Document:

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                                                                    Exhibit 4.10

                                  $300,000,000

                               EMULEX CORPORATION

           1.75% CONVERTIBLE SUBORDINATED NOTES DUE FEBRUARY 1, 2007

                          REGISTRATION RIGHTS AGREEMENT

                                                                January 29, 2002

CREDIT SUISSE FIRST BOSTON CORPORATION
THOMAS WEISEL PARTNERS LLC
c/o CREDIT SUISSE FIRST BOSTON CORPORATION
    Eleven Madison Avenue
    New York, New York 10010-3629

Ladies and Gentlemen:

        Emulex Corporation, a Delaware corporation (the "COMPANY"), proposes to
issue and sell to Credit Suisse First Boston Corporation ("CSFBC") and Thomas
Weisel Partners LLC (collectively, the "INITIAL PURCHASERS"), upon the terms set
forth in a purchase agreement of even date herewith (the "PURCHASE AGREEMENT"),
$300,000,000 aggregate principal amount (plus up to an additional $45,000,000
principal amount issuable upon exercise of a 30 day over-allotment option) of
its 1.75% Convertible Subordinated Notes Due February 1, 2007 (the "INITIAL
SECURITIES"). The Initial Securities will be convertible into shares of common
stock, par value $.10 per share, of the Company (the "COMMON STOCK") at the
conversion price set forth in the Confidential Offering Circular dated January
24, 2002. The Initial Securities will be issued pursuant to an Indenture, dated
as of January 29, 2002 (the "INDENTURE"), between the Company and State Street
Bank and Trust Company of California, N.A., as trustee (the "TRUSTEE"). As an
inducement to the Initial Purchasers to enter into the Purchase Agreement, the
Company agrees with the Initial Purchasers as set forth in this Registration
Rights Agreement (the "AGREEMENT"), for the benefit of (i) the Initial
Purchasers and (ii) the holders of the Initial Securities and the Common Stock
issuable upon conversion of the Initial Securities (collectively, the
"SECURITIES") from time to time until such time as such Securities have been
sold pursuant to a Shelf Registration Statement (as defined below) (each of the
forgoing a "HOLDER" and collectively the "HOLDERS"), as follows:

        1. Shelf Registration. (a) The Company shall, at its cost, prepare and,
as promptly as practicable (but in no event more than ninety (90) days after the
first date of

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original issuance of the Initial Securities (the "ISSUE DATE")) file with the
Securities and Exchange Commission (the "COMMISSION") and thereafter use all
commercially reasonable efforts to cause to be declared effective as soon as
practicable a registration statement on Form S-3 (or other appropriate form)
(the "SHELF REGISTRATION STATEMENT") relating to the offer and sale of the
Transfer Restricted Securities (as defined in Section 5 hereof) by the Holders
thereof from time to time in accordance with the methods of distribution set
forth in the Shelf Registration Statement and Rule 415 under the Securities Act
of 1933, as amended (the "SECURITIES ACT") (hereinafter, the "SHELF
REGISTRATION"); provided, however, that no Holder (other than an Initial
Purchaser) shall be entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder (i) agrees in writing (in a form
reasonably acceptable to the Company) to be bound by all the provisions of this
Agreement applicable to such Holder, and (ii) completes and delivers to the
Company the form of Selling Security Holder Notice and Questionnaire (the
"NOTICE AND QUESTIONNAIRE") attached as Annex A to the final Confidential
Offering Memorandum utilized in connection with the sale of the Initial
Securities.

        (b) The Company shall use all commercially reasonable efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus included therein (the "PROSPECTUS") to be lawfully delivered by the
Holders of the relevant Securities, for a period of two (2) years (or for such
longer period if extended pursuant to Section 2(h) below) from the date of its
effectiveness or such shorter period that will terminate when (i) all the
Securities covered by the Shelf Registration Statement have been sold pursuant
thereto, or (ii) all the Securities covered by the Shelf Registration Statement
that are held by persons other than affiliates of the Company as defined in the
Securities Act are eligible to be sold to the public pursuant to Rule 144(k)
under the Securities Act, or any successor rule thereof (in any such case, such
period being called the "SHELF REGISTRATION PERIOD"). The Company shall be
deemed not to have used all commercially reasonable efforts to keep the Shelf
Registration Statement effective during the requisite period if it voluntarily
takes any action that would result in Holders of Securities covered thereby not
being able to offer and sell such Securities during that period, unless such
action is (i) required by applicable law or (ii) taken by the Company in good
faith and contemplated by Section 2(b)(v) below, and the Company thereafter
complies with the requirements of Section 2(h).

        (c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
Prospectus and any amendment or supplement thereto, as of the effective date of
the Shelf Registration Statement, amendment or supplement, (i) to comply in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.

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        2. Registration Procedures. In connection with the Shelf Registration
contemplated by Section 1 hereof, the following provisions shall apply:

        (a) The Company shall (i) furnish to CSFBC at least three (3) business
days prior to the filing thereof with the Commission, a copy of the Shelf
Registration Statement and each amendment thereof and each supplement, if any,
to the prospectus included therein and, in the event that CSFBC (with respect to
any portion of an unsold allotment from the original offering) is participating
in the Shelf Registration Statement, shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such comments
as CSFBC reasonably may propose; and (ii) include the names of the Holders who
propose to sell Securities pursuant to the Shelf Registration Statement (and who
return the Notice and Questionnaire required by Section 1(a) of this Agreement)
as selling securityholders.

        (b) The Company shall give written notice to the Initial Purchasers and
the Holders of the Securities (which notice pursuant to clauses (ii)-(v) hereof
shall be accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made):

               (i) when the Shelf Registration Statement or any amendment
        thereto has been filed with the Commission and when the Shelf
        Registration Statement or any post-effective amendment thereto has
        become effective;

               (ii) of any request by the Commission for amendments or
        supplements to the Shelf Registration Statement or the prospectus
        included therein or for additional information;

               (iii) of the issuance by the Commission of any stop order
        suspending the effectiveness of the Shelf Registration Statement or the
        initiation of any proceedings for that purpose;

               (iv) of the receipt by the Company or its legal counsel of any
        notification with respect to the suspension of the qualification of the
        Securities for sale in any jurisdiction or the initiation or threatening
        of any proceeding for such purpose; and

               (v) of the happening of any event that requires the Company to
        make changes in the Shelf Registration Statement or the Prospectus in
        order that the Shelf Registration Statement or the Prospectus does not
        contain an untrue statement of a material fact nor omit to state a
        material fact required to be stated therein or necessary to make the
        statements therein (in the case of the Prospectus, in light of the
        circumstances under which they were made) not misleading.

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        (c) The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Shelf Registration Statement.

        (d) The Company shall furnish to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, at least one copy
of the Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).

        (e) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the Prospectus (including each
preliminary prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the use of the
Prospectus or any amendment or supplement thereto by each of the selling Holders
of the Securities in connection with the offering and sale of the Securities
covered by the Prospectus, or any amendment or supplement thereto, included in
the Shelf Registration Statement.

        (f) Prior to any public offering of the Securities pursuant to the Shelf
Registration Statement, the Company shall register or qualify or cooperate with
the Holders of the Securities included therein and their respective counsel in
connection with the registration or qualification of the Securities for offer
and sale under the securities or "blue sky" laws of such states of the United
States as any Holder of the Securities reasonably requests in writing and do any
and all other acts or things necessary or advisable to enable the offer and sale
in such jurisdictions of the Securities covered by such Registration Statement;
provided, however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so qualified
or (ii) take any action which would subject it to general service of process or
to taxation in any jurisdiction where it is not then so subject.

        (g) The Company shall cooperate with the Holders of the Securities to
facilitate the timely preparation and delivery of certificates representing the
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Securities pursuant to the Shelf Registration Statement.

        (h) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 2(b) above during the period for which the Company is
required to maintain an effective Shelf Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the Shelf
Registration Statement or an amendment or supplement to the Prospectus and any
other required document so that, as thereafter delivered to Holders or
purchasers of the Securities, the Prospectus will not contain an

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untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Company
notifies the Initial Purchasers and the Holders in accordance with paragraphs
(ii) through (v) of Section 2(b) above to suspend the use of the Prospectus
until the requisite changes to the Prospectus have been made, then the Initial
Purchasers and the Holders shall suspend use of such Prospectus (the period of
such suspension being referred to as a "DEFERRAL PERIOD"), and the period of
effectiveness of the Shelf Registration Statement provided for in Section 1(b)
above shall be extended by the number of days from and including the date of the
giving of such notice to and including the date when the Initial Purchasers and
the Holders shall have received such amended or supplemented prospectus pursuant
to this Section 2(h).

        (i) Not later than the effective date of the Shelf Registration
Statement, the Company will provide CUSIP numbers for the Initial Securities and
the Common Stock registered under the Shelf Registration Statement, and provide
the Trustee with printed certificates for the Initial Securities, in a form
eligible for deposit with The Depository Trust Company.

        (j) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the Shelf
Registration Statement, which statement shall cover such 12-month period.

        (k) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, (the "TRUST INDENTURE ACT") in a timely
manner and containing such changes, if any, as shall be necessary for such
qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall appoint a
new trustee thereunder pursuant to the applicable provisions of the Indenture.

        (l) In addition to requiring the timely completion and return of the
Notice and Questionnaire contemplated by Section 1(a) of this Agreement, the
Company may require each Holder of Securities to be sold pursuant to the Shelf
Registration Statement to furnish to the Company such information regarding the
Holder and the distribution of the Securities as the Company may from time to
time reasonably require for inclusion in the Shelf Registration Statement, and
the Company may exclude from such registration the Securities of any Holder that
unreasonably fails to furnish such information within a reasonable time after
receiving such request.

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        (m) The Company shall enter into such customary agreements (including,
if requested and subject to the provisions of Section 7 of this Agreement, an
underwriting agreement in customary form) and take all such other actions, if
any, as any Holder shall reasonably request in order to facilitate the
disposition of the Securities pursuant to the Shelf Registration.

        (n) The Company shall (i) make reasonably available for inspection by
the Holders, any underwriter participating in any disposition pursuant to the
Shelf Registration Statement and any attorney, accountant or other agent
retained by the Holders or any such underwriter, all relevant financial and
other records, pertinent corporate documents and properties of the Company and
(ii) cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the Holders
or any such underwriter, attorney, accountant or agent in connection with the
Shelf Registration Statement, in each case, as shall be reasonably necessary to
enable such persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers by you and on behalf of the other parties, by one counsel
designated by and on behalf of such other parties as described in Section 3
hereof; and provided further, that any information that is designated by the
Company, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by the Holders or any such underwriter,
attorney, accountant or agent, unless such disclosure is made in connection with
a court proceeding or required by law, or such information becomes available to
the public generally through a third-party without an accompanying obligation of
confidentiality.

        (o) In connection with any underwritten offering of Transfer Restricted
Securities (as defined in Section 5(f) below) in accordance with Section 7 of
this Agreement, the Company, if reasonably requested by any Holder of Securities
covered by the Shelf Registration Statement, shall cause (i) its counsel to
deliver an opinion and updates thereof relating to the Securities in customary
form addressed to such Holders and the managing underwriters, if any, thereof,
and dated, in the case of the initial opinion, the effective date of such Shelf
Registration Statement (it being agreed that such opinion shall be subject to
customary assumptions and exceptions and that the matters to be covered by such
opinion shall include, without limitation, the due incorporation and good
standing of the Company and its significant subsidiaries; the qualification of
the Company and its significant subsidiaries to transact business as foreign
corporations; the due authorization, execution and delivery of the relevant
agreement of the type referred to in Section 2(m) hereof; the due authorization,
execution, authentication and issuance, and the validity and enforceability, of
the Securities; the absence of material legal or governmental proceedings
involving the Company and its subsidiaries; the absence of governmental
approvals required to be obtained in connection with the Shelf Registration
Statement, the offering and sale of the Securities, or any agreement of the type
referred to in Section 2(m) hereof; the compliance as to form of the Shelf
Registration Statement and any documents incorporated by reference therein and
of the Indenture with the

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requirements of the Securities Act and the Trust Indenture Act, respectively;
and, as of the date of the opinion and as of the effective date of the Shelf
Registration Statement or most recent post-effective amendment thereto, as the
case may be, the absence from the Shelf Registration Statement and the
prospectus included therein, as then amended or supplemented, and from any
documents incorporated by reference therein of an untrue statement of a material
fact or the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of any such documents, in the light of the circumstances existing at the time
that such documents were filed with the Commission under the Exchange Act of
1934, as amended (the "EXCHANGE ACT")); (ii) its officers to execute and deliver
all customary documents and certificates and updates thereof requested by any
underwriters of the Securities and (iii) its independent public accountants and
the independent public accountants with respect to any other entity for which
financial information is provided in the Shelf Registration Statement to provide
to the selling Holders of the applicable Securities and any underwriter therefor
a comfort letter in customary form and covering matters of the type customarily
covered in comfort letters in connection with primary underwritten offerings,
subject to receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.

        (p) The Company will use commercially reasonable efforts to (a) if the
Initial Securities have been rated prior to the initial sale of such Initial
Securities, confirm such ratings will apply to the Securities covered by a
Registration Statement, or (b) if the Initial Securities were not previously
rated, cause the Securities covered by a Registration Statement to be rated with
the appropriate rating agencies, if so requested by holders of a majority in
aggregate principal amount of Securities covered by the Shelf Registration
Statement, or by the managing underwriters, if any.

        (q) In the event that any broker-dealer registered under the Exchange
Act shall underwrite any Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Conduct Rules (the "RULES") of the National Association of
Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such
Securities or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, the Company will assist such
broker-dealer in complying with the requirements of such Rules, including,
without limitation, by (i) if such Rules, including Rule 2720, shall so require,
engaging a "qualified independent underwriter" (as defined in Rule 2720) on
commercially reasonable terms but at the expense of the Holders whose Securities
are being sold pursuant to such offering, to participate in the preparation of
the Shelf Registration Statement relating to such Securities, to exercise usual
standards of due diligence in respect thereto and, if any portion of the
offering contemplated by such Registration Statement is an underwritten offering
or is made through a placement or sales agent, to recommend the yield of such
Securities, (ii) indemnifying any such qualified independent underwriter to the
extent of the indemnification of underwriters provided in Section 5

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hereof and (iii) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the requirements of the
Rules.

        (r) The Company shall cause all Securities covered by the Shelf
Registration Statement to be listed on each securities exchange on which any
Securities are listed.

        (s) The Company shall use its reasonable efforts to take all other steps
necessary to effect the registration of the Securities covered by a Registration
Statement contemplated hereby.

        3. Registration Expenses. (a) All expenses incident to the Company's
performance of and compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement is ever filed or becomes
effective, including without limitation;

               (i) all registration and filing fees and expenses (including
        filings made by any Initial Purchasers or Holder with the NASD);

               (ii) all fees and expenses of compliance with federal securities
        and state "blue sky" or securities laws;

               (iii) all expenses of printing (including printing certificates
        for the Securities to be issued and printing of Prospectuses), messenger
        and delivery services and telephone;

               (iv) all fees and disbursements of counsel for the Company;

                (v) all application and filing fees in connection with listing
        the Securities on a national securities exchange or automated quotation
        system pursuant to the requirements hereof; and

               (vi) all fees and disbursements of independent certified public
        accountants of the Company (including the expenses of any special audit
        and comfort letters required by or incident to such performance).

The Company will bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.

        (b) In connection with the Shelf Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchasers and the Holders of
Securities covered by the Shelf Registration Statement, for the reasonable fees
and disbursements of not more than one counsel, who shall be Morrison & Foerster
LLP or such other counsel as may be designated by the Holders of a majority in
principal amount

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of the Securities covered by the Shelf Registration Statement (provided that
Holders of Common Stock issued upon the conversion of the Initial Securities
shall be deemed to be Holders of the aggregate principal amount of Initial
Securities from which such Common Stock was converted) to act as counsel for the
Holders in connection therewith.

        4. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Holder and each person, if any, who controls such Holder within
the meaning of the Securities Act or the Exchange Act (each Holder, and such
controlling persons are referred to collectively as the "INDEMNIFIED PARTIES")
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Shelf
Registration Statement or prospectus including any document incorporated by
reference therein, or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Shelf Registration, or arise out of, or
are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse, as incurred, the Indemnified Parties for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in the Shelf Registration Statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Shelf Registration in reliance upon and in conformity
with written information pertaining to such Holder and furnished to the Company
by or on behalf of such Holder specifically for inclusion therein and (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to the Shelf Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned, to
the extent that a prospectus relating to such Securities was required to be
delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such Securities to such person, a copy
of the final prospectus if the Company had previously furnished copies thereof
to such Holder; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as

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provided above with respect to the indemnification of the Holders of the
Securities if requested by such Holders.

        (b) Each Holder, severally and not jointly, will indemnify and hold
harmless the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act from and against any losses, claims, damages or liabilities or any actions
in respect thereof, to which the Company or any such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or prospectus or in any amendment
or supplement thereto or in any preliminary prospectus relating to the Shelf
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with written information pertaining to such Holder and furnished
to the Company by or on behalf of such Holder specifically for inclusion
therein; and, subject to the limitation set forth immediately preceding this
clause, shall reimburse, as incurred, the Company for any legal or other
expenses reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be in addition to any
liability which such Holder may otherwise have to the Company or any of its
controlling persons.

        (c) Promptly after receipt by an indemnified party under this Section 4
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 4,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could

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have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement (i) includes an unconditional release
of such indemnified party from all liability on any claims that are the subject
matter of such action, and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.

        (d) If the indemnification provided for in this Section 4 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above in such proportion as is appropriate to reflect the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or such Holder or such other indemnified party, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 4(d), the Holders shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to the Shelf Registration
Statement exceeds the amount of damages which such Holders have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls such indemnified party within the meaning of the Securities Act or the
Exchange Act shall have the same rights to contribution as such indemnified
party and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company.

        (e) The agreements contained in this Section 4 shall survive the sale of
the Securities pursuant to the Shelf Registration Statement and shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.

        5. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "ADDITIONAL INTEREST") with respect to the Initial Securities
shall be assessed as follows if

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any of the following events occur (each such event in clauses (i) through (iii)
below being herein called a "REGISTRATION DEFAULT"):

               (i) the Shelf Registration Statement has not been filed with the
        Commission by the 90th day after the Issue Date;

               (ii) the Shelf Registration Statement has not been declared
        effective by the Commission by the 180th day after the Issue Date; or

               (iii) the Shelf Registration Statement is declared effective by
        the Commission but (A) the Shelf Registration Statement thereafter
        ceases to be effective or, (B) the Shelf Registration Statement or the
        Prospectus ceases to be useable in connection with resales of Transfer
        Restricted Securities (as defined below) during the periods specified
        herein because (1) any event occurs as a result of which the Prospectus
        forming part of such Shelf Registration Statement would include any
        untrue statement of a material fact or omit to state any material fact
        necessary to make the statements therein in the light of the
        circumstances under which they were made not misleading, or (2) it shall
        be necessary to amend such Shelf Registration Statement or supplement
        the related prospectus, to comply with the Securities Act or the
        Exchange Act or the respective rules thereunder.

Each of the foregoing will constitute a Registration Default whatever the reason
for any such event and whether it is voluntary or involuntary or is beyond the
control of the Company or pursuant to operation of law or as a result of any
action or inaction by the Commission .

        Additional Interest shall accrue on the Initial Securities over and
above the interest set forth in the title of the Initial Securities from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all such Registration Defaults have been cured, at a
rate of 0.50% per annum (the "ADDITIONAL INTEREST RATE").

        (b) A Registration Default referred to in Section 5(a)(iii) hereof shall
be deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related Prospectus if the Company is proceeding
promptly and in good faith to amend or supplement the Shelf Registration
Statement and related prospectus so as to describe such events as required by
paragraph 2(h) hereof or so as to otherwise cure the Registration Default
referred to in Section 5(a)(iii); provided, however, that in any case if such
Registration Default occurs (i) for a period in excess of 45 days in any 90 day
period or (ii) for an aggregate of 90 days in any 12 month period, Additional
Interest shall be payable in accordance with the above paragraph from the day
such Registration Default occurs until such Registration Default is cured.

        (c) In the event, after the effective date of the Shelf Registration
Statement, a Holder notifies the Company that it desires to be included as a
Selling Stockholder in the

                                       12
<PAGE>

Shelf Registration Statement pursuant to Section 1(a) hereof, and in the process
of amending or supplementing the Shelf Registration Statement and the related
prospectus to include such Holder as a Selling Stockholder, the Securities and
Exchange Commission (the "SEC") notifies the Company in writing (the "Notice")
that the Company is prohibited from including such Holder as a Selling
Stockholder in the Shelf Registration Statement and that the Company must file a
new registration statement with the SEC and recommence the registration process
(the "New Registration Statement") in order to register such Holder's
Securities, the Company will not be deemed to be in Registration Default
pursuant to Section 5(a)(iii) hereof from the date the Company receives the
Notice until the date the New Registration Statement is declared effective by
the SEC; provided, however, that in the event the Company does receive such
Notice, the Company will proceed promptly and in good faith to cause such New
Registration Statement to be declared effective.

        (d) Any amounts of Additional Interest due pursuant to Section 5(a) will
be payable in cash on the regular interest payment dates with respect to the
Initial Securities (as set forth in the Indenture). The amount of Additional
Interest will be determined by multiplying the applicable Additional Interest
Rate by the principal amount of the Initial Securities, further multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
Rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.

        (e) All obligations of the Company set forth in this Section 5 that are
outstanding with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.

        (f) "TRANSFER RESTRICTED SECURITIES" means each Security until (i) the
date on which such Security has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (iv)
the date on which such Security is distributed to the public pursuant to Rule
144 under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act.

        6. Rules 144 and 144A. The Company shall use its best reasonable efforts
to file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder, make publicly
available other information so long as necessary to permit sales of their
Securities pursuant to Rules 144 and 144A. The Company covenants that it will
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Transfer Restricted
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)). The Company will provide a copy of this Agreement to
prospective purchasers of Securities identified to the Company by the Initial
Purchasers upon request.

                                       13
<PAGE>

Upon the request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.

        7. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by the Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("MANAGING UNDERWRITERS") will be selected by
the holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering (provided that holders of
Common Stock issued upon conversion of the Initial Securities shall not be
deemed holders of Common Stock, but shall be deemed to be holders of the
aggregate principal amount of Initial Securities from which such Common Stock
was converted; provided, however, that such Managing Underwriters will be
reasonably acceptable to the Company.

        No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.

        8. Miscellaneous.

        (a) Remedies. The Company acknowledges and agrees that any failure by
the Company to comply with its obligations under Section 1 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Sections 1 hereof. The
Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.

        (b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.

        (c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the holders of a majority in principal amount of the Transfer
Restricted Securities affected

                                       14
<PAGE>

by such amendment, modification, supplement, waiver or consents (provided that
holders of Common Stock issued upon conversion of Initial Securities shall not
be deemed holders of Common Stock, but shall be deemed holders of the aggregate
principal amount of Initial Securities from which such Common Stock was
converted). Without the consent of the Holder of each Initial Security, however,
no modification may change the provisions relating to the payment of Additional
Interest.

        (d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:

               (1) if to a Holder of the Securities, at the most current address
        given by such Holder to the Company.

               (2) if to the Initial Purchasers;

                      Credit Suisse First Boston Corporation
                      Eleven Madison Avenue
                      New York, NY 10010-3629
                      Fax No.: (212) 325-8278
                      Attention: Transactions Advisory Group

        with a copy to:

                      Morrison & Foerster LLP
                      755 Page Mill Road
                      Palo Alto, California 94304-1018
                      Fax No.: (650) 494-0792
                      Attention: Justin L. Bastian, Esq.

               (3) if to the Company, at its address as follows:

                      Emulex Corporation
                      3535 Harbor Boulevard
                      Costa Mesa, California 92626
                      Fax No.: (714) 641-0172
                      Attention: Chief Financial Officer

        with a copy to:

                      Jeffer, Mangels, Butler & Marmaro LLP
                      2121 Avenue of the Stars,
                      10th Floor Los Angeles, California 90067

                                       15
<PAGE>

                      Fax No: (310) 203-0567
                      Attention: Robert M. Steinberg, Esq.

        All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.

        (e) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.

        (f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities.

        (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

        (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

        (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.

        By the execution and delivery of this Agreement, the Company submits to
the nonexclusive jurisdiction of any federal or state court in the State of New
York.

        (j) Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

        (k) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their

                                       16
<PAGE>

holdings of such Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.

                            [Signature page follows]

                                       17
<PAGE>

        If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Company in accordance with its
terms.

                                        Very truly yours,

                                        EMULEX CORPORATION

                                        By: _________________________________

The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.

CREDIT SUISSE FIRST BOSTON CORPORATION
THOMAS WEISEL PARTNERS LLC

By: CREDIT SUISSE FIRST BOSTON CORPORATION

By: ______________________________________
      John Metz, Director

                                       18<PAGE>
                                                                   Exhibit 10.16

                               BUILD TO SUIT LEASE

                                 BY AND BETWEEN

            C.J. SEGERSTROM & SONS, A CALIFORNIA GENERAL PARTNERSHIP,

                                   AS LANDLORD

                                       AND

                  EMULEX CORPORATION, A CALIFORNIA CORPORATION,

                                    AS TENANT

<PAGE>

                               BUILD TO SUIT LEASE

                                 BY AND BETWEEN

            C.J. SEGERSTROM & SONS, A CALIFORNIA GENERAL PARTNERSHIP,

                                   AS LANDLORD

                                       AND

                  EMULEX CORPORATION, A CALIFORNIA CORPORATION

                                    AS TENANT

                              DATED: APRIL 15, 2002

                                      INDEX

<TABLE>
<CAPTION>
                                                                                            Page
                                                                                            ----
<S>               <C>                                                                       <C>
ARTICLE I. PREMISES..........................................................................1

                  Section 1.1 Premises Defined...............................................1
                  Section 1.2 Easements; Reservation of Oil, Gas, Mineral and Water
                                 Rights......................................................2
                  Section 1.3 Title Matters..................................................2
                  Section 1.4 Tenant's Expansion Option; Expansion Land Use and
                                 Related Covenants...........................................3
                  Section 1.5 Tenant's First Refusal Right to Lease..........................7
                  Section 1.6 Representations and Warranties of the Parties..................9

ARTICLE II. TERM ...........................................................................10

                  Section 2.1 Length of Term................................................10
                  Section 2.2 Lease Commencement Date and Rent Commencement Date............10
                  Section 2.3 Options to Extend Term........................................11

ARTICLE III. RENT ..........................................................................15

                  Section 3.1 Base Rent.....................................................15
                  Section 3.2 Determinations of Base Rent...................................17
                  Section 3.3 Increases in Monthly Base Rent................................19
                  Section 3.4 Expansion Land Rent...........................................20
                  Section 3.5 Rent Defined..................................................21

ARTICLE IV. TAXES ..........................................................................21

                  Section 4.1 Real Property Taxes...........................................21
                  Section 4.2 Definitions...................................................22
                  Section 4.3 Separate Tax Parcel...........................................22
                  Section 4.4 Other Taxes...................................................23
                  Section 4.5 Right to Contest..............................................23

ARTICLE V. CONDUCT OF BUSINESS BY TENANT....................................................24

                  Section 5.1 Use of Premises...............................................24
                  Section 5.2 Restrictions on Use...........................................25
                  Section 5.3 Contest of Requirements.......................................25
                  Section 5.4 Exterior Signs and Sign Monument(s)...........................25
                  Section 5.5 Other Tenant Facilities.......................................26

ARTICLE VI. MAINTENANCE, REPAIRS AND ALTERATIONS............................................27

                  Section 6.1 Landlord's Obligations........................................27
                  Section 6.2 Tenant's Obligations..........................................28
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>               <C>                                                                       <C>
                  Section 6.3 Additions to Premises; Modifications to Obligations of
                                 the Parties................................................29
                  Section 6.4 Alterations and Additions.....................................30
                  Section 6.5 Removal of Tenant's Property..................................32

ARTICLE VII. INSURANCE; INDEMNITY...........................................................32

                  Section 7.1 Liability Insurance...........................................32
                  Section 7.2 Fire and Earthquake Insurance - Fixtures, Equipment and
                                 Tenant Improvements........................................33
                  Section 7.3 Insurance Policies............................................34
                  Section 7.4 Waiver of Subrogation.........................................34
                  Section 7.5 Indemnity.....................................................34
                  Section 7.6 Exemption of Landlord.........................................35
                  Section 7.7 Notices.......................................................35

ARTICLE VIII. DAMAGE OR DESTRUCTION.........................................................35

                  Section 8.1 Damage........................................................35
                  Section 8.2 Termination Rights............................................36
                  Section 8.3 Abatement of Rent.............................................37

ARTICLE IX. ASSIGNMENT AND SUBLETTING.......................................................38

                  Section 9.1 Landlord's Rights.............................................38
                  Section 9.2 No Release of Tenant..........................................42
                  Section 9.3 Hypothecation.................................................42

ARTICLE X. CONDEMNATION.....................................................................45

                  Section 10.1 Condemnation.................................................45

ARTICLE XI. UTILITY SERVICES................................................................47

                  Section 11.1 Utility Charges..............................................47
                  Section 11.2 Interruption of Service......................................47
                  Section 11.3 Other Tenants................................................47
                  Section 11.4 Availability of Utility Services.............................48

ARTICLE XII. DEFAULTS AND REMEDIES..........................................................48

                  Section 12.1 Defaults.....................................................48
                  Section 12.2 Remedies.....................................................49
                  Section 12.3 Determination of Rent........................................49
                  Section 12.4 Default by Landlord..........................................49
                  Section 12.5 Expense of Litigation........................................50
                  Section 12.6 Holding Over.................................................50
                  Section 12.7 Landlord's Rights............................................50
                  Section 12.8 Payments and Notices.........................................51
                  Section 12.9 Third Party Litigation.......................................51
                  Section 12.10 Submission to Arbitration...................................51

ARTICLE XIII. MISCELLANEOUS.................................................................54

                  Section 13.1 Offset Statement.............................................54
                  Section 13.2 Landlord's Right of Access...................................54
                  Section 13.3 Transfer of Landlord's Interest..............................55
                  Section 13.4 Separability.................................................55
                  Section 13.5 Interest on Past Due Obligations.............................55
                  Section 13.6 Time of Essence..............................................56
                  Section 13.7 Hazardous Substances.........................................56
                  Section 13.8 Headings.....................................................58
                  Section 13.9 Incorporation of Prior Agreements; Amendments................59
                  Section 13.10 Notices.....................................................59
                  Section 13.11 Brokers.....................................................60
                  Section 13.12 Waivers.....................................................60
                  Section 13.13 Recording...................................................60
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>               <C>                                                                       <C>
                  Section 13.14 Liens.......................................................61
                  Section 13.15 Subordination...............................................61
                  Section 13.16 Force Majeure...............................................62
                  Section 13.17 Yield Up Premises; Quitclaim................................63
                  Section 13.18 Authority...................................................63
                  Section 13.19 Survival of Indemnities.....................................63
                  Section 13.20 Surrender or Cancellation...................................63
                  Section 13.21 Non-Disclosure of Lease Terms...............................64
                  Section 13.22 Security Deposit............................................64
                  Section 13.23 Gender; Tenants.............................................64
                  Section 13.24 No Option...................................................64
                  Section 13.25 Landlord Liability..........................................64
                  Section 13.26 Termination.................................................65
                  Section 13.27 Accord and Satisfaction.....................................66
                  Section 13.28 Quiet Possession............................................66
                  Section 13.29 Counterparts................................................66
                  Section 13.30 Parking for Premises........................................66
                  Section 13.31 Building Security...........................................67
                  Section 13.32 Communications Equipment....................................68
                  Section 13.33 Publicity...................................................69

ARTICLE XIV. IMPROVEMENT OF THE PREMISES....................................................69

                  Section 14.1 Landlord's Work..............................................69
                  Section 14.2 Standards for Performance of Landlord's Work.................71
                  Section 14.3 Payment for Landlord's Work..................................75
                  Section 14.4 Time for Completion..........................................80
                  Section 14.5 Warranties and Guaranties....................................81
                  Section 14.6 Tenant's Work................................................81
                  Section 14.7 Coordination, Cooperation and Change Orders..................82
                  Section 14.8 Expansion Building...........................................83
                  Section 14.9 Remediation During Construction..............................83

ARTICLE XV. TENANT'S PURCHASE RIGHTS........................................................84

                  Section 15.1 Tenant's Option to Purchase..................................84
                  Section 15.2 First Offer to Purchase......................................86

ARTICLE XVI. CONDITIONS TO EFFECTIVENESS....................................................87

                  Section 16.1 Conditions to Continued Effectiveness of Lease...............87

ARTICLE XVII. OTHER MATTERS.................................................................89

                  Section 17.1 Subdivision of Land..........................................89
                  Section 17.2 Common Areas.................................................89
                  Section 17.3 Reciprocal Easement Agreement................................90
                  Section 17.4 Relocation Costs.............................................91
                  Section 17.5 Trip Ends....................................................91
                  Section 17.6 Traffic Impact Fees..........................................91
</TABLE>

EXHIBIT A - Plot Plan of Land
EXHIBIT B - Legal Description of Land
EXHIBIT C - Form of Short Form Memorandum of Lease
EXHIBIT D - Form of Mutual Cancellation of Lease
EXHIBIT E - Schedule of Landlord Improvements
EXHIBIT F - Form of Purchase and Sale Agreement
EXHIBIT G - Permitted Exceptions
EXHIBIT H - Allocation of Development Agreement Items
EXHIBIT I - Rules and Regulations
EXHIBIT J - Form of Subordination, Non-Disturbance and Attornment Agreement
EXHIBIT K - Form of Tenant's Deed of Trust
EXHIBIT L - Development Budget
EXHIBIT M - Purchase and Sale Agreement Modifications

                                      iii

<PAGE>

                               BUILD TO SUIT LEASE

            In consideration of the rents and covenants hereinafter set forth,
C.J. SEGERSTROM & SONS, a California general partnership ("Landlord"), hereby
leases to EMULEX CORPORATION, a California corporation ("Tenant"), and Tenant
hereby rents from Landlord, the following described premises (the "Premises"),
upon the following terms and conditions:

                                   ARTICLE I.
                                    PREMISES

Section 1.1 Premises Defined

            The Premises consist of the following:

            (a) That portion of that certain real property located in the City
of Costa Mesa, State of California, bounded by Sunflower Avenue on the north,
Susan Street on the east and South Coast Drive on the south, consisting of an
area of approximately 14.158 acres, more or less, together with all easements,
rights and other appurtenances thereto (collectively, the "Land") included in
the Initial Premises, as defined in subsection (b) below. The Land is more
particularly depicted on Exhibit "A" attached hereto and is legally described on
Exhibit "B" attached hereto, each of which Exhibits is incorporated herein by
this reference.

            (b) All improvements now or hereafter located in, on and under the
Land constructed by Landlord pursuant to Article XIV (collectively, the
"Landlord Improvements"). The Landlord Improvements shall consist of a
multi-building, two story concrete tilt-up (unless otherwise mutually approved)
campus (collectively, the "Buildings") containing approximately 180,000 square
feet of Floor Area, as defined in Section 3.2 below, together with all
landscaping, lighting, parking, and other improvements constructed by Landlord
pursuant to Article XIV below as a part of the "Initial Premises." As used
herein, the term "Landlord Improvements" shall not include any tenant
improvements constructed by Tenant pursuant to Article XIV, any alterations made
or constructed by Tenant pursuant to Article VI, or any furniture, fixtures,
trade fixtures, equipment and/or miscellaneous personal property of Tenant.

            All references herein to the Premises shall, unless the context
clearly indicates to the contrary, mean and include the Land and the Landlord
Improvements. All references herein to the "Initial Premises" shall mean the
Landlord Improvements initially constructed by Landlord pursuant to Article XIV
prior to the Rent Commencement Date, other than the improvements to the
Expansion Land, as defined in this subsection (b), plus so much of the Land as
is required to:

                (i) Accommodate the initial Buildings with a floor area ratio
("FAR") of approximately 0.40; and

                (ii) Provide surface parking for the initial Buildings with a
parking ratio of four (4) stalls per 1,000 square feet of Floor Area.

Landlord and Tenant contemplate that the portion of the Land so allocated to the
Initial Premises (the "Initial Premises Land") will be approximately 10.33 acres
and the parties shall use their best efforts to configure the Land allocated to
the Initial Premises in order to stay as close to an 0.40 FAR as possible. The
square footage of each of the Initial Premises Land and the Expansion Land, as
defined below, shall be determined as provided in Section 3.2 below. That
portion of the Land other than the Initial Premises Land is herein referred to
as the "Expansion Land." The Expansion Land and the Expansion Building, as
defined in Section 1.4, are herein referred to as the "Expansion Premises."
Subject to the provision of Article XIV, Landlord and Tenant contemplate that
the Initial Premises will be located on the northerly portion of the Land
adjacent to Sunflower Avenue, while the Expansion Land will be the southerly
portion of the Land adjacent to South Coast Drive.

            (c) If Tenant ceases to be the sole tenant of the Initial Premises
and/or is not or ceases to be the sole tenant of the Expansion Premises, as
applicable, then from and after such

                                       1
<PAGE>

occurrence all references herein to the Premises shall also mean, unless the
context clearly indicates to the contrary, and include the rights of Tenant and
its employees, invitees, agents and guests to the non-exclusive use of the
public common areas on the Expansion Land and/or the Initial Premises Land, as
applicable, and in any Buildings thereon in which Tenant occupies less than all
of the Floor Area thereof.

Section 1.2 Easements; Reservation of Oil, Gas, Mineral and Water Rights

            Landlord reserves all oil, gas, hydrocarbons, mineral and water
rights in the Premises but without right of entry on the surface or within 200
feet thereof. Provided further, that no such items shall be extracted in such
manner as may cause or contribute to a lessening of the support of the Land and
the Improvements.

Section 1.3 Title Matters

            (a) Tenant's rights under this Lease are subject to the covenants,
conditions, easements, reservations, rights, rights of way and other matters
disclosed on Exhibit "G" attached hereto (the "Permitted Exceptions"). The
Permitted Exceptions also include the reservations in Section 1.2.

            (b) In recognition of Tenant's purchase rights pursuant to Article
XV, except in connection with the Permanent Financing (as defined in Section
3.1) (i.e., issuance and recordation of a deed of trust, assignment of rents and
leases, etc.), in connection with Tenant's financing provided for in Section
14.3 and in connection with the Permitted Development Easements (as defined in
subsection (c) below), Landlord covenants not to cause the creation of any
liens, easements or other encumbrances on or affecting the Initial Premises
Land, other than the Permitted Exceptions (any such unpermitted lien, easement
or other encumbrance, an "Unpermitted Exception" herein), without in each case
the prior written approval of Tenant, which Tenant may withhold or condition in
its reasonable discretion. Without limiting any other remedy of Tenant for
Landlord's breach of the foregoing covenant, the provisions of Section 13.14
shall apply to any Unpermitted Exceptions.

            (c) Landlord and Tenant recognize that, in connection with obtaining
the Home Ranch Master Entitlements (as defined in Section 14.3) and developing
the Initial Premises for Tenant pursuant to Article XIV, Landlord may be
required or may find it reasonably necessary to grant and record customary
public utility, drainage and other developmental easements for the benefit of
the Initial Premises and/or the Expansion Premises for the uses intended by the
parties pursuant to this Lease (the "Intended Use"). Such easements, to the
extent the creation or existence of same are reasonable and customary and do not
adversely affect the development, use or sale of the Initial Premises, the
Expansion Premises or any portion of either, shall be referred to herein as the
"Permitted Development Easements." No such easement shall be a Permitted
Development Easement if it runs under any Building to be constructed on the
Land. In addition, Landlord shall not grant any telecommunication easements,
licenses or other similar rights to install such facilities on the Land.

            (d) Notwithstanding anything to the contrary contained in this
Lease, the continued effectiveness of this Lease shall be subject to issuance by
Chicago Title Company (the "Title Company") of a standard CLTA leasehold and
option title insurance policy or binder in favor of Tenant, insuring Tenant's
interest in this Lease subject only to the Permitted Exceptions with a liability
amount approximating the Project Purchase Price, as defined in Section 15.1, or
such lesser amount as is determined by Tenant (the "Leasehold Policy"). Tenant
shall be solely responsible to obtain and pay for the Leasehold Policy, and the
condition set forth in this subsection (d) shall be deemed satisfied unless,
within five (5) business days after the last execution and delivery of this
Lease and the memorandum of lease provided for in Section 13.13, Tenant notifies
Landlord in writing that Tenant has been unable to obtain the Leasehold Policy.
If Tenant timely notifies Landlord that the condition set forth in this
subsection has not been satisfied, such notice shall constitute a notice of
termination of this Lease. In the event of a termination of this Lease pursuant
to this subsection, the provisions of clauses (i) and (ii) and the last sentence
of clause (iii) of Section 16.1(c) shall apply. If Tenant exercises the Purchase
Option pursuant to Section 15.1, or a right pursuant to Section 15.2, Tenant
shall receive the

                                       2
<PAGE>

benefit of any credit or reduction in premium which Landlord receives on the
title policy which Landlord is to provide to Tenant as the result of issuance of
the Leasehold Policy. Such benefit shall be in the form of a credit against the
purchase price otherwise payable by Tenant.

Section 1.4 Tenant's Expansion Option; Expansion Land Use and Related Covenants

            (a) Provided that Tenant is not in Default (as defined in Section
12.1), Tenant shall have the option (the "Expansion Option") to add to the
Premises all Floor Area in an additional Building (the "Expansion Building") to
be constructed by Landlord on the Expansion Land pursuant to the terms of this
Lease. Tenant shall occupy and pay rent on the entire Expansion Building. The
Expansion Option shall be exercised, if at all, by written notice from Tenant to
Landlord given at any time after the Rent Commencement Date of this Lease for
the Initial Premises, as defined in Section 2.2, and prior to the second
anniversary of the Rent Commencement Date as to the Initial Premises (the
"Expansion Option Period"). If Tenant is not entitled to exercise the Expansion
Option, or if Tenant is entitled to exercise the Expansion Option but fails to
timely and properly exercise the Expansion Option, the Expansion Option shall
lapse and thereafter not be exercisable by Tenant and the provisions of
subsection (j) below shall apply. If Tenant is entitled to exercise, and timely
and properly exercises, the Expansion Option, then subsections (b) through (h)
below shall apply.

            Notwithstanding the provisions of the immediately preceding
paragraph, Tenant shall be entitled to exercise the Expansion Option only if, as
of the date of exercise, Tenant's financial condition is such that Landlord can
reasonably obtain construction financing, if applicable, and Permanent Financing
with respect to Landlord's Work with respect to the Expansion Premises in an
amount at least equal to the Development Costs, as defined in Section 14.3, with
respect to the Expansion Premises. In the event of a dispute between Landlord
and Tenant as to whether the condition set forth in the immediately preceding
sentence can be met, such dispute shall be resolved in the manner provided in
Section 12.10.

            (b) The Expansion Building to be constructed on the Expansion land
shall be a two story concrete, tilt-up (unless otherwise mutually approved)
Building with a Floor Area equal to:

                (i) The maximum Floor Area entitlement approved by the City of
Costa Mesa (the "City") for the Land; less

                (ii) The aggregate Floor Area of all Buildings in the Initial
Premises.

In no event shall the Floor Area of the Expansion Building cause the FAR for all
buildings constructed or to be constructed on the Land to exceed 0.40. Based
upon a FAR for the Land of 0.40 and an anticipated aggregate Floor Area of
180,000 square feet for the Buildings in the Initial Premises, the Floor Area of
the Expansion Building will be approximately 66,689 square feet.

            (c) Design and construction of the Expansion Building, including all
parking, lighting, landscaping and related exterior Landlord Improvements on the
Expansion Land, will be the responsibility of Landlord in the manner provided in
Article XIV, and design and construction of all tenant improvements to the
Expansion Building will be the responsibility of Tenant in the manner provided
in Article XIV. For the purposes of the design and construction provided for in
this subsection (c):

                (i) All references in Article XIV to the Initial Premises shall
mean the Expansion Premises together with all exterior Landlord Improvements to
the Expansion Land.

                (ii) All references in Article XIV to Tenant Improvements (as
defined in Section 14.6) shall mean Tenant Improvements to the Expansion
Building.

                (iii) Landlord shall commence construction of the Expansion
Building and related exterior Landlord Improvements promptly following receipt
of the last of (A) all governmental permits required to construct such Expansion
Building and related exterior Landlord Improvements, (B) all Tenant approvals
required with respect to the Expansion

                                       3
<PAGE>

Building and related exterior Landlord Improvements and (C) a fully executed new
lease as required pursuant to subsection (g) below. Landlord shall deliver the
Expansion Building to Tenant upon Substantial Completion, as defined in Section
14.4, thereof.

                (iv) Tenant shall construct all Tenant Improvements to the
Expansion Building and shall commence the same promptly following Substantial
Completion of the Core and Shell Work (as defined in Section 14.1) for the
Expansion Building by Landlord.

                (v) The time frame for the construction of Landlord's
Improvements shall be similar to that set forth in the Schedule of Landlord's
Improvements provided for in Section 14.2, but using as a starting point the
exercise by Tenant of the Expansion Option.

            (d) The Commencement Date of the Lease as to the Expansion Premises
shall be the date upon which Landlord delivers to Tenant the Expansion Building
with Landlord's Core and Shell Work Substantially Complete. The Rent
Commencement Date of the Lease as to the Expansion Premises shall be the first
to occur of (i) the date upon which Tenant completes the Tenant Improvements to
the Expansion Building and commences to occupy the same and (ii) the 150th day
after the Commencement Date as to the Expansion Premises. Provided, however,
that the Rent Commencement Date as to the Expansion Premises shall not be deemed
to occur until Landlord substantially completes the Other Work, as defined in
Section 14.1, for the Expansion Land. Upon the Rent Commencement Date of the
Lease as to the Expansion Premises, the term "Premises" shall include the
Initial Premises and the Expansion Premises.

            (e) The term of the Lease as to the Expansion Premises shall be ten
(10) years from the Rent Commencement Date as to the Expansion Premises, subject
to any earlier termination of the Lease pursuant to any provision thereof. In
addition, upon the Rent Commencement Date as to the Expansion Premises, the term
of this Lease as to the Initial Premises shall be extended to be coterminus with
the term of the Lease as to the Expansion Premises. The term of this Lease, as
established and extended pursuant to this subsection, shall be subject to
further extension pursuant to Section 2.3.

            (f) The Base Rent for the Expansion Premises shall be determined in
the manner provided in Section 3.1 and shall be paid at the times and in the
manner provided in Section 3.1. Base Rent shall be subject to adjustment at the
times and in the manner provided in Sections 3.2 and 3.3. For the purposes of
application of this subsection (f):

                (i) All references to Development Costs shall mean the
Development Costs with respect to the Expansion Building and other Landlord
Improvements to the Expansion Land; and

                (ii) The annual debt service used in determining the Base Rent
with respect to the Expansion Premises shall be based upon the financing
obtained by Landlord with respect to the Expansion Premises. In no event shall
Landlord be required to refinance the Initial Premises to include the cost of
the Expansion Building and related Landlord Improvements.

                (iii) All references to the Commencement Date and the Rent
Commencement Date in Sections 3.1, 3.2 and 3.3 shall mean, as to the Initial
Premises, the Commencement Date and Rent Commencement Date with respect thereto,
and as to the Expansion Premises, the Commencement Date and Rent Commencement
Date with respect thereto. In other words, the determinations and adjustments
provided for in such Sections shall be made separately as to the Initial
Premises and the Expansion Premises.

            (g) Promptly following the exercise by Tenant of the Expansion
Option, Landlord shall prepare, and Landlord and Tenant shall execute and
deliver, a document setting forth and memorializing:

                (i) The exercise by Tenant of the Expansion Option;

                (ii) The approximate Floor Area of the Expansion Building and
the area of the Expansion Land;

                                       4
<PAGE>

                (iii) A target schedule for design, permitting and construction
of the Expansion Building, the related exterior Landlord Improvements and the
Tenant Improvements to the Expansion Building; and

                (iv) Such other matters as shall be agreed upon by Landlord and
Tenant.

Unless Landlord shall finance the Initial Premises and the Expansion Premises
with a single financing, such document shall be a separate lease covering the
Expansion Premises. Such separate lease (the "Second Lease") shall be upon the
same terms and conditions as this Lease except that the Second Lease shall not
include those provisions which are specifically related to and limited to the
Initial Premises, such as this Section 1.4 and Section 1.3. Concurrently with
the execution of the Second Lease, Landlord and Tenant shall execute and
deliver, an amendment to this Lease eliminating the Expansion Premises from the
scope of this Lease. Landlord and Tenant agree that this Lease and the Second
Lease shall be construed and applied to function together and to give effect to
the provisions of this Lease as they apply to the Expansion Premises.

            Similarly, in the event of a Permitted Sale, as defined in
subsection (i), of only the Initial Premises, the parties shall cooperate to
bifurcate this Lease into two separate leases for, respectively, the Initial
Premises and the Expansion Land, with the intent that Tenant's rights and
obligations shall remain the same but shall run to separate landlords as to the
Initial Premises and the Expansion Land. In such respect, the following
documents shall be executed and delivered:

                    (A) An amendment to this Lease between Tenant and the
purchaser in the Permitted Sale eliminating from this Lease the Expansion Land
and all obligations of the landlord under this Lease with respect to the
Expansion Land and fixing the Trip Ends as to the Initial Premises.

                    (B) A Second Lease with respect to the Expansion Land
between Landlord and Tenant. Such Second Lease shall be upon the same terms and
provisions as this Lease except that:

                        (1) The Second Lease shall not include those provisions
which are specifically related to and limited to the Initial Premises, such as
Sections 1.3 and 15.1.

                        (2) Initially the sole rights of Tenant under the Second
Lease shall be those under this Section 1.4, Section 1.5 and Section 15.2
hereof, and Tenant's sole obligations under the Second Lease shall be those
under Section 3.4. If Tenant fails to exercise the Expansion Option, then
Tenant's sole rights under the Second Lease shall be those set forth under
Sections 1.5 and 15.2.

                        (3) Except for the right to terminate this Lease as to
the Expansion Building for unforeseen hazardous materials on the Expansion Land,
none of the termination rights set forth in Sections 1.3 and 16.1 shall be
included in the Second Lease.

                    (C) An amendment to the REA, if applicable, among Landlord,
Tenant and the purchaser in the Permitted Sale by which such purchaser assumes,
from and after the effective date of the Permitted Sale, those obligations of
Landlord under the REA relating to or resulting from Landlord's ownership of the
Initial Premises.

            (h) In consideration for the grant of the Expansion Option, Tenant
shall pay to Landlord the Expansion Land Rent, as such term is defined in
Section 3.4. below, in accordance with the terms of such Section. In
consideration for Tenant's payment of Expansion Land Rent, and without any
further fee or charge to Tenant other than as provided in this subsection,
Tenant shall have the right, during the period that Tenant pays Expansion Land
Rent, to use the Expansion Land from time to time for company functions (each
such function, herein, a "Permitted Function"). Provided, however, that each
such Permitted Function shall be specifically subject to and conditioned upon
each of the following:

                                       5
<PAGE>

                (i) Prior execution and delivery by Tenant and Landlord of a
license agreement or encroachment permit with respect to such Permitted Function
and in commercially reasonable form and substance.

                (ii) Tenant shall erect no permanent structures on the Expansion
Land. Any temporary structures shall be removed promptly upon conclusion of the
Permitted Function.

                (iii) Tenant shall promptly, at Tenant's cost, repair any damage
to the Expansion Land caused by the Permitted Function. This includes filling
all holes, replanting grass as necessary and replacing other vegetation and
improvements which are trampled or damaged.

                (iv) Tenant's insurance pursuant to Sections 7.1 and 7.2 and
Tenant's indemnification pursuant to Section 7.5 shall specifically extend to
each Permitted Function, all injuries, damage or death occurring thereat and all
property placed by Tenant (or by others with the permission of Tenant) on the
Expansion Land in connection with a Permitted Function. Landlord shall have no
responsibility for and no liability in connection with any Permitted Function.

                (v) Tenant shall be solely responsible to obtain (and to furnish
to Landlord copies of) any liquor license and any other governmental permit or
license required in connection with a Permitted Function. Tenant's
indemnification pursuant to Section 7.5 shall specifically extend to any claims
arising out of Tenant's failure to obtain and/or maintain any required permit or
license with respect to a Permitted Function.

                (vi) Tenant shall conduct each Permitted Function in a manner
which minimizes damage to the Expansion Land, any improvements thereto and
vegetation thereon and which does not unreasonably bother the occupants of
adjacent lands.

                (vii) Tenant shall, during each Permitted Function, provide
appropriate receptacles for trash and refuse, shall promptly remove such
receptacles following each Permitted Function and shall pick up and dispose of
any garbage, litter or refuse resulting from each Permitted Function.

                (viii) During the period that Tenant pays Expansion Land Rent
with respect to the Expansion Land, Landlord shall not use the Expansion Land
for any purpose. In other words, the sole uses of the Expansion Land during such
period shall be (A) for a Green Area as provided in Section 14.1 and (B) for
Permitted Functions as provided for in this subsection (h).

            (i) As further consideration for Tenant's payment of the Expansion
Land Rent, Landlord covenants that:

                    (A) Pending development of the Expansion Land by Landlord,
Landlord shall not improve the Expansion Land other than as provided in Section
14.1(c).

                    (B) Any hypothecation of the Expansion Land or any interest
therein shall be subject to the rights of Tenant pursuant to this Section and
Sections 1.5, 15.1 and 15.2.

                    (C) Landlord shall maintain liability insurance with respect
to the Expansion Land comparable to that maintained by Tenant pursuant to
Section 7.1 with respect to the acts or omissions of Landlord and its agents,
employees and contractors.

                    (D) Landlord's indemnification pursuant to Section 7.5 shall
extend to acts or omissions of Landlord and its agents, employees and
contractors in or on the Expansion Land.

                    (E) To and until the earlier of exercise by Tenant of the
Expansion Option (and until the Rent Commencement Date as to the Expansion
Premises if Tenant exercises the Expansion Option) or expiration of the
Expansion Option without exercise

                                       6
<PAGE>

by Tenant, Landlord shall not sell, transfer or encumber the Expansion Land. The
foregoing shall not, however, preclude transfer of the Expansion Land to a
parent, subsidiary or affiliate of Landlord which takes title to the Expansion
Land subject to all of the provisions of this Lease or encumbrance of the
Expansion Land with the Permanent Financing for the Initial Premises. Landlord
may, however, at any time after expiration of the Purchase Option Period, as
defined in Section 15.1, and subject to Section 15.2, sell the Initial Premises
to a Buyer which assumes in writing the obligations of Landlord as to the
Initial Premises accruing subsequent to the close of such sale (a "Permitted
Sale"). Upon a Permitted Sale, Landlord, Tenant and the purchaser shall execute
and deliver the documents provided for in subsection (g) above.

                    (F) From and after the last of (1) Tenant ceases to pay
Expansion Land Rent (or the cost reimbursement provided for in Section 14.1(c))
and (2) expiration of the Expansion Option without exercise by Tenant, Tenant
shall have no further rights to use the Expansion Land pursuant to subsection
(h) and Landlord may use the Expansion Land for any purpose not inconsistent
with Tenant's use of the Initial Premises.

Nothing contained in clauses (C) or (D) shall be deemed or construed to defeat
or lessen Tenant's obligations with respect to Permitted Functions or to render
Landlord responsible for any acts or omissions of Tenant, its agents, employees,
contractors or invitees on the Expansion Land.

            (j) The lapse of the Expansion Option pursuant to subsection (a)
above shall not affect Tenant's rights pursuant to Sections 1.5 and 15.2. To the
extent applicable, Section 6.3 hereof shall also apply with respect to the lapse
of the Expansion Option.

Section 1.5 Tenant's First Refusal Right to Lease

            (a) Provided that (i) Tenant is not in Default pursuant to this
Lease beyond any applicable grace period and (ii) Landlord or a parent,
subsidiary or affiliate (as the terms parent, subsidiary and affiliate are
defined in Section 9.1(j)) of Landlord is then the owner of the Expansion Land,
Tenant shall have a right of first refusal (the "First Lease Right") to lease
any space constructed by Landlord on the Expansion Land which is or becomes
available for lease during the term of this Lease, including any extension
thereof pursuant to Section 2.3 (each, an "Available Space"). For the purposes
of this Section 1.5, Tenant may assign the First Lease Right to an assignee of
Tenant's interest in this Lease or to a subtenant which holds and occupies at
least one (1) full Building. Similarly, in connection with a subletting by
Tenant, Tenant may retain the First Lease Right so long as Tenant continues to
hold and occupy at least one (1) full Building. At all times, there shall be
only one (1) person or entity holding the First Lease Right and such First Lease
Right must be held by a person or entity which holds and occupies at least one
(1) full Building. Such First Lease Right shall be subject to and in accordance
with the terms and provisions of this Section 1.5.

            (b) In the event that an Available Space becomes available, Landlord
shall be free to market the Available Space upon such terms as Landlord
determines. Upon receipt by Landlord of a written offer to lease the Available
Space which Landlord determines is acceptable to Landlord, Landlord shall
promptly deliver to Tenant a written notice (the "Lease Notice") providing, in
substance;

                (i) A description (size, location, configuration, etc) of such
Available Space and that such Available Space is available for lease or the date
upon which such Available Space will become available for lease; and

                (ii) The Base Rent, term and other terms upon which Landlord is
prepared to lease the Available space.

            (c) Within ten (10) business days after receipt of a Lease Notice,
Tenant may exercise the First Lease Right as to the Available Space described in
such Lease Notice. Such First Lease Right shall be exercised, if at all, by
written notice to Landlord agreeing to lease the Available Space upon the terms
set forth in the Lease Notice and given within such ten (10) business day
period. In the event that Tenant fails to exercise the First Lease Right with
respect to an Available Space in the manner and within the time period specified
in this subsection (c),

                                       7
<PAGE>

the First Lease Right for such Available Space shall lapse and shall not
thereafter be exercisable with respect to such Available Space except as set
forth in subsections (e) and (h) below.

            (d) If Tenant fails to properly and timely exercise the First Lease
Right as to an Available Space, Landlord shall be free to offer such Available
Space to third parties upon substantially the same terms as set forth in the
Lease Notice as to such Available Space and to enter into a lease of such
Available Space with a third party. Provided, however, that Landlord shall not
enter into a lease of such Available Space upon total economic terms, as defined
in subsection (f) below, which are more than five percent (5%) less favorable to
Landlord than those set out in the Lease Notice given to Tenant as to such
Available Space without first providing to Tenant a second notice (the "Second
Lease Notice") providing, in substance, the information required by subsection
(b) above. Such Second Lease Notice shall be accompanied by an amendment to this
Lease adding such Available Space to the Premises upon the terms and conditions
set forth in the Second Lease Notice and otherwise upon those terms and
conditions of this Lease which are applicable to the Available Space.

            (e) Within five (5) business days after receipt of a Second Lease
Notice, Tenant may exercise the First Lease Right, if at all, by execution and
delivery to Landlord of the lease amendment enclosed with the Second Lease
Notice without change and within such five (5) business day period. Except as
provided in subsection (d) above, if Tenant fails to exercise the First Lease
Right in the manner and within the time period specified in this subsection, the
First Lease Right shall lapse and shall thereafter not be exercisable as to such
Available Space.

            (f) As used in this Section 1.5, the phrase "total economic terms"
shall mean the total net economic consideration to Landlord with respect to a
proposed lease of an Available Space (i) taking into account all amounts payable
to Landlord pursuant to the proposed lease, such as Base Rent, additional rent,
"key money" and expenses payable directly by the proposed tenant (such as
utilities, property taxes and insurance) and (ii) giving effect to all costs
incurred or to be incurred by Landlord to enter into and perform pursuant to
such proposed lease, including but not limited to any brokerage fee or
commission, any "free rent," any tenant allowance, any moving allowance,
assumption of any prior lease obligation and any remodeling, renovation or other
capital expenditure by Landlord for the benefit of the tenant.

            (g) Upon any timely exercise by Tenant of a First Lease Right as to
an Available Space, Landlord shall prepare and Landlord and Tenant shall
promptly execute and deliver an amendment to this Lease adding such Available
Space to the Premises. Any such amendment shall contain the economic and other
terms and conditions set forth in the relevant Lease Notice or Second Lease
Notice, as applicable, and shall otherwise be upon such of the terms and
conditions of this Lease as are applicable to such Available Space. Without
limiting the generality of the foregoing, Landlord and Tenant acknowledge and
agree that (i) there will or may be differences in general terms and conditions
(such as liability for taxes, maintenance, repairs, insurance requirements,
etc., but not Section 7.5, Articles IX and XII and the standards set forth in
Section 13.30(b)) due to the differences between a ground lease (i.e., the
Initial Premises) and a space lease (i.e., the Available Space), (ii) certain
provisions of this Lease are particular to the Initial Premises (such as Article
XIV) and will not apply to an Available Space and (iii) the term of this Lease
as to the Available Space shall be as set forth in the Lease Notice or Second
Lease Notice, as applicable, without regard to Section 2.3 hereof.

            (h) The First Lease Right provided for in this Section 1.5 shall be
a separate right as to each Available Space becoming available during the Lease
term, including any extension thereof pursuant to Section 2.3, and shall apply
to an Available Space each time that such Available Space becomes available for
lease during the Lease Term. Failure of Tenant to exercise the First Lease Right
as to an Available Space shall not affect the ability of Tenant to exercise the
First Lease Right as to any other Available Space or as to the Available Space
as to which Tenant failed to exercise the First Lease Space if such Available
Space thereafter again becomes available.

            (i) Notwithstanding anything to the contrary in this Section, the
First Lease Right shall be subordinate and inferior to any expansion or
extension options held by any tenant of space on the Expansion Land as to any
space becoming an Available Space. In other words,

                                       8
<PAGE>

Landlord shall not be obligated to offer such Available Space to Tenant, and
Tenant shall not be entitled to exercise the First Lease Right with respect to
such Available Space, to and until the holder of such option shall have elected
not to exercise such option or the time for exercise of such option shall have
expired without exercise of such option, as applicable. The First Lease Right
shall be superior to any right of first offer or right of first refusal granted
by Landlord to any tenant of space on the Expansion Land. In other words,
Landlord shall not be entitled to offer such Available Space to such other
tenant until Landlord shall first have offered such Available Space to Tenant
and Tenant shall have declined to exercise the First Lease Right or the time for
exercise thereof shall have expired without exercise of the First Lease Right,
as applicable.

Section 1.6 Representations and Warranties of the Parties

            (a) Landlord hereby makes the following representations, warranties
and covenants, as of the date of execution of this Lease by Landlord:

                (i) Landlord and each partner of Landlord which is not a natural
person have been duly organized and are validly existing under the laws of the
State of California. Landlord has the full right, power and authority to execute
and deliver this Lease and to perform the obligations of Landlord hereunder. The
persons executing this Lease on behalf of Landlord are authorized to do so and
to bind Landlord to the obligations of Landlord hereunder.

                (ii) Landlord is the fee owner of the Land and no person or
entity has any present or future right (whether or not contingent) to occupy,
use or acquire any interest in the Land, or any portion thereof, except as
listed on Exhibit "G."

                (iii) There is no action, suit, arbitration, unsatisfied order
or judgment, governmental investigation or proceeding pending, or to Landlord's
knowledge, threatened against Landlord which, if determined adversely to
Landlord, could individually or in the aggregate materially interfere with the
rights of Tenant hereunder. There is no litigation which has been filed against
Landlord that arises out of the ownership of the Land and which, if determined
adversely to Landlord, would materially adversely affect the Land, the Intended
Use or Landlord's ability to perform hereunder.

                (iv) To Landlord's knowledge, there are no agreements concerning
the operation and maintenance of the Land entered into by Landlord except as
identified on Exhibit "G."

                (v) Landlord has not received any notice of any condemnation
proceeding related to the Land.

                (vi) The Land is currently in the Planned Development Industrial
zoning classification of the City.

                (vii) Landlord has not received any written notice from any
governmental entity or agency alleging that the Land violates any provision of
any federal or state statute or any ordinance of the City.

                (viii) Main water, sewer, gas, electrical and telephone lines
are available in the streets adjacent to the Land for connections from such main
lines to the improvements to be constructed on the Land.

                (ix) That certain Development Agreement dated December 3, 2001
between the City of Costa Mesa, on the one hand, and Landlord and others, on the
other hand, (the "Development Agreement") has not been terminated, cancelled,
modified or amended and there are no proceedings pending or threatened to
cancel, terminate, modify or amend the Development Agreement.

                (x) The Floor Area entitlement of the Land is O.4FAR (the
"Entitlement"). The trip budget for the Land is 376 trips (AM) and 362 (PM) (the
"Trip Budget"). To and until the expiration of the Purchase Option without
exercise by Tenant,

                                       9
<PAGE>

Landlord shall not decrease either the Entitlement or the Trip Budget for the
Land. If Tenant timely exercises, the Purchase Option, the foregoing covenant
shall continue in effect until the first to occur of (A) the close of a purchase
of the Land by Tenant and (B) failure of the sale escrow to close due to a
termination by or the default of Tenant.

                (xi) If either (A) Tenant fails to exercise the Purchase Option
or (B) clause (x)(B) applies, from and after the expiration of the covenants in
clause (x) to and until expiration of the Expansion Option without exercise by
Tenant, Landlord shall not decrease the Entitlement applicable to the Expansion
Land (i.e., the Entitlement applicable to the Land less the actual Floor Area of
the Initial Premises) and shall maintain a Trip Budget for the Expansion Land
equal to that required for office usage. If Tenant timely exercises, the
Expansion Option, Landlord shall not reduce the Entitlement of the Expansion
Land below that necessary to construct the Expansion Premises and shall not
reduce the Trip Budget for the Land below that necessary for Tenant's actual use
of the Initial Premises and Expansion Premises.

            As used in this subsection, "knowledge" of Landlord shall mean to
the knowledge of Seller's agents, Jeffrey M. Reese and J. Barney Page, and shall
not impose or imply any duty of diligent inquiry.

            (b) Tenant hereby makes the following representations and warranties
as of the date of execution of this Lease by Tenant:

                (i) Tenant is a corporation duly organized and validly existing
under the laws of the State of California. Tenant has the full right, power and
authority to execute and deliver this Lease and to perform the obligations of
Tenant hereunder. The persons executing this Lease on behalf of Tenant are
authorized to do so and to bind Tenant to the obligations of Tenant hereunder.

                (ii) There is no action, suit, arbitration, unsatisfied order or
judgment, governmental investigation or proceeding pending, or to Tenant's
knowledge, threatened against Tenant which, if determined adversely to Tenant,
could materially interfere with the rights of Landlord hereunder. There is no
litigation which has been filed against Tenant which, if determined adversely to
Tenant, would materially adversely affect Tenant's ability to perform hereunder.

                                   ARTICLE II.
                                      TERM

Section 2.1 Length of Term

            The term (the "term") of this Lease shall be from the date of the
last execution and delivery of this Lease by Landlord and Tenant, and shall
continue for a period of one hundred twenty (120) months following the Rent
Commencement Date for the Initial Premises, as defined in Section 2.2(b),
subject to any extension of the term pursuant to Section 1.4(e) and Section 2.3
and to any early termination of this Lease pursuant to any provision hereof.

Section 2.2 Lease Commencement Date and Rent Commencement Date

            (a) The "Lease Commencement Date" as to the Initial Premises shall
be the date upon which Landlord delivers to Tenant possession of all Buildings
which form a part of the Initial Premises with Landlord's Core and Shell Work
Substantially Complete. Delivery of possession shall be accomplished by written
notice to Tenant setting forth the date upon which Landlord's Core and Shell
Work in such Buildings will be substantially complete and given not less than
three (3) days prior to the date of such proposed delivery of possession. Upon
Substantial Completion and delivery of possession of the Initial Premises to
Tenant, Tenant shall take possession of the Initial Premises and commence the
Tenant Improvements and installation of Tenant's furniture, furnishings and
equipment in the Buildings. From and after the Lease Commencement Date, Tenant
shall observe or perform all obligations of the tenant pursuant to this Lease
with respect to the Initial Premises, other than those requiring the payment of
Base Rent, Expansion Land Rent and additional rent. Pending the occurrence of
the Lease Commencement Date as to the Initial Premises, each party shall observe
or perform all

                                       10
<PAGE>

obligations of such party pursuant to this Lease not dependant upon the
occurrence of the Lease Commencement Date.

            (b) The "Rent Commencement Date" as to the Initial Premises shall be
the first to occur of (i) completion by Tenant of the Tenant Improvements to the
Buildings in the Initial Premises and commencement of occupancy of such
Buildings by Tenant and (ii) the 150th day after the Lease Commencement Date as
to the Initial Premises. For purposes of this subsection, the term "occupancy"
shall mean occupancy of any portion of any Building for the purpose of
conducting Tenant's business but shall not include possession for the purposes
of storage of construction materials and furniture, construction of Tenant
Improvements or installation of furniture, furnishings and equipment.
Notwithstanding the foregoing, the Rent Commencement Date as to the Initial
Premises shall not be deemed to occur until Substantial Completion by Landlord
of the Other Work with respect to the Initial Premises. For the purposes of this
subsection (b) and subsection (a) above, Substantial Completion shall be
separately determined with respect to the Core and Shall Work, the Other Work
and the Tenant Improvements. Landlord and Tenant contemplate that the Rent
Commencement Date shall be approximately May 12, 2003. From and after the Rent
Commencement Date, Tenant shall observe or perform all obligations of the tenant
pursuant to this Lease, including but not limited to the payment of Base Rent
and all additional rent with respect to the Initial Premises.

            (c) Within thirty (30) days following the Rent Commencement Date,
Landlord and Tenant shall execute and acknowledge a supplemental agreement
setting forth the Lease Commencement Date and Rent Commencement Date of this
Lease. Notwithstanding the foregoing, failure of Tenant to execute such
supplemental agreement shall not affect the Lease Commencement Date or the Rent
Commencement Date in accordance with the provisions of this Lease. In the event
of a dispute between Landlord and Tenant as to the date of the Lease
Commencement Date and/or the Rent Commencement Date, such dispute shall be
resolved in the manner provided in Section 12.10. The provisions of this Section
shall be separately applied with respect to the Initial Premises and the
Expansion Premises.

Section 2.3 Options to Extend Term

            Provided that (1) Tenant is not in Default either on the date of
exercise or on the date when an Additional Term, as defined below, would
otherwise commence and (2) Tenant remains the tenant pursuant to this Lease with
respect to one or more Buildings, Tenant shall have the options to extend the
term of this Lease for two (2) additional terms of five (5) years each (each, an
"Additional Term"). As to each such option (each, an "Extension Option"), Tenant
may extend the term of this Lease as to any or all of the Buildings then
occupied by Tenant, and each Extension Option shall be exercised only as to all
space then held by Tenant in a Building. Each such Extension Option shall be
exercised, if at all, by written notice from Tenant to Landlord given not more
than fifteen (15) months and not less than nine (9) months prior to the
expiration of the initial term or the then Additional Term. Each such notice of
exercise shall also designate all Buildings as to which such Extension Option is
exercised, if less than all Buildings then leased by Tenant. Any such notice
which does not designate the Buildings as to which such Extension Option is
exercised shall be deemed to extend to all Buildings then leased by Tenant. If
Tenant is not entitled to exercise an Extension Option pursuant to this Section
2.3, or is entitled to exercise such Extension Option but fails to do so in the
manner and within the time specified in this Section 2.3, such Extension Option
shall lapse and thereafter not be exercisable. If the first Extension Option
lapses, then the second Extension Option shall lapse as well.

            If Tenant is entitled to exercise and timely and properly exercises
an Extension Option pursuant to this Section 2.3, then the Additional Term
resulting from such exercise shall be upon all of the terms and conditions of
this Lease, except that:

            (a) Each Additional Term shall commence immediately upon the
expiration of the initial term or the prior Additional Term, as applicable.

            (b) There shall be no further options to extend the term of this
Lease other than the two (2) Extension Options expressly provided for in this
Section 2.3.

                                       11
<PAGE>

            (c) Sections 2.1 and 2.2, Article XIV, Sections 15.1 and 15.2 and
Section 16.1 shall have no application to either Additional Term.

            (d) Initial monthly Base Rent for each Additional Term shall be an
amount equal to the then prevailing fair market rental for similar properties in
the general market area in which the Premises are located. For the purposes of
determining monthly Base Rent with respect to an Additional Term, the following
shall pertain:

                (i) The "general market area" shall mean the Costa Mesa-Newport
Beach-Irvine area, shall not include Newport Center but shall also include (A)
South Coast Metro (i.e., the area bounded by the 55 Freeway on the East,
MacArthur Boulevard on the North, the Santa Ana River on the West and the 405
Freeway on the South) and (B) Pacific Center (i.e., the commercial center in
Santa Ana bounded by Edinger to the North, Lyon Street to the East, Grand Avenue
to the West and St. Gertrude Place to the South).

                (ii) The term "similar properties" shall mean low rise
office/corporate headquarters properties of similar age and quality and with
similar parking, access and other amenities as described in clause (iii) below.

                (iii) The term "fair market rental" shall mean the effective
amount per month that a willing tenant comparable to Tenant would pay and a
willing landlord comparable to Landlord would accept in an arm's-length leasing
transaction, for a term comparable in length to the applicable Additional Term
and commencing on or about the commencement date of the applicable Additional
Term, for similar properties which are non-sublease, non-encumbered and
non-expansion space. The determination of fair market rental shall not include
any value to Landlord for the Tenant Improvements and any other improvements to
the Premises installed by Tenant at its cost. In determining fair market rental,
appropriate consideration shall be given to annual rental rates per square foot
of Floor Area, the type of escalation clauses (including, without limitation,
operating costs or base year and CPI, as defined in Section 3.3, rental
adjustments), the length of the term, the size and location of the similar
properties, the date as to which such fair market rental is to be determined
(i.e., the commencement date of the applicable Additional Term) and other
generally applicable terms and conditions of tenancy for comparably sized space.
In addition, fair market rental for similar properties shall be determined as if
such similar properties were delivered in a "shell condition" (i.e., with a
level of improvements equal to the Core and Shell Work pursuant to Article XIV).
Fair market rental shall be determined as a rate per month per square foot of
Floor Area of the Buildings included in the Premises for the relevant Additional
Term, and the initial monthly Minimum Rent for each Additional Term shall be
determined by multiplying such rate by the Floor Area of the Buildings included
in the Premises for the relevant Additional Term. The fair market rental shall
specifically take into account all parking and other amenities in or on the
Premises (including its conversion to or existence as a "campus" of office
buildings), the size of the Land within the Premises in relation to the Floor
Area of the Landlord Improvements thereon and the Base Rent increases pursuant
to Section 3.3.

                (iv) Promptly following the exercise of an Extension Option by
Tenant pursuant to this Section 2.3, Landlord and Tenant shall attempt to agree
upon the initial fair market rental for the relevant Additional Term, taking
into account the matters set forth above in this subsection (d). If Landlord and
Tenant agree upon such fair market rental value, initial monthly Base Rent for
the relevant Additional Term shall be the fair market rental value so
determined. In addition, during each Additional Term Tenant shall pay all
additional rent provided for in this Lease. Upon reaching agreement pursuant to
this clause (iv), Landlord shall prepare and Landlord and Tenant shall promptly
execute an amendment to this Lease setting forth the relevant Additional Term
and the agreed initial Base Rent with respect thereto.

                (v) If Landlord and Tenant are not able to reach agreement as to
the fair market rental as to an Additional Term within thirty (30) days after
Tenant's exercise of an Extension Option pursuant to this Section, then fair
market rental shall be determined by appraisal. In connection with any such
appraisal, the following shall pertain:

                                       12
<PAGE>

                    (A) The appraisals shall be conducted in Orange County,
California in accordance with the provisions of this clause (v).

                    (B) Within fifteen (15) days after the expiration of the
foregoing thirty (30) day period, each party shall, by written notice to the
other, select an appraiser with the qualifications set forth below. If either
party shall fail to select an appraiser in the manner and within the time
specified in this clause (B), and such failure continues for five (5) days after
receipt of notice of such failure from the other party, then the appraiser
timely and properly selected by the other party shall be the sole appraiser. If
neither party shall timely and properly select an appraiser pursuant to this
clause (B), then a single appraiser shall be selected by the Presiding Judge of
the Orange County Superior Court or his or her designee upon application of
either party.

                    (C) If a single appraiser is selected or appointed pursuant
to clause (B), such sole appraiser shall, within fifteen (15) days after his or
her appointment, schedule a meeting with the parties at which such appraiser
shall receive such oral or written evidence as he or she determines. The
appraiser need not follow the rules of evidence and may set such time limits as
he or she deems appropriate. Within thirty (30) days after being appointed, the
appraiser shall in writing notify the parties of his or her determination as to
fair market rental, determined in accordance with this clause (v). The
determination of such single appraiser shall be conclusive upon the parties.

                    (D) If two (2) appraisers are selected pursuant to clause
(B), the same procedure set forth in (C) above shall be used, except that each
appraiser shall in writing notify the parties and the other appraiser of his or
her determination as to fair market rental, determined in accordance with this
clause (v). The notices provided for in clause (C) and this clause (D) may be in
letter form, but shall be accompanied by an appraisal or report of valuation
meeting MAI standards, containing information as to the similar properties
utilized by the appraiser and setting forth the basis of such appraiser's
determination as to fair market rental.

                    (E) If two (2) appraisers are used, and if the fair market
rentals as determined by them are not the same but the larger fair market rental
so determined does not exceed one hundred ten percent (110%) of the lesser fair
market rental so determined, then fair market rental shall be the average of the
fair market rentals determined by the two (2) appraisers.

                    (F) If two (2) appraisers are used, and if the two (2)
appraisers determine different fair market rentals and if fair market rental is
not determined pursuant to clause (E), then within fifteen (15) days after the
last determination of the two (2) appraisers (i.e., the last notice to the
parties), the two (2) appraisers shall select a third appraiser. If the two (2)
appraisers are unable to select a third appraiser within such fifteen (15) day
period, the third appraiser shall be appointed in the manner provided in the
last sentence of clause (B).

                    (G) Any third appraiser selected pursuant to clause (F)
shall, within fifteen (15) days after his or her selection, notify the parties
and the other appraisers in writing of his or her determination of fair market
rental, determined in accordance with this clause (v) but with no additional
required meetings of the types described in clauses (C) and D) above. Such
determination and notice shall be in accordance with the last sentence of clause
(D), and in no event shall such determination be greater than the higher of the
fair market rentals determined by the original two (2) appraisers or lesser than
the lower of the fair market rentals determined by the original two (2)
appraisers. In other words, such determination may equal the low appraisal, may
equal the high appraisal or may be anywhere between the first two appraisals,
but may not be lower than the lower of the first two appraisals or higher than
the higher of the first two appraisals. The fair market rental determined by the
third appraiser shall be conclusive upon the parties.

                    (H) Each appraiser selected or appointed pursuant to the
foregoing clauses shall be a licensed MAI appraiser with not less than five (5)
years of appraisal work with respect to buildings similar to the Buildings in
the general market area who is independent of each party. For this purpose,
independent shall mean that such person is not

                                       13
<PAGE>

employed by a party and has not been an employee of a party for two (2) years
prior to his or her selection or appointment.

                    (I) Each party shall bear the costs and fees of each
appraiser selected by it and one-half (1/2) of the costs and fees of any third
or sole appraiser. Each party shall also bear all costs and fees of any attorney
or other professional employed or retained by such party in connection with such
appraisal process.

                    (J) All determinations as to fair market rental shall be
expressed as a rate per square foot of Floor Area per year.

            (e) If the new initial Base Rent for an Additional Term shall not
have been determined as of the commencement date of such Additional Term, Tenant
shall pay Base Rent for the entire then Premises at the rate(s) in effect at the
expiration of the initial Lease term or first Additional Term, as applicable,
until such determination is made. If the new Base Rent is greater than the Base
Rent(s) in effect at the expiration of the initial Lease term or first
Additional Term, as applicable, within twenty (20) days after the determination
of the new Base Rent Tenant shall pay to Landlord an amount equal to the new
monthly Base Rent times the number of months from the commencement of the
relevant Additional Term through the month in which such determination is made
less the aggregate payments on account of monthly Base Rent for such period
previously made by Tenant. If the new monthly Base Rent is less than the rate(s)
in effect at the expiration of the initial Lease term or first Additional Term,
as applicable, Landlord shall credit against the next monthly installments of
Base Rent coming due hereunder an amount equal to the aggregate monthly payments
on account of Base Rent by Tenant for the period from the commencement date of
the relevant Additional Term through the month in which the Base Rent is
determined less the actual aggregate Base Rent due for such period. Thereafter,
Tenant shall pay monthly Base Rent at the rate determined pursuant to subsection
(d).

            (f) Upon determination of Base Rent pursuant to subsection (d)
above, Landlord shall prepare and Landlord and Tenant shall promptly execute and
deliver an amendment to this Lease setting forth:

                (i) The commencement and expiration dates of the relevant
Additional Term;

                (ii) The Buildings included in the Premises for such Additional
Term; and

                (iii) The initial Base Rent for the relevant Additional Term.

In addition, if the Premises for an additional Term consists of less than the
entire Initial Premises, or if the Premises includes an Available Space which is
less than all space located on the Expansion Land, Landlord shall include in
such amendment such additional provisions, as shall not have been included in
the amendment(s) executed pursuant to Section 1.4 and as shall be necessary to
convert this Lease, in whole or in part, from a ground lease of an entire
"campus" to a space lease encompassing a portion of the space on the Land. Such
provisions shall be as described in Section 1.5(g).

            (g) The Extension Options shall remain available after any extension
of the Lease term pursuant to Section 1.4(e), and shall extend to the entire
Premises then leased by Tenant, including the Expansion Building, if applicable,
pursuant to the second lease provided for in Section 1.4(g). As provided in
Section 3.3, the initial Base Rent for each Additional Term shall be increased
on the thirty-first (31st) month of such Additional Term.

            (h) As used in this Lease, the terms "term" and "term of this Lease"
shall include each Additional Term resulting from the exercise of an Extension
Option pursuant to this Section.

                                       14
<PAGE>

                                  ARTICLE III.
                                      RENT

Section 3.1 Base Rent

            (a) Initial Premises. With respect to the Initial Premises, Tenant
shall pay to Landlord in advance, without deduction or offset, for each month
following the Rent Commencement Date, as monthly Base Rent, an amount equal to
one-twelfth (1/12th) of the sum of:

                (i) Eleven and one-half percent (11 1/2%) of the product of the
square footage of the Land included in the Initial Premises and twenty dollars
($20.00) per square foot; plus

                (ii) Eleven and one-half percent (11 1/2%) on all cash equity,
if any, provided by Landlord for design and construction of the Initial Premises
and not included in Tenant's Loan pursuant to Section 14.3(b).

Base Rent shall continue at such rate until the first to occur of (A) the
Permanent Financing Date, as defined in subsection (c) below, with respect to
the Initial Premises and (B) close of a purchase of the entire Land and all
Improvements thereon by Tenant pursuant to Section 15.1.

            (b) Expansion Premises. If (i) Tenant exercises the Expansion Option
pursuant to Section 1.4 and (ii) Tenant elects to make a Tenant's Loan as to the
Development Costs for the Expansion Premises, then the initial monthly Base Rent
for the Expansion Premises shall be determined in the manner provided in
subsection (a), substituting the Expansion Premises for the Initial Premises. If
(A) Tenant exercises the Expansion Option but (B) Tenant does not elect to make
a Tenant's Loan as to the Development Costs for the Expansion Premises, then the
initial monthly Base Rent for the Expansion Premises shall be an amount equal to
one-twelfth (1/12th) of the sum of:

            (1) Eleven and one-half percent (11 1/2%) of the product of the
square footage of the Land included in the Expansion Premises and twenty dollars
($20.00); plus

            (2) The annual debt service payable by Landlord on all Development
Costs with respect to the Expansion Premises, using the financing rate obtained
by Landlord on the construction financing obtained by Landlord with respect to
the Expansion Premises; plus

            (3) Eleven and one-half percent (11 1/2%) on all cash equity, if
any, provided by Landlord for design and construction of the Expansion Premises.

            Base Rent as determined pursuant to this subsection shall be in
effect from the Rent Commencement Date with respect to the Expansion Premises
until the Permanent Financing Date with respect to the Expansion Premises.

            (c) Financing Adjustments. The initial Base Rent amounts determined
pursuant to subsections (a) and (b) shall be subject to the following financing
adjustments:

                (i) If Tenant elects not to make a Tenant's Loan with respect to
the Development Costs for the Expansion Premises and if the construction
financing obtained by Landlord for the Expansion Premises is variable rate
financing, then upon each change in the interest rate on such financing, the
monthly Base Rate determined pursuant to subsection (b) shall be redetermined
using such new interest rate. Such new monthly Base Rent shall be effective from
and after the effective date of the change in the interest rate.

                (ii) If Tenant does not exercise its option pursuant to Section
15.1 (i.e., to purchase the entire Land and all Landlord Improvements thereon),
Landlord shall use commercially reasonable, good faith efforts to obtain
permanent financing ("Permanent Financing") secured by the Initial Premises and
this Lease at the most favorable market rate available from qualified
institutional lenders. For this purpose, Landlord shall, in good faith, consider
any lender proposals obtained by Tenant for Permanent Financing with respect to
the

                                       15
<PAGE>

Initial Premises. Landlord shall use reasonable, good faith efforts to cause
such Permanent Financing to fund as promptly as possible following the accrual
of Landlord's obligation to seek such Permanent Financing. Such Permanent
Financing shall:

                    (A) Be at the most favorable market rate available from a
qualified institutional lender;

                    (B) Be non-recourse (except for standard carve-outs such as
waste, misappropriation and hazardous materials) as to Landlord and its
partners;

                    (C) Be in an amount sufficient to retire in full Tenant's
Loan (i.e., Landlord shall not be required to invest equity to retire Tenant's
Loan); and

                    (D) Have an assumed principal amortization schedule for the
Development Costs of twenty-five (25) years and a term of ten (10) years.

Effective upon the date on which the Permanent Financing is funded (the
"Permanent Financing Date"), (1) Tenant's Loan shall be paid in full and (2)
monthly Base Rent for the Initial Premises shall be redetermined using the two
(2) factors described in subsection (a) plus the actual principal and interest
payments on the Permanent Financing obtained by Landlord with respect to the
Initial Premises and an assumed principal amortization schedule of twenty-five
(25) years (collectively, the "Permanent Financing Factor"). The revised monthly
Base Rent for the Initial Premises resulting from the adjustment provided for in
this clause (ii) shall be effective upon the Permanent Financing Date, prorated
on the basis of a thirty (30) day month. For the purposes of this clause (ii),
Landlord shall not be required to seek Permanent Financing with respect to the
Initial Premises until the first to occur of (aa) expiration of the Purchase
Option Period, as defined in Section 15.1, without exercise of the Purchase
Option, as defined in Section 15.1, by Tenant and (bb) receipt by Landlord of a
written notice from Tenant irrevocably and unequivocally waiving the Purchase
Option. In addition, if Tenant exercises the Purchase Option and thereafter
fails to close the purchase, Landlord shall promptly thereafter seek to obtain
Permanent Financing pursuant to this clause (ii). Notwithstanding anything to
the contrary contained in this clause (ii), if Landlord is unable to locate
Permanent Financing for the Initial Premises, or is unable to locate Permanent
Financing in an amount sufficient to retire Tenant's Loan in full, then, in
either such event, the portion of Tenant's Loan not repaid by Landlord from
Permanent Financing shall not be retired but shall instead become a capital
investment by Tenant in the Initial Premises. Such investment shall not bear
interest or any other return thereon and shall not be taken into account for any
purpose in the determination of Base Rent for the Initial Premises. Moreover,
upon any termination of this Lease pursuant to Section 8.2 or Article X, the
then unamortized portion of such capital investment shall be returned to Tenant
from the insurance proceeds or condemnation award in connection with such
termination. For this purpose, amortization shall be on a straight line basis
from date of expenditure through the initial scheduled expiration date of this
Lease.

                (iii) If Tenant exercises the Expansion Option and elects not to
make a Tenant's Loan with respect to the Development Costs for the Expansion
Premises, Landlord shall use commercially reasonable good faith efforts to
obtain construction financing with respect to the Expansion Premises at the most
favorable market rate available from qualified institutional lenders, and shall,
in good faith, consider any lender proposals obtained by Tenant for the
Expansion Premises. Moreover, in order to minimize financing costs with respect
to the Expansion Premises, Tenant shall have the right, at Tenant's option, to
provide a Tenant's Loan to Landlord. Any such Tenant's Loan provided by Tenant
shall be at an interest rate, if any, and upon such other terms and conditions
as are mutually agreed upon by Landlord and Tenant.

                (iv) Whether or not Tenant elects to provide a Tenant's Loan
with respect to the Expansion Premises, Landlord shall use commercially
reasonable, good faith efforts to obtain Permanent Financing secured by the
Expansion Premises to fund as promptly as possible following the completion of
the Tenant Improvements and the Landlord Improvements with respect to the
Expansion Premises and at the most favorable market rate available from
qualified institutional lenders. The date of such funding shall be the Permanent
Financing Date with respect to the Expansion Premises. Such Expansion Premises
Permanent Financing shall be

                                       16
<PAGE>

subject to clauses (A), (B) and (D) of clause (ii) above and, if applicable,
clause (C) of clause (ii) above. Upon the Permanent Financing Date as to the
Expansion Premises, (A) Tenant's Loan or Landlord's construction financing, as
applicable, as to the Development Costs of the Expansion Premises shall be paid
in full and (B) monthly Base Rent for the Expansion Premises shall be
redetermined either to (1) add the Permanent Financing payments as a third
factor in determining monthly Base Rent or (2) substitute the Permanent
Financing payments for factor (2) in subsection (b) above, as applicable.
Notwithstanding anything to the contrary contained in this clause (iv), if
Tenant makes a Tenant's Loan as to the Expansion Premises and Landlord is unable
to locate Permanent Financing for the Expansion Premises, or is unable to locate
Permanent Financing in an amount sufficient to retire such Tenant's Loan in
full, then, in either such event, the portion of such Tenant's Loan not repaid
by Landlord from Permanent Financing with respect to the Expansion Premises
shall not be retired but shall instead become a capital investment by Tenant in
the Expansion Premises. Such investment shall not bear interest or any other
return thereon and shall not be taken into account for any purpose in the
determination of Base Rent for the Expansion Premises. Moreover, upon any
termination of this Lease pursuant to Section 8.2 or Article X, the then
unamortized portion of such capital investment shall be returned to Tenant from
the insurance proceeds or condemnation award in connection with such
termination. For this purpose, amortization shall be on a straight line basis
from date of expenditure through the revised scheduled expiration date of this
Lease.

                (v) In connection with Landlord's construction financing, if
applicable, with respect to the Expansion Premises or Landlord's Permanent
Financing with respect to the Initial Premises or the Expansion Premises,
Landlord may elect to borrow more than the aggregate Development Costs thereof
(i.e., to finance, in part, on the basis of the value of the Land). In any such
event, the first proceeds of any such financing must be used to retire any
Tenant's Loan in full. In connection with any such borrowing (i.e., borrowing
more than the Development Costs), (1) Landlord may effect such borrowing only if
such borrowing is commercially feasible and does not increase the rate of
interest on the Development Costs and (2) if Landlord elects to use such excess
financing, incremental debt service and costs attributable to the portion of the
financing in excess of the Development Costs shall not be included in the Base
Rent determinations pursuant to subsection (b) or this subsection (c).

                (vi) As to each Permanent Financing effected by Landlord
pursuant to this subsection (c), the lender shall be obligated, upon the close
of a purchase by Tenant pursuant to Section 15.2 hereof, to release its lien as
to the Project or Sale Portion, each as defined in Section 15.2. Such release
shall be subject only to (A) prior subdivision by Landlord of the Sale Portion
as a separate legal parcel pursuant to Section 17.1, if the sale is of a Sale
Portion, and (B) retirement from the proceeds of such sale of the loan or
portion thereof applicable to the Sale Portion. In addition, if the proceeds of
the sale are less than the then balance of the loan (or portion thereof) to be
retired and any prepayment fees, costs and other amounts due the lender,
Landlord shall cover any shortfall with Landlord's own funds.

            (d) Base Rent shall be payable in equal monthly installments on or
before the first day of each calendar month or partial calendar month following
the Rent Commencement Date. Base Rent for any fractional part of a calendar
month at the beginning or end of the term of this Lease shall be a proportionate
part of the Base Rent for a full calendar month. Such proration and all other
prorations pursuant to this Lease shall be made on the basis of actual days
(whether remaining or elapsed) in the relevant month or year.

Section 3.2 Determinations of Base Rent

            (a) The actual areas of the Initial Premises and the Expansion
Premises shall be determined by RBF Associates, unless the parties otherwise
agree in writing to use another licensed civil engineering firm.

            Landlord shall retain such engineering firm to determine (i) the
square footage of the Land included in the Initial Premises and (ii) the square
footage of the Expansion Land. For the purposes of the foregoing determinations,
the Initial Premises shall include so much of the Land as necessary to (A)
achieve an 0.40 FAR and (B) include sufficient parking to provide four (4)
spaces per 1,000 square feet of Floor Area of the Buildings included in the
Initial Premises.

                                       17
<PAGE>

Such engineering firm shall furnish copies of such determinations, in reasonable
detail, to Landlord and Tenant, and, absent a disagreement pursuant to the next
sentence, such determinations shall be final and conclusive for purposes of
Sections 1.4 and 3.1. If either party disagrees with such determinations, such
party shall notify the other party and RBF in writing within thirty (30) days
after such party's receipt of such determinations. Such notice shall specify in
reasonable detail the basis for such disagreement. If a notice(s) of
disagreement is timely given, RBF, Landlord and Tenant shall, for ten (10)
business days after such notice(s) attempt to resolve the disagreement. If the
parties are unable to resolve the disagreement within such ten (10) business day
period, the Project Architect shall select a second licensed civil engineering
firm (the "Second Engineer"). The Second Engineer shall review the
determinations by RBF and the notice(s) of disagreement and shall promptly
furnish to RBF and the parties in writing its own determinations of the areas of
the Initial Premises and the Expansion Land. Such determinations shall be final
and conclusive for purposes of Sections 1.4 and 3.1.

            The costs and fees of each engineering firm shall be split equally
by Landlord and Tenant, and such determinations shall be made and delivered to
Landlord and Tenant prior to the Rent Commencement Date with respect to the
Initial Premises.

            In making the determinations required pursuant to this subsection
(a), each engineering firm shall deduct from the gross acreage of the Land all
road and highway easements and dedications of record as of the date of this
Lease, but shall not deduct any easements or other dedications which are
required in connection with the Home Ranch Master Entitlements.

            (b) As used in this Lease, the term "Floor Area" means the aggregate
rentable area of a Building or Buildings determined in accordance with the
standards set forth in ANSI Z65.1 1980, as promulgated by the Building Owners
and Managers Association (the "Standard") pursuant to this subsection. Landlord
shall, promptly upon completion of the Core and Shell Work, cause the Floor Area
of the Buildings included in the Initial Premises to be determined by Hok
Architects, unless another space planner is agreed upon in writing by Landlord
and Tenant.

            The space planner shall determine the Floor Area of the Buildings in
the Initial Premises in accordance with the Standard. Such space planner shall
furnish copies of such determinations, in reasonable detail, to Landlord and
Tenant, and such determinations shall, absent a disagreement pursuant to the
next sentence, be final and conclusive for all purposes of this Lease, including
Section 2.3. If either party disagrees with such determinations, such party
shall notify the other party and Hok Architects in writing within thirty (30)
days after such party's receipt of such determinations. Such notice shall
specify in reasonable detail the basis for such disagreement. If a notice(s) of
disagreement is timely given, the disagreement shall be resolved in the manner
provided in subsection (a), except that any appointment by the Project Architect
shall be of a second space planner. The determination of Floor Area resulting
from such process shall be final and conclusive for all purposes under this
Lease.

            The costs and fees of each space planner shall be split equally by
Landlord and Tenant, and such determinations shall be made and delivered to
Landlord and Tenant prior to the Rent Commencement Date as to the Initial
Premises.

            Similarly, if it shall become necessary to determine the Floor Area
of an Expansion Building or an Available Space (i.e., due to exercise by Tenant
of an option or right pursuant to this Lease), the space planner selected
pursuant to this subsection shall be promptly retained by Landlord and shall
determine the relevant Floor Area in the manner provided in this subsection (b)
and shall notify both parties of such determination in the manner provided in
this subsection (b). Payment of such space planner shall be as provided in this
subsection, and any such determination shall be made prior to the date when such
Floor Area determination is required pursuant to this Lease (i.e., for the
determination of Base Rent payable hereunder). Each determination by such space
planner pursuant to this paragraph shall be final and conclusive upon Landlord
and Tenant unless either party disagrees with such determination in the manner
and within the time specified in the next sentence. If either party disagrees
with such determination, such party shall notify the other party and the space
planner in writing within thirty (30) days after such party's receipt of such
determination, specifying in reasonable detail the basis for such disagreement.
Any such disagreement shall be resolved using the same

                                       18
<PAGE>

process for resolving a disagreement as to the Floor Area of the Initial
Premises. The determination of Floor Area resulting from such process shall be
final and conclusive for all purposes under this Lease. The costs and fees of
any space planner(s) who determines the Floor Area of an Available Space shall
be borne equally by Landlord and Tenant.

            (c) Landlord shall make each determination of monthly Base Rent
required pursuant to Sections 3.1(a), 3.1(b) and 3.1(c), including any
determination required pursuant to Section 1.4. Each such determination shall be
made, in the case of the initial determination of Base Rent, at least thirty
(30) days prior to the relevant Rent Commencement Date, and a copy of such
determination, in reasonable detail, shall be furnished to Tenant. Each such
determination shall utilize the relevant determination of the civil engineering
firm pursuant to subsection (a) above. Each such determination shall also be
accompanied by reasonable documentary evidence as to the debt service and equity
amounts described in Sections 3.1(a), 3.1(b) and 3.1(c). Each such determination
shall be final unless Tenant disagrees with such determination by written notice
to Landlord given within thirty (30) days after receipt of such determination
specifying in reasonable detail the basis of such disagreement. Any timely
disagreement shall be resolved in the manner provided in Section 12.10. Pending
resolution of such disagreement, Tenant shall pay monthly Base Rent in the
amounts determined by Landlord. Upon resolution of such disagreement, the
parties shall make the adjustment provided for in the next succeeding paragraph.

            Landlord shall also make all redeterminations of monthly Base Rent
required by Sections 3.1 (a), 3.1(b) and 3.1(c) as promptly as practicable after
the occurrence of the event (i.e., interest rate change or close of Permanent
Financing) requiring such redetermination. Promptly following such
redetermination, Landlord shall furnish a copy thereof, in reasonable detail, to
Tenant. Each such redetermination shall, absent a notice of disagreement by
Tenant within thirty (30) days after receipt of such redetermination, be binding
and conclusive upon Landlord and Tenant. In the event of a timely notice of
disagreement by Tenant, such disagreement shall be resolved in the manner
provided in the first paragraph of this subsection (c), and pending the
resolution of such disagreement, Tenant shall pay monthly Minimum Rent in the
amount redetermined by Landlord. In the event that any such final
redetermination results in an increase in the monthly Base Rent, Tenant shall,
within twenty (20) days after receipt of such redetermination, pay to Landlord
an amount equal to the aggregate Base Rent (as so redetermined) payable from the
effective date of such redetermined Base Rent through the month in which Tenant
receives such redetermination less the aggregate amount paid by Tenant on
account of Base Rent for the same period. In the event that any such
redetermination results in a decrease in the monthly Base Rent, Tenant shall
receive a credit in an amount equal to the difference between the aggregate Base
Rent paid by Tenant from the effective date of such redetermined Base Rent
through the month in which Tenant receives such redetermination less the
redetermined Base Rent for the same period, plus interest on such overage from
dates of payment to date(s) of credit at the then Bank of America (Los Angeles)
prime or reference rate plus two percent (2%). Such credit shall be applied
against the next payments of Base Rent coming due under this Lease until
complete exhaustion of such credit. In either event, from and after each
redetermination of Base Rent pursuant to this subsection, Tenant shall pay
monthly Base Rent in the amount so redetermined to and until the next
redetermination of Base Rent pursuant to this subsection.

Section 3.3 Increases in Monthly Base Rent

            The initial monthly Base Rent for the Initial Term and each
Additional Term determined pursuant to Sections 2.3 and 3.1, after giving effect
to all financing adjustments, shall be increased on each Adjustment Date, as
defined below, to reflect any change in the cost of living. Each adjustment
shall be calculated upon the basis of the United States Department of Labor,
Bureau of Labor Statistics Consumer Price Index of Urban Wage Earners and
Clerical Workers (Revised Series), Subgroup "all items," entitled "Consumer
Price Index of Urban Wage Earners and Clerical Workers (Revised Series), Los
Angeles-Anaheim-Riverside Average, (1982-1984 = 100)" (the "CPI"). The index for
said subgroup published for the month prior to the Rent Commencement Date of the
Initial Term shall initially be the "base" for the first adjustment. Thereafter,
the comparison index used pursuant to the penultimate sentence of this paragraph
shall become the "base" for the next succeeding adjustment. Finally, the index

                                       19
<PAGE>

published for the month prior to the commencement date of each Additional Term
shall be the "base" for the purposes of the adjustment to be made during such
Additional Term. The initial monthly Base Rent for the Initial Term and each
Additional Term shall be adjusted as of each Adjustment Date by the percentage
increase, if any, in the Index published for the month immediately prior to the
relevant Adjustment Date over the relevant "base." When the new monthly Base
Rent for any period is determined, Landlord shall give Tenant written notice to
that effect indicating how the new monthly Base Rent figure was computed.

            For the purposes of this Section 3.3, the adjustment dates (each an
"Adjustment Date") shall be the first day of each of:

                (i) The thirty-first (31st), sixty-first (61st), ninety-first
(91st) and one hundred twenty-first (121st) (if applicable) months following the
Rent Commencement Date for the Initial Premises, as to the Initial Premises;

                (ii) The thirty-first (31st), sixty-first (61st) and
ninety-first (91st) months following the Rent Commencement Date for the
Expansion Premises, as to the Expansion Premises; and

                (iii) The thirty-first (31st ) month of each Additional Term.

            In no event shall the increase in Base Rent pursuant to this Section
3.3 be less than three percent (3%) per twelve (12) month period, calculated on
a cumulative and compounded basis, from the Rent Commencement Date (as to the
relevant Premises). By way of example of the foregoing, if the CPI increase as
of the first Adjustment Date for the Initial Premises is less than seven and
sixty-eight one hundredths percent (7.68%), the adjustment shall be an increase
of seven and sixty-eight one hundredths percent (7.68%). By way of further
example, if the cumulative adjustment as of the first Adjustment Date for the
Initial Premises is ten percent (10%) and the CPI increase as of the second
Adjustment Date for the Initial Premises is three percent (3%), the adjustment
as of the second Adjustment Date shall be an increase of five and ninety-two one
hundredths percent (5.92%) of the Base Rent as increased at the first Adjustment
Date. By way of final example, if the two (2) immediately preceding sentences
apply and the CPI decreases as of the third Adjustment Date, the adjustment as
of the third Adjustment Date shall be seven and sixty-eight one hundredths
percent (7.68%) of the Base Rent as increased at the second Adjustment Date.

            If at any Adjustment Date there shall not exist the Consumer Price
Index of Urban Wage Earners and Clerical Workers (Revised Series) in the same
format as recited in this Section, Landlord shall substitute any official index
published by the Bureau of Labor Statistics, or successor or similar
governmental agency, as may then be in existence and shall be most nearly
equivalent thereto.

            If any adjustment provided for herein has not been made by the
relevant Adjustment Date, Tenant shall continue to pay monthly Base Rent at the
last rate applicable until Tenant receives Landlord's written notice as to such
adjustment. Within ten (10) days after Tenant's receipt of Landlord's notice,
Tenant shall pay to Landlord an amount equal to the new monthly Base Rent times
the number of months from the relevant Adjustment Date to the date of receipt of
Landlord's notice, less the aggregate amount paid by Tenant on account of
monthly Base Rent for the same period. Thereafter, Tenant shall pay monthly Base
Rent at the new rate set forth in Landlord's notice.

Section 3.4 Expansion Land Rent

            From and after the Rent Commencement Date as to the Initial
Premises, to and until the first to occur of (a) expiration of the Expansion
Option without exercise thereof by Tenant, (b) written notice by Tenant to
Landlord irrevocably and unequivocally surrendering the Expansion Option, or (c)
exercise by Tenant of the Expansion Option, Tenant shall pay to Landlord an
"Expansion Land Rent." Such Expansion Land Rent shall be payable quarterly on
the first day of such calendar quarter, and each such quarterly payment shall be
in an amount equal to three percent (3%) of the value of the Expansion Land,
determined using a Land value of $20.00 per square foot of the Expansion Land
and the square footage of the Expansion Land

                                       20
<PAGE>

determined pursuant to Section 3.2(a). Expansion Land Rent for any partial
calendar quarter shall be pro rated in the manner provided in Section 3.1(d).
The Expansion Land Rent shall be paid without offset or deduction of any kind.
Except as provided in Section 1.4(h) and Section 14.1(c), prior to the Rent
Commencement Date for the Expansion Premises, Tenant shall not be required to
pay any other rent, property taxes, costs, or expenses for or have any other
obligations with respect to the Expansion Land other than the Expansion Land
Rent. Tenant's rights to use the Expansion Land provided in Section 1.4(h) shall
cease when Tenant's obligation to pay Expansion Land Rent ceases, unless Tenant
agrees to pay the costs of maintaining the same pursuant to Section 14.1(c).
Notwithstanding the immediately preceding sentence, if Tenant's obligation to
pay Expansion Land Rent ceases pursuant to clause (a) hereof, and whether or not
Tenant agrees to pay the costs of maintaining the Expansion Land pursuant to
Section 14.1(c), Landlord may at any time for any reason terminate Tenant's
rights to use the Expansion Land upon not less than thirty (30) days written
notice to Tenant.

Section 3.5 Rent Defined

            As used in this Lease, the term "rent" shall mean monthly Base Rent
and additional rent, and the term "additional rent" shall mean all amounts
payable by Tenant pursuant to this Lease other than Base Rent, including,
without limitation, Expansion Land Rent payable pursuant to Section 3.4 and the
real property taxes payable by Tenant pursuant to Article IV below, and the
insurance reimbursement required pursuant to Article VII. All Base Rent and
additional rent shall be paid without deduction or offset in lawful money of the
United States of America which shall be legal tender at the time of payment.
When no other time is stated herein for payment, payment of any amount due from
Tenant to Landlord hereunder shall be made within ten (10) business days after
Tenant's receipt of Landlord's invoice or statement therefor.

                                   ARTICLE IV.
                                      TAXES

Section 4.1 Real Property Taxes

            Tenant shall pay, as additional rent, all "real property taxes," as
defined in Section 4.2, levied or assessed by, or becoming payable to any
governmental authority having jurisdiction, for or in respect of the Initial
Premises or the Expansion Premises, as applicable, for each tax period wholly
included in the period between the Rent Commencement Date for the Initial
Premises or the Expansion Premises, as applicable, and the expiration or earlier
termination of the term. All such payments shall be made directly to the
authority charged with the collection thereof not less than ten (10) days prior
to the last date on which the same may be paid without interest or penalty and,
as provided in Section 4.3, Landlord and Tenant shall use commercially
reasonable efforts to cause each of the Initial Premises and the Expansion
Premises to be separately assessed with the bills for real property taxes to be
delivered directly to Tenant. In the event that such bills are delivered to
Landlord, Landlord shall promptly deliver copies thereof to Tenant. Tenant shall
provide to Landlord on or before the delinquency date for payment of such taxes,
a copy of a receipted tax bill or other documentary evidence reasonably
satisfactory to Landlord, showing the amount of the taxes due and the payment of
same prior to the delinquency date. For any fraction of a tax period included in
the period between the applicable Rent Commencement Date and the expiration or
earlier termination of the term, Tenant shall pay to Landlord, within thirty
(30) days after receipt of Landlord's invoice therefor, that portion of the
total taxes levied or assessed or becoming payable which is allocable to such
included period, determined by multiplying the total taxes by a fraction whose
denominator is the number of days in the tax period and whose numerator is the
number of days in the period between the Rent Commencement Date and the
expiration or earlier termination of the Lease term. Subject to Section 4.5
below, in the event Tenant fails to pay any real property tax bill before the
delinquency date thereof, Landlord may, but need not, pay the same on behalf of
Tenant and such amount thereafter shall become due and payable as additional
rent by Tenant to Landlord within ten (10) business days after Tenant's receipt
of Landlord's written demand therefor. The obligation of Tenant pursuant to this
Section 4.1 shall extend to any increase in real property taxes resulting from a
sale, transfer or other transaction with respect to the Premises which causes a
reassessment resulting in an increase in real property taxes.

                                       21
<PAGE>

Section 4.2 Definitions

            (a) The term "real property taxes" shall include (i) all taxes,
assessments and governmental charges and surcharges, (including, without
limitation, assessments for public improvements or benefits whether or not
commenced or completed during the term, water, sewer, storm drains and other
rents, rates and charges, excises, levies, license fees, use fees, permit fees
and other authorization fees) and all other charges (in each case whether
general or special, ordinary or extraordinary, foreseen or unforeseen) of every
kind and character (including all penalties and interest thereon), levied upon
or with respect to the Premises, during the term, (ii) any tax or excise on or
measured by rents, and (iii) any other tax, however described, levied against
Landlord on account of the rent reserved hereunder or on the business of renting
the Premises. Without limiting the generality of the foregoing, real property
taxes shall include any assessment by any governmental authority pursuant to any
enabling statute (such as, for example an "SB 55 Assessment") or payment to
retire bonds or other indebtedness created by a special assessment district, an
improvement district or other governmental authority (such as, for example, 1911
Act and 1915 Act Bonds). Provided, however, that the term "real property taxes"
shall not include any franchise, estate, inheritance, succession, capital levy,
net income or excess profits taxes imposed upon Landlord except that in the
event that real property taxes are withdrawn in whole or in part or any
substitute tax is made therefor or for any increase therein, such tax shall in
any event for the purpose of this Lease be considered a real property tax
regardless of how denominated or the source from which it is collected.

            (b) For the purposes of this Section, real property taxes which are
levied on a fiscal year basis shall be deemed to apply one-twelfth (1/12) to
each calendar month in such fiscal year.

            (c) To the extent that the same may be permitted by law, Tenant
shall have the right, at Tenant's cost, to apply for the conversion of any
assessment for local improvements assessed during the term, in order to cause
the same to be payable in annual installments, and upon any such conversion
Tenant shall pay and discharge punctually all installments (including all
interest thereon) which become due and payable during the term, and that portion
of any installment for any tax year partially included at the beginning or the
end of the term determined pursuant to Section 4.1. Landlord agrees to permit
the application for the foregoing conversion to be filed in Landlord's name, if
necessary, and shall execute any and all documents reasonably requested by
Tenant to accomplish the foregoing result, all without cost to Landlord.

Section 4.3 Separate Tax Parcel

            (a) In the event that the Initial Premises or the Expansion Premises
are not levied and assessed as separate tax parcels, Landlord shall use its
commercially reasonable efforts to cause each such area to be assessed and taxed
as a separate tax parcel as soon as practicable.

            (b) If the Initial Premises and/or the Expansion Premises, if
applicable, are not assessed and taxed as separate tax parcels, then
notwithstanding anything to the contrary set forth in this Article IV, "real
property taxes for or in respect of the Premises" shall mean, as to the Initial
Premises and/or the Expansion Premises, as applicable:

                (i) That portion of the real property taxes assessed against the
land underlying the tax parcel which the square footage of the Initial Premises
or the Expansion Premises, as applicable, bears to the aggregate square footage
of all land within the applicable tax parcel; plus

                (ii) That portion of the real property taxes assessed against
the Improvements included within the tax parcel which the valuation assigned by
the taxing authorities to the Improvements included within the Initial Premises
or Expansion Premises, as applicable, bears to the valuation so assigned to all
of the Improvements included within such tax parcel. If such separate valuations
are available from the county tax assessor, then such separate valuations shall
be conclusive. If such separate valuations are not reasonably available to
Landlord, then Landlord shall determine, reasonably and in good faith, from the
best information reasonably available to it, the proportion of the real property
taxes assessed against the

                                       22
<PAGE>

Improvements included within such tax parcel which is attributable to the
Improvements included within the Initial Premises or Expansion Premises, as
applicable. In the event of a dispute as to the correctness of such
determination by Landlord, such dispute shall be resolved in the manner provided
in Section 12.10; plus

                (iii) With respect to other types of taxes, a proportion thereof
based upon the assessment methodology used by the assessor, or if such
methodology cannot be used to determine Tenant's portion, then a reasonable
proportion as determined by Landlord. In the event of a dispute as to whether
any determination by Landlord pursuant to this clause (iii) is reasonable, such
dispute shall be resolved in the manner provided in Section 12.10.

            In the event that the Initial Premises or Expansion Premises, as
applicable, are not assessed and taxed as a separate tax parcel, then real
property taxes for or in respect of the Premises or such portion thereof shall
be paid by Tenant to Landlord not later than the later of (A) ten (10) days
after Tenant's receipt of Landlord's written notice of the amount thereof and
(B) the delinquency date therefor. There shall be no administrative or overhead
fee payable to Landlord with respect to real property taxes payable by Tenant.
Landlord and Tenant acknowledge and agree that it is their intent that real
property taxes be billed to and paid directly by Tenant. Accordingly, Landlord
and Tenant agree that:

                    (A) Each shall take all steps reasonably necessary to cause
the real property tax bills with respect to the Initial Premises and the
Expansion Premises, if applicable, to be mailed directly to Tenant; and

                    (B) Neither party shall take any action to cause the Initial
Premises and/or the Expansion Premises, if applicable, to be taxed other than as
a separate tax parcel.

Section 4.4 Other Taxes

            Tenant shall be responsible for and shall pay or cause to be paid
not later than ten (10) days prior to delinquency all municipal, county and
state taxes, levies and fees of every kind and nature, including but not limited
to general or special assessments assessed during the term against any leasehold
interest, leasehold improvements or personal property of any kind, owned by or
placed in, upon or about the Premises by Tenant or its sublessees,
concessionaires, franchisees or licensees, if any. Tenant shall cause all taxes
imposed upon any personal property situated in or on the Premises to be levied
or assessed separately from the Premises and not as a lien thereon. Upon request
of Landlord, Tenant shall, not later than the delinquency date for any such tax,
furnish to Landlord documentary proof of payment of said tax.

Section 4.5 Right to Contest

            Provided that the Premises are separately assessed and taxed, Tenant
shall have the right, at Tenant's sole risk and cost, to contest the amount
and/or validity of the applicable real property taxes by appropriate legal
proceedings; provided, however, that said right shall be availed of by Tenant
only upon the condition that Tenant shall indemnify, defend and hold Landlord
and the Premises harmless from any loss, cost or expense, including, but not
limited to, Landlord's reasonable attorneys' fees, court costs and expenses of
litigation, which in any manner arise from or with respect to such contest and
upon the further condition that Tenant shall take any and all actions,
including, but not limited to, the payment of any judgment or bonding
requirement, so as to prevent the loss or forfeiture of the Premises or any part
thereof or of any other property of Landlord. The foregoing shall not, however,
be deemed or construed to relieve, modify, or extend Tenant's covenant to pay
any such real property taxes at the time and in the manner provided in this
Article IV, unless such proceedings shall operate to prevent the sale of the
Premises or any part thereof or any other property of Landlord or the placing of
any lien thereon or on any other property of Landlord to satisfy such taxes
prior to the final determination of such proceedings. Upon the termination of
such proceedings, Tenant shall promptly pay all real property taxes, if any,
then payable as the result of such proceedings and the interest and penalties in
connection therewith, and the charges accruing in such proceedings. To the
extent Landlord receives any refund for any real property taxes paid by Tenant
hereunder, Landlord shall promptly pay and deliver such refund to Tenant.

                                       23
<PAGE>

                                   ARTICLE V.
                          CONDUCT OF BUSINESS BY TENANT

Section 5.1 Use of Premises

            (a) Tenant shall use the Premises only for high quality general
office purposes, engineering and light assembly functions consistent with
Tenant's current business operations at Harbor Gateway Business Center (the
"Center"). Tenant may also use the Premises for uses which are (i) consistent,
as to quality, with the uses described in the immediately preceding sentence and
(ii) permitted under the general plan and zoning classifications applicable to
the Land as of the Rent Commencement Date with respect to the Initial Premises.

            As used herein, "high quality general office purposes" shall mean
uses of a quality and character consistent with those in the Center and with
Tenant's historical usage at the Center. The term "high quality general office
purposes" shall not include (and Landlord shall not approve) any use of the
Premises incompatible with uses generally located on properties adjacent to the
Premises (i.e., those in the immediate vicinity of the Premises) due to the
appearance created by such use, the nature of the clients visiting such use,
excessive parking requirements, excessive demand on the physical facilities or
any disreputable image in the minds of the public generally with respect to such
use. Without limiting the generality of the foregoing, the following are
examples of office and other uses which are not high quality general office
purposes and/or are inconsistent therewith:

        government social services office

        government or charity operated psychiatric office or clinic (private
        practitioner acceptable)

        government or charity operated medical or dental office or clinic
        (private practitioner acceptable)

        substance abuse counseling or clinic abortion counseling or clinic

        bail bondsman

        on-site manufacturing facility

        gun shop

        pawn shop

        fast-food restaurant

        health club or youth club (provided that fitness facilities for Tenant's
        employees are permitted)

        tavern, dance club or night club

        arcades, casinos, off-track wagering facilities

        gasoline service station or vehicle repair shop

        escort services

        thrift shops and second-hand stores

        soup kitchens

        half-way house or homeless shelter

        training center for mentally or physically handicapped

        hiring hall for day laborers

        equipment or vehicle storage or rental facility (excluding Tenant's vans
        and all items specifically permitted pursuant to this Lease)

        jail or other detention facility

The foregoing are merely examples of the types of uses which are inconsistent
with high quality general office uses, and are not intended to limit the right
of Landlord to disapprove other proposed uses of the Premises which are
inconsistent with high quality general office uses.

            (b) Tenant shall not use the Premises in violation of any applicable
law, ordinance or governmental regulation or of the certificate of occupancy
issued for the Premises. Subject to the provisions of Section 6.1 below, Tenant
shall promptly comply with Applicable Laws, as defined below, together with all
protective covenants and architectural standards, if any, applicable to the
Premises as of the date of this Lease and shall, upon five (5) days written
notice from Landlord, discontinue any use of the Premises which is a violation
thereof. For the

                                       24
<PAGE>

purposes of this Lease, the term "Applicable Laws" shall mean all present and
future laws, ordinances, orders, rules, regulations and requirements of all
governmental authorities having jurisdiction over the Premises, Landlord or
Tenant and the requirements of any applicable insurance underwriters, all of the
foregoing applicable to the ownership, development, use, occupancy and
maintenance of the Premises and any certificates of occupancy issued for the
Premises.

            (c) Tenant shall not do or permit anything to be done in or about
the Premises which will interfere with the rights of other occupants of the
Land, or allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
or commit any waste in, on or about the Premises. Tenant shall not (i) place a
load upon any floor of the Premises which exceeds the floor load per square foot
which such floor was designed to carry, (ii) attach or hang any object or item
from the roof of the Premises or any structural component of the Premises
without Landlord's prior written consent thereto, or (iii) violate any mandatory
restrictions generally imposed by any governmental authority with respect to
conservation of energy, water, gas or electricity or reduction of automobile or
other emissions. Tenant shall not do or permit to be done anything which will
injure the Premises or invalidate any insurance policy(ies) covering the
Premises or property located therein. Tenant shall maintain no outside storage
which is not appropriately screened from the view of the public. Tenant shall
promptly upon demand reimburse Landlord for any additional premium charged for
any such policy maintained by Landlord by reason of Tenant's failure to comply
with the provisions of this Article.

            (d) Tenant shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Landlord's prior written consent.

Section 5.2 Restrictions on Use

            Tenant shall, at Tenant's expense, procure any and all governmental
licenses and permits required for Tenant's permitted use of the Premises and
shall at all times comply with all requirements of such licenses or permits.
Tenant shall not use or permit the use of the Premises in any manner that will
damage or deface the Premises. Tenant shall not do, or suffer to be done, or
keep or suffer to be kept, anything on the Premises or on any property therein
which will prevent the obtaining of any insurance on the Premises or on any
property therein, including, but without limiting the generality of the
foregoing, fire, all risk coverage, and public liability insurance, or which may
make void any such insurance.

Section 5.3 Contest of Requirements

            Notwithstanding the foregoing, Tenant may contest any Applicable Law
or alleged violation thereof, so long as Landlord's interest in the Premises and
the Land are not thereby materially and adversely affected, and Landlord shall,
at Tenant's request, join in such contest if its participation is necessary, but
at no expense to Landlord. If any security must be posted, or any order must be
obtained to forestall compliance with such requirement pending the determination
of such contest, Tenant shall post such security or shall obtain such order
prior to commencing such contest and such action shall be a condition to
Tenant's right to contest. If such contest is finally determined adversely to
Tenant, Tenant shall promptly comply with the requirement(s) determined to be
applicable to the Premises and shall indemnify and hold Landlord harmless from
all liabilities, damages, costs (including costs and attorneys' fees incurred or
awarded in such contest) and expenses occasioned by any non-compliance by Tenant
and any delay in effecting compliance, including any delay occasioned by a
contest determined adversely to Tenant.

Section 5.4 Exterior Signs and Sign Monument(s)

            (a) For so long as Tenant is the sole tenant of the Initial
Premises, Tenant shall have the exclusive sign rights for the Initial Premises,
including both exterior signage on the Buildings and any monument signage placed
upon any sign monument(s) constructed by Tenant. All such signage ("Tenant's
Signage") shall be subject to the following:

                                       25
<PAGE>

                (i) All Tenant's Signage shall be the sole responsibility of
Tenant, as to fabrication, construction and erection thereof and payment of the
costs thereof.

                (ii) All Tenant's Signage shall be subject to the prior written
approval of Landlord based upon drawings and specifications therefor prepared by
Tenant and reasonably approved by Landlord, and all Tenant's Signage shall
conform to the drawings and specifications therefor approved by Landlord.

                (iii) All Tenant's Signage shall comply with all Applicable Laws
and shall be professionally done, neat and attractive and of a quality
consistent with the quality of the Buildings.

                (iv) All Tenant's Signage shall be attached or affixed to the
Buildings and/or sign monument(s) in a manner reasonably approved in advance in
writing by Landlord.

                (v) Tenant shall maintain, repair, remove and replace Tenant's
Signage as a part of Tenant's obligations pursuant to Section 6.2 so that
Tenant's Signage is at all times maintained in a neat, clean, good condition.

                (vi) Within ten (10) days after the expiration or any earlier
termination of the Lease term, Tenant shall, at Tenant's sole cost, remove all
Tenant's Signage and repair all damage to the Buildings and/or the sign
monument(s) caused by such removal.

                (vii) Without limiting the generality of the foregoing,
Landlord's reasonable approval rights with respect to Tenant's Signage shall
extend to the location of Tenant's Signage on the Buildings and on any sign
monument(s).

            (b) As a part of Landlord's Work pursuant to Article XIV, Landlord
shall construct one or more sign monuments with respect to the Initial Premises
(i) as permitted by the City and (ii) as reasonably mutually approved by
Landlord and Tenant. The cost of such monument(s) shall be included in
Landlord's Core and Shell Work pursuant to Article XIV. As described in
subsection (a), Tenant may, at Tenant's cost, place Tenant's signage on such
monument(s).

            (c) If Tenant exercises the Expansion Option, the provisions of
subsections (a) and (b) above shall apply with respect to the Expansion
Building.

            (d) If Tenant elects to add one or more Available Spaces to the
Premises, or if Tenant ceases to be the sole tenant of the Initial Premises
(i.e., pursuant to Section 2.3), Tenant shall continue to have signage rights
pursuant to subsections (a) and (b) above. However, in such event, Tenant's
signage shall not be exclusive as to the Expansion Land or the Initial Premises,
as applicable, but shall be in common with other tenants to whom Landlord grants
signage rights. In such event, Tenant's Signage rights shall be proportionate to
the portions of the Buildings leased by Tenant in, respectively, the Initial
Premises and the Expansion Land and, if Tenant is the largest Tenant of the
Initial Premises and/or the Expansion Premises, Tenant shall have the most
prominent locations on such signs.

Section 5.5 Other Tenant Facilities

            (a) Notwithstanding anything to the contrary contained in this
Lease, Tenant shall also have the right to install and maintain on the Initial
Premises:

                (i) A free-standing trailer/room of approximately 350 square
feet in the parking area of the Initial Premises to provide a properly insulated
area for various electromagnetic testing procedures as required by the Federal
Communications Commission (the "FCC Testing Trailer").

                (ii) A large above-ground liquid nitrogen gas tank adjacent to
one of the Buildings, including any special power requirements and screening
(the "Tank").

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<PAGE>

                (iii) One or more generators and related switches, tanks and
facilities adjacent to one of the Buildings, including screening (the
"Generators").

The FCC Testing Trailer, the Tank and the Generators are herein referred to as
"Tenant's Special Facilities."

            (b) Tenant's Special Facilities shall comply with all of the
following:

                (i) All Tenant's Special Facilities shall be installed or
constructed by Tenant at Tenant's sole cost.

                (ii) All Tenant's Special Facilities must comply with all
Applicable Laws, and Tenant shall be solely responsible to obtain all
governmental licenses and permits required to install, maintain and operate
Tenant's Special Facilities.

                (iii) Tenant shall provide the specifications for all Tenant's
Special Facilities, and all such specifications, including power sources and
screening, are subject to the prior reasonable written approval of Landlord and
all governmental authorities with jurisdiction.

                (iv) The locations of all Tenant's Special Facilities shall be
subject to the prior reasonable written approval of Landlord, in its reasonable
discretion. Without limiting the generality of the foregoing, the Generators
(and any tanks serving the same) shall be located above-ground unless otherwise
approved by Landlord in its reasonable discretion.

                (v) Tenant shall be solely responsible, at Tenant's sole cost,
to maintain, repair, replace and operate all Tenant's Special Facilities in good
condition consistent with the quality of the Buildings and in compliance with
all Applicable Laws.

                (vi) Tenant shall pay all charges for all utilities used by
Tenant in or at Tenant's Special Facilities, directly to the purveyors thereof.

                (vii) Any changes in the locations of Tenant's Special
Facilities, Tenant's usage thereof and/or any chain link fencing or screening
erected by Tenant with respect to such Facilities shall be subject to the prior
written consent of Landlord, not to be unreasonably withheld, delayed or
conditioned.

                (viii) Within ten (10) days after the expiration or any earlier
termination of this Lease, Tenant shall, at Tenant's cost, remove Tenant's
Special Facilities, any chain-link fencing erected by Tenant with respect
thereto and all other personal property and improvements placed or erected by
Tenant in the area occupied thereby. Tenant shall concurrently repair all damage
caused by such Facilities, such fencing and such other improvements (such as
post holes, broken pavement and dead grass) and restore the area to its
condition prior to placement of such Facilities by Tenant. The provisions of
this clause (viii) shall also apply to require a relocation by Tenant of any
Special Facility from an area no longer leased by Tenant to an area then leased
by Tenant, but only to the extent that such relocation is reasonably required
and it is commercially practicable to effect such relocation.

                                   ARTICLE VI.
                      MAINTENANCE, REPAIRS AND ALTERATIONS

Section 6.1 Landlord's Obligations

            (a) Except as provided in subsection (b) below and in Section 6.3,
Landlord shall not be obligated or required at any time to maintain or repair
the Buildings, the other Landlord Improvements or the Tenant Improvements
constituting the Initial Premises or the Expansion Premises, if applicable, or
any part of either or to make or bear any part of the expense of any
improvement, alteration or change of any nature in or about the Premises or any
part thereof.

            (b) Notwithstanding the provisions of subsection (a) above or
anything else to the contrary contained in this Lease, for a period of one (1)
year after Substantial Completion of

                                       27
<PAGE>

Landlord's Work, Landlord shall, at Landlord's sole cost and expense, promptly
repair or replace, or cause to be repaired or replaced, any portion of
Landlord's Work which shall be materially defective or shall fail to comply with
the Approved Working Drawings therefor. Such repair or replacement shall be
commenced as soon as reasonably possible after Landlord's receipt of written
notice from Tenant of the need for such work, but only if such notice is given
within such one (1) year period, and shall be diligently pursued to completion.
For the purposes of this subsection:

                (i) This Section shall be applied separately to the Initial
Premises and, if applicable, the Expansion Premises.

                (ii) Landlord may satisfy its obligation pursuant to this
subsection by causing Landlord's general contractor or any subcontractor who has
provided a warranty or guaranty to perform such repair or replacement.

                (iii) The provisions of this subsection shall not apply to any
damage to Landlord's Work caused by Tenant, any employee, agent or contractor of
Tenant, any business visitor or guest of Tenant, any vandal or any casualty
(fire, wind, rain, lightning, etc.). Landlord's obligations hereunder shall be
limited to defects in the original construction of and failures of Landlord's
Work to comply with the Approved Working Drawings therefor.

                (iv) During any period of repair or replacement by Landlord
pursuant to this subsection, Base Rent shall be abated to the extent, if at all,
that Tenant's operations in the Premises are interfered with, including totally
if applicable. Subject to the next sentence, such abatement shall be Tenant's
sole remedy in the event of a repair or replacement by Landlord pursuant to this
subsection. Notwithstanding the provisions of the immediately preceding
sentence, to the extent that Landlord is able to recover the same from any
contractor, insurer or other warranting party, Tenant shall be entitled to any
damages incurred by Tenant during any such period of repair or replacement.

Upon the expiration of the one (1) year period specified in this subsection,
Landlord shall, upon request of Tenant, assign to Tenant all warranties and
guaranties received by Landlord with respect to Landlord's Work. Such assignment
shall be on a form prepared by Tenant and reasonably approved by Landlord.

Section 6.2 Tenant's Obligations

            (a) Subject to the provisions of Section 6.1, Articles VIII and X
and Section 13.7, Tenant shall (i) during the term of this Lease keep in good
order, condition and repair all of the Initial Premises (and the Expansion
Premises, if applicable) and all Improvements thereon and every part thereof,
including the Buildings, furnishings and other personal property of Tenant, and
all landscaped and parking areas (which shall be kept free of weeds and debris).
Tenant shall promptly at Tenant's own cost and expense make all necessary
repairs and replacements, interior and exterior, structural and nonstructural,
ordinary and extraordinary, foreseen and unforeseen, as necessary to maintain
the Initial Premises (and the Expansion Premises, if applicable) and all
Improvements thereon and every part thereof, in good condition. Tenant shall
provide whatever treatment may be necessary, as often as may be required, to
keep the Premises and all Improvements thereon and every part thereof neat and
attractive. Tenant's maintenance and repair obligations pursuant to this
subsection shall specifically include the roof membranes of the Buildings.

            (b) Without limiting the generality of subsection (a), Tenant shall,
at all times during the term of this Lease, maintain in effect an inspection and
maintenance contract covering the heating, ventilating and air conditioning
equipment serving the Buildings with a maintenance firm reasonably approved by
Landlord. Such contract shall provide for inspection and maintenance of such
equipment (including replacement of components as required) not less frequently
than quarterly. Such contract, and any replacement therefor, shall be subject to
the reasonable approval of Landlord. Such inspection and maintenance shall
include replacement of parts as necessary to keep the system in good working
order. At the expiration of the Lease term, such equipment shall be in good
working condition. Good working condition shall take into account the age of the
system as of the expiration of the Lease term. Tenant shall not,

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<PAGE>

however, be required to make additions to the HVAC system to extend the useful
life of the HVAC system beyond the term of this Lease.

            (c) For the purposes of this Section 6.2:

                (i) Tenant's obligations hereunder shall extend to furnishing
and restocking all expendables in the Buildings (soap, towels, etc.).

                (ii) Tenant shall also be responsible to insure that all truck
loading areas and loading doors which constitute a part of the Premises, if any,
are not unreasonably damaged and do not accumulate litter or debris as a result
of deliveries to and pickups from Tenant.

                (iii) As to all Building roofs, parking lots and landscaped
areas, Tenant shall provide a schedule of maintenance to be performed by Tenant
and the intervals therefor. Such schedule shall be subject to the prior
reasonable written approval of Landlord and shall not be subject to change
without the prior reasonable written approval of Landlord, which shall not be
unreasonably withheld if consistent with industry standards.

                (iv) All repairs and maintenance by Tenant shall be made only by
a licensed, bondable contractor. Landlord may impose reasonable restrictions and
requirements with respect to such repairs, and the provisions of 6.4 shall apply
to all such repairs. Tenant shall indemnify, defend and hold Landlord harmless
from and against all actions, claims, and damages by reason of Tenant's failure
to comply with the foregoing provisions.

            (d) If Tenant fails to perform its obligations under this Section
6.2, Landlord may at its option, after thirty (30) days written notice to Tenant
and failure of Tenant to perform such obligations within such thirty (30) day
period, enter upon the Premises and put the same in good order, condition and
repair and the cost thereof shall become due and payable as additional rent by
Tenant to Landlord upon demand. Notwithstanding the foregoing, Landlord shall
not be entitled to undertake any work for the account of Tenant which reasonably
requires more than thirty (30) days to complete if Tenant commences such work
within such thirty (30) day period and diligently pursues the same to
completion. Landlord need not, however, wait for the expiration of such thirty
(30) day period to remedy any condition which poses a danger to persons or
property or which will or may result in the imposition of a fine or penalty upon
Landlord if not cured prior to the expiration of such period.

            (e) Subject to Sections 6.4 and 6.5, within ten (10) days after the
expiration of the term hereof, or within ten (10) days after any earlier
termination hereof, Tenant shall surrender the Premises and all Improvements
thereon to Landlord in good condition, reasonable wear and tear excepted.

Section 6.3 Additions to Premises; Modifications to Obligations of the Parties

            (a) In the event that Tenant exercises the Expansion Option, from
and after the Rent Commencement Date as to the Expansion Premises, maintenance
and repair as to the Expansion Building and other Improvements to the Expansion
Land shall be pursuant to Sections 6.1 and 6.2. If Tenant adds one or more
Available Spaces to the Premises, or ceases to be the sole tenant of the Initial
Premises, then, in either such case, Landlord shall maintain and repair the
Initial Premises or the Expansion Land and Tenant shall pay, as additional rent,
Tenant's proportionate cost of such maintenance and repair. Such proportionate
share shall be that proportion of the total costs of such maintenance and
repair, including a fifteen percent (15%) overhead allowance to Landlord,
derived by dividing the total Floor Area occupied by Tenant in the Initial
Premises or on the Expansion Land, as applicable, by the total Floor Area in the
Initial Premises or on the Expansion Land, as applicable. The amendment to this
Lease adding such Available Space or providing for Tenant to cease to be the
sole tenant of the Initial Premises shall, among other things, (i) allocate the
maintenance and repair obligations of Landlord and Tenant, (ii) establish
Tenant's proportionate share of the costs of maintenance and repair provided by
Landlord and (iii) set forth the manner and timing of payment by Tenant of such
additional rent.

                                       29
<PAGE>

            (b) In connection with Landlord's construction of Landlord's
Improvements to the Initial Premises, Landlord may construct one or more
facilities (such as an entry drive, a driveway or a common utility line) which
serves both the Initial Premises and the Expansion Land (each such facility, a
"Common Facility" herein). Any such Common Facility may be located on either the
Initial Premises Land or the Expansion Land. Initially, from and after the Rent
Commencement Date as to the Initial Premises, Tenant shall operate, maintain,
repair and replace the Common Facility pursuant to Section 6.2. The costs of
such operation, maintenance, repair and replacement shall be split between
Landlord and Tenant based upon the respective aggregate Floor Areas on the
Initial Premises and the Expansion Land. Landlord shall reimburse Tenant for
Landlord's share of such costs within ten (10) days after Landlord's receipt of
Tenant's invoices therefor accompanied by reasonable documentary evidence of the
amounts paid by Tenant and the nature of such payments, which invoices shall be
not more frequently than monthly. Tenant recognizes that initially Tenant will
bear one hundred percent of the cost of such repairs and maintenance.

                As provided in Section 17.3, upon the occurrence of a Trigger
Event, as defined in such Section 17.3, Landlord shall prepare, and Landlord and
Tenant shall execute, acknowledge and record, an REA, as defined in such Section
17.3, providing for, among other things, the allocation of responsibility for
operation, maintenance, repair and replacement of each Common Facility and
allocation of the costs thereof. From and after recordation of the REA, the REA
shall replace this subsection (b).

            (c) From and after Landlord develops the Expansion Land (other than
pursuant to Section 1.4):

                (i) Landlord shall maintain the Expansion Land and all
Improvements thereon to the same standards required by Section 6.2.

                (ii) Tenant shall, except to the extent that Tenant occupies an
Available Space(s), use reasonable efforts to prevent its employees and invitees
from parking on the Expansion Land. Similarly, Landlord shall use reasonable
efforts to prevent the tenants of the Expansion Land, and their employees and
invitees, from parking on the Initial Premises (except to the extent that such
tenants also occupy Floor Area on the Initial Premises).

                (iii) Landlord shall use or permit the use of the Improvements
on the Expansion Land only for the purposes permitted by Section 5.1.

Section 6.4 Alterations and Additions

            (a) Tenant shall not, without the prior written consent of Landlord,
which consent shall not unreasonably be withheld, make any alterations,
improvements, remodeling or additions to the Premises which are structural,
which materially affect the exterior appearance of any Building, which are
outside of the Buildings, which adversely affect the function or maintenance of
the utility systems of any Building or which equal or exceed $1.00 per square
foot of Floor Area of any Building per twelve (12) month period in total cost
for any alteration, improvement or addition (or series of related alterations,
improvements or additions), excluding interior painting, carpeting and other
floor covering costs (any such alterations, improvements, remodeling or
additions requiring Landlord's approval are herein the "Alterations Requiring
Consent"). The foregoing square foot limitation shall be applied separately as
to each Building leased by Tenant. Construction, alterations, improvements,
remodeling and additions made by Tenant during the term hereof shall be done
with reasonable diligence in a good and workmanlike manner, consistent with the
construction quality of Landlord's Work and in compliance with all Applicable
Laws. As to Alterations Requiring Consent, Landlord shall have the same rights
with respect to the nature and quality of the improvements and construction, the
approval of Tenant's plans, the obtaining of permits and licenses, payment and
liens as are granted Landlord by Section 5.4 with respect to Tenant's Signage.
The cost of any construction, alteration, improvement, remodeling or addition
shall be paid or discharged by Tenant so that the Premises and all Improvements
thereon shall at all times be free of liens resulting therefrom, subject to the
provisions of Section 13.14. Whether or not any alteration, improvement or
addition is an Alteration Requiring Consent, Tenant shall supply to Landlord,
promptly upon

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<PAGE>

completion thereof, a set of as-built drawings therefor on mylar if and to the
extent such drawings are required by Applicable Laws or are in fact prepared by
Tenant.

            (b) Subject to the provisions of Section 6.5, the Buildings, and all
alterations, improvements, remodeling, additions or fixtures which may be made
or installed in the Premises or any improvements thereon and which are attached
to the floor, walls or ceiling of any improvements on the Premises and cannot be
removed without material damage to the Buildings, and any floor covering which
is cemented or otherwise affixed to the floor of any improvements on the
Premises and cannot be removed without material damage to the Buildings, are
collectively called "leasehold improvements." All installations by Tenant other
than leasehold improvements and all personal property of Tenant placed in or on
the Premises are herein referred to as "Tenant's Property." Except as expressly
provided to the contrary in this Article VI, all leasehold improvements shall be
the property of Landlord. Such leasehold improvements shall remain upon and be
surrendered with the Premises at the termination of this Lease, unless Landlord
shall have notified Tenant to remove such leasehold improvements (other than the
Buildings themselves), or some of them, by written notice given to Tenant, in
the case of Landlord's Improvements, on or prior to the relevant Lease
Commencement Date, and in the case of any other leasehold improvements, upon
approval thereof if Landlord's approval is requested and such leasehold
improvements are Alterations Requiring Consent. If such leasehold improvements
are not Alterations Requiring Consent, Landlord may give Tenant notice to remove
the same at any time prior to the expiration or termination of this Lease or
within ten (10) days after any early termination of this Lease. Tenant shall
remove any leasehold improvements or other property which Tenant is permitted or
required to remove, pursuant to Section 6.5 below or this subsection, at
Tenant's sole cost, within ten (10) days after the expiration of this Lease, or
in the event of an early termination, within ten (10) days after Landlord's
notice. In the event Landlord directs Tenant to remove any leasehold
improvements constructed by Tenant on the Premises as aforesaid, Tenant shall
complete such removal within the time limits specified herein and restore the
Premises to substantially the same condition as the Premises existed at the time
Landlord tendered delivery of possession thereof to Tenant, less reasonable wear
and tear.

            (c) Tenant shall promptly in writing notify Landlord of the filing
of any mechanics' lien against the Premises arising out of work performed by or
for Tenant.

            (d) To the fullest extent permitted by law, Landlord waives any
claim it may now or hereafter have, whether at common or statutory law or in
equity, to or against any of Tenant's Property, and acknowledges that Tenant may
from time to time install personal property or fixtures constituting Tenant's
Property in or on the Premises and that, with respect thereto, Tenant may choose
or be required to obtain and file a written confirmatory waiver by Landlord of
claims to such personal property. Landlord agrees not to unreasonably withhold
or delay approval of any waiver requested by Tenant and presented by Tenant to
Landlord for execution, provided that any such waiver requires, in substance,
that (i) any removal of Tenant's Property be effected within ten (10) days after
the expiration or earlier termination of this Lease, (ii) any person removing
any of Tenant's Property from the Premises repair any damage to the Premises
caused by such removal and (iii) Landlord has no obligation thereunder to assist
any person in the removal of any of Tenant's property from the Premises.
Landlord shall promptly execute and deliver to Tenant any such waiver approved
by Landlord. If Landlord shall neither execute a waiver presented by Tenant nor
in a writing to Tenant disapprove such waiver for bona fide reasons stated
therein within twenty (20) days after Tenant's delivery of such waiver to
Landlord for approval and execution, Tenant may, after the expiration of such
20-day period, execute and file such waiver as attorney-in-fact for Landlord.
Landlord hereby appoints Tenant as its attorney-in-fact for this purpose. A
desire by Landlord to avoid the filing of Landlord's waivers shall not be a
valid reason for disapproval of a landlord's waiver requested by Tenant.

            (e) The approval by Landlord of any specifications, working drawings
or other plans for alterations to be made by Tenant of or to the Premises,
whether upon commencement of possession by Tenant of the Premises or at any
other time during the term of this Lease, shall not be deemed to be a
representation or warranty by Landlord as to the adequacy or sufficiency of such
specifications, working drawings or other plans or of the improvements or
construction contemplated thereby for any use or purpose. By its approval
thereof, Landlord

                                       31
<PAGE>

assumes no liability or responsibility therefor, or for any defect in any
improvements or construction made pursuant thereto.

            (f) Before commencement of any work of improvement in the Premises,
Tenant shall give Landlord fifteen (15) days written notice thereof, specifying
precisely the expected date of commencement. For the period from ten (10) days
prior to commencement of such work and during the performance thereof, Landlord
may maintain in the Premises such notices of non-responsibility or other notices
as may be necessary to protect Landlord against liability for liens and claims.

Section 6.5 Removal of Tenant's Property

            Notwithstanding anything to the contrary in this Article VI or
elsewhere in this Lease, Tenant may remove, at any time or times during the term
of this Lease (a) any and all interior and exterior signs, (b) the Security
System (as defined in Section 13.31) and any other security systems, devices or
containers, (c) the Communications System (as defined in Section 13.32) and any
other telecommunications or data conveyance fiber, wiring, cabling and
equipment, (d) supplemental HVAC, (e) portable generators, (f) raised floors,
(g) modular wall panel systems, (h) uninterruptible power systems and (i) any
other fixtures or personal property installed or placed in or on the Premises
(including Tenant's Special Facilities) during the term of this Lease, in any
and all cases, by or on behalf of Tenant and not constituting leasehold
improvements; provided, however, that Tenant shall not remove any components of
Landlord's Work or any linoleum or other floor covering cemented or otherwise
affixed to the floor of any Building. Tenant shall promptly repair any damage to
the Premises or any Improvements thereon resulting from the installation or
removal of any of Tenant's Property.

                                  ARTICLE VII.
                              INSURANCE; INDEMNITY

Section 7.1 Liability Insurance

            Tenant shall at all times from and after the Lease Commencement Date
with respect to the Initial Premises, and at its cost and expense, for the
protection of Tenant and Landlord, as their interests may appear, maintain in
full force and effect a policy or policies of insurance which afford the
following coverages:

            (a) Worker's Compensation in the statutorily required amount,
including employer's liability with a liability limit of not less than
$1,000,000 per occurrence.

            (b) Comprehensive General Liability Insurance or Commercial
Liability Insurance with an aggregate liability amount not less than $3,000,000
combined single limit for both bodily injury and property damage, including
blanket contractual liability (including Tenant's indemnification obligation
under Section 7.5), broad form property damage, personal injury, completed
operations, products liability, host liquor liability (or liquor liability, if
applicable) and owned and non-owned automobile coverage and acts or omissions of
any security guards hired by Tenant. Provided, however, coverage for acts or
omissions of security guards may be provided by the contractor providing such
guards so long as such insurance has a minimum liability limit equal to or
greater than that required by this clause (b) and the additional insured
requirements of the next succeeding paragraph are met. At least $1,000,000 of
such coverage shall be provided by a primary liability policy, and any balance
may be provided by a so-called umbrella policy. The liability insurance policy
required to be maintained by Tenant pursuant to this subsection shall be on an
occurrence (as opposed to claims made) basis. Further, if such policy is an
aggregate liability limit policy, not less than $3,000,000 of such limit per
annum shall be available for claims originating at the Premises.

            Landlord, and any other persons designated by Landlord and having an
insurable interest in the Premises, shall be added as additional insureds
pursuant to the policies required by clause (b) (although they shall not have
any obligations of "named" insureds therein). The insurance required by this
Section shall be the primary insurance as respects Landlord (and any other
additional insureds designated by Landlord) and not contributory with any other
available insurance. The policy or policies providing the coverage required by
subsection (b) above shall

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<PAGE>

contain an endorsement providing, in substance, that "such insurance as is
afforded hereby for the benefit of [Landlord and any additional insureds
designated by Landlord] shall be primary and any insurance carried by [Landlord
and any additional insureds designated by Landlord] shall not be contributory."
In no event shall the limits of any coverage maintained by Tenant pursuant to
this Section be considered as limiting the liability of Tenant pursuant to this
Lease.

Section 7.2 Fire and Earthquake Insurance - Fixtures, Equipment and Tenant
Improvements

            (a) Tenant shall at all times from and after the Lease Commencement
Date with respect to the Initial Premises, and at Tenant's cost and expense,
maintain in effect policies of insurance covering all Tenant's Property located
in or on the Premises, including but not limited to fixtures, furnishings,
equipment, furniture, inventory and stock in trade, in an amount not less than
their full replacement value, providing protection against any peril included
within the classification "All Risk," including but not limited to insurance
against fire, sprinkler leakage, vandalism and malicious mischief, but not
including earthquake and flood coverage. The insurance required by this
subsection shall be the primary insurance with respect to the property covered
thereby.

            (b) Landlord shall at all times during the term maintain in effect
policies of insurance (i) covering all Improvements, including without
limitation, the Buildings and all leasehold improvements (including tenant
improvements other than Tenant Property), providing protection against any risk
included within the classification "All Risk," including all coverages listed in
subsection (a), such insurance to be in an amount no less than the full
replacement value of such improvements, which shall be determined at the time
the policy is initially obtained, and not less frequently than at each third
anniversary of the Lease Commencement Date as to the Initial Premises and (ii)
rental interruption insurance covering the payment of Base Rent and additional
rent for a period of at least twelve (12) months following the occurrence of a
covered casualty. The deductible or self-insurance reserve for the insurance
pursuant to clause (i) shall not exceed $25,000 per occurrence. The insurance
required by this subjection shall be the primary insurance with respect to the
property covered thereby.

            To and until the Rent Commencement Date, the coverage by Landlord
pursuant to this subsection will be builder's risk insurance, maintained by
Landlord or Landlord's Contractor (as defined in Section 14.2), with the cost
thereof to be included in Development Costs. Thereafter, such insurance shall be
standard casualty insurance. The insurance required by this subsection shall, if
possible, be pursuant to a blanket policy maintained by Landlord (and any
affiliates) to take advantage of any lower portfolio rate. Notwithstanding
anything to the contrary contained in this subsection, Landlord shall maintain
earthquake and flood coverage only during such period(s) when it is commercially
reasonable to do so taking into account premium rates, deductibles and/or
self-insurance reserve requirements and maximum coverage limits available.

            (c) The cost of the insurance maintained pursuant to subsection (b),
any deductible or self-insurance reserve payouts and an overhead allowance to
Landlord of five percent (5%), shall be additional rent payable by Tenant to
Landlord. Such additional rent shall be paid within ten (10) days after Tenant's
receipt of Landlord's invoices therefor, which invoices shall be not more
frequent than monthly.

            (d) The proceeds of the insurance maintained pursuant to subsections
(a) and (b) shall be payable as provided in Article VIII and, so long as this
Lease remains in effect, shall be used to repair or replace the Premises, any
improvements thereto and personal property so insured. Upon any termination of
this Lease pursuant to Section 8.2(c), the proceeds of the insurance required
pursuant to subsection (b) shall be applied first, to retire Tenant's Loan, if
applicable, second, to the then unamortized (using the amortization method in
Section 3.1(c)) cost of Tenant's investment in Landlord's Work, if any, third,
on a pro rata basis to Tenant and Landlord based upon the respective costs of
Tenant's Work and Landlord's Work (until all such costs are fully recovered) and
fourth any remainder to Landlord. The proceeds of all rental interruption
insurance shall be solely the property of Landlord and not subject to the
foregoing allocation. Tenant shall keep the proceeds of the insurance required
pursuant to subsection (a) above.

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<PAGE>

Section 7.3 Insurance Policies

            All insurance required to be carried by Tenant or Landlord shall be
with companies rated A:VIII, or better, in the then most recent version of
Best's Key Rating Guide. Each party shall deliver to the other at least ten (10)
days prior to the time such insurance is first required to be carried, and
thereafter at least ten (10) days prior to the expiration or renewal date of any
policy so maintained, copies of the policies or certificates evidencing such
insurance. All policies and certificates delivered pursuant to this Section
shall contain liability limits not less than those set forth in Sections 7.1 and
7.2, shall list the additional insureds and shall specify all endorsements and
special coverages required by Sections 7.1 and 7.2. Each such policy shall
contain a provision (by endorsement or otherwise) requiring not less than ten
(10) days written notice to each party prior to any cancellation, non-renewal or
material amendment thereof. Any insurance required to be maintained by a party
hereunder may be provided by such party by means of a so-called "blanket"
policy, so long as the Premises is specifically covered therein (by rider,
endorsement or otherwise) and the policy otherwise complies with the provisions
of this Lease, without reduction or diminution due to use of such blanket
policy. If, on account of the failure of a party to comply with any provision of
this Article VII, the other party or any additional insured is adjudged a
co-insurer by its insurance carrier, then any loss or damage the other party or
such additional insured shall sustain by reason thereof shall be borne by the
insuring party and shall be paid by the insuring party upon receipt of a bill
therefor and evidence of such loss.

Section 7.4 Waiver of Subrogation

            Landlord and Tenant each hereby waives any and all rights of
recovery against the other and against any other occupant of the Land, and
against the partners, officers, employees, agents, representatives, customers
and business visitors of such other party and of such other occupant, for loss
of or damage to such waiving party or its property or the property of others
under its control, arising from any cause insured against under any policy of
insurance required to be carried by such waiving party pursuant to the
provisions of this Lease (or any other policy of insurance carried by such
waiving party in lieu thereof) at the time of such loss or damage. The foregoing
waiver shall be effective whether or not a waiving party shall actually obtain
and maintain the insurance which such waiving party is required to obtain and
maintain pursuant to this Lease (or any substitute therefor). Each party shall,
upon obtaining the policies of insurance which it is required to maintain
hereunder, give notice to its insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.

Section 7.5 Indemnity

            (a) To the fullest extent permitted by law, and subject to the last
sentence of this subsection, Tenant shall indemnify, defend and hold Landlord,
its agents, employees and partners harmless from and against any liability or
expense (including but not limited to loss of life and reasonable attorneys'
fees and costs of defense) for any damage or injury to persons or property in or
about the Premises or any Improvements thereon which may result from the use or
occupation of the Premises or any Improvements thereon by Tenant, its employees,
agents, invitees and contractors or the breach of the provisions of this Lease
by Tenant, its agents, employees, contractors, or other persons claiming under
Tenant. Such indemnification shall extend to liabilities arising from any
activity, work, or thing done, permitted or suffered by Tenant or any such
person in or about the Premises and shall further extend to any liabilities
arising from any default in the performance of any obligation on Tenant's part
hereunder. "Liabilities" shall include all suits, actions, claims and demands
and all expenses (including attorneys' fees and costs of defense) incurred in or
about any such liability and any action or proceeding brought thereon. It is
understood and agreed that payment shall not be a condition precedent to
enforcement of the foregoing indemnification obligations. Tenant's defense
obligations hereunder shall include the obligation, upon demand, to defend
Landlord against any claim or action of the types herein specified by legal
counsel reasonably satisfactory to Landlord. Notwithstanding anything to the
contrary in this Lease, this subsection shall not apply to any damage or injury
which Tenant establishes in a court of competent jurisdiction was caused by the
negligence or willful misconduct of Landlord, its agents, employees or
contractors.

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<PAGE>

            (b) To the fullest extent permitted by law, and subject to Section
7.4 and the last sentence of this subsection, Landlord shall indemnify, defend
and hold Tenant, its agents, employees, officers and partners, harmless from and
against any liability or expense (including but not limited to reasonable
attorneys' fees and costs of defense) for any damage or injury to persons or
property in or about the Premises or any Improvements thereon which may result
from the actions of Landlord, its agents, employees or contractors, or from the
breach of the provisions of this Lease by Landlord, its agents, employees or
contractors. It is understood and agreed that payment shall not be a condition
precedent to enforcement of the foregoing indemnification obligations.
Landlord's defense obligations hereunder shall include the obligation, upon
demand, to defend Tenant against any claim or action of the types herein
specified by legal counsel reasonably satisfactory to Tenant. Notwithstanding
anything to the contrary contained in this Lease, this paragraph shall not apply
to any damage or injury which Landlord establishes in a court of competent
jurisdiction was caused by the negligence or willful misconduct of Tenant, its
agents, employees or contractors.

Section 7.6 Exemption of Landlord

            Neither Landlord nor its agents or employees shall be liable for any
damage to property entrusted to Landlord's employees or agents at the Premises,
nor for any loss of any property by theft. Landlord and its partners and their
respective partners, officers, agents and employees shall not be liable for
injury or damage which may be sustained by the person, goods, wares, or property
of Tenant, its employees, invitees or customers or any other person in or about
the Premises, or for loss or interruption of business, caused by or resulting
from any peril which may affect the Premises, including, but not limited to
fire, steam, electricity, gas, water or rain, which may leak or flow from or
into any part of the Premises, or from the breakage, leakage, obstruction or
other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures of the same, whether such damage or injury
results from conditions arising upon the Premises, or from other sources.
Landlord shall not be liable for any damages arising from any act or neglect of
any occupant of any property adjacent to the Premises, or any of their officers,
employees, agents, representatives, customers, business visitors or invitees.
Tenant, as a material consideration to Landlord, assumes all risk of damages to
property and injury to or death of persons in or about the Premises from any
cause. Notwithstanding anything to the contrary herein, this Section shall not
apply to the extent of any damage or injury which Tenant establishes in a court
of competent jurisdiction was proximately caused by the breach of this Lease,
negligence or willful misconduct of Landlord, its employees or agents.

Section 7.7 Notices

            Tenant shall give prompt notice to Landlord in case of fire or
material casualties in or to the Premises and of material defects therein.

                                  ARTICLE VIII.
                              DAMAGE OR DESTRUCTION

Section 8.1 Damage

            (a) Subject to the provisions of this Article, in the event the
Premises or the leasehold improvements thereon shall, during the term, be
damaged or destroyed in whole or in part by any cause whatsoever, and whether or
not such cause shall be covered by any insurance maintained by Tenant, Tenant
shall give Landlord prompt written notice thereof if Landlord or its agents are
not already aware thereof, and Landlord, without cost to Tenant, shall repair,
replace and rebuild the same, at least to the extent of the quality and value of
the Premises and such leasehold improvements immediately prior to such
occurrence. Landlord shall have no responsibility to repair or replace Tenant's
Property, or any of it.

            (b) Such repair, replacement or rebuilding shall be commenced within
a reasonable time after the occurrence of the event causing such damage or
destruction and the adjustment of insurance claims, if applicable, and shall
thereafter be diligently prosecuted to completion.

                                       35
<PAGE>

            (c) All insurance monies recovered on account of damage or
destruction, less the cost, if any, of such recovery, shall be paid to the
insuring party and shall be applied to the payment of the cost of repairing,
replacing and rebuilding, and shall be paid out from time to time as such work
progresses. If the insurance monies shall be insufficient to pay the entire cost
of such work, the party obligated to perform such work shall pay the deficiency.
Upon the completion of the work and payment in full therefor, any insurance
monies then remaining shall be applied or allocated as provided in the last two
sentences of Section 7.2(d).

            (d) Except as otherwise expressly provided in this Article VIII,
this Lease shall not terminate or be affected in any way, and neither party
shall, except to the extent provided in Sections 8.2 and 8.3, be released from
any of its liabilities or obligations hereunder by reason of damage to or
destruction of the Premises, any leasehold improvements thereon or Tenant's
Property. Tenant shall have no claim against Landlord for any damage suffered by
Tenant by reason of any such damage, destruction, repair or restoration. Tenant
hereby waives the provisions of California Civil Code Sections 1932(2) and
1933(4) and of any other statute, law or judicial decision now or hereafter in
effect contrary to the obligations of Tenant under this Article VIII or which
relieve Tenant therefrom.

Section 8.2 Termination Rights

            (a) Notwithstanding the provisions of Section 8.1, Landlord shall
have the option to terminate this Lease and not repair, restore or rebuild in
the event that a casualty results in:

                (i) Major Destruction, as defined in subsection (b), during the
last twelve (12) months of the term of this Lease;

                (ii) Total Destruction, as defined in subsection (b); or

                (iii) Uninsured Damage, as defined in subsection (b), with a
cost to repair, restore or rebuild in excess of the Upset Amount, as defined in
subsection (b).

Tenant shall also have the option to terminate this Lease in the event of an
occurrence described in clauses (i) and (ii) of this subsection.

            (b) As used in this Section 8.2:

                (i) "Major Destruction" shall mean damage to or destruction of
Landlord's Improvements in any Building leased by Tenant, the estimated cost of
repair, restoration or rebuilding of which exceeds thirty-three and one-third
percent (33 1/3%) of the then replacement cost of the Building damaged or
destroyed.

                (ii) "Total Destruction" shall mean damage to or destruction of
Landlord's Improvements in any Building leased by Tenant, the estimated time for
completion of repair, restoration or rebuilding of which exceeds one year from
the date of the damage or destruction.

                (iii) "Uninsured Damage" shall mean damage to or destruction of
Landlord's Improvements from any cause which (A) is not covered by the insurance
maintained by Landlord pursuant to Section 7.2(b) and (B) would not have been
covered if Landlord maintained all coverages required by Section 7.2(b). The
provisions of this clause (iii) and clause (iii) of Section 8.2(a) above are
subject to the provisions of subsection (c) below.

                (iv) The "Upset Amount" shall mean $500,000 per Building as of
February 1, 2002, adjusted by any changes in the CPI published for each
succeeding February from the CPI published for February 2002. If the CPI is not
published as of any February, a replacement index shall be selected as provided
in Section 3.3.

                All cost and time determinations and estimates required by the
provisions of this subsection shall be made by a licensed architect or general
contractor selected and

                                       36
<PAGE>

retained by Landlord and approved in advance in writing by Tenant, which such
approval shall not be unreasonably withheld, delayed or conditioned.

            (c) In the event that a casualty has any of the results described in
subsection (a), Landlord shall have the option to terminate this Lease by
written notice to Tenant given within thirty (30) days after the date of such
damage or destruction. In the event that a casualty has either of the results
described in clauses (i) or (ii) of subsection (a), Tenant shall have the option
to terminate this Lease by written notice to Landlord given within thirty (30)
days after the date of such damage or destruction. Any notice of termination
given by either Landlord or Tenant pursuant to this subsection (c) shall pertain
only to the Building or Buildings as to which a casualty causes the applicable
result pursuant to subsection (a), and this Lease shall remain in effect as to
any Building not suffering such result. Provided, however, that if Landlord
elects to terminate this Lease as to a Building or Buildings as the result of
Uninsured Damage with a cost to repair, restore or rebuild in excess of the
Upset Amount, Tenant may, by written notice to Landlord given within twenty (20)
days after receipt of Landlord's notice of termination, elect to provide funds
equal to that portion of the cost of repair, restoration or rebuilding in excess
of the Upset Amount. In such event, this Lease shall not terminate as to the
affected Building(s) and Landlord shall repair, restore or rebuild pursuant to
Section 8.1. In addition, if neither party is entitled to or either party is
entitled to but does not elect to terminate pursuant to this Section, Landlord
shall repair, restore or rebuild pursuant to Section 8.1. If Tenant elects to
provide funds in excess of the Upset Amount, Tenant shall, within ten (10) days
after receipt by Tenant of a written estimate from landlord of the total cost of
Landlord's work of repair or restoration, deposit such funds with Landlord.
Similarly, if such estimate thereafter increases, Tenant shall within ten (10)
days after receipt of an increased written estimate make such additional deposit
as shall be required. Upon completion of Landlord's work, Landlord shall provide
to Tenant an accounting of the total cost of Landlord's work, the Upset Amount
and all amounts previously deposited by Tenant, and the parties shall promptly
make any adjustments required to give effect to the financial obligations of the
parties pursuant to this subsection. Failure of Tenant to timely make any
deposit required hereunder shall be treated as a failure to pay additional rent
pursuant to this Lease.

            (d) If either party is entitled to terminate and timely elects to
terminate this Lease pursuant to this Section, then:

                (i) This Lease shall terminate as to the affected Building(s)
only upon receipt of notice of termination from the terminating party, unless
Tenant has the option to and elects to furnish funds pursuant to subsection (c).

                (ii) The proceeds recovered pursuant to the policies maintained
by Landlord and Tenant pursuant to Section 7.2 shall be allocated and paid as
follows:

                    (A) Tenant shall receive the proceeds of the policies
maintained by Tenant.

                    (B) The proceeds of the policies maintained by Landlord
pursuant to Section 7.2(b) shall be applied or allocated as provided in the
penultimate sentence of Section 7.2(d).

                (iii) Sections 5.5, 6.4(b), 6.5 and 13.27 of this Lease shall
apply with respect to such termination.

                (iv) Rent shall cease to accrue as of the date of termination of
this Lease.

Section 8.3 Abatement of Rent

            If at any time during the term hereof all or any part of the
Premises or any improvements thereon are destroyed or damaged by any casualty
and this Lease is not terminated pursuant to Section 8.2, Tenant shall have no
claim against Landlord for any damage suffered by Tenant by reason of any such
damage, destruction, repair or restoration, unless and only to the extent that
Tenant establishes in a court of competent jurisdiction that such damage was
solely

                                       37
<PAGE>

and proximately caused by the negligence of Landlord, its employees or agents
and Section 7.4 does not apply thereto. For the period from the date of such
casualty until completion of repairs or restoration pursuant to Section 8.1,
Base Rent shall be abated in proportion to the degree of interference with
Tenant's use of the Premises occasioned by such damage or destruction, including
totally if applicable. Provided, however, that in no event shall such period of
abatement extend beyond the first to occur of (a) the 150th day following
substantial completion by Landlord of its work of repair or restoration and (b)
the expiration of such reasonable period of time in which Tenant could have
completed its work of repair, restoration or rebuilding had Tenant diligently
prosecuted such work to completion.

                                   ARTICLE IX.
                            ASSIGNMENT AND SUBLETTING

Section 9.1 Landlord's Rights

            (a) Except as provided in this Article, Tenant shall not, either
voluntarily or by operation of law, assign, sell, encumber, pledge or otherwise
transfer all or any part of Tenant's leasehold estate hereunder, or permit the
Premises to be used or occupied by anyone other than Tenant or Tenant's
employees, affiliates or contractors or sublet the Premises or any portion
thereof, without Landlord's prior written consent in each instance, which
consent shall not be unreasonably withheld. Consent by Landlord to one or more
assignments of this Lease or to one or more sublettings of the Premises shall
not operate to exhaust Landlord's rights under this Section. The voluntary or
other surrender of this Lease by Tenant or a mutual cancellation hereof shall
not work a merger, and shall, at the option of Landlord, terminate all or any
existing subleases or subtenancies or shall operate as an assignment to Landlord
of such subleases or subtenancies. If Tenant is a corporation which is not
required to file periodic reports under Sections 12 or 15 of the Securities
Exchange Act of 1934, or is an unincorporated association or partnership, the
transfer, assignment or hypothecation of any stock or interest in Tenant in the
aggregate in excess of fifty percent (50%) shall be deemed an assignment within
the meaning and provisions of this Article, but the transfer, assignment or
hypothecation of less than fifty percent (50%) of the stock or interest in
Tenant shall not be deemed an assignment. In connection with any request for
Landlord's consent required under this Article, Tenant shall reimburse to
Landlord all reasonable attorneys' fees and other out-of-pocket costs incurred
by Landlord in responding to such request. Attorneys' fees and costs shall be
charged at the same rate such attorneys' charge Landlord for other similar work.
The reimbursement due under this subsection shall be paid, as additional rent
under this Lease, within twenty (20) days after Tenant's receipt of Landlord's
invoice therefor. Any such reimbursement may be recovered in any unlawful
detainer or other action instituted by Landlord upon any default by Tenant as
rent, whether or not included in any notice given to Tenant by Landlord prior to
or as a condition to the institution of such action.

            (b) If Tenant desires at any time to assign this Lease or to sublet
the Premises or any portion thereof, other than as permitted in subsection (i),
it shall first in writing notify Landlord of its desire to do so and shall
submit in writing to Landlord (i) the name of the proposed subtenant or
assignee; (ii) the nature of the proposed subtenant's or assignee's business to
be carried on in the Premises; (iii) the terms and provisions of the proposed
sublease or assignment; and (iv) such reasonable financial 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 prior to 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 a
written statement in reasonable detail as to the business experience of the
proposed subtenant or assignee during the three (3) years preceding the request
for Landlord's consent, if available.

            (c) At any time within fifteen (15) business days after Landlord's
receipt of the information specified in subsection (b) above, Landlord may by
written notice to Tenant elect to (i) consent to the subletting or assignment
upon the terms and to the subtenant or assignee proposed or (ii) refuse to give
its consent, specifying in reasonable detail the reason(s) therefor.

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<PAGE>

            (d) Except as provided in subsection (i), Landlord shall have the
right to reasonably approve or disapprove any proposed assignee or sublessee. In
exercising such right of approval or disapproval, Landlord shall be entitled to
take into account any fact or factor which Landlord reasonably deems relevant to
such decision, including but not necessarily limited to the following, all of
which are agreed to be appropriate factors for Landlord's consideration:

                (i) The financial strength of any proposed assignee or
subtenant, including the adequacy of its working capital to pay all expenses
anticipated in connection with any remodeling of the Premises.

                (ii) The experience of the proposed assignee or subtenant with
respect to businesses of the type and size which such assignee or subtenant
proposes to conduct in the Premises.

                (iii) The quality and nature of the use which such proposed
assignee or subtenant proposes for the Premises, and the consistency or lack
thereof with the quality of the Premises. For this purpose, the standards set
forth in Section 5.1 shall apply.

                (iv) The quality of the Premises' appearance resulting from any
remodeling or renovation to be conducted by the proposed assignee or subtenant.

                (v) Whether there then exists any Default by Tenant pursuant to
this Lease or any non-payment or non-performance by Tenant under this Lease
which, with the passage of time and/or the giving of notice, would constitute a
Default under this Lease.

In no event shall the Premises be used except as expressly approved in writing
by Landlord in advance or as permitted by Section 5.1. Landlord and Tenant
acknowledge that the express standards and provisions set forth in this Lease
dealing with assignment and subletting, including those set forth in subsections
(d), (e), (g) and (h), have been freely negotiated and are reasonable at the
date hereof. Landlord would not offer similar terms to smaller tenants. Approval
of any assignment of Tenant's interest shall, whether or not expressly so
stated, be conditioned upon such assignee assuming in writing all obligations of
the tenant hereunder accruing subsequent to the effective date of the assignment
by means of a written assumption in form and substance reasonably satisfactory
to Landlord.

            (e) In connection with any assignment, subletting or other transfer
other than a subletting or assignment permitted without the consent of Landlord
pursuant to subsection (i), Landlord shall be entitled to receive, in the case
of a subletting or transfer other than an assignment, one-half ( 1/2) of all net
rent (however denominated and paid) payable by the subtenant or transferee to
Tenant in excess of that payable by Tenant to Landlord pursuant to the other
provisions of this Lease and, in the case of an assignment, one-half ( 1/2) of
all net consideration given, directly or indirectly, by the assignee to Tenant
in connection with such assignment and allocable to Tenant's leasehold estate.
For the purposes of this subsection, the term "rent" shall mean all
consideration paid or given, directly or indirectly, for the use of the Premises
or any portion thereof. The term "consideration" shall mean and include money,
services, property and any other thing of value such as payment of costs,
cancellation of indebtedness, discounts, rebates and the like. "Sublet" and
"sublease" shall include a sublease as to which Tenant is sublessor and any
sub-sublease or other sub-subtenancy, irrespective of the number of tenancies
and tenancy levels between the ultimate occupant and Landlord, and as to which
Tenant receives any consideration, as defined in this subsection. Any net rent
or other net consideration which is to be passed through to Landlord by Tenant
pursuant to this subsection shall be paid to Landlord promptly upon receipt by
Tenant and shall be paid in cash, irrespective of the form in which received by
Tenant. In the event that any net rent or other net consideration received by
Tenant is in a form other than cash, Tenant shall pay to Landlord in cash
one-half ( 1/2) of the fair market value of such consideration. Landlord and
Tenant agree that the payment required by this subsection represents payment for
Landlord's property rights in and to the leasehold estate hereby created.

            The information to be supplied to Landlord under subsection 9.1(b)
shall include an itemized statement of all rent and consideration (whether for
the use of the Premises, the

                                       39
<PAGE>
leasehold estate, leasehold improvements, furniture, fixtures and equipment,
inventory, franchises, licenses or otherwise) to be paid to Tenant in connection
with the assignment, subletting or other transfer. Such statement shall allocate
the total to be paid to Tenant among all such items as reasonably agreed by
Tenant and Tenant's assignee, subtenant or transferee, and such allocations
shall be subject to the review and approval of Landlord. If Tenant and Landlord
cannot agree as to the amount to be allocated for the use of the Premises or the
leasehold estate, one-half (1/2) of which amount shall belong to Landlord in
accordance with the provisions of this subsection, then such amount shall be
determined as follows: The amount to be allocated to each of leasehold
improvements, furniture, fixtures and equipment, franchises, licenses and other
hard assets shall be the then reasonable market value of each such item as
determined by a certified public accountant selected by Landlord, and such
determination shall be binding upon the parties. The total of all such book
value amounts shall be deducted from the total of all rent and consideration to
be paid to Tenant in connection with such assignment, subletting or other
transfer, and one-half (1/2) of the remainder, after deducting from the
remainder transaction expenses, as defined below, shall belong to Landlord as
the amount due hereunder for the use of the Premises or the leasehold estate.

            As used herein, the terms "net rent" and "net consideration" shall
mean the gross rent payable and actually paid by a subtenant in excess of that
payable by Tenant hereunder or the gross consideration actually received by
Tenant for its leasehold estate, as the case may be, less Tenant's transaction
expenses in connection with the subletting or assignment giving rise to such
excess rent or consideration. The term "transaction expenses" shall mean the
aggregate out-of-pocket costs incurred or to be incurred by Tenant in connection
with a subletting or an assignment, including all fees and costs of attorneys,
accountants, architects, designers and other professionals retained by Tenant in
connection with such transaction, any brokerage or finder's fees or commissions
paid by Tenant in connection with such transaction, any advertising costs
incurred by Tenant in connection with such transaction, any escrow fees and
costs paid in connection with such transaction and any costs and fees paid by
Tenant to renovate or remodel the Premises or any portion thereof for the use of
such assignee or subtenant, whether paid directly by Tenant, or in the form of
an allowance to a proposed subtenant or assignee. Transaction expenses shall
also include any payment made to or for the benefit of an assignee or subtenant,
such as a moving allowance or a decorating allowance, shall include any rent
abatement afforded to a subtenant by Tenant and any lease takeover costs
incurred by Tenant in connection with such transaction. Transaction expenses
shall also include the amount of any Base Rent paid by Tenant to Landlord with
respect to the Premises, or any portion thereof, for any period during which
Tenant cannot occupy the same due to renovation of the same for an assignee or
subtenant, and for any period after Tenant vacates the Premises and lists the
same for assignment or sublease to the date an assignee or subtenant commences
the payment of rent hereunder or under such sublease. Tenant's transaction
expenses shall be set forth in reasonable detail on a written statement provided
by Tenant pursuant to this subsection and shall be recovered by Tenant from the
first excess rent or consideration received by Tenant prior to any split with
Landlord pursuant to this subsection. Upon request by Landlord, Tenant shall
supply to Landlord reasonable documentary evidence as to the actual transaction
expenses paid or incurred by Tenant in connection with an assignment or
subletting of the Premises or a portion thereof.

            (f) If Landlord consents to such assignment or subletting or does
not exercise one of its other options within the fifteen (15) business day
period specified in subsection (c) above, Tenant may thereafter within one
hundred twenty (120) days after the expiration of said fifteen (15) business day
period enter into a valid assignment or sublease of the Premises or portion
thereof, upon the terms and conditions described in the information required to
be furnished by Tenant to Landlord pursuant to subsection 9.1(b), or upon other
terms not less favorable to Tenant; provided, however, that any material change
in such terms shall be subject to Landlord's consent as provided in this
Section; and, provided further, that any amounts to be paid to Landlord by
Tenant in connection therewith pursuant to subsection (e) shall be paid to
Landlord upon the later of consummation of such transaction or receipt by Tenant
of such consideration.

            (g) All options to extend, expand, renew or purchase, if any,
including the Extension Options with respect to the Additional Terms, contained
in this Lease are personal to

                                       40

<PAGE>

Tenant. Consent by Landlord to any assignment or subletting shall not include
consent to the assignment or transfer of any such rights with respect to the
Premises. All such options shall terminate upon such assignment or subletting
unless Landlord specifically grants in writing such options to such assignee or
subtenant. The provision of this subsection shall not apply to sublettings or an
assignment permitted without the consent of Landlord pursuant to subsection (i).

            (h) In the event that this Lease is assigned to any person or entity
pursuant to the provisions of the United States Bankruptcy Code (11 U.S.C., Sec.
101 et seq.) (the "Code"), all consideration payable or otherwise to be
delivered in connection with such assignment shall be paid or 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 Code. Any consideration constituting Landlord's property pursuant to the
immediately preceding sentence not paid or delivered to Landlord shall be held
in trust for the benefit of Landlord and shall be promptly paid or delivered to
Landlord. For the purposes of this Section, the term "consideration" shall have
the meaning given to such term in subsection (e). In addition, subsection (g)
shall apply with respect to such assignment.

            (i) Notwithstanding anything to the contrary contained in this
Section 9.1, Landlord's consent shall not be required and subsection 9(c) shall
not apply in connection with an assignment of Tenant's interest in this Lease or
a subletting of all or a portion of the Premises:

                (i) To any parent, subsidiary or affiliate of Tenant;

                (ii) In connection with a reorganization, merger or
consolidation to which Tenant is a party;

                (iii) To any person or entity which acquires all or
substantially all of the capital stock or assets of Tenant;

                (iv) To a joint venture or partnership of which Tenant or a
parent, subsidiary or affiliate of Tenant is a joint venturer or partner;

                (v) To any person or entity which acquires a substantial portion
of the assets or business of Tenant (such as an entire division or comparable
business unit); and

                (vi) To an entity which performs a function or group of
functions previously performed by Tenant or a division or department of
arrangement between Tenant and such entity (a so-called out-sourcing).

Provided, however, that in connection with any such transaction ( a "Permitted
Transaction"), Tenant shall comply with all of the following as are applicable:

                    (A) The use of the Premises shall be a use permitted by
Section 5.1.

                    (B) Any such sublease shall be subject to the terms and
provisions of this Lease. Without limiting the generality of the foregoing, any
such sublease shall be terminable by Landlord upon the expiration or any earlier
termination of this Lease, including a termination by mutual agreement of
Landlord and Tenant.

                    (C) The assignee shall assume the obligations of the tenant
hereunder accruing subsequent to the effective date of the assignment by means
of a written assumption in form and substance reasonably satisfactory to
Landlord.

                    (D) Tenant shall not be released from any of the obligations
of the tenant hereunder, whether accruing prior to or subsequent to the
effective date of such transfer.

                    (E) There shall be no Default by Tenant with respect to its
obligations hereunder beyond any applicable notice and cure period.

                                       41
<PAGE>

                    (F) Within ten (10) days after the effective date of the
transaction, Tenant shall notify Landlord in writing of the effective date of
the transaction, the name of the other party thereto, the facts which bring such
transaction within the scope of this subsection and any change in the address
for notices to tenant pursuant to this Lease. Such notice shall be accompanied
by any executed assumption required pursuant to clause (C) above.

                    (G) In the event of any change in the trade name of the
tenant hereunder, all changes to Tenant's Signage shall be subject to the
provisions of Section 5.4.

            For the purposes of this subsection, a parent of Tenant shall be any
person or entity which owns, directly or indirectly, more than 50% of the voting
capital stock or profit and loss interests in Tenant; a subsidiary of Tenant
shall be an entity as to which Tenant owns, directly or indirectly, more than
50% of the voting capital stock or profit and loss interests in such entity; and
an affiliate of Tenant shall be a subsidiary of any parent of Tenant.
Subsections (a), (b), (c), (d), (e) and (f) shall not apply in connection with a
Permitted Transaction.

Section 9.2 No Release of Tenant

            No sublease, assignment or transfer, even with the consent of
Landlord, shall relieve Tenant of its obligation to pay the rent and to perform
all of the other obligations to be performed by Tenant hereunder. The acceptance
of rent by Landlord 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 assignment,
sublease or transfer. The foregoing restrictions shall be binding upon any
assignee or subtenant to which Landlord has consented. Any sale, assignment,
mortgage, transfer of this Lease or subletting which does not comply with the
provisions of this Article shall be void. If any assignee defaults in any
performance due hereunder, Landlord may proceed directly against Tenant without
exhausting its remedies against such assignee.

Section 9.3 Hypothecation

            Notwithstanding anything which is or appears to be to the contrary
in this Lease, Tenant shall not encumber the leasehold estate created by this
Lease, except as expressly provided in this Section 9.3.

            (a) As used herein, the following terms shall have the following
meanings:

                (i) The term "Mortgage" shall mean a mortgage, deed of trust,
assignment or other instrument hypothecating the Leasehold Estate pursuant to
this Lease.

                (ii) The term "Mortgagee" shall mean the beneficiary under any
deed of trust, any mortgagee under any mortgage, the assignee under any
assignment or any lender occupying a similar position under any other instrument
hypothecating the leasehold interest pursuant to this Lease.

                (iii) The term "Leasehold Estate" shall mean Tenant's estate
created pursuant to this Lease.

            (b) Any Mortgage shall be a lien only upon the Leasehold Estate and
shall not be a lien upon Landlord's fee interest in the Premises. So long as a
Mortgage shall remain unsatisfied of record and until written notice of
satisfaction is given by the Mortgagee to Landlord, the following provisions
shall apply to such Mortgage.

            (c) Landlord shall serve a copy of any notice, as defined below,
including a notice of default, required to be served on Tenant under this Lease
upon such Mortgagee, and no notice by Landlord to Tenant hereunder shall be
deemed to have been duly given unless and until a copy thereof has been served
on the Mortgagee. As used herein, the term "notice" shall mean any notice of
default, any notice of arbitration, and any notice pertaining to any option held
by Tenant hereunder.

            (d) In the event of a default by Tenant hereunder, any Mortgagee
shall, within the period allowed Tenant to cure such default and otherwise as
herein provided, have the right

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<PAGE>

to cure such default, or cause the same to be cured, and Landlord shall accept
such performance by or on behalf of such Mortgagee as if the same had been made
by Tenant.

            (e) For the purposes of this Section, no event of default shall be
deemed to exist if (i) in the case of a monetary default, the same shall be
cured within the time permitted therefor and (ii) in the case of a non-monetary
default, steps shall in good faith have been commenced by the Mortgagee within
the time permitted therefor to cure the same and shall be prosecuted to
completion with diligence and continuity.

            (f) Notwithstanding the provisions of subsection (e), upon the
occurrence of an event of default, other than an event of default due to a
default in the payment of money or other default which may be cured without
taking possession of the Premises, Landlord shall take no action to terminate
this Lease without first giving to the Mortgagee written notice of Landlord's
intention to terminate this Lease (which may be a copy of a notice to pay or
quit or a notice to perform or quit given to Tenant) and thirty (30) days
thereafter within which either (i) to obtain possession of the Premises
(including possession by a receiver) or (ii) to institute, prosecute and
thereafter diligently complete foreclosure proceedings or otherwise acquire
Tenant's interest under this Lease. Such Mortgagee, upon obtaining possession or
acquiring Tenant's interest under this Lease, shall be required, within thirty
(30) days after obtaining such possession or interest, to cure all defaults
reasonably susceptible of being cured by such Mortgagee. Provided, however,
that: (x) such Mortgagee shall not be obligated to continue such possession or
to continue such foreclosure proceedings after such default shall have been
cured; (y) nothing herein contained shall preclude Landlord, subject to the
provisions of this Section, from exercising any rights or remedies under this
Lease with respect to any other default by Tenant; and (z) such Mortgagee shall
agree with Landlord in writing to comply during the period of such forbearance
with such of the terms, conditions and covenants of this Lease as are reasonably
susceptible of being complied with by such Mortgagee, including those requiring
the payment of money. Any default by Tenant not reasonably susceptible of being
cured by such Mortgagee shall be deemed to have been waived by Landlord upon
completion of such foreclosure proceedings or upon such acquisition of Tenant's
interest under this Lease, except that any such events of default which are
reasonably susceptible of being cured after such completion and acquisition
shall then be cured by Mortgagee within the time specified in this Section. Such
Mortgagee or other purchaser in foreclosure proceedings may become the legal
owner and holder of Tenant's interest under this Lease by foreclosure or
assignment in lieu of foreclosure.

            (g) In the event of termination of this Lease prior to the
expiration of the term, except by reason of condemnation or casualty as provided
herein or a mutual termination with the consent of Mortgagee, Landlord shall
serve upon the Mortgagee written notice that this Lease has been terminated
together with a statement of any and all sums which would at that time be due
under this Lease but for such termination, and of all other defaults, if any,
under this Lease then known to Landlord. Such Mortgagee shall thereupon have the
option to obtain a new lease in accordance with and upon the following terms and
conditions: upon the written request of the Mortgagee within thirty (30) days
after service of such notice that this Lease has been terminated, Landlord shall
enter into a new lease of the Premises with such Mortgagee, or its nominee. Such
new lease shall be effective on the date of termination of this Lease and shall
be for the remainder of the term, at the rent and upon all the agreements,
terms, covenants and conditions hereof, including any applicable rights of
renewal. As a condition to such new lease, the Mortgagee shall perform all
unfulfilled obligations of Tenant under this Lease which are reasonably
susceptible of being performed by the Mortgagee. Upon the execution of such new
lease, the tenant named therein shall pay all sums which would at the time of
the execution thereof be due under this Lease but for such termination and shall
pay the reasonable expenses (including attorneys' fees and costs) incurred by
Landlord in connection with such defaults and termination, the recovery of
possession of the Premises and the preparation, execution and delivery of such
new lease, less the net income (after payment of any operating expenses), if
any, derived by Landlord from the Premises during the period from the date of
termination of this Lease to the date of execution of the new lease.

                                       43
<PAGE>

            (h) Effective upon the commencement of the term of any new lease
executed pursuant to subsection (g), all subleases, if any, shall be assigned
and transferred without recourse by Landlord to the tenant under such new lease.

            (i) This Lease may not be modified, cancelled or surrendered by
agreement of the parties without the express written consent of the Mortgagee.
For the purposes of this subsection (i):

                (i) The prohibition against modifications shall not extend to
immaterial modifications of this Lease (i.e., modifications which do not
materially increase the obligations or materially decrease the rights of
Tenant).

                (ii) No Mortgagee shall unreasonably withhold or delay its
consent to a proposed modification of this Lease, and such consent shall be
deemed given if a Mortgagee shall fail to disapprove a proposed amendment to
this Lease by written notice to Landlord and Tenant given within thirty (30)
days after receipt of the proposed amendment.

                (iii) The provisions of this subsection shall not apply to any
termination of this Lease due to a default by Tenant, a casualty, a condemnation
or in a proceeding under the federal Bankruptcy Code.

            (j) There shall be no merger of this Lease, or of the Leasehold
Estate, with the fee estate in and to the Premises by reason of the fact that
this Lease, or the Leasehold Estate, or any interest in either thereof, may be
held directly or indirectly by or for the account of any person who shall own
the fee estate in and to the Premises, or any portion thereof, and no such
merger shall occur unless and until all persons at the time having any interest
in this Lease or the Leasehold Estate, including Mortgagee, shall join in a
written instrument effecting such merger.

            (k) No Mortgagee shall become personally liable under this Lease
unless and until the Mortgagee shall acquire title to Tenant's interest under
this Lease by foreclosure, assignment in lieu of foreclosure or otherwise, or
under a new lease pursuant to subsection (g). In such event the Mortgagee may
assign such interest under this Lease or in such new lease, but only in
accordance with this Article IX, and shall thereupon be released from all
liability for the performance or observance of the covenants, and conditions in
this Lease or in such new lease contained on Tenant's or the tenant's part to be
performed and observed from and after the date of such assignment. Provided,
however, that the assignee from such Mortgagee shall have expressly assumed in
writing this Lease or such new lease on an assignment form reasonably
satisfactory to Landlord and an executed copy of such assumption shall have been
submitted to Landlord and such assignment shall expressly be made subject to the
provisions of this Lease. No such assignment shall modify or limit any right or
power of Landlord hereunder.

            (l) All notices by Landlord to such Mortgagee pursuant to this
Section shall be in writing and sent by United States registered or certified
mail, postage prepaid, return receipt requested, addressed to such Mortgagee at
the address last specified to Landlord by Tenant or such Mortgagee, and any such
notice shall be deemed to have been served as of the date of receipt or refusal
indicated on the return receipt.

            (m) Notwithstanding anything to the contrary contained in this
Section:

                (i) The loan secured by any Mortgage (a "Loan") must be with an
institutional or equivalent lender (e.g., bank, savings and loan association,
insurance company, pension fund, investment banker or other entity engaged in
the making of loans secured by interests in real property).

                (ii) The term of any Loan, including any permitted extensions or
renewals thereof, shall not extend past the expiration date of this Lease
(including the additional terms pursuant to Section 2.3).

                (iii) Such Loan shall constitute permanent financing with
respect to the Premises.

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<PAGE>

                (iv) The Mortgage shall contain provisions requiring that copies
of all notices of default thereunder must be sent to Landlord.

                (v) The Mortgage shall not permit or authorize, or be construed
to permit or authorize, any Lender to devote the Premises to any uses other than
those uses authorized by Section 5.01 or to construct any Improvements thereon
other than the specific Improvements provided for in this Lease.

                (vi) Promptly following the closing of the Loan, Landlord shall
be furnished with two complete executed sets of the documents executed in
connection with the Loan, delivery of which may be conditioned upon delivery of
a reasonably satisfactory confidentiality agreement by Landlord. Such sets may
be photocopies rather than originals, but shall bear the filing or recording
stamps of all government officers with which filed or recorded.

                (vii) Landlord shall execute and deliver, and Tenant shall
record concurrently with the Mortgage, a request for special notice to Landlord
under Civil Code Section 2924b.

                (viii) Unless the Mortgage is secured by all or substantially
all of the assets of the Tenant, the Mortgage shall specifically provide that:
(1) in the event of a default by Tenant thereunder, Landlord shall have the
right at its option (but shall not be required) to cure such default; and (2) no
action shall be taken by the Lender to foreclose upon any such mortgage or deed
of trust until at least thirty (30) days after such Lender shall have notified
Landlord in writing of any default by Tenant.

                (ix) The rights of any Mortgagee shall be subject to all of the
terms and provisions of this Lease (as the same may from time to time be amended
with the consent of the Mortgagee). Any purchaser of the Leasehold Estate upon
foreclosure or under power of sale shall, except as set forth below, succeed to
the rights of Tenant hereunder, including possession of the Premises, and shall
be liable for the performance of the terms and provisions hereof to be performed
by the tenant from and after such purchaser acquires the Leasehold Estate.
Provided, however, that a Mortgagee which acquires the Leasehold Estate shall be
liable only for obligations accruing during the period that it holds the
Leasehold Estate. Moreover, the rights granted to Tenant pursuant to Sections
1.4, 1.5, 15.1 and 15.2 shall not survive the judicial foreclosure, sale under
power of sale or transfer of Tenant's interest hereunder pursuant to or with
respect to any Mortgage executed by Tenant pursuant to this Section.

                (x) To the extent that any Mortgagee declines or refuses to
comply with any condition contained in this Section to forbearance by Landlord
in exercising its right to terminate this Lease for a default by Tenant,
Landlord shall be relieved of such forbearance obligation.

                (xi) Landlord shall have no obligation to deliver possession of
the Premises or any portion thereof to any Mortgagee, to any person or entity
succeeding to the rights of Tenant hereunder by foreclosure, sale under power of
sale or deed in lieu of foreclosure or to the lessee under any new lease
executed pursuant to the terms of this Section unless Landlord shall previously
have obtained possession of the Premises or such portion thereof.

                (xii) There shall be no more than one (1) Mortgage with respect
to the Leasehold Estate at any time.

                                   ARTICLE X.
                                  CONDEMNATION

Section 10.1 Condemnation

            (a) In the event of a taking of or damage to all or any part of the
Premises by reason of any exercise of the power of eminent domain, whether by
condemnation proceedings or otherwise, or any transfer of all or any part of the
Premises made in avoidance of an exercise of the power of eminent domain (all of
the foregoing being hereinafter referred to as an "appropriation") during the
term of this Lease, the rights and obligations of Landlord and Tenant

                                       45
<PAGE>

with regard to such appropriation, including rights to the award therefrom and
including compensation, severance or other damage, and interest shall be as
provided in this Article X.

            (b) If by reason of any such appropriation, economic operation of
the Premises is materially and adversely affected (an appropriation of
twenty-five percent (25%) or more of the Floor Area of the Premises shall be
deemed to have such effect) this Lease shall, at the option of either party, be
cancelled and terminated and the rents and other charges payable by Tenant
hereunder shall be apportioned to the termination date.

            Such option to terminate the Lease shall be exercised at any time
subsequent to delivery of written notice of such appropriation to Tenant. The
termination date of this Lease if this Lease is terminated by either party
pursuant to this Section shall be the date upon which the condemning authority
shall require possession of the Premises or the portion thereof so appropriated.

            In the event, however, that the condemning agency shall abandon such
eminent domain proceeding after such notice of exercise of option to terminate
this Lease has become effective under the provisions hereof, then either
Landlord or Tenant may, at its option, revoke and cancel its notice of exercise
of option to terminate this Lease by notifying the other in writing, not more
than thirty (30) days after written notice of such abandonment shall have been
served on Tenant and filed in court.

            (c) If only a portion of the Premises shall be so taken and if this
Lease shall not be terminated pursuant to the provisions of subsection (b),
Landlord shall promptly restore, repair or reconstruct any Landlord Improvements
on the Premises only a portion of which were so taken so that when so restored,
repaired or reconstructed such Landlord Improvements shall be of substantially
the same quality and character as existed immediately prior to such taking, and
the rental payable by Tenant hereunder shall be reduced, effective as of the
taking of possession by the condemning authority, in proportion to the reduction
in the fair market rental value of the Premises by reason of such taking. Such
repair, restoration or reconstruction shall be the sole responsibility of
Landlord, both as to performance and payment of the costs thereof, shall be
designed by an architect selected and retained by Landlord, shall be performed
by a general contractor selected and retained by Landlord, shall comply with
Applicable Laws, shall be commenced as promptly as practicable after the taking
and shall be diligently pursued to completion. Article XIV shall not apply to
such Landlord, repair, restoration or renovation, and Landlord shall be entitled
to utilize so much of the award for such taking (including amounts otherwise
allocated to Tenant pursuant to subsection (d)), up to the full amount of the
award, as necessary to effect such repair, restoration or reconstruction. In no
event shall Landlord be required to spend on such repair, restoration and
reconstruction any amount in excess of the award for such taking. Promptly upon
completion of Landlord's work, Tenant shall, at Tenant's sole cost and expense,
repair, restore or reconstruct any Tenant Improvements and Tenant Property taken
or damaged. Any such work by Tenant shall be subject to the provisions of
Sections 5.4, 5.5, 6.2 and 6.4.

            (d) Any award for any taking of all or any part of the Premises
under the power of eminent domain shall be the property of Landlord, whether
such award shall be made as compensation for diminution in value of the
leasehold or for taking of the fee. Except as provided in subsection (c),
nothing contained herein shall be deemed to preclude Tenant from obtaining, or
to give Landlord any interest in, any award to Tenant for (i) loss of or damage
to Tenant's Property, (ii) damages for cessation or interruption of Tenant's
business or for the cost of relocation or (iii) Tenant Improvements, alterations
and Tenant's Signage paid for by Tenant, provided that such damages are set
forth in a separate award to Tenant or are separately broken out in a single
award. The parties acknowledge Landlord's right to apply the entire award as
provided in subsection (c).

            (e) If less than a fee title to all or any portion of the Premises
shall be taken by any competent authority for temporary use or occupancy, rental
payable hereunder shall be abated in accordance with subsection (c) above and
any award made in connection with such temporary taking shall be allocated and
paid in accordance with subsection (d) above. This

                                       46
<PAGE>

Lease shall, subject to the foregoing and notwithstanding such temporary taking,
remain in full force and effect.

            (f) A sale by Landlord to any authority having the power of eminent
domain, either under threat of condemnation or while condemnation proceedings
are pending, shall be deemed a taking by eminent domain for all purposes under
this Article.

                                   ARTICLE XI.
                                UTILITY SERVICES

Section 11.1 Utility Charges

            (a) Tenant shall contract for and pay, directly to the purveyors of
such services, all charges, surcharges, taxes and other fees for gas, water,
sanitary and storm sewer, electricity, telephone and other utility services
furnished to the Premises subsequent to the Lease Commencement Date and all fees
for installation of any facilities to supply such services or for connection by
Tenant to any facilities of the purveyors of such services. The immediately
preceding sentence shall be applied separately to the Initial Premises and
Expansion Premises. Notwithstanding the foregoing, it is understood and agreed
that installation and connection fees may be paid by Landlord as a part of
Development Costs. Moreover, billing for utility services to the Premises shall
initially be to Landlord (with the service bills included in Development Costs)
and Tenant shall be required to change such billings to Tenant. Tenant shall
attempt to effect such change on the Lease Commencement Date or as soon
thereafter as possible. Pending such changeover, service billings shall remain
in Development Costs; upon effecting such changeover, Tenant shall pay such
service billings directly to the service purveyors. If any such charges are not
paid when due Landlord may, but shall not be obligated to, pay the same, and any
amount so paid by Landlord shall become due to Landlord from Tenant as
additional rent upon presentation by Landlord of an invoice therefor.

            (b) All such utilities shall, to the extent feasible, initially be
separately metered and billed directly to Tenant. For this purpose, each
Building shall be separately metered for electrical, gas and water and sewer
service. Tenant shall indemnify Landlord, the Initial Premises and the Expansion
Premises from and against any such charges and liens arising therefrom.

Section 11.2 Interruption of Service

            (a) Landlord shall not be liable for damages or otherwise for any
failure or interruption of any utility service being furnished to the Premises
and no such failure or interruption shall entitle Tenant to terminate this Lease
or an abatement of rent hereunder.

            (b) Notwithstanding subsection (a) above, in the event of any
interruption to any utility service to the Premises which is caused by the
negligence or intentional action of Landlord or any agent, employee or
contractor of Landlord, Base Rent shall be abated for the period of the
interruption in proportion to the degree of interference with Tenant's
operations in the Premises, including totally if applicable. Degree of
interference shall be determined by reference to the portion of the Premises
(including all, if applicable) which is rendered unusable by Tenant as the
result of such interruption. The remedy set forth in this subsection shall be
Tenant's sole remedy in the event of such interruption. In addition, Landlord
shall use commercially reasonable efforts to cause the restoration of the
service so interrupted as promptly as practicable.

Section 11.3 Other Tenants

            In the event that (a) Tenant adds one or more Available Spaces to
the Premises and/or (b) Tenant ceases to be the sole Tenant with respect to the
entire Initial Premises, Section 11.1 may not apply as to any Building in which
Tenant does not lease all Floor Area and/or the portions of the Initial Premises
or Expansion Premises, as applicable, exterior to the Buildings. In lieu of
direct utility expense billing to and payment by Tenant, the costs of utilities
furnished to multi-tenant Buildings and/or such exterior areas may be billed to
Landlord and rebilled by Landlord to Tenant and other tenants on the basis of
their proportionate shares or

                                       47
<PAGE>

actual usage based upon submetering installed by Landlord. Tenant's share of the
costs of such common utilities costs, plus an administrative charge not to
exceed fifteen percent (15%), shall be additional rent hereunder payable within
ten (10) days after Tenant's receipt of Landlord's invoices therefor not more
frequently than once per calendar month. Tenant's Special Facilities shall at
all times, however, be separately metered (which may be by inclusion on a
separate meter for an adjacent Building) and the costs of the utilities used by
such Special Facilities shall be either billed directly to Tenant or allocated
to Tenant as provided in this Section. Whether the utilities services are
directly metered to Tenant or are on a common meter with usage costs allocated
to Tenant and others, Tenant shall comply with all rules and regulations which
Landlord may reasonably establish for the proper functioning and protection of
the air conditioning, electrical, heating and plumbing systems. Tenant shall not
overload any of the mechanical, electrical, plumbing, sewer or other utility
equipment.

Section 11.4 Availability of Utility Services

            Whether utilities services are directly metered to Tenant or are on
a common meter with usage costs allocated to Tenant and others, heating,
ventilating and air conditioning and all other Building utility systems
(electric, water and sewer) shall be available to Tenant seven (7) days per
week, twenty-four (24) hours per day. With respect to any Building as to which
Tenant leases less than all of the Floor Area, Landlord may reasonably adjust
the cost allocations between Tenant and other tenants of such Building to take
account of disproportionate usage of services, due to different hours of use or
otherwise.

                                  ARTICLE XII.
                              DEFAULTS AND REMEDIES

Section 12.1 Defaults

            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 Base Rent,
additional rent, or other payment required to be made by Tenant hereunder, as
and when due, where such failure shall continue for a period of five (5)
business days after written notice thereof 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 Sec. 1161, et seq., as
amended.

            (b) The failure by Tenant to observe or perform any of the express
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in (a) above, where such failure shall continue for a
period of thirty (30) days after written notice thereof 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,
et seq., as amended; and provided further, that if the nature of Tenant's
default 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 shall commence
such cure within said thirty (30) day period and thereafter diligently prosecute
such cure to completion.

            (c) (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 "Debtor" 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 sixty (60) 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, where possession
is not restored to Tenant within sixty (60) 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 such seizure is not
discharged within sixty (60) days; or (v) Tenant's convening of a meeting of
substantially all of its creditors for the purpose of effecting a moratorium
upon or composition of its debts.

                                       48
<PAGE>

Section 12.2 Remedies

            (a) In the event of any Default by Tenant, in addition to any other
remedies available to Landlord, including that provided in California Civil Code
Section 1951.4, 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. In
such event Landlord shall be entitled to recover from Tenant all amounts which
Landlord is entitled to recover pursuant to Section 1951.2 of the California
Civil Code (or any successor thereto), including, but not limited to:

                (i) 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; and

                (ii) Any other amount reasonably necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to perform
its obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom, specifically including, but not limited to, the
cost of recovering possession of the Premises, expenses of reletting, including
reasonable brokerage commissions and any necessary repair, renovation and
alteration of the Premises, reasonable attorneys' fees, and any other reasonable
costs.

            The "worth at the time of award" of all rent other than that
referred to in clause (i) above shall be computed by allowing interest at the
rate per annum determined pursuant to Section 13.5 from the date such amounts
accrue to Landlord. The worth at the time of award of the amount referred to in
clause (i) above shall be computed by discounting such amount at one (1)
percentage point above the discount rate of the Federal Reserve Bank of San
Francisco at the time of award.

            (b) In any action for unlawful detainer commenced by Landlord
against Tenant by reason of any default hereunder, the reasonable rental value
of the Premises for the period of the unlawful detainer shall be deemed to be
the amount of rent and additional rent reserved in this Lease for such period,
unless Landlord or Tenant shall prove to the contrary by competent evidence.

            (c) The rights and remedies reserved to Landlord herein, including
those not specifically described, shall be cumulative, and except as provided by
California statutory law in effect at the time, Landlord may pursue any or all
of such rights and remedies, at the same time or otherwise.

            (d) No delay or omission of Landlord to exercise any right or remedy
shall be construed as a waiver of any such right or remedy or of any Default by
Tenant hereunder. The acceptance by Landlord of any rent hereunder shall not be
a waiver of any preceding breach or Default by Tenant of any provision hereof,
other than the failure of Tenant to pay the particular rent accepted, regardless
of Landlord's knowledge of such preceding breach or Default at the time of
acceptance of such rent, or a waiver of Landlord's right to exercise any remedy
available to Landlord by virtue of such 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 12.1(c). The term "rent" as used in Sections 12.1 and 12.2 shall
include the Base Rent and all other sums required to be paid by Tenant pursuant
to this Lease.

Section 12.3 Determination of Rent

            For the purposes of this Article XII, the rent due for any calendar
month after re-entry by Landlord shall be determined in the manner provided in
Section 12.2(b).

Section 12.4 Default by Landlord

            Landlord shall not be deemed to be in default in the performance of
any obligation required to be performed by it hereunder unless and until it has
failed to perform such obligation within thirty (30) days after written notice
by Tenant to Landlord specifying wherein

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<PAGE>

Landlord has failed to perform such obligation. 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 shall commence such performance within such thirty (30) day period and
thereafter diligently prosecute the same to completion. Tenant's remedies for
Landlord's default shall be limited to suit or action and shall not extend to
withholding or offsetting rent.

Section 12.5 Expense of Litigation

            If either party incurs any expense, including reasonable attorneys'
fees, in connection with any action or proceeding instituted by either party by
reason of any default or alleged default of the other party hereunder or for a
declaration of the rights and obligations of the parties hereunder, the party
prevailing in such action or proceeding shall be entitled to recover its said
reasonable expenses from the other party. For the purposes of determining what
expenses and fees are reasonable, the court or arbitrator shall look to the
nature of the proceeding and the issues and scope of the proceeding, and shall
not be bound by any court schedule or guideline which purports to establish the
amount of expenses or fees to be awarded based upon the nature of the
proceeding, the size of the award or similar standards.

Section 12.6 Holding Over

            This Lease shall terminate without further notice upon expiration of
the term. If Tenant or anyone claiming under Tenant shall remain in possession
of the Premises or any part thereof after expiration of the term hereof or
earlier termination hereof without an agreement in writing between Landlord and
Tenant with respect thereto, Tenant shall (a) occupy upon all of the terms and
conditions of this Lease except that the monthly Base Rent due from Tenant for
the first ninety (90) days of such holdover shall be equal to the monthly Base
Rent in effect at the end of the term of this Lease, for the next ninety (90)
days shall be equal to one hundred fifty percent (150%) of the monthly Base Rent
in effect at the end of the term of this Lease and thereafter shall be equal to
two hundred percent (200%) of the monthly Base Rent in effect at the end of the
term of this Lease, (b) pay all damages sustained by Landlord by reason of such
retention and (c) indemnify, defend, and hold Landlord harmless from and against
any loss or liability resulting from holding over for more than thirty (30) days
after the expiration or earlier termination of this Lease. Landlord's acceptance
of rent shall create only a month-to-month tenancy, upon the terms set forth in
this Section. Any such month-to-month tenancy shall be terminable at the end of
any calendar month by either party by written notice to the other party given
not less than ten (10) days prior to the end of such month. Nothing contained in
this Section shall be deemed or construed to waive Landlord's right of re-entry
or any other right of Landlord hereunder or at law. All additional rent provided
for herein shall also be payable with respect to the period of such
month-to-month tenancy.

Section 12.7 Landlord's Rights

            All covenants and agreements to be performed by Tenant under this
Lease shall be performed by Tenant at Tenant's sole cost and expense and without
any abatement of rent. If Tenant fails to pay any sum of money, other than rent,
required to be paid by it or fails to perform any other act on its part to be
performed, and such failure continues beyond any applicable grace period set
forth in the Article providing for such obligation (or if no grace period is set
forth in such Article, then the applicable grace period pursuant to this
Article), then in addition to any other remedies provided herein Landlord may,
but shall not be obligated so to do, without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or perform any such other act
on Tenant's part. Landlord's election to make any such payment or perform any
such 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, within ten (10) days after written demand therefor
by Landlord, reimburse Landlord for all sums so paid by Landlord and all
necessary incidental costs, together with interest thereon at the rate
determined under Section 13.5, accruing from the date of such payment by
Landlord and the late performance charge provided therein; and Landlord shall
have the same rights and remedies in the event of failure by Tenant to pay such
amounts as Landlord would have in the event of a default by Tenant in payment of
rent.

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<PAGE>

Section 12.8 Payments and Notices

            If at any time a dispute shall arise as to any amount or sum of
money to be paid by one party to the other under the provisions of this Lease,
the party against whom the obligation to pay the money is asserted shall have
the right to make payment "under protest" and such payment shall not be regarded
as a voluntary payment, and there shall survive the right on the part of such
paying party to institute suit for recovery of such sum. If it shall be
adjudicated that there was no legal obligation on the part of the paying party
to pay such sum or any part thereof, such party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease plus interest from the date of payment under protest to
date of repayment at the rate determined pursuant to Section 13.5.

Section 12.9 Third Party Litigation

            Should either party ("First Party") without fault on the part of
First Party, be made a party to any litigation instituted by the other party
("Second Party") or by any third party against Second party or by or against any
person holding under or using the Premises under license from Second Party, or
for the foreclosure of any lien for labor or material furnished to or for Second
Party or any such other person or arising out of any act or transaction of
Second Party or of any such other person, Second Party shall save and hold First
Party harmless from any judgment rendered against First Party or the Premises,
and all costs and expenses, including reasonable attorney's fees, incurred by
First Party in or in connection with such litigation.

Section 12.10 Submission to Arbitration

            (a) Any controversy, dispute or claim principally and primarily
concerning any subject matter set forth in subsection (c) below shall be
determined by final and binding arbitration without appeal or review, pursuant
to the laws of the State of California including the limitations period
applicable, before a single arbitrator (the "Arbitrator") at a location
determined by the Arbitrator in Orange County, California and administered by
Judicial Arbitration & Mediation Services, Inc. ("JAMS"). If JAMS shall not then
exist, or refuses to accept submission of such dispute, such arbitration shall
be conducted before such other organization as to which the parties to the
dispute may agree. If the parties to the dispute are unable to so agree within
fifteen (15) days after the dispute arises, the organization shall be selected
by the presiding judge of the Orange County Superior Court or his or her
designee upon application by any party to the dispute. Judgment upon any award
rendered by the Arbitrator may be entered by any state or federal court having
jurisdiction thereof. Any Arbitrator appointed or selected pursuant to this
Section shall be a retired judge of the Superior Court or Court of Appeal of the
State of California or a retired Federal District Court judge. The parties
hereby waive any and all rights contrary to the provisions of this Section, as
to the matters described in subsection (c), and shall at all times conduct
themselves in strict, full, complete and timely accord with the terms of this
Section. All attempts to circumvent such terms shall be null and void.

            (b) Without limiting the provisions of subsection (c) below, the
provisions of this Section shall not apply to:

                (i) Any unlawful detainer action instituted by Landlord as the
result of a default or alleged default by Tenant pursuant to this Lease.

                (ii) Any specific controversy, dispute, question or issue as to
which this Lease specifically provides another method of determining such
controversy, dispute, question or issue and provides that a determination
pursuant to such method is final and binding, unless both Landlord and Tenant
agree in writing to waive such procedure and proceed instead pursuant to this
Section.

                (iii) Any request or application for an order or decree granting
any provisional or ancillary remedy (such as a temporary restraining order or
injunction) with respect to any right or obligation of either party to this
Lease, and any preliminary determination of the underlying controversy, dispute,
question or issue as is required to determine whether or not to grant the relief
requested or applied for. A final and binding determination of such underlying
controversy, dispute, question or issue, to the extent described in subsection
(c), shall be made by

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<PAGE>

an arbitration conducted pursuant to this Section after an appropriate transfer
or reference to JAMS upon motion or application of either party hereto. Any
ancillary or provisional relief which is granted pursuant to this clause (iii)
shall continue in effect pending an arbitration determination and entry of
judgment thereon pursuant to this Section.

                (iv) Exercise of any remedies to enforce any judgment entered
based upon a determination made by arbitration pursuant to this Section.

            (c) The provisions of this Section shall apply only to the
determination of the following issues:

                (i) Whether Tenant has timely and properly exercised the
Expansion Option under Section 1.4;

                (ii) Whether Tenant is entitled to exercise and has timely
exercised a first Lease Right under Section 1.5, including a First Lease Right
following a Second Lease Notice;

                (iii) The Lease Commencement Date and/or Rent Commencement Date
for the Initial Premises and/or the Expansion Premises pursuant to Sections 1.4
and 2.2;

                (iv) Whether Tenant has timely and properly exercised an
Extension Option pursuant to Section 2.3;

                (v) The determination of Base Rent for the Initial Premises
and/or the Expansion Premises pursuant to Sections 3.1 and 3.2;

                (vi) Any increase in Base Rent for the Initial Premises and/or
the Expansion Premises pursuant to Section 3.3;

                (vii) The determination of Expansion Land Rent pursuant to
Section 3.4;

                (viii) Any determination by Landlord pursuant to Section 4.3;

                (ix) Any determination of the Upset Amount pursuant to Section
8.2;

                (x) Whether Landlord has timely and properly exercised an option
to terminate pursuant to Section 8.2;

                (xi) The Development Costs for the Initial Premises and/or
Expansion Premises pursuant to Section 1.4 and Article XIV;

                (xii) The Project Purchase Price pursuant to Section 15.1;

                (xiii) Whether Tenant has timely and properly exercised any
right to purchase the Project or Sale Portion pursuant to Section 15.2;

                (xiv) The amount of any credit to which Tenant is entitled
pursuant to Section 1.3(d);

                (xv) Any dispute pursuant to the second paragraph of Section
1.4(a).

            (d) Any arbitration pursuant to this Section shall be initiated by
the parties, or either of them, within ten (10) days after either party sends
written notice (the "Arbitration Notice") of a demand to arbitrate to the other
party and to JAMS. The Arbitration Notice shall contain a description of the
subject matter of the arbitration, the dispute with respect thereto, the amount
involved, if any, and the remedy or determination sought. Any arbitration
pursuant to this Section shall be conducted in accordance with the Comprehensive
Arbitration Rules and Procedures of JAMS copyright 1995 Version 1.1 currently in
effect (the "Rules"), regardless of the amount in dispute, except that, whether
or not such Rules so provide:

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<PAGE>

                (i) The Arbitrator shall schedule a pre-hearing conference to
resolve procedural matters, arrange for the exchange of information, obtain
stipulations and attempt to narrow the issues to be arbitrated. The arbitrator
shall have the discretion to order a pre-hearing exchange of information by the
parties, including, without limitation, production of requested documents,
exchanges of summaries of testimony of proposed witnesses and examination by
deposition of parties and third-party witnesses.

                (ii) There shall be no mediation or settlement conferences
unless all parties agree thereto in writing.

                (iii) Discovery shall be limited to that permitted by the Rules,
and the Arbitrator shall have discretion to determine the scope thereof.

                (iv) All motions shall be in letter form and hearings thereon
shall be by conference telephone calls unless the Arbitrator orders otherwise.

                (v) Hearings of motions shall require only twenty (20) days
prior written notice.

                (vi) All notices in connection with any arbitration may be
served in any manner permitted by Section 13.10 of this Lease.

                (vii) Fees and costs paid or payable to JAMS shall be included
in "reasonable expenses" for purposes of Section 12.5. The arbitrator shall
specifically have the power to award to the "prevailing party" such party's
reasonable expenses incurred in such proceeding, except as otherwise provided in
subsection (e) below. Reasonable expenses shall include any reasonable
attorneys' fees. The prevailing party shall be the party whose proposal for the
resolution of the dispute is the closer to that adopted by the Arbitrator.

                (viii) The selection of the Arbitrator (who must be a retired
judge) shall be in accordance with the then existing Rules. In the event that
the parties are unable to agree upon an arbitrator within the period of time
allowed for them to select an arbitrator, JAMS will provide a list of three
available retired judges and each party may strike one. The remaining judge (or
if there are two, the one selected by the administrator of the Orange County
office of JAMS) will serve as the arbitrator.

                (ix) In rendering a decision, the Arbitrator shall determine the
rights and obligations of the parties according to the terms of this Lease and
the substantive and procedural laws of the State of California. The Arbitrator's
decision shall be based on the evidence introduced at the hearing, including any
logical and reasonable inferences therefrom. The decision must be based upon,
and accompanied by, a written statement of decision explaining the factual and
legal basis for the decision as to each of the principal controverted issues.

                (x) The Arbitrator may make any determination, and/or grant any
relief that is just and equitable, other than an award of exemplary or punitive
damages. The Arbitrator's decision shall be conclusive and binding, and it may
thereafter be confirmed as a judgment by the Superior Court of the State of
California, subject only to challenge on the grounds set forth in California
Code of Civil Procedure Section 1286.2, subsections (a), (b), (c), (e) and (f).
The validity and enforceability of the Arbitrator's decision is to be determined
exclusively by the Courts of the State of California pursuant to the provisions
of this Lease.

            (e) As soon as practicable after selection of the Arbitrator, JAMS,
working with the Arbitrator, shall determine a reasonable estimate of
anticipated fees and costs of the arbitration and shall deliver a statement to
each party setting forth that party's pro rata share of such fees and costs.
Each party shall deposit its pro rata share of such fees and costs with JAMS
within ten (10) days after receipt of such statement. If any party fails to make
a required deposit hereunder, the other party may make such deposit on behalf of
the defaulting party and the amount of such deposit, plus interest thereon at
the rate determined pursuant to Section 13.5 from date of deposit to date of
repayment, shall be awarded against the defaulting party by the

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<PAGE>

Arbitrator in making any final arbitration award without regard to whether the
defaulting party is the prevailing party in the arbitration pursuant to this
Section.

                                  ARTICLE XIII.
                                  MISCELLANEOUS

Section 13.1 Offset Statement

            (a) Within twenty (20) days following a request in writing by either
party (the "requesting party"), but no more frequently than twice in any twelve
(12) month period, the other party shall execute and deliver to the requesting
party a statement in writing (i) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such modification
and certifying that this Lease, as so modified, is in full force and effect) and
the date to which the monthly Base Rent and other charges are paid in advance,
if any, (ii) acknowledging that there are not, to such party's knowledge, any
uncured Defaults on the part of the requesting party hereunder, or specifying
such Defaults if any are claimed and (iii) acknowledging (if true) the accuracy
of such other facts as are reasonably included in such statement and relate to
this Lease. Any such statement may be relied upon by any prospective purchaser,
transferee or encumbrancer of the Premises, this Lease or an interest herein.

            (b) Failure of a party to deliver such statement within such time
shall be conclusive upon such party (i) that this Lease is in full force and
effect, without modification, except as may be represented by the requesting
party, (ii) that there are no uncured Defaults in the requesting party's
performance, (iii) that no more than one month's Base Rent has been paid in
advance and (iv) that any other statements of fact included by the requesting
party in the statement and relating to this Lease are correct.

            (c) Notwithstanding anything to the contrary in Article XII, any
failure of a party to execute and deliver an estoppel certificate within the
time period herein specified shall be a Default hereunder if not cured within
ten (10) days after the requesting party's written notice to the other party
thereof.

Section 13.2 Landlord's Right of Access

            (a) Landlord and its agents shall have free access to the Premises
and all Improvements thereon (other than Tenant's vaults, safes and other
special or high security or hygiene areas) during all reasonable business hours,
and at any time during an emergency, for the purpose of examining the same to
ascertain if they are in good repair, making reasonable repairs or installations
which Landlord may be required or permitted to make hereunder, posting notices
which Landlord may deem necessary for its protection and exhibiting the same to
prospective purchasers or tenants (during the last nine (9) months of the term);
provided, Landlord's access shall not, under the circumstances, unreasonably
interfere with Tenant's use and enjoyment of the Premises. Any entry by Landlord
pursuant to this Section shall be without rebate of rent to Tenant.

            (b) Nothing contained herein shall constitute an actual or
constructive eviction or relieve Tenant of any obligation with respect to making
any repair, replacement or improvement or complying with any law, order or
requirement of any government or other authority. Nothing contained herein shall
impose upon Landlord any obligation to Tenant except as specifically provided in
this Lease.

            (c) Except in an emergency, any entry by Landlord shall be upon 24
hours prior oral or written notice to Tenant. In an emergency, Landlord shall be
required to give only such notice, if any, as shall be reasonable under the
circumstances. For this purpose, an emergency shall be a condition or set of
facts posing imminent danger of harm to persons or property.

            (d) Without limiting the restrictions set forth in subsection (a)
above, if and to the extent that Landlord or its representatives, agents or
employees obtain any information which is, or reasonably appears to be,
confidential or proprietary to Tenant as a result of any entry into any
Building, such information shall not be copied, transferred or otherwise
disclosed or

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<PAGE>

communicated to any other party (other than Tenant, as provided below)unless
pursuant to court order. If Landlord acquires any such information or becomes
aware that any of its representatives, employees or agents have obtained such
information, Landlord shall promptly notify Tenant thereof and reasonably
describe the circumstances of such discovery and the nature of the information
discovered.

Section 13.3 Transfer of Landlord's Interest

            In the event of any transfer or transfers of Landlord's interest in
the Premises other than a transfer for security purposes only, the transferor
shall be automatically relieved of any and all obligations and liabilities on
the part of Landlord accruing from and after the date of such transfer, provided
the transferee in writing agrees to assume such obligations accruing from and
after the effective date of the transfer. No holder of a mortgage 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 any security
deposited, or in connection with any other funds paid by Tenant hereunder,
unless such mortgagee, holder of a deed of trust or landlord shall actually
receive such funds. The covenants contained in this Lease on the part of
Landlord shall, subject to the foregoing, be binding on Landlord, its successors
and assigns, only in respect of their respective periods of ownership of the
landlord's interest in this Lease.

Section 13.4 Separability

            Any provision of this Lease which shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provision hereof,
and such remaining provisions shall remain in full force and effect.

Section 13.5 Interest on Past Due Obligations

            (a) Any amount due from either party to the other hereunder which is
not paid within ten (10) days after the date due shall bear interest at the
maximum rate of interest then permitted to be charged pursuant to the applicable
usury law, accruing from the date due until the same is fully paid, but not to
exceed ten percent (10%) per annum simple interest (the "Default Rate"). Payment
of such interest shall not excuse or cure any default by a party pursuant to
this Lease. Such rate shall remain in effect after the occurrence of any breach
or default hereunder by a party to and until payment of the entire amount due.

            (b) TENANT ACKNOWLEDGES THAT THE LATE PAYMENT BY TENANT TO LANDLORD
OF RENT AND OTHER SUMS DUE HEREUNDER AND THE FAILURE TO DELIVER CERTAIN ITEMS
REQUIRED TO BE DELIVERED HEREUNDER WILL CAUSE LANDLORD TO INCUR COSTS NOT
CONTEMPLATED BY THIS LEASE, THE EXACT AMOUNT OF WHICH WILL BE EXTREMELY
DIFFICULT TO ASCERTAIN. SUCH 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 ENCUMBRANCE COVERING THE PREMISES.
ACCORDINGLY, IF, ON MORE THAN TWO OCCASIONS IN ANY CALENDAR YEAR, ANY SUM DUE
FROM TENANT OR ANY ITEM DUE FROM TENANT HEREUNDER SHALL NOT BE RECEIVED BY
LANDLORD OR LANDLORD'S DESIGNEE WITHIN TEN (10) DAYS AFTER THE DATE DUE, TENANT
SHALL PAY TO LANDLORD, IN ADDITION TO ANY INTEREST ON DELINQUENT AMOUNTS
PROVIDED ABOVE, A LATE CHARGE EQUAL TO THE GREATER OF TWO PERCENT (2%) OF THE
DELINQUENT AMOUNT (IF APPLICABLE) OR $100.00, AS LIQUIDATED DAMAGES PER
OCCURRENCE. THE PARTIES AGREE THAT SUCH LATE CHARGE REPRESENTS A FAIR AND
REASONABLE ESTIMATE OF THE COST LANDLORD WILL INCUR BY REASON OF LATE PAYMENT OR
LATE DELIVERY BY TENANT. ACCEPTANCE OF SUCH LATE CHARGE SHALL NOT CONSTITUTE A
WAIVER OF TENANT'S DEFAULT WITH RESPECT TO SUCH OVERDUE AMOUNT OR OTHER ITEM,
NOR PREVENT LANDLORD FROM EXERCISING ANY OTHER RIGHTS AND REMEDIES GRANTED
HEREUNDER OR BY LAW TO LANDLORD.

               ---------------------------         --------------------------
               Landlord's Initials                 Tenant's Initials

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<PAGE>

Section 13.6 Time of Essence

            Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor.

Section 13.7 Hazardous Substances

            (a) Without limiting the generality of Sections 5.1 and 5.2 of this
Lease, Tenant covenants and agrees that Tenant, its employees, agents,
contractors and other third parties entering upon the Premises at the request or
invitation of Tenant shall not bring into, maintain upon, generate, use, store,
dispose of or release or discharge in or about the Premises any hazardous or
toxic substances or hazardous waste (collectively, "hazardous materials"). The
foregoing covenant shall not extend to substances typically found or used in
general office and administrative applications so long as (i) such substances
and any equipment which generates such substances are maintained only in such
quantities as are reasonably necessary for Tenant's operations in the Premises,
(ii) such substances are used and stored strictly in accordance with the
manufacturers' instructions therefor and the highest standards prevailing in the
industry for such substances, (iii) such substances are not disposed of in or
about the Premises in a manner which would constitute a release or discharge
thereof and (iv) all such substances and any equipment which generates such
substances are removed from the Premises by Tenant upon the expiration or
earlier termination of this Lease. Any use, storage, generation, disposal,
release or discharge by Tenant of hazardous materials in or about the Premises
as is permitted pursuant to this paragraph shall be carried out in compliance
with all Applicable Laws. Tenant shall, annually within thirty (30) days after
Tenant's receipt of Landlord's written request therefor, provide to Landlord a
written list identifying any hazardous materials then maintained by Tenant in
the Premises, the use of each such hazardous material and the approximate
quantity of each such hazardous material so maintained by Tenant, together with
written certification by Tenant stating, in substance, that neither Tenant nor
any person for whom Tenant is responsible has released or discharged any
hazardous materials in or about the Premises.

            In the event that Tenant proposes to conduct any use or to operate
any equipment which will or may utilize or generate a hazardous material other
than as specified in the first paragraph of this subsection, Tenant shall first
in writing submit such use or equipment to Landlord for approval. No approval by
Landlord shall relieve Tenant of any obligation of Tenant pursuant to this
subsection, including the removal, clean-up and indemnification obligations
imposed upon Tenant by this subsection. Tenant shall, within fifteen (15)
business days after receipt thereof, furnish to Landlord copies of all notices
or other communications received by Tenant with respect to any actual or alleged
release or discharge of any hazardous material in or about the Premises and
shall, whether or not Tenant receives any such notice or communication, notify
Landlord in writing of any discharge or release of hazardous material by Tenant
or anyone for whom Tenant is responsible in or about the Premises. In the event
that Tenant is required to maintain any hazardous materials license or permit in
connection with any use conducted by Tenant or any equipment operated by Tenant
in the Premises, copies of each such license or permit, each renewal or
revocation thereof and any communication relating to suspension, renewal or
revocation thereof, shall be furnished to Landlord within fifteen (15) business
days after receipt thereof by Tenant. Compliance by Tenant with the two
immediately preceding sentences shall not relieve Tenant of any other obligation
of Tenant pursuant to this subsection.

            Upon any violation of the foregoing covenants, Tenant shall be
obligated, at Tenant's sole cost, to clean-up and remove from the Premises all
hazardous materials introduced into the Premises by Tenant or any third party
for whom Tenant is responsible. Such clean-up and removal shall include all
testing and investigation required by any governmental authorities having
jurisdiction and preparation and implementation of any remedial action plan
required by any governmental authorities having jurisdiction. All such clean-up
and removal activities of Tenant shall, in each instance, be conducted to the
reasonable satisfaction of Landlord and to the satisfaction of all governmental
authorities having jurisdiction. Landlord's right of entry pursuant to Section
13.2 shall include the right to enter, inspect and test the Premises for
violations of Tenant's covenants in this subsection, provided that such right is
reasonably exercised and the exercise of such right does not unreasonably
interfere with Tenant's use and

                                       56
<PAGE>

occupancy of the Premises. If any governmental authority or lender to Landlord
shall require testing for hazardous materials in the Premises, and it is
determined as the result of such testing that Tenant has disposed of, released
or discharged any hazardous materials in or about the Premises, then Tenant
shall reimburse Landlord for all reasonable costs of such testing as additional
rent hereunder in addition to Tenant's remediation obligations hereunder.

            Tenant shall indemnify, defend and hold harmless Landlord, its
partners, officers, employees, agents and lenders from and against any and all
claims, liabilities, losses, actions, costs and expenses (including reasonable
attorneys' fees and costs of defense) incurred by such indemnified persons, or
any of them, as the result of (A) the introduction into or about the Premises by
Tenant, its employees, subtenants, licensees, contractors, agents or invitees
(each, a "Tenant Party" and, collectively, the "Tenant Parties") of any
hazardous materials, (B) the usage, storage, maintenance, generation, production
or disposal by Tenant or any Tenant Party of hazardous materials in or about the
Premises, (C) the discharge or release in or about the Premises by Tenant or any
Tenant Party of any hazardous materials, (D) any injury to or death of persons
or damage to or destruction of property resulting from the use, introduction,
maintenance, storage, generation, disposal, disposition, release or discharge by
Tenant or any Tenant Party of hazardous materials in or about the Premises, and
(E) any failure of Tenant or any Tenant Party to observe the foregoing covenants
of this subsection. Payment shall not be a condition precedent to enforcement of
the foregoing indemnification provision.

            Within 180 days prior to the expiration of this Lease (or within
thirty (30) days after any earlier termination), Landlord may at its election
retain a hazardous materials consultant (to be reasonably approved by Tenant) to
conduct a survey or audit of the Premises to determine whether or not hazardous
materials introduced by Tenant or any Tenant Party are present in or about the
Premises. Tenant shall cooperate fully with Landlord and such consultant in the
conduct of any such survey or audit. If such survey or audit reveals the
presence of hazardous materials brought into or upon the Premises by Tenant in
violation of the provisions of this subsection, Tenant shall pay for the cost of
such audit. Such payment shall be made by Tenant to Landlord, as additional
rent, within twenty (20) days after Tenant's receipt of Landlord's invoice
therefor. Otherwise, the cost of such survey or audit shall be borne by
Landlord. If the audit or survey discloses the presence of hazardous materials
introduced by Tenant or any Tenant Party, the third, fourth and sixth paragraphs
of this subsection shall apply to such hazardous materials and Tenant's
obligations with respect thereto.

            Upon any violation of the foregoing covenants, Landlord shall be
entitled to exercise all remedies available to a landlord against a defaulting
tenant, including but not limited to these set forth in Article XII. Without
limiting the generality of the foregoing, Tenant expressly agrees that upon any
such violation Landlord may, at its option, (A) after notice and failure to cure
pursuant to Section 12.1, terminate this Lease or (B) continue this Lease in
effect until compliance by Tenant with its clean-up and removal covenant
notwithstanding any earlier expiration date of the term of this Lease. No action
by Landlord hereunder shall impair the obligations of Tenant pursuant to this
subsection.

            As used in this Section, "hazardous materials" shall mean asbestos,
all petroleum substances, and all hazardous materials, hazardous wastes and
hazardous or toxic substances as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C., Sec.
9601 et seq.) ("CERCLA"), the Resource Conservation and Recovery Act, as amended
(42 U.S.C., Sec. 6901 et seq.), the Toxic Substances Control Act, as amended (15
U.S.C. Sec. 2601 et seq.) and California Health and Safety Code Section 25316,
including such hazardous or toxic substances or wastes as are identified,
defined or listed elsewhere where such identifications, definitions or lists are
incorporated into such acts or section by reference, as well as all products
containing such hazardous substances. In addition, "hazardous materials" shall
include any substance designated pursuant to the Clean Water Act (33 U.S.C.
Sections 1321 et seq.), any hazardous waste having the characteristics
identified under or listed pursuant to the Solid Waste Disposal Act (42 U.S.C.
Sections 1317(a), et seq.), any hazardous air pollutant listed under Section 112
of the Clean Air Act (42 U.S.C. Sections 7412, et seq.) and any imminently
hazardous chemical substance or mixture with respect to which the Administrator
of the Environmental Protection Agency has taken action pursuant to Section 7 of
the Toxic

                                       57
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Substances Control Act (15 U.S.C. Sections 2606, et seq.). The term also
includes, but is not limited to, polychlorinated biphenyls, urea formaldehyde
and related substances.

            Tenant acknowledges that incorporation of any material containing
asbestos in any Building is absolutely prohibited. Tenant agrees that it shall
not knowingly incorporate or permit or suffer to be incorporated any material
containing asbestos into any Building. Tenant shall not be in breach of the
foregoing covenant by virtue of any asbestos placed or caused to be placed in
any Building by Landlord, whether pursuant to the performance of Landlord's
obligations hereunder or otherwise. The covenants contained in this subsection
shall survive the expiration or any earlier termination of this Lease.

            (b) Landlord is aware of, and has advised Tenant that, the property
located to the west of the Land (the "Western Parcel") and owned by the Los
Angeles Times (the "Times") has underground hazardous materials contamination
believed to result from leakage from an underground fuel tank maintained by the
Times. To Landlord's knowledge, such hazardous materials have not migrated from
the Western Parcel onto or under the Land. Landlord has also disclosed to Tenant
the facts that (1) the Land was used in the farming operations of Landlord and
(2) in connection with such farming operations, chemical pesticides and weed
control agents may have been applied, which applications may have resulted in
residual levels of such chemicals in the soil on the Land.

            Except as described in the immediately preceding paragraph, to the
best of Landlord's actual knowledge, but with no duty to investigate, there are
no hazardous materials located in, on or under the Land or located near the Land
which could migrate onto the Land. For the purposes of this paragraph,
"Landlord's actual knowledge" shall mean to the knowledge of Landlord's agents,
Jeffrey M. Reese, J. Barney Page and Theodore W. Segerstrom. Without limiting
any other provision of this Lease or any obligation of Landlord hereunder,
Landlord shall indemnify, defend and hold harmless Tenant, its officers,
directors, employees, agents, lenders and attorneys from and against any and all
claims, liabilities, losses, actions, costs and expenses (including reasonable
attorneys' fees and costs of defense) incurred by such indemnified parties, or
any of them, as the result of (i) the introduction into or about the Premises by
Landlord, its employees, agents or contractors (each, a "Landlord Party" and,
collectively, the "Landlord Parties") of any hazardous materials, (ii) the
usage, storage, maintenance, generation, production or disposal by a Landlord
Party of hazardous materials in or about the Premises, (iii) the discharge or
release in or about the Premises of any hazardous materials introduced into or
about the Premises by a Landlord Party, (iv) any injury to or death of persons
or damage to or destruction of property resulting from the use, introduction,
maintenance, storage, generation, disposal, disposition, release or discharge of
hazardous materials introduced into or about the Premises by a Landlord Party
and (v) any breach of Landlord's representations, warranties or covenants
contained in this subsection (b). Payment shall not be a condition precedent to
enforcement of the foregoing indemnification provision.

            (c) Except as set forth in subsections (a) and (b) above and Section
14.9 below and except with respect to Landlord's Work and Tenant's Work, neither
party shall have any indemnification obligation to the other with respect to
claims resulting from the presence of hazardous materials in, on or under the
Land where the cause of the presence of such hazardous materials is the action
or omission of any third person or entity. Provided, however, that nothing in
this subsection (c) is or shall be deemed to constitute (i) an assumption be
either party of any risks or liabilities for which the other party is
responsible or (ii) a waiver by either party of such party's right of
contribution under CERCLA or any other analogous federal or state law.

            (d) The covenants contained in this Section shall survive the
expiration or any earlier termination of this Lease.

Section 13.8 Headings

            The Article and Section captions contained in this Lease are for
convenience only and shall not be considered in the construction and
interpretation of any provision hereof.

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<PAGE>

Section 13.9 Incorporation of Prior Agreements; Amendments

            This Lease and the exhibits hereto contain all of the agreements of
the parties hereto with respect to any matter covered or mentioned in this
Lease, and all preliminary negotiations, agreements or understandings pertaining
to any such matter, except those contained herein, shall not be effective for
any purpose. Tenant acknowledges that Landlord has made no representations,
promises or guarantees, either by verbal statement or by its conduct, upon which
Tenant has relied except for those that are expressly contained in this Lease or
in any exhibit attached hereto. No person, firm or corporation has at any time
had any authority from Landlord to make any representations on behalf of
Landlord and Tenant waives any right to rely upon any such representations. No
verbal agreement or implied covenant shall be held to vary the provisions
hereof, any statute, law or custom to the contrary notwithstanding. No provision
of this Lease may be amended or added to except by an agreement in writing
signed by the parties hereto or their respective successors in interest. No
employee or agent of Landlord shall have authority, by letter, memorandum or
other written communication, to amend, vary or delete any provision of this
Lease.

Section 13.10 Notices

            Any notice, consent or approval ("Notice") required or permitted to
be given hereunder shall be in writing and may be served personally or by mail;
if served by mail it shall be addressed to Landlord or Tenant, as the case may
be, at the address of such party shown below:

            To Landlord:      C.J. Segerstrom & Sons
                              3315 Fairview Road
                              Costa Mesa, California 92626
                              Attn:  Chief Financial Officer
                              FAX No.: (714) 546-9835

            With a copy to:   Latham & Watkins
                              650 Town Center Drive, Suite 2000
                              Costa Mesa, California 92626
                              Attn:  James W. Daniels, Esq.
                              FAX No.: (714) 755-8290

            To Tenant:        Emulex Corporation
                              3535 Harbor Boulevard
                              Costa Mesa, California 92626
                              Attn:  Ms. Sadie Herrera, EVP HR and Facilities
                              FAX No.: (714) 556-0252

            With a copy to:   Paul, Hastings, Janofsky & Walker LLP
                              695 Town Center Drive, 17th Floor
                              Costa Mesa, California 92626
                              Attn:  John F. Simonis, Esq.
                              FAX No.: (714) 979-1921

Any Notice which is personally served shall be effective upon service; any
Notice given by mail shall be deemed effectively given, if deposited in the
United States mail in the State of California, registered or certified with
return receipt requested, postage prepaid and addressed as specified above, on
the date of receipt, refusal or non-delivery (in the case of change of address
without notice thereof) indicated on the return receipt. In addition, either
party may send Notices by facsimile transmission ("FAX") or by any reputable
courier service which provides written proof of delivery. Any Notice sent by FAX
shall be effective upon confirmation of receipt in legible form (provided a hard
copy of such Notice is also sent by another means permitted by this Section),
and any Notice sent by courier shall be effective upon the date of delivery as
set forth in the courier's delivery receipt. Either party may, by Notice to the
other from time to time, specify a different address for Notice purposes.

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Section 13.11 Brokers

            Tenant has been represented in connection with the transactions
provided for in this Lease by Julien J. Studley, Inc. ("Broker"). Landlord shall
be solely responsible for the commission due Broker in connection with the
transactions provided for in this Lease. Such commission shall be in the amount
of $835,920 (the "Leasing Commission"), shall be payable solely at the time(s)
and in the manner set forth in that certain written commission agreement dated
July 20, 2001 between Landlord and Broker, as amended by a certain letter
agreement dated March 19, 2002 (collectively, the "Commission Agreement"). The
Leasing Commission shall be included in Development Costs with respect to the
Initial Premises. The Commission Agreement also provides for Landlord to pay to
Broker a commission with respect to the sale of the Expansion Option in the
event that Tenant exercises the Purchase Option (the "Sale Commission"). The
Sale Commission shall not be included in Development Costs.

            Except for the Broker, Tenant and Landlord each represent and
warrant to the other that they have had no dealings with any real estate brokers
or agents in connection with the negotiation of this Lease and that no broker or
agent retained by them is entitled to a fee or commission in connection with the
execution of this Lease. Each party hereby expressly agrees and covenants to
defend, indemnify and hold the other harmless from and against any and all
claims, threatened or asserted, by any broker, finder or agent claiming under or
through such indemnifying party in connection with the negotiation and execution
of this Lease. Such defense, indemnification and hold harmless obligation shall
extend to but not be limited to any and all claims by any broker or leasing
agent employed or retained by an indemnifying party in connection with leasing
matters generally. Failure of either party to fulfill its defense and
indemnification obligation under this Section shall be deemed a breach of this
Lease entitling the other to exercise all remedies available to a landlord
against a defaulting tenant or to a tenant against a defaulting landlord, as the
case may be, including, but not limited to the remedies provided in Article XII.
Landlord and Tenant acknowledge that payment shall not be a condition precedent
to recovery upon the foregoing indemnification provision.

Section 13.12 Waivers

            No waiver of any provision hereof shall be deemed a waiver of any
subsequent breach of the same provision or of any other provision hereof.
Consent to or approval of any act by one of the parties hereto shall not be
deemed to render unnecessary the obtaining of such party's consent to or
approval of any subsequent act. Failure of Landlord to take any action or send
any notice to Tenant shall not be deemed a waiver by Landlord of any failure by
Tenant to timely and properly exercise any option granted to Tenant pursuant to
this Lease or any amendment hereto. Any such option which is not exercised
within the time and in the manner specified for exercise shall automatically
lapse without requirement of any action by Landlord. No act or thing done by
Landlord or Landlord's agents during the term of this Lease shall be deemed an
acceptance of a surrender of the Premises, unless done in a writing signed by
Landlord. Tenant's delivery of keys to any employee or agent of Landlord shall
not operate as a termination of this Lease or a surrender of the Premises unless
done pursuant to a written agreement to such effect executed by Landlord.

Section 13.13 Recording

            Concurrently with their execution of this Lease, Landlord and Tenant
shall each execute and acknowledge a short form memorandum of lease (including
Tenant's extension and purchase options and rights of first offer to lease and
purchase) in the form attached hereto as Exhibit "C." Landlord shall promptly
record such short form memorandum and, upon recordation, shall furnish to Tenant
a fully executed counterpart thereof bearing the stamp of the Orange County
Recorder. Landlord and Tenant shall execute, acknowledge and deliver a mutual
cancellation of lease in the form attached hereto as Exhibit "D" upon the first
to occur of:

            (a) The expiration of the term of this Lease.

            (b) Execution by Landlord and Tenant of an agreement in writing
terminating this Lease.

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<PAGE>

            (c) Entry of an order or judgment by a court of competent
jurisdiction to the effect that the Lease is or has been terminated.

            (d) Termination of this Lease by either party pursuant to Section
1.3 or Article XVI.

            (e) Termination of this Lease pursuant to Article VIII, Article X,
Article XII or any other provision of this Lease, including a purchase of the
Land and all Improvements thereon pursuant to Sections 15.1 or 15.2.

Upon execution, acknowledgment and delivery of such mutual cancellation,
Landlord may immediately cause the same to be recorded in the office of the
Orange County Recorder.

Section 13.14 Liens

            Each party, to the extent it is responsible, shall do all things
reasonably necessary to prevent the filing of any mechanics' or other liens
against the Premises or any part thereof by reason of work, labor, services or
materials supplied or claimed to have been supplied to such party, or anyone
holding the Premises, or any part thereof, through or under such party. If any
such lien or any Unpermitted Exception shall at any time be filed against the
Premises, the responsible party shall either cause the same to be discharged of
record within twenty (20) days after the date of filing of the same or, if such
party determines in good faith that such lien should be contested, shall furnish
such security as may be necessary or required to (a) prevent any foreclosure
proceedings against the Premises or any portion thereof or interest therein
during the pendency of such contest, and (b) cause Chicago Title Company or
other mutually satisfactory title insurance company to remove such lien as a
matter affecting title to the Premises on a preliminary title report or title
policy with respect to the Premises. If the responsible party shall fail to
discharge such lien within such period and fail to furnish such security within
such period, then, in addition to any other right or remedy of the other party
resulting from the default of the responsible party, such other party may, but
shall not be obligated to, discharge the same either by paying the amount
claimed to be due or by procuring the discharge of such lien by giving security
or in such other manner as is, or may be, prescribed by law. The responsible
party shall repay to the other party, on demand, all sums disbursed or deposited
by the other party pursuant to the foregoing provisions of this Section 13.14,
including the other party's costs, expenses and reasonable attorneys' fees
incurred in connection therewith, with interest thereon from the date of such
disbursement or deposit to the date of repayment at the Default Rate. Nothing
contained herein shall imply any consent or agreement on the part of Landlord to
subject Landlord's estate to liability under any mechanics' or other lien law.
Tenant shall give Landlord adequate opportunity and Landlord shall have the
right to post such notices of non-responsibility as are provided for in the
mechanics' lien laws of California.

Section 13.15 Subordination

            This Lease shall, at Landlord's option, be subordinate to any
mortgage or deed of trust that may exist or hereafter be placed upon the
Premises or any part thereof and to any and all advances to be made thereunder
and to the interest thereon and to all renewals, replacements and extensions
thereof and to any ground lease hereafter executed with respect to the Premises.
If, however, a prospective lender or ground lessor requires that this Lease be
subordinated to any such ground lease or encumbrance, this Lease shall be
subordinate to such encumbrance only if Landlord first obtains from such
prospective ground lessor or lender and delivers to Tenant a commercially
reasonable non-disturbance agreement in favor of Tenant, and such delivery shall
be in consideration of and a condition to Tenant's obligation to subordinate
this Lease to such encumbrance or ground lease. Any such agreement shall be in
recordable form and shall be in form and substance reasonably satisfactory to
Landlord, Tenant and such lender or ground lessor. Tenant and Landlord
acknowledge that the form of Subordination, Nondisturbance and Attornment
Agreement attached hereto as Exhibit "J" (the "SNDA") is a commercially
reasonable subordination, nondisturbance and attornment agreement. Such
commercially reasonable nondisturbance agreement(s), except as set forth in the
SNDA to the contrary, shall include the obligation of any successor ground
lessor, mortgage holder or lien holder to recognize Tenant's rights specifically
set forth in this Lease to offset certain amounts against rent

                                       61
<PAGE>

due hereunder and Landlord's obligations to comply with the terms of this Lease,
or to otherwise receive certain credits against rent as set forth herein.
Subject to Tenant's receipt of the nondisturbance and other agreements described
above and in the SNDA, Tenant shall upon written demand by Landlord (a) execute
such instruments as may be required at any time and from time to time to
subordinate the rights and interest of Tenant under this Lease to the lien of
any such ground lease, mortgage or deed of trust, or if requested by Landlord,
to subordinate any such ground lease, mortgage or deed of trust to this Lease
and (b) supply such financial information concerning Tenant as may be reasonably
requested by any ground lessor or lender. For the purposes of the foregoing
clause (b), if Tenant's securities are publicly traded and Tenant files
financial information under the Securities Exchange Act of 1934, Tenant will
have no delivery requirement pursuant to clause (b). If the immediately
preceding sentence does not apply, Tenant's delivery requirement shall be
subject to Tenant's receipt of a confidentiality agreement reasonably
satisfactory to Tenant. Subject to Tenant's receipt of the agreements described
above, Tenant covenants and agrees that, in the event any proceedings are
brought for the foreclosure of any such mortgage or deed of trust, upon a deed
in lieu thereof or if any ground lease is terminated, to attorn, without any
deductions or setoffs whatsoever, to the purchaser, lienholder, ground lessor or
any successors thereto upon any such foreclosure sale, deed in lieu thereof or
ground lease termination, if requested to do so by such purchaser, lienholder or
ground lessor, and to recognize such purchaser, lienholder or ground lessor as
the landlord under this lease, provided such lienholder, purchaser or ground
lessor shall agree to accept this Lease and not disturb Tenant's tenancy so long
as Tenant timely pays the rent and observes and performs the terms, covenants
and conditions of this Lease to be observed or performed by Tenant. Landlord's
interest herein may be assigned at any time as security to any lienholder.
Subject to Tenant's receipt of the agreement(s) described in this Section,
Tenant waives the provisions of any current or future statute, rule or law which
may give or purport to give Tenant any right or election to terminate or
otherwise adversely affect this Lease and the obligations of the Tenant
hereunder in the event of any foreclosure sale, foreclosure proceeding, deed in
lieu or ground lease termination. Tenant shall, within fifteen (15) business
days after request by Landlord from time to time (i) execute, acknowledge and
deliver the SNDA in favor of any ground lessor or mortgagee of the Premises or
any portion thereof or interest therein and (ii) execute, acknowledge and
deliver any commercially reasonable other form of nondisturbance and attornment
agreement (or subordination, nondisturbance and attornment agreement, or
subordination of the applicable mortgagee's lien or ground lessor's ground
lease) reasonably required by any mortgagee or ground lessor of the Premises
which provides substantially comparable protection to Tenant in the event of a
foreclosure, deed in lieu or ground lease termination.

Section 13.16 Force Majeure

            In the event that either Landlord or Tenant is delayed in performing
any obligation of Landlord or Tenant pursuant to this Lease by any cause beyond
the reasonable control of the party required to perform such obligation, the
time period for performing such obligation shall be extended by a period of time
equal to the period of the delay. For the purpose of this Section:

            (a) A cause shall be beyond the reasonable control of a party to
this Lease when such cause would affect any person similarly situated (such as a
power outage, labor strike or truckers' strike) but shall not be beyond the
reasonable control of such party when peculiar to such party (such as financial
inability or failure to order long lead time materials sufficiently in advance).

            (b) This Section shall not apply to any obligation to pay money or
delay the Rent Commencement Date.

            (c) In the event of any occurrence which a party believes
constitutes a cause beyond the reasonable control of such party and which will
delay any performance by such party hereunder, such party shall promptly in
writing notify the other party of the occurrence and nature of such cause, the
anticipated period of delay and the steps being taken by such party to mitigate
the effects of such delay.

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<PAGE>

Section 13.17 Yield Up Premises; Quitclaim

            (a) At the expiration or earlier termination of this Lease, Tenant
shall peaceably yield up the Premises and all Improvements thereto to Landlord
(subject to Sections 5.4, 5.5, 6.4 and 6.5 above), broom clean and in good
condition, reasonable wear and tear excepted. Without limiting the generality of
the foregoing, upon delivery of the Premises to Landlord, the roofs of the
Buildings shall be watertight, all mechanical, electrical, plumbing and
irrigation systems on the Premises shall be in good operating condition, all
landscaping shall be in good condition and the parking lots shall be striped,
free of potholes and with good surface conditions.

            (b) At the expiration or earlier termination of this Lease, Tenant
shall execute, acknowledge and deliver to Landlord, within fifteen (15) days
after written demand from Landlord to Tenant, any quitclaim deed or other
document, which in addition to the mutual cancellation of lease described in
Section 13.13 above, may be reasonably requested by any reputable title company
to remove this Lease as a matter affecting title to the Premises.

            (c) Whenever Landlord shall re-enter the Premises as provided in
Article XII, or as otherwise provided in this Lease, any property of Tenant not
removed by Tenant upon the expiration of the term (or within fifteen (15) days
after a termination by reason of Tenant's Default) shall be considered abandoned
and Landlord may remove any or all of such items and dispose of the same as
provided in California Civil Code Sec. 1980 et seq. or as otherwise provided by
law. Tenant waives all claims for damages caused by Landlord's re-entering and
taking possession of the Premises or removing and storing the property of Tenant
as provided herein, and no such entry shall be considered a forcible entry.

Section 13.18 Authority

            Each individual executing this Lease on behalf of Landlord and
Tenant represents and warrants that the execution and delivery of this Lease on
behalf of the party for whom such person is executing is duly authorized and
that this Lease is binding upon such party in accordance with its terms. Tenant
shall, within ten (10) days after Tenant's execution and delivery of this Lease,
deliver to Landlord a certified copy of a resolution of the Board of Directors
of Tenant or any Executive Committee thereof authorizing or ratifying the
execution of this Lease. Failure of Tenant to provide such resolution shall not,
however, relieve Tenant of its obligations pursuant to this Lease.

Section 13.19 Survival of Indemnities

            The obligations of the indemnifying party under each and every
indemnification and hold harmless provision contained in this Lease shall
survive the expiration or earlier termination of this Lease to and until the
last to occur of (a) the last date permitted by law for the bringing of any
claim or action with respect to which indemnification may be claimed by the
indemnified party against the indemnifying party under such provision or (b) the
date on which any claim or action for which indemnification may be claimed under
such provision is fully and finally resolved and, if applicable, any compromise
thereof or judgment or award thereon is paid in full by the indemnifying party
and the indemnified party is reimbursed by the indemnifying party for any
amounts paid by the indemnified party in compromise thereof or upon a judgment
or award thereon and in defense of such action or claim, including reasonable
attorneys' fees incurred. Payment shall not be a condition precedent to recovery
upon any indemnification provision contained herein.

Section 13.20 Surrender or Cancellation

            The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not work a merger, and shall terminate all or
any existing subleases, unless Landlord elects to treat such surrender or
cancellation as an assignment to Landlord of any or all of such subleases.

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<PAGE>

Section 13.21 Non-Disclosure of Lease Terms

            Landlord and Tenant each acknowledge and agree that the terms of
this Lease are confidential and constitute proprietary information of Landlord
and Tenant. Disclosure of the terms hereof could adversely affect the ability of
Landlord to negotiate other leases. Each of Landlord and Tenant agree that they,
and their respective partners, officers, directors, employees and attorneys
shall not disclose the terms and conditions of this Lease to any other person
without the prior written consent of the other party except pursuant to an order
of a court of competent jurisdiction or if required or reasonably necessary
under applicable federal and state securities laws. Provided, however, that the
foregoing shall not extend to disclosure by Landlord of the terms of this Lease
to the holder of any mortgage(s) or deed(s) of trust encumbering the Premises,
or any portion thereof, or any replacement of any existing mortgage or deed of
trust or any prospective lender to Landlord and, provided further, that any
party hereto may disclose the terms hereof to its respective attorneys, to its
respective accountants who audit its respective financial statements or prepare
its respective tax returns, to any prospective transferee of all or any portion
of their respective interests hereunder (including a prospective sublessee of
Tenant) to any governmental agency or authority to whom disclosure is required
pursuant to applicable laws, regulations or ordinances and in connection with
any litigation instituted by any party hereto against another party hereto
arising out of this Lease. It is understood and agreed that damages would be an
inadequate remedy for the breach of this provision by any party hereto, and each
of the parties hereto shall have the right to specific performance of this
provision and to injunctive relief to prevent its breach or continued breach. If
Tenant purchases the Premises pursuant to Sections 15.1 or 15.2 of this Lease,
the confidentiality obligations of the parties pursuant to this Section shall
terminate upon the close of such sale, except that, for a period of one (1) year
following the close of such sale Tenant shall continue to maintain the
confidentiality of (a) the economic terms of this Lease and (b) the purchase
price paid by Tenant for the Premises or portion thereof purchased by Tenant.
Notwithstanding the foregoing, Landlord and Tenant acknowledge and agree that
Tenant may or will be required to disclose the terms hereof and/or to file this
Lease in or with Tenant's public filings pursuant to the Securities Act of 1933,
the Securities Exchange Act of 1934 or the rules and regulations under such
acts.

         -----------------------------            ---------------------------
         Landlord's Initials                      Tenant's Initials

Section 13.22 Security Deposit

            There shall be no security deposit pursuant to this Lease.

Section 13.23 Gender; Tenants

            The use of the masculine pronoun includes the feminine and neuter
genders; the use of the singular form of a pronoun includes the plural and
vice-versa. If there be more than one person or entity indicated as Tenant
herein, each person or entity subscribing as a Tenant shall be jointly and
severally liable for all obligations of Tenant hereunder. Subject to the
provisions of Article IX, the terms, conditions and covenants contained herein
shall be binding upon and inure to the benefit of the heirs, successors,
executors, administrators, marital communities, if any, and assigns of the
parties hereto.

Section 13.24 No Option

            Submission of this Lease to Tenant shall not be deemed to be an
offer or option for Tenant to lease the Premises or a reservation of the
Premises. Landlord shall not be bound hereby until Landlord's delivery to Tenant
of an executed copy hereof signed by Landlord, already having been signed by
Tenant, and until such delivery Landlord reserves the right to exhibit and lease
the Premises to other prospective tenants.

Section 13.25 Landlord Liability

            The obligations of Landlord herein are intended to be binding only
on the property of the entity acting as Landlord and shall not be personally
binding, nor shall any resort

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be had to the private properties of, the general partners thereof or any
employees or agents of Landlord.

Section 13.26 Termination

            If this Lease is terminated by either party under any provision
hereof, and upon the expiration of the term of this Lease (collectively, the
"termination date"), the following shall pertain:

            (a) Tenant shall, within fifteen (15) days after the termination
date, remove from the Premises all furniture, furnishings, equipment, other
personal property, Tenant's Signage and movable trade fixtures and any other
items which Tenant is permitted or required to remove, and shall surrender the
Premises to Landlord in the condition required by Sections 6.2, 6.4 and 6.5.
Tenant shall, at Tenant's cost, repair any damage to the Premises caused by such
removal. Any items which Tenant is permitted to remove but fails to remove prior
to the surrender of the Premises to Landlord shall be deemed abandoned by
Tenant, and Landlord may retain or dispose of the same as Landlord sees fit
without claim by Tenant thereto or to any proceeds thereof. If Landlord elects
to remove and dispose of any such items abandoned by Tenant, the cost of such
removal and disposal shall be additional rent payable by Tenant to Landlord upon
demand. Tenant shall pay all rent and other amounts payable by it through the
termination date and any costs charged pursuant to the immediately preceding
sentence, each of the parties shall bear their own costs and fees incurred
(including all costs incurred in performing their respective obligations
hereunder) through the termination date and from and after the termination date
neither party shall have any further obligations to the other, except for those
obligations set forth in this subsection, in Sections 13.14 and 13.19 and in
subsection (b) below.

            (b) Notwithstanding the provisions of subsection (a), upon any such
termination or expiration, the following shall pertain:

                (i) Landlord agrees to defend, indemnify and hold harmless
Tenant from and against any and all claims, costs, expenses, losses, damages,
actions and causes of action for which Landlord is responsible under this Lease
and which accrue on or before the termination date.

                (ii) Tenant agrees to defend, indemnify and hold harmless
Landlord from and against any and all claims, costs, losses, expenses, damages,
actions and causes of action for which Tenant is responsible under this Lease
and which accrue on or before the termination date.

                (iii) Tenant shall remain liable for the cost of all utilities
used in or at the Premises through the termination date accrued and unpaid and
billed directly to Tenant, whether or not then billed, as of the termination
date until full payment thereof by Tenant. Tenant shall obtain directly from the
companies providing such services closing statements for all services rendered
through the termination date and shall promptly pay the same. If any utility
statement with respect to the Premises includes charges for a period partially
prior to and partially subsequent to the termination date, such charges shall be
prorated as between Landlord and Tenant, with Tenant responsible for the portion
thereof (based upon a fraction the numerator of which is the number of days of
service on such statement through the termination date and the denominator of
which is the total number of days of service on such statement) through the
termination date and Landlord shall be responsible for the balance. The party
receiving any such statement which requires proration hereunder shall promptly
pay such statement and the other party shall, within ten (10) days after receipt
of a copy of such statement, remit to the party paying the statement any amount
for which such other party is responsible hereunder.

                (iv) Tenant shall remain responsible for any taxes of the type
described in Section 4.4 and assessed against the Premises and the personal
property located therein or thereon with a lien date prior to the termination
date, irrespective of the date of the billing therefor, and shall indemnify and
hold Landlord harmless with respect to any claims for such taxes or resulting
from non-payment thereof.

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Section 13.27 Accord and Satisfaction

            (a) The receipt, retention, cashing, depositing or endorsement by
Landlord of any check, draft or other instrument of payment delivered by Tenant
or any proposed assignee of or successor to Tenant shall not be deemed to be an
acceptance by Landlord of any attempted alteration, assignment or notation
written on said instrument by the maker thereof.

            (b) No payment by Tenant or receipt by Landlord of a lesser amount
than the rent herein stipulated shall be deemed to be other than on account of
the earliest accruing rent, nor shall any endorsement or statement on any check
or any letter accompanying any such check or payment be deemed an accord and
satisfaction. Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
provided for in this Lease or available at law or in equity.

            (c) All amounts payable by either party hereunder to the other shall
be paid in lawful money of the United States to the party entitled to receive
the same at its address set forth in Section 13.10 or at such other address as a
party may designate by notice to the other pursuant to this Article. All amounts
to be paid by Tenant shall be paid without deduction or offset.

Section 13.28 Quiet Possession

            Upon Tenant paying the rent for the Premises and observing and
performing all of the covenants, conditions and provisions on Tenant's part to
be observed or performed hereunder, Tenant shall have quiet possession of the
Premises for the entire term hereof. Landlord shall defend such possession
against the claims of all persons lawfully claiming through or under Landlord.

Section 13.29 Counterparts

            This Lease may be executed in two (2) or more counterparts, each of
which shall be deemed to constitute an original but all of which together shall
constitute one and the same instrument. It shall not be necessary for Landlord
and Tenant to execute the same counterpart(s) of this Lease for this Lease to
become effective.

Section 13.30 Parking for Premises

            (a) In connection with the Initial Premises, in connection with the
Expansion Building, if applicable, and in connection with each Available Space,
if any, added to the Premises pursuant to this Lease, Landlord shall provide
parking at a ratio of four (4) parking spaces per 1,000 square feet of Floor
Area of the Initial Premises and the Expansion Premises and a pro rata share of
the available parking as to any Available Space. For so long as Tenant leases
the entire Initial Premises, all parking spaces thereon shall be for the
exclusive use of Tenant and its employees and business visitors, without charge
by Landlord other than the rent payable by Tenant hereunder. Similarly, if
Tenant exercises the Expansion Option and for so long as Tenant leases the
entire Expansion Premises, all parking spaces thereon shall be for the exclusive
use of Tenant and its employees and business visitors, without charge other than
as set forth in the immediately preceding sentence.

            (b) In the event that Tenant ceases to lease all Floor Area on the
Initial Premises and/or leases one or more Available Spaces on the Expansion
Land, then:

                (i) Except as provided in clause (iii) below, Tenant shall be
entitled, without additional charge, to vehicular and pedestrian ingress and
egress over the Land, and to the use of four (4) parking spaces per 1,000 square
feet of Floor Area on the Initial Premises (if leased entirely by Tenant) and
Expansion Premises (if leased entirely by Tenant) and a pro rata share of the
available parking as to any Available Space or the Initial Premises (if not
entirely leased by Tenant);

                (ii) At Tenant's election, up to twenty-five percent (25%) of
Tenant's parking entitlement shall be reserved parking spaces located reasonably
adjacent to the Building(s) in which Tenant occupies space. If Tenant elects
such reserved parking, reserved

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spaces shall be established for Tenant and other tenants on a basis such that
Tenant has equal priority with other tenants of, as applicable, the Initial
Premises and the Expansion Land as to reserved spaces. In other words, if Tenant
elects twenty-five percent (25%) reserved spaces, then all tenants on such
parcel will have twenty-five (25%) reserved spaces. Reservation shall be through
marking or signage as reasonably determined by Landlord. All other spaces which
Tenant and other tenants are entitled to use on a portion of the Land as to
which Tenant does not lease all Floor Area shall be used by Tenant (and its
employees and business visitors) and such other tenants on a non-exclusive
basis; and

                (iii) To the extent that Landlord operates, maintains and
repairs the parking areas on any portion of the Land as to which Tenant does not
lease all Floor Area, Tenant shall pay its proportionate share (based on Floor
Area) of the cost of such operation, maintenance and repair in accordance with
Article VI and the Reciprocal Easement Agreement, as defined in Section 17.3.
Tenant shall also reimburse Landlord for all costs of designating Tenant's
reserved spaces as reserved for Tenant.

            (c) Whether Tenant is entitled to exclusive parking rights pursuant
to subsections (a) or (b) or non-exclusive parking rights pursuant to subsection
(b), Tenant and its employees and business visitors shall be entitled to access
to the Initial Premises and, to the extent Tenant leases the same or Floor Area
thereon, the Expansion Premises, on a seven day per week, 24 hour per day basis.
The parking rights of Tenant pursuant to this Section shall extend throughout
the initial Lease term and each Additional Term as to which Tenant exercises an
Extension Option pursuant to this Lease.

Section 13.31 Building Security

            (a) Tenant acknowledges that the rental payable by Tenant hereunder
does not include the cost of guard service or other security measures, and that
Landlord shall have no obligation whatsoever to provide the same. Tenant assumes
all responsibility for the protection of Tenant, its employees, agents and
invitees from acts of third parties.

            (b) Tenant shall be entitled, at Tenant's sole cost and expense, to
install, maintain, replace and use Tenant's own proprietary security system for
all Buildings in the Initial Premises. Similarly, if Tenant leases the Expansion
Building and/or adds one or more Available Spaces to the Premises, Tenant may,
at Tenant's sole cost and expense, install, maintain, replace and use its own
proprietary security system for the Expansion Building or Available Space(s), as
applicable. In connection with such security system (the "Security System"), the
following shall pertain:

                (i) The Security System shall be subject to the prior written
approval of Landlord, not to be unreasonably withheld, conditioned or delayed.

                (ii) Tenant shall be solely responsible to obtain all
governmental approvals and permits required with respect to the Security System.
Installation of the Security System shall be in accordance with the plans
therefor approved by Landlord and all required governmental approvals and
permits.

                (iii) Tenant shall be solely responsible to maintain, repair and
replace the Security System. In no event shall Landlord have any obligations
with respect to the Security System.

                (iv) The Security System shall not interfere with any other
systems for the Landlord Improvements on the Initial Premises or Expansion Land,
as applicable.

                (v) There shall be no additional charge to or rent payable by
Tenant hereunder on account of Tenant's exercise of its rights pursuant to this
Section.

                (vi) Upon the expiration of this Lease or any earlier
termination of this Lease (including a termination as to one or more Buildings
or one or more Available Spaces), Tenant shall remove the Security System from
the Premises (or portion(s) thereof as to which this Lease is terminated) in
accordance with the provisions of Section 6.5.

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Section 13.32 Communications Equipment

            (a) Tenant shall be entitled to install, maintain, replace and use,
at Tenant's sole cost and expense, on the roof of each Building in which Tenant
leases space, satellite and/or microwave antenna(e) and/or other devices for the
reception and transmission of telecommunications transmissions/signals. In
connection with such equipment (collectively, the "Communications System"), the
following shall pertain:

                (i) The Communications System shall be subject to the prior
written approval of Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed. Landlord's approval rights shall extend to but are not
limited to the location, size and shielding of the antennae, the method of
installation of the Communications System, the routing of all cabling on and
within the Buildings and all roof penetrations and related flashings. For the
purposes of this clause (i), (A) the cabling route provided or approved by
Landlord from the roofs of the Buildings to the interiors thereof shall be the
least expensive functional route available taking into account the
characteristics of the Buildings and (B) all roof and Building penetrations,
patching, flashings, etc. required with respect to the Communications System
shall be performed by a roofing or other contractor selected by Tenant and
reasonably approved by Landlord but retained and paid by Tenant.

                (ii) Tenant shall be solely responsible to obtain all
governmental approvals and permits required with respect to the Communications
System, including any license(s) necessary to operate the same. Installation and
operation of the Communications System shall be in accordance with the plans
therefor approved by Landlord and all required governmental approvals, permits
and licenses.

                (iii) Tenant shall be solely responsible to maintain, repair and
replace the Communications System. In no event shall Landlord have any
obligations with respect to the Communications System. In performing the
foregoing maintenance, repair and replacement, Tenant and its agents and
employees shall exercise reasonable care to avoid damage to other Building
systems located on the roofs thereof.

                (iv) The Communications system shall not interfere with any
other Building systems located on the Initial Premises or Expansion Premises, as
applicable.

                (v) As to any Building in which Tenant leases all of the Floor
Area in the Building, Tenant shall have the exclusive right to place a
communications system on and in such Building. As to any Building in which
Tenant leases less than all Floor Area, Tenant's right to place a communications
system on and in the Building shall be non-exclusive with any similar rights
Landlord has granted or will grant to other tenants of such Building, provided
that preference shall be given based on relative Floor Areas leased by the
parties.

                (vi) Upon the expiration of this Lease or any earlier
termination of this Lease (including a termination as to one or more Buildings
or one or more Available Spaces), Tenant shall remove the Communications System
from the Premises (or portion(s) thereof as to which this Lease is terminated)
in accordance with the provisions of Section 6.5. All patching and sealing of
Building roofs and structures upon such removal shall be subject to the approval
of Landlord.

                (vii) No antennae or other equipment comprising the
Communications System shall overload the roof of any Building or any structural
portion of any Building. Without limiting the foregoing, Tenant shall be solely
responsible to install and maintain any bracing or other structural
reinforcement required as the result of the Communications System. All such
structural reinforcement shall be subject to the prior written approval of
Landlord, and Tenant shall be solely responsible to obtain all required
governmental permits and approvals with respect to such structural
reinforcement.

                (viii) There shall be no additional charge to or rent payable by
Tenant hereunder on account of Tenant's exercise of its rights under this
Section.

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            (b) Tenant shall have access, without charge by Landlord, to any
cable television, fiber optic or other communications system available at the
Land. Nothing herein, however, shall require Landlord to connect the Landlord
Improvements on the Land to any such cable television, fiber optic or other
communications system. Tenant shall be responsible, at Tenant's sole cost and
expense, to effect such connection(s), to pay any connection fee and to pay all
usage fees required by the purveyor of such system.

Section 13.33 Publicity

            Each of Landlord and Tenant shall consult with each other prior to
issuing any press release, public statement or other publicity concerning the
transactions provided for in this Lease. Neither Landlord nor Tenant shall issue
any press release, public statement or other publicity with respect to the
transactions provided for in this Lease without the prior written approval of
the other party, both as to the issuance of such publicity and the form and
content thereof. No such publicity release shall disclose the economic terms of
the transactions provided for in this Lease. Subject to the immediately
preceding sentence, any such required approval shall not be unreasonably
withheld, delayed or conditioned by either party hereto. The provisions of this
Section shall not apply to any disclosure described in the last sentence of
Section 13.21.

                                  ARTICLE XIV.
                           IMPROVEMENT OF THE PREMISES

Section 14.1 Landlord's Work

            Landlord shall perform the following work ("Landlord's Work") with
respect to the Initial Premises and the Expansion Land:

            (a) Design and construction of the shell and core of each of the
Buildings located on the Initial Premises (the "Core and Shell Work"). The Core
and Shell Work shall include the following:

                (i) Men's and women's toilet rooms on both floors of each
Building, per local codes, including the Americans With Disabilities Act and
life safety issues. Toilet rooms shall be to a finished condition, with finishes
to be selected by Tenant to match Tenant's Work, as defined in Section 14.6;

                (ii) Drinking fountain at core of each Building, both floors;

                (iii) Electrical/telephone closets;

                (iv) Building stairways for exiting that are required by code,
with base building finishes;

                (v) Mechanical equipment rooms as required for each Building;

                (vi) Drywall on (A) core walls (including elevator lobby), (B)
first and second floor structures (for plenum), (C) perimeter and interior
columns, and (D) interior surface of exterior walls above and below the windows,
all taped and sanded, ready for Tenant's finish work;

                (vii) HVAC: HVAC system to be as selected by Tenant and approved
by Landlord. Primary HVAC duct loop from the mechanical equipment room and
installed on each floor;

                (viii) Fire sprinklers: temporary protection consisting of
mains, laterals and uprights, installed according to applicable codes;

                (ix) Fire protection alarm and communications system installed
according to applicable code;

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                (x) Smooth and level (1/4" deflection over ten (10) foot span)
concrete floor on each floor in accordance with industry standards;

                (xi) Sufficient electrical power, equipment (including panels,
breakers, transformers, and switchgear) to provide for Tenant's lighting, HVAC,
office, and equipment usage;

                (xii) Window coverings;

                (xiii) Hanging wires for drop ceiling system;

                (xiv) Connection of the electrical lighting system to the
Building's computerized control system (if applicable); and

                (xv) One (1) elevator per Building meeting applicable building
code requirements.

            (b) Design, construction and installation of all site work, parking
lots and landscaping in the Initial Premises (the "Other Work"). The Other Work
shall include the following:

                (i) All landscaping, together with a sprinkler system to serve
the same;

                (ii) All parking areas, including striping, directional signs
and markings, parking bumpers, handicapped markings and signage and all bicycle
racks;

                (iii) All sidewalks, walkways, driveways and street connections;

                (iv) All parking lot lighting, driveway lighting and landscape
lighting;

                (v) Trash enclosures;

                (vi) Underground utilities connections from the main lines of
the purveyors to the Buildings and landscape sprinkler system; and

                (vii) Any exterior recreational facilities approved by Landlord
and Tenant.

            (c) Grading, hydro seeding and installing an irrigation system for
the Expansion Land sufficient to maintain thereon a green lawn (the "Green
Area"). Landlord covenants to maintain the Green Area as a lawn or landscaped
area, at Landlord's cost, until the first to occur of (i) expiration of Tenant's
obligation to pay Expansion Land Rent pursuant to Section 3.4 and (ii) purchase
by Tenant of the Project (as defined in Section 15.1) pursuant to Section 15.1.
Provided, however, that Landlord will continue such maintenance beyond the date
determined pursuant to clause (i), but not beyond the date that Tenant purchases
or leases the Expansion Land and all Buildings thereon, if Tenant executes and
delivers an amendment to this Lease agreeing to pay Landlord, on a monthly basis
as additional rent, all costs of Landlord incurred in such maintenance plus an
administrative fee of fifteen percent (15%). The immediately preceding sentence
is subject to Landlord's termination right in the last sentence of Section 3.4.

            For the purpose of Section 14.3 below, the costs of design and
construction of the Core and Shell Work and Other Work shall be included in
Development Costs; the cost of Landlord's Work with respect to the Green Area
shall also be included in Development Costs of the Initial Premises. Landlord's
Work shall be performed in strict accordance with this Article XIV.

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Section 14.2 Standards for Performance of Landlord's Work

            Landlord's Work shall be performed in accordance with the following:

            (a) All Landlord's Work shall be the sole responsibility of Landlord
as to performance and, subject to Section 14.3, shall be paid for by Landlord.
Landlord shall apply Landlord's diligent and good faith efforts, professional
skills and judgment to carry out all of its obligations pursuant to this Article
XIV and, in doing so, shall use the same degree of care and diligence used by
first class developers of projects similar to the projects contemplated
hereunder.

            (b) The Buildings to be constructed as part of the Initial Premises
shall be two story concrete tilt-up buildings unless otherwise mutually agreed
by the parties. The number, size and configuration of such Buildings will be a
function of Tenant's program for the use of the Buildings. Such program shall
consist of required interior functional layouts for Tenant's use of the
Buildings, including size and proximity of various functions and departments.
The program shall be used to develop the required Floor Areas for the Buildings
and such required Floor Areas shall be used to determine the precise number and
location of the Buildings. For this purpose, there shall be not fewer than two
Buildings nor more than four Buildings.

                Tenant, working with Tenant's development manager and Tenant's
Designer, as defined in Section 14.6, has developed a preliminary program.
Tenant shall review, refine and complete Tenant's program and deliver the same
to Landlord within thirty (30) days after the last execution and delivery of
this Lease. Such program (the "Program") shall be subject to the approval of
Landlord, which approval shall not be unreasonably withheld so long as the
Program reasonably meets the criteria set forth in subsection (e) below and
shall be deemed given unless Landlord disapproves the Program by written notice
to Tenant given by Landlord within ten (10) business days after receipt by
Landlord of the complete Program. If Landlord timely disapproves the Program,
Tenant shall within ten (10) business days revise the same to meet Landlord's
objections and resubmit the Program for Landlord's approval pursuant to this
subsection. The foregoing process shall be repeated as often as necessary to
obtain Landlord's approval or deemed approval of the Program. The Program
approved pursuant to the foregoing process is herein referred to as the
"Approved Program."

                Notwithstanding the foregoing, if Landlord and Tenant cannot
agree upon an Approved Program within forty-five (45) days after Tenant's first
submission to Landlord, either party may at any time thereafter terminate this
Lease by written notice to the other given prior to achieving an Approved
Program. If the parties are entitled to terminate this Lease pursuant to this
provision, and either party timely and properly does so, then:

                (i) This Lease shall terminate upon receipt by the recipient
party of the notice of termination;

                (ii) Each party shall bear its own costs and fees incurred in
the preparation and negotiation of this Lease and in performing its respective
obligations hereunder through the date of termination;

                (iii) If the Memorandum of Lease shall previously have been
recorded, Landlord and Tenant shall promptly execute, acknowledge and deliver
the Mutual Cancellation of Lease and Landlord may record the same; and

                (iv) Neither party shall have any further rights or obligations
pursuant to this Lease.

            (c) Landlord's Work shall be designed by HOK Architects (the
"Project Architect"), and a landscape architect selected by Landlord, approved
by Landlord and Tenant and retained by Landlord. Promptly following the
execution and delivery of this Lease and satisfaction of the condition set forth
in Section 1.3, Landlord shall enter into a contract with the Project Architect.
Such contract shall be upon terms agreed upon by Landlord and the Project
Architect, but must contain provisions to the effect that (i) the Project
Architect has all required state and local licenses and reasonable experience
with projects of the size, quality and scope of

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Landlord's Work, (ii) the Project Architect will provide errors and omissions
insurance in the amount of $1,000,000 per occurrence on a form reasonably
satisfactory to Landlord and Tenant, (iii) the Project Architect agrees in
advance to make Tenant a third-party beneficiary of the contract with Landlord
and (iv) the Project Architect agrees in writing, without qualification,
reservation or fee that, if Tenant purchases the Initial Premises pursuant to
Sections 15.1 or 15.2 hereof, Landlord may assign such contract to Tenant in
connection with such sale. In addition, the scope of work and pricing provisions
(i.e., fees, disbursements and how and when paid) provided for in Landlord's
contract with the Project Architect shall be subject to the approval of Tenant.
Such approval shall not be unreasonably withheld, delayed or conditioned and
shall be deemed given unless Tenant disapproves the same by written notice to
Landlord specifying any required changes to the scope of work and/or pricing
provisions and given within five (5) business days after receipt by Tenant of a
copy of the proposed contract. The Project Architect is agreed by Landlord and
Tenant to be the primary architect who shall design and supervise Landlord's
Work. Landlord and Tenant acknowledge and agree that Landlord's Work may require
the services of a landscape architect. Such determination (i.e., whether a
landscape architect is required) and the selection of the landscape architect to
be retained shall be subject to the mutual approval of Landlord and Tenant.
Tenant's approval of the Landscape Architect shall not be unreasonably withheld,
delayed or conditioned so long as the proposed landscape architect satisfies the
criteria set forth in clauses (i) and (ii) above. Such approval shall be deemed
given unless Tenant shall disapprove the proposed landscape architect by written
notice to Landlord given within ten (10) days after receipt by Tenant of written
notice from Landlord indicating Landlord's selection of the landscape architect.
Upon approval or deemed approval of the landscape architect, Landlord shall
enter into a contract with the landscape architect meeting the requirements of
clauses (i) through (iv). Any landscape architect selected pursuant to this
subsection is herein referred to as the "Landscape Architect."

            (d) All engineering work required in connection with Landlord's Work
shall be performed by structural, mechanical, electrical, plumbing and civil
engineers selected and retained by the Project Architect and reasonably approved
by Landlord and Tenant. Tenant's approval as to each such engineer shall be
deemed given unless Tenant disapproves the same by written notice to Landlord
given within ten (10) days after receipt of written notice from Landlord
identifying such proposed engineer. All such engineers and the Landscape
Architect shall be coordinated by the Project Architect.

            (e) Promptly upon the last of (A) selection and retention of the
Project Architect and Landscape Architect, if any, and (B) approval of the
Approved Program, Landlord shall cause the Project Architect to prepare and
submit to Landlord and Tenant for approval proposed preliminary plans with
respect to the Buildings for the Initial Premises. As and when appropriate
(i.e., once the preliminary plans for the Buildings are sufficiently developed
and approved to permit the Landscape Architect to do so), Landlord shall cause
the Landscape Architect to prepare and submit to Landlord and Tenant for
approval proposed preliminary plans with respect to the exterior landscaping and
parking lots for the Initial Premises. Such preliminary plans shall include a
site plan (the "Master Plan"), space plans and character architectural
elevations for the Buildings. For the purpose of preparation of such preliminary
plans, Tenant and its consultants shall supply to the Project Architect and
Landscape Architect detailed information as to Tenant's requirements for the
Initial Premises. For this purpose, Tenant and Landlord shall work cooperatively
to arrive at a mutually acceptable set of plans for Landlord's Work. Such design
shall be based upon the Approved Program, but shall also, to the extent
feasible, take into account other factors such as overall cost, design
excellence, quality of materials, impact on surrounding properties and the ease
of releasing the Buildings in a multi-tenant format. Approval of the proposed
preliminary plans shall not be unreasonably withheld by Landlord or Tenant
provided that (i) the proposed preliminary plans address Tenant's requirements
as set forth in the Approved Program, (ii) the proposed preliminary plans comply
with the applicable requirements of all governmental authorities having
jurisdiction of the Premises, (iii) the Project Architect advises Landlord and
Tenant that Landlord's Work as set forth on such proposed preliminary plans can
be completed within the Budget Figures (unless Tenant agrees to increase one or
both of the Budget Figures) and (iv) the exterior design is generally compatible
with surrounding properties. Each portion (i.e., the Buildings and the exterior
landscaping and parking lots) of the proposed preliminary plans shall be deemed
approved by a party unless such party disapproves the same by written notice to
the Project

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Architect or Landscape Architect, as applicable, and the other party given
within ten (10) days after receipt of the proposed preliminary plans and
specifying in reasonable detail the items disapproved. In the event of timely
and proper disapproval of the proposed preliminary plans, the Project Architect
or Landscape Architect, as applicable, shall promptly revise the same to meet
such objections and resubmit the same for approval pursuant to this subsection.
Such process shall continue until proposed preliminary plans are approved or
deemed approved by Landlord and Tenant. The approved preliminary plans resulting
from such process are hereby referred to as the "Approved Preliminary Plans."

            (f) Landlord and Tenant have selected Gordon & Williams, Snyder
Langston and Oltman's Construction as potential general contractors with respect
to Landlord's Work (each, a "qualifying contractor"). Landlord and Tenant agree
that all qualifying contractors have all required state and local licenses, have
reasonable experience with work of the size, scope and quality of Landlord's
Work, and are capable of performing Tenant's Work pursuant to Section 14.6 as
well as Landlord's Work.

                Promptly following the approval of the Approved Preliminary
Plans, the Project Architect shall request from each qualifying contractor a
reasonably detailed statement of probable cost to construct Landlord's Work,
with the proposed contractor's fee and general conditions costs or rates of each
contractor and a lump sum amount for pre-construction services separately
stated. Such preliminary estimates shall be based upon a preliminary bid package
prepared by the Project Architect. Such preliminary bid package shall contain
(i) the Approved Preliminary Plans and (ii) specific requirements and procedures
relating to insurance (including builder's risk insurance), change orders and
warranties and guaranties (and the assignability thereof) and no bonding
requirement. The preliminary bid package shall be subject to the reasonable
approval of Tenant prior to delivery to the qualifying contractors, which
approval shall be deemed given unless Tenant disapproves the same by written
notice to Landlord and the Project Architect given within ten (10) days after
Tenant's receipt of the complete package and setting out with specificity the
item(s) disapproved.

                Landlord and Tenant shall mutually select the general contractor
for Landlord's Work based upon the statements of probable cost from the
qualifying contractors. If Landlord and Tenant are unable to agree within ten
(10) days after receipt of the last statement of probable cost, the qualifying
contractor with the lowest total cost statement, including contractor's fee,
general conditions and pre-construction services, shall be the general
contractor with respect to Landlord's Work. The contractor selected pursuant to
the foregoing process is herein referred to as "Landlord's Contractor." From and
after the selection of Landlord's Contractor, Landlord's Contractor shall
coordinate and consult with the Project Architect on the development of the
Approved Working Drawings pursuant to subsection (g) below.

            (g) Promptly upon approval of the Approved Preliminary Plans and
selection of Landlord's Contractor, the Project Architect and Landscape
Architect shall prepare and submit for approval by Landlord and Tenant proposed
working drawings and specifications for Landlord's Work. The proposed working
drawings and specifications shall include all exterior and interior Landlord's
Work, shall include a landscaping and parking plan and shall be in sufficient
detail to permit subcontractor bidding thereon and the obtaining of all
governmental permits and approvals required with respect to Landlord's Work. A
copy of the proposed working drawings and specifications shall be delivered to
Landlord's Contractor with a request for comments as to cost savings
possibilities, further detail requirements and any other comments which
Landlord's Contractor cares to make. Copies of such comments, if any, shall be
furnished to Landlord and Tenant. Approval of the proposed working drawings and
specifications shall not be unreasonably withheld by Landlord or Tenant provided
that (i) the proposed plans and specifications conform to the Approved
Preliminary Plans and (ii) the proposed plans and specifications meet the
requirements of clauses (i) through (iv) of subsection (e) above. The proposed
working drawings and specifications shall be deemed approved by a party unless
such party disapproves the same by written notice to the Project Architect or
Landscape Architect, as applicable, and the other party given within ten (10)
business days after receipt of a complete set of the proposed working drawings
and specifications and specifying in reasonable detail the items disapproved. In
the event of timely and proper disapproval of the proposed working drawings and
specifications, the Project Architect or Landscape Architect, as applicable,
shall

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revise the same to meet such objections and resubmit the same for approval
pursuant to this subsection. Upon any such resubmission, the time for
disapproval or deemed approval shall be five (5) business days after receipt of
a complete set of the revised working drawings and specifications. The foregoing
process shall continue until proposed working drawings and specifications are
approved or deemed approved by Landlord and Tenant. The approved working
drawings and specifications resulting from the foregoing process are herein
referred to as the "Approved Working Drawings."

            (h) Promptly following approval of the Approved Working Drawings,
the Project Architect shall prepare and provide to Landlord's Contractor a final
bid package consisting of the Approved Working Drawings and the items described
in clause (ii) of subsection (f). Such final bid package shall be subject to the
approval of Tenant prior to submission to Landlord's Contractor, in the manner
and within the time specified in subsection (f). Landlord's Contractor shall,
within thirty (30) days after receipt of the final bid package, obtain all
subcontractor bids required with respect to Landlord's Work and furnish to
Landlord, Tenant and the Project Architect a final bid price for Landlord's Work
utilizing the contractor's fee and general conditions costs or rates set forth
in such contractor's preliminary cost estimate and the bids received from the
proposed subcontractors. Promptly upon receipt of such final bid price, Landlord
shall enter into a construction contract with Landlord's Contractor for
Landlord's Work. Such contract shall be in a guaranteed maximum cost format
(unless Landlord and Tenant agree to use a stipulated sum format), shall utilize
the final bid price supplied by Landlord's Contractor and shall contain the
terms and provisions included in the final bid package. The general contractor's
contract shall be subject to the approval of Tenant. Such approval shall not be
unreasonably withheld, delayed or conditioned, and shall be deemed given unless
Tenant disapproves the same by written notice to Landlord specifying any
required changes and given within five (5) business days after receipt by Tenant
of a copy of the proposed contract.

                If Tenant elects to utilize Landlord's Contractor to perform
Tenant's Work, and if Tenant's working drawings therefor are complete at the
date of approval of the Approved Working Drawings, the final bid package shall
include such working drawings with a request for a separate bid for Tenant's
Work. If Tenant so obtains and accepts a bid from Landlord's Contractor with
respect to Tenant's Work, such work shall be pursuant to a separate contract
between Tenant and Landlord's Contractor.

            (i) Promptly following approval of the Approved Working Drawings,
Landlord shall (or shall cause the Project Architect to) apply for all
governmental permits and approvals required with respect to Landlord's Work. In
connection with such applications:

                (i) Landlord shall (or shall cause the Project Architect to)
diligently pursue such applications in accordance with the Schedule of Landlord
Improvements. Tenant shall cooperate as reasonably requested by Landlord.

                (ii) Landlord shall (or shall cause the Project Architect to)
retain all structural engineers, electrical engineers and other consultants
required to provide engineering and other drawings or plans as necessary to
obtain the required governmental approvals and permits with respect to
Landlord's Work and shall cause the preparation and submission to the relevant
governmental authorities of all such materials. Tenant shall furnish information
and otherwise cooperate as reasonably requested by Landlord.

                (iii) Any changes to the Approved Working Drawings required by
any governmental authorities shall be effected by the Project Architect or
Landscape Architect, as applicable, within seven (7) days after the request for
such change and shall be subject to the approval of Landlord and Tenant in
accordance with subsection (g) above.

            (j) All Landlord's Work shall comply with all Applicable Laws and
all Landlord's Work shall comply with the Approved Working Drawings and all
governmental permits and approvals issued with respect thereto.

            (k) Landlord's Work shall be commenced promptly following the last
of (i) the last execution and delivery of this Lease, (ii) satisfaction or
waiver of the last of the conditions set forth in Article XVI hereof and (iii)
completion of the matters described in

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subsections (b) through (i) above. Subsequent to commencement of Landlord's
Work, Landlord shall, subject to Section 13.16, diligently pursue the same to
completion. Landlord shall use commercially reasonable efforts to complete all
Landlord's Work in accordance with the schedule of improvements attached hereto
as Exhibit "E" and incorporated herein by this reference (the "Schedule of
Landlord Improvements").

            (l) Approximately ten (10) days prior to the Lease Commencement Date
(i.e., Substantial Completion of the Core and Shell Work), but in any event upon
not less than two (2) days prior written notice to the parties, the Project
Architect and representatives of Landlord and Tenant shall conduct a
walk-through of the Initial Premises Buildings and compile a so-called
punch-list of items to be completed, corrected or removed and replaced. Landlord
shall cause its contractor to complete, correct or remove and replace all such
punch-list items of the Core and Shell Work as promptly as practicable following
the compilation and initialing of the punch-list. Such walk-through shall be
scheduled by Landlord.

            (m) For the purposes of this Section, it is understood and agreed
that:

                (i) Landlord's representative with respect to the design and
construction process provided for in this Section shall be Mr. Grant Wilson.

                (ii) Without limiting any of the other provisions of this
Section, Tenant shall have the specific right to monitor the progress of the
Project Architect to assure compliance with the Schedule of Landlord
Improvements. This right shall include, among other things, the rights to (A)
review progress prints at reasonable intervals in the course of the design of
Landlord's Work and (B) attend design review meetings on a regular basis to
assess the degree of completion of design versus the Schedule of Landlord
Improvements. To facilitate such monitoring by Tenant, Landlord shall provide to
Tenant copies of such progress prints as the same are available and notify
Tenant of the dates and times of design review meetings.

Section 14.3 Payment for Landlord's Work

            (a) As used herein, the term "Development Costs" shall mean all
out-of-pocket costs and fees incurred in the design and construction of all Core
and Shell Work and all Other Work with respect to the Initial Premises, plus the
development fee provided for in clause (xiii) below, including but not limited
to the following:

                (i) Design fees for the Core and Shell Work and the Other Work,
including architectural, engineering, landscaping, etc.;

                (ii) All City and transportation fees and the fire suppression
fee applicable to the Initial Premises, exclusive of any in-lieu fees or other
new fees or fee increases negotiated in connection with the general plan
amendment, specific plan amendment, rezoning, final master plan, development
agreement and/or EIR for Landlord's Home Ranch development (collectively the
"Home Ranch Master Entitlements"). For the purposes of this provision, it is
understood and acknowledged that Landlord may be required to pay to the City all
traffic impact fees for the Home Ranch. In the event of such payment by
Landlord, Development Costs shall include reimbursement to Landlord of those
traffic impact fees applicable to the Initial Premises at the standard rate used
for calculating such fees. All such fees shall be reimbursed at the times
typically payable to the collecting authority, except that any such traffic
impact fees so prepaid by Landlord and not theretofore reimbursed shall be paid
at close of the escrow pursuant to Section 15.1;

                (iii) Mitigation fees and costs (such as a right hand turn lane
into the Land) specific to the Initial Premises required as conditions of
approval of the Initial Premises, but excluding mitigation costs, off-site
improvements, exactions or other public benefits for the Home Ranch master
development ("Home Ranch Master Exactions"), i.e., which are requirements,
conditions or mitigation measures of any of the Home Ranch Master Entitlements.
For the purposes hereof, the Home Ranch Master Exactions shall include any
mitigation fees and costs which are included as Home Ranch Master Exactions
under the Home Ranch Master Entitlements, even if such mitigation fees and costs
are subsequently shifted to Initial Premises specific conditions because of
changes in the proposed Home Ranch development. To the extent

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that any Initial Premises specific mitigation fees and costs are not Home Ranch
Master Exactions but are the result of requirements or development conditions of
both the Initial Premises and one or more other parcels within Home Ranch
("Other Benefited Parcel(s)"), such mitigation fees and costs shall be allocated
between the Initial Premises and the Other Benefited Parcel(s) based on the
standards typically used by the City to determine or allocate the amount of such
fees or costs (such as trip-ends, acreage, rentable area, parking requirements,
etc.). If another standard is not typically applied by the City for any fees and
costs described in the immediately preceding sentence, relative acreages shall
be used;

                (iv) Plan check and permit fees;

                (v) Utility connection and deposit fees (but excluding any line
extension fees or other fees or costs recaptured by Landlord or its affiliates
pursuant to any reimbursement agreement or arrangement with the City or a public
utility purveyor);

                (vi) All costs of construction, including grading/site work,
Core and Shell Work, parking lots, landscaping, site lighting, monument sign
structures and contractors' profit and overhead;

                (vii) Legal fees for construction documents;

                (viii) Property taxes and insurance during construction only;

                (ix) Utility consumption during construction only;

                (x) The Leasing Commission, but not the Sale Commission;

                (xi) Costs of design and performance of the work described in
Section 14.1(c);

                (xii) Costs and fees incurred to prepare, process and record the
Map, as defined in Section 17.1;

                (xiii) A development fee equal to four percent (4%) of all
Development Costs, excluding brokerage commission, to compensate Landlord for
providing comprehensive management of the development of the Initial Premises;

                (xiv) At Tenant's option, its out of pocket fees and costs for
its development manager, up to a maximum of $270,000, shall be included in
Development Costs but only to the extent that such costs and fees do not cause
total Development Costs, exclusive of Land cost, to exceed $17 million. The
parties acknowledge that, pursuant to subsection (b), such fees and costs will
be funded by means of monthly draws on Tenant's Loan. If such fees and costs are
over-funded (i.e., the fees and costs cause total Development Costs to exceed
$17 million) and Tenant does not purchase the Project pursuant to the Purchase
Option, Landlord shall not include such fees and costs in the Permanent
Financing with respect to the Initial Premises and shall not return the same to
Tenant as a part of the payoff of Tenant's Loan, as defined in subsection (b)
below; and

                (xv) Costs and fees for financing of all items listed above. For
the purposes of Landlord's Work as to the Initial Premises, such costs and fees
shall be limited to those incurred to obtain Permanent Financing with respect to
the Initial Premises. For the purposes of the Expansion Premises, if applicable,
such costs and fees included in Development Costs shall include (A) the costs
and fees incurred with respect to construction financing of Landlord's Work
(unless Tenant elects to finance the same on the basis provided in subsection
(b) below) through the commencement of payment of Base Rent with respect to the
Expansion Premises and (B) the costs and fees incurred to obtain Permanent
Financing with respect to Landlord's Work with respect to the Expansion
Premises. If Landlord elects to finance more than Development Costs, financing
costs and fees allocable to such excess shall not be included in Development
Costs.

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            Notwithstanding the foregoing, no expenses or costs incurred by
Landlord prior to January 4, 2002, and no costs or exactions for the master
entitlement of the Home Ranch project (as opposed to permit fees and costs for
the development of the Initial Premises), shall be included in Development
Costs. For the purposes of clauses (ii) and (iii) above and this paragraph,
Landlord and Tenant acknowledge that Landlord has entered into a development
agreement (the "Development Agreement) setting forth certain of the Home Ranch
Master Entitlements, the Home Ranch Master Exactions and certain other fees and
mitigation costs. Without limiting the generality of clauses (ii) and (iii),
Landlord and Tenant have set forth on Exhibit "H" attached hereto a listing of
those costs, fees and exactions provided for in the Development Agreement,
together with their agreement as to which of such items are included, in whole
or in part, in the Development Costs.

            (b) Tenant shall lend to Landlord the Development Costs with respect
to the Initial Premises. Such loan ("Tenant's Loan") shall be upon the following
terms and conditions:

                (i) Tenant's Loan shall be disbursed to Landlord monthly
commencing with the first calendar month following the last execution and
delivery of this Lease. Each disbursement shall be made within ten (10) days
after Tenant's receipt of a written recommendation from Landlord setting forth
the amount of the payment due, accompanied by (A) reasonable documentary
evidence as to the amounts spent by Landlord for Development Costs, (B) a
certificate of Landlord's Construction Coordinator, as defined in Section 14.7,
certifying that the amounts spent constitute Development costs pursuant to
subsection (a) above and (C) all supporting documents as shall be required by
the construction contract with Landlord's Contractor. A copy of each application
for payment (and all supporting documents) shall be submitted by Landlord's
Contractor to Tenant's development manager at the same time as submission
thereof to Landlord. Each request for payment may also include a request for the
development fee applicable to the other Development Costs, calculated at the
rate set forth in subsection (a) above. The fees and costs of Tenant's
development manager shall also be included in monthly disbursements of Tenant's
Loan, but only if and to the extent payable pursuant to subsection (a) above.
Tenant's obligations to fund Development Costs pursuant to this clause (i) shall
survive any purchase of the Project by Tenant pursuant to Section 15.1 to and
until completion of punch-list work, if applicable, and the funding of any final
payment due as the result of the final accounting provided for in subsection (d)
below.

                For the purposes of this clause (i), Landlord shall obtain (and
shall cause to be furnished to Tenant's development manager) each monthly
application for payment and the items described in clauses (A), (B) and (C) on
or about the 20th of each calendar month. Thereafter, Landlord shall furnish to
Tenant Landlord's recommendation as to such application on or before the first
of the next calendar month. Tenant shall authorize payment, as provided below,
by the 10th of such calendar month (i.e., within ten (10) calendar days after
Landlord's recommendation as to such application, subject to the next succeeding
paragraph).

                Notwithstanding the two (2) immediately preceding paragraphs,
Tenant may, by written notice to Landlord and Landlord's Contractor given within
the ten (10) day payment period herein, in good faith contest (I) the amount of
the payment requested and/or (II) the propriety of the payment due to lack of or
improper components in the application package. Any such notice shall specify
the defect or irregularity noted by Tenant, the portion of the payment contested
by Tenant and the portion, if any, of the payment not contested by Tenant. If
Tenant timely and properly contests a payment, or a portion thereof, Landlord
shall not make the payment (or portion contested) until the contest is resolved.
Tenant and Landlord shall diligently move to resolve the contest, and upon such
resolution Tenant shall pay any additional amount agreed to be due within five
(5) business days after resolution of the contest.

                To facilitate the disbursements of Tenant's Loan pursuant to
this clause (i), Landlord and Tenant shall establish a design and construction
funding account (the "Funding Account"), as follows:

                    1. The Funding Account shall be with a bank, trust company
or other financial institution with reasonable experience in the business of
construction funding.

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                    2. Tenant shall select the funding agent and Landlord shall
approve the funding agent, with such approval not to be unreasonably withheld,
delayed or conditioned.

                    3. The Funding Account shall be either an escrow or trust
account, as customarily used by the funding agent. In either event, Tenant shall
be entitled to interest on the account (i.e., investment of the deposits in the
account), subject to availability of funds for the monthly draws provided for in
this clause (ii).

                    4. There shall be at least three deposits into the Funding
Account. The first will be within two (2) business days after execution by
Landlord of an agreement with the Project Architect and shall be in the contract
amount plus all other Development Costs other than those described in the next
two sentences. The second shall be within two (2) business days after selection
of Landlord's Contractor and shall be in the amount of the fee for
pre-construction services estimated by Landlord's Contractor. The third shall be
within two (2) business days after execution by Landlord of a construction
contract with Landlord's Contractor and shall be in the full amount of the
construction contract. In the event of any material increases in the Development
Budget, additional deposits as necessary shall be made within two (2) business
days after approval or deemed approval of such increases.

                    5. The costs and fees of the funding agent shall be paid by
Landlord and not included in Development Costs. Landlord and Tenant have been
advised that the funding agent anticipates a set-up fee for the funding account
of $2,500 and an annual maintenance fee of $7,500 for such account.

                    6. Monthly disbursements from the Funding Account shall
require the signatures of both Tenant's development manager and Landlord's
representative. Each monthly disbursement shall be to a construction account
designated by Landlord.

                    If Tenant fails to timely make any required deposit into the
Funding Account, or to authorize any monthly disbursement pursuant to this
clause (i) (other than due to a timely instituted contest), Landlord may advance
such funds and Tenant shall promptly repay the same to Landlord with interest at
the Default Rate . Such repayment shall be included in Tenant's Loan; the
interest thereon shall not be included in Tenant's Loan. In addition, if Tenant
fails to timely fund the Funding Account or to timely authorize a monthly
disbursement, then (1) Tenant shall be responsible for all penalties and
additional costs incurred by Landlord with respect to Landlord's Work as the
result of such failure to timely fund, and such penalties and costs shall be
included in Development Costs and (2) failure to timely fund, after notice and
failure to cure pursuant to Section 12.1, shall constitute a Default by Tenant
pursuant to this Lease entitling Landlord to exercise all remedies available to
Landlord on account of a default by Tenant hereunder, including termination of
this Lease and recovery of damages from Tenant. In the event of a Tenant
initiated contest, clause (1) above shall apply, and if the contested payout
results in any mechanics' liens, Tenant shall be responsible to bond over or
discharge any lien claims which have become the subject of a foreclosure action
(within ten (10) days after service of a complaint in such action). Clause (2)
above shall apply to any failure of Tenant to timely authorize payment of any
amount agreed to be due as the result of a contest.

                (ii) Tenant's Loan may be prepaid (i.e., paid before the
principal and interest thereof become due pursuant to the succeeding clauses of
this subsection), in whole or in part, without payment of any interest, penalty
or premium of any type.

                (iii) If and only if this Lease has been terminated based upon a
Landlord default or Landlord transfers the Property in violation of the terms of
the Deed of Trust, (A) interest shall accrue at the Default Rate on
disbursements of Tenant's Loan from the date of such termination or transfer
until such amounts are repaid in full and (B) Landlord shall pay to Tenant such
accrued interest, together with the entire outstanding principal amount of the
Tenant Loan thereof, on or prior to the date (the "Loan Repayment Date") which
is the one hundred eightieth (180th) day after the date of such termination or
transfer, as applicable. Landlord's obligations to repay Tenant's Loan in
accordance with the terms hereof shall survive the termination of this Lease. No
principal payments shall be required with respect to Tenant's

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Loan prior to the earlier of the Permanent Financing or the Loan Repayment Date.
Failure to repay Tenant's Loan on or prior to such time shall constitute an
Event of Default under Tenant's Deed of Trust. Landlord and Tenant agree that
any acceleration of Tenant's Loan under the terms of this Lease or Tenant's Deed
of Trust or Tenant's enforcement of its rights under Tenant's Deed of Trust,
relate(s) solely to the relationship of Landlord and Tenant as borrower and
lender, to the protection of Tenant's Loan and its security interest in the
Premises and to Tenant's exercise, in its capacity as a lender, of its rights
and remedies as a lender, and that the foregoing do not, nor shall they be
deemed to, constitute a remedy or an election of any remedy by or for Tenant in
connection with Landlord's breach of its obligations hereunder. There shall be
no interest payable on Tenant's Loan except as provided in this clause (iii),
and principal shall be repaid as provided in this clause (iii).

                (iv) Tenant's Loan shall be secured by a deed of trust in the
form attached hereto as Exhibit "K" ("Tenant's Deed of Trust"). Landlord shall
execute, acknowledge and deliver Tenant's Deed of Trust concurrently with
Landlord's execution and delivery of this Lease. Landlord shall record Tenant's
Deed of Trust concurrently with the short form memorandum of this Lease. Upon
such recordation, Landlord shall furnish the original of Tenant's Deed of Trust
to Tenant.

                (v) Subject to clause (ii) of Section 3.1(c), Tenant's Loan
shall be repaid from the proceeds of the Permanent Financing obtained by
Landlord with respect to the Initial Premises. Tenant shall (A) cooperate with
Landlord as reasonably requested in closing such Permanent Financing and (B)
furnish to Landlord, or Landlord's lender or escrow agent, an executed and
acknowledged full reconveyance of Tenant's Deed of Trust for use upon repayment
in full of Tenant's Loan.

                (vi) In no event shall Tenant's Loan exceed the aggregate amount
of Development Costs with respect to the Initial Premises, as determined
pursuant to subsections (a) above and (c) below.

                (vii) To facilitate the payments required pursuant to this
subsection, Landlord and Tenant have developed a development budget (the
"Development Budget") for the Initial Premises. The Development Budget is
attached hereto as Exhibit "L." Payments hereunder shall be made in accordance
with the Development Budget, as the same is modified from time to time. Landlord
shall periodically update and submit the revised Development Budget to Tenant as
actual costs replace estimated costs therein. Any such revisions shall be
subject to the approval of Tenant. Such approval shall not be unreasonably
withheld, delayed or conditioned, and such approval shall be deemed given unless
Tenant disapproves by written notice to Landlord given within five (5) business
days after Tenant's receipt of the revised Development Budget specifying the
item(s) disapproved. Payments with respect to various Development Costs shall
not exceed the amounts thereof as reflected from to time on the then current
Development Budget.

            (c) Subject to reimbursement by Tenant pursuant to subsection (b)
above, all Development Costs shall be paid by Landlord. The parties have agreed
that, with respect to Landlord's Work with respect to the Initial Premises, the
initial budget shall be $46.00 per square foot of Floor Area in the Buildings
for the Core and Shell Work and $4.00 per square foot of the Initial Premises
Land outside of the Buildings for Other Work. The foregoing per square foot
estimates are herein referred to as the "Budget Figures."

                The parties acknowledge and agree that the Budget Figures are
merely estimates, and that the actual cost of Landlord's Work (and the total
Development Costs) will be established based upon the contractor bidding and
selection process set forth in Section 14.2(d). Once the actual cost of
Landlord's Work (the "Actual Cost") is so established, such Actual Cost shall be
increased only by change orders to the construction contract for Landlord's Work
("Change Orders") which:

                (i) Are required to meet changes required as the result of field
inspections (which changes are not the fault of the Project Architect or
Landlord's Contractor) and provide for no increase in the guaranteed maximum
cost of Landlord's Work, decrease such

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guaranteed maximum cost or increase such guaranteed maximum cost less than
$10,000 per change order and $500,000 in the aggregate; or

                (ii) Are reasonably approved by Landlord and Tenant.

Landlord's Construction Coordinator shall promptly furnish to Landlord and
Tenant, for information purposes only, copies of all Change Orders required
pursuant to clause (i). With respect to all Change Orders described in clause
(ii), Landlord's Construction Coordinator shall furnish the same to Landlord and
Tenant for approval together with a brief explanation of the reason therefor and
a written request for approval. Each such Change Order submitted for approval by
a party shall be deemed approved by such party unless such party reasonably
disapproves the same by written notice to Landlord's Construction Coordinator
delivered within five (5) business days after such party's receipt of the Change
Order and request for approval and specifying with reasonable particularity the
reason for such disapproval. Upon execution and delivery to the contractor of
each Change Order required pursuant to clause (i), and upon approval or deemed
approval of each Change Order described in clause (ii), the Actual Cost of
Landlord's Work shall be increased by the amount of the Change Order. Change
Orders which do not increase the Actual Cost of Landlord's Work or extend the
time for completion of Landlord's Work shall be delivered to Landlord and Tenant
for informational purposes only, and shall not require the approval of Landlord
and Tenant unless such Change Orders reflect a material change to the Approved
Working Drawings, which change has not previously been approved by Landlord and
Tenant.

            (d) Promptly following receipt of Landlord's Contractor's final bid
pursuant to Section 14.2(h), Landlord shall update and submit to Tenant the
Development Budget for the Initial Premises. Thereafter, in the event of any
increase in the total Development Costs for the Initial Premises, Landlord shall
supply to Tenant a new update of the Development Budget. Such updates shall be
prepared and furnished not more frequently than monthly. Within thirty (30) days
after substantial completion of Landlord's Work, Landlord shall supply to Tenant
a final accounting of total Development Costs. Landlord shall accompany such
final accounting with a final draw request on Tenant's Loan pursuant to Section
14.3(b).

Section 14.4 Time for Completion

            Landlord shall use commercially reasonable efforts to commence and
complete Landlord's Work in accordance with the Schedule of Landlord
Improvements. In connection therewith, Landlord and Tenant agree as follows:

            (a) Nothing contained in this Lease or in the Schedule of Landlord
Improvements shall require Landlord to commence Landlord's Work until
satisfaction or waiver of the last of the conditions set forth in Article XVI.

            (b) Landlord shall, as to all permits required from the City,
utilize the third party plan check system available with the City. All costs and
fees of using such system shall be included in Development Costs for the Initial
Premises.

            (c) Any delay by Tenant in meeting any of the dates set forth in the
Schedule of Landlord Improvements, other than such delays as are occasioned by
Landlord, is herein referred to as a "Tenant Delay." In addition if, after
approval of the Approved Working Drawings, Tenant requests changes in Landlord's
Work, Landlord shall effect such changes and (i) all additional design costs
incurred to effect such changes, and any increase in the guaranteed maximum cost
of Landlord's Work, shall be included in Development Costs and (ii) any
additional time to complete Landlord's Work as the result of such changes shall
be a Tenant Delay. For the purposes of clause (ii), additional time to complete
shall constitute a Tenant Delay only if the additional time affects the critical
path of Landlord's Work and shall not be a Tenant Delay if it does not affect
such critical path. By way of example, a structural change in a Building during
construction of the Building structure would be a Tenant Delay, while a change
in landscape features before the start of landscape work would not be a Tenant
Delay. The Lease Commencement Date shall be advanced (i.e., moved earlier in
time) by a period of time equal to the aggregate period of Tenant Delay.

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            (d) Promptly upon Substantial Completion, as defined in subsection
(e) below, of the Core and Shell Work, Landlord shall deliver the Buildings to
Tenant. Such delivery shall be upon not less than ten (10) days prior written
notice to Tenant stating the date upon which the Core and Shell Work shall be
Substantially Complete.

            (e) Substantial Completion shall be separately determined with
respect to the Core and Shell Work, the Other Work and Tenant's Work. As used in
this Lease, the term "Substantial Completion" and "Substantially Complete" shall
mean, with respect to the Core and Shell Work, that (i) such work shall be
substantially completed in accordance with the construction contract, subject
only to minor punch-list items which do not materially interfere with Tenant's
build-out of the Tenant Improvements, (ii) such Substantial Completion shall
have been unconditionally certified by the Project Architect and Landlord's
Contractor in a written certificate delivered to Landlord and Tenant and (iii)
the Building Department of the City shall have given a final sign-off on the
permit for the Core and Shell Work and released the same for utilities to be set
in place. Such terms shall mean, as to the Other Work, that (i) such work shall
be substantially completed in accordance with the construction contract, subject
only to minor punch-list items which do not materially interfere with Tenant's
use of the Land for access and parking (on the Initial Premises Land only), (ii)
the City shall have provided final sign-offs for all such work which requires
such sign-offs and (iii) all landscaping shall be installed and shall be in good
and living condition and all utilities, lighting and sprinkler systems shall be
fully installed and operational.

            (f) The Other Work need not be Substantially Complete as of
Substantial Completion of the Core and Shell Work. The Other Work need only be
at such stage as shall permit entry to the Initial Premises by Tenant's
Contractor in order to commence Tenant's Work. All Other Work and Landlord's
Work with respect to the Grass Area shall be Substantially Complete by the date
of Substantial Completion of Tenant's Work.

Section 14.5 Warranties and Guaranties

            Landlord shall, as a part of the construction contract for
Landlord's Work, obtain a one-year warranty as to materials (or as otherwise
warranted by the manufacturer) and labor from Landlord's general contractor.
Landlord shall also obtain such warranties and guaranties as shall be customary
from all subcontractors, materialmen and equipment suppliers involved in the
performance of Landlord's Work. All such guaranties and warranties shall be
written in a manner permitting assignment of Landlord's rights thereunder to
Tenant. Upon the expiration of the period set forth in Section 6.1(a), Landlord
shall assign to Tenant Landlord's rights under all such warranties and
guaranties. Such assignment shall be without recourse to Landlord and shall be
effected by execution and delivery of an assignment instrument prepared by
Tenant and reasonably approved by Landlord.

Section 14.6 Tenant's Work

            (a) Tenant shall design, conduct and perform (i) all tenant
improvement work with respect to the Buildings included in the Initial Premises
(the "Tenant Improvements") and (ii) all work required to construct or install
all Tenant's Special Facilities, the Security System and the Communications
System. All such work (collectively, "Tenant's Work") shall be in accordance
with the succeeding provisions of this Section 14.6.

            (b) All Tenant's Work shall be the sole responsibility of Tenant, as
to all of design, performance and payment of all costs thereof.

            (c) Tenant's Work shall be designed by HOK Architects or another
architect/space planner retained by Tenant and mutually approved by Landlord and
Tenant ("Tenant's Designer"). If Tenant determines to use an architect/space
planner other than HOK Architects, such Tenant's Designer shall be subject to
the approval or deemed approval of Landlord in the manner provided in Section
14.2(b). All engineering work required in connection with Tenant's Work shall be
performed by engineers selected and retained by Tenant.

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            (d) As used herein, the term Tenant Improvements shall include all
work with respect to the Buildings required for Tenant's use thereof and not
included in the Core and Shell Work.

            (e) Tenant's Work shall be conducted by (in either case, "Tenant's
Contractor") either (i) the general contractor selected pursuant to Section
14.2(f) (but under a separate contract with Tenant) or (ii) another licensed
general contractor meeting the criteria set forth in such Section, selected by
Tenant and approved or deemed approved by Landlord in the manner provided in
Section 14.2(f).

            (f) The working drawings for Tenant's Work shall be subject to the
approval or deemed approval of Landlord in the manner provided in Section
14.2(g).

            (g) Tenant's Designer shall obtain all required governmental permits
and approvals with respect to Tenant's Work in the manner provided in Section
14.2(i), including the right of Landlord and Tenant to approve any changes to
Tenant's Work required by any governmental authority.

            (h) Tenant's Work shall comply with all Applicable Laws, all
applicable requirements of this Lease, the approved working drawings therefor
and all governmental permits and approvals issued with respect thereto.

            (i) Tenant's Work shall be commenced promptly upon delivery of the
Buildings to Tenant (with the Core and Shell Work Substantially Complete), shall
be diligently pursued and shall be completed as promptly as practicable. No
delays in completion of Tenant's Work shall delay the occurrence of the Rent
Commencement Date.

            (j) Tenant shall pay all costs of Tenant's Work, and Section 13.14
hereof shall apply with respect to Tenant's Work.

Section 14.7 Coordination, Cooperation and Change Orders

            Landlord and Tenant acknowledge and agree that prompt attention will
be required with respect to Change Orders requiring the approval of Tenant and
that Tenant's Work may proceed concurrently with portions of Landlord's Work. In
recognition of such facts, Landlord and Tenant agree that:

            (a) Landlord and Tenant, and their respective architects and
contractors, shall coordinate and cooperate as reasonably necessary to avoid
interference by either contractor with the other in the performance of their
respective work on the Initial Premises.

            (b) Ms. Sadie Herrera is hereby designated as Tenant's
representative with respect to design and construction of the Initial Premises.
Such representative ("Tenant's Representative") shall interface with the
architects, Tenant's Contractor and Landlord's Construction Coordinator and
shall have authority to make all design and construction decisions with respect
to the Initial Premises, which decisions shall bind Tenant. Such decisions shall
specifically include the authority to approve or disapprove all Change Orders
with respect to Landlord's Work which require Tenant's approval and all changes
to the Approved Working Drawings for Landlord's Work. Within ten (10) days after
the last execution and delivery of this Lease, Tenant shall supply to Landlord
in writing the address, telephone number(s) and FAX number(s) for Tenant's
Representative and the name, address, telephone number(s) and FAX number(s) of
an alternate Tenant representative with the authority to make all decisions and
provide all approvals or disapprovals described in this subsection if Tenant's
Representative is unavailable for any reason.

            (c) Mr. Grant Wilson is hereby designated as Landlord's Construction
Coordinator with respect to the Initial Premises. Landlord's Construction
Coordinator shall interface with the architects, the contractors and Tenant's
Representative. Landlord's Construction Coordinator shall have the authority to
make all decisions and provide all approvals or disapprovals described in
subsection (b) above, which decisions shall bind Landlord. Within ten (10) days
after the last execution and delivery of this Lease, Landlord shall supply to
Tenant

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in writing the address, telephone number(s) and FAX number(s) for Landlord's
Construction Coordinator and the name, address, telephone number(s) and FAX
number(s) of an alternate Landlord construction coordinator with the authority
to make all decisions and provide all approvals and disapprovals described in
subsection (b) above if Landlord's Construction Coordinator is unavailable for
any reason. In the event of any disputes as to scheduling and coordination of
Tenant's Work and Landlord's Work, the reasonable determination of Landlord's
Construction Coordinator shall be binding on the parties and their respective
architects and contractors.

            (d) Each of Landlord and Tenant can change its respective
representatives at any time upon not less than ten (10) days written notice to
the other party.

Section 14.8 Expansion Building

            If Tenant exercises the Expansion Option, the Expansion Building and
all other improvements to the Expansion Land shall be designed and constructed
in the manner provided in this Article XIV, except that:

            (a) All references herein to the "Buildings" shall mean the
"Expansion Building." All references herein to the "Initial Premises" shall mean
the "Expansion Premises."

            (b) A new Schedule of Landlord Improvements for the Expansion
Building and related Landlord Improvements to the Expansion Land shall be agreed
upon by Landlord and Tenant and attached to the amendment to this Lease or New
Lease executed with respect to the Expansion Building.

            (c) New Budget Figures for the Core and Shell Work and the Other
Work with respect to the Expansion Premises shall be agreed upon by Landlord and
Tenant and included in the amendment to this Lease executed with respect to the
Expansion Building.

            (d) There shall be no Green Area with respect to the Expansion
Building.

            (e) Unless Tenant elects, at the time Tenant exercises the Expansion
Option, to loan to Landlord the Development Costs for the Expansion Premises,
Landlord may finance such Development Costs with construction and/or Permanent
Financing secured by a lien upon the Expansion Premises. All costs and fees
incurred to obtain such construction financing, all interest paid on such
construction financing through the Rent Commencement Date with respect to the
Expansion Premises and all costs and fees incurred to obtain Permanent Financing
with respect to the Expansion Premises shall be included in Development Costs
for the Expansion Premises.

Section 14.9 Remediation During Construction

            Landlord and Tenant acknowledge and agree that:

            (a) Landlord's predecessor farmed the Land and may have used
chemical pesticides, weed abatement agents and other agricultural chemicals. In
addition, there may be asbestos pipe in the Land due to such farming operation.

            (b) Tenant's Phase I report suggests further testing of the portion
of the Land adjacent to the railroad tracks for the presence of hazardous
materials and Tenant shall, as provided in Section 16.1, perform a Phase II
assessment of such portion of the Land.

            (c) If as the result of such Phase II assessment and/or discoveries
during grading of the Land, items of types described in subsections (a) and/or
(b) are discovered, and this Lease is not terminated pursuant to Sections 1.3,
14.2 or 16.1, then:

                (i) Landlord shall do all remedial work required as a part of
Landlord's Work.

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                (ii) The cost of remediation of materials described in
subsection (a) shall be borne by Landlord and not included in Development Costs.

                (iii) The costs of remediation of any other materials, including
those described in subsection (b), shall be included in Development Costs.

                                   ARTICLE XV.
                            TENANT'S PURCHASE RIGHTS

Section 15.1 Tenant's Option to Purchase

            (a) Provided that (i) Tenant or an assignee permitted without the
consent of Landlord pursuant to Article IX hereof is then the Tenant pursuant to
this Lease and (ii) Tenant is not then in Default pursuant to this Lease, Tenant
shall have the option to purchase the Land and all Landlord Improvements thereon
or under construction thereon (collectively, the "Project"). Such option (the
"Purchase Option") shall be exercised, if at all, by written notice from Tenant
to Landlord given at any time after the last execution and delivery of this
Lease and not later than the expiration of the sixth (6th) full calendar month
following the Rent Commencement Date with respect to the Initial Premises (the
"Purchase Option Period"). If Tenant is not entitled to exercise the Purchase
Option, or is entitled to exercise the Purchase Option but fails to do so in the
manner and within the time specified in this subsection, the Purchase Option
shall lapse and thereafter not be exercisable by Tenant. The Purchase Option
shall be exercisable only as to the entire Project, and shall not be exercisable
as to less than the entire Project.

            (b) If Tenant is entitled to exercise the Purchase Option and timely
and properly does so, then Tenant shall purchase the Project upon the following
terms and conditions:

                (i) The purchase price (the "Project Purchase Price") shall be
equal to the sum of (A) Tenant's Loan, (B) all Development Costs (as defined in
Section 14.3) paid by Landlord and not included in Tenant's Loan, (C) any
prepaid traffic impact fees pursuant to clause (iii) of Section 17.6(b) plus (D)
an amount equal to Twenty Dollars ($20.00) per square foot of the Land (as such
square footage is determined pursuant to Section 3.2 hereof). The Project
Purchase Price shall be paid at close of escrow by delivery of immediately
available funds equal to the sum of the amounts determined pursuant to clauses
(B) and (C) and cancellation of Tenant's Loan in its entirety. In no event shall
the Project Purchase Price include the cost of any Tenant's Work paid for by
Tenant.

                (ii) A purchase and sale escrow (the "Escrow") shall be opened
with Chicago Title Company or another mutually acceptable title/escrow company
in Orange County, California (the "Escrow Agent") within ten (10) business days
after Tenant's exercise of the Purchase Option. Tenant shall have an agreed
thirty (30) day period to conduct a due diligence review of the Project, which
shall be limited solely to a review of title, environmental, entitlement (for
the Expansion Land) and structural matters. Provided Tenant does not terminate
the Escrow within the due diligence period, Escrow shall, subject to subsection
(d) below, close within ten (10) days following the expiration of the due
diligence period.

                (iii) The Project shall be sold to Tenant "AS IS" and with no
representations and warranties by Landlord, except as set forth in the Purchase
and Sale Agreement, as defined below. Landlord shall, however, at the end of the
period described in Section 6.1, assign to Tenant all design and construction
warranties and rights obtained by Landlord and all other ongoing rights of
Landlord under the design, development and construction documents with respect
to the Project.

                (iv) Landlord will pay the premium for a standard owner's CLTA
title policy with respect to the Project in the amount of the Project Purchase
Price and the cost of any endorsements required to cure title defects. Tenant
shall be responsible for all additional premiums and costs for an ALTA extended
coverage policy of title insurance (i.e., the premium difference between a CLTA
policy and an ALTA policy), plus the cost of any endorsements required by Tenant
(other than those required to cure title defects). Landlord shall convey title
to

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the Project to Tenant subject only to those matters permitted by the Purchase
and Sale Agreement, as defined in subsection (c) below.

                (v) Base Rent and real property taxes shall be prorated at close
of Escrow. Landlord shall pay the documentary transfer tax with respect to the
grant deed, the recording fee for the deed and one-half of escrow agent's fees
and costs. Tenant shall pay the recording fees for the mutual cancellation of
this Lease and a complete reconveyance of Tenant's Deed of Trust, all recording
fees for any deed of trust placed on the Project by Tenant and one-half of
escrow agent's fees and costs. All other costs and fees in connection with the
Escrow shall be paid in accordance with customary escrow practice in Orange
County, California.

            (c) Concurrently with Tenant's exercise of the Purchase Option,
Landlord and Tenant shall execute and deliver a purchase and sale agreement in
the form attached hereto as Exhibit "F" (the "Purchase and Sale Agreement").
Tenant and Landlord shall also execute and deliver such supplemental escrow
instructions not inconsistent with the foregoing as the Escrow Agent may
reasonably request. To the extent the terms and provisions of the Purchase and
Sale Agreement conflict with the terms and provisions of this Section, the terms
and provisions of the Purchase and Sale Agreement shall control.

            (d) Notwithstanding anything to the contrary set forth in
subsections (b) and (c) above, it is understood and agreed that:

                (i) Tenant may elect to exercise the Purchase Option prior to
Substantial Completion of Landlord's Work. If Tenant elects to exercise prior to
Substantial Completion of Landlord's Work, Tenant shall have the option to
either:

                    (A) Close the purchase pursuant to the time frame set out in
clause (ii) of subsection (b); or

                    (B) Extend the close of the purchase escrow until
Substantial Completion of the Core and Shell Work.

Such election shall be included in Tenant's notice of exercise of the Purchase
Option and, if Tenant fails to make an election in such notice, Tenant shall be
deemed to have elected to proceed pursuant to clause (B).

                (ii) If Tenant elects or is deemed to elect to proceed pursuant
to clause (i)(B), then:

                    (A) The close of escrow shall be extended until Substantial
Completion of the Core and Shell Work. Such extension shall not extend the due
diligence period pursuant to clause (ii) of subsection (b).

                    (B) The Project Purchase Price shall be determined in the
manner provided in clause (i) of subsection (b), based upon actual Development
Costs incurred by Landlord.

                    (C) Landlord shall not complete the Other Work, but only so
much thereof as is scheduled for completion by Substantial Completion of the
Core and Shell Work. Landlord shall assign the construction contract to Tenant,
and Tenant shall complete the balance of the Other Work.

                    (D) The Project Purchase Price shall include Landlord's
Development fee on all Development Costs actually included in the Project
Purchase Cost, but without the Breakage Fee, as defined below.

                    (E) Landlord's obligations pursuant to Section 6.1(b) shall
apply to the Shell and Core Work but not the Other Work.

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                    (F) Tenant shall be responsible for the second installment
of the Leasing Commission payment due to the Broker pursuant to Section 13.11
and the Commission Agreement referenced therein.

                (iii) If Tenant elects to proceed pursuant to clause (i)(A),
then:

                    (A) The close of escrow shall be in accordance with clause
(ii) of subsection (b).

                    (B) The Project Purchase Price shall be determined in the
manner provided in clause (i) of subsection (b), based upon actual Development
Costs incurred by Landlord through close of escrow.

                    (C) Landlord shall not complete either the Shell and Core
Work or the Other Work. Landlord shall assign the construction contract to
Tenant, and Tenant shall complete the balance of the Shell and Core Work and the
Other Work.

                    (D) Clause (ii)(D) shall apply except that there shall be a
"Breakage Fee" of ten percent (10%) of the Development Fee remaining to be paid.
For this purpose, the Development Fee shall be based upon the most current
Development Budget. The Breakage Fee shall be paid at close of the Escrow, if
not previously paid by Tenant to Landlord.

                    (E) Landlord shall have no obligation pursuant to Section
6.1(b) as to either the Shell and Core Work or the Other Work.

                    (F) Clause (ii)(F) shall apply.

Section 15.2 First Offer to Purchase

            (a) In the event (i) Tenant shall not exercise the Purchase Option,
(ii) Tenant or an assignee permitted without the consent of Landlord pursuant to
this Lease is then the tenant pursuant to this Lease, (iii) Tenant is not in
Default pursuant to this Lease and (iv) Landlord desires to sell the Project, or
any portion thereof, during the initial Lease Term (but not any Additional
Term), Landlord shall in writing notify Tenant (a "Sale Notice") of Landlord's
intent to sell the Project or portion thereof identified in the Sale Notice. The
Sale Notice shall be given prior to any offer by Landlord to sell the Project
(or any portion thereof) to a third party.

            (b) Upon receipt of a Sale Notice by Tenant, Tenant shall have
fifteen (15) business days to notify Landlord in writing of Tenant's intent to
purchase the Project or the portion thereof specified in Landlord's Sale Notice.
If Tenant timely notifies Landlord of its intent to purchase the Project or
portion thereof specified in Landlord's Sale Notice, the parties shall proceed
pursuant to subsection (c). If Tenant does not so timely notify Landlord, or
notifies Landlord that it does not intend to purchase the Project or portion
thereof specified in Landlord's Sale Notice (the "Sale Portion"), Landlord may
proceed pursuant to subsection (d).

            (c) If Tenant timely and properly notifies Tenant of its intent to
purchase the Project or Sale Portion, Tenant and Landlord shall, for thirty (30)
days after Tenant's notice, enter into exclusive negotiations to attempt to
reach a mutually satisfactory agreement as to price and terms of the sale. Such
negotiation process shall include at least one good faith written offer by
Tenant (the "Tenant Offer") of the price at which Tenant proposes to purchase
the Project or Sale Portion. If agreement as to price is reached during the
thirty (30) day exclusive negotiation period, the parties shall have an
additional thirty (30) day period to enter into and deliver a purchase and sale
agreement and open a purchase and sale escrow.

            (d) If (i) Tenant fails to timely give the notice provided for in
subsection (b) (or notifies Landlord that Tenant does not intend to purchase the
Project or Sale Portion), or (ii) Tenant and Landlord fail to reach an agreement
as to price within the thirty (30) day exclusive negotiation period pursuant to
subsection (c) or (iii) Tenant and Landlord reach an agreement as to price
during the exclusive negotiation period but fail to execute and deliver a
purchase agreement within the second thirty (30) day period pursuant to
subsection (c), then, in any such event, Landlord shall be free to sell the
Project or Sale Portion to any third party buyer,

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but only at a price greater than the purchase price contained in the last Tenant
Offer by Tenant pursuant to subsection (c) (the "Tenant Price").

            (e) Notwithstanding the provisions of subsection (d), if Tenant
shall have provided to Landlord at least one Tenant Offer during the exclusive
negotiation period and either (i) Landlord has not executed a definitive
purchase agreement with a third party buyer to sell the Project or Sale Portion
within twelve (12) months after the expiration of the first thirty (30) day
period in subsection (c) above (with no agreement as to price) or twelve (12)
months after the expiration of the second thirty (30) day period in subsection
(c) above (with no execution of a purchase and sale agreement), as applicable,
or (ii) Landlord proposes to sell the Project or Sale Portion at a price equal
to or less than the Tenant Price, then, in either such event, Landlord shall
provide to Tenant a Sale Notice pursuant to subsection (b) and Tenant shall have
the same right specified in subsection (b) to notify Landlord of its intent to
purchase, except that Tenant shall have five (5) business days from receipt of
Landlord's second Sale Notice to give the notice therein described. If Tenant
shall not have provided to Landlord at least one Tenant Offer during the
exclusive negotiation period, then the provisions of this subsection (e) shall
not apply, there shall be no second Sale Notice and Landlord shall be free to
sell the Project or Sale Portion to any third party at any price and upon any
terms agreed upon by Landlord and such third party.

            (f) If (i) Tenant timely and properly notifies Landlord of its
intent to purchase pursuant to subsection (b), Tenant and Landlord reach
agreement upon a sale price and execute and deliver a purchase and sale
agreement pursuant to subsection (c) or (ii) subsection (e) applies and Tenant
timely notifies Landlord of Tenant's intent to purchase in response to
Landlord's second Sale Notice, which purchase shall be at the Tenant Price,
Tenant and Landlord shall proceed to close the sale of the Project or Sale
Portion. Such sale shall be for cash at close of a purchase and sale escrow at
the price agreed upon pursuant to subsection (c) above or the Tenant Price, as
applicable. In addition, in connection with such sale:

                    (A) The purchase price to be paid shall be paid by delivery
of immediately available funds at close of the Escrow;

                    (B) Clause (ii) of Section 15.1(b) shall apply except that
the ten (10) day period to open Escrow shall run from execution and delivery of
a purchase and sale agreement (in the case of subsection (c)) or from Tenant's
acceptance of Landlord's second Sale Notice (in the case of subsection (e));

                    (C) Clauses (iii), (iv) and (v) of Section 15.1(b) shall
apply with respect to such sale; and

                    (D) Section 15.1(c) shall apply with respect to such sale,
except that the Purchase and Sale Agreement shall be modified as described in
Exhibit "M".

            (g) The process provided for in this Section 15.2, and Tenant's
rights hereunder, shall apply only during the initial Lease term and shall apply
only once. In other words, if the process provided for in this Section does not
result in a sale to Tenant of the Project or Sale Portion, and Landlord
thereafter again determines to sell the Project or any portion thereof, Landlord
need not provide to Tenant a Sale Notice and Tenant shall have no rights
pursuant to this Section 15.2 with respect to such sale.

                                  ARTICLE XVI.
                           CONDITIONS TO EFFECTIVENESS

Section 16.1 Conditions to Continued Effectiveness of Lease

            (a) As described in Section 14.9, Tenant has conducted a Phase I
hazardous materials assessment with respect to the Land. Tenant shall, at
Tenant's cost, promptly conduct a Phase II assessment of the Land and furnish a
copy of the results thereof to Landlord. Such assessment shall be completed and
such results shall be furnished to Landlord within thirty (30) days after the
last execution and delivery of this Lease. Each party shall, at its sole
discretion, have the right to review the results of the Phase II assessment. If
such Phase II assessment reveals material amounts of hazardous materials on the
Property other than those covered by

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Section 14.9(c)(ii), either party may terminate this Lease. Any such termination
of this Lease shall be by written notice from one party to the other given
within ten (10) days after receipt of the results of the Phase II assessment
(the "Drop Dead Date"). If neither party exercises such right of disapproval and
termination by the Drop Dead Date, such right shall lapse and thereafter not be
exercisable by either party. The provisions of this subsection (a) shall be
separately applied to the Expansion Land if Tenant exercises the Expansion
Option, with the thirty (30) day Phase II assessment period to run from the date
of Tenant's exercise of the Expansion Option.

            (b) Due to the zoning of the Land (Planned Development Industrial),
Tenant will be required to obtain City approval of the Master Plan. Such
approval is a discretionary approval by the City, and such approval may result
in a legal challenge (i.e., a court action) by a person or persons opposed to
such approval within thirty (30) days after the final approval of the Master
Plan (the "Second Drop Dead Date"). In the event that a legal challenge is filed
with respect to final approval of the Master Plan on or before the Second Drop
Dead Date, Tenant shall have the option to terminate this Lease. Such option
shall be exercised, if at all, by written notice to Landlord given at any time
after ninety (90) days after the filing of a timely legal challenge and prior to
a dismissal with prejudice or judgment in favor of Landlord with respect to such
challenge. If Tenant is not entitled to exercise such option, or is entitled to
exercise such option but fails to timely exercise, such option shall lapse and
thereafter not be exercisable by Tenant.

                For the purposes of this provision, it is understood and agreed
that (i) Landlord shall obtain the approval of the Master Plan and (ii) Landlord
shall bear the cost of defending any legal challenge to the approval of the
Master Plan. If this Lease is terminated pursuant to this subsection, Tenant
shall reimburse Landlord for one-half of the legal fees and costs incurred
pursuant to clause (ii). If this Lease is not so terminated (i.e., the defense
is successful), the legal fees and costs incurred in such defense shall be
included in Development Costs. If, however, Tenant retains separate counsel with
respect to such defense, the costs and fees of such separate counsel shall be
borne by Tenant.

            (c) If Tenant is entitled to exercise and timely exercises its
option pursuant to subsection (b), or either party timely exercises its option
pursuant to subsection (a), then, in either such event:

                (i) This Lease shall terminate on the date of receipt of notice
of termination;

                (ii) If the Memorandum of Lease shall previously have been
recorded, Landlord and Tenant shall promptly execute, acknowledge and deliver
the Mutual Cancellation of Lease and Landlord shall record the same;

                (iii) If this Lease is terminated pursuant to subsection (a)
above, or subsection (b) above, Landlord shall pay all design fees and costs
incurred by Landlord with respect to the Initial Premises and Tenant shall pay
all design fees and costs incurred by Landlord with respect to the Initial
Premises. In addition, in the event of a termination pursuant to subsection (b),
legal defense fees and costs shall be borne as provided therein. Whether this
Lease is terminated pursuant to subsection (a) or subsection (b), each party
shall bear its own costs and fees incurred in the preparation and negotiation of
this Lease; and

                (iv) Neither party shall have any further rights or obligations
pursuant to this Lease and Tenant shall have no further rights in or to the
Land.

            (d) Neither Landlord nor Tenant shall be obligated to commence
design of, respectively, Landlord's Work or Tenant's Work or to prepare the Map
until satisfaction of the condition set forth in Section 1.3. The cost of any
such work so undertaken by either party prior to the satisfaction of such
condition shall be borne in accordance with clause (c)(iii). If Landlord
undertakes any such work and the conditions set forth in such Section, Section
14.2 and this Section are satisfied, such costs (other than costs related to the
Map) shall be included in Development Costs for the Initial Premises as provided
in Section 14.3.

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            (e) Promptly following satisfaction of the condition set forth in
subsection (a) above, Landlord shall diligently proceed with the design of
Landlord's Work (i.e., the Core and Shell Work, the Other Work and the work on
the Grass Area). Similarly, promptly following satisfaction of the condition set
forth in subsection (a) above, Tenant shall diligently proceed with the design
of Tenant's Work (including Tenant's Special Facilities, the Security System and
the Communications System).

                                  ARTICLE XVII.
                                  OTHER MATTERS

Section 17.1 Subdivision of Land

            Landlord and Tenant acknowledge that the Land currently consists of
a single legal parcel. Tenant acknowledges that, initially, this Lease covers
the entire Land and all Landlord Improvements to be constructed by Landlord with
respect to the Initial Premises. Prior to the Lease Commencement Date with
respect to the Initial Premises, Landlord shall subdivide the Land into two
separate legal parcels consisting of, respectively, the Initial Premises Land
and the Expansion Land. In connection with such subdivision, the following shall
pertain:

            (a) Subject to the foregoing deadline, Landlord may elect to effect
such subdivision at any time after the execution and delivery of this Lease.

            (b) Landlord shall be solely responsible to prepare and process a
parcel map (the "Map") to effect such subdivision. Landlord shall pay all costs
incurred to prepare and process the Map, including, but not limited to,
engineering costs, all governmental fees and costs and the costs of recording
the Map. Such costs and fees shall not be included in Development Costs with
respect to the Initial Premises.

            (c) Tenant shall cooperate as reasonably requested by Landlord in
connection with the processing and approval of the Map, including execution of
the Map, if legally required, and execution and delivery of such other
instruments as may be required by law to process the Map and obtain all
approvals required to record the Map.

            (d) Any subdivision provided for in this Section shall:

                (i) Result in one legal parcel encompassing the entire Initial
Premises (i.e., all Buildings on the Initial Premises Land, associated parking
at a ratio of four (4) spaces per 1,000 square feet of Floor Area of such
Buildings and all associated hardscaping and landscaping).

                (ii) Not materially alter the rights and obligations of Tenant
pursuant to this Lease. In other words, no such subdivision shall reduce the
size of the Initial Premises Land or any rights of Tenant therein or reduce or
eliminate any rights of Tenant with respect to the Expansion Land, including the
rights of Tenant pursuant to Sections 1.4 and 1.5.

Section 17.2 Common Areas

            (a) Initially, Tenant shall be the sole Tenant of the Initial
Premises and shall have the exclusive right to use all areas and improvements
comprising a part of the Initial Premises and located outside of the Buildings
(the "Initial Premises Exterior Areas"). Similarly, if Tenant exercises the
Expansion Right, Tenant shall be the sole Tenant of the Expansion Building and
shall have the exclusive right to use all areas and improvements located on the
Expansion Land and located outside of the Expansion Building (the "Expansion
Land Exterior Areas").

            (b) If Tenant ceases to be the sole tenant of the Initial Premises
(i.e., Tenant exercises an Extension Option for less than all Buildings in the
Initial Premises), or Tenant becomes the tenant of only a portion of the Floor
Area on the Expansion Land (i.e., Tenant adds one or more Available Spaces to
the Premises), then, from and after the occurrence of either such event (a
"Common Area Event"):

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                (i) Those portions of the Initial Premises Exterior Areas or the
Expansion Land Exterior Areas not occupied by Tenant's Special Facilities shall
become "common areas." For this purpose, common areas shall mean all areas (and
all improvements thereon) within the exterior boundaries of the Initial
Premises, Expansion Premises or Land which (A) are not now or hereafter held for
exclusive use by Tenant, or any other tenant of the Initial Premises, Expansion
Premises or Land and (B) are made available for the common use of Landlord,
Tenant and other occupants and their respective employees and invitees in or
around the Initial Premises, Expansion Premises or Land. Common Areas shall
include, without limiting the generality of the foregoing, all parking areas,
entrances, exits, landscaped and planted areas, retaining walls, irrigation
systems and controllers, drains, sewers, lighting fixtures, wiring, electrical
panels and automatic control systems, driveways, delivery passages, loading
docks, sidewalks, stairways, ramps, open and enclosed courts and malls, central
identification signs and structures designed for the use of all owners,
occupants, employees and invitees and shall include any "greenbelt" or set back
areas maintained by Landlord on any parcel leased for the exclusive use of a
tenant. Common Areas shall include lobbies or other common areas within any
building which is leased to more than one tenant and shall include any legal
parcel which constitutes a portion of the Initial Premises, Expansion Premises
or Land and on which no buildings have been or may be constructed for occupancy.

                (ii) If but only if either the Initial Premises or the Expansion
Premises becomes a multi-tenant project, the rules and regulations attached
hereto as Exhibit "I" shall govern and control Tenant's use of such common areas
to the extent applicable thereto. Initially, such Exhibit "I" shall not apply to
the Initial Premises. Moreover, in the event of any inconsistency between this
Lease and Exhibit "I," this Lease shall control. No application of the Rules and
Regulations shall materially adversely affect Tenant's then operation in, at or
from the Premises.

                (iii) Landlord shall operate and maintain the common areas, and
Tenant shall pay to Landlord, as additional rent, a proportionate share of the
costs thereof, and Landlord's overhead allowance, in accordance with Article VI
of this Lease and an amendment to this Lease to be executed and delivered in
connection with and concurrently with such Common Area Event.

Section 17.3 Reciprocal Easement Agreement

            If there are any Common Facilities, as defined in Section 6.3(b),
Tenant shall initially operate, maintain, repair and replace such Common
Facilities pursuant to Section 6.3(b) and the costs of such operation,
maintenance, repair and replacement shall be borne by Tenant and Landlord as
provided in Section 6.3(b). If (a) imposed as a condition to approval or
recordation of the Map or (b) Tenant does not exercise either the Purchase
Option or the Expansion Option and either (i) Landlord proposes to develop the
Expansion Land or (ii) Tenant ceases to be the sole tenant of the Initial
Premises (any event in clause (a) and clause (b) a "Trigger Event" herein), then
Landlord shall prepare and Tenant and Landlord shall execute and deliver a
reciprocal easement agreement (the "REA") covering the use, maintenance, repair
and replacement of each such Common Facility and payment and allocation of the
costs thereof. The REA shall be intentionally short and simple and shall contain
the following principal provisions:

                    (A) A non-exclusive right of use for all tenants, occupants
(and employees, invitees and business visitors, if applicable) of the Initial
Premises as to any Common Facility located on the Expansion Land, and a
non-exclusive right of use for all tenants, occupants (and employees, invitees
and business visitors, if applicable) of the Expansion Land as to any Common
Facility located on the Initial Premises.

                    (B) Until the first to occur of (1) development of the
Expansion Land and (2) Tenant ceasing to be the sole tenant of the Initial
Premises, Tenant shall operate, maintain, repair and replace all Common
Facilities, whether located on the Initial Premises or the Expansion Land,
pursuant to Section 6.2 and pay all costs thereof.

                    (C) Subsequent to the first to occur of the events described
in clause (B), Landlord shall operate, maintain, repair and replace all Common
Facilities located on

                                       90
<PAGE>

the Expansion Land. The costs thereof shall be allocated between the tenants on
the Expansion Land and the tenant(s) on the Initial Premises based on their
respective Floor Areas.

                    (D) Until Tenant ceases to be the sole tenant of the Initial
Premises, Tenant shall operate, maintain, repair and replace all Common
Facilities located on the Initial Premises, with the costs thereof allocated as
provided in clause (C). Thereafter, Landlord shall operate, maintain, repair and
replace such common facilities, with the costs thereof allocated as provided in
clause (C).

                    (E) For the termination of the REA upon the first to occur
of (1) expiration or any earlier termination of this Lease and (2) a purchase by
Tenant of the entire Project.

                    (F) Such other provisions as are customary for instruments
such as the REA.

            Notwithstanding the provisions of clauses (A) through (E), if any
Common Facility is a driveway which supplies access to both the Initial Premises
and the Expansion Land, Tenant does not exercise the Expansion Option and
Landlord elects to develop the Expansion Land, then during the period of
construction by Landlord, Landlord shall maintain and repair such common
driveway, bear all costs thereof and keep open the driveway for ingress to and
egress from the Initial Premises.

Section 17.4 Relocation Costs

            Tenant shall be solely responsible, both as to performance and
payment of the costs thereof, to relocate from its present facilities to the
Initial Premises. No portion of the allowance shall be applied to payment of
such relocation costs.

Section 17.5 Trip Ends

            Landlord and Tenant acknowledge that, as provided in Section 1.6(a),
there is both a Floor Area Entitlement and a Trip Budget for the Land. In
connection therewith, Landlord and Tenant agree as follows:

            (a) Subject to subsection (c) below, the Entitlement and the Trip
Budget for the Land are as set forth in Section 1.6(a) and shall not change.

            (b) In the event that Tenant exercises the Purchase Option, upon the
close of the sale the entire Trip Budget will be assigned and allocated to
Tenant as a part of the sale as provided in the Purchase and Sale Agreement.

            (c) After the Purchase Option has expired and until the Expansion
Option expires without exercise by Tenant, Landlord shall reserve sufficient
a.m. and p.m. trips (up to the entire remaining Trip Budget) to satisfy the trip
requirements for development of the maximum remaining Entitlement for the
Expansion Land as Office. Any excess trips above the allocation to the Initial
Premises and those reserved pursuant to the immediately preceding sentence may
be allocated by Landlord to any other portion of the Home Ranch. If the
Expansion Option is not exercised, Landlord may allocate any portion of the Trip
Budget not allocated to the Initial Premises to any other portion of the Home
Ranch.

            (d) Any portion of the Trip Budget not allocated to the Initial
Premises or the Expansion Premises may be allocated by Landlord to any other
portion of the Home Ranch.

Section 17.6 Traffic Impact Fees

            As described on Exhibit "H" and in Section 14.3, Tenant shall be
required to pay Traffic Impact Fees with respect to the development of
Improvements to the Land. In connection with such fees (the "Fees"), Landlord
and Tenant agree as follows:

                                       91
<PAGE>

            (a) In the event that any or all of such Fees are not required to be
prepaid (i.e., in a single lump payment by Landlord), then (i) Landlord shall
pay the Fees (using Tenant's Loan funds) as to the Initial Premises as a part of
the Development Costs when required to be paid by the City with respect to the
Initial Premises, (ii) if Tenant exercises the Expansion Option, Landlord shall
pay such Fees as to the Expansion Premises as a part of the Development Costs
thereof when required to be paid by the City and (iii) if Tenant exercises the
Purchase Option, Tenant shall pay such Fees as to the Expansion Land at the time
Tenant develops the same.

            (b) If any or all of such Fees are required by the City to be
prepaid (i.e., in a single lump payment by Landlord, then (i) Landlord shall
reimburse itself for the Fees as to the Initial Premises (using Tenant's Loan
funds) as a part of the Development Costs for the Initial Premises when such
Fees would otherwise (absent such prepayment commitment) have been paid to the
City (i.e., upon issuance of a certificate of occupancy), (ii) if Tenant
exercises the Expansion Option, Landlord shall reimburse itself for the Fees as
to the Expansion Premises as a part of the Development Costs for the Expansion
Premises when such Fees would otherwise (absent such prepayment commitment) have
been paid to the City (i.e., upon issuance of a certificate of occupancy) and
(iii) if Tenant exercises the Purchase Option, Tenant shall reimburse Landlord
for the Fees applicable to the Expansion Land at Close of the Escrow based upon
the Fees which would be applicable to the Expansion Land assuming the
development of the full remaining Entitlement and a corporate headquarters
designation (the "Fee Reimbursement"). The Fee Reimbursement shall be the only
reimbursement required from Tenant to Landlord related to such prepaid Fees, and
the Fee Reimbursement shall not be changed based upon any recharacterization of
the Expansion Land by the City (e.g., recharacterization as office or
industrial).

            (c) The provisions of this Section shall survive the close of the
Escrow.

                                       92
<PAGE>

            IN WITNESS WHEREOF the parties hereto have executed this Build to
Suit Lease as of the ______ day of _______________, 2002.

                                   C.J. SEGERSTROM & SONS, a California
                                   partnership

                                   By   Henry T. Segerstrom Management LLC,
                                        a California limited liability company,
                                        Manager

                                        By
                                           -------------------------------------
                                                                         Manager

                                   By   HTS Management Co., Inc., a California
                                        corporation, Manager

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------

                                                     "Landlord"

(AFFIX CORPORATE SEAL)                  EMULEX CORPORATION, a California
                                        corporation

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------

                                                         "Tenant"

                                       93
<PAGE>

                                PLOT PLAN OF LAND

                                [Diagram of Land]

                                  EXHIBIT "A"

<PAGE>

                            LEGAL DESCRIPTION OF LAND

            That certain real property located in the City of Costa Mesa, County
of Orange, State of California and more particularly described as follows:

            Parcel 3 of Parcel Map 94-120, in the City of Costa Mesa, County of
Orange, State of California, as per Map filed in Book 284, Pages 7 and 10,
inclusive, of Parcel Maps, in the Office of the County Recorder of said County.

                                  EXHIBIT "B"

<PAGE>

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

LATHAM & WATKINS
650 Town Center Drive, Suite 2000
Costa Mesa, CA 92626
Attn:  James W. Daniels, Esq.

--------------------------------------------------------------------------------
                                                (Space Above for Recorder's Use)

               MEMORANDUM OF LEASE, PURCHASE AND EXPANSION OPTIONS
                 AND RIGHTS OF FIRST OFFER TO PURCHASE AND LEASE

                                               THIS LEASE HEREIN IS FOR A PERIOD
                                                     OF TIME LESS THAN 99 YEARS.

                                                              A.P.N.  140-041-61
                                                                      140-041-58

            C.J. SEGERSTROM & SONS, a California general partnership
("Landlord"), hereby leases to EMULEX CORPORATION, a California corporation
("Tenant"), that certain real property located in the City of Costa Mesa,
California and more particularly described on Exhibit "A" attached hereto (the
"Premises").

            1. The rent payable by Tenant and the other terms of the tenancy are
set forth in a certain unrecorded lease instrument between Landlord and Tenant
dated April 15, 2002 (the "Lease"), the provisions of which Lease are
incorporated herein by this reference, and covering the Premises. The term of
the Lease shall be for a period of ten (10) full lease years, commencing as
provided in the Lease.

            2. The Lease also provides to Tenant (a) the options to extend the
term of the Lease for two (2) additional periods of five (5) years each, (b) an
option to purchase the Premises, (c) certain first rights of offer to purchase
the Premises, (d) an option to add additional leased space to the Premises and
(e) certain rights of first offer to lease other space in the Premises. The
terms of all such options and first offer rights are as set forth in the Lease.

            3. This instrument is executed solely for recording purposes and
nothing herein shall be deemed or construed to modify or vary the terms of the
Lease.

                                  EXHIBIT "C"

<PAGE>

            IN WITNESS WHEREOF, the undersigned have executed this Memorandum of
Lease as of the _____ day of ____________________, 2002.

EMULEX CORPORATION, a              C.J. SEGERSTROM & SONS, a California
California corporation             partnership

By                                 By   Henry T. Segerstrom Management LLC,
  -----------------------------         a California limited liability company,
Title:                                  Manager
      -------------------------

By                                           By
  -----------------------------                 --------------------------------
                                                                         Manager
Title:
      -------------------------    By   HTS Management Co., Inc., a California
             "Tenant"                   corporation, Manager

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------
                                                          "Landlord"

                                       2
<PAGE>

STATE OF CALIFORNIA

COUNTY OF __________________

            On ________________________, before me,
____________________________, Notary Public, personally appeared
_____________________________________________ and
__________________________________________, personally known to me OR proved to
me on the basis of satisfactory evidence to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the persons, or the entity upon behalf of which the persons acted,
executed the instrument.

            WITNESS my hand and official seal.

                                            ------------------------------------
                                            Signature of Notary

STATE OF CALIFORNIA

COUNTY OF __________________

            On ________________________, before me,
____________________________, Notary Public, personally appeared
_____________________________________________ and
__________________________________________, personally known to me OR proved to
me on the basis of satisfactory evidence to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the persons, or the entity upon behalf of which the persons acted,
executed the instrument.

            WITNESS my hand and official seal.

                                            ------------------------------------
                                            Signature of Notary

<PAGE>

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

LATHAM & WATKINS
650 Town Center Drive, Suite 2000
Costa Mesa, CA 92626
Attn:  James W. Daniels, Esq.

--------------------------------------------------------------------------------
                                                (Space Above for Recorder's Use)

                          MUTUAL CANCELLATION OF LEASE

            THIS MUTUAL CANCELLATION OF LEASE is made and entered into as of the
______ day of _______________________, ______, by and between C.J. SEGERSTROM &
SONS, a California general partnership ("Landlord"), and EMULEX CORPORATION, a
California corporation ("Tenant"), with respect to the following:

                                    RECITALS

            A. Landlord is the landlord and Tenant is the tenant under that
certain unrecorded lease dated April 15, 2002. Such instrument and any and all
prior amendments or supplements thereto are herein collectively referred to as
the "Lease."

            B. The Lease is evidenced by a certain short form memorandum of
lease recorded on ______________________, 2002 as Instrument No. 2002-__________
in the Office of the County Recorder of Orange County, California.

            C. The Lease describes certain real property located in the City of
Costa Mesa, County of Orange, State of California and more particularly
described on Exhibit "A" attached hereto and incorporated herein by this
reference (the "Premises").

            D. Landlord and Tenant mutually desire to cancel and terminate the
Lease and all modifications, amendments and supplements thereof effective
___________________, which date shall be the date of cancellation and
termination of the Lease irrespective of the date of the execution and
recordation of this instrument.

            NOW THEREFORE, for and in consideration of the Premises, and for
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant do hereby mutually cancel the Lease and all
modifications, amendments and supplements thereof, and the leasehold created
thereby, effective on _________________.

            The undersigned declare:

            Documentary transfer tax is $0.

            ( ) Computed on full value of property conveyed, or

            ( ) Computed on full value less value of liens and encumbrances, or

            (x) Consideration less than $100

            ( ) Unincorporated area; (x) City of Costa Mesa

                                  EXHIBIT "D"
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Mutual
Cancellation of Lease as of the day and year first above written.

EMULEX CORPORATION, a              C.J. SEGERSTROM & SONS, a California
California corporation             partnership

By                                 By   Henry T. Segerstrom Management LLC,
  -----------------------------         a California limited liability company,
Title:                                  Manager
      -------------------------

By                                      By
  -----------------------------            --------------------------------
                                                       Manager
Title:
      -------------------------    By   HTS Management Co., Inc., a California
             "Tenant"                   corporation, Manager

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------
                                                          "Landlord"

                                       2
<PAGE>

STATE OF CALIFORNIA

COUNTY OF __________________

            On ________________________, before me,
____________________________, Notary Public, personally appeared
_____________________________________________ and
__________________________________________, personally known to me OR proved to
me on the basis of satisfactory evidence to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the persons, or the entity upon behalf of which the persons acted,
executed the instrument.

            WITNESS my hand and official seal.

                                            ------------------------------------
                                            Signature of Notary

STATE OF CALIFORNIA

COUNTY OF __________________

            On ________________________, before me,
____________________________, Notary Public, personally appeared
_____________________________________________ and
__________________________________________, personally known to me OR proved to
me on the basis of satisfactory evidence to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the persons, or the entity upon behalf of which the persons acted,
executed the instrument.

            WITNESS my hand and official seal.

                                            ------------------------------------
                                            Signature of Notary

<PAGE>

                        SCHEDULE OF LANDLORD IMPROVEMENTS

                         Emulex Corporation - Home Ranch

                             Updated March 19, 2002

                                  (Preliminary)

DATE                         MILESTONE

March 1 (done)        Architect (HOK) selected

March 20              Final lease document executed

April 19              Initial design program submitted by Emulex to Segerstrom
                      for review and approval (2 weeks)

May 6                 Design program approved by Emulex and Sengstrom

August 19             Emulex Master Plan submitted to City for processing (10
                      weeks)

October 28            Emulex Masterplan approved by City

November 4            Shell contractor commences construction of shell (7
                      months)

May 5, 2003           Interiors contractor commences construction of interior
                      improvements (3 months)

June 2                Completion of shell construction

August 4, 2003        Completion of interior improvement construction; Emulex
                      move-in

                                  EXHIBIT "E"

<PAGE>

                       FORM OF PURCHASE AND SALE AGREEMENT

                           PURCHASE AND SALE AGREEMENT
                                       AND
                            JOINT ESCROW INSTRUCTIONS

                             C.J. SEGERSTROM & SONS,
                        A CALIFORNIA GENERAL PARTNERSHIP

                                  AS "SELLER,"

                                       AND

                               EMULEX CORPORATION,
                            A CALIFORNIA CORPORATION,

                                   AS "BUYER"

                                  EXHIBIT "F"

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>     <C>                                                                      <C>
1.      DEFINITIONS................................................................1

        1.1            "Sale Land".................................................1
        1.2            "Due Diligence Period"......................................2
        1.3            "Funds".....................................................2
        1.4            "Improvements"..............................................2
        1.5            "Laws"......................................................2
        1.6            "Liabilities"...............................................2
        1.7            "Property"..................................................2
        1.8            "Personal Property".........................................2
        1.9            "Closing Date," "Closing," "Close of Escrow"................2
        1.10           "City"......................................................2
        1.11           "Days"......................................................3
        1.12           "Opening of Escrow".........................................3
        1.13           "Escrow Holder".............................................3
        1.14           "Business Day"..............................................3
        1.15           "Lease".....................................................3
        1.16           "Construction Contracts"....................................3
        1.17           "Construction Deliveries"...................................3
        1.18           "Warranties"................................................3
        1.19           "Deposit"...................................................4
        1.20           "Escrow"....................................................4
        1.21           "Development Agreement".....................................4
        1.22           "Breakage Fee"..............................................4
        1.23           "Traffic Impact Fees".......................................4
        1.24           "Trip Ends".................................................4
        1.25           "Tenant's Deed of Trust"....................................4

2.      SALE OF THE PROPERTY.......................................................5

3.      ESCROW.....................................................................5

        3.1            General Instructions........................................5
        3.2            Tax Reporting Person........................................5
        3.3            Opening of Escrow...........................................5

4.      PURCHASE PRICE.............................................................5

        4.1            Purchase Price..............................................5
        4.2            Deposit.....................................................6
        4.3            Closing Funds...............................................6

5.      CONDITIONS TO CLOSING......................................................6

        5.1            Buyer's Contingencies.......................................6
        5.1.1  Title Approval......................................................6
        5.1.2  Due Diligence Review................................................8
</TABLE>

                                       i

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>     <C>                                                                      <C>
        5.1.3  Performance by Seller...............................................9
        5.1.4  Truth of Seller's Representations and Warranties...................10
        5.1.5  Title Policy.......................................................10
        5.1.6  [Certificate(s) of Occupancy.......................................10
        5.1.7  No Condemnation....................................................10
        5.1.8  Casualty...........................................................10
        5.2            Seller's Opportunity to Cure; Termination of Escrow
                          and This Agreement......................................10
        5.2.1  Buyer's Approval, Disapproval or Waiver of Conditions..............10
        5.2.2  Seller's Cure with Respect to Title................................11
        5.2.3  Termination of Escrow and This Agreement by Buyer..................12
        5.3            Seller's Contingency.......................................12
        5.4            Limited Representations and Warranties.....................12
        5.5            Rights Upon Termination....................................13
        5.6            Seller's Inability To Cure.................................14
        5.7            Force Majeure..............................................14
        5.8            Satisfaction of Conditions.................................14

6.      CLOSING OF ESCROW.........................................................14

        6.1            Closing Date...............................................14
        6.2            Deposits by Seller.........................................16
        6.2.1  Grant Deed.........................................................16
        6.2.2  FIRPTA Affidavit...................................................16
        6.2.3  Mutual Cancellation................................................16
        6.2.4  Assignment.........................................................16
        6.2.5  Copies of Documents................................................16
        6.2.6  Evidence of Authority..............................................16
        6.2.7  Additional Items...................................................16
        6.2.8  Assignment of Development Agreement................................17
        6.3            Deposits by Buyer..........................................17
        6.3.1  Mutual Cancellation................................................17
        6.3.2  Evidence of Authority..............................................17
        6.3.3  Additional Items...................................................17
        6.3.4  Assignment.........................................................18
        6.3.5  Development Agreement Assignment...................................18
        6.4            Issuance of Title Policy...................................18
        6.5            Prorations.................................................19
        6.6            Closing Costs..............................................20
        6.7            Disbursements by Escrow Holder.............................20
        6.8            Completion and Distribution of Documents...................20
        6.9            Seller's Election of 1031 Exchange.........................21
        6.9.1  Simultaneous Exchange..............................................21
        6.9.2  Non-Simultaneous Exchange..........................................21
        6.9.3  Expenses and Documents.............................................21
        6.9.4  Indemnity..........................................................22
        6.10           Disputed Portion...........................................22
</TABLE>

                                       ii

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>     <C>                                                                      <C>
7.      DEFAULTS AND REMEDIES.....................................................23

        7.1            Default by Either Party....................................23
        7.2            Cancellation Charges.......................................23
        7.3            LIQUIDATED DAMAGES.........................................23
        7.4            Specific Performance by Seller.............................24

8.      REPRESENTATIONS AND WARRANTIES............................................25

        8.1            In General.................................................25
        8.2            By Each Party..............................................25
        8.2.1  Authority..........................................................25
        8.2.2  Binding Effect.....................................................25
        8.2.3  Compliance.........................................................25
        8.3            By Seller Only.............................................25
        8.3.1  Not a Foreign Person...............................................25
        8.3.2  Agreements.........................................................25
        8.3.3  Documents..........................................................26
        8.3.4  Hazardous Materials................................................26
        8.3.5  Organization.......................................................26
        8.3.6  Fee Ownership......................................................26
        8.3.7  No Litigation......................................................26
        8.3.8  Condemnation.......................................................26
        8.3.9  Zoning.............................................................26
        8.3.10 No Violation.......................................................27
        8.3.11 Utility Service....................................................27
        8.3.12 Development Agreement..............................................27
        8.3.13 Entitlement and Trip Budget........................................27

9.      CERTAIN EVENTS PRIOR TO CLOSING...........................................27

10.     POST-CLOSING MATTERS......................................................28

        10.1           Confidentiality............................................28
        10.2           Seller's Construction Warranty.............................29
        10.3           Assignment of Warranties...................................29
        10.4           General Release and Indemnification........................29

11.     BROKERS...................................................................30

12.     MISCELLANEOUS PROVISIONS..................................................31

        12.1           Assignment; Binding on Successors..........................31
        12.2           Fees and Other Expenses....................................31
        12.3           Approval and Notices.......................................31
        12.4           Jurisdiction...............................................32
        12.5           Interpretation.............................................32
        12.6           Gender; Joint Obligations..................................33
        12.7           No Waiver..................................................33
        12.8           Modifications..............................................33
</TABLE>

                                      iii
<PAGE>

                                TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>     <C>                                                                      <C>
        12.9           Severability...............................................33
        12.10          Survival...................................................33
        12.11          Merger of Prior Agreements.................................33
        12.12          Time of Essence............................................34
        12.13          Counterparts...............................................34
        12.14          Exhibits...................................................34
        12.15          Cooperation of Parties.....................................34
        12.16          Preliminary Change of Ownership Report.....................34
        12.17          No Third Party Beneficiaries...............................34
        12.18          Alternative Dispute Resolution Procedure...................34
        12.19          Property Disclosures.......................................36
        12.20          Escrow Holder Not to Be Concerned..........................36
        12.21          Possession.................................................37
        12.22          Calculation of Days........................................37
        12.23          Covenant as to Trip Ends...................................37
</TABLE>

                                       iv
<PAGE>

                                TABLE OF CONTENTS

Exhibit         Description
-------         -----------

   A            Legal Description of Land

   A-1          Depiction of Land

   B            Escrow General Provisions

   C            Form of Grant Deed

   D            Form of FIRPTA Certificate

   E            Form of Assignment of Personal Property

   F            Form of Assignment and Assumption of Development Agreement

                                       v

<PAGE>

                           PURCHASE AND SALE AGREEMENT
                          AND JOINT ESCROW INSTRUCTIONS

To:   Chicago Title Company            Sub-Escrow Identification:
      16969 Von Karman Avenue          203008184 ("Escrow")
      Irvine, California 92714         Attn:  Ms. Margie Wheeler, Escrow Officer
                                       Tel. No.  (949) 263-2500
                                       Fax No.   (949) 263-1022

            This Purchase and Sale Agreement and Joint Escrow Instructions (the
"Agreement") is entered into as of ________________ ____, 200__, by and between
C.J. SEGERSTROM & SONS, a California general partnership ("Seller"), and EMULEX
CORPORATION, a California corporation ("Buyer"), as follows:

                                    RECITALS

            A. Seller is the landlord and Buyer is the tenant pursuant to a
certain Build To Suite Lease dated April 15, 2002 (the "Lease") covering certain
Land and Landlord Improvements, both as defined in the Lease.

            B. Pursuant to Section 15.1 of the Lease, Buyer has exercised the
Purchase Option, as defined in such Section, to purchase all of the Land and all
Landlord Improvements constructed or to be constructed on the Land.

            C. Seller and Buyer enter into this Agreement to set forth more
fully the terms of the purchase in accordance with Recital B above.

                                    AGREEMENT

                           ARTICLE XVIII. DEFINITIONS

                The following terms, when used in this Agreement, shall have the
following meanings, unless the context clearly indicates otherwise:

<PAGE>

Section 18.1 "Sale Land" shall mean that certain real property located between
Sunflower Avenue and South Coast Drive to the west of Susan Street in the City
of Costa Mesa, California, together with all appurtenant rights thereto,
including, without limitation, all appurtenant easements and development rights
relating to the Sale Land and Improvements, but excluding those rights reserved
to Seller pursuant to Section 1.7. The Sale Land is described on Exhibit A
attached hereto and incorporated herein by this reference. The Sale Land is as
depicted on Exhibit A-1 attached hereto and incorporated herein by this
reference.

Section 18.2 "Due Diligence Period" shall mean the period described in Section
5.1.2 below, unless the date of expiration of such period would be a day other
than a Business Day, in which case the Due Diligence Period shall expire on the
next following Business Day.

Section 18.3 "Funds" shall mean immediately available funds in the form of cash,
wire transfer of funds, or a certified or bank cashier's check drawn on a
reputable financial institution.

Section 18.4 "Improvements" shall mean, collectively, all Landlord Improvements,
as defined in the Lease, located on the Sale Land, or any portion thereof.

Section 18.5 "Laws" shall mean all applicable governmental laws, codes,
ordinances, regulations, judgments, permits, approvals and other requirements.

Section 18.6 "Liabilities" shall mean any claim, liability, loss, cost, action,
damage, expense or fee, including but not limited to reasonable attorneys' fees
and costs of defense.

Section 18.7 "Property" shall mean, collectively, the Sale Land, the
Improvements and the Personal Property. The Property shall not include, and
there are hereby excluded from the Property and reserved to Seller, all water,
oil, minerals and gas located beneath the surface of the Sale Land but without
right of surface entry or entry within 200 vertical feet of the surface of the
Sale Land and without the right to deprive the Sale Land of structural support
or to interfere with Buyer's use of the Sale Land and Improvements.

Section 18.8 "Personal Property" shall mean, collectively, all Warranties, as
defined below, agreements, utility contracts, approvals (governmental or
otherwise), plans and specifications, entitlements and other rights relating to
the construction, ownership, use and operation of all or any part of the Sale
Land or the Improvements.

Section 18.9 "Closing Date," "Closing," "Close of Escrow" shall have the
meanings set forth in Section 6.1.

Section 18.10 "City" shall mean the City of Costa Mesa, California.

Section 18.11 "Days" shall mean, whenever a number of days is referred to
herein, calendar days unless expressly stated to be Business Days.

Section 18.12 "Opening of Escrow" shall have the meaning set forth in Section
3.3.

Section 18.13 "Escrow Holder" shall be the entity designated as such pursuant to
Section 3.1.

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Section 18.14 "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks located in Orange County, California may or must be
closed.

Section 18.15 "Lease" shall have the meaning set forth in Recital A.

Section 18.16 "Construction Contracts" shall mean any construction management,
construction or professional services contracts entered into by Seller, any
affiliate of Seller or any other person or entity on behalf of or for Seller, on
the one hand, and the respective contractors and consultants named therein (the
"Contractors"), on the other hand, in connection with the performance of
Seller's obligations to construct or perform Landlord's Improvements (also
defined as "Landlord's Work"), as defined in the Lease.

Section 18.17 "Construction Deliveries" shall mean those respective documents,
"as built" plans, ratifications, reports, surveys and studies which the
Contractors are required to deliver under the respective Construction Contracts,
but excluding the Warranties.

Section 18.18 "Warranties" shall mean all Contractor warranties and guaranties,
and all rights and claims of Seller, any affiliate of Seller or any other person
or entity acting on behalf of or for Seller with respect to the Improvements,
including without limitation, all rights of Seller under the Construction
Contracts for the Improvements and any bonds issued by any Contractor in
connection therewith, and all construction or manufacturer's warranties,
guaranties or certifications which are required to be delivered to Seller (or to
Buyer, if so provided in the Lease) under the Construction Contracts. Each
Warranty shall, at the time such Warranty is transferred to Buyer pursuant to
this Agreement, be either (a) fully assignable to Buyer, with no consent of any
third party required or with such third party's unconditional written consent,
if required or (b) issued in the name of Buyer.

Section 18.19 "Deposit" shall mean the entire deposit held by Escrow Agent
pursuant to Section 4.2, including all accrued interest thereon.

Section 18.20 "Escrow" shall mean the purchase and sale escrow with respect to
the Property established by Seller and Buyer pursuant to Section 3.1 below.

Section 18.21 "Development Agreement" shall mean that certain Development
Agreement for Home Ranch dated December 3, 2001 and effective January 3, 2002
between the City, on the one hand, and Seller, Segerstrom Properties LLC and
Henry T. Segerstrom Properties LLC, on the other hand, and recorded on March 20,
2002, as Instrument No. 2002-__________, in the Official Records of the County
Recorder of Orange County, California (the "Official Records").

Section 18.22 "Breakage Fee" shall mean an amount determined pursuant to Section
15.1 of the Lease and payable by Buyer to Seller at Close of Escrow. The
Breakage Fee is in addition to and not included in the Purchase Price.

                                       3
<PAGE>

Section 18.23 "Traffic Impact Fees" shall mean $___________, the amount
determined pursuant to Section 17.6 of the Lease and payable by Buyer to Seller
at Close of Escrow. The Traffic Impact Fees are in addition to and not included
in the Purchase Price. For this purpose, Traffic Impact Fees for the Expansion
Land, as defined in the Lease, shall be determined as if the Expansion Land is
classified as "Corporate Headquarters." The foregoing Traffic Impact Fees shall
be the only reimbursement required from Buyer to Seller related to such fees,
and shall not be changed based upon any recharacterization of the Expansion
Land.

Section 18.24 "Trip Ends" shall mean that number of aggregate daily number of
vehicle trips into or out of the Property, consisting of both A.M. and P.M.
trips, set forth in Exhibit F to this Agreement and applicable to the Property.

Section 18.25 "Tenant's Deed of Trust" shall mean that certain Deed of Trust,
Assignment of Rents and Leases, Security Agreement and Fixture Filing dated
March ___, 2002, executed by Seller in favor of Buyer, as Beneficiary, and
Escrow Holder, as Trustee, and recorded on ___________ ___, 2002, as Instrument
No. 2002-__________, in the Official Records.

                        ARTICLE XIX. SALE OF THE PROPERTY

                Buyer agrees to purchase from Seller, and Seller agrees to sell
to Buyer, the Property upon the terms, covenants and conditions set forth in
this Agreement.

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<PAGE>

                               ARTICLE XX. ESCROW

Section 20.1 General Instructions. Chicago Title Company is hereby designated as
escrow holder (the "Escrow Holder"). Escrow Holder's general conditions or
provisions, which are attached hereto as Exhibit B, are incorporated by
reference herein; provided, however, that in the event of any inconsistency
between Exhibit B and any of the provisions of this Agreement, the provisions of
this Agreement shall control. Buyer and Seller each shall also execute, deliver
and be bound by such further escrow instructions or other instruments as may be
reasonably requested by the other party or by Escrow Holder from time to time,
so long as the same are consistent with this Agreement. Escrow Holder shall
comply, but shall have no liability whatsoever for complying, with the
unilateral instructions of only one party without the consent of the other party
hereto if expressly required to do so in this Agreement.

Section 20.2 Tax Reporting Person. For purposes of complying with Internal
Revenue Code Section 6045(e), as amended effective January 1, 1991, Escrow
Holder is hereby designated as the "person responsible for closing the
transaction," and also as the "reporting person" for purposes of filing any
information returns (and Escrow Holder shall file any such required returns)
with the Internal Revenue Service concerning this transaction, as required by
law.

Section 20.3 Opening of Escrow. Escrow shall be deemed open when (a) this
Agreement, fully signed by both parties either together or in counterparts, is
delivered to Escrow Holder and (b) Buyer has delivered to Escrow Holder the
Deposit provided for, in Funds. The last of such events shall be the "Opening of
Escrow." The Opening of Escrow shall occur within five (5) Business Days after
the last execution of this Agreement. Escrow Holder shall immediately notify
Buyer, Seller and their respective attorneys orally and in writing of the
official date of the Opening of Escrow.

                           ARTICLE XXI. PURCHASE PRICE

Section 21.1 Purchase Price. The purchase price for the Property (the "Purchase
Price") shall be as determined pursuant to Section 15.1 of the Lease and
Sections 6.1 and 6.10 of this Agreement. The Purchase Price shall be paid as
provided in Sections 4.2, 4.3 and Article 6.

Section 21.2 Deposit. At the Opening of Escrow, Buyer shall deposit with Escrow
Holder the sum of $100,000 in Funds (the "Deposit"). Escrow Holder shall hold
the Deposit in such number of interest-bearing accounts as shall be fully
insured by the Federal Deposit Insurance Corporation, such account(s) to be
selected by Buyer on a funds investment form provided by Escrow Holder, subject
to collection and subject to availability of the Deposit for use in accordance
with the provisions of this Section. All interest earned on the Deposit shall
accrue to Buyer's benefit.

            Except as provided in Section 5.5, the Deposit and all accrued
interest thereon shall become non-refundable upon the expiration of the Due
Diligence Period, provided that Buyer has not earlier terminated this Agreement
and the Escrow pursuant to Article 5. If Escrow closes, the entire Deposit and
all accrued interest thereon shall be credited against the Purchase Price.

                                       5
<PAGE>

            If Escrow fails to close pursuant to the provisions of this
Agreement for any reason other than Buyer's default, the Deposit and all accrued
interest thereon, less any Escrow fees and costs for which Buyer is responsible,
shall be returned to Buyer in full. If Escrow fails to close under the
provisions of this Agreement as a result of Buyer's default, the entire Deposit
plus all accrued interest thereon shall be delivered to and retained by Seller
as non-refundable liquidated damages under Section 7.3 below.

Section 21.3 Closing Funds. On the last Business Day before the Close of Escrow,
Escrow Holder shall calculate and Buyer shall wire Funds into Escrow (using
wiring instructions reasonably satisfactory to Escrow Holder) in an amount
which, together with the credit for Tenant's Loan, as defined in the Lease,
shall equal the sum of the Purchase Price, the Breakage Fee, if applicable, the
Traffic Impact Fees, if applicable, plus any other sums payable by Buyer
hereunder (the "Closing Funds").

                       ARTICLE XXII. CONDITIONS TO CLOSING

Section 22.1 Buyer's Contingencies. The obligation of Buyer to purchase the
Property shall be subject to satisfaction of each of the conditions set forth in
this Section 5.1 and elsewhere in this Agreement, which conditions must be
satisfied within the respective time periods specified therefor. Seller and
Buyer expressly acknowledge and agree that each of the conditions in this
Section 5.1 is for the benefit of and may be waived by Buyer as hereinafter
provided in its sole discretion.

            (a) Title Approval.

                (i) Buyer shall have approved the condition of title to the Sale
Land as provided in this Section 5.1.1. Seller has obtained from Chicago Title
Company (the "Title Company"), under order number 203008184, a title binder or
leasehold policy pursuant to the Lease and covering the Sale Land (herein, the
"Preliminary Report"), together with legible copies of all documents (the "Title
Documents") shown on the Preliminary Report as exceptions affecting title to the
Property and a plot plan depicting the locations of the easements described in
the Preliminary Report. Buyer has approved all exceptions shown on Schedule B to
the Preliminary Report, which exceptions are listed on Exhibit "G" to the Lease
(such approved exceptions are herein referred to as the "Permitted Exceptions").
Seller shall deliver to Buyer an update (which may be an updated preliminary
title report or a supplement or amendment to the Preliminary Report) to the
Preliminary Report (the "Update"), together with legible copies of all new
exceptions, if any, appearing on the Update (the "Updated Title Documents") and
a plot plan depicting the location of any easements appearing on the Update and
not appearing on the Preliminary Report. Buyer shall take title to, and Seller
shall deliver, title to the Property subject only to the following exceptions
(the "Title Exceptions"): (i) all Permitted Exceptions, (ii) the Permitted
Development Easements, as defined in the Lease, (iii) the other items described
in Section 6.4, (iv) any exceptions created or caused by Buyer and (v) any new
items shown on the Update which are expressly approved in writing by Buyer. Any
item(s) not so expressly approved within ten (10) days after delivery of the
last of the items to be delivered pursuant to this Section shall be deemed
disapproved and must be addressed by Buyer pursuant to the two succeeding
paragraphs of this Section.

                                       6
<PAGE>

            Seller covenants that (x) Seller shall not create or cause any liens
or encumbrances against the Property other than Tenant's Deed of Trust and the
Permitted Development Easements and (y) Seller shall cause to be removed from
record title to the Property at or prior to the Close of Escrow all delinquent
taxes, bonds and assessments which are not the responsibility of Buyer pursuant
to the Lease, all involuntary liens or encumbrances against the Property other
than those which are created or caused by Buyer and any judgment liens against
Seller which affect title to the Property. The aggregate obligation of Seller
pursuant to clause (y) shall not exceed the cash portion of the Purchase Price.
As to any liens or encumbrances created by Seller against the Property in
violation of clause (x), Seller must remove the same at or prior to Closing
without regard to the amount thereof. If Buyer desires to have the Title Company
issue any endorsements to the Title Policy, then Buyer shall notify Seller and
Escrow Holder of the desired endorsements within thirty (30) days after delivery
of the Updated Title Documents. Any such endorsements shall be at the cost and
expense of Buyer, and issuance of such endorsements shall not be a condition to
Closing.

            For the purposes of the immediately preceding paragraph:

            (1) Seller shall make arrangements to remove from record title to
the Property at or prior to Close of Escrow all items described in clause (x)
other than Tenant's Deed of Trust and the Permitted Development Easements. Such
removal may be effected by payment, bonding or other method sufficient to permit
the Title Company to issue the Title Policy, as defined in Section 6.4.

            (2) Buyer has recorded a memorandum of the Purchase Option to
establish Buyer's priority as to the Property. As to delinquent taxes, bonds and
assessments for which Seller is responsible, Seller must remove the same from
record title to the Property at or prior to Close of Escrow in any manner
provided in clause (1). As to all other involuntary liens, encumbrances and
judgment liens against the Property, Buyer does not agree to subordinate its
priority as to the Property. Rather, Seller shall cause the same to be removed
from the Title Policy at or before Close of Escrow in any manner described in
clause (1), including escrow of the entire cash portion of the Purchase Price
for the benefit of the holders of such involuntary liens, encumbrances and
judgment liens, if necessary.

            (3) To the extent necessary to accomplish the matters described in
clause (2) or to address Intervening Liens pursuant to Section 5.1.1(b), Buyer
and Seller shall extend the Close of Escrow for such time as may be reasonably
necessary, not to exceed 120 days, without reduction in the Purchase Price, but
Buyer's Base Rent pursuant to the Lease shall be reduced in the manner set forth
in the last paragraph of Section 6.1 for any portion of such extension in excess
of thirty (30) days or, if Seller is not diligently attempting to eliminate such
Intervening Lien, for the entire period of such extension.

                (ii) Any liens, encumbrances, easements, restrictions,
conditions, covenants, rights, rights-of-way, and other matters affecting title
to the Property which are created or which may appear of record after the date
of the Update but before the Closing Date and which are not Title Exceptions and
are not created or caused by Buyer (collectively, the "Intervening Liens") shall
also be subject to Buyer's approval (pursuant to the last sentence of the first
paragraph of Section 5.1.1(a)) (after written notice to Buyer thereof from any
source)

                                       7
<PAGE>

and, unless so approved, must be addressed by Seller pursuant to the last two
paragraphs of such Section.

            (b) Due Diligence Review. Buyer shall have satisfactorily completed
its due diligence review of the Property and, subject to the limitations in this
Section 5.1.2, shall have approved or be deemed to have approved the condition
of the Property. The Due Diligence Period review shall be limited to (a)
environmental review of the Property, (b) structural review of the Improvements
on the Sale Land, (c) review of existing entitlements for the Expansion Land,
(d) review of the as-built plans for the Improvements constructed by Seller
(only if Landlord's Improvements have been Substantially Completed, as defined
in the Lease), the forms of the Warranties, reports and other deliveries in
connection with the Improvements constructed by Seller, including those required
to be delivered by Seller pursuant to Section 14.5 of the Lease. The Due
Diligence Period shall specifically extend to Buyer's review of contamination
with hazardous materials and similar physical features. Buyer may obtain a Phase
I Environmental Assessment with respect to the Property. Buyer shall not perform
a Phase II Environmental Assessment or any other invasive physical testing with
respect to the Property except with the prior approval of Seller or Seller's
representative, which approval shall not be unreasonably withheld, delayed or
conditioned if the Phase I Environmental Assessment indicates the need for such
invasive physical testing. For the purposes of this provision (i) invasive
physical testing shall include all borings and drillings, (ii) Seller's
representative shall initially be Jeffrey M. Reese and (iii) Seller may change
its representative at any time by written notice to Buyer. Such review and
investigation, any testing or sampling conducted by Buyer and all reports and
analyses prepared in connection therewith shall be the sole responsibility of
Buyer, both as to performance and payment therefor and shall be conducted within
the limitations set forth above.

            To the extent not previously delivered to Buyer, Seller shall,
within ten (10) days after the Opening of Escrow, deliver to Buyer correct and
complete copies of all pertinent reports, maps, surveys, contracts, studies,
warranties, guaranties and other written information in Seller's possession or
control with respect to the ownership or construction of the Property,
including, without limitation, all reports, maps, studies, notifications and
other written information in Seller's possession or control, if any, which
relate to the environmental condition of the Property (collectively, the
"Diligence Documents"). As used herein, the term "pertinent" shall mean related
to or concerning the Property as currently configured, approved and occupied,
and shall not include superseded parcel maps, outdated surveys, title reports
and policies, and similar material which is outdated (for whatever reason),
superseded or replaced by more current materials.

            Buyer shall be deemed to have approved all the matters referenced in
this Section 5.1.2 unless Buyer has delivered to Seller and Escrow Holder
written notice of its reasonable disapproval thereof, specifying with reasonable
particularity the grounds for such disapproval, within thirty (30) days after
the later of (A) the Opening of Escrow and (B) Seller's delivery of all
Diligence Documents (the "Due Diligence Period"). The exercise of Buyer's
discretion with respect to the Property shall be limited to the matters
described above in this Section 5.1.2.

                                       8
<PAGE>

            Buyer and Seller specifically agree that there is NO financing
condition to the close of the purchase of the Property. Accordingly, Buyer's due
diligence review pursuant to this Section shall not include such item (i.e.,
financing) and such issue shall not be a ground for termination of this
Agreement and the Escrow by Buyer pursuant to this Section or any other
provision of this Agreement.

            (c) Performance by Seller. On or before the Closing Date, Seller
shall have performed, and hereby covenants to perform, all obligations of Seller
hereunder to be performed by the Closing Date, including this Article 5 and:

                (i) Seller shall have executed and delivered to Escrow Holder
each and all of the documents to be delivered to Escrow Holder by Seller and
described in Section 6.2.

                (ii) Seller shall have delivered to Buyer the Construction
Deliveries.

                (iii) Seller shall have delivered correct and complete copies of
the Warranties.

                (iv) If the Closing Date will be on or after Substantial
Completion of the Landlord Improvements, Seller shall, notwithstanding anything
in this Agreement to the contrary, remain responsible to complete all punch-list
items with respect to the Landlord Improvements, whether prior to or subsequent
to the Closing Date. Seller shall retain from Seller's contractor sufficient
funds to insure completion of all punch-list work. For purposes of this
provision:

                    (A) Seller specifically covenants and agrees to complete all
punch-list items with respect to the Landlord Improvements, whether before or
after the Closing Date, and promptly following such completion, to deliver to
Buyer all Construction Deliveries not delivered at Close of Escrow.

                    (B) Buyer shall be entitled to retain the unpaid (as of the
Closing Date) portion of the Development Fee, as defined in the Lease, but not
to exceed ten percent (10%) of the total Development Fee, until completion of
all punch-list work. Buyer shall continue to make payments of the Development
Fee pursuant to the Lease after Close of Escrow (but not more than ninety
percent (90%) in the aggregate) and shall pay the retention to Seller, outside
of Escrow, within ten (10) business days after completion of the last of the
punch-list work.

                    (C) Buyer shall continue to Fund Development Costs, as
defined in the Lease, incurred after Close of Escrow (such as the retention for
Seller's contractor and the Development Fee) until all such Development Costs
are paid in full.

                (d) Truth of Seller's Representations and Warranties. Seller's
representations and warranties set forth in Sections 8.2 and 8.3 shall be true
and correct as of the Close of Escrow.

                (e) Title Policy. The Title Company shall be irrevocably and
unconditionally committed to issue to Buyer the Title Policy, subject only to
the matters set forth in Section 6.4.

                                       9
<PAGE>

            [Only if Close of Escrow at or after Substantial Completion.]

            (f) [Certificate(s) of Occupancy. Unless revoked or rendered invalid
due to the actions of Buyer, the certificate(s) or temporary certificate(s) of
occupancy issued for the Improvements (to the extent such certificate(s) is
(are) required for Buyer to occupy the Improvements) shall have been issued and
shall be in full force and effect.]

            (g) No Condemnation. There shall be neither pending nor threatened a
condemnation proceeding of the type described in the second paragraph of Article
9.

            (h) Casualty. The Lease shall not have been terminated pursuant to
Article VIII thereof.

Section 22.2 Seller's Opportunity to Cure; Termination of Escrow and This
Agreement.

            (a) Buyer's Approval, Disapproval or Waiver of Conditions. In the
event that Buyer disapproves of the condition set forth in Section 5.1.2, such
writing shall also state the specific grounds for disapproval and/or
non-satisfaction thereof. In the event that Buyer fails to approve, disapprove
or waive the condition in Section 5.1.2 within the time and in the manner
therein specified, then such condition shall be deemed conclusively approved or
satisfied by Buyer and thereafter shall not be a condition precedent to the
performance by Buyer and Seller of their respective obligations hereunder.

            (b) Seller's Cure with Respect to Title. To the extent that any
title exception, condition or Intervening Lien is not a Title Exception and is
not approved by Buyer in writing pursuant to Section 5.1.1(a) or Section
5.1.1(b), then Seller shall have until 5:00 p.m. Pacific Time on the fifth (5th)
Business Day following the expiration of Buyer's approval period without
approval by Buyer in which to investigate the disapproved item(s) and to notify
Buyer and Escrow Holder in writing how Seller has cured or will cure the items
not approved prior to the Close of Escrow.

            Any cure or proposed cure by Seller pursuant to this Section 5.2.2
shall be subject to the approval of Buyer in Buyer's reasonable discretion. Such
reasonable discretion shall include the right to review and approve or
disapprove any Seller Endorsement, as defined in Section 6.4, offered as a cure
of a title exception not approved by Buyer. Such approval shall be deemed given
unless Buyer disapproves of such cure or proposed cure by written notice to
Seller and Escrow Holder given within five (5) Business Days after Buyer's
receipt of Seller's written notice pursuant to this Section 5.2.2 describing in
reasonable detail the cure effected or to be effected. Such approval shall not
be unreasonably withheld so long as the cure effected or proposed by Seller does
not materially adversely affect the value, financeability or use of the Property
and is sufficient to (i) permit issuance of the Title Policy pursuant to Section
6.4 and (ii) permit Buyer to obtain a policy of ALTA Lender's Title Insurance
without the disapproved items for a loan to Buyer with respect to the Property.
It shall be reasonable for Buyer to disapprove a Seller Endorsement offered as a
cure if the Title Company is unwilling to commit to issue the same endorsement
on a subsequent sale of the Property by Buyer and, absent such Seller
Endorsement, the title exception endorsed over would materially adversely affect
the use or value of the Property. If Seller proposes a cure pursuant to this
Section 5.2.2, and Buyer

                                       10
<PAGE>

approves or is deemed to approve such cure, Seller shall use commercially
reasonable efforts, at Seller's sole cost and expense, to effect the cure
proposed by Seller on or prior to the Closing Date. If (A) Seller proposes a
cure, Buyer approves or is deemed to approve such cure but Seller is unable to
effect such cure or (B) if Buyer timely disapproves Seller's proposed cure with
respect to any item(s) described in this Section, then, in any such case, Buyer
may within five (5) business days after the event described in clause (A) or
(B), as applicable, in its sole and absolute discretion, elect by written notice
to Seller and Escrow Holder to cure such item(s). In the event of an election by
Buyer to cure pursuant to this Section, Close of Escrow shall be extended as
necessary as provided in Section 5.1.1(a), such cure shall be at Seller's cost
and expense (but only to the extent provided in Section 5.1.1(a)) and Seller
shall cooperate with Buyer and execute and deliver such documents, affidavits
and other instruments as reasonably necessary to enable Buyer to effect such
cure. Such covenant of cooperation shall not require Seller to incur any costs
or assume any obligations other than or in addition to those costs and
obligations to be paid or assumed by Seller pursuant to this Agreement,
including those set forth in Section 5.1.1(a).

            (c) Termination of Escrow and This Agreement by Buyer.

                (i) If (i)(A) there is a title exception, condition or
Intervening Lien which is not a Title Exception and is not approved by Buyer in
writing pursuant to Sections 5.1.1(a) or 5.1.1(b), AND (B) Buyer reasonably
disapproves a proposed cure by Seller pursuant to Section 5.2.2, then Buyer
shall have until 5:00 p.m. Pacific Time on the tenth (10th) Business Day
following the later of (1) its receipt of Seller's notice (2) the date that
Buyer is notified of and/or reasonably determines that Seller has not cured or
will not be able to cure such disapproved condition(s), to notify Seller and
Escrow Holder in writing that Buyer in its sole and absolute discretion either:

1.      Waives its prior objections to such condition and will proceed to
        purchase the Property, subject to any then remaining conditions, without
        any reduction in or offset to the Purchase Price; or

2.      Elects to cure such disapproved item(s) itself pursuant to the terms of
        Section 5.2.2; and

3.      Elect to extend the Escrow within the time frame set forth in Section
        5.1.1(a) as reasonably necessary to cure such disapproved condition; or

4.      Terminates Escrow and this Agreement.

                (ii) If the conditions set forth in Section 5.1 (other than
Section 5.1.1) fail to occur, then Escrow and this Agreement shall automatically
terminate upon receipt by Seller and Escrow Holder of Buyer's written notice
indicating such disapproval or the failure of such condition(s). Such notice, in
the case of the condition set forth in Section 5.1.2, shall be given within the
Due Diligence Period. Such notice, in the case of all other conditions set forth
in Section 5.1 (other than 5.1.1), may be given at any time prior to the Closing
Date.

                                       11
<PAGE>

Section 22.3 Seller's Contingency. The obligation of Seller to sell the Property
shall be subject to Buyer performing all obligations of Buyer hereunder to be
performed by the Closing Date.

Section 22.4 Limited Representations and Warranties. Except as expressly
provided to the contrary in this Agreement, including, without limitation,
Sections 8.2, 8.3 and 10.1, it is expressly understood and agreed that Buyer is
acquiring the Property "AS IS," in its present state and condition, without any
representations or warranties from Seller of any kind whatsoever, either express
or implied. In particular, subject to the foregoing, Seller makes no
representation or warranty respecting the use, condition, title, operation or
management of the Property, or compliance with any applicable Laws relating to
zoning, subdivision, planning, buildings, fire, safety, earthquake, health or
environmental matters, the presence or absence of toxic or hazardous waste or
materials, or compliance with any other covenants, conditions and restrictions
(whether or not of record). Seller has disclosed to Buyer the facts that (a) the
Sale Land was used in the farming operations of Seller, (b) in connection with
such farming operations, chemical pesticides and weed control agents may have
been applied, which applications may have resulted in residual levels of such
chemicals in the soil on the Sale Land and (c) Seller is aware of, and has
advised Buyer that, the property located to the west of the Land (the "Western
Parcel") and owned by the Los Angeles Times (the "Times") has underground
hazardous materials contamination believed to result from leakage from an
underground fuel tank maintained by the Times. To Seller's knowledge, such
hazardous materials have not migrated from the Western Parcel onto or under the
Land. Apart from the foregoing usages, Seller is not aware of any prior use of
the Property which would indicate that there are or may be hazardous materials
present in or on the Property. Buyer represents that it is knowledgeable in real
estate matters and is relying upon Buyer's own investigation and analysis in
purchasing the Property, together with the express representations and
warranties of Seller set forth herein. Buyer further represents that it has had,
and will have during the Due Diligence Period, ample opportunity to inspect and
will, in fact, make all of the investigations Buyer deems necessary in
purchasing the Property. The foregoing representation is expressly subject to
Seller's cooperation and compliance with the terms of this Agreement, including
but not limited to Section 5.1.2. If this Agreement is not terminated but Buyer
acquires the Property as provided herein, Buyer shall have thereby approved all
aspects of the Property and this transaction and thereby waives any claim or
liability against Seller, except as specifically provided herein to the
contrary.

Section 22.5 Rights Upon Termination.

(i) If the Escrow and this Agreement are terminated by Buyer in the manner and
within the applicable time period(s) provided pursuant to Section 5.2.3, or
otherwise for failure of Seller to perform its obligations pursuant to this
Agreement, then (i) all instruments in Escrow shall be returned to the party
depositing the same, (ii) Buyer shall return all items previously delivered by
Seller to Buyer, (iii) Buyer and Seller shall each pay one-half (1/2) of all
Escrow and title cancellation charges (unless Section 7.2 applies), (iv) the
Deposit and all accrued interest thereon shall be returned to Buyer and (v)
neither party shall have any further rights, obligations or liabilities
whatsoever to the other party concerning the Property by reason of this
Agreement, except as expressly stated in this Agreement to survive termination.

                                       12
<PAGE>

                (ii) If the Escrow and this Agreement are terminated by Seller
for failure of Buyer to perform its obligations pursuant to this Agreement, then
(i) all instruments in Escrow shall be returned to the party depositing the
same, (ii) Buyer shall return all items previously delivered by Seller to Buyer,
(iii) Buyer and Seller shall each pay one-half ( 1/2) of all Escrow and title
cancellation charges (unless Section 7.2 applies) and (iv) neither party shall
have any further rights, obligations or liabilities whatsoever to the other
party concerning the Property by reason of this Agreement, except as expressly
stated in this Agreement to survive termination. Moreover, Seller shall be
entitled to retain the entire Deposit and all interest accrued thereon.
Notwithstanding anything to the contrary set forth in this Agreement, the Lease
shall survive any termination of this Agreement and shall remain in full force
and effect.

Section 22.6 Seller's Inability To Cure. If a cure by Seller has been approved
by Buyer pursuant to Section 5.2, Seller shall use all commercially reasonable
efforts to effect, on or prior to the Closing Date, the approved cure proposed
by Seller. If Seller proposes a cure, Buyer approves such cure, and Seller fails
to effect such cure on or before the last Business Day before Close of Escrow,
then Buyer, in its sole discretion, may elect in writing any of the alternatives
available to Buyer pursuant to Sections 5.2.2 and 5.2.3; provided, however, that
by mutual agreement the parties may elect to extend the Close of Escrow as
provided in Section 5.1.1(a) in order to provide Seller with additional time to
cure any title item. The provisions of this Section shall not apply to Seller's
cure obligations pursuant to the second paragraph of Section 5.1.1(a), which
obligations shall be absolute.

Section 22.7 Force Majeure. In the event that, as of the Closing Date, (a) each
of the parties has performed its respective obligations hereunder, (b) the
Escrow is in a position to close pursuant to Article 6 and (c) the parties are
prevented from closing due to a cause beyond the reasonable control of the
parties, then:

                (i) The Escrow shall be extended for up to an additional thirty
(30) days beyond the date specified for closing in Section 6.1;

                (ii) The parties shall take all actions reasonably available to
them to attempt to eliminate such delaying cause and close the Escrow; and

                (iii) If the parties are unable to close the Escrow within such
additional thirty (30) day period, either party may terminate this Agreement and
the Escrow by written notice to the other party and Escrow Holder given at any
time after the end of such thirty (30) day period and prior to the close of the
Escrow. Any termination pursuant to this clause (c) shall have the effects
described in clauses (i) through (v) of Section 5.5(a).

                                       13
<PAGE>

Section 22.8 Satisfaction of Conditions. Each party shall cooperate as
reasonably requested by the other party to permit satisfaction of all conditions
to closing of the within transaction. The foregoing covenant of cooperation
shall not, however, require either party to pay any money or assume any
obligations in addition to those amounts and obligations agreed to be paid or
assumed by such party pursuant to this Agreement.

                        ARTICLE XXIII. CLOSING OF ESCROW

Section 23.1 Closing Date. Escrow shall close on or before 5:00 p.m. Pacific
Time on the tenth (10th) day following expiration of the Due Diligence Period
(the "Scheduled Closing Date"), unless (i) earlier terminated by Buyer or
Seller, (ii) extended pursuant to any express provision of this Agreement,
including but not limited to Sections 5.6 and 5.7 hereof or (iii) extended by
mutual agreement of Seller and Buyer, in each case pursuant to the applicable
provision(s) of this Agreement. The terms "Close of Escrow," "Closing Date"
and/or "Closing" are used in this Agreement to mean the time and date the Grant
Deed is recorded in the Office of the Recorder of Orange County, California (the
"Official Records").

            Notwithstanding the foregoing, if the Purchase Price has not been
determined at least three (3) Business Days prior to the Scheduled Closing Date,
then at Buyer's election:

                (i) The Escrow shall be extended as necessary to determine the
Purchase Price pursuant to Section 15.1 of the Lease, but not longer than an
additional thirty (30) days; or

                (ii) The Escrow shall close on the Scheduled Closing Date,
subject to the other provisions of this Agreement, and pursuant to Section 6.3
Buyer shall deposit with Escrow Holder the entire Purchase Price requested by
Seller in Seller's good faith determination thereof set forth in a notice to
Buyer and Escrow Holder delivered at least three (3) Business Days prior to the
Scheduled Closing Date (the "Seller Purchase Price"). However, Escrow Holder
shall disburse to Seller at Closing the Seller Purchase Price less the portion
thereof identified by Buyer in a good faith written notice to Seller and Escrow
Holder at the time of such deposit as in dispute (the "Disputed Portion"). The
Disputed Portion shall be retained by Escrow Holder and disbursed subsequent to
the Closing Date pursuant to Section 6.10.

The election by Buyer provided for in this Section shall be made by written
notice to Seller and Escrow Holder delivered at least one (1) business day prior
to the Scheduled Closing Date. If Buyer fails to make a timely election pursuant
to this Section, Buyer shall have elected to proceed pursuant to clause (b)
above. If (A) Buyer timely elects to proceed pursuant to clause (a) and (B) the
final Purchase Price has not been determined by the expiration of the thirty
(30) day period provided for in clause (a), Buyer and Seller shall proceed to
close the Escrow pursuant to clause (b) above on the fifth (5th) Business Day
following the expiration of such thirty (30) day period. Nothing contained in
this paragraph shall be deemed or construed to relieve either party of any
obligation, or to deprive either party of any right, with respect to the
determination of the Purchase Price pursuant to the applicable provisions of the
Lease. Moreover, nothing contained in this paragraph shall be deemed or
construed to affect the determination of the Rent Commencement Date or the
accrual of rent pursuant to the Lease.

                                       14
<PAGE>

            Notwithstanding anything in this Section to the contrary, if the
Closing Date would otherwise occur on or after November 25 of any calendar year,
Seller may elect to defer the Closing Date to the first Business Day of the next
succeeding January. Such election shall be made by written notice to Buyer and
Escrow Holder not less than five (5) days prior to the date on which the Closing
Date would otherwise occur. If Seller is entitled to defer the Closing Date
pursuant to this paragraph and elects to do so then, for the period from the
date on which Close of Escrow would have occurred but for such deferral through
the actual Close of Escrow, Base Rent pursuant to the Lease with respect to the
Initial Premises shall be reduced. Such reduction shall be based upon a
calculation of the Land component of Base Rent for such period using the prime
rate of Bank of America (Los Angeles) as in effect on the originally scheduled
Closing Date rather than eleven and one-half percent (11 1/2%). Seller shall
make the adjustment required pursuant to this paragraph, and any closing
adjustment required to reflect such Base Rent decrease shall be accomplished in
the manner provided in Section 6.5.

Section 23.2 Deposits by Seller. At or before 2:00 p.m. on the Business Day
before the Close of Escrow, Seller shall deliver to Escrow Holder the following
items for handling as described below; provided that Escrow Holder need not be
concerned with the form or content but only with manual delivery of all of the
following other than the items described in Sections 6.2.1, 6.2.2 and 6.2.3:

            (a) Grant Deed. A duly executed and acknowledged grant deed
conveying the Land and Improvements to Buyer in the form of attached Exhibit C
(the "Grant Deed");

            (b) FIRPTA Affidavit. At least two (2) counterparts of a duly
executed certificate, executed by Seller and in the form of Exhibit D attached
hereto (the "FIRPTA Affidavit");

            (c) Mutual Cancellation. At least two (2) counterparts, duly
executed and acknowledged by Seller, of a mutual cancellation of the Lease in
the form attached as Exhibit D to the Lease (the "Mutual Cancellation");

            (d) Assignment. At least two (2) counterparts, duly executed by
Seller, of an assignment (the "Personal Property Assignment") to Buyer of all
rights of Seller (or any affiliate of or person or entity acting for or on
behalf of Seller) in and to the Personal Property (other than the Warranties),
the Construction Contracts and the Construction Deliveries in the form of
Exhibit E attached hereto;

            (e) Copies of Documents. True and correct copies of all Personal
Property, Construction Contracts, Construction Deliveries and Warranties;

            (f) Evidence of Authority. Such certificates or documents as may be
reasonably required by Escrow Holder in order to cause the Title Policy to be
issued and the Close of Escrow to occur;

            (g) Additional Items. Any additional funds and/or instruments,
signed and properly acknowledged by Seller, if appropriate, as may be reasonably
necessary to comply with Seller's obligations under this Agreement; and

                                       15
<PAGE>

            (h) Assignment of Development Agreement. At least two (2)
counterparts, duly executed and acknowledged by Seller, the other entities
identified as "Assignor" therein and the City, of a partial assignment and
assumption of the Development Agreement in the form attached hereto as Exhibit F
(the "Development Agreement Assignment"). For this purpose, Seller shall use
good faith, commercially reasonable efforts to cause the City to execute,
acknowledge and deliver the Development Agreement Assignment at or prior to
Close of Escrow (and Buyer shall have the right to extend the Closing Date as
reasonably necessary in order to obtain City's execution of the Development
Agreement Assignment).

Section 23.3 Deposits by Buyer. At or before 2:00 p.m. on the Business Day prior
to the Close of Escrow (early enough on the Closing Date as to the wire transfer
provided for in Section 6.3.2 to permit closing on the Closing Date), Buyer
shall deliver or cause to be delivered to Escrow Holder:

            (a) Mutual Cancellation. At least two (2) counterparts, duly
executed and acknowledged by Buyer, of the Mutual Cancellation;

            6.3.2 FUNDS. Immediately available Closing Funds by wire transfer
into Escrow Holder's depository bank account in an amount equal to the Purchase
Price plus the Breakage Fee and the Traffic Impact Fees, in each case if
applicable, and all closing costs, charges and prorations payable by Buyer
hereunder less (a) the principal amount of Tenant's Loan pursuant to Section
14.3 of the Lease, (b) the Deposit and all accrued interest thereon and (c) any
credit to which Seller is entitled with respect to the Leasehold Policy, as
defined in the Lease. Concurrently with the delivery of the Closing Funds, Buyer
shall deliver to Escrow Holder a full release and reconveyance of Tenant's Deed
of Trust, duly executed and acknowledged by the Trustee thereunder (the "Full
Reconveyance"). For the purposes of this subsection, the Breakage Fee shall be
payable only if and to the extent (i) a Breakage Fee is payable pursuant to
Section 15.1 of the Lease (i.e., Landlord, at Tenant's election, does not
complete Landlord's Improvements) and (ii) the Breakage Fee has not previously
been paid by Buyer to Seller outside of and prior to Close of Escrow. Traffic
Impact Fees applicable to the Sale Land shall be payable only if the same shall
have been prepaid by Seller and Seller shall not, through the funding of
Development Costs by Buyer, have been reimbursed for the total such fees paid by
Seller with respect to the Sale Land.

            (b) Evidence of Authority. Any documents authorizing purchase of the
Property by Buyer which may be reasonably required by the Title Company in order
to issue the Title Policy described in Section 6.4 and close Escrow; and

            (c) Additional Items . Any additional Funds and/or instruments,
signed and properly acknowledged by Buyer, if appropriate, as may be reasonably
necessary to comply with Buyer's obligations under this Agreement.

            (d) Assignment. At least two (2) counterparts, duly executed by
Buyer, of the Personal Property Assignment.

            (e) Development Agreement Assignment. At least two (2) counterparts,
duly executed and acknowledged by Buyer, of the Development Agreement
Assignment.

                                       16
<PAGE>

Section 23.4 Issuance of Title Policy. At the Close of Escrow, the Title Company
shall be irrevocably committed to issue to Buyer a 1970 Form ALTA owner's
extended coverage policy of title insurance (the "Title Policy"), together with
such endorsements required by Buyer pursuant to Section 5.1 and/or such
endorsements, if any, which have been approved by Buyer and are required to cure
Buyer's objections to title ("Seller's Endorsements"), as applicable. Such Title
Policy shall have a liability amount in the amount of the gross Purchase Price
set forth in or determined pursuant to Sections 4.1 and 6.1, shall cover the
Property and shall insure fee title vested in Buyer, free of all encumbrances,
except:

                (i) All general and special real property taxes and assessments
a lien not yet delinquent or for which Buyer is responsible under the Lease;

                (ii) The Title Exceptions;

                (iii) The reservations contained in the Grant Deed;

                (iv) Any exceptions created or caused by the actions of Buyer or
its agents or employees;

                (v) The Permitted Development Easements; and

                (vi) Any other title exceptions expressly approved in writing by
Buyer pursuant to Sections 5.1.1(a) and/or 5.1.1(b).

Buyer shall be responsible, at Buyer's cost, to provide any survey required in
connection with the Title Policy and neither such survey nor such Title Policy
shall delay the Closing Date. If Buyer fails to provide any survey or other
requirement for the Title Policy by the Closing Date, Escrow Holder shall
nevertheless close the Escrow and provide to Buyer a CLTA Standard Owner's
Policy which complies with the provisions of this Section 6.4. The cost of the
Title Policy and the endorsements thereon shall be borne by Buyer and Seller as
provided in Section 6.6 below. In addition, Seller shall execute and deliver
such certificates, mechanics lien indemnifications and other instruments as
shall be reasonably required for the issuance of the Title Policy and/or the
endorsements described in this Section and in Section 5.1. Nothing herein,
however, shall be deemed or construed to require Seller to bear any costs or to
assume any obligations over and above those costs to be borne and those
obligations to be undertaken by Seller pursuant to this Agreement and/or the
Lease.

Section 23.5 Prorations.

                (i) All property taxes and assessments on the Property and any
service and maintenance charges for the Property, whether paid in installments
or not, shall be prorated between Buyer and Seller as of the Closing Date based
upon the most current statements and information available to Escrow Holder or
otherwise provided by Seller and agreed upon by Buyer, including any known
supplemental reassessments. Subject to the preceding proration provision, Buyer
shall be responsible for all installments of bonds and assessments secured by
the Property which are due and payable after the Closing. For the purposes of
this subsection, property taxes and assessments shall, to the extent that the
information is available to do so, be prorated through Escrow to reflect the
obligations of Buyer and Seller with respect thereto

                                       17
<PAGE>

pursuant to the Lease. Buyer and Seller recognize that, due to possible parcel
map prepayments and construction supplemental bills, it is likely or probable
that all real property taxes and assessments cannot be prorated through Escrow.
In light of such fact, Buyer and Seller agree that:

                    (A) Buyer and Seller shall make such prorations through
Escrow as can be reasonably made by them based upon the best information then
available to them.

                    (B) All prorations required and not possible through Escrow
shall be made by Buyer and Seller outside of and after close of the Escrow.

                    (C) Section 12.10 of the Lease shall be applicable to all
disputes arising out of the process provided for in clauses (i) and (ii) above.

                    (D) The covenants set forth in this Section 6.5(a), Section
12.10 of the Lease and Article IV of the Lease shall survive the Close of Escrow
until all prorations required by this Section are completed.

                    (E) Nothing contained in this subsection shall modify or
defeat the allocation of property taxes and assessments set forth in the Lease.

Subject to the foregoing, Seller and Buyer shall reasonably cooperate to develop
a proration closing statement for delivery to and use by Escrow Holder pursuant
to this subsection.

                (ii) Buyer shall obtain its own insurance with respect to the
Property and shall not succeed to Seller's insurance. There shall be no
proration with respect to liability insurance with respect to the Property. To
the extent that Seller carries casualty insurance with respect to the Property
and Landlord's Improvements thereon, Buyer shall be responsible for the premiums
therefor (and Seller's overhead allowance with respect thereto) through the
Closing Date to the extent specified in the Lease. Seller may cancel such
insurance as of the Closing Date and Buyer shall place its own casualty
insurance with respect to the Property and the improvements thereon. Except as
provided in subsection (a) above and this subsection (b), there shall be no
prorations or adjustments with respect to the Property.

                                       18
<PAGE>
 Section 23.6 Closing Costs. Subject to Section 7.2, Seller shall pay the
premium for a CLTA owner's standard title policy, any premiums for the Seller
Endorsements, if any, all documentary transfer taxes, all costs for recording
the Grant Deed and the Development Agreement Assignment, and one-half (1/2) of
all Escrow costs and fees. Buyer shall pay any additional premium for the Title
Policy (i.e., the difference between the premium for the aforementioned CLTA
policy and the premium for the Title Policy), the premiums for any endorsements
to the Title Policy (other than the Seller's Endorsements), all costs for
recording the Mutual Cancellation and the Full Reconveyance, one-half (1/2) of
all Escrow costs and fees, and any costs and expenses relating to Buyer's
obtaining the Full Reconveyance and any financing to acquire the Property. Any
other costs and fees shall be paid by the party causing the same to be incurred
or, if not directly attributable to a party, in accordance with southern
California escrow practice. Buyer and Seller shall each bear their own legal and
accounting costs and fees.

Section 23.7 Disbursements by Escrow Holder. Upon the Close of Escrow, Escrow
Holder shall disburse or retain, as applicable, all Funds deposited with Escrow
Holder by Buyer in payment of the Purchase Price, the Breakage Fee and the
Traffic Impact Fees, in each case as applicable, as follows:

            1. Deduct therefrom all costs chargeable to the account of Seller
            pursuant hereto;

            2. Retain any Disputed Portion pursuant to Sections 6.1 and 6.10 and
            distribute the remaining balance of the Funds to or at the direction
            of Seller promptly upon the Close of Escrow. If such Funds to be
            disbursed to Seller cannot be transferred to Seller in sufficient
            time after the Closing for Seller to invest the Funds itself on the
            Closing Date, then Escrow Holder shall hold and invest the Funds
            overnight as instructed by Seller; and

            3. To the extent that Buyer has deposited total Funds in excess of
            the Purchase Price, costs and fees payable by Buyer and any other
            amounts payable by Buyer, distribute such excess funds to or at the
            direction of Buyer promptly upon the Close of Escrow.

Section 23.8 Completion and Distribution of Documents. Escrow Holder shall also
undertake the following at or promptly after the Close of Escrow:

            4. Determine the documentary transfer tax based upon the Purchase
            Price and complete the documentary transfer tax statement.

            5. If necessary, Escrow Holder is authorized and instructed to
            insert the date Escrow closes as the date of any documents conveying
            or terminating interests herein or to become operative as of the
            Closing Date (including the Mutual Cancellation, Personal Property
            Assignment and Development Agreement Assignment). Compile completely
            executed (and acknowledged, if required) copies of the Mutual
            Cancellation, Personal Property Assignment and Development Agreement
            Assignment, if delivered in partially executed and acknowledged
            counterparts.

                                       19
<PAGE>

            6. Cause the Grant Deed, the Full Reconveyance, the Mutual
            Cancellation and the Development Agreement Assignment, in that
            order, and any other recordable instruments which the parties so
            direct to be recorded in the Official Records. Escrow Holder is
            hereby instructed not to affix the amount of the documentary
            transfer tax on the face of the Deed but to pay on the basis of a
            separate affidavit of Seller not made a part of the public record,
            in accordance with Section 11932 of the California Revenue and
            Taxation Code.

            7. Cause each non-recorded document to be delivered to the party
            acquiring rights thereunder, or for whose benefit such document was
            obtained.

Section 23.9 Seller's Election of 1031 Exchange. Seller may elect to sell the
Property to Buyer in the form of a tax-deferred exchange pursuant to Section
1031 of the Internal Revenue Code of 1986, as amended (a "1031 Exchange"). In
the event that Seller shall so elect, Seller shall give written notice to Buyer
and Escrow Holder of such election not less than five (5) days before the Close
of Escrow and the following shall apply:

            (a) Simultaneous Exchange. Seller shall attempt to identify before
the Closing other property which qualifies as "like-kind" property for a 1031
Exchange (the "Target Property") by Seller giving written notice to Buyer and
Escrow Holder identifying the Target Property prior to the Closing.

            (b) Non-Simultaneous Exchange. If Seller has not so identified the
Target Property before the Closing Date, then Seller shall proceed to Close of
Escrow as provided in this Agreement unless Seller at its option enters into an
exchange agreement with an accommodation party ("Accommodator") in order to
facilitate a non-simultaneous or so-called "Starker deferred" exchange. If an
Accommodator is so designated, Seller shall cause the Accommodator (i) to
acquire title to the Property from Seller at or before the Closing, (ii) to
transfer title to the Property to Buyer at the Closing for the Purchase Price,
and (iii) to acquire and convey the Target Property to Seller after the Closing.

            (c) Expenses and Documents. Buyer shall cooperate with any such 1031
Exchange, including but not limited to executing and delivering additional
documents reasonably requested or approved by Seller; provided, that Buyer shall
not be required to incur any additional Liabilities or financial obligations as
a consequence of any of the foregoing exchange transactions and Buyer's
cooperation shall be subject to the specific limitations set forth in this
Section. Without limiting the generality of the foregoing, Buyer shall not be
required to execute any agreement with an Accommodator unless such agreement is
required by Laws to effect such exchange. All expenses beyond those amounts
agreed to be paid by Buyer in this Agreement resulting from any aspect of the
1031 Exchange, and any difference in equity between the Target Property and the
Property, shall be borne solely by Seller. Any risk that such an exchange or
conveyance might not qualify as a tax-deferred transaction shall also be borne
by Seller. In no event shall the 1031 Exchange delay or extend the Closing Date.
Moreover, any out-of-pocket expenses incurred by Buyer in cooperating with such
exchange shall be credited against the Purchase Price.

                                       20
<PAGE>

            In no event shall Buyer be required to take title to any property,
including the Target Property, other than the Property in connection with the
1031 Exchange, and the Close of the Escrow shall not be contingent in any way
upon the acquisition of the Target Property. The 1031 Exchange shall not relieve
Seller from liability for any representation, warranty or covenant of Seller or
diminish any right or remedy of Buyer with respect to Seller. Buyer shall not be
liable to Seller for any adverse tax consequences suffered or incurred by Seller
in the event this Agreement is terminated or fails to close on the Closing Date,
whether or not such termination or failure is due to an actual or alleged
default by Buyer hereunder. This Section 6.9.3 shall survive the Close of Escrow
or termination of this Agreement.

            (d) Indemnity. Seller shall defend, indemnify and hold Buyer
harmless against and reimburse Buyer for any claims, demands, actions,
liabilities, damages, losses, obligations, fines, penalties, costs and expenses,
including, without limitation, attorneys' fees and all court costs which may
arise or be asserted against Buyer in connection with the 1031 Exchange, which
are greater, by reason of Seller's participation in any 1031 Exchange, than
those which Buyer would have incurred were it not for such 1031 Exchange.

Section 23.10 Disputed Portion. In the event that the Escrow closes on the basis
of clause (b) of Section 6.1, then the following shall pertain:

                (i) Escrow Holder shall retain rather than disburse to Seller
the Disputed Portion.

                (ii) The Disputed Portion shall be invested in the manner
provided in Section 4.2.

                (iii) The Disputed Portion shall be disbursed to Seller and/or
Buyer, as applicable, in accordance with:

                    (A) Mutual instructions of Buyer and Seller, which may be
delivered in counterparts; or

                    (B) The decision of an arbitrator in an arbitration held
pursuant to Section 12.10 of the Lease which determines the amount of the
Purchase Price. Delivery of such decision to Escrow Holder may be made by either
Seller or Buyer.

                (iv) Interest accrued shall be disbursed in the same
proportion(s) as disbursement of the Disputed Portion pursuant to subsection
(c).

                (v) Buyer and Seller shall each pay one-half ( 1/2) of the fees
of Escrow Holder for acting as the escrow holder of the Disputed Portion
pursuant to this Section 6.10.

                                       21
<PAGE>

                       ARTICLE XXIV. DEFAULTS AND REMEDIES

Section 24.1 Default by Either Party. If Escrow fails to close when and as
provided in Section 6.1 above (including any applicable extensions pursuant to
this Agreement) due to the failure of either party to perform any obligation
under this Agreement, then the nondefaulting party may elect, by written notice
to the defaulting party and to Escrow Holder, to terminate Escrow and this
Agreement. That termination shall be effective three (3) days after delivery of
such notice; provided, that (i) the nondefaulting party has performed or is in a
position to perform all conditions on its part to be performed as of the
termination date; and (ii) the defaulting party has not cured the default and
the nondefaulting party has not waived such default by the effective termination
date. Without in any way affecting the validity of such termination, both Buyer
and Seller agree to execute and deliver mutual termination instructions in a
form specified by Escrow Holder in order to satisfy Escrow Holder's reasonable
cancellation requirements. Except as otherwise provided in this Article 7,
Escrow Holder and the parties shall, upon such termination, return all of the
other party's funds and documents then held by them to the party depositing or
delivering the same. Thereafter, each of the parties shall be discharged and
released from all obligations and liabilities except as otherwise provided in
Sections 7.2, 7.3 and 7.4 and except for those obligations and liabilities which
are expressly intended to survive the termination of this Agreement.

Section 24.2 Cancellation Charges. A defaulting party shall be liable for all
escrow, title cancellation and similar charges, in addition to any other damages
or remedies due the nondefaulting party (except as limited by Sections 7.1, 7.3
or 7.4). If Close of Escrow fails to occur for any reason other than a party's
default, Buyer and Seller shall each pay one-half (1/2) of any escrow, title
cancellation or similar charges.

                                       22
<PAGE>

Section 24.3 LIQUIDATED DAMAGES. IF BUYER FAILS TO COMPLETE THE PURCHASE OF THE
PROPERTY AND SUCH FAILURE CONSTITUTES A BREACH OF THIS AGREEMENT, BUYER, BY ITS
INITIALS FOLLOWING THIS SECTION, AGREES THAT THE DEPOSIT AND ALL INTEREST
ACCRUED THEREON SHALL CONSTITUTE LIQUIDATED DAMAGES TO SELLER FOR SUCH BREACH
AND FAILURE TO CLOSE BY BUYER. THE PAYMENT OF SUCH AMOUNT IS NOT INTENDED AS A
FORFEITURE OR A PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS
3275 OR 3369 OR SIMILAR AUTHORITIES, BUT IS INTENDED TO CONSTITUTE LIQUIDATED
DAMAGES TO SELLER PURSUANT TO THE REQUIREMENTS OF CALIFORNIA CIVIL CODE SECTIONS
1671, 1676 AND 1677. BUYER AND SELLER AGREE THAT THE AFORESAID SUM IS A FAIR AND
REASONABLE AMOUNT FOR LIQUIDATED DAMAGES FOR SUCH A BREACH AND FAILURE TO CLOSE
UNDER THE CIRCUMSTANCES EXISTING AT THE TIME THIS AGREEMENT IS ENTERED INTO.
ESCROW HOLDER IS HEREBY AUTHORIZED AND INSTRUCTED TO RELEASE SUCH SUMS TO SELLER
UPON THE DELIVERY OF UNILATERAL WRITTEN INSTRUCTIONS TO ESCROW HOLDER BY SELLER,
AND ESCROW HOLDER IS HEREBY RELIEVED OF ALL LIABILITY THEREFOR. SELLER
ACKNOWLEDGES AND AGREES THAT SELLER'S RETENTION OF THE DEPOSIT AND THE ACCRUED
INTEREST THEREON PURSUANT TO THIS SECTION SHALL BE SELLER'S SOLE AND EXCLUSIVE
REMEDY AS TO SUCH DEFAULT(S) AND FAILURE TO CLOSE IN THE EVENT OF ANY DEFAULT(S)
AND FAILURE TO CLOSE BY BUYER. IT IS UNDERSTOOD AND AGREED THAT THIS SECTION
APPLIES ONLY TO A FAILURE OF BUYER TO CLOSE THE ESCROW, WHICH FAILURE IS A
DEFAULT OR BREACH OF THIS AGREEMENT. AS USED HEREIN, ALL REFERENCES TO THE
"DEPOSIT" SHALL MEAN THE AGGREGATE AMOUNT THEN HELD BY ESCROW HOLDER PURSUANT TO
ARTICLE 4.

            NOTWITHSTANDING THE FOREGOING, (a) IN NO EVENT SHALL THIS SECTION
7.3 LIMIT THE DAMAGES RECOVERABLE BY EITHER PARTY AGAINST THE OTHER PARTY (i)
UPON SUCH OTHER PARTY'S INDEMNIFICATION OBLIGATIONS PURSUANT TO THIS AGREEMENT
OR (ii) UPON OR WITH RESPECT TO THIRD PARTY CLAIMS AND (b) THIS SECTION 7.3
SHALL NOT LIMIT SELLER'S RIGHT TO RECOVER COSTS, EXPENSES AND ATTORNEYS' FEES TO
ENFORCE THE PROVISIONS OF THIS SECTION 7.3. NOTWITHSTANDING ANYTHING TO THE
CONTRARY HEREIN, NEITHER BUYER'S DEFAULT HEREUNDER NOR SELLER'S TERMINATION OF
THIS AGREEMENT AS A RESULT THEREOF SHALL TERMINATE THE LEASE.

                ---------------------            ----------------------
                Seller's Initials                Buyer's Initials

                                       23
<PAGE>

Section 24.4 Specific Performance by Seller. If Seller defaults under any
obligation in this Agreement, then in lieu of termination as provided in Section
7.1, Buyer may compel specific performance by Seller of Seller's obligation to
convey the Property as provided herein. In addition, Buyer may recover any
provable actual damages which Buyer may incur as the result of such default by
Seller, in addition to such specific performance. In no event, however, shall
Seller ever be liable for any punitive or consequential damages and Buyer hereby
specifically waives the right to recover the same. Actual damages recoverable by
Buyer may include those provided in Sections 11 and 12.2 below. By its signature
hereto, Seller acknowledges that damages would be an inadequate remedy to Buyer
in the event of a default by Seller pursuant to this Agreement and consents to
the entry of an order or judgment for specific performance in the event of a
default by Seller. Nothing contained in this Section shall preclude Buyer from
recovering the Deposit and Buyer's attorneys' fees and expenses of so doing
pursuant to Section 12.2 if Seller defaults and Buyer elects not to seek
specific performance.

                   ARTICLE XXV. REPRESENTATIONS AND WARRANTIES

Section 25.1 In General. In addition to any express agreements of either party
contained herein, the following constitute representations and warranties by
each party to the other, which shall be true and correct as of the expiration of
the Contingency Period and the Close of Escrow, in each case, and the truth and
accuracy of such representations shall constitute a condition to the Close of
Escrow for the benefit of the party to whom such representations and warranties
were made.

Section 25.2 By Each Party. Each party hereto covenants, represents and warrants
to the other as follows:

            (a) Authority. Such party has full power and authority to enter into
and comply with the terms of this Agreement, and the individuals executing this
Agreement on behalf of such party have actual right and authority to bind that
party to the terms of this Agreement.

            (b) Binding Effect. No action or consent which has not been obtained
is necessary to make this Agreement, and this Agreement and all documents to be
executed hereunder are, the valid and legally binding obligations of such party,
enforceable in accordance with their respective terms.

            (c) Compliance. To the best knowledge of such party, this Agreement
and that party's performance of the obligations herein contained do not and will
not contravene any provision of any present judgment, order, decree, writ or
injunction, or any provision of any Laws currently applicable to such party, or
any evidence of indebtedness or security therefor or other agreement to which
such party is a participant or by which any of such party's properties may be
bound.

Section 25.3 By Seller Only.

            (a) Not a Foreign Person. Seller represents and warrants to Buyer,
in accordance with Section 1445 of the Internal Revenue Code and Sections 18805,
18815 and 26131 of the California Revenue and Taxation Code, that (a) Seller is
not now, and at Closing

                                       24
<PAGE>

will not be, a "foreign person," and (b) Buyer need not withhold tax at the
Closing as a result of this transfer.

            (b) Agreements. There are no agreements entered into by Seller
concerning the operation and maintenance of the Property which would bind Buyer
or the Property for more than thirty (30) days after the Close of the Escrow,
other than the Title Exceptions and the Permitted Development Easements.

            (c) Documents. Seller has delivered (or will deliver) to Buyer
copies of all Diligence Documents in Seller's possession or under Seller's
control. The copies shall be true and correct copies of such Diligence Documents
as are in Seller's possession.

            (d) Hazardous Materials. Except as described in Section 5.4 of this
Agreement, to the best of Seller's actual knowledge, but with no duty to
investigate, there are no hazardous materials located in, on or under the Land
or located near the Land which could migrate onto the Land.

            (e) Organization. Seller and each partner of Seller which is not a
natural person has been duly organized and is validly existing under the laws of
the State of California. Seller has the full right, power and authority to
execute and deliver this Agreement and to perform the obligations of Seller
hereunder. The persons executing this Agreement on behalf of Seller are
authorized to do so and to bind Seller to the obligations of Seller hereunder.

            (f) Fee Ownership. Seller is the fee owner of the Property and no
person or entity other than Buyer has any present or future right (whether or
not contingent) to occupy, use or acquire any interest in the Property, or any
portion thereof, except as listed in the Title Report.

            (g) No Litigation. There is no action, suit, arbitration,
unsatisfied order or judgment, governmental investigation or proceeding pending,
or to Seller's knowledge, threatened against Seller which, if determined
adversely to Seller, could individually or in the aggregate materially interfere
with the rights of Buyer hereunder. There is no litigation which has been filed
against Seller that arises out of ownership of the Property and which, if
determined adversely to Seller, would materially adversely affect the Property,
the Intended Use, as defined in the Lease, or Seller's ability to perform
hereunder.

            (h) Condemnation. Seller has not received any written notice of any
condemnation proceeding related to the Property.

            (i) Zoning. The Sale Land is currently in the Planned Development
Industrial zoning classification of the City of Costa Mesa (the "City").

            (j) No Violation. Seller has not received any written notice from
any governmental entity or agency alleging that the Property violates any
provision of any federal or state statute or any ordinance of the City.

            (k) Utility Service. Main water, sewer, gas, electrical and
telephone lines are available in the streets adjacent to the Sale Land for
connections from such main lines to the Improvements constructed or to be
constructed on the Sale Land.

                                       25
<PAGE>

            (l) Development Agreement. The Development Agreement has not been
terminated, cancelled, modified or amended and there are no proceedings pending
or threatened to cancel, terminate, modify or amend the Development Agreement.

            (m) Entitlement and Trip Budget. The Floor Area, as defined in the
Lease, entitlement of the Sale Land is a 0.4 FAR (the "Entitlement"). The trip
budget for the Sale Land is 376 trips (AM) and 362 (PM) (the "Trip Budget").
There are no proceedings pending or threatened to modify the zoning of, the
Entitlement of or the Trip Budget for the Sale Land.

            For purposes of Sections 8.2.3, 8.3.4 and 8.3.7, Seller's knowledge
shall mean to the knowledge of Seller's agents, Jeffrey M. Reese and J. Barney
Page, and as to 8.3.4 only, Theodore W. Segerstrom.

            Notwithstanding anything herein to the contrary, all representations
and warranties set forth in this Section 8 shall survive the Closing for a
period of one (1) year thereafter, but only as to claims made by a demand for
arbitration filed and served within one (1) year after the Closing Date, or
shall be forever barred.

                  ARTICLE XXVI. CERTAIN EVENTS PRIOR TO CLOSING

                If any portion of the Property, or any interest therein, is
taken before the Closing Date as a result of any street widening or other
condemnation (including the filing of any notice of intended condemnation or
proceedings in the nature of eminent domain), Seller shall immediately give
Buyer notice of the taking. Buyer shall nonetheless proceed with the purchase of
the Property and consummate this Agreement in accordance with its terms, and all
awards payable by reason of such taking shall belong to Buyer.

                Notwithstanding the foregoing, in the event of any taking by
condemnation (including the filing of any notice of intended condemnation or
proceedings in the nature of eminent domain or the threat of such proceedings)
prior to the Closing Date of such portion of the Property as shall adversely
affect the ability of Buyer to utilize the remainder of the Property for the
Intended Use, Buyer shall have the option to terminate this Agreement. Such
option shall be exercised, if at all, by written notice to Seller and Escrow
Holder given within fifteen (15) days after Buyer's receipt from Seller of
written notice of such taking or intended taking and the portion of the Property
taken or proposed to be taken. If Buyer is entitled to terminate and timely and
properly terminates this Agreement pursuant to this Article 9, then:

                (i) This Agreement shall terminate upon Seller's receipt of
Buyer's notice of termination;

                (ii) All instruments in Escrow shall be returned to the party
depositing the same;

                (iii) Buyer and Seller shall each pay one-half (1/2) of all
Escrow and title cancellation charges;

                                       26
<PAGE>

                (iv) Neither party shall have any further rights, obligations or
liabilities whatsoever to the other party concerning the Property by reason of
this Agreement except as expressly stated in this Agreement to survive
termination; and

                (v) The Lease shall continue in effect unless terminated
pursuant to Section 10.1 thereof.

If Buyer does not timely and properly terminate this Agreement pursuant to this
Article 9, then the first paragraph hereof shall apply with respect to such
taking or proposed taking.

                                       27
<PAGE>

                       ARTICLE XXVII. POST-CLOSING MATTERS

Section 27.1 Confidentiality. Each party shall hold in strict confidence the
terms and conditions set forth in this Agreement, and the other information
related to the Property obtained from the other (collectively, "Confidential
Information"). Notwithstanding the foregoing, neither party shall incur
liability for disclosure of Confidential Information: (a) to its employees and
employees of its affiliates, accountants, attorneys, insurance brokers,
consultants, and others to the extent such disclosure is necessary or desirable
in connection with Buyer's evaluation of the Property (in which event, to the
fullest extent possible, the person receiving the information shall be informed
of its confidential nature and instructed to maintain the confidentiality of the
same), (b) that is, or hereafter becomes, part of the public domain other than
through a breach by Buyer or Seller of its obligations in this paragraph, (c)
that Buyer receives from a third party who is not under the confidentiality
obligations contained in this paragraph, (d) in response to a subpoena in
litigation, or (e) as otherwise necessary in connection with litigation or as
required by law. Each party will use reasonable efforts to consult with the
other prior to responding to any inquiries made by any third party respecting
the transactions contemplated by this Agreement. Whether or not the Escrow
closes, each party shall treat as Confidential Information the Purchase Price
for a period of twelve (12) months after Close of Escrow or termination of this
Agreement, as applicable. Notwithstanding the foregoing, Seller and Buyer
acknowledge and agree that Buyer may or will be required to disclose the terms
hereof and/or to file this Lease in or with Buyer's public filings pursuant to
the Securities Act of 1933, the Securities Exchange Act of 1934 or the rules and
regulations under such acts.

Section 27.2 Seller's Construction Warranty. Neither anything contained in this
Agreement nor the Close of the Escrow shall terminate or otherwise affect
Seller's obligations contained in Section 6.1(b) of the Lease, all of which
obligations shall survive for the entire period set forth in such Section (the
"Warranty Period"). The obligations of Seller pursuant to such Section 6.1(b)
are herein referred to as "Seller's Warranty Obligations."

Section 27.3 Assignment of Warranties. Upon the expiration of the Warranty
Period, Seller shall deliver to Buyer the originals of all Warranties and shall
execute and deliver to Buyer an assignment of all Warranties. Such assignment
shall be in the form attached hereto as Exhibit E, including the representations
and warranties therein contained. To the extent that any Warranty runs in favor
of a parent, subsidiary or affiliate of Seller or any other person or entity
acting on behalf of or for Seller, Seller shall cause such parent, subsidiary,
affiliate or other person to join in such assignment.

Section 27.4 General Release and Indemnification.

                (i) Except as expressly provided to the contrary in this
Agreement, Buyer hereby releases the "Releasees" hereunder, consisting of Seller
and each of its past, present and future partners, officers, trustees,
beneficiaries, members, managers, employees, agents, representatives, attorneys,
successors and assigns, or any of them, of and from any and all manner of action
or actions, cause or causes of action, in law or in equity, suits, debts, liens,
contracts, agreements, promises or Liabilities of any nature whatsoever, known
or unknown, fixed or contingent, arising out of, based upon or relating to the
Property, including the existence of toxic or hazardous wastes or materials of
any kind, on, under or about the Property, or arising

                                       28
<PAGE>

from any use of the Property, including, any claims for contribution or
reimbursement pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (42 U.S.C. Section 6601, et seq.), or any
other or similar state or federal environmental statute, rule or decision.

            The foregoing release shall not apply to (i) any claims with respect
to the rights reserved (i.e., minerals, water, etc.) by Seller as described in
Section 1.7, (ii) any claim in connection with a breach of a representation,
warranty or indemnification obligation hereunder, (iii) claims for
indemnification by Buyer pursuant to Section 13.7(b) of the Lease, (iv) the
other obligations of Seller which survive the Close of Escrow as provided in
this Agreement, (v) the obligations of Seller pursuant to Article 11 of this
Agreement and Section 6.1(b) of the Lease and (vi) any claim for fraud on the
part of Seller in connection with this Agreement or the Lease. Section 12.2
shall apply with respect to any claims of the types described in clauses (i)
through (vi). Any claim described in this paragraph must be made by a demand for
arbitration filed and served within one (1) year after the Closing Date or shall
be forever barred. Provided, however, that, as to the representations and
warranties to be set forth in the assignment provided for in Section 10.3, such
one (1) year period shall run from the date of delivery of such assignment to
Buyer In addition, Buyer agrees that it will not initiate any action (but
excluding a cross-complaint for purposes of bringing Seller into any action
initiated by a third party) against Seller pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any other or similar state or federal environmental statute, rule, or decision,
but shall not be required to indemnify Seller against any liability which Seller
may have under any such statute, rule or decision as the result of Seller's
ownership of the Property.

            BUYER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY LEGAL COUNSEL AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES AS FOLLOWS:

            "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
            NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
            THE RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED
            HIS SETTLEMENT WITH THE DEBTOR."

            BUYER, BEING AWARE OF THIS CODE SECTION, HEREBY EXPRESSLY WAIVES ANY
RIGHTS IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT.

                                --------------------
                                Buyer's Initials

                (ii) In addition to the other indemnities of Buyer contained
herein, those provisions of the Lease by which Buyer indemnifies Seller from and
against Liabilities based upon or relating to the Property, whether accruing
prior to or after the Closing Date, shall survive the Closing. Payment shall not
be condition precedent to enforcement of any such indemnification provision.

                                       29
<PAGE>

                (iii) The provisions of this Section 10.4 shall survive the
execution and delivery of this Agreement and the Grant Deed and the occurrence
of the Closing.

                             ARTICLE XXVIII. BROKERS

                    Seller shall pay to Julien J. Studley, Inc. ("Broker") a
commission with respect to that portion of the Property denominated as the
Expansion Land in the Lease. Such commission shall be payable in the amount and
at the time determined in that certain letter agreement dated July 20, 2001
(with any amendments thereto, the "Letter") between Seller and Broker and shall
not be included in Development Costs pursuant to the Lease. Seller shall
indemnify, defend and hold Buyer and the Property harmless against any liability
for the commission due Broker pursuant to the Letter with respect to the within
sale. The last two sentences of the next succeeding paragraph shall also apply
with respect to such indemnification obligation.

                    Except as provided in the immediately preceding paragraph,
Seller and Buyer each represents and warrants to the other that no broker or
finder or other real estate agent is entitled to any commission, finder's fee or
other compensation with respect to this Agreement resulting from any action on
its part. Each party agrees to indemnify, defend, protect and hold the other
party and the Property harmless against any liability for any broker's
commission or finder's fee for which it is responsible or which is asserted as a
result of its own act or omission in connection with this transaction. Payment
shall not be a condition precedent to enforcement of the foregoing
indemnification provision. The foregoing indemnification provision shall include
a covenant by each indemnifying party to defend the indemnified party against
all claims for which indemnification is available with legal counsel selected by
its liability insurance carrier or otherwise reasonably satisfactory to the
indemnified party.

                                       30
<PAGE>

                     ARTICLE XXIX. MISCELLANEOUS PROVISIONS

Section 29.1 Assignment; Binding on Successors. This Agreement shall be binding
upon and shall inure to the benefit of Buyer and Seller and their respective
representatives, successors and assigns; provided, however, that Buyer shall not
have the right to assign this Agreement or any interest or right under this
Agreement or under the Escrow or to appoint a nominee to act as Buyer under this
Agreement without obtaining the prior written consent of Seller, which consent
shall be in the sole and absolute discretion of Seller. No such assignment shall
relieve Buyer of its obligations hereunder. Any attempted assignment in
violation of this provision shall be null and void.

Section 29.2 Fees and Other Expenses. Except as otherwise provided herein, each
of the parties hereto shall pay its own fees and expenses in connection with
this Agreement. In any dispute or action between the parties arising out of this
Agreement or the Escrow, or in connection with the Property, the prevailing
party shall be entitled to have and recover from the other party all losses,
damages, costs and expenses (including without limitation court costs and
reasonable attorneys' fees) related thereto, whether by final judgment or by out
of court settlement.

Section 29.3 Approval and Notices. Any approval, disapproval, demand, document
or other notice or communication (collectively, a "Notice") required or
permitted to be given hereunder shall be in writing and may be served
personally, by commercial delivery or private courier service, by registered or
certified mail (return receipt requested, postage prepaid) or by facsimile
transmission. Any Notice shall be effective (i) upon personal delivery, (ii)
when received or refused as indicated by the date on the return invoice or
receipt showing delivery or refusal or (iii) upon receipt of a legible
transmission on a Business Day. The parties' addresses for Notices are as
follows:

               TO BUYER:            Emulex Corporation
                                    3535 Harbor Boulevard
                                    Costa Mesa, California 92626
                                    Attn:  Ms. Sadie Herrera,
                                           EVP HR and Facilities
                                    Fax: (714) 556-0252

               COPIES TO:           John F. Simonis, Esq.
                                    Paul, Hastings, Janofsky & Walker, LLP
                                    695 Town Center Drive, 17th Floor
                                    Costa Mesa, California 92626
                                    Fax: (714) 979-1921

               TO SELLER:           C.J. Segerstrom & Sons
                                    3315 Fairview Road
                                    Costa Mesa, California 92626
                                    Attn:  Chief Financial Officer
                                    Fax: (714) 918-4425

                                       31
<PAGE>

               COPIES TO:           LATHAM & WATKINS
                                    Twentieth Floor
                                    650 Town Center Drive
                                    Costa Mesa, California 92626
                                    Attn:  James W. Daniels, Esq.
                                    Fax:   (714) 755-8290

Notice of change of address shall be given by written Notice in the manner
detailed in this paragraph. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no Notice was given
shall be deemed to constitute receipt of the Notice.

                                       32
<PAGE>

Section 29.4 Jurisdiction. This Agreement shall be construed under the laws of
the State of California. Venue and jurisdiction of any action arising out of
this Agreement shall exclusively be in any state or federal court sitting in the
County of Orange, State of California.

Section 29.5 Interpretation. Each provision herein shall be construed in all
cases as a whole according to its fair meaning, neither strictly for nor against
either Buyer or Seller and without regard for the identity of the party
initially preparing this Agreement. Titles and captions are inserted for
convenience only and shall not define, limit or construe in any way the scope or
intent of this Agreement. References to sections are to sections as numbered in
this Agreement unless expressly stated otherwise.

Section 29.6 Gender; Joint Obligations. As used in this Agreement, the
masculine, feminine or neuter gender and the singular or plural number shall
each be deemed to include the others where and when the context so dictates. If
more than one party is the Buyer or Seller hereunder, the obligations of all
such parties shall be joint and several.

Section 29.7 No Waiver. A waiver by either party of a breach of any of the
covenants, conditions or agreements to be performed by the other party shall not
be construed as a waiver of any succeeding breach of the same or other
covenants, conditions or agreements.

Section 29.8 Modifications. Any alteration, change or modification of or to this
Agreement, in order to become effective, must be made in writing and in each
instance signed on behalf of each party to be charged.

Section 29.9 Severability. If any term, provision, condition or covenant of this
Agreement or its application to any party or circumstances shall be held, to any
extent, invalid or unenforceable, the remainder of this Agreement, or the
application of the term, provision, condition or covenant to persons or
circumstances other than those as to whom or which it is held invalid or
unenforceable, shall not be affected, and shall be valid and enforceable to the
fullest extent permitted by law.

Section 29.10 Survival. Each representation, warranty, covenant and agreement of
the parties to be performed hereunder after the Closing, shall, subject to the
time limitations set forth in Article 8 and the provisions of Section 10.4,
survive Close of Escrow until full performance of such obligations.

                                       33
<PAGE>

Section 29.11 Merger of Prior Agreements. This Agreement and the Exhibits hereto
contain the entire understanding between the parties relating to the sale
transaction contemplated by this Agreement. All prior or contemporaneous
agreements, understandings, representations and statements, whether direct or
indirect, oral or written, are merged into and superseded by this Agreement, and
shall be of no further force or effect. In connection with the foregoing, those
portions of the Lease governing the purchase of the Property by Buyer from
Seller are subsumed into and superseded by the provisions of this Agreement.
Those portions of the Lease which are not so superseded shall survive the
Closing Date as necessary to give effect to the rights and obligations of the
parties hereunder and thereunder until fulfillment of such rights and
satisfaction of such obligations in full. Moreover, all provisions of the Lease
to which reference is made herein for the purpose of any determination required
pursuant to this Agreement are incorporated herein by this reference. Either
party may deliver to Escrow Holder along with this Agreement a true and complete
copy of the Lease. By its signature hereto, Escrow Holder agrees to comply with
the provisions of Section 10.1 with respect to the Lease.

Section 29.12 Time of Essence. Time is of the essence of this Agreement.

Section 29.13 Counterparts. This Agreement may be signed in multiple
counterparts which, when duly delivered and taken together, shall constitute a
single binding Agreement between the parties. It shall not be necessary for both
parties to execute the same counterparts of this Agreement for this Agreement to
become effective.

Section 29.14 Exhibits. All exhibits attached to this Agreement are incorporated
herein by reference.

Section 29.15 Cooperation of Parties. Each party agrees to execute and deliver
any other and further instruments and documents and take such other actions as
may be reasonably necessary or proper in order to accomplish the intent of this
Agreement. The foregoing covenant shall not require either party to pay any
costs or assume any obligations other than or in addition to those to be paid or
assumed by such party pursuant to this Agreement.

Section 29.16 Preliminary Change of Ownership Report. Buyer shall be fully
responsible for all matters in connection with the filing of a Preliminary
Change of Ownership Report in accordance with California Revenue and Taxation
Code Section 480.3.

Section 29.17 No Third Party Beneficiaries. The provisions of this Agreement are
intended to be solely for the benefit of the parties hereto, and the execution
and delivery of this Agreement shall not be deemed to confer any rights upon,
nor obligate either of the parties hereunder, to any person or entity other than
the parties to this Agreement.

Section 29.18 Alternative Dispute Resolution Procedure.

                (i) Except as provided in subsection (b) below, any controversy,
dispute or claim of whatsoever nature arising out of, in connection with, or in
relation to the interpretation, performance or breach of this Agreement,
including any claim based on contract, tort or statute, shall be determined by
final and binding arbitration conducted before a single arbitrator at a location
determined by the arbitrator in Orange County, California and administered by
Judicial Arbitration & Mediation Services, Inc. ("JAMS"), or if JAMS shall not

                                       34
<PAGE>

then exist, such other organization as to which Seller and Buyer agree. If
Seller and Buyer are unable to so agree within fifteen (15) days after the
dispute arises, the organization shall be selected by the presiding judge of the
Orange County Superior Court or his or her designee upon application by any
party to the dispute. Judgment upon any award rendered by the arbitrator may be
entered by any state or federal court having jurisdiction thereof.

                (ii) The provisions of this Section shall not apply to:

                    (A) Any specific controversy, dispute, question or issue as
to which this Agreement specifically provides another method of determining such
controversy, dispute, question or issue and provides that a determination
pursuant to such method is final and binding, unless both Seller and Buyer agree
in writing to waive such procedure and to proceed instead pursuant to this
Section.

                    (B) Any request or application to any state or federal court
having jurisdiction thereof for an order or decree granting any provisional or
ancillary remedy (such as a temporary restraining order or injunction) in aid of
or with respect to any right or obligation of either party to this Agreement,
and any preliminary determination of the underlying controversy, dispute,
question or issue as is required to determine whether or not to grant the relief
requested or applied for. A final and binding determination of such underlying
controversy, dispute, question or issue shall be made by an arbitration
conducted pursuant to this Section after an appropriate transfer or reference to
JAMS upon motion or application of either party hereto. Any ancillary or
provisional relief which is granted pursuant to this clause (ii) shall continue
in effect pending an arbitration determination and entry of judgment thereon
pursuant to this Section.

                    (C) Exercise of any remedies to enforce any judgment entered
based upon a determination made by arbitration pursuant to this Section.

                (iii) Any arbitration pursuant to this Section shall be
conducted in accordance with the streamlined Arbitration Rules and Procedures of
JAMS (the "Rules"), regardless of the amount in dispute, except that, whether or
not such Rules so provide:

                    (A) There shall be a pre-hearing conference prior to the
arbitration hearing to reach agreement on procedural matters, arrange for the
exchange of information, obtain stipulations and attempt to narrow the issues to
be arbitrated.

                    (B) There shall be no mediation or settlement conferences
unless all parties agree thereto in writing.

                    (C) Discovery shall be limited to that permitted by the
Rules, and "good cause" where a condition to discovery shall be strictly
construed.

                    (D) All motions shall be in letter form and hearings thereon
shall be by conference telephone calls unless the arbitrator orders otherwise.

                    (E) Hearings shall require only twenty (20) days prior
written notice.

                                       35
<PAGE>

                    (F) All notices in connection with any arbitration may be
served in any manner permitted by Section 12.3 of this Agreement.

                    (G) Fees and costs paid or payable to JAMS shall be included
in "expenses" for purposes of Section 12.2. The arbitrator shall specifically
have the power to award to the prevailing party such party's reasonable expenses
incurred in such proceeding, except as otherwise provided in subsection (d)
below. Reasonable expenses shall include attorneys' fees and fees and costs paid
or payable to JAMS.

                    (H) The selection of the arbitrator shall be in accordance
with the then existing Rules of JAMS, provided that Seller and Buyer may agree
to extend the period of time by which an arbitrator must be selected by them. In
the event that the parties are unable to agree upon an arbitrator within thirty
(30) days after submission of a matter to arbitration, the arbitrator shall be
appointed by the administrator of the Orange County office of JAMS or its
successor, if any, as provided in the Rules.

                    (I) The arbitration award shall include findings of fact and
conclusions of law and shall not be limited as to amount.

                (iv) As soon as practicable after selection of the arbitrator,
the arbitrator or his or her designated representative shall determine a
reasonable estimate of anticipated fees and costs of the arbitrator and shall
deliver a statement to each party setting forth that party's pro rata share of
such fees and costs. Each party shall deposit its pro rata share of such fees
and costs with the arbitrator within ten (10) days after receipt of such
statement. If either party fails to make a required deposit hereunder, the other
party may make such deposit on behalf of the defaulting party and the amount of
such deposit, plus interest thereon at ten percent (10%) per annum, shall be
awarded against the defaulting party by the arbitrator in making any final
arbitration award without regard to whether the defaulting party is the
prevailing party in the arbitration pursuant to this Section.

                (v) The arbitrator shall have no authority or power to award any
party any exemplary or punitive damages.

                                       36
<PAGE>

Section 29.19 Property Disclosures. As required by California law, Seller has
delivered to Buyer a natural hazards disclosure report with respect to the Sale
Land.

Section 29.20 Escrow Holder Not to Be Concerned. Sections 5.4, 8.1, 8.2, 8.3,
10, 12.19, 12.21 and 12.23 are agreements solely between Seller and Buyer, and
Escrow Holder need not be concerned therewith.

Section 29.21 Possession. As to any portion of the Property of which Buyer does
not currently hold possession, Buyer shall be entitled to possession of the
Property from and after the Closing Date.

Section 29.22 Calculation of Days. Whenever, as to any action to be taken within
a specified number of days, the last day of the specified period is a Saturday,
Sunday or recognized legal holiday, such specified period shall be deemed to
expire on the first succeeding day which is not a Saturday, Sunday or recognized
legal holiday.

Section 29.23 Covenant as to Trip Ends. Tenant covenants that, with respect to
Tenant's use of the Property, Tenant shall not, at any time, utilize or attempt
to utilize any additional trips allocated to the balance of the Home Ranch
except by transfer from the owner of those trips.

                                       37
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.

"BUYER":                               "SELLER":

EMULEX CORPORATION, a California       C.J. SEGERSTROM & SONS, a California
corporation                            general partnership

By                                     By    Henry T. Segerstrom Management LLC,
   -----------------------------             a California limited liability
Title:                                       company, Manager
      --------------------------
                                             By
                                                --------------------------------
By                                                                       Manager
   -----------------------------
Title:                                 By    HTS MANAGEMENT CO., INC.,
      --------------------------             a California corporation, Manager

"ESCROW HOLDER":

The undersigned acknowledges                 By
receipt of this Agreement and                   --------------------------------
agrees to act in accordance with             Title:
all applicable provisions contained                -----------------------------
herein.
                                             By
CHICAGO TITLE COMPANY, a California             --------------------------------
corporation                                  Title:
                                                   -----------------------------

By
   ---------------------------------
Title:
       -----------------------------
Dated:                      , 200
       ---------------------      --

                                       38
<PAGE>

                            LEGAL DESCRIPTION OF LAND

ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE,
CITY OF COSTA MESA, DESCRIBED AS FOLLOWS:

PARCEL 3 OF PARCEL MAP 94-120, IN THE CITY OF COSTA MESA, COUNTY OF ORANGE,
STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 284, PAGES 7 TO 10, INCLUSIVE, OF
PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

                                    Exhibit A

<PAGE>

                                DEPICTION OF LAND

                                [TO BE SUPPLIED]

                                   Exhibit A-1

<PAGE>

                            GENERAL ESCROW PROVISIONS

(a)     All funds received in this Escrow shall be deposited in a separate
        escrow fund account or accounts of CHICAGO TITLE COMPANY (for the
        benefit of the parties hereto) with a State or National Bank qualified
        to do business in the State of California, such that each account shall
        be fully insured at all times by the Federal Deposit Insurance
        Corporation, to the maximum extent permitted by law. All disbursements
        shall be made by check of CHICAGO TITLE COMPANY, or by wire transfer
        from CHICAGO TITLE COMPANY, as selected by the payee.

(b)     You are authorized to prepare, obtain, record and deliver the necessary
        instruments to carry out the terms and conditions of this Escrow and to
        order to be issued at Close of Escrow the policy of title insurance as
        called for in these instructions. Close of Escrow shall mean the date
        instruments are recorded.

(c)     All adjustments and prorations shall be made on the basis of a 30-day
        month.

(d)     You are not to be held accountable or liable for the sufficiency or
        correctness as to form, manner of execution, or validity of any
        instrument deposited in this Escrow, nor as to the identity, authority
        or rights of any person executing the same. Your duties hereunder shall
        be limited to the proper handling of such money and the proper
        safekeeping of such instruments, or other documents received by you as
        Escrow Holder, and for the disposition of same in accordance with the
        written instructions accepted by you in this Escrow.

(e)     You shall have no responsibility of notifying any of the parties to this
        Escrow of any sale, resale, loan, exchange or other transaction
        involving any property herein described or of any profit realized by any
        person, firm or corporation in connection therewith, regardless of the
        fact that such transaction(s) may be handled by you in this Escrow or in
        another escrow.

(f)     No notice, demand or change of instruction shall be of any effect in
        this Escrow unless given in writing by all parties affected thereby and
        except as otherwise specifically provided in the Agreement to which
        these General Provisions are attached. In the event a demand for the
        funds on deposit in this Escrow is made, not concurred in by all parties
        hereto, the Escrow Holder, regardless of who made demand therefor, may,
        except as expressly provided to the contrary in the Agreement, elect to
        do any of the following:

        (i)    After three (3) business days from the date Escrow Holder was
               first notified that the Escrow is to be canceled and/or demand
               for funds was made, absent mutually concurring instructions
               providing for payment of funds and the disposition to be made of
               this Escrow, the Escrow Holder may return all funds and documents
               to the parties depositing same, and without liability therefor.

                        Exhibit B to Purchase Agreement

<PAGE>

        (ii)   Withhold and stop all further proceedings in, and performance of,
               this Escrow pending a resolution of any conflict by and between
               the parties hereto.

        (iii)  File a suit in interpleader and obtain an order from the court
               allowing Escrow Holder to deposit all funds and documents in
               court and have no further liability hereunder, except for its own
               negligent or willful misconduct or any breach by Escrow Holder of
               any obligations in this Agreement.

(g)     If the conditions of this Escrow have not been complied with at the time
        herein provided, you are nevertheless to complete the same as soon as
        the conditions (except as to time) have been complied with, unless Buyer
        has made written demand upon you for the return of money and instruments
        deposited by Buyer.

(h)     All parties hereto agree, jointly and severally, to pay on demand, as
        well as to indemnify and hold you harmless from and against all costs,
        damages, judgments, attorneys' fees, expenses, obligations and
        liabilities of any kind or nature which, in good faith, you may incur or
        sustain in connection with this Escrow, whether arising before or
        subsequent to the close of this Escrow, except to the extent caused by
        the negligence or willful misconduct of the Escrow Holder.

(i)     Unless the Agreement otherwise provides or unless otherwise instructed
        by either Buyer or Seller, you are authorized to furnish copies of these
        instructions, any supplements or amendments thereto, notices of
        cancellation and closing statements to the attorneys named in this
        Escrow.

(j)     These instructions may be executed in counterparts, each of which when
        so executed shall, irrespective of the date of its execution and
        delivery, be deemed an original, and said counterparts together shall
        constitute one and the same instrument.

(k)     These instructions shall become effective as an Escrow only upon the
        delivery thereof to the Escrow Holder signed by all parties thereto.

(l)     Any funds abandoned or remaining unclaimed, after good faith efforts
        have been made by the Escrow Holder to return same to the party(ies)
        entitled thereto, shall be assessed a holding fee of $50.00 annually.
        After seven (7) years the amount thereafter remaining unclaimed may
        escheat to the State of California.

(m)     All documents, closing statements, and balances due the parties to this
        Escrow are to be mailed by ordinary mail to said parties at the
        addresses shown opposite their signatures, unless otherwise instructed.

(n)     Notwithstanding the foregoing, if Escrow Holder is also acting as Title
        Company under this Agreement, nothing set forth in these General Escrow
        Provisions shall limit any liability set forth in the Title Policy
        provided for in the Agreement.

                        Exhibit B to Purchase Agreement

                                     Page 2
<PAGE>

(o)     For purposes of complying with Internal Revenue Code Section 6045(e), as
        amended effective January 1, 1991, Escrow Holder is hereby designated as
        the "person responsible for closing the transaction" and also as the
        "reporting person," for purposes of filing any information returns with
        the Internal Revenue Service concerning this transaction, as required by
        law.

                        Exhibit B to Purchase Agreement

                                     Page 3
<PAGE>

RECORDING REQUESTED BY:

Chicago Title Company

WHEN RECORDED MAIL TO:

---------------------------------
---------------------------------
---------------------------------
---------------------------------
Attn:
      ---------------------------

MAIL TAX STATEMENTS TO ADDRESS ABOVE.

--------------------------------------------------------------------------------
                                                (Space Above for Recorder's Use)

                                   GRANT DEED

            FOR VALUE RECEIVED, C.J. SEGERSTROM & SONS, a California general
partnership ("Grantor"), hereby GRANTS to EMULEX CORPORATION, a California
corporation ("Grantee"), that certain real property and all improvements located
thereon, situated in the City of Costa Mesa, Orange County, California, and
described on Schedule "1" attached hereto and by this reference incorporated
herein (the "Property").

            EXCEPTING AND RESERVING UNTO Grantor, its successors and assigns,
together with the right to grant and transfer all or a portion of the same, any
and all underground water, water rights, oil, oil rights, minerals, mineral
rights, natural gas, natural gas rights and other hydrocarbons by whatsoever
name known and all rights therein, geothermal steam, and all products derived
from any of the foregoing, that may be within or under the Property, together
with the perpetual right of drilling, pumping, mining, extracting, exploring and
operating therefor and storing in and removing the same from the Property or any
other property, including the right to whipstock or directionally drill, pump
and mine from property other than the Property, water, oil or gas wells, tunnels
and shafts into, through or across the subsurface of the Property, and to bottom
such whipstocked or directionally drilled wells, tunnels and shafts under and
beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip,
maintain, repair, deepen and operate any such wells, tunnels or shafts;
provided, however, that in no event shall Grantor or its successors or assigns
have the right to drill, pump, mine or excavate through the surface or the upper
200 feet of the subsurface of the Property. Provided, however, that Grantor
shall have no right to enter upon the surface of the Property, to deprive the
Property of structural support or otherwise interfere in any way with Grantee's
development, construction or operation of the Property for Grantee's intended
use thereof.

            SUBJECT TO:

            (a) All real property taxes and assessments, whether general or
special and a lien not delinquent, against the Property.

                        Exhibit C to Purchase Agreement

<PAGE>

            (b) All other liens, encumbrances, easements, rights of way,
covenants, conditions, restrictions, reservations, rights, dedications and
offers of dedication of record or apparent.

            IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of
-------------------, -----.

                                   C.J. SEGERSTROM & SONS, a California
                                   general partnership

                                   By    Henry T. Segerstrom Management LLC,
                                         a California limited liability company,
                                         Manager

                                         By
                                            ------------------------------------
                                                                         Manager

                                   By    HTS MANAGEMENT CO., INC.,
                                         a California corporation, Manager

                                         By
                                            ------------------------------------
                                         Title:
                                                --------------------------------

                                         By
                                            ------------------------------------
                                         Title:
                                                --------------------------------

                        Exhibit C to Purchase Agreement

                                     Page 2
<PAGE>

STATE OF CALIFORNIA   )
                      )   ss.
COUNTY OF ORANGE      )

            On __________________, before me, , Notary Public, personally
appeared , personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose names(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.

            WITNESS my hand and official seal

---------------------------------------
SIGNATURE OF NOTARY PUBLIC

STATE OF CALIFORNIA   )
                      )   ss.
COUNTY OF ORANGE      )

            On __________________, before me, , Notary Public, personally
appeared , personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose names(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.

            WITNESS my hand and official seal

---------------------------------------
SIGNATURE OF NOTARY PUBLIC

                        Exhibit C to Purchase Agreement

<PAGE>

                                  SCHEDULE "1"
                        LEGAL DESCRIPTION OF THE PROPERTY

ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE,
CITY OF COSTA MESA, DESCRIBED AS FOLLOWS:

                        Exhibit C to Purchase Agreement

<PAGE>

                              SEPARATE STATEMENT OF
                            DOCUMENTARY TRANSFER TAX

County Recorder
Orange County

Dear Sir:

            In accordance with California Revenue and Taxation Code Section
11932, it is requested that this Statement of Documentary Transfer Tax due not
be recorded with the attached deed, but be affixed to the deed after recordation
and before return as directed on the deed.

            The deed names C.J. SEGERSTROM & SONS, a California general
partnership, as Grantor, and EMULEX CORPORATION, a California corporation, as
Grantee. The land and improvements being transferred are located in the City of
Costa Mesa, County of Orange, State of California.

            The amount of the documentary transfer tax due on the attached deed
is ____________________________________________________ Dollars and
____________/100 ($_______________), computed on the full value of the land and
improvements.

                                   C.J. SEGERSTROM & SONS, a California
                                   general partnership

                                   By    Henry T. Segerstrom Management LLC,
                                         a California limited liability company,
                                         Manager

                                         By
                                            ------------------------------------
                                                                         Manager

                                   By    HTS MANAGEMENT CO., INC.,
                                         a California corporation, Manager

                                         By
                                            ------------------------------------
                                         Title:
                                                --------------------------------

                                         By
                                            ------------------------------------
                                         Title:
                                                --------------------------------

                        Exhibit C to Purchase Agreement

<PAGE>

                                FIRPTA AFFIDAVIT

            Section 1445 of the Internal Revenue Code provides that a transferee
of a United States real property interest must withhold tax if the transferor is
a foreign person. To inform the transferee that withholding of tax is not
required upon the disposition of a United States real property interest by C.J.
SEGERSTROM & SONS, a California general partnership ("Seller"), the undersigned
hereby certify the following on behalf of Seller:

            Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);

            Seller's U.S. employer tax identification number is 95-1877493; and

            Seller's office address is 3315 Fairview Road, Costa Mesa, CA 92626.

            Seller understands that this certification may be disclosed to the
Internal Revenue Service by transferee and that any false statement contained
herein could be punished by fine, imprisonment, or both.

            The undersigned Managers of Seller declare that he/she/they has/have
examined this certification and to the best of her/his/their knowledge and
belief it is true, correct and complete, and he/she/they further declare that
he/she/they has/have authority to sign this document on behalf of Seller.

Dated:  _______________, ________

HENRY T. SEGERSTROM MANAGEMENT LLC, a          HTS MANAGEMENT CO., INC.,
California limited liability company,          a California corporation, Manager
Manager

By                                             By
   ----------------------------------             ------------------------------
                              Manager
                                               Title:
                                                      --------------------------

                                               By
                                                  ------------------------------
                                               Title:
                                                     ---------------------------

                                   Exhibit D

<PAGE>

                 ASSIGNMENT AND ASSUMPTION OF PERSONAL PROPERTY

            THIS ASSIGNMENT AND ASSUMPTION OF PERSONAL PROPERTY (the
"Assignment") is made and entered into as of the _____ day of ______________,
20__ by and between C.J. SEGERSTROM & SONS, a California general partnership
("Assignor"), and EMULEX CORPORATION, a California corporation ("Assignee"),
with respect to the following:

                                    RECITALS

            A. Assignor is the "Seller" and Assignee is the "Buyer" pursuant to
a certain Purchase and Sale Agreement and Joint Escrow Instructions dated
______________ __, 20___ (the "Agreement"). Pursuant to the Agreement, Assignor
is selling and Assignee is purchasing certain real property and improvements
described on Schedule 1 attached hereto (the "Property").

            B. In connection with the sale of the Property, Seller is required
to assign to Buyer all Warranties, as defined in the Agreement, agreements,
utility contracts, approvals (governmental or otherwise), plans and
specifications, entitlements and other rights relating to the construction,
ownership, use and operation of the Property (collectively, the "Personal
Property"). The Personal Property is listed on Schedule 2 attached hereto. This
Assignment is executed to satisfy such obligation.

                                    AGREEMENT

            IN CONSIDERATION OF the foregoing recitals and the mutual covenants
contained herein, Assignor and Assignee agree as follows:

            1. Assignment. Assignor hereby assigns and transfers to Assignee all
of Assignor's right, title and interest in and under the Personal Property.

            2. Assumption. Assignee hereby accepts the foregoing assignment and
assumes and agrees to be bound by all obligations of Assignor under the Personal
Property accruing from and after the Effective Date, as defined below, of this
Assignment. Such assumption relates only to the Personal Property as listed on
Schedule 2, and does not extend to other items which would be within the
definition of Personal Property but for not being included on Schedule 2.

            3. Effective Date. The Effective Date of this Assignment shall be
the date upon which there is recorded in the Office of the County Recorder of
Orange County, California a deed to the Property executed by Seller in favor of
Buyer.

            4. Indemnity. Assignor shall indemnify, defend and hold harmless
Assignee from and against all claims, losses, costs, liabilities and expenses
(including, without limitation, reasonable attorneys' fees and costs) arising
out of the failure or alleged failure of Assignor to perform any of the
obligations of the Assignor pursuant to the Personal Property and accruing

                        Exhibit E to Purchase Agreement

<PAGE>

prior to the Effective Date. Assignee shall indemnify, defend and hold harmless
Assignor from and against any and all claims, losses, costs, liabilities and
expenses (including, without limitation, reasonable attorneys' fees and costs)
arising out of the failure or alleged failure of Assignee to perform any of the
obligations of the Assignor pursuant to the Personal Property and accruing on or
after the Effective Date. The foregoing indemnification provisions shall each
contain a covenant by the indemnifying party to defend the indemnified party
against all claims for which indemnification is available hereunder with legal
counsel appointed by the liability insurance carrier for the indemnifying party.
Payment shall not be a condition precedent to recovery upon the foregoing
indemnification provisions.

            5. Successors and Assigns. All of the terms, covenants and
conditions set forth herein shall be binding upon and inure to the benefit of
Assignor and Assignee and their respective successors and assigns.

            6. Warranties. Assignor represents and warrants to Assignee that
each item included in the Personal Property either (a) is fully assignable to
Assignee with no consent required from any third party, (b) has appended thereto
the unqualified consent of any third party from whom a consent to the within
assignment is required or (c) was issued or created in the name of Assignee as a
party, co-party or third party beneficiary thereof.

            7. No Implied Representations. There are no representations and
warranties in connection with this Assignment other than as expressly set forth
in the Agreement and this Assignment. Except for such express representations
and the indemnification set forth in paragraph 4, Assignee shall have no claims
against Assignor pursuant to the provisions of the Personal Property.

                        Exhibit E to Purchase Agreement

                                     Page 2
<PAGE>

            IN WITNESS WHEREOF, Assignor and Assignee have executed and
delivered this Agreement and Assumption of Personal Property to be effective as
provided in paragraph 3 above.

C.J. SEGERSTROM & SONS, a California            EMULEX CORPORATION, a California
general partnership                             corporation

By    Henry T. Segerstrom Management LLC,       By
      a California limited liability                ----------------------------
      company, Manager                          Title:
                                                       -------------------------
      By
         ------------------------------
                                Manager
                                                By
                                                   -----------------------------
By    HTS MANAGEMENT CO., INC.,                 Title:
      a California corporation, Manager                -------------------------
                                                            "Assignee"

      By
         ------------------------------
      Title:
             --------------------------
                    "Assignor"

                        Exhibit E to Purchase Agreement

                                     Page 3
<PAGE>

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

John F. Simonis, Esq.
Paul Hastings Janofsky & Walker, LLP
695 Town Center Drive, 17th Floor
Costa Mesa, CA 92626

--------------------------------------------------------------------------------
                                 (Space above this line for Recorder's use only)

                        PARTIAL ASSIGNMENT AND ASSUMPTION
                            OF DEVELOPMENT AGREEMENT
                                  (HOME RANCH)

            This PARTIAL ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT AGREEMENT
(this "Assignment") is dated as of this day of __________, 200__, by and between
C.J. Segerstrom & Sons, a California general partnership ("CJS"), Segerstrom
Properties LLC, a California limited liability company, and Henry T. Segerstrom
Properties LLC, a California limited liability company (collectively,
"Assignor"), Emulex Corporation, a California corporation ("Assignee"), and the
City of Costa Mesa, a general law city ("City").

                                    RECITALS

            A. Assignor is the owner of land located in the City of Costa Mesa,
County of Orange, California, consisting of approximately 93.34 acres, which is
commonly known as the "Home Ranch" and is more particularly described on Exhibit
A attached hereto and incorporated herein by this reference (the "Home Ranch").

            B. Assignor and City are parties to that certain Development
Agreement for the Home Ranch dated December 3, 2001 (the "Development
Agreement"), and having a term of 15 years commencing on January 3, 2002, which
contains certain rights, duties and obligations relating to the development of
Home Ranch with retail, office, and industrial uses.

            C. CJS, as "Seller," and Assignee, as "Buyer," have entered into a
certain Purchase and Sale Agreement and Escrow Instructions (the "Purchase
Agreement"), dated as of _______________, pursuant to which Assignor is selling
to Assignee certain real property within the Home Ranch, which real property is
described on Exhibit B attached hereto and incorporated herein by this reference
(the "Sale Property"). The portions of Home Ranch other than the Sale Property
are sometimes collectively referred to herein as the "Other Property."

            D. Pursuant to the terms of the Purchase Agreement, Assignor is
obligated to assign and convey to Assignee certain of its rights and interests
under the Development Agreement, as the Development Agreement relates to the
Sale Property. In addition, Assignor and Assignee have agreed that Assignor
shall delegate to Assignee certain of the obligations of Assignor under the
Development Agreement relating to the Sale Property, and that those

                         Exhibit F to Purchase Agreement

<PAGE>

obligations not delegated to and assumed by Assignee pursuant to this Assignment
shall remain the obligations of Assignor, as set forth herein.

            E. The purpose of this Assignment is to set forth the terms and
provisions agreed upon between Assignor and Assignee with respect to the
assignment of certain rights and interests and the delegation of certain
obligations of Assignor under the Development Agreement, as the Development
Agreement relates to the Sale Property.

            NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

            1. Partial Assignment. Assignor hereby assigns, conveys and
transfers to Assignee all of Assignor's rights and interests under the
Development Agreement to the extent such rights and interests relate to,
benefit, or are reasonably necessary for the ownership, development or use of,
the Sale Property, including, without limitation, all Development Approvals (as
defined in the Development Agreement) and other vested entitlement and
development rights with respect to the Sale Property including any fees prepaid
pursuant to Exhibit F to the Development Agreement.

            2. Delegation and Assumption of Obligations.

                2.1 Assignor hereby delegates to Assignee and Assignee hereby
assumes those obligations of Assignor under the Development Agreement which
relate specifically to improvements and dedications within the boundaries of the
Sale Property, including those obligations relating to onsite development and
the payment of any permit or occupancy fees which have not been prepaid by
Assignor (but excluding any obligation to prepay fees for any property other
than the Sale Property) and the indemnity obligations arising under the
Development Agreement with respect to any future development on the Sale
Property.

                2.2 The parties acknowledge that the obligations referenced in
Section 2.1 (the "Assumed Obligations") are the only "Owner" obligations under
the Development Agreement being assumed by Assignee hereunder and that Assignee
is not assuming and Assignor shall remain fully responsible for all obligations
of the "Owner" under the Development Agreement with respect to the Other
Property and for any exactions or improvements required under the terms of the
Development Agreement outside the boundaries of the Sale Property (collectively,
the "Retained Obligations").

            3. Density/Trip Allocations. The parties acknowledge and agree that
pursuant to Section 1.1(o) of the Development Agreement, the Sale Property has
been allocated a maximum density of 0.4 FAR. Assignor hereby irrevocably
allocates and assigns to Assignee 376 a.m. and 362 p.m. peak trips from the
overall trip budget for the Home Ranch, which trips shall hereafter be the
property of Assignee and may not be used by Assignor for the development of any
of the Other Property.

            4. Pre-Paid Fees and Costs. Assignor, Assignee and City all
acknowledge and agree that [list any pre-paid fees and costs such as Traffic
Impact Fees under first paragraph

                         Exhibit F to Purchase Agreement

                                     Page 2
<PAGE>

and intersection improvement costs pursuant to second paragraph of Section A of
Exhibit F of Development Agreement] applicable to the Sale Property have been
paid in full.

            5. No Cross-Defaults. City and Assignor agree that any default by
Assignor with respect to the Retained Obligations shall not be considered a
default by Assignee as to the Sale Property and shall not impact Assignee's
development rights with respect to the Sale Property under the Development
Agreement.

            6. Estoppel. In accordance with Section 3.16 of the Development
Agreement, Assignor and City each certify to Assignee that: (i) the Development
Agreement is in full force and effect and a binding obligation of the parties
thereto; (ii) the Development Agreement has not been amended or modified except
as set forth on Exhibit C attached hereto; and (iii) to the best knowledge of
such party, the other parties to the Development Agreement are not in default of
their respective obligations under the Development Agreement except as set forth
on Exhibit D attached hereto.

            7. Amendment to Development Agreement. Assignor and Assignee agree
that any amendment to the Development Agreement requiring the approval of the
"Owner" that affects the Sale Property shall require the approval in writing of
both Assignor and Assignee. Assignor shall have the right to amend the
Development Agreement without the approval of Assignee if the amendment does not
affect the Sale Property or otherwise modify the Development Agreement in a
manner that affects Assignee's rights, obligations or liabilities thereunder.
Hereafter, Assignor shall have no rights as they relate to modification of the
Development Agreement solely with respect to the Sale Property.

            8. Contingency. The parties hereby agree that the effectiveness of
this Assignment is contingent upon the completion of the sale of the Sale
Property to Assignee pursuant to the provisions of the Purchase Agreement, which
completion shall be evidenced by the recordation of a grant deed conveying the
Sale Property to Assignee. If such grant deed is not recorded in the Official
Records on or before ___________________, then this Assignment shall be of no
force or effect whatsoever.

            9. Miscellaneous.

                9.1 Interpretation; Governing Law. This Assignment shall be
construed according to its fair meaning and as if prepared by all parties
hereto. This Assignment shall be construed in accordance with and governed by
the laws of the State of California. Any action hereunder shall be brought in a
court of competent jurisdiction located in Orange County, California.

                9.2 Hold Harmless. Assignor agrees to indemnify and hold
Assignee harmless from and against any and all losses, costs, liabilities,
damages and expenses, including, without limitation, reasonable attorneys' fees,
accruing prior to the date hereof and arising out of any default or alleged
default of Assignor, as "Owner" under the Development Agreement. Assignee agrees
to indemnify and hold Assignor harmless from and against any and all losses,
costs, liabilities, damages and expenses including, without limitation,
reasonable attorneys' fees, accruing on or after the date hereof and arising out
of any default or alleged default of Assignee

                         Exhibit F to Purchase Agreement

                                     Page 3
<PAGE>

in connection with the Assumed Obligations. The covenants in this Section 9.2
shall run with the land and shall be binding on, and inure to the benefit of,
the parties hereto, and to their respective successors and assigns who succeed
to title to the Home Ranch Project, as defined in the Development Agreement, or
a portion thereof.

                9.3 Attorneys' and Other Fees. In the event of any dispute
between the parties hereto or institution of any action or proceeding to
interpret or enforce the provisions of this Assignment, or arising out of the
subject matter of this Assignment or the transaction contemplated hereby, the
prevailing party shall be entitled to recover its reasonable expenses,
attorneys' fees and costs, including professional or expert consultation or
testimony fees, both at trial and on any appeal and in any administrative
proceeding.

                9.4 Authority. Each of the parties hereto represents and
warrants to the others that the person or persons executing this Assignment on
behalf of such party is or are authorized to execute and deliver this Assignment
and that this Assignment shall be binding upon such party.

                9.5 Further Assurances. Assignor and Assignee each agree to do
such further acts and things and to execute and deliver such additional
agreements and instruments as the other may reasonably request to consummate,
evidence, confirm or more fully implement the agreements of the parties as
contained herein.

                9.6 Execution in Counterparts. This Assignment may be executed
in several counterparts, and all so executed shall constitute one agreement
between the parties hereto, notwithstanding that all parties are not signatories
to the original or the same counterpart.

            [BALANCE OF THIS PAGE LEFT BLANK; SIGNATURE PAGES FOLLOW]

                         Exhibit F to Purchase Agreement

                                     Page 4
<PAGE>

            IN WITNESS WHEREOF, the parties have executed this Partial
Assignment and Assumption of Development Agreement (Home Ranch) to be effective
as of the date of the satisfaction of the contingency set forth in Section 8
above.

<TABLE>
<CAPTION>
<S>                                                       <C>
C.J. SEGERSTROM & SONS,                                   EMULEX CORPORATION,
a California general partnership                          a California corporation

By    Henry T. Segerstrom Management LLC, a
      California limited liability
      company, Manager                                    By
                                                             -----------------------------------
      By                                                  Title:
         ----------------------------------                      -------------------------------
                                    Manager

By    HTS MANAGEMENT CO., INC.,                           By
      a California corporation, Manager                      -----------------------------------
                                                          Title:
      By                                                         -------------------------------
         ----------------------------------                        "Assignee"
      Title:
            -------------------------------

SEGERSTROM PROPERTIES LLC,                                CITY OF COSTA MESA
a California limited liability company

By    Henry T. Segerstrom Properties LLC, a               By:
      California limited liability company,                   ----------------------------------
      Manager                                                 Mayor Of The City Of Costa Mesa
                                                                            "City"
      By    Henry T. Segerstrom Management
            LLC, A California limited liability           ATTEST:
            company, Manager
                                                          --------------------------------------
            By                                            City Clerk, City Of Costa Mesa
               --------------------------------
                                        Manager
                                                          APPROVED AS TO FORM:
By    Ruth Ann Moriarty Properties LLC, a
      a California limited liability company,
      Manager                                             -------------------------------------
                                                          City Attorney, City Of Costa Mesa
      By
         --------------------------------------
                                        Manager

HENRY T. SEGERSTROM PROPERTIES LLC, a California
limited liability company

By    Henry T. Segerstrom Management LLC, a
      California limited liability company, Manager

      By
         --------------------------------------
                                        Manager
                      "Assignor"
</TABLE>

                         Exhibit F to Purchase Agreement

                                     Page 5
<PAGE>
                                   EXHIBIT "A"

                  LEGAL DESCRIPTION OF THE HOME RANCH PROPERTY

PARCEL A

Parcels 1 and 3, as shown on Parcel Map 94-120 in the City of Costa Mesa, County
of Orange, filed in Book 284, Pages 7 through 10 of Parcel Maps, in the office
of the County Recorder of said County.

PARCEL B

Parcel 1, as shown on Parcel Map 84-379 in the City of Costa Mesa, County of
Orange, filed in Book 194, Pages 13 and 14 of Parcel Maps, in the office of the
County Recorder of said County.

PARCEL C

PARCEL 1

That certain parcel of land situated in the City of Costa Mesa, County of
Orange, State of California, being Parcels 3 and 4 of Parcel Map No. 79-381 as
shown on a map thereof filed in Book 139, Pages 21 through 24 of Parcel Maps, in
the Office of the County Recorder of said Orange County, together with that
portion of Parcel 2 of said Parcel Map No. 79-381 lying westerly of the
following described line:

COMMENCING at the northwest corner of said Parcel 4; thence along the northerly
line of said parcel map North 89 degrees 25'40" East 1370.17 feet to the
beginning of a tangent curve, concave northerly and having a radius of 1384.00
feet; thence along said curve and northerly line easterly 89.79 feet through a
central angle of 03 degrees 43'02" to a point on a non-tangent curve concave
westerly and having a radius of 1135.50 feet; a radial line of said curve from
said point bears North 88 degrees 08'36" West, said point also being the TRUE
POINT OF BEGINNING; thence leaving said northerly line along said curve
southerly 87.13 feet through a central angle of 04 degrees 23'48"; thence
tangent from said curve South 06 degrees 15'12" West 119.68 feet to the
beginning of a tangent curve concave easterly and having a radius of 1161.09
feet; thence along said curve southerly 154.54 feet through a central angle of
07 degrees 37'33"; thence along a radial line of said curve North 88 degrees
37'39" East 7.83 feet; thence South 00 degrees 53'48" East 198.66 feet to the
beginning of a tangent curve concave northeasterly and having a radius of 513.45
feet; thence along said curve southerly 439.17 feet through a central angle of
49 degrees 00'24"; thence along a radial line of said curve North 40 degrees
05'48" East 12.79 feet to a point on a non-tangent curve concave northeasterly
and having a radius of 500.66 feet, said curve being concentric with said curve
hereinabove described as having a radius of 513.45 feet; thence along said
concentric curve southeasterly 117.49 feet through a central angle of 13 degrees
26'45" to the southerly line of said Parcel 2.

                         Exhibit F to Purchase Agreement
                                      A-1
<PAGE>

               EXCEPTING THEREFROM that portion described as follows:

COMMENCING at the northwest corner of said Parcel 4; thence along the northerly
line of said parcel map North 89 degrees 25'40" East 1169.02 feet to the TRUE
POINT OF BEGINNING; thence continuing along said northerly line North 89 degrees
25'40" East 201.15 feet to the beginning of a tangent curve concave northerly
and having a radius of 1384.00 feet; thence along said curve and northerly line
easterly 89.79 feet through a central angle of 03 degrees 43'02" to a point on a
non-tangent curve concave westerly and having a radius of 1135.50 feet, a radial
line of said curve from said point bears North 88 degrees 08'36" West; thence
leaving said northerly line along said curve southerly 87.13 feet through a
central angle of 04 degrees 23'48"; thence tangent from said curve South 06
degrees 15'12" West 119.68 feet to the beginning of a tangent curve concave
easterly and having a radius of 1161.09 feet; thence along said curve southerly
125.26 feet through a central angle of 06 degrees 10'52"; thence non-tangent
from said curve South 88 degrees 33'29" West 249.74 feet; thence North 79
degrees 24'20" West 10.08 feet; thence North 00 degrees 53'48" West 329.52 feet
to the TRUE POINT OF BEGINNING;

ALSO EXCEPTING THEREFROM Parcels 101839-1 and 101839-2 as described in that
certain Grant Deed to the State of California, recorded October 27, 2000, as
Instrument No. 20000582392 of Official Records, in the Office of the County
Recorder of said Orange County.

And ALSO EXCEPTING THEREFROM Parcels 101837-1 and 101837-3 as described in that
certain Grant Deed to the State of California recorded October 27, 2000 as
Instrument No. 20000582393 of Official Records, in the Office of the County
Recorder of said Orange County.

CONTAINING: 17.246 Acres, more or less.

PARCEL 2

That certain parcel of land situated in the City of Costa Mesa, County of
Orange, State of California, being those portions of Parcels 2 and 3 of Parcel
Map No. 79-381 as shown on a map thereof filed in Book 139, Pages 21 through 24
of Parcel Maps, in the Office of the County Recorder of said Orange County
described as follows:

COMMENCING at the northwest corner of Parcel 4 of said Parcel Map No. 79-381;
thence along the northerly line, of said parcel map North 89 degrees 25'40" East
1169.02 feet to the TRUE POINT OF BEGINNING; thence continuing along said
northerly line North 89 degrees 25'40" East 201.15 feet to the beginning of a
tangent curve concave northerly and having a radius of 1384.00 feet; thence
along said curve and northerly line easterly 89.79 feet through a central angle
of 03 degrees 43'02" to a point on a non-tangent curve concave westerly and
having a radius of 1135.50 feet, a radial line of said curve from said point
bears North 88 degrees 08'36" West; thence leaving said northerly line along
said curve southerly 87.13 feet through a central angle of 04 degrees 23'48";
thence tangent from said curve South 06 degrees 15'12" West 119.68 feet to the
beginning of a tangent curve concave easterly and having a radius of 1161.09
feet; thence along said curve southerly 125.26 feet through a central angle of
06 degrees 10'52"; thence non-tangent from said curve South 88 degrees 33'29"
West 249.74 feet; thence North 79 degrees 24'20" West 10.08 feet; thence North
00 degrees 53'48" West 329.52 feet to the TRUE POINT OF BEGINNING;

                         Exhibit F to Purchase Agreement
                                      A-2
<PAGE>

CONTAINING: 2.074 Acres, more or less.

PARCEL 3

That certain parcel of land situated in the City of Costa Mesa, County of
Orange, State of California, being that portion of Parcel 2 of Parcel Map No.
79-381 as shown on a map thereof filed in Book 139, Pages 21 through 24 of
Parcel Maps, in the Office of the County Recorder of said Orange County, lying
easterly of the following described line:

COMMENCING at the northwest corner of said Parcel 4; thence along the northerly
line of said parcel map North 89 degrees 25'40" East 1370.17 feet to the
beginning of a tangent curve, concave northerly and having a radius of 1384.00
feet; thence along said curve and northerly line easterly 89.79 feet through a
central angle of 03 degrees 43'02" to a point on a non-tangent curve concave
westerly and having a radius of 1135.50 feet, a radial line of said curve from
said point bears North 88 degrees 08'36" West, said point also being the TRUE
POINT OF BEGINNING; thence leaving said northerly line along said curve
southerly 87.13 feet through a central angle of 04 degrees 23'48"; thence
tangent from said curve South 06 degrees 15'12" West 119.68 feet to the
beginning of a tangent curve concave easterly and having a radius of 1161.09
feet; thence along said curve southerly 154.54 feet through a central angle of
07 degrees 37'33"; thence along a radial line of said curve North 88 degrees
37'39" East 7.83 feet; thence South 00 degrees 53'48" East 198.66 feet to the
beginning of a tangent curve concave northeasterly and having a radius of 513.45
feet; thence along said curve southerly 439.17 feet through a central angle of
49 degrees 00'24"; thence along a radial line of said curve North 40 degrees
05'48" East 12.79 feet to a point on a non-tangent curve concave northeasterly
and having a radius of 500.66 feet, said curve being concentric with said curve
hereinabove described as having a radius of 513.45 feet; thence along said
concentric curve southeasterly 117.49 feet through a central angle of 13 degrees
26'45" to the southerly line of said Parcel 2.

EXCEPTING THEREFROM Parcels 101837-1, 101837-2 and 101837-3 as described in that
certain Grant Deed to the State of California recorded October 27, 2000 as
Instrument No. 20000582393 of Official Records, in the Office of the County
Recorder of said Orange County.

CONTAINING: 31.214 Acres, more or less.

SUBJECT TO all Covenants, Rights, Rights-of-Way and Easements of Record.

                         Exhibit F to Purchase Agreement
                                      A-3
<PAGE>

                                    EXHIBIT B

                                THE SALE PROPERTY

                         Exhibit F to Purchase Agreement
                                      B-1
<PAGE>

                                    EXHIBIT C

                       EXCEPTIONS TO ESTOPPEL (SECTION 6)

                          [include only if applicable]

                                   EXHIBIT "F"
<PAGE>

                              PERMITTED EXCEPTIONS

IN ADDITION TO THE EXCEPTIONS SHOWN BELOW, THIS POLICY OF TITLE INSURANCE TO BE
ISSUED UNDER THE TERMS OF THIS BINDER WILL CONTAIN THE APPLICABLE PRINTED
EXCEPTIONS AND EXCLUSIONS SHOWN ON THE ATTACHED LIST.

EXCEPTIONS.

1.      PROPERTY TAXES, INCLUDING ANY ASSESSMENTS COLLECTED WITH TAXES, TO BE
        LEVIED FOR THE FISCAL YEAR 2002-2003 THAT ARE A LIEN NOT YET DUE.

2.      THE LIEN OF SUPPLEMENTAL OR ESCAPED ASSESSMENTS OF PROPERTY TAXES, IF
        ANY, MADE PURSUANT TO THE PROVISIONS OF PART 0.5, CHAPTER 3.5 OR PART 2,
        CHAPTER 3, ARTICLES 3 AND 4 RESPECTIVELY (COMMENCING WITH SECTION 75) OF
        THE REVENUE AND TAXATION CODE OF THE STATE OF CALIFORNIA AS A RESULT OF
        THE TRANSFER OF TITLE TO THE VESTED NAMED IN SCHEDULE A, OR AS A RESULT
        OF CHANGES IN OWNERSHIP OR NEW CONSTRUCTION OCCURRING AFTER THE DATE OF
        POLICY.

3.

                                  EXHIBIT "G"
<PAGE>

                    ALLOCATION OF DEVELOPMENT AGREEMENT ITEMS

<TABLE>
<CAPTION>
                      Exhibit F*                            Tenant Bears**      Tenant Not Bear
                      ----------                            --------------      ---------------
<S>    <C>                                                  <C>                 <C>
A.     Traffic Impact Fees                                        X
       Improvements beyond General Plan                                                X
       Site Access Improvements                                                        X
       Susan Street Offramp                                                            X
       Future Unanticipated Right of Way Needs                   X***

B.     Cultural Resources                                                              X

C.     Contribution of Ed. Advancement                                                 X

D.     Contribution for High School                                                    X

E.     Contribution to Restoration                                                     X

F.     Residential Component                                                           X

G.     Fire Station                                                                    X
       Fire Suppression Fee                                       X
       Land                                                                            X
       Building Construction                                                           X

H.     Sales and Use Tax Guarantee                                                     X
</TABLE>
----------
*       Exhibit "F" is Exhibit "F" to the Development Agreement.

**      Fees based on allocation methods used by the City of Costa Mesa.

***     If Tenant becomes fee owner of all or a portion of the Land. Relates
        only to right of way needs within the Land or portion thereof acquired
        by Tenant.

                                  EXHIBIT "H"
<PAGE>

                              RULES AND REGULATIONS

        The Premises are located within and constitute a part of a planned
development developed by Landlord as a high-quality business center (the
"Center"). Consistent with such development, Landlord has adopted the following
Rules and Regulations to preserve the high quality of the development and
retains certain reasonable rights of approval to preserve the aesthetic
appearance, quality and value of the Center as a whole.

2.      To the extent that such maintenance and repair is not the responsibility
        of Landlord under the leases for the Center, each tenant shall take all
        actions necessary to preserve the external appearance of his premises in
        a neat, clean and orderly condition and to prevent his operations from
        interfering with the use by other Center occupants of their respective
        premises. By way of illustration but not limitation of the foregoing:

        (a)     Sidewalks, passages, paths, courts, and stairways exterior to
                any Premises shall not be obstructed or used other than for
                ingress and egress. All tenant property shall be located within
                a building or within an approved exterior structure.

        (b)     No trash shall be allowed to accumulate outside of a building,
                except in approved receptacles or screened enclosures.

        (c)     No awnings or other projections shall be attached to the outside
                walls of any building without approval of Landlord.

        (d)     No sign, advertisement or notice shall be exhibited, painted or
                affixed on any part of, or so as to be seen from the outside of,
                any premises without approval.

        (e)     Premises features which reflect or admit light and air shall not
                be covered or obstructed in any way.

        (f)     No tenant shall mark, paint, drill into, or in any way deface
                any exterior part of any building.

        (g)     No bicycles, motorbikes, mopeds, motor scooters, or motorcycles
                shall be stored outside of any building except in approved racks
                or other facilities.

        (h)     No tenant shall permit any unusual or objectionable odor to
                permeate from any building or permit any noises which disturb or
                interfere with occupants of neighboring buildings or those
                having business with them whether from machinery, musical
                instruments, radios, photographs or other sources. No tenant
                shall throw anything out of doors, windows or skylights.

        (i)     All machinery which generates noise and/or vibrations shall be
                placed in approved settings to avoid damage to premises and
                creation of noise and vibrations in areas outside of premises.

        (j)     All electric carts and other vehicles used on the Premises or in
                the Common Areas which are not designed for ordinary use on
                public streets and highways must be approved by Landlord. Such
                vehicles are subject to all rules pertaining to auto safety
                contained herein or pursuant to governmental regulation. All
                approvals required shall be by Landlord, must be in advance in
                writing and shall not be unreasonably withheld, delayed or
                conditioned.

3.      Unless done in compliance with law, no flammable, combustible,
        explosive, caustic or poisonous fluids, chemicals or other substances
        shall be discarded in Center trash receptacles or enclosures or dumped
        into Center sewer or drain systems. All operations which emit gases,
        dust, smoke, particulates and other noxious substances shall be hooded,
        ventilated or otherwise conducted to prevent the escape of such
        substances from the building. Washing, draining, spraying and other
        operations involving use of any liquid

                                  EXHIBIT "I"
<PAGE>

        shall be conducted to prevent runoff outside of any building and oozing
        or seepage into other portions of the Center.

4.      Each tenant shall obtain at its own expense and keep in its premises in
        a reasonably accessible place at least one ABC-type fire extinguisher in
        working condition.

5.      Landlord reserves the right to prohibit or impose conditions upon the
        installation in any premises of heavy objects which might overload the
        premises floors.

6.      Landlord may prohibit on-site advertising by any tenant which, in
        Landlord's reasonable opinion, impairs the reputation of the Center, and
        upon written notice from Landlord any tenant shall discontinue such
        advertising.

7.      Employees of Landlord shall not perform any work outside of their
        regular duties except under special instructions from Landlord. Landlord
        will under no circumstances open any building for any tenant or its
        employees.

8.      Water and wash closets, plumbing fixtures, mirrors and partitions shall
        not be used for any purpose other than those for which constructed. No
        sweepings, rubbish, rags or other substances shall be thrown therein.
        All expenses of repair or replacement resulting from misuse shall be
        borne by the tenant who causes the same.

9.      To the extent not permitted by a tenant's lease, no boring or cutting or
        hanging of any objects or items from the roof shall be permitted, except
        with the prior written consent of Landlord, and then only as Landlord
        may direct. The location of exterior telephone boxes, call boxes and
        other equipment affixed to any premises shall be subject to Landlord's
        approval. Landlord will direct electricians as to where and how
        telephone or telegraph wires are to be introduced into any premises.

10.     No air conditioning unit or other similar apparatus shall be installed
        or used by any tenant without the prior written consent of Landlord and
        all installations shall be as directed by Landlord.

11.     In the event that any tenant shall change any lock or install any new
        lock on any exterior or interior door to or within his premises, such
        tenant shall immediately deliver a key to each such lock to Landlord.
        Landlord shall use such keys only for emergency entries and for such
        other purposes as are permitted by these Rules and Regulations and such
        tenant's lease.

12.     A copy of these Rules and Regulations shall be attached to and form a
        part of each tenant lease in the Center. Landlord is not responsible to
        any person for non-observance or violation of these Rules by any tenant
        or other person, provided, however, that Landlord shall enforce these
        Rules and Regulations in a uniform and non-discriminatory manner. Each
        tenant is responsible for any loss or damage occasioned by any violation
        of these Rules by such tenant or by any employee, agent, visitor or
        invitee of such tenant.

13.     No waiver of any Rule by Landlord shall be effective unless in a writing
        signed by Landlord. Landlord may amend these Rules from time to time
        when desirable in Landlord's judgment to preserve good order in the
        Center, for the convenience of tenants or visitors of the Center or to
        comply with any law or regulation now or hereafter in effect. Any
        amendment to these Rules shall be effective and binding upon each tenant
        upon delivery to such tenant of a copy thereof.

                                       2
<PAGE>

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

----------------------------------------

----------------------------------------

----------------------------------------
Attention:
           -----------------------------

--------------------------------------------------------------------------------
                                 (Space Above This Line For Recorder's Use Only)

             SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

        THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement"), is made and entered into as of the ___ day of ___________, 200__,
by and among Emulex Corporation, a California corporation ("TENANT"), whose
address is ____________________________________________________________, C.J.
SEGERSTROM & SONS, a California general partnership ("BORROWER"), whose address
is ________________________________________________________________________, and
_______________________, a ____________________________ ("LENDER"), whose
address is _______________________________________________________________.

        A. Lender has agreed to make a mortgage loan (the "Loan") to Borrower
secured by a deed of trust (the "DEED OF TRUST") on Borrower's interest in the
real property legally described in Exhibit "A" attached hereto (the "PREMISES");
and

        B. Tenant is the present lessee under that certain lease, dated as of
_________________, 2002, made by and between Tenant, as Tenant, and Borrower, as
Landlord, demising a portion of the Premises and other property (said lease as
so amended being referred to as the "LEASE"); and

        C. Subject to the terms and conditions of this Agreement, Tenant has
agreed to subordinate its interest in the Lease to the lien of the Deed of Trust
so long as, among other things, Lender agrees not to disturb Tenant's possession
of the portion of the Premises covered by the Lease (the "DEMISED PREMISES").

        NOW, THEREFORE, the parties hereby agree as follows:

        1. Subordination. Subject to the terms and conditions hereinafter set
forth, the Lease, and the rights of Tenant in, to and under the Lease and the
Demised Premises, are hereby subjected and subordinated to the lien of the Deed
of Trust, and to any renewal, substitution, extension, modification or
replacement thereof; provided, however, that notwithstanding anything to the
contrary in this Agreement, any purchase, renewal, first refusal or first offer
rights or options (each such right or option, an "OPTION," and collectively, the
"OPTIONS") of Tenant under the Lease are not hereby subordinated to the lien of
the Deed of Trust.

        2. Tenant Not To Be Disturbed. So long as Tenant is not in default
(beyond any period given Tenant by the terms of the Lease to cure such default)
in the payment of rent or additional rent or performance of any of the terms,
covenants or conditions of the Lease on Tenant's part to be performed, (a)
Tenant's possession of the Demised Premises, and its rights and privileges under
the Lease shall not be diminished or interfered with by Lender, and (b) Lender
will not join Tenant as a party defendant in any action or proceeding
foreclosing the Deed of Trust unless such joinder is necessary to foreclose such
Deed of Trust and then only for such purpose and not for the purpose of
terminating the Lease. Lender represents and warrants that it has received and
reviewed a copy of the Lease.

        3. Tenant to Attorn To Lender. If the Premises shall be sold by reason
of foreclosure (whether judicial or non judicial) or other proceedings brought
to enforce the Deed of

                                  EXHIBIT "J"
<PAGE>

        Trust, or the Premises shall be transferred by deed in lieu of
foreclosure, the Lease shall continue in full force and effect as a direct Lease
between the then owner of the Premises, who shall succeed to the rights and
duties of the Landlord, and Tenant for the balance of the term thereof. Tenant
shall attorn to Lender or any other such owner as its Landlord, said attornment
to be effective and self operative without the execution of further instruments;
provided, however, that Lender or any such other owner shall not be (a)
personally liable for any act or omission of Landlord or any prior landlord
which cannot be cured; (b) subject to any offsets or defenses which Tenant might
have against Landlord or any prior landlord except to the extent of Tenant's
right to offsets set forth in the Lease; (c) required or obligated to credit
Tenant with any rent or additional rent for any rental period beyond the then
current month which Tenant might have paid Landlord or any prior landlord; or
(d) liable for the return of any security deposit unless and only to the extent
such security deposit shall have been actually received by Lender. Tenant hereby
agrees that upon the occurrence of any default under the Loan or the documents
evidencing or securing the same, and in the event of a demand on Tenant by
Lender, or its successors and assigns, for the payment to Lender or its
successors and assigns of the rent due under the Lease, Tenant will pay said
rent to Lender and Borrower hereby consents to said payment and releases Tenant
from any and all liability, damages, or claims in connection with any such
payment or payments. Borrower agrees that receipt by Tenant of any such demand
shall be conclusive evidence of the right of Lender to the receipt of said
rental payments. Tenant shall be under no obligation to pay rent to Lender or
any such other owner until Tenant receives written notice from Lender or any
such other owner.

        4. Notice of Default. If Borrower is in material default of one or more
of its obligations under the Lease, Tenant agrees to give written notice thereof
to Lender and Lender shall have the right (but not the obligation) to cure such
default. Tenant agrees not to terminate the Lease (if Tenant has such right
under the circumstances) for a period of thirty (30) days after Lender's receipt
of such written notice.

        5. Notice of Discharge. Borrower shall give notice to Tenant of the
reconveyance or other release of the Deed of Trust within thirty (30) days after
the date the reconveyance or other release is recorded.

        6. Limitation. This Agreement shall not apply to any equipment,
inventory, merchandise, furniture, fixtures or other personal property owned or
leased by Tenant which is now or hereafter placed or installed on the Demised
Premises, and Tenant shall have the full right to remove said property at any
time during or at the expiration of the Lease term.

        7. Notices. Any and all notices required or permitted to be given shall
be in writing and shall be sent, either prepaid by registered or certified
United States mail, return receipt requested, or personal delivery, to the
parties at their addresses set forth above; and shall be deemed given upon the
receipt thereof by the party to whom sent. The addresses to which notices shall
be sent may be changed by any party by notice given pursuant to this paragraph.

        8. Successors And Assigns. This Agreement and each and every covenant,
agreement and other provision hereof shall be binding upon and shall inure to
the benefit of the parties hereto and their representatives, successors and
assigns.

        9. Miscellaneous. This Agreement may not be modified other than by an
agreement in writing, signed by the parties hereto or by their respective
successors in interest. Nothing in this Agreement shall in any way impair or
affect the lien created by the Deed of Trust or the other lien rights of Lender.

            [BALANCE OF THIS PAGE LEFT BLANK; SIGNATURE PAGE FOLLOWS]

                                       2
<PAGE>

        10. Counterparts. This Agreement may be executed in counterparts which
together shall constitute but one and the same original.

        IN WITNESS WHEREOF, the parties hereto have each caused this
Subordination, Non-Disturbance and Attornment Agreement to be executed as of the
date first above written.

                                        "LENDER"

                                                                               ,
                                        ---------------------------------------
                                        a
                                          --------------------------------------

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

                                        Name:
                                              ----------------------------------

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

                                        "BORROWER"

                                        C.J. SEGERSTROM & SONS,
                                        a California partnership

                                        By Henry T. Segerstrom Management LLC, a
                                           California limited liability company,
                                           Manager

                                           By
                                              ----------------------------------
                                                                         Manager

                                        By HTS Management Co., Inc., a
                                           California corporation, Manager

                                           By
                                              ----------------------------------

                                           Title:
                                                  ------------------------------

                                        "TENANT"

                                        EMULEX CORPORATION,
                                        a California corporation

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

                                        Name:
                                              ----------------------------------

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

                                       3
<PAGE>

                             LENDER'S ACKNOWLEDGMENT

STATE OF CALIFORNIA
COUNTY OF                            ss.

        On this ___ day of _____________, 20__, before me, a Notary Public in
and for the State of California, personally appeared personally known to me (or
proved on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

Signature
          ------------------------------

My commission expires
                      ------------------

                            BORROWER'S ACKNOWLEDGMENT

STATE OF CALIFORNIA
COUNTY OF                            ss.

        On this ___ day of _____________, 20__, before me, a Notary Public in
and for the State of California, personally appeared personally known to me (or
proved on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

Signature
          ------------------------------

My commission expires
                      ------------------

                             TENANT'S ACKNOWLEDGMENT

STATE OF CALIFORNIA
COUNTY OF                            ss.

        On this ___ day of _____________, 20__, before me, a Notary Public in
and for the State of California, personally appeared personally known to me (or
proved on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

Signature
          ------------------------------

My commission expires
                      ------------------

                                       4
<PAGE>

                                   EXHIBIT "A"
                                LEGAL DESCRIPTION

THE LAND IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, DESCRIBED AS
FOLLOWS:

                                       5
<PAGE>

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO

John F. Simonis, Esq.
Paul Hastings Janofsky & Walker, LLP
695 Town Center Drive, 17th Floor
Costa Mesa, CA 92626

--------------------------------------------------------------------------------
                                        SPACE ABOVE THIS LINE FOR RECORDER'S USE

ATTENTION: OFFICE OF THE COUNTY RECORDER -- THIS INSTRUMENT COVERS GOODS THAT
ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN AND THIS
INSTRUMENT IS TO BE FILED OF RECORD IN THE RECORDS WHERE DEEDS OF TRUST ON REAL
ESTATE ARE RECORDED. IN ADDITION, THIS INSTRUMENT SHOULD BE APPROPRIATELY
INDEXED, NOT ONLY AS A DEED OF TRUST, BUT ALSO AS A FINANCING STATEMENT COVERING
GOODS THAT ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN. THE
NAME AND THE MAILING ADDRESS OF THE BENEFICIARY (SECURED PARTY) AND TRUSTOR
(DEBTOR) ARE SET FORTH IMMEDIATELY BELOW.

      CONSTRUCTION DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY
                          AGREEMENT AND FIXTURE FILING

        This CONSTRUCTION DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FIXTURE FILING (this "Deed of Trust"), made as of April
15, 2002, between C.J. SEGERSTROM & SONS, a California general partnership,
herein called "Trustor," whose address is 3315 Fairview Road, Costa Mesa,
California 92626, Attn: Chief Financial Officer, CHICAGO TITLE COMPANY, a
California Corporation, herein called "Trustee," whose address is 16969 Von
Karman Avenue, Irvine, California 92612, and EMULEX CORPORATION, a California
corporation, herein called "Beneficiary," whose address is 3535 Harbor
Boulevard, Costa Mesa, California 92626, Attn: EVPHR and Facilities. Trustor
irrevocably grants, transfers and assigns to Trustee in Trust, with Power of
Sale, that property (the "Property") in the City of Costa Mesa, County of
Orange, State of California, described and defined on Exhibit "A" attached
hereto, which Exhibit "A" is incorporated herein by this reference.

        For the purpose of securing the following obligations (the "Secured
Obligations"): (1) repayment of a certain Tenant's Loan as provided for in a
certain unrecorded build to suit lease dated April 15, 2002, between Trustor, as
landlord, and Beneficiary, as tenant (the "Emulex Lease"); and (2) the
performance of each agreement of Trustor incorporated by reference herein,
contained herein or reciting it is so secured.

        1. Assignment of Rents and Leases. Trustor hereby irrevocably,
absolutely, presently and unconditionally assigns to Beneficiary all of
Trustor's right, title and interest in, to and under any and all leases (the
"Leases"), together with all rents (and payments in lieu of rents), revenue,
accounts and other benefits of the Property, including all prepaid rents and
security deposits (some or all collectively, as the context may require,
"Rents"). Beneficiary hereby confers upon Trustor a license (the "License") to
collect and retain the Rents as they become due and payable, so long as no Event
of Default (as defined in Exhibit B), shall exist and be continuing. If an Event
of Default has occurred and is continuing, Beneficiary shall have the right,
which it may choose to exercise in its sole discretion, to terminate this
License upon notice to or demand upon Trustor, and without regard to the
adequacy of Beneficiary's security under this Deed of Trust.

        2. Grant of Security Interest. The parties intend for this Deed of Trust
to create a lien on the Property, and an assignment of the Rents and Leases, all
in favor of Beneficiary. To the extent that any Property or Rents may be or be
determined to be personal property, Trustor as debtor hereby grants Beneficiary
and Trustee as secured parties a security interest in all such personal
property, to secure payment and performance of the Secured Obligations. This
Deed of Trust constitutes a security agreement under Article 9 of the California
Uniform Commercial Code (as amended or recodified from time to time, the "UCC)
covering personal property. Any filing of a financing statement or other
document in the records normally pertaining to personal property shall never be
construed as derogating from or impairing this Deed of Trust or the rights or
obligations of the parties under it.

                                  EXHIBIT "K"
<PAGE>

        3. Fixture Filing. This Deed of Trust constitutes a fixture filing under
the UCC, covering any Property which now is or later may become fixtures
attached to the Property under applicable law. For this purpose, the respective
addresses of Trustor, as debtor, and Beneficiary and Trustee, as secured
parties, are as set forth in the preamble to this Deed of Trust. "Fixtures"
shall include all articles of personal property now or hereafter attached to,
placed upon for an indefinite term or used in connection with said real
property, appurtenances and improvements, together with all goods and other
property which are at any time so related to the Property that an interest
arises in them under real estate law.

        4. Other Provisions.

        4.1 Waiver of Statutory Rights. To the extent permitted by law, Trustor
hereby agrees that it shall not and will not apply for or avail itself of any
appraisement, valuation, stay, extension or exemption laws, or any so-called
"Moratorium Laws," now existing or hereafter enacted, in order to prevent or
hinder the enforcement or foreclosure of this Deed of Trust, but hereby waives
the benefit of such laws. Trustor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Property marshaled upon any foreclosure of the lien hereof and agrees that
any court having jurisdiction to foreclose such lien may order the Property sold
as an entirety.

        4.2 Due on Transfer. Trustor shall not transfer the Property or any
portion thereof or interest therein without the prior written consent of
Beneficiary. Beneficiary may grant or deny such consent in its sole discretion
and, if consent should be given, any such transfer shall be subject to this Deed
of Trust, and any transferee shall assume all of Trustor's obligations hereunder
and agree to be bound by all provisions and perform all obligations contained
herein. In the event of any such transfer without the written consent of
Beneficiary, Beneficiary may, at its option, by demand or notice to Trustor,
declare all sums secured hereby immediately due and payable. Consent to one such
transfer shall not be deemed to be a waiver of the right to require consent to
future or successive transfers. As used herein, the term "transfer" shall mean:
(a) the sale, lease (after the date hereof), conveyance or other transfer of the
Property, or any portion thereof or interest therein, whether voluntarily,
involuntarily, by operation of law or otherwise; (b) any transfer by way of
security, including the placing or permitting the placing on the Property of any
mortgage, deed of trust, assignment of rents or other security device; or (c)
the transfer of a controlling interest in Trustor, whether voluntarily,
involuntarily, by operation of law or otherwise. For purposes hereof, the term
"controlling interest" shall mean any transfer or other disposition of any
interest in such entity whereby the effective control of the management of such
entity is altered, limited or otherwise modified in any manner. The provisions
of this Section shall not apply to a transfer of the Property to an affiliate,
parent or subsidiary of Trustor as permitted by Section 1.4(i) of the Emulex
Lease. Upon any such permitted transfer, the Property shall remain subject to
the terms of this Deed of Trust.

        4.3 Inconsistencies. In the event of any inconsistency between this Deed
of Trust and the Emulex Lease, the terms hereof shall be controlling as
necessary to create, preserve and/or maintain a valid security interest upon the
Property.

        4.4 Exhibit "B." Trustor expressly makes each and all of the agreements,
and adopts and agrees to perform and be bound by each and all of the terms and
provisions set forth in Exhibit "B" attached hereto, which Exhibit "B" is
incorporated herein by this reference.

                                  EXHIBIT "K"
<PAGE>

        4.5 Notice of Default Request. The undersigned Trustor requests that a
copy of any notice of default and any notice of sale hereunder be mailed to it
at its address hereinbefore set forth.

        IN WITNESS WHEREOF, Trustor has executed this Construction Deed of
Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing as
of the date first above written.

                                        C.J. SEGERSTROM & SONS,
                                        a California partnership

                                        By Henry T. Segerstrom Management LLC,
                                           a California limited liability
                                           company, Manager

                                           By
                                              ----------------------------------
                                                                         Manager

                                        By HTS Management Co., Inc., a
                                           California corporation, Manager

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------
                                                          "Trustor"

                                  EXHIBIT "K"
<PAGE>

STATE OF CALIFORNIA

COUNTY OF __________________

        On ________________________, before me, ____________________________,
Notary Public, personally appeared _____________________________________________
and __________________________________________, personally known to me OR proved
to me on the basis of satisfactory evidence to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the persons, or the entity upon behalf of which the persons acted,
executed the instrument.

        WITNESS my hand and official seal.

                                        ----------------------------------------
                                        Signature of Notary

STATE OF CALIFORNIA

COUNTY OF __________________

        On ________________________, before me, ____________________________,
Notary Public, personally appeared _____________________________________________
and __________________________________________, personally known to me OR proved
to me on the basis of satisfactory evidence to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the persons, or the entity upon behalf of which the persons acted,
executed the instrument.

        WITNESS my hand and official seal.

                                        ----------------------------------------
                                        Signature of Notary

STATE OF CALIFORNIA

COUNTY OF __________________

        On ________________________, before me, ____________________________,
Notary Public, personally appeared _____________________________________________
and __________________________________________, personally known to me OR proved
to me on the basis of satisfactory evidence to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the persons, or the entity upon behalf of which the persons acted,
executed the instrument.

        WITNESS my hand and official seal.

                                        ----------------------------------------
                                        Signature of Notary

<PAGE>

                          EXHIBIT "A" TO DEED OF TRUST

All estate, right, title and interest which Trustor now has or may later acquire
in and to the following property (all or any part of such property, or any
interest in all or any part of it, as the context may require, the "Property"):
the real property located in the County of Orange, State of California, as
described in Schedule 1 attached hereto and incorporated herein by this
reference, together with all existing and future appurtenances thereto (the
"Premises") together with all buildings, structures and improvements now located
or later to be constructed on the Premises (the "Improvements"); together with
all rents, income, revenues, issues and profits of or from the Premises or the
Improvements (including all cash or security deposits), all existing and future
leases and other occupancy agreements and concessions relating to the use and
enjoyment of all or any part of the Premises and Improvements (the "Leases"),
and any and all guaranties and other agreements relating to or made in
connection with any of such Leases; together with all Fixtures (as defined
below) now or later to be attached to, placed in or on, or used in connection
with the ownership, development, use, enjoyment, occupancy, operation or
maintenance of all or any part of the Premises and Improvements; together with
all building materials, equipment, work in process or other personal property of
any kind, whether stored on the Premises or elsewhere, which have been or later
will be acquired for the purpose of being delivered to, incorporated into or
installed in or about the Premises or the Improvements; together with all rights
to the payment of money, reserves, cost savings and deposits, whether now or
later to be received from third parties or deposited by Trustor with third
parties (including all utility deposits), contract rights, development and use
rights and agreements, governmental permits, licenses, approvals, authorizations
and applications (governmental or private), maps, surveys, plans, specifications
and drawings, reports, and other similar work products, chattel paper,
documents, and notes, which arise from or relate to construction, ownership,
operation, management, leasing or use of the Premises or Improvements, or to the
Premises and Improvements generally; together with all insurance policies
pertaining to the Premises and all proceeds, including all claims to and demands
for them, of the voluntary or involuntary conversion of any of the Premises,
Improvements or the other property described above into cash or liquidated
claims, including proceeds of all present and future fire, hazard or casualty
insurance policies and all condemnation awards or payments now or later to be
made by any public body or decree by any court of competent jurisdiction for any
taking or in connection with any condemnation or eminent domain proceeding, and
all causes of action and their proceeds for any damage or injury to the
Premises, Improvements or the other property described above or any part of
them. Trustor acknowledges and agrees that the foregoing collateral description
covers all assets of Trustor relating to the use and enjoyment of all or any
part of the Premises and Improvements. Beneficiary may at any time and from to
time file financing and continuation statements and amendments thereto
reflecting the same.

                          EXHIBIT "A" to DEED OF TRUST
<PAGE>

                   SCHEDULE 1 TO EXHIBIT "A" TO DEED OF TRUST
                               DESCRIPTION OF LAND

                   SCHEDULE 1 TO EXHIBIT "A" to DEED OF TRUST
<PAGE>

                          EXHIBIT "B" TO DEED OF TRUST

                              ADDITIONAL PROVISIONS

A.      To protect the security of this Deed of Trust, Trustor agrees as
        follows:

        (1) To the extent not the obligation of the tenant under the Emulex
Lease, Trustor shall keep the Property in good condition and repair; not remove
or demolish any building thereon; complete or restore promptly and in good and
workmanlike manner any building which may be constructed, damaged or destroyed
thereon and pay when due all claims for labor performed and materials furnished
therefor in accordance with Article VIII of the Emulex Lease; comply with all
laws affecting said Property or requiring any alterations or improvements to be
made thereon; not commit or permit waste thereof; not commit, suffer or permit
any act upon said Property in violation of law; cultivate, irrigate, fertilize,
fumigate, prune and do all other acts which from the character or use of said
Property may be reasonably necessary; to maintain and preserve its value; and
not initiate or allow any change or variance in any zoning or other property use
classification which affects the Property or any part of it.

        (2) To insure the Property to the extent not the obligation of the
tenant under the Emulex Lease, and such insurance shall be similar in scope,
type and amount to that specified in the Emulex Lease. The amount collected
under any insurance policy shall be paid to Trustor for application to the cost
of rebuilding the Property, but only if the Emulex Lease shall not have been
terminated pursuant to Article VIII thereof. In any case, the release of such
proceeds shall not cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to such notice.

        (3) At Trustor's sole expense to appear in and defend any action or
proceeding purporting to affect the title to and right of possession of the
Property, the security hereof or the rights or powers of Beneficiary or Trustee
(Trustor shall give Beneficiary prompt notice in writing if any claim is
asserted which does or could affect any such matters, or if any action or
proceeding is commenced which alleges or relates to any such claim); and to pay
or reimburse all costs and expenses of Trustee and Beneficiary, including cost
of evidence of title and attorneys' fees in a reasonable sum, in any action or
proceeding in which Beneficiary or Trustee may appear, including in connection
with Beneficiary's or Trustee's efforts to enforce any terms of this Deed of
Trust (whether any lawsuit is filed or not) and/or seek remedies for a default
hereunder.

        (4) To pay: at least ten days before delinquency all taxes and
assessments affecting said property, including assessments on appurtenant water
stock; when due, all encumbrances, charges and liens, with interest, on said
Property or any part thereof, which appear to be prior or superior hereto or
which are not expressly permitted by the Emulex Lease; and all costs, fees and
expenses of this Trust.

Should Trustor fail to make any payment or to do any act as herein provided,
then Beneficiary or Trustee, but without obligation so to do and without notice
to or demand upon Trustor and without releasing Trustor from any obligation
hereof, may: make or do the same in such manner and to such extent as either may
deem necessary to protect the security hereof, Beneficiary or Trustee being
authorized to enter upon said Property for such purposes; appear in and defend
any action or proceeding purporting to affect the security hereof or the rights
or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any
encumbrance, charge, or lien which in the judgment of either appears to be prior
or superior hereto; and, in exercising any such powers, pay necessary expenses,
employ counsel and pay his or her reasonable fees. Trustor shall also pay or
reimburse all of Beneficiary's and Trustee's costs and expenses which may be
incurred in connection with any of the foregoing. If Beneficiary and/or Trustee
chooses to dispose of the Property (or a portion(s) thereof) through one or more
Foreclosure Sales (as defined below), Trustor shall pay all costs, expenses or
other advances that may be incurred or made by Beneficiary and/or Trustee in
each such sale. In any suit to foreclose the lien hereof or enforce any other
remedy of Trustee or Beneficiary under this Deed of Trust, there shall be
allowed and included as additional indebtedness in the decree for sale or other
judgment or decree all reasonable expenditures and expenses which may be paid or
incurred by or on behalf of Trustee and Beneficiary in connection therewith.

Neither Beneficiary nor Trustee shall be directly or indirectly liable to
Trustor or any other person as a consequence of any of the following: (i)
Beneficiary's or Trustee's exercise of or failure to exercise any rights,
remedies or powers granted to Beneficiary and/or Trustee in this Deed of trust;
(ii) Beneficiary's failure or refusal to perform or discharge any obligation or
liability of Trustor under any agreement related to the Property or under this
Deed of Trust; or (iii) any loss sustained by Trustor or any third party
resulting from Beneficiary's failure to lease

                          EXHIBIT "B" to DEED OF TRUST
                                     Page 1
<PAGE>

the Property, or from any other act or omission of Beneficiary in managing the
Property, after an Event of Default, unless the loss is caused by the willful
misconduct or gross negligence of Beneficiary. Trustor hereby expressly waives
and releases all liability of the types described above, and agrees that no such
liability shall be asserted against or imposed upon Beneficiary or Trustee.

        (5) To pay or reimburse immediately and without demand (but in no event
later than ten (10) business days after Trustor's receipt of Beneficiary's
written demand therefor) all sums expended by Beneficiary or Trustee of the
nature mentioned in this Exhibit B, with interest from date of expenditure at
the amount allowed by law in effect at the date hereof. All such sums shall be
secured by this Deed of Trust.

        B. It is mutually agreed as follows: (1) That any award of damages in
connection with any condemnation for public use of or injury to said Property or
any part thereof shall be paid in accordance with Article X of the Emulex Lease.
If the Emulex Lease is terminated pursuant to Article X thereof, Trustor's share
of the award must be used to pay in full the Secured Obligations. The payment of
such money shall not cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to such notice.

        (2) Each waiver by Beneficiary must be in writing, and no waiver shall
be construed as a continuing waiver. No waiver shall be implied from any delay
or failure by Beneficiary to take action on account of any default of Trustor.
Consent by Beneficiary to any act or omission by Trustor shall not be construed
as a consent to any other or subsequent act or omission or to waive the
requirement for Beneficiary's consent to be obtained in any future or other
instance.

        (3) At any time or from time to time, without liability therefor and
without notice, upon written request of Beneficiary and presentation of this
Deed of Trust for endorsement, and without affecting the personal liability of
any person for payment of the indebtedness secured hereby, Trustee may: reconvey
any part of said Property; consent to the making of any map or plat thereof;
join in granting any easement thereon; or join in any extension agreement or any
agreement subordinating the lien or charge hereof.

        (4) Upon written request of Beneficiary stating that all sums and
obligations secured hereby have been paid and performed, and upon surrender of
this Deed of Trust to Trustee for cancellation and retention or other
disposition as Trustee in its sole discretion may choose and upon payment of its
fees, Trustee shall reconvey, without warranty, the Property then held
hereunder. The recitals in such reconveyance of any matters or facts shall be
conclusive proof of the truthfulness thereof. The Grantee in such reconveyance
may be described as "the person or persons legally entitled thereto." Neither
Beneficiary nor Trustee shall have any duty to determine the rights of persons
claiming to be rightful grantees of any reconveyance.

        (5) Upon an Event of Default by Trustor in payment of Tenant's Loan or
in performance of any agreement hereunder, Beneficiary may declare all sums
secured hereby immediately due and payable and thereafter shall have the right,
in one or several concurrent or consecutive proceedings, to foreclose the lien
hereof upon the Property or any part thereof, for the Secured Obligations, or
any part thereof, by any proceedings appropriate under applicable law. Trustor
will be in default under this Deed of Trust upon the occurrence of any one or
more of the following events (some or all collectively, "Events of Default;" any
one singly, an "Event of Default"): (a) a "transfer occurs in violation hereof,
(b) the Emulex Lease is terminated by the tenant thereunder due to a breach by
the landlord thereunder; or (c) failure of Trustor to (i) pay any of the
principal of the Tenant Loan when due, (ii) pay interest within five (5) days
after the date when due, (iii) observe or perform any of the other covenants or
conditions by Trustor to be performed under the terms of this Deed of Trust
concerning the payment of money for a period of five (5) days after written
notice from Beneficiary that the same is due and payable; or (iv) observe or
perform any non-monetary covenant or condition contained in this Deed of Trust
for a period of thirty (30) days after written notice from Beneficiary; provided
that if any such failure concerning a non-monetary covenant or condition is
susceptible to cure but cannot reasonably be cured within said thirty (30) day
period, then no Event of Default shall be deemed to exist hereunder so long as
Trustor commences such cure within the initial thirty (30) day period and
diligently and in good faith pursues such cure to completion as promptly as
practicable following the date of Beneficiary's notice. No cure period shall
apply in the event of the termination of the Emulex Lease.

        Beneficiary and/or Trustee may elect to dispose of the Property (or any
portion(s) thereof in any manner Beneficiary may deem to be in its best
interests (any such disposition, a "Foreclosure Sale;" and any two or more,
"Foreclosure Sales"). If Beneficiary chooses to have more than one

                          EXHIBIT "B" to DEED OF TRUST
                                     Page 2
<PAGE>

Foreclosure Sale, Beneficiary at its option may cause the Foreclosure Sales to
be held simultaneously or successively, on the same day, or on such different
days and at such different times and in such order as Beneficiary may deem to be
in its best interests. No Foreclosure Sale shall terminate or affect the liens
of this Deed of Trust on any part of the Property which has not been sold, until
all of the Secured Obligations have been paid in full.

        If Beneficiary delivers to Trustee a written declaration of default and
demand for sale and a written notice of default, Trustee shall cause such notice
to be filed for record. After the lapse of such time as may then be required by
law following the recordation of said notice of default, and notice of sale
having been given as then required by law, Trustee, without demand on Trustor,
may sell said Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine,
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. Trustee may postpone sale of all or any portion
of said Property by public announcement at such time and place of sale, and from
time to time thereafter may postpone such sale by public announcement at the
time fixed by the preceding postponement. Trustee shall deliver to such
purchaser its deed conveying the property so sold, but without any covenant or
warranty, express or implied. The recitals in such deed of any matters or facts
shall be conclusive proof of the truthfulness thereof. Beneficiary or its
nominee may bid and become the purchaser of all or any part of the Property at
any Foreclosure Sale, and the amount of Beneficiary's successful bid shall be
credited on the Secured Obligations.

        Beneficiary may exercise any or all of the remedies granted to a secured
party under the UCC. Under this power of sale, Beneficiary shall have the
discretionary right to cause some or all of the Property, including any Property
which constitutes personal property, to be sold or otherwise disposed of in any
combination and in any manner permitted by applicable law (including the UCC).
Trustor agrees that such a sale of personal property together with real property
constitutes a commercially reasonable sale of the personal property. Any
proceeds of any such disposition shall not cure any Event of Default or
reinstate any Secured Obligation for purposes of Section 2924c of the California
Civil Code.

        After deducting all costs, fees and expenses of Trustee and of this
Trust, including cost of evidence of title in connection with sale, Trustee
shall apply the proceeds of sale to payment of: all sums expended under the
terms hereof, not then repaid, with accrued interest at the amount allowed by
law in effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the Trustor.

        (6) Beneficiary, or any successor in ownership of any indebtedness
secured hereby, may from time to time, by instrument in writing, substitute a
successor or successors to any Trustee named herein or acting hereunder, which
instrument, executed by the Beneficiary and duly acknowledged and recorded in
the office of the recorder of the county or counties where said Property is
situated, shall be conclusive proof of proper substitution of such successor
Trustee or Trustees, who shall, without conveyance from the Trustee predecessor,
succeed to all its title, estate, rights, powers and duties. Said instrument
must contain the name of the original Trustor, Trustee and Beneficiary
hereunder, the book and page where this Deed is recorded and the name and
address of the new Trustee.

        (7) This Deed applies to, inures to the benefit of, and binds all
parties hereto, their heirs, legatees, devisees, administrators, executors,
successors, and assigns. The term Beneficiary shall mean the owner and holder,
including pledgees, of Tenant's Loan, whether or not named as Beneficiary herein
(however, this paragraph (7) does not waive the due-on-transfer provisions
hereof). In this Deed of Trust, whenever the context so requires, the masculine
gender includes the feminine and/or the neuter, and the singular number includes
the plural. No merger shall occur as a result of Beneficiary's acquiring any
other estate in or any other lien on the Property unless Beneficiary consents to
a merger in writing. This Deed of Trust shall be governed by the laws of the
State of California. If any provision of this Deed of Trust should be held
unenforceable or void, that provision shall be deemed severable from the
remaining provisions and shall in no way affect the validity of this Deed of
Trust. Any notice, demand, request or other communication which any party hereto
may be required or may desire to give hereunder shall be given in writing at the
address as set forth above or at such other address as the party to be served
with notice may have furnished in writing to the party seeking or desiring to
serve notice as a place for the service of notice. Any notice or demand
delivered to the person or entity named above to accept notices and demands for
Trustor shall constitute notice or demand duly delivered to Trustor, even if
delivery is refused.

                          EXHIBIT "B" to DEED OF TRUST
                                     Page 3
<PAGE>

                           PURCHASE AND SALE AGREEMENT

                                  MODIFICATIONS

1.      Recital B shall be rewritten to reflect exercise of right of first offer
        pursuant to Section 15.2 of the Lease.

2.      Section 1.1 shall reflect the right of first offer property (including
        any Landlord owned personal property and fixtures located thereon).

3.      Sections 1.8 and 1.18 shall include in the Personal Property only such
        Warranties as may then be in force.

4.      Sections 1.16 and 1.17 shall be modified to reflect the property being
        purchased.

5.      Sections 1.22, 1.23, 1.24 and 1.25 shall be deleted.

6.      Section 4.1 shall set forth the Purchase Price for the right of first
        offer property.

7.      The Deposit pursuant to Section 4.2 shall be $500,000.

8.      The Tenant's Loan, Breakage Fee, Fire Suppression Fee and Traffic Impact
        Fees shall be eliminated from Sections 4.3, 6.3.2 and 6.7.

9.      The tenant leases and the Lease shall be added as Title Exceptions in
        Section 5.1.1(a), unless the Tenant disapproves any Tenant Lease(s)
        pursuant to Section 5.1.2 and terminates the Agreement.

10.     The tenant leases and all contracts and agreements affecting the right
        of first offer property shall be added as Tenant due diligence items in
        Section 5.1.2. Tenant may disapprove any Tenant Lease and/or disapprove
        the due diligence items on any reasonable basis.

11.     Clauses (b), (c) and (d) and (i), (ii) and (iii) of Section 5.1.3 shall
        be eliminated.

12.     Delivery of tenant estoppel certificates in the form of attached
        Schedule 1 and commercially reasonable SNDA's from all tenants of the
        right of first offer property, other than Tenant, shall be added as a
        new condition in Section 5.1.9. In addition, Landlord shall reasonably
        cooperate with Tenant in obtaining SNDAs for Tenant's lender in a
        commercially reasonable form, but obtaining such SNDAs shall not be a
        breach by Landlord subject to satisfaction of the reasonable cooperation
        covenant and the provisions of the tenant leases.

13.     Section 6.1 shall be modified to reflect the closing date per the right
        of first offer. The second paragraph shall be deleted in its entirety.

14.     Section 6.2.3 will be deleted unless the right of first offer property
        includes the entire Premises. Sections 6.2.4 and 6.2.5 shall be replaced
        with provisions requiring delivery of tenant estoppels and an assignment
        of leases in the form attached hereto as Schedule 2.

15.     The tenant leases shall be added as permitted encumbrances under Section
        6.4, subject to Tenant's disapproval rights under Section 5.1.2.

16.     Section 6.5 shall be rewritten to include tenant rent and deposits in
        the proration and, as applicable, any allocation of outstanding tenant
        improvement obligations in accordance with the Sale Notice or as
        negotiated by Landlord and Tenant.

17.     Section 6.10 shall be eliminated.

18.     Section 8.3.13 shall be eliminated. Representations shall be added re
        tenant leases as to (a) true and complete copies, (b) full force and
        effect, (c) no defaults, (d) deposits and (e) no other tenant leases.

19.     Sections 10.2 and 10.3 shall be eliminated.

                                  EXHIBIT "M"
<PAGE>

20.     Section 10.4 shall be modified to eliminate references to the Lease
        (unless the Premises is included in the right of first offer property)
        and the assignment of Warranties.

21.     The first paragraph of Article 11 shall be eliminated.

22.     Section 12.11 shall be modified to delete references to the Lease unless
        the right of first offer property includes some or all of the Premises.

23.     Section 12.21 shall be modified to reflect that Tenant's right to
        possession is subject to the rights of any tenants of the right of first
        offer property.

24.     Section 12.23 shall be modified to reflect the actual Trip Budget
        required for the uses on the property sold.

25.     The parties shall make any additional changes required to reflect
        particular business terms of the right of first offer.

26.     Basic operational covenants as to continued operation of the property as
        currently operated shall be added.

27.     Restrictions on ability of Landlord to, without consent of Tenant, to
        (a) execute, amend, terminate tenant leases, (b) execute, modify,
        terminate certain contracts and (c) materially modify improvements to
        sale property after due diligence period expires shall be added.

28.     The Partial Assignment of the Development Agreement shall be modified to
        reflect the actual numbers of AM and PM peak trips allocated to the sale
        land.

                                  EXHIBIT "M"
                                     Page 2
<PAGE>

                           TENANT ESTOPPEL CERTIFICATE

        THIS TENANT ESTOPPEL CERTIFICATE ("Certificate"), is made and entered
into as of this ___ day of _____, 20__ (the "Effective Date"), by
________________, a ____________ ("Lessee"), in favor of EMULEX CORPORATION, its
successors and assigns ("Purchaser").

                                    RECITALS

        A. Purchaser and C.J. SEGERSTROM & SONS, a California general
partnership ("Lessor"), have entered into a Purchase and Sale Agreement and
Joint Escrow Instructions dated as of _______________ (the "Agreement"), wherein
Purchaser agreed to purchase and Lessor agreed to sell the real property located
in the City of Costa Mesa, County of Orange, State of California (the
"Property"), which is legally described in Exhibit "A" attached hereto.

        B. Lessor and Lessee (or their respective predecessors in interest) have
entered into that certain Lease dated as of ________________ (the "Original
Lease") covering a portion of the Property (the "Premises"), more particularly
described on Exhibit "B" attached hereto.

        C. The Original Lease has been amended and modified pursuant to the
amendments and related documents listed on Exhibit "C" attached hereto (as so
amended, the "Lease").

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the recitals set forth above and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Lessee, Lessee certifies, warrants and represents to
Purchaser as follows:

        1. Lease. Exhibit "D" attached hereto is a true, complete and correct
copy of all documents and agreements constituting the Lease.

        2. Effectiveness of the Lease. The Lease has been duly executed and
delivered by Lessee and, subject to the terms and conditions thereof, the Lease
is in full force and effect, the obligations of Lessee thereunder are valid and
binding, and there have been no modifications or additions to the Lease, written
or oral, other than those which are listed on Exhibit "C" and included in
Exhibit "D."

        3. Complete Agreement. The Lease constitutes the complete agreement
between Lessor and Lessee relating to the leasing of the Premises and Lessee
claims no rights of any kind whatsoever with respect to the Property, other than
as set forth in the Lease.

        4. Lease Term. The term of the Lease expires on __________ and Lessee
has no right or option to extend the term of the Lease, other than
______________________.

        5. No Purchase Rights. Lessee has no option, right of first refusal,
right of first offer or other right to purchase all or any portion of the
Property.

        6. Rent. The monthly basic rent currently payable under the Lease is
$________, subject to ___ adjustment in accordance with the terms of the Lease.
In addition, Lessee pays __________________ (the "Additional Rent"). Monthly
basic rent and Additional Rent has been paid through _____________.

        7. No Deposits or Prepaid Rent. No security or other deposits or
prepayments of rent have been made by Lessee in connection with the Lease,
except as follows: __________________
________________________________________________________ (if none, write
"None").

        8. Lessor's Obligations. As of the date of this Certificate, Lessor has
performed all obligations required of Lessor under the Lease and Lessor is not
in default under any term, covenant or condition of the Lease. No offsets,
counterclaims or defenses of Lessee

                           Schedule 1 to Exhibit "M"
<PAGE>

under the Lease exist against Lessor. No events have occurred which, with the
passage of time or the giving of notice, would constitute a basis for offsets,
counterclaims or defenses against Lessor. There are no outstanding obligations
of Lessor to provide to Lessee (a) any improvements to the Premises, (b) any
allowance for tenant improvements, moving expenses or other costs incurred by
Lessee or (c) any "free rent" or other lease concessions.

        9. Assignment. Lessee has not subleased, assigned, hypothecated,
transferred or alienated any interest of Lessee in the Premises or pursuant to
the Lease except: ______________________________________________________________
(if none, write "None").

        10. Authority. Each individual executing this Certificate represents and
warrants that he or she is duly authorized to execute and deliver this
Certificate on behalf of Lessee and that this Certificate is binding upon Lessee
in accordance with its terms.

        11. Reliance by Purchaser. Lessee executes this Certificate with the
knowledge that this Certificate will be relied on by Purchaser, or its
successors and assigns under the Agreement, in connection with the purchase of
the Property by Purchaser. The date such purchase closes is herein referred to
as the "Effective Date." Lessee shall be bound by the certifications and
covenants contained in this Certificate. In the event of any conflict between
the terms and provisions of this Certificate and of the Lease, the terms and
provisions of this Certificate shall control.

        IN WITNESS WHEREOF, Lessee has executed this Certificate to be effective
as of the Effective Date.

                                                                               ,
                                        ---------------------------------------
                                        a
                                          --------------------------------------

                                        By
                                           -------------------------------------

                                        Title:
                                               ---------------------------------

                           Schedule 1 to Exhibit "M"
                                     Page 2
<PAGE>

                       ASSIGNMENT AND ASSUMPTION OF LEASES

        THIS ASSIGNMENT AND ASSUMPTION OF LEASES (the "Assignment") is made and
entered into as of the ___ day of ___________, 20__ by and between C.J.
SEGERSTROM & SONS, a California general partnership ("Assignor"), and EMULEX
CORPORATION, a California corporation ("Assignee"), with respect to the
following:

                                    RECITALS

        A. Assignor is the "Seller" and Assignee is the "Buyer" pursuant to a
certain Purchase and Sale Agreement and Joint Escrow Instructions dated
______________ __, 20___ (the "Agreement"). Pursuant to the Agreement, Assignor
is selling and Assignor is purchasing certain real property and improvements
described on Schedule 1 attached hereto (the "Property").

        B. In connection with the sale of the Property, Seller is required to
assign to Buyer all "Tenant Leases," as defined in the Agreement, with respect
to the Property. This Assignment is executed to satisfy such obligation.

                                    AGREEMENT

        IN CONSIDERATION OF the foregoing recitals and the mutual covenants
contained herein, Assignor and Assignee agree to follows:

        1. Assignment. Assignor hereby assigns and transfers to Assignee all of
Assignor's right, title and interest as "Landlord" or "Lessor" in and under the
Tenant Leases. The Tenant Leases are as listed on Schedule 2 attached hereto.
True, correct and complete copies of the Leases are attached hereto as Schedule
3.

        2. Assumption. Assignee hereby accepts the foregoing assignment and
assumes and agrees to be bound by all obligations of the "Landlord" or "Lessor"
under the Tenant Leases accruing from and after the Effective Date, as defined
below, of this Assignment.

        3. Effective Date. The Effective Date of this Assignment shall be the
date upon which there is recorded in the Office of the County Recorder of Orange
County, California a deed to the Property executed by Seller in favor of Buyer.

        4. Indemnity. Assignor shall indemnify, defend and hold harmless
Assignee from and against all claims, losses, costs, liabilities and expenses
(including, without limitation, reasonable attorneys' fees and costs) arising
out of the failure or alleged failure of Assignor to perform any of the
obligations of the Landlord pursuant to the Tenant Leases and accruing prior to
the Effective Date. Assignee shall indemnify, defend and hold harmless Assignor
from and against any and all claims, losses, costs, liabilities and expenses
(including, without limitation, reasonable attorneys' fees and costs) arising
out of the failure or alleged failure of Assignee to perform any of the
obligations of the Landlord pursuant to the Tenant Leases and accruing on or
after the Effective Date. The foregoing indemnification provisions shall each
contain a covenant by the indemnifying party to defend the indemnified party
against all claims for which indemnification is available hereunder with legal
counsel appointed by the liability insurance carrier for the indemnifying party.
Payment shall not be a condition precedent to recovery upon the foregoing
indemnification provisions.

        5. Successors and Assigns. All of the terms, covenants and conditions
set forth herein shall be binding upon and inure to the benefit of Assignor and
Assignee and their respective successors and assigns.

        6. No Implied Representations. There are no representations and
warranties in connection with this Assignment other than as expressly set forth
in the Agreement. Except for such express representations and the
indemnification set forth in paragraph 4, Assignee shall have no claims against
Assignor pursuant to the provisions of the Tenant Leases.

                           Schedule 2 to Exhibit "M"
<PAGE>

        IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered
this Agreement and Assumption of Tenant Leases to be effective as provided in
paragraph 3 above.

C.J. SEGERSTROM & SONS, a California    EMULEX CORPORATION, a California
general partnership                     corporation

By Henry T. Segerstrom Management LLC,  By
   a California limited liability          -------------------------------------
   company, Manager
                                        Title:
                                               ---------------------------------
   By
      -------------------------------
                              Manager
                                        By
                                           -------------------------------------
By HTS MANAGEMENT CO., INC.,
   a California corporation, Manager    Title:
                                               ---------------------------------
                                                          "Assignee"

   By
      ----------------------------------

   Title:
          ------------------------------
                   "Assignor"

                           Schedule 2 to Exhibit "M"
                                     Page 2

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