Document:

Exhibit 10.1

 

COURIER CORPORATION

1999 EMPLOYEE STOCK PURCHASE PLAN

 

First Amendment

 

A.                                   The
Courier Corporation 1999 Employee Stock Purchase Plan (the “Plan”) is hereby
amended by deleting in its entirety the last sentence of the first paragraph of
Section 8 and substituting the following in lieu thereof:

 

“The
purchase price for each share purchased under such Option (the “Option Price”)
will be 85% of the Fair Market Value of the Common Stock on the Exercise Date.”

 

B.                                     This
amendment is effective for Offerings commencing on or after March 1, 2005.

 

C.                                     The
Plan, as so amended, is in all other respects hereby confirmed.

 

IN
WITNESS WHEREOF, the Company has caused this First Amendment to the Plan to be
executed by its duly authorized officer this 20th day of January,
2005.

 

 

	
   

  	
  COURIER
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
      s/
  James F. Conway III

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   Chairman,
  President & CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
    s/
  Mary Gail D. McCarthy

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
      Assistant
  SecretaryExhibit 10.25

    
      

    

     

    EXHIBIT
      10.25

    

    TIDEL
      TECHNOLOGIES, INC.

    2900
      Wilcrest, Suite 205

    Houston,
      TX 77042

    

    

    November
      25, 2005

     

    

    Laurus
      Master Fund, Ltd.

    825
      Third
      Avenue, 14th
      Floor

    New
      York,
      New York 10022

    

    
      	 	
              Re:

            	
              Extension
                of Laurus Notes

            

    

    

    Ladies
      and Gentlemen:

    

    

    Reference
      is hereby made to the following agreements, as each is amended, modified or
      supplemented from time to time (i) that certain Convertible Term Note in the
      principal amount of $6,450,000, dated November 25, 2003, made by Tidel
      Technologies, Inc. (“Borrower”) in favor of Laurus Master Fund, Ltd. (“Holder”)
      (the “2003 Convertible Note”), (ii) that certain Convertible Term Note in the
      principal amount of $600,000, dated November 26, 2004, made by Borrower in
      favor
      of Holder (the “2004 Convertible Note”), (iii) that certain Convertible Term
      Note in the principal amount of $1,250,000, dated November 26, 2004, made by
      Borrower in favor of Holder (the “P.O. Note”), and (iv) the certain Purchase
      Order Financing and Security Agreement dated November 26, 2004 by and between
      Borrower and Holder (the “P.O. Agreement”, and together with the 2003
      Convertible Note, the 2004 Convertible Note, and the P.O. Note, the “Laurus
      Notes”). All capitalized terms used herein and not defined herein shall have the
      meaning ascribed to them in the Laurus Notes.

    

    WHEREAS,
      Borrower and Holder agree that Borrower is in process of finalizing a definitive
      proxy statement for a special meeting of Borrower’s stockholders to be held on
      or about December 28, 2005, to approve the sale of its ATM Business to NCR
      Corporation, and that it is in the best interests of Borrower and Holder to
      extend certain principal payments due to Holder by Borrower on the Laurus Notes
      prior to such special meeting date to prevent an event of default under the
      Laurus Notes,

    

    NOW
      THEREFORE, Borrower and Holder hereby agree, for good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      that
      the Laurus Notes shall be amended as follows:

    

    1.  As
      of the
      date hereof (the “Effective Date”), no payments of Principal Amount shall be due
      under the 2003 Convertible Note until March 1, 2006. From March 1, 2006 until
      the day prior to the Maturity Date, on the first business day of every calendar
      month, payments of Monthly Amounts (as defined in the 2003 Convertible Note)
      in
      an amount equal to $225,000 shall be due and payable to Holder, together with
      any accrued and unpaid interest to date on such portion of the Monthly
      Amount.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    2.  As
      of the
      Effective Date, the definition of “Maturity Date” under and as defined in the
      2004 Convertible Note shall be amended to be and read as follows:

    

    “the
      earlier of (i) February 28, 2006, or (ii) the date of the closing of the sale
      of
      the Borrower’s and its subsidiaries’ (as applicable) ATM Business to NCR
      Corporation.”

    

    3.  As
      of the
      Effective Date, Schedule A to the P.O Agreement is hereby amended by deleting
      the definition of “Stated Expiry Date” in its entirety and inserting the
      following new definition of “Stated Expiry Date” in lieu thereof: 

    

    “Stated
      Expiry Date” shall the earlier of (i) February 28, 2006 and (ii) the date of the
      closing of the sale of the Borrower’s and its subsidiaries’ (as applicable) ATM
      Business to NCR Corporation”

    

    There
      are
      no other amendments or modifications to the Laurus Notes and the Laurus Notes
      remain in full force and effect; however, in the event that the terms of this
      letter agreement conflict with the terms of such agreements or documents, the
      terms of this letter agreement shall govern. Holder hereby expressly reserves
      and preserves all of the rights and remedies of Holder under the Laurus Notes,
      any other documents related to the forgoing and/or applicable law.

    

    The
      parties hereto hereby agree to execute any further documentation required to
      evidence the foregoing.

    

    This
      letter agreement may not be amended or waived except by an instrument in writing
      signed by the Borrower and the Holder. This letter agreement may be executed
      in
      any number of counterparts, each of which shall be an original and all of which,
      when taken together, shall constitute one agreement. Delivery of an executed
      signature page of this letter by facsimile transmission shall be effective
      as
      delivery of a manually executed counterpart hereof or thereof, as the case
      may
      be. This letter agreement shall be governed by, and construed in accordance
      with, the laws of the State of New York. This letter agreement sets forth the
      entire agreement between the parties hereto as to the matters set forth herein
      and supersedes all prior communications, written or oral, with respect to the
      matters herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If
      the
      foregoing meets with your approval please signify your acceptance of the terms
      hereof by signing below.

    

     

    
      	 	
              Very
                truly yours,

            	 
	 	
              TIDEL
                TECHNOLOGIES, INC.

            	 
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
            	 	 
	 	
              Name:
                

            	 	 
	 	
              Title:
                

            	 	 

    

    

     

    The
      foregoing is hereby accepted and agreed to

    as
      of the
      date set forth above:

    

    LAURUS
      MASTER FUND, LTD.

    

    
      	
              By:

            	
            	
               

            	 
	
              Name:
                

            	 	 
	
              Title:STANDARD OFFICE LEASE

                                 BY AND BETWEEN

                         ARDEN REALTY FINANCE V, L.L.C.,
                      a Delaware limited liability company,

                                  AS LANDLORD,

                                       AND

                              MITEK SYSTEMS, INC.,
                             a Delaware corporation,

                                    AS TENANT

                                     SUITE B

                             Balboa Corporate Center

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE 1         BASIC LEASE PROVISIONS.......................................1

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

ARTICLE 3         RENTAL.......................................................3
         (a)      Basic Rental.................................................3
         (b)      Increase in Direct Costs.....................................3
         (c)      Definitions..................................................3
         (d)      Determination of Payment.....................................7
         (e)      Audit Right..................................................8

ARTICLE 4         SECURITY DEPOSIT.............................................9

ARTICLE 5         HOLDING OVER................................................10

ARTICLE 6         OTHER TAXES.................................................11

ARTICLE 7         USE.........................................................11

ARTICLE 8         CONDITION OF PREMISES.......................................12

ARTICLE 9         REPAIRS AND ALTERATIONS.....................................12
         (a)      Landlord's Obligations......................................12
         (b)      Tenant's Obligations........................................12
         (c)      Alterations.................................................13
         (d)      Insurance; Liens............................................13
         (e)      Costs and Fees; Removal.....................................14

ARTICLE 10        LIENS.......................................................14

ARTICLE 11        PROJECT SERVICES............................................15
         (a)      Basic Services..............................................15
         (b)      Excess Usage................................................15
         (c)      Additional Electrical Service...............................15
         (d)      HVAC Balance................................................15
         (e)      Telecommunications..........................................16
         (f)      After-Hours Use.............................................16
         (g)      Reasonable Charges..........................................16
         (h)      Sole Electrical Representative..............................16
         (i)      Independent HVAC Unit.......................................17

ARTICLE 12        RIGHTS OF LANDLORD..........................................17
         (a)      Right of Entry..............................................17

                                      -ii-
<PAGE>

         (b)      Maintenance Work............................................17
         (c)      Rooftop.....................................................18

ARTICLE 13        INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY.............18
         (a)      Indemnity...................................................18
         (b)      Exemption of Landlord from Liability........................18
         (c)      Security....................................................19

ARTICLE 14        INSURANCE...................................................19
         (a)      Tenant's Insurance..........................................19
         (b)      Form of Policies............................................19
         (c)      Landlord's Insurance........................................20
         (d)      Waiver of Subrogation.......................................20
         (e)      Compliance with Law.........................................20

ARTICLE 15        ASSIGNMENT AND SUBLETTING...................................21

ARTICLE 16        DAMAGE OR DESTRUCTION.......................................24

ARTICLE 17        SUBORDINATION...............................................25

ARTICLE 18        EMINENT DOMAIN..............................................26

ARTICLE 19        DEFAULT.....................................................26

ARTICLE 20        REMEDIES....................................................28

ARTICLE 21        TRANSFER OF LANDLORD'S INTEREST.............................29

ARTICLE 22        BROKER......................................................30

ARTICLE 23        PARKING.....................................................30

ARTICLE 24        WAIVER......................................................31

ARTICLE 25        ESTOPPEL CERTIFICATE........................................31

ARTICLE 26        LIABILITY OF LANDLORD.......................................32

ARTICLE 27        INABILITY TO PERFORM........................................32

ARTICLE 28        HAZARDOUS WASTE.............................................32

ARTICLE 29        SURRENDER OF PREMISES; REMOVAL OF PROPERTY..................34

ARTICLE 30        MISCELLANEOUS...............................................35
         (a)      SEVERABILITY; ENTIRE AGREEMENT..............................35
         (b)      Attorneys' Fees; Waiver of Jury Trial.......................35
         (c)      Time of Essence.............................................36

                                     -iii-
<PAGE>

         (d)      Headings; Joint and Several.................................36
         (e)      Reserved Area...............................................36
         (f)      NO OPTION...................................................36
         (g)      Use of Project Name; Improvements...........................36
         (h)      Rules and Regulations.......................................37
         (i)      Quiet Possession............................................37
         (j)      Rent........................................................37
         (k)      Successors and Assigns......................................37
         (l)      Notices.....................................................37
         (m)      Persistent Delinquencies....................................37
         (n)      Right of Landlord to Perform................................38
         (o)      Access, Changes in Project, Facilities, Name................38
         (p)      Signing Authority...........................................38
         (q)      Identification of Tenant....................................39
         (r)      Intentionally Deleted.......................................40
         (s)      Survival of Obligations.....................................40
         (t)      Confidentiality.............................................40
         (u)      Governing Law...............................................40
         (v)      Office of Foreign Assets Control............................40
         (w)      Financial Statements........................................41
         (x)      Exhibits....................................................41
         (y)      Independent Covenants.......................................41
         (z)      Counterparts................................................41

ARTICLE 31        OPTION TO EXTEND............................................41
         (a)      Option Right................................................41
         (b)      Option Rent.................................................41
         (c)      Exercise of Option..........................................42

ARTICLE 32        SIGNAGE.....................................................42

ARTICLE 33        TERMINATION OPTION..........................................43

ARTICLE 34        COMMUNICATION EQUIPMENT.....................................43

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

                                      -iv-
<PAGE>

                                      INDEX

                                                                         Page(s)
                                                                         -------

ADA............................................................................6
Additional Rent................................................................3
Affiliate.....................................................................23
Affiliated Assignee...........................................................24
Alterations...................................................................13
Approved Working Drawings..............................................Exhibit D
Architect..............................................................Exhibit D
Base Year......................................................................2
Basic Rental...................................................................1
Brokers........................................................................2
Commencement Date..............................................................1
Communication Equipment.......................................................43
Contemplated Effective Date...................................................23
Contemplated Transfer Space...................................................23
Contractor.............................................................Exhibit D
Control.......................................................................24
Controllable Operating Costs...................................................5
Cosmetic Alterations..........................................................13
Damage Repair Estimate........................................................24
Direct Costs...................................................................4
Effective Date.........................................................Exhibit D
Estimate.......................................................................7
Estimate Statement.............................................................7
Estimated Excess...............................................................7
Event of Default..............................................................26
Excess.........................................................................7
Expiration Date................................................................1
Force Majeure.................................................................32
Force Majeure Delays...................................................Exhibit D
Hazardous Material............................................................33
Initial Installment of Basic Rental............................................2
Intention to Transfer Notice..................................................23
Interest Notice...............................................................42
Landlord.......................................................................1
Landlord Parties..............................................................18
Laws..........................................................................34
Lease..........................................................................1
Lease Year.....................................................................2
Market Rent...................................................................41
Objectionable Name............................................................42
Operating Costs................................................................4
Option........................................................................41
Option Rent...................................................................41

                                      -v-
<PAGE>

Option Rent Notice............................................................41
Option Term...................................................................41
Original Tenant...............................................................41
Outside Date...........................................................Exhibit D
Outside Date Termination Notice........................................Exhibit D
Over-Allowance Amount..................................................Exhibit D
Package Unit..................................................................17
Parking Passes.................................................................2
Partnership Tenant............................................................39
Permitted Use..................................................................2
Plans..................................................................Exhibit D
Premises.......................................................................1
Project........................................................................1
Real Property..................................................................4
Review Period..................................................................8
Security Deposit...............................................................2
Six Month Period..............................................................23
Square Footage.................................................................1
Statement......................................................................8
Substantial Completion.................................................Exhibit D
Tax Costs......................................................................4
Tenant.........................................................................1
Tenant Delays..........................................................Exhibit D
Tenant Improvements...........................................................12
Tenant's Acceptance...........................................................42
Tenant's Proportionate Share...................................................2
Tenant's Signage..............................................................42
Term...........................................................................1
Termination Date..............................................................43
Termination Fee...............................................................43
Termination Notice............................................................43
Termination Option............................................................43
Transfer......................................................................22
Transfer Premium..............................................................22
Transferee....................................................................22
Working Drawings.......................................................Exhibit D

                                      -vi-
<PAGE>

                              STANDARD OFFICE LEASE

      This Standard Office Lease ("Lease") is made and entered into as of the
13th day of September, 2005, by and between ARDEN REALTY FINANCE V, L.L.C., a
Delaware limited liability company ("Landlord"), and MITEK SYSTEMS, INC., a
Delaware corporation ("Tenant").

      Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
the premises described as Suite B, as designated on the plan attached hereto and
incorporated herein as Exhibit "A" ("Premises"), of the project ("Project") now
known as Balboa Corporate Center whose address is 8911 Balboa Avenue, San Diego,
California, for the Term and upon the terms and conditions hereinafter set
forth, and Landlord and Tenant hereby agree as follows:

                                   ARTICLE 1

                             BASIC LEASE PROVISIONS

A. Term:                            Seven (7) years.

      Commencement Date:            The earlier of (i) the date Tenant first
                                    commences to conduct business in the
                                    Premises, or (ii) the date of Substantial
                                    Completion of Improvements in the Premises.
                                    The Commencement Date is estimated to occur
                                    on or about November 15, 2005.

      Expiration Date:              The date immediately preceding the seventh
                                    (7th) anniversary of the Commencement Date;
                                    provided, however, that if the Commencement
                                    Date is a date other than the first (1st)
                                    day of a month, the Expiration Date shall be
                                    the last day of the month which is
                                    eighty-four (84) months after the month in
                                    which the Commencement Date falls, unless
                                    extended or earlier terminated pursuant to
                                    this Lease.

B. Square Footage:                  15,927 rentable square feet.

C. Basic Rental:

<TABLE>
<CAPTION>
                                                  Annual             Monthly              Monthly Basic Rental
                              Lease Year       Basic Rental        Basic Rental        Per Rentable Square Foot*
                              ----------       ------------        ------------        -------------------------
<S>                                            <C>                  <C>                          <C>
                                  1            $296,242.20          $24,686.85                   $1.55
                                  2            $305,798.40          $25,483.20                   $1.60
                                  3            $315,354.60          $26,279.55                   $1.65
                                  4            $324,910.80          $27,075.90                   $1.70
                                  5            $334,467.00          $27,872.25                   $1.75
                                  6            $344,023.20          $28,668.60                   $1.80
                                  7            $353,579.40          $29,464.95                   $1.85
</TABLE>

<PAGE>

                                    * In addition, Tenant shall pay for
                                    electricity and janitorial service
                                    separately pursuant to Article 11 below.

D. Base Year:                       2006

E. Tenant's Proportionate Share:    22.79% (based on a total of 69,890 rentable
                                    square feet in the Project).

F. Security Deposit:                A security deposit of $79,635.00 shall be
                                    due and payable by Tenant to Landlord upon
                                    Tenant's execution of this Lease.

G. Permitted Use:                   General office use and uses incidental
                                    thereto which are permitted by law and are
                                    consistent with the character of the Project
                                    as a first-class office project.

H. Brokers:                         CB Richard Ellis, Inc. (for Landlord) and
                                    Burnham Real Estate (for Tenant).

I. Parking Passes:                  Tenant shall rent three point nine (3.9)
                                    parking passes for each 1,000 rentable
                                    square feet contained in the Premises, which
                                    equals sixty-two (62) passes, at the rate
                                    provided in Article 23 hereof.

J. Initial Installment of Basic
   Rental:                          The first full month's Basic Rental of
                                    $24,686.85 shall be due and payable by
                                    Tenant to Landlord upon Tenant's execution
                                    of this Lease.

                                    ARTICLE 2

                                  TERM/PREMISES

      The Term of this Lease shall commence on the Commencement Date as set
forth in Article 1.A. of the Basic Lease Provisions and shall end on the
Expiration Date set forth in Article 1.A. of the Basic Lease Provisions. For
purposes of this Lease, the term "Lease Year" shall mean each consecutive twelve
(12) month period during the Term, with the first (1st) Lease Year commencing on
the Commencement Date; however, (a) if the Commencement Date falls on a day
other than the first (1st) day of a calendar month, the first (1st) Lease Year
shall end on the last day of the eleventh (11th) month after the Commencement
Date and the second (2nd) and each succeeding Lease Year shall commence on the
first (1st) day of the next calendar month, and (b) the last Lease Year shall
end on the Expiration Date. If Landlord does not deliver possession of the
Premises to Tenant on or before the anticipated Commencement Date (as set forth
in Article 1.A, above), except as provided in Section 5.3 of the Tenant Work
Letter, Landlord shall not be subject to any liability for its failure to do so,
and such failure shall not affect the validity of this Lease nor the obligations
of Tenant hereunder. Landlord and Tenant hereby stipulate that the Premises

                                      -2-
<PAGE>

contains the number of square feet specified in Article 1.B. of the Basic Lease
Provisions. Landlord may deliver to Tenant a Commencement Letter in a form
substantially similar to that attached hereto as Exhibit "C", which Tenant shall
execute and return to Landlord within fifteen (15) days of receipt thereof.
Failure of Tenant to timely execute and deliver the Commencement Letter shall
constitute acknowledgment by Tenant that the statements included in such notice
are true and correct, without exception.

                                   ARTICLE 3

                                     RENTAL

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

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

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

            (i) "Tax Costs", which shall mean any and all real estate taxes and
other similar charges on real property or improvements, assessments, water and
sewer charges, and all other charges assessed, reassessed or levied upon the
Project and appurtenances thereto and the parking or other facilities thereof,

                                      -3-
<PAGE>

or the real property thereunder (collectively the "Real Property") or
attributable thereto or on the rents, issues, profits or income received or
derived therefrom which are assessed, reassessed or levied by the United States,
the State of California or any local government authority or agency or any
political subdivision thereof, and shall include Landlord's reasonable legal
fees, costs and disbursements incurred in connection with proceedings for
reduction of Tax Costs or any part thereof; provided, however, if at any time
after the date of this Lease the methods of taxation now prevailing shall be
altered so that in lieu of or as a supplement to or a substitute for the whole
or any part of any Tax Costs, there shall be assessed, reassessed or levied (a)
a tax, assessment, reassessment, levy, imposition or charge wholly or partially
as a net income, capital or franchise levy or otherwise on the rents, issues,
profits or income derived therefrom, or (b) a tax, assessment, reassessment,
levy (including but not limited to any municipal, state or federal levy),
imposition or charge measured by or based in whole or in part upon the Real
Property and imposed upon Landlord, then except to the extent such items are
payable by Tenant under Article 6 below, such taxes, assessments, reassessments
or levies or the part thereof so measured or based, shall be deemed to be
included in the term "Direct Costs." Tax Costs includable in Direct Costs shall
be reduced to the extent that Landlord prevails in any proceeds for a reduction
of such charges, provided that (A) Tax Costs shall only include Landlord's legal
fees incurred in connection with such proceedings to the extent such proceedings
are reasonably expected to result in a reduction of Tax Costs, and (B) in no
event shall Tax Costs included in Direct Costs for any year subsequent to the
Base Year be less than the amount of Tax Costs included in Direct Costs for the
Base Year (in such case Tenant shall not be responsible for the payment of any
Tax Costs for such subsequent year). In addition, when calculating Tax Costs for
the Base Year, special assessments shall only be deemed included in Tax Costs
for the Base Year to the extent that such special assessments are included in
Tax Costs for the applicable subsequent calendar year during the Term. Any real
estate tax assessments which are payable in installments shall be included in
Tax Costs as if such costs were paid over the maximum number of installments
permitted by law.

            (ii) "Operating Costs", which shall mean all costs and expenses
incurred by Landlord in connection with the maintenance, operation, replacement,
ownership and repair of the Project, the equipment, the intrabuilding cabling
and wiring, adjacent walks, malls and landscaped and common areas and the
parking structure, areas and facilities of the Project, including, but not
limited to, salaries, wages, medical, surgical and general welfare benefits and
pension payments, payroll taxes, fringe benefits, employment taxes, workers'
compensation, uniforms and dry cleaning thereof for all persons who perform
duties connected with the operation, maintenance and repair of the Project, its
equipment, the intrabuilding cabling and wiring and the adjacent walks and
landscaped areas, including janitorial, gardening, security, parking, operating
engineer, elevator, painting, plumbing, electrical, carpentry, heating,
ventilation, air conditioning, window washing, hired services, a reasonable
allowance for depreciation of the cost of acquiring or the rental expense of
personal property used in the maintenance, operation and repair of the Project,
accountant's fees incurred in the preparation of rent adjustment statements,
legal fees, real estate tax consulting fees, personal property taxes on property
used in the maintenance and operation of the Project, fees, costs, expenses or
dues payable pursuant to the terms of any covenants, conditions or restrictions'
or owners' association pertaining to the Project, capital expenditures incurred
where the economies reasonably expected to be achieved each year are in excess
of the reasonably expected annual amortized cost of such expenditure and capital
expenditures required by governmental regulations, law, or ordinances not in
effect as of the Commencement Date and costs incurred (capital or otherwise) on

                                      -4-
<PAGE>

a regular recurring basis every three (3) or more years for certain maintenance
projects (e.g., parking lot slurry coat or replacement of lobby and elevator cab
carpeting), provided that any such permitted capital improvements shall be
amortized over the reasonably determined useful life of the capital improvement
and the amount considered as Operating Costs in any one (1) year shall be
limited to the amount of such yearly amortization; the cost of all charges for
electricity, gas, water and other utilities furnished to the Project, including
any taxes thereon; the cost of all charges for fire and extended coverage,
liability and all other insurance in connection with the Project carried by
Landlord; the cost of all building and cleaning supplies and materials; the cost
of all charges for cleaning, maintenance and service contracts and other
services with independent contractors and administration fees; a property
management fee (which fee may be imputed if Landlord has internalized management
or otherwise acts as its own property manager) and license, permit and
inspection fees relating to the Project. In the event, during any calendar year,
the Project is less than ninety-five percent (95%) occupied at all times,
Operating Costs shall be adjusted to reflect the Operating Costs of the Project
as though ninety-five percent (95%) were occupied at all times, and the increase
or decrease in the sums owed hereunder shall be based upon such Operating Costs
as so adjusted. In no event shall costs for any item of utilities included in
Direct Costs for any year subsequent to the Base Year be less than the amount
included in Direct Costs for the Base Year for such utility item.
Notwithstanding anything to the contrary set forth in this Article 3, when
calculating Operating Costs for the Base Year, unless Operating Costs for the
applicable subsequent calendar year include the applicable following items,
Operating Costs shall exclude (a) increases due to extraordinary circumstances
including, but not limited to, labor-related boycotts and strikes, utility rate
hikes, utility conservation surcharges, or other surcharges, insurance premiums
resulting from terrorism coverage, catastrophic events and/or the management of
environmental risks, and (b) amortization of any capital items including, but
not limited to, capital improvements, capital repairs and capital replacements
(including such amortized costs where the actual improvement, repair or
replacement was made in prior years).

      Notwithstanding anything to the contrary contained herein, the aggregate
Controllable Operating Costs, as that term is defined below, shall not increase
more than six percent (6%) in any calendar year over the maximum amount of
Controllable Operating Costs chargeable for the immediately preceding calendar
year, with no limit on the Controllable Operating Costs during the Base Year
(i.e., the actual Controllable Operating Costs for the Base Year shall be the
maximum amount for the Base Year for purposes of this provision). "Controllable
Operating Costs" shall mean all Direct Costs except Tax Costs, utility charges
and insurance charges.

      In addition, notwithstanding anything above to the contrary, Operating
Costs shall not include (1) the cost of providing any service directly to and
paid directly by any tenant (outside of such tenant's Direct Cost payments); (2)
the cost of any items for which Landlord is reimbursed by insurance proceeds,
condemnation awards, a tenant of the Project, or otherwise to the extent so
reimbursed; (3) any real estate brokerage commissions or other costs incurred in
procuring tenants, or any fee in lieu of commission; (4) amortization of
principal and interest on mortgages or ground lease payments (if any); (5) costs
of items considered capital repairs, replacements, improvements and equipment
under generally accepted accounting principles consistently applied except as
expressly included in Operating Costs pursuant to the definition above; (6)
costs incurred by Landlord due to the violation by Landlord or any tenant of the
terms and conditions of any lease of space in the Project or any law, code,
regulation, ordinance or the like; (7) any compensation paid to clerks,

                                      -5-
<PAGE>

attendants or other persons in commercial concessions operated by Landlord
(other than in the parking facility for the Project); (8) costs incurred in
connection with upgrading the Project to comply with disability, life, seismic,
fire and safety codes, ordinances, statutes, or other laws in effect prior to
the Commencement Date, including, without limitation, the then applicable
requirements of the Americans with Disabilities Act ("ADA"), including penalties
or damages incurred due to such non-compliance; (9) bad debt expenses and
interest, principal, points and fees on debts (except in connection with the
financing of items which may be included in Operating Costs); (10) marketing
costs, including those costs described in (3) above, attorneys' fees in
connection with the negotiation and preparation of letters, deal memos, letters
of intent, leases, subleases and/or assignments, space planning costs, and other
costs and expenses incurred in connection with lease, sublease and/or assignment
negotiations and transactions with present or prospective tenants or other
occupants of the Project, including attorneys' fees and other costs and
expenditures incurred in connection with disputes with present or prospective
tenants or other occupants of the Project; (11) costs, including permit, license
and inspection costs, incurred with respect to the installation of other
tenants' or occupants' improvements made for tenants or other occupants in the
Project or incurred in renovating or otherwise improving, decorating, painting
or redecorating vacant space for tenants or other occupants in the Project; (12)
any costs expressly excluded from Operating Costs elsewhere in this Lease; (13)
costs of any items (including, but not limited to, costs incurred by Landlord
for the repair of damage to the Project) to the extent Landlord receives
reimbursement from insurance proceeds or from a third party (except that any
deductible amount under any insurance policy shall be included within Operating
Costs); (14) rentals and other related expenses for leasing an HVAC system,
elevators, or other items (except when needed in connection with normal repairs
and maintenance of the Project) which if purchased, rather than rented, would
constitute a capital improvement not included in Operating Costs pursuant to
this Lease; (15) depreciation, amortization and interest payments, except as
specifically included in Operating Costs pursuant to the terms of this Lease and
except on materials, tools, supplies and vendor-type equipment purchased by
Landlord to enable Landlord to supply services Landlord might otherwise contract
for with a third party, where such depreciation, amortization and interest
payments would otherwise have been included in the charge for such third party's
services, all as determined in accordance with generally accepted accounting
principles, consistently applied, and when depreciation or amortization is
permitted or required, the item shall be amortized over its reasonably
anticipated useful life; (16) expenses in connection with services or other
benefits which are not offered to Tenant or for which Tenant is charged for
directly but which are provided to another tenant or occupant of the Project,
without charge; (17) electric power costs or other utility costs for which any
tenant directly contracts with the local public service company (but Landlord
shall have the right to "gross up" as if such space was vacant); (18) costs
incurred in connection with the operation of retail stores selling merchandise
and restaurants in the Project to the extent such costs are in excess of the
costs Landlord reasonably estimates would have been incurred had such space been
used for general office use; (19) costs (including in connection therewith all
attorneys' fees and costs of settlement, judgments and/or payments in lieu
thereof) arising from claims, disputes or potential disputes in connection with
potential or actual claims litigation or arbitrations pertaining to Landlord
and/or the Project, other than such claims or disputes respecting any services
or equipment used in the operation of the Building by Landlord; (20) costs

                                      -6-
<PAGE>

associated with the operation of the business of the partnership which
constitutes Landlord as the same are distinguished from the costs of operation
of the Project; (21) costs incurred in connection with the original construction
of the Project; (22) costs of correcting defects in or inadequacy of the initial
design or construction of the Project; (23) costs incurred to (i) comply with
laws relating to the removal of any "Hazardous Material," as that term is
defined in Article 28 of this Lease, which was in existence on the Project prior
to the Commencement Date, and was of such a nature that a federal, state or
municipal governmental authority, if it had then had knowledge of the presence
of such Hazardous Material, in the state, and under the conditions that it then
existed on the Project, would have then required the removal of such Hazardous
Material or other remedial or containment action with respect thereto, and (ii)
remove, remedy, contain, or treat any Hazardous Material, which Hazardous
Material is brought onto the Project after the date hereof by Landlord or any
other tenant of the Project and is of such a nature, at that time, that a
federal, state or municipal governmental authority, if it had then had knowledge
of the presence of such Hazardous Material, in the state, and under the
conditions, that it then exists on the Project, would have then required the
removal of such Hazardous Material or other remedial or containment action with
respect thereto; (24) costs incurred due to violation by Landlord or any tenant
of the terms and conditions of any lease; (25) any overhead and/or profit
increment paid to Landlord or to subsidiaries of affiliates of Landlord for
services or materials in the Project to the extent the same exceeds the amount
which would generally be expected to be the cost of such services or materials
rendered or provided by comparably qualified unaffiliated third parties; (26)
any reserves for equipment or capital replacement; and (27) Landlord's costs of
any services sold or provided to tenants or other occupants to the extent
Landlord is entitled to be reimbursed by such tenants or other occupants as an
additional charge or rental (other than pursuant to a comparable Direct Cost
provision under the lease or other agreement with such tenant or other
occupant).

      (d) Determination of Payment.

            (i) If for any calendar year ending or commencing within the Term,
Tenant's Proportionate Share of Direct Costs for such calendar year exceeds
Tenant's Proportionate Share of Direct Costs for the Base Year, then Tenant
shall pay to Landlord, in the manner set forth in Sections 3(d)(ii) and (Hi),
below, and as Additional Rent, an amount equal to the excess (the "Excess").

            (ii) Landlord shall give Tenant a yearly expense estimate statement
(the "Estimate Statement") which shall set forth Landlord's reasonable estimate
(the "Estimate") of what the total amount of Direct Costs for the then-current
calendar year shall be and the estimated Excess (the "Estimated Excess") as
calculated by comparing Tenant's Proportionate Share of Direct Costs for such
calendar year, which shall be based upon the Estimate, to Tenant's Proportionate
Share of Direct Costs for the Base Year. Landlord shall use reasonable efforts
to provide the Estimate Statement on or before June 30 of each year after the
Base Year; however, the failure of Landlord to timely furnish the Estimate
Statement for any calendar year shall not preclude Landlord from subsequently
enforcing its rights to collect any Estimated Excess under this Article 3, once
such Estimated Excess has been determined by Landlord. If pursuant to the
Estimate Statement an Estimated Excess is calculated for the then-current
calendar year, Tenant shall pay, with its next installment of Monthly Basic
Rental due, a fraction of the Estimated Excess for the then-current calendar

                                      -7-
<PAGE>

year (reduced by any amounts paid pursuant to the last sentence of this Section
3(d)(ii)). Such fraction shall have as its numerator the number of months which
have elapsed in such current calendar year to the month of such payment, both
months inclusive, and shall have twelve (12) as its denominator. Until a new
Estimate Statement is furnished, Tenant shall pay monthly, with the Monthly
Basic Rental installments, an amount equal to one-twelfth (1/12) of the total
Estimated Excess set forth in the previous Estimate Statement delivered by
Landlord to Tenant.

            (iii) In addition, Landlord shall endeavor to give to Tenant as soon
as reasonably practicable following the end of each calendar year, a statement
(the "Statement") which shall state the Direct Costs incurred or accrued for
such preceding calendar year, and which shall indicate the amount, if any, of
the Excess. Upon receipt of the Statement for each calendar year during the
Term, if amounts paid by Tenant as Estimated Excess are less than the actual
Excess as specified on the Statement, Tenant shall pay, with its next
installment of monthly Basic Rental due, the full amount of the Excess for such
calendar year, less the amounts, if any, paid during such calendar year as
Estimated Excess. If, however, the Statement indicates that amounts paid by
Tenant as Estimated Excess are greater than the actual Excess as specified on
the Statement, such overpayment shall be credited against Tenant's next
installments of Estimated Excess. Landlord shall use reasonable efforts to
provide the Statement on or before June 30 of each year after the Base Year and
shall in any event provide the Statement on or before December 31 of each year
after the Base Year; however, the failure of Landlord to timely furnish the
Statement for any calendar year shall not prejudice Landlord from enforcing its
rights under this Article 3 for a period of two (2) years after the expiration
of the calendar year for which the Statement applies, except where the failure
to timely furnish the Statement as to any particular item includable in the
Statement is beyond Landlord's reasonable control (e.g. tax assessments that are
late in arriving from the assessor), in which case such two (2) year limit shall
not be applicable. Even though the Term has expired and Tenant has vacated the
Premises, when the final determination is made of Tenant's Proportionate Share
of the Direct Costs for the calendar year in which this Lease terminates, if an
Excess is present, Tenant shall immediately pay to Landlord an amount as
calculated pursuant to the provisions of this Section 3(d). The provisions of
this Section 3(d)(iii) shall survive the expiration or earlier termination of
the Term.

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

      (e) Audit Right. Within one hundred twenty (120) days after receipt of a
Statement by Tenant ("Review Period"), if Tenant disputes the amount set forth
in the Statement, Tenant's employees or an independent certified public
accountant (which accountant is a member of a nationally or regionally
recognized accounting firm and is not retained on a contingency fee basis),
designated by Tenant, may, after reasonable notice to Landlord and at reasonable
times, inspect Landlord's records at Landlord's offices, provided that Tenant is
not then in default after expiration of all applicable cure periods (although
Tenant shall be entitled to make payments "under protest" thereby preserving
Tenant's right to contest such payments) and provided further that Tenant and
such accountant or representative shall, and each of them shall use their
commercially reasonable efforts to cause their respective agents and employees
to, maintain all information contained in Landlord's records in strict

                                      -8-
<PAGE>

confidence. Notwithstanding the foregoing, Tenant shall only have the right to
review Landlord's records one (1) time during any twelve (12) month period.
Tenant's failure to dispute the amounts set forth in any Statement within the
Review Period shall be deemed to be Tenant's approval of such Statement and
Tenant, thereafter, waives the right or ability to dispute the amounts set forth
in such Statement. If after such inspection, but within thirty (30) days after
the Review Period, Tenant notifies Landlord in writing that Tenant still
disputes such amounts, a certification as to the proper amount shall be made in
accordance with Landlord's standard accounting practices, at Tenant's expense,
by an independent certified public accountant selected by Landlord and who is a
member of a nationally or regionally recognized accounting firm. Landlord shall
cooperate in good faith with Tenant and the accountant to show Tenant and the
accountant the information upon which the certification is to be based. However,
if such certification by the accountant proves that the Direct Costs set forth
in the Statement were overstated by more than ten percent (10%), then the cost
of the accountant and the cost of such certification shall be paid for by
Landlord. Promptly following the parties receipt of such certification, the
parties shall make such appropriate payments or reimbursements, as the case may
be, to each other, as are determined to be owing pursuant to such certification.

                                   ARTICLE 4

                                SECURITY DEPOSIT

      Tenant has deposited with Landlord the sum set forth in Article 1.F. of
the Basic Lease Provisions as security for the full and faithful performance of
every provision of this Lease to be performed by Tenant. If Tenant breaches any
provision of this Lease, including but not limited to the payment of rent,
Landlord may use all or any part of this security deposit for the payment of any
rent or any other sums in default, or to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant's default. If any
portion of said deposit is so used or applied, Tenant shall, within five (5)
days after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the security deposit to its full amount. Tenant agrees
that Landlord shall not be required to keep the security deposit in trust,
segregate it or keep it separate from Landlord's general funds, but Landlord may
commingle the security deposit with its general funds and Tenant shall not be
entitled to interest on such deposit. At the expiration of the Term, or earlier
termination of this Lease (including any termination under Article 33 below),
and provided there exists no default by Tenant hereunder, the security deposit
or any balance thereof shall be returned to Tenant (or, at Landlord's option, to
Tenant's "Transferee", as such term is defined in Article 15 below), provided
that subsequent to the expiration of this Lease, Landlord may retain from said
security deposit (i) an amount reasonably estimated by Landlord to cover
potential Direct Cost reconciliation payments due with respect to the calendar
year in which this Lease terminates or expires (such amount so retained shall
not, in any event, exceed ten percent (10%) of estimated Direct Cost payments
due from Tenant for such calendar year through the date of expiration or earlier

                                      -9-
<PAGE>

termination of this Lease and any amounts so retained and not applied to such
reconciliation shall be returned to Tenant within thirty (30) days after
Landlord's delivery of the Statement for such calendar year), (ii) any and all
amounts reasonably estimated by Landlord to cover the anticipated costs to be
incurred by Landlord to remove any signage provided to Tenant under this Lease,
to remove cabling and other items required to be removed by Tenant under Section
29(b) below and to repair any damage caused by such removal (in which case any
excess amount so retained by Landlord shall be returned to Tenant within thirty
(30) days after such removal and repair), and (iii) any and all amounts
permitted by law or this Article 4. Notwithstanding anything to the contrary
contained in this Article 4, in the event that Tenant, at the expiration of the
twelfth (12th) and thirteenth (13th) full calendar months of the Lease Term is
not in default of any of its obligations under this Lease after expiration of
applicable cure periods, Landlord shall reduce the amount of the Security
Deposit by the amount of the monthly Basic Rental due and payable to Landlord
for such months and Landlord shall apply such amounts against Tenant's monthly
Basic Rental obligations for such months. Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code and all other provisions of law, now
or hereafter in effect, which provide that Landlord may claim from a security
deposit only those sums reasonably necessary to remedy defaults in the payment
of rent, to repair damage caused by Tenant or to clean the Premises, it being
agreed that Landlord may, in addition, claim those sums specified in this
Article 4 above, all of Landlord's damages under this Lease and California law
including, but not limited to, any damages accruing upon termination of this
Lease in accordance with this Lease and Section 1951.2 of the California Civil
Code and/or those sums reasonably necessary to compensate Landlord for any other
loss or damage, foreseeable or unforeseeable, caused by the acts or omissions of
Tenant or any officer, employee, agent, contractor or invitee of Tenant.

                                   ARTICLE 5

                                  HOLDING OVER

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

                                   ARTICLE 6

                                   OTHER TAXES

      Tenant shall pay, prior to delinquency, all taxes assessed against or
levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant located in the Premises. In the event any or all of Tenant's
trade fixtures, furnishings, equipment and other personal property shall be
assessed and taxed with property of Landlord, or if the cost or value of any

                                      -10-
<PAGE>

leasehold improvements in the Premises exceeds the cost or value of a
Project-standard buildout as determined by Landlord and, as a result, real
property taxes for the Project are increased, Tenant shall pay to Landlord,
within ten (10) days after delivery to Tenant by Landlord of a written statement
setting forth such amount, the amount of such taxes applicable to Tenant's
property or above-standard improvements. Tenant shall assume and pay to Landlord
at the time Basic Rental next becomes due (or if assessed after the expiration
of the Term, then within ten (10) days), any excise, sales, use, rent,
occupancy, garage, parking, gross receipts or other taxes (other than net income
taxes) which may be assessed against or levied upon Landlord on account of the
letting of the Premises or the payment of Basic Rental or any other sums due or
payable hereunder, and which Landlord may be required to pay or collect under
any law now in effect or hereafter enacted. In addition to Tenant's obligation
pursuant to the immediately preceding sentence, Tenant shall pay directly to the
party or entity entitled thereto all business license fees, gross receipts taxes
and similar taxes and impositions which may from time to time be assessed
against or levied upon Tenant, as and when the same become due and before
delinquency. Notwithstanding anything to the contrary contained herein, any sums
payable by Tenant under this Article 6 shall not be included in the computation
of "Tax Costs."

                                   ARTICLE 7

                                       USE

      Tenant shall use and occupy the Premises only for the use set forth in
Article 1.G. of the Basic Lease Provisions and shall not use or occupy the
Premises or permit the same to be used or occupied for any other purpose without
the prior written consent of Landlord, which consent may be given or withheld in
Landlord's sole and absolute discretion, and Tenant agrees that it will use the
Premises in such a manner so as not to interfere with or infringe upon the
rights of other tenants or occupants in the Project. Tenant shall, at its sole
cost and expense, promptly comply with all laws, statutes, ordinances,
governmental regulations or requirements now in force or which may hereafter be
in force relating to or affecting (i) the condition, use or occupancy of the
Premises or the Project (excluding structural changes to the Project not related
to Tenant's particular use of the Premises), and (ii) improvements installed or
constructed in the Premises by or for the benefit of Tenant. Tenant shall not
permit more than six (6) people per one thousand (1,000) rentable square feet of
the Premises to occupy the Premises at any time. Tenant shall not do or permit
to be done anything which would invalidate or increase the cost of any fire and
extended coverage insurance policy covering the Project and/or the property
located therein and Tenant shall comply with all roles, orders, regulations and
requirements of any organization which sets out standards, requirements or
recommendations commonly referred to by major fire insurance underwriters, and
Tenant shall promptly upon demand reimburse Landlord for any additional premium
charges for any such insurance policy assessed or increased by reason of
Tenant's failure to comply with the provisions of this Article.

                                   ARTICLE 8

                              CONDITION OF PREMISES

      Landlord shall ensure that the systems of the Project serving the Premises
are in good working order as of the Commencement Date. Tenant hereby agrees that
except as provided in this Article 8 above and in the Tenant Work Letter
attached hereto as Exhibit "D" and made a part hereof, the Premises shall be

                                      -11-
<PAGE>

taken "as is", "with all faults", "without any representations or warranties",
and Tenant hereby agrees and warrants that it has investigated and inspected the
condition of the Premises and the suitability of same for Tenant's purposes, and
Tenant does hereby waive and disclaim any objection to, cause of action based
upon, or claim that its obligations hereunder should be reduced or limited
because of the condition of the Premises or the Project or the suitability of
same for Tenant's purposes. Tenant acknowledges that neither Landlord nor any
agent nor any employee of Landlord has made any representations or warranty with
respect to the Premises or the Project or with respect to the suitability of
either for the conduct of Tenant's business and Tenant expressly warrants and
represents that Tenant has relied solely on its own investigation and inspection
of the Premises and the Project in its decision to enter into this Lease and let
the Premises in the above-described condition. The Premises shall be initially
improved as provided in, and subject to, the Tenant Work Letter. The existing
leasehold improvements in the Premises as of the date of this Lease, together
with the Improvements (as defined in the Tenant Work Letter) may be collectively
referred to herein as the "Tenant Improvements." Subject to the
completion/correction of "punch list" items as provided in Section 6.4 of the
Tenant Work Letter, the taking of possession of the Premises by Tenant shall
conclusively establish that the Premises and the Project were at such time in
satisfactory condition. Tenant hereby waives subsection 1 of Section 1932 and
Sections 1941 and 1942 of the Civil Code of California or any successor
provision of law.

                                   ARTICLE 9

                             REPAIRS AND ALTERATIONS

      (a) Landlord's Obligations. Landlord shall maintain the structural
portions of the Project, including the foundation, floor/ceiling slabs, roof,
curtain wall, exterior glass, columns, beams, shafts, stairs, stairwells,
elevator cabs and common areas, and shall also maintain and repair the basic
mechanical, electrical, life safety, plumbing, sprinkler systems and heating,
ventilating and air-conditioning systems (provided, however, that Landlord's
obligation with respect to any such systems shall be to repair and maintain
those portions of the systems located in the core of the Project or in other
areas outside of the Premises, but Tenant shall be responsible to repair and
maintain any distribution of such systems throughout the Premises).

      (b) Tenant's Obligations. Except as expressly provided as Landlord's
obligation in this Article 9, Tenant shall keep the Premises in good condition
and repair, reasonable wear and tear excepted. All damage or injury to the
Premises or the Project resulting from the act or negligence of Tenant, its
employees, agents or visitors, guests, invitees or licensees or by the use of
the Premises, shall be promptly repaired by Tenant at its sole cost and expense,
to the satisfaction of Landlord; provided, however, that for damage to the
Project as a result of casualty or for any repairs that may impact the
mechanical, electrical, plumbing, heating, ventilation or air-conditioning
systems of the Project, Landlord shall have the right (but not the obligation)
to select the contractor and oversee all such repairs. Landlord may make any
repairs which are not promptly made by Tenant after Tenant's receipt of written
notice and the reasonable opportunity of Tenant to make said repair within five
(5) business days from receipt of said written notice, and charge Tenant for the
cost thereof, which cost shall be paid by Tenant within five (5) days from
invoice from Landlord. Tenant shall be responsible for the design and function
of all non-standard improvements of the Premises, whether or not installed by
Landlord at Tenant's request. Tenant waives all rights to make repairs at the
expense of Landlord, or to deduct the cost thereof from the rent.

                                      -12-
<PAGE>

      (c) Alterations. Tenant shall make no alterations, installations, changes
or additions in or to the Premises or the Project (collectively, "Alterations")
without Landlord's prior written consent, which shall not be unreasonably
withheld. Notwithstanding anything to the contrary contained herein, Tenant may
make strictly cosmetic changes to the finish work in the Premises (the "Cosmetic
Alterations"), without Landlord's consent, provided that the aggregate cost of
any such alterations does not exceed $25,000.00 in any twelve (12) month period,
and further provided that such alterations do not (i) require any structural or
other substantial modifications to the Premises, (ii) require any changes to,
nor adversely affect, the systems and equipment of the Project, or (iii) affect
the exterior appearance of the Project. If the contractor(s) for any such
Cosmetic Alterations could potentially place a lien on the Project, Tenant shall
give Landlord at least fifteen (15) days prior notice of such Cosmetic
Alterations, which notice shall be accompanied by reasonably adequate evidence
that such changes meet the criteria contained in this Section 9(c). Any
Alterations approved by Landlord must be performed in accordance with the terms
hereof, using only contractors or mechanics approved by Landlord in writing and
upon the approval by Landlord in writing of fully detailed and dimensioned plans
and specifications pertaining to the Alterations in question, to be prepared and
submitted by Tenant at its sole cost and expense. Tenant shall at its sole cost
and expense obtain all necessary approvals and permits pertaining to any
Alterations approved by Landlord. Tenant shall cause all Alterations to be
performed in a good and workmanlike manner, in conformance with all applicable
federal, state, county and municipal laws, rules and regulations, pursuant to a
valid building permit, and in conformance with Landlord's construction rules and
regulations. If Landlord, in approving any Alterations, specifies a commencement
date therefor, Tenant shall not commence any work with respect to such
Alterations prior to such date. Tenant hereby agrees to indemnify, defend, and
hold Landlord free and harmless from all liens and claims of lien, and all other
liability, claims and demands arising out of any work done or material supplied
to the Premises by or at the request of Tenant in connection with any
Alterations.

      (d) Insurance; Liens. Prior to the commencement of any Alterations, Tenant
shall provide Landlord with evidence that Tenant carries "Builder's All Risk"
insurance in an amount approved by Landlord covering the construction of such
Alterations, and such other insurance as Landlord may reasonably require, it
being understood that all such Alterations shall be insured by Tenant pursuant
to Article 14 of this Lease immediately upon completion thereof. In addition,
Landlord may, in its discretion, require Tenant to obtain a lien and completion
bond or some alternate form of security satisfactory to Landlord in an amount
sufficient to ensure the lien free completion of such Alterations and naming
Landlord as a co-obligee.

      (e) Costs and Fees; Removal. If permitted Alterations are made, they shall
be made at Tenant's sole cost and expense and shall be and become the property
of Landlord, except that Landlord may, by written notice to Tenant given at the
time of Tenant's request for consent to such Alteration (provided Tenant
requests that Landlord make such determination at the time of Tenant's request
for consent), require Tenant at Tenant's expense to remove all partitions,
counters, railings, cabling and other Alterations installed by Tenant, and to
repair any damage to the Premises and the Project caused by such removal. Any
and all costs attributable to or related to the applicable building codes of the
city in which the Project is located (or any other authority having jurisdiction

                                      -13-
<PAGE>

over the Project) arising from Tenant's plans, specifications, improvements,
Alterations or otherwise shall be paid by Tenant at its sole cost and expense.
With regard to repairs, Alterations or any other work arising from or related to
this Article 9, Landlord shall be entitled to receive an
administrative/coordination fee (which fee shall vary depending upon whether or
not Tenant orders the work directly from Landlord) sufficient to compensate
Landlord for all overhead, general conditions, fees and other costs and expenses
arising from Landlord's involvement with such work. The construction of initial
improvements to the Premises shall be governed by the terms of the Tenant Work
Letter and not the terms of this Article 9.

                                   ARTICLE 10

                                      LIENS

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

                                   ARTICLE 11

                                PROJECT SERVICES

      (a) Basic Services. Landlord agrees to furnish to the Premises, at a cost
to be included in Operating Costs, from 8:00 a.m. to 6:00 p.m. Mondays through
Fridays and 8:00 a.m. to noon on Saturdays, excepting local and national
holidays, air conditioning and heat all in such reasonable quantities as in the
judgment of Landlord is reasonably necessary for the comfortable occupancy of
the Premises. In addition, Landlord shall provide electric current for normal
lighting and normal office machines, elevator service and water on the same
floor as the Premises for lavatory and drinking purposes in such reasonable
quantities as in the judgment of Landlord is reasonably necessary for general
office use and in compliance with applicable codes. To the extent reasonably
determined by Landlord to be practicable, all such electricity (including,
without limitation, electricity in order to power the heating, ventilation and
air conditioning system serving the Premises), shall be separately metered or
submetered and Tenant shall make payment directly to the entity providing such

                                      -14-
<PAGE>

electricity if such separate meters are installed. If, however, separate meters
are not installed and the Premises are submetered or are jointly metered, then
Landlord shall determine and Tenant shall pay the amount reasonably determined
by Landlord to be Tenant's equitable share of the monthly charge for such
electricity, as Additional Rent. Tenant shall be solely responsible for
retaining a bonded janitorial company to provide janitorial service to the
Premises on a regular basis as reasonably approved by Landlord and Landlord
shall have no obligation to provide janitorial services to the Premises. Tenant
shall comply with all rules and regulations which Landlord may establish for the
proper functioning and protection of the common area air conditioning, heating,
elevator, electrical, intrabuilding cabling and wiring and plumbing systems.
Landlord shall not be liable for, and there shall be no rent abatement as a
result of, any stoppage, reduction or interruption of any such services caused
by governmental rules, regulations or ordinances, riot, strike, labor disputes,
breakdowns, accidents, necessary repairs or other cause. Except as specifically
provided in this Article 11, Tenant agrees to pay for all utilities and other
services utilized by Tenant and any additional building services furnished to
Tenant which are not uniformly furnished to all tenants of the Project, at the
rate generally charged by Landlord to tenants of the Project for such utilities
or services.

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

      (c) Additional Electrical Service. If Tenant shall require electric
current in excess of that which Landlord is obligated to furnish under Section
1.1(a) above, Tenant shall first obtain the written consent of Landlord, which
Landlord may refuse in its reasonable discretion; provided, however, that Tenant
shall be responsible for the cost of any additional equipment required in order
to provide such additional electric current.

      (d) HVAC Balance. If any lights, machines or equipment (including but not
limited to computers and computer systems and appurtenances) are used by Tenant
in the Premises which materially affect the temperature otherwise maintained by
the air conditioning system, or generate substantially more heat in the Premises
than would be generated by the building standard lights and usual office
equipment, Landlord shall have the right to install any machinery and equipment
which Landlord reasonably deems necessary to restore temperature balance,
including but not limited to modifications to the standard air conditioning
equipment, and the cost thereof, including the cost of installation and any
additional cost of operation and maintenance occasioned thereby, shall be paid
by Tenant to Landlord upon demand by Landlord.

      (e) Telecommunications. Upon request from Tenant from time to time,
Landlord will provide Tenant with a listing of telecommunications and media
service providers serving the Project, and Tenant shall have the right to
contract directly with the providers of its choice. Landlord confirms to Tenant
that SBC and Time Warner Telecom are currently providers serving the Project. If
Tenant wishes to contract with or obtain service from any provider which does
not currently serve the Project or wishes to obtain from an existing carrier
services which will require the installation of additional equipment, such

                                      -15-
<PAGE>

provider must, prior to providing service, enter into a written agreement with
Landlord setting forth the terms and conditions of the access to be granted to
such provider. In considering the installation of any new or additional
telecommunications cabling or equipment at the Project, Landlord will consider
all relevant factors in a reasonable and non-discriminatory manner, including,
without limitation, the existing availability of services at the Project, the
impact of the proposed installations upon the Project and its operations and the
available space and capacity for the proposed installations. Landlord may also
consider whether the proposed service may result in interference with or
interruption of other services at the Project or the business operations of
other tenants or occupants of the Project. In no event shall Landlord be
obligated to incur any costs or liabilities in connection with the installation
or delivery of telecommunication services or facilities at the Project. All such
installations shall be subject to Landlord's prior approval and shall be
performed in accordance with the terms of Article 9. If Landlord approves the
proposed installations in accordance with the foregoing, Landlord will deliver
its standard form agreement upon request and will use commercially reasonable
efforts to promptly enter into an agreement on reasonable and non-discriminatory
terms with a qualified, licensed and reputable carrier confirming the terms of
installation and operation of telecommunications equipment consistent with the
foregoing.

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

      (g) Reasonable Charges. Landlord may impose a reasonable charge for any
utilities or services (other than electric current and heating, ventilation
and/or air conditioning which shall be governed by Sections 11(c) and (f) above)
utilized by Tenant in excess of the amount or type that Landlord reasonably
determines is typical for general office use.

      (h) Sole Electrical Representative. Tenant agrees that Landlord shall be
the sole and exclusive representative with respect to, and shall maintain
exclusive control over, the reception, utilization and distribution of
electrical power, regardless of point or means or origin, use or generation.
Tenant shall not have the right to contract directly with any provider of
electrical power or services.

      (i) Independent HVAC Unit. Tenant shall be entitled to have Landlord
install, as an initial Improvement, a dedicated heating, ventilation and air
conditioning unit ("Package Unit") within the Premises with specifications
reasonably determined by Landlord and at Landlord's sole cost and expense. If
Tenant elects to install a Package Unit within the Premises, Landlord shall also
install, at Landlord's sole cost and expense, a separate meter or at Landlord's
option, submeter, in order to measure the amount of electricity furnished to
such unit and Tenant shall be responsible for Landlord's actual cost of
supplying electricity to such unit as reflected by such meter or submeter, which
amounts shall be payable on a monthly basis as Additional Rent. Tenant shall be
solely responsible for maintenance and repair of the Package Unit and such unit
shall, at Landlord's option, be considered to be a fixture within the Premises
and shall remain upon the Premises upon the expiration or earlier termination of
the Lease Term or any applicable Option Term.

                                      -16-
<PAGE>

                                   ARTICLE 12

                               RIGHTS OF LANDLORD

      (a) Right of Entry. Landlord and its agents shall have the right to enter
the Premises at all reasonable times upon twenty-four (24) hours prior notice
(except that no notice shall be required in the case of an emergency) for the
purpose of examining or inspecting the same, serving or posting and keeping
posted thereon notices as provided by law, or which Landlord deems necessary for
the protection of Landlord or the Project, showing the same to prospective
tenants (during the last nine (9) months of the Lease Term), lenders or
purchasers of the Project, in the case of an emergency, and for making such
alterations, repairs, improvements or additions to the Premises or to the
Project as Landlord may deem necessary or desirable. If Tenant shall not be
personally present to open and permit an entry into the Premises at any time
when such an entry by Landlord is necessary or permitted hereunder, Landlord may
enter by means of a master key, or may forcibly enter in the case of an
emergency, in each event without liability to Tenant and without affecting this
Lease.

      (b) Maintenance Work. Landlord reserves the right from time to time, but
subject to payment by and/or reimbursement from Tenant as otherwise provided
herein: (i) to install, use, maintain, repair, replace, relocate and control for
service to the Premises and/or other parts of the Project pipes, ducts,
conduits, wires, cabling, appurtenant fixtures, equipment spaces and mechanical
systems, wherever located in the Premises or the Project, (ii) to alter, close
or relocate any facility in the Premises or the common areas or otherwise
conduct any of the above activities for the purpose of complying with a general
plan for fire/life safety for the Project or otherwise, and (iii) to comply with
any federal, state or local law, rule or order. Landlord shall attempt to
perform any such work with the least inconvenience to Tenant as is reasonably
practicable, but in no event shall Tenant be permitted to withhold or reduce
Basic Rental or other charges due hereunder as a result of same, make any claim
for constructive eviction or otherwise make any claim against Landlord for
interruption or interference with Tenant's business and/or operations.

      (c) Rooftop. If Tenant desires to use the rooftop of the Project for any
purpose, including the installation of communication equipment to be used from
the Premises, such rights will be granted in Landlord's sole discretion and
Tenant must negotiate the terms of any rooftop access with Landlord or the
rooftop management company or lessee holding rights to the rooftop from time to
time. Any rooftop access granted to Tenant will be at prevailing rates and will
be governed by the terms of a separate written agreement or an amendment to this
Lease.

                                      -17-
<PAGE>

                                   ARTICLE 13

                 INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY

      (a) Indemnity. Tenant shall indemnify, defend and hold Landlord, Arden
Realty, Inc., Arden Realty Limited Partnership, their subsidiaries, partners,
affiliates and their respective officers, directors, employees and contractors
(collectively, "Landlord Parties") harmless from any and all claims arising from
Tenant's use of the Premises or the Project or from the conduct of its business
or from any activity, work or thing which may be permitted or suffered by Tenant
in or about the Premises or the Project and shall further indemnify, defend and
hold Landlord and the Landlord Parties harmless from and against any and all
claims arising from any breach or default in the performance of any obligation
on Tenant's part to be performed under this Lease or arising from any negligence
or willful misconduct of Tenant or any of its agents, contractors, employees or
invitees, patrons, customers or members in or about the Project and from any and
all costs, attorneys' fees and costs, expenses and liabilities incurred in the
defense of any claim or any action or proceeding brought thereon, including
negotiations in connection therewith. Tenant hereby assumes all risk of damage
to property or injury to persons in or about the Premises from any cause, and
Tenant hereby waives all claims in respect thereof against Landlord and the
Landlord Parties, excepting where the damage is caused solely by the gross
negligence or willful misconduct of Landlord or the Landlord Parties.

      (b) Exemption of Landlord from Liability. Landlord and the Landlord
Parties shall not be liable for injury to Tenant's business, or loss of income
therefrom, however occurring (including, without limitation, from any failure or
interruption of services or utilities or as a result of Landlord's negligence),
or, except in connection with damage or injury resulting from the gross
negligence or willful misconduct of Landlord or the Landlord Parties, for damage
that may be sustained by the person, goods, wares, merchandise or property of
Tenant, its employees, invitees, customers, agents, or contractors, or any other
person in, on or about the Premises directly or indirectly caused by or
resulting from any cause whatsoever, 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, light
fixtures, or mechanical or electrical systems, or from intrabuilding cabling or
wiring, whether such damage or injury results from conditions arising upon the
Premises or upon other portions of the Project or from other sources or places
and regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant. Landlord and the Landlord Parties
shall not be liable to Tenant for any damages arising from any willful or
negligent action or inaction of any other tenant of the Project.

      (c) Security. Tenant acknowledges that Landlord's election whether or not
to provide any type of mechanical surveillance or security personnel whatsoever
in the Project is solely within Landlord's discretion; Landlord and the Landlord
Parties shall have no liability in connection with the provision, or lack, of
such services, and Tenant hereby agrees to hold Landlord and the Landlord
Parties harmless with regard to any such potential claim. Landlord and the
Landlord Parties shall not be liable for losses due to theft, vandalism, or like
causes. Tenant shall defend, indemnify, and hold Landlord and the Landlord
Parties harmless from any such claims made by any employee, licensee, invitee,
contractor, agent or other person whose presence in, on or about the Premises or
the Project is attendant to the business of Tenant.

                                      -18-
<PAGE>

                                   ARTICLE 14

                                    INSURANCE

      (a) Tenant's Insurance. Tenant, shall at all times during the Term of this
Lease, and at its own cost and expense, procure and continue in force the
following insurance coverage: (i) Commercial General Liability Insurance,
written on an occurrence basis, with a combined single limit for bodily injury
and property damages of not less than Two Million Dollars ($2,000,000) per
occurrence and Three Million Dollars ($3,000,000) in the annual aggregate,
including products liability coverage if applicable, blanket contractual
coverage including written contracts, and personal injury coverage, covering the
performance of Tenant of the indemnity and exemption of Landlord from liability
agreements set forth in Article 13 hereof; (ii) a policy of standard fire,
extended coverage and special extended coverage insurance (all risks), including
a vandalism and malicious mischief endorsement and sprinkler leakage coverage
where sprinklers are provided in an amount equal to the full replacement value
new without deduction for depreciation of all (A) Tenant Improvements,
Alterations, fixtures and other improvements in the Premises, including but not
limited to all mechanical, plumbing, heating, ventilating, air conditioning,
electrical, telecommunication and other equipment, systems and facilities, and
(B) trade fixtures, furniture, equipment and other personal property installed
by or at the expense of Tenant; (iii) Worker's Compensation coverage as required
by law; and (iv) business interruption, loss of income and extra expense
insurance covering any failure or interruption of Tenant's business equipment
(including, without limitation, telecommunications equipment) and covering all
other perils, failures or interruptions in an amount of not less than Five
Hundred Thousand Dollars ($500,000.00). Tenant shall carry and maintain during
the entire Term (including any option periods, if applicable), at Tenant's sole
cost and expense, increased amounts of the insurance required to be carried by
Tenant pursuant to this Article 14 and such other reasonable types of insurance
coverage and in such reasonable amounts covering the Premises and Tenant's
operations therein, as may be reasonably required by Landlord, but Landlord
shall only be entitled to require such increased amounts and/or other coverages
if they are then generally required by owners of comparable office buildings in
the San Diego, California area.

      (b) Form of Policies. The aforementioned minimum limits of policies and
Tenant's procurement and maintenance thereof shall in no event limit the
liability of Tenant hereunder. The Commercial General Liability Insurance policy
shall name Landlord, the Landlord Parties, Landlord's property manager,
Landlord's lender(s) and such other persons or firms as Landlord specifies from
time to time, as additional insureds with an appropriate endorsement to the
policy(s). All such insurance policies carried by Tenant shall be with companies
having a rating of not less than A-VIII in Best's Insurance Guide. Tenant shall
furnish to Landlord, from the insurance companies, or cause the insurance
companies to furnish, certificates of coverage. No such policy shall be
cancelable or subject to reduction of coverage or other modification or
cancellation except after thirty (30) days prior written notice to Landlord by
the insurer. All such policies shall be endorsed to agree that Tenant's policy
is primary as to claims arising within the Premises and that any insurance
carried by Landlord is excess and not contributing with any Tenant insurance

                                      -19-
<PAGE>

requirement hereunder. Tenant shall, at least twenty (20) days prior to the
expiration of such policies, furnish Landlord with renewals or binders. Tenant
agrees that if Tenant does not take out and maintain such insurance or furnish
Landlord with renewals or binders in a timely manner, upon notice to Tenant and
the expiration of a three (3) business day cure period, Landlord may (but shall
not be required to) procure said insurance on Tenant's behalf and charge Tenant
the cost thereof, which amount shall be payable by Tenant upon demand with
interest (at the rate set forth in Section 20(e) below) from the date such sums
are expended. Tenant shall have the right to provide such insurance coverage
pursuant to blanket policies obtained by Tenant, provided such blanket policies
expressly afford coverage to the Premises and to Tenant as required by this
Lease.

      (c) Landlord's Insurance. Landlord may, as a cost to be included in
Operating Costs, procure and maintain at all times during the Term of this
Lease, a policy or policies of insurance covering loss or damage to the Project
in the amount of the full replacement costs without deduction for depreciation
thereof, providing protection against all perils included within the
classification of fire and extended coverage, vandalism coverage and malicious
mischief, sprinkler leakage, water damage, and special extended coverage on the
building. Additionally, Landlord may carry: (i) Bodily Injury and Property
Damage Liability Insurance and/or Excess Liability Coverage Insurance; and (ii)
Earthquake and/or Flood Damage Insurance; and (iii) Rental Income Insurance; and
(iv) any other forms of insurance Landlord may deem appropriate or any lender
may require. However, notwithstanding the foregoing, Landlord shall either
carry, or shall be deemed to have elected to self-insure, the Bodily Injury and
Property Damage Liability Insurance coverage described in subsection (i) of the
immediately preceding sentence, and if Landlord elects to self-insure any or all
of such coverage, Tenant shall be deemed to be in the same position it would
have been in had Landlord actually purchased such insurance from a third party
carrier. The costs of all insurance carried by Landlord shall be included in
Operating Costs.

      (d) Waiver of Subrogation. Landlord and Tenant each agree to require their
respective insurers issuing the insurance described in Sections l4(a)(ii),
14(a)(iv) and the first sentence of Section l4(c), waive any rights of
subrogation that such companies may have against the other party. Tenant hereby
waives any right that Tenant may have against Landlord and Landlord hereby
waives any right that Landlord may have against Tenant as a result of any loss
or damage to the extent such loss or damage is insurable under such policies.

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

                                      -20-
<PAGE>

                                   ARTICLE 15

                            ASSIGNMENT AND SUBLETTING

      Tenant shall have no power to, either voluntarily, involuntarily, by
operation of law or otherwise, sell, assign, transfer or hypothecate this Lease,
or sublet the Premises or any part thereof, or permit the Premises or any part
thereof to be used or occupied by anyone other than Tenant or Tenant's employees
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. If Tenant is a corporation, unincorporated association,
partnership or limited liability company, the sale, assignment, transfer or
hypothecation of any class of stock or other ownership interest in such
corporation, association, partnership or limited liability company in excess of
twenty-five percent (25%) in the aggregate shall be deemed a "Transfer" within
the meaning and provisions of this Article 15. Tenant may transfer its interest
pursuant to this Lease only upon the following express conditions, which
conditions are agreed by Landlord and Tenant to be reasonable:

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

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

            (ii) The financial responsibility of the proposed Transferee is not
reasonably satisfactory to Landlord or in any event not at least equal to those
which were possessed by Tenant as of the date of execution of this Lease;

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

            (iv) Either the proposed Transferee or any person or entity which
directly or indirectly controls, is controlled by or is under common control
with the proposed Transferee (A) occupies space in the Project at the time of
the request for consent, or (B) is negotiating with Landlord or has negotiated
with Landlord during the six (6) month period immediately preceding the date of
the proposed Transfer, to lease space in the Project.

                                      -21-
<PAGE>

      (b) Upon Tenant's submission of a request for Landlord's consent to any
such Transfer, Tenant shall pay to Landlord Landlord's then standard processing
fee and reasonable attorneys' fees and costs incurred in connection with the
proposed Transfer, which the parties hereby stipulate to be $1,000,00, unless
Landlord provides to Tenant evidence that Landlord has incurred greater costs in
connection with the proposed Transfer;

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

      (d) That an executed duplicate original of said assignment and assumption
agreement or other transfer on a form reasonably approved by Landlord, shall be
delivered to Landlord within five (5) days after the execution thereof, and that
such transfer shall not be binding upon Landlord until the delivery thereof to
Landlord and the execution and delivery of Landlord's consent thereto. It shall
be a condition to Landlord's consent to any subleasing, assignment or other
transfer of part or all of Tenant's interest in the Premises ("Transfer") that
(i) upon Landlord's consent to any Transfer, Tenant shall pay and continue to
pay fifty percent (50%) of any "Transfer Premium" (defined below), received by
Tenant from the transferee; (ii) any sublessee of part or all of Tenant's
interest in the Premises shall agree that in the event Landlord gives such
sublessee notice that Tenant is in default under this Lease, such sublessee
shall thereafter make all sublease or other payments directly to Landlord, which
will be received by Landlord without any liability whether to honor the sublease
or otherwise (except to credit such payments against sums due under this Lease),
and any sublessee shall agree to attorn to Landlord or its successors and
assigns at their request should this Lease be terminated for any reason, except
that in no event shall Landlord or its successors or assigns be obligated to
accept such attornment; (iii) any such Transfer and consent shall be effected on
forms supplied by Landlord and/or its legal counsel; (iv) Landlord may require
that Tenant not then be in default hereunder in any respect; and (v) Tenant or
the proposed subtenant or assignee (collectively, "Transferee") shall agree to
pay Landlord, upon demand, as Additional Rent, a sum equal to the additional
costs, if any, incurred by Landlord for maintenance and repair as a result of
any change in the nature of occupancy caused by such subletting or assignment
"Transfer Premium" shall mean all rent, Additional Rent or other consideration
payable by a Transferee in connection with a Transfer in excess of the Basic
Rental and Direct Costs payable by Tenant under this Lease during the term of
the Transfer and if such Transfer is for less than all of the Premises, the
Transfer Premium shall be calculated on a rentable square foot basis. "Transfer
Premium" shall also include, but not be limited to, key money, bonus money or
other cash consideration paid by a Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for services rendered
by Tenant to the Transferee and any payment in excess of fair market value for
assets, fixtures, inventory, equipment, or furniture transferred by Tenant to
the Transferee in connection with such Transfer. Any Transfer of this Lease
which is not in compliance with the provisions of this Article 15 shall be
voidable. by written notice from Landlord and shall, at the option of Landlord,
terminate this Lease. In no event shall the consent by Landlord to any Transfer
be construed as relieving Tenant or any Transferee from obtaining the express
written consent of Landlord to any further Transfer, or as releasing Tenant from
any liability or obligation hereunder whether or not then accrued and Tenant

                                      -22-
<PAGE>

shall continue to be fully liable therefor. No collection or acceptance of rent
by Landlord from any person other than Tenant shall be deemed a waiver of any
provision of this Article 15 or the acceptance of any Transferee hereunder, or a
release of Tenant (or of any Transferee of Tenant). Notwithstanding anything to
the contrary in this Lease, if Tenant or any proposed Transferee claims that
Landlord has unreasonably withheld or delayed its consent under this Article 15
or otherwise has breached or acted unreasonably under this Article 15, their
sole remedies shall be a declaratory judgment and an -injunction for the relief
sought without any monetary damages, and Tenant hereby waives all other
remedies, including, without limitation, any right at law or equity to terminate
this Lease, on its own behalf and, to the extent permitted under all applicable
laws, on behalf of the proposed Transferee.

      Notwithstanding anything to the contrary contained in this Article 15, if
Tenant contemplates a Transfer, then Tenant shall give Landlord notice (the
"Intention to Transfer Notice") of such contemplated Transfer (whether or not
the contemplated Transferee or the terms of such contemplated Transfer have been
determined). The Intention to Transfer Notice shall specify the portion of and
number of rentable square feet of the Premises which Tenant intends to Transfer
(the "Contemplated Transfer Space") and the contemplated date of commencement of
the contemplated Transfer (the "Contemplated Effective Date"). Thereafter,
Landlord shall have the option, by giving written notice to Tenant within ten
(10) business days after Landlord's receipt of the Intention to Transfer Notice,
to terminate this Lease as to the Contemplated Transfer Space effective as of
the Contemplated Effective Date. If this Lease shall be so terminated with
respect to less than the entire Premises, the monthly Basic Rental reserved
herein shall be prorated on the basis of the number of rentable square feet
retained by Tenant in proportion to the number of rentable square feet contained
in the entire Premises, and this Lease as so amended shall continue thereafter
in full force and effect, and upon request of either party, the parties shall
execute written confirmation of the same. If Landlord declines, or fails to
elect in a timely manner to terminate this Lease as to the Contemplated Transfer
Space under this Article 15 within such ten (10) business day period, then,
provided Landlord has consented to the proposed Transfer, Tenant shall be
entitled to proceed to transfer the Contemplated Transfer Space to a proposed
Transferee and Landlord shall not have any right to recapture such Contemplated
Transfer Space with respect to any Transfer thereof consummated within a period
of six (6) months (the "Six Month Period") commencing on the expiration of such
ten (10) business day period; provided, however, that any such Transfer shall be
subject to other terms of this Article 15. If such a Transfer is not so
consummated within the Six Month Period (or if a Transfer is so consummated,
then upon the expiration of the term of any Transfer of such Contemplated
Transfer Space consummated within such Six Month Period), Tenant shall again be
required to submit a new Intention to Transfer Notice to Landlord with respect
to any contemplated Transfer, as provided above in this Article 15.

      Notwithstanding anything to the contrary contained in this Article 15, an
assignment or subletting of all or a portion of the Premises to an affiliate
("Affiliate") of Tenant (an entity which is controlled by, controls, or is under
common control with, Tenant), shall not be deemed a Transfer under this Article
15, provided that Tenant notifies Landlord of any such assignment or sublease
and promptly supplies Landlord with any documents or information requested by
Landlord regarding such assignment or sublease or such affiliate, and further
provided that such assignment or sublease is not a subterfuge by Tenant to avoid
its obligations under this Lease. An assignee of Tenant's entire interest in
this Lease pursuant to the immediately preceding sentence may be referred to
herein as an "Affiliated Assignee." "Control," as used in this Article 15, shall
mean the ownership, directly or indirectly, of greater than fifty percent (50%)
of the voting securities of, or possession of the right to vote, in the ordinary
direction of its affairs, of greater than fifty percent (50%) of the voting
interest in, an entity.

                                      -23-
<PAGE>

                                   ARTICLE 16

                              DAMAGE OR DESTRUCTION

      If the Project is damaged by fire or other insured casualty and the
insurance proceeds have been made available therefor by the holder or holders of
any mortgages or deeds of trust covering the Premises or the Project, the damage
shall be repaired by Landlord to the extent such insurance proceeds are
available therefor and provided such repairs can, in Landlord's sole opinion, be
completed within two hundred seventy (270) days after the necessity for repairs
as a result of such damage becomes known to Landlord, without the payment of
overtime or other premiums, and until such repairs are completed rent shall be
abated in proportion to the part of the Premises which is unusable by Tenant in
the conduct of its business (but there shall be no abatement of rent by reason
of any portion of the Premises or Project parking facility being unusable for a
period equal to one (1) day or less). Furthermore, if the Project parking
facility is damaged by fire or other casualty and if Landlord is unable to make
arrangements for substitute parking for Tenant's employees and to the extent, as
a result, Tenant does not utilize all or a portion of the Premises for the
conduct of Tenant's business, Tenant's rent shall be abated in proportion to the
part of the Premises which is not so used by Tenant in the conduct of its
business. However, if any damage is due to the fault or neglect of Tenant, its
employees, agents, contractors, guests, invitees and the like, there shall be no
abatement of rent, unless and to the extent Landlord receives rental income
insurance proceeds. Within sixty (60) days after the date Landlord learns of the
necessity for repairs as a result of damage, Landlord shall notify Tenant
("Damage Repair Estimate") of Landlord's estimated assessment of the period of
time in which the repairs will be completed. Upon the occurrence of any damage
to the Premises, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Section 14(a)(ii)(A)
above; provided, however, that if the cost of repair of improvements within the
Premises by Landlord exceeds the amount of insurance proceeds received by
Landlord from Tenant's insurance carrier, as so assigned by Tenant, such excess
costs shall be paid by Tenant to Landlord prior to Landlord's repair of such
damage. If repairs cannot, in Landlord's opinion, be completed within two
hundred seventy (270) days after the necessity for repairs as a result of such
damage becomes known to Landlord without the payment of overtime or other
premiums, Landlord may, at its option, either (i) make such repairs in a
reasonable time and in such event this Lease shall continue in effect and the
rent shall be abated, if at all, in the manner provided in this Article 16, or
(ii) elect not to effect such repairs and instead terminate this Lease, by
notifying Tenant in writing of such termination within sixty (60) days after
Landlord learns of the necessity for repairs as a result of damage, such notice
to include a termination date giving Tenant sixty (60) days to vacate the
Premises. In addition, Landlord may elect to terminate this Lease if the Project
shall be damaged by fire or other casualty or cause, whether or not the Premises
are affected, if the damage is not fully covered, except for deductible amounts,
by Landlord's insurance policies. However, if Landlord does not elect to
terminate this Lease pursuant to Landlord's termination rights as provided

                                      -24-
<PAGE>

above, and if the Damage Repair Estimate indicates that repairs cannot be
completed within two hundred seventy (270) days after being commenced and if
such damage is not the result of the negligence or willful misconduct of Tenant
or Tenant's employees, agents or contractors, Tenant may elect, not later than
thirty (30) days after Tenant's receipt of the Damage Repair Estimate, to
terminate this Lease by written notice to Landlord effective as of the date
specified in Tenant's notice. Finally, if the Premises or the Project is damaged
to any substantial extent during the last twelve (12) months of the Term, then
notwithstanding anything contained in this Article 16 to the contrary, Landlord
shall have the option to terminate this Lease by giving written notice to Tenant
of the exercise of such option within sixty (60) days after Landlord learns of
the necessity for repairs as the result of such damage. A total destruction of
the Project shall automatically terminate this Lease. Except as provided in this
Article 16, there shall be no abatement of rent and no liability of Landlord by
reason of any injury to or interference with Tenant's business or property
arising from such damage or destruction or the making of any repairs,
alterations or improvements in or to any portion of the Project or the Premises
or in or to fixtures, appurtenances and equipment therein. Tenant understands
that Landlord will not carry insurance of any kind on Tenant's furniture,
furnishings, trade fixtures or equipment, and that Landlord shall not be
obligated to repair any damage thereto or replace the same. Tenant acknowledges
that Tenant shall have no right to any proceeds of insurance carried by Landlord
relating to property damage. With respect to any damage which Landlord is
obligated to repair or elects to repair, Tenant, as a material inducement to
Landlord entering into this Lease, irrevocably waives and releases its rights
under the provisions of Sections 1932 and 1933 of the California Civil Code.

                                   ARTICLE 17

                                  SUBORDINATION

      This Lease is subject and subordinate to all ground or underlying leases,
mortgages and deeds of trust which affect the property or the Project, including
all renewals, modifications, consolidations, replacements and extensions
thereof; provided, however, if the lessor under any such lease or the holder or
holders of any such mortgage or deed of trust shall advise Landlord that they
desire or require this Lease to be prior and superior thereto, upon written
request of Landlord to Tenant, Tenant agrees to promptly execute, acknowledge
and deliver any and all documents or instruments which Landlord or such lessor,
holder or holders deem necessary or desirable for purposes thereof. Landlord
shall have the right to cause this Lease to be and become and remain subject and
subordinate to any and all ground or underlying leases, mortgages or deeds of
trust which may hereafter be executed covering the Premises, the Project or the
property or any renewals, modifications, consolidations, replacements or
extensions thereof, for the full amount of all advances made or to be made
thereunder and without regard to the time or character of such advances,
together with interest thereon and subject to all the terms and provisions
thereof; provided, however, that a condition precedent to such subordination
shall be that Landlord obtains from the lender or other party in question a
commercially reasonable non-disturbance agreement in favor of Tenant. Subject to
the foregoing, Tenant agrees, within ten (10) days after Landlord's written
request therefor, to execute, acknowledge and deliver upon request any and all

                                      -25-
<PAGE>

documents or instruments requested by Landlord or necessary or proper to assure
the subordination of this Lease to any such mortgages, deed of trust, or
leasehold estates. Tenant agrees that in the event any proceedings are brought
for the foreclosure of any mortgage or deed of trust or any deed in lieu
thereof, to attorn to the purchaser or any successors thereto upon any such
foreclosure sale or deed in lieu thereof as so requested to do so by such
purchaser and to recognize such purchaser as the lessor under this Lease; Tenant
shall, within five (5) days after request execute such further instruments or
assurances as such purchaser may reasonably deem necessary to evidence or
confirm such attornment. Tenant agrees to provide copies of any notices of
Landlord's default under this Lease to any mortgagee or deed of trust
beneficiary whose address has been provided to Tenant and Tenant shall provide
such mortgagee or deed of trust beneficiary a commercially reasonable time after
receipt of such notice within which to cure any such default. Tenant waives the
provisions of any current or future statute, rule or law which may give or
purport to give Tenant any right or election to terminate or otherwise adversely
affect this Lease and the obligations of the Tenant hereunder in the event of
any foreclosure proceeding or sale.

                                   ARTICLE 18

                                 EMINENT DOMAIN

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

                                   ARTICLE 19

                                     DEFAULT

      Each of the following acts or omissions of Tenant or of any guarantor of
Tenant's performance hereunder, or occurrences, shall constitute an "Event of
Default":

      (a) Failure or refusal to pay Basic Rental, Additional Rent or any other
amount to be paid by Tenant to Landlord hereunder within three (3) calendar days
after notice that the same is due or payable hereunder; said three (3) day
period shall be in lieu of, and not in addition to, the notice requirements of
Section 1161 of the California Code of Civil Procedure or any similar or
successor law;

                                      -26-
<PAGE>

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

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

      (d) The filing by Tenant or any guarantor hereunder in any court pursuant
to any statute of a petition in bankruptcy or insolvency or for reorganization
or arrangement for the appointment of a receiver of all or a portion of Tenant's
property; the filing against Tenant or any guarantor hereunder of any such
petition, or the commencement of a proceeding for the appointment of a trustee,
receiver or liquidator for Tenant, or for any guarantor hereunder, or of any of
the property of either, or a proceeding by any governmental authority for the
dissolution or liquidation of Tenant or any guarantor hereunder, if such
proceeding shall not be dismissed or trusteeship discontinued within thirty (30)
days after commencement of such proceeding or the appointment of such trustee or
receiver; or the making by Tenant or any guarantor hereunder of an assignment
for the benefit of creditors. Tenant hereby stipulates to the lifting of the
automatic stay in effect and relief from such stay for Landlord in the event
Tenant files a petition under the United States Bankruptcy laws, for the purpose
of Landlord pursuing its rights and remedies against Tenant and/or a guarantor
of this Lease;

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

      (f) Tenant's failure to observe or perform according to the provisions of
Articles 7, 14, 17 or 25 within seven (7) business days after notice from
Landlord.

      All defaults by Tenant of any covenant or condition of this Lease shall be
deemed by the parties hereto to be material.

                                   ARTICLE 20

                                    REMEDIES

      (a) Upon the occurrence of an Event of Default under this Lease as
provided in Article 19 hereof, Landlord may exercise all of its remedies as may
be permitted by law, including but not limited to the remedy provided by Section
1951.4 of the California Civil Code, and including without limitation,
terminating this Lease, reentering the Premises and removing all persons and
property therefrom, which property may be stored by Landlord at a warehouse or
elsewhere at the risk, expense and for the account of Tenant. If Landlord elects
to terminate this Lease, Landlord shall be entitled to recover from Tenant the

                                      -27-
<PAGE>

aggregate of all amounts permitted by law, including but not limited to (i) the
worth at the time of award of the amount of any unpaid rent which had been
earned at the time of such termination; plus (ii) the worth at the time of award
of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the Term
after the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; plus (iv) any other amount necessary
to compensate Landlord for all the detriment proximately caused by Tenant's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom; and (v) at Landlord's
election, such other amounts in addition to or in lieu of the foregoing as may
be permitted from time to time by applicable law. The term "rent" as used in
this Section 20(a) shall be deemed to be and to mean all sums of every nature
required to be paid by Tenant pursuant to the terms of this Lease, whether to
Landlord or to others. As used in items (i) and (ii), above, the "worth at the
time of award" shall be computed by allowing interest at the rate set forth in
item (e), below, but in no case greater than the maximum amount of such interest
permitted by law. As used in item (iii), above, the "worth at the time of award"
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1 %).

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

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

      (d) All rights, powers and remedies of Landlord hereunder and under any
other agreement now or hereafter in force between Landlord and Tenant shall be
cumulative and not alternative and shall be in addition to all rights, powers
and remedies given to Landlord by law, and the exercise of one or more rights or
remedies shall not impair Landlord's right to exercise any other right or
remedy.

      (e) Any amount due from Tenant to Landlord hereunder which is not paid
when due shall bear interest at the lower of eighteen percent (18%) per annum or
the maximum lawful rate of interest from the due date until paid, unless
otherwise specifically provided herein, but the payment of such interest shall
not excuse or cure any default by Tenant under this Lease. In addition to such
interest: (i) if Basic Rental is not paid on or before the fifth (5th) day of

                                      -28-
<PAGE>

the calendar month for which the same is due, a late charge equal to ten percent
(10%) of the amount overdue or $100, whichever is greater, shall be immediately
due and owing and shall accrue for each calendar month or part thereof until
such rental, including the late charge, is paid in full, which late charge
Tenant hereby agrees is a reasonable estimate of the damages Landlord shall
suffer as a result of Tenant's late payment and (ii) an additional charge of $25
shall be assessed for any check given to Landlord by or on behalf of Tenant
which is not honored by the drawee thereof; which damages include Landlord's
additional administrative and other costs associated with such late payment and
unsatisfied checks and the parties agree that it would be impracticable or
extremely difficult to fix Landlord's actual damage in such event. Such charges
for interest and late payments and unsatisfied checks are separate and
cumulative and are in addition to and shall not diminish or represent a
substitute for any or all of Landlord's rights or remedies under any other
provision of this Lease.

                                   ARTICLE 21

                         TRANSFER OF LANDLORD'S INTEREST

      In the event of any transfer or termination of Landlord's interest in the
Premises or the Project by sale, assignment, transfer, foreclosure, deed-in-lieu
of foreclosure or otherwise whether voluntary or involuntary, Landlord shall be
automatically relieved of any and all obligations and liabilities on the part of
Landlord from and after the date of such transfer or termination to the extent
such obligations are assumed by the transferee by operation of law or otherwise,
including without limitation, the obligation of Landlord under Article 4 and
California Civil Code 1950.7 above to return the security deposit, provided said
security deposit is transferred to said transferee. Tenant agrees to attorn to
the transferee upon any such transfer and to recognize such transferee as the
lessor under this Lease and Tenant shall, within five (5) days after request,
execute such further instruments or assurances as such transferee may reasonably
deem necessary to evidence or confirm such attornment.

                                   ARTICLE 22

                                     BROKER

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

                                      -29-
<PAGE>

                                   ARTICLE 23

                                     PARKING

      Tenant shall rent from Landlord, commencing on the Commencement Date, the
number of parking passes set forth in Article 1.I. of the Basic Lease
Provisions, which parking passes shall pertain to the Project parking facility.
Tenant may elect to have up to five (5) of such parking passes designated for
Tenant's use as reserved parking at locations mutually agreed upon in good faith
by Landlord and Tenant and the remainder of such parking passes shall be for
unreserved parking. Unreserved parking shall be free of charge throughout the
initial Lease Term and for Tenant's reserved parking, Tenant shall pay to
Landlord the prevailing rate charged from time to time at the location of such
parking passes for reserved parking, which rate is currently $100.00 per
reserved parking pass per month. In addition, Tenant shall be responsible for
the full amount of any taxes imposed by any governmental authority in connection
with the renting of such parking passes by Tenant or the use of the parking
facility by Tenant. Tenant's continued right to use the parking passes is
conditioned upon Tenant abiding by all rules and regulations which are
prescribed from time to time for the orderly operation and use of the parking
facility where the parking passes are located, including any sticker or other
identification system established by Landlord, Tenant's cooperation in seeing
that Tenant's employees and visitors also comply with such rules and
regulations, and Tenant not being in default under this Lease. Provided that
Tenant continues to have the parking to which it is entitled under this Lease,
Landlord specifically reserves the right to change the size, configuration,
design, layout and all other aspects of the Project parking facility at any time
and Tenant acknowledges and agrees that Landlord may, without incurring any
liability to Tenant and without any abatement of rent under this Lease, from
time to time, close-off or restrict access to the Project parking facility for
purposes of permitting or facilitating any such construction, alteration or
improvements. Landlord may, from time to time, relocate any reserved parking
spaces (if any) rented by Tenant to another location in the Project parking
facility. Landlord may delegate its responsibilities hereunder to a parking
operator or a lessee of the parking facility in which case such parking operator
or lessee shall have all the rights of control attributed hereby to the
Landlord. The parking passes rented by Tenant pursuant to this Article 23 are
provided to Tenant solely for use by Tenant's own personnel and such passes may
not be transferred, assigned, subleased or otherwise alienated by Tenant without
Landlord's prior approval. Tenant may validate visitor parking by such method or
methods as the Landlord may establish, at the validation rate from time to time
generally applicable to visitor parking.

                                   ARTICLE 24

                                     WAIVER

      No waiver by Landlord of any provision of this Lease shall be deemed to be
a waiver of any other provision hereof or of any subsequent breach by Tenant of
the same or any other provision. No provision of this Lease may be waived by
Landlord, except by an instrument in writing executed by Landlord. Landlord's
consent to or approval of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to render unnecessary the obtaining of Landlord's
consent to or approval of any subsequent act of Tenant, whether or not similar
to the act so consented to or approved. No act or thing done by Landlord or
Landlord's agents during the Term of this Lease shall be deemed an acceptance of

                                      -30-
<PAGE>

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

                                   ARTICLE 25

                              ESTOPPEL CERTIFICATE

      Tenant shall, at any time and from time to time, upon not less than ten
(10) days' prior written notice from Landlord, execute, acknowledge and deliver
to Landlord a statement in writing certifying the following information, (but
not limited to the following information in the event further information is
requested by Landlord): (i) that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as modified, is in full force and effect); (ii) the dates to
which the rental and other charges are paid in advance, if any; (iii) the amount
of Tenant's security deposit, if any; and (iv) acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder,
and no events or conditions then in existence which, with the passage of time or
notice or both, would constitute a default on the part of Landlord hereunder, or
specifying such defaults, events or conditions, if any are claimed. It is
expressly understood and agreed that any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Real
Property. Tenant's failure to deliver such statement within such time shall
constitute an admission by Tenant that all statements contained therein are true
and correct. Tenant hereby irrevocably appoints Landlord as Tenant's
attorney-in-fact and in Tenant's name, place and stead to execute any and all
documents described in this Article 25 if Tenant fails to do so within the
specified time period.

                                   ARTICLE 26

                              LIABILITY OF LANDLORD

      Notwithstanding anything in this Lease to the contrary, any remedy of
Tenant for the collection of a judgment (or other judicial process) requiring
the payment of money by Landlord in the event of any default by Landlord
hereunder or any claim, cause of action or obligation, contractual, statutory or
otherwise by Tenant against Landlord or the Landlord Parties concerning, arising
out of or relating to any matter relating to this Lease and all of the covenants
and conditions or any obligations, contractual, statutory, or otherwise set
forth herein, shall be limited solely and exclusively to an amount which is

                                      -31-
<PAGE>

equal to the lesser of (i) the interest of Landlord in and to the Project, and
(ii) the interest Landlord would have in the Project if the Project were
encumbered by third party debt in an amount equal to eighty percent (80%) of the
then current value of the Project. No other property or assets of Landlord or
any Landlord Party shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies under or with respect to
this Lease, Landlord's obligations to Tenant, whether contractual, statutory or
otherwise, the relationship of Landlord and Tenant hereunder, or Tenant's use or
occupancy of the Premises.

                                   ARTICLE 27

                              INABILITY TO PERFORM

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

                                   ARTICLE 28

                                 HAZARDOUS WASTE

      (a) Tenant shall not cause or permit any Hazardous Material (as defined in
Section 28(c) below) to be brought, kept or used in or about the Project by
Tenant, its agents, employees, contractors, or invitees. Tenant indemnifies
Landlord and the Landlord Parties from and against any breach by Tenant of the
obligations stated in the preceding sentence, and agrees to defend and hold
Landlord and the Landlord Parties harmless from and against any and all claims,
judgments, damages, penalties, fines, costs, liabilities, or losses (including,
without limitation, diminution in value of the Project, damages for the loss or
restriction or use of rentable or usable space or of any amenity of the Project,
damages arising from any adverse impact or marketing of space in the Project,
and sums paid in settlement of claims, attorneys' fees and costs, consultant
fees, and expert fees) which arise during or after the Term of this Lease as a
result of such breach. This indemnification of Landlord and the Landlord Parties
by Tenant includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state, or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Project. Without limiting the foregoing, if the
presence of any Hazardous Material on the Project caused or permitted by Tenant
results in any contamination of the Project, then subject to the provisions of
Articles 9, 10 and 11 hereof, Tenant shall promptly take all actions at its sole
expense as are necessary to return the Project to the condition existing prior
to the introduction of any such Hazardous Material and the contractors to be
used by Tenant for such work must be approved by Landlord, which approval shall
not be unreasonably withheld so long as such actions would not potentially have
any material adverse long-term or short-term effect on the Project and so long
as such actions do not materially interfere with the use and enjoyment of the
Project by the other tenants thereof; provided however, Landlord shall also have
the right, by written notice to Tenant, to directly undertake any such
mitigation efforts with regard to Hazardous Materials in or about the Project
due to Tenant's breach of its obligations pursuant to this Section 28(a), and to
charge Tenant, as Additional Rent, for the costs thereof.

                                      -32-
<PAGE>

      (b) It shall not be unreasonable for Landlord to withhold its consent to
any proposed Transfer if (i) the proposed transferee's anticipated use of the
Premises involves the generation, storage, use, treatment, or disposal of
Hazardous Material; (ii) the proposed Transferee has been required by any prior
landlord, lender, or governmental authority to take remedial action in
connection with Hazardous Material contaminating a property if the contamination
resulted from such Transferee's actions or use of the property in question; or
(iii) the proposed Transferee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or storage of a
Hazardous Material.

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

      (d) As used herein, the term "Laws" means any applicable federal, state or
local law, ordinance, or regulation relating to any Hazardous Material affecting
the Project, including, without limitation, the laws, ordinances, and
regulations referred to in Section 28(c) above.

                                   ARTICLE 29

                   SURRENDER OF PREMISES; REMOVAL OF PROPERTY

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

                                      -33-
<PAGE>

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

      (c) Whenever Landlord shall reenter the Premises as provided in Article 20
hereof, or as otherwise provided in this Lease, any property of Tenant not
removed by Tenant upon the expiration of the Term of this Lease (or within
forty-eight (48) hours after a termination by reason of Tenant's default), as
provided in this Lease, shall be considered abandoned and Landlord may remove
any or all of such items and dispose of the same in any manner or store the same
in a public warehouse or elsewhere for the account and at the expense and risk
of Tenant, and if Tenant shall fail to pay the cost of storing any such property
after it has been stored for a period of thirty (30) days or more, Landlord may
sell any or all of such property at public or private sale, in such manner and
at such times and places as Landlord, in its sole discretion, may deem proper,
without notice to or demand upon Tenant, for the payment of all or any part of
such charges or the removal of any such property, and shall apply the proceeds
of such sale as follows: first, to the cost and expense of such sale, including
reasonable attorneys' fees and costs for services rendered; second, to the
payment of the cost of or charges for storing any such property; third, to the
payment of any other sums of money which may then or thereafter be due to
Landlord from Tenant under any of the terms hereof; and fourth, the balance, if
any, to Tenant.

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

                                   ARTICLE 30

                                  MISCELLANEOUS

      (a) SEVERABILITY; ENTIRE AGREEMENT. ANY PROVISION OF THIS LEASE WHICH
SHALL PROVE TO BE INVALID, VOID, OR ILLEGAL SHALL IN NO WAY AFFECT, IMPAIR OR
INVALIDATE ANY OTHER PROVISION HEREOF AND SUCH OTHER PROVISIONS SHALL REMAIN IN
FULL FORCE AND EFFECT. THIS LEASE AND THE EXHIBITS AND ANY ADDENDUM ATTACHED

                                      -34-
<PAGE>

HERETO CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH REGARD TO
TENANT'S OCCUPANCY OR USE OF ALL OR ANY PORTION OF THE PROJECT, AND NO PRIOR
AGREEMENT OR UNDERSTANDING PERTAINING TO ANY SUCH MATTER SHALL BE EFFECTIVE FOR
ANY PURPOSE. NO PROVISION OF THIS LEASE MAY BE AMENDED OR SUPPLEMENTED EXCEPT BY
AN AGREEMENT IN WRITING SIGNED BY THE PARTIES HERETO OR THEIR SUCCESSOR IN
INTEREST. THE PARTIES AGREE THAT ANY DELETION OF LANGUAGE FROM THIS LEASE PRIOR
TO ITS MUTUAL EXECUTION BY LANDLORD AND TENANT SHALL NOT BE CONSTRUED TO HAVE
ANY PARTICULAR MEANING OR TO RAISE ANY PRESUMPTION, CANON OF CONSTRUCTION OR
IMPLICATION INCLUDING, WITHOUT LIMITATION, ANY IMPLICATION THAT THE PARTIES
INTENDED THEREBY TO STATE THE CONVERSE, OBVERSE OR OPPOSITE OF THE DELETED
LANGUAGE.

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

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

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

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

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

                                      -35-
<PAGE>

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

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

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

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

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

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

                                      -36-
<PAGE>

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

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

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

      (l) Notices. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal service evidenced by a signed receipt
or sent by registered or certified mail, return receipt requested, or via
overnight courier, and shall be effective upon proof of delivery, addressed to
Tenant at the Premises (Attention: CEO/CFO) or to Landlord at the management
office for the Project, with a copy to Landlord, c/o Arden Realty, Inc., 11601
Wilshire Boulevard, Fourth Floor, Los Angeles, California 90025, Attn: Legal
Department. Either party may by notice to the other specify a different address
for notice purposes except that, upon Tenant's taking possession of the
Premises, the Premises shall constitute Tenant's address for notice purposes. A
copy of all notices to be given to Landlord hereunder shall be concurrently
transmitted by Tenant to such party hereafter designated by notice from Landlord
to Tenant. Any notices sent by Landlord regarding or relating to eviction
procedures, including without limitation three day notices, may be sent by
regular mail.

      (m) Persistent Delinquencies. In the event that Tenant shall be delinquent
by more than fifteen (15) days in the payment of rent on three (3) separate
occasions in any twelve (12) month period, Landlord shall have the right to
terminate this Lease by thirty (30) days written notice given by Landlord to
Tenant within thirty (30) days of the last such delinquency.

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

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

                                      -37-
<PAGE>

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

            (ii) Tenant shall permit Landlord to install, use and maintain
pipes, ducts and conduits within the walls, columns and ceilings of the Premises
and throughout the Project.

            (iii) Landlord reserves the right, without incurring any liability
to Tenant therefor, to make such changes in or to the Project and the fixtures
and equipment thereof, as well as in or to the street entrances, halls,
passages, elevators, stairways and other improvements thereof, as it may deem
necessary or desirable; provided, however, that no such changes shall preclude
Tenant from accessing the Premises and Landlord shall use commercially
reasonable efforts to avoid material interference with Tenant's business
operations.

            (iv) Landlord may adopt any name for the Project and Landlord
reserves the right, from time to time, to change the name and/or address of the
Project at any time.

      (p) Signing Authority. If Tenant is a corporation, partnership or limited
liability company, each individual executing this Lease on behalf of said entity
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said entity in accordance with: (i) if Tenant is a
corporation, a duly adopted resolution of the Board of Directors of said
corporation or in accordance with the By-laws of said corporation, (ii) if
Tenant is a partnership, the terms of the partnership agreement, and (iii) if
Tenant is a limited liability company, the terms of its operating agreement, and
that this Lease is binding upon said entity in accordance with its terms.
Concurrently with Tenant's execution of this Lease, Tenant shall provide to
Landlord a copy of: (i) if Tenant is a corporation, such resolution of the Board
of Directors authorizing the execution of this Lease on behalf of such
corporation, which copy of resolution shall be duly certified by the secretary
or an assistant secretary of the corporation to be a true copy of a resolution
duly adopted by the Board of Directors of said corporation and shall be in a
form reasonably acceptable to Landlord, (ii) if Tenant is a partnership, a copy
of the provisions of the partnership agreement granting the requisite authority
to each individual executing this Lease on behalf of said partnership, and (iii)
if Tenant is a limited liability company, a copy of the provisions of its
operating agreement granting the requisite authority to each individual
executing this Lease on behalf of said limited liability company. In the event
Tenant fails to comply with the requirements set forth in this subparagraph (p),
then each individual executing this Lease shall be personally liable, jointly
and severally along with Tenant, for all of Tenant's obligations in this Lease.

      (q) Identification of Tenant.

            (i) If Tenant constitutes more than one person or entity, (A) each
of them shall be jointly and severally liable for the keeping, observing and

                                      -38-
<PAGE>

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

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

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

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

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

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

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

      (r) Intentionally Deleted.

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

                                      -39-
<PAGE>

      (t) Confidentiality. Tenant acknowledges that the content of this Lease
and any related documents are confidential information. Tenant shall keep such
confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant's financial,
legal and space planning consultants and any proposed Transferees.

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

      (v) Office of Foreign Assets Control. Tenant certifies to Landlord that
Tenant is not entering into this Lease, nor acting, for or on behalf of any
person or entity named as a terrorist or other banned or blocked person or
entity pursuant to any law, order, rule or regulation of the United States
Treasury Department or the Office of Foreign Assets Control. Tenant hereby
agrees to indemnify, defend and hold Landlord and the Landlord Parties harmless
from any and all Claims arising from or related to any breach of the foregoing
certification.

      (w) Financial Statements. If Tenant is not then publicly traded on NASDAQ
or a nationally recognized securities exchange, within ten (10) days after
Tenant's receipt of Landlord's written request, Tenant shall provide Landlord
with current financial statements of Tenant and financial statements for the two
(2) calendar or fiscal years (if Tenant's fiscal year is other than a calendar
year) prior to the current financial statement year. Any such statements shall
be prepared in accordance with generally accepted accounting principles and, if
the normal practice of Tenant, shall be audited by an independent certified
public accountant.

      (x) Exhibits. The Exhibits attached hereto are incorporated herein by this
reference as if fully set forth herein.

      (y) Independent Covenants. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent (and not dependent)
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to set off of any of the rent or other amounts owing
hereunder against Landlord.

                                      -40-
<PAGE>

      (z) Counterparts. This Lease may be executed in counterparts, each of
which shall be deemed an original, but such counterparts, when taken together,
shall constitute one agreement.

                                   ARTICLE 31

                                OPTION TO EXTEND

      (a) Option Right. Landlord hereby grants the Tenant named in this Lease
(the "Original Tenant") one (1) option ("Option") to extend the Term for the
entire Premises for a period of five (5) years ("Option Term"), which Option
shall be exercisable only by written notice delivered by Tenant to Landlord as
set forth below. The right contained in this Article 31 shall be personal to the
Original Tenant or an Affiliated Assignee and may only be exercised by the
Original Tenant or an Affiliated Assignee (and not any other transferee) if the
Original Tenant or Affiliated Assignee occupies the entire Premises as of the
date of Ten ant's Acceptance (as defined in Section 31(c) below).

      (b) Option Rent. The rent payable by Tenant during the Option Term
("Option Rent") shall be equal to the "Market Rent" (defined below). "Market
Rent" shall mean the applicable Monthly Basic Rental, including all escalations,
Direct Costs, additional rent and other charges at which tenants, as of the time
of Landlord's "Option Rent Notice" (as defined below), are entering into leases
for non-sublease, non-encumbered, space comparable in size, location and quality
to the Premises in renewal transactions for a term comparable to the Option
Term, which comparable space is located in office buildings comparable to the
Project in the immediate vicinity of the Project, in San Diego, California,
taking into consideration the value of the existing improvements in the Premises
to Tenant, as compared to the value of the existing improvements in such
comparable space, with such value to be based upon the age, quality and layout
of the improvements and the extent to which the same could be utilized by Tenant
with consideration given to the fact that the improvements existing in the
Premises are specifically suitable to Tenant.

      (c) Exercise of Option. The Option shall be exercised by Tenant only in
the following manner: (i) Tenant" shall not be in default on the delivery date
of the Interest Notice and Tenant's Acceptance; (ii) Tenant shall deliver
written notice ("Interest Notice") to Landlord not more than twelve (12) months
nor less than nine (9) months prior to the expiration of the Term, stating that
Tenant is interested in exercising the Option, (iii) within fifteen (15)
business days of Landlord's receipt of Tenant's written notice, Landlord shall
deliver notice ("Option Rent Notice") to Tenant setting forth the Option Rent;
and (iv) if Tenant desires to exercise such Option, Tenant shall provide
Landlord written notice within fifteen (15) business days after receipt of the
Option Rent Notice ("Tenant's Acceptance"). Tenant's failure to deliver the
Interest Notice or Tenant's Acceptance on or before the dates specified above
shall be deemed to constitute Tenant's election not to exercise the Option. If
Tenant timely and properly exercises its Option, the Term shall be extended for
the Option Term upon all of the terms and conditions set forth in this Lease,
except that the rent for the Option Term shall be as indicated in "the Option
Rent Notice.

                                      -41-
<PAGE>

                                   ARTICLE 32

                                     SIGNAGE

      Provided Tenant is not in default hereunder, Tenant, at Tenant's sole cost
and expense, shall have the non-exclusive right to install a strip at a location
designated by Landlord on the Project's existing "monument" sign ("Tenant's
Signage"). Tenant's Signage shall be subject to Landlord's approval as to size,
design, graphics, materials, colors and similar specifications and shall be
consistent with the exterior design, materials and appearance of the Project and
the Project's signage program and shall be further subject to all applicable
local governmental laws, rules, regulations, codes and Tenant's receipt of all
permits and other governmental approvals and any applicable covenants,
conditions and restrictions. Tenant's Signage rights may not be assigned or
transferred by Tenant to any other person or entity except that in connection
with any assignment of Tenant's interest under this Lease to an Affiliated
Assignee, Tenant's Signage may be assigned to the assignee with Landlord's prior
consent, which consent shall not be unreasonably withheld by Landlord so long as
the name of the assignee is not an "Objectionable Name," as that term is defined
below. In addition, should the name of the Original Tenant change, Tenant shall
be entitled to modify, at Tenant's sole cost and expense, Tenant's Signage to
reflect Tenant's new name, but only if Tenant's new name is not an
"Objectionable Name." The term "Objectionable Name" shall mean any name that (i)
relates to an entity that is of a character or reputation, or is associated with
a political orientation or faction that is materially inconsistent with the
quality of the Project, or which would otherwise reasonably offend a landlord of
a building comparable to the Project, taking into consideration the level and
visibility of Tenant's Signage, or (ii) conflicts with any covenants in other
leases of space in the Project. Landlord shall have the right, but not the
obligation, to oversee the installation of Tenant's Signage. The cost to
maintain and operate, if any, Tenant's Signage shall be paid for by Tenant. Upon
the expiration of the Term, or other earlier termination of this Lease, Tenant
shall be responsible for any and all costs associated with the removal of
Tenant's Signage, including, but not limited to, the cost to repair and restore
the monument to its original condition, normal wear and tear excepted.

                                   ARTICLE 33

                               TERMINATION OPTION

      Provided Tenant fully and completely satisfies each of the conditions set
forth in this Article 33, Tenant shall have the on-going option ("Termination
Option") to terminate this Lease as of a date specified by Tenant, which date
(the "Termination Date") must be during the initial Lease Term and after
expiration of the fourth (4th) Lease Year. In order to exercise the Termination
Option, Tenant must fully and completely satisfy each and everyone of the
following conditions: (a) Tenant must give Landlord written notice ("Termination
Notice") of its exercise of the Termination Option, which Termination Notice
shall specify the Termination Date (which date shall be within the parameters
described in the immediately preceding sentence) and which Termination Notice
must be delivered to Landlord at least nine (9) months prior to such Termination
Date, (b) at the time of the Termination Notice Tenant shall not be in default
under this Lease after expiration of applicable cure periods, and (c)

                                      -42-
<PAGE>

concurrently with Tenant's delivery of the Termination Notice to Landlord,
Tenant shall pay to Landlord a termination fee ("Termination Fee") equal to the
sum of (i) the unamortized balance, as of the Termination Date, of the (A)
amount expended by Landlord in connection with the design and construction of
the Improvements pursuant to the Tenant Work Letter, and (B) brokerage
commissions paid by Landlord in connection with this Lease, plus (ii) Fifty-Five
Thousand Seven Hundred Forty-Four and 50/100 Dollars ($55,744.50). Amortization
pursuant to subsection (i), above, shall be calculated on a seven (7) year
amortization schedule commencing as of the Commencement Date based upon equal
monthly payments of principal and interest, with interest imputed on the
outstanding principal balance at the rate of ten percent (10%) per annum. Upon
written inquiry from Tenant, Landlord shall provide Tenant with Landlord's
calculation of the Termination Fee.

                                   ARTICLE 34

                             COMMUNICATION EQUIPMENT

      Subject to all governmental laws, rules and regulations, Tenant and
Tenant's contractors (which shall first be reasonably approved by Landlord)
shall have the right and access to install, repair, replace, remove, operate and
maintain one (1) so-called "satellite dish" or other similar device, such as
antennae (collectively, "Communication Equipment") no greater than one (1) meter
in diameter, together with aesthetic screening designated by Landlord and all
cable, wiring, conduits and related equipment, for the purpose of receiving and
sending radio, television, computer, telephone or other communication signals,
at a location on the roof of the Project designated by Landlord. Landlord shall
have the right to require Tenant to relocate the Communication Equipment, at
Landlord's expense, at any time to another location on the roof of the Project
reasonably approved by Tenant. Tenant shall retain Landlord's designated roofing
contractor to make any necessary penetrations and associated repairs to the roof
in order to preserve Landlord's roof warranty. Tenant's installation and
operation of the Communication Equipment shall be governed by the following
terms and conditions:

      (a) Tenant's right to install, replace, repair, remove, operate and
maintain the Communication Equipment shall be subject to all governmental laws,
rules and regulations and Landlord makes no representation that such laws, rules
and regulations permit such installation and operation.

      (b) All plans and specifications for the Communication Equipment shall be
subject to Landlord's reasonable approval.

      (c) All costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including, without
limitation, costs of obtaining any necessary permits and connections to the
Project's electrical system) shall be borne by Tenant.

      (d) It is expressly understood that Landlord retains the right to use the
roof of the Project for any purpose whatsoever provided that Landlord shall not
unduly interfere with Tenant's use of the Communication Equipment.

                                      -43-
<PAGE>

      (e) Tenant shall use the Communication Equipment so as not to cause any
interference to other tenants in the Project or with any other tenant's
Communication Equipment, and not to damage the Project or interfere with the
normal operation of the Project.

      (f) Landlord shall not have any obligations with respect to the
Communication Equipment. Landlord makes no representation that the Communication
Equipment will be able to receive or transmit communication signals without
interference or disturbance (whether or not by reason of the installation or use
of similar equipment by others on the roof of the Project) and Tenant agrees
that Landlord shall not be liable to Tenant therefor. Tenant shall not lease or
otherwise make the Communication Equipment available to any third party and the
Communication Equipment shall be only for Tenant's use in connection with the
conduct of Tenant's business in the Premises.

      (g) Tenant shall (i) be solely responsible for any damage caused as a
result of the Communication Equipment, (ii) promptly pay any tax, license or
permit fees charged pursuant to any laws or regulations in connection with the
installation, maintenance or use of the Communication Equipment and comply with
all precautions and safeguards recommended by all governmental authorities, and
(iii) pay for all necessary repairs, replacements to or maintenance of the
Communication Equipment.

      (h) The Communication Equipment shall remain the sole property of Tenant.
Tenant shall remove the Communication Equipment and related equipment at
Tenant's sole cost and expense upon the expiration or sooner termination of this
Lease or upon the imposition of any governmental law or regulation which may
require removal, and shall repair the Project upon such removal to the extent
required by such work of removal. If Tenant fails to remove the Communication
Equipment and repair the Project within fifteen (15) days after the expiration
or earlier termination of this Lease, Landlord may do so at Tenant's expense.
The provisions of this Section 34(h) shall survive the expiration or earlier
termination of this Lease.

      (i) The Communication Equipment shall be deemed to constitute a portion of
the Premises for purposes of Articles 13 and 14 of this Lease.

      (j) Tenant agrees to execute a license agreement with Landlord's rooftop
management company regarding Tenant's installation, use and operation of the
Communication Equipment, which license agreement should be in commercially
reasonable form and shall incorporate the terms and conditions of this Article
34. Tenant acknowledges that such license agreement will require Tenant to pay a
one-time initial oversight fee to the rooftop management company in connection
with the installation of the Communication Equipment.

      (k) Prior to Tenant's installation of the Communication Equipment, Tenant
shall pay to Landlord or Landlord's rooftop management company, a one-time
initial oversight fee in the amount of Five Hundred Dollars ($500.00).
Furthermore, Tenant shall be responsible for the cost of any utilities provided
to the Communication Equipment, which costs shall be billed to Tenant and
payable by Tenant monthly, as Additional Rent.

                                      -44-
<PAGE>

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

"LANDLORD"                              ARDEN REALTY FINANCE V, L.L.C.,
                                        a Delaware limited liability company

                                        By:
                                            ------------------------------------
                                            Its:
                                                --------------------------------

"TENANT"                                MITEK SYSTEMS, INC.,
                                        a Delaware corporation

                                        By:
                                            ------------------------------------
                                        Print Name:
                                                    ----------------------------
                                        Title:
                                               ---------------------------------

                                        By:
                                            ------------------------------------
                                        Print Name:
                                                    ----------------------------
                                        Title:
                                               ---------------------------------

                                      -45-
<PAGE>

                                   EXHIBIT "A"

                                    PREMISES

                                   [GRAPHIC]

This Exhibit "A" is provided for informational purposes only and is intended to
be only an approximation of the layout of the Premises and shall not be deemed
to constitute any representation by Landlord as to the exact layout or
configuration of the Premises.

                                  EXHIBIT "A"
                                      - 1 -
<PAGE>

                                   EXHIBIT "B"

                              RULES AND REGULATIONS

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

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

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

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

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

                                   EXHIBIT "B"
                                     - 1 -
<PAGE>

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

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

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

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

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

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

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

                                   EXHIBIT "B"
                                     - 2 -
<PAGE>

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

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

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

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

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

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

                                   EXHIBIT "B"
                                     - 3 -
<PAGE>

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

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

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

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

      23. No air-conditioning unit or other similar apparatus shall be installed
or used by any tenant without the prior written consent of Landlord. Tenant
shall pay the cost of all electricity used for air-conditioning in the Premises
if such electrical consumption exceeds normal office requirements, regardless of
whether additional apparatus is installed pursuant to the preceding sentence.

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

      25. All electrical ceiling fixtures hung in offices or spaces along the
perimeter of the Project must be fluorescent and/or of a quality, type, design
and bulb color approved by Landlord. Tenant shall not permit the consumption in
the Premises of more than 2 1/2 watts per net usable square foot in the Premises
in respect of office lighting nor shall Tenant permit the consumption in the
Premises of more than 1 1/2 watts per net usable square foot of space in the
Premises in respect of the power outlets therein, at anyone time. In the event
that such limits are exceeded, Landlord shall have the right to require Tenant
to remove lighting fixtures and equipment and/or to charge Tenant for the cost
of the additional electricity consumed.

      26. Parking.

            (a) Project parking facility hours shall be 7:00 a.m. to 7:00 p.m.,
Monday through Friday, and closed on weekends, state and federal holidays
excepted, as such hours may be revised from time to time by Landlord; however,
subject to casualty and repairs and maintenance, Tenant's employees shall have
access to the Project parking facility twenty-four (24) hours per day, seven (7)
days per week.

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

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

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

                                   EXHIBIT "B"
                                     - 4 -
<PAGE>

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

            (f) Parking cards or any other device or form of identification
supplied by Landlord (or its operator) shall remain the property of Landlord (or
its operator). Such parking identification device must be displayed as requested
and may not be mutilated in any manner. The serial number of the parking
identification device may not be obliterated. Devices are not transferable or
assignable and any device in the possession of an unauthorized holder will be
void. There will be a replacement charge to the Tenant or person designated by
Tenant of $25.00 for loss of any parking card. There shall be a security deposit
of $25.00 due at issuance for each card key issued to Tenant.

            (g) The monthly rate for parking is payable one (1) month in advance
and must be paid by the third business day of each month. Failure to do so will
automatically cancel parking privileges and a charge at the prevailing daily
rate will be due. No deductions or allowances from the monthly rate will be made
for days parker does not use the parking facilities.

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

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

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

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

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

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

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

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

                                   EXHIBIT "B"
                                     - 5 -
<PAGE>

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

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

      28. Tenant shall not, without Landlord's prior written consent (which
consent may be granted or withheld in Landlord's absolute discretion), allow any
employee or agent to carry any type of gun or other firearm in or about any of
the Premises, Building or Project.

                                   EXHIBIT "B"
                                     - 6 -
<PAGE>

                                   EXHIBIT "C"

                              NOTICE OF TERM DATES
                        AND TENANT'S PROPORTIONATE SHARE

TO: ____________________________              DATE: ____________________________
________________________________
________________________________

RE:   Lease dated ______________, 20___, between
      __________________________________ __________________________
      ("Landlord"), and ______________________________
      __________________________ ("Tenant"), concerning Suite _____________,
      located at ________________________________________.

Ladies and Gentlemen:

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

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

      2. That the Tenant has taken possession of the Premises and acknowledges
that under the provisions of the Lease the Term of said Lease shall commence as
of ______________________ for a term of ________________________ ending on
_________________________.

      3. That in accordance with the Lease, Basic Rental commenced to accrue on
____________.

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

      5. Rent is due and payable in advance on the first day of each and every
month during the Term of said Lease. Your rent checks should be made payable to
______________ at ___________________.

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

                                   EXHIBIT "C"
                                     - 1 -
<PAGE>

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

AGREED AND ACCEPTED:

TENANT:

_______________________________________,

a ______________________________________

By: ____________________________________
    Its: _______________________________

                                   EXHIBIT "C"
                                     - 2 -
<PAGE>

                                   EXHIBIT "D"

                               TENANT WORK LETTER

                              [MITEK SYSTEMS, INC.]

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

                                    SECTION 1

                     CONSTRUCTION DRAWINGS FOR THE PREMISES

      Landlord shall construct the improvements in the Premises (the
"Improvements") pursuant to that certain plan prepared by" Hurkes Harris Design
Associates dated July 15, 2005 as modified by the bulletins which are attached
hereto as Schedule 1 and made a part hereof (collectively, the "Plans"). Unless
specifically noted to the contrary on the Plans, the Improvements shall be
constructed using Project-standard quantities, specifications and materials as
determined by Landlord. Based upon the Plans, Landlord shall cause the Architect
to prepare detailed plans and specifications for the Improvements ("Working
Drawings"). Landlord shall then forward the Working Drawings to Tenant for
Tenant's approval. Tenant shall approve or reasonably disapprove any draft of
the Working Drawings within three (3) business days after Tenant's receipt
thereof; provided, however, that (i) Tenant shall not be entitled to disapprove
any portion, component or aspect of the Working Drawings which are consistent
with the Plans unless Tenant agrees to pay for the additional cost resulting
from such change in the Plans as part of the Over-Allowance Amount pursuant to
Section 2 below, and (ii) any disapproval of the Working Drawings by Tenant
shall be accompanied by a detailed written explanation of the reasons for
Tenant's disapproval. Failure of Tenant to reasonably disapprove any draft of
the Working Drawings within said three (3) business day period shall be deemed
to constitute Tenant's approval thereof. The Working Drawings, as approved by
Landlord and Tenant, may be referred to herein as the "Approved Working
Drawings." Tenant shall make no changes or modifications to the Plans or the
Approved Working Drawings without the prior written consent of Landlord, which
consent may be withheld in Landlord's sole discretion if such change or
modification would directly or indirectly delay the "Substantial Completion," as
that term is defined in Section 5.1 of this Tenant Work Letter, of the
Improvements in the Premises or increase the cost of designing or constructing
the Improvements.

                                    SECTION 2

                              OVER-ALLOWANCE AMOUNT

      In the event any revisions, changes, or substitutions are made with
Tenant's consent to the Plans or the Approved Working Drawings or the
Improvements, any additional costs which arise in connection with such
revisions, changes or substitutions shall be considered to be an "Over-Allowance
Amount." The Over-Allowance Amount shall be paid by Tenant to Landlord, as
Additional Rent, within ten (10) days after Tenant's receipt of invoice
therefor. The Over-Allowance Amount shall be disbursed by Landlord prior to the
disbursement of any portion of Landlord's contribution to the construction of
the Improvements.

                                  EXHIBIT "D"
                                     - 1 -
<PAGE>

                                    SECTION 3

                            RETENTION OF CONTRACTOR;
                            WARRANTIES AND GUARANTIES

      Landlord hereby assigns to Tenant all warranties and guaranties by the
contractor who constructs the Improvements (the "Contractor") relating to the
Improvements, and Tenant hereby waives all claims against Landlord relating to,
or arising out of the construction of, the Improvements. The Contractor shall be
designated and retained by Landlord to construct the Improvements.

                                    SECTION 4

                               TENANT'S COVENANTS

      Tenant shall, at no cost to Tenant, cooperate with Landlord and the space
planner or architect retained by Landlord ("Architect") to cause a Notice of
Completion to be recorded in the office of the Recorder of the County of San
Diego in accordance with Section 3093 of the Civil Code of the State of
California or any successor statute upon completion of construction of the
Improvements.

                                    SECTION 5

                         COMPLETION OF THE IMPROVEMENTS

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

      5.2 Delay of the Substantial Completion of the Premises. Except as
provided in this Section 5.2, the Commencement Date shall occur as set forth in
the Lease. If there shall be a delay or there are delays in the Substantial
Completion of the Improvements in the Premises as a result of the following
(collectively, "Tenant Delays"):

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

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

      5.2.3 Tenant's request for changes in the Plans, Working Drawings or
Approved Working Drawings;

      5.2.4 Changes in any of the Plans, Working Drawings or Approved Working
Drawings because the same do not comply with applicable laws;

                                  EXHIBIT "D"
                                     - 2 -
<PAGE>

      5.2.5 Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the Improvements in the Premises,
or which are different from, or not included in, Landlord's standard improvement
package items for the Project;

      5.2.6 Changes to the base, shell and core work of the Project required by
the Approved Working Drawings or any changes thereto; or

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

then, notwithstanding anything to the contrary set forth in the Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the Improvements in the Premises, the date of Substantial
Completion thereof shall be deemed to be the date that Substantial Completion
would have occurred if no Tenant Delay or Delays, as set forth above, had
occurred.

      5.3 Outside Date. In the event that the Substantial Completion of the
Improvements in the Premises has not occurred by the "Outside Date," which shall
be January 15, 2006, as such January 15, 2006 date may be extended by the number
of days of Tenant Delays and by the number of days of "Force Majeure Delays" (as
defined below), then the sole remedy of Tenant shall be the right to deliver a
notice to Landlord (the "Outside Date Termination Notice") electing to terminate
this Lease effective upon receipt of the Outside Date Termination Notice by
Landlord (the "Effective Date"). Except as provided hereinbelow, the Outside
Date Termination Notice must be delivered by Tenant to Landlord, if at all, not
earlier than the Outside Date and not later than five (5) business days after
the Outside Date. If Tenant delivers the Outside Date Termination Notice to
Landlord, then Landlord shall have the right to suspend the Effective Date for a
period ending thirty (30) days after the original Effective Date. In order to
suspend the Effective Date, Landlord must deliver to Tenant, within five (5)
business days after receipt of the Outside Date Termination Notice, a
certificate of the Contractor certifying that it is such Contractor's best good
faith judgment that Substantial Completion of the Improvements in the Premises
will occur within thirty (30) days after the original Effective Date. If
Substantial Completion of the Improvements in the Premises occurs within said
thirty (30) day suspension period, then the Outside Date Termination Notice
shall be of no further force and effect; if, however, Substantial Completion of
the Improvements in the Premises does not occur within said thirty (30) day
suspension period, then this Lease shall terminate as of the date of expiration
of such thirty (30) day period. If prior to the Outside Date Landlord determines
that Substantial Completion of the Improvements in the Premises will not occur
by the Outside Date, Landlord shall have the right to deliver a written notice
to Tenant stating Landlord's opinion as to the date by which Substantial
Completion of the Improvements in the Premises shall occur and Tenant shall be
required, within five (5) business days after receipt of such notice, to either
deliver the Outside Date Termination Notice (which will mean that this Lease
shall thereupon terminate and shall be of no further force and effect) or agree
to extend the Outside Date to that date which is set by Landlord. Failure of
Tenant to so respond in writing within said five (5) business day period shall
be deemed to constitute Tenant's agreement to extend the Outside Date to that
date which is set by Landlord. If the Outside Date is so extended, Landlord's

                                  EXHIBIT "D"
                                     - 3 -
<PAGE>

right to request Tenant to elect to either terminate or further extend the
Outside Date shall remain and shall continue to remain, with each of the notice
periods and response periods set forth above, until the Substantial Completion
of the Improvements in the Premises or until this Lease is terminated. For
purposes of this Section 5.3, "Force Majeure Delays" shall mean and refer to a
period of delay or delays encountered by Landlord affecting the work of
construction of the Improvements because of delays due to excess time in
obtaining governmental permits or approvals beyond the time period normally
required to obtain such permits or approvals for similar space, similarly
improved, in comparable office buildings in the Clairemont area of San Diego,
California; fire, earthquake or other acts of God; acts of the public enemy;
riot; public unrest; insurrection; governmental regulations of the sales of
materials or supplies or the transportation thereof; strikes or boycotts;
shortages of material or labor or any other cause beyond the reasonable control
of Landlord.

                                    SECTION 6

                                  MISCELLANEOUS

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

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

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

      6.4 Punch List. Concurrently with Landlord's delivery of the Premises to
Tenant, a representative of Landlord and a representative of Tenant shall
perform a walk-through inspection of the Premises to identify any "punchlist"
items in the Improvements (i.e., minor defects or conditions in such
Improvements that do not impair Tenant's ability to utilize the Premises for the
purposes permitted hereunder) and any "punchlist" items regarding the systems of
the Project serving the Premises pursuant to Landlord's obligations under the
first sentence of Article 8 of the Lease, which items Landlord shall repair or
correct no later than thirty (30) days after the date of such walk-through
(unless the nature of such repair or correction is such that more than thirty
(30) days are required for completion, in which case Landlord shall commence
such repair or correction work within such thirty (30) day period and diligently
prosecute the same to completion).

                                  EXHIBIT "D"
                                     - 4 -

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