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                                                                   EXHIBIT 10.21

                                  OFFICE LEASE

THIS AGREEMENT OF LEASE ("Lease") is made this______ day of________________1999,
by FEDERAL CENTER LIMITED PARTNERSHIP, a District of Columbia limited
partnership (hereinafter referred to as "Landlord") and ANADAC, INC., a Virginia
corporation (hereinafter referred to as "Tenant").

WHEREAS, Landlord is the owner of a site upon which Landlord intends to
construct a multistory office building to be known by street address as 300 M
Street, S.E., Washington, D.C. (hereinafter referred to as "Building"); and

WHEREAS, Tenant desires to lease space in the Building and Landlord is willing
to rent Tenant space in the Building, upon the terms, conditions, covenants and
agreements set forth herein.

NOW, THEREFORE, the parties hereto, intending legally to be bound, hereby
covenant and agree as set forth below.

    Article I Basic Lease Information.

        1.1 (a) Building: An eight (8) story office building that will contain
approximately 281,856 square feet of rentable area (comprised of both office and
retail space).

                (b) Premises: Approximately thirty-six thousand nine hundred
five (36,905) square feet, representing the entire sixth (6th) floor of the
Building as identified on Exhibit A attached hereto and made a part hereof. The
foregoing measurement of the Premises and the Building shall be determined by
Landlord's architect in accordance with the ANSI/BOMA Standard Method of
Measurement, which measurement shall be subject to review and approval by
Tenant's architect not later than one hundred twenty (120) days after the date
hereof.

                (c) Lease Term: Ten (10) years, subject to (i) one (1) five (5)
year option to extend the Lease Term and (ii) an option to terminate this Lease
effective as of the expiration of the sixth (6th) Lease Year (as each such
option is more particularly set forth herein).

                (d) Lease Commencement Date: Subject to the terms of this Lease,
the date that is the later of (i) July 1, 2001, or (ii) the date that Landlord
Substantially Completes the Tenant Improvements in accordance with Exhibit B (as
such terms are defined in Exhibit B attached hereto and made a part hereof),
currently projected to be July 1, 2001.

                (e) Base Rent: One Million One Hundred Seven Thousand One
Hundred Fifty Dollars ($1,107,150) per annum ($30.00 per square foot), payable
in equal monthly installments of Ninety-Two Thousand Two Hundred Sixty-Two and
501100 Dollars ($92,262.50), net of the costs of electricity, which amount is
subject to adjustment as provided in Section 4.2 hereof. The phrase "net of the
costs of electric" shall mean that Tenant shall pay for ail direct and actual
electricity used for the Premises and Tenant's Operating Expense Percentage of
direct and actual electricity used for the Building.

                (f) Base Operating Expenses: Operating Expenses for the entirety
of the first Lease Year.

                (g) Base Real Estate Taxes: Real Estate Taxes assessed and/or
charged during the entirety of the first Lease Year.

                (h) (A) Tenant's Operating Expense Percentage: The ratio that
the square feet of rentable area in the Premises bears to the square feet of
office rentable area in the Building, which Tenant's Operating Expense
Percentage is initially estimated to be 13.68%.

                    (B) Tenant's Real Estate Percentage: The ratio that the
square feet of rentable area in the Premises bears to the square feet of
rentable area in the Building, which Tenant's real Estate Percentage is
initially estimated to be 13. 10%.

                (i) Security Deposit: A letter of credit in the amount of Two
Hundred Seventy-Six Thousand Seven Hundred Eighty-Seven and 501100 Dollars
($276,787.50), subject to adjustment as set forth in Article XIII hereof.

                (j) Tenant Address for Notices: Anadac, Inc., 2200 Clarendon
Blvd., Suite 900, Arlington, VA 22201, Attn: Mindy Jensen, Chief Financial
Officer, until Tenant has commenced use of the Premises, and the Premises after
Tenant has commenced beneficial use of the Premises. A copy of all Tenant
notices shall also be sent to Watt, Tieder, Hoffar & Fitzgerald,

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L.L.P., 7929 Westpark Drive, Suite 400, McLean, VA 22102, Attn: John G. Lavoie,
Esquire. (k) Tenant Improvements: Landlord shall provide a mutually agreed upon
building standard turnkey buildout in accordance with Exhibit B to this Lease.

                (1) Parking: One (1) parking permit for each eight hundred (800)
rentable square feet comprising the Premises. ending on December 3 1.

                (m) Calendar Year: Each annual period commencing on January I
and

    Article 11 Premises.

        2.1 Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises for the Term and upon the terms, conditions, covenants,
and agreements hereinafter provided. The lease of the Premises includes the
right, together with other tenants of the Building and members of the public, to
use the common public areas of the Building, but includes no other rights not
specifically set forth herein.

        2.2 Tenant shall have the right to use on an unassigned and
non-exclusive basis the number of parking pen-nits set forth in Section 1.1(1)
in the garage structure; provided, however, that Tenant shall have the right to
have five (5) of the foregoing permits be for reserved permits. The monthly
rates for the parking permits during the first (1st Lease Year are as follows:
$150 for non-reserved permits; and $250.00 for reserved pen-nits. In addition,
upon the first granting of reserved parking to another tenant of the Building in
the Building garage, Tenant shall have the right to reserved parking in the
Building garage (a) in the same ratio as granted to such other tenant, (b) in
the same general vicinity as granted to such other tenant and (c) substantially
in accordance with the terms of such reserved parking. Landlord agrees that
during the Lease Term the per annum parking rates shall not be increased by more
than three percent (3%) over the parking rates then in effect for the
immediately preceding annual period. Tenant shall contract directly with the
manager of the parking garage and shall be responsible for the performance under
such contract, including the payment of the standard rates determined by the
parking garage manager from time to time (other than for the first (1st) Lease
Year, which are set forth above). In the event Tenant contracts with the parking
garage manager, then, Tenant covenants and agrees to comply with all reasonable
rules and regulations which Landlord or the parking garage manager may make
hereafter from time to time with respect to the use of the parking areas.
Landlord's and the parking garage manager's remedies under such rules and
regulations may include, but shall not be limited to, the right to tow away at
owner's expense any vehicles not parked in compliance with the rules and
regulations. Landlord shall not be responsible to Tenant for the noncompliance
or breach of such rules and regulations by the parking garage manager or by any
other tenant, its agents, employees and invitees or members of the public who
may park in the parking areas.

    Article III Term.

        3.1 The Lease Term and Tenant's obligation to pay rent hereunder shall
commence on the Lease Commencement Date. If the Lease Commencement Date is not
the first day of a month, then the Lease Term shall be the period set forth
above Plus the partial month in which the I-ease Commencement Date occurs. The
date on which the Lease Term expires shall be the Lease Expiration Date. Each
twelve (12) month period during the Lease Term, initially beginning on the Lease
Commencement Date, shall be a Lease Year.

        3.2 Promptly after the Lease Commencement Date is ascertained, Landlord
and Tenant shall execute a certificate substantially in the form of Exhibit C
hereto affirming the Lease Commencement Date and the Lease Expiration Date.

        3.3 It is presently anticipated that the Premises will be delivered to
Tenant on or about July 1, 2001. Landlord and Tenant agree that in the event
Substantial Completion of the Tenant Improvements is delayed for any reason
whatsoever, this Lease shall not be void or voidable except to the extent
expressly set forth below, nor shall Landlord be liable to Tenant for any loss
or damage resulting therefrom.

                (a) Landlord anticipates commencement of excavation (i.e.,
excavation of at least one floor below grade level for the entire Building) (the
"Excavation") no later than October 3 1, 1999. In the event the Excavation has
not been commenced on or before such date, Tenant shall be entitled to terminate
this Lease by written notice to Landlord within ten (10) days thereafter,
provided, further, that if the Excavation has not commenced within sixty (60)
days after October 31, 1999, either Landlord or Tenant shall be entitled to
terminate this Lease by written notice to the other within ten (10) days
thereafter. Upon any such termination, the parties shall be relieved of any
further obligations hereunder, with the exception that Landlord shall promptly
return to Tenant the Security Deposit. In addition, Landlord shall promptly
reimburse Tenant the reasonable out-of-pocket costs incurred by or arising from
this Lease (e.g., legal fees, design, engineering and architectural fees) in an
amount not to exceed One Dollar ($1.00) per rentable square foot of the Premises
(the "Termination Payment").

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                (b) Landlord further anticipates commencement of construction of
the base building (the "Base Building Construction") no later than December 31,
1999. In the event the Base Building Construction has not been commenced on or
before such date, Tenant shall be entitled to terminate this Lease by written
notice to Landlord within ten (10) days thereafter, provided, further, that if
the Base Building Construction has not commenced within sixty (60) days after
December 31, 1999, either Landlord or Tenant shall be entitled to terminate this
Lease by written notice to the other within ten (10) days thereafter. Upon any
such termination, the parties shall be relieved of further obligations
hereunder, with the exception that Landlord shall promptly return to Tenant the
Security Deposit and shall promptly pay to Tenant the Termination Payment.

                (c) In the event the Tenant Improvements have not been
Substantially Completed within ninety (90) days after the Target Completion Date
(as such term is defined in Exhibit B), Tenant shall be entitled to terminate
this Lease by written notice delivered no later than ten (10) days after such
proposed completion date. In the event Tenant is entitled to give and delivers
its termination notice, the parties shall be relieved of further obligations
hereunder, with the exception that Landlord shall promptly return to Tenant the
Security Deposit and shall promptly pay to Tenant the Termination Payment.

        3.4. Landlord and Tenant shall obtain sufficient written assurances from
NAVSEA and The Washington Navy Yard of the schedule arid manner of NAVSEA'S
relocation of substantially all its operations to The Washington Navy Yard on or
about July 1, 200 1.

        3.5 Tenant shall have the right to terminate this Lease effective as of
11:59 p.m. on the date that is the last day of the sixth (6th) Lease Year upon
the following terms and conditions: (a) Tenant shall have provided Landlord with
written notice of Tenant's election to terminate at least twelve (12) months
prior to the effective date of the termination; (b) if Tenant exercises its
termination option, such exercise shall not relieve Tenant of its obligation to
make all payments due from Tenant under the Lease through such termination date,
including all payments of Base Rent and Additional Rent; (c) once Tenant
exercises its termination option, Tenant may not thereafter revoke such
exercise; and (d) Tenant's failure to timely deliver to Landlord Tenant's
termination notice shall conclusively be deemed a waiver of Tenant's right to
terminate under this provision.

        3.6 Tenant shall have the right to extend the Lease Term for one (1)
five (5) year period (the "Extension Term") by delivering to Landlord Tenant's
written notice of its exercise of such extension no earlier than eighteen (18)
months and no later than fifteen (15) months prior to the expiration of the
initial Lease Term. Upon Tenant's exercise of its extension option, the "Lease
Expiration Date" shall automatically become the last day of the Extension Term.
Tenant's right to extend the Lease Term shall be upon the following terms and
conditions: (a) this Lease is in full force and effect; (b) no Event of Default
(as hereinafter defined) then exists and no condition exists that with notice or
the passage of time, or both, would constitute an Event of Default; (c) the
Tenant named herein shall not have assigned or sublet its rights to an aggregate
of more than fifty percent (50%) of the Premises; (d) except as expressly set
forth herein, once Tenant exercises its extension option, Tenant may not
thereafter revoke such exercise; (e) Tenant's failure to timely deliver to
Landlord Tenant's extension notice shall conclusively be deemed a waiver of
Tenant's right to extend the Lease Term; (f) Tenant shall take the Premises in
"AS IS" condition for the Extension Term and Landlord shall have no obligation
to make any improvements or alterations to the Premises; (f) Tenant shall
continue to pay Additional Rent and other charges under this lease pursuant to
the terms of this Lease; (g) Base Rent for the first year of the Extension Term
shall be ninety-five percent (95%) of the Fair Market Value Rate (as hereinafter
defined) multiplied by the number of square feet comprising the Premises as of
the commencement date of the Extension Term; and (h) Base Rent during the second
and all subsequent years during the Extension Term shall be computed in
accordance with rental increase provisions applicable at the time the Base Rent
for the Extension Term is being determined.

        For purposes hereof, "Fair Market Value Rate" means the fair market rate
per square foot of rentable area that would be agreed upon between a landlord
and tenant entering into a new lease for comparable space as to location, size,
configuration in a comparable building as to location, quality, age and
reputation with a comparable term, and also considering comparable concessions
as may then be customary in the market for new leases, including rental
abatements and cash allowances or credits for tenant improvements.

        Within ten (10) days after Landlord receives Tenant's notice that it is
exercising its extension option, Landlord shall send written notice to Tenant
specifying the Fair Market Value rate as determined by Landlord. Within ten (10)
days after receipt of Landlord's notice, Tenant shall give Landlord written
notice of Tenant's acceptance or rejection of Landlord's determination. If
Landlord and Tenant are unable to agree upon the Fair Market Value rate within
thirty (30) days after the latter of the aforementioned ten (10) day periods,
Landlord and Tenant shall each select a broker who shall each submit to the
parties his or her determination of the Fair Market Value rate. Landlord and
Tenant shall notify the other of the identity of the broker selected within ten
(10) days after the expiration of the thirty (30) day period. Each broker shall
be a licensed real estate broker having a minimum of ten (10) years' experience
in the Washington, D.C. office market. The brokers shall be instructed to
complete and submit their written appraisal reports to the other party within
twenty (20) days after the expiration of the ten (10) day selection period. If
the determination of the Fair Market Value Rate submitted by Landlord's broker
is less than the determination of the Fair Market Value Rate submitted by
Tenant's broker, the Fair Market Value Rate shall be the average of the two (2)
determinations. If the determination of the Fair Market

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Value Rate submitted by Landlord's broker is greater than the determination of
the Fair Market Value Rate submitted by Tenant's broker, the brokers shall,
within ten (10) days, appoint a third broker with the above-mentioned
qualifications, who shall either select Landlord's appraisal or Tenant's
appraisal within ten (10) days after his or her appointment. The foregoing
notwithstanding, if the lower of the first two appraisal amounts is within five
percent (5%) of the higher of the higher of the first two appraisal amounts, the
Fair Market Value Rate shall be the average of such two appraisal amounts. If
the determination of the Fair Market Value Rate is not acceptable to Tenant,
Tenant shall have the right to revoke its election to extend the Lease Term
under this provision by delivering written notice thereof to Landlord within ten
(10) days after tile determination of the Fair Market Value Rate as aforesaid.
Landlord and Tenant shall each bear the costs of their respective brokers. The
expenses of the third appraiser shall be split equally by the parties. Any term
of this provision to the contrary notwithstanding, Landlord shall not be
required to accept Base Rent for the Extension Term in an amount less than the
Base Rent in effect during the last Lease Year of the initial Lease Term.

    Article IV Base Rent.

        4.1 Tenant shall pay Base Rent in advance, in equal monthly
installments, the first payment to be made simultaneously with Tenant's
execution of this Lease, and the second and subsequent monthly payments to be
made on the first day of each and every calendar month following the Lease
Commencement Date during the Lease Term. If the Lease Term begins on a date
other than on the first day of a month, Base Rent for the month of commencement
shall be prorated at the rate of one thirtieth (1/30th) of the monthly
installment of Base Rent for each day. Tenant will pay all rent to Landlord, at
the office of Landlord, or to such other party or to such other address as
Landlord may designate from time to time by written notice to Tenant.

        4.2 (a) Commencing on the first day of the second Lease Year and on the
first day of each Lease Year thereafter during the Lease Term, annual Base Rent
then in effect shall be increased by three percent (3%) over the Base Rent
payable for the immediately preceding Lease Year.

            (b) Commencing on the first day of the seventh (7th) Lease Year,
annual Base Rent shall be reduced to a per annum rate equal to the sum of (i)
the product of $25.50 multiplied by the rentable square feet comprising the
Premises, net of the cost of electricity, and (ii) accumulated escalations as
set forth in Section 4.2(a) above, which per annum rate shall be subject to
adjustment in accordance with Section 4.2(a) above.

        4.3 All sums payable by Tenant under this Lease shall be payable without
demand, set-off or deduction and shall be paid to Landlord in immediately
available funds in legal tender of the United States by wire transfer or by
check (subject to collection), at the address to which notices to Landlord are
to be given or to such other party or such other address as Landlord may
designate in writing. Landlord's acceptance of rent after it shall have become
due and payable shall not excuse a delay upon any subsequent occasion or
constitute a waiver of any of Landlord's rights.

        4.4 All costs and expenses which Tenant assumes or agrees to pay to
Landlord pursuant to this Lease, including without limitation, Operating
Expenses and Real Estate Taxes (both as hereinafter defined), shall be deemed to
be additional rent ("Additional Rent") and, in the event of nonpayment thereof,
Landlord shall have all the rights and remedies provided for in case of
nonpayment of rent, including assessment of interest and late payment fees. Base
Rent and Additional Rent are sometimes referred to collectively herein as
"rent."

        4.5 If Tenant fails to make any payment of the Base Rent, Additional
Rent or any other sum payable to Landlord on or before the date such payment is
due and payable (without regard to any grace period specified in Section 21.1),
then Tenant shall pay a late charge of three percent (3%) of the amount of such
payment then due for each month such payment remains unpaid. Notwithstanding the
foregoing, Landlord agrees to abate the first two (2) such late charges and
interest thereon in any twelve (12) month period provided Tenant cures the late
installment within five (5) days following written notice to Tenant that
Landlord has not timely received such payment. In addition, such payment and
such late fee shall bear interest at the Default Rate as set forth in Section
21.5 commencing on the fifth (5th) day after the date such payment was due to
the date of payment thereof. Such late charge and interest shall constitute
Additional Rent due hereunder, shall be paid with the next monthly installment
of Base Rent coming due hereunder, shall constitute agreed liquidated damages
and not penalties, and shall be in addition to, and not in lieu of, all other
rights and remedies provided to Landlord in this Lease, at law, or in equity.

    Article V Increases In Operating Expenses.

        5.1 Commencing on the first day of the second Lease Year and thereafter
during the Lease Term and any renewal thereof, Tenant shall pay to Landlord as
Additional Rent Tenant's Operating Expense Percentage of any increase of
Operating Expenses for each Calendar Year falling entirely or partially within
the Lease Term over the Base Operating Expenses.

        5.2 Operating Expenses, as that term is used herein, shall be computed
oil tile accrual basis and shall mean all necessary, reasonable and actual costs
and expenses (excluding the cost of any capital improvements [other than as
provided in item 9

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below] or costs specifically billable to tenants) which Landlord shall pay or
become obligated to pay in connection with the ownership, management operation
and maintenance of the Building, including but not limited to, tile following:

        (1)     Wages, salaries and all benefits and pension payments of all
                employees located on-site and engaged in operating and
                maintenance or security of the Building at the level of building
                manager or below, including taxes, insurance and benefits
                relating thereto.

        (2)     All supplies and materials used in operation and maintenance of
                the Building.

        (3)     Cost of all utilities (including surcharges) for the Building,
                including the cost of elevator, water, sewer, power, heating,
                lighting, air conditioning and ventilating for the Building.

        (4)     Cost of all maintenance and service agreements for the Building
                and the equipment therein, including but not limited to,
                security, concierge and energy management services, window
                cleaning, elevator maintenance and janitorial service.

        (5)     Cost of all insurance relating to the Building, including the
                cost of casualty and liability insurance applicable to the
                Building and Landlord's personal property used in connection
                therewith, and worker's compensation insurance.

        (6)     Cost of repairs and general maintenance (excluding repairs and
                general maintenance paid by proceeds of insurance or by Tenant
                or other third parties, and alterations attributable solely to
                tenants of the Building other than Tenant).

        (7)     A management fee for the managers of the Building approximately
                equivalent to the prevailing market rate charged by other
                management firms operating in Washington, D.C. for the
                management of similarly-classed office buildings, but in no
                event in excess of three percent (3%) of the gross rents of the
                Building.

        (8)     The costs of any additional services made available to all
                tenants generally by Landlord in the prudent management of the
                Building.

        (9)     The cost of any capital improvements made to the Building after
                the Lease Commencement Date that, in Landlord's reasonable
                judgment, are expected to result in a net reduction of Operating
                Expenses or are required under any governmental law or
                regulation first applicable to the Building after issuance of
                the certificate of occupancy for the Building, such cost thereof
                to be amortized over the useful life of the capital improvement,
                as reasonably determined by Landlord, together with interest on
                the unamortized balance at a per annum rate equal to two percent
                (2%) over the Prime Rate published in the Wall Street Journal's
                Money Rates Column on the first business day such capital
                improvements are completed or if such rate is no longer
                published then the rate which is two percentage points in excess
                of the Prime Rate of Nations Bank (Washington, D.C.) or such
                higher rate as may have been paid by Landlord on funds borrowed
                for the purpose of constructing said capital improvements.

        (10)    All personal property taxes and any other taxes which maybe
                assessed during the Lease Term, including any business
                improvement district or similar tax, value added tax, ad valorem
                tax or excise tax. It is agreed that Tenant shall be responsible
                for all ad valorem taxes on Tenant's personal property.

        (11)    Accounting services in connection with Building operations.

        (12)    Costs and expenses associated with the operation of the Shuttle
                (as hereinafter defined).

        Notwithstanding anything to the contrary contained in this Lease,
"Operating Expenses" shall not include the following: (1) income, excess profit,
franchise taxes or other such taxes imposed on or measured by the gross or net
income of Landlord from the operation of the Building; (ii) rent for a
management office and rent and expenses for a marketing office; (iii) any
amounts paid to any person, firm or corporation related to or otherwise
affiliated with Landlord or any general partner, officer, director or
shareholder of Landlord or any of the foregoing, to the extent the same exceeds
arm's length competitive prices paid in the Washington, D.C. area for similar
services or goods; (iv) costs incurred to remove any hazardous materials or
other toxic material or substances from either the Building or the Premises; (v)
costs relating to maintaining Landlord's existence, either as a corporation,
partnership, trust or other entity, such as trustee's fees, annual fees,
partnership expenses and legal and accounting fees (other than with respect to
Building operations); (vi) Landlord's general off-site overhead expenses; (vii)
costs and expenses resulting from the gross negligence or willful misconduct of
landlord or its employees, contractors or agents; (viii) attorney's fees and
other costs and expenses incurred in connection with negotiations or disputes
with current or prospective tenants, other occupants of the Building or third
parties (except as otherwise permitted herein); (ix) capital expenditures
required by Landlord's failure to comply with laws (including ADA) applicable to
the Building as of the Lease Commencement Date; (x) costs incurred for capital
improvements to reduce Operating Expenses above

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the amount actually saved as the result of such capital improvements; (xi) costs
incurred in connection with curing any construction defects; and (xii)
alterations that are considered capital improvements and replacements under
generally accepted accounting principals (except as otherwise permitted herein).

        Operating Expenses shall be reduced by all cash discounts, trade
discounts or quantity discounts received by Landlord or Landlord's managing
agent in the purchase of any goods, utilities or services in connection with the
operation of the Building. In the calculation of any expenses hereunder, it is
understood that there shall be no duplication of charges. If applicable,
Landlord shall use commercially reasonable efforts to effect an equitable
proration of bills for services rendered to the Building and to any other
property owned by Landlord or an affiliate of Landlord. Landlord shall not
recover more than one hundred percent (100%) of the Operating Expenses actually
incurred by Landlord.

        5.3 If the average occupancy rate for the Building during any Calendar
Year (including the Calendar Year in which the Lease Commencement Date occurs)
is less than ninety-five percent (95%), or if any tenant is separately paying
for janitorial services or other services (excepting electricity for tenant
leaseable space in the Building for which there shall be no such "gross-up")
furnished to its premises, then Operating Expenses for such Calendar Year shall
be deemed to include all additional expenses, as reasonably estimated by
Landlord, which would have been incurred during or attributable to such Calendar
Year if such average occupancy rate had been ninety-five percent (95%) and if
Landlord actually paid for janitorial services and other services furnished to
such premises.

        5.4 Prior to the first day of the second Lease Year and thereafter at or
after the beginning of each subsequent Calendar Year subsequent to the Calendar
Year in which Tenant's obligation to pay Additional Rent commences (or more
frequently if deemed necessary by Landlord, but not more than two (2) times per
Calendar Year) Landlord shall submit to Tenant a statement of Landlord's
estimate on an annual basis of any increase in Operating Expenses over the Base
Operating Expenses, and within thirty (30) days after delivery of such statement
Tenant shall pay to Landlord as Additional Rent, an amount equal to one-twelfth
(1/12) of the amount determined to be Tenant's Operating Expense Percentage of
such increases ("Tenant's Share"). In case such estimate is submitted during the
Calendar Year (other than the Calendar Year in which the Tenant's obligation to
pay Additional Rent commences), Tenant shall include with the next monthly
installment of Base Rent (i) a lump sum payment to Landlord equal to one-twelfth
(1/12) of Tenant's Share multiplied by the number of months in such Calendar
Year that will have elapsed prior to the first month the payment required by
clause (ii) hereof is due and (ii) begin paying to the Landlord monthly as
Additional Rent, due and payable on the first day of each month an amount equal
to one-twelfth (1/12) of Tenant's Share. Within five (5) months after the
expiration of the Calendar Year in which Tenant's obligation to pay Additional
Rent commences and each Calendar Year thereafter during the Lease Term, Landlord
shall submit to Tenant a statement showing the determination of the total actual
increase in Operating Expenses and Tenant's Share. If such statement shows that
Tenant's monthly payments pursuant, to this paragraph exceeded Tenant's Share of
the actual increases incurred for the preceding Calendar Year, then Tenant may
deduct such overpayments from its next payment or payments of monthly Base Rent
until fully reimbursed therefor, or at Tenant's request, receive a refund of
such overpayments. If such statement shows that Tenant's Share of Landlord's
actual increases exceeded Tenant's monthly payments for the preceding Lease
Year, the deficiency shall be paid by Tenant within thirty (30) days after
receipt of such statement.

        5.5 If the Lease Term expires on a day other than the last day of a
Calendar Year, respectively, then Tenant's liability for its proportionate share
of increases in Operating Expenses and Real Estate Taxes incurred during such
Calendar Year shall be apportioned by multiplying the amount of Tenant's
liability therefor for the full Calendar Year by a fraction, the numerator of
which is the number of days during such partial Calendar Year, and the
denominator of which is 365. Tenant's liability for payment of its proportionate
share of increases as aforesaid shall survive expiration or termination of this
Lease. If Tenant's monthly estimated payments made during such partial Calendar
Year exceed its actual proportionate share, such excess (after deducting
therefrom any amounts due from Tenant to Landlord) shall be refunded by Landlord
within thirty (30) days after completion of Landlord's reconciliation for that
Calendar Year.

        5.6 Any provision of this Lease to the contrary notwithstanding, the
annual increases in Operating Expenses payable by Tenant shall not exceed seven
percent (7%) of the actual amount of Operating Expenses for the previous Lease
Year.

        5.7 Tenant, at its sole cost and expense, shall have the right to review
Landlord's books and records pertaining to Operating Expenses and Landlord's
calculation of Tenant's Percentage of Operating expenses for any given Lease
Year during the Term. Tenant shall have the right to so audit Landlord's books
and records no more than once during any Lease Year and upon at least fifteen
(15) days prior written notice to Landlord. The audit shall be conducted at a
time mutually convenient to Landlord and Tenant during Business Hours (as
hereinafter defined) at the offices where such books and records are maintained.
The audit shall be conducted by Tenant or a nationally recognized accounting
firm selected by Tenant that is paid a standard fee and not based upon any
savings or reimbursement to Tenant. If the audit reveals that Landlord has
overstated Operating Expenses and collected from Tenant more than the amount
actually due, Landlord will refund the overpayment to Tenant within ten (10)
days after completion of the audit and receipt of Tenant written demand for
payment. If Tenant does not contest a statement of Operating Expenses within one
(1) year after it is delivered to Tenant, such statement shall become binding
and conclusive on Tenant, except that any such statement that

                                       6
<PAGE>   7

contains a material misrepresentation shall not be binding and conclusive on
Tenant until three (3) years after it is delivered to Tenant. If Landlord shall
fail to invoice Tenant for any Additional Rent pursuant to this Article within
three (3) years after such Additional Rent became due and payable, Landlord
shall be deemed to have waived its right to collect such Additional Rent.

    Article VI Increases in Real Estate Taxes.

        6.1 Commencing on the first day of the second Lease Year and thereafter
during the Lease Term, and any renewal thereof, Tenant shall pay to Landlord as
Additional Rent, Tenant's Real Estate Percentage of any increase in Real Estate
Taxes for each Calendar Year falling entirely or partially within the Lease Term
over the Base Real Estate Taxes. Real Estate Taxes shall mean (i) all real
estate taxes, including general and special assessments, if any, which are
imposed upon Landlord or assessed against the Building and/or the land on which
the Building is situated ("Land") during any Calendar Year, and (ii) any other
present or future taxes or governmental charges, including any BID assessments,
that are imposed upon Landlord or assessed against the Building and/or the Land
during any Calendar Year which are in the nature of, in addition to or in
substitution for real estate taxes, including, without limitation, any license
fees, tax measured by or imposed upon rents, or other tax or charge upon
Landlord's business of leasing the Building, but shall not include any federal,
state or local income tax or any gift, transfer, succession, franchise, estate,
inheritance, capital stock, excise or excess profits tax, unless such taxes are
in the nature of or in substitution for Real Estate Taxes. Real Estate Taxes
shall also include all expenses incurred by Landlord in obtaining or attempting
to obtain a reduction of Real Estate Taxes, including but not limited to,
reasonable legal fees. Upon Tenant's written request, Landlord shall furnish
Tenant with evidence of payment of such Real Estate Taxes. Landlord shall not
include in Real Estate Taxes any interest or penalties incurred by Landlord by
reason of Landlord's failure to pay such Real Estate Taxes in a timely manner.
Landlord shall not recover more than one hundred percent (100%) of the Real
Estate Taxes actually incurred by Landlord.

        6.2 Prior to the first day of the second Lease Year and thereafter after
the beginning of each Calendar Year subsequent to the Calendar Year in which
Tenant's obligation to pay Additional Rent commences, Landlord shall submit to
Tenant a statement of Landlord's estimate of any such tax increase over the Base
Real Estate Taxes and within thirty (30) days after delivery of such statement,
Tenant shall pay to Landlord, as Additional Rent, an amount equal to one-twelfth
(1/12th) of the amount determined to be Tenant's aforesaid percentage of such
increase in annual Real Estate Taxes. Within five (5) months after the
expiration of the Calendar Year in which obligation to pay Additional Rent
commences and each Calendar Year thereafter during the Lease Term, Landlord
shall submit to Tenant a statement showing the determination of the total actual
increase in Real Estate 'Faxes and Tenant's proportionate share of such
increase. If such statement shows that Tenant's monthly payments pursuant to
this paragraph exceeded Tenant's share of the actual increase incurred for the
preceding Lease Year, then Tenant may deduct such overpayments from its next
payment or payments of monthly Base Rent until fully reimbursed therefor, or at
Tenant's request, receive a refund of such overpayments. If such statement shows
that Tenant's share of Landlord's actual increase exceeded Tenant's monthly
payments for the preceding Calendar Year, then Tenant shall pay the total amount
of such deficiency to Landlord together with the next monthly installment of
Base Rent due.

        6.3 If the Lease Term expires on a day other than the last day of a
Calendar Year, Tenant's liability for its proportionate share of increases in
Real Estate Taxes incurred during such Calendar Year shall be apportioned by
multiplying the amount of Tenant's liability therefor for the full Calendar Year
by a fraction, the numerator of which is the number of days during such partial
Calendar Year, and the denominator of which is 365. Tenant's liability for a
payment of its proportionate share of increases as aforesaid shall survive
expiration or termination of this Lease. If Tenant's monthly estimated payments
made during such partial Calendar Year exceed its actual proportionate share,
such excess (after deducting therefrom any amounts due from Tenant to Landlord)
shall be refunded by Landlord within thirty (30) days after completion of
Landlord's reconciliation for that Calendar Year.

        6.4 Real Estate Taxes shall be calculated based upon the Calendar Year,
(other than with respect to the first Lease Year only in order to determine the
Base Real Estate Taxes) notwithstanding that the fiscal year for real estate
taxes in the District of Columbia commences on October I of each year. Real
Estate Taxes for any Calendar Year shall be computed based upon the Real Estate
Taxes levied, imposed and assessed for the fiscal year ending September 30 and
those levied, imposed or assessed for the fiscal year commencing on the
immediately succeeding October 1, prorated as appropriate. For example, (a) for
purposes of determining the Base Real Estate taxes, if the Lease Commencement
Date is July 1, 2001, the determination of the Real Estate Taxes for the first
Lease Year shall be made by adding seventy five percent (75%) of the Real Estate
Taxes for October 1, 2001 through September 30, 2002 and twenty five percent
(25%) of the Real Estate Taxes for October 1, 2000 through September 30, 2001;
and (b) the determination of the Real Estate Taxes for the Calendar Year
subsequent to the Calendar Year in which Tenant's obligation to pay Additional
Rent commences shall be made by adding seventy-five percent (75%) of the Real
Estate Taxes for October 1, 2002 through September 30, 2003 and twenty-five
percent (25%) of the Real Estate Taxes for October 1, 2001 through September 30,
2002. In the event of any change by the taxing body in the period for which any
of the Real Estate Taxes are levied, assessed or imposed, Landlord shall have
the right, in its sole discretion, to make appropriate adjustments with respect
to computing Real Estate Taxes provided Tenant is not thereby unduly prejudiced,
Real Estate Taxes which are being contested by Landlord shall be included for
purposes of computing Tenant's proportionate share of increases in Real Estate
Taxes under this Article VI, but if Tenant shall have paid an amount of
increased rent because of such inclusion of contested Real Estate Taxes and
Landlord thereafter receives a

                                       7
<PAGE>   8

refund of such Real Estate Taxes, Tenant shall receive a rent refund, without
interest, for such overpayment, reduced by Tenant's proportionate share of
Landlord's costs incurred in obtaining such refund. Landlord shall have no
obligation to contest, object to or litigate the levying, assessment or
imposition of Real Estate Taxes, and may settle, compromise, consent to, waive
or otherwise determine in its sole discretion any such Real Estate Taxes without
consent to Tenant. Landlord shall have the right to pay any special assessment
by installments and in such event Real Estate Taxes shall include such
installments and interest paid on the unpaid balance of the assessment.

    Article VII Use of Premises.

        7.1 Tenant will use and occupy the Premises solely for general office
purposes consistent with a first class office building in the Washington, D.C.
metropolitan area and only in accordance with the uses permitted under all
applicable laws, ordinances and other municipal regulations and for no other use
or purpose. Tenant will not use or occupy the Premises for any unlawful purpose,
or for any purpose that will constitute a nuisance or unreasonable annoyance to
Landlord or other tenants of the Building, and will comply with all present and
future laws, ordinances, regulations, and orders of the United States of
America, District of Columbia, and any other public or quasi-public authority
having jurisdiction over the Premises. Landlord shall obtain any initial
Certificate of Occupancy required at the time of the commencement of the Lease
Tenn. Any amended or substitute certificate of occupancy necessitated by
Tenant's particular use of the Premises or any alterations made by Tenant in the
Premises shall be obtained by Tenant at Tenant's sole expense.

        7.2 Tenant shall not generate, use, store or dispose of any Hazardous
Material in or about the Building. For purposes of this Lease, "Hazardous
Materials" shall include, but shall not be limited to, (a) "hazardous wastes,"
as defined by the Resource Conservation and Recovery Act of 1976, as amended
from time to time, (b) "hazardous substances," as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any similar law of any jurisdiction in which tile Building is
located, (C) "toxic Substances," as defined by the Toxic Substances Control Act,
as amended from time to time, (d) "hazardous materials," as defined by the
Hazardous Materials Transportation Act, as amended from time to time, (e) oil or
other petroleum products, and (f) any substance whose presence could be
detrimental to the Building or hazardous to health or the environment. Tenant
shall defend (at Landlord's election), indemnify and hold Landlord harmless from
any and all claims, damages, fines, judgments, penalties, costs, liabilities or
losses arising during or after the Lease Term and arising from Tenant's breach
of this Section 7.2. The indemnification pursuant to this Section shall survive
termination or expiration of this Lease. Landlord and Tenant shall promptly
forward to the other copies of all writings received by Landlord or Tenant
relating to any alleged or suspected discharge or the alleged or suspected
presence of any Hazardous Materials in or about tile Premises or tile Building
(to the extent resulting from or relating to Tenant's operations in the
Premises), including without limitation any reports, citations, notices or other
writings by, to or from any governmental or quasi-governmental authority
empowered to regulate or oversee the disposition of Hazardous Materials, whether
demonstrating compliance with applicable law or giving notice of lily request
for information or commencement of investigation, or constituting an informal
request For action or to show cause wily action is not required, a formal
request, or any other administrative or court document. Notwithstanding the
foregoing, Landlord recognizes and acknowledges that Tenant or its agents may
use and store with the Premises reasonable quantities of customary office and
cleaning supplies; provided that (i) such items are stored, used and disposed of
in accordance with applicable federal, state or local law and (ii) Landlord's
acknowledgement of such storage or use shall in no way limit Tenant's indemnity
hereunder. Landlord represents and warrants that to the best of its knowledge
and belief there are no Hazardous Materials on, in or tinder the land upon which
the Building is to be constructed. Landlord covenants not to bring onto the Land
or the Building any Hazardous Materials, except in accordance with applicable
federal, state or local law, Landlord's covenants shall survive tile expiration
or earlier termination of this Lease. Landlord shall indemnify Tenant and hold
it harmless against any claims, damages, losses or liabilities (including
reasonable attorney's fees) incurred by Tenant and arising from any breach of
tile foregoing representation and warranty of Landlord,

    Article VIII Assignment and Subletting.

        8.1 Tenant may not, without first obtaining tile written consent of
Landlord in each instance, which consent may not be unreasonably withheld,
conditioned or delayed (a) assign this Lease or any of Tenant's rights
hereunder, in whole or in part; (b) sublease the Premises or any portion
thereof, (c) license or otherwise grant any person or entity a right to use or
operate, for its own account, the Premises or any portion thereof-, or (d) grant
any person or entity a mortgage, deed of trust or security interest in or to
this Lease or any of Tenant's rights hereunder, or otherwise pledge this Lease
or any of Tenant's rights hereunder (any of the acts referred to in clauses (a)
through (d) of this sentence being hereinafter referred to as a "Transfer"). The
foregoing prohibition shall apply, without limitation, to tile following (each
of which shall constitute a Transfer): (1) any subletting or assignment which
Would otherwise occur by operation of law, merger, consolidation,
reorganization, transfer or other change of Tenant's corporate or proprietary
structure; (2) an assignment or subletting to or by a receiver or trustee in any
Federal or State bankruptcy, insolvency, or other proceedings; or (3) if Tenant
is a partnership, a change of any general partner. Any attempted Transfer made
without Landlord's consent shall at the option of Landlord be deemed an Event of
Default under this Lease. Landlord's acceptance or collection of rent from any
assignee, subtenant or occupant shall not be construed (i) as a consent to or
acceptance of such assignee, subtenant or occupant as a tenant, (ii) as a waiver
by Landlord of any provision hereof, (iii) as a waiver or release of Tenant from
liability for the

                                       8
<PAGE>   9

performance of any obligation to be performed under this Lease by Tenant, or
(iv) as relieving Tenant or any assignee, subtenant or occupant from the
obligation of obtaining Landlord's prior written consent to any subsequent
assignment, subletting or occupancy. In the event of default by any assignee of
Tenant or any successor of Tenant in the performance of any of the terms hereof,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against such assignee or successor. Landlord may consent to Subsequent
assignment or subletting of this Lease or amendments or modifications to this
Lease with assignees of Tenant, without notifying Tenant, or any successor of
Tenant, and without obtaining its or their consent thereto and such action shall
not relieve Tenant of liability under this Lease. All restrictions and
obligations imposed pursuant to this Lease on Tenant shall be deemed to extend
to any subtenant, assignee or occupant of Tenant, and Tenant shall cause such
persons to comply with all Such restrictions and obligations. Tenant shall pay
to Landlord a processing fee not to exceed One Hundred Dollars ($100,00) in
connection with Tenant's request for Landlord to give its consent to any
assignment, subletting, occupancy or mortgage, whether or not Landlord consents
thereto.

        8.2 Notwithstanding the provisions of Section 8.1 above, Tenant may,
without tile consent of Landlord but with a minimum of twenty (20) days prior
written notice to Landlord: (i) assign or sublet this Lease to its parent,
subsidiary, affiliate or any entity that acquires one hundred percent (100%) of
the stock of Tenant (provided that upon such transfer said entity has a net
worth it least equal to that of Tenant as of the date of this Lease), provided
that in the event of an assignment, such assignee assumes, in full, the
obligations of Tenant under this Lease, and such assignment shall not relieve
the Tenant of its obligations hereunder; or (ii) sublet to a subcontractor(s) of
Tenant not more than twenty-five percent (25%) in the aggregate of the Premises.

        8.3 If at any time Tenant wants to assign or sublet all or part of the
Premises or this Lease, then Tenant shall give written notice to Landlord
("Sublease Proposal Notice") of the area proposed to be assigned or sublet (the
"Proposed Sublet Space") and the term for which Tenant desires to sublet the
Proposed Sublet Space and such other information as Landlord shall request.
Landlord shall consent to or reject such proposed subletting or assignment
pursuant to the terms of this Article within twenty (20) days after Landlord's
receipt of Tenant's written notice.

        8.4 If any Transfer (whether by operation of law or otherwise and
whether consented to or not) provides that the subtenant, assignee or other
transferee is to pay any amount in excess of the rent and other charges due
under this Lease (except rental or other payments received which are
attributable to the amortization of the cost of leasehold improvements made to
the sublet or assigned portion of the Premises by Tenant for the subtenant or
assignee, and other reasonable expenses incident to the subletting or
assignment, including standard leasing commissions), then whether such excess is
in the form of an increased monthly or annual rental, a lump sum payment or any
other cash form (and if the subleased or assigned space does not constitute the
entire Premises, the existence of such excess shall be determined on a pro rata
basis), Tenant shall pay to Landlord fifty percent (50%) of any such excess as
Additional Rent (net of all reasonable costs and expenses incurred by Tenant in
leasing the space; such as, brokerage commissions; rental concessions; tenant
improvement allowances; and reimbursement of actual and directs costs of use by
such subtenant of phone system, furniture, administrative support photocopying
and other office equipment) upon such terms as shall be specified by Landlord
and in no event later than ten (10) days after Tenant's receipt thereof. Tenant
expressly waives any right that it might have to retain such excess pursuant to
the provisions of section 365(f) of the Bankruptcy Code. Landlord shall have the
right to inspect and audit Tenant's books and records relating to any Transfer.
Any Transfer shall be effected on a form approved by Landlord.

        8.5 Notwithstanding the foregoing provisions of this Article VIII, if
consent to any Transfer is required by the holder of any mortgage on the
Building, no Transfer shall be permitted without the prior written consent of
such holder.

    Article IX Maintenance.

        9.1 Tenant will keep the Premises and fixtures and equipment therein in
clean, safe and sanitary condition, will take good care thereof, will suffer no
waste or injury thereto, except for ordinary wear and tear and damage by fire or
other casualty which is governed by Article XIX, and will, at the expiration or
other termination of the Lease Term, surrender the same as required by Article
XXIV, Landlord, as part of the Operating Expenses, shall provide and install all
original fluorescent tubes to building standard lighting within the Premises and
all standard replacement tubes for such lighting; all other bulbs, tubes and
lighting fixtures for the Premises shall be provided and installed by Landlord
at Tenant's cost and expense, Tenant's repairs to the Premises shall be limited
to interior, non-structural repairs.

        9.2 Landlord will keep the structure of the Building and general
Building mechanical, electrical and plumbing systems and of the common areas of
the Building in clean, safe and sanitary condition, will take good care thereof,
will suffer no waste or injury thereto, except for ordinary wear and tear and
damage by fire or other casualty which is otherwise governed herein.

    Article X Tenant Alterations.

                                       9
<PAGE>   10

        10.1 The original improvement of the Premises shall be accomplished by
Landlord in accordance with Exhibit B. Landlord is under no obligation to make
any structural or other alterations, decorations, additions, improvements or
other changes (collectively "Alterations") in or to the Premises except as set
forth in Exhibit B or otherwise expressly provided in this Lease. Landlord
represents and warrants that as of the date that a certificate of occupancy is
issued for the Premises, the then existing base Building, Building common areas
and the Premises shall be in compliance with all applicable laws, rules and
regulations (including applicable requirements of any board of fire underwriters
or similar body) and the Americans with Disabilities Act and all regulations
applicable thereto (the "ADA"). Any additional Alterations, which are necessary
in order for the Premises to comply with the requirements of the ADA, such other
laws or amendments thereto, which are not applicable to the Building as of the
date the certificate of occupancy for the Premises is issued, shall be the
responsibility of Tenant except, however, Tenant shall not be responsible for
making any structural improvements, and Tenant hereby agrees to indemnify
Landlord for any loss, claim or damages incurred by Landlord as a result of
'Tenant's failure to make such additional Alterations. Landlord hereby agrees to
indemnify Tenant for any loss, claim or damages incurred by Tenant as a result
of Landlord's failure to make any additional Alterations that Landlord is
required to make hereunder.

        10.2 Except as expressly provided herein, Tenant shall not make or
permit anyone to make any Alterations in or to the Premises or the Building,
without Landlord's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed with respect to proposed
Alterations to the Premises that are not visible from the exterior of the
Premises, do not affect the Building's structure, and do not impair the
Building's mechanical, electrical, plumbing or HVAC systems. Any Alterations
made by Tenant shall be made: (a) in a good, workmanlike, first-class and prompt
manner; (b) using new materials only; (c) by a contractor and in accordance with
plans and specifications approved in writing by Landlord; (d) in accordance with
all applicable legal requirements and requirements of any insurance company
insuring the Building or portion thereof, including, but not limited to,
compliance with the Americans with Disabilities Act: and (e) after Tenant has
obtained and delivered to Landlord written, unconditional waivers of mechanics'
and materialmen's liens against the Premises and the Building from all proposed
contractors, subcontractors, laborers and material suppliers for all work and
materials in connection with such Alterations. During the course of performance
of said work, Tenant will carry or cause to be carried insurance as may from
time to time be required by Landlord naming Landlord and Landlord's managing
agent as additional insureds and further providing that such insurance cannot be
canceled or reduced in amount without thirty (30) days prior written notice to
Landlord and Landlord's managing agent. In furtherance of the foregoing and not
in limitation thereof, Tenant shall require any contractor performing work on
the Premises to carry and maintain, at no expense to Landlord, the following
insurance policies, with no deductibles: (1) commercial general liability
insurance, including coverage for contractor's liability, products liability,
blanket contractual liability, completed operations coverage, broad form
property damage liability and contractor's protective liability coverage, to
afford protection with lit-nits, for each occurrence, of at least Five Million
Dollars ($5,000,000) with respect to personal injury or death, and One Million
Dollars ($1,000,000) with respect to property damage; (2) worker's compensation
or similar insurance in form and amounts required by law; and (3) auto liability
insurance covering all owned, non-owned and hired vehicles in an amount not less
than One Million Dollars ($1,000,000). Tenant shall be allowed to make
non-structural alterations, which are decorative in nature, up to $72,000
without Landlord's prior written consent.

        10.3 If any mechanic's or materialmen's lien or notice of intent with
respect thereto is filed against the Premises or the Building for work claimed
to have been done for, or materials claimed to have been furnished to, Tenant
(other than for the Tenant Improvements performed by Landlord pursuant to
Exhibit B), such lien shall be discharged by Tenant within ten (10) days
thereafter, at Tenant's sole cost and expense, by the payment thereof or by
filing any bond required by law, and Tenant hereby agrees to indemnify and save
Landlord harmless from any legal expenses which Landlord may reasonably incur as
a result of the filing of the lien or notice of intent and/or from any loss or
liability incurred as a result of any lien filed against the Premises and/or
Tenant. If Tenant shall fail to discharge any such mechanic's or materialmen's
lien within thirty (30) days of notice thereof, Landlord may, at its option,
discharge the same and treat the cost thereof as Additional Rent payable with
the monthly installment of rent next becoming due; it being hereby expressly
covenanted and agreed that such discharge by Landlord shall not be deemed to
waive or release the default of Tenant in not discharging the same. It is
understood and agreed by Landlord and Tenant that any such Alterations shall be
conducted on behalf of Tenant and Landlord shall have no liability with respect
thereto. It is further understood and agreed that in the event Landlord shall
give its written consent to Tenant's making any such Alterations, such written
consent shall not be deemed to be an agreement or consent by Landlord to subject
Landlord's interest in the Premises, the Building or the Land to any mechanic's
or materialmen's liens which may be filed in respect of any such Alterations
made by or on behalf of Tenant.

        10.4 All Alterations, including wall-to-wall carpet, upon the Premises
(whether with or without the prior written consent of Landlord) shall, at the
election of Landlord (which election shall, upon written request from Tenant, be
made at the time of the installation of such Alterations) remain upon the
Premises, become property of Landlord, and be surrendered with the Premises at
the expiration of this Lease without disturbance, molestation or injury,
provided, however, that if Tenant is not in default in the performance of any of
its obligations under this Lease beyond any applicable cure period, Tenant shall
have the right to remove, prior to the expiration of the Lease Term, all movable
furniture, furnishings, or equipment installed in the Premises at the expense of
Tenant. Should Landlord elect that Alterations made by Tenant upon the Premises
be removed upon termination of this Lease or upon termination of any renewal
period hereof, Tenant hereby agrees to cause same to be removed at Tenant's sole
cost and expense, and should Tenant fail to remove the same then and in such
event Landlord may cause same to be removed at Tenant's expense and

                                       10
<PAGE>   11

Tenant hereby agrees to reimburse Landlord for the cost of such removal together
with any and all damages which Landlord may suffer and sustain by reason of the
failure of Tenant to remove the same.

        10.5 Tenant will indemnify and hold Landlord harmless from and against
any and all expenses, liens, claims or damages to person or property which may
or might arise directly or indirectly by reason of the making of any such
Alterations except to the extent arising from the gross negligence or willful
misconduct of Landlord or any of its agents, employees or contractors. If any
such Alteration is made without the prior written consent of Landlord, Landlord
may correct or remove the same, and Tenant shall be liable for any and all
expenses incurred by Landlord in the performance of this work.

    Article XI Signs; Furnishings.

        11.1 No sign, advertisement or notice shall be inscribed, painted,
affixed or otherwise displayed on any part of the outside or the inside of the
Building except on the directories and doors of offices, and then only in such
place, number, size, color and style as is reasonably approved by Landlord and
provided by Landlord at Landlord's cost and expense; if any such sign,
advertisement or notice is nevertheless exhibited by Tenant, Landlord shall have
the right to remove the same and Tenant shall be liable for any and all expenses
incurred by Landlord in said removal. Other than any first (1st) floor tenant,
no tenant of the Building shall be permitted to have exterior signage. Any
permitted tenant exterior signage shall be limited to identifying a first (1st)
floor tenant's location, shall be generally in the vicinity of such tenant's
entrance and shall be limited to the first (is) floor of the Building. Landlord
shall have the right to prohibit any advertisement of Tenant which in Landlord's
reasonable opinion tends to impair the reputation of the Building or its
desirability as a high-quality building for offices or for financial, legal,
insurance and other institutions of like nature, and upon written notice from
Landlord, Tenant shall immediately refrain from and discontinue any such
advertisement. Landlord reserves the right to install and display signs,
advertisements and notices on any part of the exterior or interior of the
Building other than within the Premises.

        11.2 Landlord shall have the right to prescribe the weight and position
of safes and other heavy equipment or fixtures, which shall, if considered
necessary by Landlord, stand on plank strips to distribute the weight. Any and
all damage or injury to the Premises or the Building caused by moving the
property of Tenant into, in or out of the Premises, or due to the same being on
the Premises, shall be repaired by, and at the sole cost of, Tenant. No
furniture, equipment or other bulky matter of any description will be received
into the Building or carried in the elevators except as approved by Landlord,
and all such furniture, equipment and other bulky matter shall be delivered only
through the designated delivery entrance of the Building. All moving of
furniture, equipment and other materials shall be under the direct control and
supervision of Landlord who shall, however, not be responsible for any damage to
or charges for moving the same. Tenant agrees promptly to remove from the
sidewalks adjacent to the Building any of Tenant's furniture, equipment or other
material there delivered or deposited.

    Article XII Tenant's Equipment.

        Tenant will not install or operate in the Premises any electrically
operated equipment or other machinery, other than standard electric typewriters,
personal computers, telephone system, telecopiers, adding machines, radios,
televisions, clocks and copying machines, coffee machines, microwaves,
refrigerators and customary equipment used for office purposes without first
obtaining the prior written consent of Landlord. Tenant shall not install any
other equipment of any kind or nature whatsoever which will or may necessitate
any changes, replacements or additions to, or in the use of, the water system,
heating system, plumbing system, air-conditioning system, or electrical system
of the Premises or the Building without first obtaining the prior written
consent of Landlord. Business machines and mechanical equipment belonging to
Tenant which cause noise or vibration that may be transmitted to the structure
of the Building or to any space therein to such a degree as to be objectionable
to Landlord or to any tenant shall be installed and maintained by Tenant, at
Tenant's expense, on vibration eliminators or other devices sufficient to
eliminate such noise and vibration.

    Article XIII Security Deposit.

        Tenant shall deposit with Landlord the Security Deposit, which is in the
form of a letter of credit(s) (the "Letter of Credit"), as follows: one-half of
the amount of the Security Deposit upon the full execution of this Lease; and
the balance of the amount of the Security Deposit upon the commencement of the
Excavation. The Letter of Credit must be irrevocable, unconditional, payable at
sight; must be renewable annually during the Term; must name Landlord as the
sole beneficiary; and must be reasonably satisfactory to Landlord in all other
respects. At least thirty (30) days prior to the expiration of the Letter of
Credit (or any extension thereof), Tenant shall deliver to Landlord an
endorsement to the Letter of Credit extending the expiration date thereof for an
additional one year period. Tenant's failure to timely deliver such endorsement
shall constitute an Event of Default under this Lease. Provided that no Event of
Default has occurred and no condition exists that with the giving of notice or
the passage of time, or both, would constitute an Event of Default, the Letter
of Credit shall be reduced as follows: (a) upon the expiration of the second
Lease Year, the Letter of Credit shall be reduced to $184,525.00; (b) upon the
expiration of the fourth Lease Year, the Letter of Credit shall be reduced to
$92,262.50; and (c) upon tile expiration of the sixth Lease Year, the Letter of
Credit shall be reduced to zero. The Security Deposit

                                       11
<PAGE>   12

shall be security for Tenant's performance of its obligations under this Lease.
Within three (3) days after written notice of Landlord's use of the Security
Deposit or any portion thereof, Tenant shall deposit with Landlord cash in an
amount sufficient to restore the Security Deposit to its amount prior to such
use, and Tenant's failure to do so shall constitute an Event of Default
hereunder. Within approximately thirty (30) days after the later of (a) the
expiration or earlier termination of the Lease Term, or (b) Tenant's vacating
the Premises, Landlord shall return the Security Deposit less such portion
thereof as Landlord shall have used to satisfy Tenant's obligations under this
Lease. If Landlord transfers the Security Deposit to any transferee of the
Building or Landlord's interest therein, then such transferee shall be liable to
Tenant for the return of the Security Deposit and Landlord shall be released
from all liability for the return of the Security Deposit. Any such transferee
shall provide Tenant with a written acknowledgment that it has received the
Security Deposit. The holder of any mortgage shall not be liable for the return
of the Security Deposit unless such holder actually receives the Security
Deposit.

    Article XIV Inspection

        Tenant will permit Landlord, or its agents or other representatives upon
24 hours prior notice (except in case of an emergency, where no prior notice
shall be required), to enter the Premises, without charge therefor to Landlord
and without diminution of the rent payable by Tenant, to examine, inspect and
protect the Premises and the Building and to make such Alterations and/or
repairs to the Building, including the common areas of the Building, as in the
reasonable judgment of Landlord may be deemed necessary, and to make any
Alterations and/or repairs to the Premises as Landlord, in its reasonable
judgment, may deem necessary, or to exhibit the same to prospective tenants,
purchasers or mortgagees during the Lease Term. In connection with any such
entry, Landlord shall endeavor to minimize the disruption to Tenant's use of the
Premises.

    Article XV Insurance.

        15.1 Landlord agrees that it will keep the Building (excluding any
Tenant improvements) insured against loss due to fire and other property risks
included in all risk coverage insurance policies, and covering loss of income
from such property risk, or in lieu thereof, insure the Building against loss or
damage as a self insurer. In addition, Landlord shall maintain: (i) commercial
general liability insurance with minimum limits of $2,000,000 for injury to or
death of one or more persons in any one occurrence and $2,000,000 for damage to
or destruction of property in any one occurrence; (ii) employer's liability
insurance with a minimum limit of $1,000,000 for bodily injury; and (iii)
workmen's comprehensive insurance in statutory limits. At Tenant's written
request, Landlord shall furnish to Tenant a certificate or certificates of
insurance evidencing such required insurance. Any insurance required to be
maintained by Landlord hereunder may be under a blanket policy (or policies)
covering other properties of Landlord and/or its related or affiliated entities.
If such insurance is maintained under a blanket policy, at Tenant's written
request, Landlord shall procure and deliver to Tenant a statement from the
insurer or general agent of the insurer setting forth the coverage maintained
and the amounts thereof allocated to the risks intended to be- insured
hereunder. Throughout the Lease Term, Tenant shall insure the improvements
within the Premises (whether installed by Tenant or Landlord), the contents of
the Premises, including, without limitation, alterations, decorations,
furnishings, fixtures and equipment used or installed in the Premises by or on
behalf of Tenant, and the other personal property of Tenant in the Premises,
against loss due to fire and other property risks included in standard all risk
coverage insurance policies, in an amount equal to the replacement cost thereof
and covering loss of income from such property risk. All insurance carried by
Tenant hereunder shall be primary and not contributing with any insurance
carried by Landlord.

        15.2 Landlord and Tenant agree to obtain and maintain throughout the
term of this Lease endorsements to their respective All Risk Coverage policies
waiving the right of subrogation of their insurance companies against the other
party and its agents and employees. Each party hereto waives all claims for
recovery from the other party for any loss or damage to any of its property
arising from a risk insured against in the All Risk Coverage insurance policies
required to be carried pursuant to this article, even though such loss was
caused by the negligence of the Landlord or Tenant, their agents and employees
and even though Landlord or Tenant may not actually have maintained such
coverage.

        15.3 To assure the indemnity set forth in Section 17.2 hereof, Tenant,
at Tenant's expense, shall carry and keep in full force and effect at all times
during the Term of this Lease for the protection of Landlord, Landlord's
managing agent, Landlord's mortgagee (if requested by Landlord), and Tenant,
commercial general liability insurance on an occurrence basis protecting against
any liability occasioned by any occurrence on or about the Premises and
containing contractual liability coverage. Such insurance shall be initially in
minimum amounts of Two Million Dollars ($2,000,000) per occurrence and shall be
for a minimum term of one (1) year. Each of said policies of insurance shall
name Landlord and Landlord's managing agent as an additional insured, and if
requested by the holder of any mortgage or deed of trust against the Building,
the public liability policy referred to above shall also name such holder as an
additional insured. Each policy shall contain an endorsement which provides that
no cancellation or reduction of coverage may be made without first giving
Landlord and, if named as an additional insured, the holder of any mortgage or
deed of trust on the Building, at least thirty (30) days prior written notice of
such proposed action. All insurance policies required under this Lease shall be
issued by insurance companies licensed to do business in the jurisdiction
wherein the Building is located with a financial rating of at least an A:XlI as
rated in the most recent edition of Best Insurance Reports and in business for
the past five (5) years. On or before the Lease Commencement Date, and
thereafter not less than fifteen (15) days prior to the expiration dates of said

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<PAGE>   13

policy or policies, Tenant shall provide copies of policies or certificates of
insurance (Accord 27) evidencing the coverages required by this Article. The
aforesaid insurance limits may be reasonably increased from time to time by
Landlord.

    Article XVI Services and Utilities.

        Landlord will furnish reasonably adequate water, lavatory supplies,
fluorescent tube replacements, automatically operated elevator service,
maintenance and preventive maintenance service for the heating and air
conditioning equipment (but not the cost of electricity for the operation of
said equipment), and cleaning and char service in accordance with Exhibit E
attached hereto (Monday through Friday, excluding holidays). The HVAC service
provided by Landlord to the Premises shall be separately metered and controlled
by Tenant and such service within the Premises shall be available to Tenant 24
hours a day, seven (7) days a week at no additional cost to Tenant. The HVAC
specifications are set forth in Schedule 4 to the Work Agreement. Landlord
agrees that (a) the Building condenser water system shall be available to Tenant
24 hours a day, seven (7) days a week at no additional cost to Tenant and (b)
all main self contained air conditioning units serving the Premises shall be
available to Tenant 24 hours a day, seven (7) days a week at no additional cost
to Tenant, except for the cost of electricity to operate such units. The hours
of 7:00 a.m. to 6:00 p.m. on Mondays through Fridays (exclusive of federal
holidays) and from 9:00 a.m. to 1:00 p.m. on Saturdays (exclusive of federal
holidays) are the "Building Hours." Tenant shall have access to the Premises 24
hours a day, seven (7) days a week (subject to the rules and regulations
established from time to time by Landlord). There will be a minimum of one (1)
elevator in operation at all times (i.e., 24 hours per day, 7 days per week)
outside the Building Hours. Tenant shall not permit anyone, except for Tenant's
employees and authorized guests to enter the Building at times other than the
normal hours of operation of the Building. Tenant will comply, and will cause
its permitted sublessees and their respective employees to comply, with all
governmental regulations and orders concerning separation and recycling of trash
and rubbish. Tenant shall promptly pay when due for all electricity used for the
Premises, which shall be measured by a meter (installed by Landlord at
Landlord's sole cost and expense) that measures the electrical usage for the
Premises. If the Premises are separately submetered, Tenant shall be responsible
for contracting directly with the local electricity supplier. If the Premises
are not separately submetered, Landlord shall determine, based upon the ratio
that the square footage of the Premises bears to t he total square footage
covered by such meter, the amount that Tenant will be billed for electrical
usage each month and Tenant shall pay such charge within ten (10) days after
demand therefor. In addition, Tenant will be billed by Landlord each month for
Tenant's Operating Expense Percentage for the actual and direct charge of
electricity for the Building and Tenant shall pay such charge within ten (10)
days after demand therefor. The parties agree to comply with all mandatory and
voluntary energy conservation controls and requirements applicable to office
buildings that are imposed or instituted by the federal or District of Columbia
governments, including, without limitation, controls on the permitted range of
temperature settings and requirements necessitating curtailment of the volume of
energy consumption or the hours of operation of the Building. Any terms or
conditions of this Lease that conflict with compliance with such controls or
requirements shall be suspended for the duration of such controls or
requirements. It is further agreed that compliance with such controls or
requirements shall not be considered an eviction, actual or constructive, of
Tenant and shall not entitle Tenant to terminate this Lease or to an abatement
of any rent payable hereunder. It is understood and agreed that Landlord shall
not be liable for failure to furnish or for delay or suspension in furnishing,
any of the utilities or services required to be provided or performed by
Landlord caused by breakdown, maintenance, repairs, strikes, scarcity of labor
or materials, acts of God, voluntary agreement between Landlord and any
governmental body or agency or from any other cause whatsoever. It is further
agreed that any such failure or inability to furnish the utilities or services
required hereunder shall not be considered an eviction, actual or constructive,
of Tenant from the Premises, and shall not entitle Tenant to terminate this
Lease or to an abatement of any rent payable hereunder. Landlord shall use
reasonable diligence to repair promptly any failure, interruption or suspension
which is within Landlord's control.

        Notwithstanding the foregoing, if any interruption of utilities or
services, which is due to the negligence of Landlord, its agents or employees,
shall continue for more than three (3) consecutive business days and shall
render any portion of the Premises unusable for the normal conduct of Tenant's
business, and if Tenant does not in fact use or occupy such portion of the
Premises, then all rent payable hereunder with respect to such portion of the
Premises that Tenant does not occupy shall be abated retroactively to the first
(1st) business day of such interruption and such abatement shall continue until
such utility or service is fully restored to Tenant. Provided that if such
interruption continues for more than thirty (30) consecutive business days,
Tenant shall have the right to terminate this Lease upon written notice to
Landlord delivered within ten (10) days after such 30-day period. Thereupon,
this Lease shall terminate and expire on the date set forth in such notice,
which date shall not be earlier than the date of the interruption of services
nor more than ninety (90) days after the date of such notice. Except in the case
of an emergency, Landlord will give Tenant at least five (5) days prior notice
if Landlord intends to interrupt any services required to be furnished by
Landlord hereunder.

        Within twenty (20) days after Landlord's receipt of Tenant's written
request that the Premises be cleaned only by United States citizens, Landlord
shall cause the Premises to be cleaned only by United States citizens. Tenant
shall be responsible for any additional costs and expenses associated with
Tenant's request; provided, however, that if any other tenant(s) in the Building
also requires this service, the tenants requiring this service shall be solely
responsible for any additional costs and expenses in proportion to the amount of
space leased by such tenant in the Building. Landlord shall make reasonable
efforts so as not to incur unnecessary cost and expense with respect to this
service.

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<PAGE>   14

    Article XVII Liability of Landlord.

        17.1 Except as otherwise expressly set forth herein, Landlord, its
employees and agents shall not be liable to Tenant, its employees, agents,
invitees or any person or entity claiming through Tenant for any damage
(including indirect and consequential damage), injury, loss or claim (including
claims for the interruption of or loss to business) based on or arising out of
any cause whatsoever (except as otherwise provided in this Section), including
without limitation the following: repair to any portion of the Premises or the
Building; interruption in the use of the Premises or any equipment therein; any
accident or damage resulting from any use or operation (by Landlord, Tenant or
any other person or entity) of elevators or heating, cooling, electrical,
sewerage or plumbing equipment or apparatus termination of this Lease by reason
of damage to the Premises or the Building; fire, robbery, theft, vandalism,
mysterious disappearance or any other casualty; actions of any other tenant of
the Building or of any other person or entity; failure or inability of Landlord
to furnish any utility or service specified in this Lease; and leakage in any
part of the Premises or the Building, or from water, rain, ice or snow that may
leak into, or flow from, any part of the Premises or the Building, or from
drains, pipes or plumbing fixtures in the Premises or the Building. Any property
stored or placed by Tenant or its employees, agents, invitees or any other
person or entity claiming through Tenant in or about the Premises or the
Building shall be at the sole risk of Tenant, and Landlord shall not in any
manner be held responsible therefor. If any employee of Landlord receives any
package or article delivered for Tenant, then such employee shall be acting as
Tenant's agent for such purpose and not as Landlord's agent, For purposes of
this Article, the term "Building" shall be deemed to include the land.
Notwithstanding the foregoing provisions of this Section, Landlord shall not be
released from liability to Tenant for any loss, damage, or injury caused solely
by the (i) negligence of Landlord, it's employees, agents or contractors if
Landlord is required hereunder to maintain insurance for such loss, damage or
injury, or (ii) otherwise by the gross negligence or willful misconduct of
Landlord, it's employees, agents or contractors.

        17.2 Tenant shall indemnify and hold Landlord, its employees and agents
harmless from and against all costs, damages, claims, liabilities, fines, suits,
expenses and damages of any kind (including attorneys' fees) asserted by or on
behalf of any person, entity or governmental authority against Landlord,
directly or indirectly, based on or arising out of (a) Tenant's use and
occupancy of the Premises or the business conducted by Tenant therein, (b) any
act or omission of Tenant or any employee, agent or invitee of Tenant, (c) any
failure of Tenant to perform any of Tenant's obligations under this Lease, or
(d) any accident, injury or damage whatsoever caused to any person, or the
property of any person, occurring in or about the Premises unless the same was
caused solely by the gross negligence or willful misconduct of Landlord, its
employees, agents or contractors. Landlord shall indemnify, defend and hold
Tenant harmless from and against any damage, claim, liability, cost or expense
arising from injury or damage to any persons, property (including, without
limitation, any theft or destruction of Tenant's intellectual property) or
business incurred by or claimed against Tenant arising from the (i) negligence
of Landlord, it's employees, agents or contractors if Landlord is required
hereunder to maintain insurance for such loss, damage or injury, or (ii) gross
negligence or willful misconduct of Landlord, it's employees, agents or
contractors.

        17.3 If any landlord hereunder transfers the Building or such landlord's
interest therein, then such landlord shall not be liable for any obligation or
liability based on or arising out of any event or condition occurring on or
after the date of such transfer. Within thirty (30) days after any such
transferee's request, Tenant shall attorn to such transferee and execute,
acknowledge and deliver any requisite or appropriate document submitted to
Tenant confirming such attornment

        17.4 Except as otherwise expressly set forth herein, Tenant shall not
have the right to offset or deduct the amount allegedly owed to Tenant pursuant
to any claim against Landlord from any rent or other sum payable to Landlord.
Tenant's sole remedy for recovering upon such claim shall be to institute an
independent action against Landlord. Tenant shall not seek tile consolidation of
any such action brought by Tenant with any action brought by Landlord hereunder
unless required by law.

        17.5 If Tenant or any employee, agent or invitee of Tenant is awarded a
money judgment against Landlord, then recourse for satisfaction of such judgment
shall be limited to execution against Landlord's estate and interest in the
Building or the proceeds from the sale of tile Building throughout tile Term (or
the amount of the proceeds from tile sale or transfer of the Building or
partnership interest if such proceeds have been distributed or commingled with
other funds of the Landlord or any other entity). No other asset of Landlord,
any partner of Landlord or any other person or entity shall be available to
satisfy, or be subject to, Such judgment, nor shall any such partner, person or
entity be held to have personal liability for satisfaction of any claim or
judgment against Landlord or any partner of Landlord.

    Article XVIII Rules and Regulations.

        Tenant, its agents. employees, and invitees shall at all times abide by
and observe tile rules and regulations attached hereto as Exhibit D. In
addition, Tenant, its agents, employees, and invitees, shall abide by and
observe such other rules or regulations as may be promulgated from time to time
by Landlord, with a copy sent to Tenant, for the operation and maintenance of
tile Building: provided, however, that the same are not inconsistent with the
provisions of this Lease. Promptly after receipt or Tenant's written notice that
a tenant of the Building is violating the Building's rules and regulations,
Landlord shall take commercially reasonable steps to enforce such rules and
regulations against the breaching tenant. Landlord agrees not to enforce the
rules and regulations in a

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<PAGE>   15

discriminatory manner as between tenants of the Building. If there is any
inconsistency between this Lease and the rules and regulations as set forth in
Exhibit D, this Lease shall govern.

    Article XIX Damage.

        19.1 If the Premises or tile Building are totally or partially damaged
or destroyed thereby rendering the Premises totally or partially inaccessible or
unusable, then Landlord shall diligently repair and restore the Building and,
only to the extent insurance proceeds are made available from Tenant's insurer,
the improvements within the Premises, to substantially the same condition they
were in prior to such damage or destruction; provided, however, that if (i) in
Landlord's judgment such repair and restoration cannot be completed within one
hundred eighty (180) days after the occurrence of such damage or destruction
(taking into account the time needed for effecting a satisfactory settlement
with any insurance company involved, removal of debris, preparation of plans and
issuance of all required governmental permits) or (ii) twenty percent (20%) or
more of the Premises is damaged and less than six (6) months would remain of the
Lease Term or any renewal thereof upon completion of the repairs, then Landlord
shall have the right, at its sole option, to terminate this Lease as of the
sixtieth (60th) day after such damage or destruction by giving written notice of
termination within forty-five (45) days after the occurrence of such damage or
destruction.

        19.2 If this Lease is terminated pursuant to Section 19.1 above, then
all rent shall be apportioned (based on the portion of tile Premises which is
usable after such damage or destruction) and paid to tile date of termination.
If this Lease is not terminated as a result of such damage or destruction, then
until such repair and restoration of the Building and, provided insurance
proceeds for the replacement of tile improvements within the Premises are made
available from Tenant's insurer, the Premises are substantially complete, Tenant
shall be required to pay the Base Rent and Additional Rent only for the portion
of the Premises that is usable while such repair and restoration are being made.
Landlord shall bear the expenses of repairing and restoring tile Building-,
provided, however, that Landlord (i) shall not be required to repair or restore
the contents of tile Premises, including without limitation, alterations,
decorations, furnishings, fixtures and equipment used or installed in the
Premises by or oil behalf of Tenant and any other personal property of Tenant,
and (ii) shall be required to repair and restore the improvements within the
Premises only to the extent that insurance proceeds for same are made available
from Tenant's insurer. Tenant shall not be entitled to any compensation or
damages from Landlord for loss of tile use of tile whole or any portion of the
Premises or for any inconvenience or annoyance occasioned by any such damage,
repair or restoration.

        19.3 Notwithstanding anything herein to the contrary, Landlord shall not
be obligated to restore the Premises or the Building and shall have the right to
terminate this I-ease if (a) the holder of any mortgage fails or refuses to make
insurance proceeds available for such repair and restoration, (b) zoning or
other applicable laws or regulations do not permit such repair and restoration,
or (c) the cost of repairing and restoring the Building would exceed fifty
percent (50%) of tile replacement value of tile Building, whether or not the
Premises are damaged or destroyed, provided the leases of all other tenants in
the Building are similarly terminated.

        19.4 If, after electing to restore the Premises, Landlord does not
complete the restoration within one hundred eighty (180) days after the
occurrence of such damage or destruction (taking into account the time needed
for effecting a satisfactory settlement with any insurance company involved,
removal of debris, preparation of plans and issuance of all required
governmental permits), Tenant shall have the right to terminate this Lease by
delivering written notice to Landlord thereof within thirty (30) days after such
180-day period.

    Article XX Condemnation.

        20.1 If all or any portion of the Premises or Occupancy thereof shall be
permanently taken or condemned by any governmental or quasi-governmental
authority for any public or quasi-public use or purpose or sold under threat of
such a taking or condemnation (collectively, "Condemnation"), and such
Condemnation shall materially and adversely affect Tenant's use of the Premises
then this Lease shall terminate on the date possession thereof is taken by
authority and rent shall be apportioned as of such date. In the event of the
Condemnation of any portion of the Premises which does not materially and
adversely affect Tenant's use of the Premises, then this Lease shall continue in
full force and effect as to the part of the Premises not condemned, except that
as of the date possession is taken by such authority Tenant shall not be
required to pay the Base Rent and Additional Rent with respect to the part of
the Premises condemned. Notwithstanding anything herein to the contrary, if
twenty-five (25%) or more of the land or the Building is condemned, then whether
or not any portion of the Premises is condemned, Landlord shall have the right
to terminate this Lease as of the date title vests in such authority.

        All awards, damages and other compensation paid by such authority on
account of such Condemnation shall belong to Landlord, and Tenant assigns to
Landlord all rights to such awards, damages and compensation. Tenant shall not
make any claim against Landlord or the authority for any portion of such award,
damages or compensation attributable to damage to the Premises, value of the
un-expired portion of the Lease Term, loss of profits or goodwill, leasehold
improvements or severance damages. Tenant may, if allowed by statute, seek such
awards or damages for moving expenses, loss of profits and fixtures, alterations
or

                                       15
<PAGE>   16

improvements and other equipment installed by Tenant which do not, under the
terms of this Lease, become the property of Landlord at the termination hereof.
Such awards or damages must be made by a condemnation court or other authority
and must be separate and distinct from any award to Landlord for the Land and
Building and shall not diminish any award of Landlord.

    Article XXI Default of Tenant.

        21.1 Each of the following shall constitute an Event of Default: (a)
Tenant's failure timely to make any payment of the Base Rent, Additional Rent or
any other sum within five (5) days after written notice thereof from Landlord;
(b) Tenant's violation or failure to perform or observe any other covenant or
condition, which violation or failure continues for a period of thirty (30) days
after written notice thereof from Landlord, or if such violation or failure is
remediable but is of such a nature that it cannot be remedied within such thirty
(30) day period, then for such longer period (not to exceed sixty (60) days) as
may reasonably be required, provided that Tenant promptly commences and
diligently pursues such remedy to completion; (c) an Event of Bankruptcy as
specified in Article XXII with respect to Tenant, any general partner of Tenant
(a "General Partner") or any Guarantor; or (d) Tenant's dissolution or
liquidation.

        21.2 If there shall be an Event of Default, including an Event of
Default prior to the Lease Commencement Date, then Landlord shall have the
right, at its sole option, to terminate this Lease. In addition, with or without
terminating this Lease, Landlord may re-enter, terminate Tenant's right of
possession and take possession of the Premises. The provisions of this Article
shall operate as a notice to quit, any other notice to quit or of Landlord's
intention to re-enter the Premises being hereby expressly waived. If necessary,
Landlord may proceed to recover possession of the Premises under and by virtue
of the laws of the District of Columbia, or by such other proceedings, including
re-entry and possession, as may be applicable. If Landlord elects to terminate
this Lease and/or elects to terminate Tenant's right of possession, then
everything contained in this Lease to be done and performed by Landlord shall
cease, without prejudice, however, to Landlord's right to recover from Tenant
all rent and other sums due under the terms and conditions of this Lease as set
forth below. Whether or not this Lease and/or Tenant's right of possession is
terminated, Landlord may, but shall not be obligated to, relet the Premises or
any part thereof, alone or together with other premises, for such rent and upon
such terms and conditions (which may include concessions or free rent and
alterations of the Premises) as Landlord, in its sole discretion, may determine,
but Landlord shall not be liable for, nor shall Tenant's obligations be
diminished by reason of, Landlord's failure to relet the Premises or collect any
rent due upon such reletting. Whether or not this Lease is terminated, Tenant
nevertheless shall remain liable for any Base Rent, Additional Rent or damages
which may be due or sustained prior to such default, all costs, fees and
expenses (including without limitation reasonable attorneys' fees, brokerage
fees, expenses incurred in placing the Premises in a similar rentable condition
and tenant finish necessitated to obtain the new tenant) incurred by Landlord in
pursuit of its remedies and in renting the Premises to others from time to time.
Tenant shall also be liable for additional damages which at Landlord's election
shall be either:

                (a) an amount equal to the Base Rent and additional rent which
would have become due during the remainder of the Lease Term, less the amount of
rental, if any, which Landlord receives during such period from others to whom
the Premises may be rented (other than any Additional Rent payable as a result
of any failure of such other person to perform any of its obligations), which
damages shall be computed and payable in monthly installments, in advance, on
the first day of each calendar month following Tenant's default and continuing
until the date on which the Lease Term would have expired but for Tenant's
default, Separate suits may be brought to collect any such damages for any
month(s), and such suits shall not in any manner prejudice Landlord's right to
collect any such damages for any subsequent month(s), or Landlord may defer any
such suit until after the expiration of the Lease Term, in which event the cause
of action shall be deemed not to have accrued until the expiration of the Lease
Term: or

                (b) an amount equal to the Present Value Damages. "Present Value
Damages" shall be an amount equal to the present value (as of the date of
Tenant's default) of the difference between (i) the Base Rent and Additional
Rent which would have become due through the date on which the Lease Term would
have expired but for Tenant's default and (ii) the fair market rental value (as
reasonably determined by Landlord) that would be derived from the reletting of
the Premises for the same period, which Present Value Damages shall be payable
to Landlord in a lump sum on demand. For purpose of this Section, present value
shall be computed by discounting at a rate equal to one (1) whole percentage
point above the discount rate then in effect at the Federal Reserve Bank of New
York. Tenant waives any right of redemption, re-entry or restoration of the
operation of this Lease under any present or future law, including any such
right which Tenant would otherwise have if Tenant shall be dispossessed for any
cause.

        21.3 Landlord's rights and remedies set forth in this Lease are
cumulative and in addition to Landlord's other rights and remedies at law or in
equity, including those available as a result of any anticipatory breach of this
Lease. Landlord's exercise of any such right or remedy shall not prevent the
concurrent or subsequent exercise of any other right or remedy. Landlord's delay
or failure to exercise or enforce any of Landlord's rights or remedies or
Tenant's obligations shall not constitute a waiver of any such rights, remedies
or obligations, Landlord shall not be deemed to have waived any default unless
such waiver expressly is set forth in an instrument signed by Landlord. If
Landlord waives in writing any default, then such waiver shall not be construed
as a waiver of any covenant or condition set forth in this Lease except as to
the specific circumstances described in such written waiver. Neither Tenant's

                                       16
<PAGE>   17

payment of a lesser amount than the sum due hereunder nor Tenant's endorsement
or statement on any check or letter accompanying such payment shall be deemed an
accord and satisfaction, and Landlord may accept the same without prejudice to
Landlord's right to recover the balance of such sum or to pursue any other
remedy available to Landlord. Landlord's re-entry and acceptance of keys shall
not be considered an acceptance of a surrender of this Lease.

        21.4 If more than one natural person and/or entity shall execute this
Lease as Tenant, then the liability of each such person or entity shall be joint
and several. Similarly, if Tenant is a general partnership or other entity the
partners or members of which are subject to personal liability, then the
liability of each such partner or member shall be joint and several.

        21.5 If Tenant fails to make any payment to any third party or any act
herein required to be made or done by Tenant, upon the occurrence of an Event of
Default with respect thereto, or sooner if such failure presents a material risk
to Landlord's interest in the Building and Landlord gives Tenant prior written
notice of same, then Landlord may, but shall not be required to, make such
payment or do such act. Landlord's taking such action shall not be considered a
cure of such failure by Tenant or prevent Landlord from pursuing any remedy to
which it is otherwise entitled in connection with such failure. If Landlord
elects to make such payment or do such act, then all expenses incurred, plus
interest thereon at the lesser of a rate per annum (the "Default Rate") which is
three (3) whole percentage points higher than the highest Prime Rate as
published in the Wall Street Journal's Money Rates Column or if such rate is no
longer published then the rate which is three (3) whole percentage points in
excess of the Prime Rate of Nations Bank, N.A. (Washington, D.C.), or (ii) the
highest non-usurious rate permitted under the laws of the jurisdiction where the
Building is located, from the date incurred to the date of payment thereof by
Tenant, shall constitute Additional Rent.

    Article XXII Bankruptcy.

        The following shall be Events of Bankruptcy Linder this Lease: (a)
appointment of a receiver or custodian for any property of Tenant, a Guarantor
or a General Partner, which is not dismissed within thirty (30) days of such
appointment or the institution of a foreclosure or attachment action upon any
property of Tenant, a Guarantor or a General Partners (b) filing of a voluntary
petition by Tenant, a Guarantor or a General Partner under the provisions of
Title II of the United States Code (the "Bankruptcy Code") or under the
insolvency laws of any state (the "Insolvency Laws"); (c) filing of an
involuntary petition against Tenant, a Guarantor or a General Partner as the
subject debtor under the Bankruptcy Code or the Insolvency Laws, which either
(i) is not dismissed within thirty (30) days of filing, or (ii) results in the
issuance of an order for relief against the debtor; or (d) Tenant, a Guarantor
or a General Partner making or consenting to an assignment for the benefit of
creditors or a composition of creditors.

    Article XXIII Subordination.

        23.1 This Lease is subject and subordinate to all ground or underlying
leases and to all mortgages and/or deeds of trust which may now or hereafter
affect the real property of which the Premises form a part, and to all renewals,
modifications, consolidations, replacements and extensions thereof. This clause
shall be self-operative and no further instrument of subordination shall be
required by any mortgagee or trustee. In confirmation of such subordination,
Tenant shall execute within twenty (20) days any certificate that Landlord or
such ground lessor or holder of such deed of trust may request. Notwithstanding
the foregoing, the party secured by any such deed of trust shall have the right
to recognize this Lease and, in the event of any foreclosure sale under such
deed of trust, this Lease shall continue in full force and effect at the option
of the party secured by such deed of trust or the purchaser under any such
foreclosure sale in which event Tenant shall attorn to such purchaser and shall
recognize such purchaser as the Landlord under this Lease. Upon such attornment
such purchaser shall not be (a) bound by any payment of the Base Rent or
Additional Rent more than one (1) month in advance, (b) bound by any amendment
of this Lease made without the consent of the holder of the deed of trust
existing as of the date of such amendment, (c) liable for damages for any
breach, act or omission of any prior landlord, or (d) subject to any offsets or
defenses which Tenant might have against any prior landlord provided, however,
that after succeeding to Landlord's interest, such purchaser shall perform in
accordance with the terms of this Lease all obligations of Landlord arising
after the date such purchaser acquires title to the Building. Within twenty (20)
days after the request of such purchaser, Tenant shall execute, acknowledge and
deliver any requisite or appropriate document submitted to Tenant confirming
such attornment. Tenant waives the provisions of any law or regulation, now or
hereafter in effect, which may give or purport to give Tenant any right to
terminate or otherwise adversely affect this Lease and the obligations of Tenant
hereunder in the event that any such foreclosure or other proceeding is
prosecuted or completed. Notwithstanding the foregoing, as a condition to the
agreement of Tenant to subordinate this Lease to any mortgage, deed of trust or
other lien upon the Building, Landlord shall cause the party secured under such
instrument to execute and deliver unto Tenant a non-disturbance agreement in
favor of Tenant wherein Tenant agrees to subordinate and attorn to such secured
party.

        23.2 Tenant covenants and agrees that it will, at the written request of
the party secured by any such deed of trust, execute, acknowledge and deliver
any instrument that has for its purpose and effect the subordination of said
deed of trust to the lien of this Lease. At the option of any landlord under any
ground or underlying lease to which the Lease is now or may hereafter become
subject or subordinate, Tenant agrees that neither the cancellation nor
termination of such ground or underlying lease shall by operation of law or
otherwise, result in cancellation or termination of this Lease or the
obligations of Tenant hereunder. Tenant

                                       17
<PAGE>   18

covenants and agrees to attorn to such landlord or to any successor to
Landlord's interest in such ground or underlying lease subject to the attornment
provisions set forth above. In that event, this Lease shall continue as a direct
lease between Tenant and such landlord or its successor.

        23.3 After receiving notice from any person, firm or other entity that
it holds a mortgage or deed of trust on the Building or the Land, no notice from
Tenant to Landlord alleging any default by Landlord shall be effective unless
and until a copy of the same is given to such holder, provided that Tenant shall
have been furnished with the name and address of such holder. Any such holder
shall have such additional time as may reasonably be necessary, after receipt of
notice from Tenant of a default by Landlord under this Lease to cure such
default before Tenant may exercise any remedy hereunder. The curing of any of
Landlord's defaults by such holder shall be treated as performance by Landlord.

    Article XXIV Delivery at End of Lease Term.

        24.1 On the Expiration Date, Tenant shall without notice quit and
surrender the Premises broom clean and in the same order and condition in which
they were on the Lease Commencement Date (except for ordinary wear and tear and
damage by fire or other casualty, which damage is governed by Article XIX),
together with all Alterations which may have been made in or attached to the
Premises unless Landlord elects to have Tenant remove the same in accordance
with Section 10.4 hereof. Upon surrender, Tenant shall remove its Personal
Property and movable trade fixtures and repair any damage to the Premises caused
thereby. Any property of Tenant not promptly removed shall be deemed to have
been abandoned by Tenant and to have become the property of Landlord and may be
retained by Landlord or disposed of at Tenant's expense (Tenant hereby agreeing
to remain liable for the cost thereof even though this Lease shall have
terminated) as Landlord shall so desire.

        24.2 If Tenant or any party claiming under Tenant remains in possession
of the Premises, or any portion thereof, after the Expiration Date, no tenancy
or interest in the Premises shall result therefrom, unless Landlord elects as
hereinafter provided, but such holding over shall be an unlawful detainer and
all such parties shall be subject to immediate eviction and removal. If, without
consent of Landlord, Tenant or any party claiming under Tenant remains in
possession of the Premises, or any part thereof, after the Expiration Date,
Landlord may, in addition to its other rights, elect, in its sole discretion, to
treat such holding over by Tenant as the creation of a month-to-month tenancy
subject to all of the terms, covenants and conditions set forth in this Lease
insofar as the same are applicable to a month-to-month tenancy, except that
Tenant shall pay a monthly Base Rent equal to one hundred fifty percent (150%)
of the monthly Base Rent in effect during the last month of the term of the
Lease. Tenant shall give to Landlord at least thirty (30) days prior written
notice of any intention to quit the Premises and Tenant shall be entitled to
thirty (30) days prior written notice to quit the Premises except in the event
of nonpayment of rent in advance or the breach of any other covenant by Tenant,
in which event Tenant shall not be entitled to any notice to quit, the usual
thirty (30) days notice to quit being hereby expressly waived.

    Article XXV Covenant of Landlord.

        25.1 Landlord covenants that it has the right to make this Lease for the
term aforesaid, and that if Tenant shall pay the rent and perform all of the
covenants, terms, conditions and agreements of this Lease to be performed by
Tenant, Tenant shall, during the term hereby created, freely, peaceably and
quietly occupy and enjoy the full possession of the Premises without molestation
or hindrance by Landlord or any party claiming through or under Landlord,
subject to the provisions of Section 25.2 hereof.

        25.2 Landlord hereby reserves to itself and its successors and assigns
the following rights: (i) to change the street address and/or name of the
Building and/or the arrangement and/or location of entrances, passageways,
doors, doorways, corridors, elevators, stairs, toilets, or other public parts of
the Building; provided, however, that such change shall only occur after thirty
(30) days prior written notice to Tenant and Landlord shall be responsible for
reimbursing Tenant all of its reasonable out-of-pocket costs incurred to change
its stationery, business cards and similar items, (ii) to control and operate
the public portions of the Building and the public facilities, as well as
facilities furnished for the common use of the tenants, in such a manner as it
deems best for the benefit of tenants generally, and (iii) to erect, use and
maintain pipes and conduits in and through the Premises. Landlord may exercise
any or all of the foregoing rights without being deemed to be guilty of an
eviction, actual or constructive, or a disturbance or interruption of the
business of Tenant or Tenant's use or occupancy of the Premises.

        25.3 Landlord shall have the fight to change the location of the
Premises or the location or designation of any space subject to any right of
first opportunity hereunder (the "Option Space") under the following terms and
conditions: (a) Landlord shall not have the right to change the location of the
Premises if Tenant shall have commenced occupancy of the Premises; (b) Landlord
shall not have the right to change the location of the Option Space if Tenant
shall have commenced occupancy of the Option Space; (c) Landlord shall provide
substitute space (the "Substitute Premises") of the same size on a floor in the
Building not lower than the Premises with respect to the Premises and not lower
than the Option Space with respect to the Option Space (in no event shall the
Substitute Premises for either the Premises or the Option Space be reconfigured
into multiple floors); and (d) provided that the terms of (a), (b) and (c) above
are met, Landlord shall, at Landlord's sole cost and expense: (i) remove
Tenant's furniture, fixtures and

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<PAGE>   19

equipment from the Premises or the Option Space and reinstall them in the
Substitute Premises; and (ii) construct the Substitute Premises in the same
manner as required for the Premises or Option Space, as applicable.

    Article XXVI General Provisions.

        26.1 No Representations by Landlord. Tenant acknowledges that neither
Landlord nor any broker, agent or employee of Landlord has made any
representations or promises with respect to the Premises or the Building except
as herein expressly set forth, and no rights, privileges, easements or licenses
are acquired by Tenant except as herein expressly set forth. Tenant, by taking
possession of the Premises, shall accept the same "as is", and such taking of
possession shall be conclusive evidence that the Premises and the Building are
in good and satisfactory condition at the time of such taking of possession,
minor punch list items and latent defects excepted.

        26.2 No Partnership. Nothing contained in this Lease shall be deemed or
construed to create a partnership or joint venture of or between Landlord and
Tenant, or to create any other relationship between the parties hereto other
than that of Landlord or Tenant.

        26.3 Broker. Landlord recognizes Insignia Barnes Morris and Grubb &
Ellis of Metropolitan Washington, DC (the "Brokers") as the sole brokers
procuring this Lease and shall pay said Brokers a commission therefor pursuant
to a separate agreement between said Brokers and Landlord, Landlord and Tenant
each represent and warrant to one another that except as set forth herein
neither of them has employed any broker, agent or finder in carrying on the
negotiations relating to this Lease. Landlord shall indemnify and hold Tenant
harmless, and Tenant shall indemnify and hold Landlord harmless, from and
against any claim or claims for brokerage or other commission arising from or
out of any breach of the foregoing representation and warranty by the respective
indemnitors.

        26.4 Estoppel Certificate. Tenant agrees, at any time and from time to
time and within twenty (20) days after written request by Landlord, to execute,
acknowledge and deliver to Landlord a statement in writing (i) certifying that
this Lease is unmodified and in full force and effect (or if there have been
modifications, that the Lease is in full force and effect as modified and
stating the modifications), (ii) stating the rent payable and dates to which the
rent and any other charges hereunder have been paid by Tenant, (iii) stating
whether or not, to the best knowledge of Tenant, Landlord is in default in the
performance of any covenant, agreement or condition contained in this Lease, and
if so, specifying each such default of which Tenant may have knowledge, (iv)
stating the address to which notices to Tenant should be sent, (v) stating the
commencement and expiration dates of this Lease, including any optional renewals
and (vi) certifying to such other matters as Landlord may reasonably request.
Any such statement delivered pursuant hereto may be relied upon by any owner of
the Building or the Land, any prospective purchaser of the Building or the Land,
any mortgagee or prospective mortgagee of the Building or the Land or of
Landlord's interest in either, or any prospective assignee of any such
mortgagee.

        26.5 Waiver of Jury Trial. LANDLORD, TENANT, ALL GUARANTORS AND GENERAL
PARTNERS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON OR IN RESPECT OF
ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE,
THE RELATIONSHIP OF LANDLORD AND TENANT HEREUNDER, TENANT'S USE OR OCCUPANCY OF
THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE. Tenant consents to service
of process and any pleading relating to any such action at the Premises notice
addresses set forth in Section 1.1 (k); provided, however, that nothing herein
shall be construed as requiring such service at the Premises those locations.
Landlord, Tenant, all Guarantors and all General Partners of Tenant waive any
objection to the venue of any action filed in any court situated in the
jurisdiction in which the Building is located and waive any right under the
doctrine of forum non conveniens or otherwise, to transfer any such action filed
in any such court to any other court.

        26.6 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed duly sent if delivered in person (with receipt
therefor), or sent by recognized overnight delivery service or where sent by
certified or registered mail, return receipt requested, first-class, postage
prepaid, (i) if to Landlord at 1730 K Street, N.W., Washington, D.C. 20006,
Suite 1204, Attn: Michael K. Gewirz, and (ii) if to Tenant at Tenant Address for
Notices unless notice of a change of address is given pursuant to the provisions
of this Article. All notices sent by hand delivery or recognized overnight
delivery service shall be effective upon receipt and all notices sent by mail
hereunder shall be deemed for all purposes to have been received by the
addressee three (3) business days after the date of mailing.

        26.7 Invalidity of Particular Provision. If any provision of this Lease
or tile application thereof to any person or circumstances shall to any extent
be invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.

                                       19
<PAGE>   20

        26.8 Gender and Number. Feminine or neuter pronouns shall be substituted
for those of the masculine form, and the plural shall be substituted for the
singular number, in any place or places herein in which the context may require
such substitution.

        26.9 Benefit and Burden. The provisions of this Lease shall be binding
upon, and shall inure to the benefit of. the parties hereto and each of their
respective representatives, successors and assigns. Landlord may freely and
fully assign its interest hereunder.

        26.10 Entire Agreement. This Lease, together with the Exhibits attached
hereto, contains and embodies the entire agreement of the parties hereto, and no
representations, inducements or agreements, oral or otherwise, between the
parties not contained in this Lease and the Exhibits, shall be of any force or
effect. This Lease may not be modified, changed or terminated in whole or in
part in any manner other than by an agreement in writing duly signed by both
parties hereto.

        26.11 Authority. Landlord and Tenant hereby covenant each for itself,
that each has full right, power and authority to enter into this Lease upon the
terms and conditions herein set forth. If Tenant signs as a corporation, each of
the persons executing this Lease on behalf of Tenant does hereby covenant and
warrant that Tenant is a duly authorized and existing corporation, qualified to
do business in the District Of Columbia, that the corporation has full right and
authority to enter into this Lease, and that each and both of the persons
signing on behalf of the corporation were authorized to do so.

        26.12 Time of the Essence. Time is of the essence of each provision of
this Lease.

        26.13 Attorney's Fees. If as a result of any breach or default in the
performance of any of the provisions of this Lease, Landlord or Tenant uses the
services of an attorney in order to secure compliance with such provisions or
recover damages therefor, or to terminate this Lease or evict Tenant, the
prevailing party shall be entitled to reimbursement from the other party upon
demand for any and all reasonable attorneys' fees and expenses so incurred by
the prevailing party.

        26.14 Caption. Article and Section headings are used for convenience and
shall not be considered when construing this Lease.

        26.15 No Recording. This Lease shall not be recorded. This Lease shall
not be recorded in any office legally established for the purpose of giving
public notice of real estate records and any attempt to do so may be treated by
Landlord as an Event of Default under this Lease. In the event Tenant does
record this Lease or any memorandum thereof, Tenant by such act irrevocably
constitutes and appoints Landlord as its special attorney-in-fact to execute any
and all documents required to remove the Lease or any memorandum thereof from
the public records.

        26.16 Governing Law. This Lease is governed under the laws of the
District of Columbia. Landlord and Tenant agree that any litigation arising out
of, or related to, this Lease shall be brought in the courts of the District of
Columbia or in the United States District Court for the District of Columbia,
and the Landlord and Tenant hereby consent to the venue of such courts.

        26.17 Examination of Lease. Submission of this Lease for examination or
signature by Tenant shall not constitute reservation of or option for lease, and
the same shall not be effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.

        26.18 Survival. Pursuant to the terms hereof, Landlord's and Tenant's
liabilities existing as of the expiration or earlier termination of the Lease
Term shall survive such expiration or earlier termination.

        26.19 Force Majeure. If Landlord or Tenant is in any way delayed or
prevented from performing any of its obligations under this Lease due to fire,'
act of God, governmental act or failure to act, strike, labor dispute, inability
to procure materials or ANY other cause beyond Landlord's or Tenant's (as the
case may be) reasonable control (whether similar or dissimilar to the foregoing
events), then the time for performance of such obligation shall be excused for
the period of such delay or prevention and extended for a period equal to the
period of such delay or prevention.

        Article XXVII Right of First Opportunity.

        Throughout the Lease Term, subject to the rights of any existing tenants
of the Building, Tenant shall have the right of first opportunity to lease any
additional space that becomes available on the second (2nd) and third (3rd)
floors of the Building (together, the "Floors"). Landlord agrees to provide
Tenant with at least thirty (30) days prior written notice of any space on the
Floors that Landlord is aware that will become available. If Tenant desires to
lease the available space set forth in Landlord's notice (the "Available
Space"), Tenant shall exercise such option by delivering written notice thereof
to Landlord with fifteen (15) days after receipt of Landlord's notice. Tenant's
exercise of such option shall be upon the following terms and conditions: (a)
this Lease is in full force and effect; (b) no Event of Default then exists and
no condition exists that with notice or the passage of time, or both, would
constitute an Event of Default; (c) other than pursuant to Section 8.2(i), the
Tenant named herein shall not have assigned or sublet its

                                       20
<PAGE>   21

rights to an aggregate of more than fifty percent (50%) of the Premises; (d)
once Tenant exercises its option, Tenant may not thereafter revoke such
exercise; (e) Tenant's failure to timely deliver to Landlord Tenant's notice
shall conclusively be deemed a waiver of Tenant's right to lease such space; (f)
Tenant shall take such space in "AS IS" condition; (g) Tenant shall continue to
pay Additional Rent (with an appropriate corresponding increase to Tenant's
Percentage) and other charges under this Lease for such space pursuant to the
terms of this Lease; (h) Base Rent for the first year of the lease of such space
shall be ninety-five percent (95%) of the Fair Market Value Rate (as determined

                                       21
<PAGE>   22

aforesaid) multiplied by the number of square feet comprising such space as of
the commencement date for such space; (i) Base Rent during the second and all
subsequent years during the lease of such space shall be computed in accordance
with rental increase provisions applicable at the time the Base Rent for such
space is being determined; 0) the amount and the terms of the Security Deposit
may be adjusted by Landlord to correspond to the amount and the terms of the
Security Deposit to be maintained by Tenant hereunder; and (k) the leasing of
such space shall be for a term of not less than five (5) years nor exceed the
Lease Term and otherwise be on the same terms and conditions as the leasing of
the original Premises.

        Article XXVIII Building Security; Metro Shuttle.

        28.1 Access to the Building, elevator lobbies, suites, garage and
elevators outside Building Hours will be by means of an electronic Kastle
Systems key-card or Indentex type card access system (the "Access System").
Landlord, at its sole cost and expense, shall provide a reasonable number of
access cards for Tenant's employees. The Access System shall be installed at
each point of entry into the Building, including the main lobby, emergency
exits, loading docks and loading doors, roof and penthouse access and garage
doors. Key lock systems will be installed on all interior common areas, such as,
restrooms, mechanical rooms and electrical closets. Metal roll-up doors will be
installed at the loading dock and garage doors. In addition to the Access
System, Landlord shall provide a Building lobby attendant with security
responsibilities and a roving security guard during Building Hours. Landlord
shall cause the garage operator to have a garage attendant present at the
Building garage entrance booth at all times during Building Hours. In addition,
the roving security guard shall systematically patrol the Building grounds.
Tenant shall have the right to contact the Building lobby attendant who will
arrange for or provide an escort to the Washington Navy Yard and the Navy Yard
and Eastern Market Metrorail stations during Building Hours. Landlord will cause
a partially clear-glass enclosure to be constructed around each of the parking
garage elevator banks. If the security measures are not reasonably satisfactory
to Tenant, Tenant may notify Landlord in writing thereof and Landlord and Tenant
agree to then engage in discussions to resolve any outstanding issues.

        Landlord shall provide, or cause to be provided, a shuttle service (the
"Shuttle") for the use by the Building tenants and their invitees. A Shuttle
will have an approximately fifteen (15) person capacity. Access to the Shuttle
shall be by means of an identification system established from time-to-time by
Landlord. The Shuttle will operate on an approximately fifteen (15) minute
continuous circuit from 7:00 a.m. to 7:00 p.m. Monday through Friday, excluding
federal holidays, among the Building, the Washington Navy Yard and the Navy Yard
and Eastern Market Metrorail stations. The Shuttle shall be subject to the
reasonable rules and regulations that Landlord may establish from time-to-time.
If the operation of the Shuttle is not reasonably satisfactory to Tenant, Tenant
may notify Landlord in writing thereof and Landlord and Tenant agree to then
engage in discussions to resolve any outstanding issues.

        Article XXIX Retail Space.

        Landlord anticipates that approximately twelve thousand (12,000) square
feet of retail space will be located on the first (1st) floor of the Building.
Landlord shall use commercially reasonable efforts to attract quality food
service operations to the Building. Landlord will keep Tenant apprised of such
progress. Prior to the opening of retail food service at the Building, Landlord
will provide food service to Tenant under such reasonable terms as the parties
may mutually agree upon. In addition, Landlord warrants to Tenant that food
service from a retail tenant of the Building will be open and operational within
one hundred eighty (180) days after the Lease Commencement Date. The costs and
expenses in connection with the retail space will not be included in Operating
Expenses.

        Article XXX Indoor Air Quality.

        Landlord represents and warrants that: (i) the HVAC system and other
Building systems servicing the Building currently comply and during the Lease
Term will comply with any and all local, state and federal indoor air quality
laws and meet the minimum standards for operation contained with ASHRAE Standard
62-1989, as amended; (ii) as of the date hereof, there have been no indoor air
quality problems discovered by Landlord with respect to the Building or the
Building systems and Landlord has not received any complaints from tenants of
the Building regarding the indoor air quality of the Building; (iii) Landlord
shall monitor at least once per calendar year the indoor air quality and provide
copies of the annual test results to Tenant; (iv) Landlord shall take reasonable
steps to minimize the circulation of dust and chemicals during any construction
in the Building; and (v) Landlord shall inform Tenant of (A) any complaints that
it receives from other tenants of the Building regarding indoor air quality
problems and (B) the steps taken by Landlord to investigate and remedy any such
problem.

                                       22
<PAGE>   23

        Article XXXI Antenna.

        Tenant shall have the right, at its sole cost and expense, and for its
own use, to install, maintain and operate upon a portion of the rooftop of the
Building a single microwave dish or earth satellite dish (the "Rooftop
Communications Equipment"). Tenant shall furnish detailed plans and
specifications for the Rooftop Communications Equipment to Landlord for
approval, such approval not to be unreasonably withheld; provided, however,
Landlord shall have the right, in its sole discretion, to limit the location,
size, height, width and weight of the Rooftop Communications Equipment and to
prohibit any equipment that Landlord determines not to be aesthetically
acceptable. The Rooftop Communications Equipment shall not constitute a nuisance
or unreasonably interfere with the operations of Landlord or other tenants of
the Building. Tenant understands that other tenants of the Building have or may
have certain rights to install antenna and related equipment on the roof of the
Building. Tenant shall be responsible for procuring whatever licenses or permits
may be required for the use or operation of the Rooftop Communications
Equipment, and Landlord makes no representations or warranties as to the
permissibility under applicable laws of the Rooftop Communications Equipment.
The Rooftop Communications Equipment shall be (i) be installed by a contractor
reasonably acceptable to Landlord and (ii) shall be installed and operated in
compliance with all applicable laws. There shall be no additional charge to
Tenant for its use of the Rooftop Communications Equipment. Upon the expiration
or earlier termination of this Lease, Tenant shall remove all Rooftop
Communications Equipment.

        Article XXXII Waiver of Landlord's Lien.

        Landlord hereby waives any lien rights that it may otherwise have with
respect to Tenant's personal property, which shall include furniture, fixtures,
equipment and any and all equipment and/or supplies utilized by Tenant in its
business operations and Tenant shall have the right to remove the same from the
Premises at any time without Landlord's consent.

        Article XXXIII Storage Space.

        Landlord agrees to lease to Tenant storage space in tile Building. At
the time that Tenant desires to commence leasing storage space in the Building,
Landlord and Tenant shall enter into a separate mutually agreeable storage space
lease agreement that shall: (a) provide for an initial base rental rate of
Twelve Dollars ($12.00) per square foot of storage space leased (subject to
reasonable adjustment if Tenant has not elected to lease storage space as of the
Lease Commencement Date; (b) provide that commencing on the first (I")
anniversary of the commencement date of the storage space lease and on each
subsequent anniversary thereafter, the annual base rent then in effect shall be
increased by three percent (3%) over the annual base rent payable for the
immediately preceding twelve (12) month period; (c) identify the size and
location of the storage space; (d) establish the term of the storage space
lease, not to exceed the Lease Term; (e) provide that the storage space shall be
"AS IS", other than lighting shall be available for the storage space and access
will be by a locked entry; (e) provide for such other customary and reasonable
terms as Landlord and Tenant shall agree. DCLIB1/9041/7

                            [SIGNATURE PAGE FOLLOWS]

                                       23
<PAGE>   24
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under seal
on the day and year hereinabove written.

WITNESS/ATTEST:                       LANDLORD:

                                      FEDERAL CENTER
                                      LIMITED PARTNERSHIP

                                      By: FEDERAL CENTER
                                                    MANAGEMENT LLC

                                      By: MICHAEL Y. GEWITZ        (SEAL)
----------------------------          ----------------------------

Name:                                 Name: Michael Y. Gewitz
----------------------------          ----------------------------

Title:                                Title: Managing Member
----------------------------          ---------------------------

WITNESS/ATTEST:                       TENANT:

                                      ANADAC, INC.

By: WARREN H. AMSON, JR.              By: MELINDA K. JENSEN        (SEAL)
----------------------------          ----------------------------

Name: Warren H. Amson, Jr.            Name: Melinda K. Jensen
----------------------------          ----------------------------

Title: Sr. VP                         Title: CFO
----------------------------          ---------------------------
<PAGE>   25

                            FIRST AMENDMENT TO LEASE

     THIS FIRST AMENDMENT TO LEASE (this "Amendment") is dated as of December 1,
1999, and is by and between FEDERAL CENTER LIMITED PARTNERSHIP, a District of
Columbia limited partnership ("Landlord") and ANADAC, INC., a Virginia
corporation ("Tenant").

     WHEREAS, Landlord and Tenant have previously entered into that certain
office lease amendment dated April 2, 1999 (the "Lease"), pursuant to which
Tenant leased certain office space representing the entire sixth (6th) floor
(the "Premises") of a multi-story office building to be constructed by Landlord,
and to be located at 300 M Street, S.E., Washington D.C. (the "Building");

     WHEREAS, pursuant to and in accordance with Section 25.3 of the Lease,
Landlord has the right to change the location of the Premises to a floor not
lower than the Premises;

     WHEREAS, Landlord and Tenant desire to change the location of the Premises
from the sixth (6th) floor of the Building to the eighth (8th) floor of the
Building, as more particularly set forth herein.

     NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) in hand
paid, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged. Landlord and Tenant hereby agree
to amend the Lease as follows:

     1.   Definitions. Defined or capitalized terms used herein and not
otherwise defined shall have the same meanings as in the Lease.

     2.   Amendments. The Lease is hereby amended as follows:

          a.   Premises. Section 1.1(b) of the Lease is hereby deleted in its
               entirety and replaced with the following:

                    "Premises: Approximately thirty-six thousand eighty-six
                    (36,086) square feet, representing the entire eighth (8th)
                    floor of the Building as identified on Exhibit A attached
                    hereto and made a part hereof. The foregoing measurement of
                    the Premises and the Building shall be determined by
                    Landlord's architect in accordance with the ANSI/BOMA
                    Standard Method of Measurement, which measurement shall be
                    subject to review and approval by Tenant's architect not
                    later than one hundred twenty (120) days after the date
                    hereof."
<PAGE>   26

          b.   Base Rent. Section 1.1(e) of the Lease is hereby deleted in its
               entirety and replaced with the following:

                  "Base Rent:  One Million Eighty-Two Thousand Five Hundred
                  Eighty Dollars ($1,082,580) per annum ($30.00 per square
                  foot), payable in equal monthly installments of Ninety
                  Thousand Two Hundred Fifteen Dollars ($90,215), net of the
                  costs of electricity, which amount is subject to adjustment as
                  provided in Section 4.2 hereof. The phrase "net of costs of
                  electric" shall mean that Tenant shall pay for all direct and
                  actual electricity used for the Premises and Tenant's
                  Operating Expense Percentage of direct and actual electricity
                  used for the Building."

          c.   Tenant's Operating Expense Percentage. Section 1.1(h)(A) of the
               Lease is hereby deleted in its entirety and replaced with the
               following:

                  "Tenant's Operating Expense Percentage: The ratio that the
                  square feet of rentable area in the Premises bears to the
                  square feet of office rentable area in the Building, which
                  Tenant's Operating Expense Percentage is initially estimated
                  to be 13.03%."

          d.   Tenant's Real Estate Percentage. Section 1.1(h)(B) of the Lease
               is hereby deleted in its entirety and replaced with the
               following:

                  "Tenant's Real Estate Percentage: The ratio that the square
                  feet of rentable area in the Premises bears to the square feet
                  of rentable area in the Building, which Tenant's Real Estate
                  Percentage is initially estimated to be 12.80%."

          e.   Security Deposit. Section 1.1(i) of the Lease is hereby deleted
               in its entirety and replaced with the following:

                  "Security Deposit: A letter of credit in the amount of Two
                  Hundred Seventy Thousand Six Hundred Forty-Five Dollars
                  ($270,645.00), subject to adjustment as set forth in Article
                  XIII hereof."

          f.   Exhibit A. Exhibit A (Floor Plan) currently attached to the Lease
               is hereby replaced with Exhibit A attached to this Amendment.

          g.   Schedule 2. Schedule 2 (Conceptual Construction Plan) to Exhibit
               B currently attached to the Lease is hereby replaced with
               Schedule 2 attached to this Amendment.

<PAGE>   27

      3.    Retail Space. Landlord and Tenant agree that Article XXIX of the
            Lease is modified to reflect that at least five thousand (5,000)
            square feet of retail space will be located on the first (1st)
            floor of the Building.

      4.    Ratification. Except as expressly modified by this Amendment, all
            other terms, conditions and provisions of the Lease are hereby
            ratified and confirmed and shall continue in full force and effect.

      5.    Counterparts. This First Amendment to Lease may be executed in one
            or more counterparts, each of which shall be deemed an original
            notwithstanding that all parties are not signatory to the same
            counterpart.

      IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment
under seal on the date and year first above written.

                                        LANDLORD:

WITNESS:                                Federal Center Limited Partnership

                                        By:  Federal Center Management, LLC,
                                               general partner

/s/ STEVEN D. GEWITZ                         By: /s/ MICHAEL Y. GEWITZ
------------------------------                   -------------------------------
Name: Steven D. Gewitz                           Name: Michael Y. Gewitz
                                                 Title: Member

[STAMP ILLEGIBLE]

ATTEST:

/s/ [SIGNATURE ILLEGIBLE], Notary Public
-------------------------

                                        TENANT:

                                        ANADAC, Inc.

                                        By: /s/ MELINDA K. JENSEN
-------------------------                   ------------------------------------
Name:                                       Name: Melinda K. Jensen
[Assist] Secretary                          Title: CFO

<PAGE>   28
                           SECOND AMENDMENT TO LEASE

     THIS SECOND AMENDMENT TO LEASE (this "Amendment") is dated as of April 11,
2001 between FEDERAL CENTER LIMITED PARTNERSHIP, a District of Columbia limited
partnership ("Landlord"), and ANADAC, INC., a Virginia corporation ("Tenant").

     WHEREAS, Landlord and Tenant have previously entered into that certain
Office Lease dated April 2, 1999, as amended by that certain First Amendment to
Lease dated as of December 1, 1999 (as so amended, the "Lease"), pursuant to
which Tenant leases certain office space representing the entire eighth (8th)
floor (the "Premises") of a multi-story office building being constructed by
Landlord at 300 M Street, S.E., Washington D.C.; and

     WHEREAS, Landlord and Tenant desire to modify the terms for the
construction of the Tenant Improvements, as more particularly set forth herein.

     NOW THEREFORE, for and in consideration of Ten Dollars ($10.00) in hand
paid, and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Landlord and Tenant hereby agree to amend the
Lease as follows:

     1.  Definitions. Defined or capitalized terms used herein and not
otherwise defined shall have the same meanings as in the Lease.

     2.  Amendments. The Lease is hereby amended as follows:

         a.  Lease Commencement Date. Section 1.1(d) of the Lease is hereby
         deleted in its entirety and replaced with the following:

             "Lease Commencement Date:  Subject to the terms of this Lease
             including, without limitation, Section 3.3(c) of this Lease,
             the date that is the Target Completion Date."

         b.  Tenant Improvements. Section 1.1(k) of the Lease is hereby deleted
         in its entirety and replaced with the following:

             "Tenant Improvements:  Subject to Section 3.3(c) of this Lease,
             the improvement of the Premises will be completed in accordance
             with Exhibit B to this Lease."

<PAGE>   29
     c.   Term.

          i.   The first unlettered paragraph of Section 3.3 of the Lease is
               hereby deleted in its entirety and replaced with the following:

                   "It is presently anticipated that the following
                   construction milestones will be satisfied by
                   Landlord. Landlord and Tenant agree that in the
                   event the following construction milestones are not
                   satisfied by Landlord for any reason whatsoever,
                   this Lease shall not be void or voidable except to
                   the extent expressly set forth below, nor shall
                   Landlord be liable to Tenant for any loss or damage
                   resulting therefrom, except to the extent expressly
                   set forth below."

          ii.  Section 3.3(c) of the Lease is hereby deleted in its entirety and
               replaced with the following:

                   "(c) Landlord is responsible for the construction of the
                   Premises to the Base Building Conditions as described on
                   Schedule B-1 (formerly Schedule 4 to Exhibit B) to Exhibit B
                   to this Lease (the "Base Building Construction"), in
                   accordance with all laws, rules, statutes, regulations and/or
                   ordinances of any governmental agency or body having
                   jurisdiction over the Building, including, but not limited
                   to, ADA (as hereinafter defined). To the extent that the
                   description or depiction of the Base Building Conditions in
                   the Construction Drawings (as defined in Exhibit B), the Base
                   Building Construction Completion List (as hereinafter
                   defined) or the Concurrent Base Building Construction (as
                   hereinafter defined) varies from Schedule B-1, the term "Base
                   Building Construction" will mean construction of the Premises
                   to the Base Building Conditions as the same might be modified
                   by any of the foregoing. Landlord shall indemnify Tenant, and
                   hold Tenant harmless from and against all costs, damages,
                   claims, liabilities, fines, suits and expenses of any kind
                   (including attorney's fees) asserted by or on behalf of any
                   person, entity, or governmental authority against Tenant
                   based on or arising out of Landlord's failure to comply with
                   any applicable code, rule, regulation or other governmental
                   requirement, including without limitation the provisions of
                   the ADA, with regard to the Base Building Construction and/or
                   Concurrent Base Building Construction. Landlord and Tenant
                   have agreed that certain of the Base Building Construction as
                   set forth on Schedule B-2 to Exhibit B to this Lease (the
                   "Concurrent Base Building Construction") and the Work (as

                                       2
<PAGE>   30
          defined in Exhibit B) will proceed concurrently; provided that,
          Landlord will cause the Concurrent Base Building Construction to be
          performed in a manner that will not cause a Landlord Delay. A
          "Landlord Delay" shall mean (i) Landlord's failure to Substantially
          Complete the Concurrent Base Building Construction by the Target
          Completion Date, or (ii) Landlord's construction of the Concurrent
          Base Building Construction and/or Base Building Construction
          Completion List in such a manner as would cause unreasonable
          interference or delay with Tenant's construction and completion of the
          Work, which, in either event is not caused by a Tenant Delay. The
          Target Completion Date will be extended by one (1) day for each day of
          Landlord Delay, but only to the extent such Landlord Delay delays
          Tenant in its completion of the Work by the Target Completion Date. In
          addition to any such day for day extension of the Target Completion
          Date, in the event of any Landlord Delay, Landlord shall be
          responsible for the payment of (i) any and all reasonable costs and
          expenses incurred by Tenant in the design, re-design of the Work
          and/or the completion of the Concurrent Base Building Construction
          and/or Base Building Construction Completion List, and (ii)(A) a sum
          equal to the product of: (1) the positive difference, if any, between
          (a) the product of the actual per diem holdover rental payment made by
          Tenant commencing as of October 1, 2001 under that certain lease
          agreement dated July 27, 1995 between Third Gould Limited Liability
          Company, as landlord, and Tenant, with respect to certain leased
          premises at 2611 Jefferson Davis Highway, and that certain U.S.
          Airways Sublease dated January 25, 1995 in which Tenant subleases
          certain premises at 2345 Crystal Drive (together, the "Crystal City
          Lease"), multiplied by the lesser of (i) the rentable square feet
          leased by Tenant under the Crystal City Lease or (ii) the rentable
          square feet comprising the Premises and (b) the product of the per
          diem rental payment (both base rent and additional rent) that Tenant
          would be paying under the Crystal City Lease if the Tenant were not
          obligated to pay holdover rent under the Crystal City Lease; and (2)
          the number of days that elapse between and including October 1, 2001
          and the date that the Concurrent Base Building Construction and/or
          Base Building Construction List is Substantially Completed, and (B)
          other actual, out-of-pocket damages, costs or expenses incurred by
          Tenant due to any third-party vendors and contractors, including, but
          not limited, to, Tenant's contractor and architect that is the result
          of any Landlord Delay that causes the Target Completion Date to be

                                       3
<PAGE>   31
                  extended forty-five (45) days or more. In no event shall the
                  liability of Landlord for the payment of any holdover rent
                  under Section 3.3(c)(ii)(A) exceed an amount equal to a per
                  diem holdover rental payment equal to $3,200; provided,
                  further, that Landlord will have the right in lieu of any
                  payment of holdover rent as aforesaid to provide Tenant one
                  day of rent abatement under this Lease for each day that
                  Landlord would otherwise be obligated to pay any day of
                  holdover rent as aforesaid. In no event will the Lease
                  Commencement Date be extended beyond the date of Tenant's
                  completion of the Work. The term "Base Building Construction
                  Completion List" shall mean that Tenant has delivered to
                  Landlord on or before May 14, 2001 a detailed list describing
                  Landlord's failure to complete the Base Building Construction
                  in accordance with the terms of this Lease, which Base
                  Building Construction List may not include any of the items
                  set forth in that certain Memorandum and accompanying
                  materials from Tenant's CM (as defined in Exhibit B ) dated
                  April 2, 2001. A "Tenant Delay" shall mean Landlord is delayed
                  in completing the Base building Construction or Concurrent
                  Base Building Construction due to Tenant's construction of the
                  Work in such a manner as would cause unreasonable interference
                  with Landlord's contractors in their completion of the Base
                  Building Construction or Concurrent Base Building
                  Construction. The date for completion of the Base Building
                  Construction and/or Concurrent Base Building Construction
                  shall be extended by one (1) day for each day of Tenant Delay,
                  but in no event shall the Target Completion Date be extended
                  for any Tenant Delay.

          d.   Tenant Alterations.  The first sentence of Section 10.1 of the
               Lease is hereby deleted in its entirety and replaced with the
               following: "The improvement of the Premises will be completed in
               accordance with Section 3.3(c) and Exhibit B to this Lease."

          e.   Exhibit B - Work Agreement. Exhibit B currently attached to the
               Lease is hereby replaced in its entirety (including any
               schedules thereto) with Exhibit B attached to this Amendment.

     3.   Delivery of the Premises. As of the date hereof, Landlord hereby
delivers the Premises to Tenant and Tenant hereby accepts delivery of the
Premises from Landlord, subject to the terms and conditions hereof, for the
purposes of performing the Work. Tenant agrees to comply with all of the
covenants, duties and obligations of Tenant under the Lease, other than the
obligations to pay Base Rent and Additional Rent, from the date of this
Amendment until the Lease Commencement Date. Notwithstanding the foregoing,
Tenant will have no maintenance

                                       4

<PAGE>   32
and repair obligations with respect to the Premises until the Lease Commencement
Date except to the extent any repairs to the Premises are necessitated due to
the Work or any damage caused by Tenant or its agents, employees or contractors.

     4.   Ratification. Except as expressly modified by this Amendment, all
other terms conditions and provisions of the Lease are hereby ratified and
confirmed and shall continue in full force and effect.

     5.   Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original notwithstanding that
all parties are not signatory to the same counterpart.

                                       5
<PAGE>   33
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment under
and on the date and year first above written.

                              LANDLORD:

WITNESS:                      Federal Center Limited Partnership

                              By: Federal Center Management, LLC,
                                  general partner

/s/ STEVEN D. GEWITZ          By: /s/ MICHAEL Y. GEWITZ
-------------------------     -----------------------------
                              Name:  Michael Y. Gewitz
                              Title: Member

                              TENANT:

WITNESS:                      ANADAC, Inc.

/s/ CHRISTOPHER WOLF          By: /s/ D.P. SARGENT
----------------------            ------------------------
Name: Christopher Wolf        Name:  D.P. Sargent
                              Title: SVP-Defense

                                       6<PAGE>   1
                                                                   EXHIBIT 10.22

      STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE -- MODIFIED NET

                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

                                     [LOGO]

1.   BASIC PROVISIONS ("BASIC PROVISIONS").

     1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only, July
19, 2000, is made by and between Pacific Gulf Properties Inc., a Maryland
Corporation ("LESSOR") and Identix Incorporated, a Delaware Corporation
("LESSEE"), (collectively the "PARTIES," or individually a "PARTY").

     1.2(a) PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 6591 Sierra Lane, located in the City of
Dublin, County of Alameda, State of California, with zip code 94568, as outlined
on Exhibit A attached hereto ("PREMISES"). The "BUILDING" is that certain
building containing the Premises and generally described as (describe briefly
the nature of the Building): A 12 building complex of 223,371 square feet
commonly known as Sierra Trinity Park, of which the premises is a single stand
alone building deemed to be 30,723 square feet. In addition to Lessee's rights
to use and occupy the Premises as hereinafter specified, Lessee shall have
non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any rights to the roof, exterior walls
or utility raceways of the Building or to any other buildings in the Industrial
Center. The Premises, the Building, the Common Areas, the land upon which they
are located, along with all other buildings and improvements thereon, are herein
collectively referred to as the "INDUSTRIAL CENTER." (Also see Paragraph 2.)

     1.2(b) PARKING: as available unreserved vehicle parking spaces ("UNRESERVED
PARKING SPACES"); and no (0) reserved vehicle parking spaces ("RESERVED PARKING
SPACES"). (Also see Paragraph 2.6.)

     1.3 TERM: five (5) years and no (0) months ("ORIGINAL TERM") commencing
November 1, 2000 ("COMMENCEMENT DATE") and ending October 31, 2005 ("EXPIRATION
DATE"). (Also see Paragraph 3.)

     1.4 EARLY POSSESSION: N/A ("EARLY POSSESSION DATE"). (Also see Paragraphs
3.2 and 3.3.)

     1.5 BASE RENT: $43,012.20 per month ("BASE RENT"), payable on the first
(1st) day of each month commencing November 1, 2000.(Also see Paragraph 4.)

[x]  If this box is checked, this Lease provides for the Base Rent to be
     adjusted per Addendum 1.5, attached hereto.

     1.6(a) BASE RENT PAID UPON EXECUTION: $43,012.20 as Base Rent for the
period November 1 - November 30, 2000.

     1.6(b) LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: thirteen point
seven five percent (13.75%) ("LESSEE'S SHARE") as determined by [x] prorata
square footage of the Premises as compared to the total square footage of the
Building or [ ] other criteria as described in Addendum ________.

     1.7 SECURITY DEPOSIT: $124,428.15 IN CASH AND A LETTER OF CREDIT FOR AN
ADDITIONAL $248,856.30 ("SECURITY DEPOSIT"). (Also see Paragraph 5, ADDENDUM
PARAGRAPH 1.7 AND EXHIBIT F.)

     1.8 PERMITTED USE: General administrative offices and research and
development for Biometric technology, and other legally permitted uses.
("PERMITTED USE") (Also see Paragraph 6.)

     1.9 INSURING PARTY. Lessor is the "INSURING PARTY." (Also see Paragraph 8.)

     1.10(a) REAL ESTATE BROKERS. The following real estate broker(s)
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):

[x] Lee & Associates - Chris Pearson represents Lessor exclusively
    ("LESSOR'S BROKER");

[x] CM Realty - David Bruzzone represents Lessee exclusively
    ("LESSEE'S BROKER"); or

[ ] _____________________ represents both Lessor and Lessee ("DUAL AGENCY").
    (Also see Paragraph 15.)

     1.10(b) PAYMENT TO BROKERS. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s) (or in the event there is no
separate written agreement between Lessor and said Broker(s), the sum of $
per separate agreement) for brokerage services rendered by said Broker(s) in
connection with this transaction.

     1.11 GUARANTOR. The obligations of the Lessee under this Lease are to be
guaranteed by N/A ("GUARANTOR"). (Also see Paragraph 37.)

     1.12 ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 1.5  through 51, and Exhibits A through G, all of
which constitute a part of this Lease.

2.   PREMISES, PARKING AND COMMON AREAS.

     2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of square footage set forth in this Lease, or that may
have been used in calculating rental and/or Common Area Operating Expenses, is
an approximation which Lessor and Lessee agree is reasonable and the rental and
Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is not subject to
revision whether or not the actual square footage is more or less.

     2.2 CONDITION. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems, and loading doors, if any, in the Premises, other than
those constructed by Lessee, shall be in good operating condition on the
Commencement Date. If a non-compliance with said warranty exists as of the
Commencement Date, Lessor shall, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within thirty (30) days after the Commencement
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense.

     2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)) made or to be
made by Lessee. If the Premises do not comply with said

                                 PAGE 1 OF 13

<PAGE>   2

warranties, Lessor shall, except as otherwise provided in this Lease, promptly
after receipt of written notice from Lessee given within six (6) months
following the Commencement Date and setting forth with specificity the nature
and extent of such non-compliance, take such action, at Lessor's expense, as may
be reasonable or appropriate to rectify the non-compliance. Lessor makes no
warranty that the Permitted Use in Paragraph 1.8 is permitted for the Premises
under Applicable Laws (as defined in Paragraph 2.4).

     2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it has
been advised by the Broker(s) to satisfy itself with respect to the condition of
the Premises (including, but not limited to, the electrical and fire sprinkler
systems, security, environmental aspects, seismic and earthquake requirements,
and compliance with the Americans with Disabilities Act and applicable zoning,
municipal, county, state and federal laws, ordinances and regulations, and any
covenants or restrictions of record (collectively, "APPLICABLE LAWS") and the
present and future suitability of the Premises for Lessee's intended use; (b)
that Lessee has made such investigation as it deems necessary with reference to
such matters, is satisfied with reference thereto, and assumes all
responsibility therefore as the same relate to Lessee's occupancy of the
Premises and/or the terms of this Lease; and (c) that neither Lessor, nor any of
Lessor's agents, has made any oral or written representations or warranties with
respect to said matters other than as set forth in this Lease.

     2.5 LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in this
Paragraph 2 shall be of no force or effect if immediately prior to the date set
forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such
event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.

     2.6 VEHICLE PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "PERMITTED SIZE
VEHICLES." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)

          (a) Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities.

          (b) If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, then Lessor shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.

          (c) Lessor shall at the Commencement Date of this Lease provide the
parking facilities required by Applicable Law.

     2.7 COMMON AREAS -- DEFINITION. The term "COMMON AREAS" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Industrial Center and interior utility raceways within the Premises that
are provided and designated by the Lessor from time to time for the general
nonexclusive use of Lessor, Lessee and other lessees of the Industrial Center
and their respective employees, suppliers, shippers, customers, contractors and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

     2.8 COMMON AREAS -- LESSEE'S RIGHTS. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.

     2.9 COMMON AREAS -- RULES AND REGULATIONS. Lessor or such other person(s)
as Lessor may appoint shall have the exclusive control and management of the
Common Areas and shall have the right, from time to time, to establish, modify,
amend and enforce reasonable Rules and Regulations with respect thereto in
accordance with Paragraph 40. Lessee agrees to abide by and conform to all such
Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance with said rules and regulations by
other lessees of the Industrial Center.

     2.10 COMMON AREAS -- CHANGES. Lessor shall have the right, in Lessor's sole
discretion, from time to time:

          (a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;

          (b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;

          (c) To designate other land outside the boundaries of the Industrial
Center to be a part of the Common Areas;

          (d) To add additional buildings and improvements to the Common Areas;

          (e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and

          (f) To do and perform such other acts and make such other changes in,
to or with respect to the Common Areas and Industrial Center as Lessor may, in
the exercise of sound business judgment, deem to be appropriate.

3.   TERM.

     3.1 TERM. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.

     3.2 EARLY POSSESSION. If an Early Possession Date is specified in Paragraph
1.4 and if Lessee totally or partially occupies the Premises after the Early
Possession Date but prior to the Commencement Date, the obligation to pay Base
Rent shall be abated for the period of such early occupancy. All other terms of
this Lease, however, (including, but not limited to, the obligations to pay
Lessee's Share of Common Area Operating Expenses and to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.

     3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver possession
of the Premises to Lessee by the Early Possession Date, if one is specified in
Paragraph 1.4, or if no Early Possession Date is specified, by the Commencement
Date, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease, or the obligations of Lessee
hereunder, or extend the term hereof, but in such case, Lessee shall not, except
as otherwise provided herein, be obligated to pay rent or perform any other
obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee. If possession of the Premises is not
delivered to Lessee within sixty (60) days after the Commencement Date, Lessee
may, at its option, by notice in writing to Lessor within ten (10) days after
the end of said sixty (60) day period, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder; provided further,
however, that if such written notice of Lessee is not received by Lessor within
said ten (10) day period, Lessee's right to cancel this Lease hereunder shall
terminate and be of no further force or effect. Except as may be otherwise
provided, and regardless of when the Original Term actually commences, if
possession is not tendered to Lessee when required by this Lease and Lessee does
not terminate this Lease, as aforesaid, the period free of the obligation to pay
Base Rent, if any, that Lessee would otherwise have enjoyed shall run from the
date of delivery of possession and continue for a period equal to the period
during which the Lessee would have otherwise enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee.

4.   RENT.

     4.1 BASE RENT. Lessee shall pay Base Rent and other rent or charges, as the
same may be adjusted from time to time, to Lessor in lawful money of the United
States, without offset or deduction, on or before the day on which it is due
under the terms of this Lease. Base Rent and all other rent and charges for any
period during the term hereof which is for less than one full month shall be
prorated based upon the actual number of days of the month involved. Payment of
Base Rent and other charges shall be made to Lessor at its address stated herein
or to such other persons or at such other addresses as Lessor may from time to
time designate in writing to Lessee.

     4.2 COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee's Share (as specified in
Paragraph 1.6(b)) of all Common Area Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance with the
following provisions:

          (a) "COMMON AREA OPERATING EXPENSES" are defined, for purposes of this
Lease, as all costs incurred by Lessor relating to the ownership and operation
of the Industrial Center, including, but not limited to, the following:

               (i) The operation, repair and maintenance, in neat, clean, good
order and condition, of the following:

                    (aa) The Common Areas, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,

                                  PAGE 2 OF 13
<PAGE>   3

driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area
lighting facilities, fences and gates, elevators and roof.

                    (bb) Exterior signs and any tenant directories.

                    (cc) Fire detection and sprinkler systems.

               (ii) The cost of water, gas, electricity and telephone to service
the Common Areas.

               (iii) Trash disposal, property management and security services
and the costs of any environmental inspections.

               (iv) Reserves set aside for maintenance and repair of Common
Areas.

               (v) Real Property Taxes (as defined in Paragraph 10.2) to be paid
by Lessor for the Building and the Common Areas under Paragraph 10 hereof.

               (vi) The costs of the premiums for the insurance policies
maintained by Lessor under Paragraph 8 hereof.

               (vii) Any deductible portion of an insured loss concerning the
Building or the Common Areas.

               (viii) Any other services to be provided by Lessor that are
stated elsewhere in this Lease to be a Common Area Operating Expense.

          (b) Any Common Area Operating Expenses and Real Property Taxes that
are specifically attributable to the Building or to any other building in the
Industrial Center or to the operation, repair and maintenance thereof, shall be
allocated entirely to the Building or to such other building. However, any
Common Area Operating Expenses and Real Property Taxes that are not specifically
attributable to the Building or to any other building or to the operation,
repair and maintenance thereof, shall be equitably allocated by Lessor to all
buildings in the Industrial Center.

          (c) The inclusion of the improvements, facilities and services set
forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon
Lessor to either have said improvements or facilities or to provide those
services unless the Industrial Center already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide
the same or some of them.

          (d) Lessee's Share of Common Area Operating Expenses shall be payable
by Lessee within ten (10) BUSINESS days after a reasonably detailed statement of
actual expenses is presented to Lessee by Lessor. At Lessor's option, however,
an amount may be estimated by Lessor from time to time of Lessee's Share of
annual Common Area Operating Expenses and the same shall be payable monthly or
quarterly, as Lessor shall designate, during each 12-month period of the Lease
term, on the same day as the Base Rent is due hereunder. Lessor shall deliver to
Lessee within sixty (60) days after the expiration of each calendar year a
reasonably detailed statement showing Lessee's Share of the actual Common Area
Operating Expenses incurred during the preceding year. If Lessee's payments
under this Paragraph 4.2(d) during said preceding year exceed Lessee's Share as
indicated on said statement, Lessee shall be credited the amount of such
overpayment against Lessee's Share of Common Area Operating Expenses next
becoming due. If Lessee's payments under this Paragraph 4.2(d) during said
preceding year were less than Lessee's Share as indicated on said statement,
Lessee shall pay to Lessor the amount of the deficiency within ten (10) days
after delivery by Lessor to Lessee of said statement.

5.   SECURITY DEPOSIT. Lessee shall deposit with Lessor upon Lessee's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefore
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Any time the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies with Lessor as an addition to the Security Deposit so that the
total amount of the Security Deposit shall at all times bear the same proportion
to the then current Base Rent as the initial Security Deposit bears to the
initial Base Rent set forth in Paragraph 1.5. Lessor shall not be required to
keep all or any part of the Security Deposit separate from its general accounts.
Lessor shall, at the expiration or earlier termination of the term hereof and
after Lessee has vacated the Premises, return to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest herein), that portion of the
Security Deposit not used or applied by Lessor. Unless otherwise expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust, to bear interest or other increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease.

6.   USE.

     6.1  PERMITTED USE.

          (a) Lessee shall use and occupy the Premises only for the Permitted
Use set forth in Paragraph 1.8, or any other legal use which is reasonably
comparable thereto, and for no other purpose. Lessee shall not use or permit the
use of the Premises in a manner that is unlawful, creates waste or a nuisance,
or that disturbs owners and/or occupants of, or causes damage to the Premises or
neighboring premises or properties.

          (b) Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days after such request give a written notification of same,
which notice shall include an explanation of Lessor's reasonable objections to
the change in use.

     6.2  HAZARDOUS SUBSTANCES.

          (a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS SUBSTANCE" as
used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment, or the Premises; (ii) regulated or monitored by any governmental
authority; or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof. Lessee
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3). "REPORTABLE USE" shall mean (i) the installation or use of any
above or below ground storage tank; (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority; and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Laws require that a notice be given to persons entering or occupying
the Premises or neighboring properties. Notwithstanding the foregoing, Lessee
may, without Lessor's prior consent, but upon notice to Lessor and in compliance
with all Applicable Requirements, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of the Permitted
Use, so long as such use is not a Reportable Use and does not expose the
Premises or neighboring properties to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor. In addition, Lessor may (but
without any obligation to do so) condition its consent to any Reportable Use of
any Hazardous Substance by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor, including, but not limited
to, the installation (and, at Lessor's option, removal on or before Lease
expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional Security Deposit under Paragraph 5 hereof.

          (b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises or the Building, other than as previously consented to by
Lessor, Lessee shall immediately give Lessor written notice thereof, together
with a copy of any statement, report, notice, registration, application, permit,
business plan, license, claim, action, or proceeding given to, or received from,
any governmental authority or private party concerning the presence, spill,
release, discharge of, or exposure to, such Hazardous Substance including, but
not limited to, all such documents as may be involved in any Reportable Use
involving the Premises. Lessee shall not cause or permit any Hazardous Substance
to be spilled or released in, on, under or about the Premises (including,
without limitation, through the plumbing or sanitary sewer system).

          (c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee's control. Lessee's
obligations under this Paragraph 6.2(c) shall include, but not be limited to,
the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation
(including consultants' and attorneys' fees and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee
shall release Lessee from its obligations under this Lease with respect to

                                  PAGE 3 OF 13
<PAGE>   4

Hazardous Substances, unless specifically so agreed by Lessor in writing at the
time of such agreement.

     6.3  LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's sole
cost and expense, fully, diligently and in a timely manner, comply with all
"APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including,
but not limited to, matters pertaining to (i) industrial hygiene; (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions; and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill, or release
of any Hazardous Substance), now in effect or which may hereafter come into
effect. Lessee shall, within five (5) BUSINESS days after receipt of Lessor's
written request, provide Lessor with copies of all documents and information,
including, but not limited to, permits, registrations, manifests, applications,
reports and certificates, evidencing Lessee's compliance with any Applicable
Requirements specified by Lessor, and shall immediately upon receipt, notify
Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Lessee or the Premises to comply with any Applicable
Requirements.

     6.4  INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("LENDERS") shall have the right
to enter the Premises at any time in the case of an emergency, and otherwise at
reasonable times, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease and all Applicable
Requirements (as defined in Paragraph 6.3), and Lessor shall be entitled to
employ experts and/or consultants in connection therewith to advise Lessor with
respect to Lessee's activities, including but not limited to Lessee's
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance on or from the Premises. The costs and expenses of any such
inspections shall be paid by the party requesting same, unless a Default or
Breach of this Lease by Lessee or a violation of Applicable Requirements or a
contamination, caused or materially contributed to by Lessee, is found to exist
or to be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In such case, Lessee shall upon request reimburse Lessor or
Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.

7.   MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
     ALTERATIONS.

     7.1  LESSEE'S OBLIGATIONS.

          (a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically serving the Premises,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights, but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair.

          (b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain a contract, with copies to Lessor, in customary form and substance for
and with a contractor specializing and experienced in the inspection,
maintenance and service of the heating, air conditioning and ventilation system
for the Premises. However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain the contract for the heating, air conditioning and
ventilating systems, and if Lessor so elects, Lessee shall reimburse Lessor,
upon demand, for the cost thereof.

          (c) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) BUSINESS days'
prior written notice to Lessee (except in the case of an emergency, in which
case no notice shall be required), perform such obligations on Lessee's behalf,
and put the Premises in good order, condition and repair, in accordance with
Paragraph 13.2 below.

     7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof, fire sprinkler and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
and/or smoke detection systems and equipment, fire hydrants, parking lots,
walkways, parkways, driveways, landscaping, fences, signs and utility systems
serving the Common Areas and all parts thereof, as well as providing the
services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of any statute now or hereafter in effect which would otherwise
afford Lessee the right to make repairs at Lessor's expense or to terminate this
Lease because of Lessor's failure to keep the Building, Industrial Center or
Common Areas in good order, condition and repair.

     7.3  UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

          (a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS" is
used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "TRADE FIXTURES"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "ALTERATIONS" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause to be
made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises (excluding
the roof) without Lessor's consent but upon notice to Lessor, so long as they
are not visible from the outside of the Premises, do not involve puncturing,
relocating or removing the roof or any existing walls, or changing or
interfering with the fire sprinkler or fire detection systems and the cumulative
cost thereof during the term of this Lease as extended does not exceed
$10,000.00.

$2,500.00.

          (b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor. Lessor may (but without obligation
to do so) condition its consent to any requested Alteration or Utility
Installation that costs $2,500.00 or more upon Lessee's providing Lessor with a
lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation. HOWEVER, WITH RESPECT
ONLY TO THE INITIAL CONSTRUCTION OF THE TENANT IMPROVEMENTS AS DESCRIBED IN
EXHIBIT B, INCORPORATED HEREIN BY REFERENCE, LESSEE SHALL ONLY BE OBLIGATED TO
PROVIDE LESSOR WITH A LIEN AND COMPLETION BOND IN AN AMOUNT EQUAL TO ONE AND ONE
HALF TIMES THE EXCESS OF COST OF SUCH ALTERATION OR UTILITY INSTALLATION OVER
THE ALLOWANCE ALLOCATED TO THE CONSTRUCTION OF TENANT IMPROVEMENTS AS DESCRIBED
IN SECTION 2 OF EXHIBIT B.

          (c) LIEN PROTECTION. Lessee shall pay when due all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on, or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense, defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof
against the Lessor or the Premises. If Lessor shall require, Lessee shall

                                  PAGE 4 OF 13
<PAGE>   5

furnish to Lessor a surety bond satisfactory to Lessor, in an amount equal to
one and one-half times the amount of such contested lien claim or demand,
indemnifying Lessor against liability for the same, as required by law for the
holding of the Premises free from the effect of such lien or claim. In addition,
Lessor may require Lessee to pay Lessor's attorneys' fees and costs in
participating in such action if Lessor shall decide it is to its best interest
to do so.

     7.4  OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

          (a) OWNERSHIP. Subject to Lessor's right to require their removal and
to cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises by
Lessee shall be the property of and owned by Lessee, but considered a part of
the Premises. Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.

          (b) REMOVAL. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee-Owned Alterations or Utility Installations NOT INCLUDED
IN THE APPROVED WORKING DRAWINGS be removed by the expiration or earlier
termination of this Lease, notwithstanding that their installation may have been
consented to by Lessor. Lessor may require the removal at any time of all or any
part of any Alterations or Utility Installations made without the required
consent of Lessor.

          (c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, clean and
free of debris and in good operating order, condition and state of repair,
ordinary wear and tear excepted. Ordinary wear and tear shall not include any
damage or deterioration that would have been prevented by good maintenance
practice or by Lessee performing all of its obligations under this Lease. Except
as otherwise agreed or specified herein, the Premises, as surrendered, shall
include the Alterations and Utility Installations. The obligation of Lessee
shall include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment, and
Lessee-Owned Alterations and Utility Installations, as well as the removal of
any storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all as
may then be required by Applicable Requirements and/or good practice. Lessee's
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee subject to its obligation to repair and restore the Premises per this
Lease.

8.   INSURANCE; INDEMNITY.

     8.1  PAYMENT OF PREMIUMS. The cost of the premiums for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date or Expiration
Date.

     8.2  LIABILITY INSURANCE.

          (a) CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "INSURED CONTRACT"
for the performance of Lessee's indemnity obligations under this Lease. The
limits of said insurance required by this Lease or as carried by Lessee shall
not, however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All insurance to be carried by Lessee shall be primary to and not
contributory with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.

          (b) CARRIED BY LESSOR. Lessor shall also maintain liability insurance
described in Paragraph 8.2(a) above, in addition to and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.

     8.3  PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.

          (a) BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full replacement cost, as the same
shall exist from time to time, or the amount required by any Lender(s), but in
no event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. Lessee-Owned Alterations
and Utility Installations, Trade Fixtures and Lessee's personal property shall
be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and
commercially appropriate, Lessor's policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for any additional
costs resulting from debris removal and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating the reconstruction or replacement
of any undamaged sections of the Building required to be demolished or removed
by reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any co-insurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located.

          (b) RENTAL VALUE. Lessor shall also obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and any Lender(s), insuring the loss of the full rental and
other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said insurance may provide that in
the event the Lease is terminated by reason of an insured loss, the period of
indemnity for such coverage shall be extended beyond the date of the completion
of repairs or replacement of the Premises, to provide for one full year's loss
of rental revenues from the date of any such loss. Said insurance shall contain
an agreed valuation provision in lieu of any co-insurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected rental income,
Real Property Taxes, insurance premium costs and other expenses, if any,
otherwise payable, for the next 12-month period. Common Area Operating Expenses
shall include any deductible amount in the event of such loss.

          (c) ADJACENT PREMISES. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.

          (d) LESSEE'S IMPROVEMENTS. Since Lessor is the Insuring Party, Lessor
shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.

     8.4  LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall be full replacement cost coverage with a deductible not to exceed $1,000
per occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property and the restoration of Trade Fixtures and
Lessee-Owned Alterations and Utility Installations. Upon request from Lessor,
Lessee shall provide Lessor with written evidence that such insurance is in
force.

     8.5  INSURANCE POLICIES. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender, as set forth
in the most current issue of "Best's Insurance Guide." Lessee shall not do or
permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of, the insurance required under Paragraph 8.2(a) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall, at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with evidence of
renewals or "insurance binders" evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand.

     8.6  WAIVER OF SUBROGATION. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages (whether in contract or in tort) against the
other, for loss or damage to their property arising out of or incident to the
perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as

                                  PAGE 5 OF 13
<PAGE>   6

the insurance is not invalidated thereby.

     8.7  INDEMNITY. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, loss of permits, attorneys' and consultants'
fees, expenses and/or liabilities arising out of, involving, or in connection
with, the occupancy of the Premises by Lessee, the conduct of Lessee's business,
any act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee, upon notice from Lessor, shall defend
the same at Lessee's expense by counsel reasonably satisfactory to Lessor and
Lessor shall cooperate with Lessee in such defense. Lessor need not have first
paid any such claim in order to be so indemnified.

     8.8  EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not. Lessor
shall not be liable for any damages arising from any act or neglect of any other
lessee of Lessor nor from the failure by Lessor to enforce the provisions of any
other lease in the Industrial Center. Notwithstanding Lessor's negligence or
breach of this Lease, Lessor shall under no circumstances be liable for injury
to Lessee's business or for any loss of income or profit therefrom.

9.   DAMAGE OR DESTRUCTION.

     9.1  DEFINITIONS.

          (a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is less than fifty percent (50%) of
the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.

          (b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is fifty percent (50%) or more of the
then Replacement Cost of the Premises (excluding Lessee-Owned Alterations and
Utility Installations and Trade Fixtures) immediately prior to such damage or
destruction. In addition, damage or destruction to the Building, other than
Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any
lessees of the Building, the cost of which damage or destruction is fifty
percent (50%) or more of the then Replacement Cost (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures of any lessees of the
Building) of the Building shall, at the option of Lessor, be deemed to be
Premises Total Destruction.

          (c) "INSURED LOSS" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a) irrespective of any deductible amounts or coverage
limits involved.

          (d) "REPLACEMENT COST" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.

          (e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

     9.2  PREMISES PARTIAL DAMAGE -- INSURED LOSS. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect PROVIDED, HOWEVER, THAT IF REPAIRS ARE NOT
COMPLETED WITHIN 180 DAYS OF THE OCCURRENCE OF PREMISES PARTIAL DAMAGE. LESSEE
SHALL HAVE THE RIGHT TO TERMINATE THE LEASE UPON DELIVERY OF WRITTEN NOTICE TO
LESSOR STATING SUCH INTENTION, PROVIDED, HOWEVER, THAT LESSEE MUST GIVE SUCH
NOTICE NO LATER THAN 210 DAYS AFTER THE OCCURRENCE OF THE PREMISES PARTIAL
DAMAGE. In the event, however, that there is a shortage of insurance proceeds
and such shortage is due to the fact that, by reason of the unique nature of the
improvements in the Premises, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within ten (10) BUSINESS days following receipt of
written notice of such shortage and request therefor. If Lessor receives said
funds or adequate assurance thereof within said ten (10) BUSINESS day period,
Lessor shall complete them as soon as reasonably possible and this Lease shall
remain in full force and effect. If Lessor does not receive such funds or
assurance within said period, Lessor may nevertheless elect by written notice to
Lessee within ten (10) BUSINESS days thereafter to make such restoration and
repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within such ten (10) day period,
and if Lessor does not so elect to restore and repair, then this Lease shall
terminate sixty (60) days following the occurrence of the damage or destruction.
Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial Damage due to flood or earthquake shall
be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such insurance
shall be made available for the repairs if made by either Party.

     9.3  PARTIAL DAMAGE -- UNINSURED LOSS. If Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may, at Lessor's
option, either (i) repair such damage as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such damage of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) BUSINESS days
after the receipt of such notice to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage totally at Lessee's expense and
without reimbursement from Lessor. Lessee shall provide Lessor with the required
funds or satisfactory assurance thereof within thirty (30) days following such
commitment from Lessee. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not give such
notice and provide the funds or assurance thereof within the times specified
above, this Lease shall terminate as of the date specified in Lessor's notice of
termination.

     9.4  TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 9.7.

     9.5  DAMAGE NEAR END OF TERM. If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair exceeds
one month's Base Rent, whether or not an Insured Loss, Lessor may, at Lessor's
option, terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is ten (10) BUSINESS days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's expense, repair such damage as soon as reasonably possible
and this Lease shall continue in full force and effect. If Lessee fails to
exercise such option and provide such funds or assurance during such period,
then this Lease shall terminate as of the date set forth in the first sentence
of this Paragraph 9.5.

     9.6  ABATEMENT OF RENT; LESSEE'S REMEDIES.

          (a) In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base Rent,

                                  PAGE 6 OF 13
<PAGE>   7

Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder for the period during which such damage or condition, its repair,
remediation or restoration continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired, but not in excess of
proceeds from insurance required to be carried under Paragraph 8.3(b). Except
for abatement of Base Rent, Common Area Operating Expenses and other charges, if
any, as aforesaid, all other obligations of Lessee hereunder shall be performed
by Lessee, and Lessee shall have no claim against Lessor for any damage suffered
by reason of any such damage, destruction, repair, remediation or restoration.

          (b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after the receipt of such notice, this Lease
shall continue in full force and effect. "COMMENCE" as used in this Paragraph
9.6 shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever
occurs first.

     9.7  HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject
to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may, at
Lessor's option, either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000, whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.

      9.8 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.

     9.9  WAIVER OF STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.

10.  REAL PROPERTY TAXES.

     10.1 PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as defined
in Paragraph 10.2, applicable to the Industrial Center, and except as otherwise
provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions
of Paragraph 4.2.

     10.2 REAL PROPERTY TAX DEFINITION. As used herein, the term "REAL PROPERTY
TAXES" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed upon the Industrial Center by any authority having the
direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage, or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Industrial Center or any portion thereof, Lessor's
right to rent or other income therefrom, and/or Lessor's business of leasing the
Premises. The term "REAL PROPERTY TAXES" shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in Applicable Law taking effect, during the term of this
Lease, including, but not limited to, a change in the ownership of the
Industrial Center or in the improvements thereon, the execution of this Lease,
or any modification, amendment or transfer thereof, and whether or not
contemplated by the Parties. In calculating Real Property Taxes for any calendar
year, the Real Property Taxes for any real estate tax year shall be included in
the calculation of Real Property Taxes for such calendar year based upon the
number of days which such calendar year and tax year have in common.

     10.3 ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.

     10.4 JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.

     10.5 LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

11. UTILITIES. Lessee shall pay directly for all utilities and services supplied
to the Premises, including, but not limited to, electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon. If
any such utilities or services are not separately metered to the Premises or
separately billed to the Premises, Lessee shall pay to Lessor a reasonable
proportion to be determined by Lessor of all such charges jointly metered or
billed with other premises in the Building, in the manner and within the time
periods set forth in Paragraph 4.2(d).

12.  ASSIGNMENT AND SUBLETTING.

     12.1 LESSOR'S CONSENT REQUIRED.

          (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.

          (b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of fifty point
one percent (50.1%) or more of the voting control of Lessee shall constitute a
change in control for this purpose.

          (c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of full
execution and delivery of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, at whichever time
said Net Worth of Lessee was or is greater, shall be considered an assignment of
this Lease by Lessee to which Lessor may reasonably withhold its consent. "NET
WORTH OF LESSEE" for purposes of this Lease shall be the net worth of Lessee
(excluding any Guarantors) established under generally accepted accounting
principles consistently applied.

          (d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1, or a non-curable Breach without
the necessity of any notice and grace period. If Lessor elects to treat such
unconsented to assignment or subletting as a non-curable Breach, Lessor shall
have the right to either: (i) terminate this Lease, or (ii) upon thirty (30)
days'

                                  PAGE 7 OF 13
<PAGE>   8

written notice ("LESSOR'S NOTICE"), increase the monthly Base Rent for the
Premises to the greater of the then fair market rental value of the Premises, as
reasonably determined by Lessor, or one hundred ten percent (110%) of the Base
Rent then in effect. Pending determination of the new fair market rental value,
if disputed by Lessee, Lessee shall pay the amount set forth in Lessor's Notice,
with any overpayment credited against the next installment(s) of Base Rent
coming due, and any underpayment for the period retroactively to the effective
date of the adjustment being due and payable immediately upon the determination
thereof. Further, in the event of such Breach and rental adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to the then fair market value as reasonably
determined by Lessor (without the Lease being considered an encumbrance or any
deduction for depreciation or obsolescence, and considering the Premises at its
highest and best use and in good condition) or one hundred ten percent (110%) of
the price previously in effect, (ii) any index-oriented rental or price
adjustment formulas contained in this Lease shall be adjusted to require that
the base index be determined with reference to the index applicable to the time
of such adjustment, and (iii) any fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased in the same ratio as the new
rental bears to the Base Rent in effect immediately prior the adjustment
specified in Lessor's Notice.

          (e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.

     12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

          (a) Regardless of Lessor's consent, any assignment or subletting shall
not (i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of
any obligations hereunder, nor (iii) alter the primary liability of Lessee for
the payment of Base Rent and other sums due Lessor hereunder or for the
performance of any other obligations to be performed by Lessee under this Lease.

          (b) Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.

          (c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or the sublease. Lessee will be subleasing portions
of the Premises to IT Concepts during the Term. Lessor agrees that during such
sublease period to IT Concepts, Lessor shall not exercise its right under
Addendum Paragraph 12.1 (f) and Lease subparagraphs 12.1(f), 12.2(g) or (h).
Nothing contained in this Paragraph shall be interpreted to mean that Lessor's
consent is not required for any such sublease(s).

          (d) In the event of any Default or Breach of Lessee's obligation under
this Lease, Lessor may proceed directly against Lessee, any Guarantors or anyone
else responsible for the performance of the Lessee's obligations under this
Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.

          (e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including, but not limited to, the intended use and/or
required modification of the Premises, if any, together with a non-refundable
deposit of $1,000, as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested by Lessor.

          (f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.

          (g) The occurrence of a transaction described in Paragraph 12.2(c)
shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased by an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
Security Deposit increase a condition to Lessor's consent to such transaction.

          (h) Lessor, as a condition to giving its consent to any assignment or
subletting, for the remainder of the original term may require that the amount
and adjustment schedule of the rent payable under this Lease be adjusted to what
is then the market value and/or adjustment schedule for property similar to the
Premises as then constituted, as determined by Lessor.

     12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

          (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of the foregoing
provision or any other assignment of such sublease to Lessor, nor by reason of
the collection of the rents from a sublessee, be deemed liable to the sublessee
for any failure of Lessee to perform and comply with any of Lessee's obligations
to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become due under
the sublease. Sublessee shall rely upon any such statement and request from
Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Breach exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee, or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor. In the event that Lessor begins receiving sublease rents
directly from sublessee due to a stated breach, and thereafter the breach is
cured or dismissed, the Lessee may make a written request to Lessor to receive
rents and income directly from Sublessee, which may not be unreasonably refused
by Lessor.

          (b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior defaults
or breaches of such sublessor under such sublease.

          (c) Any matter or thing requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor herein.

          (d) No sublessee under a sublease approved by Lessor shall further
assign or sublet all or any part of the Premises without Lessor's prior written
consent.

          (e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.

13.  DEFAULT; BREACH; REMEDIES.

     13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default. A "DEFAULT" by Lessee is
defined as a failure by Lessee to observe, comply with or perform any of the
terms, covenants, conditions or rules applicable to Lessee under this Lease. A
"BREACH" by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set

                                  PAGE 8 OF 13
<PAGE>   9

forth in Paragraphs 13.2 and/or 13.3:

          (a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.

          (b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent, Lessee's Share of Common Area
Operating Expenses, or any other monetary payment required to be made by Lessee
hereunder as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of
three (3) business days following written notice thereof by or on behalf of
Lessor to Lessee.

          (c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Requirements per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the rescission of an unauthorized assignment or
subletting per Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs 16 or 37,
(v) the subordination or non-subordination of this Lease per Paragraph 30, (vi)
the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of ten (10) days
following written notice by or on behalf of Lessor to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof that
are to be observed, complied with or performed by Lessee, other than those
described in Subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice thereof by or on
behalf of Lessor to Lessee; provided, however, that if the nature of Lessee's
Default is such that more than thirty (30) days are reasonably required for its
cure, then it shall not be deemed to be a Breach of this Lease by Lessee if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.

          (e) The occurrence of any of the following events: (i) the making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this Subparagraph 13.1(e) is contrary to any
applicable law, such provision shall be of no force or effect, and shall not
affect the validity of the remaining provisions.

          (f) The discovery by Lessor that any financial statement of Lessee or
of any Guarantor, given to Lessor by Lessee or any Guarantor, was materially
false.

          (g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurances of security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the Guarantors that existed at the time of execution of this Lease.

     13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including, but not limited to, the obtaining of reasonably required
bonds, insurance policies, or governmental licenses, permits or approvals. The
costs and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its own
option, may require all future payments to be made under this Lease by Lessee to
be made only by cashier's check. In the event of a Breach of this Lease by
Lessee (as defined in Paragraph 13.1), with or without further notice or demand,
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such Breach, Lessor may:

          (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the award of the unpaid rent which had been earned at the time of
termination; (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 the Lessee proves could have
been reasonably avoided; (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 the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to, the cost of
recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and that portion of any leasing commission paid by Lessor in connection with
this Lease applicable to the unexpired term of this Lease. The worth at the time
of award of the amount referred to in provision (iii) of the immediately
preceding sentence shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco or the Federal Reserve Bank
District in which the Premises are located at the time of award plus one percent
(1%). Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach
of this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for such
rent and/or damages. If a notice and grace period required under Subparagraphs
13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or
to perform or quit, as the case may be, given to Lessee under any statute
authorizing the forfeiture of leases for unlawful detainer shall also constitute
the applicable notice for grace period purposes required by Subparagraph
13.1(b), (c) or (d). In such case, the applicable grace period under the
unlawful detainer statute shall run concurrently after the one such statutory
notice, and the failure of Lessee to cure the Default within the greater of the
two (2) such grace periods shall constitute both an unlawful detainer and a
Breach of this Lease entitling Lessor to the remedies provided for in this Lease
and/or by said statute.

          (b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
recover the rent as it becomes due, provided Lessee has the right to sublet or
assign, subject only to reasonable limitations. Lessor and Lessee agree that the
limitations on assignment and subletting in this Lease are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the appointment
of a receiver to protect the Lessor's interest under this Lease, shall not
constitute a termination of the Lessee's right to possession.

          (c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are located.

          (d) The expiration or termination of this Lease and/or the termination
of Lessee's right to possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.

     13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "INDUCEMENT PROVISIONS" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor, as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of
such acceptance.

     13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other sum due from Lessee shall not
be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent

                                  PAGE 9 OF 13
<PAGE>   10

(6%) of such overdue amount. The Parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of late payment by Lessee. Acceptance of such late charge by Lessor shall
in no event constitute a waiver of Lessee's Default or Breach with respect to
such overdue amount, nor prevent Lessor from exercising any of the other rights
and remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for three (3) consecutive installments of
Base Rent, then notwithstanding Paragraph 4.1 or any other provision of this
Lease to the contrary, Base Rent shall, at Lessor's option, become due and
payable quarterly in advance.

     13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by any Lender(s) whose name and address shall have been furnished to Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.

14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be
entitled to any compensation, separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of its net severance damages received, over and above Lessee's share of
the legal and other expenses incurred by Lessor in the condemnation matter,
repair any damage to the Premises caused by such condemnation authority. Lessee
shall be responsible for the payment of any amount in excess of such net
severance damages required to complete such repair.

15.  BROKERS' FEES

     15.1 PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.

     15.2 ADDITIONAL TERMS. Unless Lessor and Broker(s) have otherwise agreed in
writing, Lessor agrees that: (a) if Lessee exercises any Option (as defined in
Paragraph 39.1) granted under this Lease or any Option subsequently granted, or
(b) if Lessee acquires any rights to the Premises or other premises in which
Lessor has an interest, or (c) if Lessee remains in possession of the Premises
with the consent of Lessor after the expiration of the term of this Lease after
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Premises and/or any adjacent property in which Lessor has an interest, or
(e) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Broker(s) a fee in accordance with the schedule of said Broker(s) in effect
at the time of the execution of this Lease.

     15.3 ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Each Broker shall be an intended third party beneficiary of the provisions
of Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.

     15.4 REPRESENTATIONS AND WARRANTIES. Lessee and Lessor each represent and
warrant to the other that it has had no dealings with any person, firm, broker
or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.

16.  TENANCY AND FINANCIAL STATEMENTS.

     16.1 TENANCY STATEMENT. Each Party (as "RESPONDING PARTY") shall within ten
(10) days after written notice from the other Party (the "REQUESTING PARTY")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in a form similar to the then most current "TENANCY STATEMENT" form published by
the American Industrial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.

     16.2 FINANCIAL STATEMENT. If Lessor desires to finance, refinance, or sell
the Premises or the Building, or any part thereof, Lessee and all Guarantors
shall deliver to any potential lender or purchaser designated by Lessor such
financial statements of Lessee and such Guarantors as may be reasonably required
by such lender or purchaser, including, but not limited to, Lessee's financial
statements for the past three (3) years. All such financial statements shall be
received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.

17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises. In the event of
a transfer of Lessor's title or interest in the Premises or in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.

18. SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor within ten (10) days following
the date on which it was due, shall bear interest from the date due at the prime
rate charged by the largest state chartered bank in the state in which the
Premises are located plus four percent (4%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.

20. TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.

22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.

23.  NOTICES.

     23.1 NOTICE REQUIREMENTS. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by messenger or
courier service) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile transmission
during normal business hours, and shall be deemed sufficiently given if served
in a manner specified in this Paragraph 23. The addresses noted adjacent to a
Party's signature on this Lease shall be that Party's address for delivery or
mailing of notice purposes. Either Party may by written notice to the other
specify a different address for notice purposes, except that upon Lessee's
taking possession of the Premises, the Premises shall constitute Lessee's
address for the purpose of mailing or delivering notices to Lessee. A copy of
all notices required or permitted to be given to Lessor hereunder shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by written notice to Lessee.

     23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantees

                                  PAGE 10 OF 13
<PAGE>   11

next day delivery shall be deemed given twenty-four (24) hours after delivery of
the same to the United States Postal Service or courier. If any notice is
transmitted by facsimile transmission or similar means, the same shall be deemed
served or delivered upon telephone or facsimile confirmation of receipt of the
transmission thereof, provided a copy is also delivered via delivery or mail. If
notice is received on a Saturday or a Sunday or a legal holiday, it shall be
deemed received on the next business day.

24. WAIVERS. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any such act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. Regardless of Lessor's
knowledge of a Default or Breach at the time of accepting rent, the acceptance
of rent by Lessor shall not be a waiver of any Default or Breach by Lessee of
any provision hereof. Any payment given Lessor by Lessee may be accepted by
Lessor on account of monies or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.

25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.

26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to one hundred fifty
percent (150%) of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination. Nothing contained herein shall
be construed as a consent by Lessor to any holding over by Lessee.

27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.

29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the Parties,
their personal representatives, successors and assigns and be governed by the
laws of the state in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.

30.  SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

     30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default pursuant
to Paragraph 13.5. If any Lender shall elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.

     30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.

     30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.

     30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.

31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) in any such proceeding, action, or appeal thereon, shall be
entitled to reasonable attorneys' fees. Such fees may be awarded in the same
suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term "PREVAILING PARTY" shall include,
without limitation, a Party or Broker who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other Party or Broker of its claim or defense. The
attorneys' fee award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees reasonably
incurred. Lessor shall be entitled to attorneys' fees, costs and expenses
incurred in preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting Breach. Broker(s) shall be intended
third party beneficiaries of this Paragraph 31.

32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the Building, as Lessor
may reasonably deem necessary. Lessor may at any time place on or about the
Premises or Building any ordinary "For Sale" signs and Lessor may at any time
during the last one hundred eighty (180) days of the term hereof place on or
about the Premises any ordinary "For Lease" signs. All such activities of Lessor
shall be without abatement of Rent or liability to Lessee.

33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.

34. SIGNS. Lessee shall not place any sign upon the exterior of the Premises or
the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to advertise
Lessee's own business so long as such signs are in a location designated by
Lessor and comply with Applicable Requirements and the signage criteria
established for the Industrial Center by Lessor. The installation of any sign on
the Premises by or for Lessee shall be subject to the provisions of Paragraph 7
(Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations).
Unless otherwise expressly agreed herein, Lessor reserves all rights to the use
of the roof of the Building, and the right to install advertising signs on the
Building, including the roof, which do not unreasonably interfere with the
conduct of Lessee's business; Lessor shall be entitled to all revenues from such
advertising signs.

35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.

36.  CONSENTS.

          (a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party is required to an act by
or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor's actual reasonable costs and expenses (including, but not
limited to, architects', attorneys', engineers' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including, but not
limited to, consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering and
responding to Lessee's request not to exceed $1,500.00. Any unused portion of
said deposit shall be refunded to Lessee without interest. Lessor's consent to
any act, assignment of this Lease or subletting of the Premises by Lessee shall
not constitute an acknowledgment that no Default or Breach by Lessee of this
Lease exists, nor shall such consent be deemed a waiver of any then existing
Default or Breach, except as may be otherwise specifically stated

                                  PAGE 11 OF 13

<PAGE>   12

in writing by Lessor at the time of such consent.

          (b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.

37.  GUARANTOR.

     37.1 FORM OF GUARANTY. If there are to be any Guarantors of this Lease per
Paragraph 1.11, the form of the guaranty to be executed by each such Guarantor
shall be in the form most recently published by the American Industrial Real
Estate Association, and each such Guarantor shall have the same obligations as
Lessee under this Lease, including, but not limited to, the obligation to
provide the Tenancy Statement and information required in Paragraph 16.

     37.2 ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a Default of
the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor (and
of the party signing on Guarantor's behalf) to obligate such Guarantor on said
guaranty, and resolution of its board of directors authorizing the making of
such guaranty, together with a certificate of incumbency showing the signatures
of the persons authorized to sign on its behalf, (b) current financial
statements of Guarantor as may from time to time be requested by Lessor, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is still in
effect.

38. QUIET POSSESSION. Upon payment by Lessee of the Rent for the Premises and
the performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.

39. OPTIONS.

     39.1 DEFINITION. As used in this Lease, the word "OPTION" has the following
meaning: (a) the right to extend the term of this Lease or to renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor; (b)
the right of first refusal to lease the Premises or the right of first offer to
lease the Premises or the right of first refusal to lease other property of
Lessor or the right of first offer to lease other property of Lessor; (c) the
right to purchase the Premises, or the right of first refusal to purchase the
Premises, or the right of first offer to purchase the Premises, or the right to
purchase other property of Lessor, or the right of first refusal to purchase
other property of Lessor, or the right of first offer to purchase other property
of Lessor.

     39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.

     39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later option cannot be exercised unless the prior
Options to extend or renew this Lease have been validly exercised.

     39.4 EFFECT OF DEFAULT ON OPTIONS.

          (a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of separate Default under Paragraph 13.1 during the twelve
(12) month period immediately preceding the exercise of the Option, whether or
not the Defaults are cured.

          (b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).

          (c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of separate Defaults under Paragraph 13.1
during any twelve (12) month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.

40. RULES AND REGULATIONS. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("RULES AND REGULATIONS") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and the Industrial Center and their invitees.

41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

42. RESERVATIONS. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way, utility
raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.

43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.

44. AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

45. CONFLICT. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

46. OFFER. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.

47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.

48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

     IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEY'S
     REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
     CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS,
     UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
     RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
     OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS
     TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE
     OR THE TRANSACTION TO

                                 PAGE 12 OF 13
<PAGE>   13

     WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR
     OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE
     SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
     STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

The Parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at:                              Executed at:
             -------------------------                 -------------------------
on:                                       on:
    ----------------------------------        ----------------------------------

BY LESSOR:                                BY LESSEE:

Pacific Gulf Properties Inc., a           Identix Incorporated, A Delaware
--------------------------------------    --------------------------------------
Maryland Corporation                      Corporation
--------------------------------------    --------------------------------------

By: /s/ DOUGLAS B. KNIVETON               By: /s/ JAMES P. SCULLION
    ----------------------------------        ----------------------------------

Name Printed: Douglas B. Kniveton         Name Printed: James P. Scullion
              ------------------------                  ------------------------

Title: Director of Real Estate            Title: President, CFO & Secretary
       -------------------------------           -------------------------------

By: [SIGNATURE ILLEGIBLE]                 By:
    ----------------------------------        ----------------------------------

Name Printed: [ILLEGIBLE]                 Name Printed:
              ------------------------                  ------------------------

Title:                                    Title:
       -------------------------------           -------------------------------

Address:                                  Address:
        ------------------------------             -----------------------------

--------------------------------------    --------------------------------------

Telephone: (   )                          Telephone: (   )
            --- ----------------------                --- ----------------------

Facsimile: (   )                          Facsimile: (   )
            --- ----------------------                --- ----------------------

BROKER:                                   BROKER:

Executed at:                              Executed at:
            --------------------------                --------------------------
on:                                       on:
   -----------------------------------        ----------------------------------

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

Name Printed:                             Name Printed:
             -------------------------                  ------------------------
Title:                                    Title:
      --------------------------------           -------------------------------

Address:                                  Address:
         -----------------------------             -----------------------------

--------------------------------------    --------------------------------------

Telephone: (   )                          Telephone: (   )
            --- ----------------------                --- ----------------------

Facsimile: (   )                          Facsimile: (   )
            --- ----------------------                --- ----------------------

NOTE: These forms are often modified to meet changing requirements of law and
      needs of the industry. Always write or call to make sure you are utilizing
      the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700
      South Flower Street, Suite 600, Los Angeles, California 90017. (213)
      687-8777.

                                  PAGE 13 OF 13
<PAGE>   14
                            FIRST AMENDMENT TO LEASE

      THIS AMENDMENT, made as of December 12, 2000, by and between CALWEST
INDUSTRIAL PROPERTIES, LLC, a California limited liability company ("Lessor"),
and IDENTIX INCORPORATED, a Delaware corporation ("Lessee"),

                              W I T N E S S E T H:

      Recital of Facts:

      A. Lessor's predecessor in interest, Pacific Gulf Properties Inc., a
Maryland corporation, and Lessee entered into the Standard Industrial
Commercial Multi-Tenant Lease -- Modified Net dated July 19, 2000 (the
"Lease"), with respect to the premises commonly known as 6591 Sierra Lane,
Dublin, California. Words defined in the Lease shall have the same meanings in
this Amendment.

      B. Lessor and Lessee desire to modify the Lease to adjust the
Commencement Date and Expiration Date of the Lease and to provide that Lessee,
not Lessor, shall design and construct the improvements in the Premises to be
constructed pursuant to Exhibit B of the Lease, as more particularly set forth
herein.

      NOW, THEREFORE, Lessor and Lessee agree as follows:

      1. Term. Paragraph 1.3 of the Lease is hereby deleted in its entirety and
replaced with the following:

      "TERM: A term ("ORIGINAL TERM") commencing on the date that is the
earlier of (i) March 16, 2001 or (ii) the date Tenant occupies the Premises
(the "COMMENCEMENT DATE") and ending on March 15, 2006 ("EXPIRATION DATE")."

      2. Addendum Paragraph 3.3. The third (3rd) paragraph of Addendum
Paragraph 3.3 of the Lease is hereby deleted in its entirety.

      3. Exhibit B. Exhibit B to the Lease is hereby replaced in its entirety
by Exhibit B attached hereto and made a part hereof.

      4. No Other Amendment; Conflict. Except as set forth in this Amendment,
the Lease is unchanged and, as so amended, the Lease shall remain in full
force. If the provisions of this Amendment conflict with the provisions of the
Lease, then the provisions of this Amendment shall prevail.

      IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment as of
the date first set forth above.

CALWEST INDUSTRIAL PROPERTIES, LLC,       IDENTIX INCORPORATED, a Delaware
a California limited liability company    corporation

By PGP PARTNERS, INC., a California
   corporation, as Agent and Property
   Manager for Lessor

   By /s/ DAVID WEINSTEIN                 By /s/ JAMES P. SCULLION
     -------------------------------        -------------------------------
      David Weinstein                        James P. Scullion
     Title Regional Manager                 Title President
          --------------------------              -------------------------
<PAGE>   15

                                   EXHIBIT B

                                  WORK LETTER

     Lessee acknowledges and agrees that the Premises is satisfactory and shall
be accepted by Lessee in its "AS IS" condition as of the date of execution of
the Lease and on the Commencement Date. Lessor shall not be obligated to
construct, and except as set forth in this Exhibit B, pay for, any improvements,
additions or refurbishment in, to or of the Premises. Lessee desires to make
certain improvements to the Premises pursuant to this Exhibit B.

                                   SECTION 1

                     CONSTRUCTION DRAWINGS FOR THE PREMISES

     Prior to the execution of this Lease, Lessor and Lessee have approved a
detailed space plan for the construction of certain improvements in the
Premises, which space plan has been prepared by CONSOLIDATED INTERIORS, Dated
12/13/00 Job No. 0008 (the "Final Space Plan"). Based upon and in conformity
with the Final Space Plan, Lessee shall cause its architect and engineers to
prepare and deliver to Lessor, for Lessor's prior written approval, detailed
specifications and engineered working drawings for the tenant improvements shown
on the Final Space Plan (the "WORKING DRAWINGS"). The Working Drawings shall
incorporate modifications to the Final Space Plan as necessary to comply with
the floor load and other structural and system requirements of the Building. It
is understood and agreed that Lessee may not make any alterations to the
electrical distribution system to the Premises or the Building if, in Lessor's
sole judgment, such alterations would in any way interfere with other tenants of
the Building. The tenant improvements shown on the Working Drawings shall be
referred to herein as the "LESSEE IMPROVEMENTS."

                                   SECTION 2

                         CONDITIONS TO LESSOR APPROVAL

     Subject to Lessee's compliance with each and every provision set forth in
this Exhibit B and in the Lease, including, without limitation, Paragraph 7.3 of
the Lease, Lessor consents to Lessee's construction and completion of the Lessee
Improvements. Lessor's approval of the Lessee Improvements is subject to the
following additional provisions:

     (a)  The Lessee Improvements may be commenced any time after the
satisfaction of the items listed in this subsection and after the Commencement
Date, and shall be completed within one hundred twenty (120) days following
commencement of the Lessee Improvements. However, no delay in completion of the
Lessee Improvements shall change or extend the Commencement Date or change or
extend the Expiration Date. The work contemplated by this Exhibit B shall not
commence until:

          (i)   receipt by Lessor and written approval by both Lessor and Lessee
                of the Working Drawings;

          (ii)  a copy of a fully executed construction contract has been
                delivered to Lessor including the name of Lessee's general
                contractor (the "Contractor") and its state general contractor's
                license number, and a list of all subcontractors;

          (iii) an insurance certificate has been received by Lessor from the
                Contractor naming Lessor as an additional insured on the
                Contractor's commercial liability insurance policy;

          (iv)  all requirements regarding insurance imposed by Lessee by this
                Lease have been satisfied;

     (b)  Lessee hereby warrants and represents to Lessor that:

          (i)   prior to Lessee's taking occupancy of the Premises, all required
                governmental approvals and permits will be obtained and
                originals thereof given to Lessor, including the building permit
                application and plan check number;
<PAGE>   16
          (ii)  prior to Lessee's taking occupancy of the Premises, the Lessee
                Improvements shall be completed in accordance with the approved
                Working Drawings, the original inspection card, with all
                appropriate signatures and/or initials thereon, shall be
                delivered to Lessor and a notice of completion in accordance
                with applicable California law shall be recorded and evidence
                thereof provided to Lessor;

          (iii) prior to Lessee's taking occupancy of the Premises, it shall
                deliver to Lessor a certificate of occupancy issued by the
                applicable governmental authority, if one is mandated, all
                original blue prints, drawings and plans and specifications for
                the Lessee Improvements; and

          (iv)  within 30 days of Lessee's taking occupancy of the Premises, it
                shall submit to Lessor paid invoices evidencing the completion
                of the Lessee Improvements together with unconditional, final
                lien releases for the work covered by such invoices.

     (c)  Lessor shall have no liability or responsibility for the Lessee
Improvements or any repairs to, changes to, or code upgrades required in
connection with the construction of the Lessee Improvements.

     (d)  Time is of the essence of this Exhibit B.

     (e)  Lessee's failure to comply with each and every provision hereof shall
be default under this Lease.

                                   SECTION 3

                                ALLOWANCE AMOUNT

     As Lessor's contribution for the costs of the Lessee Improvements, Lessor
shall give Tenant an allowance in an amount up to, but not exceeding, One
Hundred Fifty-Three Thousand Six Hundred Fifteen Dollars ($153,615.00)
("LESSOR'S CONTRIBUTION"). Lessor shall pay a portion of Lessor's Contribution
directly to Consolidated Interiors for work performed by Consolidated Interiors
with respect to the Lessee Improvements. Lessor shall pay the remainder of
Lessor's Contribution to Lessee, in installments as services are rendered and
improvement work is performed, within ten (10) days after Lessee submits
invoices to Lessor showing in reasonable detail the services rendered, the work
performed and the costs incurred until Lessor's Contribution has been completely
expended. Thereafter, Lessee shall bear the entire cost of the Lessee
Improvements, including without limitation, all of the costs of architectural
and engineering consultants in connection with the Lessee Improvements, and plan
check, permit and license fees relating to construction of the Lessee
Improvements. Lessee shall not be entitled to receive in cash or as a credit
against any rental or otherwise, any portion of Landlord's Contribution not used
to pay for the cost of the design and construction of the Lessee Improvements.

                                   SECTION 4

                                INDEMNIFICATION

     Lessee hereby agrees to indemnify and defend Lessor and hold Lessor
harmless from and against any and all claims, costs, liens, expenses or
liability, arising from Lessee's design, construction and operation of any
improvements in, on or about the Premises (including, without limitation,
Lessee's failure to obtain any necessary permits, approvals or certificates from
the applicable governmental authorities and/or attorneys' costs and fees, and
court costs).

                                   SECTION 5

                         DESIGNATION OF REPRESENTATIVES

     With respect to the planning, design and construction of the Lessee
Improvements, Lessor hereby designates DOUG KNIVETON as "Lessor's
Representative" and Lessee hereby designates DANIEL KENNEY as "Lessee's
Representative." Lessee hereby confirms that Lessee's Representative has full
authority to act on behalf of and by Lessee with respect to all matters under
this Exhibit B. Lessor hereby confirms that Lessor's Representative has full
authority to
<PAGE>   17
act on behalf of Lessor with respect to matters under this Exhibit B. Each
party may change its designated representative upon one (1) day's prior written
notice to the other party.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}]]