Document:

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                                                                   EXHIBIT 10.10
                                    FORM OF
                              INDEMNITY AGREEMENT

        THIS AGREEMENT is made and entered into this __________ day of
__________, 2000 by and between PacketVideo Corporation, a Delaware corporation
(the "Corporation"), and __________ ("Agent").

                                    RECITALS

        WHEREAS, Agent performs a valuable service to the Corporation in
__________ capacity as __________ of the Corporation;

        WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at the
request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as amended
(the "DGCL");

        WHEREAS, the Bylaws and the DGCL, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and

        WHEREAS, in order to induce Agent to continue to serve as __________ of
the Corporation, the Corporation has determined and agreed to enter into this
Agreement with Agent;

        NOW, THEREFORE, in consideration of Agent's continued service as
__________ after the date hereof, the parties hereto agree as follows:

                                    AGREEMENT

        1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as
__________ of the Corporation or as a director, officer or other fiduciary of an
affiliate of the Corporation (including any employee benefit plan of the
Corporation) faithfully and to the best of his ability so long as he is duly
elected and qualified in accordance with the provisions of the Bylaws or other
applicable charter documents of the Corporation or such affiliate; provided,
however, that Agent may at any time and for any reason resign from such position
(subject to any contractual obligation that Agent may have assumed apart from
this Agreement) and that the Corporation or any affiliate shall have no
obligation under this Agreement to continue Agent in any such position.

        2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the DGCL, as the same may be amended from time to
time (but, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than the Bylaws or the DGCL permitted
prior to adoption of such amendment).

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        3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:

               (a) against any and all expenses (including attorneys' fees),
witness fees, damages, judgments, fines and amounts paid in settlement and any
other amounts that Agent becomes legally obligated to pay because of any claim
or claims made against or by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Corporation) to which Agent is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Agent is, was or at
any time becomes a director, officer, employee or other agent of Corporation, or
is or was serving or at any time serves at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and

               (b) otherwise to the fullest extent as may be provided to Agent
by the Corporation under the non-exclusivity provisions of the DGCL and Section
41 of the Bylaws.

        4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to Section
3 hereof shall be paid by the Corporation:

               (a) on account of any claim against Agent solely for an
accounting of profits made from the purchase or sale by Agent of securities of
the Corporation pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;

               (b) on account of Agent's conduct that is established by a final
judgment as knowingly fraudulent or deliberately dishonest or that constituted
willful misconduct;

               (c) on account of Agent's conduct that is established by a final
judgment as constituting a breach of Agent's duty of loyalty to the Corporation
or resulting in any personal profit or advantage to which Agent was not legally
entitled;

               (d) for which payment is actually made to Agent under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
bylaw or agreement, except in respect of any excess beyond payment under such
insurance, clause, bylaw or agreement;

               (e) if indemnification is not lawful (and, in this respect, both
the Corporation and Agent have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the
federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or

               (f) in connection with any proceeding (or part thereof) initiated
by Agent, or any proceeding by Agent against the Corporation or its directors,
officers, employees or other agents, unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
Board of Directors of the Corporation, (iii) such indemnification is provided by
the Corporation, in its sole discretion, pursuant to the powers

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vested in the Corporation under the DGCL, or (iv) the proceeding is initiated
pursuant to Section 9 hereof.

        5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.

        6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this Agreement
to indemnification by the Corporation for a portion of the expenses (including
attorneys' fees), witness fees, damages, judgments, fines and amounts paid in
settlement and any other amounts that Agent becomes legally obligated to pay in
connection with any action, suit or proceeding referred to in Section 3 hereof
even if not entitled hereunder to indemnification for the total amount thereof,
and the Corporation shall indemnify Agent for the portion thereof to which Agent
is entitled.

        7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:

               (a) the Corporation will be entitled to participate therein at
its own expense;

               (b) except as otherwise provided below, the Corporation may, at
its option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not be liable
to Agent under this Agreement for any legal or other expenses subsequently
incurred by Agent in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. Agent shall have the
right to employ separate counsel in such action, suit or proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Agent unless (i)
the employment of counsel by Agent has been authorized by the Corporation, (ii)
Agent shall have reasonably concluded, and so notified the Corporation, that
there is an actual conflict of interest between the Corporation and Agent in the
conduct of the defense of such action or (iii) the Corporation shall not in fact
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of Agent's separate counsel shall be at the expense
of the Corporation. The Corporation shall not be entitled to assume the defense
of any action, suit or proceeding brought by or on behalf of the Corporation or
as to which Agent shall have made the conclusion provided for in clause (ii)
above; and

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               (c) the Corporation shall not be liable to indemnify Agent under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.

        8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Agent in connection with such proceeding upon receipt of an
undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that Agent is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the DGCL or otherwise.

        9. ENFORCEMENT. Any right to indemnification or advances granted by this
Agreement to Agent shall be enforceable by or on behalf of Agent in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. Agent, in such enforcement action, if
successful in whole or in part, shall be entitled to be paid also the expense of
prosecuting his claim. It shall be a defense to any action for which a claim for
indemnification is made under Section 3 hereof (other than an action brought to
enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required undertaking has been tendered to the Corporation) that Agent is not
entitled to indemnification because of the limitations set forth in Section 4
hereof. Neither the failure of the Corporation (including its Board of Directors
or its stockholders) to have made a determination prior to the commencement of
such enforcement action that indemnification of Agent is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors or its stockholders) that such indemnification is improper
shall be a defense to the action or create a presumption that Agent is not
entitled to indemnification under this Agreement or otherwise.

        10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.

        11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Certificate
of Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.

        12. SURVIVAL OF RIGHTS.

               (a) The rights conferred on Agent by this Agreement shall
continue after Agent has ceased to be a director, officer, employee or other
agent of the Corporation or to serve at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise and shall inure
to the benefit of Agent's heirs, executors and administrators.

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               (b) The Corporation shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.

        13. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the DGCL or any other applicable
law.

        14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.

        15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.

        16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.

        17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.

        18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:

               (a) If to Agent, at the address indicated on the signature page
hereof.

               (b) If to the Corporation, to:

                      PACKETVIDEO CORPORATION
                      10350 Science Center Drive, Building 14
                      San Diego, CA  92121

or to such other address as may have been furnished to Agent by the Corporation.

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        IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.

                                      PACKETVIDEO CORPORATION

                                      By:
                                         ---------------------------------------
                                      Title:
                                            ------------------------------------

                                      AGENT

                                      ------------------------------------------
                                      [Agent's Printed Name]

                                      Address:

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

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

                                       6<PAGE>   1

                                                                   EXHIBIT 10.11

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - GROSS

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

[LOGO]

1. Basic Provisions ("Basic Provisions").

1.1 Parties: This Lease ("Lease"), dated for reference purposes only, September
1, 1998, is made by and between General Atomics ("Lessor") and M4LABS, INC.
("Lessee") (collectively the "Parties," or individually a "Party"). Refer to
Paragraph 49

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 3550 General Atomics Court, located in
the City of San Diego, County of San Diego, State of CA, with zip code 92121, as
outlined on Exhibit A&B attached hereto ("Premises"). The "Building" is that
certain building containing the Premises and generally described as (describe
briefly the nature of the Building): Building 14 of the General Atomics
Industrial Center. 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: Refer to Par. 50 unreserved vehicle parking spaces ("Unreserved
Parking Spaces"); and no reserved vehicle parking spaces ("Reserved Parking
Spaces"). (Also see Paragraph 2.6.)

1.3 Term: 2 years and 0 months ("Original Term") commencing November 1, 1998
("Commencement Date") and ending October 31, 2000 ("Expiration Date"). (Also see
Paragraph 3.)

1.4 Early Possession: Ref. Exhibit C ("Early Possession Date"). (Also see
Paragraphs 3.2 and 3.3.)

1.5 Base Rent: $ Refer to Ex. C per month ("Base Rent"), payable on the 1st day
of each month commencing November (Also see Paragraph 4.)

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

1.6(a) Base Rent Paid Upon Execution: $ Ex. C as Base Rent for the period of one
month.

1.6(b) Lessee's Share of Common Area Operating Expenses: Refer to Ex. C percent
(_____%) ("Lessee's Share") as determined by [*] prorata square footage of the
Premises as compared to the total square footage of the Building or [*] other
criteria as described in Addendum Ex. C.

1.7 Security Deposit: $ Refer to Ex. C ("Security Deposit"). (Also see Paragraph
5.)

1.8 Permitted Use: office in accordance with City of San Diego Scientific
Research Zoning ("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): Refer to Paragraph 51 and
Exhibit C

[X]     THE IRVING HUGHES GROUP, INC. represents Lessee exclusively ("Lessee's
        Broker");

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 49 through 61, and Exhibits A through F, 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. Ref to Par
52

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 date improvements were installed.
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 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 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). Ref. to Par. 53

2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it has been
advised by the Lessor 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

                                MULTI-TENANT GROSS         Initials:  /s/ J.C.
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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.

2.6 Vehicle Parking. Lessee shall be entitled to use the number of Unreserved
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
non-exclusive 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. Refer to Exhibit D

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;

(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. Refer to Paragraph 54

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.

                                MULTI-TENANT GROSS         Initials:  /s/ J.C.
                                   Page 2 of 15                       /s/ R.H.D.

<PAGE>   3

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 as Lessor may from time to
time designate by invoice to Lessee. Refer to Exhibit C

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:

(ii) The cost of water, gas, electricity and telephone as stipulated in Exhibit
C

(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) days after a reasonably detailed statement of actual expenses is
presented to Lessee by Lessor.

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 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

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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 of 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, quality 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 constitute 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. Refer to Paragraph
55

(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
Hazardous Substance, 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) 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 or 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 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, including, without limiting the generality of
the foregoing, all Lessee installed equipment or facilities specifically serving
the Premises, such as Lessee's supplementary heating, air conditioning,
ventilating, electrical, lighting facilities, fixtures, interior walls, interior
surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, 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. Refer to Paragraph 56

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(c) If Lessee fails to perform Lessee's obligations under this Paragraph 7.1,
Lessor may enter upon the Premises after ten (10) 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) central plumbing, heating, air-conditioning, ventilating,
electrical, lighting, facilities, fire hose connections, 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 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 in, on, under or about the Premises without Lessor's prior
written consent. Refer to Paragraph 57

(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.

(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
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 other
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 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 operation 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, furnishing, 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

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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 or included in the Base Premium), 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 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+, <184>, 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's insurance policies
shall name Lessor as additional insured. 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 Paragraphs 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 waiver 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 Lessee, as the case may be, so long as 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.

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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 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, of 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. Refer to Paragraph 58.

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 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 Utilities 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. 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) 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)
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) 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 9.3 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) 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 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) 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, 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

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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 repairs 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 prove 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(a), applicable to the industrial Center.

10.2 Real Property Tax Definitions.

(a) 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.

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 for all utilities and services supplied to the
Premises, including, but not limited to, electricity, telephone, water/sewer,
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). Refer to Paragraph 59 and Exhibit C.

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 twenty-five percent
(25%) or more of the voting control of Lessee shall constitute a change in
control of this purpose.

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(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 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' 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, (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.

(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 or ten percent (10%) of the monthly Base Rent applicable to
the portion of the Premises which is the subject of the proposed assignment or
sublease, whichever is greater, 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, 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 the 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, not 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.

(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.

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(d) No sublease under a sublease applied 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 it 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
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 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) 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, 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, given to
Lessor by Lessee, was materially false.

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 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 Subparagraph 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

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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.

13.4 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 form Lessee shall not
be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, them, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (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 or Lessor'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.

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 shall deliver to any
potential lender or purchaser designated by Lessor such financial statements of
Lessee and may be reasonably required by such

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lender or purchaser, including, but not limited to Lessor's financial statements
for the past three (3) years. All 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. 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 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.

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
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. 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 two hundred percent
(200%) 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.

26. 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.

27. Covenants and Conditions. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.

28. 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.

29. 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: (1) be liable for any

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act or omission of any prior lessor or with respect to a [illegible] occurring
prior to acquisition of ownership, (ii) be [illegible] 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. Refer to Paragraph 60.

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 of 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 terms 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 of
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, 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 of 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. 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 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 condition as are then reasonable
with reference to the particular matter for which consent is being given.

37. Guarantor.

38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the performance of all 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. Refer to Paragraph 61.

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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 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 in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of separate Defaults 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 provision 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. Refer to
Exhibit D.

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 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
reasonably 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.

Exhibits which constitute a part of this Lease:

Exhibit A - Site Map

Exhibit B - Floor Plan and Space Summary

Exhibit C - Summary of Term, Rent, Security Deposit, Operating Expenses and
Utilities

Exhibit D - Rules & Regulations

Exhibit E - Notice of Policy Regulating Asbestos Containing Materials

Exhibit F - Work Letter Agreement

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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 SEEN 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 THEIR
   CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT,
   OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO 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:  San Diego, CA                 Executed at:  San Diego, CA

on:  October 30, 1998                       on:

By Lessor:                                  By Lessee:

General Atomics                             M4Labs, Inc.

By: /s/ Robert H. Dalry                     By: /s/ Jim Carol

Name Printed:  Robert H. Dalry              Name Printed:  Jim Carol

Title:  Director Facilities                 Title:  President and Founder

By:                                         By:

Name Printed:                               Name Printed:

Title:                                      Title:

Address:                                    Address:

Telephone:  (619) 455-2130                  Telephone:  (619) 455-2511

Facsimile:  (619) 455-4375                  Facsimile:  (619) 455-2516

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.

                                MULTI-TENANT GROSS         Initials:  /s/ J.C.
                                  Page 15 of 15                       /s/ R.H.D.
<PAGE>   16

ADDENDUM

49. Insert to Paragraph 1.1, Parties:

As used herein, "Lease" means "Sublease," "Lessor" means "Sublessor" and
"Lessee" means "Sublessee."

50. Insert to Paragraph 1.2(b), Parking:

The number of parking spaces designated in Paragraph 1.2(b) is based on three
spaces per one thousand square feet of subleased space. In the event an agency
of jurisdiction places restrictions on allowed on-site parking spaces provided
by the Lessor, then the Lessee shall be responsible for implementing provisions
to restrict parking to that stipulated in this paragraph of the Sublease
Agreement, or to reimburse the Lessor in full for the cost and expenses for
payment of penalties, fees or upgrades needed to accommodate Lessee's excess
parking above the number of spaces designated herein.

51. Insert to Paragraph 1.10(a), Real Estate Brokers:

Lessee represents and warrants to Lessor that it has not engaged any broker,
finder, or other person other than the firm stipulated in Paragraph 1.10(a) who
would be entitled to any commission or fees in respect to the negotiation,
execution or delivery of this Sublease and shall indemnify and hold harmless
Lessor against any loss, cost, liability, or expense incurred by Lessor as a
result of any claim asserted by any broker, finder, or other person on the basis
of any arrangements made or alleged to have been made by or on behalf of Lessee.

52. Insert to Paragraph 2.2, Condition of Premises:

The space is offered "as-is," cleaned, unfurnished and in good working
condition. Lessee shall be responsible for furnishing its Premises with the
needed fixtures, furnishings and equipment.

53. Insert to Paragraph 2.3, Compliance with Covenants, Restrictions and
Building Code:

Lessee agrees to accept the Premises subject to a Master Lease and all
applicable zoning, municipal, county, state and federal laws, ordinances, and
regulations governing and relating to the use of the Premises. Lessor warrants
that it is not in default of the Master Lease, and the provisions of the Master
Lease are in full force and effect.

54. Insert to Paragraph 2.10, Common Area - Changes:

Lessee acknowledges that Lessor has disclosed the fact that improvements are
scheduled to be completed November 1998, which will allow all automobile and
truck access from Science Center Drive, but close access from the General
Atomics Industrial Center. However, date for operation of the new access remains
indefinite pending placement of a Building 14 anchor Tenant that will operate
the entrance access control and reception Lobby. Once the private access is put
into operation, Building 14 security access control will be changed from General
Atomic's Building 1 Lobby to Building 14 Lobby, and all visitors will process
through the Building 14 Lobby during normal business hours. During non-business
hours, visitor access will be available from the Science Center Drive entrance
but non-badged access will be controlled from Lessor's Building 1. Restricted
personnel access will continue to be available between Building 14 and the
remainder portion of the Torrey Pines Industrial Center. Further, Lessee is
advised that during Lessee's tenancy, parties to a sublease of other Building 14
space plan to install improvements for tenant expansion on the first and second
floors.

55. Insert to Paragraph 6.2, Hazardous Substances:

55.1 Lessee shall not use the Premises for processing, storage or production of
"Hazardous Substances" (as defined below). "Hazardous Substance" means (a) any
substance that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous, and is, or becomes,
regulated by any government authority, department, commission, board, agency or
instrumentality of the United States, the State of California or any political
subdivision thereof; (b) any other substance, the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation, ordinance, order, action of common law; and (c) any additional
substances or materials that at such time are classified or considered hazardous
or toxic under the Laws of California or any other applicable Laws relating to
the Premises.

                                                           Initials:  /s/ J.C.
                                        16                            /s/ R.H.D.
<PAGE>   17

55.2 Lessor and its representative agents shall have the right to enter the
Premises at reasonable times for the purpose of inspecting the same for
"Hazardous Substances" as defined below, showing the same to prospective
purchasers, lenders, or lessees, and making such alterations, repairs,
improvements or additions to the Premises or to the Industrial Center as Lessor
may deem necessary or desirable.

55.3 Hazardous Substances used by Lessee shall be the responsibility of Lessee,
and Lessee shall dispose of such Hazardous Substances in accordance with all
applicable laws and regulations, in accordance with Lessors Accepted Practices,
and in a safe and reasonable manner, both during the term of the Sublease, when
required or appropriate, but in no event later than the date that the Sublease
is terminated.

56. Insert to Paragraph 7.1, Lessee's Obligations:

56.1 Lessee agrees to conduct day-to-day operations of the Premises in a manner
to preserve the integrity of building structures and its systems including, fire
barriers, heating, air-conditioning and ventilation systems and other installed
utilities. Specifically, Lessee agrees to keep exterior doors closed at all
times except for passage.

56.2 Lessees' obligations to maintain plumbing, heating, ventilating and
air-conditioning systems, electrical, lighting and equipment within the Premises
is interpreted to include Lessee's equipment, fixtures or furnishings that the
Lessee has or will install during its tenancy. Equipment or fixtures installed
by the Lessee, are considered by the Lessor as serving the function of
supplementing Lessee's specific use of the Premises, and is deemed by the Lessor
as the Lessee's obligation under this section of the Lease.

56.3 Lessees' Premises are served by Lessees central heating, ventilation and
air-conditioning (HVAC) systems. Lessor shall operate equipment and systems
needed to supply conditioned air to the interior spaces weekdays between the
hours of 6:OOAM to 6:00PM, except on National Holidays or during scheduled
outages or breakdowns.

57. Insert to Paragraph 7.3, Utility Installations, Trade Fixtures, Alterations:

57.1. Alterations, improvements, additions or Utility Installations by the
Lessee shall be performed by licensed and insured construction or service
companies having qualified craft workers possessing the proper qualifications
and training for performing the work. Alterations, improvements, additions or
Utility Installations shall be performed by contractors for which Lessor has
given Lessee its consent. Firms engaged in performing services for the Lessor,
under Blanket Order Service Agreements, are pre-qualified to perform services
for the Lessee.

57.2. On occasion, certain building systems and Utility Installations have been
modified or altered by individuals or companies that do not possess the
knowledge, qualifications, license and insurance to engage in these services.
Modifications or alterations to building structures, systems or Utility
Installations including fire walls, doors, electrical, plumbing, heating,
ventilation and air conditioning, or other common area utilities by service
companies or personnel, (particularly those not holding a license, having the
proper insurance coverage or possessing adequate training and qualifications),
could cause damage to Lessee's business and to that of others.

57.3. Unplanned utility interruptions such as those caused by abnormal weather
conditions, earthquakes, fires, construction mishaps, or Industrial Center plant
equipment failures, may result in extended utility outages that could affect the
Lessee's business operations. Restoration of services through connection to
standby equipment such as portable electric generators, portable
air-conditioning chillers, or other Industrial Center Systems, could require
outages extending beyond a 24-hour period.

58. Insert to Paragraph 8.8, Exemption of Lessor From Liability:

Except for planned outages conducted by the Lessor for altering or maintaining
its Buildings, or private service systems of the Industrial Center, the Lessee
agrees that the Lessee shall be responsible for making any necessary provisions
that may be required for standby utility services that the Lessee considers
critical to Lessee's operations, or use of the Premises, in the event that
electrical power, air, water, sewer, gas, telephone, or other Lessor supplied
services are interrupted.

                                                           Initials:  /s/ J.C.
                                        17                            /s/ R.H.D.
<PAGE>   18

59. Insert to Paragraph 11, Utilities:

59.1. Lessee agrees to pay its prorata share of electricity, gas and water/sewer
based on size of the Premises. The prorata share shall be determined as
stipulated in Exhibit C.

59.2. Lessee shall use Lessor's telephone service and shall pay for
installation, moves, changes and monthly services attributable to Lessee,
including all toll charges. Charges for service and equipment are subject to
reasonable annual increases but shall not exceed the standard amounts charged to
other tenants in the Industrial Center, for such services and equipment. Parties
agree that the 1998 calendar year equipment and service costs shall be in
accordance with the following schedule:

EQUIPMENT RENTAL
Each Telephone and Modem Extension: $29 per extension/month
Each Telephone Set in Excess of Total Telephone and Modem Extensions:
$2.50/month

Adds, Moves and Chances
-----------------------
Installation
------------
SL-1 Set: $80/set
2500/FAX/Modem Jack: $60/line or set
10B/20B /Speaker/Head Sets: $20/add-on (plus cost)
Data Lines/Lans: $40/jack
Moves
-----
SL-1/2500/FAX/Modem: $40/set or line
Data Lines/Lans: $40/jack
Changes
-------
Program/Designation Change: $20/set
Long Handset/Line Cords: $20/set

Parties agree that reasonable annual adjustments, the same as applied to other
Industrial Center Tenants, can be made without prior notice effective January of
each calendar year.

Charges for telephone rental, services, and toll calls, prorata share, and
Extraordinary Utilities, shall be invoiced monthly by Lessor and shall be due
and payable by Lessee in accordance with Paragraph 21.

60. Insert to Paragraph 30.2, Attornment:

Upon request of Master Lessor, or on behalf of the Industrial Center Owner,
Lessee shall subordinate its interest in the Lease and the Premises to the
encumbrance instruments of any Real Property loans made to Lessor or Owner.
Lessee shall attorn to any purchaser at any foreclosure sale, or to any grantee
or transferee designated in any deed given in lieu of foreclosure. Lessee shall
execute a subordination agreement and any other documents required by any lender
of Master Lessor to accomplish the purposes of this Section.

61. Insert to Paragraph 39, Options:

61.1 Lessor grants to the Lessee the Option to extend the Term of the Agreement
for two one-year periods on the following terms and conditions: (1) The
provisions of Paragraph 39, including the provision relating to default of the
Lessee, set forth in Paragraph 39.4 applies; (2) Lessee gives Lessor written
notice of the exercise of this Option to Extend the Term a minimum of three
months prior to end of the Original Term; (3) The Lessor shall have the option
to relocate the Lessee's Premises to a comparable Space Block in Buildings 14 or
15 the first month of each option year; (4) All Terms and Conditions of this
Lease except where specifically modified by this Option apply; (5) Rent starting
the first month of the Extended Term is increased by four percent (4%) over the
Rent paid the month just prior to the Term extension.

                                                           Initials:  /s/ J.C.
                                        18                            /s/ R.H.D.
<PAGE>   19

GENERAL ATOMICS TORREY PINES MESA

site map

Exhibit A

                                                           Initials:  /s/ J.C.
                                                                      /s/ R.H.D.
<PAGE>   20
                                   EXHIBIT B

                                  [Floor Map]

                                    EXHIBIT B              Initials:  /s/ J.C.
                                   Page 1 of 2                        /s/ R.H.D.
<PAGE>   21

                                     M4LABS

                                  Space Summary

<TABLE>
<CAPTION>
First-in (Effective August 11, 1998)                             Cumulative Total SF
------------------------------------                             -------------------
Bldg. No.             Room No.        Use Code            SF
---------             --------        --------            --
<S>                   <C>             <C>                 <C>    <C>
14                    144             Office              129

14                    145             Office              168

14                    179             Office               91

14                    180             Office              187

14                    H140 (prorata)  Corridor            132
                                                          ---
Subtotal                                                  707

20% Common                                                141
                                                          ---

Total                                                     848    Total  848
</TABLE>

<TABLE>
<CAPTION>
Expansion (Effective November 1, 1998)
--------------------------------------
Bldg. No.             Room No.        Use Code          SF
---------             --------        --------          --
<S>                   <C>             <C>               <C>      <C>
14                    140             Office              128

14                    141             Office              127

14                    142             Office              132

14                    143             Office              173

14                    144             Office              129

14                    145             Office              168

14                    176A            Office              129

14                    176B            Office               90

14                    177             Office              185

14                    178             Office              233

14                    179             Office               91

14                    180             Office              187

14                    H140            Corridor            407
                                                        -----

Subtotal                                                2,179

10% Common                                                218
                                                        -----

Total                                                   2,397    Total  2,397
</TABLE>

<TABLE>
<CAPTION>
Added (Effective January 1, 1999)
---------------------------------
Bldg. No.             Room No.        Use Code          SF
---------             --------        --------          --
<S>                   <C>             <C>               <C>      <C>
14                    146             Office              131

14                    147             Office              133

14                    149             Office               97

14                    150             Office              187

14                    151             Office              175

14                    152             Office              177

14                    153             Office              243

14                    154             office              169

14                    155             Office              169

14                    181             Office              423

14                    H150            Corridor            444

Subtotal                                                2,348

10% Common                                                235
                                                        -----

Total                                                   2,583    Total  4,980
</TABLE>

                                    Exhibit B              Initials:  /s/ J.C.
                                   Page 2 of 2                        /s/ R.H.D.
<PAGE>   22

Summary of Term, Rent, Security Deposit Operating Expenses and Utilities

Insert to Paragraphs 1.3 Term:1.5 and 4.1 Base Rent
---------------------------------------------------
Original Term: The Agreement shall start month-to-month, August 11, 1998, and
convert to a two-year Agreement with a Commencement Date of November 1, 1998,
and Expiration Date of October 31, 2000.

Base Rent: The Base Rental Rate shall start at $1.52 per square foot and at the
Commencement Date, the time at which the Lessee Premises reach the Expansion
Size, the Base Rental Rate shall be adjusted to $1.32 per square foot. Starting
the first anniversary of the Agreement, the NNN rate and Operating Expenses
shall increase a nominal four percent (4%) over the previous lease year.

<TABLE>
<CAPTION>
Element                             Monthly Lease Rate & Rent
-------                             -------------------------
                                    Yr #1                                       Yr #2
                                    -----                                       -----
<S>                                 <C>            <C>           <C>            <C>
Space Block Description             First-in       Expansion     Cumulative
                                    ----------     ---------     ----------
Effective Date                      (08/11/98)     (11/1/98)     (01/01/99)     (11/1/99)
                                    ----------     ---------     ----------     ---------
NNN Rate                            $1.10/sf       $1.10/sf      $1.10/sf       $1.14/sf
CAM Charges (Std. Op. Exp.)         $0.22          $0.22         $0.22          $0.23
Premium-small area                  $0.20          $0.00         $0.00          $0.00
Janitorial                          Lessee Hires   Same          Same           Same
Utilities                           Prorated       Prorated      Prorated       Prorated
                                    --------       --------      --------       --------
Total Rate                          $1.52/sf       $1.32/sf      $1.32/sf       $1.37/sf
Space Block Size                    848sf          2,397sf       4,980sf        4,980sf
Monthly Rent                        $1,289         $3,164        $6,574         $6,823
</TABLE>

Insert to Paragraphs 1.7 and 5. Security Deposit
------------------------------------------------

A Security Deposit in the amount equivalent to one month's Rent and two month's
utility expenses shall be paid to secure payment to the Lessor. Security Deposit
is collected for the Cumulative Space Block, to secure the Lessee's Possession
for sublease of the Cumulative Space Block effective January 1, 1999.

<TABLE>
<CAPTION>
Secured Payment                                    Amount
---------------                                    ------
<S>                                                <C>
One Month's Rent                                   $6,574
Two Months' Utilities: 4,980sf @$0.20/sf           $1,992
                                                   ------
Total                                              $8,566
</TABLE>

Concurrent with the annual increase in Monthly Rent, and without prior notice,
the Lessor shall adjust the Security Deposit in direct relation to the Monthly
Rent, and Utility Expenses (as calculated above), and the increase shall be paid
by the Lessee upon receipt of an invoice from the Lessor.

Insert to Paragraph 1.10(a). Real Estate Brokers
------------------------------------------------

The Lessor shall pay commissions to the Real Estate Broker representing the
Lessee, named in Paragraph 1.10(a), an amount of four percent (4%) of the Net
Rent, exclusive the Operating Expenses. Commissions shall be paid to the Broker
by the Lessor the month of December 1998 determined as shown below. The Lessee's
Broker shall provide the Lessor an invoice for the Brokerage fees, net 30-day
payment.

<TABLE>
<CAPTION>
                                                                         Commission
Space Block           Size(sf)      Net Rent    Period      Rent         Rate          Amount
-----------           --------      --------    ------      ----         ----          ------
<S>                   <C>           <C>         <C>         <C>          <C>         <C>
First-in                848         $1.30       82 days     $  2,951.59   4%          $  118.06
Expanded              2,397         $1.10       2 months    $  5,273.40   4%          $  210.94
Cumulative            4,980         $1.10       10 months   $ 54,780.00   4%          $2,191.20
Cumulative            4,980         $1.14       12 months   $ 68,126.40   4%          $2,725.06
                                                            -----------               ---------
                                                            $131,131.39   4%          $5,245.26
</TABLE>

No commissions shall be due and payable for Lease Term Extensions, renewals or
expansion, other than those shown in the table above.

                                    Exhibit C              Initials:  /s/ J.C.
                                   Page 1 of 3                        /s/ R.H.D.
<PAGE>   23

Insert to Paragraph 4.2. Common Area Operating Expenses
-------------------------------------------------------

Lessee shall pay for cost of maintenance and repair of its fixtures, furnishings
and equipment; janitorial services, maintenance and repair of electrical or
other services from Building point of connection to Tenant fixtures, and for
supplemental equipment installed specifically for Lessee application and use.
Lessee shall also pay for locksmith service, telephone installation, adds,
moves, and changes, and for all Lessee toll calls. Lessee shall initiate the
needed job orders to engage services and pay for said services pursuant to
Paragraph 7.0 of this Sublease Agreement. Following are the provisions for
payment of Services and Operating Expenses under terms of the Sublease
Agreement:

<TABLE>
<CAPTION>
                                            Included             Included As
                                            In Monthly           Operating
<S>                                         <C>                  <C>                   <C>
Service or Utility                          Rent                 Expense               Note
------------------                          ----------           -----------           ----
Taxes                                       x                                          1
Insurance                                   x                                          2
Parking Lots, Roadways & Walkways           x
Landscape Maintenance                       x
Building and Utility Maintenance            x                                          3
Trash Collection                            x
Property Management                         x
Telecommunications Services                                      x
Utilities:
Electricity, Ordinary                                            x
Natural Gas                                                      x
Water/Sewer                                                      x
Electricity, Extraordinary                                       x                     4
Security Services-Standard                  x                                          5
Security Access Control & Keys              x                                          7
Mail Pickup and Delivery                    x                                          5
Use of Central Conference Rooms             x                                          5&9
Use of Outdoor Recreational Facility        x                                          5
Use of Central Cafeteria                    x                                          5&7
Janitorial:                                                                            6
Common Area                                 x
Lessee Space                                                     x
</TABLE>

Lessee may obtain the following services through separate agreement with the
Lessor. Payment shall be made under the same terms and conditions as for
operating expenses:

<TABLE>
<S>                                         <C>                  <C>                   <C>
Signage-Interior                                                 x                     7
Use of Corporate Fitness Center                                  x                     5&7
Contractor Services                                              x                     5&8
</TABLE>

Notes:

1. Covers Real Property Taxes. Does not cover personal property taxes.

2. Covers Lessor's insurance only. Does not cover Lessee's coverage for its
fixtures and liability, or for loss of business.

3. Covers maintenance and repairs of normal building equipment and utilities.
Does not cover maintenance and repairs of special telecommunications or
equipment installed on behalf of the Lessee to maintain special conditions such
as air conditioning or Lessee's fixtures.

4. Cost for extraordinary utilities shall be passed through at cost charged to
Lessor. Example: Cost to operate Building HVAC outside the hours of 6:00 A.M. to
6:00 P.M. Monday through Friday (excluding national holidays) as requested by
the Lessee.

5. Access or use or services are provided as an amenity but are subject to
change or termination by Lessor with thirty days advanced notice to the Lessee.

6. Lessee shall make provisions for cleaning services for its Premises.

7. Same cost as charged to other Tenant Employees.

8. Available at Lessor's cost plus 15%.

9. Parties agree that location, site and features of conference rooms can be
changed upon Lessor providing Lessee 30 days advanced notice of said change.

                                    Exhibit C              Initials:  /s/ J.C.
                                   Page 2 of 3                        /s/ R.H.D.
<PAGE>   24

Insert to Paragraph 11, Utilities
---------------------------------

Effective the date that the Lessee takes Possession, the Lessor shall commence
charging the Lessee its Prorata share of Utilities as described below:

Electricity: Electric power is supplied by San Diego Gas & Electric and metered
at one location of the Industrial Center. Building's 13 and 14 are separately
submetered. Prorata electric power costs shall be calculated using data taken
from submeters as follows:

<TABLE>
<S>                            <C>
Building 14 leased gsf      x  Building 13 Billing Period Cost
Building 13gsf (Note 1)
2,397gsf (Note 2)           x  Building 13 Billing Period Cost
64,071 gsf
</TABLE>

Note(l) Building 13 gsf is used because it is fully occupied and it is under
similar use. Building 14 is partly vacant for lease to others and usage will
vary with Building occupancy.

Note(2) Gross Square feet will be adjusted in direct relation to size of the
Lessee's Premises.

Water/Sewer: Water is supplied to the Industrial Center from two separate city
water meter stations. Sewer charges are based on water consumption. The
Industrial Center is comprised of Buildings on three separate parcels, one
Genesee Properties and two Hopkins Properties. The gross square footage in the
Industrial Center is 519,788. Prorated water/sewer costs shall be calculated as
follows:

<TABLE>
<S>                              <C>
Building 14 leased gsf      x    Billing Period Charges
Total Industrial Center gsf
2,397gsf                    x    Billing Period Charges
519,788gsf
</TABLE>

Natural Gas: Natural gas is purchased from a natural gas supplier and
transported to the Industrial Center by San Diego Gas & Electric. Pro rata
natural gas costs shall be calculated using the total Industrial Center floor
area, the same as used for water/sewer, and shall be determined as follows:

<TABLE>
<S>                               <C>
Building 14 Leased gsf      x     Billing Period (Na. Gas Cost + Transport Cost)
Total Industrial Center gsf
2,397gsf                    x     Billing Period Charges
519,788gsf
</TABLE>

                                    Exhibit C              Initials:  /s/ J.C.
                                   Page 3 of 3                        /s/ R.H.D.
<PAGE>   25

GENERAL ATOMICS RULES & REGULATIONS

ATTACHED AND MADE A PART OF THIS LEASE

1 Lessor agrees that Lessee is entitled to, and shall have the quiet enjoyment
of the Premises described in the Sublease.

2. During the term of the Sublease, Lessee shall provide Lessor the names and
home telephone numbers of two Lessee employees that can be contacted by the
Lessor for emergencies during Lessee's non-business hours.

3. Lessor shall provide Lessee a minimum 24-hour advanced notice of any
inspection by the Lessor, Owner, Lender, insurance carriers and respective
agents.

4. During the warranty period, Lessee shall give Lessor prompt notice of any
accidents to or defects in the water pipes, gas pipes, electric system, lights
and fixtures, heating and cooling apparatus or any other service equipment.

5. Any service piping, ducts, electric conduits, telephone wiring and antennas
exterior to the Building, or boring, cutting of exterior walls, floor or roof
shall not be permitted, except with the written consent of Lessor.

6. Lessee's identification sign(s) shall be subject to prior approval by Lessor.
Guidelines for Building exterior signage is available from the Lessor upon
request.

7. Lessee shall not install blinds, shades, awnings or other form of inside or
outside window covering, or window ventilators or similar devices without the
prior written consent of Lessor.

8. Lessee shall maintain Premises in a clean and safe condition. Trash shall be
placed in appropriate disposal containers at locations designated by Lessor for
pick-up and disposal by a service contractor of the Lessor.

9. Lessee and Lessee's employees shall not obstruct the sidewalks, driveways, or
other common areas and shall use the same only as a means of passage, access and
parking; all materials, fixtures, furnishings and equipment shall be stored
inside the Building. Outside storage at the Premises is prohibited.

10. The water closets, urinals and other plumbing shall be used for the purpose
for which they were constructed and no rubbish, newspapers or other substances
of any kind shall be thrown into them. Lessee shall not mark, install screws or
drill into, or in any way deface the exterior walls, stone, metal work, doors
and windows of the Building.

11. Lessee and Lessee's agent and employees shall not play any musical
instrument, including radio and television, in a loud or objectionable manner,
or make or permit any improper noises in the Building, or interfere in any way
with other Industrial Center Lessees or those having business with them.

12. Lessee shall not conduct any auction, or sell goods, wares or merchandise on
the Premises.

13. Lessor will not be responsible for loss of or damage to any fixtures,
furnishings or personal property from any cause.

14. Although Lessor may have given Lessee approval to use the name of the
Industrial Center in connection with any business on the property, Lessor shall
have the right to prohibit any advertising by any agent which in Lessor's
opinion, tends to impair the reputation of the Building or its desirability as a
Building for offices and laboratories, and upon written notice from Lessor,
Lessee shall refrain from or discontinue such advertising.

15. No cooking shall be done or permitted by Lessee on the Premises, except in
areas specifically designed for the purpose, without the consent of Lessor, nor
shall the Premises be used for the storage of merchandise, for washing clothes,
for keeping of pets, for lodging or for any improper, objectionable or immoral
purposes.

16. Lessee shall not disturb, solicit or canvass any occupant of the Industrial
Center and shall cooperate to prevent same.

17. From time to time it may become advantageous to make amendments to this list
which are in the best interests of both Lessor and Lessee and which are not
inconsistent with the Sublease. Lessor reserves the right to make such
amendments by giving notice to Lessee.

                                    Exhibit D              Initials:  /s/ J.C.
                                   Page 1 of 1                        /s/ R.H.D.
<PAGE>   26

ASBESTOS NOTIFICATION
  October 1997

  From:     Licensing, Safety and Nuclear Compliance (LSNC)

    TO:     Employees and Occupants, Via Intercompany Memo

General Atomics, in compliance with California Health and Safety Code 25915 et
seq, is required to give written notice of the presence of asbestos containing
materials to all employees. This notification applies to General Atomics
facilities at 3550 General Atomics Court, 3483 Dunhill Street, and 11222
Flintkote Avenue.

Prior to 1979, asbestos was used extensively in the building industry throughout
the United States as thermal insulation, fireproofing, and in structural support
materials. At General Atomics asbestos has been used to insulate hot water and
steam pipes and ventilation ducts. It may be found in some attics and mechanical
rooms, in floor and ceiling tiles and window wall panels, some roofing material,
and core material in certain fire doors.

The mere presence of asbestos in a building does not necessarily mean that a
health hazard exists. Asbestos containing materials are not a health threat
unless asbestos fibers become airborne and are inhaled. In areas where the
asbestos is bonded or encapsulated and properly maintained, such as in the
materials listed above, there is very little or no risk to health.

Accordingly, it is important not to disturb asbestos containing materials.
General Atomics policy restricts work on asbestos containing materials to
certified asbestos contractors who are properly trained and equipped. Moving,
drilling, cutting, or otherwise disturbing such materials can pose a health risk
and should not be attempted by untrained personnel. Employees should immediately
notify (Licensing, Safety and Nuclear Compliance) if they observe materials that
they suspect contain asbestos and which are not properly maintained.

LSNC maintains records of asbestos sampling and air monitoring results performed
during the course of asbestos abatement work. Employees may contact LSNC, Letty
Alfonso at extension 2016, Paul Englert at extension 2466, or Keith Asmussen at
extension 2823, if they have questions or concerns regarding asbestos.

                                    Exhibit E              Initials:  /s/ J.C.
                                   Page 1 of 1                        /s/ R.H.D.
<PAGE>   27

WORK LETTER AGREEMENT

This Work Letter Agreement is written to complement the Form Sublease and its
Addenda; it expands and elaborates on the Form Sublease with no conflict
intended.

I. Premises
-----------

The Lessor will deliver the Building 14 Premises in three Space Blocks,
FIRST-IN, EXPANSION and ADDED, as shown on the Floor Plan, Exhibit B, Page 1 of
2.

II. Alterations
---------------

The Promises will be delivered to M4Labs in "as-is" conditions and will provide
two captive Space Blocks with access control doors to each of the two distinct
spaces. Alterations will be made as follows:

A. Prior to M4Labs Possession of EXPANSION Space, GA will install a new exit
corridor connecting the fitness center to the building northeast exit.

B. GA will demise the Space previously occupied by SnowBrand Pharmaceuticals by
installing corridor control access doors to secure access to the ADDED portion
of the Premises.

III. Utility Installations
--------------------------

The existing Utility Installations will be used to the practical extent. M4Labs
will notify GA of any deficiencies in the Premises as stipulated in the Form
Lease Agreement.

A. GA will make the minor repairs, touch-up paint, clean, and inspect all
building systems serving the Premises, including HVAC, lighting, power and
communications to ascertain systems are in good order condition and repair.

B. M4Labs Inc. will identify the desired Utility Service Installations,
including telecommunications and security access controls, and submit approved
job orders to GA with appropriate signatures authorizing the expenditures for
installation and rental.

C. GA will engage subcontractor services to complete Utility Service
Installation and invoice M4Labs Inc. for the actual cost of these services or at
the agreed rental fee schedule.

IV. Tenant Fixtures and Equipment
---------------------------------

M4Labs will furnish the Premises as needed with equipment. fixtures' furnishings
(i.e., computers, FAX, copiers, desks, tables, chairs, files, audio visual) not
included in GA's standard offering, or as part of the Telecommunications line
and equipment rental.

A. M4Labs Inc. will make provisions for all equipment, tenant fixtures,
appurtenances, and engage the needed contract services for installation and
setup. M4Labs Inc. will pay for all costs and expense in acquiring equipment and
for its installation.

B. GA will fill M4Labs' request for used office furniture on a sale or rental
fee schedule basis to be paid by M4Labs as a monthly Operating Expense, starting
January 1, 1999.

V. Schedule
-----------

GA agrees to allow M4Labs to use the full EXPANSION Premises, at the FIRST-IN
Monthly Rent, until start of Term (November 1, 1998) at which time M4Labs will
lease the FIRST-IN plus EXPANSION portion of the Premises. GA will proceed with
the preparation of ADDED portion of the Premises for M4Labs Possession prior to
January 1, 1999.

The following reflects the schedule for Possession of the Premises:

<TABLE>
<S>                                                <C>
Possession of FIRST-IN Space                       Aug. 11, 1998
Deliver Possession-EXPANSION Space                 Oct. 31, 1998
Demise/prepare-ADDED Space                         Dec. 01, 1998
Tenant Possession-ADDED Space                      Dec. 23, 1998
</TABLE>

                                    Exhibit F              Initials:  /s/ J.C.
                                   Page 1 of 2                        /s/ R.H.D.
<PAGE>   28

VI. Tenant Obligations
----------------------

Routine and Periodic Cleaning:
------------------------------

Pursuant to the Lessee's obligations stipulated in Paragraph 7.0, the Lessee
will perform routine and periodic cleaning of the offices and dedicated
corridors serving the Lessee's offices on the following minimum frequencies.
These standards are established to maintain a clean, safe Premises, avoid
infestation of rodents and pests, and to control fire hazards.

<TABLE>
<CAPTION>
Activity                                           Frequency
--------                                           ---------
<S>                                                <C>
Empty Trash                                        Daily
Empty Recycle                                      Weekly
Vacuum                                             Weekly
Spot Clean Carpet                                  Weekly
Wipe and Clean Door Hardware/Sw Plates             Monthly
Carpet Extraction Cleaning                         Quarterly
Windows Interior Surface Cleaning                  Quarterly
</TABLE>

Checklist for Surrender of Premises:
------------------------------------

Pursuant to Paragraph 7.4 of this Agreement the following expands on the
obligations of Lessee related to the Surrender of the Premises at the end of
Tenancy. Prior to the Lessor's acceptance of part or all of the Premises, the
Parties will make inspections to ascertain the said Premises are in a condition
acceptable to the Lessor, a condition existing at the time the Lessee took
Possession, normal wear and tear excepted.

Building Location:

<TABLE>
<CAPTION>
Offices                                     Lessor        Lessee        Date
-------                                     ------        ------        ----
<S>                                         <C>           <C>           <C>
Furnishings removed
Fixtures removed
Trash removed
Telephones disconnected
Services stripped/safe off
Fixture inventory completed
Fixtures and equip. cleaned
Special telecom cable removed
Walls/minor repairs completed
Carpet extraction cleaned
Ventilation balanced
Landlord signage left in place
Tenant signage removed/repaired
Key locks changed

Successor Tenant Consent (If Applicable)
----------------------------------------
First Inspection
Ownership transfer completed
Final inspection

Turnover and Acceptance
-----------------------
</TABLE>

                                    Exhibit F              Initials:  /s/ J.C.
                                   Page 2 of 2                        /s/ R.H.D.

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