Document:

<PAGE>   1
                                                                    EXHIBIT 10.7
                                                             PECO ENERGY COMPANY
                                                          CONFIRMATION AGREEMENT

                   PECO ENERGY COMPANY CONFIRMATION AGREEMENT

01/30/01

TO:      Ian Carter

COMPANY: Commonwealth Energy Corporation

This confirmation letter ("Letter") shall confirm the agreement reached on
January 24, 2001, between Commonwealth Energy Corporation and PECO Energy
Company for the sale and purchase under the terms and conditions as follows:

Buyer:   Commonwealth Energy Corporation (d/b/a electricAMERICA) ("Commonwealth"
         or "Buyer")

Seller:  PECO Energy Company ("PECO", or "Seller")

Products: Around the clock energy ("Firm Energy") with associated Conowingo
Renewable Credits (as defined below)

Term:    35 months

Start Date: Hour Ending 0100 February 1, 2001

End Date:  Hour Ending 2400 December 31, 2003

Delivery point:  PECO Transmission Zone of PJM Interconnection

Transmission:  Buyer responsible for transmission costs beyond Delivery Point

Amount:  50 MW per hour for the Term

Price:  $38.50/MWh for the Term

Payment: Buyer to pre-pay on a monthly basis for the Term, with pre-payment due
by wire transfer five business days before the first calendar day of each month
for the entire term. For the billing month of February 2001, pre-payment must be
made by close of business January 30, 2001. If Buyer fails to pre-pay, Seller
will have the right to terminate this Agreement effective as of the date on
which pre-payment was due.

Payment Schedule:  Attached as Exhibit A.

Wire Transfer Information:  Pre-payment will be made to the following:

                  Mellon Bank

                  Philadelphia, PA

                  ABA# 031-000-037

                  Credit:  PECO Energy Company

                  Account:  2216604
<PAGE>   2
Scheduling: Seller will schedule this transaction in eSchedules, or its
successor, as PECO Zone-PECO Zone. Buyer will confirm eSchedules contract.

Congestion Expenses: Seller will be responsible for all congestion expenses
associated with the Product.

Assignment: PECO reserves the right to assign this Agreement, or any interest,
without consent to an affiliate of PECO or to a third party to be selected by
PECO in its sole discretion.

Liquidated Damages: In the event that Seller fails to schedule and/or deliver
the Quantity of Firm Energy, where such failure was not excused by Force Majeure
or by Buyer's failure to perform, Seller shall pay Buyer (on the date payment
would otherwise be due under this transaction) an amount for each MWh of such
deficiency equal to the positive difference, if any, between (i) the price at
which Buyer is able to purchase or otherwise receive such deficient quantity of
power acting in a commercially reasonable manner (adjusted to reflect the
difference in transmission costs, if any) minus (ii) the Price reflected herein.

In the event Buyer fails to schedule and/or to receive the Firm Energy where
such failure was not excused by Force Majeure or by Seller's failure to perform,
Buyer will pay Seller (on the date payment would otherwise be due under this
transaction) an amount for each MWh of such deficiency equal to the positive
difference if any, between (i) the Price reflected herein, minus (ii) the price
at which Seller is able to sell or otherwise dispose of such deficiency quantity
of power acting in a commercially reasonable manner (adjusted to reflect
difference in transmission costs, if any).

Conowingo Renewable Credits: Buyer will have exclusive entitlement to Renewable
Credits associated with a portion of the actual net output of Conowingo
Hydroelectric Station equal to 400,800 Mwh for the period February 1, 2001,
through December 31, 2001; 438,000 MWh for the period January 1, 2002, through
December 31, 2002; and 438,000 MWh for the period January 1, 2003, through
December 31, 2003. Renewable Credits are any renewable attributes that reward or
encourage power producers or suppliers to provide renewable energy that is
associated with the production of electricity from Conowingo Hydroelectric
Station.

Certification of Exclusivity; Seller certifies that no other party, including
PECO Energy Company or any of its affiliates, subsidiaries or divisions, has or
shall have claim to the Renewable Credits entitled to Buyer under this
Agreement. At the end of the Term, Seller will cooperate to the extent
reasonably necessary to assist Buyer in fulfilling substantiation obligations
regarding Certification of Exclusivity.

Tariff: This sale shall take place, be billed, paid for, and treated
confidentially pursuant to the terms of PECO Energy Company's FERC Electric
Tariff Volume No. 1.

                                       2
<PAGE>   3
         IN WITNESS WHEREOF, and intending to be legally bound, the Parties have
executed this Agreement by the undersigned duly authorized representatives as of
the date of this Agreement.

PECO Energy Company                        Commonwealth Energy Corporation

                                           (d/b/a electricAMERICA)

By: /s/ Ian McLean                         By:  /s/  Ian B. Carter
   ---------------------------                ----------------------------------

Name:  Ian McLean                          Name:
                                                --------------------------------

Title:  Senior Vice President,             Title:
                                                 -------------------------------

Exelon Generation,

And President, Exelon

Power Team

Date:                                      Date:
                                                --------------------------------

                                       3
<PAGE>   4
EXHIBIT A

Payment Schedule:
<TABLE>
<CAPTION>
Month            Payment
-----            -------
     2001
<S>              <C>
Feb-01           $1,293,600
Mar-01           $1,432,200
Apr-01           $1,386,000
May-01           $1,432,200
Jun-01           $1,386,000
Jul-01           $1,432,200
Aug-01           $1,432,200
Sep-01           $1,386,000
Oct-01           $1,432,200
Nov-01           $1,386,000
Dec-01           $1,432,200
     2002
Jan-02           $1,432,200
Feb-02           $1,293,600
Mar-02           $1,432,200
Apr-02           $1,386,000
May-02           $1,432,200
Jun-02           $1,386,000
Jul-02           $1,432,200
Aug-02           $1,432,200
Sep-02           $1,386,000
Oct-02           $1,432,200
Nov-02           $1,386,000
</TABLE>

                                       1
<PAGE>   5
<TABLE>
<CAPTION>
Month            Payment
-----            -------
<S>              <C>
Dec-02           $1,432,200
     2003
Jan-03           $1,432,200
Feb-03           $1,293,600
Mar-03           $1,432,200
Apr-03           $1,386,000
May-03           $1,432,200
Jun-03           $1,386,000
Jul-03           $1,432,200
Aug-03           $1,432,200
Sep-03           $1,386,000
Oct-03           $1,432,200
Nov-03           $1,386,000
Dec-03           $1,432,200
</TABLE>

                                       2<PAGE>   1
                                                                    EXHIBIT 10.8
                                                  EXELON GENERATION COMPANY, LLC
                                                          CONFIRMATION AGREEMENT

             EXELON GENERATION COMPANY, LLC, CONFIRMATION AGREEMENT

TO:      Ian Carter

COMPANY: Commonwealth Energy Corporation (d/b/a electricAMERICA)

This confirmation letter ("Letter") shall confirm the agreement reached on May
18, 2001, between Commonwealth Energy Corporation and Exelon Generation Company,
LLC, for the sale and purchase under the terms and conditions as follows:

Buyer:   Commonwealth Energy Corporation (d/b/a electricAMERICA) ("Buyer")

Seller:  Exelon Generation Company, LLC ("Seller")

Product: Around the clock energy

Term:    36 months

Start Date:  Hour Ending 0100 June 1, 2001

End Date:  Hour Ending 2400 May 31, 2004

Delivery Point:  Western Hub of PJM Interconnection

Transmission:  Buyer responsible for transmission costs beyond Delivery Point

Amount:  50 MW per hour for the Term

Total Amount:  1,315,200 MWh

Price:  $35.85/MWh for the Term

Buyer's Credit Support: Buyer will provide to Seller a Letter of Credit ("LOC"),
issued by a financial institution acceptable to Seller, in the amount of $2.6
million. The LOC will be effective for the Term, with an expiration date of June
1, 2004.

Wire Transfer Information:  Payment will be made to the following:

                  Mellon Bank

                  Philadelphia, PA

                  ABA# 031-000-037

                  Credit: Exelon Generation Company, LLC
                  Account:  2216604

Scheduling: Seller will schedule this transaction in day-ahead eSchedules, or
its successor Buyer will confirm day-ahead eSchedules contract.

Tariff: This sale shall take place, be billed, paid for, and treated
confidentially pursuant to the terms of Exelon Generation Company's FERC
Electric Tariff Volume No. 1.

                                       1
<PAGE>   2
         IN WITNESS WHEREOF, and intending to be legally bound, the Parties have
executed this Agreement by the undersigned duly authorized representatives as of
the date of this Agreement.

Exelon Generation Company, LLC                  Commonwealth Energy Corporation
                                                (d/b/a electricAMERICA)

By:/s/ Ian McLean                               By: /s/ Ian B. Carter
   -----------------------------                   -----------------------------

Name:  Ian McLean                               Name:  Ian B. Carter

Title:  Senior Vice President                   Title:  Chairman & CEO

Date:  5/13/01                                  Date:  6/01/01

                                       2<PAGE>   1
                                                                    EXHIBIT 10.9
                                                           STANDARD OFFICE LEASE

                         STANDARD OFFICE LEASE -- GROSS
                    AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATE

1. Basic Lease Provisions ("Basic Lease Provisions")

         1.1 Parties. This Lease, dated, for reference purposes only, April 1,
1997 is made by and between Warner/Redhill Associates, a California general
partnership, (herein called "Lessor") and Frederick Michael Bloom, an
individual, doing business under the name of Bloom Venture Funding, (herein
called "Lessee").

         1.2 Premises: Suite Number(s) 200, ___________ floors, consisting of
approximately 3160 feet, more or less, as defined in paragraph 2 and as shown on
Exhibit "A" hereto (the "premises").

         1.3 Building: Commonly described as being located at 15941 Redhill
Avenue, Suite 200, in the City of Tustin, County of Orange, State of California,
as more particularly described in Exhibit A hereto, and as defined in paragraph
2.

         1.4 Use: General Office and Venture Capital and Brokerage, subject to
paragraph 6.

         1.5 Term: Thirty-Six months commencing June 1, 1997 ("Commencement
Date") and ending May 31, 2000, as defined in paragraph 3.

         1.6 Base Rent: $3,160.00 per month, payable on the first day of each
month, per paragraph 4.1.

         1.7 Base Rent Increase: The monthly Base Rent payable under paragraph
1.6 above shall be adjusted as provided in paragraph 52 of the addendum.

         1.8 Rent Paid Upon Execution: $3,160.00 for ___________________.

         1.9 Security Deposit: $10,270.00 to be held as set forth in the
addendum.

         1.10 Lessee's Share of Operating Expense Increase: 3.33% as defined in
paragraph 4.2.

2. Premises, Parking and Common Areas.

         2.1 Premises: The Premises are a portion of a building, herein
sometimes referred to as the "Building" identified in paragraph 1.3 of the Basic
Lease Provisions. "Building" shall include adjacent parking structures used in
connection therewith. The Premises, the Building the Common Areas, the land upon
which the same are located, along with all other buildings and improvements
thereon or thereunder, are herein collectively referred to as the "Office
Building Project." Lessor hereby leases to Lessee and Lessee leases from Lessor
for the term, at the rental, and upon all of the conditions set forth herein,
the real property referred to in the Basic Lease Provisions, paragraph 1.2, as
the "premises," including rights to the Common Areas as hereinafter specified.

         2.2 Vehicle Parking: So long as Lessee is not in default, and subject
to the rules and regulations attached hereto, and as established b Lessor from
time to time, Lessee shall be entitled to rent and use 11 ** parking spaces in
the Office Building Project at the monthly rate applicable from time to time for
monthly parking as set by Lessor and/or its licensee. unreserved**

                                       1
<PAGE>   2
                  2.2.1 If Lessee commits, permits or allows any of the
prohibited activities described in the Lease or the rules then in effect, then
Lessor shall have the right, without notice, in addition to such other rights
and remedies that it ma 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.

                  2.2.2 The monthly parking rate per parking space will be $0
per month at the commencement of the term of this Lease, and is subject to
change upon five (5) days prior written notice to Lessee. Monthly parking fees
shall be payable one month in advance prior to the first day of each calendar
month.

         2.3 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 Office Building Project that are provided and designated by the
Lessor from time to time for the general non-exclusive use of Lessor, Lessee and
of other lessees of the Office Building Project and their respective employees,
suppliers, shippers, customers and invitees, including but not limited to common
entrances, lobbies, corridors, stairways and stairwells, public restrooms,
elevators, escalators, parking areas to the extent not otherwise prohibited by
this Lease, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, ramps, driveways, landscaped areas and decorative walls.

         2.4 Common Areas -- Rules and Regulations. Lessee agrees to abide by
and conform to the rules and regulations attached hereto as Exhibit B with
respect to the Office Building Project and Common Areas, and to cause its
employees, suppliers, shippers, customers, and invitees to so abide and conform.
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 modify, amend and enforce said rules and regulations. Lessor shall
not be responsible to Lessee for the non-compliance with said rules and
regulations by other lessees, their agents, employees and invitees of the Office
Building Project.

         2.5 Common Areas -- Changes. Lessor shall have the right, in Lessor's
sole discretion, from time to time:

         (a)      To make changes to the Building interior and exterior and
Common Areas, including, without limitation, changes in the location, size,
shape, number, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, decorative walls, landscaped areas and walkways;
provided, however, Lessor shall at all times provide the parking facilities
required by applicable law;

         (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 and improvements outside the
boundaries of the Office Building Project to e a part of the Common Areas,
provided that such other land and improvements have a reasonable and functional
relationship to the Office Building Project;

         (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 Office Building Project, 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 Office Building Project as Lessor
may, in the exercise of sound business judgment deem to be appropriate.

                                       2
<PAGE>   3
3. Term.

         3.1 Term. The term and Commencement Date of this Lease shall be as
specified in paragraph 1.5 of the Basic Lease Provisions.

         3.2 Delay in Possession. Notwithstanding said Commencement Date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date and subject to paragraph 3.2.2, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease or
the obligations of Lessee hereunder or extend the term hereof; but, in such
case, Lessee shall not be obligated to pay rent or perform any other obligation
of Lessee under the terms of this Lease, except as may be otherwise provided in
this Lease, until possession of the Premises is tendered to Lessee, as
hereinafter defined; provided, however, that if Lessor shall not have delivered
possession of the Premises within ninety (90) days following said Commencement
Date, as the same may be extended under the terms of the Work Letter executed by
Lessor and Lessee, Lessee may, at Lessee's option, by notice in writing, to
Lessor within ten (10) days thereafter, cancel this Lease, in which event the
parties shall be discharged from all obligations hereunder; provided, however,
that , as to Lessee's obligations, Lessee first reimburses Lessor for all costs
incurred for Non-Standard Improvements and, as to Lessor's obligations, Lessor
shall return any money previously deposited by Lessee (less any offsets due
Lessor for Non-Standard Improvements); and provided further, that if such
written notice by Lessee is not received by Lessor within said ten (10) day
period, Lessee's right to cancel this Lease hereunder shall terminate and be of
no further force or effect.

                  3.2.1 Possession Tendered -- Defined. Possession of the
Premises shall be deemed tendered to Lessee ("Tender of Possession") when (1)
the improvements to be provided by Lessor under this Lease are substantially
completed.

                  3.2.2 Delays Caused by Lessee. There shall be no abatement of
rent, and the ninety (90) day period following the Commencement Date before
which Lessee's rights to cancel this Lease accrues under paragraph 3.2, shall be
deemed extended to the extent of any delays caused by acts or omissions of
Lessee, Lessee's agents, employees and contractors.

         3.3 Early Possession. If Lessee occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not change the termination date, and Lessee shall
pay rent for such occupancy.

         3.4 Uncertain Commencement. In the event commencement of the Lease term
is defined as the completion of the improvements, Lessee and Lessor shall
execute an amendment to this Lease establishing the date of Tender of Possession
(as defined in paragraph 3.2.1).

4. Rent.

         4.1 Base Rent. Except as may be otherwise expressly provided in this
Lease, Lessee shall pay to Lessor the Base Rent for the Premises set forth in
paragraph 1.6 of the Basic Lease Provisions, without offset or deduction. Lessee
shall pay Lessor upon execution hereof the advance Base Rent described in
paragraph 1.8 of the Basic Lease Provisions. Rent for any period during the term
hereof which is for less than one month shall be prorated based upon the actual
number of days of the calendar month involved. Rent shall be payable in lawful
money of the United States to Lessor at the address stated herein or to such
other persons or at such other places as Lessor may designate in writing.

         4.2 Operating Expense Increase. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee's Share, as hereinafter
defined, of the amount by which all Operating Expenses, as hereinafter defined,
for each Comparison Year exceeds the amount of all Operating Expenses for the
Base Year, such excess being hereinafter referred to as the "Operating Expenses
Increase, "in accordance with the following provisions:

         (a)      "Lessee's Share" is defined, for purposes of this Lease, as
the percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximately square footage of
the Premises by the total approximately square footage of the rentable

                                       3
<PAGE>   4
space contained in the Office Building Project. It is understood and agreed that
the square footage figures set forth in the Basic Lease Provisions are
approximations which Lessor and Lessee agree are reasonable and shall not be
subject to revisions except in connection with an actual change in the size of
the Premises or a change in the space available for lease in the Office Building
Project.

         (b)      "Base Year" is defined as the calendar year in which the Lease
term commenced.

         (c)      "Comparison Year" is defined as each calendar year during the
term of this Lease subsequent to the Base Year; provided, however, Lessee shall
have no obligation to pay a share of the Operating Expense increase applicable
to the first twelve (12) months of the Lease Term (other than such as are
mandated by a governmental authority, as to which government mandated expenses
Lessee shall pay Lessee's Share, notwithstanding they occur during the first
twelve (12) months). Lessee's Share of the Operating Expense Increase for the
first and last Comparison Years of the Lease Term shall be prorated according to
that portion of such Comparison Year as to which Lessee is responsible for a
share of such increase.

         (d)      "Operating Expenses" is defined, for purposes of this Lease,
to include all costs, if any, incurred by Lessor in the exercise of its
reasonable discretion, for:

                  (i)      The operation, repair maintenance, and replacement,
in net, clean, safe, good order and condition, of the Office Building Project,
including but not limited to, the following:

                           (aa)     The Common Areas, including their surfaces,
coverings, decorative items, carpets, drapes and window coverings, and including
parking areas, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, stairways, parkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, Common Area lighting facilities, building exteriors and
roofs, fences and gates;

                           (bb)     All heating, air conditioning, plumbing,
electrical systems, life safety equipment, telecommunication and other equipment
used in common by, or for the benefit of, lessees or occupants of the Office
Building Project, including elevators and escalators, tenant directors, fire
detection systems including sprinkler system maintenance and repair.

                  (ii)     Trash disposal, janitorial and security services;

                  (iii)    Any other service to be provided by Lessor that is
elsewhere in this Lease stated to be an "Operating Expense";

                  (iv)     The cost of the premiums for the liability and
property insurance policies to be maintained by Lessor under paragraph 8 hereof;

                  (v)      The amount of the real property taxes to be paid by
Lessor under paragraph 10 hereof;

                  (vi)     The cost of water, sewer, gas, electricity, and other
publicly mandated services to the Office Building Project;

                  (vii)    Labor, salaries and applicable fringe benefits and
costs, materials, supplies and tools, used in maintaining and/or cleaning the
Office Building Project and accounting and a management fee attributable to the
operation of the Office Building Project;

                  (viii)   Replacing and/or adding improvements mandated by any
governmental agency and any repairs removals necessitated thereby amortized over
its useful life according to Federal income tax regulations or guidelines for
depreciation thereof (including interest on the unamortized balance as then
reasonable in the judgment of Lessor's accountants);

                                       4
<PAGE>   5
                  (ix)     Replacements of equipment or improvements that have a
useful life for depreciation purposes according to Federal income tax guidelines
for five (5) years or less, as amortized over such life.

         (e)      Operating Expenses shall not include the costs of replacements
of equipment or improvements that have a useful life for Federal income tax
purposes in excess of five (5) years unless it is of the type described in
paragraph 4.2(d)(viii), in which case their cost shall be included as above
provided.

         (f)      Operating Expenses shall not include any expenses paid by any
lessee directly to third parties, or as to which Lessor is otherwise reimbursed
by any third party, other tenant, or by insurance proceeds.

         (g)      Lessee's Share of Operating Expense Increase shall be payable
by Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however, an
amount may be estimated by Lessor from time to time in advance of Lessee's Share
of the Operating Expense Increase for any Comparison Year, and the same shall be
payable monthly or quarterly, as Lessor shall designate, during each Comparison
Year of the Lease term, on the same day as the Base Rent is due hereunder. In
the event that Lessee pays Lessor's estimate of Lessee's Share of Operating
Expense Increase as aforesaid, Lessor shall deliver to Lessee within sixty (60)
days after the expiration year. If Lessee's payments under this paragraph 4.2(g)
during said Comparison Year exceed Lessee's Share as indicated on said
statement, Lessee shall be entitled to credit the amount of such overpayment
against Lessee's Share of Operating Expense Increase next falling due. If
Lessee's payments under this paragraph during said Comparison Year were less
than Lessee's Share as indicated on said statement, Lessee shall pay to Lessor
the amount of the deficiency within ten (10) days after delivery by Lessor to
Lessee of said statement. Lessor and Lessee shall forthwith adjust between them
by cash payment any balance determined to exist with respect to that portion of
the last Comparison Year for which Lessee is responsible as to Operating Expense
increases, notwithstanding that the Lease term may have terminated before the
end of such Comparison Year.

         4.3 Rent Increase.

                  4.3.1 [deleted]

                  4.3.2 [deleted]

                  4.3.3 [deleted]

                  4.3.4 Lessee shall continue to pay the rent at the rate
previously in effect until the increase, if any, is determined. Within five (5)
days following the date on which the increase is determined, Lessee shall make
such payment to Lessor as will bring the increased rental current, commencing
with the effective date of such increase through the date of any rental
installments then due. Thereafter the rental shall be paid at the increased
rate.

                  4.3.5 At such time as the amount of any change in rental
required by this Lease is known or determined, Lessor and Lessee shall execute
an amendment to this Lease setting forth such change.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
security deposit set forth in paragraph 1.9 of the Basic Lease Provisions as
security for Lessee's faithful performance of Lessee's obligations hereunder. If
Lessee fails to pay rent or other charges due hereunder, or otherwise defaults
with respect to any provision of this Lease, Lessor may use, apply or retain all
or any portion of said deposit for the payment of any rent or other charge in
default for the payment of any other sum to which Lessor may become obligated by
reason of Lessee's default or to compensate Lessor for any loss or damage which
Lessor may suffer thereby. If Lessor so uses or applies all or any portion of
said deposit, Lessee shall within ten (10) days after written demand therefor
deposit cash with Lessor in an amount sufficient to

                                       5
<PAGE>   6
restore said deposit to the full amount then required of Lessee. If the monthly
Base Rent shall, from time to time, increase during the term of this lease,
Lessee shall, at the election of Lessor and at the time of such increase,
deposit with Lessor additional money as a security deposit so that the total
amount of the security deposit held by Lessor 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 1.6 of the Basic Lease
Provisions. Lessor shall not be required to keep said security deposit separate
from its general accounts. If Lessee performs all of Lessee's obligations
hereunder, said deposit, or so much thereof as has not heretofore been applied
by Lessor, shall be returned, without payment of interest or other increment for
its use, to Lessee (or, at Lessor's option, to the last assignee, if any, of
Lessee's interest hereunder) at the expiration of the term hereof, and after
Lessee has vacated the Premises. No trust relationship is created herein between
Lessor and Lessee with respect to said Security Deposit.

6. Use.

         6.1 Use. The Premises shall be used and occupied only for the purpose
set forth in paragraph 1.4 of the Basic Lease Provisions and for no other
purpose.

         6.2 Compliance with Law.

         (a)      Lessor warrants to Lessee that to Lessor's actual knowledge,
the Premises, in the state existing on the date that the Lease term commenced,
but without regard to alterations or improvements made by Lessee or the use for
which Lessee will occupy the Premises, does not violate any covenants or
restrictions of record, or any applicable building code, regulation or ordinance
in effect on such Lease term Commencement Date. In the event it is determined
that such a violation exists on the Commencement Date, then it shall be the
obligation of the Lessor, after written notice from Lessee, to promptly, at
Lessor's sole cost and expense, rectify any such violation.

         (b)      Lessee shall, at Lessee's expense, promptly comply with all
applicable statutes, ordinances, rules, regulations, orders, covenants and
restrictions of record, and requirements of any fire insurance underwriters or
rating bureaus, now in effect or which may hereafter come into effect, whether
or not they reflect a change in policy from that now existing, during the term
or any part of the term hereof, relating in any manner to the Premises and the
occupation and use by Lessee of the Premises. Lessee shall conduct its business
in a lawful manner and shall not use or permit the use of the Premises or the
Common Areas in any manner that will tend to create waste or a nuisance or shall
tend to disturb other occupants of the Office Building Project.

         6.3 Condition of Premises.

         (a)      Lessor shall deliver the Premises to Lessee in a clean
condition on the Lease Commencement Date (unless Lessee is already in
possession) with the plumbing, lighting, air conditioning, and heating system in
the Premises shall be in good operating condition. In the event that it is
determined that same has been violated, then it shall be the obligation of
Lessor, after receipt of written notice from Lessee setting forth with
specificity the nature of the violation, to promptly, at Lessor's sole cost,
rectify such violation.

         (b)      Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises and the Office Building Project in their condition existing
as of the Lease Commencement Date or the date that Lessee takes possession of
the Premises, whichever is earlier, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the
use of the Premises, and any easements, covenants or restrictions of record, an
accepts this Lease subject thereto and to all matters disclosed thereby and by
any exhibits attached hereto. Lessee acknowledges that it has satisfied itself
by its own independent investigation that the Premises are suitable for its
intended use, and that neither Lessor nor Lessor's agent or agents has made any
representation or warranty as to the present or future suitability of the
Premises, Common Areas, or Office Building Project for the conduct of Lessee's
business.

                                       6
<PAGE>   7
7. Maintenance, Repairs, Alterations and Common Area Services.

         7.1 Lessor's Obligations. Lessor shall keep the Office Building
Project, including the Premises, interior and exterior walls, roof, and common
areas, and the equipment whether used exclusively for the Premises or in common
with other premises, in good condition and repair; provided, however, Lessor
shall not be obligated to paint, repair or replace the floor coverings or the
wall coverings, or to repair or replace any improvements that are not ordinarily
a part of the Building or are above then Building standards. There shall be no
abatement of rent or liability of Lessee on account of any injury or
interference with Lessee's business with respect to any improvements,
alterations or repairs made by Lessor to the Office Building Project or any part
thereof. Lessee expressly waives the benefits 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
Premises in good order, condition and repair.

         7.2 Lessee's Obligations.

         (a)      Notwithstanding Lessor's obligation to keep the Premises in
good condition and repair, Lessee shall be responsible for payment of the cost
thereof to Lessor as additional rent for that portion of the cost of any
maintenance and repair of the Premises, or any equipment (wherever located) that
serves only Lessee or the Premises, to the extent such cost is attributable to
causes beyond normal wear and tear. Lessee shall be responsible for the cost of
painting, repairing or replacing the floor coverings or the wall coverings, and
to repair or replace any Premises improvements that are not ordinarily a part of
the Building or that are above then Building standards. Lessor may, at its
option, upon reasonable notice, elect to have Lessee perform any particular such
maintenance or repairs the cost of which is otherwise Lessee's responsibility
hereunder.

         (b)      On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to lessor in the same condition
as received, ordinary wear and tear excepted, clean and free of debris. Any
damage or deterioration of the Premises shall not be deemed ordinary wear and
tear if the same could have been prevented by good maintenance practices by
Lessee. Lessee shall repair any damage to the Premises occasioned by the
installation or removal of Lessee's trade fixtures, alterations, furnishings and
equipment. Except as otherwise stated in this Lease, Lessee shall leave the air
lines, power panels, electrical distribution systems, lighting fixtures, air
conditioning, window coverings, wall coverings, floor coverings, wall paneling,
ceilings and plumbing on the Premises and in good operating condition.

         7.3 Alterations and Additions.

         (a)      Lessee shall not, without Lessor's prior written consent make
any alterations, improvements, additions, Utility installations or repairs in,
on or about the Premises, or the Office Building Project. As used in this
paragraph 7.3 the term "Utility Installation" shall mean window and wall
coverings, power panels, electrical distribution systems, lighting fixtures, air
conditioning, plumbing, and telephone and telecommunication wiring and
equipment. At the expiration of the term, Lessor may require the removal of any
or all of said alterations, improvements, additions or Utility Installations,
and the restoration of the Premises and the Office Building Project to their
prior condition, at Lessee's expense. Should Lessor permit Lessee to make its
own alterations, improvements, additions or Utility Installations, Lessee shall
use only such contractor as has been expressly approved by Lessor, and Lessor
may require Lessee to provide Lessor, at Lessee's sole cost and expense, a lien
and completion bond in an amount equal to one and one-half times the estimated
cost of such improvements, to insure Lessor against any liability for mechanic's
and materialmen's liens and to insure completion of the work. Should Lessee make
any alterations, improvements, additions or Utility Installations without the
prior approval of Lessor, or use a contractor not expressly approved by Lessor,
Lessor may, at any time during the term of this Lease, require that Lessee
remove any part or all of the same.

         (b)      Any alterations, improvements, additions or Utility
Installations in or about the Premises or the Office Building Project that
Lessee shall desire to make shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent to Lessee's making
such alteration, improvement, addition or Utility Installation, the consent
shall be deemed conditioned upon Lessee

                                       7
<PAGE>   8
acquiring a permit to do so from the applicable governmental agencies,
furnishing a copy thereof to Lessor prior to the commencement of the work, and
compliance by Lessee with all conditions of said permit in a prompt and
expeditious manner.

         (c)      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 in
the Premises, which claims are or may be secured by a mechanic's or
materialmen's lien against the Premises, the Building or the Office Building
Project, or any interest therein.

         (d)      Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in the Premises by Lessee, and Lessor
shall have the right to post notices of non-responsibility in or on the Premises
or the Building 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 itself and Lessor 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, the Building or the Office Building
Project, upon the condition that if Lessor shall require, Lessee shall furnish
to Lessor a surety bond satisfactory to Lessor in an amount equal to such
contested lien claim or demand indemnifying Lessor against liability for the
same and holding the Premises, the Building and the Office Building Project free
from the effect of such lien or claim. In addition, Lessor may require Lessee to
pay Lessor's reasonable attorneys' fees and costs in participating in such
action if Lessor shall decide it is to Lessor's best interest so to do.

         (e)      All alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made to the Premises by Lessee, including but
not limited to, floor coverings, panelings, doors, drapes, built-ins, moldings,
sound attenuation, and lighting and telephone or communication systems, conduit,
wiring and outlets, shall be made and done in a good and workmanlike manner and
of good and sufficient quality and materials and shall be the property of Lessor
and remain upon and be surrendered with the Premises at the expiration of the
Lease term, unless Lessor requires their removal pursuant to paragraph 7.3(a).
Provided Lessee is not in default, notwithstanding the provisions of this
paragraph 7.3(e), Lessee's personal property and equipment, other than that
which is affixed to the Premises so that it cannot be removed without material
damage to the Premises or the Building, and other than Utility Installations,
shall remain the property of Lessee and may be removed by Lessee subject to the
provisions of paragraph 7.2.

         (f)      Lessee shall provide Lessor with as-built plans and
specifications for any alterations, improvements, additions or Utility
Installations.

         7.4 Utility Additions. Lessor reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Lessor or Lessee, or any other lessee of the Office Building Project,
including, but not by way of limitations, such utilities as plumbing, electrical
systems, communication systems, and fire protection and detection systems, so
long as such installations do not unreasonably interfere with Lessee's use of
the Premises.

8. Insurance; Indemnity.

         8.1 Liability Insurance - Lessee. Lessee shall, at Lessee's expense,
obtain and keep in force during the term of this Lease a policy of liability
insurance, as reasonably determined by lessor and shall insure Lessee with
Lessor as an additional insured against liability arising out of the use,
occupancy or maintenance of the Premises by Lessee and Lessee's agents,
contractors, employee and invitees. Compliance with the above requirement shall
not, however, limit the liability of Lessee hereunder.

         8.2 Liability Insurance - Lessor. Lessor shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Broad Form Property Damage Insurance, plus coverage against such other risks
Lessor deems advisable from time to time, insuring Lessor, but not Lessee,
against liability arising out of the ownership, use, occupancy or maintenance of
the Office Building Project.

                                       8
<PAGE>   9
         8.3 Property Insurance - Lessee. Lessee shall, at Lessee's expense,
obtain and keep in force during the term of this Lease for the benefit of
Lessee, replacement cost fire and extended coverage insurance, with vandalism
and malicious mischief, sprinkler leakage and earthquake sprinkler leakage
endorsements, in an amount sufficient to cover not less than 100% of the full
replacement cost, as the same may exist from time to time, of all of Lessee's
personal property, fixtures, equipment and tenant improvements.

         8.4 Property Insurance - Lessor. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Office Building Project improvements, but not Lessee's personal
property, fixtures, equipment or tenant improvements, in the amount of the full
replacement cost thereof, as the same may exist from time to time, utilizing
Insurance Services Office standard form, or equivalent, providing protection
against all perils included with the classification of fire, extended coverage,
vandalism, malicious mischief, plate glass, and such other perils as Lessor
deems advisable or may be required by a lender having a lien on the Office
Building Project. Lessee will not be named in any such policies carried by
Lessor and shall have no right to any proceeds therefrom. The policies required
by these paragraphs 8.2 and 8.4 shall contain such deductibles as Lessor or the
aforesaid lender may determine. In the event that the Premises shall suffer an
insured loss as defined in paragraph 9.1(f) hereof, the deductible amounts under
the applicable insurance policies shall be deemed an Operating Expense. Lessee
shall not do or permit to be done anything which shall invalidate the insurance
policies carried by Lessor. Lessee shall pay the entirety of any increase in the
property insurance premium for the Office Building Project over what it was
immediately prior to the commencement of the term of this Lease if the increase
is specified by Lessor's insurance carrier as being caused by the nature of
Lessee's occupancy or any act or omission of Lessee.

         8.5 Insurance Policies. Lessee shall deliver to Lessor copies of
liability insurance policies required under Paragraph 8.1 or certificates
evidencing the existence and amounts of such insurance within seven (7) days
prior to the Commencement Date of this Lease. No such policy shall be
cancellable or subject to reduction of coverage or other 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
renewals thereof.

         8.6 Waiver of Subrogation. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other,
for direct or consequential loss or damage arising out of or incident to the
perils covered by insurance carried by such party hereunder or required to be
insured against hereunder, whether due to the negligence of Lessor or Lessee or
their agents, employees, contractors and/or invitees. If necessary all property
insurance policies required under this Lease shall e endorsed to so provide.

         8.7 Indemnity. Lessee shall indemnify and hold harmless Lessor and its
agents, Lessor's master or ground lessor, partners and lenders, from and against
any and all claims for damage to the person or property of anyone or any entity
arising from Lessee's use of the Office Building Project, or from the conduct of
Lessee's business or from any activity, work or things done, permitted or
suffered by Lessee in or about the Premises or elsewhere and shall further
indemnify and hold harmless Lessor from and against any and all claims, costs
and expenses arising from any breach or default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any act or omission of Lessee, or any of Lessee's agents,
contractors, employees, or invitees, and from and against all costs, attorney's
fees, expenses and liabilities incurred by Lessor as the result of any such use,
conduct, activity, work, things done, permitted or suffered, breach, default or
negligence, and in dealing reasonably therewith, including but not limited to
the defense or pursuit of any claim or any action or proceeding involved there;
and in case any action or proceeding be brought against Lessor by reason of any
such matter, 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 e so indemnified. Lessee, as a material part of the consideration to
Lessor, hereby assumes all risk of damage to property of Lessee or injury to
persons, in, upon or about the Office Building Project arising from any cause
and Lessee hereby waives all claims in respect thereof against Lessor.

                                       9
<PAGE>   10
         8.8 Exemption of Lessor from Liability. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of income
therefrom or for loss of or damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other person
in or about the Premises or the Office Building Project, nor shall Lessor be
liable for injury to the person of Lessee, Lessee's employees, agents or
contractors, whether such damage or injury is caused by or results from theft,
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures, or from any other cause, whether said
damage or injury results from conditions arising upon the Premises or upon other
portions of the Office Building Project, or from other sources or places, or
from new construction or the repair, alteration or improvement of any part of
the Office Building Project or of the equipment, fixtures or appurtenances
applicable thereto, and regardless of whether the cause of such damage or injury
or the mean of repairing the same is inaccessible, Lessor shall not be liable
for any damages arising from any act or neglect of any other lessee, occupant or
user of the Office Building Project, nor from the failure of Lessor to enforce
the provisions of any other lease of any other lessee of the Office Building
Project.

         8.9 No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Lessee's property or obligations under
this Lease.

9. Damage or Destruction.

         9.1 Definitions.

         (a)      "Premises Damage" shall mean if the Premises are damaged or
destroyed to any extent.

         (b)      "Premises Building Partial Damage" shall mean if the Building
of which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is less than fifty percent (50%) of the then Replacement Cost of
the building.

         (c)      "Premises Building Total Damage" shall mean if the Building of
which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is fifty percent (50%) or more of the then Replacement Cost of
the Building.

         (d)      "Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project site.

         (e)      "Office Building Project Buildings Total Destruction" shall
mean if the Office Building Project Buildings are damaged or destroyed to the
extent that the cost of repair if fifty percent (50%) or more of the then
Replacement Cost of the Office Building Project Buildings.

         (f)      "Insured Loss" shall mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8. The fact that an insured Loss has a deductible amount shall not
make the loss an uninsured loss.

         (g)      "Replacement Cost" shall mean the amount of money necessary to
be spent in order to repair or rebuild the damaged area to the condition that
existed immediately prior to the damage occurring, excluding all improvement
made by lessees, other than those installed by Lessor at Lessee's expense.

         9.2 Premises Damage; Premises Building Partial Damage.

         (a)      Insured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is an
Insured Loss and which falls into the classification of either Premises Damage
or Premises Building Partial Damage, then Lessor shall, as soon as reasonably
possible and to the extent the required materials and labor are readily
available through the usual commercial channels, at Lessor's expense, repair
such damage (but not Lessee's fixtures, equipment or

                                       10
<PAGE>   11
tenant improvements originally paid for by Lessee) to its condition existing at
the time of the damage, and this Lease shall continue in full force and effect
(if Lessee has actually received insurance proceeds).

         (b)      Uninsured Loss: Subject to the provisions of paragraphs 9.4
and 9.5, if at any time during the term of this Lease there is damage which is
not an Insured Loss and which falls within the classification of Premises Damage
or Premises Building Partial Damage, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
which damage prevents Lessee from making any substantial use of the Premises,
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 the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage, in which event this Lease shall terminate as of the date of the
occurrence of such damage.

         9.3 Premises Building Total Destruction; Office Building Project Total
Destruction. Subject to the provisions of paragraphs 9.4 and 9.5, if at any time
during the term of this Lease there is damage, whether or not it is an Insured
Loss, which falls into the classifications of either (i) Premises Building Total
Destruction, or (ii) Office Building Project Total Destruction, then Lessor may
at Lessor's option either (i) repair such damage or destruction as soon as
reasonably possible at Lessor's expense (to the extent the required material are
readily available through usual commercial channels) to its condition existing
at the time of the damage, but not Lessee's fixtures, equipment or tenant
improvements, and this Lease shall continue in full force and effect, or either
Lessor or Lessee may elect to terminate this Lease on sixty (60) days prior
written notice to the other party (which termination shall be effective as of
the date of the occurrence of such damage).

         9.4 Damage Near End of Term.

         (a)      Subject to paragraph 9.4(b), if at any time during the last
twelve (12) months of the term of this Lease there is substantial damage to the
Premises, Lessor may at Lessor's option cancel and terminate this Lease as of
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.

         (b)      Notwithstanding paragraph 9.4(a), in the event that Lessee has
an option to extend or renew this Lease, and the time within which said option
may be exercised has not yet expired, Lessee shall exercise such option, if it
is to be exercised at all, no later than twenty (20) days after the occurrence
of an insured Loss falling within the classification of Premises Damage during
the last twelve (12) months of the term of this Lease. If, and only if, Lessee
duly exercises such option during said twenty (20) day period. Lessor, shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease shall
continue in full force and effect if Lessee fails to exercise such option during
said twenty (20) day period, then Lessor may at Lessor's option terminate and
cancel this Lease as if the expiration of said twenty (20) day period by giving
written notice to Lessee of Lessor's election to do so within ten (10) days
after the expiration of said twenty (20) day period, notwithstanding any term or
provision in the grant of option to the contrary.

         9.5 Abatement of Rent; Lessee's Remedies.

         (a)      In the event Lessor repairs or restores the Building or
Premises pursuant to the provisions of this paragraph 9, and any part of the
Premises are not usable (including loss of use due to loss of access or
essential services), the rent payable hereunder (including Lessee's Share of
Operating Expense Increase) for the period during which such damage, repair or
restoration continues shall be abated, provided (1) the damage was not the
result of negligence of Lessee, and (2) such abatement shall only be to the
extent the operation and profitability of Lessee's business as operated from the
Premises is adversely affected. Except for said abatement of rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.

                                       11
<PAGE>   12
         (b)      If Lessor shall be obligated to repair or restore the Premises
or the Building under the provisions of this Paragraph 9 and shall not commence
such repair or restoration within ninety (90) days after such occurrence (as
such date is extended by any force majeure or unavoidable delays), or if Lessor
shall not complete the restoration and repair within six (6) months after such
occurrence (as such date is extended by any force majeure or unavoidable
delays), Lessee may at Lessee's option cancel and terminate this Lease by giving
Lessor written notice of Lessee's election to do so at any time prior to the
commencement or completion of such repair or restoration. In such event this
Lease shall terminate as of the date of such notice (as such date is extended by
any force majeure or unavoidable delays).

         (c)      Lessee agrees to cooperate with Lessor in connection with any
such restoration and repair, including but not limited to the approval and/or
execution of plans and specifications required.

         9.6 Termination--Advance Payments. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.

10. Real Property Taxes.

         10.1 Payment of Taxes. Lessor shall pay the real property tax, as
defined in paragraph 10.3, applicable to the Office Building Project subject to
reimbursement by Lessee of Lessee's Share of such taxes in accordance with the
provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2.

         10.2 Additional Improvements. Lessee shall not be responsible for
paying any increase in real property tax specified in the tax assessor's records
and work sheets as being caused by additional improvements placed upon the
Office Building Project by other lessees or by Lessor for the exclusive
enjoyment of any other lessee. Lessee shall, however, pay to Lessor at the time
that Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or at Lessee's request.

         10.3 Definition of "Real Property Tax." As used herein, the term "real
property tax" 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 on the Office Building Project or any portion thereof
by any authority having the direct or indirect power to tax including any city,
county, state or federal government, or any school, agricultural, sanitary,
fire, street, drainage or other improvement district thereof, as against any
legal or equitable interest of Lessor I the Office Building Project or in any
portion thereof, as against Lessor's right to rent or other income therefrom,
and as against Lessor's business of leasing the Office Building Project. The
term "real property tax" shall also include any tax, fee, levy, assessment or
charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of "real
property tax," or (ii) the nature of which was hereinbefore included within the
definition of "real property tax," or (iii) which is imposed for a service or
right not charged prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978, or (iv) which is imposed as a result of a change
in ownership, as defined by applicable local statute for property tax purposes,
of the Office Building Project or which is added to a tax or charge hereinbefore
included within the definition of real property tax by reason of such change of
ownership, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.

         10.4 Joint Assessment. If the improvements or property, the taxes for
which are to be paid separately by Lessee under paragraph 10.2 or 10.5 are not
separately assessed, Lessee's portion of that tax shall be equitable
determination by Lessor from the respective valuations assigned in the
assessor's work sheets or such other information (which may include the cost of
construction) as may be reasonably available. Lessor's reasonable determination
thereof, in good faith, shall be conclusive.

         10.5 Personal Property Taxes.

                                       12
<PAGE>   13
         (a)      Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishing, equipment and all other
personal property of Lessee contained in the Premises or elsewhere.

         (b)      If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay to Lessor the taxes attributable
to Lessee within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property.

11. Utilities.

         11.1 Services Provided by Lessor. Lessor shall provide heating,
ventilation, air conditioning, and janitorial service as reasonably required,
reasonable amounts of electricity for normal lighting and office machines, water
for reasonable and normal drinking and lavatory use, and replacement light bulbs
and/or fluorescent tubes and ballasts for standard overhead fixtures.

         11.2 Services Exclusive to Lessee. Lessee shall pay for all water, gas,
heat, light, power, telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Lessee,
together with any taxes thereon. If any such services are not separately metered
to the Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a
reasonable proportion to be determined by Lessor of all charges jointly metered
with other premises in the Building.

         11.3 Hours of Service. Said services and utilities shall be provided
during generally accepted business days and hours or such other days or hours as
may hereafter be set forth by Lessor. Utilities and services required at other
times shall be subject to advance request and reimbursement by Lessee to Lessor
of the cost thereof.

         11.4 Excess Usage by Lessee. Lessee shall not make connection to the
utilities except by or through existing outlets and shall not install or use
machinery or equipment in or about the Premises that uses excess water, lighting
or power, or suffer or permit any act that causes extra burden upon the
utilities or services, including but not limited to security services, over
standard office usage for the Office Building Project, without Lessor's prior
written consent. Lessor shall require Lessee to reimburse Lessor for any excess
expenses or costs that may arise out of a breach of this subparagraph by Lessee.
Lessor may, in its sole discretion, install at Lessee's expense supplemental
equipment and/or separate metering applicable to Lessee's excess usage or
loading.

         11.5 Interruptions. There shall be no abatement of rent and Lessor
shall not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor's
reasonable control or in cooperation with governmental request or directions.

12. Assignment and Subletting.

         12.1 Lessor's Consent Required. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in the Lease or in the Premise,
without Lessor' prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a material
default and breach of this Lease without the need for notice to Lessee under
paragraph 13.1. "Transfer" within the meaning of this paragraph 12 shall include
the transfer or transfers aggregating: (a) if Lessee is a corporation, more than
twenty-five percent (25%) of the voting stock of such corporation, or (b) if
Lessee is a partnership, more than twenty-five percent (25%) of the profit and
loss participation of such partnership.

         12.2 Lessee Affiliate. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof without
Lessor's consent, to any corporation which controls,

                                       13
<PAGE>   14
is controlled by or is under common control with Lessee, or to any corporation
resulting from the merger or consolidation with Lessee, or to any person or
entity which acquires all the assets of Lessee as a going concern of the
business that is being conducted on the Premises, all of which are referred to
as "Lessee Affiliate"; provided that before such assignment shall be effective,
(a) said assignee shall assume, in full, the obligations of Lessee under this
Lease and (b) Lessor shall be given written notice of such assignment and
assumption. Any such assignment shall not, in any way, affect or limit the
liability of Lessee under the terms of this Lease even if after such assignment
or subletting the terms of this Lease are materially changed or altered without
the consent of Lessee, the consent of whom shall not be necessary.

         12.3 Terms and Conditions Applicable to Assignment and Subletting.

         (a)      Regardless of Lessor's consent, no assignment or subletting
shall release Lessee of Lessee's obligations hereunder or alter the primary
liability of Lessee to pay the rent and other sums due Lessor hereunder
including Lessee's Share of Operating Expense Increase, and to perform all other
obligations to be performed by Lessee hereunder.

         (b)      Lessor may accept rent from any person other than Lessee
pending approval or disapproval of such assignment.

         (c)      Neither a delay in the approval or disapproval of such
assignment or subletting, nor the acceptance of rent, shall constitute a waiver
or estoppel of Lessor's right to exercise its remedies of the breach of any of
the terms or conditions of this paragraph 12 or this Lease.

         (d)      Lessee's obligations under this Lease have been guaranteed by
third parties, then an assignment or sublease, and Lessor's consent thereto,
shall not be effective unless said guarantors give their written consent to such
sublease and the terms hereof.

         (e)      The consent by 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 sublessee.
However, Lessor may consent to subsequent subletting and assignments of the
sublease or any amendments or modifications thereto without notifying Lessee or
anyone else liable on the Lease or sublease and without obtaining their consent
and such action shall not relieve such persons from liability under this Lease
or said sublease; however, such persons shall not be responsible to the extent
any such amendment or modification enlarges or increases the obligations of the
Lessee or sublessee under this Lease or such sublease.

         (f)      In the event of any default under this Lease, Lessor may
proceed directly against Lessee, any guarantors or any one else responsible for
the performance of this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible thereof to
Lessor, or any security held by Lessor or Lessee.

         (g)      Lessor's written consent to any assignment or subletting of
the Premises by Lessee shall not constitute an acknowledgement that no default
then exists under this Lease of the obligations to be performed by Lessee nor
shall such consent be deemed a waiver of any then existing default, except as
may be otherwise stated by Lessor at the time.

         (h)      The discovery of the fact that any financial statement relied
upon by Lessor in giving its consent to an assignment or subletting was
materially false shall, at Lessor's election, render Lessor's said consent null
and void.

         12.4 Additional Terms and Conditions Applicable to Subletting.
Regardless of Lessor's consent, 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.

                                       14
<PAGE>   15
         (a)      Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease 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 default shall occur in the performance of Lessee's obligations under this
Lease, Lessee may receive, collect and enjoy the rents accruing under such
sublease. Lessor shall not, by reason of this or any other assignment of such
sublease to Lessor nor by reason of the collection of the rents from a
sublessee, be deemed liable to the sublessee for any failure of Lessee to
perform and comply with any of Lessee's obligations to such sublessee under such
sublease. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor stating that a default exists in
the performance of Lessee's obligations under this Lease, to pay to Lessor the
rents due and to become due under the sublease. Lessee agrees that such
sublessee shall have the right to rely upon any such statement and request form
Lessor, and that such sublessee shall pay such rents to Lessor without any
obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against said sublessee or Lessor for any such rents
so paid by said sublessee to Lessor.

         (b)      No sublease entered into by Lessee shall be effective unless
and until it has been approved in writing by Lessor. In entering into any
sublease, Lessee shall use only such form of sublessee as is satisfactory to
Lessor, and once approved by Lessor, such sublease shall not be changed or
modified without Lessor's prior written consent. Any sublease shall, by reason
of entering into a sublease under this Lease, be deemed, for the benefit of
Lessor, to have assumed and agreed to conform and comply with each and every
obligation herein to be performed by Lessee other than such obligations as are
contrary to or inconsistent with provisions contained in a sublease to which
Lessor has expressly consented in writing.

         (c)      In the event Lessee shall default 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 Lessee under such sublease from the time of
the exercise of said option to the termination of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to Lessee or for any other prior defaults of Lessee under
such sublease.

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

         (e)      With respect to any subletting to which Lessor has consented,
Lessor agrees to deliver a copy of any notice of default by Lessee to the
sublessee. Such sublessee shall have the right to cure a default of Lessee
within three (3) days after service of such notice of default upon such
sublessee, and the sublessee shall have a right of reimbursement and offset from
and against Lessee for any such defaults cured by the sublessee.

         12.5 Lessor's Expenses. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable costs and expenses incurred in
connection therewith, including attorneys', architects', engineers' or other
consultants' fees.

         12.6 Conditions to Consent. Lessor reserves the right to condition any
approval to assign or sublet upon Lessor's determination that (a) the proposed
assignee or sublessee shall conduct a business on the Premises of a quality
substantially equal to that of Lessee and consistent with the general character
of the other occupants of the office Building Project and not in violation of
any exclusive or rights then held by other tenants, and (b) the proposed
assignee or sublessee be at least as financially responsible as Lessee was
expected to be at the time of the execution of this Lease or of such assignment
or subletting, whichever is greater.

                                       15
<PAGE>   16
13. Default; Remedies.

         13.1 Default. The occurrence of any one or more of the following events
shall constitute a material default of this Lease by Lessee:

         (a)      The vacation or abandonment of the Premises by Lessee.
Vacation of the Premises shall include the failure to occupy the Premises for a
continuous period of sixty (60) days or more, whether or not the rent is paid.

         (b)      The breach by Lessee of any of the covenants, conditions or
provisions of paragraphs 7.3(a), (b) or (d) (alterations), 12.1 (assignment or
subletting), 13.1(a) (vacation or abandonment), 13.1(e) (insolvency), 13.1(f)
(false statement), 16(a) (estoppel certificate), 30(b) (subordination), 33
(auctions), or 41.1 (easements), all of which are hereby deemed to be material,
non-curable defaults without the necessity of any notice by Lessor to Lessee
thereof.

         (c)      The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes
such Notice to Pay Rent or Quit shall also constitute the notice required by
this subparagraph.

         (d)      The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee other than those referenced in subparagraphs (b) and (c) above, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Lessor to Lessee; provided, however, that if the nature of
Lessee's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Lessee shall not be deemed to be in default if
Lessee commenced such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion. To the extent permitted by law, such
thirty (30) day notice shall constitute the sole and exclusive notice required
to be given to Lessee under applicable Unlawful Detainer statutes.

         (e)      (i) The making by Lessee of any general arrangement or general
assignment for the benefit of creditors; (ii) Lessee becoming a "debtor" as
defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in
the care 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. In the event that any provisions of this paragraph 13.1(e) is contrary to
any applicable law, such provision shall be of no force or effect.

         (f)      The discovery by Lessor that any financial statement given to
Lessor by Lessee, or its successor in interest or by any guarantor of Lessee's
obligation hereunder, was materially false.

         13.2 Remedies. In the event of any material default or breach of this
Lease by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default:

         (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 all damages incurred by
Lessor by reason of Lessee's default 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 any real estate commission actually paid, the worth at the time of award by
the court having jurisdiction thereof of the amount by which the unpaid rent for
the balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Lessee proves could be reasonably avoided;
that portion of the leasing commission paid by Lessor pursuant to paragraph 15
applicable to the unexpired term of this Lease.

                                       16
<PAGE>   17
         (b)      [Deleted]

         (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. Unpaid installments of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.

         13.3 Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance than Lessor shall not be in
default if Lessor commences performance within such 30-day period and thereafter
diligently pursues the same to completion.

         13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of Base Rent, Lessee's Share of Operating Expense Increase or
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 on Lessor by the terms of any mortgage or
trust deed covering the Office Building Project. Accordingly, if any installment
of Base Rent, Operating Expense Increase, or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to 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 with respect to such overdue amount, nor prevent Lessor from
exercising any of the other rights and remedies granted hereunder.

14. Condemnation. If the Premises or any portion thereof or the Office Building
Project are taken under the power of eminent domain, or sold under the threat of
the exercise of aid 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; provided that if so
much of the Premises or the Office Building Project are taken by such
condemnation as would substantially and adversely affect the operation and
profitability of Lessee's business conducted from the Premises (which shall
represent the definition of the term "material" herein), Lessee shall have the
option, to be exercised only in writing within thirty (30) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within thirty (30) days after the condemning authority shall have taken
possession), to 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 rent and Lessee's Share of
Operating Expense Increase shall be reduced in proportion that the floor area of
the Premises taken bears to the total floor area of the Premises Common Areas
taken shall be excluded from the Common Areas usable by Lessee and no reduction
of rent shall occur with respect thereto or by reason thereof. Lessor shall have
the option in its sole discretion to terminate this Lease as of the taking of
possession by the condemning authority, by giving written notice to Lessee of
such election within thirty (30) days after receipt of notice of a taking by
condemnation of any part of the Premises or the Office Building Project. Any
award for the taking of all or any part of the Premises or the Office Building
Project 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 in value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that Lessee
shall be entitled to any separate award for loss of or damage to Lessee's trade
fixtures, removable personal property and unamortized tenant improvements that
have been paid for by Lessee. For that purpose the cost of such improvements
shall be amortized over the original term of this Lease excluding any options.
In the event that this Lease is not terminated by reason of such condemnation,
Lessor shall to the extent of severance damages received by Lessor in connection
with such condemnation, repair any damage to the Premises caused by such
condemnation except to the

                                       17
<PAGE>   18
extent that Lessee has been reimbursed thereof by the condemning authority.
Lessee shall pay any amount in excess of such severance damages required to
complete such repair.

15. Broker's Fee.

         15.1 The brokers involved in this transaction are Jeffrey Lerch,
Insignia Commercial Group, Inc. as "listing broker" and N/A, as "cooperating
broker," licensed real estate broker(s). A "cooperating broker" is defined as
any broker other than the listing broker entitled to a share of any commission
arising under this Lease.

16. Estoppel Certificate.

         16.1 Each party (as "responding party") shall at any time upon not less
than ten (10) days' prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrance of the Office Building Project or of
the business of Lessee.

         16.2 At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
there are no uncured defaults in the requesting party's performance, and (iii)
if Lessor is the requesting party, not more than one month's rent has been paid
in advance.

         16.3 If Lessor desire to finance, refinance, or sell the Office
Building Project, or any part thereof, Lessee hereby agrees to deliver to any
lender or purchaser designated by Lessor such financial statements of Lessee as
may be reasonably required by such lender or purchaser. Such statements shall
include the past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

17. Lessor's Liability. The term "Lessor" as used herein shall mean only the
owner or owners, at the time in question, of the fee title a lessee's interest
in a ground lease of the Office Building Project, and in the event of any
transfer of such title or interest, Lessor herein named (and in case of any
subsequent transfers then the grantor) shall be relieved from and after the date
of such transfer of all liability as respects Lessor's obligations thereafter to
be performed, provided that any funds in the hands of Lessor or the then grantor
at the time of such transfer, in which Lessee has an interest, shall be
delivered to the grantee. The obligations contained in this Lease to be
performed by Lessor shall, subject as aforesaid, be binding on Lessor's
successors and assigns, only during their respective periods of ownership.

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. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
than allowable by law or judgments from the date due. Payment of such interest
shall not excuse or cure any default by Lessee under this Lease; provided,
however, that interest shall not be payable on late charges incurred by Lessee
nor on any amounts upon which late charges are paid by Lessee.

20. Time of Essence. Time is of the essence with respect to the obligations to
be performed under this Lease.

                                       18
<PAGE>   19
21. Additional Rent. All monetary obligations of Lessee to Lessor under the
terms of this Lease, including but not limited to Lessee's Share of Operating
Expense Increase any other expenses payable by Lessee hereunder shall be deemed
to be rent.

22. Incorporation of Prior Agreements; Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
or contemporaneous agreement or understanding pertaining to any such matter
shall be effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise stated
in this Lease, Lessee hereby acknowledges that neither the real estate broker
listed in paragraph 15 hereof nor any cooperating broker on this transaction nor
the Lessor or any employee or agents of any of said persons has made any oral or
written warranties or representation to Lessee relative to the condition or use
by Lessee of the Premises of the Office Building Project and Lessee acknowledges
that Lessee assumes all responsibility regarding the Occupational Safety Health
Act, the legal use and adaptability of the Premises and the compliance thereof
with all applicable laws and regulations in effect during the term of this
Lease.

23. Notices. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified or registered
mail, and shall be deemed sufficiently given if delivered or addressed to Lessee
or to Lessor, as the case may be. Mailed notices shall be deemed given upon
actual receipt at the address required, or forty-eight hours following deposit
in the mail, postage prepaid, whichever first occurs. Either party may by 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 notice purposes. 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 notice to Lessee.

24. Waivers. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to or approval of any
subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall not
be a waiver of any preceding breach by Lessee of any provision hereof, other
than the failure of Lessee to pay the particular rent so accepted, regardless of
Lessor's knowledge of such preceding breach at the time of acceptance of such
rent.

25. [Deleted]

26. [Deleted]

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

28. Covenants and Conditions. Each provision of this Lease performable by Lessee
shall be deemed both a covenant and a condition.

29. Binding Effect; Choice of Law. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Office Building Project is located and any litigation concerning this
Lease between the parties hereto shall be initiated in the county in which the
Office Building Project is located.

30. Subordination.

         30.1 This Lease, and any Option or right of first refusal granted
hereby, at Lessor's option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter placed
upon the Office Building Project and to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding such subordination,
Lessee's right to quiet possession of the Premises shall not be disturbed if
Lessee is not

                                       19
<PAGE>   20
in default and so long as Lessee shall pay the rent and observe and perform all
of the provisions of this Lease, unless this Lease is otherwise terminated
pursuant to its terms. If any mortgage, trustee or ground lessor shall elect to
have this Lease and any Options granted hereby prior to such mortgage, deed of
trust or ground lease, whether this Lease or such Options are dated prior or
subsequent to the date of said mortgage, deed of trust or ground lease or the
date of recording thereof.

         30.2 Lessee agrees to execute any documents required to effectuate an
attainment, a subordination, or to make this Lease or any Option granted herein
prior to the lien of any mortgage, deed of trust or ground lease, as the case
may be. Lessee's failure to execute such documents within ten (10) days after
written demand shall constitute a material default by Lessee hereunder without
further notice to Lessee or, at Lessor's option, Lessor shall execute such
documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does hereby
make, constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and
in Lessee's name, place and stead, to execute such documents in accordance with
this paragraph 28(b).

31. Attorneys' Fees.

         31.1 If either party or the broker(s) named herein bring an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, trial or appeal thereon, shall be entitled to his reasonable
attorneys' fees to be paid by the losing party as fixed by the court in the same
or a separate suit, and whether or not such action is pursued to decision or
judgment. The provisions of this paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.

         31.2 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 in good faith.

         31.3 Lessor shall be entitled to reasonable attorneys' fees and all
other costs and expenses incurred in the preparation and service of notice of
default and consultations in connection therewith, whether or not a legal
transaction is subsequently commenced in connection with such default.

32. Lessor's Access.

         32.1 Lessor and Lessor's agents shall have the right to enter the
Premises at reasonable times for the purpose of inspecting the same, performing
any services required of Lessor, showing the same to prospective purchasers,
lenders, or lessees, taking such safety measures, erecting such scaffolding or
other necessary structures, making such alterations, repairs, improvements or
additions to the Premises or to the Office Building Project as Lessor may
reasonably deem necessary or desirable and the erecting, using and maintaining
of utilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Lessee's use of the
Premises. Lessor may at any time place on or about the Premises or the Building
any ordinary "For Sale" signs and Lessor may at any time during the last 120
days of the term hereof place on or about the Premises any ordinary "For Lease"
signs.

         32.2 All activities of Lessor pursuant to this paragraph shall be
without abatement of rent, nor shall Lessor have any liability to Lessee for the
same.

         32.3 Lessor shall have the right to retain keys to the Premises and to
unlock all doors in or upon the Premises other than to files, vaults and sales,
and in the case of emergency to enter the Premises by any reasonably appropriate
means, and any such entry shall not be deemed a forcible or unlawful entry or
detainer of the Premises or an eviction. Lessee waives any charges for damages
or injuries or interference with Lessee's property or business in connection
therewith.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common Areas
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. The holding of any auction

                                       20
<PAGE>   21
on the Premises or Common Areas in violation of this paragraph shall constitute
a material default of this Lease.

34. [Deleted]

35. Merger. The voluntary or other surrender of this Lese by Lessee, or a mutual
cancellation thereof, or a termination by Lessor, shall not work a merger, and
shall, at the option of Lessor, terminate all or any existing subtenancies or
may, at the option of Lessor, operate as an assignment to Lessor of any or all
of such subtenancies.

36. Consents. Except as otherwise provided herein, wherever in this Lease the
consent of one party is required to an act of the other party such consent shall
not be unreasonably withheld or delayed.

37. Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.

38. Quiet Possession. Upon Lessee paying the rent for the Premises and observing
and performing all of the covenants, conditions and provisions on Lessee's part
to be observed and performed hereunder, Lessee shall have quiet possession of
the Premises for the entire term hereof subject to all of the provisions of this
Lease. The individuals executing this Lease on behalf of Lessor represent and
warrant to Lessee that they are fully authorized and legally capable of
executing this Lease on behalf of Lessor and that such execution is binding upon
all parties holding an ownership interest in the Office Building Project.

39. Options.

         39.1 Definition. As used in this paragraph the work "Option" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option of right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other space within the Office Building Project or other
property of Lessor or the right of first offer to lease other space within the
Office Building Project or other property of Lessor; (3) the right or option to
purchase the Premises or the Office Building Project, or the right or option to
purchase other property of Lessor, or the right of first refusal to purchase
other property of Lessor or the right of first offer to purchase other property
of Lessor.

         39.2 Options Personal. Each Option granted to Lessee I this Lease is
personal to the original Lessee and may be exercised only by the original Lessee
while occupying the Premises who does so without the intent of thereafter
assigning this Lease or subletting the Premises or any portion thereof, and may
not be exercised or be assigned, voluntarily or involuntarily, by or to any
person or entity other than Lessee; provided, however, that an Option may be
exercised by or assigned to any Lessee Affiliate as defined in paragraph 12.2 of
this Lease. The Options, if any, herein granted to Lessee are not assignable
separate and apart from this Lease, nor may any Option be separated from this
Lease in any manner, either 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 option to extent or renew this Lease has been so 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 time commencing from the date Lessor gives to Lessee a notice of default
pursuant to paragraph 13.1(c) or 13.1(d) and continuing until the noncompliance
alleged in said notice of default is cured, or (ii) during the period of time
commencing ton the day after a monetary obligation to Lessor is due from Lessee
and unpaid (without any necessity for notice thereof to Lessee) and continuing
until the obligation is paid, or (iii) in the event that Lessor has given to
Lessee three or more

                                       21
<PAGE>   22
notices of default under paragraph 13.1(c), or paragraph 13.1(d), whether or not
the defaults are cured, during the 12 month period of time immediately prior to
the time that Lessee attempts to exercise the subject Option, (iv) if Lessee has
committed any non-curable breach, including without limitation those described
in paragraph 13.1(b), or is otherwise in default of any of the terms, covenants
or conditions of this Lease.

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

         (c)      All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option. If, after such exercise and during the term of
this Lease, (i Lessee fails to pay to Lessor a monetary obligation of Lessee for
a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to
commence to cure a default specified in paragraph 13.1(d) within thirty (30)
days after the date that Lessor gives notice to Lessee of such default and/or
Lessee fails thereafter to diligently prosecute said cure to completion, or
(iii) Lessor gives to Lessee three or more notices of default under paragraph
13.1(c), or paragraph 13.1(d), whether or not the defaults are cured, or (iv) if
Lessee has committed any non-curable breach, including without limitation those
described in paragraph 13.1(b), or is otherwise in default of any of the terms,
covenants and conditions of this Lease.

40. Security Measures--Lessor's Reservations.

         40.1 Lessee hereby acknowledges that Lessor shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Office Building Project. Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole option,
from providing security protection for the Office Building Project or any part
thereof, in which event the cost thereof shall be included within the definition
of Operating Expends, as set forth in paragraph 4.2(b).

         40.2 Lessor shall have the following rights:

         (a)      To change the name, address or title of the Office Building
Project or building in which the Premises are located upon no less than 90 days
prior written notice;

         (b)      To, at Lessee's expense, provide and install Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Lessor shall reasonably deem appropriate;

         (c)      To permit any lessee the exclusive right to conduct any
business as long as such exclusive does not conflict with any rights expressly
given herein;

         (d)      To place such signs, notices or displays as Lessor reasonably
deems necessary or advisable upon the roof, exterior of the buildings or the
Office Building Project or on pole signs in the Common Areas;

         40.3 Lessee shall not:

         (a)      Use a representation (photographic or otherwise) of the
Building or the Office Building Project or their name(s) in connection with
Lessee's business;

         (b)      Suffer or permit anyone, except in emergency to go upon the
roof of the Building.

Easements.

                                       22
<PAGE>   23
         40.4 Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.

         40.5 The obstruction of Lessee's view, air, or light by any structure
erected in the vicinity of the Building, whether by Lessor or third parties,
shall in no way affect this Lease or impose any liability upon Lessor.

41. 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.

42. Authority. If Lessee is a corporation, or general or limited partnership,
Lessee, and any individual executing this Lease on behalf of such entity
represent and warrant that such individual is duly authorized to execute and
deliver this Lease on behalf of said entity. If Lessee is a corporation, trust
or partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.

43. Conflict. Any conflict between the printed provisions, Exhibits or Addenda
of this Lese and the typewritten or handwritten provisions, if any, shall be
controlled by the typewritten or handwritten provisions.

44. No Offer. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become binding upon Lessor and Lessee only when fully executed
by both parties.

45. Lender Modification. Lessee agrees to make such reasonable modifications to
this Lese as may reasonably required by an institutional lender in connection
with the obtaining of normal financing or refinancing of the Office Building
Project.

46. Multiple Parties. If more than one person or entity is named as either
Lessor or Lessee herein, except as otherwise expressly provided herein, the
obligations of the Lessor or Lessee herein shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee,
respectively.

47. Work Letter. This Lease is supplemented by that certain Work Letter of even
date executed by Lessor and Lessee, attached hereto as Exhibit C, and
incorporated herein by this reference.

48. Attachments. Attached hereto are the following documents which constitute a
part of this Lease:

         Addenda Paragraphs 50 through 68

         Exhibit A - Floor Plan

         Exhibit B - Rules & Regulations

         Exhibit C - Work Letter to Standard Office Lease

                                       23
<PAGE>   24
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

         IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION OF
         YOUR ATTORNEY FOR HIS APPROVAL, NO REPRESENTATION OR RECOMMENDATIONS
         MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL
         ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY,
         LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OF THE TRANSACTION
         RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVISE OF
         THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
         LEASE.

                                       24

<PAGE>   25
         LESSOR                                 LESSEE

         Warner/Redhill Associates,             Frederick Michael Bloom,

         a California general partnership       an individual

         By: /s/ Gwen Knight                    By:  /s/ Fred Bloom
            -----------------------------          -----------------------------

         Gwen Knight                            Frederick Michael Bloom,

         Its Authorized Representative          an Individual

         Executed at                            Executed at
                     --------------------                   --------------------

         on                                     on
            -----------------------------          -----------------------------

         Address                                Address
                 ------------------------               ------------------------

                                       25
<PAGE>   26
                            RULES AND REGULATIONS FOR
                              STANDARD OFFICE LEASE

Dated: April 1, 1997

By and Between: Warner/Redhill Associates, a California General Partnership

                                  GENERAL RULES

         1. Lessee shall not suffer or permit the obstruction of any Common
Areas, including driveways, walkways and stairways.

         2. Lessor reserves the right to refuse access to any persons Lessor in
good faith judges to be a threat to the safety, reputation, or property of the
Office Building Project and its occupants.

         3. Lessee shall not make or permit any noises or odors that annoy or
interfere with other lessees or persons having business within the Office
Building Project.

         4. Lessee shall not keep animals or birds within the Office Building
Project, and shall not bring bicycles, motorcycles or other vehicles into areas
not designated as authorized for same.

         5. Lessee shall not make, suffer or permit litter except in appropriate
receptacles for that purpose.

         6. Lessee shall not alter any lock or install new or additional locks
or bolts.

         7. Lessee shall be responsible for the inappropriate use of any toilet
rooms, plumbing or other utilities. No foreign substances of any kind are to be
inserted therein.

         8. Lessee shall not deface the walls, partitions or other surfaces of
the premises or Office Building Project.

         9. Lessee shall not suffer or permit any thing in or around the
Premises or Building that causes excessive vibration or floor loading in any
part of the Office Building Project.

         10. Furniture, significant freight and equipment shall be moved into or
out of the building only with the Lessor's knowledge and consent, and subject to
such reasonable limitations, techniques and timing, as may be designated by
Lessor. Lessee shall be responsible to the Office Building Project arising from
any such activity.

         11. Lessee shall not employ any service or contractor for services or
work to be performed in the Building, except as approved by Lessor.

         12. Lessor reserves the right to close and lock the Building on
Saturdays, Sundays and legal holidays, and on other days between the hours of
____ P.M. and ____ A.M. of the following day. If Lessee uses the Premises during
such periods, Lessee shall be responsible for securely locking any doors it may
have opened for entry.

         13. Lessee shall return all keys at the termination of its tenancy and
shall be responsible for the cost of replacing any keys that are lost.

         14. No window coverings, shades or awnings shall be installed or used
by Lessee.

         15. No Lessee, employee or invitee shall go upon the roof of the
Building.
<PAGE>   27
         16. Lessee shall not suffer or permit smoking or carrying of lighted
cigars or cigarettes in areas reasonably designated by Lessor or by applicable
governmental agencies as non-smoking areas.

         17. Lessee shall not use any method of heating or air conditioning
other than as provided by Lessor.

         18. Lessee shall not install, maintain or operate any vending machines
upon the Premises without Lessor's written consent.

         19. The Premises shall not be used for lodging or manufacturing,
cooking or food preparation.

         20. Lessee shall comply with all safety, fire protection and evacuation
regulations established by Lessor or any applicable governmental agency.

         21. Lessor reserves the right to waive any one of these rules or
regulations, and/or as to any particular Lessee, and any such waiver shall not
constitute a waiver of any other rule or regulation or any subsequent
application thereof to such Lessee.

         22. Lessee assumes all risks from theft or vandalism and agrees to keep
its Premises locked as may be required.

         23. Lessor reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Office Building Project and its occupants. Lessee
agrees to abide by these and such rules and regulations.

                                  PARKING RULES

         1. Parking areas shall be used only for parking by vehicles no longer
than full size, passenger automobiles herein called "Permitted Size Vehicles."
Vehicles other than Permitted Size Vehicles are herein referred to as "Oversized
Vehicles."

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

         3. Parking stickers or identification devices shall be the property of
Lessor and be returned to Lessor by the holder thereof upon termination of the
holder's parking privileges, Lessee will pay such replacement charge as is
reasonably established by Lessor for the loss of such devices.

         4. Lessor reserves the right to refuse the sale of monthly
identification devices to any person or entity that willfully refuses to comply
with the applicable rules, regulations, laws and/or agreements.

         5. Lessor reserves the right to relocate all or a part of parking
spaces from floor to floor, within one floor, and/or to reasonably adjacent
offsite location(s), and to reasonably allocate them between compact and
standard size spaces, as long as the same complies with applicable laws ,
ordinances and regulations.

         6. Users of the parking area will obey all posted signs and park only
in the areas designated for vehicle parking.

         7. Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Lessor will not be responsible for
any damages to vehicles, injury to persons or loss of property, all of which
risks are assumed by the party using the parking area.

         8. Validation, if established, will be permissible only by such methods
as Lessor and/or its licensee may establish at rates generally applicable to
visitor parking.
<PAGE>   28
         9. The maintenance, washing, waxing or cleaning of vehicles in the
parking structure or Common Areas is prohibited.

         10. Lessee shall be responsible for seeing that all of its employees,
agents and invitees comply with the applicable parking rules, regulations, laws
and agreements.

         11. Lessor reserves the right to modify these rules and/or adopt such
other reasonable and non-discriminatory rules and regulations as it may deem
necessary for the proper operation of the parking area.

         12. Such parking use as is herein provided is intended merely as a
license only and no bailment is intended or shall be created hereby.
<PAGE>   29
67.      Early Possession.

                                    Tenant shall be granted "Early Possession"
                           of the premises prior to the Commencement Date set
                           forth herein above upon: 1) Landlord's receipt of all
                           required insurance documentation from Tenant, and; 2)
                           Execution of the Lease by Landlord. During this Early
                           Possession period, Tenant shall be permitted to
                           complete its fixturization, but shall not be
                           permitted to conduct business activities until the
                           Commencement Date.

68.      Security Deposit Applications:

                                    Provided that Tenant has not been in default
                           of its monetary obligations as set forth in this
                           lease, Landlord shall apply a portion of Tenant's
                           Security Deposit to Tenant's base rent in the amounts
                           of $3,318.00 and $3,476.00 in months thirteen (13)
                           and month twenty-four (24), respectively. If,
                           however, Tenant has been in default of any provision
                           of this lease, the entire amount, or remaining amount
                           as the case may be, shall be held as Security Deposit
                           in accordance with the terms set forth above.

                                    IN WITNESS WHEREOF, Lessor and Lessee have
                           executed this Addendum concurrently with the Lease of
                           even date herewith.

                                    "LESSOR"

                                    WARNER/REDHILL ASSOCIATES, A CALIFORNIA
                           GENERAL PARTNERSHIP

                                    By: Los Angeles Warner Redhill Company Ltd.,
                           a California limited partnership, its General Partner

                                    By /s/ Gwen Knight
                                       --------------------------------------
                                    Gwen Knight, Authorized Representative

                                    "LESSEE"

                                    Frederick Michael Bloom, as Individual

                                    By: /s/ Fred Bloom
                                        -------------------------------------
                                    Frederick Michael Bloom, an Individual
<PAGE>   30
                      WORK LETTER TO STANDARD OFFICE LEASE

Dated: April 1, 1997

                  By and between: Warner/Redhill Associates, a California
                  General Partnership.

         1. Partitions. None.

         2. Wall Surfaces. Remove wallcovering in conference room, room 2 and 3.
Paint conference room whisper grey. Pain office #2 white on top and grey on
bottom, paint office #3 whisper grey. Paint all other offices whisper grey.
Clean all other wallcovering to remove blemishes, if possible. Patch all holes
in drywall. Holes in wallcovering cannot be patched.

         3. Draperies. None.

         4. Carpeting. Clean carpeting throughout and remove strands where
slightly frayed.

         5. Doors. None.

         6. Electrical and Telephone Outlets. None.

         7. Ceiling. Replace stained ceiling tiles as necessary.

         8. Lighting. Replace lights as necessary where burnt-out.

         9. Heating and Air Conditioning Ducts. None.

         10. Sound Proofing. None.

         11. Plumbing. Clean sink and ensure in working order.

         12. Entrance Doors. None.

         13. [deleted]

         14. [deleted]

         15. Construction. If Lessor's cost of constructing the improvements to
the Premises exceeds the cost of Lessor's Standard Improvements, Lessee shall
pay to Lessor in cash before the commencement of such construction a sum equal
to such excess.

         15.1 If the final plans and specifications are approved by Lessor and
lessee, and Lessee pays Lessor for such excess, then Lessor shall, at its sole
cost and expense, construct the improvements in accordance with said approved
final plans and specifications and all applicable rules, regulations, laws or
ordinances.

         16. Completion.

         16.1 Lessor shall obtain a building permit to construct the
Improvements as soon as possible.

         16.2 Lessor shall complete the construction of the Improvements as soon
as reasonably possible after the obtaining of necessary building permits.

         16.3 The term "Completion," as used in this Work Letter, is hereby
defined to mean the date the building department of the municipality having
jurisdiction of the Premises shall have made a final
<PAGE>   31
inspection of the Improvements and authorized a final release of restrictions on
the use of public utilities in connection therewith and the same are in a
broom-clean condition.

         16.4 Lessor shall use its best efforts to achieve Completion of the
Improvements on or before the Commencement Date set forth in paragraph 1.5 of
the Basic Lease Provisions or within one hundred eighty (180) days after Lessor
obtains the building permit from the applicable building department, whichever
is later.

         16.5 In the event that the Improvements or any portion thereof have not
reached Completion by the Commencement Date, this Lease shall not be Invalid,
but rather Lessor shall complete the same as soon thereafter as is possible and
Lessor shall not be liable to Lessee for damages in any respect whatsoever.

         16.6 If Lessor shall be delayed at any time in the progress of the
construction of the Improvements or any portion thereof by extra work, changes
in construction ordered by Lessee, or by strikes, lockouts, fire, delay in
transportation, unavoidable casualties, rain or weather conditions, governmental
procedures or delay, or by any other cause beyond Lessor's control, then the
Commencement Date established in paragraph 1.5 of the Lease shall be extended by
the period of such delay.

         17. Term. Upon completion of the Improvements as defined in paragraph
14.3 above, Lessor and Lessee shall execute an amendment to the Lease setting
forth the date of Tender of Possession as defined in paragraph 3.2.1 of the
Lease or of actual taking of possession, whichever first occurs, as the
Commencement Date of this Lease.

         18. Work Done by Lessee. Any work done by Lessee shall be done only
with Lessor's prior written consent and in conformity with a valid building
permit and all applicable rules, regulations, laws and ordinances, and be done
in a good and workmanlike manner with good and sufficient materials. All work
shall be done only with union labor and only by contractors approved by Lessor,
it being understood that all plumbing, mechanical, electrical wiring and ceiling
work are to be done only by contractors designated by Lessor.

         19. Taking of Possession of Premises. Lessor shall notify Lessee of the
Estimated Completion Date at least ten (10) days before said date. Lessee shall
thereafter have the right to enter the Premises to commence construction of any
Improvements Lessee is to construct and to equip and fixturize the Premises, as
long as such entry does not interfere with Lessor's work. Lessee shall take
possession of the Premises upon the tender thereof as provided in paragraph
3.2.1 of the Lease to which this Work Letter is attached. Any entry by Lessee of
the Premises under this paragraph shall be under all of the terms and provisions
of the Lease to which this Work Letter is attached.

         20. Acceptance of Premises. Lessee shall notify Lessor in writing of
any items that Lessee deems incomplete or incorrect in order for the Premises to
be acceptable to Lessee within ten (10) days following Tender of Possession as
set forth in paragraph 3.2.1 of the Lease to which this Work Letter is attached.
Lessee shall be deemed to have accepted the Premises and approved construction
if Lessee does not deliver such a list to Lessor within said number of days.

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