Document:

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                                                           EXHIBIT 10.5

                             STANDARD OFFICE LEASE

                              (CATALINA LANDING)

LANDLORD:    JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY

TENANT:      OBAGI MEDICAL PRODUCTS, INC.

DATE:        MARCH 5, 1998

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                             STANDARD OFFICE LEASE

                              (CATALINA LANDING)

                               TABLE OF CONTENTS

<TABLE>

<S>                                                                          <C>
1.    Basic Lease Provisions ---------------------------------------------    1
      1.1   Parties ------------------------------------------------------    1
      1.2   Premises -----------------------------------------------------    1
      1.3   Building -----------------------------------------------------    1
      1.4   Permitted Use ------------------------------------------------    1
      1.5   Term ---------------------------------------------------------    1
      1.6   Monthly Base Rent (per Rentable Square Foot) -----------------    1
      1.7   Rent Paid Upon Execution -------------------------------------    1
      1.8   Security Deposit ---------------------------------------------    1
      1.9   Tenant's Share -----------------------------------------------    1
      1.10  Expense Base Year --------------------------------------------    1
      1.11  Tax Base Year ------------------------------------------------    1
      1.12  Commencement Date --------------------------------------------    1

2.    Premises, Parking and Common Areas ---------------------------------    2
      2.1   Premises -----------------------------------------------------    2
      2.2   Vehicle Parking ----------------------------------------------    2
      2.3   Common Areas - Definition ------------------------------------    3
      2.4   Common Areas - Rules and Regulations -------------------------    3
      2.5   Common Areas - Changes ---------------------------------------    3

3.    Term  --------------------------------------------------------------    4
      3.1   Term ---------------------------------------------------------    4
      3.2   Possession ---------------------------------------------------    4

4.    Rent  --------------------------------------------------------------    4
      4.1   Base Rent ----------------------------------------------------    4
      4.2   Definitions --------------------------------------------------    4
      4.3   Payment of Increases -----------------------------------------    8
      4.4   Time for Payment ---------------------------------------------    8
      4.5   Partial Year -------------------------------------------------    9
      4.6   Vacancy Adjustment -------------------------------------------    9
      4.7   Tenant's Right to Audit --------------------------------------    9

5.    Security Deposit ---------------------------------------------------    9

6.    Permitted Use ------------------------------------------------------    9
      6.1   Permitted Use ------------------------------------------------    9
      6.2   Compliance with Law ------------------------------------------   10
      6.3   Condition of Premises ---------------------------------------   11

7.    Maintenance, Repairs, Alterations and Common Area Services ---------   11
      7.1   Landlord's Obligations ---------------------------------------   11
      7.2   Tenant's Obligations -----------------------------------------   11
      7.3   Alterations and Additions ------------------------------------   12
      7.4   Utility Additions --------------------------------------------   13

8.    Insurance; Indemnity -----------------------------------------------   14
      8.1   Liability Insurance-Tenant -----------------------------------   14
      8.2   Property Insurance-Tenant ------------------------------------   14
      8.3   Worker's Compensation Insurance-Tenant -----------------------   14
      8.4   Property Insurance-Landlord ----------------------------------   14
      8.5   Insurance Policies -------------------------------------------   15
      8.6   Waiver of Subrogation ----------------------------------------   15
      8.7   Indemnity ----------------------------------------------------   16
      8.8   Exemption of Landlord from Liability -------------------------   16
      8.9   No Representation of Adequate Coverage -----------------------   17

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<TABLE>
<S>                                                                          <C>
9.    Damage or Destruction...............................................   17
      9.1   Definitions...................................................   17
      9.2   Premises Damage; Premises Building Partial Damage.............   17
      9.3   Premises Building Total Destruction; Office Building
            Project Total Destruction.....................................   18
      9.4   Extent of Damage/Damage Near End of Term......................   18
      9.5   Abatement of Rent; Tenant's Remedies..........................   19
      9.6   Termination-Advance Payments..................................   19
      9.7   Waiver........................................................   19

10.   Real Property Taxes.................................................   19
      10.1  Payment of Taxes..............................................   19
      10.2  Additional Improvements.......................................   19
      10.3  Joint Assessment..............................................   19
      10.4  Personal Property Taxes.......................................   20

11.   Utilities...........................................................   20
      11.1  Services Provided by Landlord.................................   20
      11.2  Services Exclusive to Tenant..................................   20
      11.3  Hours of Service..............................................   20
      11.4  Excess Usage by Tenant........................................   21
      11.5  Interruptions.................................................   21

12.   Assignment and Subletting...........................................   21
      12.1  Landlord's Consent Required...................................   21
      12.2  Terms and Conditions Applicable to Assignment and Subletting..   21
      12.3  Additional Terms and Conditions Applicable to Subletting......   22
      12.4  Landlord's Expenses...........................................   23
      12.5  Conditions to Consent.........................................   23

13.   Default; Remedies...................................................   24
      13.1  Default.......................................................   24
      13.2  Landlord's Remedies...........................................   25
      13.3  Default by Landlord...........................................   26
      13.4  Late Charges..................................................   26

14.   Condemnation........................................................   26

15.   Broker's Fee........................................................   27

16.   Estoppel Certificate................................................   27

17.   Landlord's Liability................................................   28

18.   Severability........................................................   28

19.   Interest on Past-due Obligations....................................   28

20.   Time of Essence.....................................................   28

21.   Additional Rent.....................................................   28

22.   Incorporation of Prior Agreements; Amendments.......................   28

23.   Notices.............................................................   28

24.   Waiver..............................................................   29

25.   Recording...........................................................   29

26.   Holding Over........................................................   29

27.   Cumulative Remedies.................................................   29

28.   Covenants and Conditions............................................   29

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<S>                                                                          <C>
29.   Binding Effect; Choice of Law.......................................   29

30.   Subordination.......................................................   29

31.   Attorneys' Fees.....................................................   30

32.   Landlord's Access...................................................   30

33.   Auctions............................................................   31

34.   Signs...............................................................   31

35.   Merger..............................................................   31

36.   Consents............................................................   32

37.   Guarantor...........................................................   32

38.   Quiet Possession....................................................   32

39.   Options.............................................................   32
      39.1  Definitions...................................................   32
      39.2  Options Personal..............................................   32
      39.3  Multiple Options..............................................   32
      39.4  Effect of Default on Options..................................   32

40.   Security Measures--Landlord's Reservations..........................   33

41.   Easements...........................................................   34

42.   Landlord's Right to Perform.........................................   34

43.   Limitation on Liability and Time....................................   34

44.   Toxic Materials.....................................................   34
      44.1  Definitions...................................................   34
      44.2  Tenant's Obligations..........................................   36
      44.3  Landlord's Obligations........................................   37

45.   Indoor Air Quality..................................................   37

46.   Force Majeure.......................................................   38

47.   Authority...........................................................   38

48.   No Offer............................................................   38

49.   Lender Modification/Government Requirements.........................   38

50.   Financial Statements................................................   38

51.   Multiple Parties....................................................   38

52.   Work Letter.........................................................   39

53.   Moving Allowance....................................................   39

54.   Abatement of Rent When Tenant is Prevented From Using Premises......   39

55.   Attachments/Counterparts............................................   39
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Exhibit "A" - Floor Plan
Exhibit "B" - Rules and Regulations
Exhibit "C" - Work Letter Agreement
Exhibit "D" - Notice of Lease Term Dates
Exhibit "E" - Sample Form of Tenant Estoppel Certificate
Exhibit "F" - Locations of Monument Sign and South End Area

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                                STANDARD OFFICE LEASE

                                  (CATALINA LANDING)

1.   BASIC LEASE PROVISIONS ("Basic Lease Provisions").

     1.1  PARTIES: This Lease, dated March 5, 1998 ("Effective Date"), is
made by and between John Hancock Mutual Life Insurance Company, a
Massachusetts corporation (herein called "Landlord") and OBAGI MEDICAL
PRODUCTS, INC., a California corporation (herein called "Tenant").

     1.2  PREMISES: Suite Number 120, on the first (1st) floor, consisting of
approximately 12,023 Rentable Square Feet (defined in paragraph 4.2.5) of
space and 10,813 square feet of Premises Usable Area (as defined in paragraph
4.2.5), as defined in paragraph 2 and as shown on Exhibit "A" hereto as the
area marked with diagonal lines (the "Premises"). Landlord and Tenant agree
that the Rentable Square Footage of the Premises and the Premises Usable Area
set forth in this paragraph 1.2 are reasonable estimates and shall be
binding on Landlord and Tenant for all purposes under this Lease even if the
actual Rentable Square Footage or the actual Premises Usable Area is more or
less than 12,023 or 10,813, respectively.

     1.3  BUILDING: Commonly described as being located at 310 Golden Shore
being a portion of the Office Building Project (defined below) known as
Catalina Landing, consisting of four buildings known as 310, 320, 330 and 340
Golden Shore, in the City of Long Beach, State of California.

     1.4  PERMITTED USE: General office, Research and Development (as defined
in paragraph 6), and Product Demonstration (as defined in paragraph 6), all
subject to paragraph 6.

     1.5  TERM: Sixty (60) calendar months (plus the applicable fraction of a
month if the actual Commencement Date is other than the first day of a
calendar month).

     1.6  MONTHLY BASE RENT (PER RENTABLE SQUARE FOOT): Months 1-30: $1.45;
months 31-60: $1.55, payable on the first (1st) day of each month, in
advance, per paragraph 4.1.

     1.7  RENT PAID UPON EXECUTION: $17,433.35, to be applied to the Monthly
Base Rent payable for the first month of the Term.

     1.8  SECURITY DEPOSIT: $17,433.35 ("Security Deposit").

     1.9  TENANT'S SHARE: 4.36% (based on 275,962 total Rentable Square Feet
of space in the Office Building Project) subject to adjustment upon
determination of the exact number of Rentable Square Feet of space contained
in the Premises in accordance with paragraph 4.2.5. Landlord and Tenant agree
that the Rentable Square Footage of the Office Building Project set forth in
this paragraph 1.9 is a reasonable estimate and shall be binding on Landlord
and Tenant for all purposes under this Lease even if the actual Rentable
Square Footage is more or less than 275,962.

     1.10 EXPENSE BASE YEAR: 1998, as more particularly defined in paragraph
4.2.

     1.11 TAX BASE YEAR: July 1, 1997 - June 30, 1998, as more particularly
defined in paragraph 4.2. The net taxable value for the Office Building
Project as assessed by the Los Angeles County Tax Assessor for the Tax Base
Year is $21,760,000.

     1.12 COMMENCEMENT DATE: The date on which the Term (defined in paragraph
3) begins as determined in accordance with paragraph 8 of the Work Letter
Agreement attached hereto as Exhibit "C" ("Work Letter Agreement").

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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 the adjacent parking lot and
structures used in connection with the Building. 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." Landlord hereby
leases to Tenant and Tenant leases from Landlord 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 Tenant is not in default, and subject
to the rules and regulations attached hereto as Exhibit "B", and such
additional non-discriminatory and reasonable rules and regulations as may be
established by Landlord from time to time, Tenant is hereby granted a license
to use forty-two (42) parking spaces ("Tenant Spaces") in the parking
structure located in the Office Building Project or in another parking area
in the Office Building Project designated by Landlord, on an unreserved
basis, provided that Tenant shall not be obligated to use any Tenant Spaces
and shall be obligated to pay for only those Tenant Spaces which Tenant uses.
Except as provided in paragraph 2.2.3, Tenant shall not be entitled to any
reserved parking unless Landlord agrees in writing to provide Tenant with
reserved parking. Tenant shall pay Landlord a monthly fee for parking as set
from time to time by Landlord, provided that Tenant shall not be charged for
use of the Tenant Spaces during the first six (6) months of the initial Term.

           2.2.1 If Tenant or its agents or employees commits, permits or
allows any of the prohibited activities described in the Lease or the rules
then in effect, then Landlord shall have the right, without notice, in
addition to such other rights and remedies that it may have, to remove or tow
away the vehicle involved and charge the cost to Tenant, which cost shall be
immediately payable upon demand by Landlord.

           2.2.2 As of the Effective Date, the monthly parking rate per parking
space is Sixty-Five and 00/100 Dollars ($65.00) for reserved parking and
Fifty-Five and 00/100 Dollars ($55.00) for unreserved parking, and is subject
to change upon five (5) days prior written notice to Tenant. Monthly parking
fees shall be payable in advance on or before the first day of each calendar
month.

           2.2.3 Twelve (12) of the Tenant Spaces shall be reserved spaces
located in a location reasonably determined by Landlord; provided, however,
that if Tenant converts the South End Area into South End Parking, the number
of Tenant Spaces which are reserved spaces will be reduced by the number of
parking spaces contained in the South End Area. In addition, subject to the
other provisions of this paragraph 2.2.3, Tenant shall have the right to
convert the area located adjacent to the south end of the Building and shown
on attached Exhibit "F" as the area marked with diagonal lines ("South End
Area") into a reserved parking area for Tenant's exclusive use during the
Term ("South End Parking"). Tenant's conversion of the South End Area for
South End Parking shall (a) be done at Tenant's sole cost and expense, (b)
comply with all applicable laws, and (c) be of a design, construction, and
materials, and be lighted (if any lighting is approved or required by Landlord
in its sole discretion) in a manner acceptable to Landlord in its sole
discretion. Tenant shall, at Tenant's sole cost and expense, obtain all
governmental permits and approvals required in connection with conversion of
the South End Area for South End Parking. Before beginning conversion of the
South End Area, Tenant shall obtain Landlord's written approval in Landlord's
sole discretion of Tenant's contractor and of all plans and specifications
for the South End Parking. Tenant's use of the South End Area will not be
subject to the monthly parking rate chargeable by Landlord under this
paragraph 2.2. Tenant agrees that Tenant's use of the South End Area shall
comply with all of Landlord's parking rules and regulations as required under
this paragraph 2.2.

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All improvements constructed by Tenant in the South End Area or in connection
with the South End Parking shall at all times be and remain the property of
Landlord, provided that upon the expiration or earlier termination of this
Lease Landlord may require that Tenant immediately (a) restore the South End
Area to its condition existing on the date of this Lease and (b) repair any
damage caused to the Office Building Project or any other property during
such restoration.

      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 Landlord from time to time for the general non-exclusive use of
Landlord, Tenant and of other tenants 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:  Tenant 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 ("Rules and
Regulations"), and to cause its employees, suppliers, shippers, customers,
and invitees to so abide and conform. Landlord or such other person(s) as
Landlord 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 the Rules and Regulations. Landlord shall not be responsible to
Tenant for any non-compliance with the Rules and Regulations by other
tenants, their agents, employees and invitees of the Office Building Project.

      2.5  COMMON AREAS -- CHANGES:  Landlord shall have the right, in
Landlord's sole discretion, from time to time:

            2.5.1  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, Landlord shall at all times provide
the parking facilities required by applicable law;

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

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

            2.5.4  To add additional buildings and improvements to the Common
Areas;

            2.5.5  To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Office Building Project, or any
portion hereof;

            2.5.6  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 Landlord may, in the exercise of sound business judgment deem to
be appropriate.

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3.    TERM:
      3.1  TERM:  The term of this Lease ("Term") shall be for the period
designated in paragraph 1.5 of the Basic Lease Provisions, beginning on the
Commencement Date under paragraph 1.12 of the Basic Lease Provisions and
ending on the expiration of that period, unless the Lease shall be terminated
sooner as hereinafter provided. The Commencement Date, the date the Term
ends, the Rentable Square Feet within the Premises, and Tenant's Share will
be as specified in Landlord's Notice of Lease Term Dates, substantially in
the form of attached Exhibit "D", which Landlord shall serve on Tenant when
Landlord tenders possession of the Premises to Tenant under Paragraph 8 of
the Work Letter Agreement.

      3.2  POSSESSION:  If Landlord is unable to tender possession of the
Premises to Tenant on the Target Commencement Date (defined in the Work
Letter Agreement), this Lease shall not be void or voidable, nor shall
Landlord be liable to Tenant for any loss or damage resulting therefrom.
However, if Landlord's tender of possession of the Premises to Tenant is
delayed beyond the Target Commencement Date, Tenant shall not be liable for
any rent until Landlord tenders possession of the Premises to Tenant and the
Term begins in accordance with paragraph 8 of the Work Letter Agreement. If
possession of the Premises has not been tendered to Tenant within one hundred
eighty (180) days after the Target Commencement Date (the "Outside Date"),
Landlord or Tenant may terminate this Lease by delivering written notice
thereof to the other within fifteen (15) days after the Outside Date, without
prejudice to any rights either party may have against the other. However, to
the extent Landlord's inability to tender possession of the Premises to
Tenant on (or earlier than) the Target Commencement Date is caused  by
Tenant's negligence or breach of this Lease or of the Work Letter Agreement,
or by other delays (including without limitation those listed in
Subparagraphs 8(a) through 8(e) of the Work Letter Agreement) caused by
Tenant or its agents or contractors (collectively, "Tenant Delays"), the
commencement of the Term for all purposes under this Lease shall be
accelerated by the number of days of those Tenant Delays.

4.    RENT:

      4.1  BASE RENT:  Subject to adjustment as hereinafter provided in
paragraphs 4.2 and 4.8, and except as may be otherwise expressly provided in
this Lease, Tenant shall pay to Landlord the Base Rent for the Premises set
forth in paragraph 1.6 of the of the Basic Lease Provisions, without any
offset or deduction whatsoever. Tenant shall pay Landlord upon execution
hereof the advance Base Rent described in paragraph 1.7 of the Basic Lease
Provisions. Rent for any period during the Term 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
Landlord at the address stated herein or to such other persons or at such
other places as Landlord may designate in writing.

      4.2  DEFINITIONS. The following definitions shall apply to this
Article 4:

            4.2.1  "Expense Base Year" shall mean the calendar year set forth
in paragraph 1.10 of the Basic Lease Provisions.

            4.2.2  "Tax Base Year" shall mean the period set forth in
paragraph 1.11 of the Basic Lease Provisions.

            4.2.3  "Expense Comparison Year" shall mean each successive
calendar year after the Expense Base Year during the Term.

            4.2.4  "Tax Comparison Year" shall mean each successive July 1 -
June 30 after the Tax Base Year during the Term.

            4.2.5  "Tenant's Share" means the percentage set forth in
paragraph 1.9 of the Basic Lease Provisions, which percentage has been

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determined by dividing the Rentable Square Feet of space contained in the
Premises by the total amount of Rentable Square Feet of space contained in
the Office Building Project, which percentage shall be applied to Operating
Expenses determined for the Base Year and Applicable Taxes for the Tax Base
Year. "Rentable Square Foot/Feet" refers to the rentable area of office space
which Landlord and Tenant have agreed are contained in the Premises and
Office Building Project as set forth in paragraphs 1.2 and 1.9, above.
"Premises Usable Area" refers to the usable area of office space which
Landlord and Tenant have agreed are contained in the Premises as set forth in
paragraph 1.2, above. Tenant shall in no event be entitled to a credit to or
adjustment of Tenant's Share of Operating Expenses payable hereunder, even if
the ratio of Operating Expenses actually paid by Tenant compared to total
Operating Expenses actually paid by other tenants of the Office Building
Project exceeds Tenant's Share (as it might, by way of example only and not
limitation, if some leases of the Office Building Project are made on a "full
gross" basis, in which case the tenants under such leases would not directly
pay any portion of the Operating Expenses or increase therein).

            4.2.6 "Operating Expenses" shall mean any and all direct costs
and expenses paid or incurred by Landlord in connection with the operation,
maintenance, management, replacement, and repair of the Office Building
Project. By way of illustration but not limitation, Operating Expenses shall
include the following: (i) the cost of air conditioning, electricity, steam,
heating, water, plumbing, mechanical, ventilating, electrical systems,
sanitary and storm drainage, life safety equipment, telecommunication
equipment, tenant directories, fire detection systems, sprinkler systems, the
cost of environmental surcharges imposed by any government entity, escalator
and elevator systems and all other utilities and the cost of supplies and
equipment and maintenance and service contracts in connection therewith; (ii)
the cost of repairs and general maintenance and cleaning, including all
goods, services and supplies purchased by Landlord in connection therewith;
(iii) the cost of fire, extended coverage, boiler, sprinkler, public
liability, property damage, loss of rent, earthquake and other insurance on
or covering operations of the Building, including such other endorsements as
Landlord may desire, all in such amounts as Landlord may reasonably determine
or the Building's share of a blanket policy, whether or not it is actually
paid for by the Building, as reasonably determined by the Landlord, and the
cost of any losses payable by Landlord as a deductible, (iv) wages, salaries
and other labor costs, including uniforms, taxes, insurance, retirement,
medical and other employee benefits; (v) reasonable fees, charges and other
costs, including without limitation management fees, consulting fees, legal
fees and accounting fees, of all independent contractors engaged by Landlord
or reasonably charged by Landlord if Landlord or its affiliate(s) perform
management services in connection with the Office Building Project, and the
costs of supplying, replacing and cleaning employee uniforms; (vi) the cost
of licenses, permits and inspections and the cost of contesting the validity
or applicability of any governmental enactments which may affect Operating
Expenses; (vii) the cost of window coverings, decorative items, carpeting and
other wall or floor coverings furnished by Landlord from time to time in
public corridors and Common Areas; (viii) the cost of repairs, maintenance
and cleaning of the Common Areas including, but not limited to striping,
bumpers, irrigation systems, Common Area lighting facilities, building
exteriors and roofs, fences and gates; (ix) Landlord's contributions to any
owner's associations providing maintenance or other services or benefits to
the Building; (x) the cost of trash disposal, janitorial and security
services; (xi) the amount of any reasonable reserves established for
anticipated expenditures; (xii) environmental damages (as hereinafter defined
to the extent not recovered by Landlord directly from any tenants of the
Office Building Project); and (xiii) the cost of any capital improvements
made to the Building after completion of its construction as a labor-saving
or energy conservation device or to effect other economies in the operation
of maintenance of the Building, or made to the Building after the date of
this Lease that are required under any governmental law or regulation that
was not applicable to the Building at the time that permits for the
construction thereof were obtained (including without limitation those
undertaken to comply with the Americans with Disabilities Act of 1990, Pub.
L. 101-336 ("ADA"), as

                                       -5-

<PAGE>

such Act applies to the Common Areas), such costs to be amortized over such
reasonable period as Landlord shall determine, together with interest on the
unamortized balance at a market rate.

       For purposes of this Lease, Operating Expenses shall not include:

                  (a) Legal fees, space planners' fees and advertising
expenses incurred in connection with the future leasing of the Building;

                  (b) Any bad debt loss, rent loss, or reserves for bad debts
or rent loss;

                  (c) Costs associated with the operation of the business of
the partnership or entity which constitutes the Landlord, as the same are
distinguished from the costs of operation of the Building, including
partnership accounting and legal matters, costs of defending any lawsuits
with any mortgagee (except as the actions of the Tenant may be in issue),
costs of selling, syndicating, financing, mortgaging or hypothecating any of
the Landlord's interest in the Building, cost (including attorneys' fees and
costs of settlements, judgments, and payments in lieu thereof) arising from
claims, disputes or potential disputes in connection with potential or actual
claims, litigation or arbitrations pertaining to the Landlord and/or the
Building and/or the site upon which the Building is situated;

                  (d) The wages and benefits of any employee who does not
devote substantially all of his or her employed time to the Building unless
such wages and benefits are prorated to reflect time spent on operating and
managing the Building;

                  (e) Fines, penalties, and interest, except as specifically
provided for in the Lease;

                  (f) Amounts paid as ground rental or as rental for the
Building by the Landlord;

                  (g) Costs, including permit, license and inspection costs,
incurred with respect to the installation of tenant improvements made for new
tenants in the Building or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for tenants or other
occupants of the Building (excluding, however, such costs relating to any
Common Areas or parking facilities);

                  (h) Overhead and profit increment paid to the Landlord or
to subsidiaries or affiliates of the Landlord for services in the Building to
the extent the same exceed the costs of such services rendered by qualified,
first class, unaffiliated third parties on a competitive basis;

                  (i) Any compensation paid to clerks, attendants or other
persons in commercial concessions operated by the Landlord other than
concierge services;

                  (j) Electric power costs for which any tenant directly
contracts with the local public service company;

                  (k) Costs arising from the Landlord's political or
charitable contributions;

                  (l) Tax penalties incurred as a result of the Landlord's
negligence, inability or unwillingness to make payments when due;

                  (m) Landlord's general corporate overhead and general and
administrative expenses provided, however, nothing herein should be deemed to
prohibit the Landlord from charging a reasonable management fee computed in
accordance with industry custom and otherwise subject to the limitations
herein. Such fee is not to be in excess of a fee that would be charged by an

                                       -6-
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independent management company not involved in brokerage or leasing activities
for the Building;

                  (n)  Costs (including attorneys' fees) incurred by the
Landlord due to the violations by the Landlord of the terms and conditions of
any lease of space in the Building;

                  (o)  Reserves for Operating Expenses;

                  (p)  Costs and expenses of enforcing leases against
Tenants, including legal fees;

                  (q)  Any charge for the rental value of any management or
Building office in excess of the reasonable rental value of such management
or Building office, which office shall not exceed the square footage typical
of a management office or Building office for comparable buildings in the
Long Beach area;

                  (r)  Expenses of relocating or moving tenants;

                  (s)  Salaries paid to employees not providing service or
some other benefit to the Building;

                  (t)  All costs relating to renewals, expansions or
extensions of existing tenants' leases in the Building, including, but not
limited to, legal fees, advertising and promotional costs and lease
concessions;

                  (u)  interest expense (except as provided in clause (xiii)
above);

                  (v)  leasing commissions;

                  (w)  depreciation on the improvements contained in the
Building (except as provided in clause (xiii) above);

                  (x)  the cost of capital expenditures not included within
clause (xiii) above; and

                  (y)  or any costs which are paid by any tenant directly to
third parties or as to which Landlord is otherwise reimbursed by any other
tenant, third party or by insurance proceeds but only to the extent of such
reimbursement.

            The computation of Operating Expenses shall be made in accordance
with fair and reasonable accounting principles customarily applied by owners
of similar properties in Los Angeles County, California.

             4.2.7   "Applicable Taxes" shall mean all taxes, assessments and
charges levied on or with respect to the Building, the Office Building
Project, or any personal property of Landlord used in the operation thereof
and payable by Landlord. Applicable Taxes shall include, without limitation,
all general real property taxes and general, special, ordinary, or
extraordinary assessments, fees, improvement bonds, assessments or charges
for transit, police, fire, housing, other governmental services, or purported
benefits to the Building, service payments in lieu of taxes, and any tax, fee
or excise on the act of entering into, modifying, amending, or transferring
this Lease or on the use or occupancy of the Building or any part thereof, or
on the rent payable under any lease or in connection with the business of
renting space in the Building, that are now or hereafter levied on or
assessed against Landlord by, or payable by Landlord as a result of, the
requirements of the United States of America, the State of California, or any
political subdivision, public corporation, district or other political or
public entity, and shall also include any other tax, fee or other excise,
however described, that may be levied or assessed as a substitute for, or as
an addition to, in whole or in part, any other taxes. Applicable Taxes shall
also include any

                                      -7-
<PAGE>

tax, fee, levy, assessment or charge (i) in substitution, partially or
totally, of any tax, fee, levy, assessment or charge hereinabove included
within the definition of "Applicable Taxes", or (ii) which is imposed as a
result of a change in ownership, as defined by applicable local statutes for
property tax purposes, of the Building, the Office Building Project or any
personal property of Landlord used in the operation thereof and payable by
Landlord, or which is added to a tax or charge hereinbefore included within
the definition of Applicable Taxes by reason of such change of ownership.
Applicable Taxes shall not include:  franchise, transfer, inheritance or
capital stock taxes or income taxes measured by the net income of Landlord
from all sources, unless, due to a change in the method of taxation, any of
such taxes are levied or assessed against Landlord as a substitute for, in
whole or in part, any other tax which would otherwise constitute an
Applicable Tax. Applicable Taxes shall also include reasonable legal fees,
costs and disbursements incurred in connection with proceedings to contest,
determine or reduce Applicable Taxes. Notwithstanding, anything to the
contrary in this Lease, in the event that any Applicable Taxes are payable,
or may at the option of the taxpayer be paid in installments, such Applicable
Taxes shall be deemed to have been paid in installments, regardless of the
method of actual payment by Landlord, and Tenant's Share of such Applicable
Taxes shall only include those installments which would become due and
payable during the Term.

      4.3   PAYMENT OF INCREASES:  If, with respect to any Expense Comparison
Year, the Operating Expenses shall be higher than the Operating Expenses for
the Expense Base Year, Tenant shall pay to Landlord as additional rent
Tenant's Share of any such increase in Operating Expenses in the manner
provided herein. If, with respect to any Tax Comparison Year, the Applicable
Taxes shall be higher than the Applicable Taxes for the Tax Base Year, Tenant
shall pay to Landlord as additional rent, Tenant's Share of any such increase
in Applicable Taxes in the manner provided herein.

      4.4  TIME FOR PAYMENT:  The payments contemplated under paragraph 4.3
shall be made as follows:

            4.4.1  During each month of each Comparison Year and Tax
Comparison Year, as applicable, Tenant shall pay to Landlord, with each
installment of Base Rent, such amounts as are estimated by Landlord to be
one-twelfth (1/12th) of Tenant's Share of Operating Expenses and Applicable
Taxes payable pursuant to paragraph 4.3 with respect to each Tax Comparison
Year and Expense Comparison Year; provided, however, that Landlord may from
time to time, by written notice to Tenant, revise its estimates for such year
and subsequent payments during the Comparison Year and Tax Comparison Year
shall be based upon such revised estimate.

            4.4.2  With reasonable promptness after the end of each Tax
and/or Expense Comparison Year, Landlord shall deliver to Tenant a statement
setting forth the actual Operating Expenses and Applicable Taxes for the
Comparison Year and/or Tax Comparison Year, as applicable, a comparison with
the Operating Expense and Applicable Taxes for the Base Year and Tax Base
Year, as applicable, and a comparison of any amounts payable under paragraph
4.3 with the estimated payments made by Tenant. If the amounts payable under
paragraph 4.3 are less than the estimated payments made by Tenant with
respect to such Comparison Year or Tax Comparison Year, as applicable, the
statement shall be accompanied by a refund of the excess by Landlord, or at
Landlord's election a notice that Landlord shall credit the excess to the
next succeeding monthly installments of the Base Rent. If the amounts payable
under paragraph 4.3 are more than the estimated payments made by Tenant with
respect to such Comparison Year or Tax Comparison Year, as applicable, Tenant
shall pay the deficiency to Landlord within thirty (30) days after delivery
of such statement. Statements provided by Landlord shall be final and binding
(a) upon Tenant unless Tenant contests the statement within one hundred
eighty (180) days after the date on which the statement is delivered to
Tenant and (b) upon Landlord unless Landlord provides Tenant with a revised
statement within three (3) years after the date on which the statement is
delivered to Tenant.

                                      -8-
<PAGE>

      4.5  PARTIAL YEAR:  If the Commencement Date, or the date on which the
Term ends, occurs on a date other than the first or last day of a Comparison
Year or Tax Comparison Year, Tenant's Share of Applicable Taxes and Tenant's
Share of Operating Expenses for such Tax Comparison Year or Comparison Year
shall, as appropriate, be prorated according to the ratio that the number of
days during that Comparison Year or Tax Comparison Year, as applicable, bears
to 365.

      4.6  VACANCY ADJUSTMENT:  Notwithstanding anything to the contrary in
this Lease, if during the Base Year or any Expense Comparison Year the
Building is less than 95% occupied, for the purposes of calculating Operating
Expenses for that year, those Operating Expenses which vary based upon
occupancy levels shall be adjusted as though the Building were 95% occupied;
provided, however, that in no event shall the aggregate amount collected by
Landlord from all tenants in the Building for any Expense Comparison Year
exceed the actual Operating Expenses for that year.

      4.7  TENANT'S RIGHT TO AUDIT:  If, within one hundred twenty (120) days
following Tenant's receipt of Landlord's annual statement of actual Operating
Expenses purusant to paragraph 4.4, Tenant notifies Landlord that Tenant
desires to audit Landlord's statement, Landlord shall cooperate with Tenant
to permit such audit during normal business hours at Tenant's sole cost and
expense. If the audit is conducted by Landlord's or Tenant's certified public
accountant (at Tenant's election) and it is determined that the Operating
Expenses are less than those reported, Landlord shall forthwith pay or credit
to Tenant any overpayment (and if there is an underpayment, Tenant shall pay
such amount to the Landlord), and if the Operating Expenses are less than
those reported by Landlord by more than seven and one-half percent (7.50%),
Landlord shall pay the reasonable costs of such audit and examination.

5.    SECURITY DEPOSIT:  Tenant has deposited with Landlord the Security
Deposit set forth in paragraph 1.8 of the Basic Lease Provisions as security
for Tenant's faithful performance of Tenant's obligations hereunder. If
Tenant fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Lease, Landlord may use, apply
or retain all or any portion of the Security Deposit for the payment of any
rent or other charge in default for the payment of any other sum to which
Landlord may become obligated by reason of Tenant's default, or to compensate
Landlord for any loss or damage which Landlord may suffer thereby. If
Landlord so uses or applies all or any portion of the Security Deposit,
Tenant shall within ten (10) days after written demand therefor deposit cash
with Landlord in an amount sufficient to restore said deposit to the full
amount then required of Tenant. Landlord shall not be required to keep the
Security Deposit separate from its general accounts. If Tenant performs all
of the Tenant's obligations hereunder, the Security Deposit, or so much
thereof as has not heretofore been applied by Landlord, shall be returned,
without payment of interest or other increment for its use, to Tenant (or, at
Landlord's option, to the last assignee, if any, of Tenant's interest
hereunder) at the expiration of the Term, and after Tenant has vacated the
Premises. No trust relationship is created herein between Landlord with
respect to the Security Deposit, and under no circumstances shall Landlord be
required to keep the Security Deposit separate from its other funds or in an
interest-bearing account, nor shall Tenant be entitled to any interest on
such amounts regardless of whether or not the Security Deposit is deposited
in an interest-bearing account.

6.    PERMITTED USE:

      6.1  PERMITTED 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. As used in this Lease, the following terms have the
following meanings:

      (a)  "Research and Development" means the development of new products
comparable to Tenant's current product using non-volatile, nonflammable,
non-toxic substances.

                                     -9-

<PAGE>

      (b)  "Product Demonstration" means the demonstration of Tenant's
products to prospective or existing customers in groups of no more than forty
(40) persons at any time.

      6.2  COMPLIANCE WITH THE LAW:

           6.2.1  Landlord makes no representation or warranty to Tenant
regarding the condition of the Premises or with respect to whether or not the
Premises, or the use for which the Tenant will occupy the Premises, will
violate any covenants or restrictions of record, or any applicable building
code, regulation, law or ordinance in effect on the Commencement Date or at
any other time. Landlord represents and warrants that, to the actual
knowledge of John P. McDonough, Landlord's representative with respect to the
Building, and Gabrielle C. Barr, Landlord's agent/property manager with
respect to the Building, without any duty to conduct any investigation: (i)
as of the date of this Lease, but subject to the normal wear and tear
expected for a project the age of the Office Building Project, the
mechanical, electrical, HVAC and elevator and plumbing systems of the
Building are in good working order and condition and (ii) the area in which
the Building is located is zoned for use as an office building.

           6.2.2  Tenant's conduct and use of the Premises shall, at Tenant's
expense, comply with all applicable statutes, ordinances, rules, regulations,
orders, covenants, conditions, or restrictions now or hereafter of record,
and requirements of any fire insurance underwriters or rating bureaus, now in
effect or which may hereafer 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, relating to any manner to the Premises and the occupation and use by
Tenant of the Premises. Tenant shall be responsible for and shall pay all
costs (i) associated with compliance of the Premises with the requirements of
the ADA and (ii) all costs associated with compliance of the Building or
Office Building Project with the requirements of the ADA arising out of or in
connection with any Alterations Tenant makes or proposes to make to the
Premises. However, Landlord shall be responsible for compliance of the first
(1st) floor Common Areas of the Building and the Common Areas of the Project
with the diasbled access requirements of the ADA. Tenant shall be responsible
for ensuring that all portions of its telephone system and any other
equipment installed by Tenant, including all related wiring and circuitry,
meets applicable code requirements. Tenant 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.

           6.2.3  Tenant shall not use any of the following in connection
with its use of the Premises: open flames, oven temperatures over 500 degrees
fahrenheit, or animals. Tenant shall not store more than the following
quantities of materials in the Premises: twenty-five (25) gallons of any
single liquid and seventy-five (75) gallons in the aggregate of all liquids
used in the manufacture of Tenants products and fifty (50) pounds in the
aggregate of all solid materials used in the manufacture of Tenant's
products. In addition, Tenant shall not store more of its finished products
in the premises than is reasonably needed in connection with Tenant's use of
the Premises for Research and Development or Product Demonstration. Tenant
will store all such materials in compliance with applicable laws and in an
otherwise safe and orderly manner. Tenant will be responsible for containing
and venting any fumes or odors generated by its Research and Development and
other activities conducted in its Premises and will pay all costs incurred to
do so. Other than Tenant's Research and Development activities, Tenant will
not manufacture any products at the Premises. Tenant will not make any retail
sales at or wholesale deliveries at the Premises.

           6.2.4  PUBLIC USE OF PREMISES.  Tenant shall take such measures or
action as Landlord may reasonably require under the circumstances so that the
access, use, and quiet enjoyment of the Office Building Project by other
tenants of the Office Building Project, and their guests, invitees,

                                     -10-

<PAGE>

employees, and agents will not be disturbed by Tenant's use of the Premises
for Product Demonstration, including, without limitation, such action as is
required to (a) protect the other tenants of the Building and the Office
Building Project from damage, injury, or nuisance caused, directly or
indirectly, by Tenant's use of the Premises for Product Demonstration and (b)
control the actions of and noise generated by any persons attracted to the
Office Building Project as a direct or indirect result of Tenant's use of the
Premises for Product Demonstration.

      6.3  CONDITION OF PREMISES:

           6.3.1  Landlord shall deliver the Premises to Tenant on the Lease
Commencement Date (unless Tenant is already in possession), but makes no
representation or warranty regarding the condition of the Premises.

           6.3.2  Except as otherwise provided in this Lease, Tenant hereby
accepts the Premises and the Office Building Project in their condition
existing as of the Lease Commencement Date or the date that Tenant 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, and accepts this Lease subject thereto
and to all matters disclosed thereby and by any exhibits attached hereto.
Except as otherwise provided in this Lease, Tenant acknowledges that it has
satisfied itself by its own independent investigation that the Premises are
suitable for its intended use, and that neither Landlord nor Landlord'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 Tenant's business. Tenant's taking of possession of the Premises
shall conclusively establish that the Premises and the Building were in
satisfactory condition at the time of that possession (excluding latent
defects), provided that nothing contained in this sentence shall be
construed to waive Tenant's rights under the Work Letter Agreement.

           6.3.3  Tenant accepts that from time to time there may be
construction and improvement work by Landlord on other space in the Building
and to the Common Areas and other portions of the Office Building Project,
and that such work may cause intermittent noise, vibrations, or other
temporary inconveniences; provided, however, Landlord will take all steps
reasonably necessary and feasible to minimize all such inconveniences to
Tenant and Tenant's employees and visitors.

7.    MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES:

      7.1  LANDLORD'S OBLIGATIONS:  Landlord shall keep the Office Building
Project interior and exterior walls (but not interior walls within the
Premises), roof, and Common Areas, in good condition and repair; provided,
however, that Landlord shall not be obligated to paint, repair or replace
wall coverings, or to repair or replace any improvements that are not
ordinarily a part of the Building or are above the then-current Building
standards. Except as provided in paragraph 9.5, there shall be no abatement
of rent or liability of Landlord on account of any injury or interference
with Tenant's business with respect to any improvements, alterations or
repairs made by Landlord to the Office Building Project or any part thereof,
or on account of any interruption of services or of access to the Premises,
Building or Office Building Project. Tenant expressly waives the benefits of
any statute now or hereafter in effect which would otherwise afford Tenant
the right to make repairs at Landlord's expense or to terminate this Lease
because of Landlord's failure to keep the Premises in good order, condition
and repair, including, without limitation, the provisions of California
Civil Code sections 1940, 1941, and 1942.

      7.2  TENANT'S OBLIGATIONS:

           7.2.1  Notwithstanding Landlord's obligation to keep the Premises
in good condition and repair, Tenant shall be responsible for payment of the

                                     -11-

<PAGE>

cost thereof to Landlord 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 Tenant or the Premises, to the extent such cost is
attributable to causes beyond normal wear and tear. Tenant shall be
responsible for the cost of painting, repairing or replacing wall coverings,
and to repair or replace all Premises improvements. Landlord may, at its
option, upon reasonable notice, elect to have Tenant perform any such
maintenance or repairs the cost of which is otherwise the Tenant's
responsibility hereunder.

           7.2.2  Upon the expiration or the earlier termination of the Term,
Tenant shall surrender the Premises (including, without limitation, the
window coverings, wall coverings, carpets, wall paneling, and ceilings) to
Landlord in the same condition as received by Tenant on the Commencement
Date, 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
Tenant.  Tenant shall repair any damage to the Premises occasioned by the
installation or removal of Tenant's trade fixtures, alterations, furnishings
and equipment. Except as otherwise stated in this Lease, Tenant shall leave
the air lines, power panels, electrical distribution systems, lighting
fixtures, air conditioning, and plumbing in the Premises and in good
operating condition.

      7.3  ALTERATIONS AND ADDITIONS:

           7.3.1  Tenant shall not, without Landlord's prior written consent
make any non-structural alterations, improvements, additions, Utility
Installations or repairs (collectively, "Alterations") in the Premises unless
Tenant first obtains Landlord's prior written consent, which consent shall
not be unreasonably withheld. In addition, Tenant shall not make any (i)
structural Alterations to the Premises, (ii) Alterations to the Building or
Office Building Project (except as permitted under the immediately preceding
sentence), or (iii) Alterations to the Utility Installations other than the
Tenant Improvements to be made under the Work Letter Agreement, unless Tenant
first obtains Landlord's prior written consent, which consent may be given or
denied in Landlord's subjective, good faith discretion. As used in this
paragraph 7.3 the term "Utility Installation" shall mean carpeting, 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, Landlord may require the
removal of any or all Alterations and the restoration of the Premises and the
Office Building Project to their prior condition, at Tenant's expense,
provided that Landlord shall not require Tenant to remove the Tenant
Improvements to be made under the Work Letter Agreement. Should Landlord
permit Tenant to make its own Alterations, Tenant shall use only such
contractor as has been expressly approved by Landlord, and Landlord may
require Tenant to provide Landlord, at Tenant'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 Landlord against any liability
for mechanic's and materialmen's liens and to insure completion of the work.
Should Tenant make any Alterations without the prior approval of Landlord, or
use a contractor not expressly approved by Landlord, Landlord may, at any
time during the Term, require that Tenant remove any part or all of such
Alterations other than the Tenant Improvements (defined in the Work Letter
Agreement). Notwithstanding the other provisions of this paragraph 7.3.1,
Tenant may, without Landlord's prior written consent, make cosmetic,
non-strucural Alterations (other than alterations, improvements, or additions
to the Utility Installations) to the Premises provided that: (i) the
aggregate cost of those Alterations during any twelve (12) month period does
not exceed Five Thousand and 00/100 Dollars ($5,000), (ii) the Alterations do
not require any demolition of any part of the Premises, (iii) Tenant provides
Landlord with five (5) days prior written notice of its planned Alterations,
and (iv) Tenant otherwise complies with the requirements of this Lease
regarding Alterations to the Premises.

                                     -12-
<PAGE>

           7.3.2  Any Alterations in or about the Premises or the Office
Building Project that Tenant shall desire to make shall be presented to
Landlord in written form, with proposed detailed plans. Any consent or
approval given by Landlord to the making of any Alterations by Tenant shall
be deemed conditioned upon Tenant acquiring all permits required to make the
Alterations from all applicable governmental agencies, furnishing a copy of
the permit to Landlord prior to the commencement of the work, and compliance
by Tenant with all conditions of the permit in a prompt and expeditious
manner.

           7.3.3  Tenant shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Tenant at or
for use in the Premises, which claims are or may be secured by any mechanic's
or materialmen's lien against the Premises, the Building or the Office
Building Project, or any interest therein.

           7.3.4  Tenant shall give Landlord not less than ten (10) days'
notice prior to the commencement of any work in the Premises by Tenant, and
Landlord shall have the right to post notices of non-responsibility in or on
the Premises or the Building as provided by law. Tenant shall at all times
keep the Premises, the Building and the Office Building Project free and
clear of liens attributable in any way to a work of improvement commissioned
by Tenant, or to the acts or omissions of Tenant, any of Tenant's employees,
agents, or contractors, or any of their employees, agents or sub-contractors.
If Tenant shall, in good faith, contest the validity of any such lien, claim
or demand, then Tenant shall, at its sole expense defend itself and Landlord
against the same and shall pay and satisfy any such adverse judgment that may
be rendered thereon before the enforcement thereof against Landlord or the
Premises, the Building or the Office Building Project, upon the condition
that if Landlord shall require, Tenant shall furnish to Landlord a surety
bond satisfactory to Landlord in an amount not less than one hundred fifty
percent (150%) of the amount of such contested lien claim or demand
indemnifying Landlord 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, Landlord may require Tenant to pay
Landlord's reasonable attorneys' fees and costs in participating in such
action if Landlord shall decide it is to Landlord's best interests to do so.

           7.3.5  All alterations (whether or not such Alterations constitute
trade fixtures of Tenant), which may be made to the Premises by Tenant,
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 Landlord and remain upon and be
surrendered with the Premises at the expiration of the lease term, unless
Landlord requires their removal pursuant to paragraph 7.3.1. Provided Tenant
is not in default, notwithstanding the provisions of this paragraph 7.3.5,
Tenant'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 Tenant and may be removed by Tenant subject to the provisions
of paragraph 7.2.

           7.3.6  Tenant shall provide Landlord with as-built plans and
specifications for any Alterations.

     7.4   UTILITY ADDITIONS:  Landlord reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Landlord or Tenant, or any other tenant of the Office Building
Project, including, but not by way of limitation, such utilities as plumbing,
electrical systems, security systems, communication systems, and fire
protection and detection systems, so long as such installations do not
unreasonably interfere with Tenant's use of the Premises.

                                      -13-
<PAGE>

8.   INSURANCE; INDEMNITY:

     8.1   LIABILITY INSURANCE-TENANT.  Tenant shall, at Tenant's expense,
obtain and keep in force during the Term a policy of Commercial General
Liability insurance utilizing an Insurance Services Office standard form with
Broad Form General Liability Endorsement (GL0404), or equivalent, in an
amount of not less than $2,000,000 per occurrence of bodily injury and
property damage combined or in a greater amount as reasonably determined by
Landlord and shall insure Tenant with Landlord and any mortgagees of which
Tenant has been provided notice as additional insureds against liability
arising out of the use, occupancy or maintenance of the Premises. Compliance
with the above requirement shall not, however, limit the liability of Tenant
hereunder.

     8.2   PROPERTY INSURANCE-TENANT.  Tenant shall, at Tenant's expense,
obtain and keep in force during the Term for the benefit of Tenant,
replacement cost all-risks insurance, including without limitation fire and
extended coverage insurance, with vandalism and malicious mischief and
sprinkler leakage endorsements, in an amount sufficient to cover not less
than 100% of the full replacement costs, as the same may exist from time to
time, of all of Tenant's personal property, fixtures, equipment and the tenant
improvements contained in the Premises. If there is a dispute as to the amount
which comprises full replacement cost, the decision of Landlord or any
mortgagees of Landlord shall be conclusive. This insurance policy shall also
cover direct or indirect loss of Tenant's earnings attributable to Tenant's
inability to use fully or obtain access to the Premises or Building in an
amount which will properly reimburse Tenant.

     8.3  WORKER'S COMPENSATION INSURANCE-TENANT:  Workers' Compensation
and Employer's Liability Insurance as required by state law.

     8.4  PROPERTY INSURANCE-LANDLORD.  Landlord agrees to maintain and keep
in full force and effect, with a reputable insurance company licensed to do
business in the state in which the Office Building Project is located, the
following: (a) comprehensive general liability insurance against all claims,
demands or actions for injury to or death of a person, or damage to
property, to a limit of not less than $5,000,000 per occurrence and/or in the
aggregate, including products liability and independent contractors'
coverage, with broad form endorsement, arising from, related to, or in any
way connected with the conduct and operation of Landlord's Office Building
Project caused by actions or omissions to act, where there is a duty to act,
of Landlord, it agents, servants and contractors, which insurance shall name
Tenant, its agents, servants, employees, contractors, licenses, and invitees
as additional insureds, (b) if there is a boiler or major refrigeration
equipment or pressure object or other similar equipment in the Office
Building Project, steam boiler, air conditioning, and machinery insurance
written on broad form basis to the limit of not less that $300,000.00; and
(c) a policy or policies of insurance covering loss or damage to the Office
Building Project improvements, but not Tenant's personal property, fixtures,
equipment or tenant improvements, in the amount of the full replacement cost
of the Office Building Project, as the same may exist from time to time,
utilizing Insurance Services Office standard form, or equivalent providing
protection against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, plate glass, and such other
perils as Landlord deems advisable or may be required by a lender having a
lien on the Office Building Project. In addition, Landlord shall obtain and
keep in force, during the Term, a policy of rental value insurance covering a
period of one year, with loss payable to Landlord. Tenant will not be named
in any such policies carried by Landlord and shall have no right to any
proceeds therefrom. The policies required under this paragraph 8 shall
contain such deductibles as Landlord or Landlord's lender may determine are
appropriate. Tenant shall not do or permit to be done anything which shall
invalidate the insurance policies carried by Landlord. Tenant 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 if the increase is specified by Landlord's insurance carrier as
being caused by the nature of Tenant's occupancy or any act or omission of
Tenant.

                                     -14-

<PAGE>

      8.5  INSURANCE POLICIES:

            Each policy required to be obtained by Tenant hereunder shall:

            8.5.1  be issued by insurers authorized to do business in the
state in which the Building is located and rated not less than financial class
X, and not less than policyholder rating B+, in the most recent version of
Best's Key Rating Guide, or the equivalent rating in any other comparable
guide selected by Landlord (provided that, in any event, the same insurance
company shall provide the coverages described in paragraphs 8.1 and 8.2
above);

            8.5.2  be in form reasonably satisfactory from time to time to
Landlord;

            8.5.3  name Tenant as named insured thereunder and shall name
Landlord and, at Landlord's request, Landlord's mortgagees and ground lessors
of which Tenant has been informed in writing, as additional insureds;

            8.5.4  not have a deductible amount exceeding Five Thousand
Dollars ($5,000.00);

            8.5.5  specifically provide that the insurance afforded by such
policy for the benefit of Landlord and Landlord's mortgagees and ground
lessors shall be primary, and any insurance carried by Landlord or Landlord's
mortgagees and ground lessors shall be excess and non-contributing;

            8.5.6  except for worker's compensation insurance, contain an
endorsement that the insurer waives its right to subrogation as described in
paragraph 8.6 below; and

            8.5.7  contain an undertaking by the insurer to notify Landlord
(and the mortgagees and ground lessors of Landlord who are named as
additional insureds) in writing not less than ten (10) days prior to any
material change, reduction in coverage, cancellation or other termination
thereof.

      Tenant agrees to deliver to Landlord, as soon as practicable after the
placing of the required insurance, but in no event later than ten (10) days
after the date Tenant takes possession of all or any part of the Premises,
certificates of each such insurance policy from the insurance company
evidencing the existence of such insurance and Tenant's compliance with the
foregoing provisions of this paragraph 8.  Tenant shall cause replacement
certificates to be delivered to Landlord not less than thirty (30) days prior
to the expiration of any such policy or policies. In addition, Tenant shall
deliver copies of all such insurance policies within ten (10) days after
request therefor by Landlord. If any such policy or initial or replacement
certificates are not furnished within the time(s) specified herein, Tenant
shall be deemed to be in material default under this Lease without the
benefit of any additional notice or cure period provided herein, and Landlord
shall have the right, but not the obligation, to procure such policies and
certificates at Tenant's expense. Any requirement of Tenant to maintain
policies of insurance may be satisfied by one or more so-called "blanket" or
"master" insurance policies covering both this Lease and other premises
occupied by Tenant and/or its affiliated entities provided that such policies
meet the following requirements: (a) Landlord is named as an additional
insured; (b) The Premises are specifically identified as insured property;
and (c) The coverage requirements described above are indicated in the
certificate delivered to Landlord.

      8.6  WAIVER OF SUBROGATION:  Tenant and Landlord 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 property insurance carried by such party, whether due
to the negligence of Landlord or Tenant or their agents, employees,
contractors and/or invitees. All property insurance policies required under
this Lease shall provide or be endorsed to provide that each party's insurance

                                     -15-

<PAGE>

provider agrees to be bound by the waivers of subrogation set forth in this
paragraph 8.6.

      8.7  INDEMNITY:

            8.7.1  TENANT'S INDEMNITY:  Except to the extent caused by
Landlord's gross negligence or willful misconduct, Tenant shall indemnify and
hold harmless Landlord and its agents, Landlord'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 Tenant's use of the
Office Building Project, or from the conduct of Tenant's business or from any
activity, work or things done, permitted or suffered by Tenant in or about
the Premises or elsewhere and shall further indemnify and hold harmless
Landlord from and against any and all claims, costs and expenses arising from
any breach or default in the performance of any obligation on Tenant's part
to be performed under the terms of this Lease, or arising from any act or
omission of Tenant, or any of Tenant's agents, contractors, employees or
invitees and from and against all costs, attorneys' fees, expenses and
liabilities incurred by Landlord as a 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
therein; and in case any action or proceeding be brought against Landlord by
reason of any such matter, Tenant upon notice from Landlord shall defend the
same at Tenant's expense by counsel reasonably satisfactory to Landlord and
Landlord shall cooperate with Tenant in such defense. Landlord need not have
first paid any such claim in order to be so indemnified. Except to the extent
caused by Landlord's gross negligence or willful misconduct, Tenant, as a
material part of the consideration to Landlord, hereby (i) assumes all risk
of damage to property of Tenant or injury to persons, in, upon or about the
Office Building Project arising from any cause and Tenant hereby waives all
claims in respect thereof against Landlord and (ii) agrees that neither
Landlord nor any officer, director, or shareholder of Landlord shall be
liable for any theft or vandalism on, to, or from the Premises.

            8.7.2  LANDLORD'S INDEMNITY:  Subject to paragraphs 8.7.1 and
8.8, Landlord shall indemnify and hold harmless Tenant and its agents and
employees from and against any and all claims for damage to the person or
property of anyone or any entity arising from the negligence or willful
misconduct of Landlord or its agents or employees in, upon or about the
Office Building Project, or from any activity, work, or things done by
Landlord in or about the Office Building Project, or from any breach or
default by Landlord of its obligations under this Lease, and from and against
all costs, attorneys' fees, expenses and liabilities incurred by Tenant, its
officials, officers, agents or employees as the result of any such negligence
or willful misconduct, or such work, activity, or things done by Landlord, or
such breach or default, and in dealing reasonably therewith, including by not
limited to the defense or pursuit of any claim or any action or proceeding
involved therein; and in case any action or proceeding be brought against
Tenant, its officials, officers, agents or employees by reason of any such
matter, Landlord upon notice from Tenant shall defend the same at Landlord's
expense by counsel reasonably satisfactory to Tenant and Tenant shall
cooperate with Landlord in such defense. Tenant need not have first paid any
such claim in order to be so indemnified.

      8.8  EXEMPTION OF LANDLORD FROM LIABILITY:  Except to the extent
caused by Landlord's gross negligence or willful misconduct, Tenant hereby
agrees that Landlord shall not be liable for injury to Tenant's business or
any loss of income therefrom or for loss of or damage to the goods, wares,
merchandise or other property of Tenant, Tenant's employees, invitees,
customers, or any other person in or about the Premises or the Office
Building Project, nor shall Landlord be liable for injury to the person of
Tenant, Tenant'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

                                     -16-
<PAGE>

any other cause, whether such 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 means of
repairing the same is inaccessible, Landlord shall not be liable for any
damages arising from any act or neglect of any other tenant, occupant or user
of the Office Building Project, nor from the failure of Landlord to enforce
the provisions of any other lease of any other tenant of the Office Building
Project.

      8.9  NO REPRESENTATION OF ADEQUATE COVERAGE:  Landlord makes no
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Tenant's property or obligations under
this Lease.

9.    DAMAGE OR DESTRUCTION:

      9.1  DEFINITIONS:

           9.1.1  "Premises Damage" shall mean if the Premises are damaged or
destroyed to a significant extent.

           9.1.2  "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.

           9.1.3  "Premises Building Total Destruction" 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 50 percent (50%) or more of the then
Replacement Cost of the Building or in the event the time to repair would
exceed two hundred seventy (270) days to accomplish.

           9.1.4  "Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project site.

           9.1.5  "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 is fifty percent (50%) or more of the then
Replacement Cost of the Office Building Project Buildings.

           9.1.6  "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.

           9.1.7  "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
improvements made by tenants, other than those installed by Landlord at
Tenant's expense.

     9.2  PREMISES DAMAGE; PREMISES BUILDING PARTIAL DAMAGE:

           9.2.1  Insured Loss:  Subject to the provisions of paragraphs 9.4
and 9.5, if at any time during the Term there is damage which is an Insured
Loss and which falls into the classification of either Premises Damage or
Premises Building Partial Damage, then Landlord shall, as soon as reasonably
possible and to the extent sufficient insurance proceeds are available
exclusive of any deductible and the required materials and labor are readily
available through usual commercial channels, at Landlord's expense, repair
such damage (but not Tenant's fixtures, equipment or tenant improvements
originally paid for by Tenant) to its condition existing at the time of the
damage, and this Lease shall continue in full force and effect.

                                     -17-

<PAGE>

           9.2.2  Uninsured Loss:  Subject to the provisions of paragraphs
9.4 and 9.5, if at any time during the Term 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 Tenant (in which event Tenant shall make the repairs at Tenant's expense),
which damage prevents Tenant from making any substantial use of the Premises,
Landlord may at Landlord's option either (i) repair such damage as soon as
reasonably possible at Landlord's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Tenant
within thirty (30) days after the date of the occurrence of such damage of
Landlord's intention to 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 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 Landlord
may at Landlord's option either (i) repair such damage or destruction as soon
as reasonably possible at Landlord's expense (to the extent the required
materials are readily available through usual commercial channels) to its
condition existing at the time of the damage, but not Tenant's fixtures,
equipment or tenant improvements, and this Lease shall continue in full force
and effect, or (ii) give written notice to Tenant within thirty (30) days
after the date of occurrence of such damage of Landlord's intention to
terminate this Lease, in which case this Lease shall terminate as of the date
of the occurrence of such damage.

     9.4  EXTENT OF DAMAGE/DAMAGE NEAR END OF TERM:

           9.4.1  For purposes of determining whether or not there has been
Partial or Total Damage or Destruction to the Building or the Office Building
Project, Landlord shall determine, in its sole discretion, the cost of
repairing any damage or destruction to the Building or Office Building
Project and the then Replacement Cost of the Building or Office Building
Project, all as appropriate, and whether the time to repair any Premises
Building Total Destruction will exceed two hundred seventy (270) days to
accomplish.

           9.4.2  Subject to paragraph 9.4.3, if at any time during the last
twelve (12) months of the Term there is substantial damage to the Premises,
either Tenant or Landlord may, at its option, terminate this Lease as of the
date of occurrence of such damage by giving written notice to the other party
of its election to do so within 30 days after the date of occurrence of such
damage.

           9.4.3  Notwithstanding paragraph 9.4.2, in the event that Tenant
has an option to extend or renew this Lease, and the time within which that
option may be exercised has not yet expired, Tenant shall exercise such
option, if it is to be exercised at all, no later than twenty (20) days
("twenty-day election period") after the occurrence  of an Insured Loss
falling within the classification of Premises Damage during the last twelve
(12) months of the Term. If Tenant duly exercises such option during said
twenty (20) day period, Landlord shall, at Landlord's expense, repair such
damage, but not Tenant's fixtures, equipment or tenant improvements, as soon
as reasonably possible and this Lease shall continue in full force and
effect.  If Tenant fails to exercise such option during the twenty (20) day
election period, then Landlord may at Landlord's option terminate and cancel
this Lease as of the expiration of the twenty (20) day election period by
giving written notice to Tenant of Landlord's election to do so within ten
(10) days after the expiration of the twenty (20) day election period,
notwithstanding any term or provision in the grant of option to the contrary.

                                     -18-
<PAGE>

     9.5   ABATEMENT OF RENT; TENANT'S REMEDIES:

           9.5.1  If, in the event of Premises Damages, Landlord 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
for the period (commencing with the occurrence of such damage) during which
such damage, repair or restoration continues shall be abated, provided the
damage was not the result of the negligence of Tenant. Except for the
abatement of rent described in this subparagraph, if any, Tenant shall have no
claim against Landlord for any damage suffered by reason of any such damage,
destruction, repair or restoration other than to the extent that such damage
was caused by the gross negligence or willful misconduct of Landlord.

           9.5.2  If Landlord 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, or if Landlord shall not complete the restoration and repair
within 270 days after such occurrence, Tenant may, at Tenant's option,
terminate this Lease by giving Landlord written notice of Tenant's election to
do so at any time prior to the commencement or completion, respectively, of
such repair or restoration. In such event this Lease shall terminate as of
the date of such notice.

           9.5.3  Tenant agrees to cooperate with Landlord 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:  Subject to paragraph 5, 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 Tenant to Landlord. Landlord shall, in addition, return to Tenant so much
of Tenant's Security Deposit as has not theretofore been applied by Landlord.

     9.7   WAIVER:  Landlord and Tenant waive the provisions of any statute
which relate to termination of leases when leased property is destroyed
including, without limitation, California Civil Code sections 1932(2) and
1933(4), and agree that such event shall be governed by the terms of this
Lease.

10.  REAL PROPERTY TAXES:

     10.1  PAYMENT OF TAXES:  Landlord shall pay the Applicable Taxes, as
defined in paragraph 4.2, applicable to the Office Building Project subject to
reimbursement by Tenant of Tenant's Share of Applicable Taxes in accordance
with the provisions of paragraph 4, except as otherwise provided in
paragraph 10.2.

     10.2  ADDITIONAL IMPROVEMENTS:  Tenant shall not be responsible for
paying any increase in Applicable Taxes specified in the tax assessor's
records and work sheets as being caused by additional improvements placed upon
the Office Building Project by other tenants or by Landlord for the exclusive
enjoyment of any other tenant. Tenant shall, however, pay to Landlord, at the
time the next scheduled rental payment comes due, the entirety of any increase
in Applicable Taxes if assessed solely by reason of additional improvements
placed upon the Premises by Tenant or at Tenant's request.

     10.3  JOINT ASSESSMENT:  If the Improvements or property, the taxes for
which are to be paid separately by Tenant under paragraph 10.2 or 10.4 are not
separately assessed, Tenant's portion of that tax shall be equitably
determined by Landlord 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. Landlord's reasonable
determination thereof, in good faith, shall be conclusive.

                                     -19-
<PAGE>

     10.4  PERSONAL PROPERTY TAXES:

           10.4.1  Tenant shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the Premises or elsewhere.

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

11.  UTILITIES:

     11.1  SERVICES PROVIDED BY LANDLORD:

           11.1.1  Landlord shall provide heating, ventilation, air
conditioning, and janitorial service as reasonably required, reasonable
amounts of electricity (which shall in no event exceed four and one-half (4 1/2)
watts of electrical power on a demand load basis per square foot of Premises
Usable Area (as defined in paragraph 1.2)) 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. The heating and air conditioning system serving the Premises
will cool the Premises to 78 degrees Fahrenheit dry bulb, heat the Premises
to 68 degrees Fahrenheit dry bulb, and provide 20 CFM of fresh air per person
occupying the Premises. Notwithstanding the foregoing or any other provision
of this Lease, Landlord shall have no obligation to provide janitorial service
to the Premises before the Commencement Date (defined in paragraph 1.12).

           11.1.2  Landlord shall, without additional charge other than
inclusion of costs incurred in Operating Expenses, furnish Tenant with the
following services in accordance with the standards of first-class office
buildings in the area in which the Premises are located or as may be required
by law of directed by governmental authority: (a) Washing of exterior windows
at intervals established by Landlord (but not less than twice per year);
(b) Replacement of all lamps, bulbs, starters, and ballasts used in the Common
Areas; (c) Cleaning and maintenance of the Common Areas, including, but not
limited to, the removal of rubbish, provided that Tenant shall pay for removal
or rubbish brought onto the Common Areas in connection with Tenant's move into
the Premises.

           11.1.3  If there is any interruption in the services to be
provided by Landlord under this Lease, Landlord shall use its reasonable
efforts to restore such services as quickly as possible.

     11.2  SERVICES EXCLUSIVE TO TENANT: Tenant 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
Tenant, together with any taxes thereon. If any such services are not
separately metered to the Premises and are not included in Operating Expenses,
Tenant shall pay a reasonable proportion to be determined by Landlord of all
charges jointly metered with other premises in the Building. In addition,
subject to the provisions of the Work Letter Agreement, Tenant shall be
responsible for, and shall pay all costs of, installing all telephone and
computer cabling, equipment, wiring, and outlets required to (a) provide
telephone service to the Premises and (b) connect the Premises to the
telephone closet or room designated by Landlord (which may be located on the
floor on which the Premises are located or on another floor of the Building)
as necessary to provide telephone service to the Premises. Tenant's
installation of telephone and computer cabling other than in connection with
the initial tenant improvements shall constitute an Alteration requiring
Landlord's prior written consent and for all other purposes under this Lease.

     11.3  HOURS OF SERVICE: The service and utilities described in paragraph
11.1 shall be provided during the hours between 7:00 a.m. and 6:00 p.m. on
Monday through Friday and between 9:00 a.m. and 1:00 p.m. on

                                    -20-

<PAGE>

Saturdays, excluding Holidays or such other days or hours as may hereafter be
set forth in the Rules and Regulations or any amendments thereto (collectively,
"Normal Business Hours"). Utilities and services required at other times shall
be subject to advance request and reimbursement by Tenant to Landlord of the
cost thereof. Currently, after-hours HVAC services (i.e., HVAC services provided
during periods other than Normal Business Hours) may be accessed by a telephone
call during Normal Business Hours to the Building property manager by 5:00 p.m.
of the day immediately preceding the day on which after-hours HVAC service is
desired in the case of weekday service and by 5:00 p.m. on the penultimate
business day immediately preceding a weekend or holiday period. Tenant shall pay
Landlord a fee set by Landlord from time to time for the costs of providing
electricity for lights furnished to the Premises during hours other than Normal
Business Hours. In addition, Tenant shall pay Landlord a fee set by Landlord
from time to time for HVAC services provided to the Premises during periods
other than Normal Business Hours; Landlord's current fee for HVAC services is
$35.00 per hour.

            11.4 EXCESS USAGE BY TENANT: Tenant 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. Tenant shall reimburse
Landlord for any excess expenses or costs that may arise out of a breach of this
subparagraph by Tenant.

            11.5 INTERRUPTIONS: There shall be no abatement of rent and Landlord
shall not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service, regardless of whether
or not the cause thereof was within Landlord's control.

12.         ASSIGNMENT AND SUBLETTING:

            12.1  LANDLORD'S CONSENT REQUIRED: Tenant shall not voluntarily
or by operation of law assign, transfer, mortgage, sublet, or otherwise
transfer or encumber all or any part of Tenant's interest in the Lease or in
the Premises, without Landlord's prior written consent, which Landlord shall
not unreasonably withhold. Landlord shall respond to Tenant's request for
consent hereunder in a timely manner and any attempted assignment, transfer,
mortgage, encumbrance or subletting (collectively, "Transfer") without such
consent shall be void, and shall constitute a material default and breach of
this Lease without the need for notice to Tenant under paragraph 13.1.
"Transfer" within the meaning of this paragraph 12 shall also include (a) the
transfer or transfers aggregating: (i) if Tenant is a corporation, more than
twenty-five percent (25%) of the voting stock of such corporation or (ii) if
Tenant is a partnership, more than twenty-five percent (25%) of the profit
and loss participation in such partnership, or (b) the involvement of Tenant
or its assets in any transaction or series of transactions resulting in a
sale of unconsolidated, tangible net worth of Tenant as represented to
Landlord as of the execution date of this Lease. Subject to the other
provisions of this paragraph 12, Landlord hereby consents to the sublease of
a portion of the Premises to Mandarin Partners, LLC ("Mandarin").

            12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING:

                        12.2.1      Regardless of Landlord's consent, no
Transfer shall release Tenant of Tenant's obligations under this Lease or alter
the primary liability of Tenant to pay the rent and other sums due Landlord
under this Lease and to perform all other obligations to be performed by Tenant
under this Lease.

                        12.2.2      Landlord may accept rent from any person
other than Tenant pending the giving or denial of Landlord's consent to any
Transfer without being deemed to have consented to the Transfer.

                                      -21-
<PAGE>

                        12.2.3      Neither a delay in the giving or denial of
Landlord's consent to any Transfer, nor the acceptance of rent, shall constitute
a waiver or estoppel of Landlord's right to exercise its remedies for the breach
of any of the terms or conditions of this Paragraph 12 or this Lease.

                        12.2.4      If Tenant's obligations under this Lease
have been guaranteed by third parties, then any Transfer, and Landlord's consent
thereto, shall not be effective unless the guarantors give their written consent
to such Transfer and the terms thereof

                        12.2.5      The consent by Landlord to any Transfer
shall not constitute a consent to any subsequent Transfer by Tenant or to any
subsequent or successive Transfer by the Transferee. However, Landlord may
consent to subsequent Transfers by a Transferee of the sublease or any
amendments or modifications thereto without notifying Tenant or anyone else
liable under this Lease or any sublease and without obtaining their consent and
such action shall not relieve such persons from liability under this Lease or
any sublease; provided, however, such persons shall not be responsible to the
extent any such amendment or modification enlarges or increases the obligations
of any Tenant or subtenant under this Lease or any sublease.

                        12.2.6      In the event of any default under this
Lease, Landlord may proceed directly against Tenant, any guarantors or anyone
else responsible for the performance of this Lease, including any Transferee
pursuant to any Transfer, without first exhausting Landlord's remedies against
any other person or entity responsible therefor to Landlord, or any security
held by Landlord or Tenant.

                        12.2.7      Landlord's written consent to any Transfer
by Tenant shall not constitute an acknowledgment that no default then exists
under this Lease of the obligations to be performed by Tenant nor shall such
consent be deemed a waiver of any then existing default, except as may be
otherwise stated by Landlord at the time.

                        12.2.8      The discovery of the fact that any financial
statement relied upon by Landlord in giving its consent to any Transfer was
materially false shall, at Landlord's election, render Landlord's consent to the
Transfer void.

                        12.2.9      Landlord's denial of its consent to any
proposed Transfer based on the fact that such Transfer is to a then existing
tenant of the Office Building Project ("Existing Tenant") shall be deemed to
be reasonable; Landlord may give or deny its consent to an assignment or
sublease to an Existing Tenant in Landlord's sole discretion.

            12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING.
Regardless of Landlord's consent, the following terms and conditions
shall apply to any subletting by Tenant 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:

                        12.3.1      Subject to the provisions of paragraph
12.3.6, Tenant hereby assigns and transfers to Landlord all of Tenant's interest
in all rentals and income arising from any sublease heretofore or hereafter made
by Tenant, and Landlord may collect such rent and income and apply same toward
Tenant's obligations under this Lease; provided, however, that until a default
shall occur in the performance of Tenant's obligations under this Lease, Tenant
may receive, collect and enjoy the rents accruing under such sublease. Landlord
shall not, by reason of this or any other assignment of such sublease to
Landlord nor by reason of the collection of the rents from a subtenant, be
deemed liable to the subtenant for any failure of Tenant to perform and comply
with any of Tenant's obligations to such subtenant under such sublease. Tenant
hereby irrevocably authorizes and directs any such subtenant, upon receipt of a
written notice from Landlord stating that a default exists in the performance of
Tenant's obligations under this Lease, to pay to Landlord the rents due and to
become due under the sublease. Tenant agrees that such

                                      -22-

<PAGE>

subtenant shall have the right to rely upon any such statement and request
from Landlord, and that such subtenant shall pay such rents to Landlord
without any obligation or right to inquire as to whether such default exists
and notwithstanding any notice from or claim from Tenant to the contrary.
Tenant shall have no right or claims against said subtenant or Landlord for
any such rents so paid by said subtenant to Landlord.

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

           12.3.3  In the event Tenant shall default in the performance of
its obligations under this Lease, Landlord at its option and without any
obligation to do so, may require any subtenant to attorn to Landlord, in
which event Landlord shall undertake the obligations of Tenant under such
sublease from the date on which the subtenant receives notice that Landlord
is requiring the subtenant to attorn to Landlord under this subparagraph
until the termination of the sublease; provided, however, that Landlord shall
not be liable for any prepaid rents or security deposit paid by such
subtenant to Tenant or for any other prior defaults of Tenant under such
sublease.

           12.3.4  No subtenant shall further assign or sublet all or any
part of the Premises without Landlord's prior written consent.

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

           12.3.6  Notwithstanding anything to the contrary in the foregoing,
fifty percent (50%) of any rent or other economic consideration received by
Tenant as a result of any Transfer which exceeds, in the aggregate, (i) the
total rent which Tenant is obligated to pay to Landlord under the Lease
(prorated to reflect obligations allocable to any portion of the Premises
subleased), plus (ii) any reasonable and customary brokerage commissions
actually paid by Tenant (not to exceed three percent (3%) of base rent
payable pursuant to the terms of the Transfer), and attorneys' fees (not to
exceed $750 per Transfer) actually paid by Tenant in connection with such
Transfer, shall be paid to Landlord within ten (10) days after receipt
thereof as additional rent under this Lease, without altering or reducing any
other obligations of Tenant under this Lease.

     12.4  LANDLORD'S EXPENSES. In the event Tenant shall Transfer the
Premises and the consent of Landlord is required to that Transfer or if
Tenant shall request the consent of Landlord for any act Tenant proposes to
do, then Tenant shall pay Landlord's reasonable costs and expenses incurred
in connection therewith, including without limitation attorneys',
architects', engineers' and other consultants' fees which fees shall not
exceed One Thousand Five Hundred and 00/100 Dollar ($1,500) per request.

     12.5  CONDITIONS TO CONSENT.  Landlord reserve the right to condition
any consent to Transfer upon Landlord's determination that (a) the proposed
Transferee shall conduct a business on the Premises of a quality
substantially equal to that of Tenant and consistent with the general
character of the other occupants of the Office Building Project and not in
violation of any exclusives or rights then held by other tenants, and (b) the
proposed

                                      -23-

<PAGE>

Transferee is at least as financially responsible as Tenant was expected to
be at the time of the execution of this Lease or of such Transfer, whichever
is greater.

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 Tenant:

           13.1.1  The vacation or abandonment of the Premises by Tenant.
Vacation of the Premises shall include the failure to occupy the Premises for
a continuous period of sixty (60) days or more, together with Tenant's
failure to pay any rent payable under this Lease.

           13.1.2  The breach by Tenant of any of the covenants, conditions
or provisions of paragraphs 7.3.1, 7.3.2 or 7.3.3 (alterations), 12.1
(assignment or subletting), 13.1.6 (false statement), 16 (estoppel
certificate), 30.2 (subordination), 33 (auctions), or 50 (financial
statements) shall constitute a material, non-curable default without the
necessity of any further notice by Landlord to Tenant thereof if Tenant fails
to cure such default within five (5) days after written notice of such
default to Tenant.

           13.1.3  The failure by Tenant to make any payment of rent or any
other payment required to be made by Tenant hereunder, as and when due, where
such failure shall continue for a period of three (3) days after written
notice thereof from Landlord to Tenant. In the event that Landlord serves
Tenant 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.

           13.1.4  The failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed
by Tenant other than those referenced in subparagraphs 13.1.2 and 13.1.3,
above, where such failure shall continue for a period of thirty (30) days
after written notice thereof from Landlord to Tenant; provided, however, that
if the nature of Tenant's noncompliance is such that more than thirty (30)
days are reasonably required for its cure, then Tenant shall not be deemed to
be in default if Tenant commenced such cure within such 30-day period and
thereafter diligently pursues such cure to completion. To the extent
permitted by law, such 30-day notice shall constitute the sole and exclusive
notice required to be given to Tenant under applicable Unlawful Detainer
statutes.

           13.1.5  (i) The making by Tenant of any general agreement or
general assignment for the benefit of creditors; (ii) Tenant becoming a
"debtor" as defined in U.S.C Section 101 or any successor statute thereto
(unless, in the case of a petition filed against Tenant, the same is dismissed
with sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the Premises or
of Tenant's interest in this Lease, where possession is not restored to
Tenant within thirty (30) days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where such seizure is not
discharged within thirty (30) days. In the event that any provision of this
paragraph 13.1.5 is contrary to any applicable law, such provision shall be
of no force or effect.

           13.1.6  The discovery by Landlord that any financial statement
given to Landlord by Tenant, or its successor in interest, or by any
Transferee pursuant to a Transfer, or by any guarantor of Tenant's
obligation hereunder, was materially false.

                                      -24-

<PAGE>

      13.2  LANDLORD'S REMEDIES.

            13.2.1  Termination.  In the event of any default by Tenant, in
addition to any other remedies available to Landlord under this Lease, at law
or in equity, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder. In the event that Landlord shall
elect to so terminate this Lease, then Landlord may recover from Tenant:

                  (i)   the worth at the time of award of any unpaid rent
which had been earned at the time of such termination; plus

                  (ii)  the worth at the time of the award of the amount by
which the unpaid rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus

                  (iii) the worth at the time of award of the amount by which
the unpaid rent for the balance of the Term after the time of award exceeds
the amount of such rental loss that Tenant proves could be reasonably
avoided; plus

                  (iv)  any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which, in the ordinary course of things,
would be likely to result therefrom including, but not limited to:
"Unreimbursed Leasehold Improvement Costs" (as defined below); attorneys'
fees; brokers' commissions; the costs of refurbishment, alterations,
renovation and repair of the Premises; and removal (including the repair of
damage caused by such removal) and storage (or disposal) of Tenant's personal
property, equipment, fixtures, Tenant's alterations, additions, leasehold
improvements and any other items which Tenant is required under this Lease to
remove but does not remove. As used herein, the term "Unreimbursed Leasehold
Improvement Costs" shall mean the product when multiplying (i) the sum of any
leasehold improvement allowance plus any other costs provided, paid or
incurred by Landlord in connection with the design and construction of the
initial leasehold improvements installed in the Premises on or prior to the
Commencement Date pursuant to the Work Letter, by (ii) the fraction, the
numerator of which is the number of months of the Term not yet elapsed as of
the date on which this Lease is terminated (excluding any unexercised
extension or renewal Option(s)), and the denomination of which is the total
number of months of the Term (excluding any unexercised extension or renewal
Option(s)). For example, if the total costs paid or incurred by Landlord with
respect to the initial leasehold improvements was $100,000.00, the Term was
sixty (60) months, and the Lease was terminated by reason of Tenant's default
at the end of twelve (12) months, the Unreimbursed Leasehold Improvement
Costs would be equal to $80,000.00 (I.E., $80,000.00 equals
$100,000.00 x 48/60).

                  (v)   As used in subparagraphs (i) and (ii), above, the
"worth at the time of award" is computed by allowing interest at the maximum
interest rate which Landlord is permitted by law to charge to Tenant (the
"Lease Rate"). As used in subparagraph (iii), above, the "worth at the time
of award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).

            13.2.2  Re-Entry Rights.  In the event of any default by Tenant,
in addition to any other remedies available to Landlord under this Lease, at
law or in equity, Landlord shall also have the right, with or without
terminating this Lease, to re-enter the Premises and remove all persons and
property from the Premises; such property may be removed, stored and/or
disposed of pursuant to this Lease or any other procedures permitted by
applicable law. No re-entry or taking possession of the Premises by Landlord
pursuant to this paragraph 13.2.2, and no acceptance of surrender of the
Premises or other action on Landlord's part, shall be construed as an
election to terminate this Lease unless a written notice of such intention is
given to

                                     -25-

<PAGE>

Tenant by Landlord or unless the termination of this Lease is decreed by a
court of competent jurisdiction.

            13.2.3  Continuation of Lease.  In the event of any default by
Tenant, in addition to any other remedies available to Landlord under this
Lease, at law or in equity, Landlord shall have the right to continue this
Lease in full force and effect, whether or not Tenant shall have abandoned
the Premises. The foregoing remedy shall also be available to Landlord
pursuant to California Civil Code section 1951.4 (which provides that a
landlord may continue a lease in effect after the tenant's breach and
abandonment and recover rent as it becomes due, if the tenant has the right
to sublet or assign, subject only to reasonable limitations) and any
successor statute thereof in the event Tenant has abandoned the Premises. In
the event Landlord elects to continue this Lease in full force and effect
pursuant to this paragraph 13.2.3, then Landlord shall be entitled to
enforce all of its rights and remedies under this Lease, including the right
to recover rent as it becomes due. Landlord's election not to terminate this
Lease pursuant to this paragraph 13.2.3 or pursuant to any other provision of
this Lease, at law or in equity, shall not preclude Landlord from
subsequently electing to terminate this Lease or pursuing any of its other
remedies.

            13.2.4  Rights and Remedies Cumulative.  All rights, options and
remedies of Landlord contained in this paragraph 13.2 and elsewhere in this
Lease shall be construed and held to be cumulative, and no one of them shall
be exclusive of the other, and Landlord shall have the right to pursue any
one or all of such remedies or any other remedy or relief which may be
provided by law or in equity, whether or not stated in this Lease. Nothing in
this paragraph 13.2 shall be deemed to limit or otherwise affect Tenant's
indemnification of Landlord pursuant to any provision of this Lease.

      13.3  DEFAULT BY LANDLORD:  Landlord shall not be in default unless
Landlord fails to perform obligations required of Landlord within a
reasonable time, but in no event later than thirty (30) days after written
notice by Tenant to Landlord 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 Tenant in writing, specifying wherein Landlord has failed
to perform such obligation; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days are required
for performance then Landlord shall not be in default if Landlord commences
performance within such 30-day period and thereafter diligently pursues the
same to completion. In addition, in no event shall Tenant have the right to
terminate this Lease or obtain injunctive relief in connection with any
default under this Lease by Landlord; Tenant's sole and exclusive remedy in
the event of a Landlord default shall be an action for damages.

      13.4  LATE CHARGES:  Tenant hereby acknowledges that late payment by
Tenant to Landlord of Base Rent or other sums due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which will be extremely difficult to ascertain. Such costs include, but are
not limited to, processing and accounting charges, and late charges which may
be imposed on Landlord by the terms of any mortgage or trust deed covering
the Office Building Project. Accordingly, if any installment of Base Rent,
Tenant's Share of Operating Expenses or Applicable Taxes or any other sum due
from Tenant shall not be received by Landlord or Landlord's designee within
ten (10) days after such amount shall be due, then, without any requirement
for notice to Tenant, Tenant shall pay to Landlord 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 Landlord will incur by
reason of late payment by Tenant. Acceptance of such late charge by Landlord
shall in no event constitute a waiver of Tenant's default with respect to
such overdue amount, nor prevent Landlord 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 that power (all of which are herein called

                                     -26-

<PAGE>

"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 Tenant's business conducted from
the Premises, Tenant shall have the option, to be exercised only in writing
within thirty (30) days after Landlord shall have given Tenant written notice
of such taking (or in the absence of such notice, within thirty (30) days
after the condemning authority shall take possession), to terminate this Lease
as of the date the condemning authority takes such possession.  If Tenant 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, Tenant's Share of Operating Expenses and Applicable
Taxes shall be reduced in the 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 Tenant and no reduction of rent
shall occur with respect thereto or by reason thereof. Landlord 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 Tenant of
such election within thirty (30) days after receipt of notice of a taking by
condemnation of any material 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
Landlord, whether such award shall be made as compensation for diminution in
value of the leasehold or for the the taking of the fee, or as severance
damages; provided, however, that Tenant shall be entitled to any separate
award for loss of or damage to Tenant's trade fixtures, removable personal
property and unamortized tenant improvements that have been paid for by
Tenant. For that purpose the cost of such improvements shall be amortized
over the original Term excluding any options. In the event that this Lease is
not terminated by reason of such condemnation, Landlord shall to the extent
of severance damages received by Landlord in connection with such
condemnation, repair any damage to the Premises caused by such condemnation
except to the extent that Tenant has been reimbursed therefor by the
condemning authority. Tenant shall pay any amount in excess of such severance
damages required to complete such repair. Tenant expressly waives the
benefits of any statute now or hereafter in effect which would permit Tenant
to terminate or seek termination of this Lease in the event of a
condemnation, including, without limitation, California Code of Civil
Procedure sections 1265.110, 1265.120, and 1265.130.

15.  BROKER'S FEE:  Landlord and Tenant represent and warrant to each other
that it has had no dealings with any real estate broker or agent in
connection with the negotiation of this Lease except Matlow-Kennedy
Commercial Real Estate Services, Robert L. Alperin, whose commission shall be
payable by Landlord pursuant to a separate written agreement. Landlord and
Tenant each agree to indemnify and defend the other from any cost, expense,
claim, loss, or liability for any compensation, fee, commission or charge
claimed by any other party claiming by, through or on behalf of it with
respect to this Lease.

16.   ESTOPPEL CERTIFICATE:

      16.1  Within ten (10) days following any written request which Landlord
may make from time to time, Tenant shall execute and deliver to Landlord an
accurate "Tenant Estoppel Certificate," in a form substantially similar to
the form of attached Exhibit "E" or in any other form reasonably required by
Landlord. Landlord and Tenant intend that any statement delivered pursuant to
this paragraph 16 may be relied upon by any mortgagee, beneficiary, purchaser
or prospective purchaser of the Building or any interest therein.

      16.2  Tenant's failure to deliver such Tenant Estoppel Certificate
within such time shall be conclusive upon Tenant (i) that this Lease is in
full force, without modification except as may be represented by Landlord,
(ii) that there are no uncured defaults in Landlord's performance, and (iii)
that not more that one (1) month's rental has been paid in advance. Tenant's

                                      -27-

<PAGE>

failure to deliver the Tenant Estoppel Certificate to Landlord within ten
(10) days after Tenant's receipt of a proposed certificate shall constitute a
material default under this Lease.

17.  LANDLORD'S LIABILITY:  The term "Landlord" as used herein shall mean
only the owner or owners and any receiver, at the time in question, of the
fee title or a Tenant's interest in a ground lease of the Office Building
Project, in the event of any transfer of such title or interest, Landlord
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 Landlord's obligations thereafter to be performed, provided that any
funds in the hands of Landlord or the then grantor at the time of such
transfer, in which Tenant has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Landlord shall,
subject as aforesaid, be binding on Landlord'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 Landlord not paid when due shall bear interest at the
maximum rate then allowable by law on judgments from the date due. Payment of
such interest shall not excuse or cure any default by Tenant under this
Lease; provided, however, that interest shall not be payable on late charges
incurred by Tenant nor on any amounts upon which late charges are paid by
Tenant.

20.  TIME OF ESSENCE:  Time is of the essence with respect to the obligations
to be performed under this Lease, including specifically and without
limitation, Tenant's obligation to make any payments, give any notices, and
timely perform under the Work Letter Agreement.

21.  ADDITIONAL RENT:  All monetary obligations of Tenant to Landlord under
the terms of this Lease, including expenses payable by Tenant 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, Tenant hereby acknowledges that neither any
real estate broker listed in paragraph 15 hereof nor any cooperating broker
on this transaction nor the Landlord or any employee or agents of any of the
foregoing has made any oral or written warranties or representations to
Tenant relative to the condition or use by Tenant of the Premises or the
Office Building Project and Tenant acknowledges that Tenant assumes all
responsibility regarding the Occupation 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.

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 Tenant or to Landlord at the address noted below or adjacent to
the signature of the respective parties, as the case may be. Mailed notices
shall be deemed given upon receipt at the address required. Either party may
by notice to the other specify a different address for notice purposes except
that upon Tenant's taking possession of the Premises, the Premises shall
constitute Tenant's address for notice purposes. A copy of all notices
required or permitted to be given to Landlord hereunder shall be concurrently
transmitted to such party or parties at such addresses as Landlord may from
time to time hereafter designate by notice to Tenant.

                                      -28-
<PAGE>

<TABLE>
<S>         <C>                                             <C>       <C>
Landlord:   John Hancock Mutual Life Insurance Company      Tenant:   Obagi Medical Products
            c/o Catalina Landing                                      310 Golden Shore
            330 Golden Shore, Suite 200                               Suite 120
            Long Beach, CA 90802-4246                                 Long Beach, CA 90802-4246
</TABLE>

24.   WAIVER:  The waiver by Landlord of any breach of any term, covenant or
condition contained in this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant or condition
contained in this Lease, nor shall any custom or practice to which the
parties may have adhered in the administration of the terms of this Lease be
deemed a waiver of or in any way affect the right of Landlord to insist upon
the performance by Tenant in strict accordance with the terms of this Lease.
The subsequent acceptance of rent under this Lease by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any term, covenant
or condition of this Lease, other than the failure of Tenant to pay the
particular rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent. No acceptance by
Landlord of a lesser sum than the sum then due shall be deemed to be other
than on account of the earliest installment of such rent or other amount due,
nor shall any endorsement or statement on any check or any letter
accompanying any check be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance of such installment or other amount or pursue any other remedy
available to Landlord.

25.   RECORDING:  Neither this Lease nor a "short form" memorandum of this
Lease shall be recorded.

26.   HOLDING OVER:  Tenant shall vacate the Premises upon the expiration or
earlier termination of this Lease. Tenant shall reimburse Landlord for and
indemnify Landlord against all damages and liability which Landlord incurs
from Tenant's delay in vacating the Premises, including, without limitation,
claims by and liability to any succeeding tenant founded on such delay and
any attorneys' fees and costs. If Tenant does not vacate the Premises upon
the expiration or earlier termination of the Lease and Landlord consents to
Tenant remaining in possession of the Premises, Tenant's occupancy of the
Premises shall be a "month-to-month" tenancy, subject to all of the terms of
this Lease applicable to a month-to-month tenancy, except that the monthly
Base Rent then in effect shall be increased by fifty percent (50%) and any
unexercised Option(s) granted under this Lease shall be terminated.

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
Tenant 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 Tenant 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 of California applicable to contracts to be wholly
performed within such State.

30.   SUBORDINATION:

      30.1  This Lease, and any Option or right of first refusal granted
hereby, at Landlord's option, shall, without the necessity of Tenant or any
other party executing any additional documentation, 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. If any mortgagee,
trustee or ground lessor shall elect to have this Lease and any Options

                                     -29-
<PAGE>

granted hereby prior to the lien of its mortgage, deed of trust or ground
lease, and shall give written notice thereof to Tenant, this Lease and such
Options shall be deemed prior to such mortgage, deed of trust or ground lease
whether this Lease or such Options are dated prior to or subsequent to the
date of that mortgage, deed of trust or ground lease or the date of recording
thereof.

      30.2  Tenant agrees to execute any documents required to effectuate an
attornment, 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. Tenant's failure to execute such documents within ten (10)
days after written demand shall constitute a material default by Tenant
hereunder without further notice to Tenant or at Landlord's option, Landlord
shall execute such documents on behalf of Tenant as Tenant's
attorney-in-fact. Tenant does hereby make, constitute and irrevocably appoint
Landlord as Tenant's attorney-in-fact and in Tenant's name, place and stead,
to execute such documents in accordance with this paragraph 30.2.

      30.3  Notwithstanding anything set forth in the Lease to the contrary,
the Lease shall not be subject or subordinate to any future mortgage, deed of
trust, ground lease, or other security instrument or arrangement unless and
until Landlord obtains from the mortgagee, beneficiary under the deed of
trust, ground lessor, or other secured party under any other security
instrument or arrangement placed against the Premises an agreement reasonably
acceptable to Tenant signed by such secured party in recordable form which
provides that, in the event of any foreclosure, sale under a power of sale,
ground lease termination or transfer in lieu of any of the foregoing, or the
exercise of any other remedy pursuant to any such security instrument or
arrangement, (a) Tenant's use, possession, and enjoyment of the Premises
shall not be disturbed and the Lease shall continue in full force and effect
so long as Tenant is not in default hereunder, and (b) the Lease shall
automatically become a direct lease between any successor to Landlord's
interest, as landlord, and Tenant as if such successor were the Landlord
originally named hereunder.

      30.4  Landlord shall make commercial reasonable efforts to obtain a
non-disturbance agreement in favor of Tenant from Landlord's ground lessor.
Landlord shall have no liability to Tenant under this Lease nor shall Tenant
have any right to terminate this Lease in the event Landlord does not obtain
a non-disturbance agreement from Landlord's ground lessor.

31.   ATTORNEYS' FEES:

      31.1  If either party to this Lease brings and 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 its 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.

       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  Landlord shall be entitled to reimbursement from Tenant of all
reasonable attorneys' fees and all other costs and expenses incurred by
Landlord in the preparation and service of notices of default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such default.

32.    LANDLORD'S ACCESS:

       32.1  Landlord and Landlord's agents shall have the right to enter the
Premises at reasonable times upon reasonable notice for the purpose of
inspecting the same, performing any services required of Landlord, showing
the same to prospective purchasers, lenders, or (during the last twelve (12)

                                     -30-

<PAGE>

months of the Term) tenants, 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 Landlord 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 Tenant's use of the Premises. Landlord may, at any time, place on or about
the Building any ordinary "For Sale" or "For Lease" signs and Landlord may at
any time during the last 180 days of the Term place on or about the Premises
any ordinary "For Lease" signs.

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

      32.3  Landlord 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
safes, 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. Tenant waives any
charges for damages or injuries or interference with Tenant's property or
business in connection therewith.

33.   AUCTIONS: Tenant 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 Landlord's prior written consent.
Notwithstanding anything to the contrary in this Lease, Landlord shall not be
obligated to exercise any standard of reasonableness in determining whether
to grant such consent. The holding of any auction on the Premises or Common
Areas in violation of this paragraph shall constitute a material default of
this Lease.

34.   SIGNS: Tenant shall not place any sign upon the Premises or the Office
Building Project without Landlord's prior written consent. Under no
circumstances shall Tenant place a sign on any roof of the Office Building
Project. Notwithstanding the other provisions of this paragraph 34, Tenant
shall have the right to install (i) suite entry signage in the Building lobby
adjacent to one side or the other (at Landlord's discretion) of the entry
door to the premises ("Lobby Sign") and (ii) a non-exclusive monument sign at
the Project in the general location shown on attached Exhibit "F" ("Monument
Sign"). The Monument Sign and the Lobby Sign shall (a) be installed at
Tenant's sole cost and expense, (b) comply with all applicable laws, (c) be
of a size, design, construction, color, and materials, in a manner acceptable to
Landlord in its sole discretion, (d) be illuminated (if any illumination is
approved or required by Landlord in its sole discretion) in a manner
acceptable to Landlord in its sole discretion, and (e) contain only such text
and logos as are reasonably acceptable to Landlord. The exact locations of
the Lobby Sign and the Monument Sign shall be designated by Landlord in its
reasonable discretion. Tenant shall obtain all governmental permits and
approvals required in connection with the Monument Sign at Tenant's sole cost
and expense. Before beginning installation of the Monument Sign, Tenant shall
obtain Landlord's written approval in Landlord's sole discretion of Tenant's
signage contractor and installer and of all plans and specifications for the
Monument Sign. Tenant agrees that notwithstanding that Tenant is paying all
costs and expenses relating to installation of the Monument Sign, Tenant will
be sharing the Monument Sign with up to three (3) other parties selected by
Landlord in Landlord's sole discretion, provided that at all times Tenant's
signage shall be located at the top of the Monument Sign and shall be the
most prominent. The Monument Sign shall at all times be and remain the
property of Landlord.

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

                                     -31-
<PAGE>

36.   CONSENTS: Except as provided for in the Work Letter Agreement and in
paragraphs 7.3.1 (alterations and additions), 33 (auctions), and 34 (signs),
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, the
guarantor shall have the same obligations as Tenant under this Lease.

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

39.   OPTIONS:

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

      39.2 OPTIONS PERSONAL: Each Option granted to Tenant under this Lease,
if any, is personal to the original Tenant and may be exercised only by the
original Tenant 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 Tenant. The Options,
if any, herein granted to Tenant 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 Tenant has any multiple
options to extend or renew this Lease a later option cannot be exercised unless
the prior option to extend or renew this Lease has been so exercised.

      39.4 EFFECT OF DEFAULT ON OPTIONS:

            39.4.1 Tenant 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 Landlord gives to Tenant a notice
of default pursuant to paragraph 13.1.3 or 13.1.4 and continuing until the
noncompliance alleged in the notice of default is cured, or (ii) during the
period of time commencing on the day after a monetary obligation to Landlord
is due from Tenant and unpaid (without any necessity for notice thereof to
Tenant) and continuing until the obligation is paid, or (iii) in the event
that Landlord has given to Tenant three or more notices of default under
paragraph 13.1.3, or paragraph 13.1.4, whether or not the defaults are cured,
during the 12-month period of time immediately prior to the time that Tenant
attempts to exercise the subject Option, or (iv) if Tenant has committed any
non-curable breach, including without limitation those described in

                                     -32-
<PAGE>

paragraph 13.1.2, or is otherwise in default of any of the terms, covenants
or conditions of this Lease.

            39.4.2  The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of Tenant's inability
to exercise an Option because of the provisions of paragraph 39.4.1.

            39.4.3  All rights of Tenant under the provisions of an Option
shall terminate and be of no further force or effect, notwithstanding
Tenant's due and timely exercise of the Option, if, after such exercise and
during the Term, (i) Tenant fails to pay to Landlord a monetary obligation of
Tenant for a period of thirty (30) days after such obligation becomes due
(without any necessity of Landlord to give notice thereof to Tenant), or (ii)
Tenant fails to commence to cure a default specified in paragraph 13.1.4
within thirty (30) days after the date that Landlord gives notice to Tenant
of such default and/or Tenant fails thereafter to diligently prosecute the
cure to completion, (iii) Landlord gives to Tenant three or more notices of
default under paragraph 13.1.3, or paragraph 13.1.4, whether or not the
defaults are cured, or (iv) if Tenant has committed any non-curable breach,
including without limitation those described in paragraph 13.1.2, or is
otherwise in default of any of the terms, covenants and conditions of this
Lease.

40.   SECURITY MEASURES--LANDLORD'S RESERVATIONS:

      40.1  Tenant hereby acknowledges that, except as provided below,
Landlord shall have no obligation whatsoever to provide guard service or
other security measures for the benefit of the Premises or the Office
Building Project. Tenant assumes all responsibility for the protection of
Tenant, its agents, and invitees and the property of Tenant and of Tenant's
agents and invitees from acts of third parties. Tenant may, at Tenant's sole
expense, install and operate, at Tenant's sole cost, a personalized suite
access control security system so long as Tenant provides Landlord with all
access codes required to gain access to the Premises without activating
Tenant's security system. Nothing herein contained shall prevent Landlord, at
Landlord's sole option, from providing additional security protection for the
Office Building Project or any part thereof.

      40.2  Without limiting its rights at law or elsewhere under this Lease,
Landlord shall have the following rights:

            40.2.1  To change the name, address or title of the Office
Building Project or building in which the Premises are located upon not less
than 90 days' prior written notice;

            40.2.2  To, at Tenant's expense, provide and install Building
standard graphics on the door of the Premises and such portions of the Common
Areas as Landlord shall reasonably deem appropriate;

            40.2.3  To permit any tenant the exclusive right to conduct any
business as long as such exclusive does not conflict with any rights
expressly given herein;

            40.2.4  To place such signs, notices or displays as Landlord
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  Tenant shall not:

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

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

                                     -33-

<PAGE>

41.   EASEMENTS:

      41.1  Landlord reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Landlord 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 Tenant. Tenant shall
sign any of the aforementioned documents upon request of Landlord and failure
to do so shall constitute a material default of this Lease by Tenant without
the need for further notice to Tenant.

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

42.   LANDLORD'S RIGHT TO PERFORM:  Except as specifically provided otherwise
in this Lease, all covenants and agreements by Tenant under this Lease shall
be performed by Tenant at Tenant's sole cost and expense and without any
abatement or offset of rent. If Tenant shall fail to pay any sum of money
(other than Basic Rent) or perform any other act on its part to be paid or
performed hereunder and such failure shall continue for three (3) days with
respect to monetary obligations (or ten (10) days with respect to
non-monetary obligations) then, notwithstanding anything to the contrary
provided elsewhere herein, after Tenant's receipt of written notice thereof
from Landlord, Landlord may, without waiving or releasing Tenant from any of
Tenant's obligations, make such payment or perform such other act on behalf
of Tenant. All sums so paid by Landlord and all necessary incidental costs
incurred by Landlord in performing such other acts, together with interest at
the Lease Rate, shall be payable by Tenant to Landlord within five (5) days
after demand therefor as additional rent. The foregoing rights are in
addition to any and all remedies available to Landlord upon Tenant's default
as described in paragraph 13.2

43.   LIMITATION ON LIABILITY AND TIME: Notwithstanding anything contained
in this Lease to the contrary, the obligations of Landlord under this Lease
(including any actual or alleged breach or default by Landlord) do not
constitute personal obligations of the individual partners, directors,
officers or shareholders of Landlord or Landlord's partners, or Landlord's
mortgagees, and Tenant shall not seek recourse against the individual
partners, directors, officers or shareholders of Landlord or Landlord's
partners, or Landlord's mortgagees, or any of their personal assets for
satisfaction of any liability with respect to this Lease. In addition, in
consideration of the benefits accruing hereunder to Tenant and
notwithstanding anything contained in this Lease to the contrary, Tenant
hereby covenants and agrees for itself and all of its successor and assigns
that the liability of Landlord for its obligations under this Lease
(including any liability as a result of any actual or alleged failure, breach
or default hereunder by Landlord), shall be limited solely to, and Tenant's
and its successors, and assigns' sole and exclusive remedy shall be against,
Landlord's interest in the Office Building Project and proceeds therefrom,
and no other assets of Landlord. Any claim, defense, or other right of Tenant
arising in connection with this Lease or negotiations before this Lease was
signed shall be barred unless Tenant files an action or interposes a defense
based thereon within two (2) years after the date of the alleged event on
which Tenant is basing its claim, defense or right.

44.   TOXIC MATERIALS:

      44.1  DEFINITIONS. For purposes of this paragraph 44, "Hazardous
Material" shall mean any substance:

            44.1.1  the presence of which requires investigation or
remediation under any federal, state or local statute, regulation, ordinance,
order, action or policy; or

                                      -34-
<PAGE>

                  44.1.2   which is or becomes defined as a "hazardous waste" or
"hazardous substance" under any federal, state or local statute, regulation,
ordinance or amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. section 9601
et seq.) and or the Resource Conservation and Recovery Act (42 U.S.C. section
6901 et seq.); or

                  44.1.3  which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is
or becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, the State of
California or any political subdivision thereof; or

                  44.1.4   the presence of which on the Premises, Building or
Office Building Project causes or threatens to cause a nuisance upon the
Premises, Building or Office Building Project or to adjacent properties or poses
or threatens to pose a hazard to the Premises, Building or Office Building
Project or to the health or safety of persons on or about the Premises, Building
or Office Building Project; or

                  44.1.5   which contains, without limitation. gasoline, diesel
fuel or other petroleum hydrocarbons; or

                  44.1.6   which contains, without limitation. polychlorinated
biphenyls (PCBs), asbestos or urea formaldehyde foam insulation; or

                  44.1.7   which is or becomes defined as "medical waste" under
the Medical Waste Management Act (Health & Safety Code sections 25015-25099.3).

         For purposes of this paragraph 44, "Environmental Requirements" means
all applicable present and future statutes, regulations, rules, ordinances,
codes, licenses, permits, orders, approvals, plans, authorizations, concessions,
franchises and similar items, of all governmental agencies, departments,
commissions, boards, bureaus or instrumentalities of the United States, states
and political subdivisions thereof and all applicable judicial and
administrative and regulatory decrees, judgments and orders relating to the
protection of human health or the environment, including without limitation:

                           (a)      all requirements, including but not limited
to those pertaining to reporting, licensing, permitting, investigation and
remediation of emissions, discharges, releases or threatened releases of
"Hazardous Materials," chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature; and

                           (b)      all requirements pertaining to the
protection of the health and safety of employees or the public.

         For purposes of this paragraph 44, "Environmental Damages" means all
claims, judgments, damages, losses, penalties, fines, liabilities (including
strict liability), encumbrances, liens, costs and expenses of investigation and
defense of any claim, whether or not such claim is ultimately defeated, and of
any good faith settlement of judgment, of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or unforeseeable, including without
limitation reasonable attorneys' fees and disbursements and consultants' fees,
any of which are incurred at any time as a result of the existence on or after
the date upon which Tenant takes possession of the Premises (the "Possession
Date") of "Hazardous Material" upon, about, beneath the Premises, Building or
Office Building Project or migrating or threatening to migrate to or from the
Premises, Building or Office Building Project or the existence of a violation of
"Environmental Requirements" pertaining to the Premises, Building or Office
Building Project, regardless of whether the

                                      -35-
<PAGE>

existence of such "Hazardous Material" or the violation of "Environmental
Requirements" arose prior to the present ownership or operation of the Premises,
Building or Office Building Project, and including without limitation:

                           (a)      damages for personal injury, or injury to
property or natural resources occurring upon or off of the Premises, Building or
Office Building Project, foreseeable or unforeseeable, including, without
limitation, lost profits, consequential damages, the cost of demolition and
rebuilding of any improvements on real property, interest and penalties
including but not limited to claims brought by or on behalf of employees of
Tenant, with respect to which Tenant waives any immunity to which it may be
entitled under any industrial or worker's compensation laws;

                           (b)      fees incurred for the service of attorneys,
consultants, contractors, experts, laboratories and all other costs incurred in
connection with the investigation or remediation of such "Hazardous materials"
or violation of "Environmental Requirements" including, but not limited to, the
preparation of any feasibility studies or reports or the performance of any
cleanup, remedial, removal, response, abatement, containment, closure,
restoration or monitoring work required by any federal, state or local
governmental agency or political subdivision, or reasonably necessary to make
full economic use of the Premises, Building or Office Building Project or any
other property or otherwise expended in connection with such conditions, and
including without limitation any attorneys' fees, costs and expenses incurred in
enforcing this Lease or collection of any sums due hereunder;

                           (c)      liability to any third person or
governmental agency to indemnify such person or agency for costs expended in
connection with the items referenced in the immediately preceding subparagraph
(b) herein; and

                           (d)      diminution in the value of the Premises,
Building or Office Building Project, and damages for the loss of business and
restriction on the use of or adverse impact on the marketing of rentable or
usable space or of any amenity of the Premises, Building or Office Building
Project

         44.2     Tenant's Obligations.

         Tenant, at its sole cost and expense, shall comply with all
Environmental Requirements relating to the storage, use and disposal of all
Hazardous Materials, including those materials identified in sections 66680
through 66685 of Title 22 of the California Administrative Code, Division 4.
Chapter 30 ("Title 22") as the same may be amended from time to time. If
Tenant does store, use or dispose of any Hazardous Materials, Tenant shall
notify Landlord in writing at least ten (10) days prior to the first
appearance of such materials on the Premises, Building or Office Building
Project, and Landlord shall have the right to disapprove of Tenant's use
thereof on the Premises (provided that Landlord's failure to disapprove
thereof shall not constitute Landlord's approval thereof or excuse Tenant
from complying with the terms of this paragraph 44), and Tenant's failure to
so notify Landlord shall constitute a default under this Lease. Tenant shall
be solely responsible for and shall protect, defend, indemnify, and hold
Landlord, its agents and contractors harmless from and against all
Environmental Damages arising out of or in connection with the storage, use
and disposal of Hazardous Materials by Tenant, its officers, employees,
agents, representatives, servants, subtenants, concessionaires, licensees,
contractors, invitees or permittees. If the presence of Hazardous Materials
on the Premises, Building or Office Building Project caused or permitted by
Tenant results in contamination or deterioration of water or soil resulting
in a level of contamination greater than the levels established by any
governmental agency having jurisdiction over such contamination, then Tenant
shall, at its sole cost and expense, promptly take any and all action
necessary to clean up such contamination if required by law or as a condition
to the issuance or continuing effectiveness of any governmental approval
which relates to the use of the Premises, Building or Office Building
Project. If

                                     -36-

<PAGE>

at any time prior to the expiration of the Term, Landlord shall reach a
reasonable good faith determination that Tenant or its officers, employees,
agents, representatives, servants, subtenants, concessionaires, licensees,
contractors, invitees or permittees have at any time violated any
Environmental Requirements, discharged any Hazardous Material onto the
Premises, Building or Office Building Project, or surrounding areas or
otherwise subjected Landlord or the Office Building Project to liability for
Environmental Damages, then Landlord shall have the right to require Tenant to
conduct appropriate tests of water and soil and to deliver to Landlord the
result of such tests to demonstrate that no contamination in excess of
legally permitted levels has occurred as a result of Tenant's use of the
Premises, Building or Office Building Project. If the presence of Hazardous
Materials on the Premises, Building or office Building Project is caused or
permitted by Tenant or its officers, employees, agents, representatives,
servants, subtenants, concessionaires, licensees, contractors, invitees or
permittees such that Landlord or Tenant becomes obligated to conduct the
necessary clean-up of such contamination as required above, then, Tenant
shall further be solely responsible for, and shall protect, defend,
indemnify and hold Landlord, its agents and contractors harmless from and
against all claims, costs and liabilities, including actual attorneys' fees,
expert witness fees and costs, arising out of or in connection with any
removal, cleanup and restoration work and materials required hereunder to
return the Premises, Building or office Building Project and any other property
of whatever nature to conditions which existed prior to Tenant's use thereof
and which are within acceptable levels according to all Environmental
Requirements or any other Federal, State or local governmental requirements.
Tenant's obligations hereunder shall survive the termination of this Lease.

      44.3  LANDLORD'S OBLIGATIONS.  Landlord represents and warrants to the
actual knowledge of John P. McDonough and Gabrielle C. Barr, without any
obligation to conduct any investigation, that the interior of the Premises
and the Building do not contain any friable asbestos. Landlord shall be
responsible for and shall protect, defend, indemnify, and hold Tenant, its
agents and contractors harmless from and against all Environmental Damages
arising out of or in connection with the storage, use and disposal of
Hazardous Materials in or on (i) the Premises before the date of this Lease
so long as Tenant does not disturb any such Hazardous Materials and (ii) the
Building or Office Building Project (other than the Premises) at any time so
long as Tenant is not responsible for the presence of the Hazardous Materials
in or on the Building or Office Building Project; provided that nothing
contained in this subparagraph 44.3 shall be construed to require Landlord to
remove or otherwise remediate any Hazardous Materials from the Premises,
Building, or Office Building Project. Landlord's obligations hereunder shall
survive the termination of this Lease.

45.  INDOOR AIR QUALITY:  To prevent the generation, growth, or deposit of
any mold, mildew, bacillus, virus, pollen or other micro-organism
(collectively, "Biologicals") and the deposit, release or circulation of any
indoor contaminants, including emissions from paint, carpet and drapery
treatments, cleaning, maintenance and construction materials and supplies,
pesticides, pressed wood products, insulation, and other materials and
products (collectively with Biologicals, "Contaminants"), that could
adversely affect the health, safety or welfare of any tenant, employee, or
other occupant of the Building or their invitees (each, an "Occupant"),
Tenant shall, at Tenant's sole cost and expense, at all times during the Term
(i) maintain, operate and repair the Premises in such a manner to prevent or
minimize the accumulation of stagnant water and moisture in planters, kitchen
appliances and vessels, carpeting, insulation, water coolers and any other
locations where stagnant water and moisture could accumulate, and (ii)
otherwise maintain, operate and repair the Premises to prevent the
generation, growth, deposit, release or circulation of any Contaminants. If
any governmental entity or any Occupant alleges that health, safety or
welfare has been or could be adversely affected by any such Contaminants,
Tenant shall notify Landlord in writing within twenty-four (24) hours of the
time the allegation is made. Landlord may then elect to engage the services
of an industrial hygiene testing laboratory (or alternatively or concurrently

                                     -37-

<PAGE>

require Tenant to do the same) to determine whether the cause of any alleged
adverse health effect is or could be attributable to any Contaminants present
within the Premises. Tenant shall be responsible for all such testing costs
resulting from Tenant's failure to comply in whole or in part with the terms
of this paragraph.

46.  FORCE MAJEURE:  Landlord shall have no liability whatsoever to Tenant on
account of (a) the inability of Landlord to fulfill, or delay in fulfilling,
any of Landlord's obligations under this Lease, the Work Letter Agreement, or
any other Lease attachment by reason of strike, other labor trouble,
govermental preemption or priorities or other controls in connection with a
national or other public emergency, or shortages of fuel, supplies or labor
resulting therefrom, or any other cause, whether similar or dissimilar to the
above, beyond Landlord's reasonable control; or (b) any failure or defect in
the supply, quantity or character of electricity or water furnished to the
Premises, by reason of any requirement, act or omission of the public utility
or others furnishing the Building with electricity or water, or for any other
reason, whether similar or dissimilar to the above, beyond Landlord's
reasonable control.  The performance of any obligation which is excused by
any of the events of force majeure described above shall only remain excused
so long as that force majeure condition continues to exist, provided that if
this Lease or any Exhibit or Work Letter Agreement specifies a time period
for performance of an obligation of Landlord, that time period shall be
extended by the period of any delay in Landlord's performance caused by any
of the events of force majeure described above.

47.  AUTHORITY:  If Tenant is a corporation, trust, or general or limited
partnership, Tenant, and each 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 that entity. If Tenant is a
corporation, trust or partnership, Tenant shall, within thirty (30) days
after execution of this Lease, deliver to Landlord evidence of such authority
satisfactory to Landlord.

48.  NO OFFER:  Preparation of this Lease by Landlord or Landlord's agent and
submission of this Lease to Tenant shall not be deemed an offer to Tenant to
lease. This Lease shall become binding upon Landlord and Tenant only when
fully executed by both parties.

49.  LENDER MODIFICATION/GOVERNMENT REQUIREMENTS:  Tenant agrees to make such
reasonable modifications to this Lease as may be reasonably required by an
institutional lender in connection with the obtaining of normal financing or
refinancing of the Office Building Project. In addition, Tenant agrees to
promptly sign all documents reasonably required by any governmental agency
from time to time in connection with the Premises, provided that those
documents do not materially adversely affect the rights or obligations of
Tenant under this Lease. Notwithstanding the other provisions of this
paragraph 49, in no event shall Tenant be obligated to execute any agreement
which materially increases Tenant's obligations or materially decreases
Tenant's rights or Landlord's obligations under this Lease.

50.  FINANCIAL STATEMENTS:  When reasonably requested by Landlord, Tenant
shall, upon ten (10) days notice from Landlord, provide Landlord with a
current financial statement and financial statements of the two (2) years, if
available, prior to the current financial statement year. Such statement(s)
shall be safeguarded by Landlord and shall be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice
of Tenant, shall be audited by an independent certified public accountant.

51.  MULTIPLE PARTIES:  If more than one person or entity is named as either
Landlord or Tenant herein, except as otherwise expressly provided herein, the
obligations of the Landlord or Tenant herein shall be the joint and several
responsibility of all persons or entities named herein as such Landlord or
Tenant, respectively.

                                     -38-
<PAGE>

52.  WORK LETTER: This Lease is supplemented by that certain Work Letter
Agreement attached hereto as Exhibit "C".

53.  MOVING ALLOWANCE. Landlord shall pay Tenant a moving allowance of up to
One and 00/100 Dollars ($1.00) per square foot of Premises Useable Area based
on Tenant's and Mandarin's actual expenses incurred to move from their
existing facilities to the Premises and/or to Suite 200 in the Building
and/or from Suite 200 into the Premises ("Moving Allowance"), including,
without limitation, moving company costs, furniture and work systems delivery
costs, rubbish removal, temporary labor costs incurred to facilitate or
effect Tenant's and Mandarin's moves, moving supply costs, and such other
costs as are reasonably approved by Landlord. Landlord shall pay Tenant the
Moving Allowance within twenty (20) days after the latest to occur of the
following dates: (a) the date on which Tenant has completely moved into the
Premises, (b) the date on which Tenant has delivered to Landlord (i) a
written request for payment of the Moving Allowance stating the amount of
Tenant's and Mandarin's actual moving expenses, and (ii) copies of all
invoices marked paid or other evidence reasonably required by Landlord to
evidence Tenant's and Mandarin's actual expenses incurred to move from their
existing facilities to the Premises and/or to Suite 200 and/or from Suite 200
into the Premises, and (c) the Commencement Date. The provisions of this
paragraph shall not apply to any Additional Space (defined in Lease Rider No.
2).

54.  ABATEMENT OF RENT WHEN TENANT IS PREVENTED FROM USING PREMISES:
Notwithstanding any other provision of this Lease, if Tenant is prevented
from using, and does not use, the Premises or any portion thereof, for twenty
(20) consecutive days (the "Eligibility Period") as a result of any failure by
Landlord through Landlord's negligence, intentional misconduct, or willful
act to provide Tenant with utility services which Landlord is required to
provide to Tenant under paragraph 11.1.1 of this Lease, and restoration of
the utility services is within Landlord's reasonable control, then after
expiration of the Eligibility Period, rent shall be abated to the extent the
operation of Tenant's business as operated from the Premises is adversely
affected but only for such time that Tenant continues to be so prevented
from using, and does not use, the Premises.

55.  ATTACHMENTS/COUNTERPARTS: Attached hereto are the following documents
which constitute a part of this Lease: Exhibits "A" through "F", and Riders
Nos. 1 and 2. This Lease may be signed in multiple counterparts.

LANDLORD AND TENANT 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 LANDLORD AND TENANT WITH
RESPECT TO THE PREMISES.

             LANDLORD                               TENANT

John Hancock Mutual Life Insurance     Obagi Medical Products, Inc., a
Company, a Massachusetts corporation   California corporation

By: /s/ [illegible]                    By:
   ---------------------------------      -------------------------------------

Its: V. P.                             Its:
   ---------------------------------       ------------------------------------

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

                                       Its:
                                           ------------------------------------

                                      -39-

<PAGE>

                          FLOOR PLAN OF THE PREMISES
                          --------------------------

                     [FLOOR 1 CATALINA LANDING BLDG.1 GRAPHIC]

                                   EXHIBIT "A"
                                   -----------
<PAGE>

                                  EXHIBIT "B"

                           RULES AND REGULATIONS FOR
                             STANDARD OFFICE LEASE

GENERAL RULES

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

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

     3.  Tenant shall not make or permit any noise or odors that annoy or
interfere with other tenants or persons having business within the Office
Building Project.

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

     6.  Except as set forth in Lease paragraph 34, no sign, advertisement of
notice shall be displayed, printed or affixed on or to the Premises or to the
outside or inside of the Building or so as to be visible from outside the
Premises or Building without Landlord's prior written consent. Landlord shall
have the right to remove any non-approved sign, advertisement or notice,
without notice to and at the expense of Tenant, and Landlord shall not be
liable in damages for such removal. All approved signs or lettering on doors
and walls shall be printed, painted, affixed or inscribed at the expense of
Tenant by Landlord or by a person selected by Landlord and in a manner and
style acceptable to Landlord.

     7.  The sidewalks, halls, passages, exits, entrances, elevators and
stairways and other portions of the common areas shall not be obstructed by
Tenant or used for any purpose other than for ingress and egress from
Tenant's Premises.

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

     9.  Tenant shall not overload the floor of the Premises or mark, drive
nails, screw or drill into the partitions, ceilings or floor or in any way
deface the Premises nor shall Tenant 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; provided, however, that Tenant
may hang pictures and other normal decorative items on the interior walls of
the Premises.

     10.  Landlord shall have the right to prescribe the weight, size and
position of all safes and other heavy equipment brought into the Building.
The times and manner of moving the same in and out of the Building shall be
prescribed by Landlord, and all such moving must be done under the
supervision of Landlord. Landlord may exclude from the Building any such
heavy or bulky equipment or articles, the weight of which may exceed the
floor load for which the Building is designed, or such equipment or articles
as may violate any provisions of the Lease of which these rules and
regulations are a part. Tenant shall not use any machinery or other bulky
articles on the Premises, even though its installation may have been
permitted, which may cause any noise, or jar, or tremor in the floors or
walls, or which by its weight might

                                      -1-

<PAGE>

injure the floor of the Building. Safes or other heavy equipment shall, as
considered necessary by Landlord, stand on a platform of such thickness as is
necessary to properly distribute the weight.

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

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

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

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

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

     16.  No bicycles, vehicles or animals of any kind shall be brought into
or kept in or about the Premises, and no cooking, shall be done or permitted
by Tenant in the Premises, except that (i) the preparation of coffee, tea,
hot chocolate and similar items for tenants, their employees and visitors
shall be permitted, and (ii) Tenant may use a small microwave oven in the
Premises to warm small quantities of food. No tenant shall cause or permit
any unusual or objectionable odors to be produced in or permeate from or
throughout the Premises.

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

     18.  No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in
existing locks or the mechanisms thereof unless Landlord is first notified
thereof, gives written approval, and is furnished a key thereof. Each tenant
must, upon the termination of its tenancy, give the Landlord all keys of
stores, offices, or toilets and toilet rooms, either furnished to, or
otherwise procured by, such tenant, and in the event of the loss of any keys
so furnished, such tenant shall pay Landlord the cost of replacing the same
or of changing the lock or locks opened by such key if Landlord shall deem it
necessary to make such change.

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

                                      -2-
<PAGE>

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

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

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

     23.   All electrical ceiling fixtures hung in offices or spaces along
the perimeter of the Building must be fluorescent and/or of a quality, type,
design and bulb color approved by Landlord. Tenant shall not permit, at any
time, the consumption in the Premises of electrical power on a demand load
basis of more than 1 1/2 watts per square foot of Premises Usable Area
with respect to office lighting nor shall Tenant permit, at any time, the
consumption in the Premises of electrical power on a demand load basis of
more than 3 watts per square foot of Premises Usable Area with respect to
power outlets therein. In the event that such limits are exceeded, Landlord
shall have the right to remove any lighting fixture or any fluorescent tube
or bulb therein, or disconnect any office equipment or machinery, as it deems
necessary and/or to charge Tenant for the cost of the additional electricity
consumed.

     24.   Tenant shall be responsible for the inappropriate use of any
toilet rooms, plumbing or other utilities by Tenant or its employees, agents,
licensees, or invitees. No foreign substances of any kind are to be inserted
therein.

     25.   Tenant shall not deface the walls, partitions or other surfaces of
the Premises or Office Building Project.

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

     27.   Tenant shall not employ any service or contractor for services or
work to be performed in the Building, except as approved by Landlord.

     28.   Landlord reserves the right to close and lock the Building at all
times other than during Normal Business Hours, or such other hours as
Landlord may determine. If Tenant uses the Premises during periods other than
during Normal Business Hours (which shall require advance notice to Landlord
in accordance with Lease paragraph 11.3 if after-hours HVAC service is
required), Tenant shall (a) be responsible for securely locking any doors it
may have opened for entry and (b) shall pay Landlord a fee determined by
Landlord for HVAC and/or electrical consumption in accordance with Lease
paragraph 11.3, and other extra services required in connection with Tenant's
use of the Premises during periods other than during Normal Business Hours
(e.g., engineering, janitorial, or security services).

     29.   No window covering, shades or awnings shall be installed or used
by Tenant other than Building standard coverings or shades.

     30.   No Tenant, employee or invitee shall go upon the roof of the
Building.

                                      -3-
<PAGE>

     31.   Tenant shall not suffer or permit smoking or carrying of lighted
cigars or cigarettes in area reasonably designated by Landlord or by
applicable governmental agencies as non-smoking areas.

     32.   Tenant shall not use any method of heating or air conditioning
other than as provided by Landlord.

     33.   Tenant shall not install, maintain or operate any vending machines
upon the Premises without Landlord's written consent.

     34.   The Premises shall not be used for lodging or manufacturing.

     35.   Tenant shall comply with all safety, fire protection and
evacuation regulations established by Landlord or any applicable governmental
agency.

     36.   Landlord shall use commercially reasonable efforts (with no
obligation to bring any legal action or incur any expense) to attempt to
secure compliance by other tenants of the Building with these rules and
regulations provided that in no event shall Landlord (a) be required to
respond in any way to any request or demand by Tenant that Landlord enforce
any of these rules or regulations and (b) have any responsibility or
liability for any failure by Landlord to enforce any of these rules or
regulations in any way at any time. Landlord reserves the right to waive any
one of these rules or regulations, and/or as to any particular tenant, and
any such waiver shall not constitute a waiver of any other rule or regulation
or any subsequent application thereof to such tenant.

     37.    Tenant assumes the risk of theft or vandalism to or from the
Premises and agrees to keep its Premises locked as may be required to prevent
theft or vandalism on, to, or from the Premises.

     38.   Landlord reserves the right to make such other reasonable and
non-discriminatory 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. Tenant agrees to abide by these and such rules and
regulations.

     39.   All doors opening onto public corridors shall be kept closed,
except when being used for ingress and egress.

     40.   The requirements of tenants will be attended to only upon
application to the Office of the Building.

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

                                      -4-

<PAGE>

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." Oversized Vehicles shall be parked only in areas
designated by Landlord and only with Landlord's prior written consent, which may
be denied in Landlord's sole discretion.

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

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

        4.      Landlord 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.      Landlord 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 locations(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.  Landlord will not be responsible
for any damage 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
method or methods as Landlord and/or its licensee may establish at rates
generally applicable to visitor parking.

        9.      The maintenance, washing, waxing or cleaning of vehicles in the
parking structure or Common Areas is prohibited.

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

        11.     Landlord 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.

        13.     Landlord or its agent may tow or otherwise remove any vehicles
which are parked illegally in the parking areas, which are parked in the
parking areas for more than seventy-two (72) consecutive hours without
Landlord's prior written consent or which constitute a nuisance or annoyance to
other users of the Office Building Project or parking areas.  Such towing shall
be at the sole cost and expense of the tenant which is in any way responsible
for the presence of such vehicle in the parking area (for example, if the
vehicle is parked by any particular tenant's invitee, customer or employee, such
tenant shall be responsible for the cost of towing such vehicle).

                                      -5-
<PAGE>

                                  EXHIBIT "C"

                             WORK LETTER AGREEMENT

                In connection with the lease to which this Work Letter Agreement
is attached (the "Lease"), and in consideration of the mutual covenants
hereinafter contained, Landlord and Tenant agree as follows:

                1.      COMPLETION SCHEDULE. Within ten (10) days after its
execution of the Lease, Landlord shall deliver to Tenant, for Tenant's review
and approval, a schedule (the "Work Schedule") setting forth a timetable for the
planning and completion of the installation of the Tenant Improvements (as
defined in Paragraph 2 below) to be constructed in the Premises based on a
target Commencement Date for the Term of May 1, 1998 ("Target Commencement
Date"). The Work Schedule shall set forth each of the various items of work to
be done by or approval to be given by Landlord and Tenant in connection with the
completion of the Tenant Improvements. The Work Schedule shall be submitted to
Tenant for its approval and, upon approval by both Landlord and Tenant,
Landlord and Tenant agree to comply with that Schedule, and it shall become the
basis for the parties' performance under this Agreement. If Tenant shall fail to
deliver to Landlord Tenant's written disapproval of the Work Schedule, as it may
be modified after discussions between Landlord and Tenant, within seven (7) days
after the date the Work Schedule is first received by Tenant, Landlord's space
planner for the Building shall determine the final Work Schedule in its sole,
good faith judgment within ten (10) days after request by either Landlord or
Tenant, which determination shall be final and binding on all parties.

                2.      TENANT IMPROVEMENTS. "Tenant Improvements" shall include
all work to be done and improvements installed in the Premises by Landlord
pursuant to the Tenant Improvement Plans (defined in Paragraph 3 below),
including, but not limited to, partitioning, doors, ceilings, floor coverings,
wall finishes (including paint and wallcovering), electrical (including
lighting, switching, outlets, etc.), plumbing, heating, ventilating and air
conditioning, fire protection, cabinets and other millwork. All Tenant
Improvements and components thereof shall at all times be and remain the sole
property of Landlord.

                3.      TENANT IMPROVEMENT PLANS.  Within five (5) business days
after execution of the Lease, Tenant agrees to meet with Landlord's architect or
space planner for the purpose of promptly preparing a space plan ("Space Plan").
The Space Plan will provide a partition layout depicting the configuration of
the Premises.  If Tenant fails to deliver to Landlord Tenant's written
disapproval of the Space Plan within five (5) business days after the date the
Space Plan, or any revised Space Plan, is first received by Tenant, such failure
shall constitute a Tenant Delay and the Commencement Date shall be accelerated
one day for each day of such Tenant Delay.  Within fifteen (15) business days
after the Space Plan is approved by Tenant pursuant to this Paragraph (which
approval shall not be unreasonably withheld), Landlord's architect or space
planner will prepare a design/development plan ("D/D Plan") from which initial
pricing for the Tenant Improvements will be prepared.  If Tenant fails to
deliver to Landlord Tenant's written disapproval of the D/D Plan within five
(5) business days after the date the D/D Plan, or any revised D/D Plan, is
first received by Tenant, such failure shall constitute a Tenant Delay and the
Commencement Date shall be accelerated one day for each day of such Tenant
Delay. If the Space Plan or D/D Plan, or any revised Space Plan or D/D Plan, is
timely disapproved by Tenant pursuant to this Paragraph, Tenant shall provide to
Landlord a written explanation of the reason(s) for such disapproval
concurrently with that disapproval, and the Space Plan or D/D Plan, as
appropriate, shall be promptly revised and resubmitted to Tenant for approval.
If Tenant fails to provide a written explanation as and when required by this
Paragraph, such failure shall constitute a Tenant Delay and the Commencement
Date shall be accelerated one day for each day of such Tenant Delay.  Within
fifteen (15) business days after the D/D Plan is approved by Tenant pursuant to
this Paragraph,

                                       -1-
<PAGE>
Landlord's architect or space planner shall promptly prepare final working
drawings and specifications for the Tenant Improvements. Those working drawings
and specifications are referred to herein as the "Tenant Improvement Plans" and
shall be approved by Landlord and Tenant pursuant to Paragraph 5 below. The
Tenant Improvement Plans must be consistent with Landlord's standard
specifications (the "Standards") for tenant improvements for the Building, as
the same may be changed from time to time by Landlord.

      4. NON-STANDARD TENANT IMPROVEMENTS. Landlord shall permit Tenant to
deviate from the Standards for the Tenant Improvements provided that (a) the
deviations shall not be of a lesser quality than the Standards; (b) the total
lighting for the Premises shall comply with the provisions of Title 24 of the
California Administrative Code; (c) the deviations conform to applicable
governmental regulations, and necessary governmental permits and approvals have
been secured; (d) the deviations do not require building service beyond the
level normally provided to other tenants in the Building and do not overload the
weight-bearing capacity of the floors; (e) the deviations will not delay
completion of the Tenant Improvements unless Tenant agrees that any such delay
will constitute a Tenant Delay; and (f) Landlord has determined in its sole
discretion that the deviations are of a nature and quality that are consistent
with the overall objectives of the Landlord for the Building.

      5. FINAL PRICING AND DRAWING SCHEDULE. After preparation by Landlord's
architect or space planner, the Tenant Improvement Plans shall be submitted to
Tenant for approval, which shall not be unreasonably withheld. If Tenant fails
to deliver to Landlord Tenant's written disapproval of the Tenant Improvement
Plans, or any revised Tenant Improvement Plans, within five (5) days after the
date the Tenant Improvement Plans, or any revised Tenant Improvement Plans, are
received by Tenant, such failure shall constitute a Tenant Delay and the
Commencement Date shall be accelerated one day for each day of such Tenant
Delay. If the Tenant Improvement Plans, or any revised Tenant Improvement Plans,
are timely disapproved by Tenant pursuant to this Paragraph, Tenant shall
provide to Landlord a written explanation of the reason(s) for such disapproval
concurrently with the disapproval, and the Tenant Improvement Plans shall be
revised and resubmitted to Tenant for approval. If Tenant fails to provide a
written explanation as and when required by this Paragraph, such failure shall
constitute a Tenant Delay and the Commencement Date shall be accelerated one day
for each day of such Tenant Delay. Within five (5) days after the Tenant
Improvement Plans are so approved by Tenant, the Tenant Improvement Plans
shall be submitted to the appropriate governmental body by Landlord for plan
checking and the issuance of a building permit. Landlord reserves the right to
disapprove any proposed Tenant Improvements which Landlord reasonable believes
will adversely affect the Building or any Building systems. Landlord, with
Tenant's cooperation, shall cause to be made to the Tenant Improvement Plans any
changes necessary to obtain the building permit and to comply with the
requirements of the Police and Fire Departments of the City of Long Beach.
Concurrently with the plan checking, Landlord shall have prepared a final
pricing for Tenant's approval in accordance with the Work Schedule, taking into
account any modifications which may be required to reflect changes in the Tenant
Improvement Plans required by the City of Long Beach or other agencies. Landlord
shall have the option to increase or decrease the final pricing, before or after
Tenant approves the final pricing, to reflect changes in the cost of performing
the Tenant Improvements caused by plan modifications required by the City of
Long Beach or other agencies. After final approval of the Tenant Improvement
Plans no further changes may be made thereto without the prior written approval
from both Landlord and Tenant, and then only after agreement by Tenant to pay
any excess costs resulting from the design or construction of such changes.
Tenant acknowledges that any such changes shall be subject to the terms of
Paragraph 8 below.

      6. CONSTRUCTION OF TENANT IMPROVEMENTS. Landlord shall request that three
(3) contractors selected by Landlord (one of which will be D&H Buildings
Systems) (collectively, "Contractors") submit bids for construction of the
Tenant Improvements, and Landlord shall select the lowest acceptable

                                        2

<PAGE>

bidder from among the three. After a building permit for the Tenant Improvements
has been issued, Landlord shall cause its contractor to begin installation of
the Tenant Improvements in accordance with the Tenant Improvement Plans.
Landlord shall supervise the completion of such work and shall use its best
efforts to secure substantial completion of the work in accordance with the Work
Schedule. The cost of such work shall be paid as provided in Paragraph 7 below.
Landlord shall not be liable for any direct or indirect damages as a result of
delays in construction beyond Landlord's reasonable control, including, but not
limited to, acts of God, inability to secure governmental approvals or permits,
governmental restrictions, strikes, lack of availability of materials or labor,
or delays by Tenant (or its architect or anyone performing services on behalf of
Tenant).

      7. PAYMENT FOR THE TENANT IMPROVEMENTS.

          (a) Landlord grants to Tenant a "Tenant Improvement Allowance" of Two
Hundred Sixteen Thousand Two Hundred Sixty and 00/100 dollars ($216,260.00). The
Tenant Improvement Allowance shall only be used for:

            (i) Payment of the cost of preparing the Space Plan, the D/D Plan
      and the Tenant Improvement Plans, including mechanical, electrical,
      plumbing and structural drawings, and of all other aspects necessary to
      complete the Tenant Improvement Plans. The Tenant Improvement Allowance
      will not be used for the payment of extraordinary design work not included
      within the scope of Landlord's Standards or for payments to any other
      consultants, designers or architects other than Landlord's architect,
      space planner or Space Accountant, all of which other costs shall be paid
      for by Tenant.

            (ii) Payment of plan check, permit and license fees relating to
      construction of the Tenant Improvements.

            (iii) Construction of the Tenant Improvements, including, without
      limitation, the following:

                  (aa) Installation within the Premises of all partitioning,
            doors, floor coverings, ceilings, wallcoverings and painting,
            millwork and similar items;

                  (bb) All electrical wiring, fixtures, outlets and switches,
            and other electrical work to be installed within the Premises,
            excluding however computer and telephone cable, wiring, fixtures,
            and outlets;

                  (cc) The furnishing and installation of all duct work,
            terminal boxes, diffusers and accessories required for the
            completion of the heating, ventilation and air conditioning systems
            within the Premises, including the cost of meter and key control for
            after-hour air conditioning;

                  (dd) Any additional tenant requirements including, but not
            limited to, air quality control, special heating, ventilation and
            air conditioning, noise or vibration control or other special
            systems;

                  (ee) All fire and life safety control systems such as fire
            walls, sprinklers, fire alarms, including piping and wiring,
            installed within the Premises;

                  (ff) All plumbing, including fixtures and pipes, to be
            installed within the Premises;

                  (gg) Testing and inspection costs;

                                        3

<PAGE>

                  (hh) Demolition and/or removal of any existing improvements
             contained in the Premises which must be demolished in connection
             with construction of the Tenant Improvements; and

                  (ii) Contractors' fees, including, but not limited to, any
             fees based on general conditions.

            (iv)  Payment to Landlord of a space improvement fee
      ("Improvement Fee") to, among other things, pay Landlord's space
      improvement costs for the Premises, including without limitation costs
      for the following: plan check and permits; utilities, including
      electrical and water consumption; elevator usage; and a tenant
      supervision fee. The Improvement Fee shall be five percent (5%) of the
      cost of the Tenant Improvements.

            (v)   All other costs to be expended by Landlord in the
      construction of the Tenant Improvements, including those costs
      incurred by Landlord for construction of elements of the Tenant
      Improvements in the Premises, which construction was performed by
      Landlord prior to the execution of the Lease and which construction is
      for the benefit of tenants and is customarily performed by Landlord
      prior to the execution of leases for space in the Building for reasons
      of economics (examples of such construction would include, but not be
      limited to, the extension of mechanical, HVAC and electrical
      distribution systems outside of the core of the Building, wall
      construction, column enclosures and painting outside of the core of the
      Building, ceiling hanger wires and window treatment).

                  (b)  If the actual costs of purchasing and installing the
Tenant Improvements exceed the Tenant Improvement Allowance, or if any of the
Tenant Improvements are not to be paid out of the Tenant Improvement
Allowance as provided in Paragraph 7(a) above, the excess shall be paid by
Tenant to Landlord prior to the commencement of construction of the Tenant
Improvements.

                  (c)  If, after the Tenant Improvement Plans have been
prepared and a price therefor has been established by Landlord, Tenant shall
require any changes or substitutions to the Tenant Improvement Plans, any
additional costs related thereto shall be paid by Tenant to Landlord prior to
the commencement of construction of the Tenant Improvements. Landlord shall
have the right to decline Tenant's request for a change to the Tenant
Improvement Plans if such changes are inconsistent with the provisions of
Paragraphs 3 or 4 above, or if the change would, in Landlord's subjective
good faith opinion, unreasonably delay construction of the Tenant
Improvements.

                  (d)  If increases in the cost of the Tenant Improvements as
set forth in Landlord's final pricing are due to the requirements of any
governmental agency, Tenant shall pay Landlord the amount of such increase
within five (5) days of Landlord's written notice; provided, however, that
Landlord shall first apply toward such increase any remaining balance in the
Tenant Improvement Allowance.

                  (e)  Any unused portion of the Tenant Improvement Allowance
upon completion of the Tenant Improvements shall not be refunded to Tenant or
available to Tenant as a credit against any obligations of Tenant under the
Lease.

                  (f)  As used in this Work Letter Agreement, the terms
"Premises Usable Area" means the area of the Premises as determined by the
Space Accountant by measuring the area within the bounds of the inside
surface of the glass in the outer wall of the Building, the surface facing
the Premises of all partitions separating the Premises from the Building core
and public corridors or other Common Areas, and from the center of partitions
separating the premises from adjoining tenant spaces. The exact amount of
Premises Usable Area within the Premises shall be determined by the Space
Accountant upon completion of the Tenant Improvements. No deductions shall be

                                      -4-

<PAGE>

made for space occupied by structural or functional columns or other
projections within the Premises.

            8.    COMPLETION AND RENTAL COMMENCEMENT DATE.  The Term, and
Tenant's obligation for the payment of rent under the Lease, shall commence
on the earlier of: (i) the date on which the Tenant first conducts any
business from all or part of the Premises; or (ii) the first (1st) Monday
after the date on which the Tenant Improvements have been substantially
completed as determined by a certificate from Landlord's architect (the
earlier of which dates shall be deemed to be the date on which Landlord has
tendered possession of the Premises to Tenant under the Lease); provided that
the Term shall not commence under Clause (ii), above, unless Tenant has been
provided with the opportunity to access the Premises during the final
fourteen (14) days of construction of the Tenant Improvements in order for
Tenant to install its telephone system, data cabling and built-in furniture
and provided further that if there shall be a delay in substantial completion
of the Tenant Improvements as a result of:

                  (a)  Tenant's failure to approve any item or perform any
other obligation in accordance with and by the date specified in the Work
Schedule;

                  (b)  Tenant's request for materials, finishes or
installations other than those readily available, whether or not approved by
Landlord or reflected in the Tenant Improvement Plans;

                  (c)  Tenant's changes in the Tenant Improvement Plans after
Tenant approves the Tenant Improvement Plans;

                  (d)  Tenant's request to deviate from the Standards for the
Building, including any deviation in materials, finishes or installations from
the Building Standards, but not including any deviation reflected in the Tenant
Improvement Plans; or

                  (e)  Tenant's failure to timely make any payment due from
Tenant under this Work Letter Agreement or the Lease;

then, as provided for in the Lease, the commencement of the Term shall be
accelerated by the number of days of such delay. The Tenant Improvements
shall be deemed substantially complete notwithstanding the fact that minor
items of the Tenant Improvements (such as construction, mechanical adjustments,
or decorations) which do not materially interfere with Tenant's use of the
Premises remain to be performed (items normally referred to as "punch list"
items), which items Landlord shall promptly complete or correct.

                                       -5-
<PAGE>

                                  EXHIBIT "D"

                           NOTICE OF LEASE TERM DATES

To:                                    Date:                , 199
   ------------------------------           ----------------     --

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

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

   Re:    Lease dated _______________, 19__, between JOHN HANCOCK MUTUAL LIFE
          INSURANCE COMPANY, a Massachusetts corporation ("Landlord") and
          _________________________ ("Tenant") (the "Lease") concerning
          Suite(s) ____ on the ____ floor(s) of the building(s) located at
          ____ Golden Shore, Long Beach, California (the "Premises").

Tenant:

     In accordance with paragraph 3 of the Lease, we wish to confirm as
follows:

     1.  That the Premises have been tendered herewith to Tenant as being
substantially complete in accordance with the Lease and that the construction
of the Premises is not deficient in any way except for punch list items.

     2.  That Tenant has been delivered possession of the Premises and
acknowledges that under the provisions of the Lease the Term commenced on
____________________________ and will end on ___________________________.

     3.  That in accordance with the Lease monthly Base Rent commenced to
accrue on ________________________.

     4.  Under paragraphs 1.10 and 4.2.5 of the Lease, the exact number of
Rentable Square Feet within the Premises is __________ square feet and
Tenant's Share of Operating Expenses and Applicable Taxes is ____________.

     5.  Except as otherwise set forth in the Lease, rent is due and payable
in advance on the first day of every month during the Term of the Lease.
Your rent checks should be made payable to _________________________________
at _________________________________.

                                      Very Truly Yours,

                                      JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY

                                      By: _______________________________
                                          Its:___________________________

                                       -1-

<PAGE>

                                 EXHIBIT "E"

                                SAMPLE FORM OF
                         TENANT ESTOPPEL CERTIFICATE

      TO:   John Hancock Mutual Life Insurance Company ("Landlord") and
__________________________________________, a ______________________.

      The undersigned, _________________________________________ ("Tenant"),
hereby certify to _______________________________ a
___________________________________________________, as follows:

      1.    Attached hereto is a true, correct and complete copy of that
certain lease dated _______________________, 199__, between Landlord and
Tenant (the "Lease"), which demises premises located at
________________________________________ (the "Premises"). The Lease is now
in full force and has not been amended, modified or supplemented, except as
set forth in Paragraph 4 below.

      2.    The term of the Lease commenced on _____________, 19__.

      3.    The term of the Lease shall expire on ______________, 19__. There
are ___________ options to extend the Lease term for a total period of ___
years, none of which has been exercised. There are no options to expand the
Premises.

      4.    The Lease has:   (Initial one)

(____)      not been amended, modified, supplemented, extended, renewed or
            assigned.

(____)      been amended, modified, supplemented, extended, renewed or
            assigned by the following described agreements, copies of which are
            attached hereto:

       _______________________________________________________

       _______________________________________________________

      5.    Tenant has accepted and is now in possession of the Premises.

      6.    Tenant acknowledges that Landlord's interest in the Lease will be
assigned to _________________________ and that no modification, adjustment,
revision or cancellation of the Lease or amendments thereto shall be
effective unless the prior written consent of ______________________________
is obtained.

      7.    The amount of fixed monthly rent is $____________.

      8.    The amount of security deposits (if any) is $______________. No
other security deposits have been made.

      9.    Tenant is paying the full lease rental, which has been paid in
full as of the date of this Certificate. No rent or other amount under the
Lease has been paid for more than thirty (30) days in advance of its due date.

     10.    All work required to be performed by Landlord under the Lease and
the Work Letter Agreement (as defined in the Lease) has been completed.

     11.    There are no defaults on the part of the Landlord or Tenant under
the Lease.

     12.    Tenant has no defense as to its obligations under the Lease and
claims no set-off or counterclaim against Landlord.

                                       -1-

<PAGE>

      13.   Tenant has no right to any concession (rental or otherwise) or
similar compensation in connection with renting the space it occupies except
as provided in the Lease.

      All provisions of the Lease and the amendments thereto (if any)
referred to above are hereby ratified.

      The foregoing certification is made with the knowledge that Landlord is
about to sell the Building or Office Building Project to _________________ or
that ______________________________ is about to fund a loan to Landlord,
which sale/loan Tenant understands is scheduled to close on _____________,
and that in either case the named party is relying upon the representations
herein made in proceeding with that execution. Tenant shall take all steps
reasonably necessary to keep the transaction and party described in this
Certificate confidential. If there is any change in the information provided
in this Certificate between now and the closing described above, Tenant shall
immediately inform you of that change.

      This Certificate has been duly executed and delivered by the authorized
officers of the undersigned as of _________________________, 19__.

                                       "TENANT"

                                       _______________________________________

                                       _______________________________________

                                       By:____________________________________
                                          Its:________________________________

                                       By:____________________________________
                                          Its:________________________________

                                      -2-

<PAGE>

                  LOCATIONS OF MONUMENT SIGN AND SOUTH END AREA
                  ---------------------------------------------

                            [SOUTH END AREA GRAPHIC]

                                   EXHIBIT "F"
                                   -----------
                                   Page 1 of 2

<PAGE>

                 LOCATIONS OF MONUMENT SIGN AND SOUTH END AREA

                                     [MAP]

SOUTH END AREA
(as of the date of this
Lease, this area is a                                      LOCATION OF PROPOSED
fenced patio area)                                          MONUMENT SIGN

                                  EXHIBIT "F"
                                  PAGE 2 OF 2

<PAGE>

                              LEASE RIDER NO. 1
                            OPTION TO EXTEND TERM

      This Rider (this "Rider") is between Obagi Medical Products, Inc., a
California corporation, as "Tenant", and John Hancock Mutual Life Insurance
Company, a Massachusetts corporation, as "Landlord". This Rider is attached
to and made a part of that certain Standard Office Lease (Catalina Landing),
dated March 5, 1998, between Landlord and Tenant for the premises commonly
known as Suite 120, 310 Golden Shore, Long Beach, CA (the "Lease"). In the
event of any inconsistency between the terms and conditions of this Rider and
the terms and conditions of the Lease, the terms and conditions of this Rider
shall control. Initially capitalized terms not otherwise defined herein shall
have the same meanings as ascribed to them in the Lease.

         1. OPTION TO EXTEND: Landlord hereby grants to Tenant the option (the
"Extension Option") to extend the Term of the Lease for one (1) five (5) - year
period (the "Option Period") commencing when the initial Term expires, upon each
and all of the following terms and conditions:

                  a. EXERCISE PERIOD. Provided Tenant is not in default of any
         terms of the Lease at either the time of notice of exercise of the
         Extension Option or at the time of the then currently pending Lease
         expiration (in which event Tenant shall have no rights under this
         Rider, provided that in the case of a non-monetary default Tenant
         shall be deemed to be not in default for purposes of this
         paragraph 1.a. if Tenant cures the default within five (5) days after
         written notice of the existence of the default), Tenant shall deliver
         to Landlord and Landlord shall have actually received a written notice
         of the exercise of the Extension Option (the "Extension Notice") at
         least one hundred eighty (180) days and not more than two hundred
         seventy (270) days before the expiration of the then-existing Term
         (the "Exercise Period"). Time is of the essence in Landlord's receipt
         of the Extension Notice during the Exercise Period. If the Extension
         Notice is not actually received by Landlord within the Exercise Period,
         all rights to extend the Term under this Rider shall automatically
         expire.

                  b. NOTICES. The provisions of paragraph 23 of the Lease
         (Notices) shall apply to this Rider; provided, however, the Extension
         Notice shall not be considered received by Landlord unless it is
         actually received by Landlord within the Exercise Period.

                  c. TERMS AND CONDITIONS. All of the terms and conditions of
         the Lease except where specifically modified by this Rider shall
         apply during the Option Period.

                  d. BASE RENT. The Base Rent payable during the Option Period
         shall be the Market Rate on the date the Option Period commences.

                  e. MARKET RATE. The term "Market Rate" shall mean the annual
         amount per rentable square foot that a willing, renewal tenant would
         pay and a willing landlord of a building similar to the Building in the
         downtown area of the City of Long Beach, California would accept at
         arm's length for similar space, giving appropriate consideration to the
         following matters: (i) annual prevailing rental rates per rentable
         square foot; (ii) the type of escalation clauses (including, but
         without limitation operating expense, real estate taxes, and CPI) and
         whether determined on a "net lease" basis or increases over a
         particular base year or base dollar amount; (iii) rent abatement
         provisions reflecting free rent and/or no rent during the lease term;
         (iv) length of lease term; (v) size and location of premises being
         leased; (vi) the quality, condition, and floor plan of the Premises
         and the tenant improvements contained in the Premises; (vii) any
         brokers' commissions payable in connection with Tenant's exercise of
         this Extension Option; and (viii) other generally applicable terms and
         conditions of tenancy for similar space; provided, however, Tenant
         shall not be entitled to any

                                      -1-
<PAGE>

     tenant improvement or refurbishment allowance. The Market Rate may also
     designate periodic rental increases, a new Expense Base Year and/or Tax
     Base Year and similar economic adjustments. The Market Rate shall be
     the Market Rate in effect as of the beginning of the Option Period,
     even though the determination may be made in advance of that date, and
     the parties may use recent trends in rental rates in determining the
     proper Market Rate as of the beginning of the Option Period. In no
     event shall the beginning Base Rent in the Option Period be less than
     the existing Base Rent during the last month of the initial Term.

          f. DETERMINATION OF MARKET RATE. If Tenant duly exercises the
     Extension Option, Landlord shall determine the Market Rate by using
     its good faith judgment, and Landlord shall provide Tenant with
     written notice of such amount within fifteen (15) days ("Tenant's
     Review Period") after receipt of Landlord's notice of the new Base Rent
     within which to accept such Base Rent. If Tenant fails to accept in
     writing such rental proposal by Landlord, then such proposal shall be
     deemed rejected, and Landlord and Tenant shall attempt to agree upon
     such Market Rate, using their best good faith efforts. If Landlord and
     Tenant fail to reach agreement within fifteen (15) days following
     Tenant's Review Period ("Outside Agreement Date"), then each party
     shall place in a separate sealed envelope their final proposal as to
     the Market Rate, and such determination shall be submitted to
     arbitration in accordance with subsections (i) through (v) below. In
     the event that Landlord fails to timely generate the initial notice of
     Landlord's opinion of the Market Rate, then Tenant may commence such
     negotiations by providing the initial notice, in which event Landlord
     shall have fifteen (15) days ("Landlord's Review Period") after receipt
     of Tenant's notice of the new Base Rent within which to accept each
     Base Rent proposed by Tenant, then such proposal shall be deemed
     rejected, and Landlord and Tenant shall attempt in good faith to
     agree upon the Market Rate, using their best good faith efforts. If
     Landlord and Tenant fail to reach agreement within fifteen (15)
     days following Landlord's Review Period (which shall be, in such event,
     the "Outside Agreement Date" in lieu of the above definition of such
     date), then each proposal as to Market Rate, and such determination
     shall be submitted to arbitration in accordance with subsections (i)
     through (v) below:

                  (i) Landlord and Tenant shall meet with each other within
               five (5) business days after the Outside Agreement Date and
               exchange their sealed envelopes and then open such envelopes in
               each other's presence. If Landlord and Tenant do not mutually
               agree upon the Market Rate within one (1) business day of the
               exchange and opening of the envelopes, then, within ten (10)
               business days of the exchange and opening of envelopes,
               Landlord and Tenant shall agree upon and jointly appoint a
               single arbitrator who shall have been active over the
               immediately preceding five (5) year period ending on the date
               of such appointment in the leasing of commercial office
               buildings similar to the building in the City of Long Beach,
               CA. Neither Landlord nor Tenant shall consult with such broker
               or agent as to his or her opinion as to the Market Rate prior
               to the appointment. The determination of the arbitrator shall
               be limited solely to the issue of whether Landlord's or
               Tenant's submitted Market Rate for the Premises is the closest
               to the actual Market Rate for the Premises as determined by the
               arbitrator, taking into account the requirements for
               determining Market Rate set forth herein. Such arbitrator may
               hold such hearings and require such briefs as the arbitrator,
               in his or her sole discretion, determines is necessary. In
               addition, Landlord or Tenant may submit to the arbitrator with
               a copy to the other party within five (5) business days after
               the appointment of the arbitrator, with a concurrent copy to
               the other party, any market data and additional information
               such party deems relevant to the determination of the market
               rate ("RR Data"), and the other party may submit a reply in

                                      -2-

<PAGE>

               writing within five (5) business days after receipt of such RR
               Data.

                  (ii) The arbitrator shall, within thirty (30) days of his or
               her appointment, reach a decision as to whether the parties shall
               use Landlord's or Tenant's submitted Market Rate and shall notify
               Landlord and Tenant of such determination.

                  (iii) The decision of the arbitrator shall be final and
               binding upon Landlord and Tenant.

                  (iv) If Landlord and Tenant fail to agree upon and appoint
               an arbitrator, then the appointment of the arbitrator shall be
               made by the presiding judge of the Los Angeles County Superior
               Court, or, if he or she refuses to act, by any judge having
               jurisdiction over the parties.

                  (v) The cost of the arbitration shall be paid by Landlord
               and Tenant equally.

          g. HOLDOVER. If Tenant, for any reason whatsoever, fails to exercise
     the Extension Option strictly in accordance with this Rider, then all
     rights under this Rider shall terminate and Lease paragraph 26 (Holding
     Over) shall be applicable to the Base Rent. If Tenant has duly exercised
     the Extension Option but the initial Term expires before completion of the
     determination of the Market Rate, Tenant shall pay Base Rent based on the
     Base Rent as forth in Lease paragraphs 1.6 and 4. Upon agreement between
     Tenant and Landlord, whether by mutual agreement or by decision of the
     arbitrator any increase in Base Rent shall be effective retroactively to
     the commencement of the Option Period, with any incremental Base Rent due
     and payable immediately with and in addition to the next due Base Rent
     payment, if Tenant has under-paid Base Rent. If Tenant has over-paid Base
     Rent based on Lease paragraph 1.6 and 4 while the Market Rate is being
     determined, then Tenant may deduct the overpayment from the Base Rent
     payment(s) next due.

          h. OPTIONS PERSONAL. The Extension Option is personal to the original
     tenant and may be exercised only by the original tenant while occupying the
     entire Premises and may not be exercised or be assigned, voluntarily or
     involuntarily, by or to any person or entity other than Tenant, including,
     without limitation, any permitted Transferee as pursuant to paragraph 12 of
     the Lease. The Extension Option is not assignable separate and apart from
     the Lease nor may any Extension Option be separated from the Lease in any
     manner, either by reservation or otherwise. If at any time the Lease is
     assigned or a sublease exists as to any portion of the Premises, all
     remaining Extension Options shall be irrevocably deemed null and void, and
     neither Tenant nor any assignee or subtenant shall have the right to
     exercise any Extension Option under this Rider.

          i. COMMISSIONS. No real estate broker's commissions, finder's fees, or
     other commission or fee shall be payable to any party by Landlord or Tenant
     should Tenant exercise any Extension Option unless Landlord hereafter
     agrees in its sole, subjective discretion, in a separate writing executed
     by Landlord, that it is in Landlord's best interests to, and that it will,
     pay a broker's commission in connection with the exercise of the Extension
     Option.

                                       -3-

<PAGE>

                               LEASE RIDER NO. 2

                           RIGHT OF FIRST NOTICE TO
                            LEASE EXPANSION SPACE

      This Rider is attached to and made a part of that certain Lease (the
"Lease"), dated March 5, 1998, between John Hancock Mutual Life Insurance
Company, a Massachusetts corporation ("Landlord"),, and Obagi Medical
Products, Inc., a California corporation ("Tenant") for the premises known as
Suite 120, 310 Golden Shore, Long Beach, California (the "Premises"). Defined
or initially capitalized terms used in this Rider shall have the same meaning
as in the Lease. The provisions of this Rider shall supersede any
inconsistent provisions of the Lease to the extent of the inconsistency.

     Provided Tenant is not then in default under the Lease (in which event
Tenant shall have no rights under this Rider, provided that in the case of a
non-monetary default Tenant shall be deemed to be not in default for purposes
of this Rider if Tenant cures the default within five (5) days after written
notice of the existence of the default), if Landlord decides that upon the
expiration or other termination of any lease between Landlord and a third
party for space on the first (1st) floor of the Building, Landlord will offer
that space for lease to the general public ("Expansion Space"), Landlord
shall first give written notice to Tenant that Landlord intends to offer the
Expansion space for lease to the general public ("Landlord's Notice"). During
the first twelve (12) months of the Term, Landlord's Notice shall state that
Tenant may lease the Expansion Space on the same terms and conditions as are
contained in the Lease except that: (i) the Tenant Improvement Allowance
shall equal $20.00 per square foot of Premises Usable Area contained in the
Additional Space (as determined by Landlord's space accountant) multiplied by
a fraction, the numerator of which is the number of full calendar months
remaining during the initial Term of the Lease on the Expansion Space
Commencement Date (defined below) and the denominator of which is sixty (60),
and (ii) no free rent, moving allowance, or parking concessions, including
free parking and reserved parking, shall apply to the Expansion Space. After
the first twelve (12) months of the Term, Landlord's Notice shall state the
terms and conditions on which Landlord is willing, in its sole discretion, to
Lease the Expansion Space to Tenant, provided that Landlord shall act in good
faith to retain in landlord's Notice as many of the non-economic provisions
of this Lease as possible consistent with the economic provisions (e.g.,
rent, base year, parking concessions, moving allowances, and tenant
improvement allowance) Landlord desires to include in or exclude from
Landlord's Notice. Tenant shall have five (5) business days after Landlord's
Notice is given within which to unconditionally agree to lease all (and not
less than all) of the Expansion Space on all the terms contained in
Landlord's Notice. If Tenant duly exercises its rights under this Rider, the
Expansion Space shall become part of the Premises as of the date on which
Tenant shall first have the right to occupy that Expansion Space ("Expansion
Space Commencement Date"). This Right of First Notice shall apply only during
each six (6) month period after Tenant has given Landlord written notice
requesting that Landlord give Tenant Landlord's Notice in accordance with
this Rider.

     If Tenant fails to duly exercise its rights under this Rider within the
above five-business day period, then all rights of Tenant to lease the
Expansion Space identified in Landlord's Notice under this Rider shall
automatically terminate and Landlord shall thereafter have no further
obligation to notify Tenant of any proposal to lease the Expansion Space.
Landlord shall thereafter have the right to lease the Expansion Space to one
or more third parties on any terms and conditions Landlord negotiates in its
sole discretion, without further obligation to Tenant.

     If Tenant duly exercises this Right of First Notice within the above
five-business day period, then Tenant shall enter into an amendment to the
Lease (i) incorporating the Expansion space into the Lease on the terms and
conditions contained in Landlord's Notice and (ii) adjusting Tenant's Share
and rent accordingly. All other terms and conditions of the Lease (except as

                                     -1-

<PAGE>

specified in the immediately preceding sentence, this Rider, and Lease paragraph
53) shall remain the same and in full effect. If Tenant fails to duly execute
and return the Lease amendment or any revised amendment, or submit reasonable
written objections to the contents of the Lease amendment to Landlord within ten
(10) days after it is delivered to Tenant for signature, this Right of First
Notice and Tenant's acceptance of Landlord's Notice shall automatically be void,
any right accrued under this Right of First Notice shall be of no effect, and
Landlord shall thereafter be free to unconditionally lease the Expansion Space
to one or more third parties as set forth above.

     This Right of First Notice shall not apply to (a) offers from any third
parties to lease the Expansion Space, (b) leases or transfers among entities or
persons related to Landlord (including, but not limited to, partners if Landlord
is a partnership, and shareholders if Landlord is a corporation), (c) any
proposed sale or purchase of the Building, including, without limitation, a
proposed sale-and-leaseback of the Building, and (d) any space in the Building
which is vacant as of the date of the Lease. In addition, this Right of First
Notice is subject and subordinate to all now existing preferential rights to the
Expansion Space granted to other tenants of the Office Building Project.

     This Right of First Notice is personal to Tenant. If Tenant Transfers any
of Tenant's interest in the Lease before the permitted exercise of Tenant's
rights under this Right of First Notice, those rights shall not be transferred
to any transferee but shall instead automatically lapse, and Landlord's
obligations under this Right of First Notice shall automatically terminate. This
Right of First Notice shall automatically expire without notice on the
expiration of the original Term or sooner termination of the Lease for any
reason or upon any Transfer by Tenant of all or any part of the Premises.

                                       -2-<PAGE>

                                                                 EXHIBIT 10.6

                                     LEASE:

                                625 Alaska Avenue
                           Torrance, California 90503

                                    LANDLORD:

                        Gateway Pacific Properties, Inc.,
                            a California corporation

                                     TENANT:

                          OBAGI Medical Products, Inc.,
                            a California corporation

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                PAGE
<S>                                                                    <C>
      REFERENCE PAGE...............................................     II
1     USE AND RESTRICTIONS ON USE..................................      1
2     TERM.........................................................      1
3     RENT.........................................................      2
4     TAXES........................................................      2
5     SECURITY DEPOSIT.............................................      3
6     ALTERATIONS..................................................      3
7     REPAIR.......................................................      3
8     LIENS........................................................      4
9     ASSIGNMENT AND SUBLETTING....................................      4
10    INDEMNIFICATION..............................................      6
11    INSURANCE....................................................      6
12    WAIVER OF SUBROGATION........................................      6
13    SERVICES AND UTILITIES.......................................      6
14    HOLDING OVER.................................................      7
15    SUBORDINATION................................................      7
16    REENTRY BY LANDLORD..........................................      7
17    DEFAULT......................................................      7
18    REMEDIES.....................................................      8
19    TENANT'S BANKRUPTCY OR INSOLVENCY............................      9
20    QUIET ENJOYMENT..............................................     10
21    DAMAGE BY FIRE, ETC..........................................     10
22    EMINENT DOMAIN...............................................     11
23    SALE BY LANDLORD.............................................     12
24    ESTOPPEL CERTIFICATE.........................................     12
25    SURRENDER OF PREMISES........................................     12
26    NOTICES......................................................     13
27    TAXES PAYABLE BY TENANT......................................     13
28    DEFINED TERMS AND HEADINGS...................................     13
29    TENANT'S AUTHORITY...........................................     13
30    COMMISSIONS..................................................     13
31    TIME AND APPLICABLE LAW......................................     14
32    SUCCESSORS AND ASSIGNS.......................................     14
33    ENTIRE AGREEMENT.............................................     14
34    EXAMINATION NOT OPTION.......................................     14
35    RECORDATION..................................................     14
36    AUTHORIZATION OF FINANCIAL INFORMATION.......................     14
37    LANDLORD'S CONSENT...........................................     14
38    TENANT'S PROPORTIONATE SHARE.................................     15
39    SCHEDULE OF RENTS............................................     15
40    LIMITATION OF LANDLORD'S LIABILITY...........................     15
</TABLE>

      ADDENDUM 1
      EXHIBIT A-PREMISES
      EXHIBIT B-INITIAL ALTERATIONS
      EXHIBIT C-RULES AND REGULATIONS
      EXHIBIT D-SIGN SPECIFICATIONS
      EXHIBIT E-HAZARDOUS WASTE MATERIALS (RIDER)
      EXHIBIT F-CONTINUING LEASE GUARANTEE (CORPORATE)

<PAGE>
                       SINGLE TENANT NET INDUSTRIAL LEASE
                                 REFERENCE PAGE
<TABLE>

<S>                                <C>
BUILDING:                          625 Alaska Avenue, Torrance, CA 90503

LANDLORD:                          Gateway Pacific Properties, Inc., a California corporation

LANDLORD'S ADDRESS:                1630 South Sunkist Street, Suite A, Anaheim, CA 92806

TENANT:                            OBAGI Medical Products, Inc., a California corporation

TENANT'S ADDRESS:                  625 Alaska Avenue, Torrance, CA 90503

LEASE REFERENCE DATE:              June 30, 1999

PREMISES:                          625 Alaska Avenue, Torrance, CA (See Exhibit "A" for outline of Premises,
                                   attached hereto and incorporated herein by refrence).

PREMISES RENTABLE AREA:            approximately 65,519 square feet

USE:                               Light manufacturing for parts and supply of artificial limbs
                                   and orthopedic equipment.

SCHEDULED COMMENCEMENT DATE:       January 1, 2000

TERMINATION DATE:                  December 31, 2004

TERM OF LEASE:                     Five (5) years beginning on the Commencement Date and ending on the
                                   Termination Date (unless sooner terminated pursuant to this Lease.)

INITIAL ANNUAL BASE RENT
(Article 3):                       $472,732.00 (See also Article 39, "SCHEDULE OF RENTS.")

INITIAL MONTHLY INSTALLMENT OF
ANNUAL RENT (Article 3):           $39,311.00 (See also Article 39, "SCHEDULE OF RENTS.")

TENANT'S PROPORTIONATE SHARE:       CAM Project: 100.00%, Taxes: 100.00% Insurance: 100.00%
(Article 38)
REAL ESTATE BROKER DUE COMMISSION: Not applicable.

SECURITY DEPOSIT:                  $48,288.00 (See also Article , "SECURITY DEPOSIT")

ASSIGNMENT/SUBLETTING FEE:         $500.00

CORPORATE GUARANTOR:               Mandarin Partners, LLC, a Delaware limited liability company
</TABLE>

The Reference Page information is incorporated into and made part of the Lease.
In the event of any conflict between any Reference Page information and this
Lease, this Lease shall control. The Lease includes Addendum 1 and Exhibits "A"
through "F", all of which are made a part hereof.

LANDLORD: Gateway Pacific Properties, Inc. TENANT: OBAGI Medical Products, Inc.,
          a California corporation                 a California corporation

BY:       RREEF MANAGEMENT COMPANY,
          a Delaware Corporation           By:   \s\ Phillip J. Rose
                                                 -------------------
                                           Name:  Phillip J. Rose
                                                 -------------------
                                           Title: President and CEO
                                                 -------------------
By:       \s\ Michael Kent                 Dated: 11-15-99
          ----------------                       -------------------
Name:     Michael Kent
Title:    Regional Manager
                                           By:    \s\ Joseph W. Sortais
                                                  ---------------------
Dated:    11/18/99                         Name:  Joseph W. Sortais
          --------                                ---------------------
                                           Title: Vice President and CFO
                                                  ---------------------
Address:  1630 South Sunkist Street,
          Suite A                          Dated: 11/17/99
          Anaheim, CA 92806                       ---------------------
                                         Address: 310 Golden Shore
Telephone:  (714)634-4664                         Long Beach, CA 90802
                                                  ---------------------
Facsimile:  (714) 634-2680                         562-628-1007
                                                  ---------------------

<PAGE>

                                     LEASE

      By this Lease Londlord leases to Tenant and Tenant leases from Landlord
the Building as set forth and described on the Reference Page (the "Premises").
The Reference Page, including all terms defined thereon, is incorporated as
part of this Lease.

1.  USE AND RESTRICTIONS ON USE.

The Premises are to be used solely for the purposes stated on the Reference
Page. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or injure, annoy, or disturb them or
allow the Premises to be used for any improper, immoral, unlawful, or
objectionable purpose. Tenant shall not do, permit or suffer in, on, or about
the Premises the sale of any alcoholic liquor without the written consent of
Landlord first obtained, or the commission of any waste. Tenant shall comply
with all governmental laws, ordinances and regulations applicable to the use
of the Premises and its occupancy and shall promptly comply with all
governmental orders and directions for the correction, prevention and
abatement of any violations in or upon, or in connection with, the Premises,
all at Tenant's sole expense. Tenant shall not do or permit anything to be
done on or about the Premises or bring or keep anything into the Premises
which will in any way increase the rate of, invalidate or prevent the
procuring of any insurance protecting against loss or damage to the Building
or any of its contents by fire or other casualty or against liability for
damage to property or injury to persons in or about the Building or any part
thereof.

      1.1 Tenant shall not, and shall not direct, suffer or permit any of its
agents, contractors, employees, licensees or invitees to at any time handle,
use, manufacture, store or dispose of in or about the Premises or the
Building any (collectively "Hazardous Materials") flammables, explosives,
radioactive materials, hazardous wastes or materials, toxic wastes or
materials, or other similar substances, petroleum products or derivatives or
any substance subject to regualtion by or under any federal, state and local
laws and ordinances relating to the protection of the environment or the
keeping, use or disposition of environmentally hazardous materials,
substances, or wastes, presently in effect or hereafter adopted, all
amendments to any of them, and all rules and regulations issued pursuant to
any of such laws or ordinances (collectively "Environmental Laws"), nor shall
Tenant suffer or permit any Hazardous Materials to be used in any manner not
fully in compliance with all Environmental Laws, in the Premises or the
Building and appurtenant land or allow the environment to become contaminated
with any Hazardous Materials. Notwithstanding the foregoing, and subject to
Landlord's prior consent, Tenant may handle, store, use or dispose of
products containing small quantities of Hazardous Materials (such as aerosol
cans containing insecticides, toner for copiers, paints, paint remover and
the like) to the extent customary and necessary for the use of the Premises
for general office purposes; provided that Tenant shall always handle, store,
use, and dispose of any such Hazardous Materials in a safe and lawful manner
and never allow such Hazardous Materials to contaminate the Premises,
Building and appurtenant land or the environment. Tenant shall protect,
defend, indemnify and hold each and all of the Landlord Entities (as defined
in Article 28) harmless from and against any and all loss, claims, liability
or costs (including court costs and attorney's fees) incurred by reason of
any actual or asserted failure of Tenant to fully comply with all applicable
Environmental Laws, or the presence, handling, use or disposition in or from
the Premises of any Hazardous Materials (even though permissible under all
applicable Environmental Laws or the provisions of this Lease), or by reason
of any actual or asserted failure of Tenant to keep, observe, or perform any
provision of this Section 1.1 except Tenant shall have no obligation or
liability of Hazardous Materials caused by Landlord or third parties other
than Tenant's agents, contractors, or invitees.

2.  TERM.

      2.1 The Term of this Lease shall begin on the date ("Commencement
Date") which shall be the later of the Scheduled Commencement Date as shown on
the Reference Page and the date that Landlord shall tender possession of the
Premises to Tenant. Landlord shall tender possession of the Premises with all
the work, if any, to be performed by Landlord pursuant to Exhibit B to this
Lease substantially completed. Tenant shall deliver a punch list of items not
completed within 30 days after Landlord tenders possession of the Premises
and Landlord agrees to proceed with due diligence to perform its obligations
regarding such items. Landlord and Tenant shall execute a memorandum setting
forth the actual Commencement Date and Termination Date.

            2.1.1 Tenant agrees that in the event of the inability of Landlord
to deliver possession of the Premises on the Scheduled Commencement Date,
Landlord shall not be liable for any damage resulting from such inability, but
Tenant shall not be leable for any rent until the time when Landlord can, after
notice to Tenant, deliver possession of the Premises to Tenant. No such failure
to give possession on the Scheduled Commencement Date shall affect the other
obligations of Tenant under this Lease, except that if Landlord is unable to
deliver possession of the Premises within one hundred twenty (120) days of the
Scheduled Commencement Date (other than as a result of strikes, shortages of
materials, or similar matters beyond the reasonable control of Landlord and
Tenant is notified by Landlord in writing as to such delay), Tenant shall have
the option to terminate this Lease unless said delay is as a result of: (a)
Tenant's failure to agree to plans and specifications; (b) Tenant's request for
materials, finishes or installations other than Landlord's standard except
those, if any, that Landlord shall have expressly

                                       1
<PAGE>

agreed to furnish without extension of time agreed by Landlord; (c) Tenant's
change in any plans or specifications; or, (d) performance or completion by a
party employed by Tenant. If any delay is the result of any of the foregoing,
the Commencement Date and the payment of rent under this Lease shall be
accelerated by the number of days of such delay.

      2.2 In the event Landlord shall permit Tenant to occupy the Premises prior
to the Commencement Date, such occupancy shall be subject to all the provisions
of this Lease. Said early possession shall not advance the Termination Date.

3.  RENT.

      3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from time
to time by paying the Monthly Installment of Rent then in effect on or before
the first day of each full calendar month during the Term, except that the first
month's rent shall be paid upon the execution of this Lease. The Monthly
Installment of Rent in effect at any time shall be one-twelfth of the Annual
Rent in effect at such time. Rent for any period during the Term which is less
than a full month shall be a prorated portion of the Monthly Installment of Rent
based upon a thirty (30) day month. Said rent shall be paid to Landlord, without
deduction or offset and without notice or demand, at the Landlord's address, as
set forth on the Reference Page, or to such other person or at such other place
as Landlord may from time to time designate in writing.

      3.2 Tenant recognizes that late payment of any rent or other sum
due under this Lease will result in administrative expense to Landlord, the
extent of which additional expense is extremely difficult and economically
impractical to ascertain. Tenant therefore agrees that if rent or any other
sum is not paid within five (5) days, when due and payable pursuant to this
Lease, a late charge shall be imposed in an amount equal to the greater of:
(a) Fifty Dollars ($50.00), or (b) a sum equal to five percent (5%) per month
of the unpaid rent or other payment. The amount of the late charge to be paid
by Tenant shall be reassessed and added to Tenant's obligation for each
successive monthly period until paid. The provisions of this Section 3.2 in
no way relieve Tenant of the obligation to pay rent or other payments on or
before the date on which they are due, nor do the terms of this Section 3.2
in any way affect Landlord's remedies pursuant to Article 18 in the event
said rent or other payment is unpaid after date due.

4.  TAXES.

      4.1 Tenant shall pay as additional rent all Taxes incurred on the Building
during the Term. Taxes shall be defined as real estate taxes and any other
taxes, charges and assessments which are levied with respect to the Building or
the land appurtenant to the Building, or with respect to any improvements,
fixtures and equipment or other property of Landlord, real or personal, located
in the Building and used in connection with the operation of the Building and
said land, any payments to any ground lessor in reimbursement of tax payments
made by such lessor; and all fees, expenses and costs incurred by Landlord in
investigating, protesting, contesting or in any way seeking to reduce or avoid
increase in any assessments, levies or the tax rate pertaining to any Taxes to
be paid by Landlord in any Lease Year. Taxes shall not include any corporate
franchise, or estate, inheritance or net income tax, or tax imposed upon any
transfer by Landlord of its interest in this Lease or the Building.

      4.2 Prior to the actual determination thereof, Landlord may from time to
time reasonably estimate Tenant's liability for Taxes under Section 4.1, Article
6 and Article 27 for the lease year or portion thereof. Landlord will give
Tenant written notification of the amount of such estimate and Tenant agrees
that it will pay, by increase of its Monthly Installments of Rent due in such
lease year, additional rent in the amount of such estimate. Any such increased
rate of Monthly Installments of Rent pursuant to this Section 4.2 shall remain
in effect until further written notification to Tenant pursuant hereto.

      4.3 When the above mentioned actual determination of Tenant's liability
for Taxes is made in any lease year and when Tenant is so notified in writing,
then:

          4.3.1 If the total additional rent Tenant actually paid pursuant to
Section 4.2 is more than Tenant's liability for Taxes, then Landlord shall
credit the difference against the then next due payments to be made by Tenant
under this Article 4.

      4.4 If the Commencement Date is other than January 1 or if the Termination
Date is other than December 31, Tenant's liability for Taxes for the year in
which said Date occurs shall be prorated based upon a three hundred sixty-five
(365) day year.

      4.5 Even though the Term has expired and Tenant has vacated the premises,
when the final determination is made of Tenant's liability for Taxes for the
year in which the Lease terminated, Tenant shall pay any difference due over the
estimated Taxes paid; and conversely any overpayment, less any amounts due
Landlord under this Lease, shall be rebated to Tenant.

                                        2

<PAGE>
5.  SECURITY DEPOSIT.

Tenant shall deposit the Security Deposit with Landlord upon the execution of
this Lease. Said sum shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants and conditions of this
Lease to be kept and performed by Tenant and not as an advance rental deposit
or as a measure of Landlord's damage in case of Tenant's default. If Tenant
defaults with respect to any provision of this Lease, Landlord may use any
part of the Security Deposit for the payment of any rent or any other sum in
default, or for the payment of any amount which Landlord may spend or become
obligated to spend by reason of Tenant's default, or to compensate Landlord
for any other loss or damage which Landlord may suffer by reason of Tenant's
default. If any portion is so used, Tenant shall within five (5) days after
written demand therefor, deposit with Landlord an amount sufficient to
restore the Security Deposit to its original amount and Tenant's failure to
do so shall be a material breach of this Lease. Except to such extent, if
any, as shall be required by law, Landlord shall not be required to keep the
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such deposit. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the Security
Deposit or any balance thereof shall be returned to Tenant within sixty (60)
days after termination of this Lease and all of Tenant's obligations under
this Lease have been fulfilled.

6.  ALTERATIONS.

      6.1 Except for those, if any, specifically provided for in Exhibit B to
this Lease, or nonstructural, nonbuilding systems alterations of less than
$10,000.00 provided Tenant gives Landlord twenty (20) days' Notice before
commencement of any work, Tenant shall not make or suffer to be made any
alterations, additions, or improvements, including, but not limited to, the
attachment of any fixtures or equipment in, on, or to the Premises or any part
thereof or the making of any improvements as required by Article 7, without the
prior written consent of Landlord. When applying for such consent, Tenant shall,
if requested by Landlord, furnish complete plans and specifications for such
alterations, additions and improvements.

      6.2 In the event Landlord consents to the making of any such alteration,
addition or improvement by Tenant, the same shall be made using Landlord's
contractor (unless Landlord agrees otherwise) at Tenant's sole cost and expense.
If Tenant shall employ any Contractor other than Landlord's Contractor and such
other Contractor or any Subcontractor of such other Contractor shall employ any
non-union labor or supplier, Tenant shall be responsible for and hold Landlord
harmless from any and all delays, damages and extra costs suffered by Landlord
as a result of any dispute with any labor unions concerning the wage, hours,
terms or conditions of the employment of any such labor. In any event Landlord
may charge Tenant a reasonable charge to cover its overhead as it relates to
such proposed work.

      6.3 All alterations, additions or improvements proposed by Tenant shall
be constructed in accordance with all government laws, ordinances, rules and
regulations and Tenant shall, prior to construction, provide the additional
insurance required under Article 11 in such case, and also all such assurances
to Landlord, including but not limited to, waivers of lien, surety company
performance bonds and personal guaranties of individuals of substance as
Landlord shall require to assure payment of the costs thereof and to protect
Landlord and the Building and appurtenant land against any loss from any
mechanic's, materialmen's or other liens.

      6.4 All alterations, additions, and improvements in, on, or to the
Premises made or installed by Tenant, including carpeting, shall be and
remain the property of Tenant during the Term but, excepting furniture,
furnishings, movable partitions of less than full height from floor to
ceiling and other trade fixtures, shall become a part of the realty and
belong to Landlord without compensation to Tenant upon expiration or sooner
termination of the Term, at which time title shall pass to Landlord under
this Lease as by a bill of sale, unless Landlord elects otherwise. Upon such
election by Landlord, Tenant shall upon demand by Landlord, at Tenant's sole
cost and expense, forthwith and with all due diligence remove any such
alterations, additions or improvements which are designated by Landlord to be
removed, and Tenant shall forthwith and with all due diligence, at its sole
cost and expense, repair and restore the Premises to their original
condition, reasonable wear and tear and damage by fire or other casualty
excepted. With respect to any alterations, additions, or improvements for
which Landlord's consent is required under this Article, Tenant is not
required to remove such alterations, additions, or improvements upon the
expiration or sooner termination of the Term unless Landlord has notified
Tenant at the time of Landlord's consent that such removal is required.

      6.5 Tenant shall pay in addition to any sums due pursuant to Article 4,
any increase in real estate taxes attributable to any such alteration, addition
or improvement for so long, during the Term, as such increase is ascertainable;
at Landlord's election said sums shall be paid in the same way as sums due under
Article 4.

7.  REPAIR.

      7.1 Landlord shall have no obligation to alter, remodel, improve, repair,
decorate or paint the Premises, except that Landlord shall repair and
maintain the exterior walls and foundation at its sole cost and expense and
shall maintain the roof subject to Tenant's reimbursement and as specified in
Exhibit B if attached to this Lease. By taking possession of the Premises,
Tenant accepts them as being in good order, condition and repair and in the
condition in which Landlord is obligated to deliver them. It is hereby
understood and agreed that no representations respecting the condition of the
Premises or the Building have been made by Landlord to Tenant, except as
specifically set forth in this Lease. Landlord shall not

                                        3
<PAGE>

be liable for any failure to make any repairs or to perform any maintenance
unless such failure shall persist for an unreasonable time after written
notice of the need of such repairs or maintenance is given to Landlord by
Tenant.

      7.2  Tenant shall (except for Landlord's obligations set forth in Section
7.1) at its own cost and expense keep and maintain all parts of the Premises in
good condition, promptly making all necessary repairs and replacements, whether
structural or non-structural, ordinary or extraordinary, with materials and
workmanship of the same character, kind and quality as the original (including,
but not limited to, repair and replacement of all fixtures installed by Tenant,
water heaters serving the Premises, windows, glass and plate glass, doors,
exterior stairs, skylights, any special office entries, interior walls and
finish work, floors and floor coverings, heating and air conditioning systems,
electrical systems and fixtures, sprinkler systems, dock boards, truck doors,
dock bumpers, parking lots, driveways, landscaping, rail tracks serving the
Premises, plumbing work and fixtures, and performance of regular removal of
trash and debris). Tenant as part of its obligations hereunder shall keep the
Premises in a clean and sanitary condition. Tenant will, as far as possible keep
all such parts of the Premises from deterioration due to ordinary wear and from
falling temporarily out of repair, and upon termination of this Lease in any way
Tenant will yield up the Premises to Landlord in good condition and repair, loss
by fire or other casualty excepted (but not excepting any damage to glass).

      7.3  Except as provided in Article 21, there shall be no abatement of rent
and no liability of Landlord by reason of any injury to or interference with
Tenant's business arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises or to
fixtures, appurtenances and equipment in the Building. Tenant's rent shall be
abated only in the event Tenant is denied access to the Premises for in excess
of 25 continuous days as a result of Landlord's repairs, alterations or
improvements.

      7.4  Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
approved by Landlord for servicing all heating and air conditioning systems and
equipment serving the Premises (and a copy thereof shall be furnished to
Landlord). The service contract must include all services suggested by the
equipment manufacturer in the operation/maintenance manual and must become
effective within thirty (30) days of the date Tenant takes possession of the
Premises. Landlord may, upon notice to Tenant, enter into such a
maintenance/service contract on behalf of Tenant, or perform the work and in
either case, charge Tenant the cost thereof along with a reasonable amount for
Landlord's overhead.

      7.5  Tenant hereby waives and releases its right to make repairs at
Landlord's expense under Section 1941 and 1942 of the California Civil Code and
its right to terminate the Lease under Section 1932(1) of the California Civil
Code or under any similar law, statute or ordinance now or hereafter in effect.

8. LIENS.

Tenant shall keep the Premises, the Building and appurtenant land and Tenant's
leasehold interest in the Premises free from any liens arising out of any
services, work or materials performed, furnished, or contracted for by Tenant,
or obligations incurred by Tenant. In the event that Tenant shall not, within
ten (10) days following the imposition of any such lien, either cause the same
to be released of record or provide Landlord with insurance against the same
issued by a major title insurance company or such other protection against the
same as Landlord shall accept, Landlord shall have the right to cause the same
to be released by such means as it shall deem proper, including payment of the
claim giving rise to such lien. All such sums paid by Landlord and all expenses
incurred by it in connection therewith shall be considered additional rent and
shall be payable to it by Tenant on demand. Landlord shall have the right at all
times to post and keep posted on the Premises any notices permitted or required
by law, or that Landlord shall deem proper, for the protection of Landlord, the
Premises, the Building, and any other party having an interest therein, from
mechanics' and materialmen's liens, and Tenant shall give to Landlord at least
five business days' prior notice of commencement of any construction on the
Premises.

9. ASSIGNMENT AND SUBLETTING.

      9.1  Tenant shall not have the right to assign or pledge this Lease or to
sublet the whole or any part of the Premises whether voluntarily or by operation
of law, or permit the use or occupancy of the Premises by anyone other than
Tenant, and shall not make, suffer or permit such assignment, subleasing or
occupancy without the prior written consent of Landlord, and said restrictions
shall be binding upon any and all assignees of the Lease and subtenants of the
Premises. In the event Tenant desires to sublet, or permit such occupancy of,
the Premises, or any portion thereof, or assign this Lease, Tenant shall give
written notice thereof to Landlord at least Forty-five (45) days but no more
than one hundred eighty (180) days prior to the proposed commencement date of
such subletting or assignment, which notice shall set forth the name of the
proposed subtenant or assignee, the relevant terms of any sublease or assignment
and copies of financial reports and other relevant financial reports and other
relevant financial information of the proposed subtenant or assignee. Tenant
shall have the right to assign this Lease or sublet a portion of the Premises
without Landlord's consent (and without being subject to Landlord's right to
recapture) to any subsidiary or parent corporation of Tenant, to United States
Manufacturing Company, LLC or Polar Vision, provided Mandarin Partners, LLC,
owns in excess of fifty percent (50%) of the voting securities, or to any other
company in which Mandarin Partners, LLC owns in excess of fifty percent (50%) of
voting securities.

      9.2  Notwithstanding any assignment or subletting, permitted or otherwise,
Tenant shall at all times remain directly, primarily and fully responsible and
liable for the payment of the rent specified in this Lease and for com-

                                        4

<PAGE>

pliance with all of its other obligations under the terms, provisions and
covenants of this Lease. Upon the occurrence of an Event of Default, if the
Premises or any part of them are then assigned or sublet, Landlord, in addition
to any other remedies provided in this Lease or provided by law, may, at its
option, collect directly from such assignee or subtenant all rents due and
becoming due to Tenant under such assignment or sublease and apply such rent
against any sums due to Landlord from Tenant under this Lease, and no such
collection shall be construed to constitute a novation or release of Tenant from
the further performance of Tenant's obligations under this Lease.

      9.3  In addition to Landlord's right to approve of any subtenant or
assignee, Landlord shall have the option, in its sole discretion, in the event
of any proposed subletting or assignment, to terminate this Lease, or in the
case of a proposed subletting of less than the entire Premises, to recapture the
portion of the Premises to be sublet, as of the date the subletting or
assignment is to be effective. The option shall be exercised, if at all, by
Landlord giving Tenant written notice given by Landlord to Tenant within sixty
(60) days following Landlord's receipt of Tenant's written notice as required
above. If this Lease shall be terminated with respect to the entire Premises
pursuant to this Section, the Term of this Lease shall end on the date stated in
Tenant's notice as the effective date of the sublease or assignment as if that
date had been originally fixed in this Lease for the expiration of the Term. If
Landlord recaptures under this Section only a portion of the Premises, the rent
to be paid from time to time during the unexpired Term shall abate
proportionately based on the proportion by which the approximate square footage
of the remaining portion of the Premises shall be less than that of the Premises
as of the date immediately prior to such recapture. Tenant shall, at Tenant's
own cost and expense, discharge in full any outstanding commission obligation on
the part of Landlord with respect to this Lease, and any commissions which may
be due and owing as a result of any proposed assignment or subletting, whether
or not the Premises are recaptured pursuant to this Section 9.3 and rented by
Landlord to the proposed tenant or any other tenant.

      9.4  In the event that Tenant sells, sublets, assigns or transfers this
Lease, Tenant shall pay to Landlord as additional rent an amount equal to
Seventy-five percent (75%) of any Increased Rent (as defined below) when and as
such Increased Rent is received by Tenant. As used in this Section, "Increased
Rent" shall mean the excess of (i) all rent and other consideration which Tenant
is entitled to receive by reason of any sale, sublease, assignment or other
transfer of this Lease, over (ii) the rent otherwise payable by Tenant under
this Lease at such time and any commission payable by Tenant to a licensed real
estate broker as a result of the assignment or sublease. For purposes of the
foregoing, any consideration received by Tenant in form other than cash shall be
valued at its fair market value as determined by Landlord in good faith.

      9.5  Notwithstanding any other provision hereof, Tenant shall have no
right to make (and Landlord shall have the absolute right to refuse consent to)
any assignment of this Lease or sublease of any portion of the Premises if at
the time of either Tenant's notice of the proposed assignment or sublease or the
proposed commencement date thereof, there shall exist any uncured default of
Tenant or matter which will become a default of Tenant with passage of time
unless cured; of if the proposed assignee or sublessee is an entity: (a) with
which Landlord is already in negotiation as evidenced by the issuance of a
written proposal; (b) is already an occupant of the Building unless Landlord is
unable to provide the amount of space required by such occupant; (c) is a
governmental agency; (d) is incompatible with the character of occupancy of the
Building; or (e) would subject the Premises to a use which would: (i) involve
increased personnel or wear upon the Building; (ii) violate any exclusive right
granted to another tenant of the Building; (iii) require any addition to or
modification of the Premises or the Building in order to comply with building
code or other governmental requirements; or, (iv) involves a violation of
Section 1.2. Tenant expressly agrees that Landlord shall have the absolute right
to refuse consent to any such assignment or sublease and that for the purposes
of any statutory or other requirement of reasonableness on the part of Landlord
such refusal shall be reasonable.

      9.6  Upon any request to assign or sublet, Tenant will pay to Landlord the
Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord's
costs, including attorney's fees, incurred in investigating and considering any
proposed or purported assignment or pledge of this Lease or sublease of any of
the Premises (which shall not exceed $1,000.00) regardless of whether Landlord
shall consent to, refuse consent, or determine that Landlord's consent is not
required for, such assignment, pledge or sublease. Any purported sale,
assignment, mortgage, transfer of this Lease or subletting which does not comply
with the provisions of this Article 9 shall be void.

      9.7  If Tenant is a corporation, partnership or trust, any transfer or
transfers of or change or changes within any twelve month period in Fifty
percent (50%) of the outstanding voting shares of the corporation, the
general partnership interests in the partnership or the identity of the
persons or entities controlling the activities of such partnership or trust
resulting in the persons or entities owning or controlling a majority of such
shares, partnership interests or activities of such partnership or trust at
the beginning of such period no longer having such ownership or control shall
be regarded as equivalent to an assignment of this Lease to the persons or
entities acquiring such ownership or control and shall be subject to all the
provisions of this Article 9 to the same extent and for all intents and
purposes as though such as assignment.

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<PAGE>

10. INDEMNIFICATION.

None of the Landlord Entities shall be liable and Tenant hereby waives all
claims against them for any damage to any property or any injury to any
person in or about the Premises by or from any cause whatsoever (including
without limiting the foregoing, rain or water leakage of any character from
the roof, windows, walls, basement, pipes, plumbing works or appliances, the
Premises not being in good condition or repair, gas, fire, oil, electricity
or theft), except to the extent caused by or arising from the gross
negligence or willful misconduct of Landlord or its agents, employees or
contractors. Tenant shall protect, indemnify and hold the Landlord Entities
harmless from and against any and all loss, claims, liability or costs
(including court costs and attorney's fees) incurred by reason of (a) any
damage to any property (including but not limited to property of any Landlord
Entity) or any injury (including but not limited to death) to any person
occurring in, on or about the Premises to the extent that such injury or
damage shall be caused by or arise from any actual or alleged act, neglect,
fault, or omission by or of Tenant, its agents, servants, employees,
invitees, or visitors to meet any standards imposed by any duty with
respect to the injury or damage; (b) the conduct or management of any work or
thing whatsoever done by the Tenant in or about the Premises or from
transactions of the Tenant concerning the Premises; (c) Tenant's failure to
comply with any and all governmental laws, ordinances and regulations
applicable to the condition or use of the Premises or its occupancy; or (d)
any breach or default on the part of Tenant in the performance or any
covenant or agreement on the part of the Tenant to be performed pursuant to
this Lease. The provisions of this Article shall survive the termination of
this Lease with respect to any claims or liability accruing prior to such
termination.

11. INSURANCE.

        11.1    Tenant shall keep in force throughout the Term: (a) a
Commercial General Liability insurance policy or policies to protect the
Landlord Entities against any liability to the public or to any invitee of
Tenant or a Landlord Entity incidental to the use of or resulting from any
accident occurring in or upon the Premises with a limit of not less than
$1,000,000.00 per occurrence and not less than $2,000,000.00 in the annual
aggregate, or such larger amount as Landlord may prudently require from time
to time, covering bodily injury and property damage liability and $1,000,000
products/completed operations aggregate; (b) Business Auto Liability covering
owned, non-owned and hired vehicles with a limit of not less than $1,000,000
per accident; (c) insurance protecting against liability under Worker's
Compensation Laws with limits at least as required by statute; (d) Employers
Liability with limits of $500,000 each accident, $500,000 disease policy
limit, $500,000 disease-each employee; (e) All Risk or Special Form coverage
protecting Tenant against loss of or damage to Tenant's alterations,
additions, improvements, carpeting, floor coverings, paneling, decorations,
fixtures, inventory and other business personal property situated in or about
the Premises to the full replacement value of the property so insured; and,
(f) Business Interruption Insurance with limit of liability representing
loss of at least approximately six months of income.

        11.2    Each of the aforesaid policies shall (a) be provided at Tenant's
expense; (b) name the Landlord and the building management company, if any, as
additional insureds; (c) be issued by an insurance company with a minimum Best's
rating of "A:VII" during the Term; and (d) provide that said insurance shall not
be cancelled unless thirty (30) days prior written notice (ten days for
non-payment of premium) shall have been given to Landlord; and said policy or
policies or certificates thereof shall be delivered to Landlord by Tenant upon
the Commencement Date and at least thirty (30) days prior to each renewal of
said insurance.

        11.3    Whenever Tenant shall undertake any alterations, additions or
improvements in, to or about the Premises ("Work") the aforesaid insurance
protection must extend to and include injuries to persons and damage to property
arising in connection with such Work, without limitation including liability
under any applicable structural work act, and such other insurance as Landlord
shall require; and the policies of or certificates evidencing such insurance
must be delivered to Landlord prior to the commencement of any such Work.

12. WAIVER OF SUBROGATION.

So long as their respective insurers so permit, Tenant and Landlord hereby
mutually waive their respective rights of recovery against each other for any
loss insured by fire, extended coverage, All Risks or other insurance now or
hereafter existing for the benefit of the respective party but only to the
extent of the net insurance proceeds payable under such policies. Each party
shall obtain any special endorsements required by their insurer to evidence
compliance with the aforementioned waiver.

13. SERVICES AND UTILITIES.

Tenant shall pay for all water, gas, heat, light, power, telephone, sewer,
sprinkler system charges and other utilities and services used on or from the
Premises, including without limitation, the cost of any central station
signaling system installed in the Premises together with any taxes, penalties,
and surcharges or the like pertaining thereto and any maintenance charges for
utilities. Any such charges paid by Landlord and assessed against Tenant shall
be

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<PAGE>

immediately payable to Landlord on demand and shall be additional rent
hereunder. Landlord shall in no event be liable for any interruption or failure
of utility services on or to the Premises.

14. HOLDING OVER.

Tenant shall pay Landlord for each day Tenant retains possession of the Premises
or part of them after termination of this Lease by lapse of time or otherwise at
the rate ("Holdover Rate") which shall be 150% of the greater of: the amount of
the Annual Rent for the last period prior to the date of such termination plus
all Rent Adjustments under Article 4;  If Landlord gives notice to Tenant of
Landlord's election to that effect, such holding over shall constitute renewal
of this Lease for a period from month to month at the Holdover Rate, but if the
Landlord does not so elect, no such renewal shall result notwithstanding
acceptance by Landlord of any sums due hereunder after such termination; and
instead, a tenancy at sufferance at the Holdover Rate shall be deemed to have
been created. In any event, no provision of this Article 14 shall be deemed to
waive Landlord's right of reentry or any other right under this Lease or at law.

15. SUBORDINATION.

Provided Landlord delivers a non-disturbance and subordination agreement in
terms acceptable to Tenant, this Lease shall be subject and subordinate at
all times to ground or underlying leases and to the lien of any mortgages or
deeds of trust now or hereafter placed on, against or affecting the Building,
Landlord's interest or estate in the Building, or any ground or underlying
lease; provided, however, that if the lessor, mortgagee, trustee, or holder
of any such mortgage or deed of trust elects to have Tenant's interest in
this Lease be superior to any such instrument, then, by notice to Tenant,
this Lease shall be deemed superior, whether this Lease was executed before
or after said instrument. Notwithstanding the foregoing, Tenant covenants and
agrees to execute and deliver upon demand such further instruments evidencing
such subordination or superiority of this Lease as may be required by
Landlord.

16. REENTRY BY LANDLORD

      16.1  Landlord reserves and shall at all times have the right to
re-enter the Premises on reasonable notice and at reasonable times except in
an emergency to inspect the same, to show said Premises to prospective
purchasers, mortgagees or tenants, and to alter, improve or repair the
Premises and any portion of the Building, without abatement of rent, and may
for that purpose erect, use and maintain scaffolding, pipes, conduits and
other necessary structures and open any wall, ceiling or floor in and through
the Building and Premises where reasonably required by the character of the
work to be performed, provided entrance to the Premises shall not be blocked
thereby, and further provided that the business of Tenant shall not be
interfered with unreasonably.

      16.2  Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned by any action
of the Landlord authorized by this Article 16.  Tenant agrees to reimburse
Landlord, on demand, as additional rent, for any expenses which Landlord may
incur in thus effecting compliance with Tenant's obligations under this Lease.

       16.3 For each of the aforesaid purposes, Landlord shall at all times
have and retain a key with which to unlock all of the doors in the Premises,
excluding Tenant's vaults and safes or special security areas (designated in
advance), and Landlord shall have the right to use any and all means which
Landlord may deem proper to open said doors in an emergency to obtain entry
to any portion of the Premises. As to any portion to which access can not be
had by means of a key or keys in Landlord's possession, Landlord is
authorized to gain access by such means as Landlord shall elect and the cost
of repairing any damage occurring in doing so shall be borne by Tenant and
paid to Landlord as additional rent upon demand.

17. DEFAULT

      17.1  Except as otherwise provided in Article 19, the following events
shall be deemed to be Events of Default under this Lease:

           17.1.1  Tenant shall fail to pay when due any sum of money
becoming due to be paid to Landlord under this Lease, whether such sum be any
installment of the rent reserved by this Lease, any other amount treated as
additional rent under this Lease, or any other payment or reimbursement to
Landlord required by this Lease, whether or not treated as additional rent
under this Lease, and such failure shall continue for a period of five days
after written notice that such payment was not made when due, but if any such
notice shall be given twice for the twelve

                                       7
<PAGE>

month period commencing with the date of such notice, the failure to pay
within five days after due any additional sum of money becoming due to be
paid to Landlord under this Lease during such period shall be an Event of
Default, without notice.

            17.1.2   Tenant shall fail to comply with any term, provision or
covenant of this Lease which is not provided for in another Section of this
Article and shall not cure such failure within twenty (20) days (forthwith, if
the failure involves a hazardous condition) after written notice of such
failure to Tenant, provided that if more than twenty (20) days are reasonably
required to cure such failure, within such longer period as may reasonably be
required for such cure if Tenant commences such cure within such Twenty (20)
day period and thereafter diligently prosecute such cure to completion.

            17.1.3   Tenant shall fail to vacate the Premises immediately
upon termination of this Lease, by lapse of time or otherwise, or upon
termination of Tenant's right to possession only.

            17.1.4   Tenant shall become insolvent, admit in writing its
inability to pay its debts generally as they become due, file a petition in
bankruptcy or a petition to take advantage of any insolvency statute, make an
assignment for the benefit of creditors, make a transfer in fraud of
creditors, apply for or consent to the appointment of a receiver of itself or
of the whole or any substantial part of its property, or file a petition or
answer seeking reorganization or arrangement under the federal bankruptcy
laws, as now in effect or hereafter amended, or any other applicable law or
statute of the United States or any state thereof.

            17.1.5   A court of competent jurisdiction shall enter an order,
judgment or decree adjudicating Tenant bankrupt, or appointing a receiver of
Tenant, or of the whole or any substantial part of its property, without the
consent of Tenant, or approving a petition filed against Tenant seeking
reorganization or arrangement of Tenant under the bankruptcy laws of the
United States, as now in effect or hereafter amended, or any state thereof,
and such order, judgment or decree shall not be vacated or set aside or
stayed within thirty (30) days from the date of entry thereof.

18. REMEDIES.

      18.1   Upon the occurrence of any of such events of default described
in Article 18.1 or elsewhere in this Lease, Landlord shall have the following
rights and remedies in addition to all other rights or remedies available to
Landlord in law or equity:

            18.1.1   The rights and remedies provided by California Civil
Code Section 1951.2, including, but not limited to, the right to terminate
Tenant's right to possession of the Premises and to recover the worth at the
time of award of the amount by which the unpaid rent for the balance of the
Term after the time of award exceeds the amount of rental loss for the same
period that the Tenant proves could be reasonably avoided, as computed
pursuant to subsection (b) of said Section 1951.2;

            18.1.2   The rights and remedies provided by California Civil
Code Section 1951.4, that allows Landlord to continue this Lease in effect
and to enforce all of its rights and remedies under this Lease, including the
right to recover rent as it becomes due, for so long as Landlord does not
terminate Tenant's right to possession; provided, however, if Landlord elects
to exercise its remedies described in this subsection and Landlord does not
terminate this Lease, and if Tenant requests Landlord's consent to an
assignment of this Lease or a sublease of the Premises at such time as
Tenant is in default, Landlord shall not unreasonably withhold its consent to
such assignment or sublease. Acts of maintenance or preservation, efforts to
relet the Premises or the appointment of a receiver upon Landlord's
initiative to protect its interest under this Lease shall not constitute a
termination of Tenant's right to possession;

            18.1.3   The right to terminate this Lease by giving notice to
Tenant in accordance with applicable law;

            18.1.4   The right to enter the Premises and remove therefrom all
persons and property, to store such property in a public warehouse or
elsewhere at the cost of and for the account of Tenant, and to sell such
property and apply the proceeds therefrom pursuant to applicable California
law. Landlord may from time to time sublet the Premises or any part thereof
for such term or terms (which may extend beyond the Term) and at such rent
and such other terms as Landlord in its sole discretion may deem advisable,
with the right to make alterations and repairs to the Premises.  Upon each
such subletting, (i)Tenant shall be immediately liable for payment to
Landlord of, in addition to indebtedness other than rent due hereunder, the
cost of such subletting and such alterations and repairs incurred by Landlord
and the amount, if any, by which the rent for the period of such subletting
(to the extent such period does not exceed the Term) exceeds the amount to be
paid as rent for the Premises for such period, or (ii) at the option of
Landlord, rents received from such subletting shall be applied, first, to
payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of any costs of such subletting and of such
alterations and repairs; third, to payment of rent due and unpaid hereunder;
and the residue, if any, shall be held by Landlord and applied in payment of
future rent as the same become due hereunder.  If Tenant has been credited
with any rent to be received

                                      8
<PAGE>

by such subletting under clause (i) and such rent shall not be promptly paid
to Landlord by the subtenant(s), or if such rentals received from such
subletting under clause (ii) during any month are less than those to be paid
during that month by Tenant hereunder, Tenant shall pay any such deficiency
to Landlord. Such deficiency shall be calculated and paid monthly. No taking
of possession of the Premises by Landlord, shall be construed as an election
on its part to terminate this Lease unless a written notice of such intention
is given to Tenant. Notwithstanding any such subletting without termination,
Landlord may at any time thereafter elect to terminate this Lease for such
previous breach; and

            18.1.5   The right to have a receiver appointed for Tenant upon
application by Landlord, to take possession of the Premises and to apply any
rental collected from the Premises and to exercise all other rights and
remedies granted to Landlord as attorney-in-fact for Tenant pursuant to
subparagraph 18.1.4.

            18.1.6   For purposes of this Article 18: "worth at the time of
award" shall be computed by allowing interest at a per annum rate of ten
percent and rent with respect to each month shall be deemed to be a monthly
rental arrived at by adding (i) one twelfth of the Annual Rent, plus (ii) an
amount equal to the monthly average of all the percentage rental received by
or payable to Landlord during the period that Tenant was conducting Tenant's
business in the Premises in the manner and to the extent required by this
Lease, plus (iii) one twelfth of any items of additional rent paid or payable
by Tenant hereunder during the 12 consecutive month period prior to the month
in which Tenant's default occurs or one twelfth of the annualized amount of
the additional rent paid or payable and the last day of the calendar month
prior to the month in which such default occurs, if such default occurs
during the first 12 calendar months of the Term).

      18.2   If, on account of any breach or default by Tenant in Tenant's
obligations under the terms and conditions of this Lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney
concerning or to enforce or defend any of Landlord's rights or remedies
arising under this Lease, Tenant agrees to pay all Landlord's attorney's
fees so incurred. Tenant expressly waives any right to: (a) trial by jury;
and (b) service of any notice required by any present or future law or
ordinance applicable to landlords or tenants but not required by the terms of
this Lease.

      18.3   Pursuit of any of the foregoing remedies shall not preclude
pursuit of any of the other remedies provided in this Lease or any other
remedies provided by law (all such remedies being cumulative), nor shall
pursuit of any remedy provided in this Lease constitute a forfeiture or
waiver of any rent due to Landlord under this Lease or of any damages
accruing to Landlord by reason of the violation of any of the terms,
provisions and covenants contained in this Lease.

      18.4   No act or thing done by Landlord or its agents during the Term
shall be deemed a termination of this Lease or an acceptance of the surrender
of the Premises, and no agreement to terminate this Lease or accept a
surrender of said Premises shall be valid, unless in writing signed by
Landlord. No waiver by Landlord of any violation or breach of any of the
terms, provisions and covenants contained in this Lease shall be deemed or
construed to constitute a waiver of any other violation or breach of any of
the terms, provisions and covenants contained in this Lease.  Landlord's
acceptance of the payment of rental or other payments after the occurrence of
an Event of Default shall not be construed as a waiver of such Default,
unless Landlord so notifies Tenant in writing. Forbearance by Landlord in
enforcing one or more of the remedies provided in this Lease upon an Event of
Default shall not be deemed or construed to constitute a waiver of such
Default or of Landlord's right to enforce any such remedies with respect to
such Default or any subsequent Default.

     18.5   To secure the payment of all rentals and other sums of money
becoming due from Tenant under this Lease, Landlord shall have and Tenant
grants to Landlord a first lien upon the leasehold interest of Tenant under
this Lease, which lien may be enforced in equity,

19. TENANT'S BANKRUPTCY OR INSOLVENCY.

      19.1   If at any time and for so long as Tenant shall be subjected to
the provisions of the United States Bankruptcy Code or other law of the
United States or any state thereof for the protection of debtors as in effect
at such time (each a "Debtor's Law"):

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<PAGE>

            19.1.1 Tenant, Tenant as debtor-in-possession, and any trustee or
receiver of Tenant's assets (each a "Tenant's Representative") shall have no
greater right to assume or assign this Lease or any interest in this Lease, or
to sublease any of the Premises than accorded to Tenant in Article 9, except to
the extent Landlord shall be required to permit such assumption, assignment or
sublease by the provisions of such Debtor's Law. Without limitation of the
generality of the foregoing, any right of any Tenant's Representative to assume
or assign this Lease or to sublease any of the Premises shall be subject to the
conditions that:

                  19.1.1.1 Such Debtor's Law shall provide to Tenant's
Representative a right of assumption of this Lease which Tenant's Representative
shall have timely exercised and Tenant's Representative shall have fully cured
any default of Tenant under this Lease.

                  19.1.1.2 Tenant's Representative or the proposed assignee,
as the case shall be, shall have deposited with Landlord as security for the
timely payment of rent an amount equal to the larger of: (a) three months' Rent
and other monetary charges accruing under this Lease; and (b) any sum specified
in Article 5; and shall have provided Landlord with adequate other assurance of
the future performance of the obligations of the Tenant under this Lease.
Without limitation, such assurances shall include, at least, in the case of
assumption of this Lease, demonstration to the satisfaction of the Landlord that
Tenant's Representative has and will continue to have sufficient unencumbered
assets after the payment of all secured obligations and administrative expenses
to assure Landlord that Tenant's Representative will have sufficient funds to
fulfill the obligations of Tenant under this Lease; and, in the case of
assignment, submission of current financial statements of the proposed assignee,
audited by an independent certified public accountant, reasonably acceptable to
Landlord and showing a net worth and working capital in amounts determined by
Landlord to be sufficient to assure the future performance by such assignee of
all of the Tenant's obligations under this Lease.

                  19.1.1.3 The assumption or any contemplated assignment of this
Lease or subleasing any part of the Premises, as shall be the case, will not
breach any provision in any other lease, mortgage, financing agreement or other
agreement by which Landlord is bound.

                  19.1.1.4 Landlord shall have, or would have had absent the
Debtor's law, no right under Article 9 to refuse consent to the proposed
assignment or sublease by reason of the identity or nature of the proposed
assignee or sublessee or the proposed use of the Premises concerned.

20. QUIET ENJOYMENT.

Landlord represents and warrants that it has full right and authority to enter
into this Lease and that Tenant, while paying the rental and performing its
other covenants and agreement contained in this Lease, shall peaceably and
quietly have, hold and enjoy the Premises for the Term without hindrance or
molestation from Landlord subject to the terms and provisions of this Lease.
Landlord shall not be liable for any interference or disturbance by other
tenants or third persons, nor shall Tenant be released from any of the
obligations of this Lease because of such interference or disturbance.

21.  DAMAGE BY FIRE, ETC.

      21.1 Landlord shall maintain all insurance policies deemed by Landlord to
be reasonably necessary or desirable and relating in any manner to the
protection, preservation or operation of the Premises, including by not limited
to, standard fire and extended coverage insurance covering the Premises in an
amount not less than ninety percent (90%) of the replacement cost thereof
insuring against the perils of fire and lightning and including extended
coverage, or, at Landlord's option, all risk coverage and, if Landlord so
elects, earthquake, flood and wind coverages and Tenant shall pay, as additional
rent, the cost of such policies upon demand by Landlord. Such insurance shall be
for the sole benefit of Landlord and under its sole control. Tenantcy shall not
take out separate insurance concurrent in form or contributing in the event of
loss with that required to be maintained by Landlord hereunder unless Landlord
is included as a loss payee thereon. Tenant shall immediately notify Landlord
whenever any such separate insurance is taken out and shall promptly deliver to
Landlord the policy or policies of such insurance.

      21.2 In the event the Premises or Building are damaged by fire or other
cause and in Landlord's reasonable estimation such damage can be materially
restored within Two Hundred Thirty (230) days, Landlord shall forthwith repair
the same and this Lease shall remain in full force and effect, except that
Tenant shall be entitled to a proportionate abatement in rent from the date of
such damage. Such abatement of rent shall be made pro rata in accordance with
the extent to which the damage and the making of such repairs shall interfere
with the use and occupancy by Tenant of the Premises from time to time. Within
forty-five (45) days from the date of such damage, Landlord shall notify Tenant,
in writing, of Landlord's reasonable estimation of the length of time within
which materials restoration can be made, and Landlord's determination shall be
binding on Tenant.  For purposes of this

                                       10

<PAGE>

Lease, the Building or Premises shall be deemed "materially restored" if they
are in such condition as would not prevent or materially interfere with Tenant's
use of the Premises for the purpose for which it was being used immediately
before such damage.

      21.3 If such repairs cannot, in Landlord's reasonable estimation be made
within Two Hundred Thirty (230) days, Landlord and Tenant shall each have the
option of giving the other, at any time within sixty (60) days after such
damage, notice terminating this Lease as of the date of such damage. In the
event of the giving of such notice, this Lease shall expire and all interest of
the Tenant in the Premises shall terminate as of the date of such damage as if
such date had been originally fixed in this Lease for the expiration of the
Term. In the event that neither Landlord nor Tenant exercises its option to
terminate this Lease, then Landlord shall repair or restore such damage, this
Lease continuing in full force and effect, and the rent hereunder shall be
proportionately abated as provided in Section 21.2.

      21.4 Landlord shall not be required to repair or replace any damage or
loss by or from fire or other cause to any panelings, decorations,
partitions, additions, railings, ceilings, floor coverings, office fixtures or
any other property or improvements installed on the Premises or belonging to
Tenant. Any insurance which may be carried by Landlord or Tenant against loss
or damage to the Building or Premises shall be for the sole benefit of the
party carrying such insurance and under its sole control.

      21.5 In the event that Landlord should fail to complete such repairs and
material restoration within sixty (60) days after the date estimated by Landlord
therefor as extended by this Section 21.5, Tenant may at its option and as its
sole remedy terminate this Lease by delivering written notice to Landlord,
within fifteen (15) days after the expiration of said period of time, whereupon
the Lease shall end on the date of such notice or such later date fixed in such
notice as if the date of such notice was the date originally fixed in the Lease
for the expiration of the Term; provided, however, that if construction is
delayed because of changes, deletions, or additions in construction requested by
Tenant, strikes, lockouts, casualties, Acts of God, war, material or labor
shortages, government regulation or control or other causes beyond the
reasonable control of Landlord, the period for restoration, repair or rebuilding
shall be extended for the amount of time Landlord is so delayed.

      21.6 Notwithstanding anything to the contrary contained in the Article:
(a) Landlord shall not have any obligation whatsoever to repair, reconstruct, or
restore the Premises when the damages resulting from any casualty covered by the
provisions of this Article 21 occur during the last twelve (12) months of the
Term or any extension thereof, but if Landlord determines not to repair such
damages Landlord shall notify Tenant and if such damages shall render any
material portion of the Premises untenantable Tenant shall have the right to
terminate this Lease by notice to Landlord within fifteen (15) days after
receipt of Landlord's notice; and (b) in the event the holder of any
indebtedness secured by a mortgage or deed of trust covering the Premises or
Building requires that any insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering written
notice of termination to Tenant within fifteen (15) days after such requirement
is made by any such holder, whereupon this Lease shall end on the date of such
damage as if the date of such damage were the date originally fixed in this
Lease for the expiration of the Term.

      21.7 In the event of any damage or destruction to the Building or Premises
by any peril covered by the provision of the Article 21, it shall be Tenant's
responsibility to properly secure the Premises and upon notice from Landlord to
remove forthwith, at its sole cost and expense, such portion of all of the
property belonging to Tenant or its licensees from such portion or all of the
Building or Premises as Landlord shall request.

      21.8 The provisions of this Lease, including this Article, constitute an
express agreement between Landlord and Tenant with respect to any and all damage
to, or destruction of, all or any part of the Premises or the Building and any
statute or regulation of the State of California, including without limitation,
Sections 1932(2) and 1934(4) of the California Civil Code, with respect to any
rights or obligations concerning damage or destruction in the absence of an
express agreement between the parties, and any other statute or regulation, now
or hereafter in effect, shall have no application to the Lease or any damage or
destruction to all or any part of the Premises or the Building.

22.  EMINENT DOMAIN.

If all or any substantial part of the Premises shall be taken or appropriated by
any public or quasi-public authority under the power of eminent domain, or
conveyance in lieu of such appropriation, either party to this Lease shall have
the right, at its option, of giving the other, at any time within thirty (30)
days after such taking, notice terminating this Lease, except that Tenant may
only terminate this Lease by reason of taking or appropriation, if such taking
or appropriation shall be so substantial as to materially interfere with
Tenant's use and occupancy of the Premises. If neither party to this Lease shall
so elect to terminate this Lease, the rental thereafter to be paid shall be
adjusted on a fair and equitable basis under the circumstances. In addition to
the rights of Landlord above, if any substantial part of the Building shall be
taken or appropriated by any public or quasi-public authority under

                                       11
<PAGE>

the power of eminent domain or conveyance in lieu thereof, and regardless of
whether the Premises or any part thereof are so taken or appropriated, Landlord
shall have the right, at its sole option, to terminate this Lease. Landlord
shall be entitled to any and all income, rent, award, or any interest whatsoever
in or upon any such sum, which may be paid or made in connection with any such
public or quasi-public use or purpose, and Tenant hereby assigns to Landlord any
interest it may have in or claim to all or any part of such sums, other than any
separate award which may be made with respect to Tenant's trade fixtures and
moving expenses; Tenant shall made no claim for the value of any unexpired Term.

23.  SALE BY LANDLORD.

In event of a sale or conveyance by Landlord of the Building, the same shall
operate to release Landlord from any future liability upon any of the covenants
or conditions, expressed or implied, contained in this Lease in favor of Tenant,
and in such event Tenant agrees to look solely to the responsibility of the
successor in interest of Landlord in and to this Lease. Except as set forth in
this Article 23, this Lease shall not be affected by any such sale and Tenant
agrees to attorn to the purchaser or assignee. If any security has been given by
Tenant to secure the faithful performance of any of the covenants of this Lease,
Landlord may transfer or deliver said security, as such, to Landlord's successor
in interest and thereupon Landlord shall be discharged from any further
liability with regard to said security.

24.  ESTOPPEL CERTIFICATES.

Within ten (10) days following any written request which Landlord may make from
time to time, Tenant shall execute and deliver to Landlord or mortgagee or
prospective mortgagee a sworn statement certifying: (a) the date of commencement
of this Lease; (b) the fact that this Lease is unmodified and in full force and
effect (or, if there have been modifications to this Lease, that this Lease is
in full force and effect, as modified, and stating the date and nature of such
modifications); (c) the date to which the rent and other sums payable under this
Lease have been paid; (d) the fact that there are no current defaults under this
Lease by either Landlord or Tenant except as specified in Tenant's statement;
and (e) such other matters as may be requested by Landlord. Landlord and Tenant
intend that any statement delivered pursuant to this Article 24 may be relied
upon by any mortgagee, beneficiary or purchaser and Tenant shall be liable for
all loss, cost or expense resulting from the failure of any sale or funding of
any loan caused by any material misstatement contained in such estoppel
certificate. Tenant irrevocably agrees that if Tenant fails to execute and
deliver such certificate within such ten (10) day period Landlord or Landlord's
beneficiary or agent may execute and deliver such certificate on Tenant's
behalf, and that such certificate shall be fully binding on Tenant.

25.  SURRENDER OF PREMISES.

      25.1 Prior to the end of Term of the Lease, Landlord shall arrange to meet
Tenant for a joint inspection of the Premises. In the event of Tenant's failure
to participate in such inspection to be held prior to vacating the Premises,
Landlord's inspection at or after Tenant's vacating the Premises shall be
conclusively deemed correct for purposes of determining Tenant's responsibility
for repairs and restoration.

      25.2 At the end of the Term or any renewal of the Term or other sooner
termination of this Lease, Tenant will peaceably deliver up to Landlord
possession of the Premises, together with all improvements or additions upon or
belonging to the same, by whomsoever made, in the same conditions received or
first installed, broom clean and free of all debris, excepting only ordinary
wear and tear and damage by fire or other casualty. Tenant may, and at
Landlord's request shall, at Tenant's sole cost, remove upon termination of
this Lease, any and all furniture, furnishings, movable partitions of less
than full height from floor to ceiling, trade fixtures and other property
installed by Tenant, title to which shall not be in or pass automatically to
Landlord upon such termination, repairing all damage caused by such removal.
Property not so removed shall, unless requested to be removed, be deemed
abandoned by the Tenant and title to the same shall thereupon pass to Landlord
under this Lease as by a bill of sale. All other alterations, additions and
improvements in, on or to the Premises shall be dealt with and disposed of as
provided in Article 6.

      25.3 All obligations of Tenant under this Lease not fully performed as of
the expiration or earlier termination of the Term shall survive the expiration
or earlier termination of the Term. In the event that Tenant's failure to
perform prevents Landlord from releasing the Premises, Tenant shall continue to
pay rent pursuant to the provisions of Article 14 until such performance is
complete. Upon the expiration or earlier termination of the Term, Tenant shall
pay to Landlord the amount, as reasonably estimated by Landlord, necessary to
repair and restore the Premises, as provided in this Lease and/or to discharge
Tenant's obligation for unpaid amounts due or to become due to Landlord. All
such amounts shall be used and held by Landlord for payment of such obligations
of Tenant, with Tenant being liable for any additional costs upon demand by
Landlord, or with any excess to be returned to Tenant after all such
obligations have been determined and satisfied. Any otherwise unused Security
Deposit shall be credited against the amount payable by Tenant under this
Lease.

                                       12

<PAGE>

26.  NOTICES.

Any notice or document required or permitted to be delivered under this Lease
shall be addressed to the intended recipient, shall be transmitted personally,
by fully prepaid registered or certified United States Mail return receipt
requested, or by reputable independent contract delivery service furnishing a
written record of attempted or actual delivery, and shall be deemed to be
delivered when tendered for delivery to the addressee at its address set forth
on the Reference Page, or at such other address as it has then last specified by
written notice delivered in accordance with this Article 26, or if to Tenant at
either its aforesaid address or its last known registered office or home of a
general partner or individual owner, whether or not actually accepted or
received by the addressee.

27.  TAXES PAYABLE BY TENANT.

In addition to rent and other charges to be paid by Tenant under this Lease,
Tenant shall reimburse to Landlord, upon demand, any and all taxes payable by
Landlord (other than net income taxes) whether or not now customary or within
the contemplation of the parties to this Lease: (a) upon, allocable to, or
measured by or on the gross or net rent payable under this Lease, including
without limitation any gross income tax or excise tax levied by the State, any
political subdivision thereof, or the Federal Government with respect to the
receipt of such rent; (b) upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy of the
Premises or any portion thereof, including any sales, use or service tax imposed
as a result thereof; (c) upon or measured by the Tenant's gross receipts or
payroll or the value of Tenant's equipment, furniture, fixtures and other
personal property of Tenant or leasehold improvements, alterations or additions
located in the Premises; or (d) upon this transaction or any document to which
Tenant is a party creating or transferring any interest of Tenant in this Lease
or the Premises. In addition to the foregoing, Tenant agrees to pay, before
delinquency, any and all taxes levied or assessed against Tenant and which
become payable during the term hereof upon Tenant's equipment, furniture,
fixtures and other personal property of Tenant located in the Premises.

28.  DEFINED TERMS AND HEADINGS.

The Article headings shown in this Lease are for convenience of reference and
shall in no way define, increase, limit or describe the scope or intent of any
provision of this Lease. Any indemnification or insurance of Landlord shall
apply to and inure to the benefit of all the following "Landlord Entities",
being Landlord, Landlord's investment manager, and the trustees, boards of
directors, officers, general partners, beneficiaries, stockholders, employees
and agents of each of them. Any option granted to Landlord shall also include or
be exercisable by Landlord's trustee, beneficiary, agents and employees, as the
case may be. In any case where this Lease is signed by more than one person, the
obligations under the Lease shall be joint and several. The terms "Tenant" and
"Landlord" or any pronoun used in place thereof shall indicate and include the
masculine or feminine, the singular or plural number, individuals, firms or
corporations, and each of their respective successors, executors, administrators
and permitted assigns, according to the context hereof. The term "rentable area"
shall mean the rentable area of the Premises of the Building as calculated by
the Landlord on the basis of the plans and specifications of the Building
including a proportionate share of any common areas. Tenant hereby accepts and
agrees to be bound by the figures for the rentable square footage of the
Premises and Tenant's Proportionate Share shown on the Reference Page.

29.  TENANT'S AUTHORITY.

If Tenant signs as a corporation each of the persons executing this Lease on
behalf of Tenant represents and warrants that Tenant has been and is qualified
to do business in the state in which the Building is located, that the
corporation has full right and authority to enter into this Lease, and that all
persons signing on behalf of the corporation were authorized to do so by
appropriate corporate actions. If Tenant signs as a partnership, trust or other
legal entity, each of the persons executing this Lease on behalf of Tenant
represents and warrants that Tenant has complied with all applicable laws,
rules, and governmental regulations relative to its right to do business in the
state and that such entity on behalf of the Tenant was authorized to do so by
any and all appropriate partnership, trust or other actions. Tenant agrees to
furnish promptly upon request a corporate resolution, proof of due authorization
by partners, or other appropriate documentation evidencing the due
authorization of Tenant to enter into this Lease.

30.  COMMISSIONS.

Each of the parties represents and warrants to the other that it has not dealt
with any broker or finder in connection with this Lease, except as described on
the Reference Page.

                                       13

<PAGE>

31.  TIME AND APPLICABLE LAW.

Time is of the essence of this Lease and all of its provisions.  This Lease
shall in all respects be governed by the laws of the state in which the
Building is located.

32.  SUCCESSORS AND ASSIGNS.

Subject to the provisions of Article 9, the terms, covenants and conditions
contained in this Lease shall be binding upon and inure to the benefit of the
heirs, successors, executors, administrators and assigns of the parties to this
Lease.

33.  ENTIRE AGREEMENTS.

This Lease, together with its exhibits, contains all agreements of the parties
to this Lease and supersedes any previous negotiations.  There have been no
representations made by the Landlord or understandings made between the parties
others than those set forth in this Lease and its exhibits.  This Lease may not
be modified except by a written instrument duly executed by the parties to this
Lease.

34.  EXAMINATION NOT OPTION.

Submission of this Lease shall not be deemed to be a reservation of the
Premises.  Landlord shall not be bound by this Lease until it has received a
copy of this Lease duly executed by Tenant and has delivered to Tenant a copy of
this Lease duly executed by Landlord, and until such delivery Landlord reserves
to right to exhibit and lease the Premises to other prospective tenants.
Notwithstanding anything contained in this Lease to the contrary, Landlord may
withhold delivery of possession of the Premises from Tenant until such time as
Tenant has paid to Landlord any security deposit required by Article 5, the
first month's rent as set forth in Article 3 and any sum owed pursuant to this
Lease.

35.    RECORDATION.

Tenant shall not record or register this Lease or a short form memorandum hereof
without the prior written consent of Landlord, and then shall pay all charges
and taxes incident such recording or registration.

36.  AUTHORIZATION OF FINANCIAL INFORMATION.

Tenant hereby authorizes Landlord to verify past and present business and
employment earning records, bank accounts, stock holdings, and any other asset
balances Landlord deems necessary to verify Tenant's financial and credit
situation. Tenant further authorizes Landlord to order a consumer credit report
and to verify other credit information, including past and present loans,
extensions of credit, and landlord references. This authorization includes the
reverification of any of the information that the Landlord shall be originally
authorized to obtain and verify and such information may by obtained and
verified by Landlord's agents and/or affiliates and any investors and/or
assigns.

37.  LANDLORD'S CONSENT.

Notwithstanding any provision of this Lease, or any present or future statute,
law, rule or ordinance, to the contrary, Landlord and Tenant hereby expressly
agree that if a court of competent jurisdiction determines that Landlord
unreasonably withheld consent to a proposed sublease, assignment or other
transfer by Tenant, then Tenant's sole and exclusive remedy for such breach by
Landlord shall be limited to electing either to (i) consummate such proposed
assignment, sublease or other transfer, subject to the other provisions of this
Lease, of (ii) keep the Lease in full force and effect without consummating such
assignment, sublease or other transfer, and Tenant hereby expressly waives in
all events the right to recover any monetary damages of whatever kind for such
breach. If a court determines that Landlord unreasonably withheld consent to the
proposed transfer, Landlord shall pay Tenant's reasonable attorneys' fees
related to such proceeding; if the court determined that Landlord acted
reasonably in denying such consent, Tenant shall by Landlord's reasonable
attorneys' fees related to such proceeding.

                                       14
<PAGE>

38.  TENANT'S PROPORTIONATE SHARE.

Notwithstanding anything to the contrary, Landlord will maintain and repair the
roof and landscaping subject to Tenant's reimbursement of such cost as part of
the Project Common Area Expense (CAM Project).  Tenant's proportionate share is
defined as follows:  (i) with respect to CAM Project which also includes
insurance, landscaping and water, the percentage obtained by dividing the number
of square feet in the premises (65,519) by the total number of leasable square
feet of the property (65,519), which is 100.00% and (ii) with respect to taxes,
the building is separately parceled and Tenant's share is 100.00%

39.  SCHEDULE OF RENTS.

Rent for the period January 1, 2000 through December 31, 2000 shall be
$39,311.00 per month.
Rent for the period January 1, 2001 through December 31, 2001 shall be
$40,884.00 per month.
Rent for the period January 1, 2002 through December 31, 2002 shall be
$42,519.00 per month.
Rent for the period January 1, 2003 through December 31, 2003 shall be
$44,220.00 per month.
Rent for the period January 1, 2004 through December 31, 2004 shall be
$45,989.00 per month.

40.  LIMITATION OF LANDLORD'S LIABILITY.

Redress for any claim against Landlord under this Lease shall be limited to and
enforceable only against and to the extent of Landlord's interest in the
Building.  The obligations of Landlord under this Lease are not intended to and
shall not be personally binding on, nor shall any resort be had to the private
properties of, any of its trustees or board of directors and officers, as the
case may be, its investment manager, the general partners thereof, or any
beneficiaries, stockholders, employees, or agents of Landlord or the investment
manager.

LANDLORD: Gateway Pacific              TENANT:     OBAGI Medical Products, Inc.,
          Properties, Inc.
          a California corporation                 a California corporation

BY:       RREEF MANAGEMENT COMPANY,
          a Delaware corporation       By:       /s/ Phillip J. Rose
                                                 ------------------------------
                                       Name:     Phillip J. rose
                                                 ------------------------------
                                       Title:    President and CEO
                                                 ------------------------------
By:       /s/ Michael Kent             Dated:    11-15-99
          ----------------------                 ------------------------------
Name:     Michael Kent
Title:    Regional Manager
                                       By:       /s/ Joseph W. Sortais
                                                 ------------------------------
Dated:    11/18/99                     Name:     Joseph W. Sortais
          ----------------------                 ------------------------------
                                       Title:    Vice President and CFO
                                                 ------------------------------
Address:  1630 South Sunkist Street    Dated:    11/17/99
          Suite A                                ------------------------------
          Anaheim, CA  92806
Telephone:(714) 634-4664               Address:  310 Golden Shore
Facsimile:(714) 634-2680                         ------------------------------
                                                 Long Beach, CA  90802
                                                 ------------------------------
                                       Phone:    562-628-1007
                                                 ------------------------------
                                       Facsimile:
                                                 ------------------------------

                                       15

<PAGE>

                                       EXHIBIT "A"

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant, for the Premises commonly known as 625 Alaska Avenue,
Torrance, California.

                                       PREMISES

Exhibit A is intended only to show the general layout of the Premises with
respect to the Project as of the beginning of the Term of this Lease. It does
not in any way supersede any of Landlord's rights set forth in Section 17.2
with respect to arrangements and/or locations of public parts of the Building
and changes in such arrangements and/or locations. It is not to scale; any
measurements or distances shown should be taken as approximate.

                                         [MAP]

ALASKA BUILDING

                                    EXHIBIT "A"
                                  page one of one

<PAGE>

                                      EXHIBIT "A-1"

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant, for the Premises commonly known as 625 Alaska Avenue,
Torrance, California.

                                       PREMISES

Exhibit A-1 is intended only to show the general layout of the Premises as of
the beginning of the Term of this Lease. It does not in any way supersede any
of Landlord's rights set forth in Section 17.2 with respect to arrangements
and/or locations of public parts of the Building and changes in such
arrangements and/or locations. It is not to scale; any measurements or
distances shown should be taken as approximate.

          FLOOR PLAN

                                       [MAP]

                                   EXHIBIT "A-1"
                                  page one of one

<PAGE>

                                  EXHIBIT "B"

attached to and made a part of the Lease bearing the Lease Reference Date
of June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

                              INITIAL ALTERATIONS

Tenant hereby accepts the demised Premises in an "as-is" condition. Landlord
shall ensure that all mechanical equipment, including electrical, plumbing,
heating, ventilating and air conditioning systems, are in good operating
order at the time of occupancy by Tenant.

                                   EXHIBIT "B"
                                  page one of one

<PAGE>

                                      EXHIBIT "C"

attached to and made a part of the Lease bearing the Lease Reference Date
of June 30, 1999, by and between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord, and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

                                 RULES AND REGULATIONS

1.  No sign, placard, picture, advertisement, name or notice shall be
installed or displayed on any part of the outside or inside of the Building
without the prior written consent of the Landlord. Landlord shall have the
right to remove, at Tenant's expense and without notice, any sign installed
or displayed in violation of this rule. All approved signs or lettering on
doors and walls shall be printed, painted, affixed or inscribed at the
expense of Tenant by a person or vendor chosen by Landlord. In addition,
Landlord reserves the right to change from time to time the format of the
signs or lettering and to require previously approved signs or lettering to
be appropriately altered.

2.  If Landlord objects in writing to any curtains, blinds, shades or screens
attached to or hung in or used in connection with any window or door of the
Premises, Tenant shall immediately discontinue such use. No awning shall be
permitted on any part of the Premises. Tenant shall not place anything or
allow anything to be placed against or near any glass partitions or doors or
windows which may appear unsightly, in the opinion of Landlord, from outside
the Premises.

3.  No birds, fish or animals shall be brought into or kept in or about the
Building, with the exception of a cat.

4.  Tenant shall not obstruct any sidewalks, halls, passages, exits,
entrances, elevators, escalators or stairways of the Building. The halls,
passages, exits, entrances, elevators and stairways are not for the general
public, and Landlord shall in all cases retain the right to control and
prevent access thereto of all persons whose presence in the judgment of
Landlord would be prejudicial to the safety, character, reputation and
interests of the Building and its tenants provided that nothing herein
contained shall be construed to prevent such access to persons with whom any
tenant normally deals in the ordinary course of its business, unless such
persons are engaged in illegal activities. No tenant and no employee or
invitee or any tenant shall go upon the roof of the Building.

5.  The directory of the Building will be provided exclusively for the
display of the name and location of tenants only and Landlord reserves the
right to exclude any other names therefrom.

6.  Landlord will furnish Tenant free of charge with two keys to each door
lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant shall not make or have made additional keys, and
Tenant shall not alter any lock or install a new or additional lock or bolt
on any door of its Premises. Tenant, upon the termination of its tenancy,
shall deliver to Landlord the keys of all doors which have been furnished to
Tenant, and in the event of loss of any keys so furnished, shall pay Landlord
therefor.

7.  Tenant shall not at any time park or permit the parking of Tenant's
vehicles, or the vehicles of others, adjacent to loading areas or so as to
interfere in any way with the use of such areas. Tenant shall not park or
permit to be parked any inoperative vehicles or equipment on any portion of
the parking or loading areas. Tenant agrees not to overburden the parking
facilities and agrees to cooperate with Landlord and other tenants in the use
of parking facilities. Landlord reserves the right in its absolute discretion
to determine whether parking facilities are becoming crowded and, in such event,
to allocate and assign parking spaces among Tenant and other tenants. The
parking ratio is 1:1.

8.  If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions in
their installation.

9.  Tenant shall not place a load upon any floor which exceeds the load per
square foot which such floor was designed to carry and which is allowed by
law.  Landlord shall have the right to prescribe the weight, size and position
of all equipment, materials, furniture or other property brought into the
Building. Heavy objects shall, stand on such platforms as determined by
Landlord to be necessary to properly distribute the weight. Business machines
and mechanical equipment belonging to Tenant which cause noise or vibration
that may be transmitted to the structure of the Building or to any space
therein to such a degree as to be objectionable to Landlord or to any tenants
shall be placed and maintained by Tenant, at Tenant's expense, on vibration
eliminators or other devices sufficient to eliminate noise or vibration. The
persons employed to move such equipment in or out of the Building must be
acceptable to Landlord. Landlord will not be responsible for loss of, or
damage to, any such equipment or other property from any cause, and all
damage done to the Building by maintaining or moving such equipment or other
property shall be repaired at the expense of Tenant.

                                    EXHIBIT "C"
                                  page one of two

<PAGE>

                                  EXHIBIT "C"
                                  (Continued)

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999, by and between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord, and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

                              RULES AND REGULATIONS

10.  Tenant shall close and lock the doors of its Premises and entirely shut
off all water faucets or other water apparatus and electricity, gas or air
outlets before Tenant and its employees leave the Premises. Tenant shall be
responsible for any damage or injuries sustained by other tenants or
occupants of the Building or by Landlord for noncompliance with this rule.

11.  The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed,
no foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the Tenant who, or whose employees or invitees,
shall have caused it.

12.  Tenant shall not install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building. Tenant shall not
interfere with radio or television broadcasting or reception from or in the
Building or elsewhere.

13.  Except as approved by Landlord or where otherwise provided in the Lease,
Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any way deface the premises. Tenant shall not cut
or bore holes for wires. Tenant shall not affix any floor covering to the
floor of the Premises in any manner except as approved by Landlord. Tenant
shall repair any damage resulting from noncompliance with this rule.

14.   Tenant may install, maintain and operate upon the Premises a vending
machine.

15.   Tenant shall store all its trash and garbage within its Premises.
Tenant shall not place into any trash box or receptacle any material which
cannot be disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.

16.   No cooking shall be done or permitted by any Tenant on the Premises,
except that use by the Tenant of Underwriters' Laboratory approved equipment
for brewing coffee, tea, hot chocolate and similar beverages, including a
microwave oven, shall be permitted, provided that such equipment and use is
in accordance with all applicable federal, state and city laws, codes,
ordinances, rules and regulations.

17.   Tenant shall not use any space or in the public halls or the Building
any hand trucks except those equipped with the rubber tires and side guards
or such other material-handling equipment as Landlord may approve. Tenant
shall not bring any other vehicles of any kind into the Building.

18.   Tenant shall not use the name of the Building in connection with or in
promoting or advertising the business of Tenant except as Tenant's address.

19.   The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside
of their regular duties unless under special instructions from Landlord, and
no employee of Landlord will admit any person (Tenant or otherwise) to any
space without specific instructions from Landlord.

20.   Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular tenant or tenants, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in
favor or any other tenant or tenants, nor prevent Landlord from thereafter
enforcing any such Rules and Regulations against any or all of the tenants of
the Building.

21.   These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of premises in the Building.

22.   Landlord reserves the right to make such other and reasonable rules and
regulations as in its judgement may from time to time be needed for safety
and security, for care and cleanliness of the Building and for the
preservation of good order therein. Tenant agrees to abide by all such rules
and regulations hereinabove stated and any additional rules and regulations
which are adopted.

23.   Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and guests.

                                  EXHIBIT "C"
                                page two of two
<PAGE>

                                  EXHIBIT "D"

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

                                SIGN SPECIFICATIONS

1.    The intent of this sign criteria is to provide the guidelines necessary
to achieve a visually coordinated, balanced and appealing signage environment
at the above mentioned project for the mutual benefit of all Tenants, and to
comply with the regulations of the city of Carson.

2.    Performance of this sign criteria shall be rigorously enforced and any
unapproved or non conforming signs shall be removed by the Tenant or his sign
contractor at the Tenant's expense, upon demand by the Landlord.

3.    Exceptions to these standards shall be reviewed by the Landlord,
however, based on field experience, deviations generally result in serious
inequities between Tenants. Accordingly, the Landlord retains full right of
approval of any sign used in the center.

4.    All signs are subject to prior written approval by the Landlord and the
City of Torrance.

5.    Each Tenant shall submit to Landlord for written approval, two (2)
copies of a detailed shop drawing of his proposed sign, indicating
conformance to the Sign Specifications herein outlined. Send to: RREEF
Management Company, 1630 S. Sunkist Street, Suite A, Anaheim, CA 92806.

6.    The Tenant, or his sign contractor, shall submit a sign drawing
approved by the Landlord to the City of Carson for approval and permits prior
to start of any sign construction.

7.    The Tenant, or his sign contractor, is responsible for obtaining all
necessary building permits from the City of Carson prior to manufacture.

8.    Maintenance of signs is the Tenant's responsibility. Should the Tenant
fail to maintain or repair his sign within 30 days of notice by Landlord,
the Landlord reserves the right to order needed repairs at Tenant's expense.

9.    All signs, lettering, etc. shall be done by a licensed and insured
professional sign contractor.

10.   Upon termination of lease, the Tenant shall be responsible for the
removal of all signs and restoration of the fascia as needed and shall pay
for same.

11.   Any Tenant sign left after thirty (30) days of Tenant's vacating
premises shall be considered abandoned and shall become property of the
Landlord, unless previous written arrangements have been agreed to by
Landlord and Tenant.

12.   All signs and their installation must comply with all local and
applicable city codes.

                                      EXHIBIT "D"
                                    page one of one

<PAGE>

                                  EXHIBIT "E"

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

                        HAZARDOUS WASTE MATERIALS RIDER

(a) Tenant agrees that Tenant, its agents and contractors, licensees, or
invitees shall not handle, use, manufacture, store or dispose of any
flammables, explosives, radioactive materials, hazardous wastes or materials,
toxic wastes or materials, or other similar substances, petroleum products or
derivatives (collectively "Hazardous Materials") on, under, or about the
Premises, without Landlord's prior written consent (which consent shall not
be unreasonably withheld as long as Tenant demonstrates and documents to
Landlord's reasonable satisfaction (i) that such Hazardous Materials (A) are
necessary or useful to Tenant's business; and (B) will be used, kept, and
stored in compliance with all laws relating to any Hazardous Materials so
brought or used or kept in or about the Premises; and (ii) that Tenant will
give all required notices concerning the presence in or on the Premises or the
release of such Hazardous Materials from the Premises) provided that Tenant
may handle, store, use or dispose of products containing small quantities of
Hazardous Materials, which products are of a type customarily found in
offices and households (such as aerosol cans containing insecticides, toner
for copies, paints, paint remover, and the like), provided further that
Tenant shall handle, store, use and dispose of any such Hazardous Materials
in a safe and lawful manner and shall not allow such Hazardous Materials to
contaminate the Premises or the environment.

(b)   Tenant further agrees that Tenant will not permit any substance
suspected of causing cancer or reproductive toxicity to come into contact
with groundwater under the Premises. Any such substance coming into contact
with groundwater shall be considered a Hazardous Material for purposes of
this Rider.

(c)   (i) Notwithstanding the provisions of Paragraph (a), Tenant may handle,
store, and use Hazardous Materials, limited to the types, amounts, and use
identified in the Hazardous Materials Exhibit attached hereto. If no
Hazardous Materials Exhibit is attached to this Lease, then this Paragraph
(c) shall be of no force and effect.  Tenant hereby certifies to Landlord
that the information provided by Tenant pursuant to this Paragraph is true,
correct, and complete. Tenant covenants to comply with the use restrictions
shown on the attached Hazardous Materials Exhibit. Tenant's business and
operations, and more especially its handling, storage, use and disposal of
Hazardous Materials shall at all times comply with all applicable laws
pertaining to Hazardous Materials. Tenant shall secure and abide by all
permits necessary for Tenant's operations on the Premises. Tenant shall give
or post all notices required by all applicable laws pertaining to Hazardous
Materials. If Tenant shall at any time fail to comply with this Paragraph,
Tenant shall immediately notify Landlord in writing of such noncompliance;
(ii) Tenant shall provide Landlord with copies of any Material Safety Data
Sheets (as required by the Occupational Safety and Health Act) relating to
any Hazardous Materials to be used, kept, or stored at or on the Premises, at
least 30 days prior to the first use, placement, or storage of such Hazardous
Material on the Premises. Landlord shall have 10 days following delivery of
such Material Safety Data Sheets to approve or forbid, in its sole discretion
subject to the limitation contained in Paragraph (a) above, such use,
placement, or storage of a Hazardous Material on the Premises; (iii) Tenant
shall not store hazardous wastes on the premises for more than 90 days;
"hazardous waste" has the meaning given it by the Resource Conservation and
Recovery Act of 1976, as amended. Tenant shall not install any underground or
above ground storage tanks on the Premises. Tenant shall not dispose of any
Hazardous Material or solid waste on the Premises. In performing any
alterations of the Premises permitted by the Lease, Tenant shall not install
any Hazardous Material in the Premises without the specific consent of
Landlord attached as an exhibit to this Rider; (iv) Any increase in the
premiums for necessary insurance on the Property which arises from Tenant's
use and/or storage of Hazardous Materials shall be solely at Tenant's
expense. Tenant shall procure and maintain at its sole expense such
additional insurance as may be necessary to comply with any requirement of
any Federal, State or local governmental agency with jurisdiction.

(d)   If Landlord, in its sole discretion, believes that the Premises or the
environment have become contaminated with Hazardous Materials that must be
removed under the laws of the state where the Premises are located, in breach
of the provisions of this Lease, Landlord, in addition to its other rights
under this Lease, may enter upon the Premises and obtain samples from the
Premises, including without limitation the soil and groundwater under the
Premises, for the purposes of analyzing the same to determine whether and to
what extent the Premises or the environment have become so contaminated.
Tenant shall reimburse Landlord for the costs of any inspection, sampling and
analysis that discloses contamination for which Tenant is liable under the
terms of this Rider. Tenant may not perform any sampling, testing, or drilling
to locate any Hazardous Materials on the Premises without Landlord's prior
written consent.

                                EXHIBIT "E"
                            page one of three

<PAGE>

                                EXHIBIT "E"
                                (Continued)

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

(e)   Without limiting the above, Tenant shall reimburse, defend, indemnify
and hold Landlord harmless from and against any and all claims, losses,
liabilities, damages, costs and expenses, including without limitation, loss
of rental income, loss due to business interruption, and attorneys fees and
costs, arising out of or in any way connected with the use, manufacture,
storage, or disposal of Hazardous Materials by Tenant, its agents or
contractors on, under or about the Premises including, without limitation,
the costs of any required or necessary investigation, repair, cleanup or
detoxification and the preparation of any closure or other required plans in
connection herewith, whether voluntary or compelled by governmental
authority. The indemnity obligations of Tenant under this clause shall
survive any termination of the Lease. At Landlord's option, Tenant shall
perform any required or necessary investigation, repair, cleanup, or
detoxification of the Premises. In such case, Landlord shall have the right,
in its sole discretion, to approve all plans, consultants, and cleanup
standards. Tenant shall provide Landlord on a timely basis with (i) copies of
all documents, reports, and communications with governmental authorities; and
(ii) notice and an opportunity to attend all meetings with regulatory
authorities. Tenant shall comply with all notice requirements and Landlord
and Tenant agree to cooperate with governmental authorities seeking access to
the Premises for purposes of sampling or inspection. No disturbance of
Tenant's use of the Premises resulting from activities conducted pursuant to
this Paragraph shall constitute an actual or constructive eviction of Tenant
from the Premises. In the event that such cleanup extends beyond the
termination of the Lease, Tenant's obligation to pay rent (including
additional rent and percentage rent, if any) shall continue until such
cleanup is completed and any certificate of clearance or similar document has
been delivered to Landlord. Rent during such holdover period shall be at
market rent; if the parties are unable to agree upon the amount of such
market rent, then Landlord shall have the option of (a) increasing the rent
for the period of such holdover based upon the increase in the cost-of-living
from the third month preceding the commencement date to the third month
preceding the start of the holdover period, using such indices and
assumptions and calculations as Landlord in its sole reasonable judgment
shall determine are necessary; or (b) having Landlord and Tenant each appoint
a qualified MAI appraiser doing business in the area; in turn, these two
independent MAI appraisers shall appoint a third MAI appraiser and the
majority shall decide upon the fair market rental for Premises as of the
expiration of the then current term.  Landlord and Tenant shall equally share
in the expense of this appraisal except that in the event the rent is found to
be within fifteen percent of the original rate quoted by Landlord, then
Tenant shall bear the full cost of all the appraisal process. In no event
shall the rent be subject to determination or modification by any person,
entity, court, or authority other than as set forth expressly herein, and in
no event shall the rent for any holdover period be less that the rent due in
the preceding period.

(f)   Notwithstanding anything set forth in this Lease, Tenant shall only be
responsible for contamination of Hazardous Materials or any cleanup resulting
directly therefrom, resulting directly from matters occurring or Hazardous
Materials deposited by Tenant, its agents or contractors (other than by
contractors, agents or representatives controlled by Landlord) during the
Lease term, and any other period of time during which Tenant is in actual or
constructive occupancy of the Premises. Tenant shall take reasonable
precautions to prevent the contamination of the Premise with Hazardous
Materials by third parties.

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

(h)   Any of Tenant's insurance insuring against claims of the type dealt
with in this Rider shall be considered primary coverage for claims against
the Property arising out of or under this paragraph.

(i)   In the event of (i) any transfer of Tenant's interest under this Lease;
or (ii) the termination of this Lease, by lapse of time or otherwise, Tenant
shall be solely responsible for compliance with any and all then effective
federal, state or local laws concerning (i) the physical condition of the
Premises, Building, or Property; or (ii) the presence of hazardous or toxic
materials in or on the Premises, Building, or Property (for example, the New
Jersey Environmental Cleanup Responsibility Act, the Illinois Responsible
Property Transfer Act, or similar applicable state laws), including but not
limited to any reporting or filing requirements imposed by such laws.
Tenant's duty to pay rent, additional rent, and percentage rent shall
continue until the obligations imposed by such laws are satisfied in full and
any certificate of clearance or similar document has been delivered to
Landlord.

                                 EXHIBIT "E"
                              page two of three

<PAGE>

                                 EXHIBIT "E"
                                  (Continued)

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

(j)  Notwithstanding the provisions of this Rider, if Tenant desires to
handle and store hazardous cargo in the Premises, Tenant shall provide
Landlord seven (7) business days prior written notice of the nature and
amount of such cargo, and the time such cargo will be, or is expected to be,
stored. Tenant shall have no right to handle or store the hazardous cargo if
Landlord objects by written notice to Tenant within seven (7) days of
Landlord's receipt of Tenant's request to handle and store hazardous cargo.
Tenant shall adhere to all laws and all provisions of this Rider with respect
to the handling and storage of any hazardous cargo permitted by Landlord."

(k)  All consents given by Landlord pursuant to this Rider shall be in
writing and shall be attached as amendments to this Rider. If such consents
are not attached to this Rider, then such consents will be deemed withheld.
Tenant agrees that Tenant, its agents and contractors, licensees, or
invitees, shall not handle, use, manufacture, store or dispose of any
flammables, explosives, radioactive materials, hazardous wastes or materials,
toxic wastes or materials, or other similar substances, petroleum products or
derivatives (collectively, "Hazardous Materials") on, under, or about the
Premises, without Landlord's prior written consent (which consent may be
given or withheld in Landlord's sole discretion), provided that Tenant may
handle, store, use or dispose of products containing small quantities of
Hazardous Materials, which products are of a type customarily found in
offices and households (such as aerosol cans containing insecticides, toner
for copies, paints, paint remover, and the like), provided further that
Tenant shall handle, store, use and dispose of any such Hazardous Materials
in a safe and lawful manner and shall not allow such Hazardous Materials to
contaminate the Premises or the environment.

                            EXHIBIT "E"

                         page three of three

<PAGE>

                                 EXHIBIT "F"

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

                           CONTINUING LEASE GUARANTEE
                                    (Corporate)

Whereas OBAGI Medical Products, Inc., a California corporation organized
under the laws of the State of California ("Lessee") is (a) engaged in
business as a corporate affiliate of the undersigned. Because of our
intercorporate or business relations, or by reason of any of the foregoing,
it will be in our direct interest in advantage to assist Lessee in securing a
lease. Therefore, in consideration of making of the Lease agreement by and
between GATEWAY PACIFIC PROPERTIES, INC., a California corporation as Lessor,
and OBAGI Medical Products, Inc., a California corporation as Lessee, dated
June 30, 1999 for the premises commonly described as 625 Alaska Avenue,
Torrance, California (hereinafter referred to as the "Lease") and for the
purpose of inducing Lessor to enter into and make the Lease, the undersigned
hereby unconditionally guarantees the full and prompt payment of rent and all
other sums required to be paid by Lessee under the Lease ("Guaranteed
Payments") and the full and faithful performance of all terms, conditions,
covenants, obligations and agreements contained in the Lease on the Lessee's
part to be performed ("Guaranteed Obligations") and the undersigned further
promises to pay all of Lessor's costs and expenses (including reasonable
attorney's fees) incurred in endeavoring to collect the Guaranteed Payments
or to enforce the Guaranteed Obligations or incurred in enforcing this
guarantee.

1.   Lessor may at any time and from time to time, without notice to the
undersigned, take any or all of the following actions without affecting or
impairing the liability and obligations of the undersigned on this guaranty:

     a.  grant an extension or extensions of time of payment of any Guaranteed
Payment or time for performance of any Guaranteed Obligation;

     b.  grant an indulgence or indulgences in any Guaranteed Payment or in
the performance of any Guaranteed Obligation;

     c.  modify or amend the Lease or any term thereof, or any obligation of
Lessee arising thereunder (other than an extension of the Term of the Lease);

     d.  consent to any assignment or assignments, sublease or subleases and
successive assignments or subleases by Lessee or the Lessee's assigns or
sublessees or a change or different use of the leased premises;

     e.  accept other guarantors; and/or

     f.  release any person primarily or secondarily liable.

The liability of the undersigned under this guaranty shall in no way be
affected or impaired by any failure or delay in enforcing any Guaranteed
Payment or Guaranteed Obligation or this guaranty or any security therefor or
in exercising any right or power in respect thereto, or by any compromise,
waiver, settlement, change, subordination, modification or disposition of any
Guaranteed Payment or Guaranteed Obligation or any security therefore. In
order to hold the undersigned liable hereunder, there shall be no obligation
on the part of Lessor, at any time, to resort for payment to Lessee or any
other guaranty or to any security or other rights and remedies, and Lessor
shall have the right to enforce this guaranty irrespective of whether or not
other proceedings or steps are pending or being taken seeking resort to or
realization upon or from any of the foregoing.

2.  The undersigned waives all diligence in collection or in protection of any
security, presentment, protest, demand, notice of dishonor or default, notice
of acceptance of this guaranty, notice of any extensions granted or other
action taken in reliance hereon and all demands and notices of any kind in
connection with this guaranty or any Guaranteed Payment or Guaranteed
Obligation.

3.  The undersigned hereby acknowledges full and complete notice and knowledge
of all of the terms, conditions, covenants, obligations and agreements of the
Lease.

4.  The payment by the undersigned of any amount pursuant to this guaranty
shall not in any way entitle the undersigned to any right, title or interest
(whether by subrogation or otherwise) of the Lessee under the Lease or to any
security being held for any Guaranteed Payment or Guaranteed Obligation.

                                  EXHIBIT "F"
                                page one of four

                                   EXHIBIT "F"

<PAGE>

                                    EXHIBIT "F"
                                    (Continued)

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999 between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

5.  This guaranty shall be continuing, absolute and unconditional and remain
in full force and effect until all Guaranteed Payments are made, all
Guaranteed Obligations are performed, and all obligations of the undersigned
under this guaranty are fulfilled.

6.  This guaranty shall also bind the successors and assigns of the
undersigned and inure to the benefit of Lessor, its successors and assigns.
This guaranty shall be construed according to the laws of California, in
which state it shall be performed by the undersigned. The remainder of this
guaranty shall continue in full force and effect and the invalid provision
shall be construed as if it were not contained herein.

7.  If this guaranty is executed by more than one person, all singular nouns
and verbs herein relating to the undersigned shall include the plural number
and the obligations of the several guarantors shall be joint and several.

8.  The Lessor and the undersigned intend and believe that each provision of
this guaranty comports with all applicable law. However, if any provision of
this guaranty is found by a court to be invalid for any reason, the parties
intend that the remainder of this guarantee shall continue in full force and
affect and the invalid provisions shall be construed as if it were not
contained herein.

IN WITNESS WHEREOF, the undersigned has caused this guaranty to be executed
by its duly authorized officers this 10 day of November, 1999.

                                MANDARIN PARTNERS, LLC
                                a Delaware limited liability company

                                BY:       Peter Tong
                                   ------------------------------

                                NAME: /s/ Peter Tong
                                     ----------------------------
                                       Peter P. Tong
                                TITLE: President

                                DATED: 11-10-99
                                     ----------------------------

                                 EXHIBIT "F"
                               page two of four

<PAGE>

                                    EXHIBIT "F"

attached to and made a part of the Lease bearing the Lease Reference Date of
June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

                             CONTINUING LEASE GUARANTEE
                                    (Corporate)

Whereas OBAGI Medical Products, Inc., a California corporation organized
under the laws of the State of California ("Lessee") is (a) engaged in
business as a corporate affiliate of the undersigned. Because of our
intercorporate or business relations, or by reason of any of the foregoing,
it will be in our direct interest in advantage to assist Lessee in securing a
lease. Therefore, in consideration of making of the Lease agreement by and
between GATEWAY PACIFIC PROPERTIES, INC., a California corporation as Lessor,
and OBAGI Medical Products, Inc., a California corporation as Lessee, dated
June 30, 1999 for the premises commonly described as 625 Alaska Avenue,
Torrance, California (hereinafter referred to as the "Lease") and for the
purpose of inducing Lessor to enter into and make the Lease, the undersigned
hereby unconditionally guarantees the full and prompt payment of rent and all
other sums required to be paid by Lessee under the Lease ("Guaranteed
Payments") and the full and faithful performance of all terms, conditions,
covenants, obligations and agreements contained in the Lease on the Lessee's
part to be performed ("Guaranteed Obligations") and the undersigned further
promises to pay all of Lessor's costs and expenses (including reasonable
attorney's fees) incurred in endeavoring to collect the Guaranteed Payments
or to enforce the Guaranteed Obligations or incurred in enforcing this
guarantee.

1.   Lessor may at any time and from time to time, without notice to the
undersigned, take any or all of the following actions without affecting or
impairing the liability and obligations of the undersigned on this guaranty:

     a.  grant an extension or extensions of time of payment of any
Guaranteed Payment or time for performance of any Guaranteed Obligation;

     b.  grant an indulgence or indulgences in any Guaranteed Payment or in
the performance of any Guaranteed Obligation;

     c.  modify or amend the Lease or any term thereof, or any obligation of
Lessee arising thereunder (other than an extension of the Term of the Lease);

     d.  consent to any assignment or assignments, sublease or subleases and
successive assignments or subleases by Lessee or the Lessee's assigns or
sublessees or a change or different use of the leased premises;

     e.  accept other guarantors; and/or

     f.  release any person primarily or secondarily liable.

The liability of the undersigned under this guaranty shall in no way be
affected or impaired by any failure or delay in enforcing any Guaranteed
Payment or Guaranteed Obligation or this guaranty or any security therefor or
in exercising any right or power in respect thereto, or by any compromise,
waiver, settlement, change, subordination, modification or disposition of any
Guaranteed Payment or Guaranteed Obligation or any security therefore. In
order to hold the undersigned liable hereunder, there shall be no obligation
on the part of Lessor, at any time, to resort for payment to Lessee or any
other guaranty or to any security or other rights and remedies, and Lessor
shall have the right to enforce this guaranty irrespective of whether or not
other proceedings or steps are pending or being taken seeking resort to or
realization upon or from any of the foregoing.

2.  The undersigned waives all diligence in collection or in protection of
any security, presentment, protest, demand, notice of dishonor or default,
notice of acceptance of this guaranty, notice of any extensions granted or
other action taken in reliance hereon and all demands and notices of any kind
in connection with this guaranty or any Guaranteed Payment or Guaranteed
Obligation.

3.  The undersigned hereby acknowledges full and complete notice and
knowledge of all of the terms, conditions, covenants, obligations and
agreements of the Lease.

4.  The payment by the undersigned of any amount pursuant to this guaranty
shall not in any way entitle the undersigned to any right, title or interest
(whether by subrogation or otherwise) of the Lessee under the Lease or to
any security being held for any Guaranteed Payment or Guaranteed Obligation.

                                  EXHIBIT "F"
                              page three of four

<PAGE>

                                     EXHIBIT "F"
                                     (Continued)

attached to and made a part of the Lease bearing the Lease Reference Date
of June 30, 1999 between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

5.   This guaranty shall be continuing, absolute and unconditional and
remain in full force and effect until all Guaranteed Payments are made, all
Guaranteed Obligations are performed, and all obligations of the undersigned
under this guaranty are fulfilled.

6.   This guaranty shall also bind the successors and assigns of the
undersigned and inure to the benefit of Lessor, its successors and assigns.
This guaranty shall be construed according to the laws of California, in
which state it shall be performed by the undersigned. The remainder of this
guaranty shall continue in full force and effect and the invalid provision
shall be construed as if it were not contained herein.

7.   If this guaranty is executed by more than one person, all singular nouns
and verbs herein relating to the undersigned shall include the plural number
and the obligations of the several guarantors shall be joint and several.

8.   The Lessor and the undersigned intend and believe that each provision of
this guaranty comports with all applicable law. However, if any provision of
this guaranty is found by a court to be invalid for any reason, the parties
intend that the remainder of this guarantee shall continue in full force and
affect and the invalid provisions shall be construed as if it were not
contained herein.

IN WITNESS WHEREOF, the undersigned has caused this guaranty to be executed
by its duly authorized officers this 15 day of November, 1999.

                     MANDARIN PARTNERS, LLC
                     a Delaware limited liability company

                     BY:      Ian Walker
                             -----------------
                     NAME:   /s/ Ian G. Walker
                             -----------------
                              Ian G. Walker
                     TITLE:   Vice President
                     DATE:    11/15/99
                             -----------------

                                    EXHIBIT "F"
                                  page four of four

<PAGE>

                                    ADDENDUM 1

attached to and made a part of the Lease bearing the Lease Reference Date
of June 30, 1999, between GATEWAY PACIFIC PROPERTIES, INC., a California
corporation, as Landlord and OBAGI Medical Products, Inc., a California
corporation, as Tenant.

1.   ASSIGNMENT AND SUBLETTING: Reference is made to Article 9 of this Lease
page 5, 9.8:

     Notwithstanding the foregoing provisions of this Article to the contrary,
     Tenant shall be permitted to assign this Lease, or sublet all or a portion
     of the Premises, to an Affiliate of Tenant without the prior consent of
     Landlord, if all the following conditions are first satisfied: (a) Tenant
     shall not then be in default under this Lease; (b) a fully executed copy of
     such assignment of sublease, the assumption of this Lease by the assignee
     or acceptance of the sublease by the sublessee, and such other information
     regarding the assignment or sublease as Landlord may reasonably request
     shall have been delivered to Landlord; (c) the Premises shall continue to
     be operated solely for the use specified in the Reference Page or other
     use acceptable to Landlord in its sole discretion; and (d) Tenant shall
     pay all costs reasonably incurred by Landlord in connection with such
     assignment or subletting, including without limitation, attorneys' fees.

Tenant acknowledges (and, at Landlord's request, at the time of such
assignment or subletting shall confirm) that in each instance Tenant shall
remain liable for performance of the terms and conditions of the Lease
despite such assignment or subletting. As used herein, the term "Affiliate"
shall mean any entity which (i) directly or indirectly controls Tenant or
(ii) is under the direct or indirect control of Tenant or (iii) is under
common direct or indirect control with Tenant. Control shall mean ownership
of fifty-one percent (51%) or more of the voting securities or rights of the
controlled entity.

                                     ADDENDUM 1
                                   page one of one

<PAGE>

                                 CONSENT TO SUBLEASE

      The undersigned, as Landlord under that certain Lease dated June 30,
1999, as more fully set forth in the attached Sublease Agreement (the
"Lease"), hereby consents to the foregoing Sublease between OBAGI Medical
Products, Inc., a California corporation ("Sublessor") and UNITED STATES
MANUFACTURING COMPANY, LLC, a Delaware limited liability company ("Sublessee").

      This consent is given upon the expressed following conditions:

1.    Sublessor shall continue to remain primarily liable for the payment of
      all amounts of rental and other sums and performance of all covenants
      required of Sublessor under the Lease.

2.    There shall be no modifications or amendments of the Sublease
      Agreement without the prior written consent of Landlord.

3.    Consent by Landlord to this subletting shall not include consent to the
      assignment or transferring of any lease renewal option rights or space
      option rights, special privileges or extra services granted to Sublessor
      by the Lease, or addendum or amendment hereto or letter of agreement
      (and such options, right, privileges or services shall terminate upon
      such assignment or transfer).

4.    In the event of any default under the terms and provisions of the Lease,
      Landlord shall have the right to collect the rental attributable to the
      Sublease Premises directly from Sublessee without waiving any of
      Landlord's rights against Sublessor as a result of such default.

5.    Consent to the sublease is without waiver of restrictions concerning
      future subleases or extensions of the foregoing sublease.

6.    Sublessor shall pay Landlord the sum of $0.00 to defray Landlord's costs
      in approving this subletting.

7.    Landlord shall not be liable for, and Sublessor hereby indemnifies and
      holds Landlord harmless from, any commission payable associated with the
      sublease agreement.

8.    In the event of any conflict between the terms and provisions of the
      Lease and the aforementioned sublease, the terms and provisions of the
      Lease shall control.

9.    Redress for any claims against Landlord under the Lease or this Consent
      shall only be made against Landlord to the extent of Landlord's interest
      in the property of which the Premises are a part. The obligations of
      Landlord under the Lease and this Consent shall not be personally
      binding on, nor shall any resort be had to the private properties of,
      any of its trustees or board of directors and officers, as the case may
      be, the general partners thereof or any beneficiaries, stockholders,
      employees or agents of Landlord, or its investment manager.

LANDLORD:                                  SUBLESSOR:

GATEWAY PACIFIC PROPERTIES, INC.,          OBAGI Medical Products, Inc.,
a California corporation                   a California corporation
and RREEF Management Company
a Delaware corporation

By: /s/ Michael Kent                    By: /s/ Phillip J. Rose
     --------------------                    --------------------
        Michael Kent                            Phillip J. Rose
Title:  Regional Manager                Title:  President and CEO

Date:   11/18/99                        Date:   11/15/99
     --------------                          -------------

                                        By: /s/ Joseph W. Sortais
                                             --------------------
                                                Joseph W. Sortais
                                        Title:  Vice President and CFO

                                        Date:   11/17/99
                                             -------------

                                        SUBLESSEE:

                                        UNITED STATES MANUFACTURING
                                        COMPANY, LLC,
                                        a Delaware limited liability company

                                        By: /s/ Ian G. Walker
                                             -------------------
                                                Ian G. Walker
                                        Title:  Secretary

                                        Date:   11/18/99
                                             -------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00017-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00017-of-00352.parquet"}]]