Document:

EXHIBIT 10.19

                               NET LEASE AGREEMENT
                               -------------------
                                 (Single Tenant)

For and in consideration of the rentals,  covenants,  and conditions hereinafter
set forth,  Landlord  hereby  leases to Tenant,  and  Tenant  hereby  rents from
Landlord,  the herein described Premises for the term, at the rental and subject
to and upon all of the terms,  covenants  and  agreements  set forth in this Net
Lease Agreement ("Lease"):

         1. Summary of Lease Provisions.

                  1.1 Tenant: Integrated Device Technology International,  Inc.,
a California corporation ("Tenant").

                  1.2 Landlord:  S.I. Hahn, LLC, a California  limited liability
company ("Landlord").

                  1.3 Date of Lease, for reference  purposes only:  December 20,
1999.

                  1.4   Premises:   That   certain   building,   consisting   of
approximately  fifty  thousand  four hundred  (50,400)  rentable  square feet of
space, more or less, located at 3001 Coronado Drive, in the City of Santa Clara,
County of Santa Clara, State of California, shown cross-hatched on the site plan
attached  hereto as  Exhibit  "A",  together  with  certain  rights  appurtenant
thereto. (Paragraph 2.1)

                  1.5 Term:  Seven  (7)  years,  unless  earlier  terminated  in
accordance  with the terms of this Lease or  extended  pursuant  to the terms of
Paragraph 3.5 below. (Paragraph 3)

                  1.6 Commencement Date: July 1, 2000, subject to the provisions
of Paragraph 3 below. (Paragraph 3)

                  1.7 Ending Date:  June 30, 2007,  subject to the provisions of
Paragraph 3 below. (Paragraph 3)

                  1.8 Rent: (Paragraph 4)

                         Months Initial Lease Term       Monthly Rent NNN
                         -------------------------       ----------------

                                 1-12                 $78,120   ($1.55 psf)
                                 13-24                $81,144   ($1.61 psf)
                                 25-36                $84,168   ($1.67 psf)
                                 37-48                $87,192   ($1.73 psf)
                                 49-60                $90,216   ($1.79 psf)

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                                 61-72                $93,240   ($1.85 psf)
                                 73-84                $96,264   ($1.91 psf)

Receipt of the first month's Rent is hereby acknowledged by Landlord.

The  monthly  Rent to be paid  during  the first year of the  Extended  Term (as
defined  below) shall be determined  in  accordance  with the terms of Paragraph
4.4.  Every twelve  calendar  months  during the Extended  Term the monthly Rent
shall be increased by an additional  $0.06 per rentable  square foot  comprising
the  Premises.  The first such  adjustment  shall  occur on the first day of the
thirteenth month of the Extended Term. (Paragraph 4.4)

                  1.9 Use of Premises:  light  industrial and general office use
(Paragraph 6)

                  1.10 Security Deposit: Zero Dollars ($0.00)

                  1.11 Addresses for Notices:

                  To Landlord:

                  SI Hahn LLC
                  c/o SIH Investment, Inc.
                  21580 Stevens Creek Blvd., Suite 107
                  Cupertino, CA.  95014
                  Attn:  Sang Hahn

                  To Tenant:  To the Premises, with a courtesy copy to:

                              Integrated Device Technology International, Inc.
                              2975 Stender Way
                              Santa Clara, CA. 95054
                              Attn:  General Counsel

                  1.12  Non-exclusive  Right  to Use No More  than  one  hundred
eighty-four (184) parking spaces within the Common Area. (Paragraph 2.1)

                  1.13 Summary Provisions in General.  Parenthetical  references
in this  Paragraph 1 to other  paragraphs in this Lease are for  convenience  of
reference,  and designate some of the other Lease  paragraphs  where  applicable
provisions  are  set  forth.  All of the  terms  and  conditions  of  each  such
referenced paragraph shall be construed to be incorporated within and are made a
part of each of the above referring Summary of Lease Provisions. In the event of
any conflict  between any Summary of Lease  Provision as set forth above and the
balance of the Lease, the latter shall control.

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         2. Property Leased.

                  2.1  Premises.  Landlord  hereby  leases to Tenant  and Tenant
hereby leases from  Landlord,  upon the terms and  conditions  herein set forth,
that certain  building  ("Premises")  referred to in Paragraph 1.4 above,  shown
cross-hatched  on the site plan  attached  hereto as Exhibit  "A". In  addition,
Tenant shall have the  following  rights with respect to the real  property more
particularly  described in the legal description  attached as Exhibit "B" hereto
and  excluding  the  buildings   situated  thereon  ("Common  Area"):   (i)  the
non-exclusive  right to use no more than the number of parking  spaces set forth
in  Paragraph  1.12  above,  within the Common Area (and not  allocated  for the
exclusive use of another tenant of Landlord);  and (ii) such other rights as are
necessary and  convenient to Tenant's  possession of the Premises or performance
of  Tenant's  obligations  under this  Lease.  Landlord  agrees that it will not
overburden the parking areas comprising the Common Area by  over-allocating  the
parking  areas to other  tenants of Landlord.  In addition,  Landlord  grants to
Tenant a non-exclusive easement for vehicular ingress and egress in and over the
paved roadways in the Common Area and pedestrian  ingress and egress in and over
the Common Area.

         Landlord  reserves  the right to grant to tenants of the  buildings  or
improvements  which now exist or may  hereafter be  constructed  upon the Common
Area or upon real property owned by Landlord adjacent to the Common Area, and to
the agents,  employees,  servants,  invitees,  contractors,  guests,  employees,
servants, invitees,  contractors,  guests, customers and representatives of such
tenants or to any other user authorized by Landlord,  the non-exclusive right to
use the  Common  Area for  pedestrian  and  vehicular  ingress  and  egress  and
vehicular  parking and the exclusive  right to use parking  spaces on the Common
Area.

                  2.2 Replacement of HVAC Units. The parties hereto  acknowledge
and agree that there are five (5) HVAC  units on the roof of the  Building  that
are currently  fifteen  years old or older (the "Older HVAC Units").  Such Older
HVAC Units are more particularly  identified on the plan or list attached hereto
as EXHIBIT "G" and made a part hereof. If any Older HVAC Unit fails and requires
replacement or, using good business judgment,  it becomes more cost effective to
replace an Older HVAC Unit than to maintain or repair it, Landlord shall replace
such  applicable  Older HVAC Unit(s) at Landlord's sole cost. The parties hereto
acknowledge that there are HVAC units on the roof of the Building that Tenant is
unlikely  to use during the Lease Term (due to over  capacity of the HVAC system
servicing the Building) and it is the intention of the parties that Landlord not
have to replace  any HVAC  units  that will not be used by Tenant.  Prior to the
Commencement Date of the Lease,  Landlord and Tenant shall enter into good faith
negotiations to attempt to agree on the HVAC units, if any, that Tenant will not
be using during the Lease Term, and Landlord shall have the right, at Landlord's
sole cost, and following not less than forty-eight hours prior notice to Tenant,
to remove  any such HVAC  units  that  Tenants  agree will not be used by Tenant
during the Lease Term.

                  2.3  Acceptance  of  Premises.  By  taking  possession  of the
Premises,  Tenant shall be deemed to have accepted the Premises as being in good
and sanitary  order,  condition  and repair and to have accepted the Premises in
their condition existing as of the date Tenant

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takes  possession of the Premises,  subject to all applicable  laws,  covenants,
conditions,  restrictions,  easements and other matters of public record and the
rules and regulations  from time to time  promulgated by Landlord  governing the
use of the Premises  and Common  Area,  and  further,  to have  accepted  tenant
improvements  to be  constructed  by  Landlord  (if any) as being  completed  in
accordance with the plans and specifications for such improvements, subject only
to completion of items on Landlord's punch list. Prior to the Commencement Date,
Landlord and Tenant shall complete a  walk-through  of the Premises and Landlord
and Tenant  shall agree on a punch list of any items  (except  HVAC  units,  the
replacement  of which  shall be governed  by the terms of  Paragraph  2.2 above)
within the Premises that are in need or repair or  maintenance.  Landlord agrees
to repair or  maintain  such items that are on the agreed  upon punch  list,  at
Landlord's sole cost,  within thirty (30) days following the  Commencement  Date
(except  that  if such  punch  list  items  cannot  reasonably  be  repaired  or
maintained  with such thirty (30) day period,  then Landlord shall commence such
repair or  maintenance of the punch list items within such thirty day period and
diligently  prosecute the same to  completion).  The preceding  notwithstanding,
Tenant  does not  waive  any  claims  of  latent  defects  that may exist in the
Premises  as of the  Commencement  Date,  however,  Landlord  shall  be under no
obligation  to repair  any  latent  defect in the  Premises  existing  as of the
Commencement  Date unless Tenant gives  Landlord  written  notice of such defect
prior  to  the  date  six  months  following  the  Commencement   Date.   Tenant
acknowledges  that,  except  as set  forth in the  following  sentence,  neither
Landlord nor Landlord's  agents have made any  representation  or warranty as to
the  suitability  of the  Premises  for the  conduct of Tenant's  business,  the
condition of the Premises, or the use or occupancy which may be made thereof and
Tenant has  independently  investigated  and is satisfied  that the Premises are
suitable for Tenant's  intended use and that the Premises meets all governmental
requirements for such intended use.  Landlord hereby  represents to Tenant that,
to Landlord's  actual  knowledge,  the Premises are not in violation of any law,
rule, regulation or ordinance applicable to the Premises.

         The preceding paragraph notwithstanding, the parties hereto acknowledge
that Landlord  intends to undertake some seismic upgrades of the Premises in the
future.  As of the date of execution of this Lease,  no plans or  specifications
for such seismic  upgrades have been prepared,  nor has Landlord  determined the
specific time or times when it may undertake such seismic upgrades.  Any seismic
upgrades   performed  by  Landlord  with  respect  to  the  Premises  shall  not
unreasonably  interfere  with  Tenant's  use  of  the  Premises.  To  Landlord's
knowledge,  such seismic  upgrades  contemplated to be performed by Landlord are
not  required  to be  performed  to bring  the  Premises  into  compliance  with
applicable  building  codes or laws,  and instead  Landlord may elect to perform
such seismic upgrades to further reduce its earthquake insurance premiums and to
improve  Landlord's  ability to obtain  financing or refinancing  secured by the
Premises.  Landlord  agrees that, if seismic upgrade of the Premises is required
to bring the Premises  into  compliance  with building  codes  applicable to the
Premises at the time the Premises  were  initially  constructed,  then  Landlord
shall be responsible for such seismic upgrades and Tenant shall not be obligated
to bear portion of the cost of such seismic upgrades.

         If Tenant  desires to construct or install,  or cause to be constructed
or installed, any alterations, additions or improvements to the Premises and, in
connection with the same,  seismic  upgrades or structural  reinforcement of the
Premises,  or portion  thereof,  are required

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and are  directly  and  physically  related  to the  alterations,  additions  or
improvements  to be  constructed  or installed,  or caused to be  constructed or
installed,  by Tenant,  then Tenant shall bear one hundred percent (100%) of the
cost of the seismic  upgrades or  structural  reinforcement  of the  Premises so
required. Except as provided in the immediately preceding sentence, Tenant shall
not be obligated to pay for any seismic upgrades or structural  reinforcement of
the Premises, or any portion thereof. If Tenant applies to a governmental agency
for  approval  of, or  issuance of a building  permit in  connection  with,  any
proposed alteration,  addition,  or improvement to the Premises,  or any portion
thereof,  and such  governmental  agency  requires Tenant to undertake a seismic
upgrade or structural  reinforcement of the Premises, or any portion thereof, in
connection with such proposed alteration,  addition or improvement,  then Tenant
shall not be obligated to pay for the cost of such seismic upgrade or structural
reinforcement  unless  the  same  is  directly  and  physically  related  to the
alteration, addition or improvement proposed to be undertaken by Tenant.

         3. Term.

                  3.1  Commencement  Date. The term of this Lease ("Lease Term")
shall be for the period specified in Paragraph 1.5 above, commencing on the date
set forth in Paragraph 1.6  ("Commencement  Date").  The expiration of the Lease
Term or sooner  termination  of this Lease is  referred  to herein as the "Lease
Termination".

                  3.2 Delay of Commencement  Date.  Landlord shall not be liable
for any damage or loss  incurred by Tenant for  Landlord's  failure for whatever
cause to deliver  possession of the Premises by any particular  date  (including
the  Commencement  Date), nor shall this Lease be void or voidable on account of
such failure to deliver  possession of the  Premises;  provided that if Landlord
does not  deliver  possession  of the  Premises  to Tenant by the date  which is
ninety (90) days following the date the Commencement Date of this Lease,  Tenant
shall have the right to  terminate  this Lease by written  notice  delivered  to
Landlord  within ten (10) days  thereafter,  and  Landlord  and Tenant  shall be
relieved of their respective obligations hereunder.  If the Commencement Date is
delayed  beyond the date set forth in  Paragraph  1.6 above (i.e.  July 1, 2000)
because Landlord is not able to deliver  possession of the Premises to Tenant on
or before such date,  then (i) Tenant  shall not be  obligated to pay Rent under
this Lease until  possession  of the Premises is  delivered to Tenant,  (ii) the
Commencement Date shall be extended to the date Landlord delivers  possession of
the Premises to Tenant (but in no event shall such Commencement Date be extended
later than six months from July 1, 2000), and (iii) all dates that are keyed off
of the Commencement Date (such as the Ending Date) shall be extended by the same
number of days as the Commencement Date is extended.

                  3.3 Early  Occupancy.  Landlord  hereby agrees that Tenant may
enter the Premises prior to the  Commencement  Date (but only after the existing
tenant or lessee  has  vacated  the  Premises)  to  install  its phone and other
communication  systems therein, to fixturize and perform general clean up of the
Premises, and to otherwise conduct Tenant's business in the Premises, and in the
event Tenant so enters the Premises prior to the Commencement Date, Tenant shall
do so subject to all the terms and  conditions  hereof  except that Tenant shall
not be

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obligated to pay Rentals provided for herein during such early occupancy period.
Tenant shall be obligated to commence paying Rentals as of the Commencement Date
of the Lease.

                  3.4 Intentionally Omitted.

                  3.5 Option to Extend Term.  Landlord  hereby  grants to Tenant
one (1) option to extend the initial  Lease Term for a period of three (3) years
(the "Extended Term"), on the following terms and conditions:

                           (a) Tenant shall give Landlord  written notice of its
exercise of the option to extend the Lease Term no earlier  than nine months nor
later than six (6) months  before the date the Lease Term would end but for said
exercise. Time is of the essence.

                           (b) Tenant may not extend the Lease Term  pursuant to
this  Paragraph 3.5 if Tenant is in material  default of any of its  obligations
under this Lease as of the date of  Tenant's  notice of  exercise  of the option
(and such  default has not been cured within the cure or grace  period,  if any,
applicable  to such  default),  or if Tenant  shall have  assigned or  otherwise
transferred  its  interest  in this Lease  and/or the  Premises,  whether or not
Landlord's  consent to such  assignment or transfer has been given, to any third
party other than an Affiliate of Tenant (as described in Paragraph  24.5 below).
If  Tenant  is in  default  under  this  Lease on the date  that the  applicable
Extended Term is to commence,  then Landlord may elect to terminate  this Lease,
notwithstanding  any  notice  given by Tenant of an  exercise  of its  option to
extend and such  exercise of  Tenant's  option to extend the Lease Term shall be
void and of no force or effect.

                           (c) All  terms and  conditions  of this  Lease  shall
apply  during the  Extended  Term,  except  that the  monthly  base Rent for the
Extended Term shall be determined in accordance with Paragraph 4.4 below, Tenant
shall have no further  options to extend the Lease Term beyond the Extended Term
described  in this  Paragraph  3.5 and  Landlord  shall  have no  obligation  to
construct or install any tenant  improvements in the Premises for the benefit of
the Tenant.

                           (d) Once Tenant  delivers  notice of its  exercise of
the option to extend the Lease Term,  Tenant may not withdraw such exercise and,
subject to the  provisions of this  Paragraph  3.5, such notice shall operate to
extend the Lease Term.  The  preceding to the contrary  notwithstanding,  if the
Rent payable during the Extended Term is determined pursuant to Paragraph 4.4(b)
below,  and Tenant objects to the amount of such Rent as determined  pursuant to
such Paragraph 4.4(b),  then Tenant may elect to rescind its extension notice by
delivering  to  Landlord,  within  ten (10) days  following  the date  Tenant is
informed of the amount of Rent  determined  pursuant to  Paragraph  4.4(b),  (i)
written  notice of  rescission,  and (ii) an  amount  equal to the sum of (1) an
amount equal to the appraisal costs paid or incurred by Landlord pursuant to the
provisions  of  Paragraph  4.4(b)  below,  plus  (2)  the  product  obtained  by
multiplying (x) the monthly base Rent determined  pursuant to Paragraph  4.4(b),
by (y) six (6) (such sum being hereinafter referred to as the "Rescission Fee").
In the  event  such  rescission  notice  is timely  given  and  payment  of such
Rescission Fee is timely made,  then the Lease Term shall expire on the date the
Lease Term would  otherwise  have expired had Tenant not exercised its option to

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extend the Lease Term.  Time is of the essence  with  respect to the delivery of
the  rescission  notice and  Rescission  Fee. If Tenant  does not  deliver  such
rescission  notice and Rescission Fee to Landlord within the ten (10) day period
referred  to above,  then  Tenant  shall be deemed to have  waived  its right to
rescind the extension  notice.  Upon the extension of the Lease Term pursuant to
this  Paragraph  3.5,  the term  "Term" as used in this Lease  shall  thereafter
include  the  Extended  Term  and the  Ending  Date of this  Lease  shall be the
expiration  date of the Extended Term unless sooner  terminated  pursuant to the
terms hereof.

         4. Rent.

                  4.1  Rent.  Tenant  shall  pay to  Landlord  as  rent  for the
Premises  ("Rent"),  in  advance,  on the  first  day of  each  calendar  month,
commencing on the date specified in Paragraph 1.6 and continuing  throughout the
Lease  Term,  the Rent set forth in  Paragraph  1.8  above.  Rent and  Operating
Expenses shall be prorated, based on thirty (30) days per month, for any partial
month  during  the Lease  Term.  Rent and  Operating  Expenses  shall be payable
without deduction,  offset, prior notice or demand in lawful money of the United
States to Landlord at the address herein  specified for purposes of notice or to
such other persons or such other places as Landlord may designate in writing.

                  4.2 Late Charge.  Tenant hereby acknowledges that late payment
by  Tenant  to  Landlord  of  Rent  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 deed of trust  covering  the  Premises.  Accordingly,
Tenant shall pay to Landlord,  as  Additional  Rent (as defined in Paragraph 4.3
below),  without the necessity of prior notice or demand, a late charge equal to
five percent (5%) of any  installment  of Rent which is not received by Landlord
within ten (10) days after the due date for such  installment.  The preceding to
the contrary  notwithstanding,  Landlord  agrees that, with respect to the first
late payment of Rent by Tenant in any twelve month  period,  Tenant shall not be
obligated to pay a late charge on such  delinquent  Rent unless  Tenant fails or
refuses to pay such Rent  within five (5)  business  days  following  receipt of
written  notice to Tenant.  Except with respect to the first  delinquency in the
payment of Rent in a twelve  month  period,  Landlord  shall not be obligated to
give Tenant  notice of  delinquent  Rent prior to imposing a late charge on such
delinquent  Rent.  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.  In no event shall this provision for a late charge be deemed
to grant to Tenant a grace  period or  extension of time within which to pay any
installment  of Rent or prevent  Landlord  from  exercising  any right or remedy
available to Landlord upon Tenant's failure to pay such installment of Rent when
due,  including  without  limitation the right to terminate  this Lease.  In the
event any  installment  of Rent is not  received by  Landlord  by the  thirtieth
(30th) day after the due date for such installment,  such installment shall bear
interest at the annual rate set forth in Paragraph 35 below,  commencing  on the
thirty-first  (31st) day after the due date for such  installment and continuing
until such installment is paid in full.

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                  4.3 Additional  Rent. All taxes,  charges,  costs and expenses
and other sums which  Tenant is required  to pay  hereunder  (together  with all
interest and charges that may accrue thereon in the event of Tenant's failure to
pay the same),  and all damages,  costs and expenses which Landlord may incur by
reason of any Default by Tenant shall be deemed to be additional  rent hereunder
("Additional Rent"). Additional Rent shall accrue commencing on the Commencement
Date.  In the event of  nonpayment by Tenant of any  Additional  Rent,  Landlord
shall have all the rights and remedies with respect  thereto as Landlord has for
the nonpayment of Rent. The term "Rentals" as used in this Lease shall mean Rent
and Additional Rent.

                  4.4 Rent During  Extended Term. If Tenant elects to extend the
Lease Term pursuant to Paragraph 3.5 above,  the monthly base Rent for the first
year of the  Extended  Term shall be in an amount equal to  ninety-five  percent
(95%) of the fair  market  rental  value of the  Premises  in relation to market
conditions at the time of the commencement of the Extended Term (including,  but
not  limited  to,  rental  rates for  comparable  space with  comparable  tenant
improvements  in Santa Clara County as of the  commencement of the Extended Term
and taking into  consideration  any  adjustments to rent based upon direct costs
(operating  expenses) and taxes,  load  factors,  and/or cost of living or other
rental adjustments; the relative strength of the tenants; the size of the space;
and any other  factors  which  affect  market  rental  values at the time of the
commencement  of the Extended Term);  however,  the monthly base Rent during the
first year of the  Extended  Term shall in no event be lower than  Seventy-eight
Thousand One Hundred Twenty Dollars ($78,120) (NNN) per month.

                           (a)  Mutual   Agreement.   After  timely  receipt  by
Landlord of Tenant's  notice of exercise of the option to extend the Lease Term,
but not sooner than the date which is nine (9) months prior to the expiration of
the initial Lease Term,  Landlord and Tenant shall have a period of fifteen (15)
days in which to agree on the monthly base Rent to be paid during the first year
of the  Extended  Term.  If Landlord  and Tenant agree on said monthly base Rent
during that period,  they shall  immediately  execute an amendment to this Lease
stating  the  monthly  base Rent for the first  year of the  Extended  Term.  If
Landlord  and Tenant are unable to agree on the monthly  base Rent for the first
year of the Extended Term as aforesaid,  then the provisions of Subparagraph (b)
below shall apply.

                           (b)  Appraisal.   Within  ten  (10)  days  after  the
expiration of the fifteen (15) day period  described in Subparagraph  (a) above,
each party at its cost and by giving notice to the other party, shall appoint an
M.A.I. real estate appraiser, with at least seven (7) years full-time commercial
appraisal  experience in Santa Clara County, to appraise and set the fair market
rental value of the  Premises.  If a party does not appoint an appraiser  within
ten (10)  days  after  the  other  party  has  given  notice  of the name of its
appraiser,  the single appraiser appointed shall be the sole appraiser and shall
set the fair market rental value. The cost of such sole appraiser shall be borne
equally by the  parties.  If two  appraisers  are  appointed  by the  parties as
provided in this  Subparagraph (b), the two appraisers shall meet promptly in an
attempt to set the fair market rental value.  If they are unable to agree within
twenty  (20) days  after the last  appraiser  has been  appointed,  then the two
appraisers shall attempt to select a third appraiser meeting the  qualifications
stated in this  Subparagraph (b) within ten (10) days after the last day the two
appraisers are given to set the fair market rental value.  If they are unable to
agree on the third appraiser, either of the

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parties to this Lease,  by giving ten (10) days notice to the other  party,  may
apply to the presiding judge of the Superior Court of Santa Clara County for the
selection of a third appraiser who meets the  qualifications  stated above. Each
of the parties shall bear one-half of the cost of appointing the third appraiser
and of paying the third appraiser's fee. The third appraiser,  however selected,
shall be a person who has not previously acted in any capacity for either party.
Within twenty (20) days after the selection of the third appraiser, the majority
of the appraisers shall set the fair market rental value. If the majority of the
appraisers  are unable to set the fair market  rental  value  within said twenty
(20) day period,  the three  appraisals  shall be added  together  and the total
divided by three (3); the  resulting  quotient  shall be the fair market  rental
value and shall be deemed incorporated herein;  provided,  however,  that if any
appraisal  differs from the median appraisal by an amount equal to more than ten
percent (10%) of such median appraisal, that appraisal shall be disregarded, and
the average of the remaining  appraisals (or the remaining  appraisal)  shall be
the fair market rental value. In establishing  the fair market rental value, the
appraiser or appraisers  shall consider the factors referred to in above in this
Subparagraph  (b), without regard to the existence of this Lease but taking into
consideration  the triple net nature of this Lease. The appraiser shall have the
right to include  adjustments  to the monthly base Rent during the Extended Term
as part of the fair market rental value of the Premises.

Every twelve  calendar  months  during the  Extended  Term the monthly base Rent
shall be increased by an additional  $0.06 per rentable  square foot  comprising
the  Premises.  The first such  adjustment  shall  occur on the first day of the
thirteenth month of the Extended Term.

         5. Intentionally Omitted.

         6. Use of Premises.

                  6.1  Permitted  Uses.  Tenant  shall use the  Premises and the
Common Area only in conformance  with applicable Laws for the purposes set forth
in  Paragraph  1.9 above,  and for no other  purpose  without the prior  written
consent of Landlord, which consent Landlord may withhold in its sole discretion.
Any change in use of the Premises or the Common Area  without the prior  written
consent of Landlord  shall be a Default by Tenant.  Tenant and  Tenant's  agents
shall comply with the provisions of any  Declaration  of Covenants,  Conditions,
and Restrictions affecting the Premises and the Common Area.

                  6.2 Tenant to Comply with Legal Requirements. Tenant shall, at
its sole cost (except as otherwise  expressly provided in this Lease),  promptly
comply with all Laws  relating to or  affecting  the use,  occupational  safety,
occupancy or condition  of the  Premises or the Common  Area,  now in force,  or
which may hereafter be in force,  including without limitation those relating to
utility  usage  and load or  number  of  permissible  occupants  or users of the
Premises,  whether or not the same are now contemplated by the parties; with the
provisions of all recorded  documents  affecting the Premises or the Common Area
insofar as the same relate to or affect the use, occupational safety, occupancy,
or condition of the Premises or the Common Area;  and with the  requirements  of
any board of fire  underwriters  (or similar body now or hereafter  constituted)
relating to or affecting the use, occupational safety, occupancy or condition of
the Premises or the Common Area. Tenant's obligations pursuant to this

                                      -9-
<PAGE>

Paragraph  6.2 shall include  without  limitation  maintaining  or restoring the
Premises and making structural and  non-structural  alterations and additions in
compliance and conformity with all Laws and recorded  documents  relating to the
use,  occupational  safety,  occupancy or  condition of the Premises  during the
Lease Term. At  Landlord's  option,  Landlord may make the required  alteration,
addition or change, and Tenant shall pay the cost thereof as Additional Rent. If
any portion of the Premises or Common Area is not in compliance  with Laws as of
the  Commencement  Date of this Lease,  then Tenant shall not be responsible for
bringing  the  Premises  or Common  Area into  compliance,  nor shall  Tenant be
obligated to pay any money to bring the Premises or Common Area into compliance.
With  respect to any  structural  alterations  or  additions as may be hereafter
required due to a change in Laws and  unrelated to (i) Tenant's  specific use of
the  Premises  or the Common  Area,  (ii)  Tenant's  alterations,  additions  or
improvements to the Premises, or (iii) Tenant's acts or omissions,  Tenant shall
be required to pay the amortized cost of such structural alteration or addition,
which amount shall be determined  as follows:  (a) all costs paid by Landlord to
construct such alteration or addition (including financing costs) shall be fully
amortized over the useful life of such  alteration or addition (as determined by
Landlord  in  good  faith)  with  interest  on the  unamortized  balance  at the
prevailing market rate Landlord would pay if it borrowed funds to construct such
alteration or addition from an institutional lender, and (b) as Additional Rent,
Tenant  shall pay the entire  monthly  amortized  payment  with  respect to such
structural  alteration or addition.  Tenant's  obligation to make payments under
the immediately  preceding sentence with respect to any structural alteration or
addition  that is required due to a change in Laws and unrelated to (i) Tenant's
specific  use of  the  Premises  or  Common  Area,  (ii)  Tenant's  alterations,
additions or improvements to the Premises,  or (iii) Tenant's acts or omissions,
shall commence when such alteration or addition has been substantially completed
and shall  cease upon the earlier of the  expiration  of the Lease Term (but not
upon a  termination  due to any Default on the part of Tenant) or the end of the
term over which the costs of constructing the particular  alteration or addition
were amortized. Payments of such Additional Rent shall be made concurrently with
payments  of Base  Rent.  Tenant  shall  pay 100% of the cost of any  structural
alteration  or addition  that is required due to a change in Laws and related to
(i)  Tenant's  specific  use of the  Premises  or  Common  Area,  (ii)  Tenant's
alterations,  additions or improvements to the Premises, and (iii) Tenant's acts
or omissions.  Tenant shall obtain prior to the  Commencement  Date any permits,
licenses  or other  authorizations  required  for the  lawful  operation  of its
business at the Premises. The judgment of any court of competent jurisdiction or
the admission of Tenant in any action or proceeding  against Tenant,  regardless
of whether Landlord is a party thereto or not, that Tenant has violated such Law
or recorded  document  relating to the use,  occupational  safety,  occupancy or
condition of the Premises or the Common Area shall be  conclusive of the fact of
such  violation by Tenant.  Any  alterations  or additions  undertaken by Tenant
pursuant to this Paragraph 6.2 shall be subject to the requirements of Paragraph
13.1 below.

                  6.3  Prohibited  Uses.  Tenant and  Tenant's  agents shall not
commit  or suffer  to be  committed  any waste  upon the  Premises.  Tenant  and
Tenant's  agents  shall  not do or  permit  anything  to be done in or about the
Premises or Common Area which will in any way  obstruct  or  interfere  with the
rights of any  authorized  users of the Common  Area,  or injure or annoy  them.
Tenant  shall not conduct or permit any auction or sale open to the public to be
held or conducted  on or about the Premises or Common Area.  Tenant and Tenant's
agents  shall  not use

                                      -10-
<PAGE>

or allow the Premises to be used for any  unlawful or  hazardous  purpose or any
purpose not permitted by this Lease,  nor shall Tenant or Tenant's agents cause,
maintain,  or permit  any  nuisance  in, on or about the  Premises.  Tenant  and
Tenant's  agents  shall  not do or  permit  anything  to be done in or about the
Premises  or Common Area nor bring or keep  anything  in the  Premises or Common
Area which will in any way increase the rate of any insurance  upon the Premises
or  Common  Area  or  any  part  thereof  or any of its  contents,  or  cause  a
cancellation of any insurance policy covering the Premises or Common Area or any
part thereof or any of its contents,  nor shall Tenant or Tenant's  agents keep,
use or sell or permit  to be kept,  used or sold in or about  the  Premises  any
articles which may be prohibited by a standard form policy of fire insurance. In
the event the rate of any insurance upon the Premises or Common Area or any part
thereof or any of its contents is increased  because of the acts or omissions of
Tenant or Tenant's  agents,  Tenant shall pay, as Additional Rent, the full cost
of such  increase to the extent  attributable  solely to Tenant's or its agents'
acts or omissions;  provided  however this provision shall in no event be deemed
to constitute a waiver of Landlord's  rights or remedies in connection with such
increase.  Tenant and Tenant's  agents shall not place any loads upon the floor,
walls or ceiling of the  Premises  which  would  endanger  the  Premises  or the
structural  elements  thereof,  nor place any  harmful  liquids in the  drainage
system of the  Premises.  No waste  materials  or refuse shall be dumped upon or
permitted  to remain  upon any part of the  Premises  or Common  Area  except in
enclosed trash containers. No materials,  supplies, equipment, finished products
(or  semi-finished  products),  raw  materials,  or other articles of any nature
shall be stored  upon,  or be  permitted to remain on, any portion of the Common
Area.

         Tenant shall not allow any activity which in the reasonable  opinion of
Landlord is  detrimental  to the  operation  of the Common Area or to tenants of
Landlord in other  buildings  located on the Common  Area or upon real  property
owned by Landlord adjacent to the Common Area,  including but not limited to any
picketing,  work stoppage, or other concerted activity.  Landlord shall have the
right to require Tenant,  at Tenant's own expense and within a reasonable period
of time, to use Tenant's commercially reasonable efforts to terminate or control
any such  picketing,  work  stoppage or other  concerted  activity to the extent
necessary to eliminate any interference with the operation of the Common Area or
such tenants. Failure by Tenant to use its commercially reasonable efforts to do
so shall be a Default by Tenant.  Nothing  contained in this paragraph  shall be
construed as placing Landlord in an  employer-employee  relationship with any of
Tenant's  employees  or with any other  employees  who may be  involved  in such
activity.

                  6.4 Hazardous  Materials.  Neither Tenant nor Tenant's  agents
shall  permit  the   introduction,   placement,   use,   storage,   manufacture,
transportation, release or disposition (collectively "Release") of any Hazardous
Material(s)  (defined  below) on or about any portion of the  Premises or Common
Area  without  the prior  written  consent of  Landlord,  which  consent  may be
withheld in the sole and absolute discretion of Landlord without any requirement
of  reasonableness  in the  exercise  of that  discretion.  Notwithstanding  the
immediately  preceding  sentence  to the  contrary,  Tenant  may use de  minimis
quantities  of the  types of  materials  which  are  technically  classified  as
Hazardous  Materials  but commonly  used in domestic or office use to the extent
not in an  amount,  which,  either  individually  or  cumulatively,  would  be a
"reportable  quantity" under any applicable  Law. Tenant  covenants that, at its
sole cost and

                                      -11-
<PAGE>

expense, Tenant will comply with all applicable Laws with respect to the Release
of such permitted Hazardous  Materials.  Any Release beyond the scope allowed in
this  paragraph  shall be  subject to  Landlord's  prior  consent,  which may be
withheld  in  Landlord's  sole and  absolute  discretion,  and shall  require an
amendment to the Lease in the event  Landlord does consent which shall set forth
the materials,  scope of use,  indemnification  and any other matter required by
Landlord in Landlord's  sole and absolute  discretion.  Tenant shall  indemnify,
defend and hold Landlord and Landlord's agents harmless from and against any and
all claims, losses, damages, liabilities, or expenses arising in connection with
the  Release of  Hazardous  Materials  by Tenant,  Tenant's  agents or any other
person  using the  Premises  during the Term of this Lease or during the term of
Tenant's  prior  lease of the  Premises.  Tenant's  obligation  to defend,  hold
harmless  and  indemnify  pursuant  to this  Paragraph 6 4 shall  survive  Lease
Termination.

         As used  in this  Lease,  the  term  "Hazardous  Materials"  means  any
chemical, substance, waste or material which has been or is hereafter determined
by any federal,  state or local  governmental  authority to be capable of posing
risk of  injury  to  health  or  safety,  including  without  limitation,  those
substances included within the definitions of "hazardous substances," "hazardous
materials,"  "toxic  substances,"  or  "solid  waste"  under  the  Comprehensive
Environmental  Response,  Compensation,  and Liability Act of 1980, the Resource
Conservation   and  Recovery   Act  of  1976,   and  the   Hazardous   Materials
Transportation Act, as amended,  and in the regulations  promulgated pursuant to
said laws;  those substances  defined as "hazardous  wastes" in section 25117 of
the  California  Health & Safety Code, or as "hazardous  substances"  in section
25316 of the California Health & Safety Code, as amended, and in the regulations
promulgated  pursuant to said laws; those substances listed in the United States
Department of  Transportation  Table (49 CFR 172.101 and amendments  thereto) or
designated by the  Environmental  Protection Agency (or any successor agency) as
hazardous substances (see, e.g., 40 CFR Part 302 and amendments  thereto);  such
other  substances,  materials and wastes which are or become regulated or become
classified as hazardous or toxic under any Laws,  including  without  limitation
the California Health & Safety Code, Division 20, and Title 26 of the California
Code  of  Regulations;  and  any  material,  waste  or  substance  which  is (i)
petroleum, (ii) asbestos, (iii) polychlorinated  biphenyls, (iv) designated as a
"hazardous substance" pursuant to section 311 of the Clean Water Act of 1977, 33
U.S.C.  sections 1251 et seq. (33 U.S.C.  ` 1321) or listed  pursuant to section
307 of the Clean Water Act of 1977 (33 U.S.C. ` 1317), as amended; (v) flammable
explosives; (vi) radioactive materials; or (vii) radon gas.

         7. Taxes.

                  7.1 Personal Property Taxes. Tenant shall cause Tenant's trade
fixtures, equipment, furnishings,  furniture, merchandise, inventory, machinery,
appliances  and other  personal  property  installed  or located on the Premises
(collectively the "personal property") to be assessed and billed separately from
the Premises. Tenant shall pay before delinquency any and all taxes, assessments
and public charges levied, assessed or imposed upon or against Tenant's personal
property.  If any of Tenant's  personal property shall be assessed with the real
property  comprising  the Common Area or with the Premises,  Tenant shall pay to
Landlord,  as Additional  Rent, the amounts  attributable  to Tenant's  personal
property within ten (10) days after receipt of a written statement from Landlord
setting  forth  the  amount  of  such  taxes,

                                      -12-
<PAGE>

assessments  and public  charges  attributable  to Tenant's  personal  property.
Tenant shall comply with the provisions of any Law which requires Tenant to file
a report of Tenant's personal property located on the Premises.

                  7.2 Other Taxes  Payable  Separately  by Tenant.  Tenant shall
pay,  prior  to  delinquency,  all  privilege,  sales,  excise,  use,  business,
occupation,  or  other  taxes,  assessments,  license  fees or  charges  levied,
assessed or imposed upon Tenant's business operations conducted at the Premises.

                  7.3 Common Taxes.

                           (a) Definition of Taxes.  The term "Taxes" as used in
this Lease shall  collectively  mean (to the extent any of the following are not
paid by Tenant  pursuant to Paragraphs  7.1 and 7.2 above) all real estate taxes
and general and special assessments (including,  but not limited to, assessments
for public  improvements or benefit);  personal  property taxes;  taxes based on
vehicles  utilizing parking areas on the Common Area; taxes computed or based on
rental  income or on the  square  footage  of the  Premises  (including  without
limitation any municipal business tax but excluding federal, state and municipal
net income  taxes);  taxes  upon,  allocable  to, or measured by the area of the
Premises or the Rentals  payable  hereunder,  including  without  limitation any
gross income,  gross  receipts,  excise,  or other tax levied by the state,  any
political  subdivision  thereof,  city or federal government with respect to the
receipt of such Rentals (but excluding  federal,  state and municipal net income
taxes); taxes upon or with respect to the use, possession,  occupancy,  leasing,
operation and management of the Premises or any portion thereof; taxes upon this
transaction or any document to which Tenant is a party creating or  transferring
an  interest  or an  estate  in  the  Premises;  taxes  imposed  as a  means  of
controlling  or  abating  environmental  pollution  or the use of  energy or any
natural  resource  (including  without  limitation  gas,  electricity or water),
including, without limitation, any parking taxes, levies or charges or vehicular
regulations imposed by any governmental agency; environmental surcharges; excise
taxes; gross receipts taxes;  sales and/or use taxes;  employee taxes; water and
sewer taxes,  levies,  assessments  and other  charges in the nature of taxes or
assessments (including,  but not limited to, assessments for public improvements
or benefit); and all other governmental,  quasi-governmental or special district
impositions of any kind and nature whatsoever  (excluding utility hook-up fees);
regardless  of whether  any of the  foregoing  are now  customary  or within the
contemplation  of the parties  hereto and  regardless of whether  resulting from
increased rate and/or valuation,  or whether extraordinary or ordinary,  general
or special,  unforeseen  or  foreseen,  or similar or  dissimilar  to any of the
foregoing and which during the Lease Term are laid, levied,  assessed or imposed
upon  Landlord  and/or  become a lien upon or  chargeable  against the  Premises
and/or  Common Area under or by virtue of any present or future laws,  statutes,
ordinances,   regulations,   or   other   requirements   of  any   governmental,
quasi-governmental  or special district authority  whatsoever.  The term "Taxes"
shall not include  reimbursement  to Landlord of  Landlord's  net income  taxes,
succession,  transfer,  gift, franchise,  estate or inheritance taxes, but shall
include  any  increases  in taxes  based  upon any  change of  ownership  of the
Premises or Common Area. The term  "environmental  surcharges" shall include any
and all expenses,  taxes, charges or penalties imposed by the Federal Department
of Energy,  Federal Environmental  Protection Agency, the Federal Clean

                                      -13-
<PAGE>

Air Act,  or any  regulations  promulgated  thereunder,  or imposed by any other
local,  state or federal  governmental  agency or entity now or hereafter vested
with the power to impose  taxes,  assessments  or other types of surcharges as a
means of controlling or abating environmental  pollution or the use of energy or
any  natural  resource  in  regard to the use,  operation  or  occupancy  of the
Premises  and/or the Common Area.  The term "Taxes" shall include (to the extent
the same are not paid by  Tenant  pursuant  to  Paragraphs  7.1 and 7.2  above),
without limitation, all taxes, assessments, levies, fees, impositions or charges
levied, imposed,  assessed,  measured, or based in any manner whatsoever upon or
with respect to the use, possession, occupancy, leasing, operation or management
of the Premises  and/or Common Area or in lieu of or equivalent to any Taxes set
forth in this  Paragraph  7.3(a).  In the event any such  Taxes are  payable  by
Landlord  and it shall not be lawful for Tenant to  reimburse  Landlord for such
Taxes, then the Rentals payable hereunder shall be increased to net Landlord the
same net Rental  after  imposition  of any such Tax upon  Landlord as would have
been payable to Landlord prior to the imposition of any such Tax.

                           (b) Operating Expenses. All Taxes which are levied or
assessed or which  become a lien upon the Premises  and/or  Common Area or which
become due or accrue  during the Lease Term shall be an Operating  Expense,  and
Tenant shall pay as  Additional  Rent each month during the Lease Term 1/12th of
such Taxes,  based on  Landlord's  estimate  thereof,  pursuant to  Paragraph 12
below.  Taxes during any partial tax fiscal  year(s) within the Lease Term shall
be  prorated  according  to the ratio  which the number of days during the Lease
Term or of actual  occupancy  of the  Premises by Tenant,  whichever is greater,
during such year bears to 365.

         8. Insurance; Indemnity; Waiver.

                  8.1 Insurance by Landlord.

                           (a) Landlord  shall,  during the Lease Term,  procure
and keep in  force  the  following  insurance,  the  cost of  which  shall be an
Operating  Expense  (subject to the limitation on earthquake  insurance  premium
pass-throughs  as provided  below),  payable by Tenant  pursuant to Paragraph 12
below:

                                    (i) Property Insurance.  "All risk" property
insurance,  including, without limitation, coverage for boiler and machinery (if
applicable);  sprinkler damage;  vandalism;  malicious  mischief;  full coverage
plate glass  insurance;  and  demolition,  increased  cost of  construction  and
contingent  liability  from change in building  laws on the  Premises and Common
Area,  including any  improvements  or fixtures  constructed or installed on the
Premises and Common Area by Landlord. Such insurance shall be in the full amount
of the replacement cost of the foregoing,  with reasonable  deductible  amounts,
which  deductible  amounts  shall be an  Operating  Expense,  payable  by Tenant
pursuant to  Paragraph  12. Such  insurance  shall also  include  rental  income
insurance,  insuring that one hundred percent (100%) of the Rentals (as the same
may be adjusted hereunder) will be paid to Landlord for a period of up to twelve
(12) months if the Premises are  destroyed or damaged,  or such longer period as
may be required by any  beneficiary  of a deed of trust or any  mortgagee of any
mortgage

                                      -14-
<PAGE>

affecting the Premises.  Such "all risk" insurance may, at Landlord's  election,
include  coverage for earthquake  and/or flood.  Landlord agrees that the annual
earthquake  insurance  premium  to be  included  as an  Operating  Expense  (and
allocable  solely to the Premises) shall not exceed Eight Thousand Eight Hundred
Fifty-seven and 65/100 Dollars  ($8,857.65) per year, as such $8,857.65 shall be
increased by five percent  (5%) per year during the Lease Term,  including,  the
Extended Term.  Such property  insurance  maintained by Landlord shall not cover
any leasehold  improvements  installed in the Premises by Tenant at its expense,
or Tenant's equipment,  trade fixtures inventory,  fixtures or personal property
located on or in the Premises;

                                    (ii)  Liability   Insurance.   Comprehensive
general  liability  (lessor's  risk)  insurance  against  any and all claims for
personal injury,  death or property damage occurring in or about the Premises or
Common Area.  Such insurance shall have a combined single limit of not less than
One  Million  Dollars  ($1,000,000)  per  occurrence  and  Two  Million  Dollars
($2,000,000) aggregate; and

                                    (iii)   Other.   Such  other   insurance  as
Landlord  deems  reasonably  necessary  and  prudent  (as long as  available  at
commercially reasonable premiums).

                  8.2 Insurance by Tenant.  Tenant shall, during the Lease Term,
at  Tenant's  sole cost and  expense,  procure  and keep in force the  following
insurance:

                           (a) Personal Property Insurance.  "All risk" property
insurance,  including, without limitation, coverage for boiler and machinery (if
applicable);  sprinkler damage;  vandalism;  malicious mischief; and demolition,
increased cost of construction and contingent liability from changes in building
laws on all  leasehold  improvements  installed in the Premises by Tenant at its
expense (if any) and on all equipment, trade fixtures,  inventory,  fixtures and
personal  property  located on or in the  Premises,  including  improvements  or
fixtures  hereinafter  constructed or installed on the Premises.  Such insurance
shall be in an amount equal to the full replacement cost of the aggregate of the
foregoing and shall provide coverage  comparable to the coverage in the standard
ISO all risk form,  when such form is supplemented  with the coverages  required
above.

                           (b)  Liability   Insurance.   Comprehensive   general
liability  insurance for the mutual benefit of Landlord and Tenant,  against any
and all claims for personal  injury,  death or property  damage  occurring in or
about the  Premises  and Common  Area,  or arising  out of  Tenant's or Tenant's
agents' use of the Common  Area,  use or  occupancy  of the Premises or Tenant's
operations on the Premises. Such insurance shall have a combined single limit of
not less than Three Million Dollars ($3,000,000) per occurrence and Five Million
Dollars ($5,000,000)  aggregate.  Such insurance shall contain a cross-liability
(severability  of interests)  clause and an extended  ("broad  form")  liability
endorsement,   including  blanket  contractual  coverage.   The  minimum  limits
specified above are the minimum amounts required by Landlord, and may be revised
by Landlord from time to time to meet changed  circumstances,  including without
limitation to reflect (i) changes in the  purchasing  power of the dollar,  (ii)
changes  indicated  by the amount of  plaintiffs'  verdicts in  personal  injury
actions  in the  State of  California,  or  (iii)  changes  consistent  with the
standards  required by other  landlords  in the

                                      -15-
<PAGE>

county in which the Premises  are located.  Such  liability  insurance  shall be
primary  and not  contributing  to any  insurance  available  to  Landlord,  and
Landlord's  insurance (if any) shall be in excess thereto.  Such insurance shall
specifically  insure  Tenant's  performance of the  indemnity,  defense and hold
harmless  agreements  contained in Paragraph 8.4, although Tenant's  obligations
pursuant to  Paragraph  8.4 shall not be limited to the amount of any  insurance
required of or carried by Tenant under this  Paragraph  8.2(b).  Tenant shall be
responsible  for insuring  that the amount of insurance  maintained by Tenant is
sufficient for Tenant's purposes.

                           (c) Other.  Such other  insurance as required by law,
including, without limitation, workers' compensation insurance.

                           (d) Form of the Policies. The policies required to be
maintained by Tenant pursuant to Paragraphs 8.2(a),  (b), and (c) above shall be
with companies,  on forms,  with  deductible  amounts (if any), and loss payable
clauses satisfactory to Landlord,  shall include Landlord and the beneficiary or
mortgagee of any deed of trust or mortgage  encumbering  the Premises and/or the
real  property  comprising  the Common Area as  additional  insureds,  and shall
provide that such parties may, although additional insureds recover for any loss
suffered by Tenant's negligence. Certified copies of policies or certificates of
insurance shall be delivered to Landlord prior to the  Commencement  Date: a new
policy or  certificate  shall be delivered to Landlord at least thirty (30) days
prior to the expiration  date of the old policy.  Tenant shall have the right to
provide insurance  coverage which it is obligated to carry pursuant to the terms
hereof in a blanket  policy,  provided  such blanket  policy  expressly  affords
coverage to the Premises  and to Tenant as required by this Lease.  Tenant shall
obtain  a  written  obligation  on the part of  Tenant's  insurer(s)  to  notify
Landlord  and any  beneficiary  or  mortgagee  of a deed of  trust  or  mortgage
encumbering the Premises and/or the real property  comprising the Common Area in
writing of any  delinquency  in premium  payments  and at least thirty (30) days
prior to any cancellation or modification of any policy. Tenant's policies shall
provide  coverage on an occurrence  basis and not on a claims made basis.  In no
event shall the limits of any policies  maintained  by Tenant be  considered  as
limiting the liability of Tenant under this Lease.

                  8.3 Failure by Tenant to Obtain Insurance.  If Tenant does not
take out the  insurance  required  pursuant to Paragraph 8.2 or keep the same in
full force and effect, Landlord may, but shall not be obligated to, take out the
necessary  insurance  and pay the premium  therefor,  and Tenant  shall repay to
Landlord,  as  Additional  Rent,  the amount so paid  promptly  upon demand.  In
addition,  Landlord  may  recover  from  Tenant  and  Tenant  agrees to pay,  as
Additional Rent, any and all reasonable expenses (including attorneys' fees) and
damages which  Landlord may sustain by reason of the failure of Tenant to obtain
and maintain such insurance,  it being expressly  declared that the expenses and
damages of Landlord shall not be limited to the amount of the premiums thereon.

                  8.4 Indemnification Tenant shall indemnify, hold harmless, and
defend Landlord (except to the extent of the negligence or willful misconduct of
Landlord or Landlord's  agents,  employees or  contractors)  against all claims,
losses, damages,  actions,  causes of action,  penalties,  demands,  expenses or
liabilities for injury or death to any person or for damage to or loss of use of
any  property  arising  out of any  occurrence  in, on or about the

                                      -16-
<PAGE>

Premises or Common Area, if and to the extent caused or contributed to by Tenant
or Tenant's  agents,  employees or  contractors or arising out of any occurrence
in, upon or at the  Premises or on account of the use,  condition,  occupational
safety or occupancy of the Premises. Tenant's indemnification,  defense and hold
harmless  obligations  under this Lease shall  include  and apply to  attorneys'
fees, investigation costs, and other costs actually incurred by Landlord. Tenant
shall further indemnify,  defend and hold harmless Landlord from and against any
and all claims, losses, damages, liabilities or 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.  The  provisions  of this  Paragraph  8.4 shall
survive Lease Termination with respect to any damage,  injury,  death, breach or
default occurring prior to such  termination.  This Lease is made on the express
condition that Landlord shall not be liable (in the absence of the negligence or
willful misconduct of Landlord or Landlord's  agents,  employees or contractors)
for, or suffer loss by reason of,  injury to person or property,  from  whatever
cause,  in any way connected with the  condition,  use,  occupational  safety or
occupancy  of the  Premises  specifically  including,  without  limitation,  any
liability  for injury to the person or property  of Tenant or  Tenant's  agents.
Anything in this Lease to the contrary  notwithstanding,  under no circumstances
shall  Landlord  be liable to Tenant  for any  claims of lost  profits,  loss of
business or lost income.

                  8.5 Claims by Tenant.  Landlord shall not be liable to Tenant,
and  Tenant  waives  all  claims  against  Landlord,  for injury or death to any
person,  damage to any property,  or loss of use of any property in the Premises
or Common Area by and from all causes, including without limitation,  any defect
in the Premises or Common Area and/or any damage or injury  resulting from fire,
steam, electricity,  gas, water or rain, which may leak or flow from or into any
part of the Premises, or from breakage, leakage, obstruction or other defects of
pipes,  sprinklers,  wires,  appliances,  plumbing, air conditioning or lighting
fixtures,  whether the damage or injury results from conditions arising upon the
Premises or Common Area or from other sources.  Landlord shall not be liable for
any  damages  arising  from any act or  neglect  of any other user of the Common
Area. Tenant or Tenant's agents shall immediately  notify Landlord in writing of
any known  defect  in the  Premises  or  Common  Area.  The  provisions  of this
Paragraph 8.5 shall not apply to any damages, claims, losses, actions, causes of
action,  penalties,  demands,  expenses,  liabilities or injuries  caused by the
negligence or willful misconduct of Landlord's agents, employees or contractors;
provided, however, under no circumstances shall Landlord be liable to Tenant for
claims of lost profits, loss of business or lost income.

                  8.6 Mutual Waiver of  Subrogation.  Landlord  hereby  releases
Tenant,  and Tenant hereby releases  Landlord,  and their  respective  officers,
agents,  employees and servants,  from any and all claims or demands of damages,
loss,  expense  or  injury  to  the  Premises  or  the  Common  Area,  or to the
furnishings, fixtures, equipment, inventory or other property of either Landlord
or Tenant in, about or upon the Premises or the Common Area,  which is caused by
or results from perils,  events or happenings which are the subject of insurance
carried by the respective  parties  pursuant to this Paragraph 8 and in force at
the time of any such loss,  whether due to the  negligence of the other party or
its  agents and  regardless  of cause or origin;  provided,  however,  that such
waiver shall be effective only to the extent permitted by the insurance

                                      -17-
<PAGE>

covering such loss, to the extent such insurance is not prejudiced thereby,  and
to the extent insured against.

         9.  Utilities.   Landlord  agrees  to  provide,  at  its  cost,  water,
electricity  and telephone  service  connections  into the Premises;  but Tenant
shall pay during the Lease Term and prior to delinquency  all charges for water,
gas, light, heat, power, electricity,  telephone or other communication service,
janitorial service,  trash pick-up,  sewer and all other services supplied to or
consumed on the Premises  (collectively  the "Services") and all taxes,  levies,
fees or surcharges therefor. Tenant shall arrange for Services to be supplied to
the Premises and shall  contract for all of the Services in Tenant's  name prior
to the Commencement  Date. The Commencement  Date shall not be delayed by reason
of any failure by Tenant to so contract for  Services.  In the event that any of
the Services cannot be separately  billed or metered to the Premises,  or if any
of the Services are not separately metered as of the Commencement Date, the cost
of such Services shall be an Operating Expense and Tenant shall pay such cost to
Landlord,  as Additional  Rent,  as provided in Paragraph 12 below,  except that
Tenant's  proportionate  share of such Services shall be the percentage obtained
by dividing the gross leasable  square footage  contained in the Premises by the
total gross  leasable  square  footage  located in all buildings  utilizing such
Services. The lack or shortage of any Services due to any cause whatsoever shall
not affect any obligation of Tenant hereunder,  and Tenant shall faithfully keep
and observe all the terms,  conditions  and  covenants of this Lease and pay all
Rentals  due  hereunder,  all  without  diminution,  credit  or  deduction.  The
immediately preceding sentence to the contrary notwithstanding,  Landlord agrees
that if Services  are  curtailed or suspended to the Premises as a result of the
acts or negligence or willful misconduct of Landlord for a period of forty-eight
(48)  consecutive  hours  during the Lease  Term,  then  Tenant's  Rent  payable
hereunder shall be equitably abated to the extent such curtailment or suspension
of  Services  interferes  with  Tenant's  use of  the  Premises  (as  reasonably
determined by Landlord and Tenant)  following such  forty-eight (48) hour period
until such Services are restored.

         10. Repairs and Maintenance.

                  10.1 Landlord's Responsibilities. Subject to the provisions of
Paragraph 15 below,  Landlord shall maintain in reasonably good order and repair
the  structural  roof and roof  surface,  structural  (i.e.  load  bearing)  and
exterior walls  (including  painting  thereof) and  foundations of the Premises,
except  for any  repairs  required  because  of the  wrongful  act of  Tenant or
Tenant's  agents,  which  repairs  shall be made at the expense of Tenant and as
Additional  Rent.  Tenant  shall give prompt  written  notice to Landlord of any
known  maintenance  work  required  to be  made  by  Landlord  pursuant  to this
Paragraph 10.1. The costs of repairs and maintenance which are the obligation of
Landlord hereunder shall be an Operating Expense and Tenant shall pay such costs
to Landlord as Additional Rent, as provided in Paragraph 12 below.

         To the extent any labor dispute in which Tenant is involved or of which
Tenant is the  object  interferes  with the  performance  of  Landlord's  duties
hereunder,  Landlord  shall be excused from the  performance  of such duties and
Tenant hereby waives any and all claims  against  Landlord for damages or losses
in regard to such duties.

                                      -18-
<PAGE>

                  10.2 Tenant's  Responsibilities.  Except as expressly provided
in Paragraph  10.1 above,  Tenant shall,  at its sole cost,  maintain the entire
Premises  and  every  part  thereof,  including  without  limitation,   windows,
skylights,  window  frames,  plate  glass,  freight  docks,  doors  and  related
hardware, interior walls and partitions, and the electrical, plumbing, lighting,
heating and air conditioning systems in good order, condition and repair. Tenant
shall  deliver to  Landlord,  every six (6)  months  during  the Lease  Term,  a
certificate of maintenance or its  equivalent,  signed by a licensed HVAC repair
and  maintenance  contractor  and stating that the heating and air  conditioning
systems  servicing  the Premises have been  inspected,  serviced and are in good
order, condition and repair. Tenant's failure to deliver said certificate or its
equivalent  within thirty (30) days following  written notice from Landlord that
said  certificate  is past due shall be a Default by Tenant.  If Tenant fails to
make repairs or perform  maintenance  work required of Tenant  hereunder  within
fifteen  (15) days  after  notice  from  Landlord  specifying  the need for such
repairs or maintenance  work,  Landlord or Landlord's agents may, in addition to
all other rights and remedies available  hereunder or by law and without waiving
any alternative  remedies,  enter into the Premises and make such repairs and/or
perform such  maintenance  work. If Landlord makes such repairs and/or  performs
such  maintenance  work,  Tenant  shall  reimburse  Landlord  upon demand and as
Additional Rent, for the cost of such repairs and/or maintenance work.  Landlord
shall have no liability to Tenant for any damage,  inconvenience or interference
with the use of the  Premises  by  Tenant  or  Tenant's  agents  as a result  of
Landlord  performing  any such  repairs  or  maintenance  (unless  such  damage,
inconvenience  or  interference  is caused by the gross  negligence  or  willful
misconduct  of Landlord  or its agents,  employees  or  contractors);  provided,
however, under no circumstances shall Landlord be liable to Tenant for claims of
lost profits,  loss of business or lost income. Tenant shall reimburse Landlord,
on demand and as Additional  Rent, for the cost of damage to the Premises and/or
Common Area  caused by Tenant or  Tenant's  agents,  employees  or  contractors.
Tenant  expressly  waives the benefits of any statute now or hereafter in effect
(including  without  limitation  the provisions of subsection 1 of Section 1932,
Section 1941 and Section 1942 of the California  Civil Code and any similar law,
statute or ordinance  now or hereafter in effect) which would  otherwise  afford
Tenant the right to make repairs at Landlord's expense (or to deduct the cost of
such repairs from Rentals due  hereunder) or to terminate  this Lease because of
Landlord's failure to keep the Premises in good and sanitary order.

         11. Common Area.

                  11.1 In General.  Subject to the terms and  conditions of this
Lease  and  such  rules  and  regulations  as  Landlord  may  from  time to time
prescribe,  Tenant and Tenant's agents shall have the nonexclusive  right to use
during the Lease Term the access roads,  sidewalks,  landscaped  areas and other
facilities on the Common Area. This right to use the Common Area shall terminate
upon Lease  Termination.  Neither  Tenant nor Tenant's  agents shall at any time
park or permit the  parking of their  vehicles in any portion of the Common Area
not designated by Landlord as a parking area.

         Landlord  reserves  the right from time to time to make  changes in the
shape, size,  location,  amount and extent of the Common Area.  Landlord further
reserves the right to promulgate such

                                      -19-
<PAGE>

reasonable  rules and  regulations  relating to the use of all or any portion of
the Common Area and to amend such rules and regulations  from time to time, with
or without advance notice, as Landlord may deem  appropriate.  Any amendments to
the rules and  regulations  shall be  effective  as to  Tenant,  and  binding on
Tenant,  upon  delivery  of a copy of such  rules  and  regulations  to  Tenant.
Landlord agrees to apply such rules and regulations, and all amendments thereto,
in a  non-discriminatory  manner.  Tenant and Tenant's agents shall observe such
rules and  regulations  and any failure by Tenant or Tenant's  agents to observe
and comply with the rules and regulations shall be a Default by Tenant. Landlord
shall not be responsible for the  nonperformance of the rules and regulations by
any tenants or occupants of the buildings or improvements which now exist or may
hereafter be constructed upon the Common Area or upon the real property owned by
Landlord  adjacent  to the  Common  Area  or by any  other  user  authorized  by
Landlord.

         Landlord  furthermore  reserves  the right,  after  having given Tenant
reasonable notice, to have any vehicles owned by Tenant or Tenant's agents which
are parked in violation of the provisions of this Paragraph 11.1 or in violation
of Landlord's rules and regulations relating to parking, to be towed away at the
expense of the owner of the vehicle so towed.

         Landlord shall have the right to close, at reasonable times, all or any
portion  of the  Common  Area  for any  reasonable  purpose,  including  without
limitation,  the prevention of a dedication thereof, or the accrual of rights of
any person or public therein; however, such closure of the Common Area shall not
unreasonably impair Tenant's access to the Premises,  Tenant's parking rights as
described in this Lease or Tenant's use of the Premises.

                  11.2 Maintenance by Landlord.  Landlord shall operate,  manage
and  maintain the Common Area in good  condition  and repair and shall manage or
cause to be managed the Common Area to reasonable and customary  standards.  The
cost of such  maintenance,  operation  and  management,  shall be an  "Operating
Expense",  and Tenant shall pay such costs to Landlord,  as Additional  Rent, as
provided in Paragraph 12 below.

         12. Operating Expenses.

                  12.1 Definition.  "Operating Expense" or "Operating  Expenses"
as used in this  Lease  shall mean and  include  all items  identified  in other
paragraphs of this Lease as an Operating  Expense and the total  reasonable cost
paid or  incurred  by  Landlord  for the  operation,  maintenance,  repair,  and
management of the Premises and Common Area,  which costs shall include,  without
limitation:  the cost of Services  and  utilities  supplied to the  Premises and
Common  Area (to the  extent the same are not  separately  charged or metered to
Tenant);  water;  sewage;  fuel;  electricity;  lighting  systems;  professional
management  fee (not to exceed four percent (4%) of the  Premises'  gross rental
income);  fire  protection  systems;  storm drainage and sanitary sewer systems;
HVAC including air  conditioning (to the extent the heating and air conditioning
systems in the Premises are not  maintained  by Tenant at Tenant's sole cost and
expense);  repairing the roof structure and roof surface; maintenance and repair
of the structural parts of the Premises  (including  foundation,  floor slab and
load bearing walls);  property and liability insurance covering the Premises and
any other insurance carried by Landlord pursuant

                                      -20-
<PAGE>

to Paragraph 8 above; cleaning, sweeping,  striping,  resurfacing of parking and
driveway  areas;  cleaning  the Common  Area  following  storms or other  severe
weather; cleaning and repairing of sidewalks, curbs, stairways; costs related to
irrigation  systems;  the  cost  of  complying  with  Laws,  including,  without
limitation,   maintenance,   alterations  and  repairs  required  in  connection
therewith;  the cost of capital  improvements  made to the Common Area amortized
over  the  useful  life of  such  capital  improvements  (with  interest  on the
unamortized  balance at the  prevailing  market  rate  Landlord  would pay if it
borrowed funds to construct such  improvements  from an  institutional  lender);
costs related to landscape maintenance;  and the cost of contesting the validity
or  applicability  of any  governmental  enactments  which may affect  Operating
Expenses.  Because the Common Area is used by more than one (1) building  during
the Lease Term, the term "Operating  Expenses" shall mean and include all of the
Operating Expenses allocable to the Premises and a proportionate share (based on
the square footage of gross leasable area in the Premises as a percentage of the
total of square  footage of gross  leasable area of the buildings  utilizing the
Common Area at the time in question) of all Operating Expenses which are related
to such buildings in general and are not allocated to any one building utilizing
the Common Area. As of the date of execution of this Lease,  the percentage that
the square  footage of gross  leasable  area in the Premises  bears to the total
square footage of gross leasable area of the buildings utilizing the Common Area
is twenty-two and fourteen hundredths percent (22.14%). Operating Expenses shall
also include an accounting and administrative fee equal to three percent (3%) of
the total  Operating  Expenses  (excluding  Taxes and insurance  premiums).  The
specific examples of Operating  Expenses stated in this Paragraph 12.1 are in no
way intended to and shall not limit the costs comprising Operating Expenses, nor
shall such  examples  be deemed to  obligate  Landlord to incur such costs or to
provide  such  services  or to take  such  actions  except  as  Landlord  may be
expressly  required in other portions of this Lease,  or except as Landlord,  in
its sole discretion, may elect. All costs incurred by Landlord in good faith for
the  operation,  maintenance,  repair and  management of the Premises and Common
Area shall be deemed conclusively binding on Tenant.

                           12.1.1 Operating Expense Exclusions.  Notwithstanding
anything to the contrary  contained in this Lease, in no event shall Tenant have
any obligation to perform, to pay directly, or to reimburse Landlord for, all or
any portion of the following repairs, maintenance,  improvements,  replacements,
premiums, claims, losses, fees, commissions, charges, disbursements,  attorneys'
fees, experts' fees, costs and expenses (collectively, "Costs"):

                                    (a) Losses Caused by Others and Construction
Defects.  Costs occasioned by the act,  omission or violation of Law by Landlord
or its agents, employees or contractors,  or costs arising out of the failure to
construct the Building,  Premises,  tenant improvements installed by Landlord in
the  Premises,  if any,  or Common  Areas in  accordance  with Laws and  private
restrictions applicable at the time of construction thereof.

                                    (b) Condemnation and Insurance Costs.  Costs
occasioned  by the  exercise of the power of eminent  domain,  or  increases  in
insurance  Costs caused by the  activities  of other tenants of buildings in the
Coronado Stender Project.

                                      -21-
<PAGE>

                                    (c) Reimbursable  Expenses.  Costs for which
Landlord has a right of  reimbursement  from others,  or Costs which Tenant pays
directly to a third person.

                                    (d) Reserves. Depreciation,  amortization or
other expense reserves.

                                    (e)  Mortgages.  Interest,  charges and fees
incurred on debt, payments or mortgages and rent under ground leases.

                                    (f) Hazardous  Materials.  Costs incurred to
investigate  the  presence of any  Hazardous  Material,  Costs to respond to any
claim of  Hazardous  Material  contamination  or  damage,  Costs to  remove  any
Hazardous  Material  from  the  Premises  or  Common  Area or to  remediate  any
Hazardous Material  contamination,  and any judgments or other Costs incurred in
connection with any Hazardous Material exposure or release, except to the extent
such Costs are incurred by Landlord in accordance with Paragraph 6.4 or incurred
by Landlord or caused by reason of the storage, use or disposal of the Hazardous
Material in question by Tenant, its agents, employees, contractors or invitees.

                                    (g)   Management.   Any   fee,   profit   or
compensation   retained  by  Landlord  or  its  affiliates  for  management  and
administration  of the Premises or Common Area in excess of the  management  fee
and accounting fee specified in Paragraph 12.1 above.

                                    (h)  Violations.  The cost of correcting any
code violations that occurred prior to the Commencement Date of the Lease Term.

                                    (i)  Benefits.   Wages,  salaries  or  other
compensation  paid to any  executive  employees  above  the  grade  of  building
manager.

                  12.2 Payment of Operating Expenses by Tenant. Tenant shall pay
the Operating  Expenses to Landlord as Additional Rent and without  deduction or
offset.  Upon reasonable  written  request made by Tenant to Landlord,  Landlord
shall provide Tenant with copies of invoices supporting the charges of Operating
Expenses;  however,  Tenant  shall  pay for the  reasonable  costs  incurred  by
Landlord  in making  copies of such  invoices  and the failure of  Landlord,  if
applicable, to timely furnish copies of such invoices to Tenant shall not excuse
or relieve Tenant of its obligation to pay Operating Expenses in accordance with
the terms of this Lease.  Tenant's payment of Operating  Expenses shall be based
upon  Landlord's  estimate of  Operating  Expenses and shall be payable in equal
monthly  installments  in  advance  on the  first  day of  each  calendar  month
commencing with the month following receipt of Landlord's  estimate (and subject
to  Landlord's  right to  change  the  method  of  payment  or  right to  change
Landlord's  estimate not more often than once in any calendar year).  Within one
hundred  twenty  (120)  days  after the end of each  calendar  year (or at Lease
Termination),  or as soon  thereafter as  practicable  under the  circumstances,
Landlord shall furnish Tenant a statement showing the actual Operating  Expenses
for the period to which  Landlord's  estimate  pertains  and shall  concurrently
either  bill Tenant for the balance due  (payable  upon demand by  Landlord)  or
credit Tenant's account for the excess previously paid (except if such statement
applies to the last year

                                      -22-
<PAGE>

of the Lease Term and Tenant has overpaid  its share of  Operating  Expenses for
such last year of the Lease Term,  then Tenant  shall be paid the amount of such
overpayment in cash following such  reconciliation of Operating Expenses in lieu
of a credit to Tenant's account).

         Notwithstanding  anything  to the  contrary  contained  in this  Lease,
within one  hundred  eighty  (180) days  after  receipt by Tenant of  Landlord's
statement of Operating  Expenses  prepared pursuant to Paragraph 12.2 hereof for
any prior  annual  period  during  the  Lease  Term,  Tenant  or its  authorized
representative  shall have the right to inspect the books of Landlord during the
business hours of Landlord at Landlord's office or, at Landlord's  option,  such
other location as Landlord reasonably may specify,  for the purpose of verifying
the  information  contained in the  statement.  Unless Tenant  asserts  specific
errors within one hundred eighty (180) days after receipt of the statement,  the
statement shall be deemed correct as between  Landlord and Tenant,  except as to
individual components subsequently determined to be in error by future audit.

         13. Alterations.

                  13.1 In General.  Tenant shall not make, or permit to be made,
any alterations, changes, enlargements,  improvements or additions (collectively
"Alterations") in, on, about or to the Premises, or any part thereof,  including
Alterations  required  pursuant to  Paragraph  6.2,  without  the prior  written
consent of Landlord and without  acquiring and complying  with the conditions of
all permits required for such  Alterations by any governmental  authority having
jurisdiction  thereof. The term "Alterations" as used in this Paragraph 13 shall
also include all heating,  lighting,  electrical (including all wiring, conduit,
outlets,  drops,  buss  ducts,  main  and  subpanels),  air  conditioning,   and
partitioning  in the Premises  made by Tenant,  regardless of how affixed to the
Premises.  The  preceding  to the  contrary  notwithstanding,  Tenant  shall  be
permitted,  without  first  obtaining  Landlord's  consent but upon giving prior
written notice to Landlord,  to make non-structural  Alterations to the Premises
during  the  Lease  Term  provided  (i) the cost of making  such  non-structural
Alterations  do not exceed $10,000  individually  or $50,000 in the aggregate in
any lease year during the Lease Term,  (ii) such  non-structural  Alterations do
not affect the  structural  integrity  of the  Premises  or any of the  building
systems,  such as HVAC,  mechanical,  electrical or plumbing  systems within the
building comprising the Premises,  and (ii) such non-structural  Alterations are
not visible from the exterior of the  Premises.  As a condition to the giving of
its  consent to any  Alterations  (for  which  Landlord's  consent  is  required
hereunder), Landlord may impose such requirements as Landlord may deem necessary
in its sole discretion,  including without  limitation,  the manner in which the
work is done;  a right of approval of the  contractor  by whom the work is to be
performed;  the requirement  that Tenant post a completion bond in an amount and
form  satisfactory  to  Landlord;  and the  requirement  that  Tenant  reimburse
Landlord,  as Additional Rent, for Landlord's actual costs incurred in reviewing
any  proposed  Alteration,  whether or not  Landlord's  consent is granted.  All
Alterations  made by Tenant shall be made at Tenant's sole cost and expense,  in
accordance with the plans and specifications approved by Landlord.  Tenant shall
give written  notice to Landlord five (5) days prior to employing any laborer or
contractor to perform services  related to, or receiving  materials for use upon
the Premises,  and prior to the  commencement  of any work of improvement on the
Premises.  Any  Alterations  to the  Premises  made by  Tenant

                                      -23-
<PAGE>

shall be made in accordance  with  applicable Laws and in a good and workmanlike
manner. In making any such Alterations,  Tenant shall, at Tenant's sole cost and
expense,  file for and secure and comply with any and all  permits or  approvals
required by any  governmental  departments  or authorities  having  jurisdiction
thereof and any utility  company having an interest  therein.  In no event shall
Tenant make any  structural  changes to the  Premises or make any changes to the
Premises which would weaken or impair the structural integrity of the Premises.

                  13.2  Removal  Upon  Lease  Termination.  At the  time  Tenant
requests  Landlord's  consent,  Tenant shall request a decision from Landlord in
writing as to whether  Landlord will require  Tenant,  at Tenant's  expense,  to
remove any such Alterations and restore the Premises to their prior condition at
Lease  Termination.  In the event  Tenant  fails to  earlier  obtain  Landlord's
written  decision as to whether Tenant will be required to remove any Alteration
(or in the event  Landlord's  consent  to any  Alterations  is not  required  as
provided in Paragraph  13.1 above),  then no less than ninety (90) nor more than
one hundred twenty (120) days prior to the expiration of the Lease Term,  Tenant
by written notice to Landlord shall request Landlord to inform Tenant whether or
not  Landlord  desires to have any  Alterations  made to the  Premises by Tenant
removed at Lease  Termination.  Following  receipt of such  notice or  following
Tenant's earlier request for a decision as to whether Tenant's  Alterations,  or
any of them,  will be  required to be removed by Tenant,  Landlord  may elect to
have all or a portion of Tenant's Alterations removed from the Premises at Lease
Termination,  and Tenant  shall,  at its sole cost and expense,  remove at Lease
Termination such  Alterations  designated by Landlord for removal and repair all
damage to the Premises and Common Area arising from such  removal.  In the event
Tenant  fails  to  so  request  Landlord's  decision  or  fails  to  remove  any
Alterations  designated  by  Landlord  for  removal,  Landlord  may  remove  any
Alterations made to the Premises by Tenant and repair all damage to the Premises
and Common Area arising from such removal, and may recover from Tenant all costs
and  expenses  incurred  thereby.  Tenant's  obligation  to pay such  costs  and
expenses to Landlord shall survive Lease  Termination  (except Landlord shall be
deemed to have waived its right to receive  such costs and  expenses if Landlord
has not  requested or demanded  payment of such costs or expenses from Tenant by
written  notice to Tenant  delivered  within one hundred  eighty days  following
Lease  Termination).  Unless  Landlord  elects to have Tenant  remove (or,  upon
Tenant's  failure to obtain  Landlord's  decision,  Landlord  removes)  any such
Alterations,  all such  Alterations,  except for  moveable  furniture  and trade
fixtures of Tenant not affixed to the  Premises,  shall  become the  property of
Landlord upon Lease  Termination  (without any payment therefor) and remain upon
and be surrendered with the Premises at Lease Termination.

                  13.3 Landlord's  Improvements.  All fixtures,  improvements or
equipment  which are  installed,  constructed  on or attached to the Premises or
Common Area by Landlord shall be a part of the realty and belong to Landlord.

         14. Default and Remedies.

                  14.1 Events of Default.  The term  "Default by Tenant" as used
in this Lease shall mean the occurrence of any of the following events:

                                      -24-
<PAGE>

                           (a) Tenant's failure to pay when due any Rentals;

                           (b) Tenant's abandonment of the Premises;

                           (c) Commencement and continuation for at least thirty
(30) days of any case,  action or proceeding  by,  against or concerning  Tenant
under any federal or state bankruptcy,  insolvency or other debtor's relief law,
including  without  limitation,  (i) a case under Title 11 of the United  States
Code  concerning  Tenant,  whether  under  Chapter 7, 11, or 13 of such Title or
under any other Chapter,  or (ii) a case, action or proceeding  seeking Tenant's
financial reorganization or an arrangement with any of Tenant's creditors;

                           (d)  Voluntary  or   involuntary   appointment  of  a
receiver,  trustee,  keeper,  or other person who takes possession for more than
thirty (30) days of substantially all of Tenant's assets or of any asset used in
Tenant's business on the Premises,  regardless of whether such appointment is as
a result of insolvency or any other cause;

                           (e)  Execution  of an  assignment  for the benefit of
creditors  of  substantially  all  assets  of  Tenant  available  by law for the
satisfaction of judgment creditors;

                           (f)  Commencement  of  proceedings  for winding up or
dissolving (whether voluntary or involuntary) the entity of Tenant, if Tenant is
a corporation or a partnership;

                           (g)  Levy of a writ of  attachment  or  execution  on
Tenant's  interest under this Lease,  if such writ continues for a period of ten
(10) days;

                           (h) Transfer or  attempted  Transfer of this Lease or
the Premises by Tenant contrary to the provisions of Paragraph 24 below; or

                           (i)   Breach  by   Tenant  of  any  term,   covenant,
condition,  warranty, or other provision contained in this Lease or of any other
obligation owing or due to Landlord.

                  14.2 Remedies. Upon any Default by Tenant, Landlord shall have
the following remedies, in addition to all other rights and remedies provided by
law, to which Landlord may resort cumulatively, or in the alternative:

                           14.2.1  Termination.  Upon  any  Default  by  Tenant,
Landlord shall have the right (but not the obligation) to give written notice to
Tenant of such default and terminate this Lease and Tenant's right to possession
of the  Premises  if (i) such  default is in the  payment of Rentals  and is not
cured within five (5) days after any such  notice,  or, (ii) with respect to the
defaults  referred to in  subparagraphs  14.1(b),  (e),  (f), (h) and (i),  such
default is not cured  within  thirty  (30) days  after any such  notice (or if a
default under  subparagraphs  14.1(b) or (i) cannot be  reasonably  cured within
thirty  (30) days,  if Tenant does not  commence to cure the default  within the
thirty (30) day period or does not  diligently  and in good faith  prosecute the
cure to  completion),  or,  (iii) with  respect  to the  defaults  specified  in
subparagraphs  14.1(c)  (d) and  (g),

                                      -25-
<PAGE>

such default is not cured within the respective time periods  specified in those
subparagraphs.  The parties  agree that any written  notice given by Landlord to
Tenant pursuant to this Paragraph 14.2.1 shall be sufficient notice for purposes
of California  Code of Civil  Procedure  Section 1161 and Landlord  shall not be
required  to give any  additional  notice in order to be entitled to commence an
unlawful detainer proceeding.  Upon termination of this Lease and Tenant's right
to  possession of the  Premises,  Landlord  shall have the right to recover from
Tenant:

                                    (a) The  worth  at the  time of award of the
unpaid Rentals which had been earned at the time of termination;

                                    (b) The  worth  at the  time of award of the
amount by which the Rentals 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;

                                    (c) The worth at the time of award (computed
by discounting at the discount rate of the Federal Reserve Bank of San Francisco
at the time of award plus one  percent)  of the amount by which the  Rentals for
the balance of the Lease Term after the time of award  exceed the amount of such
rental loss that Tenant proves could be reasonably avoided;

                                    (d)   Any   other   amounts   necessary   to
compensate  Landlord  for all  detriment  proximately  caused by the  Default by
Tenant or which in the ordinary course of events would likely result.

                                    (e) The  "worth at the time of award" of the
amounts  referred to in  subparagraphs  (a) and (b) of this Paragraph  14.2.1 is
computed  by  allowing  interest  at an annual rate equal to the greater of: ten
percent  (10%);  or five percent (5%) plus the rate  established  by the Federal
Reserve Bank of San Francisco,  as of the  twenty-fifth  (25th) day of the month
immediately  preceding the Default by Tenant,  on advances to member banks under
Sections 13 and 13(a) of the Federal  Reserve Act, as now in effect or hereafter
from time to time amended, not to exceed the maximum rate allowable by law.

                           14.2.2  Continuance  of Lease.  Upon any  Default  by
Tenant and unless and until Landlord  elects to terminate this Lease pursuant to
Paragraph 14.2.1 above, this Lease shall continue in effect after the Default by
Tenant and Landlord  may enforce all its rights and  remedies  under this Lease,
including  without  limitation,  the right to recover payment of Rentals as they
become due.  Neither efforts by Landlord to mitigate damages caused by a Default
by  Tenant  nor the  acceptance  of any  Rentals  shall  constitute  a waiver by
Landlord  of any of  Landlord's  rights or  remedies,  including  the rights and
remedies specified in Paragraph 14.2.1 above. The Landlord shall have the remedy
described in California  Civil Code Section 1951.4  (landlord may continue lease
in effect after tenant's  breach and  abandonment and recover rent as it becomes
due, if landlord has the right to sublet or assign,  subject only to  reasonable
limitations).

                                      -26-
<PAGE>

         15. Damage or Destruction.

                  15.1 Definition of Terms.  For the purposes of this Lease, the
term: (a) "Insured Casualty" means damage to or destruction of the Premises from
a cause actually insured against,  for which the insurance proceeds paid or made
available to Landlord, together with the amount of deductible applicable to such
insured casualty (and which deductible shall be paid by Tenant to Landlord), are
sufficient to rebuild or restore the Premises under then-existing building codes
to the condition  existing  immediately prior to the damage or destruction;  and
(b) "Uninsured  Casualty"  means damage to or destruction of the Premises from a
cause not actually insured against, or from a cause actually insured against but
for which the insurance  proceeds paid or made available to Landlord are for any
reason  insufficient  to rebuild or restore  the  Premises  under  then-existing
building  codes to the  condition  existing  immediately  prior to the damage or
destruction,  or  from a cause  actually  insured  against  but  for  which  the
insurance  proceeds are not paid or made available to Landlord within sixty (60)
days of the event of damage or destruction.

                  15.2 Insured Casualty.

                           15.2.1  Rebuilding  Required.  In  the  event  of  an
Insured  Casualty  where the extent of damage or destruction is less than twenty
percent (20%) of the then full replacement cost of the Premises,  Landlord shall
rebuild or restore the Premises to the condition  existing  immediately prior to
the damage or  destruction,  provided the damage or destruction was not a result
of a negligent  or willful act of Tenant,  and that there exist no  governmental
codes or regulations that would interfere with Landlord's  ability to so rebuild
or restore.

                           15.2.2  Landlord's  Election.  In  the  event  of  an
Insured  Casualty  where the  extent of  damage  or  destruction  is equal to or
greater  than  twenty  percent  (20%) of the then full  replacement  cost of the
Premises,  Landlord  may, at its option and at its sole  discretion,  rebuild or
restore the Premises to the condition  existing  immediately prior to the damage
or destruction, or terminate this Lease. Landlord shall notify Tenant in writing
within  forty-five  (45)  days  after the  event of  damage  or  destruction  of
Landlord's  election to either rebuild or restore the Premises or terminate this
Lease.

                           15.2.3  Continuance of Lease. If Landlord is required
to rebuild or restore the Premises  pursuant to Paragraph  15.2.1 or if Landlord
elects to rebuild or restore the  Premises  pursuant to Paragraph  15.2.2,  this
Lease shall remain in effect and Tenant shall have no claim against Landlord for
compensation  for  inconvenience or loss of business during any period of repair
or restoration.

                  15.3 Uninsured Casualty.

                           15.3.1  Landlord's  Election.  In  the  event  of  an
Uninsured  Casualty,  Landlord may, at its option and at its sole discretion (i)
rebuild or restore the  Premises as soon as  reasonably  possible at  Landlord's
expense  (unless the damage or destruction  was caused by a

                                      -27-
<PAGE>

negligent or willful act of Tenant, in which event Tenant shall pay all costs of
rebuilding or restoring), in which event this Lease shall continue in full force
and effect or (ii)  terminate  this Lease,  in which event  Landlord  shall give
written notice to Tenant within  forty-five  (45) days after the event of damage
or destruction of Landlord's  election to terminate this Lease as of the date of
the event of damage or destruction,  and if the damage or destruction was caused
by a negligent  or willful  act of Tenant,  Tenant  shall be liable  therefor to
Landlord.

                           15.3.2   Tenant's   Ability  to  Continue  Lease.  If
Landlord  elects to terminate this Lease and the extent of damage or destruction
is less  than  twenty  percent  (20%) of the then full  replacement  cost of the
Premises or the proceeds  paid or made  available to Landlord are for any reason
insufficient  to rebuild or restore the Premises  under  then-existing  building
codes to the condition existing  immediately prior to the damage or destruction,
and if there exist no  governmental  codes or regulations  that would  interfere
with Landlord's  ability to so repair or restore,  then Tenant may  nevertheless
cause the Lease to  continue  in effect by (i)  notifying  Landlord  in  writing
within  ten (10)  days  after  Landlord's  notice  of  termination  of  Tenant's
agreement to pay all costs of  rebuilding or restoring not covered by insurance,
and (ii) providing  Landlord with  reasonable  security for or assurance of such
payment.  Tenant  shall pay to  Landlord  in cash no later than thirty (30) days
prior to the date of commencement of construction the reasonable  estimated cost
of  rebuilding  or  restoring.  In the  event  Tenant  fails to pay such cost to
Landlord by the date specified, Landlord may immediately terminate the Lease and
recover  from  Tenant  all  costs  incurred  by  Landlord  in  preparation   for
construction.  If the  actual  cost  of  rebuilding  or  restoring  exceeds  the
estimated cost of such work, Tenant shall pay the difference to Landlord in cash
upon  notification  by Landlord of the final cost.  If the cost of rebuilding or
restoring is less than the estimated cost of such work, Tenant shall be entitled
to a refund of the difference upon completion of the rebuilding or restoring and
determination of final cost.

                  15.4  Tenant's  Election.   Notwithstanding  anything  to  the
contrary  contained in this  Paragraph  15,  Tenant may elect to terminate  this
Lease in the event the Premises are damaged or destroyed  and, in the reasonable
opinion of Landlord's architect or construction consultants,  the restoration of
the Premises cannot be  substantially  completed within one hundred eighty (180)
days after the event of damage or destruction.  Tenant's  election shall be made
by written notice to Landlord within twenty (20) days after Tenant receives from
Landlord the estimate of the time needed to complete  repair or  restoration  of
the Premises. If Tenant does not deliver said notice within said twenty (20) day
period, Tenant may not later terminate this Lease even if substantial completion
of the  rebuilding or restoration  occurs  subsequent to said one hundred eighty
day period,  provided that Landlord is proceeding  with  diligence to rebuild or
restore the Premises. The preceding sentence to the contrary notwithstanding, if
such  rebuilding or restoration is not completed  within two hundred forty (240)
days following the event of damage or destruction,  then Tenant shall be allowed
to  terminate  this Lease (even if  Landlord is  proceeding  with  diligence  to
rebuild or restore the Premises) by delivering written notice to Landlord within
twenty (20) days  following  such two hundred forty (240) day period.  If Tenant
delivers  said notice  within  said  twenty  (20) day  period,  this Lease shall
terminate as of the date of the event of damage or destruction.

                                      -28-
<PAGE>

                  15.5   Damage  or   Destruction   Near  End  of  Lease   Term.
Notwithstanding  anything to the contrary contained in this Paragraph 15, in the
event the Premises are damaged or destroyed in whole or in part  (regardless  of
the extent of damage)  from any cause  during the last twelve (12) months of the
Lease Term,  Landlord may, at Landlord's option,  terminate this Lease as of the
date of the event of damage or destruction by giving written notice to Tenant of
Landlord's  election  to do so within  thirty  (30) days after the event of such
damage or  destruction.  For purposes of this Paragraph 15.5, if Tenant has been
granted  an  option  to extend or renew  the  Lease  Term  pursuant  to  another
provision of this Lease,  then the damage or destruction shall be deemed to have
occurred during the last twelve (12) months of the Lease Term if Tenant fails to
exercise  its option to extend or renew within  twenty-five  (25) days after the
event  of  damage  or  destruction.  Notwithstanding  anything  to the  contrary
contained  in this  Paragraph  15, in the  event the  Premises  are  damaged  or
destroyed  in whole or in part  (regardless  of the extent of  damage)  from any
cause  (other than the acts,  omissions,  negligence  or willful  misconduct  of
Tenant or any of its  agents,  employees,  licensees,  invitees,  subtenants  or
contractors)  during  the last  twelve  (12)  months of the Lease  Term and such
repair or  restoration  cannot be  completed  at least six  months  prior to the
expiration of the Lease Term,  Tenant may, at Tenant's  option,  terminate  this
Lease as of the date of the  event of damage or  destruction  by giving  written
notice to Landlord of Tenant's  election to do so within  thirty (30) days after
the event of such damage or destruction.

                  15.6  Termination  of Lease.  The current  Rent and  Operating
Expenses shall be proportionately  reduced during the period following the event
of damage or destruction until the date on which Tenant surrenders the Premises,
based  upon the  extent  to which  the  damage or  destruction  interferes  with
Tenant's  business  conducted  in the  Premises,  as  reasonably  determined  by
Landlord.  The proceeds of insurance carried by Tenant pursuant to Paragraph 8.2
shall be paid to Landlord and Tenant, as their interests appear.

                  15.7  Abatement of Rentals.  If the Premises are to be rebuilt
or restored  pursuant to this  Paragraph 15, the then current Rent and Operating
Expenses  shall be  proportionately  reduced  during  the  period  of  repair or
restoration,  based upon the  extent to which the  making of repairs  interferes
with Tenant's business  conducted in the Premises,  as reasonably  determined by
Landlord.

                  15.8  Liability  for  Personal  Property.  In no  event  shall
Landlord have any liability  for, nor shall it be required to repair or restore,
any injury or damage to any  Alterations  to the Premises made by Tenant,  trade
fixtures, equipment, merchandise,  furniture, or any other property installed by
Tenant or at the expense of Tenant.  Subject to the  provisions of Paragraph 8.6
above,  the  immediately  preceding  sentence  shall not relieve  Landlord  from
liability for its negligent acts or willful  misconduct.  In no event,  however,
shall  Landlord  be liable  for any  claims by Tenant of lost  profits,  loss of
business or lost income.  If Landlord or Tenant do not elect to  terminate  this
Lease  pursuant to this  Paragraph  15,  Tenant  shall be  obligated to promptly
rebuild or restore the same to the condition  existing  immediately prior to the
damage or destruction in accordance with the provisions of Paragraph 13.1.

                                      -29-
<PAGE>

                  15.9  Waiver  of Civil  Code  Remedies.  Landlord  and  Tenant
acknowledge  that the rights  and  obligations  of the  parties  upon  damage or
destruction  of the Premises are as set forth  herein;  therefore  Tenant hereby
expressly  waives any rights to terminate  this Lease upon damage or destruction
of the  Premises,  except as  specifically  provided  by this  Lease,  including
without  limitation  any rights  pursuant to the  provisions of subdivision 2 of
Section 1932 and subdivision 4 of Section 1933 of the California  Civil Code, as
amended from time to time,  and the  provisions  of any similar law  hereinafter
enacted,  which  provisions  relate to the  termination of the hiring of a thing
upon its substantial damage or destruction.

         16. Condemnation.

                  16.1 Definition of Terms.  For the purposes of this Lease, the
term:  (a)  "Taking"  means a taking of the  Premises  or Common  Area or damage
related to the  exercise of the power of eminent  domain and  includes,  without
limitation, a voluntary conveyance, in lieu of court proceedings, to any agency,
authority,  public  utility,  person or  corporate  entity  empowered to condemn
property;  (b) "Total Taking" means the Taking of the entire Premises or so much
of the  Premises  or Common Area as to prevent or  substantially  impair the use
thereof by Tenant for the uses herein specified;  provided,  however, that in no
event  shall the Taking of less than  twenty  percent  (20%) of the  Premises be
considered  a Total  Taking;  (c)  "Partial  Taking"  means the Taking of only a
portion of the Premises or Common Area which does not constitute a Total Taking;
(d) "Date of  Taking"  means the date upon  which the title to the  Premises  or
Common Area or a portion  thereof,  passes to and vests in the  condemnor or the
effective  date of any order for  possession  if issued  prior to the date title
vests in the  condemnor;  (e)  "Award"  means  the  amount  of any  award  made,
consideration paid, or damages ordered as a result of a Taking.

                  16.2 Rights.  The parties  agree that in the event of a Taking
all rights between them or in and to an Award shall be as set forth herein.

                  16.3 Total  Taking.  In the event of a Total Taking during the
Lease Term:  (a) the rights of Tenant under this Lease and the leasehold  estate
of Tenant in and to the  Premises  shall cease and  terminate  as of the Date of
Taking;  (b) Landlord  shall refund to Tenant any prepaid Rent; (c) Tenant shall
pay Landlord any Rentals due Landlord  under the Lease,  prorated as of the Date
of  Taking;  (d) to the extent the Award is not  payable to the  beneficiary  or
mortgagee of a deed of trust or mortgage  affecting the  Premises,  Tenant shall
receive  from the  Award  those  portions  of the  Award  attributable  to trade
fixtures of Tenant, Alterations paid by Tenant and loss of goodwill, if any; (e)
the  remainder  of the Award shall be paid to and be the  property of  Landlord.
Tenant reserves the right to apply separately for compensation  resulting from a
taking of  Tenant's  trade  fixtures,  Alterations  paid by  Tenant  and loss of
goodwill,  if any. If any portion of the award  received by Landlord is directly
attributable to Tenant's trade fixtures,  Alterations paid by Tenant or Tenant's
loss of goodwill,  then  Landlord  shall  promptly pay such portion of the award
attributable to such items to Tenant.

                  16.4 Partial  Taking.  In the event of a Partial Taking during
the Lease  Term:  (a) the  rights of  Tenant  under the Lease and the  leasehold
estate of Tenant in and to the  portion

                                      -30-
<PAGE>

of the Premises  taken shall cease and  terminate as of the Date of Taking;  (b)
from and  after  the Date of Taking  the Rent  shall be an  amount  equal to the
product  obtained by multiplying the then current Rent by the quotient  obtained
by dividing the fair market value of the Premises  immediately  after the Taking
by the fair market value of the Premises immediately prior to the Taking; (c) to
the extent the Award is not payable to the beneficiary or mortgagee of a deed of
trust or mortgage  affecting the  Premises,  Tenant shall receive from the Award
the portions of the Award attributable to trade fixtures of Tenant,  Alterations
paid by Tenant and loss of goodwill,  if any; and (d) the remainder of the Award
shall be paid to and be the property of Landlord.  Tenant  reserves the right to
apply  separately  for  compensation  resulting  from a taking of Tenant's trade
fixtures,  Alterations  paid by  Tenant  and loss of  goodwill,  if any.  If any
portion of the award received by Landlord is directly  attributable  to Tenant's
trade fixtures,  Alterations  paid by Tenant or Tenant's loss of goodwill,  then
Landlord shall promptly pay such portion of the award attributable to such items
to  Tenant.  Each  party  waives  the  provisions  of  California  Code of Civil
Procedure  Section 1265.130 allowing either party to petition the Superior Court
to terminate this Lease in the event of a Partial Taking.

         17. Liens.

                  17.1  Premises to Be Free of Liens.  Tenant  shall pay for all
labor and  services  performed  for, and all  materials  used by or furnished to
Tenant,  Tenant's agents,  or any contractor  employed by Tenant with respect to
the Premises. Tenant shall indemnify, defend and hold Landlord harmless from and
keep the  Premises  and  Common  Area  free  from any  liens,  claims,  demands,
encumbrances,  or judgments,  including all costs,  liabilities  and  reasonable
attorneys' fees with respect thereto, created or suffered by reason of any labor
or  services  performed  for, or  materials  used by or  furnished  to Tenant or
Tenant's  agents or any  contractor  employed  by  Tenant  with  respect  to the
Premises.  Landlord shall have the right,  at all times, to post and keep posted
on the  Premises  any notices  permitted  or required by law, or which  Landlord
shall deem proper,  for the  protection  of Landlord and the Premises and Common
Area,  and any other  party  having an interest  therein,  from  mechanics'  and
materialmen's liens, including without limitation a notice of nonresponsibility.
In the event Tenant is required to post an improvement bond with a public agency
in connection  with any work  performed by Tenant on or to the Premises,  Tenant
shall include Landlord as an additional obligee.

                  17.2 Notice of Lien, Bond.  Should any claims of lien be filed
against, or any action be commenced affecting,  the Premises,  Tenant's interest
in the Premises or the Common Area,  Tenant shall give  Landlord  notice of such
lien or action within seven (7) days after Tenant  receives notice of the filing
of the lien or the  commencement  of the action.  In the event that Tenant shall
not,  within thirty (30) days following the  imposition of any such lien,  cause
such lien to be  released  of record by payment  or  posting  of a proper  bond,
Landlord  shall have, in addition to all other remedies  provided  herein and by
law, the right, but not the obligation, to cause the same to be released by such
means as Landlord shall deem proper,  including payment of the claim giving rise
to such lien or posting of a proper bond. All such sums paid by Landlord and all
expenses incurred by Landlord in connection therewith, including attorneys' fees
and costs, shall be payable to Landlord by Tenant as Additional Rent on demand.

                                      -31-
<PAGE>

         18. Landlord's Right of Access to Premises. Landlord reserves and shall
have the  right and  Tenant  and  Tenant's  agents  shall  permit  Landlord  and
Landlord's  agents to enter the  Premises at any  reasonable  time upon not less
than twenty-four  hours advance notice (except in the event of an emergency) for
the  purpose  of  (i)  inspecting  the  Premises,   (ii)  performing  Landlord's
maintenance and repair  responsibilities set forth herein, (iii) posting notices
of  non-responsibility,  (iv)  placing  upon the Premises at any time "For Sale"
signs, (v) placing on the Premises ordinary "For Lease" signs at any time within
six (6) months prior to Lease  Termination,  or at any time Tenant is in default
hereunder  and the  applicable  cure or grace period has expired with respect to
such default,  or at such other times as agreed to by Landlord and Tenant,  (vi)
protecting  the  Premises in the event of an  emergency,  (vii)  exhibiting  the
Premises  to  prospective  purchasers  or  lenders,  and (viii)  exhibiting  the
Premises to  prospective  tenants  during the last six (6) months prior to Lease
Termination  or at any time while a Tenant  default is continuing  following the
applicable  cure or grace period.  In the event of an emergency,  Landlord shall
have the right to use any and all means which  Landlord  may deem proper to gain
access to the Premises. Any entry by Landlord pursuant to the provisions of this
Paragraph 18 shall not  unreasonably  impair  Tenant's  access to the  Premises,
Tenant's  parking  rights under this Lease or Tenant's use of the Premises.  Any
entry to the Premises by Landlord or Landlord's  agents in accordance  with this
Paragraph  18 or  any  other  provision  of  this  Lease  shall  not  under  any
circumstances be construed or deemed to be a forcible or unlawful entry into, or
a detainer of the  Premises,  or an eviction of Tenant from the  Premises or any
portion  thereof nor give Tenant the right to abate the  Rentals  payable  under
this  Lease.  Tenant  hereby  waives any claims  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 Landlord's
or Landlord's  agents' entry into the Premises as permitted by this Paragraph 18
or any other provision of this Lease (except if such loss or damage results from
Landlord's  negligence or willful  misconduct).  The preceding  notwithstanding,
under no circumstances shall Landlord be liable to Tenant for any claims of lost
profits, loss of business or lost income.

         19. Landlord's Right to Perform Tenant's Covenants. Except as otherwise
expressly  provided herein, if Tenant shall at any time fail to make any payment
or perform any other act  required to be made or  performed by Tenant under this
Lease,  Landlord may upon ten (10) days written notice to Tenant,  but shall not
be obligated  to and without  waiving or  releasing  Tenant from any  obligation
under this Lease, make such payment or perform such other act to the extent that
Landlord  may deem  desirable,  and in  connection  therewith,  pay expenses and
employ  counsel.  All sums so paid by Landlord and all  penalties,  interest and
costs in connection  therewith  shall be due and payable by Tenant as Additional
Rent upon demand.

         20. Lender Requirements.

                  20.1 Subordination. This Lease, at Landlord's option, shall be
subject  and  subordinate  to the  lien  of any  mortgages  or  deeds  of  trust
(including  all  advances  thereunder,  renewals,  replacements,  modifications,
supplements, consolidations, and extensions thereof) in any amount(s) whatsoever
now or hereafter  placed on or against or affecting the Premises and/or the real
property  comprising the Common Area or Landlord's  interest or estate  therein,
without

                                      -32-
<PAGE>

the necessity of the execution  and delivery of any further  instruments  on the
part of Tenant to effectuate such subordination. If any mortgagee or beneficiary
shall  elect to have this  Lease  prior to the lien of its  mortgage  or deed of
trust,  and shall give  written  notice  thereof to Tenant,  this Lease shall be
deemed  prior to such  mortgage  or deed of trust,  whether  this Lease is dated
prior or subsequent to the date of such mortgage or deed of trust or the date of
the recording thereof.

                  20.2  Subordination  Agreements.   Tenant  shall  execute  and
deliver   without  charge   therefor,   such  further   instruments   evidencing
subordination  of this  Lease  to the  lien of any  mortgages  or deeds of trust
affecting the Premises and/or real property comprising the Common Area as may be
required by Landlord  within  fifteen  (15) days  following  Landlord's  request
therefor;  provided that such  mortgagee or  beneficiary  under such mortgage or
deed of trust agrees in writing that this Lease shall not be  terminated  in the
event of any  foreclosure  if Tenant is not in  default  under this  Lease,  and
provided further than any subordination,  nondisturbance agreement required by a
mortgagee or  beneficiary  under a deed of trust shall be  substantially  in the
form of Exhibit E attached  hereto and  incorporated  herein by this  reference,
unless otherwise  agreed to in writing by lender.  Landlord agrees to reasonably
request of its existing lender holding a security  interest in the Premises that
such lender execute a subordination,  non-disturbance agreement in substantially
the form of Exhibit E attached  hereto  with  respect to Tenant and this  Lease.
This Lease and the effectiveness of the same shall not be conditioned,  however,
on the execution of such subordination,  non-disturbance agreement by Landlord's
lender.

                  20.3  Approval  by  Lenders.   Tenant   recognizes   that  the
provisions  of this  Lease  may be  subject  to the  approval  of any  financial
institution that may make a loan secured by a new or subsequent deed of trust or
mortgage affecting the Premises and/or real property comprising the Common Area.
If the financial  institution should require,  as a condition to such financing,
any modifications of this Lease in order to protect its security interest in the
Premises, including without limitation,  modification of the provisions relating
to damage to and/or  condemnation of the Premises,  Tenant agrees to execute the
appropriate   amendments;   provided,   however,   that  no  modification  shall
substantially  change the size, location or dimension of the Premises,  increase
the Rentals  payable by Tenant  hereunder or increase the  obligations of Tenant
hereunder.

                  20.4  Attornment.  In the event of foreclosure or the exercise
of the power of sale under any  mortgage or deed of trust made by  Landlord  and
covering the Premises  and/or real property  comprising the Common Area,  Tenant
shall  attorn  to the  foreclosing  lender  and to the  purchaser  upon any such
foreclosure  or sale and recognize such lender or such purchaser as the Landlord
under the Lease.

                  20.5 Estoppel Certificates.

                           (a) Delivery by Tenant.  Tenant shall, within fifteen
(15) days following request by

                                      -33-
<PAGE>

Landlord  therefor and without charge,  execute and deliver to Landlord estoppel
certificates and current financial  statements of Tenant reasonably requested by
Landlord in  connection  with the sale or financing of the Premises  and/or real
property  comprising  the Common  Area,  or  reasonably  requested by any lender
making a loan affecting the Premises and/or real property  comprising the Common
Area. Landlord may require that Tenant deliver to Landlord and/or such lender an
estoppel  certificate in the form of Exhibit F attached hereto and  incorporated
herein by this  reference.  Any such estoppel  certificate  may be  conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises, and/or
real property comprising the Common Area.

                           (b)  Nondelivery  by  Tenant.   Tenant's  failure  to
deliver an estoppel  certificate as required pursuant to Paragraph 20.5(a) above
shall be conclusive upon Tenant that (i) this Lease is in full force and effect,
without  modification  except as may be represented by Landlord and has not been
assigned,  (ii) there are now no uncured  defaults  in  Landlord's  performance,
(iii) no Rentals  have been paid in advance  except  those that are set forth in
this Lease,  (iv) the improvements to be constructed on the Premises by Landlord
have been  substantially  completed  except for punch  list  items  which do not
prevent  Tenant from using the Premises for its intended use, and (v) Tenant has
entered into  occupancy of the  Premises on such date as may be  represented  by
Landlord and is open and conducting  business at the Premises.  Tenant's failure
to deliver  any  financial  statements  or  estoppel  certificates  as  required
pursuant to Paragraph 20.5(a) above shall be a Default by Tenant.

         21. Holding Over. This Lease shall terminate  without further notice at
the  expiration of the Lease Term. It is the desire of Landlord  either to enter
into a new lease with Tenant for the  Premises  prior to the  expiration  of the
Lease Term,  or to have Tenant  vacate the  Premises  pursuant to  Paragraph  35
below.  Therefore,  any holding over by Tenant after Lease Termination shall not
constitute a renewal or extension of the Lease Term,  nor give Tenant any rights
in or to the Premises  except as expressly  provided in this Lease.  Any holding
over after Lease  Termination with the consent of Landlord shall be construed to
be a tenancy from month to month,  at one hundred  fifty  percent  (150%) of the
monthly  Rent for the month  preceding  Lease  Termination  in  addition  to all
Additional  Rent  payable  hereunder,  and shall  otherwise  be on the terms and
conditions  herein  specified  insofar  as  applicable.  If  Tenant  remains  in
possession of the Premises after Lease Termination  without  Landlord's  consent
Tenant shall indemnify,  defend and hold Landlord  harmless from and against any
loss,  damage,  expense,  claim or liability  resulting from Tenant's failure to
surrender the Premises,  including  without  limitation,  any claims made by any
succeeding tenant based on delay in the availability of the Premises.

         22.  Notices.  Any notice  required  or desired to be given  under this
Lease shall be in writing,  and all notices shall be given by personal  delivery
or  mailing.  All notices  personally  given on Tenant may be  delivered  to any
person  apparently in charge at the Premises,  on any corporate officer or agent
of Tenant  (including,  without  limitation,  the General  Counsel of Tenant) if
Tenant is a  corporation,  or on any one signatory  party if more than one party
signs this Lease on behalf of Tenant;  any notice so given shall be binding upon
all signatory parties as if served upon each such party  personally.  Any notice
given  pursuant  to this  Paragraph  22 shall be deemed to have been  given when
personally  delivered,  or if mailed,  when  seventy-two (72) hours have elapsed
from the time  when  such  notice  was  deposited  in the  United  States  mail,

                                      -34-
<PAGE>

certified or registered mail and postage prepaid,  addressed to the party at the
last address  given for purposes of notice  pursuant to the  provisions  of this
Paragraph 22. At the date of execution of this Lease,  the addresses of Landlord
and Tenant are set forth in Paragraph 1.11 above.

         23.  Attorneys'  Fees. In the event either party hereto shall bring any
action or legal proceeding for damages for an alleged breach of any provision of
this Lease, to recover Rentals, to enforce an indemnity defense or hold harmless
obligation,  to terminate the tenancy of the Premises,  or to enforce,  protect,
interpret,  or establish any term, condition, or covenant of this Lease or right
or remedy of either party, the prevailing party shall be entitled to recover, as
a part of such action or proceeding, reasonable attorneys' fees and court costs,
including  attorneys' fees and costs for appeal, as may be fixed by the court or
jury.

         24. Assignment, Subletting and Hypothecation.

                  24.1 In General.  Tenant shall not voluntarily sell, assign or
transfer  all or any part of Tenant's  interest in this Lease or in the Premises
or any part thereof,  sublease all or any part of the Premises, or permit all or
any part of the Premises to be used by any person or entity other than Tenant or
Tenant's employees, except as specifically provided in this Paragraph 24.

                  24.2 Voluntary Assignment and Subletting.

                           (a)  Notice to  Landlord.  Tenant  shall,  by written
notice,  advise  Landlord of Tenant's  desire on a stated date (which date shall
not be less than  thirty (30) days nor more than ninety (90) days after the date
of  Tenant's  notice)  to assign  this Lease or to sublet all or any part of the
Premises for any part of the Lease Term. Said notice shall state that the notice
constitutes an offer to terminate the Lease or Tenant's  interest in the portion
of the Premises specified pursuant to Paragraph 24.2(b) if the notice applies to
a proposed  assignment  of the Lease or Tenant's  interest  therein,  a proposed
sublease of all or any part of the Premises for more than fifty percent (50%) of
the  remainder  of the Lease  Term,  or a proposed  sublease  of more than fifty
percent  (50%) of the Premises for any period.  Tenant's  notice shall state the
name, legal composition and address of the proposed  assignee or subtenant,  and
Tenant shall provide the following  information to Landlord with said notice:  a
true and complete  copy of the  proposed  assignment  agreement  or sublease;  a
financial statement of the proposed assignee or subtenant (certified as true and
correct by an officer or partner of the proposed assignee or subtenant) prepared
in accordance  with generally  accepted  accounting  principles  within one year
prior to the proposed  effective date of the assignment or sublease;  the nature
of the  proposed  assignee's  or  subtenant's  business  to be carried on in the
Premises;  the payments to be made or other consideration to be given on account
of the assignment or sublease; a current financial statement of Tenant; and such
other pertinent  information as may be requested by Landlord,  all in sufficient
detail to enable  Landlord to evaluate the proposed  assignment  or sublease and
the  prospective  assignee or subtenant.  Tenant's notice shall not be deemed to
have been served or given until such time as Tenant has provided  Landlord  with
all  information  reasonably  requested by Landlord  pursuant to this  Paragraph
24.2.  Tenant  shall  immediately  notify  Landlord of any  modification  to the
proposed terms of such assignment or sublease.

                                      -35-
<PAGE>

Tenant may  withdraw  its notice at any time prior to  exercise  by  Landlord of
Landlord's right to terminate as described in Paragraph 24.2(b).

                           (b) Offer to Terminate.  If Tenant notifies  Landlord
of its desire to assign this Lease or any interest herein,  to sublet all or any
part of the Premises for more than fifty  percent  (50%) of the remainder of the
Lease Term,  or to sublet more than fifty  percent (50%) of the Premises for any
period,  Tenant's  notice shall  constitute an offer to terminate  this Lease or
Tenant's  interest in the portion of the Premises  specified and Landlord  shall
have the right,  to be exercised by giving  written  notice to Tenant within ten
(10) days after receipt of Tenant's notice, to terminate the Lease (i) entirely,
in the event of a proposed  assignment or a sublease of the entire  Premises for
the remainder of the Lease Term, (ii) as to the portion of the Premises which is
the  subject of a proposed  sublease  for more than fifty  percent  (50%) of the
remainder of the Lease Term, or (iii) as to the portion of the Premises which is
the  subject of a proposed  sublease  of more than  fifty  percent  (50%) of the
Premises for any period,  as specified in Tenant's notice.  For purposes of this
Paragraph 24.2(b), (i) the term of a proposed sublease shall include all options
to extend or renew,  and (ii) a proposed  sublease shall be deemed to be for the
remainder  of the Lease Term if the term of the  proposed  sublease  will expire
within one year prior to the end of the Lease Term. If Tenant's notice specifies
all of the  Premises  and  Landlord  elects  to  terminate,  this  Lease and the
obligations of Landlord and Tenant under this Lease shall  terminate on the date
stated in the notice given by Tenant pursuant to Paragraph 24.2(a),  except that
any  obligations  which have accrued and are unfulfilled as of such date and any
obligations  under this Lease that expressly  survive  termination of this Lease
shall survive such  termination.  If Tenant's notice  specifies less than all of
the Premises and Landlord elects to terminate, this Lease and the obligations of
Landlord and Tenant under this Lease shall  terminate on the date stated  solely
with  respect to that  portion of the  Premises  specified  in  Tenant's  notice
(except that any obligations which have accrued and are unfulfilled with respect
to the  terminated  portion of the Premises as of such date and any  obligations
under this Lease with respect to such  terminated  portion of the Premises  that
expressly survive termination of this Lease shall survive such termination), and
Rent and all other  costs and  expenses  payable  by Tenant  hereunder  shall be
adjusted pro rata, based upon the number of net leasable square feet retained by
Tenant  after the  termination,  compared  to the total  number of net  leasable
square  feet  in the  entire  Premises  excluding  any  areas  of  the  Premises
designated in the proposed  sublease for ingress and egress and common areas, if
any. The Lease as so amended shall continue thereafter in full force and effect.
Landlord and Tenant shall execute an amendment to this Lease  specifying the new
Premises,  the adjusted Rent, a reasonable  method for apportioning  maintenance
and operating  obligations based on the multitenant nature of the Premises,  and
Tenant's share of costs and expenses;  provided, however, that failure by either
party to execute such an amendment shall not affect the validity of this Lease.

                           (c) Landlord's Consent. If Landlord does not exercise
its right to terminate  pursuant to Paragraph 24.2(b) within ten (10) days after
receipt of  Tenant's  notice or if a  proposed  sublease  is not  subject to the
provisions of Paragraph  24.2(b),  Landlord shall not unreasonably  withhold its
consent to the proposed  assignment or  subletting,  on the terms and conditions
specified in said notice.  If Tenant's notice fails to state that it constitutes
an  offer to  terminate  the  Lease as may be  required  pursuant  to  Paragraph
24.2(a),  such  notice  shall be

                                      -36-
<PAGE>

deemed  insufficient  for the purposes of this Paragraph  24.2, and Landlord may
withhold its consent to the proposed  assignment  or  subletting  in  Landlord's
absolute discretion. Without otherwise limiting the criteria upon which Landlord
may  withhold its consent to any proposed  assignment  or sublease,  if Landlord
withholds  its consent  where  Tenant is in default at the time of the giving of
Tenant's notice or at any time thereafter,  such withholding of consent shall be
presumptively reasonable.  Landlord and Tenant agree that fifty percent (50%) of
any and all rent paid by an assignee or  subtenant,  including,  but not limited
to, any rent in excess of the Rentals to be paid under this Lease  (prorated  in
the  event of a  sublease  of less  than  the  entire  Premises),  shall be paid
directly to Landlord,  as Additional  Rent,  at the time and place  specified in
this Lease. For the purposes of this Paragraph 24, the term "rent" shall include
any  consideration  of any kind received,  or to be received,  by Tenant from an
assignee or  subtenant,  if such sums are  related to Tenant's  interest in this
Lease or in the Premises,  including, but not limited to key money, bonus money,
and payments (in excess of the fair market value  thereof) for Tenant's  assets,
fixtures, trade fixtures, inventory,  accounts, goodwill, equipment,  furniture,
general intangibles, and any capital stock or other equity ownership interest of
Tenant.  Any  assignment  or  subletting  without  Landlord's  consent  shall be
voidable  at  Landlord's  option,  and shall  constitute  a Default  by  Tenant.
Landlord's  consent to any one  assignment  or sublease  shall not  constitute a
waiver of the provisions of this Paragraph 24 as to any subsequent assignment or
sublease  nor a consent  to any  subsequent  assignment  or  sublease;  further,
Landlord's  consent to an assignment or sublease  shall not release  Tenant from
Tenant's  obligations  under this Lease,  and Tenant  shall  remain  jointly and
severally liable with the assignee or subtenant.

                           (d) Assumption of Obligations.  In the event Landlord
consents to any assignment,  such consent shall be conditioned upon the assignee
expressly  assuming  and  agreeing  to be bound by each of  Tenant's  covenants,
agreements  and  obligations  contained  in this  Lease,  pursuant  to a written
assignment and assumption  agreement in a form reasonably  approved by Landlord.
Landlord's  consent  to  any  assignment  or  sublease  shall  be  evidenced  by
Landlord's  signature on said  assignment  and  assumption  agreement or on said
sublease or by a separate written consent.  In the event Landlord  consents to a
proposed assignment or sublease,  such assignment or sublease shall be valid and
the  assignee  or  subtenant  shall  have the  right to take  possession  of the
Premises only if an executed original of the assignment or sublease is delivered
to Landlord,  and such document contains the same terms and conditions as stated
in Tenant's notice to Landlord given pursuant to Paragraph 24.2(a) above, except
for any such modifications to which Landlord has consented in writing.

                  24.3 Collection of Rent.  Tenant hereby  irrevocably  gives to
and confers  upon  Landlord,  as security for  Tenant's  obligations  under this
Lease, the right,  power and authority to collect all rents from any assignee or
subtenant of all or any part of the Premises as permitted by this  Paragraph 24,
or  otherwise,  and  Landlord,  as assignee of Tenant,  or a receiver for Tenant
appointed on Landlord's  application,  may collect such rent and apply it toward
Tenant's  obligations  under  this  Lease;  provided,  however,  that  until the
occurrence  of any Default by Tenant or except as provided by the  provisions of
Paragraph 24.2(c) above,  Tenant shall have the right to collect such rent. Upon
the occurrence of any Default by Tenant, Landlord may at any time without notice
in Landlord's  own name sue for or otherwise  collect such rent,

                                      -37-
<PAGE>

including rent past due and unpaid,  and apply the same, less costs and expenses
of operation  and  collection,  including  reasonable  attorneys'  fees,  toward
Tenant's obligations under this Lease. Landlord's collection of such rents shall
not  constitute an acceptance by Landlord of attornment by such  subtenants;  in
the event of a Default by Tenant,  Landlord  shall have all rights  provided  by
this Lease and by law, and Landlord may, upon re-entry and taking  possession of
the Premises,  eject all parties in possession or eject some and not others,  or
eject none, as Landlord shall determine in Landlord's sole discretion.

                  24.4 No Bonus  Value.  It is the intent of the parties  hereto
that this Lease  shall  confer  upon Tenant only the right to use and occupy the
Premises, and to exercise such other rights as are conferred upon Tenant by this
Lease.  The parties  agree  that,  except to the extent  provided  in  Paragraph
24.2(c) in which Landlord agrees to split equally excess rentals paid to Tenant,
this  Lease is not  intended  to have a bonus  value,  nor to serve as a vehicle
whereby  Tenant may profit by a future  assignment  or sublease of this Lease or
the right to use or occupy  the  Premises  as a result  of any  favorable  terms
contained herein or any future changes in the market for leased space. It is the
intent of the  parties  that any such bonus  value that may attach to this Lease
shall be and  remain,  subject  to the  provisions  of  Paragraph  24.2(c),  the
exclusive property of Landlord.

                  24.5   Corporations   and   Partnerships.   If   Tenant  is  a
partnership, any withdrawal or substitution (whether voluntary,  involuntary, or
by operation of law and whether  occurring at one time or over a period of time)
of any  partner(s)  owning fifty  percent  (50%) or more  (cumulatively)  of the
partnership,  any assignment(s) of fifty percent (50%) or more (cumulatively) of
any interest in the capital or profits of the partnership, or the dissolution of
the partnership  shall be deemed an assignment of this Lease requiring the prior
written  consent  of  Landlord.  If Tenant is a  corporation,  any  dissolution,
merger,  consolidation or other  reorganization of Tenant,  any sale or transfer
(or  cumulative  sales or transfers) of the capital stock of Tenant in excess of
fifty percent (50%),  or any sale (or cumulative  sales) of all of the assets of
Tenant shall be deemed an assignment  of this Lease  requiring the prior written
consent  of  Landlord.  Any such  withdrawal  or  substitution  of  partners  or
assignment of any interest in or  dissolution of a partnership  tenant,  and any
such sale of stock or assets of a corporate  tenant  without  the prior  written
consent  of  Landlord  shall be a Default  by Tenant  hereunder.  The  foregoing
notwithstanding,  (i) the sale or transfer of any or all of the capital stock of
a corporation,  the capital stock of which is now or hereafter  becomes publicly
traded, or (ii) the sale or transfer of this Lease to Tenant's parent company or
any affiliates or subsidiaries of Tenant's parent company,  or (iii) the sale or
transfer  of this Lease to an  unaffiliated  entity with whom Tenant or Tenant's
parent company or any affiliates or subsidiaries of Tenant's parent company have
a joint  development  or joint  venture  relationship,  shall  not be  deemed an
assignment  of this  Lease,  shall not  require  the prior  written  consent  of
Landlord (but written  notice of such sale or transfer  shall be given by Tenant
to Landlord  prior to or promptly  following the date of such sale or transfer),
shall not give Landlord a right to recapture the Premises,  or portion  thereof,
which is the subject of such sale or transfer, and shall not entitle Landlord to
any bonus rent with  respect  to such sale or  transfer.  The parent  company of
Tenant  and any  subsidiaries  of the parent  company of Tenant  shall be deemed
"Affiliates" of Tenant.

                                      -38-
<PAGE>

                  24.6 Reasonable  Provisions.  Tenant expressly agrees that the
provisions of this Paragraph 24 are not unreasonable standards or conditions for
purposes of Section  1951.4(b)(2) of the California  Civil Code, as amended from
time to time, under bankruptcy laws, or for any other purpose.

                  24.7 Attorney's  Fees.  Tenant shall pay, as Additional  Rent,
Landlord's reasonable attorneys' fees for reviewing,  investigating,  processing
and/or  documenting  any  requested  assignment  or  sublease,  whether  or  not
Landlord's consent is granted (but not to exceed $750).

                  24.8 Involuntary Transfer. No interest of Tenant in this Lease
shall be assignable,  involuntarily or by operation of law,  including,  without
limitation,  the  transfer  of this Lease by testacy or  intestacy.  Each of the
following acts shall be considered an involuntary assignment:

                           (a) If Tenant is or becomes  bankrupt  or  insolvent,
makes an  assignment  for the benefit of  creditors,  or a proceeding  under any
bankruptcy law is instituted in which Tenant is the bankrupt; or, if Tenant is a
partnership or consists of more than one person or entity, if any partner of the
partnership  or other person or entity is or becomes  bankrupt or insolvent,  or
makes an assignment for the benefit of creditors;

                           (b) Levy of a writ of attachment or execution on this
Lease;

                           (c)  Appointment of a receiver with authority to take
possession  of the  Premises in any  proceeding  or action to which  Tenant is a
party; or

                           (d)  Foreclosure  of  any  lien  affecting   Tenant's
interest in the Premises,  which lien was not consented to by Landlord  pursuant
to Paragraph  24.9.  An  involuntary  assignment  shall  constitute a Default by
Tenant and Landlord shall have the right to terminate this Lease,  in which case
this Lease shall not be treated as an asset of Tenant. In the event the Lease is
not terminated,  the provisions of Paragraph  24.2(c) regarding rents paid by an
assignee or subtenant and Paragraph 24.4 shall apply. If a writ of attachment or
execution  is  levied  on  this  Lease,  or if  any  involuntary  proceeding  in
bankruptcy is brought  against  Tenant or a receiver is appointed,  Tenant shall
have  sixty  (60)  days in which to cause  the  attachment  or  execution  to be
removed, the involuntary proceeding dismissed, or the receiver removed.

                  24.9 Hypothecation.  Tenant shall not hypothecate, mortgage or
encumber  Tenant's  interest in this Lease or in the Premises or  otherwise  use
this Lease as a security  device in any manner  without the consent of Landlord,
which consent Landlord may withhold in its sole and absolute discretion. Consent
by Landlord to any such  hypothecation  or creation of a lien or mortgage  shall
not  constitute  consent  to an  assignment  or  other  transfer  of this  Lease
following foreclosure of any permitted lien or mortgage.

                  24.10 Binding on Successors.  The provisions of this Paragraph
24  expressly  apply  to  all  heirs,  successors,   sublessees,  assignees  and
transferees of Tenant.

                                      -39-
<PAGE>

         25. Hazardous Materials.

                  25.1 Permitted Materials. Notwithstanding Paragraph 6.4 of the
Lease,  Tenant may use, keep and store in the Premises those Hazardous Materials
listed on Exhibit "C" attached hereto, and such other Hazardous  Materials which
may be  approved  by  Landlord  from  time  to  time  in  Landlord's  reasonable
discretion,  in such quantities and volumes as are necessary to conduct Tenant's
business in the Premises ("Permitted  Materials").  Permitted Materials shall be
used, kept, stored,  disposed of, removed,  and transported in strict compliance
with all laws,  ordinances,  regulations,  rules,  orders,  and  policies of any
federal,   state,   county,   municipal,   or   other   governmental   authority
(collectively,  "Governmental  Authority")  having  jurisdiction  over Hazardous
Materials  ("Environmental Laws"). Upon Landlord's reasonable,  written request,
Tenant shall provide  Landlord  with an updated list of all Permitted  Materials
used,  kept, or stored in the Premises.  Tenant shall  promptly  comply with any
law,   ordinance,   or  regulation  of  any  Governmental   Authority  requiring
modifications to the Premises or the  improvements  thereon that are intended to
protect the  Premises  and the  environment  against  the  release of  Hazardous
Materials.   Tenant  shall  obtain  all   necessary   permits  from   applicable
Governmental  Authorities required to maintain the Permitted Materials and shall
furnish  Landlord,  upon  reasonable  request by  Landlord,  with copies of such
permits or any plans,  reports or other  material  required to be filed with any
Governmental Authority relating to the use of the Permitted Materials.  Upon the
expiration or sooner termination of this Lease,  Tenant covenants to remove from
the Premises or Common Area, at its sole cost and expense, any and all Hazardous
Materials  then located on or about the Premises or Common Area due to a Release
of Hazardous Materials by Tenant or Tenant's agents.

         Tenant and Tenant's  agents shall not release or dispose,  or allow the
release or disposal, of any Hazardous Materials,  including Permitted Materials,
in, on,  under,  or in the vicinity of the  Premises;  provided,  however,  that
Tenant shall dispose, remove and transport from the Premises and Common Area any
and all Permitted  Materials in accordance with all  Environmental  Laws. Tenant
shall  immediately  notify  Landlord of any  inquiry,  test,  investigation,  or
enforcement  proceeding  by or against  Tenant or the  Premises  or Common  Area
concerning Hazardous Materials. Tenant acknowledges that Landlord shall have the
right,  but not the  obligation,  in Landlord's  own name, to participate in any
negotiations with any Governmental  Authority with regard to Tenant's Release of
Hazardous  Materials on the Premises or Common Area.  Tenant shall,  within five
(5) days after receipt by Tenant,  submit to Landlord  copies of all  inquiries,
test and investigation results, and enforcement  proceedings described above and
copies of all reports and responses  thereto prepared by or on behalf of Tenant.
In connection with the transportation of any Hazardous  Materials to or from the
Premises, Tenant shall list itself as the transporter and generator.

                  25.2  Landlord's  Inspection  Rights.  Landlord shall have the
right, upon reasonable advance notice to Tenant, to inspect, investigate, sample
and/or  monitor  the  Premises  and  Common  Area,  including  any soil,  water,
groundwater,  or other sampling to the extent reasonably  necessary to determine
whether  Tenant  is  complying  with the terms of this  Lease  with  respect  to
Hazardous Materials. In connection therewith, Tenant shall provide Landlord with
reasonable  access to all  portions of the  Premises;  provided,  however,  that
Landlord  shall  avoid

                                      -40-
<PAGE>

any  unreasonable  interference  with the operation of Tenant's  business on the
Premises.  All costs  incurred by Landlord  pursuant to this  subparagraph  25.2
above  shall be  reimbursed  by Tenant to  Landlord  within  ten (10) days after
Landlord's  demand for payment if it is  determined  that a Release of Hazardous
Materials by Tenant or any of its agents, employees,  contractors or tenants has
occurred.  If  Tenant  fails to  perform  or does not  commence  and  thereafter
diligently  prosecute any  obligation to be performed by Tenant under this Lease
with  respect to  Hazardous  Materials  within sixty (60) days after the date of
Tenant's receipt of Landlord's written notice of the obligation to be performed,
Landlord shall have the right, but not the obligation,  without  limitation upon
any of  Landlord's  other  rights or  remedies  under this Lease or at law or in
equity, to enter upon the Premises and perform Tenant's obligations hereunder at
Tenant's  expense.  All sums  reasonably  disbursed,  deposited,  or incurred by
Landlord in connection with the performance of such obligation,  including,  but
not limited to, all costs,  expenses,  and actual  attorneys' fees, shall be due
and  payable by Tenant to Landlord  as an item of  additional  rent on demand by
Landlord, together with interest thereon at the maximum rate allowed by law from
the date of such demand until paid by Tenant.

                  25.3  Investigation  and Remediation.  If Tenant or any of its
Agents  Releases any Hazardous  Materials in, on or under the Premises or any of
the Common Areas,  Tenant shall promptly commence an investigation of the extent
of such Hazardous  Materials  contamination of the Premises and/or Common Areas.
Within sixty (60) days after completion of such investigation, Tenant shall also
prepare and submit to  Landlord  or within  such period  commence to prepare and
thereafter  diligently  complete  and submit to  Landlord a  comprehensive  plan
specifying  the  actions  to be taken  by  Tenant  to  remediate  the  Hazardous
Materials to levels  permitted by applicable  Environmental  Laws  ("Remediation
Plan").  Any Remediation  Plan shall be subject to the prior written approval of
Landlord,  which approval shall not be unreasonably withheld or delayed.  Within
thirty (30) days after Landlord's approval of the Remediation Plan, Tenant shall
commence and diligently  prosecute to completion  all such actions  necessary to
remediate the Hazardous  Materials in accordance with the Remediation  Plan. Any
and all work performed pursuant to an Investigation Plan and/or Remediation Plan
shall be performed at Tenant's sole cost and expense.

                  25.4 Tenant's Indemnity.  Tenant shall indemnify,  defend, and
hold Landlord and Landlord's partners,  employees,  and agents harmless from and
against any and all claims,  actions,  suits,  proceedings,  orders,  judgments,
losses, costs, damages, liabilities, or expenses (including, without limitation,
attorneys' fees and costs of investigation, remediation, and/or cleanup) arising
in connection with any Hazardous Materials Released by Tenant or any of Tenant's
Agents in, on, under,  or in the vicinity of the Premises or the Common Area, or
any  Hazardous  Materials  shipped  thereto  or  therefrom,  by Tenant or any of
Tenant's  Agents  including,   without  limitation,  (a)  the  investigation  or
remediation of Hazardous  Materials Released by Tenant or any of Tenant's Agents
in, on, or under the  Premises or Common Area and the  removal,  transportation,
and  disposal of  contaminated  building  materials,  soils  and/or  groundwater
arising  from  the  remediation  of such  contamination,  whether  voluntary  or
required by any Governmental Authority;  (b) ongoing monitoring of any Hazardous
Materials  contamination Released by Tenant or any of Tenant's Agents in, on, or
under  the  Premises  or Common  Area,  whether  voluntary  or  required  by any
Governmental   Authority;   (c)  the  migration

                                      -41-
<PAGE>

of any Hazardous Materials  contamination  Released by Tenant or any of Tenant's
Agents to nearby  properties,  (d) personal  injury,  death,  or property damage
arising out of the presence of the Hazardous Materials contamination Released by
Tenant or any of Tenant's  Agents in, on, or under the  Premises or Common Area;
(e) damage to or loss of use of the  Premises or Common Area or the  environment
or  diminution  in value of the Premises or Common Area caused by the Release of
Hazardous  Materials  by  Tenant  or any of  Tenant's  Agents;  and  (f)  fines,
penalties,  or other  assessments  levied against the Premises or Common Area or
Landlord as a result of the presence of the  Hazardous  Materials  contamination
caused by Tenant or any of Tenant's Agents. The foregoing indemnity shall run to
the benefit of Landlord, its partners,  directors,  officers, employees, agents,
and successors and assigns,  any existing or future lender who extends credit to
Landlord,  or its successors and assigns,  which credit is secured by a mortgage
or deed of trust on the Premises, any person or entity who acquires the interest
of Landlord  in the  Premises  (except  Tenant),  and any person who  acquires a
lender's interest in the Premises,  either through foreclosure,  deed in lieu of
foreclosure, or exercise of any rights or remedies under the documents governing
a loan or extension of credit.

                  25.5  Assignment  and  Subletting.  It shall be  presumptively
reasonable  for Landlord to withhold its consent to any proposed  assignment  or
subletting if the proposed  assignee or  subtenant's  use of the Premises  would
require the storage,  use, handling,  generation,  disposal or transportation of
Hazardous  Materials other than the Permitted  Materials unless such assignee or
subtenant  submits  to  Landlord,  prior  to  occupancy,  a  list  of  Permitted
Materials, which list shall be subject to the reasonable approval of Landlord.

                  25.6  Disclosures  by Landlord.  Landlord  discloses to Tenant
that,  pursuant to an Order or Orders imposed by the  California  Regional Water
Quality Control Board,  certain  remedial action has been undertaken or is being
undertaken  in connection  with certain  portions of the Common Area or soils or
groundwater  underlying  such  Common  Area.  The terms and  conditions  of that
certain Covenant to Restrict Use of Property  executed by RREEF USA FUND-III,  a
California Group Trust, and the California Regional Water Quality Control Board,
recorded December 30, 1991,  concerning the remedial action referred to above is
incorporated herein by reference.  The aforementioned  recorded document affects
that  property at 3050  Coronado  Drive and the parking lot  adjacent  thereto].
Tenant hereby  acknowledges  that  Landlord has  delivered or made  available to
Tenant,  without  representation  as to accuracy or completeness,  those certain
environmental  reports or studies  referred to in Exhibit "D"  attached  hereto.
Landlord  hereby  acknowledges  and agrees  that  Tenant  shall not be liable to
Landlord for the clean up or  remediation  of, or cost to clean up or remediate,
any Hazardous Materials existing on, in or under the Premises or the Common Area
as of the  Commencement  Date of this Lease (unless  Tenant or any of its Agents
caused the Release of such pre-existing Hazardous Materials and/or Tenant or any
of its  Agents  exacerbates  the  pre-existing  environmental  condition  of the
Premises or the Common  Area,  and in such  latter  case,  Tenant  shall only be
liable to the extent of damages, losses, liabilities, costs or expenses incurred
by Landlord as a result of such exacerbation of such pre-existing condition).

                  25.7 Environmental  Assessments by Lender. Tenant shall permit
any  lender  who has  made or will  make a loan  secured  by a deed of  trust or
mortgage affecting the Premises

                                      -42-
<PAGE>

and/or real property  comprising the Common Area,  and/or such lender's  agents,
employees and  consultants,  to enter onto the Premises and/or the real property
comprising  the Common Area at reasonable  times and with  reasonable  notice to
Tenant in order to perform and/or cause to perform  environmental testing and/or
site  assessments  of such property,  including,  without  limitation,  Phase II
environmental  assessments,  to the extent  permitted under the deed or trust or
mortgage and/or under any other loan documents  executed in connection with such
deed of trust or mortgage,  provided  that the  performance  and conduct of such
environmental testing assessments shall not unreasonably interfere with Tenant's
possession  of  the  Premises  or  otherwise  impede  the  conduct  of  Tenant's
operations on the Premises and/or the real property comprising the Common Area.

                  25.8  Survival.  The  provisions  of this  Paragraph  25 shall
survive any termination of the Lease.

         26.  Successors.  Subject to the  provisions  of Paragraph 24 above and
Paragraph 31.2(a) below, the covenants,  conditions, and agreements contained in
this Lease shall be binding on the parties hereto and on their respective heirs,
successors and assigns.

         27. Landlord  Default;  Mortgage  Protection.  Landlord shall not be in
default under this Lease unless Tenant shall have given Landlord  written notice
of the breach and, within thirty (30) days after notice,  Landlord has not cured
the breach or, if the breach is such that it cannot  reasonably  be cured  under
the  circumstances  within  thirty (30) days,  has not  commenced  diligently to
prosecute the cure to completion.  Any money  judgment  obtained by Tenant based
upon Landlord's breach of this Lease shall be satisfied only out of the proceeds
of the sale or  disposition of Landlord's  interest in the Premises  (whether by
Landlord or by execution of judgment) or the rents, issues or profits therefrom.
In the event of any  default on the part of Landlord  under this  Lease,  Tenant
shall give notice by registered or certified  mail to any  beneficiary of a deed
of trust or any mortgagee of a mortgage  affecting the Premises  and/or the real
property  comprising  the Common Area whose address shall have been furnished to
Tenant,  and shall offer such beneficiary or mortgagee a reasonable  opportunity
to cure the  default,  including  time to obtain  possession  of the Premises by
power of sale or judicial foreclosure,  if such should prove necessary to effect
a cure.

         28. Exhibits. All exhibits attached to this Lease shall be deemed to be
incorporated  herein by the individual  reference to each such exhibit,  and all
such exhibits  shall be deemed to be a part of this Lease as though set forth in
full in the body of the Lease.

         29. Surrender of Lease Not Merger.  The voluntary or other surrender of
this Lease by Tenant, or a mutual cancellation thereof,  shall not work a merger
and shall, at the option of Landlord, terminate all or any existing subleases or
subtenants,  or may,  at the option of  Landlord,  operate as an  assignment  to
Landlord of any or all such subleases or subtenants.

         30. Waiver. The waiver by Landlord of any breach of any term,  covenant
or condition  herein contained (or the acceptance by Landlord of any performance
by Tenant  after the time the same shall become due) shall not be deemed to be a
waiver of such term,  covenant or condition or any subsequent  breach thereof or
of any other term,  covenant

                                      -43-
<PAGE>

or condition herein contained,  unless otherwise expressly agreed to by Landlord
in  writing.  The  acceptance  by  Landlord  of any sum less than that  which is
required  to be paid by Tenant  shall be deemed  to have been  received  only on
account of the  obligation for which it is paid (or for which it is allocated by
Landlord,  in Landlord's absolute  discretion,  if Tenant does not designate the
obligation as to which the payment should be credited),  and shall not be deemed
an accord  and  satisfaction  notwithstanding  any  provisions  to the  contrary
written on any check or contained in any letter of  transmittal.  The acceptance
by Landlord of any sum tendered by a purported  assignee or transferee of Tenant
shall not be deemed a consent by  Landlord  to any  assignment  or  transfer  of
Tenant's  interest  herein.  No custom or practice  which may arise  between the
parties  hereto  in the  administration  of the  terms  of this  Lease  shall be
construed as a waiver or diminution of Landlord's right to demand performance by
Tenant in strict accordance with the terms of this Lease.

         31. General.

                  31.1  Captions  and  Headings.   The  captions  and  paragraph
headings used in this Lease are for  convenience of reference  only.  They shall
not be construed  to limit or extend the meaning of any part of this Lease,  and
shall not be deemed  relevant in  resolving  any question of  interpretation  or
construction of any paragraph of this Lease.

                  31.2 Definitions.

                           (a)  Landlord.  The  term  Landlord  as  used in this
Lease,  so far as the  covenants  or  obligations  on the part of  Landlord  are
concerned,  shall be limited to mean and  include  only the owner at the time in
question of the fee title to the Premises.  In the event of any  transfer(s)  of
such  interest,  the  Landlord  herein  named  (and in  case  of any  subsequent
transfers or  conveyances,  the then  grantor)  shall have no further  liability
under this Lease to Tenant except as to matters of liability  which have accrued
and are unsatisfied as of the date of such transfer,  it being intended that the
covenants and obligations  contained in this Lease on the part of Landlord shall
be binding on Landlord and its successors and assigns only during and in respect
of their respective  periods of ownership of the fee; provided that any funds in
the  possession  of Landlord or the then  grantor and as to which  Tenant has an
interest,  less any deductions  permitted by law or this Lease,  shall be turned
over to the grantee.  The covenants and  obligations  contained in this Lease on
the part of Landlord shall, subject to the provisions of this Paragraph 31.2(a),
be  binding   upon  each   Landlord   and  such   Landlord's   heirs,   personal
representatives,  successors  and assigns only during its  respective  period of
ownership. Except as provided in this Paragraph 31.2(a), this Lease shall not be
affected by any  transfer of  Landlord's  interest in the  Premises,  and Tenant
shall  attorn to any  transferee  of Landlord  provided  that all of  Landlord's
obligations hereunder are assumed in writing by such transferee.

                           (b)  Agents.  For  purposes of this Lease and without
otherwise  affecting  the  definition  of the word  "agent" or the meaning of an
"agency",  the term "agents"  shall be deemed to include the agents,  employees,
officers,    directors,    servants,    invitees,    contractors,    successors,
representatives   subcontractors,   guests,  customers,   suppliers,   partners,

                                      -44-
<PAGE>

affiliated  companies,  and any other person or entity related in any way to the
respective party, Tenant or Landlord.

                           (c) Interpretation of Terms. The words "Landlord" and
"Tenant" as used herein shall include the plural as well as the singular.  Words
in the  neuter  gender  include  the  masculine  and  feminine  and words in the
masculine or feminine gender include the neuter.

                  31.3 Copies.  Any executed  copy of this Lease shall be deemed
an original for all purposes.

                  31.4 Time of  Essence.  Time is of the  essence as to each and
every  provision in this Lease  requiring  performance  within a specified time,
except as to the  conditions  relating  to the  delivery  of  possession  of the
Premises to Tenant.

                  31.5  Severability.  In case any one or more of the provisions
contained  herein  shall  for  any  reason  be held to be  invalid,  illegal  or
unenforceable in any respect,  such invalidity,  illegality or  unenforceability
shall not affect any other  provision  of this  Lease,  but this Lease  shall be
construed as if such invalid,  illegal or  unenforceable  provision had not been
contained  herein.  However,  if  Tenant's  obligation  to pay  the  Rentals  is
determined to be invalid or unenforceable,  this Lease at the option of Landlord
shall terminate.

                  31.6 Governing Law. This Lease shall be construed and enforced
in accordance with the laws of the State of California.

                  31.7 Joint and Several  Liability.  If Tenant is more than one
person or entity,  each such  person or entity  shall be jointly  and  severally
liable for the obligations of Tenant hereunder. If Tenant is a husband and wife,
the obligations  hereunder  shall extend to their sole and separate  property as
well as community property.

                  31.8  Construction  of  Lease  Provisions.   Although  printed
provisions  of this Lease were  prepared  by  Landlord,  this Lease shall not be
construed  either for or against  Tenant or Landlord,  but shall be construed in
accordance  with the general tenor of the language to reach a fair and equitable
result.

                  31.9  Conditions.  All agreements by Tenant  contained in this
Lease,  whether  expressed as covenants or conditions,  shall be construed to be
both  covenants and  conditions,  conferring  upon  Landlord,  in the event of a
breach thereof, the right to terminate this Lease.

                  31.10 Tenant's  Financial  Statements.  Tenant hereby warrants
that all financial statements delivered by Tenant to Landlord are true, correct,
and complete,  and prepared in accordance  with  generally  accepted  accounting
principles.  Tenant  acknowledges  and agrees  that  Landlord is relying on such
financial  statements  in  accepting  this Lease,  and that a breach of Tenant's
warranty as to such financial statements shall constitute a Default by Tenant.

                                      -45-
<PAGE>

                  31.11 Withholding of Landlord's  Consent.  Notwithstanding any
other  provision  of this Lease,  where Tenant is required to obtain the consent
(whether  written or oral) of  Landlord  to do any act,  or to refrain  from the
performance of any act,  Tenant agrees that if Tenant is in default with respect
to any term, condition, covenant or provision of this Lease, then Landlord shall
be deemed to have acted  reasonably in  withholding  its consent if said consent
is, in fact, withheld.

         32.  Signs.  Tenant  shall not place or permit to be placed any sign or
decoration  on the Common Area or the  exterior of the Premises or that would be
visible from the exterior of the Premises,  without the prior written consent of
Landlord,  which consent may be withheld in Landlord's absolute discretion.  The
preceding sentence to the contrary  notwithstanding,  Landlord acknowledges that
it has no  objection  to signage  that is  substantially  similar to the signage
currently  located at 2972 Stender Way,  identifying the Tenant or its business,
provided  such signage is otherwise in  compliance  with all recorded  documents
affecting  the  Property,  including  but  not  limited  to any  Declaration  of
Conditions,  Covenants and Restrictions (as the same may be amended from time to
time),   and  applicable   statutes,   ordinances,   rules  and  regulations  of
governmental  agencies having  jurisdiction  thereof. In no event shall any such
sign  revolve,  rotate,  move or create the illusion of  revolving,  rotating or
moving or be internally  illuminated and there shall be no exterior spotlighting
or other illumination on any such sign. Tenant, upon written notice by Landlord,
shall  immediately  remove any of Tenant's signs or decorations that are visible
from the  exterior of the  Premises or that Tenant has placed or permitted to be
placed on the Common  Area or the  exterior  of the  Premises  without the prior
written  consent  of  Landlord.  If  Tenant  fails  to so  remove  such  sign or
decoration  within five (5) days after Landlord's  written notice,  Landlord may
enter the  Premises  and remove  such sign or  decoration  and Tenant  shall pay
Landlord,  as Additional Rent upon demand,  the cost of such removal.  All signs
placed on the  Premises or Common Area by Tenant  shall comply with all recorded
documents  affecting the Premises,  including but not limited to any Declaration
of Conditions,  Covenants and Restrictions (as the same may be amended from time
to  time);  and  applicable  statutes,  ordinances,  rules  and  regulations  of
governmental  agencies having jurisdiction thereof. At Landlord's option, Tenant
shall at Lease  Termination  remove any sign which it has placed on the Premises
or the Common Area, and shall, at its sole cost, repair any damage caused by the
installation or removal of such sign.

         33. Intentionally Omitted.

         34.  Landlord  Not a  Trustee.  Landlord  shall  not be  deemed to be a
trustee of any funds paid to Landlord by Tenant (or held by Landlord for Tenant)
pursuant to this Lease,  including  without  limitation  the  Security  Deposit.
Landlord shall not be required to keep any such funds  separate from  Landlord's
general funds. Any funds held by Landlord  pursuant to this Lease shall not bear
interest.

         35. Interest. Any payment due from Tenant to Landlord,  except for Rent
received by Landlord  within thirty (30) days after the same is due,  shall bear
interest from the date of written notice from Landlord that such payment is past
due,  at an annual rate equal to the  greater  of: ten  percent  (10%);  or five
percent  (5%)  plus the rate  established  by the  Federal  Reserve  Bank of

                                      -46-
<PAGE>

San  Francisco,  as of the  twenty-fifth  (25th)  day of the  month  immediately
preceding the due date, on advances to member banks under  Sections 13 and 13(a)
of the  Federal  Reserve  Act, as now in effect or  hereafter  from time to time
amended. In addition, Tenant shall pay all costs and attorneys' fees incurred by
Landlord in the collection of such amounts.

         36.  Surrender of  Premises.  On the last day of the Lease Term or upon
the  sooner  termination  of  this  Lease,   Tenant  shall,  to  the  reasonable
satisfaction  of Landlord,  surrender the Premises  (excluding the HVAC units or
system  servicing the Building  which shall be governed by the next sentence) to
Landlord in the same condition as received  (reasonable wear and tear excepted),
but subject to Tenant's  obligation to remove certain Alterations as provided in
Paragraph 13.2 above and surrender such other  Alterations  with the Premises as
provided in the last  sentence of Paragraph  13.2.  On the last day of the Lease
Term or  upon  the  sooner  termination  of this  Lease,  Tenant  shall,  to the
reasonable satisfaction of Landlord surrender the air conditioning,  ventilating
and heating  equipment  (excluding  the Older HVAC Units and any HVAC units that
are not used by Tenant during the Lease Term)  inspected,  serviced and repaired
by a reputable and licensed  service  firm.  Tenant shall remove all of Tenant's
personal property and trade fixtures from the Premises,  and all property not so
removed  shall  be  deemed  abandoned  by  Tenant.  Furthermore,   Tenant  shall
immediately repair all damage to the Premises and Common Area caused by any such
removal.  Landlord  agrees to give  Tenant  written  notice  if Tenant  left any
personal   property  in  the  Premises   following  the  expiration  or  earlier
termination  of the Lease Term. If the Premises are not so  surrendered at Lease
Termination  in the  condition  required  by this  Paragraph  36,  Tenant  shall
indemnify,  defend and hold Landlord harmless from and against any loss, damage,
expense,  claim or liability  resulting from delay by Tenant in so  surrendering
the Premises including,  without  limitation,  any claims made by any succeeding
tenant or losses to Landlord due to lost  opportunities  to lease to  succeeding
tenants.

         37. No  Partnership  or Joint  Venture.  Nothing in this Lease shall be
construed as creating a partnership or joint venture between  Landlord,  Tenant,
or any  other  party,  or cause  Landlord  to be  responsible  for the  debts or
obligations of Tenant or any other party.

         38. Entire Agreement.  Any agreements,  warranties,  or representations
not expressly  contained  herein shall in no way bind either Landlord or Tenant,
and Landlord and Tenant  expressly waive all claims for damages by reason of any
statement, representation, warranty, promise or agreement, if any, not contained
in  this  Lease.  This  Lease  supersedes  and  cancels  any  and  all  previous
negotiations,  arrangements,  brochures, agreements and understandings,  whether
written or oral,  between Landlord and its agents and Tenant and its agents with
respect to the Premises,  Common Area or this Lease.  This Lease constitutes the
entire agreement  between the parties hereto and no addition to, or modification
of, any term or provision of this Lease shall be effective  until and unless set
forth in a written instrument signed by both Landlord and Tenant.

         39.  Submission of Lease.  Submission of this  instrument  for Tenant's
examination  or  execution  does not  constitute a  reservation  of space nor an
option to lease.  This instrument  shall not be effective until executed by both
Landlord and Tenant. Execution of this Lease by Tenant

                                      -47-
<PAGE>

shall constitute an offer by Tenant to lease the Premises,  which offer shall be
deemed  accepted  by  Landlord  when this  Lease is  executed  by  Landlord  and
delivered to Tenant.

         40. Quiet  Enjoyment.  Landlord  covenants  and agrees with Tenant that
upon Tenant paying Rentals and performing its covenants and conditions under the
Lease,  Tenant  shall and may  peaceably  and quietly  have,  hold and enjoy the
Premises for the Lease Term, subject, however, to the terms of this Lease and of
any mortgages or deeds of trust  affecting the Premises and/or the real property
comprising the Common Area, and the rights reserved by Landlord  hereunder.  Any
purchaser  upon any  foreclosure  or  exercise  of the  power of sale  under any
mortgage or deed of trust made by Landlord  and  covering  the  Premises to whom
Tenant  attorns  pursuant to Paragraph 20.4 above shall be bound by the terms of
this Paragraph 40.

         41.  Authority.  The undersigned  parties hereby warrant that they have
proper  authority  and are  empowered  to  execute  this  Lease on behalf of the
Landlord and Tenant, respectively.  If Tenant is a corporation (or partnership),
each  individual  executing  this  Lease  on  behalf  of  said  corporation  (or
partnership)  represents and warrants that he is duly  authorized to execute and
deliver  this  Lease on behalf of said  corporation  in  accordance  with a duly
adopted  resolution  of  the  Board  of  Directors  of  said  corporation  or in
accordance  with  the  by-laws  of  said  corporation  (or  on  behalf  of  said
partnership in accordance with the partnership  agreement of such  partnership),
and that  this  Lease is  binding  upon said  corporation  (or  partnership)  in
accordance  with its  terms.  If  Tenant is a  corporation,  Tenant  shall  upon
execution of this Lease,  deliver to Landlord a certified copy of the resolution
of the Board of  Directors of said  corporation  authorizing  or  ratifying  the
execution  of  this  Lease  or a  certificate  of  the  Secretary  of  the  said
corporation  confirming the power and authority of the signatories of this Lease
(on behalf of Tenant) to execute and deliver  this Lease on behalf of Tenant and
to bind Tenant to its terms.  In the event  Tenant  should fail to deliver  such
resolution or  certificate  to Landlord upon  execution of this Lease,  Landlord
shall  not be deemed  to have  waived  its  right to  require  delivery  of such
resolution  or  certificate,  and at any time during the Lease Term Landlord may
request  Tenant to  deliver  the same,  and  Tenant  agrees it shall  thereafter
promptly  deliver such  resolution or  certificate  to Landlord.  If Tenant is a
corporation, Tenant warrants that:

                  (a) Tenant is a valid and existing corporation;

                  (b) Tenant is qualified to do business in California;

                  (c) All fees and all franchise and corporate taxes are paid to
date, and will be paid when due;

                  (d) All required forms and reports will be filed when due; and

                  (e) The  signers  of this  Lease are  properly  authorized  to
execute this Lease.

         42. Building Plans.  Tenant  acknowledges that any plan of the Premises
and Common Area which may have been  displayed  or  furnished to Tenant or which
may be a part of Exhibit "A" is  tentative;  Landlord may change the exterior of
the Premises and the shape,  size,

                                      -48-
<PAGE>

location,  number,  and extent of the Common Area improvements shown on any such
plan and eliminate or add any improvements to the Common Area in Landlord's sole
discretion; provided, however, that the Premises shall be substantially as shown
on  such  plan,  Tenant's  use  and  enjoyment  of  the  Premises  shall  not be
unreasonably  interfered  with and any such  change to the Common Area shall not
unreasonably  interfere with Tenant's  parking rights under this Lease or access
to the Premises.

         IN WITNESS  WHEREOF,  the parties have executed this Lease effective as
of the date set forth below.

LANDLORD:                                     TENANT:

SI HAHN LLC,                                  INTEGRATED DEVICE TECHNOLOGY
a California limited liability company        INTERNATIONAL, INC.,
                                              a California corporation

By:  ________________________________         By:______________________________
         Sang Hahn
Title:  Manager                               Title:___________________________

                                              By:______________________________
DATE:________________________________
                                              Title:___________________________

                                              DATE_____________________________

                                      -49-
<PAGE>

                                    EXHIBITS
                                    --------

A. Site Plan                        Paragraph 1.4  (Premises shown cross-hatched
                                    and Common Area illustrated on such Site
                                    Plan)

B. Legal Description                Paragraph 2.1

C. List of Permitted
   Hazardous Materials              Paragraph 25

D. List of
   Environmental
   Reports                          Paragraph 25.6

E. Form of Subordination,
   Nondisturbance and
   Attornment Agreement             Paragraph 20.2

F. Form of Estoppel Certificate     Paragraph 20.5

G. HVAC Plan or List                Paragraph 2.2 (Showing location or
                                    identification
                                    of Older HVAC Units)

                                      -50-
<PAGE>

                                    EXHIBIT C

                      LIST OF PERMITTED HAZARDOUS MATERIALS

                                [to be attached]

                                      -1-
<PAGE>

                                    EXHIBIT D

                          LIST OF ENVIRONMENTAL REPORTS

                                [to be attached]

                                      -1-
<PAGE>

                                    EXHIBIT G

                   SITE HVAC PLAN OR LIST SHOWING LOCATION OR

                       IDENTIFICATION OF OLDER HVAC UNITS

                                [to be attached]

                                       -1-EXHIBIT 10.20

                               NET LEASE AGREEMENT
                               -------------------
                                 (Single Tenant)

For and in consideration of the rentals,  covenants,  and conditions hereinafter
set forth,  Landlord  hereby  leases to Tenant,  and  Tenant  hereby  rents from
Landlord,  the herein described Premises for the term, at the rental and subject
to and upon all of the terms,  covenants  and  agreements  set forth in this Net
Lease Agreement ("Lease"):

         1. Summary of Lease Provisions.

                  1.1 Tenant: Integrated Device Technology International,  Inc.,
a California corporation ("Tenant").

                  1.2 Landlord:  S.I. Hahn, LLC, a California  limited liability
company ("Landlord").

                  1.3 Date of Lease, for reference  purposes only:  February 16,
2000.

                  1.4 Premises: That certain building, consisting of forty eight
thousand (48,000)  rentable square feet of space, more or less,  located at 2901
Coronado  Drive,  in the City of Santa Clara,  County of Santa  Clara,  State of
California, shown cross-hatched on the site plan attached hereto as Exhibit "A",
together with certain rights appurtenant thereto. (Paragraph 2.1)

                  1.5 Term:  Eight  (8)  years,  unless  earlier  terminated  in
accordance  with the terms of this Lease or  extended  pursuant  to the terms of
Paragraph 3.5 below. (Paragraph 3)

                  1.6 Commencement  Date: May 1, 2000, subject to the provisions
of Paragraph 3 below. (Paragraph 3)

                  1.7 Ending Date: April 30, 2008,  subject to the provisions of
Paragraph 3 below. (Paragraph 3)

                  1.8 Rent: (Paragraph 4)

                      Months Initial Lease Term         Monthly Rent NNN
                      -------------------------         ----------------

                              1-12                   $86,400   ($1.80 psf)
                              13-24                  $89,280   ($1.86 psf)
                              25-36                  $92,160   ($1.92 psf)
                              37-48                  $95,040   ($1.98 psf)
                              49-60                  $97,920   ($2.04 psf)
                              61-72                  $100,800 ($2.10 psf)
                              73-84                  $103,680 ($2.16 psf)

                                      -1-
<PAGE>

                              85-96                  $106,650 ($2.22 psf)

Receipt of the first month's Rent is hereby acknowledged by Landlord.

The  monthly  Rent to be paid  during  the first year of the  Extended  Term (as
defined  below) shall be determined  in  accordance  with the terms of Paragraph
4.4.  Every twelve  calendar  months  during the Extended  Term the monthly Rent
shall be increased by an additional  $0.06 per rentable  square foot  comprising
the  Premises.  The first such  adjustment  shall  occur on the first day of the
thirteenth month of the Extended Term. (Paragraph 4.4)

                  1.9 Use of Premises:  light  industrial and general office use
(Paragraph 6)

                  1.10 Security Deposit: Zero Dollars ($0.00)

                  1.11 Addresses for Notices:

                  To Landlord:

                  SI Hahn LLC
                  c/o SIH Investment, Inc.
                  21580 Stevens Creek Blvd., Suite 107
                  Cupertino, CA.  95014
                  Attn:  Sang Hahn

                  To Tenant:  To the Premises, with a courtesy copy to:

                              Integrated Device Technology International, Inc.
                              2975 Stender Way
                              Santa Clara, CA. 95054
                              Attn:  General Counsel

                  1.12  Non-exclusive  Right  to Use No More  than  one  hundred
seventy-five (175) parking spaces within the Common Area. (Paragraph 2.1)

                  1.13 Summary Provisions in General.  Parenthetical  references
in this  Paragraph 1 to other  paragraphs in this Lease are for  convenience  of
reference,  and designate some of the other Lease  paragraphs  where  applicable
provisions  are  set  forth.  All of the  terms  and  conditions  of  each  such
referenced paragraph shall be construed to be incorporated within and are made a
part of each of the above referring Summary of Lease Provisions. In the event of
any conflict  between any Summary of Lease  Provision as set forth above and the
balance of the Lease, the latter shall control.

         2. Property Leased.

                  2.1  Premises.  Landlord  hereby  leases to Tenant  and Tenant
hereby leases from  Landlord,  upon the terms and  conditions  herein set forth,
that certain  building  ("Premises")

                                      -2-
<PAGE>

referred  to in  Paragraph  1.4  above,  shown  cross-hatched  on the site  plan
attached  hereto as Exhibit  "A". In addition,  Tenant shall have the  following
rights with  respect to the real  property  more  particularly  described in the
legal  description  attached as Exhibit "B" hereto and  excluding  the buildings
situated  thereon ("Common Area"):  (i) the  non-exclusive  right to use no more
than the number of parking spaces set forth in Paragraph 1.12 above,  within the
Common  Area (and not  allocated  for the  exclusive  use of  another  tenant of
Landlord);  and (ii)  such  other  rights as are  necessary  and  convenient  to
Tenant's possession of the Premises or performance of Tenant's obligations under
this Lease.  Landlord  agrees  that it will not  overburden  the  parking  areas
comprising the Common Area by over-allocating the parking areas to other tenants
of Landlord. In addition, Landlord grants to Tenant a non-exclusive easement for
vehicular  ingress and egress in and over the paved  roadways in the Common Area
and pedestrian ingress and egress in and over the Common Area.

         Landlord  reserves  the right to grant to tenants of the  buildings  or
improvements  which now exist or may  hereafter be  constructed  upon the Common
Area or upon real property owned by Landlord adjacent to the Common Area, and to
the agents,  employees,  servants,  invitees,  contractors,  guests,  employees,
servants, invitees,  contractors,  guests, customers and representatives of such
tenants or to any other user authorized by Landlord,  the non-exclusive right to
use the  Common  Area for  pedestrian  and  vehicular  ingress  and  egress  and
vehicular  parking and the exclusive  right to use parking  spaces on the Common
Area.

                  2.2 Replacement of HVAC Units. The parties hereto  acknowledge
and agree that there are five (5) HVAC  units on the roof of the  Building  that
are currently  fifteen  years old or older (the "Older HVAC Units").  Such Older
HVAC Units are more particularly  identified on the plan or list attached hereto
as EXHIBIT "G" and made a part hereof. If any Older HVAC Unit fails and requires
replacement or, using good business judgment,  it becomes more cost effective to
replace an Older HVAC Unit than to maintain or repair it, Landlord shall replace
such  applicable  Older HVAC Unit(s) at Landlord's sole cost. The parties hereto
acknowledge that there are HVAC units on the roof of the Building that Tenant is
unlikely  to use during the Lease Term (due to over  capacity of the HVAC system
servicing the Building) and it is the intention of the parties that Landlord not
have to replace  any HVAC  units  that will not be used by Tenant.  Prior to the
Commencement Date of the Lease,  Landlord and Tenant shall enter into good faith
negotiations to attempt to agree on the HVAC units, if any, that Tenant will not
be using during the Lease Term, and Landlord shall have the right, at Landlord's
sole cost, and following not less than forty-eight hours prior notice to Tenant,
to remove  any such HVAC  units  that  Tenants  agree will not be used by Tenant
during the Lease Term.

                  2.3  Acceptance  of  Premises.  By  taking  possession  of the
Premises,  Tenant shall be deemed to have accepted the Premises as being in good
and sanitary  order,  condition  and repair and to have accepted the Premises in
their condition existing as of the date Tenant takes possession of the Premises,
subject to all applicable laws, covenants, conditions,  restrictions,  easements
and other  matters of public record and the rules and  regulations  from time to
time promulgated by Landlord  governing the use of the Premises and Common Area,
and further,  to have accepted tenant improvements to be constructed by Landlord
(if any) as being completed in accordance with the plans and  specifications for
such improvements, subject

                                      -3-
<PAGE>

only to completion of items on Landlord's  punch list. Prior to the Commencement
Date,  Landlord and Tenant  shall  complete a  walk-through  of the Premises and
Landlord and Tenant shall agree on a punch list of any items (except HVAC units,
the  replacement of which shall be governed by the terms of Paragraph 2.2 above)
within the Premises that are in need or repair or  maintenance.  Landlord agrees
to repair or  maintain  such items that are on the agreed  upon punch  list,  at
Landlord's sole cost,  within thirty (30) days following the  Commencement  Date
(except  that  if such  punch  list  items  cannot  reasonably  be  repaired  or
maintained  with such thirty (30) day period,  then Landlord shall commence such
repair or  maintenance of the punch list items within such thirty day period and
diligently  prosecute the same to  completion).  The preceding  notwithstanding,
Tenant  does not  waive  any  claims  of  latent  defects  that may exist in the
Premises  as of the  Commencement  Date,  however,  Landlord  shall  be under no
obligation  to repair  any  latent  defect in the  Premises  existing  as of the
Commencement  Date unless Tenant gives  Landlord  written  notice of such defect
prior  to  the  date  six  months  following  the  Commencement   Date.   Tenant
acknowledges  that,  except  as set  forth in the  following  sentence,  neither
Landlord nor Landlord's  agents have made any  representation  or warranty as to
the  suitability  of the  Premises  for the  conduct of Tenant's  business,  the
condition of the Premises, or the use or occupancy which may be made thereof and
Tenant has  independently  investigated  and is satisfied  that the Premises are
suitable for Tenant's  intended use and that the Premises meets all governmental
requirements for such intended use.  Landlord hereby  represents to Tenant that,
to Landlord's  actual  knowledge,  the Premises are not in violation of any law,
rule, regulation or ordinance applicable to the Premises.

         The preceding paragraph notwithstanding, the parties hereto acknowledge
that Landlord  intends to undertake some seismic upgrades of the Premises in the
future.  As of the date of execution of this Lease,  no plans or  specifications
for such seismic  upgrades have been prepared,  nor has Landlord  determined the
specific time or times when it may undertake such seismic upgrades.  Any seismic
upgrades   performed  by  Landlord  with  respect  to  the  Premises  shall  not
unreasonably  interfere  with  Tenant's  use  of  the  Premises.  To  Landlord's
knowledge,  such seismic  upgrades  contemplated to be performed by Landlord are
not  required  to be  performed  to bring  the  Premises  into  compliance  with
applicable  building  codes or laws,  and instead  Landlord may elect to perform
such seismic upgrades to further reduce its earthquake insurance premiums and to
improve  Landlord's  ability to obtain  financing or refinancing  secured by the
Premises.  Landlord  agrees that, if seismic upgrade of the Premises is required
to bring the Premises  into  compliance  with building  codes  applicable to the
Premises at the time the Premises  were  initially  constructed,  then  Landlord
shall be responsible for such seismic upgrades and Tenant shall not be obligated
to bear portion of the cost of such seismic upgrades.

         If Tenant  desires to construct or install,  or cause to be constructed
or installed, any alterations, additions or improvements to the Premises and, in
connection with the same,  seismic  upgrades or structural  reinforcement of the
Premises,  or portion  thereof,  are required  and are  directly and  physically
related to the  alterations,  additions or  improvements  to be  constructed  or
installed,  or caused to be  constructed  or installed,  by Tenant,  then Tenant
shall bear one hundred  percent  (100%) of the cost of the  seismic  upgrades or
structural reinforcement of the Premises so required.  Except as provided in the
immediately  preceding  sentence,  Tenant  shall not be obligated to pay for any
seismic  upgrades or structural  reinforcement  of the Premises,  or any portion
thereof. If Tenant applies to a governmental agency for approval of, or issuance
of a building permit in connection with, any proposed alteration,  addition,  or
improvement  to the  Premises,  or any portion  thereof,  and such  governmental
agency   requires   Tenant  to  undertake  a  seismic   upgrade  or   structural
reinforcement of the

                                      -4-
<PAGE>

Premises,  or any portion thereof, in connection with such proposed  alteration,
addition or improvement,  then Tenant shall not be obligated to pay for the cost
of such seismic upgrade or structural  reinforcement unless the same is directly
and physically related to the alteration, addition or improvement proposed to be
undertaken by Tenant.

         3. Term.

                  3.1  Commencement  Date. The term of this Lease ("Lease Term")
shall be for the period specified in Paragraph 1.5 above, commencing on the date
set forth in Paragraph 1.6  ("Commencement  Date").  The expiration of the Lease
Term or sooner  termination  of this Lease is  referred  to herein as the "Lease
Termination".

                  3.2 Delay of Commencement  Date.  Landlord shall not be liable
for any damage or loss  incurred by Tenant for  Landlord's  failure for whatever
cause to deliver  possession of the Premises by any particular  date  (including
the  Commencement  Date), nor shall this Lease be void or voidable on account of
such failure to deliver  possession of the  Premises;  provided that if Landlord
does not  deliver  possession  of the  Premises  to Tenant by the date  which is
ninety (90) days following the date the Commencement Date of this Lease,  Tenant
shall have the right to  terminate  this Lease by written  notice  delivered  to
Landlord  within ten (10) days  thereafter,  and  Landlord  and Tenant  shall be
relieved of their respective obligations hereunder.  If the Commencement Date is
delayed  beyond the date set forth in  Paragraph  1.6 above  (i.e.  May 1, 2000)
because Landlord is not able to deliver  possession of the Premises to Tenant on
or before such date,  then (i) Tenant  shall not be  obligated to pay Rent under
this Lease until  possession  of the Premises is  delivered to Tenant,  (ii) the
Commencement Date shall be extended to the date Landlord delivers  possession of
the Premises to Tenant (but in no event shall such Commencement Date be extended
later than six months from May 1, 2000),  and (iii) all dates that are keyed off
of the Commencement Date (such as the Ending Date) shall be extended by the same
number of days as the Commencement Date is extended.

                  3.3 Early  Occupancy.  Landlord  hereby agrees that Tenant may
enter the Premises prior to the  Commencement  Date (but only after the existing
tenant or lessee  has  vacated  the  Premises)  to  install  its phone and other
communication  systems therein, to fixturize and perform general clean up of the
Premises, and to otherwise conduct Tenant's business in the Premises, and in the
event Tenant so enters the Premises prior to the Commencement Date, Tenant shall
do so subject to all the terms and  conditions  hereof  except that Tenant shall
not be obligated to pay Rentals  provided for herein during such early occupancy
period.  Tenant  shall  be  obligated  to  commence  paying  Rentals  as of  the
Commencement Date of the Lease.

                  3.4 Intentionally Omitted.

                                      -5-
<PAGE>

                  3.5 Option to Extend Term.  Landlord  hereby  grants to Tenant
one (1)  option to extend the  initial  Lease Term for a period of Two (2) years
(the "Extended Term"), on the following terms and conditions:

                           (a) Tenant shall give Landlord  written notice of its
exercise of the option to extend the Lease Term no earlier  than nine months nor
later than six (6) months  before the date the Lease Term would end but for said
exercise. Time is of the essence.

                           (b) Tenant may not extend the Lease Term  pursuant to
this  Paragraph 3.5 if Tenant is in material  default of any of its  obligations
under this Lease as of the date of  Tenant's  notice of  exercise  of the option
(and such  default has not been cured within the cure or grace  period,  if any,
applicable  to such  default),  or if Tenant  shall have  assigned or  otherwise
transferred  its  interest  in this Lease  and/or the  Premises,  whether or not
Landlord's  consent to such  assignment or transfer has been given, to any third
party other than an Affiliate of Tenant (as described in Paragraph  24.5 below).
If  Tenant  is in  default  under  this  Lease on the date  that the  applicable
Extended Term is to commence,  then Landlord may elect to terminate  this Lease,
notwithstanding  any  notice  given by Tenant of an  exercise  of its  option to
extend and such  exercise of  Tenant's  option to extend the Lease Term shall be
void and of no force or effect.

                           (c) All  terms and  conditions  of this  Lease  shall
apply  during the  Extended  Term,  except  that the  monthly  base Rent for the
Extended Term shall be determined in accordance with Paragraph 4.4 below, Tenant
shall have no further  options to extend the Lease Term beyond the Extended Term
described  in this  Paragraph  3.5 and  Landlord  shall  have no  obligation  to
construct or install any tenant  improvements in the Premises for the benefit of
the Tenant.

                           (d) Once Tenant  delivers  notice of its  exercise of
the option to extend the Lease Term,  Tenant may not withdraw such exercise and,
subject to the  provisions of this  Paragraph  3.5, such notice shall operate to
extend the Lease Term.  The  preceding to the contrary  notwithstanding,  if the
Rent payable during the Extended Term is determined pursuant to Paragraph 4.4(b)
below,  and Tenant objects to the amount of such Rent as determined  pursuant to
such Paragraph 4.4(b),  then Tenant may elect to rescind its extension notice by
delivering  to  Landlord,  within  ten (10) days  following  the date  Tenant is
informed of the amount of Rent  determined  pursuant to  Paragraph  4.4(b),  (i)
written  notice of  rescission,  and (ii) an  amount  equal to the sum of (1) an
amount equal to the appraisal costs paid or incurred by Landlord pursuant to the
provisions  of  Paragraph  4.4(b)  below,  plus  (2)  the  product  obtained  by
multiplying (x) the monthly base Rent determined  pursuant to Paragraph  4.4(b),
by (y) six (6) (such sum being hereinafter referred to as the "Rescission Fee").
In the  event  such  rescission  notice  is timely  given  and  payment  of such
Rescission Fee is timely made,  then the Lease Term shall expire on the date the
Lease Term would  otherwise  have expired had Tenant not exercised its option to
extend the Lease Term.  Time is of the essence  with  respect to the delivery of
the  rescission  notice and  Rescission  Fee. If Tenant  does not  deliver  such
rescission  notice and Rescission Fee to Landlord within the ten (10) day period
referred  to above,  then  Tenant  shall be deemed to have  waived  its right to
rescind the extension  notice.  Upon the extension of the Lease Term pursuant to
this  Paragraph  3.5,  the term  "Term" as used in this Lease  shall  thereafter
include  the  Extended

                                      -6-
<PAGE>

Term and the  Ending  Date of this  Lease  shall be the  expiration  date of the
Extended Term unless sooner terminated pursuant to the terms hereof.

         4. Rent.

                  4.1  Rent.  Tenant  shall  pay to  Landlord  as  rent  for the
Premises  ("Rent"),  in  advance,  on the  first  day of  each  calendar  month,
commencing on the date specified in Paragraph 1.6 and continuing  throughout the
Lease  Term,  the Rent set forth in  Paragraph  1.8  above.  Rent and  Operating
Expenses shall be prorated, based on thirty (30) days per month, for any partial
month  during  the Lease  Term.  Rent and  Operating  Expenses  shall be payable
without deduction,  offset, prior notice or demand in lawful money of the United
States to Landlord at the address herein  specified for purposes of notice or to
such other persons or such other places as Landlord may designate in writing.

                  4.2 Late Charge.  Tenant hereby acknowledges that late payment
by  Tenant  to  Landlord  of  Rent  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 deed of trust  covering  the  Premises.  Accordingly,
Tenant shall pay to Landlord,  as  Additional  Rent (as defined in Paragraph 4.3
below),  without the necessity of prior notice or demand, a late charge equal to
five percent (5%) of any  installment  of Rent which is not received by Landlord
within ten (10) days after the due date for such  installment.  The preceding to
the contrary  notwithstanding,  Landlord  agrees that, with respect to the first
late payment of Rent by Tenant in any twelve month  period,  Tenant shall not be
obligated to pay a late charge on such  delinquent  Rent unless  Tenant fails or
refuses to pay such Rent  within five (5)  business  days  following  receipt of
written  notice to Tenant.  Except with respect to the first  delinquency in the
payment of Rent in a twelve  month  period,  Landlord  shall not be obligated to
give Tenant  notice of  delinquent  Rent prior to imposing a late charge on such
delinquent  Rent.  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.  In no event shall this provision for a late charge be deemed
to grant to Tenant a grace  period or  extension of time within which to pay any
installment  of Rent or prevent  Landlord  from  exercising  any right or remedy
available to Landlord upon Tenant's failure to pay such installment of Rent when
due,  including  without  limitation the right to terminate  this Lease.  In the
event any  installment  of Rent is not  received by  Landlord  by the  thirtieth
(30th) day after the due date for such installment,  such installment shall bear
interest at the annual rate set forth in Paragraph 35 below,  commencing  on the
thirty-first  (31st) day after the due date for such  installment and continuing
until such installment is paid in full.

                  4.3 Additional  Rent. All taxes,  charges,  costs and expenses
and other sums which  Tenant is required  to pay  hereunder  (together  with all
interest and charges that may accrue thereon in the event of Tenant's failure to
pay the same),  and all damages,  costs and expenses which Landlord may incur by
reason of any Default by Tenant shall be deemed to be additional  rent hereunder
("Additional Rent"). Additional Rent shall accrue commencing on the Commencement
Date.  In the event of  nonpayment by Tenant of any  Additional  Rent,  Landlord

                                      -7-
<PAGE>

shall have all the rights and remedies with respect  thereto as Landlord has for
the nonpayment of Rent. The term "Rentals" as used in this Lease shall mean Rent
and Additional Rent.

                  4.4 Rent During  Extended Term. If Tenant elects to extend the
Lease Term pursuant to Paragraph 3.5 above,  the monthly base Rent for the first
year of the  Extended  Term shall be in an amount equal to  ninety-five  percent
(95%) of the fair  market  rental  value of the  Premises  in relation to market
conditions at the time of the commencement of the Extended Term (including,  but
not  limited  to,  rental  rates for  comparable  space with  comparable  tenant
improvements  in Santa Clara County as of the  commencement of the Extended Term
and taking into  consideration  any  adjustments to rent based upon direct costs
(operating  expenses) and taxes,  load  factors,  and/or cost of living or other
rental adjustments; the relative strength of the tenants; the size of the space;
and any other  factors  which  affect  market  rental  values at the time of the
commencement  of the Extended Term);  however,  the monthly base Rent during the
first year of the  Extended  Term shall in no event be lower than  Seventy-eight
Thousand One Hundred Twenty Dollars ($78,120) (NNN) per month.

                           (a)  Mutual   Agreement.   After  timely  receipt  by
Landlord of Tenant's  notice of exercise of the option to extend the Lease Term,
but not sooner than the date which is nine (9) months prior to the expiration of
the initial Lease Term,  Landlord and Tenant shall have a period of fifteen (15)
days in which to agree on the monthly base Rent to be paid during the first year
of the  Extended  Term.  If Landlord  and Tenant agree on said monthly base Rent
during that period,  they shall  immediately  execute an amendment to this Lease
stating  the  monthly  base Rent for the first  year of the  Extended  Term.  If
Landlord  and Tenant are unable to agree on the monthly  base Rent for the first
year of the Extended Term as aforesaid,  then the provisions of Subparagraph (b)
below shall apply.

                           (b)  Appraisal.   Within  ten  (10)  days  after  the
expiration of the fifteen (15) day period  described in Subparagraph  (a) above,
each party at its cost and by giving notice to the other party, shall appoint an
M.A.I. real estate appraiser, with at least seven (7) years full-time commercial
appraisal  experience in Santa Clara County, to appraise and set the fair market
rental value of the  Premises.  If a party does not appoint an appraiser  within
ten (10)  days  after  the  other  party  has  given  notice  of the name of its
appraiser,  the single appraiser appointed shall be the sole appraiser and shall
set the fair market rental value. The cost of such sole appraiser shall be borne
equally by the  parties.  If two  appraisers  are  appointed  by the  parties as
provided in this  Subparagraph (b), the two appraisers shall meet promptly in an
attempt to set the fair market rental value.  If they are unable to agree within
twenty  (20) days  after the last  appraiser  has been  appointed,  then the two
appraisers shall attempt to select a third appraiser meeting the  qualifications
stated in this  Subparagraph (b) within ten (10) days after the last day the two
appraisers are given to set the fair market rental value.  If they are unable to
agree on the third appraiser, either of the parties to this Lease, by giving ten
(10) days notice to the other  party,  may apply to the  presiding  judge of the
Superior Court of Santa Clara County for the selection of a third  appraiser who
meets the  qualifications  stated above. Each of the parties shall bear one-half
of the  cost  of  appointing  the  third  appraiser  and  of  paying  the  third
appraiser's fee. The third appraiser,  however  selected,  shall be a person who
has not  previously  acted in any capacity for either party.  Within twenty (20)
days after the selection of the third appraiser,  the majority of the appraisers
shall set the fair market rental

                                      -8-
<PAGE>

value.  If the  majority  of the  appraisers  are unable to set the fair  market
rental value within said twenty (20) day period,  the three  appraisals shall be
added together and the total divided by three (3); the resulting  quotient shall
be the fair  market  rental  value  and  shall be  deemed  incorporated  herein;
provided, however, that if any appraisal differs from the median appraisal by an
amount  equal to more than ten  percent  (10%) of such  median  appraisal,  that
appraisal shall be disregarded,  and the average of the remaining appraisals (or
the remaining  appraisal) shall be the fair market rental value. In establishing
the fair market rental value,  the  appraiser or appraisers  shall  consider the
factors  referred to in above in this  Subparagraph  (b),  without regard to the
existence of this Lease but taking into  consideration  the triple net nature of
this Lease.  The appraiser  shall have the right to include  adjustments  to the
monthly  base Rent during the  Extended  Term as part of the fair market  rental
value of the Premises.

Every twelve  calendar  months  during the  Extended  Term the monthly base Rent
shall be increased by an additional  $0.06 per rentable  square foot  comprising
the  Premises.  The first such  adjustment  shall  occur on the first day of the
thirteenth month of the Extended Term.

         5. Intentionally Omitted.

         6. Use of Premises.

                  6.1  Permitted  Uses.  Tenant  shall use the  Premises and the
Common Area only in conformance  with applicable Laws for the purposes set forth
in  Paragraph  1.9 above,  and for no other  purpose  without the prior  written
consent of Landlord, which consent Landlord may withhold in its sole discretion.
Any change in use of the Premises or the Common Area  without the prior  written
consent of Landlord  shall be a Default by Tenant.  Tenant and  Tenant's  agents
shall comply with the provisions of any  Declaration  of Covenants,  Conditions,
and Restrictions affecting the Premises and the Common Area.

                  6.2 Tenant to Comply with Legal Requirements. Tenant shall, at
its sole cost (except as otherwise  expressly provided in this Lease),  promptly
comply with all Laws  relating to or  affecting  the use,  occupational  safety,
occupancy or condition  of the  Premises or the Common  Area,  now in force,  or
which may hereafter be in force,  including without limitation those relating to
utility  usage  and load or  number  of  permissible  occupants  or users of the
Premises,  whether or not the same are now contemplated by the parties; with the
provisions of all recorded  documents  affecting the Premises or the Common Area
insofar as the same relate to or affect the use, occupational safety, occupancy,
or condition of the Premises or the Common Area;  and with the  requirements  of
any board of fire  underwriters  (or similar body now or hereafter  constituted)
relating to or affecting the use, occupational safety, occupancy or condition of
the Premises or the Common Area. Tenant's obligations pursuant to this Paragraph
6.2 shall include without  limitation  maintaining or restoring the Premises and
making structural and non-structural alterations and additions in compliance and
conformity  with  all  Laws  and  recorded   documents   relating  to  the  use,
occupational  safety,  occupancy or  condition of the Premises  during the Lease
Term. At Landlord's option, Landlord may make the required alteration,  addition
or change,  and Tenant shall pay the cost  thereof as  Additional  Rent.  If any
portion of the Premises or Common Area is not in compliance  with Laws as of the

                                      -9-
<PAGE>

Commencement  Date of this  Lease,  then  Tenant  shall not be  responsible  for
bringing  the  Premises  or Common  Area into  compliance,  nor shall  Tenant be
obligated to pay any money to bring the Premises or Common Area into compliance.
With  respect to any  structural  alterations  or  additions as may be hereafter
required due to a change in Laws and  unrelated to (i) Tenant's  specific use of
the  Premises  or the Common  Area,  (ii)  Tenant's  alterations,  additions  or
improvements to the Premises, or (iii) Tenant's acts or omissions,  Tenant shall
be required to pay the amortized cost of such structural alteration or addition,
which amount shall be determined  as follows:  (a) all costs paid by Landlord to
construct such alteration or addition (including financing costs) shall be fully
amortized over the useful life of such  alteration or addition (as determined by
Landlord  in  good  faith)  with  interest  on the  unamortized  balance  at the
prevailing market rate Landlord would pay if it borrowed funds to construct such
alteration or addition from an institutional lender, and (b) as Additional Rent,
Tenant  shall pay the entire  monthly  amortized  payment  with  respect to such
structural  alteration or addition.  Tenant's  obligation to make payments under
the immediately  preceding sentence with respect to any structural alteration or
addition  that is required due to a change in Laws and unrelated to (i) Tenant's
specific  use of  the  Premises  or  Common  Area,  (ii)  Tenant's  alterations,
additions or improvements to the Premises,  or (iii) Tenant's acts or omissions,
shall commence when such alteration or addition has been substantially completed
and shall  cease upon the earlier of the  expiration  of the Lease Term (but not
upon a  termination  due to any Default on the part of Tenant) or the end of the
term over which the costs of constructing the particular  alteration or addition
were amortized. Payments of such Additional Rent shall be made concurrently with
payments  of Base  Rent.  Tenant  shall  pay 100% of the cost of any  structural
alteration  or addition  that is required due to a change in Laws and related to
(i)  Tenant's  specific  use of the  Premises  or  Common  Area,  (ii)  Tenant's
alterations,  additions or improvements to the Premises, and (iii) Tenant's acts
or omissions.  Tenant shall obtain prior to the  Commencement  Date any permits,
licenses  or other  authorizations  required  for the  lawful  operation  of its
business at the Premises. The judgment of any court of competent jurisdiction or
the admission of Tenant in any action or proceeding  against Tenant,  regardless
of whether Landlord is a party thereto or not, that Tenant has violated such Law
or recorded  document  relating to the use,  occupational  safety,  occupancy or
condition of the Premises or the Common Area shall be  conclusive of the fact of
such  violation by Tenant.  Any  alterations  or additions  undertaken by Tenant
pursuant to this Paragraph 6.2 shall be subject to the requirements of Paragraph
13.1 below.

                  6.3  Prohibited  Uses.  Tenant and  Tenant's  agents shall not
commit  or suffer  to be  committed  any waste  upon the  Premises.  Tenant  and
Tenant's  agents  shall  not do or  permit  anything  to be done in or about the
Premises or Common Area which will in any way  obstruct  or  interfere  with the
rights of any  authorized  users of the Common  Area,  or injure or annoy  them.
Tenant  shall not conduct or permit any auction or sale open to the public to be
held or conducted  on or about the Premises or Common Area.  Tenant and Tenant's
agents  shall  not use or allow  the  Premises  to be used for any  unlawful  or
hazardous  purpose or any purpose not permitted by this Lease,  nor shall Tenant
or Tenant's agents cause,  maintain,  or permit any nuisance in, on or about the
Premises.  Tenant and Tenant's agents shall not do or permit anything to be done
in or about the  Premises  or  Common  Area nor  bring or keep  anything  in the
Premises or Common Area which will in any way increase the rate of any insurance
upon the Premises or Common Area or any part thereof or any of its contents,  or
cause a  cancellation  of

                                      -10-
<PAGE>

any insurance policy covering the Premises or Common Area or any part thereof or
any of its contents,  nor shall Tenant or Tenant's  agents keep,  use or sell or
permit to be kept,  used or sold in or about the Premises any articles which may
be prohibited by a standard form policy of fire insurance. In the event the rate
of any insurance  upon the Premises or Common Area or any part thereof or any of
its contents is increased because of the acts or omissions of Tenant or Tenant's
agents,  Tenant shall pay, as Additional Rent, the full cost of such increase to
the extent  attributable  solely to Tenant's or its agents'  acts or  omissions;
provided  however  this  provision  shall in no event be deemed to  constitute a
waiver of Landlord's rights or remedies in connection with such increase. Tenant
and Tenant's  agents shall not place any loads upon the floor,  walls or ceiling
of the Premises  which would  endanger the Premises or the  structural  elements
thereof,  nor place any harmful  liquids in the drainage system of the Premises.
No waste  materials  or refuse  shall be dumped upon or permitted to remain upon
any part of the Premises or Common Area except in enclosed trash containers.  No
materials,  supplies,  equipment, finished products (or semi-finished products),
raw  materials,  or other  articles of any nature  shall be stored  upon,  or be
permitted to remain on, any portion of the Common Area.

         Tenant shall not allow any activity which in the reasonable  opinion of
Landlord is  detrimental  to the  operation  of the Common Area or to tenants of
Landlord in other  buildings  located on the Common  Area or upon real  property
owned by Landlord adjacent to the Common Area,  including but not limited to any
picketing,  work stoppage, or other concerted activity.  Landlord shall have the
right to require Tenant,  at Tenant's own expense and within a reasonable period
of time, to use Tenant's commercially reasonable efforts to terminate or control
any such  picketing,  work  stoppage or other  concerted  activity to the extent
necessary to eliminate any interference with the operation of the Common Area or
such tenants. Failure by Tenant to use its commercially reasonable efforts to do
so shall be a Default by Tenant.  Nothing  contained in this paragraph  shall be
construed as placing Landlord in an  employer-employee  relationship with any of
Tenant's  employees  or with any other  employees  who may be  involved  in such
activity.

                  6.4 Hazardous  Materials.  Neither Tenant nor Tenant's  agents
shall  permit  the   introduction,   placement,   use,   storage,   manufacture,
transportation, release or disposition (collectively "Release") of any Hazardous
Material(s)  (defined  below) on or about any portion of the  Premises or Common
Area  without  the prior  written  consent of  Landlord,  which  consent  may be
withheld in the sole and absolute discretion of Landlord without any requirement
of  reasonableness  in the  exercise  of that  discretion.  Notwithstanding  the
immediately  preceding  sentence  to the  contrary,  Tenant  may use de  minimis
quantities  of the  types of  materials  which  are  technically  classified  as
Hazardous  Materials  but commonly  used in domestic or office use to the extent
not in an  amount,  which,  either  individually  or  cumulatively,  would  be a
"reportable  quantity" under any applicable  Law. Tenant  covenants that, at its
sole cost and expense,  Tenant will comply with all applicable Laws with respect
to the Release of such  permitted  Hazardous  Materials.  Any Release beyond the
scope allowed in this  paragraph  shall be subject to Landlord's  prior consent,
which may be withheld in  Landlord's  sole and  absolute  discretion,  and shall
require an amendment to the Lease in the event Landlord does consent which shall
set forth the  materials,  scope of use,  indemnification  and any other  matter
required by Landlord in Landlord's  sole and absolute  discretion.  Tenant shall
indemnify,  defend and

                                      -11-
<PAGE>

hold  Landlord  and  Landlord's  agents  harmless  from and  against any and all
claims, losses, damages, liabilities, or expenses arising in connection with the
Release of Hazardous  Materials by Tenant,  Tenant's  agents or any other person
using the Premises  during the Term of this Lease or during the term of Tenant's
prior lease of the Premises.  Tenant's  obligation to defend,  hold harmless and
indemnify pursuant to this Paragraph 6 4 shall survive Lease Termination.

         As used  in this  Lease,  the  term  "Hazardous  Materials"  means  any
chemical, substance, waste or material which has been or is hereafter determined
by any federal,  state or local  governmental  authority to be capable of posing
risk of  injury  to  health  or  safety,  including  without  limitation,  those
substances included within the definitions of "hazardous substances," "hazardous
materials,"  "toxic  substances,"  or  "solid  waste"  under  the  Comprehensive
Environmental  Response,  Compensation,  and Liability Act of 1980, the Resource
Conservation   and  Recovery   Act  of  1976,   and  the   Hazardous   Materials
Transportation Act, as amended,  and in the regulations  promulgated pursuant to
said laws;  those substances  defined as "hazardous  wastes" in section 25117 of
the  California  Health & Safety Code, or as "hazardous  substances"  in section
25316 of the California Health & Safety Code, as amended, and in the regulations
promulgated  pursuant to said laws; those substances listed in the United States
Department of  Transportation  Table (49 CFR 172.101 and amendments  thereto) or
designated by the  Environmental  Protection Agency (or any successor agency) as
hazardous substances (see, e.g., 40 CFR Part 302 and amendments  thereto);  such
other  substances,  materials and wastes which are or become regulated or become
classified as hazardous or toxic under any Laws,  including  without  limitation
the California Health & Safety Code, Division 20, and Title 26 of the California
Code  of  Regulations;  and  any  material,  waste  or  substance  which  is (i)
petroleum, (ii) asbestos, (iii) polychlorinated  biphenyls, (iv) designated as a
"hazardous substance" pursuant to section 311 of the Clean Water Act of 1977, 33
U.S.C.  sections 1251 et seq. (33 U.S.C.  ` 1321) or listed  pursuant to section
307 of the Clean Water Act of 1977 (33 U.S.C. ` 1317), as amended; (v) flammable
explosives; (vi) radioactive materials; or (vii) radon gas.

         7. Taxes.

                  7.1 Personal Property Taxes. Tenant shall cause Tenant's trade
fixtures, equipment, furnishings,  furniture, merchandise, inventory, machinery,
appliances  and other  personal  property  installed  or located on the Premises
(collectively the "personal property") to be assessed and billed separately from
the Premises. Tenant shall pay before delinquency any and all taxes, assessments
and public charges levied, assessed or imposed upon or against Tenant's personal
property.  If any of Tenant's  personal property shall be assessed with the real
property  comprising  the Common Area or with the Premises,  Tenant shall pay to
Landlord,  as Additional  Rent, the amounts  attributable  to Tenant's  personal
property within ten (10) days after receipt of a written statement from Landlord
setting  forth  the  amount  of  such  taxes,  assessments  and  public  charges
attributable  to  Tenant's  personal  property.  Tenant  shall  comply  with the
provisions  of any Law  which  requires  Tenant  to file a  report  of  Tenant's
personal property located on the Premises.

                  7.2 Other Taxes  Payable  Separately  by Tenant.  Tenant shall
pay,  prior  to  delinquency,  all  privilege,  sales,  excise,  use,  business,
occupation,  or  other  taxes,  assessments,

                                      -12-
<PAGE>

license  fees or charges  levied,  assessed or imposed  upon  Tenant's  business
operations conducted at the Premises.

                  7.3 Common Taxes.

                           (a) Definition of Taxes.  The term "Taxes" as used in
this Lease shall  collectively  mean (to the extent any of the following are not
paid by Tenant  pursuant to Paragraphs  7.1 and 7.2 above) all real estate taxes
and general and special assessments (including,  but not limited to, assessments
for public  improvements or benefit);  personal  property taxes;  taxes based on
vehicles  utilizing parking areas on the Common Area; taxes computed or based on
rental  income or on the  square  footage  of the  Premises  (including  without
limitation any municipal business tax but excluding federal, state and municipal
net income  taxes);  taxes  upon,  allocable  to, or measured by the area of the
Premises or the Rentals  payable  hereunder,  including  without  limitation any
gross income,  gross  receipts,  excise,  or other tax levied by the state,  any
political  subdivision  thereof,  city or federal government with respect to the
receipt of such Rentals (but excluding  federal,  state and municipal net income
taxes); taxes upon or with respect to the use, possession,  occupancy,  leasing,
operation and management of the Premises or any portion thereof; taxes upon this
transaction or any document to which Tenant is a party creating or  transferring
an  interest  or an  estate  in  the  Premises;  taxes  imposed  as a  means  of
controlling  or  abating  environmental  pollution  or the use of  energy or any
natural  resource  (including  without  limitation  gas,  electricity or water),
including, without limitation, any parking taxes, levies or charges or vehicular
regulations imposed by any governmental agency; environmental surcharges; excise
taxes; gross receipts taxes;  sales and/or use taxes;  employee taxes; water and
sewer taxes,  levies,  assessments  and other  charges in the nature of taxes or
assessments (including,  but not limited to, assessments for public improvements
or benefit); and all other governmental,  quasi-governmental or special district
impositions of any kind and nature whatsoever  (excluding utility hook-up fees);
regardless  of whether  any of the  foregoing  are now  customary  or within the
contemplation  of the parties  hereto and  regardless of whether  resulting from
increased rate and/or valuation,  or whether extraordinary or ordinary,  general
or special,  unforeseen  or  foreseen,  or similar or  dissimilar  to any of the
foregoing and which during the Lease Term are laid, levied,  assessed or imposed
upon  Landlord  and/or  become a lien upon or  chargeable  against the  Premises
and/or  Common Area under or by virtue of any present or future laws,  statutes,
ordinances,   regulations,   or   other   requirements   of  any   governmental,
quasi-governmental  or special district authority  whatsoever.  The term "Taxes"
shall not include  reimbursement  to Landlord of  Landlord's  net income  taxes,
succession,  transfer,  gift, franchise,  estate or inheritance taxes, but shall
include  any  increases  in taxes  based  upon any  change of  ownership  of the
Premises or Common Area. The term  "environmental  surcharges" shall include any
and all expenses,  taxes, charges or penalties imposed by the Federal Department
of Energy,  Federal Environmental  Protection Agency, the Federal Clean Air Act,
or any regulations promulgated thereunder,  or imposed by any other local, state
or federal  governmental agency or entity now or hereafter vested with the power
to  impose  taxes,  assessments  or  other  types  of  surcharges  as a means of
controlling  or  abating  environmental  pollution  or the use of  energy or any
natural  resource in regard to the use,  operation  or occupancy of the Premises
and/or the Common Area.  The term "Taxes"  shall include (to the extent the same
are not paid by  Tenant  pursuant  to  Paragraphs  7.1 and 7.2  above),  without

                                      -13-
<PAGE>

limitation, all taxes, assessments, levies, fees, impositions or charges levied,
imposed,  assessed,  measured,  or based in any manner  whatsoever  upon or with
respect to the use, possession,  occupancy,  leasing, operation or management of
the Premises  and/or  Common Area or in lieu of or  equivalent  to any Taxes set
forth in this  Paragraph  7.3(a).  In the event any such  Taxes are  payable  by
Landlord  and it shall not be lawful for Tenant to  reimburse  Landlord for such
Taxes, then the Rentals payable hereunder shall be increased to net Landlord the
same net Rental  after  imposition  of any such Tax upon  Landlord as would have
been payable to Landlord prior to the imposition of any such Tax.

                           (b) Operating Expenses. All Taxes which are levied or
assessed or which  become a lien upon the Premises  and/or  Common Area or which
become due or accrue  during the Lease Term shall be an Operating  Expense,  and
Tenant shall pay as  Additional  Rent each month during the Lease Term 1/12th of
such Taxes,  based on  Landlord's  estimate  thereof,  pursuant to  Paragraph 12
below.  Taxes during any partial tax fiscal  year(s) within the Lease Term shall
be  prorated  according  to the ratio  which the number of days during the Lease
Term or of actual  occupancy  of the  Premises by Tenant,  whichever is greater,
during such year bears to 365.

         8. Insurance; Indemnity; Waiver.

                  8.1 Insurance by Landlord.

                           (a) Landlord  shall,  during the Lease Term,  procure
and keep in  force  the  following  insurance,  the  cost of  which  shall be an
Operating  Expense  (subject to the limitation on earthquake  insurance  premium
pass-throughs  as provided  below),  payable by Tenant  pursuant to Paragraph 12
below:

                                    (i) Property Insurance.  "All risk" property
insurance,  including, without limitation, coverage for boiler and machinery (if
applicable);  sprinkler damage;  vandalism;  malicious  mischief;  full coverage
plate glass  insurance;  and  demolition,  increased  cost of  construction  and
contingent  liability  from change in building  laws on the  Premises and Common
Area,  including any  improvements  or fixtures  constructed or installed on the
Premises and Common Area by Landlord. Such insurance shall be in the full amount
of the replacement cost of the foregoing,  with reasonable  deductible  amounts,
which  deductible  amounts  shall be an  Operating  Expense,  payable  by Tenant
pursuant to  Paragraph  12. Such  insurance  shall also  include  rental  income
insurance,  insuring that one hundred percent (100%) of the Rentals (as the same
may be adjusted hereunder) will be paid to Landlord for a period of up to twelve
(12) months if the Premises are  destroyed or damaged,  or such longer period as
may be required by any  beneficiary  of a deed of trust or any  mortgagee of any
mortgage  affecting the Premises.  Such "all risk"  insurance may, at Landlord's
election, include coverage for earthquake and/or flood. Landlord agrees that the
annual earthquake  insurance premium to be included as an Operating Expense (and
allocable  solely to the Premises) shall not exceed Eight Thousand Eight Hundred
Fifty-seven and 65/100 Dollars  ($8,857.65) per year, as such $8,857.65 shall be
increased by five percent  (5%) per year during the Lease Term,  including,  the
Extended Term.  Such property  insurance  maintained by Landlord shall not cover
any leasehold

                                      -14-
<PAGE>

improvements  installed in the  Premises by Tenant at its  expense,  or Tenant's
equipment, trade fixtures inventory, fixtures or personal property located on or
in the Premises;

                                    (ii)  Liability   Insurance.   Comprehensive
general  liability  (lessor's  risk)  insurance  against  any and all claims for
personal injury,  death or property damage occurring in or about the Premises or
Common Area.  Such insurance shall have a combined single limit of not less than
One  Million  Dollars  ($1,000,000)  per  occurrence  and  Two  Million  Dollars
($2,000,000) aggregate; and

                                    (iii)   Other.   Such  other   insurance  as
Landlord  deems  reasonably  necessary  and  prudent  (as long as  available  at
commercially reasonable premiums).

                  8.2 Insurance by Tenant.  Tenant shall, during the Lease Term,
at  Tenant's  sole cost and  expense,  procure  and keep in force the  following
insurance:

                           (a) Personal Property Insurance.  "All risk" property
insurance,  including, without limitation, coverage for boiler and machinery (if
applicable);  sprinkler damage;  vandalism;  malicious mischief; and demolition,
increased cost of construction and contingent liability from changes in building
laws on all  leasehold  improvements  installed in the Premises by Tenant at its
expense (if any) and on all equipment, trade fixtures,  inventory,  fixtures and
personal  property  located on or in the  Premises,  including  improvements  or
fixtures  hereinafter  constructed or installed on the Premises.  Such insurance
shall be in an amount equal to the full replacement cost of the aggregate of the
foregoing and shall provide coverage  comparable to the coverage in the standard
ISO all risk form,  when such form is supplemented  with the coverages  required
above.

                           (b)  Liability   Insurance.   Comprehensive   general
liability  insurance for the mutual benefit of Landlord and Tenant,  against any
and all claims for personal  injury,  death or property  damage  occurring in or
about the  Premises  and Common  Area,  or arising  out of  Tenant's or Tenant's
agents' use of the Common  Area,  use or  occupancy  of the Premises or Tenant's
operations on the Premises. Such insurance shall have a combined single limit of
not less than Three Million Dollars ($3,000,000) per occurrence and Five Million
Dollars ($5,000,000)  aggregate.  Such insurance shall contain a cross-liability
(severability  of interests)  clause and an extended  ("broad  form")  liability
endorsement,   including  blanket  contractual  coverage.   The  minimum  limits
specified above are the minimum amounts required by Landlord, and may be revised
by Landlord from time to time to meet changed  circumstances,  including without
limitation to reflect (i) changes in the  purchasing  power of the dollar,  (ii)
changes  indicated  by the amount of  plaintiffs'  verdicts in  personal  injury
actions  in the  State of  California,  or  (iii)  changes  consistent  with the
standards  required by other  landlords  in the county in which the Premises are
located.  Such liability  insurance shall be primary and not contributing to any
insurance available to Landlord,  and Landlord's  insurance (if any) shall be in
excess thereto. Such insurance shall specifically insure Tenant's performance of
the indemnity,  defense and hold harmless agreements contained in Paragraph 8.4,
although Tenant's  obligations pursuant to Paragraph 8.4 shall not be limited to
the  amount  of any  insurance

                                      -15-
<PAGE>

required of or carried by Tenant under this  Paragraph  8.2(b).  Tenant shall be
responsible  for insuring  that the amount of insurance  maintained by Tenant is
sufficient for Tenant's purposes.

                           (c) Other.  Such other  insurance as required by law,
including, without limitation, workers' compensation insurance.

                           (d) Form of the Policies. The policies required to be
maintained by Tenant pursuant to Paragraphs 8.2(a),  (b), and (c) above shall be
with companies,  on forms,  with  deductible  amounts (if any), and loss payable
clauses satisfactory to Landlord,  shall include Landlord and the beneficiary or
mortgagee of any deed of trust or mortgage  encumbering  the Premises and/or the
real  property  comprising  the Common Area as  additional  insureds,  and shall
provide that such parties may, although additional insureds recover for any loss
suffered by Tenant's negligence. Certified copies of policies or certificates of
insurance shall be delivered to Landlord prior to the  Commencement  Date: a new
policy or  certificate  shall be delivered to Landlord at least thirty (30) days
prior to the expiration  date of the old policy.  Tenant shall have the right to
provide insurance  coverage which it is obligated to carry pursuant to the terms
hereof in a blanket  policy,  provided  such blanket  policy  expressly  affords
coverage to the Premises  and to Tenant as required by this Lease.  Tenant shall
obtain  a  written  obligation  on the part of  Tenant's  insurer(s)  to  notify
Landlord  and any  beneficiary  or  mortgagee  of a deed of  trust  or  mortgage
encumbering the Premises and/or the real property  comprising the Common Area in
writing of any  delinquency  in premium  payments  and at least thirty (30) days
prior to any cancellation or modification of any policy. Tenant's policies shall
provide  coverage on an occurrence  basis and not on a claims made basis.  In no
event shall the limits of any policies  maintained  by Tenant be  considered  as
limiting the liability of Tenant under this Lease.

                  8.3 Failure by Tenant to Obtain Insurance.  If Tenant does not
take out the  insurance  required  pursuant to Paragraph 8.2 or keep the same in
full force and effect, Landlord may, but shall not be obligated to, take out the
necessary  insurance  and pay the premium  therefor,  and Tenant  shall repay to
Landlord,  as  Additional  Rent,  the amount so paid  promptly  upon demand.  In
addition,  Landlord  may  recover  from  Tenant  and  Tenant  agrees to pay,  as
Additional Rent, any and all reasonable expenses (including attorneys' fees) and
damages which  Landlord may sustain by reason of the failure of Tenant to obtain
and maintain such insurance,  it being expressly  declared that the expenses and
damages of Landlord shall not be limited to the amount of the premiums thereon.

                  8.4 Indemnification Tenant shall indemnify, hold harmless, and
defend Landlord (except to the extent of the negligence or willful misconduct of
Landlord or Landlord's  agents,  employees or  contractors)  against all claims,
losses, damages,  actions,  causes of action,  penalties,  demands,  expenses or
liabilities for injury or death to any person or for damage to or loss of use of
any  property  arising  out of any  occurrence  in, on or about the  Premises or
Common Area, if and to the extent caused or contributed to by Tenant or Tenant's
agents, employees or contractors or arising out of any occurrence in, upon or at
the  Premises  or on  account  of the use,  condition,  occupational  safety  or
occupancy of the Premises.  Tenant's indemnification,  defense and hold harmless
obligations  under  this  Lease  shall  include  and apply to  attorneys'  fees,
investigation costs, and other costs actually incurred by Landlord. Tenant

                                      -16-
<PAGE>

shall further indemnify,  defend and hold harmless Landlord from and against any
and all claims, losses, damages, liabilities or 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.  The  provisions  of this  Paragraph  8.4 shall
survive Lease Termination with respect to any damage,  injury,  death, breach or
default occurring prior to such  termination.  This Lease is made on the express
condition that Landlord shall not be liable (in the absence of the negligence or
willful misconduct of Landlord or Landlord's  agents,  employees or contractors)
for, or suffer loss by reason of,  injury to person or property,  from  whatever
cause,  in any way connected with the  condition,  use,  occupational  safety or
occupancy  of the  Premises  specifically  including,  without  limitation,  any
liability  for injury to the person or property  of Tenant or  Tenant's  agents.
Anything in this Lease to the contrary  notwithstanding,  under no circumstances
shall  Landlord  be liable to Tenant  for any  claims of lost  profits,  loss of
business or lost income.

                  8.5 Claims by Tenant.  Landlord shall not be liable to Tenant,
and  Tenant  waives  all  claims  against  Landlord,  for injury or death to any
person,  damage to any property,  or loss of use of any property in the Premises
or Common Area by and from all causes, including without limitation,  any defect
in the Premises or Common Area and/or any damage or injury  resulting from fire,
steam, electricity,  gas, water or rain, which may leak or flow from or into any
part of the Premises, or from breakage, leakage, obstruction or other defects of
pipes,  sprinklers,  wires,  appliances,  plumbing, air conditioning or lighting
fixtures,  whether the damage or injury results from conditions arising upon the
Premises or Common Area or from other sources.  Landlord shall not be liable for
any  damages  arising  from any act or  neglect  of any other user of the Common
Area. Tenant or Tenant's agents shall immediately  notify Landlord in writing of
any known  defect  in the  Premises  or  Common  Area.  The  provisions  of this
Paragraph 8.5 shall not apply to any damages, claims, losses, actions, causes of
action,  penalties,  demands,  expenses,  liabilities or injuries  caused by the
negligence or willful misconduct of Landlord's agents, employees or contractors;
provided, however, under no circumstances shall Landlord be liable to Tenant for
claims of lost profits, loss of business or lost income.

                  8.6 Mutual Waiver of  Subrogation.  Landlord  hereby  releases
Tenant,  and Tenant hereby releases  Landlord,  and their  respective  officers,
agents,  employees and servants,  from any and all claims or demands of damages,
loss,  expense  or  injury  to  the  Premises  or  the  Common  Area,  or to the
furnishings, fixtures, equipment, inventory or other property of either Landlord
or Tenant in, about or upon the Premises or the Common Area,  which is caused by
or results from perils,  events or happenings which are the subject of insurance
carried by the respective  parties  pursuant to this Paragraph 8 and in force at
the time of any such loss,  whether due to the  negligence of the other party or
its  agents and  regardless  of cause or origin;  provided,  however,  that such
waiver shall be effective only to the extent permitted by the insurance covering
such loss, to the extent such  insurance is not prejudiced  thereby,  and to the
extent insured against.

         9.  Utilities.   Landlord  agrees  to  provide,  at  its  cost,  water,
electricity  and telephone  service  connections  into the Premises;  but Tenant
shall pay during the Lease Term and prior to delinquency  all charges for water,
gas, light, heat, power, electricity,  telephone or other

                                      -17-
<PAGE>

communication  service,  janitorial service,  trash pick-up, sewer and all other
services  supplied to or consumed on the Premises  (collectively the "Services")
and all taxes,  levies,  fees or surcharges  therefor.  Tenant shall arrange for
Services  to be  supplied  to the  Premises  and shall  contract  for all of the
Services in Tenant's name prior to the Commencement  Date. The Commencement Date
shall not be  delayed  by reason of any  failure  by Tenant to so  contract  for
Services.  In the event that any of the Services cannot be separately  billed or
metered to the Premises, or if any of the Services are not separately metered as
of the  Commencement  Date,  the cost of such  Services  shall  be an  Operating
Expense and Tenant  shall pay such cost to  Landlord,  as  Additional  Rent,  as
provided in Paragraph 12 below, except that Tenant's proportionate share of such
Services shall be the percentage  obtained by dividing the gross leasable square
footage  contained in the Premises by the total gross  leasable  square  footage
located in all buildings  utilizing such  Services.  The lack or shortage of any
Services due to any cause  whatsoever  shall not affect any obligation of Tenant
hereunder,  and  Tenant  shall  faithfully  keep  and  observe  all  the  terms,
conditions  and covenants of this Lease and pay all Rentals due  hereunder,  all
without diminution,  credit or deduction.  The immediately preceding sentence to
the contrary notwithstanding,  Landlord agrees that if Services are curtailed or
suspended  to the  Premises  as a result of the acts or  negligence  or  willful
misconduct of Landlord for a period of forty-eight (48) consecutive hours during
the Lease Term, then Tenant's Rent payable  hereunder shall be equitably  abated
to the extent  such  curtailment  or  suspension  of  Services  interferes  with
Tenant's use of the Premises (as  reasonably  determined by Landlord and Tenant)
following such forty-eight (48) hour period until such Services are restored.

         10. Repairs and Maintenance.

                  10.1 Landlord's Responsibilities. Subject to the provisions of
Paragraph 15 below,  Landlord shall maintain in reasonably good order and repair
the  structural  roof and roof  surface,  structural  (i.e.  load  bearing)  and
exterior walls  (including  painting  thereof) and  foundations of the Premises,
except  for any  repairs  required  because  of the  wrongful  act of  Tenant or
Tenant's  agents,  which  repairs  shall be made at the expense of Tenant and as
Additional  Rent.  Tenant  shall give prompt  written  notice to Landlord of any
known  maintenance  work  required  to be  made  by  Landlord  pursuant  to this
Paragraph 10.1. The costs of repairs and maintenance which are the obligation of
Landlord hereunder shall be an Operating Expense and Tenant shall pay such costs
to Landlord as Additional Rent, as provided in Paragraph 12 below.

         To the extent any labor dispute in which Tenant is involved or of which
Tenant is the  object  interferes  with the  performance  of  Landlord's  duties
hereunder,  Landlord  shall be excused from the  performance  of such duties and
Tenant hereby waives any and all claims  against  Landlord for damages or losses
in regard to such duties.

                  10.2 Tenant's  Responsibilities.  Except as expressly provided
in Paragraph  10.1 above,  Tenant shall,  at its sole cost,  maintain the entire
Premises  and  every  part  thereof,  including  without  limitation,   windows,
skylights,  window  frames,  plate  glass,  freight  docks,  doors  and  related
hardware, interior walls and partitions, and the electrical, plumbing, lighting,
heating and air conditioning systems in good order, condition and repair. Tenant
shall  deliver to

                                      -18-
<PAGE>

Landlord,  every  six (6)  months  during  the  Lease  Term,  a  certificate  of
maintenance or its equivalent,  signed by a licensed HVAC repair and maintenance
contractor and stating that the heating and air conditioning  systems  servicing
the Premises have been inspected,  serviced and are in good order, condition and
repair.  Tenant's failure to deliver said  certificate or its equivalent  within
thirty (30) days following written notice from Landlord that said certificate is
past due shall be a  Default  by  Tenant.  If Tenant  fails to make  repairs  or
perform  maintenance  work required of Tenant hereunder within fifteen (15) days
after notice from Landlord  specifying  the need for such repairs or maintenance
work,  Landlord or  Landlord's  agents may, in addition to all other  rights and
remedies  available  hereunder  or by law and without  waiving  any  alternative
remedies,  enter into the  Premises and make such  repairs  and/or  perform such
maintenance   work.  If  Landlord  makes  such  repairs  and/or   performs  such
maintenance work, Tenant shall reimburse  Landlord upon demand and as Additional
Rent, for the cost of such repairs and/or maintenance work.  Landlord shall have
no liability to Tenant for any damage,  inconvenience  or interference  with the
use of the  Premises  by Tenant  or  Tenant's  agents  as a result  of  Landlord
performing any such repairs or maintenance (unless such damage, inconvenience or
interference is caused by the gross negligence or willful misconduct of Landlord
or  its  agents,  employees  or  contractors);   provided,   however,  under  no
circumstances  shall  Landlord  be liable to Tenant for claims of lost  profits,
loss of business or lost income.  Tenant shall reimburse Landlord, on demand and
as Additional  Rent,  for the cost of damage to the Premises  and/or Common Area
caused by Tenant or Tenant's agents, employees or contractors.  Tenant expressly
waives the benefits of any statute now or hereafter in effect (including without
limitation  the  provisions of  subsection 1 of Section  1932,  Section 1941 and
Section  1942 of the  California  Civil  Code and any  similar  law,  statute or
ordinance  now or hereafter in effect) which would  otherwise  afford Tenant the
right to make  repairs  at  Landlord's  expense  (or to deduct  the cost of such
repairs  from  Rentals due  hereunder)  or to  terminate  this Lease  because of
Landlord's failure to keep the Premises in good and sanitary order.

         11. Common Area.

                  11.1 In General.  Subject to the terms and  conditions of this
Lease  and  such  rules  and  regulations  as  Landlord  may  from  time to time
prescribe,  Tenant and Tenant's agents shall have the nonexclusive  right to use
during the Lease Term the access roads,  sidewalks,  landscaped  areas and other
facilities on the Common Area. This right to use the Common Area shall terminate
upon Lease  Termination.  Neither  Tenant nor Tenant's  agents shall at any time
park or permit the  parking of their  vehicles in any portion of the Common Area
not designated by Landlord as a parking area.

         Landlord  reserves  the right from time to time to make  changes in the
shape, size,  location,  amount and extent of the Common Area.  Landlord further
reserves the right to promulgate such reasonable rules and regulations  relating
to the use of all or any  portion of the Common Area and to amend such rules and
regulations  from time to time, with or without advance notice,  as Landlord may
deem appropriate. Any amendments to the rules and regulations shall be effective
as to Tenant,  and binding on Tenant,  upon delivery of a copy of such rules and
regulations to Tenant. Landlord agrees to apply such rules and regulations,  and
all amendments  thereto,  in a  non-discriminatory  manner.  Tenant and Tenant's
agents  shall  observe such rules

                                      -19-
<PAGE>

and  regulations  and any  failure by Tenant or  Tenant's  agents to observe and
comply  with the rules and  regulations  shall be a Default by Tenant.  Landlord
shall not be responsible for the  nonperformance of the rules and regulations by
any tenants or occupants of the buildings or improvements which now exist or may
hereafter be constructed upon the Common Area or upon the real property owned by
Landlord  adjacent  to the  Common  Area  or by any  other  user  authorized  by
Landlord.

         Landlord  furthermore  reserves  the right,  after  having given Tenant
reasonable notice, to have any vehicles owned by Tenant or Tenant's agents which
are parked in violation of the provisions of this Paragraph 11.1 or in violation
of Landlord's rules and regulations relating to parking, to be towed away at the
expense of the owner of the vehicle so towed.

         Landlord shall have the right to close, at reasonable times, all or any
portion  of the  Common  Area  for any  reasonable  purpose,  including  without
limitation,  the prevention of a dedication thereof, or the accrual of rights of
any person or public therein; however, such closure of the Common Area shall not
unreasonably impair Tenant's access to the Premises,  Tenant's parking rights as
described in this Lease or Tenant's use of the Premises.

                  11.2 Maintenance by Landlord.  Landlord shall operate,  manage
and  maintain the Common Area in good  condition  and repair and shall manage or
cause to be managed the Common Area to reasonable and customary  standards.  The
cost of such  maintenance,  operation  and  management,  shall be an  "Operating
Expense",  and Tenant shall pay such costs to Landlord,  as Additional  Rent, as
provided in Paragraph 12 below.

         12. Operating Expenses.

                  12.1 Definition.  "Operating Expense" or "Operating  Expenses"
as used in this  Lease  shall mean and  include  all items  identified  in other
paragraphs of this Lease as an Operating  Expense and the total  reasonable cost
paid or  incurred  by  Landlord  for the  operation,  maintenance,  repair,  and
management of the Premises and Common Area,  which costs shall include,  without
limitation:  the cost of Services  and  utilities  supplied to the  Premises and
Common  Area (to the  extent the same are not  separately  charged or metered to
Tenant);  water;  sewage;  fuel;  electricity;  lighting  systems;  professional
management  fee (not to exceed four percent (4%) of the  Premises'  gross rental
income);  fire  protection  systems;  storm drainage and sanitary sewer systems;
HVAC including air  conditioning (to the extent the heating and air conditioning
systems in the Premises are not  maintained  by Tenant at Tenant's sole cost and
expense);  repairing the roof structure and roof surface; maintenance and repair
of the structural parts of the Premises  (including  foundation,  floor slab and
load bearing walls);  property and liability insurance covering the Premises and
any other insurance carried by Landlord pursuant to Paragraph 8 above; cleaning,
sweeping,  striping,  resurfacing  of parking and driveway  areas;  cleaning the
Common Area following storms or other severe weather;  cleaning and repairing of
sidewalks,  curbs,  stairways;  costs related to irrigation systems; the cost of
complying with Laws, including, without limitation, maintenance, alterations and
repairs required in connection therewith;  the cost of capital improvements made
to the Common Area amortized  over the useful life of such capital  improvements
(with interest on the unamortized balance at the

                                      -20-
<PAGE>

prevailing market rate Landlord would pay if it borrowed funds to construct such
improvements  from  an  institutional   lender);   costs  related  to  landscape
maintenance;  and the cost of contesting  the validity or  applicability  of any
governmental enactments which may affect Operating Expenses.  Because the Common
Area is used by more  than one (1)  building  during  the Lease  Term,  the term
"Operating  Expenses"  shall  mean and  include  all of the  Operating  Expenses
allocable to the Premises and a proportionate share (based on the square footage
of gross  leasable  area in the Premises as a percentage  of the total of square
footage of gross leasable area of the buildings utilizing the Common Area at the
time in question) of all Operating  Expenses which are related to such buildings
in general and are not allocated to any one building  utilizing the Common Area.
As of the date of  execution  of this  Lease,  the  percentage  that the  square
footage of gross leasable area in the Premises bears to the total square footage
of gross leasable area of the buildings  utilizing the Common Area is twenty-two
and fourteen hundredths percent (22.14%).  Operating Expenses shall also include
an accounting  and  administrative  fee equal to three percent (3%) of the total
Operating  Expenses  (excluding  Taxes and  insurance  premiums).  The  specific
examples  of  Operating  Expenses  stated in this  Paragraph  12.1 are in no way
intended to and shall not limit the costs  comprising  Operating  Expenses,  nor
shall such  examples  be deemed to  obligate  Landlord to incur such costs or to
provide  such  services  or to take  such  actions  except  as  Landlord  may be
expressly  required in other portions of this Lease,  or except as Landlord,  in
its sole discretion, may elect. All costs incurred by Landlord in good faith for
the  operation,  maintenance,  repair and  management of the Premises and Common
Area shall be deemed conclusively binding on Tenant.

                           12.1.1 Operating Expense Exclusions.  Notwithstanding
anything to the contrary  contained in this Lease, in no event shall Tenant have
any obligation to perform, to pay directly, or to reimburse Landlord for, all or
any portion of the following repairs, maintenance,  improvements,  replacements,
premiums, claims, losses, fees, commissions, charges, disbursements,  attorneys'
fees, experts' fees, costs and expenses (collectively, "Costs"):

                                    (a) Losses Caused by Others and Construction
Defects.  Costs occasioned by the act,  omission or violation of Law by Landlord
or its agents, employees or contractors,  or costs arising out of the failure to
construct the Building,  Premises,  tenant improvements installed by Landlord in
the  Premises,  if any,  or Common  Areas in  accordance  with Laws and  private
restrictions applicable at the time of construction thereof.

                                    (b) Condemnation and Insurance Costs.  Costs
occasioned  by the  exercise of the power of eminent  domain,  or  increases  in
insurance  Costs caused by the  activities  of other tenants of buildings in the
Coronado Stender Project.

                                    (c) Reimbursable  Expenses.  Costs for which
Landlord has a right of  reimbursement  from others,  or Costs which Tenant pays
directly to a third person.

                                    (d) Reserves. Depreciation,  amortization or
other expense reserves.

                                      -21-
<PAGE>

                                    (e)  Mortgages.  Interest,  charges and fees
incurred on debt, payments or mortgages and rent under ground leases.

                                    (f) Hazardous  Materials.  Costs incurred to
investigate  the  presence of any  Hazardous  Material,  Costs to respond to any
claim of  Hazardous  Material  contamination  or  damage,  Costs to  remove  any
Hazardous  Material  from  the  Premises  or  Common  Area or to  remediate  any
Hazardous Material  contamination,  and any judgments or other Costs incurred in
connection with any Hazardous Material exposure or release, except to the extent
such Costs are incurred by Landlord in accordance with Paragraph 6.4 or incurred
by Landlord or caused by reason of the storage, use or disposal of the Hazardous
Material in question by Tenant, its agents, employees, contractors or invitees.

                                    (g)   Management.   Any   fee,   profit   or
compensation   retained  by  Landlord  or  its  affiliates  for  management  and
administration  of the Premises or Common Area in excess of the  management  fee
and accounting fee specified in Paragraph 12.1 above.

                                    (h)  Violations.  The cost of correcting any
code violations that occurred prior to the Commencement Date of the Lease Term.

                                    (i)  Benefits.   Wages,  salaries  or  other
compensation  paid to any  executive  employees  above  the  grade  of  building
manager.

                  12.2 Payment of Operating Expenses by Tenant. Tenant shall pay
the Operating  Expenses to Landlord as Additional Rent and without  deduction or
offset.  Upon reasonable  written  request made by Tenant to Landlord,  Landlord
shall provide Tenant with copies of invoices supporting the charges of Operating
Expenses;  however,  Tenant  shall  pay for the  reasonable  costs  incurred  by
Landlord  in making  copies of such  invoices  and the failure of  Landlord,  if
applicable, to timely furnish copies of such invoices to Tenant shall not excuse
or relieve Tenant of its obligation to pay Operating Expenses in accordance with
the terms of this Lease.  Tenant's payment of Operating  Expenses shall be based
upon  Landlord's  estimate of  Operating  Expenses and shall be payable in equal
monthly  installments  in  advance  on the  first  day of  each  calendar  month
commencing with the month following receipt of Landlord's  estimate (and subject
to  Landlord's  right to  change  the  method  of  payment  or  right to  change
Landlord's  estimate not more often than once in any calendar year).  Within one
hundred  twenty  (120)  days  after the end of each  calendar  year (or at Lease
Termination),  or as soon  thereafter as  practicable  under the  circumstances,
Landlord shall furnish Tenant a statement showing the actual Operating  Expenses
for the period to which  Landlord's  estimate  pertains  and shall  concurrently
either  bill Tenant for the balance due  (payable  upon demand by  Landlord)  or
credit Tenant's account for the excess previously paid (except if such statement
applies to the last year of the Lease Term and Tenant has  overpaid its share of
Operating  Expenses  for such last year of the Lease Term,  then Tenant shall be
paid the amount of such  overpayment in cash following  such  reconciliation  of
Operating Expenses in lieu of a credit to Tenant's account).

         Notwithstanding  anything  to the  contrary  contained  in this  Lease,
within one  hundred  eighty  (180) days  after  receipt by Tenant of  Landlord's
statement of Operating  Expenses

                                      -22-
<PAGE>

prepared  pursuant to Paragraph  12.2 hereof for any prior annual  period during
the Lease Term, Tenant or its authorized  representative shall have the right to
inspect  the  books  of  Landlord  during  the  business  hours of  Landlord  at
Landlord's  office or, at  Landlord's  option,  such other  location as Landlord
reasonably may specify,  for the purpose of verifying the information  contained
in the  statement.  Unless  Tenant  asserts  specific  errors within one hundred
eighty (180) days after receipt of the statement,  the statement shall be deemed
correct as between  Landlord  and  Tenant,  except as to  individual  components
subsequently determined to be in error by future audit.

         13. Alterations.

                  13.1 In General.  Tenant shall not make, or permit to be made,
any alterations, changes, enlargements,  improvements or additions (collectively
"Alterations") in, on, about or to the Premises, or any part thereof,  including
Alterations  required  pursuant to  Paragraph  6.2,  without  the prior  written
consent of Landlord and without  acquiring and complying  with the conditions of
all permits required for such  Alterations by any governmental  authority having
jurisdiction  thereof. The term "Alterations" as used in this Paragraph 13 shall
also include all heating,  lighting,  electrical (including all wiring, conduit,
outlets,  drops,  buss  ducts,  main  and  subpanels),  air  conditioning,   and
partitioning  in the Premises  made by Tenant,  regardless of how affixed to the
Premises.  The  preceding  to the  contrary  notwithstanding,  Tenant  shall  be
permitted,  without  first  obtaining  Landlord's  consent but upon giving prior
written notice to Landlord,  to make non-structural  Alterations to the Premises
during  the  Lease  Term  provided  (i) the cost of making  such  non-structural
Alterations  do not exceed $10,000  individually  or $50,000 in the aggregate in
any lease year during the Lease Term,  (ii) such  non-structural  Alterations do
not affect the  structural  integrity  of the  Premises  or any of the  building
systems,  such as HVAC,  mechanical,  electrical or plumbing  systems within the
building comprising the Premises,  and (ii) such non-structural  Alterations are
not visible from the exterior of the  Premises.  As a condition to the giving of
its  consent to any  Alterations  (for  which  Landlord's  consent  is  required
hereunder), Landlord may impose such requirements as Landlord may deem necessary
in its sole discretion,  including without  limitation,  the manner in which the
work is done;  a right of approval of the  contractor  by whom the work is to be
performed;  the requirement  that Tenant post a completion bond in an amount and
form  satisfactory  to  Landlord;  and the  requirement  that  Tenant  reimburse
Landlord,  as Additional Rent, for Landlord's actual costs incurred in reviewing
any  proposed  Alteration,  whether or not  Landlord's  consent is granted.  All
Alterations  made by Tenant shall be made at Tenant's sole cost and expense,  in
accordance with the plans and specifications approved by Landlord.  Tenant shall
give written  notice to Landlord five (5) days prior to employing any laborer or
contractor to perform services  related to, or receiving  materials for use upon
the Premises,  and prior to the  commencement  of any work of improvement on the
Premises.  Any  Alterations  to the  Premises  made by  Tenant  shall be made in
accordance with applicable Laws and in a good and workmanlike  manner. In making
any such Alterations,  Tenant shall, at Tenant's sole cost and expense, file for
and secure and comply  with any and all  permits or  approvals  required  by any
governmental  departments or  authorities  having  jurisdiction  thereof and any
utility  company having an interest  therein.  In no event shall Tenant make any
structural  changes to the  Premises or make any changes to the  Premises  which
would weaken or impair the structural integrity of the Premises.

                                      -23-
<PAGE>

                  13.2  Removal  Upon  Lease  Termination.  At the  time  Tenant
requests  Landlord's  consent,  Tenant shall request a decision from Landlord in
writing as to whether  Landlord will require  Tenant,  at Tenant's  expense,  to
remove any such Alterations and restore the Premises to their prior condition at
Lease  Termination.  In the event  Tenant  fails to  earlier  obtain  Landlord's
written  decision as to whether Tenant will be required to remove any Alteration
(or in the event  Landlord's  consent  to any  Alterations  is not  required  as
provided in Paragraph  13.1 above),  then no less than ninety (90) nor more than
one hundred twenty (120) days prior to the expiration of the Lease Term,  Tenant
by written notice to Landlord shall request Landlord to inform Tenant whether or
not  Landlord  desires to have any  Alterations  made to the  Premises by Tenant
removed at Lease  Termination.  Following  receipt of such  notice or  following
Tenant's earlier request for a decision as to whether Tenant's  Alterations,  or
any of them,  will be  required to be removed by Tenant,  Landlord  may elect to
have all or a portion of Tenant's Alterations removed from the Premises at Lease
Termination,  and Tenant  shall,  at its sole cost and expense,  remove at Lease
Termination such  Alterations  designated by Landlord for removal and repair all
damage to the Premises and Common Area arising from such  removal.  In the event
Tenant  fails  to  so  request  Landlord's  decision  or  fails  to  remove  any
Alterations  designated  by  Landlord  for  removal,  Landlord  may  remove  any
Alterations made to the Premises by Tenant and repair all damage to the Premises
and Common Area arising from such removal, and may recover from Tenant all costs
and  expenses  incurred  thereby.  Tenant's  obligation  to pay such  costs  and
expenses to Landlord shall survive Lease  Termination  (except Landlord shall be
deemed to have waived its right to receive  such costs and  expenses if Landlord
has not  requested or demanded  payment of such costs or expenses from Tenant by
written  notice to Tenant  delivered  within one hundred  eighty days  following
Lease  Termination).  Unless  Landlord  elects to have Tenant  remove (or,  upon
Tenant's  failure to obtain  Landlord's  decision,  Landlord  removes)  any such
Alterations,  all such  Alterations,  except for  moveable  furniture  and trade
fixtures of Tenant not affixed to the  Premises,  shall  become the  property of
Landlord upon Lease  Termination  (without any payment therefor) and remain upon
and be surrendered with the Premises at Lease Termination.

                  13.3 Landlord's  Improvements.  All fixtures,  improvements or
equipment  which are  installed,  constructed  on or attached to the Premises or
Common Area by Landlord shall be a part of the realty and belong to Landlord.

         14. Default and Remedies.

                  14.1 Events of Default.  The term  "Default by Tenant" as used
in this Lease shall mean the occurrence of any of the following events:

                           (a) Tenant's failure to pay when due any Rentals;

                           (b) Tenant's abandonment of the Premises;

                           (c) Commencement and continuation for at least thirty
(30) days of any case,  action or proceeding  by,  against or concerning  Tenant
under any federal or state

                                      -24-
<PAGE>

bankruptcy,   insolvency  or  other  debtor's  relief  law,   including  without
limitation,  (i) a case under  Title 11 of the  United  States  Code  concerning
Tenant,  whether  under  Chapter  7, 11, or 13 of such  Title or under any other
Chapter,  or  (ii) a case,  action  or  proceeding  seeking  Tenant's  financial
reorganization or an arrangement with any of Tenant's creditors;

                           (d)  Voluntary  or   involuntary   appointment  of  a
receiver,  trustee,  keeper,  or other person who takes possession for more than
thirty (30) days of substantially all of Tenant's assets or of any asset used in
Tenant's business on the Premises,  regardless of whether such appointment is as
a result of insolvency or any other cause;

                           (e)  Execution  of an  assignment  for the benefit of
creditors  of  substantially  all  assets  of  Tenant  available  by law for the
satisfaction of judgment creditors;

                           (f)  Commencement  of  proceedings  for winding up or
dissolving (whether voluntary or involuntary) the entity of Tenant, if Tenant is
a corporation or a partnership;

                           (g)  Levy of a writ of  attachment  or  execution  on
Tenant's  interest under this Lease,  if such writ continues for a period of ten
(10) days;

                           (h) Transfer or  attempted  Transfer of this Lease or
the Premises by Tenant contrary to the provisions of Paragraph 24 below; or

                           (i)   Breach  by   Tenant  of  any  term,   covenant,
condition,  warranty, or other provision contained in this Lease or of any other
obligation owing or due to Landlord.

                  14.2 Remedies. Upon any Default by Tenant, Landlord shall have
the following remedies, in addition to all other rights and remedies provided by
law, to which Landlord may resort cumulatively, or in the alternative:

                           14.2.1  Termination.  Upon  any  Default  by  Tenant,
Landlord shall have the right (but not the obligation) to give written notice to
Tenant of such default and terminate this Lease and Tenant's right to possession
of the  Premises  if (i) such  default is in the  payment of Rentals  and is not
cured within five (5) days after any such  notice,  or, (ii) with respect to the
defaults  referred to in  subparagraphs  14.1(b),  (e),  (f), (h) and (i),  such
default is not cured  within  thirty  (30) days  after any such  notice (or if a
default under  subparagraphs  14.1(b) or (i) cannot be  reasonably  cured within
thirty  (30) days,  if Tenant does not  commence to cure the default  within the
thirty (30) day period or does not  diligently  and in good faith  prosecute the
cure to  completion),  or,  (iii) with  respect  to the  defaults  specified  in
subparagraphs  14.1(c)  (d) and  (g),  such  default  is not  cured  within  the
respective time periods specified in those subparagraphs. The parties agree that
any written notice given by Landlord to Tenant pursuant to this Paragraph 14.2.1
shall be sufficient  notice for purposes of California  Code of Civil  Procedure
Section 1161 and Landlord shall not be required to give any additional notice in
order  to  be  entitled  to  commence  an  unlawful  detainer  proceeding.  Upon
termination  of this Lease and

                                      -25-
<PAGE>

Tenant's  right to possession of the Premises,  Landlord shall have the right to
recover from Tenant:

                                    (a) The  worth  at the  time of award of the
unpaid Rentals which had been earned at the time of termination;

                                    (b) The  worth  at the  time of award of the
amount by which the Rentals 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;

                                    (c) The worth at the time of award (computed
by discounting at the discount rate of the Federal Reserve Bank of San Francisco
at the time of award plus one  percent)  of the amount by which the  Rentals for
the balance of the Lease Term after the time of award  exceed the amount of such
rental loss that Tenant proves could be reasonably avoided;

                                    (d)   Any   other   amounts   necessary   to
compensate  Landlord  for all  detriment  proximately  caused by the  Default by
Tenant or which in the ordinary course of events would likely result.

                                    (e) The  "worth at the time of award" of the
amounts  referred to in  subparagraphs  (a) and (b) of this Paragraph  14.2.1 is
computed  by  allowing  interest  at an annual rate equal to the greater of: ten
percent  (10%);  or five percent (5%) plus the rate  established  by the Federal
Reserve Bank of San Francisco,  as of the  twenty-fifth  (25th) day of the month
immediately  preceding the Default by Tenant,  on advances to member banks under
Sections 13 and 13(a) of the Federal  Reserve Act, as now in effect or hereafter
from time to time amended, not to exceed the maximum rate allowable by law.

                           14.2.2  Continuance  of Lease.  Upon any  Default  by
Tenant and unless and until Landlord  elects to terminate this Lease pursuant to
Paragraph 14.2.1 above, this Lease shall continue in effect after the Default by
Tenant and Landlord  may enforce all its rights and  remedies  under this Lease,
including  without  limitation,  the right to recover payment of Rentals as they
become due.  Neither efforts by Landlord to mitigate damages caused by a Default
by  Tenant  nor the  acceptance  of any  Rentals  shall  constitute  a waiver by
Landlord  of any of  Landlord's  rights or  remedies,  including  the rights and
remedies specified in Paragraph 14.2.1 above. The Landlord shall have the remedy
described in California  Civil Code Section 1951.4  (landlord may continue lease
in effect after tenant's  breach and  abandonment and recover rent as it becomes
due, if landlord has the right to sublet or assign,  subject only to  reasonable
limitations).

         15. Damage or Destruction.

                  15.1 Definition of Terms.  For the purposes of this Lease, the
term: (a) "Insured Casualty" means damage to or destruction of the Premises from
a cause actually insured against,  for which the insurance proceeds paid or made
available to Landlord, together with the amount of deductible applicable to such
insured casualty (and which deductible shall be paid by Tenant to Landlord), are
sufficient to rebuild or restore the Premises under then-existing

                                      -26-
<PAGE>

building  codes to the  condition  existing  immediately  prior to the damage or
destruction;  and (b) "Uninsured Casualty" means damage to or destruction of the
Premises from a cause not actually  insured  against,  or from a cause  actually
insured  against but for which the insurance  proceeds paid or made available to
Landlord  are for any reason  insufficient  to rebuild or restore  the  Premises
under then-existing  building codes to the condition existing  immediately prior
to the damage or destruction,  or from a cause actually  insured against but for
which the insurance  proceeds are not paid or made available to Landlord  within
sixty (60) days of the event of damage or destruction.

                  15.2 Insured Casualty.

                           15.2.1  Rebuilding  Required.  In  the  event  of  an
Insured  Casualty  where the extent of damage or destruction is less than twenty
percent (20%) of the then full replacement cost of the Premises,  Landlord shall
rebuild or restore the Premises to the condition  existing  immediately prior to
the damage or  destruction,  provided the damage or destruction was not a result
of a negligent  or willful act of Tenant,  and that there exist no  governmental
codes or regulations that would interfere with Landlord's  ability to so rebuild
or restore.

                           15.2.2  Landlord's  Election.  In  the  event  of  an
Insured  Casualty  where the  extent of  damage  or  destruction  is equal to or
greater  than  twenty  percent  (20%) of the then full  replacement  cost of the
Premises,  Landlord  may, at its option and at its sole  discretion,  rebuild or
restore the Premises to the condition  existing  immediately prior to the damage
or destruction, or terminate this Lease. Landlord shall notify Tenant in writing
within  forty-five  (45)  days  after the  event of  damage  or  destruction  of
Landlord's  election to either rebuild or restore the Premises or terminate this
Lease.

                           15.2.3  Continuance of Lease. If Landlord is required
to rebuild or restore the Premises  pursuant to Paragraph  15.2.1 or if Landlord
elects to rebuild or restore the  Premises  pursuant to Paragraph  15.2.2,  this
Lease shall remain in effect and Tenant shall have no claim against Landlord for
compensation  for  inconvenience or loss of business during any period of repair
or restoration.

                  15.3 Uninsured Casualty.

                           15.3.1  Landlord's  Election.  In  the  event  of  an
Uninsured  Casualty,  Landlord may, at its option and at its sole discretion (i)
rebuild or restore the  Premises as soon as  reasonably  possible at  Landlord's
expense  (unless the damage or destruction  was caused by a negligent or willful
act of  Tenant,  in which  event  Tenant  shall pay all costs of  rebuilding  or
restoring), in which event this Lease shall continue in full force and effect or
(ii) terminate this Lease,  in which event Landlord shall give written notice to
Tenant within  forty-five  (45) days after the event of damage or destruction of
Landlord's  election  to  terminate  this  Lease as of the date of the  event of
damage  or  destruction,  and if the  damage  or  destruction  was  caused  by a
negligent or willful act of Tenant, Tenant shall be liable therefor to Landlord.

                                      -27-
<PAGE>

                           15.3.2   Tenant's   Ability  to  Continue  Lease.  If
Landlord  elects to terminate this Lease and the extent of damage or destruction
is less  than  twenty  percent  (20%) of the then full  replacement  cost of the
Premises or the proceeds  paid or made  available to Landlord are for any reason
insufficient  to rebuild or restore the Premises  under  then-existing  building
codes to the condition existing  immediately prior to the damage or destruction,
and if there exist no  governmental  codes or regulations  that would  interfere
with Landlord's  ability to so repair or restore,  then Tenant may  nevertheless
cause the Lease to  continue  in effect by (i)  notifying  Landlord  in  writing
within  ten (10)  days  after  Landlord's  notice  of  termination  of  Tenant's
agreement to pay all costs of  rebuilding or restoring not covered by insurance,
and (ii) providing  Landlord with  reasonable  security for or assurance of such
payment.  Tenant  shall pay to  Landlord  in cash no later than thirty (30) days
prior to the date of commencement of construction the reasonable  estimated cost
of  rebuilding  or  restoring.  In the  event  Tenant  fails to pay such cost to
Landlord by the date specified, Landlord may immediately terminate the Lease and
recover  from  Tenant  all  costs  incurred  by  Landlord  in  preparation   for
construction.  If the  actual  cost  of  rebuilding  or  restoring  exceeds  the
estimated cost of such work, Tenant shall pay the difference to Landlord in cash
upon  notification  by Landlord of the final cost.  If the cost of rebuilding or
restoring is less than the estimated cost of such work, Tenant shall be entitled
to a refund of the difference upon completion of the rebuilding or restoring and
determination of final cost.

                  15.4  Tenant's  Election.   Notwithstanding  anything  to  the
contrary  contained in this  Paragraph  15,  Tenant may elect to terminate  this
Lease in the event the Premises are damaged or destroyed  and, in the reasonable
opinion of Landlord's architect or construction consultants,  the restoration of
the Premises cannot be  substantially  completed within one hundred eighty (180)
days after the event of damage or destruction.  Tenant's  election shall be made
by written notice to Landlord within twenty (20) days after Tenant receives from
Landlord the estimate of the time needed to complete  repair or  restoration  of
the Premises. If Tenant does not deliver said notice within said twenty (20) day
period, Tenant may not later terminate this Lease even if substantial completion
of the  rebuilding or restoration  occurs  subsequent to said one hundred eighty
day period,  provided that Landlord is proceeding  with  diligence to rebuild or
restore the Premises. The preceding sentence to the contrary notwithstanding, if
such  rebuilding or restoration is not completed  within two hundred forty (240)
days following the event of damage or destruction,  then Tenant shall be allowed
to  terminate  this Lease (even if  Landlord is  proceeding  with  diligence  to
rebuild or restore the Premises) by delivering written notice to Landlord within
twenty (20) days  following  such two hundred forty (240) day period.  If Tenant
delivers  said notice  within  said  twenty  (20) day  period,  this Lease shall
terminate as of the date of the event of damage or destruction.

                  15.5   Damage  or   Destruction   Near  End  of  Lease   Term.
Notwithstanding  anything to the contrary contained in this Paragraph 15, in the
event the Premises are damaged or destroyed in whole or in part  (regardless  of
the extent of damage)  from any cause  during the last twelve (12) months of the
Lease Term,  Landlord may, at Landlord's option,  terminate this Lease as of the
date of the event of damage or destruction by giving written notice to Tenant of
Landlord's  election  to do so within  thirty  (30) days after the event of such
damage or  destruction.  For purposes of this Paragraph 15.5, if Tenant has been
granted  an  option  to extend

                                      -28-
<PAGE>

or renew the Lease Term  pursuant to another  provision of this Lease,  then the
damage or  destruction  shall be deemed to have occurred  during the last twelve
(12) months of the Lease Term if Tenant  fails to exercise  its option to extend
or renew within  twenty-five (25) days after the event of damage or destruction.
Notwithstanding  anything to the contrary contained in this Paragraph 15, in the
event the Premises are damaged or destroyed in whole or in part  (regardless  of
the extent of damage) from any cause (other than the acts, omissions, negligence
or willful  misconduct  of Tenant or any of its  agents,  employees,  licensees,
invitees,  subtenants or contractors)  during the last twelve (12) months of the
Lease  Term and such  repair or  restoration  cannot be  completed  at least six
months  prior to the  expiration  of the Lease  Term,  Tenant  may,  at Tenant's
option,  terminate  this  Lease  as of  the  date  of the  event  of  damage  or
destruction by giving  written notice to Landlord of Tenant's  election to do so
within thirty (30) days after the event of such damage or destruction.

                  15.6  Termination  of Lease.  The current  Rent and  Operating
Expenses shall be proportionately  reduced during the period following the event
of damage or destruction until the date on which Tenant surrenders the Premises,
based  upon the  extent  to which  the  damage or  destruction  interferes  with
Tenant's  business  conducted  in the  Premises,  as  reasonably  determined  by
Landlord.  The proceeds of insurance carried by Tenant pursuant to Paragraph 8.2
shall be paid to Landlord and Tenant, as their interests appear.

                  15.7  Abatement of Rentals.  If the Premises are to be rebuilt
or restored  pursuant to this  Paragraph 15, the then current Rent and Operating
Expenses  shall be  proportionately  reduced  during  the  period  of  repair or
restoration,  based upon the  extent to which the  making of repairs  interferes
with Tenant's business  conducted in the Premises,  as reasonably  determined by
Landlord.

                  15.8  Liability  for  Personal  Property.  In no  event  shall
Landlord have any liability  for, nor shall it be required to repair or restore,
any injury or damage to any  Alterations  to the Premises made by Tenant,  trade
fixtures, equipment, merchandise,  furniture, or any other property installed by
Tenant or at the expense of Tenant.  Subject to the  provisions of Paragraph 8.6
above,  the  immediately  preceding  sentence  shall not relieve  Landlord  from
liability for its negligent acts or willful  misconduct.  In no event,  however,
shall  Landlord  be liable  for any  claims by Tenant of lost  profits,  loss of
business or lost income.  If Landlord or Tenant do not elect to  terminate  this
Lease  pursuant to this  Paragraph  15,  Tenant  shall be  obligated to promptly
rebuild or restore the same to the condition  existing  immediately prior to the
damage or destruction in accordance with the provisions of Paragraph 13.1.

                  15.9  Waiver  of Civil  Code  Remedies.  Landlord  and  Tenant
acknowledge  that the rights  and  obligations  of the  parties  upon  damage or
destruction  of the Premises are as set forth  herein;  therefore  Tenant hereby
expressly  waives any rights to terminate  this Lease upon damage or destruction
of the  Premises,  except as  specifically  provided  by this  Lease,  including
without  limitation  any rights  pursuant to the  provisions of subdivision 2 of
Section 1932 and subdivision 4 of Section 1933 of the California  Civil Code, as
amended from time to time,  and the  provisions  of any similar law  hereinafter
enacted,  which  provisions  relate to the  termination of the hiring of a thing
upon its substantial damage or destruction.

                                      -29-
<PAGE>

         16. Condemnation.

                  16.1 Definition of Terms.  For the purposes of this Lease, the
term:  (a)  "Taking"  means a taking of the  Premises  or Common  Area or damage
related to the  exercise of the power of eminent  domain and  includes,  without
limitation, a voluntary conveyance, in lieu of court proceedings, to any agency,
authority,  public  utility,  person or  corporate  entity  empowered to condemn
property;  (b) "Total Taking" means the Taking of the entire Premises or so much
of the  Premises  or Common Area as to prevent or  substantially  impair the use
thereof by Tenant for the uses herein specified;  provided,  however, that in no
event  shall the Taking of less than  twenty  percent  (20%) of the  Premises be
considered  a Total  Taking;  (c)  "Partial  Taking"  means the Taking of only a
portion of the Premises or Common Area which does not constitute a Total Taking;
(d) "Date of  Taking"  means the date upon  which the title to the  Premises  or
Common Area or a portion  thereof,  passes to and vests in the  condemnor or the
effective  date of any order for  possession  if issued  prior to the date title
vests in the  condemnor;  (e)  "Award"  means  the  amount  of any  award  made,
consideration paid, or damages ordered as a result of a Taking.

                  16.2 Rights.  The parties  agree that in the event of a Taking
all rights between them or in and to an Award shall be as set forth herein.

                  16.3 Total  Taking.  In the event of a Total Taking during the
Lease Term:  (a) the rights of Tenant under this Lease and the leasehold  estate
of Tenant in and to the  Premises  shall cease and  terminate  as of the Date of
Taking;  (b) Landlord  shall refund to Tenant any prepaid Rent; (c) Tenant shall
pay Landlord any Rentals due Landlord  under the Lease,  prorated as of the Date
of  Taking;  (d) to the extent the Award is not  payable to the  beneficiary  or
mortgagee of a deed of trust or mortgage  affecting the  Premises,  Tenant shall
receive  from the  Award  those  portions  of the  Award  attributable  to trade
fixtures of Tenant, Alterations paid by Tenant and loss of goodwill, if any; (e)
the  remainder  of the Award shall be paid to and be the  property of  Landlord.
Tenant reserves the right to apply separately for compensation  resulting from a
taking of  Tenant's  trade  fixtures,  Alterations  paid by  Tenant  and loss of
goodwill,  if any. If any portion of the award  received by Landlord is directly
attributable to Tenant's trade fixtures,  Alterations paid by Tenant or Tenant's
loss of goodwill,  then  Landlord  shall  promptly pay such portion of the award
attributable to such items to Tenant.

                  16.4 Partial  Taking.  In the event of a Partial Taking during
the Lease  Term:  (a) the  rights of  Tenant  under the Lease and the  leasehold
estate of Tenant in and to the  portion of the  Premises  taken  shall cease and
terminate  as of the Date of  Taking;  (b) from and after the Date of Taking the
Rent shall be an amount equal to the product  obtained by  multiplying  the then
current Rent by the  quotient  obtained by dividing the fair market value of the
Premises  immediately  after the Taking by the fair market value of the Premises
immediately  prior to the Taking;  (c) to the extent the Award is not payable to
the  beneficiary  or  mortgagee  of a deed of trust or  mortgage  affecting  the
Premises,  Tenant  shall  receive  from the  Award  the  portions  of the  Award
attributable to trade fixtures of Tenant, Alterations paid by Tenant and loss of
goodwill, if any; and (d) the remainder of the Award shall be paid to and be the
property  of

                                      -30-
<PAGE>

Landlord.  Tenant  reserves  the  right to  apply  separately  for  compensation
resulting from a taking of Tenant's trade fixtures,  Alterations  paid by Tenant
and loss of goodwill,  if any. If any portion of the award  received by Landlord
is directly attributable to Tenant's trade fixtures,  Alterations paid by Tenant
or Tenant's loss of goodwill,  then Landlord  shall promptly pay such portion of
the award attributable to such items to Tenant. Each party waives the provisions
of California Code of Civil Procedure  Section 1265.130 allowing either party to
petition  the Superior  Court to terminate  this Lease in the event of a Partial
Taking.

         17. Liens.

                  17.1  Premises to Be Free of Liens.  Tenant  shall pay for all
labor and  services  performed  for, and all  materials  used by or furnished to
Tenant,  Tenant's agents,  or any contractor  employed by Tenant with respect to
the Premises. Tenant shall indemnify, defend and hold Landlord harmless from and
keep the  Premises  and  Common  Area  free  from any  liens,  claims,  demands,
encumbrances,  or judgments,  including all costs,  liabilities  and  reasonable
attorneys' fees with respect thereto, created or suffered by reason of any labor
or  services  performed  for, or  materials  used by or  furnished  to Tenant or
Tenant's  agents or any  contractor  employed  by  Tenant  with  respect  to the
Premises.  Landlord shall have the right,  at all times, to post and keep posted
on the  Premises  any notices  permitted  or required by law, or which  Landlord
shall deem proper,  for the  protection  of Landlord and the Premises and Common
Area,  and any other  party  having an interest  therein,  from  mechanics'  and
materialmen's liens, including without limitation a notice of nonresponsibility.
In the event Tenant is required to post an improvement bond with a public agency
in connection  with any work  performed by Tenant on or to the Premises,  Tenant
shall include Landlord as an additional obligee.

                  17.2 Notice of Lien, Bond.  Should any claims of lien be filed
against, or any action be commenced affecting,  the Premises,  Tenant's interest
in the Premises or the Common Area,  Tenant shall give  Landlord  notice of such
lien or action within seven (7) days after Tenant  receives notice of the filing
of the lien or the  commencement  of the action.  In the event that Tenant shall
not,  within thirty (30) days following the  imposition of any such lien,  cause
such lien to be  released  of record by payment  or  posting  of a proper  bond,
Landlord  shall have, in addition to all other remedies  provided  herein and by
law, the right, but not the obligation, to cause the same to be released by such
means as Landlord shall deem proper,  including payment of the claim giving rise
to such lien or posting of a proper bond. All such sums paid by Landlord and all
expenses incurred by Landlord in connection therewith, including attorneys' fees
and costs, shall be payable to Landlord by Tenant as Additional Rent on demand.

         18. Landlord's Right of Access to Premises. Landlord reserves and shall
have the  right and  Tenant  and  Tenant's  agents  shall  permit  Landlord  and
Landlord's  agents to enter the  Premises at any  reasonable  time upon not less
than twenty-four  hours advance notice (except in the event of an emergency) for
the  purpose  of  (i)  inspecting  the  Premises,   (ii)  performing  Landlord's
maintenance and repair  responsibilities set forth herein, (iii) posting notices
of  non-responsibility,  (iv)  placing  upon the Premises at any time "For Sale"
signs, (v) placing on the Premises ordinary "For Lease" signs at any time within
six (6) months prior to Lease  Termination,  or at any time Tenant is in default
hereunder  and the  applicable  cure or grace period has expired with respect to
such default,  or at such other times as agreed to by Landlord and Tenant,  (vi)
protecting  the  Premises in the event of an  emergency,  (vii)  exhibiting  the
Premises  to  prospective  purchasers  or  lenders,  and (viii)  exhibiting  the
Premises to  prospective  tenants  during the last six (6) months prior to Lease
Termination  or at any time while a Tenant  default is continuing  following the
applicable  cure or grace

                                      -31-
<PAGE>

period.  In the event of an emergency,  Landlord shall have the right to use any
and all means which Landlord may deem proper to gain access to the Premises. Any
entry by Landlord  pursuant to the  provisions  of this  Paragraph  18 shall not
unreasonably  impair  Tenant's access to the Premises,  Tenant's  parking rights
under this Lease or Tenant's use of the  Premises.  Any entry to the Premises by
Landlord or Landlord's  agents in accordance with this Paragraph 18 or any other
provision of this Lease shall not under any circumstances be construed or deemed
to be a forcible or unlawful  entry into, or a detainer of the  Premises,  or an
eviction of Tenant from the Premises or any portion  thereof nor give Tenant the
right to abate the Rentals  payable  under this Lease.  Tenant hereby waives any
claims 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  Landlord's  or Landlord's  agents' entry into the
Premises as permitted by this Paragraph 18 or any other  provision of this Lease
(except if such loss or damage  results from  Landlord's  negligence  or willful
misconduct).  The  preceding  notwithstanding,   under  no  circumstances  shall
Landlord be liable to Tenant for any claims of lost profits, loss of business or
lost income.

         19. Landlord's Right to Perform Tenant's Covenants. Except as otherwise
expressly  provided herein, if Tenant shall at any time fail to make any payment
or perform any other act  required to be made or  performed by Tenant under this
Lease,  Landlord may upon ten (10) days written notice to Tenant,  but shall not
be obligated  to and without  waiving or  releasing  Tenant from any  obligation
under this Lease, make such payment or perform such other act to the extent that
Landlord  may deem  desirable,  and in  connection  therewith,  pay expenses and
employ  counsel.  All sums so paid by Landlord and all  penalties,  interest and
costs in connection  therewith  shall be due and payable by Tenant as Additional
Rent upon demand.

         20. Lender Requirements.

                  20.1 Subordination. This Lease, at Landlord's option, shall be
subject  and  subordinate  to the  lien  of any  mortgages  or  deeds  of  trust
(including  all  advances  thereunder,  renewals,  replacements,  modifications,
supplements, consolidations, and extensions thereof) in any amount(s) whatsoever
now or hereafter  placed on or against or affecting the Premises and/or the real
property  comprising the Common Area or Landlord's  interest or estate  therein,
without the necessity of the  execution and delivery of any further  instruments
on the part of Tenant to  effectuate  such  subordination.  If any  mortgagee or
beneficiary  shall elect to have this Lease prior to the lien of its mortgage or
deed of trust, and shall give written notice thereof to Tenant, this Lease shall
be deemed prior to such  mortgage or deed of trust,  whether this Lease is dated
prior or subsequent to the date of such mortgage or deed of trust or the date of
the recording thereof.

                                      -32-
<PAGE>

                  20.2  Subordination  Agreements.   Tenant  shall  execute  and
deliver   without  charge   therefor,   such  further   instruments   evidencing
subordination  of this  Lease  to the  lien of any  mortgages  or deeds of trust
affecting the Premises and/or real property comprising the Common Area as may be
required by Landlord  within  fifteen  (15) days  following  Landlord's  request
therefor;  provided that such  mortgagee or  beneficiary  under such mortgage or
deed of trust agrees in writing that this Lease shall not be  terminated  in the
event of any  foreclosure  if Tenant is not in  default  under this  Lease,  and
provided further than any subordination,  nondisturbance agreement required by a
mortgagee or  beneficiary  under a deed of trust shall be  substantially  in the
form of Exhibit E attached  hereto and  incorporated  herein by this  reference,
unless otherwise  agreed to in writing by lender.  Landlord agrees to reasonably
request of its existing lender holding a security  interest in the Premises that
such lender execute a subordination,  non-disturbance agreement in substantially
the form of Exhibit E attached  hereto  with  respect to Tenant and this  Lease.
This Lease and the effectiveness of the same shall not be conditioned,  however,
on the execution of such subordination,  non-disturbance agreement by Landlord's
lender.

                  20.3  Approval  by  Lenders.   Tenant   recognizes   that  the
provisions  of this  Lease  may be  subject  to the  approval  of any  financial
institution that may make a loan secured by a new or subsequent deed of trust or
mortgage affecting the Premises and/or real property comprising the Common Area.
If the financial  institution should require,  as a condition to such financing,
any modifications of this Lease in order to protect its security interest in the
Premises, including without limitation,  modification of the provisions relating
to damage to and/or  condemnation of the Premises,  Tenant agrees to execute the
appropriate   amendments;   provided,   however,   that  no  modification  shall
substantially  change the size, location or dimension of the Premises,  increase
the Rentals  payable by Tenant  hereunder or increase the  obligations of Tenant
hereunder.

                  20.4  Attornment.  In the event of foreclosure or the exercise
of the power of sale under any  mortgage or deed of trust made by  Landlord  and
covering the Premises  and/or real property  comprising the Common Area,  Tenant
shall  attorn  to the  foreclosing  lender  and to the  purchaser  upon any such
foreclosure  or sale and recognize such lender or such purchaser as the Landlord
under the Lease.

                  20.5 Estoppel Certificates.

                           (a) Delivery by Tenant.  Tenant shall, within fifteen
(15) days following request by Landlord therefor and without charge, execute and
deliver to Landlord estoppel  certificates and current  financial  statements of
Tenant reasonably requested by Landlord in connection with the sale or financing
of the Premises  and/or real property  comprising the Common Area, or reasonably
requested  by any  lender  making a loan  affecting  the  Premises  and/or  real
property comprising the Common Area. Landlord may require that Tenant deliver to
Landlord  and/or such lender an  estoppel  certificate  in the form of Exhibit F
attached hereto and  incorporated  herein by this  reference.  Any such estoppel
certificate  may be  conclusively  relied upon by any  prospective  purchaser or
encumbrancer of the Premises, and/or real property comprising the Common Area.

                                      -33-
<PAGE>

                           (b)  Nondelivery  by  Tenant.   Tenant's  failure  to
deliver an estoppel  certificate as required pursuant to Paragraph 20.5(a) above
shall be conclusive upon Tenant that (i) this Lease is in full force and effect,
without  modification  except as may be represented by Landlord and has not been
assigned,  (ii) there are now no uncured  defaults  in  Landlord's  performance,
(iii) no Rentals  have been paid in advance  except  those that are set forth in
this Lease,  (iv) the improvements to be constructed on the Premises by Landlord
have been  substantially  completed  except for punch  list  items  which do not
prevent  Tenant from using the Premises for its intended use, and (v) Tenant has
entered into  occupancy of the  Premises on such date as may be  represented  by
Landlord and is open and conducting  business at the Premises.  Tenant's failure
to deliver  any  financial  statements  or  estoppel  certificates  as  required
pursuant to Paragraph 20.5(a) above shall be a Default by Tenant.

         21. Holding Over. This Lease shall terminate  without further notice at
the  expiration of the Lease Term. It is the desire of Landlord  either to enter
into a new lease with Tenant for the  Premises  prior to the  expiration  of the
Lease Term,  or to have Tenant  vacate the  Premises  pursuant to  Paragraph  35
below.  Therefore,  any holding over by Tenant after Lease Termination shall not
constitute a renewal or extension of the Lease Term,  nor give Tenant any rights
in or to the Premises  except as expressly  provided in this Lease.  Any holding
over after Lease  Termination with the consent of Landlord shall be construed to
be a tenancy from month to month,  at one hundred  fifty  percent  (150%) of the
monthly  Rent for the month  preceding  Lease  Termination  in  addition  to all
Additional  Rent  payable  hereunder,  and shall  otherwise  be on the terms and
conditions  herein  specified  insofar  as  applicable.  If  Tenant  remains  in
possession of the Premises after Lease Termination  without  Landlord's  consent
Tenant shall indemnify,  defend and hold Landlord  harmless from and against any
loss,  damage,  expense,  claim or liability  resulting from Tenant's failure to
surrender the Premises,  including  without  limitation,  any claims made by any
succeeding tenant based on delay in the availability of the Premises.

         22.  Notices.  Any notice  required  or desired to be given  under this
Lease shall be in writing,  and all notices shall be given by personal  delivery
or  mailing.  All notices  personally  given on Tenant may be  delivered  to any
person  apparently in charge at the Premises,  on any corporate officer or agent
of Tenant  (including,  without  limitation,  the General  Counsel of Tenant) if
Tenant is a  corporation,  or on any one signatory  party if more than one party
signs this Lease on behalf of Tenant;  any notice so given shall be binding upon
all signatory parties as if served upon each such party  personally.  Any notice
given  pursuant  to this  Paragraph  22 shall be deemed to have been  given when
personally  delivered,  or if mailed,  when  seventy-two (72) hours have elapsed
from the time  when  such  notice  was  deposited  in the  United  States  mail,
certified or registered mail and postage prepaid,  addressed to the party at the
last address  given for purposes of notice  pursuant to the  provisions  of this
Paragraph 22. At the date of execution of this Lease,  the addresses of Landlord
and Tenant are set forth in Paragraph 1.11 above.

         23.  Attorneys'  Fees. In the event either party hereto shall bring any
action or legal proceeding for damages for an alleged breach of any provision of
this Lease, to recover Rentals, to enforce an indemnity defense or hold harmless
obligation,  to terminate the tenancy of the

                                      -34-
<PAGE>

Premises, or to enforce,  protect,  interpret, or establish any term, condition,
or covenant  of this Lease or right or remedy of either  party,  the  prevailing
party  shall be entitled  to  recover,  as a part of such action or  proceeding,
reasonable attorneys' fees and court costs,  including attorneys' fees and costs
for appeal, as may be fixed by the court or jury.

         24. Assignment, Subletting and Hypothecation.

                  24.1 In General.  Tenant shall not voluntarily sell, assign or
transfer  all or any part of Tenant's  interest in this Lease or in the Premises
or any part thereof,  sublease all or any part of the Premises, or permit all or
any part of the Premises to be used by any person or entity other than Tenant or
Tenant's employees, except as specifically provided in this Paragraph 24.

                  24.2 Voluntary Assignment and Subletting.

                           (a)  Notice to  Landlord.  Tenant  shall,  by written
notice,  advise  Landlord of Tenant's  desire on a stated date (which date shall
not be less than  thirty (30) days nor more than ninety (90) days after the date
of  Tenant's  notice)  to assign  this Lease or to sublet all or any part of the
Premises for any part of the Lease Term. Said notice shall state that the notice
constitutes an offer to terminate the Lease or Tenant's  interest in the portion
of the Premises specified pursuant to Paragraph 24.2(b) if the notice applies to
a proposed  assignment  of the Lease or Tenant's  interest  therein,  a proposed
sublease of all or any part of the Premises for more than fifty percent (50%) of
the  remainder  of the Lease  Term,  or a proposed  sublease  of more than fifty
percent  (50%) of the Premises for any period.  Tenant's  notice shall state the
name, legal composition and address of the proposed  assignee or subtenant,  and
Tenant shall provide the following  information to Landlord with said notice:  a
true and complete  copy of the  proposed  assignment  agreement  or sublease;  a
financial statement of the proposed assignee or subtenant (certified as true and
correct by an officer or partner of the proposed assignee or subtenant) prepared
in accordance  with generally  accepted  accounting  principles  within one year
prior to the proposed  effective date of the assignment or sublease;  the nature
of the  proposed  assignee's  or  subtenant's  business  to be carried on in the
Premises;  the payments to be made or other consideration to be given on account
of the assignment or sublease; a current financial statement of Tenant; and such
other pertinent  information as may be requested by Landlord,  all in sufficient
detail to enable  Landlord to evaluate the proposed  assignment  or sublease and
the  prospective  assignee or subtenant.  Tenant's notice shall not be deemed to
have been served or given until such time as Tenant has provided  Landlord  with
all  information  reasonably  requested by Landlord  pursuant to this  Paragraph
24.2.  Tenant  shall  immediately  notify  Landlord of any  modification  to the
proposed terms of such assignment or sublease. Tenant may withdraw its notice at
any time prior to  exercise  by Landlord of  Landlord's  right to  terminate  as
described in Paragraph 24.2(b).

                           (b) Offer to Terminate.  If Tenant notifies  Landlord
of its desire to assign this Lease or any interest herein,  to sublet all or any
part of the Premises for more than fifty  percent  (50%) of the remainder of the
Lease Term,  or to sublet more than fifty  percent (50%) of the Premises for any
period,  Tenant's  notice shall  constitute an offer to terminate  this Lease or
Tenant's  interest in the portion of the Premises  specified and Landlord  shall
have the

                                      -35-
<PAGE>

right,  to be exercised by giving  written notice to Tenant within ten (10) days
after receipt of Tenant's  notice,  to terminate the Lease (i) entirely,  in the
event of a proposed  assignment  or a sublease  of the entire  Premises  for the
remainder of the Lease Term, (ii) as to the portion of the Premises which is the
subject  of a  proposed  sublease  for  more  than  fifty  percent  (50%) of the
remainder of the Lease Term, or (iii) as to the portion of the Premises which is
the  subject of a proposed  sublease  of more than  fifty  percent  (50%) of the
Premises for any period,  as specified in Tenant's notice.  For purposes of this
Paragraph 24.2(b), (i) the term of a proposed sublease shall include all options
to extend or renew,  and (ii) a proposed  sublease shall be deemed to be for the
remainder  of the Lease Term if the term of the  proposed  sublease  will expire
within one year prior to the end of the Lease Term. If Tenant's notice specifies
all of the  Premises  and  Landlord  elects  to  terminate,  this  Lease and the
obligations of Landlord and Tenant under this Lease shall  terminate on the date
stated in the notice given by Tenant pursuant to Paragraph 24.2(a),  except that
any  obligations  which have accrued and are unfulfilled as of such date and any
obligations  under this Lease that expressly  survive  termination of this Lease
shall survive such  termination.  If Tenant's notice  specifies less than all of
the Premises and Landlord elects to terminate, this Lease and the obligations of
Landlord and Tenant under this Lease shall  terminate on the date stated  solely
with  respect to that  portion of the  Premises  specified  in  Tenant's  notice
(except that any obligations which have accrued and are unfulfilled with respect
to the  terminated  portion of the Premises as of such date and any  obligations
under this Lease with respect to such  terminated  portion of the Premises  that
expressly survive termination of this Lease shall survive such termination), and
Rent and all other  costs and  expenses  payable  by Tenant  hereunder  shall be
adjusted pro rata, based upon the number of net leasable square feet retained by
Tenant  after the  termination,  compared  to the total  number of net  leasable
square  feet  in the  entire  Premises  excluding  any  areas  of  the  Premises
designated in the proposed  sublease for ingress and egress and common areas, if
any. The Lease as so amended shall continue thereafter in full force and effect.
Landlord and Tenant shall execute an amendment to this Lease  specifying the new
Premises,  the adjusted Rent, a reasonable  method for apportioning  maintenance
and operating  obligations based on the multitenant nature of the Premises,  and
Tenant's share of costs and expenses;  provided, however, that failure by either
party to execute such an amendment shall not affect the validity of this Lease.

                           (c) Landlord's Consent. If Landlord does not exercise
its right to terminate  pursuant to Paragraph 24.2(b) within ten (10) days after
receipt of  Tenant's  notice or if a  proposed  sublease  is not  subject to the
provisions of Paragraph  24.2(b),  Landlord shall not unreasonably  withhold its
consent to the proposed  assignment or  subletting,  on the terms and conditions
specified in said notice.  If Tenant's notice fails to state that it constitutes
an  offer to  terminate  the  Lease as may be  required  pursuant  to  Paragraph
24.2(a),  such  notice  shall be deemed  insufficient  for the  purposes of this
Paragraph 24.2, and Landlord may withhold its consent to the proposed assignment
or subletting in Landlord's absolute discretion.  Without otherwise limiting the
criteria upon which Landlord may withhold its consent to any proposed assignment
or sublease, if Landlord withholds its consent where Tenant is in default at the
time  of  the  giving  of  Tenant's  notice  or at  any  time  thereafter,  such
withholding of consent shall be  presumptively  reasonable.  Landlord and Tenant
agree  that  fifty  percent  (50%) of any and all rent  paid by an  assignee  or
subtenant,  including,  but not limited to, any rent in excess of the Rentals to
be paid under this Lease  (prorated  in the event of a sublease of less than the
entire

                                      -36-
<PAGE>

Premises),  shall be paid directly to Landlord,  as Additional Rent, at the time
and place  specified in this Lease.  For the purposes of this  Paragraph 24, the
term "rent"  shall  include any  consideration  of any kind  received,  or to be
received,  by Tenant from an assignee or subtenant,  if such sums are related to
Tenant's interest in this Lease or in the Premises,  including,  but not limited
to key money,  bonus  money,  and  payments  (in excess of the fair market value
thereof) for Tenant's assets,  fixtures,  trade fixtures,  inventory,  accounts,
goodwill,  equipment,  furniture,  general intangibles, and any capital stock or
other equity ownership  interest of Tenant. Any assignment or subletting without
Landlord's  consent shall be voidable at Landlord's option, and shall constitute
a Default by Tenant.  Landlord's consent to any one assignment or sublease shall
not  constitute  a  waiver  of the  provisions  of this  Paragraph  24 as to any
subsequent  assignment or sublease nor a consent to any subsequent assignment or
sublease;  further,  Landlord's  consent to an assignment or sublease  shall not
release  Tenant from  Tenant's  obligations  under this Lease,  and Tenant shall
remain jointly and severally liable with the assignee or subtenant.

                           (d) Assumption of Obligations.  In the event Landlord
consents to any assignment,  such consent shall be conditioned upon the assignee
expressly  assuming  and  agreeing  to be bound by each of  Tenant's  covenants,
agreements  and  obligations  contained  in this  Lease,  pursuant  to a written
assignment and assumption  agreement in a form reasonably  approved by Landlord.
Landlord's  consent  to  any  assignment  or  sublease  shall  be  evidenced  by
Landlord's  signature on said  assignment  and  assumption  agreement or on said
sublease or by a separate written consent.  In the event Landlord  consents to a
proposed assignment or sublease,  such assignment or sublease shall be valid and
the  assignee  or  subtenant  shall  have the  right to take  possession  of the
Premises only if an executed original of the assignment or sublease is delivered
to Landlord,  and such document contains the same terms and conditions as stated
in Tenant's notice to Landlord given pursuant to Paragraph 24.2(a) above, except
for any such modifications to which Landlord has consented in writing.

                  24.3 Collection of Rent.  Tenant hereby  irrevocably  gives to
and confers  upon  Landlord,  as security for  Tenant's  obligations  under this
Lease, the right,  power and authority to collect all rents from any assignee or
subtenant of all or any part of the Premises as permitted by this  Paragraph 24,
or  otherwise,  and  Landlord,  as assignee of Tenant,  or a receiver for Tenant
appointed on Landlord's  application,  may collect such rent and apply it toward
Tenant's  obligations  under  this  Lease;  provided,  however,  that  until the
occurrence  of any Default by Tenant or except as provided by the  provisions of
Paragraph 24.2(c) above,  Tenant shall have the right to collect such rent. Upon
the occurrence of any Default by Tenant, Landlord may at any time without notice
in Landlord's  own name sue for or otherwise  collect such rent,  including rent
past due and unpaid,  and apply the same,  less costs and  expenses of operation
and  collection,   including   reasonable   attorneys'  fees,   toward  Tenant's
obligations  under this  Lease.  Landlord's  collection  of such rents shall not
constitute an acceptance  by Landlord of attornment by such  subtenants;  in the
event of a Default by Tenant,  Landlord  shall have all rights  provided by this
Lease and by law, and Landlord may,  upon re-entry and taking  possession of the
Premises, eject all parties in possession or eject some and not others, or eject
none, as Landlord shall determine in Landlord's sole discretion.

                                      -37-
<PAGE>

                  24.4 No Bonus  Value.  It is the intent of the parties  hereto
that this Lease  shall  confer  upon Tenant only the right to use and occupy the
Premises, and to exercise such other rights as are conferred upon Tenant by this
Lease.  The parties  agree  that,  except to the extent  provided  in  Paragraph
24.2(c) in which Landlord agrees to split equally excess rentals paid to Tenant,
this  Lease is not  intended  to have a bonus  value,  nor to serve as a vehicle
whereby  Tenant may profit by a future  assignment  or sublease of this Lease or
the right to use or occupy  the  Premises  as a result  of any  favorable  terms
contained herein or any future changes in the market for leased space. It is the
intent of the  parties  that any such bonus  value that may attach to this Lease
shall be and  remain,  subject  to the  provisions  of  Paragraph  24.2(c),  the
exclusive property of Landlord.

                  24.5   Corporations   and   Partnerships.   If   Tenant  is  a
partnership, any withdrawal or substitution (whether voluntary,  involuntary, or
by operation of law and whether  occurring at one time or over a period of time)
of any  partner(s)  owning fifty  percent  (50%) or more  (cumulatively)  of the
partnership,  any assignment(s) of fifty percent (50%) or more (cumulatively) of
any interest in the capital or profits of the partnership, or the dissolution of
the partnership  shall be deemed an assignment of this Lease requiring the prior
written  consent  of  Landlord.  If Tenant is a  corporation,  any  dissolution,
merger,  consolidation or other  reorganization of Tenant,  any sale or transfer
(or  cumulative  sales or transfers) of the capital stock of Tenant in excess of
fifty percent (50%),  or any sale (or cumulative  sales) of all of the assets of
Tenant shall be deemed an assignment  of this Lease  requiring the prior written
consent  of  Landlord.  Any such  withdrawal  or  substitution  of  partners  or
assignment of any interest in or  dissolution of a partnership  tenant,  and any
such sale of stock or assets of a corporate  tenant  without  the prior  written
consent  of  Landlord  shall be a Default  by Tenant  hereunder.  The  foregoing
notwithstanding,  (i) the sale or transfer of any or all of the capital stock of
a corporation,  the capital stock of which is now or hereafter  becomes publicly
traded, or (ii) the sale or transfer of this Lease to Tenant's parent company or
any affiliates or subsidiaries of Tenant's parent company,  or (iii) the sale or
transfer  of this Lease to an  unaffiliated  entity with whom Tenant or Tenant's
parent company or any affiliates or subsidiaries of Tenant's parent company have
a joint  development  or joint  venture  relationship,  shall  not be  deemed an
assignment  of this  Lease,  shall not  require  the prior  written  consent  of
Landlord (but written  notice of such sale or transfer  shall be given by Tenant
to Landlord  prior to or promptly  following the date of such sale or transfer),
shall not give Landlord a right to recapture the Premises,  or portion  thereof,
which is the subject of such sale or transfer, and shall not entitle Landlord to
any bonus rent with  respect  to such sale or  transfer.  The parent  company of
Tenant  and any  subsidiaries  of the parent  company of Tenant  shall be deemed
"Affiliates" of Tenant.

                  24.6 Reasonable  Provisions.  Tenant expressly agrees that the
provisions of this Paragraph 24 are not unreasonable standards or conditions for
purposes of Section  1951.4(b)(2) of the California  Civil Code, as amended from
time to time, under bankruptcy laws, or for any other purpose.

                  24.7 Attorney's  Fees.  Tenant shall pay, as Additional  Rent,
Landlord's reasonable attorneys' fees for reviewing,  investigating,  processing
and/or  documenting  any

                                      -38-
<PAGE>

requested  assignment or sublease,  whether or not Landlord's consent is granted
(but not to exceed $750).

                  24.8 Involuntary Transfer. No interest of Tenant in this Lease
shall be assignable,  involuntarily or by operation of law,  including,  without
limitation,  the  transfer  of this Lease by testacy or  intestacy.  Each of the
following acts shall be considered an involuntary assignment:

                           (a) If Tenant is or becomes  bankrupt  or  insolvent,
makes an  assignment  for the benefit of  creditors,  or a proceeding  under any
bankruptcy law is instituted in which Tenant is the bankrupt; or, if Tenant is a
partnership or consists of more than one person or entity, if any partner of the
partnership  or other person or entity is or becomes  bankrupt or insolvent,  or
makes an assignment for the benefit of creditors;

                           (b) Levy of a writ of attachment or execution on this
Lease;

                           (c)  Appointment of a receiver with authority to take
possession  of the  Premises in any  proceeding  or action to which  Tenant is a
party; or

                           (d)  Foreclosure  of  any  lien  affecting   Tenant's
interest in the Premises,  which lien was not consented to by Landlord  pursuant
to Paragraph  24.9.  An  involuntary  assignment  shall  constitute a Default by
Tenant and Landlord shall have the right to terminate this Lease,  in which case
this Lease shall not be treated as an asset of Tenant. In the event the Lease is
not terminated,  the provisions of Paragraph  24.2(c) regarding rents paid by an
assignee or subtenant and Paragraph 24.4 shall apply. If a writ of attachment or
execution  is  levied  on  this  Lease,  or if  any  involuntary  proceeding  in
bankruptcy is brought  against  Tenant or a receiver is appointed,  Tenant shall
have  sixty  (60)  days in which to cause  the  attachment  or  execution  to be
removed, the involuntary proceeding dismissed, or the receiver removed.

                  24.9 Hypothecation.  Tenant shall not hypothecate, mortgage or
encumber  Tenant's  interest in this Lease or in the Premises or  otherwise  use
this Lease as a security  device in any manner  without the consent of Landlord,
which consent Landlord may withhold in its sole and absolute discretion. Consent
by Landlord to any such  hypothecation  or creation of a lien or mortgage  shall
not  constitute  consent  to an  assignment  or  other  transfer  of this  Lease
following foreclosure of any permitted lien or mortgage.

                  24.10 Binding on Successors.  The provisions of this Paragraph
24  expressly  apply  to  all  heirs,  successors,   sublessees,  assignees  and
transferees of Tenant.

         25. Hazardous Materials.

                  25.1 Permitted Materials. Notwithstanding Paragraph 6.4 of the
Lease,  Tenant may use, keep and store in the Premises those Hazardous Materials
listed on Exhibit "C" attached hereto, and such other Hazardous  Materials which
may be  approved  by  Landlord  from  time  to  time  in  Landlord's  reasonable
discretion,  in such quantities and volumes as are necessary to conduct Tenant's
business in the Premises ("Permitted  Materials").  Permitted Materials shall

                                      -39-
<PAGE>

be  used,  kept,  stored,  disposed  of,  removed,  and  transported  in  strict
compliance with all laws, ordinances,  regulations,  rules, orders, and policies
of any  federal,  state,  county,  municipal,  or other  governmental  authority
(collectively,  "Governmental  Authority")  having  jurisdiction  over Hazardous
Materials  ("Environmental Laws"). Upon Landlord's reasonable,  written request,
Tenant shall provide  Landlord  with an updated list of all Permitted  Materials
used,  kept, or stored in the Premises.  Tenant shall  promptly  comply with any
law,   ordinance,   or  regulation  of  any  Governmental   Authority  requiring
modifications to the Premises or the  improvements  thereon that are intended to
protect the  Premises  and the  environment  against  the  release of  Hazardous
Materials.   Tenant  shall  obtain  all   necessary   permits  from   applicable
Governmental  Authorities required to maintain the Permitted Materials and shall
furnish  Landlord,  upon  reasonable  request by  Landlord,  with copies of such
permits or any plans,  reports or other  material  required to be filed with any
Governmental Authority relating to the use of the Permitted Materials.  Upon the
expiration or sooner termination of this Lease,  Tenant covenants to remove from
the Premises or Common Area, at its sole cost and expense, any and all Hazardous
Materials  then located on or about the Premises or Common Area due to a Release
of Hazardous Materials by Tenant or Tenant's agents.

         Tenant and Tenant's  agents shall not release or dispose,  or allow the
release or disposal, of any Hazardous Materials,  including Permitted Materials,
in, on,  under,  or in the vicinity of the  Premises;  provided,  however,  that
Tenant shall dispose, remove and transport from the Premises and Common Area any
and all Permitted  Materials in accordance with all  Environmental  Laws. Tenant
shall  immediately  notify  Landlord of any  inquiry,  test,  investigation,  or
enforcement  proceeding  by or against  Tenant or the  Premises  or Common  Area
concerning Hazardous Materials. Tenant acknowledges that Landlord shall have the
right,  but not the  obligation,  in Landlord's  own name, to participate in any
negotiations with any Governmental  Authority with regard to Tenant's Release of
Hazardous  Materials on the Premises or Common Area.  Tenant shall,  within five
(5) days after receipt by Tenant,  submit to Landlord  copies of all  inquiries,
test and investigation results, and enforcement  proceedings described above and
copies of all reports and responses  thereto prepared by or on behalf of Tenant.
In connection with the transportation of any Hazardous  Materials to or from the
Premises, Tenant shall list itself as the transporter and generator.

                  25.2  Landlord's  Inspection  Rights.  Landlord shall have the
right, upon reasonable advance notice to Tenant, to inspect, investigate, sample
and/or  monitor  the  Premises  and  Common  Area,  including  any soil,  water,
groundwater,  or other sampling to the extent reasonably  necessary to determine
whether  Tenant  is  complying  with the terms of this  Lease  with  respect  to
Hazardous Materials. In connection therewith, Tenant shall provide Landlord with
reasonable  access to all  portions of the  Premises;  provided,  however,  that
Landlord  shall  avoid  any  unreasonable  interference  with the  operation  of
Tenant's  business on the Premises.  All costs incurred by Landlord  pursuant to
this  subparagraph  25.2 above shall be reimbursed by Tenant to Landlord  within
ten (10) days after  Landlord's  demand for payment if it is  determined  that a
Release  of  Hazardous  Materials  by  Tenant or any of its  agents,  employees,
contractors  or tenants  has  occurred.  If Tenant  fails to perform or does not
commence and thereafter  diligently  prosecute any obligation to be performed by
Tenant under this Lease with respect to  Hazardous  Materials  within sixty (60)
days after the date of  Tenant's  receipt of  Landlord's  written  notice of

                                      -40-
<PAGE>

the  obligation  to be  performed,  Landlord  shall have the right,  but not the
obligation,  without  limitation upon any of Landlord's other rights or remedies
under this Lease or at law or in equity,  to enter upon the Premises and perform
Tenant's  obligations   hereunder  at  Tenant's  expense.  All  sums  reasonably
disbursed, deposited, or incurred by Landlord in connection with the performance
of such  obligation,  including,  but not limited to, all costs,  expenses,  and
actual  attorneys'  fees,  shall be due and  payable by Tenant to Landlord as an
item of additional rent on demand by Landlord, together with interest thereon at
the  maximum  rate  allowed  by law from the date of such  demand  until paid by
Tenant.

                  25.3  Investigation  and Remediation.  If Tenant or any of its
Agents  Releases any Hazardous  Materials in, on or under the Premises or any of
the Common Areas,  Tenant shall promptly commence an investigation of the extent
of such Hazardous  Materials  contamination of the Premises and/or Common Areas.
Within sixty (60) days after completion of such investigation, Tenant shall also
prepare and submit to  Landlord  or within  such period  commence to prepare and
thereafter  diligently  complete  and submit to  Landlord a  comprehensive  plan
specifying  the  actions  to be taken  by  Tenant  to  remediate  the  Hazardous
Materials to levels  permitted by applicable  Environmental  Laws  ("Remediation
Plan").  Any Remediation  Plan shall be subject to the prior written approval of
Landlord,  which approval shall not be unreasonably withheld or delayed.  Within
thirty (30) days after Landlord's approval of the Remediation Plan, Tenant shall
commence and diligently  prosecute to completion  all such actions  necessary to
remediate the Hazardous  Materials in accordance with the Remediation  Plan. Any
and all work performed pursuant to an Investigation Plan and/or Remediation Plan
shall be performed at Tenant's sole cost and expense.

                  25.4 Tenant's Indemnity.  Tenant shall indemnify,  defend, and
hold Landlord and Landlord's partners,  employees,  and agents harmless from and
against any and all claims,  actions,  suits,  proceedings,  orders,  judgments,
losses, costs, damages, liabilities, or expenses (including, without limitation,
attorneys' fees and costs of investigation, remediation, and/or cleanup) arising
in connection with any Hazardous Materials Released by Tenant or any of Tenant's
Agents in, on, under,  or in the vicinity of the Premises or the Common Area, or
any  Hazardous  Materials  shipped  thereto  or  therefrom,  by Tenant or any of
Tenant's  Agents  including,   without  limitation,  (a)  the  investigation  or
remediation of Hazardous  Materials Released by Tenant or any of Tenant's Agents
in, on, or under the  Premises or Common Area and the  removal,  transportation,
and  disposal of  contaminated  building  materials,  soils  and/or  groundwater
arising  from  the  remediation  of such  contamination,  whether  voluntary  or
required by any Governmental Authority;  (b) ongoing monitoring of any Hazardous
Materials  contamination Released by Tenant or any of Tenant's Agents in, on, or
under  the  Premises  or Common  Area,  whether  voluntary  or  required  by any
Governmental   Authority;   (c)  the  migration  of  any   Hazardous   Materials
contamination Released by Tenant or any of Tenant's Agents to nearby properties,
(d) personal  injury,  death,  or property damage arising out of the presence of
the  Hazardous  Materials  contamination  Released  by Tenant or any of Tenant's
Agents in, on, or under the  Premises or Common  Area;  (e) damage to or loss of
use of the Premises or Common Area or the  environment or diminution in value of
the  Premises or Common Area caused by the  Release of  Hazardous  Materials  by
Tenant or any of Tenant's Agents; and (f) fines, penalties, or other assessments
levied  against  the  Premises  or Common  Area or  Landlord  as a result of the

                                      -41-
<PAGE>

presence of the  Hazardous  Materials  contamination  caused by Tenant or any of
Tenant's Agents.  The foregoing  indemnity shall run to the benefit of Landlord,
its  partners,  directors,  officers,  employees,  agents,  and  successors  and
assigns,  any existing or future lender who extends  credit to Landlord,  or its
successors  and assigns,  which credit is secured by a mortgage or deed of trust
on the  Premises,  any person or entity who acquires the interest of Landlord in
the Premises (except Tenant), and any person who acquires a lender's interest in
the  Premises,  either  through  foreclosure,  deed in lieu of  foreclosure,  or
exercise  of any rights or  remedies  under the  documents  governing  a loan or
extension of credit.

                  25.5  Assignment  and  Subletting.  It shall be  presumptively
reasonable  for Landlord to withhold its consent to any proposed  assignment  or
subletting if the proposed  assignee or  subtenant's  use of the Premises  would
require the storage,  use, handling,  generation,  disposal or transportation of
Hazardous  Materials other than the Permitted  Materials unless such assignee or
subtenant  submits  to  Landlord,  prior  to  occupancy,  a  list  of  Permitted
Materials, which list shall be subject to the reasonable approval of Landlord.

                  25.6  Disclosures  by Landlord.  Landlord  discloses to Tenant
that,  pursuant to an Order or Orders imposed by the  California  Regional Water
Quality Control Board,  certain  remedial action has been undertaken or is being
undertaken  in connection  with certain  portions of the Common Area or soils or
groundwater  underlying  such  Common  Area.  The terms and  conditions  of that
certain Covenant to Restrict Use of Property  executed by RREEF USA FUND-III,  a
California Group Trust, and the California Regional Water Quality Control Board,
recorded December 30, 1991,  concerning the remedial action referred to above is
incorporated herein by reference.  The aforementioned  recorded document affects
that  property at 3050  Coronado  Drive and the parking lot  adjacent  thereto].
Tenant hereby  acknowledges  that  Landlord has  delivered or made  available to
Tenant,  without  representation  as to accuracy or completeness,  those certain
environmental  reports or studies  referred to in Exhibit "D"  attached  hereto.
Landlord  hereby  acknowledges  and agrees  that  Tenant  shall not be liable to
Landlord for the clean up or  remediation  of, or cost to clean up or remediate,
any Hazardous Materials existing on, in or under the Premises or the Common Area
as of the  Commencement  Date of this Lease (unless  Tenant or any of its Agents
caused the Release of such pre-existing Hazardous Materials and/or Tenant or any
of its  Agents  exacerbates  the  pre-existing  environmental  condition  of the
Premises or the Common  Area,  and in such  latter  case,  Tenant  shall only be
liable to the extent of damages, losses, liabilities, costs or expenses incurred
by Landlord as a result of such exacerbation of such pre-existing condition).

                  25.7 Environmental  Assessments by Lender. Tenant shall permit
any  lender  who has  made or will  make a loan  secured  by a deed of  trust or
mortgage affecting the Premises and/or real property comprising the Common Area,
and/or  such  lender's  agents,  employees  and  consultants,  to enter onto the
Premises and/or the real property comprising the Common Area at reasonable times
and with reasonable notice to Tenant in order to perform and/or cause to perform
environmental  testing  and/or site  assessments  of such  property,  including,
without limitation,  Phase II environmental assessments, to the extent permitted
under  the deed or trust or  mortgage  and/or  under any  other  loan  documents
executed in  connection  with such deed of trust or mortgage,  provided that the
performance and conduct of such environmental testing

                                      -42-
<PAGE>

assessments  shall not  unreasonably  interfere with Tenant's  possession of the
Premises or otherwise impede the conduct of Tenant's  operations on the Premises
and/or the real property comprising the Common Area.

                  25.8  Survival.  The  provisions  of this  Paragraph  25 shall
survive any termination of the Lease.

         26.  Successors.  Subject to the  provisions  of Paragraph 24 above and
Paragraph 31.2(a) below, the covenants,  conditions, and agreements contained in
this Lease shall be binding on the parties hereto and on their respective heirs,
successors and assigns.

         27. Landlord  Default;  Mortgage  Protection.  Landlord shall not be in
default under this Lease unless Tenant shall have given Landlord  written notice
of the breach and, within thirty (30) days after notice,  Landlord has not cured
the breach or, if the breach is such that it cannot  reasonably  be cured  under
the  circumstances  within  thirty (30) days,  has not  commenced  diligently to
prosecute the cure to completion.  Any money  judgment  obtained by Tenant based
upon Landlord's breach of this Lease shall be satisfied only out of the proceeds
of the sale or  disposition of Landlord's  interest in the Premises  (whether by
Landlord or by execution of judgment) or the rents, issues or profits therefrom.
In the event of any  default on the part of Landlord  under this  Lease,  Tenant
shall give notice by registered or certified  mail to any  beneficiary of a deed
of trust or any mortgagee of a mortgage  affecting the Premises  and/or the real
property  comprising  the Common Area whose address shall have been furnished to
Tenant,  and shall offer such beneficiary or mortgagee a reasonable  opportunity
to cure the  default,  including  time to obtain  possession  of the Premises by
power of sale or judicial foreclosure,  if such should prove necessary to effect
a cure.

         28. Exhibits. All exhibits attached to this Lease shall be deemed to be
incorporated  herein by the individual  reference to each such exhibit,  and all
such exhibits  shall be deemed to be a part of this Lease as though set forth in
full in the body of the Lease.

         29. Surrender of Lease Not Merger.  The voluntary or other surrender of
this Lease by Tenant, or a mutual cancellation thereof,  shall not work a merger
and shall, at the option of Landlord, terminate all or any existing subleases or
subtenants,  or may,  at the option of  Landlord,  operate as an  assignment  to
Landlord of any or all such subleases or subtenants.

         30. Waiver. The waiver by Landlord of any breach of any term,  covenant
or condition  herein contained (or the acceptance by Landlord of any performance
by Tenant  after the time the same shall become due) shall not be deemed to be a
waiver of such term,  covenant or condition or any subsequent  breach thereof or
of any other term,  covenant or condition  herein  contained,  unless  otherwise
expressly  agreed to by Landlord in writing.  The  acceptance by Landlord of any
sum less than that  which is  required  to be paid by Tenant  shall be deemed to
have been  received only on account of the  obligation  for which it is paid (or
for which it is allocated by Landlord,  in Landlord's  absolute  discretion,  if
Tenant does not  designate  the  obligation  as to which the  payment  should be
credited),  and shall not be deemed an accord and  satisfaction  notwithstanding
any  provisions to the contrary  written on any check or contained in

                                      -43-
<PAGE>

any letter of  transmittal.  The acceptance by Landlord of any sum tendered by a
purported  assignee  or  transferee  of Tenant  shall not be deemed a consent by
Landlord to any assignment or transfer of Tenant's interest herein. No custom or
practice which may arise between the parties hereto in the administration of the
terms of this Lease shall be construed as a waiver or  diminution  of Landlord's
right to demand  performance  by Tenant in strict  accordance  with the terms of
this Lease.

         31. General.

                  31.1  Captions  and  Headings.   The  captions  and  paragraph
headings used in this Lease are for  convenience of reference  only.  They shall
not be construed  to limit or extend the meaning of any part of this Lease,  and
shall not be deemed  relevant in  resolving  any question of  interpretation  or
construction of any paragraph of this Lease.

                  31.2 Definitions.

                           (a)  Landlord.  The  term  Landlord  as  used in this
Lease,  so far as the  covenants  or  obligations  on the part of  Landlord  are
concerned,  shall be limited to mean and  include  only the owner at the time in
question of the fee title to the Premises.  In the event of any  transfer(s)  of
such  interest,  the  Landlord  herein  named  (and in  case  of any  subsequent
transfers or  conveyances,  the then  grantor)  shall have no further  liability
under this Lease to Tenant except as to matters of liability  which have accrued
and are unsatisfied as of the date of such transfer,  it being intended that the
covenants and obligations  contained in this Lease on the part of Landlord shall
be binding on Landlord and its successors and assigns only during and in respect
of their respective  periods of ownership of the fee; provided that any funds in
the  possession  of Landlord or the then  grantor and as to which  Tenant has an
interest,  less any deductions  permitted by law or this Lease,  shall be turned
over to the grantee.  The covenants and  obligations  contained in this Lease on
the part of Landlord shall, subject to the provisions of this Paragraph 31.2(a),
be  binding   upon  each   Landlord   and  such   Landlord's   heirs,   personal
representatives,  successors  and assigns only during its  respective  period of
ownership. Except as provided in this Paragraph 31.2(a), this Lease shall not be
affected by any  transfer of  Landlord's  interest in the  Premises,  and Tenant
shall  attorn to any  transferee  of Landlord  provided  that all of  Landlord's
obligations hereunder are assumed in writing by such transferee.

                           (b)  Agents.  For  purposes of this Lease and without
otherwise  affecting  the  definition  of the word  "agent" or the meaning of an
"agency",  the term "agents"  shall be deemed to include the agents,  employees,
officers,    directors,    servants,    invitees,    contractors,    successors,
representatives   subcontractors,   guests,  customers,   suppliers,   partners,
affiliated  companies,  and any other person or entity related in any way to the
respective party, Tenant or Landlord.

                           (c) Interpretation of Terms. The words "Landlord" and
"Tenant" as used herein shall include the plural as well as the singular.  Words
in the  neuter  gender  include  the  masculine  and  feminine  and words in the
masculine or feminine gender include the neuter.

                                      -44-
<PAGE>

                  31.3 Copies.  Any executed  copy of this Lease shall be deemed
an original for all purposes.

                  31.4 Time of  Essence.  Time is of the  essence as to each and
every  provision in this Lease  requiring  performance  within a specified time,
except as to the  conditions  relating  to the  delivery  of  possession  of the
Premises to Tenant.

                  31.5  Severability.  In case any one or more of the provisions
contained  herein  shall  for  any  reason  be held to be  invalid,  illegal  or
unenforceable in any respect,  such invalidity,  illegality or  unenforceability
shall not affect any other  provision  of this  Lease,  but this Lease  shall be
construed as if such invalid,  illegal or  unenforceable  provision had not been
contained  herein.  However,  if  Tenant's  obligation  to pay  the  Rentals  is
determined to be invalid or unenforceable,  this Lease at the option of Landlord
shall terminate.

                  31.6 Governing Law. This Lease shall be construed and enforced
in accordance with the laws of the State of California.

                  31.7 Joint and Several  Liability.  If Tenant is more than one
person or entity,  each such  person or entity  shall be jointly  and  severally
liable for the obligations of Tenant hereunder. If Tenant is a husband and wife,
the obligations  hereunder  shall extend to their sole and separate  property as
well as community property.

                  31.8  Construction  of  Lease  Provisions.   Although  printed
provisions  of this Lease were  prepared  by  Landlord,  this Lease shall not be
construed  either for or against  Tenant or Landlord,  but shall be construed in
accordance  with the general tenor of the language to reach a fair and equitable
result.

                  31.9  Conditions.  All agreements by Tenant  contained in this
Lease,  whether  expressed as covenants or conditions,  shall be construed to be
both  covenants and  conditions,  conferring  upon  Landlord,  in the event of a
breach thereof, the right to terminate this Lease.

                  31.10 Tenant's  Financial  Statements.  Tenant hereby warrants
that all financial statements delivered by Tenant to Landlord are true, correct,
and complete,  and prepared in accordance  with  generally  accepted  accounting
principles.  Tenant  acknowledges  and agrees  that  Landlord is relying on such
financial  statements  in  accepting  this Lease,  and that a breach of Tenant's
warranty as to such financial statements shall constitute a Default by Tenant.

                  31.11 Withholding of Landlord's  Consent.  Notwithstanding any
other  provision  of this Lease,  where Tenant is required to obtain the consent
(whether  written or oral) of  Landlord  to do any act,  or to refrain  from the
performance of any act,  Tenant agrees that if Tenant is in default with respect
to any term, condition, covenant or provision of this Lease, then Landlord shall
be deemed to have acted  reasonably in  withholding  its consent if said consent
is, in fact, withheld.

                                      -45-
<PAGE>

         32.  Signs.  Tenant  shall not place or permit to be placed any sign or
decoration  on the Common Area or the  exterior of the Premises or that would be
visible from the exterior of the Premises,  without the prior written consent of
Landlord,  which consent may be withheld in Landlord's absolute discretion.  The
preceding sentence to the contrary  notwithstanding,  Landlord acknowledges that
it has no  objection  to signage  that is  substantially  similar to the signage
currently  located at 2972 Stender Way,  identifying the Tenant or its business,
provided  such signage is otherwise in  compliance  with all recorded  documents
affecting  the  Property,  including  but  not  limited  to any  Declaration  of
Conditions,  Covenants and Restrictions (as the same may be amended from time to
time),   and  applicable   statutes,   ordinances,   rules  and  regulations  of
governmental  agencies having  jurisdiction  thereof. In no event shall any such
sign  revolve,  rotate,  move or create the illusion of  revolving,  rotating or
moving or be internally  illuminated and there shall be no exterior spotlighting
or other illumination on any such sign. Tenant, upon written notice by Landlord,
shall  immediately  remove any of Tenant's signs or decorations that are visible
from the  exterior of the  Premises or that Tenant has placed or permitted to be
placed on the Common  Area or the  exterior  of the  Premises  without the prior
written  consent  of  Landlord.  If  Tenant  fails  to so  remove  such  sign or
decoration  within five (5) days after Landlord's  written notice,  Landlord may
enter the  Premises  and remove  such sign or  decoration  and Tenant  shall pay
Landlord,  as Additional Rent upon demand,  the cost of such removal.  All signs
placed on the  Premises or Common Area by Tenant  shall comply with all recorded
documents  affecting the Premises,  including but not limited to any Declaration
of Conditions,  Covenants and Restrictions (as the same may be amended from time
to  time);  and  applicable  statutes,  ordinances,  rules  and  regulations  of
governmental  agencies having jurisdiction thereof. At Landlord's option, Tenant
shall at Lease  Termination  remove any sign which it has placed on the Premises
or the Common Area, and shall, at its sole cost, repair any damage caused by the
installation or removal of such sign.

         33. Intentionally Omitted.

         34.  Landlord  Not a  Trustee.  Landlord  shall  not be  deemed to be a
trustee of any funds paid to Landlord by Tenant (or held by Landlord for Tenant)
pursuant to this Lease,  including  without  limitation  the  Security  Deposit.
Landlord shall not be required to keep any such funds  separate from  Landlord's
general funds. Any funds held by Landlord  pursuant to this Lease shall not bear
interest.

         35. Interest. Any payment due from Tenant to Landlord,  except for Rent
received by Landlord  within thirty (30) days after the same is due,  shall bear
interest from the date of written notice from Landlord that such payment is past
due,  at an annual rate equal to the  greater  of: ten  percent  (10%);  or five
percent  (5%)  plus the rate  established  by the  Federal  Reserve  Bank of San
Francisco,  as of the twenty-fifth (25th) day of the month immediately preceding
the due date,  on  advances to member  banks under  Sections 13 and 13(a) of the
Federal Reserve Act, as now in effect or hereafter from time to time amended. In
addition, Tenant shall pay all costs and attorneys' fees incurred by Landlord in
the collection of such amounts.

         36.  Surrender of  Premises.  On the last day of the Lease Term or upon
the  sooner  termination  of  this  Lease,   Tenant  shall,  to  the  reasonable
satisfaction  of Landlord,  surrender the

                                      -46-
<PAGE>

Premises  (excluding the HVAC units or system servicing the Building which shall
be governed by the next  sentence) to Landlord in the same condition as received
(reasonable  wear and tear  excepted),  but  subject to Tenant's  obligation  to
remove  certain  Alterations  as provided in Paragraph  13.2 above and surrender
such other  Alterations  with the  Premises as provided in the last  sentence of
Paragraph 13.2. On the last day of the Lease Term or upon the sooner termination
of  this  Lease,  Tenant  shall,  to the  reasonable  satisfaction  of  Landlord
surrender the air conditioning, ventilating and heating equipment (excluding the
Older HVAC Units and any HVAC units that are not used by Tenant during the Lease
Term) inspected, serviced and repaired by a reputable and licensed service firm.
Tenant shall remove all of Tenant's  personal  property and trade  fixtures from
the  Premises,  and all  property  not so removed  shall be deemed  abandoned by
Tenant. Furthermore,  Tenant shall immediately repair all damage to the Premises
and Common  Area  caused by any such  removal.  Landlord  agrees to give  Tenant
written  notice if Tenant left any personal  property in the Premises  following
the expiration or earlier termination of the Lease Term. If the Premises are not
so surrendered at Lease Termination in the condition  required by this Paragraph
36, Tenant shall indemnify,  defend and hold Landlord  harmless from and against
any loss, damage,  expense, claim or liability resulting from delay by Tenant in
so surrendering the Premises including,  without limitation,  any claims made by
any succeeding  tenant or losses to Landlord due to lost  opportunities to lease
to succeeding tenants.

         37. No  Partnership  or Joint  Venture.  Nothing in this Lease shall be
construed as creating a partnership or joint venture between  Landlord,  Tenant,
or any  other  party,  or cause  Landlord  to be  responsible  for the  debts or
obligations of Tenant or any other party.

         38. Entire Agreement.  Any agreements,  warranties,  or representations
not expressly  contained  herein shall in no way bind either Landlord or Tenant,
and Landlord and Tenant  expressly waive all claims for damages by reason of any
statement, representation, warranty, promise or agreement, if any, not contained
in  this  Lease.  This  Lease  supersedes  and  cancels  any  and  all  previous
negotiations,  arrangements,  brochures, agreements and understandings,  whether
written or oral,  between Landlord and its agents and Tenant and its agents with
respect to the Premises,  Common Area or this Lease.  This Lease constitutes the
entire agreement  between the parties hereto and no addition to, or modification
of, any term or provision of this Lease shall be effective  until and unless set
forth in a written instrument signed by both Landlord and Tenant.

         39.  Submission of Lease.  Submission of this  instrument  for Tenant's
examination  or  execution  does not  constitute a  reservation  of space nor an
option to lease.  This instrument  shall not be effective until executed by both
Landlord and Tenant. Execution of this Lease by Tenant shall constitute an offer
by  Tenant to lease the  Premises,  which  offer  shall be  deemed  accepted  by
Landlord when this Lease is executed by Landlord and delivered to Tenant.

         40. Quiet  Enjoyment.  Landlord  covenants  and agrees with Tenant that
upon Tenant paying Rentals and performing its covenants and conditions under the
Lease,  Tenant  shall and may  peaceably  and quietly  have,  hold and enjoy the
Premises for the Lease Term, subject, however, to the terms of this Lease and of
any mortgages or deeds of trust  affecting the Premises and/or the real property
comprising the Common Area, and the rights reserved by

                                      -47-
<PAGE>

Landlord hereunder.  Any purchaser upon any foreclosure or exercise of the power
of sale under any  mortgage or deed of trust made by Landlord  and  covering the
Premises to whom Tenant attorns  pursuant to Paragraph 20.4 above shall be bound
by the terms of this Paragraph 40.

         41.  Authority.  The undersigned  parties hereby warrant that they have
proper  authority  and are  empowered  to  execute  this  Lease on behalf of the
Landlord and Tenant, respectively.  If Tenant is a corporation (or partnership),
each  individual  executing  this  Lease  on  behalf  of  said  corporation  (or
partnership)  represents and warrants that he is duly  authorized to execute and
deliver  this  Lease on behalf of said  corporation  in  accordance  with a duly
adopted  resolution  of  the  Board  of  Directors  of  said  corporation  or in
accordance  with  the  by-laws  of  said  corporation  (or  on  behalf  of  said
partnership in accordance with the partnership  agreement of such  partnership),
and that  this  Lease is  binding  upon said  corporation  (or  partnership)  in
accordance  with its  terms.  If  Tenant is a  corporation,  Tenant  shall  upon
execution of this Lease,  deliver to Landlord a certified copy of the resolution
of the Board of  Directors of said  corporation  authorizing  or  ratifying  the
execution  of  this  Lease  or a  certificate  of  the  Secretary  of  the  said
corporation  confirming the power and authority of the signatories of this Lease
(on behalf of Tenant) to execute and deliver  this Lease on behalf of Tenant and
to bind Tenant to its terms.  In the event  Tenant  should fail to deliver  such
resolution or  certificate  to Landlord upon  execution of this Lease,  Landlord
shall  not be deemed  to have  waived  its  right to  require  delivery  of such
resolution  or  certificate,  and at any time during the Lease Term Landlord may
request  Tenant to  deliver  the same,  and  Tenant  agrees it shall  thereafter
promptly  deliver such  resolution or  certificate  to Landlord.  If Tenant is a
corporation, Tenant warrants that:

                  (a) Tenant is a valid and existing corporation;

                  (b) Tenant is qualified to do business in California;

                  (c) All fees and all franchise and corporate taxes are paid to
date, and will be paid when due;

                  (d) All required forms and reports will be filed when due; and

                  (e) The  signers  of this  Lease are  properly  authorized  to
execute this Lease.

         42. Building Plans.  Tenant  acknowledges that any plan of the Premises
and Common Area which may have been  displayed  or  furnished to Tenant or which
may be a part of Exhibit "A" is  tentative;  Landlord may change the exterior of
the Premises and the shape,  size,  location,  number,  and extent of the Common
Area  improvements  shown on any such plan and eliminate or add any improvements
to the Common Area in Landlord's sole discretion;  provided,  however,  that the
Premises  shall  be  substantially  as  shown  on such  plan,  Tenant's  use and
enjoyment of the Premises shall not be unreasonably interfered with and any such
change to the Common Area shall not unreasonably interfere with Tenant's parking
rights under this Lease or access to the Premises.

                                      -48-
<PAGE>

         IN WITNESS  WHEREOF,  the parties have executed this Lease effective as
of the date set forth below.

LANDLORD:                                   TENANT:

SI HAHN LLC,                                INTEGRATED DEVICE TECHNOLOGY
A California limited liability company      INTERNATIONAL, INC.,
                                            a California corporation

By:  ________________________________       By:_______________________________
     Sang Hahn
Title:  Manager                             Title:____________________________

                                            By:_______________________________
DATE:________________________________
                                            Title:____________________________

                                            DATE______________________________

                                      -49-
<PAGE>

                                    EXHIBITS
                                    --------

A.  Site Plan                       Paragraph 1.4  (Premises shown cross-hatched
                                    and Common Area illustrated on such Site
                                    Plan)

B.  Legal Description               Paragraph 2.1

C.  List of Permitted
    Hazardous Materials             Paragraph 25

D.  List of Environmental
    Reports                         Paragraph 25.6

E.  Form of Subordination,
    Nondisturbance and
    Attornment Agreement            Paragraph 20.2

F.  Form of Estoppel Certificate    Paragraph 20.5

G.  HVAC Plan or List               Paragraph 2.2 (Showing location or
                                    identification of Older HVAC Units)

                                      -50-
<PAGE>

                                    EXHIBIT C

                      LIST OF PERMITTED HAZARDOUS MATERIALS

                                [to be attached]

                                      -1-
<PAGE>

                                    EXHIBIT D

                          LIST OF ENVIRONMENTAL REPORTS

                                [to be attached]

                                      -1-
<PAGE>

                                    EXHIBIT G

                   SITE HVAC PLAN OR LIST SHOWING LOCATION OR

                       IDENTIFICATION OF OLDER HVAC UNITS

                                [to be attached]

                                       -1-

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