Document:

<PAGE>

                                                               EXHIBIT 10.20

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                         SHARED SERVICES HEALTHCARE INC.

                           PRIMARY CHOICE/EQUAL VOICE

June 5, 2000

Mr. Kevin Pishkar
National Director, Outreach Business Development
Specialty Laboratories
2211 Michigan Avenue
Santa Monica, CA 90404-3900

Dear Kevin:

This letter will serve as confirmation of your company's contract award #200-17
for reference laboratory testing services. All terms and conditions will comply
with the original proposal that your company submitted to SSH, Inc. The
effective date of the contract will be July 1, 2000 to June 30, 2003.

Each quarter you will receive a sales report form from our accounting department
for your company to utilize when reporting sales to SSH, Inc. These reports are
due forty-five days after the close of each quarter, along with a check
representing the [***]* administrative fee due on this contract. Our quarters
are as follows: January to March, April to June, July to September and October
to December. If your contract begins in the middle of a quarter, a report must
be submitted for the portion of that quarter in which the contract was
effective.

Please sign below indicating your acceptance of this contract, retain a copy for
your files and return the original to SSH, Inc. Please notify authorized
distributors, any branch offices and sales representatives that may be involved
with this contract.

Within the next 90 days please call me at (800) 827-0340 to schedule a meeting
to discuss strategies and implementation of this contract. I look forward to
working with you and your company on this contract.

Sincerely,
/s/ JOE COLONNA
--------------------------------
Joe Colonna
Corporate VP, Purchasing Program

                                 SPECIAL LABORATORIES
                                 NAME:     /s/ KEVIN PISHKAR
                                           ------------------------------------
                                 TITLE:    Nat. Director of Business Development
                                           ------------------------------------
                                 DATE:     6/9/00
                                           ------------------------------------
                                 SIGNATURE:         /s/ KEVIN PISHKAR
                                                    ---------------------------

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         * PORTIONS OF THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
              1810 Water Place-Suite 220-Atlanta, Georgia 30339
                     1.800.827.0340 - www.sharedservices.org

<PAGE>

                         SHARED SERVICES HEALTHCARE INC.

                           PRIMARY CHOICE/EQUAL VOICE

June 2, 2000

<TABLE>
<CAPTION>

NEW AWARD                                                                                                  #200-17

                                          CONTRACT
<S>                                       <C>

COMPANY:                                  SPECIALTY LABORATORIES

PRODUCT:                                  Reference Laboratory Testing Services

CONTRACT DURATION:                        July 1, 2000 to June 30, 2003

PRICE PROTECTION:                         June 30, 2003

MINIMUM:                                  None

TERMS:                                    Net 30 days

PRICING:                                  Net Fee Schedule in Contract - Available to all SSH member facilities

                                          If an SSH member facility utilizes
                                          Specialty Labs for more than [***]* of
                                          their reference lab volume, Specialty
                                          Labs will additionally discount up to
                                          [***]* high volume tests, and discount
                                          will range from an additional [***]*
                                          to [***]* from the fee schedule.

DELIVERY:                                 Shipped same day or overnight

SHIPPING:                                 F.O.B. Destination

CONTRACT PRICING:                         SPECIALTY LABORATORIES HAS EXTENDED PRICING TO ALL FACILITIES

ORDERING:                                 Specialty Laboratories
                                          2211 Michigan Avenue
                                          Santa Monica, CA 90404-3900

                                          (800) 421-7110
                                          (310) 828-6634
</TABLE>

GROUP DESIGNATION FORM MUST BE COMPLETED TO INSURE SALES CREDIT & CONTRACT
PRICING

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         * PORTIONS OF THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
              1810 Water Place-Suite 220-Atlanta, Georgia 30339
                     1.800.827.0340 - www.sharedservices.org<PAGE>

                                                                   EXHIBIT 10.21

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                  STANDARD FORM
                                    SUBLEASE

     This sublease ("Sublease") is made as of the 9th day of July, 1996, by and
between THE RAND CORPORATION, a California non-profit public benefit corporation
(hereinafter referred to as "Sublandlord") and Specialty Laboratories, Inc., a
California corporation (hereinafter referred to as "Subtenant") with regard to
the following facts:

                                    RECITALS

                   A. Sublandlord is the tenant ("Tenant") under that certain
Office Lease (the "Master Lease"), dated as of January 20, 1993, as amended by
that certain First Amendment to Office Lease dated as of February 8, 1993
(collectively, the "Master Lease"), with WATER GARDEN ASSOCIATES, a Delaware
limited partnership, as predecessor-in-interest to WATER GARDEN COMPANY L.L.C.,
a Delaware limited liability company (the "Landlord") (a copy of which Master
Lease is attached hereto as EXHIBIT A and by this reference made a part hereof)
concerning approximately [***]* rentable square feet of office space (the
"Premises") located on the 5th and 6th floors of the South tower of the building
(the "Building") located at 1620 26th Street, Santa Monica, California, together
with certain other Print Facility Space.

                   B. Subtenant desires to sublease from Sublandlord a portion
of the Premises consisting of approximately [***]* rentable square feet of space
consisting of the entire 5th floor (Suite 500S) (which portion shall be
hereafter referred to as the "Subleased Premises") more particularly set forth
on EXHIBIT B attached hereto, including, subject to the provisions of Paragraphs
18.6 and 18.9, the special equipment room shown as attached on EXHIBIT B (the
"Equipment Room"), and Sublandlord has agreed to sublease the Subleased Premises
to Subtenant upon the terms, covenants and conditions herein set forth. See
Paragraph 18.9 for additional provisions concerning the Subleased Premises.

                                    AGREEMENT

     In consideration of the mutual covenants contained herein, the sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

                   1. SUBLEASE. Sublandlord hereby subleases and demises to
Subtenant and Subtenant hereby hires and takes from Sublandlord the Subleased
Premises.

                   2. TERM. The term of this Sublease shall commence on the last
to occur of (i) Sublandlord's receipt of Landlord's approval of this Sublease,
(ii) Sublandlord's delivery of the Subleased Premises to Subtenant in accordance
with Paragraph 7.7, or (iii) August 1, 1996; or earlier upon mutual written
agreement of the parties, and shall end, unless sooner terminated

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<PAGE>

as provided in the Master Lease, on January 31, 1999. In no event shall the
expiration date of this Sublease occur later than the Lease Expiration Date.

                   3. RENT. Subtenant shall pay rent during the term of this
Sublease, on a full service gross basis, in the amount of [***]* for the
Subleased Premises per month, payable monthly in advance on the first day of
each month. Furthermore, in the event that the term of this Sublease shall begin
or end on a date which is not the first day of a month, rent shall be prorated
as of such date. Concurrent with Subtenant's execution of this Sublease and
Sublandlord's receipt of Landlord's approval of this Sublease, Subtenant shall
deliver to Sublandlord the first month's rent in the amount of [***]* plus the
amount of [***]* as a Security Deposit to be held by Sublandlord pursuant to the
terms of Paragraph 18.3 hereof. See Paragraph 18.10 for additional provisions
concerning the rent and security deposit.

                   4. USE. Subtenant covenants and agrees to use the Subleased
Premises in accordance with the provisions of the Master Lease and for no other
purpose and except as provided herein otherwise in accordance with the terms and
conditions of the Master Lease and this Sublease.

                   5. MASTER LEASE. As applied to this Sublease, the words
"Landlord" and "Tenant" as used in the Master Lease shall be deemed to refer to
Sublandlord and Subtenant hereunder, respectively. Subtenant and this Sublease
shall be subject in all respects to the terms of, and the rights of the Landlord
under, the Master Lease. Except as otherwise expressly provided in Section 7
hereof, the covenants, agreements, terms, provisions and conditions of the
Master Lease insofar as they relate to the Subleased Premises and insofar as
they are not inconsistent with the terms of this Sublease are made a part of and
incorporated into this Sublease as if recited herein in full, and the rights and
obligations of the Landlord and the Tenant under the Master Lease shall be
deemed the rights and obligations of Sublandlord and Subtenant respectively
hereunder and shall be binding upon and inure to the benefit of Sublandlord and
Subtenant respectively. As between the parties hereto only, in the event of a
conflict between the terms of the Master Lease and the terms of this Sublease,
the terms of this Sublease shall control.

                   6. LANDLORD'S PERFORMANCE UNDER MASTER LEASE.

                   6.1 Subtenant recognizes that Sublandlord is not in a
position to render any of the services or to perform any of the obligations
required of Sublandlord by the terms of this Sublease. Therefore,
notwithstanding anything to the contrary contained in this Sublease, Subtenant
agrees that performance by Sublandlord of its obligations hereunder are
conditional upon due performance by the Landlord of its corresponding
obligations under the Master Lease and Sublandlord shall not be liable to
Subtenant for any default of the Landlord under the Master Lease. Subtenant
shall not have any claim against Sublandlord by reason of the Landlord's failure
or refusal to comply with any of the provisions of the Master Lease unless such
failure or refusal is a result of Sublandlord's act or failure to act. This
Sublease shall remain in full force and effect notwithstanding the Landlord's
failure or refusal to comply with any such provisions of the Master Lease and
Subtenant shall pay the rent and all other charges provided for herein

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<PAGE>

without any abatement, deduction or setoff whatsoever except as provided in the
Master Lease. Subtenant covenants and warrants that it fully understands and
agrees to be subject to and bound by all of the covenants, agreements, terms,
provisions and conditions of the Master Lease, except as modified herein.
Furthermore, Subtenant and Sublandlord further covenant not to take any action
or do or perform any act or fail to perform any act which would result in the
failure or breach of any of the covenants, agreements, terms, provisions or
conditions of the Master Lease on the part of the Tenant thereunder.

                   6.2 Whenever the consent of Landlord shall be required by, or
Landlord shall fail to perform its obligations under, the Master Lease,
Sublandlord agrees to use its best efforts to obtain, at Subtenant's sole cost
and expense, such consent and/or performance on behalf of Subtenant as Subtenant
may reasonably direct Sublandlord.

                   6.3 Sublandlord represents and warrants to Subtenant that the
Master Lease is in full force and effect, all obligations of both Landlord and
Sublandlord thereunder have been satisfied and Sublandlord has neither given nor
received a notice of default pursuant to the Master Lease.

                   6.4 Sublandlord covenants as follows: (i) not to voluntarily
terminate the Master Lease, (ii) not to modify the Master Lease so as to
adversely affect Subtenant's rights hereunder without first obtaining
Subtenant's prior written consent, and (iii) to take all actions reasonably
necessary to preserve the Master Lease.

                   7.  VARIATIONS FROM MASTER LEASE. The following covenants,
agreements, terms, provisions and conditions of the Master Lease are hereby
modified or not incorporated herein:

                   7.1 Notwithstanding anything to the contrary set forth in
Sections 5 and 6 and 8 of the Summary to the Master Lease or in Articles 2 and 3
of the Master Lease, the term of this Sublease and the rent payable under thus
Sublease and the amount of the Security Deposit required of Subtenant shall be
as set forth in Sections 2 and 3 above. Article 4 of the Master Lease has been
deleted pursuant to Paragraph 7.6 below as the parties have agreed that
Subtenant shall not be responsible for the payment of Additional Rent as
provided in the Master Lease.

                   7.2 The parties hereto represent and warrant to each other
that, except as specified in Paragraph 18.5 hereof, neither party dealt with any
broker or finder in connection with the consummation of this Sublease and each
party agrees to indemnify, hold and save the other party harmless from and
against any and all claims for brokerage commissions or finder's fees arising
out of either of their acts in connection with this Sublease. The provisions of
this Section 7.2 shall survive the expiration or earlier termination of this
Sublease.

                   7.3 Notwithstanding anything contained in the Master Lease to
the contrary, as between Sublandlord and Subtenant only, all insurance proceeds
or condemnation awards received by Sublandlord under the Master Lease shall be
deemed to be the property of Sublandlord.

                   7.4 Any notice which may or shall be given by either party
hereunder shall be either delivered personally or sent by certified mail, return
receipt requested, addressed to the

<PAGE>

party for whom it is intended at the Subleased Premises (if to the Subtenant),
or at the Premises (if to the Sublandlord), or to such other address as may have
been designated in a notice given in accordance with the provisions of this
Section 7.4.

                  7.5  All amounts payable hereunder by Subtenant shall be
payable directly to Sublandlord.

                  7.6  The provisions of Sections 5, 6, 7, 8, 9, and 10 of the
Summary to the Master Lease, Master Lease Sections 1.4 and related subsections,
2.2 and related subsections, Article 3, Article 4, Article 18, Article 21,
Section 23.4, Article 28, Section 29.29.2 and Section 29.3 and Exhibits A and E
attached to the Master Lease and Paragraphs 4, 6, 7, 11, 13 and 14 of the First
Amendment to Office Lease shall not apply to this Sublease.

                  7.7 Sublandlord shall deliver the Subleased Premises to
Subtenant in their current "as is" condition. The foregoing notwithstanding,
Sublandlord shall be responsible to have the Subleased Premises professionally
cleaned and ready for occupancy prior to August 1, 1995 including patching and
painting of drywall. Further, all building systems (light, electrical, air
conditioning and heat) shall be in good working order.

                  7.8 Subtenant shall not be required to remove any currently
existing improvements located in the Subleased Premises upon the expiration of
the term hereof.

                  8.  INDEMNITY. Subtenant hereby agrees to protect, defend,
indemnify and hold Sublandlord harmless from and against any and all
liabilities, claims, expenses, losses and damages, including, without
limitation, reasonable attorneys' fees and disbursements, which may at any time
be asserted against Sublandlord by (a) the Landlord for failure of Subtenant to
perform any of the covenants, agreements, terms, provisions or conditions
contained in the Master Lease which by reason of the provisions of this Sublease
Subtenant is obligated to perform, or (b) any person by reason of Subtenant's
use and/or occupancy of the Subleased Premises. The provisions of this Section 8
shall survive the expiration or earlier termination of the Master Lease and/or
this Sublease, except to the extent any of the foregoing is caused by the
negligence of Sublandlord. See Paragraph 18.11 for additional indemnity
provisions.

                  9.  CANCELLATION OF MASTER LEASE. In the event of the
cancellation or termination of the Master Lease for any reason whatsoever or of
the involuntary surrender of the Master Lease by operation of law prior to the
expiration date of this Sublease, Subtenant agrees to make full and complete
attornment to the Landlord under the Master Lease for the balance of the term of
this Sublease and upon the then executory terms hereof at the option of the
Landlord at any time during Subtenant's occupancy of the Subleased Premises,
which attornment shall be evidenced by an agreement in form and substance
reasonably satisfactory to the Landlord. Subtenant agrees to execute and deliver
such an agreement at any time within ten (10) business days after request of the
Landlord, and Subtenant waives the provisions of any law now or hereafter in
effect which may give Subtenant any right of election to terminate this Sublease
or to surrender possession of the Subleased Premises in the event any proceeding
is brought by the Landlord under the Master Lease to terminate the Master Lease.

<PAGE>

                  10. CERTIFICATES. Each party hereto shall at any time and from
time to time as requested by the other party upon not less than ten (10) days
prior written notice, execute, acknowledge and deliver to the other party, a
statement in writing certifying that this Sublease is unmodified and in full
force and effect (or if there have been modifications that the same is in full
force and effect as modified and stating the modifications, if any), certifying
the dates to which rent and arty other charges have been paid and stating
whether or not, to the knowledge of the person signing the certificate, the
other party is in default beyond any applicable grace period provided herein in
performance of any of its obligations under this Sublease, and if so, specifying
each such default of which the signer may have knowledge, it being intended that
any such statement delivered pursuant hereto may be relied upon by others with
whom the party requesting such certificate may be dealing.

                  11. ASSIGNMENT OR SUBLETTING. Subject further to all of the
rights of the Landlord under the Master Lease and the restrictions contained in
the Master Lease, Subtenant shall not be entitled to assign this Sublease or to
sublet all or any portion of the Subleased Premises without the prior written
consent of Sublandlord, which consent may be withheld by Sublandlord in its sole
discretion.

                  12. SEVERABILITY. If any term or provision of this Sublease or
the application thereof to any person or circumstances shall, to any extent, be
invalid and unenforceable, the remainder of this Sublease or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
or provision of this Sublease shall be valid and be enforced to the fullest
extent permitted by law.

                  13. ENTIRE AGREEMENT; WAIVER. This Sublease contains the
entire agreement between the parties hereto and shall be binding upon and inure
to the benefit of their respective heirs, representatives, successors and
permitted assigns. Any agreement hereinafter made shall be ineffective to
change, modify, waive, release, discharge, terminate or effect an abandonment
hereof, in whole or in part, unless such agreement is in writing and signed by
the parties hereto.

                  14. CAPTIONS AND DEFINITIONS. Captions to the Sections in
this Sublease are included for convenience only and are not intended and
shall not be deemed to modify or explain any of the terms of this Sublease.
All undefined terms when used herein shall have the same respective meanings
as are given such terms in the Master Lease unless expressly provided
otherwise in this Sublease.

                  15. FURTHER ASSURANCES. The parties hereto agree that each of
them, upon the request of the other party, shall execute and deliver, in
recordable form if necessary, such further documents, instruments or agreements
and shall take such further action that may be necessary or appropriate to
effectuate the purposes of this Sublease.

                  16. GOVERNING LAW. This Sublease shall be governed by and in
all respects construed in accordance with the laws of the State of California.

                  17. CONSENT OF LANDLORD. The validity of this Sublease shall
be subject to the Landlord's prior written consent hereto pursuant to the terms
of the Master Lease, and if

<PAGE>

Landlord's consent shall not be obtained and a copy thereof delivered to
Subtenant by July 26, 1996, each party shall have the option to cancel this
Sublease by written notice to the other.

                  18.  ADDENDA. The provisions of this Paragraph 18 shall
supplement the foregoing provisions of the Sublease.

                  18.1 EARLY OCCUPANCY. Notwithstanding the provisions of
Paragraph 2 above, after receipt of Landlord's consent to this Sublease,
Sublandlord shall allow Subtenant access to the Subleased Premises prior to the
commencement date for the purpose of Subtenant installing its telephones,
computers, furniture and other fixtures in the Subleased Premises subject to
Sublandlord's reasonable approval. Sublandlord shall deliver the vacant portions
of the Subleased Premises to Subtenant upon mutual execution and delivery of
this Sublease. As soon as reasonably possible thereafter, but in no event later
than July 29, 1996, Sublandlord shall deliver the balance of the Subleased
Premises to Subtenant. The commencement date may be accelerated upon mutual
agreement of the parties. Subtenant shall hold Sublandlord harmless from and
indemnify, protect and defend Sublandlord against any loss or damage to the
Building or the Subleased Premises and against injury to any persons occasioned
during such period of early occupancy and resulting from any actions or failures
to act by Subtenant or any of Subtenant's contractors, employees, agents, or
invitees.

                  18.2 ABATEMENT OF RENT. Notwithstanding the provisions of
Paragraph 3 above, no rent shall be due or payable by Subtenant to Sublandlord
during the first two (2) months of the term and for the third (3rd) and fourth
(4th) months of the term rent shall be based upon [***]* rentable square feet of
space or [***]* per month. Beginning in the fifth (5th) month of the term and
for each month thereafter, the rent shall be as stated in Paragraph 3 above.

                  18.3 SECURITY DEPOSIT. Concurrently with Subtenant's execution
of this Sublease and receipt of Landlord's approval of this Sublease, Subtenant
shall deposit with Sublandlord a security deposit (the "Security Deposit") in
the amount set forth in Paragraph 3 above. The Security Deposit shall be held by
Sublandlord as security for the faithful performance by Subtenant of all the
terms, covenants and conditions of this Sublease to be kept and performed by
Subtenant during the term. If Subtenant defaults with respect to any provision
of this Sublease, including, but not limited to, the provisions relating to the
payment of rent, Sublandlord may, but shall not be required to, use, apply or
retain all or any part of the Security Deposit for the payment of any rent or
any other sum in default, or for the payment of any amount that Sublandlord may
spend or become obligated to spend by reason of Subtenant's default, or to
compensate Sublandlord for any other loss or damage that Sublandlord may suffer
by reason of Subtenant's default. If any portion of the Security Deposit is so
used or applied, Subtenant shall, within five (5) days after written demand
therefor, deposit cash with Sublandlord in an amount sufficient to restore the
Security Deposit to its original amount, and Subtenant's failure to do so shall
be a default under this Sublease. If Subtenant shall fully and faithfully
perform every provision of this Sublease to be performed by it, the Security
Deposit, or any balance thereof, shall be returned to Subtenant within thirty
(30) days following the

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expiration of the term. Subtenant shall not be entitled to any interest on the
Security Deposit and Sublandlord may commingle the Security Deposit with its
general funds.

                  18.4 PARKING. Sublandlord shall make available to Subtenant,
on thirty (30) days advanced notice, a minimum of [***]* parking passes for
single and/or tandem unreserved parking spaces, at Sublandlord's option, for
each [***]* rentable square feet in the Subleased Premises at the prevailing
rates charged by Landlord from time to time. Tenant shall be obligated, each
month, to purchase not less than [***]* such parking passes per [***]* rentable
square feet in the Subleased Premises at the prevailing rates charged by
Landlord from time to time. Therefore, Sublandlord shall make at least [***]*
parking passes available to Subtenant and Subtenant shall, each month, purchase
a minimum of [***]* parking passes. The foregoing notwithstanding, so long as
Landlord continues to charge Sublandlord for only [***]* parking passes then
Subtenant shall be required to pay for only its minimum requirement of [***]*
parking passes even if Subtenant uses more than [***]* parking passes. However,
once Landlord begins charging Sublandlord for parking passes in excess of
[***]*, then Subtenant shall pay Sublandlord for each parking pass actually used
by Subtenant subject to the minimum number of parking passes specified above.
Parking passes requested by Subtenant in excess of [***]* per [***]* rentable
square feet in the Subleased Premises shall be made available to Subtenant upon
request of Subtenant only to the extent they are available to Sublandlord at
Landlord's regular prevailing rates.

                  18.5 BROKERS. Each party warrants to the other that it has had
no dealings with any real estate broker or agent in connection with the
negotiation of this Sublease except Cushman Realty Corporation and Julien J.
Studley, Inc. and that it knows of no other real estate broker or agent who is
or might be entitled to a commission in connection with this Sublease.
Sublandlord covenants and agrees to pay all real estate commissions due in
connection with this Sublease to such named brokers, but only at such times and
in such amounts as are agreed in writing between Sublandlord and such brokers.
Each party agrees to pay and hold the other harmless from and defend the other
against any cost, expense or liability for any compensation claimed by any other
broker, finder or agent employed or claiming to have been employed by the
indemnifying party in connection with this Sublease or with the negotiation of
this Sublease. Sublandlord and Subtenant acknowledge that payment shall not be a
condition precedent to recovery upon the foregoing indemnification provision.

                  18.6 EQUIPMENT ROOM USE AND ACCESS. Subject to the limitations
contained in Paragraph 18.9 below, the Equipment Room designated as hatched on
EXHIBIT B shall be a part of the Subleased Premises. However, Subtenant shall
permit Sublandlord to use a portion of the Equipment Room as hatched on EXHIBIT
D for its communication and computer needs and shall further permit Sublandlord
immediate access to the Equipment Room, 24 hours per day, every day of the year
provided such access does not unreasonably interfere with Subtenant's quiet
enjoyment of the Subleased Premises.

                   18.7 FURNITURE. Sublandlord shall provide, for Sublandlord's
use during the term, the existing work stations and furniture which are listed
on the inventory attached hereto as

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EXHIBIT C, without additional cost to Subtenant. At the end of the term, all of
such existing work stations and furniture shall be returned to Sublandlord in
the same condition as delivered to Subtenant subject only to reasonable wear and
tear.

                  18.8 HOLDOVER. With respect to Article 16 of the Master Lease,
it is understood and agreed that Subtenant's liability to Sublandlord for
holding over after the term has expired shall include all of Sublandlord's
liability to Landlord for the entire Premises as well as Subtenant's liability
for the Subleased Premises.

                  18.9 SUBLEASED PREMISES. Subject to Sublandlord's rights
concerning use of and access to the Equipment Room, the initial Subleased
Premises consists of the entirety of the fifth (5th) floor. Subtenant may use
the Equipment Room except the area reserved to Landlord (which is depicted on
EXHIBIT D), for purposes of installing and maintaining its communications
equipment. In no event shall any installations or activities by Subtenant
interfere with Sublandlord's installations and equipment. In connection
therewith, prior to making any installations in or to or modifications of the
Equipment Room, including without limitation, equipment placements and/or
installations, wiring modifications, or air conditioning supplementation,
Subtenant shall submit to Sublandlord for Sublandlord's review and approval,
detailed and fully engineered plans showing the proposed placement, installation
and/or modifications. Sublandlord may reasonably approve or disapprove such
proposal by written notice to Subtenant within ten (10) days of Sublandlord's
receipt of same which notice shall detail any reasons for disapproval. No
placements, installations or modifications shall be undertaken without prior
receipt of Sublandlord's approval. There shall under no circumstances be any
interruption of Sublandlord's operations in the Equipment Room. Upon thirty (30)
days advanced notice from Sublandlord to Subtenant, Sublandlord may discontinue
its use of the Equipment Room and thereafter the portion of the Equipment Room
reserved for Sublandlord as depicted on EXHIBIT D, shall revert to Subtenant for
its use.

                  18.10 RENT AND SECURITY DEPOSIT. The parties acknowledge that
the rent and security deposit are based upon the Subleased Premises consisting
of [***]* rentable square feet less the Sublandlord's portion of the Equipment
Room which is agreed by the parties to be 155 rentable square feet. If
Sublandlord's portion of the Equipment Room is surrendered by Sublandlord as
provided in Paragraph 18.9 above, the monthly rent and the security deposit
shall each be increased on the basis of [***]* per rentable square foot of the
Sublandlord's portion of the Equipment Room or, in each case, [***]*.

                  18.11 SUBLANDLORD'S INDEMNITY. Sublandlord hereby agrees to
protect, defend, indemnify and hold Subtenant harmless from and against any and
all liabilities, claims, expenses, losses and damages, including, without
limitation, reasonable attorneys' fees and disbursements, which may at any time
be asserted against Subtenant by (a) the Landlord for failure of Sublandlord to
perform any of the covenants, agreements, terms, provisions or conditions
contained in the Master Lease which by reason of the provisions of this Sublease
Sublandlord is obligated to perform, or (b) any person by reason of
Sublandlord's use and/or occupancy of the Premises excluding the Subleased
Premises. The provisions of this Paragraph 18.11 shall

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<PAGE>

survive the expiration or earlier termination of the Master Lease and/or this
Sublease, except to the extent any of the foregoing is caused by the negligence
of Subtenant.

                  18.12 NOTICES OF DEFAULT. In the event that Sublandlord
receives from Landlord or gives to Landlord a notice of default under the Master
Lease, Sublandlord shall, within five (5) business days, provide Subtenant with
a copy of same.

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Sublease to be executed as of the day and year first above written.

                          "Sublandlord":

                          THE RAND CORPORATION, a California non-profit
                          public benefit corporation

                           By:          /s/
                                        ----------------------------------------
                                Its:    Vice President, Chief Financial Officer
                                        ----------------------------------------
                           By:
                                        ----------------------------------------
                                Its:
                                        ----------------------------------------

                          "Subtenant":

                          SPECIALTY LABORATORIES, INC., a California
                          corporation

                           By:          /s/
                                        ----------------------------------------
                                Its:    Chairman 7/18/96
                                        ----------------------------------------
                           By:
                                        ----------------------------------------
                                Its:
                                        ----------------------------------------

Landlord hereby approves of the terms of
this Sublease and consents thereto.

By:
          ------------------------------------
Its:
          ------------------------------------
Date:                                , 1996
          -----------------------------------

<PAGE>

                                    EXHIBIT A

                                THE MASTER LEASE

                                 (See Attached)

<PAGE>

                           FIRST AMENDMENT TO SUBLEASE
                             AND CONSENT OF LANDLORD

                  This FIRST AMENDMENT to SUBLEASE (the "Amendment") is made and
entered into this 9th day of March, 1998 by and between THE RAND CORPORATION, a
California non-profit corporation ("Sublandlord"), and SPECIALTY LABORATORIES,
INC., a California corporation ("Subtenant"), with respect to the following:

                                    RECITALS

                  A. Sublandlord, as tenant, and Water Garden Associates, a
Delaware limited partnership, as landlord, have entered into a certain Office
Lease dated January 20, 1993 (the "Original Lease"). The landlord's interests
under the Lease (defined below) are now held by Water Garden Company L.L.C., a
Delaware Limited Liability Company ("Landlord"). The Original Lease covers
certain premises on the 5th and 6th floors and on the P-1 level of the parking
facility (collectively, the "Premises") of the Water Garden, which is located at
1620 26th Street (the "Building"), Santa Monica, California. The Lease has been
amended by that certain side letter dated January 20, 1993 (the "Side Letter"),
a First Amendment to Office Lease dated February 8, 1993 (the "First
Amendment"), a Second Amendment to Office Lease and Consent to Sublease
Agreement dated July 26, 1996 (the "Second Amendment"), and a Third Amendment to
Lease dated March 9, 1998 (the "Third Amendment"). A copy of the Third Amendment
is attached hereto as Exhibit "A." The Original Lease as amended by the Side
Letter, First Amendment, Second Amendment, and Third Amendment is hereinafter
referred to as the "Lease."

                  B. Sublandlord and Subtenant have entered into a certain
"Standard Form Sublease" dated July 9, 1996 (the "Sublease"). The Sublease
covers a portion of the Premises consisting of the entire fifth (5th) floor of
the Building and commonly known as Suite 500S (the "Subleased Premises"). The
Second Amendment (defined in Recital A, above) modified certain terms and
conditions of the Sublease and contained Landlord's consent thereto. References
hereinafter to the Sublease shall be to the Sublease as modified by the Second
Amendment, except that specific paragraph references shall be to the original
Sublease.

                  C. Sublandlord and Subtenant desire to enter into this
Amendment in order to extend the Term of the Sublease and to establish the rent
and other terms and conditions for the additional term.

                                    AGREEMENT

                  IN CONSIDERATION of the foregoing recitals and the mutual
promises and covenants contained herein, Sublandlord and Subtenant agree as
follows:

                  1. EXTENSION OF SUBLEASE. The term of the Sublease shall be
extended for one (1) additional period of five (5) years (the "Additional
Term").

<PAGE>

                  a. The Additional Term shall commence on February 1, 1999 and
expire on January 31, 2004.

                  b. There shall be no option to further extend the term of the
Sublease.

                  c. The provisions of Article 4 of the Master Lease have been
deleted pursuant to Paragraph 7.6 below as the parties have agreed that
Subtenant shall not be responsible for the payment of Additional Rent as
provided in the Master Lease and Paragraphs 2, 18.1, 18.2, and 18.4 of the
Sublease and Section 1.1 of the Second Amendment shall have no further
application during the Additional Term.

                  d. Subtenant shall have the right ("Subtenant's Cancellation
Right") to cancel the Sublease effective upon a date (the "Cancellation Date")
which occurs between February 1, 2002 and July 30, 2002 (i.e., the commencement
of the thirty-seventh (37th) month of the Additional Term through the last day
of the forty-second (42nd) month of the Additional Term), provided that (i)
Sublandlord receives written notice from Subtenant (the "Cancellation Notice")
at least twenty (20) days before the fourteenth (14th) month prior to the
Cancellation Date (i.e., between November 11, 2000 and May 12, 2001) that
Subtenant intends to cancel and terminate the Sublease effective upon the
Cancellation Date pursuant to the terms and conditions of this Section 1(d) and
(ii) as of the date of delivery of the Cancellation Notice and as of the
Cancellation Date, Subtenant is not in monetary or material non-monetary default
under the Sublease beyond the expiration of any applicable cure period. In the
event that Subtenant elects to cancel the Sublease as set forth above in this
Section 1(d), the Sublease shall automatically terminate and be of no further
force or effect and Sublandlord and Subtenant shall be relieved of their
respective obligations under the sublease as of the Cancellation Date, except
those obligations set forth in the Sublease which specifically survive the
expiration or earlier termination of the Sublease including, without limitation,
the payment by Subtenant of all amounts owed by Subtenant under the Sublease up
to and including the Cancellation Date. The rights contained in this Section
1(d) shall be personal to the Subtenant named on page 1 of this Amendment (the
"Original Subtenant") and may only be exercised by the Original Subtenant (and
not any assignee, subsublessee or other transferee of Subtenant's interest in
the Sublease).

                  e. If Sublandlord exercises Tenant's Cancellation Right on
Sublandlord's own initiative (i.e., not in response to Subtenant's exercise of
Subtenant's Cancellation Right) and Landlord (i) recognizes the Sublease but
does not agree to be bound by all of the terms and provisions of the Sublease or
(ii) for any reason refuses to recognize the Sublease in connection with the
exercise of Tenant's Cancellation Right, then the Sublease will continue in full
force and effect and Sublandlord will rescind its exercise of Tenant's
Cancellation Notice.

                  1.       RENT.

                  a. Annual rent for the Additional Term shall be [***]* per
rentable square foot). Monthly installments of rent for the Additional Term
shall be [***]* per rentable square foot).

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<PAGE>

                  b. In addition to all other rent and other obligations payable
under the Sublease and this Amendment, during the Additional Term, Subtenant
shall pay all Additional Rent required to be paid by Sublandlord pursuant to
Paragraph 4.2 of the Third Amendment. The provisions of the Lease applicable to
Additional Rent are attached hereto as Exhibit "B" for reference purposes only
and shall not limit in any way the provisions of this subparagraph (b) or
Paragraph 4.2 of the Third Amendment.

                  3. SUBLEASED PREMISES. The Subleased Premises shall remain as
described in the Sublease during the Additional Term and is mutually agreed to
contain [***]* rentable square feet. Notwithstanding the foregoing, during the
Additional Term, Subtenant shall be entitled to use (i) the entire Equipment
Room described in Recital B and Paragraphs 18.6 and 18.9 of and Exhibit "B" to
the Sublease, which Equipment Room shall not be used by Sublandlord, and (ii)
the "HVAC Unit" described in Section 11 of the Third Amendment, subject to all
terms and conditions set forth therein. Subtenant shall indemnify and hold
harmless Sublandlord from any costs, liabilities or other expenses (including
without limitation attorneys' fees) incurred as a result of Subtenant's removal,
relocation, installation, operation or maintenance of the HVAC Unit.

                  4. SECURITY DEPOSIT. The Security Deposit for the Additional
Term shall be [***]*, of which [***]* has previously been paid by Subtenant to
Sublandlord. The balance of [***]* is due and payable by Subtenant upon
execution of this Amendment.

                  5. PARKING. During the Additional Term, Subtenant shall be
required to pay for and be entitled to use [***]* parking passes ("Minimum
Passes") applicable to the Subleased Premises. Upon written notice from
Subtenant requesting additional parking passes, Sublandlord shall provide and
Subtenant shall pay for up to [***]* additional parking passes out of
Sublandlord's allocation of parking passes granted to Sublandlord under Section
7 of the Third Amendment ("Sublandlord's Passes"). Subtenant shall have the
right upon thirty (30) days written notice to Sublandlord, from time to time, to
increase or decrease the number of Sublandlord's Passes provided to Subtenant,
but not to exceed Sublandlord's allocation. In addition Subtenant shall have the
right, but not the obligation, to rent during the period commencing February 1,
1999 and expiring January 31, 2000 (the "Additional Pass Period"), up to [***]*
additional unreserved parking passes on a monthly basis (the "Additional
Passes"), which passes shall pertain to the Project parking facility. Subtenant
may change the number of Additional Passes rented during the Additional Pass
Period upon forty (40) days prior written notice to Sublandlord provided that in
no event shall Subtenant be entitled to rent more than [***]* Additional Passes.
Subtenant shall provide notice to Sublandlord no later than December 20, 1999,
specifying how many Additional Passes, if any, Subtenant desires to continue to
rent for the period commencing February 1, 2000, and ending at the expiration of
the Additional Term and commencing February 1, 2000, Subtenant shall rent the
number of Additional Passes specified in Subtenant's notice for the remainder of
the Additional Term, provided that in no event shall Subtenant be entitled to
rent more than [***]* Additional Passes. If Subtenant requests parking passes in
excess of the Minimum Passes plus Sublandlord's Passes

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<PAGE>

plus any Additional Passes Subtenant is entitled to rent as set forth above,
Sublandlord's sole obligation shall be to request such excess number of passes
from Landlord. All parking contracts during the Additional Term shall be at
Landlord's prevailing rate plus the full amount of any taxes imposed by any
governmental authority in connection with the renting of such parking passes by
Subtenant or the use of the parking facility by Subtenant. Subtenant's use of
all parking passes provided under this Section 5 shall be subject to all of the
provisions of the Lease. In addition to the foregoing, Subtenant shall be
entitled to use the [***]* additional parking passes to be provided during the
Additional Term as set forth in the last sentence of Section 7 of the Third
Amendment.

                  6. FURNITURE. During the Additional Term, Subtenant shall be
entitled to continue using the work stations and furniture described in
Paragraph 18.7 of the Sublease subject to the terms and conditions set forth
therein.

                  7. NO IMPROVEMENTS. Subtenant shall remain in the Subleased
Premises at the commencement of the Additional Term in its then-current, "as-is"
condition and Sublandlord shall have no obligation to perform any work or
install any improvements within the Subleased Premises.

                  8. LANDLORD'S RECOGNITION OF SUBTENANT. Subject to the other
provisions of this Amendment, Subtenant agrees to be bound by and comply with
all provisions of Section 8.2 of the Third Amendment within the time periods set
forth therein, including, without limitation, delivery to Landlord of all
documents necessary to demonstrate whether or not Subtenant is Financially
Capable and execution of the Recognition agreement subject to all the conditions
set forth in Section 8.2.1. If Landlord Recognizes Subtenant and Landlord fails
to credit Subtenant with any rent or Additional Rent paid by Subtenant to
Sublandlord, then Sublandlord shall on demand pay Subtenant the amount of rent
and/or Additional Rent which Landlord fails to credit to Subtenant.

                  9. CONFIDENTIALITY. The parties hereto agree that the terms of
this Amendment are confidential and constitute proprietary information of the
parties hereto. Each of the parties hereto agrees that it and its respective
partners, officers, directors, employees and attorneys shall not disclose the
terms and conditions of this Amendment to any other person other than Landlord
without the prior written consent of the other party hereto except pursuant to
an order of a court of competent jurisdiction; provided, however, that
Sublandlord may disclose the terms hereof to any lender now or hereafter having
a lien on Sublandlord's interest in the Subleased Premises or any portion
thereof, and either party may disclose the terms hereof including providing
copies of or filing this Amendment with its independent accountants who review
its financial statements or prepare its tax returns, to its counsel, bankers,
investment bankers, brokers, governmental agencies or other persons to whom
disclosure is required as a matter of law or a requirement of diligent inquiry
imposed by law and in any action which is brought to prevent the breach or
continued breach of the Sublease or to seek damages or any other available
remedy for any breach or alleged breach.

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<PAGE>

                  10. BROKERS. Each of Sublandlord and Subtenant represents and
warrants to the other that other than Muselli Commercial Real Estate ("Broker"),
which shall be paid by Sublandlord pursuant to a separate agreement, it has
employed no broker, finder or real estate agent in connection with this
Amendment and the transactions provided for herein, and that there is no broker,
finder or real estate agent who is entitled to a fee or commission from or
through such indemnifying party in connection with this Amendment or the
transactions provided for herein. Each of Sublandlord and Subtenant agrees to
indemnify, defend and hold the other harmless from and against all claims for a
fee or commission by any broker, finder or agent other than Broker, claiming
through such indemnifying party with respect to this Amendment or the
transactions provided for herein. Payment shall not be a condition precedent to
recovery upon the foregoing indemnification provision. The foregoing
indemnification provision shall be deemed to include a covenant by each
indemnifying party to defend the indemnified party against claims covered by
such indemnification with legal counsel reasonably satisfactory to the
indemnified party.

                  11. ADDITIONAL PAYMENT. In addition to Subtenant's payment of
monthly installments of rent and Additional Rent pursuant to Section 2 of this
Amendment ("Base Rent"), beginning on February 1, 1999, Subtenant shall pay to
Sublandlord the amount of [***]* per month ([***]* per rentable square foot per
month) to provide for Subtenant's payment to Sublandlord of certain costs
incurred by Sublandlord in connection with this Amendment (the "Additional
Payment"). The Additional Payment shall be payable by Subtenant to Sublandlord
if, as and when Subtenant is obligated to pay monthly installments of rent under
Section 2.a. of this Amendment and shall continue to be so payable by Subtenant
to Sublandlord (i.e., the Additional Payment shall be payable and delivered to
The Rand Corporation and not to Landlord) and Sublandlord shall be a third party
beneficiary of Subtenant's obligations under this Section 11 after the
Cancellation Date if a Recognition agreement is executed between Subtenant and
Landlord pursuant to Section 8.2 of the Third Amendment, or a substantially
equivalent arrangement exists between Subtenant and Landlord. Landlord shall
have no right, title or interest in or to the Additional Payment.

                  12. COUNTERPARTS. This Amendment may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                  13. DEFINED TERMS. All terms used in this Amendment with
initial capital letters and not defined herein shall have the meanings given to
such terms in the Sublease or otherwise in the Lease.

                  14. SUBLEASE IN EFFECT/RELATION TO MASTER LEASE. Sublandlord
and Subtenant acknowledge and agree that the Sublease, as hereby modified and
supplemented, remains in full force and effect in accordance with its terms.
Without limiting the generality of the foregoing, the provisions of Paragraph 5
of the Sublease shall apply to the rights and obligations of Landlord and
Sublandlord set forth in the Third Amendment. Sublandlord shall have no
liability

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<PAGE>

to Subtenant in the event of a termination of the Lease caused by any reason
other than a default by Sublandlord under the Lease or voluntary termination of
the Lease by Sublandlord.

                  15. CONSENT OF LANDLORD. The validity of this Amendment shall
be subject to the Landlord's prior written consent hereto pursuant to the terms
of the Lease. In the event Landlord has not executed a written consent hereto by
March 31, 1998, either party may cancel this Amendment by written notice to the
other.

                  16. LANDLORD'S ELECTION TO TERMINATE. Sublandlord shall
deliver notice to Subtenant of Landlord's election to terminate the Lease
pursuant to Section 13 of the Third Amendment within five (5) days following
Sublandlord's receipt thereof.

<PAGE>

                  IN WITNESS WHEREOF, Sublandlord and Subtenant have executed
and delivered this First Amendment to Sublease as of the day and year first
above written.

<TABLE>
<CAPTION>

<S>                                               <C>
SPECIALITY LABORATORIES, INC., a                  THE RAND CORPORATION, a California
California corporation                            non-profit corporation

By:      /s/                                      By:      /s/
       -------------------------------------      ----------------------------------------------
Title:   President                                Title:   Executive Vice President
       -------------------------------------      ----------------------------------------------

By:      /s/                                      By:      /s/ Vivian J. Arterbery
       -------------------------------------         -------------------------------------------
Title:   V.P. Finance                              Title:   Coporate Secretary
       -------------------------------------         -------------------------------------------
                      "Subtenant"                               "Sublandlord"
</TABLE>

<PAGE>

                               CONSENT OF LANDLORD

                  The undersigned is the owner of the Building and is the
Landlord under the Lease described in the foregoing Amendment and hereby
consents to the Amendment, subject to all conditions of the Landlord's consent
set forth in the Second Amendment. In addition, Landlord agrees to the
provisions of Section 11 of the Amendment. Landlord hereby certifies that to the
best of Landlord's knowledge, no Tenant default currently exists under the
Lease.

                         WATER GARDEN COMPANY, L.L.C., a Delaware limited
                         liability company

                         By:       /s/ GEORGE L. OCHS
                                   --------------------------------
                         Its:     George L. Ochs
                                  ---------------------------------
                                   Vice President
                         By:
                                   --------------------------------
                         Its:
                                  ---------------------------------

<PAGE>

                            THIRD AMENDMENT TO LEASE

                  THIS THIRD AMENDMENT TO LEASE ("Third Amendment") is made and
entered into as of March 9, 1998, by and between WATER GARDEN COMPANY L.L.C., a
Delaware Limited Liability Company ("Landlord"), and THE RAND CORPORATION, a
California non-profit public benefit corporation ("Tenant").

                                    RECITALS:

                  A. Landlord's predecessor-in-interest, Water Garden
Associates, a Delaware limited partnership, and Tenant, entered into that
certain Office Lease dated January 20, 1993 (the "Office Lease"), as amended by
that certain side letter dated January 20, 1993 (the "Side Letter"), that
certain First Amendment to Office Lease dated February 8, 1993 (the "First
Amendment") and that certain Second Amendment to Office Lease and Consent to
Sublease Agreement (the "Second Agreement") (the Office Lease, Side Letter,
First Amendment and Second Amendment are hereafter collectively referred to as
the "Lease"), pertaining to the lease of (i) approximately [***]* rentable
square feet of space commonly known as Suite 500 ("Suite 500") and located on
the fifth (5th) floor of the South tower of the building located at 1620 26th
Street, Santa Monica, California (the "Building"), (ii) approximately [***]*
rentable square feet of space commonly known as Suite 600 ("Suite 600") and
located on the sixth (6th) floor of the South tower of the Building, and (iii)
approximately [***]* rentable square feet of space located on the P-1 level of
the Project parking facility, as shown on Exhibit "E" to the Office Lease (the
"Print Facility") (the space described in items (i) and (ii), above, shall
hereafter be collectively referred to as the "Premises").

                  B. Landlord and Tenant desire to amend the Lease on the terms
and conditions set forth in this Third Amendment.

                  NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

                                    AMENDMENT

                  1. TERMS. All undefined terms when used herein shall have the
same respective meanings as are given such terms in the Lease unless expressly
provided otherwise in this Third Amendment.

                  2. SUBTRACTION FROM ORIGINALLY LEASED PREMISES. The Premises
presently consists of approximately [***]* rentable square feet and shall
continue to consist of approximately [***]* rentable square feet until Tenant
vacates and surrenders Suite 600. Effective as of May 1, 1998 (the "Give Back
Date"), and subject to the last sentence of this

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Section 2, Landlord and Tenant hereby agree that each of them shall be fully and
unconditionally released and discharged from their respective obligations
arising under the Lease, as amended hereby, after the Give Back Date with
respect to Suite 600, provided that Tenant shall remain liable with respect to
the period of its tenancy of Suite 600 for the performance of all of its
obligations under the Lease, as amended hereby. Landlord and Tenant agree that,
as of the Give Back Date, subject to Section 4 of the First Amendment, the
Premises shall instead consist of Suite 500 only. As of the Give Back Date,
subject to Section 4 of the First Amendment, all references in the Lease, as
amended hereby, and this Third Amendment to the "Premises" shall be deemed to
refer to Suite 500, and page 2 of Exhibit A attached to the Office Lease, as
amended, shall be deleted. Tenant hereby agrees to vacate Suite 600 and
surrender and deliver exclusive possession thereof to Landlord on or before the
Give Back Date, in accordance with the provisions of the Lease, as amended
hereby, and in the event that Tenant fails to timely vacate and surrender Suite
600, then notwithstanding any contrary provision of this Section 2, Tenant shall
be deemed to be holding over in Suite 600 and the terms of Article 16 of the
Office Lease, as amended, shall apply to such holder.

                  3.    NEW LEASE TERM. Notwithstanding anything to the
contrary in the Lease, the Lease Term (i) with respect to Suite 500 shall end
on January 31, 2004, and (ii) with respect to the Print Facility shall end on
May 30, 2004, unless sooner terminated as provided in the Lease, as hereby
amended. The period commencing on February 1, 1999 (the "Extended Term
Commencement Date") and ending on May 30, 2004 shall hereafter be referred to
as the "Extended Term".

                  4.    RENT.

                  4.1   BASE RENT.

                  4.1.1 SUITE 500. Notwithstanding any contrary provision of
Section 6 of the Summary, commencing on February 1, 1999 and continuing through
January 31, 2004 (the "Suite 500 Term"), the monthly installments of Base Rent
for Suite 500 shall be [***]* (i.e., [***]* per rentable square foot of Suite
500 per month times [***]* rentable square feet).

                  4.1.2 PRINT FACILITY. Notwithstanding any contrary provisions
of Section 21.3 of the Office Lease, commencing on February 1, 1999 and
continuing throughout the remainder of the Extended Term, the monthly
installments of Base Rent for the Print Facility shall be equal to [***]* per
rentable square foot of the Print Facility times [***]* rentable square feet).
Notwithstanding the foregoing, beginning our the Extended Commencement Date,
Tenant shall not be required to pay an amount equal to [***]* of Base Rent for
the Print Facility which is attributable to the Base Rent for the Print Facility
for the first four (4) months of the Extended Term.

                  4.2   ADDITIONAL RENT. Except as specifically set forth in
this Section 4.2, Tenant's payment of Tenant's Share of the annual Project
Expenses shall be governed by the terms of Article 4 of the Office Lease.
Notwithstanding anything to the contrary set forth in the Lease, and
effective as of the applicable date set forth below, for purposes of
calculating the

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<PAGE>

amount of Tenant's Share of the annual Project Expenses which Tenant shall
pay thereafter in connection with Suite 500, the following shall apply:

                   4.2.1 Effective as of the Give-Back Date, Tenant's Share
shall equal [***]*; and

                   4.2.2 Effective as of February 1, 1999, the "Base Year" shall
be calendar year 1999.

                   5.    CONDITION OF THE PREMISES. Tenant hereby acknowledges
that (i) Tenant is currently occupying the Premises and the Print Facility
pursuant to the terms of the Lease, and therefore Tenant shall, during the
applicable portion of the Extended Term, continue to accept the Premises and
the Print Facility in their presently existing, "as is" condition, (ii)
Landlord shall have no obligation to provide or pay for any improvements to
the Premises or the Print Facility, and (iii) neither Landlord nor any agent
of Landlord has made any representation or warranty regarding the condition
of the Premises or the Print Facility or the suitability of the Premises or
the Print Facility for the conduct of Tenant's business.

                   6.    BROKERS. Landlord and Tenant hereby warrant to each
other that they have had no dealings with any real estate broker or agent in
connection with the negotiation of this Third Amendment other than Tooley &
Company and Julian J. Studley, Inc. (the "Brokers"), and that they know of no
other real estate broker or agent who is entitled to a commission in
connection with this Third Amendment. Each Party hereby agrees to indemnify
and defend the other party against and hold the other party harmless from any
and all claims, demands, losses, liabilities, lawsuits, judgments, costs and
expenses (including without limitation reasonable attorneys' fees) with
respect to any leasing commission or equivalent compensation alleged to be
owing on account of any dealings with any real estate broker or agent, other
than the Brokers, occurring by, through or under the indemnifying party. The
terms of this Section 6 shall survive the expiration or earlier termination
of the term of the Lease, as hereby amended.

                   7.    PARKING. Effective as of February 1, 1999, Article 28
of the Office Lease shall be deleted and shall be of no further force and
effect. Tenant shall rent from Landlord, commencing on the Extended Term
Commencement Date, [***]* unreserved parking passes on a monthly basis
throughout the Extended Term (the "Must Rent Passes"), which parking passes
shall pertain to the Project parking facility; provided, however, that
commencing on February 1, 2004, Tenant may change the number of Must Rent
Passes rented pursuant to this Section 7 upon at least thirty (30) days prior
written notice to Landlord, provided that in no event shall Tenant be
entitled to rent more than [***]* Must Rent Passes. In addition, Tenant shall
have the right, but not the obligation, to rent during the period commencing
February 1, 1999 and expiring January 31, 2000 (the "Additional Pass
Period"), up to [***]* additional unreserved parking passes on a monthly
basis (the "Additional Passes"), which passes shall pertain to the Project
parking facility. Tenant may change the number of Additional Passes rented
during the Additional Pass Period upon thirty (30) days prior written notice
to Landlord, provided that in no event shall Tenant be entitled to rent more
than [***]* Additional Passes. Tenant shall provide notice to Landlord no
later than January 1, 2000, specifying how many Additional Passes, if any,

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<PAGE>

Tenant desires to continue to rent for the period commencing February 1,
2000 and ending at the expiration of the Extended Term, and commencing February
1, 2000, Tenant shall rent the number of Additional Passes specified in Tenant's
notice for the remainder of the Extended Term, provided that in no event shall
Tenant be entitled to rent more than [***]* Additional Passes. Further, subject
to availability, Tenant may rent, on a month-to-month basis, additional parking
passes for unreserved parking spaces in the Project parking facility directly
from the Project parking facility operator. Tenant shall pay to Landlord for
automobile parking passes on a monthly basis the prevailing rate charged from
time to time at the location of such parking passes; provided, however, that in
no event shall the parking rates in any Lease Year (exclusive of any taxes
imposed by any governmental authority) exceed the parking rates charged in the
Comparable Buildings for comparably located parking passes. In addition, Tenant
shall be responsible for the full amount of any taxes imposed by any
governmental authority in connection with the renting of such parking passes by
Tenant or the use of the parking facility by Tenant. Tenant shall abide by all
rules and regulations which are prescribed from time to tune for the orderly
operation and use of the parking facility where the parking passes are located,
including any sticker or other identification system established by Landlord and
Tenant shall use its good faith efforts to cause its employees and visitors to
comply with such rules and regulations. Landlord specifically reserves the right
to change the size, configuration, design, layout and all other aspects of the
Project parking facility at any time and Tenant acknowledges and agrees that
Landlord may, without incurring any liability to Tenant and without any
abatement of Rent under the Lease, as amended by this Third Amendment, from time
to time, temporarily close-off or restrict access to the Project parking
facility for purposes of permitting or facilitating any such construction,
alteration or improvements. Landlord shall use commercially reasonable efforts
to minimize such restricted access and shall use commercially reasonable efforts
to provide to Tenant alternative parking during such temporary period which
shall be adjacent to the Project and shall provide reasonably adequate security
and, when appropriate, shuttle services, to and from such alternate parking area
to minimize any inconvenience to Tenant resulting from such temporary closure.
Landlord may delegate its responsibilities hereunder to a parking operator in
which case such parking operator shall have all the rights of control attributed
hereby to the Landlord. The parking passes rented by Tenant pursuant to this
Section 7 are provided to Tenant solely for use by Tenant's own personnel and
such passes may not be transferred, assigned, subleased or otherwise alienated
by Tenant without Landlord's prior approval; provided, however, that during the
period that Specialty Laboratories, Inc., a California corporation ("Specialty
Laboratories") subleases Suite 500 pursuant to the Sublease (as that term is
defined in the Second Amendment), Landlord hereby approves the use of such
parking passes by Specialty Laboratories. Tenant may validate visitor parking by
such method or methods as the Landlord may establish, at the validation rate
from time to time generally applicable to visitor parking. Effective as of
February 1, 1999, Landlord shall provide Tenant with [***]* parking cards, at no
charge or cost to Tenant (excepting the cost, if any, of the parking cards
themselves), valid from 6:45 p.m. to 1:15 a.m. which will entitle Tenant's
employees (or Specialty Laboratories' employees, as the case may be) to park
during such hours.

                  8.     TENANT'S CANCELLATION RIGHT; RECOGNITION OF SPECIALTY
LABORATORIES AS TENANT.

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<PAGE>

                  8.1    TENANT'S CANCELLATION RIGHT. Tenant shall have the
right ("Tenant's Cancellation Right") to cancel the Lease, as amended by this
Third Amendment, with respect to Suite 500 only, effective upon a date (the
"Cancellation Date") which occurs between February 1, 2002 and July 30, 2002
(i.e., the commencement of the thirty-seventh (37th) month of the Extended
Term through the last day of the forty-second (42nd) month of the Extended
Term), provided that (i) Landlord receives written notice from Tenant (the
"Cancellation Notice") at least fourteen (14) months prior to the
Cancellation Date that Tenant intends to cancel and terminate the Lease, as
amended by this Third Amendment, effective upon the Cancellation Date,
pursuant to the terms and conditions of this Section 8.1, (ii) as of the date
of delivery of the Cancellation Notice and as of the Cancellation Date,
Tenant is not in monetary or material non-monetary default under the Lease,
as amended by this Third Amendment, beyond the expiration of any applicable
cure period, and (iii) on or before the date which is six (6) months prior to
the applicable Cancellation Date, Landlord receives from Tenant a check in
the amount of the applicable "Termination Fee," as that term is defined
below, as consideration for such early termination right. In the event that
Tenant elects to cancel the Lease, as amended by this Third Amendment, as set
forth above in this Section 8.1, the Lease, as amended by this Third
Amendment, with respect to Suite 500, shall automatically terminate and be of
no further force or effect and Landlord and Tenant shall be relieved of their
respective obligations under the Lease, as amended by this Third Amendment,
as of the Cancellation Date, except those obligations set forth in the Lease,
as amended by this Third Amendment, which specifically survive the expiration
or earlier termination of the Lease, as amended by this Third Amendment,
including, without limitation, the payment by Tenant of all amounts owed by
Tenant under the Lease, as amended by this Third Amendment, up to and
including the Cancellation Date. The rights contained in this Section 8.1
shall be personal to the Tenant named on page 1 of this Third Amendment (the
"Original Tenant") and may only be exercised by the Original Tenant (and not
any assignee, sublessee or other transferee of Tenant's interest in the
Lease, as amended by this Third Amendment). For purposes of this Section 8,
the "Termination Fee" shall be (a) [***]* if the Cancellation Date occurs
during the thirty-seventh (37th) month of the Extended Term, (b) [***]* if
the Cancellation Date occurs during the thirty-eighth (38th) month of the
Extended Term, (c) [***]* if the Cancellation Date occurs during the
thirty-ninth (39th) month of the Extended Term, (d) [***]* if the
Cancellation Date occurs during the fortieth (40th) month of the Extended
Term, (e) [***]* if the Cancellation Date occurs during the forty-first
(41st) month of the Extended Term, and (f) [***]* if the Cancellation Date
occurs during the forty-second (42nd) month of the Extended Term.
Notwithstanding anything to the contrary set forth in this Section 8.1,
Tenant shall not be required to deliver the Cancellation Fee to Landlord if
Tenant requests, and Landlord approves, the "Recognition," as that term is
defined in Section 8.2.1, below, in accordance with the terms of Section 8.2,
below.

                   8.2   Landlord's Recognition of Specialty Laboratories as
Tenant Upon Lease Termination.

                   8.2.1 GENERAL TERMS. Tenant may request, as part of its
Cancellation Notice, that Landlord, upon the Cancellation Date, recognize the
Sublease as a direct lease between Landlord and Specialty Laboratories (the
"Recognition"), provided that Landlord shall only so

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<PAGE>

recognize the Sublease under the following conditions (which conditions must be
reflected in a written agreement executed by Landlord and Specialty
Laboratories): (i) Landlord shall not be bound by any terms or conditions of the
Sublease which are inconsistent with the terms and conditions of the Lease, as
amended by this Third Amendment; provided, however, the economic terms of such
Sublease may be more favorable to Landlord than those set forth in the Lease, as
amended by this Third Amendment, (ii) Landlord shall not be liable for any act
or omission of Tenant, (iii) Landlord shall not be subject to any offsets or
defenses which Specialty Laboratories might have as to Tenant or to any claims
for damages against Tenant, (iv) Landlord shall not be required or obligated to
credit Specialty Laboratories with any rent or additional rent paid by Specialty
Laboratories to Tenant, (v) Landlord shall be responsible for performance of
only those covenants and obligations of Tenant pursuant to the Sublease accruing
after the Cancellation Date, (vi) Specialty Laboratories shall agree, upon
termination of the Lease, as amended by this Third Amendment, to make full and
complete attornment to Landlord, as lessor, pursuant to a written agreement
executed by Landlord and Specialty Laboratories, so as to establish direct
privity of contract between Landlord and Specialty Laboratories with the same
force and effect as though the Sublease was originally made directly between
Landlord and Specialty Laboratories, (vii) Specialty Laboratories must be, as of
the "Final Notice Date," as that term is defined in Section 8.2.3, below,
financially capable ("Financially Capable") of performing the obligations of the
Tenant with respect to Suite 500 for the remaining portion of the Suite 500
Term, and (viii) Landlord shall not be required to pay any brokerage commissions
in connection with the Recognition.

                  8.2.2 FINANCIALLY CAPABLE. For purposes of this Section 8.2,
"Financially Capable" shall mean that as of the Cancellation Date, Specialty
Laboratories has, as determined by a financial statement audited by a certified
public accountant, (a) a current ratio (I.E., current assets to current
liabilities) of at least 1.5:1, (b) a net worth of at least Fifteen Million
Dollars ($15,000,000.00), (c) net annual income of at least Six Million Dollars
($6,000,000.00), and (d) accounts receivable as a percentage of net revenue
("Accounts Receivable Percentage") which is not substantially greater than the
Accounts Receivable Percentage on the date of this Third Amendment. Tenant
shall, concurrently with Tenant's delivery of the Cancellation Notice to
Landlord and/or, within ten (10) business days of Landlord's written request,
given at any time prior to the Cancellation Date, deliver documentation
demonstrating whether or not Specialty Laboratories is Financially Capable.
Landlord shall have a reasonable approval right as to whether Specialty
Laboratories is Financially Capable of performing the obligations of the Tenant
with respect to Suite 500 for the remaining portion of the Suite 500 Term.

                  8.2.3 LANDLORD'S RESPONSE. Landlord shall, pursuant to notice
received by Tenant ("Landlord's Recognition Notice"), within thirty (30) clays
of Landlord's receipt of the Cancellation Notice and the documentation described
in Section 8.2.2, above, either (i) approve the Recognition and notify Tenant,
at that time, whether (a) the Suite 500 Term will terminate, in Landlord's sole
discretion, following the fifty-third (53rd) month or the sixtieth (60th) month
of the Suite 500 Term, and/or (b) there are inconsistent terms and/or conditions
of the Sublease by which Landlord refuses to bound in accordance with

<PAGE>

item (i) of Section 8.2.1, above, or (ii) disapprove the Recognition, in which
event Landlord's Recognition Notice shall set forth in detail the grounds for
such disapproval; provided, however, that if Landlord (A) approves the
Recognition pursuant to item (i), above, but notifies Tenant that there are
inconsistent terms and/or conditions of the Sublease by which Landlord refuses
to bound in accordance with item (i) of Section 8.2.1, above, or (B) disapproves
the Recognition pursuant to item (ii) above, Tenant may, by delivering written
notice to Landlord within ten (10) business days of receipt of Landlord's
Recognition Notice, rescind its exercise of Tenant's Cancellation Right, in
which event the Lease, as amended, will continue in full force and effect.
Notwithstanding anything to the contrary set forth in this Section 8.2, Landlord
reserves the right to notify Tenant in writing, at least six (6) months prior to
the applicable Cancellation Date (the "Final Notice Date"), that Landlord will
be disapproving of the Recognition in accordance with item (vii) of Section
8.2.1, above. Tenant, may, by delivering written notice to Landlord within ten
(10) business days of receipt of the notice described in the previous sentence,
either (a) rescind its exercise of Tenant's Cancellation Right, in which event
the Lease, as amended, will continue in full force and effect, or (b) deliver
the applicable Cancellation Payment to Landlord.

                  9.     NOTICES TO LANDLORD. Notwithstanding any contrary
provision of Section 29.18 of the Office Lease, Landlord's address for
delivery of Notices is hereby changed to:

                  J.P. Morgan Investment Management, Inc.
                  522 Fifth Avenue
                  12th Floor
                  New York, New York 10036
                  Attention: Mr. George L. Ochs, Vice President

                  and

                  Tooley & Company
                  1620 26th Street
                  Suite 1015N
                  Santa Monica, California 90404
                  Attention: Building Manager

                  With a copy to:

                  Allen, Matkins, Leck, Gamble & Mallory
                  1999 Avenue of the Stars
                  Suite 1800
                  Los Angeles, California 90067
                  Attention: Anton N. Natsis, Esq.

                   10.   LANDLORD'S OPTION AS TO SUBJECT SPACE. Notwithstanding
anything to the contrary contained in Article 14 of the Office Lease, in the
event Tenant contemplates a Transfer of all or a portion of Suite 500 to a
person or entity other than Specialty Laboratories, Tenant shall give Landlord
notice (the "Intention to Transfer Notice") of such contemplated Transfer
(whether or not the contemplated Transferee or the terms of such contemplated
Transfer have been determined). The Intention to Transfer Notice shall specify
the portion of and amount of rentable square feet of Suite 500 which Tenant
intends to Transfer (the "Contemplated Transfer Space"), the contemplated date
of commencement of the Contemplated Transfer (the "Contemplated Effective
Date"), and the contemplated length of the term of such contemplated

<PAGE>

Transfer, and shall specify that such Intention to Transfer Notice is
delivered to Landlord pursuant to this Section 10 in order to allow Landlord
to elect to recapture the Contemplated Transfer Space for the term set forth
in the Intention to Transfer Notice. Thereafter, Landlord shall have the
option, by giving written notice to Tenant within thirty (30) days after
receipt of any Intention to Transfer Notice, to recapture the Contemplated
Transfer Space. In the event such option is exercised by Landlord, the Lease,
as amended by this Third Amendment shall be canceled and terminated with
respect to such Contemplated Transfer Space as of the Contemplated Effective
Date until the last day of the term of the contemplated Transfer as set forth
in the Intention to Transfer Notice. In the event of a recapture by Landlord,
if the Lease, as amended by this Third Amendment shall be canceled with
respect to less than the entire Premises, the Rent reserved herein shall be
prorated on the basis of the number of rentable square feet retained by
Tenant in proportion to the number of rentable square feet contained in the
Premises, and the Lease, as amended by this Third Amendment as so amended
shall continue thereafter in full force and effect, and upon request of
either party, the parties shall execute written confirmation of the same. If
Landlord declines, or fails to timely elect to recapture such Contemplated
Transfer Space under this Section 10, then, subject to the other terms of
Article 14 of the Office Lease, for a period of nine (9) months (the "Nine
Month Period") commencing on the last day of such thirty (30) day period,
Landlord shall not have any right to recapture the Contemplated Transfer
Space with respect to any Transfer made during the Nine Month Period,
provided that any such Transfer is substantially on the terms set forth in
the Intention to Transfer Notice, and provided further that any such Transfer
shall be subject to the remaining terms of Article 14 of the Office Lease. If
such a Transfer is not so consummated within the Nine Month Period (or if a
Transfer is so consummated, then upon the expiration of the term of any
Transfer of such Contemplated Transfer Space consummated within such Nine
Month Period), Tenant shall again be required to submit a new Intention to
Transfer Notice to Landlord with respect any contemplated Transfer, as
provided above in this Section 10.

                  11. HVAC UNIT. At any time during the Lease Term, Tenant may,
at Tenant's sole cost and expense, (i) relocate the approximately forty (40) ton
HVAC Unit (the "HVAC Unit") from the roof of the Adjacent Building, and (ii)
install, in accordance with plans reasonably approved by Landlord, the HVAC Unit
upon the roof of the Building in a location reasonably approved by Landlord,
without the payment of Base Rent or Operating Expenses or any charge for the
same; provided, however, that (1) the HVAC Unit shall be separately metered, at
Tenant's sole cost and expense, for electricity and chilled water consumption,
and Tenant shall pay to Landlord, within thirty (30) days of receipt of written
notice, the cost of the electrical and chilled water usage of such units at the
rates charged by the utility company furnishing the same, including the cost of
the installation, operation, and maintenance of equipment which is installed in
order to supply such excess consumption, as such costs are reasonably determined
by Landlord, and (2) Tenant shall, in connection with Tenant's use of the HVAC
Unit, pay to Landlord, on an annual basis, within thirty (30) days after written
notice from Landlord, (a) the cost incurred by Landlord in connection with the
maintenance contract for the HVAC Unit, and (b) the cost of depreciation of the
HVAC Unit, as reasonably determined by Landlord. Neither Landlord nor any agent
of Landlord has made any representation or warranty regarding the condition of
the HVAC Unit or the suitability of the HVAC Unit for use in connection with the
conduct of Tenant's business. Tenant shall not lease or otherwise make available
such HVAC Unit to any third party (except Specialty Laboratories or an affiliate
of Tenant, as that term is defined in Section 14.5 of the Office Lease). Tenant
shall make any repairs and restorations to

<PAGE>

the roof of the Adjacent Building and/or the Building that may be required, in
Landlord's reasonable judgment, as a consequence of such removal and
installation of the HVAC Unit. Landlord shall have no responsibility, obligation
or liability of any nature whatsoever with respect to the HVAC Unit; and Tenant
shall protect, defend, and indemnify Landlord against and save Landlord harmless
from any and all loss, costs, liability, damage or expense (including, without
limitation, reasonable attorney's fees and costs) incurred in connection with or
in any way arising from (i) the relocation of the HVAC Unit from the Adjacent
Building to the Building, and/or (ii) the presence of the HVAC Unit on the roof
of the Building or the installation, use, operation, maintenance, repair,
replacement or removal thereof by Tenant.

                  12. MONUMENT SIGNAGE. Pursuant to the terms of Section 23.4 of
the Office Lease, effective May 1, 1998, Landlord shall have the right to
remove, at Tenant's expense, Tenant's signage on the Monument.

                  13. LANDLORD'S TERMINATION OPTION. Notwithstanding anything to
the contrary contained in the Lease, as amended, and provided that Specialty
Laboratories has not become the tenant of Suite 500 pursuant to the terms of
Section 8.2, above, effective as of the commencement of the forty-first (41st)
month of the Extended Term and continuing throughout the remainder of the
Extended Term, Landlord shall have the option in its sole and absolute
discretion to deliver written notice (the "Termination Notice") to Tenant
electing to terminate and cancel the Lease, as amended, with respect to Suite
500, effective as of the date (the "Termination Date") set forth in the
Termination Notice (which date shall not be earlier than the last day of the
fifty-third (53rd) month of the Extended Term), provided that Landlord delivers
the Termination Notice to Tenant on or before the date which is at least twelve
(12) months prior to the Termination Date. In the event that Landlord elects to
terminate the Lease, as amended, pursuant to the terms of this Section 13, the
Lease, as amended, with respect to Suite 500, shall expire at midnight on the
Termination Date, and upon such date, Tenant shall vacate and surrender
possession of Suite 500 to Landlord, and Landlord and Tenant shall thereafter be
relieved of their respective obligations under the Lease, as amended, with
respect to Suite 500, except those obligations which specifically survive the
termination of the Lease, as amended, including, without limitation, the payment
by Tenant of all amounts owed by Tenant under the Lease, as amended, with
respect to Suite 500, up to and including the Termination Date.

                  14. DELETIONS. Effective as of February 1, 1999, Sections 1.4,
2.2 and 4.4.4 of the Office Lease are hereby deleted and shall be of no further
force or effect.

                  15. NO OTHER MODIFICATIONS. Except as otherwise provided
herein, all other terms and provisions of the Lease shall remain in full force
and effect, unmodified by this Third Amendment.

                  16. BINDING EFFECT. The provisions of this Third Amendment
shall be binding upon and inure to the benefit of the heirs, representatives,
successors and permitted assigns of the parties hereto.

<PAGE>

                  IN WITNESS WHEREOF, the parties have entered into this Third
Amendment as of the date first set forth above.

                              "LANDLORD":

                               WATER GARDEN COMPANY L.L.C., a Delaware
                               Limited Liability Company

                                By:        /s/ GEORGE L. OCHS
                                           ---------------------------------
                                           George L. Ochs
                                  Its:     Vice President

                              "TENANT"

                               THE RAND CORPORATION, a California non-profit
                               public benefit corporation

                               By:       /s/
                                         -----------------------------------
                                  Its:      Executive Vice President
                                         -----------------------------------

                               By:       /s/ VIVIAN J. ARTERBERY
                                         -----------------------------------
                                  Its:      Corporate Secretary
                                         -----------------------------------

<PAGE>

                                   EXHIBIT "B"

                           ADDITIONAL RENT PROVISIONS

                  1.1.2 THE BUILDING AND THE PROJECT. The Premises are a part of
the building set forth in Section 4.1 of the Summary (the "Building") located in
Santa Monica, California, which contains approximately [***]* rentable square
feet of. space. The Building is part of an office project known as "The Water
Garden" which contains another office building located at 2425 West Olympic
Boulevard, Santa Monica, California 90404 (the "Adjacent Building"). The term
"Project," as used in this Lease, shall mean (i) the Building, the Adjacent
Building, and the "Common Areas", as that term is defined in Section 1.1.3
below, (ii) the land (which is improved with landscaping, subterranean parking
facilities and other improvements) upon which the Building, the Adjacent
Building, and the Common Areas are located, and (iii) at Landlord's discretion,
any additional real property, areas, buildings or other improvements added
thereto pursuant to the terms of Section 1.1.4 of this Lease.

                   1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right
to use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project, whether or not those areas are open
to the general public (such areas, together with such other portions of the
Project designated by Landlord, in its discretion, including certain areas
designated for the exclusive use of certain tenants, or to be shared by Landlord
and certain tenants, such as balconies abutting tenants' premises, are
collectively referred to herein as the "Common Areas"). The Common Areas shall
consist of the "Project Common Areas" and the "Building Common Areas." The term
"Project Common Areas," as used in this Lease, shall mean the portion of the
Project reasonably designated as such by Landlord, and may include, without
limitation, any parking facilities, fixtures, systems, signs, facilities, lakes,
gardens, parks or other landscaping used in connection with the Project, and may
include any city sidewalks adjacent to the Project, pedestrian walkway system,
whether above or below grade, park or other facilities open to the general
public and roadways, sidewalks, walkways, parkways, driveways and landscape
areas appurtenant to the Project. The term "Building Common Areas," as used in
this Lease, shall mean the portions of the Common Areas located within the
Building and may include, without limitation, the common entrances, lobbies,
atrium areas, restrooms, elevators, stairways and accessways, loading docks,
ramps, drives, platforms, passageways, serviceways, common pipes, conduits,
wires, equipment, loading and unloading areas, and trash areas servicing the
Building, designated as such by Landlord. The Common Areas are to be maintained
and operated in a first class manner, and shall be subject to Landlord's
obligations set forth in this Lease. The use of the Common Areas shall be
subject to such rules, regulations and restrictions as Landlord may make from
time to time, as long as such rules, regulations and restrictions do not
unreasonably interfere with the rights granted to Tenant in this Lease and the
permitted use granted under Section 5.1 of this Lease. Except when and where
Tenant's right of access is specifically excluded above and elsewhere in this
Lease, Tenant shall have the right of access to the

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<PAGE>

Premises, the Building, and the Project parking facility twenty-four (24) hours
per day, seven (7) days per week during the "Lease Term," as that term is
defined in Section 2.1 of this Lease.

                  1.1.4 LANDLORD'S USE AND OPERATION OF THE BUILDING PROJECT AND
COMMON AREAS. Landlord reserves the right from time to time without notice to
Tenant (i) to close temporarily any of the Common Areas; (ii) to make changes to
the Common Areas, including, without limitation, changes in the location, size,
shape and number of street entrances, driveways, ramps, entrances, exits,
passages, stairways and other ingress and egress, direction of traffic,
landscaped areas, loading and unloading areas, and walk-ways; provided, however,
that notwithstanding the foregoing, Landlord shall not remove the water in the
"Phase I" portion of the Project unless required by applicable laws, rules,
ordinances or regulations; (iii) to expand the Building or the Adjacent
Building; (iv) to designate land outside the Project to be part of the Project,
and in connection with the improvement of such land to add additional buildings
and common areas to the Project; provided that, notwithstanding anything to the
contrary contained in this Lease, the Project shall not be expended to include
more than the land located in Santa Monica, California, which has Olympic
Boulevard as its Southern boundary, Cloverfield Boulevard as its Western
boundary, Colorado Avenue as its Northern boundary, and 26th street as its
Eastern boundary (the "Map Area"); (v) to use the Common Areas while engaged in
making additional improvements, repairs or alterations to the Project or to any
adjacent land, or any portion thereof; and (vi) to do and perform such other
acts and make such other changes in, to or with respect to the Project, Common
Areas and Building or the expansion thereof as Landlord may, in the exercise of
sound business judgment, deem to be appropriate. Notwithstanding anything to the
contrary set forth in this Section 1.1.4 above, Landlord shall not take any of
the foregoing actions without the prior consent of Tenant if any such action is
likely to have a material adverse effect on Tenant's use of or access to the
Premises; provided, however, Landlord may take the foregoing actions without the
prior consent of Tenant in the event of an emergency, repairs or compliance with
laws. In the event that any action taken by Landlord pursuant to this Section
1.1.4 is likely to materially adversely affect Tenant's use of or access to the
Premises, Landlord shall provide Tenant with two (2) business days' prior notice
of any such action by Landlord except in the event of emergency, repairs or
compliance with law, in which case Landlord shall give no notice or such notice
as is appropriate under the circumstances. In the event any action taken by
Landlord pursuant to this Section 1.1.4 materially, adversely affects Tenant's
use of or access to the Premises, the terms of Section 19.7.2 of this Lease
shall apply as applicable. Tenant shall approve or disapprove of such action as
set forth in the notice within two (2) business days of its receipt of the same,
which approval shall not be unreasonably withheld. Tenant's failure to approve
or disapprove of such notice within the two (2) business day period described
above shall be deemed Tenant's approval of such notice. If Landlord shall
undertake any new construction of additional buildings within the Map Area, then
Landlord at its sole cost and expense, which shall not be included in "Operating
Expenses," as that term is defined in Section 4.2.3, below, shall take all
commercially reasonable efforts to minimize any inconvenience, noise, dirt,
dust, etc., emanating from such construction.

                   1.2  RENTABLE SQUARE FEET AND USABLE SQUARE FEET. For
purposes of this Lease, "rentable square feet" and "usable square feet" shall
be calculated pursuant to Standard Method for Measuring Floor Area in Office
Buildings, ANSI 265.1 - 1980 ("BOMA"), provided that the rentable square
footage of the Building and the other buildings in the Project shall include
all of

<PAGE>

(and the rentable square footage of the Premises therefore shall include a
portion of) (i) the Building Common Areas and (ii) the occupied space of the
portion of the Project dedicated to the service of the Project, provided that
notwithstanding anything to the contrary set forth in this Section 1.2, the
rentable square footage of the Premises as measured pursuant to this Section
1.2, above shall be equal to the product of (A) the usable square footage of the
Premises measured strictly pursuant to BOMA and (B) 1.180. Landlord and Tenant
hereby agree that the number of rentable square feet and usable square feet
contained in the Premises initially leased by Tenant pursuant to this Lease are
subject to verification prior to the "Lease Commencement Date," as that term is
defined in Section 2.1, below, by Landlord's planner/designer and such
verification shall be made in accordance with the provisions of this Article 1.
Tenant's architect may consult with Landlord's planner/designer regarding such
verification as it pertains to the Premises. In the event that Landlord and
Tenant disagree as to a precise measurement pursuant to this Section 1.2, such
measurement may be resolved by appropriate submittal of the same to court
proceedings within one (1) year of the subject measurement. In the event that
Landlord's planner/designer determines that the amount of the rentable square
feet or usable square feet is different from the amount set forth in this Lease,
all amounts, percentages and figures appearing or referred to in this Lease
based upon such incorrect amount (including, without limitation the amount of
the "Rent," as that term is defined in Article 4 of this Lease) shall be
modified in accordance with such determination. If such determination is made,
it will be confirmed in writing by Landlord to Tenant.

                                    ARTICLE 4

                                 ADDITIONAL RENT

                  4.1 GENERAL TERMS. As set forth in this Article 4, in addition
to paying the Base Rent specified in Article 3 of this Lease, Tenant shall pay
"Tenant's Share" of the annual "Project Expenses," as those terms are defined in
Sections 4.2.7 and 4.2.4 of this Lease, respectively, allocated to the tenants
of the Building pursuant to the terms of Section 4.3 below, to the extent such
Project Expenses allocated to the tenants of the Building are in excess or such
Project Expenses applicable to the "Base Year," as that term is defined in
Section 4.2.1 of this Lease. Such payments by Tenant, together with any and all
other amounts payable by Tenant to Landlord pursuant to the terms of this Lease,
are hereinafter collectively referred to as the "Additional Rent," and the Base
Rent and the Additional Rent are sometimes herein collectively referred to as
"Rent." Except as otherwise expressly provided in this Lease to the contrary, if
Base Rent is abated or free Base Rent is granted by Landlord during the Lease
Term, no such abatement or granting of free Base Rent shall alter or modify
Tenant's obligation to pay Additional Rent pursuant to this Article 4. Without
limitation on other obligations of Tenant which survive the expiration of the
Lease Term. the obligations of Tenant to pay the Additional Rent provided for in
this Article 4 shall survive the expiration of the Lease Term, to the extent
same is attributable to the time period prior to the expiration of the Lease
Term. If Tenant disputes that an amount is due and owing by it pursuant to this
Lease, Tenant shall have the right, without waiving any rights held by it at law
or in equity, to pay any such amount under protest and thereafter to seek
recovery of all or any part thereof from Landlord.

                  4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As
used in this Article 4, the following terms shall have the meanings hereinafter
set forth:

<PAGE>

                  4.2.1 "Base Year" shall mean the period set forth in Section
7.1 of the Summary.

                  4.2.2 "Expense Year" shall mean each calendar year in which
any portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires, provided that Landlord, upon prior notice to
Tenant, may change the Expense Year from time to time to any other twelve (12)
consecutive-month period, and, in the event of any such change, Tenant's Share
of Project Expenses shall be equitably adjusted for any Expense Year involved in
any such change.

                  4.2.3 "Operating Expenses" shall mean all expenses, costs
and amounts of every kind and nature incurred in connection with the
ownership, management, maintenance, repair, replacement, restoration or
operation of the Project, or any portion thereof. Without limiting the
generality of the foregoing, Operating Expenses shall specifically include
any and all of the following: (i) the cost of supplying all utilities, the
cost of operating, maintaining, repairing, complying with conservation
measures in connection with, and managing the utility systems, mechanical
systems, sanitary and storm drainage systems, and elevator systems, and the
cost of supplies and equipment, maintenance, and service contracts incurred
in connection therewith; (ii) the cost of licenses, certificates, permits and
inspections and the cost of contesting the validity or applicability of any
governmental enactments which may affect Operating Expenses, and the
personnel costs and expenses incurred in connection with the implementation
and operation of governmentally mandated transportation system management
program or a municipal or public shuttle service or parking program; (iii)
the cost of all insurance carried in connection with the Project, or any
portion thereof to the extent such insurance is not in excess of that carried
by the landlords of Comparable Buildings; (iv) the cost of landscaping,
relamping, and all supplies, tools, equipment and materials used in the
operation, repair and maintenance of the Project, or any portion thereof; (v)
the cost of parking area repair, restoration, and maintenance, including, but
not limited to, resurfacing, repainting, restriping, and cleaning; (vi) fees,
charges and other costs, including consulting fees, legal fees and accounting
fees, of all contractors and consultants; (vii) payments under any equipment
rental agreements or management agreements (including the cost of any
management fee and the fair rental value of any on-site office space provided
thereunder to the extent such office space is not larger than that provided
or used by other landlords of Comparable Buildings in connection with the
management of such buildings); (viii) wages, salaries and other compensation
and benefits of all persons engaged in the operation, maintenance,
management, or security of the Project, or any portion thereof, including
employer's Social Security taxes, unemployment taxes or insurance, and any
other taxes which may be levied an such wages, salaries, compensation and
benefits; provided, that if any employees of the Project provide services for
other projects then a prorated portion of such employees' wages, benefits and
taxes shall be included in Operating Expenses based on the portion of their
working time devoted to the Project, or any portion thereof, and provided
further that no portion of any employee's wages, benefits, or taxes allocable
to time spent on the development or marketing of the Project or the leasing
of space in the Project or elsewhere shall be included in Operating Expenses;
(ix) payments, fees or charges under any easement, license, operating
agreement, declaration, restrictive covenant, or instrument pertaining to the
sharing of costs by the Project, or any portion thereof; (x) the cost of
operation, repair and maintenance of all "Systems and Equipment," as that
term is defined in Section 4.2.5 of this Lease, and components thereof; (xi)
the cost of janitorial services, alarm and security

<PAGE>

service, window cleaning, trash removal, replacement of wall and floor
coverings, ceiling tiles and fixtures in lobbies, corridors, restrooms and other
common or public areas or facilities, maintenance and replacement of curbs and
walkways, and repair to roofs; (xii) amortization (including interest on the
unamortized cost) of the cost of acquiring or the rental expense of personal
property used in the maintenance, operation and repair of the Project, or any
portion thereof; (xiii) the cost of any capital improvements made to the Project
which are intended as labor-saving device or to effect other economies in the
operation or maintenance of the Project, or any portion thereof, to the extent
of cost savings reasonably anticipated by Landlord, or made to the Project, or
any portion thereof, after the Lease Commencement Date that are required under
any governmental law or regulation that was not enacted prior to the date this
Lease was fully executed and delivered or that was not applicable to the Project
on the date this Lease was fully executed and delivered; provided, however, that
each such permitted capital expenditure shall be amortized (including interest
on the unamortized cost) over its useful life as reasonably determined; and
(xiv) costs, fees, charges or assessments imposed by any federal, state or local
government for fire and police protection, trash removal, community services or
other services which do not constitute "Tax Expenses," as that term is defined
in Section 4.2.6. If Landlord is not furnishing any particular work or service
(the cost of which, if performed by Landlord, would be included in Operating
Expenses) to a tenant who has undertaken to perform such work or service in lieu
of the performance thereof by Landlord Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Project is not
fully occupied during all or a portion of any Expense Year, Landlord shall make
an appropriate adjustment to Operating Expenses for such year employing sound
accounting and management principles, to determine the amount of Operating
Expenses that would have been paid had the Project been fully occupied; and the
amount so determined shall be deemed to have been the amount of Operating
Expenses for such year. Landlord (x) shall not collect or be entitled to collect
from Tenant an amount in excess of Tenant's Share of one hundred percent (100%)
of the Operating Expenses; and (y) shall reduce the amount of the Operating
Expenses by any refund or discount received by Landlord in connection with any
expenses previously included in Operating Expenses. Notwithstanding the
foregoing, for purposes of this Lease, Operating Expenses shall not, except as
otherwise set forth in this Section 4.2, include:

                  (A) bad debt expenses and interest, principal, points and fees
on debts (except in connection with the financing of items which may be included
in Operating Expenses) or amortization on any ground lease, mortgage or
mortgages or any other debt instrument encumbering the Building or the Project
(including the land on which the Building is situated);

                  (B) marketing costs. including leasing commissions, attorneys'
fees in connection with the negotiation and preparation of letters, decal memos,
letters of intent, leases, subleases and/or assignments, space planning costs,
and other costs and expenses incurred in connection with lease, sublease and/or
assignment negotiations and transactions with present or prospective tenants or
other occupants of the Building, including attorneys' fees and other costs and
expenditures incurred in connection with disputes with present or prospective
tenants or other occupants of the Building;

                  (C) real estate brokers' leasing commissions;

<PAGE>

                  (D) costs, including permit, license and inspection costs,
incurred with respect to the installation of other tenants' or occupants'
improvements made for tenants or other occupants in the Building or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants in the Building;

                  (E) the cost of providing any service directly to and paid
directly by any tenant;

                  (F) any costs expressly excluded from Operating Expenses
elsewhere in this Lease;

                  (G) costs of any items (including, but not limited to, costs
incurred by Landlord for the repair of damage to the Building) to the extent
Landlord receives reimbursement from insurance proceeds (such proceeds to be
deducted from Operating Expenses in the year in which received) or from a third
party (such proceeds to be credited to Operating Expenses in the year in which
received, except that any deductible amount under any insurance policy shall be
included within Operating Expenses);

                  (H) costs of capital improvements, except those set forth in
Section 4.2.3 (xiii) above;

                  (I) rentals and other related expenses for leasing a HVAC
system, elevators, or other items (except when needed in connection with normal
repairs and maintenance of the Building) which if purchased, rather than rented,
would constitute a capital improvement not included in Operating Expenses
pursuant to this Lease;

                  (J) depreciation, amortization and interest payments, except
as specifically included in Operating Expenses pursuant to the terms of this
Lease and except on materials, tools, supplies and vendor-type equipment
purchased by Landlord to enable Landlord to supply services Landlord might
otherwise contract for with a third party, where such depreciation, amortization
and interest payments would otherwise have been included in the charge for such
third party's services, all as determined in accordance with generally accepted
accounting principles, consistently applied, and when depreciation or
amortization is permitted or required, the item shall be amortized over its
reasonably anticipated useful life;

                  (K) costs incurred by Landlord for alterations (including
structural additions), repairs, equipment and tools which are of a capital
nature and/or which are considered capital improvements or replacements under
generally accepted accounting principles, consistently applied, except as
specifically included in Operating Expenses pursuant to the terms of this Lease;

                  (L) expenses in connection with services or other benefits
which are not offered to Tenant or for which Tenant is charged for directly but
which are provided to another tenant or occupant of the Building or Adjacent
Building, without charge;

                  (M) costs incurred by Landlord due to the violation by
Landlord or any tenant of the terms and conditions of any lease of space in the
Building;

<PAGE>

                  (N) overhead and profit increment paid to Landlord or to
subsidiaries or affiliates of Landlord for goods and/or services in the Building
to the extent the same exceeds the costs of such by unaffiliated third parties
on a competitive basis;

                  (O) Landlord's general corporate overhead and general and
administrative expenses;

                  (P) advertising and promotional expenditures, and costs of
signs in or on the Building identifying the owner of the Building or other
tenants' signs;

                  (Q) electric power costs or other utility costs for which any
tenant directly contracts with the local public service company (but Landlord
shall have the right to "gross up" as if the floor was vacant);

                  (R) tax penalties incurred as a result of Landlord's
negligence, inability or unwillingness to make payments or file returns when
due;

                  (S) costs arising from Landlord's charitable or political
contributions;

                  (T) costs arising from earthquake insurance, except to the
extent that Landlord is required to maintain such insurance by law or by its
first mortgage lender and except to the extent carried by landlords of
Comparable Buildings;

                  (U) costs arising from latent defects in the Base, Shell and
Core of the Building or improvements installed by Landlord, excluding the Tenant
Improvements;

                  (V) costs of installing, maintaining and operating any
specialty service operated by Landlord including without limitation, any
luncheon club or athletic facility, or the repair thereof;

                  (W) the amounts of the management fee paid or charged by
Landlord in connection with the management of the Building and the Common Areas
to the extent such management fee is in excess of management fees customarily
paid or charged by landlords of other first-class office buildings in the West
Los Angeles, California area;

                  (X) costs necessitated by or resulting from the negligence of
Landlord, or any of its agents, employees or independent contractors including,
but not limited to, tax penalties incurred as a result of Landlord's negligence,
inability or unwillingness to make payments or file returns when due;

                  (Y) the amounts of the parking management fee paid by Landlord
in connection with the management of the Project parking facility to the extent
such parking management fee is in excess of parking management fees customarily
paid by landlords of Comparable Buildings; and

                  (Z) expenses incurred in connection with the construction of
all new buildings within the Map Area.

<PAGE>

Notwithstanding anything to the contrary set forth in this Section 4.2.3, for
each Lease Year during the initial Lease Term following the Base Year (but not
applicable to any renewal terms), Tenant's obligation to pay "Controllable
Costs" (as hereinafter defined) shall not increase by an amount greater than ten
percent (10%) per Lease Year, on a cumulative, compounded basis, of the total of
all of the Controllable Costs paid by Tenant. For purposes of this Section
4.2.3, "Controllable Costs" shall include only the following Operating Expenses:

                  (i)    Rent (at no greater than fair market rates) on the
management office of the Building (the aggregate size of which management office
shall be limited to no more than 2,000 rentable square feet per each building in
the Project, including the Building, which is serviced by such management
office; provided, however, if the management office servicing the Building also
services any other buildings in the Project in addition to the Building, only
the Building's proportionate share of management office rent shall be deemed to
be an Operating Expense);

                  (ii)   Salaries of Building and Project management personnel,
including but not limited to the Building manager, assistant manager, Building
on-site engineers and secretaries; and

                  (iii)  Accounting costs.

                   4.2.4  "Project Expenses" shall mean the sum of "Operating
Expenses" and "Tax Expenses."

                   4.2.5  "Systems and Equipment" shall mean any plant,
machinery, transformers, duct work, conduit, pipe, bus duct, cable, wires, and
other equipment, facilities, and systems designed to supply heat, ventilation,
air conditioning and humidity or any other services or utilities, or comprising
or serving as any component or portion of the electrical, gas, steam, plumbing,
sprinkler, communications, alarm, security, or fire/life safety, systems or
equipment, or any other mechanical, electrical, electronic, computer or other
systems or equipment which serve the Project in whole or in part.

                   4.2.6  "Tax Expenses" shall mean all federal, state, county,
or local governmental or municipal taxes, fees, charges or other impositions
of every kind and nature, whether general, special, ordinary or extraordinary
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt
of rent, including gross receipts or sales taxes applicable to the receipt of
rent, unless required to be paid by Tenant, personal property taxes imposed
upon the fixtures, machinery, equipment, apparatus, systems and equipment,
appurtenances, furniture and other personal property used in connection with
all or any portion of the Project), which shall be paid during any Expense
Year (without regard to any different fiscal year used by such governmental
or municipal authority) because of or in connection with the ownership,
leasing and operation of the Project, or any portion thereof.

                   4.2.6.1 Tax Expenses shall include, without limitation:

                   (i)     Except as otherwise provided in Section 4.4.4 below,
any tax on the rent, right to rent or other income from all or any portion of
the Project or as against the business of leasing the Project, or any portion
thereof;
<PAGE>

     (ii) Any assessment, tax, fee, levy, or charge in addition to, or in
substitution partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("Proposition 13")
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as the protection, street, sidewalk and
road maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax Expenses shall, except as
otherwise provided below, also include any governmental or private assessments
or the Project's contribution towards a governmental or private cost-sharing
agreement for the purpose of augmenting or improving the quality of services and
amenities normally provided by governmental agencies. It is the intention of
Tenant and Landlord that all such new and increased assessments, taxes, fees,
levies, and charges and all similar assessments, taxes, fees, levies and charges
be included within the definition of Tax Expenses for the purposes of this
Lease;

     (iii) Any assessment, tax, fee, levy, or charge allocable to or measured by
the area of the Premises or the Rent payable hereunder, including, without
limitation, any gross income tax with respect to the receipt of such rent, or
upon or with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or
any portion thereof; and

     (iv) Any assessment, tax, fee, levy or charge, upon this transaction or any
document to which Tenant is a party, creating or transferring an interest or an
estate in the Premises.

     4.2.6.2 With respect to any assessment that may be levied against or upon
the Project, or any portion thereof, and that under the laws then in force may
be evidenced by improvement or other bonds, or may be paid in annual
installments, there shall be included within the definition of Tax Expenses with
respect to any tax fiscal year only the amount currently payable on such bonds,
including interest, for such tax fiscal year, or the current annual installment
for such tax fiscal year. All assessments which may be paid in installments
shall be paid by Landlord in the maximum number of installments permitted by law
and not included in Operating Expenses except in the year in which the
assessment is actually paid; provided, however, that if the prevailing practice
in Comparable Buildings is to pay such assessments on an early basis, and
Landlord pays the same on such basis, such assessments shall be included in
Operating Expenses in the year paid by Landlord.

     4.2.6.3 If (i) the method of valuation or calculation used in connection
with the determination of real estate taxes is changed or altered or (ii) the
method of taxation of real estate prevailing at the time of execution hereof
shall be, or has been, altered, and as a result thereof there is an increase in
taxes now, hereafter or heretofore levied, assessed or imposed on real estate
assessed or imposed upon the owner or owners of the Project, then such new,
altered, or increasing taxes shall be included within the term "Tax Expenses."

<PAGE>

     4.2.6.4 Any expenses incurred by Landlord in its reasonable attempts to
protest, reduce or minimize Tax Expenses shall be included in Tax Expenses in
the Expense Year such expenses are paid.

     4.2.6.5 Tax refunds shall be credited against Tax Expenses, and refunded to
Tenant, regardless of when received, based on the year to which the refund is
applicable.

     4.2.6.6 If Tax Expenses for any period during the Lease Term or any
extension thereof are increased after payment thereof for any reason, including,
without limitation, error or reassessment by applicable governmental or
municipal authorities, Tenant shall pay within ten (10) business days of receipt
of notice Tenant's Share of such increased Tax Expenses.

     4.2.6.7 Notwithstanding anything to the contrary contained in this Section
4.2.6 (except as set forth in Sections 4.2.6.1 and 4.2.6.3, above), there shall
be excluded from Tax Expenses (i) all excess profits taxes, franchise taxes,
gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes,
federal and state income taxes, and other taxes to the extent applicable to
Landlord's general or net income (as opposed to rents, receipts or income
attributable to operations at the Building), (ii) any items included as
Operating Expenses, (iii) any items paid by Tenant under Section 4.5 of this
Lease, and (iv) taxes attributable to leasehold improvements in excess of the
"Cut-Off Point," as that term is defined in Section 4.5.1 of this Lease. 4.2.6.8
For purposes of this Lease, Tax Expenses shall be calculated as if the tenant
improvements in the Project were fully constructed (at a Building standard
amount) and the Project (including the land upon which the Project is located),
and all tenant improvements in the Project were fully assessed for real estate
tax purposes, and accordingly, during the portion of any Expense Year occurring
during the Base Year, Tax Expenses shall be deemed to be increased
appropriately.

     4.2.7 "Tenant's Share" shall mean the percentage set forth in Section 7.2
of the Summary. Tenant's Share was calculated by dividing the number of rentable
square feet of the Premises by the total number of rentable square feet in the
Building. In the event either the rentable square feet of the Premises and/or
the total rentable square feet of the Building is changed, Tenant's Share shall
be appropriately adjusted, and, as to the Expense Year in which such change
occurs, Tenant's Share for such year shall be determined on the basis of the
number of days during such Expense Year that each such Tenant's Share was in
effect.

     4.3 ALLOCATION OF PROJECT EXPENSES TO TENANTS OF THE BUILDING. Project
Expenses (I.E., Operating Expenses and Tax Expenses) are determined annually for
the Project as a whole. Since the Building is only one of the buildings which
constitute the Project, Project Expenses shall be allocated by Landlord, as
provided below, to both the tenants of the Building and the tenants of the other
buildings in the Project. The portion of Project Expenses allocated to the
tenants of the Building shall consist of (i) all Project Expenses attributable
solely to the Building and (ii) an equitable portion (based upon the total ratio
of the number of rentable square feet in the Building to the total number of
rentable square feet in the Project) of Project Expenses attributable to the
Project as a whole and not attributable solely to the Building, the Adjacent
Building or to any other building of the Project. Additionally, in allocating
Project Expenses to

<PAGE>

the tenants of the Building. Landlord shall have the right, from time to time,
to equitably allocate some or all of the Project Expenses allocable to tenants
of the Building among different tenants of the Building (the "Cost Pools"). Such
Cost Pools may include, but shall not be limited to, the office space tenants of
the Building and the retail space tenants of the Building. Notwithstanding
anything to the contrary set forth in this Section 4.3, Landlord shall include
in such Costs Pools all Operating Expenses attributable to any portion of the
Project which is dedicated for the exclusive use of any tenant of the Project
and is not included in the rentable square footage of the Project.

     4.4   CALCULATION AND PAYMENT OF ADDITIONAL RENT.

     4.4.1 CALCULATION AND PAYMENTS OF ADDITIONAL RENT. For every Expense Year
ending or commencing within the Lease Term, Tenant shall pay to Landlord, in the
manner set forth in Section 4.4.2, below, and as Additional Rent, an amount
equal to Tenant's Share of Project Expenses for such Expense Year in excess of
Tenant's Share of Project Expenses for the Base Year.

     4.4.2 STATEMENT OF ACTUAL PROJECT EXPENSES AND PAYMENT BY TENANT. Landlord
shall give to Tenant on or before the first day of April following the end of
each Expense Year, a statement (the "Statement") which Statement shall be
itemized on a line-item by line-item basis and shall state the Project Expenses
incurred or accrued for such preceding Expense Year and the amount thereof
allocated to the tenants of the Building, and which shall indicate the amount,
if any, of Tenant's Share of Project Expenses in excess of Tenant's Share of
Project Expenses for the Base Year. Upon receipt of the Statement for each
Expense Year ending during the Lease Term, Tenant shall pay, upon the later to
occur of its next installment of Base Rent due or within thirty (30) days after
receipt of the Statement, the full amount of Tenant's Share of Project Expenses
for such Expense Year in excess of Tenant's Share of Project Expenses for the
Base Year, less the amounts, if any, paid during such Expense Year as "Estimated
Additional Rent," as that term is defined in Section 4.4.3 below. If the amount
of Tenant's Share of Project Expenses for such Expense Year in excess of
Tenant's Share of Project Expenses for the Base Year is less than the amount
paid by Tenant as Estimated Additional Rent during the applicable period of the
Expense Year (but not including any period of the Expense Year which occurs
after the Lease has terminated), Landlord shall pay the difference to Tenant
together with the applicable Statement, even if the Lease has terminated or
expired. The failure of Landlord to timely furnish the Statement for any Expense
Year shall not prejudice Landlord or Tenant from enforcing its rights under this
Article 4. Even though the Lease Term has expired and Tenant has vacated the
Premises, when the final determination is made of Tenant's Share of Project
Expenses allocated to the tenants of the Building for the Expense Year in which
this Lease terminates, if Tenant's Share of Project Expenses for such Expense
Year is in excess of Tenant's Share of Project Expenses for the Base Year, then
Tenant shall within thirty (30) days of receipt of a Statement setting forth the
amount by which Tenant's Share of Project Expenses for such Expense Year is in
excess of Tenant's Share of Project Expenses for the Base Year pay to Landlord
an amount as calculated pursuant to the provisions of Section 4.4.1 of this
Lease, less any amounts owed from Landlord to Tenant, provided, however, that
Tenant shall not be liable for any Project Expenses, whenever occurring, unless
Tenant is billed for same within two (2) years following the expiration or
earlier termination of this Lease. The provisions of this Section 4.4.2 shall
survive the expiration or earlier termination of the Lease Term.

<PAGE>

     4.4.3   STATEMENT OF ESTIMATED PROJECT EXPENSES. In addition, Landlord
shall give Tenant a yearly expense estimate statement (the "Estimate
Statement") which Estimate Statement shall be itemized on a line-item by
line-item basis and shall set forth Landlord's reasonable estimate (the
"Estimate") of what the total amount of Project Expenses for the then-current
Expense Year shall be, the amount thereof to be allocated to the tenants of
the Building, and the estimated amount of Tenant's Share of Project Expenses
in excess of Tenant's Share of Project Expenses for the Base Year (the
"Estimated Additional Rent"). The failure of Landlord to timely furnish the
Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Additional Rent under this
Article 4. If pursuant to the Estimate Statement an Estimated Additional Rent
is calculated for the then-current Expense Year, Tenant shall pay, upon the
later to occur of (i) the date upon which its next installment of Base Rent
is due, and (ii) the date which is ten (10) days after Tenant's receipt of
the Statement, a fraction of the Estimated Additional Rent for the
then-current Expense Year (reduced by any amounts paid pursuant to the last
sentence of this Section 4.4.3). Such fraction shall have as its numerator
the number of months which have elapsed in such current Expense Year,
including the month of such payment, and twelve (12) as its denominator.
Until a new Estimate Statement is furnished (which Landlord shall have the
right to deliver to Tenant at any time), Tenant shall pay monthly, with the
monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the
total Estimated Additional Rent set forth in the previous Estimate Statement
delivered by Landlord to Tenant.

     4.4.4   TENANT'S PAYMENT OF CERTAIN TAX EXPENSES. Notwithstanding
anything to the contrary contained in this Lease, in the event that at any
time during the first five (5) Lease Years, any sale, refinancing, or change
in ownership of the Project is consummated, and as a result thereof, and to
the extent that in connection therewith the Project is reassessed (the
"Reassessment") for real estate tax purposes by the appropriate governmental
authority pursuant to the terms of Proposition 13, then the terms of this
Section 4.4.4 shall apply to such Reassessment of the Project.

     4.4.4.1 THE TAX INCREASE. For purposes of this Article 4, the term "Tax
Increase" shall mean that portion of the Tax Expenses, as calculated
immediately following the Reassessment, which is attributable solely to the
Reassessment; provided, however, that the term Tax Increase shall not include
any portion of the Tax Expenses, as calculated immediately following the
Reassessment, which (i) is attributable to the initial assessment of the
value of the land upon which the Project is located, the Base, Shell and Core
of the Building or the tenant improvements located in the Building, (ii) is
attributable to assessments pending immediately prior to the Reassessment
which assessments were conducted during, and included in, such Reassessment,
or which assessments were otherwise rendered unnecessary following the
Reassessment, or (iii) is attributable to the annual inflationary increase of
real estate taxes permitted to be assessed annually under Proposition 13.

     4.4.4.2 FIRST FIVE (5) LEASE YEARS. During the first five (5) Lease Years,
Tenant shall not be obligated to pay any portion of the Tax Increase.

     4.4.4.3 LANDLORD'S RIGHT TO PURCHASE THE PROPOSITION 13 PROTECTION AMOUNT
ATTRIBUTABLE TO A PARTICULAR REASSESSMENT. The amount of Tax Expenses which
Tenant is not obligated to pay or will not be obligated to pay during the Lease
Term in connection with a

<PAGE>

particular Reassessment pursuant to the terms of this Section 4.4.4, shall be
sometimes referred to hereafter as a "Proposition 13 Protection Amount." If the
occurrence of a Reassessment is reasonably foreseeable by Landlord and the
Proposition 13 Protection Amount attributable to such Reassessment can be
reasonably quantified or estimated for each Lease Year commencing with the Lease
Year for which the Reassessment first applies, the terms of this Section 4.4.4.3
shall apply to each such Reassessment. At any time during the Lease Term, upon
thirty (30) days' prior notice to Tenant at any time, Landlord shall have the
right to purchase the Proposition 13 Protection Amount relating to the
applicable Reassessment (the "Applicable Reassessment"), by paying to Tenant an
amount equal to the "Proposition 13 Purchase Price," as that term is defined
below, for the Applicable Reassessment, provided that the right of any successor
of Landlord to exercise its right of repurchase hereunder shall not apply to any
Reassessment which results from the event or transaction (or series of events or
transactions) pursuant to which such successor of Landlord became the Landlord
under this Lease. As used herein, the term "successor of Landlord" shall
include, without limitation, any new or different person or entity that succeeds
to the interest of Landlord under this Lease and to the person or entity that is
currently the Landlord hereunder if such person or entity has been restructured
or reconstituted so as to trigger a Reassessment. As used herein, "Proposition
13 Purchase Price" for the Applicable Reassessment shall mean the present value
of the Proposition 13 Protection Amount for the Applicable Reassessment
remaining during the Lease Term, as of the date of payment of such Proposition
13 Purchase Price by Landlord. Such present value shall be calculated (i) by
using the portion of the Proposition 13 Protection Amount for the Applicable
Reassessment attributable to each remaining Lease Year (assuming for purposes of
the computation that the amount of such Proposition 13 Protection Amount
benefited Tenant on an equal monthly basis at the middle of each month during
each Lease Year), as the amounts to be discounted, and (ii) by using an eight
percent (8%) discount rate for each monthly amount to be discounted. Upon
payment of such Proposition 13 Purchase Price, the provisions of Section 4.4.4.2
of this Lease shall not apply to any Tax Increase attributable to the Applicable
Reassessment. Since Landlord is estimating the Proposition 13 Purchase Price
because a Reassessment has not yet occurred, when such Reassessment occurs, if
Landlord has underestimated the Proposition 13 Purchase Price, then Tenant's
Rent next due shall be credited with the amount of such underestimation and
Landlord shall pay Tenant, on the next due date for Rent, the amount of any
underestimation to the extent it exceeds the Rent next due hereunder, and if
Landlord overestimates the Proposition 13 Purchase Price, then upon thirty (30)
days' prior notice by Landlord to Tenant, Rent next due shall be increased by
the amount of the overestimation. The amount of any such underestimate or
overestimate shall be calculated by taking the difference between the
Proposition 13 Purchase Price for the Applicable Reassessment actually paid to
Tenant and the Proposition 13 Purchase Price for the Applicable Reassessment as
it should have been computed had all relevant facts concerning the Applicable
Reassessment been known at the time such Purchase Price was originally computed,
and adding interest thereto at a rate per annum equal to eight percent (8%),
compounded annually, from the date such Purchase Price was paid to Tenant
through the date that the amount of the underestimate or overestimate is to be
credited or debited (as the case may be) against Rent next due hereunder.

     4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
Tenant shall reimburse Landlord upon demand for any and all takes required to be
paid by Landlord, excluding state, local and federal personal or corporate
income taxes measured by the

<PAGE>

net income of Landlord from all sources and estate and inheritance taxes,
whether or not now customary or within the contemplation of the parties hereto,
when:

     4.5.1 Said taxes are measured by or are reasonably attributable to the cost
or value of Tenant's equipment, furniture, fixtures and other personal property
located in the Premises, or by the cost or value of any leasehold improvements
made in or to the Premises by or for Tenant, to the extent the cost or value of
such leasehold improvements exceeds the greater of (i) [***]* per rentable
square foot of the Premises, and (ii) the amount per rentable square foot which
Landlord is using as a base value during the Base Year above which Landlord will
directly charge tenants in the Building for Tax Expenses attributable to the
cost or value of leasehold improvements located in such tenants' premises (the
"Cut-Off Point"); provided that any amounts of real estate taxes attributable to
tenant improvements made in or to the Premises or in or to any other premises in
the Building that are in excess of the Cut-Off Point shall not be included in
Tax Expenses;

     4.5.2 Said taxes are assessed upon or with respect to the possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy by Tenant of the Premises or any portion of the Project (including the
Project parking facility); or

     4.5.3 Said taxes are assessed upon this transaction or any document to
which Tenant is a party creating or transferring an interest or an estate in the
Premises.

     4.6   LANDLORD'S BOOKS AND RECORDS.

     Within two (2) years after receipt of a Statement by Tenant ("Review
Period"), if Tenant disputes the amount of Additional Rent set forth in the
Statement, Tenant or an independent certified public accountant (which
accountant is a member of a nationally recognized accounting firm) designated by
Tenant, may, after reasonable notice to Landlord and at reasonable times,
inspect and photocopy Landlord's records at Landlord's offices, provided that
Tenant is not then in Material Default under Section 19.1.1 of this Lease,
provided further that Tenant and such accountant shall, and each of them shall
use their commercially reasonable efforts to cause their respective agents and
employees to, maintain all information contained in Landlord's records in strict
confidence. If after such inspection, Tenant still disputes such Additional
Rent, a certification as to the proper amount shall be made, at Tenant's
expense, by an independent certified public accountant mutually selected by
Landlord and Tenant. Landlord shall cooperate in good faith with Tenant and its
accountant to show Tenant and its accountant the information upon which the
certification is based; provided that if such certification by Landlord's
accountant proves that the Project Expenses set forth in the Statement were
overstated by more than two percent (2.0%), then the cost of Tenant's accountant
and the cost of such certification shall be paid for by Landlord. Promptly
following the parties' receipt of such certification, the parties shall make
such appropriate payments or reimbursements, as the case may be, to each other,
as are determined to be owing pursuant to such certification, together with
interest at the "Interest Rate," as that term is defined in Article 22 of this
Lease, from the date due until paid, in the case of payments by Tenant to
Landlord, or from the date paid until reimbursed, in the case of reimbursements
by Landlord to Tenant. Landlord shall be required to

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<PAGE>

maintain records of all Project Expenses set forth in each Statement delivered
to Tenant for the entirety of the two (2) year period following Landlord's
delivery of the applicable Statement. The payment by Tenant of any amounts
pursuant to this Article 4 shall not preclude Tenant from questioning the
correctness of any Statement delivered by Landlord, provided that the failure of
Tenant to object thereto prior to the expiration of the Review Period shall be
conclusively deemed Tenant's approval of the applicable Statement. In the event
that any other tenant in the Project audits or reviews Project Expenses and an
adjustment is made pursuant to such audit or review because of an error in
calculation or in allocation of Project Expenses, the results of such audit or
review shall be sent to Tenant, within thirty (30) days after Landlord's receipt
of Tenant's written request, in order to allow Tenant to determine whether
Tenant is entitled to a corresponding adjustment pursuant to the terms of this
Section 4.6.

<PAGE>

                      SECOND AMENDMENT TO OFFICE LEASE AND
                          CONSENT TO SUBLEASE AGREEMENT

     THIS SECOND AMENDMENT TO OFFICE LEASE AND CONSENT TO SUBLEASE AGREEMENT
(this "Agreement") is made as of July 26, 1996, by and among WATER GARDEN
COMPANY L.L.C., a Delaware limited liability company ("Landlord"), THE RAND
CORPORATION, a California non-profit public benefit corporation ("Tenant"), and
SPECIALTY LABORATORIES, INC., a California corporation ("Subtenant").

                                    RECITALS

     A. Reference is hereby made to that certain Office Lease dated January 20,
1993, between Water Garden Associates, a Delaware limited partnership,
Landlord's predecessor-in-interest, as landlord, and Tenant (the "Original
Lease"), as amended by that certain First Amendment to Office Lease dated as of
February 8, 1993, (the "First Amendment"). The Original Lease as amended by the
First Amendment shall be referred to herein as "the Lease." Pursuant to the
Lease, Tenant leases approximately [***]* rentable square feet of office space
comprising the fifth (5th) and sixth (6th) floors, and certain Print Facility
Space (the "Premises") located in that certain office building commonly known as
1620 26th Street, Santa Monica, California (the "Building").

     B. Pursuant to the terms of Article 14 of the Lease, Tenant has requested
Landlord's consent to that certain Sublease, dated July 9, 1996, between Tenant
and Subtenant (the "Sublease"), with respect to a subletting by Subtenant of a
portion of the Premises containing approximately [***]* rentable square feet
(the "Subleased Premises"). A copy of the Sublease is attached hereto as Exhibit
A. Landlord is willing to consent to the Sublease on the terms and conditions
contained herein. By this Agreement, Landlord and Tenant desire to modify
Article 27(ii) of the Lease as provided herein.

     C. All defined terms not otherwise expressly defined herein shall have the
respective meanings given in the Lease.

                                    AGREEMENT

     1.  LANDLORD'S CONSENT. Landlord hereby consents to the Sublease;
provided however, notwithstanding anything contained in the Sublease to the
contrary, such consent is granted by Landlord only upon the terms and
conditions set forth in this Agreement. The Sublease is subject and
subordinate to the Lease. Landlord shall not be bound by any of the terms,
covenants, conditions, provisions or agreements of the Sublease, including,
without limitation the following provisions of the Sublease:

     1.1 Section 18.4. Section 18.4 of the Sublease is hereby amended as
follows:

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TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     (a) The reference to "a minimum of [***]* parking passes for single and/or
tandem unreserved parking spaces" in the second line of Section 18.4 is hereby
deleted in its entirety and a reference to "a maximum of four (4) parking passes
for single and/or tandem unreserved parking spaces" is hereby substituted in
lieu thereof.

     (b) The last sentence of Section 18.4 is hereby deleted in its entirety and
the following is substituted in lieu thereof:

          In the event Subtenant requests parking passes in excess of [***]* per
          [***]* rentable square feet in the Subleased Premises, Sublandlord
          will cooperate with Subtenant in attempting to obtain such additional
          parking passes from the Landlord, in Landlord's sole and absolute
          discretion, and any such additional parking passes shall be leased by
          Subtenant at Landlord's then prevailing monthly rates, on a month-to
          month basis.

     1.2 Section 18.8. The parties hereto hereby acknowledge that
notwithstanding the provisions of Section 18.8 of the Sublease, Tenant shall
retain primary liability to Landlord under Article 16 of the Lease.

     2.  NON-RELEASE OF TENANT; FURTHER TRANSFERS. Neither the Sublease nor
this consent thereto shall release or discharge Tenant from any liability,
whether past, present or future, under the Lease or alter the primary
liability of the Tenant to pay the rent and perform and comply with all of
the obligations of Tenant to be performed under the Lease (including the
payment of all bills rendered by Landlord for charges incurred by the
Subtenant for services and materials supplied to the Premises). Neither the
Sublease nor this consent thereto shall be construed as a waiver of
Landlord's right to consent to any further subletting either by Tenant or by
the Subtenant or to any assignment by Tenant of the Lease or assignment by
the Subtenant of the Sublease, or as a consent to any portion of the Premises
being used or occupied by any other party. Landlord may consent to subsequent
sublettings and assignments of the Lease or the Sublease or any amendments or
modifications thereto without notifying Tenant nor anyone else liable under
the Lease and without obtaining their consent. No such action by Landlord
shall relieve such persons from any liability to Landlord or otherwise with
regard to the Premises.

     3.  RELATIONSHIP WITH LANDLORD. Tenant hereby assigns and transfers to
Landlord the Tenant's interest in the Sublease and all rentals and income
arising therefrom, subject to the terms of this SECTION 3. Landlord, by
consenting to the Sublease agrees that until a default shall occur in the
performance of Tenant's obligations under the Lease, Tenant may receive,
collect and enjoy the rents accruing under the Sublease. In the event Tenant
shall default in the performance of its obligations to Landlord under SECTION
19.1 of the Lease (whether or not Landlord terminates the Lease), however,
Landlord may, in connection with SECTION 19.3 of the Lease, at its option by
notice to Tenant, either (i) terminate the Sublease, (ii) elect to receive
and collect, directly from Subtenant, all rent and any other sums owing and
to be owed under the Sublease, as further set forth in SECTION 3.1, below, or
(iii) elect to succeed to

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TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

Tenant's interest in the Sublease and cause Subtenant to attorn to Landlord, as
further set forth in SECTION 3.2, below.

     3.1 LANDLORD'S ELECTION TO RECEIVE RENTS. Landlord shall not, by reason of
the Sublease, nor by reason of the collection of rents or any other sums from
the Subtenant pursuant to SECTION 3(ii), above, be deemed liable to Subtenant
for any failure of Tenant to perform and comply with any obligation of Tenant,
and Tenant hereby irrevocably authorizes and directs Subtenant, upon receipt of
any written notice from Landlord stating that a default exists in the
performance of Tenant's obligations under the Lease, to pay to Landlord the
rents and any other sums due and to become due under the Sublease. Tenant agrees
that Subtenant shall have the right to rely upon any such statement and request
from Landlord, and that Subtenant shall pay any such rents and any other sums to
Landlord without any obligation or right to inquire as to whether such default
exists and notwithstanding any notice from or claim from Tenant to the contrary.
Tenant shall not have any right or claim against Subtenant for any such rents or
any other sums so paid by Subtenant to Landlord. Landlord shall credit Tenant
with any rent received by Landlord under such assignment but the acceptance of
any payment on account of rent from the Subtenant as the result of any such
default shall in no manner whatsoever be deemed an attornment by the Landlord to
Subtenant or by Subtenant to Landlord, or a waiver by Landlord of any provision
of the Lease, or serve to release Tenant from any liability under the terms,
covenants, conditions, provisions or agreements under the Lease. Notwithstanding
the foregoing, any other payment of rent from the Subtenant directly to
Landlord, regardless of the circumstances or reasons therefor, shall in no
manner whatsoever be deemed an attornment by the Subtenant to Landlord in the
absence of a specific written agreement signed by Landlord to such an effect.

     3.2 LANDLORD'S ELECTION OF TENANT'S ATTORNMENT. In the event Landlord
elects, at its option, to cause Subtenant to attorn to Landlord pursuant to
SECTION 3(iii), above, Landlord shall undertake the obligations of Tenant
under the Sublease from the time of the exercise of the option, but Landlord
shall not (i) be liable for any prepayment of more than one month's rent or
any security deposit paid by Subtenant, (ii) be liable for any previous act
or omission of Tenant under the Lease or for any other defaults of Tenant
under the Sublease, (iii) be subject to any defenses or offsets previously
accrued which Subtenant may have against Tenant, or (iv) be bound by any
changes or modifications made to the Sublease without the written consent of
Landlord.

     4.  GENERAL PROVISIONS.

     4.1 CONSIDERATION FOR SUBLEASE. Tenant and Subtenant represent and warrant
that there are no additional payments of rent or any other consideration of any
type payable by Subtenant to Tenant with regard to the Subleased Premises other
than as disclosed in the Sublease.

     4.2 BROKERAGE COMMISSION. Tenant and Subtenant covenant and agree that
under no circumstances shall Landlord be liable for any brokerage commission or
other charge or expense in connection with the Sublease and Tenant and Subtenant
agree to protect, defend, indemnify and hold Landlord harmless from the same and
from any cost or expense (including

<PAGE>

but not limited to attorneys' fees) incurred by Landlord in resisting any claim
for any such brokerage commission.

     4.3 RECAPTURE. This consent shall in no manner be construed as limiting
Landlord's ability to exercise its rights to recapture any portion of the
Premises, as set forth in SECTION 14.4 of the Lease, in the event of a proposed
future sublease or assignment of such portion of the Premises.

     4.4 CONTROLLING LAW. The terms and provisions of this Agreement shall be
construed in accordance with and governed by the laws of the State of
California.

     4.5 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their heirs, successors and assigns. As used
herein, the singular number includes the plural and the masculine gender
includes the feminine and neuter.

     4.6 CAPTIONS. The paragraph captions utilized herein are in no way intended
to interpret or limit the terms and conditions hereof; rather, they are intended
for purposes of convenience only.

     4.7 PARTIAL INVALIDITY. If any term, provision or condition contained in
this Agreement shall, to any extent, be invalid or unenforceable, the remainder
of this Agreement, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Agreement shall be valid and enforceable to the
fullest extent possible permitted by law.

     4.8 ATTORNEYS' FEES. If either party commences litigation against the other
for the specific performance of this Agreement, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the parties hereto
agree to and hereby do waive any right to a trial by jury and, in the event of
any such commencement of litigation, the prevailing party shall be entitled to
recover from the other party such costs and reasonable attorneys' fees as may
have been incurred.

     4.9 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
all of which shall be deemed originals and with the same effect as if all
parties hereto had signed the same document. All of such counterparts shall be
construed together and shall constitute one instrument, but in making proof, it
shall only be necessary to produce one such counterpart executed by the party
against whom it is being enforced.

     4.10 AMENDMENT TO LEASE. Landlord and Tenant hereby acknowledge that
Article 27(ii) of the Lease is hereby deleted in its entirety and the following
is substituted in lieu thereof:

     "(ii) show the Premises to prospective purchasers, mortgagees or ground or
     underlying lessors, or, to tenants; provided the Premises shall only be
     shown to prospective tenants during the last six (6) months of the Lease
     Term (notwithstanding the foregoing, with regard to that portion of the
     Premises located on the fifth (5th)

<PAGE>

     floor of the Building, provided that The Rand Corporation is not in
     occupancy thereof, such portion of the Premises may be shown to prospective
     tenants during the entire last year of the Lease Term); . . ."

Except as modified in this Section 4.10, the Lease shall remain unmodified and
in full force and effect.

<PAGE>

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

                                   "Landlord":

                                    WATER GARDEN COMPANY L.L.C., a
                                    Delaware limited liability company

                                    By:       /s/ George L. Ochs
                                       ----------------------------------------
                                                  George L. Ochs
                                                  Vice President

                                    "Tenant":

                                    THE RAND CORPORATION, a California
                                    non-profit public benefit corporation

                                    By:       /s/ Vivian J. Arterbery
                                       ----------------------------------------
                                    Its:     Corporate Secretary
                                        ---------------------------------------
                                             Vice President

                                    By:
                                       ----------------------------------------
                                    Its:
                                        ---------------------------------------

                                    "Subtenant":

                                    SPECIALTY LABORATORIES, INC., a California
                                    corporation

                                    By:       /s/
                                       ----------------------------------------
                                    Its:     Chairman
                                        ---------------------------------------

                                    By:
                                       ----------------------------------------
                                    Its:
                                        ---------------------------------------

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