Document:

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                                                                   Exhibit 10.68

                                      LEASE
                                 by and between

                                   "Landlord"

                              MEPT WEST HILLS LLC,
                      a Delaware limited liability company

                                       and

                                    "Tenant"

                            MRV COMMUNICATIONS, INC.,
                             a Delaware corporation

                              As of March 30, 2000

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                                TABLE OF CONTENTS

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 SECTION 1: DEFINITIONS.................................................................    1
          1.1     Definitions...........................................................    1
          1.2     Access Laws...........................................................    1
          1.3     Additional Rent.......................................................    1
          1.4     Base Amount Allocable to the Premises.................................    1
          1.5     Base Rent.............................................................    1
          1.6     Brokers...............................................................    1
          1.7     Building..............................................................    1
          1.8     Business Day..........................................................    1
          1.9     Claims................................................................    1
          1.10    Commencement Date.....................................................    1
          1.11    Estimated Operating Costs Allocable to the Premises...................    1
          1.12    Events of Default.....................................................    1
          1.13    Governmental Agency...................................................    1
          1.14    Governmental Requirements.............................................    1
          1.15    Intentionally Omitted.................................................    1
          1.16    Hazardous Substances..................................................    1
          1.17    Land .................................................................    2
          1.18    Landlord..............................................................    2
          1.19    Landlord's Agents.....................................................    2
          1.20    Lease Term............................................................    2
          1.21    Manager...............................................................    2
          1.22    Manager's Address.....................................................    2
          1.23    Operating Costs.......................................................    2
          1.24    Operating Costs Allocable to the Premises.............................    2
          1.25    Parking Rights........................................................    2
          1.26    Permitted Use.........................................................    2
          1.27    Intentionally Omitted.................................................    2
          1.28    Prepaid Rent..........................................................    2
          1.29    Premises..............................................................    2
          1.30    Prime Rate............................................................    2
          1.31    Project...............................................................    2
          1.32    Property Taxes........................................................    2
          1.33    Punch List Work.......................................................    3
          1.34    Security Deposit......................................................    3
          1.35    Substantial Completion................................................    3
          1.36    Tenant................................................................    3
          1.37    Tenant Alterations....................................................    3
          1.38    Tenant Improvement Allowance..........................................    3
          1.39    Tenant Improvements...................................................    3
          1.40    Tenant's Agents.......................................................    4
          1.41    Tenant's Pro Rata Share...............................................    4
          1.42    Year..................................................................    4

 SECTION 2: PREMISES AND TERM...........................................................    4
          2.1     Lease of Premises.....................................................    4
          2.2     Lease Term............................................................    4
          2.3     Early Entry into Premises.............................................    4
          2.4     Tenant Improvements...................................................    5
          2.5     Commencement Date.....................................................    5
          2.6     Tenant's Contribution to Tenant Improvement Costs.....................    6
          2.7     Condition of Premises "AS-IS".........................................    6
          2.8     Memorandum of Commencement Date.......................................    7
          2.9     Use and Conduct of Business...........................................    8
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          2.10    Compliance with Governmental Requirements and
                  Rules and Regulations.................................................    8
          2.11    Intentionally Omitted.................................................    8
          2.12    Option to Renew.......................................................    8
                  2.12.1 Renewal Options................................................    8
                  2.12.2 Notice of Exercise.............................................    9
                  2.12.3 Dispute Regarding Fair Market Rental Rate......................    9
                  2.12.4 Conditions.....................................................   10

 SECTION 3: BASE RENT, ADDITIONAL RENT AND OTHER SUMS
          PAYABLE UNDER LEASE...........................................................   10
          3.1     Payment of Rental.....................................................   10
          3.2     Base Rent.............................................................   10
          3.3     Security Deposit......................................................   10
          3.4     Additional Rent.......................................................   11
                  3.4.1 Rental Adjustment for Estimated Operating Costs.................   11
                  3.4.2 Actual Costs....................................................   12
                  3.4.3 Determination of Operating Costs................................   12
                  3.4.4 End of Term.....................................................   12
                  3.4.5 Definitions.....................................................   12
                           (a)   Base Amount Allocable to the Premises..................   12
                           (b)   Estimated Operating Costs Allocable to the
                                 Premises...............................................   13
                           (c)   Operating Costs........................................   13
                           (d)   Operating Costs Allocable to the Premises..............   15
                  3.4.6 Tenant's Costs..................................................   15
                  3.4.8 Operating Cost Audit............................................   16
          3.5     Utilities.............................................................   16
          3.6     Holdover..............................................................   17
          3.7     Late Charge...........................................................   17
          3.8     Default Rate..........................................................   17

 SECTION 4: GENERAL PROVISIONS..........................................................   18
          4.1     Maintenance and Repair by Landlord....................................   18
          4.2     Maintenance and Repair by Tenant......................................   18
          4.3     Common Areas/Security.................................................   18
          4.4     Tenant Alterations....................................................   19
          4.5     Tenant's Work Performance.............................................   20
          4.6     Surrender of Possession...............................................   21
          4.7     Removal of Property...................................................   21
          4.8     Access................................................................   21
          4.9     Damage or Destruction.................................................   22
                  4.9.1 Restoration of Premises.........................................   22
                  4.9.2 Intentionally Omitted...........................................   22
                  4.9.3 Termination of Lease by Mortgage Holder's Election..............   22
                  4.9.4 Destruction Near End of Term....................................   23
                  4.9.5 Termination by Tenant...........................................   23
                  4.9.6 Waiver..........................................................   23
          4.10    Condemnation..........................................................   23
          4.11    Parking...............................................................   24
          4.12    Indemnification.......................................................   24
          4.13    Tenant Insurance......................................................   24
                  4.13.1 Form of Policies...............................................   24
                  4.13.2 Approval of Insurer............................................   25
                  4.13.3 Landlord-Obtained Insurance....................................   25
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          4.14    Landlord's Insurance..................................................   25
          4.15    Waiver of Subrogation.................................................   26
          4.16    Assignment and Subletting by Tenant...................................   26
                  4.16.1 Restrictions on Transfer.......................................   26
                  4.16.2 Landlord Consent, Procedure....................................   26
                  4.16.3 Landlord Consent, Relevant Factors.............................   27
                  4.16.4 Notice Regarding Landlord's Consent............................   28
                  4.16.5 Restriction of Transfer of Interests in Tenant.................   28
                  4.16.6 Corporate Affiliate............................................   28
                  4.16.7 Excess Rent....................................................   28
                  4.16.8 Recapture......................................................   28
          4.17    Assignment by Landlord................................................   29
          4.18    Estoppel Certificates and Financial Statements........................   29
          4.19    Modification for Lender...............................................   30
          4.20    Hazardous Substances..................................................   30
          4.21    Access Laws...........................................................   32
                  4.21.1 Notice to Landlord of Violation................................   32
                  4.21.2 Prohibited Acts................................................   32
                  4.21.3 Tenant Responsibility..........................................   32
                  4.21.4 Landlord Responsibility........................................   32
                  4.21.5 Indemnity of Landlord..........................................   33
                  4.21.6 Inconsistent Provisions of Law.................................   33
          4.22    Quiet Enjoyment.......................................................   33
          4.23    Intentionally Omitted.................................................   33
          4.24    Subordination.........................................................   33
          4.25    Workers Compensation Immunity.........................................   33
          4.26    Brokers...............................................................   33
          4.27    Exculpation and Limitation of Liability...............................   33
          4.28    Intentionally Omitted.................................................   34
          4.29    Mechanic's Liens and Tenant's Personal Property Taxes.................   34
                  4.29.1 Mechanic's Liens...............................................   34
                  4.29.2 Personal Property Taxes........................................   34

SECTION 5: DEFAULT AND REMEDIES.........................................................   34
          5.1     Events of Default.....................................................   34
                  5.1.1 Events of Default...............................................   34
                  5.1.2 Notice of Default...............................................   35
                  5.1.3 Notice to Landlord Regarding Tenant Default.....................   35
                  5.1.4 Treatment as Unexpired Lease....................................   35
          5.2     Remedies..............................................................   35
                  5.2.1 Remedies; Termination and Recovery of Possession................   36
                  5.2.2 Remedies; Recover Rent as it Becomes Due........................   37
                  5.2.3 Succession to Tenant Rights.....................................   37
                  5.2.4 Rights and Remedies Cumulative..................................   37
                  5.2.5 Money Damages Upon Reletting....................................   38
                  5.2.6 Remedies Nonexclusive...........................................   38
          5.3     Right to Perform......................................................   38
          5.4     Landlord's Default....................................................   38
          5.5     Acceptance of Rent Without Waiving Rights.............................   38

  SECTION 6: MISCELLANEOUS PROVISIONS...................................................   39
          6.1     Notices...............................................................   39
          6.2     Attorney's Fees and Expenses..........................................   39
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          6.3     No Accord and Satisfaction............................................   39
          6.4     Successors; Joint and Several Liability...............................   39
          6.5     Choice of Law.........................................................   39
          6.6     No Waiver of Remedies.................................................   40
          6.8     Force Majeure.........................................................   40
          6.9     Severability; Captions................................................   40
          6.10    Interpretation........................................................   40
          6.11    Incorporation of Prior Agreement; Amendments..........................   41
          6.12    Authority.............................................................   41
          6.13    Time of Essence.......................................................   41
          6.14    Survival of Obligations...............................................   41
          6.15    Consent to Service....................................................   41
          6.16    Landlord's Authorized Agents..........................................   41
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                                  EXHIBITS
<S>                        <C>
          Exhibit A        Legal Description of Land
          Exhibit B        Drawing Showing Location of the Premises
          Exhibit C        Work Letter and Construction Agreement
          Exhibit D        Form of Memorandum of Commencement Date
          Exhibit E        Rules and Regulations
          Exhibit F        Intentionally Omitted
          Exhibit G        Parking Area
          Exhibit H        Environmental Questionnaire
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<PAGE>
        THIS LEASE (this "Lease") is made as of March 30, 2000, by and between
MEPT WEST HILLS, LLC, a Delaware limited liability company ("Landlord") and
MRV COMMUNICATIONS, INC., a Delaware corporation ("Tenant").

                             SECTION 1: DEFINITIONS

1.1     DEFINITIONS: Each underlined term in this section shall have the meaning
        set forth next to that underlined term.

1.2     ACCESS LAWS: The Americans With Disabilities Act of 1990 (including the
        Americans with Disabilities Act Accessibility Guidelines for Building
        and Facilities) and all other Governmental Requirements relating to the
        foregoing.

1.3     ADDITIONAL RENT: Defined in Section 3.4.

1.4     BASE AMOUNT ALLOCABLE TO THE PREMISES. Defined in paragraph captioned
        "Additional Rent".

1.5     BASE RENT: Base Rent shall be as follows:

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                   Lease Months                    Monthly Base Rent
                   ------------                    -----------------
                   <S>                           <C>
                         1-30                    $75,650.25 per month
                        31-60                    $81,469.50 per month

</TABLE>

1.6     BROKERS: Tenant was represented in this transaction by Delphi
        Business Properties, a licensed real estate broker. Landlord was
        represented in this transaction by Trammell Crow So. Cal. Inc., a
        licensed real estate broker.

1.7     BUILDING: The building located on the Land within the Project
        commonly known as Corporate Pointe at West Hills, which Building is
        commonly known as Building "B" and which is stipulated by Landlord and
        Tenant to contain 38,795 rentable square feet.

1.8     BUSINESS DAY: Calendar days, except for Saturdays and Sundays and
        holidays when banks are closed in Washington, D.C.

1.9     CLAIMS: An individual and collective reference to any and all claims,
        demands, damages, injuries, losses, liens, liabilities, penalties,
        fines, lawsuits, actions, other proceedings and expenses (including
        attorney's fees and expenses incurred in connection with the proceeding
        whether at trial or on appeal).

1.10    COMMENCEMENT DATE: The earlier of (a) the date of Substantial Completion
        and (b) the date Tenant commences to conduct business in the Premises.

1.11    ESTIMATED OPERATING COSTS ALLOCABLE TO THE PREMISES: Defined in
        paragraph captioned "Additional Rent".

1.12    EVENTS OF DEFAULT: One or more of those events or states of facts
        defined in the paragraph captioned "Events of Default".

1.13    GOVERNMENTAL AGENCY: The United States of America, the state in which
        the Land is located, any county, city, district, municipality or other
        governmental subdivision, court or agency or quasi-governmental agency
        having jurisdiction over the Land and any board, agency or authority
        associated with any such governmental entity, including the fire
        department having jurisdiction over the Land.

1.14    GOVERNMENTAL REQUIREMENTS: Any and all statutes, ordinances, codes,
        laws, rules, regulations, orders and directives of any Governmental
        Agency as now or later amended.

1.15    Intentionally Omitted.

1.16    HAZARDOUS SUBSTANCES: Asbestos, PCBs, petroleum or petroleum-based
        chemicals or substances, urea formaldehyde or any chemical, material,
        element, compound, solution, mixture, substance or other matter of any
        kind whatsoever which is now or later defined, classified, listed,
        designated or regulated as hazardous, toxic or radioactive by any
        Governmental Agency.

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1.17    LAND: The land upon which the Building is located in Los Angeles County,
        California, as legally described in Exhibit A attached to this Lease.

1.18    LANDLORD: The entity named as the "Landlord" on the first page of this
        Lease, or its successors and assigns as provided in paragraph captioned
        "Assignment by Landlord".

1.19    LANDLORD'S AGENTS: Any and all partners, officers, agents, employees,
        trustees, members, investment advisors and consultants of Landlord.

1.20    LEASE TERM: Commencing on the Commencement Date, and ending sixty (60)
        months later, provided that, if the Commencement Date is a date other
        than the first day of a calendar month, the Lease Term shall be extended
        by the number of days remaining in the month in which the Commencement
        Date occurs.

1.21    MANAGER: Trammell Crow So. Cal., Inc. or its replacement as specified by
        written notice from Landlord to Tenant.

1.22    MANAGER'S ADDRESS: 8550 Balboa Boulevard, Suite 220, Northridge,
        California 91325, which address may be changed by written notice from
        Landlord to Tenant.

1.23    OPERATING COSTS: Defined in paragraph captioned "Additional Rent".

1.24    OPERATING COSTS ALLOCABLE TO THE PREMISES: Defined in paragraph
        captioned "Additional Rent".

1.25    PARKING RIGHTS: 155 non-exclusive parking stalls, subject to the
        provisions of Paragraph 4.11, and subject to reduction as provided
        therein.

1.26    PERMITTED USE: General office purposes and incidental uses consisting of
        the following: Warehousing light assembly, shipping and receiving,
        engineering and research and development (including product testing), so
        long as such use is consistent with Governmental Requirements and with
        first-class buildings of the same or similar use as the Building located
        in the metropolitan area in which the Building is located.

1.27    INTENTIONALLY OMITTED.

1.28    PREPAID RENT: $75,650.25 to be applied toward Base Rent for the first
        full calendar month of the Lease Term or to the first calendar month in
        which full Base Rent is due.

1.29    PREMISES: The entire Building, as depicted on the plan attached to this
        Lease as Exhibit B. Landlord and Tenant hereby stipulate that the
        Premises consist of 38,795 rentable square feet.

1.30    PRIME RATE: Defined in paragraph captioned "Default Rate".

1.31    PROJECT. The project commonly known as "Corporate Pointe at West Hills"
        within which the Building and Land are located, consisting of
        approximately 30.57 acres and, approximately 329,969 square feet of
        improvements, as the same may be adjusted by Landlord from time to time.

1.32    PROPERTY TAXES: (1) Any form of ad valorem real or personal property tax
        or assessment imposed by any Governmental Agency on the Land, Building,
        related improvements or any personal property owned by Landlord
        associated with the Building or Land; (2) any other form of tax or
        assessment, license fee, tax or excise on rent or any other levy,
        charge, expense or imposition made or required by any Governmental
        Agency on any interest of Landlord in the Building, Land, related
        improvements or personal property (excluding, however, any business
        license fee or business license tax); (3) any fee for services charged
        by any Governmental Agency for any services such as fire protection,
        street, sidewalk and road maintenance, refuse collection, school systems
        or other services provided or formerly provided to property owners and
        residents within the general area of the Land; (4) any governmental
        impositions allocable to or measured by the area of any or all of the
        Building, Land, related improvements or personal property, or the amount
        of any base rent, additional rent or other sums payable under any lease
        for any or all of the Building, Land, related improvements or personal
        property, including any tax on gross receipts or any excise tax or other
        charges levied by any Governmental Agency with respect to the
        possession, leasing, operation, maintenance, alteration,

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        repair, use or occupancy of any or all of the Land or Building, related
        improvements or personal property or the rent earned by any part of or
        interest in the Building or Land, related improvements or personal
        property (5) any impositions by any Governmental Agency on any
        transaction evidenced by a lease of any or all of the Building or Land,
        related improvements or personal property or charge with respect to any
        document to which Landlord is a party creating or transferring an
        interest or an estate in any or all of the Building or Land, related
        improvements or personal property; and (6) any increase in any of the
        foregoing based upon construction of improvements or change of ownership
        of any or all of the Land, related improvements or personal property.
        Property Taxes shall not include taxes on Landlord's net income or any
        inheritance, estate or gift taxes.

               Notwithstanding anything to the contrary contained in this Lease,
        in the event that at any time during the first thirty-six (36) months of
        the initial Term, any sale, refinancing, or change in ownership of the
        Land or the Project is consummated, and as a result thereof, and to the
        extent that in connection therewith, the Land or the Project is
        reassessed (the "Reassessment") for real estate tax purposes by the
        appropriate governmental authority pursuant to the terms of Proposition
        13, all portions of the Tax Increase (as defined below) shall be
        excluded from the definition of Property Taxes. For purposes of this
        Section, the term "Tax Increase" shall mean that portion of the Property
        Taxes, as calculated immediately following the Reassessment, which is
        attributable solely to the Reassessment. Accordingly, the term "Tax
        Increase" shall not include any portion of the Property Taxes,
        calculated immediately following the Reassessment, which (i) is
        attributable to (A) the initial assessment of the value of the Real
        Property or the Project in effect prior to the applicable sale,
        refinance or change in ownership, (B) the base, shell and core of the
        Project or the tenant improvements located in the Project, (ii) is
        attributable to assessments which were pending immediately prior to the
        Reassessment and which are unrelated to a sale, refinance or change in
        ownership of the Project, 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,
        but not in excess of two percent (2.0%) per annum.

1.33    PUNCH LIST WORK: Minor items of repair, correction, adjustment or
        completion as such phrase is commonly understood in the construction
        industry in the metropolitan area in which the Land is located.

1.34    SECURITY DEPOSIT: $81,469.50

1.35    SUBSTANTIAL COMPLETION: The date that the Tenant Improvements have
        been completed substantially in accordance with the Plans (as defined in
        Exhibit C) subject only to Punch List Work.

1.36    TENANT: The person or entity(ies) named as the "Tenant" on the first
        page of this Lease, its permitted successors and assigns.

1.37    TENANT ALTERATIONS: Defined in paragraph captioned "Tenant Alterations".

1.38    TENANT IMPROVEMENT ALLOWANCE: The maximum amount to be expended by
        Landlord pursuant to the Work Letter attached to this Lease as Exhibit C
        for the cost of Tenant Improvements (including architectural,
        engineering, permitting and space planning fees), which maximum shall
        not exceed Seven Hundred Seventy-five Thousand Nine Hundred and 00/100
        Dollars ($775,900.00).

1.39    TENANT IMPROVEMENTS: Those alterations or improvements to the Premises
        which are to be constructed in accordance with and subject to the terms
        and conditions of the Work Letter Agreement attached hereto as Exhibit
        C.

1.40    TENANT'S AGENTS: Any and all officers, partners, contractors,
        subcontractors, consultants, licensees, agents, concessionaires,
        subtenants, servants, employees, customers, guests, invitees or visitors
        of Tenant.

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1.41    TENANT'S PRO RATA SHARE: is one hundred percent (100%), which percentage
        is the quotient of the rentable square footage of the Premises divided
        by the rentable square footage of the Building; however, with respect to
        Operating Costs which pertain to the Project as a whole, Tenant's Pro
        Rata Share shall equal a percentage obtained by dividing the rentable
        square footage of the Premises by the rentable square footage within the
        Project, which Pro Rata Share is currently eleven and 76/100 percent
        (11.76%).

1.42    YEAR: A calendar year commencing January 1 and ending December 31.

                          SECTION 2: PREMISES AND TERM

2.1     LEASE OF PREMISES. Landlord leases the Premises to Tenant, and Tenant
        leases the Premises from Landlord, upon the terms and conditions set
        forth in this Lease.

2.2     LEASE TERM. The Lease Term shall be for the period stated in the
        definition of that term, unless earlier terminated as provided in this
        Lease.

2.3     EARLY ENTRY INTO PREMISES. Tenant may enter into the Premises prior to
        Landlord's anticipated date of Substantial Completion of the Premises,
        upon receipt of Landlord's consent, solely for the purpose of installing
        furniture, telephones, computers, photocopy equipment, and other
        business equipment. Such early entry will not advance the Commencement
        Date so long as Tenant does not commence business operations from the
        entire Premises, or interfere with or delay the Substantial Completion
        of the Tenant Improvements. All of the provisions of this Lease shall
        apply to Tenant during any early entry, including the indemnity
        contained herein, but excluding the obligation to pay Base Rent and
        Additional Rent unless and until Tenant has commenced business
        operations in any portion of the Premises, whereupon Base Rent and
        Additional Rent shall commence. Landlord may revoke its permission for
        Tenant's early entry if Tenant's activities or workers interfere with
        the completion of the Tenant Improvements. If Tenant is granted early
        entry, Landlord shall not be responsible for any loss, including theft,
        damage or destruction to any work or material installed or stored by
        Tenant at the Premises or for any injury to Tenant or Tenant's Agents.
        Landlord shall have the right to post appropriate notices of
        non-responsibility and to require Tenant to provide Landlord with
        evidence that Tenant has fulfilled its obligation to provide insurance
        pursuant to Section 4.13 of this Lease.

               In addition to the rights granted to Tenant in the immediately
        preceding paragraph, and notwithstanding anything to the contrary
        contained therein, Tenant may take partial possession of the Premises
        (i.e., the entire Premises excluding only the conference room and the
        bathrooms to be constructed pursuant to the Tenant Work Letter) and
        commence business operations therefrom upon the satisfaction of all of
        the following conditions: (a) the portion of the Premises so being
        possessed by Tenant has been substantially completed; (b) such
        possession is permitted by applicable Governmental Requirements and, if
        necessary, a partial certificate of occupancy for the portion so being
        possessed has been obtained (with any additional cost incurred by
        Landlord to obtain such partial certificate of occupancy being paid
        solely by Tenant); (c) Tenant's partial possession of the Premises will
        not and does not, in Landlord's reasonable judgment, interfere with the
        construction and timely completion of the remainder of the Premises
        (and, to the extent there exists any such interference, the same shall
        constitute a "Tenant Delay"); and (d) Tenant shall pay Base Rent and
        Additional Rent on the portion so possessed, which amount shall be
        calculated as a fraction of the Base Rent and Additional Rent otherwise
        payable under this Lease, the numerator of which shall be the rentable
        square footage of the portion so possessed, and the denominator of which
        shall be the total rentable square footage of the Premises; and (e) such

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        possession shall not advance the Commencement Date, it being understood
        and agreed to by Tenant that the Commencement Date will not occur until
        the entire Premises is substantially completed or Tenant has commenced
        business operations from the entire Premises, as provided in Section 2.5
        below.

               Notwithstanding anything contained in this Lease to the contrary.
        Tenant's commencement of business from any portion of the Premises shall
        conclusively be deemed to be Tenant's Waiver of Tenant's rights under
        Section 2.5 below if the Premises are not substantially completed by the
        Target Date and/or the Outside Date (i.e., Tenant shall no longer be
        entitled to any credit against Base Rent to terminate this Lease
        pursuant to the provisions of Section 2.5).

2.4     TENANT IMPROVEMENTS. Landlord shall construct the Tenant Improvements in
        accordance with, and subject to the terms and conditions of, the Work
        Letter Agreement attached hereto as Exhibit C.

2.5     COMMENCEMENT DATE. The Commencement Date shall be the earlier of (a) the
        date of Substantial Completion of the Tenant Improvements in the
        Premises and (b) the date Tenant commences to conduct business in the
        Premises. Landlord shall notify Tenant in writing at least five (5)
        Business Days in advance of the estimated Substantial Completion. If
        Tenant believes that Substantial Completion has not occurred, Tenant
        shall notify Landlord in writing of its objections within five (5)
        Business Days after its receipt of the Landlord's notice described in
        the preceding sentence. Landlord shall have a reasonable time after its
        receipt of Tenant's notice in which to take such action as may be
        necessary to achieve Substantial Completion, and shall notify Tenant in
        writing when such has been completed. The conduct of business by Tenant
        from the Premises shall establish the Commencement Date as specified in
        the definition of that term and the establishment of such fact upon the
        commencement of the conduct of business shall occur even if Tenant
        disputes whether Substantial Completion has occurred or attempts to
        condition or qualify Tenant's acceptance of the Premises. Such
        commencement of the conduct of business shall further establish that the
        Premises are in good and satisfactory condition upon such commencement
        and the Commencement Date has occurred. Tenant acknowledges that no
        representations as to the condition of the Premises have been made by
        Landlord, unless such are expressly set forth in this Lease. In the
        event of any dispute as to whether Substantial Completion has occurred,
        the certificate of Landlord's architect or general contractor or the
        certificate of occupancy or the equivalent sign-off by the municipal
        building inspector shall be conclusive, except that any delay in receipt
        of such certificate or in Substantial Completion which is caused by
        Tenant or Tenant's Agents or caused by any of Tenants uncompleted work
        being contained in the same building permit as the Tenant Improvements
        shall be charged to Tenant in the amount of the daily Base Rent
        multiplied by the number of days of such delays. If on the Commencement
        Date, Punch List Work remains to be completed, Landlord and Tenant shall
        agree on such Punch List Work prior to occupancy by Tenant and Landlord
        will endeavor to promptly complete it after the Commencement Date. In no
        event shall Tenant's refusal or failure to agree on the nature and
        extent of Punch List Work or the existence of items of Punch List Work
        Delay or postpone the occurrence of the Commencement Date. Tenant shall
        make no changes to the Plans or the work reflected in the Plans without
        the prior written consent Of Landlord, which consent shall not be
        unreasonably withheld. If the estimated date of Substantial Completion
        changes at any time after Landlord has given notice pursuant to this
        Paragraph, then Landlord shall give at least five (5) Business Days
        advance notice of the new estimated date of Substantial Completion. If
        (a) Substantial Completion has not occurred by the date which is twelve
        (12) weeks after the Tenant Waiver Date (as defined in Section 4.5 of
        the Tenant

                                      -5-
<PAGE>

        Work Letter) (the "Target Date"), this Lease shall remain in full force
        and effect and shall not be void or voidable; and (b) such delay is not
        due to any delays resulting from or arising out of any acts or omissions
        of Tenant or Tenant's Agents or any Force Majeure event (as defined
        below; provided, however, that for purposes of this sentence, the term
        "Force Majeure" shall not include any labor strikes, unless the same are
        caused by the acts of Tenant or Tenant's Agents), then for each day that
        Substantial Completion is delayed beyond the Target Date, Tenant shall
        receive one (1) day of Base Rent credit against Base Rent next coming
        due so long as Tenant has not yet commenced business operations from
        the Premises and Tenant is not in default beyond applicable cure periods
        under any of the terms or conditions of this Lease. Notwithstanding the
        foregoing, if Substantial Completion has not occurred by the date which
        is sixteen (16) weeks after the Tenant Waiver Date (the "Outside Date"),
        and such delay in Substantial Completion is not due in whole or in part
        to the acts or omissions of Tenant or Tenant's Agents or to any event of
        Force Majeure (provided, however, that for purposes of this sentence,
        the term "Force Majeure" shall not include any labor strikes, unless the
        same are caused by the acts of Tenant or Tenant's Agents), the Tenant
        shall have the right, as its sole remedy, to terminate this Lease by
        delivering written notice to Landlord on or before the tenth (10th) day
        following the Outside Date. If Tenant timely and properly exercises its
        right to terminate this Lease pursuant to this Section, then Landlord
        shall promptly return the Security Deposit and the Prepaid Rent to
        Tenant. If Tenant fails to deliver such notice on or before the tenth
        (10th) day following the Outside Date, then Tenant shall be deemed to
        have waived its right to terminate this Lease under this Section 2.5.

 2.6    TENANT'S CONTRIBUTION TO TENANT IMPROVEMENT COSTS. If the cost of the
        Tenant Improvements exceeds the Tenant Improvement Allowance, Tenant
        shall pay to Landlord such excess in accordance with the terms of the
        Work Letter Agreement attached hereto as Exhibit C. All Tenant
        Improvements, regardless of which party constructed them, shall become
        the property of Landlord and shall remain upon and be surrendered with
        the Premises upon the expiration or earlier termination of this Lease
        and, provided that Tenant pays the Removal Fee (as defined below), then
        notwithstanding anything contained herein to the contrary, Tenant shall
        have no obligation to remove the same upon the expiration or earlier
        termination of this Lease. Upon the expiration or earlier termination of
        this Lease (other than a termination of this Lease by Tenant pursuant to
        Section 4.5 of the Tenant Work Letter), as consideration for Landlord's
        agreement not to require Tenant to remove the Tenant Improvements,
        Tenant shall pay to Landlord an amount equal to Twenty Thousand and
        00/100 Dollars ($20,000.00) (the "Removal Fee") which Landlord may (but
        shall not be obligated to) use for the removal of some or all of the
        Tenant Improvements. If Tenant does not pay the Removal Fee within five
        (5) days after such expiration or earlier termination, Landlord may
        apply the Security Deposit towards the Removal Fee.

 2.7    CONDITION OF PREMISES "AS-IS". Subject to the performance by Landlord of
        its obligations to perform (or cause to be performed) the Tenant
        Improvements and, except as expressly provided to the contrary, as
        Tenant hereby agrees that the Premises shall be taken "as is", "with all
        faults", without any representations or warranties, and Tenant hereby
        agrees and warrants that it has investigated and inspected the condition
        of the Premises and the suitability of same for Tenant's purposes, and
        Tenant does hereby waive and disclaim any objection to, cause of action
        based upon, or claim that its obligations hereunder should be reduced or
        limited because of the condition of the Premises or the Building or the
        suitability of same for Tenant's purposes. Except as expressly provided
        herein to the contrary, Tenant acknowledges that neither Landlord nor
        any agent nor any employee of Landlord has made any representations or
        warranty with respect to the Premises or the Building or with respect to
        the suitability of either for the

                                      -6-
<PAGE>

        conduct of Tenant's business, and Tenant expressly warrants and
        represents that Tenant has relied solely on its own investigation and
        inspection of the Premises and the Building in its decision to enter
        into this Lease and let the Premises in an "as is" condition. The
        commencement of business in the Premises by Tenant shall conclusively
        establish that the Premises and the Building (or such portion thereof
        occupied by Tenant) were at such time in satisfactory condition.
        Notwithstanding the foregoing, Landlord hereby assigns to Tenant, on a
        non-exclusive basis, to the extent assignable, all warranties and
        guaranties relating to the construction of the Building, and Landlord
        shall use commercially reasonable efforts to assist Tenant, at no cost
        or expense to Landlord, with Tenant's enforcement of any warranties or
        guaranties that have been assigned to Tenant. Landlord shall use its
        commercially reasonable efforts to obtain at least a one year warranty
        from the general contractor constructing the Tenant Improvements.

             2.7.1   HVAC. Notwithstanding the provisions to the contrary
        contained in this Lease, Landlord hereby represents that, except to the
        extent triggered by, arising out of or relating to any acts of omissions
        of Tenant or Tenant's Agents including, without limitation, the
        construction of any Tenant Alterations, the heating, air conditioning
        and ventilation systems of the Building will be free from material
        defects; provided, however, that if Tenant does not deliver written
        notice to Landlord of any material breach of the foregoing within one
        hundred eighty (180) days following the Commencement Date, then Tenant
        shall be deemed to have inspected and accepted such systems in its
        present condition, and the correction of any subsequently discovered
        defects with respect to the items set forth in this paragraph shall be
        the obligation of Tenant. If a breach of the foregoing exists, and
        Tenant timely (i.e., within one hundred eighty (180) days following the
        Commencement Date) delivers written notice to Landlord setting forth in
        reasonable detail a description of such breach, Landlord shall, as
        Tenant's sole and exclusive remedy, rectify the same at Landlord's
        expense.

             2.7.2   Compliance With Covenants, Restrictions and Building Code.
        Notwithstanding the provisions to the contrary contained in this Lease,
        Landlord hereby represents that, except to the extent triggered by,
        arising out of or relating to any acts of omissions of Tenant or
        Tenant's Agents including, without limitation, the construction of any
        Tenant Alterations, the Premises will (as of the Commencement Date) be
        in compliance with applicable covenants, conditions and restrictions
        affecting the Project, Access Laws, Governmental Requirements and
        building codes in effect as of the Commencement Date; provided, however,
        that if Tenant does not deliver written notice to Landlord of any breach
        of the foregoing within six (6) months days following the Commencement
        Date, then Tenant shall be deemed to have inspected and accepted the
        Building in its present condition, and the correction of any
        subsequently discovered noncompliance shall be the obligation of Tenant.
        If a breach of the foregoing exists, and Tenant timely (i.e., within six
        (6) months following the Commencement Date) delivers written notice to
        Landlord setting forth in reasonable detail a description of such
        breach, Landlord shall, as Tenant's sole and exclusive remedy, rectify
        the same at Landlord's expense; provided, however, Landlord's obligation
        hereunder shall only be applicable to the extent such noncompliance (i)
        constitutes a breach of the foregoing representation, and (ii) is
        required to be rectified by a Governmental Authority with jurisdiction
        over the project, notwithstanding the fact that such requirement may be
        imposed after the six (6) month period described herein.

2.8     MEMORANDUM OF COMMENCEMENT DATE. At Landlord's election and request,
        Tenant shall execute a Memorandum of Commencement Date in the form

                                      -7-
<PAGE>

        attached as Exhibit D. In no event shall Tenant record this Lease or the
        Memorandum of Commencement Date.

2.9     Use and Conduct of Business. The Premises are to be used only for the
        Permitted Uses, and for no other business or purpose without the prior
        consent of Landlord, which consent shall not be unreasonably withheld.
        Landlord makes no representation or warranty as to the suitability of
        the Premises for Tenant's intended use. Tenant shall, at its own cost
        and expense, obtain and maintain any and all licenses, permits, and
        approvals necessary or appropriate for its use, occupation and operation
        of the Premises. Tenant's inability to obtain or maintain any such
        license, permit or approval necessary or appropriate for its use,
        occupation or operation of the Premises shall not relieve it of its
        obligations under this Lease, including the obligation to pay Base Rent
        and Additional Rent. No act shall be done in or about the Premises that
        is unlawful or that will increase the existing rate of insurance on any
        or all of the Land or Building. Tenant shall not commit or allow to be
        committed or exist: (a) any waste upon the Premises, (b) any public or
        private nuisance, or (c) any act or condition which may disturb the
        quiet enjoyment of any other tenant in the Project, violate any of
        Landlord's contracts affecting any or all of the Land or Project, create
        or contribute to any work stoppage, strike, picketing, labor disruption
        or dispute, interfere in any way with the business of Landlord or any
        other tenant in the Project or with the rights or privileges of any
        contractors, subcontractors, licensees, agents, concessionaires,
        subtenants, servants, employees, customers, guests, invitees or visitors
        or any other persons lawfully in and upon the Land or Building, or
        causes any impairment or reduction of the good will or reputation of the
        Land or Building. Tenant shall not, without the prior consent of
        Landlord, use any apparatus, machinery, device or equipment in or about
        the Premises which will cause any increase in the normal consumption
        level of electric power. If any of Tenant's apparatus, machinery,
        equipment or devices should disturb the quiet enjoyment of any other
        tenant in the Project, then Tenant shall provide, at its sole cost and
        expense, adequate insulation or take other such action, including
        removing such apparatus, machinery, equipment or devices, as may be
        necessary to eliminate the disturbance.

2.10    COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS AND RULES AND REGULATIONS.
        Subject to the provisions of Section 2.7.2, Tenant shall comply with all
        Governmental Requirements relating to the Premises (including, without
        limitation, Tenant's use, occupancy and operation thereof) and all other
        covenants, conditions and restrictions and other matters of record, and
        Tenant shall observe such reasonable rules and regulations as may be
        adopted and published by Landlord from time to time for the safety, care
        and cleanliness of the Premises and the Building, and for the
        preservation of good order in the Building, including the Rules and
        Regulations attached to this Lease as Exhibit E.

2.11    Intentionally Omitted.

2.12    OPTION TO RENEW.

             2.12.1  Renewal Options. Provided Tenant is not and has not been in
        default (beyond all applicable notice and cure periods) under this Lease
        and subject to the terms and conditions of this section 2.12, Tenant
        shall have one (1) option to renew (the "Option to Renew") the term of
        the Lease with respect to the entire Premises for a period of five (5)
        years (the "Option Term"). If the Option to Renew is exercised during
        any applicable cure period following an event, which with the passage of
        time or the giving of notice, or both, would constitute an event of
        default, then such exercise shall be void and of no further force or
        effect unless the cure is fully completed within the applicable cure
        period, but in no event later than the expiration or earlier termination
        of the Lease. Except as set forth in this section 2.12, all terms and
        conditions shall remain the same during the Option Term. Base Rent
        during each Option Term shall be the greater of (i)

                                      -8-
<PAGE>

        then Fair Market Rental Rate, and (ii) the Monthly Base Rent for the
        last month of the immediately preceding term of the Lease. "Fair Market
        Rental Rate" shall mean the net effective market rental then being
        offered and accepted for comparable space and location in first class
        single story office buildings comparable in size, location and condition
        to the Building and location within the West Hills and Woodland Hills
        areas, computed as described in the remainder of this paragraph. The net
        effective market rental shall equal the arithmetic average of the rental
        rate over the term of such comparable lease less any customary
        concessions (including tenant improvement allowances granted by
        landlords under similar circumstances), provided that the value of the
        then existing Tenant Improvements shall be taken into account.

             2.12.2  Notice of Exercise. Tenant shall give Landlord written
        notice of its intent to exercise the Option to Renew at least two
        hundred forty (240) [this number was changed because if Tenant exercises
        its right to rescind then Landlord has lost 40 days (30 + 10) of time to
        market the property - since the term of the lease will not be extended
        by the amount of lost time, Landlord needs to be notified earlier of
        Tenant's intent to exercise the option] days but not more than three
        hundred sixty-five (365) days prior to the expiration of the immediately
        preceding term. If Tenant fails to notify Landlord in writing of its
        intent to exercise its Option to Renew as set forth in the preceding
        paragraph, the Option to Renew shall terminate, and Landlord shall be
        free to enter into a lease with a third party. Within twenty (20) days
        after Landlord receives the notice described in the previous sentence,
        Landlord will provide Tenant with Landlord's determination of the Fair
        Market Rental Rate for the Option Term. Tenant shall have either (a)
        thirty (30) days from Landlord's notification of the proposed Base Rent
        to accept Landlord's determination of Base Rent for the Option Term or
        provide its own determination of Fair Market Rental Rate for Landlord's
        consideration accompanied by market information on which Tenant based
        its determination or (b) ten (10) days from Landlord's notification of
        the proposed Base Rent to rescind its notice of exercise of its Option
        to Renew, in which case Tenant's Option to Renew shall be null and void
        and Tenant shall have no further rights under this Section 2.12. If
        Tenant fails to deliver a rescission notice within such ten (10) day
        period described in clause (b) above, then Tenant will be deemed to have
        forever waived its right to rescind its exercise of the Option to Renew.

             2.12.3  Dispute Regarding Fair Market Rental Rate. If Landlord and
        Tenant are unable to agree on the Fair Market Rental. Rate using their
        best good faith efforts within thirty (30) days from Landlord's
        notification of the proposed Base Rent, Landlord shall, no more than ten
        (10) days thereafter, select an independent M.A.I. (certified in the
        State of California) real estate appraiser, or real estate broker with
        at least seven (7) years experience in the metropolitan area of the Los
        Angeles, California office real estate market, who shall prepare a
        written appraisal or market report of the Fair Market Rental Rate using
        the assumptions described in paragraph 2.12.1. The report shall be
        completed and delivered to Tenant and Landlord within thirty (30) days
        from the date Landlord selects the appraiser or real estate broker. Such
        appraiser's/broker's determination of Fair Market Rental Rate shall be
        determinative unless Tenant disputes it 3s provided in the next
        sentence. If Tenant disputes such report Tenant shall within ten (10)
        days following delivery of the report, deliver to Landlord notice (a)
        that tenant disputes such report, and (b) of the identity of another
        appraiser or real estate broker selected by Tenant meeting the
        qualifications set forth in this paragraph. The appraiser/broker
        selected by Tenant shall submit his report of the Fair Market Rental
        Rate using the assumptions described in paragraph 2.12.1 within twenty
        (20) days following the delivery of Tenant's notice to Landlord
        disputing the initial report. If the two reports are within five percent
        (5%) of each other, the Fair Market Rental Rate shall be that

                                      -9-
<PAGE>

        set forth in the report of Landlord's appraiser/broker. If not, then
        within five (5) days after the delivery of the second report, the two
        appraisers/brokers shall appoint a third appraiser/broker meeting the
        qualifications set forth in this paragraph, and the third
        appraiser/broker shall deliver his decision within ten (10) days
        following his selection and acceptance of the appraisal assignment. The
        third appraiser/broker shall be limited in authority to selecting, in
        his opinion, which of the two earlier reports determinations best
        reflects the Fair Market Rental Rate under the assumptions set forth in
        this paragraph. The third appraiser/broker must choose one of the two
        earlier reports, and, upon doing so, the third appraiser's/broker's
        determination shall be the controlling determination of the Fair Market
        Rental Rate. Each party shall pay the costs and fees of the
        appraiser/broker it selected; if a third appraiser/broker is selected,
        the party whose report is not selected to be the Fair Market Rental
        Rate by said third appraiser/broker shall pay all of said third
        appraiser's/broker's costs and fees.

             2.12.4  Conditions. The Option to Renew shall be conditioned upon
        the following: (i) at the time of Tenant's notice to Landlord of its
        intent to exercise the Option to Renew and continuing thereafter until
        the commencement of the Option Term, Tenant shall have been in
        possession of and occupying the Premises for the conduct of its business
        therein and, other than to a permitted assignee that is a "Corporate
        Affiliate" (as defined in Section 4.16 below), there shall have been no
        assignment of this Lease or subletting of any portion of the Premises;
        and (ii) the rights contained in this section shall be personal to the
        originally named Tenant and any permitted Corporate Affiliate assignee
        and may be exercised only by the originally named Tenant or a permitted
        Corporate Affiliate assignee (and not any other assignee, sublessee, or
        other transferee of Tenant's interest in this Lease) and only if the
        originally named Tenant or a permitted Corporate Affiliate assignee
        occupies the entire Premises as of the date it exercises the Option to
        Renew in accordance with the terms of this section.

           SECTION 3: BASE RENT, ADDITIONAL RENT AND OTHER SUMS PAYABLE
                                   UNDER LEASE

 3.1    PAYMENT OF RENTAL. Tenant agrees to pay Base Rent, Additional Rent and
        any other sum due under this Lease to Landlord without demand,
        deduction, credit, adjustment or offset of any kind or nature, in lawful
        money of the United States when due under this Lease, at the offices of
        Manager at Manager's Address, or to such other party or at such other
        place as Landlord may from time to time designate in writing.

3.2     BASE RENT. On execution of this Lease, Tenant shall pay to Landlord
        the amount specified in the definition of Prepaid Rent for the month
        specified in the definition of that term. Tenant agrees to pay Base Rent
        to Landlord without demand, in advance on or before the first day of
        each calendar month of the Lease Term. Base Rent for any partial month
        at the beginning or end of the Lease Term shall be prorated. Base Rent
        for any partial month at the beginning of the Lease Term shall be paid
        by Tenant on the Commencement Date.

 3.3    SECURITY DEPOSIT. On execution of this Lease, Tenant shall pay to
        Landlord the sum specified in the definition of the term Security
        Deposit, as security for the full and faithful payment of all sums due
        under this Lease and the full and faithful performance of every covenant
        and condition of this Lease to be performed by Tenant. If Tenant shall
        breach or default with respect to any payment obligation or other
        covenant or condition of this Lease, Landlord may apply all or any part
        of the Security Deposit to the payment of any sum in default or any
        damage suffered by Landlord as a result of such breach or default, and
        in such event, Tenant shall, upon demand by Landlord, deposit with
        Landlord the amount so applied so that Landlord shall have the full
        Security Deposit on hand at all times during the Lease Term. In the
        event

                                      -10-
<PAGE>
        Tenant defaults on its obligations to pay Base Rent, Additional Rent or
        any other sum as and when due under this Lease on more than two
        occasions during any twelve (12) month period and Landlord has delivered
        notice of each such default, Landlord may, at any time thereafter
        require an increase in the Security Deposit by an amount equal to one
        hundred percent (100%) of the amount specified in the definition of the
        term Security Deposit and Tenant shall immediately deposit such
        additional amount with Landlord upon Landlord's demand. Following such
        increase, the definition of the term Security Deposit shall refer to the
        amount of the Security Deposit prior to the increase plus the increased
        amount. The remedy of increasing the Security Deposits for Tenant's
        multiple defaults shall be in addition to and not a substitute for any
        of Landlord's other rights and remedies under this Lease or applicable
        Law. Additionally, Landlord's use or application of all or any portion
        of the Security Deposit shall not impair any other rights or remedies
        provided under this Lease or under applicable law and shall not be
        construed as a payment of liquidated damages. If Tenant shall have fully
        complied with all of the covenants and conditions of this Lease, the
        remaining Security Deposit shall be repaid to Tenant, without interest,
        within thirty (30) Business Days after the expiration of this Lease.
        Tenant may not mortgage, assign, transfer or encumber the Security
        Deposit and any such act on the part of Tenant shall be without force or
        effect. In the event any bankruptcy, insolvency, reorganization or other
        creditor-debtor proceedings shall be instituted by or against Tenant,
        the Security Deposit shall be deemed to be applied first to the payment
        of Base Rent, Additional Rent and all other sums payable under this
        Lease to Landlord for all periods prior to the institution of such
        proceedings and the balance, if any, may be retained by Landlord and
        applied against Landlord's damages. In the event of a sale or transfer
        of Landlord's estate or interest in the Land and Building, Landlord
        shall transfer the Security Deposit to the vendee or the transferee, and
        Landlord shall be considered released by Tenant from all liability for
        the return of the Security Deposit. Tenant shall look solely to the
        transferee for the return of the Security Deposit, and it is agreed that
        all of the foregoing shall apply to every transfer or assignment made of
        the Security Deposit to a new transferee. No mortgagee or purchaser of
        any or all of the Building at any foreclosure proceeding brought under
        the provisions of any mortgage shall (regardless of whether the Lease is
        at the time in question subordinated to the lien of any mortgage) be
        liable to Tenant or any other person for any or all of such sum (or any
        other or additional security deposit or other payment made by Tenant
        under the provisions of this Lease), unless Landlord has actually
        delivered it in cash to such mortgagee or purchaser, as the case may be.
        In the event of any rightful and permitted assignment of Tenant's
        interest in this Lease, the Security Deposit shall be deemed to be held
        by Landlord as a deposit made by the assignee, and Landlord shall have
        no further liability to the assignor with respect to the return or the
        Security Deposit.

               No right or remedy available to Landlord in this Lease shall
        preclude or extinguish any other right to which Landlord may be
        entitled. It is understood that if Tenant fails to perform its
        obligations and to take possession of the Premises as provided in this
        Lease, the Prepaid Rent and the Security Deposit shall not be deemed
        liquidated damages. Landlord may apply such sums to reduce Landlord's
        damages and such application of funds shall not preclude Landlord from
        recovering from Tenant all additional damages incurred by Landlord.

 3.4    ADDITIONAL RENT. Definitions of certain terms used in this paragraph are
        set forth in subparagraph 3.4.5. Tenant agrees to pay to Landlord, as
        additional rent as computed in this paragraph (individually and
        collectively the "Additional Rent"), all Operating Costs Allocable to
        the Premises in excess of the Base Amount Allocable to the Premises.

               3.4.1 RENTAL ADJUSTMENT FOR ESTIMATED OPERATING COSTS. Landlord
        shall

                                      -11-
<PAGE>
        furnish Tenant a written statement of Estimated Operating Costs
        Allocable to the Premises for each Year and the amount payable monthly
        by Tenant for such costs shall be computed as follows: one-twelfth
        (1/12) of the amount of the Estimated Operating Costs Allocable to the
        Premises in excess of the Base Amount Allocable to the Premises shall be
        Additional Rent and shall be paid monthly by Tenant for each month
        during such Year after the Commencement Date. If such written statement
        is furnished after the commencement of the Year (or as to the first Year
        during the Lease Term, after the Commencement Date), Tenant shall also
        make a retroactive lump-sum payment to Landlord equal to the monthly
        payment amount multiplied by the number of months during the Year (or as
        to the first Year during the Lease Term, after the Commencement Date)
        for which no payment was paid. Notwithstanding the foregoing, Landlord
        reserves the right, from time to time during each Year, to revise the
        Estimated Operating Costs Allocable to the Premises and upon notice to
        Tenant of such revision Tenant shall adjust its payment to Landlord
        under this subparagraph 3.4.1 accordingly.

               3.4.2 ACTUAL COSTS. After the close of each Year, Landlord shall
        deliver to Tenant a written statement setting forth in reasonable detail
        the Operating Costs Allocable to the Premises during the preceding Year.
        If such Operating Costs Allocable to the Premises for any Year exceed
        the Estimated Operating Costs Allocable to the Premises paid by Tenant
        to Landlord pursuant to subparagraph 3.4.1 for such Year, Tenant shall
        pay the amount of such excess to Landlord within thirty (30) days after
        receipt of such statement by Tenant. If such statement shows the
        Operating Costs Allocable to the Premises to be less than the Estimated
        Operating Costs Allocable to the Premises paid by Tenant to Landlord
        pursuant to subparagraph 3.4.1, then the amount of such overpayment
        shall be paid by Landlord to Tenant within twenty (20) Business Days
        following the date of such statement or, at Landlord's option, shall be
        credited towards the installment(s) of Additional Rent next coming due
        from Tenant.

               3.4.3 DETERMINATION OF OPERATING COSTS. Subject to the
        provisions of this Section 3.4, the determination of Operating Costs
        Allocable to the Premises shall be made by Landlord.

               3.4.4 END OF TERM. If this Lease shall terminate on a day other
        than the last day of a Year, (a) Landlord shall estimate the Operating
        Costs Allocable to the Premises for such Year predicated on the most
        recent reliable information available to Landlord; (b) the amount
        determined under clause (a) of this sentence shall be prorated by
        multiplying such amount by a fraction, the numerator of which is the
        number of days within the Lease Term in such Year and the denominator of
        which is 365; (c) the Base Amount Allocable to the Premises shall be
        prorated in the manner described in clause (b); (d) the clause (c)
        amount (i.e., the prorated Base Amount Allocable to the Premises) shall
        be deducted from the clause (b) amount (i.e., the prorated Operating
        Costs Allocable to the Premises); (e) if the clause (d) amount exceeds
        the Estimated Operating Costs Allocable to the Premises paid by Tenant
        for the last Year in the Lease Term, then Tenant shall pay the excess to
        Landlord within ten (10) Business Days after Landlord's delivery to
        Tenant of a statement for such excess; and (f) if the Estimated
        Operating Costs Allocable to the Premises paid by Tenant for the last
        Year in the Lease Term exceeds the clause (d) amount, then Landlord
        shall refund to Tenant the excess within the ten (10) Business Day
        period described in clause (e) if Tenant is not then in default of any
        of its obligations under this Lease. Landlord's and Tenant's obligations
        under this paragraph shall survive the expiration or other termination
        of this Lease.

               3.4.5 DEFINITIONS. Each underlined term in this subparagraph
        shall have the meaning set forth next to that underlined term:

                     (a) BASE AMOUNT ALLOCABLE TO THE PREMISES: Subject to the
                         provisions of Section 3.4.5(c) below, the actual

                                      -12-
<PAGE>

                         Operating Costs Allocable to the Premises for calendar
                         year 2000.

                     (b) ESTIMATED OPERATING COSTS ALLOCABLE TO THE PREMISES
                         Subject to the provisions of Section 3.4.5(c) below,
                         Landlord's estimate of Operating Costs Allocable to the
                         Premises for a Year to be given by Landlord to Tenant
                         Pursuant to subparagraph 3.4.1.

                     (c) OPERATING COSTS. All expenses paid or incurred by
                         Landlord in connection with the ownership, operation,
                         maintenance and/or repair of: (i) the Building; (ii)
                         the Project, provided that for purposes of this Lease,
                         such expenses shall be limited to that amount of
                         operating costs for the entire Project which is fairly
                         and equitably allocated by Landlord, in its reasonable
                         discretion, to the Building; and (iii) the personal
                         property used in conjunction with such maintenance,
                         operation, ownership and repair, including, without
                         limitation, all expenses paid or incurred by Landlord
                         for: (a) utilities, including electricity, water, gas,
                         sewers, fire sprinkler charges, refuse collection,
                         telephone charges, cable television or other electronic
                         or microwave signal reception, steam, heat, cooling or
                         any other service which is now or in the future
                         considered a utility and which are not payable directly
                         by tenants in the Project; (b) supplies; (c) cleaning
                         and janitorial services (including window washing),
                         landscaping and landscaping maintenance (including
                         irrigating, trimming, mowing, fertilizing, seeding and
                         replacing plants), snow removal and other services; (d)
                         security services, if any; (e) insurance; (f)
                         management fees not to exceed four percent (4%) of
                         Rent; (g) Property Taxes, tax consultant fees and
                         expenses, and costs of appeals of any Property Taxes;
                         (h) services of independent contractors; (i)
                         compensation (including employment taxes and fringe
                         benefits) of all persons who perform duties in
                         connection with any service, repair, maintenance,
                         replacement or improvement or other work included in
                         this subparagraph; (j) permit and inspection fees; (k)
                         assessments and special assessments due to deed
                         restrictions, declarations or owners associations or
                         other means of allocating costs of a larger tract of
                         which the Land is a part; (l) rental of any machinery
                         or equipment; (m) audit fees and accounting services
                         related to the Building, and charges for the
                         computation of the rents and charges payable by tenants
                         in the Project (but only to the extent the cost of such
                         fees and services are in addition to the cost of the
                         management fee); (n) the cost of improvements, repairs
                         or replacements; (o) maintenance and service contracts;
                         (p) legal fees and other expenses of legal or other
                         dispute resolution proceedings; (q) maintenance and
                         repair of the roof and roof membranes, (r) subject to
                         the provisions of Section 2.7.2, costs incurred by
                         Landlord for compliance with Access Laws, as set forth
                         in the paragraph entitled "Access Laws"; (s) elevator
                         service and repair, if any and (t) any other expense or
                         charge which in accordance with generally accepted
                         accounting and management principles would be
                         considered an expense of maintaining, operating, owning
                         or repairing the Building

                                      -13-
<PAGE>

                         and the Project. Without limiting the foregoing,
                         Operating Costs shall include replacement of roofs and
                         roof membranes; exterior painting; parking area
                         resurfacing, resealing and restriping parking areas and
                         driveways; upgrading of the HVAC systems in the
                         Building, and other capital improvements to the
                         Building or to the Project made either for the purpose
                         of reducing Operating Expenses or in order to comply
                         with the requirements of applicable law which take
                         effect with regard to the Building after the
                         Commencement Date or which are necessitated as a result
                         of Tenant's particular use of the Premises or the
                         construction of the Tenant Improvements or other
                         improvements in the Premises; provided that, such
                         capital improvements, whether installed before or after
                         the Commencement Date, shall be amortized with market
                         interest over their estimated useful lives as
                         determined by Landlord in accordance with generally
                         accepted accounting principles and only the
                         amortization installments and interest attributable to
                         the Lease Term shall be an Operating Cost under this
                         Lease.

                             Notwithstanding the foregoing, the following items
                         shall not be included in Operating Expenses: (1) any
                         payments under a ground lease or master lease relating
                         to the Building; (2) bad debt expenses; (3) any
                         interest, principal payments, attorneys' fees, points,
                         fees or closing or other lender costs on financing
                         secured by a deed of trust or mortgage on the Building;
                         (4) expenditures which, under generally accepted
                         accounting principles, are capitalized, except as
                         provided in the immediately preceding paragraph; (5)
                         all costs and expenses for which Landlord is reimbursed
                         under an "all-risk" policy of insurance (or which would
                         have been reimbursed if Landlord had carried insurance
                         as herein required) or which are covered by
                         condemnation proceeds, to the extent of the net
                         receipts from such insurance or proceeds; (6)
                         advertising or promotional expenses with respect to
                         leasing space in the Building; (7) costs incurred
                         exclusively in connection with the leasing of premises
                         in the Building, including but not limited to, leasing
                         commissions, real estate brokerage commissions, and
                         attorneys' fees in connection with the negotiation and
                         preparation of lease proposals, deal 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;
                         (8) costs incurred for or services to or within the
                         premises of another tenant or occupant of the Building
                         where such services are of a nature which is not
                         Landlord's responsibility to perform pursuant to this
                         Lease, except where Landlord may do such work both to
                         such other premises and to the Premises; (9) costs and
                         expenses incurred by Landlord in performing work
                         necessary to remedy violations of code requirements
                         concerning Building improvements where such code
                         requirements were applicable at the time of the initial
                         installation or construction of such improvements or

                                      -14-
<PAGE>
                         were otherwise required to be complied with by Landlord
                         in the Building prior to the Commencement Date
                         (excluding, however, costs and expenses incurred by
                         Landlord as a result of Tenant's particular use of the
                         Premises, or the construction of the Tenant
                         Improvements or other improvements in the Premises;
                         (10) the portion of any fee or charge for services paid
                         to a party owned by or under common ownership with
                         Landlord to the extent that the same exceeds the
                         competitive cost for such services were they not so
                         rendered by a party affiliated with Landlord, except
                         that Operating Expenses may, in any event, include a
                         management fee in an amount not to exceed four percent
                         (4%) of Rent; (11) salaries and benefits of Landlord's
                         personnel above the grade of project manager; (12) any
                         compensation paid to clerks, attendants or other
                         persons or entities in any retail business operated by
                         Landlord; (13) costs arising from Landlord's charitable
                         or political contributions; (14) costs, including
                         permit, license and inspection costs, directly incurred
                         in the installation of improvements made within the
                         premises and exclusively for the benefit of a
                         particular tenant of the Building, including costs of
                         improving, decorating, painting or redecorating
                         premises for such a tenant; (15) costs and expenses
                         incurred in connection with the negotiation or
                         litigation of disputes with Tenant or another tenant of
                         claims of violation by Landlord of this Lease or any
                         other lease in the Building, including fines,
                         penalties, interest, damages and any legal and other
                         professional fees; (16) all costs and expenses for
                         repairs and maintenance for which Landlord is
                         reimbursed directly by any tenant of any space in the
                         Building (excluding reimbursement under an operating
                         expense provision) or by vendor, contractor or provider
                         of materials or services to Landlord; (17) costs
                         attributable to enforcing leases against tenants in the
                         Building or in litigating other disputes with tenants
                         regarding the rights and obligations of Landlord, such
                         as attorneys' fees, court costs, adverse judgments and
                         similar expenses; or (18) costs incurred by Landlord in
                         connection with the breach of any of Landlord's
                         covenants, representations and warranties in this
                         Lease. If less than one hundred percent (100%) of the
                         net rentable area of the Building and the Project is
                         occupied by tenants at all times during any Year, then
                         Operating Costs for such Year shall include all
                         additional costs and expenses that Landlord reasonably
                         determines would have been incurred had one hundred
                         percent (100%) of the Building and the Project been
                         occupied at all times during such Year by tenants.

                     (d) OPERATING COSTS ALLOCABLE TO THE PREMISES. The product
                         of Tenant's Pro Rata Share times Operating Costs.

               3.4.6 TENANT'S COSTS. Tenant agrees to reimburse or pay Landlord
        within twenty (20) Business Days after invoice from Landlord for (a) any
        cleaning expenses incurred by Landlord, including carpet cleaning,
        garbage and trash removal expenses, over and above the normal cleaning
        provided by Landlord, (b) any expense incurred by Landlord for usage in
        the Premises of heating, ventilating and air conditioning services,
        elevator services, electricity, water, janitorial services, or any other
        services or utilities over

                                      -15-
<PAGE>

        and above the normal usage for the Premises and (c) any expense incurred
        by Landlord arising out of or relating to the usage by Tenant or
        Tenant's Agents of the public or common areas of the Building or the
        Project, or any of the equipment contained therein, which usage is over
        and above the normal usage for such public or common areas or equipment.
        Landlord reserves the right to install and activate separate metering of
        electricity, water or other utilities to the Premises, and Tenant agrees
        to reimburse or pay Landlord within twenty (20) Business Days after
        invoice from Landlord for all costs of such separate metering in which
        case the Base Amount Allocable to the Premises and the Operating Costs
        shall be adjusted accordingly.

               3.4.7 Any sums payable under this Lease pursuant to this
        paragraph or otherwise shall be Additional Rent and, in the event of
        nonpayment of such sums, Landlord shall have the same rights and
        remedies with respect to such nonpayment as it has with respect to
        nonpayment of the Base Rent due under this Lease. The term "Rent" shall
        mean Base Rent, Additional Rent, and any other sums payable by Tenant
        under this Lease.

               3.4.8 OPERATING COST AUDIT. Landlord shall maintain records
        concerning estimated and actual Operating Costs Allocable to the
        Premises for no less than twelve (12) months following the period
        covered by the statement or statements furnished Tenant, after which
        time Landlord may, provided there is not then any ongoing dispute
        between Landlord and Tenant concerning the same of which Tenant has
        notified Landlord in writing, dispose of such records. Provided that
        Tenant is not then in default of its obligation to pay Base Rent,
        Additional Rent or other payments required to be made by it under this
        Lease and provided that Tenant is not otherwise in default under this
        Lease, Tenant may, at Tenant's sole cost and expense, cause a Qualified
        Person (as defined below) to inspect Landlord's records. Such
        inspection, if any, shall be conducted no more than once each Year,
        during Landlord's normal business hours within sixty (60) Business Days
        after receipt of Landlord's written statement of Operating Costs
        Allocable to the Premises for the previous year, and upon Tenant first
        furnishing Landlord written notice of the inspection, if any, at least
        fifteen (15) Business Days in advance of such inspection. Any errors
        disclosed by the review shall be promptly corrected by Landlord;
        provided, however, that if Landlord disagrees with any such claimed
        errors, Landlord shall have the right to cause another review to be made
        by an auditor of Landlord's choice. In the event the results of the
        review of records (taking into account, if applicable, the results of
        any additional review caused by Landlord) reveal that Tenant has
        overpaid obligations for a preceding period, the amount of such
        overpayment shall be credited against Tenant's subsequent installment of
        Base Rent, Additional Rent or other payments due to Landlord under the
        Lease. In the event that such results show that Tenant has underpaid its
        obligations for a preceding period, the amount of such underpayment
        shall be paid by Tenant to Landlord with the next succeeding installment
        obligation of estimated Operating Costs Allocable to the Premises. If
        the actual Operating Costs Allocable to the Premises for any given Year
        were improperly computed and if the actual Operating Costs Allocable to
        the Premises are overstated by more than 5%, Landlord shall reimburse
        Tenant for the cost of its audit. A "Qualified Person" means an
        accountant or other person experienced in accounting for income and
        expenses of office projects, who is engaged solely by Tenant on terms
        which do not entail any compensation based or measured in any way upon
        any savings in Additional Rent or reduction in Operating Costs Allocable
        to the Premises achieved through the inspection process described in
        this subparagraph.

3.5     UTILITIES. Tenant shall contract directly and pay for all telephone used
        on or from the premises together with any taxes, penalties, surcharges
        or similar charges relating to such telephone use. Tenant acknowledges
        that the

                                      -16-
<PAGE>
        Project currently has a utility association which administers the supply
        of water, gas, heat, light, power, sewer, fire sprinkler and other
        utilities to the Premises. Tenant shall, unless and until Landlord
        elects otherwise, be billed by, and shall pay directly to, the utility
        association providing such services to the Project, all utility charges
        in excess of Tenant's Pro Rata Share of such utility charges that are
        included in the Base Amount, together with taxes, penalties, surcharges
        or similar charges relating to such utilities, provided, however, Tenant
        shall be solely and fully responsible for the cost of all utilities in
        excess of those standard utilities provided by Landlord or the
        association pursuant to Exhibit E. All such payments shall be considered
        Operating Costs. Landlord shall in no event be liable for any damages
        directly or indirectly resulting from or arising out of the interruption
        or failure of utility services on or about the Premises. Tenant shall
        have no right to terminate this Lease nor shall Tenant be entitled to
        any abatement of Rent as a result of any such interruption or failure of
        utility services. No such interruption or failure of utility services
        shall be deemed to constitute a constructive eviction of Tenant.

 3.6    HOLDOVER. If Landlord agrees in writing that Tenant may hold over after
        the expiration or earlier termination of this Lease, unless the parties
        hereto otherwise agree in writing as to the terms of such holding over,
        the holdover tenancy shall be subject to termination by Landlord or
        Tenant at any time upon not less than thirty (30) days' prior written
        notice. If Tenant holds over without the consent of Landlord, the same
        shall be a tenancy at will terminable at any time, and Tenant shall be
        liable to Landlord for, and Tenant shall indemnify, protect, defend and
        hold Landlord harmless from and against, any damages, liabilities,
        losses, costs, expenses or claims suffered or caused by such holdover,
        including damages and costs related to any successor tenant of the
        Premises to whom Landlord could not deliver possession of the Premises
        when promised. During any holdover tenancy, whether with or without
        consent, Tenant shall pay to Landlord from time to time upon demand, an
        amount equal to two hundred percent (200%) of the then applicable Base
        Rent, plus all Additional Rent and other sums payable under this Lease,
        and be bound by all the terms, covenants and conditions specified in
        this Lease, as so far applicable. No holding over by Tenant, whether
        with or without consent of Landlord, shall operate to extend this Lease.
        The preceding provisions of this Paragraph 3.6 shall not be construed as
        Landlord's consent to any holding over by Tenant.

 3.7    LATE CHARGE. If Tenant fails to make any payment of Base Rent,
        Additional Rent or other amount when due under this Lease, a late charge
        is immediately due and payable by Tenant equal to five percent (5%) of
        the amount of any such payment; provided, however, the late charge shall
        be reduced to three percent (3%) of the amount due for the first
        delinquent installment of Rent during any Year (provided that such first
        delinquent installment is paid within ten (10) days after written notice
        from Landlord that such Rent is past due). Landlord and Tenant agree
        that this charge compensates Landlord for the administrative costs
        caused by the delinquency. The parties agree that Landlord's damage
        would be difficult to compute and the amount stated in this paragraph
        represents a reasonable estimate of such damage. Assessment or payment
        of the late charge contemplated in this paragraph shall not excuse or
        cure any Event of Default or breach by Tenant under this Lease or impair
        any other right or remedy provided under this Lease or under law.

 3.8    DEFAULT RATE. Any Base Rent, Additional Rent or other sum payable under
        this Lease which is not paid when due shall bear interest at a rate
        equal to the lesser of: (a) the published prime rate of Riggs Bank N.A.,
        or such other national banking institution designated by Landlord if
        such bank ceases to publish a prime rate (the "Prime Rate"), then in
        effect, plus four (4) percentage points, or (b) the maximum rate of
        interest per annum permitted by applicable law (the "Default Rate"), but
        the payment of such interest

                                      -17-
<PAGE>

         shall not excuse or cure any Event of Default or breach by Tenant under
         this Lease or impair any other right or remedy provided under this
         Lease or under law.

                          SECTION 4: GENERAL PROVISIONS

 4.1    MAINTENANCE AND REPAIR BY LANDLORD. Subject to the paragraphs captioned
        "Damage or Destruction" and "Condemnation", Landlord shall maintain the
        roof, the structural components and the exterior of the Building and the
        public and common areas of the Project in reasonably good order and
        condition, except ordinary wear and tear, and except for damage
        occasioned by the act or omission of Tenant or Tenant's Agents which
        shall be paid for entirely by Tenant upon demand by Landlord.
        Additionally, Landlord shall provide those services identified on
        Exhibit "E," the cost of which shall constitute an Operating Cost. In
        the event any or all of the Project becomes in need of maintenance or
        repair which Landlord is required to make under this Lease, Tenant shall
        immediately give written notice to Landlord, and Landlord shall not be
        obligated in any way to commence such maintenance or repairs until a
        commercially reasonable time elapses after Landlord's receipt of such
        notice. Tenant hereby waives the benefit of Sections 1941 and 1942 of
        the California Civil Code and any other statute providing a right to
        make repairs and deduct the cost thereof from the Rent. Tenant waives
        any right to terminate this Lease or offset or abate Rent by reason of
        any failure of Landlord to make repairs to the Premises.

 4.2    MAINTENANCE AND REPAIR BY TENANT. Except as is expressly set forth as
        Landlord's responsibility pursuant to the paragraph captioned
        "Maintenance and Repair by Landlord," Tenant shall at Tenant's sole cost
        and expense keep and maintain all portions of the Premises in good
        condition and repair, including interior painting, plumbing and utility
        fixtures and installations, carpets and floor coverings, all interior
        wall surfaces and coverings including tile and paneling, replacement of
        all broken windows (including without limitation any exterior windows),
        interior doors, roof penetrations and membranes in connection with any
        Tenant installations on the roof including satellite dishes, and
        interior preventative maintenance. If Tenant fails to maintain or repair
        the Premises in accordance with this paragraph, then Landlord may, but
        shall not be required to, enter the Premises upon five (5) days prior
        written notice to Tenant (or immediately without any notice in the case
        of an emergency) to perform such maintenance or repair at Tenant's sole
        cost and expense, unless Tenant has commenced such repair within such
        five (5) day period and is diligently prosecuting the same to
        completion. Tenant shall pay to Landlord the cost of such maintenance or
        repair plus a ten percent (10%) administration fee, within ten (10)
        Business Days of written demand from Landlord.

 4.3    COMMON AREAS/SECURITY. The common areas of the Project shall be subject
        to Landlord's sole management and control. Without limiting the
        generality of the immediately preceding sentence, Landlord reserves the
        exclusive right as it deems necessary or desirable to install,
        construct, remove, maintain and operate lighting systems, facilities,
        improvements, equipment and signs on, in or to all parts of the common
        areas; change the number, size, height, layout, or locations of walks,
        driveways and truckways or parking areas now or later forming a part of
        the Land or Project; make alterations or additions to the Building or
        common area; close temporarily all or any portion of the common areas to
        make repairs, changes or to avoid public dedication; grant easements to
        which the Land will be subject, replat, subdivide, or make other changes
        to the Land; place, relocate and operate utility lines through, over or
        under the Land and Building; and use or permit the use of all or any
        portion of the roofs of the Building. Landlord has no duty or obligation
        to provide any security services in, on or around the Premises, Land or
        Building, and Tenant recognizes that security services, if

                                      -18-
<PAGE>
        any, provided by Landlord will be for the sole benefit of Landlord and
        the protection of Landlord's property and under no circumstances shall
        Landlord be responsible for, and Tenant waives any rights with respect
        to, Landlord providing security or other protection for Tenant or
        Tenant's Agents or property in, on or about the Premises, Land or
        Building. Subject to Landlord's prior approval (which approval shall not
        be unreasonably withheld), Tenant may, at its sole cost and expense,
        install, establish and maintain security services within the Premises;
        provided that such security services, including, without limitation, any
        apparatus, facilities, equipment or people utilized in connection with
        the provision of such security services, comply with the Governmental
        Requirements and shall not cause the Building or the Project to be out
        of compliance with the Governmental Requirements. Notwithstanding the
        foregoing, any such security services installed, established or
        maintained by Tenant must not affect or impact any portion of the
        Building, Land or the Project other than the Premises and shall not in
        any way limit or interfere with Landlord's ability to exercise its
        rights as provided in the paragraph captioned "ACCESS". Tenant's rights
        under this subparagraph are subject to all the obligations, limitations
        and requirements as set forth in the paragraphs captioned "Tenant
        Alterations" and "Tenant's Work Performance". Landlord reserves the
        right to relocate parking areas and driveways and to build additional
        improvements in the common areas so long as Tenant's Parking Rights are
        maintained and Tenant's access to the Premises is not materially
        adversely affected.

 4.4    TENANT ALTERATIONS. Tenant shall not make any alterations, additions or
        improvements in or to the Premises, or make changes to locks on doors,
        or add, disturb or in any way change any floor covering, wall covering,
        fixtures, plumbing or wiring (individually and collectively "Tenant
        Alterations"), without first obtaining the consent of Landlord which may
        be withheld in Landlord's reasonable discretion; provided, however, with
        respect to Tenant Alterations that may affect structural, exterior,
        mechanical or electrical aspects of the Premises, Landlord may withhold
        its consent in its sole and absolute discretion. Notwithstanding the
        foregoing, Tenant may make strictly cosmetic changes to the finish work
        in the Premises, not including any changes affecting the Project
        structure, appearance, or systems and equipment, without Landlord's
        consent (but nevertheless requiring at least 10 days' prior notice to
        Landlord and otherwise in compliance with the provisions of this
        Paragraph 4.4), provided that (i) the cost of any individual change does
        not exceed Ten Thousand Dollars ($10,000.00), (ii) the aggregate cost of
        any such changes does not exceed Fifty Thousand Dollars ($50,000.00) in
        any consecutive twelve (12) month period, and such changes do not
        require any structural or other substantial modifications to the
        Premises, and (iii) no such Tenant Alteration affects structural,
        exterior, mechanical or electrical aspects of the Premises. Tenant shall
        deliver to Landlord full and complete plans and specifications for any
        proposed Tenant Alterations and, if consent by Landlord is given, all
        such work shall be performed at Tenant's expense by Tenant (a "Permitted
        Alteration"). Tenant shall pay to Landlord all reasonable out-of-pocket
        costs incurred by Landlord for any architectural, engineering,
        supervisory and/or legal services in connection with any Tenant
        Alterations including, without limitation, Landlord's review of the
        Plans. Without limiting the generality of the foregoing, Landlord may
        require Tenant at Tenant's sole cost and expense, to obtain and provide
        Landlord with proof of insurance coverage and a payment and performance
        bond, in forms, amounts and by companies acceptable to Landlord. Should
        Tenant make any alterations without Landlord's prior written consent, or
        without satisfaction of any conditions established by Landlord, Landlord
        shall have the right, in addition to and without limitation of any right
        or remedy Landlord may have under this Lease, at law or in equity, to
        require Tenant to remove some or all of the Tenant Alterations at
        Tenant's sole cost and expense and restore the

                                      -19-
<PAGE>

        Premises to the same condition existing prior to undertaking the
        Tenant Alterations, or, at Landlord's election, Landlord may remove such
        Tenant Alterations and restore the Premises at Tenant's expense. All
        Tenant Alterations to the Premises, regardless of which party
        constructed them or paid for them, shall become the property of Landlord
        and shall remain upon and be surrendered with the Premises upon the
        expiration or earlier termination of this Lease; provided, however, at
        Landlord's sole election Tenant shall be obligated, at its sole cost and
        expense, to remove all (or such portion as Landlord shall designate) of
        the Tenant Alterations and Tenant Improvements and repair any damage
        resulting from such removal and return the Premises to the same
        condition existing prior to the undertaking upon the expiration or
        earlier termination of this Lease. If Tenant fails to remove any such
        Tenant Alterations as required by Landlord's consent, Landlord may do so
        and Tenant shall pay the entire cost thereof to Landlord within ten (10)
        Business Days after Tenant's receipt of Landlord's written demand
        therefor. Tenant shall have the right, at the time it requests
        Landlord's consent and delivers all plans and specifications to any
        Tenant Alteration to make a written request that Landlord notify Tenant
        whether Tenant shall be obligated to remove the applicable Tenant
        Alteration at the end of the Lease Term, in which event Tenant shall
        only be obligated to remove (i) those Tenant Alterations that Landlord
        notified Tenant it must remove at the end of the Lease Term at the same
        time of and in connection with Tenant's requested approval of the Tenant
        Alterations, and (ii) those Tenant Alterations that Tenant did not seek
        or did not obtain Landlord's written consent to leave in place at the
        end of the Lease Term, and that Landlord requires Tenant to remove.
        Tenant shall reimburse Landlord, upon receipt of demand therefor, for
        all reasonable out of pocket costs and expenses incurred by Landlord
        during its review of Tenant's plans and specifications (regardless of
        whether Landlord approves Tenant's request) and Tenant's construction.
        Nothing contained in this paragraph or the paragraph captioned "Tenant's
        Work Performance" shall be deemed a waiver of the provisions of the
        paragraph captioned "Mechanic's Liens."

 4.5    TENANT'S WORK PERFORMANCE. Any Tenant Alterations to be performed by
        Tenant under this paragraph shall be performed by contractors employed
        by Tenant under one or more construction contracts, in form and content
        approved in advance in writing by Landlord (which approval shall be
        subject to Landlord's discretion and may include a requirement that the
        prime contractor and the respective subcontractors of any tier: (a) be
        parties to, and bound by, a collective bargaining agreement with a labor
        organization affiliated with the Building and Construction Trades
        Council of the AFL CIO and (b) employ only members of such labor
        organizations to perform work within their respective jurisdictions);
        provided, however, that the requirements of clauses (a) and (b) above
        shall not apply to any Permitted Alterations. Tenant's contractors,
        workers and suppliers shall work in harmony with and not interfere with
        workers or contractors of Landlord or other tenants of Landlord. Subject
        to Tenant's right to use non-union labor for Permitted Alterations
        (provided, however, that Tenant shall not perform any Permitted
        Alterations using non-union labor during such times as Landlord's Agents
        are also performing work in the Premises), if Tenant's contractors,
        workers or suppliers do, in the opinion of Landlord, cause such
        disharmony or interference, Landlord's consent to the continuation of
        such work may be withdrawn upon written notice to Tenant. All Tenant
        Alterations shall be (1) completed in accordance with the plans and
        specifications approved by Landlord; (2) completed in accordance with
        all Governmental Requirements; (3) carried out promptly in a good and
        workmanlike manner; (4) of all new materials; and (5) free of defect in
        materials and workmanship. Tenant shall pay for all damage to the
        Premises, Building and Land caused by Tenant or Tenant's Agents. Tenant
        shall indemnify, defend and hold harmless Landlord and Landlord's Agents

                                      -20-

<PAGE>
        from any Claims arising as a result of the Tenant Alterations or any
        defective design, material or workmanship of any Tenant Alterations.

4.6     SURRENDER OF POSSESSION. Tenant shall, at the expiration or earlier
        termination of this Lease, surrender and deliver the Premises to
        Landlord in as good condition as when received by Tenant from Landlord
        or as later improved, reasonable use and wear excepted, and free from
        all tenancies or occupancies by any person.

4.7     REMOVAL OF PROPERTY. Unless otherwise agreed to in writing by Landlord,
        Tenant agrees that there are and shall be no trade fixtures in the
        Premises owned by Tenant. Upon expiration or earlier termination of this
        Lease, Tenant may remove its personal property, office supplies and
        office furniture and equipment if (a) such items are readily moveable
        and are not attached to the Premises; (b) such removal is completed
        prior to the expiration or earlier termination of this Lease; (c) Tenant
        is not in default of any covenant or condition of this Lease at the time
        of such removal; and (d) Tenant immediately repairs all damage caused by
        or resulting from such removal. All other property in the Premises and
        any Tenant Alterations (including, wall-to-wall carpeting, paneling,
        wall covering or lighting fixtures and apparatus) or any other article
        affixed to the floor, walls, ceiling or any other part of the Premises
        or Building, shall become the property of Landlord and shall remain upon
        and be surrendered with the Premises; provided, however, at Landlord's
        sole election, Tenant shall be obligated, at its sole cost and expense,
        to remove all (or such portion as Landlord shall designate) of the
        Tenant Alterations and repair any damage resulting from such removal.
        Provided that Tenant pays the Removal Fee, Tenant shall not be obligated
        to remove any of the Tenant Improvements. Tenant shall have the right,
        at the time it requests Landlord's consent and delivers all plans and
        specifications to any Tenant Alteration to make a written request that
        Landlord notify Tenant whether Tenant shall be obligated to remove the
        applicable Tenant Alteration at the end of the Lease Term, in which
        event Tenant shall only be obligated to remove (i) those Tenant
        Alterations that Landlord notified Tenant it must remove at the end of
        the Lease Term at the same time of and in connection with Tenant's
        requested approval of the Tenant Alterations, and (ii) those Tenant
        Alterations that Tenant did not seek or did not obtain Landlord's
        written consent to leave in place at the end of the Lease Term, and that
        Landlord requires Tenant to remove. Tenant waives all rights to any
        payment or compensation for such Tenant Alterations. If Tenant shall
        fail to remove any of its property of any nature from the Premises,
        Building or Land at the expiration or earlier termination of this Lease
        or when Landlord has the right of re-entry, Landlord may, at its option,
        remove and store such property without liability for loss of or damage
        to such property, such storage to be for the account and at the expense
        of Tenant. If Tenant fails to pay the cost of storing any such property,
        Landlord may, at its option, after it has been stored for a period of
        twenty (20) Business Days or more, sell or permit to be sold, any or all
        such property at public or private sale (and Landlord may become a
        purchaser at such sale), in such manner and at such times and places as
        Landlord in its sole discretion may deem proper, without notice to
        Tenant, and Landlord shall apply the proceeds of such sale: first, to
        the cost and expense of such sale, including reasonable attorney's fees
        actually incurred; second, to the payment of the costs or charges for
        storing any such property; third, to the payment of any other sums of
        money which may then be or later become due Landlord from Tenant under
        this Lease; and, fourth, the balance, if any, to Tenant.

4.8     ACCESS. Tenant shall permit Landlord and Landlord's Agents to enter into
        the Premises at any time on at least one (1) Business Day's notice
        (except in case of emergency, in which case no notice shall be
        required), for the purpose of inspecting the same or for the purpose of
        repairing, altering or improving the Premises or the Building. Nothing
        contained in this paragraph shall be deemed to impose any obligation
        upon Landlord not expressly

                                      -21-
<PAGE>
        stated elsewhere in this Lease. When reasonably necessary, such as an
        emergency situation, Landlord may temporarily close Building or Land
        entrances. Building doors or other facilities, without liability to
        Tenant by reason of such closure and without such action by Landlord
        being construed as an eviction of Tenant or as relieving Tenant from the
        duty of observing or performing any of the provisions of this Lease.
        Upon one (1) Business Day's notice, Landlord shall have the right to
        enter the Premises at any time during the Lease Term for the purpose of
        showing the Premises to prospective tenants and to erect on the Premises
        a suitable sign indicating the Premises are available. Tenant shall give
        written notice to Landlord at least twenty (20) Business Days prior to
        vacating the Premises and shall arrange to meet with Landlord for a
        joint inspection of the Premises prior to vacating. In the event of
        Tenant's failure to give such notice or arrange such joint inspection,
        Landlord's inspection at or after Tenant's vacating the Premises shall
        be conclusively deemed correct for purposes of determining Tenant's
        responsibility for repairs and restoration. Landlord shall not be liable
        for the consequences of admitting by passkey, or refusing to admit to
        the Premises, Tenant or any of Tenant's Agents, or other persons
        claiming the right of admittance.

4.9     DAMAGE OR DESTRUCTION.

               4.9.1 RESTORATION OF PREMISES. If the Premises are damaged by
        fire, earthquake or other casualty, Tenant shall give immediate written
        notice thereof to Landlord. If Landlord reasonably estimates, that the
        damage can be repaired in accordance with the then established
        Governmental Requirements within two hundred ten (210) days after
        Landlord is notified by Tenant of such damage and if there are
        sufficient insurance proceeds available to repair such damage, then
        Landlord shall proceed with reasonable diligence to restore the Premises
        to substantially the condition which existed prior to the damage and
        this Lease shall not terminate. If, in Landlord's reasonable estimation,
        the damage cannot be repaired within such 210 day period or if there are
        insufficient insurance proceeds available to repair such damage,
        Landlord may elect in its absolute discretion to either: (a) terminate
        this Lease or (b) restore the Premises to substantially the condition
        which existed prior to the damage and this Lease will continue. If
        Landlord restores the Premises under this paragraph, then (1) the Lease
        Term shall be extended for the time required to complete such
        restoration, (2) Tenant shall pay to Landlord, upon demand, Tenant's Pro
        Rata Share of any applicable deductible amount specified under
        Landlord's insurance and (3) Landlord shall not be required to repair or
        restore Tenant Improvements, Tenant Alterations, or any or all
        furniture, fixtures, equipment, inventory, improvements or other
        property which was in or about the Premises at the time of the damage
        and was not owned by Landlord. Except to the extent that Landlord is
        actually reimbursed by rental loss insurance, Base Rent, Additional Rent
        and any other sum due under this Lease during any reconstruction period
        shall not be abated. Tenant agrees to look to the provider of Tenant's
        insurance for coverage for the loss of Tenant's use of the Premises and
        any other related losses or damages incurred by Tenant during any
        reconstruction period.

                4.9.2 INTENTIONALLY OMITTED.

                4.9.3 TERMINATION OF LEASE BY MORTGAGE HOLDER'S ELECTION.
        Notwithstanding anything contained in this Lease to the contrary, if
        there is damage to the Premises, or Building and the holder of any
        indebtedness secured by a mortgage or deed of trust covering any such
        property requires that the insurance proceeds be applied to such
        indebtedness or the insurance proceeds are otherwise inadequate to
        complete the repair of the damages to the Premises, the Building or
        both, then Landlord shall have the right to terminate this Lease by
        delivering written notice of termination to Tenant within fifteen (15)
        Business Days after such requirement is made by such holder.

                                      -22-
<PAGE>
                4.9.4 DESTRUCTION NEAR END OF TERM. Notwithstanding the
        forgoing, if the Premises, the Building or the Project are wholly or
        partially damaged or destroyed within the final twelve (12) months of
        the Term, Landlord may, at its option, elect to terminate this Lease
        upon written notice given to Tenant within thirty (30) days following
        such damage or destruction.

                4.9.5 TERMINATION BY TENANT. Notwithstanding anything to the
        contrary set forth in this Section 4.9 above, within sixty (60) days
        after Landlord is notified by Tenant of such damage Landlord shall
        endeavor to notify Tenant of the estimated time to complete the repairs
        and restoration of the Premises and Project, as estimated by an
        independent contractor approved by Landlord (the "Landlord Response
        Notice"). Notwithstanding anything to the contrary set forth in the
        proceeding paragraph, if Landlord notifies Tenant that the estimated
        time to complete the repairs or restoration will exceed two hundred ten
        (210) days from the date Landlord is notified by Tenant of such damage
        or destruction, Tenant may terminate this Lease effective as of the date
        of such damage or destruction by delivering written notice thereof to
        Landlord within thirty (30) days after receipt of Landlord's Response
        Notice. If the Lease is not terminated as provided above, and the
        repairs and restoration are not completed within two hundred ten (210)
        days after the date that Landlord is notified by Tenant of the damage or
        destruction, Tenant may deliver written notice to Landlord (the "Damage
        Notice") stating that if the repairs and restoration are not completed
        within forty-five (45) days thereafter, Tenant will terminate the Lease.
        If the repairs and restoration are not completed within forty-five (45)
        days after Tenant delivers such notice to Landlord, the Lease shall
        terminate effective as of the date of such damage or destruction unless
        Tenant rescinds its Damage Notice prior to the expiration of such
        forty-five (45) day period.

                4.9.6 WAIVER. Tenant waives the provisions of any statutes
        presently existing or hereafter enacted (including, without limitation,
        California Civil Code sections 1932 and 1933) which relate to
        termination of leases when the thing leased is destroyed and agrees that
        such event will be governed by the terms of this Lease.

4.10    CONDEMNATION. If all of the Premises, or such portions of the Building
        as may be required for the Tenant's reasonable use of the Premises, are
        taken by eminent domain or by conveyance in lieu thereof, this Lease
        shall automatically terminate as of the date the physical taking occurs,
        and all Base Rent, Additional Rent and other sums payable under this
        Lease shall be paid to that date. In case of taking of a part of the
        Premises or a portion of the Building not required for the Tenant's
        reasonable use of the Premises, then this Lease shall continue in full
        force and effect and the Base Rent shall be equitably reduced based on
        the proportion by which the floor area of the Premises is reduced, such
        reduction in Base Rent to be effective as of the date the physical
        taking occurs. Additional Rent and all other sums payable under this
        Lease shall not be abated but Tenant's Pro Rata Share may be
        redetermined as equitable under the circumstances. Landlord reserves all
        rights to damages or awards for any taking by eminent domain relating to
        the Premises, Building, Land and the unexpired term of this Lease.
        Tenant assigns to Landlord any right Tenant may have to such damages or
        award and Tenant shall make no claim against Landlord for damages for
        termination of its leasehold interest or interference with Tenant's
        business. Tenant shall have the right, however, to claim and recover
        from the condemning authority compensation for any loss to which Tenant
        may be entitled for Tenant's moving expenses or other relocation costs;
        provided that, such expenses or costs may be claimed only if they are
        awarded separately in the eminent domain proceedings and not as a part
        of the damages recoverable by Landlord. Tenant waives all rights it may
        have under California Code of Civil Procedure section 1265.130, or
        otherwise, to terminate this Lease based on a partial condemnation.

                                      -23-
<PAGE>
 4.11   PARKING. Tenant shall have the nonexclusive privilege to use parking
        spaces on the Land in common with other tenants of Landlord, in the area
        shown on Exhibit G attached hereto (the "Parking Area"). Tenant's
        parking privileges shall be subject to the rules and regulations
        relating to parking adopted by Landlord from time to time. Provided that
        the parking spaces provided to Tenant under this Lease shall remain
        within the Parking Area, Landlord shall have the right to grant
        designated, reserved parking stalls to other tenants in the Building. In
        no event shall the number of parking stalls used by Tenant and Tenant's
        Agents exceed the number of stalls allocated to Tenant in the definition
        of the Parking Rights. Landlord shall have no obligation whatsoever to
        monitor, secure or police the use of the parking or other common areas.
        Tenant acknowledge that, if the Space Plan mutually approved by Landlord
        and Tenant pursuant to the Tenant Work Letter provides for the
        construction of Tenant improvements which would eliminate one or more
        parking spaces in the parking area depicted on Exhibit "G", then the
        number of parking spaces available to Tenant as provided in Section 1.25
        of this Lease will be reduced by the number of such spaces so
        eliminated.

 4.12   INDEMNIFICATION. Tenant shall indemnify, defend and hold harmless
        Landlord and Landlord's Agents from and against any and all Claims,
        arising in whole or in part out of (a) the possession, use or occupancy
        of the Premises or the business conducted in the Premises, (b) any act,
        omission or negligence of Tenant or Tenant's Agents, or (c) any breach
        or default under this Lease by Tenant. Neither Landlord nor Landlord's
        Agents shall, to the extent permitted by law, have any liability to
        Tenant, or to Tenant's Agents, for any Claims arising out of any cause
        whatsoever, including repair to any portion of the Premises;
        interruption in the use of the Premises or any equipment therein; any
        accident or damage resulting from any use or operation by Landlord,
        Tenant or any person or entity of heating, cooling, electrical, sewerage
        or plumbing equipment or apparatus; termination of this Lease by reason
        of damage to the Premises or Building; fire, robbery, theft, vandalism,
        mysterious disappearance or any other casualty; actions of any other
        tenant of the Building or of any other person or entity; inability to
        furnish any service required of Landlord as specified in this Lease; or
        leakage in any part of the Premises or the Building from rain, ice or
        snow, or from drains, pipes or plumbing fixtures in the Premises or the
        Building; except for Claims arising solely out of the gross negligence
        or willful misconduct of Landlord in failing to repair or maintain the
        Building as required by this Lease after notice by Tenant as required by
        the paragraph captioned "Maintenance and Repair by Landlord"; provided
        that, in no event shall Landlord be responsible for any interruption to
        Tenant's business or for any indirect or consequential losses suffered
        by Tenant or Tenant's Agents. The obligations of this paragraph shall be
        subject to the paragraph entitled "Waiver of Subrogation. "

 4.13   TENANT INSURANCE.

                4.13.1 FORM OF POLICIES. Tenant shall, throughout the Lease
        Term, at its own expense, keep and maintain in full force and effect the
        following policies, each of which shall be endorsed as needed to provide
        that the insurance afforded by these policies is primary and that all
        insurance carried by Landlord is strictly excess and secondary and shall
        not contribute with Tenant's liability insurance:

                        (a)     A policy of commercial general liability
                                insurance, including a contractual liability
                                endorsement covering Tenant's obligations under
                                the paragraph captioned "Indemnification",
                                insuring against claims of bodily injury and
                                death or property damage or loss with a combined
                                single limit at the Commencement Date of this
                                Lease of not less than Two Million Dollars
                                ($2,000,000.00) per occurrence, which limit
                                shall be reasonably increased

                                      -24-
<PAGE>
                                during the Lease Term at Landlord's request to
                                reflect both increases in liability exposure
                                arising from inflation as well as from changing
                                use of the Premises or changing legal liability
                                standards, which policy shall be payable on an
                                "occurrence" rather than a "claims made" basis,
                                and, which policy identifies Landlord and
                                Manager and, at Landlord's request. Landlord's
                                mortgage lenders or investment advisors, as
                                additional named insureds;

                        (b)     A policy of extended property insurance (what
                                is commonly called "all risk") covering Tenant's
                                Improvements and Tenant's Alterations,
                                furniture, fixtures, equipment, inventory, and
                                other personal property located on the Premises
                                for one hundred percent (100%) of the current
                                replacement value of such property;

                        (c)     Business interruption insurance in an amount
                                sufficient to cover costs, damages, lost income,
                                expenses, Base Rent, Additional Rent and all
                                other sums payable under this Lease, should any
                                or all of the Premises not be usable for a
                                period of up to twelve (12) months;

                        (d)     A policy of worker's compensation insurance as
                                required by law and employer's liability
                                insurance with limits of no less than One
                                Million Dollars ($1,000,000); and

                        (e)     A policy of comprehensive automobile liability
                                insurance, including loading and unloading, and
                                covering owned, non-owned and hired vehicles,
                                with limits of no less than One Million Dollars
                                ($1,000,000) per occurrence.

        4.13.2 APPROVAL OF INSURER. All insurance policies required under this
paragraph shall be with companies with a Best rating of AXII or better and each
policy shall provide that it is not subject to cancellation or reduction in
coverage except after thirty (30) days' written notice to Landlord. Tenant shall
deliver to Landlord and, at Landlord's request Landlord's mortgage lender(s),
prior to the Commencement Date and from time to time thereafter, certificates
evidencing the existence and amounts of all such policies.

        4.13.3 LANDLORD-OBTAINED INSURANCE. If Tenant fails to acquire or
maintain any insurance or provide any certificate required by this paragraph,
Landlord may, but shall not be required to, obtain such insurance or
certificates and the costs associated with obtaining such insurance or
certificates shall be payable by Tenant to Landlord on demand.

        4.14 LANDLORD'S INSURANCE. Landlord shall, throughout the Lease Term,
keep and maintain in full force and effect:

                        (a)     A policy of commercial general liability
                                insurance, insuring against claims of bodily
                                injury and death or property damage or loss with
                                a combined single limit at the Commencement Date
                                of not less than Five Million Dollars
                                ($5,000,000.00), which policy shall be payable
                                on an "occurrence" rather than a "claims made"
                                basis; and

                        (b)     A policy of extended property insurance (what
                                is commonly called "all risk") covering the
                                Building and Landlord's personal property, if
                                any, located on the Property in the amount of
                                one hundred percent (100%) of the then current
                                replacement value of such property.

                        (c)     Landlord may, but shall not be required to,
                                maintain other types of insurance as Landlord
                                deems appropriate, including, but not limited
                                to, property insurance coverage for earthquakes
                                and floods in such amounts as Landlord

                                      -25-
<PAGE>
                                deems appropriate. Such policies may be
                                "blanket" policies which cover other properties
                                owned by Landlord

4.15    WAIVER OF SUBROGATION. Notwithstanding anything in this Lease to the
        contrary, Landlord and Tenant hereby each waive and release the other
        from any and all Claims or any loss or damage that may occur to the
        Land, Building, Premises, or personal property located therein, by
        reason of fire or other casualty regardless of cause or origin,
        including the negligence or misconduct of Landlord, Tenant, Landlord's
        Agents or Tenant's Agents, but only to the extent of the insurance
        proceeds paid to such releasor under its policies of insurance or, if it
        fails to maintain the required polices, the insurance proceeds that
        would have been paid to such releasor if it had maintained such
        policies. Each party to this Lease shall promptly give to its insurance
        company written notice of the mutual waivers contained in this
        subparagraph, and shall cause its insurance policies to be properly
        endorsed, if necessary, to prevent the invalidation of any insurance
        coverages by reason of the mutual waivers contained in this
        subparagraph.

4.16    ASSIGNMENT AND SUBLETTING BY TENANT.

               4.16.1 RESTRICTIONS ON TRANSFER. Tenant shall not have the right
        to assign, transfer, mortgage or encumber this Lease in whole or in
        part, nor sublet the whole or any part of the Premises, nor allow the
        occupancy of all or any part of the Premises by another, without first
        obtaining Landlord's consent, which consent shall not be unreasonably
        withheld, but may be granted or denied in accordance with this paragraph
        4.16. Notwithstanding any permitted assignment or subletting, Tenant
        shall at all times remain directly, primarily and fully responsible and
        liable for the payment of all sums payable under this Lease and for
        compliance with all of its other obligations as tenant under this Lease.
        Upon the occurrence of an Event of Default, if the Premises or any part
        of the Premises are then subject to an assignment or subletting,
        Landlord, in addition to any other remedies provided in this Lease or by
        law, may at its option collect directly from such assignee or subtenant
        all rents becoming due to Tenant under such assignment or sublease and
        apply such rents against any sums due to Landlord from Tenant under this
        Lease, and no such collection shall be construed to constitute a
        novation or release of Tenant from the further performance of Tenant's
        obligations under this Lease. Tenant makes an absolute assignment to
        Landlord of such assignments and subleases and any rent, security
        deposits and other sums payable under such assignments and subleases as
        collateral to secure the performance of the obligations of Tenant under
        this Lease.

               4.16.2 LANDLORD CONSENT, PROCEDURE. In the event Tenant desires
        to assign this Lease or to sublet all or any portion of the Premises,
        Tenant shall give written notice of such desire to Landlord setting
        forth the name of the proposed subtenant or assignee, the proposed term,
        the nature of the proposed subtenant's or assignee's business to be
        conducted on the Premises, the rental rate, and any other particulars of
        the proposed subletting or assignment that Landlord may reasonably
        request. Without limiting the preceding sentence, Tenant shall also
        provide Landlord with: (a) such financial information as Landlord may
        request concerning the proposed subtenant or assignee, including recent
        financial statements certified as accurate and complete by a certified
        public accountant and by the president, managing partner or other
        appropriate officer of the proposed subtenant or assignee; (b) proof
        satisfactory to Landlord that the proposed subtenant or assignee will
        immediately occupy and thereafter use the entire Premises (or any sublet
        portion of the Premises) for the remainder of the Lease Term (or for the
        entire term of the sublease, if shorter) in compliance with the terms of
        this Lease; and (c) a copy of the proposed sublease or assignment or
        letter of intent. Tenant shall pay to Landlord, upon Landlord's demand
        therefor, Landlord's reasonable attorneys' fees incurred in the review
        of such documentation and in documenting Landlord's consent

                                      -26-
<PAGE>
up to a maximum amount of $2,500.00, plus an administrative fee of $350.00 for
processing such proposed assignment or sublease. Receipt of such fees shall not
obligate Landlord to approve the proposed or sublease.

        4.16.3 LANDLORD CONSENT, RELEVANT FACTORS. In determining whether to
grant or withhold consent to a proposed assignment or sublease, Landlord may
consider, and weigh, any factor it deems relevant in its reasonable discretion.
Without limiting what may be construed as a factor considered by Landlord,
Tenant agrees that any one or more of the following will be proper and
reasonable grounds for Landlord's disapproval of a proposed assignment or
sublease:

                        (a)     The proposed assignee or subtenant does not, in
                                Landlord's good faith judgment, have financial
                                worth or creditworthiness equal to or greater
                                than that of Tenant as of the execution date of
                                this Lease or sufficient financial worth to
                                insure full and timely performance under this
                                Lease;

                        (b)     Landlord has received insufficient evidence of
                                the financial worth or creditworthiness of the
                                proposed assignee or subtenant to make the
                                determination set forth in clause (b);

                        (c)     Landlord has reasonably and in good faith
                                determined that the proposed assignee or
                                subtenant has a reputation for disputes in
                                contractual relations, failure to observe and
                                perform its contractual obligations in a timely
                                and complete manner or for negative business
                                relations in the business community for or
                                otherwise as a tenant of property or otherwise;

                        (d)     Landlord has received from any prior lessor of
                                the proposed assignee or subtenant a negative
                                report concerning such prior lessor's experience
                                with the proposed assignee or subtenant;

                        (e)     Landlord has had prior negative leasing
                                experience with the proposed assignee or
                                subtenant;

                        (f)     The use of the Premises by the proposed assignee
                                or subtenant will not be identical with the
                                Permitted Uses;

                        (g)     In Landlord's judgment, the proposed assignee or
                                subtenant is engaged in a business, or the
                                Premises or any part of the Premises will be
                                used in a manner, that is not in keeping with
                                the then standards of the Project, or that is
                                not compatible with the businesses of other
                                tenants in the Project, or that is inappropriate
                                for the Building, or that will violate any
                                negative covenant as to use contained in any
                                other lease of space in the Building;

                        (h)     The use of the Premises by the proposed assignee
                                or subtenant will violate any Governmental
                                Requirement or create a violation of Access
                                Laws;

                        (i)     Tenant is in default of any obligation of Tenant
                                under this Lease, or Tenant has materially
                                defaulted with respect to a monetary obligation
                                under this Lease on three (3) or more occasions
                                during the twenty-four (24) months preceding the
                                date that Tenant shall request such consent;

                        (j)     Landlord does not approve of any of the tenant
                                improvements required for the proposed assignee
                                or subtenant; or

                        (k)     Landlord has had contact with the proposed
                                assignee or subtenant, in the six (6) months
                                preceding Tenant's

                                      -27-
<PAGE>
                                request, regarding the leasing of space by such
                                proposed assignee or subtenant in the Project.

        4.16.4 NOTICE REGARDING LANDLORD'S CONSENT. Within fifteen (15) Business
Days after Landlord's receipt of all required information to be supplied by
Tenant pursuant to this paragraph, Landlord shall notify Tenant of Landlord's
approval, disapproval or conditional approval of any proposed assignment or
subletting or of Landlord's election to require recapture as described below.
Landlord's failure to respond within such fifteen (15) Business Day period shall
constitute Landlord's disapproval. Landlord shall have no obligation to respond
unless and until all required information has been submitted. In the event
Landlord approves of any proposed assignment or subletting, Tenant and the
proposed assignee or sublessee shall execute and deliver to Landlord an
assignment (or subletting) and assumption agreement in form and content
satisfactory to Landlord in its sole discretion.

        4.16.5 RESTRICTION OF TRANSFER OF INTERESTS IN TENANT. Any transfer,
assignment or hypothecation of any of the stock or interest in, or the assets
of, Tenant which is either: (a) greater than eighty percent (80%) of such stock,
interest or assets, or (b) intended as a subterfuge denying Landlord the
benefits of this paragraph, shall be deemed to be an assignment within the
meaning and provisions of this paragraph and shall be subject to the provisions
of this paragraph. The foregoing provision shall not be applicable to an initial
or subsequent public offering of shares in Tenant or the trading of publicly
traded securities in Tenant through a national stock exchange.

        4.16.6 CORPORATE AFFILIATE. Notwithstanding the provisions of Section
4.16 to the contrary, Landlord's consent shall not be required in the event of
an assignment of this Lease or a subletting of the Premises to an entity
("Corporate Affiliate") which owns, or is owned by, Tenant, (but Tenant shall be
required to give Landlord at least 10 days written notice prior to any such
assignment or sublease) provided that such Corporate Affiliate owns more than
20% of the outstanding shares of all classes of voting stock of Tenant or Tenant
owns more than 20% of all ownership and controlling interests in such Corporate
Affiliate. The term "Corporate Affiliate Assignee" shall mean a Corporate
Affiliate that has been assigned, and has assumed, all of (or the relevant
portions of, in the event of a sublease) Tenant's interest and obligations under
this Lease and has satisfied the criteria set forth in this Section. Landlord
acknowledges and agrees that Zuma, Inc. is a Corporate Affiliate, and that,
concurrently or immediately after the mutual execution and delivery of this
Lease by Landlord and Tenant, Tenant will be assigning its interest in and to
this Lease to Zuma, Inc. (although MRV Communications, Inc. will continue to
remain directly, primarily and wholly responsible and liable for the performance
of all of Tenant's obligations under this Lease).

        4.16.7 EXCESS RENT. If Landlord consents to any assignment or sublease
and Tenant receives rent or any other consideration, either initially or over
the term of the assignment of sublease, in excess of the Base Rent and
Additional Rent (or, in the case of a sublease of a portion of the Premises, in
excess of the Base Rent paid by Tenant on a square footage basis under this
Lease), Tenant shall pay to Landlord ninety percent (90%) of such excess.

        4.16.8 RECAPTURE. Landlord shall have the right to recapture the
Premises or the applicable portion thereof (a "Recapture") by giving written
notice of such Recapture to Tenant within fifteen (15) Business Days after
receipt of Tenant's written request for Landlord's consent to such proposed
assignment or subletting. Tenant shall have no right to retract its request for
Landlord's consent to assign or sublease once such request has been made, except
that Tenant shall have a one-time right, within five (5) Business Days following
Landlord's delivery of a notice electing to Recapture to retract its request and
thereby nullify the Recapture. Such

                                      -28-
<PAGE>
        Recapture shall terminate this Lease as to the applicable space
        effective on the prospective effective date of assignment or subletting,
        which shall be the last day of a calendar month and shall not be earlier
        than forty-five (45) Business Days after receipt of Tenant's request
        hereunder. If less than the entire Premises are recaptured, Landlord and
        Tenant agree that this Lease shall remain in full force and effect with
        respect to that remaining area not recaptured by Landlord. Tenant agrees
        to surrender that portion of the Premises recaptured by Landlord in
        accordance with the terms and conditions of this Lease. Notwithstanding
        the first sentence of this subparagraph, Landlord shall have no right to
        Recapture the Premises or applicable portion thereof if Tenant's
        proposed assignment or sublet is to a Corporate Affiliate Assignee.

4.17    ASSIGNMENT BY LANDLORD. Landlord shall have the right to transfer and
        assign, in whole or in part, its rights and obligations under this Lease
        and in any and all of the Land or Building. If Landlord sells or
        transfers any or all of the Building, including the Premises, Landlord
        and Landlord's Agents shall, upon consummation of such sale or transfer,
        be released automatically from any liability relating to obligations or
        covenants under this Lease to be performed or observed after the date of
        such transfer, and in such event, Tenant agrees to look solely to
        Landlord's successor-in-interest with respect to such liability;
        provided that, as to the Security Deposit and Prepaid Rent, Landlord
        shall not be released from liability therefor unless Landlord has
        delivered (by direct transfer or credit against the purchase price) the
        Security Deposit or Prepaid Rent to its successor-in-interest.

4.18    ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS. Tenant shall, from time
        to time, upon the written request of Landlord, execute, acknowledge and
        deliver to Landlord or its designee a written statement stating: (a) the
        date this Lease was executed and the date it expires; (b) the date
        Tenant entered into occupancy of the Premises; (c) the amount of monthly
        Base Rent and Additional Rent and the date to which such Base Rent and
        Additional Rent have been paid; and (d) certifying that (1) this Lease
        is in full force and effect and has not been assigned, modified,
        supplemented or amended in any way (or specifying the date of the
        agreement so affecting this Lease); (2) Landlord is not in breach of
        this Lease (or, if so, a description of each such breach) and that no
        event, omission or condition has occurred which would result, with the
        giving of notice or the passage of time or both, in a breach of this
        Lease by Landlord; (3) this Lease represents the entire agreement
        between the parties with respect to the Premises; (4) all required
        contributions by Landlord to Tenant on account of Tenant Improvements
        have been received; (5) on the date of execution, there exist no
        defenses or offsets which the Tenant has against the enforcement of this
        Lease by the Landlord; (6) no Base Rent, Additional Rent or other sums
        payable under this Lease have been paid in advance except for Base Rent
        and Additional Rent for the then current month or any prepaid rent as
        specified on the Estoppel Certificate; (7) no security has been
        deposited with Landlord (or, if so, the amount of such security); (8) it
        is intended that any Tenant's statement may be relied upon by a
        prospective purchaser or mortgagee of Landlord's interest or an assignee
        of any such mortgagee; and (9) such other information as may be
        reasonably requested by Landlord. If Tenant fails to respond within five
        (5) Business Days of its receipt of a written request by Landlord as
        provided in this paragraph, such shall be a breach of this Lease and
        Tenant shall be deemed to have admitted the accuracy of any information
        supplied by Landlord to a prospective purchaser, mortgagee or assignee.
        In addition, Tenant shall, from time to time, upon the written request
        of Landlord, deliver to or cause to be delivered to Landlord or its
        designee then current financial statements (including a statement of
        operations and balance sheet) certified as accurate by a certified
        public accountant and prepared in conformance with generally accepted
        accounting principles for (i) Tenant, (ii) any entity which owns a
        controlling

                                      -29-
<PAGE>
        interest in Tenant, (iii) any entity the controlling interest of which
        is owned by Tenant, (iv) any successor entity to Tenant by merger or
        operation of law, and (v) any guarantor of this Lease.

 4.19   MODIFICATION FOR LENDER. If, in connection with obtaining construction
        interim or permanent financing for the Building or Land, Landlord's
        lender, if any, shall request reasonable immaterial modifications to
        this Lease as a condition to such financing, Tenant will not
        unreasonably withhold or delay its consent to such modifications;
        provided that, such modifications do not increase the obligations of
        Tenant under this Lease or materially adversely affect Tenant's rights
        under this Lease.

4.20    HAZARDOUS SUBSTANCES.

               4.20.1 Tenant agrees that neither Tenant, any of Tenant's Agents
        nor any other person will store, place, generate, manufacture, refine,
        handle, or locate on, in, under or around the Land or Building any
        Hazardous Substance, except for (i) storage, handling and use of
        reasonable quantities and types of cleaning fluids and office supplies
        in the Premises in the ordinary course and the prudent conduct of
        Tenant's business in the Premises, provided that, (a) the storage,
        handling and use of such permitted Hazardous Substances must at all
        times conform to all Governmental Requirements and to applicable fire,
        safety and insurance requirements; (b) the types and quantities of
        permitted Hazardous Substances which are stored in the Premises must be
        reasonable and appropriate to the nature and size of Tenant's operation
        in the Premises and reasonable and appropriate for a first-class
        building of the same or similar use and in the same market area as the
        Building; (c) no Hazardous Substance shall be spilled or disposed of on,
        in, under or around the Land or Building or otherwise discharged from
        the Premises or any area adjacent to the Land or Building; and (d) in no
        event will Tenant be permitted to store, handle or use on, in, under or
        around the Premises any Hazardous Substance which will increase the rate
        of fire or extended coverage insurance on the Land or Building, unless:
        (1) such Hazardous Substance and the expected rate increase have been
        specifically disclosed in writing to Landlord; (2) Tenant has agreed in
        writing to pay any rate increase related to each such Hazardous
        Substance; and (3) Landlord has approved in writing each such Hazardous
        Substance, which approval shall be subject to Landlord's discretion.

               Landlord acknowledges that it is not the intent of this Article 4
        to prohibit Tenant from operating its business as described in Section
        1.26 above. Tenant may operate its business according to the custom of
        the industry so long as the use of presence of any Hazardous Substance
        is strictly and properly monitored and accomplished according to all
        applicable Governmental Requirements. As a material inducement to
        Landlord to allow Tenant to use Hazardous Substances in connection with
        its business, Tenant has delivered to Landlord (i) the Environmental
        Questionnaire attached hereto as Exhibit H and (ii) a list identifying
        each type of Hazardous Substance to be present on the Premises and
        setting forth any and all governmental approvals or permits required in
        connection with the presence of any Hazardous Substance on the Premises
        ("HAZARDOUS SUBSTANCES LIST"). Tenant shall deliver to Landlord an
        updated Environmental Questionnaire and Hazardous Substances List at
        least once each calendar year and shall also deliver an updated list
        before any new Hazardous Substance is brought onto the Premises and on
        or before the date Tenant obtains any additional permits or approvals
        for Hazardous Substances. Landlord shall have the right to terminate
        this Lease in Landlord's reasonable discretion in the event that (i) any
        anticipated use of the Premises by Tenant involves the generation,
        storage, use, treatment or disposal of Hazardous Substances in a manner
        or for a purpose prohibited by any Governmental Agency; (ii) Tenant has
        been required by any lender or Governmental Agency to take remedial
        action in connection with Hazardous Substance

                                      -30-
<PAGE>
contaminating the Premises if the contamination resulted from Tenant's actions
or use of the Premises (unless Tenant is diligently seeking compliance with such
remedial action); or (iii) Tenant is subject to an enforcement order issued by
any Governmental Agency in connection with the use, disposal or storage of a
Hazardous Substance on the Premises (unless Tenant is diligently seeking
compliance with such enforcement order); provided, however, that prior to
exercising its right to terminate pursuant to this sentence, Landlord shall
notify Tenant of its intention to so terminate this Lease, and Tenant shall have
a period of fifteen (15) days after receipt of such notice to rectify the
condition(s) described in clauses (i), (ii) and/or (iii), as applicable. If
Tenant rectifies such situation to Landlord's reasonable satisfaction within
such fifteen (15) day period, then this Lease shall continue in full force and
effect. At any time prior to the expiration of the Lease Term and upon
Landlord's reasonable belief that certain Hazardous Substances tests are
advisable, Landlord shall have the right following notice (except in the event
of an emergency), to enter upon the Premises at all reasonable times in order to
conduct appropriate tests and to deliver to Tenant the results of such tests to
attempt to demonstrate that contamination has occurred as a result of Tenant's
use of the Premises. Without limiting the foregoing sentence, Landlord shall
have the right to have an environmental audit of the Premises to be conducted
within ninety (90) days prior to the scheduled expiration date of this Lease, or
at termination of this Lease, if the Lease is terminated on a date other than
the scheduled termination date. Tenant shall promptly perform any remedial
action recommended by such environmental audit unless the audit reveals that the
Hazardous Substances resulted from the activities of a person other than Tenant
or Tenant's Agents. The costs of such audits shall be borne by Landlord unless
the audit discloses the existence of Hazardous Substances in excess of action
levels or governmental standards, in which case the costs of the audit shall be
borne by Tenant.

        4.20.2 Tenant shall indemnify, defend and hold harmless Landlord and
Landlord's Agents from and against any and all Claims arising out of any (a)
Claims arising from Tenant's use of Hazardous Substances on the Premises or the
Project and (b) breach of any provision of this paragraph, which expenses shall
also include laboratory testing fees, personal injury claims, clean-up costs and
environmental consultants' fees. Tenant agrees that Landlord may be irreparably
harmed by Tenant's breach of this paragraph and that a specific performance
action may appropriately be brought by Landlord; provided that, Landlord's
election to bring or not bring any such specific performance action shall in no
way limit, waive, impair or hinder Landlord's other remedies against Tenant.

        4.20.3 As of the execution date of this Lease, Tenant represents and
warrants to Landlord that, except as otherwise disclosed by Tenant to Landlord,
Tenant has no intent to bring any Hazardous Substances on, in or under the
Premises except for the type and quantities authorized in the first paragraph of
the paragraph captioned "Hazardous Substances."

        4.20.4 PURSUANT to HEALTH & SAFETY CODE SECTION 25395.7, Landlord hereby
notifies Tenant that releases of hazardous substances to soil and groundwater
have occurred beneath the Property. The Property and adjacent parcels are the
subject of investigation and remedial action under the supervision of the
California Regional Water Quality Control Board - Los Angeles Region ("RWQCB")
and the California Department of Toxic Substances control ("DTSC") in connection
with the former use and occupancy of the Property by Hughes Aircraft Company,
Missile Systems Group ("Hughes"). Raytheon Missile Systems Company ("Raytheon"),
as successor to Hughes, is obligated under the terms of a Consent Agreement and
Order (Docket No. HWCA 89/90-001) and relevant California law to complete
additional site characterization and mitigation as ordered and directed by DTSC
and RWQCB.

                                      -31-
<PAGE>
               4.20.5 Landlord Representation. To Landlord's actual knowledge as
        of the date of the execution of this Lease, and without independent
        investigation and inquiry, (a) no Landlord's Hazardous Substances
        (defined below) have been handled in or about the Project by Landlord or
        any current or former tenant of Landlord, except in compliance with all
        applicable laws and (b) Landlord has not received any written notice of
        the presence of Hazardous Substances at the Premises or Building in
        violation of applicable laws. The term "Landlord Hazardous Substances"
        shall mean Hazardous Substances which are present in, on, under or about
        the Building or Premises as of the date of this Lease which are released
        or brought in, on, under or about the Building or Premises by Landlord
        or any agent or tenant or former tenant of Landlord. Landlord's
        Hazardous Substances shall specifically not include any Hazardous
        Substances released, disturbed, transported, stored, generated or used
        by Tenant or Tenant's Agents. In the event of a breach of this Section
        during the Term, then Landlord's sole obligation and responsibility to
        Tenant shall be (a) the commencement, within ninety (90) days after
        Landlord receives notice of such breach or discovery and verifies the
        accuracy of such claim, of a removal, encapsulation or other containment
        program reasonably elected by Landlord which is required by and complies
        with applicable laws, and (b) the diligent prosecution of such program
        to completion, at no cost to Tenant, in such a manner as will make the
        Premises or Building, as the case may be, in compliance with applicable
        laws.

4.21    ACCESS LAWS.

               4.21.1 NOTICE TO LANDLORD OF VIOLATION. Tenant agrees to notify
        Landlord immediately if Tenant receives notification or otherwise
        becomes aware of: (a) any condition or situation on, in, under or around
        the Land or Building which may constitute a violation of any Access Laws
        or (b) any threatened or actual lien, action or notice that the Land or
        Building is not in compliance with any Access Laws. If Tenant is
        responsible for such condition, situation, lien, action or notice under
        this paragraph, Tenant's notice to Landlord shall include a statement as
        to the actions Tenant proposes to take in response to such condition,
        situation, lien, action or notice

               4.21.2 PROHIBITED ACTS. Tenant shall not alter or permit any
        assignee or subtenant or any other person to alter the Premises in any
        manner which would violate any Access Laws or increase Landlord's
        responsibilities for compliance with Access Laws, without the prior
        approval of the Landlord. In connection with any such approval, Landlord
        may require a certificate of compliance with Access Laws from an
        architect, engineer or other person acceptable to Landlord. Tenant
        agrees to pay the reasonable fees incurred by such architect, engineer
        or other third party in connection with the issuance of such certificate
        of compliance. Landlord's consent to any proposed Tenant Alteration
        shall (a) not relieve Tenant of its obligations or indemnities contained
        in this paragraph or this Lease or (b) be construed as a warranty that
        such proposed alteration complies with any Access Law.

               4.21.3 TENANT RESPONSIBILITY. Subject to the provisions of
        Section 2.7.2., Tenant shall be solely responsible for all costs and
        expenses relating to or incurred in connection with failure of the
        Premises to comply with the Access Laws.

                4.21.4 LANDLORD RESPONSIBILITY. Landlord shall be responsible
        for all costs and expenses relating to or incurred in connection with
        bringing the common areas of the Project into compliance with Access
        Laws, unless such costs and expenses are Tenant's responsibility as
        provided in the preceding subparagraph. Any cost or expense paid or
        incurred by Landlord to bring the Project into compliance with Access
        Laws which is not Tenant's responsibility under the preceding
        subparagraphs shall be amortized over the useful economic life of the
        improvements (not to exceed ten (10) years)

                                      -32-
<PAGE>
        using an amortization rate of twelve percent (12%) per annum and
        shall be an Operating Cost for purposes of this Lease.

                4.21.5 INDEMNITY OF LANDLORD. Tenant agrees to indemnify, defend
        and hold harmless Landlord and Landlord's Agents from and against any
        and all Claims arising out of or relating to any failure of Tenant or
        Tenant's Agents to comply with Tenant's obligations under this
        paragraph.

                4.21.6 INCONSISTENT PROVISIONS OF LAW. The provisions of this
        paragraph shall supersede any other provisions in this Lease regarding
        Access Laws, to the extent inconsistent with the provisions of any other
        paragraphs.

4.22    QUIET ENJOYMENT. Landlord covenants that Tenant, upon paying Base Rent,
        Additional Rent and all other sums payable under this Lease and
        performing all covenants and conditions required of Tenant under this
        Lease shall and may peacefully have, hold and enjoy the Premises
        without hindrance or molestation by Landlord, subject to the terms of
        this Lease, any ground lease, mortgage or deed of trust and all matters
        of record now or hereafter encumbering the Premises or the Project.

4.23    INTENTIONALLY OMITTED

4.24    SUBORDINATION. Tenant subordinates this Lease and all rights of Tenant
        under this Lease to any mortgage, deed of trust, ground lease or
        vendor's lien, or similar instrument which may from time to time be
        placed upon the Premises (and all renewals, modifications, replacements
        and extensions of such encumbrances), and each such mortgage, deed of
        trust, ground lease or lien or other instrument shall be superior to and
        prior to this Lease. At the request of Landlord, the holder of such
        mortgage or deed of trust or any ground Lessor, Tenant shall execute,
        acknowledge and deliver promptly in recordable form any instrument or
        subordination agreement that Landlord or such holder may request;
        provided, however, such instrument shall include a nondisturbance
        provision on the standard form of the applicable lender or ground
        lessor. Notwithstanding the foregoing, the holder or beneficiary of such
        mortgage, deed of trust, ground lease, vendor's lien or similar
        instrument shall have the right to subordinate or cause to be
        subordinated any such mortgage, deed of trust, ground lease, vendor's
        lien or similar instrument to this Lease. Tenant further covenants and
        agrees that if the lender or ground lessor acquires the Premises as a
        purchaser at any foreclosure sale or otherwise, Tenant shall recognize
        and attorn to such party as landlord under this Lease, and shall make
        all payments required hereunder to such new landlord without deduction
        or set-off and, upon the request of such purchaser or other successor,
        execute, deliver and acknowledge documents confirming such attornment.
        Tenant waives the provisions of any law or regulation, now or hereafter
        in effect, which may give or purport to give Tenant any right to
        terminate or otherwise adversely affect this Lease or the obligations of
        Tenant hereunder in the event that any such foreclosure or termination
        or other proceeding is prosecuted or completed.

4.25    WORKERS COMPENSATION IMMUNITY. If and to the extent that Tenant is
        obligated to indemnify, defend or hold harmless Landlord or Landlord's
        Agents from any Claims arising from its use of the Premises or any act
        or failure to act by Tenant or Tenant's Agents or otherwise, Tenant
        expressly waives, to and in favor of Landlord and Landlord's Agents, its
        statutory workers compensation act employers immunity relative to any
        injury to an employee or employees of Tenant.

4.26    BROKERS. Each party to this Lease shall indemnify, defend and hold
        harmless the other party from and against any and all Claims asserted
        against such other party by any real estate broker, finder or
        intermediary relating to any act of the indemnifying party in connection
        with this Lease.

4.27    EXCULPATION AND LIMITATION OF LIABILITY. Landlord has executed this
        Lease by its trustee signing solely in a representative capacity.
        Notwithstanding anything contained in this Lease to the contrary, Tenant
        confirms that the

                                      -33-
<PAGE>
        covenants of Landlord are made and intended, not as personal covenants
        of the trustee, or for the purpose of binding the trustee personally,
        but solely in the exercise of the representative powers conferred upon
        the trustee by its principal. Liability with respect to the entry and
        performance of this Lease by or on behalf of Landlord, however it may
        arise, shall be asserted and enforced only against Landlord's estate and
        equity interest in the Building. Neither Landlord nor any of Landlord's
        Agents shall have any personal liability in the event of any claim
        against Landlord arising out of or in connection with this Lease, the
        relationship of Landlord and Tenant or Tenant's use of the Premises.
        Further, in no event whatsoever shall any Landlord's Agent have any
        liability or responsibility whatsoever arising out of or in connection
        with this Lease, the relationship of Landlord and Tenant or Tenant's use
        of the Premises. Any and all personal liability, if any, beyond that
        which may be asserted under this paragraph, is expressly waived and
        released by Tenant and by all persons claiming by, through or under
        Tenant.

4.28    INTENTIONALLY OMITTED.

4:29    MECHANIC'S LIENS AND TENANT'S PERSONAL PROPERTY TAXES.

               4.29.1 MECHANIC'S LIENS. Tenant shall have no authority, express
        or implied, to create or place any lien or encumbrance of any kind or
        nature whatsoever upon, or in any manner to bind, the interest of
        Landlord or Tenant in the Premises or to charge the rentals payable
        under this Lease for any Claims in favor of any person dealing with
        Tenant, including those who may furnish materials or perform labor for
        any construction or repairs. Tenant shall pay, bond over (in a manner
        and with a company reasonably acceptable to Landlord) or cause to be
        paid all sums legally due and payable by it on account of any labor
        performed or materials furnished in connection with any work performed
        on the Premises on which any lien is or can be validly and legally
        asserted against its leasehold interest in the Premises and Tenant shall
        indemnify, defend and hold harmless Landlord from any and all Claims
        arising out of any such asserted Claims. Tenant agrees to give Landlord
        immediate written notice of any such Claim. Tenant shall notify Landlord
        in writing at least ten (10) Business Days in advance of any work to
        be done on, in, or about the Premises. In the event of such scheduled
        work, whether Landlord received notice from Tenant or not, Landlord
        shall have the right, at any time and from time to time, to enter the
        Premises to post notices of non-responsibility in such locations as
        Landlord deems appropriate. Notwithstanding anything in this Lease to
        the contrary, Landlord shall not be required to notify Tenant in advance
        of entering the Premises for the purpose of posting the notices of
        non-responsibility.

               4.29.2 PERSONAL PROPERTY TAXES. Tenant shall be liable for all
        taxes levied or assessed against personal property, furniture or
        fixtures placed by Tenant in the Premises. If any such taxes for which
        Tenant is liable are levied or assessed against Landlord or Landlord's
        property and Landlord elects to pay them or if the assessed value of
        Landlord's property is increased by inclusion of such personal
        property, furniture or fixtures and Landlord elects to pay the taxes
        based on such increase, Tenant shall reimburse Landlord for the sums so
        paid by Landlord, upon demand by Landlord.

                         SECTION 5: DEFAULT AND REMEDIES

 5.1    EVENTS OF DEFAULT.

                5.1.1 EVENTS OF DEFAULT. The occurrence of any one or more of
        the following events shall constitute a material default and breach of
        this Lease by Tenant ("Event of Default"):

                      (a) vacation or abandonment of all or any portion of the
                          Premises;

                                      -34-
<PAGE>

                      (b) failure by Tenant to make any payment of Base Rent
                          Additional Rent or any other sum payable by Tenant
                          under this Lease within five (5) days from its due
                          date;

                      (c) failure by Tenant to observe or perform any covenant
                          or condition of this Lease, other than the making of
                          payments, where such failure shall continue for a
                          period of thirty (30) days after written notice from
                          Landlord; provided however, that if the nature of
                          Tenant's obligation is such that more than thirty
                          (30) days are required for performance, then Tenant
                          shall not be in default if Tenant commences
                          performance within such thirty (30) day period and
                          thereafter diligently prosecutes the same to
                          completion within ninety (90) days after such written
                          notice from Landlord;

                      (d) (1) the making by Tenant of any general assignment or
                          general arrangement for the benefit of creditors; (2)
                          the filing by or against Tenant of a petition in
                          bankruptcy, including reorganization or arrangement,
                          unless, in the case of a petition filed against
                          Tenant, unless the same is dismissed within twenty
                          (20) Business Days; (3) the appointment of a trustee
                          or receiver to take possession of substantially all of
                          Tenant's assets located in the Premises or of Tenant's
                          interest in this Lease; (4) any execution, levy,
                          attachment or other process of law against any
                          property of Tenant or Tenant's interest in this Lease,
                          unless the same is dismissed within twenty (20)
                          Business Days; (5) adjudication that Tenant is
                          bankrupt; (6) the making by Tenant of a transfer in
                          fraud of creditors; or (7) the failure of Tenant to
                          generally pay its debts as they become due;

                      (e) any information furnished by or on behalf of Tenant to
                          Landlord in connection with the entry of this Lease is
                          determined to have been materially false, misleading
                          or incomplete when made; or

                      (f) any assignment, subletting or other transfer for which
                          the prior consent of Landlord is required under this
                          Lease and has not been obtained.

               5.1.2 NOTICE OF DEFAULT. When this Lease requires service of a
        notice, that notice shall replace rather than supplement any equivalent
        or similar statutory notice, including any notices required by Code of
        Civil Procedure section 1161 or any similar or successor statute. When
        a statute requires service of a notice in a particular manner, service
        of that notice (or a similar notice required by this Lease) in the
        manner required by paragraph 6.1 shall replace and satisfy the statutory
        service-of-notice procedures, including those required by Code of Civil
        Procedure section 1162 or any similar or successor statute.

               5.1.3 NOTICE TO LANDLORD REGARDING TENANT DEFAULT. Tenant shall
        notify Landlord promptly of any Event of Default or any facts,
        conditions of events which, with the giving of notice or passage of time
        or both, would constitute an Event of Default.

               5.1.4 TREATMENT AS UNEXPIRED LEASE. If a petition in bankruptcy
        is filed by or against Tenant, and if this Lease is treated as an
        "unexpired lease" under applicable bankruptcy law in such proceeding,
        then Tenant agrees that Tenant shall not attempt nor cause any trustee
        to attempt to extend the applicable time period within which this Lease
        must be assumed or rejected.

 5.2    REMEDIES. If any Event of Default occurs, Landlord may at any time after
        such occurrence, with or without notice or demand except as stated in
        this paragraph, and without limiting Landlord in the exercise of any
        right or

                                      -35-
<PAGE>

        remedy at law which Landlord may have by reason of such Event of Default
        exercise the rights and remedies, ether singularly or in combination as
        are specified or described in the subparagraphs of this paragraph.

               5.2.1 REMEDIES: TERMINATION AND RECOVERY OF POSSESSION. Landlord
        may terminate this Lease and recover possession of the Premises in which
        case Tenant shall immediately surrender possession of the Premises to
        Landlord and, in addition to any other rights and remedies Landlord may
        have at law and in equity, Landlord shall have the following rights:

                      (a) To re-enter the Premises then or at any time
                          thereafter, and remove all persons and property and
                          possess the Premises, without prejudice to any other
                          remedies Landlord may have by reason of Tenant's
                          default or of such termination, and Tenant shall have
                          no further claim hereunder.

                      (b) To recover all damages incurred by Landlord by reason
                          of the default, including without limitation (i) the
                          worth at the time of the award of the payments,
                          including interest, owed by Tenant to Landlord under
                          this Lease that were earned or accrued but unpaid at
                          the time of termination; (ii) the worth at the time of
                          the award of the amount by which the payments owed by
                          Tenant to Landlord under the Lease that would have
                          been earned or accrued after the date of termination
                          until the time of the award exceeds the amount of the
                          loss of payments owed by Tenant to Landlord under this
                          Lease for the same period that Tenant affirmatively
                          proves could have been reasonably avoided; (iii) the
                          worth at the time of the award of the amount by which
                          the payments owed by Tenant to Landlord for the
                          balance of the Term after the time of the award
                          exceeds the amount of the loss of payments owed by
                          Tenant for the same period that Tenant proves could
                          have been reasonably avoided; (iv) all costs incurred
                          by Landlord in retaking possession of the Premises and
                          restoring them to good order and condition; (v) all
                          costs, including without limitation brokerage
                          commissions, advertising costs and restoration and
                          remodeling costs, incurred by Landlord in reletting
                          the Premises; plus (vi) any other amount, including
                          without limitation attorneys' fees and audit expenses,
                          necessary to compensate Landlord for all detriment
                          proximately caused by Tenant's failure to perform its
                          obligations under this Lease or which in the ordinary
                          course of things would be likely to result therefrom.
                          "The worth at the time of the award," as used in
                          clauses (i) and (ii) of this paragraph, is to be
                          determined by computing interest as to each unpaid
                          payment owed by Tenant to Landlord under the Lease, at
                          the highest interest rate permitted by law. "The worth
                          at the time of the award," as referred to in clause
                          (iii) of this paragraph, is to be determined by
                          discounting such amount, as of the time of award, by
                          the discount rate of the Federal Reserve Bank of San
                          Francisco at the time of the award plus one percent
                          (1%).

                      (c) To remove, at Tenant's sole risk, any and all personal
                          property in the Premises and place such in a public or
                          private warehouse or elsewhere at the sole cost and
                          expense and in the name of Tenant. Any such warehouser
                          shall have all of the rights and remedies provided by
                          law against Tenant as owner of such property

                                      -36-
<PAGE>

                          If Tenant shall not pay the cost of such storage
                          within thirty (30) days following Landlord's demand,
                          Landlord may, subject to the provisions of applicable
                          law, sell any or all such property at a public or
                          private sale in such manner and at such times and
                          places as Landlord deems proper, without notice to
                          or demand upon Tenant. Tenant waives all claims for
                          damages caused by Landlord's removal, storage or sale
                          of the property and shall indemnify and hold Landlord
                          free and harmless from and against any and all loss,
                          cost and damage, including without limitation court
                          costs and attorneys' fees. Tenant hereby irrevocably
                          appoints Landlord as Tenants attorney-in-fact, coupled
                          with an interest, with all rights and powers necessary
                          to effectuate the provisions of this subparagraph 5.2.

               5.2.2 REMEDIES: RECOVER RENT AS IT BECOMES DUE. Landlord may
        elect, in its absolute discretion, to maintain Tenant's right to
        possession, in which case this Lease shall continue in effect whether or
        not Tenant shall have abandoned the Premises. In such event, Landlord
        may enforce all of Landlord's rights and remedies under this Lease,
        including the right to recover rent as it becomes due hereunder, and, at
        Landlord's election, to re-enter and relet the Premises on such terms
        and conditions as Landlord deems appropriate. Without limiting the
        generality of the foregoing, Landlord shall have the remedy described in
        California Civil Code Section 1951.4 (lessor may continue lease in
        effect after lessee's breach and abandonment and recover rent as it
        becomes due, if lessee has right to sublet or assign, subject only to
        reasonable limitations). Landlord may execute any lease made pursuant
        hereto in its own name, and Tenant shall have no right to collect any
        such rent or other proceeds. Landlord's re-entry and/or reletting of the
        Premises, or any other acts, shall not be deemed an acceptance of
        surrender of the Premises or Tenant's interest therein, a termination of
        this Lease or a waiver or release of Tenant's obligations hereunder.
        Landlord shall have the same rights with respect to Tenant's
        improvements and personal property as under Section 5.2.1 above, even
        though such re-entry and/or reletting do not constitute acceptance of
        surrender of the Premises or termination of this Lease.

               5.2.3 SUCCESSION TO TENANT RIGHTS. Whether or not Landlord elects
        to terminate this Lease on account of any default by Tenant, Landlord
        may:

                      (a) Terminate any sublease, license, concession, or other
                          consensual arrangement for possession entered into by
                          Tenant and affecting the Premises.

                      (b) Choose to succeed to Tenant's interest in such an
                          arrangement. If Landlord elects to succeed to Tenant's
                          interest in such an arrangement, Tenant shall, as of
                          the date of notice by Landlord of that election, have
                          no further right to, or interest in, the rent or other
                          consideration receivable under that arrangement.

               5.2.4 RIGHTS AND REMEDIES CUMULATIVE. None of the foregoing
        remedial actions, singly or in combination, shall be construed as an
        election by Landlord to terminate this Lease unless Landlord has in fact
        given Tenant written notice that this Lease is terminated: an act by
        Landlord to maintain or preserve the Premises; any efforts by Landlord
        to relet the Premises; any repairs or alterations made by Landlord to
        the Premises; re-entry, repossession or reletting of the Premises by
        Landlord pursuant to this paragraph; or the appointment of a receiver,
        upon the initiative of Landlord, to protect Landlord's interest under
        this Lease. If Landlord takes any of the foregoing remedial action
        without terminating this Lease, Landlord may nevertheless at any time
        after taking any such remedial action terminate this Lease by written
        notice to Tenant.

                                      -37-
<PAGE>

                5.2.5 MONEY DAMAGES UPON RELETTING. If Landlord relets the
        Premises, Landlord shall apply the revenue from such reletting as
        follows: first, to the payment of any indebtedness other than Base Rent,
        Additional Rent or any other sums payable under this Lease by Tenant to
        Landlord; second, to the payment of any cost of reletting (including
        finders' fees and leasing commissions); third, to the payment of the
        cost of any alterations improvements, maintenance and repairs to the
        Premises; and fourth, to the payment of Base Rent, Additional Rent and
        other sums due and payable and unpaid under this Lease. Landlord shall
        hold and apply the residue, if any, to payment of future Base Rent,
        Additional Rent and other sums payable under this Lease as the same
        become due, and shall deliver the eventual balance, if any, to Tenant.
        Should revenue from letting during any month after application pursuant
        to the foregoing provisions, be less than the sum of the Base Rent,
        Additional Rent and other sums payable under this Lease and Landlord's
        expenditures for the Premises during such month. Tenant shall be
        obligated to pay such deficiency to Landlord as and when such deficiency
        arises.

               5.2.6 REMEDIES NONEXCLUSIVE. Pursuit of any of the foregoing
        remedies shall not preclude Landlord's pursuit of any of the other
        remedies provided in this Lease or by law (all such remedies being,
        cumulative), nor shall pursuit by Landlord of any remedy provided in
        this Lease constitute a forfeiture or waiver of any Base Rent,
        Additional Rent or other sum payable under this Lease or of any damages
        accruing to Landlord by reason of the violation of any of the covenants
        or conditions contained in this Lease.

 5.3    RIGHT TO PERFORM. If Tenant shall fail to pay any sum of money, other
        than Base Rent or Additional Rent, required to be paid by it under this
        Lease or shall fail to perform any other act on its part to be performed
        under this Lease, and such failure shall continue for ten (10) Business
        Days after notice of such failure by Landlord, or such shorter time if
        reasonable under the circumstances, Landlord may, but shall not be
        obligated to, and without waiving or releasing Tenant from any
        obligations of Tenant, make such payment or perform such other act on
        Tenant's part to be made or performed as provided in this Lease.
        Landlord shall have (in addition to any other right or remedy of
        Landlord) the same rights and remedies in the event of the nonpayment of
        sums due under this paragraph as in the case of default by Tenant in the
        payment of Base Rent.

 5.4    LANDLORD'S DEFAULT. Landlord shall not be in default under this Lease
        unless Landlord fails to perform obligations required of Landlord within
        twenty (20) Business Days after written notice is delivered by Tenant to
        Landlord and to the holder of any mortgages or deeds of trust
        (collectively, "Lender") covering the Premises whose name and address
        shall have theretofore been furnished to Tenant in writing, specifying
        the obligation which Landlord has failed to perform; provided, however,
        that if the nature of Landlord's obligation is such that more than
        twenty (20) Business Days are required for performance, then Landlord
        shall not be in default if Landlord or Lender commences performance
        within such twenty (20) Business Day period and thereafter diligently
        prosecutes the same to completion. All obligations of Landlord hereunder
        shall be construed as covenants, not conditions. In the event of any
        default, breach or violation of Tenant's rights under this Lease by
        Landlord Tenant's exclusive remedies shall be an action for specific
        performance or an action for actual damages. Tenant hereby waives the
        benefit of any laws granting it the right to perform Landlord's
        obligation, a lien upon the property of Landlord and/or upon Rent due
        Landlord, or the right to terminate this Lease or withhold Rent on
        account of any Landlord default.

 5.5    ACCEPTANCE OF RENT WITHOUT WAIVING RIGHTS. Under the paragraph captioned
        "No Waiver of Remedies", Landlord may accept Tenant's payments without
        waiving any rights under this Lease, including rights under a previously
        served notice of default. If Landlord accepts partial

                                      -38-
<PAGE>

        payments which cumulatively are less than the sum owed after serving a
        notice of default, Landlord may nevertheless commence and pursue
        an action to enforce rights and remedies under the previously serviced
        notice of default without giving Tenant any further notice or demand.

                       SECTION 6: MISCELLANEOUS PROVISIONS

6.1     NOTICES. Any notice, approval, consent, request or written communication
        required or permitted to be delivered under this Lease shall be: (a) in
        writing; (b) transmitted by personal delivery, facsimile, a nationally
        recognized overnight courier service, United States Postal Service in
        the manner described below; and (c) deemed to be delivered on the
        earlier of the date received or four (4) Business Days after having been
        deposited in the United States Postal Service, postage prepaid. Such
        writings shall be addressed to Landlord or Tenant, as the case may be,
        at the respective designated addresses set forth opposite their
        signatures, or at such other address(es) as they may, after the
        execution date of this Lease, specify by written notice delivered in
        accordance with this paragraph, with copies to the persons at the
        addresses, if any, designated opposite each party's signature. Those
        notices which contain a notice of breach or default or a demand for
        performance may be sent by any of the methods described in clause (b)
        above, but if transmitted by personal delivery or electronic means,
        shall also be sent concurrently by certified or registered mail, return
        receipt requested.

6.2     ATTORNEY'S FEES AND EXPENSES. In the event either party requires the
        services of an attorney in connection with enforcing the terms of this
        Lease, or in the event suit is brought for the recovery of Base Rent,
        Additional Rent or any other sums payable under this Lease or for the
        breach of any covenant or condition of this Lease, or for the
        restitution of the Premises to Landlord or the eviction of Tenant during
        the Lease Term or after the expiration or earlier termination of this
        Lease, the prevailing party shall be entitled to a reasonable sum for
        attorney's and paralegal's fees incurred at the trial or appellate
        levels and for all costs and expenses associated with such levels. The
        prevailing party shall be determined under Civil Code section 1717(b)(1)
        or any successor statute.

 6.3    NO ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord
        of an amount less than the Base Rent or Additional Rent or any other sum
        due and payable under this Lease shall be deemed to be other than a
        payment on account of the Base Rent, Additional Rent or other such sum,
        nor shall any endorsement or statement on any check or any letter
        accompanying any check or payment be deemed an accord and satisfaction,
        nor preclude Landlord's right to recover the balance of any amount
        payable or Landlord's right to pursue any other remedy provided in this
        Lease or at law.

 6.4    SUCCESSORS; JOINT AND SEVERAL LIABILITY. Except as provided in the
        paragraph captioned "Exculpation and Limitation of Liability" and
        subject to the paragraph captioned "Assignment and Subletting by
        Landlord," all of the covenants and conditions contained in this Lease
        shall apply to and be binding upon Landlord and Tenant and their
        respective heirs, executors, administrators, successors and assigns. In
        the event that more than one person, partnership, company, corporation
        or other entity is included in the term "Tenant," then each such person,
        partnership, company, corporation or other entity shall be jointly and
        severally liable for all obligations of Tenant under this Lease.

 6.5    CHOICE OF LAW. This Lease shall be construed and governed by the laws of
        the state of California. Tenant consents to Landlord's choice of venue
        for any legal proceeding brought by Landlord or Tenant to enforce the
        terms of this Lease.

                                      -39-
<PAGE>
6.6     NO WAIVER OF REMEDIES. The waiver by Landlord of any covenant of
        condition contained in this Lease shall not be deemed to be a waiver of
        any subsequent breach of such covenant or condition nor shall any custom
        or practice which may develop between the parties in the administration
        of this Lease be construed to waive or lessen the rights of Landlord to
        insist on the strict performance by Tenant of all of the covenants and
        conditions of this Lease. No act or thing done by Landlord or Landlord's
        Agents during the Lease Term shall be deemed an acceptance or a
        surrender of the Premises and no agreement to accept a surrender of the
        Premises shall be valid unless made in writing and signed by Landlord.
        The mention in this Lease of any particular remedy shall not preclude
        Landlord from any other remedy it might have, either under this Lease or
        at law, nor shall the waiver of or redress for any violation of any
        covenant or condition in this Lease or in any of the rules or
        regulations attached to this Lease or later adopted by Landlord, prevent
        a subsequent act, which would have originally constituted a violation,
        from having all the force and effect of an original violation. The
        receipt by Landlord of Base Rent, Additional Rent or any other sum
        payable under this Lease with knowledge of a breach of any covenant or
        condition in this Lease shall not be deemed a waiver of such breach. The
        failure of Landlord to enforce any of the rules and regulations attached
        to this Lease or later adopted, against Tenant or any other tenant in
        the Building, shall not be deemed a waiver. Any waiver by Landlord must
        be in writing and signed by Landlord to be effective.

6.7     OFFER TO LEASE. The submission of this Lease to Tenant or its broker or
        other agent does not constitute an offer to Tenant to lease the
        Premises. This Lease shall have no force or effect until: (a) it is
        executed and delivered by Tenant to Landlord; and (b) it is executed and
        delivered by Landlord to Tenant.

6.8     FORCE MAJEURE. Subject to the provisions of Section 4.9, in the event
        that either party shall be delayed, hindered in or prevented from the
        performance of any act or obligation required under this Lease by reason
        of acts of God, strikes, lockouts, labor troubles or disputes, inability
        to procure or shortage of materials or labor, failure of power or
        utilities, delay in transportation, fire, vandalism, accident, flood,
        severe weather, other casualty, Governmental Requirements (including
        mandated changes in the Plans or the Tenant Improvements resulting from
        changes in pertinent Governmental Requirements or interpretations
        thereof), riot, insurrection, civil commotion, sabotage, explosion, war,
        natural or local emergency, acts or omissions of others, including
        Tenant, or other reasons of a similar or dissimilar nature not solely
        the fault of, or under the exclusive control of, Landlord, then
        performance of such act shall be excused for the period of the delay and
        the period for the performance of any such act shall be extended for the
        period equivalent to the period of such delay. Notwithstanding the
        foregoing, this Section 6.8 shall not be applicable with respect to
        monetary obligations.

6.9     SEVERABILITY; CAPTIONS. If any clause or provision of this Lease is
        determined to be illegal, invalid, or unenforceable under present or
        future laws, the remainder of this Lease shall not be affected by such
        determination, and in lieu of each clause or provision that is
        determined to be illegal, invalid or unenforceable, there be added as a
        part of this Lease a clause or provision as similar in terms to such
        illegal, invalid or unenforceable clause or provision as may be possible
        and be legal, valid and enforceable. Headings or captions in this Lease
        are added as a matter of convenience only and in no way define, limit or
        otherwise affect the construction or interpretation of this Lease.

 6.10   INTERPRETATION. Whenever a provision of this Lease uses the term (a)
        "include" or "including", that term shall not be limiting but shall be
        construed as illustrative, (b) "covenant," that term shall include any
        covenant, agreement, term or provision, and (c) "at law," that term
        shall mean at law or in equity, or both. This Lease shall be given a
        fair and

                                      -40-
<PAGE>

        reasonable interpretation of the words contained in it without any
        weight being given to whether a provision was drafted by one party or
        its counsel.

6.11    INCORPORATION OF PRIOR AGREEMENT; AMENDMENTS. This Lease contains all of
        the agreements of the parties to this Lease with respect to any matter
        covered or mentioned in this Lease, and no prior agreement or
        understanding pertaining to any such matter shall be effective for any
        purpose. No provision of this Lease may be amended or added to except by
        an agreement in writing signed by the parties to this Lease or their
        respective successors in interest.

6.12    AUTHORITY. If Tenant is a partnership, company, corporation or other
        entity, each individual executing this Lease on behalf of Tenant
        represents and warrants to Landlord that he or she is duly authorized to
        so execute and deliver this Lease and that all partnership, company,
        corporation or other entity actions and consents required for execution
        of this Lease have been given, granted or obtained. If Tenant is a
        partnership, company, corporation or other business organization, it
        shall, within ten (10) Business Days after demand by Landlord, deliver
        to Landlord satisfactory evidence of the due authorization of this Lease
        and the authority of the person executing this Lease on its behalf.

6.13    TIME OF ESSENCE. Time is of the essence with respect to the performance
        of every covenant and condition of this Lease.

6.14    SURVIVAL OF OBLIGATIONS. Notwithstanding anything contained in this
        Lease to the contrary or the expiration or earlier termination of this
        Lease, any and all obligations of either party accruing prior to the
        expiration or termination of this Lease shall survive the expiration or
        earlier termination of this Lease, and either party shall promptly
        perform all such obligations whether or not this Lease has expired or
        terminated. Such obligations shall include any and all indemnity
        obligations set forth in this Lease.

6.15    CONSENT TO SERVICE. Tenant irrevocably consents to the service of
        process of any action or proceeding at the address of the Premises.
        Nothing in this paragraph shall affect the right to serve process in any
        other manner permitted by law.

6.16    LANDLORD'S AUTHORIZED AGENTS. Notwithstanding anything contained in the
        Lease to the contrary, including without limitation, the definition of
        Landlord's Agents, only officers of Riggs Bank N.A., are authorized to
        amend, renew or terminate this Lease, or to compromise any of Landlord's
        claims under this Lease or to bind Landlord in any manner. Without
        limiting the effect of the previous sentence, no property manager or
        broker shall be considered an authorized agent of Landlord to amend,
        renew or terminate this Lease or to compromise any of Landlord's claims
        under this Lease or to bind Landlord in any manner.

 6.17   WAIVER OF JURY TRIAL. LANDLORD AND TENANT BY PLACING THEIR INITIALS AT
        THE END OF THIS PARAGRAPH HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
        RIGHTS TO TRIAL BY JURY OF ANY CONTRACT OR TORT CLAIM, COUNTERCLAIM,
        CROSS-COMPLAINT, OR CAUSE OF ACTION IN ANY ACTION, PROCEEDING,
        COUNTERCLAIM, OR HEARING BROUGHT BY EITHER PARTY AGAINST THE OTHER ON
        ANY MATTER ARISING OUT OF OR RELATING IN ANY WAY TO THIS LEASE, THE
        RELATIONSHIP OF LANDLORD AND TENANT, OR TENANT'S USE OR OCCUPANCY OF THE
        PREMISES, INCLUDING ANY CLAIM OF INJURY OR DAMAGE OR THE ENFORCEMENT OF
        ANY REMEDY UNDER ANY CURRENT OR FUTURE LAW, STATUTE, REGULATION, CODE OR
        ORDINANCE.

                              [SIGNATURE PAGE FOLLOWS]

                                      -41-
<PAGE>

        IN WITNESS WHEREOF, this Lease has been executed the day and year first
above set forth.

Designated Address for Landlord:        LANDLORD:
c/o Riggs Trust Group
                                        MEPT WEST HILLS, LLC,
Attn: Patrick O. Mayberry               a Delaware limited liability company

808 17th Street, N.W.                   By: Riggs & Company, a division of
Washington, DC 20006                        Riggs Bank, N.A., as Trustee of
Facsimile: 202-835-6887                     the Multi-Employer Property
                                            Trust, a trust organized under 12
                                            C.F.R. Section 9.18, its sole
                                            member

                                        By: /s/ MARY ANNE MARTINS
                                           ------------------------------------
                                        Name: Mary Anne Martins
                                             ----------------------------------
                                        Its:  Managing Director
                                            -----------------------------------

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

with copy to Manager at:

8550 Balboa Boulevard, Suite 220
Northridge, CA 91325
Attn: Property Manager
Facsimile: (818) 893-5092

Designated Address for Tenant:          TENANT:

                                        MRV Communications, Inc., a Delaware
-------------------------------         corporation

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

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

Facsimile:                              By:  /s/ NOAM LOTAN
          ---------------------            ------------------------------------
                                        Name:   Noam Lotan
                                             ----------------------------------

                                        Its:        CEO
                                             ----------------------------------

                                        By:  /s/ SHLOMO MARGALIT
                                           ------------------------------------
                                        Name:   Shlomo Margalit
                                             -----------------------------------
                                        Its:     Chairman of Board
                                             -----------------------------------

                                      -42-
<PAGE>

                             LANDLORD ACKNOWLEDGMENT

                                         )
DISTRICT OF COLUMBIA               ) ss.
                                         )

        On this 11th day of April, 2000, before me personally appeared Mary Anne
Martins, to me known to be a Managing Director, of Riggs & Company, a division
of Riggs Bank N.A., the Trustee of the Multi-Employer Property Trust, the
national banking association that executed the within and foregoing instrument,
and acknowledged said instrument to be the free and voluntary act and deed of
said national banking association as trustee, for the uses and purposes therein
mentioned, and on oath stated that she was authorized to execute said
instrument.

        IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.

                                     /s/ DENISE HART-GAMBLE
                                     ----------------------------------------

                                     Name:         Denise Hart-Gamble
                                          ------------------------------------

                                     NOTARY PUBLIC in and for the District of
                                     Columbia,
                                     residing at Riggs Bank N.A. My appointment
                                     expires: March 31, 2003

                                      -43-
<PAGE>

                [COMPLETE APPROPRIATE ACKNOWLEDGMENT FOR TENANT]

                       TENANT ACKNOWLEDGMENT (INDIVIDUAL)

State of California     )
                          ) ss.
County of Los Angeles   )

     On this 31st day of March, 2000, before me, a Notary Public in and for the
state of California, personally Noam Lotan & Sholomo Margalit, to me known to
be the individual(s) described in and who executed the within and foregoing
instrument, and acknowledged that s/he/they signed the same as his/her/their
free and voluntary act and deed, for the uses and purposes therein mentioned.

     WITNESS my hand and official seal hereto affixed the day and year first as
above written.

                                      /s/ SARAH L. ROGERS
                                      -----------------------------------------
                                      Name:
    [NOTARY PUBLIC SEAL]              Sarah L. Rogers
      SARAH L. ROGERS                 -----------------------------------------
    Commission # 1218080              NOTARY PUBLIC
 Notary Public - California
     Los Angeles County               residing at               . My appointment
My Comm. Expires May 30, 2003                     ------------
                                      expires: May 30, 2003.
[NOTARIAL SEAL]                                ------------

                                      -44-

<PAGE>

                      TENANT ACKNOWLEDGMENT (PARTNERSHIP)

__________________)
                     ) ss.
__________________)

     On this _______ day of _______________________, 2000, before me, a Notary
Public in and for the _______________ of _______________ personally appeared
___________________________, the ____________________________________ of
_______________________________, a _____________________________________
partnership, the partnership that executed the within and foregoing instrument
and acknowledged said instrument to be the free and voluntary act and deed of
said partnership for the uses and purposes therein mentioned, and on oath
stated that s/he/they was/were authorized to execute said instrument.

     WITNESS my hand and official seal hereto affixed the day and year first as
above written.

                                    __________________________________________
                                    Name:_____________________________________
                                    NOTARY PUBLIC in and for the District of
                                    Columbia,
                                    residing at ________________. My appointment
                                    expires: ___________________.

[NOTARIAL SEAL]

                                      -45-

<PAGE>
                      TENANT ACKNOWLEDGMENT (CORPORATION)

_________________________________ )
                                        ) SS.
_________________________________ )

        On this ________ day of ____________, 2000, before me, a Notary Public
in and for the ________ of _________________________________________________
_______________________, personally appeared _______________________________
_______________________, the ________________________ of ____________________
_________________________________, the _______________________________________
corporation that executed the within and foregoing instrument, and acknowledged
said instrument to be the free and voluntary act and deed of said corporation
for the uses and purposes therein mentioned, and on oath stated that s/he/they
was/were authorized to execute said instrument.

        WITNESS my hand and official seal hereto affixed the day and year first
as above written.

                                        ----------------------------------------
                                        Name:
                                             -----------------------------------
                                        NOTARY PUBLIC in and for the District of
                                        Columbia,
                                        residing at ___________.
                                        My appoint expires: ___________________.

[NOTARIAL SEAL]

                                      -46-
<PAGE>
                               EXHIBIT A to Lease

                           LEGAL DESCRIPTION OF LAND

                          (To be attached by Landlord)

                                      -1-

<PAGE>
                               EXHIBIT B to Lease

                    DRAWING SHOWING LOCATION OF THE PREMISES

                                      -1-
<PAGE>
                                  EXHIBIT "B"
<PAGE>
                               EXHIBIT C to Lease

                     WORK LETTER AND CONSTRUCTION AGREEMENT
                      (Landlord to Construct Improvements)

        1. TENANT'S IMPROVEMENTS. Except as set forth herein and in the Lease
Tenant accepts the Premises and existing improvements therein in their "as is"
condition. Landlord shall furnish and install within the Premises those items of
general construction, but not personal property or trade fixtures (the "Tenant
Improvements"), shown on the plans and specifications attached to this Lease as
Exhibit C or, if the foregoing is not applicable, as finally approved by
Landlord and Tenant, pursuant to Paragraph 2 below. All Tenant improvements
shall be constructed pursuant to this Work Letter and shall be performed by
Landlord's general contractor utilizing those subcontractors selected by
Landlord in accordance with this Work Letter. Such general contractors and all
subcontractors shall satisfy those union labor requirements set forth in the
Lease in the paragraph captioned "Tenant's Work Performance".

        2. PLANS AND SPECIFICATIONS FOR IMPROVEMENTS.

           2.1  Landlord shall retain Ware-Malcolmb to prepare the plans and
specifications described hereinafter for the Tenant Improvements. The plans and
specifications shall be subject to Tenant and Landlord's approval, which
approval shall not be unreasonably delayed.

           2.2  Landlord and Tenant agree that the parties have approved the
Space Plan for the Premises dated March 30, 2000 attached hereto as Schedule I
(the "Space Plan").

           2.3  Based upon the Space Plan, Landlord shall cause the Architect to
prepare detailed plans and specifications for the Tenant Improvements ("PLANS")
within ten (10) business days after the execution and delivery of this Lease by
Landlord and Tenant. Landlord shall then forward the Plans to Tenant for
Tenant's approval. Tenant shall approve or reasonably disapprove any draft of
the Plans within three (3) business days after Tenant's receipt thereof;
provided, however, that (i) Tenant shall not be entitled to disapprove any
portion, component or aspect of the Plans which are consistent with the Space
Plan unless Tenant agrees to pay for the additional cost resulting from such
change in the Plans as part of the Excess Cost of Tenant Improvements pursuant
to Section 4.2 below, and (ii) any disapproval of the Plans by Tenant shall be
accompanied by a detailed written explanation of the reasons for Tenant's
disapproval. Failure of Tenant to reasonably disapprove any draft of the Plans
within said three (3) business day period shall be deemed to constitute Tenant's
approval thereof. The Plans as approved by Landlord and Tenant, may be referred
to herein as the "APPROVED PLANS". Tenant shall make no changes or modifications
to the Space Plan or the Approved Plans without the prior written consent of
Landlord, which consent may be withheld in Landlord's sole discretion if such
change or modification would directly or indirectly delay the Substantial
Completion or increase the cost of designing or constructing the Tenant
Improvements.

        Tenant shall cooperate with Landlord to provide information requested by
Landlord or Landlord's Agents in connection with the preparation of the Plans.
Tenant shall provide such information within three (3) business days after
requested by Landlord or Landlord's Agents. Tenant's failure to so provide such
information within such three (3) business day period shall be deemed a Tenant
Delay.

        3. BUILDING SHELL CHANGES. If the Plans or any amendment thereof or
supplement thereto shall require changes in the Building shell, the cost of the

                                      -1-
<PAGE>
Building shell work caused by such Plans, amendment or supplement, shall be
charged against Tenant. If Building shell work is permitted by Landlord, the
cost thereof shall include all architectural and/or engineering fees and
expenses in connection therewith, as well as compensation to Landlord for the
costs of any delays which arise from such changes (which delays shall also
constitute Tenant Delay).

        4. LEASEHOLD IMPROVEMENT APPROVAL AND COST.

           4.1  Upon Landlord and Tenant's approval of the Plans, Landlord shall
submit the Approved Plans to competitively bid them to not less than three (3)
general contractors. Copies of such bids shall be delivered to Tenant, and
Tenant shall have input (but no approval rights) in the selection of the general
contractor; provided, however, that Landlord shall, using its good faith
judgment, ultimately be entitled to select the general contractor. Landlord
shall have three (3) business days after receipt of all bids to select the
general contractor; provided, however, that if all such bids are not received
within fourteen (14) days after Landlord's submission of the Approved Plans to
such contractor (as the same may be extended due to the acts of Tenant or
Tenant's agents), then the twelve (12) week and sixteen (16) week periods
described in Section 2.5 of the Lease shall commence upon the seventh (7th)
business day after the expiration of such fourteen (14) day period (as the same
may be extended due to the acts of Tenant or Tenant's agents). Tenant
acknowledges that, if Landlord has submitted the Approved Plans to bid as
provided herein, but has not received bids from all three (3) general
contractors within fourteen (14) days after Landlord has submitted the same to
bid (as the same may be extended due to the acts of Tenant or Tenant's agents),
then Landlord shall be entitled to select the general contractor from the bids
received upon the expiration of such fourteen (14) day period (as the same may
be extended due to the acts of Tenant or Tenant's agents). Landlord's general
contractor (who shall have been selected by Landlord from the competitive bids)
will be entitled to a contractor's fee and general conditions fee (not to exceed
the current market rate for such fees). Upon receipt of the general contractor's
cost of construction, Landlord shall provide Tenant with a detailed breakdown of
the cost of furnishing and installing the Tenant Improvements, including,
without limitation: the cost of constructing improvements; the cost of preparing
engineering plans; governmental agency plan check, permit and other fees; sales
and use taxes; Title 24 fees; all other costs to be expended by Tenant in the
construction of the Tenant Improvements; and a Landlord's administration fee of
five percent (5%) of the cost of the Tenant Improvements (collectively, the
"Cost of Tenant Improvements"). The Cost of Tenant Improvements may include
expenses and "soft costs" incurred by Tenant, such as the fees of Tenant's
architect. Tenant shall approve in writing the estimated cost of Tenant
Improvements' Section, Tenant's sole remedy shall be to terminate the Lease in
accordance with Section 4.5 below. No construction of Tenant Improvements shall
commence until such approval is received by Landlord. At Landlord's election,
any delay by Tenant in giving such approval shall constitute Tenant Delay.

           4.2  Landlord shall establish an allowance (the "Tenant Improvement
Allowance") of Seven Hundred Seventy-five Thousand Nine Hundred and 00/100
Dollars ($775,900.00) which Tenant Improvement Allowance shall be used by
Landlord solely for the design and installation of the Tenant Improvements.
Tenant shall have the right to use the Tenant Improvement Allowance for any
improvements described in the Approved Plans. However, in no event shall more
than Three and 00/100 Dollars ($3.00) per usable square foot of the Tenant
Improvement Allowance be used for the purpose of acquiring and installing
telecommunications cabling, built-in or movable furniture or data/computer
networking, and in no event shall more than One and 00/100 Dollars ($1.00) per
usable square foot of the Tenant Improvement Allowance be used for moving

                                      -2-
<PAGE>
costs. Except as provided in this Section, in no event shall the Tenant
Improvement Allowance be used to pay for costs of Tenant's furniture or other
personal property, which shall be paid for by Tenant at its sole cost and
expense. If the Cost of Tenant Improvements (including the portion used for
moving costs and for acquiring and installing telecommunications cabling,
built-in or movable furniture or data/computer networking) is less than the
Tenant Improvement Allowance, Landlord shall retain such excess portion of the
Tenant Improvement Allowance as its sole and separate property and Tenant shall
have no rights or claims to it whatsoever, nor shall Tenant be entitled to any
credit as a result of such excess. Notwithstanding anything to the contrary
contained in this Work Letter and Construction Agreement, and subject to the
provisions of Section 4.5 below, if the Cost of Tenant Improvements exceed the
Tenant Improvement Allowance ("Excess Cost of Tenant Improvements"), prior to
commencement of construction, Tenant shall deposit with Landlord, in cash, the
amount of such Excess Cost of Tenant Improvements to be disbursed by Landlord
following full disbursement of the Tenant Improvement Allowance, and the
balance, if any, to be returned to Tenant, without interest, following
completion of the Tenant Improvements.

                4.3 If the Cost of Tenant Improvements increases due to the
requirements of any governmental agency subsequent to Landlord's approval of the
bids pursuant to Paragraph 4.1, or for any other reason not the fault of
Landlord, Tenant shall pay to Landlord the amount of any such increase within
ten (10) Business Days after receipt of notice of such cost increases.

                4.4 Subject to the terms of the Lease paragraph captioned
"Removal of Property", all of the Tenant Improvements, whether or not the cost
thereof is covered by the Tenant Improvement Allowance, shall become the
property of Landlord upon expiration or earlier termination of the Lease and
shall remain on the Premises at all times during the Term.

                4.5 If the estimated Cost of Tenant Improvements (but only those
estimated Costs of Tenant Improvements which are consistent with the scope of
work for the Tenant Improvements as set forth on the Space Plan exceeds the
Tenant Improvement Allowance, Tenant shall have the right, upon written notice
(the "Termination Notice") given to Landlord within three (3) business days
after Landlord selects the general contractor pursuant to 4.1 above, terminate
this Lease; provided, however, that, as a condition to Tenant's right to so
terminate this Lease, Tenant shall pay to Landlord a termination fee equal to
(a) all reasonable attorneys fees and costs incurred by Landlord in connection
with the negotiation, preparation and execution of this Lease (not to exceed
$13,500) and (b) all costs and expenses incurred by Landlord in connection with
the preparation and performance of design work, architectural plans and drawings
and engineering fees and costs relating to the Tenant Improvements (not to
exceed $45,600) [collectively, the "Termination Fee"]. In no event shall the
Termination Fee include any brokerage commissions. The Termination Fee shall be
paid to Landlord by Landlord's application of the Security Deposit, with any
remaining balance, if any, payable by Tenant within ten (10) days after
Landlord's submission of the amount of the Termination Fee to Tenant (supported
by a reasonably detailed statement thereof), and this Lease shall not be
terminated until Landlord's receipt of the entire Termination Fee. Upon
Landlord's timely and proper termination hereunder, Landlord shall promptly
return the unapplied portion of the Security Deposit and the Prepaid Rent to
Tenant. If Tenant fails to deliver the Termination Notice to Landlord within the
three business day period described above, Tenant shall be deemed to have
forever waived its right to terminate this Lease in accordance with this Section
4.5. The date on which Tenant shall be deemed to have waived its right to
terminate this Lease pursuant to this Section 4.5 shall be referred to as the
"Tenant Waiver Date".

                                      -3-

<PAGE>
        5. TENANT CHANGES. Tenant may request a change, addition or alteration
in the Tenant Improvements as shown by the Approved Plans after Tenant's final
approval of such Approved Plans (a "Change Order") by delivery of a written
request to Landlord for its approval and for the general contractor's
determination of (i) the increase on the cost of work to implement the Change
Order, and (ii) the estimated delay, if any, in the construction of the Tenant
Improvements occasioned by the Change Order. Tenant's architect shall complete
all working drawings necessary to show the change, addition or alteration, and a
Change Order in form satisfactory to Landlord. Following its approval of the
Change Order and any delays in construction occasioned by the Change Order,
Landlord shall deliver to Tenant its written approval of the Change Order and
authorization to proceed with the work as shown by the Change Order, conditioned
upon payment by Tenant to Landlord, in advance and in full, of any cost increase
occasioned thereby. Landlord may decline any proposed Change Order if the change
is inconsistent with the provisions of any of paragraphs 1 through 4 above. Any
delay caused by work stoppage pending Landlord's approval of a Change Order of
payment by Tenant of any cost increase shall constitute Tenant Delay. If
Landlord fails to disapprove a Change Order within five (5) days after
Landlord's receipt thereof, the Change Order shall be deemed approved.

        6. CONSTRUCTION OF TENANT IMPROVEMENTS.

                6.1 Landlord shall construct the Tenant Improvements in
substantial accordance with the Plans in a good and workmanlike manner. Unless
specifically noted to the contrary on the Plans, the Tenant Improvements shall
be constructed using Project-standard specifications and materials as determined
by Landlord. Upon approval by Tenant of the Plans and Cost of the Tenant
Improvements, the general contractor shall proceed to secure a building permit
and commence construction.

                6.2 The construction of Tenant Improvements shall be subject to
the following:

                        (i) As part of the Cost of the Tenant Improvements to be
paid by Tenant (subject to Landlord's contribution of the Tenant Improvement
Allowance), Tenant shall reimburse Landlord for all costs directly or indirectly
related to the Tenant Improvements, including, without limitation: costs of site
services, facilities and utilities (such as trash removal, use of vertical
transportation, electrical service, etc.); costs of remedying deficient or
faulty work or inadequate clean-up done by Tenant or its contractor(s); and
costs incurred by reason of delays caused by such work.

                        (ii) All Tenant Improvements shall be installed only
under the supervision of Landlord or its designated agent, and Tenant shall pay
to Landlord an administration fee in the amount of five percent (5%) as
described in Paragraph 4 above, which cost may be paid out of the Tenant
Improvement Allowance.

                6.3 "Tenant Delay" shall include, without limitation, any delay
in the completion of construction of Tenant Improvements resulting from (i)
Tenant's failure to comply with the provisions of this Work Letter and
Construction Agreement or the Lease, including without limitation Tenant's
failure to meet any time deadlines established herein, (ii) any additional time
as reasonably determined by Landlord required for ordering, receiving,
fabricating and/or installing items of materials or other components of the
construction of Tenant Improvements, including, without limitation, millwork,
which are not used in the construction of Tenant Improvements in accordance with
Landlord's building standards and which causes a delay in the Substantial
Completion of the Tenant Improvements beyond the time when such improvements
would otherwise be completed if constructed in accordance with the standards
used in the remainder of the Building, (iii) delay in

                                      -4-

<PAGE>
work caused by submission by Tenant of a request for any Change Order following
Landlord's approval of the Plans, (iv) any additional time, as reasonably
determined by Landlord, required for implementation of any Change Order with
respect to the Tenant Improvements, (v) any changes in the Building Shell
(provided that Landlord has notified Tenant at the time Landlord approves the
Approved Plans for any Change Order thereto] that the same will constitute a
Tenant Delay) or (vi) any other delay arising from the act or omission of Tenant
or Tenant's Agents if there shall be any Tenant Delay, then Landlord may require
Tenant to commence the payment of Rent under the Lease based upon when
Substantial Completion would have occurred but for the Tenant Delay, or if not
previously required by Landlord, Tenant shall pay such Rent to Landlord prior to
Tenant occupying the Premises. Landlord shall not be liable for, and Tenant
waives all claims against Landlord for, any defaults of the general contractor
and all subcontractors and suppliers relating to construction of the Tenant
Improvements. In the event of any such default, Tenant shall look solely to the
general contractor or the subcontractors or suppliers.

      7.    MISCELLANEOUS.

            7.1   Any default of Tenant in this Work Letter and Construction
Agreement shall constitute a default of Tenant under the Lease, and Landlord's
remedies shall be as set forth therein. All provisions of the Lease are fully
incorporated in this Exhibit "C" as though set forth herein at length.

            7.2   Tenant shall designate one (1) construction representative
authorized to act for Tenant upon whom Landlord can rely, and who shall consult
with Landlord and Landlord's contractors, employees and agents in connection
with the construction of the Tenant Improvements.

            7.3   Landlord hereby assigns to Tenant on a non-exclusive basis
all warranties and guaranties by the contractor who constructs the Tenant
Improvements relating to the Tenant Improvements, and Tenant hereby waives all
claims against Landlord relating to, or arising out of the construction of, the
Tenant Improvements.

LANDLORD:                                 TENANT:

MEPT WEST HILLS, LLC,                     MRV Communications, Inc., a
a Delaware limited liability company      Delaware corporation

By:   Riggs & Company, a division of
      Riggs Bank, N.A., as Trustee of     By:  /s/ NOAM LOTAN
      the Multi-Employer Property            ----------------------------------
      Trust, a trust organized under      Name:  Noam Lotan
      12 C.F.R. Section 9.18, its sole         --------------------------------
      member                              Its:  President and CEO
                                              ---------------------------------

      By:                                 By:  /s/ SHLOMO MARGALIT
         -----------------------------       ----------------------------------
      Name:                               Name:  Shlomo Margalit
           ---------------------------         --------------------------------
      Its:                                Its:  Chairman
          ----------------------------        ---------------------------------

      By:
         -----------------------------
      Name:
           ---------------------------
      Its:
          ----------------------------
<PAGE>

                                   SCHEDULE 1

                                   SPACE PLAN

                                  [FLOOR PLAN]

                                      -6-

<PAGE>

                               EXHIBIT D to Lease

                    FORM OF MEMORANDUM OF COMMENCEMENT DATE

     MEPT West Hills, LLC, as Landlord, and MRV Communications, Inc., a
Delaware corporation as Tenant, executed that certain Lease dated as of
March 30, 2000 (the "Lease").

     The Lease contemplates that upon satisfaction of certain conditions
Landlord and Tenant will agree and stipulate as to certain provisions of the
Lease. All such conditions precedent to that stipulation have been satisfied.

     Landlord and Tenant agree as follows:

     1.   The Commencement Date of the Lease is August 4, 2000.

     2.   The Termination Date of the Lease is August 3, 2005.

     3.   The Premises consist of 38,795 rentable square feet.

     4.   Base Rent is as follows:

          8/4/00 through 8/31/00; $68,329.26 per month

          9/1/00 through 1/31/03; $75,650.25 per month

          2/1/03 through 8/3/05; $81,469.50 per month

          ______ through ______; $__________ per month

     5.   Tenant's Pro Rata Share is 11.76 percent (11.76%).

     IN WITNESS WHEREOF, the parties have caused this Memorandum to be duly
executed as of 9/13, 2000.

LANDLORD:                                   TENANT:

MEPT WEST HILLS, LLC, a Delaware            MRV Communications, Inc., a
limited liability company                   Delaware corporation

By:  RIGGS & COMPANY, a division of         By:     /s/ NOAM LOTAN
     Riggs Bank N.A., as Trustee of the     ----------------------------------
     Multi-Employer Property Trust, a       Name:   Noam Lotan
     trust organized under 12 C.F.R.        ----------------------------------
     Section 9.18                           Its:    CEO
                                            ----------------------------------

By: _________________________________
Name: _______________________________
Its: ________________________________

                                      -1-

<PAGE>
                               EXHIBIT D to Lease

                    FORM OF MEMORANDUM OF COMMENCEMENT DATE

     MEPT West Hills, LLC, as Landlord, and MRV Communications, Inc., a Delaware
corporation as Tenant, executed that certain Lease dated as of
____________________, 2000 (the "Lease").

     The Lease contemplates that upon satisfaction of certain conditions
Landlord and Tenant will agree and stipulate as to certain provisions of the
Lease. All such conditions precedent to that stipulation have been satisfied.

     Landlord and Tenant agree as follows:

     1.   The Commencement Date of the Lease is

          _______________________.

     2.   The Termination Date of the Lease is

          ____________________________.

     3.   The Premises consist of _________________________ rentable square
          feet.

     4.   Base Rent is as follows:

          ______________ through ____________; $__________ per
          month
          ______________ through ____________; $__________ per
          month
          ______________ through ____________; $__________ per
          month
          ______________ through ____________; $__________ per
          month

     5.   Tenant's Pro Rata Share is _______________ percent (_______%).

     IN WITNESS WHEREOF, the parties have caused this Memorandum to be duly
executed as of _________, 2000.

LANDLORD:                                    TENANT:

MEPT WEST HILLS, LLC, a Delaware limited     MRV Communications, Inc., a
liability company                            Delaware corporation

By:  RIGGS & COMPANY, a division of
     Riggs Bank N.A., as Trustee of the      By:
     Multi-Employer Property Trust, a trust  _______________________
     organized under 12 C.F.R. Section       Name:
     9.18                                    _______________________
                                             Its:
     By: ___________________________         _______________________
     Name: _________________________
     Its: __________________________

                                      -1-
<PAGE>
                               EXHIBIT E to Lease

                             RULES AND REGULATIONS

1.   No sign, placard, picture, advertisement, name or notice shall be installed
     or displayed on any part of the outside or inside of the Building or Land
     without the prior written consent of the Landlord. Landlord shall have the
     right to remove, at Tenant's expense and without notice, any sign installed
     or displayed in violation of this rate. All approved signs or lettering on
     doors and walls shall be printed, painted, affixed or inscribed at the
     expense of Tenant by a person chosen by Landlord.

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

3.   Tenant shall not obstruct any sidewalk, halls, passages, exits, entrances,
     elevators, escalators, or stairways of the Building. The halls, passages,
     exits, entrances, elevators, escalators and stairways are not open to the
     general public. Landlord shall in all cases retain the right to control and
     prevent access to such areas of all persons whose presence in the judgment
     of Landlord would be prejudicial to the safety, character, reputation and
     interest of the Land, Building and the Building's tenants; provided that,
     nothing in this Lease contained shall be construed to prevent such access
     to persons with whom any Tenant normally deals in the ordinary course of
     its business, unless such persons are engaged in illegal activities. Tenant
     shall not go upon the roof of the Building.

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

5.   All cleaning and janitorial services for the Building and the Premises
     shall be provided exclusively through Landlord, and except with the written
     consent of Landlord, no person or persons other than those approved by
     Landlord shall be employed by Tenant or permitted to enter the Building for
     the purpose of cleaning the same. Cleaning and janitorial services shall be
     provided five (5) days per week. Tenant shall not cause any unnecessary
     labor by carelessness or indifference to the good order and cleanliness of
     the Premises. Landlord shall not in any way be responsible to any Tenant
     for any loss of property on the Premises, however occurring, or for any
     damage to any Tenant's property by the janitor, any of Landlord's Agents or
     any other person.

6.   Landlord will furnish Tenant, free of charge, two (2) keys to each door
     lock in the Premises. Landlord may make a reasonable charge for any
     additional keys. Tenant shall not make or have made additional keys, and
     Tenant shall not alter any lock or install a new additional lock or bolt on
     any door of its Premises. Tenant, upon the termination of its tenancy,
     shall deliver to Landlord the keys of all doors which have been furnished
     to Tenant, and in the event of loss of any keys so furnished, shall pay
     Landlord therefor.

7.   Except on holidays, HVAC service shall be provided to the Premises Monday
     through Friday from 8:00 a.m. to 10:00 p.m. and Saturday and Sunday from
     9:00 a.m. to 4:00 p.m.

8.   If Tenant requires telegraphic, telephonic, computer circuits, burglar
     alarm or similar services, it shall first obtain, and comply with,

                                      -1-
<PAGE>

     Landlord's instructions for their installation, and shall pay the entire
     cost of such installation(s).

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

10.  Tenant shall not use or keep in the Premises any kerosene, gasoline or
     inflammable or combustible fluid or material other than those limited
     quantities permitted by the Lease. Tenant shall not use or permit to be
     used in the Premises any foul or noxious gas or substance, or permit or
     allow the Premises to be occupied or used in a manner offensive or
     objectionable to Landlord or other occupants of the Project by reason of
     noise, odors or vibrations nor shall Tenant bring into or keep in or about
     the Premises any birds or animals.

11.  Tenant shall not use any method of heating or air-conditioning other than
     that supplied by Landlord.

12.  Tenant shall not waste any utility provided by Landlord and agrees to
     cooperate fully with Landlord to assure the most effective operation of
     the Building's heating and air-conditioning and to comply with any
     governmental energy-saving rules, laws or regulations of which Tenant has
     actual notice.

13.  Landlord reserves the right, exercisable without notice and without
     liability to Tenant, to change the name and street address of the Building.

14.  Intentionally Omitted.

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

16.  Intentionally Omitted.

17.  The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
     not be used for any purpose other than that for which they were
     constructed and no foreign substance of any kind whatsoever shall be
     deposited in them. The expenses of any breakage, stoppage or damage
     resulting from the violation of this rule shall be borne by Tenant if it
     or its employees or invitees shall have caused it.

18.  Tenant shall not sell, or permit the sale at retail, of newspapers,
     magazines, periodicals, theater tickets or any other goods or merchandise
     to the general public in or on the Premises. Tenant shall not make any
     room-to-room solicitation of business from other tenants in the Building.
     Tenant shall not use the Premises for any

                                      -2-
<PAGE>

     business or activity other than that specifically provided for in the
     Lease.

19.  Tenant shall not install, without Landlord's prior written consent which
     consent may be granted or withheld in Landlord's sole and absolute
     discretion, any radio or television antenna, loudspeaker or other device
     on the roof or exterior walls of the Building. Tenant shall not interfere
     with radio or television broadcasting or reception from or in the Building
     or elsewhere.

20.  Except as provided in the Tenant Work Letter, Tenant shall not mark, drive
     nails, screws or drill into the partitions, woodwork or plaster or in any
     way deface the Premises. Landlord reserves the right to direct
     electricians as to where and how telephone and telegraph wires are to be
     introduced to the Premises. Tenant shall not cut or bore holes for wires.
     Tenant shall not affix any floor covering to the floor of the Premises in
     any manner except as approved by Landlord. Tenant shall repair any damage
     resulting from noncompliance with this rule.

21.  Intentionally Omitted.

22.  Canvassing, soliciting and distribution of handbills or any other written
     material, and peddling in the Building or Land are prohibited and Tenant
     shall cooperate to prevent the same.

23.  Landlord reserves the right to exclude or expel from the Building and Land
     any person who, in Landlord's judgment, is intoxicated, under the
     influence of liquor or drugs or in violation of any of these Rules and
     Regulations.

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

25.  The Premises shall not be used for lodging or any improper or immoral or
     objectionable purpose. No cooking shall be done or permitted by Tenant,
     except that use by Tenant of Underwriters' Laboratory approved equipment
     for microwaving, brewing coffee, tea, hot chocolate and similar beverages
     shall be permitted; provided that such equipment and its use is in
     accordance with all Governmental Requirements.

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

27.  Without the prior written consent of Landlord, Tenant shall not use the
     name of the Building in connection with or in promoting or advertising the
     business of Tenant except as Tenant's address.

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

29.  Tenant assumes any and all responsibility for protecting the Premises from
     theft, robbery and pilferage, which includes keeping doors locked and
     other means of entry to the Premises closed.

30.  The requirements of tenant will be attended to only upon appropriate
     application to the Manager of the Building by an authorized individual.
     Employees of Landlord are not required to perform any work or do anything
     outside of their regular duties unless under special instructions from
     Landlord, and no employee of Landlord is required to admit Tenant to any
     space other than the Premises without specific instructions from Landlord.

31.  Tenant shall not park its vehicles in any parking areas designated by
     Landlord as areas for parking by visitors to the Building or Land.

                                      -3-
<PAGE>
             Tenant shall not leave vehicles in the parking areas overnight nor
             park any vehicles in the Building parking areas other than
             automobiles, motorcycles, motor driven or nonmotor driven bicycles
             or four wheeled trucks.

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

        33.  These Rules and Regulations are in addition to, and shall not be
             construed to in any way modify or amend, in whole or in part, the
             covenants and conditions of any lease of Premises in the Building.
             If any provision of these Rules and Regulations conflicts with any
             provision of the Lease, the terms of the Lease shall prevail.

        34.  Landlord reserves the right to make such other and reasonable Rules
             and Regulations as, in its judgment, may from time to time be
             needed for safety and security, the care and cleanliness of the
             Building and Land and the preservation of good order in the
             Building. Tenant agrees to abide by all the Rules and Regulations
             stated in this exhibit and any additional rules and regulations
             which are so made by Landlord.

        35.  Tenant shall be responsible for the observance of all of the
             foregoing rules by Tenant and Tenant's Agents.

                                      -1-
<PAGE>
                               Exhibit G to Lease

                                  Parking Area

                                      -2-
<PAGE>

                                  Exhibit "G"

                                  Parking Area
<PAGE>
                                   Exhibit H

                          Environmental Questionnaire

                                      -3-
<PAGE>
                                  EXHIBIT "F"

                          ENVIRONMENTAL QUESTIONNAIRE

FOR OFFICE USE ONLY:

Proposed Lease Commencement Date: March 31, 2000      Marketing Director: ______

        Original               Renewal              Expansion

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

                PRE-LEASING ENVIRONMENTAL EXPOSURE QUESTIONNAIRE
                   (To be completed prior to Lease Approval)

Property Address:   As described in attached lease
                    8433 Fallbrook Avenue "Bldg. B at Corporate Pointe"
                    West Hills, CA

Proposed Tenant:    MRV Communications Inc./Zuma Networks Inc.

                    (Include full legal name of proposed tenant and any d/b/a)

Current Address:    _8943 Fullbright Avenue, Chatsworth, CA 91311 ______________

Description of Proposed Use of Property: General office purposes and incidental
use consisting of the following; warehousing, light assembly, shipping and
receiving, engineering and research development (including project testing)

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

PLEASE ANSWER THE FOLLOWING QUESTIONS ACCURATELY AND FULLY, ATTACHING ADDITIONAL
PAGES IF NECESSARY. YOUR RESPONSES TO THIS QUESTIONNAIRE, INCLUDING ANY AND ALL
ATTACHMENTS, SHALL BE INCORPORATED AS REPRESENTATIONS AND WARRANTIES IN THE
LEASE WHEN EXECUTED, AND INCORRECT, MISLEADING OR MATERIALLY INCOMPLETE
RESPONSES SHALL BE DEEMED A BREACH OF SAID LEASE.

1.   Will any of the following chemicals, petroleum products or hazardous
     materials be made, used, placed, or stored on the property in quantities
     greater than the minimum quantity listed in column (1) below? If yes,
     please mark column(s) (2), (3), and/or (4) as applicable.

                                      (1)       (2)      (3)      (4)       (5)
                                    Minimum
     Categories of Chemicals        Quantity    Made    Used    Placed    Stored
     -----------------------        --------    ----    ----    ------    ------

     Solvents, Degreasers           1 Gallon    ____    ____    ______    ______
     Paint Thinners/Remover         1 Gallon    ____    ____    ______    ______
     Paint                          5 Gallons   ____    ____    ______    ______
     Oil (New)                      5 Gallons   ____    ____    ______    ______
     Gasoline                       1 Gallon    ____    ____    ______    ______
     Antifreeze                     5 Gallons   ____    ____    ______    ______
     Other Automotive Fluids        1 Gallon    ____    ____    ______    ______
     Diesel Fuel                    5 Gallons   ____    ____    ______    ______
     Heavy (Toxic) Metal
       Containing Compounds         1 Pound     ____    ____    ______    ______
     Liquid Plastics/Activators     1 Gallon    ____    ____    ______    ______
     Flammable Gases                20 Cu Ft    ____    ____    ______    ______
     Toxic Gases                    20 Cu Ft    ____    ____    ______    ______
     Acids                          1 Gl/5 Lb   ____    ____    ______    ______
     Bases (soda, ash, lye, etc.)   1 Gl/5 Lb   ____    ____    ______    ______
     Other Flammable Materials      1 Gl/5 Lb   ____    ____    ______    ______
     Other Corrosive Materials      1 Gl/5 Lb   ____    ____    ______    ______
     Other Toxic Materials          1 Gl/5 Lb   ____    ____    ______    ______
     Other Reactive Materials       1 Gl/5 Lb   ____    ____    ______    ______
     Liquid Hazardous Waste         1 Gallon    ____    ____    ______    ______
     Solid Hazardous Waste          1 Pound     ____    ____    ______    ______

     1.1  If required for your operations, please provide Landlord a copy of
          your Hazardous Material Business Management Plan.

     1.2  Do your operations require H-occupancy storage or other     Yes    No
          special construction?                                       ___    NO

<PAGE>
            If yes, please explain:

            _________________________________

            _________________________________

2.  Will any of the following structures be used on the property?
    If yes, describe the contents of each.                           ____   ____

    Feature                     Contents

    Underground Tank   ____________________________________           NO    ____
    Above-ground Tank  ____________________________________           NO    ____
    Clarifier          ____________________________________           NO    ____
    Sump               ____________________________________           NO    ____
    Trench             ____________________________________           NO    ____
    Waste Pile         ____________________________________           NO    ____
    Chemical Piping    ____________________________________           NO    ____
    Floor Drain        ____________________________________           NO    ____
    Other              Nitrogen Containers of 22PSI, 148
                       LTR will be used                               YES   ____
                       ____________________________________           ____  ____

    2.1  Please describe plans for secondary containment and
         leak monitoring.
         __________________________________________________

         __________________________________________________

3.  Will any hazardous wastes or liquid wastes be generated           NO    ____
    by on site operations or brought on to the property?

    If yes, complete the following:

    3.1  Identify each such hazardous waste or liquid waste:

         __________________________________________________

         __________________________________________________

    3.2  Describe onsite storage, including secondary
         containment, and/or treatment.

         __________________________________________________

         __________________________________________________

    3.3  Describe yours plans for disposal of hazardous wastes
         or liquid waste including off-site disposal.

         __________________________________________________

         __________________________________________________

4.  Will operations results in any wastewater discharges to           NO    ____
    the sewer?

    Will operations result in any wastewater discharges to
    locations other than the sewer (including storm drain)?

    If yes, describe each wastewater stream and plans for
    handling wastewater discharges:

         __________________________________________________

         __________________________________________________

    4.1  Have you performed any testing or analysis of                NO    ____
         wastewater discharges or other wastewater effluent
         from your current facility?

         If yes, attach the results of any such testing or
         analysis.

    4.2  Will your operations require any stormwater discharge        NO    ____
         permits?

                                      -2-
<PAGE>
            If yes, describe:

            _________________________________

            _________________________________

5.  Will activities on the property require warnings to be           NO     ____
    given to workers or visitors on the Leased Premises or the
    surrounding community?

    If yes, please describe how you will provide such
    communications or warnings: ______________________________

    __________________________________________________________

6.  Will operations result in any air emissions (including dust)?    NO     ____

    If yes, describe:

    __________________________________________________________

    __________________________________________________________

    6.1  Will permits from the Southern Coast Air Quality            NO     ____
         Management District be required?

7.  Will operations result in air emissions which include            NO     ____
    hazardous or toxic air pollutants?

    7.1  If yes, will any public notice or disclosure be required?   ____   ____

8.  Will operations be subject to Risk Management & Preview          NO     ____
    Planning requirements or other risk reduction requirements?

9.  Will your operations involve any on-site vehicle or equipment    NO     ____
    maintenance, repair or cleaning, including but not limited
    to oil changes, oil filter changes, brake pad replacement,
    battery changes, radiator flushing, radiator fluid replacement,
    and equipment, and equipment wash down and cleaning?

    If yes, describe all such maintenance:

    __________________________________________________________

    __________________________________________________________

    9.1  Will these on-site vehicles or equipment use batteries?     ____   ____

         If yes, describe battery storage method: ____________

         _____________________________________________________

10. Will your operations include a machine shop?                     NO     ____

    If yes, describe all operation:

    __________________________________________________________

    __________________________________________________________

11. Will your operations include any metal plating or metal          NO     ____
    fabrication:

    If yes, describe:

    __________________________________________________________

    __________________________________________________________

12. Will your operations include the use of solvents?                NO     ____

    If yes, describe:

    __________________________________________________________

    __________________________________________________________

                                      -3-
<PAGE>
13. Has your present facility or operation ever been the            NO      ____
    subject of an environmental investigation, an environmental
    enforcement action, or permit revocation proceeding?

    If yes describe:

    __________________________________________________________

    __________________________________________________________

14. Have you ever been identified as a potentially responsible      NO     ____
    party for any environmental cleanup, compliance or abatement
    proceeding?

    If yes, describe:

    __________________________________________________________

    __________________________________________________________

15. Have you ever received a notice of violation or notice to       NO     ____
    comply from any environmental regulatory agency within the
    past five years?

    If yes, describe:

    __________________________________________________________

    __________________________________________________________

16. Have you had any complaints from neighbors relating to noise,    NO     ____
    odor, air emissions, or dust at your present facility?

    If yes, describe:

    __________________________________________________________

    __________________________________________________________

    16.1 Have you had any complaints relating to hazardous           NO     ____
         materials handling, storage, treatment or disposal
         from neighbors at your present facility?

         If yes, describe:

         _____________________________________________________

         _____________________________________________________

17. Will the proposed use of the property require the filing of
    any environmental reports or other documents to any agencies?

18. Attach copies of all Material Safety Data Sheets ("MSDS") for
    all chemicals you intend to use, sore, or handle on the
    property.

19. Has an Environmental Audit been conducted at your present        NO     ____
    facility? (If yes, attach a copy of any report prepared in
    connection with any such audit.)

20. Please provide the Landlord your Emergency Response Plan
    and any contingency or emergency plans for the property
    in case of an accidental release of hazardous materials.

                                      -4-
<PAGE>

21. Identify the name, title and qualifications/experience of person responsible
    for your environmental health and safety program:

    Name: ____________________________________________________________________

    Title: ___________________________________________________________________

    Qualifications/experience: _______________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

22. Name and telephone number of person to contact for additional information:

    Name: RAYMOND WEBSTER
    __________________________________________________________________________

    Title: VICE PRESIDENT CORPORATE DEVELOPMENT
    __________________________________________________________________________

    Telephone Number: 818-993-9862 Ext. 270
    __________________________________________________________________________

23. Please provide any additional information/comments concerning your
    environmental compliance program and environmental compliance history:

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

The undersigned hereby certifies that the information above is correct and
complete.

MRV Communications/Zuma Networks

/s/ NOAM LOTAN
-------------------------------------------
Name of Proposed Tenant

Name:  Moti Weizman

Title: General Manager

Date:  March 31, 2000<PAGE>

                                                                   EXHIBIT 10.69

                                     [LOGO]

                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

           STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
                (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.      BASIC PROVISIONS ("BASIC PROVISIONS").

        1.1     PARTIES: This Lease ("LEASE"), dated for reference purposes
only, August 14, 2000, is made by and between George DeRado ("LESSOR") and
Luminent, Inc., a Delaware Corporation ("LESSEE"), (collectively the "PARTIES,"
or individually a "PARTY").

        1.2     PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 20520 Nordhoff Street, Chatsworth, CA. 91311, located in the County of
Los Angeles, State of California, and generally described as (describe briefly
the nature of the property and, if applicable, the "PROJECT", if the property is
located within a Project) that certain concrete tilt up industrial facility
comprising roughly 22,200 square feet on approximately 59,260 square feet of
industrially zoned land ("PREMISES"). (See also Paragraph 2)

        1.3     TERM: Five (5) years and Five (5) months ("ORIGINAL TERM")
commencing August 1, 2000 ("COMMENCEMENT DATE") and ending December 31, 2005
("EXPIRATION DATE"). (See also Paragraph 3)

See attached Addendum for Paragraph 57.

        1.4     EARLY POSSESSION: August 1, 2000 ("EARLY POSSESSION DATE"). (See
also Paragraphs 3.2 and 3.3)

        1.5     BASE RENT: $15,540.00 per month ("BASE RENT"), payable on the
First day of each month commencing January 1, 2001. (See also Paragraph 4)

[X] If this box is checked, there are provisions in this Lease for the Base Rent
    to be adjusted.

        1.6     BASE RENT PAID UPON EXECUTION: $15,540.00 as Base Rent for the
period January 1 through January 31, 2001.

        1.7     SECURITY DEPOSIT: $15,540.00 ("SECURITY DEPOSIT"). (See also
Paragraph 5)

        1.8     AGREED USE: Engineering, manufacture, storage and distribution
of electrical products and office uses (See also Paragraph 6)

        1.9     INSURING PARTY: Lessor is the "INSURING PARTY" unless otherwise
stated herein. (See also Paragraph 8)

        1.10    REAL ESTATE BROKERS: (See also Paragraph 15)

                (a) REPRESENTATION: The following real estate brokers
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction (check applicable boxes):

[X] Capital Commercial attn: Tim Foutz represents Lessor exclusively ("LESSOR'S
     BROKER");

[X] Delphi Business Properties attn: Scott Caswell represents Lessee
    exclusively ("LESSEE'S BROKER"); or

[ ] _________________________ represents both Lessor and Lessee ("DUAL AGENCY").

                (b) PAYMENT TO BROKERS: Upon execution and delivery of this
Lease by both Parties, Lessor shall pay to the Broker the fee agreed to in their
separate written agreement (or if there is no such agreement, the sum of ----*%
of the total Base Rent for the brokerage services rendered by said Broker).

* Payment to Brokers is per a separate listing agreement.

        1.11    GUARANTOR. The obligations of the Lessee under this Lease are to
be guaranteed by _______________________________________________________________
_________________________________________ ("GUARANTOR"). (See also Paragraph 37)

        1.12    ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 7.4(a) (b); 9.1(b); 9.3; 9.5; 12.1(b); 14; 32; and 49
through 59, and Exhibit "A" all of which constitute a part of this Lease.

2.      PREMISES.

        2.1     LETTING. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.

        2.2     CONDITION. Lessor shall deliver the Premises to Lessee broom
clean and free of debris on August 1, 2000, the Early Possession Date. "Start
Date" shall be defined as January 1, 2001. As of the August 1, 2000 (unless
otherwise provided in the Lease), Lessor warrants that the existing electrical,
plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning
systems ("HVAC"), loading doors, if any, and all other such elements in the
Premises, other than those constructed by Lessee, shall be in good operating
condition on said date and that the structural elements of the roof, bearing
walls and foundation of any buildings on the Premises (the "BUILDING") shall be
free of material defects. If a non-compliance with said warranty exists as of
the Start Date, Lessor shall, as Lessor's sole obligation with respect to such
matter, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify same at Lessor's expense. If, after the Start
Date, Lessee does not give Lessor written notice of any non-compliance with this
warranty within: (i) one year as to the surface of the roof and the structural
portions of the roof, foundations and bearing walls, (ii), (iii) thirty (30)
days as to the remaining systems and other elements of the Building except as
set forth in Paragraph 53, correction of such non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.

        2.3     COMPLIANCE. Lessor warrants that the improvements on the
Premises comply with all applicable laws, covenants or restrictions of record,
building codes, regulations and ordinances ("APPLICABLE REQUIREMENTS") in effect
on the Start Date. Said warranty does not apply to the use to which Lessee will
put the Premises or to any Alterations or Utility Installations (as defined in
Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the zoning is appropriate for Lessee's intended use,
and acknowledges that past uses of the Premises may no longer be allowed. If the
Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify the same
at Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within six (6) months following the Start
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense. If the Applicable Requirements are hereafter
changed (as opposed to being in existence at the Start Date, which is addressed
in Paragraph 6.2(e) below)

                                  PAGE 1 OF 11

<PAGE>

so as to require during the term of this Lease the construction of an addition
to or an alteration of the Building, the remediation of any Hazardous Substance,
or the reinforcement or other physical modification of the Building ("CAPITAL
EXPENDITURE"), Lessor and Lessee shall allocate the cost of such work as
follows:

               (a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.

               (b) If such Capital Expenditure is not the result of the specific
and unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor and Lessee shall allocate the obligation to
pay for such costs pursuant to the provisions of Paragraph 7.1(c); provided,
however, that if such Capital Expenditure is required during the last two years
of this Lease or if Lessor reasonably determines that it is not economically
feasible to pay its share thereof, Lessor shall have the option to terminate
this Lease upon ninety (90) days prior written notice to Lessee unless Lessee
notifies Lessor, in writing, within ten (10) days after receipt of Lessor's
termination notice that Lessee will pay for such Capital Expenditure. If Lessor
does not elect to terminate, and fails to tender its share of any such Capital
Expenditure, Lessee may advance such funds and deduct same, with Interest, from
Rent until Lessor's share of such costs have been fully paid. If Lessee is
unable to finance Lessor's share, or if the balance of the Rent due and payable
for the remainder of this Lease is not sufficient to fully reimburse Lessee on
an offset basis, Lessee shall have the right to terminate this Lease upon thirty
(30) days written notice to Lessor.

               (c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.

        2.4     ACKNOWLEDGEMENTS. Subject to Lessor's obligations under
Paragraph 53, Lessee acknowledges that: (a) it has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises
(including but not limited to the electrical, HVAC and fire sprinkler systems,
security, environmental aspects, and compliance with Applicable Requirements),
and their suitability for Lessee's intended use; (b) Lessee has made such
investigation as it deems necessary with reference to such matters and assumes
all responsibility therefor as the same relate to its occupancy of the Premises;
and (c) neither Lessor, Lessor's agents, nor any Broker has made any oral or
written representations or warranties with respect to said matters other than as
set forth in this Lease. In addition, Lessor acknowledges that: (a) Broker has
made no representations, promises or warranties concerning Lessee's ability to
honor the Lease or suitability to occupy the Premises; and (b) it is Lessor's
sole responsibility to investigate the financial capability and/or suitability
of all proposed tenants.

3.      TERM.

        3.1     TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.

        3.2     EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this Lease
(including, but not limited to, the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect the Expiration
Date.

        3.4     LESSEE COMPLIANCE. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.5). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence of insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.

4.      RENT.

        4.1.    RENT DEFINED. All monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are deemed to be rent
("RENT").

        4.2     PAYMENT. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which it is
due. Rent for any period during the term hereof which is for less than one (1)
full calendar month shall be prorated based upon the actual number of days of
said month. Payment of Rent shall be made to Lessor at its address stated herein
or to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.

5.      SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. If the Base Rent increases
during the term of this Lease, Lessee shall, upon written request from Lessor,
deposit additional monies with Lessor so that the total amount of the Security
Deposit shall at all times bear the same proportion to the increased Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the Agreed
Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on said change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the
Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.

6.      USE.

        6.1     USE. Lessee shall use and occupy the Premises only for the
Agreed Use, or any other legal use which is reasonably comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises in
a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.

        6.2     HAZARDOUS SUBSTANCES.

                (a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, or waste
whose presence, use, manufacture, disposal, transportation, or release, either
by itself or in combination with other materials expected to be on the Premises,
is either: (i) potentially injurious to the public health, safety or welfare,
the environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii)

                                  PAGE 2 OF 11
<PAGE>
a basis for potential liability of Lessor to any governmental agency or third
party under any applicable statute or common law theory. Hazardous Substances
shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or
crude oil or any products, by-products or fractions thereof. Lessee shall not
engage in any activity in or on the Premises which constitutes a Reportable Use
of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee's expense) with all Applicable Requirements.
"REPORTABLE USE" shall mean (i) the installation or use of any above or below
ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and/or (iii) the
presence at the Premises of a Hazardous Substance with respect to which any
Applicable Requirements requires that a notice be given to persons entering or
occupying the Premises or neighboring properties. Notwithstanding the foregoing,
Lessee may use any ordinary and customary materials reasonably required to be
used in the normal course of the Agreed Use, so long as such use is in
compliance with all Applicable Requirements, is not a Reportable Use, and does
not expose the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself,
the public, the Premises and/or the environment against damage, contamination,
injury and/or liability, including, but not limited to, the installation (and
removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or increasing the Security
Deposit.

               (b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises, other than as previously consented to by Lessor,
Lessee shall immediately give written notice of such fact to Lessor, and provide
Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.

               (c) LESSEE REMEDIATION. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any Hazardous
Substance brought onto the Premises during the term of this Lease, by or for
Lessee, or any third party.

               (d) LESSEE INDEMNIFICATION. Lessee shall indemnify, defend and
hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless
from and against any and all loss of rents and/or damages, liabilities,
judgments, claims, expenses, penalties, and attorneys' and consultants' fees
arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party (provided, however, that Lessee shall have no
liability under this Lease with respect to underground migration of any
Hazardous Substance under the Premises from adjacent properties). Lessee's
obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. NO TERMINATION, CANCELLATION OR RELEASE AGREEMENT ENTERED INTO BY
LESSOR AND LESSEE SHALL RELEASE LESSEE FROM ITS OBLIGATIONS UNDER THIS LEASE
WITH RESPECT TO HAZARDOUS SUBSTANCES, UNLESS SPECIFICALLY SO AGREED BY LESSOR IN
WRITING AT THE TIME OF SUCH AGREEMENT.

               (e) LESSOR INDEMNIFICATION. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which existed as a result of Hazardous Substances on the
Premises prior to August 1, 2000 or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor's obligations, as
and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.

               (f) INVESTIGATIONS AND REMEDIATIONS. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start Date, unless such
remediation measure is required as a result of Lessee's use (including
"Alterations", as defined in Paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities.

               (g) LESSOR TERMINATION OPTION. If a Hazardous Substance Condition
occurs during the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect, or (ii) if the estimated cost to remediate such condition
exceeds twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater, give written notice to Lessee, within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of
Lessor's desire to terminate this Lease as of the date sixty (60) days following
the date of such notice. In the event Lessor elects to give a termination
notice, Lessee may, within ten (10) days thereafter, give written notice to
Lessor of Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to
twelve (12) times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within thirty (30) days following such commitment. In such event, this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor's notice of termination.

        6.3     LESSEE'S COMPLIANCE WITH APPLICABLE REQUIREMENTS. Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, without regard to whether said requirements are now in effect or
become effective after the Start Date. Lessee shall, within ten (10) days after
receipt of Lessor's written request, provide Lessor with copies of all permits
and other documents, and other information evidencing Lessee's compliance with
any Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with
any Applicable Requirements.

        6.4     INSPECTION; COMPLIANCE. Lessor and Lessor's "Lender" (as defined
in Paragraph 30 below) and consultants shall have the right to enter into
Premises at any time, in the case of an emergency, and otherwise at reasonable
times, for the purpose of inspecting the condition of the Premises and for
verifying compliance by Lessee with this Lease. The cost of any such inspections
shall be paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the inspection is requested
or ordered by a governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
reasonably related to the violation or contamination.

7.      MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
        ALTERATIONS.

        7.1     LESSEE'S OBLIGATIONS.

                (a) IN GENERAL. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair
(whether or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises), including, but
not limited to, all equipment or facilities, such as plumbing, heating,
ventilating, air-conditioning, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, floors, windows, doors, plate glass,
skylights, landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on, or adjacent to the Premises. Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. Lessee shall, during the term of this
Lease, keep the exterior appearance of the Building in a first-class condition
consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity.

               (b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure
vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and
drains, (vi) driveways and parking lots, (vii) clarifiers (viii) basic utility
feed to the perimeter of the Building, and (ix) any other equipment, if
reasonably required by Lessor, herein defined as "Basic Elements".

               (c) REPLACEMENT. Subject to Lessee's indemnification of Lessor as
set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Basic Elements described in Paragraph 7.1(b) cannot be
repaired other

                                  PAGE 3 OF 11
<PAGE>

than at a cost which is in excess of 50% of the cost of replacing such Basic
Elements, then such Basic Elements shall be replaced by Lessor, and the cost
thereof shall be prorated between the Parties and Lessee shall only be obligated
to pay, each month during the remainder of the term of this Lease, on the date
on which Base Rent is due, an amount equal to the product of multiplying the
cost of such replacement by a fraction, the numerator of which is one, and the
denominator of which is the number of months of the useful life of such
replacement as such useful life is specified pursuant to Federal income tax
regulations or guidelines for depreciation thereof (including interest on the
unamortized balance as is then commercially reasonable in the judgment of
Lessor's accountants), with Lessee reserving the right to prepay its obligation
at any time.

        7.2     LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14
(Condemnation), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, or
the equipment therein, all of which obligations are intended to be that of the
Lessee. It is the intention of the Parties that the terms of this Lease govern
the respective obligations of the Parties as to maintenance and repair of the
Premises, and they expressly waive the benefit of any statute now or hereafter
in effect to the extent it is inconsistent with the terms of this Lease.

        7.3     UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS. (SEE
ADDENDUM FOR FURTHER CLARIFICATION).

               (a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" refers to all floor and window coverings, air lines, power
panels, electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing
in or on the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery
and equipment that can be removed without doing material damage to the Premises.
The term "ALTERATIONS" shall mean any modification of the improvements, other
than Utility Installations or Trade Fixtures, whether by addition or deletion.
"LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural Utility Installations to the interior
of the Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during this Lease as extended does not exceed $50,000 in
the aggregate or $10,000 in any one year.

               (b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.

               (c) INDEMNIFICATION. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. If Lessor shall require, Lessee shall furnish a
surety bond in an amount equal to one and one-half times the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for the
same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor's attorneys' fees and costs.

        7.4     OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.

               (a) OWNERSHIP. Subject to Lessor's right to require removal or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per Paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises. See Addendum for further clarification.

               (b) REMOVAL. By delivery to Lessee of written notice from Lessor
not earlier than ninety (90) and not later than thirty (30) days prior to the
end of the term of this Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease. Lessor may require the removal at any time of all or any part of
any Lessee Owned Alterations or Utility Installations made without the required
consent. See Addendum for further clarification.

               (c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Lessee shall repair
any damage occasioned by the installation, maintenance or removal of Trade
Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings,
and equipment as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
groundwater contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.4(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below.

8.      INSURANCE; INDEMNITY.

        8.1     PAYMENT FOR INSURANCE. Lessee shall pay for all insurance
required under Paragraph 8 except to the extent of the cost attributable to
liability insurance carried by Lessor under Paragraph 8.2(b) in excess of
$2,000,000 per occurrence. Premiums for policy periods commencing prior to or
extending beyond the Lease term shall be prorated to correspond to the Lease
term. Payment shall be made by Lessee to Lessor within ten (10) days following
receipt of an invoice.

        8.2     LIABILITY INSURANCE.

                (a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "ADDITIONAL INSURED-MANAGERS OR LESSORS OF PREMISES
ENDORSEMENT" and contain the "AMENDMENT OF THE POLLUTION EXCLUSION ENDORSEMENT"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an "insured contract" for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

                (b) CARRIED BY LESSOR. Lessor shall maintain liability insurance
as described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.

        8.3     PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.

                (a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain
and keep in force a policy or policies in the name of Lessor, with loss payable
to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lenders, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's
personal property shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake) including coverage for debris
removal and the enforcement of any Applicable Requirements requiring the
upgrading, demolition, reconstruction or replacement of any portion of the
Premises as the result of a covered loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss.

                (b) RENTAL VALUE. The Insuring Party shall obtain and keep in
force a policy or policies in the name of Lessor with loss payable to Lessor
and any Lender, insuring the loss of the full Rent for one (1) year. Said
insurance shall provide that in the event the Lease is terminated by reason of
an insured loss, the period of indemnity for such coverage shall be extended
beyond the date of the completion of repairs or replacement of the Premises, to
provide for one full year's

                                  PAGE 4 OF 11
<PAGE>

loss of Rent from the date of any such loss. Such insurance shall contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next twelve (12) month period. Lessee shall be liable
for any deductible amount in the event of such loss.

        8.4     LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.

                (a) PROPERTY DAMAGE. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.

                (b) BUSINESS INTERRUPTION. Lessee shall obtain and maintain loss
of income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

                (c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

        8.5     INSURANCE POLICIES. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, as set forth in the most current issue
of "Best's Insurance Guide", or such other rating as may be required by a
Lender. Lessee shall not do or permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the Start Date, deliver to
Lessor certified copies of policies of such insurance or certificates evidencing
the existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.

        8.6     WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

        8.7     INDEMNITY. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified.

        8.8     EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under
no circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.

9.      DAMAGE OR DESTRUCTION.

        9.1     DEFINITIONS.

                (a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction
to the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in six (6) months or
less from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

                (b) "PREMISES TOTAL DESTRUCTION" shall mean damage or
destruction to the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in six (6)
months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within thirty (30) days from the date of the damage or
destruction as to whether or not the damage is Partial or Total.

                (c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.

                (d) "REPLACEMENT COST" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.

                (e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

        9.2     PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect; provided, however, that Lessee shall, at
Lessor's election, make the repair of any damage or destruction the total cost
to repair of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within ten (10) days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said ten (10)
day period, the party responsible for making the repairs shall complete them as
soon as reasonably possible and this Lease shall remain in full force and
effect. If such funds or assurance are not received, Lessor may nevertheless
elect by written notice to Lessee within ten (10) days thereafter to: (i) make
such restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or have this Lease terminate thirty (30) days thereafter. Lessee shall
not be entitled to reimbursement of any funds contributed by Lessee to repair
any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be
made available for the repairs if made by either Party.

        9.3     PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage without reimbursement from Lessor. Lessee shall provide Lessor with
said funds or satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make the
required commitment, this Lease shall terminate as of the date specified in the
termination notice.

        9.4     TOTAL DESTRUCTION. Notwithstanding any other provision hereof,
if a Premises Total Destruction occurs, this Lease shall terminate sixty (60)
days

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<PAGE>

following such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

        9.5     DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of this Lease there is damage for which the cost to repair exceeds one
(1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which
such option expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in insurance proceeds, Lessor shall, at Lessor's commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during such period, then this Lease shall
terminate on the date specified in the termination notice and Lessee's option
shall be extinguished.

        9.6     ABATEMENT OF RENT; LESSEE'S REMEDIES.

                (a) ABATEMENT. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value
insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.

                (b) REMEDIES. If Lessor shall be obligated to repair or restore
the Premises and does not commence, in a substantial and meaningful way, such
repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than sixty (60) days following the giving of such notice. If Lessee gives
such notice and such repair or restoration is not commenced within thirty (30)
days thereafter, this Lease shall terminate as of the date specified in said
notice. If the repair or restoration is commenced within said thirty (30) days,
this Lease shall continue in full force and effect. "COMMENCE" shall mean either
the unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.

        9.7     TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.

        9.8     WAIVE STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.

10.     REAL PROPERTY TAXES.

        10.1    DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term
"REAL PROPERTY TAXES" shall include any form of general, special, ordinary or
extraordinary, Ad Valorem real estate taxes or assessments or rental levy or tax
(other than inheritance, personal income or estate taxes); improvement bond;
and/or license fee imposed upon or levied against any legal or equitable
interest of Lessor in the Premises, Lessor's right to other income therefrom,
and/or Lessor's business of leasing, by any authority having the direct or
indirect power to tax and where the funds are generated with reference to the
Building address and where the proceeds so generated are to be applied by the
city, county or other local taxing authority of a jurisdiction within which the
Premises are located. The term "REAL PROPERTY TAXES" shall also include any tax,
fee, levy, assessment or charge, or any increase therein, imposed by reason of
events occurring during the term of this Lease, including but not limited to, a
change in the ownership of the Premises.

        10.2

                (a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment. If Lessee shall fail to pay any required
Real Property Taxes, Lessor shall have the right to pay the same, and Lessee
shall reimburse Lessor therefor upon demand.

                (b) ADVANCE PAYMENT. In the event Lessee incurs a late charge on
any Rent payment, Lessor may, at Lessor's option, estimate the current Real
Property Taxes, and require that such taxes be paid in advance to Lessor by
Lessee, either: (i) in a lump sum amount equal to the installment due, at least
twenty (20) days prior to the applicable delinquency date, or (ii) monthly in
advance with the payment of the Base Rent. If Lessor elects to require payment
monthly in advance, the monthly payment shall be an amount equal to the amount
of the estimated installment of taxes divided by the number of months remaining
before the month in which said installment becomes delinquent. When the actual
amount of the applicable tax bill is known, the amount of such equal monthly
advance payments shall be adjusted as required to provide the funds needed to
pay the applicable taxes. If the amount collected by Lessor is insufficient to
pay such Real Property Taxes when due, Lessee shall pay Lessor, upon demand,
such additional sums as are necessary to pay such obligations. All monies paid
to Lessor under this Paragraph may be intermingled with other monies of Lessor
and shall not bear interest. In the event of a Breach by Lessee in the
performance of its obligations under this Lease, then any balance of funds paid
to Lessor under the provisions of this Paragraph may, at the option of Lessor,
be treated as an additional Security Deposit.

        10.3    JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.

        10.4    PERSONAL PROPERTY TAXES. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.

11.     UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.

12.     ASSIGNMENT AND SUBLETTING.

        12.1    LESSOR'S CONSENT REQUIRED.

                (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "ASSIGN OR ASSIGNMENT") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent.

                (See Addendum)

                (c) The involvement of Lessee or its assets in any transaction,
or series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the execution of this Lease or at the time of the most recent assignment to
which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is
greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. "NET WORTH OF LESSEE" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.

                (d) An assignment or subletting without consent shall, at
Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon thirty (30)
days written notice, increase the monthly Base Rent to one hundred ten percent
(110%) of the Base Rent then in effect. Further, in the event of such Breach and
rental adjustment, (i) the purchase price of any option to purchase the Premises
held by Lessee shall be subject to similar adjustment to one hundred ten percent
(110%) of the price previously in effect, and (ii) all fixed and non-fixed
rental adjustments scheduled during the remainder of the Lease term shall be
increased to One Hundred Ten Percent (110%) of the scheduled adjusted rent.

                (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.

        12.2    TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

                                  PAGE 6 OF 11
<PAGE>

                (a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease; (ii)
release Lessee of any obligations hereunder; or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.

                (b) Lessor may accept Rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.

                (c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

                (d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor's remedies against any other
person or entity responsible therefore to Lessor, or any security held by
Lessor.

                (e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with a fee not to exceed $1,000 as consideration for Lessor's
considering and processing said request. Lessee agrees to provide Lessor with
such other or additional information and/or documentation as may be reasonably
requested.

                (f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed to
have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.

        12.3    ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

                (a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease; provided,
however, that until a Breach shall occur in the performance of Lessee's
obligations, Lessee may collect said Rent. Lessor shall not, by reason of the
foregoing or any assignment of such sublease, nor by reason of the collection of
Rent, be deemed liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee's obligations to such sublessee. Lessee hereby
irrevocably authorizes and directs any such sublessee, upon receipt of a written
notice from Lessor stating that a Breach exists in the performance of Lessee's
obligations under this Lease, to pay to Lessor all Rent due and to become due
under the sublease. Sublessee shall rely upon any such notice from Lessor and
shall pay all Rents to Lessor without any obligation or right to inquire as to
whether such Breach exists, notwithstanding any claim from Lessee to the
contrary.

                (b) In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.

                (c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.

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

                (e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.

13.     DEFAULT; BREACH; REMEDIES.

        13.1    DEFAULT; BREACH. A "DEFAULT" is defined as a failure by the
Lessee to comply with or perform any of the terms, covenants, conditions or
rules under this Lease. A "BREACH" is defined as the occurrence of one or more
of the following Defaults, and the failure of Lessee to cure such Default within
any applicable grace period:

                (a) The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is jeopardized
as a result thereof, or without providing reasonable assurances to minimize
potential vandalism.

                (b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of five
(5) business days following written notice to Lessee.

                (c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice to Lessee.

                (d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.

                (e) The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a "DEBTOR" as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph 13.1 (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.

                (f) The discovery that any financial statement of Lessee or of
any Guarantor given to Lessor was materially false.

                (g) If the performance of Lessee's obligations under this Lease
is guaranteed: (i) the death of a Guarantor; (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty; (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing; (iv) a Guarantor's refusal to honor the
guaranty; or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within sixty (60) days following
written notice of any such event, to provide written alternative assurance or
security, which, when coupled with the then existing resources of Lessee, equals
or exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.

        13.2    REMEDIES. If Lessee fails to perform any of its affirmative
duties or obligations, within ten (10) days after written notice (or in case of
an emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If three (3) times
during a calendar year any check given to Lessor by Lessee shall not be honored
by the bank upon which it is drawn, Lessor, at its option, may require all
future payments to be made by Lessee to be by cashier's check. In the event of a
Breach, Lessor may, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach:

                (a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding

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sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent (1%). Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessor's right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

                (b) Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor's interests, shall
not constitute a termination of the Lessee's right to possession.

                (c) Pursue any other remedy now or hereafter available under the
laws or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.

        13.3    INDUCEMENT RECAPTURE. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into this
Lease, all of which concessions are hereinafter referred to as "INDUCEMENT
PROVISIONS," shall be deemed conditioned upon Lessee's full and faithful
performance of all of the terms, covenants and conditions of this Lease. Upon
Breach of this Lease by Lessee, any such Inducement Provision shall
automatically be deemed deleted from this Lease and of no further force or
effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an Inducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of Rent or
the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such acceptance. The
"Inducement Recapture" amount shall be limited to $58,000.00.

        13.4    LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to ten percent (10%) of each such overdue
amount. The Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.

        13.5    INTEREST. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within thirty (30) days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("INTEREST") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus four percent (4%), but shall not exceed the maximum rate
allowed by law. Interest is payable in addition to the potential late charge
provided for in Paragraph 13.4.

        13.6    BREACH BY LESSOR.

                (a) NOTICE OF BREACH. Lessor shall not be deemed in breach of
this Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and any Lender whose name and address shall have been furnished Lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed; provided, however, that if the nature of
Lessor's obligation is such that more than thirty (30) days are reasonably
required for its performance, then Lessor shall not be in breach if performance
is commenced within such thirty (30) day period and thereafter diligently
pursued to completion.

                (b) PERFORMANCE BY LESSEE ON BEHALF OF LESSOR. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to the greater of one month's Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.

14.     CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "CONDEMNATION"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building portion of the
Premises, or more than twenty-five percent (25%) of the land area portion of the
Premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation. All
Alterations and Utility Installations made to the Premises by Lessee, for
purposes of Condemnation only, shall be considered the property of the Lessee
and Lessee shall be entitled to any and all compensation which is payable
therefor. In the event that this Lease is not terminated by reason of the
Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation. (See Addendum for clarification)

15.     BROKERS' FEE.

        15.1    ADDITIONAL COMMISSION. In addition to the payments owed pursuant
to Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
acquires any rights to the Premises or other premises owned by Lessor and
located within the same Project, if any, within which the Premises is located,
(c) if Lessee remains in possession of the Premises, with the consent of Lessor,
after the expiration of this Lease, or (d) if Base Rent is increased, whether by
agreement or operation of an escalation clause herein, then, Lessor shall pay
Brokers a fee in accordance with the schedule of said Brokers in effect at the
time of the execution of this Lease.

        15.2    ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease shall be deemed to have assumed Lessor's obligation
hereunder. Each Broker shall be a third party beneficiary of the provisions of
Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to a Broker any amounts
due as and for commissions pertaining to this Lease when due, then such amounts
shall accrue Interest. In addition, if Lessor fails to pay any amounts to
Lessee's Broker when due, Lessee's Broker may send written notice to Lessor and
Lessee of such failure and if Lessor fails to pay such amounts within ten (10)
days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by and/or
between Lessor and Lessor's Broker.

        15.3    REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS. Lessee
and Lessor each represent and warrant to the other that it has had no dealings
with any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, and/or attorneys' fees reasonably incurred with respect thereto.

16.     ESTOPPEL CERTIFICATES.

                (a) Each Party (as "RESPONDING PARTY") shall within ten (10)
days after written notice from the other Party (the "REQUESTING PARTY") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "ESTOPPEL CERTIFICATE" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

                (b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect without modification except as may be represented by the Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting Party, not more than one month's Rent has
been paid in advance.

                                  PAGE 8 OF 11
<PAGE>
Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.

                (c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee and all Guarantors shall deliver to any
potential lender or purchaser designated by Lessor such financial statements as
may be reasonably required by such lender or purchaser, including, but not
limited to, Lessee's financial statements for the past three (3) years. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

17.     DEFINITION OF LESSOR. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event of
a transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent holders of
the Lessor's interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above.

18.     SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

19.     DAYS. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.

20.     LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17
above, the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.

21.     TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.

22.     NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and Attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

23.     NOTICES.

                23.1    NOTICE REQUIREMENTS. All notices required or permitted
by this Lease shall be in writing and may be delivered in person (by hand or by
courier) or may be sent by regular, certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease
shall be that Party's address for delivery or mailing of notices. Either Party
may by written notice to the other specify a different address for notice,
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.

                23.2    DATE OF NOTICE. Any notice sent by registered or
certified mail, return receipt requested, shall be deemed given on the date of
delivery shown on the receipt card, or if no delivery date is shown, the
postmark thereon. If sent by regular mail the notice shall be deemed given
forty-eight (48) hours after the same is addressed as required herein and mailed
with postage prepaid. Notices delivered by United States Express Mail or
overnight courier that guarantee next day delivery shall be deemed given
twenty-four (24) hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall be
deemed delivered upon telephone confirmation of receipt, provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.

24.     WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of monies or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.

25.     RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.

26.     NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.

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

28.     COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties
had prepared it.

29.     BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30.     SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

        30.1    SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lessor's Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.

        30.2    ATTORNMENT. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new
owner shall not: (i) be liable for any act or omission of any prior lessor or
with respect to events occurring prior to acquisition of ownership; (ii) be
subject to any offsets or defenses which Lessee might have against any prior
lessor; or (iii) be bound by prepayment of more than one (1) month's rent.

        30.3    NON-DISTURBANCE. With respect to Security Devices entered into
by Lessor after the execution of this Lease, Lessee's subordination of this
Lease shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "NON-DISTURBANCE AGREEMENT") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.

        30.4    SELF-EXECUTING. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31.     ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder,

                                  PAGE 9 OF 11
<PAGE>

the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"PREVAILING PARTY" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys' fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach.

32.     LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. See Attached Addendum for
further clarification.

33.     AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.

34.     SIGNS. Except for ordinary "For Sublease" signs, Lessee shall not place
any sign upon the Premises without Lessor's prior written consent. All signs
must comply with all Applicable Requirements. See Addendum Paragraph 56.

35.     TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.

36.     CONSENTS. Except as otherwise provided herein, wherever in this Lease
the consent of a Party is required to an act by or for the other Party, such
consent shall not be unreasonably withheld or delayed. Lessor's actual
reasonable costs and expenses (including, but not limited to, architects',
attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including, but not limited to, consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor's consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor's consent shall
not preclude the imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular matter
for which consent is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the
reasons for such determination, the determining party shall furnish its reasons
in writing and in reasonable detail within ten (10) business days following such
request.

37.     GUARANTOR.

        37.1    EXECUTION. The Guarantors, if any, shall each execute a guaranty
in the form most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.

        37.2    DEFAULT. It shall constitute a Default of the Lessee if any
Guarantor fails or refuses, upon request to provide: (a) evidence of the
execution of the guaranty, including the authority of the party signing on
Guarantor's behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is still in
effect.

38.     QUIET POSSESSION. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.

39.     OPTIONS.

        39.1    DEFINITION. "OPTION" shall mean: (a) the right to extend the
term of or renew this Lease or to extend or renew any lease that Lessee has on
other property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.

        39.3    MULTIPLE OPTIONS. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.

        39.4    EFFECT OF DEFAULT ON OPTIONS.

                (a) Lessee shall have no right to exercise an Option: (i) during
the period commencing with the giving of any notice of Default and continuing
until said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given three (3) or more notices of separate Default, whether or not the
Defaults are cured, during the twelve (12) month period immediately preceding
the exercise of the Option.

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

                (c) An Option shall terminate and be of no further force or
effect, notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and prior to the commencement of the extended term, (i)
Lessee fails to pay Rent for a period of thirty (30) days after such Rent
becomes due (without any necessity of Lessor to give notice thereof), (ii)
Lessor gives to Lessee three (3) or more notices of separate Default during any
twelve (12) month period, whether or not the Defaults are cured, or (iii) if
Lessee commits a Breach of this Lease.

40.     MULTIPLE BUILDINGS. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties, including

the care and cleanliness of the grounds and including the parking, loading and
unloading of vehicles, and that Lessee will pay its fair share of common
expenses incurred in connection therewith.

41.     SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

42.     RESERVATIONS. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not interfere with the use of the Premises by Lessee. Lessee
agrees to sign any documents reasonably requested by Lessor to effectuate any
such easement rights, dedication, map or restrictions.

43.     PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay.

44.     AUTHORITY. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each Party
shall, within thirty (30) days after request, deliver to the other Party
satisfactory evidence of such authority.

45.     CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.

46.     OFFER. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

                                 PAGE 10 OF 11
<PAGE>
47.     AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

48.     MULTIPLE PARTIES. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.

49.     MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease [X] IS  [ ] IS NOT attached to this Lease.

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

________________________________________________________________________________

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1.   SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2.   RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
________________________________________________________________________________

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at: Ventura, CA. 93006          Executed at: Chatsworth, CA. 91311

on: August 16, 2000                      on: August 15, 2000

By LESSOR:                               By LESSEE:
Mr. George DeRado                        Mr. Eric Blachno
_____________________________________    _______________________________________

_____________________________________    _______________________________________

By: /s/ GEORGE DERADO                    By: /s/ ERIC BLACHNO

Name Printed:  George DeRado             Name Printed:  Eric Blachno

Title: Owner                             Title: Chief Financial Officer

By:__________________________________    By: WILLIAM R. SPIVEY

Name Printed:________________________    Name Printed: Dr. William Spivey

Title:_______________________________    Title: President

Address: Accutech @ P.O. Box 6930,       Address: 20550 Nordhoff Street,
         Ventura, CA. 93006-6930                  Chatsworth, CA. 91311

Telephone: (805) 644-7100 x.326          Telephone: (818) 773-9044

Facsimile: (805) 650-3900                Facsimile: (818) 407-5865

Federal ID No. ###-##-####               Federal ID No. 95-4978130

NOTE: These forms are often modified to meet the changing requirements of law
      and industry needs. Always write or call to make sure you are utilizing
      the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700
      So. Flower Street, Suite 600, Los Angeles, California 90017. (213)
      687-8777. Fax No. (213) 687-8616

                                 PAGE 11 of 11
                                    REVISED
<PAGE>
               ADDENDUM No. I TO STANDARD INDUSTRIAL/ COMMERCIAL
                            SINGLE-TENANT LEASE - NET
                              DATED AUGUST 14, 2000
                    BY AND BETWEEN GEORGE DE RADO, AS LESSOR
                          AND LUMINENT, INC. AS LESSEE

This Addendum to Lease ("Lease Addendum") is made and entered into by and
between GEORGE DE RADO ("Lessor"), and LUMINENT, INC. a Delaware Corporation
("Lessee"), and is dated as of the date set forth on the first page of the Lease
between Lessor and Lessee ("Lease") to which this Addendum is attached. The
promises, covenants, agreements and declarations made and set forth herein are
intended to and shall have the same force and effect as if set forth at length
in the body of the Lease. To the extent that the provisions of this Addendum are
inconsistent with the terms and conditions of the Lease, the terms and
conditions hereof shall control.

7.4 (a) OWNERSHIP. The following language shall be added to the Paragraph 7.4
(a).

      Lessee shall not be required to remove any alterations, additions, trade
      fixtures or utility installation placed upon the Premises by Lessee,
      unless as a condition to Lessor's consent for such alterations, additions,
      trade fixtures or utility installation, Lessor requires that Lessee remove
      such alterations, additions, trade fixtures or utility installation, at
      the expiration of the Lease

7.4 (b) REMOVAL. The following language shall be added to the Paragraph 7.4 (b).

      Lessee shall not be required to remove any alterations, additions, trade
      fixtures or utility installation placed upon the Premises by Lessee,
      unless as a condition to Lessor's consent for such alterations, additions,
      trade fixtures or utility installation, Lessor requires that Lessee remove
      such alterations, additions, trade fixtures or utility installation, at
      the expiration of the Lease

9.1 (b). PREMISES TOTAL DESTRUCTION. The following language replaces the
language contained in Paragraph 9.1(b) of the Lease:

            (b) "Premises Total Destruction" shall mean damage or destruction to
      improvements on the Premises, other than Lessee Owned Alterations and
      Utility Installations and Trade Fixtures, which cannot reasonably be
      repaired within six (6) months or less from the date of the damage or
      destruction. Within thirty (30) days following the date of the damage or
      destruction, Lessor shall select a general contractor ("Lessor's
      Contractor") who shall, by written notice to Lessor and Lessee (a
      "Determination Notice"), determine whether or not the repair of such
      damage or destruction can be completed within six (6) months from the date
      of the damage or destruction. If Lessee elects not to accept such
      determination by Lessor's Contractor, Lessee shall, at Lessee's sole
      expense, select another general contractor ("Lessee's Contractor") who
      shall, within ten (10) days after receipt by Lessee of such Determination
      Notice, by written notice to Lessor and Lessee, determine whether or not

                                       1
<PAGE>

      the repair of such damage or destruction can be completed within six (6)
      months from the date of the damage or destruction. Should Lessor's
      Contractor and Lessee's Contractor fail to agree upon whether such damage
      or destruction can be repaired within six (6) months from the date of the
      damage or destruction, then the matter shall be resolved by binding
      arbitration in accordance with the Rules of the American Arbitration
      Association.

9.3 PARTIAL DAMAGE - UNINSURED LOSS. The following language replaces the first
two sentences of Paragraph 9.3 of the Lease:

      If a Premises Partial Damage occurs that is not an Insured Loss, (i) if
      the total cost of repairing such damage is reasonably determined by Lessor
      to be equal to or less than $100,000, then Lessor shall repair such damage
      (but not Lessee's Trade Fixtures or Lessee Owned Alterations and/or
      Utility Installations), and (ii) if the total cost of repairing such
      damage is reasonably determined by Lessor to be greater than $100,000,
      then Lessor may either (A) repair such damage (but not Lessee's Trade
      Fixtures or Lessee Owned Alterations and/or Utility Installations) as soon
      as is reasonably possible at Lessor's expense, in which event the Lease
      shall remain in full force and effect, or (B) terminate the Lease by
      giving written notice to Lessee (a "Termination Notice") within thirty
      (30) days after the date that Lessor becomes aware of the occurrence of
      such damage, such termination to be effective ninety (90) days after the
      date of such notice; provided, however, that the Lease shall not so
      terminate if Lessee, by written notice to Lessor within thirty (30) days
      after receipt of such Termination Notice, elects to repair such damage at
      Lessee's sole expense.

9.5 DAMAGE NEAR END OF TERM. The following language replaces the language
contained in the first sentence of Paragraph 9.5 of the Lease:

      If at any time during the last (6) months of the Original Term (as the
      same may be extended by any Extension Option) there is damage for which
      the cost of repairs is reasonably estimated by an impartial general
      contractor selected by Lessor to exceed $50,000, whether or not an Insured
      Loss, Lessor or Lessee may, by written notice to the other party within
      thirty (30) days after the date of occurrence of such damage, terminate
      this Lease effective thirty (30) days following the date of occurrence of
      such damage.

12.1(b) ASSIGNMENT AND SUBLETTING - LESSOR'S CONSENT REQUIRED. The following is
added as a new Paragraph 12.1 (b) of the Lease:

      (b) Lessee shall have the right, without Lessor's consent, to assign or
      sublease the Lease to an entity (an "Affiliate")) controlling, under
      common control with, or controlled by Lessee, including an entity
      resulting from a merger or consolidation by Lessee, provided that in the
      event of an assignment the Affiliate also assumes in writing Lessee's
      obligations under this Lease, without relieving Lessee of any liability
      under the Lease.

      Notwithstanding the provisions of Paragraphs 12.1 (b) and (c) the Net
      Worth of the Lessee or assignee shall be equal to or greater than the Net
      Worth of Lessee at the Commencement Date. Lessor's consent shall not be
      required for an initial public offering of Lessee's stock. On or after any
      such public offering, the transactions, or series of transactions, set
      forth in Paragraph 12(c) (which shall include, without limitation,

                                       2
<PAGE>

      distributions or transfers of Lessee's stock) shall thereafter be
      permitted, without regard to the Net Worth of Lessee, and no consent of
      Lessor shall be required thereto, provided that 1) in the event of a sale
      or acquisition, Lessee shall not be released from its obligations
      hereunder, and 2) the event of a merger where Lessee is not the surviving
      entity, such surviving entity shall have a Net Worth equal to or greater
      than that of Lessee as of the date of execution of this Lease.

14. CONDEMNATION. The following language replaces the fourth sentence of
Paragraph 14 of the Lease:

      Condemnation awards and/or payments shall be the property of Lessor,
      whether such award shall be compensation for diminution in value of the
      Premises, the value of the part taken, or for severance damages; provided,
      however, that Lessee shall be entitled to any portion of such condemnation
      award specifically attributable to (i) Lessee's loss of business goodwill
      and/or Trade Fixtures, and (ii) if this Lease is terminated pursuant to
      the provisions of Paragraph 14 of the Lease, Lessee's reasonable
      relocation expenses and any excess of the market value of the Premises for
      the remainder of the Original Term (as the same may be extended by an
      Extension Option) over the present value as of the date of such
      termination of the Base Rent payable for the remainder of the Original
      Term (as the same may be extended by an Extension Option).

32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. The following language replaces
the language contained in Paragraph 32 of the Lease:

      Lessor and Lessor's agents shall have the right to enter the Premises at
      any time, in the case of an emergence, and otherwise, upon 24 hours' prior
      notice to Lessee, for the purpose of showing same to prospective
      purchasers, lenders, or lessees, and making alterations, repairs,
      improvements and additions to the Premises as Lessor may deem necessary.
      All such activities shall be without abatement of rent or liability to
      Lessor. Lessor may at any time place a commercially standard,
      free-standing or wall mounted "For Sale" sign at a location to be selected
      by mutual agreement of Lessor and Lessee. Lessor may at any time during
      the last six (6) months of the Original Term (as the same may be extended
      by an Extension Option) place on commercially standard, free-standing "For
      Lease" sign at a location to be selected by Lessor. Lessee may at any time
      place one commercially standard, free-standing "For Sublease" sign at a
      location to be selected by mutual agreement of Lessor and Lessee near the
      perimeter of the Premises.

49. ARBITRATION AGREEMENT.

      (See attached American Industrial Real Estate Association - Standard Lease
Addendum).

50. (PRIOR/EARLY OCCUPANCY BY LESSEE). Lessor waives the payment of Base Rent
from the date of formal Lease execution through and including the 31st day of
December, 2000. The purpose of such prior/early occupancy shall be for the
purpose of Lessee constructing Lessee's tenant improvements and installing
furniture, fixtures and equipment. This possession shall be subject to all of
the terms, covenants and conditions of this Lease (including the tax, insurance,
utility, and maintenance obligations of Lessee Paragraphs 3.2 and 13.3) other
than the payment of the base rent from the date of such possession through and
including December 31, 2000.

                                       3
<PAGE>

51. BASE RENT. (COMMENCING JANUARY 1, 2000)

      51.1 Notwithstanding any contrary provision hereof, the monthly Base
Rental under Paragraph 1.5 and this Paragraph 51 of the Lease shall be payable
in accordance with the following schedule:

      (a) The Base Rent for the months of January 1, 2001 through December 31,
2001 shall be Fifteen Thousand Five Hundred Forty and NO/100 Dollars
($15,540.00) per month ("Base Rent").

      (b) Thereafter, the Base Rent for each of the following twelve month
period(s) shall be subject to adjustment, upward only, the same percentage
proportion that the Consumer Price Index of the Bureau of Labor Statistics of
the U. S. Department of Labor for Urban Wage Earners and Clerical Workers, Los
Angeles-Riverside-Orange County, California ("All Items, 1982/84 = 100)
("Index") for the month of October, which is three (3) months prior to the month
in which the adjustment(s) is to take effect, shall increase over the Index for
the calendar month of October of the prior year. Notwithstanding the foregoing,
in no event shall the annually Adjusted Base Rent be less than three percent
(3%) per annum nor greater than five percent (5%) per annum over the Base Rent
for the immediate prior period. The sum so calculated shall constitute the new
monthly Base Rent hereunder. Should the Bureau of Labor Statistics discontinue
the publication of the Index or publish the same less frequently, or alter the
same in some other manner, Lessor shall adopt a substitute index or procedure
which reasonably reflects and monitors consumer prices.

52. MANUFACTURING PROCESS: Lessee's manufacturing process (which includes the
use of Liquid Nitrogen) as described in Exhibit "A" attached hereto is hereby
approved.

53. CONDITION OF THE PREMISES: (PRIOR TO JANUARY 1, 2000).

      (a) At Lease execution, Lessor shall deliver the Premises to Lessee in a
clean, broom-swept condition.

      (b) After Lease execution and prior to January 1, 2001 Lessor shall
complete the following items at Lessor's sole cost and expense: i) Lessor shall
have Advanced Heating and Air Conditioning inspect all existing HVAC units.
Lessor shall complete all work as recommended by Advanced Heating and Air
Conditioning. Upon completion of said work all units shall be in good working
condition. Lessor shall not be liable for the balancing of the HVAC system.
Lessor shall provide a six (6) month warranty from January 1, 2001 regarding the
condition of the existing HVAC, lighting, plumbing and electrical systems and
other such elements. Any modifications to the existing systems, by Lessee, shall
not be covered under this six (6) month warranty. This warranty shall expire and
be null and void as of June 30, 2001. ii) Lessor, at Lessor's sole cost and
expense, shall have Channel Roofing inspect the existing roof and membrane. Said
roofing inspector shall make recommendations as to delivering the roof and
membrane in a watertight condition. Channel Roofing shall perform all noted
recommendations. Lessor warrants that the roof and membrane shall be watertight
and free of leaks for a period of one (1) year from the date of completion of
Channel Roofings' work. Any and all warranties applicable to the roof and
membrane shall be assigned to Lessee. iii) Lessor, at Lessor's sole cost and
expense shall have MJM Paving inspect the Premises and prepare a report as to
the current condition of the existing parking lot and loading areas. Lessor

                                       4
<PAGE>

shall instruct MJM Paving to perform the work so outlined in the parking lot
report. Copies of all inspection reports shall be delivered to Lessee prior to
the Commencement of any work.

54. TENANT IMPROVEMENTS. Notwithstanding any contrary provision hereof of the
printed Lease form, the following shall apply:

      (a) LESSOR CONTRIBUTION: All Tenant Improvements, as defined below, shall
be completed by Lessee's contractor. Lessor shall contribute a sum of Fifty
Eight ($58,000.00). This sum shall be payable upon Building Department's Final
Inspection, and unconditional labor & material releases from all material
suppliers, subcontractors/General Contractor.

            (i) As used herein, the term Tenant Improvements means: the actual
hard and soft costs and charges for material and labor and contractor's profit
incurred in connection with a portion of the Improvements to be constructed by
Lessee.

            (ii) There shall be no profit, overhead and supervision fee, or
general conditions cost, including with respect to review and approval of
Lessee's plans and specifications, charged by Lessor and/or its contractors, if
any, with respect to the leasehold improvements or alterations to be installed
in the Premises at any time during the term of this Lease by Lessee.

      (b) LESSEE'S SUBMISSION AND APPROVAL PROCESS:

            (i) Any alterations, improvements, additions, or Utility
Installations made by Lessee during the term of this Lease or Option Term shall
be done in a good and workmanlike manner and of good and sufficient materials,
and Lessee shall, within thirty (30) days after completion of such alteration,
improvements, addition or Utility Installation, provide Lessor with as-built
plans and specifications for same.

            (ii) Any alterations, improvements, additions, or Utility
Installations in or about the Premises shall be conditioned upon Lessee
acquiring a permit, if required, to do so from appropriate governmental
agencies, the furnishing of a copy thereof to Lessor prior to the commencement
of the work and the compliance by Lessee of all conditions of said permit in a
prompt and expeditious manner.

            (iii) For any additions, alterations, improvements, or Utility
Installations requiring Lessor's prior written consent:

                  Lessee shall:
                  (aa) Deleted.

                  (bb) Employ a California licensed architect, contractor and
structural engineer in connection with any proposed construction.

                  (cc) Be fully responsible for the acts of Lessee's
consultants, employees, contractors, subcontractors, invitees and agents, and
cause them to fully comply with any applicable terms of this Lease and
documents referred to by this Lease and Addendum and all applicable laws, rules
and regulations.

                  (dd) Deleted.

                                       5
<PAGE>

                  (ee) Cause to be obtained an applicable building permit for
any and all construction and modifications, and construct the additions and
alterations and perform the construction work in accordance with all applicable
laws, including without limitation the Americans With Disabilities Act.

            c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, or any interest therein. Lessee shall
give Lessor not less than thirty (30) day's notice prior to commencement of any
work in the Premises, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises or the Building as provided by law.

55. MAINTENANCE AND REPAIRS.

      55.1 PARKING LOT MAINTENANCE. Subject to Paragraph 53 (b) (iii), a) As
additional terms and conditions to Paragraph 7.1(a) and (b) and notwithstanding
any contrary provision thereof, during the Original Term and Option Term, if
duly exercised, Lessee agrees that the parking lot maintenance shall be
contracted for by Lessee and the cost of the maintenance and repair shall be
that of the Lessee and b) Lessee shall maintain the parking areas of the
Premises as needed including asphalt patching and the replacement of broken
concrete wheel stops. Notwithstanding the foregoing, Lessee shall also be solely
responsible for the cost of repairs caused by gross negligent or willful act of
Lessee or its invitees.

      55.2 LANDSCAPE SERVICE CONTRACT AND MAINTENANCE. As additional terms and
conditions to Paragraph 7.1 (a) and (b) and notwithstanding any contrary
provision thereof, during the Original Term and Option Term, if duly exercised,
Lessee shall maintain all exterior landscaping for the Premises.

      55.3 AIR-CONDITIONING SERVICE CONTRACT AND MAINTENANCE. As additional
terms and conditions to Paragraph 7.1 (a) and (b) notwithstanding any provision
therein to the contrary and subject to the provisions under Paragraph 53 (b)
(i), Lessee shall maintain during the Original Term and Option Term, if duly
exercised, a regular full-service air conditioning maintenance Service Contract
with a qualified air conditioning contractor. The Service Contract shall include
the changing of filters at the intervals recommended by the equipment
manufacturer or maintenance contractor, and the other regular maintenance
recommended in the service manual written by the original equipment
manufacturer. The Service Contract shall also provide for the waterproofing of
the HVAC equipment and related ductwork.

56. SIGN RIGHTS.

      Lessee shall have the right to install its identification sign on either
the exterior of the Premises or on the front monument, subject to the prior
written approval by Lessor and subject to Lessee's agreement to remove such sign
and make the repairs occasioned by such removal at the termination of this
Lease. Lessee agrees by its execution hereof that, in the event it shall install
any sign on the exterior of the Premises, or in any landscaped area adjacent to
the Premises, it shall remove such sign at the termination of this Lease and
shall make any and all repairs to the building exterior and/or landscaping
occasioned by such removal, at its sole cost and expense, not later than ten
(10) days after the termination of this Lease.

                                       6
<PAGE>

      Such repairs shall include, but not be limited to, the filling of holes
and/or cracks and the painting of portions of the building exterior which, in
the reasonable opinion of Lessor, must be repainted in order for the removal of
such sign to leave no visible effect.

57. OPTION TO EXTEND.

      Lessor hereby grants to Lessee one (1) option to extend the term of this
Lease for the subject Premises for the period described below commencing when
the prior term expires upon each and all of the following terms and conditions.

            57.1. EXTENSION TERM. Lessor hereby grants to Lessee one (1) option
to extend the term of this Lease for the entire Premises for a term of five (5)
additional years, (the "Option Term").

            57.2 NOTICE. If Lessee desires to extend the term of the Lease for
the Option Term, Lessee shall give to Lessor written notice thereof by a date
which is no sooner than nine (9) months nor later than five (5) months prior to
the expiration date of the original Term of this Lease or of the Option Term. If
that written notice is not timely given and received, the option to extend set
forth in this Section 57 shall automatically terminate or if Lessee is in
default of the terms and conditions of said Lease; then all Option's shall
become null and void.

            57.3 SAME TERMS AS LEASE. All terms and conditions of this Lease,
except where specifically modified by this option, shall apply.

            57.4 BASE RENT OPTION TERM. If Lessee shall exercise its option to
extend the term of this Lease for said additional period of five (5) years, the
monthly Base Rental to be paid hereunder shall be subject to an upward
adjustment.

            (i) The Option Rate for the five (5) year term shall be subject to
adjustment, upward only, in the same percentage proportion as that of the
Consumer Price Index, Bureau of Labor Statistics of the U. S. Department of
Labor for Urban Wage Earners and Clerical Workers, Los Angeles-Riverside-Orange
County, California ("All Items, 1982/84 = 100) ("Index") for the month of
October, which is three (3) months prior to the month in which the Option To
Extend is to take effect, shall increase over the Index for the calendar month
of October of the prior year. Notwithstanding the foregoing, in no event shall
the Adjusted Base Rent payable for the first twelve months of the option term be
adjusted upward less than three (3%) percent per annum or greater than six (6%)
percent per annum over the Base Rental for the immediate prior period. The sum
so calculated shall constitute the new monthly Base Rent hereunder. Should the
Bureau of Labor Statistics discontinue the publication of the Index or publish
the same less frequently, or alter the same in some other manner, Lessor shall
adopt a substitute index or procedure which reasonably reflects and monitors
consumer prices.

            (ii) Cost of Living Adjustments shall be every twelve (12) months,
for the option term, subject to adjustment, upward only, in the same percentage
proportion as that of the Consumer Price Index, Bureau of Labor Statistics of
the U. S. Department of Labor for Urban Wage Earners and Clerical Workers, Los
Angeles-Riverside-Orange County, California ("All Items, 1982/84 = 100)
("Index") for the month of October, which is three (3) months prior to the month
in which the adjustment(s) is to take effect, shall increase over the Index for
the calendar month of October of the prior year. Notwithstanding the foregoing,
in

                                       7
<PAGE>

no event shall the Adjusted Base Rent payable for the first twelve months of the
option term be adjusted upward less than three (3%) percent per annum or greater
than six (6%) percent per annum over the Base Rental for the immediate prior
period. The sum so calculated shall constitute the new monthly Base Rent
hereunder. Should the Bureau of Labor Statistics discontinue the publication of
the Index or publish the same less frequently, or alter the same in some other
manner, Lessor shall adopt a substitute index or procedure which reasonably
reflects and monitors consumer prices.

58. APPROVAL BY BOARD OF DIRECTORS. Intentionally Omitted.

59. SUBMISSION OF LEASE DOCUMENTATION.

    Lessee acknowledges, understands and agrees that Lessor's submission of an
unexecuted copy of the Lease to Lessee shall not be deemed a binding contractual
obligation to lease the Premises upon the terms and conditions of the Lease, or
otherwise, until and unless Lessor duly executes and delivers to Lessee an
executed original of the Lease. Lessor may entertain other offers for the
Premises and shall have no obligations to lease the Premises to Lessee until and
unless the Lease is duly executed in writing by Lessor and Lessee.

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

Read and approved:

George DeRado                               Luminent, Inc.
                                            a Delaware Corporation

By:  /s/ GEORGE DERADO                      By:  /s/ ERIC BLACHNO
   -------------------------------------       ---------------------------------

Printed Name:    George DeRado              Printed Name:     Eric Blachno
             ---------------------------                 -----------------------

Title:  Owner                               Title:    C.F.O.
      ----------------------------------          ------------------------------
Dated:  August 16, 2000                     Dated:  August 16, 2000
      ----------------------------------          ------------------------------

Read and approved:

                                            Luminent, Inc.
                                            a Delaware Corporation

                                            By: /s/ WILLIAM R. SPIVEY
                                               ---------------------------------

                                            Printed Name:  Dr. William Spivey
                                                         -----------------------

                                            Title:     President
                                                  ------------------------------
                                            Dated: August   , 2000
                                                  ------------------------------
<PAGE>
                                   [AIR LOGO]

                              ARBITRATION AGREEMENT
                             Standard Lease Addendum

          DATED  August 14, 2000
                --------------------------------------------------------

          BY AND BETWEEN (LESSOR)  George DeRado
                                  --------------------------------------

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

                         (LESSEE) Luminent, Inc., a Delaware Corporation
                                  --------------------------------------

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

          ADDRESS OF PREMISES        20520 Nordhoff Street
                              ------------------------------------------

                                     Chatsworth, CA 91311
                              ------------------------------------------

Paragraph   49
          -----

A. ARBITRATION OF DISPUTES:

Except as provided In Paragraph B below, the Parties agree to resolve any and
all claims, disputes or disagreements arising under this Lease, including, but
not limited to any matter relating to Lessor's failure to approve an assignment,
sublease or other transfer of Lessee's Interest In the Lease under Paragraph 12
of this Lease, any other defaults by Lessor, or any defaults by Lessee by and
through arbitration as provided below and irrevocably waive any and all rights
to the contrary. The Parties agree to at all times conduct themselves in strict,
full, complete and timely accordance with the terms hereof and that any attempt
to circumvent the terms of this Arbitration Agreement shall be absolutely null
and void and of no force or effect whatsoever.

B. DISPUTES EXCLUDED FROM ARBITRATION:

The following claims, disputes or disagreements under this Lease are expressly
excluded from the arbitration procedures set forth herein: 1. Disputes for which
a different resolution determination is specifically set forth In this Lease, 2.
All claims by either party which (a) seek anything other than enforcement or
determination of rights under this Lease, or (b) are primarily founded upon
matters of fraud, willful misconduct, bad faith or any other allegations of
tortious action, and seek the award of punitive or exemplary damages, 3. Claims
relating to (a) Lessor's exercise of any unlawful detainer rights pursuant to
applicable law or (b) rights or remedies used by Lessor to gain possession of
the Premises or terminate Lessee's right of possession to the Premises, all of
which disputes shall be resolved by suit filed in the applicable court of
jurisdiction, the decision of which court shall be subject to appeal pursuant to
applicable law and 4. All claims arising under Paragraph 39 of this Lease, which
disputes shall be resolved by the specific dispute resolution procedure provided
in Paragraph 39 to the extent that such disputes concern solely the
determination of rent.

C. APPOINTMENT OF AN ARBITRATOR:

All disputes subject to this Arbitration Agreement, shall be determined by
binding arbitration before: [ ] a retired judge of the applicable court of
jurisdiction (e.g., the Superior Court of the State of California) affiliated
with Judicial Arbitration & Mediation Services, Inc. ("JAMS"), [X] the American
Arbitration Association ("AAA") under its commercial arbitration rules, [ ]
________________________________________________________________________________
_____________________________________, or as may be otherwise mutually agreed by
Lessor and Lessee (the "Arbitrator"). Such arbitration shall be initiated by the
Parties, or either of them, within ten (10) days after either party sends
written notice (the "Arbitration Notice") of a demand to arbitrate by registered
or certified mail to the other party and to the Arbitrator. The Arbitration
Notice shall contain a description of the subject matter of the arbitration, the
dispute with respect thereto, the amount involved, if any, and the remedy or
determination sought. If the Parties have agreed to use JAMS they may agree on a
retired judge from the JAMS panel. If they are unable to agree within ten days,
JAMS will provide a list of three available judges and each party may strike
one. The remaining judge (or if there are two, the one selected by JAMS) will
serve as the Arbitrator. If the Parties have elected to utilize AAA or some
other organization, the Arbitrator shall be selected in accordance with said
organization's rules. In the event the Arbitrator is not selected as provided
for above for any reason, the party initiating arbitration shall apply to the
appropriate Court for the appointment of a qualified retired judge to act as the
Arbitrator.

D. ARBITRATION PROCEDURE:

       1. PRE-HEARING ACTIONS. The Arbitrator shall schedule a pre-hearing
conference to resolve procedural matters, arrange for the exchange of
information, obtain stipulations, and narrow the issues. The Parties will submit
proposed discovery schedules to the Arbitrator at the pre-hearing conference.
The scope and duration of discovery will be within the sole discretion of the
Arbitrator. The Arbitrator shall have the discretion to order a pre-hearing
exchange of information by the Parties, including, without limitation,
production of requested documents, exchange of summaries of testimony of
proposed witnesses, and examination by deposition of parties and third-party
witnesses. This discretion shall be exercised in favor of discovery reasonable
under the circumstances. The Arbitrator shall issue subpoenas and subpoenas
duces tecum as provided for in the applicable statutory or case law (e.g., in
California Code of Civil Procedure Section 1282.6).

       2. THE DECISION. The arbitration shall be conducted in the city or county
within which the Premises are located at a reasonably convenient site. Any Party
may be represented by counsel or other authorized representative. In rendering a
decision(s), the Arbitrator shall determine the rights and obligations of the
Parties according to the substantive laws and the terms and provisions of this
Lease. The Arbitrator's decision shall be based on the evidence introduced at
the hearing, including all logical and reasonable inferences therefrom. The
Arbitrator may make any determination and/or grant any remedy or relief that is
just and equitable. The decision must be based on, and accompanied by, a written
statement of decision explaining the factual and legal basis for the decision as
to each of the principal controverted issues. The decision shall be conclusive
and binding, and it may thereafter be confirmed as a judgment by the court of
applicable jurisdiction, subject only to challenge on the grounds set forth in
the applicable statutory or case law (e.g., in California Code of Civil
Procedure Section 1286.2). The validity and enforceability of the Arbitrator's
decision is to be determined exclusively by the court of appropriate
jurisdiction pursuant to the provisions of this Lease. The Arbitrator may award
costs, including without limitation, Arbitrator's fees and costs, attorneys'
fees, and expert and witness costs, to the prevailing party, if any, as
determined by the Arbitrator in his discretion.

       Where a matter which has been submitted to arbitration involves a dispute
as to whether or not a particular act or omission (other than failure to

                                  Page 1 of 2
<PAGE>
pay money) constitutes a Default, the time to commence or cease such action
shall be tolled from the ????? at the Notice of Arbitration is served through
and until the date the Arbitrator renders his or her decision. Provided,
however, that this provision shall NOT apply in the event that the Arbitrator
determines that the Arbitration Notice was prepared in bad faith.

       Whenever a dispute arises between the Parties concerning whether or not
the failure to make a payment of money constitutes a default, the service of an
Arbitration Notice shall NOT toll the time period in which to pay the money. The
Party allegedly obligated to pay the money may, however, elect to pay the money
"under protest" by accompanying said payment with a written statement setting
forth the reasons for such protest. If thereafter, the Arbitrator determines
that the Party who received said money was not entitled to such payment, said
money shall be promptly returned to the Party who paid such money under protest
together with interest thereon as defined in Paragraph 13.5. If a Party makes a
payment "under protest" but no Notice of Arbitration is filed within thirty
days, then such protest shall be deemed waived. (See also Paragraph 43)

NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call us to make sure you are utilizing the most
current form: American Industrial Real Estate Association, 700 South Flower
Street, Suite 600, Los Angeles, CA 90017, Telephone No.: (213) 687-8777. Fax
No.: (213) 687-8616.

                                  Page 2 of 2
<PAGE>
                                                                       EXHIBIT A

                                [LUMINENT LOGO]

                    SEMICONDUCTOR DEVICE MANUFACTURING PLANS
                              20520 NORDHOFF STREET

The majority of the Luminent facility at 20520 Nordhoff Street will be used for
engineering and light assembly of electronic components for telecommunications.
A small portion of the facility is planned for semiconductor device
manufacturing. These devices will include light emitting diodes (LEDs), laser
diodes, and other optoelectronic devices. The manufacturing steps will include
cleaning, etching, patterning, and thin film deposition.

Although some hazards are involved in semiconductor manufacturing, steps will be
taken to ensure a high level of safety to protect employees, the facility,
surrounding areas, and the environment. Below is a brief list of the planned
hazardous materials to be used in this facility.

We will have our plans and construction review by the Los Angeles City Building
and Safety Department as well as the Los Angeles City Fire Department. We
already have permits or applications for other Luminent facilities with the Los
Angeles City Fire Department for the Certified Unified Program Agency (CUPA) for
Hazardous Material Operations as well as the South Coast Air Quality Management
District.

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

Tentative List of Hazardous Materials to be Used
(estimated amounts indicated in parentheses)

Organic Solvents
        Disposal Method: pick up by disposal service
        Partial List: acetone (10 gal), methanol (10 gal), trichloroethylene (1
        gal), photoresist (10 gal), other organic solvents (20 gal)

Acids, Bases, and Other Liquids
        Disposal Method: on-site neutralization; pick-up by disposal service
        Partial List: hydrochloric acid (10 gal), hydrofluoric acid (1 gal),
               hydrogen peroxide (2 gal), ammonium hydroxide (5 gal), sulfuric
               acid (10 gal), other liquids (15 gal)

Gases and Related Materials
        General Gases
               Disposal Method: scrubbing as needed
               Partial List: oxygen (2 cylinders), silane (1 cylinder), methane
                    (1 cylinder), nitrogen (2 cylinders), ammonia (1 cylinder),
                    hydrogen (1 cylinder), other compressed gases (5 cylinders)

        Liquid Nitrogen
               Estimated Amount on Site: 400 gallons
               Disposal Method: release

                                                    /s/ CASPER REAVES
                                             -----------------------------------

                                                prepared by Casper Reaves, Ph.D.
                                                                  16 August 2000

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