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                                                                   EXHIBIT 10.21

               [AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION LOGO]

            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. May 1, 2000, is made by and between ONE MORGAN, LLC, a Delaware limited
liability company ("LESSOR") and WESTERN DIGITAL CORPORATION, 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 One Morgan, City of Irvine, located in the County of
Orange, 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) a freestanding concrete tilt-up industrial building
containing approximately 59,213 square feet ("PREMISES"). (See also Paragraph 2)

         1.3      TERM: ten (10) years and -0- months ("ORIGINAL TERM")
commencing October 1, 2000 ("COMMENCEMENT DATE") and ending September 30, 2010
("EXPIRATION DATE"). (SEE ALSO PARAGRAPH 3 AND PARAGRAPH 53 OF ADDENDUM NO. 1)

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

         1.5      BASE RENT: $54,476 per month ("BASE RENT"), payable on she
first (1st) day of each month commencing October 1, 2000. (See also Paragraph
4) [x] If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted. SEE PARAGRAPHS 50 AND 51 OF ADDENDUM NO. 1.

         1.6      BASE RENT PAID UPON EXECUTION: $54,476 as Base Rent for the
period December 1, 2000-January 31, 2001.

         1.7      SECURITY DEPOSIT: $N/A ("SECURITY DEPOSIT"). (See also
Paragraph 5)

         1.8      AGREED USE: general offices, laboratories and incubator space
for new Western Digital ventures. (See also Paragraph 6)

         1.9      INSURING PARTY: Lessee is the "INSURING PARTY". (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] Collins Commercial Corporation represents Lessor exclusively ("LESSOR'S
BROKER");

[X] Daum Commercial Real Estate Services represents Lessee exclusively
("LESSEE'S BROKER"); or

[ ] N/A 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.

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

         1.12     ADDENDA AND EXHIBITS. Attached hereto is an Addendum or
Addenda consisting of Paragraphs 50 through 59 and Exhibits 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 the Commencement Date or the Early Possession Date,
whichever first occurs ("START DATE"), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee within
thirty (30) days following the Start Date, 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
Lessors 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
foundations, (ii) three (3) years as to the HVAC systems, (iii) thirty (30) days
as to the remaining systems and other elements of the Building, 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)) or "Tenant Improvements" (defined In Exhibit 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) 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

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by Lessee as compared with uses by tenant in general, Lessee shall be fully
responsible for the trust 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 so 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. 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.

         2.5      LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor
in Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.

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 so 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.

         3.3      DELAY IN POSSESSION. Lessor agrees to use its best
commercially reasonable efforts to deliver possession of the Premises to Lessee
by the Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within sixty (60)
days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such (60) day period, cancel this
Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten (10)
day period, Lessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease, as aforesaid, any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession of the Premises is not delivered within
four (4) months after the Commencement Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.

         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.

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

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Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment on the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) 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 of 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 the Start Date or which are caused by total 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 defines 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 Lessors 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, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, 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 of 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 its employees, agents, and
representatives 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 and with reasonable prior
notice, 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 due to the actions of Lessee or its
employees or agents. 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),
foundations, ceilings, 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 contrasts 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, including, when necessary, the exterior repainting of the
Building.

                  (b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form

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and substance for, and with contractors specifying 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.

                  (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 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, except that Lessor shall be responsible for making any repairs to the
exterior roof and exterior walls, unless the need for the repair is due to the
acts of Lessee or Lessee's employees or agents or invitees or permitted
successors or assigns. 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
PARAGRAPH 57 OF ADDENDUM NO. 1.

                  (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 exerior or
load-bearing 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. Lessor's failure either (a) to request
further Information pertaining to the proposed Alterations or Utility
Installations or (b) to disapprove Lessee's request for consent, within ten (10)
business days commencing on the date when Lessor receives Lessee's request for
consent, shall be deemed to be Lessor's approval of and consent thereto.

                  (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.

                  (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.

                  (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. SEE PARAGRAPH 56 OF ADDENDUM NO. 1.

         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 within 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.

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         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. 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
unless required by a Lender), 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 $100,000 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 loss of Rent from the date of any such loss. Said 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.

                  (c) ADJACENT PREMISES. If the Premises are part of a larger
building, or of a group of buildings owned by Lessor which are adjacent to the
Premises, the Lessee shall pay for any increase in the premiums for the property
insurance of such building or buildings if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.

         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 $100,000 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) 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)

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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 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 or Lessee may
terminate this Lease effective sixty (60) days following the date of occurrence
of such damage by giving a written termination notice to the other 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 assessment; real estate,
general, special, ordinary or extraordinary, 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, but as to any such increase imposed by reason of any
change in the ownership of the Premises, shall include only those increases
which are imposed due to changes in ownership of the Premises which occur after
June 30, 2005.

         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
ten (10) 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

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Lessor, of all charges jointly metered.

12.      ASSIGNMENT AND SUBLETTING.

         12.1     LESSOR'S CONSENT REQUIRED. SEE PARAGRAPH 58 OF ADDENDUM No. 1

                  (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.

                  (b) A change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of fifty-one
percent (51%) or more of the voting control of Lessee shall constitute a change
in control for this purpose.

                  (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 fifty percent (50) 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 me 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.

                  (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 of $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
Estoppel Certificate, (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

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Premises or of Lessee's interest in this Lease or 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 when made.

                  (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 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 reasonable and actual 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 (but in no event
above the standard required by a normal commercial or industrial lessee),
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 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.

         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 three percent (3%), 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.

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%) at 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

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reduced in proportion to the reduction in utility these Premises caused by
such Condemnation. Consolidation awards and/or payments shall be the property of
Lessor, whether such award shall be made as compensation for diminution in value
of the leasehold, the value of the part taken, or for severance damages;
provided, however, that Lessee shall be entitled to any compensation for
Lessee's relocation expenses, loss of business goodwill and/or Trade Fixtures,
without regard to whether or not this Lease is terminated pursuant to the
provisions of this Paragraph. 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.

15.      BROKERS' FEE.

         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 reasonable 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. 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
ordinarily prepared by Leases as may be reasonably requires 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 or members of Lessor or its or
their individual partners, members, 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 other 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.

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 certified or registered mail or U.S. Postal Service Express
Mail or other reputable overnight courier service, 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. Notices delivered by United States Express Mail or Federal Express or
other 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

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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.

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 twenty-five percent (125%) 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 brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, 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 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 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. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times upon reasonable prior notice for
the purpose of showing the same to prospective purchasers, lenders, or lessees,
and making such alterations, repairs, improvements or additions to the Premises
as Lessor may deem necessary. All such activities shall be without abatement of
rent or liability to Lessee. Lessor may at any time place on the Premises any
ordinary "FOR SALE" signs and Lessor may during the last six (6) months of the
term hereof place on the Premises any ordinary "FOR LEASE" signs. Lessee may at
any time place on or about the Premises any ordinary "FOR SUBLEASE" sign.

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 PARAGRAPH 55 OF ADDENDUM NO.
1.

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 not to exceed $1,000 per
request for consent by Lessee. 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.

                                  Page 10 of 12

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39.      OPTIONS.

         39.1     DEFINITION. "OPTION" shall mean: (a) the right to extend the
term of or renew this Lease or to extend of 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 of other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.

         39.2     OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to
Lessee in this Lease is personal to the original Lessee, and cannot be assigned
or exercised by anyone other than said original Lessee and only while the
original Lessee is in full possession of the Premises and, if requested by
Lessor, with Lessee certifying that Lessee has no intention of thereafter
assigning or subletting.

         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 fight 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 attended 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 unreasonably 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 she 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.

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 [ ] is [X] 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.

                                 Page 11 of 12

(c)1997 - AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION  REVISED  FORM STN-6-2/97E
<PAGE>

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: TORONTO, CANADA
on: MAY 12/00
By LESSOR:

ONE MORGAN, LLC,
a Delaware limited liability company

By: /s/ [ILLEGIBLE]
    ----------------------------
Name Printed: [ILLEGIBLE]
Title: C.O.O.

By: _____________________________________________
Name Printed: ___________________________________
Title: __________________________________________
Address: 620 Wilson Avenue, Suite 401,
         Toronto, Ontario M3K 1Z3 Canada
Telephone: ______________
Facsimile: ______________
Federal ID No. 95-3251541

Executed at: Western Digital, Irvine Calif 92618
on: May 9, 2000
By LESSEE:

WESTERN DIGITAL CORPORATION,
a Delaware corporation

By: /s/ Steven M. Slavin
    ---------------------------
Name Printed: Steven M. Slavin
Title: Chairman of the Board/President/Vice Pres.
       [circle one]                    ----------

By: /s/ Michael A. Cornelius
    ---------------------------
Title: Secy. Asst. Secy./CFO/Asst. Treasurer
       -----
Address: [circle one] 8105 Irvine Center Dr.
         Irvine, CA 92618
Telephone: (949) 932-5642
Facsimile: (949) 932-5775
Federal ID No. 95-2647125

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 12 of 12

(c)1997 - AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION  REVISED  FORM STN-6-2/97E
<PAGE>

                            ADDENDUM NO. 1

                                  To

        STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-NET

         THIS ADDENDUM NO. 1 TO STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT
LEASE-NET (the "Addendum") is made as of May 1, 2000, by and between ONE MORGAN,
LLC, a Delaware limited liability company ("Lessor"), and WESTERN DIGITAL
CORPORATION, a Delaware corporation ("Lessee"), with reference to the following
facts:

         A.       Lessor and Lessee are parties to that certain Standard
Industrial/Commercial Single-Tenant Lease-Net dated as of the date hereof (the
"Lease"), which provides for Lessee's rental from Lessor of those certain
premises commonly known as One Morgan, Irvine, California (the "Premises").

         B.       Lessor and Lessee desire to supplement and amend the Lease
according to the terms and conditions set forth herein.

         C.       Defined terms used herein, unless otherwise provided, shall
have the meanings set forth in the Lease.

         NOW, THEREFORE, for valuable consideration the parties hereto agree as
follows:

         50.      Base Rent.

                  50.1.    First Three Year Period. The Base Rent from October
1, 2000 through September 30, 2003 shall be $54,476 per month, subject to the
rental abatement provisions of Paragraph 51 below;

                  50.2.    Second Three Year Period. The Base Rent from October
1, 2003 through September 30, 2006 shall be $59,379 per month;

                  50.3.    Third Three Year Period. The Base Rent from October
1, 2006 through September 30, 2009 shall be $64,723 per month; and

                  50.4.    Final Year. The Base Rent from October 1, 2009
through September 30, 2010 shall be $70,548 per month.

         51.      Rent Abatement. Notwithstanding anything to the contrary
contained in Paragraph 1.5 of the Lease and Paragraph 50.1 above, provided
Lessee shall fully and timely perform all of its duties and obligations
hereunder prior, during and subsequent to the first twelve (12) months of the
Original Term, the Base Rent shall be reduced from $54,476 per month to $0.00
from October 1, 2000 through November 30, 2000, and the Base Rent shall be
reduced from $54,476 per month to $27,238 per month from December 1, 2000
through September 30, 2001. Lessee shall nonetheless be liable during this
period of abated rent for the payment of Real Property Taxes, utilities,
insurance premiums and all other charges required to be paid by Lessee
throughout the Original Term. In the event of a Default by Lessee under the
terms of the Lease, which Default remains uncured after the expiration of any
applicable grace period, then as a part of the recovery set forth in Paragraph
13.3 of the Lease, Lessor shall be entitled to the recovery of the Base Rent
that was abated under the provisions of this Paragraph 51, and such Base Rent
shall not be deemed to have been forgiven or abated, but shall become
immediately due and payable as unpaid rent which had been earned at the time of
termination.

                                      -1-
<PAGE>

         52.      Condition of Premises.

                  52.1.    "As Is" Condition. Except as otherwise provided in
Paragraphs 2.2 and 2.3 of the Lease, Lessee shall accept the Premises in their
then "as is" physical condition as of the Start Date, without any obligation on
Lessor's part to make any repairs, improvements or alterations to the Premises,
except for Lessor's obligation to fund the "T.I. Allowance" (as defined in
Paragraph 3.1 of Exhibit A), and except that Lessor at Lessor's cost shall
slurry seal and restripe the parking lot and driveway of the Premises within
thirty (30) days after the date of due execution of this Lease.

                  52.2.    No Delay in Commencement Date. Lessee understands and
acknowledges that its completion of its desired "Tenant Improvements" (as
defined in Paragraph 3.1 of Exhibit A) in the Premises per the provisions of
Exhibit A is not a contingency to the occurrence of the Commencement Date, and
the Commencement Date shall occur on October 1, 2000 regardless of the status of
Lessee's work at that time.

         53.      Lessee's Early Termination Right. Provided that Lessee is not
in Default or Breach under the Lease or this Addendum as of the date Lessor
receives the "Termination Notice" (as defined below) and also on November 30,
2005, Lessee shall have the right to terminate the Original Term effective as of
November 30, 2005. Lessee may exercise its termination right only by giving
Lessor written notice (the "Termination Notice") not later than January 31,
2005, and by paying to Lessor concurrently with the delivery of the Termination
Notice an amount equal to: (i) one-half of the "T.I. Allowance" (as defined in
Paragraph 3.1 of Exhibit A attached hereto), plus (ii) one-half of the Brokers'
real estate commissions, plus (iii) one-half of the cost of the slurry sealing
and restriping of the parking lot and driveway referred to in Paragraph 52.1
above (collectively the "Termination Payment"). If Lessee timely and properly
delivers the Termination Notice and concurrently pays the Termination Payment to
Lessor, the Original Term shall terminate on November 30, 2005, and Lessee shall
surrender and vacate the Premises in accordance with the provisions of Paragraph
7.4 of the Lease no later than November 30, 2005.

         54.      Options to Renew.

                  54.1.    Grant. Subject to the provisions of Paragraph 39 of
the Lease, and provided Lessee has not earlier exercised its early termination
right set forth in Paragraph 53 above, Lessee shall have two (2) options (the
"First Option" and "Second Option", respectively, sometimes each individually
referred to as the "Option" and collectively as the "Options") to extend the
Original Term for two (2) consecutive terms of five (5) years each (the "First
Option Period" and the "Second Option Period", respectively, sometimes each
individually referred to as the "Option Period" and collectively as the "Option
Periods"). The First Option Period, if any, shall commence immediately following
the expiration of the Original Term, on the terms and conditions set forth
herein, and the Second Option Period, if any, shall commence immediately
following the expiration of the First Option Period, on the terms and conditions
set forth herein.

                  54.2.    Exercise. Each Option may be exercised only by Lessee
delivering to Lessor written notice of Lessee's unconditional exercise of the
particular Option then being exercised; provided, however, that the First Option
may be exercised no earlier than twelve (12) months and no-later than nine (9)
months prior to the expiration of the Original Term, and the Second Option may
be exercised no earlier than twelve (12) months and no later than nine (9)
months prior to the expiration of the First Option Period. If Lessee fails to
timely exercise

                                      -2-
<PAGE>

either Option in the manner herein specified, then that Option and any
successive Option shall immediately and automatically terminate and be of no
further force or effect on the ninth (9th) month prior to the expiration of the
then term of the Lease, and Lessee shall have no other right or option to renew
or extend the Lease. Time is of the essence with respect to the exercise of each
Option.

                  54.3.    Rent Determination. All provisions of the Lease and
this Addendum shall continue in full force and effect during the Option Periods;
provided, however, that the Base Rent for the first thirty (30) months of each
Option Period shall be set at ninety five percent (95%) of the "Prevailing
Market Rent" (as such term is defined below). Lessor and Lessee shall have
thirty (30) days following the exercise of an Option in which to agree as to the
Prevailing Market Rent for the Premises as of the first thirty (30) months of
the Option Period in question. In the event Lessor and Lessee are unable to
agree on the Prevailing Market Rent within such thirty (30) day period, the
Prevailing Market Rent shall be determined as follows:

                           A.       Within fifteen (15) days following the
expiration of such thirty (30) day period for Lessor and Lessee to agree on the
Prevailing Market Rent for the Premises for the first thirty (30) months of the
Option Period in question, Lessor and Lessee shall each give written notice to
the other designating by name, address and telephone number an M.A.I. appraiser
having at least five (5) years experience in the appraisal of industrial
properties in Orange County, California. Within fifteen (15) days following the
selection of the second appraiser to be designated, the first two (2)
appraisers shall select a third appraiser. The employment of each appraiser
shall be conditioned on such appraiser's agreement to comply with the provisions
of this Paragraph 54.3.A. Within thirty (30) days after the selection of the
third appraiser, the three (3) appraisers so selected shall determine the
Prevailing Market Rent for the Premises and each shall notify Lessor and Lessee
in writing within such thirty (30) day period of the Prevailing Market Rent for
the Premises determined by such appraisal. The Prevailing Market Rent for the
Premises shall be determined by applying the following criteria:

                                    (i)      The Prevailing Market Rent shall be
based on the net monthly base rent projected to be paid by tenants as of the
first day of the Option Period in question, based on leases executed not earlier
than six (6) months prior to the date the appraisers shall meet, for industrial
building space comparable to the Premises in size (plus or minus 20%) and
cosmetic condition, and with comparable tenant improvements as are in the
Premises (whether paid for by Lessor or Lessee) and rent concessions, if any
(collectively referred to herein as "PMR Criteria"), for industrial buildings
located within a five (5) mile radius of the Premises (the "Comparison Area").

                           B.       The two appraisals for the Prevailing Market
Rent which arithmetically are the closest shall be added together and divided by
two (2). The third appraisal shall be disregarded. An amount equal to ninety
five percent (95%) of the quotient so derived shall be the Base Rent for the
first thirty (30) months of the Option Period in question. Notwithstanding any
provision of this Paragraph 54, however, the Base Rent during the first month of
the First Option Period shall in no event be less than the Base Rent during the
last month of the Original Term, and the Base Rent during the first month of the
Second Option Period shall in no event be less than the Base Rent during the
last month of the First Option Period.

                           C.       Lessor and Lessee shall each pay the costs
and fees of the appraiser selected by it. Lessor and Lessee

                                      -3-
<PAGE>

shall share equally the costs and fees of the third appraiser. In the event that
either Lessor or Lessee does not identify an appraiser within the first fifteen
day (15) period set forth in Paragraph 54.3.A above, the appraiser appropriately
and timely identified shall alone render the appraisal based on the PMR
Criteria.

                           D.       Following the first thirty (30) months of
each Option Period, the monthly Base Rent then in effect shall be increased by
ten percent (10%), effective as of the first day of the thirty-first (31st)
month of that Option Period, and such increased monthly Base Rent shall remain
in effect for the balance of the then Option Period.

                  54.4.    Additional Rent. In addition to Base Rent payable
during the Option Periods, Lessee shall continue to be obligated to pay all Real
Property Taxes and utilities and insurance premiums and other categories of
charges required to be paid by Lessee throughout the Original Term, and all
maintenance and repair obligations set forth in the Lease and this Addendum
shall continue in full force and effect.

         55.      Signage Rights. Lessee at Lessee's sole cost shall have the
right to install signage at the Premises indicating Lessee's corporate name and
logo, subject to: (i) Lessee's compliance with all applicable governmental laws,
codes and ordinances, and any recorded covenants, conditions and restrictions,
and (ii) Lessor's prior written approval, not to be unreasonably withheld, as to
the size, exact location, contents, graphics, materials and colors of such
signage, (iii) Lessee's maintenance and repair of such signage, and (iv)
Lessee's removal of such signage at Lessee's sole cost at the expiration or
earlier termination of the Original Term and any Option Period, and restoration
of such signage area to its condition presently existing, ordinary wear and tear
excepted.

         56.      Insurance Limitations. Notwithstanding any provision to the
contrary contained in Paragraphs 8.1 and 8.2(a) of the Lease, the limitations of
Lessee's insurance coverage and Lessee's obligation to reimburse Lessor for the
premium cost therefor during the Original Term shall be adjusted upward to such
higher amounts as Lessor shall reasonably request from time to time.

         57.      Lessee's Contractor. Following the completion of the Tenant
Improvements, the construction of any Alteration or Utility Installation
thereafter by Lessee or Lessee's contractor shall be at Lessee's sole cost and
expense and performed in a lien-free manner by a reputable California licensed
contractor retained by Lessee who has been reasonably approved in advance by
Lessor. The contractor shall have at least five (5) years experience in building
tenant improvements similar to the proposed Alterations or Utility Installations
and shall warrant to Lessee and for the benefit of Lessor that the Alterations
or Utility Installations shall be free from any defects in workmanship and
materials for a period of one (1) year from the date of completion of the
Alterations or Utility Installations. The contractor's selection of the
subcontractors who will perform work affecting the Utility Installations shall
also be subject to Lessor's prior reasonable approval. As a condition to the
contractor's commencement of work, Lessor shall receive from the contractor a
certificate of insurance that names Lessor as an additional insured, from an
insurer who complies with the requirements of Paragraph 8.5 of the Lease, and
evidencing liability and property damage coverages reasonably acceptable to
Lessor, plus statutorily-required workers compensation insurance as being in
force through the anticipated completion date of the Alterations or Utility
Installations, and providing that Lessor will receive at least thirty (30) days
written notice of any

                                      -4-
<PAGE>

amendments to or cancellation of such coverage. The insurance shall be written
on an occurrence basis form, and shall include endorsements for completed
operations and broad form and contractually assumed liabilities, and shall be a
non-reporting form. Lessee's contractor shall adhere to such governmental laws,
ordinances, rules and regulations as may now or in the future be reasonably
promulgated. Before Lessee makes payment to the contractor of the final unpaid
balance of the contract amount, the contractor shall provide to Lessor
"as-built" plans for the Alterations or Utility Installations in form reasonably
acceptable to Lessor.

         58.      Assignment and Subletting. Notwithstanding any provision to
the contrary contained in Section 12 of the Lease, Lessee shall have the right
to enter into an assignment or sublease with any entity that is either a
subsidiary of Lessee or under common ownership or control with Lessee (i.e. the
persons owning a majority interest in the outstanding stock of Lessee are the
same persons who own a majority interest in the outstanding stock of such
affiliated corporation) without Lessor's consent, subject to Lessee giving
Lessor advance written notice of any such assignment or sublease at least thirty
(30) days prior to its effective date. In addition, any consent of Lessor to a
proposed sublease or assignment (where required to be given) shall be deemed
given if Lessor fails within ten (10) business days commencing on the date when
it receives Lessee's request for consent either (a) to request further
information pertaining to the proposed assignment or sublease or (b) to
disapprove Lessee's request for consent.

         59.      Ratification. Except as otherwise expressly provided in this
Addendum, all of the terms and conditions of the Lease are hereby ratified,
confirmed and remain in full force and effect and shall be applicable to
Lessee's rental of the Premises during the Original Term. The Lease and this
Addendum contain the entire agreement of the parties with respect to Lessee's
lease of the Premises and supersede all prior oral and written agreements,
including without limitation: (i) Lessee's broker's letter dated March 24, 2000;
(ii) Lessor's broker's letter of response dated March 27, 2000; (iii) Lessee's
broker's letter of response dated March, 30, 2000; (iv) Lessor's broker's letter
of response dated March 31, 2000; and (v) Lessee's broker's letter of response
dated April 12, 2000.

                                      -5-
<PAGE>

         IN WITNESS WHEREOF, the parties have entered into this Addendum as of
the day and year first written above.

LESSOR:                         ONE MORGAN, LLC,
                                a Delaware limited liability company

                                By: /s/ [ILLEGIBLE]
                                    --------------------------
                                Name: [ILLEGIBLE]
                                Its:  [ILLEGIBLE]

                                Dated: May 12, 2000

LESSEE:                         WESTERN DIGITAL CORPORATION,
                                a Delaware corporation

                                By: /s/ Steven M. Slavin
                                    --------------------------
                                    Its Chairman of the Board/
                                    President/Vice President
                                              --------------
                                    [Circle One]

                                By: /s/ Michael A. Cornelius
                                    --------------------------
                                    Its Secretary/Assistant Secretary/
                                    -------------
                                    Chief Financial Officer/Assistant
                                    Treasurer [Circle One]

                                Dated: May 9, 2000

                                      -6-
<PAGE>

                                    Exhibit A

                    TENANT IMPROVEMENT CONSTRUCTION ADDENDUM

1.       Approval Process For Plans.

                           1.1.     Space Planner and Preliminary Plan Approval.
Lessee shall retain, at Lessee's sole cost, an architect/space planner (the
"Space Planner") familiar with the practices and procedures of the City of
Irvine's Department of Building and Safety and reasonably acceptable to Lessor
to prepare detailed plans and specifications for the "Tenant Improvements" (as
such term is defined in Paragraph 3.1 below) to be constructed in the Premises
(the "Plans"), which shall include a layout and designation of all walls,
windows, offices, rooms, restrooms and other partitioning, and location of
computer and telephone rooms, heavy equipment, plumbing requirements, corridors
and any specific use items required by Lessee, and architectural and engineering
drawings for the Tenant Improvements in a form which is sufficiently complete to
allow a general contractor and subcontractors to bid on the job and to obtain
all applicable governmental permits. The Plans shall include, without
limitation, Lessee's finish schedule for interior decoration of the Premises
including, without limitation, floor coverings or carpets, any special wall
coverings, lighting or other fixtures, painting, finish hardware, detailed
drawings of all shelving and cabinet work, locations of special electrical
outlets, telephones, machinery, electrical equipment and plumbing fixtures. The
architectural and engineering drawings shall include engineering working
drawings for all work to the systems in the Premises (e.g., electrical,
plumbing, HVAC, mechanical, fire/life-safety systems). Together with the Plans,
Lessee shall deliver to Lessor such additional information regarding the Tenant
Improvements as Lessor may reasonably request.

                           1.2.     Lessor Approval of Plans. Lessor shall
approve or disapprove the Plans as soon as reasonably possible, but in no event
later than ten (10) business days following Lessor's receipt thereof. Lessor's
disapproval of the Plans shall be effected by Lessor's delivery to the Space
Planner, as soon as reasonably possible but in no event beyond such ten (10)
business day period, of a writing setting forth the reasonable basis for its
disapproval. As soon as reasonably possible following delivery by Lessor of its
reasonable objections, the Space Planner shall cause the Plans to be modified
and delivered to Lessor. Lessor shall then approve or disapprove such modified
Plans in the same manner as set forth above as soon as reasonably possible, but
in no event later than ten (10) business days from Lessor's receipt thereof.
This procedure shall be followed until all reasonable objections of Lessor have
been resolved and the Plans have been approved by Lessor. Lessee's and Lessor's
approval of the Plans shall be evidenced by their initialing and dating of each
page thereof. Lessor's review of the Plans as set forth in this Paragraph 1
shall be for Lessor's sole purpose and shall not obligate Lessor to review the
same for quality, design, fitness for Lessee's intended use of the Premises,
compliance with applicable law or other like matters. The Plans as approved by
Lessor shall be referred to herein as the "Final Plans." Lessor's failure within
ten (10) business days commencing on the date when it receives Lessee's request
for approval to the Plans or any modification thereof either (a) to request
further information pertaining to such Plans or modification or (b) to
disapprove Lessee's request for approval, shall be deemed to be Lessor's
approval thereof.

<PAGE>

                           1.3.     Plan Check. Upon Lessor's approval of the
Final Plans, Lessee shall cause the Space Planner to submit the Final Plans to
the applicable department of the City of Irvine (the "City") for necessary plan
checks and approvals as required by applicable law. Lessee shall cause the Space
Planner to provide Lessor with reasonable advance notice of all its meetings
with City personnel, so as to provide Lessor reasonable opportunity to have a
representative accompany the Space Planner to such meetings as Lessor may
desire, for purposes of allowing Lessor input on matters affecting the Premises.
Lessee shall cause any and all plan check corrections to be made by the Space
Planner, subject to Lessor's approval, as soon as reasonably possible following
receipt of such corrections from the City.

                           1.4.     Timely Performance. Lessee shall cause any
plans, specifications, drawings, schedules and documents to be provided by the
Space Planner under this Paragraph 1 to be prepared promptly and delivered to
Lessor.

                           1.5.     Exculpation. Notwithstanding Lessor's or
Lessor's agents involvement in the preparation of any Plans, and Lessor's
approval of the Final Plans, Lessor and its officers, directors, shareholders,
employees, agents and contractors shall not have any liability in connection
with any errors or omissions in such Plans, including the Final Plans.

                  2.       Selection of Contractor.

                           2.1.     Lessee's Selection. Lessee shall select the
general contractor of its choice to construct the Tenant Improvements, so long
as such general contractor is a California-licensed contractor reasonably
acceptable to Lessor with a minimum of five (5) years experience in tenant
improvement construction in industrial buildings, and such contractor is
familiar with the building and safety requirements and procedures of the City of
Irvine.

                           2.2.     Lessee's Contractor. The qualified
contractor selected by Lessee ("Lessee's Contractor") shall enter into a written
contract with Lessee for the construction of the Tenant Improvements. Lessor
shall have the right to review and reasonably approve in advance in writing the
provisions of the contract between Lessee and Lessee's Contractor as relate to
payment procedures, warranties, indemnities and insurance. Notwithstanding any
of the foregoing, however, Lessor reserves the right to review and reasonably
approve in advance Lessee's designated subcontractors for work affecting the
electrical, plumbing, HVAC, fire/life-safety and mechanical systems of the
Premises.

                           2.3.     Construction Standards. Lessee's Contractor
shall obtain all necessary permits for and construct the Tenant Improvements in
strict accordance with all applicable codes, ordinances, regulations, laws and
the Final Plans. The Tenant Improvements shall be constructed and completed
lien-free and in a diligent and workmanlike manner. As a condition to Lessee's
Contractor's commencement of work, Lessor shall receive from Lessee's Contractor
a certificate of insurance that names Lessor as an additional insured, from an
insurer meeting the requirements of Paragraph 8 of the Lease and Paragraph 57 of
Addendum No. 1, and evidencing liability, property damage and "course of
construction" coverages reasonably acceptable to Lessor, plus
statutorily-required workers compensation insurance as being in force through
the anticipated completion date of the Tenant Improvements, and providing that
Lessor will-receive at least thirty (30) days written notice of any amendments
to or cancellation of such coverage. Lessee's Contractor shall warrant to Lessee
and for the benefit of Lessor that the tenant improvements shall be free from
any defects in workmanship and

                                      -8-

<PAGE>

materials for a period of one (1) year from the date of completion of the Tenant
Improvements. Lessee's Contractor shall adhere to such governmental laws,
ordinances, rules and regulations as may now or in the future be reasonably
promulgated. Lessee shall permit Lessor or Lessor's representatives to observe
the on-going construction within the Premises to insure compliance with Lessee's
obligations under the Lease and this Exhibit A, so long as such observation does
not interfere with Lessee's Contractor's activities. Promptly following the
completion of the Tenant Improvements, Lessee shall obtain from Lessee's
Contractor or the Space Planner and deliver to Lessor "as-built" or a record set
(contained corrections made at the site) of plans for the Tenant Improvements in
form reasonably acceptable to Lessor.

                  3.       Tenant Improvement Allowance.

                           3.1.     Allowance Amount. Provided that Lessee shall
fully and timely perform all of its duties and obligations under the Lease, the
Addendum and this Exhibit A during the Original Term, Lessor shall grant to
Lessee a tenant improvement allowance in an amount not to exceed Seven Hundred
Twenty Thousand Dollars ($720,000) (the "T.I. Allowance"). The T.I. Allowance
shall be used by Lessee only for: (i) costs of construction of improvements that
are permanently affixed to the Premises and are included in the Final Plans; and
(ii) Lessee's out-of-pocket fees and costs incurred in connection with
architectural, engineering and space planning services pertaining to the Final
Plans, and for governmental permits. Lessee shall not be entitled to receive or
apply any unused portion of the T.I. Allowance for any other purpose, including
without limitation the payment of any Rent due under the Lease or the Addendum.
The improvements to be permanently affixed to the Premises as described in the
Final Plans are collectively referred herein as the "Tenant Improvements". The
T.I. Allowance shall be disbursed by Lessor in accordance with Paragraph 3.2
below.

                           3.2.     Payment. Provided that Lessee is not then in
Default under the Lease, the Addendum or this Exhibit A, the T.I. Allowance, or
such lesser amount as may be necessary to reimburse Lessee for its Tenant
Improvement costs, shall be paid by Lessor to Lessee in a lump sum payment equal
to the T.I. Allowance, or a lesser amount as may be necessary to reimburse
Lessee for the costs of its T.I. Improvements, following Lessee's delivery to
Lessor of all of the following: (i) a written statement from the Space Planner
and Lessee that the Tenant Improvements have been completed to Lessee's
satisfaction; (ii) copies of all invoices from Lessee's Contractor, all
subcontractors and all other suppliers of labor and material to the Tenant
Improvements, whether or not being paid for out of the T.I. Allowance,
pertaining to the work performed to date; (iii) copies of all applicable
governmental permits, approvals and signed-off inspection cards, for all work
completed for which payment is being sought; (iv) ink-executed mechanic's lien
releases in compliance with the applicable provisions of California Civil Code
Section 3262(d) from Lessee's Contractor and all other suppliers of labor and
material to the Tenant Improvements having mechanics lien rights, or other
documentary evidence satisfactory to Lessor that neither Lessee's Contractor nor
any subcontractor, laborer or materialman has filed or threatened to file a
mechanic's lien against the Premises, pertaining to the work performed to date;
and (v) such other information and documentation pertaining to the Tenant
Improvements as Lessor may reasonably request.

                           3.3.     Alternative - Progress Payments of T.I.
Allowance. In the alternative to the procedure set forth in Paragraph 3.2 above,
Lessee may request Lessor to make payments

                                      -9-

<PAGE>

to Lessee of the T.I. Allowance in the following manner: provided that on or
before the fifteenth (15th) day of each calendar month during the progress of
the work Lessee delivers to Lessor all of the information and documentation
referred to in clauses (ii) through (v) of Paragraph 3.2 and, in addition, a
statement prepared by Lessee's Contractor, in a form approved by Lessor, showing
by trade the schedule of percentage of completion of the Tenant Improvements,
and detailing the portion of the work completed and the portion not completed,
then, on or before the tenth (10th) business day of the following calendar
month, provided no mechanic's liens have been recorded or threatened to be
recorded, and provided further that Lessee is not then in Default of the Lease,
Lessor shall deliver a check(s) to Lessee in payment of the amounts so
requested, (but in no event shall the amount requested in any month be less than
$50,000, nor the aggregate amount paid exceed the amount of the T.I. Allowance),
less a ten percent (10%) retention ("Retention"), provided that all
documentation as set forth above has been provided to Lessor and has been
approved by Lessor in all respects, including without limitation with respect to
percentage of the work actually completed as compared to percentage of the T.I.
Allowance requested to be paid to Lessee. Such check(s) may be joint payment.
Each payment made pursuant to this Section 3.3 shall be subject to the
following:

                           3.3.1.   Percentage Completed. Under no circumstances
shall any portion of the T.I. Allowance paid (including the corresponding
Retention amount) exceed the percentage of the Tenant Improvements completed. By
way of example, if the aggregate cost of the work is $1,000,000 and twenty
percent (20%) of the Tenant Improvements has been completed on the date when the
request for payment is made by Lessee pursuant to Section 3.3 above, then the
aggregate amount of the T.I. Allowance disbursed shall not exceed $200,000 (less
the Retention); and

                           3.3.2.   Retention. The final Retention shall be paid
by Lessor to Lessee five (5) calendar days following the last day that any
mechanic's lien can lawfully be recorded against the Premises or the Project,
provided that Lessee delivers to Lessor properly ink-executed mechanic's lien
releases in compliance with California Civil Code Section 3262(d)(4), or other
documentary evidence satisfactory to Lessor that all mechanic's lien rights in
connection with Lessee's work have been finally and unconditionally waived, and
neither Lessee's Contractor nor any subcontractor or laborer or materialman
engaged by Lessee's Contractor has filed a mechanic's lien against the Project
and provided further that no suits are threatened against Lessor, Lessee,
Lessor's lender or the Project, or in the alternative, all liens shall be bonded
in accordance with the provisions of California Civil Code Section 3143.

                  4.       Construction by Lessee's Contractor. Except as
otherwise provided in the Lease or this Exhibit A, Lessor shall not have any
responsibility or obligations whatsoever for the design or construction of any
of the Tenant Improvements or for the timeliness in completion of the Tenant
Improvements, including deficiencies in the quality or adequacy of the labor or
material constructed in the Premises. Lessee understands and acknowledges that
the occurrence of the Commencement Date of the Original Term is not contingent
on the completion of the Tenant Improvements by Lessee's Contractor.

                                      -10-<PAGE>
                                                                   EXHIBIT 10.22

                                 LEASE AGREEMENT

1.       Parties. This Lease, dated for reference purposes only, June 3, 1996,
         is made by and between SOUTH BAY/EDENVALE ASSOCIATES, a California
         general partnership, ("Landlord"), and WESTERN DIGITAL CORPORATION, a
         Delaware corporation ("Tenant").

2.       Premises. Landlord hereby leases to Tenant and Tenant hereby leases
         from Landlord, upon the terms and conditions hereinafter set forth,
         those certain premises (the "Premises") presently known, as of the date
         of this Lease, as 5853 Rue Ferrari Drive, situated in the City of San
         Jose, County of Santa Clara, State of California, described as follows:
         for purposes of this Lease, the rentable square footage area of the
         Building shall be deemed to be approximately one hundred twenty-nine
         thousand six hundred (129,600) square feet located in that building
         commonly known as Building A (the "Building"), as shown cross-hatched
         on the site plan (the "Site Plan") attached hereto as Exhibit "A". The
         Building is located on a parcel legally described on Exhibit "B"
         attached hereto (the "Parcel") containing one other building, known as
         and referred to herein as "Building B" and a connecting corridor
         between Buildings "A" and "B", known as and referred to herein as
         "Building C." The total square footage of Building A and Building B is
         approximately two hundred eighty-six three hundred thirty square feet
         (286,330) (the "Buildings") as shown on the Site Plan. For purposes of
         calculating the Monthly Installment of Rent to be paid by Tenant for
         use of the Premises and calculating Tenant's Pro Rata Share (as defined
         in Section 7B below) fifty percent (50%) of the rentable square footage
         of Building C (which is equal to approximately one thousand three
         hundred twenty-five (1,325) square feet) has been added to the
         approximate square footage of Building A, resulting in a total rentable
         square footage of one hundred thirty thousand nine hundred twenty-five
         (130,925) square feet for the Premises. In the event Landlord
         subdivides the Parcel in the future into two (2) or more legal parcels,
         the term "Parcel" shall thereafter refer to the legal parcel on which
         the Premises are located, provided, any such subdivision shall not
         impair or reduce Tenant's parking rights under this Lease or access to
         the Premises. Landlord shall not be required to make any alterations,
         additions or improvements to the Premises except as set forth in this
         Lease, and the Premises shall be leased to Tenant in an "as-is"
         condition except as specifically provided in this Lease. Tenant shall
         construct all improvements to the Premises in accordance with Exhibit
         "C".

3.       Term. The term of this Lease ("Lease Term") shall be for ten (10)
         years, commencing on August 1, 1996 (the "Commencement Date") and
         ending on July 31, 2006, unless sooner terminated pursuant to any
         provision hereof. If for any reason Landlord has not delivered
         possession of the Premises to Tenant on or before June 15, 1996, then
         Tenant shall have the option, exercisable by written notice given to
         Landlord within ten (10) days thereafter, to terminate this Lease. Upon
         exercising such option, all rights and obligations of Landlord and
         Tenant under this Lease shall terminate ab initio, and Landlord shall
         promptly refund to Tenant all prepaid rent paid by Tenant to Landlord
         in connection with this Lease. Notwithstanding any earlier completion
         of construction by Tenant, Tenant shall not be obligated to pay the
         Monthly Installment of rent, and Common Area Charges until the
         Commencement Date.

4.       Rent.

         A.       Time of Payment. Tenant shall pay to Landlord as rent for the
                  Premises the sum specified in Paragraph 4.B below (the
                  "Monthly Installment") each month in advance on the first day
                  of each calendar month, without deduction or offset, prior
                  notice or demand, commencing on the Commencement Date and
                  continuing through the term of this Lease,

                                      -1-

<PAGE>

         together with such additional rents as are payable by Tenant to
         Landlord under the terms of this Lease. The Monthly Installment for any
         period during the Lease Term which period is less than one (1) full
         month shall be a prorata portion of the Monthly Installment based on
         the actual number of days in such month.

B.       Monthly Installment.

         (1) Initial Monthly Installment. The initial Monthly Installment of
         rent payable each month during the period from August 1, 1996 through
         and including July 31, 1998, shall be the sum of One Hundred Eight
         Thousand Thirteen and no/100ths Dollars ($108,013.00) per month.

         (2) Rental Adjustments. During the Lease Term, the Monthly Installment
         of rent shall be adjusted as follows:

         Upon commencement of the twenty-fifty (25th); forty-ninth (49th);
         seventy-third (73rd); and ninety-seventh (97th) months of the Lease
         Term ("Rental Adjustment Periods"), the Monthly Installment of rent
         shall be adjusted by multiplying the Monthly Installment of rent
         payable during the period immediately prior to the Rental Adjustment
         Period by one hundred eight and sixteen hundredths percent (108.16%),
         which results in the following rental schedule:

<TABLE>
<CAPTION>
Months of Lease Term                                Monthly Installment
--------------------                                -------------------
<S>                                                 <C>
       01 - 24                                      $108,013.00 per month
       25 - 48                                      $116,827.00 per month
       49 - 72                                      $126,360.00 per month
       73 - 96                                      $136,671.00 per month
       97 - 120                                     $147,823.00 per month
</TABLE>

C.       Late Charge. Tenant acknowledges that late payment by Tenant to
         Landlord of rent and other sums due hereunder will cause Landlord to
         incur costs not contemplated by this Lease, the exact amount of which
         will be extremely difficult to ascertain. Such costs include, but are
         not limited to, processing and accounting charges, and late charges
         which may be imposed on Landlord by the terms of any mortgage or deed
         of trust covering the Premises. Accordingly, if any installment of rent
         or any other sum due from Tenant shall not be received by Landlord
         within ten (10) days after such amount shall be due, Tenant shall pay
         to Landlord, as additional rent, a late charge equal to four percent
         (4%) of such overdue amount. The parties hereby agree that such late
         charge represents a fair and reasonable estimate of the costs Landlord
         will incur by reason of late payment by Tenant. Acceptance of such late
         charge by Landlord shall in no event constitute a waiver of Tenant's
         default with respect to such overdue amount, nor prevent Landlord from
         exercising any of its other rights and remedies granted hereunder.

D.       Additional Rent. All taxes, insurance premiums, Common Area Charges,
         late charges, costs and expenses which Tenant is required to pay
         hereunder, together with all interest and penalties that may accrue
         thereon in the event of Tenant's failure to pay such amounts, shall be
         deemed to be additional rent ("Additional Rent") and shall be paid in
         addition to the Monthly Installment of rent.

                                      -2-
<PAGE>

         E.       Place of Payment. Rent shall be payable in lawful money of the
                  United States of America to Landlord at 511 Division Street,
                  Campbell CA, or to such other person(s) or at such other
                  place(s) as Landlord may designate in writing.

         F.       Advance Payment. Concurrently with the execution of this
                  Lease, Tenant shall pay to Landlord the sum of One Hundred
                  Eight Thousand Thirteen and no/100ths Dollars ($108,013.00) to
                  be applied to the Monthly Installment of rent first accruing
                  under this Lease.

5.       Security Deposit. [INTENTIONALLY DELETED.]

6.       Use of Premises. Tenant shall use the Premises only in conformance with
         governmental laws, regulations, rules and ordinances applicable to
         Tenant's business operations at and use of the Premises for the purpose
         of general office, marketing, sales, warehousing, distribution, light
         industrial manufacturing and assembly, research and development of
         electronics products, and any other related and legally permitted uses,
         and for no other purpose. Tenant shall indemnify, protect, defend, and
         hold Landlord harmless against any loss, expense, damage, attorneys'
         fees or liability arising solely out of the failure of Tenant to comply
         with any applicable law. Tenant shall not commit or suffer to be
         committed, any waste upon the Premises, or any nuisance, or other acts
         or things which may disturb the quiet enjoyment of any other tenant in
         the buildings adjacent to the Premises, or allow any sale by auction
         upon the Premises (except at the expiration or earlier termination of
         the Lease, Tenant may auction equipment in place from the Premises), or
         allow the Premises to be used for any unlawful purpose, or place any
         loads upon the floor, walls or ceiling which endanger the structure, or
         place any harmful liquids in the drainage system of the Building. No
         waste materials or refuse shall be dumped upon or permitted to remain
         upon any part of the Premises outside of the Building proper, except in
         trash containers placed inside exterior enclosures designated for that
         purpose by Landlord. No materials, supplies, equipment, finished
         products or semi-finished products, raw materials or articles of any
         nature shall be stored upon or permitted to remain on any portion of
         the Premises outside of the Building proper, except that Tenant may
         store its personal property in the storage areas or in the loading dock
         areas (comprising part of the Building A Exclusive Areas described in
         Paragraph 11A. below) exclusively reserved for Tenant's use and
         identified on the Site Plan attached hereto as Exhibit "A." Such
         storage shall be in compliance with all laws, rules, and regulations
         applicable thereto. Tenant's use of the Premises shall be subject to
         with the terms of Paragraph 39 below.

7.       Taxes and Assessments.

         A.       Tenant's Property. Tenant shall pay before delinquency any and
                  all taxes and assessments, license fees and public charges
                  levied, assessed or imposed upon or against Tenant's fixtures,
                  equipment, furnishings, furniture, appliances and personal
                  property installed or located on or within the Premises.
                  Tenant shall cause said fixtures, equipment, furnishings,
                  furniture, appliances and personal property to be assessed and
                  billed separately from the real property of Landlord. If any
                  of Tenant's said personal property shall be assessed with
                  Landlord's real property, Tenant shall pay Landlord the taxes
                  attributable to Tenant within thirty (30) days after receipt
                  of a written statement from Landlord setting forth the taxes
                  applicable to Tenant's property, together with a copy of
                  Landlord's tax bill therefor.

                                      -3-

<PAGE>

         B.       Property Taxes. Tenant shall pay, as additional rent, its Pro
                  Rata Share (as defined below) of all Property Taxes levied or
                  assessed with respect to the land comprising the Parcel and
                  with respect to all buildings and improvements located on the
                  Parcel which become due or accrue during die term of this
                  Lease. Provided that Landlord bills Tenant at least thirty
                  (30) days prior to the delinquency date of such Property
                  Taxes, Tenant shall pay such Property Taxes to Landlord at
                  least ten (10) days prior to the delinquency date, and if
                  Tenant fails to do so, Tenant shall reimburse Landlord, on
                  demand, for all interest, late fees and penalties that the
                  taxing authority charges Landlord. If Landlord bills Tenant
                  less than thirty (30) days prior to the delinquency date of
                  such Property Taxes, Tenant shall pay such Property Taxes to
                  Landlord within thirty (30) days of the date of delivery of
                  such bill to Tenant. Landlord's bill to Tenant shall include a
                  copy of Landlord's tax bill from the taxing authority. In the
                  event Landlord's mortgagee requires an impound for Property
                  Taxes, then on the first day of each month during die Lease
                  Term (commencing not less than thirty (30) days after written
                  notice to Tenant that such impound account is so required),
                  Tenant shall pay Landlord one twelfth (1/12) of its annual
                  share of such Property Taxes. - Tenant's liability hereunder
                  shall be prorated to reflect the Commencement Date and
                  termination date of this Lease. If the amount of any such
                  impound installment payments paid by Tenant exceeds Tenant's
                  actual share of such Property Taxes after payment to the
                  applicable taxing authority (exclusive of any interest or
                  penalties arising from late payment) such excess shall be
                  refunded to Tenant within thirty (30) days after the payment
                  is made to the taxing authority.

                  As used in this Lease, the term "Tenant's Pro Rata Share"
                  shall mean a fraction, expressed as a percentage, the
                  numerator of which is the number of square feet of floor space
                  contained in the Premises, inclusive of fifty percent of the
                  square footage of Building C (130,925 square feet), and the
                  denominator of which is the number of square feet of floor
                  space contained in all of the Buildings (286,330 square feet)
                  located on the Parcel. As of the Commencement Date, Tenant's
                  Pro Rata Share is forty-five and seventy-three hundredths
                  percent (45.73%).

                  For the purpose of this Lease, "Property Taxes" means and
                  includes all taxes, assessments (including, but not limited
                  to, assessments for public improvements or benefits), taxes
                  based on vehicles, utilizing parking areas, taxes based or
                  measured by the rent paid, payable or received under this
                  Lease, taxes based upon, allocable to, or measured by the area
                  of the Premises or the Buildings or the Parcel; taxes upon or
                  with respect to the possession, leasing, operation,
                  management, maintenance, alteration or repair of the Premises
                  or any portion thereof; gross receipts tax, sales and/or use
                  tax, water tax, sewer tax, employee tax, occupational license
                  tax imposed upon Landlord or Tenant with respect to the
                  Premises, any tax upon this transaction or any document to
                  which Tenant is a party creating or transferring an interest
                  or an estate in the Premises, taxes on the value, use, or
                  occupancy of the Premises, the Buildings and/or the Parcel,
                  Environmental Surcharges, and all other governmental
                  impositions and charges of every kind and nature whatsoever,
                  whether or not customary or within the contemplation of the
                  parties hereto and regardless of whether the same shall be
                  extraordinary or ordinary, general or special, unforeseen or
                  foreseen, or similar or dissimilar to any of the foregoing
                  which, at any time during the Lease Term, shall be applicable
                  to the Premises, the Buildings and/or the Parcel or assessed,
                  levied or imposed upon the Premises, the Buildings and/or the
                  Parcel, or become due and payable and a lien or charge upon
                  the Premises, the Buildings and/or the Parcel, or any part
                  thereof, under or by virtue of any present or future laws,
                  statutes, ordinances,

                                     -4-

<PAGE>

                  regulations or other requirements of any governmental
                  authority whatsoever. The term "Environmental Surcharges"
                  shall mean and include any and all expenses, taxes, charges or
                  penalties imposed by the Federal Department of Energy, the
                  Federal Environmental protection Agency, the Federal Clean Air
                  Act, or any regulations promulgated thereunder or any other
                  local, state or federal governmental agency or entity now or
                  hereafter vested with the power to impose taxes, assessments,
                  or other types of surcharges as a means of controlling or
                  abating environmental pollution or the use of energy. The term
                  "Property Taxes" shall not include (a) any federal, state or
                  local income, franchise, estate, gift or inheritance tax, (b)
                  any transfer taxes, recording fees, or monument preservation
                  fees, (c) any license or similar fees imposed to permit the
                  conduct of Landlord's business, (d) that portion of any tax,
                  fee or encumbrance that would otherwise come within the
                  definition of "Property Taxes" but which is assessed or
                  imposed with respect to the operations, activities of any
                  tenant or occupant other than Tenant, (e) fuel taxes on
                  Landlord's vehicles, sales taxes on Landlord's purchases,
                  withholding taxes for Landlord's employees and Landlord's
                  business license, (f) any tax imposed on Landlord as a result
                  of it financing or refinancing the Parcel, or any portion
                  thereof, or as a result of Landlord's secured lender
                  foreclosing on the Parcel (except Property Taxes shall include
                  any increased taxes resulting from a change of ownership
                  following any foreclosure of the Parcel), or (g) any interest
                  or penalties imposed as a result of Landlord's failure to
                  comply with applicable law, including, without limitation,
                  Landlord's failure to pay its taxes timely, unless such
                  failure arises from Tenant's acts, negligence, willful
                  misconduct or breach of this Lease. The term "Environmental
                  Surcharge" shall not include any expense, tax, penalty or
                  other charges imposed as a result of (a) any environmental
                  contamination not caused by Tenant or its Agents, (b) the
                  operations or activities of any tenant or occupant other than
                  Tenant, or (c) Landlord's failure to comply with applicable
                  law, unless such failure arises from Tenant's acts,
                  negligence, willful misconduct or breach of this Lease.

8.       Insurance.

         A.       Indemnity. Tenant agrees to indemnify, protect and defend
                  Landlord against and hold Landlord harmless from any and all
                  claims, causes of action, judgments, obligations or
                  liabilities, and all reasonable expenses incurred in
                  investigating or resisting the same (including reasonable
                  attorneys' fees), on account of, or arising out of, the
                  operation, maintenance, use or occupancy of the Premises and
                  all areas appurtenant thereto by Tenant or Tenant's agents,
                  employees, contractors, guests, invitees or licensees. This
                  Lease is made on the express understanding that Landlord shall
                  not be liable for, or suffer loss by reason of, injury to
                  person or property, from whatever cause (except for negligence
                  or willful misconduct of Landlord or its Agents), which in any
                  way may be connected with the operation, use or occupancy of
                  the Premises by Tenant or Tenant's agents, employees,
                  contractors, guests, invitees or licensees, specifically
                  including, without limitation, any liability for injury to the
                  person or property of Tenant, its agents, officers, employees,
                  licensees and invitees. The obligations of Tenant under this
                  Paragraph 8.A shall survive the expiration or earlier
                  termination of this Lease.

         B.       Liability Insurance. Tenant shall, at Tenant's expense, obtain
                  and keep in force during the term of this Lease a policy of
                  commercial general liability insurance insuring Landlord and
                  Tenant against claims and liabilities arising out of the
                  operation, use, or occupancy of the Premises and all areas
                  appurtenant thereto, including parking areas. Such insurance
                  shall be in an amount of not less than Three Million Dollars
                  ($3,000,000.00) for bodily injury

                                     -5-

<PAGE>

                  or death as a result of any one occurrence and Five Hundred
                  Thousand Dollars ($500,000.00) for damage to property as a
                  result of any one occurrence. The insurance shall be with
                  companies rated A X or better by A. M. Best insurance rating.
                  Tenant shall deliver to Landlord, prior to possession, and at
                  least thirty (30) days prior to the expiration thereof, a
                  certificate of insurance evidencing the existence of the
                  policy required hereunder and such certificate shall certify
                  that the policy (1) names Landlord as an additional insured,
                  (2) shall not be canceled or the coverage or amount of
                  coverage reduced without thirty (30) days prior written notice
                  to Landlord, (3) insures performance of the indemnity set
                  forth in Paragraph 8.A above, (4) the coverage is primary and
                  any coverage by Landlord is in excess thereto and (5) contains
                  a cross-liability endorsement or its equivalent (i.e. a
                  separation of insured provision in the basic comprehensive
                  liability insurance policy). Landlord may maintain a policy or
                  policies of comprehensive general liability insurance (or
                  commercial general liability insurance) insuring Landlord (and
                  such others as are designated by Landlord), against liability
                  for personal injury, bodily injury, death and damage to
                  property occurring or resulting from an occurrence in, on or
                  about the Premises or the Common Area, with such limits of
                  coverage as Landlord may from time to time determine are
                  reasonably necessary for its protection. The cost of any such
                  liability insurance maintained by Landlord shall be a Common
                  Area Charge and Tenant shall pay, as additional rent, its
                  share of such cost to Landlord as provided in Paragraph 12
                  below.

         C.       Property Insurance. Landlord shall obtain and keep in force
                  during the term of this Lease a policy or policies of
                  insurance covering loss or damage to the Premises and the
                  Buildings, in the amount of the full replacement value
                  thereof, providing protection against those perils included
                  within the classification of "all risk" insurance, plus a
                  policy of rental income insurance in the amount of one hundred
                  percent (100%) of twelve (12) months rent (including, without
                  limitation, sums payable as Additional Rent), plus, at
                  Landlord's option, flood insurance and earthquake insurance,
                  and any other coverages which may be required from time to
                  time by Landlord's mortgagee. Landlord shall furnish to
                  Tenant, within twenty (20) days after written request by
                  Tenant, a certificate from Landlord's insurance carrier
                  evidencing that the insurance coverage required to be carried
                  by Landlord is in effect. Tenant shall have no interest in nor
                  any right to the proceeds of any insurance procured by
                  Landlord on the Premises except as specifically provided in
                  this Lease.

                  Provided that Landlord bills Tenant at least thirty (30) days
                  prior to the due date of the premium for such insurance
                  procured and maintained by Landlord, Tenant shall pay Tenant's
                  Pro Rata Share of such premium to Landlord at least ten (10)
                  days prior to the due date, and if Tenant fails to do so,
                  Tenant shall reimburse Landlord, on demand, for all interest,
                  late fees and penalties that the insurance carrier charges
                  Landlord. If Landlord bills Tenant less than thirty (30) days
                  prior to the due date of such insurance premium, Tenant shall
                  pay Tenant's Pro Rata Share of such premium to Landlord within
                  thirty (30) days of the date of delivery of such bill to
                  Tenant. Landlord's bill to Tenant shall include a copy of the
                  insurance carrier's invoice to Landlord. In the event
                  Landlord's mortgagee requires an impound for insurance
                  premiums, then on the first day of each month during the Lease
                  Term (commencing not less than thirty (30) days after written
                  notice to Tenant that such impound account is so required),
                  Tenant shall pay Landlord one twelfth (1/12) of its annual Pro
                  Rata Share of such insurance premiums. If the amount of any
                  such impound installment payments paid by Tenant exceeds
                  Tenant's actual share of such insurance premiums after payment
                  to Landlord's insurer (exclusive of any penalties for

                                      -6-

<PAGE>

                  late payment) such excess shall be refunded to Tenant within
                  thirty (30) days after the payment is made to Landlord's
                  insurer.

                  Tenant acknowledges that such insurance procured by Landlord
                  shall contain a commercially reasonable deductible which
                  reduces Tenant's cost for such insurance and, in the event of
                  loss or damage, Tenant shall be required to pay to Landlord
                  the amount of such deductible (which, exclusive of the
                  deductible applicable to the earthquake insurance coverage,
                  shall not exceed Twenty Thousand Dollars ($20,000) without
                  Tenant's prior written approval). Tenant further acknowledges
                  that the insurance carried by Landlord does not cover, and
                  Landlord has no obligation to insure, the improvements
                  installed by Tenant pursuant to Exhibit "C", or any
                  alterations, additions or improvements thereto.

         D.       Tenant's Insurance; Release of Landlord. Tenant acknowledges
                  that the insurance to be maintained by Landlord on the
                  Premises pursuant to Subparagraph C above will not insure any
                  of Tenant's property. Accordingly, Tenant, at Tenant's own
                  expense, shall maintain in full force and effect on all of its
                  fixtures, equipment, leasehold improvements and personal
                  property in the Premises, a policy of "All Risk" coverage
                  insurance to the extent of at least ninety percent (90%) of
                  their insurable value. The foregoing notwithstanding, Tenant
                  may elect to self-insure Tenant's fixtures, equipment and
                  personal property (but not leasehold improvements). Tenant
                  hereby releases Landlord, and its partners, officers, agents
                  employees and servants from any and all claims, demands,
                  losses, expenses or injuries to the Premises or to the
                  furnishings, fixtures, equipment, inventory or other personal
                  property of Tenant in, about, or upon the Premises, which are
                  caused by perils, events or happenings where the same are
                  covered by the insurance required by this Lease or which are
                  the subject of insurance carried by Tenant and in force at the
                  time of such loss (and then only to the extent of such
                  insurance proceeds payable thereunder). Tenant shall procure
                  an appropriate clause in, or an endorsement to, all policies
                  required by this Lease or any other insurance policy
                  maintained by Tenant with respect to the Premises or Tenant's
                  occupancy thereof, pursuant to which the insurance company or
                  companies waive subrogation or consent to a waiver of a right
                  of recovery against Landlord.

         E.       Waiver of Subrogation. Notwithstanding any provision of this
                  Lease to the contrary, Landlord and Tenant each hereby waive,
                  for themselves and their respective insurers, any and all
                  rights of recovery against the other for any loss or damage
                  occasioned to such waiving party or its property or the
                  property of others under its control (and whether or not such
                  loss or damage is due to the neglect or fault of a party) to
                  the extent such loss or damage is insured, or is required
                  hereunder to be insured, against under any casualty insurance
                  policy existing for the benefit of the respective parties at
                  the time of such loss or damage. Each party shall obtain any
                  special endorsements, if required by their insurer, to
                  evidence compliance with the aforementioned waiver.

9.       Utilities. Tenant shall pay for all water, gas, light, heat, power,
electricity, telephone, trash pickup, sewer charges and all other services
supplied to or consumed on the Premises and separately metered to or chargeable
exclusively to the Premises, and all taxes and surcharges thereon. In addition,
the cost of any utility services supplied to the Common Area or not separately
metered to the Premises shall be a Common Area Charge and Tenant shall pay its
share of such costs to Landlord as provided in Paragraph 12 below. Landlord
shall promptly install a separate water meter for the Premises, at Landlord's
sole cost and expense. If, after the Commencement Date, water is not separately
metered to the Premises, then Tenant shall pay a reasonable proportion (as
reasonably determined by Landlord) of the jointly metered water

                                     -7-
<PAGE>

charges, as a Common Area Charge, until such time as Landlord separately meters
the Premises as provided for hereinabove.

         The parties hereto acknowledge that heating, ventilation and air
conditioning (HVAC) serving Building C is provided mostly through the Building
and power and lighting serving Building C is provided through Building A. The
parties hereto intend and agree that Tenant shall pay approximately one-half
(1/2) of the cost of such utilities serving Building C and that the tenant of
Building B (or Landlord if Building B is not leased or such tenant of Building B
is not obligated to pay its share of such utilities) shall pay the remaining
approximately one-half (1/2)of the cost of such utilities. In order to equalize
the sharing of such utilities' cost applicable to Building C, the parties hereto
agree that not later than July 15, 1996, Landlord shall cause, at Landlord's
sole expense, a consultant (selected by Landlord and reasonably approved by
Tenant and the tenant of Building B) to survey the utilities serving Building C
and the costs of providing the same. Based upon such survey, the consultant will
determine the amount that Tenant and the tenant of Building B (or Landlord if
Building B is not leased or such tenant of Building B is not obligated to pay
its share of such utilities) shall be obligated to pay, respectively, in order
that each of them bear during each year of the Lease Term (prorated for any
partial calendar year) approximately fifty percent (50%) of the costs of such
utilities serving Building C. If, based on such survey (or subsequent survey as
described below), it is determined that Tenant is bearing less than fifty
percent (50%) of the cost of such utilities serving Building C, then Tenant
shall pay to the tenant of Building B (or to Landlord, as the case may be), an
amount equal to that which, when added to the portion of the utilities costs
estimated by the consultant to be borne by Tenant during the preceding calendar
year (prorated for any partial year), shall equal fifty percent (50%) of the
costs of the utilities serving Building C. If, based on such survey (or
subsequent survey as described below), it is determined that Tenant is bearing
more than fifty percent (50%) of the cost of such utilities serving Building C,
then the tenant of Building B (or Landlord if Building B is not leased or the
tenant of Building B is not obligated to pay its share of such Building C
utilities) shall pay to Tenant an amount equal to that which, when added to the
portion of the utilities costs estimated by the consultant to be borne during
the preceding calendar year (prorated for any partial year) by the tenant of
Building B or Landlord, as the case may be, shall equal fifty percent (50%) of
the costs of the utilities serving Building C. Payment shall be made within
thirty (30) days after receipt by Tenant (if payment is owed by Tenant) or by
the tenant of Building B or Landlord, as the case may be, of an invoice setting
forth the amount due with respect to the preceding calendar year (or portion
thereof) within the Lease Term. Consistent with the foregoing, the parties
hereto agree that Tenant's obligation to equalize the costs of utilities serving
Building C for calendar year 1996 shall only be applicable to the period of
August 1, 1996 through December 31, 1996. The obligation to equalize the costs
of utilities serving Building C shall survive the expiration or earlier
termination of this Lease but only with respect to utilities consumed in
Building C within the Lease Term. It is contemplated hereunder that Tenant and
the tenant of Building B will be the parties responsible for equalizing the
amount of the utilities costs applicable to Building C and that Landlord shall
not be involved in such equalization process or obligated to pay for any portion
of the utilities serving Building C unless there is no tenant of Building B at
the time such equalization is applicable or the tenant of Building B is not
obligated to bear its fifty percent share of the cost of the Building C
utilities.

         At any time during the Lease Term, but in no event more than once in
any calendar year, Tenant, Landlord or the tenant of Building B shall have the
right to retain a consultant selected by it and reasonably approved by the
others to undertake a survey of the utilities serving Building C and the costs
of providing the same. Based upon such completed survey, the sharing of costs of
utilities serving Building C shall be readjusted so that Tenant and the tenant
of Building B (or Landlord if Building B is not leased or the tenant of Building
B is not obligated to pay its share of such Building C utilities) each pay fifty
percent (50%) of the costs of utilities serving Building C.

                                     -8-
<PAGE>

         Set forth below is an illustrative example of the manner in which the
costs of utilities serving Building C are to be equalized. Suppose that the
initial consultant determines that the costs of HVAC service to Building C
(which is read on the meter in Building B) equals Six Hundred Dollars ($600) per
month and the costs of power and lighting service to Building C (which is read
on the meter in Building A) equals Three Hundred Dollars ($300) per month. Based
on the foregoing, the tenant of Building B is paying Six Hundred Dollars ($600)
of the Nine Hundred Dollars ($900) of Building C utilities costs. Since the
tenant of Building B should only be paving fifty percent (50%) of the total
Building C utilities costs (i.e., $450), the Tenant should reimburse the tenant
of Building B, not later than January 30 of the applicable year, an amount equal
to One Hundred Fifty Dollars ($150) per month (or One Thousand Eight Hundred
Dollars ($1,800) per year (prorated for any partial year)) to equalize the
payment of Building C utilities costs.

         Tenant shall store its waste either inside the Premises or in its own
dumpsters located within the now existing outside trash enclosures. Tenant shall
not at any time store, place or maintain any garbage, trash, rubbish, other
refuse or Tenant's personal property in any area of the Common Areas or exterior
of the Premises (except in the outside dumpsters and in any storage areas which
have been designated for Tenant's exclusive use and are identified on Exhibit A
attached hereto). Tenant at its sole expense shall be responsible to maintain
and keep the designated trash enclosures and Common Areas free of garbage,
trash, rubbish and other refuse of Tenant or Tenant's personal property.

10.      Repairs and Maintenance.

         A.       Landlord's Repairs. Subject to provisions of Paragraph 16,
                  Landlord shall keep and maintain the structural elements of
                  the Building in good order and repair. Tenant shall not be
                  required to reimburse Landlord for the cost of maintenance and
                  repairs of the structural elements of the Building unless such
                  maintenance or repair is required because of the negligence or
                  willful misconduct of Tenant or its employees, agents or
                  invitees. As used herein, the term "structural elements of the
                  building" shall mean and be limited to the foundation,
                  footings, floor slab (but not flooring), structural walls, and
                  roof structure (but not roofing or roof membrane). Landlord
                  shall have no obligation to make repairs to the structural
                  elements of the Building under this Subparagraph until a
                  reasonable time after receipt of written notice from Tenant of
                  the need for such repairs. However, in the event of
                  circumstances posing imminent risk of personal injury or
                  property damage, Tenant, upon notice to Landlord, shall have
                  the right, but not the obligation, to make such repairs and
                  Landlord shall reimburse Tenant the reasonable cost thereof
                  within thirty (30) days after presentation of Tenant's
                  invoice.

                  As provided in Paragraph 11, Landlord shall keep and maintain
                  the driveways, parking areas, walkways, landscaped areas and
                  the roofing and roof membrane of Building "C" ("Common Area")
                  in good order and repair. Tenant shall reimburse Landlord, as
                  additional rent, within thirty (30) days after receipt of
                  billing, its Pro Rata Share of the cost of such repairs and
                  maintenance of the Common Areas, which are the obligation of
                  Landlord hereunder.

         B.       Tenant's Repairs. Except as expressly provided in Subparagraph
                  A above and subject to Paragraphs 16 and 17 below, Tenant
                  shall, at its sole cost, keep and maintain the entire Premises
                  and every part thereof and the Building A Exclusive Common
                  Area (defined in

                                     -9-
<PAGE>

                  Paragraph 11.A below) in the same condition as delivered to
                  Tenant by Landlord, ordinary wear and tear excepted, including
                  without limitation the exterior walls, roof, roof membrane,
                  the windows, window frames, plate glass, glazing, skylights,
                  truck doors, doors and all door hardware, the walls and
                  partitions, and the electrical, plumbing, lighting, heating,
                  ventilating and air conditioning systems and equipment. The
                  term "repair" shall include replacements, restorations and/or
                  renewals when necessary as well as painting. Tenant's
                  obligation shall extend to all alterations, additions and
                  improvements to the Premises and the Building A Exclusive
                  Common Area, and all fixtures and appurtenances therein and
                  thereto. Landlord hereby assigns to Tenant all of its rights
                  and interests under all manufacturer and installation
                  warranties covering the heating, ventilation and air
                  conditioning ("HVAC") equipment or other fixtures or personal
                  property within the Premises and agrees to reasonably
                  cooperate, at no cost to Landlord, with Tenant in enforcing
                  such warranties.

                  Should Tenant fail to commence making repairs required of
                  Tenant hereunder forthwith upon thirty (30) days notice from
                  Landlord or should Tenant fail thereafter to diligently
                  complete the repairs, Landlord, in addition to all other
                  remedies available hereunder or by law and without waiving any
                  alternative remedies, may make the same, and in that event,
                  Tenant shall reimburse Landlord as additional rent for the
                  cost of such maintenance or repairs within thirty (30) days of
                  written demand by Landlord. In the event Tenant is required to
                  effect repairs or replacements to the Premises which are
                  capitalized under generally accepted accounting principles,
                  Tenant shall submit the estimated cost thereof to Landlord for
                  Landlord's reasonable approval prior to undertaking such
                  repair or replacement. Following approval by Landlord of the
                  cost, and completion of the work by Tenant, Landlord shall
                  reimburse Tenant, within thirty (30) days after receipt of
                  Tenant's invoice, that portion of the capitalized cost which
                  is determined by multiplying the capitalized cost by a
                  fraction, the numerator of which is the estimated useful life
                  (in months) of such repair or replacement reduced by the then
                  remaining Term of the Lease, and the denominator of which is
                  the estimated useful life of such repair or replacement.

                  Landlord shall have no maintenance or repair obligations
                  whatsoever with respect to the Premises or the Building A
                  Exclusive Area except as expressly provided in Paragraphs 10.A
                  and 11. Tenant hereby expressly waives the provisions of
                  Subsection 1 of Section 1932 and Sections 1941 and 1942 of the
                  Civil Code of California and all rights to make repairs at the
                  expense of Landlord as provided in Section 1942 of said Civil
                  Code. There shall be no allowance to Tenant for diminution of
                  rental value, and no liability on the part of Landlord by
                  reason of inconvenience, annoyance or injury to business
                  arising from the making of any repairs, alterations,
                  decorations, additions or improvements in or to any portion of
                  the Premises, the Building, the Common Area or the Building A
                  Exclusive Areas (or any of the areas used in connection with
                  the operation thereof, or in or to any fixtures, appurtenances
                  or equipment), or by reason of the negligence of Tenant or any
                  other tenant or occupant of the Parcel. Landlord shall use
                  reasonable efforts to minimize the disruption to Tenant's
                  business resulting from such activities by Landlord or its
                  Agents. In no event shall Landlord be responsible for any
                  consequential damages arising or alleged to have arisen from
                  any of the foregoing matters. Tenant hereby agrees that
                  Landlord shall not be liable for injury to Tenant's business
                  or any loss of income therefrom or for damage to the goods,
                  wares, merchandise or other property of Tenant, Tenant's
                  employees, invitees, customers, or any other person in or
                  about the Premises, the Building, or the Common Area, nor
                  shall Landlord be liable for injury to the person of

                                      -10-
<PAGE>

                  Tenant, Tenant's employees, agents or contractors 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, sprinklers,
                  wires, appliances, plumbing, air conditioning or lighting
                  fixtures, or from any other cause, whether the said damage or
                  injury results from any other cause, whether the said damage
                  or injury results from conditions arising upon the Premises or
                  upon other portions of the Building, or from other sources or
                  places and regardless of whether the cause of such damage or
                  injury or the means of repairing the same is inaccessible to
                  Tenant. Landlord shall not be liable for any damages arising
                  from any act or neglect of any other tenant, if any, of the
                  Building or the Parcel. However, the provisions of this
                  subparagraph 10.B shall not apply in the event of the
                  negligence or willful misconduct of Landlord or its Agents,
                  but in no event shall Landlord be liable for consequential
                  damages, including without limitation, lost profits or loss of
                  business.

11.      Common Area.

         A.       Definitions. The term "Common Areas" shall mean all areas and
                  facilities outside the Premises and within the exterior
                  boundary line of the Parcel (excluding, however, Building B,
                  those areas designated as Building A Exclusive Areas on
                  Exhibit "A" attached hereto and made a part hereof, and those
                  areas designated as Building B Exclusive Areas on Exhibit "A"
                  attached hereto) that are provided and designated by Landlord
                  from time to time for the general non-exclusive use of
                  Landlord, Tenant, and of other tenants and other authorized
                  users of the Buildings and the respective employees,
                  suppliers, shippers, customers and invitees of the
                  aforementioned parties, including, but not limited to parking
                  areas (excluding those parking spaces comprising part of the
                  Building A Exclusive Areas or Building B Exclusive Areas),
                  loading and unloading areas, trash areas, roadways, sidewalk,
                  walkways, parkways, ramps, driveways, landscaped areas and
                  decorative walls. Common Areas shall also include all of
                  Building C. Area 18 designated on the Site Plan attached
                  hereto as Exhibit "A" shall also comprise part of the Common
                  Area and shall be for the shared use of Landlord, Tenant and
                  the tenant of Building B.

                  The term "Project" shall mean the Premises, the Buildings, the
                  Parcel, the Common Areas and all improvements now or hereafter
                  situated therein or thereon.

         B.       Tenant's Rights. From and after the Commencement Date,
                  Landlord hereby grants to Tenant, for the benefit of Tenant
                  and its employees, agents, contractors, suppliers, shippers,
                  customers and invitees, during the term of the Lease, the
                  non-exclusive right to use, in common with others entitled to
                  such use, the Common Areas as they exist from time to time,
                  subject to any rights, powers, and privileges expressly
                  reserved by Landlord under the terms hereof. Under no
                  circumstances shall the right herein granted to use the Common
                  Areas be deemed to include the right to store any property,
                  temporarily or permanently, in the Common Areas, excluding
                  vehicle parking and temporary storage of property incidental
                  to Tenant's use of loading and unloading areas. In the event
                  that any unauthorized storage shall occur, the Landlord shall
                  have the right, with notice (except in the event of an
                  emergency, in which event notice to Tenant need not be given),
                  in addition to such other rights and remedies that it may
                  have, to remove the property and charge the cost to Tenant,
                  which cost shall be immediately payable upon demand by
                  Landlord.

                                      -11-
<PAGE>

         C.       Exclusive Area Rights. Tenant shall have the exclusive right
                  to use the Building A Exclusive Areas (designated as Area 19
                  on the Site Plan attached hereto as Exhibit "A" attached
                  hereto) including, without limitation, the loading docks
                  adjacent to Building A, for the specific purposes or uses
                  identified on Exhibit "A" attached hereto, provided such
                  purposes or uses are in compliance with all laws, rules and
                  regulations applicable thereto. Landlord's approval of
                  Tenant's use of the Building A Exclusive Areas for the
                  specific purposes identified on Exhibit "A" attached hereto
                  shall be conditioned upon Tenant obtaining any and all
                  permits, licenses or approvals from the applicable
                  governmental agency or agencies required with respect to such
                  specific uses. Tenant acknowledges that the ATM machine in
                  Building C is, and shall continue to be, the personal property
                  of the tenant of Building B.

                  Landlord or, if included in the terms of any lease of Building
                  B, any tenant of Building B, shall have the exclusive right to
                  use those areas designated on Exhibit "A" as the Building B
                  Exclusive Areas (i.e. Areas 1-17 as shown on the Site Plan
                  attached hereto as Exhibit "A"), including, without
                  limitation, the loading docks adjacent to Building B. Tenant
                  shall have no right to use all or any portion of the areas
                  designated as Building B Exclusive Areas (as shown on Exhibit
                  "A" attached hereto) without the prior written consent of
                  Landlord or, if applicable the tenant of Building B (which
                  consent may be given or withheld in the sole and absolute
                  discretion of Landlord or the tenant of Building B, as the
                  case may be).

         D.       Rules and Regulations; Landlord's Rights. Tenant's use of the
                  Common Area shall be subject to the terms and conditions of
                  this Lease and such rules and regulations as Landlord may from
                  time to time prescribe. This right and Tenant's right to use
                  the Building A Exclusive Areas shall terminate upon the
                  termination of this Lease. Landlord reserves the right from
                  time to time to make changes in the shape, size, location,
                  amount and extent of the Common Area; provided that such
                  change shall not interfere with Tenant's access to and from
                  the Premises, reduce the number of parking spaces to which
                  Tenant is entitled hereunder, or otherwise materially impair
                  Tenant's rights under this Lease. Landlord further reserves
                  the right to promulgate such reasonable and uniform rules and
                  regulations relating to the use of the Common Area, and any
                  part or parts thereof, as Landlord may deem appropriate for
                  the best interest of the occupants of the Project. The rules
                  and regulations shall be binding upon Tenant upon delivery of
                  a copy of them to Tenant, and Tenant shall abide by them and
                  cooperate in their observance. Such rules and regulations may
                  be amended by Landlord from time to time, with or without
                  advance notice, and all amendments shall be effective upon
                  delivery of a copy of them to Tenant.

         E.       Parking. Tenant shall have the non-exclusive use of no more
                  than four hundred forty-five (445) of the parking spaces in
                  the Common Area. Tenant shall not at any time park or permit
                  the parking of Tenant's trucks or other vehicles, or the
                  trucks or other vehicles of others, adjacent to loading areas
                  for Building B so as to interfere in any way with the use of
                  such areas, nor shall Tenant at any time park or permit the
                  parking of Tenant's vehicles or trucks, or the vehicles or
                  trucks of Tenant's suppliers or others, in any portion of the
                  Common Area not designated by Landlord for such use by Tenant.
                  Tenant shall not abandon any inoperative vehicles or equipment
                  on any portion of the Common Area. Tenant shall make no
                  alterations, improvements or additions to the Common Area.

                                     -12-
<PAGE>

                  The number of parking spaces that would otherwise be located
                  within the Building A Exclusive Areas as shown on Exhibit "A"
                  attached hereto shall be counted against the total of four
                  hundred forty-five (445) non-exclusive spaces allocated to
                  Tenant as provided above, notwithstanding that Tenant may
                  elect to use a portion of such exclusive areas originally
                  designated for parking for other purposes as noted on Exhibit
                  "A". Tenant shall not use more parking spaces than the four
                  hundred forty-five (445) spaces allocated to Tenant.

         F.       Maintenance. Landlord shall operate, manage, insure, maintain
                  and repair the Common Area in good order, condition and
                  repair. Without limiting the foregoing, Landlord shall keep
                  and maintain the driveways, parking areas, walkways,
                  landscaped areas, exterior lighting, irrigation systems,
                  fences, curbs, gutters, drainage systems, and all other
                  facilities within the Common Area (including, without
                  limitation, utility systems located therein), and Building C,
                  in good order and repair. The cost of such repair,
                  maintenance, operation, insurance and management shall be a
                  Common Area Charge and Tenant shall pay to Landlord its Pro
                  Rata Share of such costs as provided in Paragraph 12 below.

                  The foregoing notwithstanding, Tenant shall operate, manage,
                  insure, maintain and repair the Building A Exclusive Areas in
                  good order, condition and repair.

12.      Common Area Charges. Tenant shall pay to Landlord, as additional rent,
         within thirty (30) days after presentation of an invoice therefor, but
         not more often than once each calendar month, an amount equal to its
         Pro Rata Share of the Common Area Charges as defined in Paragraphs 8.C,
         9, and 11 of this Lease. Tenant acknowledges and agrees that the Common
         Area Charges shall include an additional five percent (5%) of the
         actual Common Area Charges (excluding insurance premiums) in order to
         compensate Landlord for accounting, management and processing services.
         Provided Tenant gives Landlord not less than five (5) days prior
         written notice, Tenant shall have the right, not more often than twice
         during any calendar year, to inspect and make copies at Tenant's
         expense, of Landlord's books, records and invoices evidencing the
         Common Area Charges allocated to Tenant hereunder.

         Notwithstanding anything to the contrary in the Lease, Common Area
         Charges shall not include, and Tenant shall have no liability for, the
         expense items listed below:

                  (a) The costs of original construction, the purchase price or
                  any depreciation or all or any portion of the Project, and the
                  cost of correcting any building code violation existing as of
                  the date of execution of the Lease.

                  (b) Costs incurred for the repair, maintenance and replacement
                  of the structural elements of the Project, including, without
                  limitation, beams, columns, foundations, footings, loan
                  bearing and exterior walls, structural slabs, and the roof
                  support system (except where the same are required by law).

                  (c) Costs incurred for the repair, maintenance or replacement
                  of the Project or any portion thereof, to the extent: (i) of
                  the proceeds of insurance which Landlord is required to
                  maintain under the Lease or actually maintains (whichever is
                  greater), (ii) of any reimbursement which Landlord receives
                  therefor under any warranties or from any third party (other
                  than on account of a tenant's pro rata share of the Common
                  Area Charges, or (iii) caused by the negligence or willful
                  misconduct of Landlord or Landlord's Agents.

                                     -13-
<PAGE>

                  (d) Rentals and other payments by Landlord under any ground
                  lease or other lease underlying this Lease; interest,
                  principal, points, penalties and fees on any security
                  instrument encumbering all or any portion of the Project; and
                  any Property Taxes (provided, however, that Tenant is
                  obligated to pay Tenant's Pro Rata Share of Property Taxes
                  pursuant to Paragraph 7).

                  (e) Expenses and penalties (including, without limitation,
                  attorneys' fees) incurred due to Landlord's violation of any
                  lease, deed of trust, mortgage, other security instrument,
                  ground lease, law (including, without limitation, statutes,
                  ordinances, rules, regulations, orders, judgments and decrees)
                  or private restriction, unless such violation was caused by
                  Tenant's or Tenant's agents', employees' or contractors' acts,
                  negligence or willful misconduct or breach of this Lease.

                  (f) Leasing commissions, attorneys' fees, tenant improvement
                  costs and other costs and expenses incurred in connection with
                  the leasing, or the improvement for leasing, of any premises.

                  (g) Advertising, marketing, media and promotional expenditures
                  regarding the Project or any portion thereof, and costs of
                  signs in or on the Project identifying the owner, lender or
                  any contractor.

                  (h) The rental value of any management office, engineer's
                  office, mechanical spaces, and Common Areas.

                  (i) Costs incurred in connection with the presence,
                  investigation, monitoring, release, removal or remediation of
                  any Hazardous Materials on, under, in or about the Project
                  (subject, however, to the requirements of Paragraph 39).

                  (j) Any cost items that are not subject to apportionment among
                  all tenants of the Project in proportion to the ratio of the
                  total floor area of the premises leased by such tenants (with
                  Landlord being considered the tenant of any unleased premises)
                  to the total floor area of the Buildings (except as expressly
                  provided above with respect to utilities provided to Building
                  C).

                  (k) Insurance premiums allocable to tenant improvements in
                  Building B and costs incurred by Landlord, if any, to repair,
                  maintain, insure, manage and operate the Building B Exclusive
                  Areas.

         Common Area Charges shall also be subject to the following limitations:

                  (l) Any management fee included in the Common Area Charge
                  shall exclude: salaries, wages and benefits paid for or
                  provided to persons not employed full-time in the management
                  and operation of the Project; costs of automobiles and travel
                  expenses; professional, civic or recreational memberships;
                  costs of seminars, conventions, educational programs and the
                  like; charitable contributions; and any other administrative
                  cost or expense not directly related to the management and
                  operation of the Project.

                                     -14-
<PAGE>

                  (m) The rates paid by Landlord under landscape and parking lot
                  maintenance contracts and other on-going service contracts for
                  the Project shall not exceed rates customarily charged in
                  Santa Clara County.

                  (n) No fee shall be charged for the use of the Project parking
                  area or any other Common Area facility.

                  (o) The aggregate sum of all Common Area charges allocated to
                  tenants of the Project for any year upon which an allocation
                  is made shall not exceed the aggregate sum of such Common Area
                  Charges which were actually incurred by Landlord for the year
                  in question. No cost item shall be included more than once or
                  allocated under more that one expense category. No cost item
                  shall be submitted for payment by Tenant before it is incurred
                  by Landlord.

                  (p) All expense items which are classified as capital
                  expenditures, improvements or replacements under generally
                  accepted accounting principles and which are permitted to be
                  charged to Tenant hereunder shall be amortized on a monthly
                  basis over their maximum estimated useful lives at the lesser
                  of Landlord's cost of funds or the Bank of America prime rate
                  plus two percent (2%) per annum. Only the monthly amortized
                  portion of such expense which falls due during the Term shall
                  be included as a Common Area Charge payable by Tenant
                  hereunder.

13.      Alterations. Tenant shall not make, or suffer to be made, any
         alterations, improvements or additions in, on, about or to the Premises
         or the Building A Exclusive Areas or any part thereof, without the
         prior written consent of Landlord, which consent will not be
         unreasonably withheld or delayed; and without a valid building permit
         issued by the appropriate governmental authority. The foregoing
         notwithstanding, Landlord's consent shall not be required for
         non-structural alterations, improvements or additions (which do not
         adversely affect the basic building systems of Building A or involve
         roof or wall penetrations) costing not more that $100,000 annually. The
         preceding sentence notwithstanding, whether or not Landlord's consent
         is required, Tenant agrees to give Landlord at least five (5) days
         prior written notice prior to commencing any work of improvement in, on
         or about the Premises (a) for which a building permit is required,
         and/or (b) which is to be performed by a third party contractor or
         subcontractor and which is estimated to cost or will cost in excess of
         $25,000. Within ten (10) days after Tenant's written request, Landlord
         shall advise Tenant as to whether Landlord will require any proposed
         alterations, improvements or additions to be removed or surrendered at
         the expiration (or earlier termination) of the Term. In the absence of
         any such request by Tenant, Landlord shall give Tenant written notice,
         not less than ninety (90) days prior to the expiration of the Term, of
         any alterations, additions or improvements Landlord requires to be
         removed. Failure of Landlord to respond timely to Tenant's request or,
         otherwise to give timely notice of the alterations, additions or
         improvements Landlord requires to be removed at the expiration of the
         Term, shall constitute Landlord's consent to the surrender of such
         alterations, improvements or additions, excluding any non-structural
         alterations, improvements or additions which Tenant elects to remove,
         provided that Tenant repairs all damage to the Premises caused by such
         removal. Unless Landlord requires that Tenant remove any such
         alterations, improvement or addition, any alteration, addition or
         improvement to the Premises, except movable furniture and trade
         fixtures, shall become the property of Landlord upon termination of the
         Lease and shall remain upon and be surrendered with the Premises at the
         termination of this Lease. Without limiting the generality of the
         foregoing, all heating, lighting, electrical (including all wiring,
         conduit, outlets, drops, buss ducts, main and

                                     -15-
<PAGE>

         subpanels), air conditioning, partitioning [except for modular
         demountables, which may be removed], drapery, and carpet installations
         made by Tenant regardless of how affixed to the Premises, together with
         all other additions, alterations and improvements that have become an
         integral part of the Building, shall be and become the property of the
         Landlord upon termination of the Lease, and shall not be deemed trade
         fixtures, and shall remain upon and be surrendered with the Premises at
         the termination of this Lease.

         If, during the term hereof, any alteration, addition or change of any
         sort to all or any portion of the Premises or the Building A Exclusive
         Areas is required by law, regulation, ordinance or order of any public
         agency as a result of (i) Tenant's negligence or willful misconduct,
         (ii) Tenant's particular use of the Premises (including, without
         limitation, any change of use of the Premises by Tenant), (iii) any
         alterations, additions or improvements to the Premises by or for
         Tenant, or (iv) Tenant's applications for governmental approvals or
         permits, rather than due to the use and occupancy of the Premises in
         general or for any other reason, Tenant shall promptly make the same at
         its sole cost and expense. If during the term hereof, any alteration,
         addition, or change to the Premises (except as provided in the previous
         sentence) or to the Common Area is required by law, regulation,
         ordinance or order of any public agency, Landlord shall make the same
         and no portion of the cost of such alteration, addition or change shall
         be a Common Area Charge or borne by the Tenant. It is expressly
         understood and agreed that Tenant shall not be required to make any
         alterations, improvement or addition to the Premises which is required
         by any law, regulation, ordinance or order except and only to the
         extent that such requirement applies because of the specific activities
         conducted by Tenant at the Premises, including without limitation, the
         negligence or willful misconduct of Tenant, the particular use or any
         change in use of the Premises by Tenant, any alterations, additions or
         improvements to the Premises by or for Tenant, or any application by
         Tenant for governmental approvals or permits.

14.      Acceptance of the Premises. Landlord represents and warrants to Tenant
         that (a) Landlord has received no notice from any governmental
         authority claiming that the Project (or any portion thereof) fails to
         comply with any applicable law, is the subject of any investigation to
         determine whether or not the Project (or any portion thereof) is in
         compliance with any applicable law, or otherwise requiring any work to
         be done on or about the Project; and (b) as of the date of delivery of
         possession of the Premises by Landlord to Tenant, to the best of
         Landlord's knowledge, the Premises are in good condition and repair,
         with all plumbing, electrical, water, sewer, mechanical and HVAC
         systems in good working order, except that certain cabling installed in
         the Building by the prior tenant remains in the Building, there exists
         water leakage at certain joints between the window frame and the
         exterior walls of the Building, and there is deferred maintenance with
         respect to the roof and HVAC system of the Building. Not later than the
         Commencement Date of this Lease, Landlord shall, at no cost to Tenant,
         and without interference by Tenant or its agents, employees or
         contractors, remove the aforementioned cabling from the Building,
         repair the leak(s) around the window(s) referred to in the immediately
         preceding sentence, repair the roof so that the same is water tight and
         repair the HVAC system in the Building so that it is in good operating
         condition and repair. Except for latent defects and violations of
         applicable law, and without limiting Landlord's obligations under this
         Lease (and subject to Landlord performing its obligations under the
         immediately preceding sentence), by entering and taking possession of
         the Premises pursuant to this Lease, Tenant accepts the Premises as
         being in good and sanitary order, condition and repair and accepts the
         Premises in their condition existing as of the date of such entry.
         Tenant acknowledges that neither the Landlord nor Landlord's agents has
         made any representation or warranty as to the suitability of the
         Premises to the conduct of Tenant's business. Any agreements,
         warranties or representations not expressly contained herein shall in
         no way bind

                                     -16-
<PAGE>

         either Landlord or Tenant, and Landlord and Tenant expressly waive all
         claims for damages by reason of any statement, representation,
         warranty, promise or agreement, if any, not contained in this Lease.
         This Lease constitutes the entire understanding between the parties
         hereto and no addition to, or modification of, any term or provision of
         this Lease shall be effective until set forth in a writing signed by
         both Landlord and Tenant.

15.      Default.

         A.       Events of Default. A breach of this Lease shall exist if any
                  of the following events (hereinafter referred to as "Event of
                  Default") shall occur:

                  1.       Default in the payment when due of any installment of
                           rent or other payment required to be made by Tenant
                           hereunder, where such default shall not have been
                           cured within five (5) days after written notice of
                           such default is given to Tenant;

                  2.       Tenant's failure to perform any other term, covenant
                           or condition contained in this Lease where such
                           failure shall have continued for thirty (30) days
                           after written notice of such failure is given to
                           Tenant; provided that if performance reasonably
                           requires more than thirty (30) days, then Tenant
                           shall not be in default unless Tenant shall have
                           failed to commence performance within such thirty
                           (30) day period and thereafter diligently pursued
                           such performance to completion.

                  3.       Tenant's general assignment of its assets for the
                           benefit of its creditors:

                  4.       The sequestration of, attachment of, or execution on,
                           any substantial part of the property of Tenant or on
                           any property essential to the conduct of Tenant's
                           business shall have occurred and Tenant shall have
                           failed to obtain a return or release of such property
                           within sixty (60) days thereafter, or prior to sale
                           pursuant to such sequestration, attachment or levy,
                           whichever is earlier;

                  5.       Tenant shall commence any case, proceeding or other
                           action seeking reorganization, arrangement,
                           adjustment, liquidation, dissolution or composition
                           of it or its debts under any law relating to
                           bankruptcy, insolvency, reorganization or relief of
                           debtors, or seek appointment of a receiver, trustee,
                           custodian, or other similar official for it or for
                           all or any substantial part of its property; or

                  6.       Any case, proceeding or other action against Tenant
                           shall be commenced seeking to have an order for
                           relief entered against it as debtor, or seeking
                           reorganization, arrangement, adjustment, liquidation,
                           dissolution or composition of it or its debts under
                           any law relating to bankruptcy, insolvency,
                           reorganization or relief of debtors, or seeking
                           appointment of a receiver, trustee, custodian or
                           other similar official for it or for all or any
                           substantial part of its property, and such case,
                           proceeding or other action (i) results in the entry
                           of an order for relief against it which is not fully
                           stayed within thirty (30) business days after the
                           entry thereof or (ii) remains undismissed for a
                           period of sixty (60) days.

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

                                      -17-
<PAGE>

                  1.       Recovery of Rent. Landlord shall be entitled to keep
                           this Lease in full force and effect (whether or not
                           Tenant shall have abandoned the Premises) and to
                           enforce all of its rights and remedies under this
                           Lease, including the right to recover rent and other
                           sums as they become due, plus interest at the
                           Permitted Rate (as defined in Paragraph 33 below)
                           from the due date of each installment of rent or
                           other sum until paid.

                  2.       Termination. Landlord may terminate this Lease by
                           giving Tenant written notice of termination. On the
                           giving of the notice all of Tenant's rights in the
                           Premises and the Building and Parcel shall terminate.
                           Upon the giving of the notice of termination, Tenant
                           shall surrender and vacate the Premises in the
                           condition required by Paragraph 34, and Landlord may
                           re-enter and take possession of the Premises and all
                           the remaining improvements or property and eject
                           Tenant or any of Tenant's subtenants, assignees or
                           other person or persons claiming any right under or
                           through Tenant or eject some and not others or eject
                           none. This Lease may also be terminated by a judgment
                           specifically providing for termination. Any
                           termination under this paragraph shall not release
                           Tenant from the payment of any sum then due Landlord
                           or from any claim for damages or rent previously
                           accrued or then accruing against Tenant. In no event
                           shall any one or more of the following actions by
                           Landlord constitute a termination of this Lease:

                           a.       maintenance and preservation of the
                                    Premises;

                           b.       efforts to relet the Premises;

                           c.       appointment of a receiver in order to
                                    protect Landlord's interest hereunder;

                           d.       consent to any subletting of the Premises or
                                    assignment of this Lease by Tenant, whether
                                    pursuant to provisions hereof concerning
                                    subletting and assignment or otherwise; or

                           e.       any other action reasonably taken by
                                    Landlord or Landlord's agents intended to
                                    mitigate the adverse effects from any breach
                                    of this Lease by Tenant.

                  3.       Damages. In the event this Lease is terminated
                           pursuant to Subparagraph 15.B.2 above, or otherwise,
                           Landlord shall be entitled to damages in the
                           following sums:

                           a.       the worth at the time of award of the unpaid
                                    rent which has been earned at the time of
                                    termination; plus

                           b.       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 Tenant proves could have been
                                    reasonably avoided; plus

                                      -18-
<PAGE>

                           c.       the worth at the time of award of the amount
                                    by which the unpaid rent for the balance of
                                    the term after the time of award exceeds the
                                    amount of such rental loss that Tenant
                                    proves could be reasonably avoided; and

                           d.       any other amount necessary to compensate
                                    Landlord for all detriment proximately
                                    caused by Tenant's failure to perform
                                    Tenant's obligations under this Lease, or
                                    which in the ordinary course of things would
                                    be likely to result therefrom including,
                                    without limitation, the following: (i)
                                    expenses for cleaning, repairing or
                                    restoring the Premises; ii) costs of
                                    carrying the Premises such as taxes and
                                    insurance premiums thereon, utilities and
                                    security precautions; (iii) expenses in
                                    retaking possession of the Premises; (iv)
                                    reasonable attorneys' fees and court costs;
                                    and (v) any unamortized real estate
                                    brokerage commission paid in connection with
                                    this Lease.

                           e.       The "worth at the time of award" of the
                                    amounts referred to in Subparagraphs (a) and
                                    (b) of this Paragraph, is computed by
                                    allowing interest at the Permitted Rate. The
                                    "worth at the time of award" of the amounts
                                    referred to in Subparagraph (c) of this
                                    Paragraph is computed by discounting such
                                    amount at the discount rate of the Federal
                                    Reserve Board of San Francisco at the time
                                    of award plus one percent (1%). The term
                                    "rent" as used in this Paragraph shall
                                    include all sums required to be paid by
                                    Tenant to Landlord pursuant to the terms of
                                    this Lease.

16.      Destruction. In the event that any portion of the Premises are
         destroyed or damaged by an uninsured peril, Landlord or Tenant may,
         upon written notice to the other, given within thirty (30) days after
         the occurrence of such damage or destruction, elect to terminate this
         Lease; provided, however, that either party may, within thirty (30)
         days after receipt of such notice, elect to make any required repairs
         and/or restoration at such party's sole cost and expense, in which
         event this Lease shall remain in full force and effect, and the party
         having made such election to restore or repair shall thereafter
         diligently proceed with such repairs and/or restoration.

         In the event the Premises are damaged or destroyed from any insured
         peril to the extent of fifty percent (50%) or more of the then
         replacement cost of the Premises, Landlord may, upon written notice to
         Tenant, given within thirty (30) days after the occurrence of such
         damage or destruction, elect to terminate this Lease. If Landlord does
         not give such notice in writing within such period, Landlord shall be
         deemed to have elected to rebuild or restore the Premises, in which
         event Landlord shall, at its expense, promptly rebuild or restore the
         Premises to their condition prior to the damage or destruction and
         Tenant shall pay to Landlord upon commencement of reconstruction the
         amount of any deductible from the insurance policy.

         In the event the Premises are damaged or destroyed from any insured
         peril to the extent of less than fifty percent (50%) of the then
         replacement cost of the Premises, Landlord shall, at Landlord's
         expense, promptly rebuild or restore the Premises to their condition
         prior to the damage or destruction and Tenant shall pay to Landlord
         upon commencement of reconstruction the amount of any deductible from
         the insurance policy.

         In the event that, pursuant to the foregoing provisions, Landlord is to
         rebuild or restore the Premises, Landlord shall, within thirty (30)
         days after the occurrence of such damage or

                                      -19-
<PAGE>

         destruction, provide Tenant with written notice of the estimated time
         required for such repair or restoration. If such period is longer than
         one hundred eighty (180) days from the date of the event causing such
         damage or destruction of the Premises, Tenant may, within thirty (30)
         days after receipt of Landlord's notice, elect to terminate the Lease
         by giving written notice to Landlord of such election, whereupon the
         Lease shall immediately terminate. The period of time for Landlord to
         complete the repair or restoration shall be extended for delays caused
         by the fault or neglect of Tenant or because of acts of God, labor
         disputes, strikes, fires, freight embargoes, rainy or stormy weather,
         inability to obtain materials, supplies or fuels, acts of contractors
         or subcontractors, or delay of contractors or subcontractors due to
         such causes, or other contingencies beyond the control of Landlord.
         Landlord's obligation to repair or restore the Premises shall not
         include restoration of Tenant's trade fixtures, equipment, merchandise,
         or any improvements (including the initial improvements installed
         pursuant to Exhibit "C"), alterations or additions made by Tenant to
         the Premises.

         Unless this Lease is terminated pursuant to the foregoing provisions,
         this Lease shall remain in full force and effect; provided, however,
         that during any period of repairs or restoration, rent and all other
         amounts to be paid by Tenant on account of the Premises and this Lease
         shall be abated in proportion to the area of the Premises rendered not
         reasonably suitable for the conduct of Tenant's business thereon.
         Tenant hereby expressly waives the provisions of Section 1932,
         Subdivision 2 and Section 1933, Subdivision 4 of the California Civil
         Code.

17.      Condemnation.

         A.       Definition of Terms. For the purposes of this Lease, the term
                  (1) "Taking" means a taking of the Premises or the Common Area
                  or damage to the Premises or the Common Area related to the
                  exercise of the power of eminent domain and includes a
                  voluntary conveyance, in lieu of court proceedings, to any
                  agency, authority, public utility, person or corporate entity
                  empowered to condemn property and who has commenced
                  proceedings to condemn the Premises or the Common Area; (2)
                  "Total Taking" means the taking of the entire Premises or the
                  Common Area or so much of the Premises or the Common Area as
                  to prevent or substantially impair the use thereof by Tenant
                  for the uses herein specified; provided, however, in no event
                  shall a Taking of less than ten percent (10%) of the Premises
                  or twenty-five percent (25%) of the Common Area be deemed a
                  Total Taking; (3) "Partial Taking" means the taking of only a
                  portion of the Premises which does not constitute a Total
                  Taking; (4) "Date of Taking" means the date upon which the
                  title to the Premises, or a portion thereof, passes to and
                  vests in the condemnor or the effective date of any order for
                  possession if issued prior to the date title vests in the
                  condemnor; and (5) "Award" means the amount of any award made,
                  consideration paid, or damages ordered as a result of a
                  Taking.

         B.       Rights. The parties agree that in the event of a Taking all
                  rights between them or in and to an Award shall be as set
                  forth herein and Tenant shall have no right to any Award
                  except as set forth herein.

         C.       Total Taking. In the event of a Total Taking during the term
                  hereof (1) the rights of Tenant under the Lease and the
                  leasehold estate of Tenant in and to the Premises shall cease
                  and terminate as of the Date of Taking; (2) Landlord shall
                  refund to Tenant any prepaid rent; (3) Tenant shall pay
                  Landlord any rent or charges due Landlord under the Lease,
                  each prorated as of the Date of Taking; (4) Tenant shall
                  receive from Landlord

                                      -20-
<PAGE>
                  those portions of the Award attributable to (a) the
                  unamortized Excess TI Costs (defined in Exhibit "C"),
                  amortized on a straight-line basis over a ten-year period, (b)
                  movable personal property or trade fixtures of Tenant, and (c)
                  moving expenses of Tenant; and (5) the remainder of the Award
                  shall be paid to and be the property of Landlord.

         D.       Partial Taking. In the event of a Partial Taking during the
                  term hereof (1) the rights of Tenant under the Lease and
                  leasehold estate of Tenant in and to the portion of the
                  Premises taken shall cease and terminate as of the Date of
                  Taking; (2) from and after the Date of Taking the Monthly
                  Installment of rent shall be an amount equal to the product
                  obtained by multiplying the Monthly Installment of rent
                  immediately prior to the Taking by a fraction, the numerator
                  of which is the number of square feet contained in the
                  Premises after the Taking and the denominator of which is the
                  number of square feet contained in the Premises prior to the
                  Taking; (3) Tenant shall receive from the Award the portions
                  of the Award attributable to (a) the unamortized Excess TI
                  Costs allocable on a per-square-foot basis to the portion of
                  the Premises taken, amortized on a straight-line basis over a
                  ten-year period, (b) movable personal property or trade
                  fixtures of Tenant, and (c) removal costs; and (4) the
                  remainder of the Award shall be paid to and be the property of
                  Landlord.

18.      Mechanics' Lien. Tenant shall (A) pay for all labor and services
         performed for, materials used by or furnished to, Tenant or any
         contractor employed by Tenant with respect to the Premises; (B)
         indemnify, defend, protect and hold Landlord and the Premises harmless
         and free from any liens, claims, liabilities, demands, encumbrances, or
         judgments created or suffered by reason of any labor or services
         performed for, materials used by or furnished to, Tenant or any
         contractor employed by Tenant with respect to the Premises; and (C)
         permit Landlord to post a notice of nonresponsibility in accordance
         with the statutory requirements of California Civil Code Section 3094
         or any amendment thereof. In the event Tenant is required to post an
         improvement bond with a public agency in connection with the above,
         Tenant agrees to include Landlord as an additional obligee.

19.      Inspection of the Premises. Tenant shall permit Landlord and its agents
         to enter the Premises at any reasonable time for the purpose of
         inspecting the same, performing Landlord's maintenance and repair
         responsibilities, posting a notice of non-responsibility for
         alterations, additions or repairs and at any time within ninety (90)
         days prior to expiration of this Lease, to place upon the Premises,
         ordinary "For Lease" or "For Sale" signs. Except in the event of an
         emergency, Landlord shall give Tenant at least 48 hours prior notice
         and enter only during Tenant's normal business hours. Entry shall be
         subject to Tenant's reasonable security requirements. Landlord shall
         exercise good faith efforts to perform its activities on the Premises
         in a manner so as to minimize any disruption, disturbance or
         interference with the conduct of Tenant's business to the extent
         practicable under the circumstances.

20.      Compliance with Laws. Tenant shall, at its own cost, comply with all of
         the requirements of all municipal, county, state and federal
         authorities now in force, or which may hereafter be in force,
         pertaining to the use and occupancy of the Premises by Tenant, and
         shall faithfully observe all municipal, county, state and federal law,
         statutes or ordinances now in force or which may hereafter be in force
         applicable to Tenant's use or occupancy of the Premises. The judgment
         of any court of competent jurisdiction or the admission of Tenant in
         any action or proceeding against Tenant, whether Landlord be a party
         thereto or not, that Tenant has violated any such ordinance or statute
         in the use and occupancy of the Premises shall be conclusive of the
         fact that such violation by Tenant has occurred.

                                      -21-
<PAGE>

21.      Subordination. The following provisions shall govern the relationship
         of this Lease to any underlying lease, mortgage or deed of trust which
         now or hereafter affects the Premises, the Building and/or the Parcel,
         or Landlord's interest or estate therein (the "Project") and any
         renewal, modification, consolidation, replacement, or extension thereof
         (a "Security Instrument").

         A.       Priority. This Lease is subject and subordinate to Security
                  Instruments existing as of the Commencement Date. However, if
                  any Lender so requires, this Lease shall become prior and
                  superior to any such Security Instrument. Landlord shall use
                  its reasonable efforts to obtain a non-disturbance agreement
                  from the existing Lender for the benefit of Tenant; provided
                  that the obtaining of such agreement shall not be a condition
                  to the effectiveness of the Lease.

         B.       Subsequent Security Instruments. At Landlord's election, this
                  Lease shall become subject and subordinate to any Security
                  Instrument created after the Commencement Date.
                  Notwithstanding such subordination, Tenant's rights under this
                  Lease, including without limitation, its right to quiet
                  possession of the Premises shall not be disturbed so long as
                  Tenant is not in default and performs all of its obligations
                  under this Lease, unless this Lease is otherwise terminated
                  pursuant to its terms.

         C.       Documents. Tenant shall execute any document or instrument
                  required by Landlord or any Lender to make this Lease either
                  prior or subordinate to a Security Instrument, which may
                  include such other matters as the Lender customarily requires
                  in connection with such agreements, including provisions that
                  the Lender not be liable for (1) the return of the Security
                  Deposit unless the Lender receives it from Landlord, and (2)
                  any defaults on the part of Landlord occurring prior to the
                  time that the Lender takes possession of the Project in
                  connection with the enforcement of its Security Instrument.
                  Tenant's failure to execute any such document or instrument
                  within fifteen (15) days after written demand therefor shall
                  constitute a default by Tenant.

         D.       Tenant's Attornment. Tenant shall attorn (1) to any purchaser
                  of the Premises at any foreclosure sale or private sale
                  conducted pursuant to any Security Instrument encumbering the
                  Project; (2) to grantee or transferee designated in any deed
                  given in lieu of foreclosure; or (3) to the lessor under any
                  underlying ground lease should such ground lease be
                  terminated, provided such party, in writing, assumes and
                  agrees to observe and perform the obligations of Landlord
                  under this Lease accruing after the date of the applicable
                  transfer.

         E.       Lender. The term "Lender" shall mean (1) any beneficiary,
                  mortgagee, secured party, or other holder of any deed of
                  trust, mortgage, or other written security device or agreement
                  affecting the Project; and (2) any lessor under any underlying
                  lease under which Landlord holds its interest in the Project.

22.      Holding Over. This Lease shall terminate without further notice at the
         expiration of the Lease Term. Any holding over by Tenant after
         expiration shall not constitute a renewal or extension or give Tenant
         any rights in or to the Premises except as expressly provided in this
         Lease. Any holding over after the expiration without the consent of
         Landlord shall be construed to be a tenancy from month to month, at one
         hundred twenty-five percent (125%) of the monthly rent for the last
         month of the Lease Term, and shall otherwise be on the terms and
         conditions herein specified insofar as applicable.

                                      -22-
<PAGE>

23.      Notices. Any notice required or desired to be given under this Lease
         shall be in writing with copies directed as indicated below and shall
         be personally served or given by mail. Any notice given by mail shall
         be deemed to have been given on the third (3rd) day following the date
         on which such notice was deposited in the United States mails,
         certified and postage prepaid, addressed to the party to be served with
         a copy as indicated herein at the last address given by that party to
         the other party under the provisions of this Paragraph. At this date of
         execution of this Lease, the address of Landlord is:

                  511 Division Street
                  Campbell CA  95008

         and the address of Tenant is:

                  8105 Irvine Center Drive
                  Irvine, CA 92718
                  Attention: Manager, Corporate Real Estate

24.      Attorneys' Fees. In the event either party shall bring any action or
         legal proceeding for damages for any alleged breach of any provision of
         this Lease, to recover rent or possession of the Premises, to terminate
         this Lease, or to enforce, protect or establish any term or covenant of
         this Lease or right or remedy of either party, the prevailing party
         shall be entitled to recover as a part of such action or proceeding,
         reasonable attorneys' fees and court costs, including attorneys' fees
         and costs for appeal, as may be fixed by the court or jury. The term
         "prevailing party" shall mean the party who received substantially the
         relief requested, whether by settlement, dismissal, summary judgment,
         judgment, or otherwise.

25.      Nonassignment.

         A.       Landlord's Consent Required. Except as expressly provided in
                  this Paragraph 25, Tenant's interest in this Lease is not
                  assignable, by operation of law or otherwise, nor shall Tenant
                  have the right to sublet the Premises, transfer any interest
                  of Tenant therein or permit any use of the Premises by another
                  party, without the prior written consent of Landlord to such
                  assignment, subletting, transfer or use, which consent
                  Landlord agrees not to withhold or delay unreasonably subject
                  to the provisions of Subparagraph B below. A consent to one
                  assignment, subletting, occupancy or use by another party
                  shall not be deemed to be a consent to any subsequent
                  assignment, subletting, occupancy or use by another party. Any
                  assignment or subletting without such consent shall be void
                  and shall, at the option of Landlord, terminate this Lease.

                  Landlord's waiver or consent to any assignment or subletting
                  hereunder shall not relieve Tenant from any obligation under
                  this Lease unless the consent shall so provide.

         B.       Transferee Information Required. If Tenant desires to assign
                  its interest in this Lease or sublet the Premises, or transfer
                  any interest of Tenant therein, or permit the use of the
                  Premises by another party (hereinafter collectively referred
                  to as a "Transfer"), Tenant shall give Landlord at least ten
                  (10) days prior written notice of the proposed Transfer and of
                  the terms of such proposed Transfer, including, but not
                  limited to, the name and legal composition of the proposed
                  transferee, a financial statement of the proposed transferee,

                                      -23-
<PAGE>

                  the nature of the proposed transferee's business to be carried
                  on in the Premises, the payment to be made or other
                  consideration to be given to Tenant on account of the
                  Transfer, and such other pertinent information as may be
                  requested by Landlord, all in sufficient detail to enable
                  Landlord to evaluate the proposed Transfer and the prospective
                  transferee. Landlord shall keep and maintain such information
                  in strict confidence and shall not disclose the same to any
                  person or entity (other than to Landlord's lender, general
                  partners, attorneys and employees who have a need to know such
                  information and who agree in writing to comply with this
                  confidentiality obligation) without Tenant's express written
                  consent. In the event Tenant seeks to Transfer its interest in
                  this Lease or the Premises, Landlord shall have the following
                  options, which may be exercised at its sole choice without
                  limiting Landlord in the exercise of any other right or remedy
                  which Landlord may have by reason of such proposed Transfer:

                  (1)      If Tenant proposes to assign this Lease or sublet
                           more than seventy-five percent (75%) of the total
                           rentable square footage of the Premises for a term
                           exceeding two years (or, if less, for the balance of
                           the Term), then Landlord may elect to terminate this
                           Lease effective as of the proposed effective date of
                           the proposed Transfer and release Tenant from any
                           further liability hereunder accruing after such
                           termination date by giving Tenant written notice of
                           such termination within ten (10) days after receipt
                           by Landlord of Tenant's notice of intent to transfer
                           as provided above. If Landlord makes such election to
                           terminate this Lease, Tenant shall surrender the
                           Premises, in accordance with Paragraph 34, on or
                           before the effective termination date, however, this
                           Lease shall not terminate if, within five (5) days
                           after receiving Landlord's notice electing to
                           terminate this Lease, Tenant notifies Landlord in
                           writing that Tenant has withdrawn its assignment or
                           sublet proposal; or

                  (2)      Landlord may consent to the proposed Transfer on the
                           condition that Tenant agrees to pay to Landlord, as
                           additional rent, fifty percent (50%) of all rents or
                           other consideration (including key money) received by
                           Tenant from the transferee by reason of such Transfer
                           in excess of the rent payable by Tenant to Landlord
                           under this Lease (prorated in the event of a
                           subletting of less than the entire Premises) (less
                           any brokerage commissions, advertising expenses, or
                           tenant improvement costs or other concessions paid or
                           incurred by Tenant in connection with the Transfer).
                           Tenant expressly agrees that the foregoing is a
                           reasonable condition for obtaining Landlord's consent
                           to any Transfer; or

                  (3)      Landlord may reasonably withhold its consent to the
                           proposed Transfer.

                  Notwithstanding anything to the contrary contained herein, the
                  provisions of this Paragraph 25 shall not apply to any
                  transfer (a) to any affiliate of Tenant, (b) any entity who
                  acquires all or substantially all of the assets of Tenant, by
                  merger or otherwise, or (c) to independent contractors under
                  contract to provide services to or for the benefit if Tenant,
                  including, without limitation, vending machine companies, food
                  service providers, and consultants.

26.      Successors. The covenants and agreements contained in this Lease shall
         be binding on the parties hereto and on their respective heirs,
         successors and assigns (to the extent the Lease is assignable).

                                      -24-
<PAGE>

27.      Mortgagee Protection. In the event of any default on the part of
         Landlord, Tenant will give notice by registered or certified mail to
         any beneficiary of a deed of trust or mortgagee of a mortgage
         encumbering the Premises, whose address shall have been furnished to
         Tenant, and shall offer such beneficiary or mortgagee a reasonable
         opportunity to cure the default, including reasonable time to obtain
         possession of the Premises by power of sale or judicial foreclosure, if
         such should prove necessary to effect a cure.

28.      Landlord Loan or Sale. Tenant agrees promptly following request by
         Landlord to (A) execute and deliver to Landlord estoppel certificates
         presented to Tenant by Landlord, (i) certifying that this Lease is
         unmodified and in full force and effect or specifying any modifications
         and the date to which the rent and other charges are paid in advance,
         if any, and (ii) acknowledging that there are not, to Tenant's
         knowledge, any uncured defaults on the part of Landlord hereunder or
         specifying the nature of any such defaults, and (iii) evidencing the
         status of the Lease as may be required either by a lender making a loan
         to Landlord to be secured by a deed of trust or mortgage covering the
         Premises or a purchaser of the Premises from Landlord and (B) to
         deliver to Landlord the publicly available (as to the original Tenant
         hereunder) financial statement of Tenant with an opinion of a certified
         public accountant, if available, including a balance sheet and profit
         and loss statement, for the last completed fiscal year all prepared in
         accordance with generally accepted accounting principles consistently
         applied. Tenant's failure to deliver an estoppel certificate promptly
         following such request shall be an Event of Default under this Lease.

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

30.      Waiver. The waiver by Landlord or Tenant of any breach of any term,
         covenant or condition herein contained shall not be deemed to be a
         waiver of any preceding or succeeding breach of the same or any other
         covenant or condition herein contained.

31.      General.

         A.       Captions. The captions and paragraph headings used in this
                  Lease are for the purposes of convenience only. They shall not
                  be construed to limit or extend the meaning of any part of
                  this Lease, or be used to interpret specific sections. The
                  word (s) enclosed in quotation marks shall be construed as
                  defined terms for purposes of this Lease. As used in this
                  Lease, the masculine, feminine and neuter and the singular or
                  plural number shall each be deemed to include the other
                  whenever the context so requires.

         B.       Definition of Landlord. The term "Landlord" as used in this
                  Lease, so far as the covenants or obligations on the part of
                  Landlord are concerned, shall be limited to mean and include
                  only the owner at the time in question of the fee title of the
                  Premises, and in the event of any transfer or transfers of the
                  title of such fee, the Landlord herein named (and in case of
                  any subsequent transfers or conveyances, the then grantor)
                  shall after the date of such transfer or conveyance be
                  automatically freed and relieved of all liability with respect
                  to performance of any covenants or obligations on the part of
                  Landlord contained in this Lease, thereafter to be performed;
                  provided that any funds in the hands of Landlord or the then
                  grantor at the time of such transfer, in which Tenant has an
                  interest, shall be turned over to the grantee. It is intended
                  that the covenants and obligations contained in this

                                      -25-
<PAGE>

                  Lease on the part of Landlord shall, subject as aforesaid, be
                  binding upon each Landlord, its heirs, personal
                  representatives, successors and assigns only during its
                  respective period of ownership.

         C.       Time of Essence. Time is of the essence for the performance of
                  each term, covenant and condition of this Lease in which the
                  time for performance is specified.

         D.       Severability. In case any one or more of the provisions
                  contained herein, except for the payment of rent, shall for
                  any reason be held to be invalid, illegal or unenforceable in
                  any respect, such invalidity, illegality or unenforceability
                  shall not affect any other provision of this Lease, but this
                  Lease shall be construed as if such invalid, illegal or
                  unenforceable provision had not been contained herein. This
                  Lease shall be construed and enforced in accordance with the
                  laws of the State of California.

         E.       Joint and Several Liability. If Tenant is more than one person
                  or entity, each such person or entity shall be jointly and
                  severally liable for the obligations of Tenant hereunder.

         F.       Law. The term "law" shall mean any judicial decision, statute,
                  constitution, ordinance, resolution, regulation, rule,
                  administrative order, or other published and available
                  requirement of any government agency or authority having
                  jurisdiction over the parties to this Lease or the Premises or
                  both, in effect at the Commencement Date of this Lease or any
                  time during the Lease Term, including, without limitation, any
                  regulation, order, or policy of any quasi-official entity or
                  body (e.g., board of fire examiners, public utility or special
                  district).

         G.       Agent. As used herein the term "Agent" shall mean, with
                  respect to either Landlord or Tenant, its respective agents,
                  employees, contractors (and their subcontractors), and
                  invitees (and in the case of Tenant, its subtenants).

         H.       WAIVER OF JURY TRIAL. LANDLORD AND TENANT HEREBY WAIVE THEIR
                  RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION,
                  CLAIM COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION,
                  PROCEEDING, AND/OR HEARING BROUGHT BY EITHER LANDLORD AGAINST
                  TENANT OR TENANT AGAINST LANDLORD ON ANY MATTER WHATSOEVER
                  ARISING OUT OF, OR AN ANY WAY CONNECTED WITH, THIS LEASE, THE
                  RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY
                  OF THE PREMISES OR ANY CLAIM OF INJURY OR DAMAGE, OR THE
                  ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, OR
                  REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN
                  EFFECT.

                  INITIALS:       LANDLORD [ILLEGIBLE]
                                           --------------

                                  TENANT [ILLEGIBLE]
                                         ----------------

32.      Sign. Subject to all necessary governmental approvals, Tenant shall
         have the right to place identifying signs on the exterior of the
         Building and on a sign monument at the entrance to the Project. The
         location and size of such sign shall be subject to Landlord's approval,
         which shall not be unreasonably withheld or delayed. Tenant may place
         additional signs or decorations on the

                                      -26-
<PAGE>
         exterior of the Building or on the Parcel with the prior written
         consent of Landlord, which consent will not be unreasonably withheld or
         delayed.

33.      Interest on Past Due Obligations. Any Monthly Installment of rent or
         any other sum due from Tenant under this Lease which is received by
         Landlord after the date the same is due shall bear interest from said
         due date until paid, at an annual rate equal to the lesser of (the
         "Permitted Rate"): (1) twelve percent (12%); or (2) five percent (5%)
         plus the rate established by the Federal Reserve Bank of San Francisco,
         as of the twenty-fifth (25th) day of the month immediately preceding
         the due date, on advances to member banks under Section 13 and 13 (a)
         of the Federal Reserve Act, as now in effect or hereafter from time to
         time amended. Payment of such interest shall not excuse or cure any
         default by Tenant. In addition, Tenant shall pay all reasonable costs
         and attorneys' fees incurred by Landlord in collection of such amounts.

34.      Surrender of the Premises. On the last day of the term hereof, or on
         the sooner termination of this Lease, Tenant shall surrender the
         Premises and the Building A Exclusive Areas to Landlord in their
         condition existing as of the Commencement Date of this Lease, ordinary
         wear and tear and damage from casualty or condemnation excepted (unless
         caused by the negligence or willful misconduct of Tenant or Tenant's
         agents, employees or contractors), with all interior walls cleaned, and
         repaired or replaced, all carpets shampooed and cleaned, the air
         conditioning and heating equipment serviced and repaired by a reputable
         and licensed service firm, all floors cleaned and waxed, all to the
         reasonable satisfaction of Landlord. Tenant shall remove all of
         Tenant's personal property and trade fixtures from the Premises, and
         all property not so removed shall be deemed abandoned by Tenant.
         Tenant, at its sole cost, shall repair any damage to the Premises and
         the Building A Exclusive Areas caused by the removal of Tenant's
         personal property, machinery and equipment, which repair shall include,
         without limitation, the patching and filling of holes and repair of
         structural damage. If the Premises and the Building A Exclusive Areas
         are not so surrendered at the termination of this Lease, Tenant shall
         indemnify, defend, protect and hold Landlord harmless from and against
         loss or liability resulting from delay by Tenant in so surrendering the
         Premises and the Building A Exclusive Areas including without
         limitation, any claims made by any succeeding tenant or losses to
         Landlord due to lost opportunities to lease to succeeding tenants.

35.      Authority. The undersigned parties hereby warrant that they have proper
         authority and are empowered to execute this Lease on behalf of Landlord
         and Tenant, respectively.

36.      Public Record. This Lease is made subject to all matters of public
         record affecting title to the property of which the Premises are a
         part. Tenant shall abide by and comply with all matters of public
         record now or hereafter affecting the Premises and any amendment
         thereof. The preceding notwithstanding, Tenant shall not be responsible
         for correcting any violations existing as of the date possession of the
         Premises is delivered to Tenant of the provisions of any document which
         is of public record and affecting the Premises or the Parcel.

37.      Brokers. Tenant represents and warrants to Landlord that it has dealt
         solely with CB Commercial with respect to this transaction and hereby
         agrees to indemnify and hold Landlord harmless from and against any
         brokerage commission or fee, obligation, claim or damage (including
         attorneys' fees) paid or incurred respecting any other broker claiming
         through Tenant or with which/whom Tenant has dealt. It is acknowledged
         that one or more of Landlord's partners may be real estate brokers.
         Landlord shall pay and be solely responsible for all commissions due CB
         Commercial pursuant to a separate written agreement between Landlord
         and CB Commercial and any other persons or entities representing or
         claiming under or through Landlord in connection with this

                                      -27-
<PAGE>

         transaction. Landlord hereby indemnifies and agrees to defend and hold
         harmless Tenant from and against all claims, demands, liabilities,
         damages and expenses (including, without limitation, attorneys' fees
         and costs) from all such persons or entities.

38.      Limitation on Landlord's Liability. Tenant, for itself and its
         successors and assigns (to the extent this Lease is assignable), hereby
         agrees that in the event of any actual, or alleged, breach or default
         by Landlord under this Lease that:

         (A)      Tenant's sole and exclusive remedy against Landlord shall be
                  as against the assets owned by Landlord (including, without
                  limitation, Landlord's interest in the Building and Parcel,
                  and any insurance proceeds available to Landlord), but not
                  against the individual assets of Landlord's partners;

         B)       No partner or officer of any partner of Landlord shall be sued
                  or named as a party in a suit or action (except as may be
                  necessary to secure jurisdiction of the partnership);

         C)       No service of process shall be made against any partner of
                  Landlord (except as may be necessary to secure jurisdiction of
                  the partnership);

         D)       No partner of Landlord shall be required to answer or
                  otherwise plead to any service of process;

         E)       No judgment will be taken against any partner of Landlord;

         F)       Any judgment taken against any partner of Landlord maybe
                  vacated and set aside at any time nunc pro tunc;

         G)       No writ of execution will ever be levied against the assets of
                  any partner of Landlord;

         H)       The covenants and agreements of Tenant set forth in this
                  Section 38 shall be enforceable by Landlord and any partner of
                  Landlord.

39.      Hazardous Material.

         A.       Definitions. As used herein, the term "Hazardous Material"
                  shall mean any substance: (i) the presence of which requires
                  investigation or remediation under any federal, state or local
                  statutes, regulation, ordinance, order, action, policy or
                  common law; (ii) which is or becomes defined "hazardous
                  waste," "hazardous substance," pollutant or contaminant under
                  any federal, state or local statute, regulation, rule or
                  ordinance or amendments thereto including, without limitation,
                  the Comprehensive Environmental Response, Compensation and
                  Liability Act (42 U.S.C. Section 9601 et seq.) and/or the
                  Resource Conservation and Recovery Act (42 U.S.C. Section 6901
                  et seq.); (iii) which is toxic, explosive, corrosive,
                  flammable, infectious, radioactive, carcinogenic, mutagenic,
                  or otherwise hazardous and is or becomes regulated by any
                  governmental authority, agency, department, commission, board,
                  agency, or instrumentality of the United States, the State of
                  California or any political subdivision thereof; (iv) the
                  presence of which on the Premises poses or threatens to pose a
                  hazard to the health or safety of persons on or about the
                  Premises; (v) without limitation which contains gasoline,
                  diesel fuel, or other petroleum

                                      -28-
<PAGE>

                  hydrocarbons; (vi) without limitation which contains
                  polychlorinated biphenyls (PCBs), asbestos or urea
                  formaldehyde foam insulation; or (vii) without limitation
                  radon gas.

         B.       Landlord's Indemnity. Landlord shall indemnify, defend,
                  protect and hold Tenant harmless from and against all
                  liabilities, claims, penalties, fines, response costs and
                  other expenses (including, but limited to, reasonable
                  attorneys' fees and consultants' fees and costs) arising out
                  of, resulting from, or caused by any Hazardous Material used,
                  generated, discharged, transported to or from, stored or
                  disposed of by Landlord or its Agents in, on, under, over,
                  through or about the Premises and/or the surrounding real
                  property. Landlord further agrees not to hold Tenant
                  responsible for the cleanup or remediation of any Hazardous
                  Materials that exist, if any, in, on or under the Parcel or
                  the Premises as of the date possession of the Premises is
                  delivered to Tenant (unless the same was generated or caused
                  to be present by Tenant or its agents, employees or
                  contractors). Nothing stated herein (including, without
                  limitation, the terms of the immediately preceding sentence)
                  shall be interpreted or construed as creating an obligation on
                  Landlord to indemnify or defend Tenant against liabilities,
                  claims, penalties, fines, response costs and other expenses
                  (including, without limitation, attorneys' fees and
                  consultants' fees and costs) arising out of, resulting from,
                  or caused by any Hazardous Materials used, generated,
                  discharged, transported to or from, stored or disposed of by a
                  person or entity other than Landlord or its Agents.

         C.       Permitted Use. Subject to the compliance by Tenant with the
                  provisions of Subparagraphs D, E, F, G, I, J and K below,
                  Tenant shall be permitted to use and store on the Premises
                  those Hazardous Materials listed in Exhibit "D" attached
                  hereto in the quantities attached set forth in Exhibit "D" and
                  such additional Hazardous Materials as are reasonably required
                  or necessary in connection with Tenant's business. Unless such
                  new Hazardous Materials are described in a HMMP (as described
                  below) furnished to Landlord, promptly following Tenant's use
                  of any Hazardous Materials that are not described on Exhibit
                  "D" attached hereto, Tenant shall notify Landlord in writing
                  of the name of the new Hazardous Materials being used by
                  Tenant and the estimated quantities of such Hazardous
                  Materials being used.

         D.       Hazardous Materials Management Plan. Prior to Tenant using,
                  handling, transporting or storing any Hazardous Material at or
                  about the Premises (including, without limitation, those
                  listed in Exhibit "D"). Tenant shall submit to Landlord a
                  Hazardous Materials Management Plan ("HMMP") for Landlord's
                  review and approval, which approval shall not be unreasonably
                  withheld. The HMMP shall describe: (i) the approximate
                  quantities of each material to be used, (ii) the purpose for
                  which each material is to be used (subject to Tenant's
                  requirements for maintaining the confidentiality of its trade
                  secrets), (iii) the method of storage of each material, (iv)
                  the method of transporting each material to and from the
                  Premises and within the Premises, (v) the methods Tenant will
                  employ to monitor the use of the material and to detect any
                  leaks or potential hazards, and (vi) any other information any
                  department of any governmental entity (city, state or federal)
                  requires prior to the issuance of any required permit for the
                  Premises or during Tenant's occupancy of the Premises.
                  Landlord may, but shall have no obligation to review and
                  approve the foregoing information and HMMP, and such review
                  and approval or failure to review and approve shall not act as
                  an estoppel or otherwise waive Landlord's rights under this
                  Lease or relieve Tenant of its obligations under this lease.
                  If Landlord determines in good faith by inspection of the
                  Premises or review of the HMMP that the methods in use or
                  described

                                      -29-
<PAGE>

                  by Tenant are not adequate in Landlord's good faith judgment
                  to prevent or eliminate the existence of environmental
                  hazards, then Tenant shall not use, handle, transport, or
                  store such Hazardous Materials at or about the Premises unless
                  and until such methods are approved by an environmental
                  consultant reasonably approved by Landlord and Tenant and
                  added to an approved HMMP. Tenant shall strictly comply with
                  the HMMP and shall not change its use, operations or
                  procedures with respect to Hazardous Materials without
                  submitting an amended HMMP for Landlord's review and approval
                  as provided above.

         E.       Use Restriction. Except as specifically allowed in
                  Subparagraph C above, Tenant shall not cause or permit any
                  Hazardous Material to be used, stored, generated, discharged,
                  transported to or from, or disposed of in or about the
                  Premises, or any other land or improvements in the vicinity of
                  the Premises. Without limiting the generality of the
                  foregoing, Tenant, at its sole cost, shall comply with all
                  Laws relating to the storage, use, generation, transport,
                  discharge and disposal by Tenant or its Agents of any
                  Hazardous Material. If the presence of any Hazardous Material
                  on the Premises caused or permitted by Tenant or its Agents
                  results in contamination of the Premises or any soil, air,
                  ground or surface waters under, through, over, on, in or about
                  the Premises, Tenant, at its expense, shall promptly take all
                  actions necessary to return the Premises and/or the
                  surrounding real property to the condition required by
                  applicable governmental authorities or agencies. The
                  obligation of Tenant to return the Premises and/or surrounding
                  property to the condition required by applicable governmental
                  authorities or agencies shall not limit, reduce or alter in
                  any manner Tenant's indemnity obligation under Subparagraph F
                  below; it being understood and agreed by Tenant that, although
                  hypothetically the applicable governmental agencies may allow
                  Tenant to keep on the Premises, or encapsulate thereunder,
                  certain traces of a Hazardous Material(s) and not remove all
                  of it from the Premises, if Tenant suffers any damages,
                  liabilities or losses as a result of such Hazardous Materials
                  remaining on the Premises or the Parcel or migrating onto
                  another property (including, without limitation, diminution in
                  the fair market value of the Premises or Parcel, diminution in
                  the fair rental value of the Premises or Parcel, inability to
                  finance or refinance the Premises or Parcel or inability to
                  lease or sell the Premises or Parcel), Tenant shall be liable
                  for such damages, liabilities or losses under the terms of
                  Subparagraph F below.

         F.       Tenant Indemnity. Tenant shall defend, protect, hold harmless
                  and indemnify Landlord and its Agents and Lenders with respect
                  to all actions, claims, losses (including, diminution in value
                  of the Premises), fines, penalties, fees, (including, but not
                  limited to, reasonable attorneys' and consultants' fees and
                  costs) costs, damages, liabilities, remediation costs,
                  investigation costs, response costs and other expenses arising
                  out of, resulting from, or caused by any Hazardous Material
                  used, generated discharged, transported to or from, stored, or
                  disposed of by Tenant or its Agents in, on, under, over,
                  through or about the Premises and/or the surrounding real
                  property. Tenant shall not suffer any lien to be recorded
                  against the Premises as a consequence for the disposal of any
                  Hazardous Material on the Premises by Tenant or its Agents,
                  including any so called state, federal or local "super fund"
                  lien related to the "clean up" of any Hazardous Material in,
                  over, on, under through, or about the Premises.

         G.       Compliance. Tenant shall immediately notify Landlord of any
                  governmentally required test, investigation, or enforcement
                  proceeding against Tenant or the Premises concerning any
                  Hazardous Material in, on, under or about the Premises or
                  allegedly used in, on, under

                                      -30-
<PAGE>

                  or about the Premises. Any remediation plan prepared by or on
                  behalf of Tenant must be submitted to Landlord prior to
                  conducting any work pursuant to such plan and prior to
                  submittal to any applicable government authority and shall be
                  subject to Landlord's consent. Tenant acknowledges that
                  Landlord, as the owner of the Parcel and Buildings located
                  thereon, at its election, shall have the sole right to
                  negotiate, defend, approve and appeal any action taken or
                  order issued with regard to any Hazardous Material by any
                  applicable governmental authority. The preceding sentence
                  notwithstanding, Landlord agrees that if governmental
                  enforcement action is taken against Landlord with respect to
                  any Hazardous Materials discharged or released or caused to be
                  present on, in or under the Parcel or Building B, then
                  Landlord shall promptly notify Tenant of such enforcement
                  action and Tenant shall be entitled to participate in any
                  negotiations with the applicable governmental agency
                  concerning the clean up, remediation or monitoring of such
                  Hazardous Materials. Nothing stated herein shall preclude
                  Landlord from settling or compromising any claims or actions
                  initiated against it or from entering into any monitoring or
                  remediation plan for which Tenant has an obligation of
                  indemnity hereunder.

         H.       Assignment and Subletting. It shall not be unreasonable for
                  Landlord to withhold its consent to any proposed assignment or
                  subletting if the proposed assignee or subtenant has been
                  required by any prior landlord, lender, or governmental
                  authority to "clean up" or remediate any Hazardous Material
                  and has failed to promptly do so; provided that the foregoing
                  will not apply in the case of a Fortune 1,000 Company.
                  Landlord shall not unreasonably withhold its consent to any
                  proposed assignment or subletting if (i) the proposed
                  assignee's or subtenant's anticipated use of the Premises
                  involves the storage, generation, discharge, transport, use or
                  disposal of any Hazardous Material not permitted under
                  Subparagraph C above; or (ii) if the proposed assignee or
                  subtenant is subject to investigation or enforcement order or
                  proceeding by any governmental authority in connection with
                  the use, generation, discharge, transport, disposal or storage
                  of any material amount of Hazardous Material.

         I.       Surrender. Upon the expiration or earlier termination of the
                  Lease, Tenant, at its sole cost, shall remove all Hazardous
                  Materials from the Premises that Tenant or its Agents
                  introduced to the Premises. If Tenant fails to so surrender
                  the Premises, Tenant shall indemnify, protect, defend and hold
                  Landlord harmless from and against all damages resulting from
                  Tenant's failure to surrender the Premises as required by this
                  Paragraph, including, without limitation, any actions, claims,
                  losses, liabilities, fees (including, but not limited to,
                  reasonable attorneys' fees and consultants' fees and costs),
                  fines, costs, penalties, or damages in connection with the
                  presence of such Hazardous Materials at the Premises
                  including, without limitation, damages occasioned by the
                  inability to relet the Premises or a reduction in the fair
                  market and/or rental value of the Premises by reason of the
                  existence of any Hazardous Materials in, on, over, under,
                  through or around the Premises introduced by Tenant.

         J.       Right to Appoint Consultant. Landlord shall have the right to
                  appoint a consultant, reasonably acceptable to Tenant, to
                  conduct an investigation to determine whether any Hazardous
                  Material is being used, generated, discharged, transported to
                  or from, stored or disposed of in, on, over, through, or about
                  the Premises, in an appropriate and lawful manner. If Tenant
                  has violated any Law or covenant in this Lease regarding the
                  use, storage or disposal of Hazardous Materials on or about
                  the Premises, Tenant shall reimburse Landlord for the
                  reasonable cost of such investigations applicable to the

                                      -31-
<PAGE>

                  discovery of Tenant's violation and future investigations of
                  the environmental condition of the Parcel reasonably
                  undertaken by or on behalf of Landlord to confirm the
                  violation has been cured. Tenant, at its expense, shall comply
                  with all reasonable recommendations of the consultant required
                  to conform Tenant's use, storage or disposal of Hazardous
                  Materials to the requirements of applicable Law or to fulfill
                  the obligations of Tenant hereunder.

         K.       Holding Over. If any action of any kind is required to be
                  taken by any governmental authority to clean-up, remove,
                  remediate or monitor Hazardous Material (the presence of which
                  is the result of the acts or omissions of Tenant or its
                  Agents) and such action is not completed prior to the
                  expiration or earlier termination of the Lease, Tenant shall
                  be deemed to have impermissibly held over until such time as
                  such required action is completed, and Landlord shall be
                  entitled, subject to Landlord's obligation to attempt to
                  reasonably mitigate its damages, to all damages directly or
                  indirectly incurred in connection with such holding over,
                  including without limitation, damages occasioned by the
                  inability to re-let the Premises or a reduction of the fair
                  market and/or rental value of the Premises.

         L.       Existing Environmental Reports. Tenant hereby acknowledges
                  that it has received, read and reviewed the reports and test
                  results described in Exhibit "E" attached hereto and made a
                  part hereof (the "Existing Environmental Reports").

         M.       Provisions Survive Termination. The provisions of this
                  Paragraph 39 shall survive the expiration or termination of
                  this Lease.

         N.       Controlling Provisions. The provisions of this Paragraph 39
                  are intended to govern the rights and liabilities of the
                  Landlord and Tenant hereunder respecting Hazardous Materials
                  to the exclusion of any other provisions in this Lease that
                  might otherwise be deemed applicable. The provisions of this
                  Paragraph 39 shall be controlling with respect to any
                  provisions in this Lease that are inconsistent with this
                  Paragraph 39.

40.      First Opportunity to Lease.

         A.       Definitions. As used in this Paragraph 40, the following terms
                  shall have the following meanings:

                  (1)      "First Opportunity Space" shall mean that certain
                  154,080 space commonly known as "Building B" and the Building
                  B Exclusive Areas.

                  (2)      "Xerox Lease" shall mean the existing lease, as the
                  same has been amended, between Landlord and Xerox Corporation,
                  a New York corporation ("Xerox") covering the First
                  Opportunity Space.

         B.       First Opportunity to Lease. Provided that (i) Tenant is not in
                  default under this Lease; (ii) this Lease is in full force and
                  effect; and, iii) Tenant has not assigned this Lease and is in
                  physical occupancy of at least fifty percent (50%) of the area
                  of the Premises (excluding transfers not requiring Landlord's
                  consent hereunder); then, and only then, Tenant shall have the
                  right to lease the First Opportunity Space, as the First
                  Opportunity Space becomes available upon the

                                      -32-
<PAGE>

                  expiration or sooner termination of the Xerox Lease subject,
                  however, to the following terms and conditions.

         C.       Landlord's Notice. If Landlord proposes to lease the First
                  Opportunity Space to a prospective tenant after the expiration
                  or sooner termination of Xerox Lease and all conditions set
                  forth in Subparagraph B above are satisfied, then Landlord
                  shall notify Tenant in writing ("Landlord's Notice") of the
                  following basic business terms upon which Landlord is willing
                  to lease such space (collectively referred to herein as the
                  "Basic Business Terms"): (i) the description of the particular
                  First Opportunity Space then available (the "Proposed Space");
                  (ii) the term of the lease; (iii) the tenant improvements
                  Landlord is willing to construct or that it will require to be
                  constructed and the contribution Landlord is willing to make
                  to pay for such tenant improvements, if any; (iv) the rent for
                  the initial term or the formula to be used to determine such
                  rent (including, if applicable the rental commencement date,
                  Tenant's share of taxes, assessments, operating expenses,
                  insurance costs and the like); (v) any option or options to
                  extend (including the rent to be charged or the formula for
                  such charges during the extension periods); and (vi) any other
                  material business term Landlord elects to specify.

         D.       Second Lease. If, within five (5) business days after receipt
                  of Landlord's Notice, Tenant delivers to Landlord in writing
                  Tenant's agreement to lease the Proposed Space on the Basic
                  Business Terms stated in Landlord's Notice, and within five
                  (5) business days after Tenant's receipt of a written lease in
                  substantially the same form as this Lease with the Basic
                  Business Terms incorporated therein (the "Second Lease"),
                  Tenant executes and returns to Landlord the Second Lease,
                  Landlord shall lease to Tenant and Tenant shall lease from
                  Landlord the Proposed Space on the terms and conditions
                  contained in the Second Lease, provided, however, that this
                  Lease shall be modified to include, and the Second Lease shall
                  include, a cross-default provision providing that Tenant will
                  be in default under both the Second Lease and this Lease, if
                  Tenant is in default under either Lease.

         E.       Failure to Exercise. If Tenant does not indicate in writing
                  its agreement to lease the Proposed Space on the terms
                  contained in Landlord's Notice within the five (5) business
                  day time period, or if Tenant does not execute and return to
                  Landlord the Second Lease within five (5) business days after
                  Tenant's receipt thereof, then Landlord shall thereafter have
                  the unfettered right to lease the Proposed Space to any third
                  party on terms and conditions not substantially more favorable
                  to the tenant than those set forth in the Basic Business
                  Terms. For purposes of this subparagraph E., the term
                  "substantially more favorable" shall mean a rental rate of
                  less than ninety-five percent (95%) of the rental rate offered
                  to Tenant in the Basic Business Terms and/or a deviation of
                  more than five percent (5%) in the overall economics of the
                  offer described in the Basic Business Terms. If Landlord
                  proposes to lease the Proposed Space on substantially more
                  favorable terms that those submitted to Tenant, then Landlord
                  must resubmit the modified terms to Tenant, and Tenant shall
                  have the right to accept or reject such modified terms, in
                  accordance with subparagraphs C. and D. above.

         F.       Termination. The provisions of this Paragraph shall terminate
                  upon (i) the expiration of earlier termination of this Lease;
                  or (ii) any assignment by Tenant of its interest in this Lease
                  or the subletting by Tenant of substantially all of the
                  Premises for substantially all of the remainder of the Lease
                  Term (except for any Transfer not requiring Landlord's consent
                  under this Lease). Tenant's failure to exercise its right to
                  lease granted herein as to any particular Proposed Space shall
                  not terminate Tenant's right to lease any subsequently
                  available Proposed Space.

                                      -33-
<PAGE>

41.      Effectiveness of Lease. The effectiveness of this Lease is expressly
         conditioned upon (i) the execution by Landlord and Xerox of an
         amendment to the Xerox Lease, which amendment shall be in form and
         substance acceptable to Landlord in Landlord's sole discretion and
         will, among other things, reduce the size of the premises leased by
         Xerox under the Xerox Lease by terminating the Xerox Lease with respect
         to the Premises leased to Tenant herein, and (ii) the granting of
         written consent by The Sumitomo Bank Limited ("Sumitomo") to the
         above-described amendment of the Xerox Lease and to this Lease. If
         either of the aforementioned conditions are not satisfied on or before
         June 15, 1996, this Lease shall automatically terminate and shall be of
         no further force or effect. Upon satisfaction of both of the
         aforementioned conditions by June 15 1996, this Lease shall not
         terminate pursuant to this Paragraph 42, and shall be binding on and
         enforceable against Landlord and Tenant. Landlord shall notify Tenant
         in writing promptly upon satisfaction of both conditions.

IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set
forth below.

LANDLORD:                                       TENANT:

SOUTH BAY/EDENVALE ASSOCIATES,                  WESTERN DIGITAL CORPORATION,
a California general partnership                a Delaware corporation

By: M & ASSOCIATES, a California                By: /s/ Richard M. Salvi
    general partnership                             ----------------------------

By: /s/ James D. Mair                           Printed: Richard M. Salvi
    -----------------------------
                                                Title: Vice President
Printed: James D. Mair
                                                Dated: 6/4/96
Title: General Partner

Dated: 6/11/96

                                      -34-
<PAGE>

                                   EXHIBIT "A"

                               BUILDING SITE PLAN

                                [To Be Attached]

                                      -1-
<PAGE>

                                    EXHIBIT A

All that certain real property situate in the City of San Jose, County of Santa
Clara, State of California, described as follows:

Parcels 2 and 3, as shown on the Parcel Map filed for record in the Office of
the Recorder of the County of Santa Clara, State of California on September 26,
1991 in Book 630 of Maps, Pages 39 and 40.

<PAGE>

                                   EXHIBIT "B"

All that certain real property situated in the City of San Jose, County of Santa
Clara, State of California, described as follows:

Parcel 1, as shown on the Parcel Map filed for record in the Office of the
Recorder of the County of Santa Clara, State of California on September 26, 1991
in Book 630 of Maps, Pages 39 and 40.

                                      -1-

<PAGE>

                                   EXHIBIT "C"

                              IMPROVEMENT AGREEMENT

         This Improvement Agreement is made part of that Lease dated June 3,
1996 (the "Lease") by and between SOUTH BAY/EDENVALE ASSOCIATES, a California
general partnership ("Landlord") and WESTERN DIGITAL CORPORATION, a Delaware
corporation ("Tenant"). Landlord and Tenant agree that the following terms are
part of the Lease:

         1.       Purpose of Improvement Agreement. The purpose of the
Improvement Agreement is to set forth the rights and obligations of Landlord and
Tenant with respect to the construction of the Tenant Improvements in the
Premises.

         2.       Definitions. As used in this Improvement Agreement, the
following terms shall have the following meanings, and initially capitalized
terms which are not defined below, but which are defined in the Lease and which
are used in this Improvement Agreement, shall have the meanings ascribed to them
in the Lease:

                  (a)      Final Tenant Improvement Plans. The term "Final
Tenant Improvement Plans" shall mean those plans and specifications for the
Tenant Improvements to be constructed by Tenant which are to be prepared by
Tenant and approved by Landlord pursuant to Paragraph 3 below.

                  (b)      Tenant Improvements. The term "Tenant Improvements"
shall mean the tenant improvements to be constructed by Tenant in accordance
with the Final Tenant Improvement Plans.

                  (c)      TI Costs. The terms "TI Costs" shall mean and include
all costs and expenses incurred by Tenant for any or all of the following:
architectural and engineering fees and costs, all building permits fees and
taxes and other governmental fees and taxes required for the construction and
occupancy of the Tenant Improvements. all of Tenant's contractors' and
subcontractors' prices and fees for constructing the Tenant Improvements,
including the cost of all partitions, utility systems, fire sprinkler systems,
heating, ventilating and air conditioning systems and equipment, roof screens,
electrical distribution facilities, wiring, lighting, ceilings, installations of
fixtures and equipment, restrooms, carpeting, and all other improvements and
alterations required to prepare the Building for occupancy by Tenant in
accordance with the Final Tenant Improvement Plans. However, "TI Costs" shall
not include any costs and expenses incurred (a) to remove any cabling left in
the Premises by the prior tenant of the Building, (b) to repair any water leaks
at the joints between the window frame and the exterior walls of the Building,
(c) to repair the roof of the Building so that it is water tight, or (d) to
repair the HVAC system in the Premises so that it is in good condition and
repair; it being understood and agreed that Landlord shall perform such work, at
no cost to Tenant, as provided in Paragraph 14 of the Lease.

                  (d)      Maximum TI Allowance. The term "Maximum TI Allowance"
shall mean a sum equal to Six Hundred Sixty-five Thousand Five Hundred Fifty
Dollars ($665,550).

                                      -1-

<PAGE>

                  (e)      Excess TI Costs. The term "Excess TI Costs" shall
mean all TI Costs in excess of the Maximum TI Allowance.

         3.       Design of Tenant Improvements.

                  (a)      Preliminary Tenant Improvement Plans. Tenant shall,
on or before 6/15/96, prepare and deliver to Landlord for its review and
approval preliminary plans for the Tenant Improvements, which preliminary plans
shall show Tenant's desired floor plan, layout, electrical requirements, HVAC
requirements and general requirements ins sufficient detail in order to permit
Tenant's architect to prepare working drawings for the Tenant Improvements (the
"Preliminary Tenant Improvement Plans"). Within five (5) business days after
receipt of the Preliminary Tenant Improvement Plans, Landlord shall either
approve such plans or notify Tenant in writing of any request for changes to the
Preliminary Tenant Improvement Plans. If Landlord submits any request for
changes, the parties shall meet and confer to develop Preliminary Tenant
Improvement Plans that are acceptable to both Landlord and Tenant within five
(5) business days after Landlord has notified Tenant of its request for changes.

         At the time Tenant submits its Preliminary Tenant Improvement Plans to
Landlord, Tenant shall inquire of Landlord in writing whether Landlord will
require any of the proposed Tenant Improvements to be removed or surrendered at
the expiration (or earlier termination) of the Lease Term. Landlord shall have
ten (10) days following receipt of Tenant's written inquiry to respond to the
same. In the absence of any such written inquiry by Tenant, Landlord shall give
Tenant written notice, not less than ninety (90) days prior to the expiration of
the Lease Term, of any of the Tenant Improvements Landlord requires to be
removed. Failure of Landlord to respond timely to Tenant's inquiry or to
otherwise give timely notice of the Tenant Improvements, if any, Landlord
requires to be removed at the expiration (or earlier termination) of the Lease
Term, shall constitute Landlord's consent to the surrender of such Tenant
Improvements with the Premises. Unless Landlord requires that Tenant remove any
such Tenant Improvements, the same shall, once constructed or installed in the
Premises by or for Tenant, become the property of Landlord upon termination of
the Lease and shall remain upon and be surrendered with the Premises at the
termination of the Lease. The preceding sentence to the contrary
notwithstanding, so long as no Event of Default by Tenant exists under the Lease
as of the date(s) Tenant desires to remove any Tenant Improvements from the
Premises and provided, further, that Tenant notifies Landlord in writing not
later than 180 days prior to the expiration of the Lease Term of the Tenant
Improvements that Tenant desires to remove from the Premises prior to the
expiration of the Lease Term, Tenant shall have the right to remove any such
Tenant Improvements from the Premises prior to the expiration of the Lease Term,
except that Tenant shall then restore the portion of the Premises from which
such Tenant Improvements are removed to the condition existing immediately prior
to the installation or construction of such Tenant Improvements so removed and
Tenant shall repair all damage, if any, to the Premises caused by such removal.
Any Tenant Improvements that Landlord timely requests be removed from the
Premises at the expiration (or earlier termination of the Lease Term), shall be
so removed by Tenant at its sole cost, and Tenant shall repair all damage, if
any, to the Premises caused by such removal.

                  (b)      Development and Approval of Tenant Improvement Plans.
Once the Preliminary Tenant Improvement Plans have been approved by Landlord and
Tenant, Tenant shall cause Tenant's architect to complete and submit to Landlord
for its approval final working drawings for

                                      -2-

<PAGE>

the Tenant Improvements that are consistent with and are logical evolutions of
the Preliminary Tenant Improvement Plans approved by the parties. Landlord shall
approve the final working drawings for the Tenant Improvements or notify Tenant
in writing of its specific request for changes within five (5) business days
after receipt of the working drawings from Tenant. If Landlord submits any
request for changes, the parties shall confer and reach agreement upon the final
working drawings for the Tenant Improvements within five (5) business days after
Landlord has notified Tenant of its request for changes. When Landlord and
Tenant agree upon the final working drawings for the Tenant Improvements, a
representative of each shall sign the same. The final working drawings so
approved by Landlord and Tenant are referred to herein as the "Final Improvement
Plans".

         4.       Construction of Tenant Improvements. Prior to the commencement
of the construction of the Tenant Improvements, Tenant shall submit to Landlord
for its approval Tenant's general contractor for the Tenant Improvements.
Landlord shall have the right but not the obligation nor the duty, to disapprove
any such contractor who, in Landlord's good faith determination, is financially
or otherwise unqualified. The failure of Landlord to disapprove a contractor
shall not constitute a warranty that any contractor not so disapproved is in
fact qualified. Following Landlord's approval of the Final Tenant Improvement
Plans and Tenant's contractor, Tenant shall promptly commence construction and
installation of the Tenant Improvements and shall thereafter pursue the same
diligently to completion. Any damage to the Building caused by Tenant or its
contractors or subcontractors in connection with the construction of the Tenant
Improvements shall be repaired at Tenant's expense. Tenant shall be responsible
for obtaining all necessary permits and approvals required for the construction
and installation of the Tenant Improvements and Landlord agrees to reasonably
cooperate at no cost to it with Tenant in obtaining the same. All work done in
connection with the Tenant Improvements shall be performed in compliance with
all applicable laws, ordinances, rules, orders and regulations of all federal,
state, county and municipal governments or agencies now in force or that may be
enacted hereafter and with all directives rules and regulations of the fire
marshal, health officer, building inspector or other proper officers of any
governmental agency now having or hereafter acquiring jurisdiction.

         5.       Changes to Approved Plans. There shall be no changes to the
approved Final Tenant Improvement Plans without the prior written consent of
Landlord except that Landlord's consent shall not be required for non-material
deviations rendered necessary or appropriate by on-site conditions or required
by building inspectors or similar government agencies. All change orders
requested by Tenant shall be made in writing. Any change not approved or
disapproved by Landlord within five (5) business days of Landlord's receipt of
detailed plans and specifications therefor shall be deemed disapproved. Landlord
shall not withhold or delay its consent unreasonably.

         6.       Purpose of Maximum TI Allowance. The Maximum TI Allowance
shall be used by Tenant to design and construct the Tenant Improvements in the
Building.

         7.       Payment of TI Costs. The TI Costs for the Tenant Improvements
shall be paid by Landlord and Tenant as follows:

                  (a)      Maximum TI Allowance. Landlord shall contribute the
Maximum TI Allowance toward the TI Costs, in the manner set forth below, but
subject to the satisfaction of the conditions set forth in Paragraphs 8 and 9
below. In no event shall Landlord be required to contribute

                                      -3-
<PAGE>

more than the Maximum TI Allowance toward the costs of designing and
constructing the Tenant Improvements.

                  (b)      Excess TI Costs. Tenant shall pay the full amount of
all Excess TI Costs, in the manner set forth below.

                  (c)      Progress Payments During Construction. During the
course of construction of the Tenant Improvements, each progress payment due to
Tenant's contractor or to any subcontractor or material supplier shall be paid
by Landlord and Tenant as follows: (i) Landlord shall pay a fraction of each
progress or other payment, which fraction shall have as its numerator the
Maximum TI Allowance and shall have as its denominator Tenant's estimate of the
total TI Costs to complete construction of the Tenant Improvements (it being
understood and agreed, however, that in no event shall Landlord be required to
contribute more than the Maximum TI Allowance toward the costs of designing and
constructing the Tenant Improvements); and (ii) Tenant shall pay the balance of
each progress or other payment. If Tenant's construction contract does not
otherwise provide for a retention of at least ten percent (10%) then Landlord's
portion of each progress payment shall be reduced by ten percent (10%) and such
ten percent (10%) retention shall be paid by Landlord to Tenant thirty-five (35)
days after the timely filing of a Notice of Completion or, if no Notice of
Completion is filed, then ninety-five (95) days after substantial completion of
the Tenant Improvements, in each case assuming such period shall expire without
the filing of any lien claims. If lien claims are filed, such retention shall be
paid within ten (10) days after presentation to Landlord of appropriate recorded
lien releases, surety bonds or other evidence satisfactory to Landlord that such
lien has been removed or released from record title.

         8.       Conditions Precedent. Landlord shall not be obligated to make
any disbursements of the Maximum TI Allowance to or for the benefit of Tenant
unless at the time of each request for disbursement, all of the following
conditions are satisfied:

                  (a)      Such request shall be made (except with respect to
disputed claims made within ninety (90) days after completion) prior to the date
which is one (1) year following the Commencement Date;

                  (b)      There shall exist no Event of Default hereunder or
under the Lease;

                  (c)      The Lease shall be in full force and effect;

                  (d)      Tenant shall have furnished to Landlord bills and
statutory releases of lien rights covering work done and/or materials furnished
in connection with the construction of the Tenant Improvements.

         9.       Disbursement Procedures. Tenant may request disbursements from
the Maximum TI Allowance not more frequently than once each month. No
disbursements shall be made until Landlord has approved the Final Tenant
Improvement Plans. Each request for disbursement shall be accompanied by (i) an
itemized statement, in form and content reasonably acceptable to Landlord; (ii)
statutory lien releases from all persons and entities providing work or
materials covered by such statement; and (iii) invoices, vouchers, statements,
affidavits and/or other documents in a form

                                      -4-
<PAGE>

reasonably acceptable to Landlord which substantiate and justify the
disbursement requested. Landlord shall make disbursements of the Maximum TI
Allowance within thirty (30) days after Landlord's receipt of each fully
completed disbursement request directly to Tenant or, at Landlord's option upon
notice to Tenant, directly to contractors, contractors, laborers or suppliers
entitled thereto. Prior to or at the time of each disbursement hereunder for
construction costs, Tenant shall deliver to Landlord statutory lien waivers from
Tenant's prime contractor to whom funds were disbursed under the previous
disbursement.

         10.      Inspections. In addition to Landlord's right under the Lease
to enter the Premises for the purpose of posting notices of nonresponsibility,
Landlord, its officers, agents or employees, shall have the right at all
reasonable times to enter upon the Premises and inspect the Tenant Improvements
to determine that the same are in conformity with the Final Tenant Improvement
Plans and all requirements hereof. Landlord, however, is under no obligation to
supervise, inspect or inform Tenant of the progress of construction and Tenant
shall not rely upon Landlord therefor. While on the Premises, Landlord shall not
unreasonably interfere with the progress of construction.

         11.      Protection Against Lien Claims. In addition to the Lease,
Tenant agrees to fully pay and discharge all claims for labor done and materials
and services furnished in connection with the construction of the Tenant
Improvements, to diligently file or procure the filing of a valid Notice of
Completion upon completion of construction or within ten (10) days thereafter,
to diligently file or procure the filing of a Notice of Cessation upon a
cessation of labor on the Tenant Improvements for a continuous period of thirty
(30) days or more, and to take all other reasonable steps to forestall the
assertion of claims of lien against the Premises, the Parcel, or any part
thereof or right or interest appurtenant thereto.

         12.      Default. Each of the following events shall constitute an
Event of Default hereunder:

                  (a)      Substantial deviations in construction work from the
Final Tenant Improvement Plans, without the prior approval of Landlord (not to
be withheld or delayed unreasonably) or the appearance of defective workmanship
or materials when said deviations or defects are not corrected within thirty
(30) days after written notice thereof;

                  (b)      Cessation of construction work prior to the
completion of the Tenant Improvements for a continuous period of thirty (30)
days or more for causes other than causes beyond the reasonable control of
Tenant;

                  (c)      The filing of any claim of lien against the Premises,
the Parcel, or any part thereof, in connection with the Tenant Improvements, and
the continued maintenance of said claim of lien for a period of forty-five (45)
days after notice to Tenant thereof without discharge or satisfaction thereof or
provision therefor satisfactory to Landlord (at Landlord's sole discretion),
provided that recording of a surety bond pursuant to the terms of Civil Code
Section 3143 in the amount of one and one-half (1 1/2) of the amount of such
lien claim shall constitute satisfactory provision; or

                  (d)      The occurrence of a Event of Default by Tenant under
the Lease.

                                      -5-
<PAGE>

         13.      Remedies. In the event of a default by Tenant hereunder,
Landlord shall thereafter have no further obligation to disburse any portion of
the Maximum TI Allowance, unless and until such default is cured. In addition,
Landlord shall have the right (but not the obligation) to enter upon the
Premises and take over and complete the construction of the Tenant Improvements,
to make disbursements from the Maximum TI Allowance, and to discharge or replace
the contractors or subcontractors performing such work. In no event shall
Landlord be required to expend its own funds to complete the Tenant Improvements
if the Maximum TI Allowance is insufficient. Where substantial deviations from
the Final Tenant Improvement Plans have occurred which have not been approved in
accordance with Paragraph 5 above, or defective or unworkmanlike labor or
materials are being used in construction of the Tenant Improvements, Landlord
shall have the right to immediately order stoppage of all construction and
demand that such condition be corrected. After issuance of such an order in
writing, no further work shall be done on the Tenant Improvements without the
prior written consent of Landlord unless and until said condition has been
corrected to Landlord's reasonable satisfaction, and upon correction, Landlord
shall promptly consent to the continuation of construction.

         14.      Evidence of Compliance with Government Regulations. Upon
completion of the Tenant Improvements, Tenant shall furnish to Landlord copies
of such permits of occupancy as may be required by any public authority having
jurisdiction.

         15.      Indemnification. Tenant shall, at Tenant's expense, defend,
indemnify, save and hold Landlord harmless from any and all claims, demands,
losses, expenses, damages (general, punitive or otherwise but excluding lost
profits) causes of action (whether legal or equitable in nature) asserted by any
person, firm, corporation, governmental body or agency, or entity arising out of
the construction of the Tenant Improvements or caused by the use of the Maximum
TI Allowance. Tenant shall pay to Landlord upon demand all claims, judgments,
damages, losses or expenses (including attorneys' fees) incurred by Landlord as
a result of any legal action arising out of the construction of the Tenant
Improvements. The provisions of this paragraph shall not apply to claims,
demands, losses, expenses, damages, judgments and causes of action arising from
or related to any act, neglect or misconduct of

                                      -6-
<PAGE>

Landlord or its Agents. The obligations of Tenant under this Paragraph 15 shall
survive the expiration or earlier termination of the Lease.

IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set
forth below.

LANDLORD:                                      TENANT:

SOUTH BAY/EDENVALE ASSOCIATES,                 WESTERN DIGITAL CORPORATION,
a California general partnership               a Delaware corporation

By: M & ASSOCIATES, a California               By: /s/ Richard M. Salvi
    general partnership                            ----------------------------

By /s/ James D. Mair                           Printed: Richard M. Salvi
   ----------------------
                                               Title: Vice President
Printed: James D. Mair
                                               Dated: 6/4/96
Title: General Partner

Dated: 6/11/96

                                      -7-
<PAGE>

                                   EXHIBIT "D"

           LIST OF HAZARDOUS MATERIALS PERMITTED TO BE USED BY TENANT

                                      -1-
<PAGE>

                                 FIRST AMENDMENT

This First Amendment to Lease ("First Amendment") is made by and between WESTERN
DIGITAL CORPORATION, A DELAWARE CORPORATION, ("Tenant") and SOUTH BAY/EDENVALE
ASSOCIATES, a California general partnership ("Landlord"), as of the date set
forth below with reference to the following facts:

         A.       By Lease Agreement dated June 14, 1996 (the "Lease"), Landlord
has leased to Tenant certain property commonly known as 5863 Rue Ferrari Drive,
San Jose, California.

         B.       Landlord and Tenant desire to amend the Lease to acknowledge
their mutual understanding to extend the term of the Lease as provided below.

NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Landlord and Tenant hereby agree as follows:

         1.       Landlord and Tenant mutually agree that the address of Tenant,
as defined in the second paragraph of the Lease, shall be changed from 5853 Rue
Ferrari Drive, San Jose, California to 5863 RUE FERRARI DRIVE, SAN JOSE,
CALIFORNIA.

All other terms and conditions of the Lease shall remain the same and in full
force and effect.

         As entered into this ____ day of _________, 1996.

LANDLORD:                                     TENANT:

SOUTH BAY/EDENVALE ASSOCIATES,                WESTERN DIGITAL CORPORATION,
a California general partnership              a Delaware corporation

By:        [SIGNED]                           By: /s/ Richard M. Salvi
    -----------------------------                 ------------------------------
        James D. Mair                                 Richard M. Salvi

Title: General Partner                        Title: Vice President

Dated: __________________________             Dated: 8/7/96

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