Document:

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                              RAINBOW TECHNOLOGIES
                                      DBA
                         SYSTEMATIC SYSTEMS INTEGRATION

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
LEASE
<S>                                                                                 <C>
ARTICLE 1 - BASIC LEASE PROVISIONS...................................................1

ARTICLE 2 - TERM.....................................................................2

ARTICLE 3 - BASIC MONTHLY RENT.......................................................3

ARTICLE 4 - TAX RENT.................................................................3

ARTICLE 5 - OPERATING EXPENSE RENT [SEE ADDENDUM]....................................4

ARTICLE 6 - CAPITAL EXPENSE RENT [SEE ADDENDUM]......................................5

ARTICLE 7 - SECURITY DEPOSIT.........................................................6

ARTICLE 8 - USE......................................................................6

ARTICLE 9 - UTILITIES AND SERVICES...................................................6

ARTICLE 10 - PARKING LICENSE [SEE ADDENDUM]..........................................7

ARTICLE 11 - REPAIRS.................................................................8

ARTICLE 12 - CONDITION OF PREMISES...................................................8

ARTICLE 13 - ENTRY BY LANDLORD.......................................................8

ARTICLE 14 - ALTERATIONS & RENOVATIONS...............................................9

ARTICLE 15 - HAZARDOUS MATERIALS....................................................10

ARTICLE 16 - LIENS..................................................................10

ARTICLE 17 - BROKERS................................................................10

ARTICLE 18 - INSURANCE..............................................................10

ARTICLE 19 - INDEMNIFICATION........................................................11

ARTICLE 20 - DAMAGE OR DESTRUCTION..................................................12

ARTICLE 21 - EMINENT DOMAIN.........................................................13

ARTICLE 22 - INTERRUPTION OF USE....................................................13

ARTICLE 23 - SUBORDINATION, NONDISTURBANCE AND ATTORNMENT...........................14

ARTICLE 24 - OFFSET STATEMENT.......................................................14

ARTICLE 25 - BUILDING PLANNING [DELETED]............................................15

ARTICLE 26 - ASSIGNMENT AND SUBLETTING..............................................15

ARTICLE 27 - BANKRUPTCY AND INVOLUNTARY ASSIGNMENT..................................16

ARTICLE 28 - FINANCIAL STATEMENTS...................................................17

ARTICLE 29 - HOLDING OVER...........................................................17

ARTICLE 30 - DEFAULTS...............................................................17

ARTICLE 31 - REMEDIES...............................................................18

ARTICLE 32 - ATTORNEYS' FEES........................................................18

ARTICLE 33 - WAIVER OF JURY TRIAL...................................................19

ARTICLE 34 - NOTICES [SEE ADDENDUM].................................................19

ARTICLE 35 - GENERAL PROVISIONS.....................................................19
</TABLE>

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<TABLE>
<CAPTION>
ADDENDUM NO. 1
<S>                                                                                 <C>
ARTICLE 36 - TENANT IMPROVEMENTS.....................................................1

ARTICLE 37 - OPTION TO RENEW.........................................................1

ARTICLE 38 - SIGNS...................................................................3

ARTICLE 39 - RIGHT TO AUDIT..........................................................4

ADDENDUM TO ARTICLE 5 - OPERATING EXPENSE RENT.......................................6

ADDENDUM TO ARTICLE 6 - CAPITAL EXPENSE RENT.........................................7

ADDENDUM TO ARTICLE 10 - PARKING LICENSE.............................................7

ADDENDUM TO ARTICLE 34 - NOTICES.....................................................9

REAFFIRMATION OF LEASE...............................................................9

EXHIBIT "A" - LOCATION PLAN

EXHIBIT "B" - LEGAL DESCRIPTION

EXHIBIT "C" - RULES AND REGULATIONS

EXHIBIT "D" - WORK LETTER

SECTION 1  - CONSTRUCTION REPRESENTATIVES............................................1

SECTION 2  - LANDLORD'S AND TENANT'S WORK............................................1

SECTION 3  - PERFORMANCE SCHEDULE AND DELAYS.........................................1

SECTION 4  - PLANS AND PERMITS FOR TENANT'S WORK.....................................2

SECTION 5  - SELECTION OF CONTRACTOR TO PERFORM TENANT'S WORK........................3

SECTION 6  - ACCESS TO PREMISES......................................................3

SECTION 7  - WORK COSTS..............................................................4

SCHEDULE 1 - LANDLORD'S WORK.........................................................6

SCHEDULE 2 - CONSTRUCTION SCHEDULE...................................................6

SCHEDULE 3 - INSURANCE REQUIREMENTS..................................................6

SCHEDULE 4 - SUPERVISION FEES........................................................7
</TABLE>

                                       ii
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                                      LEASE

                By this Lease dated November 24, 1999, for reference purposes
only, Landlord hereby leases to Tenant the Premises, together with the
non-exclusive right to use the Common Areas, upon and subject to the following
terms, covenants and conditions:

ARTICLE 1 - BASIC LEASE PROVISIONS

        1.1 For purposes of this Lease, these certain provisions are defined as
follows:

                (a)     Landlord:           Stevens Creek Associates, a
                                            California general partnership, dba
                                            TrizecHahn Landmark Square
                                            Management.

                (b)     Tenant:             Rainbow Technologies, Inc., a
                                            Delaware corporation, dba Systematic
                                            Systems Integration.

                (c)     Building:           111 West Ocean Boulevard, Long
                                            Beach, California, consisting of
                                            approximately:

                                            Gross Rentable Square Feet: 440,032

                (d)     Premises:           Suite 2000, subdivided into three
                                            (3) areas to facilitate a phased
                                            initial occupancy (all as indicated
                                            on the location plan attached hereto
                                            as Exhibit "A"), as follows:

<TABLE>
<CAPTION>
                                                                  RENTABLE AREA
                           SUITE/AREA                           (IN SQUARE FEET)
                           ----------                           ----------------
<S>                                                             <C>
                             2000A                                    5,000
                             2000B                                    4,400
                             2000C                                    9,412
                        TOTAL SUITE 2000                             18,812
</TABLE>

                (e)     Proportional Share: 4.28%

                (f)     Base Year:          The calendar year 2000.

                (g)     Commencement Date:  For each respective phase of initial
                                            occupancy:

<TABLE>
<CAPTION>
                        SUITE/AREA                           COMMENCEMENT DATE
                        ----------                           -----------------
<S>                                                          <C>
                          2000A                              December 1, 1999
                          2000B                               January 1, 2000
                          2000C                                April 1, 2000
</TABLE>

                (h)     Termination Date:   March 31, 2005.

                (i)     Basic Monthly Rent: Tenant's Basic Monthly Rent for each
                                            effective date through the day prior
                                            to the following effective date (or
                                            the Termination Date, as the case
                                            may be) shall be as follows:

<TABLE>
<CAPTION>
                         EFFECTIVE DATE                        BASIC MONTHLY RENT
                         --------------                        ------------------
<S>                                                            <C>
                        December 1, 1999                              $0.00
                        January 1, 2000                            $17,860.00
                         April 1, 2000                             $35,742.80
                        October 1, 2000                            $37,529.94
                        January 1, 2001                            $39,406.44
                        January 1, 2002                            $41,376.76
                        January 1, 2003                            $43,445.60
                        January 1, 2004                            $45,617.88
</TABLE>

                (j)     Initial Security    Thirty-Five Thousand Seven Hundred
                        Deposit:            Forty-Two and 80/100 Dollars
                                            ($35,742.80).

                                  Page 1 of 22
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                (k)     Parking Allotment:  Seventy-three (73) automobiles.

                (l)     Procuring Broker:   The Seeley Company.

                (m)     Permitted Use:      General administrative office use
                                            consistent with the character of a
                                            first-class office building.

                (n)     Business Hours:     8:00 AM to 6:00 PM, Monday through
                                            Friday, and 9:00 AM to 1:00 PM on
                                            Saturdays excepting holidays
                                            generally recognized in the State of
                                            California.

        1.2 For purposes of this Lease, the "Land" shall be defined as the site
upon which the Building, Common Areas and other related improvements,
facilities, service areas and equipment are located (as legally described in
Exhibit "B" attached hereto).

        1.3 For purposes of this Lease, the "Common Areas" shall be defined as
those interior and exterior portions of the Building and such other areas,
facilities and equipment serving the Building, which are designated by Landlord
for the common use or benefit of tenants, tenants' employees, customers and
invitees, and/or members of the general public. Such areas, facilities and
equipment shall include, without limitation: entrances; exits; lobbies;
elevators; stairways; corridors; passageways; public washrooms; parking
facilities; loading areas; plazas; private sidewalks; landscaped areas;
walkways; mechanical, electrical and telephone rooms; utilities and related
facilities; electrical, mechanical, sprinkler, fire detection or prevention
equipment, security equipment, and related facilities; duct shafts; operating,
maintenance and storage areas; and service areas, equipment and facilities.

        1.4 For purposes of this Lease, the "Leasehold Improvements" shall be
defined as all non-structural improvements in and to the Premises, including,
without limitation: partitions within the interior of the Premises and the
interior one-half of partitioning demising the Premises from adjacent premises
(whether slab-to-slab, ceiling-height or a lesser height), and the fixtures,
doors, windows, openings and finishes installed therein or thereon; the interior
drywall on exterior walls and partitions demising the Premises from Common
Areas; cabinetry, railings, paneling, and woodwork; integrated ceiling systems
(including grid, panels and lighting); carpeting and other floor finishes;
kitchen facilities (including sinks, appliances and other fixtures) or other
similar facilities; rest rooms intended to exclusively serve the Premises
(including showers, toilets, basins and other fixtures); the components of the
mechanical, heating, ventilation, air-conditioning, electrical, fire/life safety
and plumbing systems (collectively "Mechanical Systems") from the common point
of distribution on the floor for each such system to and throughout the
Premises; any Mechanical Systems or intra-Building telephone network cabling
which are independent of the base-Building Mechanical Systems and exclusively
serve the Premises (whether or not such system is contained entirely within the
Premises); and, Alterations which Landlord has not required Tenant to remove as
a condition of making such Alterations. The Leasehold Improvements shall include
all of the foregoing improvements in or to the Premises regardless of whether
such improvements either: existed in the Premises prior to Tenant's having
entered into this Lease; were paid for by either Landlord or Tenant (or a prior
tenant); were installed by either Tenant or Landlord as a condition of this
Lease; were installed by Landlord during the Term of this Lease to comply with
the requirements or directives of a government, quasi-government or regulatory
agency or authority; were installed by Landlord during the Term of this Lease
with the intent of reducing Operating Expenses; were installed by Landlord
during the Term of this Lease to maintain the quality, integrity and/or
character of the Land, Building, Common Areas and/or the machinery, equipment
and facilities related thereto; or, were installed by Tenant as an Alteration.

        1.5 Notwithstanding the foregoing, those terms defined in Articles 1.1
through 1.4, above are subject to modification, revision or alteration by other
terms and conditions of this Lease, addenda, exhibits and other attachments
hereto.

ARTICLE 2 - TERM

        2.1 The "Initial Term" of this Lease shall commence on the earliest
Commencement Date and continue to the Termination Date, unless sooner terminated
as otherwise provided herein. The "Term" of this Lease shall include the Initial
Term and any other period of Tenant's occupancy resulting either from Tenant's
holding over with Landlord's consent (pursuant to Article 29.2), or from
Tenant's exercise of an express option to renew, re-lease or extend the Term, or
other express agreement to extend the Term, all made in accordance with this
Lease (or a modification or addendum thereto made in accordance with this
Lease). Unless expressly stated to the contrary herein, any and all references
herein to "months" during the Term shall be deemed to refer to full calendar
months of the Term, beginning the earliest Commencement Date (if the
Commencement Date is the first day of a calendar month) or the first day of the
first full calendar month after the earliest Commencement Date (if the
Commencement Date is not the first day of a calendar month).

                                  Page 2 of 22
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ARTICLE 3 - BASIC MONTHLY RENT

        3.1 The first installment of Basic Monthly Rent is due on or before the
execution of this Lease. All other installments of Basic Monthly Rent are
payable in advance on the first day of each calendar month, together with any
monthly installments of estimated Tax Rent, Operating Expense Rent and Capital
Expense Rent (collectively "Total Monthly Rent"). Except as provided in Article
29, if the Commencement Date is not the first day of the calendar month or the
Termination Date is not the last day of the calendar month, then Total Monthly
Rent shall be prorated based upon a thirty (30) day month.

        3.2 All amounts due or relating to Tenant's occupancy under this Lease,
other than Total Monthly Rent, are due and payable within thirty (30) days of
receipt of Landlord's invoice for same. Such amounts include, without
limitation: annual reconciliations and retroactive charges of Tax Rent,
Operating Expense Rent or Capital Expense Rent; Orders for Extra Work; charges
for extra utilities and services; and Late Charges (collectively "Additional
Rent"). All amounts due under this Lease or relating to Tenant's occupancy are
deemed to be rent, receivable as such, and subject to all remedies of Landlord
for nonpayment of rent. Tenant's obligation to pay all amounts owing under this
Lease shall survive Tenant's relinquishment of possession to Landlord, or the
expiration or early termination of this Lease.

        3.3 Tenant agrees that Tenant's late payment of any sum due under this
Lease will cause Landlord to incur costs not contemplated hereunder, the exact
amount of which is impracticable or extremely difficult to fix. Therefore, if
all or any portion of any installment of Total Monthly Rent is not received by
Landlord by the fifth (5th) day of the month for which it is due, or if all or
any portion of any item of Additional Rent is not received by Landlord when due
pursuant to Article 3.2, then Tenant shall pay to Landlord a "Late Charge" of
ten percent (10%) of the overdue amount. Landlord and Tenant agree that the Late
Charge represents a fair and reasonable estimate of costs that Landlord will
incur by reason of any late payment by Tenant. Landlord's acceptance of a Late
Charge shall not constitute a waiver of Tenant's default with respect to the
overdue amount, or prevent Landlord from exercising any of the other rights and
remedies available to Landlord under this Lease or pursuant to law. The Late
Charge shall be in addition to, and not in lieu of, any interest which may
accrue pursuant to Article 35.11 of this Lease.

        3.4 All amounts due Landlord shall be paid by Tenant, without deduction
or offset, in lawful money of the United States of America, which shall be legal
tender at the time of payment. Payments shall be made at the office of Landlord
or to such other person or at such other place as Landlord notifies Tenant.
Landlord reserves the right to require that payments be made by certified check
or cash. No receipt by Landlord of an amount less than the full amount due will
be deemed to be other than a payment on account, and no endorsement or statement
on any check or any accompanying writing effect or evidence an accord and
satisfaction; and, Landlord may accept such check or payment without prejudice
to Landlord's right to recover the balance or pursue any other right or remedy
of Landlord.

ARTICLE 4 - TAX RENT

        4.1 For each successive calendar year of the Term after the Base Year
("Comparison Year"), Tenant shall pay to Landlord "Tax Rent", which shall be the
Proportional Share of the amount, if any, which the aggregate annual Property
Taxes for the Comparison Year exceeds the Property Taxes for the Base Year. Tax
Rent is payable in the manner set forth in Article 4.3. If this Lease terminates
on a day other than the last day of the Comparison Year, then Tax Rent for the
Comparison Year shall be prorated.

        4.2 "Property Taxes" is defined for purposes of this Lease as: all costs
and expenses which Landlord or Landlord's managing agent has incurred or will
incur for real and personal property taxes, or any other assessments upon
Landlord's legal or equitable interest in the Land, Building, Common Areas and
all or any related facilities and improvements (including, without limitation,
leasehold taxes or other taxes or assessments levied in lieu thereof or in
addition thereto), whether imposed by a government authority or agency, or by a
special assessment district; any taxes resulting from a reassessment of the
Building occasioned by any cause whatsoever, including, without limitation, any
reassessment resulting from a conveyance of Landlord's interest in the Land,
Building or Common Areas (whether or not such transfer occurs before or after
the Commencement Date), or by the determination by a court that any law,
regulation, statute, or constitutional provision purporting to limit tax
increases is invalid in whole or in part; any non-progressive tax on or measured
with respect to gross receipts from the rental of space in the Building; any
user fees or charges assessed for any government services which were provided
without cost prior to the imposition of Proposition 13; any assessment, tax,
fee, charge or levy for any transportation plan, fund or system within the
general geographic area of the Building; and, any expenses of Landlord in
contesting any of the foregoing or the assessed valuation of the Land, Building
or Common Areas. Notwithstanding the foregoing, the definition of "Property
Taxes" excludes any net income, franchise, capital stock, estate or inheritance
taxes.

                                  Page 3 of 22
<PAGE>   7

        4.3 As soon as practical after the beginning of each Comparison Year,
Landlord shall provide Tenant with Landlord's estimate of Property Taxes and Tax
Rent for the Comparison Year. During the Comparison Year, Tenant shall pay
Landlord's estimated Tax Rent in equal monthly installments on the first day of
each month. If the estimated Tax Rent for the Comparison Year is not determined
until after the beginning of the Comparison Year, then Tenant shall continue to
pay the monthly installments for the prior Comparison Year, if any, and shall
retroactively pay any underpayment of estimated Tax Rent payable for the period
from the beginning of the Comparison Year until the estimate was provided. As
soon as practical after the end of the Base Year, Landlord shall determine the
Property Taxes incurred in the Base Year and shall deliver to Tenant a written
statement setting forth the same. As soon as practical after the end of each
Comparison Year, Landlord shall determine the Property Taxes incurred in the
Comparison Year and shall deliver to Tenant a written statement setting forth
the same and a calculation of the Tax Rent allocable to Tenant. If Tenant has
underpaid its Tax Rent for the Comparison Year, then Tenant shall pay to
Landlord the full amount of such deficiency as Additional Rent. If Tenant has
overpaid its Tax Rent for the Comparison Year, then Landlord shall either credit
the overpayment toward Tenant's next installment(s) of Total Monthly Rent or, if
this Lease has terminated and Tenant is not in default, refund the overpayment
to Tenant within thirty (30) days of determination.

        4.4 If the value of the improvements in the Premises (regardless of
whether such improvements were installed or paid for by Landlord or Tenant, or
have been affixed to the real property to become a part thereof) exceed the
value of improvements generally prevailing in other leased premises in the
Building, then Tenant shall pay to Landlord as Additional Rent all Property
Taxes levied on such excess value. If the records of the County Assessor are
available and sufficiently detailed to serve as a basis for determining such
excess value, then such records shall be binding on Landlord and Tenant;
otherwise, the actual cost of construction shall be determinative.

        4.5 Tenant shall directly pay the taxing authority any tax levied
against the personal property or trade fixtures of Tenant in or about the
Premises. If Tenant fails to pay such tax before delinquency, then Landlord may
pay such tax on behalf of Tenant, and the amount paid shall constitute
Additional Rent due Landlord.

        4.6 The calculation and payment of Tax Rent is separate, distinct and
shall not be affected by the calculation and payment of either Basic Monthly
Rent, Operating Expense Rent or Capital Expense Rent. Any item of cost or
expense included as Property Taxes shall not be included as either Operating
Expenses or Capital Expenses.

ARTICLE 5 - OPERATING EXPENSE RENT [SEE ADDENDUM]

        5.1 For each Comparison Year, Tenant shall pay to Landlord "Operating
Expense Rent", which shall be the Proportional Share of the amount, if any, by
which the aggregate annual Operating Expenses for the Comparison Year exceeds
the Operating Expenses for the Base Year. Operating Expense Rent is payable in
the manner set forth in Article 5.4. If this Lease terminates on a day other
than the last day of the Comparison Year, then Operating Expense Rent for the
Comparison Year shall be prorated.

        5.2 "Operating Expenses" is defined for purposes of this Lease as all
costs and expenses, calculated as if the Building were one hundred percent
(100%) occupied and all services were provided to the entire Building, which
Landlord or Landlord's managing agent has incurred or will incur (without offset
for any revenue derived from any source whatsoever) in the operation,
maintenance, repair, improvement, management and administration of the Land,
Building and Common Areas, plus a management fee not to exceed five percent (5%)
of gross Building and Common Areas revenue.

        5.3 "Operating Expenses" includes, without limitation, costs and
expenses for: all wages, salaries, benefits, payroll taxes, other similar
government charges and other direct costs of personnel rendering services to the
Building, whether or not situated in the Building, including, without
limitation, Building managers and their assistants and supervisors, clerical,
accounting, and technical services personnel; utility charges and surcharges;
janitorial, mechanical, security, landscaping, elevator, waste disposal, alarm
maintenance and other Building services; parking facility operation, maintenance
and management; labor; lighting; fire/life safety systems; intra-Building
telephone network cabling; air-conditioning; heating; ventilating; water and
sewage charges; supplies; materials; tools; equipment; uniforms; operation,
maintenance and repair of systems and facilities; structural and non-structural
repair; business licenses or similar licenses or taxes; insurance premiums,
deductibles and related charges, whether required pursuant to this Lease or by
any lienholder or encumbrancer; professional fees and other expenses; and the
expenses of maintaining a Building management office, with rent imputed at
Landlord's scheduled rate for the building containing the office.

                                  Page 4 of 22
<PAGE>   8

        5.4 As soon as practical after the beginning of each Comparison Year,
Landlord shall provide Tenant with Landlord's estimate of Operating Expenses and
Operating Expense Rent for the Comparison Year. During the Comparison Year,
Tenant shall pay Landlord's estimated Operating Expense Rent in equal monthly
installments on the first day of each month. If the estimated Operating Expense
Rent for the Comparison Year is not determined until after the beginning of the
Comparison Year, then Tenant shall continue to pay the monthly installments for
the prior Comparison Year, if any, and shall retroactively pay any underpayment
of estimated Operating Expense Rent payable for the period from the beginning of
the Comparison Year until the estimate was provided. As soon as practical after
the end of the Base Year, Landlord shall determine the Operating Expenses
incurred in the Base Year and shall deliver to Tenant a written statement
setting forth the same. As soon as practical after the end of each Comparison
Year, Landlord shall determine the Operating Expenses incurred in the Comparison
Year and shall deliver to Tenant a written statement setting forth the same and
a calculation of the Operating Expense Rent allocable to Tenant. If Tenant has
underpaid its Operating Expense Rent for the Comparison Year, then Tenant shall
pay to Landlord the full amount of such deficiency as Additional Rent. If Tenant
has overpaid its Operating Expense Rent for the Comparison Year, then Landlord
shall either credit the overpayment toward Tenant's next installment(s) of Total
Monthly Rent or, if this Lease has terminated and Tenant is not in default,
refund the overpayment to Tenant within thirty (30) days of determination.

        5.5 The calculation and payment of Operating Expense Rent is separate,
distinct and shall not be affected by the calculation and payment of either
Basic Monthly Rent, Tax Rent or Capital Expense Rent. Any item of cost or
expense included as Operating Expenses shall not be included as either Property
Taxes or Capital Expenses.

ARTICLE 6 - CAPITAL EXPENSE RENT [SEE ADDENDUM]

        6.1 During the Term, Tenant shall pay to Landlord "Capital Expense
Rent", which shall be the Proportional Share of any Capital Expenses incurred in
the calendar year, or which Landlord has in its discretion elected to amortize
in the calendar year. Capital Expense Rent is payable in the manner set forth in
Article 6.3. If this Lease commences or terminates on a day other than the first
or last day of a calendar year, Capital Expense Rent for the year shall be
prorated.

        6.2 "Capital Expenses" is defined for purposes of this Lease as all
costs and expenses which Landlord or Landlord's managing agent has incurred or
will incur (without offset for any revenue derived from any source whatsoever,
excepting the salvage value of any asset being removed or replaced to facilitate
the improvement, modification or addition to the Land, Building, Common Areas
and/or the machinery, equipment, and facilities related thereto) in the making
or installation of capital improvements, modifications or additions to the Land,
Building, Common Areas and/or the machinery, equipment and facilities related
thereto, either:

                (a)     Required by directive of an insurer or a government,
                        quasi-government or regulatory agency or authority
                        pursuant to either (i) a law or statute enacted after
                        the execution of this Lease, or (ii) an interpretation
                        of an existing law or statute, which interpretation is
                        promulgated after the execution of this Lease;

                (b)     Made with the intent and reasonable expectation of
                        reducing Operating Expenses; or

                (c)     Deemed reasonably necessary by Landlord to maintain the
                        quality, integrity and/or character of the Land,
                        Building, Common Areas and/or the machinery, equipment
                        and facilities related thereto.

        6.3 As soon as practical after the beginning of each calendar year (or
the Term, as the case may be), Landlord shall provide Tenant with Landlord's
estimate of the Capital Expenses and Capital Expense Rent for the calendar year.
During the calendar year, Tenant shall pay Landlord's estimated Capital Expense
Rent in equal monthly installments on the first day of each month. If the
estimated Capital Expense Rent for the calendar year is not determined until
after the beginning of the calendar year, then Tenant shall continue to pay the
monthly installments for the prior calendar year, if any, and shall
retroactively pay any underpayment of estimated Capital Expense Rent payable for
the period from the beginning of the calendar year until the estimate was
provided. As soon as practical after the end of each calendar year, Landlord
shall determine the Capital Expenses incurred, allocated or amortized in the
calendar year and shall deliver to Tenant a written statement setting forth the
same and a calculation of the Capital Expense Rent allocable to Tenant. If
Tenant has underpaid its Capital Expense Rent for the calendar year, then Tenant
shall pay to Landlord the full amount of such deficiency as Additional Rent. If
Tenant has overpaid its Capital Expense Rent for the calendar year, then
Landlord shall either credit the overpayment toward Tenant's next installment(s)
of Total Monthly Rent or, if this Lease has terminated and Tenant is not in
default, refund the overpayment to Tenant within thirty (30) days of
determination.

        6.4 The calculation and payment of Capital Expense Rent is separate,
distinct and shall not be affected by the calculation and payment of either
Basic Monthly Rent, Tax Rent or Operating Expense Rent. Any item of cost or
expense included as Capital Expenses shall not be included as either Property
Taxes or Operating Expenses.

                                  Page 5 of 22
<PAGE>   9

ARTICLE 7 - SECURITY DEPOSIT

        7.1 On or before execution of this Lease, Tenant shall deposit with
Landlord the Initial Security Deposit. The Initial Security Deposit and any
other sums deposited with Landlord pursuant to this Article (collectively
"Security Deposit") shall be held by Landlord as security for the faithful
performance by Tenant of all of the terms, covenants and conditions of this
Lease to be kept or performed by Tenant. From time to time during the Term,
Tenant shall deposit additional sums with Landlord so that the total Security
Deposit held by Landlord is not less than Tenant's then current Total Monthly
Rent. Landlord shall not be required to segregate the Security Deposit from its
general funds, refund any Security Deposit except as provided in Article 7.3, or
pay Tenant any interest thereon.

        7.2 If Tenant defaults on any obligation hereunder, Landlord may (but
shall not be required to) use, apply or retain all or any part of the Security
Deposit for the payment of rent or any other sum in default, or to compensate
Landlord for any loss or damage which Landlord has suffered or may suffer due to
Tenant's default. Tenant shall, upon demand, restore any Security Deposit so
used, applied or retained to the amount held by Landlord immediately prior
thereto.

        7.3 If Tenant has fully and faithfully performed every provision of this
Lease to be performed by Tenant, then, within sixty (60) days of the later of
the termination of this Lease or delivery of possession of the Premises to
Landlord, Landlord shall return to Tenant (or, at Landlord's option, the last
assignee of Tenant hereunder) any Security Deposit which has not been so used,
applied or retained. Notwithstanding the foregoing, Landlord may retain all or a
portion of the Security Deposit to secure any remaining obligations of Tenant
hereunder (including, without limitation, Tenant's obligations pursuant to
Articles 4, 5 and 6, which Tenant acknowledges cannot be fully ascertained until
as soon as practical after the end of the calendar year). Tenant waives
application of the provisions of California Civil Code section 1950.7 in respect
hereto.

        7.4 If Landlord transfers, assigns or conveys its interest in the
Premises, then Landlord shall be discharged from any liability for the return of
Tenant's Security Deposit, provided Landlord transfers all Security Deposit
which has not been used, applied or retained to Landlord's successor in
interest.

ARTICLE 8 - USE

        8.1 Tenant agrees that the Permitted Use is a material provision of this
Lease. Tenant shall use the Premises solely for the Permitted Use and shall not
use or permit the Premises to be used for any other purpose without the prior
written consent of Landlord. Any consent by Landlord to a change of use by
Tenant shall not be deemed a waiver of Landlord's right to withhold its consent
to any subsequent proposed change of use.

        8.2 Tenant shall, at Tenant's sole cost and expense, comply with all
certificates, rules, directives, orders and regulations of any public authority
(including Federal, State, County and Municipal authorities) which concern
either the Premises or Tenant's use or occupancy thereof. Tenant shall not use
or occupy the Building, Common Areas or Premises in violation of any law,
certificate of occupancy, or covenant, condition or restriction and shall
discontinue the violating use upon Landlord's demand.

        8.3 Tenant shall not knowingly do or permit to be done anything which
will invalidate or increase the cost of any insurance policy covering the Land,
Building, Common Areas, or equipment, property and facilities therein. Tenant
shall comply with all rules, orders, regulations and requirements of any
insurance fire rating bureau or any other organization performing a similar
function. Tenant shall, upon Landlord's demand, reimburse Landlord for any
additional insurance premium which may be incurred due to Tenant's failure to
comply with this Lease.

        8.4 Tenant shall not do or permit to be done anything which will
constitute a nuisance, or obstruct, injure, annoy or interfere with the rights
of other tenants or occupants of the Building. The Premises shall not be used
for any lodging, sleeping, improper, immoral, unlawful or objectionable purpose.
Tenant shall not commit waste.

ARTICLE 9 - UTILITIES AND SERVICES

        9.1 Landlord shall provide Tenant with:

                (a)     Twenty-four (24) hour access to the Premises, including
                        automated elevator service;

                (b)     Electric current for reasonable quantities of standard
                        fluorescent lighting and receptacles; and water for
                        lavatory and drinking purposes;

                (c)     Heat, ventilation, or air conditioning as may be
                        required for the comfortable use and occupation of the
                        Premises during Business Hours;

                (d)     Reasonable access and use of Landlord's intra-Building
                        telephone network cabling;

                                  Page 6 of 22
<PAGE>   10

                (e)     Janitorial services five (5) days a week, excluding
                        holidays; and

                (f)     Security services to the extent and during such times as
                        are determined by Landlord.

        9.2 Notwithstanding the provisions of Article 9.1, Landlord may, subject
to the provisions of Articles 13.1 and 13.2: restrict access to the Premises
while making any repairs, alterations or improvements to the Premises, Common
Areas or Building; make reasonable nondiscriminatory changes to the access,
utilities and services Landlord is obligated to provide hereunder; make such
changes in the access, utilities and services Landlord is obligated to provide
hereunder as may be reasonable and necessary to comply with any government
restriction, requirement or standard relating thereto; or prevent access, or
curtail utilities or services to the Land, Building, Common Areas or Premises
during any invasion, mob, riot, public excitement or other circumstances
rendering such action advisable, in Landlord's reasonable opinion.

        9.3 If Tenant either:

                (a)     Requires or uses more utilities or services than
                        generally used by other tenants in the Building;

                (b)     Requires utilities or services that are not generally
                        provided to the Building during non-Business Hours; or

                (c)     Has special water, electric, cooling or ventilation
                        needs due to concentration of personnel, or the use of
                        office equipment, devices or machines which consume
                        power or generate heat in excess of a personal computer
                        or electric office typewriter (which may include,
                        without limitation, communications equipment, main-frame
                        or mini-computers, or photocopiers);

then Tenant shall pay, as Additional Rent, the charge for such use, as
determined by Landlord. Landlord may further require Tenant, at Tenant's sole
cost and expense, to install separate circuitry, cabling or meters to
accommodate and/or measure Tenant's demand.

        9.4 Except as expressly provided elsewhere in this Lease, Landlord shall
not be liable for any loss or damage to Tenant or Tenant's employees, or their
respective property or business, and Tenant shall not be entitled to any
abatement or reduction of rent as a result of Landlord's failure to provide
access, utilities or services that Landlord is required to provide hereunder,
when such failure is due to any cause beyond Landlord's reasonable control
(including, without limitation, accident, breakage, repairs, shortage of
materials or supplies, strike, lockout, boycott, labor dispute, fire,
earthquake, acts of God, rioting, insurrection, war, government action, and acts
of public enemy).

ARTICLE 10 - PARKING LICENSE [SEE ADDENDUM]

        10.1 Tenant shall have a revocable license to park, in common with other
tenants, up to Tenant's Parking Allotment of automobiles in the parking
facilities of the Building, subject to the following:

                (a)     Tenant shall pay Landlord or Landlord's agent, the
                        regularly scheduled parking rates at such time and in
                        such manner as Landlord or Landlord's agent may, from
                        time to time, establish for tenants of the Building;

                (b)     Tenant shall not be in default under any Term or
                        condition of this Lease;

                (c)     Tenant shall abide by any rules and regulations for use
                        of the parking facilities that Landlord or Landlord's
                        agent establishes from time to time, and otherwise use
                        the parking facility in a safe and lawful manner;

                (d)     Tenant and Tenant's employees, contractors and invitees
                        may be required to use attended or tandem parking;

                (e)     No bailment shall be created hereunder or by any use of
                        the parking facility;

                (f)     Tenant and Tenant's agents, servants, employees,
                        successors or assigns each hereby releases Landlord and
                        Landlord's agents, servants, employees and independent
                        contractors from all claims for loss or damage
                        (including, without limitation, vandalism and theft)
                        arising out of or related to use of the parking
                        facility; and

                                  Page 7 of 22
<PAGE>   11

                (g)     Tenant shall have this revocable license, only, and no
                        estate shall be conveyed to Tenant under this Article.

If Tenant violates any of the terms and conditions of this Article, or fails to
use the parking facility in accordance with the terms of this Article and this
Lease, then Landlord may revoke this license to the extent that Landlord deems
reasonable and necessary, without liability to Tenant. Tenant's license shall
otherwise be revoked and terminate concurrently with the termination of this
Lease.

ARTICLE 11 - REPAIRS

        11.1 Except as provided in Article 11.2, Tenant shall, at Tenant's sole
cost and expense, keep the Leasehold Improvements in good condition and repair.
Tenant shall exclusively use Landlord or Landlord's approved contractors for all
work related to the Mechanical Systems or intra-Building telephone network
cabling which are a part of the Leasehold Improvements.

        11.2 Landlord shall repair and maintain all parts of the Land, Building
or Common Areas which do not constitute the Leasehold Improvements.
Notwithstanding the foregoing, if any such maintenance or repair is caused in
part or in whole by the negligence or willful misconduct of Tenant, its agents,
servants, employees, licensees or invitees, then Tenant shall directly reimburse
Landlord (as Additional Rent) the reasonable cost for such maintenance and
repairs. If Landlord reasonably believes damage to the Land, Building or Common
Areas is being caused by Tenant, its agents, servants, employees, licensees or
invitees (whether an isolated incident or a continuous course of conduct, and
whether by an individual or group), then upon receipt of written notice from
Landlord, Tenant shall take reasonable action to prevent any additional or
future damage and Tenant's failure to do so shall be a material breach of this
Lease.

ARTICLE 12 - CONDITION OF PREMISES

        12.1 Subject to any provisions of this Lease concerning the making of
Leasehold Improvements in the Premises (if any), by taking possession of the
Premises hereunder, Tenant accepts the Premises as being in good order,
condition and repair (excepting only latent defects and items noted on a
punch-list executed by both Landlord and Tenant prior to occupancy), and
otherwise as is, where is and with all faults. Except as may be expressly set
forth in this Lease, Tenant acknowledges that neither Landlord, nor any
employee, agent or contractor of Landlord has made any representation or
warranty concerning the Land, Building, Common Areas or Premises, or the
suitability of either for the conduct of Tenant's business.

        12.2 Upon the expiration of the Term or earlier termination of this
Lease, Tenant shall relinquish possession of the Premises to Landlord inclusive
of all Leasehold Improvements and Alterations (unless Landlord has either
permitted removal of the same in writing, or required removal of an Alteration
as a condition of making such Alteration) and otherwise in the same condition as
received, ordinary wear and tear excepted, free of all trash and rubbish, and in
broom clean condition. Landlord may dispose of any personal property remaining
in the Premises in accordance with California Civil Code section 1980, et seq.,
and shall be entitled to recover all costs and expenses provided therein,
including Landlord's reasonable attorneys' fees and costs.

ARTICLE 13 - ENTRY BY LANDLORD

        13.1 Provided Landlord uses commercially reasonable efforts to minimize
interference with Tenant's business and advises Tenant an appropriate period in
advance of same, Landlord shall have the right to enter the Premises to inspect
the Premises, show the Premises to prospective purchasers or tenants, and make
alterations, improvements or repairs (including construction required by the
character of the work). No advance notice shall be required for Landlord to
supply janitorial services or to post legal notices.

        13.2 Notwithstanding the provisions of Article 13.1, Landlord shall be
entitled to enter the Premises without advising Tenant in advance or making the
required effort to minimize interference with Tenant's business when Tenant is
in default of this Lease, or in an "Emergency" (which shall be any circumstance
which may threaten or endanger the Building, or health or property of Landlord,
other tenants, occupants or the general public, or result in a liability or loss
to Landlord).

        13.3 Landlord shall at all times have a key with which to unlock all of
the doors in and to the Premises, excepting Tenant's vaults and safes. If Tenant
changes locks on any doors without Landlord's prior written consent, Landlord
shall have the right to enter the Premises, change, remove and/or replace such
locks, repair any damage and restore the Premises, and charge Tenant as
Additional Rent all expenses incurred in accomplishing the foregoing.

        13.4 Except as expressly provided elsewhere in this Lease, there shall
be no abatement of rent and no liability of Landlord by reason of any injury to,
or interference with Tenant's business arising from any entry performed by
Landlord in a good faith attempt to comply with the terms of this Article. Any
such good faith entry shall not constitute an eviction, or a forcible or
unlawful entry or detainer of the Premises.

                                  Page 8 of 22
<PAGE>   12

ARTICLE 14 - ALTERATIONS & RENOVATIONS

        14.1 All alterations, additions, decorations or improvements made by or
on behalf of Tenant in or to the Premises except Tenant Improvements
("Alterations"), shall require Landlord's prior written consent. Tenant shall
give Landlord ten (10) days' prior written notice of Tenant's desire to make
Alterations. Landlord may impose any reasonable condition upon issuing
Landlord's consent (including, without limitation: requiring Tenant to remove
Alterations at the end of the Term and restore the Premises to the condition
prior to Alterations having been made [reasonable wear and tear excepted];
obtaining the consent of any mortgagee, encumbrancer, lender or ground lessee;
providing Landlord with working drawings, as-built CAD drawings, specifications,
and estimated costs; providing Landlord with verification of all required
permits or approvals; and, obtaining a lien and completion bond).

        14.2 Tenant shall use Landlord's designated contractors for all
Alterations affecting basic Building mechanical, electrical, plumbing, fire/life
safety, intra-Building telephone network cabling, heating, ventilation and
air-conditioning systems; and, shall otherwise use licensed, qualified
contractors and subcontractors which shall carry course of construction,
products liability, completed operations, worker's compensation and public
liability insurance in amounts satisfactory to Landlord, naming Landlord as an
additional insured. Alterations shall be performed at the times and in the
manner specified by Landlord, and shall not interfere with access or use of the
Common Areas or other premises. Alterations shall be performed in full
compliance with all laws, rules and/or directives of any government or
regulatory agency or authority; and, if any such government or regulatory agency
or authority requires any improvements, modifications, additions or alterations
to any part of the Base Building, as a result of the Alterations, then the same
shall be made by Tenant at Tenant's sole cost and expense.

        14.3 All permanent improvements to the Premises, Leasehold Improvements
and Alterations (including, without limitation, floor and wall coverings,
blinds, drapes, cabinets, shelving, doors, locks, paneling and the like) which
Landlord has not required Tenant to remove at the end of the Term shall become
the property of Landlord upon the termination of this Lease and shall be
relinquished with the Premises.

        14.4 Landlord may require Tenant to immediately remove any Alterations
not made in accordance with this Article, and restore the Premises to the
condition immediately prior to the Alterations' having been made (reasonable
wear and tear excepted). If Tenant either fails to immediately remove
Alterations not made in accordance with this Article after Landlord's demand, or
fails at the end of the Term to remove Alterations which Landlord required to be
removed at the end of the Term as a condition of issuing Landlord's consent to
the making of such Alterations, then Landlord may perform such removal and
restore the Premises, at Tenant's sole cost and expense, to the condition
immediately prior to the Alterations having been made (reasonable wear and tear
excepted).

        14.5 All Alterations, removal of Alterations and restoration of the
Premises which Landlord is reasonably required to perform or supervise are
subject to Landlord's charge, as Additional Rent, for all costs and expenses of
such performance and supervision (including, without limitation, review of plans
or work by Landlord's architect, engineer or other consultant), plus a
supervision fee payable to Landlord in the amount of fifteen percent (15%) of
the cost of such work.

        14.6 During the Term, Landlord may renovate, improve, alter, or modify
the Building, Common Areas, Premises or Leasehold Improvements ("Renovations"),
although nothing herein shall be construed to obligate Landlord to make such
Renovations, except as expressly set forth in this Lease. In connection with any
Renovations, Landlord may erect scaffolding or other necessary structures, limit
or eliminate access to portions of the Building, Common Areas or Premises, or
perform work which may create noise, dust or debris. Tenant hereby agrees that,
except as expressly provided in this Lease (in particular, Article 22), such
Renovations shall in no way constitute a constructive eviction of Tenant nor
entitle Tenant to any abatement of rent, and Landlord shall have no
responsibility or for any reason be liable to Tenant for any direct or indirect
injury to or interference with Tenant's business arising from the Renovations,
nor shall Tenant be entitled to any compensation or damages from Landlord for
loss of the use of the whole or any part of the Premises or of Tenant's personal
property or improvements resulting from the Renovations, or for any
inconvenience or annoyance occasioned by the Renovations.

                                  Page 9 of 22
<PAGE>   13

ARTICLE 15 - HAZARDOUS MATERIALS

        15.1 Tenant shall neither create, bring into nor store in the Building,
Common Areas or Premises any hazardous waste or hazardous materials (defined as
any substance, material, emission, discharge or waste defined as "hazardous",
"toxic", or a "pollutant" or "contaminant" under any local, state or federal
government law, statute, code, order or regulation for the protection of health,
safety or the environment). Tenant shall comply with all laws, regulations,
recommendations or orders promulgated by any government, quasi-government or
regulatory agency or authority, or the manufacturer of hazardous waste or
materials with regard to maintenance of records, and its handling, storage and
disposal. Upon Landlord's request, Tenant shall supply Landlord with a copy of
any record or certificates required to be maintained by Tenant concerning
hazardous materials or waste.

ARTICLE 16 - LIENS

        16.1 Tenant shall keep the Land, Building and Premises free from any
liens resulting from work performed, materials furnished or obligations incurred
by, or on behalf of Tenant. Tenant shall promptly discharge any such lien by
bond or otherwise. If Tenant fails to promptly discharge any such lien after
Landlord's demand, then Landlord may discharge the lien and charge Tenant as
Additional Rent all costs and expenses reasonably incurred by Landlord to do so,
including attorneys' fees and costs.

ARTICLE 17 - BROKERS

        17.1 Tenant warrants that no broker, agent, finder, person or entity,
other than Procuring Broker, was instrumental in negotiating or consummating
this Lease, or might be entitled to a commission or compensation in connection
with the execution of this Lease. Tenant shall indemnify and hold Landlord
harmless from any claim, damages, costs and expenses, including attorneys' fees
and costs, resulting from any claim that may be asserted against Landlord by any
broker, agent, finder, person or entity other than Procuring Broker which is not
disclosed by Tenant to Landlord in writing prior to entering into this Lease, or
who claims a right to compensation through Tenant.

ARTICLE 18 - INSURANCE

        18.1 Throughout the Term, Landlord shall provide, maintain and keep in
force:

                (a)     Commercial general liability insurance for personal
                        injury, bodily injury (including death), and property
                        damage, with limits of not less than Five Million
                        Dollars ($5,000,000.00) for any one accident or
                        occurrence, which limits may be satisfied by Landlord by
                        the maintenance of a blanket policy (or policies),
                        including excess or umbrella policies, meeting or
                        exceeding such amount;

                (b)     All risk insurance or fire insurance (with standard
                        extended coverage endorsement perils, leakage from fire
                        protection devices and water damage) covering the full
                        replacement cost of the Building, Common Areas and all
                        fixed improvements therein, except those fixtures,
                        furnishings, Leasehold Improvements, equipment and other
                        property which Tenant is required to insure pursuant to
                        Article 18.2, subparagraphs (b), (c), (d) and (e);

                (c)     Insurance for loss of rental income or insurable gross
                        profits covering such perils set forth in subparagraph
                        (b) in such amounts as Landlord prudently elects to
                        maintain;

                (d)     Boiler and machinery insurance in such amounts as
                        Landlord prudently elects to maintain; and

                (e)     Such other insurance (including earthquake or other
                        change in condition) as Landlord elects, in its sole
                        discretion, to obtain.

Each policy of insurance provided or maintained by Landlord hereunder may
contain such deductibles, uninsured gaps, exclusions or such other terms and
conditions as Landlord prudently determines to be commercially reasonable and
sufficient, provided such terms are generally available at a commercially
reasonable price in the area in which the Building is located.

                                 Page 10 of 22
<PAGE>   14

        18.2 Throughout the Term, Tenant shall provide, maintain and keep in
force:

                (a)     Commercial general liability insurance for personal and
                        bodily injury, including death and property damage, with
                        respect to Tenant's use and occupancy of the Premises,
                        Common Areas and Building, and the business carried on
                        by Tenant therein, with limits of not less than Two
                        Million Dollars ($2,000,000.00) for any one accident or
                        occurrence, with Landlord named as an additional
                        insured, containing cross-liability and severability of
                        interests clauses, and on an occurrence (and not claims
                        made) form;

                (b)     All risk or fire insurance (with standard extended
                        coverage endorsement perils, theft, vandalism,
                        explosion, falling plaster, steam, gas, electricity,
                        water, rain, elements of nature, water damage or
                        dampness, and leakage from any part of the Building or
                        Land [including fire protection devices, pipes,
                        appliances and other plumbing]) covering the full
                        replacement cost of the Leasehold Improvements and
                        Tenant's fixtures, furnishings, equipment, inventory,
                        stock-in-trade;

                (c)     Insurance covering those items set forth in subparagraph
                        (b) against loss or damage due to earthquake (or change
                        in condition);

                (d)     Insurance for loss of income or insurable gross profits
                        covering such perils set forth in subparagraphs (b) and
                        (c), in such amounts as Tenant prudently determines is
                        commercially reasonable and sufficient; and

                (e)     Any insurance which may be required pursuant to any
                        local, state or federal government law, statute or
                        regulation (including, without limitation, workers'
                        compensation insurance).

Notwithstanding the foregoing, Tenant may elect to self-insure the coverage
required pursuant to subparagraphs (c) and (d), above; however, Tenant's
election to self-insure such coverage shall not impair the waivers of
subrogation and recovery set forth in Article 18.4, below. Notwithstanding the
above, Landlord may reasonably and prudently change the insurance requirements
set forth herein (including, without limitation, requiring additional coverage
or types of insurance), provided that insurance to meet such changed
requirements is generally available at a commercially reasonable price in the
area in which the Building is located.

        18.3 On or before Tenant's use or occupancy of the Premises for any
purpose and from time to time during the Term, Tenant shall provide Landlord
with copies of such policies, certificates or other proof necessary for Landlord
to verify that the required insurance coverage has been obtained, is in full
force and effect and that the premiums have been paid thereon. All policies
shall contain an undertaking by the insurer to notify Landlord (and any
mortgagees or ground lessors designated by Landlord) in writing not less than
thirty (30) days prior to any material change, reduction, cancellation or other
termination of coverage required hereunder. Replacement policies or certificates
shall be furnished to Landlord not less than thirty (30) days prior to the
expiration of any such policy or policies. Landlord's failure to request
evidence of coverage shall not constitute a waiver of any of Landlord's rights
hereunder or Tenant's obligation to so insure.

        18.4 Insurance to be provided and maintained by either party pursuant to
Article 18.1, subparagraphs (b), (c) and (d) (and [e], to the extent of
earthquake and other change of condition insurance), and Article 18.2,
subparagraphs (b), (c) and (d) shall include a clause or endorsement whereby the
insurer waives its right of subrogation against the other party; and Landlord
and Tenant each waive any rights of recovery against the other for injury or
loss due to hazards required to be covered by insurance which is required to
contain such a waiver of subrogation, to the extent of the injury or loss
required to be covered thereby.

ARTICLE 19 - INDEMNIFICATION

        19.1 Subject to the waivers of subrogation and liability set forth in
Article 18.4, Tenant shall indemnify and hold Landlord harmless from and against
any and all liability, loss, claims, demands, damages or expenses, including
attorneys' fees, whether for personal injury, theft, property damage or
otherwise, due to or arising from:

                (a)     Any accident, act or omission (whether or not related to
                        Tenant's use of the Premises or conduct of business
                        therein) occurring in, or originating or emanating from
                        the Premises, except to the extent caused by the
                        negligence or willful misconduct, or breach or
                        non-performance described in Article 19.2, subparagraph
                        (b) or (c);

                (b)     The negligence or willful misconduct of Tenant, its
                        servants, employees, agents, contractors, invitees,
                        concessionaires or licensees, or those over whom Tenant
                        would normally be expected to exercise control, whether
                        in or about the Land, Building, Common Areas, Premises,
                        or parking facility; or

                (c)     Tenant's breach or non-performance of any provision of
                        this Lease.

If any action or proceeding is brought against Landlord by reason of any such
claim, Tenant, upon notice from the Landlord, shall defend the same at Tenant's
expense by counsel reasonably satisfactory to Landlord.

                                 Page 11 of 22
<PAGE>   15

        19.2 Subject to the waivers of subrogation and liability set forth in
Article 18.4, Landlord shall indemnify and hold Tenant harmless from and against
any and all liability, loss, claims, demands, damages or expenses, including
attorneys' fees, whether for personal injury, theft, property damage or
otherwise, due to or arising from:

                (a)     Any accident, act or omission in or about the Land,
                        Building, and Common Areas, except to the extent caused
                        by any accident, act or omission, negligence or willful
                        misconduct, or breach or non-performance described in
                        Article 19.1, subparagraphs (a) through (c);

                (b)     The negligence or willful misconduct of Landlord, its
                        servants, employees, agents, contractors, invitees,
                        concessionaires or licensees, or those over whom
                        Landlord would normally be expected to exercise control,
                        whether in or about the Land, Building, Common Areas,
                        Premises, or parking facility; or

                (c)     Landlord's breach or non-performance of any provision of
                        this Lease.

If any action or proceeding is brought against Tenant by reason of any such
claim, then Landlord, upon notice from Tenant, shall defend the same at
Landlord's expense by counsel reasonably satisfactory to Tenant.

ARTICLE 20 - DAMAGE OR DESTRUCTION

        20.1 If the Leasehold Improvements are damaged or destroyed by any
cause, then Tenant shall, at Tenant's sole cost and expense, promptly repair,
replace and restore the Leasehold Improvements to at least the condition
existing prior to the damage (reasonable wear and tear excepted) during which
time this Lease shall remain in full force and effect, subject to Article 22.

        20.2 If any portion of the Land, Building or Common Areas (excepting the
Leasehold Improvements) reasonably necessary for Tenant's access, use or
occupancy of the Premises is damaged or destroyed by any cause, then:

                (a)     Within thirty (30) days after the event of damage or
                        destruction, Landlord shall assess the damage, determine
                        how long repairs will take and promptly thereafter
                        provide Tenant with written notice of the same (however,
                        if more than thirty (30) days are reasonably required to
                        so assess the damage and determine the length of time
                        for repair, then Landlord shall not be in default
                        hereunder if Landlord commences such assessment and
                        determinations within said thirty (30) day period and
                        otherwise diligently proceeds with such assessment and
                        determinations, and promptly provides Tenant with
                        written notice of the same).

                (b)     If the event such damage or destruction either:

                        (i)     Is uninsured by Landlord (and not required to be
                                insured by Landlord pursuant to Article 18.1),
                                or

                        (ii)    Cannot, in Landlord's reasonable opinion, be
                                repaired within one hundred eighty (180) days
                                after the occurrence of such damage or
                                destruction,

                        then Landlord may terminate this Lease upon at least
                        thirty (30) days' prior written notice to Tenant, the
                        Lease to remain in full force and effect through the
                        specified termination date, subject to Article 22;
                        otherwise, Landlord shall proceed with repairs during
                        which time this Lease shall remain in full force and
                        effect, subject to Articles 20.3 and 22.

        20.3 Notwithstanding anything to the contrary contained herein, Landlord
shall have no obligation to repair or restore damage or destruction described
under Article 20.2 when it occurs during the last twelve (12) months of the
Term; however, if Landlord so elects not to repair or restore and the damage or
destruction either:

                (a)     Substantially adversely affects Tenant's use of all or a
                        material part of the Premises, or

                (b)     Prevents Tenant's reasonable access to the Premises,

then, in addition to Tenant's rights under Article 22, Tenant shall have the
right to terminate this Lease upon at least thirty (30) days' prior written
notice to Landlord, which notice shall be given within fifteen (15) days after
receipt of Landlord's election not to repair or restore.

        20.4 If the damage or destruction is insured (or required to be insured
or self-insured) by Tenant pursuant to Article 18.2 and either Landlord or
Tenant elect to terminate this Lease pursuant to Article 20.2(b), 20.3 or 22,
then Tenant shall assign to Landlord its right to receive the benefits under
such insurance for the repair and restoration of the Leasehold Improvements, and
directly pay Landlord any deductible under such policy (and any other uninsured
amounts). If the damage or destruction is uninsured (and not required to be
insured or self-insured) by Tenant pursuant to Article 18.2 and either Landlord
or Tenant elect to terminate this Lease pursuant to Article 20.2(b), 20.3 or 22,
then Tenant shall pay to Landlord the lesser of:

                                 Page 12 of 22
<PAGE>   16

                (a)     The cost of repairing the damage or destruction of the
                        Leasehold Improvements; or

                (b)     The unamortized value of the Leasehold Improvements on
                        the effective date of termination (assuming the value of
                        the Leasehold Improvements in the Premises at the
                        inception of the Lease was amortized over the term, with
                        interest at the rate set forth in Article 35.11, in
                        equal monthly installments).

        20.5 Tenant hereby waives the application of California Civil Code
sections 1932(2) and 1933(4), to the extent contrary to the provisions of
Articles 20 and 22 of this Lease.

ARTICLE 21 - EMINENT DOMAIN

        21.1 If all or any portion of the Land, Building, Common Areas or
Premises is taken for any public or quasi-public purpose by any lawful power or
authority by exercise of the right of appropriation, condemnation or eminent
domain (or sold in lieu of such taking), then:

                (a)     If such taking or sale substantially interferes with
                        Tenant's use and occupancy of the Premises, then this
                        Lease shall terminate on the date of surrender or sale
                        to said authority; or

                (b)     If such taking or sale does not substantially interfere
                        with Tenant's use and occupancy of the Premises, then
                        Landlord may either terminate this Lease or restore the
                        Premises to substantially the same condition prior to
                        such partial taking, and Tenant's Total Monthly Rent
                        shall be abated with respect to that portion of the
                        Premises rendered unusable for the conduct of Tenant's
                        business therein as a result of the taking or sale, for
                        the period of time that such portion is so rendered
                        unusable.

        21.2 Tenant shall not assert any claim for the taking of any interest in
this Lease, the Land, Building, Common Areas or Premises and Landlord shall be
entitled to receive the entire amount of any award without deduction or offset
for any estate or interest of Tenant; however, Tenant shall be entitled to bring
a separate action for relocation expenses, and damages to Tenant's personal
property, trade fixtures and goodwill. Tenant hereby waives the application of
California Code of Civil Procedure section 1265.130.

ARTICLE 22 - INTERRUPTION OF USE

        22.1 If either use of the Premises is substantially adversely affected
or reasonable access to the Premises is prevented as a result of:

                (a)     An event of damage or destruction as described in
                        Articles 20.1 and 20.2, excepting only damage or
                        destruction caused by the gross negligence or willful
                        misconduct of Tenant;

                (b)     A Taking (as defined in Article 21);

                (c)     The failure of Landlord to repair or maintain the
                        Building or Common Areas to the extent required pursuant
                        to Article 11;

                (d)     The failure of Landlord to provide utilities or services
                        which Landlord is obligated to provide pursuant to
                        Article 9 (provided that such failure is not caused by
                        the public utility providing service to the Building);
                        or

                (e)     Renovations (as defined in Article 14);

then, such event shall constitute an "Interruption" hereunder.

        22.2 If an Interruption occurs and continues for a period of at least
five (5) consecutive business days, then Tenant's Total Monthly Rent shall be
abated from the sixth (6th) business day until use of the Premises is no longer
so substantially and adversely affected and reasonable access to the Premises
exists, provided, however, that:

                (a)     Any abatement of rent hereunder shall be prorated to
                        reflect that portion of the Premises that is actually
                        rendered unusable for the conduct of business therein
                        for the period of time such portion is so rendered
                        unusable, and shall not be afforded Tenant to the extent
                        that Tenant uses the Premises for the conduct of
                        business therein;

                                 Page 13 of 22
<PAGE>   17

                (b)     No abatement of rent hereunder shall be afforded Tenant
                        for any period of time which Tenant has not complied
                        with its obligations under Article 20.1, provided that
                        abatement of rent is solely available under the
                        provisions of Article 20.1; and

                (c)     Notwithstanding the Permitted Use, no abatement of rent
                        shall result from any inability of Tenant to use the
                        Premises because of Tenant's unique use of the Premises
                        as other than general administrative offices.

Such period to which Tenant shall be entitled to abatement of Total Monthly Rent
hereunder shall constitute the "Interruption Period." Landlord shall advise
Tenant of Landlord's reasonable estimate of the Interruption Period (based upon
taking commercially reasonable action in response to such Interruption), as soon
as reasonably practicable or as otherwise required under this Lease.

        22.3 In addition to Tenant's rights under Article 22.2, if the
Interruption Period is reasonably estimated by Landlord to continue for a period
exceeding one hundred eighty (180) days, then Tenant may, within fifteen (15)
days after receipt of Landlord's estimate, elect to terminate the Lease upon
thirty (30) days' prior written notice. Notwithstanding the foregoing, this
Lease shall not be terminated if Landlord elects to take such additional action
not otherwise required under this Lease within said thirty (30) day period which
will result in the restoration of Tenant's reasonable access to, and use of the
Premises within said one hundred eighty (180) day period. If Tenant does not
elect to terminate this Lease within such fifteen (15) day period, Landlord
shall not be liable to Tenant and Tenant will not be entitled to terminate this
Lease if such repairs and restoration are not in fact completed within the
estimated Interruption Period, provided that the Interruption Period was
reasonably estimated by Landlord and Landlord diligently commenced and pursues
such repairs and restoration to completion.

ARTICLE 23 - SUBORDINATION, NONDISTURBANCE AND ATTORNMENT

        23.1 Subject to the provisions of Article 23.2, this Lease shall be
subject and subordinate to all present and future ground or underlying leases of
the Building or Project and to the lien of any mortgage, trust deed or other
encumbrances now or hereafter in force against the Building or Project or any
part thereof, and to any and all renewals, modifications, consolidations,
replacements, substitutions and extensions thereof, as if the mortgage, trust
deed or other encumbrance and all of its renewals, modifications,
consolidations, replacements, substitutions and extensions had been executed,
delivered and recorded prior to execution of this Lease.

        23.2 In the event of the termination of any ground lease or underlying
lease, or the foreclosure of any mortgage, trust deed or other encumbrance, or
upon a transfer or conveyance in lieu of such foreclosure, then so long as the
Lease is then in full force and effect and Tenant is not in default under any of
the terms, covenants or conditions of the Lease, Tenant agrees to attorn to and
accept any such successor owner as lessor under the Lease and to be bound by and
perform all of the obligations imposed by the Lease, and successor owner will
not disturb the possession of Tenant and will be bound by and perform all of the
obligations of Landlord, except that successor owner will not be liable for: any
act, omission or default of Landlord, or be subject to any claims, offsets,
defenses, credits or deductions which Tenant might have against Landlord; any
rent, additional rent or other sum Tenant paid to Landlord more than one (1)
month in advance, or by any security deposit, cleaning deposit or other prepaid
charge Tenant paid to Landlord and not held by or paid over to successor owner;
any conflict between the provisions of the Lease and any other lease affecting
the Building or Project; or, constructing or completing any improvements to the
Premises, Building or Project required under this Lease, whether prior to or
during the Term, or in connection with any renewal, extension or expansion
hereof.

        23.3 Tenant shall, within five (5) business days after receipt of
Landlord's written request, execute such further instruments or assurances as
Landlord may reasonably deem necessary to evidence or confirm the subordination,
nondisturbance and attornment pursuant to this Article. Tenant waives the
provisions of any current or future statute, rule or law contrary to the
provisions of this Article which may give Tenant any right or election to
terminate or otherwise adversely affect this Lease and the obligations of the
Tenant hereunder in the event of any the foreclosure of any mortgage, trust deed
or other encumbrance, or upon a transfer or conveyance in lieu of such
foreclosure.

ARTICLE 24 - OFFSET STATEMENT

        24.1 Upon Landlord's request, Tenant shall execute, acknowledge and
deliver to Landlord a statement in writing setting forth Tenant's certification
of the following: that this Lease is unmodified (or, if modified, the nature of
such modification) and is in full force and effect; the extent to which rental
or other charges have been prepaid; and that Landlord, to Tenant's knowledge,
has not failed to cure any default of Landlord of this Lease (or specifying such
uncured defaults, if any are claimed). Tenant's failure or refusal to execute
and deliver such a statement within ten (10) days after receipt of Landlord's
request shall be conclusive upon Tenant that: this Lease is in full force and
effect, without modification (except as may be represented by Landlord); except
as provided in this Lease, not more than one month of rent has been paid in
advance, and not more than one month of security deposit is being held by
Landlord; and, there are no uncured defaults of Landlord. Tenant acknowledges
that such statement may be relied upon by a prospective purchaser or
encumbrancer of all or any portion of the Land, Building or Premises.

                                 Page 14 of 22
<PAGE>   18

ARTICLE 25 - BUILDING PLANNING [DELETED]

ARTICLE 26 - ASSIGNMENT AND SUBLETTING

        26.1 Unless Tenant has obtained the prior written consent of Landlord
(which may only be denied by Landlord upon a commercially reasonable ground),
Tenant shall not pledge, sell, transfer, hypothecate, encumber or assign this
Lease or Tenant's interest therein, sublet all or any part of the Premises, or
permit occupancy or the conduct of business in any or all of the Premises by
anyone other than Tenant. Any assignment, sublease, sale, mortgage, pledge,
encumbrance or transfer by Tenant or such other party made in contravention of
this Article shall be void and of no force or effect.

        26.2 If Tenant proposes to assign this Lease or to sublet all or any
portion of the Premises, then Tenant shall give Landlord written notice of
Tenant's intent to so assign or sublet at least thirty (30) days' prior to the
proposed effective date of the assignment or sublease. The notice shall include,
with respect to each proposed assignee or subtenant: name and address; terms and
conditions of the proposed assignment or sublease; a detailed statement of facts
about the nature of the proposed use of the Premises and the proposed assignee's
or subtenant's business experience; a balance sheet showing financial condition
as of a date within ninety (90) days prior to the date of the notice; statements
of income, profit and loss for the last two (2) complete fiscal years; bank and
credit references; and, such other and further information as Landlord may
reasonably require.

        26.3 If Tenant proposes to assign this Lease or sublet substantially all
of the Premises for substantially all of the remaining Term of this Lease to a
party other than Tenant's Affiliate, then during the thirty (30) day period
immediately following Landlord's receipt of Tenant's notice pursuant to Article
26.1, Landlord shall have the right to terminate this Lease in its entirety,
after which Tenant shall have no further obligation to Landlord under this
Lease, except for matters occurring or obligations arising prior to the
effective date of termination. Landlord shall exercise Landlord's right to
terminate by giving Tenant written notice of same, such notice to specify the
effective date of termination (which shall be the later of either: the effective
date of the assignment or sublease proposed by Tenant; or a date specified by
Landlord which is no less than thirty (30) days, but no more than sixty (60)
days after Tenant's receipt of Landlord's notice to terminate). Landlord
reserves the right, after electing to terminate as provided herein, to acquire
the Premises for its own use, or enter into a Lease with another tenant or the
proposed assignee or subtenant on such terms and conditions as in Landlord's
sole discretion, without Tenant being entitled to any portion of the profit
which Landlord may realize as a result of such termination and reletting.

        26.4 If Landlord does not exercise its termination right set forth in
Article 26.3, then Landlord shall, within such thirty (30) day period following
receipt of Tenant's notice pursuant to Article 26.2, notify Tenant that Landlord
either grants or denies its consent for Tenant to proceed to assign or sublet on
the terms and conditions contained in Tenant's notice. Landlord's failure to
timely exercise its termination rights pursuant to Article 26.3 or timely deny
consent shall be deemed approval to assign or sublet on the terms and conditions
contained in Tenant's notice, but only to the extent that the represented terms
and conditions do not conflict with the terms and conditions of this Lease.
Landlord may deny consent to assign or sublet upon any commercially reasonable
ground, including, but not limited to, the following:

                (a)     The proposed assignee or subtenant is an existing Tenant
                        of Landlord in the Building or any other Building owned
                        or managed by Landlord in the Los Angeles/Orange County
                        Metropolitan Area, or has negotiated with Landlord
                        concerning the leasing of Premises from Landlord within
                        the prior one hundred twenty (120) days;

                (b)     The financial strength of the proposed assignee or
                        subtenant, in Landlord's opinion, is insufficient to
                        enable it to meet its proposed financial obligations;

                (c)     If Tenant is to relocate, the financial strength of
                        Tenant after the proposed assignment or sublease and
                        relocation would be insufficient to enable it to meet
                        its financial obligations under this Lease;

                (d)     The proposed use, or reputation or character of the
                        proposed assignee or subtenant is not in keeping with
                        the nature of the Building or may adversely affect the
                        operation, insurability, or reputation of the Building;

                (e)     The proposed use of the Premises is materially different
                        than the Permitted Use; or

                (f)     The proposed use of the Premises conflicts with any
                        other existing agreements between Landlord and other
                        tenants concerning the Land, Building, Common Areas or
                        Premises;

                (g)     {Deleted}.

If Landlord denies consent to assign or sublet, Tenant waives the right to
terminate this Lease pursuant to California Civil Code section 1995.310(b).

                                 Page 15 of 22
<PAGE>   19

        26.5 Fifty percent (50%) of any consideration, including rents, received
by or on behalf of Tenant from such assignment or sublease in excess of Total
Monthly Rent shall be payable to Landlord upon receipt by Tenant as Additional
Rent. Notwithstanding the foregoing, Tenant shall be entitled to recapture from
any such excess consideration Tenant's costs and expenses for brokerage
commissions, advertising to sublet or assign and shared services (including,
without limitation, expenses of a shared receptionist, library, telephone
system, photocopier, or other similar office expense).

        26.6 Any allowances, concessions, rights to acquire additional Premises,
rights to extend or renew, options, parking discounts or any other similar
concessions or consideration set forth in this Lease and any addenda or
amendments thereto are expressly understood to be solely for the benefit of the
original Tenant and shall be null, void and of no force or effect as of the
effective date of any assignment or subletting; however, this shall not be
deemed to retroactively nullify or void any allowances, concessions, rights or
options actually disbursed, made or exercised prior to such effective date.

        26.7 Any advertisement, publicity or other public solicitation of any
assignment or subletting of the Premises shall require Landlord's prior written
approval.

        26.8 Any permitted assignment or subletting of the Premises shall not
act to release Tenant or any subsequent assignor or sublessor from any liability
under this Lease, and Tenant shall cause any assignee to execute an agreement
with Landlord upon a form furnished by Landlord binding the assignee or
sublessee to all the terms of this Lease without relieving Tenant of any
liability hereunder. As security for Tenant's obligations under this Lease,
Tenant assigns to Landlord the right to collect all rent resulting from any
assignment or sublease of the Premises in the event of Tenant's default; and
Landlord (as assignee and attorney-in-fact for Tenant, or as a receiver for
Tenant appointed on Landlord's application, may upon written notice to Tenant
and subtenant or assignee, thereafter collect and apply such rent toward the
satisfaction of Tenant's obligations under this Lease. Tenant shall pay a
reasonable processing fee to Landlord for each assignment or sublease submitted
to Landlord, not to exceed Five Hundred Dollars ($500.00).

        26.9 Unless Tenant is a corporation whose stock is traded through a
recognized United States exchange, any of the following shall be deemed to be a
voluntary assignment requiring Landlord's consent: a change in business status
or organization, dissolution, merger, consolidation or other reorganization of
Tenant (either voluntarily or pursuant to any provision of the Bankruptcy Act);
the sale or other transfer of a controlling share of the voting capital stock of
Tenant; or, the sale of fifty-one percent (51%) or more of the interests of
Tenant. However, if Tenant is a corporation whose stock is traded through a
recognized United States exchange, then, provided Tenant is not in default
hereunder, Tenant may assign this Lease or sublet the Premises to a corporation
into or with which Tenant is merged or consolidated, or to which all or
substantially all of Tenant's assets are transferred, or to any corporation or
other entity which controls or is controlled by the Tenant or is under common
control or affiliated with the Tenant. Tenant shall notify Landlord of any such
assignment or sublease in accordance with Article 34 of this Lease and
concurrently provide Landlord with the same financial information as required in
Article 26.2 with respect to any proposed assignee or sublessee.

        26.10 Notwithstanding anything to the contrary contained in Article 26
of this Lease, and provided Tenant is not in default of this Lease with all
applicable notices having been given and cure periods having expired, Tenant may
assign this Lease or sublet the Premises without Landlord's prior consent to
"Tenant's Affiliate" defined as: to a corporation into or with which Tenant is
merged or consolidated; to a corporation into which all or substantially all of
Tenant's assets are transferred; to any corporation or other entity which
controls or is controlled by Tenant; or, to a corporation controlled by Tenant's
parent corporation to the same extent as Tenant is controlled by such parent
corporation. Tenant shall, nevertheless, notify Landlord of any such assignment
or sublease in accordance with Article 34 of this Lease and provide Landlord
with the same information regarding the assignee or transferee required by
Article 26.2, herein.

ARTICLE 27 - BANKRUPTCY AND INVOLUNTARY ASSIGNMENT

        27.1 Any of the following acts or occurrences with respect to either
Tenant or any guarantor of this Lease shall constitute an involuntary
assignment: filing a petition under Chapter 7, 10, 11 or any other provision of
the Bankruptcy Act now or hereafter in effect; making an assignment for the
benefit of creditors; being adjudicated bankrupt in involuntary bankruptcy
proceedings, unless the judgment is vacated within sixty (60) days from entry;
becoming insolvent (reflected by either a written admission of inability to meet
current obligations, actual inability to meet current obligations, or
liabilities exceeding assets); appointment of a receiver or trustee for any
property, unless the appointment is set aside or vacated within sixty (60) days
after entry; attachment or execution upon any property (including, without
limitation, this Lease) unless the attachment or execution is removed within
sixty (60) days after levy; or transfer or assignment of this Lease by operation
of law (including, without limitation, transfer by will or intestacy).

        27.2 An involuntary assignment shall constitute a default by Tenant and
Landlord shall have the right to terminate this Lease. This Lease shall not be
treated as an asset of Tenant and neither Tenant nor any person claiming through
or under Tenant (or by virtue of any statute or order of any court) shall be
entitled to possession of the Premises, which shall be forthwith surrendered to
Landlord. Landlord shall be entitled to recover damages at least in the amounts
set forth in Article 31 of this Lease; however, nothing herein shall limit or
prejudice the right of Landlord to seek any other damages allowed by any
applicable statute or rule of law.

                                 Page 16 of 22
<PAGE>   20

ARTICLE 28 - FINANCIAL STATEMENTS

        28.1 If Tenant is in default of this Lease, or Landlord is proposing to
convey, finance or refinance Landlord's interest in the Land, Building or Common
Areas, then Landlord shall have the right to require Tenant to furnish Landlord
with financial statements prepared by a Certified Public Accountant according to
generally recognized accounting principles showing Tenant's financial condition
as of a date not more than ninety (90) days prior to submission to Landlord.

ARTICLE 29 - HOLDING OVER

        29.1 Tenant shall not hold over after the expiration of the Term or
earlier termination of this Lease without the prior written consent of Landlord
(which shall not be subject to Article 35.1). Tenant agrees that Tenant's
failure to surrender possession of the Premises at the end of the Term can and
will cause actual damage to Landlord which is impracticable or extremely
difficult to ascertain (including, without limitation, lost opportunities to
lease the Premises, increase in the cost of improvements, lost rent and
liability for Landlord's inability to deliver timely possession of the Premises
to another tenant). Therefore, if Tenant holds over after the Term without the
prior written consent of Landlord, then Tenant shall become a Tenant at
sufferance only and shall continue to perform each and every term, condition and
covenant of this Lease during any such period of holding over; except that, in
lieu of damages to which Landlord may be entitled hereunder, Landlord may elect
to have Tenant pay Landlord liquidated damages in an amount equal to one hundred
fifty percent (150%) of the Total Monthly Rent payable by Tenant to Landlord in
the last complete month of the Term, for each month or portion thereof which
Tenant so holds over.

        29.2 {Deleted}.

        29.3 The foregoing provisions of this Article are in addition to any
other rights of Landlord hereunder, or as otherwise provided by law, including,
without limitation, the right to bring an action for unlawful detainer.
Landlord's acceptance of rent after expiration or earlier termination of this
Lease, or during any such period of holding over shall not be construed as a
renewal or extension of this Lease. Notwithstanding anything to the contrary
contained in this Lease, Tenant shall not be entitled to any parking discounts
or specified modes of parking during any such period of holding over.

ARTICLE 30 - DEFAULTS

        30.1 The occurrence of any one or more of the following events shall
constitute a default of this Lease by Tenant:

                (a)     Tenant's failure to pay when due any Basic Monthly Rent,
                        Tax Rent, Operating Expense Rent, Capital Expense Rent,
                        Additional Rent or any other payment due Landlord under
                        this Lease where such failure continues for a period of
                        five (5) days after receipt of written notice from
                        Landlord setting forth such failure;

                (b)     Any default set forth in Article 27 of this Lease; or

                (c)     Tenant's failure to observe or perform any express or
                        implied covenant or provision of this Lease, other than
                        those specified in subparagraphs (a) and (b), above,
                        within ten (10) days after receipt of notice from
                        Landlord; however, if more than ten (10) days are
                        reasonably required to so observe or perform, then
                        Tenant shall not be in default so long as Tenant
                        commences observance or performance within said ten (10)
                        day period and diligently prosecutes same to completion.

        30.2 Any notice of default Landlord is required to give Tenant hereunder
and any notice Landlord may be required to give pursuant to California Code of
Civil Procedure section 1161, et seq. (or any similar law now or hereafter in
effect) may be satisfied by a single notice inclusive of the requirements of
both this Article and statutory law.

        30.3 Landlord shall be in default of this Lease if Landlord fails to
observe or perform any material covenant or provision of this Lease that
Landlord is required to so observe or perform within fifteen (15) days after
receipt of written notice from Tenant to Landlord specifying the nature of such
failure; however, if more than fifteen (15) days are reasonably required to so
observe or perform, then Landlord shall not be in default so long as Landlord
commences observance or performance within said fifteen (15) day period and
diligently prosecutes same to completion. In no event shall Tenant have the
right to terminate this Lease as a result of Landlord's default, and Tenant's
remedies shall be limited to damages and/or an injunction. Tenant acknowledges
that the Premises do not constitute a "Dwelling Unit" or "Dwelling" as the term
is used in California Civil Code section 1940, et seq. Tenant waives any right
to make repairs at Landlord's expense pursuant to California Civil Code section
1942 or any similar law, statute or ordinance.

                                 Page 17 of 22
<PAGE>   21

ARTICLE 31 - REMEDIES

        31.1 If Tenant is in default of this Lease, then Landlord may avail
itself of any remedies under law, Landlord's election of any particular remedy
to be at Landlord's sole discretion, without obligation under Article 35.1.
Landlord may elect to avail itself of the remedy described in California Civil
Code section 1951.4, in which case this Lease shall continue in full force and
effect after Tenant's breach and abandonment, and notwithstanding anything to
the contrary contained in Article 26, Tenant shall thereafter have the right to
sublet or assign this Lease subject only to reasonable limitations. If Landlord
does not elect to avail itself of the remedy described in California Civil Code
section 1951.4 and Tenant either breaches this Lease and abandons the Premises
before the end of the Term, or Tenant's right to possession is terminated by the
Landlord because of a breach of this Lease, then this Lease shall terminate, and
Landlord shall recover from Tenant the following:

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

                (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;

                (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 the 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, any
                        costs of obtaining mitigating rental income, such as
                        excused rent, brokerage commissions, Tenant
                        improvements, parking concessions, lease takeovers, cash
                        payments, advertising, moving costs or any other cost or
                        Tenant concession related to the re-leasing of the
                        Premises upon the default of Tenant).

The "worth at the time of award" of the amounts referred to in subparagraphs (a)
and (b), above, shall be computed by allowing interest at the rate specified in
Article 35.11 of this Lease, compounded monthly; and the "worth at the time of
award" of the amounts referred to in subparagraph (c), above, shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award, plus one percent (1%).

        31.2 Tenant waives any equity of redemption and any right to relief from
forfeiture as provided by California Code of Civil Procedure section 1179 (or
any other similar applicable statute, regulation or law now or hereafter in
effect).

        31.3 Any liability for damages, breach or nonperformance by Landlord, or
arising out of the subject matter of or the relationship created by, this Lease,
will be collectible only out of Landlord's interest in the Building and no
personal liability is assumed by or will at any time be asserted against
Landlord, its parent and affiliated corporations, its and their partners,
venturers, directors, officers, agents, servants and employees, or any of its or
their successors or assigns; all such liability, if any, being expressly waived
and released by Tenant.

ARTICLE 32 - ATTORNEYS' FEES

        32.1 In any action brought by either Landlord or Tenant against the
other to enforce or interpret any provision of this Lease (including any claim
in a bankruptcy or an assignment for the benefit of creditors), the prevailing
party shall recover from the other party all reasonable costs and attorneys'
fees of such action (including those incurred either prior to such action in the
proposed resolution or contemplation of such action, in a prior unlawful
detainer action rendered moot by Tenant's vacancy, in the maintenance or
enforcement of any judgment resulting from said action, or in the appeal from
any such judgment), whether such costs were incurred or services were performed
by in-house or outside counsel.

                                 Page 18 of 22
<PAGE>   22

ARTICLE 33 - WAIVER OF JURY TRIAL

        33.1 Landlord and Tenant each hereby waive their respective rights 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, as to any matter whatsoever arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, Tenant's
use or occupancy of the Premises, any claim of injury or damage, or the
enforcement of any remedy under any law, statue, or regulation, emergency or
otherwise, now or hereafter in effect. Notwithstanding the foregoing, Landlord
and Tenant agree that this waiver shall not be effective where the legal effect
of such waiver would be to invalidate in whole or in part, or to limit or impair
in any manner any policy of insurance in force for the benefit of Landlord or
Tenant or to limit or impair any rights, remedies or coverage afforded
thereunder.

ARTICLE 34 - NOTICES [SEE ADDENDUM]

        34.1 Notice shall be given to Tenant at the Premises. Notice shall be
given to Landlord at 15760 Ventura Boulevard, Suite 500, Encino, California
91436-3095. Either party may, by written notice to the other, specify a
different address for notice purposes.

        34.2 In order to prevent disputes concerning the giving of notice, if
any provision of this Lease (or addenda or amendments thereto) requires "notice"
to be given, for either party to "notify" the other, or otherwise refers to
"notification", then such notice shall be made in writing and be given by either
personal delivery, certified mail or a nationally recognized overnight courier
service, in each case delivery to be evidenced by a signed receipt therefor.
Notice may also be given by facsimile transmission, provided the party to whom
the transmission is addressed acknowledges actual, legible receipt by executing
a copy of the transmission (or a receipt for same) and returning a copy of same
to the sender, by facsimile transmission or otherwise. Notices shall be deemed
effective at the time of delivery, as confirmed by said signed receipts. If
either party fails or refuses to accept delivery by certified mail or overnight
courier service, or refuses to execute a receipt evidencing delivery, then
notice may be given by first-class mail and shall be deemed effective two (2)
business days after mailing.

        34.3 The term "notice" shall not include any bills, invoices, rent
statements or statement of any other charges or sums due from Tenant to
Landlord, or any notice required or permitted to be given pursuant to any law or
statute.

ARTICLE 35 - GENERAL PROVISIONS

        35.1 Reasonableness. Except as may be otherwise specifically provided in
this Lease, wheresoever and whenever Landlord's or Tenant's discretion or
consent is required under this Lease, Landlord and Tenant agree that such
discretion will be reasonably exercised and that such consent will not be
unreasonably withheld or delayed.

        35.2 Rules and Regulations. Tenant shall faithfully observe and comply
with the Rules and Regulations attached hereto as Exhibit "C", and all
reasonable and nondiscriminatory modifications or additions thereto made by
Landlord from time to time.

        35.3 Conflict of Laws. This Lease shall be governed by and construed
under the laws of the State of California.

        35.4 Venue. Any lawsuit brought by Tenant against Landlord shall be
filed in a court of competent jurisdiction for the county in which the Building
is located.

        35.5 Identification of Tenant. The term "Tenant" as used in this Lease
shall mean and include each person or entity that executes this Lease as Tenant,
who shall be jointly and severally liable for the keeping, observing and
performing of all of the terms, covenants, conditions, provisions and agreements
of this Lease to be kept, observed and performed by Tenant. Notice from or to
any single person or entity executing this Lease as Tenant shall be deemed to be
effective notice from or to each and every person or entity executing this Lease
as Tenant, with the same force or effect as if each such person or entity had so
given or received such notice. Any act or signature by any single person or
entity executing this Lease as Tenant concerning this tenancy or Lease
(including, without limitation, any renewal, extension, expiration, termination
or modification of this Lease) shall be binding upon each person or entity
executing this Lease as Tenant with the same force and effect as if each person
or entity had so acted or signed. Any refund to any single person or entity
executing this Lease as Tenant shall be deemed to be a refund to each person or
entity executing this Lease as Tenant, as if each such refund had been
collectively made to all such persons or entities.

        35.6 Successors and Assigns. Except as otherwise provided in this Lease,
each covenant, condition and provision of this Lease shall be binding upon and
shall inure to the benefit of the parties hereto, their respective heirs,
personal representatives, successors and permissible assigns.

                                 Page 19 of 22
<PAGE>   23

        35.7 Relinquishment of Possession. The voluntary or involuntary
relinquishment of possession of the Premises by Tenant to Landlord, or a mutual
cancellation of this Lease by both Tenant and Landlord, shall at the option of
Landlord operate as an assignment to Landlord of any or all subleases or
subtenancies and no merger shall be effected.

        35.8 Performance by Tenant. If Tenant fails to perform any act to be
performed by Tenant hereunder other than payment of money to Landlord and such
failure continues for ten (10) days after Tenant's receipt of notice thereof
from Landlord, Landlord may, without waiving or releasing Tenant from any
obligation, perform any such act and all costs incurred by Landlord, together
with interest thereon at the rate specified in Article 35.11 of this Lease from
the date of such payment by Landlord, shall be payable by Tenant to Landlord.

        35.9 Definition of Landlord. The term "Landlord" as used in this Lease
shall be limited to mean and include only the owner at the time in question of
the fee or leasehold interest under a ground lease of the Land. If Landlord
transfers, assigns or otherwise conveys any such title or leasehold, Landlord
shall be automatically freed and relieved of all liability with respect to the
performance of any covenants or obligations in this Lease to be performed from
and after the date of such transfer, assignment or conveyance, except as may be
provided in Article 7.3.

        35.10 Waiver. The waiver by Landlord of any breach of any term, covenant
or condition of this Lease shall neither be deemed a waiver of any concurrent or
subsequent breach of the same or any other term, covenant or condition of this
Lease, nor shall any custom or practice which may develop between the parties in
the administration of the terms hereof be deemed a waiver of, or in any way
affect the right of Landlord to require strict performance by Tenant. The
acceptance of rent or any sum hereunder by Landlord shall not be deemed to be a
waiver of any breach by Tenant of any term, covenant or condition of this Lease
other than the failure of Tenant to pay such rent or sum, regardless of
Landlord's knowledge of such breach at the time of acceptance.

        35.11 Interest. Wheresoever required in this Lease, and in lieu of the
legal rate to be used in the computation of any interest owed Landlord in any
judgment or award of the court, interest shall be compounded monthly and charged
at a rate equal to the higher of:

                (a)     Ten percent (10%) per annum; or

                (b)     Five percent (5%) per annum, plus the rate established
                        by the Federal Reserve Bank of San Francisco on advances
                        to member banks under Sections 13 and 13(a) of the
                        Federal Reserve Act (as now in effect, or hereafter from
                        time to time amended or, if there is no such single
                        terminable rate of advances, the closest counterpart of
                        such rate as shall be designated by the Superintendent
                        of Banks of the State of California, unless some other
                        person or agency is delegated such authority by the
                        legislature) which is prevailing on the twenty-fifth
                        (25th) day of the month preceding the "Accrual Date".

The "Accrual Date" shall be defined as follows: for purposes of Article 30, as
the initial date of default; for purposes of Article 6, the date of final
payment by Landlord for the Capital Expense; and for all other purposes, the
date of execution of this Lease. Tenant hereby agrees that the use of such
interest rate herein shall not be deemed to be interest upon a loan or
forbearance of money, for goods or things in action for use primarily for
personal, family or household purposes within the meaning of the California
Constitution, Article 15, section 1.

        35.12 Terms, Headings and Print. The words "Landlord" and "Tenant" as
used herein shall include the plural as well as the singular. Words used in any
gender include other genders. The article headings are not a part of this Lease,
and such headings and any use of boldface, italics or underlining are for
convenience only, and shall have no effect upon the construction or
interpretation of this Lease.

        35.13 Time. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.

        35.14 Entire Agreement. This Lease contains the entire agreement of the
parties hereto with respect to any matter covered or mentioned in this Lease and
no prior agreement or understanding, oral or written, expressed or implied,
pertaining to any such matter shall be effective for any purpose. No provision
of this Lease may be amended or added to except by an agreement in writing
executed by both Landlord and Tenant or their respective successors in interest.
The parties acknowledge that all prior agreements, representations and
negotiations concerning the subject matter of this Lease, or collateral thereto,
are deemed superseded by the execution of this Lease to the extent they are not
incorporated herein and that this agreement shall be deemed to be integrated.

        35.15 Severability. Any provision of this Lease which proves to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provisions hereof, and such other provisions shall remain in full force and
effect.

                                 Page 20 of 22
<PAGE>   24

        35.16 Recording. Tenant shall not record this Lease or a short form
memorandum thereof without the written consent of Landlord. Any recording
without Landlord's written consent shall be a material breach of this Lease.

        35.17 Plats, Riders and Clauses. Any addenda, clauses, plats, riders and
provisions executed by both Landlord and Tenant which are inserted in, endorsed
on or affixed to this Lease are a part hereof. If there is any variation or
discrepancy between duplicate original documents held by Landlord and Tenant,
then the duplicate original held by Landlord shall be deemed controlling.

        35.18 Building Name. Tenant shall not use the name of the Building for
any purpose other than as the address of the business to be conducted by Tenant
in the Premises. Landlord shall have the right, without liability to Tenant for
any damage or injury, whatsoever, to change the name or street address of the
Building.

        35.19 Quiet Possession. Except as otherwise provided in this Lease,
Tenant, upon paying the rents reserved hereunder and observing and performing
all of the covenants, conditions and provisions on Tenant's part to be observed
and performed hereunder, shall have quiet possession of the Premises for the
entire Term.

        35.20 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive and, wherever possible, each remedy shall be cumulative with
all other remedies.

        35.21 Examination and Delivery of Lease. Submission of this instrument
for examination or signature by Tenant does not constitute a reservation of, or
option to Lease and is not effective as a Lease or otherwise, or a binding legal
instrument until execution and delivery by all parties. Prior to such execution
and delivery, this Lease shall neither be legally binding nor effective.

        35.22 Confidentiality. Tenant agrees to keep the terms of this Lease
confidential and shall not disclose same to any other person not a party hereto
without the prior written consent of Landlord; however, Tenant may disclose the
terms hereof to Tenant's accountants, attorneys, managing employees, and others
in privity with Tenant to the extent reasonably necessary for Tenant's business
purposes. Tenant agrees that a breach of this Article will cause irreparable
injury to Landlord and Landlord shall be entitled, together with all other
remedies in law or equity available to Landlord, to injunctive relief to
restrain such breach.

        35.23 Agreed Figures. All figures set forth in this Lease represent
negotiated sums and percentages and are conclusive as between Landlord and
Tenant.

                                 Page 21 of 22
<PAGE>   25

        35.24 Measurement of Premises. The usable area of the Premises has been
measured consistent with the American National Standard Institute Publication
ANSI Z65.1 - 1996 ("BOMA"). The rentable area of the Premises and Building
include a factor for those Common Areas on the floor containing the Premises and
an additional factor for those Common Areas which generally serve rentable areas
of the Building (such as the Ground Floor Lobby), and exclude those areas
designated exclusively as storage space. If Landlord elects to remeasure the
Premises, Common Areas, Building or any portion thereof, or the use of any
portion of the Building is modified so as to affect the gross rentable square
footage of the Building, then Landlord may upon written notice to Tenant revise
the Proportional Share to reflect the results of any such survey or
modification, provided that such remeasurement is consistent with the method of
measurement and calculation of rentable area set forth herein.

             WHEREUPON, THE PARTIES HERETO HAVE EXECUTED THIS LEASE
                             ON THE DATES INDICATED

                           RAINBOW TECHNOLOGIES, INC.

Date:                                       By:
     -----------------------------             ---------------------------------

                                            Title:
                                                  ------------------------------

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

                                            Title:
                                                  ------------------------------

                            STEVENS CREEK ASSOCIATES
                    DBA TRIZECHAHN LANDMARK SQUARE MANAGEMENT
                           BY TRIZECHAHN CENTERS, INC.

Date:                                       By:
     -----------------------------             ---------------------------------

                                            Title:
                                                  ------------------------------

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

                                            Title:
                                                  ------------------------------

                                 Page 22 of 22
<PAGE>   26

                                 ADDENDUM NO. 1

                This Addendum dated November 24, 1999, is made a part of and is
attached to that certain Lease dated November 24, 1999, between Stevens Creek
Associates, a California general partnership, dba TrizecHahn Landmark Square
Management ("Landlord"), and Rainbow Technologies, Inc., a Delaware corporation,
dba Systematic Systems Integration ("Tenant"), concerning Suite 2000 located at
111 West Ocean Boulevard, Long Beach, California.
--------------------------------------------------------------------------------

ARTICLE 36 - TENANT IMPROVEMENTS

        36.1 Landlord shall provide Tenant with a "Construction Allowance" in
the amount of Three Hundred Thousand Nine Hundred Ninety-Two Dollars
($300,992.00), such amount to be applied toward construction of permanent
improvements (including cabling) in the Premises ("Tenant Improvements") in
accordance with the Work Letter attached hereto as Exhibit "E".

        36.2 Notwithstanding anything to the contrary contained herein or in the
Work Letter, Tenant may use a portion of the Construction Allowance not to
exceed One Hundred Twelve Thousand Eight Hundred Seventy-Two Dollars
($112,872.00) to reimburse Tenant for the purchase of fixtures, furnishings and
equipment for the Premises (the "FF&E"), and a portion of the Construction
Allowance not to exceed Twenty-Eight Thousand Two Hundred Eighteen Dollars
($28,218.00) to reimburse Tenant for the costs of moving Tenant's fixtures,
furnishings and equipment to the Premises by qualified licensed and insured
movers (the "Moving Expenses"). Landlord shall have no obligation to reimburse
Tenant for FF&E or Moving Expenses unless and until Landlord, in Landlord's sole
discretion, is satisfied that there is or will be Construction Allowance
remaining after the completion of all Tenant's Work and payment of those Work
Costs other than FF&E and Moving Expenses that may result in a lien upon the
Land and Building. Landlord shall not be obligated to reimburse Tenant for FF&E
unless and until the FF&E subject to the reimbursement request is delivered and
installed in the Premises and functioning to Tenant's satisfaction. Landlord
shall not be obligated to reimburse Tenant for Moving Expenses unless and until
the moving activities included in the Moving Expenses subject to the
reimbursement request have been performed to Tenant's reasonable satisfaction.
Any reimbursement of FF&E or Moving Expenses shall be subject to offset by
Landlord for the reasonable costs of repairing any damage to the Building and
Common Areas caused by the subcontractors performing the work subject to the
request for reimbursement.

ARTICLE 37 - OPTION TO RENEW

        37.1 Tenant shall have the option to renew this Lease for an additional
term of sixty (60) months (the "Renewal Term"), upon the following terms and
conditions:

                (a)     Tenant shall not at the time of exercising this Option
                        be in material monetary default (with all applicable
                        notices having been given and cure periods having
                        expired without Tenant having cured such material
                        default) under any of the terms, covenants, conditions,
                        provisions or agreements of this Lease.

                (b)     Such re-leasing shall be upon the same terms, covenants,
                        conditions, provisions and agreements as in this Lease,
                        except that:

                        (i)     Tenant's Basic Monthly Rent shall be an amount
                                determined by multiplying the rentable area of
                                the Premises by the "Fair Market Rate" (as
                                defined in Article 37.3).

                        (ii)    Tenant's Base Year shall be amended to be the
                                calendar year 2005.

                        (iii)   Tenant shall continue in the Premises in its "as
                                is" condition.

                (c)     Tenant shall exercise this option to renew this Lease by
                        notifying Landlord of the same in writing on or before
                        May 31, 2004, or this option shall be null, void and of
                        no force or effect.

                                  Page 1 of 9
<PAGE>   27

                (d)     Within ten (10) business days after Landlord's receipt
                        of Tenant's notice of exercise of this Option, Landlord
                        shall propose to Tenant the Fair Market Rate for the
                        Renewal Term (based upon the definition in Article
                        37.3).

                (e)     Landlord and Tenant shall thereafter continue to
                        negotiate Fair Market Rate in good faith until the
                        earlier of the agreement of the parties or November 30,
                        2004 (the "Outside Agreement Date").

                (f)     If the parties have not reached agreement on Fair Market
                        Rate by the Outside Agreement Date, then the last such
                        proposal for the Fair Market Rate submitted by each
                        party to the other prior to the Outside Agreement Date
                        shall be submitted to arbitration in accordance with
                        Article 37.2.

        37.2 If arbitration is required pursuant to Article 37.1, then the
parties shall proceed as follows:

                (a)     Each arbitrator appointed hereunder shall be a licensed
                        real estate professional who shall have been active over
                        the five (5) year period immediately prior to the date
                        of such appointment in the leasing of first-class
                        commercial high-rise office properties in the Market
                        Area (defined in Article 37.3, below), and who does not
                        then represent or act on behalf of either of the
                        parties.

                (b)     If Landlord and Tenant cannot agree to a single
                        arbitrator within ten (10) business days after the
                        Outside Agreement Date, then Landlord and Tenant shall
                        each appoint one (1) arbitrator within such ten (10)
                        business day period; however, if one (1) party fails to
                        timely appoint an arbitrator, and further fails to
                        appoint an arbitrator within two (2) business days after
                        receipt of written notice of such failure from the other
                        party, then the determination shall be made by the sole
                        appointed arbitrator.

                (c)     If a sole arbitrator is not agreed upon or deemed
                        selected, then the two (2) qualified arbitrators so
                        appointed shall, within ten (10) business days
                        thereafter, appoint a third (3rd) arbitrator having the
                        same minimum required qualifications; however, if the
                        two (2) arbitrators fail to agree upon and appoint a
                        third (3rd) arbitrator, then the identity of the third
                        (3rd) arbitrator shall be submitted to arbitration under
                        the provisions of the American Arbitration Association,
                        but subject to such arbitrator having the foregoing
                        qualifications.

                (d)     The determination of the arbitrator(s) shall be limited
                        solely to the issue of whether Landlord's or Tenant's
                        submitted Fair Market Rate is closer to the actual Fair
                        Market Rate for such space. The arbitrator(s) shall have
                        no authority to issue any decision other than the
                        selection of either Landlord's or Tenant's submitted
                        Fair Market Rate.

                (e)     A majority of the arbitrator(s) shall, within thirty
                        (30) days after the appointment of the last arbitrator,
                        reach a decision consistent with subparagraph (d),
                        above, and shall notify Landlord and Tenant thereof. The
                        decision of the arbitrator(s) shall be binding upon both
                        Landlord and Tenant.

                (f)     The losing party shall be responsible for paying all
                        reasonable fees of the arbitrator(s) hereunder.

        37.3 For purposes of this Lease, the term "Fair Market Rate" shall mean
a single Basic Monthly Rent per rentable square foot (such rate to amortize over
the term any mid-term increases or indexing, and excused rent to reach a single
effective rate payable in each month of the term) that a landlord has accepted
in current transactions from new or renewing non-equity tenants (not affiliated
with Landlord) of comparable credit-worthiness, for a comparable amount of
improved space, for a comparable use for a comparable term with a commencement
date within six (6) months of the commencement of the renewal term ("Comparable
Transactions"). If there are at least two (2) Comparable Transactions in the
Building, then the Fair Market Rate shall be determined considering only those
Comparable Transactions in the Building. If there are not at least two (2) such
Comparable Transactions in the Building, then such determination shall be made
further considering what comparable landlords of comparable buildings (which
shall each be of a comparable size, class and age in the Downtown Long Beach
area fronting on Ocean Boulevard [the "Market Area"], and with comparable
vacancy) have accepted in Comparable Transactions. Although determination of
Fair Market Rent shall be limited to determination of the Basic Monthly Rent per
rentable square foot, in comparison of Comparable Transactions appropriate
consideration shall be given to differences in the method of measuring the area
of the premises, the ratio of rentable to usable square area, whether rent is
based upon usable or rentable area, and the type of escalation clause (e.g.,
whether increases in additional rent are determined on a net or gross basis and,
if gross, whether such increases are determined according to a base year or a
base dollar amount expense stop); the extent to which the premises have been or
are obligated to be improved; whether or not a brokerage commission was payable;
and, any other customary concession granted the tenant in the Comparable
Transaction.

                                  Page 2 of 9
<PAGE>   28

ARTICLE 38 - SIGNS

        38.1 Full Floor Signage. Effective upon the Commencement Date for Suite
2000A, Tenant shall be entitled to the sign rights set forth therein.
Notwithstanding anything to the contrary contained in Article 23, Tenant shall
have the right to install signs in Premises visible from, but not within, the
elevator lobby on the Twentieth (20th) Floor, identifying Tenant by Tenant's
name and/or logo. Tenant may design and construct the Premises (incorporating
such improvements as may be required by any fire/life safety codes applicable to
the Premises and elevator lobby at Tenant's sole cost and expense, for which
Tenant may use the Construction Allowance) so that the doors from the elevator
lobby to the Premises may remain open for the conduct of normal business.

        38.2 Monument Signage. Effective upon the Commencement Date for Suite
2000A, Tenant shall have the non-exclusive right to place Tenant's name on one
(1) insert on each of the two (2) sides of either the existing monument sign at
the Ocean Boulevard entrance to the Building or any additional monument sign
that may be installed by Landlord along the Ocean Boulevard frontage of the
Building (the "Sign") upon the following terms and conditions:

                (a)     Tenant's rights hereunder shall be subject to all rights
                        granted to other tenants in the Building existing as of
                        the execution of this Amendment (the "Prior Rights");
                        and, shall be further subject to space on the Sign
                        becoming available, unencumbered by any Prior Rights.
                        Landlord shall not be obligated to reduce the size of
                        any inserts or increase the number of inserts which the
                        Sign can accommodate to create an opportunity for Tenant
                        to install Tenant's name on the Sign. Tenant is advised
                        that there are, as of the execution of this Lease,
                        rights to the Sign superior to those granted herein to
                        Tenant.

                (b)     Tenant's right to install and maintain Tenant's inserts
                        on the Sign is subject to:

                        (i)     Tenant not being in default of this Lease, with
                                all applicable notices having been given and
                                cure periods having expired; and

                        (ii)    The occupancy for the conduct of business by
                                Tenant and affiliates of Tenant of not less than
                                eighteen thousand eight hundred twelve rentable
                                square feet (18,812 RSF) of the Premises (e.g.,
                                the entire Twentieth (20th) Floor).

                        If at the time that Tenant's sign rights accrue, Tenant
                        fails to satisfy any requirement hereunder, then this
                        Article 38.2 shall be deemed deleted and of no further
                        force or effect. If at any time after installation of
                        the Sign, Tenant fails to satisfy either of the above
                        requirements, and continues to do so for a period of
                        thirty (30) days, then Landlord by notice to Tenant may
                        require Tenant to remove the Sign in accordance with
                        subparagraph (j), below, and shall thereafter forfeit
                        all rights to replace such Sign for the remainder of the
                        Term (as may be extended).

                (c)     The cost to fabricate, construct, install, repair and
                        maintain Tenant's inserts on the Sign shall be borne
                        solely by Tenant, and Tenant shall keep Tenant's inserts
                        on the Sign in good order, condition and repair. If
                        Tenant changes Tenant's legal name, then Tenant shall
                        promptly replace the inserts on the Sign with correct
                        inserts, at Tenant's sole cost and expense. Landlord may
                        determine, in Landlord's sole discretion, in which slot
                        Tenant's inserts shall be placed.

                (d)     Tenant's inserts on the Sign shall have the same
                        dimensions as those other inserts on the Sign, and
                        materials used to construct Tenant's inserts shall be of
                        the same composition as the existing inserts on the
                        Sign.

                (e)     Tenant shall secure Landlord's prior written approval as
                        to the design, size, color, construction and other
                        aesthetic aspects of Tenant's inserts on the Sign.

                (f)     Prior to installation or any modification of Tenant's
                        inserts on the Sign, Tenant or Tenant's contractors
                        shall obtain all required plans, permits and government
                        approvals which may be required.

                (g)     Tenant shall indemnify and defend Landlord in regards to
                        the installation and maintenance of Tenant's inserts on
                        the Sign to the same extent as with respect to the
                        Premises.

                (h)     Tenant shall insure Tenant's inserts on the Sign to the
                        same extent as Tenant is obligated to insure Tenant's
                        personal property in the Premises.

                (i)     Landlord reserves the right to erect such other signs in
                        the Common Areas, the real property upon which the
                        Building is situated, the parking facilities, and
                        otherwise upon the interior and exterior of the Building
                        as Landlord in its sole discretion deems appropriate,
                        and any such installation shall not serve to increase
                        Tenant's rights hereunder.

                                  Page 3 of 9
<PAGE>   29

                (f)     At the end of the Term (or as may be required pursuant
                        to subparagraph [b], above) Tenant shall, at Tenant's
                        sole cost and expense, remove the Sign and repair and
                        restore the area of the monument in which the Sign
                        panels were located to their original or blank
                        condition.

                (g)     The rights under this Article 38 are personal to Tenant
                        or any affiliate of Tenant defined in Article 26.10, and
                        may not be sublet or assigned to any other entity.

ARTICLE 39 - RIGHT TO AUDIT

        39.1 Tenant shall have a right to audit Landlord's determination of Tax
Rent, Operating Expense Rent and Capital Expense Rent and the respective
Property Taxes, Operating Expenses and Capital Expenses upon which the same were
based (collectively, "Escalations"), upon the following terms and conditions:

                (a)     Tenant shall not be in material monetary default of this
                        Lease (including, but not limited to payment of any
                        charges to be reviewed hereunder) at the time notice of
                        audit is given by Tenant, or at any other time prior to
                        completion of the audit.

                (b)     Any audit shall be limited to those annual
                        determinations of actual Escalations that Landlord is
                        required to make pursuant to Articles 4, 5 and 6, and
                        shall not include a right to audit Landlord's estimates
                        of Escalations that Landlord is required to make
                        thereunder.

                (c)     Each audit shall be limited to the Escalations for not
                        more than two (2) consecutive Comparison Years of the
                        Term and, in the case of the first audit performed, the
                        Base Year. No Escalations for any Comparison Year or the
                        Base Year may be audited more than once. For any
                        Comparison Year, Tenant shall notify Landlord that it is
                        exercising its right to audit Escalations for such
                        Comparison Year not later than a date two (2) years
                        after Tenant's receipt of Landlord's statement
                        reconciling the Escalations for such Comparison Year.
                        With respect to each Comparison Year, if Tenant fails to
                        give timely notice of exercise of Tenant's rights (or
                        such notice is not effective because of Tenant's default
                        pursuant to subparagraph [a], above), then Tenant shall
                        be deemed to have accepted Landlord's statement of such
                        Escalations and be deemed to have waived any claim with
                        respect to such Escalations, except as such claim may
                        arise from the fraud or other intentional tort on the
                        part of Landlord.

                (d)     The audit shall take place at Landlord's regional
                        offices within the Los Angeles Metropolitan area or, at
                        Landlord's option, the Building, at a time mutually
                        convenient to Landlord and Tenant (but not later than
                        sixty [60] days after receipt of Tenant's notice to
                        audit). Except as Landlord may consent in writing, and
                        provided Landlord has fully cooperated with Tenant's
                        auditors to supply requested information on a prompt
                        bases, the audit shall be completed within ten (10)
                        consecutive business days after commencement.

                (e)     The audit may be accomplished by either Tenant's own
                        employees with accounting experience reasonably
                        sufficient to conduct such review, or a nationally or
                        regionally recognized public accounting firm mutually
                        acceptable to Landlord and Tenant that is not
                        compensated on a contingency or bonus basis. Under no
                        circumstances shall Landlord be required to consent to
                        an accounting firm which is also a tenant of Landlord in
                        the Building.

                (f)     If it is determined that Tenant overpaid Escalations,
                        Landlord shall repay to Tenant the amount of the
                        overpayment to the extent that Landlord does not dispute
                        the results of such audit. If the audit determines that
                        Tenant underpaid Escalations, then Tenant shall promptly
                        pay to Landlord the amount of any such underpayment.

                (g)     If the audit is performed by a nationally or regionally
                        recognized public accounting firm, and it is determined
                        that the total Property Taxes, Operating Expense and
                        Capital Expenses subject to audit (as opposed to the
                        resulting calculations of Tax Rent, Operating Expense
                        Rent and Capital Expense Rent) were overstated by
                        Landlord by more than five percent (5%), then Landlord
                        shall reimburse Tenant for all actual and reasonable
                        expenses incurred to such firm in auditing the same.

                                  Page 4 of 9
<PAGE>   30

                (h)     Tenant agrees to keep all information acquired, as a
                        result of Tenant's exercise of its rights, hereunder,
                        confidential and shall not disclose same to any other
                        person not a party hereto without the prior written
                        consent of Landlord; however, Tenant may disclose the
                        terms hereof to the mutually agreed upon auditor,
                        Tenant's accountants, attorneys, managing employees,
                        assignees, sublessees, other persons and entities as may
                        be required pursuant to legal process or other legal
                        requirements, and others in privity with Tenant only to
                        the extent reasonably necessary for Tenant to exercise
                        its rights hereunder. Any accounting firm hired by
                        Tenant to perform the audit shall likewise agree in
                        writing to the foregoing as a condition of Landlord
                        consenting to the employment of such firm or such firm
                        being provided access to Landlord's records.

                (i)     If Tenant fails to notify Landlord of Tenant's exercise
                        of Tenant's right to audit (or subsequently perform such
                        audit) within the time periods specified herein, then
                        Tenant shall be deemed to have accepted as correct
                        Landlord's statement of Escalations and shall waive any
                        and all claims in regard to the same; however, nothing
                        herein shall be deemed a waiver of any claim for fraud
                        or other intentional tort on the part of Landlord.

        39.2 The submittal of all matters to arbitration in accordance with the
terms and conditions of this Article 39.2 shall be the sole and exclusive
method, means and procedure to resolve any and all claims, disputes or
disagreements arising in regard to any dispute by Landlord pursuant to Article
39.1(f), Landlord's election pursuant to Article 6 to amortize certain items of
Capital Expenses (including, without limitation, the determination of useful
life or payback period by Landlord) or the extent to which costs incurred by
Landlord shall be included as an item of Capital Expenses, as follows:

                (a)     The parties hereby irrevocably waive any and all rights
                        to the contrary and shall at all times conduct
                        themselves in strict, full, complete and timely
                        accordance with the terms and conditions of this Article
                        39.2 and all attempts to circumvent this Article 39.2
                        shall be absolutely null and void and of no force or
                        effect whatsoever.

                (b)     Any payment to Landlord can be made "under protest,"
                        which shall occur when such payment is accompanied by a
                        good faith notice stating the reasons that the party has
                        elected to make a payment under protest. Such protest
                        will be deemed waived unless the subject matter
                        identified in the protest is submitted to arbitration as
                        set forth in this Article 39.2.

                (c)     Any dispute to be arbitrated pursuant to the provisions
                        of this Article 39.2 shall be determined by binding
                        arbitration before a retired judge of the Superior Court
                        of the State of California (the "Arbitrator") under the
                        auspices of Judicial Arbitration & Mediation Services,
                        Inc. ("JAMS"), or any other similar arbitration or
                        mediation service to which the parties may agree,
                        subject to the following:

                        (i)     Such arbitration shall be initiated by the
                                parties, or either of them, within ten (10) days
                                after either party sends Notice (the
                                "Arbitration Notice") of a demand to arbitrate
                                to the other party and to JAMS. The Arbitration
                                Notice shall contain a description of the
                                subject matter of the arbitration, the dispute
                                with respect thereto, the amount involved, if
                                any, and the remedy or determination sought.

                        (ii)    The parties may agree on a retired judge from
                                the JAMS panel. If they are unable to promptly
                                agree, JAMS will provide a list of three
                                available judges and each party may strike one.
                                The remaining judge (or if there are two, the
                                one selected by JAMS) will serve as the
                                Arbitrator. In the event that JAMS shall no
                                longer exist or if JAMS fails or refuses to
                                accept submission of such dispute and the
                                parties cannot agree on another similar service,
                                then the dispute shall be resolved by binding
                                arbitration before the American Arbitration
                                Association ("AAA") under the AAA's commercial
                                arbitration rules then in effect.

                        (iii)   The Arbitrator shall schedule a pre-hearing
                                conference to resolve procedural matters,
                                arrange for the exchange of information, obtain
                                stipulations, and narrow the issues. The parties
                                will submit proposed discovery schedules to the
                                Arbitrator at the pre-hearing conference. The
                                scope and duration of discovery will be within
                                the sole discretion of the Arbitrator. The
                                Arbitrator shall have the discretion to order a
                                pre-hearing exchange of information by the
                                parties, including, without limitation,
                                production of requested documents, exchange of
                                summaries of testimony of proposed witnesses,
                                and examination by deposition of parties and
                                third-party witnesses. This discretion shall be
                                exercised in favor of discovery reasonable under
                                the circumstances.

                        (iv)    The arbitration shall be conducted in the County
                                of Los Angeles, California. Any party may be
                                represented by counsel or other authorized
                                representative.

                                  Page 5 of 9
<PAGE>   31

                        (v)     In rendering a decision(s), the Arbitrator shall
                                determine the rights and obligations of the
                                parties according to the substantive and
                                procedural laws of the State of California and
                                the terms and conditions of this Lease. The
                                Arbitrator's decision shall be based on the
                                evidence introduced at the hearing, including
                                all logical and reasonable inferences therefrom.

                        (vi)    The Arbitrator may make any determination,
                                and/or grant any remedy or relief (an
                                "Arbitration Award") that is just and equitable.
                                The decision must be based on, and accompanied
                                by, a written statement of decision explaining
                                the factual and legal basis for the decision as
                                to each of the principal controverted issues.

                        (vii)   The decision shall be conclusive and binding,
                                and it may thereafter be confirmed as a judgment
                                by the Superior Court of the State of
                                California, subject only to challenge on the
                                grounds set forth in the California Code of
                                Civil Procedure Section 1286.2. The validity and
                                enforceability of the Arbitrator's decision is
                                to be determined exclusively by the California
                                courts pursuant to the terms and conditions of
                                this Lease.

                        (viii)  The Arbitrator shall award costs, including
                                without limitation attorneys' fees, and expert
                                and witness costs, to the prevailing party as
                                defined in California Code of Civil Procedure
                                Section 1032 ("Prevailing Party"), if any, as
                                determined by the Arbitrator in his or her
                                discretion. The Arbitrator's fees and costs
                                shall be paid by the non-prevailing party as
                                determined by the Arbitrator in his or her
                                discretion.

                (d)     This Article 39.2 shall not apply to any claims by
                        Tenant that are primarily founded upon matters of fraud,
                        willful misconduct, bad faith or any other allegation of
                        an intentional tortious act.

ADDENDUM TO ARTICLE 5 - OPERATING EXPENSE RENT

        5.6 Notwithstanding the provisions of Article 5, Operating Expenses, as
defined therein, shall not include expenses or costs incurred for the following:

                (a)     Repairs or other work occasioned by fire or other
                        casualty to the extent of actual insurance proceeds
                        received by Landlord (however, any deductibles under
                        such policy shall be included in Operating Expenses);

                (b)     Leasing commissions, attorneys' fees, costs and
                        disbursements and other expenses incurred in connection
                        with negotiations or disputes with tenants, other
                        occupants or prospective tenants or prospective tenants
                        or occupants;

                (c)     Renovating, decorating, painting, redecorating or making
                        leasehold improvements to the interior of the existing
                        or prospective premises of other tenants, or storage
                        space, in the Building, but not excluding costs and
                        expenses of such work in the Common Areas of the
                        Building;

                (d)     Services to tenants for which Landlord is reimbursed by
                        tenants under the leases with such tenants (excepting
                        fees for parking);

                (e)     Depreciation, interest on any mortgage, and rent under
                        any ground lease;

                (f)     Violations of this Lease by Landlord and violations by
                        other tenants of provisions of their leases (however, if
                        such violation results in an insured loss, then any
                        deductibles under such policy shall be included in
                        Operating Expenses);

                (g)     Insurance deductibles to the extent that the same exceed
                        an aggregate of Fifty Thousand Dollars in a calendar
                        year;

                (h)     Without waiving Landlord's right to include the same in
                        Capital Expenses to the extent permitted pursuant to
                        Article 6, any costs or expenses required to be
                        capitalized according to generally accepted accounting
                        principles applicable to, and generally recognized by
                        the commercial office real estate industry; and

                (i)     Earthquake insurance, unless earthquake insurance was
                        included in the Base Year.

        5.7 If any facilities, services or utilities used in connection with the
Building are provided from another building owned or operated by Landlord (or an
affiliate of Landlord), or vice versa, the costs incurred by Landlord in
connection therewith shall be equitably pro rated and allocated to Operating
Expenses by Landlord on an reasonable basis.

                                  Page 6 of 9
<PAGE>   32

ADDENDUM TO ARTICLE 6 - CAPITAL EXPENSE RENT

        6.5 Notwithstanding anything to the contrary contained in Article 6, for
purposes of this Lease, only, Capital Expenses shall be subject to the following
provisions:

                (a)     Each item of Capital Expenses defined in subparagraph
                        (a) or (c) of Article 6.2 incurred during any calendar
                        year in which all or any part of the Term occurs and
                        costing in excess of Fifty Thousand Dollars ($50,000.00)
                        shall be amortized with interest as provided in Article
                        35.11, in equal installments, over its "Useful Life"
                        (defined below), and only those installments accruing
                        during any calendar year in which all or any part of the
                        Term occurs shall be included in Capital Expenses for
                        such calendar year; and

                (b)     Each item of Capital Expenses defined in subparagraph
                        (b) of Article 6.2 incurred during any calendar year in
                        which all or any part of the Term occurs shall not
                        exceed the savings in Operating Expenses reasonably
                        projected by Landlord to result and actually resulting
                        therefrom (as reasonably determined by Landlord after
                        consultation with experts experienced in the applicable
                        improvement and calculation of savings therefrom)
                        discounted to present value at the rate specified in
                        Article 35.11, and such lesser amount shall be amortized
                        with interest as provided in Article 35.11, in equal
                        installments, over the payback period for such Capital
                        Expense (as reasonably projected by Landlord), and only
                        those installments accruing during any calendar year in
                        which all or any part of the Term occurs shall be
                        included in Capital Expenses for such calendar year.

The term "Useful Life" for purposes of this Article 6, shall mean and refer to
that period of time which the subject capital improvement, modification or
addition will be productive and/or useful, without replacement, for the purpose
required and intended at the time of installation, assuming that such capital
improvement, modification or addition is repaired and maintained as provided in
this Lease and will be subject to the elements of nature or any other condition
beyond the reasonable control of Landlord (including further governmental action
which renders the improvement, modification or addition obsolete).

        6.6 Notwithstanding anything to the contrary contained in Article 6,
Capital Expenses shall exclude any item of costs incurred by Landlord in the
making or installation of capital improvements, modifications or additions to
the Land, Building, Common Areas and/or the machinery, equipment and facilities
related thereto and arising in connection with renovating, decorating, painting,
redecorating or making leasehold improvements to the premises of existing or
prospective tenants, or to storage space, in the Building, excepting costs and
expenses of such work in those portions of the Common Areas of the Building (a)
that are available for use by Tenant (and do not duplicate facilities on the
Twentieth [20th] Floor of the Building), and (b) which otherwise directly
benefit Tenant by maintaining or enhancing the health or safety of occupants of
the Premises or facilitating access between the Premises and the Common Areas.

        6.7 Notwithstanding anything to the contrary contained herein, that
portion of Capital Expense Rent attributable to Capital Expenses defined
pursuant to subparagraph (c) of Article 6.2 shall not in any calendar year
during the Term exceed a sum determined by multiplying the rentable square
footage of the Premises by 20/100 Dollars ($0.20).

ADDENDUM TO ARTICLE 10 - PARKING LICENSE

        10.2 Notwithstanding anything to the contrary contained herein:

                (a)     Effective from the Commencement Date for Suite 2000A
                        through March 31, 2000, Tenant shall purchase not less
                        than ten (10) parking passes entitling Tenant to park in
                        the Building's parking facility in either the unreserved
                        or reserved mode (parking in the reserved mode to be
                        subject to availability), at the scheduled rates for
                        parking in such mode in effect from time to time; and

                                  Page 7 of 9
<PAGE>   33

                (b)     Effective April 1, 2000, and continuing for the
                        remainder of the Term (as may be extended or renewed),
                        Tenant shall purchase not less than seventy-three (73)
                        parking passes entitling Tenant to park in the
                        Building's parking facility in either the unreserved or
                        reserved mode (parking in the reserved mode to be
                        subject to availability), at the scheduled rates for
                        parking in such mode in effect from time to time.

Any parking purchased by Tenant's Affiliate occupying the Premises shall be
included in determining whether Tenant has fulfilled its requirement hereunder.
The foregoing obligation is referred to herein as the "Minimum Parking
Requirement".

        10.3 Tenant's rights and obligations to satisfy the Minimum Parking
Requirement may not be assigned, sublet, licensed or otherwise transferred to
any third party (other than Tenant's Affiliate), except as follows:

                (a)     Tenant's rights and obligations to satisfy the Minimum
                        Parking Requirement may be transferred by Tenant to
                        Tenant's assignee in conjunction with an assignment of
                        this Lease approved by Landlord in accordance with
                        Article 26; and

                (b)     Tenant may purchase such parking on behalf of any
                        approved subtenant of Tenant and be reimbursed for the
                        same by such subtenant, provided that:

                        (i)     Any such reimbursement shall be at cost, without
                                profit, markup or administrative charge; and

                        (ii)    Tenant may not purchase parking or seek
                                reimbursement from any such subtenant for any
                                portion of the Minimum Parking Requirement that
                                exceeds each such subtenant's share of the
                                Premises (based upon the rentable area of such
                                portion of the Premises exclusively granted and
                                occupied by such subtenant). For example, if
                                after April 1, 2000, a subtenant exclusively
                                subleases and occupies nine thousand three
                                hundred rentable square feet (9,300 RSF) of the
                                Premises, then Tenant may not purchase and seek
                                reimbursement from such subtenant for more than
                                49.43% of the Minimum Parking Requirement, or
                                thirty-six (36) passes; and, if such subtenant
                                requires passes in addition to such amount, then
                                such subtenant must purchase the same directly
                                from Landlord, on a month-to-month basis,
                                subject to availability.

        10.4 Notwithstanding anything to the contrary contained herein, Tenant
or Tenant's Affiliate may purchase such additional parking at the scheduled
rates for parking in such mode in effect from time to time in such amounts and
modes as Landlord may reasonably determine a month-to-month basis.

                                  Page 8 of 9
<PAGE>   34

ADDENDUM TO ARTICLE 34 - NOTICES

        34.4 Landlord shall send additional notice to:

               Rainbow Technologies, Inc.
               50 Technology Drive
               Irvine, California 92618
               Attention:  Laurie Casey

REAFFIRMATION OF LEASE

                Except as expressly amended hereby, the parties hereby reaffirm
all of the terms, conditions, provisions, covenants, and agreements of this
Lease and same shall remain unchanged and in full force and effect.

            WHEREUPON, THE PARTIES HERETO HAVE EXECUTED THIS ADDENDUM
                             ON THE DATES INDICATED

                           RAINBOW TECHNOLOGIES, INC.

Date:                                       By:
     -----------------------------             ---------------------------------

                                            Title:
                                                  ------------------------------

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

                                            Title:
                                                  ------------------------------

                            STEVENS CREEK ASSOCIATES
                    DBA TRIZECHAHN LANDMARK SQUARE MANAGEMENT
                           BY TRIZECHAHN CENTERS, INC.

Date:                                       By:
     -----------------------------             ---------------------------------

                                            Title:
                                                  ------------------------------

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

                                            Title:
                                                  ------------------------------

                                  Page 9 of 9
<PAGE>   35

                           EXHIBIT "A" - LOCATION PLAN

                                   Page 1 of 1
<PAGE>   36

                         EXHIBIT "B" - LEGAL DESCRIPTION

The real property commonly known as 111 West Ocean Boulevard, Long Beach,
California, and more particularly described as:

That real property constituting Lot 1-20, Block 110 in the City of Long Beach,
County of Los Angeles, State of California as shown on the Los Angeles County
Tract Number Townsite of Long Beach, recorded in Book 19, Pages 91-96 in the
Office of the County Recorder of said County.

                                  Page 1 of 1
<PAGE>   37

                       EXHIBIT "C" - RULES AND REGULATIONS

        1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or used for any purpose
other than ingress and egress. The sashes, sash doors, skylights, windows, and
doors that reflect or admit light and air into halls, passageways or other
public places in the Building shall not be covered or obstructed by Tenant, nor
shall any bottles, parcels or other items be placed on the windowsills. Tenant
shall not throw anything out of doors, windows or skylights or down the
passageways.

        2. No awnings or other projection shall be attached to the outside walls
of the Building. No sign, advertisement or notice shall be exhibited, painted or
affixed by Tenant on any part of the Premises or the Building without the prior
written consent of the Landlord. Tenant shall not place any radio or television
antenna on the roof or on any part of the inside or the outside of the Building,
other than the inside of the Premises, without the prior written consent of the
Landlord.

        3. No curtains, blinds, shades or screens shall be attached to or hung
in, or used in connection with, any window or door of the Premises other than
Landlord's approved window coverings. Neither the interior nor exterior of any
windows shall be coated or otherwise sun-screened without the express written
consent of Landlord. All electric ceiling fixtures hung in offices or spaces
along the perimeter of the Buildings must be fluorescent, of a quality type,
design and bulb color approved by Landlord. Tenant shall keep all window
coverings closed when the Building air conditioning, heating and ventilation
systems are in operation, and Landlord shall not be responsible for variance in
room temperatures caused by Tenant's failure to comply with this Rule.

        4. Signs on doors which are in the Common Areas or visible from the
Common Areas, and directory tablets or listings in the lobby or other Common
Areas of the Building are: (a) provided exclusively for the display of a single
business name for Tenant, only, and Landlord reserves the right to exclude any
other names therefrom, (b) shall be inscribed, painted or affixed for Tenant by
the Landlord at the expense of Tenant, and (c) shall be of a number, size, color
and style prescribed by Landlord. All doors opening onto public corridors shall
be kept closed, except when in use for ingress and egress. Tenant shall be
entitled to directory listing in the lobby directory in the amount of one (1)
strip for each one thousand rentable square feet (1,000 RSF) of Premises.

        5. The water and wash closets and other plumbing fixtures shall not be
used for any purpose other than those for which they were constructed and no
sweepings, rubbish, rags or other substances shall be thrown therein.

        6. Tenant shall not mark, paint, bore or drill into, or in any way
deface any part of the Premises or the Building, or string any wires.

        7. The laying of linoleum or other similar floor coverings shall be
permitted only with the prior written consent of the Landlord and as the
Landlord may direct. Tenant shall place particle boards or plastic chair mats
under all desk or secretarial chairs. Said mats shall be provided and maintained
at Tenant's cost and expense.

        8. No bicycles or vehicles of any kind shall be brought into, stored or
kept in or about the Premises. There shall not be used in any space, or in the
Common Areas of the Building, either by Tenant or others, any hand trucks except
those equipped with rubber tires and rubber side guards or such other material
handling equipment as Landlord may approve.

        9. No birds, pets or animals of any kind shall be brought into or kept
in or about the Premises.

        10. No cooking shall be done or permitted by Tenant on the Premises,
except that the preparation of coffee, tea, hot chocolate and similar items for
Tenant and its employees shall be permitted, provided the power requirement does
not exceed that amount which can be provided by a 30 amp circuit. Tenant shall
not cause or permit any unusual or objectionable odors to be produced or
permeate the Premises or the Building. No vending or similar machines shall be
installed, maintained or operated upon the Premises without the written consent
of Landlord.

        11. The Premises shall not be used for manufacturing or for the storage
of merchandise except as such storage may be incidental to the use of the
Premises for general office purposes or Tenant's use of the Premises as set
forth in this Lease. Tenant shall not occupy or permit any portion of its
Premises to be occupied as an office for a public stenographer or typist, or for
the manufacture or sale of liquor, narcotics, or tobacco in any form, or as a
medical office, or as a barber or manicure shop, or as an employment bureau.

        12. Tenant shall neither use the Premises as a location to pay employees
working outside the Premises, nor advertise for laborers giving an address at
the Premises.

        13. The Premises shall not be used for lodging or sleeping or for any
immoral or illegal purposes.

                                  Page 1 of 3
<PAGE>   38

        14. Tenant shall not make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of the Building, or
neighboring buildings or Premises, or those having business with them, whether
by the use of any musical instrument, radio, phonograph, unusual noise, or any
other way. Tenant shall not operate or permit to be operated any musical or
sound producing instrument or device inside or outside the Premises which may be
heard outside the Premises, or operate any electrical device from which may
emanate electrical waves which may interfere with or impair radio or television
broadcasting or reception from or in the Building or elsewhere, without the
Landlord prior written consent.

        15. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by Tenant, nor shall any changes be made in existing locks
or the mechanism thereof. Tenant must, upon the termination of its tenancy,
restore to the Landlord all keys of stores, offices, and toilet rooms, either
furnished to, or otherwise procured by Tenant. If Tenant loses any keys, then
Tenant shall pay to the Landlord the cost of replacing the keys or changing
locks, if Landlord deems it necessary.

        16. All moving of safes, freight, furniture, or bulky matter of any
description requiring the use of the Building's elevators must take place
between the hours of 9:00 - 11:30 a.m. and 1:30 - 4:15 p.m. Monday through
Friday (exclusive of holidays). The moving of safes, other fixtures, equipment
or bulky matter of any kind must be made upon previous notice to the management
of the Building and under its supervision, and the persons employed by Tenant
for such work must be acceptable to the Landlord. If additional expenses are
incurred by Landlord by reason of moving Tenant's safes, other fixtures,
equipment or bulky matter of any kind, such expenses shall be borne by Tenant.
The scheduling of moves of Tenant's furniture and equipment into or out of the
Building is subject to the reasonable discretion of Landlord. The person
employed to move such equipment in or out of the Building must be acceptable to
Landlord. Landlord will not be responsible for loss of, or damage to any such
equipment or other property from any cause, and all damage done to the Building
by maintaining or moving such equipment or other property shall be repaired at
the expense of Tenant.

        17. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry and
which is allowed by law. Landlord shall have the right to prescribe the weight,
size and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects shall, if considered necessary by
Landlord, stand on such platforms as determined by Landlord to be necessary to
properly distribute the weight. Business machines and mechanical equipment
belonging to Tenant, which cause noise or vibration that may be transmitted to
the structure of the Building, or to any space therein, to such a degree as to
be objectionable to Landlord, or to any tenants in the Building, shall be placed
and maintained by Tenant, at Tenant's expense, on vibration eliminators or other
devices sufficient to eliminate noise or vibration. The Landlord reserves the
right to inspect all safes, freight or other bulky items to be brought into the
Building and to exclude from the Building all safes, freight or bulky items
which violate any of these Rules and Regulations or this Lease.

        18. Tenant shall not purchase janitorial, maintenance or other like
services from any company or persons not approved by the Landlord, so long as
the company or persons approved by Landlord provide such services at a
reasonable cost. Any persons employed by Tenant to do janitorial work, shall,
while in the Building and outside of the Premises, be subject to and under the
control and direction of the management of the Building (but not as an agent or
servant of the Landlord), and Tenant shall be responsible for all acts of such
persons. No such person shall be allowed in the Building between 6:00 p.m. and
8:00 a.m. on Mondays through Fridays and at all hours on Saturdays, Sundays and
legal holidays.

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

        20. The Landlord reserves the right to exclude from the Building on
Mondays through Fridays between the hours of 6:00 p.m. and 8:00 a.m. and at all
hours on Saturdays, Sundays and legal holidays all persons who have not received
clearance as a result of a written request from Tenant or who do not present a
pass to the Building signed by the Landlord. The Landlord will furnish passes
or, at Landlord's option, clearances to persons for whom Tenant requests the
same in writing. Landlord shall not be liable for damages caused by any error
with regard to any person's admission to or exclusion from the Building.

        21. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual. Employees
of Landlord shall not perform any work or do anything outside of their regular
duties unless under special instructions from Landlord.

        22. Canvassing, soliciting and peddling in the Building are prohibited
and Tenant shall cooperate to prevent the same.

                                  Page 2 of 3
<PAGE>   39

        23. No air conditioning unit or other similar apparatus shall be
installed or used by Tenant without the written consent of Landlord. Tenant
shall not connect any apparatus, device, conduit or pipe to the Building's
chilled or hot water supply lines or to the air conditioning system. Tenant's
use of electric current shall never exceed the electrical capacity of the floor
or Building or cause such capacity to be exceeded. Tenant shall close and lock
the doors of its Premises and entirely shut off all water faucets or other water
apparatus, and electricity, gas or air outlets before Tenant and its employees
leave the Premises. Tenant shall be responsible for any damage or injuries
sustained by other tenants or occupants of the Building or by Landlord for
noncompliance with this Rule.

        24. All electric wiring and electrical outlets and connections of every
kind shall be introduced and connected only by Landlord, and no boring or
cutting for wires shall be allowed except with the prior written consent of the
Landlord. The location of telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the prior written approval of
Landlord. Neither Tenant nor Tenant's servants, employees, agents, visitors,
licensees or contractors shall, at any time, enter the mechanical installations
or facilities of the Building or adjust, tamper with, touch or otherwise in any
manner affect said installation or facilities.

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

        26. Tenant shall comply with all rules and regulations applicable to the
parking garage established from time to time by the Landlord or Landlord's
parking garage operator.

        27. Tenant shall store all its trash and garbage within its Premises.
Tenant shall not place in any trash box or receptacle any material which cannot
be disposed of in the ordinary and customary manner of trash and garbage
disposal. Tenant shall be solely responsible for the disposition of any
hazardous or infectious waste brought onto or generated by Tenant in the
Premises. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.

        28. The word "Tenant" as used herein shall include any subtenant.

                                  Page 3 of 3
<PAGE>   40

                            EXHIBIT "D" - WORK LETTER

                This Work Letter is attached to and made a part of the Lease
executed concurrently herewith by and between the Landlord and Tenant. Except as
otherwise provided herein, all capitalized terms not otherwise defined herein
shall have the same meaning as provided in the Lease.
--------------------------------------------------------------------------------

SECTION 1 - CONSTRUCTION REPRESENTATIVES

        1.1 With respect to matters covered by this Work Letter, Landlord shall
be represented by either the Director of Construction or Senior Project Manager
of the Construction Department of Western U.S. Division of TrizecHahn Office
Properties Inc. ("Landlord's Representative"), subject to certain limitations in
such representation set forth herein.

        1.2 With respect to matters covered by this Work Letter, Tenant shall
designate an individual to be Tenant's representative ("Tenant's
Representative").

        1.3 All inquiries, requests, instructions, authorizations and other
communications with respect to the matters covered by this Work Letter shall be
made between Landlord's Representative and Tenant's Representative; including
any inquiries, requests, instructions or authorizations to any employee,
contractor or agent of the other. Either party may change its respective
representative by giving written notice to the other.

SECTION 2 - LANDLORD'S AND TENANT'S WORK

        2.1 Tenant shall acquire the Premises in its "as is" condition,
inclusive of all defects, imperfections, mars, stains, blemishes and flaws in
the existing Leasehold Improvements, and Landlord shall not be required to
perform any improvements or corrections to the Premises, except and unless
specifically set forth in Schedule 1, attached hereto ("Landlord's Work").
Landlord's Work, if any, shall be performed in a good and workmanlike manner,
and otherwise in accordance with the provisions of this Work Letter.

        2.2 All work shown on the Construction Drawings or otherwise required as
a condition of obtaining permits, approvals and certificates from governing
authorities necessary for construction of the work and Tenant's use and
occupancy of the Premises, excepting only that specifically set forth as
Landlord's Work (if any), shall be performed and constructed by Tenant
("Tenant's Work") in accordance with the provisions of this Work Letter and the
Lease. Tenant's Work shall be performed, constructed, installed, inspected and
supervised in a good and workmanlike manner, and otherwise in accordance with
the provisions of this Work Letter. All Tenant's Work shall conform to the
Construction Drawings and any approved modifications thereto.

SECTION 3 - PERFORMANCE SCHEDULE AND DELAYS

        3.1 All Work to be performed pursuant to this Work Letter (including,
without limitation, preparation, review and revision of Space Plans and Working
Drawings, bidding, obtaining permits, Landlord's Work and Tenant's Work) shall
be proceed and be performed in accordance with the "Construction Schedule"
attached hereto as Schedule 2.

        3.2 "Tenant Delay" is defined as any delay in the performance of
Landlord's Work or Tenant's Work caused by Tenant's (or its employee's,
contractor's or agent's) act or failure to act, including without limitation:
failure to complete any item on the Construction Schedule for which Tenant is
responsible, on or before the date specified therein; changes to Space Plans or
Construction Drawings after submission to Landlord for Landlord's approval;
specification of a material, finish or installation which is unavailable or
requires a lead time substantially exceeding that of comparable products;
failure to cooperate with Landlord or government authorities having jurisdiction
over Tenant's Work; failure to timely make payments required hereunder.
Notwithstanding the foregoing, Tenant Delay shall be excused to the extent
caused by or aggravated by Landlord Delay or Force Majeure Delay.

        3.3 "Landlord Delay" is defined as any delay in the performance of
Landlord's Work or Tenant's Work caused by Landlord's (or its employee's,
contractor's or agent's) act or failure to act, including without limitation:
failure to complete any item on the Construction Schedule for which Landlord is
responsible, on or before the date specified therein; misrepresentation of the
accuracy of base building plans furnished to Tenant; changes to the Space Plans
or Construction Drawings after issuing Landlord's approval of the same; failure
to provide access to Tenant or Tenant's contractor as required herein; failure
to cooperate with Tenant or government authorities having jurisdiction over
Tenant's Work; failure to timely make payments required hereunder.
Notwithstanding the foregoing, Landlord Delay shall be excused to the extent
caused by or aggravated by Tenant Delay or Force Majeure Delay.

                                  Page 1 of 7
<PAGE>   41

        3.4 "Force Majeure Delay" is defined as any delay in the performance of
Landlord's Work or Tenant's Work resulting from an occurrence beyond the
reasonable control of either Landlord or Tenant (or their respective employees,
contractors or agents), including (without limitation): an act of God or the
elements of nature; fire or other casualty; war, riot, insurrection, or public
disturbance; a black-out or other interruption of utility service from the
provider to the Building; a strike or other labor disturbance (except to the
extent caused by an illegal act of Landlord); changes in government codes or
regulations (or the interpretation of same); the unavailability of government
permits or approvals within the time customarily available; or a general
shortage of materials or supplies.

        3.5 A claim for delay for the failure of a party to timely complete any
item on the Construction Schedule for which the party is responsible shall be
presumed and established without any requirement of written notice; however, in
all other cases (including the claim that the failure to adhere to the
Construction Schedule was a result of delay of the other party or Force Majeure
Delay), the party claiming delay shall promptly notify the other party in
writing of such claim and the nature of the delay within five (5) business days
of discovery of the delay, or the delay shall not be deemed effective until the
fifth (5th) business day prior to the date such notice is given.

SECTION 4 - PLANS AND PERMITS FOR TENANT'S WORK

        4.1 Tenant shall prepare plans showing the architectural design of the
Premises, including storefront elevations (with colored renderings), proposed
signage, partition layout, location of receptacles, location of major trade
fixtures, reflective ceiling plans ("Space Plans"). Tenant shall submit the
Space Plans to Landlord for review and approval. Landlord shall review and
approve/disapprove of the Space Plans within five (5) business days of receipt.
If Landlord disapproves of any portion of the Space Plans, Landlord shall advise
Tenant of the same and the reason therefor, and Tenant shall revise the Space
Plans accordingly and resubmit the same to Landlord for review and approval.
Landlord shall review and approve/disapprove of revised Space Plans within three
(3) business days of receipt. Review, revision and resubmission shall continue
until the Space Plans are fully approved by Landlord. Any revisions or
supplements to the Space Plans after initial approval by Landlord (and before
initial submittal to Landlord of the Construction Drawings) shall be subject to
Landlord's review and approval/disapproval in the same manner as provided herein
with respect to resubmissions.

        4.2 After the Space Plans are fully approved by Landlord, Tenant shall
prepare complete architectural plans, drawings and specifications, and
engineered mechanical, structural and electrical working drawings in a form and
in such detail as is reasonably necessary to accurately construct Tenant's Work
("Construction Drawings") in accordance with code; including, without
limitation, layout, finish and decorative work (including carpeting and other
floor coverings), any proposed improvement affecting the base Building
structural, mechanical, electrical, intra-Building telephone network cabling,
plumbing, fire/life safety, heating, ventilation and air conditioning systems,
exhaust systems, and any item will require installation of conduit, plumbing or
other improvements within Common Areas or other premises. Landlord shall review
and approve/disapprove of the Construction Drawings within ten (10) business
days of receipt. If Landlord disapproves of any portion of the Construction
Drawings, Landlord shall advise Tenant of the same and the reason therefor, and
Tenant shall revise the Construction Drawings accordingly and resubmit the same
to Landlord for review and approval. Landlord shall review and
approve/disapprove of revised Construction Drawings within three (3) business
days of receipt. Review, revision and resubmission shall continue until the
Construction Drawings are fully approved by Landlord. Any revisions or
supplements to the Construction Drawings after initial approval by Landlord
shall be subject to Landlord's review and approval/disapproval in the same
manner as provided herein with respect to resubmissions.

        4.3 Notwithstanding anything to the contrary contained in Articles 4.1
and 4.2, Tenant shall not include in the Space Plans or Construction Drawings
any requirement which will, in Landlord's reasonable opinion:

                (a)     Be incompatible with the design, construction and
                        equipment of the Building (including floor loading
                        requirements);

                (b)     Differ in quality or quantity from the Building
                        standards unless said quality or quantity or exceeds the
                        Building standards;

                (c)     Impair the exterior appearance of the Building;

                (d)     Impair Landlord's ability to maintain, operate, alter,
                        modify or improve the Building Structure or Mechanical
                        Systems;

                (e)     Violate any applicable laws, ordinances and/or the rules
                        and regulations of any governmental authority having
                        jurisdiction;

                (f)     Violate any applicable insurance regulations, including
                        but not limited to any such regulation for a fire
                        resistive Class A Building; or

                                  Page 2 of 7
<PAGE>   42

                (g)     Locate any of Tenant's fixtures, furnishings or
                        equipment (including, without limitation, communications
                        systems) in the Common Areas (including, without
                        limitation, telecommunications closets), and all such
                        fixtures, furnishings and equipment shall be located
                        entirely within the Premises.

If Tenant requires Landlord's consent or waiver of any of the foregoing
requirements, Tenant shall give Landlord written notice of the same, such notice
to set forth with reasonable particularity a description of the Tenant
Improvements proposed to violate the requirement, and Landlord's consent or
waiver in regard to the same may be withheld by Landlord, in Landlord's sole
discretion (and without regard to the requirements of Article 35.1 of the
Lease). Any consent or waiver of Landlord obtained hereunder shall only be valid
if obtained in writing and signed by an authorized officer of Landlord, and not
solely by Landlord's Representative.

        4.4 If permits are required, Tenant shall (with Landlord's cooperation
and assistance) secure such permits and approvals as may be required from any
governmental authority having jurisdiction. If any government authority requires
alterations, modifications or supplements to the Construction Drawings, Tenant
hereby agrees to promptly make such alterations, modifications or supplements
necessary to obtain any required permits. Upon obtaining a permit and prior to
accessing the Premises to perform any work therein, Tenant shall furnish
Landlord with a complete stamped set of permitted Construction Drawings.

        4.5 Upon completion of Tenant's Work, Tenant shall furnish Landlord with
a complete set of "as-built" drawings depicting all permanent improvements in
the Premises (including all Mechanical Systems), as actually constructed or
installed ("As-Built Drawings). All As-Built Drawings shall be prepared using
AutoCAD Release 12, or later, conforming to current AIA layering standards. The
conversion of any Working Drawings not so prepared to the foregoing standard
shall be a Work Cost.

        4.6 Landlord's Representative's review and approval/disapproval of Space
Plan and Construction Drawings pursuant to sections 4.1 and 4.2, above, and any
cooperation and assistance of Landlord's Representative in the preparation
thereof, is solely for the protection of Landlord's interests in the Land,
Building and Premises, and should not be construed as a waiver of any of
Tenant's or the Tenant Improvements Architect's obligations hereunder to prepare
and modify the Space Plans and Construction Drawings in accordance with sections
4.3 and 4.4. The provisions of this section 4 shall apply equally to any
modifications of approved and/or permitted drawings required hereunder.

SECTION 5 - SELECTION OF CONTRACTOR TO PERFORM TENANT'S WORK

        5.1 Tenant shall submit the approved Construction Drawings to
independent general contractors subject to Landlord's reasonable approval for
bidding on Tenant's Work. Landlord may require that each contractor use
Landlord's designated subcontractors for all work pertaining to the Mechanical
Systems (Landlord to provide a list of said designated subcontractors for
Mechanical Systems in response the written request of each such contractor);
however, Landlord warrants that such designated subcontractors shall timely
respond to Tenant and Tenant's contractor, cooperate with Tenant and Tenant's
contractor, perform their respective work on a timely basis, and that such
subcontractors' charges shall be reasonably competitive in the marketplace.

        5.2 Tenant shall select a contractor ("Tenant's Contractor") and enter
into a written contract with Tenant's choice of contractor, providing for
payment on a progress payment basis, and otherwise on such terms and conditions
as are commercially reasonably and do not otherwise violate the terms of the
Lease and this Work Letter, to include a retention of not less than ten percent
(10%) of the total contract price ("Retention"). Landlord shall be provided a
copy of the fully executed construction contract prior to Landlord being
required to furnish any access to the Premises for the performance of any
Tenant's Work.

SECTION 6 - ACCESS TO PREMISES

        6.1 Landlord shall provide Tenant's Contractor and its subcontractors
with reasonable access to the Building, Common Areas and Premises in order that
Tenant's Contractor may construct Tenant's Work in a timely manner, subject to
the following:

                (a)     Access shall be subject to, and coordinated with, the
                        activities and construction schedules of Landlord,
                        Landlord's Representative, any contractor engaged by
                        Landlord performing work in or about the Premises, and
                        their respective employees, agents and subcontractors.

                                  Page 3 of 7
<PAGE>   43

                (b)     Tenant and Tenant's Personnel shall comply with all
                        reasonable rules and regulations which Landlord may,
                        from time-to-time, establish for the performance of
                        Tenant's Work or other improvements in the Building, and
                        shall otherwise be subject to the reasonable direction
                        of Landlord, Landlord's Representative or either of
                        their contractors; however, such direction shall not
                        confer on Landlord or Landlord's representative
                        responsibility for the timely and proper installation of
                        any work performed by Tenant or Tenant's Contractor, or
                        otherwise create an employer/employee, independent
                        contractor or agency relationship between said parties.

                (c)     If the presence and/or activities of Tenant or Tenant's
                        Contractor unreasonably interferes with:

                        (i)     The work of Landlord, Landlord's Representative
                                or any contractor engaged by Landlord, or either
                                of their subcontractors or agents,

                        (ii)    The normal operations of the Building, or

                        (iii)   Causes labor difficulties,

                        then Landlord shall have the right to order Tenant
                        and/or Tenant's Contractor to immediately cease work and
                        vacate the Building, Common Areas or Premises of
                        personnel, equipment, materials and supplies to the
                        extent reasonably required to eliminate any such
                        interference.

                (d)     Tenant and Tenant's Personnel shall comply with all
                        applicable laws, regulations, permits and other
                        government approvals applicable to such entry and work
                        in the Premises.

                (e)     Prior to any access to the Premises to perform Tenant's
                        Work, Tenant and Tenant's Contractor shall furnish
                        Landlord with:

                        (i)     Certificates or other proof reasonably required
                                by Landlord to establish that Tenant's
                                Contractor and each of its subcontractors is in
                                compliance with the Insurance Requirements set
                                forth in Schedule 3, attached hereto;

                        (ii)    A copy of the fully executed construction
                                contract between Tenant and Tenant's Contractor;

                        (iii)   A complete stamped set of permitted Construction
                                Drawings;

                        (iv)    A copy of all required building permits;

                        (v)     A complete list of subcontractors;

                        (vi)    A copy of the contractor's license for Tenant's
                                Contractor; and

                        (vii)   A copy of the construction schedule for the
                                completion of Tenant's Work.

SECTION 7 - WORK COSTS

        7.1 As used in this Work Letter, the term "Work Costs" means:

                (a)     All design and engineering fees incurred in connection
                        with the preparation and review of the Space Plans,
                        Construction Drawings and the processing of the same by
                        governing authorities;

                (b)     Any reasonable fees incurred by Landlord in having
                        Landlord's architect and/or engineer review, test or
                        inspect the Space Plans, Construction Drawings or
                        Tenant's Work;

                (c)     Governmental agency plan check, permit and other fees
                        applicable to Tenant's Work;

                (d)     Increased costs to Landlord's Work (if any) caused by
                        changes in the approved Space Plans or approved
                        Construction Drawings by Tenant;

                (e)     The cost of any improvements, modifications, additions
                        or alterations to the Base Building (including base
                        Building structural and mechanical systems) required by
                        any government or regulatory agency or authority having
                        jurisdiction over Tenant's Work.

                (f)     Sales and use taxes applicable to Tenant's Work;

                                  Page 4 of 7
<PAGE>   44

                (g)     Material and labor costs incurred in making Tenant's
                        Work;

                (h)     General conditions and contractor's fees;

                (i)     FF&E, not to exceed One Hundred Twelve Thousand Eight
                        Hundred Seventy-Two Dollars ($112,872.00);

                (j)     Moving Expenses, not to exceed Twenty-Eight Thousand Two
                        Hundred Eighteen Dollars ($28,218.00); and

                (k)     The reasonable costs of repairing any damage to and
                        restoring any portion of the Building or Common Areas
                        damaged caused by Tenant, Tenant's Contractor or any
                        other subcontractor, person or entity in the course of
                        performing Tenant's Work or in the purchase, delivery or
                        installation of any other materials, goods or services
                        for or benefiting the Premises.

                (l)     A Supervision Fee payable to Landlord in accordance with
                        Schedule 4, attached hereto.

        7.2 The Construction Allowance, if any, shall be first applied toward
items (d), (k) and (i) of Work Costs, and then applied toward the payment of any
other items which are Work Costs, subject to Article 36.3. If the Work Costs are
estimated to exceed the Construction Allowance, the Construction Allowance has
been exhausted, or the period of use for the Construction Allowance has expired,
then Tenant shall pay all Work Costs on a progress payment basis, as follows. On
or before the performance of any Work, Tenant shall deposit with Landlord any
Work Costs to the extent that such Work Costs are reasonably estimated to exceed
the Construction Allowance (if any). Landlord shall retain such funds and
promptly disburse the same to Tenant's Contractor, subject to the remaining
provisions of this Section 7. Any funds deposited by Tenant with Landlord which
remain unused after completion of the Work, and which are not subject to any
claim by Landlord, Tenant's Contractor, or any subcontractor (or their
respective providers of any labor or materials used or expended in the
performance of the Work), shall be promptly returned to Tenant.

        7.3 No payment of any Work Costs shall be made by either Landlord (from
the Construction Allowance, if any, or funds deposited by Tenant) or by Tenant
unless and until Landlord has received copies of Tenant-approved invoices
certifying that the work stated therein has been performed, Landlord has
independently confirmed that such work has been performed in accordance with
this Work Letter and the Lease, and Landlord has received appropriate lien
releases from Tenant's Contractor and all subcontractors and suppliers
(including a conditional lien release for any current application for payment,
accompanied by an unconditional lien release for any prior application for
payment for which payment has been made). Tenant shall endeavor to limit
payments to two (2) checks in any thirty (30) day period to Tenant's general
contractor, and a reasonable number of payments to any other direct contractors
of Tenant (including, but not limited to, engineers, designers, architects, and
telephone and computer cabling services).

        7.4 If the Work Costs do not exceed the Construction Allowance, and any
Construction Allowance remains unused six (6) months after the Commencement
Date, then the unused balance of the Construction Allowance shall be forfeited.

        7.5 Under no circumstances shall Landlord be required to pay any
Retention to Tenant or Tenant's Contractors unless and until Tenant or Tenant's
Contractor furnishes Landlord with:

                (a)     The permit card with all final inspector sign-offs
                        completed;

                (b)     A certificate of occupancy (if required by law);

                (c)     A copy of the recorded Notice of Completion;

                (d)     The As-Built Drawings;

                (e)     The air balance report;

                (f)     Any punchlist showing Tenant has approved all
                        corrections set forth therein;

                (g)     Guarantees, warrantees and operation manuals for all
                        Mechanical Systems or other trade fixtures installed in
                        the Premises;

                (h)     All unconditional lien releases; and

                (i)     An Estoppel Certificate.

                                  Page 5 of 7
<PAGE>   45

SCHEDULE 1 - LANDLORD'S WORK

                Landlord shall not be required to perform or construct any
Landlord's Work in the Premises.
--------------------------------------------------------------------------------

SCHEDULE 2 - CONSTRUCTION SCHEDULE

                Not less than ten (10) business days prior to commencing
Tenant's Work in the Premises, Tenant shall furnish to Landlord a Construction
Schedule showing all major trades for Tenant's Work and a critical path
analysis, which schedule shall be subject to Landlord's approval.
--------------------------------------------------------------------------------

SCHEDULE 3 - INSURANCE REQUIREMENTS

        The following are the standard types, amounts and forms of insurance
required under the General Subcontract Conditions. The policies of insurance
shall be in such form and shall be issued by such company or companies as may be
satisfactory to Landlord's Representative.

                         WORKER'S COMPENSATION INSURANCE

                As required by any applicable law or regulation or statute and
to include coverage for the state in which the project is located and the states
in which any subcontractor is domiciled.

                    COMPREHENSIVE GENERAL LIABILITY INSURANCE

                Tenant's Contractor and each subcontractor shall carry
comprehensive general liability insurance, including personal injury, owner's
and contractor's protective liability, explosion, collapse and underground
damage liability endorsement (commonly called S, C and U hazard), products,
completed operations, blanket contractual and broad form property damage
coverage, naming Landlord (and Landlord's property manager and Landlord's
Representative, if not Landlord) as additional insureds, providing primary (and
not contributing) coverage, and containing cross-liability and severability of
interest clauses, of not less than the following limits:

                (a)     If the total cost of the contract (or subcontract, as
                        applicable) is $20,000.00 or less, coverage in an amount
                        of not less than $1,000,000.00 combines single limit per
                        occurrence;

                (b)     If the total cost of the contract (or subcontract, as
                        applicable) is more than $20,000.00, but not more than
                        $150,000.00, coverage in an amount of not less than
                        $2,000,000.00 combines single limit per occurrence; and

                (c)     If the total cost of the contract (or subcontract, as
                        applicable) is $150,000.00 or more, coverage in an
                        amount of not less than $5,000,000.00 combines single
                        limit per occurrence.

Notwithstanding the foregoing, coverage required under subparagraphs (b) or (c),
above, may be satisfied by a combination of not less than $1,000,000.00 primary
coverage, plus excess insurance up to the applicable limit.

                         AUTOMOBILE LIABILITY INSURANCE

        Tenant's Contractor and each subcontractor shall carry automobile
liability insurance, including owned, non-owned, leased and hired car coverage,
naming Landlord (and Landlord's property manager and Landlord's Representative,
if not Landlord) as additional insureds, providing primary (and not
contributing) coverage, and containing cross-liability and severability of
interest clauses, in an amount of not less than $1,000,000.00 combined single
limit per occurrence.

                                  Page 6 of 7
<PAGE>   46

                        BUILDERS RISK PROPERTY INSURANCE

        Unless waived in writing by Landlord, Tenant's Contractor and each
subcontractor shall carry "all risk" builders risk property insurance for the
full replacement cost of the work on a completed value basis, naming Landlord as
a loss payee, as its interest may appear, providing primary (and not
contributing) coverage, and including a waiver of all rights of subrogation
against Landlord.

                              GENERAL REQUIREMENTS

        Prior to commencement of work Tenant's Contractor and each subcontractor
shall submit to Landlord certificates of insurance showing the required
insurance. If the coverage expires prior to completion of the work, then
Tenant's Contractor and each subcontractor shall submit replacement certificates
of insurance to Landlord prior to the expiration of such coverage. All
certificates shall provide that there will be no cancellation, material
modification or reduction of coverage without reasonable written notice to
Landlord.

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

SCHEDULE 4 - SUPERVISION FEES

                The Supervision Fee shall be one percent (1%) of the total Work
Costs (excluding this Supervision Fee).

                                  Page 7 of 7<PAGE>   1

                                                                   EXHIBIT 10.24

                              PUT OPTION AGREEMENT

        THIS PUT OPTION AGREEMENT ("Agreement") is made as of October 26, 1999,
between Micro Therapeutics, Inc., a Delaware corporation ("the Company"), and
Abbott Laboratories, an Illinois corporation ("Abbott").

                                    RECITALS

        WHEREAS, Abbott has agreed to grant to the Company, and the Company has
agreed to accept, the option to issue, sell and deliver to Abbott shares of the
Company's Common Stock; and

        WHEREAS, the Company and Abbott desire to make certain representations,
warranties, and covenants in connection with said grant to the Company of the
option to issue, sell and deliver to Abbott the Company's Common Stock and to
prescribe conditions precedent to such sale, issuance and delivery;

                                    AGREEMENT

        NOW THEREFORE, in consideration of the premises and the respective
promises made in this Agreement, and in consideration of the representations,
warranties, and covenants contained herein, the parties hereto agree as follows:

        1. Certain Definitions. Unless the context otherwise requires, the terms
hereafter set forth when used in this Agreement shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:

        1.1 "Business Day" means any day except a Saturday, Sunday, or other day
on which commercial banks in the City of Chicago are authorized by law to close.

        1.2 "Closing" has the meaning set forth in Section 2.6 of this
Agreement.

        1.3 "Common Stock" means the shares of Common stock of the Company, par
value $0.001 per share.

        1.4 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

        1.5 "Material Adverse Effect" has the meaning set forth in SECTION 3.1
of this Agreement.

        1.6 "Option Limit" means $3,000,000.

        1.7 "Option Shares" means shares of Common Stock acquired by Abbott
under the terms of this Agreement and any other securities received on account
of such shares as have been issued at any time in any stock split, stock
dividend, recapitalization, merger, consolidation or similar event.

                                      -1-
<PAGE>   2

        1.8 "Price Per Option Share" means $12 (as adjusted pursuant to Section
2.3).

        1.9 "Purchase Price" has the meaning set forth in SECTION 2.5 of this
Agreement.

        1.10 "Put Option" has the meaning set forth in SECTION 2.1 of this
Agreement.

        1.11 "SEC" means the United States Securities and Exchange Commission.

        1.12 "SEC Documents" has the meaning set forth in SECTION 3.10 of this
Agreement.

        1.13 "Securities Act" means the Securities Act of 1933, as amended.

        2. Put Option.

        2.1 Grant of Put Option. The Company shall have the right, at its sole
discretion, but subject to the terms and conditions of this Agreement and on the
basis of the representations, warranties and covenants set forth herein, to
require Abbott to purchase up to the number of shares of Common Stock obtained
by dividing the Option Limit by the Price Per Option Share and rounding down to
the nearest whole number (the "Put Option"). The Put Option may be exercised,
whether in whole or in part, on only one occasion.

        2.2 Term of the Put Option. The Put Option shall terminate immediately
after the Closing or on October 31, 1999, whichever occurs first.

        2.3 Price and Certain Adjustment. The price per share of Common Stock to
be paid by Abbott shall be the Price Per Option Share. If the Company at any
time effects a subdivision or combination of the outstanding Common Stock, the
Price Per Option Share shall be decreased, in the case of a subdivision
(including by way of any stock split or recapitalization), or increased, in the
case of a combination (including by way of any reverse stock split or
recapitalization), in the same proportions as the Common Stock is subdivided or
combined, in each case effective automatically upon, and simultaneously with,
the effectiveness of the subdivision or combination which gives rise to the
adjustment. If the Company at any time pays a dividend, or makes any other
distribution, to holders of Common Stock payable in shares of Common Stock, or
fixes a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in shares of Common Stock, the
Price Per Option Share shall be adjusted by multiplying it by a fraction:

        (a)     the numerator of which shall be the total number of shares of
                Common Stock outstanding immediately prior to such dividend or
                distribution; and

        (b)     the denominator of which shall be the total number of shares of
                Common Stock outstanding immediately after such dividend (plus,
                if the Company paid cash instead of fractional shares otherwise
                issuable in such dividend or distribution, the number of
                additional shares which would have been outstanding had the
                Company issued

                                      -2-
<PAGE>   3

                fractional shares instead of cash).

        Whenever the Price Per Option Share shall be adjusted, the Company shall
prepare a certificate signed by a corporate officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Price Per Option Share
after giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first class mail postage prepaid) to Abbott
promptly after each adjustment.

        2.4 Additional Limitation. Notwithstanding any other provision of this
Agreement to the contrary, the Company shall not be entitled to exercise the Put
Option to the extent that such exercise will cause Abbott to become the record
holder of more than 14.9% of the outstanding voting stock of the Company, unless
the purchase of such shares has been approved by the Board of Directors of the
Company prior to the date of such Put Option for the purpose of Section 203 of
the Delaware General Corporation Law, such that on the applicable Closing,
neither Abbott nor any of Abbott's affiliates will be subject to the
restrictions set forth in said Section 203 with respect to the Company. A
certified copy of the resolution or consent evidencing the approval called for
by this SECTION 2.4 will be provided to Abbott prior to the Company exercising
the Put Option causing Abbott to become the record holder of more than 14.9% of
the outstanding voting stock of the Company (after giving effect to the exercise
of such Put Option).

        2.5 Manner of Exercising Put Option. To exercise the Put Option, the
Company shall deliver to Abbott a written notice (the "Exercise Notice"), which
shall set forth: (i) the number of shares of Common Stock to be sold to and
purchased by Abbott in connection with the exercise of the Put Option; (ii) the
aggregate purchase price for such shares determined by multiplying (a) the
number of shares of Common Stock to be sold to and purchased by Abbott in
connection with the exercise of the Put Option by (b) the Price Per Option Share
(the "Purchase Price"), and (iii) the date of the Closing, which shall be no
sooner than the tenth Business Day after Abbott's receipt of the Exercise Notice
or such other date as shall be agreed to in writing by Abbott and the Company.
The Company shall deliver to Abbott written wire transfer instructions (setting
forth the name and address of the bank, the account number, the ABA routing
number and any other required information for the payment of the Purchase Price)
at least 48 hours prior to the Closing.

        2.6 Place of Closing. The closing of the purchase and sale of shares of
Common Stock under this Agreement (the "Closing") shall be held at the time
specified in Section 2.5 at the offices of Stradling Yocca Carlson & Rauth, 660
Newport Center Drive, Suite 1600, Newport Beach, CA 92660, or at such time and
place upon which the Company and Abbott shall agree.

        2.7 Delivery. At any Closing, the Company will issue a certificate to
Abbott registered in Abbott's name representing the number of shares of Common
Stock being purchased by Abbott against payment to the Company of the Purchase
Price therefor. The Purchase Price shall be paid

                                      -3-
<PAGE>   4

by Abbott to the Company by wire transfer to the bank account of the Company
specified by the Company pursuant to Section 2.5.

        3. Representations And Warranties of The Company. Except as set forth in
the Schedule of Exceptions attached hereto as EXHIBIT A specifically identifying
the relevant subsection of this Agreement, the Company hereby represents and
warrants to Abbott that:

        3.1 Authority.

        (a)     The Company has full legal right, power and authority to execute
                and deliver this Agreement and to consummate the transactions
                contemplated hereby.

        (b)     All corporate action on the part of the Company, its officers,
                directors and stockholders necessary for the execution and
                delivery of, and the consummation of the transactions
                contemplated by this Agreement and the performance of all
                obligations of the Company hereunder have been taken.

        (c)     This Agreement, upon execution and delivery by the Company and,
                assuming the due and proper execution and delivery by Abbott,
                constitutes a legal, valid and binding obligation of the
                Company, enforceable in accordance with its terms, except as may
                be limited by: (i) applicable bankruptcy, insolvency,
                reorganization or other laws of general application relating to
                or affecting the enforcement of creditors rights generally, and
                (ii) the effect of rules of law governing the availability of
                equitable remedies.

        (d)     The making and performance of the Agreement by the Company and
                the consummation of the transactions contemplated by the
                Agreement: (i) will not violate any provision of the
                organizational documents of the Company or any of its
                subsidiaries; (ii) will not result in the creation of any lien,
                charge, security interest or encumbrance upon any assets of the
                Company pursuant to the terms or provisions of, and will not
                conflict with, result in the breach or violation of, or
                constitute, either by itself or upon notice or the passage of
                time or both, a default under any agreement, mortgage, deed of
                trust, lease, franchise, licence, indenture, permit or other
                instrument to which the Company or any of its subsidiaries is a
                party or by which the Company or any of its subsidiaries or any
                of their respective properties may be bound or affected, except,
                in each such case, as would not reasonably be expected to have a
                material adverse affect on the condition (financial or
                otherwise), properties, business, prospects, or results of
                operations of the Company and its subsidiaries taken as a whole
                (a "Material Adverse Effect"); and (iii) will not conflict with,
                or result in the breach or violation of, any statute or any
                authorization, judgment, decree, order, rule or regulation of
                any court or any regulatory body, administrative agency or other
                governmental body applicable to the Company or any of its
                subsidiaries or any of their respective properties.

                                      -4-
<PAGE>   5

        3.2 Organization, Good Standing and Qualification.

        (a)     The Company and each of its subsidiaries, has been duly
                incorporated and is validly existing as a corporation in good
                standing under the laws of its jurisdiction of incorporation,
                with full power and authority (corporate and other) to own and
                lease its properties and conduct its businesses as presently
                conducted and as proposed to be conducted. The Company and each
                of its subsidiaries, is duly qualified to do business and in
                good standing as a foreign corporation in each jurisdiction in
                which the ownership or leasing of properties or the conduct of
                its business requires such qualification, except for
                jurisdictions in which the failure to so qualify would not have
                a Material Adverse Effect; and no proceeding has been instituted
                in any such jurisdiction, revoking, limiting or curtailing, or
                seeking to revoke, limit or curtail such power and authority or
                qualification.

        (b)     The Company has delivered to Abbott complete and correct copies
                of its Certificate of Incorporation and Bylaws, as amended to
                the date hereof, and will furnish to Abbott true and correct
                copies of any amendments thereto throughout the term of this
                Agreement.

        3.3 Capitalization.

        (a)     The authorized capital stock of the Company consists of
                20,000,000 shares of Common Stock $0.001 par value and 5,000,000
                shares of Preferred Stock, $0.001 par value.

        (b)     As of the date hereof, there were 7,926,659 shares of Common
                Stock issued and outstanding and no shares of Preferred Stock
                issued and outstanding. All such issued an outstanding shares
                have been duly authorized and validly issued and are fully paid
                and non-assessable and no issued and outstanding shares are
                subject to preemptive rights created by statute, the Certificate
                of Incorporation or Bylaws, or any agreement to which the
                Company is a party or by which the Company may be bound.

        (c)     All outstanding shares of the Company's capital stock have been
                issued in compliance with applicable federal and state
                securities laws.

        (d)     There are no other options, warrants, conversion privileges or
                other contractual rights presently outstanding or in existence
                to purchase or otherwise acquire any authorized but unissued
                shares of the Company's capital stock or other securities or the
                capital stock or other securities of any subsidiary of the
                Company.

        3.4 Valid Issuance of Common Stock. The Option Shares shall have been
duly authorized and, when issued, delivered, and paid for in the manner set
forth in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and, at the Closing, Abbott shall receive good and marketable
title to the Option Shares free of any liens or restrictions (unless created

                                      -5-
<PAGE>   6

by Abbott), other than the restrictions expressly set forth in this Agreement or
under applicable state and federal securities laws. No preemptive rights or
other subscription or purchase rights exist with respect to the issuance and
sale of the Option Shares by the Company pursuant to this Agreement.

        3.5 Governmental Consents. Other than compliance with the Securities Act
and such filings as may be required to be made with the National Association of
Securities Dealers, no consent, approval order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement.

        3.6 Offering. Subject in part to the truth and accuracy of Abbott's
representations set forth in SECTION 4 of this Agreement, the offer, sale and
issuance of the Option Shares as contemplated by this Agreement are exempt from
the registration requirements of the Securities Act, and neither the Company nor
any authorized agent acting on its behalf will take any action hereafter that
would cause the loss of such exemption.

        3.7 Litigation. There are no legal or governmental actions, suits or
proceedings pending or, to the Company's knowledge, threatened to which the
Company or any of its subsidiaries is or may be a party or of which property
owned or leased by the Company or any of its subsidiaries is or may be the
subject, which actions, suits or proceedings might, individually or in the
aggregate, prevent or adversely affect the transactions contemplated by this
Agreement or result in a Material Adverse Effect. The Company is not a party or
subject to the provisions of any material injunction, judgment, decree or order
of any court, regulatory body, administrative agency or other governmental body.
There are no material legal or governmental actions, suits or proceedings
pending or, to the Company's knowledge, threatened against any executive
officers or directors of the Company.

        3.8 Disclosure. Neither this Agreement, nor any other statements or
certificates made or delivered in connection herewith or therewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading.

        3.9 Changes. Since June 30, 1999:

        (a)     the Company has not incurred any material liabilities or
                obligations, indirect, direct or contingent, or entered into any
                material verbal or written agreement or other transaction which
                is not in the ordinary course of business;

        (b)     the Company has not sustained any material loss or interference
                with its business or properties from fire, flood, storm,
                accident or other calamity, whether or not covered by insurance;

        (c)     the Company has not paid or declared any dividends or other
                distributions with respect to its capital stock and the Company
                is not in default in the payment of principal or interest on any
                outstanding debt obligations;

                                      -6-
<PAGE>   7

        (d)     there has not been any change in the capital stock or, other
                than in the ordinary course of business, indebtedness material
                to the Company; and

        (e)     there has not been any event, change or development resulting in
                or which may reasonably be expected to result in a Material
                Adverse Effect.

        3.10 Financial and SEC Documents.

        (a)     The Company has furnished to Abbott its audited consolidated
                statement of operations, statement of stockholders' equity and
                statement of cash flows for the fiscal year ended December 31,
                1998 and the Company's audited consolidated balance sheet at
                December 31, 1998; and the unaudited consolidated statement of
                operations and statement of cash flows for the six (6) months
                ended June 30, 1999 and the unaudited consolidated balance sheet
                at June 30, 1999. The balance sheet at June 30, 1999 is
                hereinafter referred to as the "Company Balance Sheet," and all
                such financial statements are hereinafter referred to
                collectively as the "Company Financial Statements." The Company
                Financial Statements have been and will be prepared in
                accordance with generally accepted accounting principles in the
                United States applied on a consistent basis, except for any
                change due to the adoption of an accounting principle
                established by the FASB, AICPA, SEC or any other accounting
                standard setting board, during the periods involved, and fairly
                present the consolidated financial position of the Company and
                the results of its operations as of the date and for the periods
                indicated thereon. At the date of the Company Balance Sheet (the
                "Company Balance Sheet Date"), neither the Company nor its
                consolidated subsidiaries had any material liabilities or
                obligations, secured or unsecured (whether accrued, absolute,
                contingent or otherwise) not reflected on the Company Balance
                Sheet or the accompanying notes thereto.

        (b)     The Company has furnished to Abbott a true and complete copy of
                the Company's Form 10-KSB for the year ended December 31, 1998
                and Form 10-QSB for each of the quarters ended March 31, 1999
                and June 30, 1999 (the "Company SEC Documents"). The Company has
                filed in a timely manner each statement, annual, quarterly and
                other report, registration statement and definitive proxy
                statement required to be filed (other than preliminary material)
                by the Company with the SEC. As of their respective filing
                dates, the Company SEC Documents comply in all material respects
                with the requirements of the Exchange Act or the Securities Act,
                and none of the Company SEC Documents contain any untrue
                statement of a material fact or omit to state a material fact
                required to be stated therein or necessary in order to make the
                statements made therein, in light of the circumstances under
                which they were made, not misleading, except to the extent
                corrected by a subsequently filed Company SEC Document.

        (c)     Since June 30, 1999, there have been no events or transactions
                that would require adjustment to, or disclosure in, the audited
                financial statements of the Company for the period then ended in
                order to keep them from being misleading.

                                      -7-
<PAGE>   8

        3.11 DGCL. The issue, sale and delivery of the Common Stock under the
terms if this Agreement shall not cause Abbott to become an "interested
shareholder" (as defined in Section 203 of the Delaware General Corporation
Law).

        4. Representations, Warranties and Covenants of Abbott. Abbott hereby
represents and warrants to the Company that:

        4.1 Authority.

        (a)     Abbott has full legal right, power and authority to execute and
                deliver this Agreement and to consummate the transactions
                contemplated hereby.

        (b)     All corporate action on the part of Abbott, its officers,
                directors and stockholders necessary for the execution and
                delivery of, and the consummation of the transactions
                contemplated by this Agreement and the performance of all
                obligations of Abbott hereunder have been taken.

        (c)     This Agreement, upon execution and delivery by Abbott and,
                assuming the due and proper execution and delivery by the
                Company, constitutes a legal, valid and binding obligation of
                Abbott, enforceable in accordance with its terms, except as may
                be limited by: (i) applicable bankruptcy, insolvency,
                reorganization or other laws of general application relating to
                or affecting the enforcement of creditors rights generally, and
                (ii) the effect of rules of law governing the availability of
                equitable remedies.

        (d)     The making and performance of the Agreement by Abbott and the
                consummation of the transactions contemplated by Abbott will not
                violate any provision of the organizational documents of Abbott
                or any of its subsidiaries.

        4.2 Purchase Entirely for Own Account. The Option Shares to be received
by Abbott at the Closing will be acquired for investment for Abbott's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and Abbott has no present intention of
selling, granting any participation in, or otherwise distributing the same.
Abbott does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to any
third person, with respect to any of the Option Shares.

        4.3 Disclosure of Information. Abbott further represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Option Shares and the business,
properties, prospects and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in SECTION 3 of this Agreement or the right of Abbott to rely thereon.

                                      -8-
<PAGE>   9

        4.4 Investment Experience. Abbott acknowledges that it can bear the
economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Option Shares.

        4.5 Restricted Securities. Abbott understands that the Option Shares are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are acquired from the Company in a transaction not involving a
registered offering and that such securities may be resold without registration
under the Securities Act, only in compliance with the federal securities laws
and the regulations thereunder.

        4.6 Accredited Investor. Abbott is an "accredited investor" within the
meaning of SEC Rule 501 of Regulation D, as presently in effect.

        4.7 Shares of Common Stock. As of the date hereof, excluding the number
of Option Shares to be acquired by Abbott under the terms of this Agreement,
Abbott is the beneficial owner of 962,628 shares of Common Stock.

        5. Additional Covenants.

        5.1 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC which may permit the sale of restricted
Common Stock to the public without registration, as long as a public market
exists for the Common Stock, the Company agrees to use its best efforts to:

        (a)     Make and keep available adequate current public information, as
                those terms are understood and defined in Rule 144 under the
                Securities Act;

        (b)     File with the SEC in a timely manner all reports and other
                documents required of the Company under the Securities Act and
                the Exchange Act; and

        (c)     For the two year period following the Closing and for so long as
                Abbott owns any restricted Common Stock, furnish to Abbott
                forthwith upon request a written statement by the Company as to
                its compliance with the reporting requirements of Rule 144, and
                of the Securities Act and the Exchange Act, a copy of the most
                recent annual or quarterly report of the Company, and such other
                reports and documents of the Company and other information in
                the possession of or reasonably obtainable by the Company as
                Abbott may reasonably request in availing itself of any rule or
                regulation of the SEC allowing Abbott to sell any such
                securities without registration.

        5.2 Press Releases. Any press release or other public announcement
concerning this Agreement or the transactions contemplated hereby shall be
mutually satisfactory to the Company and Abbott, except that the Company and
Abbott may issue such press releases or make such public statements as it
reasonably believes to be required by law or the rules of any national
securities

                                      -9-
<PAGE>   10

exchange or inter-dealer quotation system.

        5.3 Legends. Each certificate or instrument representing the Option
Shares shall bear legend in substantially the following form:

        "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND
        ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE
        SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
        OTHERWISE DISTRIBUTED EXCEPT (I) IN CONJUNCTION WITH AN EFFECTIVE
        REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR
        (II) IN COMPLIANCE WITH RULE 144, OR (III) PURSUANT TO AN OPINION OF
        COUNSEL REASONABLY SATISFACTORY TO THE ISSUER OF THESE SECURITIES THAT
        SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SUCH SALE, OFFER
        OR DISTRIBUTION".

        6. Conditions of Abbott's Obligations at Closing. Abbott's obligation to
purchase Option Shares at the Closing is subject to fulfillment, on or prior to
such Closing of each of the following conditions unless waived by Abbott.

        6.1 Representations And Warranties. The representations and warranties
of the Company contained in SECTION 3 shall be true and correct when made and at
the Closing with the same effect as though such representations and warranties
had been made on and as of the date of the Closing.

        6.2 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.

        6.3 Qualifications. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Option Shares pursuant to this Agreement shall be duly obtained and effective as
of the Closing.

        6.4 Proceedings And Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Abbott, and it shall have received all such counterpart original and certified
or other copies of such documents as it may reasonably request.

        6.5 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.

        6.6 Compliance Certificate. The Company shall have delivered to Abbott a
certificate, executed on behalf of the Company by the Chief Executive Officer of
the Company, dated as of the

                                      -10-
<PAGE>   11

date of the Closing and certifying to the fulfillment of the conditions
specified in SECTION 6.1 and SECTION 6.2.

        6.7 Opinion of Counsel. Counsel for the Company shall have delivered to
Abbott an opinion, dated as of the Closing, substantially to the effect that, on
the basis of facts and representations set forth in such opinion or set forth in
writing elsewhere and referred to therein:

        (a)     The Company has been duly incorporated and is a validly existing
                corporation in good standing under the laws of the State of
                Delaware, with corporate power and authority to own its
                properties and conduct its business as described in SECTION 3.2
                of this Agreement.

        (b)     The Company has corporate power to enter into and perform its
                obligations under this Agreement.

        (c)     The Option Shares have been duly authorized and validly issued
                and are fully paid and nonassessable and, to the best of their
                knowledge and information, have not been issued in violation of
                or not otherwise subject to any preemptive rights or other
                similar rights.

        (d)     Assuming the accuracy of the representations, warranties and
                covenants of Abbott contained in SECTION 4 of this Agreement,
                the offer, issue and sale of the Option Shares will be exempt
                from the registration and prospectus delivery requirements of
                the Securities Act, and the Option Shares have been registered
                or qualified (or are exempt from registration and qualification)
                under the registration, permit, or qualification requirements of
                all applicable state securities laws.

        (e)     The form of certificate used to evidence the Option Shares is in
                proper form and complies with all applicable statutory
                requirements.

        7. Conditions of the Company's Obligations at Closing. The Company's
obligation to issue and sell Option Shares at any Closing are subject to
fulfillment, on or prior to the Closing with respect to the Option Shares, of
each of the following conditions unless waived by the Company.

        7.1 Representations And Warranties. The representations and warranties
of Abbott contained in SECTION 4 shall be true and correct when made and at the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.

        7.2 Payment of Purchase Price. Abbott shall have delivered the Purchase
Price.

        7.3 Qualifications. All authorizations, approvals, or permits, if any,
of any governmental

                                      -11-
<PAGE>   12

authority or regulatory body of the United States or of any state that are
required in connection with the lawful issuance and sale of the Option Shares
pursuant to this Agreement shall be duly obtained and effective as of the
Closing.

        7.4 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.

        8. Miscellaneous.

        8.1 Survival of Warranties. The warranties, representations and
covenants of the Company and Abbott contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closings and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of Abbott or the Company.

        8.2 Assignment: Successors and Assigns. No provision of this Agreement
may be assigned without the prior written consent of the other party hereto.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties (including transferees of any of the Option Shares).
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

        8.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware without regard to conflicts of law
principles.

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

        8.5 Titles And Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

        8.6 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by personal delivery,
facsimile, overnight courier or mailed by certified or registered mail, postage
prepaid, return receipt requested, to the address or facsimile number as
follows:

If to the Company:

                      Micro Therapeutics, Inc.

                      2 Goodyear

                                      -12-
<PAGE>   13

                      Irvine, CA 92618

                      Attention: George Wallace

                      Facsimile: (949) 465-1743

With a copy (which will not constitute notice) to:

                      Stradling Yocca Carlson & Rauth

                      660 Newport Center Drive, Suite 1600

                      Newport Beach, CA 92660

                      Attention: Bruce Feuchter

                      Facsimile: (949) 725-4100

If to Abbott:

                      Abbott Laboratories

                      D-960, AP30

                      200 Abbott Park Road

                      Abbott Park, IL 60064-3500

                      Attention: President, Hospital Products Division

                      Facsimile: (847) 937-0805

With a copy (which will not constitute notice) to:

                      Abbott Laboratories

                      Legal Division

                      D-322, AP6D

                      100 Abbott Park Road

                                      -13-
<PAGE>   14

                      Abbott Park, IL 60064-3500

                      Attention: Divisional Vice President

                      Domestic Legal Operations

                      Facsimile: (847) 938-1206

or to such other facsimile number or address provided to the parties to this
Agreement in accordance with this SECTION 8.6. Such notices or other
communications shall be deemed delivered only upon receipt.

        8.7 Finder's Fee.

        (a)     Each party represents that it neither is nor will be obligated
                for any finders' fee or commission in connection with this
                transaction.

        (b)     Abbott agrees to indemnify and hold harmless the Company from
                any liability for any commission or compensation in the nature
                of a finders' fee (and the costs and expenses of defending
                against such liability or asserted liability) for which Abbott
                or any of its officers, partners, employees or representatives
                is responsible.

        (c)     The Company agrees to indemnify and hold harmless Abbott from
                any liability for any commission or compensation in the nature
                of a finders' fee (and the costs and expenses of defending
                against such liability or asserted liability) for which the
                Company or any of its officers, employees or representatives is
                responsible.

        8.8 Expenses. Irrespective of whether the Closing is effected, each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.

        8.9 Alternative Dispute Resolution. The parties agree to effectuate all
reasonable efforts to resolve in an amicable manner any and all disputes between
them in connection with this Agreement. The parties agree that any dispute that
arises in connection with this Agreement, which cannot be amicably resolved
informally shall be finally settled as set forth in the Alternative Dispute
Resolution provisions of EXHIBIT B attached hereto.

        8.10 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and Abbott.

        8.11 Severability. If one or more provisions of this Agreement are held
to be

                                      -14-
<PAGE>   15

unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.

        8.12 Entire Agreement. This Agreement and the documents referred to
herein and constitute the entire agreement among the parties with respect to the
transactions contemplated by this Agreement and supersedes any prior
understandings, agreements, or representations by or between the parties,
written or oral, that may have related in any way to the subject matter of this
Agreement, and no party shall be liable or bound to any other party in any
manner by any warranties, representations, or covenants except as specifically
set forth herein.

        8.13 Further Assurances. The Company and Abbott shall do and perform or
cause to be performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments or documents as the
other party may reasonably request from time to time in order to carry out the
intent and purposes of this Agreement and the consummation of the transactions
contemplated by the Agreement. Neither the Company nor Abbott shall voluntarily
undertake any course of action inconsistent with the satisfaction of the
requirements applicable to them as set forth in this Agreement, and each shall
promptly do all such acts and take all such measures as may be appropriate to
enable them to perform as early as practicable their obligations under this
Agreement.

        8.14 No Third Party Rights. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to his
Agreement.

        8.15 Mutual Drafting. This Agreement is the joint product of the Company
and Abbott and each provision of the Agreement has been subject to consultation,
negotiation and agreement of the Company and Abbott and their respective legal
counsel and advisers and any rule of construction that a document shall be
interpreted or construed against the drafting party shall not apply.

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

                                            MICRO THERAPEUTICS, INC.

                                            By: /s/    George Wallace
                                               ---------------------------------
                                            Title: President and Chief Executive
                                                   Officer

                                            ABBOTT LABORATORIES

                                            By: /s/ Richard A. Gonzalez
                                               ---------------------------------
                                            Title: President, H.P.D.

                                      -15-

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