Document:

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                                                                   Exhibit 10.29

                            STANDARD LEASE AGREEMENT

                               NNN - MULTI-TENANT

For and in consideration of the rental and of the covenants and agreements
hereinafter set forth to be kept and performed by the Tenant, Landlord hereby
leases to Tenant and Tenant hereby leases from Landlord the Premises described
below in Section 1.2 for the term, at the rental and subject to and upon all of
the terms, covenants and agreements hereinafter set forth.

1.       BASIC LEASE PROVISIONS.

         1.1 PARTIES. This Lease, dated for reference purposes only February 02,
2000 is made by and between South San Jose, LLC. (hereinafter "Landlord") and
MCMS, an Idaho corporation (hereinafter, "Tenant").

         1.2 PREMISES. Those premises commonly known as 83 Great Oaks Blvd., San
Jose, CA 95110, deemed to be approximately 15,608 square feet, more or less, as
defined in Paragraph 2 and as shown in Exhibit "A" attached hereto and made a
part hereof (hereinafter the "Premises").

         1.3 BUILDING. Commonly described as being located at 81-85 Great Oaks
Blvd., in the City of San Jose, County of Santa Clara, State of California, as
more particularly shown in Exhibit "A" attached hereto and made a part hereof.
Tenant acknowledges that the sole purpose of any floor plan provided herein is
to identify the location of the Premises in the Building. Landlord makes no
representation or warranty in the attached floor plan as to the usable or
rentable square footage of the Premises.

         1.4 USE. General office, manufacturing and warehouse use for the
design, assembly, testing and distribution of electronic manufacturing products
and services, and related legal uses subject to Paragraph 7.

         1.5 TERM. Seven (7) years, commencing on March 1, 2000 or upon
substantial completion of Landlord's work, as set forth in Exhibit "C",
whichever is sooner (hereinafter "Commencement Date") and ending seven (7) years
thereafter (Termination Date).

         1.6 BASE RENT. Twenty-one Thousand Seventy-one Dollars ($21,071) per
month, payable on the first (1st) day of each month subject to Paragraph 4
below.

         1.7 BASE RENT INCREASE. On March 01,2001 the monthly Base Rent payable
under Paragraph 1.6 above all be increased by 4% and 4% annually thereafter. All
monthly rent has been rounded to the nearest dollar in the following Rent
Schedule:

<TABLE>
<S>                                     <C>              <C>                        <C>
                  RENT SCHEDULE.        Year One:        02/01/00 - 01/31/01        $21,071 p/mo.
                                        Year Two:        02/01/01 - 01/31/02        $21,914 p/mo.
                                        Year Three:      02/01/02 - 01/31/03        $22,791 p/mo.
                                        Year Four:       02/01/03 - 01/31/04        $23,703 p/mo.
                                        Year Five:       02/01/04 - 01/31/05        $24,651 p/mo.
                                        Year Six:        02/01/05 - 01/31/06        $25,637 p/mo.
                                        Year Seven:      02/01/06 - 01/31/07        $26,662 p/mo.
</TABLE>

         1.8 RENT PAID UPON EXECUTION. Upon execution of this Lease, Tenant
shall pay the sum of Twenty-one Thousand Seventy-one Dollars ($21,071) for the
first month's rent.

         1.9 SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall pay to
Landlord the sum of Twenty-six Thousand Six hundred and sixty two Dollars
($26,662) as a security deposit, as defined in Paragraph 5 below.

         1.10 TENANT'S SHARE OF OPERATING EXPENSES. Thirty-eight & eighty-six
one-hundredth percent (38.86%) of the Project as defined in Paragraphs 2.1 and
4.2 below.

         1.11 TENANT'S SHARE OF REAL PROPERTY TAXES. Seventy-seven and
seventy-three one-hundredth percent (77.73%) of the Premises and the adjacent
premises, which constitutes fifty percent (50%) of the Project.

         1.12 PARKING. Tenant shall have the exclusive use of sixty (60)-parking
spaces.

         1.13 ADDITIONAL LEASE PROVISIONS. Subject to the terms of Section 3.5
below, Tenant shall have one option to renew the term of this lease for an
additional five (5) year period (the "Extended Term"). Base Rent during the
first year of the Extended Term shall be the then fair market rent, with Base
Rent increasing annually on each anniversary of the Extended Term by an amount
equal to four percent (4%) of the amount payable in the immediately preceding
year of the Extended Term.

         1.14 WORK OF IMPROVEMENT. Any obligations of the Landlord and Tenant to
perform work and supply material and labor to prepare the Premises for occupancy
shall be set forth in detail in Exhibit "C": attached hereto and made part
hereof. Landlord and Tenant shall expend all funds and do all acts required of
them in Exhibit "C" and shall have the work performed promptly and diligently in
a first-class workmanlike manner.

2.       PREMISES, PARKING, COMMON AREAS, WORK OF IMPROVEMENT:

         2.1 PREMISES. The Premises are a portion of a building, herein
sometimes referred to as the "Building" identified in Paragraph 1.3. "Building"
shall include adjacent parking structures used in connection therewith. The
Premises, the Building, the Common Areas (defined below) and the land upon which
the same are located, along with all other buildings and improvements thereon or
thereunder, are herein collectively referred to as the "Project". The Project is
more particularly described in Exhibit "B" attached hereto.

         2.2 VEHICLE PARKING. Tenant shall be entitled to the exclusive use of
reserved and unassigned parking spaces the number of which is specified in
Paragraph 1.12 above, on those portions of the Common Area designed by Landlord
for parking. Tenant shall not use more parking spaces than the number specified.
Said parking spaces shall be used only for parking by vehicles no larger than
full size passenger automobiles or pick-up trucks, herein called "Permitted Size
Vehicles". Vehicles other than Permitted Size Vehicles are herein referred to as
"Oversized Vehicles". Tenant shall not at any time park to permit the parking of
Tenant's vehicles, trucks, oversized Vehicles, or the vehicles, trucks or
Oversized Vehicles of Tenant's employees, invitees, suppliers, or others, in any
portion of the Common Area not designated by Landlord for such use by Tenant.
Tenant shall not abandon any inoperative vehicles or equipment on any portion of
the Common Area, nor shall Tenant, its employees, invitees, suppliers or others
park or store any vehicle (Permitted Size or otherwise) on any portion of the
Common Area, including designated parking areas, unattended for any period
longer than twenty-four (24) hours. If Tenant commits, permits or allows any of
the prohibited activities described in the Lease or the rules then in effect,
then Landlord shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove or tow
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away the vehicle involved and charge the cost to Tenant, which cost shall be
immediately paid by Tenant to Landlord upon demand from Landlord.

      2.3 COMMON AREAS - DEFINITION. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary
line of the Project that are provided and designated by Landlord from time to
time for the general non-exclusive use of Landlord, Tenant, and the other
tenants and other authorized users of the Project and their respective
employees, suppliers, shippers, customers and invitees, including, but not
limited to common entrances, lobbies, corridors, stairways and stairwells,
public restrooms, elevators, escalators, parking areas to the extent not
otherwise prohibited by this Lease, loading and unloading areas, trash areas,
roadways, sidewalk, walkways, parkways, ramps, driveways, landscaped areas and
decorative walls.

      2.4 COMMON AREAS - TENANT'S RIGHTS. Landlord hereby grants to Tenant, for
the benefit of Tenant and its employees, suppliers, shippers, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by
Landlord under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Project. Under no circumstances shall
the right herein granted to use the Common Area be deemed to include the right
to store any property, temporarily or permanently, in the Common Area or to
construct or install any improvements in the Common Area. Any such storage shall
be permitted only by the prior written consent of Landlord or Landlord's
designated agent, which consent may be revoked at any time. In the event that
any unauthorized storage shall occur, the Landlord shall have the right,
without notice, in addition to such other rights and remedies that it may have,
to remove the property and charge the cost to Tenant, which cost shall be
immediately payable by Tenant to Landlord upon demand by Landlord.

      2.5 COMMON AREAS - RULES AND REGULATIONS/CC&R's. Landlord or such other
person(s) as Landlord may appoint, shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
establish, modify, amend and enforce reasonable rules and regulations with
respect thereto, Tenant agrees to abide by and conform to all such rules and
regulations, as well as any private conditions, covenants, and restrictions
of public record now or hereafter affecting the Premises and any amendment
thereof, and to cause its employees, suppliers, shippers, customers and
invitees, to abide and conform. Landlord shall not be responsible to Tenant for
the non-compliance with said rules and regulations by other tenants or
authorized users of the Project except, to the extent the same infringes on
Tenant's right to quietly enjoy the premises, Landlord shall take commercially
reasonable actions to enforce such rules and regulations. Any failure by Tenant
or its agents, employees or representatives to observe and comply with the rules
and regulations established by Landlord with respect to the Common Areas shall
be a default by Tenant hereunder. Tenant agrees to comply with all terms and
conditions of the Covenants, Conditions and Restrictions applicable to the
Premises, as the same may be modified from time to time. A copy of the current
Covenants, Conditions and Restrictions are attached hereto as Exhibit "D".

      2.6 COMMON AREAS - CHANGES. Landlord shall have the right at Landlord's
sole discretion, from time to time:

         (i) To make changes to the Common Areas, including, without limitation,
changes in the location. size, shape and number of driveways entrances, parking
spaces, parking areas, loading and unloading areas, ingress, egress, direction
of traffic, landscaped areas and walkways: (b) To close temporarily any of the
Common Areas for maintenance purposes, so long as reasonable access to the
Premises remains available. (c) To designate other land outside the boundaries
of the Project to be a part of the Common Areas, (d) To add additional buildings
and improvements to the Common Areas: (e) To use the Common Areas while engaged
in making additional improvements, repairs or alterations to the Project, or any
portion thereof. (f) To close, at reasonable times, all or any portion of the
parking areas for any reasonable purpose, including without limitation, the
prevention of a dedication thereof, or the accrual of the rights of any person
or public therein, and, (g) to do and perform such other acts and make such
other changes in, to or with respect to the Common Areas and the Project as
Landlord may, in the exercise of sound business judgement, deem to be
appropriate.

         Notwithstanding the foregoing, Lessor shall at all times provide the
parking spaces required by applicable law and except as provided immediately
below, in no event shall the number of parking spaces that Tenant is entitled to
under Paragraph 2.2 be reduced. The preceding sentence to the contrary
notwithstanding, in the event by reason of any rule, regulation, order, law,
statute or ordinance of any governmental or quasi-governmental authority
relating to or affecting parking on the Project, or any other cause beyond
Landlord's reasonable control. Landlord is required to have the right to
proportionately reduce the number of Tenant's parking spaces and the
non-exclusive parking spaces of the other tenants of the Building.

3.    TERM

      3.1 TERM. The term (the "Lease Term") and Commencement Date of this Lease
shall be as specified in Paragraph 1.5 of the Basic Lease Provisions, unless
terminated earlier pursuant to this Lease.

      3.2 DELAY IN COMMENCEMENT. Tenant agrees that in the event of the
inability of Landlord for any reason to deliver possession of the Premises to
Tenant on said Commencement Date set forth in Paragraph LS of the Basic Lease
Provisions, Landlord shall not be liable for any damage thereby nor shall such
inability affect the validity of this Lease or the obligations of Tenant
hereunder, but in such case Tenant shall not be obligated to pay rent or other
monetary sums until possession of the Premises is tendered to Tenant, provided
that if the delay in delivery of possession exceeds thirty (30) days, then the
expiration date of the term of the Lease shall be extended by the period of time
computed from the scheduled commencement date to the date possession is
tendered. If Tenant occupies the Premises prior to said commencement date, such
occupancy shall be subject to all provisions hereof, such occupancy shall not
advance the termination date, and Tenant shall pay Base Rent and Additional Rent
for such period at the initial monthly rates as set forth in this Lease.
Notwithstanding the foregoing, Tenant shall be allowed to enter the Premises
prior to the Commencement Date for the purpose of installing its furniture,
fixtures and equipment, with no obligation to pay rent, as long as such entrance
or installation does not interfere or delay Landlord's completion of Landlord's
work in accordance with Exhibit "C" attached hereto.

      3.3 COMMENCEMENT AFTER CONSTRUCTION. If Landlord is obligated under
Paragraph 1.14 of the Basic Lease Provisions and Exhibit C to perform
construction or remodeling work, then possession shall not be deemed tendered
and the term of this Lease shall not commence until the first to occur of the
following:

      (a) The date on which all improvements to be constructed by Landlord have
 been substantially completed except for punch list items which do not prevent
 Tenant from using the Premises for its intended use: such work as Landlord is
 required to perform but which is delayed because of fault or neglect of Tenant,
 acts of Tenant or Tenant's agents (including, without limitation, delays caused
 by work done on the Premises by Tenant or Tenant's agents or by acts of
 Tenant's contractors or subcontractors) or delays caused by change orders
 requested by Tenant or required because of errors or omissions in plans
 submitted by Tenant and such work as Landlord is required to perform but cannot
 complete until Tenant performs necessary portions of construction work it has
 elected or is required to do or,
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      (b) After a Certificate of Occupancy, or its equivalent, is granted by the
proper governmental agency or, if no Certificate of Occupancy, or its
equivalent, is issued by any local agency, then after notification by Landlord's
architect or contractor that Landlord's construction work has been completed; or

      (c) Upon the occupancy of the Premises by any or Tenant's operating
personnel.

      3.4 If the term commences on a date other than as set forth in Paragraph
1.5 of the Basic Lease Provisions above, then Landlord and Tenant shall execute
a written acknowledgment stating the date of commencement

      3.5 OPTION(S) TO EXTEND TERM. Tenant is given the option(s) to extend the
term of this Lease on all of the same terms and conditions contained herein,
except for Base Rent, for the period set forth in paragraph 1.13, above. The
option(s) to extend and renew this Lease must be exercised, if at all, by notice
in writing (the "option notice") given to Landlord at least one hundred twenty
(120) days, but not more than two hundred forty (240) days, before the
expiration of the initial term- provided, however, that if Tenant is in default
on the date of giving the option notice, the option notice shall, at Landlord's
election, be totally ineffective, or if Tenant is in default on the date the
extended term is to commence at Landlord's election, the extended term shall not
commence and this Lease shall expire at the end of the initial term.

         (a) The parties shall have sixty (60) days after Landlord receives the
option notice in which to agree on minimum monthly rent during the first (1st)
year of the extended term. If the parties agree on the minimum monthly rent for
the first (1st) year of the extended term, they shall immediately execute an
Amendment to this Lease stating the minimum monthly rent. If the parties are
unable to agree on the minimum monthly rent for the first (1st) year of the
extended term, then, within twenty (20) days after the expiration of that period
each party at its cost and by giving notice to the other party shall appoint a
real estate appraiser with at least five (5) years full-time commercial
appraisal experience in the area in which the premises are located to appraise
and set the minimum monthly rent for the first (1st) year of the "tended term".
If a party does not appoint an appraiser within fifteen (15) days after the
other party has given notice of the name of its appraiser, the single appraiser
appointed shall be the sole appraiser and shall set the minimum monthly rent for
the first (1st) year of the extended term. If the two (2) appraisers are
appointed by the parties as stated in this paragraph they shall meet promptly
and attempt to set the minimum monthly rent for the first (1st) year of the
extended term.

         If the second appraiser has been appointed, they shall attempt to elect
a third appraiser meeting the qualifications stated in this paragraph within ten
(10) days after the last day the two appraisers are given to set the minimum
monthly rent. If they are unable to agree on the third appraiser either of the
parties to this Lease by giving ten (10) days notice to the other party can
apply to the then Presiding Judge of the Superior Court for the county in which
the Premises are located for the selection of a third appraiser who meets the
qualifications stated in this paragraph. Each of the parties shall bear one-half
(1/2) of the cost of appointing the third appraiser and of paying the third
appraisees fee. The third appraiser however selected, shall be a person who has
not previously acted in any capacity for either party.

         Within thirty (30) days after the selection of the third appraiser, a
majority of the appraisers shall set the minimum monthly rent for the first
(1st) year of the extended term. If a majority of the appraisers are unable to
set the minimum monthly rent within the stipulated period of time, the three (3)
appraisals shall be added together and their total divided by three (3) the
resulting quotient shall be the minimum monthly rent for the premises during the
first (1st) year of the extended term.

         In setting the minimum monthly rent, the appraiser or appraisers shall
not consider the use to which the premises are restricted under this Lease and
shall consider the highest and best use for the premises, without regard to the
restrictions on use of the premises contained in this Lease.

         If, however, the low appraisal and/or the high appraisal are/is more
than twenty percent (20%) lower and/or higher than the middle appraisal, the low
appraisal and/or the high appraisal shall be disregarded. If only one (1)
appraisal is disregarded, the remaining two (2) appraisals shall be added
together and their total divided by two (2): the resulting quotient shall be the
minimum monthly rent for the premises during the extended term. If both the low
appraisal and the high appraisal are disregarded, as stated in this paragraph,
the middle appraisal shall be the minimum monthly rent for the premises during
the first (1st) year of the extended term.

      After the minimum monthly rent for the extended term has been set, the
appraisers shall immediately notify the parties.

      (b) The Base Rent shall be adjusted at the commencement of the second
(2nd) year of the Extended Term, and each Lease year then after during the
extended term (hereinafter referred to as the "adjustment date"), in the manner
set forth in Paragraph 1.13 of this Lease.

      (c) Tenant shall have no other right to extend the term beyond the
extended term(s) provided herein.

      (d) Tenant's fights to extend this Lease are personal to Tenant and any
assignee, sublessee or successor shall have no right to exercise this option
unless specifically agreed to in writing by Landlord.

4.    RENT

      4.1 BASE MONTHLY RENT. Tenant shall pay to Landlord as base monthly rent
for the Premises in advance on the first day of each calendar month of the term
of this Lease without deduction, offset, prior notice or demand, in lawful money
of the United States, the sum as defined in Paragraphs 1.6 and 1.7 of the Basic
Lease Provisions (the "Base Rent"). If the Commencement Date is not the first
day of a month, or if the Lease expiration or termination date is not the last
day of a month, a prorated monthly installment shall he paid at the then current
rate for the fractional month during which the Lease commences and/or
terminates.

      Concurrently with Tenant's execution of this Lease. Tenant shall pay to
Landlord in the form of a Cashier's Check or Certified Check the sum as defined
in Paragraph 1.8 or the Basic Lease Provisions as Base Rent for the period
defined in Paragraph 1.8 of the Basic Lease Provisions.

      4.2 ADDITIONAL RENT. Commencing on the date set forth in Section 1.5 of
the Basic Lease Provisions above, and continuing throughout the Lease Term,
Tenant pay as additional rent Tenant's Share (as defined in Section 4.5(a)) of
(i) Operating Expenses as required by Section 4.5, 8.1 and 9.2 and as defined in
Paragraph 4.5 below, (ii) Real Property Taxes as required by Section 6. 1, and,
(iii) the cost of any insurance premiums for property insurance, pursuant to
Section 13.2. All Operating Expenses, real property taxes, insurance costs, late
charges, costs, expenses and other sums which Tenant is required to pay under
this Lease together with all interest and penalties that may accrue thereon in
the event of Tenant's failure to pay such amounts, and all reasonable damages,
costs and attorneys' fees and expenses which Landlord may incur by reason of any
default of Tenant or failure on Tenant's part to comply with the term of this
Lease, shall be deemed to be additional rent ("Additional Rent") and shall be
paid in addition to the Base Rent, and, in the event of non-payment by Tenant,
Landlord shall have all the rights and remedies with respect thereto as
Landlord has for the non-payment of the Base Rent.

      4.3 LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant
to Landlord of Base Monthly Rent, Additional Rent and other sums due hereunder
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be
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extremely difficult to ascertain. Such costs include, but are not limited to,
processing, accounting charges and late payment fees which may be imposed on
Landlord by the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of Base Monthly Rent, Additional Rent or any
other sum due from Tenant shall not be received by Landlord or Landlord's
designee within four (4) days after such amount shall be due, Tenant shall pay
to Landlord as Additional Rent a late charge equal to ten percent (10%) of such
overdue amount. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Landlord will incur by reason of late
payments by Tenant. Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's default with respect to such overdue amount nor
prevent Landlord from exercising any of the other rights and remedies granted
hereunder. In no event shall this provision for a late charge be deemed to grant
to Tenant a grace period or extension of time within which to pay any
installment of Basc Monthly Rent or Additional Rent or prevent Landlord from
exercising any right or remedy available to Landlord upon Tenant's failure to
make such payment when due. In the event any payment of Base Monthly Rent or
Additional Rent is not received by Landlord by the thirtieth (30th) day after
the due date for such payment or installment, such payment or installment shall
bear interest at the Permitted Rate, as defined in Paragraph 20.17 below,
commencing on the thirty-first (31st) day after the due date for such payment or
installment and continuing until the same is paid.

      4.4 RETURNED CHECK FEE. A twenty-five dollar ($25.00) charge will be paid
by Tenant as Additional Rent to Landlord for each check returned unpaid by the
bank and Tenant shall replace the payment with a Cashier's Check or Certified
Check. If Tenant has two (2) or more checks returned for insufficient funds at
any time during its tenancy, Landlord, at its option, may request all payments,
current and future, be made by Cashier's Check or Certified Check.

      4.5 OPERATING EXPENSES. Tenant shall pay to Landlord during the term
hereof, in addition to the Base Rent, Tenant's Share, as hereinafter defined, of
all Operating Expenses, as hereinafter defined, during each calendar year of the
term of this Lease, in accordance with the following provisions:

      (a) "Tenant's Share" is defined, for purposes of this Lease, as the
respective percentages set forth in Paragraph 1.10 of the Basic Lease
Provisions, which percentages have been determined by dividing the approximate
square footage of the Premises by the total approximate square footage available
for lease of both the space contained within the Building and all buildings
located in the Project. Tenant's Share used in calculating Tenant's Share of any
Operating Expense shall be determined by the specific charge and its
relationship to the Building versus the Project, which determination shall be
made by Landlord in its reasonable discretion. It is understood and agreed that
the square footage figures set forth in the Basic Lease Provisions are
approximate, which Landlord and Tenant agree are reasonable and shall not be
subject to revision except in connection with an actual change in the size of
the Premises, or a change in the space available for lease in the Project.

      (b) "Operating Expenses" as defined, for purposes of this Lease, shall
include all costs and expenses incurred by Landlord in connection with
the ownership and operating of the Project, including but not limited to the
following:

          (i) The operating, repair, maintenance, and replacement in neat,
          clean, good order and condition of the following:

               (aa) the Common Areas, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area
lighting facilities, electric rooms, elevators, fences and gates;

               (bb) Common Area signage (i.e., address, directional, Project
identity and tenant directories),

               (cc) tire detection systems, including sprinkler systems; and,

               (dd) security services, if provided.

          (ii) The cost of water, gas, electricity and other utilities to serve
          the Common Areas or which are not separately metered to the Premises;

          (iii) trash disposal services;

          (iv) Real Property Taxes as provided in Paragraph 6.1;

          (v) property insurance premiums as provided in Paragraph 13.2;

          (vi) the cost of liability insurance carried by Landlord with respect
to the Common Areas;

          (vii) any deductible portion of an insured loss concerning the Project
or any portion thereto;

         (viii) the cost of any capital improvements made to the Building or
Project by Landlord and, subject to the terms of Paragraph 9.3 (b) below, the
cost of any capital improvements that are required under any governmental law or
regulation that was not applicable to the Building at the time it was
constructed, which costs, in each case shall be amortized over the estimated
useful life of such improvements, as Landlord shall reasonably determine with
interest on the unamortized balance at the rate of ten percent (10%) per annum
or such higher rate as may have been paid by Landlord on funds borrowed for the
purpose of constructing such capital improvements. For purposes of this Lease,
capital improvements are defined as improvements to the Building or Project with
a cost in excess of five thousand dollars ($5,000.00), and with a useful life
expectancy in excess of one (1) year;

          (ix) fees for licenses and permits required for the operation of the
Building & Common Areas and Project;

          (x) the reasonable cost of contesting the validity or applicability of
property tax assessments, which may affect Operating Expenses;

          (xi) the repair, maintenance or patching but not replacement, of the
roof membrane of the Building unless such repair, maintenance or patching
constitutes a capital improvement as defined herein;

          (xii) any other services to be provided by Landlord that are stated
elsewhere in this Lease to be an operating expense; and

          (xiii) an administrative fee payable to Landlord and/or its property
manager in an amount equal to five percent (5%) of the sum of the total
Operating Expenses.

      (c) Notwithstanding the foregoing, Operating Expenses shall not include
the costs and expenses incurred by Landlord in connection with: (i) the
operation of the business or ownership of the entity which constitutes
"Landlord," as distinguished from the costs of Building operations, including,
but not limited to, costs of partnership accounting and legal matters relating
solely to such entity, cost of defending any lawsuits with any mortgagee (except
as the actions of Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlord's interest in the
Building and/or Common Areas and the costs of any disputes between Landlord and
its employees: (ii) Landlord's or Landlord's Managing Agent's general corporate
overhead and general administrative expenses and (iii) Landlord's gross receipts
taxes, personal and corporate income taxes, inheritance and estate taxes, and
other business taxes and assessments, Franchise, gift and transfer taxes.

      (d) The inclusion of the improvements, facilities and services set forth
in Paragraph 4.5(b) shall not be deemed to impose an obligation by Landlord to
either have said improvements or facilities or to provide those services.
Without limiting the generality of the foregoing, nothing contained in Paragraph
4.5(b) or elsewhere in this Lease shall create or imply an obligation or duty on
the part of Landlord to provide any security services or protection for the
Premises, the Building, Common Area and/or the Project.
<PAGE>   5
      (c) Tenant's share of Operating Expenses shall be payable by Tenant within
thirty (30) days after a reasonably detailed statement or actual expenses is
presented to Tenant by Landlord. At Landlord's option, however, an amount may be
estimated by Landlord from time to time of Tenant's share of annual Operating
Expenses and the same shall be payable monthly or quarterly, as Landlord shall
designate, during the Lease Term herein, on the same day as the Base Rent is due
hereunder. In the event that Tenant pays Landlord's estimate of Tenant's Share
of Operating Expenses as aforesaid, Landlord shall provide Tenant with a
reasonably detailed statement reconciling Tenant's Share of the actual Operating
Expenses. Said detailed statement shall be provided on an annual basis, or, with
respect to the final year of the lease, within thirty (30) days of the
expiration of this Lease or Tenant's vacation of the Premises. If Tenant's
payments under this Paragraph 4.5 (d) during the preceding year exceed Tenant's
Share as indicated on said statement. Tenant shall be entitled to a refund of
the amount of such overpayment within thirty (30) days after delivery by
Landlord to Tenant of said statement. If Tenant's payments under this Paragraph
during said preceding year were less than Tenant's Share, is indicated on said
statement, Tenant shall pay to Landlord the amount of the deficiency within
thirty (30) days after delivery by Landlord to Tenant of said statement.

5. SECURITY DEPOSIT. Concurrently with Tenant's execution of this Lease, Tenant
shall deposit with Landlord the sum, as defined in Paragraph 1.9 of the Basic
Lease Provisions outlined above, in the form of a Cashier's Check or Certified
Check payable to Landlord. Said sum shall be held by Landlord as a security
deposit for the faithful performance by Tenant of all of the terms, covenants,
and conditions of this Lease to be kept and performed by Tenant during the term
hereof, including any extension or renewal of the term. If Tenant defaults with
respect to any provisions of this Lease, including but not limited to the
provisions relating to the payment of rent, additional rent and any of the
monetary sums due herewith, Landlord may use, apply or retain all or any part of
this security deposit for the payment of Base Rent. Additional Rent or any other
amount which Landlord may spend or become obligated to spend by reason of
Tenants default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenants default, including, but not limited to,
any damages or deficiency in the re-letting of the demised Premises or other
reentry by Landlord. If any portion of said deposit is so used or applied,
Tenant shall, within ten (10) days after written demand therefore, deposit cash
with Landlord in an amount sufficient to restore the security deposit to its
original amount, Tenant's failure to do so shall be a material breach of this
Lease. Landlord shall not be required to keep this security deposit separate
from its general funds, and Tenant shall not be entitled to interest on such
deposit. If Tenant shall fully and faithfully comply with all the term,
covenants and conditions of this Lease, any part of the security deposit not
used or retained by Landlord, or previously credited to Tenant, pursuant to the
terms outlined, above shall be returned to Tenant (or, at Landlord's option, to
THE LAST ASSIGNEE OF TENANTS INTEREST hereunder) at the expiration of the Lease
Term and after delivery of exclusive possession of the demised Premises to
Landlord. If at any time the Base Rent is increased, the security deposit shall
be increased to an amount equal to no less than the Base Rent then in effect. In
the event of termination of Landlord's interest in the Lease, Landlord shall
transfer said deposit to Landlord's successor in interest whereupon Landlord
shall be automatically released of all liability for return of such deposit or
the accounting therefore.

      Tenant hereby agrees not to look to the mortgages or Lenders, as
mortgagee, mortgagee in possession, or successor in title to the property, for
accountability for any security deposit required by the Landlord hereunder,
unless said sums have actually been received by said mortgagee as security for
the Tenant's performance of this Lease.

      Tenant covenants that it shall not assign or encumber the security deposit
given to Landlord pursuant to this Lease. Neither Landlord, its successors or
assigns shall be bound by any such assignment or encumbrance or any attempted
assignment or encumbrance.

6.    TAXATION.

      6.1 PAYMENT OF REAL PROPERTY TAXES AS ADDITIONAL RENT. Tenant shall pay,
as Additional Rent, Tenant's Share of Real Property Taxes (as defined below) of
all Real Property Taxes levied against the Premises and the adjacent premises,
which constitutes approximately fifty percent (50%) of the Project, during the
term of this Lease. Such payment shall be made by Tenant to Landlord within
thirty (30) days after receipt of Landlord's written statement setting forth the
amount of such Real Property Taxes. Tenant's liability for Real Property Taxes
shall be prorated to reflect the commencement and termination dates of this
Lease. Tenant's Share of Real Property Taxes is defined, for purposes of this
Lease, as the respective percentage set forth in Paragraph 1.11 of the Basic
Lease Provisions, which percentage has been determined by dividing the
approximate square footage of the Premises by the total approximate square
footage available for lease in the assessed parcels in which the Premises are a
part which constitutes approximately fifty percent (50%) of the Project. It is
understood and agreed that the square footage figures set forth in the Basic
Lease Provisions are approximate, which Landlord and Tenant agree am reasonable
and shall not be subject to revision except in connection with an actual change
in the size of the Premises, or a change in the space available for lease in the
assessed parcels.

      6.2 DEFINITION OF "REAL PROPERTY TAX". For the purpose of this Lease,
"Real Property Taxes" means and includes all taxes, assessments (including, but
not limited to assessments for public improvements or benefits), taxes based on
vehicles utilizing parking areas, taxes based or measured by the rent paid,
payable or received under this Lease, taxes on the value use or occupancy of the
Premises, the Buildings and/or the Parcel, Environmental Surcharges and all
other governmental impositions, fees and charges of every kind and nature
whatsoever, whether or not customary or within the contemplation of the parties
hereto and regardless of whether the same shall be extraordinary or ordinary,
general or special, unforeseen or foreseen, similar or dissimilar to any of the
foregoing which at any time during the Lease Term shall be applicable to the
Premises, the Building and/or the Project, or assessed, levied or imposed upon
the Premises, the Building and/or the Project, or become due and payable and a
lien or charge upon the Premises, the Building and/or the Project, or become due
and payable and a lien or charge upon the Premises, the Building and/or the
Project, or any part thereof under or by virtue of any present or future laws,
statutes, ordinances, regulations or other requirements of any governmental
authority whatsoever. The term "Environmental Surcharges" shall mean and include
any and all taxes, charges or assessments imposed by the Federal Department of
Energy, the Federal Environmental Protection Agency, the Federal Clean Air Act,
or any regulations promulgated thereunder or any other local, state or federal
governmental agency now or hereafter vested with the power to impose taxes,
assessments, or other types of surcharges as a means of controlling or abating
environmental pollution or the use of energy; provided, however, that
Environmental surcharges shall not include and Tenant shall not be responsible
for, taxes, charges, assessments or penalties with respect to the Premises, the
Building and/or the Parcel if the same are imposed due to environmental
conditions existing prior to Tenant's occupancy of the Premises. The term "Real
Property Taxes" shall not include any federal, state or local net income,
estate, or inheritance tax imposed on Landlord or assessments, taxes, penalties
or charges arising or incurred prior to the commencement of the Lease other than
pro-rated portions thereof attributable to periods after the Commencement Date.

      6.3    PERSONAL PROPERTY TAXES.
<PAGE>   6
      (a) Tenant shall pay prior to delinquency all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant contained in the Premises or elsewhere. When possible, Tenant
shall cause said trade, fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of
Landlord.

      (b) If any of Tenant's personal property shall be assessed with Landlords
real property, Tenant shall pay to Landlord, the taxes attributable to Tenant
within ten (10) days after receipt of a written statement setting forth the
taxes applicable to Tenant's property.

      6.4 OTHER TAXES. Tenant shall, as Additional Rent, pay or reimburse
Landlord for any tax based upon, allocable to, or measured by the area of the
Premises or by the rent paid, payable or received under this Lease; any tax upon
or with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy of the Premises or any portion thereof; any
privilege tax, excise tax, business and occupation tax, gross receipts tax,
sales and/or use tax, water tax, sewer tax, employee tax, occupational license
tax imposed upon Landlord or Tenant with respect to the Premises, any tax upon
this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises.

      7. USE.

      7.1 USE. The Premises shall be used and occupied by Tenant only for the
purpose as set forth in Paragraph 1.4 of the Basic Lease Provisions above and
for no other purpose whatsoever.

      7.2 SUITABILITY. If the Premises are completed as of the date of execution
hereof, then Tenant, by execution of this Lease, shall be deemed to have
accepted the Premises in the condition existing as of the date of execution and
in any event this Lease shall be subject to all applicable zoning ordinances,
and to any municipal, county and state laws and regulations governing and
regulating the use of the Premises, and further to have accepted tenant
improvements to be constructed by Landlord, if any, as being completed in
accordance with the plans and specifications for such improvements. Tenant
acknowledges that neither Landlord nor Landlord's agent has made any
representation, warranty, estimation or promise of any kind as to the
suitability of the Premises for the conduct of Tenant's business, the condition
of the building or Premises or the use or occupancy which may be made thereof,
Tenant hereby warrants to Landlord that Tenant (i) has made its own
investigation and examination of all the relevant data relating to or affecting
the Premises; (ii) is relying solely on its own judgment in entering into this
Lease; and, Notwithstanding the foregoing, Landlord represents that, to the best
of its knowledge, the sites compliance with environmental laws and that: (i) the
roof, exterior walls and foundation are free of defects; (ii) the fire and life
safety systems are in full compliance with all applicable laws; (iii) the
Premises are in compliance with the Americans with Disabilities Act; (iv) the
Premises comply with all applicable code requirements for "primary path of
travel to the Premises" to the extent required for a Certificate of Occupancy,
(v) the power, lighting and plumbing are, as of the execution of this Lease, in
good working order; (vi) the Building does not contain any asbestos containing
materials or lead paint.

      7.3 USES PROHIBITED.

      (a)   Tenant shall not do or permit anything to be done in or about the
            Premises which will increase the existing rate of insurance upon the
            Premises (unless Tenant shall pay any increased premium as a result
            of such use or acts) or cause the cancelation of any insurance
            policy covering said Premises or any building of which the Premises
            may be a part, nor shall Tenant sell or permit to be kept, used or
            sold in or about said Premises any articles which may be prohibited
            by a standard form policy of fire insurance.

      (b)   Tenant shall not do or permit anything to be done in or about the
            Premises which will in any way obstruct or interfere with the rights
            of other tenants or occupants of any building of which the Premises
            may be a part or injure or annoy them or use or allow the Premises
            to be used for any unlawful or objectionable purpose, nor shall
            Tenant cause, maintain or permit any nuisance in, on or about the
            Premises. Tenant shall not commit or suffer to be committed any
            waste in or upon the Premises and Tenant shall keep the Premises in
            a clean, attractive condition, free of any objectionable noises,
            odors, dust or debris.

      (c)   Tenant shall not use the Premises or permit anything to be in or
            about the Premises which will in any way conflict with or violate
            any law, statute, zoning restriction, ordinance, governmental rule,
            regulation, requirements now in force or which may hereafter be
            enacted or promulgated. Unless otherwise contemplated herein, Tenant
            shall, at its sole cost and expense, promptly comply with all law,
            statutes, ordinances and governmental rules, regulations or
            requirements now in force or which may hereafter be in force and
            with requirements of any board of fire underwriters or other similar
            body now or hereafter constituted relating to or affecting the
            condition, use or occupancy of the Premises, whether applicable due
            to Tenant's particular use of the Premises, applicable to business
            uses in general, or otherwise. Tenant shall also comply, at its sole
            cost, with the provisons of all recorded documents affecting the
            Premises insofaras the same relate to or affect the condition, use
            or occupancy of the Premises. Tenant shall obtain, prior to taking
            possession of the Premises, any permits, licenses or other
            authorizations required for the lawful operation of its business at
            the Premises. The judgment of any court of competent jurisdiction or
            the admission of Tenant in any action against Tenant, whether
            Landlord be a party thereto or not, that Tenant has violated any
            law, statute, ordinance or governmental rule, regulation, recorded
            document, or requirement, shall be conclusive of that fact as
            between Landlord and Tenant. Unless otherwise contemplated herein,
            Tenant shall indemnify and hold Landlord harmless from and against
            any and all loss, expense, cost, damage, attorney's fees, penalties
            or liability arising out of the failure of Tenant or Tenant's agents
            or employees to comply with any applicable law, statute, ordinance,
            rule, regulation, order, requirement or recorded document.

      (d)   Tenant shall not store, park or operate any vehicles inside the
            Building, other than those operated by electricity.

8.    UTILITIES AND WASTE DISPOSAL

      8.1 UTILITIES. Tenant shall pay as Additional Rent prior to delinquency
for all water, gas, heat, light, power, telephone, sewage, air conditioning and
ventilating, scavenger, trash disposal, janitorial, landscaping and all other
materials and utilities supplied to the Premises and all taxes and surcharges
thereon. If any such services are not separately metered to Tenant, Tenant shall
pay a reasonable proportion of all charges which are jointly metered or
maintained by Landlord as an Operating Expense, the determination to be made by
Landlord, and payment shall be made by Tenant within thirty (30) days of receipt
of a statement for such charges. The lack or shortage of any utilities or
services described above due to any cause whatsoever shall not affect any
obligation of Tenant hereunder, and Tenant shall faithfully keep and observe all
the terms, conditions and covenants of this Lease and pay all rentals due
hereunder, all without diminution, credit or deduction.

      8.2 WASTE DISPOSAL. Tenant shall store its waste either inside the
Premises or in its own dumpsters located within outside trash enclosures. Tenant
shall not store, place or maintain any garbage, trash, rubbish, other refuse or
Tenant's personal property in any area of the Common Area or exterior of the
Premises at any time. Tenant, at its sole expense, shall be responsible to
maintain and keep the designated trash enclosures and Common Area free of
garbage, trash, rubbish, other refuse or Tenant's personal property.

      8.3 NO LANDLORD REPRESENTATION REGARDING UTILITIES. Tenant acknowledges
and agrees that Landlord has made no representation whatsoever regarding the
availability or quality of any utility or other services to the Premises, the
Building or the Project.
<PAGE>   7
and Tenant agrees that Landlord shall not be liable in any manner whatsoever for
any failure or interruption of any such services, whether such failure or
interruption occurs due to acts or omissions of the service provider, Tenant,
Landlord or any other party.

9.    MAINTENANCE AND REPAIRS, ALTERATIONS AND ADDITIONS

      9.1 LANDLORD'S OBLIGATIONS. Subject to the provisions of Section 14 and
except for damage caused by a negligent or intentional act or negligent omission
of Tenant and Tenant's agents, employees or invitees, Landlord, at Landlord's
expense, shall keep in good order, condition and repair the foundations,
exterior walls and the exterior roof of the Premises. In addition, Landlord
shall be responsible for maintaining, repairing and replacing the heating, air
conditioning and ventilating equipment. The cost of such repairs shall
constitute an Operating Expense and/or a capital expense under paragraph 4.5
above, and Tenant shall pay Tenant's Share of the cost thereof pursuant to
paragraph 4.5 above. Landlord shall not, however, be obligated to paint such
exterior, nor shall Landlord be required to maintain the interior surface of
exterior walls, ceiling or doors, nor shall Landlord be required to maintain,
repair or replace windows, doors, skylights or plate glass. Landlord shall have
no obligation to make repairs under this Paragraph 9.1 until a reasonable time
after receipt of written notice of the need for such repairs. Landlord shall
maintain, repair or patch the roof membrane (as an Operating Expense), and
Tenant shall pay Tenant's Share of the cost thereof, pursuant to Paragraph 4.5
above. Tenant expressly waives the benefits of any statute (including, without
limitation, the provisions of subsection 1 of Section 1932, Section 1941 and
Section 1942 of the California Civil Code and any similar law, statute or
ordinance now or hereafter in effect) which would otherwise afford Tenant the
right to make repairs at Landlord's expense (or to deduct the cost of such
repairs from rent due hereunder) or, except as specifically provided in
Paragraph 18.3, below, to terminate this Lease because of Landlord's failure to
keep the Premises in good order, condition and repair.

      9.2 TENANT'S OBLIGATIONS.

      (a) Subject to the provisions of Sections 9.1 and 14, Tenant, at Tenant's
expense, shall maintain in good order, condition and repair the Premises and
every part thereof, regardless of whether the damaged portion of the Premises or
the means of repairing the same are accessible to Tenant, including, but not
limited to floors, ceilings, windows, doors, skylights, interior walls, and the
interior surfaces of the exterior walls, plumbing, telecommunications equipment
and intrabuilding network cabling, electrical and lighting facilities and
equipment including circuit breakers and exterior lighting attached to the
Premises. In addition, Tenant shall, at Tenant's expense, maintain in good
order, condition and repair any sidewalks, landscaping (including but not
limited to irrigation systems and backflow prevention devices), driveways,
parking lots, fences and signs located in the areas which are adjacent to and
included with the Premises, unless such items are to be maintained by Landlord
as an Operating Expense, pursuant to Paragraphs 4.5 and 9.1 above. If Tenant's
use of the Premises is limited to normal business hours (8:00 am to 6:00 pm),
such agreement shall provide for service at least as often as every ninety (90)
days. If Tenant's use extends beyond normal business hours, this service shall
be as often as may he required by Landlord.

      (b) All glass in or around the building, both interior and exterior, is at
the sole risk of Tenant, and any broken glass shall promptly be replaced by
Tenant at Tenant's expense with glass of the same kind, size and quality
according to the current local code.

      (c) In the event the Premises is damaged due to an attempted burglary or
forcible entry into Premises, Tenant shall be responsible for any ensuing damage
to the Premises or that larger building of which Premises is part thereof.

      (d) In the event Tenant fails to perform Tenant's obligations under this
Section 9, Landlord shall give Tenant notice to do such acts as are reasonably
required to so maintain the Premises. If Tenant, within ten (10) days after
notice from Landlord, fails to commence to do the work and diligently prosecute
it to completion, then Landlord shall have the right (but not the obligation) to
do such acts and expend such funds at the expense of Tenant as am reasonably
required to perform such work. Any amount so expended by Landlord shall be paid
by Tenant promptly after demand with interest at the Permitted Rate from the
date of such work until paid. Landlord shall have no liability to Tenant for any
damage, inconvenience or interference with the use of the Premises by Tenant as
a result of performing any such work.

      (e) Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises in the same condition as received, broom clean, ordinary
wear and tear and damage by rain, earthquake, act of God or the elements alone
excepted. On the last day of the Lease Term or upon the sooner termination of
the Lease, Tenant shall, to the reasonable satisfaction of Landlord surrender
the Premises in good condition (and free or all Hazardous Materials used,
generated or stored by Tenant and its agents, employees and contractors). Tenant
further agrees to remove all Tenant's personal property and trade fixtures from
the Premises and repair any damage to the Premises caused by or in connection
with the removal of any articles of personal property, business or trade
fixtures, machinery, equipment or furniture, including without limitation
thereto, repairing the floor and patching and painting the walls where required
by Landlord to Landlord's reasonable satisfaction. Tenant agrees that all
Tenant's personal property and trade fixtures not removed shall be deemed to be
abandoned by Tenant and may be removed by Landlord at Tenant's expense. Tenant
shall indemnify the Landlord against any loss or liability resulting from delay
by Tenant in so surrendering the Premises, including without limitation, any
claims made by any succeeding tenant founded in whole or in part on such delay.

      9.3 ALTERATIONS.

      (a) Tenant shall not construct any improvements or additions or otherwise
alter, change or improve the Premises without Landlord's prior written approval,
and not until Landlord shall have first approved the plans and specifications
therefor, which approvals shall not be unreasonably withheld. Upon review,
Landlord shall determine if any of the proposed improvements, additions or
alterations will be required to be removed prior to the expiration or sooner
termination of the Lease Term and promptly notify Tenant of such determination.
Landlord's approval of the plans, specifications and working drawings for
Tenant's alterations shall create no responsibility or liability on the part of
Landlord for their completeness, design sufficiency, or compliance with all
laws, rules and regulations of governmental agencies or authorities. All such
approved alterations, or improvements shall be installed by Tenant at Tenant's
expense using a licensed contractor first approved by Landlord in compliance
with the approved plans and specifications therefor and in strict accordance
with all laws. All such construction shall be done in a good and workmanlike
manner using new materials of good quality. As a condition to consenting to any
leasehold improvement or alteration or change requested by Tenant, the cost
of which may exceed Twenty-five Thousand Dollars ($25,000), Landlord shall have
the right to require Tenant to post a completion bond in an amount and in a form
satisfactory to Landlord. In no event shall Tenant make any structural changes
to the Premises or make any changes to the Premises which would weaken or impair
the structural integrity of the Building or the roof membrane integrity of the
Building. Tenant shall not commence construction of any alterations, additions,
or improvements until (i) all required governmental approvals and permits shall
have been obtained, (ii) all requirements regarding insurance imposed by this
Lease have been satisfied, and (iii) Tenant shall have given Landlord at least
ten (10) days prior written notice of its intention to commence Such
construction. All alterations, additions and improvements constructed by Tenant
shall remain the property of Tenant during the Lease Term but shall not be
damaged, altered, or removed from the Premises. At the expiration or sooner
termination of the Lease Term, all

<PAGE>   8
alterations, additions. or improvements shall be surrendered to Landlord as a
part of the realty and shall then become Landlord's property, and Landlord shall
have no obligation to reimburse Tenant for all or any portion of the value or
cost thereof, however, Landlord may, at its option, require Tenant to remove any
alterations, additions, or improvements previously identified in accordance with
the terms herein, in which case Tenant shall so remove such alterations,
additions or improvements prior to the expiration or sooner termination of the
Lease Term, repair any damage to the Premises caused by such removal, and
restore the Premises to the condition they were in at the commencement of this
Lease.

      (b) Alterations Required by Law. If during the term of this Lease, any
alteration, addition or change of any sort, whether structural or otherwise to
all or any portion of the Premises is required by law (including, but not
limited to, alterations required by the Americans with Disabilities Act of 1990
or any amendments thereto or any regulations prorogated thereunder (collectively
the "ADA") because of (i) Tenant's use or occupancy of the Premises or change of
use or occupancy of the Premises, (ii) Tenant's application for any permit or
governmental approval, (iii) Tenant's construction or installation of any
leasehold improvements or trade fixtures, (iv) any violation by Tenant of any
Law (including any requirement of the ADA), (v) any special use of the Premises
or any part thereof by Tenant or any subtenant or assignee of Tenant (including,
but not limited to any use for a facility which constitutes, or if open to the
public would generally constitute a "place of public accommodation" under the
ADA requirements), or (vi) any special needs of the employees of Tenant or any
assignee or subtenant of Tenant, then Tenant shall promptly make the same at its
sole cost and expense. Within ten (10) days after receipt, Tenant shall notify
Landlord in writing and provide Landlord with copies of (i) any notices alleging
any violation of any Law relating to the Premises or Tenant's occupancy or use
of the Premises, including any notices alleging violation of the relating ADA to
any portion of the Project or the Premises; (ii) any claims made or threatened
in writing regarding non-compliance with the ADA or any Law relating to the
Project or the Premises, or (iii) any governmental or regulatory actions or
investigations instituted or threatened regarding non-compliance with the ADA or
any Law relating to any portion of the Project or the Premises.

10. ENTRY BY LANDLORD

      Landlord and Landlord's agents shall have the right at reasonable times
and upon reasonable notice to enter the Premises to inspect the same or to
maintain or repair, make alterations or additions to the Premises or any portion
thereof or to show the Premises to prospective purchasers, tenants or lenders.
Landlord may, at any time, place on or about the Premises any ordinary "for
sale" signs. Landlord may at any time during the last one hundred eighty (180)
days of the term of the Lease place on or about the Premises any ordinary "for
lease" signs. Tenant hereby waives claim for abatement of rent or for damages
for any injury or inconvenience to or interference with Tenant's business, any
loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby.

11. LIENS

      Tenant shall keep the Premises and any building of which the Premises are
a part free from any liens arising out of work performed, materials furnished or
obligations incurred by Tenant and shall indemnify, hold harmless and defend
Landlord from any liens and encumbrances arising out of any work performed or
materials furnished to or at the direction of Tenant. In the event that Tenant
shall not, within twenty (20) days following the imposition of any such liens,
cause such lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other remedies provided herein and by
law, the right, but not the obligation, to cause the same to be released by such
means as it shall deem proper, including payment of the claim giving rise to
such lien. All such sums paid by Landlord and all expenses incurred by it in
connection therewith including, without limitation, attorneys' fees and costs,
plus an administrative fee equal to ten percent (10%) of all such amounts, shall
be payable to Landlord by Tenant on demand with interest at the Permitted
Rate-(as defined in Paragraph 20.17 below). Landlord shall have the right at all
times to post and keep posted on the Premises any notices permitted or required
by law, or which Landlord shall deem proper, for the protection of Landlord and
the Premises, and any other party having an interest therein, from mechanics'
and material person's liens and Tenant shall give to Landlord at least ten (10)
business days prior written notice of the expected date of commencement of any
work relating to alterations, improvements or additions to the Premises.

12. INDEMNITY

      12.1 INDEMNITY. Tenant agrees to indemnify, protect and defend Landlord
and Landlord's Agents and Lenders against and hold Landlord and Landlord's
Agents and Lenders harmless from any and all claims, causes of action,
judgments, obligations or liabilities and all reasonable expenses incurred in
investigating or resisting the same (including, without limitation, attorneys'
fees), on account of, or arising out of (i) the operation, condition,
maintenance, use or occupancy of the Premises, (ii) any bodily injury, death or
property damage occurring in or about the Premises, (iii) any act, omission or
neglect of Tenant or its Agents, (iv) any breach or default in the performance
in a timely manner of any obligation on Tenant's part to be performed under this
Lease, or (v) any other cause related to or occurring on the premises. In the
event any action or proceeding is brought against Landlord by reason of any such
claim, Tenant upon notice from Landlord shall defend same at Tenant's expense by
counsel satisfactory to Landlord and Tenant. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons, in, upon or about the Premises arising from any cause and
Tenant hereby waives all claims in respect thereof against Landlord. The
provisions of this Paragraph 12.1 shall survive termination of the Lease with
respect to any damage, injury or death occurring or accruing prior to such
termination. Notwithstanding the foregoing, Tenant shall not be obligated to
defend and indemnify Landlord hereunder to the extent such indemnification claim
arises out of the failure of Landlord to fulfill its obligations hereunder or
under law.

      12.2 EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not be liable
for injury and Tenant waives all claims against Landlord to Tenant's business or
loss of income therefrom or for damage which may be sustained by the person,
goods, wares, merchandise or property of Tenant, its employees, invitees,
customers, agents or contractors or any other person in or about the Premises,
caused by or resulting from fire, steam, electricity, gas, water or rain, which
may leak or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures of the same, whether
the said damage or injury results from conditions arising upon the Premises or
upon other portions of the building of which the Premises are a part, or from
other sources or places and regardless of whether the cause of such damage or
injury or the means of repairing the same is inaccessible to Tenant. Landlord
shall not be liable for any damages arising from any act or neglect of any other
tenant, if any, of the Building in which the Premises are located, or of the
Project. IN NO EVENT SHALL LANDLORD BE LIABLE TO TENANT FOR ANY LOSS OF PROFITS,
LOSS OF BUSINESS, LOSS OF USE OF DATA, INTERRUPTION OF BUSINESS, OR FOR
INDIRECT, SPECIAL, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND
WHETHER UNDER THIS AGREEMENT OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF
SUCH LOSS, FOR ANY CLAIM CONCERNING PERFORMANCE OR NONPERFORMANCE BY LANDLORD
PURSUANT TO OR IN ANY OTHER WAY
<PAGE>   9
RELATED TO THE SUBJECT MATTER OF THIS LEASE, OR FOR DAMAGES FOR ANY CAUSE
WHATSOEVER AND REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT OR IN TORT
INCLUDING, WITHOUT LIMITATION, NEGLIGENCE. TENANT'S SOLE REMEDY SHALL BE ACTUAL
DAMAGES UP TO THE AMOUNT OF THE RENT ATTRIBUTABLE TO THE APPLICABLE PERIOD THAT
IS THE SUBJECT OF THE CLAIM.

13. INSURANCE

      13.1 TENANT'S INSURANCE. Tenant shall, at its own expense, maintain in
full force and effect during the Lease Term the following insurance:

      (a) Tenant shall maintain a policy or policies of comprehensive general
liability insurance, including fire and property damage carried with a company
or companies satisfactory to Landlord, which will insure Tenant and Landlord
(and such others as am designated by Landlord) against liability for personal
injury, bodily injury, death, and damage to property (including but not limited
to, Tenants personal property, inventory, trade fixtures and improvements
constructed by Tenant within the Premises with coverage for the full actual
replacement cost thereof), occurring in or about or resulting from any
occurrence in or about, the Premises or use or occupancy of the Premises (and
Tenant's operations on the Premises) or arising out of Tenant's or its agents',
employees', or representatives' use of the building, Common Areas or Project
with combined single limit coverage of not less than two million dollars
($2,000,000.00). Such comprehensive general liability insurance shall define
lease of Premises as an insured contract insuring Tenants performance of
Tenant's obligation to indemnify Landlord contained in Section 12.1. If
Landlord's lender, insurance advisor or counsel reasonably determines at any
time that the amount of such coverage is not adequate, Tenant shall increase
such coverage to such amount as Landlord's lender, insurance advisor or counsel
reasonably deems adequate. The limits of such insurance shall not limit the
liability of Tenant. Tenant shall deliver to Landlord, prior to possession, and
at least seven (7) days prior to the expiration of any policy, a certificate of
insurance evidencing the existence of the policy required hereunder and such
certificate shall certify that the policy (i) names Landlord as additional
insured, (ii) shall not be canceled or reduced in coverage without thirty (30)
days prior written notice to Landlord, (iii) insures performance of the
indemnity set forth in Paragraphs 12.1, above, and 19.5, Wow (including,
provided Tenant uses Hazardous Materials pursuant to Paragraph 19 above, without
limitation, "Pollution Liability"); (iv) provides coverage which is primary and
not contributing with and not in excess of coverage which Landlord may carry;
and (v) contains a cross-liability endorsement. In the event Tenant fails to
procure and maintain such insurance, Landlord may (but shall not be required to)
procure same at Tenant's expense after ten (10) days prior written notice. No
such policy shall be cancelable or subject to reduction of coverage or other
modification except after thirty (30) days prior written notice to Landlord by
the insurer. All such policies shall be written as primary policies, not
contributing with and not in excess of coverage which Landlord may carry. Tenant
shall have the right to provide such insurance coverage pursuant to blanket
policies obtained by Tenant provided such blanket policies expressly afford
coverage to the Premises and to Tenant as required by this Lease.

      (b) Tenant, at its sole cost shall procure and maintain in force during
the Lease term, "all-risk" property insurance including vandalism, boiler and
machinery, sprinkler damage, and malicious mischief on all leasehold
improvements installed in the Premises by Tenant at its expense and all
equipment, trade fixtures, inventory fixtures and personal property located on
in or about the Premises. Such insurance shall be an amount equal to the full
replacement cost of the aggregate of the foregoing.

      (c) The policies required to be maintained by Tenant pursuant to
subparagraphs (a) and (b) above shall be with companies, on forms, with
deductible amounts (if any) and loss payable clauses satisfactory to Landlord
and shall include Landlord and the beneficiary of any deed of trust encumbering
the Premises as additional insureds, and shall provide that such parties may,
although additional insureds, recover for any loss suffered by Tenant's neglect.

      13.2 PROPERTY INSURANCE. Landlord shall obtain and keep in force during
the term of this Lease a policy or policies of insurance covering loss or damage
to the Premises, (the Building and all other buildings located in the Project,
in the amount of full replacement cost thereof, including protection against
those perils included within the classification of "all risk" insurance plus a
policy of rental income insurance in the amount of 100% of 12 months rent
(including, without limitation, sums payable as Additional Rent) plus, at
Landlord's option, flood insurance and earthquake insurance and any other
coverages which may be required from time to time by Landlord's Lender. Tenant
shall have no interest in nor any right to the proceeds of any insurance
procured by Landlord on the Premises, the Building or the project. Landlord
shall not be required to cause such insurance to cover any of Tenant's personal
property, inventory, trade fixtures or any modifications, alterations or
improvements made or constructed by Tenant to or within the Premises. During the
term of this Lease, Tenant shall pay to Landlord, as Additional Rent, Tenant's
Share (as defined in Paragraph 4.5(a) above) of the amount of any premium for
the insurance maintained by Landlord under this Paragraph 13.2, including,
without limitation, any insurance premium due to Lender's requirements or
increase in insured value. Tenant shall pay such insurance premiums to Landlord
within thirty (30) days after receipt by Tenant of a copy of the premium
statement or other reasonably satisfactory evidence of the amount due, which
shall include the method of calculation of Tenant's share thereof if the
insurance covers other improvements than the Premises. If the term of this Lease
does not expire concurrently with the expiration of the period covered by the
insurance, Tenant's liability for such insurance premium shall be prorated on an
annual basis.

      13.3 MUTUAL WAIVER OF SUBROGATION. Tenant and Landlord hereby mutually
waive their respective rights of recovery against each other of any loss of or
damage to the property of either party, to the extent such loss or damage is
covered by any insurance policy required to be maintained by this Lease or
otherwise in force at the time of such loss or damage. Each party shall obtain
any special endorsements, if required by the insurer, whereby the insurer waives
its right of subrogation against the other party hereto. The provisions of this
Subparagraph 13.3 shall not apply in those instances in which the waiver of
subrogation would cause either party's insurance coverage to be voided or
otherwise made uncollectible, or, if any such insurance policy cannot be
obtained with such a waiver of subrogation, then the party obtaining such
insurance shall notify the other party of that fact and thereon shall be
relieved of the obligation to obtain such a waiver of subrogation rights from
the insurer with respect to the particular insurance involved.

14. DAMAGE OR DESTRUCTION

      14.1 PARTIAL DAMAGE - INSURED. Subject to the provisions of Paragraphs 12
and 13 above, and if at any time during the term of this Lease there is partial
damage to the Premises that is not caused by the fault, or negligence of Tenant,
its agents, employees, contractors, or invitees, which is covered under an
insurance policy being maintained pursuant to Section 13.2, then Landlord shall
repair such damage as soon as reasonably possible and this Lease shall continue
in full force and effect. If there is a monetary deductible applicable to the
aforementioned insurance policy coverage which is required to be paid prior to
coverage of such casualty or damage, it shall be the sole responsibility for
Tenant to reimburse Landlord for said monetary deductible. Tenant shall
reimburse Landlord within thirty (30) days of receipt by Tenant of a copy of the
monetary deductible statement. In the event of damage to the Premises or the
Building by fire or other causes resulting from fault or negligence of Tenant,
its agents, employees, contractors, or
<PAGE>   10
invitees, such damage shall be promptly reported to Landlord and shall be
repaired by and at expense of Tenant under direction and supervision of Landlord
and there shall be no abatement of rent during the period of repair. In such
case, Tenant shall indemnify and hold harmless Landlord from and against any
damages, injuries, losses, claims, liabilities or causes of action arising out
of or relating to the repair or restoration of the Premises or Building.

      14.2 PARTIAL DAMAGE - UNINSURED. In the event the improvements on the
Premises are damaged, except by a negligent or willful act or negligent omission
of Tenant or any of Tenant's Agents, or from an attempted burglary or forcible
entry pursuant to Section 9.2 (c), by any casualty not covered under an
insurance policy being maintained pursuant to Section 13.2, then Landlord may,
at Landlord's option, either (a) repair such damage as soon as reasonably
possible at Landlord's expense, in which event this Lease shall continue in full
force and effect or (b) give written notice to Tenant within thirty (30) days
after the date of occurrence of such damage of Landlord's intention to cancel
and terminate this Lease as of the date of the occurrence of the damage. In the
event Landlord elects to terminate this Lease pursuant to this Section 14.2,
Tenant shall have the right within ten (10) days of receipt of the required
notice to notify Landlord of Tenant's election to repair such damage, at
Tenant's sole cost and expense, in which event this Lease shall continue in full
force and effect and Tenant shall proceed to make such repairs as soon as
reasonably possible (or Landlord may elect, in its sole discretion, to require
Tenant to pay to Landlord within ten (10) days following written request
therefor, or furnish evidence reasonably satisfactory to Landlord of Tenant's
ability to fund that portion of the cost of such repair or restoration which is
not covered by insurance proceeds, in which event Landlord shall proceed to make
such repairs). If Tenant does not give such notice within the ten (10) day
period, this Lease shall be canceled and terminated as of the date of the
occurrence of such damage. All insurance proceeds available from the fire and
property damage insurance carried by Landlord pursuant to Section 13.2 shall be
paid to and become the property of Landlord. If this Lease is not so terminated,
then upon receipt of the insurance proceeds (if the loss is covered by
insurance) and the issuance of all necessary governmental permits, Landlord
shall commence and diligently prosecute to completion the restoration of the
leased Premises, to the extent then allowed by law, to substantially the same
condition in which the leased Premises was immediately prior to such damage.
Landlord's obligation to restore shall be limited to the building and interior
improvements constructed by Landlord as they existed as of the commencement
date. Landlord's obligation to repair or restore the Premises shall not include
restoration of Tenant's trade fixtures, equipment, merchandise, or any
improvements, alterations, or additions made by Tenant to the Premises.

      14.3 TOTAL DESTRUCTION. If the Premises are totally destroyed during the
term of this Lease from any cause whether or not covered by the insurance
required under Section 13.2 (including any destruction required by any
authorized public authority), this Lease, at Landlord's or Tenant's option,
which option must be exercised within ten (10) days of such destruction, may
automatically terminate as of the date of such total destruction. If this Lease
is not terminated pursuant to this Section within ten (10) days of the date of
such destruction, Landlord shall immediately begin the process of reconstructing
the Premises and all rent for the Premises shall be abated during the period of
reconstruction.

       14.4 DAMAGE NEAR END OF THE TERM. If the Premises are partially destroyed
 or damaged during the last six (6) months of the term of this Lease, Landlord
 may at Landlord's option cancel and terminate this Lease as of the date of
 occurrence of such damage by giving written notice to Tenant of Landlord's
 election to do so within sixty (60) days after the date of occurrence of such
 damage.

       14.5 LANDLORD'S OBLIGATIONS. The Landlord shall not be required to repair
 any injury or damage by fire or other cause, or to make any restoration or
 replacement of any paneling, decorations, office fixtures, partitions,
 railings, ceilings, floor covering, equipment, machinery or fixtures or any
 other improvements or property installed in the Premises by Tenant or at the
 direct or indirect expense of Tenant. Tenant shall be required to restore or
 replace same in the event of damage.

      14.6 ABATEMENT OF RENT; TENANT'S REMEDIES.

               (a) If the Premises are partially destroyed or damaged and
Landlord or Tenant repairs them pursuant to this Lease, the rent payable
hereunder for the period during which such damage and repair continues shall be
abated in proportion to the extent to which Tenant's use of the Premises is
impaired, provided, however there shall be no abatement of rent if the damage or
destruction was caused by the fault, negligence or willful misconduct of Tenant
or any of its Agents. Except for abatement of rent, if any, Tenant shall have no
claim against Landlord for any damage suffered by reason of any such damage,
destruction or restoration.

               (b) If Landlord shall be obligated to repair or restore the
Premises under this Section 14 and shall not commence such repair or restoration
within sixty (60) days after such obligation shall accrue, Tenant, at Tenant's
option, may cancel and terminate this Lease by written notice to Landlord at any
time prior to the commencement of such repair or restoration. In such event, the
Lease shall terminate as of the date of such notice.

      14.7 TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease pursuant
to Section 14, an equitable adjustment shall be made concerning advance rent and
any advance payments made by Tenant to Landlord. Landlord shall, in addition,
return to Tenant so much of Tenant's security deposit as has not therefore been
applied by Landlord.

15. CONDEMNATION

      15.1 DEFINITION OF TERMS. For the purposes of this Lease, the term (1)
"Taking" means a taking of the Premises or damage to the Premises related to the
exercise of the power to eminent domain and includes a voluntary conveyance in
lieu of court proceedings, to any agency, authority, public utility, person or
corporate entity empowered to condemn property, (2) "Total Taking" means the
taking of the entire Premises or so much of the Premises as to prevent or
substantially impair the use thereof by Tenant for the uses herein specified.
(3) "Partial Taking" means the taking of only a portion of the Premises which
does not constitute a Total Taking, (4) "Date of Taking" means the date upon
which the title to the Premises, or a portion thereof, passes to and vests in
the condemnor or effective date of any order for possession if issued prior to
the date title vests in the condemnor, and (5) "Award" means the amount of any
award made, consideration paid, or damages ordered as a result of a Taking.

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

      15.3 TOTAL TAKING. In the event of a Total Taking during the term hereof,
(1) the rights of Tenant under the Lease and the leasehold estate of Tenant in
and to the Premises shall cease and be terminated as of the date of Taking; (2)
Landlord shall refund to Tenant any prepaid rent, (3) Tenant shall pay to
Landlord any rent or charges due Landlord under the Lease, each prorated as of
the Date of Taking, (4) To the extent the Award is not payable to the
beneficiary of any mortgage affecting the Premises, Tenant shall receive from
the Award those portions of the Award attributable to trade fixtures of Tenant,
and (5) the remainder of the Award shall be paid it and be the property of
Landlord.

      15.4 PARTIAL TAKING. In the event of a Partial Taking during the term
hereof, (1) the rights of Tenant under the Lease and the leasehold estate of
Tenant in and to the portion of the Premises taken shall cease and terminate as
of the Date of Taking, (2) from and after the Date of Taking the monthly
installment of rent shall be an amount equal to the product obtained by
multiplying the monthly
<PAGE>   11
installment of rent immediately prior to the Taking by the quotient obtained by
dividing the number of square feet of floor area contained in the Premises after
the Taking by the number of square feet of floor area contained in the Premises
prior to the Taking; (3) To the extent the Award is not payable to the
beneficiary of any mortgage affecting the Premises, Tenant shall receive from
the Award the portions or the Award attributable to trade fixtures of Tenant,
and (4) the remainder of the Award shall be paid to and be the property of
Landlord. Each party waives the provisions of California Code of Civil Procedure
Section 1265.130 allowing either party to petition the Superior Court to
terminate this Lease in the event of a Partial Taking.

16.   ASSIGNMENT & SUBLETTING

      16.1 LANDLORD'S CONSENT REQUIRED. Tenant's interest in this Lease is not
assignable, by operation of law or otherwise, nor shall Tenant have the right to
sublet the Premises, transfer any interest of Tenant therein or permit any use
of the Premises by another party, without the prior written consent of Landlord
to each such assignment subletting, transfer or use, which consent Landlord
agrees not to withhold unreasonably subject to the provisions of Subparagraph
16.3 below. A consent to one assignment, subletting, occupancy or use by another
party shall not be deemed to be a consent to any subsequent assignment,
subletting, occupancy or use by another party. Any assignment or subletting
without such consent shall be void and shall, at the option of Landlord,
terminate this Lease.

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

      If Tenant is a corporation, association, limited liability company,
partnership or other legal entity. any dissolution, merger, consolidation or
other reorganization of Tenant, or the sale or other transfer of a controlling
percentage of Tenant, or the sale or other transfer of fifty percent (50%) of
the value of the assets of Tenant, shall be deemed a voluntary assignment
pursuant to the terms hereof.

      Notwithstanding the foregoing, however, Tenant shall be permitted to
assign this Lease or sublet all or any portion of the Premises, at any time upon
delivery of written notice thereof to Landlord, to any entity which controls, is
controlled by or is under common control with Tenant. No such assignment or
subletting shall relieve Tenant of any of its obligations under this Lease. For
purposes of this paragraph, "control" means ownership of more than fifty percent
(50%) of the voting interest of the applicable entity.

      16.2 TRANSFEREE INFORMATION REQUIRED. If Tenant desires to assign its
interest in this Lease or sublet the Premises or any part thereof, or transfer
any interest of Tenant therein, or permit the use of the Premises by another
party (hereinafter collectively referred to as a -Transfer-11. Tenant shall give
Landlord at least fifteen (15) business days prior written notice of the
proposed Transfer and of the name and legal composition of the
proposed-transferee, financial statements and Federal and State income tax
returns of the proposed transferee fix the past three (3) years upon
availability from such proposed transferee, which shall not be unreasonably
withheld by the proposed transferee, the nature of the proposed use of the
Premises by the proposed transferee (including a list of the type and quantities
of all Hazardous Materials to be used by the transferee on the Premises), names
and addresses of any and all lessors from whom the proposed transferee has
leased real property during the past five (5) years, the terms of the proposed
Transfer, and such other pertinent information as may be requested by Landlord,
all in sufficient detail to enable Landlord to evaluate the proposed Transfer
and the prospective transferee. Failure to provide such information shall be
reasonable grounds for Landlord to withhold consent to the proposed assignment
or sublease.

      16.3 LANDLORD'S RIGHTS. It is the intent of the parties hereto that this
Lease shall confer upon Tenant only the right to use and occupy the Premises,
and to exercise such other rights as are conferred upon Tenant by this Lease.
The panics agree that this Lease is not intended to have a bonus value nor to
serve as a vehicle whereby Tenant may profit by a future Transfer of this Lease
or the right to use or occupy the Premises as a result of any favorable terms
contained herein, or future changes in the market for leased space. It is the
intent of the parties that any such bonus value that may attach to this Lease
shall be and remain the exclusive property of Landlord. In the event Tenant
seeks to Transfer its interest in this Lease or the Premises, Landlord shall
have the following options, which may be exercised at its sole choice without
limiting Landlord in the exercise of any other right or remedy which Landlord
may have by reason of such proposed Transfer.

      (a) Landlord may consent to the proposed transfer, in which case fifty
percent (50%) of any amount received by Tenant on account of such sublease or
assignment which is in excess of the amount payable by Tenant hereunder (on a
square footage basis), net of any leasing commissions and tenant improvements
required to be paid by Tenant on account of such sublease or assignment, shall
be payable to Landlord as Additional Rent hereunder.

      (b) Landlord may reasonably withhold its consent to the proposed transfer.

      16.4 CONSENT. As a condition for granting its consent to any subletting or
assignment, Landlord may require any or all of the following:

      (a) Tenant shall provide Landlord with adequate evidence that the proposed
assignee or sublessee is creditworthy and experienced in the business for which
the Premises are let hereunder, that he, she, it or they can satisfy the
conditions of this Lease including, but not limited to, the payment of any and
all additional costs incurred by Landlord for maintenance and repair as a result
of any change in the nature of the occupancy caused by such assignment or
sublease.

      (b) The assignment or sublease shall be on the same terms set forth in the
Tenant's written notice given to Landlord.

      (c) Tenant, or the proposed assignee or sublessee, agrees to pay to
Landlord, upon demand, as additional rent, a sum equal to the additional costs,
if any, reasonably incurred by Landlord for maintenance and repair as a result
of any change in the nature of the occupancy caused by such assignment or
subletting.

      (d) The occupancy resulting from such assignment or subletting shall
conform with the use restrictions set forth in this Lease, with the proposed use
by the new tenant or occupant being subject to the reasonable consent of
Landlord;

      (e) No assignment or sublease shall be valid, and no assignee or sublessee
shall take possession of the Premises until an executed counterpart of such
assignment or sublease has been delivered to Landlord, containing a copy of this
Lease and expressly providing that the assignee or sublessee has expressly
assumed all obligations under this Lease, that Tenant and assignee or sublessee
are jointly and severally liable for the payment of all sums due under this
Lease and the performance and observance of all of the agreements, covenants,
conditions and provisions to be performed and observed by Tenant under this
Lease as and when performance and observances are due, and that Landlord shall
have the right to enforce such agreements, covenants, conditions and provisions
directly against Tenant and assignee or sublessee and each of them.

      (f) Any further assignment or subletting by such assignee or sublessee
shall be and shall remain subject to the terms of this Lease.

      (g) Landlord may cancel any options to extend the term of this Lease.

      (h) Landlord may require Tenant, or the proposed assignee or sublessee,
to make such improvements to the Premises as may be required to bring the
Premises to the same standard and appearance as the remainder of the Building
and/or the Project. Such
<PAGE>   12
improvements will be determined in Landlord's reasonable judgment and will be at
the expense of Tenant, or the proposed assignee or sublessee.

      16.5 RELEASE OF TENANT. Neither the assignment of this Lease by Tenant,
the subletting of the Premises by Tenant nor Landlord's waiver or consent to any
assignment or subletting shall release Tenant from any obligations under this
lease Landlord, instead of disapproving the transaction, may condition its
consent to a transfer to a corporation or limited liability company upon the
personal guarantee or this Lease by the directors, shareholders and/or members
of any corporate or limited liability company Tenant.

      16.7 PAYMENT OF LANDLORD'S EXPENSES. If Tenant assigns or sublets the
Premises, or requests the consent of Landlord for any act that Tenant proposes
to (it) including, without limitation, the assignment or subletting of the
Premises, then Tenant shall pay Landlord's reasonable attorneys', engineers',
architects' and accountants' fees incurred in connection therewith, whether or
not such consent is granted. Tenant's payment obligation shall be limited to an
aggregate amount of Two Thousand Five Hundred Dollars ($2,500.00) per request.

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

      17.1 PRIORITY. This Lease is subject and subordinate to all Security
Instruments existing as of the Commencement Date. However, if any Lender so
requires, this Lease shall become prior and superior to any such Security
Instrument.

      17.2 SUBSEQUENT SECURITY INSTRUMENTS. At Landlord's election, this Lease
shall become subject and subordinate to any Security Instrument created after
the Commencement Date. Notwithstanding such subordination, Tenant's right to
quiet possession of the Premises shall not be disturbed so long as Tenant is not
in default and performs all of its obligations under this Lease, unless this
Lease is otherwise terminated pursuant to its terms.

      17.3 DOCUMENTS. Tenant shall execute any reasonable document or instrument
required by Landlord or any Lender to make this Lease either prior or
subordinate to a Security Instrument, which may include such other matters as
the Lender customarily requires. In connection with such agreements, including
provisions that the Lender, if it succeeds to the interest of Landlord under
this Lease, shall not be (i) liable for any act or omission of any prior
landlord (including Landlord), (ii) subject to any offsets or difference which
Tenant may have against any prior landlord (including Landlord), (iii) bound by
any rent or additional rent paid more than one (1) month in advance of the date
due under this Lease, (iv) liable for any defaults on the part of Landlord
occurring prior to the time that Lender takes possession of the Premises in
connection with enforcement of its Security Instrument, (v) liable for the
return of any security deposit unless such deposit has been delivered to Lender,
and (vi) bound by any agreement or modification of the Lease made without the
prior written consent of the Lender.

      17.4 TENANT'S ATTORNMENT. Tenant shall attorn (1) to any purchase of the
Premises at any foreclosure sale or private sale conducted pursuant to any
Security Instrument encumbering the Premises; (2) to any grantee or transferee
designated in any deed given in lieu of foreclosure; or (3) to the lessor under
any underlying ground lease should such ground lease be terminated.

      17.5 NONDISTURBANCE AGREEMENT. Landlord shall use its best efforts to
obtain from the existing lienholder of the Premises a Nondisturbance Agreement
in a form provided by Tenant. Landlord's sole obligations hereunder is to
solicit such lienholder's agreement to the Nondisturbance Agreement, and
Landlord's failure to obtain such agreement shall not constitute a default
hereunder by Landlord, shall not provide Tenant with any additional rights under
this Lease, and shall not result in any liability of any kind to Landlord.

18.   DEFAULT:  REMEDIES

      18.1 DEFAULT. The occurrence of any of the following shall constitute a
material default and breach of this Lease by Tenant:

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

      (b) The abandonment or vacation of the Premises by Tenant (failure to
occupy and operate the Premises for thirty (30) consecutive days shall be deemed
an abandonment and vacation);

      (c) A failure by Tenant to observe and perform any other provision of the
Lease to be observed or performed by Tenant, where such failure shall have
continued for thirty (30) days after written notice thereof by Landlord to
Tenant; provided, however, that if the nature of such default is such that the
same cannot reasonably be cured within such thirty (30) day period. Tenant shall
not be deemed to be in default if Tenant shall within such period commence such
cure and thereafter diligently prosecute the same to completion;

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

      (e) Tenant or any such guarantor shall take any corporate action to
authorize any of the actions set forth in Clause (d) above, or;

      (f) Any case, proceeding or other action against Tenant or any guarantor
of Tenant's obligations hereunder shall be commenced seeking to have an order
for relief entered against it as debtor, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its property, and such case,
proceeding or other action (i) results in the entry of an order for relief
against it which is not fully stayed within seven (7) business days after the
entry thereof or (ii) is not dismissed within forty-five (45) days of filing
such case, action or proceeding.

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

      (h) an assignment sublease or other transfer of this Lease or Tenant's
interest in the Premises or portion thereof contrary to the provisions of
Section 16; or

      (i) execution of an assignment for the benefit of creditors of
substantially all assets of Tenant available bylaw for the satisfaction of
judgment creditor.

      18.2 REMEDIES. In the event of any such material default or breach by
Tenant. Landlord may at anytime thereafter, with or without notice and demand
and without limiting Landlord in the exercise of any right or remedy at law or
in equity which Landlord may have by reason of such default or breach:

      (a) Maintain this Lease in full force and effect and recover the rent and
other monetary charges as they become due, without terminating Tenant's right to
possession, irrespective or whether Tenant shall have abandoned the Premises. In
the event Landlord elects to not terminate the Lease, Landlord shall have the
right to enter the Premises and to relet the Premises or any party thereof, at
such rent and upon such conditions and for such a term as Landlord shall
determine, for Tenant's account, and to do all acts necessary to maintain or
preserve the Premises as Landlord deem reasonable and necessary without being
deemed to have elected to terminate
<PAGE>   13
the Lease including removal of all persons and property from the Premises; such
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Tenant. Tenant shall be liable immediately to
Landlord for all costs Landlord incurs in reletting the Premises, including,
without limitation, brokers' commissions, expenses of remodeling the Premises
required by the reletting, attorneys' fees incurred in negotiating and drafting
the documentation related to the reletting, and like costs. Reletting can be for
a period shorter or longer than the remaining term of this Lease. Tenant shall
pay to Landlord the rent due under this Lease on the dates the rent is due, less
the rent Landlord receives from any reletting. No act by Landlord allowed by
this paragraph shall terminate this Lease unless Landlord notifies Tenant that
Landlord elects to terminate this Lease. After Tenant's default and for as long
as Landlord does not terminate Tenant's right to possession of the Premises, if
Tenant obtains Landlord's consent, Tenant shall have the right to assign or
sublet its interest in this Lease, but Tenant shall not be released from
liability. Any such assignment or subletting shall be subject to the provisions
of Paragraph 16, above. Notwithstanding that Landlord fails to elect to
terminate the Lease initially, Landlord at any time during the Term of this
Lease, may elect to terminate this Lease by virtue of such previous default of
Tenant.

      (b) Terminate this Lease by giving Tenant written notice of termination or
other lawful means. On the giving of the notice, all of Tenant's rights in the
Premises and the Building and Project shall terminate. Upon the giving of the
notice of termination, Tenant shall surrender and vacate the Premises in the
condition required by Paragraph 9.2(c), and Landlord may re-enter and take
possession of the Premises and all the remaining improvement or property and
eject Tenant or any of Tenant's ???????????, assignees or the person or persons
claiming any right under or through Tenant or eject some and not others or eject
none. This Lease may also be terminated by a judgment specifically providing for
termination. Any termination under this paragraph shall not release Tenant from
the payment of any sum then due Landlord or from any claim for damages or rent
previously accrued or then accruing against Tenant. In no event shall any one or
more of the following actions by Landlord constitute a termination of this
Lease:

          (i) maintenance and preservation of the Premises;

          (ii) efforts to relet the Premises;

          (iii) appointment of a receiver in order to protect Landlord's
interest hereunder;

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

          (v) any other action by Landlord or Landlord's agents intended to
mitigate the adverse effects from any breach of this Lease by Tenant.

      (c) In the event this Lease terminated pursuant to Subparagraph 18.2(b)
above, or otherwise, Landlord shall be entitled to damages in the following
sums:

          (i) the worth at the time of award of the unpaid rent which has been
earned at the time of termination; plus

          (ii) the worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus

         (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided, and

         (iv) any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under the Lease, or which in ordinary course of things would be likely to result
therefrom including, without limitation, the following: (A) expenses for
cleaning, repairing or restoring the Premises, (B) expenses for altering,
remodeling or otherwise improving the Premises for the purpose of reletting,
including installation of leasehold improvements (whether such installation be
funded by a reduction of rent, direct payment or allowance to the succeeding
lessee, or otherwise), (C) real estate broker's fees, advertising costs and
other expenses of reletting the Premises, (D) costs of carrying the Premises
such as taxes and insurance premiums thereon, utilities and security
precautions, (E) expenses in retaking possession of the Premises, (F) attorneys'
fees and court costs and (G) any unamortized real estate brokerage commission
paid in connection with this Lease.

         (v) The "worth at the time of award" of the amounts referred to in
Subparagraphs (i) and (ii) of this paragraph 18.2(c) is computed by allowing
interest at the rate of ten percent (10%) per annum. The "worth at the time of
award" of the amounts referred to in Subparagraph (iii) of this Paragraph
18.2(c) is computed by discounting such amount at the discount rate of the
Federal Reserve Board of San Francisco at the time of award plus one percent
(21%). The term "rent" as used in this Paragraph 18 shall include all sums
required to be paid by Tenant to Landlord pursuant to the terms of this Lease,
including, without limitation, Base Rent Additional Rent and Operating Expenses.

      18.3 DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord hereunder within a reasonable
time, but in no event later than thirty (30) days after written notice by Tenant
to Landlord and to the holder of any first mortgage or deed of trust covering
the Premises whose name and address shall have theretofore been furnished to
Tenant in writing, specifying wherein Landlord has failed to perform such
obligation, provided, however, that if the nature of Landlord's obligation is
such that more than thirty (30) days are required for performance, then Landlord
shall not be in default if Landlord commences performance within such thirty-day
period and thereafter diligently prosecutes the same to completion. In no event
shall Tenant have the right to terminate this Lease as a result of Landlord's
default unless and until: (i) if Landlord agrees that Landlord has default under
an obligation hereunder. Landlord fails to commence performance within such
thirty (30) day period and diligently prosecutes the same to completion; or (ii)
if Landlord disagrees in writing to Tenant within such thirty (30) day period
with the factual or legal basis of Tenant's claim of default, Landlord fails to
commence performance within thirty (30) days after a final settlement or order
of a Court of competent jurisdiction finding that Landlord is, in fact, in
default, and fails to diligently prosecute the same to completion.

 19.  HAZARDOUS MATERIALS.

      19.1 DEFINITIONS. As used herein, the term "Hazardous Material" shall mean
any substance: (i) the presence of which requires investigation or remediation
under any federal, state or local statute, regulation, ordinance, order, action,
policy or rules, (ii) "hazardous substance", pollutant or contaminant under any
federal, state or local statute, regulation, rule or ordinance or amendments
thereto including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and/or the
Resource Conservation and Recover Act (42 U.S.C. Section 6901 et seq.); (iii)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by
any governmental authority, agency, Department, commission, board, agency or
instrumentality of the United States, the State of California or any political
subdivision thereof, (iv) the presence of which (in the Premises causes or
threatens to cause a nuisance upon the Premises or to the adjacent properties or
poses or threatens to pose a hazard to the health or safety of Persons on or
about the Premises, (v) the presence of which on adjacent properties could
constitute a trespass by Landlord or Tenant, (vi) any substance which contains
<PAGE>   14
gasoline, diesel fuel or other petroleum hydrocarbons, (vii) any substance which
contains polychlorinated biphenyl's (PCBs), asbestos or urea formaldehyde foam
insulation, and/or (viii) radon gas.

      19.2 PERMITTED USE. Subject to the compliance by Tenant with the
provisions of Paragraphs 19.3, 19.4, 19.5, 19.6, 19.7, 19.8 and 19.9 below.
Tenant shall be permitted to use and store on the Premises those Hazardous
Materials listed in Paragraph 19.11 attached hereto, in the quantities set forth
in Paragraph 19.11.

      19.3 HAZARDOUS MATERIALS MANAGEMENT PLAN.

      (a) Prior to Tenant using, handling, transporting, or storing any
Hazardous Material at or about the Premises (including, without limitation,
those listed in Paragraph 19.11), Tenant shall submit to Landlord a Hazardous
Materials Management Plan ("HMMP") for Landlord's review and approval which
approval shall be in Landlord's sole reasonable discretion. The HMMP shall
describe: (aa) the quantities of each material to be used, (bb) the purpose for
which each material is to be used, (cc) the method of storage of each material,
(dd) the method of transporting each material to and from the Premises and
within the Premises, (ee) the methods Tenant will employ to monitor the use of
the material and to detect any leaks or potential hazards, (ff) any other
information any department of any governmental entity (city, state or federal)
requires prior to the issuance of any required permit for the Premises or during
Tenant's occupancy of the Premises, and (gg) any other information which
Landlord may request. Landlord may, but shall have no obligation to review and
approve the foregoing information and HMMP, and such review and approval or
failure to review and approve shall not act as an estoppel or otherwise waive
Landlord's rights under this Lease or relieve Tenant of its obligations under
this Lease, if Landlord determines in its sole discretion by inspection of the
Premises or review of the HMMP or otherwise that the methods in use or described
by Tenant are not adequate in Landlord's reasonable opinion to prevent or
eliminate the existence of environmental hazards, then Tenant shall not use,
handle, transport, or store such Hazardous Materials on or about the Premises
unless and until such methods are approved by Landlord and added to an approved
FNMP, Once approved by Landlord, Tenant shall strictly comply with the HMMP and
shall not change its use, operations or procedures with respect to Hazardous
Materials in any material respect without submitting an amended HMMP for
Landlord's review and approval as provided above.

      (b) Tenant shall pay to Landlord when Tenant submits an HMMP (or amended
HMMP) the amount reasonably determined by Landlord to Cover all Landlord's costs
and expenses reasonably incurred or to be incurred in connection with Landlord's
review of the HMMP which costs and expenses shall include, among other things,
all reasonable out-of-pocket fees of attorneys, architects, of other consultants
incurred by Landlord in connection with Landlord's review of the HMMP. Landlord
shall have no obligation to consider a request for consent to a proposed HMMP
unless and until Tenant has paid all such ??? and expenses to Landlord,
irrespective of whether Landlord consents to such proposed HMMP. Tenant shall
pay to Landlord on demand the excess, if any, Of such costs and expenses
actually incurred by Landlord over the amount of such costs and expenses
actually paid by Tenant, and Landlord shall promptly refund to Tenant the
excess, if any, of such costs and expenses actually paid by Tenant over the
amount of such costs and expenses actually incurred by Landlord.

      19.4 USE RESTRICTION. Except as specifically allowed in Paragraph 192
above, Tenant shall not cause or permit any Hazardous Material to be used,
stored, generated, discharged, transported to or from, or disposed of in or
about the Premises, or any other land of improvements in the vicinity of the
Premises. Without limiting the generality of the foregoing, Tenant at its sole
cost, shall comply with all Laws relating to the storage, use, generation,
transport, discharge and disposal by Tenant or its Agents of any Hazardous
Material. If the presence of any Hazardous Materials results in contamination of
the Premises or any soil, air, ground or surface waters under, through, over,
on, in or about the Premises, or in any surrounding properties, Tenant at its
expense, shall promptly take all actions necessary to return the Premises and/or
the surrounding real property to the condition existing prior to the appearance
of such Hazardous Material. In the event there is a release, discharge or
disposal of or contamination of the Premises by a Hazardous Material, or in the
event any part of the Project or any surrounding properties are contaminated
with Hazardous Materials in each case which is of the type that has been stored,
handled, transported or otherwise used or permitted by Tenant or Its Agent; on
or about the Premises, Tenant shall have the burden of proving that such
release, discharge, disposal or contamination is not the result of the acts Of
Omissions of Tenant or its Agents.

      19.5 TENANT INDEMNITY. Tenant shall defend, protect, hold harmless and
indemnify Landlord and its Agents and Lenders with respect to all actions,
claims, losses (including, diminution in value of the Premises), fines,
penalties, fees (including, but not limited to, attorneys' and consultants'
fees) costs, damages, liabilities, remediation costs, investigation costs,
response costs and other expenses arising out of resulting from, or caused by
any Hazardous Material used, generated, discharged, transported to or from,
stored, or disposed of by Tenant or its Agents in, on, under, over, through or
about the Premises and/or the surrounding real property, or otherwise being
introduced to, on or about the Premises from a source other than nugration of
Hazardous Materials from a neighboring property during the period of time in
which Tenant is in possession of the Premises. Tenant shall not suffer any lien
to be recorded against the Premises as a consequence of the disposal of any
Hazardous Material on the Premises by Tenant or its Agents, including any so
called stam federal or local "super fund" lien related to the "clean up" of any
Hazardous Material in, over, on, under, through or about the Premises.

      19.6 COMPLIANCE. Tenant shall immediately notify Landlord of any inquiry,
test, investigation enforcement proceeding by or against Tenant or the Premises
concerning any Hazardous Material. Any remediation plan prepared by or on behalf
of Tenant must be submitted to Landlord prior to conducting any work pursuant to
such plan and prior to submittal to any applicable government authority and
shall be subject to Landlord's consent. Tenant acknowledges that Landlord, as
the owner of the Prepacy, at its election, shall have the sole right to
negotiate, defend, approve and appeal any action taken or order issued with
regard to my Hazardous Material by any applicable governmental authority.

      19.7 ASSIGNMENT AND SUBLETTING. It shall not be unreasonable for Landlord
to withhold its consent to any proposed assignment or subletting If (i) the
proposed assignee's or subtenant's anticipated use of the Premises involves the
storage, generation, discharge, transport, use or disposal of any Hazardous
Material, (ii) if the proposed assignee or subtenant has been required by any
prior landlord, leader or governmental authority to "clean up" or remediate any
Hazardous Material; (iii) if the proposed assignee or subtenant is subject to
investigation or enforcement order or proceeding by any governmental authority
in Connection with the use, generation, discharge, transport, disposal of
storage of any Hazardous Material.

      19.8 SURRENDER. Upon the expiration or earlier termination of the Lease,
Tenant, at its sole cost, shall remove all Hazardous Materials from the Premises
that Tenant or its Agents introduced to the Premises. If Tenant fails to so
surrender the Premises, Tenant shall indemnify, protect defend and hold Landlord
harmless from and against all damages resulting from Tenant's Wure to surrender
the Premises as required by this Paragraph, including without limitation, any
actions, claims, losses, liabilities, fees, (including but limited to attorneys'
and consultants' fees), fines costs penalties, or damages in connection with the
condition of the Premises including, without

<PAGE>   15
limitation, damages occasioned by the inability to relet the Premises or a
reduction in the fair market and/or rental value of the Premises by ream of the
existence of any Hazardous Material in, on, over, under, through or around the
Premises; from a source other than migration of Hazardous Materials from a
neighboring property.

      19.9 RIGHT TO APPOINT CONSULTANT. Landlord shall have the right to appoint
a consultant to conduct an investigation to determine whether any Hazardous
Material is being used, generated, discharged, transported to or from, stored
or disposed of in, on, over, through, or about the Premises, in an appropriate
and lawful manner and in compliance with the requirements of this Law Tenant
shall reimburse Landlord for the cost of such investigation if such consultant
reasonably determines that Tenant is in breach of this Section 19. Tenant, at
its expense, shall comply with all reasonable recommendations of the consultant
required to conform Tenant's use, storage at disposal of Hazardous Materials to
the requirements of applicable Law or to fulfill the obligations of Tenant
hereunder.

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

      19.11 MATERIALS. Tenant shall provide the list of its Hazardous Materials
to be legally used during its tenancy in the following section provided below in
this Paragraph 19.11, or attach a separate list and so indicate below or
indicate "NONE" and initial below to indicate if no Hazardous Materials will be
used:
<PAGE>   16
<TABLE>
<CAPTION>
Material:                                                 Quantities:   Storage:
--------                                                  -----------   --------
<S>                                                       <C>           <C>
Propanol                                                  6 Gal         Flammable Storage Cabinet
  Isopropyl Alcohol (67-63-0)
67 PST (R) Pipe Sealant With Teflon (R)                   2 pints       Chemical Cabinet/Shelf
  Cumene Hydroperoxide (80-15-9)
  Saccharin (81-07-2)
235 Water Soluble Soldering Flux                          30 Gal.       Flammable Storage Cabinet
  2-Propanol (67-63-0)
__blebond 8175                                            8 oz.         Chemical Cabinet/Shelf
  Silver (7440-22-4)
ABOVE Floor Finish                                        10 Gal        Chemical Cabinet/Shelf
  Dibutyl phthalate (84-74-2)
Akaline Batteries - No Mercury Formula                    5 lbs.        Shelf/Storage Cabinet
  Zinc (7440-66-6)
  Potassium Hydroxide (1310-58-3)
Anti-Seize Thread Compound 767                            2 lbs.        Shelf/Storage Cabinet
  Copper (7440-50-8)
  Aluminum (7429-90-5)
Assure JM) 425 Instant Adhesive                           8 oz.         Chemical Cabinet/Shelf
  Hydroquinone (123-31-9)
Ball Paint Marker                                         10 oz.        Shelf/Storage Cabinet
  Isopropyl Alcohol (67-63-0)
Biral AS Anti-Seize                                       500 mL        Flammable Storage Cabinet
  Copper, Metal Powder (7440-50-8)
  Potassium Hydroxide (1310-58-3)
Buffer, pH 7.0 Standard Solution                          1 gal         Shelf/Storage Cabinet
  Sodium Phosphate, Dibasic (7558-79-4)
Comet Cleaner With Bleach                                 4 lbs         Shelf/Storage Cabinet
  Sodium Hypochlorite (7681-52-9)
  Sodium Hydroxide (1310-73-2)
D-3001 Acrylic Cove Base Adhesive                         20 oz.        Shelf/Storage Cabinet
  Ethylene Glycol (107-21-1)
Drain Master                                              2 gal         Shelf/Storage Cabinet
  Potassium Hydroxide (1310-58-3)
  Sodium Hydroxide (1310-73-2)
High Temp RTV Silicone Gasket Maker                       13 oz.        Shelf/Storage Cabinet
  Acetic Acid (64-19-7)
_H-1 6-101 -1 Solder Paste                                20 lbs.       Refrigerator/Chemical Cabinet
  Lead (7439-92-1)
Low Strength Threadlocker 222                             8 oz.         Shelf/Storage Cabinet
  Saccharin (81-07-2)
  Cumene Hydroperoxide (80-15-9)
NC-771                                                    1 lb.         Flammable Storage Cabinet
  2-Propanol (67-63-0)
Nitrogen, Refrigerated Liquid                             3,000 gal     Storage Tank (Outside)
  Nitrogen (7727-37-9)
Nokorode(R) Cold Weather Past Flux                        1 pint        Chemical Cabinet
  Zinc Chloride (7646-85-7)
  Ammonium Chloride (12125-02-9)
Output (TM) 7387 Activator                                8 oz.         Flammable Storage Cabinet
</TABLE>
<PAGE>   17
<TABLE>
<S>                                                        <C>            <C>
   Isopropyl Alcohol (67-63-0)
Printed Wiring Board (PWB)                                 600 lbs        Shelf
   Lead (7439-92-1)
   Copper (7440-50-8)
ProClean Flux Remover                                      1 gal.         Flammable Storage Cabinet
   Isopropyl Alcohol (67-63-0)
   Methanol (67-56-1)
   Ethyl Acetate (141-78-6)
   Methyl Isobutyl Ketone (108-10-1)
Protective Coating (Car)                                   1 qrt.         Chemical Cabinet
   Isopropyl Alcohol (67-63-0)
Protective Coating (Furniture)                             64 oz.         Chemical Cabinet
   Isopropyl Alcohol (67-63-0)
Quick Metal (R) Press Fit Repair                           8 oz.          Chemical Cabinet
   Cumene Hydroperoxicle (80-15-9)
   Methyl Alcohol (67-56-1)
   Maleic Acid (110-16-7)
   Saccharin (81-07-2)
R244L Solder Paste                                         60 lbs         Refrigerator/Chemical Cabinet
   Lead (7439-92-1)
R292-3/D Solder Paste                                      60 lbs         Refrigerator/Chemical Cabinet
   Lead (7439-92-1)
R596L Solder Paste                                         60 lbs         Refrigerator/Chemical Cabinet
   Lead (7439-92-1)
Shiney Bright                                              1 gal          Shelf
    Sodium Hydroxide(1310-73-2)
Sight Savers brand Anti-Fog Liquid Without Silicone        1 qt           Shelf
    Isopropyl Alcohol (67-63-0)
Solder Paste 63/37 RMA390                                  60 lbs         Refrigerator/Chemical Cabinet
    Lead (7439-92-1)
Structural Adhesive 352 UV Curing                          1 pint         Chemical Cabinet
    Acrylic Acid (79-10-7)
    Saccharin (81-07-2)
Super Bonder (R) Thermal Cycling Resistant Adh             2 oz.          Chemical Cabinet
    Phthalic Anhydride (85-44-9)
    Hydroquinone (123-31-9)
Tin/Lead Alloys                                            2,500 lbs.     Shelf
    Lead (7439-92-1)
W/S 629 Solder Paste 63Sn/37Pb                             60 lbs.        Refrigerator/Chemical Cabinet
    Lead(7439-92-1)
</TABLE>
<PAGE>   18
      19.12 PROVISIONS SURVIVE TERMINATION. The provisions of this Paragraph 19
shall survive the expiration or termination of this Lease.

      19.13 CONTROLLING PROVISIONS. The provisions of this Paragraph 19 are
intended to govern the rights and liabilities of the Landlord and Tenant
hereunder respecting Hazardous Materials to the exclusion of any other
provisions in this Lease that might otherwise be deemed applicable. The
provisions of this Paragraph 19 shall be controlling with respect to any
provisions in this Lease that are inconsistent with this Paragraph 19.

20.   MISCELLANEOUS

      20.1 ESTOPPEL CERTIFICATE.

      (a) Tenant shall at any time, upon not less than ten (10) days prior
written notice from Landlord, execute, acknowledge and deliver to Landlord a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
(iii) evidence the status of this Lease as may be required by a lender making a
loan to Landlord to be secured by a deed of trust covering the Premises,
Building or Project or a purchaser of the same from Landlord, (v) certify that
all improvements to be constructed on or in the Premises by Landlord have been
substantially completed except for punch list items which do not prevent Tenant
from using the Premises for its intended use, and (v) certify such other
matters relating to the Lease and/or the Premises as may be requested by a
lender making a loan to Landlord or a purchaser of the Premises, Building or
Project from Landlord. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premises.

      (b) Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant (i) that this Lease is in full force and effect without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, and (iii) that not more than one
month's rent has been paid in advance; and, (iv) the improvements to be
constructed on the Premises by Landlord have been substantially completed except
for punch list items which do not prevent Tenant from using the Premises for its
intended use.

      (c) If Landlord desires to finance, refinance or sell said Premises, or
any part hereof, Tenant hereby agrees to deliver to Landlord, its agent or any
prospective purchaser or lender designated by Landlord such Financial statements
of Tenant as may be reasonably required by such lender or prospective purchaser.
Such statements shall include the past three years financial statements of
Tenant. All such financial statements shall be received by Landlord in
confidence and shall be used only for the purposes herein set forth.

      20.2 TRANSFER OF LANDLORD'S INTEREST. In the event of a sale or conveyance
by Landlord of Landlord's interest in the Premises other than a transfer for
security purposes only, Landlord shall be relieved from and after the date
specified in such notice of transfer of all obligations and liabilities accruing
thereafter on the part of the Landlord, provided that any funds in the hands of
Landlord at the time of transfer in which Tenant has an interest, shall be
delivered to the successor of Landlord. This Lease shall not be affected by any
such sale and Tenant agrees to attorn to the purchaser or assignee.

      20.3 CAPTIONS; ATTACHMENTS; DEFINED TERMS.

      (a) The captions of the paragraphs of this Lease are for convenience only
and shall not be deemed to be relevant in resolving any question of
interpretation or construction of any section of this Lease.

      (b) Exhibits attached hereto, and addendums and schedules initialed by
the parties, are deemed by attachment to constitute part of this Lease and are
incorporated herein.

      (c) The words "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular. Words used in neuter gender include the
masculine and feminine and words in the masculine or feminine gender include the
neuter. If there be more than one Tenant, the obligations hereunder imposed upon
Tenant shall be Joint and several. If the Tenants are husband and wife, the
obligations shall extend individually to their sole and separate property as
well as to their community property. The term "Landlord" shall mean only the
owner or owners at the time in question of the fee title or a tenant's interest
in a ground lease of the Premises. The obligations contained in this Lease to be
performed by Landlord shall be binding on Landlord's successors and assigns only
during their respective periods of ownership.

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

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

      (d) Lender. As used in this Lease, the term "Lender" shall mean any
beneficiary, mortgagee, secured party or other holder of any deed of trust,
mortgage or other written security device or agreement affecting Landlord's
interest in the Premises.

      20.4 ENTIRE AGREEMENT. This instrument along with any exhibits and
attachments hereto constitutes the entire agreement between Landlord and Tenant
relative to the Premises and this Agreement and the exhibits and attachments may
be altered, amended or revoked only by an instrument in writing signed by both
Landlord and Tenant. Landlord and Tenant agree hereby that all prior or
contemporaneous oral agreements between and among themselves and their agents or
representatives relative to the leasing of the Premises are merged in or revoked
by this Agreement.

      20.5 SEVERABILITY. If any term or provision of this Lease shall, to any
extent, be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Lease shall not be affected thereby, and
each term and provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.

      20.6 COSTS OF SUIT.
<PAGE>   19
      (a) If Tenant or Landlord shall bring any action for any relief against
the other, declaratory or otherwise, arising out of this Lease, including any
suit by Landlord for the recovery of rent or possession of the Premises, the
losing party shall pay the successful party a reasonable sum for attorneys' fees
which shall be deemed to have accrued on the commencement of such action and
shall be paid whether or not such action is prosecuted to judgment.

         The attorney's fee award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse attorneys' fees
reasonably incurred in good faith in any such action and in the appeal or
enforcement of any judgment rendered in any such action.

      20.7 LANDLORD AS PARTY DEFENDANT. Should Landlord, without fault on
Landlord's part, be made a party to any litigation instituted by Tenant or by
any third party against Tenant, or by or against any person holding under or
using the Premises by license of Tenant, or for the foreclosure of any lien for
labor or material furnished to or for Tenant or any such other person or
otherwise arising out of or resulting from any act or transaction of Tenant or
of any such other person, Tenant covenants to save and hold Landlord harmless
from any judgment rendered against Landlord or the Premises or any part thereof,
and all costs and expenses, including reasonable attorneys fees, incurred by
Landlord in or in connection with such litigation. Such indemnity obligation
shall survive termination of this Lease.

      20.8 WAIVER OF JURY TRIAL. Landlord and Tenant hereby waive their
respective right to trial by jury of any cause of action, Claim, counterclaim,
crosscomplaint in any action, proceeding and/or hearing brought by either
Landlord against Tenant or Tenant against Landlord on any matter whatsoever
arising out of, or in any way connected with, this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Premises, or any claim or
injury or damage, or the enforcement of any remedy under any law, statute or
regulation, emergency or otherwise, now or hereafter in effect.

      20.9 TIME. Time is of the essence of this Lease and each and every
provision hereof, except as to the conditions relating to the delivery of
possession of the Premises to Tenant. All rights and remedies of Landlord shall
be cumulative and non-exclusive of any other remedy at law or in equity.

      20.10 BINDING EFFECT: CHOICE OF LAW. Each provision of this Lease to be
performed by Tenant shall be construed as both a covenant and condition. Subject
it) any provisions hereof restricting assignment or subletting any Tenant and
subject to Section 18.2, all of the provisions hereof shall bind and inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of California.

      20.11 WAIVER. No covenant term or condition or the breach thereof shall be
deemed waived, except by written consent of the party against whom the waiver is
claimed, and any waiver or the breach of any covenant, term or condition shall
not be deemed to be a waiver of any preceding or succeeding breach of the same
of any other Covenant, term or condition. Acceptance by Landlord of the
performance by Tenant after the time the same shall have become due shall not
constitute a waiver by Landlord of the breach or default or any covenant, term
or condition unless otherwise expressly agreed to by Landlord in writing.

      Landlord's failure to enforce against Tenant or any other tenant of the
Building or the Project any of the rules or regulations made by Landlord shall
not be deemed a waiver of such rules or regulations. No act or thing done by
Landlord, its agents or employees during this Lease Term shall be deemed an
acceptance of a surrender of the Premises and no agreement to accept a surrender
of the Premises shall be valid unless it is in writing and is signed by
Landlord. The delivery of keys to any of Landlord's agents or employees shall
not serve to terminate this Lease or surrender the Premises. No payment by
Tenant, or receipt and acceptance by Landlord, of a lesser amount than the Base
Rent, Additional Rent or other amount due shall be deemed to be other than on
account of the earliest stipulated rent or additional rent, nor shall any
endorsement or statement on any check or any letter accompanying a payment as
rent be deemed an accord and satisfaction. The receipt and acceptance by
Landlord of any delinquent rent shall not constitute a waiver of any other
default; it shall only be a waiver of timely payment for the particular Base
Rent, Additional Rent or other payment involved. Landlord may accept such check
or payment without prejudice to Landlord's right to recover the balance of such
Base Rent, Additional Rent or other amount due, or pursue any other remedy
available to Landlord.

      20.12 SURRENDER OF PREMISES. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of the Landlord, terminate all or any existing subleases or
subtenancies, or may, at the option of Landlord, operate as an assignment to it
of any or all such subleases or subtenancies.

      20.13 HOLDING OVER.

      (a) Surrender of Possession. Tenant shall surrender possession of the
Premises immediately upon the expiration or earlier termination of the Lease.
If Tenant shall continue to occupy or possess the Premises after such expiration
or termination without the consent of Landlord, then Tenant shall be a tenant at
sufferance. If Landlord has consented to such holdover in writing, Tenant shall
be a tenant from month-to-month. All the terms, provisions and conditions or the
Lease shall apply to the month-to-month tenancy except those terms, provisions
and conditions pertaining to the Lease Term, and except that the Base Rent shall
be immediately adjusted upward upon the expiration or earlier termination of
the Lease to equal one hundred fifty percent (150%) of the Base Rent for the
Premises in effect under this Lease on the day immediately prior to the date or
the expiration or earlier termination of the Lease. The month-to-month tenancy
may be terminated by Landlord or Tenant upon thirty (30) days prior notice to
the non-terminating party. In the event that Tenant fails to surrender the
Premises upon such expiration or earlier termination, then Tenant shall
indemnify and hold Landlord harmless against all losses, damages or liability
resulting from or arising out of Tenant's failure to surrender the Premises.

      20.14 PAYMENT OF MONEY AFTER TERMINATION. No payment of money by Tenant to
Landlord after the termination of the Lease by Landlord or after the giving
of any notice of termination to Tenant by Landlord, which Landlord is entitled
to give Tenant under the Lease, shall reinstate, continue or extend the Term of
the Lease or shall affect any such notice given to Tenant prior to the payment
of such money. It is agreed that after the service of such notice or the
commencement of any suit by Landlord to obtain possession of the Premises,
Landlord may receive and collect when due any and all payments owed by Tenant
under the Lease and otherwise exercise its rights and remedies. The making of
any such payments by Tenant shall not waive such notice or in any manner affect
any pending suit or judgment obtained.

      20.15 SIGNS AND AUCTIONS.
<PAGE>   20
      (a) Tenant shall not place any sign upon the Premises or conduct any
auction thereon without Landlord's prior written consent. All such signs placed
on the Premises by Tenant and consented to by Landlord shall comply with all
recorded documents affecting the Premises and applicable statutes, ordinances,
rules and conditions of governmental agencies having jurisdiction thereof. At
Landlord's option, Tenant shall at the expiration or earlier termination of the
Lease, remove any sign which it has placed on the Premises and shall at its sole
cost, repair any damage caused by the installation or removal of such sign.

      (b) Obtaining permits for Tenant signs as may he required by any
governmental agency shall be the responsibility of Tenant.

      20.16 REASONABLE CONSENT. Except as limited elsewhere in this Lease,
wherever in this Lease Landlord or Tenant is required to give consent or
approval to any action on the part of the other, such consent or approval shall
not be unreasonably withheld. In the event of failure to give any such consent,
the other party shall be entitled to specific performance at law and shall have
such other remedies to it under this Lease, but in no event shall Landlord or
Tenant be responsible in monetary damages for failure to give consent unless
said failure is withheld maliciously or in bad faith.

      20.17 INTEREST ON PAST DUE OBLIGATIONS. Any installment of Base Rent or
Additional Rent due from Tenant, or any other sum due tinder this Lease from
Tenant, which is not received by Landlord when due, shall bear interest from
said due date until paid, at an annual rate equal to the lower of (the
"Permitted Rate"): (a) twelve percent (12%), or (b) five percent (5%) plus the
rate established by the Federal Reserve Bank of San Francisco, as of the
twenty-fifth (25th) day of the month immediately preceding the due date, on
advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act,
as now in effect or hereafter from time to time amended, or (c) the highest rate
allowable at law. Payment of such interest shall not excuse or cure any default
by Tenant. In addition, Tenant shall pay all costs and attorneys' fees incurred
by Landlord in collection of such amounts.

      20.18 RECORDING. Tenant shall not record this Lease without Landlord's
prior written consent (which may be given or withheld in Landlord's sole and
absolute discretion), and such recordation shall, at the option of Landlord,
constitute a non-curable default of Tenant hereunder.

      20.19 NOTICES. All notices or demands of any kind required or desired to
be given by Landlord or Tenant hereunder shall be in writing and shall be deemed
delivered on the date received if personally delivered to Landlord or Tenant, as
the case may be, or if mailed, then forty-eight (48) hours after depositing the
notice or demand in the United States mail, certified or registered, postage
prepaid, addressed to the Landlord or Tenant respectively at the addresses set
forth after their signatures at the end of this Lease.

      20.20 CORPORATE AUTHORITY. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation individually and personally
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said corporation in accordance with a duly adopted
resolution of the Board of Directors of said corporation or in accordance with
the Bylaws of said corporation, that this Lease is binding upon said corporation
in accordance with its terms, and that all information provided to Landlord by
Tenant is true, correct and complete in all material respects. If Tenant is a
corporation Tenant shall, within thirty (30) days after execution of this Lease,
deliver to Landlord a certified copy of a resolution of the Board of Directors
of said corporation authorizing or ratifying the execution of this Lease.

      20.21 CONSTRUCTION OR LEASE PROVISIONS. Although printed provisions of
this Lease were prepared by Landlord, Tenant acknowledges that it has reviewed
this lease and has obtained such legal counsel as Tenant has deemed necessary or
appropriate to fully explain Tenant's rights, obligations and tax consequences
hereunder consequently, the doctrine or rule that ambiguities in an agreement or
document are to be construed against the drafting party, shall not be utilized
in interpreting this Lease and this Lease shall instead be construed or
interpreted in accordance with the general tenor of the language to reach a fair
and equitable result.

      20.22 RULES AND REGULATIONS. Landlord shall, in a manner it deems proper
in its opinion, establish and enforce reasonable rules and regulations
concerning the Common Areas and the parking areas, close any of the Common Areas
to whatever extent required, in the opinion of Landlord, to prevent a dedication
of any of the Common Areas or the accrual of any rights of any person or of the
public to the Common Areas, close temporarily any of the Common Areas for
maintenance purposes, and make changes to the Common Areas, including, without
limitation, changes in the location of entrances and exists. Landlord reserves
the right to make any reasonable rules affecting the Project throughout the term
hereof. All delivery and dispatch of merchandise, supplies, fixtures, equipment
and furniture shall be by means and during hours established by Landlord.

      20.23 CONFIDENTIALITY. Tenant hereby agrees not to disclose the terms of
this lease (specifically including, without limitation, the rent or rental rate
to be paid by Tenant hereunder and/or any tenant improvement allowance to be
furnished by Landlord to Tenant) to any existing or prospective tenant of the
Building or other third party; provided, however, Tenant may disclose the terms
of this Lease to its accountant, bookkeeper or tax advisor or any employee of
Tenant who has a need to know such information for a legitimate business
purpose, or if Tenant is otherwise required to disclose such confidential
information as permitted hereunder of the requirements of this Paragraph and
shall require each such person to comply with such confidentiality requirements.
In the event Tenant or any person to whom it discloses such confidential
information fails in any respect to comply with its obligations under this
Paragraph, Tenant shall be liable to Landlord for breach of this Paragraph 20.24
and Landlord may bring an action against Tenant for damages as a result of such
breach. In addition, nothing stated herein shall preclude or prohibit Landlord
from seeking an injunction to prevent disclosure of such confidential
information or an order compelling specific protection of such confidential
information. The provisions of this Paragraph 20.24 shall survive the
termination of this Lease.

      20.24 BROKERS. Landlord and Tenant each represent that they have not dealt
with any broker in connection with this transaction with the exception of
Cushman & Wakefield, who has acted as the exclusive agent for Tenant, and Grubb
& Ellis, who has acted as the exclusive agent for Landlord. All commissions
payable to either of these brokers shall be paid by Landlord. Each party agrees
to defend, protect and indemnify and hold the other free and harmless from and
against any and all claims, demands, causes of action, liabilities, expenses,
and judgments respecting payment of any sales commission, brokerage commission
or finder's fee, including attorneys' fees and costs, arising from a breach of
the foregoing representation.

      20.25 RIGHT OR FIRST OFFER. Tenant acknowledges that there is currently
approximately Four Thousand Four Hundred Seventy-three (4,473) square feet of
space in the Building which is owned by Landlord and is currently being leased
to another tenant (the "Expansion Space"). In the event the Expansion Space
becomes vacant at any time during the term of this Lease, Landlord shall notify
Tenant in writing of the vacancy, and Tenant shall have the right to lease such
additional space upon such terms and conditions
<PAGE>   21
as may be agreed by and between the parties hereto. In the event Tenant fails to
notify Landlord in writing of its desire to lease the Expansion Space within
thirty (30) days of Landlord notifying Tenant that the space is or is about to
become vacant, or in the event Landlord and Tenant fail to agree upon terms and
conditions under which the Expansion Space shall be leased within thirty (30)
days of the date Tenant notifies Landlord that it desires to lease the Expansion
Space, then Landlord shall be free to market and lease the Expansion Space to
any person or entity without restriction. In the event the Expansion Space
subsequently becomes vacant again, then Tenant shall again have the right of
first offer as enumerated herein.

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

IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO LEGAL
COUNSEL FOR APPROVAL NO REPRESENTATION OR RECOMMENDATION IS MADE BY LANDLORD,
ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR THE
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO. THE PARTIES
SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND
TAX CONSEQUENCES OF THIS LEASE.

In Witness Whereof, Landlord and Tenant have executed this Lease the date and
year first above written.

LANDLORD:                            TENANT:
SOUTH SAN JOSE, LLC.                 MCMS, INC.

By:      /s/  David S. Fece          By:      /s/  Angelo Ninivaggi
Printed: David S. Fece               Printed: Angelo Ninivaggi
Its:     Member                      its:     Vice President, General Counsel
Dated:   2-9-2000                    Dated:   2-7-2000

                                     By:      /s/ Chris Anton
                                     Printed: Chris Anton
                                     Its:     V.P. Finance & CFO
                                     Dated:   2-7-2000

                                     Note: If Tenant is a corporation, the
                                     signatures of two corporate officers is
                                     required, one signature must be one of the
                                     following: chairman of the board, president
                                     or any vice president and the second
                                     signature must be one of the following:
                                     secretary, assistant secretary, chief
                                     financial officer or any assistant
                                     treasurer.
<PAGE>   22
                                   EXHIBIT 'A'
                                    PREMISES

               Sketch of building located at Great Oaks Boulevard

                              Intentionally omitted
<PAGE>   23
                                   EXHIBIT "B"
                                   THE PROJECT

                           Sketch of land and vicinity

                              Intentionally omitted
<PAGE>   24
                                   EXHIBIT "C"
                               WORK OF IMPROVEMENT

Landlord shall provide the general building internal improvements including
mechanical systems ("Landlord Improvements"). Personal property and personal
improvements for purposes of Tenant's business operations shall not however,
constitute Landlord Improvements. Landlord shall pay up to One Hundred Fifty Six
Thousand Eighty Dollars ($156,080) for the Landlord Improvements. Any cost in
excess of this amount shall be paid by Tenant immediately upon receipt of an
invoice therefor from Landlord. Any additional improvements desired by Tenant or
required for Tenant's business shall be installed and paid for by Tenant in
accordance with the provisions of Section 9.3 of the Lease. Improvements
hereunder shall be in accordance with the plans and specifications to be
prepared by Landlord and/or Landlord's architect or contractor, which shall be
mutually agreed upon by Landlord and Tenant. Landlord Improvements shall be
completed by a contractor selected by Landlord to perform construction, with
such work being subject to reasonable fees for profit and overhead. Landlord
shall not charge a construction supervision fee. Tenant shall have the right to
select its own contractor for any specialized tenant improvement, which
contractor shall be subject to Landlord's approval, which shall not be
unreasonably withheld. Any such specialized tenant improvements shall be at
Tenant's sole cost and expense, and the installation thereof shall not delay the
Commencement Date.<PAGE>   1
                                                                    Exhibit 10.3

                          LICENSE AND SUPPLY AGREEMENT

         This License and Supply Agreement (the "Agreement"), effective as of
April 5, 1999 (the "Effective Date"), is made by and between Molecular Probes,
Inc., an Oregon corporation, ("MPI") and Cellomics(TM), Inc., a Delaware
corporation ("CI").

                                   BACKGROUND

         A.       CI has developed a cell based screening system for the
                  analysis of cellular biochemical and molecular parameters
                  through combinatorial cell biology; and

         B.       MPI has expertise in the development and manufacture of
                  certain proprietary and non-proprietary fluorescence based
                  reagents; and

         C.       CI desires to obtain from MPI and MPI desires to grant CI
                  certain licenses to use MPI's proprietary fluorescence based
                  reagents; and

         D.       The parties desire that CI purchase and MPI supply certain
                  proprietary and non-proprietary products on the terms and
                  conditions set forth below.

NOW, THEREFORE, for and in consideration of the mutual covenants and promises
herein contained, the parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1 "CI Specifications" shall mean collectively (i) the quality control
standards, as amended from time to time, that materials supplied to CI must meet
for use under this Agreement; and (ii) the packaging protocols required by CI,
as amended from time to time, for materials supplied for use under this
Agreement.

         1.2 "Confidential Information" shall have the meaning as set forth in
Section 8.1 below.

         1.3 "Custom Product" shall mean a Licensed Material or a
Non-Proprietary Material that is not available from MPI as a Stock Item, but is
available by special request, e.g. to obtain a material that has the same
chemical formula as a Stock Item but has different quality control
specifications or special packaging requirements, or a material with a chemical
composition that is not offered as a Stock Item. For purposes of this Agreement,
consolidated packaging of bulk amounts of Stock Items are not Custom Products.

         1.4 "Field" shall mean   [*]  .

         1.5 "Finished Product(s)" shall mean any kit incorporating Licensed
Materials that is transferred by CI, in return for compensation, to a third
party for use in the Field, where the kit, or the Licensed Materials in such
kit, or the use thereof, is covered by a Valid Claim.

     "CONFIDENTIAL [*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED."

                                                                               1
<PAGE>   2

         1.6 "High Content Screening" or ("HCS") shall mean [*]  .

         1.7 "Licensed Material(s)" shall mean (i) any chemical or biochemical
composition(s), including Proprietary Material(s), that are covered by a Valid
Claim or, (ii) where the composition itself is not covered by a Valid Claim, its
use is covered by a Valid Claim and its manufacture is a trade secret of MPI.
Licensed Materials include, but are not limited to,  [*]  . Not all Licensed
Materials are Proprietary Materials  [*]  .

         1.8 "MPI Technology Package" shall mean the groupings of MPI Patents
that are designated in Exhibits A and B, and the corresponding MPI Technical
Information.

                  1.8.1 "MPI Patents" shall mean any issued patents or patent
applications that are identified as "Licensed Patents" on Exhibits A and B, as
amended from time to time, and all corresponding patents issuing from such
applications, and all reissues, renewals, re-examinations, and extensions
thereof, and any divisions or continuations (in whole or in part) thereof, and
any foreign equivalents thereof, as amended from time to time by the agreement
of the parties,  [*]  .

                  1.8.2 "MPI Technical Information" shall mean confidential
information, tangible or intangible, and materials, including but not limited
to: pharmaceutical, chemical, biological, genetic and biochemical compositions;
and technical and non-technical data and information, and/or the results of
tests, assays, methods and processes; and plans, specifications and/or other
documents containing said information and data; in each case that is possessed
by MPI as of the Effective Date or during the Term, to the extent such relates
to the manufacture of Licensed Materials, including Proprietary Materials, of a
given MPI Technology Package.

         1.9 "Net Sales" shall mean the gross amounts received by CI for the
Sale of Finished Products or Services, less the following amounts directly
chargeable to such Finished Products or

     "CONFIDENTIAL [*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED."

                                                                               2
<PAGE>   3

Services: (a) customary trade, quantity or cash discounts and rebates, actually
allowed and taken; (b) amounts repaid or credited to customers on account of
rejections; (c) freight and other transportation costs, including insurance
charges, and duties, tariffs, sales and excise taxes and other governmental
charges based directly on Sales, turnover or delivery of such Finished Products
or Services and actually paid or allowed by CI; and (d) amounts allowed or
credited due to returns or uncollectible amounts. Where Finished Materials or
Services are Sold to third parties for compensation other than cash, Net Sales
shall mean the cash equivalent of the fair market value of such other
compensation.

         1.10 "Non-Proprietary Materials" shall mean any non-proprietary
materials set forth on Exhibit C attached hereto produced by MPI and purchased
by CI pursuant to this Agreement.

         1.11 "Proprietary Materials" shall mean those materials set forth in
Exhibits A and B attached hereto, as amended from time to time, under the column
entitled "Proprietary Materials".

         1.12 "Sell", including any variations of the verb "to Sell" or the noun
"Sale" means to transfer to a third party in return for compensation, whether
such compensation is in the form of cash payment or in the form of a transfer of
a non-cash, tangible or intangible asset.

         1.13 "Services" shall mean any services conducted by CI in the Field
and covered by a Valid Claim.

         1.14 "Stock Item(s)" shall mean any material that is commercially
available from MPI and is identified with a specific product number on MPI's
website (www.probes.com) or in MPI's publications.

         1.15 "Ultra High-Throughput Screening" or ("UHTS") shall mean  [*]  .

         1.16 "Valid Claim" shall mean a written claim filed as part of any
unexpired patent application or issued patent within the MPI Patents that has
not been held unenforceable, unpatentable or invalid by a decision of a court or
governmental body of competent jurisdiction in a ruling that is unappealable or
unappealed within the time allowed for appeal, and that has not been rendered
unenforceable through disclaimer or otherwise, and that has not been lost
through an interference proceeding. In the event that the relevant MPI Patent is
a provisional patent application that does not include any claims, any specific
embodiment that is described in such provisional application shall be deemed to
be covered by a Valid Claim until such time as a corresponding utility
application is filed that contains one or more claims or such provisional
application expires without the filing of a corresponding utility application
that contains one or more claims, whichever is sooner.

     "CONFIDENTIAL [*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED."

                                                                               3

<PAGE>   4

                                    ARTICLE 2
                                    LICENSES

         2.1 Non-exclusive License to CI to Make or Have Made Licensed
Materials. Subject to the terms and conditions of this Agreement, MPI hereby
grants to CI a non-exclusive license under the MPI Technology Packages, to make
or have made Licensed Materials in accordance with the provisions of Article 5
below. CI is not authorized to Sell Licensed Materials except in Finished
Product(s) or in Services.

         2.2 Exclusive License to CI for Use with HCS. Subject to the terms and
conditions of this Agreement, and in accordance with the specific limitations of
this Section 2.2 (including the subsections below), MPI hereby grants to CI
certain worldwide, exclusive rights under each MPI Technology Package listed in
Exhibit A, for use in the Field, where such rights are exclusive solely for use
with HCS.

                  2.2.1 MPI hereby grants to CI an exclusive, world-wide,
royalty bearing license under the MPI Technology Packages to Sell or offer for
Sale Licensed Materials as part of Finished Products to third parties for use
with HCS.

                  2.2.2 MPI hereby grants to CI an exclusive, world-wide,
royalty bearing license under the MPI Technology Packages to import or export
Finished Products for use with HCS.

                  2.2.3 MPI hereby grants to CI an exclusive, world-wide,
royalty bearing license under the MPI Technology Packages to use Licensed
Materials with HCS in Services that are Sold or offered for Sale to third
parties.

                  2.2.4 In the event that CI is unable to (i) commercialize the
use of a given MPI Technology Package within three years after the Effective
Date, and (ii) generate royalties of $50,000 per year from such MPI Technology
Package within five years after the Effective Date, the exclusive license
granted to CI pursuant to this Section 2.2 shall become non-exclusive with
respect to that MPI Technology Package only, and the provisions of Sections
3.2.2 and 3.5 shall apply.

         2.3 Non-Exclusive License to CI for Use with UHTS. Subject to the terms
and conditions of this Agreement, and in accordance with the specific
limitations of this Section 2.3 (including the subsections below), MPI hereby
grants to CI certain worldwide, non-exclusive rights under each MPI Technology
Package listed in Exhibit A, for use in the Field, where such rights are solely
for use in UHTS.

                  2.3.1 MPI hereby grants to CI a non-exclusive, world-wide,
royalty bearing license under the MPI Technology Packages to Sell or offer for
Sale Licensed Materials as part of Finished Products to third parties for use
with UHTS.

                  2.3.2 MPI hereby grants to CI a non-exclusive, world-wide,
royalty bearing license under the MPI Technology Packages to import or export
Finished Products for use with UHTS.

     "CONFIDENTIAL [*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED."

                                                                               4
<PAGE>   5

                  2.3.3 MPI hereby grants to CI a non-exclusive, world-wide,
royalty bearing license under the MPI Technology Packages to use Licensed
Materials with UHTS in Services that are Sold or offered for Sale to third
parties.

         2.4 Right of First Refusal to Obtain an Exclusive License for Use in
HCS. MPI hereby grants to CI a right of first refusal ("Option"), commencing on
the Effective Date and expiring on the first anniversary thereafter ("Option
Period"), to obtain an exclusive, worldwide, royalty-bearing license under the
MPI Technology Packages listed in Exhibit B to make, have made, Sell, offer for
Sale, import, export or use Licensed Materials solely for use in HCS, in
accordance with the rights and limitations in Sections 2.1 and 2.2 above; and a
non-exclusive, worldwide, royalty-bearing license under the MPI Technology
Packages listed in Exhibit B to make, have made, Sell, offer for Sale, import,
export or use Licensed Materials solely for use in UHTS, in accordance with the
rights and limitations in Sections 2.1 and 2.3 above. Whether to exercise such
Option is solely at the discretion of CI, but CI must exercise its Option by
payment of the license fee, as described in Section 3.8, for the desired
additional MPI Technology Packages before the expiration of the Option Period.
Upon payment of the corresponding license fee(s) set forth in Section 3.8, the
same rights granted in Sections 2.1 through 2.3 covering the use of the MPI
Technology Packages in Exhibit A shall be extended automatically to cover the
use of the corresponding MPI Technology Package(s) in Exhibit B.

         2.5 Option to Add Subsequent MPI Technology Packages to Exhibit A and
Exhibit B. CI and MPI agree to negotiate in good faith the terms under which CI
shall, from time to time, add subsequent MPI Technology Packages to Exhibit A
and Exhibit B. In particular, CI shall have a right of first refusal for use and
Sale in the Field  [*] The parties anticipate the annual license fees for
each individual MPI Technology Package added hereunder shall approximate the
license fee (described in Section 3.8) for the addition of MPI Technology
Packages pursuant to Section 2.4 above.

         2.6 Termination of Rights Under Technology Packages. CI may terminate
its obligations to pay to MPI any Annual Minimum Royalty payments and royalties
under any particular MPI Technology Package by notifying MPI in writing of such
intent before the next Annual Minimum Royalty payment is due pursuant to Section
3.2, and concurrently terminating all activities described under Sections 2.1,
2.2 and 2.3 above, with respect to such MPI Technology Package.

         2.7 Exchange of Exclusive License for Non-Exclusive License. CI may
elect to change the exclusive license under a given MPI Technology Package
granted pursuant to Section 2.2, to a non-exclusive license under such MPI
Technology Package by notifying MPI in writing of such intent before the next
Annual Minimum Royalty payment is due pursuant to Section 3.2. In the event of
such an election by CI, the provisions of Section 3.2.2 and 3.5 shall apply.

         2.8 No Implied Licenses. Nothing herein shall be construed as granting
to either party, by implication, estoppel or otherwise, any license or other
right to any intellectual property of the other party other than those expressly
granted herein.

     "CONFIDENTIAL [*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED."

                                                                               5
<PAGE>   6

                                    ARTICLE 3
                           COMPENSATION AND ROYALTIES

         3.1 License Fee. In consideration of rights granted under Sections 2.1
through 2.3, and Section 2.5, CI shall pay to MPI a total license fee ("License
Fee") of $90,000 for the six MPI Technology Packages set forth on Exhibit A
hereto.

                  3.1.1 The License Fee shall be paid pursuant to the following
payment schedule:

                             [*]

                  3.1.2 From the License Fee paid to MPI pursuant to this
Section 3.1,  [*]  per MPI Technology Package shall be creditable against any
royalty payments for that MPI Technology Package that become due from the
Effective Date until April 1, 2000.

         3.2 Annual Minimum Royalty Payment. Beginning on April 1 of 2000 and
each subsequent anniversary thereof, CI shall pay to MPI an annual minimum
royalty ("Annual Minimum Royalty") for each MPI Technology Package in the
amounts described below, which Annual Minimum Royalty shall be creditable
against any royalties due on the corresponding MPI Technology Package during the
subsequent twelve month period following the previous Annual Minimum Royalty
payment:

                  3.2.1 For each MPI Technology Package under which CI wishes to
maintain exclusive rights pursuant to Section 2.2, as well as non-exclusive
rights pursuant to Sections 2.1 and 2.3, CI shall pay MPI an Annual Minimum
Royalty of  [*]  ;

                  3.2.2 For each MPI Technology Package in which CI wishes to
maintain non-exclusive rights pursuant to Sections 2.2.4 or 2.7, as well as
non-exclusive rights pursuant to Sections 2.1 and 2.3, the Annual Minimum
Royalty for that MPI Technology Package due to MPI by CI shall be reduced to
[*]  .

         3.3 Royalties on Services. Subject to the provisions of Section 3.5, CI
shall pay to MPI the following royalty rates for Services:

         3.3.1 For Services licensed under 2.2.3, a royalty of  [*]  in which
Licensed Material from any MPI Technology Package is used. If more than one
Licensed Material is simultaneously used  [*]  for such Services, whether from
the same MPI Technology Package or a different MPI Technology Package, CI would
pay an additional royalty of  [*]  for each additional Licensed Material used;
and

     "CONFIDENTIAL [*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED."

                                                                               6
<PAGE>   7
         3.3.2 For Services licensed under 2.3.3, a royalty of  [*]  received by
CI for Services in which any Licensed Material from any MPI Technology Package
is used for UHTS.

         3.4 Royalties on Finished Products. Subject to the provisions of
Section 3.5, CI shall pay to MPI the following royalty rates for Finished
Products:

         3.4.1 a royalty of  [*]  of Net Sales of Finished Products sold for use
with HCS; and

         3.4.2 a royalty of  [*]  of Net Sales of Finished Products sold for use
with UHTS.

         3.5 Reduced Royalties from Change in Exclusivity. In the event that
exclusive rights under a given MPI Technology Package for use with HCS become
non-exclusive rights pursuant to Section 2.2.4 or 2.7, CI shall pay to MPI, in
lieu of any other royalty payments, the following royalty rates:

         3.5.1 a royalty of  [*]  of Net Sales of Finished Products sold for use
with HCS; and

                  3.5.2 a royalty for Services utilizing HCS that shall be
negotiated in good faith.

         3.6 Additional Royalties from Manufacture of Licensed Materials. In the
event that CI shall make or have made Licensed Materials for use in Services or
Finished Products pursuant to Sections 5.1.6, 5.1.8 or 5.1.9, instead of
obtaining such Licensed Materials from MPI, then CI shall pay to MPI the
following royalty rates, in addition to the royalty rates under Sections 3.2,
3.3, 3.4 or 3.5:

         3.6.1 for Services licensed under 2.2.3, an additional royalty of  [*]
for each such Licensed Material used for HCS;

         3.6.2 for Services licensed under 2.3.3, an additional royalty of  [*]
received by CI for Services in which any Licensed Material from any MPI
Technology Package is used for UHTS;

         3.6.3 for Finished Products sold for use with HCS or UHTS and that
incorporate such Licensed Materials, an additional royalty of  [*]  of Net Sales
of such Finished Products.

         3.7 Option Fee. CI shall pay to MPI a non-refundable option fee of  [*]
for each MPI Technology Package set forth on Exhibit B ("Option Fee"), which
Option Fee shall be due upon the Effective Date and shall be fully creditable
against any subsequent license fee (as described in Section 3.8) for such MPI
Technology Package upon exercise of the Option.

         3.8 License Fee for Additional MPI Technology Packages. To exercise its
Option pursuant to Section 2.4 above, CI shall pay MPI a license fee for each
individual MPI Technology Package added hereunder that approximates  [*]  for
the first year (subject to the credit applied under Section 3.7 above), after
which time the Annual Minimum Royalty of Section 3.2 would apply.

     "CONFIDENTIAL [*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED."

                                                                               7
<PAGE>   8

                                    ARTICLE 4
                           PAYMENTS; BOOKS AND RECORDS

         4.1 Payment Terms and Method. Unless otherwise specified herein, all
payments hereunder shall be calculated on a quarterly basis from the Effective
Date and shall be due and payable sixty (60) days after. All dollar amounts
specified in this Agreement, and all payments made hereunder, are and shall be
made in U.S. dollars. If any payments are based on Net Sales denominated in
other than U.S. dollars, the conversion to U.S. dollars shall be the same
internal method CI uses to convert any other Sales denominations to U.S.
dollars, which internal method shall be in accordance with generally accepted
accounting principles.

         4.2 Any payments due under this Agreement which are not paid by the
date such payments are due under this Agreement shall bear interest to the
extent permitted by applicable law at the U.S. prime rate per annum quoted in
the "Money Rates" column of The Wall Street Journal (U.S., Western Edition) on
the first business day after such payment is due. This Section 4.2 shall in no
way limit any other remedies available to either party.

         4.3 Records. CI shall keep, complete, true and accurate books of
accounts and records for the purpose of determining the amounts payable pursuant
to this Agreement. Such books and records shall be kept for at least three (3)
years following the end of the calendar quarter to which they pertain. Such
records will be open for inspection at CI's principal place of business during
such three (3)-year period by an independent auditor chosen by MPI and
reasonably acceptable to CI for the purpose of verifying the amounts payable by
CI hereunder. Such inspections may be made no more than once each calendar year,
at reasonable times and on reasonable notice. The independent auditor shall be
obligated to execute a reasonable confidentiality agreement prior to commencing
any such inspection. Inspections conducted under this Section 4.3 shall be at
the expense of MPI, unless a variation or error producing an underpayment in
amounts payable exceeding ten percent (10%) of the amount paid for the period
covered by the inspection is established in the course of any such inspection,
whereupon all costs relating to the inspection for such period and any unpaid
amounts that are discovered shall be paid by CI, together with interest on such
unpaid amounts at the rate set forth in Section 4.2 above. The parties will
endeavor to minimize disruption of CI's normal business activities to the extent
reasonably practicable.

                                    ARTICLE 5
                             MANUFACTURE AND SUPPLY

         5.1 Exclusive Supplier of Licensed Materials. Except as expressly
provided in Sections 5.1.6, 5.1.8 or 5.1.9, MPI shall be the exclusive supplier
of all Licensed Materials.

                  5.1.1 Licensed Materials that are available from MPI as Stock
Items shall be manufactured to conform to MPI's internal specifications for
research grade reagents and packaged according MPI's internal packaging
protocols.

                  5.1.2 In the event that CI believes that such Stock Items do
not meet CI Specifications (including, e.g. where CI desires a chemical
composition that is not available as a Stock Item) CI shall notify MPI of such
CI Specifications. If such Licensed Materials are dye

                                                                               8
<PAGE>   9

conjugates of biomolecules, and the biomolecule is the basis for such Licensed
Materials not meeting CI Specifications (e.g. because CI desires a biomolecule
of a different class, or a different purity, etc.), then CI shall also identify
the nature of the desired biomolecule.

                  5.1.3 If CI desires to keep the identity of the desired
Licensed Material secret, CI shall indicate the confidential nature of its
communication, and MPI shall indicate the terms and conditions, if any, under
which such Licensed Material could be made available exclusively to CI as a
Custom Product and such Custom Product would not be made a Stock Item.

                  5.1.4 Within fifteen (15) days of CI's notification that
original Stock Items do not meet CI Specifications, MPI shall notify CI whether
or not MPI waives its right under Section 5.1 to exclusively manufacture a
Licensed Material that meets such CI Specifications.

                  5.1.5 If MPI does not waive its exclusive manufacturing right
for such specified Licensed Material at issue, MPI shall (concurrently with
MPI's notification to CI pursuant to Section 5.1.4) provide CI with a firm
quotation (including both price and delivery schedule) for such Licensed
Materials meeting such CI Specifications, and addressing all concerns under
Sections 5.1.3 and 5.2.5.

                  5.1.6 If the Licensed Material is not a Proprietary Material
and CI elects not to accept MPI's quotation, CI may make or have made the
Licensed Material for use in accordance with Article 2, subject to the
provisions of Sections 3.6, 6.2 and 6.5.

                  5.1.7 In the event that such Stock Items that do not meet CI
Specifications pursuant to this Section 5.1 are Proprietary Materials, CI may
request that such Proprietary Materials be supplied as a Custom Product, which
will be supplied at prices to be negotiated in good faith, and taking into
account all concerns under Sections 5.1.3 and 5.2.5.

                  5.1.8 In the event that MPI waives its rights to exclusively
manufacture a specific Licensed Material, CI shall have the right to make or
have made such Licensed Material for use in accordance with Article 2, subject
to the provisions of Sections 3.6, 6.2 and 6.5.

                  5.1.9 Notwithstanding the provisions of Section 11.2, CI shall
have the right to make or have made a given Proprietary Material, subject to the
provisions of Section 3.6, 6.2 and 6.5 in the event that:

                           (i) MPI fails to deliver such Proprietary Material as
stated on any CI firm purchase order, where such order for Proprietary
Material(s) conforms to the terms and conditions of this Agreement with respect
to:

                                    (a)      the price to be paid for such
                                             Proprietary Material;

                                    (b)      the amount of Proprietary Material
                                             to be delivered;

                                    (c)      the time frame for delivery of the
                                             Proprietary Material;

                                    (d)      the time frame for delivery of
                                             payment for Proprietary Material;

                                    (e)      the specifications for the
                                             Proprietary Material; and

                                    (f)      the location of the delivery of
                                             Proprietary Material;

                                                                               9
<PAGE>   10

and MPI fails to correct such failure within sixty (60) days of a written notice
of deficiency from CI, provided CI is not in default under any other provision
of this Agreement; or

                           (ii) MPI is declared insolvent pursuant to Section
365(n)(1) of the Bankruptcy Code or any similar provision of any controlling
state insolvency law(s);

until such time as MPI resumes manufacturing of such Proprietary Materials in
quantities sufficient to supply CI with Proprietary Materials consistent with
the terms and conditions set forth in this Agreement, and MPI notifies CI that
MPI is prepared to resume exclusive manufacture of such Proprietary Materials.

                  5.1.10 In the event that the provisions of Section 5.1.9
apply, MPI shall transfer to CI that documentation possessed by MPI that would
be reasonably necessary for a person with a Bachelor of Science degree in
organic chemistry and reasonably skilled in the relevant manufacturing and/or
analytical processes, to reproduce and manufacture the Proprietary Material(s)
previously available from MPI under the terms of this Agreement, including
without limitation, lists of raw materials, and their commercial sources,
synthesis and purification protocols, and methods and procedures for the
characterization and quality control. To the extent such documentation contains
Confidential Information of MPI, CI shall institute reasonable measures to
prevent its unauthorized use and/or disclosure.

         5.2 Supply. Subject to the terms and conditions of Section 5.1 and this
Section 5.2, MPI shall manufacture Licensed Materials in accordance with CI
Specifications, and shall supply CI with CI's requirements for Licensed
Materials. At CI's request, MPI shall also supply CI with Non-Proprietary
Material(s) subject to Sections 5.2.4, 5.2.5 and 5.5 (i) non-exclusively as
Stock Item(s) or (ii) exclusively as a Custom Product(s) or non-exclusively,
pursuant to Section 5.2.5, at CI's option. CI shall have the right to repackage
Licensed Materials (subject to the terms and conditions of Sections 2.1-2.3, 6.2
and 6.5), and Non-Proprietary Materials supplied by MPI hereunder

                  5.2.1 Forecasts. For so long as MPI is supplying Licensed
Materials to CI hereunder, at least thirty (30) days prior to the start of any
calendar quarter ("Q1"), CI shall provide MPI with a rolling written forecast of
the quantities of Licensed Materials (on a product-by-product basis) estimated
to be required on a quarter-by-quarter basis for four (4) consecutive quarters
("Q1" to "Q4", respectively). Each forecast shall indicate the estimated
quantities of Licensed Materials. CI will provide such forecasts as a means of
production planning only and such forecasts shall not constitute a binding
obligation upon MPI or CI. CI may also provide forecasts of its estimated
requirements for Non-Proprietary Materials, at its option, if CI desires such
estimates to be included in MPI's production planning for the purposes of
extending the provisions of Sections 5.2.3 to such Non-Proprietary Materials.

                  5.2.2 Form of Order. CI's orders shall be made pursuant to a
written purchase order which is in a form mutually acceptable to the parties.
MPI shall use reasonable efforts to notify CI within ten (10) days from receipt
of an order of its ability to fill quantities ordered thereunder, subject to
Section 5.2.3 below.

                                                                              10
<PAGE>   11

                  5.2.3 Shipping. All Licensed Materials and Non-Proprietary
Materials delivered pursuant to the terms of this Section 5.2 shall be suitably
packed for shipment by MPI, marked for shipment to the destination point
indicated in CI's purchase order. Unless otherwise agreed between the parties in
writing, orders for less than twenty-five (25) units of the same Stock Item for
which MPI has previously received a forecast pursuant to Section 5.2.1 shall be
shipped to CI within five (5) business days of receipt of the order; orders for
twenty-five (25) units or more of the same Stock Item shall be shipped within
thirty (30) days of receipt of the order. The shipment schedules for orders of
Custom Products will be determined at the time such order is placed, in
accordance with MPI's standard completion schedules for custom synthesis. All
Licensed Materials and Non-Proprietary Materials shipped to CI will be
delivered FOB (U.C.C.) the shipping point. All shipping and insurance costs, as
well as any special packaging expenses, shall be paid by CI.

                  5.2.4 Prices. MPI shall provide to CI all Licensed Materials
and Non-Proprietary Materials to CI for use in Finished Products and Services as
follows:

                           (i) MPI shall provide Stock Items at MPI's standard
retail rates as set forth in MPI's website for the period in which the purchase
order was submitted. CI shall be entitled to any standard quantity discounts MPI
offers to industry customers  [*]  .

                           (ii) In addition to the discount set forth above, CI
shall receive an additional discount rebate within thirty (30) days after the
conclusion of a semi-annual period, for aggregate purchases of Licensed
Materials and Non-Proprietary Materials that are Stock Items from the attached
MPI Technology Packages according to the following schedule:

                                    (1) for aggregate annual purchases of less
than  [*]  no discount rebate, regardless of the amount purchased;

                                    (2) for aggregate annual purchases of at
least  [*] ; a discount rebate that is  [*]  of such annual aggregate purchases
within the specified range;

                                    (3) for aggregate annual purchases of at
least  [*]  a discount rebate that is  [*]  of such annual aggregate purchases
within the specified range;

                                    (4) for aggregate annual purchases of at
least  [*]  ; a discount rebate that is  [*]  of such annual aggregate purchases
within the specified range.

                           (iii) MPI shall provide Custom Products at prices to
be negotiated in good faith, subject to Sections 5.1.3, 5.1.5, 5.1.7 and 5.2.5.
Prior to determination of the price to be paid for such Custom Product, MPI and
CI shall agree on the degree of exclusivity (pursuant to Section 5.2.5) as well
as the quality control specifications and packaging specifications for such
Custom Product, which agreed specifications shall become the CI Specifications
for such Custom Product, and in the event such Custom Product shall become a
Stock Item, subject to Sections 5.1.3 and 5.2.5, for such Stock Item. Such
Custom Products shall not be included in the annual aggregate purchases

     "CONFIDENTIAL [*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED."

                                                                              11
<PAGE>   12

that qualify for the discount rebate, unless and until such Custom Products
shall become available as Stock Items.

                  5.2.5 Prior to MPI accepting an order for a Custom Product, CI
and MPI shall agree in writing whether MPI may convert such Custom Product into
a Stock Item or produce it as a custom product for other party/ies, without
further approval from CI, to address CI's concerns about preserving CI's trade
secrets and MPI's concerns about maintaining flexibility in offering MPI's
technology to third parties for uses other than those exclusively licensed to
CI.

                  5.2.6 Invoicing and Payment. MPI shall submit an invoice to CI
upon shipment of Licensed Materials and Non-Proprietary Materials ordered by CI.
All invoices shall be sent to CI's address for notices hereunder and marked
"Attention: Accounting Department." Each such invoice shall state CI's aggregate
price therefor in a given shipment, plus any insurance, taxes or other costs
incident to the purchase or shipment initially paid by MPI but to be borne by CI
hereunder. Payment shall be made within thirty (30) days after the invoice is
sent to CI.

         5.3 Product Acceptance/Returns.

                  5.3.1 Unless agreed otherwise in writing prior to or
concurrently with acceptance of an order in accordance with Section 5.2.2, any
Licensed Materials and Non-Proprietary Materials supplied hereunder shall
conform at the time of shipment to MPI's internal specifications for research
grade reagents and packaged according MPI's internal packaging protocols.

                  5.3.2 Unless agreed otherwise in writing prior to or
concurrently with acceptance of an order in accordance with Section 5.2.2, any
Custom Products supplied hereunder shall conform at the time of shipment to CI
Specifications.

                  5.3.3 The parameters for evaluating the performance of
Licensed Materials in a particular application undertaken by CI are beyond the
control of MPI and, while such parameters may determine the suitability of
materials for such application, such parameters shall not be used to determine
acceptance of materials. Only written specifications agreed to between the
parties shall be used to determine acceptance of materials supplied by MPI.

                  5.3.4 Each shipment of Licensed Materials and Non-Proprietary
Materials hereunder shall be accompanied by a certificate of analysis for each
lot therein as well as such customs and other documentation as is necessary or
appropriate for shipment of materials from MPI to CI.

                  5.3.5 MPI will provide, upon CI's request, those test
procedures and test data that are the basis for the certificate of analysis
pertaining to Licensed Materials and Non-Proprietary Materials.

                  5.3.6 Without limiting the foregoing, if any Licensed
Materials or Non-Proprietary Materials supplied hereunder fail to conform to the
applicable CI Specifications or certificate of analysis, then CI shall promptly
notify MPI and present reasonable evidence to MPI of such nonconformity, if
requested to do so. Subject to the limitations in Sections 5.1, 5.2.4, 5.3.1,
5.3.2 and 5.3.3, MPI agrees to replace, at no additional expense to CI, such
nonconforming Licensed

                                                                              12
<PAGE>   13

Materials or Non-Proprietary Materials with conforming product within thirty
(30) days after receipt of CI's notification under this Section 5.3.

                  5.3.7 In the event that MPI disputes CI's evidence of
nonconformity, MPI may, at its own expense, request that an independent third
party tester selected by the parties analyze any unit of Licensed Materials or
Non-Proprietary Materials rejected by or on behalf of CI for nonconformity and,
if the independent third party tester determines that any such unit of Licensed
Materials or Non-Proprietary Materials was conforming, then CI shall be
responsible for payment of such units and for such analysis.

                  5.3.8 All returns of Licensed Materials and Non-Proprietary
Materials shall be in accordance with a mutually agreeable product return
protocol.

         5.4 Allocation. In the event that MPI is unable (due to force majeure
or otherwise) to supply both MPI's worldwide requirements of Licensed Materials
or Non-Proprietary Materials, and quantities of such Materials forecast pursuant
to Section 5.2.1 and ordered by CI under Section 5.2.2 above, MPI shall allocate
the quantities of such Licensed Materials or Non-Proprietary that MPI has in
inventory, and that MPI is able to produce, so that CI receives at least its
proportional share of available supplies as determined based on reasonable
forecasts of the requirements of CI, MPI and other third parties (taking into
consideration past requirements for such Materials relative to past forecasts).

         5.5 Compliance with Regulatory Agency Requirements. MPI shall comply
with all laws and regulations applicable to the manufacture of Licensed
Materials and Non-Proprietary Materials. Upon CI's prior written approval, such
approval not to be unreasonably withheld, CI shall reimburse MPI up to $400 for
each low volume exemption ("LVE") filing required for non-research use, in
performance of MPI's obligations hereunder. Non-Proprietary Materials for which
such non-research use is intended shall be identified by CI prior to such
non-research use, for determination of such LVE filing requirement and for
inclusion in Exhibit C attached hereto.

                                    ARTICLE 6
              OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

         6.1 Patent Prosecution. MPI shall control, at its sole expense, the
prosecution and maintenance activities pertaining to MPI Patents, using counsel
of its choice and in such countries as it deems appropriate.

         6.2 Patent Marking. CI shall use reasonable efforts to mark
advertisements, labels, and product literature that pertain to Finished Products
to mention the patent number of MPI Patents or a statement of pending patent
status, and a statement to the effect that Licensed Materials are limited to use
in the Field only.

         6.3 Patent Enforcement. If either party reasonably believes that any
MPI Technology Package is infringed or misappropriated by a third party or is
subject to a declaratory judgement action arising from such infringement, such
party shall promptly notify the other party. Both parties shall use their best
efforts in cooperating with each other to terminate such infringement or

                                                                              13
<PAGE>   14

misappropriation without litigation. If such efforts without litigation are
unsuccessful, prosecution of a third party for the infringing use of MPI's
Technology Package may be undertaken.

                  6.3.1 MPI Initiating Enforcement Actions. MPI shall have the
initial right (but not the obligation) to enjoin such misappropriation, to
enforce the MPI Patents with respect to such infringement, or to defend any
declaratory judgment with respect to the MPI Technology Package (for purposes of
this Section 6.3, any such action is herein after referred to as an "Enforcement
Action"). MPI shall keep CI reasonably informed of the progress of any such
Enforcement Action, and CI shall have the right to participate with counsel of
its own choice at its own expense.

                  6.3.2 CI Initiating Enforcement Actions. In the event that MPI
fails to initiate an Enforcement Action to protect MPI Technical Information or
to enforce the MPI Patents against a commercially significant infringement by a
third party, which infringement or misappropriation consists of the manufacture,
Sale or use of a product in the Field, within one hundred twenty (120) days of a
request by CI to initiate such Enforcement Action, CI may initiate an
Enforcement Action against such infringement with MPI's prior written approval,
which approval shall not be unreasonably withheld or delayed, and at CI's
expense. MPI's approval for initiation of an Enforcement Action notwithstanding,
CI shall not enter into any settlement of an Enforcement Action initiated by CI,
if such settlement admits the unpatentability, invalidity or unenforceability of
any MPI Patent without the written consent of MPI.

                  6.3.3 Recoveries. If a party undertakes an Enforcement Action
at its own expense, it shall be entitled to 100% of the recoveries therefrom. If
the other party chooses to join such Enforcement Action at its own expense, the
parties shall agree in advance what the apportionment of expenses and recoveries
shall be.

         6.4 Defensive Actions. If a claim, suit or proceeding (any for purposes
of this Section 6.4, an "Action") is brought against CI or MPI (the "Subject
Party") and such Action is directed to the subject of a patent or patent
application within the MPI Patents, the Subject Party shall promptly notify the
other party. As between the parties to this Agreement, the Subject Party shall
be entitled to control the defense in any such action(s); provided that the
other party shall have the right to participate in the defense or settlement
thereof at its own expense with counsel of its own choosing. Except as agreed in
writing by the other party, the Subject Party shall not enter into any
settlement of an Action, if such settlement admits the unpatentability,
invalidity or unenforceability of any MPI Patent. The Subject Party agrees to
keep the other party hereto reasonably informed of all material developments in
connection with any Action.

         6.5 MPI Trademarks. CI shall use trademarks of MPI to identify Licensed
Materials that are supplied by MPI. CI shall not use MPI's trademarks to
identify Licensed Materials if such Licensed Materials contain no components
that are supplied by MPI and CI shall not use any other of MPI's trademarks,
trade names, slogans, logos, or packaging designs (or any similar trademarks,
trade names, slogans, logos, or packaging designs), except where such use is
specifically authorized in writing by MPI in advance.

                                                                              14
<PAGE>   15

                  6.5.1 CI shall properly use all such trademarks and shall
acknowledge MPI's ownership of such trademark(s) in advertisements,
publications, and product literature. Where space is available, product labels
shall acknowledge MPI's ownership of such trademarks.

                  6.5.2 CI shall not register nor assist a third party to
register any of MPI's trademarks, trade names, slogans, logos, or packaging
designs (or any similar trademarks, trade names, slogans, logos, or packaging
designs) except as specifically authorized in writing by MPI in advance.

         6.6 Reservation. Other provisions of this Article 6 notwithstanding, in
the event that any third party shall file an infringement suit against either
party, where the suit alleges that a Finished Product or Service, only when used
as offered for Sale by CI, infringes the patent of such third party, (i.e. it is
the particular method of use offered by CI that is the issue, rather than the
materials furnished by MPI); then CI shall have the option to discontinue such
use or to indemnify and hold MPI harmless from and against all proceedings and
claims by third parties arising out of the use or sale of Finished Products or
Services in the allegedly infringing manner. Where the suit alleges that it is a
Licensed Material that infringes the patent of such third party, MPI shall have
the option to waive its exclusive right to the manufacture of such Licensed
Material in accordance with Section 5.1.8 above, but not to otherwise limit the
access of CI to such Licensed Material.

                                    ARTICLE 7
                         REPRESENTATIONS AND WARRANTIES

         7.1 MPI Warranties. MPI hereby represents, warrants and covenants to CI
that (i) it has the full right and authority to enter into this Agreement and
grant the rights and licenses granted herein; (ii) it has not previously granted
and will not grant any rights in conflict with the rights and licenses granted
herein; (iii) to MPI's knowledge and belief, MPI is not aware of any third party
intellectual property rights that are infringed by Licensed Materials, and there
are no existing or threatened actions, suits or claims pending against it with
respect to its right to enter into and perform its obligations under this
Agreement; and (iv) to MPI's knowledge and belief, the Licensed Materials are
useful for the methods described or claimed in MPI Patents, but MPI MAKES NO
WARRANTIES OR REPRESENTATIONS OF MERCHANTABILITY OR SUITABILITY FOR A PARTICULAR
PURPOSE.

         7.2 CI Warranties. CI hereby represents, warrants and covenants that it
has the full right and authority to enter into this Agreement.

                                    ARTICLE 8
                                 CONFIDENTIALITY

         8.1 Confidential Information. Except as expressly provided herein, the
parties agree that, for the term of this Agreement and for five (5) years
thereafter, the receiving party shall not publish or otherwise disclose and
shall not use for any purpose any information furnished to it by the other party
hereto pursuant to this Agreement which if disclosed in tangible form is marked
"confidential" or with other similar designation to indicate its confidential or
proprietary nature, or if disclosed

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orally is confirmed as confidential (any oral disclosures must be identified in
writing as confidential within (30) thirty days of such disclosure) or
proprietary by the party disclosing such information at the time of such
disclosure (collectively, "Confidential Information"). Notwithstanding the
foregoing, it is understood and agreed that Confidential Information shall not
include information that, in each case as demonstrated by written documentation:

                  8.1.1 was already known to the receiving party, other than
under an obligation of confidentiality, at the time of disclosure;

                  8.1.2 was generally available to the public or otherwise part
of the public domain at the time of its disclosure to the receiving party;

                  8.1.3 became generally available to the public or otherwise
part of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement; or

                  8.1.4 was subsequently lawfully disclosed to the receiving
party by a person other than a party hereto or developed by the receiving party
without reference to any information or materials disclosed by the disclosing
party.

                  8.1.5 Sections 8.1.1 through 8.1.4 notwithstanding,
information disclosed by one party to another shall still be deemed Confidential
Information of the disclosing party subject to the protection of this Section
8.1 if such disclosed information is

                           (i) a specific embodiment that is only generally
described by information in the public domain or the receiving party's
possession or

                           (ii) a combination that can be pieced together and
reconstructed from multiple sources, none of which shows the whole combination
of materials, its principle of operation, and method of use.

         8.2 Permitted Disclosures. Notwithstanding the provisions of Section
8.1 above, each party hereto may use and disclose the other's Confidential
Information to the extent such use and disclosure is reasonably necessary, in
defending litigation, complying with applicable governmental regulations,
submitting information to tax or other governmental authorities or in exercising
its rights hereunder, provided that if a party is legally required to make any
such disclosure of the other party's Confidential Information, to the extent it
may legally do so, it will give reasonable advance written notice to the latter
party of such disclosure and, save to the extent inappropriate in the case of
patent applications, will use its reasonable efforts to secure confidential
treatment of such Confidential Information prior to its disclosure (whether
through protective orders or otherwise).

                                    ARTICLE 9
                                 INDEMNIFICATION

         9.1 Indemnification of CI. MPI shall indemnify each of CI and its
directors, officers and employees and the successors and assigns (only as
authorized under Section 11.7) of the foregoing

                                                                              16
<PAGE>   17

(collectively, the "CI Indemnitees"), and hold each CI Indemnitee harmless from
and against any and all liabilities, damages, settlements, claims, actions,
suits, penalties, fines, costs or expenses (including, without limitation,
reasonable attorneys' fees and other expenses of litigation) incurred by any CI
Indemnitee arising from or occurring as a result of any claim, action, suit, or
other proceeding brought by third parties against a CI Indemnitee arising from
or occurring as a result of the gross negligence or willful tortious misconduct
of a MPI Indemnitee.

         9.2 Indemnification of MPI. CI shall indemnify each of MPI and its
directors, officers and employees and the successors and assigns of the
foregoing (collectively, the "MPI Indemnitees"), and hold each MPI Indemnitee
harmless from and against any and all liabilities, damages, settlements, claims,
actions, suits, penalties, fines, costs or expenses (including, without
limitation, reasonable attorneys' fees and other expenses of litigation)
incurred by any MPI Indemnitee arising from or occurring as a result any claim,
action, suit, or other proceeding brought by third parties against a MPI
Indemnitee arising from or occurring as a result of the gross negligence or
willful tortious misconduct of a CI Indemnitee.

         9.3 Procedure. A party (for purposes of this Section 9.3, the
"Indemnitee") that intends to claim indemnification under any provision of this
Agreement shall: (i) promptly notify the indemnifying party (the "Indemnitor")
in writing of any claim, action, suit, or other proceeding brought by third
parties in respect of which the Indemnitee, or their directors, officers,
employees, successors or assigns intend to claim such indemnification hereunder;
(ii) provide the Indemnitor sole control of the defense and/or settlement
thereof, and (iii) provide the Indemnitor, at the Indemnitor's request and
expense, with reasonable assistance and full information with respect thereto.
Notwithstanding the foregoing, the indemnity obligation in this Article 9 shall
not apply to amounts paid in settlement of any loss, claim, damage, liability or
action if such settlement is effected without the consent of the Indemnitor, to
the extent such consent is not withheld unreasonably or delayed. Without
limiting the foregoing provisions of this Section 9.3, the Indemnitor shall keep
the Indemnitee reasonably informed of the progress of any claim, suit or
proceeding under this Section 9.3 and the Indemnitee shall have the right to
participate in any such claim, suit or proceeding with counsel of its choosing
at its own expense.

                                   ARTICLE 10
                              TERM AND TERMINATION

         10.1 Agreement Term. This Agreement shall become effective as of the
Effective Date and shall continue in full force and effect until the expiration,
revocation or invalidation of the last issued patent within the MPI Patents
("Term").

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<PAGE>   18

         10.2 Effect of Expiration.

                  10.2.1 Accrued Obligations. Expiration of this Agreement for
any reason shall not release either party hereto from any liability which, at
the time of such expiration, has already accrued to the other party or which is
attributable to a period prior to such expiration nor preclude either party from
pursuing all rights and remedies it may have hereunder or at law or in equity
with respect to any breach of this Agreement.

         10.3 Termination.

                  10.3.1 In the event of a material breach of a party of its
obligations hereunder, the nonbreaching party shall be entitled to terminate
this Agreement upon written notice to the breaching party, if such breach is not
cured within thirty (30) days after written notice is given by the nonbreaching
party to the breaching party specifying the breach.

                  10.3.2 In the event that CI terminates its rights to all MPI
Technology Packages pursuant to Section 2.6, CI may terminate this Agreement
upon sixty (60) days written notice to MPI.

         10.4 Effect of Termination.

                  10.4.1 Accrued Obligations. Termination of this Agreement for
any reason shall not release either party hereto from any liability which, at
the time of such termination, has already accrued to the other party or which is
attributable to a period prior to such termination nor preclude either party
from pursuing all rights and remedies it may have available hereunder or at law
or equity with respect to any breach hereunder.

                  10.4.2 Return of Materials. Upon any termination of this
Agreement, CI and MPI shall promptly return to the other party all Confidential
Information received from the other party (except one copy which may be retained
for archival purposes only).

         10.5 Survival. Sections 5.3, 10.2, 10.4, 11.1 and 11.6, and Articles
6,7,8 and 9 shall survive the expiration or termination of this Agreement for
any reason.

                                   ARTICLE 11
                                  MISCELLANEOUS

         11.1 Governing Law. This Agreement and any dispute arising from the
performance or breach hereof shall be governed by and construed and enforced in
accordance with, the laws of the State of New York, without reference to
conflicts of laws principles.

         11.2 Force Majeure. Nonperformance of any party (except for payment of
amounts due hereunder, and as provided in Section 5.1.9) shall be excused to the
extent that performance is rendered impossible by strike, fire, earthquake,
flood, governmental acts or orders or restrictions, or any other reason,
including failure of suppliers, where failure to perform is beyond the
reasonable

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<PAGE>   19

control of the nonperforming party. Without limiting the foregoing, the party
subject to such inability shall use reasonable efforts to minimize the duration
of any force majeure event.

         11.3 No Implied Waivers; Rights Cumulative. No failure on the part of
MPI or CI to exercise and no delay in exercising any right under this Agreement,
or provided by statute or at law or in equity or otherwise, shall impair,
prejudice or constitute a waiver of any such right, nor shall any partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.

         11.4 Independent Contractors. Nothing contained in this Agreement is
intended implicitly, or is to be construed, to constitute MPI or CI as partners
in the legal sense. No party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of or in the name of any
other party or to bind any other party to any contract, agreement or undertaking
with any third party.

         11.5 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or sent by registered or
certified mail, return receipt requested, postage prepaid; facsimile
transmission (receipt verified); or express courier service (signature
required), in each case to the respective address or fax number specified below,
or such other address or fax number as may be specified in writing to the other
parties hereto:

                  CI:   Cellomics, Inc.
                        635 William Pitt Way
                        Pittsburgh, PA 15238
                        Attn: Intellectual Property Manager
                        Fax: (412) 826-3895

                  MPI:  Molecular Probes, Inc.
                        P.O. Box 22010
                        Eugene, OR 97402-0469
                        Attn: Legal Department
                        Fax: (541) 344-6504

         11.6 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES
(INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME),
ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED
ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED
REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF
SAME.

         11.7 Assignment. This Agreement shall not be assignable by either party
to any third party except that CI may assign this Agreement to an entity that
acquires substantially all of its business or assets, whether by merger,
transfer of assets, or otherwise ("Acquisition"); provided, however, (i) the
acquirer pay to MPI a transfer fee of $100,000 within thirty (30) days after the
effective date of the Acquisition; and (ii) effective upon the second
anniversary of the effective date of the Acquisition, the total annual royalty
payments and the total annual purchase payments to MPI for Licensed Materials
increase to a level that is twice that of the corresponding annual payments
payable to MPI by CI in the year that immediately preceded the effective date of
the Acquisition. Such assignment shall be effective immediately upon the payment
set forth in Section 11.7(i) and continue in full force unless acquiror fails to
meet the conditions set forth in Section 11.7(ii). In the event the conditions
set forth in this Section 11.7 are not met, this Agreement shall immediately
terminate and the provisions of Section 10.4 shall apply.

     "CONFIDENTIAL [*] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED."

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         11.8 Modification. No amendment or modification of any provision of
this Agreement shall be effective unless in writing signed by both parties
hereto. No provision of this Agreement shall be varied, contradicted or
explained by any oral agreement, course of dealing or performance or any other
matter not set forth in an agreement in writing and signed by both parties
hereto.

         11.9 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the parties and all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the parties hereto
as nearly as may be possible. Such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of such provision in
any other jurisdiction.

         11.10 Confidential Terms. Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the consent of the other party, except as required by securities or
other applicable laws, to prospective and other investors and such party's
accountants, attorneys and other professional advisors.

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

         11.12 Headings. Headings used herein are for convenience only and shall
not in any way affect the construction of or be taken into consideration in
interpreting this Agreement.

         11.13 Entire Agreement. This Agreement (including the Exhibits hereto,
incorporated herein by reference) constitute the entire agreement, both written
or oral, with respect to the subject matter hereof, and supersede all prior or
contemporaneous understandings or agreements, whether written or oral, between
MPI and CI with respect to such subject matter.

[signature block next page]

###

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered in duplicate originals as of the date first above
written.

MOLECULAR PROBES, INC.

By: /s/ Rosaria P. Haugland
    ---------------------------
Name:  Rosaria P. Haugland
       ------------------------
Title: Vice President
       ------------------------

CELLOMICS, INC.

By: /s/ D. Lansing Taylor
    ---------------------------
Name:  D. Lansing Taylor
       ------------------------
Title: President & CEO
       ------------------------

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