Document:

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[LETTERHEAD]

November 04, 1999

Mr. Joseph Howard
11331 Chalon Road
Los Angeles, CA  90049

RE: 1752-1756 Cloverfield, Santa Monica

Dear Joe:

Per the terms of the lease dated June 1996, please consider this official notice
of Specialty Laboratories Inc. exercise of its option to extend for the period
of September 1, 2000 - June 30, 2003. We look forward to our continued tenancy
in your building.

Please return a signed copy for our records.

Sincerely,

/s/ Arthur L. Peter

Arthur L. Peter
(310)458-4100 Ext. 221
(310)828-6543 Ext. 786

RECEIPT ACKNOWLEDGED:

SPECIALTY LABORATORIES, INC.

/s/ James B. Peter          Date:  11/4/99
---------------------------      ----------
Dr. James B. Peter

HOWARD REAL PROPERTY TRUST

/s/ Joseph Howard           Date:  11/13/99
---------------------------      -----------
Mr. Joseph Howard

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         [LETTERHEAD]             TRANSMITTAL                 Date:  11/16/1999

TO:                  Bart Thielen
                     Specialty Laboratories, Inc.
                     2211 Michigan Avenue

OFFICE PHONE:        310-828-6543 1486

FROM:                Arthur L. Peter (310)458-4100 ext: 221

SUBJECT:             Bart, please attached to Cloverfield lease.

FAX PHONE:           310-586-7235

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              [LOGO] AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

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

1.     BASIC PROVISIONS ("BASIC PROVISIONS")

       1.1     PARTIES:  This Lease ("LEASE"), dated for reference purposes
only, JUNE, 1996, is made by and between HOWARD REAL PROPERTY TRUST
("LESSOR") and SPECIALTY LABORATORIES, INC. ("LESSEE"), (collectively the
"PARTIES," or individually a "PARTY").

       1.2     PREMISES:  That certain real property, including all
improvements therein or to be provided by Lessor under the terms of this
Lease, and commonly known by the street address of 1752 - 1756 CLOVERFIELD,
SANTA MONICA, located in the County of LOS ANGELES, State of CALIFORNIA, and
generally described as (describe briefly the nature of the property) a
one-story building consisting of approximately 15,750 square feet situated on
approximately 32,700 square feet of land ("PREMISES"). (See Paragraph 2 for
further provisions.)

       1.3     TERM:  four (4) years and (15) fifteen days ("ORIGINAL TERM")
commencing August 16, 1996 ("COMMENCEMENT DATE") and ending August 31, 2000
("EXPIRATION DATE"). (See Paragraph 3 for further provisions.)

       1.5     BASE RENT:  $14,962.50 per month ("BASE RENT"), payable on the
fifteenth (15th) day of each month commencing August 15, 1996 (See Paragraph 4
for further provisions.)

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

       1.6     BASE RENT PAID UPON EXECUTION:  $14,962.50 as Base Rent for the
period August 16, 1996 through September 15, 1996.

       1.7     SECURITY DEPOSIT:  $14,962.50 ("SECURITY DEPOSIT"). (See
Paragraph 5 for further provisions.)

       1.8     PERMITTED USE: Medical laboratory and general office (See
Paragraph 6 for further provisions.)

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

       1.12    ADDENDA.  Attached hereto is an Addendum or Addenda consisting of
Paragraphs 49 through 59 and Exhibits A all of which constitute a part of this
Lease.

2.     PREMISES.

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

       2.2     CONDITION.  Lessor shall deliver the Premises to Lessee clean
and free of debris on the Commencement Date and warrants to Lessee that the
existing plumbing, exterior roof, lighting, air conditioning, heating and
loading doors, if any, in the Premises, other than those constructed by
Lessee, shall be in good operating condition on the Commencement Date.  If a
non-compliance with said warranty exists as of the Commencement Date, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee
does not give Lessor written notice of a non-compliance with this warranty
within thirty (30) days after the Commencement Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense.

       2.3     COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants to Lessee that the improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date.  Said warranty
does not apply to the use to which Lessee will put the Premises or to any
Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or
to be made by Lessee. If the Premises do not comply with said warranty,
Lessor shall, except as otherwise provided in this Lease, promptly after
receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, rectify the same at Lessor's
expense. If Lessee does not give Lessor written notice of a non-compliance
with this warranty within six (6) months following the Commencement Date,
correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense.

       2.4     ACCEPTANCE OF PREMISES.  Lessee hereby acknowledges: (a) that
it has been advised by the Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and
fire sprinkler systems, security, environmental aspects, compliance with
Applicable Law, as defined in Paragraph 6.3) and the present and future
suitability of the Premises for Lessee's intended use, (b) that Lessee has
made such investigation as it deems necessary with reference to such matters
and assumes all responsibility therefor as the same relate to Lessee's
occupancy of the Premises and/or the term of this Lease, and (c) that neither
Lessor, nor any of Lessor's agents, has made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease.

       2.5     LESSEE PRIOR OWNER/OCCUPANT.  The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the
date set forth in Paragraph 1.1 Lessee was the owner or occupant of the
Premises. In such event, Lessee shall, at Lessee's sole cost and expense,
correct any non-compliance of the Premises with said warranties .

3.     TERM.

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

       3.2     EARLY POSSESSION.  If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent
shall be abated for the period of such early possession. All other terms of
this Lease, however, (including but not limited to the obligations to pay
Real Property Taxes and insurance premiums and to maintain the Premises)
shall be in effect during such period. Any such early possession shall not
affect nor advance the Expiration Date of the Original Term.

                                                        Initials [ILLEGIBLE]
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                                                                 [ILLEGIBLE]
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       3.3     DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession Date
is specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease,
or the obligations of Lessee hereunder, or extend the term hereof, but in
such case, Lessee shall not, except as otherwise provided herein, be
obligated to pay rent or perform any other obligation of Lessee under the
terms of this Lease until Lessor delivers possession of the Premises to
Lessee. If possession of the Premises is not delivered to Lessee within
thirty (30) days after the Commencement Date, Lessee may, at its option, by
notice in writing to Lessor within ten (10) days thereafter, cancel this
Lease, in which event the Parties shall be discharged from all obligations
hereunder; provided, however, that if such written notice by Lessee is not
received by Lessor within said ten (10) day period, Lessee's right to cancel
this Lease shall terminate and be of no further force or effect. Except as
may be otherwise provided, and regardless of when the term actually
commences, if possession is not tendered to Lessee when required by this
Lease and Lessee does not terminate this Lease, as aforesaid, the period free
of the obligation to pay Base Rent, if any, that Lessee would otherwise have
enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts, changes or omissions
of Lessee.

4.     RENT.

       4.1     BASE RENT. Lessee shall cause payment of Base Rent and other
rent or charges, as the same may be adjusted from time to time, to be
received by Lessor in lawful money of the United States, without offset or
deduction, on or before the day on which it is due under the terms of this
Lease. Base Rent and all other rent and charges for any period during the
term hereof which is for less than one (1) full calendar month shall be
prorated based upon the actual number of days of the calendar month involved.
Payment of Base Rent and other charges shall be made to Lessor at its address
stated herein or to such other persons or at such other addresses as Lessor
may from time to time designate in writing to Lessee.

5.     SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for
Lessee's faithful performance of Lessee's obligations under this Lease. If
Lessee fails to pay Base Rent or other rent or charges due hereunder, or
otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor
may use, apply or retain all or any portion of said Security Deposit for the
payment of any amount due Lessor or to reimburse or compensate Lessor for any
liability, cost, expense, loss or damage (including attorneys' fees) which
Lessor may suffer or incur by reason thereof. If Lessor uses or applies all
or any portion of said Security Deposit, Lessee shall within ten (10) days
after written request therefor deposit moneys with Lessor sufficient to
restore said Security Deposit to the full amount required by this Lease. Any
time the Base Rent increases during the term of this Lease, Lessee shall,
upon written request from Lessor, deposit additional moneys with Lessor
sufficient to maintain the same ratio between the Security Deposit and the
Base Rent as those amounts are specified in the Basic Provisions. Lessor
shall not be required to keep all or any part of the Security Deposit
separate from its general accounts. Lessor shall, at the expiration or
earlier termination of the term hereof and after Lessee has vacated the
Premises, return to Lessee (or, at Lessor's option, to the last assignee, if
any, of Lessee's interest herein), that portion of the Security Deposit not
used or applied by Lessor. Unless otherwise expressly agreed in writing by
Lessor, no part of the Security Deposit shall be considered to be held in
trust, to bear interest or other increment for its use, or to be prepayment
for any moneys to be paid by Lessee under this Lease.

6.     USE.

       6.1     USE. Lessee shall use and occupy the Premises only for the
purposes set forth in Paragraph 1.8, or any other use which is comparable
thereto, and for no other purpose. Lessee shall not use or permit the use of
the Premises in a manner that creates waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to, neighboring premises or
properties. Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessees assignees or subtenants,
and by prospective assignees and subtenants of the Lessee, its assignees and
subtenants, for a modification of said permitted purpose for which the
premises may be used or occupied, so long as the same will not impair the
structural integrity of the improvements on the Premises, the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises and the improvements thereon, and is otherwise permissible pursuant
to this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall
within five (5) business days give a written notification of same, which
notice shall include an explanation of Lessor's reasonable objections to the
change in use.

       6.2     HAZARDOUS SUBSTANCES.

               (a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or
effect, either by itself or in combination with other materials expected to
be on the Premises, is either: (i) potentially injurious to the public
health, safety or welfare, the environment or the Premises, (ii) regulated or
monitored by any governmental authority, or (iii) a basis for liability of
Lessor to any governmental agency or third party under any applicable statute
or common law theory. Hazardous Substance shall include, but not be limited
to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products
or fractions thereof. Lessee shall not engage in any activity in, on or about
the Premises which constitutes a Reportable Use (as hereinafter defined) of
Hazardous Substances without the express prior written consent of Lessor and
compliance in a timely manner (at Lessee's sole cost and expense) with all
Applicable Law (as defined in Paragraph 6.3). "REPORTABLE USE" shall mean (i)
the installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with,
any governmental authority. Reportable Use shall also include Lessee's being
responsible for the presence in, on or about the Premises of a Hazardous
Substance with respect to which any Applicable Law requires that a notice be
given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may, without Lessor's prior
consent, but in compliance with all Applicable Law, use any ordinary and
customary materials reasonably required to be used by Lessee in the normal
course of Lessee's business permitted on the Premises, so long as such use is
not a Reportable Use and does not expose the Premises or neighboring
properties to any meaningful risk of contamination or damage or expose Lessor
to any liability therefor. In addition, Lessor may (but without any
obligation to do so) condition its consent to the use or presence of any
Hazardous Substance, activity or storage tank by Lessee upon Lessee's giving
Lessor such additional assurances as Lessor, in its reasonable discretion,
deems necessary to protect itself, the public, the Premises and the
environment against damage, contamination or injury and/or liability
therefrom or therefor, including, but not limited to, the installation (and
removal on or before Lease expiration or earlier termination) of reasonably
necessary protective modifications to the Premises (such as concrete
encasements) and/or the deposit of an additional Security Deposit under
Paragraph 5 hereof.

               (b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same, has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor. Lessee shall also
immediately give Lessor a copy of any statement, report, notice,
registration, application, permit, business plan, license, claim, action or
proceeding given to, or received from, any governmental authority or private
party, or persons entering or occupying the Premises, concerning the
presence, spill, release, discharge of, or exposure to, any Hazardous
Substance or contamination in, on, or about the Premises, including but not
limited to all such documents as may be involved in any Reportable Uses
involving the Premises.

               (c) INDEMNIFICATION. Lessee shall indemnify, protect, defend
and hold Lessor, its agents, employees, lenders and ground lessor, if any,
and the Premises, harmless from and against any and all loss of rents and/or
damages, liabilities, judgments, costs, claims, liens, expenses, penalties,
permits and attorney's and consultant's fees arising out of or involving any
Hazardous Substance or storage tank brought onto the Premises by or for
Lessee or under Lessee's control. Lessee's obligations under this Paragraph 6
shall include, but not be limited to, the effects of any contamination or
injury to person, property or the environment created or suffered by Lessee,
and the cost of investigation (including consultant's and attorney's fees and
testing), removal, remediation, restoration and/or abatement thereof, or of
any contamination therein involved, and shall survive the expiration or
earlier termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Substances or storage
tanks, unless specifically so agreed by Lessor in writing at the time of such
agreement.

       6.3     LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in
this Lease, Lessee, shall, at Lessee's sole cost and expense, fully,
diligently and in a timely manner, comply with all "APPLICABLE LAW," which
term is used in this Lease to include all laws, rules, regulations,
ordinances, directives, covenants, easements and restrictions of record,
permits, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or
consultants, relating in any manner to the Premises (including but not
limited to matters pertaining to (i) industrial hygiene, (ii) environmental
conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill or release
of any Hazardous Substance or storage tank), now in effect or which may
hereafter come into effect, and whether or not reflecting a change in policy
from any previously existing policy. Lessee shall, within five (5) days after
receipt of Lessor's written request, provide Lessor with copies of all
documents and information, including, but not limited to, permits,
registrations, manifests, applications, reports and certificates, evidencing
Lessee's compliance with any Applicable Law specified by Lessor, and shall
immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or
the Premises to comply with any Applicable Law.

       6.4     INSPECTION; COMPLIANCE. Lessor and Lessor's Lender(s) (as
defined in Paragraph 8.3(a)) shall have the right to enter the Premises at
any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease and all Applicable Laws (as defined in
Paragraph 6.3), and to employ experts and/or consultants in connection
therewith and/or to advise Lessor with respect to Lessee's activities,
including but not limited to the installation, operation, use, monitoring,
maintenance, or removal of any Hazardous Substance or storage tank on or from
the Premises. The costs and expenses of any such inspections shall be paid by
the party requesting same, unless a Default or Breach of this Lease,
violation of Applicable Law, or a contamination, caused or materially
contributed to by Lessee is found to exist or be imminent, or unless the
inspection is requested or ordered by a governmental authority as the result
of any such existing or imminent violation or contamination. In any such
case, Lessee shall upon request reimburse Lessor or Lessor's Lender, as the
case may be, for the costs and expenses of such inspections.

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

       7.1     LESSEE'S OBLIGATIONS.

               (a) Subject to the provisions of Paragraphs 2.2 (Lessor's
warranty as to condition), 2.3 (Lessor's warranty as to compliance with
convenants [ILLEGIBLE]

                                                       Initials  [ILLEGIBLE]
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                                                                 [ILLEGIBLE]
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                                Page 2

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7.2 (Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation). Lessee shall, at Lessee's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair, ** (whether or not such portion of the Premises requiring, repairs or
the means of repairing the same, are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as a result of
Lessee's use, any prior use, the elements or the age of such portion of the
Premises), including, without limiting the generality of the foregoing, all
equipment or facilities serving the Premises, such as plumbing, heating, air
conditioning, ventilating, electrical, lighting facilities, boilers, fired or
unfired pressure vessels, fire sprinkler and/or standpipe and hose or other
automatic fire extinguishing system, including fire alarm and/or smoke
detection systems and equipment, fire hydrants, fixtures, walls (interior),
ceilings, floors, windows, doors, plate glass, skylights, landscaping,
driveways, parking lots, fences, retaining walls, signs, sidewalks and
parkways located in, on, about, or adjacent to the Premises. Lessee shall not
cause or permit any Hazardous Substance to be spilled or released in, on,
under or about the Premises (including through the plumbing or sanitary sewer
system) and shall promptly, at Lessee's expense, take all investigatory
and/or remedial action reasonably recommended, whether or not formally
ordered or required, for the cleanup of any contamination of, and for the
maintenance, security and/or monitoring of the Premises, the elements
surrounding same, or neighboring properties, that was caused or materially
contributed to by Lessee, or pertaining to or involving any Hazardous
Substance and/or storage tank brought onto the Premises by or for Lessee or
under its control. Lessee, in keeping the Premises in good order, condition
and repair, shall exercise and perform good maintenance practices. Lessee's
obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof
in good order, condition and state of repair. If Lessee occupies the Premises
for seven (7) years or more, Lessor may require Lessee to repaint the
exterior of the buildings on the Premises as reasonably required, but not
more frequently than once every seven (7) years.

          (b)  Lessee shall, at Lessee's sole cost and expense, maintain: (i)
heating, air conditioning and ventilation equipment, (ii) boiler, fired or
unfired pressure vessels, (iii) fire sprinkler and/or standpipe and hose or
other automatic fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and drain
maintenance and (vi) asphalt and parking lot maintenance.

                                  * * *

     7.2  LESSOR'S OBLIGATIONS.  Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the Premises),
2.3 (relating to compliance with covenants, restrictions and building code),
9 (relating to destruction of the Premises) and 14 (relating to condemnation
of the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises,
the improvements located thereon, or the equipment therein, whether
structural or non structural, all of which obligations are intended to be
that of the Lessee under Paragraph 7.1 hereof. It is the intention of the
Parties that the terms of this Lease govern the respective obligations of the
Parties as to maintenance and repair of the Premises. Lessee and Lessor
expressly waive the benefit of any statute now or hereafter in effect to the
extent it is inconsistent with the terms of this Lease with respect to, or
which affords Lessee the right to make repairs at the expense of Lessor or to
terminate this Lease by reason of any needed repairs.

     7.3  UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.

          (a)  DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all carpeting, window coverings, air lines,
power panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing, and fencing in, on or about the Premises. The
term "TRADE FIXTURES" shall mean Lessee's machinery and equipment that can be
removed without doing material damage to the Premises. The term "ALTERATIONS"
shall mean any modification of the improvements on the Premises from that which
are provided by Lessor under the terms of this Lease, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "LESSEE OWNED
ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as Alterations and/or
Utility Installations made by lessee that are not yet owned by Lessor as defined
in Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations in, on, under or about the Premises without Lessor's prior written
consent. Lessee may, however, make non-structural Utility Installations to the
interior of the Premises (excluding the roof), as long as they are not visible
from the outside, do not involve puncturing, relocating or removing the roof or
any existing walls, and the cumulative cost thereof during the term of this
Lease as extended does not exceed $25,000.

          (b)  CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all applicable
permits required by governmental authorities, (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor prior to commencement of the work
thereon, and (iii) the compliance by Lessee with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility Installations by
Lessee during the term of this Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and in compliance with all
Applicable Law. Lessee shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefor. Lessor may (but without
obligation to do so) condition its consent to any requested Alteration or
Utility Installation that costs $10,000 or more upon Lessee's providing Lessor
with a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor under Paragraph 36 hereof.

          (c)  INDEMNIFICATION. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by
any mechanics' or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior
to the commencement of any work in, on or about the Premises, and Lessor
shall have the right to post notices of non-responsibility in or on the
Premises as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same
and shall pay and satisfy any such adverse judgment that may be tendered
thereon before the enforcement thereof against the Lessor or the Premises. If
Lessor shall require, Lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to one and one-half times the
amount of such contested lien claim or demand, indemnifying Lessor against
liability for the same, as required by law for the holding of the Premises
free from the effect of such lien or claim. In addition, Lessor may require
Lessee to pay Lessor's attorney's fees and costs in participating in such
action if Lessor shall decide it is to its best interest to do so.

     7.4  OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.

          (a)  OWNERSHIP. Subject to Lessor's right to require their removal or
become the owner thereof as hereinafter provided in this Paragraph 7.4, all
Alterations and Utility Additions made to the Premises by Lessee shall be the
property of and owned by Lessee, but considered a part of the Premises. Lessor
may, at any time and at its option, elect in writing to Lessee to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per subparagraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
earlier termination of this Lease, become the property of Lessor and remain upon
and be surrendered by Lessee with the Premises.

          (b)  REMOVAL. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.

          (c)  SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date,
with all of the improvements, parts and surfaces thereof clean and free of
debris and in good operating order, condition and state of repair, ordinary
wear and tear excepted. "ORDINARY WEAR AND TEAR" shall not include any damage
or deterioration that would have been prevented by good maintenance practice
or by Lessee performing all of its obligations under this Lease. Except as
otherwise agreed or specified in writing by Lessor, the Premises, as
surrendered, shall include the Utility Installations. The obligation of
Lessee shall include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment,
and Alterations and/or Utility Installations, as well as the removal of any
storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all
as may then be required by Applicable Law and/or good service practice.
Lessee's Trade Fixtures shall remain the property of Lessee and shall be
removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.

8. INSURANCE; INDEMNITY.

     8.1  PAYMENT FOR INSURANCE. Regardless of whether the Lessor or Lessee is
the Insuring Party, Lessee shall pay for all insurance required under this
Paragraph 8 except to the extent of the cost attributable to liability insurance
carried by Lessor in excess of $1,000,000 per occurrence. Premiums for policy
periods commencing prior to or extending beyond the Lease term shall be prorated
to correspond to the Lease term. Payment shall be made by Lessee to Lessor
within ten (10) days following receipt of an invoice for any amount due.

     8.2  LIABILITY INSURANCE.

          (a)  CARRIED BY LESSEE. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of
insurance protecting Lessee and Lessor (as an additional insured) against
claims for bodily injury, personal injury and property damage based upon,
involving or arising out of the ownership, use, occupancy or maintenance of
the Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$1,000,000 per occurrence with an "Additional Insured-Managers or Lessors of
Premises" Endorsement and contain the "Amendment of the Pollution Exclusion"
for damage caused by heat, smoke or fumes from a hostile fire. The policy
shall not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this
Lease as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance required by this
Lease or as carried by Lessee shall not, however, limit the liability of
Lessee nor relieve Lessee of any obligation hereunder. All insurance to be
carried by Lessee shall be primary to and not contributory with any similar
insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

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

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     8.3  PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.

          (a)  BUILDING AND IMPROVEMENTS. The insuring Party shall obtain and
keep in force during the term of this Lease a policy or policies in the name
of Lessor, with loss payable to Lessor and to the holders of any mortgages,
deeds of trust or ground leases on the Premises ("LENDER(S)"), insuring loss
or damage to the Premises. The amount of such insurance shall be equal to the
full replacement cost of the Premises, as the same shall exist from time to
time, or the amount required by Lenders, but in no event more than the
commercially reasonable and available insurable value thereof if, by reason
of the unique nature or age of the improvements involved, such latter amount
is less than full replacement cost. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations shall be insured by Lessee
under Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for any
additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Premises
required to be demolished or removed by reason of the enforcement of any
building, zoning, safety or land use laws as the result of a covered cause of
loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property
insurance coverage amount by a factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban Consumers for the city
nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per
occurrence, and Lessee shall be liable for such deductible amount in the
event of an Insured Loss, as defined in Paragraph 9.1(c).

          (b)  RENTAL VALUE. The Insuring Party shall, in addition, obtain and
keep in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the full
rental and other charges payable by Lessee to Lessor under this Lease for one
(1) year (including all real estate taxes, insurance costs, and any scheduled
rental increases). Said insurance shall provide that in the event the Lease is
terminated by reason of an insured loss, the period of indemnity for such
coverage shall be extended beyond the date of the completion of repairs or
replacement of the Premises, to provide for one full year's loss of rental
revenues from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premium costs and other expenses, if any, otherwise
payable by Lessee, for the period the premises are unusable. Lessee shall be
liable for any deductible amount in the event of such loss.

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

          (d)  TENANT'S IMPROVEMENTS. If the Lessor is the Insuring Party, the
Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease. If Lessee is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations.

     8.4  LESSEE'S PROPERTY INSURANCE. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain
insurance coverage on all of Lessee's personal property, Lessee Owned
Alterations and Utility Installations in, on, or about the Premises similar
in coverage to that carried by the Insuring Party under Paragraph 8.3. Such
insurance shall be full replacement cost coverage with a deductible of not to
exceed $1,000 per occurrence. The proceeds from any such insurance shall be
used by Lessee for the replacement of personal property or the restoration of
Lessee Owned Alterations and Utility Installations. Lessee shall be the
Insuring Party with respect to the insurance required by this Paragraph 8.4
and shall provide Lessor with written evidence that such insurance is in
force.

     8.5  INSURANCE POLICIES. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B +, V, or such other rating as may be required by a Lender having a lien
on the Premises, as set forth in the most current issue of "Best's Insurance
Guide." Lessee shall not do or permit to be done anything which shall invalidate
the insurance policies referred to in this Paragraph 8. If Lessee is the
Insuring Party, Lessee shall cause to be delivered to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of such insurance with the insureds and loss payable clauses as required by this
Lease. No such policy shall be cancellable or subject to modification except
after thirty (30) days prior written notice to Lessor. Lessee shall at least
thirty (30) days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or "insurance binders" evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand. If the Insuring Party
shall fail to procure and maintain the insurance required to be carried by the
Insuring Party under this Paragraph 8, the other Party may, but shall not be
required to, procure and maintain the same, but at Lessee's expense.

     8.6  WAIVER OF SUBROGATION. Without affecting any other rights or remedies,
Lessee and Lessor ("WAIVING PARTY") each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's property arising
out of or incident to the perils required to be insured against under
Paragraph 8. The effect of such releases and waivers of the right to recover
damages shall not be limited by the amount of insurance carried or required, or
by any deductibles applicable thereto.

     8.7  INDEMNITY. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of, involving, or in dealing with, the
occupancy of the Premises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee in the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well founded or not. In case any action or proceeding be brought against
Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor
shall defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be so indemnified.

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

9. DAMAGE OR DESTRUCTION.

     9.1  DEFINITIONS.

          (a)  "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, the repair cost of which damage or destruction is less than 50%
of the then Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.

          (b)  "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations the
repair cost of which damage or destruction is 50% or more of the then
Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.

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

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

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

     9.2  PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that is
an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect; provided, however, that Lessee shall, at
Lessor's election, make the repair of any damage or destruction the total
cost to repair of which is $10,000 or less, and, in such event, Lessor shall
make the insurance proceeds available to Lessee on a reasonable basis for
that purpose. Notwithstanding the foregoing, if the required insurance was
not in force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in proceeds
(except as to the deductible which is Lessee's responsibility) as and when
required to complete said repairs. In the event, however, the shortage in
proceeds was due to the fact that, by reason of the unique nature of the
improvements, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the
shortage in insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within ten (10) days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds
or adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If Lessor does
not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days
thereafter to make such restoration and repair as is commercially reasonable
with Lessor paying any shortage in proceeds, in which case this Lease shall
remain in full force and effect. If in such case Lessor does not so elect,
then this Lease shall terminate sixty (60) days following the occurrence of
the damage or destruction. Unless otherwise agreed, Lessee shall in no event
have any right to reimbursement from Lessor for

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any funds contributed by Lessee to repair any such damage or destruction.
Premises Partial Damage due to flood or earthquake shall be subject to
Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that there may be
some insurance coverage but the net proceeds of any such insurance shall be
made available for the repairs if made by other Party.

    9.3  PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option, either: (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which
event this Lease shall continue in full force and effect, or (ii) give
written notice to Lessee within thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such damage of Lessor's desire to terminate
this Lease as of the date sixty (60) days following the giving of such
notice. In the event Lessor elects to give such notice of Lessor's intention
to terminate this Lease, Lessee shall have the right within ten (10) days
after the receipt of such notice to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage totally at Lessee's expense
and without reimbursement from Lessor. Lessee shall provide Lessor with the
required funds or satisfactory assurance thereof within thirty (30) days
following Lessee's said commitment. In such event this Lease shall continue
in full force and effect, and Lessor shall proceed to make such repairs as
soon as reasonably possible and the required funds are available. If Lessee
does not give such notice and provide the funds or assurance thereof within
the times specified above, this Lease shall terminate as of the date
specified in Lessor's notice of termination.

    9.4  TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the
damage or destruction is an Insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however, that the damage or destruction
was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 8.6.

    9.5  DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one (1) month's Base Rent, whether or not an Insured Loss, Lessor
may, at Lessor's option, terminate this Lease effective sixty (60) days
following the date of occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within thirty (30) days after the date
of occurrence of such damage. Provided, however, if Lessee at that time has
an exercisable option to extend this Lease or to purchase the Premises, then
Lessee may preserve this Lease by, within twenty (20) days following the
occurrence of the damage, or before the expiration of the time provided in
such option for its exercise, whichever is earlier ("EXERCISE PERIOD"), (i)
exercising such option and (ii) providing Lessor with any shortage in
insurance proceeds (or adequate assurance thereof) needed to make the repairs.
If Lessee duly exercises such option during said Exercise Period and provides
Lessor with funds (or adequate assurance thereof) to cover any shortage in
insurance proceeds, Lessor shall, at Lessor's expense repair such damage as
soon as reasonably possible and this Lease shall continue in full force and
effect. If Lessee fails to exercise such option and provide such funds or
assurance during said Exercise Period, the Lessor may at Lessor's option
terminate this Lease as of the expiration of said sixty (60) day period
following the occurrence of such damage by giving written notice to Lessee of
Lessor's election to do so within ten (10) days after the expiration of the
Exercise Period, notwithstanding any term or provision in the grant of option
to the contrary.

    9.6  ABATEMENT OF RENT; LESSEE'S REMEDIES.
         (a) In the event of damage described in Paragraph 9.2 (Partial
Damage - Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues, shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired.
Except for abatement of Base Rent, Real Property Taxes, insurance premiums,
and other charges, if any, as aforesaid, all other obligations of Lessee
hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration.

         (b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at
any time prior to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which Lessee has actual notice
of Lessee's election to terminate this Lease on a date not less than sixty
(60) days following the giving such notice. If Lessee gives such notice to
Lessor and such Lenders and such repair or restoration is not commenced
within thirty (30) days after receipt of such notice, this Lease shall
terminate as of the date specified in said notice. If Lessor or a Lender
commences the repair or restoration of the Premises within thirty (30) days
after receipt of such notice, this Lease shall continue in full force and
effect. "COMMENCE" as used in this Paragraph shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.

    9.7  HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Law and this Lease shall continue in full force and effect, but subject to
Lessor's rights under Paragraph 13), Lessor may at Lessor's option either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor's expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost to
investigate and remediate such condition exceeds twelve (12) times the then
monthly Base Rent or $100,000, whichever is greater, give written notice to
Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the giving of
such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten
(10) days after the receipt of such notice to give written notice to Lessor
of Lessee's commitment to pay for the investigation and remediation of such
Hazardous Substance Condition totally at Lessee's expense and without
reimbursement from Lessor except to the extent of an amount equal to twelve
(12) times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with the funds required of Lessee or satisfactory
assurance thereof within thirty (30) days following Lessee's said commitment.
In such event this Lease shall continue in full force and effect, and Lessor
shall proceed to make such investigation and remediation as soon as
reasonably possible and the required funds are available. If Lessee does not
give such notice and provide the required funds or assurance thereof within
the times specified above, this Lease shall terminate as of the date
specified in Lessor's notice of termination. If a Hazardous Substance
Condition occurs for which Lessee is not legally responsible, there shall be
abatement of Lessee's obligations under this Lease to the same extent as
provided in Paragraph 9.6(a) for a period of not to exceed twelve (12) months.

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

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

10. REAL PROPERTY TAXES.

    10.1 (a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Premises during the term of this
Lease. Subject to Paragraph 10.1(b), all such payments shall be made at least
ten (10) days prior to the delinquency date of the applicable installment.
Lessee shall promptly furnish Lessor with satisfactory evidence that such
taxes have been paid. If any such taxes to be paid by Lessee shall cover any
period of time prior to or after the expiration or earlier termination of the
term hereof, Lessee's share of such taxes shall be equitably prorated to
cover only the period of time within the tax fiscal year this Lease is in
effect, and Lessor shall reimburse Lessee for any overpayment after such
proration. If Lessee shall fail to pay any Real Property Taxes required by
this Lease to be paid by Lessee, Lessor shall have the right to pay the same,
and Lessee shall reimburse Lessor therefor upon demand.

         (b) ADVANCE PAYMENT. In order to insure payment when due and before
delinquency of any or all Real Property Taxes, Lessor reserves the right, at
Lessor's option, to estimate the current Real Property Taxes applicable to
the Premises, and to require such current year's Real Property Taxes to be
paid in advance to Lessor by Lessee, either: (i) in a lump sum amount equal
to the installment due, at least twenty (20) days prior to the applicable
delinquency date, or (ii) monthly in advance with the payment of the Base
Rent. If Lessor elects to require payment monthly in advance, the monthly
payment shall be that equal monthly amount which, over the number of months
remaining before the month in which the applicable tax installment would
become delinquent (and without interest thereon), would provide a fund large
enough to fully discharge before delinquency the estimated installment of
taxes to be paid. When the actual amount of the applicable tax bill is known,
the amount of such equal monthly advance payment shall be adjusted as
required to provide the fund needed to pay the applicable taxes before
delinquency. If the amounts paid to Lessor by Lessee under the provisions of
this Paragraph are insufficient to discharge the obligations of Lessee to pay
such Real Property Taxes as the same become due, Lessee shall pay to Lessor,
upon Lessor's demand, such additional sums as are necessary to pay such
obligations. All moneys paid to Lessor under this Paragraph may be
intermingled with other moneys of Lessor and shall not bear interest. In the
event of a Breach by Lessee in the performance of the obligations of Lessee
under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1(a), at the option of Lessor, be treated as an additional
Security Deposit under Paragraph 5.

    10.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "REAL
PROPERTY TAXES" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, levied against any legal or
equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, Lessor's right to rent or other income therefrom,
and/or Lessor's business of leasing the Premises. The term "REAL PROPERTY
TAXES" shall also include any tax, fee, levy, assessment or charge, or any
increase therein, imposed by reason of events occurring, or changes in
applicable law taking effect, during the term of this Lease, including but
not limited to a change in the ownership of the Premises or in the
improvements thereon, the execution of this Lease, or any modification,
amendment or transfer thereof, and whether or not contemplated by the Parties.

    10.3  JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property
Taxes for all of the land and improvements included within the tax parcel
assessed, such proportion to be determined by Lessor from the respective
valuations

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assigned in the assessor's work sheets or [MISSING TEXT] other information as
may be reasonably available. Assessor's reasonable determination thereof, in
good faith, shall be conclusive.

    10.4 PERSONAL PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee contained in the Premises or elsewhere. When possible,
Lessee shall cause its Trade Fixtures, furnishings, equipments and all other
personal property to be assessed and billed separately from the real property
of Lessor. If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property or, at Lessor's options, as
provided in Paragraph 10.1(b).

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

12. ASSIGNMENT AND SUBLETTING.

    12.1 LESSOR'S CONSENT REQUIRED.

         (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively,
"ASSIGNMENT") or sublet all or any part of Lessee's interest in this Lease or
in the Premises without Lessor's prior written consent given under and
subject to the terms of Paragraph 36.

         (b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of
forty-nine percent (49%) or more of the voting control of Lessee shall
constitute a change in control for this purpose.

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

         (d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be
a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period. If Lessor elects to
treat such unconsented to assignment or subletting as a noncurable Breach,
Lessor shall have the right to either: (i) terminate this Lease, or (ii) upon
thirty (30) days written notice ("Lessor's Notice"), increase the monthly
Base Rent to fair market rental value. Pending determination of the new fair
market rental value, if disputed by Lessee, Lessee shall pay the amount set
forth in Lessor's Notice, with any overpayment credited against the next
installment(s) of Base Rent coming due, and any underpayment for the period
retroactively to the effective date of the adjustment being due and payable
immediately upon the determination thereof. Further, in the event of such
Breach and market value adjustment, (i) the purchase price of any option to
purchase the Premises held by Lessee shall be subject to similar adjustment
to the then fair market value (without the Lease being considered an
encumbrance or any deduction for depreciation or obsolescence, and
considering the Premises at its highest and best use and in good condition),
or one hundred ten percent (110%) of the price previously in effect,
whichever is greater, (ii) any index-oriented rental or price adjustment
formulas contained in this Lease shall be adjusted to require that the base
index be determined with reference to the index applicable to the time of
such adjustment, and (iii) any fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior to the
market value adjustment.

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

    12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

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

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

         (c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the sublessee.
However, Lessor may consent to subsequent sublettings and assignments of the
sublease or any amendments or modifications thereto without notifying Lessee
or anyone else liable on the Lease or sublease and without obtaining their
consent, and such action shall not relieve such persons from liability under
this Lease or sublease.

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

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

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

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

         (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a
portion of the Premises heretofore or hereafter made by Lessee, and Lessor
may collect such rent and income and apply same toward Lessee's obligations
under this Lease; provided, however, that until a Breach (as defined in
Paragraph 13.1) shall occur in the performance of Lessee's obligations under
this Lease, Lessee may, except as otherwise provided in this Lease, receive,
collect and enjoy the rents accruing under such sublease. Lessor shall not,
by reason of this or any other assignment of such sublease to Lessor, nor by
reason of the collection of the rents from a sublessee, be deemed liable to
the sublessee for any failure of Lessee to perform and comply with any of
Lessee's obligations to such sublessee under such sublease. Lessee hereby
irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance
of Lessee's obligations under this Lease, to pay to Lessor the rents and
other charges due and to become due under the sublease. Sublessee shall rely
upon any such statement and request from Lessor and shall pay such rents and
other charges to Lessor without any obligation or right to inquire as to
whether such Breach exists and notwithstanding any notice from or claim from
Lessee to the contrary. Lessee shall have no right or claim against said
sublessee, or, until the Breach has been cured, against Lessor, for any such
rents and other charges so paid by said sublessee to Lessor.

         (b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of
such sublease; provided, however, Lessor shall not be liable for any prepaid
rents or security deposit paid by such sublessee to such sublessor or for any
other prior Defaults or Breaches of such sublessor under such sublease.

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

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

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

13. DEFAULT; BREACH; REMEDIES.
    13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter define), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in
said notice as rent due and payable to cure said Default. A "DEFAULT" is
defined as a failure by the Lessee to observe, comply with or perform any of
the terms, covenants, conditions or rules applicable to Lessee under this
Lease. A "BREACH"

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is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to registration of the applicable grace
period, shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2
and/or 13.3:

         (a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.

         (b) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent or any other monetary
payment required to be made by Lessee hereunder, whether to Lessor or to a
third party, as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which
endangers or threatens life or property, where such failure continues for a
period of three (3) days following written notice thereof by or on behalf of
Lessor to Lessee.

         (c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Law per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the recission of an unauthorized assignment or
subletting per Paragraph 12.1(b). (iv) a Tenancy Statement per Paragraphs 16
or 37, (v) the subordination or non-subordination of this Lease per Paragraph
30, (vi) the guaranty of the performance of Lessee's obligations under this
Lease it required under Paragraphs 1.11 and 37, (vii) the execution of any
document requested under Paragraph 42 (easements), or (viii) any other
documentation or information which Lessor may reasonably require of Lessee under
the terms of this Lease, where any such failure continues for a period of ten
(10) days following written notice by or on behalf of Lessor to Lessee.

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

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

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

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

     13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its option,
may require all future payments to be made under this Lease by Lessee to be made
only by cashier's check. In the event of a Breach of this Lease by Lessee, as
defined in Paragraph 13.1, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach, Lessor may:

         (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor.
In such event Lessor shall be entitled to recover from Lessee: (i) the worth
at the time of the award of the unpaid rent which had been earned at the time
of termination; (ii) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that the Lessee proves could
have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor
for all the detriment proximately caused by the Lessee's failure to perform
its obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, including but not limited to the cost of
recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys'
fees, and that portion of the leasing commission paid by Lessor applicable to
the unexpired term of this Lease. The worth at the time of award of the
amount referred to in provision (iii) of the prior sentence shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of award plus one percent (1%). Efforts by
Lessor to mitigate damages caused by Lessee's Default or Breach of this Lease
shall not waive Lessor's right to recover damages under this Paragraph. If
termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to recover in such proceeding
the unpaid rent and damages as are recoverable therein, or Lessor may reserve
therein the right to recover all or any part thereof in a separate suit for
such rent and/or damages. If a notice and grace period required under
subparagraphs 13.1(b), (c) or (d) was not previously given, a notice to pay
rent or quit, or to perform or quit, as the case may be, given to Lessee
under any statute authorizing the forfeiture of leases for unlawful detainer
shall also constitute the applicable notice for grace period purposes
required by subparagraphs 13.1(b), (c) or (d). In such case, the applicable
grace period under subparagraphs 13.1(b), (c) or (d) and under the unlawful
detainer statute shall run concurrently after the one such statutory notice,
and the failure of Lessee to cure the Default within the greater of the two
such grace periods shall constitute both an unlawful detainer and a Breach of
this Lease entitling Lessor to the remedies provided for in this Lease and/or
by said statute.

         (b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
abandonment and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.

         (c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are located.

         (d) The expiration or termination of this Lease and/or the termination
of Lessee's right to possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.

     13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "INDUCEMENT PROVISIONS," shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, any such
inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph shall not be deemed a waiver by Lessor of the provisions of this
Paragraph unless specifically so stated in writing by Lessor at the time of such
acceptance.

     13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within five (5)
days after such amount shall be due, then, without any requirement for notice
to Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%)
of such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of late payment by Lessee. Acceptance of such late charge by Lessor
shall in no event constitute a waiver of Lessee's Default or Breach with
respect to such overdue amount, nor prevent Lessor from exercising any of the
other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Rent, then notwithstanding Paragraph 4.1 or any other
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.

     13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt
by Lessor, and by the holders of any ground lease, mortgage or deed of trust
covering the Premises whose name and address shall have been furnished Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after
such notice are reasonably required for its performance, then Lessor shall
not be in breach of this Lease if performance is commenced within such thirty
(30) day period and thereafter diligently pursued to completion.

14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said
power (all of which are herein called "CONDEMNATION"), this Lease shall
terminate as to the part so taken as of the date the condemning authority
takes

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title or possession, whichever first occurs. If more than ten percent (10%)
of the floor area of the Premises, or more than twenty-five percent (25%) of
the land area not occupied by any building, is [MISSING TEXT] by
condemnation, Lessee may, at Lessee's option [MISSING TEXT] be exercised in
writing within ten (10) days after Lessor shall have given Lessee written
notice of such taking (or in the absence of such notice, within ten (10) days
after the condemning authority shall have taken possession) terminate this
Lease as of the date the condemning authority takes such possession. If
Lessee does not terminate this Lease in accordance with the foregoing, this
Lease shall remain in full force and effect as to the portion of the Premises
remaining, except that the Base Rent shall be reduced in the same proportion
as the rentable floor area of the Premises taken bears to the total rentable
floor area of the building located on the Premises. No reduction of Base Rent
shall occur if the only portion of the Premises taken is land on which there
is no building. Any award for the taking of all or any part of the Premises
under the power of eminent domain or any payment made under threat of the
exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that
Lessee shall be entitled to any compensation separately awarded to Lessee for
Lessee's relocation expenses and/or loss of Lessee's Trade Fixtures. In the
event that this Lease is not terminated by reason of such condemnation,
Lessor shall to the extent of its net severance damages received, over and
above the legal and other expenses incurred by Lessor in the condemnation
matter, repair any damage to the Premises caused by such condemnation, except
to the extent that Lessee has been reimbursed therefor by the condemning
authority. Lessee shall be responsible for the payment of any amount in
excess of such net severance damages required to complete such repair.

16. TENANCY STATEMENT.

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

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

17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises, or, if this is
a sublease, of the Lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or in this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor at the time of such transfer or assignment.
Except as provided in Paragraph 15, upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.

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

19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor within thirty (30) days
following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.

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

21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.

22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the nature, quality and character of the Premises.
Brokers have no responsibility with respect thereto or with respect to any
default or breach hereof by either Party.

23. NOTICES.

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

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

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

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

26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.

                                                         Initials [ILLEGIBLE]
                                                                 ------------

                                    PAGE 8

<PAGE>

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

28.  COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.

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

30.  SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

     30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Lessee may have by reason thereof.
If any Lender shall elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.

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

     30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "NON-DISTURBANCE AGREEMENT") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.

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

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

32.  LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the building of which
they are a part, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred twenty (120) days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability to Lessee.

33.  AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to
the contrary in this Lease, Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to grant such consent.

34.  SIGNS. Lessee shall not place any sign upon the Premises, except that
Lessee may, with Lessor's prior written consent, install (but not on the roof)
such signs as are reasonably required to advertise Lessee's own business. The
installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to install, and
all revenues from the installation of, such advertising signs on the Premises,
including the roof, as do not unreasonably interfere with the conduct of
Lessee's business.

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

36.  CONSENTS.

          (a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party is required to an act by
or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' or other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, practice or storage tank, shall be paid by Lessee to Lessor
upon receipt of an invoice and supporting documentation therefor. Subject to
Paragraph 12.2(e) (applicable to assignment or subletting), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee deposit
with Lessor an amount of money (in addition to the Security Deposit held under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor will
incur in considering and responding to Lessee's request. Except as otherwise
provided, any unused portion of said deposit shall be refunded to Lessee without
interest. Lessor's consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgment that no Default or
Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver
of any then existing Default or Breach, except as may be otherwise specifically
stated in writing by Lessor at the time of such consent.

          (b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent or such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.

37.  GUARANTOR.

     37.1 If there are to be any Guarantors of this Lease per Paragraph 1.11,
the form of the guaranty to be executed by each such Guarantor shall be in the
form most recently published by the American Industrial Real Estate Association,
and each said Guarantor shall have the same obligations as Lessee under this
Lease, including but not limited to the obligation to provide the Tenancy
Statement and information called for by Paragraph 16.

     37.2 It shall constitute a Default of the Lessee under this Lease if any
such Guarantor fails or refuses, upon reasonable request by Lessor to give: (a)
evidence of the due execution of the guaranty called for by this Lease,
including the authority of the Guarantor (and of the party signing on
Guarantor's behalf) to obligate such Guarantor on said guaranty, and including
in the case of a corporate Guarantor, a certified copy of a resolution of its
board of directors authorizing the making of such guaranty, together with a
certificate of incumbency showing the signature of the persons authorized to
sign on its behalf, (b) current financial statements of Guarantor as may from
time to time be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in effect.

38.  QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.

39.  OPTIONS

     39.1 DEFINITION. As used in this Paragraph 39 the word "OPTION" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor, or the right of first offer to purchase other
property of Lessor.

     39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof,
and cannot be voluntarily or involuntarily assigned or exercised by any person
or entity other than said original Lessee while the original Lessee is in full
and actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.

                                                          [ILLEGIBLE]
                                               Initials   -----------

<PAGE>

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

     39.4 EFFECT OF DEFAULT ON OPTIONS.

          (a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary: (i)
during the period commencing with the giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or (ii)
during the period of time any monetary obligation due Lessor from Lessee is
unpaid (without regard to whether notice thereof is given Lessee), or (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessor has given to Lessee three (3) or more notices of Default under
Paragraph 13.1, whether or not the Defaults are cured, during the twelve (12)
month period immediately preceding the exercise of the Option.

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

          (c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three(3) or more notices of Default under Paragraph 13.1 during any
twelve (12) month period, whether or not the Defaults are cured, or (iii) if
Lessee commits a Breach of this Lease.

40.  MULTIPLE BUILDINGS. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred in
connection therewith.

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

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

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

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

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

46.  OFFER. Preparation of this Lease by Lessor or Lessor's agent and submission
of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is
not intended to be binding until executed by all Parties hereto.

47.  AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.

48.  MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.

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

     IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO
     YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO
     EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF
     ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
     RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
     OR BY THE REAL ESTATE BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO THE
     LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
     TRANSACTION TO WHICH RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE
     OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF
     THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA, AN
     ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

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

Executed at 2211 Michigan Santa Monica  Executed at  Santa Monica CA
            --------------------------          -------------------------------
on   June 27, 1996    CA 90404          on  6/27/96
  ------------------------------------    -------------------------------------
by LESSOR:                              by LESSEE:
                                                    [ILLEGIBLE]
--------------------------------------  ---------------------------------------
 HOWARD REAL PROPERTY TRUST              SPECIALTY LABORATORIES, INC., a
                                         California Corporation
--------------------------------------  ---------------------------------------

By  /s/ Joseph L. Howard                By   2211 Michigan Ave
  ------------------------------------    -------------------------------------
Name Printed: Joseph L. Howard,         Name Printed: Santa Monica CA 90404
              Trustee
             -------------------------               --------------------------

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

By                                      By
  ------------------------------------    -------------------------------------

Name Printed:                           Name Printed:
             -------------------------               --------------------------

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

Address:                                Address:
        ------------------------------          -------------------------------

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

Tel No. (   )      Fax No. (   )        Tel No. (   )      Fax No. (   )
         --- ------         --- ------           --- ------         --- -------

NET                                    PAGE 10

NOTICE:   These forms are often modified to meet changing requirements of law
          and industry needs. Always write or call to make sure you are
          utilizing the most current form: American Industrial Real Estate
          Association, 345 South Figueroa Street, Suite M-1, Los Angeles, CA
          90071, (213) 687-8777, Fax. No. (213) 687-8616.

<PAGE>

SITE PLAN
1752-1756 CLOVERFIELD BLVD.

                         [GRAPHIC]

                          EXHIBIT "A"
<PAGE>

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

AGREED AND APPROVED BY:

LESSOR:                                 LESSEE:

HOWARD REAL PROPERTY TRUST              SPECIALTY LABORATORIES, INC.,
                                        A California corporation

By: /s/ Joseph L. Howard                By: /s/ [ILLEGIBLE]
    ------------------------------          ------------------------------
    Joseph L. Howard, Trustee                                , President

Dated: June 27, 1996                    Dated: 6/27/96
       ---------------------------             ---------------------------

                                      5

<PAGE>

                      ADDENDUM TO LEASE BY AND BETWEEN
                     HOWARD REAL PROPERTY TRUST - LESSOR
                                      AND
                    SPECIALTY LABORATORIES, INC. - LESSEE

                              DATED JUNE  , 1996

     49.  RENTAL INCREASE

          49.1  On August 15th of each year of the Lease term commencing
August 15, 1997, the monthly rental payable under Paragraph 1.5 of this Lease
shall be adjusted by the increase, if any, from the date this Lease
commences, in the Consumer Price Index of the Bureau of Labor Statistics of
the U.S. Department of Labor for Urban Wage Earners and Clerical Workers, Los
Angeles-Riverside (1982-84=100), "all items" (referred to herein as the
"Consumer Price Index").

          49.2  The monthly rental payable in accordance with Paragraph 49.1
of this Addendum shall be calculated as follows: the rent payable for the
first month for the term of this Lease as set forth in Paragraph 1.5 of this
Lease shall be multiplied by a fraction, the numerator of which shall be the
Consumer Price Index of the calendar month during which the adjustment is to
take effect, and the denominator of which shall be the Consumer Price Index
for the calendar month in which the original Lease term commences. The sum so
calculated shall constitute the new monthly rent hereunder. In no event shall
the rent for the first year of the first extended term be less than the rent
for the last year of the original term.

          49.3  Pending receipt of the relevant Consumer Price Index and
determination of the actual adjustment, Lessee shall pay an estimated
adjustment rental, as reasonably determined by Lessor by reference to the
then available Consumer Price Index information. Upon notification of the
actual adjustment after publication of the required Consumer Price Index, any
overpayment shall be credited against the next installment of rent due, and
any underpayment shall be immediately due and payable by Lessee. Lessor's
failure to request payment of an estimated or an actual rent adjustment
shall not constitute a waiver of the right to any adjustment provided for in
the Lease.

          49.4  In the event the compilation and/or publication of the
Consumer Price Index shall be transferred to any other governmental
department or bureau or agency or shall be discontinued, then the index most
nearly the same as the Consumer Price Index shall be used to make such
calculation. In the event that Lessor and Lessee cannot agree on such
alternate index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said arbitrators shall be paid equally by Lessor and
Lessee.

                                        1
<PAGE>

          49.5.  Notwithstanding the provisions of paragraph 49.1 through 49.4
above, Lessor and Lessee agree that the maximum annual monthly rental
increase shall not exceed six percent (6%) per year. In no event shall the
monthly rent decrease during the lease term.

     50.  RIGHT OF FIRST REFUSAL

          50.1.  Lessor shall not at any time prior to the expiration of the
term or option term of this Lease sell the Premises, or any interest therein,
excluding any sale or transfer between one or more of the trustees, settlors,
and/or beneficiaries (including then respective heirs) and/or any trusts,
family partnerships, limited liability companies and/or corporations owned
primarily by such persons, without first giving written notice thereof to
Lessee, which notice is hereinafter referred to as the "Notice to Sell,"
along with the rights described below.

          50.2.  The Notice to Sell shall include the exact and complete terms
of the proposal sale transaction.

          50.3.  For a period of seven (7) business days after receipt by
Lessee of the Notice to Sell, Lessee shall have the right, provided that this
lease is still in full force and effect and Lessee is not then in default in
the payment of rent or any other term or condition of the lease, to give
written notice to Lessor of Lessee's exercise of Lessee's right to purchase
the premises or the interest proposed to be sold on the same terms, prices
and conditions as set forth in the Notice to Sell. In the event that Lessor
does not receive written notice of Lessee's exercise of the right herein
granted within said seven (7) day period, there shall be a conclusive
presumption that Lessee has elected not to exercise Lessee's right hereunder
and Lessor may sell the premises or the interest proposed to be sold on the
same terms as set forth in the Notice to Sell. If the proposed sale
transaction is not consummated, a new notice shall be given to Lessee for all
subsequent offers as set forth above.

     51.  SUBLEASING PROFITS.  Any excess rent over and above the base
monthly rent as stated in this Lease, generated as the result of a sublease,
shall be evenly divided between Lessor and Lessee.

     52.  FIRST OPTION TO RENEW.  Provided that the Lease is still in full
force and effect and Lessee is not then in default in the payment of rent or
of any other term or condition of the Lease, Lessor hereby grants Lessee the
right and option to extend the term of this Lease for one (1) additional
thirty-four (34) month period ("first extended term") commencing on the first
day immediately following the expiration of the original term, specified in
Paragraph 1.5, and ending thirty-four (34) months thereafter, on all the
terms and conditions contained herein. Lessee shall exercise the option
granted herein, if at all, by giving Lessor written notice of its election to
extend the term of the Lease at least six (6) months, but not more than
twelve (12) months, prior to the expiration of the original term of this
lease. The Base Rent for the first extended term shall be an amount equal to
the rent in effect as of the end of the original term plus a cost of living

                                        2
<PAGE>

increase calculated in accordance with the formula set forth in Paragraph 49
of this Addendum. On September 1st of each year, commencing on September 1,
2001, the Base Rent for the first extended term shall be adjusted in
accordance with Paragraph 49 of this Addendum.

     53.  SECOND OPTION TO RENEW.  Provided that the Lease is still in full
force and effect and Lessee is not then in default in the payment of rent or
of any other term or condition of the Lease, Lessor hereby grants Lessee the
right and option to extend the term of this Lease for one (1) additional
five-year period ("second extended term") commencing on the first day
immediately following the expiration of the first extended term, specified in
Paragraph 52 of this Addendum, and ending five (5) years thereafter, on all
the terms and conditions contained herein. Lessee shall exercise the option
granted herein, if at all, by giving lessor written notice of its election to
extend the term of the Lease at least six (6) months, but not more than
twelve (12) months, prior to the expiration of the first extended term of
this Lease. The minimum annual rental payable during the second extended term
shall be the then fair market value ("Fair Market Rental Value") of the
premises for the second extended term, computed as follows: if Lessor and
Lessee cannot agree upon the fair market rental value of the premises within
thirty (30) days of Lessee's exercise of its option for the second extended
term, Lessor and Lessee shall attempt to agree in good faith upon a single
appraiser, not later than ten (10) days after the appraisal is invoked. If
Lessor and Lessee shall each appoint one such appraiser, not less than twenty
(20) days after the expiration of said ten-day period. Within ten (10) days
thereafter, the two (2) appointed appraisers shall appoint a third appraiser.
If either Lessor or Lessee fails to appoint its appraiser within the
prescribed time period, the single appraiser appointed shall determine the
Fair market Rental Value of the premises. If both parties fail to appoint
appraisers within the prescribed time periods, then the first appraiser
selected by a party shall determine the Fair Market Rental Value of the
premises. Each party shall bear the costs of its own appraiser and the
parties shall share equally the cost of the single or third appraiser, if
applicable. All appraisers shall have at least five (5) years of experience
in the appraisal of commercial real property in Santa Monica and shall be
members of professional organizations such as MAI or equivalent. If a single
appraiser is chosen, then such appraiser shall determine the Fair market
Rental Value of the premises. Otherwise, the Fair Market Rental Value of the
premises shall be the arithmetic average of the two (2) of the three (3)
appraisals which are closest in amount, and the third appraisal shall be
disregarded. Fair Market Rental Value shall take into consideration annual
rental increases but shall not take into consideration tenant improvements.

     54.  LESSOR'S MAINTENANCE.  Lessor shall maintain responsibility for the
exterior roof, exterior walls, foundations, main plumbing line, and seismic
structural integrity of the building for the Lease term and any extensions
thereafter.

                                     3
<PAGE>

     55.  HVAC SYSTEM.  Lessee shall maintain an HVAC and maintenance
contract with L.E.C. Service, Inc.. Lessor shall deliver all work orders,
warranty contracts and repair invoices to Lessee regarding HVAC maintenance.

     56.  PARKING.

     Lessee shall have the exclusive use of the entire parking area at no
additional charge and, subject to the approval of Lessor, shall have the
right to make improvements to the parking area which may include but shall
not be limited to ingress and egress to adjacent property.

     57.  CONDITION OF PREMISES.

     Notwithstanding anything herein contained to the contrary, Lessee
accepts the premises in its "as is" condition as of the commencement date,
with the exception that all building systems are delivered in working order.

     58.  CONSTRUCTION.

     Lessee shall have the right to make improvements to the premises with
Lessor's prior written consent. Within fifteen (15) working days of either
the delivery of the existing building plans for the premises by Lessor to
Lessee or within fifteen (15) working days after the execution of this Lease
by Lessee, whichever occurs later, Lessee shall deliver to Lessor a
preliminary plan for Lessee's contemplated improvements to the premises which
shall set forth in detail the scope of work involved and the preliminary
estimate of the cost of such work. Lessee shall be responsible for and timely
pay any and all bills and/or obligations created or incurred in connection
with such improvement, including all planning costs, governmental fees and
permits, and constructions costs. Any such improvement shall comply with the
Americans with Disabilities Act. All work performed will meet and comply with
all applicable codes and regulations. Lessee shall only use licensed and
bonded contractors. Lessee shall indemnify and hold Lessor free and harmless
from any and all costs, claims and/or liabilities arising out of such
improvements. Lessee shall keep Lessor reasonably informed of all aspects of
the planning and construction of such improvements.

     59.  PERMITS

     Upon execution of this Lease, Lessee will proceed immediately with
drafting of architectural plans and the processing of all permits necessary to
build and operate a medical laboratory at the Premises. This Lease shall be
contingent upon receiving all necessary governmental permits and construction
estimates to build and operate Lessee's business which shall be obtained by
July 17, 1996.

                                        4<PAGE>

                         SPECIALTY LABORATORIES, INC.
                         ----------------------------

                                                        Property No. OLSMS671G12
                                                                Account No. 3022

                       L I C E N S E      A G R E E M E N T

                                   I N D E X

 1. USE
 2. TERM
 3. CONSIDERATION
 4. INSURANCE
 5. LICENSOR'S USE OF THE PROPERTY
 6. LICENSEE'S IMPROVEMENTS
 7. LICENSEE'S PERSONAL PROPERTY
 8. HEIGHT LIMITATIONS
 9. ACCESS AND CLEARANCES
10. PARKING
11. FLAMMABLES, WASTE AND NUISANCES
12. PESTICIDES AND HERBICIDES
13. HAZARDOUS WASTE
14. SIGNS
15. FENCING
16. PARKWAYS AND LANDSCAPING -- DELETED
17. IRRIGATION EQUIPMENT
18. UNDERGROUND TANKS
19. UNDERGROUND FACILITIES -- DELETED
20. UTILITIES -- DELETED
21. TAXES, ASSESSMENTS AND LIENS
22. EXPENSE
23. ASSIGNMENTS
24. COMPLIANCE WITH LAW
25. GOVERNING LAW
26. INDEMNIFICATION
27. TERMINATION
28. EVENTS OF DEFAULT
29. REMEDIES
30. NON-POSSESSORY INTEREST
31. WAIVER
32. AUTHORITY
33. ATTORNEY FEES
34. ELECTRIC AND MAGNETIC FIELDS
35. NOTICES
36. RECORDING
37. COMPLETE AGREEMENT
ADDENDUM
--------
    PARKING

<PAGE>

                                                        Property No. OLSMS671G12
                                                                Account No. 3022

                               LICENSE AGREEMENT

     THIS AGREEMENT, made as of the _______ day of _______________, 19__,
between SOUTHERN CALIFORNIA EDISON COMPANY, a corporation organized under the
laws of the State of California, hereinafter called "licensor", and SPECIALTY
LABORATORIES, INC. hereinafter called "licensee";

WITNESSETH: That Licensor, for and in consideration of the faithful performance
by Licensee of the terms, covenants and agreements hereinafter set forth to be
kept and performed by Licensee, does hereby give to Licensee the license to use
that certain real property described below and depicted on Exhibit "A" attached
hereto and made a part hereof the ("Property") solely for the purpose
hereinafter specified, upon and subject to the terms, reservations, covenants
and conditions hereinafter set forth.

     The subject Property is located in the City of Santa Monica, County of Los
Angeles, State of California

     SUBJECT TO:

     Covenants, conditions, restrictions, reservations, exceptions, rights and
easements, whether or not of record including but not limited to, the follow:

     A. License Agreement to Kehillat Ma'Arav for parking purposes every
Saturday between the hours of 8:00 a.m. and 4:00 p.m.  effective September 17,
1998.

     B. The subject License Agreement to Specialty Laboratories, Inc. is for
parking purposes only, 7 days a week, 24 hours a day except on Saturdays between
the hours 8:00 a.m. - 4:00 p.m. .

     C. Licensee will be responsible for all maintenance needed to maintain and
repair the electronic keypad and electronic gate.

     D. Licensee will park in designated parking spaces only which are shown on
the attached Exhibit "A". The subject parking spaces will be painted "Specialty
Labs" for easy identification.

     1. USE: Licensee will use the Property for automobile parking (private)
purposes only. Licensor makes no representation, covenant, warranty or promise
that the Property is fir for any particular use, including the use for which
this Agreement is made and Licensee is not relying on any such representation,
covenant, warranty or promise. Licensee's failure to make such use of the
Property as determined by the Licensor in its sole discretion, will be grounds
for immediate termination of this Agreement in accordance with Article 28.

     2. TERM: Unless otherwise terminated as provided herein, this Agreement
will be in effect for a term of four (4) years commencing on the first day of
August, 1999 and ending on the last day of July, 2003. Licensee acknowledges
that this Agreement does not entitle Licensee to any subsequent agreement, for
any reason whatsoever, regardless of the use Licensee makes of the Property, the
improvements Licensee places on or makes to the Property, or for any other
reason.

     3. CONSIDERATION: Licensee will pay to Licensor the sum of Thirty Nine
Thousand Five Hundred Sixty and 00/100 Dollars ($39,560.00) upon the execution
and delivery of this Agreement for the first year; with subsequent annual
payments to be made as follows:

                                      -1-
<PAGE>

<TABLE>
<CAPTION>
                                            YEARLY           PAYMENT DUE
          TERM           YEAR DUE           AMOUNT           1ST DAY OF

       <S>               <C>              <C>                <C>
        2nd Year           2000           $35,600.00           August
        3rd Year           2001           $36,670.00           August
        4th Year           2002           $34,620.00           August
</TABLE>

All payments subsequent to the initial payment will be paid to the Southern
California Edison Company, Post Office Box 800, Rosemead, California, 91770,
Attention: Corporate Accounting Department - Accounts Receivable.

All accounts not paid within 30 days of the agreed upon due date will be charged
a late fee on all amounts outstanding.

     4. INSURANCE: During the term of this Agreement, Licensee shall maintain
the following insurance:

     (a)  Workers' Compensation with statutory limits, in accordance with the
          laws of the State of California and Employer's Liability with limits
          of not less than $500,000. Licensee shall require its insurer to
          waive all rights of subrogation against Licensor, its officers,
          agents and employers, except for any liability resulting from the
          willful or gross negligent acts of the Licensor.

     (b)  Commercial General Liability Insurance, including contractual
          liability and products liability, with a combined single limit of
          $1,000,000.00 Such insurance shall: (i) name Licensor, its officers,
          agents and employees as additional insureds, but only for Licensee's
          acts or ommissions; (ii) be primary for all purposes and (iii) contain
          standard cross-liability provisions

     (c)  Commercial Automobile Insurance with a combined single limit of
          $1,000,000. Such insurance shall: (i) cover the use of owned,
          non-owned and hired vehicles on the Property and (ii) name Licensor,
          its officers, agents and employees as additional insureds.

Licensee shall provide Licensor with proof of such insurance by submission of
certificates of insurance, pursuant to Section 35 "Notices," at least ten days
prior to the effective date of this Agreement. Such insurance shall not be
canceled nor allowed to expire nor be materially reduced without thirty days
prior written notice to Licensor.

     5. LICENSOR'S USE OF THE PROPERTY: Licensee agrees that Licensor, its
successors and assigns, have the right to enter upon the Property, at any time,
for any purpose, and the right to conduct any activity on the Property. Exercise
of this rights by Licensor, its successors and assigns, will not result in
compensation to Licensee for any damages whatsoever to personal property and/or
crops located on the Property.

     6. LICENSEE'S IMPROVEMENTS: Licensee must submit, for Licensor's prior
written approval, complete improvement plans, including grading plans,
identifying all existing and proposed improvements, a minimum of sixty (6) days
prior to making any use of the Property. Licensee must submit, for Licensor's
prior written approval plans for any modifications to such improvements. Written
approval may be modified and/or remove any or all such previously approved
improvements at Licensee's risk and expense and without any compensation from
Licensor. Licensor is no required, at any time, to make any improvements,
alterations, changes or additions of any nature whatsoever to the Property.
Licensee expressly acknowledges that any expenditures or improvements will in no
way alter Licensor's right to terminate in accordance with Article 27.

                                      -2-
<PAGE>

     7. LICENSEE'S PERSONAL PROPERTY: All approved equipment  and other property
brought, placed or erected on the Property by Licensee shall be and remain the
Property of Licensee, except as otherwise set forth herein. If Licensee is not
in default hereunder, Licensee shall have the right to remove the same from the
Property at any time prior to thirty (30) days after the expiration or earlier
termination of this Agreement; provided, however, that Licensee shall promptly
restore any damage to the Property caused by the removal. If Licensee is in
default, however, such equipment or other property shall not be removed by
Licensee without Licensor's written consent until Licensee has cured such
default, and Licensor shall have a lien thereon to the extent thereof.

     8. HEIGHT LIMITATIONS: Any equipment used by Licensee or its agents,
employees or contractors, on and/or adjacent to the Property, will be used and
operated so as to maintain a minimum clearance of twenty five (25) feet from all
overhead electrical conductors.

     9. ACCESS AND CLEARANCES: Licensee will provide Licensor with adequate
access to all of Licensor's facilities on the Property and at no time will there
be an interference with the free movement of Licensor's equipment and materials
over the Property. Licensor may require Licensee to provide and maintain access
roads within the Property, at a minimum of sixteen (16) feet in width, together
with commercial driveway aprons and curb depressions capable of supporting a
gross load of forth (40) tons on a three-axle vehicle. Unless otherwise
specified in writing by Licensor, Licensee will make no use of the area directly
underneath Licensor's towers and will maintain the following minimum clearances
at all times:

          a. A 25-foot-radius around all tower legs.
          b. A 10-foot-radius around all steel and wood poles.

NOTE: Additional clearance shall be required for structures and other material
improvements.

     10. PARKING: Licensee will not repair or refuel any motor vehicle or all
parking, storage, repairing or refueling of any motor vehicles on the Property
unless specifically approved in writing by Licensor.

     11. FLAMMABLES, WASTE AND NUISANCES: Licensee will not, nor allow others
to, place or store any flammable or waste materials on the Property or commit
any waste or damage to the Property or allow any to be done. Licensee will keep
the Property clean, free from weeds, rubbish and debris, and in a condition
satisfactory to Licensor. Licensee will be responsible for the control of and
will be liable for any damage or disturbance, caused by dust, odor, flammable or
waste materials, noise or other nuisance disturbances. Licensee will not permit
dogs on the Property.

     12. PESTICIDES AND HERBACIDES: Any pesticide or herbicide applications and
disposals will be made in accordance with all federal, state, county and local
laws. All horticulture Licensees are required to provide a copy of the annual
License for Pest Exclusion/Nursery Program from the State of California,
Department of Food and Agriculture. Licenses will dispose of all pesticides,
herbicides and any other toxic substances declared to be either a health or
environmental hazard as well as all materials contaminated by such substances,
including but not limited to, containers, clothing and equipment in the manner
prescribed by law.

     13. HAZARDOUS WASTE: Licensee will not engage in, or permit any other
party to engage in, any activity on the Property that violates federal, state or
local laws, rules or regulations pertaining to hazardous, toxic or infectious
materials and/or waste. Licensee will indemnify and hold Licensor, its
directors, officers agents and employees, and its successors and assigns,
harmless from any and all claims, loss, damage, actions, causes or action,
expenses and/or liability arising from leaks of, spills of, and/or contamination
by or from hazardous materials as defined by applicable laws or regulations,
which may occur during and after the Agreement term, and are attributable to the
actions of, or failure to act by, Licensee or any person claiming under
Licensee.

                                      -3-
<PAGE>

     14. SIGNS: Licensee must obtain written approval from Licensor prior to the
construction or placement of any sign, signboard or other form ow outdoor
advertising.

     15. FENCING: Licensee may install fencing on the Property with prior
written approval from Licensor. Such fencing will include double drive gates, a
minimum of sixteen (16) feet in width, designed to accommodate Licensor's locks,
in locations specified by Licensor. Licensee will ground and maintain all
fencing.

     16. PARKWAYS AND LANDSCAPING: Deleted

     17. IRRIGATION EQUIPMENT: Any irrigation equipment located on the Property
prior to the commencement of this Agreement, including but not limited to
pipelines, well pumping equipment and other structures, is the property of
Licensor and will remain on and be surrendered with the Property upon
termination of this Agreement.

     18. UNDERGROUND TANKS: Licensee will not install underground or
above-ground storage tanks, as defined by any and all applicable laws or
regulations, without Licensor's prior written approval.

     19. UNDERGROUND FACILITIES: Deleted

     20. UTILITIES: Deleted

     21. TAXES, ASSESSMENTS AND LIENS: Licensee will pay all taxes and
assessments which may be levied upon any crops, personal property, and
improvements, including but not limited to, buildings, structures, and fixtures
on the Property. Licensee will keep the Property free from all liens, including
but not limited to, mechanics liens and encumbrances by reason of use or
occupancy by Licensee, or any person claiming under Licensee. If Licensee fails
to pay the above-mentioned taxes, assessments or liens when due, Licensor will
have the right to pay the same and charge the amount to the Licensee. All
accounts not paid within 30 days of the agreed upon due date will be charged a
"late fee" on all amounts outstanding up to the maximum rate allowed by law.

     22. EXPENSE: Licensee will perform and pay all obligations of Licensee
under this Agreement. All matters or things herein required on the part of
Licensee will be performed and paid for at the sole cost and expense of
Licensee, without obligation on the part of Licensor to make payment or incur
cost or expense for any such matters or things.

     23. ASSIGNMENTS: This Agreement is person to Licensee, and Licensee will
not assign, transfer or sell this Agreement or any privilege hereunder in whole
or in part, and any attempt to do so will be void and confer no right on any
third party.

     24. COMPLIANCE WITH LAW: Licensee will comply with all applicable federal,
state, county and local laws, all covenants, conditions and restrictions of
record and all applicable ordinances, zoning restrictions, rules, regulations,
orders and any requirements of any duly constituted public authorities now or
hereafter in any manner affecting the Property or the streets and ways adjacent
thereto. Licensee will obtain all permits and other governmental approvals
required in connection with Licensee's activities hereunder.

     25. GOVERNING LAW: The existence, validity, construction, operation and
effect of this Agreement and all of its terms and provisions will be determined
in accordance with the laws of the state of California.

     26. INDEMNIFICATION: Licensee shall hold harmless, defend and indemnify
Licensor, its officers, agents and employees, and its successors and assigns,
from and against all claims, loss, damage, actions, causes and actions, expense
and/or liability arising from or growing out of loss or damage to property,
including that of Licensor, or injury to or death of persons, including
employees of

                                      -4-
<PAGE>

Licensor resulting in any manner whatsoever, directly or indirectly, by reason
of this Agreement or the use or occupancy of the Property by Licensee or any
person claiming under Licensee.

     27. TERMINATION: This Agreement may be cancelled and terminated by either
Licensor or Licensee, at any time, upon one hundred and twenty (120) days notice
in writing. Licensee will peaceably quit, surrender and, prior to termination
date, restore the Property to a condition satisfactory to the Licensor.
Termination, cancellation or expiration does not release Licensee from any
liability or obligation (indemnity or otherwise) which Licensee may have
incurred. Licensee's continued presence after termination shall be deemed a
trespass.

     28. EVENTS OF DEFAULT: The occurrence of any of the following shall
constitute a material default and breach of this Agreement by Licensee:

     (a)  Any failure by Licensee to pay the consideration due in accordance
          with Article 3, or to make any other payment required to be made by
          Licensee hereunder when due.

     (b)  The abandonment or vacating of the Property by Licensee.

     (c)  An attempted assignment or subletting of this Agreement by Licensee in
          violation of Article 23.

     (d)  The violation by Licensee of any resolution, ordinance, stature, code,
          regulation or other rule of any governmental agency in connection with
          Licensee's activities pursuant to this Agreement.

     (e)  A failure by Licensee to observe and perform any other provision of
          this Agreement to be observed or performed by Licensee, where such
          failure continues for the time period specified in a written notice
          thereof by Licensor to Licensee.

     (f)  Any attempt to exclude Licensor from the licensed premises.

     (g)  The making by Licensee of any general assignment for the benefit of
          creditors; the appointment of a receiver to take possession of
          substantial all of Licensee's assets located on the Property or of
          Licensee's privileges hereunder where possession is not restored to
          Licensee within five (5) days; the attachment, execution or other
          judicial seizure of substantially all of Licensee's assets located on
          the Property or of Licensee's privileges hereunder, where such seizure
          is not discharged within five (5) days.

     (h)  Any case, proceeding or other action brought against Licensee seeking
          any of the relief mentioned in "clause g" of this Article which has
          not been stayed or dismissed within thirty (30) days after the
          commencement thereof.

     29. REMEDIES: In the event of any default by Licensee, then in addition to
any other remedies available to Licensor at law or in equity, Licensor shall
have the immediate option to terminate this Agreement and all rights of Licensor
will have the right to remove Licensee's personal property from the Property,
including but not limited to, buildings, structures and fixtures. In addition,
Licensor may immediately recover from Licensee all amounts due and owing
hereunder, plus interest at the maximum rate permitted by law on such amounts
until paid, as well as any other amount necessary to compensate Licensor for all
the detriment proximately caused by Licensee's failure to perform its
obligations under this Agreement.

     30. NON-POSSESSORY INTEREST: Licensor retains full possession of the
Property and Licensee will not acquire any interest temporary, permanent,
irrevocable, possessory or otherwise by reason of this Agreement, or by the
exercise of the permission given herein. Licensee will make no claim to any such
interest. Any violation of this provision will immediately void and terminate
this Agreement.

                                      -5-
<PAGE>

     31. WAIVER: No waiver by Licensor or any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Licensee of
the same or any other provision. Licensor's consent to or approval of any act
shall not be deemed to render unnecessary the obtaining of Licensor's consent to
or approval of any subsequent act by Licensee.

     32. AUTHORITY: This Agreement is pursuant to the authority of and upon, and
is subject to the conditions prescribed by General Order No. 69-C of the Public
Utilities Commission of the State of California dated and effective July 10,
1985, which General Order No. 69-C, by this reference, is hereby incorporated
herein and made a part hereof.

     33. ATTORNEYS' FEES: In the event of any action, suit or proceeding against
the other, related to this Agreement, or any of the matters contained herein,
the successful party in such action, suit or proceeding shall be entitled to
recover from the other party reasonable attorney fees incurred.

     34. ELECTRIC AND MAGNETIC FIELDS ("EMF"): There have been numerous
scientific studies about the potential effects of power-frequency electric and
magnetic field ("EMF"). There are several sources of EMF, including household
appliances and electric power facilities. After many hears of Research on this
topic is continuing. Whenever anyone plans to license Edison property that is in
close proximity to Edison electrical facilities, Edison wants to share with
those involved in the development, information or literature it has about EMF.
Should Licensee wish, brochures will be made available, upon request, that
explain some facts about EMF and that outline Edison's policy in this area.
Please let Edison know if you have questions or wish to have additional
information.

     35. NOTICES: All notices required to be given by either party will be made
in writing and deposited in the United States mail, first class, postage
prepaid, addressed as follows:

         To Licensor: Southern California Edison Company
                      Corporate Realty Estate Department
                      Real Estate Revenue Division
                      100 Long Beach Blvd. Suite 1004
                      Long Beach CA 90802

         To Licensee: Specialty Laboratories, Inc.
                      2211 Michigan Avenue
                      Santa Monica, CA 90404-3900

         Business Telephone No. (310) 828-6543

Licensee will immediately notify Licensor of any address change.

                                      -6-
<PAGE>

     36. RECORDING: Licensee will not record this Agreement.

     37. COMPLETE AGREEMENT: Licensor and Licensee acknowledge that the
foregoing provisions and any addenda and exhibits attached hereto constitute the
entire Agreement between the parties.

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

                                           SOUTHERN CALIFORNIA EDISON COMPANY

                                           By /s/ MIKE ORDUNO
                                              -------------------------------
                                                                     LICENSOR
                                                  MIKE ORDUNO, CCIM
                                                  Land Development Manager
                                                  Real Estate Revenue

                                           SPECIALTY LABORATORIES, INC.

                                           By /s/ Bart E. Thielen
                                              -------------------------------
                                                                     LICENSEE

                                           Print Name:  Bart E. Thielen
                                                       ----------------------

                                      -7-
<PAGE>

                                A D D E N D U M
                                ---------------

PARKING

A.   Vehicles parked on the Property are limited to those owned by Licensee and
     its employees, invitees, customers and visitors. Licensee will not allow
     the storage, repairing or refueling of any vehicles on the property.

B.   No portion of the Property will be used to satisfy the minimum parking
     requirements of any government agency.

C.   Licensee must obtain prior written approval from Licensor for any vehicle
     parking improvements and/or subsequent modification. Licensee will maintain
     parking improvements at all times in a safe condition satisfactory to
     Licensor.

D.   Parking will be permitted in designated areas only. No parking will be
     permitted under or within ten feet of the "drip line" of Licensor's
     overhead electric conductors.

E.   At any time, Licensor may require the relocation of any portion of the
     parking improvements. Licensee will relocate same, at its expense, to a
     location satisfactory to Licensor with sixty (60) days after receiving
     notice to relocate from Licensor.

                                  [Illegible]
                            -----------------------
                              Licensee's Initials

                                      -8-
<PAGE>

                    [GRAPHIC OMMITED ON THIS PAGE CONTAINED
                   DESCRIPTION OF FACILITIES AND MAP OF AREA]

<PAGE>

                          [INSURANCE CERTIFICATE FORM]

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