Document:

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                                                                    Exhibit 10.7

                    MULTI-TENANT INDUSTRIAL TRIPLE NET LEASE

                        Effective Date: December 3, 1999
                 (the date set forth below Landlord's signature)

                             BASIC LEASE INFORMATION

<TABLE>
<S>                                <C>
Landlord:                          CATELLUS DEVELOPMENT CORPORATION,
                                   a Delaware corporation

Landlord's Address For             201 Mission Street
  Notice:                          San Francisco, California 94105
                                   Attn: Asset Management
                                   Telephone: (415) 974-4500
                                   Fax: (415) 974-4687

Landlord's Address                 File #1918
  For Payment of Rent:             P.O. Box 61000
                                   San Francisco, California 94161-1918

Tenant:                            DICON FIBEROPTICS, INC., a California corporation

Tenant's Address                   Dicon Fiberoptics, Inc.
  For Notice:                      1331 Eighth Street
                                   Berkeley, California 94710
                                   Attn: Gina Liang
                                   Telephone: (510) 528-0427
                                   Fax: (51) 528-1519

Project:                           Regatta Business Park

Building:                          Building IB, consisting of approximately 88,845 rentable square feet

Premises:                          Approximately 50,885 rentable square feet as shown in Exhibit A.

Parking:                           3.25 unreserved spaces per each 1,000 rentable square feet of the
                                   Premises

Premises Address:                  914 Marina Way South
  Street:                          [ADDRESS SUBJECT TO CHANGE BY CITY OF RICHMOND]
  City and State:                  Richmond, California

Term:                              Sixty (60) months

Estimated Commencement             March 1, 2000
  Date:
</TABLE>

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<TABLE>
<CAPTION>

Base Rent:                         Months           Monthly Base Rent
                                   ------           -----------------
<S>                                <C>              <C>
                                    1-12               $53,429.25
                                   13-24               $55,032.13
                                   25-36               $56,683.09
                                   37-48               $58,383.58
                                   49-60               $60,135.09
</TABLE>

<TABLE>
<S>                                <C>
Tenant's Share:                    57.27%

Security Deposit:                  $60,135.09

Broker:                            Landlord's Broker:  Colliers International
                                   Tenant's Broker:    Colliers International

Lease Year:                        Shall refer to each twelve month period during the Term commencing
                                   on the Commencement Date.

Permitted Uses                     Manufacturing, testing and assembly of fiberoptic equipment and
                                   products, general office and other related activities and no
                                   other uses shall be permitted without the prior written consent
                                   of Landlord in its sole and absolute discretion.

Options:                           Tenant has one (1) five (5) year option to extend the Term.
</TABLE>

ADDENDUM

EXHIBITS

A      Premises
B      Work Letter
C      Commencement Date Memorandum
D      [INTENTIONALLY LEFT BLANK]
E      Prohibited Uses
P      Rules and Regulations
G      Requirements for Improvements or Alterations by Tenant
H      Estoppel Certificate

      The Basic Lease Information set forth above and the Addendum and Exhibits
attached hereto are incorporated into and made a part of the following Lease.
Each reference in this Lease to any of the Basic Lease Information shall mean
the respective information above and shall be construed to incorporate all of
the terms provided under the particular Lease paragraph pertaining to such
information. In the event of any conflict between the Basic Lease Information
and the provisions of the Lease, the latter shall control.

      LANDLORD (_______)    AND TENANT    (_______) AGREE.
                initial                    initial

                                      (ii)
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                               TABLE OE CONTENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>                                                                              <C>
l.   PREMISES ................................................................    1
     1.1   Premises ..........................................................    1
     1.2   Common Area  ......................................................    1
     1.3   Reserved Rights ...................................................    1
     1.4   Condition of the Premises .........................................    1

2.   TERM ....................................................................    1
     2.1   Commencement Date .................................................    1
     2.2   Possession ........................................................    2
     2.3   Early Entry .......................................................    2

3.   RENT ....................................................................    2
     3.1   Rent ..............................................................    2
     3.2   Late Charge and Interest ..........................................    3
     3.3   Security Deposit ..................................................    3

4.   UTILITIES ...............................................................    3

5.   TAXES ...................................................................    3
     5.1   Real Property Taxes ...............................................    3
     5.2   Definition of Real Property Taxes .................................    4
     5.3   Personal Property Taxes ...........................................    4
     5.4   Enterprise Zone ...................................................    4

6.   OPERATING EXPENSES ......................................................    4
     6.1   Operating Expenses ................................................    4
     6.2   Definition of Operating Expenses ..................................    4

7.   ESTIMATED EXPENSES ......................................................    5
     7.1   Payment ...........................................................    5
     7.2   Adjustment ........................................................    5

8.   INSURANCE ...............................................................    5
     8.1   Landlord ..........................................................    5
     8.2   Tenant ............................................................    6
     8.3   General ...........................................................    6
     8.4   Indemnity .........................................................    7
     8.5   Exemption of Landlord from Liability ..............................    7
     8.6   Landlord's Indemnity ..............................................    7

9.   REPAIRS AND MAINTENANCE .................................................    8
     9.1   Tenant ............................................................    8
     9.2   Landlord ..........................................................    8

10.  ALTERATIONS .............................................................    9
     10.1  Trade Fixtures; Alterations .......................................    9
     10.2  Damage; Removal ...................................................    9
     10.3  Liens..............................................................    9
     10.4  Standard of Work ..................................................    9

11.  USE .....................................................................   10

12.  ENVIRONMENTAL MATTERS ...................................................   10
     12.1  Hazardous Materials ...............................................   10
     12.2  Indemnification ...................................................   11

13.  DAMAGE AND DESTRUCTION ..................................................   11
     13.1  Casualty ..........................................................   11
</TABLE>

                                     (iii)
<PAGE>

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>                                                                              <C>
     13.2  Tenant's Fault ....................................................   12
     13.3  Uninsured Casualty ................................................   13
     13.4  Waiver ............................................................   13

14.  EMINENT DOMAIN ..........................................................   13
     14.1  Total Condemnation ................................................   13
     14.2  Partial Condemnation ..............................................   13
     14.3  Award..............................................................   13
     14.4  Temporary Condemnation ............................................   13

15.  DEFAULT .................................................................   14
     15.1  Events of Defaults ................................................   14
     15.2  Remedies ..........................................................   14
     15.3  Cumulative ........................................................   15

16.  ASSIGNMENT AND SUBLETTING ...............................................   15
     16.1  Landlord's Consent ................................................   15
     16.2  Permitted Assignments and Subleases ...............................   16
     16.3  Assign to Joint Venture ...........................................   16

17.  ESTOPPEL, ATTORNMENT AND SUBORDINATION ..................................   17
     17.1  Estoppel ..........................................................   17
     17.2  Subordination .....................................................   17
     17.3  Attornment ........................................................   17

18.  [INTENTIONALLY DELETED] .................................................   17

19.  MISCELLANEOUS ...........................................................   17
     19.1  General ...........................................................   17
     19.2  Signs .............................................................   18
     19.3  Waiver ............................................................   18
     19.4  Financial Statements ..............................................   19
     19.5  Limitation of Liability ...........................................   19
     19.6  Notices ...........................................................   19
     19.7  Brokerage Commission ..............................................   19
     19.8  Authorization .....................................................   19
     19.9  Holding Over; Surrender ...........................................   19
     19.10 Joint and Several .................................................   20
     19.11 Covenants and Conditions ..........................................   20
     19.12 Auctions ..........................................................   20
     19.13 Consents ..........................................................   20
     19.14 Force Majeure .....................................................   20
     19.15 Mortgagee Protection ..............................................   20
     19.16 Guarantors ........................................................   21
     19.17 Hazardous Substance Disclosure ....................................   21
     19.18 Year 2000 Compliance ..............................................   21
     19.19 Parking ...........................................................   21
     19.20 Addenda ...........................................................   21
</TABLE>

                                      (iv)
<PAGE>

1.    PREMISES

      1.1   Premises. Landlord hereby leases to Tenant the Premises as shown on
Exhibit A attached hereto, but excluding the Common Area (defined below) and any
other portion of the Project. Tenant has determined that the Premises are
acceptable for Tenant's use and Tenant acknowledges that, except as set forth in
the Work Letter, if any, neither Landlord nor any broker or agent has made any
representations or warranties in connection with the physical condition of the
Premises or their fitness for Tenant's use upon which Tenant has relied directly
or indirectly for any purpose. By taking possession of the Premises, Tenant
accepts the Premises "AS-IS" and waives all claims of defect in the Premises,
except as set forth in the Work Letter.

      1.2   Common Area. Tenant may, subject to rules made by Landlord, use the
following areas ("Common Area") in common with Landlord and other tenants of the
Project: refuse facilities, landscaped areas, driveways necessary for access to
the Premises, parking spaces and other common facilities designated by Landlord
from time to time for the common use of all tenants of the Project.

      1.3   Reserved Rights. Landlord reserves the right to enter the Premises
for any reason upon reasonable notice to Tenant (or without notice in case of an
emergency) and/or to undertake the following all without abatement of rent or
liability to Tenant (provided, however, that in exercising Landlord's rights
under this sentence Landlord shall use reasonable efforts to minimize
interference with Tenant's use of the Premises): inspect the Premises and/or the
performance by Tenant of the terms and conditions hereof; make such alterations,
repairs, improvements or additions to the Premises as required or permitted
hereunder; change boundary lines of the Common Areas; install, use, maintain,
repair, alter, relocate or replace any pipes, ducts, conduits, wires, equipment
and other facilities in the Common Area or the Building; grant easements on the
Project, dedicate for public use portions thereof and record covenants,
conditions and restrictions ("CC&Rs") affecting the Project and/or amendments to
existing CC&Rs which do not unreasonably interfere with Tenant's use of the
Premises or impose additional material monetary obligations on Tenant; change
the name of the Project; affix reasonable signs and displays; and, during the
last nine (9) months of the Term, place signs for the rental of, and show the
Premises to prospective tenants.

      1.4   Condition of the Premises. Landlord shall, at its sole cost and
expense, be responsible for the Premises' compliance with any law, ordinance,
regulation or code (collectively, "Laws") applicable to any condition of the
Premises existing as of the Commencement Date, irrespective of the time when the
Premises' non-compliance is discovered, cited or brought to the attention of
Landlord by Tenant or a third party; provided, however, Landlord shall not be
required to make any improvements or alterations to the Premises (or any portion
thereof) to bring the Premises (or any portion thereof) in compliance with any
Law (i) which are required as a result of the specific business being conducted
by Tenant on or at the Premises or a change of use of the Premises, (ii) which
are made by or at the request of Tenant, including, without limitation, the
Tenant Improvements, or (iii) which are required in order for the Premises (or
any portion thereof) to comply with the Americans with Disabilities Act (42
U.S.C. 12101 et seq.) ("ADA"), as amended or recodified from time-to-time, as a
result of Tenant's status as an employer of employees or as a result of the
Tenant Improvements requested by Tenant. Tenant shall, at its sole cost and
expense, be responsible for the compliance with all Laws for improvements to the
Premises (a) which are required as a result of the specific business being
conducted by Tenant on or at the Premises, or a change of use of the Premises,
(b) made by or at the direction of Tenant, including, without limitation, the
Tenant Improvements, and (c) which are required in order for the Premises (or
any portion thereof) to comply with the ADA as a result of Tenant's status as an
employer of employees or as a result of the Tenant Improvements requested by
Tenant.

2.    TERM

      2.1   Commencement Date. The Term of the Lease shall commence
("Commencement Date") on the first day of the first full month following the
date on which Landlord delivers to Tenant the Premises Substantially Complete
(as hereinafter defined) except that if Landlord delivers the Premises to Tenant
on the first day of a month, that date shall be the Commencement Date, and the
Lease shall continue in full force and effect for the period of time specified
as the Term or until this Lease is terminated as otherwise provided herein. The
Premises shall be deemed to be "Substantially Complete" on the earliest of the
date on which: (1) Landlord files or causes to be fled with the City in which
the Premises are located (if required) and delivers to Tenant an architect's
notice of substantial completion, or similar written notice that the Premises
are substantially complete or (2) Tenant

<PAGE>

commences business operations in the Premises. Landlord shall arrange for the
construction of certain Tenant Improvements (as defined in the Work Letter), if
any, in accordance with and subject to the terms of the Work Letter attached
hereto as Exhibit B. Tenant shall, upon demand after delivery of the Premises to
Tenant, execute and deliver to Landlord a Commencement Date Memorandum in the
form attached hereto as Exhibit C acknowledging (i) the Commencement Date, (ii)
the final square footage of the Premises and (iii) Tenant's acceptance of the
Premises. If the Premises are not Substantially Complete on the Estimated
Commencement Date as extended by Force Majeure events and Tenant Delays (as
defined in the Lease or Work Letter, if any), this Lease shall remain in effect,
Landlord shall not be subject to any liability, and the Commencement Date shall
be delayed until the date the Premises are Substantially Complete.

      2.2   Possession. Tenant's possession of the Premises during the period of
time, if any, from the date on which Landlord delivers possession of the
Premises to Tenant Substantially Complete (the "Possession Date") to the
Commencement Date, shall be subject to all the provisions of this Lease and
shall not advance the expiration date. Rent shall be paid for such period at the
rate stated in the Basic Lease Information, prorated on the basis of a thirty
(30) day month, and shall be due and payable to Landlord on or before the
Commencement Date. Tenant shall upon demand acknowledge in writing the
Possession Date in the form attached hereto as Exhibit C.

      2.3   Early Entry. Notwithstanding anything to the contrary contained in
Section 2.2 above, or elsewhere in this Lease, Tenant shall have the right to
enter the Premises no earlier than forty-five (45) days prior to the
Commencement Date to install phone systems, furniture, fixtures and equipment,
etc. and such early entry for such purposes shall not constitute occupancy for
operation of Tenant's business and shall not trigger the Commencement Date.
Tenant agrees (i) any such early entry by Tenant shall be at Tenant's sole risk;
(ii) Tenant shall not interfere with Landlord or Landlord's contractors
completing work within the Premises (such interference to be determined in the
exercise of Landlord's sole discretion) or cause any labor difficulties; Tenant,
together with its employees, agents and independent contractors will be subject
to and will work under the direction of Landlord's contractor, (iii) Tenant
shall comply with and be bound by all provisions of this Lease during the period
of any such early entry except for the payment of Rent, (iv) prior to entry upon
the Premises by Tenant, Tenant agrees to pay for and provide to Landlord
certificates evidencing the existence and amounts of liability insurance carried
by Tenant, which coverage must comply with the provisions of this Lease relating
to insurance, (v) Tenant and its agent and contractors agree to comply with all
applicable laws, regulations, permits and other approvals required to perform
its work during the early entry on the Premises, and (vi) except in cases of
Landlord's gross negligence or willful acts, Tenant agrees to indemnify,
protect, defend and save Landlord and the Premises harmless from and against
any and all liens, liabilities, losses, damages, costs, expenses, demands,
actions, causes of action and claims (including, without limitation, attorneys'
fees and legal costs) arising out of the early entry, use, construction, or
occupancy of the Premises by Tenant or its agents, employees or contractors.

3.    RENT

      3.1   Rent. Tenant shall pay to Landlord, at Landlord's Address for
Payment of Rent designated in the Basic Lease Information, or at such other
address as Landlord may from time to time designate in writing to Tenant for the
payment of Rent, the Base Rent, without notice, demand, offset or deduction, in
advance, on the first day of each calendar month. Landlord shall have no
obligation to notify Tenant of any increase in Rent and Tenant's obligation to
pay all Rent (and any increases) when due shall not be modified or altered by
such lack of notice from Landlord. It is intended that this Lease be a "triple
net lease," and that the Rent to be paid hereunder by Tenant will be received by
Landlord without any deduction or offset whatsoever by Tenant, foreseeable or
unforeseeable, except as otherwise expressly provided in this Lease. Except as
expressly provided to the contrary in this Lease, Landlord shall not be required
to make any expenditure, incur any obligation, or incur any liability of any
kind whatsoever in connection with this Lease or the ownership, construction,
maintenance, operation or repair of the Premises or the Project. If the Term
commences (or ends) on a date other than the first (or last) day of a month,
Base Rent shall be prorated on the basis of a thirty (30) day month. All sums
other than Base Rent which Tenant is obligated to pay under this Lease shall be
deemed to be additional rent due hereunder ("Additional Rent"), whether or not
such sums are designated Additional Rent and, together with the Base Rent, shall
be due and payable to Landlord commencing on the Possession Date. The term
"Rent" means the Base Rent and all Additional Rent payable hereunder.

                                      -2-
<PAGE>

      3.2   Late Charge and Interest. The late payment of any Rent will cause
Landlord to incur additional costs, including administration and collection
costs and processing and accounting expenses and increased debt service
("Delinquency Costs"). If Landlord has not received any installment of Rent
within five (5) days after such amount is due, Tenant shall pay a late charge of
ten percent (10%) of the delinquent amount, which is agreed to represent a
reasonable estimate of the Delinquency Costs incurred by Landlord. In addition,
all such delinquent amounts shall bear interest from the date such amount was
due until paid in full at a rate per annum ("Applicable Interest Rate") equal to
the lesser of (a) the maximum interest rate permitted by law or (b) five percent
(5%) above the rate publicly announced by Bank of America, N.A. (or if Bank of
America, N.A. ceases to exist, the largest bank then headquartered in the State
of California) ("Bank") as its "Reference Rate". If the use of the announced
Reference Rate is discontinued by the Bank, then the term Reference Rate shall
mean the announced rate charged by the Bank which is, from time to time,
substituted for the Reference Rate. Landlord and Tenant recognize that the
damage which Landlord shall suffer as a result of Tenant's failure to pay such
amounts is difficult to ascertain and said late charge and interest are the best
estimate of the damage which Landlord shall suffer in the event of late payment.
If a late charge becomes payable for any three (3) installments of Rent within
any twelve (12) month period, then the Rent shall automatically become due and
payable quarterly in advance.

      3.3   Security Deposit. Upon the execution of this Lease, Tenant shall pay
to Landlord the Security Deposit. The Security Deposit shall secure the full and
faithful performance of each provision of this Lease to be performed by Tenant.
Landlord shall not be required to pay interest on the Security Deposit or to
keep the Security Deposit separate from Landlord's own funds. If Tenant fails to
perform fully and timely all or any of Tenant's covenants and obligations
hereunder, Landlord may, but without obligation, apply all or any portion of the
Security Deposit toward fulfillment of Tenant's unperformed covenants and/or
obligations. If Landlord does so apply any portion of the Security Deposit,
Tenant shall immediately pay Landlord sufficient cash to restore the Security
Deposit to the amount of the then current Base Rent per month. Upon any increase
in Base Rent, Landlord may require the Security Deposit to be increased by the
amount of the increase in Base Rent per month. After Tenant vacates the
Premises, upon the expiration or sooner termination of this Lease, if Tenant is
not then in default, Landlord shall return to Tenant any unapplied balance of
the Security Deposit. Should the Permitted Use be amended (in Landlord's sole
and absolute discretion) to accommodate a change in the business of Tenant or to
accommodate a subtenant or assignee approved by Landlord, Landlord shall have
the right to increase the Security Deposit to the extent necessary, in
Landlord's reasonable judgment, to account for any increased risk to the
Premises or increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Tenant occurs during this Lease and following
such change the financial condition of Tenant is, in Landlord's reasonable
judgment, reduced, Tenant shall deposit such additional monies with Landlord as
shall be sufficient to cause the Security Deposit to be at a commercially
reasonable level based on said change in financial condition.

4.    UTILITIES. Tenant shall pay all charges for heat, water, gas, electricity,
telephone and any other utilities used on or provided to the Premises. Landlord
shall not be liable to Tenant for interruption in or curtailment of any utility
service, nor shall any such interruption or curtailment constitute constructive
eviction or grounds for rental abatement; provided, however, if as a result of
Landlord's negligence or willful misconduct there exists an interruption of
essential utilities or building services, such as electricity,
telephone/telecommunication service, fire protection or water such that the
Premises (or a material portion thereof) are unfit for occupancy and not
occupied by Tenant for its ordinary business operations during any five (5)
consecutive business days following written notice to Landlord of such
interruption in services, then Tenant's Base Rent shall thereafter be abated
until the Premises are again usable by Tenant in proportion to the extent to
which Tenant's use of the Premises is interfered with. The foregoing provision
regarding interruption of utility services shall not apply in case of damage to,
or destruction of, the Premises, which shall be governed by Section 13 of this
Lease. In the event the Premises is not separately metered, Tenant shall have
the option, subject to Landlord's prior written consent and the terms of this
Lease, to cause the Premises to be separately metered at Tenant's cost and
expense. If Tenant does not elect to cause the Premises to be separately
metered, Tenant shall pay a reasonable proration of utilities, as determined by
Landlord.

5.    TAXES

      5.1   Real Property Taxes. Tenant shall pay to Landlord Tenant's Share of
the Real Property Taxes for each full or partial calendar year during the Lease
Term; provided, however, that Landlord shall reimburse Tenant for any refund of
Real Property Taxes received by Landlord for Real Property Taxes paid by Tenant
during the Term of the Lease.

                                      -3-
<PAGE>

      5.2   Definition of Real Property Taxes. "Real Property Taxes" shall be
the sum of the following: all real property taxes, possessory-interest taxes,
business or license taxes or fees, service payments in lieu of such taxes or
fees, annual or periodic license or use fees, excises, transit and traffic
charges, housing fund assessments, open space charges, childcare fees, school,
sewer and parking fees or any other assessments, levies, fees, exactions or
charges, general and special, ordinary and extraordinary, unforeseen as well as
foreseen (including fees "in-lieu" of any such tax or assessment) which are
assessed, levied, charged, conferred or imposed by any public authority upon the
Project (or any real property comprising any portion thereof) or its operations,
together with all taxes, assessments or other fees imposed by any public
authority upon or measured by any Rent or other charges payable hereunder,
including any gross receipts tax or excise tax levied by any governmental
authority with respect to receipt of rental income, or upon, with respect to or
by reason of the development, possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion thereof, or documentary transfer taxes upon this transaction or any
document to which Tenant is a party creating or transferring an interest in the
Premises, together with any tax imposed in substitution, partially or totally,
of any tax previously included within the aforesaid definition or any additional
tax the nature of which was previously included within the aforesaid definition,
together with any and all costs and expenses (including, without limitation,
attorneys, administrative and expert witness fees and costs) of challenging any
of the foregoing or seeking the reduction in or abatement, redemption or return
of any of the foregoing, but only to the extent of any such reduction,
abatement, redemption or return. All references to Real Property Taxes during a
particular year shall be deemed to refer to taxes accrued during such year,
including supplemental tax bills regardless of when they are actually assessed
and without regard to when such taxes are payable. The obligation of Tenant to
pay for supplemental taxes shall survive the expiration or early termination of
this Lease. In no event shall Tenant or any Tenant Party (as defined in Section
12.1) be entitled to file any property tax assessment appeal. Nothing contained
in this Lease shall require Tenant to pay any franchise, corporate, estate or
inheritance tax of Landlord, or any income, profits or revenue tax or charge
upon the net income of Landlord, nor shall Tenant be obligated to pay for any
increase in Real Property Taxes resulting solely from the reassessment of the
Project caused by the installation of any additional improvements on or to the
Project after the Commencement Date that are made expressly for the benefit of
other tenants of the Project and do not benefit the Project as a whole or the
Common Areas. Real Property Taxes for partial years, if any, falling within the
Term shall be prorated. Tenant's obligations for Real Property Taxes for the
last full and/or partial year(s) of the Term shall survive the expiration or
early termination of the Lease.

      5.3   Personal Property Taxes. Prior to delinquency, Tenant shall pay all
taxes and assessments levied upon trade fixtures, alterations, additions,
improvements, inventories and other personal property located and/or installed
on, the Premises by Tenant; and Tenant shall provide Landlord copies of receipts
for payment of all such taxes and assessments. To the extent any such taxes are
not separately assessed or billed to Tenant, Tenant shall pay the amount thereof
as invoiced by Landlord.

      5.4   Enterprise Zone. To the extent that an "enterprise zone" is created
with respect to the Project (and Landlord shall have no obligations to effect
the creation of such enterprise zone), Landlord shall not have any rights with
respect to any tax credits resulting therefrom.

6.    OPERATING EXPENSES

      6.1   Operating Expenses. Tenant shall pay to Landlord Tenant's Share of
the Operating Expenses for each full or partial calendar year during the Lease
Term.

      6.2   Definition of Operating Expenses. "Operating Expenses" means the
total costs and expenses incurred by Landlord in the ownership, operation,
maintenance, repair and management of the Project, the Common Area and the
Building, including, but not limited to, (a) repair, maintenance, utility costs
and landscaping of the Common Area, including, but not limited to, any and all
costs of maintenance, repair and replacement of all parking areas (including
sweeping, striping and slurry coating), common driveways, outdoor lighting,
walkways, landscaping, and other costs which are allocable to the Project or the
real property of which the Premises are a part including any costs under the
terms of any CC&Rs affecting the real property, (b) non-structural repairs to
and maintenance of the roof (and roof membrane), skylights and exterior walls of
the Premises (including painting); (c) insurance deductibles and the costs
relating to the insurance maintained by Landlord with respect to the Project,
including, without limitation, Landlord's cost of any self insurance deductible
or retention; (d) maintenance contracts for, and the repair and replacement of,
the heating, ventilation and air-conditioning (HVAC) systems and elevators,

                                      -4-
<PAGE>

if any, and maintenance, repair, replacement, monitoring and operation of the
fire/life safety system; (e) trash collection; (f) capital improvements made to
or capital assets acquired for the Project after the Commencement Date that are
intended to reduce Operating Expenses (to the extent of the savings reasonably
estimated by Landlord to result therefrom) or are reasonably necessary for the
health and safety of the occupants of the Project or are required under any
governmental law or regulation, which capital costs, or an allocable portion
thereof, shall be amortized over the useful life of the applicable capital
improvement or capital asset, together with interest on the unamortized balance
at the Applicable Interest Rate; and (g) any other costs incurred by Landlord
related to the Project as a whole. Operating Expenses shall also include all
actual costs and fees incurred by Landlord in connection with the management of
this Lease and the Premises including the cost of those services which are
customarily performed by a property management services company (in an amount
equal to three percent [3%] of Rent), whether performed internally or through an
outside management company. Operating Expenses shall not include (i) replacement
of or structural repairs to the roof or the exterior walls; (ii) repairs to the
extent covered by insurance proceeds, or paid by Tenant or other third parties;
(iii) alterations and repairs solely attributable to tenants of the Project
other than Tenant; or (iv) marketing expenses.

7.    ESTIMATED EXPENSES

      7.1   Payment. "Estimated Expenses" for any particular year shall mean
Landlord's estimate of Operating Expenses and Real Property Taxes for a calendar
year. Tenant shall pay Tenant's Share of the Estimated Expenses with
installments of Base Rent in monthly installments of one-twelfth (1/12th)
thereof on the first day of each calendar month during such year. If at any time
Landlord determines that Operating Expenses and Real Property Taxes are
projected to vary from the then Estimated Expenses, Landlord may, by notice to
Tenant, revise such Estimated Expenses, and Tenant's monthly installments for
the remainder of such year shall be adjusted so that by the end of such calendar
year Tenant has paid to Landlord Tenant's Share of the revised Estimated
Expenses for such year.

      7.2   Adjustment. "Operating Expenses and Real Property Taxes Adjustment"
(or "Adjustment") shall mean the difference between Tenant's Share of Estimated
Expenses and Tenant's Share of Operating Expenses and Real Property Taxes for
any calendar year. After the end of each calendar year, Landlord shall deliver
to Tenant a statement of Tenant's Share of Operating Expenses and Real Property
Taxes for such calendar year, accompanied by a computation of the Adjustment. If
Tenant's payments are less than Tenant's Share, then Tenant shall pay the
difference within twenty (20) days after receipt of such statement. Tenant's
obligation to pay such amount shall survive the expiration or termination of
this Lease. If Tenant's payments exceed Tenant's Share, then (provided that
Tenant is not in default), Landlord shall credit such excess amount to future
installments of Tenant's Share for the next calendar year. If Tenant is in
default, Landlord may, but shall not be required to, credit such amount to Rent
arrearages. Within 45 days after Tenant's receipt of Landlord's statement,
Tenant, at Tenant's expense, may audit the tax and expense records for the
Project, the Common Area and the Building upon reasonable prior notice to
Landlord during normal business hours. If such audit is by a certified public
accountant reasonably acceptable to Landlord then (i) if such audit discloses
that Tenant has overpaid either Real Property Taxes or Operating Expenses,
Landlord will reimburse Tenant for any such excess Operating Expenses or Real
Property Taxes paid by Tenant, and (ii) if such audit discloses that such
overpayment was more than five percent, Landlord will reimburse Tenant for the
actual reasonable cost of the audit. If during any calendar year the Building is
not at least 95% occupied, Operating Expenses for such year shall be calculated
based on a 95% occupancy rate for the Building.

8.    INSURANCE

      8.1   Landlord. Landlord shall maintain insurance through individual or
blanket policies insuring the Building against fire and extended coverage
(including, if Landlord elects, "all risk" coverage, earthquake/volcanic action,
flood and/or surface water insurance) for the full replacement cost of the
Building, with deductibles and the form and endorsements of such coverage as
selected by Landlord, together with rental abatement insurance against loss of
Rent in an amount equal to the amount of Rent for a period of at least twelve
(12) months commencing on the date of loss. Landlord may also carry such other
insurance as Landlord may deem prudent or advisable, including, without
limitation, liability insurance in such amounts and on such terms as Landlord
shall determine. Tenant shall pay to Landlord, as a portion of the Operating
Expenses, the costs of the insurance coverages described herein, including,
without limitation, Landlord's cost of any self insurance deductible or
retention.

                                      -5-
<PAGE>

      8.2   Tenant. Tenant shall, at Tenant's expense, obtain and keep in force
at all times the following insurance:

            8.2.1 Commercial General Liability Insurance (Occurrence Form). A
policy of commercial general liability insurance (occurrence form) having a
combined single limit of not less than Two Million Dollars ($2,000,000) per
occurrence and Two Million Dollars ($2,000,000) aggregate per location if Tenant
has multiple locations, providing coverage for, among other things, blanket
contractual liability, premises, products/completed operations with an
"Additional Insured-Managers or Lessors of Premises Endorsement" and containing
the "Amendment of the Pollution Exclusion Endorsement" for damage caused by
heat, smoke or fumes from a hostile fire, and personal and advertising injury
coverage, with deletion of (a) the exclusion for operations within fifty (50)
feet of a railroad track (railroad protective liability), if applicable, and (b)
the exclusion for explosion, collapse or underground hazard, if applicable, and,
if necessary, Tenant shall provide for restoration of the aggregate limit, and
provided that 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 Tenant's indemnity obligations under this Lease;

            8.2.2 Automobile Liability Insurance. Business automobile liability
insurance having a combined single limit of not less than Two Million Dollars
($2,000,000) per occurrence and insuring Tenant against liability for claims
arising out of ownership, maintenance, or use of any owned, hired or non-owned
automobiles;

            8.2.3 Workers' Compensation and Employer's Liability Insurance.
Workers' compensation insurance having limits not less than those required by
state statute and federal statute, if applicable, and covering all persons
employed by Tenant in the conduct of its operations on the Premises (including
the all states endorsement and, if applicable, the volunteers endorsement),
together with employer's liability insurance coverage in the amount of at least
One Million Dollars ($1,000,000); and

            8.2.4 Property Insurance. "All-risk" property insurance including
boiler and machinery comprehensive form, if applicable, covering damage to or
loss of any of Tenant's personal property, fixtures, equipment and alterations,
including electronic data processing equipment (collectively "Tenant's
Property") (and coverage for the full replacement cost thereof including
business interruption of Tenant), together with, if the property of Tenant's
invitees is to be kept in the Premises, warehouser's legal liability or bailee
customers insurance for the full replacement cost of the property belonging to
invitees and located in the Premises; and

            8.2.5 Business Interruption. Loss of income and extra expense
insurance in amounts as will reimburse Tenant for direct or indirect loss of
earnings attributable to all peril commonly insured against by prudent lessees
in the business of Tenant or attributable to prevention of access to the
Premises as a result of such perils.

      8.3   General

            8.3.1 Insurance Companies. Insurance required to be maintained by
Tenant shall be written by companies licensed to do business in the state in
which the Premises are located and having a "General Policyholders Rating" of at
least "A - VIII" (or such higher 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."

            8.3.2 Certificates of Insurance. Tenant shall deliver to Landlord
certificates of insurance for all insurance required to be maintained by Tenant
in a form acceptable to Landlord in its reasonable discretion, no later than
seven (7) days prior to the date of possession of the Premises. Tenant shall, at
least ten (10) days prior to expiration of the policy, furnish Landlord with
certificates of renewal or "binders" thereof. Each certificate shall expressly
provide that such policies shall not be cancelable or otherwise subject to
modification except after sixty (60) days prior written notice to the parties
named as additional insureds in this Lease (except in the case of cancellation
for nonpayment of premium in which case cancellation shall not take effect until
at least ten (10) days' notice has been given to Landlord). If Tenant fails to
maintain any insurance required in this Lease, Tenant shall be liable for all
losses and costs suffered or incurred by Landlord (including litigation costs
and attorneys' fees and expenses) resulting from said failure.

                                      -6-
<PAGE>

            8.3.3 Additional Insureds. Landlord, Landlord's lender, if any, and
any property management company of Landlord for the Premises shall be named as
additional insureds on a form approved by Landlord under all of the policies
required by Section 8.2.1. The policies required under Section 8.2.1 shall
provide for severability of interest.

            8.3.4 Primary Coverage. All insurance to be maintained by Tenant
shall, except for workers' compensation and employer's liability insurance, be
primary, without right of contribution from insurance of Landlord. Any umbrella
liability policy or excess liability policy (which shall be in "following form")
shall provide that if the underlying aggregate is exhausted, the excess coverage
will drop down as primary insurance. The limits of insurance maintained by
Tenant shall not limit Tenant's liability under this Lease.

            8.3.5 Waiver of Subrogation. Landlord and Tenant each waive any
right to recover against the other party for claims for damages to that party's
property arising from any risk covered by the insurance that party is required
to maintain under Section 8 above. This provision is intended to waive fully,
and for the benefit of each party, any rights and/or claims which might give
rise to a right of subrogation in favor of any insurance carrier. The coverages
obtained by Tenant and Landlord pursuant to this Lease shall include, without
limitation, a waiver of subrogation endorsement attached to the certificate of
insurance.

            8.3.6 Notification of Incidents. Tenant shall notify Landlord within
twenty-four (24) hours after Tenant obtains knowledge of the occurrence of any
accidents or incidents in the Premises, the Building, Common Areas or the
Project which could give rise to a claim under any of the insurance policies
required under this Section 8, except Worker's Compensation or Employer's
Liability, unless Tenant has knowledge that a claim under such Worker's
Compensation or Employer's Liability policy may result in a claim against
Landlord.

      8.4   Indemnity. Tenant shall indemnify, protect, defend (by counsel
acceptable to Landlord) and hold harmless Landlord and Landlord's affiliated
entities, and each of their respective members, managers, partners, directors,
officers, employees, shareholders, lenders, agents, contractors, successors and
assigns from and against any and all claims, judgments, causes of action,
damages, penalties, costs, liabilities, and expenses, including all costs,
attorneys' fees, expenses and liabilities incurred in the defense of any such
claim or any action or proceeding brought thereon, arising at any time during or
after the Term as a result (directly or indirectly) of or in connection with (i)
any default in the performance of any obligation on Tenant's part to be
performed under the terns of this Lease; or (ii) Tenant's use of the Premises,
the conduct of Tenant's business or any activity, work or things done, permitted
or suffered by Tenant or any Tenant Party in or about the Premises, the
Building, the Common Area or other portions of the Project, except for claims
caused solely by Landlord's, its employees', contractors' or agents' gross
negligence or willful misconduct. The obligations of Tenant under this Section
8.4 shall survive the termination of this Lease with respect to any claims or
liability arising prior to such termination.

      8.5   Exemption of Landlord from Liability. Tenant, as a material part of
the consideration to Landlord, hereby assumes all risk of damage to property
including, but not limited to, Tenant's fixtures, equipment, furniture and
alterations or illness or injury to persons in, upon or about the Premises, the
Building, the Common Area or other portions of the Project arising from any
cause, and Tenant hereby expressly releases Landlord and waives all claims in
respect thereof against Landlord, except only such claims are caused solely by
Landlord's gross negligence or willful misconduct. Tenant hereby agrees that
Landlord shall not be liable for injury to Tenant's business or any loss of
income therefrom or for damage to the property of Tenant, or injury to or
illness or death of Tenant or any Tenant Party or any other person in or about
the Premises, the Building, the Common Area or the Project, whether such damage,
illness or injury is caused by fire, steam, electricity, gas, water or rain, or
from the breakage, leakage or other defects of sprinklers, wires, appliances,
ventilation, plumbing, air conditioning or lighting fixtures, or from any other
cause, and whether said damage, illness or injury results from conditions
arising upon the Premises, upon other portions of the Building or from other
sources or places, and regardless of whether the cause of such damage, illness
or injury or the means of repairing the same is inaccessible to Tenant, except
only damage, illness or injury caused solely by Landlord's, its employees',
contractors' or agents' gross negligence or willful misconduct. Landlord shall
not be liable for any damages arising from any act or neglect of any contractor
or other tenant, if any, of the Building or the Project or Landlord's failure to
enforce the terms of any agreements with parties other than Tenant.

      8.6   Landlord's Indemnity. Landlord shall indemnify, protect, defend and
hold Tenant harmless from and against any and all claims, judgments, causes of
action, damages, penalties, costs, liabilities, and expenses,

                                      -7-
<PAGE>

including all costs, reasonable attorneys' fees, expenses and liabilities
incurred in the defense of any such claim or any action or proceeding brought
thereon, arising at any time during or after the Term as a result (directly or
indirectly) of or in connection with (collectively, "Liabilities"), but only to
the extent of, Landlord's, its employees', contractors' or agents' grossly
negligent acts or willful misconduct. Landlord's agreement to indemnify and hold
Tenant harmless as provided above is not intended to and shall not relieve any
insurance carrier of its obligations under policies required to be carried by
Tenant pursuant to the provisions of this Lease to the extent that such policies
cover (or, if such policies would have been carried as required, would have
covered) Liabilities incurred as a result of negligent acts or omissions or the
willful misconduct of Landlord or those of its employees or agents.

9.    REPAIRS AND MAINTENANCE

      9.1   Tenant. Tenant, at Tenant's sole cost and expense, shall keep and
maintain the Premises (interior and exterior, excluding roofing and painting),
including, without limitation, loading docks, roll up doors and ramps, floors,
subfloors and floor coverings, walls and wall coverings, doors, windows, glass,
plate glass, locks, ceilings, skylights, lighting systems, interior plumbing,
electrical and mechanical systems and wiring, appliances and devices using or
containing refrigerants, fixtures and equipment in good repair and in a clean
and safe condition, and repair and/or replace any and all of the foregoing in a
clean and safe condition, in good order, condition and repair. Without limiting
the foregoing, Tenant shall, at Tenant's sole expense, immediately replace all
broken glass in the Premises with glass equal to or in excess of the
specification and quality of the original glass; and repair any area damaged by
Tenant, Tenant's agents, employees, invitees and visitors, including any damage
caused by any roof penetration, whether or not such roof penetration was
approved by Landlord. All repairs and replacements by Tenant shall be made and
performed: (a) at Tenant's cost and expense and at such time and in such manner
as Landlord may designate, (b) by contractors or mechanics approved by Landlord,
(c) so that same shall be at least equal in quality, value and utility to the
original work or installation, (d) in a manner and using equipment and materials
that will not interfere with or impair the operations, use or occupation of the
Building or any of the mechanical, electrical, plumbing or other systems in the
Building or the Project, and (e) in accordance with the Rules and Regulations
and all Applicable Laws (as defined in Section 11). In the event Tenant fails,
in the reasonable judgment of Landlord, to maintain the Premises in accordance
with the obligations under the Lease, which failure continues at the end of a
reasonable period of time (but no longer than 30 days to commence repair)
following Tenant's receipt of written notice from Landlord stating the nature of
the failure, Landlord shall have the right to enter the Premises and perform
such maintenance, repairs or refurbishing at Tenant's sole cost and expense
(including a sum for overhead to Landlord equal to ten percent (10%) of the
costs of maintenance, repairs or refurbishing). Tenant shall maintain written
records of maintenance and repairs, as required by any Applicable Law, and
shall use certified technicians to perform such maintenance and repairs, as so
required. Tenant shall deliver full and complete copies of all service or
maintenance contracts entered into by Tenant for the Premises to Landlord within
one hundred twenty (120) days after the Commencement Date.

      9.2   Landlord. Landlord shall, subject to the following limitations,
repair damage to structural portions of the roof, foundation and load-bearing
portions of walls (excluding wall coverings, painting, glass and doors) of the
Building; provided, if such damage is caused by an act or omission of Tenant, or
any Tenant Party, then such repairs shall be at Tenant's sole expense. Landlord
shall not be required to make any repair resulting from (i) any alteration or
modification to the Building or to mechanical equipment within the Building
performed by, for or because of Tenant or to special equipment or systems
installed by, for or because of Tenant, (ii) the installation, use or operation
of Tenant's property, fixtures and equipment, (iii) the moving of Tenant's
property in or out of the Building or in and about the Premises, (iv) Tenant's
use or occupancy of the Premises in violation of Section 11 of this Lease or in
the manner not contemplated by the parties at the time of the execution of this
Lease, (v) the acts or omissions of Tenant or any Tenant Party, (vi) fire and
other casualty, except as provided by Section 13 of this Lease or (vii)
condemnation, except as provided in Section 14 of this Lease. Landlord shall
have no obligation to make repairs under this Section 9.2 until a reasonable
time (but no longer than 30 days to commence repair) after receipt of written
notice from Tenant of the need for such repairs. There shall be no abatement of
Pent during the performance of such work. Landlord shall not be liable to Tenant
for injury or damage that may result from any defect in the construction or
condition of the Premises, nor for any damage that may result from interruption
of Tenant's use of the Premises during any repairs by Landlord. Tenant waives
any right to repair the Premises, the Building and/or the Common Area at the
expense of Landlord under any Applicable Laws, including, without limitation,
Sections 1941 and 1942 of the California Civil Code.

                                      -8-
<PAGE>

10.   ALTERATIONS

      10.1  Trade Fixtures; Alterations. Tenant may install necessary trade
fixtures, equipment and furniture in the Premises, provided that such items are
installed and are removable without structural or material damage to the
Premises, the Building, the Common Area or the Project. Tenant shall not
construct, nor allow to be constructed, any alterations or physical additions
in, about or to the Premises without obtaining the prior written consent of
Landlord, which request for consent shall be directed by Tenant to the specific
attention of Don Little and Lisa Hooton, and which consent by Landlord shall not
be unreasonably withheld or delayed but shall be conditioned upon Tenant's
compliance with the provisions of Exhibit G and any other applicable
requirements of Landlord regarding construction of improvements and alterations;
provided, however, notwithstanding the contrary provisions of Exhibit G and this
Section 10, Tenant shall have the right, without Landlord's consent, to make any
non-structural alteration or physical addition to the Premises which, for any
single project or for any series of projects, does not cost more than Five
Thousand Dollars ($5,000) during each twelve (12) month period during the Term
of the Lease so long as (a) Tenant provides Landlord with ten (10) days prior
written notice of the commencement of any such alteration and shall furnish to
Landlord a copy of Tenant's proposed plans for such alteration, (b) such
alteration does not affect the Building's electrical, mechanical or HVAC systems
or any other structural part of the Building or the Premises, (c) the materials
used by or for Tenant are of the same or better quality than those comprising
the Premises at the time of the Lease and shall be performed in a workmanlike
manner and in accordance with all applicable laws and regulations, and (d) upon
completion of any such alteration, Tenant shall provide Landlord with a copy of
Tenant's "as built" plans for such alteration. Except as expressly specified
above, Tenant shall submit plans and specifications to Landlord with Tenant's
request for approval and shall reimburse Landlord for all actual costs which
Landlord may incur in connection with granting approval to Tenant for any such
alterations and additions, including any costs or expenses which Landlord may
incur in electing to have outside architects and engineers review said matters.
If Landlord does not respond to a written request from Tenant within ten (10)
business days, then Landlord shall be deemed to disapprove such request;
provided, however, that such deemed disapproval by Landlord shall not prevent
Tenant from resubmitting such request to Landlord (and to the specific attention
of Don Little and Lisa Hooton). In the event that Tenant resubmits such request
(after not receiving a response from Landlord to the first request), and
Landlord does not respond to such second written request from Tenant within ten
(10) business days, Landlord shall be deemed to approve such request. In the
event Tenant makes any alterations to the Premises that trigger or give rise to
a requirement that the Building or the Premises come into compliance with any
governmental laws, ordinances, statutes, orders and/or regulations (such as ADA
requirements), Tenant shall be fully responsible for complying, at its sole cost
and expense, with same. Tenant shall file a notice of completion after
completion of such work and provide Landlord with a copy thereof. Tenant shall
provide Landlord with a set of "as-built" drawings for any such work.

      10.2  Damage; Removal. Tenant shall repair all damage to the Premises, the
Building, the Common Area or the Project caused by the installation or removal
of Tenant's fixtures, equipment, furniture or alterations. Upon the termination
of this Lease, Tenant shall remove any or all trade fixtures, alterations,
additions, improvements and partitions made or installed by Tenant and restore
the Premises to its condition existing prior to the construction of any such
items; provided, however, Landlord has the absolute right to require Tenant to
have all or any portion of such items, except movable trade fixtures, designated
by Landlord to remain on the Premises, in which event they shall be and become
the property of Landlord upon the termination of this Lease. All such removals
and restoration shall be accomplished in a good and workmanlike manner and so
as not to cause any damage to the Premises, the Building, the Common Area or the
Project whatsoever.

      10.3  Liens. Tenant shall promptly pay and discharge all claims for labor
performed, supplies furnished and services rendered at the request of Tenant and
shall keep the Premises free of all mechanics' and materialmen's liens in
connection therewith. Tenant shall provide at least ten (10) days prior written
notice to Landlord before any labor is performed, supplies furnished or services
rendered on or at the Premises and Landlord shall have the right to post on the
Premises notices of non-responsibility. If any lien is filed, Tenant shall cause
such lien to be released and removed within ten (10) days after the date of
filing, and if Tenant fails to do so, Landlord may take such action as may be
necessary to remove such lien and Tenant shall pay Landlord such amounts
expended by Landlord together with interest thereon at the Applicable Interest
Rate from the date of expenditure.

      10.4  Standard of Work. All work to be performed by or for Tenant pursuant
hereto shall be performed diligently and in a first class, workmanlike manner,
and in compliance with all Applicable Laws, and/or Tenant and

                                      -9-
<PAGE>

Landlord's insurance carriers. Landlord shall have the right, but not the
obligation, to inspect periodically the work on the Premises and Landlord may
require changes in the method or quality of the work.

11.   USE. The Premises shall be used only for the Permitted Uses set forth in
the Basic Lease Information and for no other uses. Tenant's use of the Premises
shall be in compliance with and subject to all applicable laws, statutes, codes,
ordinances, orders, rules, regulations, conditions of approval and requirements
of all federal, state, county, municipal and governmental authorities and all
administrative or judicial orders or decrees and all permits, licenses,
approvals and other entitlements issued by governmental entities, and rules of
common law, relating to or affecting the Project, the Premises or the Building
or the use or operation thereof, whether now existing or hereafter enacted,
including, without limitation, the Americans with Disabilities Act of 1990, 42
USC 12111 et seq. (the "ADA") as the same may be amended from time to time, all
Environmental Laws (as defined in Section 12.1), and any CC&Rs or any supplement
thereto recorded in any official or public records with respect to the Project
or any portion thereof ("Applicable Laws"). Tenant shall be responsible for
obtaining any permit, business license, or other permits or licenses required by
any governmental agency permitting Tenant's use or occupancy of the Premises. In
no event shall the Premises be used for any of the Prohibited Uses set forth on
Exhibit E attached hereto. Tenant shall comply with the rules and regulations
attached hereto as Exhibit F, together with such reasonable additional rules and
regulations as Landlord may from time to time prescribe. Tenant shall not commit
waste, overload the floors or structure of the Building, subject the Premises,
the Building, the Common Area or the Project to any use which would damage the
same or violate any insurance coverage, permit any unreasonable odors, smoke,
dust, gas, substances, noise or vibrations to emanate from the Premises, take
any action which would constitute a nuisance or would disturb, obstruct or
endanger any other tenants, take any action which would abrogate any warranties,
or use or allow the Premises to lie used for any unlawful purpose. Tenant shall
have the right in common with other tenants of Landlord to use the parking
facilities of the Project. Tenant agrees not to overburden the parking
facilities and agrees to cooperate with Landlord and other tenants in the use of
parking facilities. Landlord shall not be responsible for non-compliance by any
other tenant or occupant of the Project with, or Landlord's failure to enforce,
any of the rules or regulations or CC&Rs or any other terms or provisions of
such tenant's or occupant's lease. Tenant shall promptly comply with the
reasonable requirements of any board of fire insurance underwriters or other
similar body now or hereafter constituted. Tenant shall not do any act which
shall in any way encumber the title of Landlord in and to the Premises, the
Building or the Project.

12.   ENVIRONMENTAL MATTERS

      12.1  Hazardous Materials. Tenant shall not cause nor permit, nor allow
any of Tenant's employees, agents, customers, visitors, invitees, licensees,
contractors, assignees or subtenants (individually, a "Tenant Party" and
collectively, "Tenant's Parties") to cause or permit, any Hazardous Materials
to be brought upon, stored, manufactured, generated, blended, handled, recycled,
treated, disposed or used on, under or about the Premises, the Building, the
Common Area or the Project, except (i) for routine office and janitorial
supplies in usual and customary quantities stored, used and disposed of in
accordance with all applicable Environmental Laws and (ii) for such Hazardous
Materials as are normally used in Tenant's business operations on the Premises,
and then only in compliance with all Environmental Laws and provided such
materials are disposed of off the Premises in a properly licensed disposal site.
Tenant shall provide Landlord with a list of the Hazardous Materials used in
Tenant's normal business operations at the Premises on the Commencement Date,
and Tenant shall thereafter update said Hazardous Material list semi-annually,
commencing with the first day of the sixth (6th) month following the
Commencement Date. As used herein, "Hazardous Materials" means any chemical,
substance, material, controlled substance, object, condition, waste, living
organism or combination thereof, whether solid, semi-solid, liquid or gaseous,
which is or may be hazardous to human health or safety or to the environment due
to its radioactivity, ignitability, corrosivity, reactivity, explosivity,
toxicity, carcinogenicity, mutagenicity, phytotoxicity, infectiousness or other
harmful or potentially harmful properties or effects, including, without
limitation, tobacco smoke, petroleum and petroleum products, asbestos, radon,
polychlorinated biphenyls (PCBs), refrigerants (including those substances
defined in the Environmental Protection Agency's "Refrigerant Recycling Rule,"
as amended from time to time) and all of those chemicals, substances, materials,
controlled substances, objects, conditions, wastes, living organisms or
combinations thereof which are now or become in the future listed, defined or
regulated in any manner by any Environmental Law based upon, directly or
indirectly, such properties or effects. As used herein, "Environmental Laws"
means any and all federal, state or local environmental, health and/or
safety-related laws, regulations, standards, decisions of courts, ordinances,
rules, codes, orders, decrees, directives, guidelines, permits or permit
conditions, currently existing and as amended, enacted, issued or adopted in the
future which are or become

                                      -10-
<PAGE>

applicable to Tenant, the Premises, the Building, the Common Area or the
Project. Tenant and Tenant's Parties shall comply with all Environmental Laws
and promptly notify Landlord in writing of the violation of any Environmental
Law or presence of any Hazardous Materials, other than as expressly permitted
above, in, on, under or about the Premises or the improvements or the soil or
groundwater thereunder. Landlord shall have the right to enter upon and inspect
the Premises and to conduct tests, monitoring and investigations. If such tests
indicate the presence of any environmental condition caused or exacerbated by
Tenant or any Tenant Party or arising during Tenant's or any Tenant Party's
occupancy, Tenant shall reimburse Landlord for the cost of conducting such
tests. The phrase "environmental condition" shall mean any adverse condition
relating to any Hazardous Materials or the environment, including surface water,
groundwater, drinking water supply, land, surface or subsurface strata or the
ambient air and includes air, land and water pollutants, noise, vibration, light
and odors. In the event of any such environmental condition, Tenant shall
promptly take any and all steps necessary to rectify the same to the
satisfaction of the applicable agencies and Landlord, or shall, at Landlord's
election, reimburse Landlord, upon demand, for the cost to Landlord of
performing rectifying work. The reimbursement shall be paid to Landlord in
advance of Landlord's performing such work, based upon Landlord's reasonable
estimate of the cost thereof; and upon completion of such work by Landlord,
Tenant shall pay to Landlord any shortfall promptly after receipt of Landlord's
bills therefor or Landlord shall promptly refund to Tenant any excess deposit,
as the case may be.

      12.2  Indemnification. Tenant shall indemnify, protect, defend (by counsel
acceptable to Landlord) and hold harmless Landlord and Landlord's affiliated
entities, and each of their respective members, managers, partners, directors,
officers, employees, shareholders, lenders, agents, contractors, successors and
assigns (individually and collectively, "Indemnitees") (a) from and against any
and all claims, judgments, causes of action, damages, penalties, fines, taxes,
costs, liabilities, losses and expenses arising at any time during or after the
Term as a result (directly or indirectly) of the presence of Hazardous Materials
caused by Tenant and/or Tenant's Parties and (b) from and against any and all
actual costs of remediation, orders, penalties, fines, costs, liabilities,
losses, administrative actions or other proceedings (collectively, a "Compliance
Obligation") commenced by any governmental agency including, without limitation,
the United States Environmental Protection Agency, arising at any time during or
after the Term as a result of or in connection with Tenant's and/or Tenant's
Parties' breach of any prohibition or provision contained in Paragraph 12.1
hereof. This indemnity shall include, without limitation, the cost of any
required or necessary repair, cleanup or detoxification, and the preparation and
implementation of any closure, monitoring or other required plans, whether such
action is required or necessary prior to or following the termination of this
Lease. Neither the written consent by Landlord to the presence of Hazardous
Materials on, under or about the Premises, nor the strict compliance by Tenant
with all Environmental Laws, shall excuse Tenant from Tenant's obligation of
indemnification pursuant hereto. Tenant's obligations pursuant to the foregoing
indemnity shall survive the expiration or termination of this Lease.

13.   DAMAGE AND DESTRUCTION

      13.1  Casualty. If the Premises or Building should be damaged or destroyed
by fire or other casualty, Tenant shall give immediate written notice to
Landlord. Within thirty (30) days after receipt from Tenant of such written
notice, Landlord shall notify Tenant whether the necessary repairs can
reasonably be made: (a) within ninety (90) days; (b) in more than ninety (90)
days but in less than one hundred eighty (180) days; or (c) in more than one
hundred eighty (180) days, in each case after the date of the issuance of
permits for the necessary repair or reconstruction of the portion of the
Building or Premises which was damaged or destroyed.

            13.1.1 Less Than 90 Days. If the Premises or Building should be
damaged only to such extent that rebuilding or repairs can reasonably be
completed within ninety (90) days after the issuance of permits for the
necessary repair or reconstruction of the portion of the Building or Premises
which was damaged or destroyed and provided that insurance proceeds are
available to fully repair the damage, this Lease shall not terminate, and
Landlord shall repair the Premises, commencing such repairs as soon as
reasonable possible and thereafter prosecuting such repairs until completion,
except that Landlord shall not be required to rebuild, repair or replace
Tenant's Property which may have been placed in, on or about the Premises by or
for the benefit of Tenant. If Tenant is required to vacate all or a portion of
the Premises during Landlord's repair thereof, the Base Rent payable hereunder
shall be abated proportionately on the basis of the size of the area of the
Premises that is damaged (i.e., the number of square feet of floor area of the
Premises that is damaged compared to the total square footage of the floor area
of the Premises) from the date Tenant vacates all or a portion of the Premises
that was damaged only to

                                      -11-
<PAGE>

the extent rental abatement insurance proceeds are received by Landlord and only
during the period the Premises are unfit for occupancy. .

            13.1.2 Greater Than 90 Days. If the Premises or Building should be
damaged only to such extent that rebuilding or repairs can reasonably be
completed in more than ninety (90) days but in less than one hundred eighty
(180) days after the issuance of permits for the necessary repair or
reconstruction of the portion of the Building or Premises which was damaged or
destroyed, then Landlord shall have the option of: (a) terminating the Lease
effective upon the occurrence of such damage, in which event the Base Rent shall
be abated from the date Tenant vacates the Premises; or (b) electing to repair
the Premises, provided insurance proceeds are available to fully repair the
damage, commencing such repairs as soon as reasonable possible and thereafter
prosecuting such repairs until completion (except that Landlord shall not be
required to rebuild, repair or replace Tenant's Property which may have been
placed in, on or about the Premises by or for the benefit of Tenant). If Tenant
is required to vacate all or a portion of the Premises during Landlord's repair
thereof, the Base Rent payable hereunder shall be abated proportionately on the
basis of the size of the area of the Premises that is damaged (i.e., the number
of square feet of floor area of the Premises that is damaged compared to the
total square footage of the floor area of the Premises) from the date Tenant
vacates all or a portion of the Premises that was damaged only to the extent
rental abatement insurance proceeds are received by Landlord and only during the
period the Premises are unfit for occupancy. In the event that Landlord should
fail to substantially complete such repairs within one hundred eighty (180) days
after the issuance of permits for the necessary repair or reconstruction of the
portion of the Building or Premises which was damaged or destroyed, (such period
to be extended for delays caused by Tenant or because of any items of Force
Majeure, as hereinafter defined) and Tenant has not re-occupied the Premises,
Tenant shall have the right, as Tenant's exclusive remedy, within ten (10) days
after the expiration of such one hundred eighty (180) day period, and provided
that such repairs have not been substantially completed within such ten (10) day
period, to terminate this Lease by delivering written notice to Landlord as
Tenant's exclusive remedy, whereupon all rights hereunder shall cease and
terminate thirty (30) days after Landlord's receipt of such notice.

            13.1.3 Greater Than 180 Days. If the Premises or Building should be
so damaged that rebuilding or repairs cannot be completed within one hundred
eighty (180) days after the issuance of permits for the necessary repair or
reconstruction of the portion of the Building or Premises which was damaged or
destroyed, either Landlord or Tenant may terminate this Lease by giving written
notice within ten (10) days after notice from Landlord specifying such time
period of repair; and this Lease shall terminate and the Rent shall be abated
from the date Tenant vacates the Premises. In the event that neither party
elects to terminate this Lease, Landlord shall promptly commence and diligently
prosecute to completion the repairs to the Building or Premises, provided
insurance proceeds are available to repair the damage (except that Landlord
shall not be required to rebuild, repair or replace Tenant's Property which may
have been placed in, on or about the Premises by or for the benefit of Tenant).
If Tenant is required to vacate all or a portion of the Premises during
Landlord's repair thereof, the Base Rent payable hereunder shall be abated
proportionately on the basis of the size of the area of the Premises that is
damaged (i.e., the number of square feet of floor area of the Premises that is
damaged compared to the total square footage of the floor area of the Premises),
from the date Tenant vacates all or a portion of the Premises that was damaged
only to the extent rental abatement insurance proceeds are received by Landlord
and only during the period that the Premises are unfit for occupancy.

            13.1.4 Casualty During the Last Year of the Lease Term.
Notwithstanding any other provisions hereof, if the Premises or the Building
shall be damaged within the last year of the Lease Term, and if the cost to
repair or reconstruct the portion of the Building or the Premises which was
damaged or destroyed shall exceed $10,000, then, irrespective of the time
necessary to complete such repair or reconstruction, Landlord shall have the
right, in its sole discretion, to terminate the Lease effective upon the
occurrence of such damage, in which event the Rent shall be abated from the date
Tenant vacates the Premises. The foregoing right shall be in addition to any
other right and option of Landlord under this Section 13.

      13.2  Tenant's Fault. If the Premises or any portion of the Building is
damaged resulting from the negligence or breach of this Lease by Tenant or any
of Tenant's Parties, Rent shall not be reduced during the repair of such damage
and Tenant shall be liable to Landlord for the cost of the repair caused thereby
to the extent such cost is not covered by insurance proceeds received by
Landlord.

                                      -12-
<PAGE>

      13.3  Uninsured Casualty. Tenant shall be responsible for and shall pay to
Landlord Tenant's Share of any deductible or retention amount payable under the
property insurance for the Building. In the event that the Premises or any
portion of the Building is damaged to the extent Tenant is unable to use the
Premises and such damage is not covered by insurance proceeds received by
Landlord or in the event that the holder of any indebtedness secured by the
Premises requires that the insurance proceeds be applied to such indebtedness,
then Landlord shall have the right at Landlord's option either (i) to repair
such damage as soon as reasonably possible at Landlord's expense, or (ii) to
give written notice to Tenant within thirty (30) days after the date of the
occurrence of such damage of Landlord's intention to terminate this Lease as of
the date of the occurrence of such damage. In the event Landlord elects to
terminate this Lease, Tenant shall have the right within ten (10) days after
receipt of such notice to give written notice to Landlord of Tenant's commitment
to pay the cost of repair of such damage, in which event this Lease shall
continue in full force and effect, and Landlord shall make such repairs as soon
as reasonably possible subject to the following conditions: Tenant shall deposit
with Landlord Landlord's estimated cost of such repairs not later than ten (10)
days prior to Landlord's commencement of the repair work. If the cost of such
repairs exceeds the amount deposited, Tenant shall reimburse Landlord for such
excess cost within fifteen (15) days after receipt of an invoice from Landlord.
Any amount deposited by Tenant in excess of the cost of such repairs shall be
refunded within thirty (30) days of Landlord's final payment to Landlord's
contractor. If Tenant does not give such notice within the ten (10) day period,
or fails to make such deposit as required, this Lease shall terminate
automatically as of the date of the occurrence of the damage.

      13.4  Waiver. With respect to any damage or destruction which Landlord is
obligated to repair or may elect to repair, Tenant waives all rights to
terminate this Lease pursuant to rights otherwise presently or hereafter
accorded by law, including without limitation any rights granted under Section
1932, subdivision 2, and Section 1933 of the California Civil Code.

14.   EMINENT DOMAIN

      14.1  Total Condemnation. If all of the Premises is condemned by eminent
domain, inversely condemned or sold under threat of condemnation for any public
or quasi-public use or purpose ("Condemned"), this Lease shall terminate as of
the earlier of the date the condemning authority takes title to or possession of
the Premises, and Rent shall be adjusted to the date of termination.

      14.2  Partial Condemnation. If any portion of the Premises or the Building
is Condemned and such partial condemnation materially impairs Tenant's ability
to use the Premises for Tenant's business as reasonably determined by Landlord,
Landlord shall have the option of either (i) relocating Tenant to comparable
space within the Project or (ii) terminating this Lease as of the earlier of the
date title vests in the condemning authority or as of the date an order of
immediate possession is issued and Rent shall be adjusted to the date of
termination. If such partial condemnation does not materially impair Tenant's
ability to use the Premises for the business of Tenant, Landlord shall promptly
restore the Premises to the extent of any condemnation proceeds recovered by
Landlord, excluding the portion thereof lost in such condemnation, and this
Lease shall continue in full force and effect except that after the date of such
title vesting or order of immediate possession Rent shall be adjusted as
reasonably determined by Landlord.

      14.3  Award. If the Premises are wholly or partially Condemned, Landlord
shall be entitled to the entire award paid for such condemnation, and Tenant
waives any claim to any part of the award from Landlord or the condemning
authority; provided, however, Tenant shall have the right to recover from the
condemning authority such compensation as may be separately awarded to Tenant in
connection with costs in removing Tenant's merchandise, furniture, fixtures,
leasehold improvements and equipment to a new location. No condemnation of any
kind shall be construed to constitute an actual or constructive eviction of
Tenant or a breach of any express or implied covenant of quiet enjoyment. Tenant
hereby waives the effect of Sections 1265.120 and 1265.130 of the California
Code of Civil Procedure and any successor statutes.

      14.1  Temporary Condemnation. In the event of a temporary condemnation
not extending beyond the Term, this Lease shall remain in effect, Tenant shall
continue to pay Rent and Tenant shall receive any award made for such
condemnation except damages to any of Landlord's property. If a temporary
condemnation is for a period which extends beyond the Term, this Lease shall
terminate as of the date of initial occupancy by the condemning authority and
any such award shall be distributed in accordance with the preceding section. If
a temporary

                                      -13-
<PAGE>

condemnation remains in effect at the expiration or earlier termination of this
Lease, Tenant shall pay Landlord the reasonable cost of performing any
obligations required of Tenant with respect to the surrender of the Premises,

15.   DEFAULT

      15.1  Events of ,Defaults. The occurrence of any of the following events
shall, at Landlord's option, constitute an "Event of Default":

            15.1.1 Vacation or abandonment of the Premises for a period of
thirty (30) consecutive days;

            15.1.2 Failure to pay Rent on the date when due and the failure
continuing for a period of five (5) days after such payment is due;

            15.1.3 Failure to perform. Tenant's covenants and obligations
hereunder (except default in the payment of Rent) where such failure continues
for a period of thirty (30) days after written notice from Landlord; provided,
however, if the nature of the default is such that more than thirty (30) days
are reasonably required for its cure, Tenant shall not be deemed to be in
default if Tenant commences the cure within ten (10) days after written notice
from Landlord and diligently and continuously prosecutes such cure to
completion;

            15.1.4 The making of a general assignment by Tenant for the benefit
of creditors; the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing; the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold; Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due; any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets; Tenant taking
any action toward the dissolution or winding up of Tenant's affairs; the
cessation or suspension of Tenant's use of the Premises; or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;

            15.1.5 The making of any material misrepresentation or omission by
Tenant or any successor in interest of Tenant in any materials delivered by or
on behalf of Tenant to Landlord or Landlord's lender pursuant to this Lease; or

            15.1.6 The occurrence of an Event of Default set forth in Section
15.1.4 or 15.1.5 with respect to any guarantor of this Lease, if applicable.

      15.2  Remedies

            15.2.1 Termination. In the event of the occurrence of any Event of
Default, Landlord shall have the right to give a written termination notice to
Tenant (which notice may be the notice given under Section 15.1 above, if
applicable, and which notice shall be in lieu of any notice required by
California Code of Civil Procedure Section 1161, et seq.) and, on the date
specified in such notice, this Lease shall terminate unless on or before such
date all arrears of Rent and all other sums payable by Tenant under this Lease
and all costs and expenses incurred by or on behalf of Landlord hereunder shall
have been paid by Tenant and all other Events of Default at the time existing
shall have been fully remedied to the satisfaction of Landlord.

                   15.2.1.1 Repossession. Following termination, without
prejudice to other remedies Landlord may have, Landlord may (i) peaceably
re-enter the Premises upon voluntary surrender by Tenant or remove Tenant
therefrom and any other persons occupying the Premises, using such legal
proceedings as may be available; (ii) repossess the Premises or relet the
Premises or any part thereof for such term (which may be for a term extending
beyond the Term), at such rental and upon such other terms and conditions as
Landlord in Landlord's sole discretion shall determine, with the right to make
reasonable alterations and repairs to the Premises; and (iii) remove all
personal property therefrom.

                                      -14-
<PAGE>

                   15.2.1.2 Unpaid Rent. Landlord shall have all the rights and
remedies of a landlord provided by Applicable Law, including the right to
recover from Tenant: (a) the worth, at the time of award, of the unpaid Rent
that had been earned at the time of termination, (b) the worth, at the time of
award, of the amount by which the unpaid Rent that would have been earned after
the date of termination until the time of award exceeds the amount of loss of
rent that Tenant proves could have been reasonably avoided, (c) the worth, at
the time of award, of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, and (d) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused by
Tenant's default. The phrase "worth, at the time of award," as used in (a) and
(b) above, shall be computed at the Applicable Interest Rate, and as used in (c)
above, shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).

            15.2.2 Continuation. Even though an Event of Default may have
occurred, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession; and Landlord may enforce all of
Landlord's rights and remedies under this Lease, including the remedy described
in California Civil Code Section 1951.4 ("lessor" may continue the Lease in
effect after "lessee's" breach and abandonment and recover Rent as it becomes
due, if "lessee" has the right to sublet or assign, subject only to reasonable
limitations) to recover Rent as it becomes due. Landlord, without terminating
this Lease, may, during the period Tenant is in default, enter the Premises and
relet the same, or any portion thereof, to third parties for Tenant's account
and Tenant shall be liable to Landlord for all costs Landlord incurs in
reletting the Premises, including, without limitation, brokers' commissions,
expenses of remodeling the Premises and like costs. Reletting may be for a
period shorter or longer than the remaining Term. Tenant shall continue to pay
the Rent on the date the same is due. No act by Landlord hereunder, including
acts of maintenance, preservation or efforts to lease the Premises or the
appointment of a receiver upon application of Landlord to protect Landlord's
interest under this Lease, shall terminate this Lease unless Landlord notifies
Tenant that Landlord elects to terminate this Lease. In the event that Landlord
elects to relet the Premises, the rent that Landlord receives from reletting
shall be applied to the payment of, first, any indebtedness from Tenant to
Landlord other than Base Rent and Tenant's Share of Operating Expenses and Real
Property Taxes; second, all costs, including maintenance, incurred by Landlord
in reletting; and, third, Base Rent and Tenant's Share of Operating Expenses and
Real Property Taxes under this Lease. After deducting the payments referred to
above, any sum remaining from the rental Landlord receives from reletting shall
be held by Landlord and applied in payment of future Rent as Rent becomes due
under this Lease. In no event, and notwithstanding anything in Section 16 to the
contrary, shall Tenant be entitled to any excess rent received by Landlord. If,
on the date Rent is due under this Lease, the rent received from the reletting
is less than the Rent due on that date, Tenant shall pay to Landlord, in
addition to the remaining Rent clue, all costs, including maintenance, which
Landlord incurred in reletting the Premises that remain after applying the rent
received from reletting as provided hereinabove. So long as this Lease is not
terminated, Landlord shall have the right to remedy any default of Tenant, to
maintain or improve the Premises, to cause a receiver to be appointed to
administer the Premises and new or existing subleases and to add to the Rent
payable hereunder all of Landlord's reasonable costs in so doing, with interest
at the Applicable Interest Rate from the date of such expenditure. Landlord
shall have no duty to relet the Premises so long as it has other unleased space
available in the Project.

      15.3  Cumulative. Each right and remedy of Landlord provided for herein or
now or hereafter existing at law, in equity, by statute or otherwise shall be
cumulative and shall not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity, by statute or otherwise. No payment by Tenant of a lesser amount than
the Rent nor any endorsement on any check or letter accompanying any check or
payment as Rent shall be deemed an accord and satisfaction of full payment of
Rent; and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies.

16.   ASSIGNMENT AND SUBLETTING.

      16.1  Landlord's Consent. Tenant shall not assign, sublet or otherwise
transfer, whether voluntarily or involuntarily or by operation of law, the
Premises or any part thereof without Landlord's prior written approval, which
request for approval shall be directed by Tenant to the specific attention of
Don Little, Ralph Pickett and Lisa Hooton, and which shall not be unreasonably
withheld or delayed; provided, however, Tenant agrees it shall be reasonable for
Landlord to disapprove of a requested sublease or assignment, if, in Landlord's
reasonable

                                      -15-
<PAGE>

determination, the proposed subtenant or assignee does not have a tangible net
worth (as determined in accordance with generally accepted accounting principles
consistently applied) sufficient to permit the proposed subtenant or assignee to
meet the obligations imposed on Tenant under this Lease, or if the proposed
subtenant or assignee is currently a tenant in any other space leased by
Landlord or if such proposed subtenant or assignee is in the process of
negotiation with Landlord to lease other space owned or managed by Landlord. The
merger of Tenant with any other entity or the transfer of any controlling or
managing ownership or beneficial interest in Tenant, or the assignment of a
substantial portion of the assets of Tenant, whether or not located at the
Premises, shall constitute an assignment hereunder. If Tenant desires to assign
this Lease or sublet any or all of the Premises, Tenant shall give Landlord
written notice thereof with copies of all related documents and agreements
associated with the assignment or sublease, including without limitation, the
financial statements of any proposed assignee or subtenant, thirty (30) days
prior to the anticipated effective date of the assignment or sublease. Tenant
shall pay Landlord's reasonable attorneys' fees incurred in the review of such
documentation plus an administrative fee of Five Hundred Dollars ($500.00) for
each proposed transfer. Landlord shall have a period of thirty (30) days
following receipt of such notice and all related documents and agreements to
notify Tenant in writing of Landlord's approval or disapproval of the proposed
assignment or sublease. If Landlord fails to notify Tenant in writing of such
election, Landlord shall be deemed to have approved such assignment or
subletting. This Lease may not be assigned by operation of law. Any purported
assignment or subletting contrary to the provisions hereof shall be void and
shall constitute an Event of Default hereunder. If Tenant receives rent or other
consideration for any such transfer in excess of the Rent, or in case of the
sublease of a portion of the Premises, in excess of such Rent that is fairly
allocable to such portion, after appropriate adjustments to assure that all
other payments required hereunder are appropriately taken into account, Tenant
shall pay Landlord fifty percent (50%) of the difference (deducting only those
costs incurred by Tenant for leasing commissions and reasonable attorneys' fees
incurred by Tenant and the costs for tenant improvements paid for by Tenant)
between each such payment of rent or other consideration and the Rent required
hereunder. Landlord may, without waiving any rights or remedies, collect rent
from the assignee, subtenant or occupant and apply the net amount collected to
the Rent herein reserved and apportion any excess rent so collected in
accordance with the terms of the preceding sentence. Such acceptance of Rent
shall in no event be deemed to imply that Landlord is approving a subtenant or
assignee which Landlord has not approved in writing pursuant to the requirements
of this Section 16. Tenant shall continue to be liable as a principal and not as
a guarantor or surety to the same extent as though no assignment or subletting
had been made. Landlord may consent to subsequent assignments or subletting of
this Lease or amendments or modifications to the Lease by assignees of Tenant
without notifying Tenant or any successor of Tenant and without obtaining their
consent. No permitted transfer shall be effective until there has been delivered
to Landlord a counterpart of the transfer instrument in which the transferee
agrees to be and remain jointly and severally liable with Tenant for the payment
of Rent pertaining to the Premises and for the performance of all the terms and
provisions of this Lease relating thereto arising on or after the date of the
transfer.

      16.2  Permitted Assignments and Subleases. Notwithstanding the above,
Tenant may, without the consent of, but with written notice to, Landlord, assign
the Lease, or any part thereof, or sublease the Premises, in whole or in part,
to any of the following (collectively, "Permitted Affiliates"): (i) any entity
which has the power to direct Tenant's management and operation, or any entity
whose management and operation is controlled by Tenant, or (ii) any entity a
majority of whose voting interest is owned by Tenant; or (iii) any entity in
which or with which Tenant, its successor or assigns, is merged or consolidated,
in accordance with applicable statutory provisions for merger or consolidation,
so long as the liabilities of the entities participating in such merger or
consolidation are assumed by the entity surviving such merger or created by such
consolidation; or (iv) any entity acquiring this Lease and all or substantially
all of Tenant's assets; or (v) any successor to a successor becoming such by
either of the methods described in subsections (iii) or (iv); or (vi) any entity
(or member of a group of affiliated entities) which is acquiring Tenant's
business services division or any other division of Tenant then occupying the
Premises, provided, however, that in such event, Tenant shall notify Landlord in
writing and the assignment or subletting shall not become effective until Tenant
has provided Landlord with such resolutions and/or documentation evidencing the
existence of, the authority of and the assumption of lease obligations by such
assignee or subtenant.

      16.3  Assignment to Joint if Venture. Notwithstanding anything to the
contrary set forth in this Section 16, Tenant may without the consent of, but
with written notice to, Landlord, assign this Lease, or any part

                                      -16-
<PAGE>

thereof, or sublease the Premises in whole or in part to a joint venture (the
"Joint Venture") the two partners or owners of which are (a) Tenant or a
subsidiary of Tenant and (b) a major national telecommunications company, or
subsidiary of such company, provided that such entity has a credit rating equal
to or better than Tenant's (as determined in the exercise of Landlord's
reasonable discretion).

17.   ESTOPPEL, ATTORNMENT AND SUBORDINATION

      17.1  Estoppel. Within ten (10) business days after written request by
Landlord. Tenant shall deliver an estoppel certificate duly executed (and
acknowledged if required by any lender), in the form attached hereto as Exhibit
H, or in such other form as may be acceptable to the lender, which form may
include some or all of the provisions contained in Exhibit H, to any proposed
mortgagee, purchaser or Landlord. Tenant's failure to deliver said statement in
such time period shall be an Event of Default hereunder and shall be conclusive
upon Tenant that (a) this Lease is in full force and effect, without
modification except as may be represented by Landlord; (b) there are no uncured
defaults in Landlord's performance and Tenant has no right of offset,
counterclaim or deduction against Rent hereunder; and (c) no more than one
month's Base Rent has been paid in advance. If any financier should require that
this Lease be amended (other than in the description of the Premises, the Term,
the Permitted Use, the Rent or as will substantially, materially or adversely
affect the rights of Tenant), Landlord shall give written notice thereof to
Tenant, which notice shall be accompanied by a Lease supplement embodying such
amendments. Tenant shall, within ten (10) business days after the receipt of
Landlord's notice, execute and deliver to Landlord the tendered Lease
supplement. If Tenant fails to deliver to Landlord either a written notice that
such supplement will substantially, materially or adversely affect the rights of
Tenant, or the tendered Lease supplement within ten (10) business days after
receipt of Landlord's notice, Tenant shall be deemed to have given Landlord a
power of attorney to execute such supplement on behalf of Tenant.

      17.2  Subordination. Subject to Tenant receiving a duly executed
commercially reasonable nondisturbance and attornment agreement, this Lease
shall be subject and subordinate to all ground leases, master leases and the
lien of all mortgages and deeds of trust which now or hereafter affect the
Premises or the Project or Landlord's interest therein, and all amendments
thereto, all without the necessity of Tenant's executing further instruments to
effect such subordination. If requested, Tenant shall execute and deliver to
Landlord within ten (10) days after Landlord's request whatever documentation
that may reasonably be required to further effect the provisions of this
paragraph including a Subordination, Nondisturbance and Attornment Agreement in
the form required by the applicable lender, ground Lessor and/or master lessor.

      17.3  Attornment. Subject to the limitations specified in Section 17.2,
Tenant hereby agrees that Tenant will recognize as its landlord under this Lease
and shall attorn to any person succeeding to the interest of Landlord in
respect of the land and the buildings governed by this Lease upon any
foreclosure of any mortgage upon such land or buildings or upon the execution of
any deed in lieu of foreclosure in respect to such deed of trust. If requested,
Tenant shall execute and deliver an instrument or instruments confirming its
attornment as provided for herein; provided, however, that no such beneficiary
or successor-in-interest shall be bound by any payment of Base Rent for more
than one (1) month in advance, or any amendment or modification of this Lease
made without the express written consent of such beneficiary where such consent
is required under applicable loan documents.

18.   [INTENTIONALLY DELETED].

19.   MISCELLANEOUS

      19.1  General

            19.1.1 Entire Agreement. This Lease sets forth all the agreements
between Landlord and Tenant concerning the Premises; and there are no agreements
either oral or written other than as set forth herein.

            19.1.2 Time of Essence. Time is of the essence of this Lease.

                                      -17-
<PAGE>

            19.1.3 Attorneys' Fees. In any action or proceeding which either
party brings against the other to enforce its rights hereunder, the
nonprevailing party shall pay all costs incurred by the prevailing party,
including reasonable attorneys' fees, which amounts shall be a part of the
judgment in said action or proceeding.

            19.1.4 Severability. If any provision of this Lease or the
application of any such provision shall be held by a court of competent
jurisdiction to be invalid, void or unenforceable to any extent, the remaining
provisions of this Lease and the application thereof shall remain in full force
and effect and shall not be affected, impaired or invalidated.

            19.1.5 Law. This Lease shall be construed and enforced in accordance
with the laws of the state in which the Premises are located.

            19.1.6 No Option. Submission of this Lease to Tenant for examination
or negotiation does not constitute an option to lease, offer to lease or a
reservation of, or option for, the Premises; and this document shall become
effective and binding only upon the execution and delivery hereof by Landlord
and Tenant.

            19.1.7 Successors and Assigns. This Lease shall be binding upon and
inure to the benefit of the successors and assigns of Landlord and, subject to
compliance with the terms of Section 16, Tenant.

            19.1.8 Third Party Beneficiaries. Nothing herein is intended to
create any third party benefit.

            19.1.9 Memorandum of Lease. Tenant shall not record this Lease or a
short form memorandum hereof without Landlord's prior written consent which
Landlord may withhold in its sole discretion.

            19.1.10 Agency, Partnership or Joint Venture. Nothing contained
herein nor any acts of the parties hereto shall be deemed or construed by the
parties hereto, nor by any third party, as creating the relationship of
principal and agent or of partnership or of joint venture by the parties hereto
or any relationship other than the relationship of landlord and tenant.

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

            19.1.12 Headings. Section headings have been inserted solely as a
matter of convenience and are not intended to define or limit the scope of any
of the provisions contained therein.

            19.1.13 Security Measures. Tenant hereby acknowledges that Landlord
shall have no obligation to provide a guard service or other security measures
whatsoever. Tenant assumes all responsibility for the protection of the
Premises, Tenant, its agents and invitees and their property from the acts of
third parties.

      19.2  Signs. All signs and graphics of every kind visible in or from
public view or corridors, the Common Areas or the exterior of the Premises
(whether located inside or outside of the Premises) shall be subject to
Landlord's prior written approval and shall be subject to any applicable
governmental laws, ordinances, and regulations and in compliance with Landlord's
signage program. Tenant shall remove all such signs and graphics prior to the
termination of this Lease. Such installations and removals shall be made in such
manner as to avoid injury or defacement of the Premises; and Tenant shall repair
any injury or defacement, including without limitation, discoloration caused by
such installation or removal.

      19.3  Waiver. No waiver of any default or breach hereunder shall be
implied from any omission to take action on account thereof, notwithstanding any
custom and practice or course of dealing. No waiver by either party of any
provision under this Lease shall be effective unless in writing and signed by
such party. No waiver shall affect any default other than the default specified
in the waiver and then such waver shall be operative only for the time and to
the extent therein stated. Waivers of any covenant shall not be construed as a
waiver of any subsequent breach of the same.

                                      -18-
<PAGE>

      19.4  Financial Statements. Tenant shall provide, and cause each
Guarantor, if applicable, to provide to any lender, purchaser or Landlord,
within ten (10) days after request, a current, accurate, audited financial
statement for Tenant and Tenant's business and financial statements for Tenant
and Tenant's business for each of the three (3) years prior to the current
financial statement year prepared under generally accepted accounting principles
consistently applied. Tenant shall also provide within said 10-day period such
other financial information or tax returns as may be reasonably required by
Landlord, purchaser or any lender of either.

      19.5  Limitation of Liability. The obligations of Landlord under this
Lease are not personal obligations of the individual partners, members,
managers, directors, officers, shareholders, agents or employees of Landlord;
and Tenant shall look solely to the Building for satisfaction of any liability
of Landlord and shall not look to other assets of Landlord nor seek recourse
against the assets of the individual partners, directors, officers,
shareholders, agents or employees of Landlord. Whenever Landlord transfers its
interest, Landlord shall be automatically released from further performance
under this Lease and from all further liabilities and expenses hereunder and the
transferee of Landlord's interest shall assume all liabilities and obligations
of Landlord hereunder from the date of such transfer.

      19.6  Notices. All notices to be given hereunder shall be in writing and
mailed postage prepaid by certified or registered mail, return receipt
requested, or delivered by personal or courier delivery, or sent by facsimile,
electronically confirmed, (immediately followed by one of the preceding
methods), to Landlord's Address and Tenant's Address, or to such other place as
Landlord or Tenant may designate in a written notice given to the other party.
Notices shall be deemed served upon the first attempted delivery by the U.S.
Postal Service, the courier or a recognized overnight delivery service, or upon
receipt of the facsimile prior to 5 p.m. on any business day, or, if after 5
p.m., on the next business day.

      19.7  Brokerage Commission. Landlord shall pay a brokerage commission to
Landlord's Broker specified in the Basic Lease Information in accordance with a
separate agreement between Landlord and Landlord's Broker. Landlord shall have
no further or separate obligation for payment of any commissions or fees to any
other broker or finder. Tenant warrants to Landlord that Tenant's sole contact
with Landlord or with the Premises in connection with this transaction has been
directly with Landlord, Landlord's Broker and Tenant's Broker specified in the
Basic Lease Information, and that no other broker or finder can properly claim a
right to a commission or a finder's fee based upon contacts between the claimant
and Tenant. Any commissions or fees payable to Tenant's Broker with respect to
this transaction shall be paid by Landlord's Broker, and Landlord shall have
no obligation with respect thereto. Subject to the foregoing, Tenant agrees to
indemnify and hold Landlord harmless from any claims or liability, including
reasonable attorneys' fees, in connection with a claim by any person for a real
estate broker's commission, finder's fee or other compensation based upon any
statement, representation or agreement of Tenant, and Landlord agrees to
indemnify and hold Tenant harmless from any such claims or liability, including
reasonable attorneys' fees, based upon any statement, representation or
agreement of Landlord.

      19.8  Authorization. Each individual executing this Lease on behalf of
Tenant represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of Tenant and that such execution is binding upon
Tenant.

      19.9  Holding Over; Surrender

            19.9.1 Holding Over. If Tenant holds over the Premises or any part
thereof after expiration of the Term, such holding over shall, at Landlord's
option, constitute a month-to-month tenancy, at a rent equal to one hundred
twenty-five percent (125%) of the Base Rent in effect immediately prior to such
holding over for the first month of such holding over and thereafter at a rent
equal to two hundred percent (200%) of the Base Rent in effect immediately prior
to such holding over, and shall otherwise be on all the other terms and
conditions of this Lease. This paragraph shall not be construed as Landlord's
permission for Tenant to hold over. Acceptance of Rent by Landlord following
expiration or termination shall not constitute a renewal of this Lease or
extension of the Term except as specifically set forth above. If Tenant fails to
surrender the Premises upon expiration or earlier termination of this Lease,
Tenant shall indemnify and hold Landlord harmless from and against all loss or
liability resulting from or arising out of Tenant's failure to surrender the
Premises, including, but not limited to, any amounts required to be paid to any
tenant or prospective tenant who was to have occupied the Premises after the
expiration or earlier termination of this Lease and any related attorneys' fees
and brokerage commissions.

                                      -19-
<PAGE>

            19.9.2 Surrender. Upon the termination of this Lease or Tenant's
right to possession of the Premises, Tenant will surrender the Premises broom
clean, together with all keys, in good condition and repair, reasonable wear and
tear excepted. Tenant shall patch and fill all holes within the Premises and all
penetrations of the roof shall be resealed to a watertight condition. In no
event may Tenant remove from the Premises any mechanical or electrical systems
or any wiring or any other aspect of any systems within the Premises. Conditions
existing because of Tenant's failure to perform maintenance, repairs or
replacements shall not be deemed "reasonable wear and tear."

      19.10 Joint and Several. If Tenant consists of more than one person, the
obligation of all such persons shall be joint and several.

      19.11 Covenants and Conditions. Each provision to be performed by Tenant
hereunder shall be deemed to be both a covenant and a condition.

      19.12 Auctions. Tenant shall not conduct, nor permit to be conducted, any
auction upon the Premises without Landlord's prior written consent. Landlord
shall not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.

      19.13 Consents. Except as otherwise provided elsewhere in this Lease,
Landlord's actual reasonable costs and expenses (including, but not limited to,
architects', attorneys', engineers' and other consultants' fees), incurred in
the consideration of, or response to, a request by Tenant for any Landlord
consent, including but not limited to, consents to an assignment, a subletting
or the presence or use of a Hazardous Material, shall be paid by Tenant upon
receipt of an invoice and supporting documentation therefor. Landlord's consent
to any act, assignment or subletting shall not constitute an acknowledgment that
no Event of Default or breach by Tenant of this Lease exists, nor shall such
consent be deemed a waiver of any then existing Event of Default or breach,
except as may be otherwise specifically stated in writing by Landlord at the
time of such consent. Except as otherwise set forth herein, the failure to
specify herein any particular condition to Landlord's consent shall not preclude
the imposition by Landlord at the tinge of consent of such further or other
conditions as are then reasonable with reference to the particular matter for
which consent is being given.

      19.14 Force Majeure. "Force Majeure" as used herein means delays resulting
from causes beyond the reasonable control of the other party, including, without
limitation, any delay caused by any action, inaction, order, ruling, moratorium,
regulation, statute, condition or other decision of any private party or
governmental agency laving jurisdiction over any portion of the Project, over
the construction anticipated to occur thereon or over any uses thereof, or by
delays in inspections or in issuing approvals by private parties or permits by
governmental agencies, or by fire, flood, inclement weather, strikes, lockouts
or other labor or industrial disturbance (whether or not on the part of agents
or employees of either party hereto engaged in the construction of the
Premises), civil disturbance, order of any government, court or regulatory body
claiming jurisdiction or otherwise, act of public enemy, war, riot, sabotage,
blockage, embargo, failure or inability to secure materials, supplies or labor
through ordinary sources by reason of shortages or priority, discovery of
hazardous or toxic materials, earthquake, or other natural disaster, delays
caused by any dispute resolution process, or any cause whatsoever beyond the
reasonable control (excluding financial inability) of the party whose
performance is required, or any of its contractors or other representatives,
whether or not similar to any of the causes hereinabove stated.

      19.15 Mortgagee Protection. Tenant agrees to give any holder of any
mortgage or deed of trust secured by the Real Property, by registered or
certified mail or nationally recognized overnight delivery service, a copy of
any notice of default served upon the Landlord by Tenant, provided that, prior
to such notice, Tenant has been notified in writing (by way of service on Tenant
of a copy of assignment of rents and leases or otherwise) of the address of such
holder of a mortgage or deed of trust. Tenant further agrees that if Landlord
shall have failed to cure such default within thirty (30) days after such notice
to Landlord (or if such default cannot be cured or corrected within that time,
then such additional time as may be necessary if Landlord has commenced within
such thirty (30) day period and is diligently pursuing the remedies or steps
necessary to cure or correct such default), then the holder of any mortgage or
deed of trust shall have an additional sixty (60) days within which to cure or
correct such default (or if such default cannot be cured or corrected within
that time, then such additional time as may be necessary if such holder of any
mortgage or deed of trust has commenced within such sixty (60) day period and is
diligently

                                      -20-
<PAGE>

pursuing the remedies or steps necessary to cure or correct such default).
Notwithstanding the foregoing, in no event shall any holder of any mortgage or
deed of trust have any obligation to cure any default of the Landlord.

      19.16 Guarantors. The Guarantors, if any, shall each execute a guaranty in
a form provided by Landlord. It shall constitute an Event of Default of the
Tenant if any Guarantor fails or refuses, upon request to provide: (a) evidence
of the execution and continued enforceability of the guaranty, including the
authority of the party signing on Guarantor's behalf to obligate Guarantor, and
in the case of a corporate Guarantor, a certified copy of a resolution of its
board of directors authorizing the making of such guaranty, (b) current
financial statements, (c) an estoppel certificate, or (d) written confirmation
that the guaranty is still in effect as a valid binding obligation.

      19.17 Hazardous Substance Disclosure. California law requires landlords to
disclose to tenants the existence of certain Hazardous Materials. Accordingly,
the existence of gasoline and other automotive fluids, asbestos containing
materials, maintenance fluids, copying fluids and other office supplies and
equipment, certain construction and finish materials, tobacco smoke, cosmetics
and other personal items must be disclosed. Gasoline and other automotive fluids
are found in the garage and parking areas of the Project. Cleaning, lubricating
and hydraulic fluids used in the operation and maintenance of the Building are
found in the utility areas of the Building not generally accessible to Building
occupants or the public. Many Building occupants use copy machines and printers
with associated fluids and toners, and pens, markers, inks, and office equipment
that may contain Hazardous Materials. Certain adhesives, paints and other
construction materials and finishes used in portions of the Building may contain
Hazardous Materials. The Building may from time to time be exposed to tobacco
smoke. Building occupants and other persons entering the Building from time to
time may use or carry prescription and non-prescription drugs, perfumes,
cosmetics and other toiletries, and foods and beverages, some of which may
contain Hazardous Materials. By its execution of this Lease, Tenant acknowledges
that the notice set forth hereinabove shall constitute the notice required under
California Health and Safety Code Section 25915.5.

        19.18 Year 2000 Compliance. Tenant represents and warrants that (i)
Tenant has developed or is developing and has budgeted for a comprehensive
program to address the "Year 2000 problem" (that is, the inability of some
computers, as well as embedded microchips in non-computing devices, to properly
perform date-sensitive functions with respect to certain dates prior to and
after December 31, 1999); and (ii) Tenant has implemented or will implement that
program substantially in accordance with its timetable and budget, and
reasonably anticipates that it will substantially avoid the Year 2000 problem as
to all computers, as well as embedded microchips in non-computing devices that
are material to Tenant's business, properties or operations.

      19.19 Parking. Tenant shall have the right, at no cost or expense to
Tenant, to use in common with the other tenants of the Project the number of
parking spaces designated for Tenant's use in the Basic Lease Information in the
parking facilities of the Project throughout the term of this Lease. Tenant's
continued right to use the parking spaces is conditioned upon Tenant abiding by
all rules and regulations which are prescribed from time to time for the orderly
operation and use of the parking facility and upon Tenant's cooperation in
seeing that Tenant's employees and visitors also comply with such rules and
regulations. Tenant agrees not to overburden the parking facilities and agrees
to cooperate with Landlord and other tenants in the use of parking facilities.
Tenant further agrees that Landlord. shall not be responsible for enforcing any
parking rights in the Project. Landlord specifically reserves the right to
change the size, configuration, design, layout, location and all other aspects
of the Project's parking facility and Tenant acknowledges and agrees that
Landlord may, without incurring any liability to Tenant and without any
abatement of Rent under this Lease, from time to time, close-off or restrict
access to the Project's parking facility. Landlord may delegate its
responsibilities hereunder to a parking operator in which case such parking
operator shall have all the rights of control attributed hereby to the Landlord.

      19.20 Addenda. The Addenda attached hereto, if any, and identified with
this Lease are incorporated herein by this reference as if fully set forth
herein.

                                      -21-
<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Lease as of the date
set forth above.

"Landlord"                              "Tenant"

CATELLUS DEVELOPMENT CORPORATION, a     DICON FIBEROPTICS, INC.
Delaware corporation                    a California corporation

By:  /s/ DON D. LITTLE                  By: HO-SHANG LEE
    ---------------------------------       ---------------------------------
Name: SENIOR VICE PRESIDENT             Name: Ho-Shang Lee Ph.D.
      -------------------------------         -------------------------------
Its: NORTHWEST INDUSTRIAL DEVELOPMENT   Its: President
     --------------------------------         --------------------------------

Date: 12/3/99                           Date: 12/3/99
      -------------------------------         -------------------------------

                                        By: DAVID POLINSKY
                                            ---------------------------------
                                        Name: David Polinsky Ph.D.
                                              -------------------------------
                                        Its: Vice-President
                                             --------------------------------

                                        Date: 12/3/99
                                              -------------------------------

                                       22<PAGE>

                                                                   EXHIBIT 10(a)
                                                                   -------------

                           CHANGE IN CONTROL AGREEMENT
                           ---------------------------

This Agreement between Stewart K. Owens ("Executive") and Bob Evans Farms, Inc.,
a Delaware  corporation (the "Corporation") is effective May 1, 2002 ("Effective
Date") and  supercedes  any  similar  agreement  between the  Executive  and the
Corporation.

                                  1.00 PURPOSE

The Corporation believes that [1] a sound and stable management team is
essential to promoting the best interests of the Group and the Corporation's
stockholders, [2] as is the case with many publicly held corporations, a Change
in Control may materially alter the Group's structure and adversely affect
managers' employment security, [3] appropriate steps should be taken to enable
certain managers, including the Executive, to devote their full and continued
attention to the Group's business affairs during the crucial (and often
tumultuous) period preceding and immediately following a Change in Control and
[4] subject to the terms of this Agreement, these objectives can best be met by
providing the Executive with the severance payments described in this Agreement.

                                2.00 DEFINITIONS

When used in this Agreement, the following terms will have the meanings given to
them in this section unless another meaning is expressly provided elsewhere in
this Agreement. When applying these definitions, the form of any term or word
will include any of its other forms.

2.01 BOARD. The Corporation's board of directors.

2.02 CAUSE. The Executive's [1] willful and continued refusal to substantially
perform assigned duties (other than any refusal resulting from incapacity due to
physical or mental illness), [2] willful engagement in gross misconduct
materially and demonstrably injurious to any Group Member or [3] breach of any
term of this Agreement. However, [4] Cause will not arise [a] solely because the
Executive is absent from active employment during periods of vacation,
consistent with the Employer's applicable vacation policy, or other period of
absence initiated by the Executive and approved by the Employer or [b] due to
any event that constitutes Good Reason.

2.03 CHANGE IN CONTROL.

     [1] Subject to the rules of application described in Section 2.03[2], the
     date on which the earliest of the following events occurs:

         [a] After the Effective Date, an event that would be required to be
         reported as a change in control for purposes of the Exchange Act.

         [b] During any 12-consecutive-calendar-month period ending after the
         Effective Date, there is a change in a majority of the Incumbent
         Directors for any reason other

<PAGE>

         than death or disability as reasonably established by the Corporation
         on the basis of medical and other information known (or made
         available) to it.

         [c] After the Effective Date, any entity or "person," [including a
         "group" as contemplated by Exchange Acts Sections 13(d)(3) and
         14(d)(2)] is or becomes the "beneficial owner" [as defined in Rule
         13d-3 under the Exchange Act], through a tender offer or otherwise, of
         Common Shares representing 50 percent or more of the combined voting
         power of the Corporation's then outstanding Common Shares.

         [d] During any 12-consecutive-calendar-month period ending after the
         Effective Date, any entity or "person," [including a "group" as
         contemplated by Exchange Act Sections 13(d)(3) and 14(d)(2)] acquires,
         either directly or as a "beneficial owner" [as defined in Rule 13d-3
         under the Exchange Act], through a tender offer or otherwise, Common
         Shares representing more than 20 percent of the combined voting power
         of the Corporation's then outstanding Common Shares. However, this
         element of this definition will be applied without regard to the effect
         of any redemption of Common Shares by the Corporation or the
         acquisition of Common Shares by any Group Member and after ignoring any
         Common Shares acquired:

             [i] Before the beginning of any 12-consecutive-calendar-month
             measurement period;

             [ii] By or through an employee benefit plan [whether or not
             intended to comply with Code Section4 01(a) and whether or not the
             Executive participates in that plan] maintained by any Group
             Member;

             [iii] Directly, through an equity compensation plan maintained by
             any Group Member;

             [iv] Directly, through inheritance, gift, bequest or by operation
             of law on the death of an individual; or

             [v] By any entity or "person" [including a "group" as contemplated
             by Exchange Act Sections 13(d)(3) and 14(d)(2)] with respect to
             which that acquirer has filed SEC Schedule 13G indicating that the
             Common Shares were not acquired and are not held for the purpose of
             or with the effect of changing or influencing, directly or
             indirectly, the Corporation's management or policies, unless and
             until that entity or person indicates that its intent has changed
             by filing SEC Schedule 13D.

         [e] After the Effective Date, the Corporation's stockholders approve a
         definitive agreement to merge or combine the Corporation with or into
         another entity, a majority of the directors of which were not Incumbent
         Directors immediately before the merger and in which the Corporation's
         stockholders will hold less than 50

                                       2
<PAGE>

         percent of the voting power of the surviving entity. When applying this
         element of this definition:

             [i] Stockholders will be determined immediately before and
             immediately after the merger or combination; and

             [ii] The Common Shares owned before the transaction by the entity
             with which the Corporation merges or combines will be disregarded
             for all purposes.

         [f] Within any 12-consecutive-calendar-month period ending after the
         Effective Date, any entity or "person" [including a "group" as
         contemplated by Exchange Act Sections 13(d)(3) and 14(d)(2) and Code
         Section 280G] acquires, either directly or as a "beneficial owner" [as
         defined in Rule 13d-3 under the Exchange Act] of another entity or
         person, Group assets having a total gross fair market value equal to or
         greater than 50 percent of the book value of the Group's assets. For
         purposes of this definition, "book value" will be established on the
         basis of the latest consolidated financial statement the Corporation
         filed with the Securities and Exchange Commission before the date any
         12-consecutive calendar month measurement period began.. However,
         except as otherwise provided in this section, this element of this
         definition will be applied after ignoring:

             [i] Any transfer of assets to a stockholder of the Corporation
             (determined immediately before the asset transfer), but only to the
             extent exchanged for or with respect to the Corporation's stock;

             [ii] Any transfer of assets to an entity, 50 percent or more of the
             total value or voting power of which is owned by one or more Group
             Members;

             [iii] Any transfer of assets to any entity or "person" [including a
             "group" as contemplated by Exchange Act Sections 13(d)(3) and
             14(d)(2)] that, immediately before the transfer, owns, directly or
             as a "beneficial owner" [as defined in Rule 13d-3 under the
             Exchange Act], 50 percent or more of the total value or voting
             power of the Corporation's outstanding securities; or

             [iv] Any transfer of assets to an entity, at least 50 percent or
             more of the total value or voting power of which, immediately
             before the transfer, is owned, directly or indirectly, by a person
             described in Section 2.03[1][c] of this definition.

     [2] The following rules of application will be applied to this definition:

         [a] For purposes of applying all parts of this definition, [i] Common
         Shares owned or acquired by the Executive or by any other entity or
         "person" [including a "group" as contemplated by Exchange Act Sections
         13(d)(3) and 14(d)(2)] acting in

                                       3
<PAGE>

         concert with the Executive will be disregarded, [ii] any transfer of
         assets to the Executive or to any other entity or "person" [including a
         "group" as contemplated by Exchange Act Sections 13(d)(3) and 14(d)(2)]
         acting in concert with the Executive will be disregarded and [iii] the
         constructive ownership rules of Code Section 318(a) will be applied to
         determine stock ownership;

         [b] For purposes of applying Section 2.03[1][f], an entity's or a
         person's status (unless specifically indicated otherwise) will be
         determined immediately after the transfer of assets; and

         [c] Any transfer of assets disregarded under Section 2.03[1][f][i] will
         not be ignored when applying that subsection if that transaction is
         part of a larger transaction or series of transactions that also
         involve the transfer of assets for cash or consideration other than
         Common Shares.

2.04 CODE. The Internal Revenue Code of 1986, as amended, or any successor
statute.

2.05 COMMON SHARES. The Corporation's shares of Common Stock or any security
issued in substitution, exchange or in place of the Corporation's Common Stock.

2.06 CONFIDENTIAL INFORMATION. Any and all information (other than information
in the public domain) related to the Group's business or that of any Group
Member, including all processes, inventions, trade secrets, computer programs,
engineering or technical data, drawings or designs, manufacturing techniques,
information concerning pricing and pricing policies, marketing techniques, plans
and forecasts, new product information, information concerning suppliers,
methods and manner of operations, and information relating to the identity and
location of all past, present and prospective customers.

2.07 DATE OF TERMINATION. Except as otherwise provided in Section 4.00:

     [1] If the Executive is Terminated because of Retirement or for Cause, the
     date specified in the Notice of Termination;

     [2] If the Executive is Terminated because of Disability, the date
     determined under Section 4.04[1];

     [3] If the Executive dies, the date of death;

     [4] If the Executive is Terminated for Good Reason, the date specified in
     the Notice of Termination;

     [5] If the Executive is Terminated for any reason other than Retirement,
     Cause, Disability, death or Good Reason, the date on which a Notice of
     Termination is given; or

     [6] If the Employer Terminates the Executive without giving a Notice of
     Termination, the date on which that Termination is effective.

                                       4
<PAGE>

However, if either Party utilizes the procedures described in Section 7.03 to
dispute the basis on which the Executive's employment is being terminated, the
Date of Termination will be no later than the last day of the Executive's active
employment as a common law employee of all Group Members.

2.08 DISABILITY. An incapacity due to physical or mental illness that has
prevented the Executive from discharging assigned duties on a full-time basis
for at least the lesser of [1] 26 consecutive weeks or [2] the period between
the date the incapacity arose and the last day but one of the Effective Period.

2.09 EFFECTIVE PERIOD. The 36 consecutive calendar months beginning after a
Change in Control occurring during the Term, even if that period extends beyond
the Term.

2.10 EMPLOYER. The Group Member by which the Executive is directly employed on
the date of any event, act or occurrence described in this Agreement, including
execution of this Agreement. If, without incurring a Termination, the Executive
becomes a common law employee of a Group Member other than the Employer, that
Group Member will automatically become the Executive's "Employer" under this
Agreement and will be fully liable, as the Executive's Employer, for all
obligations arising under this Agreement during the period of that employment
relationship, including the payment of any amount described in Section 5.00 that
becomes due during the course of that employment relationship.

2.11 EXCHANGE ACT. The Securities Exchange Act of 1934, as amended, or any
successor statute.

2.12 GOOD REASON. For purposes of Section 4.06, any of the following to which
the Executive has not consented in writing:

     [1] At any time after a Change in Control, any breach of this Agreement of
     any nature whatsoever by or in behalf of the Group or any Group Member;

     [2] At any time after a Change in Control, a reduction in the Executive's
     title, duties, responsibilities or status, as compared to either [a] the
     Executive's title, duties, responsibilities or status immediately before a
     Change in Control or [b] any enhanced or increased title, duties,
     responsibilities or status to which the Executive accedes after the Change
     in Control;

     [3] At any time after a Change in Control, the assignment to the Executive
     of duties that are inconsistent with [a] the Executive's office immediately
     before the date of a Change in Control or [b] any more senior office to
     which the Executive is promoted after a Change in Control;

     [4] During any calendar year ending after a Change in Control, a 10 percent
     (or larger) reduction (other than a reduction attributable to any
     Termination for death, Disability or Cause or for any period the Executive
     is temporarily absent from active employment) in the highest of [a] the
     Executive's total cash compensation for the

                                       5
<PAGE>

     preceding calendar year or, if higher, [b] the Executive's total cash
     compensation for the last calendar year ending before the Change in Control
     but [c] in both cases, determined without regard to any amounts described
     in this Agreement;

     [5] At any time after a Change in Control, a requirement that the Executive
     relocate to a principal office or worksite (or accept indefinite
     assignment) to a location more than 50 miles distant from [a] the principal
     office or worksite to which the Executive was assigned immediately before a
     Change in Control or [b] any location to which the Executive agreed to be
     assigned after a Change in Control;

     [6] At any time after a Change in Control, the imposition on the Executive
     of business travel obligations substantially greater than the Executive's
     business travel obligations during the 12-consecutive-calendar-month period
     ending before the Change in Control but determined without regard to any
     special business travel obligations associated with activities relating to
     the Change in Control;

     [7] At any time after a Change in Control, the Employer's [a] failure to
     continue in effect any material fringe benefit or compensation plan,
     retirement or deferred compensation plan, life insurance plan, health and
     accident plan or disability plan in which the Executive is participating at
     the time of a Change in Control, [b] modification of any of the plans or
     programs just described that adversely affects the value of the Executive's
     benefits under those plans, or [c] failure to provide the Executive, after
     a Change in Control, with the same number of paid vacation days to which
     the Executive is or becomes entitled at or anytime on or after a Change in
     Control under the terms of the Employer's vacation policy or program.
     However, Good Reason will not arise under this subsection solely because
     [d] the Corporation or the Employer terminates or modifies any program
     after a Change in Control solely to comply with applicable law but only to
     the extent of the change required or [e] a plan or benefit program expires
     under self-executing terms contained in that plan or benefit program before
     the Change in Control; or

     [8] The Employer fails to deliver a Notice of Termination to the Executive
     within 30 days after the Executive becomes Disabled.

2.13 GROUP. The Employer, the Corporation and any other entity to which either
is related through common ownership as defined in Code Section 1504.

2.14 GROUP MEMBER. Each entity that is a member of the Group.

2.15 INCUMBENT DIRECTOR. Each person who was a member of the Board on the
Effective Date and, after the Effective Date, each director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least a majority of the then Incumbent Directors.

2.16 NOTICE OF PAYMENT. The written notice by which the Corporation apprises the
Executive of [1] the amount of any payment due under this Agreement, [2] the
reason that amount is payable and [3] the basis on which that payment was
calculated.

                                       6
<PAGE>

2.17 NOTICE OF TERMINATION. A written notice that describes in reasonable detail
the facts and circumstances claimed to provide a basis for Termination.

2.18 PARTIES. The Corporation and the Executive.

2.19 RETIREMENT. The Executive's Termination in accordance with [1] the
Employer's normal retirement policy in effect on the date of a Change in Control
and which is generally applicable to its salaried employees or [2] in accordance
with any individual retirement arrangement agreed upon by the Parties.

2.20 RETIREMENT AGE. The normal or mandatory retirement age specified in any of
the policies or arrangements described in Section 2.19.

2.21 TERM. Initially, the period beginning on the Effective Date and ending
midnight, April 30, 2003 ("Termination Date"). Subject to Section 6.00, the Term
will automatically be extended for successive one-year periods beginning on the
Termination Date and anniversaries of each Termination Date.

2.22 TERMINATION. Termination of the common law employee-employer relationship
between the Executive and all Group Members for any reason, whether or not the
Executive subsequently becomes a consultant or adviser to any Group Member or
serves as a member of the board of directors of any Group Member. However, a
Termination will not be deemed to have occurred [1] solely because the
Executive's Employer ceases to be a Group Member and the Executive continues to
be employed by that former Group Member or [2] subject to Section 4.06, if the
Executive's common law employment relationship is transferred between Group
Members without interruption.

                          3.00 EXECUTIVE'S OBLIGATIONS

3.01 SERVICES DURING CERTAIN EVENTS. If any "person" (as used in Section
2.03[1][c]) initiates a tender or exchange offer, distributes proxy materials to
the Corporation's stockholders or takes other steps to effect, or that may
result in, a Change in Control, the Executive agrees not to Terminate
voluntarily during the pendency of that activity other than by reason of
Retirement and to continue to serve as a full-time employee of the Employer
until those efforts are abandoned, that activity is terminated or until a Change
in Control has occurred.

3.02 CONFIDENTIAL INFORMATION. Except as otherwise required by applicable law,
Executive expressly agrees to keep and maintain Confidential Information
confidential and not, at any time during or subsequent to the Executive's
employment with any Group Member, to use any Confidential Information for
Executive's own benefit or to divulge, disclose or communicate any Confidential
Information to any person or entity in any manner except [1] to employees or
agents of the Employer or of the Corporation that need the Confidential
Information to perform their duties on behalf of any Group Member or [2] in the
performance of Executive's duties to the Employer. Executive also agrees to
notify the Corporation promptly of any circumstance Executive believes may
legally compel the disclosure of Confidential Information and to give this
notice before disclosing any Confidential Information.

                                       7
<PAGE>

3.03 EFFECT OF BREACH OF OBLIGATIONS. If the Executive breaches any obligation
described in this Agreement:

     [1] If that breach occurs before a Change in Control, this Agreement will
     terminate as of the date of the breach, even if the fact of the breach
     becomes apparent at a later date;

     [2] If that breach occurs after a Change in Control but before the
     Executive has Terminated, this Agreement will terminate as of the date of
     the breach, even if the fact of the breach becomes apparent at a later date
     and no amounts will be due under this Agreement; or

     [3] If that breach occurs after a Change in Control and after the Executive
     Terminates, the Executive will repay any amounts paid under this Agreement
     plus interest calculated at the prime interest rate quoted in the Wall
     Street Journal, over the period beginning on the date of the payment to the
     Executive (or any beneficiary under this Agreement and ending on the date
     of repayment.

4.00 COMPENSATION PAID IF EXECUTIVE TERMINATES AFTER A CHANGE IN CONTROL

4.01 TERMINATION FOR CAUSE.

     [1] The Employer may Terminate the Executive for Cause at any time by
     delivering to the Executive a Notice of Termination specifying the
     effective date of the Termination (which may not be earlier than the date
     the Notice of Termination is given) and the basis upon which the Employer
     believes that it has Cause to Terminate the Executive.

     [2] As of the Date of Termination specified in the Notice of Termination,
     [a] the Executive's employment will end, [b] this Agreement will terminate
     and [c] no amounts will be paid or due under this Agreement at any time.

4.02 TERMINATION BECAUSE OF DEATH. Subject to Section 8.03, if the Executive
dies, this Agreement will terminate as of the date the Executive dies and no
amounts will be paid or due under this Agreement at any time.

4.03 TERMINATION AFTER RETIREMENT AGE. If the Executive Terminates after
Retirement Age for any reason, this Agreement will terminate as of the date
specified in the Notice of Termination (which may not be earlier than the
Executive's Retirement Age) and no amounts will be paid or due under this
Agreement at any time.

4.04 TERMINATION BECAUSE OF DISABILITY.

     [1] The Employer may Terminate the Executive at any time after the
     Executive has become Disabled but only if it delivers to the Executive a
     Notice of Termination specifying the effective Date of Termination, which
     may be [a] no earlier than 30 days after this Notice of Termination is
     delivered or [b] no later than the last day but one of the Effective Period
     during which the Disability began.

                                       8
<PAGE>

     [2] If the Executive does not return to full-time active employment before
     the Date of Termination specified in the Notice of Termination and if the
     specified Date of Termination is within an Effective Period (whether or not
     the Executive's absence began before or after the Effective Period began)
     or if the Executive Terminates for Good Reason (as defined in Section
     2.12[8]), [a] the Executive's employment will Terminate as of the Date of
     Termination specified in the Notice of Termination, [b] this Agreement will
     terminate and [c] the Executive will receive an amount equal to:

         [i] The amount described in Section 5.00, calculated on the basis of
         the compensation paid to the Executive before the absence began or, if
         higher, the amount the Executive was receiving during the period of
         absence; minus

         [ii] The value of:

              [A] One half of the disability benefit payable under the Social
              Security Act;

              [B] The amount by which the Executive's employer-funded benefit
              under any retirement or deferred compensation plan [whether or not
              intended to comply with Code Section 401(a)] is enhanced by the
              Disability; and

              [C] The value of any employer-funded disability income or other
              benefits the Executive is entitled to receive from any disability
              plan or program.

         The value of these reductions:

              [D] Will be calculated by applying the factors described in
              Section 5.02[3]; and

              [E] Will be applied before application of Section 5.02.

4.05 TERMINATION WITHOUT CAUSE.

     [1] The Employer may Terminate the Executive without Cause for any reason
     by delivering to the Executive a Notice of Termination that specifies the
     Date of Termination, which may not be earlier than the date the Notice of
     Termination is given.

     [2] If [a] the Date of Termination specified in the Notice of Termination
     is within the period beginning six months before the beginning of an
     Effective Period and ending on the last day of the same Effective Period
     and [b] the Executive's employment is not being Terminated due to death,
     Disability or Cause, [c] the Corporation will pay (or cause the Employer to
     pay) to the Executive the amount described in Section 5.00. After those
     amounts have been paid, this Agreement will terminate and no further
     amounts will be paid or due under this Agreement.

                                       9
<PAGE>

4.06 TERMINATION FOR GOOD REASON.

     [1] The Executive may Terminate for Good Reason after a Change in Control
     by delivering to the Corporation a Notice of Termination for Good Reason
     (other than Good Reason as defined in Section 2.12[8]) specifying the Date
     of Termination (which may not be earlier than the date the Notice of
     Termination is given) and the basis upon which the Executive believes that
     Good Reason has arisen.

     [2] If [a] the Date of Termination specified in the Notice of Termination
     is within the period beginning six months before the beginning of an
     Effective Period and ending on the last day of the same Effective Period
     and [b] within 30 days after the Date of Termination, the Employer does not
     cure the Good Reason event described in the Notice of Termination, [c] the
     Corporation will pay (or cause the Employer to pay) to the Executive the
     amount described in Section 5.00. After those amounts have been paid, this
     Agreement will terminate and no further amounts will be paid or due under
     this Agreement.

                         5.00 CHANGE IN CONTROL PAYMENTS

5.01 CALCULATION OF CHANGE IN CONTROL PAYMENTS. Subject to the terms of this
Agreement, if the Executive is Terminated under Section 4.04, 4.05 or 4.06, the
Corporation (or the Employer) will:

     [1] Continue to pay the Executive's compensation and other benefits through
     the Date of Termination and also will pay the Executive the value of any
     unused vacation and compensation days determined under the Employer's
     personnel policy. These amounts will be paid no later than 30 days after
     the Executive's Date of Termination and will be based on the rate of
     compensation and value of benefits in effect before the Notice of
     Termination was delivered.

     [2] Pay the Executive a lump sum equal to the amount described in this
     subsection. This payment will be accompanied by a Notice of Payment and,
     subject to Section 5.02, made no more than 30 days after the Executive's
     Date of Termination. The amount payable under this subsection will be the
     sum of:

         [a] 299 percent of the Executive's "base amount" as defined under Code
         Section 280G [whether or not the Change in Control generating benefits
         under this Agreement is a "change in control" as defined under Code
         Section 280G]; plus

         [b] An additional amount equal to:

             [i] The cash bonus paid to the Executive by all Group Members
             averaged over the three full fiscal years ending before the Date of
             Termination (or, if shorter, over the full period of the
             Executive's employment by all Group Members); multiplied by

                                       10
<PAGE>

             [ii] The number of days between the Executive's Date of Termination
             and the last day of the Corporation's last complete fiscal year
             ending before that Date of Termination; and divided by

             [iii] 365 days.

         [c] Any other change in control benefit to which the Executive is
         entitled under any other plan, program or agreement with any Group
         Member.

     [3] For 36 months after the Executive's Date of Termination, the
     Corporation also will maintain (or cause the Employer to maintain) in full
     force and effect, for the Executive's continued benefit (and that of all
     family members and other dependents who were enrolled in the programs on
     the Executive's Date of Termination) all life, medical and dental insurance
     programs in which the Executive (or members of the Executive's family or
     other dependents) was participating or was covered immediately before the
     Executive's Date of Termination. If the terms of any of the programs just
     described do not allow the continued participation described in the
     preceding sentence, the Corporation (or the Employer) will [a] provide
     benefits that are substantially similar (including eligibility conditions,
     conditions on benefits, the value of benefits and the scope of coverage) to
     those provided by the life, medical and dental insurance programs in which
     the Executive, members of the Executive's family and dependents were
     participating immediately before the Executive's Date of Termination and
     [b] ensure that any eligibility or other conditions on benefits under these
     programs, including deductibles and copayments, will be administered by
     applying the Executive's experience under any predecessor program in which
     the Executive (or members of the Executive's family and dependents) were
     participating before Termination.

5.02 EFFECT OF CODE SECTION 280G.

     [1] If the sum of the amounts described in Section 5.01 and those promised
     under any other plan, program or agreement between the Executive and any
     Group Member ("Payment") constitute "excess parachute payments" as defined
     in Code Section 280G(b)(1), and it is established that any Payment is
     subject to any excise tax under Code Section 4999 or any interest and/or
     penalties are due with respect to that excise tax (the excise tax and any
     associated interest and/or penalties being collectively referred to as the
     "Excise Tax"), the Corporation (or the Employer) will make an additional
     payment (referred to as the "Excise Gross-Up Payment") to the Executive in
     sufficient amount to ensure that, after the Executive pays all applicable
     federal, state and local taxes (including any interest and/or penalties
     associated with those taxes), including any Excise Tax imposed on the
     Excise Gross-Up Payment, the Executive will retain an amount of the Excise
     Gross-Up Payment equal to the Excise Tax imposed on the Payment.

     [2] If the Internal Revenue Service or any court of competent jurisdiction
     subsequently and conclusively decides that the Corporation has
     miscalculated the amount of any "excess parachute payment" and if that
     decision, had it been made initially:

                                       11
<PAGE>

         [a] Would have resulted in a larger payment than initially calculated,
         the Corporation will reapply Section 5.02 based on the revised
         calculation to identify the Executive's revised parachute payment and
         immediately pay that additional amount to the Executive; but

         [b] If, after that reapplication, the Executive is entitled to a
         smaller amount under this Agreement than initially calculated, the
         Executive will repay the amount of any overpayment to the Corporation
         within 30 days of the date of that decision, together with interest on
         that amount at the prime rate of interest quoted in the Wall Street
         Journal, as of the date of that final decision, calculated over the
         period beginning on the date the excess amount was paid and ending on
         the date the excess amount is repaid.

     [3] The value of all amounts due under this Agreement will be established
     by the Corporation's independent auditors applying principles, assumptions
     and procedures consistent with Code Section 280G. These principles,
     assumptions and procedures will be explained to the Executive in the Notice
     of Payment.

5.03 CONDITIONS AFFECTING PAYMENTS.

     [1] Except as expressly provided in this Agreement, the Executive's right
     to receive the payments described in this Agreement will not decrease the
     amount of, or otherwise adversely affect, any other benefits payable to the
     Executive under any plan, agreement or arrangement between the Executive
     and any Group Member.

     [2] The Executive is not required to mitigate the amount of any payment
     described in this Agreement by seeking other employment or otherwise, nor
     will the amount of any payment or benefit provided for in this Agreement be
     reduced by any compensation the Executive earns in any capacity after
     Termination or, except as provided in Section 4.04, by reason of the
     Executive's receipt of or right to receive any retirement or other benefits
     on or after Termination.

     [3] The amount of any payment made under this Agreement will be reduced by
     amounts the Employer is required to withhold in payment (or in anticipation
     of payment) of any income, wage or employment taxes imposed on the payment.

5.04 LIMIT ON NUMBER OF CHANGES IN CONTROL. Regardless of any provision of this
Agreement, if more than one Change in Control (whether or not related) occurs
during the Term, the total amount payable under this Agreement will be the
largest amount (after application of Section 5.02) calculated with respect to
any single change in control occurring during the Effective Period.

                                       12
<PAGE>

                         6.00 AMENDMENT AND TERMINATION

6.01 AMENDMENT. This Agreement may be amended at any time by written agreement
between the Executive and the Corporation.

6.02 TERMINATION. This Agreement will terminate on the earliest of the following
to occur:

     [1] The Executive's employment with all Group Members is Terminated before
     a Change in Control;

     [2] Before a Change in Control, the Executive is reassigned to a more
     junior position, unless the Corporation decides that the new position is
     sufficiently senior to justify continuation of this Agreement;

     [3] The Corporation and the Executive mutually agree, in writing, to
     terminate this Agreement, whether or not it is replaced with a similar
     agreement;

     [4] The Corporation notifies the Executive, in writing, that the Agreement
     is to terminate at the end of its then current Term. To be effective,
     however, this written notice [a] must be given no later than midnight of
     the February 28 preceding the end of the then current Term but [b] may
     never be effective [i] during an Effective Period or [ii] at any time after
     the Corporation learns that activities have begun that, if completed, would
     cause a Change in Control, although the notice may be given if those
     activities end without generating a Change in Control;

     [5] All payments due under this Agreement have been fully paid; or

     [6] As provided in Section 4.00.

                    7.00 EQUITABLE RELIEF/DISPUTE RESOLUTION

7.01 UNIQUENESS OF OBLIGATIONS. The Executive's obligations described in this
Agreement are of a special and unique character which gives them a peculiar
value to the Group and the Group cannot be reasonably or adequately compensated
in damages in an action at law if Executive breaches those obligations.
Executive therefore expressly agrees that, in addition to any other rights or
remedies that the Corporation, the Employer or the Group may have, the
Corporation, the Employer and the Group will be entitled to injunctive and other
equitable relief in the form of preliminary and permanent injunctions without
bond or other security if the Executive actually breaches (or threatens to
breach) any obligation under this Agreement.

7.02 INITIAL RESOLUTION OF DISPUTES AFFECTING PAYMENT AMOUNT.

     [1] The Executive may request the Corporation to recalculate the amount of
     payments due under this Agreement. That request must [a] be filed in
     writing no later than 30 days after the Executive receives the Notice of
     Payment and [b] specify the basis upon which the Executive believes that an
     additional amount is due. Any request for recalculation that does not
     comply with both requirements will be ineffective.

                                       13
<PAGE>

     [2] Within 30 days of receiving a request that complies with Section
     7.02[1], the Corporation will notify the Executive of any changes to its
     calculations and the effect of any changes on the amount payable to the
     Executive. If the Corporation does not deliver this information to the
     Executive within this 30-day period, the Executive may regard the request
     as having been denied.

     [3] The Executive expressly waives any right to proceed under Section 7.03
     to dispute the calculation of the amount payable under this Agreement
     unless and until the administrative remedies described in this Section 7.02
     are fully exhausted.

7.03 ARBITRATION Any [a] disagreement concerning the calculation of any payment
due under this Agreement that is not resolved after utilizing the procedures
described in Section 7.02, [b] breach of any term of this Agreement or [c] other
dispute or controversy arising out of or relating to this Agreement, including
the basis on which the Executive is Terminated, will be resolved by arbitration
in accordance with the rules of the American Arbitration Association. The award
of the arbitrator will be final, conclusive and nonappealable and judgment upon
the award rendered by the arbitrator may be entered in any court having
competent jurisdiction. The arbitrator must be an arbitrator qualified to serve
in accordance with the rules of the American Arbitration Association and one who
is approved by the Corporation and the Executive. If the Executive and the
Corporation fail to agree on an arbitrator, each must designate a person
qualified to serve as an arbitrator in accordance with the rules of the American
Arbitration Association and these persons will select the arbitrator from among
those persons qualified to serve in accordance with the rules of the American
Arbitration Association. Any arbitration relating to this Agreement will be held
in the city in which the Executive's last principal place of employment with a
Group Member before the Executive's Date of Termination is or was located or
another place the Parties mutually select immediately before the arbitration.

7.04 COSTS. The Corporation will bear all reasonable costs associated with any
dispute arising under this Agreement, including reasonable accounting and legal
fees incurred by the Executive through any proceeding described in Section 7.02
or 7.03. However, no amounts will be paid under this subsection to the extent
that those payments are "excess parachute payments."

7.05 PAYMENT DURING DISPUTE RESOLUTION PERIOD. If otherwise due, the Corporation
may not defer (or cause the Employer to defer) payment of any amount that is not
being contested under Section 7.02 or 7.03.

7.06 PAYMENT OF ADDITIONAL AMOUNTS. If the arbitrators decide, at the conclusion
of the arbitration proceedings described in Section 7.03, that the Corporation
has understated the amount due under this Agreement, the Corporation will pay
the additional amount to the Executive within 30 days after the date of the
award along with interest calculated at the prime rate quoted in the Wall Street
Journal, for the period beginning on the Executive's Date of Termination and
ending on the date of payment. However, no amounts will be paid under this
subsection to the extent that those payments are "excess parachute payments."

                                       14
<PAGE>

                               8.00 MISCELLANEOUS

8.01 SECURITY. At any time during the Term, the Corporation may provide (or
cause the Employer to provide) security for payment of the amounts and benefits
described in Section 5.00. This security may include one or more of [1] a
stand-by letter of credit issued by a reputable financial institution, [2] an
irrevocable grantor trust (the "Trust") established on terms the Corporation
believes to be appropriate, including a ruling from the Internal Revenue
Service, (or opinion of counsel satisfactory to the Corporation), to the effect
that any funds held by the Trust will be includible in the Executive's gross
income only for the taxable year or years paid to the Executive under the terms
of the Trust's related trust agreement or [3] any other form of security the
Corporation believes is appropriate.

8.02 NONASSIGNMENT. The right of an Executive or any other person to receive any
amount under this Agreement may not be assigned, transferred, pledged or
encumbered except by will or by applicable laws of descent and distribution. Any
attempt to assign, transfer, pledge or encumber any amount that is or may be
receivable under this Agreement will be null and void and of no legal effect.

8.03 SUCCESSORS TO THE EXECUTIVE. Subject to Section 8.02, this Agreement inures
to the benefit of and may be enforced by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

8.04 TRANSFERS.

     [1] If, either before or after a Change in Control, the Executive's common
     law employment relationship shifts within the Group and there has been no
     intervening Termination, this Agreement will remain in full force and
     effect and for all purposes of this Agreement, the Executive's new Employer
     will be substituted for the Executive's prior Employer.

     [2] If the Employer is no longer a Group Member, whether or not as part of
     a transaction that constitutes a Change in Control, this Agreement will
     remain in full force and effect as described in Section 8.02. However, the
     Executive will not be entitled to any amount under this Agreement on
     account of a Change in Control that [a] solely affects the Group after that
     transfer and [b] is not part of the same transaction through which the
     Employer left the Group.

8.05 NOTICES. All notices and other communications provided for in this
Agreement must be written and will be deemed to have been given when deposited
with a reputable delivery service or in United States registered mail, return
receipt requested, postage prepaid. Also,:

     [1] All notices must be directed to the address shown on the last page of
     this Agreement;

                                       15
<PAGE>

     [2] Notices and other communications to the Corporation and the Employer
     will not be deemed to have been given unless they are directed to the
     attention of the Corporation's Chief Executive Officer and copies are sent
     to the Corporation's Secretary.

     [3] Neither Party will be required to use any address other than that shown
     on the last page of this Agreement unless notified of a change in the other
     Party's address. Any change in either Party's address must be given in
     writing to the other Party and will be effective only upon receipt.

8.06 COMPLETE AGREEMENT. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter of this Agreement have
been made by either Party that are not set forth expressly in this Agreement.

8.07 APPLICABLE LAW. The validity, interpretation, construction and performance
of this Agreement will be governed by the laws (but not the law of conflicts of
laws) of the State of Ohio.

8.08 VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement will not affect the validity or enforceability of any other provisions
of this Agreement, which will remain in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be
effective as of the date and year first above written.

                            BOB EVANS FARMS, INC.

                                     By:      /s/ Donald J. Radkoski
                                          ------------------------------------

                                     Title:   CFO, Treasurer
                                             ---------------------------------

                            ADDRESS:

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

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

                            STEWART K. OWENS

                                       /s/ Stewart K. Owens
                                     -----------------------------------------

                            ADDRESS:

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

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

                                       16

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