Jamboree Business Center (Irvine, CA) Industrial Lease - The Irvine Co. and eMachines Inc.

 
                               INDUSTRIAL LEASE
                              (Multi-Tenant; Net)

                                    BETWEEN

                              THE IRVINE COMPANY

                                      AND

                               E-MACHINES, INC.

 
                                     INDEX

                                                                          Page  
                                                                          ----  
 
ARTICLE I. BASIC LEASE PROVISIONS........................................   1

ARTICLE II. PREMISES.....................................................   3

     SECTION 2.1    LEASED PREMISES......................................   3
     SECTION 2.2    ACCEPTANCE OF PREMISES...............................   3
     SECTION 2.3    BUILDING NAME AND ADDRESS............................   3
     SECTION 2.4    LANDLORD'S RESPONSIBILITIES..........................   3

ARTICLE III. TERM........................................................   4

     SECTION 3.1    GENERAL..............................................   4
     SECTION 3.2    DELAY IN POSSESSION..................................   4
     SECTION 3.3    RIGHT TO EXTEND LEASE................................   4

ARTICLE IV. RENT AND OPERATING EXPENSES..................................   5

     SECTION 4.1    BASIC RENT...........................................   5
     SECTION 4.2    OPERATING EXPENSES...................................   5
     SECTION 4.3    SECURITY DEPOSIT.....................................   7

ARTICLE V. USES..........................................................   8

     SECTION 5.1    USE..................................................   8
     SECTION 5.2    SIGNS................................................   8
     SECTION 5.3    HAZARDOUS MATERIALS..................................   9

ARTICLE VI. COMMON AREAS; SERVICES.......................................  11

     SECTION 6.1    UTILITIES AND SERVICES...............................  11
     SECTION 6.2    OPERATION AND MAINTENANCE OF COMMON AREAS............  11
     SECTION 6.3    USE OF COMMON AREAS..................................  12
     SECTION 6.4    PARKING..............................................  12
     SECTION 6.5    CHANGES AND ADDITIONS BY LANDLORD....................  12

ARTICLE VII. MAINTAINING THE PREMISES....................................  13

     SECTION 7.1    TENANT'S MAINTENANCE AND REPAIR......................  13
     SECTION 7.2    LANDLORD'S MAINTENANCE AND REPAIR....................  13
     SECTION 7.3    ALTERATIONS..........................................  13
     SECTION 7.4    MECHANIC'S LIENS.....................................  14
     SECTION 7.5    ENTRY AND INSPECTION.................................  14
     SECTION 7.6    TENANT'S SELF-HELP...................................  14

ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY.................  15

ARTICLE IX. ASSIGNMENT AND SUBLETTING....................................  15

     SECTION 9.1    RIGHTS OF PARTIES....................................  15
     SECTION 9.2    EFFECT OF TRANSFER...................................  16
     SECTION 9.3    SUBLEASE REQUIREMENTS................................  17
     SECTION 9.4    CERTAIN TRANSFERS....................................  17

ARTICLE X. INSURANCE AND INDEMNITY.......................................  17

     SECTION 10.1   TENANT'S INSURANCE...................................  17
     SECTION 10.2   LANDLORD'S INSURANCE.................................  17
     SECTION 10.3   JOINT INDEMNITY......................................  18
     SECTION 10.4   LANDLORD'S NONLIABILITY..............................  19
     SECTION 10.5   WAIVER OF SUBROGATION................................  19


                                      -i-

 
                                     INDEX
                                  (continued)

                                                                         Page
                                                                         ---- 
  
ARTICLE XI. DAMAGE OR DESTRUCTION........................................  19

     SECTION 11.1   RESTORATION..........................................  19
     SECTION 11.2   LEASE GOVERNS........................................  20

ARTICLE XII. EMINENT DOMAIN..............................................  20

     SECTION 12.1   TOTAL OR PARTIAL TAKING..............................  20
     SECTION 12.2   TEMPORARY TAKING.....................................  21
     SECTION 12.3   TAKING OF PARKING AREA...............................  21

ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS............  21

     SECTION 13.1   SUBORDINATION........................................  21
     SECTION 13.2   ESTOPPEL CERTIFICATE.................................  21
     SECTION 13.3   FINANCIALS...........................................  21

ARTICLE XIV. DEFAULTS AND REMEDIES.......................................  22

     SECTION 14.1   TENANT'S DEFAULTS....................................  22
     SECTION 14.2   LANDLORD'S REMEDIES..................................  23
     SECTION 14.3   LATE PAYMENTS........................................  24
     SECTION 14.4   RIGHT OF LANDLORD TO PERFORM.........................  24
     SECTION 14.5   DEFAULT BY LANDLORD..................................  24
     SECTION 14.6   EXPENSES AND LEGAL FEES..............................  24
     SECTION 14.7   WAIVER OF JURY TRIAL.................................  25
     SECTION 14.8   SATISFACTION OF JUDGMENT.............................  25
     SECTION 14.9   LIMITATION OF ACTIONS AGAINST LANDLORD...............  25

ARTICLE XV. END OF TERM..................................................  25

     SECTION 15.1   HOLDING OVER.........................................  25
     SECTION 15.2   MERGER ON TERMINATION................................  25
     SECTION 15.3   SURRENDER OF PREMISES; REMOVAL OF PROPERTY...........  25

ARTICLE XVI. PAYMENTS AND NOTICES........................................  26

ARTICLE XVII. RULES AND REGULATIONS......................................  26

ARTICLE XVIII. BROKER'S COMMISSION.......................................  26

ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST.............................  26

ARTICLE XX. INTERPRETATION...............................................  27

     SECTION 20.1   GENDER AND NUMBER....................................  27
     SECTION 20.2   HEADINGS.............................................  27
     SECTION 20.3   JOINT AND SEVERAL LIABILITY..........................  27
     SECTION 20.4   SUCCESSORS...........................................  27
     SECTION 20.5   TIME OF ESSENCE......................................  27
     SECTION 20.6   CONTROLLING LAW......................................  27
     SECTION 20.7   SEVERABILITY.........................................  27
     SECTION 20.8   WAIVER AND CUMULATIVE REMEDIES.......................  27
     SECTION 20.9   INABILITY TO PERFORM.................................  27
     SECTION 20.10  ENTIRE AGREEMENT.....................................  28
     SECTION 20.11  QUIET ENJOYMENT......................................  28
     SECTION 20.12  SURVIVAL.............................................  28


                                     -ii-

 
                                     INDEX
                                  (continued)

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                                                                         ---- 
   
ARTICLE XXI. EXECUTION AND RECORDING.....................................  28

     SECTION 21.1   COUNTERPARTS.........................................  28
     SECTION 21.2   CORPORATE AND PARTNERSHIP AUTHORITY..................  28
     SECTION 21.3   EXECUTION OF LEASE; NO OPTION OR OFFER...............  28
     SECTION 21.4   RECORDING............................................  28
     SECTION 21.5   AMENDMENTS...........................................  28
     SECTION 21.6   EXECUTED COPY........................................  28
     SECTION 21.7   ATTACHMENTS..........................................  28

ARTICLE XXII. MISCELLANEOUS..............................................  28

     SECTION 22.1   NONDISCLOSURE OF LEASE TERMS.........................  28
     SECTION 22.2   GUARANTY.............................................  29
     SECTION 22.3   CHANGES REQUESTED BY LENDER..........................  29
     SECTION 22.4   MORTGAGEE PROTECTION.................................  29
     SECTION 22.5   [INTENTIONALLY DELETED]..............................  29
     SECTION 22.6   SECURITY MEASURES....................................  29
     SECTION 22.7   JAMS.................................................  29
     SECTION 22.8   APPROVALS............................................  29


EXHIBITS
     Exhibit A  Description of Premises
     Exhibit B  Environmental Questionnaire
     Exhibit C  Landlord's Disclosures
     Exhibit D  Insurance Requirements
     Exhibit E  Rules and Regulations
     Exhibit X  Work Letter
     Exhibit Y  Project Site Plan

 
                               INDUSTRIAL LEASE
                               ----------------
                              (Multi-Tenant; Net)


     THIS LEASE is made as of the 30 day of November, 1998, by and between THE
IRVINE COMPANY, hereafter called "Landlord," and E-MACHINES, INC., a Delaware
corporation, hereinafter called "Tenant."

                       ARTICLE I. BASIC LEASE PROVISIONS

     Each reference in this Lease to the "Basic Lease Provisions" shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.

1.   Premises: The Premises are more particularly described in Section 2.1.

     Address of Building: 14350 Myford Road, Irvine, California

2.   Project Description (if applicable): Jamboree Business Center

3.   Use of Premises: General office, light manufacturing, research and
     development, warehousing, sales, distribution and other uses permitted by
     law, provided, however, that in no event shall the retail sale of products
     or services be permitted.

4.   Estimated Commencement Date:  March 1, 1999

5.   Lease Term: Sixty (60) months, plus such additional days as may be required
     to cause this Lease to terminate on the final day of the calendar month.

6.   Basic Rent: Eighty-Three Thousand Eight Hundred Sixty-Eight Dollars
     ($83,868.00) per month, based on $.57 per rentable square foot.

     Basic Rent is subject to adjustment as follows:

     Commencing on the first day of the thirteenth (13th) month of the Term,
     Basic Rent shall be increased to Eighty-Six Thousand Eight Hundred Ten
     Dollars ($86,810.00) per month, based on $.59 per rentable square foot.

     Commencing on the first day of the twenty-fifth (25th) month of the Lease
     Term, the Basic Rent shall be Ninety-One Thousand Two Hundred Twenty-Four
     Dollars ($91,224.00), based on $.62 per rentable square foot.

     Commencing on the first day of the thirty-seventh (37th) month of the Lease
     Term, the Basic Rent shall be Ninety-Four Thousand One Hundred Sixty-Seven
     Dollars ($94,167.00), based on $.64 per rentable square foot.

     Commencing on the first day of the forty-ninth (49th) month of the Lease
     Term, the Basic Rent shall be Ninety-Seven Thousand One Hundred Ten Dollars
     ($97,110.00), based on $.66 per rentable square foot.

7.   Guarantor(s): Korea Data Systems (America), Inc., a California corporation,
     and TriGem Computer Inc., a Korea corporation

8.   Floor Area of Premises:  Approximately 147,136 rentable square feet

 
9.   Security Deposit:  $250,000.00

10.  Broker(s): Travers Realty Corporation

11.  Additional Insureds: Insignia\ESG of California, Inc.

12.  Address for Payments and Notices:

           LANDLORD                                    TENANT

     INSIGNIA/ESG OF CALIFORNIA, INC.             E-MACHINES, INC.
     1 Ada, Suite 270                             14350 Myford Road
     Irvine, CA 92618                             Irvine, CA
                                                  Attention: John Ham
                                                             President
     with a copy of notices to:
     IRVINE INDUSTRIAL COMPANY
     P.O. Box 6370
     Newport Beach, CA 92658-6370
     Attn: Vice President, Industrial Operations

13.  Tenant's Liability Insurance Requirement: $ 2,000,000.00

14.  Vehicle Parking Spaces: Two Hundred Ninety-Four (294)

                                      -2-

 
                             ARTICLE II. PREMISES

     SECTION 2.1   LEASED PREMISES. Landlord leases to Tenant and Tenant leases
from Landlord the premises shown in Exhibit A (the "Premises"), containing
                                    ---------
approximately the floor area set forth in Item 8 of the Basic Lease Provisions
and known by the suite number identified in Item 1 of the Basic Lease
Provisions. The Premises consist of all the rentable square footage of and are
located within the interior of, the building identified in Item 1 of the Basic
Lease Provisions (which together with the underlying real property, is called
the "Building"). The Building is a portion of the project shown in Exhibit Y
                                                                   ---------
(the "Project"). Tenant understands that the floor area set forth in Item 8 of
the Basic Lease Provisions may include, at Landlord's option, a factor
approximating the total square footage of any common lobby or internal common
features of the Building times the ratio of the actual square footage of the
Premises to the total square footage of the Building.

     SECTION 2.2   ACCEPTANCE OF PREMISES. Except as expressly provided in this
Lease, Tenant acknowledges that neither Landlord nor any representative of
Landlord has made any representation or warranty with respect to the Premises or
the Building or the suitability or fitness of either for any purpose, including
without limitation any representations or warranties regarding zoning or other
land use matters, and that neither Landlord nor any representative of Landlord
has made any representations or warranties regarding (i) what other tenants or
uses may be permitted or intended in the Building and the Project, or (ii) any
exclusivity of use by Tenant with respect to its permitted use of the Premises
as set forth in Item 3 of the Basic Lease Provisions. Tenant further
acknowledges that neither Landlord nor any representative of Landlord has agreed
to undertake any alterations or additions or construct any improvements to the
Premises except as expressly provided in this Lease. The taking of possession or
use of the Premises by Tenant for any purpose other than construction shall
conclusively establish that the Premises and the Building were in satisfactory
condition and in conformity with the provisions of this Lease in all respects,
subject to Landlord's responsibilities set forth in Section 2.4 below and except
for those matters which Tenant shall have brought to Landlord's attention on a
written punch list. The list shall be limited to any items required to be
accomplished by Landlord under the Work Letter attached as Exhibit X, and shall
                                                           ---------
be delivered to Landlord within thirty (30) days after the term ("Term") of this
Lease commences as provided in Article III below. Nothing contained in this
Section shall affect the commencement of the Term or the obligation of Tenant to
pay rent. Landlord shall diligently complete all punch list items of which it is
notified as provided above.

     SECTION 2.3   BUILDING NAME AND ADDRESS. Tenant shall not utilize any name
selected by Landlord from time to time for the Building and/or the Project as
any part of Tenant's corporate or trade name. Landlord shall have the right to
change the name, address, number or designation of the Building or Project
without liability to Tenant.

     SECTION 2.4   LANDLORD'S RESPONSIBILITIES. Notwithstanding anything to the
contrary contained in this Lease, Landlord agrees: (i) that the Premises
(including, without limitation, the "Tenant Improvements" constructed pursuant
to the Work Letter attached hereto) shall be in good and clean operating
condition and repair as of the Commencement Date, and that the plumbing,
electrical and mechanical systems serving the Building, including, without
limitation, the HVAC systems, shall be in good operating condition as of the
Commencement Date, and (ii) that Landlord, at its sole cost and expense, shall
correct, repair or restore the integrity of the slabs, foundations, footings,
load-bearing walls and structural components of the roof of the Building during
the initial Term of the Lease. Landlord shall, promptly after receipt of the
written notice from Tenant setting forth the nature and extent of the need of
any repairs referred to in the foregoing, rectify same at Landlord's sole cost
and expense. Further, Landlord shall correct, repair or replace, at Landlord's
sole cost and expense and not as a Project Cost, any non-compliance of the
Building (including, without limitation, the Tenant Improvements constructed
therein) and/or the Common Areas of the Project with all applicable building
permits and codes in effect as of the Commencement Date, including without
limitation, the provisions of Title III of the Americans With Disabilities Act
("ADA") in effect as of the Commencement Date. Subject to the provisions for
Landlord's construction and rehabilitation and the inclusion of the amortized
costs thereof in "Project Costs" as provided in Section 5.1 of this Lease, all
other ADA compliance issues regarding the Premises, including without
limitation, Tenant's construction of any alterations or other improvements in
the Premises and in connection with the operation of Tenant's business and
employment practices in the Premises, shall be the responsibility of Tenant at
its sole cost and expense. The repairs, corrections or replacements required of
Landlord under this Section 2.4 in connection with noncompliance with permits
and codes shall be made promptly following notice of noncompliance from any
applicable governmental agency. Tenant shall promptly forward any such notice
that Tenant receives to Landlord.  

                                      -3-

 
                               ARTICLE III. TERM

     SECTION 3.1  GENERAL. The Term shall be for the period shown in Item 5 of
the Basic Lease Provisions. Subject to the provisions of Section 3.2 below, the
Term shall commence ("Commencement Date") on the later of: (i) January 1, 1999
or (ii) the date by which all of the following have occurred: (a) Landlord has
substantially completed the Tenant Improvements in accordance with Exhibit X,
(b) Landlord has tendered delivery of possession of the Premises to Tenant, and
(c) Landlord has obtained all permits and approvals required by the appropriate
governmental authorities for the legal occupancy of the Premises. Within ten
(10) days after the Commencement Date has occurred, the parties shall
memorialize on a form provided by Landlord the actual Commencement Date and the
expiration date ("Expiration Date") of this Lease. Tenant's failure to execute
that form shall not affect the validity of Landlord's determination of those
dates.

     SECTION 3.2  DELAY IN POSSESSION. If Landlord, for any reason whatsoever,
cannot deliver possession of the Premises to Tenant on or before the Estimated
Commencement Date, this Lease shall not be void or voidable nor shall Landlord
be liable to Tenant for any resulting loss or damage. However, Tenant shall not
be liable for any rent and the Commencement Date shall not occur until Landlord
delivers possession of the Premises and the Premises are in fact available for
Tenant's occupancy with any Tenant Improvements that have been approved as per
Section 3.1(a) above, except that if Landlord's failure to so deliver possession
on the Estimated Commencement Date is attributable to any "Tenant Delay" as
defined in the Work Letter attached to this Lease, then the Commencement Date
shall not be advanced to the date on which possession of the Premises is
tendered to Tenant, and Landlord shall be entitled to full performance by Tenant
(including the payment of rent) from the date Landlord would have been able to
deliver the Premises to Tenant but for Tenant's delay(s). Notwithstanding
anything to the contrary contained in this Section 3.2, if for any reason other
than Tenant Delays or other matters beyond Landlord's reasonable control, the
actual Commencement Date has not occurred by the date that is one hundred fifty
(150) days following the Estimated Commencement Date, then Tenant may, by
written notice to Landlord given at any time thereafter but prior to the actual
occurrence of the Commencement Date, elect to terminate this Lease.
Notwithstanding the foregoing, if at any time during the construction period,
Landlord reasonably believes that the Commencement Date will not occur on or
before one-hundred fifty (150) days following the Estimated Commencement Date,
Landlord may notify Tenant in writing of such fact and of a new outside date on
or before which the Commencement Date will occur, and Tenant must elect within
ten (10) days of receipt of such notice to either terminate this Lease or waive
its right to terminate this Lease provided the Commencement Date occurs on or
prior to the new outside date established by Landlord in such notice to Tenant.
Tenant's failure to elect to terminate this Lease within such ten (10) day
period shall be deemed Tenant's waiver of its right to terminate this Lease as
provided in this paragraph as to the previous outside date, but not as to the
new outside date established by said notice.

     SECTION 3.3  RIGHT TO EXTEND LEASE. Provided that Tenant is not in Default
under any provision of this Lease, either at the time of exercise of the
extension right granted herein or at the time of the commencement of such
extension, and provided further that Tenant (and/or any "Tenant Affiliate" as
hereinafter defined) is occupying at least sixty-six and sixty-seven hundredths
percent (66.67%) of the floor area of these Premises, Tenant may extend the Term
of this Lease for one (1) period of sixty (60) months. Tenant shall exercise its
right to extend the Term by and only by delivering to Landlord, not less than
nine (9) months or more than twelve (12) months prior to the expiration date of
the Term, Tenant's irrevocable written notice of its commitment to extend (the
"Commitment Notice"). The Basic Rent payable under the Lease during any
extension of the Term shall be at the fair market rental, including subsequent
adjustments, for comparable industrial space being leased by Landlord in the
Project. In the event that the parties are not able to agree on the fair market
rental within one hundred twenty (120) days prior to the expiration date of the
Term, then said rental, including subsequent adjustments, to be determined by
appraisal as follows.

          Within one hundred twenty (120) and ninety (90) days prior to the
expiration date of the Term, Landlord shall notify Tenant in writing of the
Basic Rent, including adjustments, that would reflect the prevailing market
rental rate for a 60-month renewal of comparable space in the Project as of the
commencement of the extension period ("Landlord's Determination"). Should Tenant
disagree with the Landlord's Determination, then Tenant shall, not later than
twenty (20) days thereafter, notify Landlord in writing of Tenant's
determination of those rental terms ("Tenant's Determination"). Within ten (10)
days following delivery of the Tenant's Determination, the parties shall attempt
to agree on an appraiser to determine the fair market rental. If the parties are
unable to agree in that time, then each party shall designate an appraiser
within ten (10) days thereafter. Should either party fail to so designate an
appraiser within that time, then the appraiser designated by the other party
shall determine the fair market rental. Should each of the parties timely
designate an appraiser, then the two appraisers so designated shall appoint a
third appraiser who shall, acting alone, determine the fair market rental for
the Premises. Any appraiser designated

                                      -4-

 
hereunder shall have an MAI certification with not less than five (5) years'
experience in the valuation of commercial industrial buildings in Orange County,
California.

          Within thirty (30) days following the selection of the appraiser and
such appraiser's receipt of the Landlord's Determination and the Tenant's
Determination, the appraiser shall determine whether the rental rate determined
by Landlord or by Tenant more accurately reflects the fair market rental rate
for the 60-month renewal of the Lease for the Premises, as reasonably
extrapolated to the commencement of the extension period. Accordingly, either
the Landlord's Determination or the Tenant's Determination shall be selected by
the appraiser as the fair market rental rate for the extension period. Any time
before the decision of the appraiser is rendered, either party may, by written
notice to the other party, accept the rental terms submitted by the other party,
in which event such terms shall be deemed adopted as the agreed fair market
rental. The fees of the appraiser(s) shall be borne entirely by the party whose
determination of the fair market rental rate was not accepted by the appraiser.

          Within twenty (20) days after the determination of the fair market
rental, Landlord shall prepare a reasonably appropriate amendment to this Lease
for the extension period and Tenant shall execute an return same to Landlord
within ten (10) days. Should the fair market rental not be established by the
commencement of the extension period, then Tenant shall continue paying rent at
the rate in effect during the last month of the initial Term, and a lump sum
adjustment shall be made promptly upon the determination of such new rental.

          If Tenant fails to timely exercise its right to extend the Term as
herein provided, Tenant's right to extend the Term shall be extinguished and the
Lease shall automatically terminate as of the expiration date of the Term,
without any extension and without any liability to Landlord. Any attempt to
assign or transfer any right or interest created by this paragraph to any person
or entity other than a "Tenant Affiliate" (as hereinafter defined) shall be void
from its inception. Tenant shall have no other right to extend the Term beyond
the single sixty (60) month extension created by this paragraph. Unless agreed
to in a writing signed by Landlord and Tenant, any extension of the Term,
whether created by an amendment to this Lease or by a holdover of the Premises
by Tenant, or otherwise, shall be deemed a part of, and not in addition to, any
duly exercised extension period permitted by this paragraph.   

                    ARTICLE IV. RENT AND OPERATING EXPENSES


     SECTION 4.1   BASIC RENT. From and after the Commencement Date, Tenant
shall pay to Landlord without deduction or offset, Basic Rent for the Premises
in the total amount shown (including subsequent adjustments, if any) in Item 6
of the Basic Lease Provisions. Any rental adjustment shown in Item 6 shall be
deemed to occur on the specified monthly anniversary of the Commencement Date,
whether or not that date occurs at the end of a calendar month. The rent shall
be due and payable in advance commencing on the Commencement Date (as prorated
for any partial month) and continuing thereafter on the first day of each
successive calendar month of the Term. No demand, notice or invoice shall be
required for the payment of Basic Rent. An installment of rent in the amount of
one (1) full month's Basic Rent at the initial rate specified in Item 6 of the
Basic Lease Provisions shall be delivered to Landlord concurrently with Tenant's
execution of this Lease and shall be applied against the Basic Rent first due
hereunder.

     SECTION 4.2   OPERATING EXPENSES.

          (a)  Tenant shall pay to Landlord, as additional rent, Tenant's Share
of "Operating Expenses", as defined below, incurred by Landlord in the operation
of the Building and Project. The term "Tenant's Share" means that portion of an
Operating Expense determined by multiplying the cost of such item by a fraction,
the numerator of which is the floor area of the Premises and the denominator of
which is the total square footage of the floor area of the Building or the
Project, as applicable, as of the date on which the computation is made, to be
charged with such Operating Expense.

          (b)  Commencing prior to the start of the first full "Expense Recovery
Period" (as defined below) of the Lease, and prior to the start of each full or
partial Expense Recovery Period thereafter, Landlord shall give Tenant a written
estimate of the amount of Tenant's Share of Operating Expenses for the Expense
Recovery Period. Tenant shall pay the estimated amounts to Landlord in equal
monthly installments, in advance, with Basic Rent. If Landlord has not furnished
its written estimate for any Expense Recovery Period by the time set forth
above, Tenant shall continue to pay cost reimbursements at the rates established
for the prior Expense Recovery Period, if any; provided that when the new
estimate is delivered to Tenant, Tenant shall, at the next monthly payment date,
pay any accrued cost reimbursements based upon the new estimate. For purposes
hereof, "Expense Recovery Period" shall mean every twelve month period during
the Term (or portion thereof for the first and last lease years) commencing July
1 and ending June 30.

                                      -5-

 
          (c)  Within one hundred twenty (120) days after the end of each
Expense Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Operating Expenses incurred by Landlord
during the period, and the parties shall within thirty (30) days thereafter make
any payment or allowance necessary to adjust Tenant's estimated payments, if
any, to the actual Tenant's Share as shown by the annual statement. Any delay or
failure by Landlord in delivering any statement hereunder shall not constitute a
waiver of Landlord's right to require Tenant to pay Tenant's Share of Operating
Expenses pursuant hereto. Any amount due Tenant shall be credited against
installments next coming due under this Section 4.2, and any deficiency shall be
paid by Tenant together with the next installment. If Tenant has not made
estimated payments during the Expense Recovery Period, any amount owing by
Tenant pursuant to subsection (a) above shall be paid to Landlord in accordance
with Article XVI. Should Tenant fail to object in writing to Landlord's
determination of actual Operating Expenses within one hundred eighty (180) days
following delivery of Landlord's expense statement, Landlord's determination of
actual Operating Expenses for the applicable Expense Recovery Period shall be
conclusive and binding on the parties and any future claims to the contrary
shall be barred.

          Provided Tenant is not then in Default hereunder, Tenant shall have
the right to cause a trained accountant to audit Landlord's Operating Expenses.
In no event, however, shall such accountant be compensated by Tenant on a
"contingency" basis, or on any other basis tied to the results of said audit.
Tenant shall give notice to Landlord of Tenant's intent to audit within one
hundred eighty (180) days after Tenant's receipt of Landlord's expense statement
which sets forth Landlord's actual Operating Expenses. Such audit shall be
conducted at a mutually agreeable time during normal business hours at the
office of Landlord or its management agent where the records are maintained. If
Tenant's audit determines that actual Operating Expenses have been overstated by
more than five percent (5%), then subject to Landlord's right to review and/or
contest the audit results, Landlord shall reimburse Tenant for the reasonable
out-of-pocket costs of such audit. Tenant's rent shall be appropriately adjusted
to reflect any overstatement in Operating Expenses. In the event of a dispute
between Landlord and Tenant regarding the results of such audit, either party
may elect to submit the matter for binding arbitration with JAMS/ENDISPUTE or
its successor in Orange County, California.

          All of the information obtained by Tenant and/or its auditor in
connection with such audit, as well as any compromise, settlement, or adjustment
reached between Landlord and Tenant as a result thereof (except to the extent
that Tenant shall prove that such information, compromise, settlement or
adjustment was otherwise available in the public domain), shall be held in
strict confidence and, except as may be required pursuant to litigation or court
order and except for inadvertent disclosures despite Tenant's reasonable efforts
to keep the disclosed information confidential, shall not be disclosed to any
third party, directly or indirectly, by Tenant or its auditor or any of their
officers, agents or employees. Landlord may require Tenant's auditor to execute
a separate confidentiality agreement in commercially reasonable form affirming
the foregoing as a condition precedent to any audit. In the event of a violation
of this confidentiality covenant in connection with any audit, then in addition
to any other legal or equitable remedy available to Landlord, Tenant shall
forfeit its right to any reconciliation or cost reimbursement payment from
Landlord due to said audit (and any such payment theretofore made by Landlord
shall be promptly returned by Tenant), and Tenant shall have no further audit
rights under this Lease.

          (d)  Even though the Lease has terminated and the Tenant has vacated
the Premises, when the final determination is made of Tenant's Share of
Operating Expenses for the Expense Recovery Period in which the Lease
terminates, Tenant shall within ten (10) days after receiving notice pay the
entire increase due over the estimated expenses paid. Conversely, any
overpayment made in the event expenses decrease shall be rebated by Landlord to
Tenant within ten (10) days following such final determination.

          (e)  If, at any time during any Expense Recovery Period, any one or
more of the Operating Expenses are increased to a rate(s) or amount(s) in excess
of the rate(s) or amount(s) used in calculating the estimated expenses for the
year, then the estimate of Tenant's Share of Operating Expenses shall be
increased for the month in which such rate(s) or amount(s) becomes effective and
for all succeeding months by an amount equal to Tenant's Share of the increase.
Landlord shall give Tenant written notice of the amount or estimated amount of
the increase, the month in which the increase will become effective, Tenant's
Share thereof and the month for which the payments are due. Tenant shall pay the
increase to Landlord as a part of Tenant's monthly payments of estimated
expenses as provided in paragraph (b) above, commencing with the month in which
effective.

          (f)  The term "Operating Expenses" shall mean and include all "Project
Costs" (as hereafter defined) and "Property Taxes" (as hereafter defined).

          (g)  The term "Project Costs" shall include all expenses of operation
and maintenance of the Building and the Project, together with all appurtenant
Common Areas (as defined in Section 6.2), and shall include the following
charges by way of illustration but not limitation: water and sewer charges;

                                      -6-

 
insurance premiums or reasonable premium equivalents should Landlord elect to
self-insure any risk that Landlord is authorized to insure hereunder; license,
permit and inspection fees; heat; light; power; janitorial services to any
interior Common Areas; air conditioning; supplies; materials; equipment; tools;
the cost of any environmental, insurance, tax or other consultant utilized by
Landlord in connection with the Building and/or Project; establishment of
reasonable reserves for replacements and/or repair of Common Area improvements,
equipment and supplies; costs incurred in connection with compliance of any laws
or changes in laws applicable to the Building or the Project; the cost of any
capital investments (other than tenant improvements for specific tenants) to the
extent of the amortized amount thereof over the useful life of such capital
investments (in accordance with generally accepted accounting principles,
consistently applied) calculated at a market cost of funds, as reasonably
determined by Landlord, for each such year of useful life during the Term; costs
associated with the procurement and maintenance of an air conditioning, heating
and ventilation service agreement; labor; reasonably allocated wages and
salaries, fringe benefits, and payroll taxes for administrative and other
personnel directly applicable to the Building and/or Project, including both
Landlord's personnel and outside personnel; any expense incurred pursuant to
Sections 6.1, 6.2, 6.4, 7.2, and 10.2; and a reasonable and reasonably allocated
overhead/management fee for the professional operation of the Project which
shall be competitive with fees charged for the management of similar projects in
the Irvine Spectrum area. It is understood that Project Costs shall include
competitive charges for direct services provided by any subsidiary or division
of Landlord.

          Notwithstanding anything to the contrary in this Section 4.2(g),
"Project Costs" shall not include and Tenant shall not have any obligation to
perform or to pay for the following (collectively, "Costs"): (a) Costs
occasioned by the violation of any law by Landlord or its authorized agents,
contractors or employees; (b) Costs of repair or restoration as the result of
damage to the Building occasioned by a casualty governed by the provisions of
Article XI of this Lease, and Costs of restoration as the result of the exercise
of the power of eminent domain and governed by the provisions of Article XII of
this Lease; (c) Costs for which Landlord has received reimbursement from others;
(d) Costs for which Landlord is responsible pursuant to Section 2.4 of this
Lease; (e) fees, commissions, attorneys' fees, costs or other disbursements
incurred in connection with negotiations or disputes with any other occupant of
the Project or arising from the violation by Landlord or any occupant of the
Project (other than Tenant) of the terms and conditions of any lease or other
agreement; (f) depreciation or amortization; (g) interest, charges and fees
incurred on debt, payments on mortgages and rent under ground leases encumbering
the Premises and/or the Project; (h) Costs incurred in connection with the
presence of any Hazardous Material in, on, under or about the Project, except to
the extent Tenant is responsible for such Costs as provided in Section 5.3 of
this Lease; (i) Costs and expenses for which Tenant reimburses Landlord directly
or which Tenant pays directly to a third person; (j) any salaries or other
compensation payable by Landlord at the "executive" level; (k) the cost of any
capital investments to the Project and of the Building except to the extent that
such costs are incurred either for the replacement or restoration of any
existing system component of the Building and/or the Project, or for a new
system or component that Landlord reasonably believes overall Project Costs
(provided that nothing contained in this Subsection (k) shall amend or
supersede the provisions of Section 5.1 of this Lease, nor amend or supersede
Tenant's responsibility for capital costs resulting from its particular use of
the Premises); and (l) Costs relating exclusively to other buildings in the
Project other than the Building.

          (h)  The term "Property Taxes" as used herein shall include the
following: (i) all real estate taxes or personal property taxes, as such
property taxes may be reassessed from time to time; and (ii) other taxes,
charges and assessments which are levied with respect to this Lease or to the
Building and/or the Project, and any improvements, fixtures and equipment and
other property of Landlord located in the Building and/or the Project, except
that general net income and franchise taxes imposed against Landlord shall be
excluded; and (iii) all assessments and fees for public improvements, services,
and facilities and impacts thereon, including without limitation arising out of
any Community Facilities Districts, "Mello Roos" districts, similar assessment
districts, and any traffic impact mitigation assessments or fees; (iv) any tax,
surcharge or assessment which shall be levied in addition to or in lieu of real
estate or personal property taxes, other than taxes covered by Article VIII; and
(v) costs and expenses incurred in contesting the amount or validity of any
Property Tax by appropriate proceedings. Notwithstanding anything to the
contrary in this Section 4.2(h), "Property Taxes" shall not include and Tenant
shall not be required to pay any portion of any tax or assessment expense or any
increase therein (a) levied on Landlord's rental income, unless such tax or
assessment expense is imposed in lieu of Property Taxes; (b) imposed on land and
improvements other than the Building or Project; or (c) attributable to
Landlord's net income, inheritance, gift, transfer, estate or state taxes; or
(d) taxes and/or assessments to the extent that such taxes or assessments were
paid in installments other than over the longest possible term.

     SECTION 4.3  SECURITY DEPOSIT. Concurrently with Tenant's delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions, to be held by Landlord as security for the full and
faithful performance of Tenant's obligations under this Lease (the "Security
Deposit"). Upon any Default by Tenant, including specifically Tenant's failure
to pay rent or to abide by its obligations under Sections 7.1 and 15.3 below,
whether or not Landlord is informed of or has

                                      -7-

 
knowledge of the Default, the Security Deposit shall be deemed to be
automatically and immediately applied, without waiver of any rights Landlord may
have under this Lease or at law or in equity as a result of the Default, as a
setoff for full or partial compensation for that Default. If any portion of the
Security Deposit is applied after a Default by Tenant, Tenant shall within five
(5) days after written demand by Landlord deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount.
Landlord shall not be required to keep this Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest on the Security
Deposit. The Security Deposit shall be returned to Tenant (or, at Landlord's
option, to the last assignee of Tenant's interest in this Lease) within sixty
(60) days after the expiration of the Term, provided that Landlord may, in its
reasonable discretion, retain all or a portion of the Security Deposit to the
extent and until such time as all amounts due from Tenant in accordance with
this Lease have been determined and paid in full, with any balance of the
Security Deposit being returned to Tenant within sixty (60) days after the
expiration of the Term. In the event that (i) Tenant has not been in Default
under the Lease at any time during the Term hereof, and (ii) Tenant has not at
any time been more than five (5) days late with respect to any payments of rent
due under the Lease more than twice during the Term, then: (A) an amount equal
to Fifty Thousand Dollars ($50,000.00) of the Security Deposit shall be credited
against Basic Rent due and payable for the thirteenth (13th) month of the Term,
(B) a further amount equal to Fifty Thousand Dollars ($50,000.00) of the
Security Deposit shall be credited against Basic Rent due and payable for the
twenty-fifth (25th) month of the Term, and (C) a further amount equal to Forty-
Three Thousand One Hundred Seventy-Nine Dollars ($43,179.00) of the Security
Deposit shall be credited against Basic Rent due and payable for the thirty-
seventh (37th) month of the Term.

                                ARTICLE V. USES

     SECTION 5.1  USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and authorities. The
parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief in
addition to any other available remedy. Tenant, at its expense, shall procure,
maintain and make available for Landlord's inspection throughout the Term, all
governmental approvals, licenses and permits, if any, required for the proper
and lawful conduct of Tenant's business in the Premises. Tenant shall not do or
permit anything to be done in or about the Premises which will in any way
interfere with the rights of other occupants of the Building or the Project, or
use or allow the Premises to be used for any unlawful purpose, nor shall Tenant
permit any nuisance or commit any waste in the Premises or the Project. Tenant
shall not perform any work or conduct any business whatsoever in the Project
other than inside the Premises. Tenant shall not do or permit to be done
anything which will invalidate or increase the cost of any insurance policy(ies)
covering the Building, the Project and/or their contents (unless Tenant agrees
to pay for such increases), and shall comply with all applicable insurance
underwriters rules. Tenant shall comply at its expense with all present and
future laws, ordinances, restrictions, regulations, orders, rules and
requirements of all governmental authorities that pertain to Tenant or its use
of the Premises, including without limitation all federal and state occupational
health and safety requirements, whether or not Tenant's compliance will
necessitate expenditures or interfere with its use and enjoyment of the
Premises. Notwithstanding the foregoing or anything in this Lease to the
contrary, to the extent that construction or rehabilitation is required in
connection with the foregoing compliance, Landlord shall perform such
construction or rehabilitation and the costs thereof, subject to the limitations
on capital investments contained in Section 4.2(g), shall be considered as part
of "Project Costs" (except to the extent that such compliance results from
Tenant's particular use of the Premises [including, without limitation, ADA
compliance by Tenant in connection with its business and employment practices in
the Premises], in which event Tenant shall perform all required construction
and/or rehabilitation at its sole cost and expense). Tenant shall comply at its
expense with all present and future covenants, conditions, easements or
restrictions now or hereafter affecting or encumbering the Building and/or
Project, and any amendments or modifications thereto, including without
limitation the payment by Tenant of any periodic or special dues or assessments
charged against the Premises or Tenant which may be allocated to the Premises or
Tenant in accordance with the provisions thereof, provided that such compliance
with future covenants, conditions, easements or restrictions hereafter affecting
the Building and/or the Project, and/or compliance with amendments or
modifications to existing covenants, conditions, easements or restrictions, do
not unreasonably interfere with Tenant's business operations on the Premises or
materially increase the obligations or materially decrease the rights of Tenant
under this Lease. Tenant shall promptly upon demand reimburse Landlord for any
additional insurance premium charged by reason of Tenant's failure to comply
with the provisions of this Section, and shall indemnify Landlord from any
liability and/or expense resulting from Tenant's noncompliance.

     SECTION 5.2  SIGNS. Tenant shall have the right to two (2) exterior
Building top signs, subject to Landlord's right of prior approval that such
exterior signage is in compliance with the Signage Criteria (defined below).
Except as provided in the foregoing or as otherwise approved in writing by

                                      -8-

 
Landlord, in its sole discretion, Tenant shall have no right to maintain
identification signs in any location in, on or about the Premises, the Building
or the Project and shall not place or erect any signs, displays or other
advertising materials that are visible from the exterior of the Building. The
size, design, graphics, material, style, color and other physical aspects of any
permitted sign shall be subject to Landlord's written approval prior to
installation (which approval may be withheld in Landlord's discretion), any
covenants, conditions or restrictions encumbering the Premises, Landlord's
signage program for the Project, as in effect from time to time and approved by
the City in which the Premises are located ("Signage Criteria"), and any
applicable municipal or other governmental permits and approvals. Tenant
acknowledges having received and reviewed a copy of the current Signage Criteria
for the Project. Tenant shall be responsible for the cost of any permitted sign,
including the fabrication, installation, maintenance and removal thereof. If
Tenant fails to maintain its sign, or if Tenant fails to remove same upon
termination of this Lease and repair any damage caused by such removal, Landlord
may do so at Tenant's expense.

     SECTION 5.3  HAZARDOUS MATERIALS.

          (a)  For purposes of this Lease, the term "Hazardous Materials"
includes (i) any "hazardous materials" as defined in Section 25501(n) of the
California Health and Safety Code, (ii) any other substance or matter which
results in liability to any person or entity from exposure to such substance or
matter under any statutory or common law theory, and (iii) any substance or
matter which is in excess of permitted levels set forth in any federal,
California or local law or regulation pertaining to any hazardous or toxic
substance, material or waste.

          (b)  Tenant shall not cause or permit any Hazardous Materials to be
brought upon, stored, used, generated, released or disposed of on, under, from
or about the Premises (including without limitation the soil and groundwater
thereunder) without the prior written consent of Landlord. Notwithstanding the
foregoing, Tenant shall have the right, without obtaining prior written consent
of Landlord, to utilize within the Premises standard office products that may
contain Hazardous Materials (such as photocopy toner, "White Out", and the
like), provided however, that (i) Tenant shall maintain such products in their
       -------- -------
original retail packaging, shall follow all instructions on such packaging with
respect to the storage, use and disposal of such products, and shall otherwise
comply with all applicable laws with respect to such products, and (ii) all of
the other terms and provisions of this Section 5.3 shall apply with respect to
Tenant's storage, use and disposal of all such products. Landlord may, in its
sole discretion, place such commercially reasonable conditions as Landlord deems
appropriate with respect to any such Hazardous Materials, and may further
require that Tenant demonstrate that any such Hazardous Materials are necessary
or useful to Tenant's business and will be generated, stored, used and disposed
of in a manner that complies with all applicable laws and regulations pertaining
thereto and with good business practices. Tenant understands that Landlord may
utilize an environmental consultant to assist in determining conditions of
approval in connection with the storage, generation, release, disposal or use of
Hazardous Materials by Tenant on or about the Premises, and/or to conduct
periodic inspections of the storage, generation, use, release and/or disposal of
such Hazardous Materials by Tenant on and from the Premises, and Tenant agrees
that any costs incurred by Landlord in connection therewith shall be reimbursed
by Tenant to Landlord as additional rent hereunder upon demand.

          (c)  Prior to the execution of this Lease, Tenant shall complete,
execute and deliver to Landlord an Environmental Questionnaire and Disclosure
Statement (the "Environmental Questionnaire") in the form of Exhibit B attached
                                                             ---------
hereto. The completed Environmental Questionnaire shall be deemed incorporated
into this Lease for all purposes, and Landlord shall be entitled to rely fully
on the information contained therein. On each anniversary of the Commencement
Date until the expiration or sooner termination of this Lease, Tenant shall
disclose to Landlord in writing the names and amounts of all Hazardous Materials
which were stored, generated, used, released and/or disposed of on, under or
about the Premises for the twelve-month period prior thereto, and which Tenant
desires to store, generate, use, release and/or dispose of on, under or about
the Premises for the succeeding twelve-month period. In addition, to the extent
Tenant is permitted to utilize Hazardous Materials upon the Premises, Tenant
shall promptly provide Landlord with complete and legible copies of all the
following environmental documents relating thereto: reports filed pursuant to
any self-reporting requirements; permit applications, permits, monitoring
reports, workplace exposure and community exposure warnings or notices and all
other reports, disclosures, plans or documents (even those which may be
characterized as confidential) relating to water discharges, air pollution,
waste generation or disposal, and underground storage tanks for Hazardous
Materials; orders, reports, notices, listings and correspondence (even those
which may be considered confidential) of or concerning the release,
investigation of, compliance, cleanup, remedial and corrective actions, and
abatement of Hazardous Materials; and all complaints, pleadings and other legal
documents filed by or against Tenant related to Tenant's use, handling, storage,
release and/or disposal of Hazardous Materials.

          (d)  Landlord and its agents shall have the right, but not the
obligation, to inspect, sample and/or monitor the Premises and/or the soil or
groundwater thereunder at any time to determine whether

                                      -9-

 
Tenant is complying with the terms of this Section 5.3, and in connection
therewith Tenant shall provide Landlord with full access to all relevant
facilities, records and personnel. If Tenant is not in compliance with any of
the provisions of this Section 5.3, or in the event of a release of any
Hazardous Material on, under or about the Premises caused or permitted by
Tenant, its agents, employees, contractors, licensees or invitees, Landlord and
its agents shall have the right, but not the obligation, without limitation upon
any of Landlord's other rights and remedies under this Lease, to immediately
enter upon the Premises without notice and to discharge Tenant's obligations
under this Section 5.3 at Tenant's expense, including without limitation the
taking of emergency or long-term remedial action. Landlord and its agents shall
endeavor to minimize interference with Tenant's business in connection
therewith, but shall not be liable for any such interference. In addition,
Landlord, at Tenant's expense, shall have the right, but not the obligation, to
join and participate in any legal proceedings or actions initiated in connection
with any claims arising out of the storage, generation, use, release and/or
disposal by Tenant or its agents, employees, contractors, licensees or invitees
of Hazardous Materials on, under, from or about the Premises.

          (e)  If the presence of any Hazardous Materials on, under, from or
about the Premises or the Project caused or permitted by Tenant or its agents,
employees, contractors, licensees or invitees results in (i) injury to any
person, (d) injury to or any contamination of the Premises or the Project, or
(iii) injury to or contamination of any real or personal property wherever
situated, Tenant, at its expense, shall promptly take all actions necessary to
return the Premises and the Project and any other affected real or personal
property owned by Landlord to the condition existing prior to the introduction
of such Hazardous Materials and to remedy or repair any such injury or
contamination, including without limitation, any cleanup, remediation, removal,
disposal, neutralization or other treatment of any such Hazardous Materials.
Notwithstanding the foregoing, Tenant shall not, without Landlord's prior
written consent, take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Premises or the Project or any other
affected real or personal property owned by Landlord or enter into any similar
agreement, consent, decree or other compromise with any governmental agency with
respect to any Hazardous Materials claims; provided however, Landlord's prior
written consent shall not be necessary in the event that the presence of
Hazardous Materials on, under or about the Premises or the Project or any other
affected real or personal property owned by Landlord (i) imposes an immediate
threat to the health, safety or welfare of any individual or (ii) is of such a
nature that an immediate remedial response is necessary and it is not possible
to obtain Landlord's consent before taking such action. To the fullest extent
permitted by law, Tenant shall indemnify, hold harmless, protect and defend
(with attorneys acceptable to Landlord) Landlord and any successors to all or
any portion of Landlord's interest in the Premises and the Project and any other
real or personal property owned by Landlord from and against any and all
liabilities, losses, damages, diminution in value, judgments, fines, demands,
claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys' fees, court costs and other professional expenses),
whether foreseeable or unforeseeable, arising directly or indirectly out of the
use, generation, storage, treatment, release, on- or off-site disposal or
transportation of Hazardous Materials on, into, from, under or about the
Premises, the Building and the Project and any other real or personal property
owned by Landlord caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees, specifically including without limitation
the cost of any required or necessary repair, restoration, cleanup or
detoxification of the Premises, the Building and the Project and any other real
or personal property owned by Landlord, and the preparation of any closure or
other required plans, whether or not such action is required or necessary during
the Term or after the expiration of this Lease. If Landlord at any time
discovers that Tenant or its agents, employees, contractors, licensees or
invitees may have caused or permitted the release of a Hazardous Material on,
under, from or about the Premises or the Project or any other real or personal
property owned by Landlord, Tenant shall, at Landlord's request, immediately
prepare and submit to Landlord a comprehensive plan, subject to Landlord's
approval, specifying the actions to be taken by Tenant to return the Premises or
the Project or any other real or personal property owned by Landlord to the
condition existing prior to the introduction of such Hazardous Materials. Upon
Landlord's approval of such cleanup plan, Tenant shall, at its expense, and
without limitation of any rights and remedies of Landlord under this Lease or at
law or in equity, immediately implement such plan and proceed to cleanup such
Hazardous Materials in accordance with all applicable laws and as required by
such plan and this Lease. The provisions of this subsection (e) shall expressly
survive the expiration or sooner termination of this Lease.

          (f)  Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges, certain facts relating to Hazardous Materials at the Project known
by Landlord to exist as of the date of this Lease, as more particularly
described in Exhibit C attached hereto. Tenant shall have no liability or
             ---------
responsibility with respect to the Hazardous Materials facts described in
Exhibit C, nor with respect to any Hazardous Materials which were not caused or
---------
permitted by Tenant, its agents, employees, contractors, licensees or invitees.
Notwithstanding the preceding two sentences, Tenant agrees to notify its agents,
employees, contractors, licensees, and invitees of any exposure or potential
exposure to Hazardous Materials at the Premises that Landlord brings to Tenant's
attention.

                                      -10-

 
          (g)  To "Landlord's knowledge" (as hereinafter defined), except as
disclosed on Exhibit C attached hereto: (a) no Hazardous Material is present on
             ---------
the Project or the soil, surface water or groundwater thereof, (b) no
underground storage tanks are present on the Project, and (c) no action,
proceeding or claim is pending or threatened regarding the Project concerning
any Hazardous Material or pursuant to any environmental law. As used herein,
"Landlord's knowledge" shall mean the actual knowledge, as of the Commencement
Date of this Lease, of the current employees of Landlord charged with
responsibility for the environmental compliance of the Project with Hazardous
Materials laws, but without obligation whatsoever for on-or off-site inquiry,
investigation or inspection.

          (h)  Landlord shall take responsibility, at its sole cost and expense,
for any governmentally-ordered clean-up, remediation, removal, disposal,
neutralization, monitoring or other treatment of the Hazardous Materials
conditions disclosed on Exhibit C attached hereto, and in connection with other
                        ---------
Hazardous Materials which were present in, on, under or about any part of the
Project as of the Commencement Date. The foregoing obligation on the part of
Landlord shall include the reasonable costs (including, without limitation,
reasonable attorney's fees) of defending Tenant (with attorneys reasonably
acceptable to Tenant) from and against any legal action or proceeding instituted
by any governmental agency in connection with such clean-up, remediation,
removal, disposal, neutralization or other treatment of such conditions,
provided that Tenant promptly tenders such defense to Landlord. The obligation
on the part of Landlord contained in this Section 5.3(h) is personal to The
Irvine Company and shall not be binding on, nor inure against any successor in
interest to The Irvine Company as of the owner of the Premises, including
without limitation, any lender acquiring the Premises by foreclosure of its
mortgage or deed of trust or deed in lieu of foreclosure. Subject to the
foregoing, and to the limitations contained elsewhere in this Lease, the
provisions of this subsection (h) shall expressly survive the expiration or
sooner termination of this Lease.

          (i)  The rights, obligations and duties of the parties contained in
this Section 5.3 shall supersede any contrary provisions contained in Sections
7.1, 7.2 and/or 10.3 of this Lease.


                      ARTICLE VI. COMMON AREAS; SERVICES

     SECTION 6.1  UTILITIES AND SERVICES. Tenant shall pay promptly, directly to
the appropriate supplier, all charges for water, gas, electricity, sewer, heat,
light, power, telephone, refuse pickup, janitorial service, interior landscape
maintenance and all other utilities, materials and services furnished directly
to Tenant or the Premises or used by Tenant in, on or about the Premises during
the Term, together with any taxes thereon. If any utilities or services are not
separately metered or assessed to Tenant, Landlord shall make a reasonable
determination of Tenant's proportionate share of the cost of such utilities and
services and Tenant shall pay such amount to Landlord, as an item of additional
rent, within ten (10) days after receipt of Landlord's statement or invoice
therefor. Alternatively, Landlord may elect to include such cost in the
definition of Building Costs in which event Tenant shall pay Tenant's
proportionate share of such costs in the manner set forth in Section 4.2.
Landlord shall not be liable for damages or otherwise for any failure or
interruption of any utility or other service furnished to the Premises, and no
such failure or interruption shall be deemed an eviction or entitle Tenant to
terminate this Lease or withhold or abate any rent due hereunder. Landlord shall
at all reasonable times have free access to all electrical and mechanical
installations of Landlord, provided that Landlord shall interfere as little as
reasonably practicable with the conduct of Tenant's business in the Premises.
Notwithstanding the foregoing, if as a result of the actions of Landlord, its
authorized agents or employees, for more than three (3) consecutive business
days following written notice to Landlord there is no HVAC or electricity
services to all or a portion of the Premises, or such an interruption of other
essential utilities and building services, such as fire protection or water, so
that all or a portion of the Premises cannot be used by Tenant, then Tenant's
Basic Rent (or an equitable portion of such Basic Rent to the extent that less
than all of the Premises are affected) shall thereafter be abated until the
Premises are again usable by Tenant; provided, however, that if Landlord is
diligently pursuing the repair of such utilities or services and Landlord
provides substitute services reasonably suitable for Tenant's purposes, as for
example, bringing in portable air-conditioning equipment, then there shall not
be an abatement of Basic Rent. Any disputes concerning the foregoing shall be
submitted to and resolved by JAMS arbitration pursuant to Section 22.7 of this
Lease. The foregoing provisions shall not apply in case of damage to, or
destruction of the Premises, which shall be governed by the provisions of
Article XI of the Lease.

     SECTION 6.2  OPERATION AND MAINTENANCE OF COMMON AREAS.  During the Term,
Landlord shall operate all Common Areas within the Building and the Project. The
term "Common Areas" shall mean all areas within the exterior boundaries of the
Building and other buildings in the Project which are not held for exclusive use
by persons entitled to occupy space, and all other appurtenant areas and
improvements provided by Landlord for the common use of Landlord and tenants and
their respective employees and invitees, including without limitation parking
areas and structures, driveways, sidewalks, landscaped and planted areas,
hallways and interior stairwells not located within the premises of any tenant,

                                      -11-

 
common electrical rooms and roof access entries, common entrances and lobbies,
elevators, and restrooms not located within the premises of any tenant.

     SECTION 6.3  USE OF COMMON AREAS. The occupancy by Tenant of the Premises
shall include the use of the Common Areas in common with Landlord and with all
others for whose convenience and use the Common Areas may be provided by
Landlord, subject, however, to compliance with all rules and regulations as are
prescribed from time to time by Landlord. Landlord shall operate and maintain
the Common Areas in the manner Landlord may determine to be appropriate as a
"first class" Project. All costs incurred by Landlord for the maintenance and
operation of the Common Areas shall be included in Project Costs unless any
particular cost incurred can be charged to a specific tenant of the Project.
Landlord shall at all times during the Term have exclusive control of the Common
Areas, and may restrain any use or occupancy, except as authorized by Landlord's
rules and regulations. Tenant shall keep the Common Areas clear of any
obstruction or unauthorized use related to Tenant's operations. Nothing in this
Lease shall be deemed to impose liability upon Landlord for any damage to or
loss of the property of, or for any injury to, Tenant, its invitees or
employees. Landlord may temporarily close any portion of the Common Areas for
repairs, remodeling and/or alterations, to prevent a public dedication or the
accrual of prescriptive rights, or for any other reason deemed reasonably
sufficient by Landlord, without liability to Landlord.

     SECTION 6.4  PARKING. Tenant shall be entitled to the number of vehicle
parking spaces set forth in Item 14 of the Basic Lease Provisions, which spaces
shall be unreserved and unassigned, on those portions of the Common Areas
designated by Landlord for parking. Tenant shall not use more parking spaces
than such number. All parking spaces shall be used only for parking by vehicles
no larger than full size passenger automobiles, vans or pickup trucks. Tenant
shall not permit or allow any vehicles that belong to or are controlled by
Tenant or Tenant's employees, suppliers, shippers, customers or invitees to be
loaded, unloaded or parked in areas other than those designated by Landlord for
such activities. If Tenant permits or allows any of the prohibited activities
described above, then Landlord shall have the right, without notice, in addition
to such other rights and remedies that Landlord may have, to remove or tow away
the vehicle involved and charge the costs to Tenant. Parking within the Common
Areas shall be limited to striped parking stalls, and no parking shall be
permitted in any driveways, access ways or in any area which would prohibit or
impede the free flow of traffic within the Common Areas. There shall be no
overnight parking of any vehicles of any kind unless otherwise authorized by
Landlord, and vehicles which have been abandoned or parked in violation of the
terms hereof may be towed away at the owner's expense. Landlord shall have the
right to establish, and from time to time amend, and to enforce against all
users all reasonable rules and regulations (including the designation of areas
for employee parking) that Landlord may deem necessary and advisable for the
proper and efficient operation and maintenance of parking within the Common
Areas. Landlord shall have the right to construct, maintain and operate lighting
facilities within the parking areas; to change the area, level, location and
arrangement of the parking areas and improvements therein; to restrict parking
by tenants, their officers, agents and employees to employee parking areas; to
enforce parking charges (by operation of meters or otherwise); and to do and
perform such other acts in and to the parking areas and improvements therein as,
in the use of good business judgment, Landlord shall determine to be advisable.
Notwithstanding the foregoing, in no event shall Landlord enforce parking
charges (by operation of meters or otherwise): (i) during the initial 60-month
Term of this Lease, or (ii) during an extension of the Term if Tenant exercises
its right to extend the Term as provided in Section 3.3 of this Lease, unless
Landlord has expressly reserved the right to so enforce parking charges as part
of its "Landlord's Determination" (as provided in said Section 3.3). Any person
using the parking area shall observe all directional signs and arrows and any
posted speed limits. In no event shall Tenant interfere with the use and
enjoyment of the parking area by other tenants of the Building or their
employees or invitees. Parking areas shall be used only for parking vehicles.
Washing, waxing, cleaning or servicing of vehicles, or the storage of vehicles
for 24-hour periods, is prohibited unless otherwise authorized by Landlord.
Tenant shall be liable for any damage to the parking areas caused by Tenant or
Tenant's employees, suppliers, shippers, customers or invitees, including
without limitation damage from excess oil leakage. Tenant shall have no right to
install any fixtures, equipment or personal property in the parking areas.

     SECTION 6.5  CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Building or the Project, or to the
attendant fixtures, equipment and Common Areas. Landlord may at any time
relocate or remove any of the various buildings, parking areas, and other Common
Areas, and may add buildings and areas to the Project from time to time. No
change shall entitle Tenant to any abatement of rent or other claim against
Landlord, provided that the change does not deprive Tenant of reasonable access
to or use of the Premises. Notwithstanding anything to the contrary in this
Section 6.5, Landlord shall not make any modifications to or use of the Common
Areas if such modifications or use would unreasonably interfere with Tenant's
business operations on the Premises or materially increase the obligations or
materially decrease the rights of Tenant under the Lease. Landlord shall use its
reasonable diligence to minimize any disruption to Tenant's business operations
in connection with any such modifications to the Common Areas.  

                                      -12-

 
                     ARTICLE VII. MAINTAINING THE PREMISES

     SECTION 7.1  TENANT'S MAINTENANCE AND REPAIR. Except as expressly
otherwise provided in Sections 2.4, 5.1, 7.2 and in Articles XI and XII of this
Lease, Tenant at its sole expense shall make all repairs necessary to keep the
Premises in the condition as existed on the Commencement Date (or on any later
date that the improvements may have been installed), excepting ordinary wear and
tear, including without limitation all glass, windows, doors, door closures,
hardware, fixtures and fire extinguisher equipment. Any damage or deterioration
of the Premises shall not be deemed ordinary wear and tear if the same could
have been prevented by good maintenance practices by Tenant. As part of its
maintenance obligations hereunder, Tenant shall, at Landlord's request, provide
Landlord with copies of all maintenance schedules, reports and notices prepared
by, for or on behalf of Tenant. All repairs shall be at least equal in quality
to the original work, shall be made only by a licensed contractor approved in
writing in advance by Landlord. Any contractor utilized by Tenant shall be
subject to Landlord's reasonable requirements for contractors, as modified from
time to time. Landlord may impose reasonable restrictions and requirements with
respect to repairs, as provided in Section 7.3, and the provisions of Section
7.4 shall apply to all repairs. If Tenant fails to properly maintain and/or
repair the Premises as herein provided following Landlord's notice and the
expiration of the applicable cure period, then Landlord may elect to make any
repair or maintenance required hereunder on behalf of Tenant and at Tenant's
expense, and Tenant shall promptly reimburse Landlord for all reasonable costs
incurred within ten (10) days following submission of an invoice.

     SECTION 7.2  LANDLORD'S MAINTENANCE AND REPAIR. Landlord shall provide
service, maintenance and repair with respect to any air conditioning,
ventilating or heating equipment which serve the Premises and shall maintain in
good repair the roof, foundations, footings, the exterior surfaces of the
exterior walls of the Building, and the structural, electrical, plumbing and
mechanical systems, except that Tenant at its expense shall make all repairs
which Landlord deems reasonably necessary as a result of the act or negligence
of Tenant, its agents, employees, invitees, subtenants or contractors. Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of Landlord or any of Landlord's affiliates or
divisions, to perform any service, repair or maintenance function. Landlord need
not make any other improvements or repairs except as specifically required under
this Lease, and nothing contained in this Section shall limit Landlord's right
to reimbursement from Tenant for maintenance, repair costs and replacement costs
as provided elsewhere in this Lease. Except as expressly provided in Section 7.6
of this Lease, Tenant understands that it shall not make repairs at Landlord's
expense or by rental offset. Tenant further understands that Landlord shall not
be required to make any repairs to the roof, foundations, footings, structural,
electrical or mechanical systems unless and until Tenant has notified Landlord
in writing of the need for such repair and Landlord shall have a reasonable
period of time thereafter to commence and complete said repair, if warranted.
Subject to the provisions of Sections 2.4 and 4.2 of this Lease, all costs of
any maintenance and repairs on the part of Landlord provided hereunder shall be
considered part of Project Costs.

     SECTION 7.3  ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises without the prior written consent of Landlord,
which consent may be given or withheld in Landlord's sole discretion.
Notwithstanding the foregoing, Landlord shall not unreasonably withhold its
consent to any alterations, additions or improvements to the Premises which cost
less than Three Hundred Thousand Dollars ($300,000.00), provided that such
alterations, additions or improvements do not (i) affect the exterior of the
Building or outside areas (or be visible from adjoining sites), or (ii) affect
or penetrate any of the structural portions of the Building, including but not
limited to the roof, or (iii) require any change to the basic floor plan of the
Premises, any change to any structural or mechanical systems of the Premises, or
any governmental permit as a prerequisite to the construction thereof, or (iv)
interfere in any manner with the proper functioning of or Landlord's access to
any mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building, or (v) diminish the value of the Premises.
Landlord may impose, as a condition to its consent, any requirements that
Landlord in its discretion may deem reasonable or desirable, including but not
limited to a requirement that any alteration project costing in excess of 
Twenty-Five Thousand Dollars ($25,000.00) be covered by a lien and completion
bond satisfactory to Landlord, and requirements as to the manner, time, and
contractor for performance of the work. Tenant shall obtain all required permits
for the work and shall perform the work in compliance with all applicable laws,
regulations and ordinances, all covenants, conditions and restrictions affecting
the Project, and the Rules and Regulations (hereafter defined). Tenant
understands and agrees that Landlord shall be entitled to a supervision fee in
the amount of five percent (5%) of the cost of such work requiring a permit from
the City of Irvine. If any governmental entity requires, as a condition to any
proposed alterations, additions or improvements to the Premises by Tenant, that
improvements be made to the Common Areas, and if Landlord consents to such
improvements to the Common Areas, then Tenant shall, at Tenant's sole expense,
make such required improvements to the Common Areas in such manner, utilizing
such materials, and with such contractors (including, if required by Landlord,
Landlord's contractors) as Landlord may require in its reasonable discretion.
Under no circumstances shall Tenant make any improvement which incorporates any
Hazardous Materials, including without limitation asbestos-containing
construction materials into the

                                      -13-

 
Premises. Any request for Landlord's consent shall be made in writing and shall
contain architectural plans describing the work in detail reasonably
satisfactory to Landlord. Unless Landlord otherwise agrees in writing, all
alterations, additions or improvements affixed to the Premises (excluding trade
fixtures, personal property and furniture) shall become the property of Landlord
and shall be surrendered with the Premises at the end of the Term, except that
Landlord may, by notice to Tenant, require Tenant to remove by the Expiration
Date, or sooner termination date of this Lease, all or any alterations,
decorations, fixtures, additions and the like installed either by Tenant or by
Landlord at Tenant's request, and any "Non-Standard Improvements" installed by
Landlord pursuant to the Work Letter, and to repair any damage to the Premises
arising from that removal. Any notice to Tenant pursuant to the foregoing shall
be given by Landlord concurrently with its consent (following Tenant's request
for such consent) for all or any alterations, decorations, fixtures or additions
and the like, and concurrently with Landlord's consent (following Tenant's
request for such consent) for any Non-Standard Improvements installed by
Landlord pursuant to the Work Letter. If such consent for such alterations,
decorations, fixtures, additions or Non-Standard Improvements is either not
requested by Tenant or given by Landlord, then any such notice of removal may be
given at any time prior to sixty (60) days following the expiration or earlier
termination of the Term of this Lease. Except as otherwise provided in this
Lease or in any Exhibit to this Lease, should Landlord make any alteration or
improvement to the Premises for Tenant, Landlord shall be entitled to prompt
reimbursement from Tenant for all costs incurred.

     SECTION 7.4  MECHANIC'S LIENS. Tenant shall keep the Premises free from
any liens arising out of any work performed, materials furnished, or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly cause
any such lien to be released by posting a bond in accordance with California
Civil Code Section 3143 or any successor statute. In the event that Tenant shall
not, within thirty (30) days following the imposition of any lien, cause the
lien to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other available remedies, the right to cause the
lien to be released by any means it deems proper, including payment of or
defense against the claim giving rise to the lien. All expenses so incurred by
Landlord, including Landlord's attorneys' fees, and any consequential or other
damages incurred by Landlord arising out of such lien, shall be reimbursed by
Tenant promptly following Landlord's demand, together with interest from the
date of payment by Landlord at the maximum rate permitted by law until paid.
Tenant shall give Landlord no less than twenty (20) days' prior notice in
writing before commencing construction of any kind on the Premises so that
Landlord may post and maintain notices of nonresponsibility on the Premises.

     SECTION 7.5  ENTRY AND INSPECTION. Subject to Tenant's reasonable security
requirements, Landlord shall at all reasonable times, upon at least twenty-four
(24) hours' written or oral notice (except in emergencies, when no notice shall
be required) have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to protect the interests of Landlord in
the Premises, and to submit the Premises to prospective or actual purchasers or
encumbrance holders (or, during the last one hundred and eighty (180) days of
the Term or when a Default exists, to prospective tenants), all without being
deemed to have caused an eviction of Tenant and without abatement of rent except
as provided elsewhere in this Lease. Landlord shall have the right, if desired,
to retain a key which unlocks all of the doors in the Premises, excluding
Tenant's vaults and safes, and Landlord shall have the right to use any and all
means which Landlord may deem proper to open the doors in an emergency in order
to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord shall not under any circumstances be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or any eviction of Tenant
from the Premises.

     SECTION 7.6  TENANT'S SELF-HELP. Notwithstanding anything to the contrary
contained in Section 7.2 of this Lease, if Landlord shall fail to perform any
repair obligations required under this Article VII within thirty (30) days
following Tenant's written request for such repairs, or if Landlord shall fail
to perform any repairs required under this Lease of an emergency condition
within 48 hours' written notice from Tenant, then Tenant may elect to make such
repairs at Landlord's expense by complying with the following provisions of this
Section 7.6. Before making any such repair, Tenant shall deliver to Landlord a
notice for the need for such repair ("Self-Help Notice"), which notice shall
specifically advise Landlord that Tenant intends to exercise its self-help right
hereunder. Should Landlord fail, within ten (10) days following receipt of the
Self-Help Notice (or within 48 hours following notice in the event of necessary
emergency repairs), to commence the necessary repair or to make other
arrangements reasonably satisfactory to Tenant, then Tenant shall have the right
to make such repair on behalf of Landlord. Landlord shall promptly reimburse
Tenant for the reasonable costs of such repairs, but in no event shall Tenant
have the right to offset rent against such costs. In the event that the work
could affect the Building's structural, mechanical, electrical, heating,
ventilating, air conditioning, life safety or plumbing components or systems,
then Tenant shall use only those contractors used by Landlord in the Project for
such work. The foregoing requirement shall not apply in cases of emergency if
Tenant is unable to obtain such contractors for emergency repair work. If those
contractors are unwilling or unable to perform the work, Tenant may retain the
services of qualified, reputable and licensed, bondable contractors with like
experience in similar building systems. Tenant shall be responsible

                                      -14-

 
for obtaining any necessary governmental permits before commencing the repair
work, and Tenant shall assume the risk of any damage, loss or injury resulting
from such work.

           ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

     Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, against all improvements to the Premises made by
Landlord or Tenant which are above Landlord's Project standard in quality and/or
quantity for comparable space within the Project ("Above Standard
Improvements"), and against any alterations, additions or like improvements made
to the Premises by or on behalf of Tenant. When possible Tenant shall cause its
personal property, Above Standard Improvements and alterations to be assessed
and billed separately from the real property of which the Premises form a part.
If any taxes on Tenant's personal property, Above Standard Improvements and/or
alterations are levied against Landlord or Landlord's property and if Landlord
pays the same, or if the assessed value of Landlord's property is increased by
the inclusion of a value placed upon the personal property, Above Standard
Improvements and/or alterations of Tenant and if Landlord pays the taxes based
upon the increased assessment, Tenant shall pay to Landlord the taxes so levied
against Landlord or the proportion of the taxes resulting from the increase in
the assessment. In calculating what portion of any tax bill which is assessed
against Landlord separately, or Landlord and Tenant jointly, is attributable to
Tenant's Above Standard Improvements, alterations and personal property,
Landlord's reasonable determination shall be conclusive.  

                     ARTICLE IX. ASSIGNMENT AND SUBLETTING

     SECTION 9.1  RIGHTS OF PARTIES.

          (a)  Notwithstanding any provision of this Lease to the contrary,
Tenant will not, either voluntarily or by operation of law, assign, sublet,
encumber, or otherwise transfer all or any part of Tenant's interest in this
lease, or permit the Premises to be occupied by anyone other than Tenant,
without Landlord's prior written consent, which consent shall not unreasonably
be withheld in accordance with the provisions of Section 9.1(b). No assignment
(whether voluntary, involuntary or by operation of law) and no subletting shall
be valid or effective without Landlord's prior written consent and, at
Landlord's election, any such assignment or subletting shall constitute a
material Default of this Lease. Landlord shall not be deemed to have given its
consent to any assignment or subletting by any other course of action, including
its acceptance of any name for listing in the Building directory. To the extent
not prohibited by provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et
seq. (the "Bankruptcy Code"), including Section 365(f)(1), Tenant on behalf of
itself and its creditors, administrators and assigns waives the applicability of
Section 365(e) of the Bankruptcy Code unless the proposed assignee of the
Trustee for the estate of the bankrupt meets Landlord's standard for consent as
set forth in Section 9.1(b) of this Lease. If this Lease is assigned to any
person or entity pursuant to the provisions of the Bankruptcy Code, any and all
monies or other considerations to be delivered in connection with the assignment
shall be delivered to Landlord, shall be and remain the exclusive property of
Landlord and shall not constitute property of Tenant or of the estate of Tenant
within the meaning of the Bankruptcy Code. Any person or entity to which this
Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be
deemed to have assumed all of the obligations arising under this Lease on and
after the date of the assignment, and shall upon demand execute and deliver to
Landlord an instrument confirming that assumption.

          (b)  If Tenant desires to transfer an interest in this Lease, it shall
first notify Landlord of its desire and shall submit in writing to Landlord: (i)
the name and address of the proposed transferee; (ii) the nature of any proposed
subtenant's or assignee's business to be carried on in the Premises; (iii) the
terms and provisions of any proposed sublease or assignment, including a copy of
the proposed assignment or sublease form; (iv) evidence of insurance of the
proposed assignee or subtenant complying with the requirements of Exhibit D
                                                                  ---------
hereto; (v) a completed Environmental Questionnaire from the proposed assignee
or subtenant; and (vi) any other information requested by Landlord and
reasonably related to the transfer. Except as provided in Subsection (c) of this
Section, Landlord shall not unreasonably withhold its consent, provided: (1) the
use of the Premises will be consistent with the provisions of this Lease and
with Landlord's commitment to other tenants of the Building and Project; (2) the
proposed assignee or subtenant has not been required by any prior landlord,
lender or governmental authority to take remedial action in connection with
Hazardous Materials contaminating a property arising out of the proposed
assignee's or subtenant's actions or use of the property in question and is not
subject to any enforcement order issued by any governmental authority in
connection with the use, disposal or storage of a Hazardous Material; (3) at
Landlord's election, insurance requirements shall be brought into conformity
with Landlord's then current leasing practice; (4) any proposed subtenant or
assignee demonstrates that it is financially responsible by submission to
Landlord of all reasonable information as Landlord may request concerning the
proposed subtenant or assignee, including, but not limited to, a balance sheet
of the proposed subtenant or assignee as of a date within ninety (90) days of
the

                                      -15-

 
request for Landlord's consent, statements of income or profit and loss of the
proposed subtenant or assignee for the two-year period preceding the request for
Landlord's consent, and/or a certification signed by the proposed subtenant or
assignee that it has not been evicted or been in arrears in rent at any other
leased premises for the 3-year period preceding the request for Landlord's
consent; (5) any proposed subtenant or assignee demonstrates to Landlord's
reasonable satisfaction a record of successful experience in business; (6) the
proposed assignee or subtenant is not an existing tenant of the Building or
Project or a prospect with whom Landlord is negotiating to become a tenant at
the Building or Project; and (7) the proposed transfer will not impose
additional burdens or adverse tax effects on Landlord. If Tenant has any
exterior sign rights under this Lease, such rights are personal to Tenant and
may not be assigned or transferred to any assignee of this Lease or subtenant of
the Premises without Landlord's prior written consent which may be withheld in
Landlord's reasonable discretion, provided that such signage complies with the
provisions of Section 5.2 of this Lease, and provided that Landlord's sole and
absolute discretion shall apply to the assignee's or sublessee's name on said
signage.

          If Landlord consents to the proposed transfer, Tenant may within
ninety (90) days after the date of the consent effect the transfer upon the
terms described in the information furnished to Landlord; provided that any
material change in the terms shall be subject to Landlord's consent as set forth
in this Section. Landlord shall approve or disapprove any requested transfer
within thirty (30) days following receipt of Tenant's written request, the
information set forth above, and the fee set forth below.

          (c)  Notwithstanding the provisions of Subsection (b) above, in the
event that Tenant shall determine to assign this Lease, or to sublease more than
thirty-three and thirty-three hundredths percent (33.33%) of the floor area of
the Premises in the aggregate, to any entity other than a Tenant Affiliate, then
Tenant shall give written notice of the basic economic terms upon which Tenant
purposes to so assign or sublet the Premises, including, without limitation, the
proposed consideration payable for such assignment or subrent payable under such
sublease, the proposed sublease term, and the amount of any improvement
allowances proposed by Tenant for such assignment or subletting (collectively,
the "Economic Terms"). Within thirty (30) days after the date of such notice,
Landlord shall elect whether or not to terminate this Lease in its entirety if
an assignment is proposed, or to terminate this Lease as to the portion of the
Premises proposed to be subleased with an abatement in the rent payable under
this Lease proportionate to the floor area proposed for sublease to the entire
floor area of the Premises. Any such termination shall be effective on that date
which is sixty (60) days following Landlord's notice of its election to so
terminate. Landlord's failure to so elect within said thirty (30) days shall
constitute Landlord's election not to so terminate. In the event of any such
termination, Landlord may thereafter, at its option, assign or re-let any space
so recaptured to any third party, including without limitation, any party with
whom Tenant is then negotiating to assign or sublet the Lease, and Tenant shall
surrender the Premises (or the portion of the Premises recaptured) to Landlord
as provided in Section 15.3 as of the effective date of such termination. In the
event that Landlord shall elect not to terminate the Lease as provided in the
foregoing, then Tenant may assign the Lease, or sublet that portion of the
Premises set forth in its notice to Landlord, as applicable, upon Economic Terms
which are not more favorable to the assignee or sublessee than those Economic
Terms offered to Landlord. In the event that Tenant shall not enter into a
binding assignment agreement or sublease agreement with an assignee or
subtenant, as applicable, which shall be effective within one hundred eighty
(180) days following the original offer notice to Landlord, then Tenant shall
repeat the procedures set forth in this Subsection 9.1(c).

          (d)  Tenant agrees that fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described, in excess of (i) the Basic Rent
payable by Tenant hereunder, or in the case of a sublease of a portion of the
Premises, in excess of the Basic Rent reasonably allocable to such portion, plus
(ii) Tenant's direct out-of-pocket costs which Tenant certifies to Landlord have
been paid to provide occupancy related services to such assignee or subtenant of
a nature commonly provided by landlords of similar space, plus (iii) Tenant's
other reasonable out-of-pocket costs in connection with such assignment or
sublease including, without limitation, reasonable attorneys' fees, brokerage
fees and (subject to the provisions of Section 7.3 of this Lease) the
unamortized portion of improvements made to the Premises at the expense of
Tenant in connection with such assignment or sublease, shall be the property of
Landlord and such amounts shall be payable directly to Landlord by the assignee
or subtenant or, at Landlord's option, by Tenant. At Landlord's request, a
written agreement shall be entered into by and among Tenant, Landlord and the
proposed assignee or subtenant confirming the requirements of this subsection.

          (e)  Tenant shall pay to Landlord a fee of Five Hundred Dollars
($500.00) if and when any transfer hereunder is requested by Tenant. Such fee is
hereby acknowledged as a reasonable amount to reimburse Landlord for its costs
of review and evaluation of a proposed assignee/sublessee, and Landlord shall
not be obligated to commence such review and evaluation unless and until such
fee is paid.

     SECTION 9.2  EFFECT OF TRANSFER. No subletting or assignment, even with
the consent of Landlord, shall relieve Tenant of its obligation to pay rent and
to perform all its other obligations under this Lease. Moreover, Tenant shall
indemnify and hold Landlord harmless, as provided in Section 10.3, for any

                                      -16-

 
act or omission by an assignee or subtenant as provided in said Section 10.3.
Each assignee, other than Landlord, shall be deemed to assume all obligations of
Tenant under this Lease and shall be liable jointly and severally with Tenant
for the payment of all rent, and for the due performance of all of Tenant's
obligations, under this Lease. No transfer shall be binding on Landlord unless
any document memorializing the transfer is delivered to Landlord and both the
assignee/subtenant and Tenant deliver to Landlord an executed consent to
transfer instrument prepared by Landlord and consistent with the requirements of
this Article. The acceptance by Landlord of any payment due under this Lease
from any other person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any transfer. Consent by Landlord
to one or more transfers shall not operate as a waiver or estoppel to the future
enforcement by Landlord of its rights under this Lease.

     SECTION 9.3  SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be deemed included in each sublease:

          (a)  Any such subtenant's interest shall be subject to the terms and
provisions of this Lease.

          (b)  Tenant hereby irrevocably assigns to Landlord all of Tenant's
interest in all rentals and income arising from any sublease of the Premises,
and Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until a Default occurs in
the performance of Tenant's obligations under this Lease, Tenant shall have the
right to receive and collect the sublease rentals. Landlord shall not, by reason
of this assignment or the collection of sublease rentals, be deemed liable to
the subtenant for the performance of any of Tenant's obligations under the
sublease. Tenant hereby irrevocably authorizes and directs any subtenant, upon
receipt of a written notice from Landlord stating that a Default exists in the
performance of Tenant's obligations under this Lease, to pay to Landlord all
sums then and thereafter due under the sublease. Tenant agrees that the
subtenant may rely on that notice without any duty of further inquiry and
notwithstanding any notice or claim by Tenant to the contrary. Tenant shall have
no right or claim against the subtenant or Landlord for any rentals so paid to
Landlord.

          (c)  In the event of the termination of this Lease, Landlord may, at
its sole option, take over Tenant's entire interest in any sublease and, upon
notice from Landlord, the subtenant shall attorn to Landlord. In no event,
however, shall Landlord be liable for any previous act or omission by Tenant
under the sublease or for the return of any advance rental payments or deposits
under the sublease that have not been actually delivered to Landlord, nor shall
Landlord be bound by any sublease modification executed without Landlord's
consent or for any advance rental payment by the subtenant in excess of one
month's rent. The general provisions of this Lease, including without limitation
those pertaining to insurance and indemnification, shall be deemed incorporated
by reference into the sublease despite the termination of this Lease.

     SECTION 9.4  CERTAIN TRANSFERS. Notwithstanding anything to the contrary
contained in this Article IX, Landlord's consent shall not be required for the
assignment of this Lease, or to a subletting of the Premises, to (a) a
subsidiary, affiliate, division or corporation controlling, controlled by or
under common control with Tenant, (b) a successor corporation to Tenant by
merger, consolidation, nonbankruptcy reorganization, or government action, (c) a
purchaser of substantially all of Tenant's assets located in the Premises, or
(d) either of the Guarantors of this Lease (collectively, a "Tenant Affiliate"
herein), so long as (i) the net worth of the successor entity after any such
merger, consolidation, reorganization, action or assignment, is at least equal
to the net worth of Tenant immediately prior to the date of such merger,
consolidation, reorganization, action or assignment, evidence of which,
satisfactory to Landlord, shall be presented to Landlord prior thereto, (ii)
Tenant shall provide to Landlord, prior to such merger, consolidation,
reorganization, action or assignment, written notice thereof and such assignment
documentation and other information as Landlord may reasonably request in
connection therewith, and (iii) all of the other terms and requirements of this
Article shall apply with respect to such merger, consolidation, reorganization,
action or assignment, except for the terms and requirements of Section 9.1 which
shall not apply thereto.

                      ARTICLE X. INSURANCE AND INDEMNITY

     SECTION 10.1  TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit D.
                                                                ---------
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.

     SECTION 10.2  LANDLORD'S INSURANCE. Landlord shall provide the following
types of insurance, with or without deductible and in amounts and coverages as
may be determined by Landlord in its discretion: "all risk" property insurance,
subject to standard exclusions (such as, but not limited to, earthquake and
flood exclusions), covering the full replacement cost of the Building, the
Tenant Improvements and the

                                      -17-

 
Common Areas (the "All-Risk Policy"). In addition, Landlord may, at its
election, obtain insurance for such other risks as Landlord or its mortgagees
may from time to time deem appropriate, including without limitation, coverage
for earthquake, flood and commercial general liability. Landlord shall not be
required to carry insurance of any kind on Tenant's property, including
leasehold improvements, trade fixtures, furnishings, equipment, plate glass,
signs and all other items of personal property, and shall not be obligated to
repair or replace that property should damage occur. All proceeds of insurance
maintained by Landlord upon the Building and Project shall be the property of
Landlord, whether or not Landlord is obligated to or elects to make any repairs.
At Landlord's option, Landlord may self-insure all or any portion of the risks
for which Landlord elects or is required to provide insurance hereunder.

     SECTION 10.3  JOINT INDEMNITY.

          (a)  Tenant's Indemnity. To the fullest extent permitted by law,
               ------------------
Tenant shall defend (with attorneys reasonably acceptable to Landlord),
indemnify, protect, save and hold harmless Landlord, its agents, and any and all
affiliates of Landlord, including, without limitation, any corporations or other
entities controlling, controlled by or under common control with Landlord, from
and against any and all claims, liabilities, costs or expenses arising from
Tenant's use or occupancy of the Premises or the Building, or from the conduct
of its business, or from any activity, work, or thing done, permitted or
suffered by Tenant or its agents, employees, invitees or licensees in or about
the Premises or the Building, or from any Default in the performance of any
obligation on Tenant's part to be performed under this Lease, or from any act or
negligence of Tenant or its agents, employees, visitors, patrons, guests,
invitees or licensees; provided Tenant shall have no obligation to indemnify,
save or hold harmless Landlord for any claims, liabilities, costs or expenses to
the extent the same is caused by the negligence or willful misconduct on the
part of Landlord, or its authorized agents, contractors or employees, or for
which Tenant is otherwise indemnified hereunder. In cases of alleged negligence
asserted by third parties against Landlord which arise out of, are occasioned
by, or in any way attributable to Tenant's, its agents, employees, contractors,
licensees or invitees use and occupancy of the Premises or the Building, or from
the conduct of its business or from any activity, work or thing done, permitted
or suffered by Tenant or its agents, employees, invitees or licensees on
Tenant's part to be performed under this Lease, or from any act of negligence of
Tenant, its agents, employees, licensees or invitees, Tenant shall accept any
tender of defense for Landlord and shall, notwithstanding any allegation of
negligence or willful misconduct on the part of the Landlord, defend Landlord
and protect and hold Landlord harmless and pay all costs expenses and attorneys'
fees incurred in connection with such litigation, provided that Tenant shall not
be liable for any such injury or damage, and Landlord shall reimburse Tenant for
the reasonable attorney's fees and costs for the attorney representing both
parties, all to the extent and in the proportion that such injury or damage is
ultimately determined by a court of competent jurisdiction (or in connection
with any negotiated settlement agreed to by Landlord) to be attributable to the
negligence or willful misconduct of Landlord. Upon Landlord's request, Tenant
shall at Tenant's sole cost and expense, retain a separate attorney selected by
Landlord to represent Landlord in any such suit if Landlord determines that the
representation of both Tenant and Landlord by the same attorney would cause a
conflict of interest; provided, however, that to the extent and in the
proportion that the injury or damage which is the subject of the suit is
ultimately determined by a court of competent jurisdiction (or in connection
with any negotiated settlement agreed to by Landlord) to be attributable to the
negligence or willful misconduct of Landlord, Landlord shall reimburse Tenant
for the reasonable legal fees and costs of the separate attorney retained by
Tenant. The provisions of this Subsection 10.3(a) shall expressly survive the
expiration or sooner termination of this Lease.

          (b)  Landlord's Indemnity. To the fullest extent permitted by law, but
               --------------------
subject to the express limitations on liability contained in this Lease
(including, without limitation, the provisions of Sections 10.4, 10.5 and 14.8
of this Lease), Landlord shall defend (with attorneys reasonably acceptable to
Tenant), indemnify, protect, save and hold harmless Tenant, its agents and any
and all affiliates of Tenant, including, without limitation, any corporations,
or other entities controlling, controlled by or under common control with
Tenant, from and against any and all claims, liabilities, costs or expenses
arising from the maintenance or repair of the Common Areas, the Project and/or
the Building by Landlord or its employees, authorized agents or contractors;
provided that Landlord shall have no obligation to indemnify, save or hold
harmless Tenant for any claims, liabilities, costs or expenses to the extent the
same is caused by the negligence or willful misconduct on the part of Tenant, or
its agents, employees, licensees or invitees, or for which Landlord is otherwise
indemnified hereunder. In cases of alleged negligence asserted by third parties
against Tenant which arise out of, are occasioned by, or in any way attributable
to the maintenance or repair of the Common Areas, the Project or the Building by
Landlord or its contractors, authorized agents or employees, Landlord shall
accept any tender defense for Tenant and shall, notwithstanding any allegation
of negligence or willful misconduct on the part of Tenant, defend Tenant and
protect and hold Tenant harmless and pay all cost, expense and attorneys' fees
incurred in connection with such litigation, provided that Landlord shall not be
liable for any such injury or damage, and Tenant shall reimburse Landlord for
the reasonable attorney's fees and costs for the attorney representing both
parties, all to the extent and in the proportion that such injury or damage is
ultimately determined by a court of competent jurisdiction (or in

                                      -18-

 
connection with any negotiated settlement agreed to by Tenant) to be
attributable to the negligence or willful misconduct of Tenant. Upon Tenant's
request, Landlord shall at Landlord's sole cost and expense, retain a separate
attorney selected by Tenant to represent Tenant in any such suit if Tenant
determines that the representation of both Tenant and Landlord by the same
attorney would cause conflict of interest; provided, however, that to the extent
and the proportion that the injury or damage which is the subject of the suit is
ultimately determined by a court of competent jurisdiction (or in connection
with any negotiated settlement agreed to by Tenant) to be attributable to the
negligence or willful misconduct of Tenant, Tenant shall reimburse Landlord for
the reasonable legal fees and costs of the separate attorney retained by
Landlord. The provisions of this Subsection 10.3(b) shall expressly survive the
expiration or sooner termination of this Lease.

     SECTION 10.4  LANDLORD'S NONLIABILITY. Except as expressly provided by the
indemnity obligations contained in Section 10.3(b) of this Lease, Landlord shall
not be liable to Tenant, its employees, agents and invitees, and Tenant hereby
waives all claims against Landlord, for loss of or damage to any property, or
any injury to any person, or any other loss, cost, damage, injury or liability
whatsoever resulting from fire, explosion, failing plaster, steam, gas,
electricity, water or rain which may leak or flow from or into any part of the
Building or from the breakage, leakage, obstruction or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, electrical
works or other fixtures in the Building, whether the damage or injury results
from conditions arising in the Premises or in other portions of the Project.
Notwithstanding any provision of this Lease to the contrary, including, without
limitation, the provisions of Section 10.3(b) of this Lease, Landlord shall in
no event be liable to Tenant, its employees, agents, and invitees, and Tenant
hereby waives all claims against Landlord, for loss or interruption of Tenant's
business or income (including, without limitation, any consequential damages and
lost profit or opportunity costs), or any other loss, cost, damage, injury or
liability resulting from, but not limited to, Acts of God, acts of civil
disobedience or insurrection, acts of omissions (criminal or otherwise) of any
third parties, including without limitation, any other tenants within the
Project or their agents, employees, contractors, guests or invitees. It is
understood that any such condition may require the temporary evacuation or
closure of all or a portion of the Building. Except as expressly provided in
this Lease, there shall be no abatement of rent and no liability of Landlord
by reason of any injury to or interference with Tenant's business (including
without limitation consequential damages and lost profit or opportunity costs)
arising from the making of any repairs, alterations or improvements to any
portion of the Building, including repairs to the premises, nor shall any
related activity by Landlord constitute an actual or constructive eviction,
provided, however, that in making repairs, alterations or improvements,
Landlord shall interfere as little as reasonably practicable with the conduct
of Tenant's business in the Premises. Neither Landlord nor its agents shall be
liable for interference with light or other similar intangible interests.
Tenant shall immediately notify Landlord in case of fire or accident in the
Premises, the Building or the Project and of defects in any improvements or
equipment.

     SECTION 10.5  WAIVER OF SUBROGATION. Notwithstanding anything to the
contrary contained in this Lease, Landlord and Tenant each hereby waives all
rights of recovery against the other and the other's agents on account of loss
and damage occasioned to the property of such waiving party to the extent only
that such loss or damage is required to be insured against under any "all risk"
property insurance policies required by this Article X (including, without
limitation, the All-Risk Policy carried by Landlord, whether or not Landlord
chooses to self-insure such coverage); provided however, that the foregoing
waiver shall not apply to the extent of Tenant's obligations to pay deductibles
under any such policies and this Lease. By this waiver it is the intent of the
parties that neither Landlord nor Tenant shall be liable to any insurance
company (by way of subrogation or otherwise) insuring the other party for any
loss or damage insured against under any "all-risk" property insurance policies
required by this Article, even though such loss or damage might be occasioned by
the negligence of such party, its agents, employees, contractors, guests or
invitees. All of the parties' repair and maintenance and indemnity obligations
under this Lease shall be subject to the waiver of subrogation contained in this
Section 10.5. The parties hereto shall cause each property insurance policy it
obtains to include a waiver of subrogation regarding the liabilities released
hereby.   

                       ARTICLE XI. DAMAGE OR DESTRUCTION

     SECTION 11.1  RESTORATION.

          (a)  If the Building of which the Premises are a part is damaged,
Landlord shall repair that damage as soon as reasonably possible, at its
expense, unless: (i) Landlord reasonably determines that the cost of repair is
greater than Fifty Thousand Dollars ($50,000.00) and is not covered by
Landlord's All-Risk Policy (whether or not Landlord chooses to self-insure such
coverage) or by Landlord's other insurance coverages, plus such additional
amounts Tenant elects, at its option, to contribute, excluding however the
deductible (for which Tenant shall be responsible for Tenant's Share); (ii)
Landlord reasonably determines that the Premises cannot, with reasonable
diligence, be fully repaired by Landlord (or cannot be safely

                                      -19-

 
repaired because of the presence of hazardous factors, including without
limitation Hazardous Materials, earthquake faults, and other similar dangers)
within two hundred seventy (270) days after the date of the damage; (iii) a
Default by Tenant has occurred at the time of such damage; or (iv) the damage
costs more than Fifty Thousand Dollars ($50,000.00) to repair and occurs during
the final nine (9) months of the Term (unless Tenant has validly exercised its
option to extend the Term contained in Section 3.3 of this Lease). Should
Landlord elect not to repair the damage for one of the preceding reasons,
Landlord shall so notify Tenant in writing within sixty (60) days after the
damage occurs and this Lease shall terminate as of the date of that notice.
Tenant's responsibility for the reimbursement of deductibles contained in this
Lease shall be subject to the following limitations: (A) Tenant shall have no
responsibility for so-called "co-insurance" requirements for any deficiencies in
Landlord's All-Risk Policy coverage; and (B) in no event shall Tenant's
obligation for payment or reimbursement of any deductible exceed the amount of
One Hundred Thousand Dollars ($100,000.00) for any single casualty. Further, in
the event that Landlord terminates this Lease pursuant to this Section 11.1(a),
Tenant shall have no responsibility for reimbursement of any deductible.

          (b)  Unless Landlord elects to terminate this Lease in accordance with
subsection (a) above, this Lease shall continue in effect for the remainder of
the Term; provided that so long as Tenant is not in Default under this Lease, if
the damage is so extensive that Landlord reasonably determines that the Premises
cannot, with reasonable diligence, be repaired by Landlord (or cannot be safely
repaired because of the presence of hazardous factors, earthquake faults, and
other similar dangers) so as to allow Tenant's substantial use and enjoyment of
the Premises, or are not in fact repaired by Landlord, within two hundred
seventy (270) days after the date of damage, then Tenant may elect to terminate
this Lease by written notice to Landlord either within the sixty (60) day period
stated in subsection (a), or within sixty (60) days following Landlord's failure
to so repair the Premises within two hundred seventy (270) days after the date
of damage.

          (c)  Commencing on the date of any damage to the Building, and ending
on the sooner of the date the damage is repaired or the date this Lease is
terminated, the rental to be paid under this Lease shall be abated in the same
proportion that the floor area of the Premises that is rendered unusable by the
damage from time to time bears to the total floor area of the Premises, provided
that Tenant is then carrying the business interruption insurance required in
Exhibit D.
---------

          (d)  The provisions of this Section 11.1 shall not be deemed to
require Landlord to repair any improvements or fixtures that Tenant is obligated
to repair or insure pursuant to any other provision of this Lease.

          (e)  Tenant shall fully cooperate with Landlord in removing Tenant's
personal property and any debris from the Premises to facilitate all inspections
of the Premises and the making of any repairs. Notwithstanding anything to the
contrary contained in this Lease, if Landlord in good faith believes there is a
risk of injury to persons or damage to property from entry into the Building or
Premises following any damage or destruction thereto, Landlord may restrict
entry into the Building or the Premises by Tenant, its employees, agents and
contractors in a non-discriminatory manner, without being deemed to have
violated Tenant's rights of quiet enjoyment to, or made an unlawful detainer of,
or evicted Tenant from, the Premises. Upon request, Landlord shall consult with
Tenant to determine if there are safe methods of entry into the Building or the
Premises solely in order to allow Tenant to retrieve files, data in computers,
and necessary inventory, subject however to all indemnities and waivers of
liability from Tenant to Landlord contained in this Lease and any additional
indemnities and waivers of liability which Landlord may reasonably require.

     SECTION 11.2  LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.

                          ARTICLE XII. EMINENT DOMAIN

     SECTION 12.1  TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises is taken by any lawful authority by exercise of the right of eminent
domain, or sold to prevent a taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
the authority. In the event either: (i) title to a portion of the Building or
Project, other than the Premises, is taken or sold in lieu of taking, and if
Landlord elects to restore the Building in such a way as to alter the Premises
materially, or (ii) Landlord fails to restore the Building within two hundred
seventy (270) days following the effective date of such taking, then Tenant may
terminate this Lease, by written notice to Landlord given within thirty (30)
days thereafter, effective on the date of vesting of title. In the event neither
party has elected to terminate this Lease as provided above, then Landlord shall
promptly, after receipt of a sufficient condemnation award, proceed to restore
the Premises to substantially their condition prior to the taking, and a
proportionate allowance shall be made to Tenant for the rent corresponding to
the time during which, and to the part of the Premises of which, Tenant is
deprived on account of the taking and restoration. In the event of a taking,
Landlord shall be entitled to the entire amount of the condemnation award
without

                                      -20-

 
deduction for any estate or interest of Tenant; provided that nothing in this
Section shall be deemed to give Landlord any interest in, or prevent Tenant from
seeking any award against the taking authority for, the taking of personal
property and fixtures belonging to Tenant or for relocation or business
interruption expenses or loss of good will recoverable from the taking
authority.

     SECTION 12.2   TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed one hundred
eighty (180) days.

     SECTION 12.3   TAKING OF PARKING AREA . In the event there shall be a
taking of the parking area such that Landlord can no longer provide sufficient
parking to comply with this Lease, Landlord may substitute reasonably equivalent
parking in a location reasonably close to the Building; provided that if
Landlord fails to make that substitution within sixty (60) days following the
taking and if the taking materially impairs Tenant's use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to
Landlord. If this Lease is not so terminated by Tenant, there shall be no
abatement of rent and this Lease shall continue in effect.

         ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

     SECTION 13.1   SUBORDINATION. At the option of Landlord, this Lease shall
be either superior or subordinate to all ground or underlying leases, mortgages
and deeds of trust, if any, which may hereafter affect the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as Tenant is not in Default under this Lease, this Lease
shall not be terminated or Tenant's quiet enjoyment of the Premises disturbed in
the event of termination of any such ground or underlying lease, or the
foreclosure of any such mortgage or deed of trust. In the event of a termination
or foreclosure, Tenant shall become a tenant of and attorn to the successor-in-
interest to Landlord upon the same terms and conditions as are contained in this
Lease, and shall execute any instrument reasonably required by Landlord's
successor for that purpose. Tenant shall also, upon written request of Landlord,
execute and deliver all instruments as may be required from time to time to
subordinate the rights of Tenant under this Lease to any ground or underlying
lease or to the lien of any mortgage or deed of trust (provided that such
instruments include the nondisturbance and attornment provisions set forth
above), or, if requested by Landlord, to subordinate, in whole or in part, any
ground or underlying lease or the lien of any mortgage or deed of trust to this
Lease. Prior to the Commencement Date, Landlord shall obtain from any lenders or
ground lessors of the Building or Project a written agreement, in form
reasonably satisfactory to Tenant, providing that Tenant's rights and interest
shall not be disturbed in the event of any foreclosure of any such ground or
underlying lease, mortgage or deed of trust.

     SECTION 13.2   ESTOPPEL CERTIFICATE.

          (a)  Tenant shall, at any time upon not less than fifteen (15) days'
prior written notice from Landlord, execute, acknowledge and deliver to
Landlord, in any form that Landlord may reasonably require, a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of the modification and certifying
that this Lease, as modified, is in full force and effect) and the dates to
which the rental, additional rent and other charges have been paid in advance,
if any, and (ii) acknowledging that, to Tenant's knowledge, there are no uncured
defaults on the part of Landlord, or specifying each default if any are claimed,
and (iii) setting forth all further information that Landlord may reasonably
require. Tenant's statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the Building or Project.
 
          (b)  Notwithstanding any other rights and remedies of Landlord,
Tenant's failure to deliver any estoppel statement within the provided time
shall be conclusive upon Tenant that (i) this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) there are no
uncured defaults in Landlord's performance, and (iii) not more than one month's
rental has been paid in advance.

     SECTION 13.3   FINANCIALS.

          (a)  Tenant shall deliver to Landlord, prior to the execution of this
Lease and thereafter at any time upon Landlord's request, Tenant's current tax
returns and financial statements, certified true, accurate and complete by the
chief financial officer of Tenant, including a balance sheet and profit and loss
statement for the most recent prior year (collectively, the "Statements"), which
Statements shall accurately and completely reflect the financial condition of
Tenant. Landlord agrees that it will keep the Statements confidential, except
that Landlord shall have the right to deliver the same to any proposed purchaser
of the Building or Project (provided that any such purchaser shall be required
to keep such Statements confidential),

                                      -21-

 
and to any encumbrancer of all or any portion of the Building or Project
(provided that Landlord shall request that any such encumbrancer keep such
Statements confidential).

          (b)  Tenant acknowledges that Landlord is relying on the Statements in
its determination to enter into this Lease, and Tenant represents to Landlord,
which representation shall be deemed made on the date of this Lease and again on
the Commencement Date, that no material change in the financial condition of
Tenant, as reflected in the Statements, has occurred since the date Tenant
delivered the Statements to Landlord. The Statements are represented and
warranted by Tenant to be correct and to accurately and fully reflect Tenant's
true financial condition as of the date of submission by any Statements to
Landlord.

                      ARTICLE XIV.  DEFAULTS AND REMEDIES

     SECTION 14.1   TENANT'S DEFAULTS. The occurrence of any one or more of the
following events, following notice by Landlord and the expiration of the
applicable cure period, if any, without cure by Tenant, shall constitute a
default by Tenant (a "Default" as used in this Lease):

          (a)  The failure by Tenant to make any payment of rent or additional
rent required to be made by Tenant, as and when due, where the failure continues
for a period of five (5) days after written notice from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161
and 1161(a) as amended, provided such notice is served in the manner required
under Code of Civil Procedure Section 1162. For purposes of these default and
remedies provisions, the term "additional rent" shall be deemed to include all
amounts of any type whatsoever other than Basic Rent to be paid by Tenant
pursuant to the terms of this Lease.

          (b)  Assignment, sublease, encumbrance or other transfer of the Lease
by Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means, without the prior
written consent of Landlord.

          (c)  The discovery by Landlord that any financial statement provided
by Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.
  
          (d)  The failure of Tenant to timely and fully provide any
subordination agreement, estoppel certificate or financial statements in
accordance with the requirements of Article XIII, where the failure continues
for a period of ten (10) days after written notice from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161
and 1161(a) as amended, provided such notice is served in the manner required
under Code of Civil Procedure Section 1162. 

          (e)  The failure or inability by Tenant to observe or perform any of
the express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in any other subsection of this
Section, where the failure continues for a period of thirty (30) days after
written notice from Landlord to Tenant or such shorter period as is specified in
any other provision of this Lease; provided, however, that any such notice shall
be in lieu of, and not in addition to, any notice required under California Code
of Civil Procedure Section 1161 and 1161(a) as amended, provided such notice is
served in the manner required under Code of Civil Procedure Section 1162.
However, if the nature of the failure is such that more than thirty (30) days
are reasonably required for its cure, then Tenant shall not be deemed to be in
Default if Tenant commences the cure within thirty (30) days, and thereafter
diligently pursues the cure to completion.

          (f)  (i) The making by Tenant of any general assignment for the
benefit of creditors; (ii) the filing by or against Tenant of a petition to have
Tenant adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within thirty (30) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where the seizure
is not discharged within thirty (30) days. Landlord shall not be deemed to have
knowledge of any event described in this subsection unless notification in
writing is received by Landlord, nor shall there be any presumption attributable
to Landlord of Tenant's insolvency. In the event that any provision of this
subsection is contrary to applicable law, the provision shall be of no force or
effect.

                                      -22-

 
     SECTION 14.2   LANDLORD'S REMEDIES.

          (a)  In the event of any Default by Tenant, or in the event of the
abandonment of the Premises by Tenant, then in addition to any other remedies
available to Landlord, Landlord may exercise the following remedies:

               (i)  Landlord may terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant:

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

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

                    (3)  The worth at the time of award of the amount by which
the unpaid rent and additional rent for the balance of the Term after the time
of award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;

                    (4)  Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result from Tenant's Default, including, but not limited to, the cost
of recovering possession of the Premises, refurbishment of the Premises,
marketing costs, commissions and other expenses of reletting, including
necessary repair, the unamortized portion of any tenant improvements and
brokerage commissions funded by Landlord in connection with this Lease,
reasonable attorneys' fees, and any other reasonable costs; and

                    (5)  At Landlord's election, all other amounts in addition
to or in lieu of the foregoing as may be permitted by law. The term "rent" as
used in this Lease shall be deemed to mean the Basic Rent and all other sums
required to be paid by Tenant to Landlord pursuant to the terms of this Lease.
Any sum, other than Basic Rent, shall be computed on the basis of the average
monthly amount accruing during the twenty-four (24) month period immediately
prior to Default, except that if it becomes necessary to compute such rental
before the twenty-four (24) month period has occurred, then the computation
shall be on the basis of the average monthly amount during the shorter period.
As used in subparagraphs (1) and (2) above, the "worth at the time of award"
shall be computed by allowing interest at the rate of ten percent (10%) per
annum. As used in subparagraph (3) above, the "worth at the time of award" shall
be computed by discounting the amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).

               (ii) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event Landlord may continue to enforce all
of its rights and remedies under this Lease, including the right to collect all
rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the appointment of a receiver to protect the Landlord's
interests under this Lease, shall not constitute a termination of the Tenant's
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy provided by this subsection (ii), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the Premises
subject to the reasonable standards for Landlord's consent as are contained in
this Lease.

          (b)  The various rights and remedies reserved to Landlord in this
Lease or otherwise shall be cumulative and, except as otherwise provided by
California law, Landlord may pursue any or all of its rights and remedies at the
same time.

          (c)  No delay or omission of Landlord to exercise any right or remedy
shall be construed as a waiver of the right or remedy or of any Default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or Default by Tenant of any provision of this Lease, other than
the failure of Tenant to pay the particular rent accepted, regardless of
Landlord's knowledge of the preceding breach or default at the time of
acceptance of rent, or (ii) a waiver of Landlord's right to exercise any remedy
available to Landlord by virtue of the breach or default. The acceptance of any
payment from a debtor in possession, a trustee, a receiver or any other person
acting on behalf of Tenant or Tenant's estate shall not waive or cure a default
under Section 14.1. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent required by this Lease shall be deemed to be other than a
partial payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an

                                      -23-

 
accord and satisfaction and Landlord shall accept the check or payment without
prejudice to Landlord's right to recover the balance of the rent or pursue any
other remedy available to it. No act or thing done by Landlord or Landlord's
agents during the Term shall be deemed an acceptance of a surrender of the
Premises, and no agreement to accept a surrender shall be valid unless in
writing and signed by Landlord. No employee of Landlord or of Landlord's agents
shall have any power to accept the keys to the Premises prior to the termination
of this Lease, and the delivery of the keys to any employee shall not operate as
a termination of the Lease or a surrender of the Premises.

     SECTION 14.3   LATE PAYMENTS.

          (a)  Any rent due under this Lease that is not received by Landlord
within five (5) days of the date when due shall bear interest at the maximum
rate permitted by law from the date due until fully paid. The payment of
interest shall not cure any Default by Tenant under this Lease. In addition,
Tenant acknowledges that the late payment by Tenant to Landlord of rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult and impracticable to ascertain. Those costs
may include, but are not limited to, administrative, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
ground lease, mortgage or trust deed covering the Premises. Accordingly, if any
rent due from Tenant shall not be received by Landlord or Landlord's designee
within five (5) days after the date due, then Tenant shall pay to Landlord, in
addition to the interest provided above, a late charge in a sum equal to the
greater of five percent (5%) of the amount overdue or Two Hundred Fifty Dollars
($250.00) for each delinquent payment. The foregoing late charge shall not be
charged, however, in connection with the initial payment of rent not paid by
Tenant within five (5) days after the date due. Acceptance of a late charge by
Landlord shall not constitute a waiver of Tenant's Default with respect to the
overdue amount, nor shall it prevent Landlord from exercising any of its other
rights and remedies.

          (b)  Following each second consecutive installment of rent that is not
paid within five (5) days following notice of nonpayment from Landlord, Landlord
shall have the option (i) to require that beginning with the first payment of
rent next due, rent shall no longer be paid in monthly installments but shall be
payable quarterly three (3) months in advance and/or (ii) to require that Tenant
increase the amount, if any, of the Security Deposit by one hundred percent
(100%). Should Tenant deliver to Landlord, at any time during the Term, two (2)
or more insufficient checks, the Landlord may require that all monies then and
thereafter due from Tenant be paid to Landlord by cashiers check.

     SECTION 14.4   RIGHT OF LANDLORD TO PERFORM. All covenants and agreements
to be performed by Tenant under this Lease shall be performed at Tenant's sole
cost and expense and without any abatement of rent or right of set-off except as
specifically set forth in this Lease. If Tenant fails to pay any sum of money,
other than rent, or fails to perform any other act on its part to be performed
under this Lease, and the failure continues beyond any applicable grace period
set forth in Section 14.1, then in addition to any other available remedies,
Landlord may, at its election make the payment or perform the other act on
Tenant's part. Landlord's election to make the payment or perform the act on
Tenant's part shall not give rise to any responsibility of Landlord to continue
making the same or similar payments or performing the same or similar acts.
Tenant shall, promptly upon demand by Landlord, reimburse Landlord for all sums
paid by Landlord and all necessary incidental costs, together with interest at
the maximum rate permitted by law from the date of the payment by Landlord.
Landlord shall have the same rights and remedies if Tenant fails to pay those
amounts as Landlord would have in the event of a Default by Tenant in the
payment of rent.

     SECTION 14.5   DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion. Except as expressly provided in this Lease, no delay or
omission of Tenant to exercise any right or remedy shall be construed as a
waiver of the right or remedy or of any default by Landlord.

     SECTION 14.6   EXPENSES AND LEGAL FEES. All sums reasonably incurred by
Landlord in connection with any Default by Tenant under this Lease or holding
over of possession by Tenant after the expiration or earlier termination of this
Lease, including without limitation all costs, expenses and actual accountants,
appraisers, attorneys and other professional fees, and any collection agency or
other collection charges, shall be due and payable by Tenant to Landlord on
demand, and shall bear interest at the rate of ten percent (10%) per annum.
Should either Landlord or Tenant bring any action in connection with this Lease,
the prevailing party shall be entitled to recover as a part of the action its
reasonable attorneys' fees, and all other costs. The prevailing party for the
purpose of this paragraph shall be determined by the trier of the facts.

                                      -24-

 
     SECTION 14.7   WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH ACKNOWLEDGES
THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT
TO ITS RIGHTS TO TRIAL BY JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND
KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER
(AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR
AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY
CLAIM OF INJURY OR DAMAGE.

     SECTION 14.8   SATISFACTION OF JUDGMENT. The obligations of Landlord and
Tenant under this Lease do not constitute the personal obligations of the
individual partners, trustees, directors, officers or shareholders of Landlord
or Tenant, or their respective constituent partners. Should Tenant recover a
money judgment against Landlord, such judgment shall be satisfied only out of
the proceeds of sale received upon execution of such judgment and levied thereon
against the right, title and interest of Landlord in the Project and out of the
rent or other income from such property receivable by Landlord or out of
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title or interest in the Project and no action for
any deficiency may be sought or obtained by Tenant.

     SECTION 14.9   LIMITATION OF ACTIONS AGAINST LANDLORD. Any claim or demand
arising in tort or in contract against Landlord based upon or arising in
connection with this Lease (except those arising in connection with Sections
10.3(b), 5.3(g) and 5.3(h) of this Lease) shall be barred unless Tenant
commences an action thereon within twelve (12) months after the date that the
occurrence of the act, omission, event or default upon which the claim, demand
or right arises is discovered by Tenant. Nothing contained in this Section 14.9,
however, shall extend the operation of any applicable statute of limitations
binding on Tenant.

                            ARTICLE XV. END OF TERM

     SECTION 15.1   HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. If Tenant holds over for any period after the expiration (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only; such holding over with
the prior written consent of Landlord shall constitute a month-to-month tenancy
commencing on the first (1st) day following the termination of this Lease. In
either of such events, possession shall be subject to all of the terms of this
Lease, except that the monthly Basic Rent shall be the greater of (a) one
hundred fifty percent (150%) of the Basic Rent for the month immediately
preceding the date of termination for the initial month of hold over and one
hundred seventy-five percent (175%) of the Basic Rent for the month immediately
preceding the date of termination for each month of hold over thereafter, or (b)
the then currently scheduled Basic Rent for comparable space in the Project. If
Tenant fails to surrender the Premises upon the expiration of this Lease despite
demand to do so by Landlord, Tenant shall indemnify and hold Landlord harmless
from all loss or liability, including without limitation, any claims made by any
succeeding tenant relating to such failure to surrender. Acceptance by Landlord
of rent after the termination shall not constitute a consent to a holdover or
result in a renewal of this Lease. The foregoing provisions of this Section are
in addition to and do not affect Landlord's right of re-entry or any other
rights of Landlord under this Lease or at law.

     SECTION 15.2   MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant, or a mutual termination of this Lease, shall terminate any
or all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.

     SECTION 15.3   SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall quit
and surrender possession of the Premises to Landlord in as good order, condition
and repair as when received or as hereafter may be improved by Landlord or
Tenant, reasonable wear and tear, casualty, Hazardous Materials (except to the
extent Tenant is responsible therefor as provided in Section 5.3 of this Lease)
and repairs which are Landlord's obligation excepted, and shall, without expense
to Landlord, remove or cause to be removed from the Premises all personal
property and debris, except for any items that Landlord may by written
authorization allow to remain. Tenant shall repair all damage to the Premises
resulting from the removal, which repair shall include the patching and filling
of holes and repair of structural damage, provided that Landlord may instead
elect to repair any structural damage at Tenant's expense. If Tenant shall fail
to comply with the provisions of

                                      -25-

 
this Section, Landlord may effect the removal and/or make any repairs, and the
cost to Landlord shall be additional rent payable by Tenant upon demand. If
Tenant fails to remove Tenant's personal property from the Premises upon the
expiration of the Term, Landlord may remove, store, dispose of and/or retain
such personal property, at Landlord's option, in accordance with then applicable
laws, all at the expense of Tenant. Upon the expiration of the Term, if
requested by Landlord, Tenant shall execute, acknowledge and deliver to Landlord
an instrument in writing releasing and quitclaiming to Landlord all right, title
and interest of Tenant in the Premises.

                       ARTICLE XVI. PAYMENTS AND NOTICES

     All sums payable by Tenant to Landlord shall be paid, without deduction or
offset, in lawful money of the United States to Landlord at its address set
forth in Item 12 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing. Unless this Lease expressly provides
otherwise, as for example in the payment of rent pursuant to Section 4.1, all
payments shall be due and payable within twenty (20) days after demand. All
payments requiring proration shall be prorated on the basis of a thirty (30) day
month and a three hundred sixty (360) day year. Any notice, election, demand,
consent, approval or other communication to be given or other document to be
delivered by either party to the other may be delivered in person or by courier
or overnight delivery service to the other party, or may be deposited in the
United States mail, duly registered or certified, postage prepaid, return
receipt requested, and addressed to the other party at the address set forth in
Item 12 of the Basic Lease Provisions, or if to Tenant, at that address or, from
and after the Commencement Date, at the Premises (whether or not Tenant has
departed from, abandoned or vacated the Premises). Either party may, by written
notice to the other, served in the manner provided in this Article, designate a
different address. If any notice or other document is sent by mail, it shall be
deemed served or delivered three (3) business days after mailing. If more than
one person or entity is named as Tenant under this Lease, service of any notice
upon any one of them shall be deemed as service upon all of them.

                      ARTICLE XVII. RULES AND REGULATIONS

     Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E, and any reasonable and nondiscriminatory
                         ---------
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises, Building, Project and Common Areas.
Landlord shall not be liable to Tenant for any violation of the Rules and
Regulations or the breach of any covenant or condition in any lease by any other
tenant or such tenant's agents, employees, contractors, guests or invitees. One
or more waivers by Landlord of any breach of the Rules and Regulations by Tenant
or by any other tenant(s) shall not be a waiver of any subsequent breach of that
rule or any other. Tenant's failure to keep and observe the Rules and
Regulations following notice from Landlord and the expiration of the applicable
cure period, shall constitute a Default under this Lease. In the case of any
conflict between the Rules and Regulations and this Lease, this Lease shall be
controlling. Notwithstanding anything to the contrary in this Article XVII,
Tenant shall not be required to comply with any rule or regulation unless the
same applies non-discriminatorily to all occupants of the Project.

                      ARTICLE XVIII. BROKER'S COMMISSION

     The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant warrants that it has had no dealings with any other real estate
broker or agent in connection with the negotiation of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by Tenant in connection with
the negotiation of this Lease. The foregoing agreement shall survive the
termination of this Lease. If this Lease terminates prior to the Expiration Date
as the result of failure of performance by Tenant, Landlord shall be entitled to
recover from Tenant the unamortized portion of any brokerage commission funded
by Landlord in addition to any other damages to which Landlord may be entitled.

                 ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST

     In the event of any transfer of Landlord's interest in the Premises, the
transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that the transferee assumes in writing all of such obligations and any
funds held by the

                                      -26-

 
transferor in which Tenant has an interest shall be turned over, subject to that
interest, to the transferee and Tenant is notified of the transfer as required
by law. No holder of a mortgage and/or deed of trust to which this Lease is or
may be subordinate, and no landlord under a so-called sale-leaseback, shall be
responsible in connection with the Security Deposit, unless the mortgagee or
holder of the deed of trust or the landlord actually receives the Security
Deposit. It is intended that the covenants and obligations contained in this
Lease on the part of Landlord shall, subject to the foregoing, be binding on
Landlord, its successors and assigns, only during and in respect to their
respective successive periods of ownership. Nothing contained in the foregoing
sentence, however, shall be deemed to release The Irvine Company from any
obligation under Section 5.3(h) of this Lease from and after its period of
ownership.

                          ARTICLE XX. INTERPRETATION

     SECTION 20.1   GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.

     SECTION 20.2   HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.

     SECTION 20.3   JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or refund to, or the signature
of, any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.

     SECTION 20.4   SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.

     SECTION 20.5   TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease.

     SECTION 20.6   CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.

     SECTION 20.7   SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.

     SECTION 20.8   WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.

     SECTION 20.9   INABILITY TO PERFORM. In the event that either party shall
be delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, then the performance of the work or the doing
of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent. Further, the provisions of this Section 20.9 shall
not operate to extend the time at which Tenant is entitled to an abatement of
rent as provided by the express terms of this Lease, nor to extend by more than
ninety (90) days in the aggregate Tenant's right to terminate this Lease as
provided by the express terms of Articles XI and XII of this Lease.

                                      -27-

 
     SECTION 20.10  ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect.
Tenant waives its rights to rely on any representations or promises made by
Landlord or others which are not contained in this Lease. No verbal agreement or
implied covenant shall be held to modify the provisions of this Lease, any
statute, law, or custom to the contrary notwithstanding.

     SECTION 20.11  QUIET ENJOYMENT. Upon the observance and performance of all
the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without hindrance
or interruption by Landlord or any other person claiming by or through Landlord.

     SECTION 20.12  SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

                     ARTICLE XXI. EXECUTION AND RECORDING

     SECTION 21.1   COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.

     SECTION 21.2   CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a
corporation or partnership, each individual executing this Lease on behalf of
the corporation or partnership represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the corporation or
partnership, and that this Lease is binding upon the corporation or partnership
in accordance with its terms. Tenant shall, at Landlord's request, deliver a
certified copy of its board of directors' resolution or partnership agreement or
certificate authorizing or evidencing the execution of this Lease.

     SECTION 21.3   EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact executed
and delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.

     SECTION 21.4   RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a "short form" memorandum of this Lease for recording
purposes.

     SECTION 21.5   AMENDMENTS. No amendment or termination of this Lease shall
be effective unless in writing signed by authorized signatories of Tenant and
Landlord, or by their respective successors in interest. No actions, policies,
oral or informal arrangements, business dealings or other course of conduct by
or between the parties shall be deemed to modify this Lease in any respect.

     SECTION 21.6   EXECUTED COPY. Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.

     SECTION 21.7   ATTACHMENTS. All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease.

                          ARTICLE XXII. MISCELLANEOUS

     SECTION 22.1   NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose the terms and conditions of this Lease to any other tenant
or apparent prospective tenant of the Building or Project, either directly or
indirectly, without the prior written consent of Landlord, provided, however,
that Tenant may disclose the terms to prospective subtenants or assignees under
this Lease, and as required for any security filings, financings or sales,
reorganizations or consolidations of Tenant's business.

                                      -28-

 
     SECTION 22.2   GUARANTY. As a condition to the execution of this Lease by
Landlord, the obligations, covenants and performance of the Tenant as herein
provided shall be guaranteed in writing by the Guarantor(s) listed in Item 7 of
the Basic Lease Provisions, if any, on a form of guaranty provided by Landlord.

     SECTION 22.3   CHANGES REQUESTED BY LENDER. If, in connection with
obtaining financing for the Project, the lender shall request reasonable
modifications in this Lease as a condition to the financing, Tenant will not
unreasonably withhold or delay its consent, provided that the modifications do
not materially increase the obligations of Tenant or materially and adversely
affect the leasehold interest created by this Lease.

     SECTION 22.4   MORTGAGEE PROTECTION. No act or failure to act on the part
of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder or to terminate this Lease shall result in such a release
or termination unless (a) Tenant has given notice by registered or certified
mail to any beneficiary of a deed of trust or mortgage covering the Building
whose address has been furnished to Tenant in writing and (b) such beneficiary
is afforded a reasonable opportunity to cure the default by Landlord (which in
no event shall be less than sixty (60) days), including, if necessary to effect
the cure, time to obtain possession of the Building by power of sale or judicial
foreclosure provided that such foreclosure remedy is diligently pursued. Tenant
agrees that each beneficiary of a deed of trust or mortgage covering the
Building is an express third party beneficiary hereof, Tenant shall have no
right or claim for the collection of any deposit from such beneficiary or from
any purchaser at a foreclosure sale unless such beneficiary or purchaser shall
have actually received and not refunded the deposit, and Tenant shall comply
with any written directions by any beneficiary to pay rent due hereunder
directly to such beneficiary without determining whether an event of default
exists under such beneficiary's deed of trust.

     SECTION 22.5   [INTENTIONALLY DELETED]

     SECTION 22.6   SECURITY MEASURES. Tenant hereby acknowledges that Landlord
shall have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Project. Tenant assumes all
responsibility for the protection of Tenant, its agents, invitees and property
from acts of third parties. Nothing herein contained shall prevent Landlord, at
its sole option, from providing security protection for the Project or any part
thereof, in which event the cost thereof shall be included within the definition
of Project Costs.

     SECTION 22.7   JAMS. Should a dispute arise between the parties regarding
any matter which is expressly authorized by a provision hereof to submit to
arbitration, then either party may cause the dispute to be submitted to
Jams/Endispute or its successor ("JAMS") in Orange County, California for
binding arbitration before a single arbitrator. However, each party reserves the
right to seek any equitable remedy by judicial action. No arbitration election
by either party pursuant to this subsection shall be effective if made later
than thirty (30) days following service of a judicial summons and complaint by
or upon such party concerning the dispute. The arbitration shall be conducted in
accordance with the rules of practice and procedure of JAMS and otherwise
pursuant to the California Arbitration Act (Code of Civil Procedure Sections
1280 et seq.). Notwithstanding the foregoing, the arbitrator is specifically
directed to limit discovery to that which is essential to the effective
prosecution or defense of the action, and in no event shall such discovery by
either parry include more than one non-expert witness deposition unless both
parties otherwise agree. The arbitrator shall apportion the costs of the
arbitration, together with the attorneys fees of the parties, in the manner
deemed equitable by the arbitrator, it being the intention of the parties that
the prevailing party ordinarily be entitled to recover its reasonable costs and
fees. Judgment upon any award rendered by the arbitrator may be entered by any
court having jurisdiction.

     SECTION 22.8   APPROVALS. Subject to Landlord's rights to consent or
approve in its "discretion" or "sole discretion" as provided in this Lease,
whenever the Lease requires an approval, consent, designation, determination,
discretion or judgment by either Landlord or Tenant, such approval, consent,
designation, determination, discretion or judgment (including, without limiting
the generality of the foregoing, those required in connection with assignment
and subletting) shall not be unreasonable or unreasonably withheld or delayed
and in exercising any right or remedy hereunder, each party shall at all times
act reasonably and in good faith.


                        [Signatures on following page.]

                                      -29-

 
LANDLORD:                                            TENANT:

THE IRVINE COMPANY                                   E-MACHINE, INC.
                                                     A Delaware corporation



By: /s/ Clarence W. Barker                           By: /s/ Stephen Dukker
   ---------------------------------------              -----------------------
   Clarence W. Barker,                                  Name: Stephen Dukker
                                                              -----------------
   President, Irvine Industrial Company,                Title: CEO
                                                              ----------------- 
   a division of The Irvine Company



By: /s/ Gary A. Vaccaro                              By: /s/ John Hahm
   ---------------------------------------              -----------------------
   Gary A. Vaccaro,                                     Name: John Hahm
                                                             ------------------
   Assistant Secretary                                  Title: Vice President
                                                              -----------------

                                      -30-

 
                                   EXHIBIT A

                    MANUFACTURING - BLDG. 1 - FLOOR PLAN

                                   [GRAPH]

 
                                   EXHIBIT B
                                   ---------
 
                THE IRVINE COMPANY - INVESTMENT PROPERTIES GROUP

                         HAZARDOUS MATERIAL SURVEY FORM

         The purpose of this form is to obtain information regarding the use of
hazardous substances on Investment Properties Group ("IPG") property.
Prospective tenants and contractors should answer the questions in light of
their proposed activities on the premises. Existing tenants and contractors
should answer the questions as they relate to ongoing activities on the premises
and should update any information previously submitted.

         If additional space is needed to answer the questions, you may attach
separate sheets of paper to this form. When completed, the form should be sent
to the following address:

                         INSIGNIA COMMERCIAL GROUP, INC.
                                1 Ada, Suite 270
                                Irvine, CA 92618

         Your cooperation in this matter is appreciated. If you have any
questions, please call your property manager at (714) 753-4744 for assistance.

1.       GENERAL INFORMATION
         -------------------

         Name of Responding Company:_________________________________________
         Check all that apply:            Tenant        ( )   Contractor   ( )
                                          Prospective   ( )   Existing     ( )

         Mailing Address:____________________________________________________

         Contact Person & Title:_____________________________________________

         Telephone Number: (    ) ___________-______

         Current TIC Tenant(s):
         ---------------------

         Address of Lease Premises:__________________________________________

         Length of Lease or Contract Term:___________________________________

         Prospective TIC Tenant(s):
         -------------------------

         Address of Proposed Lease Premises:_________________________________

         Address of Current Operations:______________________________________

         Describe the proposed operations to take place on the property,
         including principal products manufactured or services to be conducted.
         Existing tenants and contractors should describe any proposed changes
         to ongoing operations. ______________________________________________
         _____________________________________________________________________


2.       HAZARDOUS MATERIALS. For the purposes of this Survey Form, the term
         -------------------
         "hazardous material" means any raw material, product or agent
         considered hazardous under any state or federal law. The term does not
         include wastes which are intended to be discarded.

         2.1      Will any hazardous materials be used or stored on site?

                  Chemical Products        Yes       (    )   No        (    )
                  Biological Hazards/
                  Infectious Wastes        Yes       (    )   No        (    )
                  Radioactive Materials    Yes       (    )   No        (    )
                  Petroleum Products       Yes       (    )   No        (    )

         2.2      List any hazardous materials to be used or stored, the
                  quantities that will be on-site at any given time, and the
                  location and method of storage (e.g., bottles in storage
                  closet on the premises).

 
                                           Location and Method      
                                           -------------------
                  Hazardous Materials           of Storage         Quantity
                  -------------------           ----------         --------

                  ___________________      ___________________    _____________

                  ___________________      ___________________    _____________

                  ___________________      ___________________    _____________

                  ___________________      ___________________    _____________ 

         2.3      Is any underground  storage of hazardous materials proposed or
                  currently conducted on the premises? Yes ( ) No ( )

                  If yes, describe the materials to be stored, and the size and
                  construction of the tank. Attach copies of any permits
                  obtained for the underground storage of such substances. ____
                  _____________________________________________________________

3.        HAZARDOUSWASTE. For the purposes of this Survey Form, the term
          --------------           
          "hazardous waste" means any waste (including biological, infectious or
          radioactive waste) considered hazardous under any state or federal
          law, and which is intended to be discarded.

          3.1     List any hazardous waste generated or to be generated on the
                  premises, and indicate the quantity generated on a monthly
                  basis.

                                           Location and Method     
                                           -------------------
                                           of Storage Prior to 
                                           -------------------
                  Hazardous Waste               Disposal           Quantity 
                  ---------------               --------           --------

                 ___________________      ___________________    _____________
                 
                 ___________________      ___________________    _____________
                 
                 ___________________      ___________________    _____________

                 ___________________      ___________________    _____________ 


          3.2     Describe the method(s) of disposal (including recycling) for
                  each waste. Indicate where and how often disposal will take
                  place.

                                        Location of Disposal   
                                        --------------------
                  Hazardous Materials           Site            Disposal Method
                  -------------------           ----            ---------------
                  
                  ___________________      ___________________    _____________
                  
                  ___________________      ___________________    _____________
                  
                  ___________________      ___________________    _____________
                  
                  ___________________      ___________________    _____________ 



         3.3      Is any treatment or processing of hazardous, infections or
                  radioactive wastes currently conducted or proposed to be
                  conducted on the premise? Yes ( ) No ( )


                  If yes, please describe any existing or proposed treatment
                  methods. __________________________________________________
                  ___________________________________________________________
         
         3.4      Attach copies of any hazardous waste permits or licenses
                  issued to your company with respect to its operations on the
                  premises.

4.       SPILLS
         ------

         4.1      During the past year, have any spills or releases of hazardous
                  materials occurred on the premises? Yes ( ) No ( )

                  If so, please describe the spill and attach the results of any
                  testing conducted to determine the extent of such spills.
                  _________________________________________________________
                  _________________________________________________________

         4.2      Were any agencies notified in connection with such spills? Yes
                  ( ) No ( )

                  If so, attach copies of any spill reports or other
                  correspondence with regulatory agencies.

         4.3      Were any clean-up actions undertaken in connection with the
                  spills? Yes ( ) No ( )

                                      -2-

 
               If so, briefly describe the actions taken. Attach copies of any
               clearance letters obtained from any regulatory agencies involved
               and the results of any final soil or groundwater sampling done
               upon completion of the clean-up work.__________________________
               _______________________________________________________________

5.        WASTEWATER TREATMENT/DISCHARGE
          ------------------------------
  
          5.1  Do you discharge industrial wastewater to:

               _____storm drain?                  _____sewer?
               _____surface water?                _____no industrial discharge

          5.2  Is your industrial wastewater treated before discharge? Yes ( )
               No( )

               If yes, describe the type of treatment conducted. ___________
               _____________________________________________________________ 

          5.2  Attach copies of any wastewater discharge permits issued to your
               company with respect to its operations on the premises.

6.        AIR DISCHARGES
          -------------- 

          6.1  Do you have any air filtration systems or stacks that discharge
               into the air? Yes ( ) No ( )

          6.2  Do you operate any equipment that require air emissions permits?
               Yes ( ) No ( )

          6.3  Attach copies of any air discharge permits pertaining to these
               operations.

7.        HAZARDOUS MATERIALS DISCLOSURES
          -------------------------------

          7.1  Does your company handle an aggregate of at least 500 pounds, 55
               gallons or 200 cubic feet of hazardous material at any given
               time? Yes ( ) No ( )

          7.2  Has your company prepared a Hazardous Materials Disclosure -
               Chemical Inventory and Business Emergency Plan or similar
               disclosure document pursuant to state or county requirements?
               Yes ( ) No ( )

               If so, attach a copy.

          7.3  Are any of the chemicals used in your operations regulated under
               Proposition 65?

               If so, describe the procedures followed to comply with these
               requirements. __________________________________________________
               ________________________________________________________________ 

          7.4  Is your company subject to OSHA Hazard Communication Standard
               Requirements? Yes ( ) No ( )

               If so, describe the procedures followed to comply with these
               requirements. ___________________________________________________
               _________________________________________________________________

8.        ANIMAL TESTING

          8.1. Does your company bring or intend to bring live animals onto the
               premises for research or development purposes? Yes ( ) No ( )

               If so, describe the activity. __________________________________
               ________________________________________________________________ 

          8.2  Does your company bring or intend to bring animal body parts or
               bodily fluids onto the premises for research or development
               purposes? Yes ( ) No ( )

               If so, describe the activity. __________________________________
               ________________________________________________________________

                                      -3-

 
9.   ENFORCEMENT ACTIONS, COMPLAINTS
     -------------------------------

     9.1  Has your company ever been subject to any agency enforcement actions,
          administrative orders, lawsuits, or consent orders/decrees regarding
          environmental compliance or health and safety? Yes ( ) No ( )

          If so, describe the actions and any continuing obligations imposed as
          a result of these actions. __________________________________________
          _____________________________________________________________________

     9.2  Has your company ever received any request for information, notice of
          violation or demand letter, complaint, or inquiry regarding
          environmental compliance or health and safety? Yes ( ) No ( )

     9.3  Has an environmental audit ever been conducted which concerned
          operations or activities on premises occupied by you? Yes ( ) No ( )

     9.3  If you answered "yes" to any questions in this section, describe the
          environmental action or complaint and any continuing compliance
          obligation imposed as a result of the same. __________________________
          ______________________________________________________________________


                                                   ____________________________
                                                   ____________________________
                                                   
                                                   By:_________________________
                                                       Name:___________________
                                                       Title:__________________

                                                       Date:___________________

                                      -4-

 
                                   EXHIBIT C
                                   ---------

                        HAZARDOUS MATERIALS DISCLOSURE

                               Tustin Annex Area
                               -----------------
         Byran Avenue, Tustin Ranch Road, El Camino Real, Myford, Road
                              Tustin, California

                                  March, 1997

Within an approximate one mile radius of the Premises, The Irvine Company is
aware of the following properties which have experienced a Hazardous Materials
contamination problem. These are identified and discussed below:

Tustin Marine Corps Air Station
-------------------------------
Tustin, California

The Tustin Air Station is identified in regulatory agency files as having
experienced a variety of contamination problems including underground storage
tank leaks. The full extent of contamination in soils and groundwater has not
yet been fully defined. Assessment and remediation activities are currently
being conducted under regulatory agency oversight. Additional information
concerning the status of this site may be obtained from regulatory agencies.

Treasure Farms Main Yard
------------------------
Jamboree Road / Irvine Blvd.
Irvine, California

Discharges from former underground fuel tanks have impacted soils and
groundwater at this property. The site is currently in assessment / remediation
under regulatory agency oversight.

Additional Study

Other properties in the area may have been impacted by hazardous substances
contamination. It is recommended that the Tenant satisfy itself as to the effect
of the above-described sites (or any other sites) on the condition of the
Premises.

 
                                   EXHIBIT D
                                   ---------

                              TENANT'S INSURANCE

     The following standards for Tenant's insurance shall be in effect at the
Building. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to those standards. Tenant agrees to obtain and
present evidence to Landlord that it has fully complied with the insurance
requirements.

     1.   Tenant shall, at its sole cost and expense, commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term, procure, pay for and keep in full force and effect: (i) commercial general
liability insurance with respect to the Premises and the operations of or on
behalf of Tenant in, on or about the Premises, including but not limited to
personal injury, owned and nonowned automobile, blanket contractual, independent
contractors, broad form property damage (with an exception to any pollution
exclusion with respect to damage arising out of heat, smoke or fumes from a
hostile fire), fire and water legal liability, products liability (if a product
is sold from the Premises), liquor law liability (if alcoholic beverages are
sold, served or consumed within the Premises), and severability of interest,
which policy(ies) shall be written on an "occurrence" basis and for not less
than the amount set forth in Item 13 of the Basic Lease Provisions, with a
combined single limit (with a $50,000 minimum limit on fire legal liability) per
occurrence for bodily injury, death, and property damage liability, or the
current limit of liability carried by Tenant, whichever is greater, and subject
to such increases in amounts as Landlord may determine from time to time; (ii)
workers' compensation insurance coverage as required by law, together with
employers' liability insurance; (iii) with respect to improvements, alterations,
and the like required or permitted to be made by Tenant under this Lease,
builder's all-risk insurance, in an amount equal to the replacement cost of the
work; (iv) insurance against fire, vandalism, malicious mischief and such other
additional perils as may be included in a standard "all risk" form in general
use in the county in which the Premises are situated, insuring Tenant's
leasehold improvements, trade fixtures, furnishings, equipment and items of
personal property of Tenant located in the Premises, in an amount equal to not
less than ninety percent (90%) of their actual replacement cost (with
replacement cost endorsement); and (v) business interruption insurance in
amounts satisfactory to cover one (1) year of loss. In no event shall the limits
of any policy be considered as limiting the liability of Tenant under this
Lease.

     2.   In the event Landlord consents to Tenant's use, generation or storage
of Hazardous Materials on, under or about the Premises pursuant to Section 5.3
of this Lease, Landlord shall have the continuing right to require Tenant, at
Tenant's sole cost and expense (provided the same is available for purchase upon
commercially reasonable terms), to purchase insurance specified and approved by
Landlord, with coverage not less than Five Million Dollars ($5,000,000.00),
insuring (i) any Hazardous Materials shall be removed from the Premises, (ii)
the Premises shall be restored to a clean, healthy, safe and sanitary condition,
and (iii) any liability of Tenant, Landlord and Landlord's officers, directors,
shareholders, agents, employees and representatives, arising from such Hazardous
Materials.

     3.   All policies of insurance required to be carried by Tenant pursuant to
this Exhibit D containing a deductible exceeding Five Thousand Dollars
     ---------
($5,000.00) per occurrence must be approved in writing by Landlord prior to the
issuance of such policy. Tenant shall be solely responsible for the payment of
all deductibles.

     4.   All policies of insurance required to be carried by Tenant pursuant to
this Exhibit D shall be written by responsible insurance companies authorized to
     ---------
do business in the State of California and with a Best's rating of not less than
"A" subject to final acceptance and approval by Landlord. Any insurance required
of Tenant may be furnished by Tenant under any blanket policy carried by it or
under a separate policy, so long as (i) the Premises are specifically covered
(by rider, endorsement or otherwise), (ii) the limits of the policy are
applicable on a "per location" basis to the Premises and provide for restoration
of the aggregate limits, and (iii) the policy otherwise complies with the
provisions of this Exhibit D. A true and exact copy of each paid up policy
                   ---------
evidencing the insurance (appropriately authenticated by the insurer) or a
certificate of insurance, certifying that the policy has been issued, provides
the coverage required by this Exhibit D and contains the required provisions,
                              ---------
shall be delivered to Landlord prior to the date Tenant is given the right of
possession of the Premises. Proper evidence of the renewal of any insurance
coverage shall also be delivered to Landlord not less than thirty (30) days
prior to the expiration of the coverage. Landlord may at any time, and from time
to time, inspect and/or copy any and all insurance policies required by this
Lease.

     5.   Each policy evidencing insurance required to be carried by Tenant
pursuant to this Exhibit D shall contain the following provisions and/or clauses
                 ---------
satisfactory to Landlord: (i) a provision that the policy and the coverage
provided shall be primary and that any coverage carried by Landlord shall be
noncontributory with respect to any policies carried by Tenant except as to
workers' compensation insurance; (ii) a provision including Landlord, the
Additional Insureds identified in Item 11 of the Basic Lease

 
Provisions, and any other parties in interest designated by Landlord as an
additional insured, except as to workers' compensation insurance; (iii) a waiver
by the insurer of any right to subrogation against Landlord, its agents,
employees, contractors and representatives which arises or might arise by reason
of any payment under the policy or by reason of any act or omission of Landlord,
its agents, employees, contractors or representatives; and (iv) a provision that
the insurer will not cancel or change the coverage provided by the policy
without first giving Landlord thirty (30) days prior written notice.

     6.   In the event that Tenant fails to procure, maintain and/or pay for, at
the times and for the durations specified in this Exhibit D, any insurance
                                                  ---------
required by this Exhibit D, or fails to carry insurance required by any
                 ---------
governmental authority, Landlord may at its election procure that insurance and
pay the premiums, in which event Tenant shall repay Landlord all sums paid by
Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord, within ten (10) days following
Landlord's written demand to Tenant.

                                      -2-

 
                                   EXHIBIT E
                                   ---------

                             RULES AND REGULATIONS

     This Exhibit sets forth the rules and regulations governing Tenant's use of
the Premises leased to Tenant pursuant to the terms, covenants and conditions of
the Lease to which this Exhibit is attached and therein made part thereof. In
the event of any conflict or inconsistency between this Exhibit and the Lease,
the Lease shall control.

     1.   Tenant shall not place anything or allow anything to be placed near
the glass of any window, door, partition or wall which may appear unsightly from
outside the Premises.

     2.   The walls, walkways, sidewalks, entrance passages, courts and
vestibules shall not be obstructed or used for any purpose other than ingress
and egress of pedestrian travel to and from the Premises, and shall not be used
for loitering or gathering, or to display, store or place any merchandise,
equipment or devices, or for any other purpose. The walkways, entrance
passageways, courts, vestibules and roof are not for the use of the general
public and Landlord shall in all cases retain the right to control and prevent
access thereto by all persons whose presence in the judgment of the Landlord
shall be prejudicial to the safety, character, reputation and interests of the
Building and its tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom Tenant normally deals in
the ordinary course of Tenant's business unless such persons are engaged in
illegal activities. No tenant or employee or invitee of any tenant shall be
permitted upon the roof of the Building.

     3.   No awnings or other projection shall be attached to the outside walls
of the Building. No security bars or gates, curtains, blinds, shades or screens
shall be attached to or hung in, or used in connection with, any window or door
of the Premises without the prior written consent of Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without the express written consent of Landlord.

     4.   Tenant shall not mark, nail, paint, drill into, or in any way deface
any part of the Premises or the Building. Tenant shall not lay linoleum, tile,
carpet or other similar floor covering so that the same shall be affixed to the
floor of the Premises in any manner except as approved by the Landlord in
writing. The expense of repairing any damage resulting from a violation of this
rule or removal of any floor covering shall be borne by Tenant.

     5.   The toilet rooms, urinals, wash bowls and other plumbing apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein. The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees or
invitees, caused it.

     6.   Landlord shall direct electricians as to the manner and location of
any future telephone wiring. No boring or cutting for wires will be allowed
without the prior consent of Landlord. The locations of the telephones, call
boxes and other office equipment affixed to the Premises shall be subject to the
prior written approval of Landlord.

     7.   The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the permitted use of the
Premises. No exterior storage shall be allowed at any time without the prior
written approval of Landlord. The Premises shall not be used for cooking or
washing clothes without the prior written consent of Landlord, or for lodging or
sleeping or for any immoral or illegal purposes.

     8.   Tenant shall not make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of this or neighboring
buildings or premises or those having business with them, whether by the use of
any musical instrument, radio, phonograph, noise, or otherwise. Tenant shall not
use, keep or permit to be used, or kept, any foul or obnoxious gas or substance
in the Premises or permit or suffer the Premises to be used or occupied in any
manner offensive or objectionable to Landlord or other occupants of this or
neighboring buildings or premises by reason of any odors, fumes or gases.

     9.   No animals shall be permitted at any time within the Premises.

     10.  Tenant shall not use the name of the Building or the Project in
connection with or in promoting or advertising the business of Tenant, except as
Tenant's address, without the written consent of Landlord. Landlord shall have
the right to prohibit any advertising by any Tenant which, in Landlord's
reasonable opinion, tends to impair the reputation of the Project or its
desirability for its intended uses, and upon written notice from Landlord any
Tenant shall refrain from or discontinue such advertising.

 
     11.  Canvassing, soliciting, peddling, parading, picketing, demonstrating
or otherwise engaging in any conduct that unreasonably impairs the value or use
of the Premises or the Project are prohibited and each Tenant shall cooperate to
prevent the same.

     12.  No equipment of any type shall be placed on the Premises which in
Landlord's opinion exceeds the load limits of the floor or otherwise threatens
the soundness of the structure or improvements of the Building.

     13.  No air conditioning unit or other similar apparatus shall be installed
or used by any Tenant without the prior written consent of Landlord.

     14.  No aerial antenna shall be erected on the roof or exterior walls of
the Premises, or on the grounds, without in each instance, the prior written
consent of Landlord. Any aerial or antenna so installed without such written
consent shall be subject to removal by Landlord at any time without prior notice
at the expense of the Tenant, and Tenant shall upon Landlord's demand pay a
removal fee to Landlord of not less than $200.00.

     15.  The entire Premises, including vestibules, entrances, doors, fixtures,
windows and plate glass, shall at all times be maintained in a safe, neat and
clean condition by Tenant. All trash, refuse and waste materials shall be
regularly removed from the Premises by Tenant and placed in the containers at
the locations designated by Landlord for refuse collection. All cardboard boxes
must be "broken down" prior to being placed in the trash container. All
styrofoam chips must be bagged or otherwise contained prior to placement in the
trash container, so as not to constitute a nuisance. Pallets may not be disposed
of in the trash container or enclosures. The burning of trash, refuse or waste
materials is prohibited.

     16.  Tenant shall use at Tenant' s cost such pest extermination contractor
as Landlord may direct and at such intervals as Landlord may require.

     17.  All keys for the Premises shall be provided to Tenant by Landlord and
Tenant shall return to Landlord any of such keys so provided upon the
termination of the Lease. Tenant shall not change locks or install other locks
on doors of the Premises, without the prior written consent of Landlord. In the
event of loss of any keys furnished by Landlord for Tenant, Tenant shall pay to
Landlord the costs thereof.

     18.  No person shall enter or remain within the Project while intoxicated
or under the influence of liquor or drugs. Landlord shall have the right to
exclude or expel from the Project any person who, in the absolute discretion of
Landlord, is under the influence of liquor or drugs.

          Landlord reserves the right to amend or supplement the foregoing Rules
and Regulations and to adopt and promulgate additional rules and regulations
applicable to the Premises. Notice of such rules and regulations and amendments
and supplements thereto, if any, shall be given to the Tenant.

                                      -2-

 
                                   EXHIBIT X
                                   ---------
 
                            INDUSTRIAL WORK LETTER

                               DOLLAR ALLOWANCE

The Tenant Improvement work (herein "Tenant Improvements") shall consist of any
work, including work in place as of the date hereof, required to complete the
Premises pursuant to the approved Working Drawings and Specifications (as
hereinafter defined). The Tenant Improvements shall not include the "Shell
Building Work" (as defined in Article III below). All of the Tenant Improvement
work shall be performed by the "Selected Contractor" (as hereinafter defined)
and in accordance with the procedures and requirements set forth below.

1.   ARCHITECTURAL AND CONSTRUCTION PROCEDURES.

     A.   Tenant and Landlord have approved prior to the execution of this
          Lease, both (i) a detailed space plan for the Premises dated November
          20, 1998 and consisting of Sheets PP1, PP2 and PP3, prepared by
          Landlord's architect, Ware & Malcolm Architects, Inc. ("Preliminary
          Plan"), and (ii) an estimate dated November 24, 1998, prepared by
          Landlord's contractor, Insignia/ESG of California, Inc., of the cost
          for which Landlord will complete or cause to be completed the Tenant
          Improvements ("Preliminary Cost Estimate").

     B.   Prior to the execution of this Lease, Tenant has provided in writing
          to Landlord or Landlord's architect all specifications and information
          requested by Landlord for the preparation of final construction
          documents and costing, including without limitation Tenant's final
          selection of wall and floor finishes, complete specifications and
          locations (including load and HVAC requirements) of Tenant's
          equipment, and details of all "Non-Standard Improvements" (as defined
          below) to be installed in the Premises (collectively, "Programming
          Information"). Tenant understands that final construction documents
          for the Tenant Improvements shall be predicated on the Programming
          Information, and accordingly agrees that such information provided to
          Landlord is accurate and complete.

     C.   Except as specified in the Preliminary Plan, the Tenant Improvements
          shall incorporate Landlord's building standard materials and
          specifications ("Standards") described with particularity in the
          Section entitled "Tenant Improvements" of that certain Outline
          Specifications and Project Description dated September 22, 1997 (the
          "Outline Specifications"). A copy of the Outline Specifications is
          attached as Exhibit X-1 hereto. No deviations from the Standards shall
          be permitted, provided that Landlord may, in its reasonable
          discretion, authorize in writing one or more of such deviations if
          requested by Tenant. Subject to the express provisions of Article II.A
          below, any excess cost of such deviations shall be part of "Tenant's
          Contribution" (as hereinafter defined). Notwithstanding anything to
          the contrary contained in the foregoing, Landlord shall in no event be
          required to approve any deviations from the Standards ("Non-Standard
          Improvements") if Landlord determines that such improvement (i) is of
          a lesser quality than the corresponding Standard, (ii) fails to
          conform to applicable governmental requirements, (iii) requires
          building services beyond the level normally provided to other tenants,
          (iv) would delay construction of the Tenant Improvements beyond the
          Estimated Commencement Date and Tenant declines to accept such delay
          in writing as a Tenant Delay, or (v) would have an adverse aesthetic
          impact from the exterior of the Premises.

     D.   Landlord's architect and engineers shall prepare and deliver to Tenant
          working drawings and specifications ("Working Drawings and
          Specifications") for the Tenant Improvements based on the Preliminary
          Plan not later than twenty (20) days following the execution and
          delivery of this Lease by both Landlord and Tenant. Tenant shall have
          three (3) business days from the receipt thereof to approve or
          disapprove the Working Drawings and Specifications. Tenant shall not
          unreasonably withhold or delay its approval, and any disapproval or
          requested modification shall be limited to items not contained in the
          approved Preliminary Plan or Preliminary Cost Estimate. Should Tenant
          disapprove the Working Drawings and Specifications, such disapproval
          shall be accompanied by a detailed list of revisions. Any revision
          requested by Tenant and reasonably accepted by Landlord shall be
          incorporated into a revised set of Working Drawings and
          Specifications, and Tenant shall approve same in writing within three
          (3) business days of receipt without further revision (provided said
          revised set of Working Drawings and Specifications complies with the
          applicable revision requested by Tenant and reasonably accepted by
          Landlord). Tenant's failure to comply in a timely manner with any of
          the requirements of this paragraph shall constitute a Tenant Delay.
          

 
          Without limiting the rights of Landlord for Tenant Delays as set forth
          herein, in the event Tenant has not approved the Working Drawings and
          Specifications within sixty (60) days following the date of this Lease
          for any reason other than the failure by Landlord to abide by the
          terms and conditions of this Work Letter, then Landlord may, at its
          option, elect to terminate this Lease by written notice to Tenant. In
          the event Landlord elects to effect such a termination, Tenant shall,
          within ten (10) days following demand by Landlord, pay to Landlord any
          costs incurred by Landlord in connection with the preparation or
          review of plans, construction estimates, price quotations, drawings or
          specifications under this Work Letter and for all costs incurred in
          the preparation and execution of this Lease, including any leasing
          commissions.

     E.   Upon Tenant's approval of the Working Drawings and Specifications,
          Landlord shall submit same both to the City of Irvine for plan check
          approval and to Turelk Construction Co. (the "Selected Contractor").
          The Selected Contractor shall competitively bid each of the major
          subtrades of the Tenant Improvement work with at least three (3)
          licensed and qualified subcontractors. Landlord shall also
          competitively bid the general contractor's fee and general conditions
          of the Tenant Improvements work with at least two (2) other licensed
          and qualified general contractors. Such bidding process shall be
          completed within ten (10) days following the request for bids, and
          Landlord shall notify Tenant of the Selected Contractor's final bid
          amount for the Tenant Improvements work (the "Bid Amount"). If the Bid
          Amount exceeds the Preliminary Cost Estimate, Landlord and Tenant
          shall cooperate in good faith, within three (3) business days
          thereafter, to "value engineer" the Tenant Improvements work to reduce
          the cost thereof. Upon completion of such process, Landlord shall
          execute a "fixed price" or "lump sum" construction contract with the
          Selected Contractor for the Bid Amount, as adjusted by any such "value
          engineering". Landlord shall cause the Tenant Improvements to be
          constructed in a good and workmanlike manner and substantially in
          accordance with the approved Working Drawings and Specifications (as
          modified by Changes approved by Landlord and Tenant). All materials
          and equipment furnished shall conform to such approved Working
          Drawings and Specifications and shall be of good quality. Landlord
          shall, promptly following notice from Tenant, rectify any
          noncompliance with the foregoing obligations at its sole cost and
          expense.

     F.   In the event that Tenant requests in writing a revision in the
          approved Working Drawings and Specifications ("Change"), Landlord
          shall advise Tenant by written change order as soon as is practical of
          any increase in the Completion Cost and/or any Tenant Delay such
          Change would cause. Tenant shall approve or disapprove such change
          order in writing within three (3) business days following its receipt
          from Landlord. Subject to the provisions for application of up to
          Ninety Thousand Dollars ($90,000.00) for Non-Standards contained in
          Article II.A below, if such Change either involves a Non-Standard
          Improvement acceptable to Landlord, or if such Change would result in
          the Completion Cost exceeding the Landlord's Contribution, then
          Tenant's approval of such Change shall be accompanied by Tenant's
          payment of any such increase in the Completion Cost. Landlord shall
          have the right to decline Tenant's request for a Change for any of the
          reasons set forth in Article I.C above for Landlord's disapproval of a
          Non-Standard Improvement. It is understood that Landlord shall have no
          obligation to interrupt or modify the Tenant Improvement work pending
          Tenant's approval of a change order.

     G.   Notwithstanding any provision in the Lease to the contrary, if Tenant
          fails to comply with any of the time periods specified in this Work
          Letter, fails otherwise to approve or reasonably disapprove any
          submittal within three (3) business days, fails to approve or
          disapprove in writing the Working Drawings and Specifications or the
          Final Cost Estimate within the time provided herein, requests any
          Changes, furnishes inaccurate or erroneous specifications or other
          information, or specifies materials that are not readily available
          (provided that Tenant was made aware by Landlord of the delay
          associated, or anticipated to be associated, with such Change or
          specification at the time of Tenant's request for such Change or
          materials) (any of the foregoing being referred to in this Lease as a
          "Tenant Delay"), then Tenant shall bear any resulting additional
          construction cost or other expenses, and the Commencement Date of this
          Lease shall be deemed to have occurred for all purposes, including
          Tenant's obligation to pay rent, as of the date Landlord reasonably
          determines that it would have been able to deliver the Premises to
          Tenant but for the collective Tenant Delays. In no event, however,
          shall such date be earlier than the Estimated Commencement Date set
          forth in the Basic Lease Provisions. Should Landlord determine that
          the Commencement Date should be advanced in accordance with the
          foregoing, it shall so notify Tenant in writing. Landlord's
          determination shall be conclusive unless Tenant notifies Landlord in
          writing, within five (5) days thereafter, of Tenant's election to
          contest same by arbitration with JAMS pursuant to

                                      -2-

 
          Section 22.7 of the Lease. Pending the outcome of such arbitration
          proceedings, Tenant shall make timely payment of all rent due under
          this Lease based upon the Commencement Date set forth in the aforesaid
          notice from Landlord.

     H.   Landlord shall permit Tenant and its agents to enter the Premises
          prior to the Commencement Date of the Lease in order that Tenant may
          perform any work to be performed by Tenant hereunder through its own
          contractors, subject to Landlord's prior written approval, and in a
          manner and upon terms and conditions and at times satisfactory to
          Landlord's representative. The foregoing license to enter the Premises
          prior to the Commencement Date is, however, conditioned upon Tenant's
          contractors and their subcontractors and employees working in harmony
          and not interfering with the work being performed by Landlord. If at
          any time that entry shall cause disharmony or interfere with the work
          being performed by Landlord, this license may be withdrawn by Landlord
          upon twenty-four (24) hours written notice to Tenant. That license is
          further conditioned upon the compliance by Tenant's contractors with
          all requirements imposed by Landlord on third party contractors,
          including without limitation the maintenance by Tenant and its
          contractors and subcontractors of workers' compensation and public
          liability and property damage insurance in amounts and with companies
          and on forms satisfactory to Landlord, with certificates of such
          insurance being furnished to Landlord prior to proceeding with any
          such entry. The entry shall be deemed to be under all of the
          provisions of the Lease except as to the covenants to pay rent. Except
          to the extent of the active negligence or willful misconduct of
          Landlord, or its authorized agents, contractors or employees, Landlord
          shall not be liable in any way for any injury, loss or damage which
          may occur to any such work being performed by Tenant, the same being
          solely at Tenant's risk. In no event shall the failure of Tenant's
          contractors to complete any work in the Premises extend the
          Commencement Date of this Lease beyond the date that Landlord has
          completed its Tenant Improvement work and tendered the Premises to
          Tenant.

     I.   Tenant hereby designates John Ham, Telephone No. (510) 770-8787, as
          its representative, agent and attorney in-fact for the purpose of
          receiving notices, approving submittals and issuing requests for
          Changes, and Landlord shall be entitled to rely upon authorizations
          and directives of such person(s) as if given directly by Tenant.
          Tenant may amend the designation of its construction representative(s)
          at any time upon delivery of written notice to Landlord.

II.  COST OF TENANT IMPROVEMENTS.
     ---------------------------

     A.   Landlord shall complete, or cause to be completed, the Tenant
          Improvements, at the construction cost shown in the Bid Amount
          (subject to the provisions of this Work Letter), in accordance with
          final Working Drawings and Specifications approved by both Landlord
          and Tenant. Landlord shall pay towards the "Completion Cost" (as
          hereinafter defined) as incurred a maximum of One Million Ninety
          Thousand Dollars ($1,090,000.00) ("Landlord's Contribution"), based on
          $7.408 per square foot of the Premises, provided that in the event
          that Standards (or Non-Standards approved by Landlord) incorporated
          into the Tenant Improvement work shall increase the Completion Cost,
          such increase (not to exceed Two Hundred Thousand Dollars
          [$200,000.00] in the aggregate) shall be amortized at an interest
          factor of twelve percent (12%) per annum over the initial forty-eight
          (48) months of the Term, Tenant's Basic Rent shall be so increased by
          said amortized amount for the initial forty-eight (48) months of the
          Term (and Landlord and Tenant shall execute a memorandum prepared by
          Landlord and reasonably acceptable to Tenant confirming said increase
          in the Basic Rent), and the Landlord's Contribution shall be deemed to
          include any such increase. Tenant shall be fully responsible for the
          remainder of the Completion Cost ("Tenant's Contribution"). Landlord's
          Contribution shall only be used for construction and installation of
          Standards incorporated into the approved Working Drawings and
          Specifications, except that: (i) Tenant shall have the right to apply
          up to, but not exceeding, Ninety Thousand Dollars ($90,000.00) of the
          Landlord's Contribution towards the cost of overtime payments to the
          Selected Contractor and for the costs of Changes for any Non-Standards
          Improvements approved by Landlord and incorporated in the Tenant
          Improvement work. In the event the Completion Cost is less than the
          Landlord's Contribution, Tenant may apply such difference towards the
          cost of any alterations to the Premises, conforming to Landlord's
          Standards and approved by Landlord pursuant to Section 7.3, which
          alterations shall be constructed by Tenant within six (6) months
          following the Commencement Date.

     B.   The Completion Cost shall mean the following: (i) payments made to
          architects, engineers and other third party consultants in connection
          with the preparation of the Preliminary Plan and Working Drawings and
          Specifications, (ii) permit fees and other sums paid to

                                      -3-

 
          governmental agencies, and (iii) costs of all labor and materials for
          construction of the Tenant Improvement work in accordance with the
          approved Working Drawings and Specifications. The Completion Cost
          shall also include an administrative/supervision fee to be paid to
          Landlord or to Landlord's management agent in the amount of five
          percent (5%) of all such costs. Landlord, at its sole cost and
          expense, shall be responsible for and the Completion Cost shall not
          include (and Tenant shall have no responsibility for and Landlord's
          Contribution shall not be used for) the following: (a) costs
          attributable to the "Building Shell Work" defined below; (b) costs
          incurred to remove Hazardous Materials from the Premises or the
          Project; (c) attorneys' fees incurred in connection with negotiation
          of construction contracts, and attorneys' fees, experts' fees and
          other costs in connection with disputes with third parties; (d)
          interest and other costs of financing construction costs; (e) costs
          incurred as a consequence of delay (unless the delay is a "Tenant
          Delay" as herein defined), construction defects or default by the
          Selected Contractor; (f) costs recoverable by Landlord upon account of
          warranties and insurance; (g) restoration costs in excess of insurance
          proceeds as a consequence of casualties; (h) penalties and late
          charges attributable to Landlord's failure to pay construction costs;
          and (i) costs for which Landlord is responsible as provided in Section
          2.4 of the Lease.

     C.   Tenant shall pay to Landlord the amount of the Tenant's Contribution
          estimated by Landlord ("Landlord's Final Estimate") following the
          final bidding of the Tenant Improvement work and the execution of the
          construction contract with the Selected Contractor, as follows: (i)
          fifty percent (50%) of the Tenant's Contribution prior to the start of
          construction, and (ii) fifty percent (50%) within ten (10) days
          following notice from Landlord that the Tenant Improvements work has
          been substantially completed. If the actual Completion Cost of the
          Tenant Improvements is greater than the Landlord's Final Estimate
          because of Changes, or because of Tenant Delays, then Tenant shall be
          responsible for all such additional costs; otherwise, Landlord shall
          be responsible for such additional costs. The balance of any sums not
          otherwise paid by Tenant shall be due and payable on or before the
          Commencement Date of this Lease. If Tenant defaults in the payment of
          any sums due under this Work Letter, Landlord shall (in addition to
          all other remedies) have the same rights as in the case of Tenant's
          failure to pay rent under the Lease.

III. SHELL BUILDING WORK.
     -------------------

     Landlord shall complete, or cause to be completed at its sole cost and
     expense, the shell Building work as described with particularity in those
     Sections entitled "Site Work" and "Building Shell" in the Outline
     Specifications attached as Exhibit X-1 hereto, and the lobby and core
                                -----------
     improvements as described with particularity in the Section entitled
     "Lobby/Core Improvements" in the Outline Specifications attached as Exhibit
                                                                         -------
     X-1 hereto for the lobby and core to be constructed in the northeast corner
     ---
     of the Building (collectively, the "Building Shell Work"). The Building
     Shell Work shall be constructed in a good and workmanlike manner. All
     materials and equipment furnished shall conform to the Outline
     Specifications (except to the extent that Landlord shall otherwise
     reasonably determine), and shall be of good quality. Landlord shall,
     promptly following notice from Tenant, rectify any noncompliance with the
     foregoing obligations at its sole cost and expense.

                                      -4-

 
                 OUTLINE SPECIFICATION AND PROJECT DESCRIPTION

                            MANUFACTURING BUILDINGS
                           JAMBOREE BUSINESS CENTER

                              THE IRVINE COMPANY

                              September 22, 1997

In addition to the Project Data and information provided on the attached
drawings sheets, the following should be considered:

                                   Site Work
                                   ---------
Utilities
---------

         a)    Underground storm drain system including catch basins, man holes,
               and connections.
         b)    Interior roof drains at front of building, sheet metal downspouts
               at rear of building.
         c)    Connect sewer from building to street. Include clean outs.
         d)    Install electrical transformer on pad and connect underground
               conduits to building.
         e)    Provide for telephone connection to the street with underground
               conduits between buildings.
         f)    Provide for underground natural gas to face of building.
         g)    Provide metered domestic building water connection to the street.
               Include separate metered water connection for on-site landscape
               irrigation.
         h)    Provide underground fire line/fire sprinkler water system
               including detector check assembly, fire hose connections, post
               indicator valves, fire hydrants, and main service into the site
               per local fire authority requirements.

Site Concrete
-------------

         a)    Provide concrete curbs, gutters and swales, in accordance with
               standards of the local municipality.
         b)    Provide handicapped access curb ramps with 12" wide grooved
               warning strips, non slip surface and slopes, crossfall and side
               slopes per code.
         c)    Construct new driveway entrances per city standards including off
               site work to patch as required.
         d)    Construct 6" reinforced concrete trucking pad as shown with
               sealed expansion joints at approximately 24' on center and
               intermediate sawcut control joints. Broom finish. Reinforcement
               as recommended by Geotechnical report.
         e)    Construct 6" reinforced truck ramps and ramp walls. Ramp walls
               may be tilt-up construction. Provide expansion joints, control
               joints, broom finish. Paint walls to match building.
         f)    Construct exit stairs as shown of tilt-up construction and
               reinforced concrete steps. Paint walls.

Site Lighting
-------------

         a)    Provide high  pressure  sodium shoe box wall  mounted  cut-off
               light fixtures  mounted on the building to meet City of Irvine
               and Irvine Spectrum lighting foot-candle requirements.
         b)    Provide  additional  pole mounted high pressure sodium cut-off
               light  fixtures  around the site to achieve  minimum  lighting
               levels per city security  ordinance  throughout site. Mount on
               2' height concrete footing base.

Hardscape
---------

         a)    Construct building entry plaza and lunch patio with textured
               concrete finish on 4" concrete slab. Provide 1/2" sealed
               expansion joints spaced apart as recommended by Geotechnical
               report.
         b)    Construct 4" concrete walks over sand base with score line and
               expansion joints spaced apart as recommenced by Geotechnical
               report, slab to be finished with medium salt or accent finish.

AC Paving
---------

         a)    Provide standard paving over base at parking stalls and drive
               aisles to be used only by cars as recommended by Geotechnical
               report.

 
         b)    Provide heavier duty paving over base at drive aisles which will
               be used by trucks as recommended by Geotechnical report.
         c)    Paving to be finished smooth with no sealer.

Striping & Signage
------------------

         a)    Provide city standard parking lot striping double striped with
               compact and carpool stall identification.
         b)    Stripe handicapped stalls with loading zone stripes and
               handicapped symbol per code.
         c)    Provide other site signage for handicapped and accessibility
               directions as required, as well as other required surface
               markings and curb painting.

                                Building Shell
                                --------------
Concrete Slab
-------------

         a)    Warehouse slab shall be 6" thick reinforced with wire mesh or re-
               bars over gravel base for 3,000 psi strength. Reinforcement and
               base as recommended by Geotechnical report. Provide control
               joints throughout. Control joints may be sawcut if completed
               within twenty four hours of the pour.
         b)    Office area slab shall be 6" thick reinforced over base and sand
               with visqueen vapor barrier centered in sand. Reinforcement, base
               and sand thickness as recommended by Geotechnical report.

Columns/Structural Frames
-------------------------

         a)    Standard section tube, pipe, or H steel roof and mezzanine
               columns full height with welded plates and connectors to accept
               floor and/or roof framing structure.
         b)    Standard section tube or H steel braced "K" frames as needed for
               lateral resistance.

Roof Structure
--------------

         a)    Steel carrying girders with continuous connectors and shear
               straps as needed. 30' clear height.
         b)    Steel trusses at 8' o.c. with steel connectors, straps and       
               bracing.
         c)    Panelized roof with 2 x 4 sub purlins at 24" o.c. and 1/2"
               structural grade OSB sheathing over Warehouse areas and 2 x 6
               purlins over office areas.
         d)    Provide supports and blockouts for roof mounted equipment,
               skylights, roof access hatch and roof drains per structural
               engineer's recommendation.

Roof Finish
-----------

         a)    4-ply built up fiberglass roof system (10 year warranty) complete
               with fiber cants, cap sheet, walking pads, and base flashing.

Smokehatch Skylights
--------------------

         a)    Provide 4' x 8' vented skylight smoke hatches with integral curb
               by Bristolite or equal 2% coverage of warehouse area.
         b)    Smokehatch skylight units shall have acrylic domes, and shall be
               double domed burglar resistant or outfitted with security
               bars, as required by local municipality.

Warehouse Curtains
------------------

         a)    Provide separations to 50,000 SF.
         b)    6' deep measured from underside of roof sheathing. Smoke curtains
               made of 1/2" gyp. board on drywall frame or corrugated sheet
               metal with top and bottom angle stiffener. Seal all penetrations.

Walls
-----

         a)    7 1/2" thick concrete tilt-up full height and extended 18" below
               finish floor. Walls to be 5' below finished floor at trucking pad
               and elsewhere as indicated on grading and structural plans. Walls
               may be thicker at panels with openings and at shear wall panels,
               or may be thicker per structural engineer's requirements.
         b)    Add reinforcing steel for future expansion knock-outs as
               indicated.
 
                                      -2-

 
         c)    Include 3/4" deep integral reveals and feature recessed wall
               panel areas at exterior side.
         d)    The exterior side of wall panels shall be sacked and patched as
               necessary to result in a smooth, uniform painted surface.
               Patching and sacking will also be performed on the edges and
               interior surfaces of door and window openings, and any accents or
               reveals to provide the same smooth, uniform painted surface as
               the exterior walls.
         e)    Interior shell walls to be 3 5/8" wide 25 gauge or 6" wide / 16
               gauge steel studs as required at 24" o.c. or 2 x wood studs at
               16" o.c. where indicated.

Fire Sprinkler
--------------

         a)    Provide separate zoned system as best suited for this size and
               type of building.
         b)    Provide .45 / 3,000 SF density system throughout entire warehouse
               area. (ESFR Ready).
         c)    Sprinkler spacing in warehouse designed for future ESFR.
         d)    Provision on site for future ESFR pump location.
         e)    Ceiling drops into lobbies or care restrooms shall be fitted with
               adjustable nipples to allow for future adjustment.
         f)    Ceiling drops into tenant improved areas by tenant.

Footings
--------

         a)    Perimeter walls and interior shear walls to be supported by
               continuous type concrete footings. Step as necessary to conform
               with exterior finish grades.
         b)    Interior columns to be supported on concrete spread pad footings.
         c)    Dry pack under all walls and base plates.

Misc. Steel
-----------

         a)    Provide channel or double angle truck door jambs to 4' height and
               angle sill edge at all truck doors.
         b)    Trellis to have structural steel perimeter members and perforated
               metal panel in-fill, painted finish.
         c)    Provide roof access ladder and roof hatch.

Windows
-------

         a)    Provide 2" x 4 1/2" aluminum store front mullion system, front
               glazed with wallboard adapters at perimeter walls; Kynar or
               Duranar finish.
         b)    Glazing to be 1/4" Tinted Reflective Glass by Spectrum, Guardian,
               PPG or equal.
         c)    Tempered glass at entry doors and elsewhere per code. Provide
               spandrel glazing at shear wall and between floor space, where
               occurs.

Man Doors
---------

         a)    Provide 3' x 7' 18 ga. hollow metal doors and frames at all
               warehouse perimeter doors. Provide drip at top exterior. Paint
               finish.
         b)    Hardware to include 3 ball bearing hinges, lever action exit from
               interior, key only from exterior, door stop, self closure,
               threshold and seals.

Truck Doors
-----------

         a)    Grade level truck doors to be 2 part vertical lift type with
               painted finish. Designed for 20 lb. wind load. Manually operated.
               Provide minimum air infiltration seals and locks.
         b)    Dock high truck doors to be overhead sectional lift type with
               painted finish. Designed for 20 lb. wind load. Manually operated.
               Provide minimum air infiltration seals and locks.

Entry Doors
-----------

         a)    Pair 3' x 9' narrow stile aluminum entrance doors with 1/4"
               tempered glass.
         b)    Provide door hardware including recessed floor closer, panic
               hardware, key entry, threshold, and pulls.

Glass Exit Doors
----------------

         a)    3' x 9' narrow stile aluminum entrance door with l/4" tempered
               reflective glass.
         b)    Provide door hardware including overhead closer, panic hardware,
               threshold, seals, and key entry.

                                      -3-

 
Mezzanine Floor
---------------

         a)    Steel wide flange support beams with 3x wood plates.
         b)    Wood TJI solid web trusses maximum 20" deep with end hangers and
               cross bracing.
         c)    3/4" structural plywood subfloor.
         d)    1" thick gypsum concrete floor fill.
         e)    Provide all anchors, ties, straps, and block outs for ducts as
               needed.
         f)    Design load of floor to be 80 lb. reduced live load plus 20 1b.
               partition load.

Stairs
------

         a)    Wood framed stair construction with 2 x 16 cut stringers at 12"
               o.c. and 3/4" plywood over treads and risers. Treads / risers
               shall be glued and nailed to each stringer. Platform framed
               landings.
         b)    Enclosure walls to be wood studs of 1-hour rated construction to
               roof with Type "X" gyp. board finish each side.

Electrical / Communications
---------------------------

         a)    Service to building will be 277/480 volt, three phase, four wire.
         b)    1200 amp 480 volt 3 phase 4 wire future service provided for,
               with additional conduit stubs for future upgrades. (Switchgear
               and tenant panels installed as part of the tenant improvement
               scope of work).
         c)    Transformer on grade with bus duct per electric utility purveyor.
         d)    House meter installed to separately meter common interior and
               exterior electrical usage.
         e)    PacBell service conduits provided to telephone backboard in main
               electrical room at each building. Fiber optic service available
               to site.
         f)    2 - 2" conduits provided to each building for future third party
               telephone service use.
         g)    1 - 4" conduit between buildings for future inter-building
               communications.

Dock Equipment
--------------

         a)    Provide a pair of rubber dock bumpers 10" x 11" x 6" thick at
               each dock high door.

                           Lobby / Core Improvements
                           -------------------------
Wall Framing
------------

         a)    25 gauge steel studs at 24" o.c. with top and bottom tracks and
               screw connections. 3-5/8" throughout except 6" at some plumbing
               walls. Provide wood studs at stairwell walls.
         b)    Use 2 1/2" furring at all improved area concrete exterior walls
               and all improved area columns to 6" above finish ceiling height.
         c)    Provide R-11 Fiberglass Batt insulation at exterior concrete
               walls within furring space; full height in improved areas and
               restroom walls where indicated.

Ceiling
-------

         a)    Use light gauge steel studs or steel channels at solid drywall
               ceilings in lobby/core and restrooms, etc., 6" deep at 24" o.c.
               or as needed per span. Provide bracing. Gypsum board ceilings at
               lobby/core and restrooms to be painted per finish schedule, with
               color to match standard wall color.

Insulation
----------

         a)    Provide R-19 fiberglass batt insulation above ceiling or at the
               underside of roof structure directly over improved areas, and as
               required per acoustical analysis recommendations.

Drywall
-------

         a)    5/8" drywall throughout all interior walls and over furring at
               improved area exterior walls.
         b)    Type "X" drywall all corridor walls, lobby walls, columns at
               lobby and corridors.
         c)    Type "X" drywall at 1-hour rated roof/ceiling at lobby, stair
               wells and 1-hour rated floor/ceiling at lobby balconies.
         d)    Use 5/8" greenboard at restrooms and janitor rooms.

                                      -4-

 
         e)    All drywall at lobbies to receive painted finish of one standard
               color. Color options:
                    a.   Benjamin Moore #960
                    b.   Frazee #484.

Carpet
------

         b)    Provide Bentley Mills "Pebble Point" textured loop carpeting at
               building entry lobbies. Color options:
                    a.   PB32B-6624 Bone
                    b.   PB32B-6636 Kestrel
                    c.   PB32B-6622 Ash Green
                    d.   PB32B-6632 Graywood

Tile
----
         a)    Provide 2" x 2" ceramic tile on thin set at all rest room floors;
               slope to floor drain. Color: Daltile "Almond" DK-35.
         b)    Provide 4" x 4" full height glazed ceramic tile at all wet walls
               in restroom - Daltile Almond.

Doors
-----

         a)    Provide solid core 1-3/4", 3' x 9' plastic laminate, Formica 
               #757-58 Golden Oak - Matte finish. Timely steel frame, CC404
               Nickel finish.
         b)    Provide 20 minute rating for all corridor doors.

Finish Hardware
---------------

         a)    Schlage "L" series dull chrome finish hardware throughout.
               Provide 3 ball bearing hinges, hardware stops, silencers, and
               concealed auto flush bolts for pairs.
         b)    Provide panic hardware at all rated doors to corridors, etc.
         c)    Provide kick plates, push pulls and handicapped signage at
               restrooms.

Toilet Compartments
-------------------

         a)    Standard height floor mounted overhead braced metal toilet
               partitions throughout all restrooms by Global Steel Products
               Corporation Spectra 21 or equal. Baked enamel color to be Glogard
               #2103 Almond.

Toilet Rooms
------------

         a)    Standard accessories for toilet paper, trash, seat covers,
               feminine napkins, soap, mirrors, etc. by Bobrick or equal for all
               restrooms. Recessed and semi-recessed.
         b)    Plastic laminate lavatory top with self-rimming porcelain sink
               (s) - Nevamar MR-7-1T.
         c)    Vision quality mirrors above lavatories, full width and height to
               ceiling, one mirror per toilet room.

Cabinets
--------

         a)    All restrooms to have lavatory counters/splashes with angle
               supports and laminated plastic finish.
         b)    Plastic laminate finish options:
                    a.   Nevamar. Spa White, Textured #S-7-48T
                    b.   Nevamar, Smoky White, Textured #S-7-27T

Paint
-----
         a)    All surfaces shall be painted unless noted to be finished
               otherwise.
         b)    A standard spec. for paint such as by Frazee or Benjamin Moore
               shall be followed for all types of surfaces and conditions.

HVAC
----
         a)    Rooftop package units as required for lobby/core and restroom
               areas. Units shall be mounted on factory supplied steel curbs, or
               shall be mounted on curbs constructed per structural engineer's
               recommendation, and a full sheet metal cap. All sides of curbs
               shall be provided with fiber cant strips prior to roofing or re-
               roofing.

                                      -5-

 
         b)    Thermostats set points 55(degree)F, control heating no more than
               70(degree)F and cooling not less than 78(degree)F.
         c)    Ceiling supply and return diffusers, perforated face in 2x4
               ceiling grid.
         d)    Exhaust fans provided at all restrooms and mechanical rooms,
               controlled by timer in electrical room.
         e)    Roof loading criteria 1,600 lbs. at first 1/3 of truss spans. No
               more than one unit at every other truss at each end of truss.

Lighting
--------
         a)    Double switch per Title 24, paired in double gang box, white
               plastic cover, 42" AFF. to switch centerline. 2x4 fluorescent
               fixture with prismatic lens. Provide parabolic lens at lobby/core
               fixtures.
         b)    Exit signs to be internally illuminated, brushed stainless steel
               face.

Outlets
-------
         a)    Power: 15 amps 125 volt specification grade duplex receptacle
               mounted vertically. 15" AFF. to centerline, white plastic
               coverplate.
         b)    Telephone: Single gang box with mud ring and pull string, mounted
               vertically, 15" AFF. to centerline, coverplate by telephone
               company. Conduit to grid.

Elevator (Optional)
-------------------

         a)    Two stop 2,500 lb. Capacity hydraulic passenger elevator with
               standard finished cab, finished elevator shaft, elevator
               equipment and necessary mechanical/electrical devices associated
               with the installation.

Fire Sprinkler / Protection
---------------------------

         a)    Provide standard office type system at lobby/core areas. Semi-
               recessed heads, chrome finish. b) Provide fire extinguishers and
               fire extinguisher cabinets as required by fire department.

                              Tenant Improvements
                              -------------------  
Wall Framing
------------

         a)    25 gauge steel studs at 24" o.c. with top and bottom tracks and
               screw connections. 3-5/8" throughout except 6" at some plumbing
               walls. Provide wood studs at stairwell walls.
         b)    Use 2 1/2" furring at all office area concrete exterior walls and
               all office area columns to 6" above finish ceiling height.
         c)    Provide R-11 Fiberglass Batt insulation at exterior concrete
               walls within furring space; full height in office improved areas
               and restroom walls where indicated.

Ceiling
-------
         a)    2' x 4' suspended ceiling grid system in standard white finish by
               Donn or equal. Include all seismic anchors, compression struts
               and diagonal wires per code.
         b)    2' x 4' Armstrong Minaboard Cortega White lay-in tile in 9/16" T-
               bar grid.

Insulation
----------

         a)    Provide R-19 fiberglass batt insulation above ceiling or at the
               underside of roof structure directly over improved tenant office
               areas, and as required per acoustical analysis recommendations.

Drywall
-------

         a)    5/8" drywall throughout all interior walls and over furring at
               office area exterior walls.
         b)    Type "X" drywall all corridor walls, lunch room walls, and
               conference room walls.
         c)    Type "X" drywall at 1-hour rated roof/ceiling at stair wells and
               conference room, and 1-hour rated floor/ceiling at conference
               room.
         d)    Use 5/8" greenboard at restrooms and janitor rooms.
         e)    All drywall at lobbies to receive painted finish of one standard
               color. Color options:
                    a.   Benjamin Moore #960
                    b.   Frazee #484.

                                      -6-

 
Carpet
------

         a)    Provide Designweave 971 Tempest Classic - direct glue down carpet
               at standard office areas, and corridors as indicated on the
               finish schedule. Color options:
                    a.   836 "Graphite"
                    b.   226 "Buckwheat"
                    c.   236 "Sable"
                    d.   968 "Silverwing"
                    e.   967 "Platinum"

Vinyl Flooring & Base
---------------------

         a)    Provide 12 x 12 VCT Mannington Essentials. Color options:
                    a.   129 Putty
                    b.   131 Oyster White
                    c.   112 Pewter
                    d.   122 Glacier where indicated in the finish schedule.
                         Include carpet edge trim.
         b)    Provide rubber stair treads at exit stair well stairs.
         c)    Provide 2 1/2" Burke rubber base at all walls.  Color options:
                    a.   "Pearl" 137P
                    b.   "Bluish White" 168P. Provide rubber stair base at all
                         stairs.

         Note: Coordinated Office Tenant Improvement finishes to be per the
following grid:

 
                 
           ------------------------------ ------------------------- ---------------------------------
                      Carpet                     a, b or e                       d or e
           ------------------------------ ------------------------- ---------------------------------
                        VCT                        a or b                        c or d
           ------------------------------ ------------------------- ---------------------------------
                       Paint                         a                             b
           ------------------------------ ------------------------- ---------------------------------
                       Base                          a                             b
           ------------------------------ ------------------------- ---------------------------------
                     P. Lam.                         a                             b
           ------------------------------ ------------------------- ---------------------------------
Doors ----- a) Provide solid core 1-3/4", 3' x 9' plastic laminate, Formica #757-58 Golden Oak - Matte finish. Timely steel frame. CC404 Nickel finish. b) Provide 20 minute rating for all corridor doors. Finish Hardware --------------- a) Schlage "L" series dull chrome finish hardware throughout. Provide 3 ball bearing hinges, hardware stops, silencers, and concealed auto Rush bolts for pairs. b) Provide panic hardware at all rated doors to corridors, etc. c) Provide kick plates, push pulls and handicapped signage at restrooms. Cabinets -------- a) Coffee bar to have 8 lineal feet of plastic laminate faced upper and lower cabinets, flush overlay custom grade design with single stainless steel sink and garbage disposal at one location per tenant, adjacent to restrooms and / or building waste line. b) Plastic laminate finish options: a. Nevamar, Spa White, Textured #S-7-48T b. Nevamar, Smoky White, Textured #S-7-27T Miniblinds ---------- a) All exterior windows to have standard Meriak Industries PVC vertical blinds throughout. Paint ----- a) All surfaces shall be painted unless noted to be finished otherwise. b) A standard spec. for paint such as by Frazee or Benjamin Moore shall be followed for all types of surfaces and conditions. c) Eggshell wall paint finish at standard offices. a. Benjamin Moore #960 b. Frazee #484 City Lights d) Semi-gloss at lunch room, restrooms, storage rooms or as otherwise noted. -7- HVAC ---- a) Rooftop package units as required for improved areas. Units shall be mounted on factory supplied steel curbs, or shall be mounted on curbs constructed per structural engineer's recommendation, and a full sheet metal cap. All sides of curbs shall be provided with fiber cant strips prior to roofing or re-roofing. b) Thermostats set points 55(degree)F, control heating no more than 70(degree)F and cooling not less than 78(degree)F. c) Ceiling supply and return diffusers, perforated face in 2x4 ceiling grid. d) Exhaust fans provided at all restrooms and mechanical rooms, controlled by timer in electrical room. e) Roof loading criteria 1,600 lbs. at first 1/3 of truss spans. No more than one unit at every other truss at each end of truss. Office Lighting --------------- a) Double switch per Title 24, paired in double gang box, white plastic cover, 42" AFF. to switch centerline. 2x4 fluorescent fixture with prismatic lens. b) Exit signs to be internally illuminated, brushed stainless steel face. Electrical ---------- a) Electrical switchgear and tenant panels installed as part of tenant improvements. b) Power: 15 amps 125 volt specification grade duplex receptacle mounted vertically, 15" AFF. to centerline, white plastic coverplate. c) Telephone: Single gang box with mud ring and pull string, mounted vertically. 15" AFF. to centerline, coverplate by telephone company. Conduit to grid. Fire Sprinkler/ Protection -------------------------- a) Provide standard office type system at office areas. Semi- recessed heads, chrome finish. b) Provide fire extinguishers and fire extinguisher cabinets as required by fire department. Warehouse Curtains ------------------ a) Provide separations to 10,000 SF or as required by fire department. b) 6' deep measured from underside of roof sheathing. Smoke curtains made of l/2" gyp. board on drywall frame or corrugated sheet metal with top and bottom angle stiffener. Seal all penetrations. Warehouse Lighting ------------------ a) 400 w. metal halide aluminum high bay fixtures for 20 fc general warehouse lighting. b) Exit signs to be internally illuminated, brushed stainless steel face. Dock Equipment -------------- a) Recessed mechanical dock levelers (25,000 lb. capacity) as manufactured by Kelley Dock Systems or equal. Mechanical Screen ----------------- a) Vertical-ribbed corrugated metal siding equipment screen (size as indicated) attached to steel angle frames, and braced to roof. Paint to match building panels. Concrete Slab Finishes ---------------------- a) Warehouse area slabs to be sealed with "Cementone" clear water- based concrete sealer as manufactured by L.M. Scofield Company. b) Warehouse floor joints/sawcuts shall be filled with Chemtron CP- 2010 joint filler as manufactured by Chemtron Polymers, Inc., Lynnwood, WA. -8- EXHIBIT Y [Project Site Plan] GUARANTEE OF LEASE ------------------ ARTICLE I. PARTIES The undersigned, KOREA DATA SYSTEMS (AMERICA), INC., a California corporation (hereinafter, "GUARANTOR"), whose address is hereinafter set forth, as a material inducement to and in consideration of THE IRVINE COMPANY, a Delaware corporation, (hereinafter "LANDLORD") entering into a written lease, (hereinafter, the "Lease") with E-MACHINE, INC., a California corporation, (hereinafter "TENANT"), of approximately even date herewith, for lease of that certain space located at 14350 Myford Road, Irvine, California and more particularly described in the Lease, to which this Guarantee of Lease (the "Guarantee") shall be attached and made a part, pursuant to the provisions of this Guarantee unconditionally guarantees and promises to and for the benefit of LANDLORD full payment and performance of each and all of the terms, covenants and conditions of the Lease by TENANT, all as more specifically set forth hereinafter. ARTICLE II. GUARANTOR'S DUTIES Section 2.1. Guarantee of TENANT's Performance ----------------------------------------------- GUARANTOR hereby unconditionally guarantees to LANDLORD the full and complete performance of each and all of the terms, covenants and conditions of the Lease as required to be performed by TENANT, including, but not limited to, the payment of all rental, property taxes, insurance premiums, and any and all other charges or sums, or any portion thereof, to accrue or become due from TENANT to LANDLORD pursuant to the terms of the Lease. Section 2.2. TENANT's Failure to Perform ---------------------------------------- 2.2.1 Payment of Rental and Other Sums. In the event that TENANT shall -------------------------------- be in Default of its obligations under the Lease to pay any rental, property taxes, insurance premiums, or any other sums or charges, or any portion thereof, accrued or due pursuant to the terms of said Lease, then within fifteen (15) days following written notice to GUARANTOR by LANDLORD as herein provided, GUARANTOR shall, by certified or cashier's check, or in such other manner as LANDLORD may demand, pay to LANDLORD or LANDLORD's designated agent any and all such amounts as may be due and owing from TENANT to LANDLORD by reason of TENANT's Default. 2.2.2 Other Provisions. In the event that TENANT shall be in Default ---------------- of its obligations under the Lease to perform any covenants, terms or conditions of the Lease as required to be performed, other than as provided for in Section 2.2.1 above, then upon written notice to GUARANTOR by LANDLORD, as provided herein, GUARANTOR shall commence and complete performance of such conditions, covenants and terms within fifteen (15) days after the date of LANDLORD's notice to GUARANTOR of such Default by TENANT to so perform, and in the event such performance by GUARANTOR cannot be completed within said fifteen (15) days, GUARANTOR shall commence performance within said time and shall diligently pursue completion thereof within a reasonable time duly set forth hereinafter. Section 2.3. Statements of GUARANTOR. GUARANTOR SHALL __________ LANDLORD, ------------------------------------ prior to the execution of this Guarantee and thereafter at any time upon Landlord's request of GUARANTOR's current tax returns and financial statements, certified true, accurate and complete by the chief financial officer of GUARANTOR, including a balance sheet and profit and loss statement for the most recent prior year (collectively, the "Statements"), which Statements shall accurately and completely reflect the financial condition of GUARANTOR. LANDLORD agrees that it will keep the Statements confidential, except that LANDLORD shall have the right to deliver the same to any proposed purchaser or encumbrancer of the premises described in the Lease (provided that LANDLORD shall require that any such proposed purchaser keep such Statements confidential, and shall request that any such encumbrancer keep such Statements confidential). ARTICLE III. LANDLORD'S RIGHTS Section 3.1. Enforcement ------------------------ Notwithstanding the provisions of Section 2.2.1 above, LANDLORD reserves the right, in the event of any failure of TENANT to pay rental, property taxes, insurance premiums and other sums which may become due and owing pursuant to the terms of the Lease, to proceed against TENANT or GUARANTOR, or both, and to enforce against GUARANTOR or TENANT, or both, any and all rights that LANDLORD may have to said rental, property taxes, insurance premiums and other sums accrued pursuant to the terms of the Lease, without giving prior notice to TENANT or GUARANTOR, and without making demands therefor on either of them. GUARANTOR understands and agrees that its liability under this Guarantee shall be primary and that, in any right of action which may accrue to LANDLORD under the Lease or this Guarantee, LANDLORD at its option may proceed against GUARANTOR without having taken any action or obtained any judgment against TENANT. Section 3.2. GUARANTOR's Waivers -------------------------------- In addition to any other waiver herein and except as otherwise specifically provided in this Guarantee, GUARANTOR hereby waives: (a) any and all notices, presentments, notice of nonpayment or nonperformance; (b) all defenses by reason of any disability of TENANT; (c) any and all rights it may have now or in the future, whether pursuant to Section 2845 of the California Civil Code or otherwise, to require or demand that LANDLORD pursue any right or remedy LANDLORD may have against TENANT or any other third party; (d) until such time as all obligations of TENANT under the Lease have been satisfied in full, any and all rights it may have for subrogation against, or reimbursement from, TENANT with respect to any sums paid hereunder; and (e) any and all right to the benefit of, or to participate in, any security held by LANDLORD now or in the future, or to require that such security be applied by LANDLORD either (i) prior to any action against GUARANTOR hereunder or (ii) as a credit or offset against sums owing hereunder. ARTICLE IV. ALTERATION, MODIFICATION, OR ASSIGNMENT Section 4.1. Effect of Extension, Modification, or Alteration of Lease ---------------------------------------------------------------------- GUARANTOR understands and agrees that notwithstanding the provisions of Section 2819 of the California Civil Code, the obligations of GUARANTOR under this Guarantee shall in no way be affected by any extension, modification or alteration of the Lease, including, but not limited to, TENANT entering into any sublease thereunder, or TENANT's obligations under the Lease and each of its provisions, and any such extension, modification or alteration of the Lease, including TENANT entering into any sublease thereunder, shall in no way release or discharge GUARANTOR from any obligations accruing under this Guarantee. The term "Lease" shall include all amendments, modifications, alterations and extensions of the Lease. Section 4.2. Assignment ----------------------- GUARANTOR understands and agrees that any assignment of the Lease, or any rights or obligations accruing thereunder, shall in no way affect GUARANTOR's obligations under this Guarantee. Section 4.3. Delay in Enforcement --------------------------------- GUARANTOR understands and agrees that any failure or delay of LANDLORD to enforce any of its rights under the Lease or this Guarantee shall in no way affect GUARANTOR's obligations under this Guarantee. ARTICLE V. TENANT'S INSOLVENCY Section 5.1. Liability upon TENANT's Insolvency ----------------------------------------------- GUARANTOR understands and agrees that in the event TENANT shall become insolvent or be adjudicated bankrupt, whether by voluntary or involuntary petition, or shall a petition for organization, -2- arrangement, or similar relief be filed against it, or if a receiver of any part of its property or assets is appointed by any court, GUARANTOR will remain obligated to pay to LANDLORD the amount of all unpaid rent, property taxes, operating expenses, and any other sums accrued and thereafter accruing under the Lease. Section 5.2. Effect of Operation of Law --------------------------------------- Any operation of any present or future debtor's relief act or similar act or law, or decision of any court, shall in no way abrogate or otherwise limit the obligation of GUARANTOR to perform any of the terms, covenants or conditions of this Guarantee. ARTICLE VI. MISCELLANEOUS Section 6.1. Notices -------------------- Any and all notices required under this Guarantee shall be made in writing, and shall be personally delivered, sent by reputable courier or overnight delivery service, or mailed, first-class mail, postage prepaid, to the party who is designated to receive such notice at the address set forth after their respective signatures on this Guarantee, or at such other place as may be designated by said party upon written notice from time to time hereafter. Section 6.2. Extent of Obligations ---------------------------------- Notwithstanding anything to the contrary in this Guarantee, it is understood and agreed that this Guarantee shall extend to any and all obligations of TENANT and LANDLORD. Section 6.3. Assignability -------------------------- This agreement may be assigned in whole or in part by LANDLORD at any time to any successor to LANDLORD's interest in the leased premises and/or to any lender of LANDLORD. Section 6.4. Successors and Assigns ----------------------------------- The terms and provisions of this Guarantee shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. Section 6.5. Modification of Guarantee -------------------------------------- This Guarantee constitutes the full and complete agreement between the parties hereto, and it is understood and agreed that the provisions hereof may only be modified by a writing executed b y both parties hereto. Section 6.6. Number and Gender ------------------------------ As used herein the singular shall include the plural, and as used herein the masculine shall include the feminine and neuter genders. Section 6.7. Captions/Headings ------------------------------ Any captions or headings used in this Guarantee are for reference purposes only and are in no way to be construed as part of this Guarantee. Section 6.8. Invalidity ----------------------- If any term, provision, covenant or condition of this Guarantee is held to be void, invalid, or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be affected, impaired, or invalidated. Section 6.9. Jurisdiction ------------------------- The validity of this agreement and of any of its terms or provisions, as well as the rights and duties of the parties hereunder, shall be interpreted and construed pursuant to and in accordance with the laws of the State of California. -3- Section 6.10. Joint and Several ------------------------------- Should more than one party execute this instrument as GUARANTOR, then the obligations of each such party shall be joint and several. Section 6.11. Attorney's Fees ----------------------------- In the event it becomes necessary to enforce any of the terms and provisions of this Guarantee, whether or not suit be instituted, the prevailing party shall be entitled to its reasonable costs and expenses incurred with respect thereto, including, but not limited to, reasonable attorney's fees, and such other costs and expenses as may be allowed by law. Section 6.12. Guarantee of Payment and Performance --------------------------------------------------- It is understood and agreed that this Guarantee is unconditional and continuing, and a guarantee of payment and performance and not of collection. ARTICLE VII. EXECUTION IN WITNESS WHEREOF, the undersigned have executed this Guarantee and made it effective this 24th day of November, 1998. KOREA DATA SYSTEMS (AMERICA), INC., a California corporation By: /s/ John Hui _____________________________ Name: John Hui ____________________________ Title: CEO ___________________________ Address: 12360 Edison Way Garden Grove, CA 92891 _________________________ By: /s/ Ben Wong ______________________________ Name: Ben Wong ____________________________ Title: Secretary ___________________________ Address: 12360 Edison Way Garden Grove, CA 92891 _________________________ -4-