EXHIBIT 10.17 AIRPORT BUS. CENTER Dated: December 4, 1997 1. BASIC LEASE TERMS. For purposes of this Lease, the following terms have the following definitions and meanings: (a) LANDLORD: Airport Industrial Complex, a California Limited Partnership...

 
                                                                   EXHIBIT 10.17



                              AIRPORT BUS. CENTER

                            Dated:  December 4, 1997

1.   BASIC LEASE TERMS. For purposes of this Lease, the following terms have the
following definitions and meanings:

(a)  LANDLORD: Airport Industrial Complex, a California Limited Partnership
               Landlord's Address (For Notices): 00000 Xxx Xxxx Xxxx, Xxx 000,
               Xxxxxx, XX 00000

     or such other place as Landlord may from time to time designate by notice
     to Tenant with a copy to Xxxx Management Services, X.X. Xxx 0000, Xxxxxxx
     Xxxxx, Xxxxxxxxxx 00000.

(b)  Tenant:  Litronic Industries, Inc., a California Corporation
     TENANT'S TRADE NAME:  Litronic
     TENANT'S ADDRESS FOR NOTICES (PREMISES):
     00000 Xxx Xxxx Xxxxxx, Xxxxx X
     Xxxxxx. XX 00000                        Attention: Xxxx Xxxx

(c)  PREMISES:  Suite(s) A of building 2401 (the "Building") of AIRPORT BUS.
     CENTER (the "Project"), located in the City of Irvine ("City"), County of
     Orange ("County"), State of California ("State") as shown on Exhibit "A-I".
     The Premises are depicted on Exhibit "A-II" and contain approximately 1,800
     Rentable Square Feet (subject to adjustment as provided in this Lease).

(d)  TENANT'S SHARE:  0.2%

(e)  TERM:  18 Lease Months and 0 Days.

(f)  COMMENCEMENT DATE:  January 1, 1998.

(g)  EXPIRATION DATE:  June 30. 1999.

(h)  INITIAL MONTHLY BASE RENT:  $1,476.00, subject to adjustment as
     provided in Exhibit "B" and as otherwise provided in this Lease.

(i)  MONTHLY OPERATING EXPENSE CHARGE:  $54.00, subject to adjustment as
     provided in Exhibit "B" and as set forth in Paragraph 6.

(j)  SECURITY DEPOSIT: $1,655.00.

(k)  NON-REFUNDABLE CLEANING FEE PORTION OF SECURITY DEPOSIT:  $125.00

 
(l)  PERMITTED USE:  General office for computer programming and
     installation of computer chips and no other use without the express written
     consent of Landlord, which consent Landlord may withhold in its sole and
     absolute discretion.

(m)  BROKER(S):  Xxxx Xxxxxx, CB Commercial.

(n)  GUARANTOR(S):  None

(o)  INTEREST RATE:  The greater of ten percent (10%) per annum or two percent
     (2%) in excess of the prime lending or reference rale of Xxxxx Fargo Bank
     N.A. or any successor bank in effect on the twenty-fifth (25th) day of the
     calendar month immediately prior to the event giving rise to the Interest
     Rate imposition; provided, however, the Interest Rate will in no event
     exceed the maximum interest rale permitted to be charged by applicable law.

(p)  EXHIBITS:  A-l through H, inclusive, which Exhibits are attached to this
     Lease and incorporated herein by this reference.

This Paragraph 1 represents a summary of the basic terms and definitions of this
Lease. In the event of any inconsistency between the terms contained in this
Paragraph 1 and any specific provision of this Lease, the terms of the more
specific provision shall prevail.

2.   PREMISES AND COMMON AREAS.

(a)  PREMISES. Landlord hereby leases lo Tenant and Tenant hereby leases from
     Landlord the Premises upon and subject to the terms, covenants and
     conditions contained in this Lease to be performed by each party.

(b)  TENANT'S USE OF COMMON AREAS. During the Term of this Lease, Tenant shall
     have the nonexclusive right to use in common with all other occupants of
     the Project, the following common areas of the Project (collectively, the
     "Common Areas"):  the parking facilities of the Project which serve the
     Building, loading and unloading areas, trash areas, roadways, sidewalks,
     walkways, parkways, driveways, landscaped areas, and similar areas and
     facilities situated within the Project and appurtenant to the Building
     which are not reserved for the exclusive use of any Project occupants.

(c)  LANDLORD'S RESERVATION OF RIGHTS. Provided Tenant's use of and access to
     the Premises is not interfered with in an unreasonable manner, Landlord
     reserves for itself and for all other owner(s) and operator(s) of the
     Common Areas and the balance of the Project, the right from time to time
     to:  (i) install, use, maintain, repair, replace and relocate pipes, ducts,
     conduits, wires and appurtenant meters and equipment above the ceiling
     surfaces, below the floor surfaces and within the walls of the Building;
     (ii) make changes to the design and layout of the Project, including,
     without limitation, changes to buildings, driveways, entrances, loading and
     unloading areas, direction of traffic, landscaped areas and walkways,
     parking spaces and parking areas; and 

                                       2

 
     (iii) use or close temporarily the Common Areas, and/or other portions of
     the Project while engaged In making improvements, repairs or alterations to
     the Building, the Project, or any portion thereof

3.   TERM. The term of this Lease ("Term") will be for the period designated in
     Subparagraph 1(e), commencing on the Commencement Date, and ending on the
     Expiration Date. Each consecutive twelve (12) month period of the Term of
     this Lease, commencing on the Commencement Date, will be referred to herein
     as a "Lease Year".

4.   POSSESSION.

(a)  DELIVERY OF POSSESSION. Landlord will deliver possession of the Premises to
     Tenant in its current "as-is" condition with the addition of only those
     items of work described on Exhibit "C" which are to be completed by
     Landlord on or before the Commencement Date. If, for any reason not caused
     by Tenant, Landlord cannot deliver possession of the Premises to Tenant on
     the Commencement Date, this Lease will not be void or voidable, nor will
     Landlord be liable to Tenant for any loss or damage resulting from such
     delay, but in such event, the Commencement Date and Tenant's obligation to
     pay rent will not commence until Landlord delivers possession to Tenant. If
     the delay in possession is caused by Tenant, then the Term and Tenant's
     obligation to pay rent will commence as of the Commencement Date even
     though Tenant does not yet have possession. Notwithstanding the foregoing,
     Landlord will not be obligated to deliver possession of the Premises to
     Tenant (but Tenant will be liable for rent if Landlord can otherwise
     deliver the Premises to Tenant) until Landlord has received from Tenant all
     of the following:  (i) a copy of this Lease fully executed by Tenant and
     the guaranty of Tenant's obligations under this Lease, if any, executed by
     the Guarantor(s), (ii) the Security Deposit and the first installment of
     Monthly Rase Rent; and (iii) copies of policies of insurance or
     certificates thereof as required under Paragraph 19 of this Lease.

(b)  CONDITION OF PREMISES. By taking possession of the Premises, Tenant will be
     deemed to have accepted the Premises in its "as-is" condition on the date
     of delivery of possession and to have acknowledged that all work to be
     completed by Landlord as described on Exhibit "C" has been completed and
     there are no additional items needing work or repair by Landlord. Tenant
     acknowledges that neither Landlord nor any agent of Landlord has made any
     representation or warranty with respect to the Premises, the Building, the
     Project or any portions thereof or with respect to the suitability of same
     for the a conduct of Tenant's business and Tenant further acknowledges that
     Landlord will have no obligation to construct or complete any additional
     buildings or improvements within the Project. Landlord shall deliver the
     premises in a good working condition, including but not limited to the
     HVAC, electrical, plumbing and mechanical systems, etc. Tenant shall have
     (30) days after possession to notify Landlord.

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5.   RENT

(a)  MONTHLY BASE RENT. Tenant agrees to pay Landlord the Monthly Base Rent for
     the Premises (subject to adjustment as hereinafter provided) in advance on
     the first day of each calendar month during the Term without prior notice
     or demand, except that Tenant agrees to pay the Monthly Base Rent for the
     first month of the Term directly to Landlord concurrently with Tenant's
     delivery of the executed Lease to Landlord. All rent must be paid to
     Landlord, without any deduction or outset, in lawful money of the United
     States of America, at the address designated by Landlord or to such other
     person or at such other place as Landlord may from time to time designate
     in writing. Monthly Base Rent will be adjusted during the Term of this
     Lease as provided in Exhibit "B".

(b)  ADDITIONAL RENT. All amounts and charges to be paid by Tenant hereunder,
     including, without limitation, payments for Operating Expenses, insurance
     and repairs, will be considered additional rent for purposes of this Lease,
     and the word "rent" as used in this Lease will include all such additional
     rent unless the context specifically or clearly implies that only Monthly
     Base Rent is intended.

(c)  LATE PAYMENTS. Late payments of Monthly Base Rent and/or any item of
     additional rent will be subject to interest and a late charge as provided
     in Subparagraph 22(t) below.

6.   OPERATING EXPENSES.

(a)  OPERATING EXPENSES. Throughout the Term of this Lease, commencing on the
     Commencement Date, Tenant agrees to pay Landlord as additional rent in
     accordance with the terms of this Paragraph 6, Tenant's Share of Operating
     Expenses /or the taxes and insurance for the Project and all costs and
     expenses of the operation, maintenance, repair, and replacement o/ the
     Project including, without limitation:  (i) any form of real property tax
     assessment, license tee, license tax, business license fee, commercial
     rental tax, levy, charge, improvement bond or similar imposition of any
     kind or nature imposed by any authority having the direct power to tax,
     including any city, county, state or federal government, or any school,
     agricultural lighting, drainage or other improvement or special assessment
     district thereof; (ii) any and all assessments under any covenants,
     conditions and restrictions affecting the Project; (iii) water, sewer and
     other utility charges; (iv) costs of insurance obtained by Landlord
     pursuant to Paragraph 19 of the Lease; (v) waste disposal and janitorial
     services; (vi) security; (vii) labor; (viii) management costs including,
     without limitation:  (A) wages and salaries (and payroll taxes and similar
     charges) of property management employees, and (B) management office
     rental, supplies, equipment and related operating expenses and management
     tees; (ix) supplies, materials, equipment and tools including rental o/
     personal property; (x) repair and maintenance o/ the structural portions o/
     the buildings with the Project, including the plumbing, heating,
     ventilating, air-conditioning and electrical systems installed or furnished
     by Landlord; (xi) maintenance, costs and upkeep of ail parking and other
     Common Areas; (xii) depreciation on a straight line basis and rental of
     personal property used in maintenance; (xiii) amortization on a straight
     line basis over the useful life [together with interest at the Interest
     Rate on the unamortized balance] of all capitalized expenditures which are:
     (A) reasonably intended to produce a reduction in 

                                       4

 
     operating charges or energy consumption; or (B) required under any
     governmental law or regulation that was not applicable to the Project at
     the time it was originally constructed; or (C) for replacement of any
     Project equipment needed to operate the Project at the same quality levels
     as prior to the replacement; (xiv) gardening and landscaping; (xv)
     maintenance of signs (other than signs of tenant's of the Project); (xvi)
     personal property taxes levied on or attributable lo personal property used
     in connection with the Common Areas; (xvii) reasonable accounting, audit,
     verification, legal and other consulting fees; and (xviii) costs and
     expenses of repairs, resurfacing, repairing, maintenance, painting,
     lighting, cleaning, refuse removal, security and similar items, including
     appropriate reserves

(b)  Determination of Tenant's Monthly Operating Expense Charge. Tenant's
     Monthly Operating Expense Charge shall be determined as provided in
     Subparagraph 1(i) of this Lease. If Tenant's Monthly Operating Expense
     Charge is scheduled for each year of the Lease Term as shown on Exhibit
     "B", then Subparagraphs (c) and (d) below will not apply.

(c)  Estimate Statement. Prior to the Commencement Date and on or about March
     1st of each subsequent calendar year during the Term o/ this Lease,
     Landlord will endeavor to deliver to Tenant a statement ("Estimate
     Statement") wherein Landlord will estimate both the Operating Expenses and
     Tenant's Monthly Operating Expense Charge for the then current calendar
     year. Tenant agrees to pay Landlord, as additional rent, Tenant's estimated
     Monthly Operating Expense Charge each month thereafter, beginning with the
     next installment of rent due, until such time as Landlord issues a revised
     Estimate Statement or the Estimate Statement /or the succeeding calendar
     year; except that, concurrently with the regular monthly rent payment next
     due following the receipt of each such Estimate Statement, Tenant agrees to
     pay Landlord an amount equal to one monthly installment of Tenant's
     estimated Monthly Operating Expense Charge (less any applicable Operating
     Expenses already paid) multiplied by the number of months from January, in
     the current calendar year, to the month of such rent payment next due, all
     months inclusive.  If at any time during the Term of this Lease, but not
     more often than quarterly, Landlord reasonably determines that Tenant's's
     share of Operating Expenses for the current calendar year will be greater
     than the amount set forth in the then current Estimate Statement, Landlord
     may issue a revised Estimate Statement and Tenant agrees to pay Landlord,
     within ten (10) days of receipt of the revised Estimate Statement, the
     difference between the amount owed by Tenant under such revised Estimate
     Statement and the amount owed by Tenant under the original Estimate
     Statement for the portion o/ the then current calendar year which has
     expired. Thereafter Tenant agrees to pay Tenant's Monthly Operating Expense
     Charge based on such revised Estimate Statement until Tenant receives the
     next calendar year's Estimate Statement or a new revised Estimate Statement
     for the current calendar year.

(d)  Actual Statement. By March 1st of each calendar year during the Term of
     this Lease, Landlord will also endeavor to deliver to Tenant a statement
     ("Actual Statement") which states Tenant's Share of the actual Operating
     Expenses [or the preceding calendar year. If the Actual Statement reveals
     that Tenant's Share of the actual Operating Expenses is more than the total
     Additional Rent paid by Tenant for Operating Expenses on account of the
     preceding calendar 

                                       5

 
     year, Tenant agrees to pay Landlord the difference in a lump sum within ten
     (10) days of receipt of the Actual Statement. If the Actual Statement
     reveals that Tenant's Share of the actual Operating Expenses is less than
     the Additional Rent paid by Tenant for Operating Expenses on account of the
     preceding calendar year, Landlord will credit any overpayment toward the
     next monthly installment(s) of Tenant's Share of the Operating Expenses due
     under this Lease.

(e)  Miscellaneous. Any delay or failure by Landlord in delivering any Estimate
     Statement or Actual Statement pursuant to this Paragraph 6 will not
     constitute a waiver of its right to require an increase in rent nor will it
     relieve Tenant of its obligations pursuant to this Paragraph 6, except that
     Tenant will not be obligated to make any payments based on such Estimate
     Statement or Actual Statement unless ten (10) days after receipt of such
     Estimate Statement or Actual Statement it Tenant does not object to any
     Estimate Statement or Actual Statement within thirty (30) days after Tenant
     receives any such statement, such statement will be deemed final and
     binding on Tenant. Even though the Term has expired and Tenant has vacated
     the Premises, when the final determination is made of Tenant's Share of the
     actual Operating Expenses for the year in which this Lease terminates,
     Tenant agrees to promptly pay any increase due over the estimated expenses
     paid and, conversely, any overpayment made in the event said expenses
     decrease shall promptly be rebated by Landlord to Tenant. Such obligation
     will be a continuing one which will survive The expiration or termination
     of This Lease. Prior to the expiration or sooner termination of the Lease
     Term and Landlord's acceptance of Tenant's surrender of the Premises,
     Landlord will have the right to estimate the actual Operating Expenses for
     the then current Lease Year and to collect from Tenant prior to Tenant's
     surrender of the Premises, Tenant's Share of any excess of such actual
     Operating Expenses over the estimated Operating Expenses paid by Tenant in
     such Lease Year.


7.   SECURITY DEPOSIT AND CLEANING FEE. Upon Tenant's execution of This Lease,
     Tenant will deposit with Landlord the Security Deposit designated in
     Subparagraph 1(j). The Security Deposit will be held by Landlord as
     security for the full and faithful performance by Tenant of all of the
     terms, covenants, and conditions of this Lease to be kept and performed by
     Tenant during the Term hereof. The Security Deposit is not, and may not be
     construed by Tenant to constitute, rent for the last month or any portion
     thereof. If Tenant defaults with respect to any provisions of this Lease
     including, but not limited to, the provisions relating to the payment of
     rent or additional rent, Landlord may (but will not be required to) use,
     apply or retain all or any part of the Security Deposit for the payment of
     any rent or any other sum in default, or for the payment of any other
     amount which Landlord may spend by reason of Tenant's default or to
     compensate Landlord for any loss or damage which Landlord may suffer by
     reason of Tenant's default. If any portion to the Security Deposit is so
     used or applied, Tenant agrees, within ten (10) days after Landlord's
     written demand therefor, to Deposit cash with Landlord in an amount
     sufficient to restore The Security Deposit to its original amount and
     Tenant's failure to do so shall constitute a default under this Lease.
     Landlord is not required to keep Tenant's Security Deposit separate from
     its general funds, and Tenant is not entitled to interest on such Security
     Deposit. If Tenant is not in default at the expiration or termination of
     this Lease, Landlord will return the Security Deposit to Tenant, less the
     non-refundable Cleaning Fee 

                                       6

 
     portion designated in Subparagraph 1(k). Landlord's obligations with
     respect to the Security Deposit are those of a debtor and not of a Trustee.

8.   USE.

(a)  TENANT'S USE OF THE PREMISES. The Premises may be used for the use or uses
     set forth in Subparagraph 1(1) only, and Tenant will not use or permit the
     Premises to be used for any other purpose without the prior written consent
     of Landlord, which consent Landlord may not unreasonably withhold. Nothing
     in this Lease will be deemed to give Tenant any exclusive right to such use
     in the Project.

(b)  COMPLIANCE. Al Tenant's sole cost and expense, Tenant agrees to procure,
     maintain and hold available for Landlord's inspection, all governmental
     licenses and permits required for the proper and lawful conduct of Tenant's
     business from the Premises, it any. Tenant agrees not to use, alter or
     occupy the Premises or allow the Premises to be used, altered and occupied
     in violation of, and Tenant, at its sole cost and expense, agrees to use
     and occupy the Premises, and cause the Premises to be used and occupied, in
     compliance with:  (i) any and all laws, statutes, zoning restrictions,
     ordinances, rules, regulations, orders and rulings now or hereafter in
     force and any requirements of any insurer, insurance authority or duly
     constituted public authority having jurisdiction over the Premises, the
     Building or the Project now or hereafter in force, (ii) the requirements of
     the Board of Fire Underwriters and any other similar body, (iii) the
     Certificate of Occupancy issued for the Building, and (iv) any recorded
     covenants, conditions and restrictions and similar regulatory agreements,
     if any, which affect the use, occupation or alteration of the Premises, the
     Building and/or the Project. Tenant agrees to comply with the Rules and
     Regulations referenced in Paragraph 28 below. Tenant agrees not to do or
     permit anything to be done in or about the Premises which will in any
     manner obstruct or interfere with the rights of other tenants or occupants
     of the Project, or injure or unreasonably annoy them, or use or allow the
     Premises to be used for any unlawful or unreasonably objectionable purpose.
     Tenant agrees not to place or store any articles or materials outside of
     the Premises or to cause, maintain or permit any nuisance or waste in, on,
     under or about the Premises or elsewhere within the Project. Tenant shall
     not use or allow The Premises to be used for lodging, bathing or the
     washing of clothes.

(c)  HAZARDOUS MATERIALS. Except for ordinary and general office supplies, such
     as copier toner, liquid paper, glue, ink and common household cleaning
     materials (some or all of which may constitute "Hazardous Materials" as
     defined in this Lease), Tenant agrees not to cause or permit any Hazardous
     Materials to be brought upon, stored, used, handled, generated, released or
     disposed of on, in, under or about the Premises, the Building, the Common
     Areas or any other portion of The Project by Tenant, its agents, employees,
     subtenants, assignees, licensees, contractors or invitees (collectively,
     "Tenant's Parties"), without the prior written consent of Landlord, which
     consent Landlord may withhold in its sole and absolute discretion.
     Concurrently with the execution of this Lease, Tenant agrees to complete
     and deliver to Landlord an Environmental Questionnaire in the form of
     Exhibit "G" attached hereto. Upon the expiration or 

                                       7

 
     earlier termination of this Lease, Tenant agrees to promptly remove from
     the Premises, the Building and the Project, at its sole cost and expense,
     any and all Hazardous Materials, including any equipment or systems
     containing Hazardous Materials which are installed, brought upon, stored,
     used, generated or released upon, in, under or about The Premises, the
     Building and/or the Project or any portion thereof by Tenant or any of
     Tenant's Parties. To the fullest extent permitted by law, Tenant agrees to
     promptly indemnity, protect, defend and hold harmless Landlord and
     Landlord's partners, officers, directors, employees, agents, successors and
     assigns (collectively, "Landlord indemnified Parties") from and against any
     and all claims, damages, judgments, suits, causes of action, losses,
     liabilities, penalties, fines, expenses and costs (including, without
     limitation, clean-up, removal, remediation and restoration costs, sums paid
     in settlement of claims, attorneys' fees, consultant lees and expert lees
     and court costs) which arise or result from the presence of Hazardous
     Materials on, in, under or about the Premises, the Building or any other
     portion of the Project and which are caused or permitted by Tenant or any
     of Tenant's Parties. Tenant agrees to promptly notify Landlord of any
     release of Hazardous Materials in the Premises, the Building or any other
     portion of the Project which Tenant becomes aware o/ during the Term of
     this Lease, whether caused by Tenant or any other persons or entities. In
     the event of any release of Hazardous Materials caused or permitted by
     Tenant or any of Tenant's Parties, Landlord shall have The right, but not
     the obligation, to cause Tenant to immediately take all steps Landlord
     deems necessary or appropriate to remediate such release and prevent any
     similar future release to the satisfaction of Landlord and Landlord's
     mortgagee(s). At all times during the Term of this Lease, Landlord will
     have the right, but not the obligation, to enter upon the Premises to
     inspect, investigate, sample and/or monitor the Premises to determine if
     Tenant is in compliance with the terms of this Lease regarding Hazardous
     Materials. As used in this Lease, the term "Hazardous Materials" shall mean
     and include any hazardous or toxic materials, substances or wastes as now
     or hereafter designated under any law, statute, ordinance, rule,
     regulation, order or ruling of any agency of the State, the United States
     Government or any local governmental authority, including, without
     limitation, asbestos, petroleum, petroleum hydrocarbons and petroleum based
     products, urea formaldehyde foam insulation, polychlorinated biphenyls
     ("PCBs"), and freon and other chlorofluorocarbons. The provisions of this
     Subparagraph 8(c) will survive the expiration or earlier termination o/
     this Lease.

(d)  Refuse and Sewage. Tenant agrees not to keep any trash, garbage, waste or
     other refuse on the Premises except in sanitary containers and agrees to
     regularly and frequently remove same from the Premises. Tenant shall keep
     all containers or other equipment used for storage of such materials in a
     clean and sanitary condition. Tenant shall properly dispose of all sanitary
     sewage and shall not use the sewage disposal system for the disposal of
     anything except sanitary sewage. Tenant shall keep the sewage disposal
     system tree of all obstructions and in good operating condition. If the
     volume of Tenant's trash becomes excessive in Landlord's judgment, Landlord
     shall have the right to charge Tenant for additional trash disposal
     services and/or to require that Tenant contract directly for additional
     trash disposal services at Tenant's sole cost and expense.

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9.   NOTICES. Any notice required or permitted to be given hereunder must be in
     writing and may be given by personal delivery (including delivery by
     overnight courier or an express mailing service) or by mail, if sent by
     registered or certified mail. Notices to Tenant shall be sufficient if
     delivered to Tenant at the Premises and notices to Landlord shall be
     sufficient if delivered to Landlord at the address designated in
     Subparagraph 1(a). Either party may specify a different address /or notice
     purposes by written notice to the other, except that the Landlord may in
     any event use the Premises as Tenant's address for notice purposes.

10.  BROKERS. The parties acknowledge that the broker(s) who negotiated this
     Lease are stated in Subparagraph 1(m) Landlord and Tenant each agree to
     promptly indemnify, protect, defend and hold harmless the other from and
     against any and all claims, damages, judgments, suits, causes of action,
     losses, liabilities, penalties, fines, expenses and costs (including
     attorneys' tees and court costs) resulting from any breach by the
     indemnifying party of the foregoing representation, including, without
     limitation, any claims that may be asserted by any broker, agent or finder
     undisclosed by the indemnifying party. The foregoing mutual indemnity shall
     survive The expiration or earlier termination of this Lease. Tenant agrees
     that Landlord will not recognize or compensate any third party broker with
     regards to any renewals and/or expansions unless such renewal or expansion
     rights are included within this Lease at the time of execution by the
     parties and in Landlord's commission agreement with the broker(s) specified
     in Subparagraph 1(m).

11.  SURRENDER; HOLDING OVER.

(a)  Surrender. The voluntary or other surrender of this Lease by Tenant, or a
     mutual cancellation thereof, shall not constitute a merger, and shall, at
     the option of Landlord, operate as an assignment to Landlord of any or all
     subleases or subtenancies. Upon The expiration or earlier termination of
     this Lease, Tenant agrees to peaceably surrender the Premises to Landlord
     broom clean and in a state of good order, repair and condition, ordinary
     wear and tear and casually damage excepted, with all of Tenant's personal
     property and alterations removed from The Premises to The extent required
     under Paragraph 13 and all damage caused by such removal repaired as
     required by Paragraph 13. The delivery of keys to any employee of Landlord
     or to Landlord's agent or any employee thereof alone will not be sufficient
     to constitute a termination of This Lease or a surrender of The Premises.

(b)  Holding Over. If Tenant holds over after The expiration or earlier
     termination of the Term, Landlord may, at its option, treat Tenant as a
     tenant at sufferance only, and evict Tenant immediately, or consent in
     writing to the continued occupancy by Tenant which shall be subject to all
     of the terms, covenants and conditions of this Lease, so far as applicable,
     including the payment of Operating Expenses, except that the Monthly Rase
     Rent for any month or partial month during which Tenant holds over shall be
     equal to one hundred fifty percent (150%) of the Monthly Base Rent in
     effect under this Lease immediately prior to such holdover. Acceptance by
     Landlord of rent alter such expiration or earlier termination will not
     result in a renewal o/ this Lease. If Tenant fails to surrender the
     Premises upon the expiration of this Lease in accordance 

                                       9

 
     with the terms of this Paragraph 11 despite demand to do so by Landlord,
     Tenant agrees to promptly indemnify, protect, defend and hold Landlord
     harmless from all claims, damages, judgments, suits, causes of action,
     losses, liabilities, penalties, tines, expenses and costs (including
     attorneys' lees and costs), including, without limitation, costs and
     expenses incurred by Landlord in returning the Premises to the condition in
     which Tenant was to surrender it and claims made by any succeeding tenant
     founded on or resulting from Tenant's failure to surrender the Premises.
     The provisions of this Subparagraph 11(b) will survive the expiration or
     earlier termination of this Lease.

12.  TAXES ON TENANT'S PROPERTY. Tenant agrees to pay before delinquency, all
     taxes and assessments (real and personal) levied against Tenant's business
     operations or any personal property, improvements, alterations, trade
     fixtures or merchandise placed by Tenant in or about the Premises.

13.  ALTERATIONS. Tenant shall not make any alterations to the Premises or any
     other aspect of the Project, without Landlord's prior written consent,
     which consent Landlord may withhold in its reasonable but subjective
     discretion. All permitted alterations must be performed in compliance with
     Landlord's standard rules and regulations regarding alterations. All
     alterations will become the property of Landlord and will remain upon and
     be surrendered with the Premises at the end of the Term o/ this Lease;
     provided, however, Landlord may require Tenant to remove any or all
     alterations at the end of the Term of this Lease. If Tenant fails to remove
     by the expiration or earlier termination of this Lease all of its personal
     property, or any alterations identified by Landlord for removal, Landlord
     may, at its option, treat such failure as a hold-over pursuant to
     Subparagraph 11(b) above, and/or Landlord may (without liability to Tenant
     for loss thereof) treat such personal property and/or alterations as
     abandoned and, at Tenant's sole cost and expense and in addition to
     Landlord's other rights and remedies under this Lease, at law or in equity:
     (a) remove and store such items; and/or (b) upon ten (10) days' prior
     notice to Tenant, sell, discard or otherwise dispose of all or any such
     items at private or public sale for such price as Landlord may obtain or by
     other commercially reasonable means. Tenant shall be liable for all costs
     of disposition of Tenant's abandoned property and Landlord shall have no
     liability to Tenant with respect to any such abandoned property. Landlord
     agrees to apply the proceeds of any sale of any such property to any
     amounts due to Landlord under this Lease from Tenant (including Landlord's
     attorneys' fees and other costs incurred in the removal, storage and/or
     sale of such items), with any remainder to be paid to Tenant.

14.  REPAIRS.

(a)  LANDLORD'S OBLIGATIONS. Landlord agrees to repair and maintain the
     structural portions of the Building, including the foundations, bearing and
     exterior walls (excluding glass), subflooring and roof (excluding
     skylights), and the unexposed electrical, plumbing and sewer systems,
     including those portions of such systems which are outside the Premises,
     gutters and downspouts on the Building and the heating, ventilating and air
     conditioning systems which serve the Premises, unless such maintenance and
     repairs are caused in part or in whole by the act, 

                                       10

 
     neglect or omission of any duty by Tenant, its agents, servants, employees
     or invitees, in which case Tenant will pay to Landlord, as additional rent,
     the reasonable cost of such maintenance and repairs. The costs of
     maintenance and repairs performed by Landlord will be included in Operating
     Expenses. Except as provided in this Subparagraph 14(a), Landlord has no
     obligation to alter, remodel, improve, repair, decorate or paint the
     Premises or any part thereof. Landlord will not be liable for any failure
     to make any such repairs or to perform any maintenance unless such failure
     shall persist for an unreasonable time after written notice of the need of
     such repairs or maintenance is given to Landlord by Tenant. Tenant will not
     be entitled to any abatement of rent and Landlord will not have any
     liability by reason of any injury to or interference with Tenant's business
     arising from the making of any repairs, alterations or improvements in or
     to any portion o/ the Building or the Premises or in or to fixtures,
     appurtenances and equipment therein. Tenant waives the right to make
     repairs al Landlord's expense under any law, statute, ordinance, rule,
     regulation, order or ruling (including, without limitation, to the extent
     the Premises are located in California, the provisions of California Civil
     Code Sections 1941 and 1942 and any successor statutes or laws of a similar
     nature).

(b)  Tenant's Obligations. Tenant agrees to keep, maintain and preserve the
     Premises in a state of condition and repair consistent with the Building
     and, when and if needed, at Tenant's sole cost and expense, to make all
     repairs to the Premises and every part thereof including, without
     limitation, all walls, storefronts, floors, ceilings, interior and exterior
     doors and windows and fixtures and interior plumbing. Any such maintenance
     and repairs will be performed by Landlord's contractor, or at Landlord's
     option, by such contractor or contractors as Tenant may choose from an
     approved list to be submitted by Landlord. Tenant agrees to pay all costs
     and expenses incurred in such maintenance and repair within seven (7) days
     after billing by such contractor or contractors. It Tenant refuses or
     neglects to repair and maintain the Premises property as required hereunder
     to the reasonable satisfaction of Landlord, Landlord, at any time following
     ten (10) days from the date on which Landlord makes a written demand on
     Tenant to effect such repair and maintenance, may enter upon the Premises
     and make such repairs and/or maintenance, and upon completion thereof,
     Tenant agrees to pay to Landlord as additional rent, Landlord's costs for
     making such repairs plus an amount not to exceed ten percent (10%) of such
     costs for overhead, within ten (10) days of receipt from Landlord of a
     written itemized xxxx therefor. Any amounts not reimbursed by Tenant within
     such ten (10) day period will bear interest at the interest Rate until paid
     by Tenant.

15.  LIENS. Tenant agrees not to permit any mechanic's, materialmen's or other
     liens to be filed against all or any part of the Project, the Building or
     the Premises, nor against Tenant's leasehold interest in the Premises, by
     reason of or in connection with any repairs, alterations, improvements or
     other work contracted for or undertaken by Tenant or any other act or
     omission o/ Tenant or Tenant's agents, employees, contractors, licensees or
     invitees. Al Landlord's request, Tenant agrees to provide Landlord with
     enforceable, conditional and final lien releases (or other evidence
     reasonably requested by Landlord to demonstrate protection from liens) from

                                       11

 
     all persons furnishing labor and/or materials at the Premises. Landlord
     will have the right at all reasonable times to post on the Premises and
     record any notices o/ non-responsibility which it deems necessary for
     protection from such liens. If any such liens are filed, Tenant will, at
     its sole cost and expense, promptly cause such liens to be released of
     record or bonded so that it no longer affects title to the Project, the
     Building or the Premises. If Tenant fails to cause any such liens to be so
     released or bonded within ten (10) days after filing thereof, such failure
     will be deemed a material breach by Tenant under this Lease without the
     benefit of any additional notice or cure period described in Paragraph 22
     below, and Landlord may, without waiving its rights and remedies based on
     such breach, and without releasing Tenant from any o/ its obligations,
     cause such liens to be released by any means it shall deem proper,
     including payment in satisfaction of the claims giving rise to such liens.
     Tenant agrees to pay to Landlord within ten (10) days after receipt of
     invoice from Landlord, any sum paid by Landlord to remove such liens,
     together with interest at the Interest Rate from the xxxx of such payment
     by Landlord.

16.  ENTRY BY LANDLORD. Landlord and its employees and agents will at all
     reasonable times have the right to enter the Premises to inspect the same,
     to show the Premises to prospective purchasers or tenants, to post notices
     of nonresponsibility, and/or to repair the Premises as permitted or
     required by this Lease. In exercising such entry rights, Landlord will
     endeavor to minimize as reasonably practicable, the interference with
     Tenant's business, and will provide Tenant with reasonable advance notice
     of any such entry (except in emergency situations). Landlord will at all
     times have and retain a key with which to unlock all doors in the Premises,
     excluding Tenant's vaults and safes. Tenant shall not alter any lock or
     install any new or additional locks or bolts on any door of the Premises
     without Landlord's prior written consent and without providing Landlord
     with a key to all such locks. Except in the case of the gross negligence or
     willful misconduct of Landlord, any entry to the Premises obtained by
     Landlord will not be construed or deemed to be a forcible or unlawful entry
     into the Premises, or an eviction of Tenant from the Premises and Landlord
     will not be unable to Tenant for any damages or losses resulting from any
     such entry.

17.  UTILITIES AND SERVICES. Throughout the Term of this Lease, Tenant shall pay
     directly to the utility company providing such service all costs for water,
     gas, heat, light, power, sewer, electricity, telephone and other services
     metered, chargeable or provided to the Premises. Landlord will not be
     liable to Tenant for any failure to furnish any of the foregoing utilities
     and services if such failure is caused by all or any of the following: (i)
     accident, breakage or repairs' (ii) strikes, lockouts or other labor
     disturbance or labor dispute of any character; (iii) governmental
     regulation, moratorium or other governmental action or inaction; (iv)
     inability despite the exercise of reasonable diligence to obtain
     electricity, water or fuel, or (v) any other cause beyond Landlord's
     reasonable control. In addition, in the event of any stoppage or
     interruption of services or utilities, Tenant shall not be entitled to any
     abatement or reduction of rent (except as expressly provided in
     Subparagraphs 20(t) or 21(b) if such failure results from a damage or
     taking described therein), no eviction of Tenant will result from such
     failure and Tenant will not be relieved from the performance of any
     covenant or agreement in this Lease 

                                       12

 
     because of such failure. In the event of any failure, stoppage or
     interruption thereof, Landlord agrees to diligently attempt to resume
     service promptly.

18.  ASSUMPTION OF RISK AND INDEMNIFICATION.

(a)  Assumption of Risk. Tenant, as a material part other consideration to
     Landlord, agrees that neither Landlord nor any Landlord indemnified Parties
     (as defined in Subparagraph 8(c) above) will be liable to Tenant for, and
     Tenant expressly assumes the risk o/ and waives any and all claims it may
     have against Landlord or any Landlord Indemnified Parties with respect to,
     (i) any and all damage to property or injury to persons in, upon or about
     the Premises, the Building or the Project resulting /rom the act or
     omission (except for the grossly negligent or intentionally wrongful act or
     omission) of Landlord, (ii) any such damage caused by other tenants or
     persons in or about the Building or the Project, or caused by quasi-public
     work, (iii) any damage to property entrusted to employees of The Building,
     (iv) any loss of or damage to property by them or otherwise, or (v) any
     injury or damage to persons or property resulting from any casualty,
     explosion, falling plaster or other masonry or glass, steam, gas,
     electricity, water or rain which may leak /rom any part o/ the Building or
     any other portion of the Project or from the pipes, appliances or plumbing
     works therein or from the root, street or subsurface or from any other
     place, or resulting from dampness. Neither Landlord nor any Landlord
     Indemnified Parties will be liable for consequential damages arising out of
     any loss of the use of the Premises or any equipment or facilities therein
     by Tenant or any Tenant Parties (as defined in Subparagraph 8(c) above) or
     for interference with light. Tenant agrees to give prompt notice to
     Landlord in case of fire or accidents in the Premises or the Building, or
     of detects therein or in the fixtures or equipment.

(b)  Indemnification. Tenant will be liable for, and agrees, to the maximum
     extent permissible under applicable law, to promptly indemnify, protect,
     defend and hold harmless Landlord and all Landlord Indemnified Parties,
     from and against, any and all claims, damages, judgments, suits, causes of
     action, losses, liabilities, penalties, fines, expenses and costs,
     including attorneys' tees and court costs (collectively, "Indemnified
     Claims"), arising or resulting from (i) any act or omission of Tenant or
     any Tenant Parties; (ii) the use of the Premises and Common Areas and
     conduct of Tenant's business by Tenant or any Tenant Parties, or any other
     activity, work or thing done, permitted or suffered by Tenant or any Tenant
     Parties, in or about the Premises, the Building or elsewhere within the
     Project and/or (iii) any default by Tenant o/ any obligations on Tenant's
     part to be performed under the terms of this Lease. In case any action or
     proceeding is brought against Landlord or any Landlord indemnified Parties
     by reason of any such indemnified Claims, Tenant, upon notice from
     Landlord, agrees to promptly defend the same at Tenant's sole cost and
     expense by counsel approved in writing by Landlord, which approval Landlord
     will not unreasonably withhold.

(c)  Survival; No Release of Insurers. Tenant's indemnification obligations
     under Subparagraph 18(b) will survive the expiration or earlier termination
     of this Lease Tenant's covenants, agreements and indemnification obligation
     in Subparagraphs 18(a) and 18(b) above, 

                                       13

 
     are not intended to and will not relieve any insurance carrier of its
     obligations under policies required to be carried by Tenant pursuant to the
     provisions of This Lease.

19. INSURANCE.

(a)  Tenant's Insurance. On or before the earlier to occur of (i) the
     Commencement Date, or (ii) the date Tenant commences any work of any type
     in the Premises pursuant to this Lease (which may be prior to the
     Commencement Date), and continuing throughout the entire Term hereof and
     any other period of occupancy, Tenant agrees to keep in full force and
     effect, at its sole cost and expense, the insurance specified on Exhibit
     "F" attached hereto. Landlord reserves the right to require any other form
     or forms of insurance as Tenant or Landlord or any mortgagees of Landlord
     may reasonably require from time to time in form, in amounts, and for
     insurance risks against which, a prudent tenant would protect itself, but
     only to the extent coverage for such risks and amounts are available in The
     insurance market at commercially acceptable rates Landlord makes no
     representation that the limits of liability required to be carried by
     Tenant under the terms of this Lease are adequate to protect Tenant's
     interests and Tenant should obtain such additional insurance or increased
     liability limits as Tenant deems appropriate.

(b)  Supplemental Tenant Insurance Requirements. All policies must be in a form
     reasonably satisfactory to Landlord and issued by an insurer admitted to do
     business in the State. All policies must be issued by insurers with a
     policyholder rating of"A" and a financial rating of "X" in the most recent
     version of Best's Key Rating Guide. AU policies must contain a requirement
     to notify Landlord (and Landlord's property manager and any mortgagees or
     ground lessors of Landlord who are named as additional insureds, if any) in
     writing not less than thirty (30) days prior to any material change,
     reduction in coverage, cancellation or other termination thereof. Tenant
     agrees to deliver to Landlord, as soon as practicable after placing the
     required insurance, but in any event within the time frame specified in
     Subparagraph 19(a) above, certificate(s) of insurance and/or H required by
     Landlord, certified copies of each policy evidencing the existence of such
     insurance and Tenant's compliance with The provisions of This Paragraph 19.
     Tenant agrees to cause replacement policies or certificates to be delivered
     to Landlord not less than thirty (30) days prior to the expiration of any
     such policy or policies. If any such initial or replacement policies or
     certificates are not furnished within the time(s) specified herein,
     Landlord will have the right, bul not the obligation, to obtain such
     insurance as Landlord deems necessary to protect Landlord's interests at
     Tenant's expense. Tenant's insurance under Subparagraphs 19(a)(iii) and
     (iv) must name Landlord and Landlord's property manager (and at Landlord's
     request, Landlord's mortgagees and ground lessors of which Tenant has been
     informed in writing) as additional insureds and must also contain a
     provision that the insurance afforded by such policy is primary insurance
     and any insurance carried by Landlord and Landlord's property manager or
     Landlord's mortgagees or ground lessors, if any, will be excess over and
     non-contributing with Tenant's insurance.

                                       14

 
(c)  Waiver of Subrogation. Tenant's property insurance shall contain a clause
     whereby the insurer waives all rights of recovery by way of subrogation
     against Landlord. Tenant shall also obtain and furnish evidence to Landlord
     of the waiver by Tenant's worker's compensation insurance carrier of all
     rights of recovery by way of subrogation against Landlord.

20. DAMAGE OR DESTRUCTION.

(a)  Partial Destruction. If The Premises or the Building are damaged by lire or
     other casualty to an extent not exceeding twenty-five percent (25%) of the
     full replacement cost thereof and Landlord's contractor reasonably
     estimates in a writing delivered to Landlord and Tenant that the damage
     thereto may be repaired reconstructed or restored to substantially its
     condition immediately prior to such damage within one hundred eighty (180)
     days from the date of such casualty and Landlord will receive insurance
     proceeds sufficient to cover the costs of such repairs reconstruction and
     restoration (including proceeds from Tenant and/or Tenants insurance which
     Tenant is required to deliver to Landlord pursuant to Subparagraph 20(d)
     below to cover Tenant s obligation for the costs of repair reconstruction
     and restoration of any portion of the tenant improvements and any
     alterations for which Tenant is responsible under this Lease) then Landlord
     agrees to commence and proceed diligently with the work of repair
     reconstruction and restoration and this Lease will continue in full force
     and effect.

(b)  Substantial Destruction. Any damage or destruction to the Premises or the
     Building which Landlord is not obligated to repair pursuant to Subparagraph
     20(a) above will be deemed a substantial destruction. In the event of a
     substantial destruction Landlord may elect to either:  (i) repair
     reconstruct and restore the portion of the Building or the Premises damaged
     by such casualty in which case this Lease will continue in full force and
     effect subject to Tenant s termination right contained in Subparagraph
     20(c) below; or (ii) terminate this Lease effective as of the date of
     Tenant's receipt of Landlord s election to so terminate.

(c)  Termination Rights. It Landlord elects to repair reconstruct and restore
     pursuant to Subparagraph 20(b)(i) hereinabove and if Landlord's contractor
     estimates that as a result of such damage Tenant cannot be given reasonable
     use of and access to the Premises within two hundred forty (240) days after
     the xxxx of such damage then either Landlord or Tenant may terminate this
     Lease effective upon delivery of written notice to the other within ten
     (10) days after Landlord delivers notice to Tenant of its election to so
     repair reconstruct or restore; provided however Tenant shall have no right
     to terminate this Lease it Landlord can relocate Tenant to other comparable
     Premises in the Building or the Project within one hundred eighty (180)
     days after the date of such damage.

(d)  Tenants Costs and Insurance Proceeds. In the event of any damage or
     destruction of all or any part of the Premises Tenant agrees to immediately
     (i) notify Landlord thereof and (ii) deliver to Landlord all property
     insurance proceeds received by Tenant with respect to any tenant
     improvements installed by or at the cost of Tenant and any alterations bul
     excluding proceeds for Tenant s furniture, fixtures, equipment and other
     personal property whether or not this Lease is 

                                       15

 
     terminated as permitted in this Paragraph 20 and Tenant hereby assigns to
     Landlord all rights to receive such insurance proceeds. If for any reason
     (including Tenants failure to obtain required insurance) Tenant fails to
     receive insurance proceeds covering the full replacement cost of any tenant
     improvements and any alterations which are damaged Tenant will be deemed to
     have self-insured the replacement cost oi such items and upon any damage or
     destruction thereto Tenant agrees to immediately pay to Landlord the full
     replacement cost of such items less any insurance proceeds actually
     received by Landlord from Landlord's or Tenant's insurance with respect to
     such items.

(e)  Abatement of Rent. In the event of any damage repair reconstruction and/or
     restoration described in this Paragraph 20 rent will be abated or reduced
     as the case may be from the date of such casualty in proportion to the
     degree to which Tenant s use of the Premises is impaired during such period
     of repair until such use is restored. Except for abatement of rent as
     provided hereinabove, Tenant will not be entitled to any compensation or
     damages for loss of or interference with Tenant's business or use or access
     of all or any part of the Premises or for lost profits or any other
     consequential damages of any kind or nature which result from any such
     damage repair reconstruction or restoration.

(f)  Damage Near End of Term. Landlord and Tenant shall each have the right to
     terminate this Lease if any damage to the Premises or the Building occurs
     during the last twelve (12) months of the Term of this Lease where Landlord
     s contractor estimates in a writing delivered to Landlord and Tenant that
     the repair reconstruction or restoration of such damage cannot be completed
     within sixty (60) days after the date of such casualty. If either party
     desires to terminate this Lease under this Subparagraph (f) it shall
     provide written notice to the other party of such election within ten (10)
     days after receipt of Landlord's contractor's repair estimates.

(g)  Waiver of Termination Right. Landlord and Tenant agree that the foregoing
     provisions of this Paragraph 20 are to govern their respective rights and
     obligations in the event of any damage or destruction and supersede and are
     in lieu of The provisions of any applicable law statute ordinance rule
     regulation order or ruling now or hereafter in force which provide remedies
     for damage or destruction of leased premises (including without limitation
     to the extent the Premises are located in California. The provisions of
     California Civil Code Section 1932 Subsection 2 and Section 1933 Subsection
     4 and any successor statute or laws of a similar nature).

21.  EMINENT DOMAIN.

(a)  Substantial Taking. If the whole of The Premises or such part hereof as
     shall substantially interfere with Tenant s use and occupancy of the
     Premises as contemplated by this Lease is taken for any public or quasi-
     public purpose by any lawful power or authority by exercise of the right of
     appropriation condemnation or eminent domain or sold to prevent such taking
     either party will have the right to terminate this Lease effective as of
     the date possession is required to be surrendered to such authority.

                                       16

 
(b)  Partial Taking; Abatement of Rent. in the event of a taking of a portion of
     the Premises which does not substantially interfere with Tenant s use and
     occupancy of the Premises including any temporary taking of ninety (90)
     days or less then neither party will have the right to terminate this Lease
     and Landlord will thereafter proceed to make a functional unit of the
     remaining portion of the Premises (but only to the extent Landlord receives
     proceeds therefor from the condemning authority) and rent will be abated
     with respect to the part of the Premises which Tenant is deprived of on
     account of such taking. Notwithstanding the immediately preceding sentence
     to the contrary it any part of the Building or the Project is taken
     (whether or not such taking substantially interferes with Tenant s use of
     the Premises) Landlord may terminate this Lease upon thirty (30) days prior
     written notice to Tenant if Landlord also terminates the leases of the
     other tenants of the Building which are leasing comparably sized space for
     comparable lease terms.

(c)  Condemnation Award. In connection with any taking of the Premises or the
     Building Landlord will be entitled to receive the entire amount of any
     award which may be made or given in such taking or condemnation without
     deduction or apportionment for any estate or interest of Tenant, it being
     expressly understood and agreed by Tenant that no portion of any such award
     will be allowed or paid to Tenant for any so-called bonus or excess value
     of This Lease and such bonus or excess value will be the sole property of
     Landlord. Tenant agrees not to assert any claim against Landlord or the
     taking authority for any compensation because of such taking (including any
     claim for bonus or excess value of this Lease); provided however, if any
     portion of the Premises is taken, Tenant will have the right to recover
     from the condemning authority (but not from Landlord) any compensation as
     may be separately awarded or recoverable by Tenant for the taking of
     Tenant's furniture, fixtures, equipment and other personal property within
     the Premises for Tenant's relocation expenses and for any loss of goodwill
     or other damage to Tenant's business by reason of such taking.

22.  DEFAULTS AND REMEDIES.

(a)  Defaults. The occurrence of any one or more of the following events will be
     deemed a default by Tenant:

(i)  The abandonment or vacation of the Premises by Tenant.

(ii) The failure by Tenant to make any payment of rent or additional rent or any
     other payment required to be made by Tenant hereunder as and when due where
     such failure continues for a period of three (3) days after written notice
     thereof from Landlord to Tenant; provided however that any such notice will
     be in lieu of and not in addition to any notice required under applicable
     law (including without limitation to the extent the Premises are located in
     California the provisions of California Code of Civil Procedure Section
     1161 regarding unlawful detainer actions or any successor statute or law of
     a similar nature).

                                       17

 
(iii)  The failure 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 Subparagraph 22(a)(i) or (ii) above
       where such failure continues for a period of five (5) days after written
       notice thereof from Landlord to Tenant The provisions of any such notice
       will be in lieu of and not in addition to any notice required under
       applicable law (including without limitation to the extent the Premises
       are located in California, California Code of Civil Procedure Section
       1161 regarding unlawful detainer actions and any successor statute or
       similar law). It the nature of Tenants default is such that more than
       five (5) days are reasonably required for its cure then Tenant will not
       be deemed to be in default if Tenant with Landlord's concurrence
       commences such cure within such five (5) day period and thereafter
       diligently prosecutes such cure to completion.

(iv) (A)  The making by Tenant of any general assignment for the benefit of
          creditors; (B) the Fling by or against Tenant of a petition to have
          Tenant adjudged a bankrupt 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 sixty
          (60) days); (C) 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 where possession is not
          restored to Tenant within thirty (30) days; or (D) 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 such seizure is not discharged within thirty (30) days.

(b)  Landlord's Remedies; Termination. In the event of any default by Tenant in
     addition to any other remedies available to Landlord at law or in equity
     under applicable law (including without limitation to the extent the
     Premises are located in California the remedies of Civil Code Section
     1951.4 and any successor statute or similar law) Landlord will have the
     immediate right and option to terminate this Lease and all rights of Tenant
     hereunder. If Landlord elects to terminate this Lease, then to the extent
     permitted under applicable law Landlord may recover from Tenant: (i) the
     worth at the lime of award of any unpaid rent which had been earned at the
     time of such termination plus (ii) the worth at the time of award of the
     amount by which the unpaid rent which would have been earned after
     termination until the time of award exceeds the amount of such rent loss
     that Tenant proves could have been reasonably avoided; plus (iii) the worth
     at the lime of award of the amount by which the unpaid rent for the balance
     of the Term after the time of award exceeds the amount of such rent loss
     that Tenant proves could be reasonably avoided plus (iv) 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 results therefrom including but not limited
     to:  attorneys fees and costs; brokers commissions; the costs of
     refurbishment alterations renovation and repair of the Premises and removal
     (including the repair of any damage caused by such removal) and storage (or
     disposal) of Tenant's personal property equipment fixtures alterations the
     Tenant improvements and any other items which Tenant is required under this
     Lease to remove but does not remove as well as the unamortized value of any
     tree rent reduced rent free parking reduced rate parking and any tenant
     improvement allowance or other costs or economic concessions 

                                       18

 
     provided paid granted or incurred by Landlord pursuant to this Lease. As
     used in Subparagraphs 22(b)(i) and (ii) above the worth at the time of
     award is computed by allowing interest at the interest Rate. As used in
     Subparagraph 22(b)(iii) above the worth at the time of award is computed by
     discounting such amount al the discount rate of the Federal Reserve Bank of
     San Francisco at the time of award plus one percent (1%).

(c)  Landlord s Remedies; Re-Entry Rights. In the event of any default by Tenant
     in addition to any other remedies available to Landlord under {his Lease at
     law or in equity Landlord will also have the right with or without
     terminating this Lease to re-enter the Premises and remove all persons and
     property from the Premises; such property may be removed and stored in a
     public warehouse or elsewhere and/or disposed of at the sole cost and
     expense of and for the account of Tenant in accordance with the provisions
     of Paragraph 13 of this Lease or any other procedures permitted by
     applicable law. No reentry or taking possession of the Premises by Landlord
     pursuant to this Subparagraph 22(c) will be construed as an election to
     terminate this Lease unless a written notice of such intention is given to
     Tenant or unless the termination thereof is decreed by a court of competent
     jurisdiction.

(d)  Landlord s Remedies; Re-Letting.  If Landlord does not elect to terminate
     this Lease Landlord may from time to time without terminating this Lease
     either recover all rent as If becomes due or relate the Premises or any
     part thereof on terms and conditions as Landlord in its sole and absolute
     discretion may deem advisable with the right to make alterations and
     repairs to the Premises in connection with such reletting. If Landlord
     elects to relet the Premises then rents received by Landlord from such
     reletting will be applied:  first to the payment of any indebtedness other
     than rent due hereunder from Tenant to Landlord; second to the payment of
     any cost of such reletting; third to the payment of the cost of any
     alterations and repairs to the Premises incurred in connection with such
     reletting; fourth to the payment of rent due and unpaid hereunder and the
     residue if any will be held by Landlord and applied to payment of future
     rent as the same may become due and payable hereunder. Should that portion
     of such rents received from such reletting during any month which is
     applied to the payment of rent hereunder be less than the rent payable
     during that month by Tenant hereunder then Tenant agrees to pay such
     deficiency to Landlord immediately upon demand therefor by Landlord. Such
     deficiency will be calculated and paid monthly.

(e)  Landlord's Remedies; Performance for Tenant. All covenants and agreements
     to be performed by Tenant under any of the terms of this Lease are to be
     performed by Tenant al Tenant s sole cost and expense and without any
     abatement of rent. If Tenant fails to pay any sum of money owed to any
     party other than Landlord for which it is liable under this Lease or it
     Tenant fails to perform any other act on its part to be performed hereunder
     and such failure continues for ten (10) days after notice thereof by
     Landlord, Landlord may without waiving or releasing Tenant from its
     obligations but shall not be obligated to make any such payment or perform
     any such other act to be made or performed by Tenant. Tenant agrees to
     reimburse Landlord upon demand for all sums so paid by Landlord and all
     necessary incidental costs together with interest thereon at the Interest
     Rate from the date of such payment by Landlord 

                                       19

 
     until reimbursement by Tenant. This remedy shall be in addition to any
     other right or remedy of Landlord set forth in this Paragraph 22.

(f)  Late Payment. If Tenant fails to pay any installment of rent within seven
     (7) days when due or fi Tenant fails to make any other payment for which
     Tenant is obligated under this Lease when due, such late amount will accrue
     interest at the Interest Rate until such amount is paid by Tenant to
     Landlord. In addition Tenant agrees to pay to Landlord concurrently with
     such late payment amount as additional rent, a late charge equal to ten
     percent (10%) of the amount due to compensate Landlord for the extra costs
     Landlord will incur as a result of such late payment. Landlord and Tenant
     agree that such late charge represents a fair and reasonable estimate of
     the costs that Landlord will incur by reason of any such late payment.
     Acceptance of any such interest and late charge will not constitute a
     waiver of the Tenant's default with respect to the overdue amount or
     prevent Landlord from exercising any of the other rights and remedies
     available to Landlord. If Tenant incurs a late charge more than three (3)
     times in any period of twelve (12) months during the Lease Term then
     notwithstanding that Tenant cures the late payments for which such late
     charges are imposed Landlord will have the right to require Tenant
     thereafter to pay all installments of Monthly Base Rent quarterly in
     advance in the form of a cashiers check throughout the remainder of the
     Lease Term. Any payments of any kind returned for insufficient funds will
     be subject to an additional handling charge of $25.00 and thereafter
     Landlord may require Tenant to pay all future payments of rent or other
     sums due by money order or cashier's check.

(g)  Rights and Remedies Cumulative. All rights options and remedies of Landlord
     contained in this Lease will be construed and held to be cumulative and no
     one of them will be exclusive of the other and Landlord shall have the
     right to pursue any one or all of such remedies or any other remedy or
     relief which may be provided by law or in equity whether or not stated in
     this Lease. Nothing in this Paragraph 22 will be deemed to limit or
     otherwise affect Tenant's indemnification of Landlord pursuant to any
     provision of This Lease.

23.  LANDLORD'S DEFAULT. Landlord will not be in default in the performance of
     any obligation required to be performed by Landlord under this Lease unless
     Landlord fails to perform such obligation within thirty (30) days after the
     receipt of written notice from Tenant specifying in detail Landlord's
     failure to perform; provided however that it the nature of Landlord's
     obligation is such that more than thirty (30) days are required for
     performance, then Landlord will not be deemed in default if it commences
     such performance within such thirty (30) day period and thereafter
     diligently pursues the same to completion. Upon any default by Landlord
     Tenant may exercise any of its rights provided at law or in equity subject
     to the limitations on liability set forth in Paragraph 35 of This Lease.

24.  ASSIGNMENT AND SUBLETTING.

(a)  Restriction on Transfer. Except as expressly provided in this Paragraph 24
     Tenant will not either voluntarily or by operation of law assign or
     encumber this Lease or any interest herein 

                                       20

 
     or sublet the Premises or any part thereof or permit the use or occupancy
     of the Premises by any party other than Tenant (any such assignment
     encumbrance sublease or the like will sometimes be referred to as a
     Transfer) without the prior written consent of Landlord, which consent
     Landlord will not unreasonably withhold. For purposes of this Paragraph 24
     it Tenant is a corporation partnership or other entity any transfer
     assignment, encumbrance or hypothecation of fifty percent (50%) or more
     (individually or in the aggregate) of any stock or other ownership interest
     in such entity and/or any transfer, assignment, hypothecation or
     encumbrance of any controlling ownership or voting interest in such entity
     will be deemed a Transfer and will be subject to all of the restrictions
     and provisions contained in this Paragraph 24; provided however, this
     provision will not apply to public corporations the stock of which is
     traded through a public stock exchange or over the counter system.

(b)  Transfer Notice. If Tenant desires to elect a Transfer, then at least
     thirty (30) days prior to the date when Tenant desires the Transfer to be
     effective (the Transfer Date) Tenant agrees to give Landlord a notice (the
     Transfer Notice ) stating the name address and business of the proposed
     assignee sublessee or other transferee (sometimes referred to hereinafter
     as Transferee) reasonable information (including references) concerning the
     character ownership and financial condition of the proposed Transferee the
     Transfer Date any ownership or commercial relationship between Tenant and
     the proposed Transferee and the consideration and all other material terms
     and conditions of the proposed Transfer all in such detail as Landlord may
     reasonably require.

(c)  Landlords Options. Within fifteen (15) days of Landlords receipt of any
     Transfer Notice and any additional information requested by Landlord
     concerning the proposed Transferee's financial responsibility, Landlord
     will notify Tenant of its election to do one of the following:  (i) consent
     to the proposed Transfer subject to such reasonable conditions as Landlord
     may impose in providing such consent; (ii) refuse such consent which
     refusal shall be on reasonable grounds; or (iii) terminate this Lease as to
     all or such portion of the Premises which is proposed to be sublet or
     assigned and recapture all or such portion of the Premises for reletting by
     Landlord.

(d)  Additional Conditions. A condition to Landlord's consent to any transfer of
     this Lease will be the delivery to Landlord of a true copy of the fully
     executed instrument of assignment, sublease, transfer or hypothecation in
     form and substance reasonably satisfactory to Landlord. Tenant agrees to
     pay to Landlord as additional rent all sums and other consideration payable
     to and for the benefit of Tenant by the assignee or sublessee in excess of
     the rent payable under this Lease for the same period and portion of the
     Premises. In calculating excess rent or other consideration which may be
     payable to Landlord under this paragraph Tenant will be entitled to deduct
     commercially reasonable third party brokerage commissions and attorneys
     fees and other amounts reasonably and actually expended by Tenant in
     connection with such assignment or subletting if acceptable written
     evidence of such expenditures is provided to Landlord. No Transfer will
     release Tenant of Tenant's obligations under This Lease or alter the
     primary liability of Tenant to pay the rent and to perform all other
     obligations to be performed by Tenant hereunder. Landlord may require that
     any Transferee remit directly to Landlord on a monthly 

                                       21

 
     basis all monies due Tenant by said Transferee. Consent by Landlord to one
     Transfer will not be deemed consent to any subsequent Transfer. In the
     event of default by any Transferee of Tenant or any successor of Tenant in
     the performance of any of the terms hereof, Landlord may proceed directly
     against Tenant without the necessity of exhausting remedies against such
     Transferee or successor. If Tenant effects a Transfer or requests the
     consent of Landlord to any Transfer (whether or not such Transfer is
     consummated), then, upon demand, Tenant agrees to pay Landlord a non-
     refundable administrative fee of not less than One Hundred Dollars
     ($100.00) and actual expenses incurred, plus Landlord's reasonable
     attorneys' fees.

25.  SUBORDINATION. Without the necessity of any additional document being
     executed by Tenant for the purpose of effecting a subordination and at the
     election of Landlord or any mortgagee or beneficiary with a deed of trust
     encumbering the Building and/or the Project or any lessor of a ground or
     underlying lease with respect to the Building, this Lease will be subject
     and subordinate at all times to: (i) all ground leases or underlying leases
     which may now exist or hereafter be executed affecting the Building; and
     (ii) the lien of any mortgage or deed of trust which may now exist or
     hereafter be executed for which the Building, the Project or any leases
     thereof or Landlord's interest and estate in any of said items is specified
     as Security. Notwithstanding the foregoing, Landlord reserves the right to
     subordinate any such ground leases or underlying leases or any such liens
     to This Lease. If any such ground lease or underlying lease terminates for
     any reason or any such mortgage or deed of trust is foreclosed or a
     conveyance in lieu of foreclosure is made for any reason, at the election
     of Landlord's successor in interest, Tenant agrees to attorn to and become
     the tenant of such successor in wich event Tenant s right to possession of
     The Premises will not be disturbed as long as Tenant is not in default
     under this Lease. Tenant hereby waives its rights under any law which gives
     or purports to give Tenant any right to terminate or otherwise adversely
     affect this Lease and the obligations of Tenant hereunder in the event of
     any such foreclosure proceeding or sale. Tenant covenants and agrees to
     execute and deliver upon demand by Landlord and in the form reasonably
     required by Landlord any additional documents evidencing the priority or
     subordination of this Lease and Tenant's attornment agreement with respect
     to any such ground lease or underlying leases or the lien of any such
     mortgage or deed of trust. If Tenant fails to sign and return any such
     documents within ten (10) days of receipt, Tenant will be in default
     hereunder.

26.  ESTOPPEL CERTIFICATE. Within ten (10) days following any written request
     which Landlord may make from time to time, Tenant agrees to execute and
     deliver to Landlord an estoppel certificate in Landlord's standard form or
     as may reasonably be required by Landlord's lender. Landlord and Tenant
     intend that any Statement delivered pursuant to this Paragraph 26 may be
     relied upon by any mortgagee , purchaser or prospective purchaser of the
     Building or any interest therein. Tenant's failure to deliver such
     statement within such time will be conclusive upon Tenant (i) that this
     Lease is in full force and effect without modification except as may be
     represented by Landlord (ii) that there are no uncured defaults in
     Landlord's performance and (iii) that not more than one (1) month's rent
     has been paid in advance. Without limiting the foregoing if Tenant fails to
     deliver any such statement within such ten (10) day period Landlord may
     deliver to Tenant an additional request for such Statement and Tenant's
     failure to deliver 

                                       22

 
     such Statement to Landlord within ten (10) days after delivery of such
     additional request will constitute a default under this Lease. Tenant
     agrees to indemnify and protect Landlord from and against any and all
     claims, damages, losses, liabilities and expenses (including attorneys fees
     and costs) attributable to any failure by Tenant to timely deliver any such
     estoppel certificate to Landlord as required by this Paragraph 26.

27.  BUILDING PLANNING. If Landlord requires the Premises for use in conjunction
     with another suite or for other reasons connected with the planning program
     for the Building or the Project, Landlord will have the right upon sixty
     (60) days prior written notice to Tenant to move Tenant to other space in
     the Building of substantially similar size as the Premises and with tenant
     improvements of substantially similar age, quality and layout as then
     existing in the Premises. Any such relocation will be at Landlord's cost
     and expense including the cost of providing such substantially similar
     tenant improvements (but not any furniture or personal property) and
     Tenant's reasonable moving, telephone installation and stationary
     reprinting costs. If Landlord so relocates Tenant, the terms and conditions
     of this Lease will remain in full force and effect and apply to the new
     space except that (a) a revised Exhibit A will become part of this Lease
     and will reflect the location of the new space, (b) Paragraph 1 of This
     Lease will be amended to include and state all correct data as to the new
     space, (c) the new space will thereafter be deemed to be the Premises and
     (d) all economic terms and conditions (e.g. rent, total Operating Expense
     Allowance, etc.) will be adjusted on a per square foot basis based on the
     total number of rentable square feel of area contained in the new space.
     Landlord and Tenant agree to cooperate fully with one another in order to
     minimize the inconvenience to Tenant resulting from any such relocation.

28.  RULES AND REGULATIONS. Tenant agrees to faithfully observe and comply with
     the Rules and Regulations, a copy of which is attached hereto and
     incorporated herein by this reference as Exhibit E, and all reasonable and
     nondiscriminatory modifications thereof and additions thereto from time to
     time put into effect by Landlord. Landlord will not be responsible to
     Tenant for the violation or non-performance by any other tenant or occupant
     of the Building of any of the Rules and Regulations.

29.  MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND LESSORS. Tenant
     within ten (10) days after request therefor agrees to execute any
     reasonable amendments to this Lease which may be requested by any lender or
     ground lessor of the Project provided any such amendments do not increase
     the obligations of Tenant under this Lease or adversely affect the
     leasehold estate created by this Lease. In the event of any default on the
     part of Landlord Tenant will give notice by registered or certified mail to
     any beneficiary of a deed of trust or mortgage covering The Premises or
     ground lessor of Landlord whose address has been furnished to Tenant and
     Tenant agrees to offer such beneficiary, mortgagee or ground lessor a
     reasonable opportunity to cure The default (including with respect to any
     such beneficiary or mortgagee time to obtain possession of the Premises
     subject to This Lease and Tenant's rights hereunder by power of sale or a
     judicial foreclosure if such should prove necessary to effect a cure).

                                       23

 
30.  DEFINITION OF LANDLORD. The term Landlord as used in this Lease, so far as
     covenants or obligations on the part of Landlord are concerned, means and
     includes only the owner or owners at the time in question of the fee title
     of the Premises or the lessees under any ground lease if any. In the event
     of any transfer assignment or other conveyance or transfers of any such
     title (other than a transfer for security purposes only) Landlord herein
     named (and in case of any subsequent transfers or conveyances, the then
     grantor) will be automatically relieved from and after the date of such
     transfer, assignment or conveyance of all liability as respects. The
     performance of any covenants or obligations on the part of Landlord
     contained in this Lease thereafter to be performed so long as the
     transferee assumes in writing all such covenants and obligations of
     Landlord arising after the date of such transfer. Landlord and Landlord's
     transferees and assignees have the absolute right to transfer all or any
     portion of their respective title and interest in the Project, the
     Building, the Premises and/or this Lease without the consent of Tenant and
     such transfer or subsequent transfer will not be deemed a violation on
     Landlord's part of any of the terms and conditions of This Lease.

31.  WAIVER. The waiver by either party of any breach or any term, covenant or
     condition herein contained will not be deemed to be a waiver of any
     subsequent breach of the same or any other term, covenant or condition
     herein contained, nor will any custom or practice which may develop between
     the parties in the administration of the terms hereof be deemed a waiver of
     or in any way affect the right of either party to insist upon performance
     in strict accordance with said terms. The subsequent acceptance of rent or
     any other payment hereunder by Landlord will not be deemed to be a waiver
     of any preceding breach by Tenant of any term covenant or condition of this
     Lease other than the failure of Tenant to pay the particular rent so
     accepted regardless of Landlord's knowledge of such preceding breach at the
     time of acceptance of such rent. No acceptance by Landlord of a lesser sum
     than the basic rent and additional rent or other sum then due will be
     deemed to be other than on account of the earliest installment of such rent
     or other amount due nor will any endorsement or statement on any check or
     any letter accompanying any check be deemed an accord and satisfaction and
     Landlord may accept such check or payment without prejudice to Landlord's
     right to recover the balance of such installment or other amount or pursue
     any other remedy provided in This Lease. The consent or approval of
     Landlord to or of any act by Tenant requiring Landlord's consent or
     approval will not be deemed to waive or render unnecessary Landlord's
     consent or approval to or of any subsequent similar acts by Tenant.

32.  PARKING. So long as this Lease is in effect and provided Tenant is not in
     default hereunder, Landlord grants to Tenant, Tenant's visitors and guests
     a non-exclusive license to use the parking areas which serve the Building
     subject to the terms and conditions of this Paragraph 32 and the Rules and
     Regulations regarding parking contained in Exhibit E attached hereto.
     Tenant will not use or allow any of Tenant's employees or guests to use any
     parking spaces which have been specifically assigned by Landlord to other
     tenants or occupants or for other uses such as visitor parking or which
     have been designated by any governmental entity as being restricted to
     certain uses. Landlord may assign any unreserved and unassigned parking
     spaces and/or make all or any portion of such spaces reserved if Landlord
     reasonably determines that it 

                                       24

 
     is necessary for orderly and efficient parking or for any other reasonable
     reason. Tenant agrees to cause its employees subtenants, assignees,
     contractors, suppliers, customers and invitees to comply with the Rules and
     Regulations. Landlord reserves the right from time to lime to modify and/or
     adopt such other reasonable and non-discriminatory rules and regulations
     for the parking facilities as if deems reasonably necessary for the
     operation of the parking facilities.

33.  FORCE MAJEURE. If either Landlord or Tenant is delayed hindered in or
     prevented from the performance of any act required under this Lease by
     reason of strikes, lock-outs, labor troubles, inability to procure standard
     materials, failure of power, restrictive governmental laws, regulations or
     orders or governmental action or inaction (including failure, refusal or
     delay in issuing permits, approvals and/or authorizations which is not the
     result of the action or inaction of the party claiming such delay), riots,
     civil unrest or insurrection, war, fire, earthquake, flood or other natural
     disaster, unusual and unforeseeable delay which results from an
     interruption of any public utilities (e.g., electricity, gas, water,
     telephone) or other unusual and unforeseeable delay not within the
     reasonable control of the party delayed in performing work or doing acts
     required under the provisions of this Lease, then performance of such act
     will be excused for the period of the delay and the period for the
     performance of any such act will be extended for a period equivalent to the
     period of such delay. The provisions of this Paragraph 33 will not operate
     to excuse Tenant from prompt payment of rent or any other payments required
     under the provisions of this Lease.

34.  SIGNS. Landlord will designate the location on the Premises it any for one
     or more Tenant identification sign(s). Tenant has no right to install
     Tenant identification signs in any other location in on or about the
     Premises or the Project and will not display or erect any other signs,
     displays or other advertising materials that are visible from the exterior
     of the Building or from within the Building in any interior or exterior
     common areas. The size design color and other physical aspects of any and
     all permitted sign(s) will be subject to (i) Landlord's written approval
     prior to installation which approval may be withheld in Landlord s
     discretion (ii) any covenants conditions or restrictions and sign criteria
     governing the Project and (iii) any applicable municipal or governmental
     permits and approvals. Tenant will be solely responsible for all costs for
     installation, maintenance, repair and removal of any Tenant identification
     sign(s). If Tenant fails to remove Tenant's sign(s) upon termination of
     this Lease and repair any damage caused by such removal, Landlord may do so
     at Tenant's sole cost and expense. Tenant agrees to reimburse Landlord for
     all costs incurred by Landlord to effect any installation, maintenance or
     removal on Tenant's account, which amount will be deemed additional rent
     and may include without limitation all sums disbursed, incurred or
     deposited by Landlord, including Landlord's costs, expenses and actual
     attorneys fees with interest thereon at the Interest Rate from the date of
     Landlord's demand until paid by Tenant. Any sign rights granted to Tenant
     under this Lease are personal to Tenant and may not be assigned transferred
     or otherwise conveyed to any assignee or subtenant of Tenant without
     Landlord's prior written consent, which consent Landlord may withhold in
     its sole and absolute discretion.

                                       25

 
35.  LIMITATION ON LIABILITY. In consideration of the benefits accruing
     hereunder Tenant on behalf of itself and all successors and assigns of
     Tenant covenants and agrees that in the event of any actual or alleged
     failure breach or default hereunder by Landlord: (a) Tenant's recourse
     against Landlord for monetary damages will be limited to Landlord's
     interest in the Building including subject to the prior rights of any
     Mortgagee Landlord's interest in the rents of the Building and any
     insurance proceeds payable to Landlord; (b) except as may be necessary to
     secure jurisdiction of the partnership no partner of Landlord shall be sued
     or named as a party in any suit or action and no service of process shall
     be made against any partner of Landlord; (c) no partner of Landlord shall
     be required to answer or otherwise plead to any service of process; (d) no
     judgment will be taken against any partner of Landlord and any judgment
     taken against any partner of Landlord may be vacated and set aside at any
     time after the fact; (e) no writ of execution will be levied against the
     assets of any partner of Landlord; (t) the obligations under this Lease do
     not constitute personal obligations of the individual partners, directors,
     officers or shareholders of Landlord and Tenant shall not seek recourse
     against the individual partners, directors, officers or shareholders of
     Landlord or any of their personal assets for satisfaction of any liability
     in respect to this Lease; and (g) these covenants and agreements are
     enforceable both by Landlord and also by any partner of Landlord.

36.  FINANCIAL STATEMENTS. Prior to the execution of this Lease by Landlord and
     at any time during the Term of this Lease upon ten (10) days prior written
     notice from Landlord Tenant agrees to provide Landlord with a current
     financial statement for Tenant and any guarantors of Tenant and financial
     statements for the two (2) years prior to the current financial statement
     year for Tenant and any guarantors of Tenant. Such statements are to be
     prepared in accordance with generally accepted accounting principles and,
     if such is the normal practice of Tenant audited by an independent
     certified public accountant.

37.  QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that upon Tenant
     paying the rent required under this Lease and paying all other charges and
     performing all of the covenants and provisions on Tenant's part to be
     observed and performed under this Lease Tenant may peaceably and quietly
     have hold and enjoy the Premises in accordance with This Lease.

38.  MISCELLANEOUS.

(a)  Conflict of Laws. This Lease shall be governed by and construed solely
     pursuant to the laws of the State without giving effect to choice of law
     principles thereunder.

(b)  Successors and Assigns. Except as otherwise provided in this Lease all of
     the covenants conditions and provisions of this Lease shall be binding upon
     and shall inure to the benefit of the parties hereto and their respective
     heirs personal representatives successors and assigns.

(c)  Professional Fees and Costs. If either Landlord or Tenant should bring suit
     against the other with respect to this Lease, then all costs and expenses,
     including without limitation, actual professional fees and costs such as
     appraisers, accountants and attorneys fees and costs incurred 

                                       26

 
     by the party which prevails in such action, whether by final judgment or
     out of court settlement, shall be paid by the other party, which obligation
     on the part of the other party shall be deemed to have accrued on the date
     of the commencement of such action and shall be enforceable whether or not
     the action is prosecuted to judgment. As used herein attorneys fees and
     costs shall include without limitation attorneys fees costs and expenses
     incurred in connection with any (i) post-judgment motions; (ii) contempt
     proceedings; (iii) garnishment levy and debtor and third party examination;
     (iv) discovery; and (v) bankruptcy litigation. Tenant agrees to pay all
     collection agency fees and attorneys lees charged to Landlord in connection
     with any late payment or non-payment of rent or any other amounts due under
     this Lease including without limitation a fee of $75.00 for the preparation
     of any demand for delinquent rent or any notice to pay rent or quit.

(d)  Terms and Headings. The words Landlord and Tenant as used herein shall
     include The plural as well as the singular. Words used in any gender
     include other genders. The paragraph headings of this Lease are not a part
     of this Lease and shall have no effect upon the construction or
     interpretation of any part hereof.

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

(f)  Prior Agreement; Amendments. This Lease constitutes and is intended by the
     parties to be a final, complete and exclusive statement of their entire
     agreement with respect to the subject matter of this Lease. This Lease
     supersedes any and all prior and contemporaneous agreements and
     understandings of any kind relating to the subject matter of this Lease.
     There are no other agreements, understandings, representations, warranties
     or statements, either oral or in written form, concerning the subject
     matter of this Lease. No alteration modification amendment or
     interpretation of this Lease shall be binding on the parties unless
     contained in a writing which is signed by both parties.

(g)  Separability. The provisions of this Lease shall be considered separable
     such that it any provision or part of this Lease is ever held to be
     invalid, void or illegal under any law or ruling all remaining provisions
     of this Lease shall remain in full force and effect to the maximum extent
     permitted by law.

(h)  Recording. Neither Landlord nor Tenant shall record this Lease nor a short
     form memorandum thereof without the consent of the other.

(i)  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.

(j)  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 Landlords relationship with
     other tenants. Accordingly, Tenant agrees that it, and its partners,

                                       27

 
     officers, directors, employees, agents and attorneys, shall not
     intentionally and voluntarily disclose the terms and conditions of this
     Lease to any newspaper or other publication or any other Tenant or apparent
     prospective tenant of the Building or other portion of the Project, or real
     estate agent, 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.

(k)  Non-Discrimination. Tenant acknowledges and agrees that there shall be no
     discrimination against, or segregation of, any person, group of persons, or
     entity on the basis of race, color, creed, religion, age, sex, marital
     status, national origin, or ancestry in the leasing, subleasing,
     transferring, assignment, occupancy, tenure, use, or enjoyment of the
     Premises, or any portion thereof.

39.  EXECUTION OF LEASE.

(a)  Joint and Several Obligations.  If more than one person executes this Lease
     as Tenant, their execution of this Lease will constitute their covenant and
     agreement that (i) each of them is jointly and severally liable for the
     keeping, observing and performing of all of the terms, covenants,
     conditions, provisions and agreements of this Lease to be kept, observed
     and performed by Tenant, and (ii) the term Tenant as used in this Lease
     means and includes each of them jointly and severally.

     The act of or notice from, or notice or refund to, or the signature of any
     one or more of them, with respect to the tenancy of this Lease, including,
     but not limited to, any renewal, extension, expiration, termination or
     modification of this Lease, will be binding upon each and all of the
     persons executing this Lease as Tenant with the same force and effect as if
     each and all of them had so acted or so given or received such notice or
     refund or so signed.

(b)  Tenant as Corporation or Partnership. If Tenant executes this Lease as a
     corporation or partnership, then Tenant and the persons executing this
     Lease on behalf of Tenant represent and warrant that such entity is duly
     qualified and in good standing to do business in California and that the
     individuals executing this Lease on Tenant's behalf are duly authorized to
     execute and deliver this Lease on its behalf, and in the case of a
     corporation, in accordance with a duly adopted resolution of the board of
     directors of Tenant, a copy of which is to be delivered to Landlord on
     execution hereof, if requested by Landlord, and in accordance with the by-
     laws of Tenant, and, in the case of a partnership, in accordance with the
     partnership agreement and the most current amendments thereto, if any,
     copies of which are to be delivered to Landlord on execution hereof, if
     requested by Landlord, and that this Lease is binding upon Tenant in
     accordance with its terms.

(c)  Examination of Lease. Submission of this instrument by Landlord to Tenant
     for examination or signature by Tenant does not constitute a reservation of
     or option for lease, and it 

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     is not effective as a lease or otherwise until execution by and delivery to
     both Landlord and Tenant.

IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed by
their duly authorized representatives as of the date first above written.

TENANT:                                       LANDLORD:

Litronic Industries, Inc.,                    Airport Industrial Complex,
a California Corporation                      a California Limited Partnership


By:   /S/   XXXX XXXX                         By:   /S/   XXXXX XXXXX
   -------------------------------                -------------------------
Name:     Xxxx Xxxx                           Name:     Xxxxx X. Xxxxx
Title:    Chief Executive Officer             Title:    Senior Manager

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