Sample Business Contracts


California-Los Angles-5670 Wilshire Boulevard Lease - 5670 Wilshire LP and ARTISTdirect Network

Lease Forms

  • Start a state-specific lease for the rental of commercial property. Specify the term and rent due, as well as whether the landlord or tenant is responsible for property taxes, insurance, and maintenance and repairs.
  • When a tenant vacates commercial property before the lease term has expired, it may be able to rent the premises to a third party. The tenant would be the sublessor and the third party would be the sublessee. Besides preparing a sublease, both parties will want to review the provisions for assignment or subletting in the original lease agreement between the landlord and the sublessor.
  • Tenants of residential property should prepare a sublease agreement if they are seeking to sublease a room or the entire apartment or house to a third party. All parties should review the original lease agreement to see if there are any restrictions on subletting or assigning the premises.
  • Triple net leases are a type of commercial leases where the tenant has to pay for property taxes, insurance, utilities, and maintenance, in addition to the monthly rent.
  • When renting an office space, tenants should understand the amount of the rent and duration of the lease. Other important terms include whether the space can be subleased, which parties are responsible for maintenance, and whether any furniture and furnishings will be provided.

                             5670 WILSHIRE BOULEVARD

                                  OFFICE LEASE

     This Office Lease (the "Lease"), dated as of the date set forth in Section
1 of the Summary of Basic Lease Information (the "Summary"), below, is made by
and between 5670 WILSHIRE L.P., a California limited partnership ("Landlord"),
and ARTISTDIRECT NETWORK a Delaware corporation ("Tenant").

                       SUMMARY OF BASIC LEASE INFORMATION

TERMS OF LEASE                    DESCRIPTION

1.  Date:                         December 13, 1999

2.  Premises
    (Article 1).

    2.1  Building:                5670 Wilshire Boulevard

    2.2  Premises:                Approximately 63,955 rentable (56,365 usable)
                                  square feet of space in the aggregate,
                                  comprised of the entire second (2nd) (29,870
                                  rentable, 26,257 usable, square feet) (the
                                  "Second Floor Premises") and third (3rd)
                                  (34,085 rentable, 30,108 usable, square feet)
                                  (the "Third Floor Premises") floors of the
                                  Building, as further set forth in Exhibit A
                                  to the Office Lease.

3.  Lease Term
    (Article 2).

    3.1  Length of Term:          Approximately ten (10) years and three (3)
                                  months.

    3.2  Lease Commencement Date: The earlier to occur of (i) the expiration of
                                  the applicable "Construction Period," as that
                                  term is defined in Section 1 of the "Tenant
                                  Work Letter" attached hereto as Exhibit B,
                                  for the Second Floor Premises, and (ii) the
                                  expiration of the applicable Construction
                                  Period for the Third Floor Premises, after
                                  the delivery of any such space by Landlord
                                  pursuant to the terms of Section 1 of the
                                  Tenant Work Letter.

    3.3  Lease Expiration Date:   April 30, 2010.


<PAGE>   2


4.  Base Rent
    (Article 3):
                                                                                   Monthly
                                                           Monthly               Rental Rate
Period During                   Annual                  Installment              per Rentable
 Lease Term                   Base Rent*               of Base Rent*             Square Foot
----------                   ----------                -------------             ------------

                                                                       
Lease Commencement Date         $997,698.00              $83,141.50                  $1.30
through April 30, 2001

May 1, 2001, through          $1,742,134.20             $145,177.85                  $2.27
   April 30, 2005

May 1, 2005 through           $1,933,999.20             $161,166.60                  $2.52
  April 30, 2010



                                        * The total monthly Base
                                        Rent payable for any
                                        particular period of the
                                        Lease Term shall equal
                                        the product of (i) the
                                        total rentable square
                                        footage of the portion
                                        of the Premises for
                                        which the applicable
                                        Construction Period has
                                        expired, and (ii) the
                                        Monthly Rental Rate set
                                        forth above.

5.   Base Year
     (Article 4):                       The calendar year 2000.

6.   Tenant's Share
     (Article 4):                       Approximately 7.32% for the Second Floor
                                        Premises, 8.35% for the Third Floor
                                        Premises; provided that Tenant's Share
                                        for any particular period of the Lease
                                        Term shall be calculated by multiplying
                                        the total rentable square footage of the
                                        portion of the Premises for which the
                                        applicable Construction Period has
                                        expired, by 100, and dividing the
                                        product by the total rentable square
                                        footage of the Building.

7.   Permitted Use
     (Article 5):                       General office use
                                        and uses incidental to
                                        the conduct of Tenant's
                                        business of internet and
                                        music/entertainment and
                                        broadband broadcasting
                                        only, consistent with a
                                        first-class office
                                        building which allows
                                        such uses.

8.   Letter of Credit
     (Article 21):                      $2,258,136.38.

9.   Parking Pass Ratio
     (Article 28):                      Four (4) unreserved
                                        parking passes for every
                                        1,000 usable square feet
                                        of the Premises, of
                                        which six-tenths (.6) of
                                        a pass for every 1,000
                                        usable square feet of
                                        the Premises shall be
                                        for the use of a
                                        reserved parking space.

10.  Address of Tenant
     (Section 29.18):                   ARTISTdirect network
                                        17835 Ventura Boulevard
                                        Suite 310
                                        Encino, California 91316
                                        Attention:  Mr. James Carroll


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<PAGE>   3

                                       with a copy to:

                                       Troop Steuber Pasich Reddick & Tobey,
                                       LLP 2029 Century Park East, Suite 2400
                                       Los Angeles, California 90067
                                       Attention: Robert J. Plotkowski, Esq.
                                       (Prior to Lease Commencement Date)

                                       and

                                       ARTISTdirect network
                                       5670 Wilshire Boulevard
                                       Los Angeles, California  90036
                                       Attention: Mr. James Carroll

                                       with a copy to:

                                       Troop Steuber Pasich Reddick & Tobey, LLP
                                       2029 Century Park East, Suite 2400
                                       Los Angeles, California 90067
                                       Attention: Robert J. Plotkowski, Esq.
                                       (After Lease Commencement Date)

11.  Address of Landlord
     (Section 29.18):                  See Section 29.16 of the Lease.

12.  Broker(s)                         JSG Realty, Inc.
     (Section 29.24):                  5757 Wilshire Boulevard
                                       Penthouse 30
                                       Los Angeles, California  90036

                                       and

                                       Julien J. Studley
                                       10960 Wilshire Boulevard
                                       Suite 1500
                                       Los Angeles, California  90024


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                                    ARTICLE 1

         PREMISES, BUILDING, PROJECT, AND COMMON AREAS; VERIFICATION OF
                   RENTABLE SQUARE FEET; RIGHT OF FIRST OFFER

     .1 PREMISES, BUILDING, PROJECT AND COMMON AREAS; LANDLORD MODIFICATION OF
        PROJECT.

          .1.1 THE PREMISES. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the premises set forth in Section 2.2 of the Summary (the
"Premises"). The outline of the Premises is set forth in Exhibit A attached
hereto and each floor or floors of the Premises has the number of rentable
square feet as set forth in Section 2.2 of the Summary. The parties hereto agree
that the lease of the Premises is upon and subject to the terms, covenants and
conditions herein set forth, and Tenant covenants as a material part of the
consideration for this Lease to keep and perform each and all of such terms,
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of such performance. The parties hereto hereby
acknowledge that the purpose of Exhibit A is to show the approximate location of
the Premises in the "Building," as that term is defined in Section 1.1.2, below,
only, and such Exhibit is not meant to constitute an agreement, representation
or warranty as to the size of the Premises. Tenant also acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty regarding the condition of the Premises, the Building or the Project or
with respect to the suitability of any of the foregoing for the conduct of
Tenant's business, except as specifically set forth in this Lease and the Tenant
Work Letter attached hereto as Exhibit B (the "Tenant Work Letter").

          .1.2 THE BUILDING AND THE PROJECT. The Premises are a part of the
building set forth in Section 2.1 of the Summary (the "Building"). The term
"Project," as used in this Lease, shall mean (i) the Building and the Common
Areas, (ii) the land (which is improved with landscaping, subterranean parking
facilities and other improvements) upon which the Building and the Common Areas
are located, and (iii) at Landlord's discretion, any additional real property,
areas, land, buildings or other improvements added thereto outside of the
Project.

          .1.3 COMMON AREAS. Tenant shall have the non-exclusive right to use in
common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project (such areas, together with such
other portions of the Project designated by Landlord, in its discretion,
including certain areas designated for the exclusive use of certain tenants, or
to be shared by Landlord and certain tenants, are collectively referred to
herein as the "Common Areas"). The term "Building Common Areas," as used in this
Lease, shall mean the portions of the Common Areas located within the Building.
The manner in which the Common Areas are maintained and operated shall be at the
sole discretion of Landlord and the use thereof shall be subject to such rules,
regulations and restrictions as Landlord may make from time to time (the "Rules
and Regulations"). Landlord shall use reasonable efforts to cause other tenants
or occupants of the Project to comply with the Rules and Regulations and to
avoid any unreasonable, material interference of Tenant's use of the Premises as
a result of the failure of such other tenants or occupants to comply with the
Rules and Regulations. The Rules and Regulations of the Project, attached to and
made a part of the Lease as Exhibit "D," shall not be changed or revised or
enforced in any unreasonable way by Landlord, nor enforced or changed by
Landlord in such a way as to substantially interfere with "Tenant's Lease
Rights," as that term is defined in Section 1.1.4 of this Lease. In the event of
any conflict between this Lease and this Rules and Regulations, the Lease shall
prevail and control and the inconsistent provisions of the Rules and Regulations
shall not be inapplicable to Tenant. Landlord reserves the right to close
temporarily, make alterations or additions to, or change the location of
elements of the Project and the Common Areas.

          .1.4 LANDLORD MODIFICATION OF THE PROJECT. Notwithstanding anything to
the contrary set forth in Section 1.1.2, Section 1.1.3, the Rules and
Regulations or elsewhere in the Lease, Landlord shall not modify the Common Area
or any other portion of the Project in such a manner which shall (i) materially
reduce the common facilities available to the Building, (ii) materially diminish
the amount of visitor parking available to the Building; or (iii) unreasonably
obstruct or interfere with the accessibility of the Premises, the Building or
the parking areas, the



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<PAGE>   5

visibility of Tenant's signage or Tenant's use and enjoyment of the Premises or
the Building or the parking areas ("Tenant's Lease Rights").

     .2 VERIFICATION OF RENTABLE SQUARE FEET OF FIRST OFFER SPACE. The rentable
and usable square feet of the initial Premises shall be as set forth in Section
2.2 of the Summary and shall not be subject to remeasurement or modification.
The usable areas of any "First Offer Space" and any "Expansion Space," as those
terms are defined in Sections 1.3 and 1.4, respectively, of this Lease, shall be
determined in accordance with the standards set forth in ANSI Z65.1-1996, as
promulgated by the Building Owners and Managers Association (the "BOMA
Standard"). The rentable square footage of any First Offer Space and/or any
Expansion Space shall equal the product of (i) the usable square footage of the
applicable space measured pursuant to the BOMA Standard, and (ii) the applicable
"Load Factor," as set forth below. Landlord and Tenant shall each have the
right, upon notice (the "Remeasurement Notice") delivered to the other party
within ninety (90) days following the date Tenant completes construction of the
tenant improvements in any First Offer Space and/or any Expansion Space to
remeasure the applicable space in accordance with the BOMA Standard. In the
event that any remeasurement pursuant to the terms of this Section 1.2 indicates
that the square footage measurement previously set forth in an amendment to this
Lease or otherwise agreed upon by Landlord and Tenant is in excess of or lower
than the square footage number which would have resulted had the BOMA Standard
been properly utilized, any payments due either party (or other rights between
Landlord and Tenant) based upon the amount of rentable or usable square feet
contained in the applicable space shall be proportionally, retroactively and
prospectively reduced or increased, as appropriate, to reflect the actual number
of rentable square feet as properly remeasured under the BOMA Standard. If
either party disagrees with the other party's remeasurement and if a dispute
occurs regarding the final accuracy of the measurement of any space in
accordance with the BOMA Standard, upon five (5) business days notice by either
party to the other, the parties shall mutually and reasonably select a third
party architect to finally and conclusively determine the applicable square
footage in accordance with the standards set forth in this Section 1.2. In the
event that a Remeasurement Notice is not timely delivered in accordance with the
terms of this Section 1.2, the rentable and usable square footage of the
applicable space shall not be subject to remeasurement, and the rentable and
usable square footage previously set forth in an amendment to this Lease or
otherwise agreed upon by Landlord and Tenant shall be binding and conclusive.
For purposes of this Section 1.2, the "Load Factors" shall be as follows:

                  Multi-Tenant Floor
    Floor            Load Factors               Full Floor Load Factors
    -----            ------------               -----------------------

      1               1.18827                           N/A

      4               1.18827                         1.06246

      5               1.18827                         1.08995

     .3 RIGHT OF FIRST OFFER. Landlord hereby grants to the Tenant named in this
Lease (the "Original Tenant") or any assignee permitted or approved pursuant to
the terms of Article 14 of this Lease (a "Permitted Assignee"), an ongoing right
of first offer with respect to all of the space located on the first (1st),
fourth (4th) and fifth (5th) floors of the Building (other than space which is
(i) included in the initial Premises, or (ii) leased by Tenant pursuant to
Section 1.4, below) (the "First Offer Space"). Notwithstanding the foregoing,
such first offer right of Tenant shall commence only following the expiration or
earlier termination of any existing, as of the date of this Lease, lease
(including renewals) of the First Offer Space. Any First Offer Space offered to
Tenant shall be of a commercially reasonable configuration. Any First Offer
Space leased by Tenant shall be subject to remeasurement in accordance with, and
subject to the terms of, Section 1.2 of this Lease. Upon Tenant's lease of First
Offer Space, the number of parking spaces available to Tenant shall be increased
in accordance with the ratio set forth in Section 9 of the Summary, and the
parking charges applicable to such spaces shall be as set forth in Article 28 of
this Lease. Tenant's right of first offer shall be on the terms and conditions
set forth in this Section 1.3.

          .3.1 PROCEDURE FOR OFFER. Landlord shall notify Tenant (the "First
Offer Notice") from time to time when the First Offer Space becomes available
for lease to third




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<PAGE>   6

parties. Pursuant to such First Offer Notice, Landlord shall offer to lease to
Tenant the then available First Offer Space. The First Offer Notice shall
describe the space so offered to Tenant and shall set forth the "First Offer
Rent," as that term is defined in Section 1.3.3 below, and the other economic
terms upon which Landlord is willing to lease such space to Tenant.

          .3.2 PROCEDURE FOR ACCEPTANCE. If Tenant wishes to exercise Tenant's
right of first offer with respect to the space described in the First Offer
Notice, then within ten (10) business days of delivery of the First Offer Notice
to Tenant, Tenant shall deliver notice (the "Election Notice") to Landlord
indicating Tenant's election to exercise its right of first offer with respect
to all of the space described in the First Offer Notice on the terms contained
in such notice. Notwithstanding the foregoing, in the event that Landlord shall
materially increase or decrease the size of the First Offer Space from that
offered to Tenant, Landlord shall "re-offer" such space to Tenant in accordance
with the terms of this Section 1.3. Tenant agrees that it shall respond to any
such "re-offer" within seven (7) business days, rather than the ten (10)
business days otherwise set forth in this Section 1.3.2. Upon and concurrent
with such exercise, Tenant may, at its option, object to the First Offer Rent,
in which case the parties shall follow the procedure, and such First Offer Rent
shall be determined, as set forth in Section 2.2.4, below. If Tenant does not so
notify Landlord within the ten (10) business day period, then Landlord shall be
free to lease the space described in the First Offer Notice to anyone to whom
Landlord desires on any terms Landlord desires; provided, however, that upon the
expiration or earlier termination of any lease (an "Intervening Lease") entered
into by Landlord following Tenant's failure to lease any applicable First Offer
Space, including any renewal or extension of such lease and regardless of
whether such renewal or extension is pursuant to an express written provision in
such lease or whether such renewal or extension is consummated pursuant to a
lease amendment or a new lease, Landlord shall re-offer such First Offer Space
to Tenant in accordance with the terms of this Section 1.3.

          .3.3 FIRST OFFER SPACE RENT. The "Rent," as that term is defined in
Section 4.1, below, payable by Tenant for the First Offer Space (the "First
Offer Rent") shall be equal to the "Market Rent," as that term is defined below,
for such First Offer Space. For purposes of this Lease, the term "Market Rent"
shall mean the rent (including additional rent and considering any "base year"
or "expense stop" applicable thereto), including all escalations, at which
tenants, pursuant to transactions completed during the "Market Rent Review
Period," as that term is defined in this Section 1.3.3, below, are leasing
non-sublease, non-encumbered, non-equity space comparable in size, location and
quality to the First Offer Space, or, in connection with the Option Term, the
Premises, as the case may be, for a "Comparable Term," as that term is defined,
below (the "Comparable Deals"), which comparable space is located in the
Building and the "Comparable Buildings," as that term is defined in this Section
1.3.3, below, giving appropriate consideration to the annual rental rates per
rentable square foot, the standard of measurement by which the rentable square
footage is measured, the ratio of rentable square feet to usable square feet,
and taking into consideration only, and granting only, the following concessions
(collectively, the "Rent Concessions"): (a) rental abatement concessions, if
any, being granted such tenants in connection with such Comparable Deals; (b)
tenant improvements or allowances provided or to be provided for such Comparable
Deals, but deducting therefrom the value of the existing improvements in the
First Offer Space, or Premises, as the case may be, such value to be based upon
the age, quality and layout of the improvements and the extent to which the same
could be utilized by general office users, (c) the condition of the "Base
Building," as that term is defined in Section 8.2, below, as compared to the
condition of the base building provided to tenants in Comparable Deals, and (d)
all other economic concessions, if any, being granted such tenants in connection
with such Comparable Deals; provided, however, that notwithstanding anything to
the contrary herein, no consideration shall be given to (x) the fact that
Landlord is or is not required to pay a real estate brokerage commission in
connection with the applicable term or the fact that the Comparable Deals do or
do not involve the payment of real estate brokerage commissions, and (y) only in
connection with the calculation of the Market Rent for the Option Terms, any
period of rental abatement, if any, granted to tenants in Comparable Deals in
connection with the design, permitting and construction of tenant improvements
in such comparable spaces. In determining the Market Rent, the terms of
Comparable Deals may be equitably adjusted to reflect the square footage leased,
whether the rental payable was determined by use of a discounted fair market
formula, and other factors relevant and appropriate to an analysis and
comparison of the terms of the Comparable Deals. The term "Comparable Term"


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<PAGE>   7

shall refer to the length of the lease term, without consideration of options to
extend such term, for the space in question. In no event shall the Rent payable
by Tenant with respect to the initial Premises, as set forth in this Lease, be
considered in determining the Market Rent. For purposes of this Lease, the term
"Comparable Buildings" shall mean first class office buildings which are
comparable in size and age (based upon the date of completion of construction or
major renovation) to the Building and located on that section of Wilshire
Boulevard which is bordered on the West by San Vicente Boulevard and on the East
by La Brea. The Market Rent Review Period shall be the period which commences
three (3) months prior to the date Tenant exercises the right which triggers the
calculation of Market Rent and concludes as of the date of Landlord's delivery
of the applicable space to Tenant (or in the case of an Option Term, as of the
commencement of the Option Term).

          .3.4 CONSTRUCTION IN FIRST OFFER SPACE. Tenant shall take the First
Offer Space in its "as is" condition except as provided in items (b) and (c)
below, provided that (a) in no event shall the foregoing modify the calculation
of the Market Rent pursuant to the terms of Section 1.3.3 of this Lease, (b)
Landlord shall deliver the Base Building portion of such First Offer Space to
Tenant in the condition set forth in Section 1 of the Tenant Work Letter
(provided that the calculation of the Market Rent pursuant to the terms of
Section 1.3.3 of this Lease shall reflect the terms of this item (b)), and (c)
Landlord shall be responsible, at Landlord's sole cost and expense, for the
removal and/or remediation of any asbestos or asbestos containing material from
the Building to the extent required by "Applicable Laws," as that term is
defined in Article 24 of this Lease, in connection with the improvement or
occupancy of the First Offer Space by Tenant. The construction of improvements
in the First Offer Space shall comply with the terms of Article 8 of this Lease.

          .3.5 AMENDMENT TO LEASE. If Tenant timely exercises Tenant's right to
lease the First Offer Space as set forth herein, Landlord and Tenant shall
within thirty (30) days thereafter execute an amendment to this Lease for such
First Offer Space upon the terms and conditions as set forth in the First Offer
Notice and this Section 1.3. Tenant shall commence payment of Rent for the First
Offer Space, and the term of the First Offer Space shall commence upon the date
(the "First Offer Commencement Date") which is 120 days (as the same may be
extended as a result of Force Majeure and Landlord caused delays) (the "First
Offer Space Buildout Period") following the date of delivery of the First Offer
Space to Tenant with the work required of Landlord, as set forth in Section
1.3.4(b), above, substantially complete, and shall terminate on the date set
forth in the First Offer Notice. In connection with the foregoing, Landlord and
Tenant hereby acknowledge and agree that the Market Rent for First Offer Space
shall be adjusted to reflect the length of the First Offer Space Buildout Period
as compared to the length of the construction period granted to tenants in
Comparable Deals.

          .3.6 TERMINATION OF RIGHT OF FIRST OFFER. The rights contained in this
Section 1.3 shall be personal to the Original Tenant or any Permitted Assignee,
and may only be exercised by the Original Tenant or such Permitted Assignee (and
not any other assignee, sublessee or transferee of the Original Tenant's or such
Permitted Assignee's interest in this Lease) if the Original Tenant or such
Permitted Assignee occupies not less than seventy-five percent (75%) of the
Premises. Tenant shall not have the right to lease First Offer Space, as
provided in this Section 1.3, if, as of the date of the attempted exercise of
any right of first offer by Tenant, or, at Landlord's option, as of the
scheduled date of delivery of such First Offer Space to Tenant, Tenant is in
default under Section 19.1.1 of this Lease or in material nonmonetary default of
this Lease, in either event after the expiration of the applicable notice and
cure period (a "Triggering Default").

     .4 Expansion Space. Landlord hereby grants to the Original Tenant or any
Permitted Assignee the right to lease 12,458 rentable (11,726 usable) square
feet of space located on the fourth (4th) floor of the Building (the "Expansion
Space"), on the terms and conditions set forth in this Section 1.4.

          .4.1 Method of Exercise. The expansion option contained in this
Section 1.4 shall be exercised only by Tenant's delivery of Notice ("Expansion
Notice") to Landlord at any time on or before June 30, 2000, of Tenant's
irrevocable intent to lease the Expansion Space.


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          .4.2 Delivery of the Expansion Space. Provided that Tenant timely
exercises its option to lease the Expansion Space, Landlord shall deliver the
Expansion Space to Tenant on May 1, 2001 (the "Anticipated Expansion Space
Delivery Date"). Tenant hereby acknowledges that the Expansion Space is
currently occupied by another tenant. If Landlord is unable for any reason to
deliver possession of the Expansion Space on the Anticipated Expansion Space
Delivery Date, Landlord shall not be subject to any liability for its failure to
do so.

          .4.3 Expansion Space Rent. The rent payable by Tenant for the
Expansion Space (the "Expansion Space Rent") shall be equal to the then-current
Rent (per rentable square foot applicable as of that time) payable, as same may
be increased from time to time pursuant to the terms of this Lease, for the
initial Premises, including the same Base Year, and all other terms and
conditions of this Lease applicable to the Premises, including the Tenant
Improvement Allowance (based upon the number of usable square feet of such
Expansion Space), and all other concessions, shall also apply. The Expansion
Space Rent payable by Tenant for the Expansion Space is not subject to
negotiation or the arbitration procedure set forth in Section 2.2.4.

          .4.4 Construction In Expansion Space. Tenant shall take the Expansion
Space in its "as is" condition, subject to the terms of Section 1 of the Tenant
Work Letter. The construction of improvements in the Expansion Space shall be
performed in compliance with the terms of the Tenant Work Letter.

          .4.5 Amendment to Lease. If Tenant timely exercises Tenant's right to
lease the Expansion Space as set forth herein, Landlord and Tenant shall within
fifteen (15) days thereafter execute an amendment to this Lease for such
Expansion Space upon the same terms and conditions as the initial Premises,
except as otherwise set forth in this Section 1.4. Tenant agrees that it shall
commence payment of rent for any Expansion Space, and the term of the Expansion
Space shall commence upon the date (the "Expansion Commencement Date") which is
one hundred five (105) days (as the same may be extended as a result of Force
Majeure and Landlord caused delays) (the "Expansion Space Construction Period")
following the date of delivery of the Expansion Space to Tenant in accordance
with the terms of Section 1 of the Tenant Work Letter, and shall terminate on
the "Lease Expiration Date," as that term is defined in Article 2, below.

          .4.6 Termination of Expansion Right. The rights contained in this
Section 1.4 may only be exercised by Tenant on or before June 30, 2000. Tenant
shall not have the right to lease the Expansion Space, as provided in this
Section 1.4, if, as of the date of the attempted exercise of the expansion right
by Tenant, or as of the scheduled date of delivery of such Expansion Space to
Tenant, a Triggering Default exists.

                                   ARTICLE 2

            INITIAL LEASE TERM; OPTION TERM; TENANT TERMINATION RIGHT

     .1 INITIAL LEASE TERM. The terms and provisions of this Lease shall be
effective as of the date of this Lease. The term of this Lease (the "Lease
Term") shall be as set forth in Section 3.1 of the Summary, shall commence on
the date set forth in Section 3.2 of the Summary (the "Lease Commencement
Date"), and shall terminate on the date set forth in Section 3.3 of the Summary
(the "Lease Expiration Date") unless this Lease is sooner terminated as
hereinafter provided. Tenant shall have the right to occupy the Second Floor
Premises and/or the Third Floor Premises subsequent to the delivery of such
space by Landlord pursuant to the terms of Section 1 of the Tenant Work Letter
and prior to the expiration of the applicable Construction Period for such space
for the conduct of Tenant's business, provided that (A) Tenant shall give
Landlord at least ten (10) days' prior notice of any such occupancy of any such
portion of the Premises, (B) a temporary certificate of occupancy, or its
equivalent, shall have been issued by the appropriate governmental authorities
for any such portion of the Premises, and (C) all of the terms and conditions of
the Lease shall apply, other than Tenant's obligation to pay "Base Rent," as
that term is defined in Article 3, below, and "Tenant's Share" of the annual
"Direct Expenses," as those terms are defined in Article 4, below, as though the
Lease Commencement Date had occurred (although the Lease Commencement Date shall
not actually occur until the occurrence of the same pursuant to the terms of the
second sentence of this Article 2.1) upon such occupancy of any such portion of
the Premises by Tenant. For purposes of this Lease, the term "Lease Year" shall
mean each consecutive twelve (12) month period during the Lease Term; provided,


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<PAGE>   9

however, that the first Lease Year shall commence on the Lease Commencement Date
and end on the last day of the twelfth month thereafter and the second and each
succeeding Lease Year shall commence on the first day of the next calendar
month; and further provided that the last Lease Year shall end on the Lease
Expiration Date. Within thirty (30) days following the Lease Commencement Date
(and, if applicable, the commencement of any Option Term), Landlord may deliver
to Tenant a notice in the form as set forth in Exhibit C, attached hereto, as a
confirmation only of the information set forth therein, which Tenant shall
execute and return to Landlord within ten (10) days of receipt thereof, provided
that in the event that such notice is not factually correct, Tenant shall have
the right to make such changes as may be necessary to make the same factually
correct and shall thereafter execute and return the same to Landlord within such
ten (10) day period.

     .2 OPTION TERM.

          .2.1 OPTION RIGHT. Landlord hereby grants the Original Tenant or any
Permitted Assignee two (2) options to extend the Lease Term for a period of five
(5) years each (each, an "Option Term"), which options shall be exercisable only
by written notice delivered by Tenant to Landlord as provided below, provided
that, as of the date of delivery of the applicable notice, a Triggering Default
does not exist. Upon the proper exercise of such option to extend, and, at
Landlord's option, provided that, as of the end of the then Lease Term, a
Triggering Default does not exist, the Lease Term, as it applies to the
Premises, shall be extended for a period of five (5) years. The rights contained
in this Section 2.2 shall be personal to the Original Tenant or any Permitted
Assignee and may only be exercised by the Original Tenant or such Permitted
Assignee (and not any other assignee, sublessee or transferee of the Original
Tenant's or such Permitted Assignee's interest in this Lease). Landlord and
Tenant hereby knowledge and agree that the first Option Term shall be applicable
following the Lease Term set forth in Section 3.1 of the Summary.

          .2.2 OPTION RENT. The Rent payable by Tenant during each Option Term
(the "Option Rent") shall be equal to ninety-five percent (95%) of the then
applicable Market Rent for the Premises; provided that if the Original Tenant or
any Permitted Assignee occupies less than fifty percent (50%) of the Premises,
then the Option Rent shall be equal to one hundred percent (100%) of the then
applicable Market Rent for the Premises.

          .2.3 EXERCISE OF OPTIONS. The options contained in this Section 2.2
shall be exercised by Tenant, if at all, and only in the following manner: (i)
Tenant shall deliver written notice (the "Interest Notice") to Landlord not more
than twenty-one (21) months nor less than fifteen (15) months prior to the
expiration of the then Lease Term, stating that Tenant is interested in
exercising its option; (ii) Landlord, after receipt of Tenant's notice, shall
deliver notice (the "Option Rent Notice") to Tenant not less than fourteen (14)
months prior to the expiration of the then Lease Term, setting forth the Option
Rent; and (iii) if Tenant wishes to exercise such option, Tenant shall, on or
before the date occurring twelve (12) months prior to the expiration of the then
Lease Term, exercise the option by delivering written notice (the "Option
Exercise Notice") thereof to Landlord, and upon, and concurrent with, such
exercise, Tenant may, at its option, object to the Option Rent contained in the
Option Rent Notice, in which case the parties shall follow the procedure, and
the Option Rent shall be determined, as set forth in Section 2.2.4 below.
Notwithstanding the foregoing, in the event that Tenant shall fail to deliver
the Interest Notice, Tenant shall nonetheless have the right to deliver the
Option Exercise Notice within the time period set forth above, in which case the
parties shall follow the procedure, and the Option Rent shall be determined, as
set forth in Section 2.2.4, below.

          .2.4 DETERMINATION OF MARKET RENT. In the event Tenant timely and
appropriately objects to the First Offer Rent or Option Rent, as the case may
be, Landlord and Tenant shall attempt to agree upon the Market Rent using their
best good-faith efforts. If Landlord and Tenant fail to reach agreement within
ten (10) days following Tenant's objection to the First Offer Rent or Option
Rent, as the case may be (the "Outside Agreement Date"), then each party shall
make a separate determination of the Market Rent, as the case may be, within
five (5) days, and such determinations shall be submitted to arbitration in
accordance with Sections 2.2.4.1 through 2.2.4.7 below.



                                      -9-
<PAGE>   10


               .2.4.1 Landlord and Tenant shall each appoint one arbitrator who
shall by profession be a real estate broker who shall have been active over the
five (5) year period ending on the date of such appointment in the leasing (or
appraisal, as the case may be) of commercial office buildings in the Miracle
Mile and East Beverly Hills area of Los Angeles, California. The determination
of the arbitrators shall be limited solely to the issue area of whether
Landlord's or Tenant's submitted Market Rent, is the closest to the actual
Market Rent as determined by the arbitrators, taking into account the
requirements of Section 1.3.3 of this Lease. Each such arbitrator shall be
appointed within fifteen (15) days after the applicable Outside Agreement Date.

               .2.4.2 The two arbitrators so appointed shall within ten (10)
days of the date of the appointment of the last appointed arbitrator agree upon
and appoint a third arbitrator who shall be qualified under the same criteria
set forth hereinabove for qualification of the initial two arbitrators.

               .2.4.3 The three arbitrators shall within thirty (30) days of the
appointment of the third arbitrator reach a decision as to whether the parties
shall use Landlord's or Tenant's submitted Market Rent, and shall notify
Landlord and Tenant thereof.

               .2.4.4 The decision of the majority of the three arbitrators
shall be binding upon Landlord and Tenant.

               .2.4.5 If either Landlord or Tenant fails to appoint an
arbitrator within fifteen (15) days after the applicable Outside Agreement Date,
the arbitrator appointed by one of them shall reach a decision, notify Landlord
and Tenant thereof, and such arbitrator's decision shall be binding upon
Landlord and Tenant.

               .2.4.6 If the two arbitrators fail to agree upon and appoint a
third arbitrator, or both parties fail to appoint an arbitrator, then the
appointment of the third arbitrator or any arbitrator shall be dismissed and the
matter to be decided shall be forthwith submitted to binding, final,
non-applicable arbitration before a J.A.M.S. arbitrator mutually agreed upon by
Landlord and Tenant. If Landlord and Tenant cannot agree on the arbitrator, the
parties will so inform J.A.M.S., who will then be authorized to select a
J.A.M.S. judge to arbitrate the matter. Each party shall have the right of
discovery pursuant to the California Code of Civil Procedure and evidentiary
hearings shall be governed by the California Evidence Code, but subject to the
instruction set forth in this Section 2.2.4.

               .2.4.7 The cost of arbitration shall be paid by Landlord and
Tenant equally.


     .3 TENANT TERMINATION RIGHT. Notwithstanding anything to the contrary
contained in this Lease, Tenant shall have the option to terminate and cancel
this Lease effective as of the date (the "Termination Date") which is six (6)
months after Tenant's delivery of written notice to Landlord (the "Termination
Notice"), provided that such Termination Date shall be on or after the first day
of the eighty-fourth (84th) month of the Lease Term. In connection with, and as
a condition precedent to, such termination, Tenant shall deliver to Landlord a
fee (the "Termination Fee"). Fifty percent (50%) of the Termination Fee shall be
paid to Landlord by Tenant concurrently with Tenant's delivery of the
Termination Notice and fifty percent (50%) of the Termination shall be paid to
Landlord by Tenant on or before the Termination Date. The Termination Fee shall
be equal to the sum of (A) six (6) months of Base Rent payable pursuant to the
terms of this Lease, in the amount payable as of the Termination Date, (B) the
product of (1) a fraction, with a numerator equal to the number of unexpired
days in the initial Lease Term as of the Termination Date, and a denominator
equal to the number 3,650, and (2) the sum of the dollar value of (i) the total,
aggregate amount of any moving allowances, tenant improvement allowances in
connection with Tenant's occupancy of the Premises, and (ii) any brokerage
commissions paid by Landlord with respect to the Premises, and (C) the product
of (1) a fraction, with a numerator equal to the number of unexpired days in the
initial Lease Term as of the Termination Date, and a denominator equal to the
total number of days in the term of any lease by Tenant of any First Offer
Space, and (2) the sum of the dollar value of (i) the total, aggregate amount of
any moving allowances, tenant improvement allowances in connection with Tenant's
occupancy of any First Offer Space, and (ii) any brokerage commissions paid by
Landlord with


                                      -10-
<PAGE>   11

respect to any First Offer Space. Subject to Landlord's timely receipt of the
Termination Notice and Termination Fee, this Lease as it pertains to the entire
Premises shall automatically terminate and be of no further force or effect,
Landlord shall return the "L-C," as that term is defined in Section 21.1, below,
to Tenant undrawn and Landlord and Tenant shall be relieved of their respective
obligations under this Lease, as of the Termination Date, except with respect to
those obligations set forth in this Lease which specifically survive the
expiration or earlier termination of this Lease, including, without limitation,
the payment by Tenant of all amounts owed by Tenant under this Lease.

                                   ARTICLE 3

                                    BASE RENT

Tenant shall pay, without prior notice or demand, to Landlord or Landlord's
agent at the management office of the Project, or, at Landlord's option, at such
other place as Landlord may from time to time designate in writing, by a check
for currency which, at the time of payment, is legal tender for private or
public debts in the United States of America, base rent ("Base Rent") as set
forth in Section 4 of the Summary, payable in equal monthly installments as set
forth in Section 4 of the Summary in advance on or before the first day of each
and every calendar month during the Lease Term, without any setoff or deduction
except as otherwise provided in this Lease. The Base Rent for the first full
month of the Lease Term which occurs after the expiration of any free rent
period shall be paid at the time of Tenant's execution of this Lease. If any
Rent payment date (including the Lease Commencement Date) falls on a day of the
month other than the first day of such month or if any payment of Rent is for a
period which is shorter than one month, the Rent for any fractional month shall
accrue on a daily basis for the period from the date such payment is due to the
end of such calendar month or to the end of the Lease Term at a rate per day
which is equal to 1/365 of the applicable annual Rent. All other payments or
adjustments required to be made under the terms of this Lease that require
proration on a time basis shall be prorated on the same basis.

                                   ARTICLE 4

                                 ADDITIONAL RENT

     .1 GENERAL TERMS. In addition to paying the Base Rent specified in Article
3 of this Lease, Tenant shall pay Tenant's Share of the annual Direct Expenses
which are in excess of the amount of Direct Expenses applicable to the "Base
Year," as that term is defined in Section 4.2.1, below; provided, however, that
in no event shall any decrease in Direct Expenses for any Expense Year below
Direct Expenses for the Base Year entitle Tenant to any decrease in Base Rent or
any credit against sums due under this Lease. Such payments by Tenant, together
with any and all other amounts payable by Tenant to Landlord pursuant to the
terms of this Lease, are hereinafter collectively referred to as the "Additional
Rent", and the Base Rent and the Additional Rent are herein collectively
referred to as "Rent." All amounts due under this Article 4 as Additional Rent
shall be payable for the same periods and in the same manner as the Base Rent.
Without limitation on other obligations of Tenant which survive the expiration
of the Lease Term, the obligations of Tenant to pay the Additional Rent provided
for in this Article 4 shall survive the expiration of the Lease Term but shall
be payable only for periods included within the Lease Term. Notwithstanding the
foregoing, other than Tax Expenses and costs incurred for utilities (the
"Excluded Expenses"), Tenant shall not be responsible for Tenant's Share of any
Direct Expenses which are first billed to Tenant more than two (2) calendar
years after the end of the Expense Year to which such Direct Expenses relate,
provided that Tenant shall be responsible for Excluded Expenses first billed to
Tenant more than two (2) calendar years after the end of the Expense Year to
which such Excluded Expenses relate only to the extent that Landlord becomes
aware of such increased Excluded Expenses following such two (2) year period due
to governmental revision, supplementation or other governmental action which
results in the adjustment of the Excluded Expenses. Notwithstanding anything to
the contrary set forth in this Lease, Tenant shall not be obligated to pay any
Direct Expenses attributable to the first twelve (12) months of the initial
Lease Term.

     .2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:


                                      -11-
<PAGE>   12

          .2.1 "Base Year" shall mean the period set forth in Section 5 of the
Summary.

          .2.2 "Direct Expenses" shall mean "Operating Expenses" and "Tax
Expenses."

          .2.3 "Expense Year" shall mean each calendar year in which any portion
of the Lease Term falls, through and including the calendar year in which the
Lease Term expires, provided that Landlord, upon notice to Tenant, may change
the Expense Year from time to time to any other twelve (12) consecutive month
period, and, in the event of any such change, Tenant's Share of Direct Expenses
shall be equitably adjusted for any Expense Year involved in any such change.

          .2.4 "Operating Expenses" shall mean all expenses, costs and amounts
of every kind and nature which Landlord pays or accrues during any Expense Year
because of or in connection with the ownership, management, maintenance,
security, repair, replacement, restoration or operation of the Project, or any
portion thereof. Without limiting the generality of the foregoing, Operating
Expenses shall specifically include any and all of the following: (i) the cost
of supplying all utilities, the cost of operating, repairing, and maintaining,
the utility, mechanical, sanitary, storm drainage, and elevator systems, and the
cost of maintenance and service contracts in connection therewith; (ii) the cost
of licenses, certificates, permits and inspections and the cost of contesting
any governmental enactments which may affect Operating Expenses, and the costs
incurred in connection with any governmentally mandated transportation system
management program or similar program; (iii) the cost of all insurance carried
by Landlord in connection with the Project; (iv) the cost of landscaping,
relamping with similar items, and all supplies, tools, equipment and materials
used in the operation, repair and maintenance of the Project, or any portion
thereof, or any area adjacent to the Project in connection with which Landlord
is required to perform such services; (v) costs incurred in connection with the
parking areas servicing the Building; (vi) reasonable fees and other costs,
including management fees, consulting fees, legal fees and accounting fees, of
all contractors and consultants in connection with the management, operation,
maintenance and repair of the Project; (vii) payments under any equipment rental
agreements and the fair rental value of any management office space; (viii)
reasonable wages, salaries and other compensation and benefits, including taxes
levied thereon, of all persons engaged in the operation, maintenance and
security of the Project; (ix) reasonable costs under any instrument currently in
force pertaining to the sharing of costs by the Project; (x) operation, repair
and maintenance of all systems and equipment and components thereof of the
Building; (xi) the reasonable cost of janitorial, alarm, security and other
services, reasonable replacement of wall and floor coverings, ceiling tiles and
fixtures in common areas with similar items, maintenance and replacement of
curbs and walkways, repair to roofs; (xii) amortization (including interest on
the unamortized cost) of the cost of acquiring or the rental expense of personal
property used in the maintenance, operation and repair of the Project, or any
portion thereof; (xiii) the cost of capital improvements or other costs incurred
in connection with the Project (A) which are reasonably intended to effect
economies operation or maintenance of the Project, or any portion thereof, but
only to the extent of reasonably intended cost savings, or (B) that are required
under any governmental law or regulation enacted after the Lease Commencement
Date; provided, however, that any capital expenditure shall be amortized with
interest over its useful life as reasonably determined; (xiv) costs, fees,
charges or assessments imposed by, or resulting from any mandate currently in
force imposed on Landlord by, any federal, state or local government for fire
and police protection, trash removal, community services, or other services
which do not constitute "Tax Expenses" as that term is defined in Section 4.2.5,
below; and (xv) payments under any easement, license, operating agreement,
declaration, restrictive covenant, or instrument currently in force pertaining
to the sharing of costs by the Building.

               .2.4.1 OPERATING EXPENSE EXCLUSIONS. Notwithstanding anything to
the contrary contained in the Lease, "Operating Expenses" shall not include the
following:

          A. Landlord's brokerage fees or commissions, finder's fees, space
planning costs, attorneys' fees and other costs incurred by Landlord in leasing
or attempting to lease space or operate concessions in the Project, including
design, construction and construction management costs relating to tenant
improvements of other tenants;


                                      -12-
<PAGE>   13

          B. costs of design, entitlement, site preparation, planning,
marketing, construction, and/ or acquisition of new buildings, additional land
or any expansion of or major physical change to the Building or the Project;

          C. except as set forth in Section 4.2.4 (xii) and (xiii), costs of
items considered capital repairs, replacements, improvements and equipment, or
amortization or depreciation under generally accepted accounting principles
consistently applied or otherwise except for minor capital improvements, tools
or expenditures to the extent each such improvement or acquisition costs less
than Three Thousand Dollars ($3,000) and the total cost of same are not in
excess of Ten Thousand Dollars ($10,000) in any twelve (12) month period;

          D. except as set forth in Section 4.2.4 (xii) and (xiii) and except to
the extent reasonably required in connection with the operation, maintenance, or
repair of the Project, costs for equipment or machinery incurred by Landlord
after the Lease Commencement Date (unless same are reasonably anticipated to
effectuate an annual reduction in Operating Expenses greater than the annual
expense thereof to be included in Operating Expenses pursuant to the other terms
and provisions hereof);

          E. except as set forth in Section 4.2.4 (xii) and (xiii), interest,
principal, points and fees on debt or amortization on any mortgage, deed of
trust or other debt secured, or unsecured, by the Project;

          F. repairs or replacements to any utility systems which are dedicated
to the use of a single other tenant or concession operator;

          G. amounts paid for goods or services to any persons or entities
related to Landlord in excess of the prevailing cost of such goods or services
from competitive unrelated sources;

          H. any fee to or charge by Landlord (or any person and/or entity
related to Landlord) for management, supervision, employee costs, profit and/or
general overhead, and any bookkeeping and accounting costs or expenses, except
to the extent (i) incurred in connection with Landlord's in-house accountant, or
(ii) included in the management fee permitted hereunder;

          I. any cost which is the responsibility of any utility company,
governmental agency, or other third party to the extent such cost is reimbursed
to Landlord from such company, agency or other third party, or to the extent
such cost is reimbursable but Landlord has failed to seek such reimbursement
with due diligence;

          J. reserves for future expenses beyond current year anticipated
expenses;

          K. any costs or expenses for which Landlord is paid or reimbursed by
insurance or a past or present tenant of the Project to the extent Landlord has
failed to seek payment or reimbursement with due diligence;

          L. all interest and penalties incurred as a result of Landlord's
failure to pay bills as the same become due;

          M. charitable or political contributions;

          N. accountants' fees, arbitration fees, and other costs and expenses
incurred in connection with any audits conducted by Landlord or any past or
present tenant or any existing or prospective leasing, lease renewal, lease
termination, lease modification or other negotiations or disputes with employees
or contractors, present or prospective tenants or other occupants of the
Project, or their assignees or sublessees, or lenders or ground lessors;

          O. costs associated with the operation of the business of the entity
which constitutes Landlord as the same are distinguished from the costs of
operation of the Project, including accounting and legal matters, costs of
selling, syndicating, financing, mortgaging or hypothecating any of Landlord's
interest in the Project or the entity constituting Landlord, and costs incurred
by Landlord, in whole or in part, in connection with or as a result of
Landlord's ownership, operation or management of any properties other than the
Project;


                                      -13-
<PAGE>   14

          P. expenses in connection with services, repairs or other benefits for
which Tenant is charged directly but which are provided without charge to
another tenant or occupant of the Project, and costs for which tenants contract
directly with the applicable service provider;

          Q. costs incurred to comply with laws relating to the removal of
hazardous material (as defined under applicable law as of the Lease Commencement
Date) which was in existence in the Building or on the Project prior to the
Lease Commencement Date; and costs incurred to remove, remedy, contain, or treat
hazardous material (as defined by then applicable law), which hazardous material
is brought into the Building or onto the Project after the date hereof by
Landlord or any other tenant of the Project;

          R. advertising and promotional expenditures, costs of installing,
lighting or maintaining signs in or on the Project identifying the owner,
manager, leasing agent or tenants of the Project;

          S. any compensation paid or costs incurred in connection with
commercial concessions operated by Landlord or third party operators;

          T. rent for space occupied as a Project management office to the
extent such space is larger than 2,000 rentable square feet; to the extent such
management office is used for other purposes, including, without limitation,
leasing activities, the rent and other charges associated with such office shall
be prorated in an equitable manner;

          U. costs arising from the gross negligence or willful misconduct of
Landlord's agents or tenants of the Project, and costs incurred due to the
violation by Landlord of any law or the terms and conditions of any lease of
space in the Project;

          V. costs incurred for the repair of damage or destruction or eminent
domain/taking governed by the destruction and condemnation provisions of the
Lease, except as provided in item II, below;

          W. cost of meals, beverages and bottled water;

          X. automobile or travel expense for Landlord or its agents;

          Y. any bad debt loss, rent loss or reserves for bad debts or rent
loss;

          Z. costs for acquisition and refurbishment (as opposed to ordinary
repair) of sculpture, murals, paintings or other objects of art;

          AA. except as specifically permitted in Sections 4.2.4 (ii), (iv),
(ix) and (xv), fees and payments to obtain or arising under any REA or any
recorded easements, development agreements, participation agreements, covenants,
conditions or restricting conditional use permits, traffic management programs,
mitigation fees, conservation fees, housing replacement or linkage fees, or
similar fees;

          BB. rentals and other related expenses incurred in leasing HVAC
systems, elevators or other equipment ordinarily considered to be Capital Items,
except for (1) expenses in connection with making repairs on or keeping Building
Systems in operation while repairs are being made and (2) costs of equipment not
affixed to the Building which is used in providing janitorial or similar
services;

          CC. The cost of any electric power provided to the rentable area of
the Building (i) in excess of the amount provided to Tenant without charge to
the extent that Landlord actually charges Tenant directly for such overstandard
use, and (ii) which any tenant directly contracts with the local public service
company or for which any tenant is separately or submetered and pays Landlord
directly;

          DD. Any management fees whether paid to Landlord or a third party, in
excess of those management fees which are normally and customarily charged by
landlords of comparable buildings, or otherwise in excess of an amount (the
"Maximum Amount") equal to the product of


                                      -14-
<PAGE>   15

(A) three percent (3%) and (B) the amount of gross revenues for the Building,
from office tenants;

          EE. Costs of any "tap fees" or any sewer or water connection fees for
the benefit of any particular tenant in the Building;

          FF. Any entertainment, dining or travel expenses for any purpose;

          GG. Any "finders fees", brokerage commissions, job placement costs or
job advertising cost;

          HH. The cost of any training or incentive programs, other than for
tenant life safety information services;

          II. In no event shall Operating Expenses include insurance deductible
amounts in excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00)
in any Expense Year;

          JJ. Tax Expenses;

          KK. Costs incurred in removing and storing the property of former
tenants or occupants of the Building;

          LL. The cost of any work or services performed for any tenant
(including Tenant) at such tenant's cost (unless such cost is an allowable part
of Operating Expenses);

          MM. "Takeover" expenses, including, but not limited to, the expenses
incurred by Landlord with respect to space located in another building of any
kind or nature in connection with the leasing of space in the Project;

          NN. Costs of renovating the Building or preparing the Base Building
for Tenant's occupancy;

          OO. Cost of work or replacements covered by warranties;

          PP. Costs, expenses and charges incurred during the Lease Term which
are of the nature of a cost, expense or charge incurred during the Base Year but
not included therein as an Operating Expense (unless the cost, expense or charge
is imputed to have been included in Operating Expenses for the Base Year so that
the Operating Expenses for the Base Year are appropriately adjusted);

          QQ. Costs of installing, maintaining and operating any specialty
service operated by Landlord including without limitation, any luncheon club or
athletic facility, or the repair thereof;

          RR. Costs resulting from the failure of the Project, as of the Lease
Commencement Date, to comply with laws applicable to the Project as of the Lease
Commencement Date; and

          SS. Costs to repair the tenant improvements within space occupied by
any other tenant of the Building to the extent Tenant is charged directly for
comparable repairs to the tenant improvements within the Premises.

     The foregoing schedule of exclusions from Operating Expenses is intended to
function solely as an exclusionary listing and shall not be interpreted to
permit or authorize any cost or expense which would not otherwise be considered
to be an Operating Expense under the other terms and conditions of this Lease.
In no event shall Landlord bill tenants of the Project in the aggregate for more
than 100% of the cost actually incurred by Landlord for any item of Operating
Expense. Landlord shall not include in Operating Expenses for any Expense Year
after the Base Year any new category of Operating Expenses relating to (i)
earthquake insurance, (ii) parking garage operation expenses, or (iii) services
provided by Landlord, unless such new category is (a) required to comply with
applicable governmental law or regulation, (b) reasonably necessary to maintain
the safe occupancy and use of the Premises, Building and/or Project by Tenant
and the other tenants of the Project, in which event such new category shall be
included in the Base Year,




                                      -15-
<PAGE>   16

such Expense Year and each Expense Year thereafter, or (c) reasonably approved
by Tenant. Operating Expenses shall be calculated in a manner consistent with
sound real estate accounting principles, consistently applied.

     If Landlord is not furnishing any particular work or service (the cost of
which, if performed by Landlord, would be included in Operating Expenses) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If Landlord does not
carry earthquake insurance for the Building during the Base Year but
subsequently obtains earthquake insurance for the Building during the Lease
Term, then from and after the date upon which Landlord obtains such earthquake
insurance and continuing throughout the period during which Landlord maintains
such insurance, Operating Expenses for the Base Year shall be deemed to be
increased by the amount of the premium Landlord would have incurred had Landlord
maintained such insurance for the same period of time during the Base Year as
such insurance is maintained by Landlord during such subsequent Expense Year. If
the Project is not at least one hundred percent (100%) occupied during all or a
portion of the Base Year or any Expense Year, Landlord shall elect to make an
appropriate adjustment to the components of Operating Expenses for such year to
determine the amount of Operating Expenses that would have been incurred had the
Project been one hundred percent (100%) occupied; and the amount so determined
shall be deemed to have been the amount of Operating Expenses for such year. In
no event shall Landlord's grossed-up calculations for any particular expense
result in a determination of such particular expense which, if applied to all
tenants of the Building, would result in more than 100% of such expense being
reimbursable to Landlord by all tenants of the Building, and if such
calculations result in an excess, Tenant's Share of the amount in excess of 100%
shall be returned to Tenant. All exclusions to Operating Expenses, as set forth
above, shall be deducted prior to applying a gross-up methodology to any item of
Operating Expenses. Only those items, or components of items, which are variable
(i.e., costs which vary as a result of changes in occupancy of the Building such
as cleaning, repair, maintenance, HVAC operation, etc.), as opposed to fixed
costs (i.e., costs which do not vary as a result of changes in occupancy of the
Building such as annual contracted inspections of systems of equipment, fixed
security and insurance costs, etc.) shall be grossed-up. In the gross-up
treatment, reasonable projections shall be used and sound real estate accounting
principles, consistently applied, utilized.

          .2.5 TAXES.

               .2.5.1 "Tax Expenses" shall mean all federal, state, county, or
local governmental or municipal taxes, fees, charges or other impositions of
every kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Project, or any portion thereof. Tax Expenses for the Base Year
shall be increased to equal the Taxes Expenses, including ad valorem taxes and
gross receipts taxes, which would be payable if the Building were fully occupied
by tenants paying rental comparable to Tenant's rent, built out at a level
comparable to Tenant's improvements, and the Project fully assessed as a result
of the foregoing.

               .2.5.2 Tax Expenses shall include, without limitation: (i) Any
tax on the rent, right to rent or other income from the Project, or any portion
thereof, or as against the business of leasing the Project, or any portion
thereof; (ii) Any assessment, tax, fee, levy or charge in addition to, or in
substitution, partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("Proposition 13")
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk


                                      -16-
<PAGE>   17

and road maintenance, refuse removal and for other governmental services
formerly provided without charge to property owners or occupants, and, in
further recognition of the decrease in the level and quality of governmental
services and amenities as a result of Proposition 13, Tax Expenses shall also
include any governmental or private assessments or the Project's contribution
towards a governmental or private cost-sharing agreement for the purpose of
augmenting or improving the quality of services and amenities normally provided
by governmental agencies; (iii) Any assessment, tax, fee, levy, or charge
allocable to or measured by the area of the Premises or the Rent payable
hereunder, including, without limitation, any gross rents or gross income tax or
excise tax with respect to the receipt of such rent, or upon or with respect to
the possession, leasing, operating, management, maintenance, alteration, repair,
use or occupancy by Tenant of the Premises, or any portion thereof; and (iv) Any
assessment, tax, fee, levy or charge, upon this transaction or any document to
which Tenant is a party, creating or transferring an interest or an estate in
the Premises.

               .2.5.3 Any reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred in attempting to protest,
reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense
Year such expenses are paid. Tax refunds shall be credited against Tax Expenses
and refunded to Tenant regardless of when received, based on the Expense Year to
which the refund is applicable, provided that in no event shall the amount to be
refunded to Tenant for any such Expense Year exceed the total amount paid by
Tenant as Additional Rent under this Article 4 for such Expense Year. If Tax
Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord within thirty (30) days following demand by Landlord,
Tenant's Share of any such increased Tax Expenses included by Landlord as
Building Tax Expenses pursuant to the terms of this Lease. Notwithstanding
anything to the contrary contained in this Section 4.2.5 (except as set forth in
Section 4.2.5.1, above), there shall be excluded from Tax Expenses (i) all
excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes,
and other taxes to the extent applicable to Landlord's general or net income (as
opposed to rents, receipts or income attributable to operations at the Project),
(ii) any items included as Operating Expenses, (iii) any items paid by Tenant or
other tenants under Section 4.5 of this Lease, and (iv) Operating Expense
exclusions E, J, K, L and AA.

               .2.5.4 The amount of Tax Expenses for the Base Year attributable
to the valuation of the Project, inclusive of tenant improvements, shall be
known as the base taxes.

          .2.6 "Tenant's Share" shall mean the percentage set forth in Section 6
of the Summary.

     .3 ALLOCATION OF DIRECT EXPENSES. Landlord shall have the right, from time
to time, to equitably allocate some or all of the Direct Expenses for the
Project among different portions or occupants of the Project (the "Cost Pools"),
in a reasonable and equitable manner. Such Cost Pools may include, but shall not
be limited to, the office space tenants of a building of the Project or of the
Project, and the retail space tenants of a building of the Project or of the
Project. The Direct Expenses within each such Cost Pool shall be allocated and
charged to the tenants within such Cost Pool in a reasonable and equitable
manner.

     .4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. If for any Expense Year
ending or commencing within the Lease Term, Tenant's Share of Direct Expenses
for such Expense Year exceeds Tenant's Share of Direct Expenses applicable to
the Base Year, then Tenant shall pay to Landlord, in the manner set forth in
Section 4.4.1, below, and as Additional Rent, an amount equal to the excess (the
"Excess").

          .4.1 STATEMENT OF ACTUAL DIRECT EXPENSES AND PAYMENT BY TENANT.
Landlord shall give to Tenant within 180 days following the end of each Expense
Year, a statement (the "Statement") which shall state the Direct Expenses
incurred or accrued for such preceding Expense Year, and which shall indicate
the amount of the Excess. Each Statement shall be itemized with reasonable
detail as to general categories and shall specifically note the amount of each
such category. Upon receipt of the Statement for each Expense Year commencing or
ending during the Lease Term, if an Excess is present, Tenant shall pay, with
its next installment


                                      -17-
<PAGE>   18

of Base Rent due or within 30 days following Tenant's receipt of the Statement,
whichever is later, the full amount of the Excess for such Expense Year, less
the amounts, if any, paid during such Expense Year as "Estimated Excess," as
that term is defined in Section 4.4.2, below. If the amount of the Excess is
less than the amount paid by Tenant as Estimated Excess during the applicable
Expense Year, Tenant shall receive a credit for such overpayment against the
Rent next due under this Lease, provided that if the Lease Term has expired,
Landlord shall pay the amount of Tenant's overpayment to Tenant. The failure of
Landlord to timely furnish the Statement for any Expense Year shall not
prejudice Landlord or Tenant from enforcing its rights under this Article 4.
Even though the Lease Term has expired and Tenant has vacated the Premises, when
the final determination is made of Tenant's Share of Direct Expenses for the
Expense Year in which this Lease terminates, if an Excess if present, Tenant
within thirty (30) days following demand by Landlord shall pay to Landlord such
amount. The provisions of this Section 4.4.1 shall survive the expiration or
earlier termination of the Lease Term. Notwithstanding anything in this Section
4.4.1 to the contrary, except in connection with the Excluded Expenses, Tenant
shall not be responsible for Tenant's Share of any Direct Expenses which are
first billed to Tenant more than two (2) calendar years after the end of the
Expense Year to which such Direct Expenses relate, provided that Tenant shall be
responsible for Excluded Expenses first billed to Tenant more than two (2)
calendar years after the end of the Expense Year to which such Excluded Expenses
relate only to the extent that Landlord becomes aware of such increased Excluded
Expenses following such two (2) year period due to governmental revision,
supplementation or other governmental action which results in the adjustment of
the Excluded Expenses.

          .4.2 STATEMENT OF ESTIMATED DIRECT EXPENSES. In addition, Landlord
shall endeavor to give Tenant within 180 days following the commencement of each
Expense Year a yearly expense estimate statement (the "Estimate Statement")
which shall set forth Landlord's reasonable estimate (the "Estimate") of what
the total amount of Direct Expenses for the then-current Expense Year shall be
and the estimated excess (the "Estimated Excess") as calculated by comparing the
Direct Expenses for such Expense Year, which shall be based upon the Estimate,
to the amount of Direct Expenses for the Base Year. The failure of Landlord to
timely furnish the Estimate Statement for any Expense Year shall not preclude
Landlord from enforcing its rights to collect any Estimated Excess under this
Article 4, nor shall Landlord be prohibited from revising any Estimate Statement
or Estimated Excess theretofore delivered to the extent necessary. Thereafter,
Tenant shall pay, with its next installment of Base Rent due or within 30 days
following Tenant's receipt of the Estimate Statement, whichever is later, a
fraction of the Estimated Excess for the then-current Expense Year (reduced by
any amounts paid pursuant to the next to last sentence of this Section 4.4.2).
Such fraction shall have as its numerator the number of months which have
elapsed in such current Expense Year, including the month of such payment, and
twelve (12) as its denominator. Until a new Estimate Statement is furnished
(which Landlord shall have the right to deliver to Tenant at any time), Tenant
shall pay monthly, with the monthly Base Rent installments, an amount equal to
one-twelfth (1/12) of the total Estimated Excess set forth in the previous
Estimate Statement delivered by Landlord to Tenant.

     .5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.

          .5.1 Tenant shall be liable for and shall pay ten (10) days before
delinquency, taxes levied against Tenant's equipment, furniture, fixtures and
any other personal property located in or about the Premises. If any such taxes
on Tenant's equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.

          .5.2 If the tenant improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation in excess the highest value for tenant improvements
which Landlord includes in Tax Expenses without direct charge to the applicable
tenant of the Building, then the Tax Expenses levied against Landlord or the
property


                                      -18-
<PAGE>   19

by reason of such excess assessed valuation shall be deemed to be taxes levied
against personal property of Tenant and shall be governed by the provisions of
Section 4.5.1, above.

          .5.3 Notwithstanding any contrary provision herein, Tenant shall pay
prior to delinquency any (i) rent tax or sales tax, service tax, transfer tax or
value added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease; or (ii) taxes assessed upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises.

     .6 TENANT'S PAYMENT OF CERTAIN TAX EXPENSES. Notwithstanding anything to
the contrary contained in this Lease, in the event that, at any time during the
initial Lease Term, any sale, or change in ownership of the Project at arm's
length is consummated, and as a result thereof, and to the extent that in
connection therewith, the Project is reassessed (the "Reassessment") for real
estate tax purposes by the appropriate governmental authority pursuant to the
terms of Proposition 13, then the terms of this Section 4.6 shall apply to the
first such Reassessment of the Project.

          .6.1 THE TAX INCREASE. For purposes of this Article 4, the term "Tax
Increase" shall mean that portion of the Tax Expenses, as calculated immediately
following the Reassessment, which is attributable solely to the Reassessment.
Accordingly, the term Tax Increase shall not include any portion of the Tax
Expenses, as calculated immediately following the Reassessment, which (i) is
attributable to assessments which were pending immediately prior to the
Reassessment which assessments were conducted during, and included in, such
Reassessment, or which assessments were otherwise rendered unnecessary following
the Reassessment, or (ii) is attributable to the annual inflationary increase of
real estate taxes, but not in excess of two percent (2.0%) per annum, or (iii)
is attributable to any Tax Expenses incurred during the Base Year (with such Tax
Expenses incurred during the Base Year calculated without regard to any
Proposition 8 reduction in Tax Expenses for the Base Year).

          .6.2 PROTECTION. During the first five (5) Lease Years of the initial
Lease Term, Tenant shall not be obligated to pay any portion of any Tax Increase
attributable to such five (5) Lease Years.

          .6.3 LANDLORD'S RIGHT TO PURCHASE THE PROPOSITION 13 PROTECTION AMOUNT
ATTRIBUTABLE TO A PARTICULAR REASSESSMENT. The amount of Tax Expenses which
Tenant is not obligated to pay or will not be obligated to pay during the Lease
Term in connection with a particular Reassessment pursuant to the terms of this
Section 4.6, shall be sometimes referred to hereafter as a "Proposition 13
Protection Amount." If, in connection with a pending or anticipated sale of the
Project by Landlord, the occurrence of a Reassessment is reasonably foreseeable
by Landlord and the Proposition 13 Protection Amount attributable to such
Reassessment can be reasonably quantified or estimated for each Lease Year
commencing with the Lease Year in which the Reassessment will occur, the terms
of this Section 4.6.3 shall apply to each such Reassessment. Upon notice to
Tenant, Landlord shall have the right to purchase the Proposition 13 Protection
Amount relating to the applicable Reassessment (the "Applicable Reassessment"),
within a reasonable period of time prior to the pending or anticipated sale of
the Project by Landlord, by paying to Tenant an amount equal to the "Proposition
13 Purchase Price," as that term is defined below, provided that the right of
any successor of Landlord to exercise its right of repurchase hereunder shall
not apply to any Reassessment which results from the event pursuant to which
such successor of Landlord became the Landlord under this Lease. As used herein,
"Proposition 13 Purchase Price" shall mean the present value of the Proposition
13 Protection Amount remaining during the Lease Term, as of the date of payment
of the Proposition 13 Purchase Price by Landlord. Such present value shall be
calculated (i) by using the portion of the Proposition 13 Protection Amount
attributable to each remaining Lease Year (as though the portion of such
Proposition 13 Protection Amount benefited Tenant at the end of each Lease
Year), as the amounts to be discounted, and (ii) by using discount rates for
each amount to be discounted equal to the average rates of yield for United
States Treasury Obligations with maturity dates as close as reasonably possible
to the end of each Lease Year during which the portions of the Proposition 13
Protection Amount would have benefited Tenant, which rates shall be those in
effect as of Landlord's exercise of its right to purchase, as set forth in this
Section 4.6.3. Upon such payment of the Proposition 13 Purchase Price, the
provisions of Section 4.6.2 of this Lease shall not apply to any Tax Increase
attributable to the Applicable


                                      -19-
<PAGE>   20

Reassessment. Since Landlord is estimating the Proposition 13 Purchase Price
because a Reassessment has not yet occurred, then when such Reassessment occurs,
if Landlord has underestimated the Proposition 13 Purchase Price, then upon
notice by Landlord to Tenant, Tenant's Rent next due shall be credited with the
amount of such underestimation, and if Landlord overestimates the Proposition 13
Purchase Price, then upon notice by Landlord to Tenant, Rent next due shall be
increased by the amount of the overestimation.

     .7 LANDLORD'S BOOKS AND RECORDS. In the event that Tenant disputes the
amount of Additional Rent set forth in any annual Statement delivered by
Landlord, then within two (2) years after receipt of such Statement by Tenant,
Tenant shall have the right to notify Landlord in writing that it intends to
cause an independent certified public accountant (which accountant must be
qualified and experienced, must be employed by a firm which derives its primary
revenues from its accounting practice) (the "Third Party Auditor") to inspect
Landlord's accounting records at Landlord's office in the Building for the
Expense Year covered by such Statement during normal business hours ("Tenant's
Review"), provided that as a condition precedent to any such inspection, Tenant
shall deliver to Landlord a copy of Tenant's written agreement with such Third
Party Auditor, which agreement shall include a provision which states that such
Third Party Auditor shall maintain in strict confidence any and all information
obtained in connection with the Tenant Review and shall not disclose such
information to any person or entity other than to the management personnel of
Tenant. Tenant shall provide Landlord with not less than two (2) weeks' prior
written notice of its desire to conduct Tenant's review. In connection with the
foregoing review, Landlord shall furnish Tenant with such reasonable supporting
documentation relating to the subject Statement (and the Statement for the Base
Year, provided that such supporting documentation relating to the Statement for
the Base Year shall be for informational purposes only and not for the purpose
of any audit of the Base Year Statement if the time period for Tenant's audit of
the Base Year Statement shall have expired) as Tenant may reasonably request. In
no event shall Tenant have the right to conduct Tenant's Review if Tenant is
then in default under the Lease with respect to any of Tenant's monetary
obligations (following the expiration of all notice and cure periods set forth
in Article 19), including, without limitation, the payment by Tenant of all
Additional Rent amounts described in the Statement which is the subject of
Tenant's Review, which payment, at Tenant's election, may be made under dispute.
In the event that Tenant shall fail to provide Landlord with written
notification within two (2) years following receipt of a particular Statement of
Tenant's desire to conduct a Tenant's Review, Tenant shall have no further right
to dispute the amounts of Additional Rent set forth on such Statement. In the
event that following Tenant's Review Tenant continues to dispute the amounts of
Additional Rent shown on Landlord's Statement and Landlord and Tenant are unable
to resolve such dispute, then Landlord shall cause a final and determinative
audit to be made by an independent accountant mutually and reasonably agreed
upon by Landlord and Tenant, of the proper amount of the disputed items and/or
categories of Direct Expenses to be shown on such Statement (the "Final Audit").
The results of such Final Audit shall be conclusive and binding upon both
Landlord and Tenant unless either party objects to the results of such Final
Audit by written notice delivered to the other party within ten (10) days
following receipt by the parties of the result of the Final Audit, which
objection must be accompanied by a request that the correctness of the
Additional Rent determination for such Expense Year in question be determined
pursuant to binding arbitration ("Arbitration") under J.A.M.S., as set forth in
Section 2.2.4.6 of this Lease. If the resolution of the parties' dispute with
regard to the Additional Rent shown on the Statement, whether pursuant to
Tenant's Review, the Final Audit or the Arbitration reveals an error in the
calculation of Tenant's Share of Building Direct Expenses to be paid for such
Expense Year, the parties' sole remedy shall be for the parties to make
appropriate payments or reimbursements, as the case may be, to each other as are
determined to be owing. Any such payments shall be made within thirty (30) days
following the resolution of such dispute, along with interest at the "Interest
Rate," as that term is defined in Article 25, below, from the date such amounts
were originally due, until the date of such payment. At Tenant's election,
Tenant may treat any overpayments (plus the interest described above) resulting
from the foregoing resolution of such parties' dispute as a credit against Rent
until such amounts are otherwise paid by Landlord. Tenant shall be responsible
for all costs and expenses associated with Tenant's Review and any Final Audit,
provided that if the parties' final resolution of the dispute involves the
overstatement by Landlord of Direct Expenses for such Expense Year in excess of
two and three quarters percent (2.75%), then Landlord shall be responsible for
all reasonable, out-of-pocket costs and expenses associated with Tenant's Review
and any Final Audit. In the event



                                      -20-
<PAGE>   21

that the parties' dispute is resolved pursuant to Arbitration, Tenant shall be
responsible for all costs and expenses associated with such Arbitration,
provided that if the arbitrator's decision reveals that Landlord's determination
of Tenant's Share of Direct Expenses as submitted to arbitration was overstated
by more than two and three quarters percent (2.75%), then Landlord shall be
responsible for all reasonable, out-of-pocket costs and expenses of such
Arbitration. If another tenant of the Building audits Direct Expenses for the
Building and, as a result of that audit, Landlord discovers a material error in
Direct Expenses previously paid or to be payable by Tenant, Landlord shall make
an appropriate adjustment to Direct Expenses to correct such error and shall
provide Tenant with supporting documentation of such error at the time of such
correction.

                                   ARTICLE 5

                                 USE OF PREMISES

     .1 PERMITTED USE. Tenant shall use the Premises solely for the Permitted
Use set forth in Section 7 of the Summary and Tenant shall not use or permit the
Premises or the Project to be used for any other purpose or purposes whatsoever
without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion.

     .2 PROHIBITED USES. The uses prohibited under this Lease shall include any
use other than the Permitted Use, provided that notwithstanding anything in
Section 7 of the Summary to the contrary, the Permitted Use shall specifically
exclude, without limitation, the use of the Premises or a portion thereof for
(i) offices of any agency or bureau of the United States or any state or
political subdivision thereof; (ii) offices or agencies of any foreign
governmental or political subdivision thereof; (iii) offices of any health care
professionals or health care service organization (except to the extent utilized
primarily for general office purposes); (iv) schools or other training
facilities which are not ancillary to corporate, executive or professional
office use; (v) retail or restaurant uses; or (vi) communications firms such as
radio and/or television stations (except to the extent utilized primarily for
general office purposes). Tenant further covenants and agrees that Tenant shall
not use, or suffer or permit any person or persons to use, the Premises or any
part thereof for any use or purpose contrary to the provisions of the Rules and
Regulations set forth in Exhibit D, attached hereto, or in violation of the laws
of the United States of America, the State of California, or the ordinances,
regulations or requirements of the local municipal or county governing body or
other lawful authorities having jurisdiction over the Project) including,
without limitation, any such laws, ordinances, regulations or requirements
relating to hazardous materials or substances, as those terms are defined by
applicable laws now or hereafter in effect. Tenant shall not do or permit
anything to be done in or about the Premises which will unreasonably obstruct or
interfere with the rights of other tenants or occupants of the Building, or
injure or annoy them or use or allow the Premises to be used for any improper,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises. Tenant shall comply with all recorded
covenants, conditions, and restrictions affecting the Project as of the date of
this Lease.

                                   ARTICLE 6

                             SERVICES AND UTILITIES

     .1 STANDARD TENANT SERVICES. Landlord shall provide the following services
on all days (unless otherwise stated below) during the Lease Term.

          .1.1 Subject to limitations imposed by all governmental rules,
regulations and guidelines applicable thereto, Landlord shall provide heating
and air conditioning ("HVAC") when necessary for normal comfort for normal
office use in the Premises from 8:00 A.M. to 6:00 P.M. Monday through Friday,
and on Saturdays from 9:00 A.M. to 1:00 P.M. (collectively, the "Building
Hours"), except for the date of observation of New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and, at Landlord's
discretion, other locally or nationally recognized holidays recognized by
landlords of the Comparable Buildings (collectively, the "Holidays").


                                      -21-
<PAGE>   22

          .1.2 Landlord shall provide adequate electrical wiring and facilities
for connection to Tenant's lighting fixtures and incidental use equipment,
provided that (i) the demand electrical load of the incidental use equipment
does not exceed an average of 3 watts per usable square foot of the Premises
during the Building Hours on a monthly basis, and the electricity so furnished
for incidental use equipment will be at a nominal one hundred twenty (120) volts
and no electrical circuit for the supply of such incidental use equipment will
require a current capacity exceeding twenty (20) amperes, and (ii) the demand
electrical load of Tenant's fluorescent lighting fixtures does not exceed an
average of 1.5 watts per usable square foot of the Premises during the Building
Hours on a monthly basis, and the electricity so furnished for Tenant's lighting
will be at a nominal one hundred twenty (120) volts, which electrical usage
shall be subject to applicable laws and regulations, including Title 24.
Engineering plans shall include a calculation of Tenant's fully connected
electrical design load with and without demand factors and shall indicate the
number of watts of unmetered and submetered loads. Tenant shall bear the cost of
replacement of lamps, starters and ballasts for non-Building standard lighting
fixtures within the Premises to the extent such cost exceeds the cost of
replacing the same components in Building standard fixtures.

          .1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes in the Building Common Areas.

          .1.4 Landlord shall provide janitorial services to the Premises,
except the date of observation of the Holidays, in and about the Premises and
window washing services in a manner and with a frequency consistent with those
of the Comparable Buildings.

          .1.5 Landlord shall provide nonexclusive, non-attended automatic
passenger elevator service during the Building Hours, shall have one elevator
available at all other times, except on the Holidays.

          .1.6 Landlord shall provide nonexclusive freight elevator service
subject to scheduling by Landlord.

          .1.7 Tenant may, at its own expense, install its own security system
("Tenant's Security System") in the Premises pursuant to the terms of Article 8,
below; provided, however, that Tenant shall coordinate the installation and
operation of Tenant's Security System with Landlord to assure that Tenant's
Security does not interfere with Landlord's security system in place as of the
Lease Commencement Date and the Building systems and equipment and to the extent
that Tenant's Security System unreasonably interferes with Landlord's security
system and the Building systems and equipment, Tenant shall not be entitled to
install or operate it. Tenant shall be solely responsible, at Tenant's sole cost
and expense, for the monitoring, operation and removal of Tenant's Security
System.

          .1.8 Notwithstanding anything to the contrary in this Lease, Landlord
agrees that Landlord shall maintain and operate the Building in a condition and
repair materially consistent with that undertaken by landlords of the Comparable
Buildings.

     Tenant shall cooperate reasonably with Landlord at all times and abide by
all regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems.

     .2 OVERSTANDARD TENANT USE. Tenant shall not, without Landlord's prior
written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
Building standard lights in the Premises, which may affect the temperature
otherwise maintained by the air conditioning system or increase the water
normally furnished for the Premises by Landlord pursuant to the terms of Section
6.1 of this Lease except as permitted in this Lease. If Tenant uses water or
electricity in excess of that supplied by Landlord pursuant to Section 6.1 of
this Lease, Tenant shall pay to Landlord, upon billing, the actual, reasonable
and documented cost paid to third parties at arms length, without profit or
overhead or penalty (the "Actual Cost"), in connection with such excess
consumption. Furthermore, if Tenant uses electricity in an aggregate amount in
excess of that supplied by Landlord pursuant to Section 6.1 of this Lease,
Landlord may, at its option, install devices to separately meter such excess
electrical use, and provided that such meters indicate excess usage



                                      -22-
<PAGE>   23

by Tenant when measured on a monthly basis, Tenant shall pay to Landlord, within
thirty (30) days following demand by Landlord, the Actual Cost of any such
devices. Tenant's use of electricity shall never exceed "Capacity," as that term
is defined, below. If Tenant desires to use heat, ventilation or air
conditioning during hours other than those for which Landlord is obligated to
supply such utilities pursuant to the terms of Section 6.1 of this Lease (the
"After Hours HVAC"), Landlord shall supply such utilities to Tenant at
Landlord's Actual Cost for such After Hours HVAC (which shall be treated as
Additional Rent). For purposes of this Section 6.2, "Capacity" shall mean seven
(7) watts per usable square foot, provided that the foregoing "Capacity" shall
be (a) inclusive of the 1.5 watts per usable square foot available for Tenant's
fluorescent lighting, and (b) exclusive of the electricity utilized by the
Building HVAC system.

                                   ARTICLE 7

                                     REPAIRS

     .1 DUTIES OF REPAIR. Landlord shall maintain, repair and replace (i) the
structural portions of the Building, including the foundation, floor/ceiling
slabs, roof, curtain wall, exterior glass and mullions, columns, beams, shafts
(including elevator shafts), exit stairs, Project parking facility, elevator
cabs, and Building mechanical, electrical and telephone closets and Base
Building (collectively, "Building Structure"), and (ii) the mechanical,
electrical, life safety, plumbing, sprinkler systems and HVAC systems installed
or furnished by Landlord and not located within the Premises (the "Building
Systems"), in good order and repair and in a first class condition. In addition,
Landlord shall, at all times during the Lease Term, cause the Building Systems
(including the Building HVAC units servicing the second floor of the Building)
to operate in such a manner which does not result in a level of noise and/or a
level of vibration which unreasonably interferes with Tenant's use of the
Premises. Except as to Landlord's obligations set forth above in this Section
7.1, Tenant shall, at Tenant's own expense, keep the Premises, including all
Alterations, "Tenant Improvements," as that term is defined in the Tenant Work
Letter, improvements, fixtures and furnishings therein, in good order, repair
and condition at all times during the Lease Term. In addition, except as
provided as part of Landlord's repair obligations set forth above or elsewhere
in this Lease, Tenant shall, at Tenant's own expense but under the supervision
and subject to the prior approval of Landlord, and within a reasonable period of
time, promptly and adequately complete all repairs which Tenant in obligated to
complete; provided however, that, at Landlord's option, if Tenant fails to make
such repairs, Landlord may, but need not, on not less that ten (10) business
days prior notice to Tenant (except in case of an emergency) make such repairs,
and to the extent Tenant was obligated to undertake such repair at Tenant's sole
cost, Tenant shall pay Landlord the cost thereof, including a reasonable
percentage of the cost thereof sufficient to reimburse Landlord for the Actual
Cost arising from Landlord's involvement with such repairs and replacements
forthwith upon being billed for same. Notwithstanding the foregoing, following
reasonable prior notice from Tenant, Landlord shall repair any items required to
be repaired by Tenant pursuant to the terms of this Section 7.1, provided that,
in such event, Tenant shall pay to Landlord, within thirty (30) days following
demand by Landlord, the Actual Cost incurred by Landlord in connection with such
repairs. Landlord may, but shall not be required to, enter the Premises at all
reasonable times to make repairs, alterations, improvements and additions to the
Premises or to the Building or to any equipment located in the Building as
Landlord shall desire or deem necessary or as Landlord may be required to do by
governmental or quasi-governmental authority or court order or decree. Subject
to Section 7.2, Tenant hereby waives and releases its right to make repairs at
Landlord's expense under Sections 1941 and 1942 of the California Civil Code; or
under any similar law, statute, or ordinance now or hereafter in effect.

     .2 TENANT'S RIGHT TO MAKE REPAIRS. If Tenant provides written notice to
Landlord of an event or circumstance which requires the action of Landlord with
respect to the provision of utilities and/or services and/or repairs and/or
maintenance to the Premises or Project, and Landlord fails to provide such
action as required by the terms of this Lease within ten (10) business days
after receipt of such written notice (or such longer period of time if the
nature of such action is such that the same cannot reasonably be completed
within a ten (10) business day period, provided Landlord has diligently and
continuously commenced such action within such period and thereafter diligently
proceeds to complete said action as soon as possible), and such action relates
to items contained on the floor or floors of the Building upon which the
Premises


                                      -23-
<PAGE>   24

are located Tenant may proceed to take the required action upon delivery of an
additional five (5) business days notice to Landlord specifying that Tenant is
taking such required action, and if such action was required under the terms of
this Lease to be taken by Landlord, then Tenant shall be entitled to prompt
reimbursement by Landlord of Tenant's reasonable costs and expenses in taking
such action plus interest at the Interest Rate during the period from the date
Tenant incurs such costs and expenses until such time as payment is made by
Landlord. In the event Tenant takes the action permitted above, and such work
may create a "Deficiency," as that term is defined in Section 3.1 of the Tenant
Work Letter, Tenant shall use reputable contractors with experience in similar
work. Further, if Landlord does not deliver a detailed written objection to
Tenant, within thirty (30) days after receipt of an invoice by Tenant of its
costs of taking action which Tenant claims should have been taken by Landlord,
and if such invoice from Tenant sets forth a reasonably particularized breakdown
of its costs and expenses in connection with taking such action on behalf of
Landlord, then Tenant shall be entitled to deduct from Rent payable by Tenant
under this Lease, the amount set forth in such invoice together with interest at
the Interest Rate. If, however, Landlord is in good faith delivers to Tenant
within thirty (30) days after receipt of Tenant's invoice, a written objection
to the payment of such invoice, setting forth with reasonable particularity
Landlord's reasons for its claim that such action did not have to be taken by
Landlord pursuant to the terms of this Lease or that specifically enumerated
charges are excessive (in which case Landlord shall pay all of the charges not
so enumerated, and further, with respect to the charges not so enumerated, the
amount it contends would not have been excessive), then Tenant shall not be
entitled to such deduction from Rent, but as Tenant's sole remedy, Tenant
proceed to claim a default by Landlord under this Lease.

                                   ARTICLE 8

                            ADDITIONS AND ALTERATIONS

     .1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may make any improvements,
alterations, additions or changes to the Premises or any mechanical, plumbing or
HVAC facilities or systems pertaining to the Premises (collectively, the
"Alterations") upon ten (10) days notice to Landlord by Tenant but without first
procuring the prior written consent of Landlord to such Alterations, provided
that Tenant shall obtain Landlord's prior consent with respect to (i) any
Alteration which relates to, or is required in connection with the use by,
Tenant of any hazardous materials or hazardous substances in the Premises, (ii)
any Alteration which adversely affects the structural portions or the systems or
equipment of the Building, or (iii) any Alteration which is visible from the
exterior of the Building. The construction of the initial improvements to the
Premises shall be governed by the terms of the Tenant Work Letter and not the
terms of this Article 8.

     .2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition to any
Alteration requiring Landlord's consent, the requirement that Tenant utilize for
such purposes only contractors and subcontractors approved by Landlord, in
Landlord's reasonable discretion. With respect to Alterations not requiring
Landlord's consent, Tenant shall utilize only reputable and skilled contractors
and subcontractors which are comparable to the contractors and subcontractors
utilized by tenants at the Comparable Buildings. If such Alterations will
involve the use of or disturb hazardous materials or substances existing in the
Premises, Tenant shall comply with Landlord's rules and regulations concerning
such hazardous materials or substances. Tenant shall construct such Alterations
and perform such repairs in a good and workmanlike manner, in conformance with
any and all applicable federal, state, county or municipal laws, rules and
regulations and pursuant to a valid building permit, issued by the City of Los
Angeles, all in conformance with Landlord's construction rules and regulations.
In the event Tenant performs any Alterations which are not customary general
office improvements which require or give rise to governmentally required
changes to the Base Building, then Landlord shall, at Tenant's expense, make
such changes to the Base Building. The "Base Building" shall include the
structural portions of the Building, and the public restrooms and the systems
and equipment located in the internal core of the Building on the floor or
floors on which the Premises are located. In performing the work of any such
Alterations, Tenant shall have the work performed in such manner so as not to
unreasonably obstruct access to the Project or any portion thereof, by any other
tenant of the Project, and so as not to unreasonably obstruct the business of
Landlord or other tenants in the Project. Tenant shall not use (and upon notice
from Landlord shall cease


                                      -24-
<PAGE>   25

using) contractors, services, workmen, labor, that would disturb labor harmony
with the workforce or trades engaged in performing other work, labor or services
in or about the Building or the Common Areas. In addition to Tenant's
obligations under Article 9 of this Lease, upon completion of any Alterations,
Tenant agrees to cause a Notice of Completion to be recorded in the office of
the Recorder of the County of Los Angeles in accordance with Section 3093 of the
Civil Code of the State of California or any successor statute, and Tenant shall
deliver to the Project management office a reproducible copy of the "as built"
drawings of the Alterations as well as all permits, approvals and other
documents issued by any governmental agency in connection with the Alterations.

     .3 PAYMENT FOR IMPROVEMENTS. If payment for any Alteration in excess of
Three and No/100 Dollars ($3.00) for each usable square foot of the subject area
is made directly to contractors, Tenant shall comply with Landlord's
requirements for final lien releases and waivers in connection with Tenant's
payment for work to contractors, provided that Tenant's obligations under
Article 9 of this Lease shall apply with respect to all Alterations undertaken
by Tenant. If Tenant orders any work directly from Landlord, Tenant shall pay to
Landlord a percentage (such percentage to be uniformly established for the
Building) of the cost of such work sufficient to compensate Landlord for all
overhead, general conditions, fees and other costs and expenses arising from
Landlord's involvement with such work. If Tenant does not order any work from
Landlord, Tenant shall not be required to pay Landlord any supervision fee or
other compensation in connection with such work, but if such work shall involve
any matter which reasonably requires review or consultation by Landlord's
management staff with third-party consultants, Tenant shall reimburse Landlord
for Landlord's Actual Cost in connection with such review or consultation.

     .4 CONSTRUCTION INSURANCE. In addition to the requirements of Article 10 of
this Lease, in the event that Tenant makes any Alterations, prior to the
commencement of such Alterations, Tenant shall provide Landlord with evidence
that Tenant carries "Builder's All Risk" insurance in an amount approved by
Landlord covering the construction of such Alterations, and such other insurance
as Landlord may require, it being understood and agreed that all of such
Alterations shall be insured by Tenant pursuant to Article 10 of this Lease
immediately upon completion thereof.

     .5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures, equipment
and/or appurtenances which may be installed or placed in or about the Premises,
from time to time, shall be at the sole cost of Tenant and shall be and become
the property of Landlord, except that Tenant may remove any Alterations,
improvements, fixtures and/or equipment which have not been paid for with any
Tenant improvement allowance funds provided to Tenant by Landlord, provided
Tenant repairs any damage to the Premises and Building caused by such removal.
Furthermore, Landlord may, by written notice to Tenant given at the time
Landlord grants its consent to any Alteration (which notice shall specify the
reasonable grounds for such requirement), require Tenant, at Tenant's expense,
to remove any Alterations or improvements in the Premises upon the expiration or
earlier termination of this Lease, and to repair any damage to the Premises and
Building caused by such removal. If Tenant fails to complete such removal and/or
to repair any damage caused by the removal of any Alterations or improvements in
the Premises, provided that Tenant does not fulfill such obligation within ten
(10) days following notice from Landlord, Landlord may do so and may charge the
Actual Cost thereof to Tenant. Tenant hereby protects, defends, indemnifies and
holds Landlord harmless from any liability, cost, obligation, expense or claim
of lien in any manner relating to the installation, placement, removal or
financing of any such Alterations, improvements, fixtures and/or equipment in,
on or about the Premises, which obligations of Tenant shall survive the
expiration or earlier termination of this Lease.

                                   ARTICLE 9

                             COVENANT AGAINST LIENS

     Tenant shall keep the Project and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims, liabilities,
judgments or costs (including, without limitation, reasonable attorneys' fees
and costs)


                                      -25-
<PAGE>   26

arising out of same or in connection therewith. Tenant shall give Landlord
notice at least twenty (20) days prior to the commencement of any such work on
the Premises (or such additional time as may be necessary under applicable laws)
to afford Landlord the opportunity of posting and recording appropriate notices
of non-responsibility. Tenant shall remove any such lien or encumbrance by bond
or otherwise within twenty (20) days after notice by Landlord, and if Tenant
shall fail to do so, Landlord may pay the amount necessary to remove such lien
or encumbrance, without being responsible for investigating the validity
thereof. The amount so paid shall be deemed Additional Rent under this Lease
payable within thirty (30) days following demand by Landlord , without
limitation as to other remedies available to Landlord under this Lease. Nothing
contained in this Lease shall authorize Tenant to do any act which shall subject
Landlord's title to the Building or Premises to any liens or encumbrances
whether claimed by operation of law or express or implied contract. Any claim to
a lien or encumbrance upon the Building or Premises arising in connection with
any such work or respecting the Premises not performed by or at the request of
Landlord shall be null and void, or at Landlord's option shall attach only
against Tenant's interest in the Premises and shall in all respects be
subordinate to Landlord's title to the Project, Building and Premises.

                                   ARTICLE 10

                                    INSURANCE

     .1 INDEMNIFICATION AND WAIVER. Except to the extent arising from matters
set forth in items (i), (ii) and (iii), below, Tenant hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever and agrees that Landlord, its partners, members, subpartners,
parents, subsidiaries, affiliates and their respective officers, agents,
servants, employees, and independent contractors (collectively, "Landlord
Parties") shall not be liable for, and are hereby released from any
responsibility for, any damage either to person or property or resulting from
the loss of use thereof, which damage is sustained by Tenant or by other persons
claiming through Tenant. Tenant shall indemnify, defend, protect, and hold
harmless the from any and all loss, cost, damage, expense and liability
(including without limitation court costs and reasonable attorneys' fees)
("Claims and Expenses") incurred in connection with or arising from any cause
in, on or about the Premises, any acts, omissions or negligence of Tenant or of
any person claiming by, through or under Tenant, or of the contractors, agents,
servants, employees, of Tenant or any such person, in, on or about the Project
or any breach of the terms of this Lease, either prior to, during, or after the
expiration of the Lease Term, provided that the terms of the foregoing indemnity
shall not apply to the negligence or willful misconduct of Landlord Parties.
Should Landlord be named as a defendant in any suit brought against Tenant in
connection with or arising out of Tenant's occupancy of the Premises, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including
without limitation, its actual professional fees such as appraisers',
accountants' and attorneys' fees. Further, Tenant's agreement to indemnify
Landlord pursuant to this Section 10.1 is not intended and shall not relieve any
insurance carrier of its obligations under policies required to be carried by
Tenant pursuant to the provisions of this Lease, to the extent such policies
cover the matters subject to Tenant's indemnification obligations; nor shall
they supersede any inconsistent agreement of the parties set forth in any other
provision of this Lease. Notwithstanding any contrary provision of this Lease,
neither Landlord nor Tenant shall be liable to the other party for any
consequential damages for a breach or default under this Lease, provided that
this sentence shall not be applicable to any consequential damages which may be
incurred by Landlord relating to, or in connection with (i) any storage, use,
treatment, manufacture, sale, disposal or discharge of any hazardous materials
or substances (as those terms are defined by applicable law) in, on, under or
about the Premises, Building or Project by Tenant, its agents, representatives,
employees, contractors, subtenants or assigns, or any actions taken by Tenant or
such parties in connection therewith, or (ii) any holdover by Tenant following
the expiration of the Lease Term, subject to and in accordance with the
provisions of Article 16 hereof. The provisions of this Section 10.1 shall
survive the expiration or sooner termination of this Lease with respect to any
claims or liability arising in connection with any event occurring prior to such
expiration or termination. Subject to the provisions of this Section 10.1,
Landlord shall indemnify, defend, protect and hold Tenant and its partners,
officers, agents, servants and employees (collectively, "Tenant Parties")
harmless from and against any and all Claims and Expenses incurred in connection
with, or arising form (i) any cause in or about the Project, the Land, the
Building or



                                      -26-
<PAGE>   27

the Common Areas (in each case other than the Premises), to the extent the same
would be covered under a customary CGL Policy of insurance or is otherwise
covered by Landlord's insurance; (ii) any negligence or willful misconduct of
Landlord or of any Landlord Party or any Landlord contractor, whether in or
about the Project, the Land, the Building, the Common Areas or the Premises, or
(ii) a breach of this Lease by Landlord; provided, however, that the foregoing
indemnity shall not apply to the extent of the negligence or willful misconduct
of Tenant or its partners, members, subpartners, parents, subsidiaries,
affiliates and their respective officers, agents, servants, employees, and
independent contractors.

     .2 LANDLORD'S INSURANCE. Landlord shall carry commercial general liability
insurance with respect to the Building and Project during the Lease Term, and
shall further insure the full replacement cost of the Building and Project
during the Lease Term against loss or damage due to fire and other casualties
covered within the classification of fire and extended coverage, vandalism
coverage and malicious mischief, sprinkler leakage, water damage and special
extended coverage. Landlord's insurance coverage shall be in such amounts, from
such companies, and on such other terms and conditions, as Landlord may from
time to time reasonably determine. Additionally, at the option of Landlord, such
insurance coverage may include the risks of earthquakes and/or flood damage and
additional hazards, and one or more loss payee endorsements in favor of the
holders of any mortgages or deeds of trust encumbering the interest of Landlord
in the Building or Project or the ground or underlying lessors of the Building,
Project, or any portion thereof. Notwithstanding the foregoing provisions of
this Section 10.2, the coverage and amounts of insurance carried by Landlord in
connection with the Building and Project shall, at a minimum, be comparable to
the coverage and amounts of insurance which are carried by reasonably prudent
landlords of Comparable Buildings, and Worker's Compensation and Employer's
Liability coverage as required by applicable law. The minimum limits of policies
of insurance required of Landlord under the Lease shall not limit the liability
of Landlord under this Lease with respect to claims covered by such insurance.
The insurance obtained by Landlord shall specifically cover the indemnification
liability of Landlord under this Lease. Tenant shall, at Tenant's expense,
comply with all insurance company requirements pertaining to the use of the
Premises. If Tenant's conduct or use of the Premises causes any increase in the
premium for such insurance policies then Tenant shall reimburse Landlord for any
such increase. Tenant, at Tenant's expense, shall comply with all rules, orders,
regulations or requirements of the American Insurance Association (formerly the
National Board of Fire Underwriters) and with any similar body.

     .3 TENANT'S INSURANCE. Tenant shall maintain the following coverages in the
following amounts. Tenant may utilize blanket policies of insurance (and
combinations of primary and excess/umbrella policies).

          .3.1 Commercial General Liability Insurance covering the insured
against claims of bodily injury, personal injury and property damage (including
loss of use thereof) arising out of Tenant's operations, and contractual
liabilities (covering the performance by Tenant of its indemnity agreements)
including a Broad Form endorsement covering the insuring provisions of this
Lease and the performance by Tenant of the indemnity agreements set forth in
Section 10.1 of this Lease, for limits of liability of:

Bodily Injury and                          $5,000,000 each occurrence
Property Damage Liability                  $5,000,000 annual aggregate

Personal Injury Liability                  $5,000,000 each occurrence
                                           $5,000,000 annual aggregate
                                           0% Insured's participation

          .3.2 Physical Damage Insurance covering (i) all office furniture,
business and trade fixtures, office equipment, free-standing cabinet work,
movable partitions, merchandise and all other items of Tenant's property on the
Premises installed by, for, or at the expense of Tenant, (ii) the "Tenant
Improvements," as that term is defined in Section 2.1 of the Tenant Work Letter,
and any other improvements which exist in the Premises as of the Lease
Commencement Date (excluding the Base Building) (the "Original Improvements"),
and (iii) all other improvements, alterations and additions to the Premises
installed by or for Tenant. Such insurance shall be written on "special causes"
of loss or damage basis, for the full replacement cost value (subject to


                                      -27-
<PAGE>   28

reasonable deductible amounts) new without deduction for depreciation of the
covered items and in amounts that meet any co-insurance clauses of the policies
of insurance and shall include coverage for damage or other loss caused by fire
or other peril including, but not limited to, vandalism and malicious mischief,
theft, water damage of any type, including sprinkler leakage, bursting or
stoppage of pipes, and explosion.

          .3.3 Worker's Compensation and Employer's Liability or other similar
insurance pursuant to all applicable state and local statutes and regulations.

     .4 FORM OF POLICIES. The minimum limits of policies of insurance required
of Tenant under this Lease shall in no event limit the liability of Tenant under
this Lease. Such insurance shall (i) name Landlord, and any other party
reasonably specified by Landlord, as an additional insured, including Landlord's
managing agent, if any; (ii) specifically cover the liability assumed by Tenant
under this Lease, including, but not limited to, Tenant's obligations under
Section 10.1 of this Lease; (iii) be issued by an insurance company having a
rating of not less than A-X in Best's Insurance Guide or which is otherwise
acceptable to Landlord and licensed to do business in the State of California;
(iv) be primary insurance as to all claims thereunder and provide that any
insurance carried by Landlord is excess and is non-contributing with any
insurance requirement of Tenant; and (v) provide that said insurance shall not
be canceled or coverage changed unless thirty (30) days' (ten (10) days' in the
event of nonpayment of premiums) prior written notice shall have been given to
Landlord and any mortgagee of Landlord. Tenant shall deliver said policy or
policies or certificates thereof to Landlord on or before the Lease Commencement
Date and at least thirty (30) days before the expiration dates thereof. In the
event Tenant shall fail to procure such insurance, or to deliver such policies
or certificate, Landlord may, after delivery of five (5) days' notice to Tenant,
at Landlord's option, procure such policies for the account of Tenant, and the
cost thereof shall be paid to Landlord within five (5) days after delivery to
Tenant of bills therefor. If either party fails to carry the amounts and types
of insurance required to be carried by it pursuant to this Lease, such failure
shall be deemed to be a covenant and agreement by such party to self-insure with
respect to the type and amount of insurance which such party so failed to carry,
with full waiver of subrogation with respect thereto.

     .5 SUBROGATION. Landlord and Tenant intend that their respective property
loss risks shall be borne by reasonable insurance carriers to the extent above
provided, and Landlord and Tenant hereby agree to look solely to, and seek
recovery only from, their respective insurance carriers in the event of a
property loss to the extent that such coverage is agreed to be provided
hereunder. The parties each hereby waive all rights and claims against each
other for such losses, and waive all rights of subrogation of their respective
insurers, provided such waiver of subrogation shall not affect the right to the
insured to recover thereunder. The parties agree that their respective insurance
policies are now, or shall be, endorsed such that the waiver of subrogation
shall not affect the right of the insured to recover thereunder, so long as no
material additional premium is charged therefor.

     .6 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain during
the entire Lease Term, at Tenant's sole cost and expense, increased amounts of
the insurance required to be carried by Tenant pursuant to this Article 10 and
such other reasonable types of insurance coverage and in such reasonable amounts
covering the Premises and Tenant's operations therein, as may be reasonably
requested by Landlord. Notwithstanding any provisions of this Lease to the
contrary, the obligations of Tenant to provide increased or new insurance
hereunder shall be limited to the extent the same is (i) then customarily
required by landlords of Comparable Buildings in connection with comparable
tenants occupying comparable sized premises and (ii) reasonably available for
purchase by Tenant at a commercially reasonable cost.

                                   ARTICLE 11

                             DAMAGE AND DESTRUCTION

     .1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly notify
Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance


                                      -28-
<PAGE>   29

adjustment or other matters beyond Landlord's reasonable control, and subject to
all other terms of this Article 11, restore the Base Building and such Common
Areas. Such restoration shall be to substantially the same condition of the Base
Building and the Common Areas prior to the casualty, except for modifications
required by zoning and building codes and other laws or by the holder of a
mortgage on the Building or Project or any other modifications to the Common
Areas deemed desirable by Landlord, provided that access to the Premises and any
common restrooms serving the Premises shall not be materially impaired. Upon the
occurrence of any damage to the Premises, Tenant shall repair any injury or
damage to the Tenant Improvements and the Original Improvements installed in the
Premises and shall return such Tenant Improvements and Original Improvements to
their original condition. Prior to the commencement of construction, Tenant
shall submit to Landlord, for Landlord's review and approval, all plans,
specifications and working drawings relating thereto, and Landlord shall
reasonably approve the contractors to perform such improvement work. If such
fire or other casualty shall have damaged the Premises, or Common Areas which
render the Premises unfit of occupancy for the purposes permitted under this
Lease, Landlord shall allow Tenant a proportionate abatement of Rent during the
time and to the extent the Premises are unfit for occupancy for the purposes
permitted under this Lease, and not occupied for the conduct of business by
Tenant as a result thereof. Tenant's right to rent abatement pursuant to the
preceding sentence shall continue until Tenant has been provided a reasonable
period to rebuild the portion of the Premises it is required to rebuild under
this Article 11 (subject to Force Majeure), to install Tenant's property,
furniture, fixtures, and equipment, and to move in over one (1) weekend.

     .2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of Section 11.1
of this Lease, Landlord may elect not to rebuild and/or restore the Premises,
Building and/or Project, and instead terminate this Lease, by notifying Tenant
in writing of such termination within sixty (60) days after the date of
discovery of the damage, such notice to include a termination date giving Tenant
one hundred twenty(120) days to vacate the Premises, but Landlord may so elect
only if the Building or Project shall be damaged by fire or other casualty or
cause, whether or not the Premises are affected, Landlord terminates the leases
of all tenants of the Building that are affected by the casualty in a manner
similar to Tenant, and one or more of the following conditions is present: (i)
in Landlord's reasonable judgment, repairs cannot reasonably be completed within
three hundred sixty and (360) days after the date of discovery of the damage
(when such repairs are made without the payment of overtime or other premiums);
(ii) except for an amount not to exceed the "Threshold Amount," as that term is
defined below, the damage is not fully covered by Landlord's insurance policies;
or (iii) the damage occurs during the last nine (9) months of the Lease Term.
Notwithstanding the foregoing, if Landlord does not elect to terminate this
Lease pursuant to Landlord's termination right as provided above, and the
repairs cannot, in the reasonable opinion of Landlord, be completed within three
hundred sixty and (360) days after being commenced, Tenant may elect, no earlier
than sixty (60) days after the date of the damage and not later than ninety (90)
days after the date of such damage, to terminate this Lease by written notice to
Landlord effective as of the date specified in the notice, which date shall not
be less than thirty (30) days nor more than 120 days after the date such notice
is given by Tenant. For purposes of this Section 11.2, the "Threshold Amount"
shall equal $2,000,000.00; provided, however, that such amount shall be reduced
by an amount equal to $55,555.55 on the first day of each month following the
last day of the seventh (7th) Lease Year.

     .3 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease, including
this Article 11, constitute an express agreement between Landlord and Tenant
with respect to any and all damage to, or destruction of, all or any part of the
Premises, the Building or the Project, and any statute or regulation of the
State of California, including, without limitation, Sections 1932(2) and 1933(4)
of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.

                                   ARTICLE 12

                                    NONWAIVER

     No provision of this Lease shall be deemed waived by either party hereto
unless expressly waived in a writing signed thereby. The waiver by either party
hereto of any breach of any term,


                                      -29-
<PAGE>   30

covenant or condition herein contained shall not be deemed to be a waiver of any
subsequent breach of same or any other term, covenant or condition herein
contained. The subsequent acceptance of Rent hereunder by Landlord shall 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 of a lesser amount than the
Rent herein stipulated shall be deemed a waiver of Landlord's right to receive
the full amount due, nor shall any endorsement or statement on any check or
payment or any letter accompanying such check or payment be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the full amount due. Except as provided in Section
16, no receipt of monies by Landlord from Tenant after the termination of this
Lease shall in any way alter the length of the Lease Term or of Tenant's right
of possession hereunder, or after the giving of any notice shall reinstate,
continue or extend the Lease Term or affect any notice given Tenant prior to the
receipt of such monies, it being agreed that after the service of notice or the
commencement of a suit, or after final judgment for possession of the Premises,
Landlord may receive and collect any Rent due, and the payment of said Rent
shall not waive or affect said notice, suit or judgment.

                                   ARTICLE 13

                                  CONDEMNATION

     If the whole or any material part of the Premises, Building or Project
shall be taken by power of eminent domain or condemned by any competent
authority for any public or quasi-public use or purpose, or if Landlord shall
grant a deed or other instrument in lieu of such taking by eminent domain or
condemnation, provided that Landlord terminates all of the leases of all tenants
of the Building that are affected by the taking (or a deed or other instrument
in lieu thereof) in a manner comparable to Tenant, Landlord shall have the
option to terminate this Lease effective as of the date possession is required
to be surrendered to the authority. If more than twenty-five percent (25%) of
the rentable square feet of the Premises is taken, or if access to the Premises
is substantially impaired, in each case for a period in excess of one hundred
eighty (180) days, Tenant shall have the option to terminate this Lease
effective as of the date possession is required to be surrendered to the
authority. Tenant shall not because of such taking assert any claim against
Landlord or the authority for any compensation because of such taking and
Landlord shall be entitled to the entire award or payment in connection
therewith, except that Tenant shall have the right to file any separate claim
available to Tenant for any taking of Tenant's personal property and fixtures
belonging to Tenant and removable by Tenant upon expiration of the Lease Term
pursuant to the terms of this Lease, and for moving expenses, provided in each
event that such claim by Tenant is payable to Tenant or is otherwise separately
identifiable, and provided further that if the recovery from the condemnor shall
be paid into a common fund or paid to Landlord only, so long as amounts are
specifically designated as payment for claims which are due Tenant pursuant to
the terms of this Article 13. In addition, Tenant shall be entitled to 50% of
the bonus value of this Lease (which bonus value shall be equal to the
difference between the Rent payable under this Lease and the sum established by
the condemning authority as the award for compensation for the leasehold
estate). All Rent shall be apportioned as of the date of such termination. If
any part of the Premises shall be taken, and this Lease shall not be so
terminated, the Rent shall be proportionately abated. Tenant hereby waives any
and all rights it might otherwise have pursuant to Section 1265.130 of The
California Code of Civil Procedure. Notwithstanding anything to the contrary
contained in this Article 13, in the event of a temporary taking of all or any
portion of the Premises for a period of one hundred and eighty (180) days or
less, then this Lease shall not terminate but the Base Rent and the Additional
Rent shall be abated for the period of such taking in proportion to the ratio
that the amount of rentable square feet of the Premises taken bears to the total
rentable square feet of the Premises. Landlord shall be entitled to receive the
entire award made in connection with any such temporary taking.


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<PAGE>   31

                                   ARTICLE 14

                            ASSIGNMENT AND SUBLETTING

     .1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder, permit
any assignment, or other transfer of this Lease or any interest hereunder,
sublet the Premises or any part thereof, or enter into any license or concession
agreements or otherwise permit the occupancy or use of the Premises or any part
thereof by any persons other than Tenant and its employees and contractors (all
of the foregoing are hereinafter sometimes referred to collectively as
"Transfers" and any person to whom any Transfer is made or sought to be made is
hereinafter sometimes referred to as a "Transferee"). If Tenant desires
Landlord's consent to any Transfer, Tenant shall notify Landlord in writing,
which notice (the "Transfer Notice") shall include (i) the proposed effective
date of the Transfer, which shall not be less than thirty (30) days nor more
than two hundred seventy (270) days after the date of delivery of the Transfer
Notice, (ii) a description of the portion of the Premises to be transferred (the
"Subject Space"), (iii) all of the terms of the proposed Transfer and the
consideration therefor, including calculation of the "Transfer Premium", as that
term is defined in Section 14.3 below, in connection with such Transfer, the
name and address of the proposed Transferee, and a copy of all existing executed
and/or proposed documentation pertaining to the proposed Transfer, including all
existing operative documents to be executed to evidence such Transfer, (iv)
current financial statements of the proposed Transferee certified by an officer,
partner or owner thereof, business credit and personal references and history of
the proposed Transferee and any other information required by Landlord which
will enable Landlord to determine the financial responsibility, character, and
reputation of the proposed Transferee, nature of such Transferee's business and
proposed use of the Subject Space and (v) an executed estoppel certificate from
Tenant in the form attached hereto as Exhibit E. Any Transfer made without
Landlord's prior written consent shall, at Landlord's option, be null, void and
of no effect, and shall, at Landlord's option, constitute a default by Tenant
under this Lease. Whether or not Landlord consents to any proposed Transfer,
Tenant shall pay Landlord's review and processing fees, as well as any
reasonable professional fees (including, without limitation, attorneys',
accountants', architects', engineers' and consultants' fees) incurred by
Landlord, within thirty (30) days after written request by Landlord, provided
that (I) in no event shall such fees and costs exceed $2,500.00 for a Transfer,
and (II) no such fees and costs shall be due in connection with an assignment or
sublease which does not require the consent of Landlord pursuant to the terms of
this Article 14.

     .2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold its consent
to any proposed Transfer of the Subject Space to the Transferee on the terms
specified in the Transfer Notice. Landlord shall grant or deny its consent to a
proposed Transfer within ten (10) business days following the date Landlord
receives the Transfer Notice. Any denial of Landlord's consent shall be
accompanied by a statement indicating the reasonable grounds upon which Landlord
denied such consent. In the event that Landlord shall fail to grant or deny its
consent within the foregoing ten (10) business day period, and shall fail to
grant or deny its consent within three (3) business days following receipt of
notice thereof from Tenant, Landlord's consent shall be deemed granted. Without
limitation as to other reasonable grounds for withholding consent, the parties
hereby agree that it shall be reasonable under this Lease and under any
applicable law for Landlord to withhold consent to any proposed Transfer where
one or more of the following apply:

          .2.1 The Transferee is of a character or reputation or engaged in a
business which is not consistent with the quality of the Building or the
Project;

          .2.2 The Transferee intends to use the Subject Space for purposes
which are not permitted under this Lease;

          .2.3 The Transferee is either a governmental agency or instrumentality
thereof;

          .2.4 The Transferee is not a party of reasonable financial worth
and/or financial stability in light of the responsibilities to be undertaken in
connection with the Transfer on the date consent is requested;

          .2.5 The proposed Transfer would cause a violation of another lease
for space in the Project, or would give an occupant of the Project a right to
cancel its lease; or


                                      -31-
<PAGE>   32

          .2.6 Either the proposed Transferee, or any person or entity which
directly or indirectly, controls, is controlled by, or is under common control
with, the proposed Transferee, occupies space in the Project at the time of the
request for consent and Landlord has space in the Building which is reasonably
sufficient, and has tenant improvements which are reasonably adequate, to
satisfy the proposed Transferee's requirements, provided that the terms of this
Section 14.2.6 shall be inapplicable in connection with a proposed sublease to
be entered into by Tenant during the last twenty-four (24) months of the Lease
Term which is for a term (inclusive of renewals) of twenty-four (24) months or
less.

     If Landlord consents to any Transfer pursuant to the terms of this Section
14.2 (and does not exercise any recapture rights Landlord may have under Section
14.4 of this Lease), Tenant may within six (6) months after Landlord's consent,
but not later than the expiration of said six-month period, enter into such
Transfer of the Premises or portion thereof, upon substantially the same terms
and conditions as are set forth in the Transfer Notice furnished by Tenant to
Landlord pursuant to Section 14.1 of this Lease, provided that if there are any
material changes in the terms and conditions from those specified in the
Transfer Notice (i) such that Landlord would initially have been entitled to
refuse its consent to such Transfer under this Section 14.2, or (ii) which would
cause the proposed Transfer to be more materially favorable to the Transferee
than the terms set forth in Tenant's original Transfer Notice (and Landlord
retains or based upon the changes would retain a right of recapture pursuant to
Section 14.4 of this Lease), Tenant shall again submit the Transfer to Landlord
for its approval and other action under this Article 14 (including Landlord's
right of recapture, if any, under Section 14.4 of this Lease).

     .3 TRANSFER PREMIUM. If Landlord consents to a Transfer, as a condition
thereto which the parties hereby agree is reasonable, Tenant shall pay to
Landlord fifty percent (50%) of any Transfer Premium received by Tenant from
such Transferee. "Transfer Premium" shall mean all rent, additional rent or
other consideration payable by such Transferee in connection with the Transfer
in excess of the Rent and Additional Rent payable by Tenant under this Lease
during the term of the Transfer on a per rentable square foot basis if less than
all of the Premises is transferred, after deducting the reasonable expenses (the
"Transfer Costs") incurred by Tenant for (i) any changes, alterations and
improvements to the Premises in connection with the Transfer, (ii) any free base
rent reasonably provided to the Transferee, (iii) any reasonable brokerage
commissions and attorneys fees incurred in connection with the Transfer, (iv)
marketing costs; (v) attorneys' fees paid by Tenant to Landlord in connection
with the Transfer, (vi) tenant improvement allowances granted in connection with
the Transfer, (vii) free rent and concessions granted to the Transferee, and
(viii) the amount of Base Rent and Additional Rent paid by Tenant to Landlord
with respect to the Subject Space during the period commencing on the later of
(A) the date Tenant contracts with a reputable broker to market the Subject
Space, and (B) the date Tenant vacates the Subject Space, until the commencement
of the term of the Transfer. The Transfer Costs shall also be deemed to include
the value of any permanently affixed improvements in the Subject Space which
were paid for by Tenant (specifically excluding any improvements in the Subject
Space funded by Landlord as part of the Tenant Improvement Allowance). "Transfer
Premium" shall also include, but not be limited to, key money, bonus money or
other cash consideration paid by Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for services rendered
by Tenant to Transferee or for assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to Transferee in connection with such Transfer.
Tenant shall not artificially structure any Transfer as a subterfuge in order to
intentionally circumvent the provisions of this Section 14.3. Tenant shall be
required to pay Landlord its portion of any Transfer Premium on a monthly basis
when received by Tenant, provided that Tenant shall be entitled to recover all
of its Transfer Costs prior to owing to Landlord any Transfer Premium pursuant
to the terms of this Section 14.3.

     .4 LANDLORD'S OPTION AS TO SUBJECT SPACE. Notwithstanding anything to the
contrary contained in this Article 14, in the event Tenant contemplates a
Transfer (specifically excluding an assignment or sublease under Section 14.7 of
this Lease) which, when aggregated with all other Transfers, would constitute a
Transfer of more than fifty percent (50%) of the rentable area of the Premises,
Tenant shall give Landlord notice (the "Intention to Transfer Notice") of such
contemplated Transfer (whether or not the contemplated Transferee or the terms
of such contemplated Transfer have been determined). The Intention to Transfer
Notice shall specify the portion of and amount of rentable square feet of the
Premises which Tenant intends to Transfer (the "Contemplated Transfer Space"),
the contemplated date of commencement of the



                                      -32-
<PAGE>   33

Contemplated Transfer (the "Contemplated Effective Date"), and the contemplated
length of the term of such contemplated Transfer, and shall specify that such
Intention to Transfer Notice is delivered to Landlord pursuant to this Section
14.4 in order to allow Landlord to elect to recapture the Contemplated Transfer
Space for the term set forth in the Intention to Transfer Notice. Thereafter,
Landlord shall have the option, by giving written notice to Tenant within thirty
(30) days after receipt of any Intention to Transfer Notice, to recapture the
Contemplated Transfer Space. Such recapture shall cancel and terminate this
Lease with respect to such Contemplated Transfer Space as of the Contemplated
Effective Date until the last day of the term of the contemplated Transfer as
set forth in the Intention to Transfer Notice. In the event of a recapture by
Landlord, if this Lease shall be canceled with respect to less than the entire
Premises, the Rent, Security Deposit and L-C amounts reserved herein shall be
prorated on the basis of the number of rentable square feet retained by Tenant
in proportion to the number of rentable square feet contained in the Premises,
and this Lease as so amended shall continue thereafter in full force and effect,
and upon request of either party, the parties shall execute written confirmation
of the same. Landlord shall be responsible for installing, at its cost, any
demising wall and other improvements necessary to separate the recaptured space
from the balance of the Premises. If Landlord declines, or fails to elect in a
timely manner, to recapture such Contemplated Transfer Space under this Section
14.4, then, subject to the other terms of this Article 14, for a period of nine
(9) months (the "Nine Month Period") commencing on the last day of such sixty
(60) day period, Landlord shall not have any right to recapture the Contemplated
Transfer Space with respect to any Transfer made during the Nine Month Period,
provided that any such Transfer is substantially on the terms set forth in the
Intention to Transfer Notice; provided however, that any such Transfer shall be
subject to the remaining terms of this Article 14. If such a Transfer is not so
consummated within the Nine Month Period (or if a Transfer is so consummated,
then upon the expiration of the term of any Transfer of such Contemplated
Transfer Space consummated within such Nine Month Period), Tenant shall again be
required to submit a new Intention to Transfer Notice to Landlord with respect
any contemplated Transfer, as provided above in this Section 14.4.

     .5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the terms
and conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord,
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer, (iv) Tenant shall furnish upon Landlord's request a
complete statement, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space (except to the extent Landlord
exercises its right of recapture, as set forth in Section 14.4 of this Lease).
Landlord or its authorized representatives shall have the right at all
reasonable times to audit the books, records and papers of Tenant relating to
any Transfer, and shall have the right to make copies thereof. If the Transfer
Premium respecting any Transfer shall be found understated, Tenant shall, within
thirty (30) days after demand, pay the deficiency, and if understated by more
than three percent (3%), Tenant shall pay Landlord's costs of such audit.

     .6 OCCURRENCE OF DEFAULT. Any Transfer hereunder shall be subordinate and
subject to the provisions of this Lease, and if this Lease shall be terminated
during the term of any Transfer, Landlord shall have the right to treat such
Transfer as canceled and repossess the Subject Space by any lawful means unless
Landlord has contractually agreed to recognize the sublessee. Upon the
occurrence of a Triggering Default, Landlord is hereby irrevocably authorized,
as Tenant's agent and attorney-in-fact, to direct any Transferee to make all
payments under or in connection with the Transfer directly to Landlord (which
Landlord shall apply towards Tenant's obligations under this Lease) until such
default is cured. Such Transferee shall rely on any representation by Landlord
that Tenant is in default hereunder, without any need for confirmation thereof
by Tenant. Upon any assignment, the assignee shall assume in writing all
obligations and covenants of Tenant thereafter to be performed or observed under
this Lease. No collection or acceptance of rent by Landlord from any Transferee
shall be deemed a waiver of any provision of this Article 14 or the approval of
any Transferee or a release of Tenant from any obligation under this Lease,
whether theretofore or thereafter accruing. In no event shall Landlord's
enforcement of any


                                      -33-
<PAGE>   34

provision of this Lease against any Transferee be deemed a waiver of Landlord's
right to enforce any term of this Lease against Tenant or any other person. If
Tenant's obligations hereunder have been guaranteed, Landlord's consent to any
Transfer shall not be effective unless the guarantor also consents to such
Transfer.

     .7 NON-TRANSFERS. Notwithstanding anything to the contrary contained in
this Lease, neither (i) an assignment to a transferee of all or substantially
all of the assets of Tenant, (ii) an assignment of the Premises to a transferee
which is the resulting entity of a merger or consolidation of Tenant with
another entity, nor (iii) an assignment or subletting of all or a portion of the
Premises to an affiliate of Tenant (an entity which is controlled by, controls,
or is under common control with, Tenant) (an "Affiliate"), shall be deemed a
Transfer under Article 14 of this Lease, provided that Tenant notifies Landlord
of any such assignment or sublease and promptly supplies Landlord with any
documents or information reasonably requested by Landlord regarding such
transfer or transferee as set forth in items (i) through (iii) above, that such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease. "Control," as used in this Section 14.7, shall mean the
ownership, directly or indirectly, of at least fifty-one percent (51%) of the
voting securities of, or possession of the right to vote, in the ordinary
direction of its affairs, of at least fifty-one percent (51%) of the voting
interest in, any person or entity.

     .8 PERMITTED OCCUPANTS. Notwithstanding any contrary provision of this
Article 14, Tenant shall have the right without the payment of a Transfer
Premium and without the receipt of Landlord's consent, but on prior written
notice to Landlord, to sublease, license, or otherwise grant rights of occupancy
or up to ten percent (10%) of the rentable square footage of the Premises, in
the aggregate, to attorneys, accountants, agents or other professionals on and
subject to the following conditions: (i) such individuals or entities shall not
be permitted to occupy a separately demised portion of the Premises which
contains an entrance to such portion of the Premises other than the primary
entrance to the Premises; (ii) all such individuals or entities shall be of a
character and reputation consistent with the quality of the Building and the
Project; and (iii) such occupancy shall not be a subterfuge by Tenant to avoid
its obligations under this Lease or the restrictions on Transfers pursuant to
this Article 14. Tenant shall promptly supply Landlord with any documents or
information reasonably requested by Landlord regarding any such occupancy. Any
occupancy permitted under this Section 14.8 shall not be deemed a Transfer under
this Article 14. Notwithstanding the foregoing, no such occupancy shall relieve
Tenant from any liability under this Lease.

                                   ARTICLE 15

                      SURRENDER OF PREMISES; OWNERSHIP AND
                            REMOVAL OF TRADE FIXTURES

     .1 SURRENDER OF PREMISES. No act or thing done by Landlord or any agent or
employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in writing by Landlord. The delivery of keys to the
Premises to Landlord or any agent or employee of Landlord shall not constitute a
surrender of the Premises or effect a termination of this Lease, whether or not
the keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not, or
a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises or terminate any or all such .

     .2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the Lease
Term, or upon any earlier termination of this Lease, Tenant shall, subject to
the provisions of this Article 15, quit and surrender possession of the Premises
to Landlord in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear, repairs
which are specifically made the responsibility of Landlord hereunder, and
casualty excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, business and trade
fixtures, free-standing cabinet work, movable


                                      -34-
<PAGE>   35

partitions and other articles of personal property owned by Tenant or installed
or placed by Tenant at its expense in the Premises, and such similar articles of
any other persons claiming under Tenant, and Tenant shall repair at its own
expense all damage to the Premises and Building resulting from such removal.

                                   ARTICLE 16

                                  HOLDING OVER

     If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly rate equal to one hundred twenty-five (125%) of the Rent
applicable during the last rental period of the Lease Term under this Lease for
the first one hundred twenty (120) days of any such holdover, and one hundred
fifty percent (150%) thereafter. Such month-to-month tenancy shall be subject to
every other applicable term, covenant and agreement contained herein. Nothing
contained in this Article 16 shall be construed as consent by Landlord to any
holding over by Tenant, and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord as provided in this
Lease upon the expiration or other termination of this Lease. The provisions of
this Article 16 shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Landlord provided herein or at law. If Tenant fails to
surrender the Premises upon the termination or expiration of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from all loss, costs
(including reasonable attorneys' fees) and liability resulting from such
failure, including, without limiting the generality of the foregoing, any claims
made by any succeeding tenant founded upon such failure to surrender and any
lost profits to Landlord resulting therefrom.

                                   ARTICLE 17

                              ESTOPPEL CERTIFICATES

     Within ten (10) business days following a request in writing by Landlord,
Tenant shall execute, acknowledge and deliver to Landlord an estoppel
certificate, which, as submitted by Landlord, shall be substantially in the form
of Exhibit E, attached hereto (or such other form as may be reasonably required
by any prospective mortgagee or purchaser of the Project, or any portion
thereof), indicating therein any exceptions thereto that may exist at that time,
and shall also contain any other information reasonably requested by Landlord or
Landlord's mortgagee or prospective mortgagee. Any such certificate may be
relied upon by any prospective mortgagee or purchaser of all or any portion of
the Project. Within ten (10) business days following request by Tenant, Landlord
shall deliver an estoppel certificate in substantially the form attached hereto
as Exhibit E (with such changes as are reasonably required in order to reflect
that the same shall be executed by Landlord in favor of Tenant rather than
Tenant in favor of Landlord), or such other form as may be reasonably requested
by Tenant or a purchaser or lender of Tenant, indicating therein any exceptions
thereto that may exist at that time. At any time during the Lease Term, if
Tenant is not a public company reporting under applicable federal securities
laws, Landlord may require Tenant to provide Landlord with a current financial
statement and financial statements of the two (2) years prior to the current
financial statement year. Failure of Tenant to timely execute, acknowledge and
deliver such estoppel certificate or other instruments shall constitute an
acceptance of the Premises and an acknowledgment by Tenant that statements
included in the estoppel certificate are true and correct, without exception.

                                   ARTICLE 18

                                  SUBORDINATION

     Landlord shall use commercially reasonable efforts to provide Tenant with a
commercially reasonable form of non-disturbance agreement in favor of Tenant,
from the current, as of the date of this Lease, holder of all ground leases, if
any, and holders of a deed of trust against the Project. Subject to the terms of
this Article 18, this Lease shall be subject and subordinate to all present and
future ground or underlying leases of the Building or Project and to


                                      -35-
<PAGE>   36

the lien of any mortgage, trust deed or other encumbrances now or hereafter in
force against the Building or Project or any part thereof, if any, and to all
renewals, extensions, modifications, consolidations and replacements thereof,
and to all advances made or hereafter to be made upon the security of such
mortgages or trust deeds, unless the holders of such mortgages, trust deeds or
other encumbrances, or the lessors under such ground lease or underlying leases,
require in writing that this Lease be superior thereto. Landlord agrees to
provide Tenant with commercially reasonable non-disturbance agreements in favor
of Tenant, from any ground lessors, mortgage holders or lien holders of Landlord
acquiring or modifying such interests at any time subsequent to the execution
and delivery of the Lease in consideration of, and as a condition precedent to,
Tenant's agreement to be bound by Section 18 of the Lease. Tenant covenants and
agrees in the event any proceedings are brought for the foreclosure of any such
mortgage or deed in lieu thereof (or if any ground lease is terminated), to
attorn, to the lienholder or purchaser or any successors thereto upon any such
foreclosure sale or deed in lieu thereof (or to the ground lessor), if so
requested to do so by such purchaser or lienholder or ground lessor, and to
recognize such purchaser or lienholder or ground lessor as the lessor under this
Lease, provided such lienholder or purchaser or ground lessor shall agree to
accept this Lease and not disturb Tenant's occupancy, so long as Tenant timely
pays the rent and observes and performs the terms, covenants and conditions of
this Lease to be observed and performed by Tenant. Landlord's interest herein
may be assigned as security at any time to any lienholder. Tenant shall, within
ten (10) days of request by Landlord, execute such further instruments or
assurances as Landlord may reasonably deem necessary to evidence or confirm the
subordination or superiority of this Lease to any such mortgages, trust deeds,
ground leases or underlying leases.

                                   ARTICLE 19

                               DEFAULTS; REMEDIES

     .1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:

          .1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due unless such
failure is cured within seven (7) days after written notice; or

          .1.2 Except where a specific time period is otherwise set forth for
Tenant's performance in this Lease, in which event the failure to perform by
Tenant within such time period shall be a default by Tenant under this Section
19.1.2, any failure by Tenant to observe or perform any other provision,
covenant or condition of this Lease to be observed or performed by Tenant where
such failure continues for thirty (30) days after written notice thereof from
Landlord to Tenant; provided that if the nature of such default is such that the
same cannot reasonably be cured within a thirty (30) day period, Tenant shall
not be deemed to be in default if it diligently commences such cure within such
period and thereafter diligently proceeds to rectify and cure such default; or

          .1.3 To the extent permitted by law, a general assignment by Tenant or
any guarantor of this Lease for the benefit of creditors, or the taking of any
corporate action in furtherance of bankruptcy or dissolution whether or not
there exists any proceeding under an insolvency or bankruptcy law, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located upon
the Premises or of Tenant's interest in this Lease, unless such seizure is
discharged within sixty (60) days; or

          .1.4 The failure by Tenant to observe or perform according to the
terms and conditions of Articles 17 or 18 of this Lease where such failure
continues for more than ten (10) days after notice from Landlord.


                                      -36-
<PAGE>   37

     All notices to be given pursuant to this Section 19 shall be in addition
to, and not in lieu of, the notice requirements of California Code of Civil
Procedure Section 1161.

     If Tenant disputes that any amount is due and payable by Tenant pursuant to
the Lease, Tenant shall have the right, without waiving any of its rights at law
or in equity, to pay any such amount under protest and thereafter to seek
recovery of all or any part thereof by Landlord.

     .2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), the option to pursue any one or more of the following remedies,
each and all of which shall be cumulative and nonexclusive, without any notice
or demand whatsoever.

          .2.1 Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying the Premises or any part
thereof, without being liable for prosecution or any claim or damages therefor;
and Landlord may recover from Tenant the following:

               (i) The worth at the time of any unpaid rent which has 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 rental loss that Tenant proves could have been
reasonably avoided; plus

               (iii) The worth at the time of award of the amount by which the
unpaid rent for the balance of the Lease Term after the time of award exceeds
the amount of such rental loss that Tenant proves could have been 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 would be likely to
result therefrom, specifically including but not limited to, brokerage
commissions and advertising expenses incurred, expenses of remodeling the
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; provided
that to the extent any new lease involves space other than the Premises or
extends beyond the then Lease Term, only those costs, expenses, commissions and
concessions attributable to the Premises or the remainder of the then Lease
Term, as determined on a straight line basis, shall be recoverable by Landlord;
and

               (v) At Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by applicable
law.

     The term "rent" as used in this Section 19.2 shall be deemed to be and to
mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Paragraphs
19.2.1(i) and (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the rate set forth in Article 25 of this Lease, but in no
case greater than the rate described in Article 25. As used in Paragraph
19.2.1(iii) above, the "worth at the time of award" shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).


          .2.2 Landlord shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee's breach and
abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.


                                      -37-
<PAGE>   38

          .2.3 Landlord shall at all times have the rights and remedies (which
shall be cumulative with each other and cumulative and in addition to those
rights and remedies available under Sections 19.2.1 and 19.2.2, above, or any
law or other provision of this Lease), without prior demand or notice except as
required by applicable law, to seek any declaratory, injunctive or other
equitable relief, and specifically enforce this Lease, or restrain or enjoin a
violation or breach of any provision hereof.

     .3 SUBLEASES OF TENANT. If Landlord elects to terminate this Lease on
account of any default by Tenant, as set forth in this Article 19, Landlord
shall have the right to terminate any and all subleases, licenses, concessions
or other consensual arrangements for possession entered into by Tenant and
affecting the Premises.

     .4 EFFORTS TO RELET. No re-entry or repossession, repairs, maintenance,
changes, alterations and additions, reletting, appointment of a receiver to
protect Landlord's interests hereunder, or any other action or omission by
Landlord shall be construed as an election by Landlord to terminate this Lease
or Tenant's right to possession, or to accept a surrender of the Premises, nor
shall same operate to release Tenant in whole or in part from any of Tenant's
obligations hereunder, unless express written notice of such intention is sent
by Landlord to Tenant. The foregoing shall not constitute a waiver of any of
Tenant's rights under applicable law, all of which are hereby expressly
reserved.

     .5 LANDLORD DEFAULT.

     .5.1 GENERAL. Notwithstanding anything to the contrary set forth in this
Lease, Landlord shall not be in default in the performance of any obligation
required to be performed by Landlord pursuant to this Lease unless Landlord
fails to perform such obligation within thirty (30) days after the receipt of
notice from Tenant specifying in detail Landlord's failure to perform; provided,
however, if the nature of Landlord's obligation is such that more than thirty
(30) days are required for its performance, then Landlord shall not be in
default under this Lease if it shall commence such performance within such
thirty (30) day period and thereafter diligently pursue the same to completion.
Upon any such default by Landlord under this Lease, Tenant may, except as
otherwise specifically provided in this Lease to the contrary, exercise any of
its rights provided at law or in equity.

     .5.2 ABATEMENT OF RENT. In the event that Tenant is prevented from using,
and does not use, the Premises or any portion thereof, as a result of (i) any
repair, maintenance or alteration performed by Landlord, or which Landlord
failed to perform, after the Lease Commencement Date and required by this Lease,
which substantially interferes with Tenant's use of the Premises, (ii) any
failure to provide services, utilities or access to the Premises, (iii) damage
and destruction of or eminent domain proceedings in connection with the
Premises, the Project or the parking facility servicing the Project, or (iv) the
presence of hazardous materials not brought on the Premises by Tenant, its
employees, agents, invitees or customers (any such set of circumstances as set
forth in items (i) through (iv), above, to be known as an "Abatement Event"),
then Tenant shall give Landlord notice of such Abatement Event, and if such
Abatement Event continues for five (5) consecutive business days after
Landlord's receipt of any such notice (the "Eligibility Period"), then the Base
Rent, Tenant's Share of Direct Expenses, and Tenant's obligation to pay for
parking shall be abated or reduced, as the case may be, from the commencement of
the Eligibility Period for such time that Tenant continues to be so prevented
from using, and does not use, the Premises or a portion thereof, in the
proportion that the rentable area of the portion of the Premises that Tenant is
prevented from using, and does not use, bears to the total rentable area of the
Premises; provided, however, in the event that Tenant is prevented from using,
and does not use, a portion of the Premises for a period of time from the
commencement of the Eligibility Period and the remaining portion of the Premises
is not sufficient to allow Tenant to effectively conduct its business therein,
and if Tenant does not conduct its business from such remaining portion, then
for such time after expiration of the Eligibility Period during which Tenant is
so prevented from effectively conducting its business therein, the Base Rent and
Tenant's Share of Building Direct Expenses and Tenant's obligation to pay for
parking for the entire Premises shall be abated for such time as Tenant
continues to be so prevented from using, and does not use, the Premises. If,
however, Tenant reoccupies any portion of the Premises during such period, the
Rent allocable to such reoccupied portion, based on the proportion that the
rentable area of such reoccupied portion of the Premises bears to


                                      -38-
<PAGE>   39

the total rentable area of the Premises, shall be payable by Tenant from the
date Tenant reoccupies such portion of the Premises. Such right to abate Base
Rent, Tenant's Share of Direct Expenses, and Tenant's parking charges shall be
Tenant's sole and exclusive remedy at law or in equity for an Abatement Event.
If Tenant's right to abatement occurs because of an eminent domain taking and/or
because of damage or destruction to the Premises, the Project's parking
facility, and/or the Project, Tenant's abatement period shall continue until
Tenant has been given sufficient time, and sufficient access to the Premises, to
rebuild such portion it is required to rebuild, to install its property,
furniture, fixtures, and equipment to the extent the same shall have been
removed as a result of such damage or destruction and to move in over a weekend.
Except as provided in this Section 19.5.2, nothing contained herein shall be
interpreted to mean that Tenant is excused from paying Rent due hereunder.

                                   ARTICLE 20

                           COVENANT OF QUIET ENJOYMENT

     Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.

                                   ARTICLE 21

                                LETTER OF CREDIT

     .1 LETTER OF CREDIT. Tenant shall deliver to Landlord concurrently with the
parties' full execution and unconditional delivery of this Lease, an
unconditional, clean, irrevocable letter of credit (the "L-C") in the initial
amount of $2,258,136.38 (the "Initial L-C Amount"), which L-C shall be issued by
a money-center bank (a bank which accepts deposits, maintains accounts, has a
local Los Angeles office which will negotiate a letter of credit, and whose
deposits are insured by the FDIC) reasonably acceptable to Landlord, and which
L-C shall be substantially in form and content as set forth in Exhibit J
attached hereto. Tenant shall pay all expenses, points and/or fees incurred by
Tenant in obtaining the L-C.

     .2 APPLICATION OF THE L-C. The L-C shall be held by Landlord as security
for the faithful performance by Tenant of all the terms, covenants, and
conditions of this Lease to be kept and performed by Tenant during the Lease
Term. The L-C shall not be mortgaged, assigned or encumbered in any manner
whatsoever by Tenant without the prior written consent of Landlord. 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 if Tenant fails
to renew the L-C at least thirty (30) days before its expiration, Landlord may,
but shall not be required to, draw upon all or any portion of the L-C for
payment of any Rent or any other sum in default, or for the payment of any
amount that Landlord may reasonably spend or may become obligated to spend by
reason of Tenant's default, or to compensate Landlord for any other loss or
damage that Landlord may suffer by reason of Tenant's default. The use,
application or retention of the L-C, or any portion thereof, by Landlord shall
not (a) prevent Landlord from exercising any other right or remedy provided by
this Lease or by law, it being intended that Landlord shall not first be
required to proceed against the L-C, nor (b) operate as a limitation on any
recovery to which Landlord may otherwise be entitled. Any amount of the L-C
which is drawn upon by Landlord, but is not used or applied by Landlord, shall
be held by Landlord and deemed a security deposit (the "L-C Security Deposit").
If any portion of the L-C is drawn upon or if any portion of the L-C Security
Deposit is utilized, Tenant shall, within five (5) days after written demand
therefor, either (i) deposit cash with Landlord (which cash shall be applied by
Landlord to the L-C Security Deposit) in an amount sufficient to cause the sum
of the L-C Security Deposit and the amount of the remaining L-C to be equivalent
to the amount of the L-C then required under this Lease or (ii) reinstate the
L-C to the amount then required under this Lease, and Tenant's failure to do so
shall be a default under this Lease. Tenant acknowledges that Landlord has the
right to transfer or mortgage its interest in the Building and the Project and
in this Lease and Tenant agrees that in the event of any such transfer or
mortgage, Landlord shall have the right to transfer or assign the


                                      -39-
<PAGE>   40

L-C Security Deposit and/or the L-C to the transferee or mortgagee, and in the
event of such transfer, Tenant shall look solely to such transferee or mortgagee
for the return of the L-C Security Deposit and/or the L-C. If Tenant is not in
default under this Lease beyond the applicable cure period provided in this
Lease, then the amount of the L-C shall be reduced as follows: on May 1, 2002,
the amount of the L-C shall be reduced to One Million Eight Hundred Six Thousand
Five Hundred Nine and 10/100 Dollars ($1,806,509.10); on May 1, 2003, the amount
of the L-C shall be reduced to One Million Three Hundred Fifty-Four Thousand
Eight Hundred Eighty-One and 82/100 Dollars ($1,354,881.82); on May 1, 2004, the
amount of the L-C shall be reduced to Nine Hundred Three Thousand Two Hundred
Fifty-Four and 54/100 Dollars ($903,254.54); on May 1, 2005, the amount of the
L-C shall be reduced to Four Hundred Fifty-One Thousand Six Hundred Twenty-Seven
and 26/100 Dollars ($451,627.26); and on May 1, 2006, the amount of the L-C
shall be reduced to Zero and No/100 Dollars ($0.00).

     In the event that the L-C is not reduced as set forth above because Tenant
is in default of this Lease as of a Reduction Date and Tenant shall thereafter
cure such default, the L-C shall be reduced as set forth above upon the first
day of the month following the cure of such default by Tenant. If Tenant shall
fully and faithfully perform every provision of this Lease to be performed by
it, the L-C Security Deposit and/or the L-C, or any balance thereof, shall be
returned to Tenant within thirty (30) days following the expiration of the Lease
Term, or earlier termination of this Lease for any reason other than a default
by Tenant.

                                   ARTICLE 22

                              INTENTIONALLY OMITTED
                                   ARTICLE 23

                                      SIGNS

     .1 FULL FLOORS. Subject to Landlord's prior written approval, in its
reasonable discretion, and provided all signs are in keeping with the quality,
design and style of the Building and Project, Tenant, if the Premises comprise
an entire floor of the Building (other than the ground floor of the Building),
at its sole cost and expense, may install identification signage anywhere in the
Premises including in the elevator lobby of the Premises, provided that such
signs must not be visible from the exterior of the Building.

     .2 MULTI-TENANT FLOORS. If other tenants occupy space on the floor on which
the Premises is located, Tenant's identifying signage shall be provided by
Landlord, at Tenant's cost, and such signage shall be comparable to that used by
Landlord for other similar floors in the Building and shall comply with
Landlord's Building standard signage program.

     .3 PROHIBITED SIGNAGE AND OTHER ITEMS. Any signs, notices, logos, pictures,
names or advertisements which are installed and that have not been separately
approved by Landlord may be removed without notice by Landlord at the sole
expense of Tenant. Tenant may not install any signs on the exterior or roof of
the Project or the Common Areas, except as provided in Section 23.5, below. Any
signs, window coverings, or blinds (even if the same are located behind the
Landlord-approved window coverings for the Building), or other items visible
from the exterior of the Premises or Building, shall be subject to the prior
approval of Landlord, in its sole discretion.

     .4 BUILDING DIRECTORY. A building directory will be located in the lobby of
the Building. Tenant shall have the right to designate names to be displayed
under Tenant's entry in such directory at a rate of one (1) strip for each three
thousand (3,000) rentable square feet of the Premises.

     .5 TENANT'S SIGNAGE. Tenant shall be entitled to install (i) one (1)
eyebrow sign (the "Eyebrow Signage") in the location above the third (3rd) floor
of the Building facing Wilshire Boulevard which location is currently, as of the
date of this Lease, occupied by the signage of E! Entertainment Television,
Inc., a Delaware corporation, and (ii) two (2) monument signs (the "Monument
Signage") on the existing monument located on the corner of Wilshire Boulevard
and Hauser Street in the location set forth on Exhibit I attached hereto, at
Tenant's sole cost and


                                      -40-
<PAGE>   41

expense (the Eyebrow Signage and Monument Signage may be collectively referred
to herein as "Tenant's Signage"). Landlord shall not grant to any other tenant
the right to install signage on the exterior of the Building at the same level
as the Eyebrow Signage.

     Notwithstanding the foregoing, (a) the location of Tenant's Signage shall
be consistent with Exhibit I and otherwise reasonably acceptable to Landlord and
Tenant, (b) the size, materials, design, graphics, color, illumination and
specifications of Tenant's Signage shall be subject to Landlord's approval,
which approval shall not be unreasonably withheld (provided that the graphics,
color, and design of Tenant's existing logo are hereby approved), (c) Tenant's
Signage shall comply with all applicable governmental rules and regulations, (d)
Tenant's Signage shall be personal to the Original Tenant and any Permitted
Assignee, provided that Tenant may not transfer less than all of Tenant's
Signage to such Permitted Assignee, and (e) Tenant's right to Tenant's Signage
shall terminate in the event that less than 40,000 rentable square feet of the
Premises are occupied by the Original Tenant or any Permitted Assignee. If,
following such termination Landlord requires the removal of Tenant's Signage,
Landlord shall be responsible for the cost of such removal and any repair of the
Project resulting therefrom. Tenant's Signage may, at Tenant's option, include
Tenant's name and/or logo. Tenant shall be responsible for all costs incurred by
Tenant in connection with the design, construction, installation, illumination,
maintenance and repair of Tenant's Signage. Subject to Landlord's reasonable
needs in connection with renovations of and/or in connection with the repair and
maintenance of the Building or Project, Landlord shall not (x) affix any
structures to the Building or Project which will materially obstruct the
visibility of Tenant's Signage, and (y) permit landscaping on the Project to
materially obstruct the visibility of Tenant's Signage. Upon the expiration or
earlier termination of Tenant's rights to Tenant's Signage or upon the
expiration of the Lease Term, Tenant shall, at its sole cost and expense, remove
Tenant's Signage and repair any and all damage to the Building and Project
caused by such removal. In the event Tenant fails to comply with the terms of
the proceeding sentence, Landlord shall have the right, at Tenant's sole cost
and expense after thirty (30) days advance written notice, to remove Tenant's
Signage and to repair any and all damage to the Building caused by such removal.

                                   ARTICLE 24

                               COMPLIANCE WITH LAW

     Tenant shall not do anything or suffer anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
other governmental rule, regulation or requirement now in force or which may
hereafter be enacted or promulgated ("Applicable Laws"). Subject to Landlord's
obligations as set forth in this Article 24, at its sole cost and expense,
Tenant shall promptly comply with all such governmental measures which relate to
(i) Tenant's use of the Premises, (ii) the Alterations and Tenant Improvements
(as to the Alterations and Tenant Improvements only but not as to any other part
of the Building triggered thereby, except as set forth in item (iii), below),
(iii) the Base Building, Building Systems and Building Structure, but only to
the extent such obligations are triggered by Tenant's Tenant Improvements which
are not customary general office improvements, Tenant's Alterations which are
not customary general office improvements, or Tenant's non-general office use;
provided, however, that Tenant's obligation to comply with Applicable Laws shall
only apply to the extent Tenant's failure to comply therewith would (a) prohibit
Landlord or any tenant of the Building from obtaining or maintaining a
certificate of occupancy for all or any portion of the Building, (b)
unreasonably and materially affect the safety of any tenants, occupants,
invitees, employees or any other person at the Building, (c) impose an
unreasonable health hazard for any such persons, and/or (d) otherwise materially
adversely affect Landlord and/or the Building (items (a) through (d) to be
referred to herein as "Tenant's Compliance Conditions"). Should any standard or
regulation now or hereafter be imposed on Tenant by a state, federal or local
governmental body charged with the establishment, regulation and enforcement of
occupational, health or safety standards for employers, employees, or tenants,
then Tenant agrees, at its sole cost and expense, to comply promptly with such
standards or regulations. Subject to the foregoing terms of this Article 24, and
the terms of this Lease, Landlord shall, at its sole cost and expense, comply
with laws relating to the Base Building, Building Systems, Building Structure
and the Common Areas; provided, however, that Landlord's obligation to comply
with such Applicable Laws shall only apply to the extent that failure to comply
with therewith would (I) impose an unreasonable health hazard to the occupants
of the Premises, (II) prohibit Tenant from obtaining or maintaining a


                                      -41-
<PAGE>   42

certificate of occupancy for the Premises, (III) unreasonably and materially
affect the safety of any tenants, occupants, invitees, employees or any other
person at the Building, or (IV) otherwise materially adversely affect Tenant
and/or the Premises (items (I) through (IV) to be referred to herein is
"Landlord's Compliance Conditions"). Notwithstanding anything to the contrary
set forth in this Article 24, Tenant's and Landlord's obligation under this
Article 24 shall commence upon the Lease Commencement Date.

                                   ARTICLE 25

                                  LATE CHARGES

     If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due more than once in a Lease Year, then Tenant shall pay to Landlord
a late charge equal to three and one half percent (3.5%) of the overdue amount.
The late charge shall be deemed Additional Rent and the right to require it
shall be in addition to all of Landlord's other rights and remedies hereunder or
at law and shall not be construed as liquidated damages or as limiting
Landlord's remedies in any manner. In addition to the late charge described
above, any Rent or other amounts owing hereunder which are not paid within ten
(10) days after the date they are due shall bear interest from the date when due
until paid at a rate per annum (the "Interest Rate") equal to the lesser of (i)
the annual "Bank Prime Loan" rate cited in the Federal Reserve Statistical
Release Publication G.13(415), published on the first Tuesday of each calendar
month (or such other comparable index as Landlord and Tenant shall reasonably
agree upon if such rate ceases to be published) plus two (2) percentage points,
and (ii) the highest rate permitted by applicable law.

                                   ARTICLE 26

              LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

     .1 LANDLORD'S CURE. All covenants and agreements to be kept or performed by
Tenant under this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any reduction of Rent, except to the extent, if any,
otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant's part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.

     .2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, within thirty (30) days
following demand by Landlord to Tenant, sums equal to expenditures reasonably
made and obligations incurred by Landlord in connection with the remedying by
Landlord of Tenant's defaults pursuant to the provisions of Section 26.1.
Tenant's obligations under this Section 26.2 shall survive the expiration or
sooner termination of the Lease Term.

                                   ARTICLE 27

                                ENTRY BY LANDLORD

     Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees
or, during the last nine (9) months of the Lease Term (provided Tenant has not
exercised its right to lease the Premises during an Option Term), tenants, or to
current or prospective mortgagees, ground or underlying lessors or insurers;
(iii) post notices of nonresponsibility; or (iv) make repairs to the Premises
(to the extent permitted pursuant to the terms of this Lease) or to the Building
or the Building's systems and equipment. Notwithstanding anything to the
contrary contained in this Article 27, Landlord may enter the Premises at any
time to (A) perform services required of Landlord, including janitorial service;
(B) take possession due to any breach of this Lease in the manner provided
herein; and (C) perform any covenants of Tenant which Tenant fails to perform.
Any such entries shall be performed by Landlord as expeditiously as reasonably
possible and in a manner so as to


                                      -42-
<PAGE>   43

minimize any interference with the conduct of Tenant's business. Landlord may
make any such entries and may take such reasonable steps as required to
accomplish the stated purposes. For each of the above purposes, Landlord shall
at all times have a key with which to unlock all the doors in the Premises,
excluding Tenant's vaults, safes and special security areas designated in
advance by Tenant. In an emergency, Landlord shall have the right to use any
means that Landlord may deem proper to open the doors in and to the Premises. No
provision of this Lease shall be construed as obligating Landlord to perform any
repairs, alterations or decorations except as otherwise expressly agreed to be
performed by Landlord herein. Tenant may designate certain areas of the Premises
as "Secured Areas" should Tenant require such areas for the purpose of securing
certain valuable property or confidential information. In connection with the
foregoing, Landlord shall not enter such Secured Areas except in the event of an
emergency. Landlord need not clean any area designated by Tenant as a Secured
Area and shall only maintain or repair such secured areas to the extent (i) such
repair or maintenance is required in order to maintain and repair the Building
Structure and/or the Building Systems; (ii) as required by Applicable Law, or
(iii) in response to specific requests by Tenant and in accordance with a
schedule reasonably designated by Tenant, subject to Landlord's reasonable
approval.

                                   ARTICLE 28

                                 TENANT PARKING

     Tenant may rent from Landlord, commencing on the Lease Commencement Date,
up to the amount of parking passes set forth in Section 9 of the Summary, on a
monthly basis throughout the Lease Term, which parking passes shall pertain to
the Project parking facility. Subject to the foregoing, Tenant shall be entitled
to increase or decrease the number of parking passes rented by Tenant upon not
less than thirty (30) days notice to Landlord. Upon notice to Landlord prior to
the date which is ninety (90) days after the Lease Commencement Date, Tenant
shall be entitled to lease any or all of the reserved parking spaces in the
locations designated on Exhibit G attached to this Lease. In the event that
Tenant shall fail to lease any of the reserved parking spaces designated on
Exhibit G, Tenant shall no longer have the right to lease the specific spaces
Tenant failed to so lease, provided that Tenant shall continue to have the right
to lease reserved parking spaces in the amount set forth in Section 9 of the
Summary. Tenant shall pay to Landlord for automobile parking passes on a monthly
basis the prevailing rate charged from time to time at the location of such
parking passes, provided that such rate (i) is currently, as of the date of this
Lease, One Hundred Thirty-Two and No/100 Dollars ($132.00) for each reserved
parking space and Eighty-Two and 50/100 Dollars ($82.50) for each unreserved
parking pass, (ii) shall be inclusive of any taxes imposed by any governmental
authority in connection with the renting of such parking passes by Tenant or the
use of the parking facility by Tenant, and (iii) shall not exceed the parking
rates charged by landlords of Comparable Buildings. Tenant's continued right to
use the parking passes is conditioned upon Tenant abiding by all rules and
regulations which are prescribed from time to time for the orderly operation and
use of the parking facility where the parking passes are located, including any
sticker or other identification system established by Landlord, Tenant's
cooperation in seeing that Tenant's employees and visitors also comply with such
rules and regulations and Tenant not being in default under this Lease. Landlord
specifically reserves the right to change the size, configuration, design,
layout and all other aspects of the Project parking facility at any time and
Tenant acknowledges and agrees that Landlord may, on a temporary basis or in
connection with Landlord's compliance with applicable laws, without incurring
any liability to Tenant and without any abatement of Rent under this Lease
(except as specifically set forth in Section 19.5.2 of this Lease), to the
extent reasonably required, from time to time, close-off or restrict access to
the Project parking facility for purposes of permitting or facilitating any such
construction, alteration or improvements. Landlord may delegate its
responsibilities hereunder to a parking operator in which case such parking
operator shall have all the rights of control attributed hereby to the Landlord.
The parking passes rented by Tenant pursuant to this Article 28 are provided to
Tenant solely for use by Tenant's own personnel and such passes may not be
transferred, assigned, subleased or otherwise alienated by Tenant separate and
apart from a transfer of Tenant's interest in this Lease, without Landlord's
prior approval. Tenant may validate visitor parking by such method or methods as
the Landlord may establish, at the validation rate from time to time generally
applicable to visitor parking.


                                      -43-
<PAGE>   44

     .1 OTHER TERMS. Notwithstanding anything to the contrary set forth in
Section 28 or elsewhere in the Lease (i) Tenant may use and have access to the
parking areas twenty-four hours a day, seven days a week; and (ii) no delegation
of Landlord's obligations with respect to the parking areas shall relieve
Landlord from responsibility for its obligations with respect thereto, and no
extra charges shall be imposed upon Tenant as a result of such delegation.

                                   ARTICLE 29

                            MISCELLANEOUS PROVISIONS

     .1 TERMS; CAPTIONS. The words "Landlord" and "Tenant" as used herein shall
include the plural as well as the singular. The necessary grammatical changes
required to make the provisions hereof apply either to corporations or
partnerships or individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed. The captions of
Articles and Sections are for convenience only and shall not be deemed to limit,
construe, affect or alter the meaning of such Articles and Sections.

     .2 BINDING EFFECT. Subject to all other provisions of this Lease, each of
the covenants, conditions and provisions of this Lease shall extend to and
shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of Article 14 of this Lease.

     .3 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease.

     .4 MODIFICATION OF LEASE. Should any current or prospective mortgagee or
ground lessor for the Building or Project require a modification of this Lease,
which modification will not cause an increased cost or expense to Tenant or in
any other way materially and adversely change the rights and obligations of
Tenant hereunder, then and in such event, Tenant agrees that this Lease may be
so modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within twenty (20) days following a
request therefor, provided Landlord reimburses Tenant for its attorneys' fees,
subject to the same limitation applicable to Landlord's reimbursement in the
event Tenant proposes a Transfer. At the request of Landlord or any mortgagee or
ground lessor, Tenant agrees to execute a short form of Lease and deliver the
same to Landlord within ten (10) days following the request therefor.

     .5 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord has
the right to transfer all or any portion of its interest in the Project or
Building and in this Lease, and Tenant agrees that in the event of any such
transfer to an entity which has contractually assumed the obligations of
Landlord under this Lease, Landlord shall automatically be released from all
liability under this Lease following the date of the Transfer and Tenant agrees
to look solely to such transferee for the performance of Landlord's obligations
hereunder after the date of transfer provided such transferee shall have fully
assumed and be liable for all obligations of this Lease to be performed by
Landlord, including the return of any Security Deposit, and Tenant shall attorn
to such transferee. Tenant further acknowledges that Landlord may assign its
interest in this Lease to a mortgage lender as additional security and agrees
that such an assignment shall not release Landlord from its obligations
hereunder and that Tenant shall continue to look to Landlord for the performance
of its obligations hereunder.

     .6 MEMO OF LEASE. Following request by Tenant, Landlord shall execute and
acknowledge a memorandum of this Lease in the form attached to this Lease as
Exhibit H (the "Memo of Lease"). Tenant shall be permitted to record such Memo
of Lease, at Tenant's sole cost and expense.

     .7 LANDLORD'S TITLE. Landlord's title is and always shall be paramount to
the title of Tenant. Nothing herein contained shall empower Tenant to do any act
which can, shall or may encumber the title of Landlord.


                                      -44-
<PAGE>   45

     .8 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be deemed
or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.

     .9 TIME OF ESSENCE. Time is of the essence with respect to the performance
of every provision of this Lease in which time of performance is a factor.

     .10 PARTIAL INVALIDITY. If any term, provision or condition contained in
this Lease shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, provision or condition to persons
or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.

     .11 NO WARRANTY. In executing and delivering this Lease, Tenant has not
relied on any representations, including, but not limited to, any representation
as to the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.

     .12 LANDLORD EXCULPATION. The liability of Landlord or the Landlord Parties
to Tenant for any default by Landlord under this Lease or arising in connection
herewith or with Landlord's operation, management, leasing, repair, renovation,
alteration or any other matter relating to the Project or the Premises shall be
limited solely and exclusively to an amount which is equal to the interest of
Landlord in the Building and any sales, condemnation or insurance proceeds
received by Landlord or the Landlord Parties in connection with the Project,
Building or Premises. Neither Landlord, nor any of the Landlord Parties shall
have any personal liability therefor, and Tenant hereby expressly waives and
releases such personal liability on behalf of itself and all persons claiming
by, through or under Tenant. The limitations of liability contained in this
Section 29.13 shall inure to the benefit of Landlord's and the Landlord Parties'
present and future partners, beneficiaries, officers, directors, trustees,
shareholders, agents and employees, and their respective partners, heirs,
successors and assigns. Under no circumstances shall any present or future
partner of Landlord (if Landlord is a partnership), or trustee or beneficiary
(if Landlord or any partner of Landlord is a trust), have any liability for the
performance of Landlord's obligations under this Lease.

     .13 ENTIRE AGREEMENT. It is understood and acknowledged that there are no
oral agreements between the parties hereto affecting this Lease and this Lease
constitutes the parties' entire agreement with respect to the leasing of the
Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. None of the terms, covenants, conditions or provisions of this Lease can
be modified, deleted or added to except in writing signed by the parties hereto.

     .14 RIGHT TO LEASE. Landlord reserves the absolute right to effect such
other tenancies in the Project as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of the Building or
Project.

     .15 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease (collectively, a "Force Majeure"), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by a Force Majeure, provided that,
except as set forth in Section 5 of


                                      -45-
<PAGE>   46

the Tenant Work Letter, no time periods giving rise to Tenant's right to
abatement of Rent or termination of this Lease shall be subject to extension as
a result of a Force Majeure.

     .16 NOTICES. All notices, demands, statements, designations, approvals or
other communications (collectively, "Notices") given or required to be given by
either party to the other hereunder or by law shall be in writing, shall be (A)
sent by United States certified or registered mail, postage prepaid, return
receipt requested ("Mail"), (B) transmitted by telecopy, if such telecopy is
promptly followed by a Notice sent by Mail, (C) delivered by a nationally
recognized overnight courier, or (D) delivered personally. Any Notice shall be
sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 10 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth below, or to such other places as Landlord
may from time to time designate in a Notice to Tenant. Any Notice will be deemed
given (i) three (3) days after the date it is posted if sent by Mail, (ii) the
date the telecopy is transmitted, (iii) the date the overnight courier delivery
is made, or (iv) the date personal delivery is made or attempted to be made. If
Tenant is notified of the identity and address of Landlord's mortgagee or ground
or underlying lessor, Tenant shall give to such mortgagee or ground or
underlying lessor written notice of any default by Landlord under the terms of
this Lease by means constituting notice hereunder and such mortgagee or ground
or underlying lessor shall be given a reasonable opportunity to cure such
default, not to exceed thirty (30) days following the time period granted to
Landlord under this Lease, prior to Tenant's exercising any remedy available to
Tenant. As of the date of this Lease, any Notices to Landlord must be sent,
transmitted, or delivered, as the case may be, to the following addresses:


                                   5670 Wilshire L.P.
                                   5670 Wilshire Boulevard
                                   Los Angeles, California 90036
                                   Attention:  Office of the Building

                                   and

                                   Allen, Matkins, Leck, Gamble & Mallory
                                   1999 Avenue of the Stars, Suite 1800
                                   Los Angeles, California 90067
                                   Attention:  Anton N. Natsis, Esq.

     .17 AUTHORITY. If Tenant is a corporation, trust or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. In such event, Tenant shall, within ten (10) days after
execution of this Lease, deliver to Landlord satisfactory evidence of such
authority and, if a corporation, upon demand by Landlord, also deliver to
Landlord satisfactory evidence of (i) good standing in Tenant's state of
incorporation and (ii) qualification to do business in California.

     .18 ATTORNEYS' FEES. In the event that either Landlord or Tenant should
bring suit for the possession of the Premises, for the recovery of any sum due
under this Lease, or because of the breach of any provision of this Lease or for
any other relief against the other, then all costs and expenses, including
reasonable attorneys' fees, incurred by the prevailing party therein 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.

     .19 GOVERNING LAW/WAIVER OF TRAIL BY JURY. This Lease shall be construed
and enforced in accordance with the laws of the State of California. IN ANY
ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I)
THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, (II)
SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE
INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM


                                      -46-
<PAGE>   47

BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN
RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES,
AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY.

     .20 SUBMISSION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of, option for or option
to lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.

     .21 BROKERS.

          .21.1 IN GENERAL. Landlord and Tenant hereby warrant to each other
that they have had no dealings with any real estate broker or agent in
connection with the negotiation of this Lease, excepting only the real estate
brokers or agents specified in Section 12 of the Summary (the "Brokers"), and
that they know of no other real estate broker or agent who is entitled to a
commission in connection with this Lease. Each party agrees to indemnify and
defend the other party against and hold the other party harmless from any and
all claims, demands, losses, liabilities, lawsuits, judgments, costs and
expenses (including without limitation reasonable attorneys' fees) with respect
to any leasing commission or equivalent compensation alleged to be owing on
account of any dealings with any real estate broker or agent, other than the
Brokers, occurring by, through, or under the indemnifying party.

          .21.2 TENANT OFFSET RIGHT FOR COMMISSIONS DUE STUDLEY. Landlord shall
pay all brokerage commissions owing to Julien J. Studley ("Studley") pursuant to
a separate written agreement with Studley (the "Commission Agreement"). Landlord
and Tenant hereby acknowledge and agree that the Commission Agreement provides
for the payment to Studley of certain commissions in connection with Tenant's
lease of certain additional space in the Building, as more particularly set
forth in the Commission Agreement. To the extent that Landlord fails to pay to
Studley any amounts due under the Commission Agreement on or before the date due
thereunder, then Tenant may send written notice to Landlord of such failure and
if Landlord fails to pay such amounts within thirty (30) days after said notice,
Tenant shall have the right, but not the obligation, to offset such amounts owed
to Studley against Tenant's next rental obligations which become due under this
Lease. Any amounts so offset from Tenant's rental obligations hereunder shall no
longer be owed from Landlord to Studley under the Commission Agreement, but will
become due from Tenant to Studley.

     .22 COUNTERPARTS. This Lease may be executed in counterparts with the same
effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.

     .23 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all present
or future legally mandated programs intended to manage parking, transportation
or traffic in and around the Building, and in connection therewith, Tenant shall
take responsible action for the transportation planning and management of all
employees located at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities.

     .24 TELECOMMUNICATIONS EQUIPMENT. At any time during the Lease Term, Tenant
may install, at Tenant's sole cost and expense, telecommunication equipment upon
the roof of the Building. Tenant shall not be required to pay monthly rent for
the space utilized by Tenant on the roof of the Building, provided that Tenant
shall pay to Landlord, as additional rent, for the costs of all utilities
necessary to Tenant's operation of the telecommunication equipment.
Notwithstanding the foregoing, if Tenant utilizes parking spaces on the roof of
the Project parking facility in connection with Tenant's telecommunication
equipment, then Tenant shall pay to Landlord the prevailing rate charged by
Landlord from time to time at the location of such parking spaces, which rate is
currently, as of the date of this Lease, Fifty-Five and No/100 Dollars ($55.00).
The physical appearance and location of any such installation and the size of
the equipment shall be subject to Landlord's reasonable approval, and Landlord
may require Tenant to install screening around such equipment, at Tenant's sole
cost and expense, as reasonably designated by Landlord. Tenant shall maintain
such equipment, at Tenant's sole cost



                                      -47-
<PAGE>   48

and expense. In the event Tenant elects to exercise its right to install
telecommunication equipment as set forth in this Section 29.24, then Tenant
shall give Landlord prior written notice thereof and Landlord and Tenant shall
execute an amendment to this Lease covering the installation and maintenance of
such equipment, Tenant's indemnification of Landlord with respect thereto,
Tenant's obligation to remove such equipment upon the expiration or earlier
termination of this Lease, and other related matters.

     .25 NO VIOLATION. Tenant hereby warrants and represents that neither its
execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys' fees
and costs, arising from Tenant's breach of this warranty and representation.

     .26 COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "Lines") at the Project in or serving the Premises, provided
that (i) Tenant shall obtain Landlord's prior written consent, use an
experienced and qualified contractor approved in writing by Landlord, and comply
with all of the other provisions of Articles 7 and 8 of this Lease, (ii) an
acceptable number of spare Lines and space for additional Lines shall be
maintained for existing and future occupants of the Project, as determined in
Landlord's reasonable opinion, (iii) the Lines therefor (including riser cables)
shall be appropriately insulated to prevent excessive electromagnetic fields or
radiation, and shall be surrounded by a protective conduit reasonably acceptable
to Landlord, (iv) any new or existing Lines servicing the Premises shall comply
with all applicable governmental laws and regulations and (v) Tenant shall pay
all costs in connection therewith. Landlord reserves the right to require that
Tenant remove any Lines located in or serving the Premises which are installed
in violation of these provisions, or which are at any time in violation of any
laws or represent a dangerous or potentially dangerous condition.

     .27 ASBESTOS DISCLOSURES. Tenant specifically acknowledges that Tenant has
been advised that asbestos and/or asbestos-containing materials were used in the
initial construction of the Building, and may have been used in connection with
various additions and improvements made thereafter from time to time. Tenant
shall have no obligation to clean up, remediate, monitor, abate, regarding or
reimburse, release, indemnify, or defend Landlord with respect to any hazardous
materials which Tenant did not cause to be introduced onto the Premises or any
other portion of the Project, provided that the foregoing shall in no event
limit or preclude Landlord from including costs incurred in connection with
hazardous materials in Operating Expenses to the extent permitted pursuant to
the terms of Article 4 of this Lease. Landlord covenants and agrees that
Landlord shall, at Landlord's sole cost and expense, cause a licensed asbestos
abatement contractor selected by Landlord under the supervision of an
environmental consultant selected by Landlord to remove and properly dispose of,
to the extent practicable, pursuant to Landlord's asbestos-containing materials
("ACM") removal program, which program shall be in accordance with all
applicable environmental laws, ACM located at the Premises.

     .28 PAYMENTS. Whenever in the Lease a payment is required to be made by one
party to the other, but a specific date for payment is not set forth or a
specific number of days within which payment is to be made is not set forth, or
the words "at once," "immediately," "promptly" and/or "on demand," "on billing,"
or their equivalent, are used to specify when such payment is due, then such
payment shall be due thirty (30) days after the party which is entitled to such
payment sends written notice to the other party demanding such payment.

     .29 GOOD FAITH. Wherever in the Lease Landlord or Tenant is granted the
right to grant or withhold consent or approval, exercise discretion or make a
determination, calculation or allocation, except as otherwise expressly set
forth in this Lease, Landlord or Tenant, as the case may be, shall act
reasonably and in good faith.

     .30 INTERNAL STAIRWAY. Tenant shall use commercially reasonable efforts to
cooperate with E! Entertainment Television, Inc., a Delaware corporation ("E!")
in connection with security concerns arising in connection with the internal
stairway located within the Premises during the period of time commencing on the
date of delivery of the Second Floor Premises and terminating on the date of
delivery of the Third Floor Premises.


                                      -48-
<PAGE>   49

     IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.

                                       "Landlord":

                                       5670 WILSHIRE L.P.,
                                       a California limited partnership
                                       By:
                                          ---------------------------------
                                             Its:
                                                 --------------------------


                                       "Tenant":

                                       ARTISTDIRECT NETWORK,
                                       a Delaware corporation

                                       By:
                                          ---------------------------------
                                             Its:
                                                 --------------------------

                                       By:
                                          ---------------------------------
                                             Its:
                                                 --------------------------


                                      -49-
<PAGE>   50


                                    EXHIBIT A


                             5670 WILSHIRE BOULEVARD

                               OUTLINE OF PREMISES


                              SECOND FLOOR PREMISES
















                                   EXHIBIT A
                                      -1-


<PAGE>   51




                              THIRD FLOOR PREMISES





















                                   EXHIBIT A
                                      -2-

<PAGE>   52

                                    EXHIBIT B


                             5670 WILSHIRE BOULEVARD

                               TENANT WORK LETTER

     This Tenant Work Letter shall set forth the terms and conditions relating
to the construction of the Premises. This Tenant Work Letter is essentially
organized chronologically and addresses the issues of the construction of the
Premises, in sequence, as such issues will arise during the actual construction
of the Premises. All references in this Tenant Work Letter to Articles or
Sections of "this Lease" shall mean the relevant portions of Articles 1 through
29 of the Office Lease to which this Tenant Work Letter is attached as Exhibit
B, and all references in this Tenant Work Letter to Sections of "this Tenant
Work Letter" shall mean the relevant portions of Sections 1 through 5 of this
Tenant Work Letter.

                                   SECTION 1

                            DELIVERY OF THE PREMISES

     1.1 Delivery. In accordance with the terms and conditions of this Lease,
Landlord shall deliver the Premises and Base Building to Tenant on or after the
applicable Anticipated Delivery Dates set forth below (except that Landlord may
upon not less than seven [7] days prior written notice deliver to Tenant the
Third Floor Premises prior to the applicable Anticipated Delivery Date, provided
that in no event shall Landlord deliver the Third Floor Premises to Tenant prior
to January 21, 2000), and Tenant shall accept the Premises and Base Building
from Landlord in their presently existing, "as-is" condition, except (i) as
otherwise provided in the Lease and in this Tenant Work Letter, (ii) that the
Premises shall be in a "broom-clean" condition, and (iii) that the Premises
shall not contain the items listed on Schedule 1 attached hereto. The applicable
Construction Periods set forth below shall commence upon the delivery of the
applicable portions of the Premises.



=======================================================================================================
Portion of the Premises               Anticipated Delivery Date              Construction Period
=======================================================================================================
                                                                      
Second Floor Premises                 December 14, 1999                      Thirty (30) days
=======================================================================================================
Third Floor Premises                  January 31, 2000                      One hundred five (105) days
=======================================================================================================


     If Landlord does not cause the Third Floor Premises to be delivered by
January 31, 2000, Tenant shall receive five (5) days of free Base Rent
attributable to the Second Floor Premises for each day that elapses from January
31, 2000, to the date of delivery of the Third Floor Premises pursuant to the
terms of this Section 1. If Landlord causes the Third Floor Premises to be
delivered before January 31, 2000, Tenant shall pay to Landlord an amount equal
to one (1) day of free Base Rent attributable to the Second Floor Premises for
each day that elapses from the date of delivery of the Third Floor Premises
pursuant to the terms of this Section 1.1 to January 31, 2000.

     1.2 Base Building Deficiencies. Subject to special or unusual requirements
of Tenant's design or intended particular manner of use (as opposed to
reasonably customary design elements for general office use), in no event shall
Tenant be obligated to (i) correct deficiencies in or legal violations with
respect to the Base Building; (ii) cause the Base Building to comply with laws
which would be applicable regardless of whether Tenant, or another tenant using
reasonably customary design elements for general office use, is improving the
Premises; or (iii) expend any funds or any portion of the Tenant Improvement
Allowance for the foregoing. Landlord shall deliver the Base Building portions
of the Premises in compliance with applicable building codes and other
governmental laws and regulations enacted prior to the Lease Commencement Date
only to the extent the same are (a) applicable to unoccupied space, and (b)
necessary to allow Tenant to obtain a temporary certificate of occupancy or its
equivalent. Nothing in this Section 1 shall serve to modify Landlord's and
Tenant's respective obligations set forth in Article 24 of the Lease. Landlord
shall provide Tenant with a complete set of Base Building drawings pertaining to
the Premises (the "Base Building Drawings") without representation as to
accuracy, except that Tenant shall field verify the accuracy of the dimensions


                                   EXHIBIT B
                                      -1-

<PAGE>   53

and conditions within the usable square footage of its Premises that can be
determined by visual inspection without penetration of walls, slabs or core
areas. Tenant shall have the right, within sixty (60) days following the
expiration of the applicable Construction Period to notify Landlord of any
material defects in the Base Building which materially or adversely effect
Tenant's use of the Second Floor Premises and/or the Third Floor Premises in
which event Landlord shall promptly repair such items to Tenant's reasonable
satisfaction.

     1.3 Base Building Definition. The Base Building shall include the following
items:

          (a) Primary heating, ventilating and air-conditioning service ("HVAC")
including the main distribution loop and base system and base building
thermostatic control system (all delivered in good working order).

          (b) Primary electrical system which will service the floor of the
Building on which the Premises are located (delivered in good working order).

          (c) Main loop Fire/Life-safety systems as required by applicable
building code on an unoccupied basis.

          (d) Main telephone terminal panel located in the telephone/electrical
room designated by Landlord and available for secondary branching by Tenant of
lines to the Premises.

          (e) Building standard window coverings in "as-is" condition.

                                   SECTION 1

                               TENANT IMPROVEMENTS

     .1 Tenant Improvement Allowance. Tenant shall be entitled to a one-time
tenant improvement allowance (the "Tenant Improvement Allowance") in the amount
of $30.00 per usable square foot of the Premises for the costs relating to the
initial design and construction of Tenant's improvements, which are affixed to
the Premises (the "Tenant Improvements"). In addition, Landlord shall contribute
an amount not to exceed $0.10 per usable square foot of the Premises
("Landlord's Drawing Contribution") toward the cost of one (1) preliminary space
plan to be prepared by "Architect," as that term is defined in Section 3.1,
below, and no portion of the Landlord's Drawing Contribution, if any, remaining
after the completion of the Tenant Improvements shall be available for use by
Tenant. Landlord hereby acknowledges and agrees that, as a part of Tenant's
construction of the Tenant Improvements, subject to the requirements of this
Tenant Work Letter, Tenant shall be entitled to improve the stairwells between
the floors leased by Tenant pursuant to the terms of this Lease, notwithstanding
anything in this Tenant Work Letter to the contrary, the specifications and
plans for such work shall be subject to Landlord's approval, which approval
shall not be unreasonably withheld. In no event shall Landlord be obligated to
make disbursements pursuant to this Tenant Work Letter in a total amount which
exceeds the Tenant Improvement Allowance, Landlord's Drawing Contribution and
the "Moving Allowance," as that term is defined in Section 2.4 of this Tenant
Work Letter.


     .2 Disbursement of the Tenant Improvement Allowance.

          .2.1 Tenant Improvement Allowance Items. Except as otherwise set forth
in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed
by Landlord only for the following items and costs (collectively the "Tenant
Improvement Allowance Items"):

               .2.1.1 Payment of the fees of the Architect and the "Engineers,"
as that term is defined in Section 3.1 of this Tenant Work Letter and other
consultants ("Architect and Engineers Fees"), which Architect and Engineers Fees
shall, notwithstanding anything to the contrary contained in this Tenant Work
Letter, not exceed an aggregate amount equal to $6.00 per usable square foot of
the Premises (the "Soft Cost Cap");

               .2.1.2 The payment of plan check, permit and license fees
relating to construction of the Tenant Improvements;


                                   EXHIBIT B
                                      -2-

<PAGE>   54

               .2.1.3 The cost of construction of the Tenant Improvements,
including, without limitation, (i) testing and inspection costs, (ii) freight
elevator usage, hoisting and trash removal costs, (iii) costs of cabling,
conduit, wiring, and connections for voice and data lines, (iv) cost of
designing, fabricating, installing and lighting (if applicable) Tenant's signs,
sign structures, lettering, logos and sign panels (including, without
limitation, identification on multi-tenant monuments or signs), (v) costs of
millwork, installation and finishing of built-in work stations, (vi) costs of
Tenant's security systems, including design and consulting fees and connection
costs or costs of modifying such systems to be compatible with the Building
systems, and (vii) costs of corrective work and contractors' fees and general
conditions (subject to Section 6.5 below);

               .2.1.4 The cost of any changes in the Base Building when such
changes are required by the Construction Drawings (including if such changes are
due to the fact that such work is prepared on an unoccupied basis), such cost to
include all direct architectural and/or engineering fees and expenses incurred
in connection therewith;

               .2.1.5 The cost of any changes to the Construction Drawings or
Tenant Improvements required by all applicable building codes (the "Code");

               .2.1.6 Sales and use taxes and Title 24 fees; and

               .2.1.7 The cost of delivering, installing and purchasing Tenant's
communications equipment and cabling and Tenant's furniture, fixtures and
equipment (collectively, "FF&E"), provided that the reimbursement for such costs
does not, in the aggregate, exceed Ten and No/100 Dollars ($10.00) per usable
square foot of the Premises (such portion of the Tenant Improvement Allowance
shall be referred to herein as the "FF&E Allowance").

               .2.1.8 All other costs to be expended by or at the direction of
Tenant in connection with the construction of the Tenant Improvements.

          .2.2 Disbursement of Tenant Improvement Allowance. During the
construction of the Tenant Improvements, Landlord shall make monthly
disbursements of the Tenant Improvement Allowance for Tenant Improvement
Allowance Items for the benefit of Tenant and shall authorize the release of
monies for the benefit of Tenant as follows.

               .2.2.1 Monthly Disbursements. On or before the first day of each
calendar month (the "Submittal Date"), during the construction of the Tenant
Improvements (or such other date as Landlord may designate), Tenant shall
deliver to Landlord: (i) a request for payment of the "Contractor," as that term
is defined in Section 4.1 of this Tenant Work Letter, or other payees
(including, without limitation, Tenant's Agents or Tenant) approved by Tenant,
in a form to be provided by Landlord, and, if applicable, showing the schedule,
by trade, of percentage of completion of the Tenant Improvements in the
Premises, detailing the portion of the work completed and the portion not
completed; (ii) invoices from all of "Tenant's Agents," as that term is defined
in Section 4.1.2 of this Tenant Work Letter, for labor rendered and materials
delivered to the Premises; (iii) if applicable, executed mechanic's lien
releases from all of Tenant's Agents which shall comply with the appropriate
provisions, as reasonably determined by Landlord, of California Civil Code
Section 3262(d); and (iv) all other information reasonably requested by Landlord
(collectively, "Allowance Documentation") . Upon delivery of any request for
payment, Tenant shall be deemed to have waived any claim against Landlord with
respect to the work furnished and/or the materials supplied as set forth in
Tenant's payment request. Notwithstanding the foregoing, Tenant may obtain
reimbursement, within ten (10) business days following request, for one hundred
percent (100%) of the cost of direct order items (such as long lead time
purchase of materials) and other costs for which items (i) and (iii) above are
not applicable, by providing invoices to Landlord. Such reimbursement shall be
paid out of the Tenant Improvement Allowance, up to the amount of the Tenant
Improvement Allowance (subject to the Soft Cost Cap, if applicable), without
retention. Within thirty (30) days thereafter, Landlord shall deliver a check to
payees designated by Tenant in payment of the lesser of: (A) the amounts so
requested by Tenant, as set forth in this Section 2.2.2.1, above, less a ten
percent (10%) retention (the aggregate amount of such retentions to be known as
the "Final Retention"), and (B) the balance of any remaining available portion
of the Tenant Improvement


                                   EXHIBIT B
                                      -3-
<PAGE>   55

Allowance (not including the Final Retention), provided that Landlord does not
dispute any request for payment based on non-compliance of any work with the
"Approved Working Drawings," as that term is defined in Section 3.4 below, or
due to any "Substandard Work," as that term is defined below. Landlord's payment
of such amounts shall not be deemed Landlord's approval or acceptance of the
work furnished or materials supplied as set forth in Tenant's payment request.
Although Landlord will retain the Final Retention in accordance with the terms
of this Section 2.2.2, such Final Retention shall not be in addition to a final
retention provided for in the "Contract," as that term is defined in Section
4.2.1 below, but rather the requirement herein for a Final Retention of ten
percent (10%) shall be applied in conjunction with the amount required as the
final retention in the Contract. "Substandard Work" shall mean work which
adversely affects the mechanical, electrical, plumbing, heating, ventilating and
air conditioning, life-safety or other systems of the Building, the curtain wall
of the Building, the structure or exterior appearance of the Building.

               .2.2.2 Final Retention. Subject to the provisions of this Tenant
Work Letter, a check for the Final Retention payable jointly to Tenant and
Contractor shall be delivered by Landlord to Tenant following the completion of
construction of the Premises, provided that (i) Tenant delivers to Landlord
properly executed mechanics lien releases in compliance with both California
Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or Section
3262(d)(4), (ii) Landlord has determined that no Substandard Work or
"Deficiency," as that term is defined in Section 3.1 of this Tenant Work Letter,
exists and (iii) Architect delivers to Landlord a certificate, in a form
reasonably acceptable to Landlord, certifying that the construction of the
Tenant Improvements in the Premises has been substantially completed.

               .2.2.3 Additional Terms. In the event that Landlord identifies
any Substandard Work or a Deficiency, Landlord shall fund any portion of the
draw request which is not required to correct the Substandard Work or
Deficiency. Landlord shall advise Tenant within three (3) business days of a
Submittal Date if Tenant's submittal is incomplete. Landlord may only disapprove
any aspect of the Tenant Improvements in the event of Substandard Work or a
Deficiency. Landlord shall not disapprove any aspect of the Tenant Improvements
following payment of the installment of the Tenant Improvement Allowance, except
to the extent that the matter permitting disapproval becomes evident only
following Landlord's disbursement of the applicable portion of the Tenant
Improvement Allowance. Any disapproval by Landlord pursuant to the terms of this
Tenant Work Letter shall include a description of the disapproved item and the
reasonable grounds for the disapproval. Landlord shall not disapprove any change
to the Approved Working Drawings or Tenant Improvements which is required by law
or change in law or the interpretation thereof.

               .2.2.4 Other Terms. Landlord shall only be obligated to make
disbursements from the Tenant Improvement Allowance to the extent costs are
incurred by Tenant for Tenant Improvement Allowance Items.

     .3 Standard Tenant Improvement Package. Landlord has established
specifications (the "Specifications") for certain components to be used in the
construction of the Tenant Improvements in the Premises. The quality of Tenant
Improvements shall comply with the Specifications and Tenant shall use Building
standard window coverings in the Premises.

     .4 Moving Allowance. Tenant shall be entitled to an allowance (the "Moving
Allowance") in the amount $1.00 per usable square foot of the Premises for
Tenant's moving expenses. In no event shall Landlord be obligated to disburse
any portion of the Moving Allowance for any purpose other than reimbursement for
out-of-pocket costs and expenses actually incurred by Tenant in relocating to
the Premises (collectively, "Tenant's Moving Expenses"). After the occurrence of
the Lease Commencement Date and the completion of the relocation of Tenant's
business to the Premises, Landlord shall disburse the Moving Allowance for
Tenant's Moving Expenses upon receipt by Landlord of invoices marked as having
been paid or other evidence in form and content satisfactory to Landlord in
support of such costs and expenses and Tenant's payment thereof. Landlord shall
only be obligated to disburse any component of the Moving Allowance to the
extent the same is expended by Tenant. In no event shall the Moving Allowance
provided for herein be available to Tenant as a credit against rent or other
amounts owing to Landlord pursuant to the Lease or in any manner other than as
expressly provided herein.


                                   EXHIBIT B
                                      -4-

<PAGE>   56

     .5 Failure to Disburse Tenant Improvement Allowance. In the event that (i)
Landlord fails to fulfill its obligation to disburse the Tenant Improvement
Allowance in accordance with the terms of Section 2.2.2, above, within thirty
(30) days following notice from Tenant, (ii) Tenant shall, following the
expiration of such 30-day period, provide notice to Landlord of such failure,
and (iii) Landlord shall fail to fulfill its obligation to disburse the Tenant
Improvement Allowance within ten (10) business days following receipt of such
second notice, Tenant shall have the right to offset such due but unpaid portion
of the Tenant Improvement Allowance against Tenant's obligation for Rent next
due under this Lease.

     .6 Surplus Tenant Improvement Allowance. In the event that, following the
completion of the Tenant Improvements, the Tenant Improvement Allowance is not
fully used or committed for Tenant Improvement Allowance Items, then, so long as
Tenant is not in default of the Lease after the expiration of all applicable
cure periods, upon Landlord's receipt of written notice from Tenant, Tenant
shall have the right to utilize any such remaining portions of the Tenant
Improvement Allowance for Alterations to the Premises pursuant to Article 8 this
Lease.

                                   SECTION 2

                              CONSTRUCTION DRAWINGS

     .1 Selection of Architect/Construction Drawings. Tenant shall retain the
architect/space planner approved by Landlord (the "Architect") to prepare the
"Construction Drawings," as that term is defined in this Section 3.1. Landlord
hereby approves Gensler & Associates as Architect. Tenant shall retain the
engineering consultants (the "Engineers") approved by Landlord. Landlord hereby
approves Syska and Hennesey as Engineers. The Engineers shall prepare all plans
and engineering working drawings relating to the structural, mechanical,
electrical, plumbing, and HVAC work in the Premises, which work is not part of
the Base Building. The plans and drawings to be prepared by Architect and the
Engineers hereunder shall be known collectively as the "Construction Drawings."
All Construction Drawings shall comply with the drawing format and
specifications determined by Landlord, and shall be subject to Landlord's
approval. Landlord shall grant such approval unless Landlord provides Tenant
with reasonable supporting documentation for the conclusion that the work
provided for in the Construction Drawings would violate applicable code or the
Specifications or materially and adversely affect the mechanical, electrical,
plumbing, heating, ventilating and air conditioning, life-safety or other
systems of the Building, or materially adversely affects the curtain wall of the
Building, or the structure or exterior appearance of the Building (collectively
referred to herein as a "Deficiency"). Tenant and Architect shall verify, in the
field, the dimensions and conditions as shown on the relevant portions of the
Base Building Drawings, and Tenant and Architect shall be solely responsible for
the same, and Landlord shall have no responsibility in connection therewith,
except as specifically set forth in Section 6.8 of this Tenant Work Letter.
Landlord's review of the Construction Drawings as set forth in this Section 3,
shall be for its sole purpose and shall not imply Landlord's review of the same,
or obligate Landlord to review the same, for quality, design, Code compliance or
other like matters. Accordingly, notwithstanding that any Construction Drawings
are reviewed by Landlord or its space planner, architect, engineers and
consultants, and notwithstanding any advice or assistance which may be rendered
to Tenant by Landlord or Landlord's space planner, architect, engineers, and
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the
Construction Drawings, except to the extent resulting from (a) Landlord's
determination that a Deficiency exists, or (b) changes requested by Landlord for
any other reason. Tenant's waiver and indemnity set forth in this Lease shall
specifically apply to the Construction Drawings.

     .2 Final Space Plan. Tenant shall supply Landlord with two (2) copies
signed by Tenant of its final space plan for the Premises before any
architectural working drawings or engineering drawings have been commenced. The
final space plan (the "Final Space Plan") shall include a layout and designation
of all offices, rooms and other partitioning, their intended use, and equipment
to be contained therein. Landlord may request clarification or more specific
drawings for special use items not included in the Final Space Plan. Landlord
shall advise Tenant within three (3) business days after Landlord's receipt of
the Final Space Plan for the Premises if the same is unsatisfactory or
incomplete in any respect. Landlord may only disapprove aspects of the Final
Space Plan which would constitute a Deficiency. If Tenant is so advised, Tenant
shall


                                   EXHIBIT B
                                      -5-
<PAGE>   57

promptly cause the Final Space Plan to be revised to correct any deficiencies or
other matters Landlord may reasonably require.

     .3 Final Working Drawings. After the Final Space Plan has been approved by
Landlord, Tenant shall supply the Engineers with a complete listing of standard
and non-standard equipment and specifications, including, without limitation,
B.T.U. calculations, electrical requirements and special electrical receptacle
requirements for the Premises, to enable the Engineers and the Architect to
complete the "Final Working Drawings" (as that term is defined below) in the
manner as set forth below. Upon the approval of the Final Space Plan by Landlord
and Tenant, Tenant shall promptly cause the Architect and the Engineers to
complete the architectural and engineering drawings for the Premises, and
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings in a form which is complete
to allow subcontractors to bid on the work and to obtain all applicable permits
(collectively, the "Final Working Drawings") and shall submit the same to
Landlord for Landlord's approval. Tenant shall supply Landlord with two (2)
copies signed by Tenant of such Final Working Drawings. Landlord shall advise
Tenant within five (5) business days after Landlord's receipt of the Final
Working Drawings for the Premises if the same is unsatisfactory or incomplete in
any respect. If Tenant is so advised, Tenant shall immediately revise the Final
Working Drawings in accordance with such review and any disapproval of Landlord
in connection therewith.

     .4 Approved Working Drawings. The Final Working Drawings shall be approved
by Landlord (the "Approved Working Drawings") prior to the commencement of
construction of the Premises by Tenant. Concurrently with Landlord's review of
the Final Working Drawings, Tenant may submit the same to the appropriate
municipal authorities for all applicable building permits. Tenant hereby agrees
that neither Landlord nor Landlord's consultants shall be responsible for
obtaining any building permit or certificate of occupancy for the Premises and
that obtaining the same shall be Tenant's responsibility; provided, however,
that Landlord shall cooperate with Tenant in executing permit applications and
performing other ministerial acts reasonably necessary to enable Tenant to
obtain any such permit or certificate of occupancy. No changes, modifications or
alterations in the Approved Working Drawings may be made without the prior
written consent of Landlord, which consent may not be unreasonably withheld.

     .5 Landlord's Approval. Landlord may only disapprove aspects of the Final
Working Drawings which are inconsistent with the approved Final Space Plan or
which create a Deficiency. In the event that (i) Landlord shall fail to timely
approve or disapprove of the Final Space Plan and/or the Final Working Drawings
as set forth in this Section 3, (ii) Tenant shall deliver notice to Landlord of
such failure, and (iii) Landlord shall fail to approve of the Final Space Plan
and/or Final Working Drawings within three (3) business days following receipt
of Tenant's second notice, then Landlord's approval shall be deemed granted.
Landlord's failure to disapprove any aspect of any revision to the Final Space
Plan or Final Working Drawings or Approved Working Drawings and provide detailed
reasons for such disapproval within three (3) business days shall constitute
Landlord's approval thereto. Landlord may only withhold consents to revisions to
the Final Space Plan, Final Working Drawings or Approved Working Drawings for
the reasons enumerated above.

                                   SECTION 3

                     CONSTRUCTION OF THE TENANT IMPROVEMENTS

     .1 Tenant's Selection of Contractors.

          .1.1 The Contractor. A general contractor ("Contractor") selected by
Tenant and approved by Landlord, in Landlord's reasonable discretion, shall be
retained by Tenant to construct the Tenant Improvements. Landlord approves
Taslimi Construction as Contractor. Tenant shall deliver to Landlord notice of
its selection of the Contractor upon such selection.

          .1.2 Tenant's Agents. All subcontractors performing work which
materially affects the structural elements of the Building or the mechanical,
electrical, plumbing, heating, ventilating, air conditioning or security systems
of the Building used by Tenant (such subcontractors, and the Contractor to be
known collectively as "Tenant's Agents") must be

                                   EXHIBIT B
                                      -6-
<PAGE>   58


approved in writing by Landlord, which approval shall not be unreasonably
withheld or delayed. If Landlord does not approve any of Tenant's proposed
subcontractors, laborers, materialmen or suppliers, Tenant shall submit other
proposed subcontractors, laborers, materialmen or suppliers for Landlord's
written approval.

     .2 Construction of Tenant Improvements by Tenant's Agents.

          .2.1 Construction Contract; Cost Budget. Prior to Tenant's execution
of the construction contract and general conditions with Contractor (the
"Contract"), Tenant shall submit the Contract to Landlord for its approval,
which approval shall not be unreasonably withheld or delayed. Prior to the
commencement of the construction of the Tenant Improvements, and after Tenant
has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord
with a detailed breakdown, by trade, of the final costs to be incurred or which
have been incurred, as set forth more particularly in Sections 2.2.1.1 through
2.2.1.11, above, in connection with the design and construction of the Tenant
Improvements to be performed by or at the direction of Tenant or the Contractor,
which costs form a basis for the amount of the Contract (the "Final Costs").
Prior to Tenant's first delivery of Allowance Documentation, Tenant shall pay to
Landlord fifty percent (50%) of the "Over-Allowance Amount," as that term is
defined, below; provided that if the Over-Allowance Amount is less than Fifteen
and No/100 Dollars ($15.00) per usable square foot of the Premises, then Tenant
shall not be obligated to pay such amount to Landlord but shall, at Tenant's
election, pay all costs of completing the Tenant Improvements directly to all
applicable service and materials providers, provided that Tenant shall continue
to provide Landlord with the Allowance Documentation in accordance with the
terms of this Tenant Work Letter. For purposes of this Section 4.2.1, the
"Over-Allowance Amount" shall be equal to the difference between the amount of
the Final Costs and the amount of the Tenant Improvement Allowance (less any
portion thereof already disbursed by Landlord, or in the process of being
disbursed by Landlord, on or before the commencement of construction of the
Tenant Improvements). The Over-Allowance Amount shall be disbursed by Landlord
pursuant to the same procedure as the Tenant Improvement Allowance. After the
Tenant Improvement Allowance and the portion of the Over-Allowance Amount which
Tenant has paid to Landlord has been fully disbursed, Tenant shall pay all costs
of completing the Tenant Improvements directly to all applicable service and
materials providers, provided that Tenant shall continue to provide Landlord
with the Allowance Documentation in accordance with the terms of this Tenant
Work Letter.

     .2.2 Tenant's Agents.

          .2.2.1 Landlord's General Conditions for Tenant's Agents and Tenant
Improvement Work. Tenant's and Tenant's Agent's construction of the Tenant
Improvements shall comply with the following: (i) the Tenant Improvements shall
be constructed in strict accordance with the Approved Working Drawings; (ii)
Tenant's Agents shall submit schedules of all work relating to the Tenant's
Improvements to Contractor and Contractor shall, within five (5) business days
of receipt thereof, inform Tenant's Agents of any changes which are necessary
thereto, and Tenant's Agents shall adhere to such corrected schedule; and (iii)
Tenant shall abide by all rules made by Landlord's Building manager with respect
to the use of freight, loading dock and service elevators, storage of materials,
coordination of work with the contractors of other tenants, and any other matter
in connection with this Tenant Work Letter, including, without limitation, the
construction of the Tenant Improvements, except during Tenant's initial
construction and move-in period, when Tenant shall have absolute priority over
other construction in the Building, whether by or on behalf of other tenants or
Landlord.

          .2.2.2 Indemnity. Tenant's indemnity of Landlord as set forth in this
Lease shall also apply with respect to Tenant's non-payment of any amount
arising out of the Tenant Improvements and/or Tenant's disapproval of all or any
portion of any request for payment. Such indemnity by Tenant, as set forth in
this Lease, shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to Landlord's performance of any
ministerial acts reasonably necessary to enable Tenant to obtain any building
permit or certificate of occupancy for the Premises.

          .2.2.3 Requirements of Tenant's Agents. Contractor shall guarantee to
Tenant and for the benefit of Landlord that the portion of the Tenant
Improvements for which it



                                   EXHIBIT B
                                      -7-
<PAGE>   59

is responsible shall be free from any defects in workmanship and materials for a
period of not less than one (1) year from the date of completion thereof. Each
of Tenant's Agents shall be responsible for the replacement or repair, without
additional charge, of all work done or furnished in accordance with its contract
that shall become defective within one (1) year after the later to occur of (i)
completion of the work performed by such contractor or subcontractors and (ii)
the Lease Commencement Date. The correction of such work shall include, without
additional charge, all additional expenses and damages incurred in connection
with such removal or replacement of all or any part of the Tenant Improvements,
and/or the Building and/or common areas that may be damaged or disturbed
thereby. All such warranties or guarantees as to materials or workmanship of or
with respect to the Tenant Improvements shall be contained in the Contract or
subcontract and shall be written such that such guarantees or warranties shall
inure to the benefit of both Landlord and Tenant, as their respective interests
may appear, and can be directly enforced by either.

          .2.2.4 Insurance Requirements.

               .2.2.4.1 General Coverages. Contractor shall carry worker's
compensation insurance covering all of their respective employees, and shall
also carry public liability insurance, including property damage, all with
limits, in form and with companies as are required to be carried by Tenant as
set forth in this Lease.

               .2.2.4.2 Special Coverages. Tenant shall carry "Builder's All
Risk" insurance in an amount approved by Landlord covering the construction of
the Tenant Improvements, and such other insurance as Landlord may require, it
being understood and agreed that the Tenant Improvements shall be insured by
Tenant pursuant to this Lease immediately upon completion thereof. Such
insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenant's Contractor shall carry excess
liability and Products and Completed Operation Coverage insurance, each in
amounts not less than $500,000 per incident, $1,000,000 in aggregate, and in
form and with companies as are required to be carried by Tenant as set forth in
this Lease.

               .2.2.4.3 General Terms. Certificates for all insurance carried
pursuant to this Section 4.2.2.4 shall be delivered to Landlord before the
commencement of construction of the Tenant Improvements and before the
Contractor's equipment is moved onto the site. All such policies of insurance
must contain a provision that the company writing said policy will give Landlord
ten (10) days prior written notice of any cancellation or lapse of the effective
date or any reduction in the amounts of such insurance. All policies carried
under this Section 4.2.2.4 shall insure Landlord and Tenant, as their interests
may appear, as well as Contractor. All insurance, except Workers' Compensation,
maintained by Tenant's Agents shall preclude subrogation claims by the insurer
against anyone insured thereunder. Such insurance shall provide that it is
primary insurance as respects the owner and that any other insurance maintained
by owner is excess and noncontributing with the insurance required hereunder.
The requirements for the foregoing insurance shall not derogate from the
provisions for indemnification of Landlord by Tenant under Section 4.2.2.2 of
this Tenant Work Letter.

          .2.3 Governmental Compliance. The Tenant Improvements shall comply in
all respects with the following: (i) the Code and other state, federal, city or
quasi-governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person; and (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code.

          .2.4 Inspection by Landlord. Landlord shall have the right to inspect
the Tenant Improvements at all times, provided however, that Landlord's failure
to inspect the Tenant Improvements shall in no event constitute a waiver of any
of Landlord's rights hereunder nor shall Landlord's inspection of the Tenant
Improvements constitute Landlord's approval of the same. Should Landlord
disapprove any portion of the Tenant Improvements in accordance with the terms
of this Tenant Work Letter, Landlord shall notify Tenant in writing of such
disapproval and shall specify the items disapproved. Any defects or deviations
in, and/or disapproval by Landlord of, the Tenant Improvements shall be
rectified by Tenant at no expense to Landlord,


                                   EXHIBIT B
                                      -8-
<PAGE>   60

provided however, that in the event Landlord determines that a defect or
deviation exists or disapproves of any matter in connection with any portion of
the Tenant Improvements and such defect, deviation or matter adversely affects
the mechanical, electrical, plumbing, heating, ventilating and air conditioning
or life-safety systems of the Building, the structure or exterior appearance of
the Building and Tenant does not correct such defect within thirty (30) days
following written notice from Landlord, Landlord may, take such action as
Landlord deems necessary, at Tenant's expense and without incurring any
liability on Landlord's part, to correct any such defect, deviation and/or
matter.

          .2.5 Meetings. Commencing upon the execution of this Lease, Tenant
shall hold weekly meetings at a reasonable time, with the Architect and the
Contractor regarding the progress of the preparation of Construction Drawings
and the construction of the Tenant Improvements, and Landlord and/or its agents
shall receive prior notice of, and shall have the right to attend, all such
meetings. In addition, minutes shall be taken at all such meetings, a copy of
which minutes shall be promptly delivered to Landlord. One such meeting each
month shall include the review of Contractor's current request for payment.

     .3 Notice of Completion; Copy of Record Set of Plans. Within ten (10) days
after completion of construction of the Tenant Improvements, Tenant shall cause
a Notice of Completion to be recorded in the office of the Recorder of the
county in which the Building is located in accordance with Section 3093 of the
Civil Code of the State of California or any successor statute, and shall
furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do
so, Landlord may execute and file the same on behalf of Tenant as Tenant's agent
for such purpose, at Tenant's sole cost and expense. At the conclusion of
construction, Tenant shall cause the Architect and Contractor (A) to update the
Approved Working Drawings to become "field grade" drawings as necessary to
reflect all changes made to the Approved Working Drawings during the course of
construction, and (B) to deliver to Landlord two (2) sets of copies of such
drawings within ninety (90) days following issuance of a certificate of
occupancy for the Premises.

                                   SECTION 4

                        DELAY OF LEASE COMMENCEMENT DATE

     .1 Lease Commencement Date Delays. The Lease Commencement Date shall occur
as provided in Article 2 of this Lease and the commencement of the payment of
Base Rent shall occur as set forth in the Lease, provided that the applicable
Construction Period shall be delayed by the number of days of delay of the
"substantial completion of the Tenant Improvements," as that term is defined
below in this Section 5, in the portion of the Premises to which such
Construction Period relates which is caused solely by a "Lease Commencement Date
Delay." As used herein, the term "Lease Commencement Date Delay" shall mean only
a "Force Majeure Delay" or a "Landlord Caused Delay," as those terms are defined
below in this Section 5.1 of this Tenant Work Letter. As used herein, the term
"Force Majeure Delay" shall mean only an actual delay resulting from strikes,
fire, wind, damage or destruction to the Building, explosion, casualty, flood,
hurricane, tornado, the elements, acts of God or the public enemy, sabotage,
war, invasion, insurrection, rebellion, civil unrest, riots, or earthquakes. As
used in this Tenant Work Letter, "Landlord Caused Delay" shall mean delays in
Tenant's construction of the Tenant Improvements resulting from (i) any breach
of the Lease by Landlord (including, without limitation, failure to timely fund
an installment of the Tenant Improvement Allowance); (ii) Landlord's failure to
grant Tenant reasonable access to the Premises, parking areas, and loading
facilities, (iii) delays in granting or denying Landlord's approval beyond the
applicable period of time set forth in this Tenant Work Letter, (iv) material
interference with Tenant's construction of the Tenant Improvements to the extent
resulting from Landlord's failure to deliver the Base Building portions of the
Premises in the condition set forth in Section 1 of this Tenant Work Letter; (v)
material and unreasonable interference by Landlord in Tenant's completion of the
Tenant Improvements (provided that Landlord's disapproval on any item requiring
Landlord's consent subject to and in accordance with the terms of this Tenant
Work Letter shall not be a Lease Commencement Date Delay), and (vi) failure of
Landlord to provide one (1) elevator for Tenant's use during the construction
the Tenant Improvements, the delivery of Tenant's furniture, and Tenant's move
into the Premises.


                                   EXHIBIT B
                                      -9-
<PAGE>   61

     .2 Determination of Lease Commencement Date Delay. If Tenant contends that
a Lease Commencement Date Delay has occurred, Tenant shall notify Landlord in
writing of (i) the event which constitutes the Lease Commencement Date Delay,
and (ii) the date upon which such Lease Commencement Date Delay ends. If such
actions, inaction or circumstances described in the notice set forth in clause
(i), above (the "Delay Notice") qualify as a Lease Commencement Date Delay, then
a Lease Commencement Date Delay shall be deemed to have occurred commencing as
of the date of Landlord's receipt of the Delay Notice and ending as of the date
the applicable delay ends.

     .3 Definition of Substantial Completion of the Tenant Improvements. For
purposes of this Section 5, "substantial completion of the Tenant Improvements"
shall mean completion of construction of the Tenant Improvements in the Premises
pursuant to the "Approved Working Drawings," with the exception of any punch
list items, any freestanding furniture, freestanding work-stations.

                                   SECTION 5

                                  MISCELLANEOUS

     .1 Tenant's Representative. Tenant has designated Mr. James Carroll as its
sole representative with respect to the matters set forth in this Tenant Work
Letter, who shall have full authority and responsibility to act on behalf of the
Tenant as required in this Tenant Work Letter.

     .2 Landlord's Representative. Landlord has designated Mr. Daniel Grathwohl
as its sole representative with respect to the matters set forth in this Tenant
Work Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter. Landlord shall make Landlord's Representative available, on a reasonable
basis, to assist Tenant in design, construction and relocation related issues,
at no cost to Tenant.

     .3 Time of the Essence in This Tenant Work Letter. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. If any item requiring approval is timely disapproved by Landlord,
the procedure for preparation of the document and approval thereof shall be
repeated until the document is approved by Landlord.

     .4 Tenant's Lease Default. Notwithstanding any provision to the contrary
contained in this Lease, if an event of default as described in the Lease or
this Tenant Work Letter has occurred at any time on or before the Substantial
Completion of the Premises, then in addition to all other rights and remedies
granted to Landlord pursuant to this Lease, Landlord shall have the right to
withhold payment of all or any portion of the Tenant Improvement Allowance (in
which case, Tenant shall be responsible for any delay in the substantial
completion of the Premises caused by such withholding), and .

     .5 Landlord's Actions. Wherever Landlord is required or authorized to
perform any action (or supervise such performance by others) pursuant to the
terms of this Work Letter, Landlord shall perform such action without charge to
Tenant or Tenant's Agents, without reimbursement and without deduction from the
Tenant Improvement Allowance.

     .6 Miscellaneous Charges. Neither Tenant nor Tenant's Agents shall not be
charged for reasonable amounts of parking in the Building or for use of freight
elevators, loading docks or electricity or, during Building Hours, for HVAC, in
each event to the extent utilized during the construction of the Tenant
Improvements and Tenant's move into the Premises.

     .7 Staging Area. Subject to availability, Landlord shall provide a
reasonable area within the Building for staging Tenant's initial move into the
Premises and/or for Tenant's furniture assembly. Landlord shall have no
obligation to provide a staging area to be utilized by Tenant in connection with
the construction of the Tenant Improvements.

     .8 Expenses Due to Error. If Tenant reasonably incurs increased design or
construction expenses because of material inaccuracies in the Base Building
Drawings then Landlord shall bear any increased costs in the design and
construction of the Tenant Improvements resulting therefrom separate and apart
from, and in addition to, the Tenant Improvement Allowance and


                                   EXHIBIT B
                                      -10-
<PAGE>   62

any delays encountered by Tenant in the design or construction of the Tenant
Improvement or Alteration or a result thereof shall be considered a Landlord
Caused Delay as described in Section 5.1 above of this Tenant Work Letter.





                                   EXHIBIT B
                                      -11-
<PAGE>   63


                             SCHEDULE 1 TO EXHIBIT B


                                 EXCLUDED ITEMS















                                 SCHEDULE 1 TO
                                   EXHIBIT B
                                      -1-





<PAGE>   64

                                    EXHIBIT C


                             5670 WILSHIRE BOULEVARD

                           NOTICE OF LEASE TERM DATES



To:  __________________________
     __________________________
     __________________________
     __________________________


Re:  Office Lease dated ____________, 19__ between ____________________, a
     _____________________ ("Landlord"), and _______________________, a
     _______________________ ("Tenant") concerning Suite ______ on floor(s)
     __________ of the office building located at ____________________________,
     Los Angeles, California.

Gentlemen:

     In accordance with the Office Lease (the "Lease"), we wish to advise you
and/or confirm as follows:

     1.   The Lease Term shall commence on or has commenced on ______________
          for a term of __________________ ending on __________________.

     2.   Rent commenced to accrue on __________________, in the amount of
          ________________.

     3.   If the Lease Commencement Date is other than the first day of the
          month, the first billing will contain a pro rata adjustment. Each
          billing thereafter, with the exception of the final billing, shall be
          for the full amount of the monthly installment as provided for in the
          Lease.

     4.   Your rent checks should be made payable to __________________ at
          ___________________.

     5.   The exact number of rentable/usable square feet within the Premises is
          ____________ square feet.

     6.   Tenant's Share as adjusted based upon the exact number of usable
          square feet within the Premises is _______%.

                                           "Landlord":

                                           ------------------------------------,
                                           a
                                            ------------------------------------
                                           By:
                                              ----------------------------------
                                                Its:
                                                    ----------------------------

Agreed to and Accepted
as of ____________, 19___.

"Tenant":


---------------------------
a
  -------------------------
By:
   ------------------------
Its:
    -----------------------


                                   EXHIBIT C
                                      -1-


<PAGE>   65


                                    EXHIBIT D


                             5670 WILSHIRE BOULEVARD

                              RULES AND REGULATIONS

     Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. Landlord shall use
reasonable efforts to cause other tenants or occupants of the Project to comply
with the Rules and Regulations and to avoid any unreasonable interference of
Tenant's use of the Premises as a result of the failure of such other tenants or
occupants to comply with the Rules and Regulations. The Rules and Regulations of
the Project, attached to and made a part of the Lease as Exhibit "D," shall not
be changed or revised or enforced in any unreasonable way by Landlord, nor
enforced or changed by Landlord in such a way as to substantially interfere with
Tenant's Lease Rights. In the event of any conflict between the Lease and the
Rules and Regulations, the Lease shall prevail and control and the inconsistent
provisions of the Rules and Regulations shall not be inapplicable to Tenant. In
the event of any conflict between the Rules and Regulations and the other
provisions of this Lease, the latter shall control.

     1. Tenant shall not alter any lock or install any new or additional locks
or bolts on any doors or windows of the Premises without obtaining Landlord's
prior written consent. Tenant shall bear the cost of any lock changes or repairs
required by Tenant. Upon the termination of this Lease, Tenant shall restore to
Landlord one set of all keys relating to the Premises.

     2. All doors opening to public corridors shall be kept closed at all times
except for normal ingress and egress to the Premises.

     3. Landlord reserves the right to close and keep locked all entrance and
exit doors of the Building during such hours as are customary for Comparable
Buildings. Tenant, its employees and agents must be sure that the doors to the
Building are securely closed and locked when leaving the Premises if it is after
the normal hours of business for the Building. Any tenant, its employees, agents
or any other persons entering or leaving the Building at any time when it is so
locked, or any time when it is considered to be after normal business hours for
the Building, may be required to sign the Building register. Access to the
Building may be refused unless the person seeking access has proper
identification or has a previously arranged pass for access to the Building.
Landlord will furnish passes to persons for whom Tenant requests same in
writing. Tenant shall be responsible for all persons for whom Tenant requests
passes and shall be liable to Landlord for all acts of such persons. The
Landlord and his agents shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person. In
case of invasion, mob, riot, public excitement, or other commotion, Landlord
reserves the right to prevent access to the Building or the Project during the
continuance thereof by any means it deems appropriate for the safety and
protection of life and property.

     4. No furniture, freight or equipment of any kind shall be brought into the
Building without prior notice to Landlord. All moving activity into or out of
the Building shall be scheduled with Landlord and done only at such time and in
such manner as Landlord designates except during Tenant's initial construction
and move-in period, when Tenant shall have absolute priority over other
construction in the Building, whether by or on behalf of other tenants or
Landlord. Landlord shall have the right to prescribe the weight, size and
position of all safes and other heavy property brought into the Building and
also the times and manner of moving the same in and out of the Building. Safes
and other heavy objects shall, if considered necessary by Landlord, stand on
supports of such thickness as is necessary to properly distribute the weight.
Landlord will not be responsible for loss of or damage to any such safe or
property in any case. Any damage to any part of the Building, its contents,
occupants or visitors by moving or maintaining any such safe or other property
shall be the sole responsibility and expense of Tenant.

                                   EXHIBIT D
                                      -1-
<PAGE>   66

     5. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except between
such hours, in such specific elevator and by such personnel as shall be
designated by Landlord, except during Tenant's initial construction and move-in
period, when Tenant shall have absolute priority over other construction in the
Building, whether by or on behalf of other tenants or landlord..

     6. The requirements of Tenant will be attended to only upon application at
the management office for the Project or at such office location designated by
Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.

     7. Except as otherwise provided in this Lease, no sign, advertisement,
notice or handbill shall be exhibited, distributed, painted or affixed by Tenant
on any part of the Premises or the Building without the prior written consent of
the Landlord. Tenant shall not disturb, solicit, peddle, or canvass any occupant
of the Project and shall cooperate with Landlord and its agents of Landlord to
prevent same.

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

     9. Tenant shall not overload the floor of the Premises or drywall, nor in
any way deface the Premises or any part thereof without Landlord's prior written
consent. Tenant shall not purchase spring water, ice, towel, linen, maintenance
or other like services from any person or persons not approved by Landlord.

     10. Intentionally Deleted.

     11. Tenant shall not use or keep in or on the Premises, the Building, or
the Project any kerosene, gasoline, explosive material, corrosive material,
material capable of emitting toxic fumes, or other inflammable or combustible
fluid chemical, substitute or material. Tenant shall provide to applicable
governmental authorities material safety data sheets for any Hazardous Material
used or kept on the Premises.

     12. Except as otherwise provided in this Lease, Tenant shall not without
the prior written consent of Landlord use any method of heating or air
conditioning other than that supplied by Landlord.

     13. Tenant shall not use or allow the Premises to be occupied or used in a
manner offensive or objectionable to Landlord or other occupants of the Project
by reason of noise, odors, or vibrations, or interfere with other tenants or
those having business therein, whether by the use of any musical instrument,
radio, phonograph, or in any other way. Tenant shall not throw anything out of
doors, windows or skylights or down passageways.

     14. Tenant shall not bring into or keep within the Project, the Building or
the Premises any animals, birds, aquariums, or, except in areas designated by
Landlord, bicycles or other vehicles. Notwithstanding the foregoing, animals
serving the disabled and wheelchairs shall be permitted.

     15. No cooking shall be done or permitted on the Premises, for lodging or
for any improper, objectionable or immoral purposes. Notwithstanding the
foregoing, Underwriters' laboratory-approved equipment and microwave ovens may
be used in the Premises for heating food and brewing coffee, tea, hot chocolate
and similar beverages for employees and visitors, provided that such use is in
accordance with all applicable federal, state, county and city laws, codes,
ordinances, rules and regulations.


     16. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such manufacturing and/or storage may be incidental to the
use of the Premises provided for in the Summary. Tenant shall not occupy or
permit any portion of the Premises to be occupied as an office for a
messenger-type operation or dispatch office, public


                                   EXHIBIT D
                                      -2-
<PAGE>   67

stenographer or typist, or for the manufacture or sale of liquor, narcotics, or
tobacco in any form, or as a medical office, or as a barber or manicure shop, or
as an employment bureau without the express prior written consent of Landlord.
Tenant shall not engage or pay any employees on the Premises except those
actually working for such tenant on the Premises nor advertise for laborers
giving an address at the Premises.

     17. Landlord reserves the right to exclude or expel from the Project any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.

     18. Tenant, its employees and agents shall not loiter in or on the
entrances, corridors, sidewalks, lobbies, courts, halls, stairways, elevators,
vestibules or any Common Areas for the purpose of smoking tobacco products or
for any other purpose, nor in any way obstruct such areas, and shall use them
only as a means of ingress and egress for the Premises.

     19. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to ensure the most effective operation
of the Building's heating and air conditioning system, and shall refrain from
attempting to adjust any controls. Tenant shall participate in recycling
programs undertaken by Landlord.

     20. Tenant shall store all its trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in Los Angeles,
California without violation of any law or ordinance governing such disposal.
All trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes at such times as Landlord shall designate.
If the Premises is or becomes infested with vermin as a result of the use or any
misuse or neglect of the Premises by Tenant, its agents, servants, employees,
contractors, visitors or licensees, Tenant shall forthwith, at Tenant's expense,
cause the Premises to be exterminated from time to time to the satisfaction of
Landlord and shall employ such licensed exterminators as shall be approved in
writing in advance by Landlord.

     21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by any governmental agency.

     22. Any persons employed by Tenant to do janitorial work shall be subject
to the prior written approval of Landlord, and while in the Building and outside
of the Premises, shall be subject to and under the control and direction of the
Building manager (but not as an agent or servant of such manager or of
Landlord).

     23. Except as otherwise provided in this Lease no awnings or other
projection shall be attached to the outside walls of the Building without the
prior written consent of Landlord, and, except as set forth below, no curtains,
blinds, shades or screens shall be attached to or hung in, or used in connection
with, any window or door of the Premises other than Landlord standard window
coverings. Notwithstanding the foregoing, Tenant shall be permitted to apply
privacy tinting to the exterior windows on the ground floor portion of the
Premises, provided that the color and other specifications relating to the
tinting shall be subject to the approval of Landlord, which approval shall not
be unreasonably withheld. Tenant shall be responsible for any damage to the
window film on the exterior windows of the Premises caused by Tenant and shall
promptly repair any such damage at Tenant's sole cost and expense.

     24. The sashes, sash doors, skylights, windows, and doors that reflect or
admit light and air into the halls, passageways or other public places in the
Building shall not be covered or obstructed by Tenant.

     25. Tenant must comply with requests by the Landlord concerning the
informing of their employees of items of importance to the Landlord.

     26. Tenant shall comply with all applicable governmental laws, rules,
regulations and ordinances concerning smoking.


                                   EXHIBIT D
                                       -3-
<PAGE>   68

     27. Except as specifically set forth set forth in this Lease, (i) Tenant
hereby acknowledges that Landlord shall have no obligation to provide guard
service or other security measures for the benefit of the Premises, the Building
or the Project, and (ii) Tenant hereby assumes all responsibility for the
protection of Tenant and its agents, employees, contractors, invitees and
guests, and the property thereof, from acts of third parties. Tenant shall
cooperate in any reasonable safety or security program developed by Landlord or
required by law.

     28. All office equipment of any electrical or mechanical nature shall be
placed by Tenant in the Premises in a manner reasonably calculated to eliminate
unreasonable vibration, noise and annoyance.

     29. Tenant shall not use in any space or in the public halls of the
Building, any hand trucks except those equipped with rubber tires and rubber
side guards.

     30. No auction, liquidation, fire sale, going-out-of-business or bankruptcy
sale shall be conducted in the Premises without the prior written consent of
Landlord.

     31. No tenant shall use or permit the use of any portion of the Premises
for living quarters, sleeping apartments or lodging rooms.

     Landlord reserves the right to change or rescind any one or more of these
Rules and Regulations, in Landlord's reasonable discretion, or to make such
other and further reasonable Rules and Regulations. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as a
condition of its occupancy of the Premises. Landlord shall enforce the Rules and
Regulations in a reasonable and nondiscriminatory manner.



                                   EXHIBIT D
                                       -4-



<PAGE>   69


                                    EXHIBIT E


                             5670 WILSHIRE BOULEVARD

                      FORM OF TENANT'S ESTOPPEL CERTIFICATE



     The undersigned as Tenant under that certain Office Lease (the "Lease")
made and entered into as of ___________, 199 by and between _______________ as
Landlord, and the undersigned as Tenant, for Premises on the ______________
floor(s) of the office building located at ______________, Los Angeles,
California ____________, certifies as follows:

     1. Attached hereto as Exhibit A is a true and correct copy of the Lease and
all amendments and modifications thereto. The documents contained in Exhibit A
represent the entire agreement between the parties as to the Premises.

     2. The undersigned currently occupies the Premises described in the Lease,
the Lease Term commenced on __________, and the Lease Term expires on
___________, and the undersigned has no option to terminate or cancel the Lease
or to purchase all or any part of the Premises, the Building and/or the Project.

     3. Base Rent became payable on ____________.

     4. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.

     5. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows:






     6. Tenant shall not modify the documents contained in Exhibit A without the
prior written consent of Landlord's mortgagee.

     7. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through ___________. The current monthly installment of Base Rent is
$______________.

     8. To the actual knowledge of Tenant, all conditions of the Lease to be
performed by Landlord necessary to the enforceability of the Lease have been
satisfied and Landlord is not in default thereunder. In addition, the
undersigned has not delivered any notice to Landlord regarding a default by
Landlord thereunder.

     9. No rental has been paid more than thirty (30) days in advance and no
security has been deposited with Landlord except as provided in the Lease.

     10. As of the date hereof, to the actual knowledge of Tenant, there are no
existing defenses or offsets, or, to the undersigned's knowledge, claims or any
basis for a claim, that the undersigned has against Landlord.

     11. If Tenant is a corporation or partnership, each individual executing
this Estoppel Certificate on behalf of Tenant hereby represents and warrants
that Tenant is a duly formed and existing entity qualified to do business in
California and that Tenant has full right and authority to execute and deliver
this Estoppel Certificate and that each person signing on behalf of Tenant is
authorized to do so.


                                   EXHIBIT E
                                      -1-
<PAGE>   70

     12. There are no actions pending against the undersigned under the
bankruptcy or similar laws of the United States or any state.

     13. To the undersigned's knowledge, all initial tenant improvement work to
be performed by Landlord under the Lease has been completed in accordance with
the Lease and has been accepted by the undersigned and all reimbursements and
allowances due to the undersigned under the Lease in connection with any initial
tenant improvement work have been paid in full.

     The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee or prospective purchaser,
and acknowledges that said prospective mortgagee or prospective purchaser will
be relying upon the statements contained herein in making the loan or acquiring
the property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.

Executed at ______________ on the ____ day of ___________, 19  .

"Tenant":

----------------------------------,
a
 --------------------------------

By:
   ------------------------------
      Its:
          -----------------------


By:
   ------------------------------
      Its:
          -----------------------









                                   EXHIBIT E
                                      -2-
<PAGE>   71



                                    EXHIBIT F


                              INTENTIONALLY OMITTED

















                                   EXHIBIT F
                                      -1-




<PAGE>   72


                                    EXHIBIT G


                       LOCATION OF RESERVED PARKING SPACES
















                                   EXHIBIT G
                                      -1-





<PAGE>   73

                                    EXHIBIT H


                               MEMORANDUM OF LEASE

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

ARTISTDIRECT NETWORK
c/o Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, Suite 2400
Los Angeles, California 90067
Attention:  Robert J. Plotkowski. Esq.

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

                           MEMORANDUM OF OFFICE LEASE



     THIS MEMORANDUM OF OFFICE LEASE (this "Memorandum") is entered into as of
the __ day of ________, 199_, by and between _________________________________
("Landlord"), and _________________________________ ("Tenant").

     1. Terms and Premises. Landlord leases to Tenant, and Tenant leases from
Landlord, certain premises (the "Premises") to be located on a portion of the
real property (the "Property") legally described on Exhibit A attached hereto
(known by the street address of 5670 Wilshire Boulevard (the "Building")) in
accordance with the provisions of that certain Office Lease, dated ___________,
between the parties hereto (the "Lease"). The provisions of the Lease are
incorporated herein.

     2. Term. The initial term of the Lease expires on the date set forth in the
Lease. Tenant also has one (1) option to extend the Lease for a period of five
(5) years.

     3. Provisions Binding on Parties. The provisions of the Lease to be
performed by Landlord or Tenant, whether affirmative or negative in nature, are
intended to and shall bind or benefit the respective parties and their assigns
or successors, as applicable, at all times.

     4. Purpose of Memorandum of Lease. This Memorandum is prepared solely for
purposes of recordation, and in no way modifies the provisions of the Lease.

                                           "Landlord":

                                           ----------------------,
                                           a
                                             ----------------------------------

                                           By:
                                                -------------------------------
                                                    Its:
                                                        -----------------------
                                           "Tenant":

                                           -------------------------,

                                           ----------------------,
                                           a
                                             ----------------------------------

                                           By:
                                                -------------------------------
                                                    Its:
                                                        -----------------------





                                   EXHIBIT H
                                      -1-

<PAGE>   74



STATE OF                            )
        ---------------------------
                                    )  ss.
COUNTY OF                           )
         --------------------------

     On ________________________, before me, ________________________, a Notary
Public in and for said state, personally appeared _______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.

     WITNESS my hand and official seal.


                                   --------------------------------------------
                                       Notary Public in and for said State









STATE OF                             )
         ----------------------------
                                     )  ss.
COUNTY OF                            )
          --------------------------

     On ________________________, before me, ________________________, a Notary
Public in and for said state, personally appeared _______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.

     WITNESS my hand and official seal.


                                   --------------------------------------------
                                        Notary Public in and for said State










                                   EXHIBIT H
                                      -2-


<PAGE>   75


STATE OF                             )
         ----------------------------
                                     )  ss.
COUNTY OF                            )
          --------------------------

     On ________________________, before me, ________________________, a Notary
Public in and for said state, personally appeared _______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.

         WITNESS my hand and official seal.


                                   --------------------------------------------
                                        Notary Public in and for said State






STATE OF                             )
         ----------------------------
                                     )  ss.
COUNTY OF                            )
          --------------------------

     On ________________________, before me, ________________________, a Notary
Public in and for said state, personally appeared _______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.

         WITNESS my hand and official seal.


                                   --------------------------------------------
                                        Notary Public in and for said State





                                   EXHIBIT H
                                      -3-

<PAGE>   76


                                    EXHIBIT A


                        LEGAL DESCRIPTION OF THE PROPERTY

     The land referred to is situated in the County of Los Angeles, State of
California, and is described as follows:



                                   [ATTACHED]












                                   EXHIBIT A
                                      -1-



<PAGE>   77



                                    EXHIBIT I


                          LOCATION OF TENANT'S SIGNAGE














                                   EXHIBIT I
                                      -1-
<PAGE>   78




                                    EXHIBIT J


                             5670 WILSHIRE BOULEVARD

                            FORM OF LETTER OF CREDIT

DATE OF ISSUE:                        ------------------------------

EXPIRY DATE:                          (ONE YEAR FROM DATE OF ISSUE)

PLACE OF PRESENTATION OF              REPUBLIC BANK CALIFORNIA N.A.
DOCUMENTS FOR PAYMENT                 445 NORTH BEDFORD DRIVE
                                      BEVERLY HILLS, CALIFORNIA  90210

CURRENCY/AMOUNT                       USD $2,258,136.38
                                      (U.S. DOLLARS                   ONLY)
                                                    ------------------

APPLICANT:                            ARTIST DIRECT, INC.
                                      17836 VENTURA BLVD., NO. 330
                                      ENCINO, CALIFORNIA  91316

BENEFICIARY:                          5670 WILSHIRE L.P.
                                      A CALIFORNIA LIMITED PARTNERSHIP
                                      5670 WILSHIRE BOULEVARD
                                      LOS ANGELES, CALIFORNIA  90036
                                      ATTN:    OFFICE OF THE BUILDING

     WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR
WHICH IS AVAILABLE BY PAYMENT OF YOUR DRAFT(S) AT SIGHT DRAWN ON US BEARING THE
CLAUSE "DRAWN UNDER REPUBLIC BANK CALIFORNIA N.A. BEVERLY IRREVOCABLE STANDBY
LETTER OF CREDIT NO. ________ DATED MM/DD/YY" AND ACCOMPANIED BY THIS ORIGINAL
STANDBY LETTER OF CREDIT, AMENDMENT(S) HERETO (IF ANY), AND THE DOCUMENT(S) AS
SPECIFIED BELOW:


     A. A STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF 5670
WILSHIRE, L.P., A CALIFORNIA LIMITED PARTNERSHIP, CERTIFY THAT SUCH MONEYS ARE
DUE AND OWING TO 5670 WILSHIRE, L.P., A CALIFORNIA LIMITED PARTNERSHIP.

     SPECIAL CONDITIONS:

     A. THIS STANDBY LETTER OF CREDIT SHALL BE AUTOMATICALLY EXTENDED WITHOUT
AMENDMENT FOR ADDITIONAL PERIOD(S) OF ONE (1) YEAR EACH FROM THE PRESENT AND
EACH FUTURE EXTENDED EXPIRY DATE HEREOF, WITH A FINAL EXPIRY DATE OF UNLESS WE
ELECT NOT TO RENEW THIS STANDBY LETTER OF CREDIT AND DELIVER TO YOU WRITTEN
NOTICE OF SUCH ELECTION AT LEAST THIRTY (30) DAYS PRIOR TO ANY SUCH EXPIRY DATE,
ANY SUCH NOTICE SHALL BE DELIVERED BY REGISTERED MAIL OR COURIER SERVICE TO YOU
AT THE ABOVE ADDRESS.

     B. THIS LETTER OF CREDIT IS TRANSFERABLE AT YOUR OPTION PROVIDED THE
ATTACHED TRANSFER FORM IS COMPLETED AND RETURNED TO US WITH THIS ORIGINAL LETTER
OF CREDIT (AND AMENDMENTS, IF ANY) AND YOUR CHECK FOR OUR TRANSFER FEE AT USDLRS
1,000.00, PLUS DELIVERY CHARGES USDLRS 25.00.

     C. IN CASE THIS LETTER OF CREDIT IS TRANSFERRED, THE NAME AND ADDRESS OF
THE ORIGINAL BENEFICIARY WILL BE SUPERSEDED BY THE NAME AND ADDRESS OF THE
TRANSFEREE WHEREVER IT APPEARS IN THE TEXT OF


                                   EXHIBIT J
                                      -1-


<PAGE>   79


THIS ORIGINAL LETTER OF CREDIT AND THE WORD "BENEFICIARY" WHEREVER IT APPEARS IN
THE TEXT OF THIS CREDIT MEANS THE TRANSFEREE (AS WELL AS AMENDMENTS, IF ANY) AND
THE TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE
RIGHTS RELATING TO ANY AMENDMENTS WHETHER INCREASES OR EXTENSIONS OR OTHER
AMENDMENTS AND WHETHER EXISTING OR HEREAFTER MADE AND THE REQUIRED SIGNED
STATEMENT TO BE PURPORTEDLY SIGNED BY THE TRANSFEREE.

     D. PROVIDED THAT APPLICANT IS NOT IN DEFAULT UNDER THE TERMS OF THAT
CERTAIN OFFICE LEASE DATED DECEMBER 13, 1999, BY AND BETWEEN APPLICANT AND
BENEFICIARY (THE "LEASE"), BEYOND THE APPLICABLE CURE PERIOD PROVIDED IN THE
LEASE, THEN THE AMOUNT OF THIS LETTER OF CREDIT SHALL BE REDUCED AS FOLLOWS: ON
MAY 1, 2002, THE AMOUNT OF THE L-C SHALL BE REDUCED TO ONE MILLION EIGHT HUNDRED
SIX THOUSAND FIVE HUNDRED NINE AND 10/100 DOLLARS ($1,806,509.10); ON MAY 1,
2003, THE AMOUNT OF THE L-C SHALL BE REDUCED TO ONE MILLION THREE HUNDRED
FIFTY-FOUR THOUSAND EIGHT HUNDRED EIGHTY-ONE AND 82/100 DOLLARS ($1,354,881.82);
ON MAY 1, 2004, THE AMOUNT OF THE L-C SHALL BE REDUCED TO NINE HUNDRED THREE
THOUSAND TWO HUNDRED FIFTY-FOUR AND 54/100 DOLLARS ($903,254.54); ON MAY 1,
2005, THE AMOUNT OF THE L-C SHALL BE REDUCED TO FOUR HUNDRED FIFTY-ONE THOUSAND
SIX HUNDRED TWENTY-SEVEN AND 26/100 DOLLARS ($451,627.26); AND ON MAY 1, 2006,
THE AMOUNT OF THE L-C SHALL BE REDUCED TO ZERO AND NO/100 DOLLARS ($0.00).

     WE HEREBY AGREE WITH YOU THAT DRAFT DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS STANDBY LETTER OF CREDIT WILL BE DULY HONORED IF PRESENTED TO THIS
OFFICE AT 445 NORTH BEDFORD DRIVE, BEVERLY HILLS, CALIFORNIA 90210 ON OR BEFORE
OUR CLOSE OF BUSINESS HOUR (3:00 P.M.) OF THE ABOVE-STATED EXPIRY DATE OR ANY
EXTENDED EXPIRY DATE.

     ANY DOCUMENTS PRESENTED HEREUNDER WITH DISCREPANCY(IES) WILL BE SUBJECT TO
A DISCREPANCY FEE OF USD 50.00 PAYABLE BY THE BENEFICIARY, IN ADDITION, OUR
TELECOMMUNICATION EXPENSES, PLUS ANY OTHER APPLICABLE FEES/CHARGES RELATED TO
DISCREPANT DOCUMENT AND PAYMENT ARE ALSO FOR BENEFICIARY'S ACCOUNT WHICH WILL BE
DEDUCTED FROM REMITTANCE MADE UNDER THIS CREDIT.

     EXCEPT AS OTHERWISE EXPRESSLY STATED, THIS STANDBY LETTER OF CREDIT IS
SUBJECT TO UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDIT (1993 REVISION)
INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NUMBER 500.



                                   EXHIBIT J
                                      -2-


<PAGE>   80

         THIS FORM IS TO BE USED WHERE A LETTER OF CREDIT IS TRANSFERRED
           IN ITS ENTIRETY AND NO SUBSTITUTION OF INVOICE IS INVOLVED

                                             Date:
[LETTERHEAD OF REPUBLIC                            ----------------------------
BANK CALIFORNIA, N.A.]        Re:  Credit         issued by:
                                                             ------------------
                                              Your Advice No.
                                                             -------------------
Gentlemen:

For value received, the undersigned beneficiary hereby irrevocably transfers to:

---------------------------------         ----------------------------
     (Name of Transferee)                          (Address)

all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.

By this transfer, all rights of the undersigned beneficiary in such Letter of
Credit are transferred to the transferee and the transferee shall have the sole
rights as beneficiary thereof, including sole rights relating to any amendments
whether increases or extensions or other amendments and whether now existing or
hereafter made. All amendments are to be advised direct to the transferee
without necessity of any consent of or notice to the undersigned beneficiary.

The advice of such Letter of Credit is returned herewith together with any and
all amendments, and we ask you to endorse the transfer on the reverse of the
advise, and forward it direct to the Transferee with your customary notice of
transfer.

We enclose our check for $ representing your transfer commission at $1,000.00,
plus $ representing Telex/courier charges and in addition thereto we agree to
pay to you on demand any other expenses which may be incurred by you in
connection with this transfer.

SIGNATURE AUTHENTICATED                   Yours very truly,

The signer is an authorized
signatory who is authorized to
execute this instrument for
and on behalf of


-----------------------------          -----------------------------------
          (Bank)                            (Signature of Beneficiary)


-----------------------------          -----------------------------------
  (Authorized Signature)



                                   EXHIBIT J
                                      -3-
<PAGE>   81

                              TRANSFERABLE CREDIT

A.   A transferable Credit is a Credit under which the Beneficiary (First
     Beneficiary) may request the bank authorized to pay, incur a deferred
     payment undertaking, accept or negotiate (the "Transferring Bank"), or in
     the case of a freely negotiable Credit, the bank specifically authorized in
     the Credit as a Transferring Bank, to make the Credit available in whole or
     in part to one or more other Beneficiary(ies) (Second Beneficiary(ies)).

B.   A Credit can be transferred only if it is expressly designated as
     "transferable" by the Issuing Bank. Terms such as "divisible,"
     "fractionable," "assignable," and transmissible" do not render the Credit
     transferable. If such terms are used they shall be disregarded.

C.   The Transferring Bank shall be under no obligation to effect such transfer
     except to the extent and in the manner expressly consented to by such bank.

D.   At the time of making a request for transfer and prior to transfer of the
     Credit, the First Beneficiary must irrevocably instruct the Transferring
     Bank whether or not he retains the right to refuse to allow the
     Transferring Bank to advise amendments to the Second Beneficiary(ies). If
     the Transferring Bank consents to the transfer under these conditions, it
     must, at the time of transfer, advise the Second Beneficiary(ies) of the
     First Beneficiary's instructions regarding amendments.

E.   If a Credit is transferred to more than one Second Beneficiary(ies),
     refusal of an amendment by one or more Second Beneficiary(ies) does not
     invalidate the acceptance(s) by the other Second Beneficiary(ies) with
     respect to whom the Credit will be amended accordingly. With respect to the
     Second Beneficiary(ies) who rejected the amendment, the Credit will remain
     unamended.

F.   Transferring Bank charges in respect of transfers including commissions,
     fees, costs or expenses are payable by the First Beneficiary, unless
     otherwise agreed. If the Transferring Bank agrees to transfer the Credit it
     shall be under no obligation to effect the transfer until such charges are
     paid.

G.   Unless otherwise stated in the Credit, a transferable Credit can be
     transferred once only. Consequently, the Credit cannot be transferred at
     the request of the Second Beneficiary to any subsequent Third Beneficiary.
     For the purpose of this Article, a retransfer to the First Beneficiary does
     not constitute a prohibited transfer.

     Fractions of a transferable Credit (not exceeding in the aggregate the
     amount of the Credit) can be transferred separately, provided partial
     shipments/drawings are not prohibited, and the aggregate of such transfers
     will be considered as constituting only one transfer of the Credit.

H.   The Credit can be transferred only on the terms and conditions specified in
     the original Credit, with the exception of:

          B.   the amount of the Credit,

          C.   any unit price stated therein,

          D.   the expiry date,

          E.   the last date for presentation of documents in accordance with
               Article 43,

          F.   the period for shipment.

     The percentage for which insurance cover must be effected may be increased
     in such a way as to provide the amount of cover stipulated in the original
     Credit, or these Articles.

     In addition, the name of the First Beneficiary can be substituted for that
     of the Applicant, but if the name of the Applicant is specifically required
     by the original Credit to appear in any document(s) other than the invoice,
     such requirement must be fulfilled.

                                   EXHIBIT J
                                      -4-
<PAGE>   82


A.   The First Beneficiary has the right to substitute his own invoice(s) (and
     Draft(s))for those of the Second Beneficiary(ies), for amounts not in
     excess of the original amount stipulated in the Credit and for the original
     unit prices if stipulated in the Credit, and upon such substitution of
     invoice(s) (and Draft(s)) the First Beneficiary can draw under the Credit
     for the difference, if any, between his invoice(s) and the Second
     Beneficiary's(ies') invoices(s).

     When a Credit has been transferred and the First Beneficiary is to supply
     his own invoice(s) (and Draft(s)) in exchange for the Second
     Beneficiary's(ies') invoice(s) (and Draft(s)) but fails to do so on first
     demand, the Transferring Bank has the right to deliver to the Issuing Bank
     the documents received under the transferred Credit, including the Second
     Beneficiary's(ies') invoice(s) (and Draft(s)) without further
     responsibility to the First Beneficiary.

     The First Beneficiary may request that payment or negotiation be effected
to the Second Beneficiary(ies) at the place to which the Credit has been
transferred up to and including the expiry date of the Credit, unless the
original Credit expressly states that it may not be made available for payment
or negotiation at a place other than that stipulated in the Credit. This is
without prejudice to the First Beneficiary's right to substitute subsequently
his own invoice(s) (and Draft(s)) for those of the Second Beneficiary(ies) and
to claim any difference due to him.





                                   EXHIBIT J
                                      -5-
<PAGE>   83

                                  OFFICE LEASE



                             5670 WILSHIRE BOULEVARD







                               5670 WILSHIRE L.P.,

                        a California limited partnership,

                                  as Landlord,

                                       and

                              ARTISTDIRECT NETWORK,

                             a Delaware corporation,

                                   as Tenant.










<PAGE>   84


                                TABLE OF CONTENTS




                                                                                                         Page
                                                                                                         ----

                                                                                                     
ARTICLE 1     PREMISES, BUILDING, PROJECT, AND COMMON AREAS; VERIFICATION OF RENTABLE QUARE
              FEET; RIGHT OF FIRST OFFER....................................................................4

ARTICLE 2     INITIAL LEASE TERM; OPTION TERM...............................................................8

ARTICLE 3     BASE RENT....................................................................................10

ARTICLE 4     ADDITIONAL RENT..............................................................................11

ARTICLE 5     USE OF PREMISES..............................................................................20

ARTICLE 6     SERVICES AND UTILITIES.......................................................................21

ARTICLE 7     REPAIRS......................................................................................22

ARTICLE 8     ADDITIONS AND ALTERATIONS....................................................................23

ARTICLE 9     COVENANT AGAINST LIENS.......................................................................25

ARTICLE 10    INSURANCE....................................................................................25

ARTICLE 11    DAMAGE AND DESTRUCTION.......................................................................28

ARTICLE 12    NONWAIVER....................................................................................29

ARTICLE 13    CONDEMNATION.................................................................................29

ARTICLE 14    ASSIGNMENT AND SUBLETTING....................................................................30

ARTICLE 15    SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES...............................33

ARTICLE 16    HOLDING OVER.................................................................................34

ARTICLE 17    ESTOPPEL CERTIFICATES........................................................................34

ARTICLE 18    SUBORDINATION................................................................................34

ARTICLE 19    DEFAULTS; REMEDIES...........................................................................35

ARTICLE 20    COVENANT OF QUIET ENJOYMENT..................................................................38

ARTICLE 21    LETTER OF CREDIT.............................................................................38

ARTICLE 22    INTENTIONALLY OMITTED........................................................................39

ARTICLE 23    SIGNS........................................................................................39

ARTICLE 24    COMPLIANCE WITH LAW..........................................................................40

ARTICLE 25    LATE CHARGES.................................................................................40

ARTICLE 26    LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT.........................................41

ARTICLE 27    ENTRY BY LANDLORD............................................................................41

ARTICLE 28    TENANT PARKING...............................................................................42

ARTICLE 29    MISCELLANEOUS PROVISIONS.....................................................................42




<PAGE>   85

                                                                      Page
                                                                      ----
EXHIBITS

A        OUTLINE OF PREMISES

B        TENANT WORK LETTER

C        FORM OF NOTICE OF LEASE TERM DATES

D        RULES AND REGULATIONS

E        FORM OF TENANT'S ESTOPPEL CERTIFICATE

F        INTENTIONALLY OMITTED

G        TENANT'S RESERVED PARKING

H        MEMORANDUM OF LEASE

I        LOCATION OF TENANT'S SIGNAGE

J        FORM OF LETTER OF CREDIT



                                     (iii)

<PAGE>   86


                                      INDEX


                                                                       Page(s)
                                                                       -------
Abatement Event..........................................................37
ACM......................................................................47
Actual Cost..............................................................22
Affiliate................................................................33
After Hours HVAC.........................................................22
Alterations..............................................................23
Anticipated Expansion Space Delivery Date.................................7
Applicable Laws..........................................................40
Applicable Reassessment..................................................19
Arbitration..............................................................20
Bank Prime Loan..........................................................41
Base Building............................................................24
Base Rent................................................................10
Base Year................................................................11
BOMA Standard.............................................................5
Brokers..................................................................45
Builder's All Risk.......................................................24
Building..................................................................4
Building Hours...........................................................21
Building Structure.......................................................22
Building Systems.........................................................22
Capacity.................................................................22
Claims and Expenses......................................................25
Commission Agreement.....................................................45
Common Areas..............................................................4
Comparable Buildings......................................................6
Comparable Deals..........................................................6
Comparable Term...........................................................6
Contemplated Effective Date..............................................32
Contemplated Transfer Space..............................................32
Cost Pools...............................................................17
Direct Expenses..........................................................11
E!.......................................................................47
Election Notice...........................................................6
Eligibility Period.......................................................37
Estimate.................................................................17
Estimate Statement.......................................................17
Estimated Excess.........................................................17
Excess...................................................................17
Excluded Expenses........................................................11
Expansion Commencement Date...............................................8
Expansion Notice..........................................................7
Expansion Space...........................................................7
Expansion Space Construction Period.......................................8
Expansion Space Rent......................................................7
Expense Year.............................................................11
Eyebrow Signage..........................................................39
Final Audit..............................................................20
First Offer Commencement Date.............................................7
First Offer Notice........................................................5
First Offer Rent..........................................................6
First Offer Space.........................................................5
First Offer Space Buildout Period.........................................7
Force Majeure............................................................44
Holidays.................................................................21
HVAC.....................................................................21
Initial L-C Amount.......................................................38



<PAGE>   87

                                                                       Page(s)
                                                                       -------
Intention to Transfer Notice.............................................32
Interest Notice...........................................................9
Interest Rate............................................................41
Intervening Lease.........................................................6
Landlord..................................................................1
Landlord Parties.........................................................25
Landlord's Compliance Conditions.........................................40
L-C......................................................................38
L-C Security Deposit.....................................................38
Lease.....................................................................1
Lease Commencement Date...................................................8
Lease Expiration Date.....................................................8
Lease Term................................................................8
Lease Year................................................................8
Lines....................................................................46
Mail.....................................................................44
Market Rent...............................................................6
Maximum Amount...........................................................14
Memo of Lease............................................................43
Monument Signage.........................................................39
Nine Month Period........................................................32
Notices..................................................................44
Operating Expenses.......................................................11
Option Exercise Notice....................................................9
Option Rent...............................................................9
Option Rent Notice........................................................9
Option Term...............................................................9
Original Improvements....................................................27
Original Tenant...........................................................5
Outside Agreement Date....................................................9
Permitted Assignee........................................................5
Premises..................................................................4
Proposition 13...........................................................16
Proposition 13 Purchase Price............................................19
Reassessment.............................................................18
Remeasurement Notice......................................................5
Rent Concessions..........................................................6
Rules and Regulations.....................................................4
Second Floor Premises.....................................................1
Secured Areas............................................................41
Statement................................................................17
Studley..................................................................45
Subject Space............................................................30
Summary...................................................................1
Tax Expenses.............................................................16
Tax Increase.............................................................18
Tenant....................................................................1
Tenant Parties...........................................................26
Tenant Work Letter........................................................4
Tenant's Lease Rights.....................................................4
Tenant's Compliance Conditions...........................................40
Tenant's Review..........................................................19
Tenant's Security System.................................................21
Tenant's Share...........................................................17
Tenant's Signage.........................................................39
Termination Date.........................................................10
Termination Fee..........................................................10
Termination Notice.......................................................10
Third Floor Premises......................................................1

<PAGE>   88

                                                                       Page(s)
                                                                       -------

Third Party Auditor......................................................19
Threshold Amount.........................................................28
Transfer Costs...........................................................31
Transfer Notice..........................................................30
Transfer Premium.........................................................31
Transferee...............................................................30
Transfers................................................................30
Triggering Default........................................................7


<PAGE>   89



                            FIRST AMENDMENT TO LEASE

     THIS FIRST AMENDMENT TO LEASE ("FIRST AMENDMENT") is made and entered into
as of the _____ day of March, 2000, by and between 5670 WILSHIRE L.P., a
California limited partnership ("LANDLORD") and ARTISTDIRECT NETWORK a Delaware
corporation ("TENANT").

                                R E C I T A L S :

     A. Landlord and Tenant entered into that certain Office Lease dated
December 13, 1999 (the "Lease"), whereby Landlord leased to Tenant and Tenant
leased from Landlord certain office space consisting of Approximately 63,955
rentable (56,365 usable) square feet of space (the "PREMISES"), located on the
second (2nd) and third (3rd) floors of that certain building located and
addressed at 5670 Wilshire Boulevard, Los Angeles, California (the "BUILDING").

     B. Landlord and Tenant desire to modify the Lease on the terms and
conditions set forth in this First Amendment.

                               A G R E E M E N T:

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows.

     1. CAPITALIZED TERMS. All capitalized terms when used herein shall have the
same meaning as is given such terms in the Lease unless expressly superseded by
the terms of this First Amendment.

     2. TENANT'S SIGNAGE. Section 23.5 of the Lease is hereby entirely deleted
and replaced with the following:

          "23.5 TENANT'S SIGNAGE. Tenant shall be entitled to install (i) one
     (1) eyebrow sign (the "Eyebrow Signage") in the location above the third
     (3rd) floor of the Building facing Wilshire Boulevard which location is
     currently, as of the date of this Lease, occupied by the signage of E!
     Entertainment Television, Inc., a Delaware corporation, (ii) two (2)
     monument signs (the "Monument Signage") on the existing monument located on
     the corner of Wilshire Boulevard and Hauser Street in the location set
     forth on Exhibit I attached hereto, and (iii) four (4) building top signs
     (one (1) on each side of the fascia of the Building) (the "Building Top
     Signage"), at Tenant's sole cost and expense (the Eyebrow Signage, Monument
     Signage, and Building Top Signage may be collectively referred to herein as
     "Tenant's Signage"). Landlord shall not grant to any other tenant the


                                      -1-
<PAGE>   90


     right to install signage on the exterior of the Building at the same level
     as the Eyebrow Signage or above the Eyebrow Signage.

          23.5.1 SPECIFICATIONS, REQUIREMENTS AND TRANSFERABILITY.
     Notwithstanding anything to the contrary set forth in this Section 23.5,
     (a) the location of the Eyebrow Signage and the Monument Signage shall be
     consistent with Exhibit I and otherwise reasonably acceptable to Landlord
     and Tenant, (b) the location of the Building Top Signage, and the size,
     materials, design, graphics, color, illumination and specifications of
     Tenant's Signage shall be subject to Landlord's approval, which approval
     shall not be unreasonably withheld (provided that the graphics, color, and
     design of Tenant's existing logo are hereby approved), (c) Tenant's Signage
     shall comply with all applicable governmental rules and regulations, (d)
     Tenant's Eyebrow Signage and the Monument Signage shall be personal to the
     Original Tenant and any Permitted Assignee, provided that Tenant may not
     transfer less than all of Tenant's Eyebrow Signage and the Monument Signage
     to such Permitted Assignee, (e) Tenant's right to Tenant's Eyebrow Signage
     and the Monument Signage shall terminate in the event that less than 40,000
     rentable square feet of the Premises are occupied by the Original Tenant or
     any Permitted Assignee (if, following such termination, Landlord requires
     the removal of Tenant's Signage, Landlord shall be responsible for the cost
     of such removal and any repair of the Project resulting therefrom), and (f)
     Tenant may transfer Tenant's Building Top Signage to any "Qualified
     Tenant," as that term is defined in Section 23.5.2, below. The Eyebrow
     Signage and the Monument Signage may, at Tenant's option, include Tenant's
     name and/or logo. The Building Top Signage shall include (A) Tenant's name
     and logo on two (2) of the four (4) locations of the Building Top Signage,
     and (B) Tenant's logo only on two (2) of the four (4) locations of the
     Building Top Signage; provided that Tenant shall, in Tenant's sole
     discretion, decide which locations shall include Tenant's name and logo and
     which locations shall include only Tenant's logo. Should Tenant change
     Tenant's name and/or logo (the "New Designation"), Tenant shall be entitled
     to modify, at Tenant's sole cost and expense, Tenant's name and/or logo on
     Tenant's Signage so long as Tenant's New Designation is not an
     "Objectionable Designation." The term "Objectionable Designation" shall
     mean any name and/or logo which relates to an entity which is of a
     character or reputation, or is associated with a political orientation or
     faction, which is inconsistent with the quality of the Project, or which
     would otherwise reasonably offend a landlord of the Comparable Buildings.
     Tenant shall be responsible for all costs incurred by Tenant in connection
     with the design, construction, installation, illumination, maintenance and
     repair of Tenant's Signage. Landlord, at Tenant's expense, shall clean,
     replace light bulbs as necessary, and provide adequate electricity to the
     Building Top Signage. On or before June 1, 2000, Landlord, at Landlord's
     sole cost and expense, shall remove the signage currently, as of the date
     hereof, existing in the location of Tenant's Building Top Signage. Subject
     to Landlord's reasonable needs in connection with renovations of and/or in
     connection with the repair and maintenance of the Building or Project,
     Landlord


                                      -2-
<PAGE>   91

     shall not (x) affix any structures to the Building or Project which will
     materially obstruct the visibility of Tenant's Signage, and (y) permit
     landscaping on the Project to materially obstruct the visibility of
     Tenant's Signage. Upon the expiration or earlier termination of Tenant's
     rights to Tenant's Signage or upon the expiration of the Lease Term, Tenant
     shall, at its sole cost and expense, remove Tenant's Signage and repair any
     and all damage to the Building and Project caused by such removal. In the
     event Tenant fails to comply with the terms of the proceeding sentence,
     Landlord shall have the right, at Tenant's sole cost and expense after
     thirty (30) days advance written notice, to remove Tenant's Signage and to
     repair any and all damage to the Building caused by such removal.

          23.5.2 QUALIFIED TENANT. For purposes of this Section 23.5, a
     "QUALIFIED TENANT" shall mean an entity that (i) has a name and/or logo,
     and (ii) is in a business line, for which institutional landlords of
     comparable buildings in the West Los Angeles area ("COMPARABLE LANDLORDS")
     would typically lease building top signage in connection with the lease of
     a significant amount of office space (e.g., "The Coca-Cola Company" is a
     large, well-known, reputable entity, but operates a business (manufacturing
     and sale of soft-drinks) to which Comparable Landlords do not typically
     lease building top signage, while "First Bank of Brazil" may be a less
     well-known or reputable entity, but financial institutions are a business
     line to which Comparable Landlords typically lease building top signage).
     In the event that Landlord and Tenant, using their best good-faith efforts,
     are unable to agree on whether or not the entity to whom Tenant desires to
     transfer the Building Top Signage is a Qualified Tenant, then such question
     shall be submitted to arbitration in accordance with Sections 23.5.2.1
     through 23.5.2.7 below.

               23.5.2.1 Landlord and Tenant shall each appoint one arbitrator
     who shall by profession be a real estate broker who shall have been active
     over the five (5) year period ending on the date of such appointment in the
     leasing (or appraisal, as the case may be) of commercial office buildings
     in the West Los Angeles area. The determination of the arbitrators shall be
     limited solely to the issue area of whether or not the entity to whom
     Tenant desires to transfer the Building Top Signage is a Qualified Tenant,
     taking into account the requirements of Section 23.5.2 of this Lease. Each
     such arbitrator shall be appointed within fifteen (15) days after the issue
     is submitted to arbitration.

               23.5.2.2 The two arbitrators so appointed shall within ten (10)
     days of the date of the appointment of the last appointed arbitrator agree
     upon and appoint a third arbitrator who shall be qualified under the same
     criteria set forth hereinabove for qualification of the initial two
     arbitrators.

               23.5.2.3 The three arbitrators shall within thirty (30) days of
     the appointment of the third arbitrator reach a decision as to whether or
     not the entity to whom Tenant desires to transfer the Building Top Signage
     is a Qualified Tenant, and shall notify Landlord and Tenant thereof.


                                      -3-
<PAGE>   92

               23.5.2.4 The decision of the majority of the three arbitrators
     shall be binding upon Landlord and Tenant.

               23.5.2.5 If either Landlord or Tenant fails to appoint an
     arbitrator within fifteen (15) days after the issue is submitted to
     arbitration, the arbitrator appointed by one of them shall reach a
     decision, notify Landlord and Tenant thereof, and such arbitrator's
     decision shall be binding upon Landlord and Tenant.

               23.5.2.6 If the two arbitrators fail to agree upon and appoint a
     third arbitrator, or both parties fail to appoint an arbitrator, then the
     appointment of the third arbitrator or any arbitrator shall be dismissed
     and the matter to be decided shall be forthwith submitted to binding,
     final, non-applicable arbitration before a J.A.M.S. arbitrator mutually
     agreed upon by Landlord and Tenant. If Landlord and Tenant cannot agree on
     the arbitrator, the parties will so inform J.A.M.S., who will then be
     authorized to select a J.A.M.S. judge to arbitrate the matter. Each party
     shall have the right of discovery pursuant to the California Code of Civil
     Procedure and evidentiary hearings shall be governed by the California
     Evidence Code, but subject to the instruction set forth in this Section
     23.5.2.

               23.5.2.7 The cost of arbitration shall be paid by Landlord and
     Tenant equally."

     3. BROKERS. Landlord and Tenant hereby warrant to each other that they have
had no dealings with any real estate broker or agent in connection with the
negotiation of this First Amendment, excepting only the Brokers, and that they
know of no other real estate broker or agent who is entitled to a commission in
connection with this First Amendment. Each party agrees to indemnify and defend
the other party against and hold the other party harmless from any and all
claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses
(including without limitation reasonable attorneys' fees) with respect to any
leasing commission or equivalent compensation alleged to be owing on account of
any dealings with any real estate broker or agent, other than the Brokers,
occurring by, through, or under the indemnifying party.

     4. NO FURTHER MODIFICATION. Except as set forth in this First Amendment,
all of the terms and provisions of the Lease shall remain unmodified and in full
force and effect.


                                      -4-
<PAGE>   93

     IN WITNESS WHEREOF, this First Amendment has been executed as of the day
and year first above written.

"LANDLORD"                      5670 WILSHIRE L.P.,
                                a California limited partnership


                                By:
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"TENANT"
                                ARTISTDIRECT NETWORK, a Delaware corporation



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                                      -5-

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