<PAGE>   1
                                                                   EXHIBIT 10.26


                                  OFFICE LEASE


                              33 CLEMENTINA STREET
                            San Francisco, California




                          ECKER-FOLSOM PROPERTIES, LLC


                                    LANDLORD




                               CRITICAL PATH, INC.



                                     TENANT


<PAGE>   2
                                  OFFICE LEASE

                              33 Clementina Street
                            San Francisco, California


BASIC LEASE INFORMATION


<TABLE>
<S>                          <C>
Lease Date:                  December __, 1999

Landlord:                    ECKER-FOLSOM PROPERTIES, LLC,
                             a California limited liability company

Tenant:                      CRITICAL PATH, INC.,
                             a California corporation

Premises:                    Approximately 13,345 square feet of rentable area
                             within the Building (as defined in Section 1.1) as shown on
                             Exhibit A.

Term:                        Ten (10) years from the Commencement Date
                             (the "Initial Term"), subject to two (2) options to extend the
                             Term each for a period of five (5) years.

Possession Date:             The date the Premises is delivered to Tenant in the
                             condition required under Section 3.1.

Commencement Date:           The later of (i) August 1, 2000 or (ii) two (2) weeks
                             following the Possession Date.

Expiration Date:             A date ten (10) years after the Commencement Date,
                             subject to extension pursuant to Section 3.2 of the Lease
</TABLE>

<TABLE>
<CAPTION>
Base Rent:                   PERIOD OF TERM               AMOUNT
<S>                          <C>                          <C>
                             Commencement Date to
                             end of Initial Term          $50,718.75/month

                             Extended Term:               The fair market rent for
                                                          the Premises, as determined in
                                                          accordance with Section 3.2 of the
                                                          Lease.

</TABLE>

<TABLE>
<S>                          <C>
Base Year:                   The calendar year 2000.

Permitted Use:               General office, administrative, research and
                             development, computer laboratory, and related functions.

Security Deposit:            $101,437.50 which shall be deposited simultaneously with
                             Tenant's execution hereof.
</TABLE>


                                       i


<PAGE>   3
<TABLE>
<S>                          <C>
Tenant's Address:            Critical Path, Inc.
                             320 First Street
                             San Francisco, California 94105
                             Attention: Chief Financial Officer

Landlord's Address:          Ecker-Folsom Properties, LLC
                             c/o The Bock Company
                             2996 Washington Street
                             San Francisco, California 94115

Brokers:

        Landlord's Broker:   The Bock Company

        Tenant's Broker:     Cushman Realty Corporation
</TABLE>


Exhibits and Addenda:

        Exhibit A:    Floor Plan(s) of Premises
        Exhibit B:    Legal Description of Land
        Exhibit C:    Work Letter
        Exhibit D:    Rules and Regulations of the Building
        Exhibit E:    Confirmation of Lease Term


The Basic Lease Information is incorporated into and made a part of the Lease.
Each reference in the Lease to any Basic Lease Information shall mean the
applicable information set forth above. In the event of any conflict between an
item in the Basic Lease Information and the Lease, the Lease shall control.


                                       ii


<PAGE>   4
                                  OFFICE LEASE


               THIS LEASE is made and entered into by and between Landlord and
Tenant as of the Lease Date. Landlord and Tenant hereby agree as follows:

        1. Definitions.

               1.1. Terms Defined. The following terms have the meanings set
forth below. Certain other terms have the meanings set forth in the Basic Lease
Information or elsewhere in this Lease.

                      Alterations: Alterations, additions or other improvements
to the Premises made by Tenant or its employees or contractors (but not
including the alterations, additions or other improvements, if any, made by or
on behalf of Tenant during the initial improvement of the Premises pursuant to
and governed by the provisions of the Work Letter).

                      Base Operating Expenses and Base Real Estate Taxes: The
Operating Expenses and the Real Estate Taxes paid or incurred by Landlord in the
Base Year.

                      Building: The office building, and surrounding property,
consisting of a four-story building located on the Land, commonly known as 33
Clementina Street, San Francisco, California, and any additions to such
Building.

                      Escalation Rent: The total dollar increase, if any, in
Operating Expenses and in Real Estate Taxes, each as paid or incurred by
Landlord in each calendar year, or part thereof, after the Base Year, over the
amount of Base Operating Expenses and Base Real Estate Taxes. For purposes of
determining Operating Expenses for the Base Year, since the Building will be
less than ninety-five percent (95%) occupied during the Base Year, Landlord
shall make an appropriate adjustment of the variable components of Operating
Expenses for that year, as reasonably determined by Landlord using sound
accounting and management principles, to determine the amount of Operating
Expenses that would have been incurred during such year if the Building had been
ninety-five percent (95%) occupied during the entire year. This amount shall be
considered to have been the amount of Operating Expenses for the Base Year. For
purposes hereof, "variable components" include only those component expenses
that are affected by variations in occupancy levels. For purposes of determining
Real Estate Taxes for the Base Year, Landlord shall make an appropriate
adjustment to the Real Estate Taxes for such year as reasonably determined by
Landlord using sound accounting and management principles, to determine the
amount of Real Estate Taxes that would have been incurred during such year if
the tenant improvements in the Building had been fully constructed and the Land,
the Building, and all tenant improvements in the Building had been fully
assessed for Real Estate Tax purposes.


                      Impositions: Taxes, assessments, charges, excises and
levies, business taxes, licenses, permits, inspection and other authorization
fees, transit development fees, assessments or charges for housing funds,
service payments in lieu of taxes and any other fees or charges of any kind at
any time levied, assessed, charged or imposed by any federal, state or local
entity, upon, measured by or reasonably attributable to the cost or value of
Tenant's equipment, furniture, fixtures or other personal property located in
the Premises, or the cost or value of any alterations, additions or other
improvements to the Premises made by or on behalf of Tenant during the initial
improvement of the Premises pursuant to and governed by the Work Letter which
exceed Building standard improvements (which for purposes of this definition are
defined


                                       1


<PAGE>   5
to mean tenant improvements costing less than $50.00 per square foot of Rentable
Area) and any subsequent Alterations. Impositions do not include Real Estate
Taxes, franchise, transfer, inheritance or capital stock taxes, or income taxes
measured by the net income of Landlord from all sources, unless any such taxes
are levied or assessed against Landlord as a substitute for, in whole or in
part, any Imposition.

                      Land: The parcel of land described on Exhibit B attached
to this Lease.

                      Operating Expenses: All costs of management, operation,
maintenance and repair of the Building, including, but not limited to, the
following: (i) a prorata portion of salaries, wages, benefits and other payroll
expenses of employees engaged in the operation, maintenance or repair of the
Building and the Land based on the percentage of such employees' time that is
devoted to the operation, maintenance or repair of the Building and the Land;
(ii) commercially reasonable property management fees and expenses; (iii)
electricity, natural gas, water, waste disposal, sewer, heating, lighting, air
conditioning and ventilating and other utilities; (iv) maintenance, security,
life safety and other services, such as alarm service, window cleaning and
elevator maintenance; (v) repair and replacement, resurfacing or repaving of
paved areas, sidewalks, curbs and gutters (except that any such work which
constitutes a capital improvement shall be included in Operating Expenses in the
manner provided in clause (xiii) below); (vi) landscaping, ground keeping,
management, operation, and maintenance and repair of all public, private and
park areas adjacent to the Building and Land; (vii) materials, supplies, tools
and rental equipment; (viii) license, permit and inspection fees and costs; (ix)
insurance premiums and costs (including a proportionate share if Landlord
insures under a "blanket" policy) for any and all insurance carried by Landlord
with respect to the Premises, and the deductible portion of any insured loss
under any such Landlord's insurance ( not to exceed $20,000.00); (x) sales, use
and excise taxes; (xi) legal, accounting and other professional services for the
Building and the Land, including costs, fees and expenses of contesting the
validity or applicability of any law, ordinance, rule, regulation or order
relating to the Building and the Land; (xii) depreciation on personal property,
including exterior window draperies provided by Landlord and floor coverings in
the Common Areas and other public portions of the Building, and/or rental costs
of leased furniture, fixtures, and equipment; and (xiii) the cost of any capital
improvements to the Building or the Land made at any time that are intended in
Landlord's judgment as labor saving devices, or to reduce or eliminate other
Operating Expenses or to effect other economies in the operation, maintenance,
or management of the Building, or that are necessary or appropriate in
Landlord's judgment for the health and safety of occupants of the Building, or
that are required under any law, ordinance, rule, regulation or order which was
not applicable to the Building before the Commencement Date, all amortized over
the useful life of such items determined in accordance with generally accepted
accounting principles at an interest rate of ten percent (10%) per annum, or, if
applicable, the rate paid by Landlord on funds borrowed for the purpose of
constructing or installing such capital improvements and provided that, as to
cost savings expenditures, the annual amount of such amortized costs passed
through as an expense shall not exceed the cost savings realized in such year.
Operating Expenses shall not include: (A) Real Estate Taxes; (B) legal fees,
brokers' commissions or other costs incurred in the negotiation, termination, or
extension of leases or in proceedings involving a specific tenant; (C)
depreciation, except as set forth above; (D) interest, amortization or other
payments on loans to Landlord except as a component of amortization as set forth
above; (E) the cost of any repairs or alterations resulting from defects in the
design or construction of the remodeled Building and the initial improvement of
the Premises or that are required under any law, ordinance, rule, regulation or
order which was applicable to the Building before the Commencement Date; (F)
costs of repairs that are covered by warranties in connection with the
construction of the Building; (G) the cost of capital improvements, except as
set forth in clause (xiii) above; (H) any management fees, representing an
amount paid to a person, firm, corporation, or other entity affiliated to
Landlord to the extent in excess of the amount which would have been paid in the
absence of such relationship; (I) expenses directly resulting from the
negligence, willful misconduct or violation of laws by Landlord, its agents,
servants or employees; (J) any costs of repairs for damage or destruction
occasioned by eminent domain or fires or other casualty (except the deductible
amount permitted


                                       2


<PAGE>   6
under clause (iv) above); (K) all costs arising from monitoring, cleaning up and
otherwise remediating, or due to the presence of, Hazardous Substances (defined
below) at the Premises except to the extent caused by the release or emisssion
of Hazardous Substances by Tenant, its contractors, employees or agent; (L) the
creation of any reserves (other than standard operating reserves); (M) costs of
correcting defects in or inadequacy of the renovation of the Building; and (N)
insurance costs for coverage not customarily required by lenders, or paid by
tenants, of similar projects in the vicinity of the Premises, insurance
deductibles in excess of $20,000 per occurrence and premiums for earthquake
insurance. Subject to the provisions of this definition, the determination of
Operating Expenses shall be made by Landlord in accordance with generally
accepted accounting principles and practices consistently applied.

                      Real Estate Taxes: All taxes, assessments and charges now
or hereafter levied or assessed upon, or with respect to, the Building or any
portion thereof, or any personal property of Landlord used in the operation
thereof or located therein, or Landlord's interest in the Building or such
personal property, by any federal, state or local entity, including: (i) all
real property taxes and general and special assessments; (ii) charges, fees or
assessments for transit, housing, day care, open space, art, police, fire or
other governmental services or benefits to the Building; (iii) service payments
in lieu of taxes; (iv) any tax, fee or excise on the use or occupancy of any
part of the Building, or on rent for space in the Building; (v) any other tax,
fee or excise, however described, that may be levied or assessed as a substitute
for, in whole or in part, any other Real Estate Taxes; and (vi) reasonable fees
and expenses, including those of consultants or attorneys, incurred in
connection with proceedings to contest, determine or reduce Real Estate Taxes.
Real Estate Taxes do not include: (A) franchise, transfer, gift, estate,
inheritance or capital stock taxes, or income taxes measured by the net income
of Landlord, unless any such taxes are levied or assessed against Landlord as a
substitute for, in whole or in part, any Real Estate Tax; (B) Impositions and
all similar amounts payable by Tenant; and (C) penalties, fines, interest or
charges due for late payment of Real Estate Taxes by Landlord. If any Real
Estate Taxes are payable, or may at the option of the taxpayer be paid, in
installments, such Real Estate Taxes shall, together with any interest that
would otherwise be payable with such installment, be deemed to have been paid in
installments, amortized over the maximum time period allowed by applicable law.

                      Rent: Base Rent, Escalation Rent and all other additional
charges and amounts payable by Tenant in accordance with this Lease.

                      Term: The period from the Possession Date to the
Expiration Date.

        2. Lease of Premises. Landlord leases to Tenant and Tenant leases from
Landlord the Premises.

        3. Term; Condition and Acceptance of Premises.

               3.1 Initial Term and Acceptance of Premises. Except as
hereinafter provided, and unless sooner terminated pursuant to the provisions of
this Lease, the Term of this Lease shall commence on the Possession Date and end
on the Expiration Date. Landlord shall deliver the Premises to Tenant on the
Possession Date in the condition required by the Work Letter. To the extent that
(i) Landlord has agreed in the Work Letter to make any alterations or
improvements to the Premises prior to the Possession Date, (ii) Tenant desires
to take occupancy of the Premises in advance of the Possession Date, and (iii)
Landlord determines in its sole discretion that Tenant's early occupancy shall
not delay the completion of the improvements to the Premises, then Landlord
shall deliver the Premises to Tenant in advance of the Possession Date on a date
mutually agreed upon by Landlord and Tenant. If Landlord, for any reason
whatsoever, is delayed in the delivery of the Premises to Tenant, this Lease
shall not be void or voidable, and Landlord shall not be in default or liable to
Tenant for any loss or damage resulting therefrom: provided, however, that if
the Possession Date does not occur on or before January 1, 2001, then Tenant
shall have the


                                       3


<PAGE>   7
right to terminate this Lease by delivering written notice to Landlord at any
time before February 1, 2002, whereupon any monies previously paid by Tenant to
Landlord shall be reimbursed to Tenant. Within five (5) days after the
Possession Date, Landlord and Tenant shall execute a Confirmation of Lease Term
in the form as set forth in Exhibit E attached to this Lease. Tenant's occupancy
of all or any portion of the Premises shall constitute Tenant's acceptance of
the Premises in the condition called for by this Lease. Tenant's occupancy of
all or any portion of the Premises shall constitute Tenant's acceptance of the
Premises in the condition called for by this Lease, subject to the punchlist
items as described in the Work Letter. Notwithstanding the foregoing, if the
Possession Date occurs after September 1, 2000 as a result of events other than
delays caused by the acts or omissions of Tenant, or Tenant's contractors,
employees or agents ("Tenant Delays"), then the "Commencement Date" shall be a
date calculated as follows: (i) two (2) weeks after the Possession Date, plus
(ii) the number of days by which the Possession Date exceeds September 1, 2000,
minus (iii) the number of days of delay that Landlord is actually delayed in
delivering the Premises to Tenant caused by Tenant Delays.


               3.2 Option to Extend.

                      3.2.1. Exercise of Option to Extend Term. If no
"Suspension Condition" (as hereinafter defined) exists at the time of Tenant's
exercise of the option to extend the Initial Term or at the commencement of the
Extended Term, as the case may be, Tenant shall have two (2) options (each an
"Extension Option") to extend the Initial Term for an additional period of five
(5) years each (each an "Extended Term"). To exercise Tenant's option with
respect to the Extended Term, Tenant shall give notice to Landlord not less than
two hundred ten (210) days prior to the expiration of the Initial Term, or the
first Extended Term ("Election Notice"). A "Suspension Condition" shall mean the
existence of any event or condition of default after expiration of any
applicable grace, notice or cure periods. Tenant shall have no right to exercise
the second Extension Option unless Tenant properly exercised the first Extension
Option.

                      3.2.2. Fair Market Rent. If Tenant properly and timely
exercises Tenant's option to extend pursuant to Section 3.2.1 above, such
extension shall be upon all of the same terms, covenants and conditions of this
Lease; provided, however, that the Base Rent applicable to the Premises for each
Extended Term shall be one hundred percent (100%) of the "Fair Market Rent" for
space comparable to the Premises as of the commencement of the applicable
Extended Term. "Fair Market Rent" shall mean the annual rental being charged for
first class space comparable to the Premises in buildings comparable to the
Building in the south of Market and financial districts of San Francisco, taking
into account location, parking, condition and improvements to the space and the
fact that Tenant is not entitled to rent concessions or a tenant improvement
allowance. All other terms and conditions of the Lease, which may be amended
from time to time by the parties in accordance with the provisions of the Lease,
shall remain in full force and effect and shall apply during each Extended Term,
as applicable, except that: (i) there shall be no further option to extend the
Term beyond a date ten (10) years after the expiration of the Initial Term, (ii)
there shall be no further rent concessions, and (iii) there shall be no tenant
improvement allowance or similar provisions.

                      3.2.3. Determination of Rent. Within thirty (30) days
after the date of the Election Notice, Landlord and Tenant shall negotiate in
good faith in an attempt to determine Fair Market Rent for the Extended Term. If
they are unable to agree within said thirty (30) day period, then the Fair
Market Rent shall be determined as provided in Section 3.2.4 below, unless on or
before such thirtieth (30th) day after the date of the Election Notice Tenant
provides Landlord with written notice of its election to revoke the Election
Notice and to not exercise its option to extend.

                      3.2.4. Appraisal. If it becomes necessary to determine the
Fair Market Rent for the Premises by appraisal, the real estate appraiser(s)
indicated in this Section 3.2.4, each of whom shall be


                                       4


<PAGE>   8
members of the Appraisal Institute and each of whom have at least five (5) years
experience appraising office space located in the vicinity of the Premises,
shall be appointed and shall act in accordance with the following procedures:

                      (i) If the parties are unable to agree on the Fair Market
Rent within the allowed time, either party may demand an appraisal by giving
written notice to the other party, which demand to be effective must state the
name, address and qualifications of an appraiser selected by the party demanding
the appraisal ("Notifying Party"). Within ten (10) days following the Notifying
Party's appraisal demand, the other party ("Non-Notifying Party") shall either
approve the appraiser selected by the Notifying Party or select a second
properly qualified appraiser by giving written notice of the name, address and
qualification of said appraiser to the Notifying Party. If the Non-Notifying
Party fails to select an appraiser within the ten (10) day period, the appraiser
selected by the Notifying Party shall be deemed selected by both parties and no
other appraiser shall be selected. If two (2) appraisers are selected, they
shall select a third appropriately qualified appraiser. If the two (2)
appraisers fail to select a third qualified appraiser, the third appraiser shall
be appointed by the then presiding judge of the county where the Premises are
located upon application by either party.

                      (ii) If only one appraiser is selected, that appraiser
shall notify the parties in simple letter form of its determination of the Fair
Market Rent for the Premises within fifteen (15) days following his or her
selection, which appraisal shall be conclusively determinative and binding on
the parties as the appraised Fair Market Rent.

                      (iii) If multiple appraisers are selected, the appraisers
shall meet not later than ten (10) days following the selection of the last
appraiser. At such meeting, the appraisers shall attempt to determine the Fair
Market Rent for the Premises as of the commencement date of the Extended Term in
question by the agreement of at least two (2) of the appraisers.

                      (iv) If two (2) or more of the appraisers agree on the
Fair Market Rent for the Premises at the initial meeting, such agreement shall
be determinative and binding upon the parties hereto and the agreeing appraisers
shall forthwith notify both Landlord and Tenant of the amount set by such
agreement. If multiple appraisers are selected and two (2) appraisers are unable
to agree on the Fair Market Rent for the Premises, each appraiser shall submit
to Landlord and Tenant his or her respective independent appraisal of the Fair
Market Rent for the Premises, in simple letter form, within twenty (20) days
following appointment of the final appraiser. The parties shall then determine
the Fair Market Rent for the Premises by averaging the appraisals; provided that
any high or low appraisal, differing from the middle appraisal by more than ten
percent (10%) of the middle appraisal, shall be disregarded in calculating the
average.

                      (v) If only one (1) appraiser is selected, then each party
shall pay one-half (1/2) of the fees and expenses of that appraiser. If three
(3) appraisers are selected, each party shall bear the fees and expenses of the
appraiser it selects and one-half (1/2) of the fees and expenses of the third
appraiser.

                      3.2.5. Restriction on Assignment. The Extension Option
shall be personal to Critical Path or any Related Entity (defined below), shall
not be assignable or transferable, shall terminate upon any assignment of the
Premises other than to a Related Entity and or any sublease that results in
Tenant or a Related Entity retaining a portion of the Premises that is less than
fifty percent (50%) of the Rentable Area of the original Premises

                      3.2.6. Amendment to Lease. Immediately after the Fair
Market Rent has been determined, the parties shall enter into an amendment to
this Lease setting forth the Base Rent for the Extended Term and shall also
state the new Expiration Date of the Term of the Lease.


                                       5


<PAGE>   9
               3.3 Right to Terminate. Tenant shall have the right to terminate
this Lease effective at the end of the seventh year following the Commencement
Date (the "Early Termination Date") provided that Tenant delivers written notice
to Landlord at least 180 days prior to the Early Termination Date and that on or
before the Early Termination Date Tenant pays to Landlord a termination fee in
an amount equal to the unamortized (amortized on a straight line basis over the
Initial Term) Tenant Allowance (as defined in the Work Letter) and brokerage fee
paid by Landlord to the Brokers at the time this Lease is executed and at the
time the Tenant takes possession of the Premises.

        4. Rent.

               4.1. Obligation to Pay Base Rent. Tenant shall pay Base Rent to
Landlord, in advance, in equal monthly installments, commencing on the
Commencement Date, and thereafter on or before the first day of each calendar
month during the Term. If the Commencement Date and/or Expiration Date is other
than the first day of a calendar month, the installment of Base Rent for the
first and/or last fractional month of the Term shall be prorated on a daily
basis. Not less than thirty (30) days prior to the Commencement Date, Tenant
shall pay to Landlord the first month's Base Rent.

               4.2. Manner of Rent Payment. All Rent shall be paid by Tenant
without notice, demand, abatement, deduction or offset (except as expressly set
forth herein), in lawful money of the United States of America, payable to
Landlord, at Landlord's Address as set forth in the Basic Lease Information, or
to such other person or at such other place as Landlord may from time to time
designate by notice to Tenant.

               4.3. Additional Rent. All Rent not characterized as Base Rent or
Escalation Rent shall constitute additional rent, and if payable to Landlord
shall, unless otherwise specified in this Lease, be due and payable thirty (30)
days after Tenant's receipt of Landlord's invoice therefor.

               4.4. Late Payment of Rent; Interest. Tenant acknowledges that
late payment by Tenant of any Rent will cause Landlord to incur administrative
costs not contemplated by this Lease, the exact amount of which are extremely
difficult and impracticable to ascertain based on the facts and circumstances
pertaining as of the Lease Date. Accordingly, if any Rent is not paid by Tenant
when due, a late charge equal to five percent (5%) of such Rent; provided,
however, that the following additional provisions shall apply to such late
charge: (i) the first late payment in any calendar year shall not result in any
late charge payment unless such payment of Rent is not received within two (2)
business days after Landlord's delivery of written notice to Tenant, and (ii) if
there are more than two (2) late payments of Rent by Tenant in any calendar
year, then the late charge for each subsequent late payment in such calendar
year shall be eight percent (8%). Any Rent, other than late charges, due
Landlord under this Lease, if not paid when due, shall also bear interest from
the date due until paid, at the lesser of the rate of ten percent (10%) per
annum and the highest rate legally permitted. The parties acknowledge that such
late charge and interest represent a fair and reasonable estimate of the
administrative costs and loss of use of funds Landlord will incur by reason of a
late Rent payment by Tenant, but Landlord's acceptance of such late charge
and/or interest shall not constitute a waiver of Tenant's default with respect
to such Rent or prevent Landlord from exercising any other rights and remedies
provided under this Lease, at law or in equity.

        5. Calculation and Payments of Escalation Rent. During each full or
partial calendar year of the Term subsequent to the Base Year, Tenant shall pay
to Landlord Escalation Rent in accordance with the following procedures:

               5.1. Payment of Estimated Escalation Rent. During December of the
Base Year and


                                       6


<PAGE>   10
December of each subsequent calendar year, or as soon thereafter as practicable,
Landlord shall give Tenant notice of its estimate of Escalation Rent due for the
next ensuing calendar year. On or before the first day of each month during such
next ensuing calendar year, Tenant shall pay to Landlord in advance, in addition
to Base Rent, one-twelfth (1/12th) of such estimated Escalation Rent. In the
event such notice is given after December 31st of any year during the Term, (i)
Tenant shall continue to pay Escalation Rent on the basis of the prior calendar
year's estimate until the month after such notice is given, (ii) subsequent
payments by Tenant shall be based of the estimate of Escalation Rent set forth
in Landlord's notice, and (iii) with the first monthly payment of Escalation
Rent based on the estimate set forth in Landlord's notice, Tenant shall also pay
the difference, if any, between the amount previously paid for such calendar
year and the amount which Tenant would have paid through the month in which such
notice is given, based on Landlord's noticed estimate or, in the alternative, if
such amount previously paid by Tenant for such calendar year through the month
in which such notice is given exceeds the amount which Tenant would have paid
through such month based on Landlord's noticed estimate, Landlord shall credit
such excess amount against the next monthly payments of Escalation Rent due from
Tenant. If at any time Landlord reasonably determines that the Escalation Rent
for the current calendar year will vary from Landlord's estimate by more than
five percent (5%), Landlord may, by notice to Tenant not more than once a
calendar year, revise its estimate for such calendar year, and subsequent
payments by Tenant for such calendar year shall be based upon such revised
estimate. Notwithstanding anything to the contrary contained herein, Tenant may
pay the portion of Escalation Rent attributable to Real Estate Taxes as set
forth in Landlord's notice of its estimate of Escalation Rent on or before a
date thirty (30) days prior to the date such Real Estate Taxes are due, unless
Landlord notifies Tenant that its lender is requiring Landlord to escrow Real
Estate Taxes pursuant to a deed of trust encumbering the Premises.

               5.2. Escalation Rent Statement and Adjustment. Within one hundred
twenty (120) days after the close of each calendar year, or as soon thereafter
as practicable, Landlord shall deliver to Tenant a statement of the actual
Escalation Rent for such calendar year, accompanied by a statement prepared by
Landlord showing in reasonable detail the Operating Expenses and the Real Estate
Taxes comprising the actual Escalation Rent. If Landlord's statement shows that
Tenant owes an amount less than the payments previously made by Tenant for such
calendar year, Landlord shall credit the difference first against any sums then
owed by Tenant to Landlord and then against the next payment or payments of Rent
due Landlord within thirty (30) days, except that if a credit amount is due
Tenant after termination of this Lease, Landlord shall pay to Tenant any excess
remaining after Landlord credits such amount against any sums owed by Tenant to
Landlord. If Landlord's statement shows that Tenant owes an amount more than the
payments previously made by Tenant for such calendar year, Tenant shall pay the
difference to Landlord within thirty (30) days after delivery of the statement.

               5.3. Proration for Partial Year. If this Lease terminates other
than on the last day of a calendar year (other than due to Tenant's default),
the amount of Escalation Rent for such fractional calendar year shall be
prorated on a daily basis. Upon such termination, Landlord may, at its option,
calculate the adjustment in Escalation Rent prior to the time specified in
Section 5.2 above. Tenant's obligation to pay Escalation Rent and Landlord's
obligation to reimburse excess amounts as set forth in Section 5.2, above, shall
survive the expiration or termination of this Lease.

               5.4. Tenant's Right to Contest Taxes If Real Estate Taxes are not
contested by Landlord, Tenant shall have the right to contest such Taxes, at no
cost or expense to Landlord, by the appropriate proceedings diligently contested
in good faith. Notwithstanding such proceedings, the contested Real Estate Taxes
shall be promptly paid and discharged, unless such proceedings (and where
necessary the posting of any appropriate bond or other security) shall operate
to prevent or stay the collection of the Real Estate Taxes and secure any
accruing penalties or interest and such proceedings shall provide a cure of
Landlord's default in the payment of Real Estate Taxes required under any deed
of trust upon the


                                       7


<PAGE>   11
Premises. Landlord shall join Tenant in such proceedings, if necessary, provided
that Tenant pays all reasonable costs and expenses incurred by Landlord.

        6. Impositions Payable by Tenant. Tenant shall pay all Impositions prior
to delinquency. If billed directly to Tenant, Tenant shall pay such Impositions
and concurrently deliver to Landlord evidence of such payments. If any
Impositions are billed to Landlord or included in bills to Landlord for Real
Estate Taxes or other charges, then Tenant shall pay to Landlord all such
amounts within twenty (20) days after delivery of Landlord's invoice therefor.
If applicable law prohibits Tenant from reimbursing Landlord for an Imposition,
but Landlord may lawfully increase the Base Rent to account for Landlord's
payment of such Imposition, the Base Rent payable to Landlord shall be increased
to net to Landlord the same return without reimbursement of such Imposition as
would have been received by Landlord with reimbursement of such Imposition.
Tenant's obligation to pay Impositions which have accrued and remain unpaid upon
the expiration or earlier termination of this Lease shall survive the expiration
or earlier termination of this Lease.

        7. Use of Premises.

               7.1. Permitted Use. The Premises may only be used solely for the
Permitted Use and for no other use or purpose.

               7.2. No Violation of Legal and Insurance Requirements. Tenant
shall not do or knowingly permit to be done, or bring or keep or knowingly
permit to be brought or kept, in or about the Premises, or any other portion of
the Building, anything which (i) is prohibited by or will in any way conflict
with any law, ordinance, rule or regulation; (ii) would invalidate or be in
conflict with the provisions of any insurance policy carried by Landlord or
Tenant on any portion of the Building or Premises, or any property therein; or
(iii) would cause a cancellation of any such insurance, increase the existing
rate of or affect any such Landlord's insurance (unless Tenant pays an increase
in premium), or subject Landlord to any liability or responsibility for injury
to any person or property. If Tenant does or knowingly permits anything to be
done which increases the cost of any of Landlord's insurance, or which results
in the need, in Landlord's reasonable judgment, for additional insurance by
Landlord or Tenant with respect to any portion of the Building or Premises, then
after prior written notice to Tenant of such action Tenant shall reimburse
Landlord, upon demand, for any such additional costs or the costs of such
additional insurance, and/or procure such additional insurance at Tenant's sole
cost and expense. Exercise by Landlord of such right to require reimbursement of
additional costs (including the costs of procuring of additional insurance)
shall not limit or preclude Landlord from prohibiting Tenant's impermissible use
of the Premises or from invoking any other right or remedy available to Landlord
under this Lease.

               7.3. Compliance with Legal, Insurance and Life Safety
Requirements. Except as provided in clauses (i) through (iii) below, Tenant, at
its cost and expense, shall promptly comply with all laws, ordinances, rules,
regulations, orders and other governmental requirements, the requirements of any
board of fire underwriters or other similar body, any directive or occupancy
certificate issued pursuant to any law by any public officer or officers, the
provisions of all recorded documents affecting any portion of the Building and
all life safety programs, procedures and rules implemented or promulgated by
Landlord in its reasonable judgement pertaining to Tenant's use of the Premises
in order to comply with applicable laws, ordinances, rules, regulations, orders
or governmental requirements or requirements of insurance underwriters ("Laws").
Tenant shall not, however, be required to comply with Laws requiring Tenant to
make structural changes or capital improvements to the Premises unless
necessitated, in whole or in part, by (i) Tenant's particular use or occupancy
of the Premises, or (ii) Alterations (excluding any alterations, additions or
other improvements to the Premises made by or on behalf of Tenant during the


                                       8


<PAGE>   12
initial improvement of the Premises pursuant to the Work Letter).

               7.4. No Nuisance. Tenant shall not (i) do or permit anything to
be done in or about the Premises, or any other portion of the Building, which
would injure or annoy, or obstruct or interfere with the rights of, Landlord or
other occupants of the Building, or others lawfully in or about the Building;
(ii) use or allow the Premises to be used in any manner inappropriate for a
Class A office building, or for any improper or objectionable purposes; or (iii)
cause, maintain or permit any nuisance or waste in, on or about the Premises, or
any other portion of the Building.

               7.5. Hazardous Substances. The term "Hazardous Substances" as
used in the Lease, is defined as follows:

        Any element, compound, mixture, solution, particle or substance, which
        presents danger or potential danger of damage or injury to health,
        welfare or to the environment including, but not limited to: (i) those
        substances which are inherently or potentially radioactive, explosive,
        ignitable, corrosive, reactive, carcinogenic or toxic and (ii) those
        substances which have been recognized as dangerous or potentially
        dangerous to health, welfare or to the environment by any federal,
        municipal, state, county or other governmental or quasi-governmental
        authority and/or any department or agency thereof.

               Tenant represents and warrants to Landlord and agrees that at all
times during the term of this Lease and any extensions or renewals thereof,
Tenant shall:

               (i) promptly comply at Tenant's sole cost and expense, with all
        laws, orders, rules, regulations, certificates of occupancy, or other
        requirements, as the same now exist or may hereafter be enacted, amended
        or promulgated, of any federal, municipal, state, county or other
        governmental or quasi-governmental authorities and/or any department or
        agency thereof relating to the manufacturing, processing, distributing,
        using, producing, treating, storing (above or below ground level),
        disposing or knowingly allowing to be present(the "Environmental
        Activity") of Hazardous Substances in or about the Premises (each, an
        "Environmental Law", and all of them, "Environmental Laws") to the
        extent Tenant is responsible for the presence of such Hazardous
        Substances.

               (ii) indemnify and hold Landlord, its agents and employees,
        harmless from any and all demands, claims, causes of action, penalties,
        liabilities, judgments, damages (including consequential damages) and
        expenses including, without limitation, court costs and reasonable
        attorneys' fees incurred by Landlord as a result of (a) Tenant's failure
        or delay in properly complying with any Environmental Law as required by
        clause (i) above, or (b) any adverse effect which results from the
        Environmental Activity by Tenant, Tenant's subtenants or any of their
        respective agents, employees or contractors, whether Tenant or Tenant's
        subtenants or any of their respective agents, employees, contractors or
        invitees has caused such Environmental Activity, with or without
        Tenant's consent, , or either intentionally or unintentionally. If any
        action or proceeding is brought against Landlord, its agents or
        employees by reason of any such claim, Tenant, upon notice from
        Landlord, will defend such claim at Tenant's expense with counsel
        reasonably satisfactory to Landlord. This indemnity obligation by Tenant
        of Landlord will survive the expiration or earlier termination of this
        Lease.

               (iii) promptly disclose to Landlord by delivering, in the manner
        prescribed for delivery of notice in this Lease, a copy of any forms,
        submissions, notices, reports, or other written documentation (each, a
        "Communication") relating to any Environmental Activity, whether any


                                       9


<PAGE>   13
        such Communication is delivered to Tenant or any of its subtenants or is
        requested of Tenant or any of its subtenants by any federal, municipal,
        state, county or other government or quasi-governmental authority and/or
        any department or agency thereof.

               (iv) in the event there is a release of any Hazardous Substance
        as a result of or in connection with any Environmental Activity by
        Tenant or any of Tenant's subtenants or any of their respective agents,
        employees, contractors or invitees, which must be remediated under any
        Environmental Law, Landlord shall perform the necessary remediation; and
        Tenant shall reimburse Landlord for all costs thereby incurred within
        fifteen (15) days after delivery of a written demand therefor from
        Landlord (which shall be accompanied by reasonable substantiation of
        such costs). In the alternative, Landlord shall have the right to
        require Tenant, at its sole cost and expense, to perform the necessary
        remediation in accordance with a detailed plan of remediation which
        shall have been approved in advance in writing by Landlord. Landlord
        shall give notice to Tenant within thirty (30) days after Landlord
        receives notice or obtains knowledge of the required remediation. The
        rights and obligations of Landlord and Tenant set forth in this clause
        (iv) shall survive the expiration or earlier termination of this Lease.

               (v) notwithstanding any other provisions of this Lease, allow
        Landlord, and any authorized representative of Landlord, access and the
        right to enter and inspect the Premises for Environmental Activity, at
        any time deemed reasonable by Landlord, upon prior notice to Tenant on
        the terms set forth in Article 19.

Compliance by Tenant with any provision of this Section 7.5 shall not be deemed
a waiver of any other provision of this Lease. Without limiting the foregoing,
Landlord's consent to any Environmental Activity shall not relieve Tenant of its
indemnity obligations under the terms hereof.

               Except as set forth in the Phase I Environmental Assessment dated
January 22, 1996 prepared by William Dubovsky Environmental and that certain
letter dated April 12, 1999 prepared by William Dubovsky Environmental,, to
Landlord's knowledge, (a) no Hazardous Substance is present on the Building or
the soil, surface water or groundwater of the Land, (b) no underground storage
tanks are present on the Land, and (c) no action proceeding or claim is pending
or threatened regarding the Building concerning any Hazardous Substance or
pursuant to any Environmental Law. Landlord shall promptly remedy and shall
indemnify, defend, protect and hold harmless Tenant, its agents, contractors,
stockholders, directors, successors, representatives, and assigns from and
against, all losses, costs, claims, liabilities and damages (including
attorneys' and consultants' fees) of every type and nature, directly or
indirectly arising out of or in connection with any Hazardous Substance present
at any time on or about the Building, or the soil, air, improvements,
groundwater or surface water of the Land, or the violation of any Environmental
Laws, except to the extent that any of the foregoing results from the
Environmental Activity by Tenant or any of Tenant's subtenants or any of their
respective agents, employees, contractors or invitees, in violation of
Environmental Laws.


               This Section 7.5 of the Lease constitutes the entire agreement of
Landlord and Tenant regarding Hazardous Substances.

               7.6. Special Provisions Relating to The Americans With
Disabilities Act of 1990.

                      7.6.1. Allocation of Responsibility to Landlord. As
between Landlord and Tenant, Landlord shall be responsible that the Building as
of the Commencement Date complies with the requirements of Title III of the
Americans with Disabilities Act of 1990 (42 U.S.C. 12181, et seq., The
Provisions Governing Public Accommodations and Services Operated by Private
Entities), and all


                                       10


<PAGE>   14
regulations promulgated thereunder, and all amendments, revisions or
modifications thereto now or hereafter adopted or in effect in connection
therewith (hereinafter collectively referred to as the "ADA"), and to take such
actions and make such alterations and improvements as are necessary for such
compliance. All costs incurred by Landlord in discharging its responsibilities
under this Section 7.6.1 shall be included in Operating Expenses to the extent
permitted by Section 1.1.

                      7.6.2. Allocation of Responsibility to Tenant. As between
Landlord and Tenant, Tenant, at its sole cost and expense, shall be responsible
that all Alterations to the Premises (excluding any alterations, additions or
other improvements to the Premises made by or on behalf of Tenant during the
initial improvement of the Premises pursuant to the Work Letter), Tenant's
particular use and occupancy of the Premises, and Tenant's performance of its
obligations under this Lease, comply with the requirements of the ADA, and to
take such actions and make such Alterations as are necessary for such
compliance; provided, however, that Tenant shall not make any such Alterations
except upon Landlord's prior written consent pursuant to the terms and
conditions of this Lease. Tenant shall protect, defend, indemnify and hold
Landlord harmless from and against any claim, demand, cause of action,
obligation, liability, loss, cost or expense (including reasonable attorneys'
fees) which may be asserted against or incurred by Landlord as a result of
Tenant's failure in any respect to comply with its obligations set forth in this
Section 7.6.2. Tenant's indemnity obligations set forth in the immediately
preceding sentence shall survive the expiration or earlier termination of this
Lease.

                      7.6.3. General. Notwithstanding anything in this Lease to
the contrary, no act or omission of Landlord, including any approval, consent or
acceptance by Landlord or Landlord's agents, employees or other representatives,
shall be deemed an agreement, acknowledgment, warranty, or other representation
by Landlord that Tenant has complied with the ADA or that any action, alteration
or improvement by Tenant complies or will comply with the ADA or constitutes a
waiver by Landlord of Tenant's obligations to comply with the ADA under this
Lease or otherwise. Any failure of Landlord to comply with the obligations of
the ADA shall not relieve Tenant from any obligations under this Lease or
constitute or be construed as a constructive or other eviction of Tenant or
disturbance of Tenant's use and possession of the Premises.

        8. Building Services.

               8.1. Maintenance of Building. Except as provided in Section 9,
Landlord shall maintain the Building in good order and condition, except for
ordinary wear and tear, damage by casualty or condemnation, or damage occasioned
by the act or omission of Tenant or Tenant's employees, agents, contractors,
licensees or invitees, which damage by Tenant or Tenant's employees, agents,
contractors, licensees or invitees shall be repaired by Landlord at Tenant's
expense. Landlord shall perform and construct, and Tenant shall have no
responsibility to perform or construct, any repair, maintenance or improvements
(a) to the roof or the structural portions of the Building, (b) which could be
treated as a "capital expenditure" under generally accepted accounting
principles, (c) to the heating, ventilating, air conditioning, electrical, fire
and life safety, water, sewer, and plumbing systems serving the Premises and the
Building, (d) to any exterior or other portion of the Land outside of the
demising walls of the Premises, (e) due to negligent acts or omissions of
Landlord or (f) for which Landlord has a right of reimbursement. Notwithstanding
the foregoing, Tenant shall pay for its share of the repairs described above to
the extent such costs are properly included in Operating Expenses.Landlord's
maintenance of, and provision of services to, the Building shall be performed in
a manner consistent with that of comparable office buildings in the San
Francisco, California area. Landlord shall not be in default under this Lease or
liable for any damages directly or indirectly resulting from or incidental to,
nor shall the rental reserved in this Lease be abated by reason of, Landlord's
failure to make any repair or to perform any maintenance required to be made or
performed by Landlord under this Section 8.1, except as otherwise provided in
Section 20.6 or unless such failure shall persist for


                                       11


<PAGE>   15
an unreasonable time after written notice of the need for such repair or
maintenance is given to Landlord by Tenant; provided, however, that Landlord
shall be liable only to Tenant for actual, out of pocket, costs or expenses
incurred by Tenant as a direct result of Landlord's failure to cause the floor
lobby or elevators of the Building to comply with laws which are immediately
applicable to, and enforceable against, the Building (subject to Landlord's
reasonable right of contest of such laws).


               8.2. Building Standard Services. During the Term, the Premises
shall be furnished with water, gas, electricity and heating, ventilating and air
conditioning in the capacity set forth in the Work Letter. Any additional
utility services required by Tenant shall be procured by Tenant at its sole cost
and expense and shall comply with all regulations and limitations as may be
prescribed by any applicable policies, regulations or guidelines adopted by any
federal, state or local governmental or quasi-governmental entities or utility
suppliers. Landlord may establish in the Premises such measures as are required
by laws, ordinances, rules or regulations or as it deems necessary or
appropriate to conserve energy, including automatic switching of lights and/or
more efficient forms of lighting. Tenant shall have access to the Building and
all of the foregoing services 24 hours a day, 7 days a week.

               8.3. Interruption or Unavailability of Services. Rent shall not
abate, no constructive or other eviction shall be construed to have occurred,
Tenant shall not be relieved from any of its obligations under this Lease, and
Landlord shall not be in default hereunder or liable for any damages directly or
indirectly resulting from, the failure of Landlord to furnish, or delay in
furnishing, any maintenance or services under this Article 8 as a result of
repairs, alterations, improvements or any circumstances beyond Landlord's
reasonable control. Landlord shall use reasonable diligence to remedy any
failure or interruption in the furnishing of such maintenance or services.
Notwithstanding anything set forth in this Lease to the contrary, if such
interruption or interference with access to the Premises, or unavailability of
services continues for more than thirty (30) consecutive days and such
interruption or unavailability prevents Tenant from using the Premises, then
commencing upon the expiration of such thirty (30) day period, Rent shall abate
until beneficial use of the Premises is restored.

               8.4. Tenant's Payment of Utilities. Commencing on the
Commencement Date and continuing throughout the Term, Tenant shall pay directly
to the utility providing such service, as the same become due, all charges for
water, gas, electricity, steam, telephone, sewer, waste pick-up and any other
utilities, materials or services furnished to the Premises and/or used by Tenant
on or about the Premises during the Term, including, without limitation, (i)
meter, use, connection, hook-up and/or standby fees (including any connection or
hook-up fees which relate to making the existing electrical, steam, gas, and
water service available to the Premises as of or following the Commencement
Date), and (ii) penalties for discontinued or interrupted service relating to
discontinuance and interruptions following the Commencement Date (except
penalties resulting from Landlord's acts or omissions).

        9. Maintenance of Premises. Except as set forth in the second sentence
of Section 8.1, Tenant shall, at all times during the Term, at Tenant's cost and
expense, keep the Premises in good condition and repair, except for ordinary
wear and tear and damage by casualty or condemnation. Tenant shall obtain at its
own cost janitorial supplies and services for the Premises (which services shall
at a minimum consist of vacuuming, emptying waste baskets and dusting at least
five days a week) so that the interior of the Premises shall be maintained in a
clean and sanitary order and condition as required by this Article 9. Except as
may be specifically set forth in this Lease (including the Work Letter),
Landlord has no obligation to alter, remodel, improve, repair, decorate or paint
the Premises, or any part thereof, or any obligation respecting the condition,
maintenance and repair of the Premises or any other portion of the Building.
Except as expressly set forth herein, Tenant hereby waives all rights, including
those provided in California Civil Code Section 1941 or any successor statute,
to make repairs which are Landlord's


                                       12


<PAGE>   16
obligation under this Lease at the expense of Landlord or to receive any setoff
or abatement of Rent or in lieu thereof to vacate the Premises or terminate this
Lease.

        10. Alterations to Premises.

               10.1. Landlord Consent; Procedure. Tenant shall not make or
permit to be made any Alterations without Landlord's prior consent, which
consent may be granted or withheld in Landlord's reasonable discretion; no
consent shall be required for non-structural Alterations which do not require a
building permit and which, in the aggregate per project, cost less than
$25,000.00 to construct. Any Alterations to which Landlord has consented shall
be made in accordance with procedures as then established by Landlord and the
provisions of this Article 10.

               10.2. General Requirements. All Alterations shall be made at
Tenant's cost and expense. Tenant shall be solely responsible for compliance
with applicable laws, ordinances, rules and regulations in connection with all
Alterations. Tenant shall be responsible for the cost of any additional
alterations required by applicable laws, ordinances, rules and regulations to be
made by Landlord to any portion of the Building as a result of Alterations.
Tenant shall promptly commence or cause the commencement of construction of all
Alterations and complete or cause completion of the same with due diligence as
soon as possible after commencement.

               10.3. Removal of Alterations. If required by Landlord at the time
Landlord provides consent to an Alteration, Tenant shall, prior to the
expiration of the Term or termination of this Lease, remove such Alteration at
Tenant's cost and expense and restore the Premises to the condition existing
prior to the installation of such Alteration. If Tenant fails so to do, then
Landlord may remove such Alteration and perform such restoration and Tenant
shall reimburse Landlord for Landlord's cost and expense incurred to perform
such removal and restoration (which obligation of Tenant shall survive the
expiration or earlier termination of this Lease). Tenant shall repair at its
cost and expense all damage to the Premises or the Building caused by the
removal of such Alteration. Subject to the foregoing provisions regarding
removal, all Alterations (including any above Building standard improvements to
the Premises) shall be Landlord's property and from and after the expiration or
earlier termination of this Lease shall remain on the Premises without
compensation to Tenant. Tenant's trade fixtures, furniture, equipment and other
personal property installed in the Premises ("Tenant's Property") shall at all
times be and remain Tenant's property. Tenant may remove Tenant's Property from
the Premises at any time, provided that Tenant repairs all damage caused by such
removal. Landlord shall have no lien or other interest in any item of Tenant's
Property.

        11. Liens. Tenant shall keep the Premises and the Building free from any
liens arising out of any work performed or obligations incurred by or for, or
materials furnished to, Tenant pursuant to this Lease or otherwise. Landlord
shall have the right to post and keep posted on the Premises any notices
required by law or which Landlord may deem to be proper for the protection of
Landlord, the Premises and the Building from such liens and to take any other
action at the expense of Tenant that Landlord deems necessary or appropriate to
prevent, remove or discharge such liens. Tenant shall protect, defend, indemnify
and hold Landlord harmless from and against any claim, demand, cause of action,
obligation, liability, loss, cost or expense (including reasonable attorneys'
fees) which may be asserted against or incurred by Landlord as a result of
Tenant's failure to comply with the foregoing obligation (which indemnity
obligation shall survive the expiration or earlier termination of this Lease).

        12. Damage or Destruction.

               12.1. Obligation to Repair. Except as otherwise provided in this
Article 12, if the


                                       13


<PAGE>   17
Premises, or any other portion of the Building necessary for Tenant's use and
occupancy of the Premises, are damaged or destroyed by fire or other casualty,
Landlord shall, within thirty (30) days after such event, notify Tenant of the
estimated time, in Landlord's reasonable judgment, required to repair such
damage or destruction. Unless Landlord terminates this Lease as set forth in
Section 12.2, then (i) Landlord shall proceed with all due diligence to repair
the Premises, and/or the portion of the Building necessary for Tenant's use and
occupancy of the Premises, to substantially the condition existing immediately
before such damage or destruction, as permitted by and subject to then
applicable laws, ordinances, rules and regulations; (ii) this Lease shall remain
in full force and effect; and (iii) Rent shall abate for such part of the
Premises rendered unusable by Tenant in the conduct of its business during the
time such part is so unusable, in the proportion that the Rentable Area
contained in the unusable part of the Premises bears to the total Rentable Area
of the Premises.

               12.2. Termination Rights. If Landlord determines that the
necessary repairs cannot be completed within two hundred seventy (270) days
after the date of damage or destruction, or if such damage or destruction arises
from causes not covered by Landlord's insurance policy required to be carried
hereunder, Landlord may elect, in its notice to Tenant pursuant to Section 12.1,
to (i) terminate this Lease or (ii) repair the Premises pursuant to the
applicable provisions of Section 12.1 above. If Landlord terminates this Lease,
then this Lease shall terminate as of the date of occurrence of the damage or
destruction. If Landlord determines that the necessary repairs cannot be
completed within two hundred seventy (270) days after the date of damage but
Landlord does not elect terminate the Lease pursuant to this Section 12.2,
Tenant shall have the right to terminate the Lease upon written notice to Tenant
to be delivered within ten (10) days of receipt by Tenant of Landlord's notice
of Landlord's determination that such damage or destruction cannot be completed
within two hundred seventy (270) days. Notwithstanding anything to the contrary
herein, Landlord shall not have the right to terminate the Lease if (i) that
portion of the damage or destruction arising from causes covered by Landlord's
insurance policy required to be carried hereunder may be completed within two
hundred seventy (270) after the date of damage or destruction; (ii) the cost of
that portion of the damage or destruction arising from causes not covered by
Landlord's insurance policy required to be carried hereunder is less than five
percent (5%) of the replacement cost of the Building; or (iii) Tenant deposits
with Landlord prior to the commencement of any restoration work the full cost of
the uninsured portion of the costs required to repair the Building.


               12.3. Cost of Repairs. Landlord shall pay the cost for repair of
the Building and all improvements in the Premises, other than any Alterations.
If Tenant elects to repair any damaged Alterations, Tenant may pay the costs
therfor (but Landlord shall make available to Tenant for such purpose any
insurance proceeds received by Landlord for such purpose under Landlord's
insurance policy then in force). Tenant may also replace or repair, at Tenant's
cost and expense, Tenant's movable furniture, equipment, trade fixtures and
other personal property in the Premises which Tenant shall be responsible for
insuring during the Term of this Lease.

               12.4. Damage at End of Term. Notwithstanding anything to the
contrary contained in this Article 12, if the Premises, or any other portion
thereof or of the Building, are materially damaged or destroyed by fire or other
casualty within the last seven (7) months of the Term, then Landlord shall have
the right, in its sole discretion, to terminate this Lease by notice to Tenant
given within ninety (90) days after the date of such event. Such termination
shall be effective on the date specified in Landlord's notice to Tenant, but in
no event later than the end of such 90-day period. For purposes hereof, the
Premises or other portion of the Building shall be deemed to be materially
damaged if such damage costs more than $2,000,000 to repair

               12.5. Waiver of Statutes. The respective rights and obligations
of Landlord and Tenant


                                       14


<PAGE>   18
in the event of any damage to or destruction of the Premises, or any other
portion of the Building, are governed exclusively by this Lease. Accordingly,
Tenant hereby waives the provisions of any law to the contrary, including
California Civil Code Sections 1932(2) and 1933(4) providing for the termination
of a lease upon destruction of the leased property.

        13. Eminent Domain.

               13.1. Effect of Taking. Except as otherwise provided in this
Article 13, if all or any part of the Premises is taken as a result of the
exercise of the power of eminent domain or condemned for any public or
quasi-public purpose, or if any transfer is made in avoidance of such exercise
of the power of eminent domain (collectively, "taken" or a "taking"), this Lease
shall terminate as to the part of the Premises so taken as of the effective date
of such taking. On a taking of a portion of the Premises, Tenant shall have the
right to terminate this Lease by notice to Landlord within thirty (30) days
after the effective date of such taking, if the portion of the Premises taken is
of such extent and nature so as to materially impair Tenant's business use of
the balance of the Premises, as reasonably determined by Tenant. Such
termination shall be operative as of the effective date of the taking. Landlord
may terminate this Lease on a taking of any material portion of the Building if
Landlord reasonably determines that such taking is of such extent and nature as
to render the operation of the remaining Building economically infeasible or to
require a substantial alteration or reconstruction of such remaining portion.
Landlord shall elect such termination by notice to Tenant given within thirty
(30) days after the effective date of such taking, and such termination shall be
operative as of the effective date of such taking. Upon a taking of the Premises
which does not result in a termination of this Lease, the Base Rent shall
thereafter be reduced as of the effective date of such taking in the proportion
that the rentable area of the Premises so taken bears to the total rentable area
of the Premises.

               13.2. Condemnation Proceeds. Except as hereinafter provided, in
the event of any taking, Landlord shall have the right to all compensation,
damages, income, rent or awards made with respect thereto (collectively an
"award"), including any award for the value of the leasehold estate created by
this Lease. No award to Landlord shall be apportioned and, subject to Tenant's
rights hereinafter specified, Tenant hereby assigns to Landlord any right of
Tenant in any award made for any taking. Notwithstanding the foregoing, Tenant
may seek to recover, at its cost and expense, as a separate claim, any damages
or awards payable on a taking of the Premises to compensate for the unamortized
cost paid by Tenant for the alterations, additions or improvements, if any, made
by or on behalf of Tenant during the initial improvement of the Premises
pursuant to the Work Letter and for any Alterations, or for Tenant's personal
property taken, or for interference with or interruption of Tenant's business
(including goodwill), or for Tenant's removal and relocation expenses.

               13.3. Restoration of Premises. On a taking of the Premises which
does not result in a termination of this Lease, Landlord and Tenant shall
restore the Premises as nearly as possible to the condition they were in prior
to the taking in accordance with the applicable provisions and allocation of
responsibility for repair and restoration of the Premises on damage or
destruction pursuant to Article 12 above, and both parties shall use any awards
received by such party attributable to the Premises for such purpose.

               13.4. Tenant Waiver. The rights and obligations of Landlord and
Tenant on any taking of the Premises or any other portion of the Building are
governed exclusively by this Lease. Accordingly, Tenant hereby waives the
provisions of any law to the contrary, including California Code of Civil
Procedure Sections 1265.120 and 1265.130, or any similar successor statute.

        14. Insurance.


                                       15


<PAGE>   19
               14.1. Liability Insurance. Landlord, with respect to the
Building, and Tenant, at its cost and expense with respect to the Premises,
shall each maintain or cause to be maintained, from the Lease Date and
throughout the Term, a policy or policies of Commercial General Liability
insurance with limits of liability not less than Two Million Dollars
($2,000,000.00) per occurrence and in the aggregate. Each policy shall contain
coverage for blanket contractual liability, personal injury liability, and
premises operations, coverage deleting liquor liability exclusions and, as to
Tenant's insurance, fire legal liability. Landlord shall have the right to
approve the deductible under each policy of Tenant's liability insurance, such
approval not to be unreasonably withheld.

               14.2. Form of Policies. All insurance required by this Article 14
shall be issued on an occurrence basis by solvent companies qualified to do
business in the State of California, with a Best's rating of at least A and a
financial size category of at least Class X, as set forth in the most recent
edition of Best's. Any insurance required under this Article 14 may be
maintained under a "blanket policy", insuring other parties and other locations,
so long as the amount and coverage required to be provided hereunder is not
thereby diminished. Tenant shall provide Landlord a copy of each policy of
insurance or a certificate thereof certifying that the policies contain the
provisions required hereunder. Tenant shall deliver such policies or
certificates to Landlord within (30) days after the Lease Date, but in no event
less than ten (10) business days prior to the Commencement Date or such earlier
date as Tenant or Tenant's contractors, agents, licensees, invitees or employees
first enter the Premises and, upon renewal, not less than thirty (30) days prior
to the expiration of such coverage. All evidence of insurance provided to
Landlord shall provide (i) that Landlord, Landlord's managing agent and any
other person requested by Landlord who has an insurable interest, is designated
as an additional insured without limitation as to coverage afforded under such
policy; (ii) for severability of interests or that the acts or omissions of one
of the insureds or additional insureds shall not reduce or affect coverage
available to any other insured or additional insured; (iii) that the insurer
agrees not to cancel or reduce the coverage under the policy without at least
thirty (30) days prior written notice to all additional insureds; (iv) that the
aggregate liability applies solely to the Premises and the remainder of the
Building; and (v) that Tenant's insurance is primary and noncontributing with
any insurance carried by Landlord.

               14.3. Workers' Compensation Insurance. Tenant, at its sole cost
and expense, shall maintain Workers' Compensation insurance as required by law
and employer's liability insurance in an amount of not less than Five Hundred
Thousand Dollars ($500,000).

               14.4. Additional Tenant Insurance. Tenant, at its sole cost and
expense, shall maintain such other insurance as Landlord may reasonably require
from time to time, but in no event may Landlord require any other insurance
which is (i) not then being required of comparable tenants leasing comparable
amounts of space in comparable buildings in the vicinity of the Building or (ii)
not then available at commercially reasonable rates.

               14.5. Landlord's Casualty Insurance. Landlord shall, during the
Term of this Lease, procure and maintain in full force and effect, a policy or
policies of "all risk" insurance covering the Building and the permanent tenant
improvements in the Premises (including Alterations of which Landlord has
notice), with standard extended coverage, vandalism, malicious mischief and
sprinkler leakage endorsements. The amount and scope of coverage of Landlord's
insurance hereunder shall be determined by Landlord from time to time in its
reasonable discretion based on prudent risk management practices for buildings
comparable to the Building (but shall not be less than 90% of full replacement
value of the Building and Tenant's permanent tenant improvements in the Premises
(including Alterations of which Landlord has notice), and shall be subject to
such deductible amounts as Landlord may reasonably elect based on prudent risk
management practices for buildings comparable to the Building).


                                       16


<PAGE>   20
        15. Waiver of Subrogation Rights. Notwithstanding anything to the
contrary contained in this Lease, Landlord and Tenant, for themselves and their
respective insurers, agree to and do hereby release each other and their
respective employees, contractors, agents, assignees and subtenants, of and from
any and all claims, demands, actions and causes of action that each may have or
claim to have against the other for loss or damage to property, both real and
personal, notwithstanding that any such loss or damage may be due to or result
from the negligence of either of the parties hereto or their respective
employees, contractors, agents, assignees and subtenant, to the extent such
damage is due to a risk that is required to be insured hereunder. Each party
shall, to the extent such insurance endorsement is lawfully available at
commercially reasonable rates, obtain or cause to be obtained, for the benefit
of the other party, a waiver of any right of subrogation which the insurer of
such party may acquire against the other party by virtue of the payment of any
such loss covered by such insurance.

        16. Tenant's Waiver of Liability and Indemnification.

               16.1. Waiver and Release. Except to the extent due to the gross
negligence or willful misconduct of Landlord or its agents, employees or
contractors and Landlord's breach of its obligations hereunder, Landlord shall
not be liable to Tenant or Tenant's employees, agents, contractors, licenses or
invitees for, and Tenant waives and releases Landlord and Landlord's managing
agent from, all claims for loss or damage to any property or injury, illness or
death of any person in, upon or about the Premises and/or any other portion of
the Building (including claims caused in whole or in part by the act, omission,
or neglect of other tenants, contractors, licensees, invitees or other occupants
of the Building or their agents or employees). The waiver and release contained
in this Section 16.1 extends to the officers, directors, shareholders, partners,
employees, agents and representatives of Landlord.

               16.2. Indemnification of Landlord. Tenant shall indemnify,
defend, protect and hold Landlord harmless of and from any and all loss, liens,
liability, claims, causes of action, damage, injury, cost or expense arising out
of or in connection with (i) the making of any alterations, additions or other
improvements made by or Tenant or by its employees, contractors or agents during
the initial improvement of the Premises pursuant to the Work Letter or any
Alterations, or (ii) injury to or death of persons or damage to property
occurring or resulting directly or indirectly from: (A) the use or occupancy of,
or the conduct of business in, the Premises by Tenant or its subtenants or any
of their respective officers, directors, employees, agents, contractors,
invitees or licensees; (B) any other occurrence or condition in or on the
Premises; and (C) the negligence or willful ,misconduct of Tenant , its
subtenants or any of their respective officers, directors, employees, agents,
contractors, invitees or licensees, in or about any portion of the Building.
Tenant's indemnity obligation includes reasonable attorneys' fees and costs,
investigation costs and all other reasonable costs and expenses incurred by
Landlord. If Landlord disapproves the legal counsel proposed by Tenant for the
defense of any claim indemnified against hereunder, Landlord shall have the
right to appoint its own legal counsel, the reasonable fees, costs and expenses
of which shall be included as part of Tenant's indemnity obligation hereunder.
The indemnification contained in this Section 16.2 shall extend to the officers,
directors, shareholders, partners, employees, agents and representatives of
Landlord.

               16.3. Indemnification of Tenant. Notwithstanding anything to the
contrary herein, Landlord shall not be released or indemnified from and shall
indemnify, defend, protect and hold Tenant harmless of and from any and all
loss, liens, liability, claims, causes of action, damage, injury, cost or
expense arising out of or in connection with (i) any breach or default by
Landlord in the performance of any of its obligations under this Lease, (ii) the
negligence or willful misconduct of Landlord or its agents, employees or
contractors, or (iii) any loss or damage to property or injury to person
occurring in the public entrances, stairways, corridors, elevators and elevator
lobbies, and other public areas in the


                                       17


<PAGE>   21
Building or the other public areas in the Building (except for such loss, damage
or injury for which Tenant is obligated to indemnify Landlord under Section
16.2).

        17. Assignment and Subletting.

               17.1. Compliance Required. Tenant shall not, directly or
indirectly, voluntary or by operation of law, sell, assign or otherwise transfer
this Lease, or any interest herein (collectively, "assign" or "assignment"), or
sublet the Premises, or any part thereof, or permit the occupancy of the
Premises by any person other than Tenant (collectively, "sublease" or
"subletting", the assignee or sublessee under an assignment or sublease being
referred to as a "transferee"), without Landlord's prior consent given or
withheld in accordance with the express standards and conditions of this Article
17 and compliance with the other provisions of this Article 17. Any assignment
or subletting made in violation of this Article 17 shall be void. Tenant
acknowledges and agrees that the limitations on Tenant's right to sublet or
assign which are set forth in this Article 17 are reasonable and, in particular,
that the express standards and conditions upon Tenant's right to assign or
sublet which are set forth in this Article 17 are reasonable as of the Lease
Date.

               17.2. Request by Tenant; Landlord Response. If Tenant desires to
effect an assignment or sublease, Tenant shall submit to Landlord a request for
consent together with the identity of the parties to the transaction, the nature
of the transferee's proposed business use for the Premises, the proposed
documentation for and terms of the transaction, and all other information
reasonably requested by Landlord concerning the proposed transaction and the
parties involved therein, including certified financial information, credit
reports, the business background and references regarding the transferee, and an
opportunity to meet and interview the transferee. Within fifteen (15) days after
the later of such interview or the receipt of all such information required by
Landlord, or within fifteen (15) days after the date of Tenant's request to
Landlord if Landlord does not request additional information or an interview,
Landlord shall have the right, by notice to Tenant, to: (i) consent to the
assignment or sublease, subject to the terms of this Article 17; or (ii) decline
to consent to the assignment or sublease. Provided that the request for consent
and documentation is marked "LANDLORD'S RESPONSE IS REQUIRED WITHIN 15 DAYS OF
RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF THE LEASE BETWEEN LANDLORD AND
THE UNDERSIGNED" and the envelope containing the request is marked "PRIORITY",
Landlord's failure to respond within the fifteen-day period described in the
foregoing sentence shall constitute Landlord's consent to the proposed sublease
or assignment.

               17.3. Conditions for Landlord Approval. Landlord shall not
unreasonably withhold its consent to a proposed subletting or assignment by
Tenant. Without limiting the grounds on which it may be reasonable for Landlord
to withhold its consent to an assignment or sublease, Tenant agrees that
Landlord would be acting reasonably in withholding its consent in the following
instances: (i) if Tenant is in default under this Lease after applicable notice
and cure periods; (ii) if the transferee is a governmental or quasi-governmental
agency, foreign or domestic; (iii) if, in Landlord's sole but reasonably
judgment, the transferee's business, use and/or occupancy of the Premises would
(A) violate any of the terms of this Lease , or (B) require any Alterations
which would reduce the value of the existing leasehold improvements in the
Premises; (iv) if the financial condition of the transferee does not meet the
requirements that would be applied by Landlord for a tenant in the Building
under leases with comparable terms. If Landlord consents to an assignment or
sublease, the terms of such assignment or sublease transaction shall not be
modified without Landlord's prior written consent pursuant to this Article 17.
Landlord's consent to an assignment or subletting shall not be deemed consent to
any subsequent assignment or subletting.

               17.4. Costs and Expenses. As a condition to the effectiveness of
any assignment or


                                       18


<PAGE>   22
subletting under this Article 17, Tenant shall pay to Landlord all reasonable
costs and expenses, including reasonable attorneys' fees and disbursements,
incurred by Landlord in evaluating Tenant's requests for assignment or sublease,
whether or not Landlord consents to an assignment or sublease. Tenant shall pay
the processing fee with Tenant's request for Landlord's consent under Section
17.2.

               17.5. Payment of Excess Rent and Other Consideration. Tenant
shall also pay to Landlord, promptly upon Tenant's receipt thereof, fifty
percent (50%) of any and all rent, sums or other consideration, howsoever
denominated, realized by Tenant in connection with any assignment or sublease
transaction in excess of the Base Rent and Escalation Rent payable hereunder
(prorated to reflect the Rent allocable to the portion of the Premises if a
sublease), after first deducting, (i) in the case of an assignment, the
unamortized reasonable cost of Alterations paid for by Tenant and reasonable
attorney's fee and real estate commissions paid by Tenant in connection with
such assignment and, (ii) in the case of a sublease, the reasonable cost of
Alterations made to the Premises at Tenant's cost to effect the sublease, and
the reasonable attorney's fees and the amount of any real estate commissions
paid by Tenant, both amortized over the term of the sublease.

               17.6. Assumption of Obligations; Further Restrictions on
Subletting. Each assignee shall, concurrently with any assignment, assume all
obligations of Tenant under this Lease. Each sublease shall be made subject to
this Lease and all of the terms, covenants and conditions contained herein; and
the surrender of this Lease by Tenant, or a mutual cancellation thereof, or the
termination of this Lease in accordance with its terms, shall not work a merger
and shall, at the option of Landlord, terminate all or any existing subleases or
operate as an assignment to Landlord of any or all such subleases. No sublessee
of a sublessee shall have the right further to sublet more than one additional
time. Any assignment by a sublessee of its sublease shall be subject to
Landlord's prior consent in the same manner as a sublease by Tenant. No
sublease, once consented to by Landlord, shall be modified without Landlord's
prior consent. No assignment or sublease shall be binding on Landlord unless the
transferee delivers to Landlord a fully executed counterpart of the assignment
or sublease which contains the assumption by the assignee, or recognition by the
sublessee, of the provisions of this Section 17.6, in form and substance
satisfactory to Landlord, but the failure or refusal of a transferee to deliver
such instrument shall not release or discharge such transferee from the
provisions and obligations of this Section 17.6, but such failure shall
constitute a breach under this Lease by Tenant.

               17.7. No Release. No assignment or sublease shall release Tenant
from its obligations under this Lease, whether arising before or after the
assignment or sublease. The acceptance of Rent by Landlord from any other person
shall not be deemed a waiver by Landlord of any provision of this Article 17. On
a default by any assignee of Tenant in the performance of any of the terms,
covenants or conditions of this Lease, Landlord may proceed directly against
Tenant without the necessity of commencing or exhausting remedies against such
assignee. No consent by Landlord to any further assignments or sublettings of
this Lease, or any modification, amendment or termination of this Lease, or
extension, waiver or modification of payment or any other obligations under this
Lease, or any other action by Landlord with respect to any assignee or
sublessee, or the insolvency, or bankruptcy or default of any such assignee or
sublessee, shall affect the continuing liability of Tenant for its obligations
under this Lease and Tenant waives any defense arising out of or based thereon,
including any suretyship defense of exoneration. Landlord shall have no
obligation to notify Tenant or obtain Tenant's consent with respect to any of
the foregoing matters.

               17.8. No Encumbrance. Notwithstanding anything to the contrary
contained in this Article 17, Tenant shall have no right to encumber, pledge,
hypothecate or otherwise transfer this Lease, or any of Tenant's interest or
rights hereunder, as security for any obligation or liability of Tenant without
Landlord's prior written consent.


                                       19


<PAGE>   23
               17.9 Assignment or Sublease to Related Entity. As long as
Critical Path or a Related Entity (as defined herein) is the Tenant in
possession of the Premises and no default then exists beyond applicable notice
and cure periods, Tenant shall have the right, subject to the terms and
conditions set forth in this Sections 17.9 but not Section 17.5, without the
consent of Landlord, but without in any way releasing Critical Path from any of
its obligations under this Lease, to (a) assign its interest in this Lease to a
corporation or other entity which shall control, be under the control of, or be
under common control with Critical Path (the term "control" as used herein shall
be deemed to mean ownership of more than fifty percent (50%) of the outstanding
voting stock of a corporation, or other majority equity and control interest if
Tenant is not a corporation) or successor entity related to Tenant by merger,
consolidation or reorganization or a purchaser of substantially all of Tenant's
assets (any such entity being a "Related Entity"), or (b) sublease all or any
portion of the Premises to a Related Entity, so long as such sublease does not
result in the demising of any space in the Premises. Any assignment or sublease
to a Related Entity pursuant to this Section 17.9 shall be subject to the
following conditions: (i) the principal purpose of such assignment or sublease
is not the acquisition of Tenant?s interest in this Lease (except if such
assignment or sublease is made to a Related Entity and is made for a valid
intra-corporate business purpose and is not made to circumvent the provisions of
this Article 17), (ii) any such assignee shall have a net worth and annual
income and cash flow, determined in accordance with generally accepted
accounting principles, consistently applied, after giving effect to such
assignment, in amounts necessary to perform its duties, obligations and
liabilities hereunder, as reasonably determined by Landlord, (iii) such
assignment or sublease shall be subject to the terms of this Lease, including
the provisions of Sections 17.6 and 17.7, and (iv) such Related Entity shall
have executed all documents reasonably requested by Landlord to memorialize the
foregoing. Tenant shall, within ten (10) business days after execution thereof,
deliver to Landlord (A) a duplicate original instrument of assignment in form
and substance reasonably satisfactory to Landlord, duly executed by Tenant, (B)
if applicable, evidence reasonably satisfactory to Landlord establishing
compliance by the assignee with the net worth, income and cash flow requirements
of clause (b)(ii) above, (C) an instrument in form and substance reasonably
satisfactory to Landlord, duly executed by the assignee, in which such assignee
shall assume observance and performance of, and agree to be personally bound by,
all of the terms, covenants and conditions of this Lease on Tenant?s part to be
observed and performed or (D) a duplicate original sublease in form and
substance reasonably satisfactory to Landlord, duly executed by Tenant and
subtenant.

        18. Rules and Regulations. Tenant shall observe and comply, and shall
cause its sublessees, employees, agents, contractors, licensees and invitees to
observe and comply, with the Rules and Regulations of the Building, a copy of
which are attached to this Lease as Exhibit D, and, after notice thereof, with
all modifications and additions thereto from time to time promulgated in writing
by Landlord. Landlord shall not be responsible to Tenant, or Tenant's
sublessees, employees, agents, contractors, licensees or invitees, for
noncompliance with any Rules and Regulations of the Building by any other
tenant, sublessee, employee, agent, contractor, licensee, invitee or other
occupant of the Building. Tenant shall not be required to comply with any new
rule or regulation unless the same applies non-discriminatorily to all occupants
of the Building, does not unreasonably interfere with Tenant's use of the
Premises or Tenant's parking rights and does not materially increase the
obligations or decrease the rights of Tenant under the Lease

        19. Entry of Premises by Landlord.

               19.1. Right to Enter. Upon 24 hours advance notice to Tenant
(except in emergencies or in order to provide regularly scheduled or other
routine Building standard services or additional services requested by Tenant,
or post notices of nonresponsibility or other notices permitted or required by
law when no such notice shall be required), Landlord and its authorized agents,
employees, and contractors


                                       20


<PAGE>   24
may enter the Premises at reasonable hours to: (i) inspect the same; (ii)
determine Tenant's compliance with its obligations hereunder; (iii) exhibit the
same to prospective purchasers, lenders or tenants; (iv) supply any services to
be provided by Landlord hereunder; (v) post notices of nonresponsibility or
other notices permitted or required by law; (vi) make repairs, improvements or
alterations, or perform maintenance in or to, the Premises or any other portion
of the Building, including Building systems; and (vii) perform such other
functions as Landlord deems reasonably necessary or desirable. Landlord may also
grant access to the Premises to government or utility representatives and bring
and use on or about the Premises such equipment as reasonably necessary to
accomplish the purposes of Landlord's entry. Landlord shall use reasonable good
faith efforts to effect all entries and perform all work hereunder in such
manner as to minimize interference with Tenant's use and occupancy of the
Premises. Landlord shall have and retain keys with which to unlock all of the
doors in or to the Premises (excluding Tenant's vaults, safes and similar secure
areas designated in writing by Tenant in advance), and Landlord shall have the
right to use any and all means which Landlord may deem proper in an emergency in
order to obtain entry to the Premises, including secure areas. Any entry shall
comply with Tenant's reasonable security measures.

               19.2. Tenant Waiver of Claims. Except for damages to persons or
property caused by the gross negligence or willful misconduct of Landlord,
Tenant waives any claim for damages for any inconvenience to or interference
with Tenant's business, or any loss of occupancy or quiet enjoyment of the
Premises, or any other loss, occasioned by any entry effected or work performed
under this Article 19, and Tenant shall not be entitled to any abatement of Rent
by reason of the exercise of any such right of entry or performance of such
work. No entry to the Premises by Landlord or anyone acting under Landlord shall
constitute a forcible or unlawful entry into, or a detainer of, the Premises or
an eviction, actual or constructive, of Tenant from the Premises, or any portion
thereof.

        20. Default and Remedies.

               20.1. Events of Default. The occurrence of any of the following
events shall constitute a default by Tenant under this Lease:

                      a. Nonpayment of Rent. Failure to pay any Rent when due.

                      b. Unpermitted Assignment. An assignment or sublease made
in contravention of any of the provisions of Article 17 above.

                      c. Abandonment. Abandonment of the Premises for a
continuous period in excess of five (5) business days. For purposes hereof,
"abandonment" shall have the meaning provided under California law.

                      d. Other Obligations. Failure to perform or fulfill any
other obligation, covenant, condition or agreement under this Lease.

                      e. Bankruptcy and Insolvency. A general assignment by
Tenant for the benefit of creditors, any action or proceeding commenced by
Tenant under any insolvency or bankruptcy act or under any other statute or
regulation for protection from creditors, or any such action commenced against
Tenant and not discharged within thirty (30) days after the date of
commencement; the employment or appointment of a receiver or trustee to take
possession of all or substantially all of Tenant's assets or the Premises which
is not discharged within thirty (30) days; the attachment, execution or other
judicial seizure of all or substantially all of Tenant's assets or the Premises,
if such attachment or other seizure remains undismissed or undischarged for a
period of thirty (30) days after the levy thereof; the admission


                                       21


<PAGE>   25
by Tenant in writing of its inability to pay its debts as they become due; or
the filing by Tenant of a petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, the filing by Tenant of an answer
admitting or failing timely to contest a material allegation of a petition filed
against Tenant in any such proceeding or, if within thirty (30) days after the
commencement of any such proceeding against Tenant, such proceeding is not
dismissed. For purposes of this Section 20.1(e), "Tenant" means Tenant and any
partner of Tenant, if Tenant is a partnership, or any person or entity
comprising Tenant, if Tenant is comprised of more than one person or entity, or
any guarantor of Tenant's obligations, or any of them, under this Lease.

                      f. 530 Folsom Street. If, at any time that Landlord is
also the owner of the premises leased by Tenant under that certain Office Lease
of even date herewith for premises commonly known as 530 Folsom Street, San
Francisco (the "Folsom Lease"), Tenant is in default under the Folsom Lease,
beyond any applicable notice and cure period.

               20.2. Notice to Tenant. Upon the occurrence of any default,
Landlord shall give Tenant notice thereof. If a time period is specified below
for cure of such default, then Tenant may cure such default within such time
period.

                      a. Nonpayment of Rent. For failure to pay Rent, within
five (5) days after Landlord's notice, unless Tenant has failed more than two
(2) times during any calendar year to timely pay any Rent, in which event no
cure period shall apply.

                      b. Other Obligations. For failure to perform any
obligation, covenant, condition or agreement under this Lease (other than
nonpayment of Rent or Tenant's abandonment of the Premises) within ten (10) days
after Landlord's notice or, if the failure is of a nature requiring more than 10
days to cure, then an additional forty five (45) days after the expiration of
such 10-day period, but only if Tenant commences cure within such 10-day period
and thereafter diligently pursues such cure to completion within such additional
45-day period. If Tenant has failed to perform any such obligation, covenant,
condition or agreement more than two (2) times during any calendar year and
notice of such event of default has been given by Landlord in each instance,
then no cure period shall apply.

                      c. Assignment/Sublease. For an assignment or subletting in
violation of Article 17, within ten (10) days after Landlord's notice.

                      d. No Cure Period. No cure period shall apply for any
other event of default specified in Section 20.1.

               20.3. Remedies Upon Occurrence of Default. On the occurrence of a
default which Tenant fails to cure after notice and expiration of the time
period for cure, if any, specified in Section 20.2 above, Landlord shall have
the right either (i) to terminate this Lease and recover possession of the
Premises, or (ii) to continue this Lease in effect and enforce all Landlord's
rights and remedies under California Civil Code Section 1951.4 (by which
Landlord may recover Rent as it becomes due, subject to Tenant's right to assign
pursuant to Article 17). Landlord may store any property of Tenant located in
the Premises at Tenant's expense or otherwise dispose of such property in the
manner provided by law. If Landlord does not terminate this Lease, Tenant shall
in addition to continuing to pay all Rent when due, also pay Landlord's costs of
attempting to relet the Premises, any repairs and alterations necessary to
prepare the Premises for such reletting, and brokerage commissions and
attorneys' fees incurred in connection therewith, less the rents, if any,
actually received from such reletting. Notwithstanding Landlord's election to
continue this Lease in effect, Landlord may at any time thereafter


                                       22


<PAGE>   26
terminate this Lease pursuant to this Section 20.3.

               20.4. Damages Upon Termination. If and when Landlord terminates
this Lease pursuant to Section 20.3, Landlord may exercise all its rights and
remedies available under California Civil Code Section 1951.2, including the
right to recover from Tenant the worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such Rent loss that the Tenant proves could have been
reasonably avoided. As used herein and in Civil Code Section 1951.2, "time of
award" means either the date upon which Tenant pays to Landlord the amount
recoverable by Landlord, or the date of entry of any determination, order or
judgment of any court or other legally constituted body determining the amount
recoverable, whichever occurs first.

               20.5. Computation of Certain Rent for Purposes of Default. For
purposes of computing unpaid Rent pursuant to Section 20.4 above, Escalation
Rent for the balance of the Term shall be determined by averaging the amount
paid by Tenant as Escalation Rent for the calendar year prior to the year in
which the default occurred (or, if the prior year is the Base Year or such
default occurs during the Base Year, Escalation Rent shall be based on
Landlord's operating budget for the Building for the Base Year), increasing such
average amount for each calendar year (or portion thereof) remaining in the
balance of the Term at a per annum compounded rate equal to the mean average
rate of increase for the preceding five (5) calendar years in the United States
Department of Labor, Bureau of Labor Statistics, Consumer Price Index (All Urban
Consumers, All Items, 1982-1984 = 100) for the Metropolitan Area of which San
Francisco, California, is a part, and adding together the resulting amounts. If
such Index is discontinued or revised, such computation shall be made by
reference to the index designated as the successor or substitute index by the
United States Department of Labor, Bureau of Labor Statistics, or its successor
agency, and if none is designated, by a comparable index as determined by
Landlord in its sole discretion, which would likely achieve a comparable result
to that achieved by the use of the Consumer Price Index. If the base year of the
Consumer Price Index is changed, then the conversion factor specified by the
Bureau, or successor agency, shall be utilized to determine the Consumer Price
Index.


               20.6. Right to Cure Defaults. If Tenant fails to pay Rent (other
than Base Rent and Escalation Rent) required to be paid by it hereunder, or
fails to perform any other obligation under this Lease, and Tenant fails to cure
such default within the applicable cure period, if any, specified in Section
20.2 above, then Landlord may, without waiving any of Landlord's rights in
connection therewith or releasing Tenant from any of its obligations or such
default, make any such payment or perform such other obligation on behalf of
Tenant. All payments so made by Landlord, and all costs and expenses incurred by
Landlord to perform such obligations, shall be due and payable by Tenant as Rent
immediately upon receipt of Landlord's demand therefor. If Landlord fails to
make repairs to the Premises or perform any other obligations under this Lease
which Landlord is required to make pursuant to the terms of this Lease within
fifteen (15) days after written notice from Tenant (provided Landlord shall have
a longer time if reasonably necessary if Landlord commences cure within such
fifteen (15) day period and diligently prosecutes such cure to completion) and
such failure to repair materially and adversely affect Tenant's use of the
Premises, then Tenant shall give Landlord an additional three (3) business days
prior notice. If Landlord has not commenced repair within such three (3)
business day period, Tenant shall have the right to repair the Premises, and
Landlord shall reimburse Tenant for the reasonable cost thereof within thirty
(30) days after presentation of a reasonably detailed invoice demonstrating the
expenses incurred by Tenant. In the event Tenant makes such repairs, Tenant
shall be responsible for damages or injuries caused by Tenant or its employees,
contractors and subcontractors in making such repairs or any defect therein and
shall indemnify Landlord against any liability, cost or expense (including
attorneys' fees) arising out of such repair or any defect in the work performed.
If Landlord does not dispute Tenant's


                                       23


<PAGE>   27
right to reimbursement and fails to reimburse Tenant within such thirty (30) day
period, Tenant may deduct the cost of such cure from Rent.

               20.7. Remedies Cumulative. The rights and remedies of Landlord
under this Lease are cumulative and in addition to, and not in lieu of, any
other rights and remedies available to Landlord at law or in equity. Landlord's
pursuit of any such right or remedy shall not constitute a waiver or election of
remedies with respect to any other right or remedy.

        21. Subordination, Attornment and Nondisturbance.

               21.1. Subordination and Attornment. This Lease and all of
Tenant's rights hereunder shall be subordinate to any ground lease or underlying
lease, and the lien of any mortgage, deed of trust, or any other security
instrument now or hereafter affecting or encumbering the Building, or any part
thereof or interest therein, and to any and all advances made on the security
thereof or Landlord's interest therein, and to all renewals, modifications,
consolidations, replacements and extensions thereof (an "encumbrance", the
holder of the beneficial interest thereunder being referred to as an
"encumbrancer"). An encumbrancer may, however, subordinate its encumbrance to
this Lease, and if an encumbrancer so elects by notice to Tenant, this Lease
shall be deemed prior to such encumbrance. If any encumbrance to which this
Lease is subordinate is foreclosed, or a deed in lieu of foreclosure is given to
the encumbrancer thereunder, Tenant shall attorn to the purchaser at the
foreclosure sale or to the grantee under the deed in lieu of foreclosure; and if
any encumbrance consisting of a ground lease or underlying lease to which this
Lease is subordinate is terminated, Tenant shall attorn to the lessor thereof.
Tenant shall execute, acknowledge and deliver in the form reasonably requested
by Landlord or any encumbrancer, any documents required to evidence or
effectuate the subordination hereunder, or to make this Lease prior to the lien
of any encumbrance, or to evidence such attornment.

               21.2. Nondisturbance. If any encumbrance to which this Lease is
subordinate is foreclosed, or a deed in lieu of foreclosure is given to the
encumbrancer thereunder, or if any encumbrance consisting of a ground lease or
underlying lease to which this Lease is subordinate is terminated, this Lease
shall not terminate, and the rights and possession of Tenant under this Lease
shall not be disturbed if (i) no default by Tenant then exists under this Lease
(after expiration of applicable notice and cure periods); (ii) Tenant attorns to
the purchaser, grantee, or successor lessor as provided in Section 21.1 above
or, if requested, enters into a new lease for the balance of the Term upon the
same terms and provisions contained in this Lease; and (iii) Tenant enters into
a written agreement in a form reasonably acceptable to such encumbrancer with
respect to subordination, attornment and non-disturbance. Concurrent with the
execution of this Lease, Landlord shall use reasonable efforts to obtain a
non-disturbance agreement from the existing encumbrancer in a form reasonably
acceptable to Tenant. . If Tenant and the existing encumbrancer are not able to
agree upon a mutually acceptable non-disturbance agreement within fifteen (15)
days after the Lease Date, Tenant shall have the right to terminate the Lease
within three (3) business days after such fifteenth day.

        22. Sale or Transfer by Landlord; Lease Non-Recourse.

               22.1. Release of Landlord on Transfer. Landlord may at any time
transfer, in whole or in part, its right, title and interest under this Lease
and in the Building, or any portion thereof. If the original Landlord hereunder,
or any successor to such original Landlord, transfers (by sale, assignment or
otherwise) its right, title or interest in the Building and the transferee
assumes in writing all of landlord's obligations hereunder, all liabilities and
obligations of the original Landlord or such successor under this Lease accruing
after such transfer shall terminate, the original Landlord or such successor
shall automatically be released therefrom, and thereupon all such liabilities
and obligations shall be binding upon the new owner. Tenant shall attorn to each
such new owner.


                                       24


<PAGE>   28
               22.2. Lease Nonrecourse to Landlord. Landlord shall in no event
be personally liable under this Lease, and Tenant shall look solely to
Landlord's interest in the Building (including insurance and condemnation
proceeds, the Security Deposit and all proceeds thereof) of for recovery of any
damages for breach of this Lease by Landlord or on any judgment in connection
therewith. None of the persons or entities comprising or representing Landlord
(whether partners, shareholders, officers, directors, trustees, employees,
beneficiaries, agents or otherwise) shall ever be personally liable under this
Lease or liable for any such damages or judgment and Tenant shall have no right
to effect any levy of execution against any assets of such persons or entities
on account of any such liability or judgment. Any lien obtained by Tenant to
enforce any such judgment, and any levy of execution thereon, shall be subject
and subordinate to all encumbrances as specified in Article 21 above.

        23. Estoppel Certificate.

               23.1. Procedure and Content. From time to time, and within ten
(10) days after written notice by Landlord, Tenant shall execute, acknowledge,
and deliver to Landlord a certificate as specified by Landlord certifying: (i)
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that this Lease is in full force and effect, as modified,
and identifying each modification); (ii) the Commencement Date and Expiration
Date; (iii) that Tenant has accepted the Premises (or the reasons Tenant has not
accepted the Premises), and if Landlord has agreed to make any alterations or
improvements to the Premises, that Landlord has properly completed such
alterations or improvements (or the reasons why Landlord has not done so); (iv)
the amount of the Base Rent and current Escalation Rent, if any, and the date to
which such Rent has been paid; (v) that Tenant has not committed any event of
default, except as to any events of default specified in the certificate, and
whether there are any existing defenses against the enforcement of Tenant's
obligations under this Lease; (vi) that no default of Landlord is claimed by
Tenant, except as to any defaults specified in the certificate; and (vii) such
other matters as may be requested by Landlord.

               23.2. Effect of Certificate. Any such certificate may be relied
upon by any prospective purchaser of any part or interest in the Building or
encumbrancer (as defined in Section 21.1) and, at Landlord's request, Tenant
shall deliver such certificate to Landlord and/or to any such entity and shall
agree to such notice and cure provisions and such other matters as such entity
may reasonably require. In addition, at Landlord's request, Tenant shall provide
to Landlord for delivery to any such entity such information, including
financial information, that may reasonably be requested by any such entity. Any
such certificate shall constitute a waiver by Tenant of any claims Tenant may
have in contravention to the information contained in such certificate and
Tenant shall be estopped from asserting any such claim. If Tenant fails or
refuses to give a certificate hereunder within the time period herein specified,
then the information contained in such certificate as submitted by Landlord
shall be deemed correct for all purposes, but Landlord shall have the right to
treat such failure or refusal as a default by Tenant.

               23.2. Landlord's Estoppel If Tenant is required by an
unaffiliated third party to produce an estoppel certificate, Landlord shall,
within thirty (30) days after Tenant's request, execute and deliver to Tenant an
estoppel certificate in favor of Tenant and such other persons as Tenant shall
reasonably request, setting forth the following: (a) the Commencement Date and
the Expiration Date; (b) that this Lease is in full force and effect and has not
been assigned, modified, supplemented or amended (except by such writing as
shall be stated); (c) that all conditions under this Lease to be performed by
Tenant have, to Landlord's knowledge, been satisfied, or, in the alternative,
those claimed by Landlord to be unsatisfied; (d) that, to Landlord's knowledge,
no defenses or offsets exist against the enforcement of this Lease by Landlord,
or in the alternative, those claimed by Landlord; (e) that the amount of advance
Rent, if any (or none if such is the case), has been paid by Tenant; (f) the
date to which rent has been paid; and


                                       25


<PAGE>   29
(g) such other information as Tenant may reasonably request.

        24. No Light, Air, or View Easement. Nothing contained in this Lease
shall be deemed, either expressly or by implication, to create any easement for
light and air or access to any view. Any diminution or shutting off of light,
air or view to or from the Premises by any structure which now exists or which
may hereafter be erected, whether by Landlord or any other person, shall in no
way affect this Lease or Tenant's obligations hereunder, entitle Tenant to any
reduction of Rent, or impose any liability on Landlord.

        25. Holding Over. No holding over by Tenant shall operate to extend the
Term. If Tenant remains in possession of the Premises after expiration or
termination of this Lease, unless otherwise agreed by Landlord in writing, then
(i) Tenant shall become a tenant at sufferance upon all the applicable terms and
conditions of this Lease, except that Base Rent shall be increased to equal 150%
of the Base Rent then in effect; (ii) Tenant shall indemnify, defend, protect
and hold harmless Landlord, and any tenant to whom Landlord has leased all or
part of the Premises, from any and all liability, loss, damages, costs or
expense (including loss of Rent to Landlord or additional rent payable by such
tenant and reasonable attorneys' fees) suffered or incurred by either Landlord
or such tenant resulting from Tenant's failure timely to vacate the Premises;
and (iii) such holding over by Tenant shall constitute a default by Tenant.

        26. Security Deposit. If so specified in the Basic Lease Information,
Tenant shall deposit with Landlord the Security Deposit upon the execution of
this Lease by Tenant. The Security Deposit shall be held by Landlord as security
for the performance by Tenant of all its obligations under this Lease. If Tenant
fails to pay any Rent due hereunder, or otherwise commits a default (after
applicable notice and cure periods) with respect to any provision of this Lease,
Landlord may use, apply or retain all or any portion of the Security Deposit for
the payment of any such Rent or for the payment of any other amounts expended or
incurred by Landlord by reason of Tenant's default, or to compensate Landlord
for any loss or damage which Landlord may incur thereby (subject to the
provisions of California Civil Code Section 1950.7(c) and any similar or
successor statute providing that Landlord may claim from a security deposit only
those sums reasonably necessary to remedy defaults in the payment of Rent, to
repair damage caused by Tenant, or to clean the Premises). Exercise by Landlord
of its rights hereunder shall not constitute a waiver of, or relieve Tenant from
any liability for, any default. If Landlord so uses or applies all or any
portion of the Security Deposit, Tenant shall, within ten (10) days after demand
by Landlord, deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its full amount. If Tenant performs all of Tenant's
obligations hereunder, the Security Deposit, or so much thereof as has not
theretofore been applied by Landlord, shall be returned, without interest, to
Tenant (or, at Landlord's option, to the last assignee, if any, of Tenant's
interest under this Lease) within thirty (30) days after the later of (i) the
date of expiration or earlier termination of this Lease, or (ii) vacation of the
Premises by Tenant if the Premises has been left in the condition specified by
this Lease. Landlord's receipt and retention of the Security Deposit shall not
create any trust or fiduciary relationship between Landlord and Tenant and
Landlord need not keep the Security Deposit separate from its general accounts.
Subject to Section 22.1, upon termination of the original Landlord's (or any
successor owner's) interest in the Premises, the original Landlord (or such
successor) shall be released from further liability with respect to the Security
Deposit upon the original Landlord's (or such successor's) compliance with
California Civil Code Section 1950.7(d), or successor statute.

        27. Waiver. Failure of Landlord to declare a default by Tenant upon
occurrence thereof, or delay in taking any action in connection therewith, shall
not waive such default, but Landlord shall have the right to declare such
default at any time after its occurrence. To be effective, a waiver of any


                                       26


<PAGE>   30
provision of this Lease, or any default, shall be in writing and signed by the
waiving party. Any waiver hereunder shall not be deemed a waiver of subsequent
performance of any such provision or subsequent defaults. The subsequent
acceptance of Rent hereunder, or endorsement of any check by Landlord, shall not
be deemed to constitute an accord and satisfaction or a waiver of any preceding
default by Tenant, except as to the particular Rent so accepted, regardless of
Landlord's knowledge of the preceding default at the time of acceptance of the
Rent. No course of conduct between Landlord and Tenant, and no acceptance of the
keys to or possession of the Premises by Landlord before the Expiration Date
shall constitute a waiver of any provision of this Lease or of any default, or
operate as a surrender of this Lease.

        28. Notices and Consents; Tenant's Agent for Service. All notices,
approvals, consents, demands and other communications from one party to the
other given pursuant to this Lease shall be in writing and shall be made by
personal delivery, by use of a reputable overnight courier service or by deposit
in the United States mail, certified, registered or Express, postage prepaid and
return receipt requested. Notices shall be addressed if to Landlord, to
Landlord's Address, and if to Tenant, to Tenant's Address. Landlord and Tenant
may each change their respective Addresses from time to time by giving written
notice to the other of such change in accordance with the terms of this Article
28, at least ten (10) days before such change is to be effected. Any notice
given in accordance with this Article 28 shall be deemed to have been given (i)
on the date of personal delivery or (ii) on the earlier of the date of delivery
or attempted delivery (as shown by the return receipt or other delivery record)
if sent by courier service or mailed.

        29. Authority. Tenant represents and warrants that (i) Tenant is a duly
formed, authorized and existing corporation, (ii) Tenant is qualified to do
business in California, (iii) Tenant has the full right and authority to enter
into this Lease and to perform all of Tenant's obligations hereunder, and (iv)
each person signing on behalf of Tenant is authorized to do so. Tenant shall
deliver to Landlord, upon Landlord's request, such certificates, resolutions, or
other written assurances authorizing Tenant's execution and delivery of this
Lease, and such financial information regarding Tenant and its constituent
members, as requested by Landlord from time to time or at any time in order for
Landlord to assess Tenant's then authority and/or ability to meet its
obligations under this Lease. Landlord represents and warrants that (i) Landlord
is a duly formed, authorized and existing limited liability company (ii)
Landlord is qualified to do business in California, (iii) Landlord has the full
right and authority to enter into this Lease and to perform all of Landlord's
obligations hereunder, and (iv) each person signing on behalf of Landlord is
authorized to do so. Landlord shall deliver to Tenant, upon Landlord's request,
such certificates, resolutions, or other written assurances authorizing
Landlord's execution and delivery of this Lease.

        30. Automobile Parking. In consideration for the Base Rent paid
hereunder, Tenant shall have the right to occupy all of the parking stalls in
the Building during the Initial Term and any Extended Term at no additional
cost.

        31. Tenant to Furnish Financial Statements. In order to induce Landlord
to enter into this Lease, Tenant agrees that it shall promptly deliver to
Landlord, from time to time, upon Landlord's written request, publicly available
financial statements (including a balance sheet and statement of income and
expenses on an annualized basis) reflecting Tenant's then current financial
condition. Such statements shall be delivered to Landlord within fifteen (15)
days after Tenant's receipt of Landlord's request. Tenant represents and
warrants that all financial statements, records, and information furnished by
Tenant to Landlord in connection with this Lease are and shall be true, correct
and complete in all respects.

        32. Tenant's Signs. Tenant shall have the right to exclusive building
signage (including the exclusive right to utilize any billboard signage), but
Tenant shall not place on the Premises or on the


                                       27


<PAGE>   31
Building any exterior signs nor any interior signs that are visible from the
exterior of the Premises or Building without Landlord's prior consent, which
Landlord may withhold in its reasonable discretion. Landlord hereby consents to
the signage for the Building substantially similar to that on Tenant's existing
building located at 320 First Street in San Francisco. Tenant shall pay all
costs and expenses relating to any such sign approved by Landlord, including
without limitation, the cost of the installation and maintenance of the sign. On
the date of expiration or earlier termination of this Lease, Tenant, at its sole
cost and expense, shall remove all signs and repair any damage caused by such
removal. If Tenant elects to no longer utilize the billboard signage, Base Rent
payable to Landlord shall be reduced by $6,000 per month for the Initial Term
and any Extended Terms. Tenant shall have the right to terminate the rental of
the billboard signage upon one hundred eighty (180) days' written notice to
Landlord. If Tenant elects to terminate the rental of the billboard signage,
Landlord may rent the billboard signage to a third party, subject to the
reasonable approval of the Tenant. In no case shall Landlord lease any signage
on the Building to a competitor of Tenant.

        33. Miscellaneous.

               33.1. No Joint Venture. This Lease does not create any
partnership or joint venture or similar relationship between Landlord and
Tenant.

               33.2. Successors and Assigns. Subject to the provisions of
Article 17 regarding assignment, all of the provisions, terms, covenants and
conditions contained in this Lease shall bind, and inure to the benefit of, the
parties and their respective successors and assigns.

               33.3. Construction and Interpretation. The words "Landlord" and
"Tenant" include the plural as well as the singular. If there is more than one
person comprising Tenant, the obligations under this Lease imposed on Tenant are
joint and several. References to a party or parties refers to Landlord or
Tenant, or both, as the context may require. The captions preceding the
Articles, Sections and subsections of this Lease are inserted solely for
convenience of reference and shall have no effect upon, and shall be disregarded
in connection with, the construction and interpretation of this Lease. Use in
this Lease of the words "including", "such as", or words of similar import when
following a general matter, shall not be construed to limit such matter to the
enumerated items or matters whether or not language of nonlimitation (such as
"without limitation") is used with reference thereto. All provisions of this
Lease have been negotiated at arm's length between the parties and after advice
by counsel and other representatives chosen by each party and the parties are
fully informed with respect thereto. Therefore, this Lease shall not be
construed for or against either party by reason of the authorship or alleged
authorship of any provision hereof, or by reason of the status of the parties as
Landlord or Tenant, and the provisions of this Lease and the Exhibits hereto
shall be construed as a whole according to their common meaning in order to
effectuate the intent of the parties under the terms of this Lease.

               33.4. Severability. If any provision of this Lease, or the
application thereof to any person or circumstance, is determined to be illegal,
invalid or unenforceable, the remainder of this Lease, or its application to
persons or circumstances other than those as to which it is illegal, invalid or
unenforceable, shall not be affected thereby and shall remain in full force and
effect, unless enforcement of this Lease as so invalidated would be unreasonable
or grossly inequitable under the circumstances, or would frustrate the purposes
of this Lease.

               33.5. Entire Agreement; Amendments. This Lease, together with the
Exhibits hereto and any Addenda identified on the Basic Lease Information,
contains all the representations and the entire agreement between the parties
with respect to the subject matter hereof and any prior negotiations,
correspondence, memoranda, agreements, representations or warranties are
replaced in total by this


                                       28


<PAGE>   32
Lease, the Exhibits hereto and such Addenda. Neither Landlord nor Landlord's
agents have made any warranties or representations with respect to the Premises
or any other portion of the Building, except as expressly set forth in this
Lease. This Lease may be modified or amended only by an agreement in writing
signed by both parties.

               33.6. Governing Law. This Lease shall be governed by and
construed pursuant to the laws of the State of California.

               33.7. Litigation Expenses. If either party brings any action or
proceeding against the other (including any cross-complaint, counterclaim or
third party claim) to enforce or interpret this Lease or otherwise arising out
of this Lease, the prevailing party in such action or proceeding shall be
entitled to its costs and expenses of suit, including reasonable attorneys' fees
and accountants' fees.

               33.8. Standards of Performance and Approvals. Unless otherwise
provided in this Lease, (i) each party shall act in a reasonable manner in
exercising or undertaking its rights, duties and obligations under this Lease
and (ii) whenever approval, consent or satisfaction (collectively, an
"approval") is required of a party pursuant to this Lease or an Exhibit hereto,
such approval shall not be unreasonably withheld or delayed. Unless provision is
made for a specific time period, approval (or disapproval) shall be given within
thirty (30) days after receipt of the request for approval. Nothing contained in
this Lease shall, however, limit the right of a party to act or exercise its
business judgment in a subjective manner with respect to any matter as to which
it has been (A) specifically granted such right, (B) granted the right to act in
its sole discretion or sole judgment, or (C) granted the right to make a
subjective judgment hereunder, whether "objectively" reasonable under the
circumstances and any such exercise shall not be deemed inconsistent with any
covenant of good faith and fair dealing implied by law to be part of this Lease.
The parties have set forth in this Lease their entire understanding with respect
to the terms, covenants, conditions and standards pursuant to which their
obligations are to be judged and their performance measured, including the
provisions of Article 17 with respect to assignments and sublettings.

               33.9. Brokers. Landlord shall pay to Landlord's Broker and
Tenant's Broker, if any as specified in the Basic Lease Information of this
Lease, a commission in connection with such Brokers' negotiation of this Lease
pursuant to a separate agreement or agreements between Landlord and such
Brokers. Other than such Brokers, Landlord and Tenant each represent and warrant
to the other that no broker, agent, or finder has procured or was involved in
the negotiation of this Lease and no such broker, agent or finder is or may be
entitled to a commission or compensation in connection with this Lease. Landlord
and Tenant shall each indemnify, defend, protect and hold the other harmless
from and against any and all liability, loss, damages, claims, costs and
expenses (including reasonable attorneys' fees) resulting from claims that may
be asserted against the indemnified party in breach of the foregoing warranty
and representation.

               33.10. Memorandum of Lease. Either party shall, upon request of
the other, execute, acknowledge and deliver a short form memorandum of this
Lease (and any amendment hereto) in form suitable for recording. Tenant shall
have the right to record the memorandum and, if Tenant elects to do so, Tenant
shall pay all recording fees and transfer taxes in connection therewith. Upon
termination or expiration of the Lease, Tenant shall promptly execute and record
a quit claim deed or other instrument required to remove such memorandum from
the records of the San Francisco County Recorder's office.

               In no event shall this Lease be recorded by Tenant.

               33.11. Quiet Enjoyment. Upon paying the Rent and performing all
its obligations under


                                       29


<PAGE>   33
this Lease, Tenant may peacefully and quietly enjoy the Premises during the Term
as against all persons or entities claiming by or through Landlord, subject,
however, to the provisions of this Lease and any encumbrances as specified in
Article 21.

               33.12. Surrender of Premises. Upon the Expiration Date or earlier
termination of this Lease, Tenant shall quietly and peacefully surrender the
Premises to Landlord in the condition specified in Article 9 above. On or before
the Expiration Date or earlier termination of this Lease, Tenant shall remove
all of its personal property from the Premises and repair at its cost and
expense all damage to the Premises or Building caused by such removal. All
personal property of Tenant not removed hereunder shall be deemed, at Landlord's
option, to be abandoned by Tenant and Landlord may store such property in
Tenant's name at Tenant's expense and/or dispose of the same in any manner
permitted by law.

               33.13. Building Directory. INTENTIONALLY DELETED.

               33.14. Name of Building; Address. Tenant shall not use the name
of the Building for any purpose other than as the address of the business
conducted by Tenant in the Premises. Tenant shall, in connection with all
correspondence, mail or deliveries made to or from the Premises, use the
official Building address specified from time to time by Landlord.

               33.15 Year 2000 Compliance. The Premises, Building and Land shall
meet all Year 2000 compliance requirements and the cost of such compliance shall
be at Landlord's sole expense.

               33.16. Exhibits. The Exhibits specified in the Basic Lease
Information are by this reference made a part hereof.

               33.17. Time of the Essence. Time is of the essence of this Lease
and of the performance of each of the provisions contained in this Lease.

               33.18. Reasonable Expenditures Any expenditure by a party
permitted or required under the Lease, for which such party demands
reimbursement from the other party, shall be limited to the fair market value of
the goods and services involved, shall be reasonably incurred, and shall be
substantiated by documentary evidence available for inspection and review by the
other party.

               IN WITNESS WHEREOF, the parties have executed this Lease as of
the Lease Date.


LANDLORD:                               ECKER-FOLSOM PROPERTIES, LLC,
                                        a California limited liability company

                                        By:
                                           -------------------------------

                                             Its:
                                                 -------------------------

TENANT:                                 CRITICAL PATH, INC.,
                                        a California corporation


                                        By:
                                           -------------------------------


                                       30


<PAGE>   34
                                             Its:
                                                 -------------------------


                                        By:
                                           -------------------------------

                                             Its:
                                                 -------------------------


                                       31


<PAGE>   35
                                    EXHIBIT A

                             FLOOR PLANS OF PREMISES


<PAGE>   36
                                    EXHIBIT B

                            LEGAL DESCRIPTION OF LAND



<PAGE>   37
                                    EXHIBIT C

                          TENANT IMPROVEMENT AGREEMENT

        THIS TEN ANT IMPROVEMENT AGREEMENT ("Agreement") is made and entered
into by and between Landlord and Tenant as of the date of the Lease. This
Agreement shall be deemed a part of the Lease to which it is attached.
Capitalized terms which are used in this Agreement and defined in the Lease
shall have the meaning given in the Lease.

        1. General.

               1.1. The Parties' Respective Obligations. At Landlord's sole cost
and expense, in a good and workman like manner and in compliance with all
workplans and as-built plans approved by the City, Landlord shall construct the
Premises in "shell" condition which shall include only the work (the "Landlord's
Work") described on Schedule I attached to this Agreement and in those certain
plans prepared by Architecture Design Studio dated 10/5/99 (Delta 3 Set) Sheets
A0.1 through A10.2 and S-1 through S-21. At Tenant's sole cost and expense,
subject to the Construction Allowance described below, Landlord shall cause the
contractor (as defined below) to construct all initial leasehold improvements in
compliance with Final Plans (as defined below). The work which is to be
performed pursuant to Final Plans and this Agreement is referred to as the
"Tenant Improvements".

               1.2. Tenant Improvement Costs. The cost of performing the Tenant
Improvements, including without limitation the costs described in Section 6
below (collectively, the "Tenant Improvement Costs") shall be paid by Tenant in
the manner set forth in Section 5.

               1.3. Construction Allowance. In the manner provided in this
Section 5, Landlord shall provide an allowance for the Tenant Improvement Costs
in an amount equal to equal to Thirty and 00/100 Dollars ($30.00) multiplied by
the Rentable Area of the Premises (the "Construction Allowance"). If the cost of
Tenant Improvements is less than the Construction Allowance, Tenant shall be
entitled to a credit for any unused portion of the Construction Allowance in the
form of rent abatement of the rent first becoming due under the Lease.

        2. Approval of Plans for Tenant Improvements.

               2.1. Notification of Architect. Tenant hereby notifies Landlord
that it has engaged Richard Pollack & Associates having an address of 214 Grant
Street, San Francisco, California, who is licensed architect, as Tenant's
architect of record for the Tenant Improvements ("Architect"). Tenant's
Architect shall prepare plans for the Tenant Improvements and shall be retained
by Tenant for administrative services throughout the performance of Tenant
Improvements.

               2.2. Submittal of Plans.

                      2.2.1. Preliminary Plans. On or before March 15, 2000,
Tenant shall deliver to Landlord, for Landlord's review and approval,
"Preliminary Plans" which shall include the following: (i) floor plans; (ii)
preliminary architectural finish schedule; and (iii) sufficient detail showing
the location of electrical, mechanical and plumbing to permit pricing. Within
five (5) business days after Landlord's receipt of Preliminary Plans, Landlord
shall either approve or disapprove Preliminary Plans, which approval shall not
be unreasonably withheld. Failure by Landlord to respond within such five (5)
day period shall be conclusively deemed approval. If Landlord disapproves
Preliminary Plans, then Landlord shall state in reasonable detail the changes
which Landlord requires to be made thereto. Landlord hereby approves the


                                       1


<PAGE>   38
description of the Tenant Improvements attached as Schedule III hereto and shall
not withhold consent to the Preliminary Plans or the Final Plans to the extent
the same are consistent with such description and provided that the Tenant
Improvements as described therein will not materially adversely affect the
structure of the Building, the Building systems or the exterior of the Building
nor violate any Laws or Environmental Laws.

                      2.2.2. Preliminary Budget. Landlord shall retain a
third-party general contractor for the construction of the Tenant Improvements.
Tenant shall have the right to approve the fee for the general contractor and
the general conditions of the construction contract between Landlord and
Contractor for the construction of the Tenant Improvements, which approval shall
not be unreasonably withheld or delayed. Ten (10) days after approval by
Landlord and Tenant of Preliminary Plans, Contractor shall prepare a preliminary
budget for the Tenant Improvements based upon the approved Preliminary Plans,
which Contractor shall submit to Tenant for its review and approval. Within five
(5) days after Tenant's receipt of the preliminary budget, Tenant shall either
approve or disapprove the preliminary budget. If Tenant reasonably rejects such
preliminary budget, Tenant shall, within five (5) days of Tenant's delivery of a
written rejection notice to Landlord, require Architect to revise the
Preliminary Plans to reduce the cost of the Tenant Improvements. Following
Tenant's instructions to the Architect, Landlord and Tenant shall again follow
the procedures set forth in Section 2.2.1 and this Section 2.2.2 with respect to
the approval of the Preliminary Plans and to the submission and approval of the
preliminary budget from Contractor.

                      2.2.3. Final Plans. Within fifteen (15) business days
after Landlord and Tenant's approval of the preliminary budget for the Tenant
Improvements, Tenant shall cause the Architect to deliver to Landlord, for
Landlord's review and approval, complete plans, specifications and working
drawings which incorporate and are consistent with Preliminary Plans and the
preliminary budget, as previously approved by Landlord, and which show in detail
the intended design, construction and finishing of all portions of Tenant
Improvements, in sufficient detail for construction ("Final Plans"). Within ten
(10) business days after Landlord's receipt of Final Plans, Landlord shall
either approve or disapprove Final Plans, which approval shall not be
unreasonably withheld. If Landlord disapproves Final Plans, then Landlord shall
state in reasonable detail the changes which Landlord requires to be made
thereto. If Landlord disapproves the Final Plans, then Landlord shall state in
reasonable detail the changes which Landlord requires to be made thereto. Tenant
shall submit to Landlord revised Final Plans within five (5) business days after
Tenant's receipt of Landlord's disapproval notice. Following Landlord's receipt
of the revised Final Plans from Tenant, Landlord shall have the right to review
and approve the revised Final Plans pursuant to this Section 2.2.3. Landlord
shall give Tenant written notice of its approval or disapproval of the revised
Final Plans within five (5) business days after the date of Landlord's receipt
thereof. If Landlord reasonably disapproves the revised Final Plans, then the
following shall occur: (i) Landlord and Tenant shall continue to follow the
procedures set forth in this Section 2.2.3 until Landlord and Tenant reasonably
approve such Final Plans in accordance with this Section 2.2.3, and (ii) the
period between the date which is ten (10) business after Landlord's reasonable
disapproval (or such earlier date if Landlord approves or disapproves the first
revised Final Plans in a period less than the 5-business days provided Landlord
above) and the eventual mutual approval of such Final Plans shall constitute a
Tenant Delay.

               2.3. Landlord's Approval. Landlord's approval of any of Tenant's
plans, signs or materials samples shall not be valid unless such approval is in
writing and signed by Landlord, or otherwise deemed approved in accordance with
the provisions of Sections 2.2.1 and/or 2.2.3 of this Agreement. Landlord's
approval of any of Tenant's plans, including any preliminary draft or version
thereof, shall not be deemed to be a representation as to their completeness,
adequacy for Tenant's intended use of the Premises or compliance with applicable
law. Tenant shall pay to Landlord all reasonable costs incurred by Landlord's


                                       2


<PAGE>   39
architect in the review of Preliminary Plans and Final Plans.

        3. Construction Budget. Upon approval by Landlord and Tenant of the
Final Plans, Tenant shall propose preferred subcontractors to Landlord in
certain trades which Landlord shall reasonably approve and in all other trades
Landlord shall propose acceptable subcontractors to Tenant which Tenant shall
reasonably approve and from such lists Landlord shall instruct Contractor to
obtain competitive bids for the Tenant Improvements from at least three (3)
subcontractors for each of the major subtrades and to submit the same to
Landlord and Tenant for their review and approval. Landlord shall select the
lowest bid unless Tenant agrees otherwise. Upon selection of the subcontractors
and approval of the bids, Contractor shall prepare a cost estimate for the
Tenant Improvements described in such Final Plans, based upon the bids submitted
by the subcontractors selected. Contractor shall submit such cost estimate to
Landlord and Tenant for their review and approval. Within five (5) days after
their receipt of the cost estimate, Landlord and Tenant shall each either
approve or disapprove the cost estimate, which approval shall not be
unreasonably withheld. Tenant's failure to approve or disapprove the cost
estimate within such 5-day period shall constitute grounds for the assertion of
a Tenant Delay. Landlord or Tenant may each approve or reject such cost estimate
in their reasonable sole discretion. If either Landlord or Tenant rejects such
cost estimate, Landlord shall resolicit bids based on such Final Plans, in
accordance with the procedures specified above. Following any resolicitation of
bids by Landlord pursuant to this Section 3, Landlord and Tenant shall again
follow the procedures set forth in this Section 3 with respect to the submission
and reasonable approval of the cost estimate from Contractor; provided, however
that the period between Tenant's disapproval of the first revised cost estimate
and the eventual mutual approval of a cost estimate shall constitute a Tenant
Delay. Tenant shall have the right to revise the Final Plans to reduce the
Tenant Improvement Costs but the time required to do so and delays in the
construction schedule as a result thereof shall constitute a Tenant Delay.

        4. Landlord to Construct. The construction contract shall specify and
Landlord shall use best efforts to cause Contractor to construct the Tenant
Improvements in a good and workmanlike manner, in accordance with the approved
Final Plans and in compliance with all applicable Laws. Architect shall be
responsible for promptly obtaining all necessary building permits and approvals
and other authorizations from governmental agencies required in connection with
the Tenant Improvements. The cost of all such permits and approvals, including
inspection and other building fees required to obtain the permits for the Tenant
Improvements, shall be included as part of the Tenant Improvement Costs. Tenant
shall have the benefit of any warranties provided by Contractor, the
subcontractors and suppliers in connection with the Tenant Improvements.
Landlord shall diligently prosecute construction of Landlord's Work and the
Tenant Improvements to completion. Landlord, Tenant, Contractor and Architect
shall hold weekly meetings to discuss the status of the construction. Landlord
shall provide Tenant with current construction schedules, including the
estimated date of completion.

        5. Payment for Tenant Improvements. The Tenant Improvement Costs shall
be paid solely by Tenant as follows:

               5.1 Method of Payment. Landlord shall bear the Tenant Improvement
Costs up to the amount of the Construction Allowance; and Tenant shall be
responsible for paying any excess in the Tenant Improvement Costs over the
amount of such Construction Allowance. For the purposes of this Agreement, the
term "Tenant's Share of Tenant Improvement Costs" shall mean the entire amount
of all Tenant Improvement Costs, less the Construction Allowance provided by
Landlord.

                      5.1.1. Payment. Within twenty (20) days after Landlord's
receipt of reasonably satisfactory invoices for costs of labor and materials
incurred in connection with the Tenant Improvements, together with such
supporting documentation and lien waivers as Landlord may reasonably require in
order to review the costs covered by the billing, Landlord shall pay the Tenant
Improvement Costs represented by such invoices first coming due for payment, up
to an aggregate


                                       3


<PAGE>   40
amount equal to the Construction Allowance. As and when any amount of Tenant's
Share of Tenant Improvement Costs become due and payable, Tenant shall pay such
Tenant Improvement Costs to Landlord within fourteen (14) days after the date of
Tenant's receipt of Landlord's written request therefor, together with such
supporting documentation and lien waivers as Tenant may reasonably require in
order to review the costs covered by the billing. Any failure by Tenant to pay
any amount of Tenant's Share of Tenant Improvement Costs as and when required
under this Agreement shall constitute a default by Tenant under the Lease after
notice and applicable cure period provided under the Lease. Notwithstanding the
foregoing, Tenant may elect to have Landlord finance Tenant's Share of Tenant
Improvement Costs in an amount up to Five and 00/100 ($5.00) per square foot of
Rentable Area by amortizing the Tenant's Share of Tenant Improvement Costs over
the Initial Term at an interest rate of ten percent (10%) per annum. Tenant
shall make such election within five (5) days of the approval of the
construction budget pursuant to Sections 2 and 3 and within ten (10) days
following such election, Landlord and Tenant shall enter into an amendment to
the Lease providing for the increase in Base Rent.

                      5.1.2. Penalties. To the extent that any contractor or
subcontractor working on the Tenant Improvements imposes upon Landlord any
penalty or late charge due to Tenant's failure to pay to Landlord any amount due
under this Section 5.1 as and when such amount is due, Tenant shall be solely
responsible for paying such penalty or late charge; provided, however, that if
Tenant disputes the imposition of such penalty or late charge, Tenant shall not
be required to pay the penalty or late charge until the dispute has been settled
or otherwise resolved; provided further, that if any penalty or late charge is
imposed due to Tenant's exercise of its rights under this Section 5.1.3, Tenant
shall pay such penalty or late charge as provided in this Section 5.1.3.

               5.2 Extra Work. Tenant shall be solely responsible for any and
all costs and expenses arising from any improvements to or installations in the
Building desired by Tenant and approved by Landlord that are outside the scope
of the Final Plans.

        6. Tenant Improvement Costs. The Tenant Improvement Costs shall include
all reasonable costs incurred in connection with the Tenant Improvements, as
determined by Landlord in its reasonable discretion, including the following:

               6.1 All costs of space plans and other architectural and
engineering plans and specifications for the Tenant Improvements, including
engineering costs associated with completion of the State of California energy
utilization calculations under Title 24 legislation required in connection with
the Tenant Improvements; provided however that only Two and 50/100 Dollars
($2.50) per square foot of Rentable Area for such costs may be allocated to the
construction allowance and any costs in excess thereof shall be allocated to
Tenant's Share of Tenant's Improvement Costs.

               6.2 All costs of obtaining building permits and other necessary
authorizations from the City of San Francisco;

               6.3 All costs of interior design and finish schedule plans and
specifications, including as-built drawings by Architect;

               6.4 All direct and indirect costs of procuring, constructing and
installing the Tenant Improvements in the Premises, including, but not limited
to, the construction fee payable to the Contractor for overhead and profit, and
the cost of all on-site supervisory and administrative staff, office, equipment
and temporary services rendered by Contractor in connection with construction of
the Tenant


                                       4


<PAGE>   41
Improvements;

               6.5 All fees payable to Architect and Landlord's engineering firm
if they are required by Tenant to redesign any portion of the Tenant
Improvements following Tenant's approval of the Final Plans;

               6.6 All costs of installing an emergency power supply systems in
the Building for Tenant's computer rooms, including emergency HVAC;

Tenant Improvement Costs shall not include (and Tenant shall have no
responsibility for and the Construction Allowance shall not be used for) the
following: (a) cost incurred to remove Hazardous Materials from the Premises or
the surrounding areas existing prior to the Commencement Date; (b) attorneys'
fees incurred in connection with the negotiation of construction contracts and
attorneys' fees, experts' fees and other costs in connection with disputes with
third parties; (c) interest and other costs of financing construction costs; (d)
cost incurred as a consequence of delay (unless the delay is caused by Tenant),
construction defects or default by a contractor; (e) costs recoverable by
Landlord upon account of warranties and insurance; (f) restoration costs in
excess of insurance proceeds as a consequence of casualties; (g) penalties and
late charges attributable to Landlord's failure to pay construction costs; (h)
management or other general overhead costs incurred by Landlord except as
provided in the construction contract with the general contractor or pursuant to
Section 6.4; (i) costs to bring the Premises prior to delivery thereof into
compliance with all Laws in effect as of the Possession Date; (j) wages for
overtime except required by Tenant's Delay or Tenant's change orders: and (k)
constructions costs in excess of ten percent (10%) over the final construction
cost estimate.

        7. Change Requests. No revisions to the approved Final Plans shall be
made by either Landlord or Tenant unless approved in writing by both parties.
Landlord agrees to make all changes (i) required by any public agency to conform
with governmental regulations, or (ii) requested in writing by Tenant and
approved in writing by Landlord, which approval shall not be unreasonably
withheld. Any costs related to such changes shall be added to the Tenant
Improvement Costs and shall be paid for in accordance with Section 5. The
billing for such additional costs shall be accompanied by evidence of the
amounts billed as is customarily used in the business. Costs related to changes
shall include, without limitation, any architectural, structural engineering, or
design fees, and the Contractor's price for effecting the change. Any change
order which may extend the date of substantial completion of the Tenant
Improvements may be disapproved by Landlord unless Tenant agrees that for all
purposes under this Lease, the Tenant Improvements shall be deemed to have been
substantially completed on that date on which such Tenant Improvements would
have been substantially completed without giving effect to the change order in
question. All change orders shall specify any change in the cost estimate as a
consequence of the change order.

        8. Acceptance of Building. When Landlord's Work and Tenant Improvements
are complete Landlord shall deliver possession of the Premises to Tenant. As
used herein, "complete" shall mean the first business day following a weekend
after the date that all of the following have occurred: (i) Landlord shall
certify in writing that Contractor has substantially completed the Landlord's
Work and the Tenant Improvements, notwithstanding that minor details of
construction, mechanical adjustment or decorations which do not materially
interfere with Tenant's use of the Premises remain to be performed (such items
being normally referred to as "punch list" items); (ii) Landlord or Contractor
has obtained "signed-off" building permits and/or a temporary certificates of
occupancy permitting Tenant's occupancy of the Premises; (iii) all sanitary,
electrical, heating, ventilating and air conditioning systems of the Building
are operational; and (iv) access to the Building and parking areas are available
to the Tenant and Tenant's


                                       5


<PAGE>   42
invitees 24 hours per day and 365 days per year. Within thirty (30) days after
completion of the Tenant Improvements, Tenant shall conduct a walk-through
inspection of the Building with Landlord and complete a punch-list of items
needing additional work. Other than the items specified in the punch list, if
any, by taking possession of the Building, Tenant shall be deemed to have
accepted the Building in good, clean and completed condition and repair, subject
to all applicable laws, codes and ordinances, except for latent defects in
Landlord's Work discovered within six (6) months after the Possession Date. Any
damage to the Building caused by Tenant's move-in shall be repaired or corrected
by Tenant, at its sole cost and expense, which repair or corrective work shall
not be paid for out of any Construction Allowance. Tenant acknowledges that
neither Landlord nor Landlord's agents shall be deemed to have made any
representations or warranties as to the suitability or fitness of the Building
for the conduct of Tenant's business or for any other purpose, nor shall
Landlord or Landlord's agents be deemed to have agreed to undertake any
alterations or construct any improvements to the Building except as expressly
provided in the Lease, this Agreement. If Tenant fails to submit a punch-list to
Landlord within such 30-day period, it shall be deemed that there are no items
needing additional work or repair. Contractor shall complete all reasonable
punch-list items within thirty (30) days after the walk-through inspection or as
soon as practicable thereafter. Upon completion of such punch-list items, Tenant
shall approve such completed items in writing to Landlord. If Tenant fails to
approve such items within fourteen (14) days of completion, such items shall be
deemed approved by Tenant. Nothing contained in this Section 9 shall limit,
restrict, or terminate any right of Landlord or Tenant to make any claim against
Contractor based upon the condition of the Building or any and all of
Contractor's warranties (express and implied) with respect to the Building.
Landlord shall use reasonable efforts to obtain a final certificate of occupancy
for the Premises within ninety (90) days after the issuance of the temporary
certificate of occupancy.


                        [SIGNATURES FOLLOW ON NEXT PAGE]


                                       6


<PAGE>   43
               IN WITNESS WHEREOF, Landlord and Tenant have each caused their
duly authorized representatives to execute this Agreement on their respective
behalf as of the day and year first above written.


LANDLORD:                               ECKER-FOLSOM PROPERTIES, LLC,
                                        a California limited liability company

                                        By:
                                           -------------------------------

                                             Its:
                                                 -------------------------

TENANT:                                 CRITICAL PATH, INC.,
                                        a California corporation


                                        By:
                                           -------------------------------

                                             Its:
                                                 -------------------------


                                       7


<PAGE>   44
                   SCHEDULE 1 TO TENANT IMPROVEMENT AGREEMENT

                                 LANDLORD'S WORK

                           CORE AND SHELL DESCRIPTION
               (DESCRIPTION OF THE BUILDING, SYSTEMS AND FINISHES)
                            REVISED DECEMBER 13, 1999



                                      STEEL

                                    STRUCTURE


        The purpose of this Exhibit is to define general and specific parameters
        of architectural and engineering design practice to be employed by
        Landlord to the benefit of Tenant.

                                    BUILDING

                1.      Landlord shall cause the building to be designed,
                        engineered and constructed.

                2.      Details of architecture shall be in substantial
                        conformance with details of design as demonstrated by
                        Landlord's building plans dated 10/5/99 (Delta 3 Set)
                        Sheets A0.1 through A10.2 and S-1 through S-21.

                3.      All areas of the Premises (as defined within the Lease)
                        and all common areas shall be fully permitted by
                        Landlord and shall be in compliance with the most recent
                        version of all local, state and federal building codes
                        and regulations including the Americans with
                        Disabilities Act, necessary for occupancy.

                4.      At time of delivery, Landlord shall provide all areas
                        within the Premises in broom clean condition and all
                        systems serving the Premises or within the Premises
                        shall be in good working order.

                5.      Landlord shall be responsible for the improvement within
                        the building's main lobby including finished floor,
                        painted smooth drywall finish, ceiling and lighting
                        treatments, all subject to the reasonable approval of
                        Tenant.

                6.      All perimeter gypsum board details/treatment taped and
                        mudded, including all areas above and below perimeter
                        glazing, at soffits, columns, etc.


                                       8


<PAGE>   45
                                    STRUCTURE

                1.      The design of the building shall integrate all current
                        codes, regulations and utilize the highest level of
                        engineering practice.

                2.      The floors of the Premises shall be finished in
                        accordance with the mutually approved plans and
                        specifications for the building.

                3.      Landlord shall provide finished gypcrete floors. The
                        floors shall be ready to accept Tenant's carpeting
                        and/or hard surface floor covering without further
                        treatment.

                4.      Floor flatness within the Premises shall be within a
                        tolerance of 5/16 of an inch in ten feet.

                5.      Tenant's space shall be designed to accommodate a
                        combined live weight load of no less than 70 lbs per
                        square foot and dead load of 35lbs per square foot and
                        shall be designed to minimize vibration caused by people
                        movement.

                                      ROOF

                1.      The design of the roof structure shall incorporate
                        accommodations for all equipment to be located upon the
                        roof.

                2.      At a minimum the roof shall have a minimum 10-year
                        warranty.


                                  BUILDING CORE

                1.      The building structure shall be constructed with
                        sufficient provisions for thermal insulation, acoustic
                        control and vibration isolation to limit noise and
                        structural vibration transmission generated from
                        building equipment.

                2.      Noise levels found in all occupied office space within
                        the Premises created or dispersed by equipment and
                        ductwork shall be measured in all eight (8) octave
                        bands.

                3.      The maximum acceptable noise levels relating
                        specifically to noise generated from the HVAC system,
                        elevators and toilet rooms shall conform to the
                        following.

                        a.      Adjacent to the building core and extending out
                                a distance of 10 feet NC 35.

                        b.      Lobbies, toilets, commercial area NC 40

                        c.      Perimeter offices NC 35 d. Adjacent to roof
                                penetrations and HVAC supply NC 35

                                  TOILET ROOMS

                1.      Women's and men's toilet rooms, within the Premises,
                        shall be in compliance with all code requirements and
                        law and recommendations for size and quantity including
                        the Americans with Disabilities Act.

                2.      Each toilet room shall be consistent with details of
                        design and finish


                                       9


<PAGE>   46
                        developed by Landlord's architect and mutually approved
                        by Tenant and Landlord including details and methods of
                        installation.

                3.      The minimum level of design and finish shall not be less
                        than the following. - Water (hot at 110 degrees and
                        cold) shall be provided for all rest rooms.

                        -       Lavatory counters shall have high quality tops
                                with bull nose leading edges.

                        -       Recessed lavatories with splashes.

                        -       All vertical walls shall be finished with full
                                height ceramic tile.

                        -       Floors shall be finished with ceramic tile.

                        -       The ceilings shall be painted, water proof
                                drywall.

                        -       Metal toilet partitions shall be ceiling mounted
                                with concealed latch and coat hooks.

                        -       Urinal partitions shall be wall mounted.

                        -       Toilets and urinals shall be wall mounted in all
                                rest rooms.

                5.      Notwithstanding the foregoing, Tenant shall have the
                        right to review and approve the finishes in the toilet
                        rooms.


                             TENANT PLUMBING SYSTEM

                1.      One point of access to domestic cold and hot water,
                        sanitary waste and vent for Tenant's distribution shall
                        be provided on each floor to allow for Tenant's coffee
                        bars and service kitchens.


                                   HVAC SYSTEM

                1.      Landlord shall provide and operate a first class quality
                        Heating, Ventilating and Air Conditioning System with
                        service available on a year round basis in all occupied
                        areas of each of the buildings.

                2.      The systems shall include controls that can monitor and
                        manage each zone and can be centrally located for
                        climate management.

                3.      The systems shall have sufficient cooling and heating
                        capacity to maintain an average inside temperature of
                        72f +/- 2 FDB during summer and 68 FDB during winter
                        based on 99% ASHRAE standards for minimum / maximum
                        exterior temperature and humidity.

                4.      Internal heat loads for the building shall be calculated
                        and generated by occupancy levels of one person per 140
                        useable sq. ft., lighting load of 1.5 watts/sq. ft., and
                        miscellaneous power loads equivalent to a heat output of
                        8.5 watts per useable square foot.

                5.      Outdoor air ventilation shall be consistent with ASHRAE
                        Standard 62-1989. The building shall employ a variable
                        volume fan system.

                6.      Landlord shall make available condenser water for
                        Tenant's supplemental cooling requirements.

                7.      The supplemental cooling capability shall be 20 tons per
                        floor and shall be designed into the building cooling
                        system.


                                       10


<PAGE>   47
                8.      The exact type of system(s), water cooled VAV or air
                        cooled roof mounted package units, and related
                        requirements shall be mutually agreed upon.

                9.      Landlord has provided a description of acceptable HVAC
                        systems which is dated _____ and is authored by _____,
                        PE (Exhibit _____).

                10.     The HVAC system(s) includes the completed primary
                        pneumatic trunks within the Premises of each floor,
                        ventilation make-up air systems, toilet exhaust systems
                        and direct digital controls for primary systems and an
                        energy management system, including HVAC and lighting
                        control.

                11.     The energy management system shall be capable of
                        allowing Tenant to request floor by floor after hours
                        HVAC

                12.     Landlord's HVAC system shall be designed to accommodate
                        the general exhaust requirements related to performing
                        general business services.


                           ELECTRICAL AND POWER SYSTEM

                1.      Landlord shall provide the main power service from
                        multiple sub stations, if available, from utility
                        provider to the entry point of each building and to
                        Tenant distribution panels which shall be at 277/480
                        volts, three-phase, four wire from multiple feeds
                        located in a vault(s) within each of the buildings.

                2.      277/480 volt power is to be delivered by Landlord to
                        lighting panels and 120/208 volt transformers (K-rated)
                        and panels for Tenant power distribution.

                3.      Each tenant floor shall be provided with 277/480 volt
                        lighting panels and 120/208 volt power panels sufficient
                        to provide the following connected capacities:

                        -       Distributable power for lighting at a minimum of
                                1.5 watts per rentable square foot of the
                                Premises or as permitted by the local energy
                                code.

                        -       Distributable 120/208 volt power at 8.5 watts of
                                connected power per rentable square foot of the
                                Premises and an additional 3 watts per rentable
                                square foot of capacity for use by Tenant.

                4.      Landlord shall provide emergency power to operate
                        lighting and fire and life safety systems as required by
                        code.


                          FIRE AND LIFE SAFETY SYSTEMS

                1.      Base building fire and life safety systems shall meet
                        all local codes and regulations and all requirements of
                        California State Title 24, the Americans with
                        Disabilities Act and shall be capable of being extended
                        beyond the core or the Premises with adequate capacity
                        to accommodate Tenant's improvements.

                2.      Fire alarm pull stations and fire extinguishers only as
                        required by code shall be at each stairwell entry along
                        with fire alarm pulls, strobes, exit


                                       11


<PAGE>   48
                        signs, as required by code at each elevator lobby.

                3.      The shell and core building improvements shall include a
                        fire sprinkler system, main loop, and lateral runs.
                        Tenant to pay for relocated or added heads.


                                 ACCESS SYSTEMS

                1.      The building shall have a fully operable security
                        system, with card readers at all points of entry.

                2.      Landlord shall provide adequate card access devices to
                        Tenant's employees.

                3.      All building security equipment shall be separate from
                        Tenant's security system(s).


                             COMMUNICATION SYSTEM(S)

                1.      A main telephone terminal room within the building
                        garage, shall be provided by Landlord with multiple
                        feeder ducts and service from the telephone company(s).

                2.      Conduits shall be provided by Landlord from this
                        terminal room to the main telephone risers and conduits
                        that services Tenant's premises.

                3.      Fire resistant plywood telephone backboards shall be
                        provided for each building in the telephone room.

                4.      Fire sealed floor openings shall be provided in the
                        telephone room on each floor for additional risers,
                        conduits and cables.

                5.      Vertical and horizontal shaft and raceway space shall be
                        provided and identified, for the exclusive use of Tenant
                        within the core.

                6.      Landlord shall provide conduit raceway for
                        building-to-building connections for data and
                        telecommunications and security transmission and to the
                        point of utility demarcation to accommodate requirements
                        for Tenant's private telephone, electrical, data,
                        security and CTV systems.


                                    ELEVATORS


                1.      Elevator cab shall be equipped with security code push
                        button access and will have 2,500 lb. capacity at 125
                        feet per minute.

                2.      All elevator cabs shall be in compliance with all codes
                        and regulations including the Americans with
                        Disabilities Act.

                3.      This elevator shall provide access to all floors of
                        Tenant's Premises, the building, the garage, and other
                        equipment levels of the Building (excluding the roof).


                                       12


<PAGE>   49
                                    EXHIBIT D

                              RULES AND REGULATIONS

        No rules and regulations exist at this time. Landlord reserves the right
to promulgate rules and regulations at a future date in accordance with the
terms of the Lease.


<PAGE>   50
                                    EXHIBIT E

                           CONFIRMATION OF LEASE TERM

LANDLORD:             ECKER-FOLSOM PROPERTIES, LLC

TENANT:               CRITICAL PATH, INC.

LEASE DATE:           December _______, 1999

PREMISES:             33 Clementina Street, San Francisco, California


Pursuant to Section 3 of the above referenced Lease, the Commencement Date as
defined in Section 3 shall be _________________________.


LANDLORD:                               ECKER-FOLSOM PROPERTIES, LLC,
                                        a California limited liability company

                                        By:
                                           -------------------------------

                                             Its:
                                                 -------------------------

TENANT:                                 CRITICAL PATH, INC.,
                                        a California corporation


                                        By:
                                           -------------------------------

                                             Its:
                                                 -------------------------


<PAGE>   51
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                           PAGE
<S>                                                                                        <C>
1.  Definitions                                                                              1

   1.1.  Terms Defined                                                                       1

2.  Lease of Premises                                                                        3

3.  Term; Condition and Acceptance of Premises                                               3

4.  Rent                                                                                     6

   4.1.  Obligation to Pay Base Rent                                                         6

   4.2.  Manner of Rent Payment                                                              6

   4.3.  Additional Rent                                                                     6

   4.4.  Late Payment of Rent; Interest                                                      6

5.  Calculation and Payments of Escalation Rent                                              6

   5.1.  Payment of Estimated Escalation Rent                                                6

   5.2.  Escalation Rent Statement and Adjustment                                            7

   5.3.  Proration for Partial Year                                                          7

   5.4.  Tenant's Right to Contest Taxes                                                     7

6.  Impositions Payable by Tenant                                                            8

7.  Use of Premises                                                                          8

   7.1.  Permitted Use                                                                       8

   7.2.  No Violation of Legal and Insurance Requirements                                    8

   7.3.  Compliance with Legal, Insurance and Life Safety Requirements                       8

   7.4.  No Nuisance                                                                         9

   7.5.  Hazardous Substances                                                                9

   7.6.  Special Provisions Relating to The Americans With Disabilities Act of 1990         10

     7.6.1.  Allocation of Responsibility to Landlord                                       10

     7.6.2.  Allocation of Responsibility to Tenant                                         11

     7.6.3.  General                                                                        11

8.  Building Services                                                                       11

   8.1.  Maintenance of Building                                                            11

   8.2.  Building Standard Services                                                         12

   8.3.  Interruption or Unavailability of Services                                         12

   8.4.  Tenant's Payment of Utilities                                                      12

9.  Maintenance of Premises                                                                 12

10.  Alterations to Premises                                                                13

   10.1.  Landlord Consent; Procedure                                                       13

   10.2.  General Requirements                                                              13

   10.3.  Removal of Alterations                                                            13

11.  Liens                                                                                  13

12.  Damage or Destruction                                                                  13

   12.1.  Obligation to Repair                                                              13

   12.2.  Termination Rights                                                                14

   12.3.  Cost of Repairs                                                                   14

   12.4.  Damage at End of Term                                                             14

   12.5.  Waiver of Statutes                                                                14

13.  Eminent Domain                                                                         15

   13.1.  Effect of Taking                                                                  15

   13.2.  Condemnation Proceeds                                                             15

   13.3.  Restoration of Premises                                                           15

   13.5.  Tenant Waiver                                                                     15

14.  Insurance                                                                              15
</TABLE>


<PAGE>   52

<TABLE>
<S>                                                                                        <C>
   14.1.  Liability Insurance                                                               16

   14.2.  Form of Policies                                                                  16

     14.3.  Workers' Compensation Insurance                                                 16

     14.4.  Additional Tenant Insurance                                                     16

15.  Waiver of Subrogation Rights                                                           17

16.  Tenant's Waiver of Liability and Indemnification                                       17

   16.1.  Waiver and Release                                                                17

   16.2.  Indemnification of Landlord                                                       17

     16.3.  Indemnification of Tenant                                                       17

17.  Assignment and Subletting                                                              18

   17.1.  Compliance Required                                                               18

   17.2.  Request by Tenant; Landlord Response                                              18

   17.3.  Conditions for Landlord Approval                                                  18

   17.4.  Costs and Expenses                                                                18

   17.5.  Payment of Excess Rent and Other Consideration                                    19

   17.6.  Assumption of Obligations; Further Restrictions on Subletting                     19

   17.7.  No Release                                                                        19

   17.8.  No Encumbrance                                                                    19

18.  Rules and Regulations                                                                  20

19.  Entry of Premises by Landlord                                                          20

   19.1.  Right to Enter                                                                    20

   19.2.  Tenant Waiver of Claims                                                           21

20.  Default and Remedies                                                                   21

   20.1.  Events of Default                                                                 21

   20.2.  Notice to Tenant                                                                  22

   20.3.  Remedies Upon Occurrence of Default                                               22

   20.4.  Damages Upon Termination                                                          23

   20.5.  Computation of Certain Rent for Purposes of Default                               23

   20.6.  Right to Cure Defaults                                                            23

   20.7.  Remedies Cumulative                                                               24

21.  Subordination, Attornment and Nondisturbance                                           24

   21.1.  Subordination and Attornment                                                      24

   21.2.  Nondisturbance                                                                    24

22.  Sale or Transfer by Landlord; Lease Non-Recourse                                       24

   22.1.  Release of Landlord on Transfer                                                   24

   22.2.  Lease Nonrecourse to Landlord                                                     25

23.  Estoppel Certificate                                                                   25

   23.1.  Procedure and Content                                                             25

   23.2.  Effect of Certificate                                                             25

   23.2. Landlord's Estoppel                                                                25

24.  No Light, Air, or View Easement                                                        26

25.  Holding Over                                                                           26

26.  Security Deposit                                                                       26

27.  Waiver                                                                                 26

28.  Notices and Consents; Tenant's Agent for Service                                       27

29. Authority                                                                               27

30.  Automobile Parking                                                                     27

31.  Tenant to Furnish Financial Statements                                                 27

32.  Tenant's Signs                                                                         27

33.  Miscellaneous                                                                          28
</TABLE>


<PAGE>   53

<TABLE>
<S>                                                                                        <C>
   33.1.  No Joint Venture                                                                  28

   33.2.  Successors and Assigns                                                            28

   33.3.  Construction and Interpretation                                                   28

   33.4.  Severability                                                                      28

   33.5.  Entire Agreement; Amendments                                                      28

   33.6.  Governing Law                                                                     29

   33.7.  Litigation Expenses                                                               29

   33.8.  Standards of Performance and Approvals                                            29

   33.9.  Brokers                                                                           29

   33.10.  Memorandum of Lease                                                              29

   33.11.  Quiet Enjoyment                                                                  29

   33.12.  Surrender of Premises                                                            30

   33.13.  Building Directory                                                               30

   33.14.  Name of Building; Address                                                        30

   33.16.  Exhibits                                                                         30

   33.17.  Time of the Essence                                                              30

   33.18.  Reasonable Expenditures                                                          30
</TABLE>