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                                                                    Exhibit 10.7

                                LEASE AGREEMENT           BLDG: Westport 12
                                                          OWNER: 90
                                                          PROP:  912
                                                          UNIT:  200
                                                          TENANT: 91201

     THIS LEASE, made this 16th day of March, 1999 between WESTPORT JOINT
VENTURE, a California general partnership, hereinafter called Landlord, and
SABA SOFTWARE, INCORPORATED, a Delaware corporation, hereinafter called Tenant.

                                  WITNESSETH:

     Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the "Premises") outlined in red on Exhibit
"A", attached hereto and incorporated herein by this reference thereto more
particularly described as follows:

Subject to Paragraph 54, for the period beginning on May 1,1999 through November
30, 2000, Premises shall mean the second floor and related Common Area on the
first floor (for a total square footage of 25, 884+ square feet) of that certain
48,384 +/- square foot, two-story building located at 2400 Bridge Parkway,
Redwood City, California 94065 as shown in Red on Exhibit B attached hereto (the
"Initial Leased Premises"); beginning December 1, 2000 through April 30, 2001,
the Premises shall be increased to approximately 36,000+ square feet; and
beginning May 1, 2001, Premises shall mean one hundred percent of the Building,
with the total additional 22,500+/- square feet (the "Must Take Space") shown in
Blue on Exhibit B attached hereto. Said Premises is more particularly shown
within the area outlined in Red and Blue on Exhibit A attached hereto. The
entire parcel, of which the Premises is a part, is shown within the area
outlined in Green on Exhibit A attached. The Initial Leased Premises shall be
improved by Landlord as shown on Exhibit B, and is leased in the configuration
as shown in Red on Exhibit B attached hereto. The Must Take Space shall be
improved pursuant to Lease Paragraph 54.

As used herein the Complex shall mean and include all of the land outlined in
Green and described in Exhibit "A", attached hereto, and all of the buildings,
common area private roads within the Complex, improvements, fixtures and
equipment now or hereafter situated on said land.

     Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions. This Lease is made upon the conditions of such
performance and observance.

1.  USE  Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of general
office, light manufacturing, research and development, and storage and other
uses necessary for Tenant to conduct Tenant's business, provided that such uses
shall be in accordance with all applicable governmental laws and ordinances and
for no other purpose. Tenant shall not do or permit to be done in or about the
Premises or the Complex nor bring or keep or permit to be brought or kept in or
about the Premises or the Complex anything which is prohibited by or will in any
way increase the existing rate of (or otherwise affect) fire or any insurance
covering the Complex or any part thereof, or any of its contents, or will cause
a cancellation of any insurance covering the Complex or any part thereof, or any
of its contents. Tenant shall not do or permit to be done anything in, on or
about the Premises or the Complex which will in any way obstruct or interfere
with the rights of other tenants or occupants of the Complex or injure or
unreasonably annoy them, or use or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises or the Complex. No
sale by auction shall be permitted on the Premises. Tenant shall not place any
loads upon the floors, walls, or ceiling, which endanger the structure, or place
any harmful fluids or other materials in the drainage system of the building, or
overload existing electrical or other mechanical systems. No waste materials or
refuse shall be dumped upon or permitted to remain upon any part of the Premises
or outside of the building in which the Premises are a part, except in trash
containers placed inside exterior enclosures designated by Landlord for that
purpose or inside of the building proper where designated by Landlord. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
outside the Premises or on any portion of common area of the Complex. No
loudspeaker or other device, system or apparatus which can be heard outside the
Premises shall be used in or at the Premises without the prior written consent
of Landlord. Tenant shall not commit or suffer to be committed any waste in or
upon the Premises. Tenant shall indemnify, defend and hold Landlord harmless
against any loss, expense, damage, attorney's fees, or liability arising out of
failure of Tenant to comply with any applicable law. Tenant shall comply with
any covenant, condition, or restriction ("CC&R's") affecting the Premises. The
provisions of this paragraph are for the benefit of Landlord only and shall not
be construed to be for the benefit of any tenant or occupant of the Complex.

2. TERM *
     A. The term of this Lease shall be for a period of FIFTEEN (15)  years
(unless sooner terminated as hereinafter provided) and, subject to Paragraph
2(B) and 3, shall commence on the 1st day of May, 1999 and end on the 30th day
April, 2014.

     B. Possession of the Premises shall be deemed tendered and the term of
this Lease shall commence when the first of the following occurs:

        (a) One day after a Certificate of Occupancy is granted by the proper
governmental agency, or, if the governmental agency having jurisdiction over
the area in which the Premises are situated does not issue certificates of
occupancy, then the same number of days after certification by Landlord's
architect or contractor that Landlord's construction work has been completed; or

        (b) Upon the occupancy of the Premises by any of Tenant's operating
personnel; or

        (c) When the Tenant Improvements have been substantially completed for
Tenant's use and occupancy, in accordance and compliance with Exhibit B of this
Lease Agreement; or

        (d) As otherwise agreed in writing.

3. POSSESSION  If Landlord, for any reason whatsoever, cannot deliver
possession of said premises to Tenant at the commencement of the said term, as
hereinbefore specified, this Lease shall not be void or voidable; no obligation
of Tenant shall be affected thereby; nor shall Landlord or Landlord's agents be
liable to Tenant for any loss or damage resulting therefrom; but in that event
the commencement and termination dates of the Lease, and all other dates
affected thereby shall be revised to conform to the date of Landlord's delivery
of possession, as specified in Paragraph 2(b), above. The above is, however,
subject to the provisions that [ILLEGIBLE] 60 days from the commencement date
herein (except those delays caused by Acts of God, strikes, war, utilities,
governmental [ILLEGIBLE] materials, and delays beyond Landlord's control shall
be excluded in calculating such period) in which instance Tenant, at its
option, may, by written notice to Landlord, terminate this Lease.


* It is agreed in the event said Lease commences on a date other than the
first day of the month the term of the Lease will be extended to account for
the number of days in the partial month. The Basic Rent during the resulting
partial month will be pro-rated (for the number of days in the partial month)
at the Basic Rent scheduled for the projected commencement date as shown in
Paragraph 43.





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4.   RENT

     A. Basic Rent. Tenant agrees to pay to Landlord at such place as Landlord
may designate without deduction, offset, prior notice, or demand, and Landlord
agrees to accept as Basic Rent for the leased Premises the total sum of THIRTY
ONE MILLION FIVE HUNDRED SIXTY FIVE THOUSAND FIVE HUNDRED EIGHTY EIGHT AND
40/100 ($31,565,588.40) Dollars in lawful money of the United States of America,
payable as follows:

SEE PARAGRAPH 43 FOR BASIC RENT SCHEDULE.

     B. Time for Payment. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number
of days between such date of commencement and the first day of the next
succeeding calendar month bears to the number of days in the partial month. In
the event that the term of this Lease for any reason ends on a date other than
the last day of a calendar month, on the first day of the last calendar month of
the term hereof Tenant shall pay to Landlord as rent for the period from said
first day of said last calendar month to and including the last day of the term
hereof that proportion of the monthly rent hereunder which the number of days
between said first day of said last calendar month and the last day of the term
hereof bears to the number of days in the partial month.

     C. Late Charge. Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to
the delinquent rental due, a late charge for each rental payment in default ten
(10) days. Said late charge shall equal ten (10%) percent of each rental
payment so in default.

     D. Additional Rent. Beginning with the commencement date of the term of
this Lease, Tenant shall pay to Landlord in addition to the Basic Rent and as
Additional Rent the following:

     (a)  Tenant's proportionate share of all Taxes relating to the Complex as
          set forth in Paragraph 12, and

     (b)  Tenant's proportionate share of all insurance premiums relating to
          the Complex, as set forth in Paragraph 15, and

     (c)  Tenant's proportionate share of expenses for the operation,
          management, maintenance and repair of the Building (including common
          areas of the Building) and Common Areas of the Complex in which the
          Premises are located as set forth in Paragraph 7, and

     (d)  All charges, costs and expenses, which Tenant is required to pay
          hereunder, together with all interest and penalties, costs and
          expenses including attorneys' fees and legal expenses, that may
          accrue thereto in the event of Tenant's failure to pay such amounts,
          and all damages, reasonable costs and expenses which Landlord may
          incur by reason of default of Tenant or failure on Tenant's part to
          comply with the terms of this Lease. In the event of nonpayment by
          Tenant of Additional Rent, Landlord shall have all the rights and
          remedies with respect thereto as Landlord has for nonpayment of rent.

The Additional Rent due hereunder shall be paid to Landlord or Landlord's agent
(i) within five days for taxes and insurance and within thirty days for all
other Additional Rent items after presentation of invoice from Landlord or
Landlord's agent setting forth such Additional Rent and/or (ii) at the option of
Landlord, Tenant shall pay to Landlord monthly, in advance, Tenant's prorata
share of an amount estimated by Landlord to be Landlord's approximate average
monthly expenditure for such Additional Rent items, which estimated amount shall
be reconciled within 120 days of the end of each calendar year or more
frequently if Landlord so elects to do so at Landlord's sole and absolute
discretion, as compared to Landlord's actual expenditure for said Additional
Rent items, with Tenant paying to Landlord, upon demand, any amount of actual
expenses expended by Landlord in excess of said estimated amount, or Landlord
crediting to Tenant (providing Tenant is not in default in the performance of
any of the terms, covenants and conditions of this Lease) any amount of
estimated payments made by Tenant in excess of Landlord's actual expenditures
for said Additional Rent items.

     The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease,
and if the term hereof shall expire or shall otherwise terminate on a day other
than the last day of a calendar year, the actual Additional Rent incurred for
the calendar year in which the term hereof expires or otherwise terminates
shall be determined and settled on the basis of the statement of actual
Additional Rent for such calendar year and shall be prorated in the proportion
which the number of days in such calendar year preceding such expiration or
termination bears to 365.

     E. Fixed Management Fee. Beginning with the Commencement Date of the Term
of the Lease, Tenant shall pay, in addition to the Basic Rent and Additional
Rent, a fixed management fee equal to 3% of the Basic Rent due for each month
during the Lease Term ("Management Fee"). The Management Fee shall be paid to
A&P Property Management Company at 2560 Mission College Blvd., Suite 101, Santa
Clara, CA 95054.

     F. Place of Payment of Rent and Additional Rent. All Basic Rent hereunder
and all payments hereunder for Additional Rent shall be paid to Landlord at the
office of Landlord at 2560 Mission College Blvd., Suite 101, Santa Clara, CA
95054 or to such other person or to such other place as Landlord may from time
to time designate in writing.

    *G. Security Deposit. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord the sum of FOUR HUNDRED SIXTY NINE THOUSAND
THREE HUNDRED TWENTY FOUR AND 80/100 ($469,324.80) Dollars. Said sum shall be
held by Landlord as a Security Deposit for the faithful performance by Tenant of
all of the terms, covenants, and conditions of this Lease to be kept and
performed by Tenant during the term hereof. If Tenant defaults with respect to
any provision of this Lease, including, but not limited to, the provisions
relating to the payment of rent and any of the monetary sums due herewith.
Landlord may (but shall not be required to) use, apply or retain all or any part
of this Security Deposit for the payment of any other amount which Landlord may
spend by reason of Tenant's default or to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant's default. If any
portion of said Deposit is so used or applied, Tenant shall, within ten (10)
days after written demand therefor, deposit cash with Landlord in the amount
sufficient to restore the Security Deposit to its original amount. Tenant's
failure to do so shall be a material breach of this Lease. Landlord shall not be
required to keep this Security Deposit separate from its general funds, and
Tenant shall not be entitled to interest on such Deposit. If Tenant fully and
faithfully performs every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned to Tenant (or at
Landlord's option, to the last assignee of Tenant's interest hereunder) at the
expiration of the Lease term and after Tenant has vacated the Premises. In the
event of termination of Landlord's interest in this Lease, Landlord shall
transfer said Deposit to Landlord's successor in interest whereupon Tenant
agrees to release Landlord from liability for the return of such Deposit or the
accounting therefor.

[ILLEGIBLE] AND COMMON AREA  Subject to the terms and conditions of this Lease
and such Rules and Regulations as Landlord may from time to time prescribe,
Tenant and Tenant's employees, invitees and customers shall, in common with
other occupants of the Complex in which the Premises are located, and their
respective employees, invitees and customers, and others entitled to the use
thereof, have the non-exclusive right to use the access roads, parking areas,
and facilities provided and designated by Landlord for the general use and
convenience of the occupants of the Complex in which the Premises are located,
which areas and facilities are referred to herein as "Common Area". This right
shall terminate upon the termination of this Lease. Landlord reserves the right
from time to time to make changes in the shape, size, location, amount and
extent of Common Area. Landlord further reserves the right to promulgate such
reasonable rules and regulations relating to the use of the Common Area, and any
part or parts thereof, as Landlord may deem appropriate for the best interests
of the occupants of the Complex. The Rules and Regulations shall be binding upon
Tenant upon delivery of a copy of them to Tenant, and Tenant shall abide by them
and cooperate in their observance. Such Rules and Regulations may be amended by
Landlord form time to time, with or without advance notice, and all amendments
shall be effective upon delivery of a copy to Tenant. Landlord shall not be
responsible to Tenant for the non-performance by any other tenant or occupant of
the Complex of any of said Rules and Regulations.

     Landlord shall operate, manage and maintain the Common Area. The manner in
which the Common Area shall be maintained and the expenditures for such
maintenance shall be at the discretion of Landlord.

* $140,313.60 Cash due upon Lease execution.
  $68,486.40 Promissory Note due December 1, 2000.
  $260,524.80 Promissory Note due May 1, 2001.


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6. PARKING. Tenant shall have the right to use with other tenants or occupants
of the Complex 117 parking spaces in the common parking areas of the Complex.
Tenant agrees, that Tenant, Tenant's employees, agents, representatives and/or
invitees shall not use parking spaces in excess of said 117 spaces allocated to
Tenant hereunder. Landlord shall have the right, at Landlord's sole discretion,
to specifically designate the location of Tenant's parking spaces within the
common parking areas of the Complex in the event of a dispute among the tenants
occupying the building and/or Complex referred to herein, in which event Tenant
agrees that Tenant. Tenant's employees, agents, representatives and/or invitees
shall not use any parking spaces other than those parking spaces specifically
designated by Landlord for Tenant's use. Said parking spaces, if specifically
designated by Landlord to Tenant, may be relocated by Landlord at any time, and
from time to time. Landlord reserves the right, at Landlord's sole discretion,
to rescind any specific designation of parking spaces, thereby returning
Tenant's parking spaces to the common parking area. Landlord shall give Tenant
written notice of any change in Tenant's parking spaces. Tenant shall not, at
any time, park, or permit to be parked, any trucks or vehicles adjacent to the
loading areas so as to interfere in any way with the use of such areas, nor
shall Tenant at any time park, or permit the parking of Tenant's trucks or other
vehicles or the trucks and vehicles of Tenant's suppliers or others, in any
portion of the common area not designated by Landlord for such use by Tenant.
Tenant shall not park nor permit to be parked, any inoperative vehicles or
equipment on any portion of the common parking area or other common areas of the
Complex. Tenant agrees to assume responsibility for compliance by its employees
with the parking provision contained herein. If Tenant or its employees park in
other than such designated parking areas, then Landlord may charge Tenant, as an
additional charge, and Tenant agrees to pay, ten ($10.00) Dollars per day for
each day or partial day each such vehicle is parked in any area other than that
designated. Tenant hereby authorizes Landlord at Tenant's sole expense to tow
away from the Complex any vehicle belonging to Tenant or Tenant's employees
parked in violation of these provisions, or to attach violation stickers or
notices to such vehicles. Tenant shall use the parking areas for vehicle parking
only, and shall not use the parking areas for storage. See Paragraph 55.

7. EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON AREAS OF THE
COMPLEX AND BUILDING IN WHICH THE PREMISES ARE LOCATED. As Additional Rent and
in accordance with Paragraph 4D of this Lease. Tenant shall pay to Landlord
Tenant's proportionate share (calculated on a square footage or other equitable
basis as calculated by Landlord) of all expenses of operation, management,
maintenance and repair of the Common Areas of the Complex including, but not
limited to, license, permit, and inspection fees; security; utility charges
associated with exterior landscaping and lighting (including water and sewer
charges); all charges incurred in the maintenance and replacement of landscaped
areas, lakes, private roads within the Complex and roads with reciprocal
easement areas; parking lots and paved areas (including repairs, replacement,
resealing and restriping), sidewalks, driveways, maintenance, repair and
replacement of all fixtures and electrical, mechanical, and plumbing systems;
structural elements and exterior surfaces of the buildings; salaries and
employee benefits of personnel and payroll taxes applicable thereto; supplies,
materials, equipment and tools; the cost of capital expenditures which have the
effect of reducing operating expenses, provided, however that in the event
Landlord makes such capital improvements. Landlord may amortize its investment
in said improvements (together with interest at the rate of fifteen (15%)
percent per annum on the unamortized balance) as an operating expense in
accordance with standard accounting practices, provided, that such amortization
is not a rate greater than the anticipated savings in the operating expenses.

     "Additional Debt" as used herein shall not include Landlord's debt
repayments; interest on charges; expenses directly or indirectly incurred by
Landlord for the benefit of any other tenant; cost for the installation of
partitioning or any other tenant improvements; cost of attracting tenants;
depreciation; interest, or executive salaries.

     As Additional Rent and in accordance with paragraph 4D of this Lease.
Tenant shall pay its proportionate share (calculated on a square footage or
other equitable basis as calculated by Landlord) of the cost of operation
(including common utilities), management, maintenance, and repair of the
building (including common areas such as lobbies, restrooms, janitor's closets,
hallways, elevators, mechanical and telephone rooms, stairwells, entrances,
spaces above the ceilings and janitorization of said common areas) in which the
Premises are located. The maintenance items herein referred to include, but are
not limited to, all windows, window frames, plate glass, glazing, truck doors,
main plumbing systems of the building (such as water and drain lines, sinks,
toilets, faucets, drains, showers and water fountains), main electrical systems
(such as panels and conduits), heating and airconditioning systems (such as
compressors, fans, air handlers, ducts, boilers, heaters), store fronts, roofs,
downspouts, building common area interiors (such as wall coverings, window
covering, floor coverings and partitioning), ceilings, building exterior doors,
skylights (if any), automatic fire extinguishing systems, and elevators;
license, permit, and inspection fees; security; salaries and employee benefits
of personnel and payroll taxes applicable thereto; supplies, materials,
equipment and tools; the cost of capital expenditures which have the effect of
reducing operating expenses, provided, however, that in the event Landlord makes
such capital improvements. Landlord may amortize its investment in said
improvements (together with interest at the rate of fifteen (15%) percent per
annum on the unamortized balance) as an operating expense in accordance with
standard accounting practices, provided, that such amortization is not at a rate
greater than the anticipated savings in the operating expenses. Tenant hereby
waives all rights under, and benefits of, subsection 1 of Section 1932 and
Sections 1941 and 1942 of the California Civil Code and under any similar law,
statute or ordinance now or hereafter in effect. See Paragraph 56.

8. ACCEPTANCE AND SURRENDER OF PREMISES. By entry hereunder, Tenant accepts the
Premises as being in good and sanitary order, condition and repair and accepts
the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire, normal
wear and tear excepted), with all interior walls painted, or cleaned so that
they appear freshly painted, and repaired and replaced, if damaged; all floors
cleaned and waxed; all carpets cleaned and shampooed; the airconditioning and
heating equipment serviced by a reputable and licensed service firm and in good
operating condition (provided the maintenance of such equipment has been
Tenant's responsibility during the term of this Lease) together with all
alterations, additions, and improvements which may have been made in, to, or on
the Premises (except movable trade fixtures installed at the expense of Tenant)
except that Tenant shall ascertain from Landlord within thirty (30) days before
the end of the term of this Lease whether Landlord desires to have the Premises
or any part or parts thereof restored to their condition and configuration as
when the Premises were delivered to Tenant and if Landlord shall so desire,
then Tenant shall restore said Premises or such part or parts thereof before
the end of this Lease at Tenant's sole cost and expense. Tenant, on or before
the end of the term or sooner termination of this Lease, shall remove all of
Tenant's personal property and trade fixtures from the Premises, and all
property not so removed on or before the end of the term or sooner termination
of this Lease shall be deemed abandoned by Tenant and title to same shall
thereupon pass to Landlord without compensation to Tenant. Landlord may, upon
termination of this Lease, remove all moveable furniture and equipment so
abandoned by Tenant, at Tenant's sole cost, and repair any damage caused by
such removal at Tenant's sole cost. If the Premises be not surrendered at the
end of the term or sooner termination of this Lease, Tenant shall indemnify
Landlord against loss or liability resulting from the delay by Tenant in so
surrendering the Premises including, without limitation, any claims made by any
succeeding tenant founded on such delay. Nothing contained herein shall be
construed as an extension of the term hereof or as a consent of Landlord to any
holding over by Tenant. The voluntary or other surrender of this Lease or the
Premises by Tenant or a mutual cancellation of this Lease shall not work as a
merger and, at the option of Landlord, shall either terminate all or any
existing subleases or subtenancies or operate as an assignment to Landlord of
all or any such subleases or subtenancies.

9. ALTERATIONS AND ADDITIONS. Tenant shall not make, or suffer to be made, any
alteration or addition to the Premises, or any part thereof, without the
written consent of Landlord first and obtained by Tenant, but at the cost of
Tenant, and any addition to, or alteration of, the Premises, except moveable
furniture and trade fixtures, shall at once become a part of the Premises and
belong to Landlord. Landlord reserves the right to approve all contractors and
mechanics proposed by Tenant to make such alterations and additions. Tenant
shall retain title to all moveable furniture and trade fixtures placed in the
Premises. All heating, lighting, electrical, airconditioning, floor to ceiling
partitioning, drapery, carpeting, and floor installations made by Tenant,
together with all property that has become an integral part of the Premises,
shall not be deemed trade fixtures. Tenant agrees that it will not proceed to
make such alteration or additions, without having obtained consent from
Landlord to do so, and until five (5) days from the receipt of such consent, in
order that Landlord may post appropriate notices to avoid any liability to
contractors or material suppliers for payment for Tenant's improvements. Tenant
will at all times permit such notices to be posted and to remain posted until
the completion of work. Tenant shall, if required by Landlord, secure at
Tenant's own cost and expense, a completion and lien indemnity bond,
satisfactory to Landlord, for such work. Tenant further covenants and agrees
that any mechanic's lien filed against the Premises or against the Complex for
work claimed to have been done for, or materials claimed to have been furnished
to Tenant, will be discharged by Tenant, by bond or otherwise, within fifteen
(15) days after the filing thereof, at the cost and expense of Tenant. Any
exceptions to the foregoing must be made in writing and executed by both
Landlord and Tenant. Notwithstanding anything to the contrary herein, under no
circumstances shall Tenant be authorized to penetrate the soil to a depth that
exceeds three and one-half feet from the uppermost surface of the soil.

10. TENANT MAINTENANCE. Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and [illegible], and in good and
sanitary condition. Tenant's maintenance and repair responsibilities herein
referred to include, but are not limited to, janitorization, plumbing systems
within the non-common areas of the Premises (such as water and drain lines,
sinks), electrical systems within the non-common areas of the Premises (such as
outlets, lighting fixtures, lamps, bulbs, tubes, ballasts), heating and
airconditioning controls within the non-common areas of the Premises (such as
mixing boxes, thermostats, time clocks, supply and return grills), all interior
improvements within the premises including but not limited to: wall coverings,
window coverings, acoustical ceilings, vinyl tile, carpeting, partitioning,
doors (both interior and exterior, including closing mechanisms, latches,
locks), and all other interior improvements of any nature whatsoever. Tenant
agrees to provide carpet shields under all rolling chairs or to otherwise be
responsible for wear and tear of the carpet caused by such rolling chairs if
such wear and tear exceeds that caused by normal foot traffic in surrounding
areas. Areas of excessive wear shall be replaced at Tenant's sole expense upon
Lease termination. See Paragraph 57.


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11.  UTILITIES OF THE BUILDING IN WHICH THE PREMISES ARE LOCATED  As additional
Rent and in accordance with paragraph 4D of this Lease, Tenant shall pay its
proportionate share (calculated on a square footage or other equitable basis as
calculated by Landlord) of the cost of all utility charges such as water, gas,
electricity, telephone, telex and other electronic communications service, sewer
service, waste-pick-up and any other utilities, materials or services furnished
directly to the building in which the Premises are located, including, without
limitation, any temporary or permanent utility surcharge or other exactions
whether or not hereinafter imposed.

     Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts, or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.

     Provided that Tenant is not in default in the performance or observance of
any of the terms, covenants or conditions of this Lease to be performed or
observed by it, Landlord shall furnish to the Premises between the hours of 8:00
AM and 6:00 PM, Mondays through Fridays (holidays excepted) and subject to the
rules and regulations of the Complex hereinbefore referred to, reasonable
quantities of water, gas and electricity suitable for the intended use of the
Premises and heat and airconditioning required in Landlord's judgment for the
comfortable use and occupation of the Premises for such purposes. Tenant may,
from time to time, have its staff and equipment operate on a twenty-four (24)
hour-a-day, seven (7) day-a-week schedule, and Tenant shall pay for any extra
utilities used by Tenant. Tenant agrees that at all times it will cooperate
fully with Landlord and abide by all regulations and requirements that Landlord
may prescribe for the proper functioning and protection of the building heating,
ventilating and airconditioning systems. Whenever heat generating machines,
equipment, or any other devices (including exhaust fans) are used in the
Premises by Tenant which affect the temperature or otherwise maintained by the
airconditioning system, Landlord shall have the right to install supplementary
airconditioning units in the Premises and the cost thereof, including the cost
of installation and the cost of operation and maintenance thereof, shall be paid
by Tenant to Landlord upon demand by Landlord. Tenant will not, without the
written consent of Landlord, use any apparatus or device in the Premises
(including, without limitation), electronic data processing machines or machines
using current in excess of 110 Volts which will in any way increase the amount
of electricity, gas, water or airconditioning usually furnished or supplied to
premises being used as general office space, or connect with electric current
(except through existing electrical outlets in the Premises), or with gas or
water pipes any apparatus or device for the purposes of using electric current,
gas, or water. If Tenant shall require water, gas, or electric current in excess
of that usually furnished or supplied to premises being used as general office
space, Tenant shall first obtain the written consent of Landlord, which consent
shall not be unreasonably withheld and Landlord may cause an electric current,
gas, or water meter to be installed in the Premises in order to measure the
amount of electric current, gas or water consumed for any such excess use. The
cost of any such meter and of the installation, maintenance and repair thereof,
all charges for such excess water, gas and electric current consumed (as shown
by such meters and at the rates then charged by the furnishing public utility);
and any additional expense incurred by Landlord in keeping account of electric
current, gas, or water so consumed shall be paid by Tenant, and Tenant agrees to
pay Landlord therefor promptly upon demand by Landlord. See Paragraph 58.

12.  TAXES  A. As Additional Rent and in accordance with Paragraph 4D of this
Lease, Tenant shall pay to Landlord Tenant's proportionate share of all Real
Property Taxes, which prorata share shall be allocated to the leased Premises by
square footage or other equitable basis, as calculated by Landlord. The term
"Real Property Taxes", as used herein, shall mean (i) all taxes, assessments,
levies and other charges of any kind or nature whatsoever, general and special,
foreseen and unforeseen (including all installments of principal and interest
required to pay any general or special assessments for public improvements and
any increases resulting from reassessments caused by any change in ownership of
the Complex) now or hereafter imposed by any governmental or quasi-governmental
authority or special district having the direct or indirect power to tax or levy
assessments, which are levied or assessed against, or with respect to the value,
occupancy or use of, all or any portion of the Complex (as now constructed or as
may at any time hereafter be constructed, altered, or otherwise changed) or
Landlord's interest therein; any improvements located within the Complex
(regardless of ownership); the fixtures, equipment and other property of
Landlord, real or personal, that are an integral part of and located in the
Complex; or parking areas, public utilities, or energy within the Complex; (ii)
all charges, levies or fees imposed by reason of environmental regulation or
other governmental control of the Complex; and (iii) all costs and fees
(including attorneys' fees) incurred by Landlord in contesting any Real Property
Tax and in negotiating with public authorities as to any Real Property Tax. If
at any time during the term of this Lease the taxation or assessment of the
Complex prevailing as of the commencement date of this Lease shall be altered so
that in lieu of or in addition to any Real Property Tax described above there
shall be levied, assessed or imposed (whether by reason of a change in the
method of taxation or assessment, creation of a new tax or charge, or any other
cause) an alternate or additional tax or charge (i) on the value, use or
occupancy of the Complex or Landlord's interest therein or (ii) on or measured
by the gross receipts, income or rentals from the Complex, on Landlord's
business of leasing the Complex, or computed in any manner with respect to the
operation of the Complex, then any such tax or charge, however designated, shall
be included within the meaning of the term "Real Property Taxes" for purposes of
this Lease. If any Real Property Tax is based upon property or rents unrelated
to the Complex, then only that part of such real Property Tax that is fairly
allocable to the Complex shall be included within the meaning of the term "Real
Property Taxes". Notwithstanding the foregoing, the term "Real Property Taxes"
shall not include estate, inheritance, gift or franchise taxes of Landlord or
the federal or state net income tax imposed on Landlord's income from all
sources. Tenant shall not be responsible for any real estate tax increase herein
that are attributable solely to extraordinary improvements in excess of typical
office tenant improvements for other tenants in the Complex.

B.   Taxes on Tenant's Property

(a) Tenant shall be liable for and shall pay ten days before delinquency, taxes
levied against any personal property or trade fixtures placed by Tenant in or
about the Premises. If any such taxes on Tenant's personal property or trade
fixtures are levied against Landlord or Landlord's property or if the assessed
value of the Premises is increased by the inclusion therein of a value placed
upon such personal property or trade fixtures of Tenant and if Landlord, after
written notice to Tenant, pays the taxes based on such increased assessment,
which Landlord shall have the right to do regardless of the validity thereof,
but only under proper protest if requested by Tenant, Tenant shall upon demand,
as the case may be, repay to Landlord the taxes so levied against Landlord, or
the proportion of such taxes resulting from such increase in the assessment;
provided that in any such event Tenant shall have the right, in the name of
Landlord and with Landlord's full cooperation, to bring suit in any court of
competent jurisdiction to recover the amount of any such taxes so paid under
protest, and any amounts so recovered shall belong to Tenant.

     (b) If the Tenant improvements in the Premises, whether installed, and/or
paid for by Landlord or Tenant and whether or not affixed to the real property
so as to become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which standard office improvements in
other space in the Complex are assessed, then the real property taxes and
assessments levied against Landlord or the Complex by reason of such excess
assessed valuation shall be deemed to be taxes levied against personal property
of Tenant and shall be governed by the provisions of 12Ba, above. If the records
of the County Assessor are available and sufficiently detailed to serve as a
basis for determining whether said Tenant improvements are assessed at a higher
valuation than standard office improvements in other space in the Complex, such
records shall be binding on both the Landlord and the Tenant. If the records of
the County Assessor are not available or sufficiently detailed to serve as a
basis for making said determination, the actual cost of construction shall be
used.

13.  LIABILITY INSURANCE  Tenant at Tenant's expense, agrees to keep in force
during the term of this Lease a policy of commercial general liability insurance
with a combined single limit coverage of not less than Two Million Dollars
($2,000,000) per occurrence for injuries to or death of persons occurring in, on
or about the Premises or the Complex, and property damage. The policy or
policies affecting such insurance, certificates of insurance of which shall be
furnished to Landlord, shall name Landlord as additional insureds, and shall
insure any liability of Landlord, contingent or otherwise, as respects acts or
omissions of Tenant, its agents, employees or invitees or otherwise by any
conduct or transactions of any of said persons in or about or concerning the
Premises, including any failure of Tenant to observe or perform any of its
obligations hereunder, shall be issued by an insurance company admitted to
transact business in the State of California; and shall provide that the
insurance effected thereby shall not be canceled, except upon thirty (30) days'
prior written notice to Landlord. If, during the term of this Lease, in the
considered opinion of Landlord's Lender, insurance advisor, or counsel, the
amount of insurance described in this paragraph 13 is not adequate, Tenant
agrees to increase said coverage to such reasonable amount as Landlord's Lender,
insurance advisor, or counsel shall deem adequate.

14.  TENANT'S PERSONAL PROPERTY INSURANCE AND WORKMAN'S COMPENSATION INSURANCE
Tenant shall maintain a policy or policies of fire and property damage insurance
in "all risk" form with a sprinkler leakage endorsement insuring the personal
property, inventory, trade fixtures, and leasehold improvements within the
leased Premises for the full replacement value thereof. The proceeds from any of
such policies shall be used for the repair or replacement of such items so
insured.

     [ILLEGIBLE] policies of workman's compensation insurance and any other
employee benefit insurance sufficient to comply with all laws.

15.  PROPERTY INSURANCE  Landlord shall purchase and keep in force and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord (or Landlord's agent if so directed by Landlord) Tenant's
proportionate share (calculated on a square footage or other equitable basis as
calculated by Landlord) of the deductibles on insurance claims and the cost of
policy or policies of insurance covering loss or damage to the Premises and
Complex in the amount of the full replacement value thereof, providing
protection against those perils included within the classification of "all
risks" insurance and flood and/or earthquake insurance, if available, plus a
policy of rental income insurance in the amount of one hundred (100%) percent of
twelve (12) months Basic Rent, plus sums paid as Additional Rent. If such
insurance cost is increased due to Tenant's use of the Premises or the Complex,
Tenant agrees to pay to Landlord the full cost of such increase. Tenant shall
have no interest in nor any right to the proceeds of any insurance procured by
Landlord for the Complex.

     Landlord and Tenant do each hereby respectively release the other, to the
extent of insurance coverage of the releasing party, from any liability for loss
or damage caused by fire or any of the extended coverage casualties included in
the releasing party's insurance policies, irrespective of the cause of such fire
or casualty; provided, however, that if the insurance policy of either releasing
party prohibits such waiver, then this waiver shall not take effect until
consent to such waiver is obtained. If such waiver is so prohibited, the insured
party affected shall promptly notify the other party thereof.


                                  page 4 of 8

<PAGE>   5
16. INDEMNIFICATION Landlord shall not be liable to Tenant and Tenant hereby
waives all claims against Landlord for any injury to or death of any person or
damage to or destruction of property in or about the Premises or the Complex by
or from any cause whatsoever, including, without limitation, gas, fire, oil,
electricity or leakage of any character from the roof, walls, basement or other
portion of the Premises or the Complex but excluding, however, the willful
misconduct or negligence of Landlord, its agents, servants, employees,
invitees, or contractors of which negligence Landlord has knowledge and
reasonable time to correct. Except as to injury to persons or damage to
property to the extent arising from the willful misconduct or the negligence of
Landlord, its agents, servants, employees, invitees, or contractors. Tenant
shall hold Landlord harmless from and defend Landlord against any and all
expenses, including reasonable attorneys' fees, in connection therewith,
arising out of any injury to or death of any person or damage to or destruction
of property occurring in, on or about the Premises, or any part thereof, from
any cause whatsoever.

17. COMPLIANCE  Tenant, at its sole cost and expense, shall promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted; and with
any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such failure shall be deemed a breach of
the provisions if Tenant, immediately upon notification, commences to remedy or
rectify said failure. The judgment of any court of competent jurisdiction or
the admission of Tenant in any action against Tenant, whether Landlord be a
party thereto or not, that Tenant has violated any such law, statute, ordinance
or governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. This paragraph shall
not be interpreted as requiring Tenant to make structural changes or
improvements, except to the extent such changes or improvements are required as
a result of Tenant's use of the Premises. Tenant shall, at its sole cost and
expense, comply with any and all requirements pertaining to said Premises, or
any insurance organization or company, necessary for the maintenance of
reasonable fire and public liability insurance covering the Premises.

18. LIENS Tenant shall keep the Premises and the Complex free from any liens
arising out of any work performed, materials furnished or obligation incurred
by Tenant. In the event that Tenant shall not, within ten (10) days following
the imposition of such lien, cause the same to be released of record. Landlord
shall have, in addition to all other remedies provided herein and by law, the
right, but no obligation, to cause the same to be released by such means as it
shall deem proper, including payment of the claim giving rise to such lien. All
sums paid by Landlord for such purpose, and all expenses incurred by it in
connection therewith, shall be payable to Landlord by Tenant on demand with
interest at the prime rate of interest as quoted by the Bank of America.

19. ASSIGNMENT AND SUBLETTING Tenant shall not assign, transfer, or hypothecate
the leasehold estate under this Lease, or any interest therein, and shall not
sublet the Premises, or any part thereof, or any right or privilege appurtenant
thereto, or suffer any other person or entity to occupy or use the Premises, or
any portion thereof, without, in each case, the prior written consent of
Landlord which consent will not be unreasonably withheld. As a condition for
granting this consent to any assignment, transfer, or subletting, Landlord
shall require Tenant to pay to Landlord, as additional Rent, all rents and/or
additional consideration due Tenant from its assignees, transferees, or
subtenants in excess of the Rent payable by Tenant to Landlord hereunder for
the assigned, transferred and/or subleased space; provided, however, that
before sharing such excess rent, Tenant shall first be entitled to recover from
such excess rent the amount of any reasonable leasing commissions related to
said transaction paid by Tenant to third parties not affiliated with Tenant.
Tenant shall, by thirty (30) days written notice, advise Landlord of its intent
to assign or transfer Tenant's interest in the Lease or sublet the Premises or
any portion thereof for any part of the term hereof. Within thirty (30) days
after receipt of said written notice, if Tenant intends to assign or sublet
more than fifty percent (50%) of the Premises, Landlord may, in its sole
discretion, elect to terminate this Lease as to the portion of the Premises
described in Tenant's notice on the date specified in Tenant's notice by giving
written notice of such election to terminate. If no such notice to terminate is
given to Tenant within said thirty (30) day period, Tenant may proceed to
locate an acceptable sublessee, assignee, or other transferee for presentment
to Landlord for Landlord's approval, all in accordance with the terms,
covenants, and conditions of this paragraph 19. If Tenant intends to sublet the
entire Premises and Landlord elects to terminate this Lease, this Lease shall
be terminated on the date specified in Tenant's notice. If, however, this Lease
shall terminate pursuant to the foregoing with respect to less than all the
Premises, the rent, as defined and reserved hereinabove shall be adjusted on a
pro rata basis to the number of square feet retained by Tenant, and this Lease
as so amended shall continue in full force and effect. In the event Tenant is
allowed to assign, transfer or sublet the whole or any part of the Premises,
with the prior written consent of Landlord, no assignee, transferee or
subtenant shall assign or transfer this Lease, either in whole or in part, or
sublet the whole or any part of the Premises, without also having obtained the
prior written consent of Landlord. A consent of Landlord to one assignment,
transfer, hypothecation, subletting, occupation or use by any other person
shall not release Tenant from any of Tenant's obligations hereunder or be
deemed to be a consent to any subsequent similar or dissimilar assignment,
transfer, hypothecation, subletting, occupation or use by any other person. Any
such assignment, transfer, hypothecation, subletting, occupation or use without
such consent shall be void and shall constitute a breach of this Lease by
Tenant and shall, at the option of Landlord exercised by written notice to
Tenant, terminate this Lease. The leasehold estate under this Lease shall not,
nor shall any interest therein, be assignable for any purpose by operation of
law without the written consent of Landlord. As a condition to its consent,
Landlord shall require Tenant to pay all expenses in connection with the
assignment, and Landlord shall require Tenant's assignee or transferee (or
other assignees or transferees) to assume in writing all of the obligations
under this Lease and for Tenant to remain liable to Landlord under the Lease.
Notwithstanding the above, in no event will Landlord consent to a sub-sublease.
See Paragraph 50.

20. SUBORDINATION AND MORTGAGES In the event Landlord's title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest
of Landlord in the land and buildings in which the demised Premises are
located, to secure a loan from a lender (hereinafter referred to as "Lender")
to Landlord, Tenant shall, at the request of Landlord or Lender, execute in
writing an agreement subordinating its rights under this Lease to the lien of
such deed of trust, or, if so requested, agreeing that the lien of Lender's
deed of trust shall be or remain subject and subordinate to the rights of
Tenant under this Lease. Notwithstanding any such subordination, Tenant's
possession under this Lease shall not be disturbed if Tenant is not in default
and so long as Tenant shall pay all rent and observe and perform all of the
provisions set forth in this Lease.

21. ENTRY BY LANDLORD Landlord reserves, and shall at all reasonable times
after at least 24 hours notice (except in emergencies) have, the right to enter
the Premises to inspect them; to perform any services to be provided by
Landlord hereunder; to submit the Premises to prospective purchasers,
mortgagers or tenants; to post notices of nonresponsibility; and to alter,
improve or repair the Premises and any portion of the Complex, all without
abatement of rent; and may erect scaffolding and other necessary structures in
or through the Premises where reasonably required by the character of the work
to be performed; provided, however that the business of Tenant shall be
interfered with to the least extent that is reasonably practical. For each of
the foregoing purposes, any entry to the Premises obtained by Landlord by any of
said means, or otherwise, shall not under any circumstances be construed or
deemed to be 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. Landlord shall also have the right at any time to change the
arrangement or location of entrances or passageways, doors and doorways, and
corridors, elevators, stairs, toilets or other public parts of the Complex and
to change the name, number or designation by which the Complex is commonly
known, and none of the foregoing shall be deemed an actual or constructive
eviction of Tenant, or shall entitle Tenant to any reduction of rent hereunder.

22. BANKRUPTCY AND DEFAULT The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord's option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject Tenant's unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty (30)
days after an order for relief in a liquidation action or within thirty (30)
days after the commencement of any action.

     Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure)
any and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual percuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used herein, includes, but shall
not be limited to: (i) assurance of source and payment of rent, and other
consideration due under this Lease; (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.

     Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in
[ILLEGIBLE] or an assignment of Tenant for the benefit of creditors or other
similar act. Nothing contained in this Lease shall be construed as giving or
granting or creating an equity in the demised Premises to Tenant. In no event
shall the leasehold estate under this Lease, or any interest therein, be
assigned by voluntary or involuntary bankruptcy proceeding without the prior
written consent of Landlord. In no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency or
reorganization proceedings.

     The failure to perform or honor any covenant, condition or representation
made under this Lease shall constitute a default hereunder by Tenant upon
expiration of the appropriate grace period hereinafter provided. Tenant shall
have a period of five (5) days from the date of written notice from Landlord
within which to cure any default in the payment of rental or adjustment
thereto. Tenant shall have a period of thirty (30) days from the date of
written notice from Landlord within which to cure any other default under this
Lease. Upon an uncured default of this Lease by Tenant, Landlord shall have the
following rights and remedies in addition to any other rights or remedies
available to Landlord at law or in equity:

     (a) The rights and remedies provided for by California Civil Code Section
1951.2, including but not limited to, recovery of 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 rental loss for the same period that
Tenant proves could be reasonably avoided, as computed pursuant to subsection
(b) of said Section 1951.2. Any proof by Tenant under subparagraphs (2) and (3)
of Section 1951.2 of the California Civil Code of the amount of rental loss
that could be reasonably avoided shall be made in the following manner:
Landlord and Tenant shall each select a licensed real estate broker in the
business of renting property of the same type and use as the Premises and in
the same geographic vicinity. Such two real estate brokers shall select a third
licensed real estate



                                  page 5 of 8


<PAGE>   6
broker, and the three licensed real estate brokers so selected shall determine
the amount of the rental loss that could be reasonably avoided from the balance
of the term of this Lease after the time of award. The decision of the majority
of said licensed real estate brokers shall be final and binding upon the parties
hereto.

     (b). The rights and remedies provided by California Civil Code Section
which allows Landlord to continue the Lease in effect and to enforce all of its
rights and remedies under this Lease, including the right to recover rent as it
becomes due, for so long as Landlord does not terminate Tenant's right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord's initiative to protect its
interest under this Lease shall not constitute a termination of Tenant's right
to possession.

     (c). The right to terminate this Lease by giving notice to Tenant in
accordance with applicable law.

     (d). To the extent permitted by law, the right and power, to enter the
Premises and remove therefrom all persons and property, to store such property
in a public warehouse or elsewhere at the cost of and for the account of Tenant,
and to sell such property and apply such proceeds therefrom pursuant to
applicable California law. Landlord may from time to time sublet the Premises or
any part thereof for such term or terms (which may extend beyond the term of
this Lease) and at such rent and such other terms as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises. Upon each subletting, (i) Tenant shall be immediately liable to
pay Landlord, in addition to indebtedness other than rent due hereunder, the
cost of such subletting, including, but not limited to, reasonable attorneys'
fees, and any real estate commissions actually paid, and the cost of such
alterations and repairs incurred by Landlord and the amount, if any, by which
the rent hereunder for the period of such subletting (to the extent such period
does not exceed the term hereof) exceeds the amount to be paid as rent for the
Premises for such period or (ii) at the option of Landlord, rents received from
such subletting shall be applied first to payment of indebtedness other than
rent due hereunder from Tenant to Landlord; second, to the payment of any costs
of such subletting and of such alterations and repairs; third to payment of rent
due and unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future rent as the same becomes due hereunder. If Tenant
has been credited with any rent to be received by such subletting under option
(i) and such rent shall not be promptly paid to Landlord by the subtenant(s), or
if such rentals received from such subletting under option (ii) during any month
be less than that to be paid during that month by Tenant hereunder. Tenant shall
pay any such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. For all purposes set forth in this subparagraph d. No taking
possession of the Premises by Landlord shall be construed as an election on its
part to terminate this Lease unless a written notice of such intention be given
to Tenant. Notwithstanding any such subletting without termination, Landlord may
at any time hereafter elect to terminate this Lease for such previous breach.

     (e). The right to have a receiver appointed for Tenant upon application by
Landlord, to take possession of the Premises and to apply any rental collected
from the Premises and to exercise all other rights and remedies granted to
Landlord pursuant to subparagraph d. above.

23. ABANDONMENT  Tenant shall not vacate or abandon the Premises at any time
during the term of this Lease and if Tenant shall abandon, vacate or surrender
said Premises, or be dispossessed by the process of law, or otherwise, any
personal property belonging to Tenant and left on the Premises shall be deemed
to be abandoned, at the option of Landlord, except such property as may be
mortgaged to Landlord.

24. DESTRUCTION  In the event the Premises are destroyed in whole or in part
from any cause, except for routine maintenance and repairs and incidental damage
and destruction caused from vandalism and accidents for which Tenant is
responsible for under Paragraph 10, Landlord may, at its option:

     (a) Rebuild or restore the Premises to their condition prior to the damage
or destruction, or

     (b) Terminate this Lease, (providing that the Premises is damaged to the
extent of at least 33 1/3% of the replacement cost).

     If Landlord does not give Tenant notice in writing within thirty (30) days
from the destruction of the Premises of its election to either rebuild and
restore them, or to terminate this Lease, Landlord shall be deemed to have
elected to rebuild or restore them, in which event Landlord agrees, at its
expense, promptly to rebuild or restore the Premises to their condition prior to
the damage or destruction. Tenant shall be entitled to a reduction in rent while
such repair is being made in the proportion that the area of the Premises
rendered untenantable by such damage bears to the total area of the Premises. If
Landlord initially estimates that the rebuilding or restoration will exceed 180
days or if Landlord does not complete the rebuilding or restoration within one
hundred eighty (180) days following the date of destruction (such period of time
to be extended for delays caused by the fault or neglect of Tenant or because of
Acts of God, acts of public agencies, labor disputes, strikes, fires, freight
embargoes, rainy or stormy weather, inability to obtain materials, supplies or
fuels, acts of contractors or subcontractors, or delay of the contractors or
subcontractors due to such causes or other contingencies beyond the control of
Landlord), then Tenant shall have the right to terminate this Lease by giving
fifteen (15) days prior written notice to Landlord. Notwithstanding anything
herein to the contrary, Landlord's obligation to rebuild or restore shall be
limited to the building and interior improvements constructed by Landlord as
they existed as of the commencement date of the Lease and shall not include
restoration of Tenant's trade fixtures, equipment, merchandise, or any
improvements, alterations or additions made by Tenant to the Premises, which
Tenant shall forthwith replace or fully repair at Tenant's sole cost and expense
provided this Lease is not cancelled according to the provisions above.

     Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives the
provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of the
California Civil Code.

     In the event that the building in which the premises are situated is
damaged or destroyed to the extent of not less than 33 1/3% of the replacement
cost thereof, Landlord may elect to terminate this Lease whether the Premises be
inured or not. Notwithstanding anything to the contrary herein, Landlord may
terminate this Lease in the event of an uninsured event or if insurance proceeds
are insufficient to cover 100% of the rebuilding costs net of the deductible,
and in such event, the Lease shall terminate within 20 days of Landlord's
receipt of notice of the uninsured event or insufficient funds to cover said
costs.

25. EMINENT DOMAIN  If all or any part of the Premises shall be taken by any
public or quasi-public authority under the power of eminent domain or conveyance
in lieu thereof, this Lease shall terminate as to any portion of the Premises so
taken or conveyed on the date when title vests in the condemnor, and Landlord
shall be entitled to any and all payment, income, rent, award, or any interest
therein whatsoever which may be paid or made in connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value of any unexpired term of this Lease. Notwithstanding the foregoing
paragraph, any compensation specifically awarded Tenant for loss of business,
Tenant's personal property, moving costs or loss of goodwill, shall be and
remain the property of Tenant.

     If (i) any action or proceeding is commenced for such taking of the
Premises or any part thereof, or if Landlord is advised in writing by any entity
or body having the right or power of condemnation of its intention to condemn
the premises or any portion thereof, or (ii) any of the foregoing events occur
with respect to the taking of any space in the Complex not leased hereby, or if
any such spaces so taken or conveyed in lieu of such taking and Landlord shall
decide to discontinue the use and operation of the Complex, or decide to
demolish, alter or rebuild the Complex, then, in any of such events Landlord
shall have the right to terminate this Lease by giving Tenant written notice
thereof within sixty (60) days of the date of receipt of said written advice, or
commencement of said action or proceeding, or taking conveyance, which
termination shall take place as of the first to occur of the last day of the
calendar month next following the month in which such notice is given or the
date on which title to the Premises shall vest in the condemnor.

     In the event of such a partial taking or conveyance of the Premises, if the
portion of the Premises taken or conveyed is so substantial that the Tenant can
no longer reasonably conduct its business. Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intentions so to do, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next following the month in which such notice is given, upon payment by
Tenant of the rent from the date of such taking or conveyance to the date of
termination.

     If a portion of the Premises be taken by condemnation or conveyance in lieu
thereof and neither Landlord nor Tenant shall terminate this Lease as provided
herein, this Lease shall continue in full force and effect as to the part of the
Premises not so taken or conveyed, and the rent herein shall be apportioned as
of the date of such taking or conveyance so that thereafter the rent to be paid
by Tenant shall be in the ratio that the area of the portion of the Premises not
so taken or conveyed bears to the total areas of the [ILLEGIBLE COPY]

26.  SALE OR CONVEYANCE BY LANDLORD  In the event of a sale or conveyance of the
complex or any interest therein, by any owner of the reversion then constituting
Landlord, the transferor shall thereby be released from any further liability
upon any of the terms, covenants or conditions (express or implied) herein
contained in favor of Tenant, and in such event, insofar as such transfer is
concerned. Tenant agrees to look solely to the responsibility of the successor
in interest of such transferor in and to the Complex and this Lease. This Lease
shall not be affected by any such sale or conveyance, and Tenant agrees to
attorn to the successor in interest of such transferor.

27.  ATTORNMENT TO LENDER OR THIRD PARTY  In the event the interest of Landlord
in the land and buildings in which the leased Premises are located (whether such
interest of Landlord is a fee title interest or a leasehold interest) is
encumbered by deed of trust, and such interest is acquired by the lender or any
third party through judicial foreclosure or by exercise of a power of sale at
private trustee's foreclosure sale. Tenant hereby agrees to attorn to the
purchaser at any such foreclosure sale and to recognize such purchaser as the
Landlord under this Lease. In the event the lien of the deed of trust securing
the loan from a Lender to Landlord is prior and paramount to the Lease, this
Lease shall nonetheless continue in full force and effect for the remainder of
the unexpired term hereof, at the same rental herein reserved and upon all the
other terms, conditions and covenants herein contained.

28.  HOLDING OVER  Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of
this Lease, with the consent of Landlord, shall be construed to be a tenancy
from month to month at the same terms and conditions herein specified insofar as
applicable except that the monthly Basic Rent shall be increased to an amount
equal to one hundred fifty (150%) percent of the monthly Basic Rent required
during the last month of the Lease term.
<PAGE>   7
29.  CERTIFICATE OF ESTOPPEL  Tenant shall at any time upon not less than ten
(10) days' prior written notice from Landlord execute, acknowledge and deliver
to Landlord a statement in writing (i) certifying that this Lease is unmodified
and in full force and effect (or, if modified, standing the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or
specifying such defaults, if any, are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises. Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant that this Lease is in full force and effect, without
modification except as may be represented by Landlord; that there are no
uncured defaults in Landlord's performance, and that not more than one month's
rent has been paid in advance.

30.  CONSTRUCTION CHANGES  It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein
are subject to such minor changes as Landlord or Landlord's architect
determines to be desirable in the course of construction of the Premises, and
no such changes, or any changes in plans for any other portions of the Complex
shall affect this Lease or entitle Tenant to any reduction or rent hereunder or
result in any liability of Landlord to Tenant. Landlord does not guarantee the
accuracy of any drawings supplied to Tenant and verification of the accuracy of
such drawings rests with Tenant.

31.  RIGHT OF LANDLORD TO PERFORM  All terms, covenants and conditions of this
Lease to be performed or observed by Tenant shall be performed or observed by
Tenant at Tenant's sole cost and expense and without any reduction of rent. If
Tenant shall fail to pay any sum of money, or other rent, required to be paid
by it hereunder and such failure shall continue for five (5) days after written
notice by Landlord, or shall fail to perform any other term or covenant
hereunder on its part to be performed, and such failure shall continue for
thirty (30) days after written notice thereof by Landlord, Landlord, without
waiving or releasing Tenant from any obligation of Tenant hereunder, may, but
shall not be obligated to, make any such payment or perform any such other term
or covenant on Tenant's part to be performed. All sums so paid by Landlord and
all necessary costs of such performance by Landlord together with interest
thereon at the rate of the prime rate of interest per annum as quoted by
the Bank of America from the date of such payment or performance by Landlord,
shall be paid (and Tenant covenants to make such payment) to Landlord on demand
by Landlord, and Landlord shall have (in addition to any other right or remedy
of Landlord) the same rights and remedies in the event of nonpayment by Tenant
as in the case of failure by Tenant in the payment of rent hereunder.

32.  ATTORNEYS'S FEES.
     (A) In the event that either Landlord or Tenant should bring suit for the
possession of the Premises, for the recovery of any sum due under this Lease,
or because of the breach of any provision of this Lease, or for any other
relief against the other party hereunder, then all costs and expenses, including
reasonable attorneys' fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgement.

     (B) Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy hereunder,
Tenant shall pay to Landlord its costs and expenses incurred in such suit,
including a reasonable attorney's fee.

33.  WAIVER  The waiver by either party of the other party's failure to perform
or observe any term, covenant or condition herein contained to be performed or
observed by such waiving party shall not be deemed to be a waiver of such term,
covenant or condition or of any subsequent failure of the party failing to
perform or observe the same or any other such term, covenant or condition
therein contained, and no custom or practice which may develop between the
parties hereto during the term hereof shall be deemed a waiver of, or in any
way affect, the right of either party to insist upon performance and observance
by the other party in strict accordance with the terms hereof.

34.  NOTICES  All notices, demands, requests, advices or designations which may
be or are required to be given by either party to the other hereunder shall be
in writing. All notices, demands, requests, advices or designations by Landlord
to Tenant shall be sufficiently given, made or delivered if personally served
on Tenant by leaving the same at the Premises or if sent by United States
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises. All notices demands, requests, advices or designations by Tenant to
Landlord shall be sent by United States certified or registered mail, postage
prepaid, addressed to Landlord at its offices at 2560 Mission College Blvd.,
Suite 101, Santa Clara, CA 95054. Each notice, request, demand, advice or
designation referred to in this paragraph shall be deemed received on the date
of the personal service or mailing thereof in the manner herein provided, as
the case may be.

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

36.  DEFAULT BY LANDLORD  Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event earlier than thirty (30) days after written notice by Tenant to
Landlord and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have heretofore been furnished to Tenant
in writing, specifying wherein Landlord has failed to perform such
obligations; provided, however, that if the nature of Landlord's obligations is
such that more than thirty (30) days are required for performance, then
Landlord shall not be in default if Landlord commences performance within such
thirty (30) day period and thereafter diligently prosecutes the same to
completion.

37.  CORPORATE AUTHORITY  If Tenant is a corporation, (or a partnership) each
individual executing this Lease on behalf of said corporation (or partnership)
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of said corporation (or partnership) in accordance with the
by-laws of said corporation (or partnership in accordance with the partnership
agreement) and that this Lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of the resolution of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.

39.  LIMITATION OF LIABILITY  In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in
the event of any actual or alleged failure, breach or default hereunder by
Landlord:

     (i)    the sole and exclusive remedy shall be against Landlord's interest
in the Premises leased herein;

     (ii)   no partner of Landlord shall be sued or named as a party in any suit
or action (except as may be necessary to secure jurisdiction of the partnership)

     (iii)  no service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the partnership)

     (iv)   no partner of Landlord shall be required to answer or otherwise
plead to any service of process;

     (v)    no judgement will be taken against any partner of Landlord;

     (vi)   any judgment taken against any partner of Landlord may be vacated
and set aside at any time without hearing;

     (vii)  ?? execution will ever be levied against the assets of any partner
of Landlord;

     (viii) these covenants and agreement are enforceable both by Landlord and
also by any partner of Landlord.

     Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this
Lease or imposed by statute or at common law.


                                  page 7 of 8
<PAGE>   8
40. MISCELLANEOUS AND GENERAL PROVISIONS

     a. Tenant shall not, without the written consent of Landlord, use the name
     of the building for any purpose other than as the address of the business
     conducted by Tenant in the Premises.

     b. This Lease shall in all respects be governed by and construed in
     accordance with the laws of the State of California. If any provision of
     this Lease shall be invalid, unenforceable or ineffective for any reason
     whatsoever, all other provisions hereof shall be and remain in full force
     and effect.

     c.   The term "Premises" includes the space leased hereby and any
     improvements now or hereafter installed therein or attached thereto. The
     term "Landlord" or any pronoun used in place thereof includes the plural
     as well as the singular and the successors and assigns of Landlord. The
     term "Tenant" or any pronoun used in place thereof includes the plural as
     well as the singular and individuals, firms, associations, partnerships
     and corporations, and their and each of their respective heirs, executors,
     administrators, successors and permitted assigns, according to the context
     hereof, and the provisions of this Lease shall inure to the benefit of and
     bind such heirs, executors, administrators, successors and permitted
     assigns.

          The term "person" includes the plural as well as the singular and
     individuals, firms, associations, partnerships and corporations. Words
     used in any gender include other genders. If there be more than one Tenant
     the obligation of Tenant hereunder are joint and several. The paragraph
     headings of this Lease are for convenience of reference only and shall
     have no effect upon the construction or interpretation of any provision
     hereof.

     d.   Time is of the essence of this Lease and of each and all of its
     provisions.

     e.   At the expiration or earlier termination of this Lease, Tenant shall
     execute, acknowledge and deliver to Landlord, within ten (10) days after
     written demand from Landlord to Tenant, any quitclaim deed or other
     document required by any reputable title company, licensed to operate in
     the State of California, to remove the cloud or encumbrance created by
     this Lease from the real property of which Tenant's Premises are a part.

     f.   This instrument along with any exhibits and attachments hereto
     constitutes the entire agreement between Landlord and Tenant relative to
     the Premises and this agreement and the exhibits and attachments may be
     altered, amended or revoked only by an instrument in writing signed by
     both Landlord and Tenant. Landlord and Tenant agree hereby that all prior
     or contemporaneous oral agreements between and among themselves and their
     agents or representatives relative to the leasing of the Premises are
     merged in or revoked by this agreement.

     g.   Neither Landlord nor Tenant shall record this Lease or a short form
     memorandum hereof without the consent of the other.

     h.   Tenant further agrees to execute any amendments required by a lender
     to enable Landlord to obtain financing, so long as Tenant's rights or
     obligations hereunder are not substantially affected.

     i.   Paragraphs 43 through 58 are added hereto and are included as a part
     of this lease.

     j.   Clauses, plats and riders, if any, signed by Landlord and Tenant and
     endorsed on or affixed to this Lease are a part hereof.

     k.   Tenant covenants and agrees that no diminution or shutting off of
     light, air or view by any structure which may be hereafter erected
     (whether or not by Landlord) shall in any way affect his Lease, entitle
     Tenant to any reduction of rent hereunder or result in any liability of
     Landlord to Tenant.

41. BROKERS  Tenant warrants that it had dealings with only the following real
estate brokers or agents in connection with the negotiation of this Lease: none
_______________________________________________________________________________
and that it knows of no other real estate broker or agent who is entitled to a
commission in connection with this Lease.

42. SIGNS  No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside of
the Premises or any exterior windows of the Premises without the written
consent of Landlord first had and obtained and Landlord shall have the right to
remove any such sign, placard, picture, advertisement, name or notice without
notice to and at the expense of Tenant. If Tenant is allowed to print or affix
or in any way place a sign in, on, or about the Premises, upon expiration or
other sooner termination of this Lease, Tenant at Tenant's sole cost and
expense shall both remove such sign and repair all damage in such a manner as
to restore all aspects of the appearance of the Premises to the condition prior
to the placement of said sign.

     All approved signs or lettering on outside doors shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person approved of
by Landlord.

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

     IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year last written below.

LANDLORD:                                    TENANT:

WESTPORT JOINT VENTURE                       SABA SOFTWARE INCORPORATED
a California general partnership             a Delaware corporation

JOHN ARRILLAGA SURVIVOR'S TRUST
                                             By: /s/ BARRY JAHANSETAN
                                                -------------------------------
By: /s/ JOHN ARRILLAGA
  --------------------------------------
  John Arrillaga, Trustee                    Title: VP FINANCE, ADMIN
                                                   ----------------------------
Date:     4/9/99
     -----------------------------------

PEERY PRIVATE INVESTMENT COMPANY-WP, L.P.    Type or Print Name BARRY JAHANSETAN
a California Limited Partnership                               -----------------

                                             Date:   4/9/99
                                                  ------------------------------
By: /s/ RICHARD T. PEERY
  --------------------------------------
  Richard T. Peery, Trustee of the
  Richard T. Peery Separate Property Trust
  dated 7/20/77, as its General Partner

Date:     4/9/99
     -----------------------------------

PEERY PUBLIC INVESTMENT COMPANY-WP, L.P.
a California limited partnership



By: /s/ RICHARD T. PEERY
  --------------------------------------
  Richard T. Peery, Trustee of the
  Richard T. Peery Separate Property Trust
  dated 7/20/77, as its General Partner

Date:     4/9/99
     -----------------------------------

                                  page 8 of 8


<PAGE>   9
Paragraphs 43 through 58 to Lease Agreement dated March 16, 1999, By and
Between Westport Joint Venture, a California joint venture, as Landlord, and
Saba Software, Incorporated, a Delaware corporation, as Tenant for 48,384+
Square Feet of Space Located at 2400 Bridge Parkway, Redwood City, California.

43.   BASIC RENT: In accordance with Paragraph 4A herein, the total aggregate
sum of THIRTY ONE MILLION FIVE HUNDRED SIXTY FIVE THOUSAND FIVE HUNDRED EIGHTY
EIGHT AND 40/100 DOLLARS ($31,565,588.40), shall be payable as follows:

      On May 1, 1999, the sum of FORTY ONE THOUSAND TWO HUNDRED FIFTY AND
NO/100 DOLLARS ($41,250.00) shall be due, and a like sum due on the first day
of each month thereafter, through and including November 1, 1999.

      On December 1, 1999, the sum of SEVENTY ONE THOUSAND ONE HUNDRED EIGHTY
ONE AND NO/100 DOLLARS ($71,181.00) shall be due, and a like sum due on the
first day of each month thereafter, through and including April 1, 2000.

      On May 1, 2000, the sum of SEVENTY FIVE THOUSAND SIXTY THREE AND 60/100
DOLLARS ($75,063.60) shall be due, and a like sum due on the first day of each
month thereafter, through and including November 1, 2000.

      On December 1, 2000, the sum of ONE HUNDRED FOUR THOUSAND FOUR HUNDRED
AND NO/100 DOLLARS ($104,400.00) shall be due, and a like sum due on the first
day of each month thereafter, through and including April 1, 2001.

      On May 1, 2001, the sum of ONE HUNDRED FORTY SEVEN THOUSAND FIVE HUNDRED
SEVENTY ONE AND 20/100 DOLLARS ($147,571.20) shall be due, and a like sum due
on the first day of each month thereafter, through and including April 1, 2002.

      On May 1, 2002, the sum of ONE HUNDRED FIFTY FOUR THOUSAND EIGHT HUNDRED
TWENTY EIGHT AND 80/100 DOLLARS ($154,828.80) shall be due, and a like sum due
on the first day of each month thereafter, through and including April 1, 2003.

      On May 1, 2003, the sum of ONE HUNDRED SIXTY TWO THOUSAND EIGHTY SIX AND
40/100 DOLLARS ($162,086.40) shall be due, and a like sum due on the first day
of each month thereafter, through and including April 1, 2004.

      On May 1, 2004, the sum of ONE HUNDRED SIXTY NINE THOUSAND THREE HUNDRED
FORTY FOUR AND NO/100 DOLLARS ($169,344.00) shall be due, and a like sum due on
the first day of each month thereafter, through and including April 1, 2005.

      On May 1, 2005, the sum of ONE HUNDRED SEVENTY SIX THOUSAND SIX HUNDRED
ONE AND 60/100 DOLLARS ($176,601.60) shall be due, and a like sum due on the
first day of each month thereafter, through and including April 1, 2006.

     On May 1, 2006, the sum of ONE HUNDRED EIGHTY THREE THOUSAND EIGHT HUNDRED
FIFTY NINE AND 20/100 DOLLARS ($183,859.20) shall be due, and a like sum due on
the first day of each month thereafter, through and including April 1, 2007.

     On May 1, 2007, the sum of ONE HUNDRED NINETY ONE THOUSAND ONE HUNDRED
SIXTEEN AND 80/100 DOLLARS ($191,116.80) shall be due, and a like sum on the
first day of each month thereafter, through and including April 1, 2008.

     On May 1, 2008, the sum of ONE HUNDRED NINETY EIGHT THOUSAND THREE HUNDRED
SEVENTY FOUR AND 40/100 DOLLARS ($198,374.40) shall be due, and a like sum due
on the first day of each month thereafter, through and including April 1, 2009.

     On May 1, 2009, the sum of TWO HUNDRED FIVE THOUSAND SIX HUNDRED THIRTY
TWO AND NO/100 DOLLARS ($205,632.00) shall be due, and a like sum due on the
first day of each month thereafter, through and including April 1, 2010.

     On May 1, 2010, the sum of TWO HUNDRED TWELVE THOUSAND EIGHT HUNDRED
EIGHTY NINE AND 60/100 DOLLARS ($212,889.60) shall be due, and a like sum due
on the first day of each month thereafter, through and including April 1, 2011.

                                       9
<PAGE>   10

        On May 1, 2011, the sum of TWO HUNDRED TWENTY THOUSAND ONE HUNDRED
FORTY SEVEN AND 20/100 DOLLARS ($220,147.20) shall be due, and a like sum due
on the first day of each month thereafter, through and including April 1, 2012.

        On May 1, 2012, the sum of TWO HUNDRED TWENTY SEVEN THOUSAND FOUR
HUNDRED FOUR AND 80/100 DOLLARS ($227,404.80) shall be due, and a like sum due
on the first day of each month thereafter, through and including April 1, 2013.

        On May 1, 2013, the sum of TWO HUNDRED THIRTY FOUR THOUSAND SIX HUNDRED
SIXTY TWO AND 40/100 DOLLARS ($234,662.40) shall be due, and a like sum due on
the first day of each month thereafter, through and including April 1, 2014; or
until the entire aggregate sum of THIRTY ONE MILLION FIVE HUNDRED SIXTY FIVE
THOUSAND FIVE HUNDRED EIGHTY EIGHT AND 40/100 DOLLARS ($31,565,588.40) has been
paid.

44.     "AS-IS" BASIS: Subject only Paragraphs 45 and 54 below and to Landlord
making the improvements shown on Exhibit B to be attached hereto, it is hereby
agreed that the Premises leased hereunder is leased strictly on an "as-is" basis
and in its present condition, and in the configuration as shown on Exhibit B to
be attached hereto, and by reference made a part hereof. It is specifically
agreed between the parties that after Landlord makes the interior improvements
as shown on Exhibit B, Landlord shall not be required to make, nor be
responsible for any cost, in connection with any repair, restoration, and/or
improvement to the Premises in order for this Lease to commence, or thereafter,
throughout the Term of this Lease. Notwithstanding anything to the contrary
within this Lease, Landlord makes no warranty or representation of any kind or
nature whatsoever as to the condition or repair of the Premises, nor as to the
use or occupancy which may be made thereof.

45.     TENANT INTERIOR IMPROVEMENTS: Landlord shall, at its sole cost and
expense, construct certain interior improvements (the "Tenant Improvements") in
the Initial Leased Premises, as shown on Exhibit B to be attached to the Lease
and Landlord agrees to deliver the Premises leased hereunder to Tenant, at
Landlord's expense, in the configuration shown in Red on Exhibit B to be
attached hereto. Notwithstanding anything to the contrary above, it is
specifically understood and agreed that Landlord shall be required to furnish
only a standard air conditioning/heating system, normal electrical outlets,
standard fire sprinkler systems, standard bathroom, standard lobby, 2'x4'
suspended acoustical tile drop ceiling throughout the entire space leased,
carpeting and/or vinyl-coated floor tile, and standard office partitions and
doors, as shown on Exhibit B to be attached hereto; provided however, that any
special HVAC and/or plumbing and/or electrical requirements over and above that
normally supplied by Landlord shall be 100 percent the responsibility of and be
paid for 100 percent by Tenant.

Notwithstanding anything to the contrary, it is agreed that in the event Tenant
makes changes, additions, or modifications to the plans and specifications to be
constructed by Landlord as set forth herein, or improvements are installed for
Tenant in excess of those to be provided Tenant by Landlord as set forth on
Exhibit B, any increased cost(s) resulting from said changes, additions, and/or
modifications and/or improvements in excess of those to be provided Tenant shall
be contracted for with Landlord and paid for one hundred percent (100%) by
Tenant.

The interior shall be constructed in accordance with Exhibit B of the Lease, it
being agreed, however, that if the interior improvements constructed by
Landlord relating thereto, do not conform exactly to the plans and
specifications as set forth in the Lease, and the general appearance,
structural integrity, and Tenant's uses and occupancy of the Premises and
interior improvements relating thereto are not materially or unreasonably
affected by such deviation, it is agreed that the commencement date of the
Lease, and Tenant's obligation to pay rental, shall not be affected, and Tenant
hereby agrees, in such event, to accept the Premises and interior improvements
as constructed by Landlord.

Tenant shall have thirty (30) days after the Commencement Date to provide
Landlord with a "punch list" pertaining to Landlord's work with respect to
Tenant's interior improvements. As soon as reasonably possible thereafter,
Landlord, or one of Landlord's representatives (if so approved by Landlord),
and Tenant shall conduct a joint walk-through of the Premises (if Landlord so
requires), and inspect such Tenant Improvements, using their best efforts to
agree on the incomplete or defective construction related to the __________
_______________ by Landlord. After such inspection has been completed,
Landlord shall prepare, and both parties shall sign, a list of all "punch list"
items which the parties reasonably agree are to be corrected by Landlord (but
which shall exclude any damage or defects caused by Tenant, its employees,
agents or parties Tenant has contracted with to work on the Premises). Landlord
shall have thirty (30) days thereafter (or longer if necessary, provided
Landlord is diligently pursuing the completion of the same) to complete, at
Landlord's expense, the repairs on the "punch list" without the Commencement
Date of the Lease and Tenant's obligation to pay Rental thereunder being
affected. This Paragraph shall be of no force and effect if Tenant shall fail
to give any such notice to Landlord within thirty (30) days after the
Commencement


                                       10
<PAGE>   11

Date of this Lease.

46.  CONSENT: Whenever the consent of one party to the other is required
hereunder, such consent shall not be unreasonably withheld.

47.  CHOICE OF LAW; SEVERABILITY. This Lease shall in all respects be governed
by and construed in accordance with the laws of the State of California. If any
provisions of this Lease shall be invalid, unenforceable, or ineffective for
any reason whatsoever, all other provisions hereof shall be and remain in full
force and effect.

48.  ASSIGNMENT OF WARRANTIES: During the Term of the Lease, Landlord hereby
assigns to Tenant all of Landlord's Contractor's warranties related to the
tenant improvements provided for Tenant by Landlord as stated in Paragraph 45
and shall cooperate with Tenant in enforcing any of such warranties except that
Landlord shall not be required to pay any legal fees or incur any expenses in
this regard.

49.  ASSESSMENT CREDITS:  The demised property herein may be subject to a
special assessment levied by the City of Redwood City as part of an Improvement
District. As a part of said special assessment proceedings (if any), additional
bonds were or may be sold and assessments were or may be levied to provide for
construction contingencies and reserve funds. Interest shall be earned on
such funds created for contingencies and on reserve funds which will be
credited for the benefit of said assessment district. To the extent surpluses
are created in said district through unused contingency funds, interest
earnings or reserve funds, such surpluses shall be deemed the property of
Landlord. Notwithstanding that such surpluses may be credited on assessments
otherwise due against the Leased Premises, Tenant shall pay to Landlord, as
additional rent if, and at the time of any such credit of surpluses, an amount
equal to all such surpluses so credited. For example: if (i) the property is
subject to an annual assessment of $1,000.00, and (ii) a surplus of $200.00 is
credited towards the current year's assessment which reduces the assessment
amount shown on the property tax bill from $1,000.00 to $800.00, Tenant shall,
upon receipt of notice from Landlord, pay to Landlord said $200.00 credit as
Additional Rent.

50.  ASSIGNMENT AND SUBLETTING (CONTINUED):

     A.   Notwithstanding the foregoing, Landlord and Tenant agree that it
shall not be unreasonable for Landlord to refuse to consent to a proposed
assignment, sublease or other transfer ("Proposed Transfer") if the Premises or
another portion of the Property would become subject to additional or
different Government Requirements as a direct or indirect consequence of the
Proposed Transfer and/or the Proposed Transferee's use and occupancy of the
Premises and the Property. However, Landlord may, in its sole discretion,
consent to such a Proposed Transfer where Landlord is indemnified by Tenant and
(i) Subtenant or (ii) Assignee, in form and substance satisfactory to
Landlord's counsel, by Tenant and/or the Proposed Transferee from and against
any and all costs, expenses, obligations and liability arising out of the
Proposed Transfer and/or the Proposed Transferee's use and occupancy of the
Premises and the Property.

     B.   Any and all sublease agreement(s) between Tenant and any and all
subtenant(s) (which agreements must be consented to by Landlord, pursuant to
the requirements of this Lease) shall contain the following language:

          "If Landlord and Tenant jointly and voluntarily elect, for any reason
     whatsoever, to terminate the Master Lease prior to the scheduled Master
     Lease termination date, then this Sublease (if then still in effect)
     shall terminate concurrently with the termination of the Master Lease.
     Subtenant expressly acknowledges and agrees that (1) the voluntary
     termination of the Master Lease by Landlord and Tenant and the resulting
     termination of this Sublease shall not give Subtenant any right or power
     to make any legal or equitable claim against Landlord, including without
     limitation any claim for interference with contract or interference with
     prospective economic advantage, and (2) Subtenant hereby waives any and
     all rights it may have under law or at equity against Landlord to
     challenge such an early termination of the Sublease, and unconditionally
     releases and relieves Landlord, and its officers, directors, employees and
     agents, from any and all claims, demands, and/or causes of action
     whatsoever (collectively, "Claims"), whether such matters are known or
     unknown, latent or apparent, suspected or unsuspected, foreseeable or
     unforeseeable, which Subtenant may have arising out of or in connection
     with any such early termination of this Sublease. Subtenant knowingly and
     intentionally waives any and all protection which is or may be given by
     Section 1542 of the California Civil Code which provides as follows: "A

                                       11
<PAGE>   12
     general release does not extend to claims which the creditor does not know
     or suspect to exist in his favor at the time of executing the release,
     which if known by him must have materially affected his settlement with
     debtor.

          The term of his Sublease is therefore subject to early termination.
     Subtenant's initials here below evidence (a) Subtenant's consideration of
     and agreement to this early termination provision, (b) Subtenant's
     acknowledgment that, in determining the net benefits to be derived by
     Subtenant under the terms of this Sublease, Subtenant has anticipated the
     potential for early termination, and (c) Subtenant's agreement to the
     general waiver and release of Claims above.

     Initials: ___________    Initials: ___________
                Subtenant                  Tenant

     C.   Landlord hereby agrees to consent to Tenant's assigning or subletting
said Lease to: (i) any parent or subsidiary corporation, affiliate, or
corporation with which Tenant merges or consolidates, provided that the net
worth of said parent or subsidiary corporation, affiliate, or said corporation
has a net worth equal to or greater than the net worth of Tenant (a) at the
time of Lease execution or (b) at the time of such assignment, merger, or
consolidation (whichever is greater); or (ii) any third party or entity to whom
Tenant sells all or substantially all of its assets; provided, that the net
worth of the resulting or acquiring corporation has a net worth after the
merger, consolidation or acquisition equal to or greater than the net worth of
Tenant (a) at the time of Lease execution or (b) at the time of such merger,
consolidation or acquisition (whichever is greater). No such assignment or
subletting will release the Tenant from its liability and responsibility under
this Lease to the extent Tenant continues in existence following such
transaction. Notwithstanding the above, Tenant shall be required to (a) give
Landlord written notice prior to such assignment or subletting to any party as
described in (i) and (ii) above, (b) execute Landlord's consent document
prepared by Landlord reflecting the assignment or subletting and (c) pay
Landlord's costs for processing said Consent prior to the effective date of
said assignment or sublease.

51.  BANKRUPTCY AND DEFAULT. Paragraph 22 is modified to provide that with
respect to non-monetary defaults not involving Tenant's failure to pay Basic
Rent or Additional Rent, Tenant shall not be in default of any non-monetary
obligation if (i) more than thirty (30) days is required to cure such
non-monetary default, and (ii) Tenant commences cure of such default as soon as
reasonably practicable after receiving written notice of such default from
Landlord and thereafter continuously and with due diligence prosecutes such
cure to completion.

52.  ABANDONMENT. Paragraph 23 is modified to provide that Tenant shall not be
in default under the Lease if it leaves all or any part of Premises vacant so
long as (i) Tenant is performing all of its other obligations under the Lease
including the obligation to pay Basic Rent and Additional Rent (ii) Tenant
provides on-site security during normal business hours for those parts of the
Premises left vacant, (iii) such vacancy does not materially and adversely
affect the validity or coverage of any policy of insurance carried by Landlord
with respect to the Premises, and (iv) the utilities and heating and
ventilation system are operated and maintained to the extent necessary to
prevent damage to the Premises or its systems.

53.  HAZARDOUS MATERIALS. Landlord and Tenant agree as follows with respect to
the existence or use of "Hazardous Materials" (as defined herein) on, in, under
or about the Premises and real property located beneath said Premises and the
common areas of the Complex (hereinafter collectively referred to as the
"Property"):

     A.   As used herein, the term "Hazardous Materials" shall mean any
material, waste, chemical, mixture or byproduct which is or hereafter is
defined, listed or designated under Environmental Laws (defined below) as a
pollutant, or as contaminant, or as a toxic or hazardous substance, waste or
material, or any other unwholesome, hazardous, toxic, biohazardous, or
radioactive material, waste, chemical, mixture or byproduct, or which is listed,
regulated or restricted by any Environmental Law (including without limitation,
[illegible] or derivatives or fractions thereof, polychlorinated bipheryls, or
asbestos). As used herein, the term "Environmental Laws" shall mean any
applicable Federal, State of California or local government law (including
common law), statute, regulation, rule, ordinance, permit, license, order,
requirement, agreement, or approval, or any determination, judgment, directive,
or order of any executive or judicial authority at any level of Federal, State
of California or local government (whether now existing or subsequently adopted
or promulgated) relating to pollution or the protection of the environment,
ecology, natural resources, or public health and safety.



                                       12

<PAGE>   13
     B.  Tenant shall obtain Landlord's written consent, which may be withheld
in Landlord's discretion, prior to the occurrence of any Tenant's Hazardous
Materials activities (defined below); provided, however, that Landlord's
consent shall not be required for normal use in compliance with applicable
Environmental Laws of customary household and office supplies, such as mild
cleaners, lubricants and copier toner. As used herein, the term "Tenant's
Hazardous Materials Activities" shall mean any and all use, handling,
generation, storage, disposal, treatment, transportation, release, discharge,
or emission of any Hazardous Materials on, in, beneath, to, from, at or about
the Property, in connection with Tenant's use of the Property, or by Tenant or
by any of Tenant's agents, employees, contractors, vendors, invitees, visitors
or its future subtenants or assignees. Tenant agrees that any and all Tenant's
Hazardous Materials Activities shall be conducted in strict, full compliance
with applicable Environmental Laws at Tenant's expense, and shall not result in
any contamination of the Property or the environment. Tenant agrees to provide
Landlord with prompt written notice of any spill or release of Hazardous
Materials at the Property during the term of the Lease of which Tenant becomes
aware, and further agrees to provide Landlord with prompt written notice of any
violation of Environmental Laws in connection with Tenant's Hazardous Materials
Activities of which Tenant becomes aware. If Tenant's Hazardous Materials
Activities other than normal use of customary household and office supplies,
Tenant also agrees at Tenant's expense: (i) to install such Hazardous Materials
monitoring, storage and containment devices as Landlord reasonably deems
necessary (Landlord shall have no obligation to evaluate the need for any such
installation or to require any such installation); (ii) provide Landlord with a
written inventory of such Hazardous Materials, including an update of same each
year upon the anniversary date of the Commencement Date of the Lease
("Anniversary Date"); and (iii) on each Anniversary Date, to retain a qualified
environmental consultant, acceptable to Landlord, to evaluate whether Tenant is
in compliance with all applicable Environmental Laws with respect to Tenant's
Hazardous Material Activities. Tenant, at its expense, shall submit to Landlord
a report from such environmental consultant which discusses the environmental
consultant's findings within two (2) months of each Anniversary Date. Tenant,
at its expense, shall promptly undertake and complete any and all steps
necessary, and in full compliance with applicable Environmental Laws,
to fully correct any and all problems or deficiencies identified by the
environmental consultant, and promptly provide Landlord with documentation of
all such corrections.

     C.  Prior to termination or expiration of the Lease, Tenant, at its
expense, shall (i) properly remove from the Property all Hazardous Materials
which come to be located at the Property in connection with Tenant's Hazardous
Materials Activities, and (ii) fully comply with and complete all facility
closure requirements of applicable Environmental Laws regarding Tenant's
Hazardous Materials Activities, including but not limited to (x) properly
restoring and repairing the Property to the extent damaged by such closure
activities, and (y) obtaining from the local Fire Department or other
appropriate governmental authority with jurisdiction a written concurrence that
closure has been completed in compliance with applicable Environmental Laws.
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
such closure activities.

     D.  If Landlord, in its sole discretion, believes that the Property has
become contaminated as a result of Tenant's Hazardous Materials Activities,
Landlord in addition to any other rights it may have under this Lease or under
Environmental Laws or other laws, may enter upon the Property and conduct
inspection, sampling and analysis, including but not limited to obtaining and
analyzing samples of soil and groundwater, for the purpose of determining the
nature and extent of such contamination. Tenant shall promptly reimburse
Landlord for the costs of such an investigation, including but not limited to
reasonable attorney's fees Landlord incurs with respect to such investigation,
that discloses Hazardous Materials contamination for which Tenant is liable
under this Lease. Except as may be required of Tenant by applicable
Environmental Laws, Tenant shall not perform any sampling, testing, or drilling
to identify the presence of any Hazardous Materials at the Property, without
Landlord's prior written consent which may be withheld in Landlord's
discretion. Tenant shall promptly provide Landlord with copies of any claims,
notices, work plans, data and reports prepared, received or submitted in
connection with any sampling, testing or drilling performed pursuant to the
preceding sentence.

     E.  Tenant shall indemnify, defend (with legal counsel acceptable to
Landlord, whose consent shall not unreasonably be withheld) and hold harmless
Landlord, its employees, assigns, successors, successors-in-interest, agents
and representatives from and against any and all claims (including but not
limited to third party claims from a private party or a government authority),
liabilities, obligations, losses, causes of action, demands, governmental
proceedings or directives, fines, penalties, expenses, costs (including but not
limited to reasonable attorneys', consultants' and other experts' fees and
costs), and damages, which arise from or relate to: (i) Tenant's Hazardous
Materials Activities; (ii) any Hazardous Materials contamination caused by
Tenant prior to the Commencement Date of the Lease; or (iii) the breach of any
obligation of Tenant under this Paragraph 53 (collectively, "Tenant's
Environmental Indemnification"). Tenant's Environmental Indemnification
shall include but is not limited to the obligation to promptly and fully
reimburse Landlord for losses in or reductions to rental income, and diminution
in fair market value of the Property. Tenant's Environmental Indemnification
shall further include but is not limited to the obligation to diligently and
properly implement to completion, at Tenant's expense, any and all environmental


                                       13
<PAGE>   14
investigation, removal, remediation, monitoring, reporting, closure activities,
or other environmental response action (collectively, "Response Actions").
Tenant shall promptly provide Landlord with copies of any claims, notices, work
plans, data and reports prepared, received or submitted in connection with any
Response Actions.

     F.   Landlord hereby informs Tenant, and Tenant hereby acknowledges, that
the Premises and adjacent properties overlie a former solid waste landfill site
commonly known as the Westport Landfill ("Former Landfill"). Landlord further
informs Tenant, and Tenant hereby acknowledges, that (i) prior testing has
detected the presence of low levels of certain volatile and semi-volatile
organic compounds and other contaminants in the groundwater, in the leachate
from the landfilled solid waste, and/or in certain surface waters of the
Property, as more fully described in Section 2.3.2 of the report entitled
"Revised Discharge Monitoring Plan, Westport Landfill Site, Redwood City,
California" prepared by Geomatrix Consultants, dated May 1996 ("Discharge
Plan"), (ii) methane gas is or may be generated by the landfilled solid waste
(item "i" immediately preceding and this item "ii" are hereafter collectively
referred to as the "Landfill Contamination"), and (iii) the Premises and the
Former Landfill are subject to the California Regional Water Quality Control
Board's ("Regional Board") Waste Discharge Requirements Order No. 94-181 (the
"Order"). The Order is attached hereto as Exhibit C. As evidenced by their
initials set forth immediately below, Tenant acknowledges that Landlord has
provided Tenant with copies of the environmental reports listed on Exhibit D,
and Tenant acknowledges that Tenant and Tenant's experts (if any) have had
ample opportunity to review such reports and that Tenant has satisfied itself
as to the environmental conditions of the Property and the suitability of such
conditions for Tenant's intended use of the Property.

          Initial:                      Initial:
                  -----------                    ----------
                    Tenant                        Landlord

     G.   Landlord shall indemnify, defend, and hold harmless Tenant against
any and all claims asserted by third parties (excluding any agents, employees,
contractors, vendors, invitees, visitors, future subtenants and assignees of
Tenant, and excluding any other parties related to Tenant), including all
liabilities, judgments, damages, suits, orders, government directives, costs
and expenses in connection with such claims, which arise from (i) the Landfill
Contamination, or (ii) the Order, as may be amended ("Landlord's Environmental
Indemnity"); provided, however that Landlord's Environmental Indemnity shall be
subject to the following limitations and conditions:

          (1)  Landlord's Environmental Indemnity shall not apply to any
               economic or consequential damages suffered by Tenant, including
               but not limited to loss of business or profits.

          (2)  Landlord's Environmental Indemnity shall not apply, without
               limitation, to any releases caused by Tenant's Hazardous
               Materials Activities.

          (3)  Tenant acknowledges that Landlord must comply with the Order, as
               may be amended, and with directives of government authorities
               including the Regional Board, with respect to the Contamination
               and the Former Landfill. Tenant further acknowledges that
               groundwater monitoring wells, methane recovery wells and
               equipment, and other environmental control devices are located on
               and about the Premises and may be modified or added to during the
               term of the Lease (collectively, "Environmental Equipment"), and
               that environmental investigation, monitoring, closure and
               post-closure activities (collectively, "Environmental
               Activities") will be performed on the Premises during the term of
               the Lease. Tenant shall allow Landlord, and any other party named
               as a discharger under the Order, as may be amended, and their
               respective agents, consultants and contractors, and agents of
               governmental environmental authorities with jurisdiction
               ("Government Representatives") to enter the Premises to access
               the Environmental Equipment and to perform Environmental
               Activities during the term of the Lease, provided that Tenant's
               use and occupancy of the Premises shall not unreasonably be
               disturbed.

          (4)  Tenant and Landlord shall reasonably cooperate with each other
               regarding any Environmental Activities to be performed, and
               regarding any Environmental Equipment to be installed,
               maintained, or removed on the Premises during the term of the
               Lease.

          (5)  Tenant shall be responsible at its expense for repairing any
               Environmental Equipment damaged due to the negligence of Tenant
               or Tenant's agents, employees, contractors, vendors, invitees,
               visitors, future subtenants or assignees (such terms "invitees"
               and "visitors" are used in this Paragraph 54 shall not include
               Landlord or any other party named as a discharger under the Order
               as may be amended, or any of their respective agents, consultants
               or contractors, or any Government Representatives).



                                       14

<PAGE>   15
It is agreed that the Tenant's responsibilities related to Hazardous Materials
will survive the expiration or termination of this Lease and that Landlord may
obtain specific performance of Tenant's responsibilities under this Paragraph
53.

54.  MUST-TAKE SPACE: As consideration to Tenant, Landlord has agreed to allow
Tenant to phase into the entire Building as noted below. This Lease provides the
obligation for Tenant to phase into additional space (located on the first floor
of the Building in areas to be selected by Landlord) on two separate dates
following the Commencement Date of the Lease. The date of the first phase in is
December 1, 2000 and the estimated phase in square footage is 10,116+/- square
feet including Tenant's share of the Common Area of the Building (hereinafter
referred to as Must-Take Space #1); the date of the second phase in is April 1,
2001 and the estimated square footage is 12,384+/- (hereinafter referred to as
Must-Take Space #2). Reference to the "Must-Take Space" herein after refers to
Must-Take Space #1 and Must-Take Space #2. As of April 1, 2001, Tenant's total
square footage leased shall equal one hundred percent (100%) of said Building.

The parties understand that the exact square footage of the Must-Take Space #1 &
the Must-Take Space #2 is unknown at this time and will be measured by Landlord
once the locations of said Must-Take Space are determined by Landlord. Upon
completion of construction of the demising walls of the Must-Take Space,
Landlord shall calculate the total square footage of the Must-Take Space #1 and
the Must-Take Space #2 (including Tenant's share of the Common Area, the sum of
which is the hereinafter referred to as the "Actual Square Footage"). On the
final determination of the Actual Square Footage of the Must-Take Space #1 and
of Must-Take Space #2, the parties shall execute an amendment to this Lease
stating said Actual Square Footage and adjusting the Basic Rent accordingly.
Tenant acknowledges that the Basic Rent projected in the Rent schedule is based
on the Actual Square Footage for (i) Must-Take Space #1 being 10,116 square feet
at the then monthly per square foot rate of $2.90 and (ii) Must-Take Space #2
being 12,384 square feet at then monthly per square foot rate of $3.05. Any
change in the Actual Square Footage will result in an adjustment to the Basic
Rent Schedule. Execution of said amendment shall not be a condition precedent to
the effectiveness of the increase in square footage and the resultant adjustment
in Rent.

The Must-Take Space shall be leased to Tenant in its then "as-is" condition and
configuration as of the respective phase in dates (i.e., Landlord shall not be
required to construct any improvements in, or contribute any tenant improvement
allowance for the Must-Take Space other than installing the demising walls,
dropped ceiling and carpeting (with materials similar to those used on the
second floor of the Leased Premises).

Except as otherwise noted in this Lease, beginning on the respective phase in
dates and continuing for the balance of the Lease Term (including extensions, if
any), the Must-Take Space shall be part of the Premises under this Lease.
Tenant's lease of the Must-Take Space shall be on the same terms and conditions
as those affecting the Initial Premises, including the same Monthly Basic Rent
rate as then applies to the Initial Premises.

Landlord shall tender the Must-Take Space to Tenant on the aforementioned date;
however, Landlord shall not be liable to Tenant or otherwise be in default under
this Lease if Landlord is unable to tender the Must-Take Space to Tenant on the
projected delivery date(s) due to the failure of any other tenant to timely
vacate and surrender to Landlord the Must-Take Space or any portion of it.
Landlord agrees to use its commercially reasonable efforts to enforce its right
to possession of the Must-Take Space against such other tenant should it be
necessary to do so. Tenant's obligation to pay Basic Rent on the respective
Must-Take Space  will not commence until Landlord tenders the respective
Must-Take Space to Tenant. In the event of a delay in said delivery, the Basic
Rent schedule and the Aggregate Rent will be amended accordingly. Landlord's
failure to so tender any portion of the Must-Take Space on the respective
date(s) identified above (i) shall not affect the Lease or Tenant's obligation
to pay Rent as related to the portion of the Building that Landlord has tendered
possession to Tenant, and (ii) shall not give Tenant reason to terminate the
Lease or cancel Tenant's obligation to lease said Must-Take Space.

Notwithstanding anything to the contrary above, due to Landlord's accommodating
Tenant and allowing tenant to phase into the entire Building, Tenant shall be
responsible for one hundred percent (100%) of all Additional Rent expenses on
the entire Building as if Tenant has leased one hundred percent (100%) of said
Building from the original Lease Commencement Date. However, during the period
any part of the Must-Take Space is leased by Landlord to a third party tenant
prior to Tenant phasing into the Must-Take Space #1 and/or Must-Take Space #2 as
noted above, Landlord shall adjust Tenant's share of the Additional Rent
expenses on a pro-rata basis based on the total square footage leased by
Landlord to a third party tenant. Tenant understands that prior to the
respective phase in dates, Landlord may, from time to time, lease all or any
part of the Must-Take Space to one or more third party tenants, and that portion
of the Must-Take Space so leased will be leased between


                                       15
<PAGE>   16
Landlord and said third party tenants; provided that in no event will Landlord
lease any portion of the Must-Take Space for a period that exceeds the
respective phase in date.

Notwithstanding anything to the contrary herein, in the event Tenant is, at any
time in material default of this Lease prior to the respective phase in date(s)
and Tenant has not cured the default as provided for in this Lease, Landlord
shall have the right, but not the obligation, to rescind Tenant's right to phase
into said Must-Take Space by giving written notice to Tenant within thirty (30)
days of said material default by Tenant, and this Lease shall continue, absent
this Paragraph 54, for the remaining Term hereof.

55.  PARKING CONTINUED: Subject to Paragraph 54 above, (i) effective December
1, 2000, Tenant's non-exclusive parking spaces shall increase to approximately
162 spaces (the total number of parking spaces is subject to the actual square
footage occupied by Tenant) and (ii) effective May 1, 2001 (i) Tenant's
non-exclusive parking space shall increase to 218 spaces.

56.  EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON AREAS OF
THE COMPLEX AND BUILDING IN WHICH THE PREMISES ARE LOCATED: Effective May 1,
2001, Tenant shall occupy one hundred percent (100%) of the Building in which
the Premises are located, and as a result, Lease Paragraph 7 shall be deleted
in its entirety and replaced with the following:

          "7. EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON
          AREAS OF THE COMPLEX: As Additional Rent and in accordance with
          Paragraph 4D of this Lease, Tenant shall pay to Landlord Tenant's
          proportionate share (calculated on a square footage or other equitable
          basis as calculated by Landlord) of all expenses of operation,
          management, maintenance and repair of the Common Areas of the Complex
          including, but not limited to, license, permit, and inspection fees;
          security; utility charges associated with exterior landscaping and
          lighting (including water and sewer charges); all charges incurred in
          the maintenance and replacement of landscaped areas, lakes, parking
          lots and paved areas (including repair, replacement, resealing and
          restriping), sidewalks, driveways and private roads within the Complex
          and roads with reciprocal easement areas; maintenance, repair, and
          replacement of all fixtures and electrical, mechanical and plumbing
          systems; structural elements and exterior surfaces of the buildings;
          salaries and employees benefits of personnel and payroll taxes
          applicable thereto; supplies, materials, equipment and tools; the cost
          of capital expenditures which have the effect of reducing operating
          expenses, provided, however, that in the event Landlord makes such
          capital improvements, Landlord may amortize its investment in said
          improvements (together with interest at the rate of fifteen percent
          (15%) per annum on the unamortized balance) as an operating expense in
          accordance with standard accounting practices, provided, that such
          amortization is not at a rate greater than the anticipated savings in
          the operating expenses.

               "Additional Rent" as used herein shall not include Landlord's
          debt repayments, interest on charges; expenses directly or indirectly
          incurred by Landlord for the benefit of any other tenant; cost for the
          installation of partitioning or any other tenant improvements; cost of
          attracting tenants; depreciation; interest, or executive salaries."

57. TENANT MAINTENANCE:

          A. It is understood that as of the Lease Commencement Date, Tenant
shall be the sole occupant of the building located at 2400 Bridge Parkway,
Redwood City, of which the Leased Premises is a part. Tenant agrees that,
until such time as Landlord leases any portion of the remaining vacant space in
the building to a third party, Tenant shall be responsible for the maintenance
and repair, as defined in Lease Paragraph 10 ("Tenant Maintenance"), for the
entire building, including, but not limited to, the entire HVAC system,
electrical systems and plumbing systems within the Building.

          B. Effective May 1, 2001, Tenant shall occupy one hundred percent
(100%) of the Building in which the Premises are located, and as a result,
Lease Paragraph 10 shall be deleted in its entirety and replaced with the
following:

          "10. TENANT MAINTENANCE. Tenant shall, at its sole cost and expense,
          keep and maintain the Premises (including appurtenances) and every
          part thereof in a high standard of maintenance and repair, or
          replacement, and in good and sanitary


                                       16

<PAGE>   17

     condition. Tenant's maintenance and repair responsibilities herein
     referred to include, but are not limited to, janitorization, all windows
     (interior and exterior), window frames, plate glass and glazing (destroyed
     by accident or act of third parties), truck doors, plumbing systems (such
     as water and drain lines, sinks, toilets, faucets, drains, showers and
     water fountains), electrical systems (such as panels, conduits, outlets,
     lighting fixtures, lamps, bulbs, tubes and ballasts), heating and air
     conditioning systems (such as compressors, fans, air handlers, ducts,
     mixing boxes, thermostats, time clocks, boilers, heaters, supply and
     return grills), structural elements and exterior surfaces of the building,
     store fronts, roofs, downspouts, all interior improvements within the
     Premises including but not limited to wall coverings, window coverings,
     carpet, floor coverings, partitioning, ceilings, doors (both interior and
     exterior), including closing mechanisms, latches, locks, skylights (if
     any), automatic fire extinguishing systems, and elevators and all other
     interior improvements of any nature whatsoever. Tenant agrees to provide
     carpet shields under all rolling chairs or to otherwise be responsible for
     wear and tear of the carpet caused by such rolling chairs if such wear and
     tear exceeds that caused by normal foot traffic in surrounding areas.
     Areas of excessive wear shall be replaced at Tenant's sole expense upon
     Lease termination. Tenant hereby waives all rights under, and benefits of,
     Subsection 1 of Section 1932 and Section 1941 and 1942 of the California
     Civil Code and under any similar law, statute or ordinance now or
     hereafter in effect. In the event any of the above maintenance
     responsibilities apply to any other tenant(s) of Landlord where there is
     common usage with other tenant(s), such maintenance responsibilities and
     charges shall be allocated to the Leased Premises by square footage or
     other equitable basis as calculated and determined by Landlord."

58.  UTILITIES CONTINUED:

     A. It is understood that as of the Lease Commencement Date, Tenant shall
be the sole occupant of the building located at 2400 Bride Parkway, Redwood
City, of which the Leased Premises is a part. Tenant agrees to be responsible
for paying 100% of the utilities, including, but not limited to, water, sewer,
gas and electricity, for the entire building until such time as the remaining
vacant space in the building is leased. Tenant agrees that the utilities for
said building will be placed in Tenant's name and that Tenant will pay all
utilities directly to the respective company(s). When any of the remaining
vacant space in said building is leased, Landlord will notify Tenant and
Landlord will transfer all utilities into Landlord's name and subject to the
entire provisions of this Paragraph 56A, Tenant will pay its pro rata charge
for said utilities monthly in advance as described in and subject to Paragraph
4 "Rent" and Paragraph 8 "Utilities" of this Lease. If Tenant shall require
water, gas, or electric current in excess of that usually furnished or supplied
to Premises being used as general office space, Tenant shall first obtain the
written consent of Landlord, which consent shall not be unreasonably withheld
and Landlord may cause an electric current, gas and/or water meter to be
installed in the Premises in order to measure the amount of electric current,
gas or water consumed for any such excess use. The cost of any such meter and
of the installation, maintenance and repair thereof, all charges for water, gas
and electric current consumed by Tenant (as shown by such meters and at the
rates then charged by the furnishing public utility); and any additional
expense incurred by Landlord in keeping account of electric current, gas, or
water so consumed shall be paid by Tenant, and Tenant agrees to pay Landlord
therefor promptly upon demand by Landlord.

     B. Subject to Paragraph 54 above, effective May 1, 2001, Tenant shall lease
100% of the Building from Landlord, and shall be responsible for paying to the
respective utility companies one hundred percent of the utilities for the
Building. Effective May 1, 2001, Lease Paragraph 11 ("UTILITIES OF THE BUILDING
IN WHICH THE PREMISES ARE LOCATED") shall be deleted in its entirety and shall
be replaced with the following:

     "11. UTILITIES: Tenant shall pay promptly, as the same become due, all
     charges for water, gas, electricity, telephone, telex and other electronic
     communications service, sewer service, waste pick-up and any other
     utilities, materials or services furnished directly to or used by Tenant
     on or about the Premises during the Term of this Lease, including, without
     limitation, any temporary or permanent utility surcharge or other
     exactions whether or not hereinafter imposed.

          Landlord shall not be liable for and Tenant shall not be entitled to
     any abatement or reduction of Rent by reason of any interruption or
     failure of utility services to the Premises when such interruption or
     failure is caused by accident, breakage, repair, strikes, lockouts, or
     other labor disturbances or labor disputes of any nature, or by any other
     cause, similar or dissimilar, beyond the reasonable control of Landlord."



                                       17
<PAGE>   18



                                [PARCEL I AND II MAP]
<PAGE>   19
                                   EXHIBIT C

CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD
SAN FRANCISCO BAY REGION

ORDER NO. 94-181
UPDATED WASTE DISCHARGE REQUIREMENT FOR:

WESTPORT INVESTMENTS
(PEERY/ARRILLAGA)
PARKWOOD 101/Westport Landfill
REDWOOD CITY, SAN MATEO COUNTY


        The California Regional Water Quality Control Board, San Francisco Bay
Region, (hereinafter called the Board), finds that:

        1.      Westport Investments Inc. is the site's legal owner hereinafter
referred to as the discharger. The site is located adjacent to Belmont Slough in
Redwood City as shown in Figure 1, which is incorporated herein as a part of
this Order. No waste has been disposed of at the site since 1970, and the site
is considered a closed site.

PURPOSE OF UPDATING ORDER:

        2.      The primary objectives of this order are to revise the site's
groundwater and leachate monitoring program, and to bring the site into
compliance with the current regulations of Article 5, Title 23, Division 3,
Chapter 15 of the California Code of Regulations. Additionally, this Order
requires the discharger to reconstruct those portions of the landfill which do
not meet the requirements of Section 2581, Article 8, of Chapter 15.

SITE DESCRIPTION:

        3.      The site is located approximately one mile east of Highway 101,
and it is bordered by Belmont Slough to the north and west, and by an existing
residential development and Marine World Parkway to the east and south. The site
is divided into three areas. Two of these areas, the mound (35 acres) and
panhandle (10 acres) areas, are associated with refuse fill and currently have a
cap (with a varying thickness) overlying them. The third area (40 acres),
between the refuse fill areas and the levees, is a low-lying area that does not
contain refuse. The site's surface soils are currently composed largely of fill
that has been used to establish a cap over the refuse fill area, or used to fill
the low-lying elevations.



                                       1
<PAGE>   20

SITE HISTORY:


4.    The site was a tidal marshlands until approximately 1910, at which time
      the area was diked and used for pasture lands. The area was used as a
      refuse disposal site from 1948 to about 1970. Disposal in the panhandle
      area of the site reportedly ceased in about 1963, while disposal in the
      mound area continued until 1970 (Levin-Fricke, 1989a). The site has been
      closed in accordance with the Board's Order No. 76-77 dated October 18,
      1977. Closure involved placement of low permeability soils, Bay Mud clays
      and construction fill, over the top of the refuse.

5.    On July 20, 1976 Waste Discharge Requirements (WDRs) Order No. 76-77 was
      adopted for the site. On October 18, 1977 Order NO. 76-77 was revised by
      the adoption of Order NO. 77-134.

6.    On March 2, 1994 United Soil Engineering, Inc., (USC), conducted an
      investigation to determine the thickness of the landfill's cover. A total
      of 77 borings were advanced to a depth of 6 feet. USC's investigation
      revealed that an additional one to two feet of clay or low permeability
      soils are required to achieve a minimum thickness for most part of the
      landfill's cover. [Note: Section 2581 of Article 8 requires two feet of
      appropriate materials as a foundation layer for the final cover, one foot
      of soil with a permeability of (less than or equal to) 10(-6) cm/sec and
      one foot of protective cover soil.]

7.    In some portion of the landfill, the thickness of final cover does not
      meet the requirements of Article 8 of Chapter 15.

GEOLOGIC SETTING OF THE SITE:

8.    The sediments underlying the landfill consist primarily of shallow Bay
      deposits comprised of "Bay mud" clays and silty clays. Stiff to very stiff
      sandy clay/clayey sand was encountered below the Bay Mud extending to a
      depth of approximately 200 feet below ground surface. According to Cooper
      Engineers (Cooper, 1983), a moderately permeable sequence of clay, sand,
      and gravel underlies the stiff clays, beginning at a depth of 200 feet
      below ground surface. Franciscan bedrock was reported to be at a depth of
      approximately 300 feet below ground surface (bgs) along the western side
      of the site and 500 feet bgs along the eastern side of the site as
      reported by Cooper Engineers (1983). A general geologic cross section of
      the South Bay, including the site, is shown in Figure 2.

HYDROGEOLOGIC SETTING OF THE SITE:

9.    Investigations have shown that the groundwater movement is radially away
      from the mounded areas. However, the potential flow directions are likely
      influenced by the presence of the operating leachate collection and
      recovery system located along a line


                                       2
<PAGE>   21

        approximately 10 feet from the southern border of the mound area.
        Groundwater flow may also be influenced by the presence of landfill gas
        barriers installed off site on the Peninsula Landing site, south of the
        Panhandle, and on the Boardwalk site south of the Mound area.

10.     The direction of deeper groundwater flow cannot be established with a
        high level of certainty because of the relatively discontinuous nature
        of the water bearing zones in the low permeability clay layer beneath
        the recent Bay Mud. However, based on a study conducted by Mclaren
        (McLaren, 1989), "...regional hydrogeologic condition suggest that
        deeper groundwater moves in an easterly direction toward San Francisco
        Bay."

11.     A comparison of the shallow and deep groundwater levels have indicated
        the existence of a slightly downward vertical gradient except for well
        P-1A and P-1B. In October of 1988, an upward gradient was observed for
        the two aforementioned monitoring wells. However, subsequent studies for
        these wells showed a downward vertical gradient.

12.     Confined aquifer zones of moderate permeability which are the major
        groundwater sources for the region, are located at a depth of 190 to 200
        feet beneath the site. This aquifer zone is an extension of the major
        artesian basin of the South Bay and Santa Clara Valley and consists
        chiefly of unconsolidated Quarternary alluvium.

13.     The beneficial uses of Belmont slough, and South San Francisco Bay are
        as follows:

        a.      Wildlife habitat

        b.      Brackish and salt water marshes

        c.      Water contact recreation

        d.      Non-water contact water recreation

        e.      Commercial and sport fishing

        f.      Preservation of rare and endangered species

        g.      Esturaine habitat

        h.      Fish migration and spawning

14.     The present and potential beneficial uses of the deeper groundwater are
        as follows:

        a.      Domestic and municipal water supply

        b.      Industrial process supply

        c.      Industrial service supply

        d.      Agricultural supply

WASTES AND THEIR CLASSIFICATION:

15.     Approximately 45 acres of the project site were used for landfill
        disposal of municipal solid waste and incinerator ash from 1948 to 1970.
        About 650,000 cubic yards of fill material has been disposed of at the
        site. The refuse material at the site consisted of


                                       3

<PAGE>   22
        paper, glass, plastic, and minor amounts of wood and rock fragments and
        incinerator ashes.

MONITORING PROGRAM:

16.     There are 10 existing on-site groundwater monitoring wells and 2
        off-site wells to the south of the site, near Marine World Parkway.
        These wells were installed by various consultants in conjunction with
        the evaluation of groundwater conditions for the entire 85-acre site.
        Seven wells monitor landfill leachate.

17.     An investigation was conducted by LEVIN-FRICKE during the period from
        August through December 1988 to characterize soil and groundwater
        quality at the landfill in accordance with the Solid Waste Assessment
        Test (SWAT) requirements. This investigation concluded that the landfill
        was leaking low levels of contaminants.

18.     The discharger shall initiate a semi-annual monitoring program for the
        existing monitoring network which consists of 6 leachate wells (P-2A,
        P-1A, S-1A, S-2, S-5, LW-1), five deep groundwater wells (UGP-1, P-2B,
        P-1B, MW-1, MW-2), 21 shallow groundwater wells (UPG-2, P-8, P-7, K-1,
        P-3, K-3, K-4, P-5, P5-1, K-5, MW-3, MW3-1, MW3-2, S-3A, S-4A, P-4, K-2,
        P-6), and 4 surface water monitoring points (SW-1, SW-2, SW-3, SW-4) as
        shown in Figure 1 of the attached discharge monitoring program. The
        points of compliance for shallow and deep groundwater zones have been
        identified as those wells which monitor the shallow and the deep
        groundwater zones beneath the site.

19.     Federal Regulations [40 Code of Federal Regulations (CFR) Parts 122,
        123, and 124] require specific categories of industrial activities,
        including landfills, to obtain a NPDES permit for storm water
        discharges. The State Water Resources Control Board has issued a General
        Permit for Storm Water Discharges Associated with Industrial Activities
        (NPDES Permit No. CAS000001). This facility is subject to these
        requirements. Pursuant to the Stormwater Discharge Program, this
        facility is required to submit a Notice of Intent for coverage under
        the General Permit; to prepare and implement a monitoring program; and
        to submit an annual report. Compliance with the monitoring and reporting
        requirements of this Order are intended to assure compliance with the
        requirements of the General Permit.

EXISTING LEACHATE CONTROL SYSTEM:

20.     The leachate collection system of the site consists of two trenches. The
        trenches were excavated to depths of 8 to 13 feet bgs. The approximate
        locations of the leachate trenches are shown in Figure 3. The leachate
        collection and recovery system has been



                                       4
<PAGE>   23


     operational in Trench No. 1 since installation. Leachate Trench No. 1 is
     fitted with an automatic pumping system that periodically pumps leachate
     from manhole No. 1 to the sanitary sewer as needed to maintain a low level
     of leachate in the trench. The pumping system for Trench No. 2 is not
     currently operating because migration of leachate has been mitigated to
     some extent by the relatively impervious clays at the site.

CALIFORNIA ENVIRONMENTAL QUALITY ACT

21.  This site is exempt from the provisions of the California Environmental
     Quality Act (CEQA) pursuant to Section 15308, Title 14 of the California
     Code of Regulation. However, any subsequent development of closed landfill
     may not be exempt from CEQA.

22.  Sanitary landfills could potentially impact groundwater if not properly
     designed maintain and/or operated. Groundwater can also be affected by
     water that percolates through waste materials and extracts or dissolves
     substances from it and carries them into the groundwater.

23.  The preceding impacts are mitigated or avoided by design measures to
     control erosion and assure containment of waste and leachate through the
     use of leachate collection and removal systems.

24.  The Board has notified the discharger and interested agencies and persons
     of its intent to prescribe waste discharge requirements for the discharge,
     and has provided them with an opportunity to submit their written views and
     recommendations.

25.  The Board in a public meeting heard and considered all comments pertaining
     to the discharge.

IT IS HEREBY ORDERED that the dischargers, their agents, successors and assigns
are to complete closure activities (modifications of clay cap), conduct
postclosure maintenance and monitoring pursuant to authority in Title 23,
Chapter 15, Section 2581 and California Water Code Division 7 and the following:

A.   PROHIBITIONS

     1.   Wastes shall not be in contact with ponded water.

     2.   Leachate from wastes and ponded water containing leachate or in
          contact with refuse shall not be discharged to waters of the State or
          of the United States.

     3.   Wastes of any origin and type shall not be deposited or stored at this
          site after the adoption of this Order.


                                       5


<PAGE>   24
     4.   The discharger, or any future owner or operator of this site, shall
          not cause the following conditions to exist in waters of the State at
          any place outside the waste management facility:

          a.   Surface Waters

               1.   Floating, suspended, or deposited macroscopic particulate
                    matter or foam.

               2.   Bottom deposits or aquatic growth.

               3.   Adversely alter temperature, turbidity, or apparent color
                    beyond natural background levels.

               4.   Visible, floating, suspended or deposited oil or other
                    products of petroleum origin.

               5.   Toxic or other deleterious substances to be present in
                    concentrations or quantities which may cause deleterious
                    effects on aquatic biota, wildlife or waterfowl, or which
                    render any of these unfit for human consumption either at
                    levels created in the receiving waters or as a result of
                    biological concentrations. [Note: the surface water and
                    shallow groundwater on and in the vicinity of the site are
                    not used for human consumption since they are brackish
                    and/or saline]

          b.   Groundwater

               The groundwater shall not be degraded as a result of the waste
               maintained at the facility.

B.   SPECIFICATIONS

     1.   All reports pursuant to this Order shall be prepared under the
          supervision of a registered civil engineer, California registered
          geologist or certified engineering geologist.

     2.   The site shall be protected from any washout or erosion of wastes from
          inundation which could occur as a result of a 100-year 24-hour
          precipitation event, or as the result of flooding with a return
          frequency of 100 years.

     3.   The existing leachate control facility shall be maintained and remain
          operational as long as leachate is present and it poses a threat to
          water quality.


                                       6



<PAGE>   25

4.      All conveyance control facilities and hydraulic structures shall be
        maintained to ensure normal flow of liquid and to prevent hydraulic
        pressure buildup within the pipeline.

5.      The discharger shall assure that the foundation of the site, the refuse
        fill, and the structures which control leachate, surface drainage,
        erosion and gas for this site are constructed and maintained to
        withstand conditions generated during maximum probable earthquake.

6.      The facility's Leachate Collection and Removal System (LCRS) must be
        capable of creating an inward leachate gradient which shall prevent
        leachate migration offsite.

7.      The existing LCRS shall be inspected monthly or more frequently as
        necessary and any accumulated fluid shall be removed.

8.      The exterior surfaces (cap) shall be graded to promote lateral runoff of
        precipitation and to ensure that ponding does not occur.

9.      A detailed survey of the landfill's cap must be made, to assure that
        construction is in compliance with the requirement of Article 8 of
        Chapter 15.

10.     The discharger shall maintain and monitor the waste unit to prevent a
        statistically significant increase to exist between water quality at
        the point of compliance as provided in Section 2550.5, Article 5 of
        Chapter 15.

11.     In the event of a release of a constituent of concern beyond the Point
        of Compliance, the site will begin a Compliance Period pursuant to
        Section 2550.6(a). During the Compliance Period, the discharger shall
        perform an Evaluation Monitoring Program and a Corrective Action
        Program.

12.     The discharger shall install any reasonable additional groundwater and
        leachate monitoring devices required to fulfill the terms of any
        Discharge Monitoring Program issued by the Executive Officer.

13.     Methane and other landfill gases shall be adequately vented, removed
        from the landfill units, or otherwise controlled to minimize the danger
        of explosion, adverse health effects, nuisance conditions, or the
        impairment of beneficial uses of water due to migration through the
        vadose (unsaturated) zone in accordance with applicable regulatory
        requirements.

14.     This Board considers the property owner and site operator to have
        continuing responsibility for correcting any problems which arise in
        the future as a result


                                       7
<PAGE>   26
        of this waste discharge or related operations during the active life and
        post-closure maintenance period.

15.     The discharger shall maintain all devices or designed features,
        installed in accordance with this Order such that they continue to
        operate as intended without interruption as provided for by the
        performance standards adopted by the California Integrated Waste
        Management Board.

16.     The discharger shall provide and maintain a minimum of two permanent
        surveyed monuments near the landfill from which the location and
        elevation of wastes, containment structures, and monitoring facilities
        can be determined throughout the post-closure and maintenance periods.
        These monuments shall be installed by a licensed land surveyor or
        registered civil engineer.

17.     The Regional Board shall be notified immediately of any failure
        occurring in the waste management unit. Any failure which threatens the
        integrity of containment features or the landfill shall be promptly
        corrected after approval of the method and schedule by the Executive
        Officer.

18.     The discharger shall comply with all applicable provisions of Chapter 15
        that are not specifically referred to in this Order.

19.     The discharger must reconstruct the final cover to meet the requirements
        of CCR Title 23.

20.     The discharger shall maintain the facility so as to prevent a
        statistically significant increase in water quality parameters at the
        point of compliance as provided in Section 2550.5. According to Section
        2550.2 and 2550.3 of Chapter 15, the discharger is also required to
        establish a Water Quality Protection Standards (WQPS) and a list of
        Constituents of Concern (COCs). The discharger shall meet the following
        schedule in implementing the requirements of this Provision. The
        discharger shall monitor a minimum of four quarters (one year) for the
        parameters listed in Table 2. Based upon the results of the monitoring,
        the discharger shall propose a revised list of COC's and monitoring
        parameters in accordance with the requirements of this Order and Article
        5 of Chapter 15. Within 15 months following the adoption of this Order,
        the discharger shall submit a monitoring program to include a
        statistical analysis method to the Board for approval by the Executive
        Officer. A non statistical method (e.g., concentration trend analysis
        and comparison to practical quantitation limits) will be utilized to
        evaluate the significance of groundwater data until the proposed
        statistical methods are approved by the Board.
<PAGE>   27
C.   PROVISIONS

     1.   The discharger shall comply with all Prohibitions, Specifications, and
          Provisions of this Order, immediately upon adoption of this Order or
          as provided below.

     2.   The discharger shall submit a detailed POST EARTHQUAKE INSPECTION AND
          CORRECTIVE ACTION PLAN acceptable to the Executive Officer to be
          implemented in the event of any earthquake generating ground shaking
          of Richter Magnitude 7 or greater or within 30 miles of the landfill.
          The report shall describe the containment features, and ground water
          monitoring and leachate control facilities potentially impacted by the
          static and seismic deformations of the landfill. The plan shall
          provide for reporting results of the post earthquake inspection to the
          Board within 72 hours of the occurrence of the earthquake. Immediately
          after an earthquake event causing damage to the landfill structures,
          the corrective action plan shall be implemented and this Board shall
          be notified of any damage.

               REPORT DUE DATE:    WITHIN THREE MONTHS OF ADOPTION OF THIS ORDER

     3.   The discharger shall submit a CONTINGENCY PLAN to be instituted in the
          event of a leak or spill from the leachate facilities. The discharger
          shall give immediate notification to the San Francisco Bay Regional
          Water Quality Control Board, the Local Enforcement Agency (LEA), and
          the California Department of Toxic Substance Control. The discharger
          shall initiate its corrective action plan to stop and contain
          the migration of pollutants from the site.

               REPORT DUE DATE:    WITHIN THREE MONTHS OF ADOPTION OF THIS ORDER

     4.   The discharger shall file with the Regional Board Discharge Monitoring
          Reports prepared under the supervision of a registered civil engineer
          or registered geologist performed according to any DISCHARGE
          MONITORING PROGRAM issued by the Executive Officer.

     5.   The reports pursuant to these Provisions shall be prepared under the
          supervision of a registered engineer or certified engineering
          geologist.

     6.   The discharger shall comply with all applicable items of the attached
          Discharge Monitoring Program, or any amendments thereafter.

     7.   In the event of any change in control of ownership of land or waste
          discharge


                                       9

<PAGE>   28
          facilities presently owned or controlled by the Discharger, the
          Discharger shall notify the succeeding owner or operator of the
          existence of this Order by letter, a copy of which shall be
          immediately forwarded to this office. To assume operations of this
          Order, the succeeding owner or operator must apply in writing to the
          Executive Officer requesting transfer of the Order. (Refer to Standard
          Provisions referenced above). The request must contain the requesting
          entity's full legal name, the address and telephone number of the
          persons responsible for contract with the Board and a statement. The
          statement shall comply with the signatory paragraph described in
          Standard Provisions and state that the new owner or operator assumes
          full responsibility for compliance with this Order. Failure to submit
          the request shall be considered a discharge without requirements, a
          violation of the California Water Code.

     8.   The discharger shall immediately notify the Board of any flooding,
          equipment failure, slope failure, or other change in site conditions
          which could impair the integrity of waste or leachate contaminant
          facilities or precipitation and drainage control structures.

               NOTIFICATION:  IMMEDIATELY
               REPORT DUE DATE:    WITHIN 7 DAYS AFTER THE INCIDENT

     9.   The discharger shall prepare, implement and submit a Storm Water
          Pollution Prevention Plan in accordance with requirements specified in
          State Water Resources Control Board General Permit for Storm Water
          Discharges Associated with Industrial Activities (NPDES Permit No.
          CAS000001).

               REPORT DUE DATE: APRIL 1, 1995

     10.  The discharger must reconstruct those portions of the landfill's cap
          which do not meet the requirements of Article 8, Section 2581 of
          Chapter 15. The discharge is required to submit a complete and
          comprehensive construction plan with 60 days of the adoption of this
          Order.

     11.  This order requires the discharger to initiate the semi-annual self
          monitoring program as defined in the attached Parts A & B.

     12.  The discharger shall maintain a copy of this Order at the site so as
          to be available at all times to site operating personnel.

     13.  This Board considers the property owner and site operator to have
          continuing responsibility for correcting any problems which may arise
          in the future as


                                       10
<PAGE>   29

     result of this waste discharge or related operations.

14.  The discharge shall permit the Board or its authorized representative, upon
     presentation of credentials:

     a.   Immediate entry upon the premises on which wastes are located or in
          which any required records are kept.

     b.   Access to copy any records required to be kept under the terms and
          conditions of this Order.

     c.   Inspection of any treatment equipment, monitoring equipment, or
          monitoring method required by this Order or by any other California
          State Agency.

     d.   Sampling of any discharge or ground water governed by this Order.

15.  These requirements do not authorize commission of any act causing injury
     to the property of another or of the public; do not convey any property
     rights; do not remove liability under federal, state or local laws; and do
     not authorize the discharge of wastes without appropriate permits from
     other agencies or organizations.

16.  This Order is subject to Board review and updating, as necessary, to comply
     with changing State or Federal laws, regulations, policies, or guidelines;
     changes in the Board's Basin Plan; or changes in the discharge
     characteristics.

17.  Copies of all correspondence, reports, and documents pertaining to
     compliance with the Prohibitions, Specifications and Provisions of this
     Order, shall also be provided to the Environmental Health Services Division
     of San Mateo County.

18.  The discharger shall analyze groundwater, leachate and surface water
     samples for the parameters as presented in Table 2 of the Discharge
     Monitoring Program for the Parkwood 101/westport landfill.

19.  TASK 1: DOCUMENTATION OF INSTALLATION OF ADDITIONAL GROUNDWATER
     MONITORING WELLS
     Completion Date: March 1, 1995
     The discharger is required to submit a technical report acceptable to the
     Executive Officer that documents that the monitoring wells (MW3-1, MW3-2,
     P5-1, LW-1) listed in Table No. 1 in Part B of the attached Self Monitoring
     Program have been installed.


                                       11

<PAGE>   30
     20.  This Order rescinds Orders No. 76-77 and 77-134.

I, Steven R. Ritchie Executive Officer, do hereby certify that the foregoing is
a full, complete, and correct copy of an Order adopted by the California
Regional Water Quality Control Board, San Francisco Bay Region, December 14,
1994.

                                        /s/ STEVEN R. RITCHIE
                                        ---------------------
                                        Steven R. Ritchie
                                        Executive Officer

Attachments:

1.   Figures:
     1.   Site Location Map
     2.   General Geologic X-Section
     3.   Leachate Trenches Location Map

2.   Discharge Monitoring Program

References:

Cooper Engineers (1983). Geotechnical and Waste Management Engineering Studies
for Approval of Concept Plan, Lands of Parkwood 101 Associates, Redwood City,
California.

Levin-Fricke, Inc. (1989). Solid Waste Assessment Test Investigation Report,
Westport Landfill Site, Redwood City, California. November.

McLaren Engineers (1989). Drat Supplemental Environmental Impact Report,
Westport Development Project. October.

United Soil Engineering INC. (1994). Clay Cap Thickness Investigation, Westport
Office Park, Marine World Parkway, Redwood City, California.



                                       12
<PAGE>   31
                                  FIGURE NO. 1

                               SITE LOCATION MAP
<PAGE>   32
                                  FIGURE NO. 2

                           GENERAL GEOLOGIC S-SECTION
<PAGE>   33
                                  FIGURE NO. 3

                         LEACHATE TRENCHES LOCATION MAP
<PAGE>   34
                CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD
                            SAN FRANCISCO BAY REGION

                          DISCHARGE MONITORING PROGRAM

                                      FOR

                            WESTPORT INVESTMENTS INC.
                          PARKWOOD 101 CLOSED LANDFILL
                         REDWOOD CITY, SAN MATEO COUNTY

                                ORDER NO. 94-181



                                  CONSISTS OF

                                     PART A

                                      AND

                                     PART B
<PAGE>   35
                                     PART A

A.   GENERAL

     Reporting responsibilities of waste dischargers are specified in Sections
     13225(a), 13267(b), 13383, and 13387(b) of the California Water Code and
     this Regional Board's Resolution No. 73-16. This Discharge Monitoring
     Program is issued in accordance with Provision C.4 of Regional Board Order
     No. 94-181.

     The principal purposes of a discharge monitoring program are:

     (1)  to document compliance with waste discharge requirements and
          prohibitions established by the Board,

     (2)  to facilitate self-policing by the waste discharger in the prevention
          and abatement of pollution arising from waste discharge,

     (3)  to develop or assist in the development of standards of performance,
          and toxicity standards,

     (4)  to assist the discharger in complying with the requirements of Article
          5, Chapter 15 as revised July 1, 1991.

B.   SAMPLING AND ANALYTICAL METHODS

     Sample collection, storage, and analyses shall be performed according to
     the most recent version of EPA Standard Methods and in accordance with an
     approved sampling and analysis plan.

     Water and waste analysis shall be performed by a laboratory approved for
     these analyses by the State of California. The director of the laboratory
     whose name appears on the certification shall supervise all analytical work
     in his/her laboratory and he/she or their authorized representative shall
     sign all reports of such work submitted to the Regional Board.

     All monitoring instruments and equipment shall be properly calibrated
     and maintained to ensure accuracy of measurements.

C.   DEFINITION OF TERMS

     1.   A grab sample is a discrete sample collected at any time.

     2.   Receiving waters refers to any surface water which actually or
          potentially receives surface or groundwater which pass over, through,
          or under waste materials or contaminated soils. In this case, the
          groundwater beneath and adjacent to the landfill


                                       2
<PAGE>   36
     areas and the surface runoff from the site are considered receiving waters.

3.   Standard observations refer to:

     a.   Receiving Waters

          1) Floating and suspended materials of waste origin: presence or
             absence, source and size of affected area.

          2) Discoloration and turbidity: description of color, source, and size
             of affected area.

          3) Evidence of odors, presence or absence, characterization, source,
             and distance of travel from source.

          4) Evidence of beneficial use: presence of water associated wildlife.

          5) Flow rate.

          6) Weather conditions: wind direction and estimated velocity, total
             precipitation during the previous five days and on the day of
             observation.

     b.   Perimeter of the waste management unit

          1) Evidence of liquid leaving or entering the waste management unit,
             estimated size of affected area and flow rate. (Show affected area
             on a map.)

          2) Evidence of odors, presence or absence, characterization, source,
             and distance of travel from source.

          3) Evidence of erosion and/or daylighted refuse.

     c.   The waste management unit

          1) Evidence of ponded water at any point on the waste management
             facility.

          2) Evidence of odors, presence or absence, characterization, source,
             and distance of travel from source.

          3) Evidence of erosion and/or daylighted refuse.

          4) Standard Analysis (SA) and measurements are listed on Table 2
             (attached).

D.   SAMPLING, ANALYSIS, AND OBSERVATIONS

     The discharger is required to perform sampling, analyses, and observations
     in the following media:

     1.   Groundwater per Section 2550.7(b)

     2.   Surface water per Section 2550.7(c) and per the general requirements
          specified in Section 2550.7(e) of Article 5, Chapter 15 and

     3.   Vadose zone per Section 2550.7(d). This item is neither feasible nor
          applicable for this landfill.


                                       3
<PAGE>   37
<TABLE>
<CAPTION>
<S>                           <C>               <C>                 <C>
Chlorinated Herbicides        8150 w/           Once in 5 yr        3
                              capillary
                              column
-----------------------------------------------------------------------------
Arsenic                       7061              Semi-annual         3
-----------------------------------------------------------------------------
Cadmium                       7131              Semi-annual         3
-----------------------------------------------------------------------------
Chromium                      6010              Semi-annual         3
-----------------------------------------------------------------------------
Copper                        6010              Semi-annual         3
-----------------------------------------------------------------------------
Lead                          7421              Semi-annual         3
-----------------------------------------------------------------------------
Mercury                       7470              Semi-annual         3
-----------------------------------------------------------------------------
Nickel                        6010              Semi-annual         3
-----------------------------------------------------------------------------
Selenium                      7740              Semi-annual         3
-----------------------------------------------------------------------------
Silver                        6010              Semi-annual         3
-----------------------------------------------------------------------------
Zinc                          6010              Semi-annual         3
-----------------------------------------------------------------------------
</TABLE>

1.  Not Applicable
2.  Methods for Chemical Analysis of Water and Wastes, EPA600/4/79/029, revised
    March 1983
3.  EPA SW-846
4.  Only for surface water monitoring

                                       2
<PAGE>   38
Table 2 - Discharge Monitoring Plan, List of Analytical Parameters

<TABLE>
<CAPTION>
                                      Method
Parameters                            (USEPA)     Frequency           Reference
--------------------------------------------------------------------------------
<S>                                   <C>         <C>                 <C>
Leachate Level Measurements           Field       Semi-annual             1
--------------------------------------------------------------------------------
Water Level Measurements              Field       Semi-annual             1
--------------------------------------------------------------------------------
Temperature Measurements              Field       Semi-annual             1
--------------------------------------------------------------------------------
Electrical Conductivity               Field       Semi-annual             3
--------------------------------------------------------------------------------
pH                                    Field       Semi-annual             3
--------------------------------------------------------------------------------
Total Organic Carbon                  415.1       Semi-annual             2
--------------------------------------------------------------------------------
Total Nitrogen (the sum of Nitrate    351.2       Semi-annual             2
Nitrogen and Kjeldahl Nitrogen)
--------------------------------------------------------------------------------
Turbidity                             Field       Semi-annual             1, 4
--------------------------------------------------------------------------------
Alkalinity, bicarbonate               310.1       Semi-annual             2
--------------------------------------------------------------------------------
Alkalinity, hydroxide                 310.1       Semi-annual             2
--------------------------------------------------------------------------------
Biological Oxygen Demand              410.4       Semi-annual             4
--------------------------------------------------------------------------------
Ammonia as N (nonionized)             350.1       Semi-annual             4
--------------------------------------------------------------------------------
Chemical Oxygen Demand                410.2       Semi-annual             2, 4
--------------------------------------------------------------------------------
Total Dissolved Solids                160.1       Semi-annual             2, 4
--------------------------------------------------------------------------------
Total Suspended Solids                160.2       Semi-annual             2, 4
--------------------------------------------------------------------------------
Volatile Organic Compounds            8260 w/     Once in 5 yrs           3
(Appendix I)                          capillary
                                      column
--------------------------------------------------------------------------------
Volatile Organic Compounds            8260/w      Once in 5 yrs           3
(Appendix I & II)                     capillary
                                      column
--------------------------------------------------------------------------------
Appendix II                           8270        Once in 5 yrs           3
Semi-volatile Organics Compounds
--------------------------------------------------------------------------------
Organophosphorus Pesticides &         8140 w/     Once in 5 yrs           3
PCB's                                 capillary
                                      column
--------------------------------------------------------------------------------
</TABLE>

                                       1

<PAGE>   39
E. RECORDS TO BE MAINTAINED

   Written reports shall be maintained by the discharger or laboratory, and
shall be retained for a minimum of five years. This period of retention shall
be extended during the course of any unresolved litigation regarding this
discharge or when requested by the Board. Such records shall show the following
for each sample:

   1. Identity of sample and sample station number.

   2. Date and time of sampling.

   3. Date and time of analyses, and name of the personal performing the
      analyses.

   4. Complete procedure used, including method of preserving the sample, and
      the identity and volumes of reagents used where applicable; or reference
      to standard EPA methods.

   5. Calculation of results.

   6. Results of analyses, and detection limits for each analysis.

F. REPORTS TO BE FILED WITH THE BOARD

   1. Written detection monitoring reports shall be filed by the 15th day of the
      month following the report period. In addition, an annual report shall be
      filed as indicated in F.3 below. The reports shall be comprised of the
      following:

      a. Letter of Transmittal

         A letter transmitting the essential points in each report should
         accompany each report. Such a letter shall include a discussion of any
         requirement violations found during the last report period, and
         actions taken or planned for correcting the violations. If the
         discharger has previously submitted a detailed time schedule for
         correcting requirement violations, a reference to the correspondence
         transmitting such schedule will be satisfactory. If no violations have
         occurred in the last report period, this shall be stated in the letter
         of transmittal. Monitoring reports and the letter transmitting the
         monitoring reports shall be signed by a principal executive officer at
         the level of vice president or his duly authorized representative, if
         such representative is responsible for the overall operation of the
         facility from which the discharge originates. The letter shall contain
         a statement by the official, under penalty of perjury, that to the
         best of the signer's knowledge, the report is true, complete, and
         correct.

      b. Each monitoring report shall include a compliance evaluation summary.
         The summary shall contain:


                                       4
<PAGE>   40
    1)  A graphic description of the velocity and direction of groundwater flow
        under/around the waste management unit, based upon the past and present
        water level elevations and pertinent visual observations. A statistical
        evaluation of the water quality monitoring data for all groundwater
        compliance points (As required under Part B (Table 1)).

    2)  The method and time of water level measurement, the type of pump used
        for purging, pump placement in the well; method of purging, pumping
        rate, equipment and methods used to monitor field PH, temperature, and
        conductivity during purging, calibration of the field equipment,
        results of the PH, temperature conductivity and turbidity testing, well
        recovery time, and method of disposing of the purge water.

    3)  Type of pump used, pump placement for sampling, a detailed description
        of the sampling procedure; number and description of equipment, field
        and travel blanks; number and description of duplicate samples; type of
        sample containers and preservatives used, the date and time of
        sampling, the name and qualification of the person actually taking the
        samples, and any other observations.

c.  A map or aerial photograph shall accompany each report showing observation
    and monitoring station locations.

d.  Laboratory statements of results of analyses specified in Part B must be
    included in each report. The director of the laboratory whose name appears
    on the laboratory certification shall supervise all analytical work in
    his/her laboratory and shall sign all reports of such work submitted to the
    Board.

    1)  The methods of analyses and detection limits must be appropriate for
        the expected concentrations. Specific methods of analyses must be
        identified. If methods other than EPA approved methods or Standard
        Methods are used, the exact methodology must be submitted for review
        and approval by the Executive Officer prior to use.

    2)  In addition to the results of the analyses, laboratory quality
        assurance/quality control (QA/QC) information must be included in the
        monitoring report. The laboratory QA/QC information should include the
        method, equipment and analytical detection limits; the recovery rates;
        and explanation for any recovery rate that is outside of the normal
        range specified by the EPA for that method; the results of equipment
        and method blanks; the results of spiked and surrogate samples; the
        frequency of quality control analysis; and the name of the person(s)
        performing the analyses.

e.  An evaluation of the effectiveness of the leachate-monitoring or control
    facilities,



                                       5
<PAGE>   41


    which includes an evaluation of leachate buildup within the disposal units,
    a summary of leachate volumes removed from the units, and a discussion of
    the leachate disposal methods utilized.

f.  A summary and certification of completion of all standard observations for
    the waste management unit, the perimeter of the waste management unit, and
    the receiving waters.

g.  The quantity and types of wastes disposed of during the past quarter, and
    the locations of the disposal operations.

2. CONTINGENCY REPORTING

a.  A report shall be made by telephone of any seepage from the disposal area
    immediately after it is discovered. A written report shall be filed with the
    Board within five days thereafter. This report shall contain the following
    information:

    1) a map showing the location(s) of discharge;
    2) approximate flow rate;
    3) nature of effects; i.e., all pertinent observations and analyses; and
    4) corrective measures underway or proposed.

b.  A report shall be made in writing to the Board within seven days of
    determining that a statistically significant increase occurred at a point of
    compliance (between a down gradient sample and a WQPS). Notification shall
    indicate what WQPS(s) has/have been exceeded. The discharger shall
    immediately re-sample at the compliance point where this difference has been
    found and reanalyze.

c.  If re-sampling and analysis confirms the earlier finding of a statistically
    significant increase between monitoring results and WQPS(s), the discharger
    must submit to the Board an amended Report of Waste Discharge as specified
    in Section 2550.8(k)(5) for establishment of an Evaluation Monitoring
    Program (EMP) meeting the requirements of Section 2550.9 of Chapter 15.

d.  Within 180 days of determining statistically significant evidence of a
    release, submit to the regional board an engineering feasibility study for a
    Corrective Action Program (CAP) necessary to meet the requirements of
    Section 2550.10. At a minimum, the feasibility study shall contain a
    detailed description of the corrective action measures that could be taken
    to achieve background concentrations for all constituents of concern.

3. REPORTING

    By January 31 of each year, the discharger shall submit an annual report to
    the Board

                                       6
<PAGE>   42
   covering the previous calendar year. This report shall contain:

   a. Tabular and graphical summaries of the monitoring data obtained
      during the previous year; the report should be accompanied by a 5-1/4" or
      3-1/2" computer data disk, MS-DOS ASCII format, tabulating the year's
      data.

   b. A comprehensive discussion of the compliance record, and the
      corrective actions taken or planned which may be needed to bring the
      discharger into full compliance with the waste discharge requirements.

   c. A map showing the area, if any, in which filling has been completed
      during the previous calendar year. [Not applicable for this site]

   d. A written summary of the groundwater analyses indicating any change
      in the quality of the groundwater.

   e. An evaluation of the effectiveness of the leachate monitoring/control
      facilities, which includes an evaluation of leachate buildup within the
      disposal units, a summary of leachate volumes removed from the units, and
      a discussion of the leachate disposal methods utilized.

4. WELL LOGS

   A boring log and a monitoring well construction log shall be submitted for
   each new sampling well established for this monitoring program, as well as a
   report of inspection or certification that each well has been constructed in
   accordance with the construction standards of the Department of Water
   Resources. These shall be submitted within 30 days after well installation.


                                       7
<PAGE>   43

                                     PART B

1.   DESCRIPTION OF OBSERVATION STATIONS AND SCHEDULE OF OBSERVATIONS

     A.   ON-SITE OBSERVATIONS -- Report Semi-annually

<TABLE>
<CAPTION>
               STATION   DESCRIPTION         OBSERVATIONS        FREQUENCY
<S>                      <C>                 <C>                 <C>
               V-1       Located on the      Standard            Quarterly
               thru      waste disposal      observations
               V-'n'     area as deli-       for the waste
                         neated by a         management
                         500 foot grid       unit.
                         network.

               P-1       Located at          Standard            Quarterly
               thru      equidistant         observations
               P-'n'     intervals not       for the
               (perim-   exceeding 1000      perimeter.
               eter)     feet around the
                         perimeter of
                         the waste
                         management unit.
</TABLE>

        A map showing visual and perimeter compliance points (V and P stations)
        shall be submitted by the discharger in the semi-annually monitoring
        report.

B.      GROUNDWATER, LEACHATE AND SURFACE WATER MONITORING

        REPORT SEMI-ANNUALLY

        Groundwater, surface water, leachate and seepage monitoring points shall
        be monitored as outlined below on Table 1 and Table 2 and shown on
        Figure 1 (Attached).

        During the wet season (October through April), estimate or calculate the
        volume of storm water discharge from each outfall and collect and
        analyze samples of storm water discharge from two storm events during
        each wet season which produce


                                       8
<PAGE>   44
     significant storm water discharge as defined in State Water Resources
     Control Board Order No. 92-12-DWQ (General Permit for Storm Water
     Discharges). The samples must be analyzed for:

     -    pH, total suspended solids (TSS), specific conductance, and total
          organic carbon (TOC).

     -    Toxic chemicals and other pollutants that are likely to be present in
          storm water discharge in significant quantities.

<PAGE>   45
                                    TABLE 1

MONITORING POINTS FOR EACH MONITORING MEDIUM:

<TABLE>
<CAPTION>
                                                                 UPGRADIENT
MONITORING MEDIA              POINTS OF COMPLIANCE               WELLS
----------------              --------------------               -----------
<S>                           <C>                                <C>
Surface Water                 SW1, SW2, SW3                      SW1
----------------------------------------------------------------------------
Groundwater                   Deep groundwater                   UPG-1
                              Monitoring Wells: P-2B,
                              P-1B, MW-1, MW-2.

                              Shallow Groundwater                UPG-2
                              Monitoring Wells: P-8, P-
                              7, K-1, P-3, K-3,* K-4, P-
                              5, P5-1, K-5, MW-3,
                              MW3-1, MW3-2, S-3A, S-
                              4A, P-4, K-2, P-6
----------------------------------------------------------------------------
Leachate                      *P-2A, P-1A, LW-1, S-              Not Applicable
                              1A, S-2, S-5
----------------------------------------------------------------------------
</TABLE>

*    Leachate wells are not considered compliance points
*    K-4 is not a compliance groundwater monitoring well

     C.   FACILITIES MONITORING

          The discharger shall inspect all facilities to ensure proper and safe
          operations once per quarter and report quarterly. The facilities to be
          monitored shall include, but not be limited to:

          a.   Leachate collection and removal systems;
          b.   Surface water monitoring points;
          c.   Shallow and deep groundwater monitoring wells;
          d.   Perimeter diversion channels;
          e.   Leachate wells;


                                       10
<PAGE>   46
I, Steven Ritchie Executive Officer, hereby certify that the foregoing
Self-Monitoring Program:

1.   Has been developed in accordance with the procedures set forth in this
     Board's Resolution No. 73-16 in order to obtain data and document
     compliance with waste discharge requirements established in this Board's
     Order No. 94-181.

2.   Is effective on the date shown below.

3.   May be reviewed or modified at any time subsequent to the effective date,
     upon written notice from the Executive Officer.

                                        /s/ STEVEN R. RITCHIE
                                        ----------------------------------------
                                        Steven R. Ritchie
                                        Executive Officer

Date Ordered: December 14, 1994
Attachments:
Figure 1 - Monitoring Points Location Map
Table 2 - Discharge Monitoring Plan



                                       11

<PAGE>   47

                                    FIGURE 1

                        [MONITORING POINTS LOCATION MAP]

<PAGE>   48
                                  EXHIBIT "D"

                          HAZARDOUS MATERIALS REPORTS
                               PROVIDED TO TENANT

1)  Applicability of ChemRisk Assessment for the Westport Site, Dated October
    1989, to Currently Proposed Site Development Plan - Report dated June 28,
    1994, prepared by ChemRisk

2)  Draft Supplement Environment Impact Report for Westport Development
    Project dated October 1989, prepared by McLaren

3)  Revised Discharge Monitoring Plan for Westport Landfill Site Dated May 1996
    prepared by Geomatrix Consultants