<PAGE>


                                                                   Exhibit 10.17


                                   TENANT COPY
                       FIRST AMENDMENT TO LEASE AGREEMENT

         This First Amendment to Lease Agreement (the "Amendment") is made and
entered into as of June 2, 2000, by and between LEGACY-RECP SORRENTO OPCO, LLC,
a Delaware limited liability company ("Landlord"), and WEBSENSE, Inc., a
Delaware corporation ("Tenant"), with reference to the following facts.

                                    RECITALS

         A.       Landlord and Tenant have entered into that certain Lease
Agreement dated as of February 12, 2000 (the "Lease"), for the leasing of
certain premises consisting of approximately 7,493 rentable square feet located
at 10240 Sorrento Valley Road, Suite 150, San Diego, California (the "Original
Premises") as such Original Premises are more fully described in the Lease.

         B.       Landlord and Tenant now wish to amend the Lease to provide
for, among other things, the expansion of the Original Premises to include those
certain premises consisting of approximately 2,214 rentable square feet located
at 10240 Sorrento Valley Road, Suite 125, San Diego, California (the "Expansion
Premises"), which Expansion Premises are depicted on the site plan attached
hereto and made a part hereof as Exhibit A, all upon and subject to each of the
terms, conditions, and provisions set forth herein.

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant agree as follows:

         1.       RECITALS: Landlord and Tenant agree that the above recitals
are true and correct and are hereby incorporated herein as though set forth in
full.

         2.       PREMISES.

                  2.1      Commencing on the earlier of: (a) the date Tenant
commences business operations in the Expansion Premises, or (b) one-hundred
(100) days after the date of full execution and delivery of this Amendment by
Landlord to Tenant (the "EP Commencement Date"), the Original Premises shall be
expanded to include the Expansion.

                  2.2      For purposes of the Lease, from and after the EP
Commencement Date, the "Premises" as defined in the Lease shall mean and refer
to the aggregate of the Original Premises and the Expansion Premises consisting
of a combined total of approximately 9,707 rentable square feet located at 10240
Sorrento Valley Road, Suites 125 and 150, San Diego, California. Accordingly,
from and after the EP Commencement Date, all references in this Amendment and in
the Lease to the term "Premises" shall mean and refer to the Original Premises
and the Expansion Premises. Landlord and Tenant hereby agree that for purposes
of the Lease, from and after the EP Commencement Date, the rentable square
footage area of the Premises shall be conclusively deemed to be 9,707 rentable
square feet. in addition to the foregoing, it is the parties express intention
that the expiration of the Term of the Lease for the Original Premises and the
Expansion Premises be extended to August 31, 2003 and that any option or renewal
term described in the Lease shall be applicable to both the Premises and the
Expansion Premises.

                  2.3      Notwithstanding anything to the contrary contained
herein or in the Lease, Landlord shall neither be subject to any liability, nor
shall the validity of the Lease be affected if Landlord is not able to deliver
to Tenant possession of the Expansion Premises by the EP Commencement Date.
Provided, however, Tenant's obligation to pay Rent on the Expansion Premises
shall commence on the date possession is tendered.

         3.       BASE RENT: The Basic Lease Information and Section 3 of the
Lease are hereby modified to provide that from and after the EP Commencement
Date the monthly Base Rent payable by Tenant to Landlord, in accordance with the
provisions of Section 3 of the Lease shall be as follows:


<PAGE>


<TABLE>
<CAPTION>

------------------------------- ---------------------------- ---------------------------- ----------------------------
                                ORIGINAL PREMISES            EXPANSION PREMISES           *AGGREGATE AMOUNT OF
PERIOD                          MONTHLY BASE RENT            MONTHLY BASE RENT            MONTHLY BASE RENT
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                             <C>                          <C>                          <C>
EP Commencement                 $ 9,891.00                   $2,922.00                    $12,813.00
Date to August 31, 2001
------------------------------- ---------------------------- ---------------------------- ----------------------------
9/1/01 - 8/31/02                $10,286.00                   $3,039,00                    $13,325.00
------------------------------- ---------------------------- ---------------------------- ----------------------------
9/1/02 - 8/31/03                $10,698.00                   $3,161.00                    $13,859.00
------------------------------- ---------------------------- ---------------------------- ----------------------------

</TABLE>

         Notwithstanding the foregoing, the Base Rent for the following months
of occupancy shall be abated: (A) For the Original Premises, the second, third
and fourth months following the Commencement date (as defined in the Lease for
the Original Premises) shall be free of Base Rent; and (B) For the Expansion
Premises, the first month following the EP Commencement Date shall be free of
Base Rent. The initial monthly Base Rent for any extended or option term shall
be determined in accordance with Addendum 1 to the Lease for both the Premises
and Expansion Premises.

         4.       ADVANCE BASE RENT: Concurrently with Tenant's execution of
this Amendment, Tenant Landlord the amount of $2,922.00, which shall represent
Tenant's first monthly installment of Base Rent payable for the Expansion
Premises.

         5.       CONDITION OF THE EXPANSION PREMISES: Subject to the provisions
of Section 2 above, on the EP Commencement Date Landlord shall deliver to Tenant
possession of the Expansion Premises in its then existing condition and state of
repair, "AS IS", and Landlord shall not be obligated to provide or pay for any
improvement, remodeling or refurbishment work or services related to the
improvement, remodeling or refurbishment of the Expansion Premises except as
otherwise set forth in EXHIBIT B hereto. The Tenant Improvements (defined in
EXHIBIT B) shall be installed in accordance with the terms, conditions, criteria
and provisions set forth in EXHIBIT B. Any Tenant Improvements to be constructed
hereunder shall be in compliance with the requirements of the Americans with
Disabilities Act, a federal law codified at 42 U.S.C. 12101 et seq., including,
but not limited to Title III thereof, all regulations and guidelines related
thereto and all requirements of Title 24 of the State of California, and all
costs incurred for purposes of compliance therewith shall be a part of and
included in the costs of the Tenant Improvements. By taking possession of the
Expansion Premises, Tenant shall be deemed to have accepted the Expansion
Premises in good condition and state of repair. Tenant expressly acknowledges
and agrees that neither Landlord nor any of Landlord's agents, representatives
or employees has made any representations as to the suitability, fitness or
condition of the Expansion Premises for the conduct of Tenant's business or for
any other purpose, including without limitation, any storage incidental thereto,
or for any other purpose. Any exception to the foregoing provisions must be made
by express written agreement signed by both parties. Tenant acknowledges that no
representations or warranties of any kind, express or implied, respecting the
condition of the Expansion Premises, Building, or Park or have been made by
Landlord or any agent of Landlord to Tenant, except as expressly set forth
herein.

         6.       SECURITY DEPOSIT: Concurrently with Tenant's execution of this
Amendment, Tenant shall deposit with Landlord the sum of $2,922.00 (the "EP
Security Deposit"). The EP Security Deposit shall be added to the Security
Deposit presently being held by Landlord under the Lease in the amount of
$9,891.00 (the "Original Security Deposit"). The aggregate amount of the EP
Security Deposit and the Original Security Deposit is 12,813.00. From and after
the EP Commencement Date, the term "Security Deposit" shall mean and refer to
the aggregate of the EP Security Deposit and the Original Security Deposit in
the amount of 12,813.00. The EP Security Deposit shall be subject to, and the
use and application thereof governed by, Section 41 of the Lease.

         7.       TENANT'S SHARE OF OPERATING EXPENSES: As of the EP
Commencement Date, the Lease shall be modified to provide that Tenant's Share of
Operating Expenses (as defined in the Basic Lease Information and Section 6.1 of
the Lease) shall be increased to 14.9% of Building 10240 and 8.0% of the Park.


                                       2
<PAGE>


         8.       TENANT'S SHARE OF TAX EXPENSES: As of the EP Commencement
Date, the Lease shall be modified to provide that Tenant's Share of Tax Expenses
(as defined in the Basic Lease Information and Section 6.2 of the Lease) shall
be increased to 8.0% of the Park.

         9.       TENANT'S SHARE OF UTILITY EXPENSES: As of the EP Commencement
Date, the Lease shall be modified to provide that Tenant's Share of Utility
Expenses (as defined in the Basic Lease Information and Section 7 of the Lease)
shall be increased to 14.9% of Building 10240 and 8.0% of the Park.

         10.      TENANT'S SHARE OF COMMON AREA UTILITY COSTS: As of the EP
Commencement Date, the Lease shall be modified to provide that Tenant's Share of
Common Area Utility Costs (as defined in the Basic Lease Information and Section
7 of the Lease) shall be increased to 8.0% of the Park.

         11.      UNRESERVED PARKING SPACES: As of the EP Commencement Date, the
Lease shall be modified to provide that Tenant's Unreserved Parking Spaces (as
defined in the Basic Lease Information) shall be increased to thirty-seven (37).

         12.      INSURANCE: Tenant shall deliver to Landlord, upon execution of
this Amendment, a certificate of insurance evidencing that the Expansion
Premises are included within and covered by Tenant's insurance policies required
to be carried by Tenant pursuant to the Lease.

         13.      BROKERS: Tenant warrants that it has had no dealings with any
real estate broker or agent in connection with the negotiation of this Amendment
whose commission shall be payable by Landlord, except for CB Richard Ellis
("Tenant's Broker"). If Tenant has dealt with any person, real estate broker or
agent with respect to this Amendment, other than Tenant's Broker, Tenant shall
be solely responsible for the payment of any fee due to said person or firm, and
Tenant shall indemnify, defend and hold Landlord free and harmless against any
claims, judgments, damages, costs, expenses, and liabilities with respect
thereto, including attorneys' fees and costs.

         14.      LETTER OF CREDIT: As of the EP Commencement Date, Tenant shall
increase the amount of the Letter of Credit (as defined in Section 4 of the
Lease) by $14,567.00. The amount "$9,860.00" is hereby deleted from the last
sentence of the Lease and replaced with the amount of "12,773.00". in addition
to the provisions of Section 5(E) of Exhibit B of the Lease, the amount of the
Letter of Credit shall be increased by Tenant by an amount equal to the Excess
Tenant Improvement Costs as described in Section 5(E) of Exhibit B to this
Amendment.

         15.      EFFECT OF AMENDMENT: Except as modified herein, the terms and
conditions of the Lease shall remain unmodified and continue in full force and
effect. in the event of any conflict between the terms and conditions of the
Lease and this Amendment, the terms and conditions of this Amendment shall
prevail.

         16.      DEFINITIONS: Unless otherwise defined in this Amendment, all
terms not defined in this Amendment shall have the meanings assigned to such
terms in the Lease.

         17.      AUTHORITY: Subject to the assignment and subletting provisions
of the Lease, this Amendment shall be binding upon and inure to the benefit of
the parties hereto, their respective heirs, legal representatives, successors
and assigns. Each party hereto and the persons signing below warrant that the
person signing below on such party's behalf is authorized to do so and to bind
such party to the terms of this Amendment.

         18.      INCORPORATION: The terms and provisions of the Lease are
hereby incorporated in this Amendment.


                                       3
<PAGE>


         IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date and year first above written.

Tenant:                                     Landlord:
WEBSENSE, INC.                              Legacy-RECP Sorrento OPCO, LLC
a Delaware Corp.                            a Delaware limited liability company
By:                                         By: Legacy Partners Commercial, Inc.
    ---------------------------------           As Agent and Manager of Landlord
Its:
    ---------------------------------
Date:                                       By:
      -------------------------------          ---------------------------------
                                            Its:
                                                --------------------------------
By:                                         Date:
    ---------------------------------            -------------------------------
Its:
    ---------------------------------
Date:
     --------------------------------


                                       4
<PAGE>


                                   EXHIBIT "A"


                                   [DRAWINGS]















                                       5
<PAGE>


                          EXHIBIT B TO LEASE AGREEMENT
                               TENANT IMPROVEMENTS


         This exhibit, entitled "Tenant Improvements", is and shall constitute
EXHIBIT B to that certain First Amendment to Lease Agreement dated June 2, 2000
(the "Lease"), by and between Lincoln-RECP Sorrento OPCO, LLC, a Delaware
limited liability company ("Landlord"), and WEBSENSE, INC., a Delaware
corporation ("Tenant"), for the leasing of certain Expansion Premises located at
10240 Sorrento Valley Road, Suite 125, San Diego, California (the "Expansion
Premises"). The terms, conditions and provisions of this EXHIBIT B are hereby
incorporated into and are made a part of the Lease. Any capitalized terms used
herein and not otherwise defined herein shall have the meaning ascribed to such
terms as set forth in the Lease:

         1.       TENANT TO CONSTRUCT TENANT IMPROVEMENTS. Subject to the
provisions below, Tenant shall be solely responsible for the planning,
construction and completion of the Interior tenant Improvements ("Tenant
Improvements") to the Expansion Premises in accordance with the terms and
conditions of this EXHIBIT B. The Tenant Improvements shall not include any of
Tenant's personal property, trade fixtures, furnishings, equipment or similar
items.

         2.       TENANT IMPROVEMENT PLANS.

                  A.       PRELIMINARY PLANS AND SPECIFICATIONS. Promptly after
execution of the Lease, Tenant shall retain a licensed and Insured architect
("Architect") to prepare preliminary working architectural and engineering plans
and specifications ("Preliminary Plans and Specifications") for the Tenant
Improvements. Tenant shall deliver the Preliminary Plans and Specifications to
Landlord. The Preliminary Plans and Specifications shall be in sufficient detail
to show locations, types and requirements for all heat loads, people loads,
floor loads, power and plumbing, regular and special HVAC needs, telephone
communications, telephone and electrical outlets, lighting, lighting fixtures
and related power, and electrical and telephone switches. Landlord shall
reasonably approve or disapprove the Preliminary Plans and Specifications within
five (5) days after Landlord receives the Preliminary Plans and Specifications
and, if disapproved, Landlord shall return the Preliminary Plans and
Specifications to Tenant, who shall make all necessary revisions within ten (10)
days after Tenant's receipt thereof. This procedure shall be repeated until
Landlord approves the Preliminary Plans and Specifications. The approved
Preliminary Plans and Specifications, as modified, shall be deemed the "Final
Preliminary Plans and Specifications".

                  B.       FINAL PLANS AND SPECIFICATIONS. After the Final
Preliminary Plans and Specifications are approved by Landlord and are deemed to
be the Final Preliminary Plans and Specifications, Tenant shall cause the
Architect to prepare in twenty (20) days following Landlord's approval of the
Final Preliminary Plans and Specifications the final working architectural and
engineering plans, specifications and drawings, ("Final Plans and
Specifications") for the Tenant Improvements. Tenant shall then deliver the
Final Plans and Specifications to Landlord. Landlord shall reasonably approve or
disapprove the Final Plans and Specifications within five (5) days after
Landlord receives the Final Plans and Specifications and, if disapproved,
Landlord shall return the Final Plans and Specifications to Tenant who shall
make all necessary revisions within ten (10) days after Tenant's receipt
thereof. This procedure shall be repeated until Landlord approves, in writing,
the Final Plans and Specifications. The approved Final Plans and Specifications,
as modified, shall be deemed the "Construction Documents".

                  C.       MISCELLANEOUS. All deliveries of the Preliminary
Plans and Specifications, the Final Preliminary Plans and Specifications, the
Final Plans and Specifications, and the Construction Documents shall be
delivered by messenger service, by personal hand delivery or by overnight parcel
service. While Landlord has the right to approve the Preliminary Plans and
Specifications, the Final Preliminary Plans and Specifications, the Final Plans
and Specifications, and the Construction Documents, Landlord's Interest in doing
so is to protect the Expansion Premises, the Building and Landlord's Interest.
Accordingly, Tenant shall not rely upon Landlord's approvals and Landlord shall
not be the guarantor of, nor responsible for, the adequacy and correctness or
accuracy of the Preliminary Plans and Specifications, the Final Preliminary
Plans and Specifications, the Final Plans and Specifications, and the
Construction Documents, or the compliance thereof with applicable laws, and
Landlord shall incur no liability of any kind by reason of granting such
approvals.


                                       6
<PAGE>


                  D.       BUILDING STANDARD WORK. The Construction Documents
shall provide that the Tenant Improvements to be constructed in accordance
therewith must be at least equal, in quality, to Landlord's building standard
materials, quantities and procedures then in use by Landlord ("Building
Standards") at the Building, and shall consist of improvements which are generic
in nature.

                  E.       CONSTRUCTION AGREEMENTS. Tenant hereby covenants and
agrees that a provision shall be included in each and every agreement made with
the Architect and the Contractor with respect to the Tenant Improvements
specifying that Landlord shall be a third party beneficiary thereof, including
without limitation, a third party beneficiary of all covenants, representations,
indemnities and warranties made by the Architect and/or Contractor.

         3.       PERMITS. Tenant at its sole cost and expense (subject to the
provisions of Paragraph 5 below) shall obtain all governmental approvals of the
Construction Documents to the full extent necessary for the issuance of a
building permit for the Tenant Improvements based upon such Construction
Documents. Tenant at its sole cost and expense shall also cause to be obtained
all other necessary approvals and permits from all governmental agencies having
jurisdiction or authority for the construction and installation of the Tenant
Improvements in accordance with the approved Construction Documents. Tenant at
its sole cost and expense (subject to the provisions of Paragraph 5 below) shall
undertake all steps necessary to insure that the construction of the Tenant
Improvements is accomplished in strict compliance with all statutes, laws,
ordinances, codes, rules, and regulations applicable to the construction of the
Tenant Improvements and the requirements and standards of any insurance
underwriting board, inspection bureau or insurance carrier insuring the
Expansion Premises and/or the Building.

         4.       CONSTRUCTION.

                  A.       Tenant shall be solely responsible for the
construction, installation and completion of the Tenant Improvements in
accordance with the Construction Documents approved by Landlord and is solely
responsible for the payment of all amounts when payable in connection therewith
without any cost or expense to Landlord, except for Landlord's obligation to
contribute the Tenant Improvement Allowance in accordance with the provisions of
Paragraph 5 below. Tenant shall diligently proceed with the construction,
installation and completion of the Tenant Improvements in accordance with the
Construction Documents and the completion schedule reasonably approved by
Landlord. No material changes shall be made to the Construction Documents and
the completion schedule approved by Landlord without Landlord's prior written
consent, which consent shall not be unreasonably withheld or delayed.

                  B.       Tenant at its sole cost and expense (subject to the
provisions of Paragraph 5 below) shall employ a licensed, insured and bonded
general contractor ("Contractor") to construct the Tenant Improvements in
accordance with the Construction Documents. The construction contracts between
Tenant and the Contractor and between the Contractor and subcontractors shall be
subject to Landlord's prior written approval, which approval shall not be
unreasonably withheld or delayed. Proof that the Contractor is licensed in
California, is bonded as required under California law, and has the insurance
specified in EXHIBIT B-1, attached hereto and incorporated herein by this
reference, shall be provided to Landlord at the time that Tenant requests
approval of the Contractor from Landlord. Tenant shall comply with or cause the
Contractor to comply with all other terms and provisions of EXHIBIT B-1.

                  C.       Prior to the commencement of the construction and
installation of the Tenant Improvements, Tenant shall provide the following to
Landlord, all of which shall be to Landlord's reasonable satisfaction:

                           (i)      An estimated budget and cost breakdown for
the Tenant Improvements.

                           (ii)     Estimated completion schedule for the Tenant
Improvements.

                           (iii)    Copies of all required approvals and permits
from governmental agencies having jurisdiction or authority for the construction
and installation of the Tenant Improvements; provided, however, if prior to
commencement of the construction and installation of Tenant Improvements Tenant
has not received the electrical, plumbing or mechanical permits, Tenant shall
only be required to provide Landlord with evidence that Tenant has made


                                       7
<PAGE>


application thereof, and, upon receipt by Tenant of such permits, Tenant shall
promptly provide Landlord with copies thereof.

                           (iv)     Evidence of Tenant's procurement of
insurance required to be obtained pursuant to the provisions of Paragraphs 4.B
and 4.G.

                  D.       Landlord shall at all reasonable times have a right
to inspect the Tenant Improvements (provided Landlord does not materially
interfere with the work being performed by the Contractor or its subcontractors)
and Tenant shall immediately cease work upon written notice from Landlord if the
Tenant Improvements are not in compliance with the Construction Documents
approved by Landlord. If Landlord shall give notice of faulty construction or
any other deviation from the Construction Documents, Tenant shall cause the
Contractor to make corrections promptly. However, neither the privilege herein
granted to Landlord to make such inspections, nor the making of such inspections
by Landlord, shall operate as a waiver of any rights of Landlord to require good
and workmanlike construction and improvements constructed in accordance with the
Construction Documents.

                  E.       Subject to Landlord complying with its obligations in
Paragraph 5 below, Tenant shall pay and discharge promptly and fully all claims
for labor done and materials and services furnished in connection with the
Tenant Improvements. The Tenant Improvements shall not be commenced until five
(5) business days after Landlord has received notice from Tenant stating the
date the construction of the Tenant Improvements is to commence so that Landlord
can post and record any appropriate Notice of Non-responsibility.

                  F.       Tenant acknowledges and agrees that the agreements
and covenants of Tenant in Sections 10 and 9 of the Lease shall be fully
applicable to Tenant's construction of the Tenant Improvements.

                  G.       Tenant shall maintain, and cause to be maintained,
during the construction of the Tenant Improvements, at its sole cost and
expense, insurance of the types and in the amounts specified in EXHIBIT B-1 and
in Section 12 of the Lease, together with builders' risk insurance for the
amount of the completed value of the Tenant Improvements on an all-risk
non-reporting form covering all improvements under construction, including
building materials, and other insurance in amounts and against such risks as the
Landlord shall reasonably require in connection with the Tenant Improvements.

                  H.       No materials, equipment or fixtures shall be
delivered to or installed upon the Expansion Premises pursuant to any agreement
by which another party has a security interest or rights to remove or repossess
such items, without the prior written consent of Landlord, which consent shall
not be unreasonably withheld.

                  I.       Landlord reserves the right to establish reasonable
rules and regulations for the use of the Building during the course of
construction of the Tenant Improvements, including, but not limited to,
construction parking, storage of materials, hours of work, use of elevators, and
clean-up of construction related debris.

                  J.       Upon completion of the Tenant Improvements, Tenant
shall deliver to Landlord the following, all of which shall be to Landlord's
reasonable satisfaction:

                           (i)      Any certificates required for occupancy,
including a permanent and complete Certificate of Occupancy issued by the City
of San Diego.

                           (ii)     A Certificate of Completion signed by the
Architect who prepared the Construction Documents, reasonably approved by
Landlord.

                           (iii)    A cost breakdown itemizing all expenses for
the Tenant Improvements, together with invoices and receipts for the same or
other evidence of payment.

                           (iv)     Final and unconditional mechanic's lien
waivers for all the Tenant Improvements.

                           (v)      A Notice of Completion for execution by
Landlord, which certificate once executed by Landlord shall be recorded by
Tenant in the official records of the


                                       8
<PAGE>


County of San Diego, and Tenant shall then deliver to Landlord a true and
correct copy of the recorded Notice of Completion.

                           (vi)     A true and complete copy of all as-built
plans and drawings for the Tenant Improvements.

         5.       TENANT IMPROVEMENT ALLOWANCE.

                  A.       Subject to Tenant's compliance with the provisions of
this EXHIBIT B, Landlord shall provide to Tenant an allowance in the amount of
Seventeen Thousand Seven Hundred Twelve dollars ($17,712.00) (the "Tenant
Improvement Allowance") to construct and install only the Tenant Improvements.
The Tenant Improvement Allowance shall be used to design, prepare, plan, obtain
the approval of, construct and Install the Tenant Improvements and for no other
purpose. However, the cost to demise the security panel closet within the
Expansion Premises shall be paid by Landlord in its entirety, and said cost
shall not be deducted from the Tenant Improvement Allowance. Except as otherwise
expressly provided herein, Landlord shall have no obligation to contribute the
Tenant Improvement Allowance unless and until the Construction Documents have
been approved by Landlord and Tenant has complied with all requirements set
forth in Paragraph 4.C. of this EXHIBIT B. in addition to the foregoing,
Landlord shall have no obligation to disburse all or any portion of the Tenant
Improvement Allowance to Tenant unless Tenant makes a progress payment request
pursuant to the terms and conditions of Section 5.B. below prior to that date
which is six (6) months after the Lease Commencement Date (as such term is
defined in the Basic Lease Information and Section 2 of the Lease). The costs to
be paid out of the Tenant Improvement Allowance shall include all reasonable
costs and expenses associated with the design, preparation, approval, planning,
construction and installation of the Tenant Improvements (the "Tenant
Improvement Costs"), including all of the following:

                           (i)      All costs of the Preliminary Plans and
Specifications, the Final Plans and Specifications, and the Construction
Documents, and engineering costs associated with completion of the State of
California energy utilization calculations under Title 24 legislation:

                           (ii)     All costs of obtaining building permits and
other necessary authorizations from local governmental authorities;

                           (iii)    All costs of Interior design and finish
schedule plans and specifications including as-built drawings, if applicable;

                           (iv)     All direct and indirect costs of procuring,
constructing and installing the Tenant Improvements in the Expansion Premises,
Including, but not limited to, the construction fee for overhead and profit and
the cost of all on-site supervisory and administrative staff, office, equipment
and temporary services rendered by the Contractor in connection with the
construction of the Tenant Improvements; provided, however, that the
construction fee for overhead and profit, the cost of all on-site supervisory
and administrative staff, office, equipment and temporary services shall not
exceed amounts which are reasonable and customary for such items in the local
construction industry;

                           (v)      All fees payable to the Architect and any
engineer if they are required to redesign any portion of the Tenant Improvements
following Tenant's and Landlord's approval of the Construction Documents;

                           (vi)   Utility connection fees;

                           (vii)    Inspection fees and filing fees payable to
local governmental authorities, if any;

                           (viii)   All costs of all permanently affixed
equipment and non-trade fixtures provided for in the Construction Documents,
including the cost of Installation; and,

                           (ix)     A construction management fee payable to
Landlord in the amount of three percent (3%) of the aggregate of the principal
amount of the Amortized Excess TI Costs (defined below) and the Tenant
Improvement Allowance (the "CM Fee").


                                       9
<PAGE>


The Tenant Improvement Allowance shall be the maximum contribution by Landlord
for the Tenant Improvement Costs, and the disbursement of the Tenant Improvement
Allowance is subject to the terms contained herein below.

                  B.       Except for payment of the CM Fee, and subject to
Section 5.A. above, Landlord will make payments to Tenant from the Tenant
Improvement Allowance to reimburse Tenant for Tenant Improvement Costs paid or
incurred by Tenant. Payment of the CM Fee shall be the first payment from the
Tenant Improvement Allowance and shall be made by means of a deduction or credit
against the Tenant Improvement Allowance. All other payments of the Tenant
Improvement Allowance shall be by progress payments not more frequently than
once per month and only after satisfaction of the following conditions
precedent: (a) receipt by Landlord of conditional mechanics' lien releases for
the work completed and to be paid by said progress payment, conditioned only on
the payment of the sums set forth in the mechanics' lien release, executed by
the Contractor and all subcontractors, labor suppliers and materialmen; (b)
receipt by Landlord of unconditional mechanics' lien releases from the
Contractor and all subcontractors, labor suppliers and materialmen for all work
other than that being paid by the current progress payment previously completed
by the Contractor, subcontractors, labor suppliers and materialmen and for which
Tenant has received funds from the Tenant Improvement Allowance to pay for such
work; (c) receipt by Landlord of any and all documentation reasonably required
by Landlord detailing the work that has been completed and the materials and
supplies used as of the date of Tenant's request for the progress payment,
including, without limitation, invoices, bills, or statements for the work
completed and the materials and supplies used; and (d) completion by Landlord or
Landlord's agents of any inspections of the work completed and materials and
supplies used as deemed reasonably necessary by Landlord. Except for the CM Fee
payment (credit), Tenant Improvement Allowance progress payments shall be paid
to Tenant within fourteen (14) days from the satisfaction of the conditions set
forth in the immediately preceding sentence. The preceding notwithstanding, all
Tenant Improvement Costs paid or incurred by Tenant prior to Landlord's approval
of the Construction Documents in connection with the design and planning of the
Tenant Improvements by Architect shall be paid from the Tenant Improvement
Allowance, without any retention, within fourteen (14) days following Landlord's
receipt of invoices, bills or statements from Architect evidencing such costs.
Notwithstanding the foregoing to the contrary, Landlord shall be entitled to
withhold and retain five percent (5%) of the Tenant Improvement Allowance or of
any Tenant Improvement Allowance progress payment until the lien-free expiration
of the time for filing of any mechanics' liens claimed or which might be filed
on account of any work ordered by Tenant or the Contractor or any subcontractor
in connection with the construction and installation of the Tenant Improvements.

                  C.       Landlord shall not be obligated to pay any Tenant
Improvement Allowance progress payment or the Tenant Improvement Allowance
retention if on the date Tenant is entitled to receive the Tenant Improvement
Allowance progress payment or the Tenant Improvement Allowance retention Tenant
is in default of this Lease. Such payments shall resume upon Tenant curing any
such default within the time periods which may be provided for in the Lease.

                  D.       Should the total cost of constructing the Tenant
Improvements be less than the Tenant Improvement Allowance, the Tenant
Improvement Allowance shall be automatically reduced to the amount equal to said
actual cost.

                  E.       The term "Excess Tenant Improvement Costs" as used
herein shall mean and refer to the aggregate of the amount by which the actual
Tenant Improvement Costs exceed the Tenant Improvement Allowance. A portion of
the Excess Tenant Improvement Costs up to a maximum amount of Six Thousand Six
Hundred Forty-two dollars ($6,642.00) shall be paid by Landlord in the same
manner as the Tenant Improvement Allowance and such Excess Tenant Improvement
Costs will then be amortized over the initial term of the Lease at the rate of
eleven percent (11%) per annum and such amortized amount (including interest
charges) shall be paid by Tenant to Landlord with, and as part of, the Base Rent
for the Expansion Premises in accordance with the provisions and requirements of
Section 3 of the Lease (the "Amortized Excess Costs"). Notwithstanding any
provision to the contrary, however, Tenant shall pay to Landlord such amortized
amount during the entire initial term of the Lease, regardless if Base Rent is
or is not abated. Within two (2) weeks after the Tenant Improvements have been
substantially completed and the actual Tenant Improvement Costs are known, the
parties shall execute and deliver a written amendment to the Lease, in the form
acceptable to the parties,


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<PAGE>


wherein there shall be specified, INTER ALIA, the amount of the Base Rent
payable by Tenant during the initial term of the Lease after taking into account
the amount of the Amortized Excess Costs. Tenant shall promptly pay any and all
Excess Tenant Improvement Costs in excess of the principal amount of the
Amortized Excess Costs.

         6.       TERMINATION. If the Lease is terminated prior to the date on
which the Tenant Improvements are completed, for any reason due to the default
of Tenant hereunder, in addition to any other remedies available to Landlord
under the Lease, Tenant shall pay to Landlord as Additional Rent under the
Lease, within five (5) days of receipt of a statement therefor, any and all
costs incurred by Landlord and not reimbursed or otherwise paid by Tenant
through the date of termination in connection with the Tenant Improvements to
the extent planned, installed and/or constructed as of such date of termination,
Including, but not limited to, any costs related to the removal of all or any
portion of the Tenant Improvements and restoration costs related thereto.
Subject to the provisions of Section 10.2 of the Lease, upon the expiration or
earlier termination of the Lease, Tenant shall not be required to remove the
Tenant Improvements it being the intention of the parties that the Tenant
Improvements are to be considered incorporated Into the Building.

         7.       LEASE PROVISIONS; CONFLICT. The terms and provisions of the
Lease, insofar as they are applicable, in whole or in part, to this EXHIBIT B,
are hereby incorporated herein by reference, and specifically including all of
the provisions of Section 29 of the Lease. In the event of any conflict between
the terms of the Lease and this EXHIBIT B, the terms of this EXHIBIT B shall
prevail. Any amounts payable by Tenant to Landlord hereunder shall be deemed to
be Additional Rent under the Lease and, upon any default in the payment of same,
Landlord shall have all rights and remedies available to it as provided for in
the Lease.


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<PAGE>


                                   EXHIBIT B-1
                       CONSTRUCTION INSURANCE REQUIREMENTS


         Before commencing work, the contractor shall procure and maintain at
its sole cost and expense until completion and final acceptance of the work, at
least the following minimum levels of insurance.

         A.       Workers' Compensation in statutory amounts and Employers
Liability Insurance in the minimum amounts of each accident for bodily injury by
accident and $100,000 each employee for bodily injury by disease with a $500,000
policy limit, covering each and every worker used in connection with the
contract work.

         B.       Comprehensive General Liability Insurance on an occurrence
basis including, but not limited to, protection for Expansion
Premises/Operations Liability, Broad Form Contractual Liability, Owner's and
Contractor's Protective, and Products/Completed Operations Liability*, in the
following minimum limits of liability.

                  Bodily Injury, Property Damage, and

                  Personal Injury Liability          $2,000,000/each occurrence
                                                     $3,000,000/aggregate

                  *        Products/Completed Operations Liability Insurance is
to be provided for a period of at least one (1) year after completion of work.

                  Coverage should include protection for Explosion, Collapse and
                  Underground Damage.

         C.       Comprehensive Automobile Liability Insurance with the
following minimum limits of liability.

                  Bodily Injury and Property         $1,000,000/each occurrence
                  Damage Liability                   $2,000,000/aggregate

                  This insurance will apply to all owned, non-owned or hired
automobiles to be used by the Contractor in the completion of the work.

         D.       Umbrella Liability Insurance in a minimum amount of five
million dollars ($5,000,000), providing excess coverage on a following-form
basis over the Employer's Liability limit in Paragraph A and the liability
coverages outlined in Paragraphs B and C.

         E.       Equipment and Installation coverages in the broadest form
available covering Contractor's tools and equipment and material not accepted by
Tenant. Tenant will provide Builders Risk Insurance on all accepted and
installed materials.

         All policies of insurance, duplicates thereof or certificates
evidencing coverage shall be delivered to Landlord prior to commencement of any
work and shall name Landlord, and its partners and lenders as additional
insureds as their interests may appear. All insurance policies shall (1) be
issued by a company or companies licensed to be business in the state of
California, (2) provide that no cancellation, non-renewal or material
modification shall be effective without thirty (30) days prior written notice
provided to Landlord, (3) provide no deductible greater than $15,000 per
occurrence, (4) contain a waiver to subrogation clause in favor of Landlord, and
its partners and lenders, and (5) comply with the requirements of Sections 12.2,
12.3 and 12.4 of the Lease to the extent such requirements are applicable.


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