<PAGE>

                                                                    Exhibit 10.6

                                    L E A S E
                                    ---------


  THIS INSTRUMENT IS A LEASE, dated as of  February 2, 1999 in which the
Landlord and the Tenant are the parties hereinafter named, and which relates to
space in the building (the "Building") located at 112 Turnpike Road,
Westborough, Massachusetts.  The parties to this instrument hereby agree with
each other as follows:


                                    ARTICLE 1
                                    ---------

                             BASIC LEASE PROVISIONS
                             ----------------------


1.1   INTRODUCTION.  The following set forth basic data and, where appropriate,
      ------------
      constitute definitions of the terms hereinafter listed.

1.2   BASIC DATA.
      ----------

      Landlord:  OTR, an Ohio general partnership, acting as the duly designated
nominee of the State Teachers Retirement System of Ohio.

      Landlord's Original Address: 275 East Broad Street, Columbus, Ohio 43215.

      Tenant:  Peritus Software Services, Inc., a Massachusetts corporation.

      Tenant's Original Address:  2 Federal Street, Billerica, MA 01821

      Guarantor:  None.

      Basic Rent:  The sum of (i) $172,326.00 ($21.00 per square foot of
Premises Rentable Area) per annum, plus (ii) $7,795.70 ($0.95 per square foot of
Premises Rentable Area) per annum as an allowance (the "Estimated Electricity
Payment") toward the actual cost to Landlord of providing electricity to the
Premises, as all of the same may be adjusted and/or abated pursuant to Sections
7.5 and 12.1.

      Premises Rentable Area:  Agreed to be 8,206 square feet consisting of
6,906 square feet located on the third (3rd) floor of the Building and 1,300
square feet located on the first (1st) floor of the Building.

      Permitted Uses:  Executive or professional offices, including software
research, development and services, all of the type generally found in first-
class office buildings in the suburban Boston area, subject to the provisions of
Section 5.1(a).

      Escalation Factor:  12.1%, as computed in accordance with the Escalation
Factor Computation.

      Extended Term:   As defined in Section 15.1.

      Initial Term:  Three (3) years commencing on the Commencement Date and
expiring at the close of the day immediately preceding the third (3rd)
anniversary of the Commencement Date, except that if the Commencement Date shall
be other than the first day of a calendar month, the expiration of the Initial
Term shall be at the close of the day on the last day of the calendar month on
which such anniversary shall fall.

      Security Deposit: $28,721.00

                                       5
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      Base Operating Expenses: The actual Operating Expenses with respect to the
calendar year ending December 31, 1999 (which includes an allowance of $0.95 per
square foot of Building Rentable Area toward the actual cost to Landlord of
providing convenience electricity to those portions of the Building leased or
intended to be leased to tenants).

      Base Taxes: The sum of (x) one-half ( 1/2) the Taxes assessed with respect
to the fiscal year ending June 30, 1999, as the same may be reduced by the
amount of any abatement, and (y) one-half ( 1/2) the Taxes assessed with respect
to the fiscal year ending June 30, 2000, as the same may be reduced by the
amount of any abatement.

      Broker: Spaulding & Slye and Lynch, Murphy, Walsh & Partners, Inc.


1.3   ADDITIONAL DEFINITIONS.
      ----------------------

      Agent: Spaulding & Slye, Inc., or such other person or entity from time to
time designated by Landlord.

      Building Rentable Area:  Agreed to be 72,634 square feet.

      Business Days:  All days except Saturday, Sunday, New Year's Day, Martin
Luther King Day, President's Day, Patriots Day, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day, Christmas Day (and the
following day when any such day occurs on Sunday) and such other days that
tenants occupying at least 50% of Building Rentable Area now or in the future
recognize as holidays for their general office staff.

      Commencement Date:  As defined in Section 4.1.

      Construction Deadline: As defined in Section 4.2.

      Default of Tenant:  As defined in Section 13.1.

      Escalation Charges:  The amounts prescribed in Sections 8.1 and 9.2.

      Escalation Factor Computation: Premises Rentable Area divided by 93% of
Building Rentable Area.

      Force Majeure:  Collectively and individually, strike or other labor
trouble, fire or other casualty, governmental preemption of priorities or other
controls in connection with a national or other public emergency or shortages of
fuel, supplies or labor resulting therefrom, or any other cause, whether similar
or dissimilar, beyond Landlord's reasonable control.

      Initial Public Liability Insurance:  $3,000,000 per occurrence/$5,000,000
aggregate (combined single limit) for property damage, bodily injury or death.

      Landlord's Work: As defined in Section 4.2.

      Operating Expenses:  As determined in accordance with Section 9.1.

                                       6
<PAGE>

      Operating Year:  As defined in Section 9.1.

      Park:  The properties owned by Landlord at 110, 112 and 114 Turnpike Road,
Westborough, Massachusetts.

      Premises:  A portion of the Building as shown on Exhibit A annexed hereto.

      Property:  The Building and the land parcels on which it is located
(including adjacent sidewalks and other portions of the Park).

      Substantial Completion Date: As defined in Section 4.2.

      Tax Year:  As defined in Section 8.1.

      Taxes:  As determined in accordance with Section 8.1.

      Tenant's Removable Property:  As defined in Section 5.2.

      Term of this Lease:  The Initial Term and any extension thereof in
accordance with the provisions hereof.


                                    ARTICLE 2
                                    ---------

                         PREMISES AND APPURTENANT RIGHTS
                         -------------------------------


2.1   LEASE OF PREMISES.  Landlord hereby demises and leases to Tenant for the
      -----------------
      Term of this Lease and upon the terms and conditions hereinafter set
      forth, and Tenant hereby accepts from Landlord, the Premises.

2.2   APPURTENANT RIGHTS AND RESERVATIONS.  (a)  Tenant shall have, as
      -----------------------------------
      appurtenant to the Premises, the non-exclusive right to use, and permit
      its invitees to use in common with others, public or common lobbies,
      hallways, stairways, elevators and common walkways necessary for access to
      the Building, and if the portion of the Premises on any floor includes
      less than the entire floor, the common toilets, corridors and elevator
      lobby of such floor; but such rights shall always be subject to reasonable
      rules and regulations from time to time established by Landlord pursuant
      to Section 14.7 and to the right of Landlord to designate and change from
      time to time areas and facilities so to be used.

      (b) Excepted and excluded from the Premises are the ceiling, floor,
      perimeter walls and exterior windows (except the inner surface of each
      thereof), and any space in the Premises used for shafts, stacks, pipes,
      conduits, fan rooms, ducts, electric or other utilities, sinks or other
      Building facilities, but the entry doors (and related glass and finish
      work) to the Premises are a part thereof.  Landlord shall have the right
      to place in the Premises (but in such manner as not to unreasonably
      interfere with Tenant's use of the Premises) interior storm windows, sun
      control devices, utility lines, equipment, stacks, pipes, conduits, ducts
      and the like.  In the event that Tenant shall install any hung ceilings or
      walls in the Premises, Tenant shall install and maintain, as Landlord may
      require, proper access panels therein to afford access to any facilities
      above the ceiling or within or behind the walls.

                                       7
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      (c) Tenant shall also have the right (subject to reasonable rules and
      regulations from time to time established by Landlord) to use, on an non-
      exclusive, unreserved basis the parking areas located on the Property
      adjacent to the Building. The parking areas serving the Park contain
      approximately 4 spaces per 1,000 square feet of rentable area in the Park.


                                    ARTICLE 3
                                    ---------

                                   BASIC RENT
                                   ----------

3.1   PAYMENT.  (a) Tenant agrees to pay to Landlord, or as directed by
      -------
      Landlord, commencing on the Commencement Date without offset, abatement
      (except as provided in Section 12.2), deduction or demand, the Basic Rent.
      Such Basic Rent shall be payable in equal monthly installments, in
      advance, on the first day of each and every calendar month during the Term
      of this Lease, to Landlord at Fleet Bank, Box 30474, 99 Founders Plaza,
      Hartford, CT 06108, Attn: Lockbox CT/EHF03N, or at such other place as
      Landlord shall from time to time designate by notice, in lawful money of
      the United States. In the event that any installment of Basic Rent is not
      paid when due, Tenant shall pay, in an addition to any charges under
      Section 14.18, at Landlord's request an administrative fee equal to 5% of
      the overdue payment. Landlord and Tenant agree that all amounts due from
      Tenant under or in respect of this Lease, whether labeled Basic Rent,
      Escalation Charges, additional charges or otherwise, shall be considered
      as rental reserved under this Lease for all purposes, including without
      limitation regulations promulgated pursuant to the Bankruptcy Code, and
      including further without limitation Section 502(b) thereof.

      (b)  Basic Rent for any partial month shall be pro-rated on a daily basis,
      and if the first day on which Tenant must pay Basic Rent shall be other
      than the first day of a calendar month, the first payment which Tenant
      shall make to Landlord shall be equal to a proportionate part of the
      monthly installment of Basic Rent for the partial month from the first day
      on which Tenant must pay Basic Rent to the last day of the month in which
      such day occurs, plus the installment of Basic Rent for the succeeding
      calendar month.


                                    ARTICLE 4
                                    ---------

                           COMMENCEMENT AND CONDITION
                           --------------------------


4.1   COMMENCEMENT DATE.  The Commencement Date shall be the last to occur of:
      -----------------

      (a)  January 1, 1999, or

      (b)  the day following the Substantial Completion Date, as defined in
      Section 4.2(c).

      Notwithstanding the foregoing, if Tenant's personnel shall occupy all or
      any part of the Premises for the conduct of its business prior to the
      Commencement Date as determined pursuant to the preceding sentence, such
      date of occupancy shall, for all purposes of this Lease, be the
      Commencement Date. Promptly upon the occurrence of the Commencement Date,
      Landlord and Tenant shall enter into a

                                       8
<PAGE>

      letter agreement substantially in the form annexed hereto as Exhibit E but
      the failure by either party to execute such a letter shall have no effect
      on the Commencement Date, as hereinabove determined.

4.2   PREPARATION OF THE PREMISES. (a) Landlord is currently having plans (the
      ---------------------------
      "Plans") for the layout of the Premises prepared, which Plans shall be
      submitted to Tenant for its approval, which shall not be unreasonably
      withheld or delayed.  The Plan shall reflect the changes to the Premises
      shown on the sketch plan attached hereto as Exhibit LW-1 and listed on
      Exhibit LW-2 hereto.  Failure by Tenant to disapprove any submission of
      the Plans within five (5) Business Days after submission shall constitute
      approval thereof. Any disapproval shall be accompanied by a reasonably
      specific statement of reasons therefor.

      (b) Promptly after approval of the Plans (and execution of a work letter
      if requested by Landlord) Landlord shall exercise all reasonable efforts
      to complete the work ("Landlord's Work") specified therein necessary to
      prepare the Premises for Tenant's occupancy, but Tenant shall have no
      claim against Landlord for failure so to complete such Work except the
      right to terminate this Lease in accordance with Section 4.2(d). Landlord
      shall perform Landlord's Work in a good and workmanlike manner, in
      accordance with applicable laws, codes and ordinances. To the extent that
      the cost to Landlord of completing Landlord's Work (as reasonably
      estimated by Landlord's contractor as of the time of approval of Tenant's
      Plans and including without limitation all architectural and engineering
      costs and fees) exceeds an amount ("Landlord's Contribution") equal to
      $15.00 per square foot of Premises Rentable Area, Tenant shall pay such
      excess to Landlord in cash within thirty (30) days after Landlord advises
      Tenant of the amount of such excess.  Landlord's Contribution is based on
      the Original Scope of Work, as listed on Exhibit LW-2 hereto, as well as
      additional HVAC and electrical work associated with the first floor
      computer room.  If at the time of approval of the Plans Tenant elects to
      reduce the Original Scope of Work such that there is a resulting cost
      savings so that the actual cost is less than Landlord's Contribution,
      Tenant shall be allowed to spend an amount equal to not more than 50% of
      the excess of Landlord's Contribution over the actual cost, provided that
      amount shall only be used for work associated with HVAC and electrical
      improvements to the first floor space.  Tenant shall, if requested by
      Landlord, execute a work letter confirming any excess costs prior to the
      time Landlord shall be required to commence work.  In the event that the
      actual cost to Landlord of completing Tenant's Work is greater or less
      than the estimate of Landlord's contractor, then Tenant shall pay, or
      Landlord shall credit, such difference (as the case may be) within fifteen
      (15) days after Landlord shall advise Tenant of such actual cost.

      (c) The Premises shall be deemed ready for occupancy on the first day (the
      "Substantial Completion Date") as of which (i) Landlord's Work has been
      completed except for minor items of work (and, if applicable, adjustment
      of equipment and fixtures) which can be completed after occupancy has been
      taken without causing undue interference with Tenant's use of the Premises
      (i.e. so-called "punch list" items), (ii) all conditions for a certificate
      of use and occupancy have been satisfied and such a certificate has been
      requested, and (iii) Tenant has been given notice thereof.  Landlord shall
      complete as soon as conditions permit all "punch list" items (and in any
      event within sixty (60) days after substantial completion)  and Tenant
      shall afford Landlord access to the Premises for such purposes.

      (d) If the Substantial Completion Date has not occurred by that day which
      is ninetieth (90th) day after the date hereof (the "Construction
      Deadline," as it may be extended pursuant to Section 4.4), Tenant shall
      have the right to terminate this Lease by giving notice to Landlord, not
      later than thirty (30) days after the Construction Deadline (as so
      extended), of Tenant's desire so to do; and this Lease

                                       9
<PAGE>

      shall cease and come to an end without further liability or obligation on
      the part of either party ninety (90) days after the giving of such notice,
      unless, within such 90-day period, Landlord substantially completes
      Landlord's Work; and such right of termination shall be Tenant's sole and
      exclusive remedy at law or in equity for Landlord's failure so to complete
      such Work within such time.

4.3   CONCLUSIVENESS OF LANDLORD'S PERFORMANCE.  Except to the extent to which
      ----------------------------------------
      Tenant shall have given Landlord notice, not later than the end of the
      second full calendar month of the Term of this Lease next beginning after
      the Commencement Date (which period shall be extended to the first
      anniversary of the Commencement Date for defects that could not have been
      discovered through normal use or testing or by careful visual inspection),
      of respects in which Landlord has not performed Landlord's Work, Tenant
      shall have no claim that Landlord has failed to perform any of Landlord's
      Work.  Except for Landlord's Work, the Premises are being leased in their
      condition AS IS WITHOUT REPRESENTATION OR WARRANTY by Landlord.  Tenant
      acknowledges that it has inspected the Premises and common areas of the
      Building and, except for Landlord's Work, have found the same
      satisfactory.

4.4   TENANT'S DELAYS.  (a)  If a delay shall occur in the Substantial
      ---------------
      Completion Date and such delay would not have occurred but for:

      (i)   any request by Tenant that Landlord delay in the commencement or
            completion of Landlord's Work for any reason;

      (ii)  any change by Tenant in any of the Plans;

      (iii) any other act or omission of Tenant or its officers, agents,
            servants or contractors;

      (iv)  any special requirement of the Plans not in accordance with
            Landlord's building standards; or

      (v)   any reasonably necessary displacement of any of Landlord's Work from
            its place in Landlord's construction schedule resulting from any of
            the causes for delay referred to in clauses (i), (ii), (iii) or (iv)
            of this paragraph and the fitting of such Work back into such
            schedule;

      then Tenant shall, from time to time and within ten (10) days after demand
      therefor, pay to Landlord for each day of such delay the amount of Basic
      Rent, Escalation Charges and other charges that would have been payable
      hereunder had the Tenant's obligation to pay Basic Rent (without regard to
      any period of free rent) commenced immediately prior to such delay.

      (b) If a delay in the Substantial Completion Date, or if any substantial
      portion of such delay, is the result of Force Majeure, and such delay
      would not have occurred but for a delay described in paragraph (a), such
      delay shall be deemed added to the delay described in that paragraph.

      (c) The delays referred to in paragraphs (a) and (b) are herein referred
      to collectively and individually as "Tenant's Delay."

      (d) If, as a result of Tenant's Delay(s), the Substantial Completion Date
      is delayed in the aggregate for more than ninety (90) days, Landlord may
      (but shall not be required to) at any time thereafter terminate this Lease
      by giving written notice of such termination to Tenant and thereupon this
      Lease shall terminate without further liability or obligation on the part
      of either party, except that Tenant

                                       10
<PAGE>

      shall pay to Landlord the cost theretofore incurred by Landlord in
      performing Landlord's Work, plus an amount equal to Landlord's
      out-of-pocket expenses reasonably incurred in connection with this Lease,
      including, without limitation, brokerage and legal fees, together with any
      amount required to be paid pursuant to paragraph (a) through the effective
      termination date.

      (e) The Construction Deadline shall automatically be extended for the
      period of any delays caused by Tenant's Delay(s) or Force Majeure.


                                    ARTICLE 5
                                    ---------

                                 USE OF PREMISES
                                 ---------------


5.1   PERMITTED USE.  (a)  Tenant agrees that the Premises shall be used and
      -------------
      occupied by Tenant only for Permitted Uses specifically excluding, without
      limitation, use for medical, dental, governmental, utility company or
      employment agency offices.

      (b)  Tenant agrees to conform to the following provisions during the Term
      of this Lease:

          (i)  Tenant shall cause all freight to be delivered to or removed from
          the Building and the Premises in accordance with reasonable rules and
          regulations established by Landlord therefor;

          (ii)  Tenant will not place on the exterior of the Premises (including
          both interior and exterior surfaces of doors and interior surfaces of
          windows) or on any part of the Building outside the Premises, any
          signs, symbol, advertisement or the like visible to public view
          outside of the Premises.  Landlord will not withhold consent for signs
          or lettering on the entry doors to the Premises provided such signs
          conform to building standards adopted by Landlord in its sole
          discretion and Tenant has submitted to Landlord a plan or sketch in
          reasonable detail (showing, without limitation, size, color, location,
          materials and method of affixation) of the sign to be placed on such
          entry doors.  Landlord agrees, however, to maintain a tenant directory
          in the lobby of the Building (and, in the case of multi-tenant floors,
          in that floor's elevator lobby) in which will be placed Tenant's name
          and the location of the Premises in the Building;

          (iii)  Tenant shall not perform any act or carry on any practice which
          may injure the Premises, or any other part of the Building, or cause
          any offensive odors or loud noise or constitute a nuisance or a menace
          to any other tenant or tenants or other persons in the Building;

          (iv)  Tenant shall, in its use of the Premises, comply with the
          requirements of all applicable governmental laws, rules and
          regulations, including without limitation the Americans With
          Disabilities Act of 1990 (provided that Tenant shall not be required
          to make any structural changes to the Building or the Premises as a
          result of such requirements, unless such requirements would

                                       11
<PAGE>

          not be applicable to the Premises or Tenant's use thereof but for
          Tenant's particular business uses); and

          (v)  Tenant shall continuously throughout the Term of this Lease
          occupy the Premises for Permitted Uses.

5.2   INSTALLATIONS AND ALTERATIONS BY TENANT.  (a)  Tenant shall make no
      ---------------------------------------
      alterations, additions (including, for the purposes hereof, wall-to-wall
      carpeting), or improvements in or to the Premises (including any
      improvements other than Landlord's Work necessary for Tenant's initial
      occupancy of the Premises) without Landlord's prior written consent, which
      shall not be unreasonably withheld with respect to alterations, additions
      or improvements that do not affect the structure of the Building or the
      electrical, mechanical or plumbing systems therein. Any such alterations,
      additions or improvements shall be in accordance with complete plans and
      specifications meeting the requirements set forth in the rules and
      regulations from time to time in effect and approved in advance by
      Landlord.  Such work shall (i) be performed in a good and workmanlike
      manner and in compliance with all applicable laws, (ii) be made at
      Tenant's sole cost and expense and at such times and in such a manner as
      Landlord may from time to time reasonably designate, (iii) be made only in
      accordance with the rules and regulations from time to time in effect with
      respect thereto, and (iv) except to the extent specified by Landlord, and
      except for Tenant's Removable Property, become part of the Premises and
      the property of Landlord. If any alterations or improvements shall involve
      the removal of fixtures, equipment or other property in the Premises which
      are not Tenant's Removable Property, such fixtures, equipment or property
      shall be promptly replaced by Tenant at its expense with new fixtures,
      equipment or property of like utility and of at least equal quality.

      (b) All articles of personal property and all business fixtures, machinery
      and equipment and furniture, including without limitation the supplemental
      HVAC and telecommunication and other equipment described on Exhibit F
                                                                  ---------
      hereto, owned or installed by Tenant solely at its expense in the Premises
      ("Tenant's Removable Property") shall remain the property of Tenant and
      may be removed by Tenant at any time prior to the expiration of this
      Lease, provided that Tenant, at its expense, shall repair any damage to
      the Building caused by such removal.

      (c) Notice is hereby given that Landlord shall not be liable for any labor
      or materials furnished or to be furnished to Tenant upon credit, and that
      no mechanic's or other lien for any such labor or materials shall attach
      to or affect the reversion or other estate or interest of Landlord in and
      to the Premises.  To the maximum extent permitted by law, before such time
      as any contractor commences to perform work on behalf of Tenant, such
      contractor (and any subcontractors) shall furnish a written statement
      acknowledging the provisions set forth in the prior clause.  Whenever and
      as often as any mechanic's lien shall have been filed against the Property
      based upon any act or interest of Tenant or of anyone claiming through
      Tenant, Tenant shall forthwith take such action by bonding, deposit or
      payment as will remove or satisfy the lien.

      (d) In the course of any work being performed by Tenant (including without
      limitation the "field installation" of any Tenant's Removable Property),
      Tenant agrees to use labor compatible with that being employed by Landlord
      for work in or to the Building or other buildings owned by Landlord or its
      affiliates (which term, for purposes hereof, shall include, without
      limitation, entities which control or are under common control with
      Landlord, or which are controlled by Landlord or, if Landlord is a
      partnership, by any partner of Landlord) and not to employ or permit the
      use of any labor or

                                       12
<PAGE>

      otherwise take any action which might result in a labor dispute involving
      personnel providing services in the Building pursuant to arrangements made
      by Landlord.


                                    ARTICLE 6
                                    ---------

                            ASSIGNMENT AND SUBLETTING
                            -------------------------

  6.1 PROHIBITION. (a) Tenant covenants and agrees that whether voluntarily,
      -----------
      involuntarily, by operation of law or otherwise neither this Lease nor the
      term and estate hereby granted, nor any interest herein or therein, will
      be assigned, mortgaged, pledged, encumbered or otherwise transferred and
      that neither the Premises nor any part thereof will be encumbered in any
      manner by reason of any act or omission on the part of Tenant, or used or
      occupied or permitted to be used or occupied, by anyone other than Tenant,
      or for any use or purpose other than a Permitted Use, or be sublet (which
      term, without limitation, shall include granting of concessions, licenses
      and the like) in whole or in part, or be offered or advertised for
      assignment or subletting, without in each and every instance obtaining the
      prior written consent of Landlord (which consent Landlord may grant or
      withhold in its sole discretion). Without limiting the foregoing, any
      agreement pursuant to which: (x) Tenant is relieved from the obligation to
      pay, or a third party agrees to pay on Tenant's behalf, all or any portion
      of Basic Rent, Escalation Charges or other charges due under this Lease;
      and/or (y) a third party undertakes or is granted the right to assign or
      attempt to assign this Lease or sublet or attempt to sublet all or any
      portion of the Premises, shall for all purposes hereof be deemed to be an
      assignment of this Lease and subject to the provisions of this Article VI.
      The provisions of this paragraph (a) shall apply to a transfer (by one or
      more transfers) of a majority of the stock or partnership interests or
      other evidences of ownership of Tenant as if such transfer were an
      assignment of this Lease.

      (b) The provisions of paragraph (a) shall not apply to either:
      transactions with an entity into or with which Tenant is merged or
      consolidated, or to which substantially all of Tenant's assets are
      transferred; or transactions with any entity which controls or is
      controlled by Tenant or is under common control with Tenant; provided that
      in either such event:

          (i) the successor to Tenant has a net worth computed in accordance
          with generally accepted accounting principles consistently applied at
          least equal to the greater of (1) the net worth of Tenant immediately
          prior to such merger, consolidation or transfer, or (2) the net worth
          of Tenant herein named on the date of this Lease,

          (ii) proof satisfactory to Landlord of such net worth shall have been
          delivered to Landlord at least 10 days prior to the effective date of
          any such transaction, and

          (iii) the assignee agrees directly with Landlord, by written
          instrument in form satisfactory to Landlord, to be bound by all the
          obligations of Tenant hereunder including, without limitation, the
          covenant against further assignment and subletting.

      (c) If, in violation of this Article 6, this Lease be assigned, or if the
      Premises or any part thereof be sublet or occupied by anyone other than
      Tenant, Landlord may, at any time and from time to

                                       13
<PAGE>

      time, collect rent and other charges from the assignee, subtenant or
      occupant, and apply the net amount collected to the rent and other charges
      herein reserved, but no such assignment, subletting, occupancy, collection
      or modification of any provisions of this Lease shall be deemed a waiver
      of this covenant, or the acceptance of the assignee, subtenant or occupant
      as a tenant or a release of Tenant from the further performance of
      covenants on the part of Tenant to be performed hereunder. Any consent by
      Landlord to a particular subletting or occupancy shall not in any way
      diminish the prohibition stated in paragraph (a) of this Section 6.1 or
      the continuing liability of the original named Tenant. No assignment or
      subletting hereunder shall relieve Tenant from its obligations hereunder
      and Tenant shall remain fully and primarily liable therefor. No such
      assignment, subletting, or occupancy shall affect or be contrary to
      Permitted Uses. Any consent by Landlord to a particular assignment,
      subletting or occupancy shall be revocable, and any assignment, subletting
      or occupancy shall be void ab initio, if the same shall fail to require
      that such assignee, subtenant or occupant agree therein to be
      independently bound by and upon all of the covenants, agreements, terms,
      provisions and conditions set forth in this Lease on the part of Tenant to
      be kept and performed.



                                    ARTICLE 7
                                    ---------

              RESPONSIBILITY FOR REPAIRS AND CONDITION OF PREMISES;
             ------------------------------------------------------
                      SERVICES TO BE FURNISHED BY LANDLORD
                      ------------------------------------


7.1   LANDLORD REPAIRS.  (a)  Except as otherwise provided in this Lease,
      ----------------
      Landlord agrees to keep in good order, condition and repair the roof,
      public and common areas, exterior walls (including exterior glass) and
      structure of the Building (including all HVAC, plumbing, mechanical and
      electrical systems installed by Landlord, but specifically excluding any
      supplemental heating, ventilation or air conditioning equipment or systems
      installed at Tenant's written request or as a result of Tenant's
      requirements in excess of building standard design criteria, it being
      expressly agreed that Tenant shall be solely responsible for maintenance,
      repair and replacement of any supplement HVAC unit installed in the first
      floor computer room), all insofar as they affect the Premises, except that
      Landlord shall in no event be responsible to Tenant for the repair of
      glass in the Premises, the doors (or related glass and finish work)
      leading to the Premises, or any condition in the Premises or the Building
      caused by any act or neglect of Tenant, its invitees or contractors.
      Landlord shall not be responsible to make any improvements or repairs to
      the Building other than as expressly in this Section 7.1 provided, unless
      expressly provided otherwise in this Lease.

      (b) Landlord shall never be liable for any failure to make repairs which
      Landlord has undertaken to make under the provisions of this Section 7.1
      or elsewhere in this Lease, unless Tenant has given notice to Landlord of
      the need to make such repairs, and Landlord has failed to commence to make
      such repairs within a reasonable time after receipt of such notice, or
      fails to proceed with reasonable diligence to complete such repairs.

      (c) If Landlord shall be required to make any repairs or alterations to
      the Premises to comply with any laws and requirements of public
      authorities hereafter in effect, or with any directions, rules or
      regulations of governmental agencies having or purporting to have
      jurisdiction, and if the cost to Landlord of making such repairs or
      alterations, together with the cost of other such repairs or alterations
      theretofore required, would exceed an amount equal to six months' Basic
      Rent in the aggregate, Landlord may (but shall not be required to) elect
      to terminate this Lease by giving Tenant

                                       14
<PAGE>

     notice of its desire to do so, which notice shall set forth a date not less
     than ninety (90) days from the giving of such notice on which this Lease
     shall terminate with the same force and effect as if such date were the
     date originally set forth herein as the expiration hereof. Tenant may,
     however, void Landlord's election to so terminate this Lease by giving
     Landlord notice, within fifteen days after the date of Landlord's notice to
     Tenant, to the effect that Tenant shall, at Tenant's expense, promptly and
     diligently cause all such repairs or alterations to be performed in the
     Premises, and Tenant shall hold Landlord harmless from and against any and
     all costs, expenses, penalties and/or liabilities (including without
     limitation reasonable legal fees and costs) in connection therewith.

7.2   TENANT'S AGREEMENT.  (a) Tenant will keep reasonably neat and clean and
      ------------------
      maintain in good order, condition and repair the Premises and every part
      thereof, excepting only those repairs for which Landlord is responsible
      under the terms of this Lease, reasonable wear and tear of the Premises,
      and damage by fire or other casualty or as a consequence of the exercise
      of the power of eminent domain; and shall surrender the Premises, at the
      end of the Term, in such condition. Without limitation, Tenant shall
      continually during the Term of this Lease maintain the Premises in
      accordance with all laws, codes and ordinances from time to time in effect
      and all directions, rules and regulations of the proper officers of
      governmental agencies having jurisdiction, and the standards recommended
      by the Boston Board of Fire Underwriters, and shall, at Tenant's expense,
      obtain all permits, licenses and the like required by applicable law. To
      the extent that the Premises constitute a "Place of Public Accommodation"
      within the meaning of the Americans With Disabilities Act of 1990, Tenant
      shall be responsible, subject to the requirements of Section 5.2, for
      making the Premises comply with such Act. Notwithstanding the foregoing or
      the provisions of Article XII, to the maximum extent this provision may be
      enforceable according to law, Tenant shall be responsible for the cost of
      repairs which may be made necessary by reason of damage to the Building
      caused by any act or neglect of Tenant, or its contractors or invitees
      (including any damage by fire or other casualty arising therefrom) and, if
      the premium or rates payable with respect to any policy or policies of
      insurance purchased by Landlord or Agent with respect to the Property
      increases as a result of payment by the insurer of any claim arising from
      the any act or neglect of Tenant, or its contractors or invitees, Tenant
      shall be pay such increase, from time to time, within fifteen (15) days
      after demand therefor by Landlord, as an additional charge.

      (b) If repairs are required to be made by Tenant pursuant to the terms
      hereof, Landlord may demand that Tenant make the same forthwith, and if
      Tenant refuses or neglects to commence such repairs and complete the same
      with reasonable dispatch, after such demand (except in the case of an
      emergency, in which event Landlord may make such repairs immediately),
      Landlord may (but shall not be required to do so) make or cause such
      repairs to be made (the provisions of Section 14.18 being applicable to
      the costs thereof), and shall not be responsible to Tenant for any loss or
      damage whatsoever that may accrue to Tenant's stock or business by reason
      thereof.

7.3   FLOOR LOAD - HEAVY MACHINERY. (a)  Tenant shall not place a load upon any
      ----------------------------
      floor in the Premises exceeding the floor load per square foot of area
      which such floor was designed to carry and which is allowed by law.
      Landlord reserves the right to prescribe the weight and position of all
      heavy business machines and mechanical equipment, including safes, which
      shall be placed so as to distribute the weight. Business machines and
      mechanical equipment shall be placed and maintained by Tenant at Tenant's
      expense in settings sufficient, in Landlord's reasonable judgment, to
      absorb and prevent vibration, noise and annoyance.  Tenant shall not move
      any safe, heavy machinery, heavy equipment, freight, bulky matter or
      fixtures into or out of the Building without Landlord's prior consent,
      which consent shall not be unreasonably withheld, but which may include a

                                       15
<PAGE>

      requirement to provide insurance, naming Landlord as an insured, in such
      amounts as Landlord may deem reasonable.

      (b) If any such safe, machinery, equipment, freight, bulky matter or
      fixtures requires special handling, Tenant agrees to employ only persons
      holding a Master Rigger's License to do such work, and that all work in
      connection therewith shall comply with applicable laws and regulations.
      Any such moving shall be at the sole risk and hazard of Tenant, and Tenant
      will exonerate, indemnify and save Landlord harmless against and from any
      liability, loss, injury, claim or suit resulting directly or indirectly
      from such moving.

7.4   BUILDING SERVICES.  (a) Landlord shall, on Business Days from 8:00 a.m. to
      -----------------
      6:00 p.m. and on Saturdays from 8:00 a.m. to 1:00 p.m., furnish heating
      and cooling as normal seasonal changes may require to provide reasonably
      comfortable space temperature and ventilation for occupants of the
      Premises under normal business operation at an occupancy of not more than
      one person per 150 square feet of Premises Rentable Area and an electrical
      load not exceeding 3.0 watts per square foot of Premises Rentable Area.
      Landlord has advised Tenant that the Building heating needs are served by
      a gas-fired Hydrotherm boiler, with hot water fin-tube radiation, and that
      cooling needs are served by three McQuay variable rooftop units, which
      supply VAV boxes serving the Premises. Landlord reserves the right to
      modify the Building system from time to time, provided that the service to
      the Premises, as hereinabove stated, is not diminished. If Tenant shall
      require air conditioning, heating or ventilation outside the hours and
      days above specified, Landlord may furnish such service and Tenant shall
      pay therefor such charges as may from time to time be in effect (which
      shall be computed using Landlord's actual cost plus a reasonable
      administrative charge). Landlord and Tenant acknowledge that, as part of
      Tenant's initial improvements in the Premises, Tenant is installing, at
      its cost, a Liebert cooling system to provide supplemental cooling in
      Tenant's computer room, which system shall constitute a part of Tenant's
      Removable Property as described on Exhibit F. Tenant shall be solely
      responsible for the repair and maintenance of such system and equipment,
      and the cost of electricity therefor shall be paid by Tenant in accordance
      with a separate check meter to be installed therefor. Without limiting the
      foregoing, in the event Tenant introduces into the Premises personnel or
      equipment which overloads the capacity of the Building system or in any
      other way interferes with the system's ability to perform adequately its
      proper functions, supplementary systems may, if and as needed, at
      Landlord's option, be provided by Landlord, at Tenant's expense.

      (b) Landlord shall also provide:

          (i)  Passenger elevator service from the existing passenger elevator
          system in common with Landlord and other tenants in the Building.

          (ii)  Warm water for lavatory purposes and cold water (at temperatures
          supplied by the city in which the Property is located) for drinking,
          lavatory and toilet purposes.  If Tenant uses water for any purpose
          other than for ordinary lavatory and drinking purposes, Landlord may
          assess a reasonable charge for the additional water so used, or
          install a water meter and thereby measure Tenant's water consumption
          for all purposes.  In the latter event, Tenant shall pay the cost of
          the meter and the cost of installation thereof and shall keep such
          meter and installation equipment in good working order and repair.
          Tenant agrees to pay for water consumed, as shown on such meter,
          together with the sewer charge based on such meter charges, as and
          when

                                       16
<PAGE>

          bills are rendered, and in default in making such payment Landlord may
          pay such charges and collect the same from Tenant as an additional
          charge.

          (iii)  Cleaning and janitorial services to the Premises, provided the
          same are kept in order by Tenant, substantially in accordance with the
          cleaning standards from time to time in effect for the Building.

          (iv)  Free access to the Premises on Business Days from 8:00 a.m. to
          6:00 p.m., and at all other times subject to security precautions from
          time to time in effect, and subject always to restrictions based on
          emergency conditions.

      (c)  Landlord or Agent may from time to time, but shall not be obligated
      to, provide one or more uniformed attendants in or about the lobby of the
      Building. Unless Landlord expressly agrees otherwise in writing, such
      attendant(s) shall serve functions such as assisting visitors and invitees
      of tenants and others in the Building, monitoring fire control and alarm
      equipment, and summoning emergency services to the Building as and when
      needed. Tenant expressly acknowledges and agrees that: (i) such attendants
      shall not serve as police officers, and will be unarmed, and will not be
      trained in situations involving potentially physical confrontation; and
      (ii) if provided, such attendants will be provided solely as an amenity to
      tenants of the Building for the sole purposes set forth above, and not for
      the purpose of securing any individual tenant premises or guaranteeing the
      physical safety of Tenant's Premises or of Tenant's employees, agents,
      contractors or invitees. If and to the extent that Tenant desires to
      provide security for the Premises or for such persons or their property,
      Tenant shall be responsible for so doing, after having first consulted
      with Landlord and after obtaining Landlord's consent, which shall not be
      unreasonably withheld. Landlord expressly disclaims any and all
      responsibility and/or liability for the physical safety of Tenant's
      property, and for that of Tenant's employees, agents, contractors and
      invitees, and, without in any way limiting the operation of Article X
      hereof, Tenant, for itself and its agents, contractors, invitees and
      employees, hereby expressly waives any claim, action, cause of action or
      other right which may accrue or arise as a result of any damage or injury
      to the person or property of Tenant or any such agent, invitee, contractor
      or employee. Tenant agrees that, as between Landlord and Tenant, it is
      Tenant's responsibility to advise its employees, agents, contractors and
      invitees as to necessary and appropriate safety precautions.

7.5   ELECTRICITY.  (a) Landlord shall supply electricity to the Premises to
      -----------
      meet a demand requirement not to exceed 3.0 watts per square foot of
      Premises Rentable Area for standard single-phase 120 volt alternating
      current and Tenant agrees in its use of the Premises (i) not to exceed
      such requirements and (ii) that its total connected lighting load will not
      exceed the maximum from time to time permitted under applicable
      governmental regulations.  If, without in any way derogating from the
      foregoing limitation, Tenant shall require electricity in excess of the
      requirements set forth above, Tenant shall notify Landlord and Landlord
      may (without being obligated to do so) supply such additional service or
      equipment at Tenant's sole cost and expense.  Landlord shall purchase and
      install, at Tenant's expense (which shall be computed using Landlord's
      actual cost plus a reasonable administrative charge), all lamps, tubes,
      bulbs, starters and ballasts.  In order to assure that the foregoing
      requirements are not exceeded and to avert possible adverse affect on the
      Building's electric system, Tenant shall not, without Landlord's prior
      consent, connect any fixtures, appliances or equipment to the Building's
      electric distribution system other than personal computers, facsimile
      transceivers, typewriters, pencil sharpeners, adding machines,
      photocopiers, word and data processors, clocks, radios, hand-held or desk
      top calculators, dictaphones, desktop computers and other similar small
      electrical equipment normally found in business offices and not drawing
      more

                                       17
<PAGE>

      than 15 amps at 120/208 volts. Landlord has advised Tenant that, as of the
      date hereof, the Building has electrical equipment and supply providing
      1,200 amp, 277/480 volt, 3-phase, 4-wire service, with the main switch in
      the second floor electric closet, and a tenant buss duct in electric
      closets on each floor. Landlord reserves the right to modify the Building
      system from time to time, provided that the service to the Premises, as
      hereinabove stated, is not diminished.

      (b) From time to time during the Term of this Lease, Landlord shall have
      the right to have an independent electrical consultant selected by
      Landlord make a survey of Tenant's electric usage, the result of which
      survey shall be conclusive and binding upon Landlord and Tenant.  In the
      event that such survey shows that Tenant has exceeded the requirements set
      forth in paragraph (a), in addition to any other rights Landlord may have
      hereunder, Tenant shall, upon demand, reimburse Landlord for the actual
      cost of such survey (plus a reasonable administrative fee) and the cost,
      as determined by such consultant, of electricity usage in excess of such
      requirements as an additional charge.

      (c) Landlord shall have the right to either (A) discontinue furnishing
      electricity to the Premises at any time upon not less than thirty (30)
      days' notice to Tenant provided Landlord shall, at Landlord's expense
      (unless such action results from Tenant's having exceeded the requirements
      in paragraph (a) above), separately meter the Premises directly to the
      applicable public utility company, or (B) install at Landlord's expense
      (unless such action results from Tenant's having exceeded the requirements
      in paragraph (a) above), a so called "check meter" which measures the
      actual electric usage in the Premises. If Landlord exercises such right
      under clause (A), from and after the effective date of such
      discontinuance, Landlord shall not be obligated to furnish electricity to
      the Premises.  If Landlord exercises such right in clause (B) from and
      after the date of installation of such check meter, tenant's electric cost
      for the Premises shall be determined periodically by Landlord (based on
      such meter readings), using the rate (per kilowatt/hour) paid by Landlord
      for electricity to other portions of the Building.  In either case:

          (i) in the computation of Operating Expenses, only the cost of
          electricity supplied to those portions of the Building other than
          those leased or intended to be leased to tenants for their exclusive
          use and occupancy, i.e., only those areas which are so-called common
          areas, shall be included;

          (ii) Tenant shall no longer be required to pay the Estimated
          Electricity Payment, and Base Operating Expenses shall be reduced by
          $0.95 per square foot of Building Rentable Area; and

          (iii) Landlord shall permit Landlord's existing wires, risers,
          conduits and other electrical equipment of Landlord to be used to
          supply electricity to Tenant provided that the limits set forth in
          paragraph (a) shall not be exceeded, and Tenant shall be responsible
          for payment of all electricity charges directly to such utility.

      (d) Tenant shall not at any time contract to purchase electricity from any
      provider (an "ASP") other than the service provider from whom Landlord
      from time to time shall purchase electricity for the common areas of the
      Building, or give any such ASP permission to install lines or other
      equipment, without in each case obtaining the Landlord's prior written
      consent. Such consent shall not be unreasonably withheld or delayed,
      provided that it shall not be unreasonable in any case for Landlord to
      require: (i) that Landlord shall not be required to incur any expense in
      connection with any aspect of the service to be provided by Tenant's ASP,
      including without limitation, the cost of installation, service and/or
      removal of equipment, fixtures or materials associated therewith; (ii)
      that prior to the commencement of any work in the Building by the ASP,
      Landlord shall have been

                                       18
<PAGE>

     furnished with information (acceptable to Landlord in its sole discretion)
     as to the ASP's financial condition, business reputation and insurance
     coverage; (iii) that Landlord shall have determined that there is
     sufficient space in the Premises and in any common electrical closets (for
     which Landlord may charge a reasonable fee) or other facilities for the ASP
     to install, maintain and repair its equipment, and that the installation,
     maintenance and repair of such equipment shall not have any detrimental
     effect on the Building, the Property or on the property or facilities of
     any other tenant or occupant of any part thereof; (iv) that Tenant and/or
     the ASP shall have obtained all necessary permits, licenses and approvals;
     (v) that Landlord shall have the right to have access to any equipment
     placed in the Building for purposes of inspection and ensuring compliance
     herewith; and (vi) that Tenant's agreement with the ASP shall not result in
     any adverse financial impact on Landlord or the other tenants in the
     Building. Tenant shall be solely responsible for any and all costs and
     expenses incurred in connection with the installation, use, maintenance,
     repair and removal of such equipment and shall indemnify, defend and hold
     Landlord harmless from and against any loss, cost, damage or expense
     suffered by Landlord as a result of Tenant's arrangements with its ASP
     (except to the extent arising from Landlord's grossly negligent acts or
     omissions). Landlord shall have no liability for the service to be provided
     by any ASP, including without limitation any loss or interruption of
     service or any damages to Tenant or its business arising therefrom.


                                    ARTICLE 8
                                    ---------

                                REAL ESTATE TAXES
                                -----------------


8.1   PAYMENTS ON ACCOUNT OF REAL ESTATE TAXES.  (a)  For the purposes of this
      ----------------------------------------
      Article, the term "Tax Year" shall mean the twelve-month period commencing
      on the July 1 immediately preceding the Commencement Date and each twelve-
      month period thereafter commencing during the Term of this Lease; and the
      term "Taxes" shall mean real estate taxes assessed with respect to (i) the
      Property for any Tax Year.

      (b) In the event that for any reason, Taxes during any Tax Year shall
      exceed Base Taxes, Tenant shall pay to Landlord, as an Escalation Charge,
      an amount equal to (i) the excess of Taxes over Base Taxes for such Tax
      Year, multiplied by (ii) the Escalation Factor, such amount to be
      apportioned for any portion of a Tax Year in which the Commencement Date
      falls or the Term of this Lease ends.

      (c) Estimated payments by Tenant on account of Taxes shall be made on the
      first day of each and every calendar month during the Term of this Lease,
      in the fashion herein provided for the payment of Basic Rent.  The monthly
      amount so to be paid to Landlord shall be sufficient to provide Landlord
      by the time real estate tax payments are due with a sum equal to Tenant's
      required payments, as estimated by Landlord from time to time, on account
      of Taxes for the then current Tax Year.  Promptly after receipt by
      Landlord of bills for such Taxes, Landlord shall advise Tenant of the
      amount thereof and the computation of Tenant's payment on account thereof.
      If estimated payments theretofore made by Tenant for the Tax Year covered
      by such bills exceed the required payments on account thereof for such
      Year, Landlord shall credit the amount of overpayment against subsequent
      obligations of Tenant on account of Taxes (or promptly refund such
      overpayment if the Term of this Lease has ended and Tenant has no further
      obligation to Landlord); but if the required payments on account thereof
      for such Year are greater than estimated payments theretofore made on
      account

                                       19
<PAGE>

     thereof for such Year, Tenant shall make payment to Landlord within 30 days
     after being so advised by Landlord.

8.2   ABATEMENT.  If Landlord shall receive any tax refund or reimbursement of
      ---------
      Taxes or sum in lieu thereof with respect to any Tax Year, then out of any
      balance remaining thereof after deducting Landlord's expenses reasonably
      incurred in obtaining such refund, Landlord shall promptly pay to Tenant,
      provided there does not then exist a Default of Tenant, an amount equal to
      such refund or reimbursement or equivalent sum in lieu thereof (exclusive
      of any interest) multiplied by the Escalation Factor; provided, that in no
      event, shall Tenant be entitled to receive more than the payments made by
      Tenant on account of Taxes for such Tax Year pursuant to paragraph (b) of
      Section 8.1 or to receive any payments or abatement of Basic Rent if Taxes
      for any year are less than Base Taxes or Base Taxes are abated.

8.3   ALTERNATE TAXES.  (a)  If some method or type of taxation shall replace
      ---------------
      the current method of assessment of real estate taxes in whole or part, or
      the type thereof, or if additional types of taxes are imposed upon the
      Property or Landlord, Tenant agrees that such taxes or other charges shall
      be deemed to be, and shall be, Taxes hereunder and Tenant shall pay an
      equitable share of the same as an additional charge computed in a fashion
      consistent with the method of computation herein provided, to the end that
      Tenant's share thereof shall be, to the maximum extent practicable,
      comparable to that which Tenant would bear under the foregoing provisions.

      (b) If a tax (other than a Federal or State net income tax) is assessed on
      account of the rents or other charges payable by Tenant to Landlord under
      this Lease, Tenant agrees to pay the same as an additional charge within
      thirty (30) days after billing therefor, unless applicable law prohibits
      the payment of such tax by Tenant.


                                    ARTICLE 9
                                    ---------

                         OPERATING AND UTILITY EXPENSES
                         ------------------------------


9.1   DEFINITIONS.  For the purposes of this Article, the following terms shall
      -----------
      have the following respective meanings:

      Operating Year:  Each calendar year in which any part of the Term of this
      Lease shall fall.

      Operating Expenses:  aggregate costs or expenses reasonably incurred by
      Landlord with respect to the operation, administration, cleaning, repair,
      maintenance and management of the Property all as set forth in Exhibit C
      annexed hereto, provided that, if during any portion of the Operating Year
      for which Operating Expenses are being computed, less than all of Building
      Rentable Area was occupied by tenants or if Landlord is not supplying all)
      tenants with the services being supplied hereunder, actual Operating
      Expenses incurred shall be reasonably extrapolated by Landlord on an item
      by item basis to the estimated Operating Expenses that would have been
      incurred if the Building were fully occupied for such Year and such
      services were being supplied to all tenants, and such extrapolated amount
      shall, for the purposes hereof, be deemed to be the Operating Expenses for
      such Year. Without limitation of the foregoing, Tenant acknowledges that
      the Building is a portion of the Park, and that under certain
      circumstances, Landlord will have services performed or materials supplied
      to one or more buildings or common areas in the Park. Landlord shall
      allocate the cost of such services

                                       20
<PAGE>

      and materials among one, two or all three buildings in the Park, as
      Landlord shall deem reasonably appropriate (Landlord's allocation being
      conclusive and binding) and, to the extent that any such cost would be
      included in Operating Expenses if supplied only to the Building, the
      Building's reasonable share of any such costs provided to the Park shall
      likewise be included in Operating Expenses.

9.2   TENANT'S PAYMENTS.  (a)  In the event that for any Operating Year
      -----------------
      Operating Expenses shall exceed Base Operating Expenses, Tenant shall pay
      to Landlord, as an Escalation Charge, an amount equal to (i) such excess
      Operating Expenses multiplied by (ii) the Escalation Factor, such amount
      to be apportioned for any portion of an Operating Year in which the
      Commencement Date falls or the Term of this Lease ends.

      (b) Estimated payments by Tenant on account of Operating Expenses shall be
      made on the first day of each and every calendar month during the Term of
      this Lease, in the fashion herein provided for the payment of Basic Rent.
      The monthly amount so to be paid to Landlord shall be sufficient to
      provide Landlord by the end of each Operating Year a sum equal to Tenant's
      required payments, as estimated by Landlord from time to time during each
      Operating Year, on account of Operating Expenses for such Operating Year.
      After the end of each Operating Year, Landlord shall submit to Tenant a
      reasonably detailed accounting of Operating Expenses for such Year, and
      Landlord shall certify to the accuracy thereof.  If estimated payments
      theretofore made for such Year by Tenant exceed Tenant's required payment
      on account thereof for such Year, according to such statement, Landlord
      shall credit the amount of overpayment against subsequent obligations of
      Tenant with respect to Operating Expenses (or promptly refund such
      overpayment if the Term of this Lease has ended and Tenant has no further
      obligation to Landlord); but, if the required payments on account thereof
      for such Year are greater than the estimated payments (if any) theretofore
      made on account thereof for such Year, Tenant shall make payment to
      Landlord within 30 days after being so advised by Landlord.  Landlord
      shall have the same rights and remedies for the nonpayment by Tenant of
      any payments due on account of Operating Expenses as Landlord has
      hereunder for the failure of Tenant to pay Basic Rent.


                                   ARTICLE 10
                                   ----------

                    INDEMNITY AND PUBLIC LIABILITY INSURANCE
                    ----------------------------------------


10.1  TENANT'S INDEMNITY.  (a) Except to the extent that such claims arise from
      ------------------
      the negligent or willful and wrongful acts or omissions of Landlord or its
      agents or employees, Tenant agrees to indemnify and save harmless Landlord
      from and against all claims, loss, cost, damage or expense of whatever
      nature arising: (i) from any accident, injury or damage whatsoever to any
      person, or to the property of any person, occurring in or about the
      Premises; (ii) from any accident, injury or damage occurring outside of
      the Premises but on the Property where such accident, damage or injury
      results or is claimed to have resulted from an act or omission on the part
      of Tenant or Tenant's agents or employees or independent contractors; or
      (iii) in connection with the conduct or management of the Premises or of
      any business therein, or any thing or work whatsoever done, or any
      condition created (other than by Landlord) in or about the Premises; and,
      in any case, occurring after the date of this Lease until the end of the
      Term of this Lease and thereafter so long as Tenant is in occupancy of any
      part of the Premises.  This indemnity and hold harmless agreement shall
      include indemnity against all losses, costs, damages, expenses and
      liabilities incurred in or in connection with any such claim

                                       21
<PAGE>

      or proceeding brought thereon, and the defense thereof, including, without
      limitation, reasonable attorneys' fees and costs at both the trial and
      appellate levels.

      (b) Landlord agrees to indemnify and save harmless Tenant from and against
      all claims, loss, cost, damage or expense of whatever nature arising from
      any accident, injury or damage, to the extent that such accident, damage
      or injury results from an act or omission on the part of Landlord or
      Landlord's agents or employees and occurring after the date of this Lease
      until the end of the Term of this Lease. This indemnity and hold harmless
      agreement shall include indemnity against all losses, costs, damages,
      expenses and liabilities incurred in or in connection with any such claim
      or proceeding brought thereon, and the defense thereof, including, without
      limitation, reasonable attorneys' fees and costs at both the trial and
      appellate levels.

10.2  PUBLIC LIABILITY INSURANCE.  Tenant agrees to maintain in full force from
      --------------------------
      the date upon which Tenant first enters the Premises for any reason,
      throughout the Term of this Lease, and thereafter so long as Tenant is in
      occupancy of any part of the Premises, a policy of commercial general
      liability and property damage insurance (including broad form contractual
      liability, independent contractor's hazard and completed operations
      coverage) under which Tenant is named as an insured and Landlord, Agent
      (and such other persons as are in privity of estate with Landlord as may
      be set out in a notice from time to time) are named as additional
      insureds, and under which the insurer agrees to indemnify and hold
      Landlord, Agent and those in privity of estate with Landlord, harmless
      from and against all cost, expense and/or liability arising out of or
      based upon any and all claims, accidents, injuries and damages set forth
      in Section 10.1. Each such policy shall be non-cancelable and non-
      amendable with respect to Landlord, Agent and Landlord's said designees
      without thirty (30) days' prior notice, shall be written on an
      "occurrence" basis, and shall be in at least the amounts of the Initial
      Public Liability Insurance specified in Section 1.3 or such greater
      amounts as Landlord shall from time to time (but not more often than
      annually) reasonably request, and a duplicate original thereof shall be
      delivered to Landlord.

10.3  TENANT'S RISK.  Tenant agrees to use and occupy the Premises and to use
      -------------
      such other portions of the Property as Tenant is herein given the right to
      use at Tenant's own risk. Except to the extent that such claims arise from
      the negligent or willful and wrongful acts or omissions of Landlord or its
      agents or employees, neither Landlord nor Landlord's insurers shall have
      any responsibility or liability for any loss of or damage to Tenant's
      Removable Property.  Tenant shall carry "all-risk" property insurance on a
      "replacement cost" basis, insuring Tenant's Removable Property and any
      alterations, additions or improvements installed by Tenant pursuant to
      Section 5.2, to the extent that the same have not become the property of
      Landlord, and other so-called improvements and betterments. The provisions
      of this Section 10.3 shall be applicable from and after the execution of
      this Lease and until the end of the Term of this Lease, and during such
      further period as Tenant may use or be in occupancy of any part of the
      Premises or of the Building.

10.4  INJURY CAUSED BY THIRD PARTIES.   Except to the extent that such claims
      ------------------------------
      arise from the negligent or willful and wrongful acts or omissions of
      Landlord or its agents or employees, Tenant agrees that Landlord shall not
      be responsible or liable to Tenant, or to those claiming by, through or
      under Tenant, for any loss or damage that may be occasioned by or through
      the acts or omissions of persons occupying adjoining premises or any part
      of the premises adjacent to or connecting with the Premises or any part of
      the Property or otherwise.

                                       22
<PAGE>

                                   ARTICLE 11
                                   ----------

                          LANDLORD'S ACCESS TO PREMISES
                          -----------------------------


11.1  LANDLORD'S RIGHTS.  Landlord  and Agent shall have the right to enter the
      -----------------
      Premises at all reasonable hours, and upon reasonable advance notice
      (which need not be in writing, and which need not be given at all in the
      event of any emergency) for the purpose of inspecting or making repairs to
      the same, and Landlord and Agent shall also have the right to make access
      available at all reasonable hours to prospective or existing mortgagees,
      purchasers or tenants of any part of the Property.


                                   ARTICLE 12
                                   ----------

                           FIRE, EMINENT DOMAIN, ETC.
                           --------------------------


12.1  ABATEMENT OF RENT.  If the Premises shall be damaged by fire or casualty,
      -----------------
      Basic Rent and Escalation Charges payable by Tenant shall abate
      proportionately for the period in which, by reason of such damage, there
      is substantial interference with Tenant's use of the Premises, having
      regard for the extent to which Tenant may be required to discontinue
      Tenant's use of all or a portion of the Premises, but such abatement or
      reduction shall end if and when Landlord shall have substantially restored
      the Premises (excluding any alterations, additions or improvements made by
      Tenant pursuant to Section 5.2) to the condition in which they were prior
      to such damage.  If the Premises shall be affected by any exercise of the
      power of eminent domain, Basic Rent and Escalation Charges payable by
      Tenant shall be justly and equitably abated and reduced according to the
      nature and extent of the loss of use thereof suffered by Tenant.  In no
      event shall Landlord have any liability for damages to Tenant for
      inconvenience, annoyance, or interruption of business arising from such
      fire, casualty or eminent domain.

12.2  LANDLORD'S RIGHT OF TERMINATION.  If the Premises or the Building are
      -------------------------------
      substantially damaged by fire or casualty (the term "substantially
      damaged" meaning damage of such a character that the same cannot, in
      ordinary course, reasonably be expected to be repaired within sixty (60)
      days from the time that repair work would commence), or if any part of the
      Building is taken by any exercise of the right of eminent domain, then
      Landlord shall have the right to terminate this Lease (even if Landlord's
      entire interest in the Premises may have been divested) by giving notice
      of Landlord's election so to do within 90 days after the occurrence of
      such casualty or the effective date of such taking, whereupon this Lease
      shall terminate as of the date of such notice with the same force and
      effect as if such date were the date originally established as the
      expiration date hereof.

12.3  RESTORATION.  If this Lease shall not be terminated pursuant to Section
      -----------
      12.2, Landlord shall thereafter use due diligence to restore the Premises
      (excluding any alterations, additions or improvements made by Tenant
      pursuant to Section 5.2) to their pre-existing condition, provided that
      Landlord's obligation shall be limited to the amount of insurance proceeds
      available therefor.  If, for any reason, such restoration shall not be
      substantially completed within four months after the expiration of the 90-
      day period referred to in Section 12.2 (which four-month period may be
      extended for such periods of time as Landlord is prevented from proceeding
      with or completing such restoration for any cause beyond Landlord's
      reasonable control, but in no event for more than an

                                       23
<PAGE>

      additional two months), Tenant shall have the right to terminate this
      Lease by giving notice to Landlord thereof within thirty (30) days after
      the expiration of such period (as so extended) provided that such
      restoration is not completed within such period. This Lease shall cease
      and come to an end without further liability or obligation on the part of
      either party thirty (30) days after such giving of notice by Tenant
      unless, within such 30-day period, Landlord substantially completes such
      restoration. Such right of termination shall be Tenant's sole and
      exclusive remedy at law or in equity for Landlord's failure so to complete
      such restoration, and time shall be of the essence with respect thereto.

12.4  AWARD.  Landlord shall have and hereby reserves and excepts, and Tenant
      -----
      hereby grants and assigns to Landlord, all rights to recover for damages
      to the Property and the leasehold interest hereby created, and to
      compensation accrued or hereafter to accrue by reason of such taking,
      damage or destruction, and by way of confirming the foregoing, Tenant
      hereby grants and assigns, and covenants with Landlord to grant and assign
      to Landlord, all rights to such damages or compensation, and covenants to
      deliver such further assignments and assurances thereof as Landlord may
      from time to time request, and Tenant hereby irrevocably appoints Landlord
      its attorney-in-fact to execute and deliver in Tenant's name all such
      assignments and assurances.  Nothing contained herein shall be construed
      to prevent Tenant from prosecuting in any condemnation proceedings a claim
      for the value of any of Tenant's Removable Property installed in the
      Premises by Tenant at Tenant's expense and for relocation expenses,
      provided that such action shall not affect the amount of compensation
      otherwise recoverable by Landlord from the taking authority.

12.5  LANDLORD'S INSURANCE.  Landlord agrees to maintain in full force and
      --------------------
      effect, during the Term of this Lease, property damage insurance with such
      deductibles and in such amounts as may from time to time be carried by
      reasonably prudent owners of similar buildings in the area in which the
      Property is located, provided that in no event shall Landlord be required
      to carry other than fire and extended coverage insurance or insurance in
      amounts greater than 80% of the actual insurable cash value of the
      Building (excluding footings and foundations). Landlord may satisfy such
      insurance requirements by including the Property in a so-called "blanket"
      insurance policy, provided that the amount of coverage allocated to the
      Property shall fulfill the foregoing requirements.


                                   ARTICLE 13
                                   ----------

                                     DEFAULT
                                     -------


13.1  TENANT'S DEFAULT.  (a) If at any time subsequent to the date of this Lease
      ----------------
      any one or more of the following events (herein referred to as a "Default
      of Tenant") shall happen:

          (i) Tenant shall fail to pay the Basic Rent, Escalation Charges or
          additional charges hereunder when due and such failure shall continue
          for three (3) full Business Days after notice to Tenant from Landlord;
          or

          (ii) Tenant shall neglect or fail to perform or observe any other
          covenant herein contained on Tenant's part to be performed or observed
          and Tenant shall fail to remedy the same within thirty (30) days after
          notice to Tenant specifying such neglect or failure, or if such
          failure is of such a nature that Tenant cannot reasonably remedy the
          same within such thirty (30) day

                                       24
<PAGE>

          period, Tenant shall fail to commence promptly to remedy the same and
          to prosecute such remedy to completion with diligence and continuity;
          or

          (iii) Tenant's leasehold interest in the Premises shall be taken on
          execution or by other process of law directed against Tenant; or

          (iv) Tenant shall make an assignment for the benefit of creditors or
          shall be adjudicated insolvent, or shall file any petition or answer
          seeking any reorganization, arrangement, composition, readjustment,
          liquidation, dissolution or similar relief for itself under any
          present or future Federal, State or other statute, law or regulation
          for the relief of debtors (other than the Bankruptcy Code, as
          hereinafter defined), or shall seek or consent to or acquiesce in the
          appointment of any trustee, receiver or liquidator of Tenant or of all
          or any substantial part of its properties, or shall admit in writing
          its inability to pay its debts generally as they become due; or

          (v) An Event of Bankruptcy (as hereinafter defined) shall occur with
          respect to Tenant; or

          (vi) A petition shall be filed against Tenant under any law (other
          than the Bankruptcy Code) seeking any reorganization, arrangement,
          composition, readjustment, liquidation, dissolution, or similar relief
          under any present or future Federal, State or other statute, law or
          regulation and shall remain undismissed or unstayed for an aggregate
          of sixty (60) days (whether or not consecutive), or if any trustee,
          conservator, receiver or liquidator of Tenant or of all or any
          substantial part of its properties shall be appointed without the
          consent or acquiescence of Tenant and such appointment shall remain
          unvacated or unstayed for an aggregate of sixty (60) days (whether or
          not consecutive); or

          (vii) If: (x) Tenant shall fail to pay the Basic Rent, Escalation
          Charges, additional charges or other charges hereunder when due or
          shall fail to perform or observe any other covenant herein contained
          on Tenant's part to be performed or observed and Tenant shall cure any
          such failure within the applicable grace period set forth in clauses
          (i) or (ii) above; or (y) a Default of Tenant of the kind set forth in
          clauses (i) or (ii) above shall occur and Landlord shall, in its sole
          discretion, permit Tenant to cure such Default after the applicable
          grace period has expired; and a similar failure or Default shall occur
          more than twice within the next 365 days (whether or not such similar
          failure is cured within the applicable grace period);

      then in any such case Landlord may terminate this Lease by notice to
      Tenant, specifying a date not less than five (5) days after the giving of
      such notice on which this Lease shall terminate and this Lease shall come
      to an end on the date specified therein as fully and completely as if such
      date were the date herein originally fixed for the expiration of the Term
      of this Lease, and Tenant will then quit and surrender the Premises to
      Landlord, but Tenant shall remain liable as hereinafter provided.

      (b) For purposes of clause (a)(v) above, an "Event of Bankruptcy" means
      the filing of a voluntary petition by Tenant, or the entry of an order for
      relief against Tenant, under Chapter 7, 11, or 13 of

                                       25
<PAGE>

      the Bankruptcy Code, and the term "Bankruptcy Code" means 11 U.S.C (S)101,
      et seq.. If an Event of Bankruptcy occurs, then the trustee of Tenant's
      bankruptcy estate or Tenant as debtor-in-possession may (subject to final
      approval of the court) assume this Lease, and may subsequently assign it,
      only if it does the following within 60 days after the date of the filing
      of the voluntary petition, the entry of the order for relief (or such
      additional time as a court of competent jurisdiction may grant, for cause,
      upon a motion made within the original 60-day period):

          (i)  file a motion to assume the Lease with the appropriate court;

          (ii) satisfy all of the following conditions, which Landlord and
               Tenant acknowledge to be commercially reasonable:

               (A)  cure all Defaults of Tenant under this Lease or provide
                    Landlord with Adequate Assurance (as defined below) that it
                    will (x) cure all monetary Defaults of Tenant hereunder
                    within 10 days from the date of the assumption; and (y) cure
                    all nonmonetary Defaults of Tenant hereunder within 30 days
                    from the date of the assumption;

               (B)  compensate Landlord and any other person or entity, or
                    provide Landlord with Adequate Assurance that within 10 days
                    after the date of the assumption, it will compensate
                    Landlord and such other person or entity, for any pecuniary
                    loss that Landlord and such other person or entity incurred
                    as a result of any Default of Tenant, the trustee, or the
                    debtor-in-possession;

               (C)  provide Landlord with Adequate Assurance of Future
                    Performance (as defined below) of all of Tenant's
                    obligations under this Lease; and

               (D)  deliver to Landlord a written statement that the conditions
                    herein have been satisfied.

      (c)  For purposes only of the foregoing paragraph (b), and in addition to
      any other requirements under the Bankruptcy Code, any future federal
      bankruptcy law and applicable case law, "Adequate Assurance" means at
      least meeting the following conditions, which Landlord and Tenant
      acknowledge to be commercially reasonable:

          (i)  entering an order segregating sufficient cash to pay Landlord and
               any other person or entity under paragraph (b) above, and

          (ii) granting to Landlord a valid first lien and security interest (in
               form acceptable to Landlord) in all property comprising the
               Tenant's "property of the estate," as that term is defined in
               Section 541 of the Bankruptcy Code, which lien and security
               interest secures the trustee's or debtor-in-possession's
               obligation to cure the monetary and nonmonetary defaults under
               the Lease within the periods set forth in paragraph (b) above;

      (d)  For purposes only of paragraph (b), and in addition to any other
      requirements under the Bankruptcy Code, any future federal bankruptcy law
      and applicable case law, "Adequate Assurance of Future Performance" means
      at least meeting the following conditions, which Landlord and Tenant
      acknowledge to be commercially reasonable:

                                       26
<PAGE>

          (i)  the trustee or debtor-in-possession depositing with Landlord, as
               security for the timely payment of rent and other monetary
               obligations, an amount equal to the sum of two (2) months' Basic
               Rent plus an amount equal to two (2) months' installments on
               account of Operating Expenses and Taxes, computed in accordance
               with Articles 8 and 9;

          (ii) the trustee or the debtor-in-possession agreeing to pay in
               advance, on each day that the Basic Rent is payable, the monthly
               installments on account of Operating Expenses and Taxes, computed
               in accordance with Articles 8 and 9 hereof;

          (iii)  the trustee or debtor-in-possession providing adequate
               assurance of the source of the rent and other consideration due
               under this Lease;

          (iv) Tenant's bankruptcy estate and the trustee or debtor-in-
               possession providing Adequate Assurance that the bankruptcy
               estate (and any successor after the conclusion of the Tenant's
               bankruptcy proceedings) will continue to have sufficient
               unencumbered assets after the payment of all secured obligations
               and administrative expenses to assure Landlord that the
               bankruptcy estate (and any successor after the conclusion of the
               Tenant's bankruptcy proceedings) will have sufficient funds to
               fulfill Tenant's obligations hereunder; and

      (e) If the trustee or the debtor-in-possession assumes the Lease under
      paragraph (b) above and applicable bankruptcy law, it may assign its
      interest in this Lease only if the proposed assignee first provides
      Landlord with Adequate Assurance of Future Performance of all of Tenant's
      obligations under the Lease, and if Landlord determines, in the exercise
      of its reasonable business judgment, that the assignment of this Lease
      will not breach any other lease, or any mortgage, financing agreement, or
      other agreement relating to the Property by which Landlord or the Property
      is then bound (and Landlord shall not be required to obtain consents or
      waivers from any third party required under any lease, mortgage, financing
      agreement, or other such agreement by which Landlord is then bound).

      (f) For purposes only of paragraph (e) above, and in addition to any other
      requirements under the Bankruptcy Code, any future federal bankruptcy law
      and applicable case law, "Adequate Assurance of Future Performance" means
      at least the satisfaction of the following conditions, which Landlord and
      Tenant acknowledge to be commercially reasonable:

          (i)  the proposed assignee submitting a current financial statement,
               audited by a certified public accountant, that allows a net worth
               and working capital in amounts determined in the reasonable
               business judgment of Landlord to be sufficient to assure the
               future performance by the assignee of Tenant's obligation under
               this Lease; and

          (ii) if requested by Landlord in the exercise of its reasonable
               business judgment, the proposed assignee obtaining a guarantee
               (in form and substance satisfactory to Landlord) from one or more
               persons who satisfy Landlord's standards of creditworthiness;

      (g) If this Lease shall have been terminated as provided in this Article,
      or if any execution or attachment shall be issued against Tenant or any of
      Tenant's property whereupon the Premises shall

                                       27
<PAGE>

      be taken or occupied by someone other than Tenant, then Landlord may
      re-enter the Premises, either by summary proceedings, ejectment or
      otherwise, and remove and dispossess Tenant and all other persons and any
      and all property from the same, as if this Lease had not been made.

      (h) In the event of any termination, Tenant shall pay the Basic Rent,
      Escalation Charges and other sums payable hereunder up to the time of such
      termination, and thereafter Tenant, until the end of what would have been
      the Term of this Lease in the absence of such termination, and whether or
      not the Premises shall have been relet, shall be liable to Landlord for,
      and shall pay to Landlord, as liquidated current damages:  (x) the Basic
      Rent, Escalation Charges and other sums that would be payable hereunder if
      such termination had not occurred, less the net proceeds, if any, of any
      reletting of the Premises, after deducting all expenses reasonably
      incurred in connection with such reletting, including, without limitation,
      all repossession costs, brokerage commissions, legal expenses, attorneys'
      fees, advertising, alteration costs and expenses (to the extent necessary
      to re-let the Premises as standard office space) of preparation for such
      reletting; (y) if, in accordance with Section 3.1(a), Tenant commenced
      payment of the full amount of Basic Rent on any day other than the
      Commencement Date, the amount of Basic Rent that would have been payable
      during the period beginning on the Commencement Date and ending on the day
      Tenant commenced payment of the full amount of Basic Rent under such
      Section 3.1(a); and (z) the then unamortized portion of Landlord's
      Contribution as of the date of such termination.  Tenant shall pay the
      portion of such current damages referred to in clause (x) above to
      Landlord monthly on the days which the Basic Rent would have been payable
      hereunder if this Lease had not been terminated, and Tenant shall pay the
      portion of such current damages referred to in clauses (y) and (z) above
      to Landlord upon such termination.

      (i) At any time after such termination, whether or not Landlord shall have
      collected any such current damages, as liquidated final damages and in
      lieu of all such current damages beyond the date of such demand, at
      Landlord's election Tenant shall pay to Landlord an amount equal to the
      excess, if any, of the Basic Rent, Escalation Charges and other sums as
      hereinbefore provided which would be payable hereunder from the date of
      such demand (discounted to then net present value using an interest rate
      of five percent (5%) per annum) assuming that, for the purposes of this
      paragraph, annual payments by Tenant on account of Taxes and Operating
      Expenses would be the same as the payments required for the immediately
      preceding Operating or Tax Year for what would be the then unexpired Term
      of this Lease if the same remained in effect, over the then fair net
      rental value of the Premises for the same period (also discounted to then
      net present value using an interest rate of five percent (5%) per annum).

      (j) In case of any Default by Tenant, re-entry, expiration and
      dispossession by summary proceedings or otherwise, Landlord may (i) re-let
      the Premises or any part or parts thereof, either in the name of Landlord
      or otherwise, for a term or terms which may at Landlord's option be equal
      to or less than or exceed the period which would otherwise have
      constituted the balance of the Term of this Lease and may grant
      concessions or free rent to the extent that Landlord considers advisable
      and necessary to re-let the same and (ii) may make such reasonable
      alterations, repairs and decorations in the Premises as Landlord in its
      sole judgment considers advisable and necessary for the purpose of
      reletting the Premises; and the making of such alterations, repairs and
      decorations shall not operate or be construed to release Tenant from
      liability hereunder as aforesaid.  Landlord shall in no event be liable in
      any way whatsoever for failure to re-let the Premises, or, in the event
      that the Premises are re-let, for failure to collect the rent under such
      re-letting.  Tenant hereby expressly waives any and all rights of
      redemption granted by or under any present or future laws in the event of
      Tenant

                                       28
<PAGE>

      being evicted or dispossessed, or in the event of Landlord obtaining
      possession of the Premises, by reason of the violation by Tenant of any of
      the covenants and conditions of this Lease.

      (k) If a Guarantor of this Lease is named in Section 1.2, the happening of
      any of the events described in paragraphs (a)(iv)-(a)(vi) of this Section
      13.1 with respect to the Guarantor shall constitute a Default of Tenant
      hereunder.

      (l) The specified remedies to which Landlord may resort hereunder are not
      intended to be exclusive of any remedies or means of redress to which
      Landlord may at any time be entitled lawfully, and Landlord may invoke any
      remedy (including the remedy of specific performance) allowed at law or in
      equity as if specific remedies were not herein provided for.

      (m) All costs and expenses incurred by or on behalf of Landlord
      (including, without limitation, attorneys' fees and expenses at both the
      trial and appellate levels) in enforcing its rights hereunder or
      occasioned by any Default of Tenant shall be paid by Tenant.

13.2  LANDLORD'S DEFAULT.  Landlord shall in no event be in default in the
      ------------------
      performance of any of Landlord's obligations hereunder unless and until
      Landlord shall have failed to perform such obligations within thirty (30)
      days, or if such failure is of such a nature that Landlord cannot
      reasonably remedy the same within such thirty (30) day period, Landlord
      shall fail to commence promptly (and in any event within such thirty (30)
      day period) to remedy the same and to prosecute such remedy to completion
      with diligence and continuity. References above to such 30-day period
      shall be shortened to that period which is reasonable in the event of an
      emergency.


                                   ARTICLE 14
                                   ----------

                            MISCELLANEOUS PROVISIONS
                            ------------------------


14.1  EXTRA HAZARDOUS USE.  Tenant covenants and agrees that Tenant will
      -------------------
      not do or permit anything to be done in or upon the Premises, or bring in
      anything or keep anything therein, which shall increase the rate of
      property or liability insurance on the Premises or the Property above the
      standard rate applicable to Premises being occupied for Permitted Uses;
      and Tenant further agrees that, in the event that Tenant shall do any of
      the foregoing, Tenant will promptly pay to Landlord, on demand, any such
      increase resulting therefrom, which shall be due and payable as an
      additional charge hereunder.

14.2  WAIVER.  (a) Failure on the part of Landlord or Tenant to complain
      ------
      of any action or non-action on the part of the other, no matter how long
      the same may continue, shall never be a waiver by Tenant or Landlord,
      respectively, of any of the other's rights hereunder.  Further, no waiver
      at any time of any of the provisions hereof by Landlord or Tenant shall be
      construed as a waiver of any of the other provisions hereof, and a waiver
      at any time of any of the provisions hereof shall not be construed as a
      waiver at any subsequent time of the same provisions.  The consent or
      approval of Landlord or Tenant to or of any action by the other requiring
      such consent or approval shall not be construed to waive or render
      unnecessary Landlord's or Tenant's consent or approval to or of any
      subsequent similar act by the other.

                                       29
<PAGE>

      (b) No payment by Tenant, or acceptance by Landlord, of a lesser amount
      than shall be due from Tenant to Landlord shall be treated otherwise than
      as a payment on account of the earliest installment of any payment due
      from Tenant under the provisions hereof.  The acceptance by Landlord of a
      check for a lesser amount with an endorsement or statement thereon, or
      upon any letter accompanying such check, that such lesser amount is
      payment in full, shall be given no effect, and Landlord may accept such
      check without prejudice to any other rights or remedies which Landlord may
      have against Tenant.

14.3  COVENANT OF QUIET ENJOYMENT.  Tenant, subject to the terms and
      ---------------------------
      provisions of this Lease, on payment of the Basic Rent and Escalation
      Charges and observing, keeping and performing all of the other terms and
      provisions of this Lease on Tenant's part to be observed, kept and
      performed, shall lawfully, peaceably and quietly have, hold, occupy and
      enjoy the Premises during the term hereof, without hindrance or ejection
      by any persons lawfully claiming under Landlord to have title to the
      Premises superior to Tenant; the foregoing covenant of quiet enjoyment is
      in lieu of any other covenant, express or implied.

14.4  LANDLORD'S LIABILITY.  (a) Tenant specifically agrees to look solely
      --------------------
      to Landlord's then equity interest in the Property at the time owned, for
      recovery of any judgment from Landlord; it being specifically agreed that
      Landlord (original or successor) shall never be personally liable for any
      such judgment, or for the payment of any monetary obligation to Tenant.
      The provision contained in the foregoing sentence is not intended to, and
      shall not, limit any right that Tenant might otherwise have to obtain
      injunctive relief against Landlord or Landlord's successors in interest,
      or to take any action not involving the personal liability of Landlord
      (original or successor) to respond in monetary damages from Landlord's
      assets other than Landlord's equity interest in the Property.

      (b) With respect to any services or utilities to be furnished by Landlord
      to Tenant, Landlord shall in no event be liable for failure to furnish the
      same when prevented from doing so by strike, lockout, breakdown, accident,
      order or regulation of or by any governmental authority, or failure of
      supply, or failure whenever and for so long as may be necessary by reason
      of the making of repairs or changes which Landlord is required or is
      permitted by this Lease or by law to make or in good faith deems
      necessary, or inability by the exercise of reasonable diligence to obtain
      supplies, parts or employees necessary to furnish such services, or
      because of war or other emergency, or for any other cause beyond
      Landlord's reasonable control, or for any cause due to any act or neglect
      of Tenant or Tenant's servants, agents, employees, licensees or any person
      claiming by, through or under Tenant, nor shall any such failure give rise
      to any claim in Tenant's favor that Tenant has been evicted, either
      constructively or actually, partially or wholly.

      (c) In no event shall Landlord ever be liable to Tenant for any loss of
      business or any other indirect or consequential damages suffered by Tenant
      from whatever cause.

      (d) Where provision is made in this Lease for Landlord's consent and
      Tenant shall request such consent and Landlord shall fail or refuse to
      give such consent, Tenant shall not be entitled to any damages for any
      withholding by Landlord of its consent, it being intended that Tenant's
      sole remedy shall be an action for specific performance or injunction, and
      that such remedy shall be available only in those cases where Landlord has
      expressly agreed in writing not to unreasonably withhold or delay its
      consent. Furthermore, whenever Tenant requests Landlord's consent or
      approval (whether or not provided for herein), Tenant shall pay to
      Landlord, on demand, as an additional charge, any expenses incurred by
      Landlord (including without limitation legal fees and costs, if any) in
      connection therewith.

                                       30
<PAGE>

      (e) With respect to any repairs or restoration which are required or
      permitted to be made by Landlord, the same may be made during normal
      business hours and Landlord shall have no liability for damages to Tenant
      for inconvenience, annoyance or interruption of business arising
      therefrom.

14.5  NOTICE TO MORTGAGEE OR GROUND LESSOR.  After receiving notice from any
      ------------------------------------
      person, firm or other entity that it holds a mortgage or a ground lease
     which includes the Premises, no notice from Tenant to Landlord alleging
      any default by Landlord shall be effective unless and until a copy of the
      same is given to such holder or ground lessor (provided Tenant shall have
      been furnished with the name and address of such holder or ground lessor),
      and the curing of any of Landlord's defaults by such holder or ground
      lessor shall be treated as performance by Landlord. Landlord hereby gives
      Tenant notice that the holder of a mortgage on the Property as of the date
      hereof is IDS Life Insurance Company, 733 Marquette Avenue, Minneapolis,
      MN 55402, Attn: RELM Unit #401.

14.6  ASSIGNMENT OF RENTS AND TRANSFER OF TITLE.  (a) With reference to any
      -----------------------------------------
      assignment by Landlord of Landlord's interest in this Lease, or the rents
      payable hereunder, conditional in nature or otherwise, which assignment is
      made to the holder of a mortgage on property which includes the Premises,
      Tenant agrees that the execution thereof by Landlord, and the acceptance
      thereof by the holder of such mortgage shall never be treated as an
      assumption by such holder of any of the obligations of Landlord hereunder
      unless such holder shall, by notice sent to Tenant, specifically otherwise
      elect and that, except as aforesaid, such holder shall be treated as
      having assumed Landlord's obligations hereunder only upon foreclosure of
      such holder's mortgage and the taking of possession of the Premises.

      (b) In no event shall the acquisition of Landlord's interest in the
      Property by a purchaser which, simultaneously therewith, leases Landlord's
      entire interest in the Property back to the seller thereof be treated as
      an assumption by operation of law or otherwise, of Landlord's obligations
      hereunder, but Tenant shall look solely to such seller-lessee, and its
      successors from time to time in title, for performance of Landlord's
      obligations hereunder.  In any such event, this Lease shall be subject and
      subordinate to the lease to such purchaser.  For all purposes, such
      seller-lessee, and its successors in title, shall be the Landlord
      hereunder unless and until Landlord's position shall have been assumed by
      such purchaser-lessor.

      (c) Except as provided in paragraph (b) of this Section, in the event of
      any transfer of title to the Property by Landlord, Landlord shall
      thereafter be entirely freed and relieved from the performance and
      observance of all covenants and obligations hereunder.

14.7  RULES AND REGULATIONS.  Tenant shall abide by reasonable rules and
      ---------------------
      regulations from time to time established by Landlord, it being agreed
      that such rules and regulations will be established and applied by
      Landlord in a non-discriminatory fashion, such that all rules and
      regulations shall be generally applicable to other tenants, of similar
      nature to the Tenant named herein, of the Building.  Landlord agrees to
      use reasonable efforts to insure that any such rules and regulations are
      uniformly enforced, but Landlord shall not be liable to Tenant for
      violation of the same by any other tenant or occupant of the Building, or
      persons having business with them.  In the event that there shall be a
      conflict between such rules and regulations and the provisions of this
      Lease, the provisions of this Lease shall control. Rules and Regulations
      currently in effect are set forth in Exhibit B.

                                       31
<PAGE>

14.8  ADDITIONAL CHARGES.  If Tenant shall fail to pay when due any sums
      ------------------
      under this Lease designated as an Escalation Charge or additional charge,
      Landlord shall have the same rights and remedies as Landlord has hereunder
      for failure to pay Basic Rent.

14.9  INVALIDITY OF PARTICULAR PROVISIONS.  If any term or provision of this
      -----------------------------------
      Lease, or the application thereof to any person or circumstance shall, to
      any extent, be invalid or unenforceable, the remainder of this Lease, or
      the application of such term or provision to persons or circumstances
      other than those as to which it is held invalid or unenforceable, shall
      not be affected thereby, and each term and provision of this Lease shall
      be valid and be enforced to the fullest extent permitted by law.

14.10 PROVISIONS BINDING, ETC. Except as herein otherwise provided, the
      -----------------------
      terms hereof shall be binding upon and shall inure to the benefit of the
      successors and assigns, respectively, of Landlord and Tenant (except in
      the case of Tenant, only such assigns as may be permitted hereunder) and,
      if Tenant shall be an individual, upon and to his heirs, executors,
      administrators, successors and permitted assigns.  Each term and each
      provision of this Lease to be performed by Tenant shall be construed to be
      both a covenant and a condition.  The reference contained to successors
      and assigns of Tenant is not intended to constitute a consent to
      assignment by Tenant, but has reference only to those instances in which
      Landlord may later give consent to a particular assignment as required by
      those provisions of Article 6 hereof.

14.11 RECORDING. Tenant agrees not to record this Lease, but, if the Term
      ---------
      of this Lease (including any extended term) is seven (7) years or longer,
      each party hereto agrees, on the request of the other, to execute a so-
      called notice of lease in recordable form and complying with applicable
      law and reasonably satisfactory to Landlord's attorneys.  In no event
      shall such document set forth the rent or other charges payable by Tenant
      under this Lease; and any such document shall expressly state that it is
      executed pursuant to the provisions contained in this Lease, and is not
      intended to vary the terms and conditions of this Lease.

14.12 NOTICES. Whenever, by the terms of this Lease, notices shall or may
      -------
      be given either to Landlord or to Tenant, such notice shall be in writing
      and shall be sent by registered or certified mail, postage prepaid, return
      receipt requested:

      If intended for Landlord, addressed to Landlord at Landlord's Original
      Address and marked:  "Attention: Mr. Andrew Paul" with a copy to Stephen
      T. Langer, Esq., Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
      Financial Center, Boston, MA 02111 (or to such other address or addresses
      as may from time to time hereafter be designated by Landlord by like
      notice).

      If intended for Tenant, addressed to Tenant at Tenant's Original Address
      until the Commencement Date and thereafter to the Premises, (or to such
      other address or addresses as may from time to time hereafter be
      designated by Tenant by like notice).

      All such notices shall be effective when deposited in the United States
      Mail within the Continental United States, provided that the same are
      received in ordinary course at the address to which the same were sent.

14.13 WHEN LEASE BECOMES BINDING; TENANT'S REPRESENTATION. The submission of
      ---------------------------------------------------
      this document for examination and negotiation does not constitute an offer
      to lease, or a reservation of, or option for, the Premises, and this
      document shall become effective and binding only upon the

                                       32
<PAGE>

      execution and delivery hereof by both Landlord and Tenant. All
      negotiations, considerations, representations and understandings between
      Landlord and Tenant are incorporated herein and this Lease expressly
      supersedes any proposals or other written documents relating hereto. This
      Lease may be modified or altered only by written agreement between
      Landlord and Tenant, and no act or omission of any employee or agent of
      Landlord shall alter, change or modify any of the provisions hereof. As a
      material inducement to Landlord to enter into this Lease, Tenant hereby
      represents and warrants to Landlord that Tenant is not a political
      subdivision of the State of Ohio, or an authority, instrumentality, or
      municipality of the State of Ohio or a corporation or other entity in
      which any of the foregoing described entities own or control fifty percent
      (50%) or more of the stock or other evidence of ownership.

14.14 PARAGRAPH HEADINGS AND INTERPRETATION OF SECTIONS.  The paragraph
      -------------------------------------------------
      headings throughout this instrument are for convenience and reference
      only, and the words contained therein shall in no way be held to explain,
      modify, amplify or aid in the interpretation, construction or meaning of
      the provisions of this Lease. The provisions of this Lease shall be
      construed as a whole, according to their common meaning (except where a
      precise legal interpretation is clearly evidenced), and not for or against
      either party. Use in this Lease of the words "including," "such as" or
      words of similar import, when followed by any general term, statement or
      matter, shall not be construed to limit such term, statement or matter to
      the specified item(s), whether or not language of non-limitation, such as
      "without limitation" or "including, but not limited to," or words of
      similar import, are used with reference thereto, but rather shall be
      deemed to refer to all other terms or matters that could fall within a
      reasonably broad scope of such term, statement or matter.

14.15 RIGHTS OF MORTGAGEE OR GROUND LESSOR.  This Lease shall be subordinate
      ------------------------------------
      to any mortgage or ground lease from time to time encumbering the
      Premises, whether executed and delivered prior to or subsequent to the
      date of this Lease, if the holder of such mortgage or ground lease shall
      so elect. If this Lease is subordinate to any mortgage or ground lease and
      the holder thereof (or successor) shall succeed to the interest of
      Landlord, at the election of such holder (or successor) Tenant shall
      attorn to such holder and this Lease shall continue in full force and
      effect between such holder (or successor) and Tenant.  Tenant agrees to
      execute such instruments of subordination or attornment in confirmation of
      the foregoing agreement as such holder may request, and Tenant hereby
      appoints such holder as Tenant's attorney-in-fact to execute such
      subordination or attornment agreement upon default of Tenant in complying
      with such holder's request. In no event shall the holder of any mortgage
      or ground lease ever: (A) be liable for any act or omission of Landlord
      hereunder occurring prior to such holder's succession to Landlord's
      interest hereunder; or (B) be subject to any defense or offset accruing in
      favor of the Tenant against Landlord prior to such holder's succession to
      Landlord's interest hereunder; or (C) be bound by any modification of this
      Lease made without such holder's written consent or by any prepayment of
      more than one month's rent.

14.16 STATUS REPORT. Recognizing that both parties may find it necessary
      -------------
      to establish to third parties, such as accountants, banks, mortgagees,
      ground lessors, or the like, the then current status of performance
      hereunder, either party, on the request of the other made from time to
      time, will promptly furnish to Landlord, or the holder of any mortgage or
      ground lease encumbering the Premises, or to Tenant, as the case may be, a
      statement of the status of any matter pertaining to this Lease, including,
      without limitation, acknowledgments that (or the extent to which) each
      party is in compliance with its obligations under the terms of this Lease.

                                       33
<PAGE>

14.17 SECURITY DEPOSIT. If, in Section 1.2 hereof, a security deposit is
      ----------------
      specified, Tenant agrees that the same will be paid upon execution and
      delivery of this Lease, and that Landlord shall hold the same throughout
      the Term of this Lease as security for the performance by Tenant of all
      obligations on the part of Tenant hereunder.  Landlord shall have the
      right from time to time without prejudice to any other remedy Landlord may
      have on account thereof, to apply such deposit, or any part thereof, to
      Landlord's damages arising from, or to cure, any Default of Tenant.  If
      Landlord shall so apply any or all of such deposit, Tenant shall
      immediately deposit with Landlord the amount so applied to be held as
      security hereunder.  There then existing no Default of Tenant (nor any
      circumstance which, with the passage of time or the giving of notice, or
      both, would constitute a Default of Tenant), Landlord shall return the
      deposit, or so much thereof as shall have theretofore not been applied in
      accordance with the terms of this Section 14.17, to Tenant on the
      expiration or earlier termination of the Term of this Lease and surrender
      of possession of the Premises by Tenant to Landlord at such time.  While
      Landlord holds such deposit, Landlord shall have no obligation to pay
      interest on the same and shall have the right to commingle the same with
      Landlord's other funds.  If Landlord conveys Landlord's interest under
      this Lease, the deposit, or any part thereof not previously applied, may
      be turned over by Landlord to Landlord's grantee, and, if so turned over,
      Tenant agrees to look solely to such grantee for proper application of the
      deposit in accordance with the terms of this Section 14.17, and the return
      thereof in accordance herewith. The holder of a mortgage shall not be
      responsible to Tenant for the return or application of any such deposit,
      whether or not it succeeds to the position of Landlord hereunder, unless
      such deposit shall have been received in hand by such holder.

14.18 REMEDYING DEFAULTS. Landlord shall have the right, but shall not be
      ------------------
      required, to pay such sums or do any act which requires the expenditure of
      monies which may be necessary or appropriate by reason of the failure or
      neglect of Tenant to perform any of the provisions of this Lease, and in
      the event of the exercise of such right by Landlord, Tenant agrees to pay
      to Landlord forthwith upon demand all such sums, together with interest
      thereon at a rate equal to 3% over the base rate in effect from time to
      time at Fleet Bank, N.A. (but in no event less than 18% per annum), as an
      additional charge.  Any payment of Basic Rent, Escalation Charges or other
      sums payable hereunder not paid when due shall, at the option of Landlord,
      bear interest at a rate equal to 3% over the base rate in effect from time
      to time at Fleet Bank, N.A. (but in no event less than 18% per annum) from
      the due date thereof and shall be payable forthwith on demand by Landlord,
      as an additional charge.

14.19 HOLDING OVER. Any holding over by Tenant after the expiration of
      ------------
      the term of this Lease shall be treated as a daily tenancy at sufferance
      at a rate equal to two times the Basic Rent then in effect plus Escalation
      Charges and other charges herein provided (prorated on a daily basis).
      Tenant shall also pay to Landlord all damages, direct and/or indirect,
      sustained by reason of any such holding over.  Otherwise, such holding
      over shall be on the terms and conditions set forth in this Lease as far
      as applicable.  The Landlord may, but shall not be required to, and only
      on written notice to Tenant after the expiration of the Term hereof, elect
      to treat such holding over as a renewal of one (1) year, to be on the
      terms and conditions set forth in this Paragraph 14.19.

14.20 WAIVER OF SUBROGATION. Insofar as, and to the extent that, the
      ---------------------
      following provision shall not make it impossible to secure insurance
      coverage obtainable from responsible insurance companies doing business in
      the locality in which the Property is located (even though extra premium
      may result therefrom) Landlord and Tenant: (i) mutually agree that, with
      respect to any damage to property, the loss from which is covered by
      insurance then being carried by them, respectively, the one carrying such
      insurance and suffering such loss releases the other of and from, and
      forever waives, any and all claims with respect to such loss, but only to
      the extent of the limits of insurance

                                       34
<PAGE>

      carried with respect thereto, less the amount of any deductible; and (ii)
      mutually agree that any property damage insurance carried by either shall
      provide for the waiver by the insurance carrier of any right of
      subrogation against the other.

14.21 SURRENDER OF PREMISES. Upon the expiration or earlier termination of
      ---------------------
      the Term of this Lease, Tenant shall peaceably quit and surrender to
      Landlord the Premises in reasonably neat and clean condition and in good
      order, condition and repair, together with all alterations, additions and
      improvements which may have been made or installed in, on or to the
      Premises prior to or during the Term of this Lease, excepting only
      ordinary wear and use and damage by fire or other casualty for which,
      under other provisions of this Lease, Tenant has no responsibility of
      repair or restoration.  Tenant shall remove all of Tenant's Removable
      Property (including without limitation the equipment listed on Exhibit F)
      and, to the extent specified by Landlord, all alterations and additions
      made by Tenant and all partitions wholly within the Premises unless
      installed initially by Landlord as a part of Landlord's Work or otherwise
      in preparing the Premises for Tenant's occupancy; and shall repair any
      damages to the Premises or the Building caused by such removal. Any
      Tenant's Removable Property which shall remain in the Building or on the
      Premises after the expiration or termination of the Term of this Lease
      shall be deemed conclusively to have been abandoned, and either may be
      retained by Landlord as its property or may be disposed of in such manner
      as Landlord may see fit, at Tenant's sole cost and expense.

14.22 SUBSTITUTE SPACE; DEMOLITION. (a) If Landlord so requests, Tenant
      ----------------------------
      shall vacate the Premises and relinquish its rights with respect to the
      same provided that Landlord shall, on not less than one hundred twenty
      (120) days' notice, provide to Tenant substitute space in the Building,
      such space to be substantially comparable in size, layout, finish and
      utility to the Premises, and further provided that Landlord shall, at its
      sole cost and expense, move Tenant and its Removable Property from the
      Premises to such new space in such manner as will minimize, to the
      greatest extent practicable, undue interference with the business or
      operations of Tenant.  Any such substitute space shall, from and after
      such relocation, be treated as the Premises demised under this Lease, and
      shall be occupied by Tenant under the same terms, provisions and
      conditions as are set forth in this Lease.

      (b) Notwithstanding any provision of this Lease to the contrary, in the
      event that Landlord desires to substantially remodel or rehabilitate the
      Building, and in connection therewith Landlord intends to demolish the
      Building or the interior thereof, then Landlord shall have the right to
      terminate the Lease by giving Tenant notice thereof, which notice shall
      set forth a date (the "Termination Date"), which shall be not less than
      six (6) months after the date of such notice, on which the Lease shall
      terminate. Such notice shall in no event be given sooner than nine (9)
      months prior to the date on which Landlord intends in good faith to
      commence such demolition. If Landlord shall give any such notice, then
      upon the Termination Date, this Lease shall terminate with the same force
      and effect as if such Date were the date originally set forth therein as
      the expiration date thereof, and Tenant shall vacate and deliver the
      Premises to Landlord as provided in Section 14.21 of this Lease.

14.23 BROKERAGE. Tenant warrants and represents that Tenant has dealt
      ---------
      with no broker in connection with the consummation of this Lease other
      than Broker, and, in the event of any brokerage claims against Landlord
      predicated upon prior dealings with Tenant, Tenant agrees to defend the
      same and indemnify Landlord against any such claim (except any claim by
      Broker).

14.24 GOVERNING LAW. This Lease shall be governed exclusively by the
      -------------
      provisions hereof and by the laws of the Commonwealth of Massachusetts as
      the same may from time to time exist.

                                       35
<PAGE>

                                   ARTICLE 15
                                   ----------

                                OPTION TO EXTEND
                                ----------------

15.1 TENANT'S RIGHT. Provided that, at the time of such exercise, (i) there
     --------------
     exists no Default of Tenant; (ii) this Lease is still in full force and
     effect; and (iii) Tenant shall not have assigned this Lease or sublet any
     or all of the Premises, Tenant shall have the right to extend the Term of
     this Lease for one extended term (the "Extended Term") of three (3) years.
     The Extended Term shall commence on the day immediately following the
     expiration date of the Initial Term, and shall end on the day immediately
     preceding the third (3rd) anniversary of the first day of the Extended
     Term. Tenant shall exercise such option by giving Landlord notice of its
     desire to do so, not later than nine (9) months prior to the expiration of
     the Initial Term, it being agreed that time shall be of the essence with
     respect to the giving of such notice. The giving of such notice shall
     automatically extend the Term of this Lease for the Extended Term, and no
     instrument of renewal need be executed. In the event that Tenant fails to
     give such notice to Landlord, the Term of this Lease shall automatically
     terminate at the end of the Initial Term, and Tenant shall have no further
     right or option to extend the Term of this Lease. The Extended Term shall
     be on all the terms and conditions of this Lease, except that: (i) Landlord
     shall have no obligation to pay any construction or improvements allowance,
     or to perform any alterations or improvements to the Premises, with respect
     to the Extended Term; and (ii) the Basic Rent for the Extended Term shall
     be determined in accordance with section 15.2.

15.2 EXTENDED TERM RENT. The Basic Rent for the Extended Term shall be the fair
     ------------------
     market rental value of the Premises (exclusive of the cost of supplying
     electricity to the Premises) as of the commencement of the Extended Term
     (including without limitation such inflation indicators or periodic
     increases as may then be customary in the market for comparable space),
     determined without regard to Tenant's right to extend, as agreed by the
     parties, plus the Electricity Allowance. In the event that Landlord and
     Tenant are unable to agree on the fair market rental value of the Premises
     for the Extended Term sooner than the first day of the sixth month before
     the expiration of the Initial Term, the fair market rental value shall be
     determined by arbitration in accordance with the commercial arbitration
     rules of the American Arbitration Association, except that there shall be
     only one arbitrator, who shall have had at least ten (10) years' experience
     as a real estate broker or appraiser in the greater Boston area. In no
     event, however, shall the Basic Rent for the Extended Term (which does not
     include Escalation Charges) be less than the Basic Rent (which does not
     include Escalation Charges) in effect on the last day of the Initial Term,
     it being understood that during the Extended Term Escalation Charges shall
     continue to be calculated based on Base Taxes and Base Operating Expenses
     set forth in Section 1.2 of this Lease


      IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed, under seal, by persons hereunto duly authorized, in multiple copies,
each to be considered an original hereof, as of the date first set forth above.


                                     LANDLORD:  OTR, an Ohio General Partnership
                                     --------



                                                By:___________________________
                                                   a General Partner,
                                                   Hereunto Duly Authorized

                                       36
<PAGE>

                                             TENANT:  PERITUS SOFTWARE SERVICES,
                                             ------
INC.,
                                                     a Massachusetts corporation


                                                By:___________________________
                                                  (Vice) President



                                                By:___________________________
                                                  (Assistant) Treasurer

                                       37
<PAGE>

                                    EXHIBIT B

                        RULES AND REGULATIONS OF BUILDING


I.    The following regulations are generally applicable:

      1.  The public sidewalks, entrances, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by Tenant (except as necessary for deliveries) or used for any purpose other
than ingress and egress to and from the Premises.

      2.  No awnings, curtains, blinds shades, screens or other projections
shall be attached to or hung in, or used in connection with, any window of the
Premises or any outside wall of the Building.  Such awnings, curtains, blinds,
shades, screens or other projections must be of a quality, type, design and
color, and attached in the manner, approved by Landlord.

      3.  No show cases or other articles shall be put in front of or affixed to
any part of the exterior of the Building, nor places in the halls, corridors or
vestibules.

      4.  The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were designed and
constructed, and no sweepings, rubbish, rags, acids or like substances shall be
deposited therein.  All damages resulting from any misuse of the fixtures shall
be borne by the Tenant.

      5.  Tenant shall not use the Premises or any part thereof, or permit the
Premises or any part thereof to be used, for manufacturing.  Tenant shall not
use the Premises or any part thereof or permit the Premises or any part thereof
to be used as a public employment bureau or for the sale of property of any kind
at auction, except in connection with Tenant's business.

      6.  Tenant must, upon the termination of its tenancy, restore to the
Landlord all locks, cylinders and keys to offices and toilet rooms of the
Premises.

      7.  The Landlord reserves the right to exclude from the Building between
the hours of 6 p.m. and 8 a.m. and at all hours on Sunday and holidays all
persons connected with or calling upon the Tenant who do not present a pass to
the Building signed by the Tenant. Tenant shall be responsible for all persons
for whom it issues any such pass and shall be liable to the Landlord for all
wrongful acts of such persons.

      8.  The requirements of Tenant will be attended to only upon application
at the Building Superintendent's Office.  Employees of Landlord shall not
perform any work or do anything outside of the regular duties, unless under
special instructions from the office of the Landlord.

      9.  There shall not be used in any space, or in the public halls of the
Building, either by Tenant or by jobbers or others, in the delivery or receipt
of merchandise, any hand trucks, except those equipped with rubber tires and
side guards.

      10. No bicycles, vehicles or animals of any kind shall be brought into or
kept in or about the Premises.

                                       38
<PAGE>

      11. No Tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of this or neighboring building or
premises or those having business with them whether by use of any musical
instrument, radio, talking machine, unmusical noise, whistling, singing, or in
any other way.  No Tenant shall throw anything out of the doors, windows or
skylights or down the passageways.

      12. The Premises shall not be used for lodging or sleeping or for any
immoral or illegal purpose.

      13. Tenants shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system by closing draperies when sun's rays fall
directly on windows of Premises.

      14. Landlord shall have the right, exercisable without notice and without
liability to any tenant, to change the name and street address of the Building.


II.   The following regulations are applicable to any additions, alterations or
improvements being undertaken by or for Tenant in the Premises:


A.    General
      -------

      1.  All alterations, installations or improvements ("Alterations") to be
made by Tenant in, to or about the Premises shall be made in accordance with the
requirements of this Exhibit and by contractors or mechanics approved by
Landlord.

      2.  Tenant shall, prior to the commencement of any work, submit for
Landlord's written approval, complete plans for the Alterations.  Drawings are
to be complete with full details and specifications for all of the Alterations.

      3.  Alterations must comply with the Building Code applicable to the
Property and the requirements, rules and regulations and any other governmental
agencies having jurisdiction.

      4.  No work shall be permitted to commence without the Landlord being
furnished with a valid permit and all other necessary approvals from agencies
having jurisdiction.

      5.  All demolition, removals or other categories of work that may
inconvenience other tenants or disturb Building operations, must be scheduled
and performed before or after normal working hours and Tenant shall provide the
Building manager with at least 24 hours' notice prior to proceeding with such
work.

      6.  All inquiries, submissions, approvals and all other matters shall be
processed through the Building manager.

B.    Prior to Commencement of Work
      -----------------------------

      1.  Tenant shall submit to the Building manager a request to perform the
work.  The request shall include the following enclosures:

      (i)  A list of Tenant's contractors and/or subcontractors for Landlord's
      approval.

                                       39
<PAGE>

      (ii)  Four complete sets of plans and specifications properly stamped by a
      registered architect or professional engineer.

      (iii)  A properly executed building permit application form.

      (iv)  Four executed copies of the Insurance Requirements agreement in the
      form attached to these Tenant's Work Requirements as Exhibit D from
      Tenant's contractor and if requested by Landlord from the contractor's
      subcontractors.

      (v)  Contractor's and subcontractor's insurance certificates including an
      indemnity in accordance with the Insurance Requirements agreement.

      2.  Landlord will return the following to Tenant:

      (i)  Two sets of plans approved or a disapproval with specific comments as
      to the reasons therefor (such approval or comments shall not constitute a
      waiver of approval of governmental agencies).

      (ii)  Two fully executed copies of the Insurance Requirements agreement.

      3.  Tenant shall obtain a building permit from the Building Department and
necessary permits from other governmental agencies.  Tenant shall be responsible
for keeping current all permits.  Tenant shall submit copies of all approved
plans and permits to Landlord and shall post the original permit on the Premises
prior to the commencement of any work.  All work, if performed by a contractor
or subcontractor, shall be subject to reasonable supervision and inspection by
Landlord's representative.  Such supervision and inspection shall be at Tenant's
sole expense and Tenant shall pay Landlord's reasonable charges for such
supervision and inspection.

C.    Requirements and Procedures
      ---------------------------

      1.  All structural and floor loading requirements shall be subject to the
prior approval of Landlord's structural engineer.

      2.  All mechanical (HVAC, plumbing and sprinkler) and electrical
requirements shall be subject to the approval of Landlord's mechanical and
electrical engineers and all mechanical and electrical work shall be performed
by contractors who are engaged by Landlord in constructing the Building.  When
necessary, Landlord will require engineering and shop drawings, which drawings
must be approved by Landlord before work is started.  Drawings are to be
prepared by Tenant and all approvals shall be obtained by Tenant.

      3.  Elevator service for construction work shall be charged to Tenant at
standard Building rates.  Prior arrangements for elevator use shall be made with
Building manager by Tenant.  No material or equipment shall be carried under or
on top of elevators.  If an operating engineer is required by any union
regulations, such engineer shall be paid for by Tenant.

      4.  If shutdown of risers and mains for electrical, HVAC, sprinkler and
plumbing work is required, such work shall be supervised by Landlord's
representative.  No work will be performed in Building mechanical equipment
rooms without Landlord's approval and under Landlord's supervision.

      5.  Tenant's contractor shall:

                                       40
<PAGE>

      (i)  have a superintendent or foreman on the Premises at all times;

      (ii)  police the job at all times, continually keeping the Premises
      orderly;

      (iii)  maintain cleanliness and protection of all areas, including
      elevators and lobbies.

      (iv)  protect the front and top of all peripheral HVAC units and
      thoroughly clean them at the completion of work;

      (v)  block off supply and return grills, diffusers and ducts to keep dust
      from entering into the Building air conditioning system; and

      (vi)  avoid the disturbance of other tenants.

      6.  If Tenant's contractor is negligent in any of its responsibilities,
Tenant shall be charged for corrective work.

      7.  All equipment and installations must be equal to the standards
generally in effect with respect to the remainder of the Building.  Any
deviation from such standards will be permitted only if indicated or specified
on the plans and specifications and approved by Landlord.

      8.  A properly executed air balancing report signed by a professional
engineer shall be submitted to Landlord upon the completion of all HVAC work.

      9.  Upon completion of the Alterations, Tenant shall submit to Landlord a
permanent certificate of occupancy and final approval by the other governmental
agencies having jurisdiction.

      10. Tenant shall submit to Landlord a final "as-built" set of drawings
showing all items of the Alterations in full detail.

      11. Additional and differing provisions in the Lease, if any, will be
applicable and will take precedence.


III.  The following regulations shall be effective with respect to any plans or
specifications that Tenant is required to prepare under the Lease:

      Whenever Tenant shall be required by the terms of the Lease to submit
plans to Landlord in connection with any improvement or alteration to the
Premises, such plans shall include at least the following:

      1.  Floor plan indicating location of partitions and doors (details
          required of partition and door types).

      2.  Location of standard electrical convenience outlets and telephone
          outlets.

      3.  Location and details of special electrical outlets; e.g.,
                                                              ----
          photocopiers, etc.

                                       41
<PAGE>

      4.  Reflected ceiling plan showing layout of standard ceiling and lighting
          fixtures. Partitions to be shown lightly with switches located
          indicating fixtures to be controlled.

      5.  Locations and details of special ceiling conditions, lighting
          fixtures, speakers, etc.

      6.  Location and specifications of floor covering, paint or paneling with
          paint colors referenced to standard color system.

      7.  Finish schedule plan indicating wall covering, paint, or paneling with
          paint colors referenced to standard color system.

      8.  Details and specifications of special millwork, glass partitions,
          rolling doors and grilles, blackboards, shelves, etc.

      9.  Hardware schedule indicating door number keyed to plan, size, hardware
          required including butts, latchsets or locksets, closures, stops, and
          any special items such as thresholds, soundproofing, etc. Keying
          schedule is required.

      10. Verified dimensions of all built-in equipment (file cabinets, lockers,
          plan files, etc.)

      11. Location and weights of storage files.

      12. Location of any special soundproofing requirements.

      13. Location and details of special floor areas exceeding 50 pounds of
          live load per square foot.

      14. All structural, mechanical, plumbing and electrical drawings, to be
          prepared by the base building consulting engineers, necessary to
          complete the Premises in accordance with Tenant's Plans.

      15. All drawings to be uniform size (30" x 46") and shall incorporate the
          standard project electrical and plumbing symbols and be at a scale of
          1/8" = 1' or larger.

      16. All drawings shall be stamped by an architect (or, where applicable,
          an engineer) licensed in the jurisdiction in which the Property is
          located and without limiting the foregoing, shall be sufficient in all
          respects for submission to applicable authorization in connection with
          a building permit application.

      17. Landlord's approval of the plans, drawings, specifications or other
          submissions in respect of any work, addition, alteration or
          improvement to be undertaken by or on behalf of Tenant shall create no
          liability or responsibility on the part of Landlord for their
          completeness, design sufficiency or compliance with requirements of
          any applicable laws, rules or regulations of any governmental or
          quasi-governmental agency, board or authority.

                                       42
<PAGE>

                                    EXHIBIT C

                     [ITEMS INCLUDED IN OPERATING EXPENSES]


Without limitation, Operating Expenses shall include:

      1.  All expenses incurred by Landlord or Landlord's agents which shall be
directly related to employment of personnel, including amounts incurred for
wages, salaries and other compensation for services, payroll, social security,
unemployment and similar taxes, workmen's compensation insurance, disability
benefits, pensions, hospitalization, retirement plans and group insurance,
uniforms and working clothes and the cleaning thereof, and expenses imposed on
Landlord or Landlord's agents pursuant to any collective bargaining agreement
for the services of employees of Landlord or Landlord's agents in connection
with the operation, repair, maintenance, cleaning, snow removal, management and
protection of the Property, and its mechanical systems including, without
limitation, day and night supervisors, property manager, accountants and
bookkeepers (to the extent not covered by the management fee), janitors,
carpenters, engineers, mechanics, electricians and plumbers and personnel
engaged in supervision of any of the persons mentioned above; provided that, if
any such employee is also employed on other property of Landlord, such
compensation shall be suitably prorated among the Property and such other
properties.

      2.  The cost of services, utilities, materials and supplies furnished or
used in the operation, repair, maintenance, cleaning, management and protection
of the Property, including without limitation fees, if any, imposed upon
Landlord, or charged to the Property, by the state or municipality in which the
Property is located on account of the need of the Property for increased or
augmented public safety services.

      3.  The cost of replacements for tools and other similar equipment used in
the repair, maintenance, cleaning and protection of the Property, provided that,
in the case of any such equipment used jointly on other property of Landlord,
such costs shall be suitably prorated among the Property and such other
properties.

      4.  Where the Property is managed by Landlord or an affiliate of Landlord,
a sum equal to the amounts customarily charged by management firms in the
Suburban Route 495 area for similar properties, but in no event more than four
percent (4%) of gross annual income of the Property, whether or not actually
paid, or where managed by other than Landlord or an affiliate thereof pursuant
to an arms-length agreement, the amounts accrued for management, together with,
in either case, amounts accrued for legal and other professional fees relating
to the Property, but excluding such fees and commissions paid in connection with
services rendered for securing or renewing leases and for matters not related to
the normal administration and operation of the Building.

      5.  Premiums for insurance against damage or loss to the Building from
such hazards as shall from time to time be generally required by institutional
mortgagees in the Suburban Route 495 area for similar properties, including, but
not by way of limitation, insurance covering loss of rent attributable to any
such hazards, and public liability insurance.

      6.  If, during the Term of this Lease, Landlord shall make a capital
expenditure, the total cost of which is not properly includable in Operating
Expenses for the Operating Year in which it was made, there shall nevertheless
be included in such Operating Expenses for the Operating Year in which it was
made and in Operating Expenses for each succeeding Operating Year the annual
charge-off of such capital expenditure.  Annual charge-off shall be determined
by dividing the original capital expenditure plus an interest factor,
                                             ----

                                       43
<PAGE>

reasonably determined by Landlord, as being the interest rate then being charged
for long- term mortgages by institutional lenders on like properties within the
locality in which the Building is located, by the number of years of useful life
of the capital expenditure; and the useful life shall be determined reasonably
by Landlord in accordance with generally accepted accounting principles and
practices in effect at the time of making such expenditure.

      7.  Costs for electricity, water and sewer use charges, and other
utilities supplied to the Property and not paid for directly (i.e., other than
                                                              ----
by escalation payments) by tenants.

      8.  Betterment assessments provided the same are apportioned equally over
the longest period permitted by law.

      9.  Amounts paid to independent contractors for services, materials and
supplies furnished for the operation, repair, maintenance, cleaning and
protection of the Property.

      10.  Landlord's allocation to the Building of the cost of any services and
materials provided to the Park, to the extent serving or benefiting the common
areas or more than one building (including the Building) in the Park, as
provided in Article 9 of the Lease.


      Operating Expenses shall in no event include:


     (i)    any increase in Landlord's insurance rates which may result from the
            negligent or willful and wrongful failure of Landlord or its agents,
            employees or contractors to comply with the provisions of this Lease
            or with applicable laws;

     (ii)   depreciation;

     (iii)  interest on and amortization of debt;

     (iv)   costs, fees and expenses (including advertising, legal and brokerage
            costs and fees) for procuring new tenants for the Building;

     (v)    costs incurred in financing or refinancing of the Building;

     (vi)   the cost of any item included in Operating Expenses to the extent
            that Landlord is actually reimbursed for such cost by Tenant, or by
            an insurance company, a condemning authority, another tenant or any
            other party;

     (vii)  ground rent;

     (viii) to the extent paid for from the management fee, wages, salaries or
            other compensation paid to any employees at or below the grade of
            Building manager, and in any event, salaries or other compensation
            paid to employees above such grade;

     (ix)   any costs representing an amount paid to a corporation related to
            Landlord which is in excess of the amount which would have been paid
            absent such relationship;

     (x)    any expenses for repairs or maintenance to the extent covered by
            warranties or service contracts;

                                       44
<PAGE>

     (xi)   Taxes; and

     (xii)  any costs incurred in removing Hazardous Materials (i) currently
            located on the Property as of the date hereof, and (ii) of which the
                                                           ---
            Landlord has actual notice.

                                       45
<PAGE>

                                    EXHIBIT D

                       CONTRACTOR'S INSURANCE REQUIREMENTS


      Building:

      Tenant:

      Premises:

      The undersigned contractor or subcontractor ("Contractor") has been hired
      by the tenant or occupant (hereinafter called "Tenant") of the Building
      named above or by Tenant's contractor to perform certain work ("Work") for
      Tenant in the Premises identified above.  Contractor and Tenant have
      requested the undersigned landlord ("Landlord") to grant Contractor access
      to the Building and its facilities in connection with the performance of
      the Work and Landlord agrees to grant such access to Contractor upon and
      subject to the following terms and conditions:

      1. Contractor agrees to indemnify and save harmless the Landlord,
      Spaulding & Slye, Inc. and their respective officers, employees and agents
      and their affiliates, subsidiaries and partners, and each of them, from
      and with respect to any claims, demands, suits, liabilities, losses and
      expenses, including reasonable attorneys' fees, arising out of or in
      connection with the Work (and/or imposed by law upon any or all of them)
      because of personal injuries, bodily injury (including death at any time
      resulting therefrom) and loss of or damage to property, including
      consequential damages, whether such injuries to person or property are
      claimed to be due to negligence of the Contractor, Tenant, Landlord or any
      other party entitled to be indemnified as aforesaid except to the extent
      specifically prohibited by law (and any such prohibition shall not void
      this Agreement but shall be applied only to the minimum extent required by
      law).

      2. Contractor shall provide and maintain at its own expense, until
      completion of the Work, the following insurance:

      (a)  Workmen's Compensation and Employers, Liability Insurance covering
      each and every workman employed in, about or upon the Work, as provided
      for in each and every statute applicable to Workmen's Compensation and
      Employers' Liability Insurance.

      (b)  Comprehensive General Liability Insurance including coverages for
      Protective and Contractual Liability (to specifically include coverage for
      the indemnification clause of this Agreement) for not less than the
      following limits:

      Personal Injury:

          $3,000,000 per person
          $10,000,000 per
          occurrence

          Property Damage:
          $3,000,000 per occurrence $3,000,000 aggregate

                                       46
<PAGE>

      (c)  Comprehensive Automobile Liability Insurance (covering all owned,
      non-owned and/or hired motor vehicles to be used in connection with the
      Work) for not less than the following limits:

          Bodily Injury:
          $1,000,000 per person
          $1,000,000 per occurrence

          Property Damage:
          $1,000,000 per occurrence

          Contractor shall furnish a certificate from its insurance carrier or
      carriers to the Building office before commencing the Work, showing that
      it has complied with the above requirements regarding insurance and
      providing that the insurer will give Landlord ten (10) days' prior written
      notice of the cancellation of any of the foregoing policies.

      3. Contractor shall require all of its subcontractors engaged in the Work
      to provide the following insurance:

      (a)  Comprehensive General Liability Insurance including Protective and
      Contractual Liability coverages with limits of liability at least equal to
      the limits stated in paragraph 2(b).

      (b)  Comprehensive Automobile Liability Insurance (covering all owned,
      non-owned and/or hired motor vehicles to be used in connection with the
      Work) with limits of liability at least equal to the limits stated in
      paragraph 2(c).

      Upon the request of Landlord, Contractor shall require all of its
subcontractors engaged in the Work to execute an Insurance Requirements
agreement in the same form as this Agreement.

      Agreed to and executed this day of               , 19  .

                         Contractor:  Landlord:

                         By:


                         By:________________________________


                         By:________________________________

                                       47
<PAGE>

                                    EXHIBIT E
                              (Commencement Letter)



                                          ____________________, 199

[Name of Contact]
[Name of Tenant]



      RE: [Name of Tenant]
          [Premises Rentable Area and Floor]

Dear [Name of Contact]:

      Reference is made to that certain Lease, dated as of           , 199 ,
between                                      as Landlord and _______________ as
Tenant, with respect to approximately square feet of space on the ____________
floor of                                           , Massachusetts. In
accordance with Section 4.1 of the Lease, this is to confirm that the
Commencement Date of the term of such Lease occurred on ________, and that the
Initial Term of such Lease shall expire on _____________.  If the foregoing is
in accordance with your understanding, would you kindly execute this letter in
the space provided below, and return the same to us for execution by Landlord,
whereupon it will become a binding agreement between us.

                                        Very truly yours,



                                        By:___________________________
                                          (Vice) President

Accepted and Agreed:

[Name of Tenant]

By:  _____________________
  Name:________________
  Title:_______________
  Date:________________

                                       48
<PAGE>

                                   EXHIBIT F

       [Equipment Constituting a Portion of Tenant's Removable Property]

                                       49
<PAGE>

                                  EXHIBIT LW-1


                             [Plan to be Furnished]

                                       50
<PAGE>

                                  EXHIBIT LW-2

The Original Scope of Work shall include the following:


Third Floor - 6,906 square feet:

1. Remove 11 offices
2. Remove private bathroom
3. Remove existing kitchen wall
4. Add new kitchen with VTC floor
5. Install new carpet throughout
6. Paint entire space
7. Add and/or relocate sprinkler heads where necessary
8. Electrical - Estimate: $3.50/SF for the following:
   a. Replace approximately 80% of existing light fixtures with parabolic lights
   b. Add convenience outlets
   c. Fire alarm upgrade
   d. Power to new kitchen
   e. New switches
9. HVAC - Estimate: $1.00/SF for the following:
   a. Minor redistribution and balancing
   b. Preventitive maintenance on equipment
   c. No new mechanical equipment


First Floor - 1,300 square feet

1.    Replace existing carpeting with VCT floor




                                       51
<PAGE>
                          LEASE MODIFICATION AGREEMENT
                                      NO. 1


     THIS LEASE MODIFICATION AGREEMENT NO. 1 (this "Agreement") dated as of
August 30, 1999, by and between OTR, an Ohio general partnership ("Landlord")
and Peritus Software Services, Inc., a Massachusetts corporation ("Tenant").

                                   WITNESSETH
                                   ----------

     WHEREAS, Landlord and Tenant entered into a Lease dated February 2, 1999,
for 8,206 square feet of space (the "Existing Premises") in the building (the
                                     -----------------
"Building") known as 112 Turnpike Road, Westborough Executive Park, Westborough,
 --------
Massachusetts (the "Lease"); and

     WHEREAS, the Term of Lease expires by its terms on December 31, 2001, and
Landlord and Tenant mutually desire to enlarge the size of the Premises by
adding thereto approximately 3,431 square feet of space (the "Additional
                                                              ----------
Premises") adjacent to the Existing Premises and shown on Exhibit A hereto; and
--------

     WHEREAS, Landlord and Tenant mutually intend and desire to modify the Lease
on and subject to the terms and conditions hereinafter set forth.

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

          1.  Tenant currently occupies the Existing Premises, and agrees that
Landlord is not responsible or liable to perform any work therein, or to pay any
allowance or contribution toward the cost of any work to be performed by Tenant
therein. Except as hereinafter expressly provided, and without in any way
derogating from Landlord's obligations under the Lease to repair and maintain
the Building and its systems, Tenant accepts the Additional Premises in their
current AS IS condition, and without representation or warranty by Landlord.

          2.  (a) Effective from and after the Effective Date (as hereinafter
defined), the definition of "Premises" set forth in Section 1.2 of the Lease is
amended such that the Premises shall contain both the Existing Premises and the
Additional Premises.

          (b) Effective from and after the Effective Date, the definition of
"Premises Rentable Area" set forth in Section 1.2 of the Lease is amended by
increasing the number of square feet from 8,206 to 11,637, comprising the
Existing Premises and the Additional Premises.

          (c) Commencing on the Effective Date (or, if the Effective Date occurs
after September 15, 1999, then on October 1, 1999), and continuing throughout
the Lease Term, the
<PAGE>

Basic Rent payable under the Lease for the Additional Premises shall be
$78,913.00 per year, payable in equal monthly installments of $6,576.08
(representing $23.00 per rentable square foot of Premises Rentable Area).

          (d) Tenant agrees to pay Landlord upon execution and delivery of this
Agreement the amount of $13,152.16, which sum shall increase the Security
Deposit from $28,721.00 to $41,873.16.

          3.  Commencing on the Effective Date and continuing throughout the
Lease Term, the Estimated Electricity Payment payable under the Lease shall be
increased to $11,055.15 per year payable in equal monthly installments of
$921.26 (representing $0.95 per rentable square foot of Premises Rentable Area).

          4.  Commencing from and after the Effective Date, the definition of
"Escalation Factor" set forth in the Lease shall be 17.2%.

          5.  The Effective Date shall be the earlier to occur of: (i) October
1, 1999 or (ii) the date upon which Tenant first occupies the Additional
Premises for the conduct of its business. From and after the full execution
hereof, Landlord shall permit Tenant's contractors and suppliers to have access
to the Additional Premises for the purpose of preparing the same for Tenant's
occupancy, such occupancy to be subject to all of the provisions of the Lease
(other than the provisions of Sections 2(b), (c) and (d) and Sections 3 and 4
hereof).

          6.  Commencing on the Effective Date and continuing throughout the
Term of the Lease, if Tenant desires to lease any office space in the 495/Mass
Pike Market Area as shown on Exhibit B attached hereto, Tenant shall give
Landlord written notice (the "Offer Notice") specifying the approximate size and
the proposed use of the space desired from time to time by Tenant (the "Desired
Space").  The Offer Notice shall constitute an irrevocable offer by Tenant to
lease the Desired Space from Landlord for a term coterminous with the Term of
the Lease at a rent equal to fair market rental value.  If Landlord has the
Desired Space available for lease in any building owned by Landlord within the
495/Mass Pike Market Area and Landlord desires to lease to such space to Tenant,
Landlord shall notify Tenant in writing (the "Acceptance Notice") of its
acceptance of Tenant's offer within thirty (30) days from Landlord's receipt of
the Offer Notice.  If Landlord accepts Tenant's offer, Landlord and Tenant shall
promptly enter into a lease for the Desired Space containing substantially the
same terms contained in the Lease (or amend the Lease to include the Desired
Space) except that the rent for the Desired Space shall be fair market rental
value.  In the event that Landlord and Tenant are unable to agree on the fair
market rental value of the Desired Premises sooner than the thirtieth (30th) day
following Tenant's receipt of the Acceptance Notice, the fair market rental
value shall be determined by arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association, except that there
shall be only one arbitrator, who  shall have had at least ten (10) years'
experience as a real estate broker or appraiser in the greater Boston area.  If
Landlord does not accept Tenant's offer as aforesaid, Tenant shall be free to
lease the Desired

                                       2
<PAGE>

Space elsewhere within six (6) months following the date of the Offer Notice; if
Tenant fails to lease the Desired Space elsewhere within such six (6) month
period as aforesaid, Tenant shall again be obligated to submit an Offer Notice
to Landlord if Tenant continues to desires to lease the Desired Space.

          7.  Prior to the end of the Initial Term, Tenant shall advise Landlord
of whether Tenant intends to lease office space in the 495/Mass Pike Market Area
substantially comparable in size and type to the Premises. If Tenant so notifies
Landlord and if Tenant shall have failed to exercise its option to extend as set
forth in Article 15 of the Lease, Landlord shall have the right, by written
notice to Tenant given prior to the thirtieth (30th) day following the giving of
Tenant's notice, to require Tenant to lease the Premises upon the terms
contained in Article 15 of the Lease.

          8.  As a material inducement to Landlord entering into this Agreement,
Tenant certifies to Landlord that as of the date hereof: (i) the Lease, as
modified hereby, contains the entire agreement between the parties hereto
relating to the Premises and that there are no other agreements between the
parties relating to the Premises, the Lease or the Building which are not
contained or referred to herein or in the Lease, (ii) Landlord is not in default
in any respect in any of the terms, covenants and conditions of the Lease; (iii)
Tenant has no existing setoffs, counterclaims or defenses against Landlord under
the Lease; and (iv) Tenant is not, and the performance by Tenant of its
obligations hereunder shall not render Tenant, insolvent within the meaning of
the United States Bankruptcy Code, the Internal Revenue Code or any other
applicable law, code or regulation.

          9.  Landlord and Tenant each mutually covenant, represent and warrant
to the other that it has had no dealings or communications with any broker or
agent (other than Spaulding & Slye, whose fee shall be paid by Landlord) in
connection with this Agreement and each covenants and agrees to pay, hold
harmless and indemnify the other from and against any and all cost, expense
(including reasonable attorneys' fees) or liability for any compensation,
commission or charges to any broker or agent claiming through the indemnifying
party with respect hereto.

          10.  Tenant represents and warrants that it has taken all necessary
corporate, partnership or other action necessary to execute and deliver this
Agreement, and that this Agreement constitutes the legally binding obligation of
Tenant, enforceable in accordance with its terms.  Tenant further represents and
warrants that it has full and complete authority to enter into and execute this
Agreement and acknowledges that Landlord is relying upon Tenant's representation
of its authority to execute this Agreement and Tenant shall save and hold
Landlord harmless from any claims or damages, including reasonable attorneys'
fees, arising from Tenant's misrepresentation of its authority to enter into and
execute this Agreement.

          11.  This Agreement is executed by certain employees of the State
Teachers Retirement System of Ohio, not individually, but solely on behalf of
Landlord, the authorized nominee and agent for The State Teachers Retirement
Board of Ohio ("STRBO"). In consideration for entering into this Agreement,
Tenant hereby waives any rights to bring a cause of action against the
individuals executing this Agreement on behalf of Landlord (except for any cause
of action based upon lack of authority or fraud), and all persons dealing with
Landlord

                                       3
<PAGE>

must look solely to Landlord's assets for the enforcement of any claim against
Landlord, and the obligations hereunder are not binding upon, not shall resort
be had to the private property of any of the trustees, officers, directors,
employees or agents of STRBO.

          12.  Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Lease.

          13.  As amended hereby, the Lease is ratified and confirmed and
declared to be in full force and effect.

  IN WITNESS WHEREOF, parties have set their respective hands as of the date
first above written.

                               LANDLORD:

                               OTR, an Ohio general partnership, as nominee
                               for the State Teachers Retirement System of Ohio

                               By:________________________________
                               a General Partner,
                               Hereunto Duly Authorized


                               TENANT:

                               PERITUS SOFTWARE SERVICES, INC.

                               By:  ____________________________
                               Name:
                               Title:

                                       4