<PAGE>
                                                                    Exhibit 10.9


                                 LEASE AGREEMENT

                                     BETWEEN

                          CASIOPEA VENTURE CORPORATION

                                   "LANDLORD"

                                       AND

                              DIGITAL IMPACT, INC.

                                    "TENANT"




<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                    PAGE
<S>                                                                                        <C>
1.      PREMISES.............................................................................4
2.      TERM; POSSESSION.....................................................................4
3.      RENT.................................................................................4
4.      SECURITY DEPOSIT.....................................................................8
5.      USE AND COMPLIANCE WITH LAWS.........................................................9
6.      TENANT IMPROVEMENTS & ALTERATIONS...................................................12
7.      MAINTENANCE AND REPAIRS.............................................................13
8.      TENANT'S TAXES......................................................................14
9.      UTILITIES AND SERVICES..............................................................15
10.     EXCULPATION AND INDEMNIFICATION.....................................................16
11.     INSURANCE...........................................................................16
12.     DAMAGE OR DESTRUCTION...............................................................19
13.     CONDEMNATION........................................................................20
14.     ASSIGNMENT AND SUBLETTING...........................................................22
15.     DEFAULT AND REMEDIES................................................................24
16.     LATE CHARGE AND INTEREST............................................................26
17.     WAIVER..............................................................................27
18.     ENTRY, INSPECTION AND CLOSURE.......................................................27
19.     SURRENDER AND HOLDING OVER..........................................................28
20.     ENCUMBRANCES........................................................................29
21.     ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS......................................29
22.     NOTICES.............................................................................30
23.     ATTORNEY'S FEES.....................................................................30
24.     QUIET POSSESSION....................................................................31
25.     SECURITY MEASURES...................................................................31
26.     FORCE MAJEURE.......................................................................31
27.     RULES AND REGULATIONS...............................................................31
28.     LANDLORD'S LIABILITY................................................................32
29.     CONSENT AND APPROVALS...............................................................32
30.     WAIVER OF RIGHT TO JURY TRIAL.......................................................32
31.     BROKERS.............................................................................33
32.     FIRST OFFER.........................................................................33
33.     ENTIRE AGREEMENT....................................................................33
34.     MISCELLANEOUS.......................................................................33
35.     AUTHORITY...........................................................................34
36.     DIGITAL LASER COMMUNICATIONS DEVICES................................................34
</TABLE>
EXHIBIT A -- THE PREMISES
EXHIBIT B -- CONSTRUCTION RIDER
EXHIBIT C -- BUILDING RULES
EXHIBIT D -- PARKING
EXHIBIT E -- ASBESTOS NOTIFICATION
EXHIBIT F - LETTER OF CREDIT
EXHIBIT F-1 -- APPROVED LETTER OF CREDIT FORM
EXHIBIT G  ACKNOWLEDGEMENT OF LEASE COMMENCEMENT


                                       i

<PAGE>

                             INDEX OF DEFINED TERMS

<TABLE>
<S>                                                                          <C>
Acknowledgement of Lease Commencement .......................................EXHIBIT G
Additional Rent .....................................................................7
Alterations ........................................................................11
Asbestos Notification .......................................................EXHIBIT E
Award ..............................................................................19
Base Operating Costs ................................................................5
Base Taxes ..........................................................................5
Broker .............................................................................31
Building ............................................................................4
Building Rules .....................................................................30
Building Systems ....................................................................9
Business Days ......................................................................14
Business Hours .....................................................................14
Claims .............................................................................15
Commencement Date ...................................................................4
Condemnation .......................................................................19
Condemnor ..........................................................................19
Connelly Act .......................................................................11
Construction Rider ..................................................................4
Controls ...........................................................................14
Date of Condemnation ...............................................................20
Encumbrance ........................................................................27
Environmental Losses ...............................................................10
Environmental Requirements ..........................................................9
Event of Default ...................................................................23
Expiration Date .....................................................................4
Face Amount .........................................................................3
Fees ...............................................................................29
Handled by Tenant ...................................................................9
Handling by Tenant ..................................................................9
Hazardous Materials .................................................................9
HVAC ................................................................................9
Interest Rate ......................................................................25
Issuer ..............................................................................3
L/C .................................................................................3
Landlord ............................................................................4
Laws ................................................................................5
Letter Of Credit ............................................................EXHIBIT F
Letter Of Credit Form .....................................................EXHIBIT F-1
Mortgagee ..........................................................................28
Operating Costs .....................................................................5
Permitted Hazardous Materials ......................................................10
Premises ............................................................................4
Project .............................................................................4
Property ............................................................................4
Property Manager ...................................................................16
Proposed Transferee ................................................................21
Rent ................................................................................8
Rental Tax .........................................................................14
Representatives ....................................................................10
Scheduled Commencement Date .........................................................4
Security Deposit ....................................................................8
Service Failure ....................................................................15
Taxes ...............................................................................6
Tenant ..............................................................................4
Tenant's Share ......................................................................6
Tenant's Taxes .....................................................................14
Tenant Delay ........................................................................4
Tenant Improvements ................................................................11
Term ................................................................................4
Trade Fixtures .....................................................................12
Transfer ...........................................................................21
Transferee .........................................................................22
Visitors ...........................................................................10
</TABLE>


                                       ii

<PAGE>

                             BASIC LEASE INFORMATION

LEASE DATE:                  For identification purposes only, the date of this
                             Lease is March 27, 2002

LANDLORD:                    Casiopea Venture Corporation, Inc.


TENANT:                      Digital Impact, Inc.



PROJECT:                     177 Bovet Road

BUILDING ADDRESS:            177 Bovet Road
                             San Mateo, California 94402

RENTABLE AREA OF
BUILDING:                    Approximately 93,017 square feet

<TABLE>
<S>                          <C>                   <C>
PREMISES:                    Floors:               First, Second and Third
                             Suite Numbers:        110 and 200 and 300
                             Rentable Area:        3,068 square feet (approx.) on the First Floor
                                                   16,047 square feet (approx.) on the Second Floor
                                                   10,510 square feet (approx.) on the Third Floor
</TABLE>

TERM:                        Five Years

SCHEDULED
COMMENCEMENT DATE:           April 1, 2002

EXPIRATION DATE:             March 31, 2007

BASE RENT:                   Mos. 1-12              $103,391.25
                             Mos. 13-24             $106,650.00
                             Mos. 25-36             $109,908.75
                             Mos. 37-48             $113,463.75
                             Mos. 49-60             $117,315.00

BASE YEAR:                   Base Operating Expense Year -- 2002
                             Base Tax Year - Fiscal Year 2001/2002

TENANT'S SHARE:              31.85%


                                       1

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<PAGE>

SECURITY DEPOSIT:            Letter of Credit

LETTER OF CREDIT:            $750,000 Irrevocable Standby Letter of Credit
                             issued by Comerica Bank -- California

LANDLORD'S ADDRESS
FOR PAYMENT OF RENT:         Casiopea Venture Corporation
                             Unit I
                             P.O. Box 51914
                             Los Angeles, CA  90051

BUSINESS HOURS:              8:00 a.m. to 6:00 p.m. Monday through Friday,
                             excluding Holidays.

LANDLORD'S ADDRESS
FOR NOTICES:                 Casiopea Venture Corporation
                             155 Bovet Road, Suite 460
                             San Mateo, CA 94402
                             Attn:  Property Manager

TENANT'S ADDRESS
FOR NOTICES:                 Digital Impact, Inc.
                             177 Bovet Road, Suite 200
                             San Mateo, CA 94402
                             Attn:  Joan Cummings,
                             Director of Tax and Treasury

                             and

                             Digital Impact, Inc.
                             177 Bovet Road, Suite 200
                             San Mateo, CA  94402
                             Attn:  Kenneth Hirschman,
                             General Counsel

BROKER(s):                   BT Commercial

PROPERTY MANAGER:            Rim Pacific Management

ADDITIONAL PROVISIONS:       37.  EXHIBIT D - Parking

Exhibits:
Exhibit A:            The Premises
Exhibit B:            Construction Rider
Exhibit C:            Building Rules
Exhibit D:            Additional Provisions Rider


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<PAGE>

Exhibit E:            Asbestos Notification
Exhibit F:            Letter of Credit
Exhibit F-1:          Approved Letter of Credit Form

Exhibit G:            Acknowledgement of Lease Commencement

        The Basic Lease Information set forth above is part of the Lease. In the
event of any conflict between any provision in the Basic Lease Information and
the Lease, the Lease shall control.



                                       3

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<PAGE>

        THIS LEASE is made as of the Lease Date set forth in the Basic Lease
Information, by and between the Landlord identified in the Basic Lease
Information ("LANDLORD"), and the Tenant identified in the Basic Lease
Information ("TENANT"). Landlord and Tenant hereby agree as follows:

1.      PREMISES

Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, upon
the terms and subject to the conditions of this Lease, the office space
identified in the Basic Lease Information as the Premises (the "PREMISES"), in
the Building located at the address specified in the Basic Lease Information
(the "BUILDING"). The approximate configuration and location of the Premises is
shown on Exhibit A. Landlord and Tenant agree that the rentable area of the
Premises for all purposes under this Lease shall be the Rentable Area specified
in the Basic Lease Information. The Building, together with the parking
facilities serving the Building (the "PARKING FACILITY"), and the parcel(s) of
land on which the Building and the Parking Facility are situated (collectively,
the "PROPERTY"), is part of the Project identified in the Basic Lease
Information (the "PROJECT").

2.      TERM; POSSESSION

The term of this Lease (the "TERM") shall, commence on the Commencement Date as
described below and, the Term shall, unless sooner terminated, expire on the
Expiration Date set forth in the Basic Lease Information (the "EXPIRATION
DATE"). Tenant currently subleases Suites 110 and 200 of the Building from
Legato Systems, Inc. and leases Suite 300 of the Building directly from
Landlord. The leases of Suites 110 and 200 will be terminated concurrently with
the commencement of the Term, pursuant to the terms of a separate Lease
Termination Agreement between Landlord and Legato Systems, Inc. The
"COMMENCEMENT DATE" shall be the day after the date on which the Lease between
Landlord and Legato Systems, Inc. is terminated. Tenant is accepting the
Premises in their current condition, "AS IS" with all faults. If the Expiration
Date set forth in the Basic Lease Information is stated to occur a stated period
of time after the Commencement Date (rather than a set date) and if the
Commencement Date does not occur on the first day of a month, then,
notwithstanding anything to the contrary in this Lease, the Expiration Date
shall be the last day of the month in which the Expiration Date is scheduled to
occur. The parties anticipate that the Commencement Date will occur on or about
the Scheduled Commencement Date set forth in the Basic Lease Information (the
"SCHEDULED COMMENCEMENT DATE"); provided, however, that Landlord shall not be
liable for any claims, damages or liabilities if Commencement Date is delayed.
When the Commencement Date has been established, Landlord and Tenant shall at
the request of either party confirm the Commencement Date and Expiration Date in
writing.

3.      RENT.

        3.1 Base Rent. Tenant agrees to pay to Landlord the Base Rent set forth
in the Basic Lease Information, without prior notice or demand, on the first day
of each and every calendar month during the Term, except that Base Rent for the
first full calendar month in which Base Rent is payable shall be paid upon
Tenant's execution of this Lease and Base Rent for any partial month at the
beginning of the Term shall be paid on the Commencement Date. Base Rent for any
partial month at the beginning or end of the Term shall be prorated based on the
actual


                                       4

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<PAGE>

number of days in the month. Any increases in Base Rent will take effect on the
first day of the month; if any increase in Base Rent is due to occur on an
anniversary of the Commencement Date and the Commencement Date is not the first
day of a month, then the increase will take effect on the first day of the month
after the month in which the anniversary occurs.

               (b) The Base Rent amounts specified in the Basic Lease
Information are based upon an estimated tenant improvement allowance of Fifteen
Dollars ($15) per square foot for the work to be performed by Tenant on the
Premises on or before one hundred twenty (120) days after the Commencement Date.
If Tenant's total direct costs of such work (including, but not limited to,
construction costs, permit fees and charges, architects', engineers' fees and
all costs incurred in connection with the design and construction of the work)
are less than the product of Fifteen Dollars ($15) multiplied by the area of the
Premises (in square feet) as determined in good faith by Landlord, then Tenant's
minimum monthly rental hereunder, beginning on six (6) month anniversary of the
Commencement Date and continuing throughout the term hereof, shall be reduced by
the amount by which such total costs are less than such product, divided by 54.

        3.2 Additional Rent: Increases in Operating Costs and Taxes.

               (a) Definitions.

                      (1) "BASE OPERATING COSTS" means Operating Costs for the
calendar year specified as the Base Year in the Basic Lease Information
(excluding therefrom, however, any Operating Costs of a nature that would not
ordinarily be incurred on an annual, recurring basis).

                      (2) "BASE TAXES" means Taxes for the fiscal year specified
as the Base Year in the Basic Lease Information.

                      (3) "OPERATING COSTS" means all costs of managing,
operating, maintaining and repairing the Property, including all costs,
expenditures, fees and charges for: (A) operation, maintenance and repair of the
Property (including maintenance, repair and replacement of glass, the roof
covering or membrane, and landscaping); (B) utilities and services (including
telecommunications facilities and equipment, recycling programs and trash
removal), and associated supplies and materials; (C) compensation (including
employment taxes and fringe benefits) for persons who perform duties in
connection with the operation, management, maintenance and repair of the
Building, such compensation to be appropriately allocated for persons who also
perform duties unrelated to the Building; (D) property (including coverage for
earthquake and flood if carried by Landlord), liability, rental income and other
insurance relating to the Property, and expenditures for deductible amounts paid
under such insurance; (E) licenses, permits and inspections; (F) complying with
the requirements of any law, statute, ordinance or governmental rule or
regulation or any orders pursuant thereto (collectively "LAWS"); (G)
amortization of capital improvements required to comply with Laws, or which are
intended to reduce Operating Costs or improve the utility, efficiency or
capacity of any Building System, with interest on the unamortized balance at the
rate paid by Landlord on funds borrowed to finance such capital improvements
(or, if Landlord finances such improvements out of Landlord's funds without
borrowing, the rate that Landlord would have paid to borrow such


                                       5

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<PAGE>

funds, as reasonably determined by Landlord), over such useful life as Landlord
shall reasonably determine; (H) an office in the Project for the management of
the Property, including expenses of furnishing and equipping such office and
rental value of any space occupied for such purposes; (I) property management
fees not to exceed commercially reasonable rates; (J) accounting, legal and
other professional services incurred in connection with the operation of the
Property and the calculation of Operating Costs and Taxes; (K) a reasonable
allowance for depreciation on machinery and equipment used to maintain the
Property and on other personal property owned by Landlord in the Property
(including window coverings and carpeting in common areas); (L) contesting the
validity or applicability of any Laws that may affect the Property; (M) the
Building's share of any shared or common area maintenance fees and expenses
(including costs and expenses of operating, managing, owning and maintaining the
Parking Facility and the common areas of the Project and any fitness center or
conference center in the Project); and (N) any other costs, expenditure, fee or
charge, whether or not hereinbefore described, which in accordance with
generally accepted property management practices would be considered an expense
of managing, operating, maintaining and repairing the Property. Operating Costs
for any calendar year during which average occupancy of the Building is less
than one hundred percent (100%) shall be calculated based upon the Operating
Costs that would have been incurred if the Building had an average occupancy of
one hundred percent (100%) during the entire calendar year.

        Operating Costs shall not include (i) capital improvements (except as
otherwise provided above), (ii) costs of special services rendered to individual
tenants (including Tenant) for which a special charge is made; (iii) interest
and principal payments on loans or indebtedness secured by the Building; (iv)
costs of improvements for Tenant or other tenants of the Building; (v) costs of
services or other benefits of a type which are not available to Tenant but which
are available to other tenants or occupants, and costs for which Landlord has a
right to be reimbursed by other tenants of the Building other than through
payment of tenants' shares of increases in Operating Costs and Taxes; (vi)
leasing commissions, attorneys' fees and other expenses incurred in connection
with leasing space in the Building or enforcing such leases; (vii) depreciation
or amortization, other than as specifically enumerated in the definition of
Operating Costs above; and (viii) costs, fines or penalties incurred due to
Landlord's violation of any Law; or (ix) costs incurred by Landlord to remove
asbestos and asbestos-containing materials from the Building that are in the
Building on the date of this Lease.

               (4) "TAXES" means: all real property taxes and general, special
or district assessments or other governmental impositions, of whatever kind,
nature or origin, imposed on or by reason of the ownership or use of the
Property; governmental charges, fees or assessments for transit or traffic
mitigation (including area-wide traffic improvement assessments and
transportation system management fees), housing, police, fire or other
governmental service or purported benefits to the Property; personal property
taxes assessed on the personal property of Landlord used in the operation of the
Property; service payments in lieu of taxes and taxes and assessments of every
kind and nature whatsoever levied or assessed in addition to, in lieu of or in
substitution for existing or additional real or personal property taxes on the
Property or the personal property described above; any increases in the
foregoing caused by changes in assessed valuation, tax rate or other factors or
circumstances; and the reasonable cost of contesting by appropriate proceedings
the amount or validity of any taxes, assessments or charges described


                                       6

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

above. To the extent paid by Tenant or other tenants as "Tenant's Taxes" (as
defined in Section 8 - Tenant's Taxes), "Tenant's Taxes" shall be excluded from
Taxes.

               (5) "TENANT'S SHARE" means the Rentable Area of the Premises
divided by the total Rentable Area of the Building, as set forth in the Basic
Lease Information. If the Rentable Area of the Building is changed or the
Rentable Area of the Premises is changed by Tenant's leasing of additional space
hereunder or for any other reason, Tenant's Share shall be adjusted accordingly.

        (b) Additional Rent.

               (1) Tenant shall pay Landlord as "ADDITIONAL RENT" for each
calendar year or portion thereof during the Term Tenant's Share of the sum of
(x) the amount (if any) by which Operating Costs for such period exceed Base
Operating Costs, and (y) the amount (if any) by which Taxes for such period
exceed Base Taxes.

               (2) No later than ninety (90) days after the end of the Base Year
and each calendar year thereafter, Landlord shall notify Tenant of Landlord's
estimate of Operating Costs, Taxes and Tenant's Additional Rent for the
following calendar year. Commencing on the first day of January of each calendar
year and continuing on the first day of every month thereafter in such year,
Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated Additional
Rent. If Landlord thereafter estimates that Operating Costs or Taxes for such
year will vary from Landlord's prior estimate, Landlord may, by notice to
Tenant, revise the estimate for such year (and Additional Rent shall thereafter
by payable based on the revised estimate).

               (3) As soon as reasonably practicable after the end of the Base
Year (generally within ninety (90) days) and each calendar year thereafter,
Landlord shall furnish Tenant a statement with respect to such year, showing
Operating Costs, Taxes and Additional Rent for the year, and the total payments
made by Tenant with respect thereto. Unless Tenant raises any objections to
Landlord's statement within ninety (90) days after receipt of the same, such
statement shall conclusively be deemed correct and Tenant shall have no right
thereafter to dispute such statement or any item therein or the computation of
Additional Rent based thereon. If Tenant does object to such statement, then
Landlord shall provide a nationally recognized public accounting firm engaged by
Tenant at Tenant's sole expense with reasonable verification of the figures
shown on the statement and the such accounting firm and Landlord shall negotiate
in good faith to resolve any disputes. Any objection of Tenant (or the
nationally recognized public accounting firm) to Landlord's statement and
resolution of any dispute shall not postpone the time for payment of any amounts
due Tenant or Landlord based on Landlord's statement, nor shall any failure of
Landlord to deliver Landlord's statement in a timely manner relieve Tenant of
Tenant's obligation to pay any amounts due Landlord based on Landlord's
statement.

               (4) If Tenant's Additional Rent as finally determined for any
calendar year exceeds the total payments made by Tenant on account thereof,
Tenant shall pay Landlord the deficiency within thirty (30) days of Tenant's
receipt of Landlord's statement. If the total payments made by Tenant on account
thereof exceed Tenant's Additional Rent as finally determined for such year,
Tenant's excess payment shall be credited toward the rent next due


                                       7

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

from Tenant under this lease. For any partial calendar year at the beginning or
end of the Term, Additional Rent shall be prorated on the basis of a 365-day
year by computing Tenant's Share of the increases in Operating Costs and Taxes
for the entire year and then prorating such amount for the number of days during
such year included in the Term. Notwithstanding the termination of this Lease,
Landlord shall pay to Tenant or Tenant shall pay to Landlord, as the case may
be, within thirty (30) days after Tenant's receipt of Landlord's final statement
for the calendar year in which this Lease terminates, the difference between
Tenant's Additional Rent for that year, as finally determined by Landlord, and
the total amount previously paid by Tenant on account thereof.

        Taxes shall not include and Tenant shall not be required to pay any
portion of any tax or assessment expense or any increase therein (a) levied on
Landlord's rental income, unless such tax or assessment is imposed in lieu of
real property taxes; (b) imposed on land and improvements other than the
Project; or (c) attributable to Landlord's net income, inheritance, gift,
transfer, estate or state taxes.

        If for any reason Base Taxes or Taxes for any year during the Term are
reduced, refunded or otherwise changed, Tenant's Additional Rent shall be
adjusted accordingly. If Taxes are temporarily reduced as a result of space in
the Building being leased to a tenant that is entitled to an exemption from
property taxes or other taxes, then for purposes of determining Additional Rent
for each year in which Taxes are reduced by any such exemption, Taxes for such
year shall be calculated on the basis of the amount the Taxes for the year would
have been in the absence of the exemption. The obligations of Landlord to refund
any overpayment of Additional Rent and of Tenant to pay any Additional Rent not
previously paid shall survive the expiration of the Term.

        3.3 Payment of Rent. All amounts payable or reimbursable by Tenant under
this Lease, including late charges and interest (collectively, "RENT"), shall
constitute rent and shall be payable and recoverable as rent in the manner
provided in the Lease. All sums payable to Landlord on demand under the terms of
this Lease shall be payable within thirty (30) days after notice from Landlord
of the amounts due. All rent shall be paid without offset, recoupment or
deduction in lawful money of the United States of America to Landlord at
Landlord's Address for Payment of Rent as set forth in the Basic Lease
Information, or to such other person or at such other place as Landlord may from
time to time designate.

4.      SECURITY DEPOSIT

On execution of this Lease, Tenant shall deposit with Landlord the letter of
credit identified in Section 38 below as the Security Deposit (the "SECURITY
DEPOSIT;" the term "Security Deposit" shall include amounts drawn on the letter
of credit), as security for the performance of Tenant's obligations under this
Lease. Landlord may (but shall have no obligation to) use the Security Deposit
or any portion thereof to cure any breach or default by Tenant under this Lease,
to fulfill any of Tenant's obligations under the Lease, or to compensate
Landlord for any damage it incurs as a result of Tenant's failure to perform any
of Tenant's obligations hereunder. In such event, Tenant shall pay to Landlord
on demand an amount sufficient to replenish the Security Deposit plus the
undrawn balance of the Letter of Credit to the applicable Face Amount (defined
in Section 38 below) of the Letter of Credit. If at the expiration or
termination of this Lease,


                                       8

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<PAGE>

Tenant is not in default, has otherwise fully performed all of Tenant's
obligations under this Lease, and there are no outstanding Claims (defined in
Section 10.1 below, and including all existing and potential Claims excluding,
however, Claims against which insurance maintained by Tenant will completely
protect Landlord, the tender of which has been accepted without reservation) for
which Tenant is responsible, Landlord shall return to Tenant the Security
Deposit or the balance thereof then held by Landlord and not applied as provided
above. Landlord may commingle the Security Deposit with Landlord's general and
other funds. Landlord shall not be required to pay interest on the Security
Deposit to Tenant. Tenant acknowledges that Landlord has agreed to accept a
letter of credit in lieu of a cash deposit as an accommodation to Tenant and
Tenant agrees that the letter of credit and all amounts drawn thereunder shall
be treated for all purposes under this Lease as if a cash deposit had been
tendered to Landlord upon the execution of this Lease.

5.      USE AND COMPLIANCE WITH LAWS.

        5.1 Use. The Premises shall be used and occupied for general business
office purposes, software development and other legally related uses and for no
other use or purpose. Tenant shall comply with all present and future Laws
relating to Tenant's use or occupancy of the Premises (and make any repairs,
alterations or improvements as required to comply with all such Laws; provided,
however, that, other than alterations required by the Americans with
Disabilities Act or similar laws, Tenant shall not be required to make
structural alterations or capital retrofits that are required as a result of the
passage of laws after the date of this Lease unless such alterations or
retrofits are required because of Tenant's specific use of the Premises (as
opposed to office uses generally) or improvements or alterations made by
Tenant), and shall observe the "Building Rules" (as defined in Section 27 -
Rules and Regulations). Tenant shall not do, bring, keep or sell anything in or
about the Premises that is prohibited by, or that will cause a cancellation of
or an increase in the existing premium for, any insurance policy covering the
Property or any part thereof. Tenant shall not permit the Premises to be
occupied or used in any manner that will constitute waste or a nuisance, or
disturb the quiet enjoyment of or otherwise annoy other tenants in the Building.
Without limiting the foregoing, the Premises shall not be used for educational
activities, practice of medicine or any of the healing arts, providing social
services, for any governmental use (including embassy or consulate use), or for
personnel agency, customer service office, studios for radio, television or
other media, travel agency or reservation center operations or uses. Tenant
shall not permit the occupancy of the Premises to exceed one person (including
Visitors) per one hundred fifty (150) square feet. Tenant shall not, without the
prior consent of Landlord (i) bring into the Building or the Premises anything
that may cause substantial noise, odor or vibration, overload the floors in the
Premises or the Building or any of the heating, ventilating and air-conditioning
("HVAC"), mechanical, elevator, plumbing, electrical, fire protection, life
safety, security or other systems in the Building ("BUILDING SYSTEM"), or
jeopardize the structural integrity of the Building or any part thereof; (ii)
connect to the utility systems of the Building any apparatus, machinery or other
than typical office equipment; or (iii) connect to any electrical circuit in the
Premises any equipment or other load that either (A) imposes aggregate
electrical power requirements in excess of 80% of the rated capacity of the
circuit or (B) in the aggregate, on a monthly basis, has an electrical load in
excess of four (4) watts per square foot of the Premises.


                                       9

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<PAGE>

        5.2 Hazardous Materials.

               (a) Definitions.

                      (1) "HAZARDOUS MATERIALS" shall mean any substance: (A)
that now or in the future is regulated or governed by, requires investigation or
remediation under, or is defined as a hazardous waste, hazardous substance,
pollutant or contaminant under any governmental statute, code, ordinance,
regulation, rule or order, and any amendment thereto, including the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., and the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., or (B) that is toxic, explosive, corrosive, flammable,
radioactive, carcinogenic, dangerous or otherwise hazardous, including gasoline,
diesel fuel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos,
radon and urea formaldehyde foam insulation.

                      (2) "ENVIRONMENTAL REQUIREMENTS" shall mean all present
and future Laws, orders, permits, licenses, approvals, authorizations and other
requirements of any kind applicable to Hazardous Materials.

                      (3) "HANDLED BY TENANT" and "HANDLING BY TENANT" shall
mean and refer to any installation, handling, generation, storage, use,
disposal, discharge, release, abatement, removal, transportation, or any other
activity of any type by Tenant or its agents employees, contractors, licensees,
assignees, sublessees, transferees or representatives (collectively,
"REPRESENTATIVE") or its guests, customers, invitees, or visitors (collectively,
"VISITORS"), at or about the Premises in connection with or involving Hazardous
Materials.

                      (4) "ENVIRONMENTAL LOSSES" shall mean all costs and
expenses of any kind, damages, including foreseeable and unforeseeable
consequential damages, fines and penalties incurred in connection with any
violation of and compliance with Environmental Requirements and all losses of
any kind attributable to the diminution of value, loss of use or adverse effects
on marketability or use of any portion of the Premises or Property.

               (b) Tenant's Covenants. No Hazardous Materials shall be Handled
by Tenant at or about the Premises or Property without Landlord's prior written
consent, which consent may be granted, denied, or conditioned upon compliance
with Landlord's requirements, all in Landlord's absolute discretion.
Notwithstanding the foregoing, normal quantities and use of those Hazardous
Materials customarily used in the conduct of general office activities, such as
copier fluids and cleaning supplies ("PERMITTED HAZARDOUS MATERIALS"), may be
used and stored at the Premises without Landlord's prior written consent,
provided that Tenant's activities at or about the Premises and Property and the
Handling by Tenant of all Hazardous Materials shall comply at all times with all
Environmental Requirements. At the expiration or termination of the Lease,
Tenant shall promptly remove from the Premises and property all Hazardous
Materials Handled by Tenant at the Premises or the Property. Tenant shall keep
Landlord fully and promptly informed of all Handling by Tenant and shall be
responsible and liable for the compliance with all of the provisions of this
Section by all of Tenant's Representatives and Visitors, and all of Tenant's
obligations under this Section (including its indemnification obligations under
paragraph (e) below) shall survive the expiration or termination of this Lease.


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               (c) Compliance. Tenant shall at Tenant's expense promptly take
all actions required by any governmental agency or entity in connection with or
as a result of the Handling by Tenant of Hazardous Materials at or about the
Premises or Property, including inspection and testing, performing all cleanup,
removal and remediation work required with respect to those Hazardous Materials,
complying with all closure requirements and post-closure monitoring, and filing
all required reports or plans. All of the foregoing work and all Handling by
Tenant of all Hazardous Materials shall be performed in a good, safe and
workmanlike manner by consultants qualified and licensed to undertake such work
and in a manner that will not interfere with any other tenant's quiet enjoyment
of the Property or Landlord's use, operation, leasing and sale of the Property.
Tenant shall deliver to Landlord prior to delivery to any governmental agency,
or promptly after receipt from any such agency, copies of all permits manifests,
closure or remedial action plans, notices, and all other documents relating to
the Handling by Tenant of Hazardous Materials at or about the Premises or
Property. If any lien attaches to the Premises or the Property in connection
with or as a result of the Handling by Tenant of Hazardous Materials, and Tenant
does not cause the same to be released, by payment, bonding or otherwise, within
ten (10) days after Tenant receives notice of the attachment thereof, Landlord
shall have the right but not the obligation to cause the same to be released and
any sums expended by Landlord (plus Landlord's administrative costs) in
connection therewith shall be payable by Tenant on demand.

               (d) Landlord's Rights. Landlord shall have the right, but not the
obligation, to enter the Premises at any reasonable time after giving oral
notice to the Tenant, absent an emergency, (i) to confirm Tenant's compliance
with the provisions of this Section 5.2, and (ii) to perform Tenant's
obligations under this Section if Tenant has failed to do so after reasonable
notice to Tenant. Landlord shall also have the right to engage qualified
Hazardous Materials consultants to inspect the Premises and review the Handling
by Tenant of Hazardous Materials, including review of all permits, reports,
plans, and other documents regarding same. Tenant shall pay to Landlord on
demand the costs of Landlord's consultants' fees and all costs incurred by
Landlord in performing Tenant's obligations under this Section. Landlord shall
use reasonable efforts to minimize any interference with Tenant's business
caused by Landlord's entry into the Premises, but Landlord shall not be
responsible for any interference caused thereby.

               (e) Tenant's Indemnification. Tenant agrees to indemnify, defend,
protect and hold harmless Landlord and its partners or members and its or their
partners, members, directors, officers, shareholders, employees and agents from
all Environmental Losses and all other claims, actions, losses, damages,
liabilities, costs and expenses of every kind, including reasonable attorneys',
experts' and consultants' fees and costs, incurred at any time and arising from
or in connection with the Handling by Tenant of Hazardous Materials at or about
the Property or Tenant's failure to comply in full with all Environmental
Requirements with respect to the Premises.

               (f) Asbestos. Tenant acknowledges that Tenant has received the
asbestos notification letter attached as Exhibit E hereto pursuant to California
Health and Safety Code Sections 25915 et seq. (as amended from time to time, the
"CONNELLY ACT" ), disclosing the existence of asbestos in the Building. As part
of Tenant's obligations under paragraph (c) of this


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Section, Tenant agrees to comply with the Connelly Act, including providing
copies of Landlord's asbestos notification letter to all of Tenant's "employees"
and "owners," as those terms are defined in the Connelly Act.

6.      TENANT IMPROVEMENTS & ALTERATIONS.

        6.1 Tenant shall not make any alterations, improvements or changes to
the Premises, including installation of any security system or telephone or data
communication wiring ("ALTERATIONS"), without Landlord's prior written consent.
Any such Alterations shall be completed by Tenant at Tenant's sole cost and
expense: (i) with due diligence, in a good and workmanlike manner, using new
materials; (ii) in compliance with plans and specifications approved by
Landlord; (iii) in compliance with the construction rules and regulations
promulgated by Landlord from time to time; (iv) in accordance with all
applicable Laws (including all work, whether structural or non-structural,
inside or outside the Premises, required to comply fully with all applicable
Laws and necessitated by Tenant's work); and (v) subject to all reasonable
conditions which Landlord may in Landlord's discretion impose. Such conditions
may include requirements for Tenant to: (i) provide payment or performance bonds
or additional insurance (from Tenant or Tenant's contractors, subcontractors or
design professionals); (ii) use contractors or subcontractors designated by
Landlord; and (iii) remove all or part of the Alterations prior to or upon
expiration or termination of the Term, as designated by Landlord, and Landlord
may reserve the right to make such designation until the termination of the
Lease, unless, at the time Landlord consents to such Alteration Landlord
notifies Tenant in writing to the contrary; Landlord has no obligation to notify
Tenant whether it will or will not require any removal when it consents to any
Alteration. If any work outside the premises, or any work on or adjustment to
any of the Building Systems, is required in connection with or as a result of
Tenant's work, such work shall be performed at Tenant's expense by contractors
designated by Landlord. Landlord's right to review and approve (or withhold
approval of) Tenant's plans, drawings, specifications, contractor(s) and other
aspects of construction work proposed by Tenant is intended solely to protect
Landlord, the Property and Landlord's interests. No approval or consent by
Landlord shall be deemed or construed to be a representation or warranty by
Landlord as to the adequacy, sufficiency, fitness or suitability thereof or
compliance thereof with applicable Laws or other requirements. Except as
otherwise provided in Landlord's consent, all Alterations shall upon
installation become part of the realty and be the property of Landlord.

        6.2 Before making any Alteration, Tenant shall submit to Landlord, in
writing, for Landlord's prior approval reasonably detailed final plans and
specifications prepared by a licensed architect or engineer, a copy of the
construction contract, including the name of the contractor and all
subcontractors proposed by Tenant to make the Alterations and a copy of the
contractor's license. Tenant shall reimburse Landlord upon demand for any
expenses incurred by Landlord in connection with any Alterations made by Tenant,
including reasonable fees charged by Landlord's contractors or consultants to
review plans and specifications prepared by Tenant and to update the existing
as-built plans and specifications of the Building to reflect the Alterations.
Tenant shall obtain all applicable permits, authorizations and governmental
approvals and deliver copies of the same to Landlord before commencement of any
Alterations.


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        6.3 Tenant shall keep the Premises and the Property free and clear of
all liens arising out of any work performed, materials furnished or obligations
incurred by Tenant. If any such lien attaches to the premises or the property,
and Tenant does not cause the same to be released by payment, bonding or
otherwise within ten (10) days after Tenant receives notice of the attachment
thereof, Landlord shall have the right but not the obligation to cause the same
to be released, and any sums expended by Landlord (plus Landlord's
administrative costs) in connection therewith shall be payable by Tenant on
demand with interest thereon from the date of expenditure by Landlord at the
Interest Rate (as defined in Section 16.2 - Interest). Tenant shall give
Landlord at least ten (10) days' notice prior to the commencement of any
Alterations and cooperate with Landlord in posting and maintaining notices of
non-responsibility in connection therewith.

        6.4 Subject to the provisions of Section 5 - Use and Compliance with
Laws and the foregoing provisions of this Section, Tenant may install and
maintain furnishings, equipment, movable partitions, business equipment and
other trade fixtures ("TRADE FIXTURES") in the Premises, provided that the Trade
Fixtures do not become an integral part of the premises or the Building;
provided, however, that Tenant may install supplemental HVAC units and UPS units
at Tenant's sole expenses if Tenant removes the same at the termination of this
Lease, repairs any damage caused by the removal, and restores the affected area
of the Premises to its condition before the units were installed if Landlord so
requests; and provided further that Tenant shall be responsible for any excess
loads to any building systems caused by any such installation. Tenant shall
promptly repair any damage to the Premises or the Building caused by any
installation or removal of such Trade Fixtures.

7.      MAINTENANCE AND REPAIRS

        7.1 By taking possession of the Premises Tenant agrees that the Premises
are then in a good and tenantable condition. During the Term, Tenant at Tenant's
expense but under the direction of Landlord, shall repair and maintain the
Premises, including the interior walls, floor coverings, ceiling, Tenant
Improvements, Alterations, fire extinguishers, outlets and fixtures, and any
appliances (including dishwashers, hot water heaters and garbage disposers) in
the Premises, in a first class condition, and keep the Premises in a clean, safe
and orderly condition.

        7.2 Landlord shall maintain or cause to be maintained in reasonably good
order, condition and repair, the structural portions of the roof, foundations,
floors and exterior walls of the Building, the Building Systems, and the public
and common areas of the Property, such as elevators, stairs, corridors and
restrooms; provided, however, that Tenant shall pay the cost of repairs for any
damage occasioned by Tenant's use of the Premises or the Property or any act or
omission of Tenant or Tenant's Representatives or Visitors, to the extent (if
any) not covered by Landlord's property insurance. Landlord shall be under no
obligation to inspect the Premises. Tenant shall promptly report in writing to
Landlord any defective condition known to Tenant which Landlord is required to
repair. As a material part of the consideration for the Lease, Tenant hereby
waives any benefits of any applicable existing or future Law, including the
provisions of California Civil Code Sections 1932(1), 1941 and 1942, that allows
a tenant to make repairs at its landlord's expense.


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<PAGE>

        7.3 Landlord hereby reserves the right, at any time and from time to
time, without liability to Tenant, and without constituting an eviction,
constructive or otherwise, or entitling Tenant to any abatement of rent or to
terminate this Lease or otherwise releasing Tenant from any of Tenant's
obligations under this Lease, to perform any of the acts set forth in
subparagraphs (a) through (d), below.

               (a) To make alterations, additions, repairs, improvements to or
in or to decrease the size of area of, all or any part of the Project and
property adjacent to the Project, the Building, the fixtures and equipment
therein, and the Building Systems. Tenant acknowledges that such alterations,
additions, repairs and improvements may generate noise and vibrations and may
temporarily interfere with access to the Premises, although they will not
prevent access;

               (b) To change the Building's name or street address;

               (c) To install and maintain any and all signs on the exterior and
interior of the Building;

               (d) To reduce, increase, enclose or otherwise change at any time
and from time to time the size, number, location, lay-out and nature of the
common areas (including the Parking Facility) and other tenancies and premises
in the Property and to create additional rentable areas through use or enclosure
of common areas; and

               (e) If any governmental authority promulgates or revises any Law
or imposes mandatory or voluntary controls or guidelines on Landlord or the
Property relating to the use or conservation of energy or utilities or the
reduction of automobile or other emissions or reduction or management of traffic
or parking on the Property (collectively "CONTROLS"), to comply with such
Controls, whether mandatory or voluntary, or make any alterations to the
Property related thereto.

8.      TENANT'S TAXES

"TENANT'S TAXES" shall mean (a) all taxes, assessments, license fees and other
governmental charges or impositions levied or assessed against or with respect
to Tenant's personal property or Trade Fixtures in the Premises, whether any
such imposition is levied directly against Tenant or levied against Landlord or
the Property, (b) all rental, excise, sales or transaction privilege taxes
arising out of this Lease (excluding, however, state and federal personal or
corporate income taxes measured by the income of Landlord from all sources)
imposed by any taxing authority upon Landlord or upon Landlord's receipt of any
rent payable by Tenant pursuant to the terms of this Lease ("RENTAL TAX"), and
(c) any increase in Taxes attributable to inclusion of a value placed on
Tenant's personal property, Trade Fixtures or Alterations. Tenant shall pay any
Rental Tax to Landlord in addition to and at the same time as Base Rent is
payable under this Lease, and shall pay all other Tenant's Taxes before
delinquency (and, at Landlord's request, shall furnish Landlord satisfactory
evidence thereof). If Landlord pays Tenant's Taxes or any portion thereof,
Tenant shall reimburse Landlord upon demand for the amount of such payment,
together with interest at the Interest Rate from the date of Landlord's payment
to the date of Tenant's reimbursement.


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<PAGE>

9.      UTILITIES AND SERVICES.

        9.1 Description of Services. Landlord shall furnish to the Premises:
reasonable amounts of heat, ventilation and air-conditioning during the Business
Hours specified in the Basic Lease Information ("BUSINESS HOURS") on weekdays
except public holidays ("BUSINESS DAYS"); reasonable amounts of electricity; and
janitorial services five days a week (except public holidays). Landlord shall
also provide the Building with normal fluorescent tube replacement, window
washing, elevator service, and common area toilet room supplies. Any additional
utilities or services that Landlord may agree to provide (including lamp or tube
replacement for other than Building Standard lighting fixtures) shall be at
Tenant's sole expense.

        9.2 Payment for Additional Utilities and Services.

               (a) Upon request by Tenant in accordance with the procedures
established by Landlord from time to time for furnishing HVAC service at times
other than Business Hours on Business Days, Landlord shall furnish such service
to Tenant and Tenant shall pay for such services on an hourly basis at the then
prevailing rate established for the Building by Landlord.

               (b) If the temperature otherwise maintained in any portion of the
Premises by the HVAC systems of the Building is affected as a result of (i) any
lights, machines or equipment used by Tenant in the Premises, or (ii) the
occupancy of the Premises by more than one person per 150 square feet of
rentable area, then Landlord shall have the right to install any machinery or
equipment reasonably necessary to restore the temperature, including
modifications to the standard air-conditioning equipment. The cost of any such
equipment and modifications, including the cost of installation and any
additional cost of operation and maintenance of the same, shall be paid by
Tenant to Landlord upon demand.

               (c) If Tenant's usage of electricity, water or any other utility
service exceeds the use of such utility Landlord determines to be typical,
normal and customary for the Building (which amount is not in excess of four (4)
watts per month per square foot of the Premises), Landlord may determine the
amount of such excess use by any reasonable means (including the installation at
Landlord's request but at Tenant's expense of a separate meter or other
measuring device chosen by Landlord in Landlord's reasonable discretion) and
charge Tenant for the cost of such excess usage. In addition, Landlord may
impose a reasonable charge for the use of any additional or unusual janitorial
services required by Tenant because of any unusual Tenant Improvements or
Alterations, the carelessness of Tenant or the nature of Tenant's business
(including hours of operations).

        9.3 Interruption of Services. In the event of an interruption in or
failure or inability to provide any services or utilities to the Premises or
Building for any reason (a "SERVICE FAILURE"), such Service Failure shall not,
regardless of its duration, impose upon Landlord any liability whatsoever,
constitute an eviction of Tenant, constructive or otherwise, entitle Tenant to
an abatement of rent or to terminate this Lease or otherwise release Tenant from
any of Tenant's obligations under this Lease. Tenant hereby waives any benefits
of any applicable existing or


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<PAGE>

future Law, including the provisions of California Civil Code Section 1932(1),
permitting the termination of this Lease due to such interruption, failure or
inability.

10.     EXCULPATION AND INDEMNIFICATION

        10.1 Landlord's Indemnification of Tenant. Landlord shall indemnify,
protect, defend and hold Tenant harmless from and against any claims, actions,
liabilities, damages, costs or expenses, including reasonable attorneys' fees
and costs incurred in defending against the same ("CLAIMS") asserted by any
third party against Tenant for loss, injury or damage, to the extent such loss,
injury or damage is caused by the willful misconduct or negligent acts or
omissions of Landlord or its authorized representatives.

        10.2 Tenant's Indemnification of Landlord. Tenant shall indemnify,
protect, defend and hold Landlord and Landlord's authorized representatives
harmless from and against Claims arising from (a) the acts or omissions of
Tenant or Tenant's Representatives or Visitors in or about the Property, or (b)
any construction or other work undertaken by Tenant on the Premises (including
any design defects), or (c) any breach or default under this Lease by Tenant, or
(d) any loss, injury or damage, howsoever and by whomsoever caused, to any
person or property, occurring in or about the Premises during the Term,
excepting only Claims described in this clause (d) to the extent they are caused
by the willful misconduct or negligent acts or omissions of Landlord or its
authorized representatives.

        10.3 Damage to Tenant and Tenant's Property. Landlord shall not be
liable to Tenant for any loss, injury or other damage to Tenant or to Tenant's
property in or about the Premises or the Property from any cause (including
defects in the Property or in any equipment in the Property; fire, explosion or
other casualty; bursting, rupture, leakage or overflow of any plumbing or other
pipes or lines, sprinklers, tanks, drains, drinking fountains or washstands in,
above the Premises or Property; or acts of other tenants in the Property).
Tenant hereby waives all claims against Landlord for any such loss, injury or
damage caused by Landlord's negligence (active or passive) or willful
misconduct. Notwithstanding any other provision of this Lease to the contrary,
in no event shall Landlord be liable to Tenant for any punitive or consequential
damages or damages for loss of business by Tenant.

        10.4 Survival. The obligations of the parties under this Section 10
shall survive the expiration or termination of this Lease.

11.     INSURANCE

        11.1 Tenant's Insurance.

               (a) Liability Insurance. Tenant shall maintain in full force
throughout the Term, commercial general liability insurance providing coverage
on an occurrence form basis with limits of not less than Two Million Dollars
($2,000,000.00) each occurrence for bodily injury and property damage combined,
Two Million Dollars ($2,000,000.00) annual general aggregate, and Two Million
Dollars ($2,000,000.00) products and completed operations annual aggregate.
Tenant's liability insurance policy or policies shall: (i) include premises and
operations liability


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<PAGE>

coverage, products and completed operations liability coverage, broad form
property damage coverage including completed operations, blanket contractual
liability coverage including, to the maximum extent possible, coverage for the
indemnification obligations of Tenant under this Lease, and personal and
advertising injury coverage; (ii) provide that the insurance company has the
duty to defend all insureds under the policy; (iii) provide that defense costs
are paid in addition to and to not deplete any of the policy limits; (iv) cover
liabilities arising out of or incurred in connection with Tenant's use or
occupancy of the Premises or the Property; (v) extend coverage to cover
liability for the actions of Tenant's representatives and Visitors; and (vi)
designate separate limits for the Property. Each policy of liability insurance
required by this Section shall: (1) contain a cross liability endorsement or
separation of insureds clause; (2) provide that any waiver of subrogation rights
or release prior to a loss does not void coverage; (3) provide that it is
primary to and not contributing with, any policy of insurance carried by
Landlord covering the same loss; (4) provide that any failure to comply with the
reporting provisions by Tenant shall not affect coverage provided to Landlord,
its partners, property managers and Mortgagees; and (5) name Landlord, its
partners, the Property Manager identified in the Basic Lease Information (the
"PROPERTY MANAGER"), and such other parties in interest as Landlord may from
time to time reasonably designate to Tenant in writing, as additional insureds.
Such additional insureds shall be provided at least the same extent of coverage
as is provided to Tenant under such policies with respect to liability arising
out of the ownership maintenance or use of the Premises. All endorsements
effecting such additional insured status shall be at least as broad as
additional insured endorsement form number CG 20 11 11 85 or CG 20 11 11 01 96
promulgated by the Insurance Services Offices.

               (b) Property Insurance. Tenant shall at all times maintain in
effect with respect to any Alterations and Tenant's trade Fixtures and personal
property, commercial property insurance providing coverage, on an "all risk" or
"special form" basis, in an amount equal to at least 90% of the full replacement
cost of the covered property. Tenant may carry such insurance under a blanket
policy, provided that such policy provides coverage equivalent to a separate
policy. During the Term, the proceeds from any such policies of insurance shall
be used for the repair or replacement of the Alterations, Trade Fixtures and
personal property so insured. Landlord shall be provided coverage under such
insurance to the extent of its insurable interest and, if requested by Landlord,
both landlord and Tenants shall sign all documents reasonably necessary or
proper in connection with the settlement of any claim or loss under such
insurance. Landlord will have no obligation to carry insurance on any
Alterations or on Tenant's Trade Fixtures or personal property.

               (c) Worker's Compensation Insurance. Tenant shall carry and
maintain Workers Compensation and Employer's Liability Insurance as required by
applicable Laws.

               (d) Requirements For All Policies. Each policy of insurance
required under this Section 11.1 shall: (i) be in a form, and written by an
insurer, reasonably acceptable to Landlord, (ii) be maintained at Tenant's sole
cost and expense, and (iii) require at least thirty (30) days' written notice to
Landlord prior to any cancellation, nonrenewal or modification of insurance
coverage. Insurance companies issuing such policies shall have rating
classifications of "A" or better and financial size category ratings of "VII" or
better according to the latest edition of the A.M. Best Key Rating Guide. All
insurance companies issuing such policies shall


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<PAGE>

be admitted carriers licensed to do business in the state where the property is
located. Any deductible amount under such insurance shall not exceed $5,000.
Tenant shall provide to Landlord, upon request, evidence that the insurance
required to be carried by Tenant pursuant to this Section, including any
endorsement effecting the additional insured status, is in full force and effect
and that premiums therefore have been paid.

               (e) Updating Coverage. Tenant shall increase the amounts of
insurance as required by any Mortgagee, and, not more frequently than once every
three (3) years, as recommended by Landlord's insurance broker, if, in the
commercially reasonable opinion of either of them, the amount of insurance then
required under this Lease is not adequate. Any limits set forth in this Lease on
the amount or type of coverage required by Tenant's insurance shall not limit
the liability of Tenant under this Lease.

               (f) Certificates of Insurance. Prior to occupancy of the Premises
by tenant, and not less than thirty (30) days prior to expiration of any policy
thereafter, Tenant shall furnish to Landlord a certificate of insurance
reflecting that the insurance required by this Section is in force, accompanied
by an endorsement showing the required additional insureds satisfactory to
Landlord in substance and form. Notwithstanding the requirements of this
paragraph, Tenant shall at Landlord's request provide to Landlord a certified
copy of each insurance policy required to be in force at any time pursuant to
the requirements of this Lease or its Exhibits. If (i) Tenant fails to provide a
certified copy of its insurance policies then in force or (ii) if the policies
or certificates of insurance provided by Tenant pursuant to this paragraph (e)
or pursuant to paragraph (c) indicate that the insurance coverage maintained by
Tenant does not satisfy the requirements of this Article 11, then Landlord, at
its option and in addition to its other remedies, but without obligation so to
do, many procure such insurance, and any sums expended by it to procure any such
insurance shall be repaid upon demand, with interest as provided in Section
16.2. Nothing in this paragraph is intended to relieve Tenant of its obligation
to maintain insurance or to impose any obligation on Landlord to obtain
insurance for the benefit of Tenant or to notify Tenant that Tenant is not
complying with the provisions of this Article 11.

        11.2 Landlord's Insurance. During the Term, Landlord shall maintain in
effect insurance on the Building with responsible insurers, on an "all risk" or
"special form" basis, insuring the Building and the Tenant Improvements in an
amount equal to at least 90% of the replacement cost thereof, excluding land,
foundations, footings and underground installations. Landlord may, but shall not
be obligated to, carry insurance against additional perils and/or in greater
amounts.

        11.3 Mutual Waiver of Right of Recovery and Waiver of Subrogation.
Notwithstanding anything to the contrary in this Lease, Landlord and Tenant each
hereby waive any right of recovery against each other and the partners,
managers, members shareholders, officers, directors and authorized
representatives of each other for any loss or damage that is covered by any
policy of property insurance maintained by either party (or required by this
Lease to be maintained) with respect to the Premises or the Property or any
operation therein, regardless of cause, including negligence (active or passive)
of the party benefiting from the waiver. If any such policy of insurance
relating to this Lease or to the Premises or the Property does not permit the
foregoing waiver or if the coverage under any such policy would be


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<PAGE>

invalidated as a result of such waiver, the party maintaining such policy shall
obtain from the insurer under such policy a waiver of all right of recovery by
way of subrogation against either party in connection with any claim, loss or
damage covered by such policy.

12.     DAMAGE OR DESTRUCTION.

        12.1 Landlord's Duty to Repair.

               (a) If all or a substantial part of the premises are rendered
untenantable or inaccessible by damage to all or any part of the Property from
fire or other casualty then, unless either party is entitled to and elects to
terminate this Lease pursuant to Sections 12.2 - Landlord's Right to Terminate
and 12.3 - Tenant's Right to Terminate, Landlord shall, at its expense, use
reasonable efforts to repair and restore the Premises and/or the Property, as
the case may be, to substantially their former condition to the extent permitted
by then applicable Laws; provided, however, that in no event shall Landlord have
any obligation for repair or restoration beyond the extent of insurance proceeds
received by Landlord for such repair or restoration, or for any of Tenant's
personal property, Trade Fixture or Alterations.

               (b) If Landlord is required or elects to repair damage to the
Premises and/or the Property, this Lease shall continue in effect, but Tenant's
base Rent and Additional Rent shall be abated with regard to any portion of the
premises that Tenant is prevented from using by reason of such damage or its
repair from the date of the casualty until substantial completion of Landlord's
repair of the affected portion of the Premises as required under this Lease. In
no event shall Landlord be liable to Tenant by reason of any injury to or
interference with Tenant's business or property arising from fire or other
casualty or by reason of any repairs to any part of the Property necessitated by
such casualty.

        12.2 Landlord's Right to Terminate. Landlord may elect to terminate this
Lease following damage by fire or other casualty under the following
circumstances:

               (a) If, in the reasonable judgment of Landlord, the premises and
the Property cannot be substantially repaired and restored under applicable Laws
within one (1) year from the date of the casualty;

               (b) If, in the reasonable judgment of Landlord, adequate proceeds
are not, for any reason, made available to Landlord from Landlord's insurance
policies (and/or from Landlord's funds made available for such purpose, at
Landlord's sole option) to make the required repairs;

               (c) If the Building is damaged or destroyed to the extent that,
in the reasonable judgment of Landlord, the cost to repair and restore the
Building would exceed twenty-five percent (25%) of the full replacement cost of
the Building, whether or not the Premises are at all damaged or destroyed; or

               (d) If the fire or other casualty occurs during the last year of
the Term.


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If any of the circumstances described in subparagraphs (a), (b), (c) or (d) of
this Section 12.2 occur or arise, Landlord shall give Tenant notice as soon as
is reasonably practicable, but in any event within one hundred and twenty (120)
days after the date of the casualty, specifying whether Landlord elects to
terminate this Lease as provided above and, if not, Landlord's estimate of the
time required to complete Landlord's repair obligations under this Lease.

        12.3 Tenant's Right to Terminate. If all or a substantial part of the
Premises are rendered untenantable or inaccessible by damage to all or any part
of the Property from fire or other casualty, and Landlord does not elect to
terminate as provided above, then Tenant may elect to terminate this Lease if
Landlord's reasonable estimate of the time required to complete Landlord's
repair obligations under this Lease is greater than one (1) year, in which event
Tenant may elect to terminate this Lease by giving Landlord notice of such
election to terminate within thirty (30) days after Landlord's notice to Tenant
pursuant to Section 12.2 - Landlord's Right to Terminate.

        12.4 Waiver. Landlord and Tenant each hereby waive the provisions of
California Civil Code Sections 1932(2), 1933(4) and any other applicable
existing or future Law permitting the termination of a lease agreement in the
event of damage or destruction under any circumstances other than as provided in
Sections 12.2 - Landlord's Right to Terminate and 12.3 - Tenant's Right to
Terminate.

13.     CONDEMNATION.

        13.1 Definitions.

               (a) "AWARD" shall mean all compensation, sum, or anything of
value awarded, paid or received on a total or partial Condemnation.

               (b) "CONDEMNATION" shall mean (i) a permanent taking (or a
temporary taking for a period extending beyond the end of the Term) pursuant to
the exercise of the power of condemnation or eminent domain by any public or
quasi-public authority, private corporation or individual having such power
("CONDEMNOR"), whether by legal proceedings or otherwise, or (ii) a voluntary
sale or transfer by Landlord to any such authority, either under threat of
condemnation or while legal proceedings for condemnation are pending.

               (c) "DATE OF CONDEMNATION" shall mean the earlier of the date
that title to the property taken is vested in the Condemnor or the date the
Condemnor has the right to possession of the property being condemned.

        13.2 Effect on Lease.

               (a) If the Premises are totally taken by Condemnation, this Lease
shall terminate as of the Date of Condemnation. If a portion but not all of the
Premises is taken by Condemnation, this Lease shall remain in effect; provided,
however, that if the portion of the Premises remaining after the Condemnation
will be unsuitable for Tenant's continued use, then


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<PAGE>

upon notice to Landlord within thirty (30) days after Landlord notifies Tenant
of the Condemnation, Tenant may terminate this Lease effective as of the Date of
Condemnation.

               (b) If twenty-five percent (25%) or more of the Project or of the
parcel(s) of land on which the Building is situated or of the Parking Facility
or of the floor area of the Building is taken by Condemnation, or if as a result
of any Condemnation the Building is no longer reasonably suited for use as an
office building, whether or not any portion of the Premises is taken, Landlord
may elect to terminate this Lease, effective as of the Date of Condemnation, by
notice to Tenant within thirty (30) days after the Date of Condemnation.

               (c) If all or a portion of the Premises is temporarily taken by a
Condemnor for a period not extending beyond the end of the Term, this Lease
shall remain in full force and effect.

        13.3 Restoration. If this Lease is not terminated as provided in Section
13.2 - Effect on Lease, Landlord, at its expense, shall diligently proceed to
repair and restore the Premises to substantially its former condition (to the
extent permitted by then applicable Laws) and/or repair and restore the Building
to an architecturally complete office building; provided, however, that
Landlord's obligations to so repair and restore shall be limited to the amount
of any Award received by Landlord and not required to be paid to any Mortgagee
(as defined in Section 20.2 below). In no event shall Landlord have any
obligation to repair or replace any improvements in the Premises beyond the
amount of any Award received by Landlord for such repair or to repair or replace
any of Tenant's personal property, Trade Fixtures, or Alterations.

        13.4 Abatement and Reduction of Rent. If any portion of the Premises is
taken in a Condemnation or is rendered permanently untenantable by repairs
necessitated by the Condemnation, and this Lease is not terminated, the Base
Rent and Additional Rent payable under this Lease shall be proportionately
reduced as of the Date of Condemnation based upon the percentage of rentable
square feet in the Premises so taken or rendered permanently untenantable. In
addition, if this Lease remains in effect following a Condemnation and Landlord
proceeds to repair and restore the Premises, the Base Rent and Additional Rent
payable under this Lease shall be abated during the period of such repair or
restoration to the extent such repairs prevent Tenant's use of the Premises.

        13.5 Awards. Any Award made shall be paid to Landlord, and Tenant hereby
assigns to Landlord, and waives all interest in or claim to, any such Award,
including any claim for the value of the unexpired Term; provided, however, that
Tenant shall be entitled to receive, or to prosecute a separate claim for, an
Award for a temporary taking of the Premises or a portion thereof by a Condemnor
where this Lease is not terminated (to the extent such Award relates to the
unexpired Term), or an Award or portion thereof separately designated for
relocation expenses or the interruption of or damage to Tenant's business or as
compensation for Tenant's personal property, Trade Fixtures or Alterations.

        13.6 Waiver. Landlord and Tenant each hereby waive the provisions of
California Code of Civil Procedure Section 1265.130 and any other applicable
existing or future Law


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<PAGE>

allowing either party to petition for a termination of this Lease upon a partial
taking of the Premises and/or the Property.

14.     ASSIGNMENT AND SUBLETTING

        14.1 Landlord's Consent Required. Tenant shall not assign this Lease or
any interest therein, or sublet or license or permit the use or occupancy of the
Premises or any part thereof by or for the benefit of anyone other than Tenant,
or in any other manner transfer all or any part of Tenant's interest under this
Lease (each and all a "TRANSFER"), without the prior written consent of
Landlord, which consent (subject to the other provisions of this Section 14)
shall not be unreasonably withheld. If Tenant is a business entity that is not
publicly traded on a nationally recognized stock exchange, any direct or
indirect transfer of fifty percent (50%) or more of the ownership interest of
the entity (whether in a single transaction or in the aggregate through more
than one transaction) shall be deemed a Transfer. Notwithstanding any provision
in this Lease to the contrary, Tenant shall not mortgage, pledge, hypothecate or
otherwise encumber this Lease or all or any part of Tenant's interest under this
Lease.

        Notwithstanding anything to the contrary in this Section, Tenant may
assign this Lease or sublease the Premises to an affiliate of Tenant (as defined
below) provided that Landlord determines in its reasonable discretion that, at
the time of the assignment or sublease, the affiliate has a net worth no less
than Five Million Dollars ($5,000,000). Tenant will provide to Landlord
information to enable Landlord to make the determination of the net worth of
Tenant and the affiliate. For purposes of this paragraph, an "affiliate" is an
entity that (a) is majority owned by Tenant, owns a majority of Tenant or is
majority owned by an entity that owns all the outstanding capital stock of
Tenant; (b) is an entity that merges with Tenant to create a new entity or that
results from a consolidation or non-bankruptcy reorganization; (c) acquires all
or substantially all the assets or stock of Tenant; or (d) Tenant is merged
into, with the result that Tenant ceases to exist after the merger.

        14.2 Reasonable Consent.

               (a) Prior to any proposed Transfer, Tenant shall submit in
writing to Landlord (i) the name and legal composition of the proposed assignee,
subtenant, user or other transferee (each a "PROPOSED TRANSFEREE"); (ii) the
nature of the business proposed to be carried on in the Premises; (iii) a
current balance sheet, income statements for the last two years and such other
reasonable financial and other information concerning the Proposed Transferee as
Landlord may request; and (iv) a copy of the proposed assignment, sublease or
other agreement governing the proposed Transfer. Within fifteen (15) Business
Days after Landlord receives all such information it shall notify Tenant whether
it approves or disapproves such Transfer or if it elects to proceed under
Section 14.7 - Landlord's Right to Space.

               (b) Tenant acknowledges and agrees that, among other
circumstances for which Landlord could reasonably withhold consent to a proposed
Transfer, it shall be reasonable for Landlord to withhold consent where (i) the
Proposed Transferee does not intend itself to occupy the entire portion of the
Premises assigned or sublet, (ii) Landlord reasonably disapproves of the
Proposed Transferee's business operating ability or history, reputation and


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<PAGE>

creditworthiness or the character of the business to be conducted by the
Proposed Transferee at the Premises, (iii) the Proposed Transferee is a
governmental agency or unit or an existing tenant in the Project, (iv) the
proposed transfer would violate any "exclusive" rights of any tenants in the
Project, (v) Landlord or Landlord's agent has shown space in the Building to the
Proposed Transferee or responded to any inquiries from the Proposed Transferee
or the Proposed Transferee's agent concerning availability of space in the
Building, at any time within the preceding nine months, or (vi) Landlord
otherwise determines that the proposed Transfer would have the effect of
decreasing the value of the Building or increasing the expenses associated with
operating, maintaining and repairing the Property. In no event may Tenant
publicly offer or advertise all or any portion of the Premises for assignment or
sublease, or attempt to sublease or assign all or any portion of the Premises,
at a rental less than that sought by Landlord for a direct lease (non-sublease)
of comparable space in the Project.

        14.3 Excess Consideration. If Landlord consents to the Transfer, Tenant
shall pay to Landlord as additional rent, within ten (10) days after receipt by
Tenant, seventy-five percent (75%) of any consideration paid by any transfer
(the "TRANSFEREE") for the Transfer, including, in the case of a sublease, the
excess of the rent and other consideration payable by the subtenant over the
amount of Base Rent and Additional Rent payable hereunder applicable to the
subleased space, after first deducting Tenant's actual out-of-pocket costs
incurred in subleasing or assigning such space.

        14.4 No Release of Tenant. No consent by Landlord to any Transfer shall
relieve Tenant of any obligation to be performed by Tenant under this Lease,
whether occurring before or after such consent, assignment, subletting or other
Transfer. Each Transferee shall be jointly and severally liable with Tenant (and
Tenant shall be jointly and severally liable with each Transferee) for the
payment of rent (or, in the case of a sublease, rent in the amount set forth in
the sublease) and for the performance of all other terms and provisions of this
Lease. The consent by Landlord to any Transfer shall not relieve Tenant or any
such Transferee from the obligation to obtain Landlord's express prior written
consent to any subsequent Transfer by Tenant or any Transferee. The acceptance
of rent by Landlord from any other person (whether or not such person is an
occupant of the Premises) shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any Transfer.

        14.5 Expenses and Attorneys' Fees. Tenant shall pay to Landlord on
demand all costs and expenses (including reasonable attorneys' fees) incurred by
Landlord in connection with reviewing or consenting to any proposed Transfer
(including any request for consent to, or any waiver of Landlord's rights in
connection with, any security interest in any of Tenant's property at the
Premises).

        14.6 Effectiveness of Transfer. Prior to the date on which any permitted
Transfer (whether or not requiring Landlord's consent) becomes effective, Tenant
shall deliver to Landlord a counterpart of the fully executed Transfer document
and Landlord's standard form of Consent to Assignment or Consent to Sublease
executed by Tenant and the Transferee in which each of Tenant and the Transferee
confirms its obligations pursuant to this Lease. Failure or refusal of a
Transferee to execute any such instrument shall not release or discharge the
Transferee from liability as provided herein. The voluntary, involuntary or
other surrender of


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<PAGE>

this Lease by Tenant, or a mutual cancellation by Landlord and Tenant, shall not
work a merger, and any such surrender or cancellation shall, at the option of
the Landlord, either terminate all or any existing subleases or operate as an
assignment to Landlord of any or all of such subleases.

        14.7 Landlord's Right to Space. Notwithstanding any of the above
provisions of this Section to the contrary, if Tenant notifies Landlord that it
desires to enter into a Transfer, Landlord, in lieu of consenting to such
Transfer, may elect (x) in the case of an assignment or a sublease of the entire
Premises, to terminate this Lease, or (y) in the case of a sublease of less than
the entire Premises, to terminate this Lease as it relates to the space proposed
to be subleased by Tenant. In such event, this Lease will terminate (or the
space proposed to be subleased will be removed from the Premises subject to this
Lease and the Base Rent and Tenant's Share under this Lease shall be
proportionately reduced) on the date the Transfer was proposed to be effective,
and Landlord may lease such space to any party, including the prospective
Transferee identified by Tenant.

        14.8 Assignment of Sublease Rents. Tenant hereby absolutely and
irrevocably assigns to Landlord any and all rights to receive rent and other
consideration from any sublease and agrees that Landlord, as assignee or as
attorney-in-fact for Tenant for purposes hereof, or a receiver for Tenant
appointed on Landlord's application may (but shall not be obligated to) collect
such rents and other consideration and apply the same toward Tenant's
obligations to Landlord under this Lease; provided, however, that Landlord
grants to Tenant at all times prior to occurrence of any breach or default by
Tenant a revocable license to collect such rents (which license shall
automatically and without notice be and be deemed to have been revoked and
terminated immediately upon any Event of Default).

15.     DEFAULT AND REMEDIES.

        15.1 Events of Default. The occurrence of any of the following shall
constitute an "EVENT OF DEFAULT" by Tenant:

               (a) Tenant fails to make any payment of rent when due, or any
amount required to replenish the security deposit as provided in Section 4
above, if payment in full is not received by Landlord within three (3) days
after written notice that it is due.

               (b) Tenant abandons the Premises.

               (c) Tenant fails timely to deliver any subordination document,
estoppel certificate or financial statement requested by Landlord within the
applicable time period specified in Sections 20 - Encumbrances - and 21 -
Estoppel Certificates and Financial Statements - below.

               (d) Tenant violates the restrictions on Transfer set forth in
Section 14 - Assignment and Subletting.

               (e) Tenant ceases doing business as a going concern; makes an
assignment for the benefit of creditors; is adjudicated an insolvent, files a
petition (or files an answer admitting


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<PAGE>

the material allegations of a petition) seeking relief under any state or
federal bankruptcy or other statute, law or regulation affecting creditors'
rights; all or substantially all of Tenant's assets are subject to judicial
seizure or attachment and are not released within 30 days, or Tenant consents to
or acquiesces in the appointment of a trustee, receiver or liquidator for Tenant
or for all or any substantial part of Tenant's assets.

               (f) Tenant fails, within ninety (90) days after the commencement
of any proceedings against Tenant seeking relief under any state or federal
bankruptcy or other statute, law or regulation affecting creditors' rights, to
have such proceedings dismissed, or Tenant fails, within ninety (90) days after
an appointment, without Tenant's consent or acquiescence, of any trustee,
receiver or liquidator for Tenant or for all or any substantial part of Tenant's
assets, to have such appointment vacated.

               (g) Tenant fails to perform or comply with any provisions of this
Lease other than those described in (a) through (f) above, and does not fully
cure such failure within thirty (30) days after notice to Tenant or, if such
failure cannot be cured within such thirty (30)-day period, Tenant fails within
such thirty (30) day period to commence, and thereafter diligently proceed with,
all actions necessary to cure such failure as soon as reasonably possible but in
all events within ninety (90) days of such notice; provided, however, that if
Landlord in Landlord's reasonable judgment determines that such failure cannot
or will not be cured by Tenant within such ninety (90) days, then such failure
shall constitute an Event of Default immediately upon such notice to Tenant.

               (h) The occurrence of any Event of Default under any other lease
agreement between Tenant and Landlord or between Tenant and Silver Harmony, Inc.

        15.2 Remedies. Upon the occurrence of an Event of Default, Landlord
shall have the following remedies, which shall not be exclusive but shall be
cumulative and shall be in addition to any other remedies now or hereafter
allowed by law:

               (a) Landlord may terminate Tenant's rights to possession of the
Premises at any time by written notice to Tenant. Tenant expressly acknowledges
that in the absence of such written notice from Landlord, no other act of
Landlord, including re-entry into the Premises, efforts to relet the Premises,
reletting of the Premises for Tenant's account, storage of Tenant's personal
property and Trade Fixtures, acceptance of keys to the Premises from Tenant or
exercise of any other rights and remedies under this Section, shall constitute
an acceptance of Tenant's surrender of the Premises or constitute a termination
of this Lease or of Tenant's right to possession of the Premises. Upon such
termination in writing of Tenant's right to possession of the Premises, as
herein provided, this Lease shall terminate and Landlord shall be entitled to
recover damages from Tenant as provided in California Civil Code Section 1951.2
and any other applicable existing or future Law providing for recovery of
damages for such breach, including the worth at the time of award of the amount
by which the rent which would be payable by Tenant hereunder for the remainder
of the Term after the date of the award of damages, including Additional Rent as
reasonably estimated by Landlord, exceeds the amount of such rental loss as
Tenant proves could have been reasonably avoided, discounted at the discount
rate


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<PAGE>

published by the Federal Reserve Bank of San Francisco for member banks at the
time of the award plus one percent (1%).

               (b) Landlord shall have the remedy described in California Civil
Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant's
breach and abandonment and recover rent as it becomes due, if Tenant has the
right to sublet or assign, subject only to reasonable limitations).

               (c) Landlord may cure the Event of Default at Tenant's expense.
If Landlord pays any sum or incurs any expense in curing the Event of Default,
Tenant shall reimburse Landlord upon demand for the amount of such payment or
expense with interest at the Interest Rate from the date the sum is paid or the
expense is incurred until Landlord is reimbursed by Tenant.

               (d) Landlord may remove all Tenant's property from the Premises,
and such property may be stored by Landlord in a public warehouse or elsewhere
at the sole cost and for the account of Tenant. If Landlord does not elect to
store any or all of Tenant's property left in the Premises, Landlord may
consider such property to be abandoned by Tenant, and landlord may thereupon
dispose of such property in any manner deemed appropriate by Landlord. Any
proceeds realized by Landlord on the disposal of any such property shall be
applied first to offset all expenses of storage and sale, and then credited
against Tenant's outstanding obligations to Landlord under this Lease, and any
balance remaining after satisfaction of all obligations of Tenant under this
Lease shall be delivered to Tenant.

16.     LATE CHARGE AND INTEREST.

        16.1 Late Charge. If any payment of rent is not received by Landlord
when due, Tenant shall pay to Landlord on demand as a late charge an additional
amount equal to ten percent (10%) of the overdue payment. Tenant acknowledges
that late payment by Tenant to Landlord of rental or other amounts due hereunder
will cause Landlord to incur costs not contemplated by this Lease, including,
without limitation, processing and accounting charges and late charges which may
be imposed on Landlord by the terms of any loan relating to the Project. Tenant
further acknowledges that it is extremely difficult and impractical to fix the
exact amount of such costs and that the late charge set forth in this Section
16.1 represents a fair and reasonable estimate thereof. Acceptance of any late
charge by Landlord shall not constitute a waiver of Tenant's default with
respect to overdue rental or other amounts, nor shall such acceptance prevent
Landlord from exercising any other rights and remedies available to it.
Acceptance of rent or other payments by Landlord shall not constitute a waiver
of late charges or interest accrued with respect to such rent or other payments
or any prior installments thereof, nor of any other defaults by Tenant, whether
monetary or non-monetary in nature, remaining uncured at the time of such
acceptance of rent or other payments. A late charge shall not be imposed more
than once on any particular installment not paid when due, but imposition of a
late charge on any payment not made when due does not eliminate or supersede
late charges imposed on other (prior) payments not made when due or preclude
imposition of a late charge on other installments or payments not made when due.


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<PAGE>

        16.2 Interest. In addition to the late charges referred to above, which
are intended to defray Landlord's costs resulting from late payments, any
payment from Tenant to Landlord not paid when due shall at Landlord's option
bear interest from the date due until paid to Landlord by Tenant at the rate of
fifteen percent (15%) per annum or the maximum lawful rate that Landlord may
charge to Tenant under applicable laws, whichever is less (the "INTEREST RATE").
Acceptance of any late charge and/or interest shall not constitute a waiver of
Tenant's default with respect to the overdue sum of prevent Landlord from
exercising any of its other rights and remedies under this Lease.

17.     WAIVER

No provisions of this Lease shall be deemed waived by either party unless such
waiver is in a writing signed by the waiving party. The waiver by either party
of any breach of any provision of this Lease shall not be deemed a waiver of
such provision or of any subsequent breach of the same or any other provision of
this Lease. No delay or omission in the exercise of any right or remedy of
Landlord upon any default by Tenant shall impair such right or remedy or be
construed as a waiver. Landlord's acceptance of any payments of rent due under
this Lease shall not be deemed a waiver of any default by Tenant under this
Lease (including Tenant's recurrent failure to timely pay rent) other than
Tenant's nonpayment of the accepted sums, and no endorsement or statement on any
check or payment or in any letter or document accompanying any check or payment
shall be deemed an accord and satisfaction. Landlord's consent to or approval of
any act by Tenant requiring Landlord's consent or approval shall not be deemed
to waive or render unnecessary Landlord's consent to or approval of any
subsequent act by Tenant.

18.     ENTRY, INSPECTION AND CLOSURE.

Upon reasonable oral or written notice to Tenant (and without notice in
emergencies), Landlord and its authorized representatives may enter the Premises
at all reasonable times to: (a) determine whether the Premises are in good
condition, (b) determine whether Tenant is complying with its obligations under
this Lease, (c) perform any maintenance or repair of the Premises or the
Building that Landlord has the right or obligation to perform, (d) install or
repair improvements for other tenants where access to the Premises is required
for such installation or repair, (e) serve, post or keep posted any noticed
required or allowed under the provisions of this Lease, (f) show the Premises to
prospective brokers, agents, buyers, transferees, Mortgagees or tenants, or (g)
do any other act or thing necessary for the safety or preservation of the
Premises or the Building. When reasonably necessary Landlord may temporarily
close entrances, doors, corridors, elevators or other facilities in the Building
without liability to Tenant by reason of such closure. Landlord shall conduct
its activities under this Section in a manner that will minimize inconvenience
to Tenant without incurring additional expense to Landlord. In no event shall
Tenant be entitled to an abatement of rent on account of any entry by Landlord,
and Landlord shall not be liable in any manner for any inconvenience, loss of
business or other damage to Tenant or other persons arising out of Landlord's
entry on the Premises in accordance with this Section. No action by Landlord
pursuant to this paragraph shall constitute an eviction of Tenant, constructive
otherwise, entitle Tenant to an abatement of rent or to terminate this Lease or
otherwise release Tenant from any of Tenant's obligations under this Lease.


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<PAGE>

19.     SURRENDER AND HOLDING OVER.

        19.1 Surrender. Upon the expiration or termination of this Lease, Tenant
shall surrender the Premises and all Tenant Improvements and Alterations to
Landlord broom-clean and in their original condition at the commencement of the
Term of this Lease or later installation, except for reasonable wear and tear,
damage from casualty or condemnation and any changes resulting from approved
Alterations; provided, however, that prior to the expiration or termination of
this Lease Tenant shall remove all telephone and other cabling installed in the
Building by Tenant and remove from the Premises all Tenant's personal property
and any Trade Fixtures and all Alterations that Landlord has elected to require
Tenant to remove as provided in Section 6.1 - Tenant Improvements & Alterations,
and repair any damage caused by such removal. If such removal is not completed
before the expiration or termination of the Term, Landlord shall have the right
(but no obligation) to remove the same, and Tenant shall pay Landlord on demand
for all costs of removal and storage thereof and for the rental value of the
Premises for the period from the end of the Term through the end of the time
reasonably required for such removal. Landlord shall also have the right to
retain or dispose of all or any portion of such property if Tenant does not pay
all such costs and retrieve the property within ten (10) days after notice from
Landlord (in which event title to all such property described in Landlord's
notice shall be transferred and vest in Landlord). Tenant waives all Claims
against Landlord for any damage or loss to Tenant resulting from Landlord's
removal, storage, retention, or disposition of any such property. Upon
expiration or termination of this Lease or of Tenant's possession, whichever is
earliest, Tenant shall surrender all keys to the Premises or any other part of
the Building and shall deliver to Landlord all keys for or make known to
Landlord the combination of locks on all safes, cabinets, and vaults that may be
located in the Premises. Tenant's obligations under this Section shall survive
the expiration or termination of this Lease.

        19.2 Holding Over. If Tenant (directly or through any Transferee or
other successor-in-interest of Tenant) remains in possession of the Premises
after the expiration or termination of this Lease, Tenant's continued possession
shall be on the basis of a tenancy at the sufferance of Landlord. No act or
omission by Landlord, other than its specific written consent, shall constitute
permission for Tenant to continue in possession of the Premises, and if such
consent is given or declared to have been given by a court judgment, Landlord
may terminate Tenant's holdover tenancy at any time upon seven (7) days written
notice. In such event, Tenant shall continue to comply with or perform all the
terms and obligations of Tenant under this Lease, except that the monthly Base
Rent during Tenant's holding over shall be twice the Base Rent payable in the
last full month prior to the termination hereof. Acceptance by Landlord of rent
after such termination shall not constitute a renewal or extension of this
Lease; and nothing contained in this provision shall be deemed to waive
Landlord's right of re-entry or any other right hereunder or at law. Tenant
shall indemnify, defend and hold Landlord harmless from and against all Claims
arising or resulting directly or indirectly from Tenant's failure to timely
surrender the Premises, including (i) any rent payable by or any loss, cost, or
damages claimed by any prospective tenant of the Premises, and (ii) Landlord's
damages as a result of such prospective tenant rescinding or refusing to enter
into the prospective lease of the Premises by reason of such failure to timely
surrender the Premises.


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<PAGE>

20.     ENCUMBRANCES.

        20.1 Subordination. This Lease is expressly made subject and subordinate
to any mortgage lien, deed of trust, ground lease, underlying lease or like
encumbrance affecting any part of the Property or any interest of Landlord
therein which is now existing or hereafter executed or recorded ("ENCUMBRANCE");
provided, however, that such subordination shall only be effective, as to future
Encumbrances, if the holder of the Encumbrance agrees that this Lease shall
survive the termination of the Encumbrance by lapse of time, foreclosure or
otherwise so long as Tenant is not in default under this Lease. Provided the
conditions of the preceding sentence are satisfied, Tenant shall execute and
deliver to Landlord, within ten (10) days after written request therefore by
Landlord and in a form reasonably requested by Landlord, any additional
documents evidencing the subordination of this Lease with respect to any such
Encumbrance and the nondisturbance agreement of the holder of any such
Encumbrance. If the interest of Landlord in the Property is transferred pursuant
to or in lieu of proceedings for enforcement of any Encumbrance, Tenant shall
immediately and automatically attorn to the new owner, and this Lease shall
continue in full force and effect as a direct lease between the transferee and
Tenant on the terms and conditions set forth in this Lease.

        20.2 Mortgagee Protection. Tenant agrees to give any holder of any
Encumbrance covering any part of the Property ("MORTGAGEE"), by registered mail,
a copy of any notice of default served upon Landlord, provided that prior to
such notice Tenant has been notified in writing (by way of notice of assignment
of rents and leases, or otherwise) of the address of such Mortgagee. If Landlord
shall have failed to cure such default within thirty (30) days from the
effective date of such notice of default, the Mortgagee shall have an additional
thirty (30) days within which to cure such default or if such default cannot be
cured within that time, then such additional time as may be necessary to cure
such default (including the time necessary to foreclose or otherwise terminate
its Encumbrance, if necessary to effect such cure), and this Lease shall not be
terminated so long as such remedies are being diligently pursued.

21.     ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

        21.1 Estoppel Certificates. Within ten (10) days after written request
therefor, either party shall execute and deliver to the other in a commercially
reasonable form provided by the requesting party, a certificate stating that
this Lease is in full force and effect, describing any amendments or
modifications hereto, acknowledging that this Lease is subordinate or prior, as
the case may be, to any Encumbrance and stating any other information Landlord
or Tenant may reasonably request, including the Term, the monthly Base Rent, the
date to which Rent has been paid, the amount of any security deposit or prepaid
rent, whether either party hereto is in default under the terms of the Lease,
and whether Landlord has completed its construction obligations hereunder (if
any). Tenant irrevocably constitutes, appoints and authorizes Landlord as
Tenant's special attorney-in-fact for such purpose to complete, execute and
deliver such certificate if Tenant fails timely to execute and delivery such
certificate as provided above. Any person or entity purchasing, acquiring an
interest in or extending financing with respect to the Property shall be
entitled to rely upon any such certificate. If Tenant fails to deliver such
certificate within ten (10) days after Landlord's second written request
therefore, Tenant shall be liable to Landlord for any damages incurred by
Landlord including any profits or other benefits from any


                                       29

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

financing of the Property or any interest therein which are lost or made
unavailable as a result, directly or indirectly, of Tenant's failure or refusal
to timely execute or deliver such estoppel certificate.

        21.2 Financial Statements. Within ten (10) days after written request
therefore, but not more than once a year, Tenant shall deliver to Landlord a
copy of the financial statements (including at least a year end balance sheet
and a statement of profit and loss) of Tenant (and of each guarantor of Tenant's
obligations under this Lease) for each of the three most recently completed
years, prepared in accordance with generally accepted accounting principles
(and, if such is Tenant's normal practice, audited by an independent certified
public accountant), all then available subsequent interim statements, and such
other financial information as may reasonably be requested by Landlord or
required by any Mortgagee.

22.     NOTICES

Any notice, demand, request, consent or approval that either party desires or is
required to give to the other party under this Lease shall be in writing and
shall be served personally, delivered by messenger or courier service, or sent
by U.S. certified mail, return receipt requested, postage prepaid, addressed to
the other party at the party's address for notices set forth in the Basic Lease
Information. Any notice required pursuant to any Laws may be incorporated into,
given concurrently with or given separately from any notice required under this
Lease. Notices shall be deemed to have been given and be effective on the
earlier of (a) receipt (or refusal of delivery or receipt); or (b) one (1) day
after acceptance by the independent service for delivery, if sent by independent
messenger or courier service, or three (3) business days after mailing if sent
by mail in accordance with this Section. Either party may change its address for
notices hereunder, effective fifteen (15) days after notice to the other party
complying with this Section. If Tenant sublets the Premises, notices from
Landlord shall be effective on the subtenant when given to Tenant pursuant to
this Section.

23.     ATTORNEY'S FEES

In the event of any dispute between Landlord and Tenant in any way related to
this Lease, and whether involving contract and/or tort claims, the
non-prevailing party shall pay to the prevailing party all reasonable attorneys'
fees and costs and expenses of any type, without restriction by statute, court
rule or otherwise, incurred by the prevailing party in connection with any
action or proceeding (including any appeal and the enforcement of any judgment
or award), whether or not the dispute is litigated or prosecuted to final
judgment (collectively, "FEES"). The "prevailing party" shall be determined
based upon an assessment of which party's major arguments or positions taken in
the action or proceeding could fairly be said to have prevailed (whether by
compromise, settlement, abandonment by the other party of its claim or defense,
final decision, after any appeals, or otherwise) over the other party's major
arguments or positions on major disputed issues. Any Fees incurred in enforcing
a judgment shall be recoverable separately from any other amount included in the
judgment and shall survive and not be merged in the judgment. The Fees shall be
deemed an "actual pecuniary loss" within the meaning of the Bankruptcy Code
Section 365(b)(1)(B), and notwithstanding the foregoing, all Fees incurred by
either party in any bankruptcy case filed by or against the other party, from
and


                                       30

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

after the order for relief until this Lease is rejected or assumed in such
bankruptcy case, will be "obligations of the debtor" as that phrase is used in
Bankruptcy Code Section 365(d)(3).

24.     QUIET POSSESSION

Subject to Tenant's full and timely performance of all of Tenant's obligations
under this Lease and subject to the terms of this Lease, including Section 20 -
Encumbrances, Tenant shall have the quiet possession of the Premises throughout
the Term as against any persons or entities lawfully claiming by, through or
under Landlord.

25.     SECURITY MEASURES

Landlord may, but shall be under no obligation to, implement security measures
for the Property, such as the registration or search of all persons entering or
leaving the Building, requiring identification for access to the Building,
evacuation of the Building for cause, suspected cause, or for drill purposes,
the issuance of magnetic pass cards or keys for Building or elevator access and
other actions that Landlord deems necessary or appropriate to prevent any threat
of property loss or damage, bodily injury or business interruption; provided,
however, that such measures shall be implemented in a way as not to
inconvenience tenants of the Building unreasonably. If Landlord uses an access
card system, Landlord may require Tenant to pay Landlord a deposit for each
after-hours Building access card issued to Tenant, in an amount specified by
Landlord. Tenant shall be responsible for any loss, theft or breakage of any
such cards, which must be returned by Tenant to Landlord upon expiration or
earlier termination of the Lease. Landlord may retain the deposit for any card
not so returned. Landlord shall at all times have the right to change, alter or
reduce any such security services or measures. Tenant shall cooperate and comply
with, and cause Tenant's Representatives and Visitors to cooperate and comply
with, such security measures. Landlord, its agents and employees shall have no
liability to Tenant or its Representatives or Visitors for the implementation or
exercise of, or the failure to implement or exercise, any such security measures
or for any resulting disturbance of Tenant's use or enjoyment of the Premises.

26.     FORCE MAJEURE

If either party is delayed, interrupted or prevented from performing any of its
obligations under this Lease, including its obligations under the Construction
Rider (if any), and such delay, interruption or prevention is due to fire, act
of God, governmental act or failure to act, labor dispute unavailability of
materials or any cause outside the reasonable control of such party, then the
time for performance of the affected obligations of such party shall be extended
for a period equivalent to the period of such delay, interruption or prevention,
provided, however that Tenant's obligations to make any payments under this
Lease are not subject to this Section 26.

27.     RULES AND REGULATIONS

Tenant shall be bound and shall comply with the rules and regulations attached
to and made a part of this Lease as Exhibit C to the extent those rules and
regulations are not in conflict with the terms of this Lease, as well as any
reasonable rules and regulations hereafter adopted by


                                       31

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

Landlord for all tenants of the Building, upon notice to Tenant thereof
(collectively, the "BUILDING RULES"). Landlord shall not be responsible to
Tenant or to any other person for any violation, or failure to observe, the
Building Rules by any other tenant or other person.

28.     LANDLORD'S LIABILITY

The term "Landlord," as used in this Lease, shall mean only the owner or owners
of the Building at the time in question. In the event of any conveyance of title
to the Building, then from and after the date of such conveyance, the transferor
Landlord shall be relieved of all liability with respect to Landlord's
obligations to be performed under this Lease after the date of such conveyance.
Notwithstanding any other term or provision of this Lease, the liability of
Landlord for its obligations under this Lease is limited solely to Landlord's
interest in the Building as the same may from time to time be encumbered, and no
personal liability shall at any time be asserted or enforceable against any
other assets of Landlord or against Landlord's partners or members or its or
their respective partners, shareholders, members, directors, officers or
managers on account of any of Landlord's obligation or actions under this Lease.

29.     CONSENT AND APPROVALS

        29.1 Determination in Good Faith. Wherever the consent, approval,
judgment or determination of Landlord is required or permitted under this Lease,
Landlord may exercise its good faith business judgment in granting or
withholding such consent or approval or in making such judgment or determination
without reference to any extrinsic standard of reasonableness, unless the
specific provision contained in this Lease providing for such consent, approval,
judgment or determination specifies that Landlord's consent or approval is not
to be unreasonably withheld, or that such judgment or determination is to be
reasonable, or otherwise specifies the standards under which Landlord may
withhold its consent. If it is determined that Landlord failed to give its
consent where it was required to do so under this Lease, Tenant shall be
entitled to injunctive relief but shall not to be entitled to monetary damages
or to terminate this Lease for such failure.

        29.2 No Liability Imposed on Landlord. The review and/or approval by
Landlord of any item or matter to be reviewed or approved by Landlord under the
terms of this Lease or any Exhibits or Addenda hereto shall not impose upon
Landlord any liability for the accuracy of sufficiency of any such item or
matter or the quality or suitability of such item for its intended use. Any such
review or approval is for the sole purpose of protecting Landlord's interest in
the Property, and no third parties, including Tenant or the Representatives and
Visitors of Tenant or any person or entity claiming by, through or under Tenant,
shall have any rights as a consequence thereof.

30.     WAIVER OF RIGHT TO JURY TRIAL

Landlord and Tenant waive their respective rights to trial by jury of an
contract or tort claim, counterclaim, cross-complaint, or cause of action in any
action, proceeding, or hearing brought by either party against the other on any
matter arising out of or in any way connected with this Lease, the relationship
of Landlord and Tenant, or Tenant's use or occupancy of the Premises,


                                       32

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

including any claim of injury or damage or the enforcement of any remedy under
any current or future law, statute, regulation, code, or ordinance.

31.     BROKERS

Landlord shall pay the fee or commission of the broker or brokers identified in
the Base Lease Information (the "BROKER") in accordance with Landlord's separate
written agreement with the Broker, if any. Tenant warrants and represents to
Landlord that in the negotiating or making of this Lease neither Tenant nor
anyone acting on Tenant's behalf has dealt with any broker or finder who might
be entitled to a fee or commission for this Lease other than the Broker. Tenant
shall indemnify and hold Landlord harmless from any claim or claims, including
costs, expenses and attorney's fees incurred by Landlord asserted by any other
broker or finder for a fee or commission based upon any dealings with or
statements made by Tenant or Tenant's Representatives.

32.     FIRST OFFER

If the premises known as 177 Bovet Road, Suite 350 become available to lease,
Landlord will notify Tenant before Landlord makes such premises generally
available for lease, and Tenant will have the right to make an offer to lease
such space from Landlord. Landlord will not, however, have any obligation to
accept such offer or to delay in making the premises generally available to
lease while awaiting, considering or negotiating any such offer.

33.     ENTIRE AGREEMENT

This Lease, including the Exhibits and any Addenda attached hereto, and the
documents referred to herein, if any, constitutes the entire agreement between
Landlord and Tenant with respect to the leasing of space by Tenant in the
Building, and supersedes all prior or contemporaneous agreements,
understandings, proposals and other representations by or between Landlord and
Tenant, whether written or oral, all of which are merged herein. Neither
Landlord nor Landlord's agents have made any representations or warranties with
respect to the Premises, the Building, the Project or this Lease except as
expressly set forth herein, and no rights, easements or licenses shall be
acquired by Tenant by implication or otherwise unless expressly set forth
herein. The submission of this Lease for examination does not constitute an
option for the Premises and this Lease shall become effective as a binding
agreement only upon execution and delivery thereof by Landlord to Tenant.

34.     MISCELLANEOUS

This Lease may not be amended or modified except by a writing signed by Landlord
and Tenant. Subject to Section 14 - Assignment and Subletting and Section 28 -
Landlord's Liability, this Lease shall be binding on and shall inure to the
benefit of the parties and their respective successors, assigns and legal
representatives. The determination that any provisions hereof may be void,
invalid, illegal or unenforceable shall not impair any other provisions hereof
and all such other provisions of this Lease shall remain in full force and
effect. The unenforceability,


                                       33

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

invalidity or illegality of any provision of this Lease under particular
circumstances shall not render unenforceable, invalid or illegal other
provisions of this Lease, or the same provisions under other circumstances. This
Lease shall be construed and interpreted in accordance with the laws (excluding
conflict of laws principles) of the State in which the Building is located. The
provisions of this Lease shall be construed in accordance with the fair meaning
of the language used and shall not be strictly construed against either party,
even if such party drafted the provision in question. When required by the
context of this Lease, the singular includes the plural. Wherever the term
"including" is used in this Lease, it shall be interpreted as meaning
"including, but not limited to" the matter or matters thereafter enumerated. The
captions contained in this Lease are for purposes of convenience only and are
not to be used to interpret or construe this Lease. If more than one person or
entity is identified as Tenant hereunder, the obligations of each and all of
them under this Lease shall be joint and several. Time is of the essence with
respect to this Lease, except as to the conditions relating to the delivery of
possession of the Premises to Tenant. Neither Landlord nor Tenant shall record
this Lease.

35.     AUTHORITY

If Tenant is a corporation, partnership, limited liability company or other form
of business entity, each of the persons executing this Lease on behalf of Tenant
warrants and represents that Tenant is a duly organized and validly existing
entity, that Tenant has full right and authority to enter into this Lease and
that the persons signing on behalf of Tenant are authorized to do so and have
the power to bind Tenant to this Lease. Tenant shall provide Landlord upon
request with evidence reasonably satisfactory to Landlord confirming the
foregoing representations.

36.     DIGITAL LASER COMMUNICATIONS DEVICES

Tenant has installed digital laser communications devices on the roofs of the 66
Bovet building, the 155 Bovet building and the Building. If Landlord requests
Tenant to remove such devices, Tenant will remove such devices on or before the
termination of this Lease and repair any damage caused by the removal of such
devices.

        IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as
of the date first above written.

LANDLORD                                TENANT
CASIOPEA VENTURE CORPORATION
By: Rim Pacific Management, Inc.        DIGITAL IMPACT, INC.,
Its:  Authorized Agent                  a Delaware corporation

                                        By:_____________________________________
____________________________________
By:                                     Its:____________________________________
Its:

Date:_______________________________    Date:___________________________________





                                       34

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

By:_______________________________

Its:______________________________

Date:_____________________________




                                       2

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

                                    EXHIBIT A

                        ATTACHED TO AND FORMING A PART OF
                                 LEASE AGREEMENT
                           DATED AS OF MARCH 27, 2002
                                     BETWEEN
                   CASIOPEA VENTURE CORPORATION, AS LANDLORD,
                                       AND
                    DIGITAL IMPACT, INC., AS TENANT ("LEASE")


                                  THE PREMISES
-------------------------------------------------------------------------------



                               Exhibit A, Page 1

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

                                    EXHIBIT B

                        ATTACHED TO AND FORMING A PART OF
                                 LEASE AGREEMENT
                           DATED AS OF MARCH 27, 2002
                                     BETWEEN
                   CASIOPEA VENTURE CORPORATION, AS LANDLORD,
                                       AND
                    DIGITAL IMPACT, INC., AS TENANT ("LEASE")


                               CONSTRUCTION RIDER

        1. Tenant's Election to Lease Premises "AS IS". Tenant has thoroughly
examined and inspected the Premises and has elected to lease the Premises on the
terms set forth in the Lease on a strictly "AS IS", WHERE IS and WITH ALL FAULTS
and Landlord has no obligation to perform or to contribute toward the cost of
any renovation or refurbishment or other work to prepare the Premises for use or
occupancy by Tenant under this Lease.

        2. Tenant Improvements. Subject to the contribution limits set forth in
Section 2.1 below, Tenant shall with reasonable diligence through a contractor
approved by Landlord perform tenant improvement work approved by Landlord
("TENANT IMPROVEMENTS").

               2.1 Cost of Tenant Improvements. Landlord shall contribute up to
a maximum of $15 per rentable square foot in the Premises toward the cost of the
construction and installation of the Tenant Improvements that are completed and
invoiced no later than one hundred twenty (120) days after the Commencement
Date. As a condition to Landlord's obligation to contribute to the cost of the
work, Tenant must provide Landlord with copies of all invoices for the work for
which Tenant is seeking payment and provide lien waivers with respect to such
work.

        3. Ownership of Tenant Improvements. All Tenant Improvements, whether
installed by Landlord or Tenant, shall become a part of the Premises, shall be
the property of Landlord and, subject to the provisions of the Lease, shall be
surrendered by Tenant with the Premises, without any compensation to Tenant, at
the expiration or termination of the Lease in accordance with the provisions of
the Lease. At Landlord's request, Tenant will remove such Tenant Improvements
designated by Landlord and restore the portion of the Premises affected by such
removal to their condition before such Tenant Improvements were made.



                               Exhibit B, Page 1

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

                                    EXHIBIT C

                        ATTACHED TO AND FORMING A PART OF
                                 LEASE AGREEMENT
                           DATED AS OF MARCH 27, 2002
                                     BETWEEN
                   CASIOPEA VENTURE CORPORATION, AS LANDLORD,
                                       AND
                    DIGITAL IMPACT, INC., AS TENANT ("LEASE")


                                 BUILDING RULES

        The following Building Rules are additional provisions of the foregoing
Lease to which they are attached. The capitalized terms used herein have the
same meaning as these terms are given in the Lease.

        1. Use of Common Areas. Tenant will not obstruct the sidewalks, halls,
passages, exits, entrances, elevators or stairways of the Building ("COMMON
AREAS"), and Tenant will not use the Common Areas for any purpose other than
ingress and egress to and from the Premises. The Common Area, except for the
sidewalks, are not open to the general public and Landlord reserves the right to
control and prevent access to the Common Areas of any person whose presence, in
Landlord's opinion, would be prejudicial to the safety, reputation and interests
of the Building and its tenants.

        2. No Access to Roof. Tenant has no right of access to the roof the
Building and will not install, repair or replace any antenna, aerial, aerial
wires, fan, air-conditioner or other device on the roof of the Building, without
the prior written consent of Landlord. Any such device installed without such
written consent is subject to removal at Tenant's expense without notice at any
time. In any event Tenant will be liable for any damages or repairs incurred or
required as a result of its installation, use, repair, maintenance or removal of
such devices on the roof and agrees to indemnify and hold harmless Landlord form
any liability, loss, damage, cost or expense, including reasonable attorneys'
fees, arising from any activities of Tenant or of Tenant's Representatives on
the roof of the Building.

        3. Signage. No sign, placard, picture, name, advertisement or notice
visible from the exterior of the Premises will be inscribed, painted, affixed or
otherwise displayed by Tenant on or in any part of the Building without the
prior written consent of Landlord. Landlord reserves the right to adopt and
furnish Tenant with general guidelines relating to signs in or on the Building.
All approved signage will be inscribed, painted or affixed at Tenant's expense
by a person approved by Landlord, which approval will not be unreasonably
withheld.

        4. Prohibited Uses. The premises will not be used for manufacturing, for
the storage of merchandise held for sale to the general public, for lodging or
for the sale of goods to the general public. Tenant will not permit any food
preparation on the Premises except that Tenant


                               Exhibit C, Page 1

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

may use Underwriters' Laboratory approved equipment for brewing coffee, tea, hot
chocolate and similar beverages so long as such use is in accordance with all
applicable federal, state and city laws, codes, ordinances, rules and
regulations.

        5. Janitorial Services. Tenant will not employ any person for the
purpose of cleaning the Premises or permit any person to enter the Building for
such purpose other than Landlord's janitorial service, except with Landlord's
prior written consent. Tenant will not necessitate, and will be liable for the
cost of, any undue amount of janitorial labor by reason of Tenant's carelessness
in or indifference to the preservation of good order and cleanliness in the
Premises. Janitorial service will not be furnished to areas in the Premises on
nights when such areas are occupied after 9:30 p.m., unless such service is
extended by written agreement to a later hour in specifically designated areas
of the Premises.

        6. Keys and Locks. Landlord shall at its expense provide a lock set and
two keys for each corridor door entering the tenant's premises. Landlord may
make a reasonable charge for any additional or replacement keys. Tenant will not
duplicate any keys, alter any locks or install any new or additional lock or
bolt on the door of its Premises or on any other part of the Building without
the prior written consent of Landlord and, in any event, Tenant will provide
Landlord with a key for any such lock. On the termination of the Lease, Tenant
will deliver to Landlord all keys to any locks or doors in the Building which
have been obtained by Tenant.

        7. Freight. Upon not less than twenty-four hours prior notice to
Landlord, which notice may be oral, an elevator will be made available for
Tenant's use for transportation of freight, subject to such scheduling as
Landlord in its discretion deems appropriate. Tenant shall not transport freight
in loads exceeding the weight limitations of such elevator. Landlord reserves
the right to prescribe the weight, size and position of all equipment,
materials, furniture or other property brought into the Building, and no
property will be received in the Building or carried up or down the freight
elevator or stairs except during such hours and along such routes and by such
persons as may be designated by Landlord. Landlord reserves the right to require
that heavy objects will stand on wood strips of such length and thickness as is
necessary to properly distribute the weight. Landlord will not be responsible
for loss of or damage to any such property from any cause, and Tenant will be
liable for all damage or injuries caused by moving or maintaining such property.

        8. Nuisances and Dangerous Substances. Tenant will not conduct itself or
permit Tenant's Representatives or Visitors to conduct themselves, in the
Premises or anywhere on or in the Property in a manner which is offensive or
unduly annoying to any other Tenant or Landlord's property managers. Tenant will
not permit alcohol to be consumed in the Premises and will not permit its
employees, agents and licensees to consume alcohol anywhere in the Project.
Tenant will not install or operate any phonograph, radio receiver, musical
instrument, or television or other similar device in any part of the Common
Areas and shall not operate any such device installed in the Premises in such
manner as to disturb or annoy other tenants of the Building. Tenant will not use
or keep in the Premises or the Property any kerosene, gasoline or other
combustible fluid or material other than limited quantities thereof reasonably
necessary for the maintenance of office equipment, or, without Landlord's prior
written approval, use any method of heating or air conditioning other than that
supplied by Landlord. Tenant will not use


                               Exhibit C, Page 2

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

or keep any foul or noxious gas or substance in the Premises or permit or suffer
the Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Building by reason of noise, odors or
vibrations, or interfere in any way with other tenants or those having business
therein. Tenant will not bring or keep any animals in or about the Premises or
the Property.

        9. Building Name and Address. Without Landlord's prior written
permission, Tenant will not use the name of the Building in connection with or
in promoting or advertising Tenant's business except as Tenant's address.

        10. Building Directory. A directory for the Building will be provided
for the display of the name and location of tenants. Landlord reserves the right
to approve any additional names Tenant desires to place in the directory and, if
so approved, Landlord may assess a reasonable charge for adding such additional
names.

        11. Window Coverings. No curtains, draperies, blinds, shutters, shades,
awnings, screens or other coverings, window ventilators, hangings, decorations
or similar equipment shall be attached to, hung or placed in, or used in or with
any window of the Building without the prior written consent of Landlord, and
Landlord shall have the right to control all lighting within the Premises that
may be visible from the exterior the Building.

        12. Floor Coverings. Tenant will not lay or otherwise affix linoleum,
tile, carpet or any other floor covering to the floor of the Premises in any
manner except as approved in writing by Landlord. Tenant will be liable for the
cost of repair of any damage resulting from the violation of this rule or the
removal of any floor covering by Tenant or its contractors, employees or
invitees.

        13. Wiring and Cabling Installation. Landlord will direct Tenant's
electricians and other vendors as to where and how data, telephone, and
electrical wires and cables are to be installed. No boring or cutting for wires
or cables will be allowed without the prior written consent of Landlord. The
location of burglar alarms, smoke detectors, telephones, call boxes and other
office equipment affixed to the Premises shall be subject to the written
approval of Landlord.

        14. Office Closing Procedures. Tenant will see that the doors of the
Premises are closed and locked and that all water faucets, water apparatus and
utilities are shut off before Tenant or its employees leave the Premises, so as
to prevent waste and damage. Tenant will be liable for all damage or injuries
sustained by other tenants or occupants of the Building or Landlord resulting
from Tenant's carelessness in this regard or violation of this rule. Tenant will
keep the doors to the Building corridors closed at all times except for ingress
and egress.

        15. Plumbing Facilities. The toilet rooms, toilets, urinals, wash bowls
and other apparatus shall not be used for any purpose other than that for which
they were constructed and no foreign substance of any kind whatsoever shall be
disposed of therein. Tenant will be liable for any breakage, stoppage or damage
resulting from the violation of this rule by Tenant, its employees or invitees.


                               Exhibit C, Page 3

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

        16. Use of Hand Trucks. Tenant will not use or permit to be used in the
Premises or in the Common Areas any hand trucks, carts or dollies except those
equipped with rubber tires and side guards or such other equipment as Landlord
may approve.

        17. Refuse. Tenant shall store all Tenant's trash and garbage within the
Premises or in other facilities designated by Landlord for such purpose. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of removing and disposing of
trash and garbage in the city in which the Building is located without being in
violation of any law or ordinance governing such disposal. All trash and garbage
removal shall be made in accordance with directions issued from time to time by
Landlord, only through such Common Areas provided for such purposes and at such
times as Landlord may designate. Tenant shall comply with the requirements of
any recycling program adopted by Landlord for the Building.

        18. Soliciting. Canvassing, peddling, soliciting and distribution of
handbills or any other written materials in the Building are prohibited, and
Tenant will cooperate to prevent the same.

        19. Parking. Tenant will use, and cause Tenant's Representatives and
Visitors to use, any parking spaces to which Tenant is entitled under the Lease
in a manner consistent with Landlord's directional signs and markings in the
Parking Facility. Specifically, but without limitation, Tenant will not park, or
permit Tenant's Representatives or Visitors to park, in a manner that impedes
access to and from the Building or the Parking Facility or that violates space
reservations for handicapped drivers registered as such with the California
Department of Motor Vehicles. Landlord may use such reasonable means as may be
necessary to enforce the directional signs and markings in the Parking Facility,
including but not limited to towing services, and Landlord will not be liable
for any damage to vehicles towed as a result of non-compliance with such parking
regulations.

        20. Fire, Security and Safety Regulations. Tenant will comply with all
safety, security, fire protection and evacuation measures and procedures
established by Landlord or any governmental agency.

        21. Responsibility for Theft. Tenant assumes any and all responsibility
for protecting the Premises from theft, robbery and pilferage, which includes
keeping doors locked and other means of entry to the Premises closed.

        22. Sales and Auctions. Tenant will not conduct or permit to be
conducted any sale by auction in, upon or from the Premises or elsewhere in the
Property, whether said auction be voluntary, involuntary, pursuant to any
assignment for the payment of creditors or pursuant to any bankruptcy or other
insolvency proceeding.

        23. Waiver of Rules. Landlord may waive any one or more of these
Building Rules for the benefit of any particular tenant or tenants, but no such
waiver by Landlord will be construed as a waiver of such Building Rules in favor
of any other tenant or tenants nor prevent


                               Exhibit C, Page 4

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

Landlord from thereafter enforcing these Building Rules against any or all of
the tenants of the Building.

        24. Effect on Lease. These Building Rules are in addition to, and shall
not be construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of the Lease. Violation of these Building
Rules constitutes a failure to fully perform the provisions of the Lease, as
referred to in Section 15.1 - "Events of Default".

        25. Non-Discriminatory Enforcement. Subject to the provisions of the
Lease (and the provision of other leases with respect to other tenants),
Landlord shall use reasonable efforts to enforce these Building Rules in a
non-discriminatory manner, but in no event shall Landlord have any liability for
any failure or refusal to do so (and Tenant's sole and exclusive remedy for any
such failure or refusal shall be injunctive relief preventing Landlord from
enforcing any of the Building Rules against Tenant in a manner that
discriminates against Tenant).

        26. Additional and Amended Rules. Landlord reserves the right to rescind
or amend these Building Rules and/or adopt any other and reasonable rules and
regulations as in its judgment may from time to time be needed for the safety,
care and cleanliness of the Building and for the preservation of good order
therein.




                               Exhibit C, Page 5

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

                                    EXHIBIT D

                        ATTACHED TO AND FORMING A PART OF
                                 LEASE AGREEMENT
                           DATED AS OF MARCH 27, 2002
                                     BETWEEN
                   CASIOPEA VENTURE CORPORATION, AS LANDLORD,
                                       AND
                    DIGITAL IMPACT, INC., AS TENANT ("LEASE")

                           ADDITIONAL PROVISIONS RIDER

37.     PARKING.

        (a) Tenant's Parking Rights. Landlord shall provide Tenant at no
additional cost to Tenant, on an unassigned and non-exclusive basis, for use by
Tenant and Tenant's Representatives and Visitors, at the users' sole risk,
ninety-seven (97) parking spaces in the Parking Facility. The parking spaces to
be made available to Tenant hereunder may contain a reasonable mix of spaces for
compact cars and up to ten percent (10%) of the unassigned spaces may also be
designated by Landlord as Building visitors' parking.

        (b) Availability of Parking Spaces. Landlord shall take reasonable
actions to ensure the availability of the parking spaces leased by Tenant, but
Landlord does not guarantee the availability of those spaces at all times
against the actions of other tenants of the Building and user of the Parking
Facility. Access to the Parking Facility may, at Landlord's option, be regulated
by card, pass, bumper sticker, decal or other appropriate identification issued
by Landlord. Landlord retains the right to revoke the parking privileges of any
user of the Parking Facility who violates the rules and regulations governing
use of the Parking Facility (and Tenant shall be responsible for causing any
employee of Tenant or other person using parking spaces allocated to Tenant to
comply with all parking rules and regulations).

        (c) Assignment and Subletting. Notwithstanding any other provision of
the Lease to the contrary and except as part of a sublease by Tenant of the
Premises, Tenant shall not assign its rights to the parking spaces or any
interest therein, or sublease or otherwise allow the use of all or any part of
the parking spaces to or by any other person, except with Landlord's prior
written consent, which may be granted or withheld by Landlord in its sole
discretion. In the event of any separate assignment or sublease of parking space
rights that is approved by Landlord, Landlord shall be entitled to receive, as
additional Rent hereunder, one hundred percent (100%) of any consideration
received by Tenant in connection with such assignment or sublease.

        (d) Condemnation, Damage or Destruction. In the event the Parking
Facility is the subject of a Condemnation, or is damaged or destroyed, and this
Lease is not terminated, and if in such event the available number of parking
spaces in the Parking Facility is permanently reduced, then Tenant's rights to
use parking spaces hereunder may, at the election of the Landlord, thereafter be
reduced in proportion to the reduction of the total number of parking



                               Exhibit D, Page 1

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

spaces in the Parking Facility, and the Monthly Parking Rental payable hereunder
shall be reduced proportionately. In such event, Landlord reserves the right to
reduce the number of parking spaces to which Tenant is entitled or to relocate
some or all of the parking spaces to which Tenant is entitled to other areas of
the Parking Facility.





                               Exhibit D, Page 2

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

                                    EXHIBIT E

                        ATTACHED TO AND FORMING A PART OF
                                 LEASE AGREEMENT
                           DATED AS OF MARCH 27, 2002
                                     BETWEEN
                   CASIOPEA VENTURE CORPORATION, AS LANDLORD,
                                       AND
                    DIGITAL IMPACT, INC., AS TENANT ("LEASE")


                              ASBESTOS NOTIFICATION

        In accordance with California law, we are providing you with information
concerning the presence of asbestos containing materials (ACM's) and certain
chemicals in Bovet Office Centre. California law also requires Tenants and
Contractors to give their respective employees, contractors, subcontractors,
agents, lessors and subtenants written notification regarding the presence of
ACM's in the buildings with in 15 days after receipt of such information.

        Many building construction materials and furnishings, when new, tend to
emit small amounts of gases, such as formaldehyde or urethane, that the State of
California has determined to be carcinogens and/or reproductive toxins. We have
implemented a policy of requiring all contractors to minimize the use of
hazardous chemicals in connection with work performed in the buildings.
Nevertheless, detectable amounts of such gases may be present in the building
air from time to time.

        Accordingly, we are providing the following warning in accordance with
Proposition 65 (Health and Safety Code Sections 25249.6 et seq.):

        WARNING: This building may contain chemicals known to the State of
        California to cause cancer or reproductive harm.

        ACM's pose no health risks unless they are broken up or disturbed so
that asbestos fibers may become airborne and are inhaled. Inhalation of asbestos
fibers has been associated with increased incidence of lung cancer,
mesothelioma, and respiratory disease. Therefore, any activity that could
disturb these materials must be taken with care and in accordance with
applicable laws, lease provisions, and the rules and regulations of Bovet Office
Centre.

        Asbestos surveys of both buildings in the Office Centre were performed
in 1988-89 by EnviroGroup, and in 1993 by H+GCL, both firms being highly
regarded environmental consultants.

        The 1988-98 surveys included inspections and samplings in certain areas
believed to be representative. Samples were analyzed by a polarized light
microscopy in accordance with procedures approved by the Environmental
Protection Agency. The only ACM identified was


                               Exhibit E, Page 1

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

vinyl flooring and the adhesive used to attach it to the floor. These materials
are located throughout both buildings (sometimes under carpets). The asbestos
fibers in these materials are believed to be fully bonded and encapsulated, so
they are not likely to become airborne unless they are sanded, sawed, cored or
broken up.

        The 1993 asbestos survey included a review of the 1988-89 survey reports
and inspections of representative areas, but no testing. The 1993 report states
that additional asbestos testing of roofing materials, pipe elbow packing,
acoustical ceiling tiles, gypsum board, and joint tape and joint compound may be
advisable prior to engaging in renovation, maintenance or demolition activities
affecting such materials. Accordingly, we require that any area scheduled for
construction activities affecting such materials be evaluated for potential
ACM's and that all suspect materials be tested for asbestos content. Only
certified asbestos consultants or EPA-accredited asbestos inspectors are
permitted to perform such evaluations.

        Only properly trained and equipped personnel are permitted to disturb
ACM in connection with repairs or remodeling. If more than 100 square foot of
ACM will be removed or disturbed, the work must be performed by a contractor
registered with Cal OSHA to perform asbestos-related work.

        In 1991, JMC Environmental & Occupational Health Services performed air
monitoring on the fourth floor of 177 Bovet Road in connection with floor
renovation activities. The results of Jam's testing demonstrated consistency
with our current building standard for airborne asbestos, which is <0.005
asbestos structures per cubic centimeter of air (s/cc), as measured by the state
of the art technology known as Transmission Electron Microscopy (TEM). The
concentration level identified as involving "no significant risk" under
regulations implementing Proposition 65 is not readily measurable. However, our
building standard is much more stringent than the current OSHA action level of
0.1 asbestos fibers per cubic centimeter (f/cc), as measured by Phase Contrast
Microscopy (a less accurate technique than TEM), and significantly lower than
the EPA clearance level of approximately 0.01 s/cc (by TEM) currently required
for schools.

        Casiopea Venture Corporation and Rim Pacific Management are committed to
maintaining a safe and pleasant physical working environment for all employees
and tenants at Bovet Office Centre.

        Copies of all asbestos survey and monitoring reports and test results
from air monitoring and bulk samplings of materials are available for your
inspection and photocopying at the building office.



                               Exhibit E, Page 2

________ Landlord's initials                          ________ Tenant's initials

<PAGE>

                                    EXHIBIT F

                        ATTACHED TO AND FORMING A PART OF
                                 LEASE AGREEMENT
                           DATED AS OF MARCH 27, 2002
                                     BETWEEN
                   CASIOPEA VENTURE CORPORATION, AS LANDLORD,
                                       AND
                    DIGITAL IMPACT, INC., AS TENANT ("LEASE")


                                LETTER OF CREDIT

38. LETTER OF CREDIT. Upon execution of this Lease, Tenant shall deliver to
Landlord an unconditional, irrevocable, transferable and negotiable standby
letter of credit (the "L/C") in an amount equal to seven hundred fifty dollars
($750,000) ("FACE AMOUNT"), issued by a bank or trust company ("ISSUER") and in
form and content acceptable to Landlord, in its sole and absolute discretion, as
additional security for the performance of Tenant's obligations under this
Lease. An L/C in the form attached hereto as Exhibit F-1 is hereby approved by
Landlord. The L/C shall name Landlord as beneficiary hereunder and provide that
draws, including partial draws, at Landlord's election, will be honored upon the
delivery to the Issuer of a certificate signed by Landlord, or its authorized
agent, that Tenant has failed to perform its obligations under the Lease. The
L/C shall also provide that it will be automatically extended upon each renewal
date unless the Issuer thereof delivers to Landlord, no later than forty-five
(45) days prior to the stated expiration date of the L/C, written notice of
Issuer's intent not to extend or renew the L/C. During any period that Tenant is
required to maintain the L/C, Tenant shall, at least thirty (30) days prior to
any expiration or termination of the L/C, provide Landlord either with written
confirmation that the existing L/C will be automatically extended and renewed or
with a new L/C that satisfies all of the requirements for the L/C in this
Section 38. In addition, upon a proposed sale or other transfer of any interest
in the Building, the Land, this Lease or Landlord (including consolidations,
mergers, or other entity changes), Tenant, at its sole cost and expense and upon
ten (10) Business Days' notice, shall, concurrent with Landlord's delivery to
Tenant of the then outstanding L/C, deliver to any such transferees, successors,
or assigns a replacement L/C on identical terms (except for the stated
beneficiary) from the same Issuer or another bank or trust company acceptable to
Landlord, in Landlord's sole discretion, naming the new landlord as the
beneficiary thereof. Tenant's failure to perform or observe any of the covenants
set forth in this Section 38 for any reason shall entitle Landlord to draw on
the full amount of the L/C and shall constitute an Event of Default under this
Lease without the requirement of any notice from Landlord. Any amount(s) drawn
under the L/C shall be held or used by Landlord in accordance with the terms of
Section 4 of the Lease.



                               Exhibit G, Page 1

________ Landlord's initials                          ________ Tenant's initials