Document:

<PAGE>   1
                                                                   Exhibit 10.16

[CB COMMERCIAL LOGO]                                            PLJ:cjk:11/03/97

ARTICLE ONE: BASIC TERMS

     This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the
Lease referred to in this Article One explain and define the Basic Terms and
are to be read in conjunction with the Basic Terms.

     Section 1.01. Date of Lease: November 24, 1997

     Section 1.02 Landlord (include legal entity): MV 1997, an L.L.C.

Address of Landlord: P.O. Box 1290
                     Seattle, WA 98111-1290

     Section 1.03.  Tenant (include legal entity): Humongous Entertainment
Inc., a Washington Corporation, a wholly owned subsidiary of GT Interactive
Software Corporation

Address of Tenant: 16932 Woodinville-Redmond Road NE, Suite 104
                   Woodinville, WA 98072

     Section 1.04. Property: (include street address, approximate square
footage and description)

Monte Villa Office Building             Approximately 65,586 Square Feet
Quadrant Monte Villa, Lot 1
Bothell, WA 98021                       Legal Description - See Exhibit A
                                        attached

     Section 1.05. Lease Term: Ten (10) years -0- months beginning on June 1,
1998 or such other date as specified in this Lease, and ending on May 31, 2008,
as adjusted pursuant to the Addendum.

     Section 1.06. Permitted Uses: (See Article Five) General office, software
assembly and distribution, and any other lawful purpose.

     Section 1.07. Tenant's Guarantor: (If none, so state) GT Interactive
Software Corporation

     Section 1.08. Brokers: (See Article Fourteen) (If none, so state)

Landlord's Broker: Colliers Macaulay Nicholls
Tenant's Broker: CB Commercial Real Estate Group, Inc.

     Section 1.09. Commission Payable to Landlord's Broker: (See Article
Fourteen) $ Per Separate Agreement

     Section 1.10. Initial Security Deposit: (See Section 3.03) $84,150.00
(Tenant may provide in the form of a Letter of Credit)

     Section 1.11.  Vehicle Parking Spaces Allocated to Tenant: 258

     Section 1.12. Rent and Other Charges Payable by Tenant:

     (a)

     (b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.02);
(ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section 4.04);
(iv) Maintenance, Repairs and Alterations (See Article Six).

     Section 1.13 Landlord's Share of Profit on Assignment or Sublease: (See
Section 9.05) Fifty percent (50%) of the Profit (the "Landlord's Share").

     Section 1.14. Riders: The following Riders are attached to and made a part
of this Lease: (if none, so state)

          see Addendum to Lease
          Exhibit A - Legal Description
          Exhibit B - Site Plan
          Exhibit C - Schedule A

(c) 1998 SOUTHERN CALIFORNIA CHAPTER
    of the Society of Industrial
    and Office Realtors   [lOGO]

<PAGE>   2
ARTICLE TWO: LEASE TERM

     Section 2.01. Lease of Property For Lease Term. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the beginning
or end of the Lease Term is changed under any provision of this Lease. The
"Commencement Date" shall be the date specified in Section 1.05 above for the
beginning of the Lease Term, unless advanced or delayed under any provision of
this Lease.

     Section 2.02. Delay in Commencement. If Landlord does not deliver
possession of the Property to Tenant by August 1, 1998, Tenant may elect to
cancel this Lease by giving written notice to Landlord no later than August 10,
1998. If Tenant gives such notice, the Lease shall be cancelled. If Tenant does
not give such notice, Tenant's right to cancel the Lease shall expire and the
Lease Term shall commence upon the delivery of possession of the Property to
Tenant. If delivery of possession of the Property to Tenant is delayed, Landlord
and Tenant shall, upon such delivery, execute an amendment to this Lease setting
forth the actual Commencement Date and expiration date of the Lease. Failure to
execute such amendment shall not affect the actual Commencement Date and
expiration date of the Lease.

     Section 2.04.  Holding Over. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. If Tenant does not vacate the
Property upon the expiration or earlier termination of the Lease, Tenant's
occupancy of the Property shall be a "month-to-month" tenancy, subject to all of
the terms of this Lease applicable to a month-to-month tenancy, except that, as
Landlord's sole remedy for such holdover, the Base Rent then in effect shall be
increased by fifty percent (50%).

ARTICLE THREE: BASE RENT

     Section 3.01.  Time and Manner of Payment. Upon execution of this Lease,
Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph
1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord's address or at such other place as
Landlord may designate in writing.

     Section 3.03.  Security Deposit; Increases.

     (a)  Upon the commencement of this Lease, Tenant shall deposit with
Landlord a cash Security Deposit in the amount set forth in Section 1.10 above.
If Landlord uses any part of the Security Deposit, Tenant shall restore the
Security Deposit to its full amount within ten (10) days after Landlord's
written request. Tenant's failure to do such shall be a material default under
this Lease. Notwithstanding the foregoing, Tenant may elect to provide Security
Deposit in the form of a Letter of Credit.

1998 SOUTHERN CALIFORNIA CHAPTER
     of the Society of Industrial
     and Office Realtors   [LOGO]

                                       2

<PAGE>   3
     Section 3.04.  TERMINATION; ADVANCE PAYMENTS. Upon termination of this
Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation)
or any other termination not resulting from Tenant's default, and after Tenant
has vacated the Property in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Tenant's successor) the unused portion of the
Security Deposit, any advance rent or other advance payments made by Tenant to
Landlord, and any amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the Lease.

ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT

     Section 4.01. Additional Rent. All charges payable by Tenant to Landlord
other than Base Rent are called "Additional Rent." Unless this Lease provides
otherwise, Tenant shall pay all Additional Rent then due with the next monthly
installment of Base Rent. The term "rent" shall mean Base Rent and Additional
Rent.

     Section 4.02. Property Taxes.

     (b) DEFINITION OF "REAL PROPERTY TAX." "Real property tax" means: (i) any
fee, license fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or tax imposed by any taxing authority against
the Property; (ii) any tax on the Landlord's right to receive, or the receipt
of, rent or income from the Property or against Landlord's business of leasing
the Property; (iii) any tax or charge for fire protection, streets, sidewalks,
road maintenance, refuse or other services provided to the Property by any
governmental agency; (iv) any tax imposed upon this transaction or based upon a
re-assessment of the Property due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord's interest in the
Property; and (v) any charge or fee replacing any tax previously included within
the definition of real property tax. "Real property tax" does not, however,
include Landlord's federal or state income, franchise, inheritance or estate
taxes.

     (c) JOINT ASSESSMENT. If the Property is not separately assessed, Landlord
shall reasonably determine Tenant's share of the real property tax payable by
Tenant under Paragraph 4.02(a) from the assessor's worksheets or other
reasonably available information. Tenant shall pay such share to Landlord within
fifteen (15) days after receipt of Landlord's written statement.

     (d) PERSONAL PROPERTY TAXES.

          (i)  Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging to Tenant.
Tenant shall try to have personal property taxed separately from the Property.

          (ii) If any of the Tenant's personal property is taxed with the
Property, Tenant shall pay Landlord the taxes for the personal property within
fifteen (15) days after Tenant receives a written statement from Landlord for
such personal property taxes.

     (e) TENANT'S RIGHT TO CONTEST TAXES. Tenant may attempt to have the
assessed valuation of the Property reduced or may initiate proceedings to
contest the real property taxes. If required by law, Landlord shall join in the
proceedings brought by Tenant. However, Tenant shall pay all costs of the
proceedings, including any costs or fees incurred by Landlord. Upon the final
determination of any proceeding or contest, Tenant shall immediately pay the
real property taxes due, together with all costs charges, interest and penalties
incidental to the proceedings. If Tenant does not pay the real property taxes
when due and contests such taxes, Tenant shall not be in default under this
Lease for nonpayment of such taxes if Tenant deposits funds with Landlord or
opens an interest-bearing account reasonably acceptable to Landlord in the joint
names of Landlord and Tenant. The amount of such deposit shall be sufficient to
pay the real property taxes plus a reasonable estimate of the interest, costs,
charges and penalties which may accrue if Tenant's action is unsuccessful, less
any applicable tax impounds previously paid by Tenant to Landlord. The deposit
shall be applied to the real property taxes due, as determined at such
proceedings. The real property taxes shall be paid under protest from such
deposit if such payment under protest is necessary to prevent the Property from
being sold under a "tax sale" or similar enforcement proceeding.

     Section 4.03. UTILITIES. Tenant shall pay, directly to the appropriate
supplier, the costs of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within fifteen (15) days after receipt of Landlord's
written statement.

     (a) LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain a
policy of commercial general liability insurance (sometimes known as broad form
comprehensive general liability insurance) insuring Tenant against liability for
bodily injury, property damage (including loss of use of property) and personal
injury arising out of the operation, use or occupancy of the Property. Tenant
shall name Landlord as an additional insured under such policy. The amount of
such insurance shall be One Million Dollars ($1,000,000) per occurrence. The
liability insurance obtained by Tenant under this Paragraph 4.04(a) shall (i)
contain cross-liability endorsements; and (ii) insure Landlord against Tenant's
performance under Section 5.05, if the matters giving rise to the indemnity
under Section 5.05 result from the negligence of Tenant. The amount and coverage
of such insurance shall not limit Tenant's liability nor relieve Tenant of any
other obligation under this Lease. Landlord may also obtain comprehensive public
liability insurance in an amount and with coverage determined by Landlord
insuring Landlord against liability arising out of ownership, operation, use or
occupancy of the Property. The policy obtained by the Landlord shall not be
contributory and shall not provide primary insurance.

(c) 1988 SOUTHERN CALIFORNIA CHAPTER
    of the Society of Industrial
    and Office Realtors   [LOGO]

                                       3

<PAGE>   4
     (b) PROPERTY AND RENTAL INCOME INSURANCE. Such policy shall contain an
Inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage.
Landlord shall have the right to obtain flood and earthquake insurance if
required by any lender holding a security interest in the Property. Landlord
shall not obtain insurance for Tenant's fixtures or equipment or building
improvements installed by Tenant on the Property. During the Lease Term,
Landlord shall also maintain a rental income insurance policy, with loss
payable to Landlord, in an amount equal to one year's Base Rent, plus estimated
real property taxes and insurance premiums. Tenant shall be liable for the
payment of any deductible amount under Landlord's or Tenant's insurance
policies maintained pursuant to this Section 4.04, in an amount not to exceed
Five Thousand Dollars ($5,000). Tenant shall not do or permit anything to be
done which invalidates any such insurance policies.

     (c) PAYMENT TO PREMIUMS. Subject to Selection 4.07, Tenant shall pay all
premiums for the insurance policies described in Paragraphs 4.04(a) and (b)
(whether obtained by Landlord or Tenant) within fifteen (15) days after Tenant's
receipt of a copy of the premium statement and a copy of the policy showing the
rates for the Property, except Landlord shall pay all premiums for non-primary
comprehensive public liability insurance which Landlord elects to obtain as
provided in Paragraph 4.04(a). If insurance policies maintained by Landlord
cover improvements on real property other than the Property, Landlord shall
deliver to Tenant a statement of the premium applicable to the Property showing
in reasonable detail how Tenant's share of the premium was computed. If the
Lease Term expires before the expiration of an insurance policy maintained by
Landlord, Tenant shall be liable for Tenant's prorated share of the insurance
premiums. Before the Commencement Date, Tenant shall deliver to Landlord a copy
of any policy of insurance which Tenant is required to maintain under this
Section 4.04. At least thirty (30) days prior to the expiration of any such
policy. Tenant shall deliver to Landlord a renewal of such policy. As an
alternative to providing a policy of insurance, Tenant shall have the right to
provide Landlord a certificate of insurance, executed by an authorized officer
of the insurance company, showing that the insurance which Tenant is required to
maintain under this Section 4.04 is in full force and effect and containing such
other information which Landlord reasonably requires.

     (d) GENERAL INSURANCE PROVISIONS.

          (i) Any insurance which Tenant is required to maintain under this
     Lease shall include a provision which requires the insurance carrier to
     endeavor to give Landlord not less than thirty (30) days' written notice
     prior to any cancellation or modification of such coverage.

          (ii) if Tenant fails to deliver any policy, certificate or renewal to
     Landlord required under this Lease within the prescribed time period or if
     any such policy is cancelled or modified during the Lease Term without
     Landlord's consent, Landlord may obtain such insurance, in which case
     Tenant shall reimburse Landlord for the cost of such insurance within
     fifteen (15) days after receipt of a statement that indicates the cost of
     such insurance.

          (iii) Tenant shall maintain all insurance required under this Lease
     with companies holding a "General Policy Rating" of B+7 or better, as set
     forth in the most current issue of "Best Key Rating Guide". Landlord and
     Tenant acknowledge the insurance markets are rapidly changing and that
     insurance in the form and amounts described in this Section 4.04 may not be
     available in the future at commercially reasonable rates. If at any time
     during the Lease Term, Tenant is unable to maintain the insurance required
     under the Lease at commercially reasonable rates, Tenant shall nevertheless
     maintain insurance coverage which is customary and commercially reasonable
     in the insurance industry for Tenant's type of business, as that coverage
     may change from time to time.

          (iv) Landlord and Tenant each hereby waive any and all rights of
     recovery against the other, or against the officers, employees, agents or
     representatives of the other, for loss of or damage to its property or the
     property of others under its control, if such loss or damage is covered by
     any insurance policy in force (whether or not described in this Lease) at
     the time of such loss or damage. Upon obtaining the required policies of
     insurance, Landlord and Tenant shall give notice to the insurance carriers
     of this mutual waiver of subrogation.

     Section 4.05. LATE CHARGES. Tenant's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but
are not limited to, processing and accounting charges and late charges which
may be imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property. Therefore, if more than once in any 12-month period
during the Lease Term, Landlord does not receive any rent payment within ten
(10) days after receipt of written notice from Landlord that such payment is
overdue, Tenant shall pay Landlord a late charge equal to five percent (5%) of
the overdue amount. The parties agree that such late charge represents a fair
and reasonable estimate of the costs Landlord will incur by reason of such late
payment.

     Section 4.06. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by Tenant
to Landlord which is not paid when due shall bear interest at the rate of
fifteen percent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.

ARTICLE FIVE: USE OF PROPERTY

     Section 5.01. PERMITTED USES. Tenant may use the Property only for the
Permitted Uses set forth in Section 1.06 above.

(c) 1988 SOUTHERN CALIFORNIA CHAPTER
    of the Society of Industrial
    and Office Realtors   [LOGO]

                                       4

<PAGE>   5
     Section 5.02.  MANNER OF USE. Tenant shall not cause or permit the
Property to be used in any way which constitutes a violation of any law,
ordinance, or governmental regulation or order, which annoys or interferes with
the rights of other tenants of Landlord, or which constitutes a nuisance or
waste. Tenant shall obtain and pay for all permits, excluding a Certificate of
Occupancy (which shall be obtained by Landlord), required for Tenant's
occupancy of the Property and shall promptly take all actions necessary to
comply with all applicable statutes, ordinances, rules, regulations, orders and
requirements regulating the particular manner of use by Tenant of the Property,
including the Occupational Safety and Health Act.

     Section 5.03.  HAZARDOUS MATERIALS. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable federal, state or
local laws or regulations, including without limitation petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products, asbestos, PCBs and
similar compounds, and including any different products and materials which are
subsequently found to have adverse effects on the environment or the health and
safety of persons. Tenant shall not cause or permit any Hazardous Material to be
generated, produced, brought upon, used, stored, treated or disposed of in or
about the Property by Tenant, its agents, employees, contractors, sublessees or
invitees without the prior written consent of Landlord. Landlord shall be
entitled to take into account such other factors or facts as Landlord may
reasonably determine to be relevant in determining whether to grant or withhold
consent to Tenant's proposed activity with respect to Hazardous Material. In no
event, however, shall Landlord be required to consent to the installation or use
of any storage tanks on the Property.

     Section 5.06.  LANDLORD'S ACCESS. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall
give Tenant prior written notice of such entry, except in the case of an
emergency. Landlord may place customary "For Lease" signs on the Property
commencing six (6) months prior to expiration of the Lease Term, as extended.

     Section 5.07.  QUIET POSSESSION. If Tenant pays the rent and complies with
all other terms of this Lease, Tenant may occupy and enjoy the Property for the
full Lease Term, subject to the provisions of this Lease.

ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS

(c) 1988 SOUTHERN CALIFORNIA CHAPTER
    of the Society of Industrial
    and Office Realtors   [LOGO]

                                       5
<PAGE>   6

     Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.

     (a) Tenant shall promptly remove any alterations, additions, or
improvements constructed in violation of this Paragraph 6.05(a) upon Landlord's
written request. All alterations, additions, and improvements shall be done in
a good and workmanlike manner, in conformity with all applicable laws and
regulations, and by a contractor approved by Landlord, which approval shall not
be unreasonably withheld. Upon completion of any such work, Tenant shall
provide Landlord with "marked" plans, copies of all construction contracts, and
proof of payment for all labor and materials.

     (b) Tenant shall pay when due all claims for labor and material furnished
to the Property. Tenant shall give Landlord at least twenty (20) days' prior
written notice of the commencement of any work on the Property, regardless of
whether Landlord's consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the Property.

     Section 6.06 CONDITION UPON TERMINATION. Upon the termination of the
Lease, tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear and loss from acts
of God or other casualty. However, Tenant shall not be obligated to repair any
damage which Landlord is required to repair under Article Seven (Damage or
Destruction). In addition, Landlord may require Tenant to remove any
alterations, additions or improvements (whether or not made with Landlord's
consent) which are unusual for buildings of the type located on the Property or
which are difficult to remove prior to the expiration of the Lease and to
restore the Property to its prior condition, all at Tenant's expense. All
alterations, additions and improvements which Landlord has not required Tenant
to remove shall become Landlord's property and shall be surrendered to Landlord
upon the expiration or earlier termination of the Lease, except that Tenant may
remove any of Tenant's machinery or equipment which can be removed without
material damage to the Property. Tenant shall repair, at Tenant's expense, any
damage to the Property caused by the removal of any such machinery or
equipment. In no event, however, shall Tenant remove any of the following
materials or equipment (which shall be deemed Landlord's property) without
Landlord's prior written consent: any power wiring or power panels; lighting or
lighting fixtures; wall coverings; drapes, blinds or other window coverings;
carpets or other floor coverings; heaters, air conditioners or any other
heating or air conditioning equipment; fencing or security gates; or other
similar building operating equipment and decorations.

ARTICLE SEVEN: DAMAGE OR DESTRUCTION

     Section 7.01. PARTIAL DAMAGE TO PROPERTY.

     (a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage to the Property. If the Property is only partially
damaged (i.e., less than fifty percent (50%) of the Property in untenantable as
a result of such damage or less than fifty percent (50%) of Tenant's operations
are materially impaired) and if the proceeds received by Landlord from the
insurance policies described in Paragraph 4.04(b) are sufficient to pay for the
necessary repairs, this Lease shall remain in effect and Landlord shall repair
the damage as soon as reasonably possible. Landlord may elect (but is not
required) to repair any damage to Tenant's fixtures, equipment, or improvements.

     (b) if the insurance proceeds received by Landlord are not sufficient to
pay the entire cost of repair, or if the cause of the damage is not covered by
the insurance policies which Landlord maintains under Paragraph 4.04(b),
Landlord may elect either to (i) repair the damage as soon as reasonably
possible, in which case this Lease shall remain in full force and effect, or
(ii) terminate this Lease as of the date the damage occurred. Landlord shall
notify Tenant within thirty (30) days after receipt of notice of the occurrence
of the damage whether Landlord elects to repair the damage or terminate the
Lease. If Landlord elects to repair the damage, Tenant shall pay Landlord the
"deductible amount" (if any) under Landlord's insurance policies to a maximum
of $5,000. If Landlord elects to terminate the Lease, Tenant may elect to
continue this Lease in full force and effect, in which case Tenant shall repair
any damage to the Property and any building in which the Property is located.
Tenant shall pay the cost of such repairs, except that upon satisfactory
completion of any such repairs, Landlord shall deliver to Tenant any insurance
proceeds received by Landlord for the damage repaired by Tenant. Tenant shall
give Landlord written notice of such election within thirty (30) days after
receiving Landlord's termination notice.

     (c) If the damage to the Property occurs during the last six (6) months of
the Lease Term (as extended) and such damage will require more than thirty (30)
days to repair, either Landlord or Tenant may elect to terminate this Lease as
of the date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Tenant's notice to Landlord of the occurrence of the damage.

(c) 1988 Southern California Chapter
    of the Society of Industrial
    and Office Realtors   [LOGO]

                                       5

<PAGE>   7
     Section 7.02. SUBSTANTIAL OR TOTAL DESTRUCTION. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e. the damage to
the Property is greater than partial damage as described in Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease shall
terminate as of the date the destruction occurred. Notwithstanding the preceding
sentence, if the Property can be rebuilt within four (4) months after the date
of destruction, Landlord may elect to rebuild the Property at Landlord's own
expense, in which case this Lease shall remain in full force and effect.
Landlord shall notify Tenant of such election within thirty (30) days after
Tenant's notice of the occurrence of total or substantial destruction. If
Landlord so elects, Landlord shall rebuild the Property at Landlord's sole
expense.

     Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is destroyed or
damaged and Landlord or Tenant repairs or restores the Property pursuant to the
provisions of this Article Seven, any rent payable during the period of such
damage, repair and/or restoration shall be reduced according to the degree, if
any, to which Tenant's use of the Property is impaired. However, the reduction
shall not exceed the sum of one year's payment of Base Rent, insurance premiums
and real property taxes. Except for such possible reduction in Base Rent,
insurance premiums and real property taxes, Tenant shall not be entitled to any
compensation, reduction, or reimbursement from Landlord as a result of any
damage, destruction, repair, or restoration of or to the Property.

     Section 7.04. WAIVER. Tenant waives the protection of any statute, code or
judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial or total destruction of the leased property. Tenant
agrees that the provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.

ARTICLE EIGHT: CONDEMNATION

     If all or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If more than twenty percent (20%) of the floor area of the building in which the
Property is located, or which is located on the Property, is taken, either
Landlord or Tenant may terminate this Lease as of the date the condemning
authority takes title or possession, by delivering written notice to the other
within ten (10) days after receipt of written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
takes title or possession). If neither Landlord nor Tenant terminates this
Lease, this Lease shall remain in effect as to the portion of the Property not
taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property. Any Condemnation
award or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property, (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or make
such repair at Landlord's expense.

ARTICLE NINE: ASSIGNMENT AND SUBLETTING

     Section 9.01. LANDLORD'S CONSENT REQUIRED. No portion of the Property or
of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord's prior written consent, except as
provided in Section 9.02 below. Landlord has the right to grant or withhold its
consent as provided in Section 9.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of this Lease.
If Tenant is a partnership, any cumulative transfer of more than twenty percent
(20%) of the partnership interests shall require Landlord's consent.

     Section 9.02. TENANT AFFILIATE. Tenant may assign this Lease or sublease
the Property, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all
of Tenant's obligations under this Lease.

     Section 9.03. NO RELEASE OF TENANT. No transfer permitted by this Article
Nine, whether with or without Landlord's  consent, shall release Tenant or
change Tenant's primary liability to pay the rent and to perform all other
obligations of Tenant under this Lease. Landlord's acceptance of rent from any
other person is not a waiver of any provision of this Article Nine. Consent to
one transfer is not a consent to any subsequent transfer. If Tenant's
transferee defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the transferee.

     Section 9.04. OFFER TO TERMINATE. If Tenant desires to assign the Lease or
sublease the Property, Tenant shall have the right to offer, in writing, to
terminate the Lease as of a date specified in the offer. If Landlord elects in
writing to accept the offer to terminate within twenty (20) days after notice
of the offer, the Lease shall terminate as of the date specified and all the
terms and provisions of the Lease governing termination shall apply. If
Landlord does not so elect, the Lease shall continue in effect until otherwise
terminated and the provisions of Section 9.05 with respect to any proposed
transfer shall continue to apply.

     Section 9.05. LANDLORD'S CONSENT.

     (a) Tenant's request for consent to any transfer described in Section 9.01
shall set forth in writing the details of the proposed transfer, including the
name, business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and the rent and security
deposit payable under any proposed assignment or sublease), and any other
information Landlord reasonably deems relevant. Landlord shall have the right to
withhold consent, if reasonable, or to grant consent, based on the following
factors: (i) the business of the proposed assignee or subtenant and the proposed
use of the

(c) 1988 Southern California Chapter
    of the Society of Industrial
    and Office Realtors   [LOGO]
<PAGE>   8
Property; (ii) the net worth and financial reputation of the proposed assignee
or subtenant; (iii) Tenant's compliance with all of its obligations under the
Lease. If Landlord objects to a proposed assignment solely because of the net
worth and/or financial reputation of the proposed assignee. Tenant may
nonetheless sublease (but not assign), all or a portion of the Property to the
proposed transferee, but only on the other terms of the proposed transfer.

     (b)  If Tenant assigns or subleases, the following shall apply:

          (i)  Tenant shall pay to Landlord as Additional Rent under the Lease
     the Landlord's Share (stated in Section 1.13) of the Profit (defined below)
     on such transaction as and when received by Tenant, unless Landlord gives
     written notice to Tenant and the assignee or subtenant that Landlord's
     Share shall be paid by the assignee or subtenant to Landlord directly. The
     "Profit" means (A) all amounts paid to Tenant for such assignment or
     sublease, including "key" money, monthly rent in excess of the monthly rent
     payable under the Lease, and all fees and other consideration paid for the
     assignment or sublease, including fees under any collateral agreements,
     less (B) costs and expenses directly incurred by Tenant in connection with
     the execution and performance of such assignment or sublease for real
     estate broker's commissions, legal expenses in an amount not to exceed
     $5,000 and costs of renovation or construction of tenant improvements
     required under such assignment or sublease. Tenant is entitled to recover
     such costs and expenses before Tenant is obligated to pay the Landlord's
     Share to Landlord. The Profit in the case of a sublease of less than all
     the Property is the rent allocable to the subleased space as a percentage
     on a square footage basis.

          (ii) Tenant shall provide Landlord a written statement certifying all
     amounts to be paid from any assignment or sublease of the Property within
     ninety (90) days after the transaction documentation is signed, and
     Landlord may inspect Tenant's books and records to verify the accuracy of
     such statement. On written request, Tenant shall promptly furnish to
     Landlord copies of all the transaction documentation, all of which shall be
     certified by Tenant to be complete, true and correct. Landlord's receipt of
     Landlord's Share shall not be a consent to any further assignment or
     subletting. The breach of Tenant's obligation under this Paragraph 9.05(b)
     shall be a material default of the Lease.

     Section 9.06.  No Merger. No merger shall result from Tenant's sublease of
the Property under this Article Nine, Tenant's surrender of this Lease or the
termination of this Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.

ARTICLE TEN: DEFAULTS; REMEDIES

     Section 10.01. Covenants and Conditions. Time is of the essence in the
performance of all covenants and conditions.

     Section 10.02. Defaults. Tenant shall be in material default under this
Lease:

     (a) If Tenant abandons the Property or if Tenant's vacation of the Property
results in the cancellation of any insurance described in Section 4.04;

     (b) If Tenant fails to pay rent or any other charge when due;

     (c) If Tenant fails to perform any of Tenant's non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30)-day period and thereafter diligently pursues
its completion. However, Landlord shall not be required to give such notice if
Tenant's failure to perform constitutes a non-curable breach of this Lease. The
notice required by this Paragraph is intended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to any such
requirement.

     (d) (i) If Tenant makes a general assignment or general arrangement for the
benefit of creditors; (ii) if a petition for adjudication of bankruptcy or for
reorganization or rearrangement is filed by or against Tenant and is not
dismissed within sixty (60) days; (iii) if a trustee or receiver is appointed to
take possession of substantially all of Tenant's assets located at the Property
or of Tenant's interest in this Lease and possession is not restored to Tenant
within sixty (60) days; or (iv) if substantially all of Tenant's assets located
at the Property or of Tenant's interest in this Lease is subjected to
attachment, execution or other judicial seizure which is not discharged within
sixty (60) days. If a court of competent jurisdiction determines that any of the
acts described in this subparagraph (d) is not a default under this Lease, and a
trustee is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest hereunder,
then Landlord shall receive, as Additional Rent, the excess, if any, of the rent
(or any other consideration) paid in connection with such assignment or sublease
over the rent payable by Tenant under this Lease.

     (e) If any guarantor of the Lease revokes or otherwise terminates, or
purports to revoke or otherwise terminate, any guaranty of all or any portion of
Tenant's obligations under the Lease. Unless otherwise expressly provided, no
guaranty of the Lease is revocable.

     Section 10.03. Remedies. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:

     (a) Terminate Tenant's right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Property to Landlord. In such event, Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including (i) the worth at the time of the award of the unpaid
Base Rent, Additional Rent and other charges which Landlord had earned at the
time of the termination; (ii) the worth at the time of the award of the amount
by which the unpaid Base Rent, Additional Rent and other charges which Landlord
would have earned after termination until the time of the award exceeds the
amount of such rental loss that Tenant proves Landlord could have reasonably
avoided; (iii) the worth at the time of the award of the amount by which the
unpaid Base Rent, Additional Rent and other charges which Tenant would have paid
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss that Tenant proves Landlord could have reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under the
Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, any costs or expenses Landlord incurs
in maintaining or preserving the Property after such default, the cost of

(c) 1988 SOUTHERN CALIFORNIA CHAPTER
    of the Society of Industrial
    and Office Realtors   [LOGO]

                                       8

<PAGE>   9
recovering possession of the Property, expenses of reletting, including
necessary renovation or alteration of the Property, Landlord's reasonable
attorneys' fees incurred in connection therewith, and any real estate commission
paid or payable. As used in subparts (i) and (ii) above, the "worth at the time
of the award" is computed by allowing interest on unpaid amounts at the "prime
rate" as announced from time to time by Bank of America, N.A. plus four percent
(4%) per annum, or such lesser amount as may then be the maximum lawful rate. As
used in subpart (iii) above, the "worth at the time of the award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus one percent (1%). If Tenant has
abandoned the Property, Landlord shall have the option of (i) retaking
possession of the Property and recovering from Tenant the amount specified in
this Paragraph 10.03(a), or (ii) proceeding under Paragraph 10.03(b);

     (b) Maintain Tenant's right to possession, in which case this Lease shall
continue in effect whether or not Tenant has abandoned the Property. In such
event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due;

     (c) Pursue any other remedy now or hereafter available to Landlord under
the laws or judicial decisions of the state in which the Property is located.

     Section 10.06. CUMULATIVE REMEDIES. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.

ARTICLE ELEVEN: PROTECTION OF LENDERS

     Section 11.01. SUBORDINATION. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever made
or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall execute
such further documents and assurances as such lender may reasonably require,
provided that Tenant's obligations under this Lease shall not be increased in
any material way (the performance of ministerial acts shall not be deemed
material), and Tenant shall not be deprived of its rights under this Lease.
Tenant's right to quiet possession of the Property during the Lease Term shall
not be disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If any ground
lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of
its ground lease, deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording thereof.

     Section 11.02. ATTORNMENT. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.

     Section 11.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so within ten (10) days after receipt of
written request.

     Section 11.04. ESTOPPEL CERTIFICATES.

     (a) Upon Landlord's written request, Tenant shall execute, acknowledge and
deliver to Landlord a written statement certifying: (i) that none of the terms
or provisions of this Lease have been changed (or if they have been changed,
stating how they have been changed); (ii) that this Lease has not been cancelled
or terminated; (iii) the last date of payment of the Base Rent and other charges
and the time period covered by such payment; (iv) that Landlord is not in
default under this Lease (or, if Landlord is claimed to be in default, stating
why); and (v) such other representations or information with respect to Tenant
or the Lease as Landlord may reasonably request or which any prospective
purchaser or encumbrancer of the Property may require. Tenant shall deliver such
statement to Landlord within ten (10) days after Landlord's request. Landlord
may give any such statement by Tenant to any prospective purchaser or
encumbrancer of the Property. Such purchaser or encumbrancer may rely
conclusively upon such statement as true and correct.

(C) 1988 SOUTHERN CALIFORNIA CHAPTER
    OF THE SOCIETY OF INDUSTRIAL
    AND OFFICE REALTORS [LOGO]

                                       9

<PAGE>   10
     (b)  If Tenant does not deliver such statement to Landlord within such ten
(10) day period, Landlord, and any prospective purchaser or encumbrancer, may
conclusively presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord; (ii) that this Lease has not been cancelled or terminated except as
otherwise represented by Landlord; (iii) that not more than one month's Base
Rent or other charges have been paid in advance; and (iv) that Landlord is not
in default under the Lease. In such event, Tenant shall be stopped from denying
the trust of such facts.

ARTICLE TWELVE: LEGAL COSTS

     Section 12.01. LEGAL PROCEEDINGS. If any action for breach of or to enforce
the provisions of this Lease is commenced, the court in such action shall award
to the party in whose favor a judgment is entered, a reasonable sum as
attorneys' fees and costs. The losing party in such action shall pay such
attorneys' fees and costs. Tenant shall also indemnify Landlord against and hold
Landlord harmless from all costs, expenses, demands and liability Landlord may
incur if Landlord becomes or is made a party to any claim or action (a)
instituted by Tenant against any third party, or by any third party against
Tenant, or by or against any person holding any interest under or using the
Property by license of or agreement with Tenant; (b) for foreclosure of any lien
for labor or material furnished to or for Tenant or such other person; (c)
otherwise arising out of or resulting from any act or transaction of Tenant or
such other person; or (d) necessary to protect Landlord's interest under this
Lease in a bankruptcy proceeding, or other proceeding under Title 11 of the
United States Code, as amended. Tenant shall defend Landlord against any such
claim or action at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any
legal fees or costs Landlord incurs in any such claim or action.

     Section 12.02. LANDLORD'S CONSENT. Tenant shall pay Landlord's reasonable
attorneys' fees (up to a maximum of $1,000) incurred in connection with Tenant's
request for Landlord's consent under Article Nine (Assignment and Subletting),
or in connection with any other act which Tenant proposes to do and which
requires Landlord's consent, other than consents required in connection with
Tenant's initial buildout of the Property.

ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS

     Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a condition
to the continuance of this Lease, that there will be no discrimination against,
or segregation of, any person or group of persons on the basis of race, color,
sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.

     Section 13.02. LANDLORD'S LIABILITY; CERTAIN DUTIES.

     (a)  As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or the leasehold estate under a
ground lease of the Property  at the time in question. Each Landlord is
obligated to perform the obligations of Landlord under this Lease only during
the time such Landlord owns such interest or title. Any Landlord who transfers
its title or interest is relieved of all liability with respect to the
obligations of Landlord under this Lease to be performed on or after the date of
transfer. However, each Landlord shall deliver to its transferee all funds that
Tenant previously paid if such funds have not yet been applied under the terms
of this Lease.

     (b)  Tenant shall give written notice of any failure by Landlord to perform
any of its obligations under this Lease to Landlord and to any ground lessor,
mortgagee or beneficiary under any deed of trust encumbering the Property whose
name and address have been furnished to Tenant in writing. Landlord shall not be
in default under this Lease unless Landlord (or such ground lessor, mortgagee or
beneficiary) fails to cure such non-performance within thirty (30) days after
receipt of Tenant's notice. However, if such non-performance reasonably requires
more than thirty (30) days to cure, Landlord shall not be in default if such
cure is commenced within such thirty (30)-day period and thereafter diligently
pursued in completion.

     (c)  Notwithstanding any term of provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and any insurance
proceeds related thereto, and neither the Landlord nor its partners,
shareholders, officers or other principals shall have any personal liability
under this Lease.

     Section 13.03. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.

     Section 13.04. INTERPRETATION. The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Property with Tenant's expressed or
implied permission.

     Section 13.05. INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This
Lease is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.

     Section 13.06. NOTICES. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered or sent by certified
mail, return receipt requested, postage prepaid. Notices to Tenant shall be
delivered to the address specified in Section 1.03 above, except that upon
Tenant's taking possession of the Property, the Property shall be Tenant's
address for notice purposes. Notices to Landlord shall be delivered to the
address specified in Section 1.02 above. All notices shall be effective upon
receipt or refusal. Either party may change its notice address upon written
notice to the other party.

  (c) 1988 Southern California Chapter
      of the Society of Industrial
      and Office Realtors [LOGO]

                                       10

<PAGE>   11
     Section 13.07. WAIVERS. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.

     Section 13.08. NO RECORDATION. Tenant shall not record this Lease without
prior written consent from Landlord. However, either Landlord or Tenant may
require that a "Short Form" memorandum of this Lease executed by both parties
be recorded. The party requiring such recording shall pay all transfer taxes
and recording fees.

     Section 13.09. BINDING EFFECT; CHOICE OF LAW. This Lease binds any party
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant's successor unless
the rights or interests of Tenant's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.

     Section 13.10. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. Within thirty
(30) days after this Lease is signed, Tenant shall deliver to Landlord a
certified copy of a resolution of Tenant's Board of Directors authorizing the
execution of this Lease or other evidence of such authority reasonably
acceptable to Landlord. If Tenant is a partnership, each person or entity
signing this Lease for Tenant represents and warrants that he or it is a general
partner of the partnership, that he or it has full authority to sign for the
partnership and that this Lease binds the partnership and all general partners
of the partnership. Tenant shall give written notice to Landlord of any general
partner's withdrawal or addition. Within thirty (30) days after this Lease is
signed, Tenant shall deliver to Landlord a copy of Tenant's recorded statement
of partnership or certificate of limited partnership.

     Section 13.11. JOINT AND SEVERAL LIABILITY. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.

     Section 13.12. FORCE MAJEURE. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.

     Section 13.13. EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.

     Section 13.14. SURVIVAL. All representations and warranties of Landlord
and Tenant shall survive the termination of this Lease.

ARTICLE FOURTEEN: BROKERS

     Section 14.01. BROKER'S FEE. When this Lease is signed by and delivered to
both Landlord and Tenant, Landlord shall pay a real estate commission to
Landlord's Broker named in Section 1.08 above, if any, as provided in the
written agreement between Landlord and Landlord's Broker, or the sum stated in
Section 1.09 above for services rendered to Landlord by Landlord's Broker in
this transaction. If a Tenant's Broker is named in Section 1.08 above,
Landlord's Broker shall pay an appropriate portion of its commission to
Tenant's Broker if so provided in any agreement between Landlord's Broker and
Tenant's Broker. Nothing contained in this Lease shall impose any obligation on
Landlord to pay a commission or fee to any party other than Landlord's Broker.

     Section 14.03. AGENCY DISCLOSURE; NO OTHER BROKERS.

Landlord and Tenant each warrant that they have dealt with no other real estate
broker(s) in connection with this transaction except: CB Commercial Real Estate
Group, Inc., who represents Tenant and Colliers Macaulay Nicholls, who
represents Landlord.

     In the event that CB Commercial represents both Landlord and Tenant,
Landlord and Tenant hereby confirm that they were timely advised of the dual
representation and that they consent to the same, and that they do not expect
said broker to disclose to either of them the confidential information of the
other party.

ARTICLE FIFTEEN: COMPLIANCE

     The parties hereto agree to comply with all applicable federal, state and
local laws, regulations, codes, ordinances and administrative orders having
jurisdiction over the parties, property or the subject matter of this
Agreement, including, but not limited to, the 1964 Civil Rights Act and all
amendments thereto, the Foreign Investment In Real Property Tax Act, the
Comprehensive Environmental Response Compensation and Liability Act, and The
Americans With Disabilities Act.

(c) 1988 Southern California Chapter
of the Society of Industrial
and Office Realtors [LOGO]

                                       11

<PAGE>   12
     ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO
OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED, PLEASE
DRAW A LINE THROUGH THE SPACE BELOW.

     Landlord and Tenant have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialled all Riders
which are attached to or incorporated by reference in this Lease.

                                               "LANDLORD"

Signed on 24 November, 1997        MV 1997, AN L.L.C.
          -----------    --        ---------------------------------
at Bellevue, Washington
   ------------------------        ---------------------------------

                               By: /s/ illegible
                                   ---------------------------------
                              Its: Member
                                   ---------------------------------
                               By:
                                   ---------------------------------
                              Its:
                                   ---------------------------------

                                               "TENANT"

Signed on Nov 24     , 1997        Humongous Entertainment, Inc.
          -----------    --        ---------------------------------
                                   a Washington Corporation
at Woodinville, WA
   ------------------------        ---------------------------------

                               By: /s/ Shelley McDay
                                   ---------------------------------
                              Its: President/CEO
                                   ---------------------------------
                               By:
                                   ---------------------------------
                              Its:
                                   ---------------------------------

     IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A
PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.

     THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION
OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS(R), INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN
CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS(R), INC.,
ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR
AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS
LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO
ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL
COUNSEL.

(C) 1988 Southern California Chapter
    of the Society of Industrial
    and Office Realtors [Logo]

                                       12

<PAGE>   13
STATE OF WASHINGTON  )
                     ) SS.
COUNTY OF KING       )

     On this 24th day of November, 1997, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn,
personally appeared SHELLEY DAY, to me known to be the person who signed as
PRESIDENT & CEO of HUMONGOUS ENTERTAINMENT, INC., the corporation that
executed the within and foregoing instrument, and acknowledged said instrument
to be the free and voluntary act and deed of said corporation for the uses and
purposes therein mentioned, and on oath stated that SHE was duly elected,
qualified and acting as said officer of the corporation, that SHE was
authorized to execute said instrument and that the seal affixed, if any, is the
corporate seal of said corporation.

     IN WITNESS WHEREOF I have hereunto set my hand and official seal the day
and year first above written.

                                       /s/ Teddi L. Hosman
                                       -------------------------------
                                       (Signature of Notary)

                                       TEDDI L. HOSMAN
                                       ------------------------------
                                       (Print or stamp name of Notary)

                                       NOTARY PUBLIC in and for the State
                                       of Washington, residing at BOTHELL, WA
                                       My appointment expires: 10/9/98

STATE OF WASHINGTON  )
                     ) SS.
COUNTY OF KING       )

     On this 24th day of November, 1997, before me, the undersigned, a Notary
Public in and for the state of Washington, duly commissioned and sworn,
personally appeared JACK MARTIN, to me known to be the person who signed as
MEMBER of M.V. 1997, An L.L.C., the limited liability company that executed the
within and foregoing instrument, and acknowledged said instrument to be the
free and voluntary act and deed of said limited liability company for the uses
and purposes

<PAGE>   14
therein mentioned, and on oath stated that he was authorized to execute said
instrument on behalf of the limited liability company.

     IN WITNESS WHEREOF I have hereunto set my hand and official seal the day
and year first above written.

[NOTARY SEAL]                           /s/ Susan C. Leitzke
                                        _______________________________________
                                        (Signature of Notary)

                                        Susan C. Leitzke
                                        _______________________________________
                                        (Print or stamp name of Notary)

                                        NOTARY PUBLIC in and for the State
                                        of Washington, residing at Bellevue.
                                        My appointment expires: 08-02-98.

                                      -2-
<PAGE>   15
                                   EXHIBIT A

                        (Legal Description of Property)

Lots 1 and 2, Plat of Quadrant Monte Villa Center, according to the Plat thereof
recorded in Volume 54 of Plats, pages 165-169, records of Snohomish County,
Washington;

EXCEPT the north 166.00 feet of Lot 2 measured at right angles from the north
line of said Lot 2.

(Also known as Lot 1A of City of Bothell Lot Line Adjustment No. SPL 0011-96,
Snohomish County Recording No. 9611190059.)

<PAGE>   16
                                   EXHIBIT B
                                   Site Plan

                                     [MAP]
<PAGE>   17
                                   EXHIBIT C

                                   SCHEDULE A

1. SPECIFICATION FOR TENANT IMPROVEMENTS

The following is an outline specification regarding the tenant improvements to
be built by Landlord, under the Lease and Addendum thereto dated November 24,
1997 between M.V. 1997, An L.L.C. ("Landlord") and Humongous Entertainment, Inc.
("Tenant").

     1.1  BASE BUILDING REQUIREMENTS

          1.1.1. MECHANICAL SYSTEM

          Landlord shall install and distribute a high quality VAV HVAC system
          with a minimum capacity of one ton of cooling capacity for every 415
          RSF. The system shall have the capacity to individually control zones
          of 800 RSF, and have DDC controls (wired or wireless at Tenant's
          option). One large passenger elevator (4,500 lb. capacity), and
          restrooms per current code. The HVAC system will be capable of
          operating 24 hours per day, seven days per week, so that Tenant may
          maintain a temperature of 68 to 72 degrees at all times.

          1.1.2. ELECTRICAL SYSTEM

          Landlord shall provide to the Property distributed through step down
          transformers and to panels on each floor a 2000 Amp, 277/480 3 Phase
          service and distributed at the perimeter open areas at one duplex per
          10 lineal feet. Lighting to be 3 tube, electronic ballast fixtures,
          deep cell parabolic lenses (one fixture per 80 square feet - open
          areas) throughout except at Lobby/Reception area and Rest Rooms which
          shall have recessed can lighting. In addition to the lighting and HVAC
          requirements, Landlord shall provide electrical outlets as set forth
          on Exhibit C-1 attached hereto based upon 2 watts per square foot.
          Further, Landlord shall provide the additional electrical needs of the
          Tenant's workstations in the amount of 2 watts per square foot. Lessor
          shall provide conduit with pull string to j:box for voice/data
          termination by Tenant. Conduit to be sized to accommodate a minimum of
          4, 4 pair level five cables.

          1.1.3. LIFE/SAFETY

          Landlord shall be responsible for compliance with all safety code
          requirements including but not limited to smoke detection, exiting,
          and ADA requirements as of the occupancy date of the Property.

          1.1.4. MINI BLINDS

          Landlord shall be responsible for providing mini blinds on all
          exterior windows of the building on all floors.

     1.2  LEVEL OF FINISH STANDARDS

                                       1
<PAGE>   18
SCHEDULE A
PAGE 2

          1.2.1.    GENERAL OFFICE AND PRIVATE OFFICES

          Landlord shall grant to Tenant an $18.00 per yard allowance for all
          carpet. This allowance may be credited towards alternate floor
          covering or other tenant improvements.

          Painted Walls - Interior low sheen acrylic latex paint, applied in two
          coats. Tenant may choose up to four different colors.

          The Property, including Open Office and Private Offices, to have 2 x 4
          Parabolic Fixtures in a 2 x 4 grid, with "second look" tegular tile.

          Doors and Relites - 3'0" x 7'0" solid core premium grade stained wood
          door with painted metal frames and 1 - 3'0" x 7'0" relites per office.
          Heavy duty mortise type locksets and latchsets of commercial hardware.
          A maximum of 75% of the private offices shall have relites.

          1.2.2.    RECEPTION AREA

          Landlord will provide slate for the reception area on the first floor.
          (300 square feet maximum.)

          6" Slate Base and Painted Walls.

          Painted Gypsum Board Ceiling with recessed fluorescent downlights and
          wall washers (10 allowed).

          1.2.3.    KITCHEN AND SHOWER AREAS

          In addition to the base building and basic tenant improvements as
          outlined, Landlord shall provide showers (2 mens - 2 women's), locker
          room and lockers; floor to be slate in the shower and locker areas.
          Restrooms - hard surface flooring with 4' wainscoating in tile; wall
          hung fixtures and P-Lam partitions. Landlord shall rough-in plumbing
          for dishwasher, refrigerator, ice maker, and provide a $10,000.00
          allowance for appliances.

          1.2.4.    GENERAL NOTES

          All interior walls to have sound batt insulation.

          1.2.5.    COFFEE BARS

          Landlord shall provide two coffee bars each with a sink in addition to
          the sink in the lunch area.

          1.2.6.    CABINETS

          Landlord will provide seventy (70) lineal feet of P-Lam upper and
          lower cabinets.

                                       2

<PAGE>   19
                                  EXHIBIT C-1

<Table>
<Caption>

DESCRIPTION                                                             QUANTITY
<S>                                                                 <C>
Furnish 2x4 Deep Cell Parabolic Lights 3F32                                 778
Install 2x4 Deep Cell Lighting Fixtures                                     778
Install Lighting Fixture Circuit Grid                                       778
Add 3rd 400AMP 120V Tenant Panelboard to Each Floor                           2
Duplex Receptacles (6 outlets per circuit                                   210
Four-Plex Receptacles (3 four-plex per circuit)                             210
Duplex Receptacles (6 outlets per circuit)--Printers                         16
Switches                                                                     60
Dual Switches                                                               120
Dedicated Duplex Receptacles--Computer Room                                   6
Dedicated Four-Plex Receptacles--Break Room                                   8
Dedicated Duplex Receptacles--Copiers                                         4
Electrical Wiring for System Furniture (4 to 6 person workstations)          30
(Plugs to be installed in floor; connections to workstations are
Tenant's cost)
Tele/Data Rough-In Outlets                                                  226
Coffee Bar Requirements (Dedicated Duplex Timer Switch UC
Lighting Miscellaneous)                                                       2
Engineering                                                         3% of above
                                                                    costs
Misc. Taxes & Insurance                                             3% of above
                                                                    costs
Electrical Permit--State                                            1% of above
                                                                    costs
Washington State Sales Tax
</Table>

                                       3
<PAGE>   20

                    ADDENDUM TO INDUSTRIAL REAL ESTATE LEASE

     THIS ADDENDUM TO INDUSTRIAL REAL ESTATE LEASE (the "Addendum") is entered
into as of November 24, 1997 by and between M.V. 1997, An L.L.C., a Washington
limited liability company ("Landlord") and Humongous Entertainment, Inc., a
Washington corporation ("Tenant"). This Addendum supplements the terms of the
Industrial Real Estate Lease between Landlord and Tenant of even date herewith
(the "Lease"). To the extent any terms of this Addendum conflict with any
provisions of the Lease, the terms of this Addendum shall control. Terms used in
this Addendum and not otherwise defined shall have the meanings given them in
the Lease.

     1.   Parking. Section 1.11 of the Lease is amended to add the following:

          "Prior to the Commencement Date, Landlord agrees to use its reasonable
          efforts to increase the number of vehicle parking spaces in the
          Property."

     2.   Base Rent. Section 1.12(a) is amended in its entirety as follows:

          "Tenant shall pay Base Rent with respect to the Property as follows:

          Month of Lease
          Term                     Base Rent per Month

          1 through 6              Sixty-Eight Thousand Two Hundred Seventy-Five
                                   Dollars ($68,275)

          7 through 12             Seventy-One Thousand Seven Hundred Fifteen
                                   Dollars ($71,715)

          13 through 60            Seventy-Five Thousand One Hundred Fifty
                                   Dollars ($75,150)

          61 through 120           Eighty-Four Thousand One Hundred Fifty
                                   Dollars ($84,150)"

     3.   Delay in Commencement. (a) The following is inserted at the beginning
          of Section 2.02 of the Lease:

          "Provided that (a) Tenant is prepared, by December 31, 1997, to file
          its Building Permit Submittal Documents with respect to the tenant
          improvements to be constructed on the Property with the City of
          Bothell in order to obtain the required building permits and (b) there
          is no Tenant Delay (as defined in Section 31 of this Addendum), then
          for every day after June 25, 1998 that the Property is not available
          for occupancy by Tenant, Tenant shall receive three (3) days of rent.
          In the event of a Tenant Delay caused by Tenant's failure to submit
          the Building Permit Submittal Documents to the City of Bothell by
          December 31, 1997, (a) if the Property is not available for Tenant's
          occupancy by June 1, 1998 due solely to such failure by Tenant, rent
          shall be payable commencing on June 1, 1998 and (b) the June 25, 1998
          date set forth in this paragraph shall be extended by one day for each
          day after December 31, 1997 that the Building Permit Submittal
          Documents are not submitted to the City of Bothell. If Landlord and
          Tenant are unable to agree with

<PAGE>   21
          respect to the cause(s) of delay in Tenant's occupancy of the Property
          by June 1, 1998, the parties' architects shall determine such cause(s)
          by mutual agreement. If the parties' architects are unable to reach
          agreement, the architects shall select a mutually agreeable third
          architect, whose determination of the cause(s) of such delay shall be
          final."

The following is inserted at the end of Section 2.02 of the Lease:

          "If Tenant elects to cancel the Lease as set forth in this Section
          2.02, Tenant shall be released from all liability under the Lease and
          shall be entitled to liquidated damages from Landlord in the amount of
          Five Hundred Thousand Dollars ($500,000)."

     4.   Early Occupancy. Section 2.03 of the Lease is amended in its entirety
          as follows:

          "Section 2.03 EARLY OCCUPANCY. Except as set forth below, if Tenant
          occupies the Property prior to the Commencement Date, Tenant's
          occupancy of the Property shall be subject to all of the provisions of
          this Lease. Tenant shall be entitled to occupy the Property during the
          ten (10) business day period immediately preceding the Commencement
          Date (the "Move-In Period") in order to install furniture, fixtures,
          equipment and cabling. Tenant shall not be required to pay rent for
          the Move-In Period. Early occupancy of the Property shall not advance
          the expiration date of this Lease."

     5.   Security Deposit. (a) The second sentence of Section 3.03(a) is
          replaced with the following:

          "Landlord shall be entitled to apply all or part of the Security
          Deposit to (a) any rent or other charges due from Tenant remaining
          unpaid after delivery of notice to Tenant and expiration of the cure
          period with respect to monetary defaults under the Lease or (b) any
          other defaults of Tenant remaining uncured after delivery of notice to
          Tenant and expiration of the applicable cure period."

     (b)  The sixth sentence of Section 3.03(a) is replaced with the following:

          "Landlord shall keep the Security Deposit in a separate
          interest-bearing account and shall not commingle the Security Deposit
          with the funds of Landlord or any third parties.

     6.   Real Property Taxes. (a) Section 4.02(a) is amended in its entirety
          as follows:

          "(a) REAL PROPERTY TAXES. Landlord shall pay all property taxes on the
          Property during the Lease Term. Tenant shall reimburse Landlord for
          such taxes within fifteen (15) days of receipt by Tenant of written
          evidence of Landlord's payment thereof."

     (b)  The following is added to Section 4.02(b):

          "With respect to any assessments imposed with respect to the Property
          during the Lease Term, if provided an option by the assessing
          authority, Landlord shall elect to spread the payment of such
          assessments over the maximum allowable time period

                                      -2-
<PAGE>   22
          and Tenant shall be responsible for payment of only those portions of
          the assessments which are due and payable during the Lease Term."

     7.   Insurance. (a) The first sentence of Section 4.04(b) of the Lease is
replaced with the following:

          "During the Lease Term, Landlord shall maintain policies of insurance
          covering loss of or damage to the Property with coverages in the
          following amounts: (i) Building -- $5,000,000; (ii) General Liability
          -- $2,000,000; (iii) Umbrella -- $10,000,000; and (iv) Earthquake --
          $5,400,000; provided, however, that Landlord shall be entitled to
          increase the insurance coverage from time to time with respect to the
          building to equal the building's replacement value, as such
          replacement value is agreed upon by Landlord and Tenant. If Landlord
          and Tenant are unable to agree upon the replacement value, an MAI
          appraiser mutually agreed upon by Landlord and Tenant shall determine
          such replacement value. The cost of such appraisal shall be borne
          equally by Landlord and Tenant. Landlord shall also be entitled to
          maintain boiler, machinery and crime insurance in amounts which a
          reasonably prudent business person would maintain under similar
          circumstances."

    (b)   Section 4.04(d)(ii) is amended in its entirety as follows:

          "If Tenant fails to deliver any policy, certificate or renewal to
          Landlord required under this Lease within the prescribed time period
          or if any such policy is canceled or modified during the Lease Term
          without Landlord's consent, Landlord may, after providing five (5)
          business days written notice to Tenant and Tenant's failure to deliver
          to Landlord within such period a policy, certificate or renewal which
          complies with this Lease, obtain such insurance, in which case Tenant
          shall reimburse Landlord for the cost of such insurance within fifteen
          (15) days after receipt of a statement that indicates the cost of such
          insurance."

    (c)   The last sentence of Section 4.04(d)(iv) is replaced with the
          following:

          "Landlord and Tenant shall each cause its insurance carriers to
          consent to such waiver and to waive all rights of subrogation against
          the other party."

     8.   Interest on Past Due Obligations.  The first two sentences of Section
4.06 of the Lease are replaced with the following:

          "Any amount owed by Tenant to Landlord which is not paid after
          delivery of written notice by Landlord to Tenant and prior to
          expiration of any applicable cure period shall bear interest at a rate
          equal to the "prime rate" as announced from time to time by Bank of
          America, N.A. plus four percent (4%) per annum from the due date until
          paid."

     9.   Hazardous Materials.  The last three sentences of Section 5.03 of the
Lease are replaced with the following:

          "Tenant shall not cause or permit any Hazardous Material to be
          generated, produced, brought on, used, stored, treated or disposed of
          in or about the Property

                                      -3-
<PAGE>   23
     by Tenant, its agents, employees, contractors, sublesses or invitees other
     than in compliance with all applicable laws and regulations. Landlord
     represents, warrants and agrees that:

     (a)       Landlord has not used, generated, manufactured, produced,
     stored, released, discharged or disposed of on, under or about the Property
     (or off-site of the Property that might affect the Property) or transported
     from the Property, any Hazardous Substance, nor to the best of Landlord's
     actual knowledge has any Hazardous Substance been used, generated,
     manufactured produced, stored, released, discharged or disposed of or,
     under or about the Property (or off-site of the Property that might affect
     the Property).

     (b)       Landlord will not use, generate, manufacture, produce, store,
     release, discharge or dispose of on, under of about the Property (or
     off-site of the Property that might affect the Property), or transport to
     or from the Property, any Hazardous Substance other than in compliance
     with all applicable laws and regulations.

     (c)       To the best of Landlord's actual knowledge no underground storage
     tanks have been removed from the Property, and no underground storage tanks
     are located on the Property.

     (d)       Landlord shall protect, indemnify, defend and hold harmless
     Tenant and its directors, officers, employees, agents, parents,
     subsidiaries, successors and assigns from any loss, damage, cost expense or
     liability (including reasonable attorneys' fees and costs) directly or
     indirectly arising out of or attributable to the Landlord's use,
     generation, manufacture, production, storage, release, threatened release,
     discharge, disposal or presence of a Hazardous Substance on, under or about
     the Property (or off-site on property owned or operated by Landlord that
     affected the Property) or a breach of any representation, warranty,
     covenant or agreement contained in this Section 5.03 including, without
     limitation, the costs of any required or necessary repairs, cleanup or
     detoxification of the Property and the preparation and implementation of
     any closure, remedial or other required plans.

     Tenant shall protect, indemnify, defend and hold harmless Landlord and its
     directors, partners, officers, employees, agents, parents, subsidiaries,
     successors and assigns from any loss, damage, cost, expense or liability
     (including reasonable attorneys' fees and costs) directly or indirectly
     arising out of or attributable to the use, generation, manufacture,
     production, storage, release, discharge, disposal or presence of Hazardous
     Substance on the Property (or off-site of the Property) caused by Tenant
     and its employees, agents, contractors, licensees and invitees, or a
     breach of any representation, warranty, covenant or agreement contained in
     this Section 5.03, including, without limitation, the costs of any required
     or necessary repairs, cleanup or detoxification of the Property and the
     preparation and implementation of any closure, remedial or other required
     plans.

     This Section 5.03. shall survive expiration of this Lease."

10.  Indemnity. Section 5.05 of the Lease is amended in its entirety as follows:

     "Section 5.05. Indemnity.

                                      -4-

<PAGE>   24
(a) Tenant shall indemnify and hold harmless Landlord from claims, suits,
actions, or liabilities for personal injury, death or for loss or damage to
property that arises out of (i) Tenant's use of the Property or (ii) the
negligence or willful misconduct of Tenant, its employees, agents, or invitees,
or (iii) any breach or default by Tenant in the performance of any obligation on
Tenant's part to be performed under this Lease.

This indemnity does not apply (A) to claims, suits, actions or liabilities to
the extent they are caused by the negligent acts or omissions or willful
misconduct of Landlord, its agents, employees, contractors or invitees, (B) to
damage, claims, suits, actions or liabilities waived under Section 4.04(d)(iv),
or (C) to the indemnity in Section 5.03.

Tenant shall have the right to assume the defense of any claim subject to this
indemnity. Landlord agrees to cooperate fully with Tenant and Tenant's counsel
in any matter where Tenant elects to defend, provided Tenant promptly reimburses
Landlord for reasonable costs and expenses incurred in connection with its duty
to cooperate.

The foregoing indemnity is conditioned upon Landlord providing prompt notice to
Tenant of any claim or occurrence that is likely to give rise to a claim, suit,
action or liability that will fall within the scope of the foregoing indemnity,
along with sufficient details that will enable Tenant to make a reasonable
investigation of the claim.

When the claim is caused by the joint negligence or willful misconduct of Tenant
and Landlord or Tenant and a third party unrelated to Tenant (except Tenant's
agents, officers, employees or invitees), Tenant's duty to indemnify and defend
shall be proportionate to Tenant's allocable share of joint negligence or
willful misconduct.

(b) Landlord shall indemnify and hold harmless Tenant from claims, suits,
actions, or liabilities for personal injury, death or for loss or damage to
property that arises from (i) any activity, work, or thing, done or permitted by
Landlord in or about the Property, or (ii) based on any breach or default by
Landlord in the performance of any obligation on Landlord's part to be performed
under this Lease.

This indemnity does not apply to claims, suits, actions or liabilities (A) to
the extent they are caused by the negligent acts or omissions or willful
misconduct of Tenant, its agents, employees, contractors or invitees, (B) to
damage, claims, suits, actions or liabilities waived under Section 4.04(d)(iv),
or (C) to the indemnity in Section 5.03.

Landlord shall have the right to assume the defense of any claim subject to this
indemnity with counsel reasonably satisfactory to Tenant. Tenant agrees to
cooperate fully with Landlord and Landlord's counsel in any matter where
Landlord elects to defend, provided Landlord shall promptly reimburse Tenant for
reasonable costs and expenses incurred in connection with its duty to cooperate.

The foregoing indemnity is conditioned upon Tenant providing prompt notice to
Landlord of any claim or occurrence that is likely to give rise to a claim,
suit, action

                                       5
<PAGE>   25
          or liability that will fall within the scope of the foregoing
          indemnity, along with sufficient details that will enable Landlord to
          make a reasonable investigation of the claim.

          When the claim is caused by the joint negligence or willful
          misconduct of Tenant and Landlord, Landlord's duty to indemnify and
          defend shall be proportionate to Landlord's allocable share of joint
          negligence or willful misconduct."

     11. CONDITION OF PROPERTY: MAINTENANCE AND REPAIRS. Sections 6.01, 6.02,
6.03 and 6.04 are amended in their entirety as follows:

          "6.01. REPAIR OF DEFECTS. Landlord, at its sole cost and expense
     without cost or charge to or contribution by Tenant, shall be responsible
     for and make all repairs, replacements and perform all maintenance required
     because of (i) defective design or construction of the improvements on the
     Property (unless designed and constructed by Tenant), and all equipment and
     systems associated therewith and/or incorporated therein, or (ii) latent
     defects in any of the foregoing. Landlord represents and warrants that, on
     completion of Tenant's Work, all improvements on the Property shall have
     been built in accordance with and comply with all applicable Laws.

          6.02. TENANT'S MAINTENANCE. Tenant shall keep and maintain Tenant's
     furniture and fixtures at the Property in good order, condition, and
     repair, ordinary wear and tear and damage by casualty or Landlord's
     negligence excepted. Tenant shall also be responsible for obtaining
     janitorial services with respect to the Property.

          6.03. LANDLORD'S MAINTENANCE. Except for repairs and replacements that
     Tenant must make under Section 6.02, Landlord shall make all other repairs
     and replacements to the Property and the improvements thereon. Landlord
     shall make the repairs and replacements and perform all maintenance
     necessary to keep the Property and all improvements thereon in good working
     order and repair. This maintenance and repair shall include without
     limitation the roof, foundation, exterior walls, interior structural walls,
     all structural components, utility lines and all systems, such as
     mechanical, electrical, HVAC, plumbing and sewer. Landlord's work under
     this Section 6.03 shall be accomplished with the least possible amount of
     interference with the conduct of Tenant's business and, to the extent
     practicable, shall be done after normal business hours. As set forth in
     Section 25 hereof, the cost of certain of such repairs and replacements
     shall be included in Operating Costs. Landlord will indemnify, protect,
     defend and hold harmless Tenant against all claims, liabilities, damages,
     costs or causes of action (including attorney fees) arising out of or
     brought on account of injury to any person or property or loss of life
     resulting from any failure by Landlord to perform its obligations under
     this Section 6.03.

          6.04. TIME TO COMPLETE WORK. All work to be performed by either party
     under this Article shall be completed promptly but in any event within
     twenty-four (24) hours in any emergency (as defined below) and within
     twenty (20) days for all other repairs. If the work cannot be completed
     within twenty-four (24) hours or twenty (20) days, as the case may be, it
     shall be commenced within the applicable period and prosecuted continuously
     and diligently thereafter until completion.

                                      -6-

<PAGE>   26
           "Emergency" means a situation that (i) threatens the physical
           well-being of persons within the Property, (ii) materially disrupts
           the Tenant's use and/or occupancy of the Property or any portion
           thereof, or (iii) disrupts Tenant's use of parking."

     12.   Alterations, Additions, and Improvements. The first and second
sentences of Section 6.05 of the Lease are replaced with the following:

           "Tenant shall not make any alterations, additions, or improvements to
           the Property without Landlord's prior written consent (which consent
           shall not be unreasonably withheld), except for non-structural
           alterations which do not exceed Twenty-Five Thousand Dollars
           ($25,000) in cost individually or Two Hundred Thousand Dollars
           ($200,000) cumulatively over the Lease Term and which are not visible
           from the outside of any building of which the Property is part. Any
           decorative alterations, additions, or improvements to the Property
           (including, but not limited to, carpet replacement) shall not be
           included for purposes of calculating the $25,000/$200,000 limitations
           set forth above."

     13.   Partial Damage to Property. (a) Section 7.01(a) of the Lease is
amended in its entirety as follows:

           "(a)  Tenant shall notify Landlord in writing immediately upon the
           occurrence of any damage to the Property. If the Property is only
           partially damaged (i.e., the cost to repair the Property is less than
           60% of the Property's replacement cost), this Lease shall remain in
           effect and Landlord shall repair the damage as soon as reasonably
           possible. Landlord may elect (but is not required) to repair any
           damage to Tenant's fixtures, equipment or improvements."

     (b)   The following is added as a new Section 7.01(d) of the Lease:

           "(d)  Landlord shall notify Tenant in writing within thirty (30) days
           of receipt of notice of damage to the Property of the estimated time
           to complete the repair of the Property. If the damage to the Property
           will require more than four (4) months to repair, Tenant may elect to
           terminate this Lease as of the date the damage occurred, regardless
           of the sufficiency of any insurance proceeds. In the event Landlord
           elects to repair the Property, but such repair is not completed
           within four (4) months, Tenant shall be entitled to terminate this
           Lease upon expiration of the four-month period."

     14.   Taking of Parking. The following is added to Article Eight of the
           Lease:

           "If only a portion of the parking area located on or serving the
           Property is the subject of a Condemnation, and the Condemnation
           reduces the number of parking spaces on the Property below 258,
           Tenant has the right to terminate this Lease by giving notice to
           Landlord within thirty (30) days after title vests in the condemning
           authority. Landlord may suspend the effectiveness of Tenant's notice
           by giving its own notice to Tenant within five (5) days of receipt
           of Tenant's termination notice that Landlord will provide substitute
           parking spaces equal to the number taken within two hundred (200)
           yards of the Property within thirty (30) days of the vesting of
           title. If Landlord restores the number of taken parking spaces within
           the thirty (30) days, Tenant's notice of termination shall be
           nullified and of no force and effect. If Landlord does not restore
           the number of taken parking spaces within the

                                      -7-
<PAGE>   27
          thirty (30) period, this Lease shall be terminated at the expiration
          of such thirty (30) day period."

     15.  ASSIGNMENT AND SUBLETTING. (a) Section 9.05(a) is amended by adding
the following at the end of such Section:

          "Landlord shall notify Tenant in writing within fifteen (15) days of
          receipt of Tenant's request for consent (and all other information
          required by this Section 9.05(a)) whether Landlord consents to an
          assignment or subletting of the Property. If Landlord does not notify
          Tenant in writing within such 15-day period, Landlord shall be deemed
          to have consented to such assignment or subletting.

     (b) Section 9.06(b)(i) of the Lease is amended by adding the following at
the end of the second sentence:

          "and an amount equal to the straight line amortization with respect to
          any improvements made to the Property by Tenant prior to the
          assignment or subletting."

     16.  DEFAULT. Section 10.02(b) is amended in its entirety as follows:

          "(b) If Tenant fails to pay rent or any other charge within ten (10)
          days of receipt of written notice from Landlord;"

     17.  SUBORDINATION. The following shall be added to the end of the first
sentence of Section 11.01 of the Lease:

          "("Mortgage"), provided that a Subordination, Attornment and
          Non-Disturbance Agreement ("SAND Agreement") in form reasonably
          satisfactory to Tenant is executed, acknowledged and delivered by the
          mortgagee to Tenant. Tenant shall execute and send to Landlord any
          such SAND Agreement within ten (10) business days of receipt if the
          SAND Agreement is acceptable to Tenant or within five (5) days after
          agreement of the parties to the contents of same."

     18.  ESTOPPEL CERTIFICATES. The following is added as a new Section
11.04(b):

          "(b) Upon Tenant's written request, Landlord shall execute,
          acknowledge and deliver to Tenant a written statement certifying: (i)
          that none of the terms or provisions of this Lease have been changed
          (or if they have been changed, stating how they have been changed);
          (ii) that this Lease has not been canceled or terminated; (iii) the
          last date of payment of the Base Rent and other charges and the time
          period covered by such payment; (iv) that Tenant is not in default
          under this lease (or, if Tenant is claimed to be in default, stating
          why); and (v) such other representations or information with respect
          to Landlord or the Lease as Tenant may reasonably request. Landlord
          shall deliver such statement to Tenant within ten (10) days after
          Tenant's request."

     19.  TENANT'S FINANCIAL CONDITION. Section 11.05 of the Lease is amended
in its entirety as

                                      -8-
<PAGE>   28
          "Section 11.05 TENANT'S FINANCIAL CONDITION. Within ten (10) days
          after written request from Landlord, Tenant shall deliver to Landlord
          a copy of the financial statements of GT Interactive Software
          Corporation (Tenant's parent) most recently filed with the U.S.
          Securities and Exchange Commission. Landlord shall be entitled to
          request such financial information no more frequently than once in any
          12-month period and only if requested by Landlord's lender with
          respect to the Property."

     20.  Landlord's Liability. The following is added to Section 13.02(c) of
          the Lease:

          "In the event that Landlord assigns this Lease to a purchaser of the
          Property, such purchaser shall expressly assume all of Landlord's
          obligations under this Lease, whether arising prior to or after such
          assignment."

     21.  Notices. The following is added to Section 13.06 of the Lease:

          "Landlord shall also send copies of any notices Landlord sends to
          Tenant to GT Interactive Software Corporation at:

                          GT Interactive Software Corporation
                                  16 East 40th Street
                                   New York, NY 10016
                                 Attn: David Chemerow"

     22.  Landlord Authority. The following is added to Section 13.10 of the
          Lease:

          "Within thirty (30) days after this Lease is signed, Landlord shall
          deliver to Tenant a certified copy of a resolution of Tenant's members
          or managers authorizing the execution of this Lease or other evidence
          of such authority reasonably acceptable to Tenant."

     23.  Force Majeure. Section 13.12 of the Lease is amended in its entirety
          as follows:

          "Section 13.12 FORCE MAJEURE. If Landlord or Tenant cannot perform any
          of their respective obligations due to events beyond Landlord's or
          Tenant's control, respectively, the time provided for performing such
          obligations shall be extended by a period of time equal to the
          duration of such events. Events beyond Landlord's or Tenant's control
          include, but are not limited to, acts of God, war, civil commotion,
          labor disputes, strikes, fire, flood or other casualty, shortages of
          labor or material, governmental regulation or restriction and weather
          conditions."

     24.  [Intentionally Omitted.].

     25.  Operating Costs. Landlord shall reasonably estimate the Operating
          Costs (as defined below) with respect to the Property for each
          calendar year wholly or partially included within the Lease Term and
          shall send notice of the estimate to Tenant within thirty (30) days
          after the Term begins for the first Lease year and thereafter at least
          thirty (30) days before commencement of each subsequent calendar year.
          The monthly charge for estimated operating costs shall be prorated for
          any partial month by dividing the operating cost charge by 365 and
          multiplying the result by the number of days in the partial month for
          which operating costs are owed. "Operating Costs" shall mean the
          following:

                                      -9-
<PAGE>   29
     (a)  real property taxes payable pursuant to Section 4.02(a) of the Lease;

     (b)  personal property taxes payable pursuant to Section 4.02(d) of the
Lease;

     (c)  insurance premiums payable pursuant to Section 4.04(c) of the Lease;

     (d)  owners' association dues with respect to the office park in which the
Property is located;

     (e)  a monthly property management fee (the "Property Management Fee")
equal to 3.25% of the Base Rent for the first five years of the Lease Term and
3.64% of the Base Rent for the remainder of the Lease Term;

     (f)  costs associated with landscape maintenance for the Property;

     (g)  a monthly roof and structural maintenance fee of $.02 per square foot
of the building to be constructed on the Property;

     (h)  costs associated with maintenance of the elevator to be located on
the Property;

     (i)  costs associated with maintenance of the HVAC system to be
installed in the improvements to be constructed on the Property;

     (j)  costs associated with once-a-month sweeping of the parking lot to be
located on the Property;

     (k)  costs associated with the twice-yearly washing of the exterior windows
of the building to be constructed on the Property; and

     (l)  repair and maintenance costs with respect to the Property (other than
costs associated with roof and structural maintenance and costs associated with
defects in the construction of the improvements on the Property).

     Landlord has estimated that the monthly Operating Costs (excluding utility
charges) of the initial twelve (12) months of the Lease Term will be between
$0.19 and $0.24 per square foot of the building to be constructed on the
Property. Tenant shall not be obligated to pay Operating Costs in excess of
$0.19 per square foot for the initial twelve (12) months of the Lease Term.

     Not later than sixty (60) days after the expiration of each calendar year
included in the Lease Term, Landlord shall submit to Tenant a written statement,
in sufficient detail for verification by Tenant, containing the amount of actual
Operating Costs for such year and any amounts owed by one party to the other for
such year. Tenant or its accountants shall have the right to inspect and audit
Landlord's books and records with respect to this Lease once each calendar year
during the Lease Term to verify actual Operating Costs. Any overcharge or
underpayment of Operating Costs shall be due from one party to the other within
thirty (30) days after the amount of the overcharge or underpayment has been
fixed.

     Tenant shall pay directly any costs associated with janitorial services
(including interior window washing), utilities (electricity, water, sewer and
garbage removal), security system and fire alarm monitoring and related fire
safety expenses with respect to the Property.

     26.  Landlord's Work. Landlord, at its sole cost and expense, shall
construct on the Property the following ("Landlord's Work"), as more
specifically described on Exhibit C attached to the Lease:

                                      -10-
<PAGE>   30
     (a) a building shell (including a finished elevator, three finished
stairwells, finished building exterior, a three-ply roof with rigid insulation.
Leveler Riviera mini blinds on exterior building windows, code compliant
restrooms at core locations, an electrical and elevator machine room, perimeter
furring, water to the building and at least one drive-in loading door);

     (b) site work;

     (c) parking areas;

     (d) landscaping;

     (e) fire sprinklers per code;

     (f) a base electrical system with a minimum of 2,000 AMPS 277/480 volt
three-phase, four wire switch board; and

     (g) an HVAC system as described in Section 1.1.1 of Exhibit C to the Lease.

     Landlord warrants that Landlord's and Tenant's Work will be completed in
accordance with the plans and specifications and shall be free of defect.
Landlord shall cause Baugh Construction Company (the general contractor with
respect to the improvements to be constructed on the Property) ("Baugh") to
obtain the most favorable warranties obtainable from subcontractors performing
work with respect to the improvements to be constructed on the Property. No
later than December 8, 1997, Landlord shall advise Tenant with respect to the
warranties which will be obtained with respect to the roof and structural
components of the improvements to be constructed on the Property. Landlord
agrees that, in the event any defect in Landlord's or Tenant's Work is
discovered during the time period during which an applicable warranty is in
effect, Landlord shall promptly cure such breach at Landlord's expense, either
by pursuing its remedy against any contractor or subcontractor who performed
such work or by undertaking such remedy itself.

     27. Space Planning Allowance. Landlord shall pay Tenant an allowance of
$35,000 on the Commencement Date to assist Tenant in defraying the direct and
indirect costs of space planning and preparing and providing Tenant's Plans and
other construction documentation. Tenant shall be responsible for the cost of
space planning and construction drawing in excess of such amount.

     28. Tenant Improvements.

     (a) The leasehold improvements on the Property, together with the base
building standard interior items and standard interior finishes provided by
Landlord and approved by Tenant will be hereinafter referred to as "Tenant's
Work." Such improvements shall include 67% enclosed spaces and/or private
offices and 33% open space. No later than December 19, 1997, Tenant shall cause
to be prepared and shall furnish to Landlord Building Permit Submittal Documents
(i.e., all documents necessary to permit Landlord to make application to the
City of Bothell for a building permit with respect to the Tenant's Work). The
Building Permit Submittal Documents shall be prepared by duly licensed or
registered architects and engineers and shall conform to applicable governmental
requirements as to the adequacy of plans and specifications submitted with an
application for a building or other construction permit so that such permit may
issue.

     (b) Landlord shall review the Building Permit Submittal Documents and shall
inform Tenant no later than December 22, 1997 of its requested changes. Upon
receipt of Landlord's comments and requested changes, Tenant shall promptly
review the requested changes and, if Tenant agrees with such requested changes,
make the requested change to the Building Permit Submittal Documents and
resubmit same to Landlord for review. If Tenant is not agreeable to Landlord's
requested changes, Landlord and Tenant shall

                                      -11-
<PAGE>   31
negotiate in good faith to resolve the disagreement. Upon agreement to the
Building Permit Submittal Documents by Landlord and Tenant, the Building Permit
Submittal Documents shall become the Construction Documents.

     (c)  If Landlord and Tenant do not agree to the changes to be made to the
Building Permit Submittal Documents as provided for in Section 28(b) by December
31, 1997, Tenant has the right, to be exercised by written notice to the
Landlord within five (5) business days after the expiration of such time period,
to terminate the Lease.

     (d)  Upon Landlord's and Tenant's agreement to the Construction Documents,
Landlord at its sole cost and expense shall obtain or cause to be obtained all
building permits and other governmental approvals which may be required to
permit construction of the Tenant's Work in accordance with the Construction
Documents and the occupancy thereof for the intended uses.

     (e)  Tenant's agreement with respect to the Construction Documents shall
not: (i) impose any present or future liability on Tenant; (ii) constitute a
waiver of any of Tenant's rights hereunder; (iii) impose additional obligations
on Tenant; or (iv) impose on Tenant any responsibility for a design and/or
construction defect or fault in the Tenant's Work. Notwithstanding anything to
the contrary contained elsewhere in this Lease, the correction of any such
defect or fault whenever necessary and whatever involving shall be at Landlord's
sole cost and expense without any expense, payment, cost or charge whatever to
or contribution by Tenant.

     (f)  Tenant shall provide Landlord with five (5) sets of Construction
Documents, and Landlord and Tenant shall execute or initial counterparts
thereof. The Construction Documents shall be final and shall not be changed by
Landlord in any material respect without the prior consent of Tenant which
consent shall not be unreasonably withheld.

     (g)  Upon establishment of the Construction Documents, Landlord shall
promptly commence construction of Tenant's Work and diligently proceed to
complete same at its sole cost and expense. Landlord warrants and represents
that all portions of the Property will be constructed with new materials. The
construction shall be performed by or on behalf of Landlord in a good and
workmanlike manner and in compliance with all Laws. Landlord has the entire and
sole responsibility to correct any portion(s) of the Tenant's Work which is not
in compliance with Laws, all at its sole cost and expense without expense,
payment, cost or charge whatever to or contribution by Tenant for causing such
compliance. Landlord shall keep Tenant apprised of the progress of construction
of Tenant's Work and shall provide Tenant with at least thirty (30) days'
advance written notice of the estimated Commencement Date.

     (h)  If Tenant requests a change to the Tenant's Work, Landlord shall
obtain from Baugh information regarding the cost of such change and the delay in
substantial completion, if any, caused by such change order and shall notify
Tenant in writing, before executing the change, of the cost thereof or the
savings to the Landlord, if any, and the delay in substantial completion, if
any, in Tenant's Work caused by the change. Alternatively, Tenant may
communicate directly with Baugh in order to obtain the above-described
information. If Tenant and Landlord are unable to agree with respect to the
delay caused by a change order within two (2) business days of Tenant's receipt
of such information, Tenant and Landlord shall promptly select a mutually
agreeable architect who shall determine the delay caused by such change order no
later than five (5) business days after such architect's selection. Tenant shall
then either tell Landlord to proceed with the change order or withdraw it within
one (1) business day thereafter. If Tenant does not take any action with respect
thereto in that time the change order is deemed withdrawn hereby. The cost of a
change order shall be determined by mutual agreement of Landlord and Tenant
negotiating the costs and savings in good faith. Payments by Tenant to Landlord
for changes that increase the cost of the Tenant's Work shall be made pro rata
as such work progresses so long as the relevant materials are installed or are
on site Tenant or its

                                      -12-

<PAGE>   32
representative(s) has inspected and approved the work, appropriate lien waivers
from the proper parties furnishing labor, materials, and/or services are
provided, and Landlord has submitted an itemized bill. Such payment shall be
made within 30 days of receipt of all of the foregoing by Tenant. If the
parties agree on the length of the delay necessitated by the change or such
delay is determined by an architect as set forth above, the date for
substantial completion of Tenant's Work shall be postponed by the length of
such delay. If the parties cannot agree, the period of postponement shall be
determined by the actual length of delay. However, commencement of payment of
rent under the Lease shall not be postponed as a result of any delay caused by
a change order.

     (i)  During construction of the Tenant's Work, Tenant or its
representative(s) may enter upon the Property for purposes of inspecting the
Tenant's Work, taking measurements, making plans and installing cabling and a
security system without being deemed thereby to have taken possession. Tenant's
use of the Property for the purposes herein stated shall be subject to all of
the terms, covenants, and conditions of this Lease, except as to commencement of
the Term and payment of rent. In exercising its rights under this Section 28(i),
Tenant shall not interfere materially with Landlord's construction work on the
Property. Tenant has the right to reject any portion(s) of the Tenant's Work
which do not meet the requirements of this Lease. If Tenant does reject any
portion(s) of the Tenant's Work as nonconforming to the requirements of this
Lease, Landlord shall take all necessary corrective measures, including but not
limited to replacement of all of such Tenant's Work, at not expense, or cost to
Tenant.

     (j)  The phrases "substantial completion" or "substantially complete(d)"
as used in this Lease shall be deemed to mean the availability of the Property
for uninterrupted use and occupancy by Tenant with a minimum of interference by
the Landlord which will be indicated by the fact that the following shall have
occurred: (i) all Tenant's Work shall have been completed, except for punchlist
items, and shall have been inspected and approved by the appropriate
authorities, (ii) a temporary or final certificate of occupancy (or the
equivalent thereof) has been issued or the City of Bothell has authorized
Tenant to assume beneficial occupancy of the Property, (iii) mechanical,
plumbing, electrical, conveying and sprinkler systems (installed and tested as
per specifications) shall have been completed such that the appropriate
services to be rendered by such systems can be and are being supplied and such
systems are fully operational, (iv) the entrance and lobby of the building to
be constructed on the Property shall have been completed and the means of
ingress and egress are not interfered with by any scaffolding, building
materials, or other articles, and (v) the parking areas and access roads have
been completed.

     (k)  Landlord shall complete all punchlist items as expeditiously as
possible but in any event within thirty (30) days after substantial completion
of Tenant's Work. The punchlist shall be developed by Landlord and Tenant after
an inspection of the Property by Landlord and Tenant or their representative(s).

     (l)  Except as otherwise provided herein, Landlord shall receive no fee
for supervision, profit, overhead or general conditions in connection with the
Tenant Work.

     29.  Clean-Up Expenses. Prior to the commencement of the Move-In Period,
Landlord shall thoroughly clean the Property. Landlord shall be responsible for
all subsequent cleanup required from construction performed by Landlord or
Landlord's contractors, agents and employees. The costs of the cleaning
provided by Landlord pursuant to this Section 29 shall not be included in
Operating Costs.

     30.  No Miscellaneous Charges. Tenant shall not be charged for parking or
for the use of electricity, water, HVAC, or security elevators during the
performance of the Tenant Work or during the Move-In Period. The HVAC systems
for the Property shall be run continuously twenty-four (24) hours per day,
seven (7) days per week during the Move-In Period to flush out and purge new
finish odors.

                                      -13-

<PAGE>   33
     31.  TENANT DELAY.  The term "Tenant Delay" as used in this Addendum shall
mean any delay that Landlord may encounter in the performance of Landlord's
obligations under the Lease or this Addendum because of any act or omission of
any nature by Tenant or its agents or contractors, including any (a) delay
attributable to changes requested by Tenant pursuant to Section 28(h) hereof;
(b) delay attributable to the postponement of any Tenant's Work at the request
of Tenant; (c) delay by Tenant in the submission of information or the giving of
authorizations or approvals within the time limits set forth in this Addendum;
and (d) delay attributable to the failure of Tenant to pay, when due, any
amounts required to be paid by Tenant pursuant to the Lease or this Addendum.
Tenant shall pay all actual out-of-pocket costs and expenses incurred by
Landlord which result from any Tenant Delay aggregating more than five (5) days,
including, without limitation, any actual costs and expenses attributable to
increases in the cost of labor or materials.

     No Tenant Delay shall be deemed to have occurred unless and until Landlord
has given written notice to Tenant specifying the action or inaction which
Landlord contends constitutes a Tenant Delay. If such action or inaction is
not cured within three (3) business days after the Tenant's receipt of such
notice, then a Tenant Delay, as set forth in such notice, shall be deemed to
have occurred commencing as of the date Tenant received such notice and
continuing for the number of days the substantial completion of the Property
was in fact delayed as a direct result of such action or inaction. The June
25, 1998 date set forth in Section 3 of this Addendum shall be extended by the
aggregate number of days taken by Tenant to cure any action or inaction as set
forth in the preceding sentence.

     32.  SIGNAGE.  Tenant, at Tenant's sole cost and expense, shall be
entitled to install signage including Tenant's names and logo, on and in the
improvements to be constructed on the Property, including on the roof line,
main entrances, the walls of elevator lobbies and on entrance doors. Tenant may
elect to install more than one sign on the improvements or Property and on more
than one side of the building to be constructed on the Property. All such
signage shall be subject to City of Bothell approval.

     33.  LANDLORD REPRESENTATIONS AND WARRANTIES.  To induce Tenant to execute
the Lease and this Addendum, and in consideration of the other representations
and warranties of Landlord contained in the Lease and this Addendum, Landlord
warrants and represents that as of the date of execution of the Lease and as of
the Commencement Date:

     (a)  Landlord is the owner in fee simple of the Property;

     (b)  Landlord has good and marketable title to the Property, there are no
liens, easements, restrictions or encumbrances upon the Property that will
prohibit, restrict or adversely affect Tenant's use and occupancy of the
Property or the intended use of the rights granted to Tenant in this Lease;

     (c)  There are no restrictions or impediments imposed by laws (including
applicable zoning and building ordinances) that would prevent Tenant from using
the Property for the uses and in the manner contemplated by this Lease, or from
using the parking facilities and access roads;

     (d)  This Lease, the Property, and the improvements constructed thereon
prior to the Commencement Date shall not violate the provisions of laws or of
any instrument executed by the Landlord or any other instrument that places any
restrictions or burdens on the Property;

     (e)  Landlord has obtained all necessary easements for access and utilities
and these are appurtenant to the Property; and

     (f)  Landlord has full right and lawful authority to enter into and perform
Landlord's obligations under this Lease for the full Lease Term.

                                      -14-

<PAGE>   34
     34. Extension Option. Tenant shall have the right to extend this Lease for
one (1) additional period of five (5) years (the "Option"), upon the same terms
and conditions of this Lease as are provided for the initial ten-year Lease
Term except that Base Rent shall be adjusted to equal ninety-five percent (95%)
of the then current fair market rental rate of the Property. To exercise the
Option, Tenant must give notice to Landlord that Tenant is exercising the
Option at least nine (9) months before the initial ten-year Lease Term expires.
If Landlord and Tenant are unable to agree upon the Base Rent for the Option
period within sixty (60) days after Tenant's exercise of the Option, Landlord
and Tenant shall mutually select an MAI appraiser who shall determine the fair
market rental rate for the Property (taking into account, among other things,
the quality and age of the tenant improvements located on the Property and the
quality, location and age of the Property and its improvements) no later than
thirty (30) days after such appraiser's selection. If Landlord and Tenant are
unable to agree upon an appraiser within twenty (20) days of expiration of the
60-day period, Landlord and Tenant shall each select an MAI appraiser, which
appraisers shall mutually select a third MAI appraiser and such third appraiser
shall perform the appraisal.

                      [This space intentionally left blank.]

                                      -15-
<PAGE>   35
IN WITNESS WHEREOF, the parties have executed this Addendum as of the date set
forth above.

                           Landlord:

                           M.V. 1997, AN L.L.C., a Washington limited liability
                           company

                           By /s/ [illegible]
                           ----------------------------------

                             Its member
                             --------------------------------

                           Tenant:

                           HUMONGOUS ENTERTAINMENT, INC., a
                           Washington corporation

                           By /s/ Shelley M. Day
                           ----------------------------------

                             Its President/CEO
                             --------------------------------

                                      -16-
<PAGE>   36
STATE OF WASHINGTON    )
                       )ss.
COUNTY OF KING         )

     On this 24th day of November, 1997, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn,
personally appeared Shelley Day, to me known to be the person who signed as
President & CEO of HUMONGOUS ENTERTAINMENT, INC., the corporation that executed
the within and foregoing instrument, and acknowledged said instrument to be the
free and voluntary act and deed of said corporation for the uses and purposes
therein mentioned, and on oath stated that she was duly elected, qualified and
acting as said officer of the corporation, that she was authorized to execute
said instrument and that the seal affixed, if any, is the corporate seal of said
corporation.

     IN WITNESS WHEREOF if have hereunto set my hand and official seal the day
and year first above written.

                                        /s/ Teddi R. Hosman
                                        _______________________________________
                                        (Signature of Notary)

                                        Teddi L. Hosman
                                        _______________________________________
                                        (Print or stamp name of Notary)

                                        NOTARY PUBLIC in and for the State
                                        of Washington, residing at Bothell, WA
                                        My appointment expires: 10/8/98

STATE OF WASHINGTON    )
                       )ss.
COUNTY OF KING         )

     On this 24th day of November, 1997, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn,
personally appeared Jack Martin, to me known to be the person who signed as
Member of M.V. 1997, An L.L.C., the limited liability company that executed the
within and foregoing instrument, and acknowledged said instrument to be the
free and voluntary act and deed of said limited liability company for the uses
and purposes therein mentioned, and on oath stated that __________ was
authorized to execute said instrument on behalf of the limited liability
company.

                                      -17-

<PAGE>   37
     IN WITNESS WHEREOF I have hereunto set my hand and official seal the day
and year first above written.

[NOTARY SEAL]                           /s/ Susan C. Leitzke
                                        _______________________________________
                                        (Signature of Notary)

                                        Susan C. Leitzke
                                        _______________________________________
                                        (Print or stamp name of Notary)

                                        NOTARY PUBLIC in and for the State
                                        of Washington, residing at BELLVUE.
                                        My appointment expires: 08-02-98.

                                       -18-
<PAGE>   38
                             1ST AMENDMENT TO LEASE
------------------------------------------------------------------------------

DATED NOVEMBER 24, 1997 BETWEEN MV 1997, L.L.C. (LANDLORD) AND HUMONGOUS
ENTERTAINMENT (TENANT).

THE BASE RENT SCHEDULE AS OUTLINED IN "ADDENDUM TO INDUSTRIAL REAL ESTATE LEASE"
SECTION 2 SHALL HEREBY BE AMENDED TO BE AS FOLLOWS:

<TABLE>
<Caption>

MONTH OF LEASE TERM                          BASE RENT PER MONTH
-------------------                          -------------------
<S>                                          <C>
1 through 6                                  Sixty-Nine Thousand Two Hundred Fifty-Nine
                                             and No/100 Dollars ($69,259.00)

7 through 12                                 Seventy-Two Thousand-Six Hundred Ninety-
                                             Nine and No/100 Dollars ($72,699.00)

13 through 60                                Seventy-Six Thousand One Hundred Thirty-
                                             Four and No/100 Dollars ($76,134.00)

61 through 120                               Eight-Five Thousand One Hundred Thirty-
                                             Four and No/100 Dollars ($85,134.00)

</Table>

AGREED AND ACCEPTED

LANDLORD:                          TENANT:

MV 1997, L.L.C.                    HUMONGOUS ENTERTAINMENT

By:  illegible                     By: /s/ Shelley Day
   ----------------------             --------------------------
Its: MEMBER                        Its: PRESIDENT
    ---------------------              -------------------------
Date: 9 JAN. 1998                  Date: 10/15/97
     --------------------               ------------------------<PAGE>   1
                                                                   Exhibit 10.17

                                 LEASE AGREEMENT

       The capitalized terms in this Lease shall have the meanings ascribed to
in the Lease and as summarized below, and each reference to such term in the
Lease shall incorporate such meaning therein as if fully set forth therein.

TERMS:

<TABLE>
<S>                      <C>
Landlord:                Northwest Properties Realty Corp., a Minnesota corporation

Tenant:                  G. T. Interactive Software Corp., a Delaware corporation

Leased Premises:         Suite 150, consisting of approximately 20,400 square feet

Project:                 Northwest Pointe Business Centre
                             2155 Niagara Lane North
                         Plymouth, Minnesota 55447-4699

Term:                    From 12:01 a.m. on March 1, 1999 (the "Commencement Date")
                         through 1l:59 p.m. on November 30, 2002 (the "Expiration Date")

Annual Minimum Rent
Payable by Tenant for
First Year of Term:      $191,124.60 per annum

Base Year:               N/A

Security Deposit:        $15,927.05
</TABLE>

                                       1
<PAGE>   2
                                     INDEX

<TABLE>
<CAPTION>
Paragraph                                 Heading
---------                                 -------
<S>                                       <C>
                                          Summary
                                          Index
1                                         Leased Premises
2                                         Term
3                                         Rent
4                                         Use
5                                         Acceptance of Leased Premises, Tenant's Work,
                                          and Repairs by Landlord
6                                         Repairs by Tenant
7                                         Plans and Specifications
8                                         Right of Entry
9                                         Landlord's Right to Act for Tenant
10                                        Defaults and Remedies
11                                        Tenant's Improvements, Liens
12                                        Tenant's Property, Landlord's Lien
13                                        Subletting and Assignment
14                                        Casualty
15                                        Condemnation
16                                        Insurance
17                                        Signage
18                                        Attorney's Fees
19                                        Parties
20                                        Landlord and Tenant Relationship
21                                        Holding Over
22                                        Sale by Landlord
23                                        Surrender of the Premises
24                                        Notices
25                                        Covenant of Quiet Enjoyment
26                                        Subordination
27                                        Estoppel Certificate
28                                        Successors and Assigns
29                                        Limitation of Liability
30                                        Broker's Commission
31                                        Rules and Regulations
32                                        Hazardous Substances
33                                        Miscellaneous
34                                        Furnishings Covenant
35                                        Tenant Access
36                                        Tenant Security System
37                                        Heating and Cooling System
Exhibit A:       Diagram of the Project
Exhibit B:       Tenant's Work
Exhibit B-1:     Plans and Specifications
Exhibit C:       Rules and Regulations
</TABLE>

                                       2
<PAGE>   3
                                 LEASE AGREEMENT

         This Lease Agreement (hereinafter called "Lease") is made on this 22nd
day of February, 1999, by and between Northwest Properties Realty Corp.
("Landlord"), having an office at c/o Sentinel Real Estate Corporation, 666
Fifth Avenue, 26th Floor, New York, New York 10103-2698 and G.T. Interactive
Software Corp., a Delaware corporation ("Tenant"), having a corporate
headquarters located at 417 Fifth Avenue, New York, New York 10016.

                                  WITNESSETH:

         Leased Premises: Landlord hereby demises and leases to Tenant, and
Tenant hereby takes and leases from Landlord, that certain space known and
numbered as Suite 150 and containing approximately 20,400 square feet (the
"Leased Premises"), consisting of 19,812 square feet of office space and 588
square feet of warehouse space, now or hereafter to be constructed in the
Northwest Pointe Business Centre (the "Project"), located at 2155 Niagara Lane
North, Plymouth, Minnesota 55447-4699. The Leased Premises are outlined and
crosshatched in red on the diagram of the Project attached hereto as Exhibit A
and made a part hereof. Exhibit A sets forth the general layout of the Project
and shall not be deemed to be a warranty on the part of Landlord that the
Project will be exactly as indicated on said diagram. Landlord may increase,
reduce or change the number, dimensions and locations of roadways, walks,
buildings, landscaped areas and parking areas as Landlord shall from time to
time deem proper; provided that such changes shall not materially impair
Tenant's access to the Leased Premises. Occupancy by Tenant of the Leased
Premises shall include the use in common with others entitled thereto of parking
areas, service roads and sidewalks shown and depicted on Exhibit A, subject,
however, to the terms and conditions of this Lease and to all rules and
regulations for the use thereof as set forth herein and as may from time to time
be otherwise prescribed by Landlord. No easement is included in the Leased
Premises.

         2. Term: (a) The term ("Term") of this Lease shall be for a period of
forty-five (45) months commencing on March 1, 1999 (herein referred to as the
"Commencement Date"), and expiring on November 30, 2002 (herein referred to as
the "Expiration Date"). All references to the "Term" or "term of this Lease"
refer to the term of the Lease as it is renewed, extended or sooner terminated.

         (b) If Landlord is unable to give possession of the Leased Premises to
Tenant on the Commencement Date because (i) a tenant or occupant remains in
possession of the Leased Premises, or (ii) for any other reason, then Landlord
shall not be liable for such failure, and no such failure shall affect the
validity of this Lease; provided, however, Tenant shall not be required to pay
rent for any period during which Landlord is prevented from giving possession of
the Leased Premises to Tenant. In no event shall the Expiration Date, as
hereinabove defined, be changed in connection with any such delay.

         3. Rent:

         (a) Minimum Rent: Landlord reserves and Tenant covenants to pay to
Landlord at the address set forth below, or such other address as Landlord shall
from time to time designate in writing, without prior demand being made therefor
and without offset or deduction of any kind, Minimum Rent for the Leased
Premises as follows:

                  (i) For the period commencing on March 1, 1999 and expiring on
November 30, 2002, the sum of $191,124.60 per annum, payable in equal monthly
installments, in advance, of $15,927.05 per month.

         (b) In addition to the Minimum Rent hereinabove set forth, Landlord
reserves, and Tenant covenants to pay to Landlord, as additional rent for the
Leased Premises, a proportion of the Project's Taxes and Operating Expenses, as
such terms are hereinafter defined, which proportion shall be 22.11% of the
Project.

         (c) For the purposes of this Lease the term "Taxes" shall mean the sum
of all real estate, ad valorem, property taxes and any general or special
assessments levied upon all or any part of the Building, both land and
improvements thereon, for each year of the Term. The additional rent provided to
be paid in this Paragraph for Taxes at the commencement of the Term have been
computed based on Taxes anticipated to be incurred during the current calendar
year for an estimated charge of $5,678.00 per month to be paid, in advance,
without prior demand being made therefor and without offset or deduction of any
kind.

         (d) For the purposes of this Lease, the term "Operating Expenses" shall
mean the total cost and expense incurred in operating and maintaining the common
areas of the Project actually used or available for use by Tenant and the
employees, agents, servants, customers and other invitees of Tenant, including
without limitation, the sum of all costs of all fire and extended casualty
insurance and all liability insurance on the Project together with the costs of
other insurance protections, including but not limited to, business interruption
insurance, gardening and landscaping, repairs, maintenance, painting, lighting,
sanitary control, security, removal of snow, trash, rubbish, garbage and other
refuse, pest control,

                                       3
<PAGE>   4
window washing, janitorial, capital expenditures amortized over their useful
lives, management fees and the cost of personnel. For the purposes of this
Lease, the term "Operating Expenses" shall not include any ground lease rental;
costs incurred by Landlord for the repair of damage to the Project, to the
extent that Landlord is reimbursed by insurance proceeds; costs, including
permit, license and inspection costs, incurred with respect to the installation
of tenant or other occupants' improvements in the Project or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants of the Project; marketing costs including,
without limitation, leasing commissions, attorneys' fees in connection with the
negotiation and preparation of letters, deal memos, letters of intent, leases,
subleases and/or assignments, space planning costs associated with tenant
improvements, and other costs and expenses incurred in connection with any
lease, sublease and/or assignment negotiations and transactions with present or
prospective tenants or other occupants of the Project; expenses in connection
with services or other benefits which are provided to another tenant or occupant
of the Project which service or benefit is not also provided to Tenant; costs
incurred by Landlord due to the violation by Landlord or any tenant of the terms
and conditions of any lease of space in the Project; overhead and profit
increment paid to Landlord or to subsidiaries or affiliates of Landlord for
goods and/or services in or to the Project to the extent the same exceeds the
costs of such goods and/or services rendered by unaffiliated third parties on a
competitive basis; interest, principal, points and fees on debts or amortization
on any mortgage or mortgages or any other debt instrument encumbering the
Project; advertising and promotional expenditures; tax penalties incurred as a
result of Landlord's negligence or inability to make payments when due; any
management fees in excess of those management fees which are normally and
customarily charged by landlords of comparable buildings; costs arising from the
negligence or fault of other tenants or Landlord or its agents, or any vendors,
contractors, or providers of materials or services selected, hired or engaged by
Landlord or its agents; costs associated with the operation of the business of
the corporate entity which constitutes Landlord as the same are distinguished
from the costs of operation of the Project, including corporate accounting and
legal matters, costs of defending any lawsuits with any mortgagee (except as the
actions of Tenant may be in issue), costs of selling, syndicating, financing,
mortgaging or hypothecating any of Landlord's interest in the Project, costs of
any disputes between Landlord and its employees (if any) not engaged in Project
operation, or outside fees paid in connection with disputes with other tenants;
and costs of capital improvements, except that Operating Expenses shall include
the cost of any capital improvement completed on or after the Commencement Date
which reduce future Operating Expenses or made by Landlord to keep the Project
in compliance with all governmental rules and regulations applicable thereto
from time to time, in either such case as amortized in accordance with generally
accepted accounting principals. For the purposes of this Lease the term "common
areas" shall mean all areas, space, equipment and services provided by Landlord
for the common or joint use and benefit of the occupants of the Project, their
employees, agents, servants, customers, and other invitees, including without
limitation, parking areas, access roads, driveways, retaining walls, landscaped
areas, truck serviceways or tunnels, loading docks, pedestrian or other malls,
courts, stairs, ramps and sidewalks, comfort and first aid stations, washrooms
and parcel pickup stations. The additional rent provided to be paid in this
Paragraph for Operating Expenses at the commencement of the Term have been
computed based on Operating Expenses anticipated to be incurred during the
current calendar year for an estimated charge of $1,666.00 per month to be paid,
in advance, without prior demand being made therefor and without offset or
deduction of any kind.

         (e) The additional rent payable for Taxes and Operating Expenses
hereunder shall be adjusted annually to reflect the actual cost of Taxes and
Operating Expenses incurred during the preceding twelve (12) months, to bill
Tenant for any amounts due or refund Tenant for any amounts overpaid for the
preceding twelve (12) months (payments to be made within 30 days of billing or
when refund is calculated, as applicable) and to compute or recompute the
monthly estimates payable by Tenant to Landlord thereafter, based on Taxes and
Operating Expenses anticipated to be incurred during the succeeding twelve (12)
months. Taxes and Operating Expenses shall be prorated for the years in which
the Term commences and expires or sooner terminates based on the portion of such
years(s) during which the Lease is in effect. If Tenant is entitled to a
refund, or Landlord is entitled to a payment, of Taxes and/or Operating Expenses
during the year in which the Term expires or sooner terminates, such amount
shall be paid to Tenant or paid to Landlord, as the case may be, within thirty
(30) days after adjustment is made as aforesaid. This paragraph shall survive
the expiration or sooner termination of this Lease.

         (f) All rental payments shall be made to Landlord in monthly
installments in advance, on or before the first of each month and delivered to
Landlord c/o Sentinel Real Estate Corporation, Commercial Accounting, 666 Fifth
Avenue, 26th Floor, New York, New York, 10103-2698.

         (g) Tenant covenants and agrees to pay a $50.00 late fee plus interest
at the rate of one and one-half percent (1.5%) per month, compounded
daily, on all Minimum Rent, additional rent and all other sums due under this
Lease from the time said rents or sums accrue if they are not paid within five
(5) days after said payments are due. Should Tenant pay its rent by a check
which is returned for "non-sufficient funds", Landlord may thereafter require
that all future payment be made by certified or bank check. Landlord expressly
reserves all rights and remedies provided herein and by law in respect thereto.

         (h) As used herein, the term "Lease Year" shall mean each term of
twelve (12) consecutive calendar months commencing on the Commencement Date or
on the first (1st) day of the first (1st) calendar month following the
Commencement Date, if the Commencement Date does not fall on the first

                                       4
<PAGE>   5
(1st) day of a calendar month; provided, however, that the first (1st) Lease
Year shall include the partial month, if any, caused by the Commencement Date's
falling on other than the first (1st) day of a calendar month.

         (i) Tenant has deposited with Landlord sum of $15,927.05 as security
for the full and faithful performance by Tenant of all terms of this Lease
required to be performed by Tenant. Said deposit shall be held by Landlord,
without liability for interest, and may be applied by Landlord, in whole or
part, for the payment of any past due fixed Minimum Rent, additional rent, or
other money, damage or loss which may be sustained by Landlord because of a
default by Tenant. In the event of any such application by Landlord; Tenant
shall, upon the written demand of Landlord, promptly remit to Landlord a
sufficient amount of cash to restore the security to the original sum deposited.
Landlord shall deliver such deposit to any purchaser or other transferee of
Landlord's interest in the Building in which the Leased Premises are located,
and thereupon Landlord shall be discharged from any further liability with
respect to such deposit.

         (j) Utilities: Tenant shall promptly pay all charges for utilities and
other services furnished to the Leased Premises by Landlord or the applicable
utility company, including, but not limited to gas, water, electricity, fuel,
light, air and heat, and Tenant shall promptly pay all charges for garbage
collection services and for all other sanitary services rendered to the Leased
Premises or used by Tenant in connection herewith. In the event any utilities
furnished to the Leased Premises are not separately metered, Tenant shall pay to
Landlord, as additional rent, Tenant's pro rata share of the utilities used
(without Landlord mark-up) by Tenant, within fifteen (15) calendar days
following receipt of a statement showing any amount due therefor. Tenant's
prorated amount shall be determined on the basis of the size of the Leased
Premises, unless Landlord reasonably determines that Tenant's use of the Leased
Premises justifies a disproportionate allocation of utility costs to Tenant.

         (k) All payments due hereunder are subject to any and all governmental
authority having jurisdiction thereover and should at any time the amounts due
hereunder be subject to sales, use or other tax, Tenant shall pay all applicable
tax together with each payment to Landlord.

         4. Use: The Leased Premises shall be used solely for general office,
warehouse, and light manufacturing and for no other purposes. The Leased
Premises shall not be used for any illegal purposes; nor in violation of any
regulation of any governmental body; nor in any manner to create any nuisance or
trespass; nor in any manner to vitiate the insurance or increase the rate of
insurance on the Leased Premises or on the Project. Tenant agrees, at its sole
cost and expense, to promptly comply with all requirements of (i) any legally
constituted public authority; provided, however, in no event shall Tenant be
obligated to make any structural repairs to the Leased Premises or to the
Project except if such structural repairs arise out of or in connection with the
specific use made of the Leased Premises by Tenant, or (ii) any insurance
company or rating agency which sets rates of insurance for the Leased Premises
or the Project made necessary by Tenant's particular use and occupancy of the
Leased Premises. Tenant agrees to use the Leased Premises for the purposes
herein leased.

         5. Tenant's Acceptance of the Leased Premises, Tenant's Work and
Repairs by Landlord: (a) Tenant hereby accepts the Leased Premises in their
present "as is" condition and as suited for the uses intended by Tenant and
acknowledges that Landlord shall not be required to perform any work therein in
consideration of Tenant's occupancy, however, Landlord shall reimburse Tenant
for improvements to be made by Tenant to the Leased Premises as more
particularly set forth on Exhibit B attached hereto. Except as otherwise
expressly provided in this Lease, Landlord shall not be required to make any
repairs or improvements to the Leased Premises except repairs to the foundation,
exterior and load bearing walls or roof of the Building as necessary for safety
and tenantability; Landlord's duties shall also include repairs to utility and
sewer pipes outside the exterior walls of the Building, or under or within the
floor of the Leased Premises, unless made necessary by the negligence or misuse
of Tenant, its employees, contractors or agents, in which event such repairs
shall be made by and at the expense of Tenant.

         (b) Subject to Tenant's payment of additional rent for Operating
Expenses, as set forth hereinabove, Landlord shall be responsible for the
maintenance of the common areas of the Project, including parking areas, planted
areas and landscaping areas which are from time to time designated by Landlord.

         (c) In consideration of Tenant's accepting the Leased Premises in their
present "as is" condition, Tenant shall receive a credit in the amount of
$93,084.20 to be applied, in equal monthly installments of $23,271.05 per month,
towards the Minimum Rent, Operating Expenses and Taxes due hereunder for the
period commencing on March 1,1999 and expiring on June 30,1999.

         6. Repairs by Tenant: Tenant shall, at all times during the Term of
this Lease, at its sole cost and expense, repair, maintain, replace as necessary
and keep in good, clean and safe repair and conditions all portions of the
Leased Premises and all equipment, fixtures and systems therein and thereon
which are not specifically set forth as the responsibility of Landlord in
Paragraph 5 of this Lease. Tenant's repairs and replacements shall include,
without limitation, all electrical, plumbing, dockbumpers, heating

                                       5
<PAGE>   6
and air conditioning systems, parts, components and fixtures within or relating
to the Leased Premises; in connection therewith, Tenant shall maintain in force
at all times a maintenance contract for the heating, ventilation and air
conditioning equipment reasonably acceptable in form and content to Landlord and
with a service organization reasonably acceptable to Landlord. Tenant shall also
promptly repair or replace all doors, non-structural partitions and all glass
and plate glass immediately when cracked or broken. Landlord gives to Tenant
exclusive control of the Leased Premises and shall be under no obligation to
inspect the Leased Premises. Tenant shall at once report in writing to Landlord
any defective conditions known to Tenant which Landlord is required to repair,
and failure to promptly report such defects shall make Tenant liable to Landlord
for any liability incurred by Landlord by reason of such delay, and, Tenant
indemnifies and holds harmless Landlord from and against all loss, cost and
damage (including reasonable attorney's fees) arising from or related to
Tenant's failure to so report such defective conditions.

         7. Plans and Specifications: Tenant agrees that it will perform
improvements to the Leased Premises as provided for in Exhibit B attached hereto
and by this reference made a part hereof pursuant to plans and specifications
mutually acceptable to Landlord and Tenant (the "Plans and Specifications"),
which are to be submitted, reviewed and approved by Landlord and Tenant prior to
the completion of the construction thereof. In the event that one party hereto
shall desire, or shall find it necessary to make, any modifications or changes
to the Plans and Specifications, the party desiring or requiring said changes
shall give the other party written notice thereof. No change to the Plans and
Specifications shall be effective unless and until it has been approved in
writing by both Landlord and Tenant. The Plans and Specifications, as amended,
shall thereafter, for all purposes, be considered the "Plans and Specifications"
hereunder. Notwithstanding the foregoing, Tenant acknowledges that in the course
of construction, certain changes, deviations or omissions may be required by
governmental authorities or job conditions and Tenant agrees to such changes,
deviations or omissions, provided that such changes, deviations, or omissions do
not materially alter the value or appearance of the Leased Premises or
materially reduce the quality of materials used in the construction of the
improvements thereto. Tenant understands and agrees that any plans, renderings
or drawings or similar documents which purport to depict any improvements to the
Leased Premises are merely an approximation of, and may not necessarily reflect,
actual, as-built conditions. Landlord shall, upon Tenant's request, during the
period of Tenants possession of the Leased Premises, permit Tenant to jointly
exercise with Landlord the rights and benefits accruing under any warranties,
guaranties and service agreements, if any, covering those portions of the Leased
Premises for which Tenant is responsible under Paragraph 6 hereof.

         8. Right of Entry: Landlord or its representative(s) shall have the
right, but not the obligation, to enter the Leased Premises at reasonable hours
upon reasonable prior verbal notice, to exhibit same to prospective purchasers
or lenders and, during the last six (6) months of this Lease only, prospective
tenants; to inspect the Leased Premises to see that Tenant is complying with all
Tenant's obligations hereunder; and to make repairs required of Landlord under
the terms of this Lease (in which event Landlord agrees to take reasonably
appropriate steps to limit the interference such work causes to Tenant's use of
the Leased Premises). Notwithstanding the foregoing, Landlord, without liability
to Tenant, shall have the right to enter the Leased Premises at anytime without
notice in cases of emergency.

         9. Landlord's Right to Act for Tenant: If Tenant fails to pay any
additional rent or make any other payment (except Minimum Rent) or take any
other action when and as required under this Lease, Landlord may, but shall be
under no obligation to, without demand upon Tenant and without waiving or
releasing Tenant from any duty, obligation or liability under this Lease, pay
any such additional rent, make any such other payment or take any such other
action required of Tenant. The actions which Landlord may take shall include,
but are not limited to, the performance of maintenance or repairs and the making
of replacements in or on the Leased Premises, the payment of insurance premiums
which Tenant is required to pay under this Lease and the payment of taxes and
assessments which Tenant is required to pay under this Lease. Landlord may pay
all incidental costs and expenses incurred in exercising its rights hereunder,
including, without limitation, reasonable attorneys' fees and expenses,
penalties, reinstatement fees, late charges and interest. All amounts paid by
Landlord pursuant to this Paragraph, and all costs and expenses incurred by
Landlord in exercising Landlord's rights under this Paragraph, shall be
immediately payable by Tenant to Landlord as additional rent upon demand.

         10. Default and Remedies: (a) In the event Tenant shall be in default
in the payment of any installment of rent herein reserved (whether Minimum Rent,
or additional rent of any kind) following five (5) days written notice to Tenant
thereof or in the event Tenant shall be in default in the performance of any of
the terms, covenants, conditions or provisions herein contained binding upon
Tenant after Landlord has given Tenant ten (10) days prior written notice of
such non-performance (except that this ten (10) day period shall be extended for
a reasonable period of time not to exceed forty-five (45) days if the default is
not reasonably capable of cure within said ten (10) day period and Tenant
proceeds to diligently cure the default), or in the event Tenant shall be
adjudicated a bankrupt (not released within thirty (30) days) or shall become
insolvent or shall make a general assignment for the benefit of its creditors,
or in the event a receiver shall be appointed for Tenant or a substantial part
of its property and such receiver is not removed within thirty (30) days after
appointment, Landlord shall have the right (in addition to all other rights and
remedies provided by law) to terminate this Lease, to re-enter and take
possession of the Leased Premises pursuant to legal process, peaceably or by
force, and to remove any property therein, without liability for

                                       6
<PAGE>   7
damage to, and without obligation to store, such property. In the event of such
termination, Landlord may (but shall be under no obligation to) relet the Leased
Premises, or any part thereof, from time to time, in the name of Landlord or
Tenant, without further notice, for such term or terms, or such conditions and
for such uses and purposes as Landlord, in its uncontrolled discretion, may
determine, and Landlord shall collect and receive all rents derived therefrom
and apply the same, after deduction of all appropriate expenses, to the payment
of the rent payable hereunder, Tenant remaining liable for any deficiency.
Landlord shall not be responsible or liable for any failure to so relet the
Leased Premises or any part thereof, or for any failure to collect, any rent
connected therewith.

                  (b) Tenant further agrees to pay all reasonable attorneys fees
and court costs incurred by Landlord on account of Tenant's default hereunder.

                  (c) If Landlord elects to terminate this Lease or if Landlord
shall reenter the Leased Premises without having terminated the Lease, then
notwithstanding such termination or reentry, Tenant shall be liable for and
shall pay to Landlord, the sum of all fixed Minimum Rents, additional rents and
other indebtedness accrued to the date of such termination or reentry, as the
case may be; and Landlord may declare the Minimum Rent and additional rent for
the balance of the Term immediately due and payable as provided for and
determined by a court of competent jurisdiction. All items of additional rent
relating to periods after termination or reentry shall be conclusively presumed
to be the highest average monthly additional rent paid by Tenant during the
Term, except that additional rent on account of Taxes, and Operating Expenses
(as hereinabove defined) shall be conclusively presumed to increase at the
average of the rates of increase thereof during the period prior to such
termination. Nothing in this Paragraph shall be construed to limit or preclude
recovery by Landlord against Tenant for any sums or damages to which, in
addition to the damages particularly provided above, Landlord may lawfully be
entitled by reason of any default hereunder on the part of Tenant.

                  (d) All remedies of Landlord shall be cumulative of and in
addition to, but not restrictive of or in lieu of, those conferred by law.

                  (e) In the event of any default by Landlord, Tenant's
exclusive remedy shall be an action for damages (Tenant hereby waiving the
benefit of any laws granting it a lien upon the property of Landlord and/or upon
rent due Landlord), but prior to any such action Tenant will give Landlord
written notice specifying such default with particularity, and Landlord shall
thereupon have thirty (30) days in which to cure any such default. Unless and
until Landlord fails to commence to cure a default after such notice or if
Landlord commences to cure and then fails to prosecute such cure diligently to
completion, Tenant shall not have any remedy or cause of action by reason
thereof. No obligation of Landlord hereunder will be construed as a condition,
and all Landlord's obligations will be binding upon Landlord only during the
period of its ownership of the Building and not thereafter.

       11. Tenant Improvements, Liens: (a) Except for unattached movable
fixtures which may be installed without drilling, cutting or otherwise defacing
the Leased Premises, Tenant shall not make any alterations, additions or
improvements to the Leased Premises, exterior or interior, without the prior
written consent of Landlord, which consent, provided such alterations will not
affect the structure or exterior of the Leased Premises or the Building shall
not be unreasonably withheld or delayed. Should Landlord grant Tenant approval
as aforesaid, all such improvements shall be performed by Tenant at Tenant's
sole cost and expense, in accordance with plans, specifications and descriptions
previously approved by Landlord in writing (such approval, provided such
alterations will not affect the structure or exterior of the Leased Premises or
the Building shall not be unreasonably withheld or conditioned), in a prompt and
diligent manner in full compliance with all applicable laws, ordinances, rules
and regulations of all governmental authorities having jurisdiction thereover,
in a good and workmanlike manner and in such a manner as to insure a minimum of
interference with all aspects of the Project's operations including cooperating
fully with Landlord's requests regarding such items as the locations of
construction equipment and the times and manner in which construction will be
performed; provided, however, Tenant shall not be required to work during
non-business hours unless said work entails loud drilling or would otherwise
cause substantial interference with occupants of the Building. Landlord agrees
to notify Tenant of its approval or disapproval of all plans and specifications
submitted to it within ten (10) business days of receipt (and ten (10) business
days on all subsequent revisions). If any such alterations, additions or
improvements are made by Tenant, then, at the expiration of the Term of this
Lease, Tenant agrees to restore the Leased Premises to the condition prior to
making same, at Tenant's sole cost and expense, reasonable wear and tear
excepted, provided that if Landlord does not require removal, then all such
alterations, additions or improvements shall become the sole property of
Landlord. Tenant may not use or penetrate the roof of the Leased Premises for
any purpose whatsoever without Landlord's prior written consent with respect
thereto. Tenant covenants and agrees that all contractors, subcontractors and
other persons or entities performing work for Tenant at the Leased Premises will
carry liability insurance in amounts reasonably acceptable to Landlord.

         (b) Tenant covenants that it shall keep the Leased Premises, the
Building and the Project free from liens of any kind for any work performed,
material furnished or obligations incurred by Tenant. Should any liens or claims
be filed against the Leased Premises, the Building or the Project by reason of
Tenant's acts or omissions or for work claimed to have been done for or
materials claimed to have been

                                       7
<PAGE>   8
furnished to Tenant, Tenant shall cause the same to be discharged by bond or
otherwise within ten (10) days after receiving notice thereof and Tenant shall
indemnify, defend and save Landlord harmless from and against any and all
costs, liabilities, suits, penalties claims, damages, judgments and expenses
(including, without limitation, reasonable attorneys fees and disbursements)
resulting therefrom. If Tenant fails to cause any such lien or claim to be
discharged within the required time, Landlord may cause same to be discharged
and may make any payment that Landlord, in its sole judgment, considers
necessary, desirable or proper in order to do so and Tenant hereby agrees to pay
to Landlord, as additional rent, all costs so expended by Landlord immediately
upon demand.

         12. Tenant's Property, Landlord's Lien: A first lien is hereby
expressly reserved by Landlord and granted by Tenant under the terms of this
Lease, upon all interest of Tenant in this leasehold and upon all personal
property, fixtures, improvements and all other similar items erected upon,
brought to or stored in the Leased Premises for the payment of Minimum Rent or
additional rent and for the satisfaction of any causes of action which may
accrue to Landlord. Furthermore, upon any termination of this Lease at a time at
which Tenant shall be liable in any amount to Landlord under this Lease,
Landlord shall have a lien upon the personal property and effects of Tenant
within the Leased Premises, and Landlord shall have the right, at Landlord's
election, without notice to Tenant, to sell all or part of said property and
effects for any price against any amounts due under this Lease from Tenant to
Landlord, including the expenses of such sale. Upon Tenant's prior written
request and only provided that Tenant is not then in default of this Lease,
Landlord hereby agrees to waive its lien upon the personal property of Tenant to
Tenant's institutional lender under an agreement reasonably acceptable to
Landlord, Tenant and Tenant's lender. If Tenant shall not remove all Tenant's
effects from the Leased Premises at any expiration or other termination of this
Lease, Landlord shall have the right, at Landlord's election, to remove all or
part of said effects in any manner that Landlord shall choose and store, sell,
or use the same without liability to Tenant for damage thereto or loss thereof,
and Tenant shall be liable to Landlord for all expenses incurred in such removal
and also for the cost of storage of said effects and all costs to sell, without
notice to Tenant, said property or any part thereof at private sale and without
legal process for such price as Landlord may obtain, and apply the proceeds of
such sale to any amounts due under the Lease and to the expense incident to the
removal and sale of said property.

         13. Subletting and Assignment: (a) Tenant shall not (i) transfer or
assign this Lease or any interest hereunder, nor permit any assignment hereof
by operation of law, (ii) sublet the Leased Premises or any part thereof nor
(iii) permit the use of the Leased Premises by desk tenants or any parties other
than Tenant or its agents, without in each instance first obtaining the prior
written consent of Landlord. Should Tenant wish to obtain Landlord's consent to
an assignment or subletting, it shall make such request in written form
detailing the proposed sub-rent, term, sub-tenant or assignee, compensation to
be received by Tenant, name and financial data of the proposed sub-tenant or
assignee and such other information as Landlord may reasonably request. Landlord
may, in its sole discretion, either (i) give its approval (ii) not give its
approval, or (iii) cancel and terminate this Lease, or if proposed subletting
or assignment is for less than all the Leased Premises, cancel and terminate
this Lease with respect to such portion (with the rent and all other charges
payable hereunder equitably apportioned). If Landlord should grant Tenant its
approval to any sublease or assignment, Tenant shall remain primarily liable for
the performance of all of the covenants contained herein. Tenant shall not
pledge or mortgage its leasehold interest or any part thereof and any such
pledge or mortgage shall, at Landlord's option, render this Lease void.

         (b) For purposes of this Paragraph: (i) the merger, transfer of a
majority of the issued and outstanding capital stock of any corporate Tenant or
subtenant or transfer of a majority partnership interest of Tenant or any
subtenant that is a partnership, however accomplished, whether in a single
transaction or in a series of related or unrelated transactions, shall be deemed
an assignment of this Lease, or of such sublease, as the case may be; (ii) a
takeover, management or succession agreement shall be deemed a transfer of this
Lease; and (iii) a modification, amendment or extension without Landlord's prior
written consent of an assignment or a sublease previously consented to by
Landlord shall be deemed a new assignment or sublease. Notwithstanding anything
to the contrary hereinabove set forth, Landlord hereby agrees that, provided
Tenant, or its successor through merger or acquisition, remains primarily liable
hereunder, Tenant may assign its interest in this Lease: (a) to its Parent, as
such term is hereinafter defined; (b) to any wholly-owned subsidiary of its
Parent; (c) to any entity in which its Parent owns a 51% or more interest in;
(d) to any entity which owns 51% or more interest in said Parent; (e) to an
entity with which Tenant or its Parent may merge or consolidate, provided that
the resulting entity has a net worth at least equal to the net worth of Tenant
prior to the deemed transfer; or (f) in connection with the sale of all or
substantially all of Tenant's assets or stock constituting Tenant (hereinafter a
"Pre-approved Assignment"). Tenant's "Parent" shall be defined as a person or
party, which owns 51% or more interest in Tenant. In the event of any such
Pre-approved Assignment by Tenant, Tenant hereby agrees to deliver to Landlord
notice of such assignment, including documentary evidence of such assignment and
the respective parties' ownership interest and net worth, within the thirty (30)
days following any such Pre-approved Assignment.

         (c) Landlord may assign this Lease or any part thereof or right
hereunder at any time. Upon such assignment, Landlord shall have no further
obligations with respect hereto and Tenant shall look solely to such assignee
for the performance of Landlord's obligations provided that the assignee has
assumed all such obligations.

                                       8
<PAGE>   9
         14. Casualty: If at any time during the Term of this Lease, the Leased
Premises or any portion thereof or any portion of the Building should be damaged
or destroyed by fire or other casualty, then Tenant shall have no right to
terminate this Lease, but Landlord shall have the election to terminate this
Lease or to repair and reconstruct the Leased Premises and Building to
substantially the condition in which they existed immediately prior to such
damage and destruction insofar as the proceeds from Landlord's insurance permit.
In any of the aforesaid circumstances, unless such fire or damage shall have
resulted from the negligence, acts or omissions of Tenant or its agents,
contractors, employees, visitors or licensees, Minimum Rent and additional rent
shall abate proportionately during the period to the extent that the Leased
Premises are unfit for use by Tenant in the ordinary course of its business;
provided, however, that should Tenant reoccupy a portion of the Leased Premises
prior to the date the whole Leased Premises are made tenantable, Minimum Rent
and additional rent allocable to such portion shall be payable by Tenant from
the date of such reoccupancy. If Landlord has elected to repair and restore the
Leased Premises, this Lease shall continue in full force and effect and such
repairs will be made within a reasonable time thereafter, subject to delays
arising from shortage of labor or materials and Acts of God, war or other
conditions beyond Landlord's reasonable control. In the event that this Lease is
terminated as herein permitted, Landlord shall refund to Tenant within sixty
(60) days from the date of termination of this Lease the prepaid rent, if any
(unaccrued as of the date of damage or destruction) and any remaining security
deposit, less any sums then owing Landlord by Tenant. If Landlord has elected to
repair and reconstruct the Leased Premises, then the Lease Term shall be
extended for a period of time equal to the period of such repair or
reconstruction. No damages, compensation or claim shall be payable by Landlord
for inconvenience, loss of business or property or annoyance arising from any
termination. Notwithstanding the foregoing, (i) if such damage shall occur
during the last year of the term of this Lease or (ii) Landlord reasonably
estimates that such damage cannot be repaired within six (6) months of the date
of such damage, then in either of such events, Landlord shall give notice of
such fact to Tenant as soon as such is reasonably determined. Not later than
fifteen (15) days following the giving of such notice to Tenant, Tenant may
elect to terminate this Lease by notice to Landlord. If Tenant makes such
election, the term of this Lease shall expire upon the thirtieth (30th) day
after notice of such election is given, and Tenant shall vacate the Leased
Premises and surrender the same to Landlord.

         15. Condemnation: (a) In the event of a taking of all or substantially
all of the Leased Premises (so that the untaken portion is unsuitable for the
continued feasible and economic operation of the Leased Premises by Tenant for
substantially the same purposes as immediately prior to such taking), then this
Lease shall automatically terminate and all rent and other sums payable by
Tenant hereunder shall be apportioned and paid through and including the date of
such taking.

         (b) In the event of a taking of less than substantially all of the
Leased Premises, either Landlord or Tenant may elect to terminate this Lease by
giving written notice of such termination to the other party, in which event
this Lease shall terminate, and all rent and other sums payable by Tenant
hereunder shall be apportioned and paid through the date of such taking.

         (c) In the event of a taking of a type described in subparagraph (b)
hereof and if Landlord and Tenant do not elect to terminate this Lease, then
this Lease and all of the duties and obligation of Tenant hereunder shall remain
unmodified and in full force and effect, provided, however, that the rent
payable after the taking shall be reduced to an amount which bears the same
ratio to the rent payable immediately prior to the taking as the rental value of
the Leased Premises after taking bears to the rental value of the Leased
Premises immediately prior to the taking.

         (d) Landlord shall be entitled to all awards, damages, compensation or
proceeds payable by reason of any taking, and Tenant shall not be entitled to
any portion thereof, and shall have no claim for, and hereby expressly
transfers, assigns, conveys and sets over unto Landlord all of its right, title
and interest, if any, in or to any award, damages, compensation or proceeds
payable by reason of any taking. Notwithstanding the foregoing, in any
condemnation proceeding Tenant may submit a separate claim against the
condemning authority for the value of Tenant's furnishings and trade fixtures
and for the cost of relocation, if such separate claim is allowable as such.

         16. Insurance: (a) Throughout the Term or any extension thereof, Tenant
shall hold Landlord harmless from any and all injury or damage to person or
property in or on the Leased Premises including, without limitation, all costs,
expenses, claims or suits arising in connection therewith, except to the extent
such damages or injuries are caused by the gross negligence or willful
misconduct of Landlord or its employees, agents, contractors and invitees.
Furthermore, Tenant covenants that it shall maintain insurance against public
liability for injury to person (including death) or damage to property occurring
within the Leased Premises howsoever occasioned. Such insurance shall be within
the minimum single limit of $1,000,000 for personal injury, death or property
damage and Landlord shall be named as an additional insured under such
policy(s). Upon Tenant's execution of this Lease and on each renewal of such
policy(s), Tenant shall deliver to Landlord a certificate evidencing such
insurance, naming Landlord as an additional insured, and in such certificate
agreement the insurer shall agree that said policy may not be cancelled without
thirty (30) days prior written notice to Landlord. In addition, Tenant hereby
agrees to maintain sufficient "contents" insurance against theft or casualty to
its property for all risks including difference in conditions and including,
without limitation, water damage; and that Landlord shall not be

                                       9
<PAGE>   10
liable for any theft or damage to persons or property sustained in or about the
Leased Premises during the Term hereof, howsoever caused.

                  (b) Throughout the Term or any extension thereof, Landlord
shall hold Tenant harmless from any and all injury or damage to person or
property occurring on the common areas of the Project including, without
limitation, all costs, expenses, claims, or suits arising in connection
therewith. Furthermore, Landlord shall maintain insurance against public
liability for injury to person (including death) or damage to property arising
out of the acts or omissions of Landlord or arising out of the use of the common
areas of the Project by Tenant, its licensees, employees, invitees or customers.
Such insurance shall be with minimum single limit of $1,000,000 for personal
injury, death or property damage.

                  (c) Each party hereto waives any and all right of recovery
against the other party or parties hereto for each and every insured loss (not
caused by the negligence of the other party) under the terms of such policy or
policies.

         17. Signage: Tenant shall not install any signs visible from outside of
the Leased Premises and shall not place or display any decoration, lettering or
advertising matter on the glass of any window or door of the Leased Premises
without the prior written consent of Landlord. Any permitted signs shall be
maintained by Tenant in a good condition of repair in compliance with all
applicable governmental laws, ordinances, rules and regulations governing such
signs, and Tenant shall be responsible to Landlord for any damage caused by the
installation, use and maintenance of said signs. Tenant agrees, upon removal of
said signs, to repair all damage incidental thereto.

         18. Attorney's Fees: In the event that at any time during the term of
this Lease either Landlord or Tenant shall institute any action or proceeding
against the other relating to the provisions of this Lease, or any default
hereunder, the unsuccessful party in such action or proceeding agrees to
reimburse the successful party for the reasonable expenses of attorneys' fees
and disbursements incurred therein by the successful party.

         19. Parties: "Landlord" as used in this Lease shall include Landlord's
assigns and successors in title to the Leased Premises. "Tenant" shall include
Tenant and, if this Lease shall be validly assigned or the Leased Premises
validly sublet, shall include such assignee or subtenant, its successors and
permitted assigns. "Landlord" and "Tenant" shall include male and female,
singular and plural, corporation, partnership or individual, as may fit the
particular parties.

         20. Landlord and Tenant Relationship: This Lease shall create the
relationship of Landlord and Tenant between Landlord and Tenant; no estate shall
pass out of Landlord; Tenant has only a leasehold interest which shall not be
subject to levy and sale.

         21. Holding Over: If Tenant remains in possession of the Leased
Premises after expiration of the Term of this Lease, with Landlord's
acquiescence and without any distinct agreement of parties, Tenant shall be a
tenant at will, subject to all of the covenants and obligations of this Lease
and at a rental rate equal to 150% of the Minimum Rent and additional rent in
effect at the end of the Term of this Lease; there shall be no renewal of this
Lease by operation of law.

         22. Sale by Landlord: In the event of any sale, conveyance, transfer or
assignment by Landlord of its interest in and to the Leased Premises, all
obligations under this Lease of the party selling, conveying, transferring,
assigning or otherwise disposing shall cease and terminate, provided such party
has agreed to assume the obligations of Landlord under this Lease from and after
the date of transfer, and Tenant releases said party from same and Tenant shall
thereafter look only and solely to the party to whom the Leased Premises were
sold, conveyed, transferred, assigned or otherwise disposed of for performance
of all of Landlord's duties and obligations under this Lease.

         23. Surrender of the Premises: At the end of the Term or other sooner
termination of this Lease, Tenant shall surrender the Leased Premises and keys
thereto to Landlord in a broom clean condition and otherwise in at least as good
a condition as at Commencement Date of the Term of this Lease, natural wear and
tear and damage by fire and other casualty only excepted. Tenant shall indemnify
Landlord against any loss or liability resulting from delay by Tenant in so
surrendering the Leased Premises, including, without limitation, any claims
made by and succeeding tenant. The terms of this Paragraph shall survive the
termination or expiration of this Lease.

         24. Notices: Tenant hereby appoints as Tenant's agent to receive the
service of all dispossessory or distraint proceedings and notices thereunder,
the person in charge of or occupying the Leased Premises at that time; and if no
person is in charge of or occupying same, then such service or notice may be
made by attaching the same on the main entrance to the Leased Premises. All
other notices required or permitted under this Lease by Landlord to Tenant shall
be sent by certified mail, return receipt requested, postage prepaid, by Federal
Express or other reputable overnight carrier or by hand delivery to Tenant at
the Leased Premises with a copy to Tenant at 417 Fifth Avenue, New York, New
York 10016 Attn: General Counsel or such other address as Tenant may from time
to time designate in writing to Landlord. All notices to Landlord shall be
delivered by certified mail, return receipt requested, postage

                                       10
<PAGE>   11
prepaid, by Federal Express or other reputable overnight carrier or by receipted
hand delivery to Landlord's principal office at Northwest Properties Realty
Corp., c/o Sentinel Real Estate Corporation, 666 Fifth Avenue, 26th Floor, New
York, New York 10103-2698, or to such other address as Landlord may from time to
time designate in writing to Tenant.

         25. Covenant of Quiet Enjoyment: So long as Tenant observes and
performs the covenants and agreements contained herein to be observed and
performed by Tenant, Landlord covenants and agrees that Tenant shall at all
times during the Term of this Lease peacefully and quietly have and enjoy
possession of the Leased Premises, subject to the terms hereof.

         26. Subordination: This Lease is subject and subordinate to all ground
leases and/or mortgages which may now or hereafter affect the Project or any
portion thereof, and to all renewals, refinancings, modifications,
consolidations, replacements and extensions of any such ground leases and/or
mortgages. This clause shall be self-operative and no further instrument of
subordination shall be required. Tenant shall promptly execute any certificate
that Landlord may reasonably request in confirmation of such subordination.
Landlord shall use reasonable efforts to obtain from the existing lender and any
future lenders or ground lessors a subordination, non-disturbance and attornment
agreement in a form reasonably satisfactory to Tenant, Landlord and such lender.

         27. Estoppel Certificate: Tenant shall, at any time and from time to
time, within ten (10) days after Landlord's request, execute, acknowledge and
deliver to Landlord a certificate evidencing whether or not (i) this Lease is in
full force and effect; (ii) this Lease has been amended in any way; (iii) there
are any existing defaults on the part of Landlord hereunder, to the knowledge of
Tenant, and specifying the nature of such defaults, if any; (iv) the date to
which rent and other amounts due hereunder, if any, have been paid; and (v) such
other matters reasonably requested by Landlord. Each certificate delivered
pursuant to this Paragraph may be relied on by any prospective purchaser of the
Project or transferee of Landlord's interest hereunder or by any holder or
prospective holder of any mortgage instrument or deed to secure debt now or
hereafter encumbering the Project.

         28. Successors and Assigns: The provisions of this Lease shall inure to
the benefit of and be binding upon Landlord and Tenant and their respective
successors, heirs, legal representatives and assigns, subject, however, in the
case of Tenant, to the restrictions on assignment and subletting contained in
this Lease.

         29. Limitation of Liability: Tenant agrees that the liability of
Landlord under this Lease and all matters pertaining to or arising out of the
tenancy and the use and occupancy of the Leased Premises including, but not
limited to, all matters or claims of whatsoever nature arising out of or caused
by the negligence of Landlord, its agents, servants or employees, shall be
limited to Landlord's interest in the Project and proceeds, if any, thereof, and
in no event shall Tenant bring any action or make any claim against, recover any
money judgement from, or seek to impose any personal liability upon any
principal, agent, officer, shareholder, director, general or limited partner of
the Landlord or any principal for whom Landlord may be acting.

         30. Broker's Commission: Tenant warrants and represents to Landlord
that no party is entitled, as a result of the actions of Tenant, to a commission
or other fee resulting from the execution of this Lease except for Brad Bohlman
of Welsh Companies, 8200 Normandale Boulevard, Suite 200, Minneapolis, Minnesota
55437-1064 (hereinafter "Welsh") and John M. Lavander of Caliber Development
Corporation, 14505 21st Avenue, Suite 205, Plymouth, Minnesota 55447
(hereinafter "Caliber") and Tenant agrees to pay, hold harmless and indemnify
Landlord from and against any and all costs, expenses (including reasonable
attorney's fees and court costs), loss and liability for any compensation,
commissions or charges claimed by any other broker or agent with respect to this
Lease or the negotiations thereof if such claim or claims by any such broker or
agent are based in whole or in part on dealings with Tenant or its
representatives. The fees paid to Welsh and Caliber in connection herewith shall
collectively be the "Brokerage Commission." Landlord agrees to pay the
applicable Brokerage Commission to Welsh and Caliber in accordance with the
terms of a separate agreement.

         31. Rules and Regulations: Tenant accepts the Leased Premises subject
to, and hereby agrees with Landlord to abide by, the rules and regulations
attached to this Lease and incorporated herein by reference, together with such
additional Rules and Regulations or amendments thereto as may hereafter from
time to time be established by Landlord, and such additions or amendments shall
be binding on Tenant upon receipt of same by Tenant. Landlord shall enforce all
rules and regulations in a uniform, non-discriminatory manner. In the case of a
conflict between this Lease and any rules and regulations that may later be
adopted, the terms of this Lease shall control.

         32. Hazardous Substances: (a) Tenant shall at all times and in all
respects comply with all federal, state, and local laws, ordinances and
regulations ("Hazardous Materials Law") relating to industrial hygiene,
environmental protection or the use, analysis, generation, manufacture, storage,
presence, disposal or transportation of any oil, flammable explosives, asbestos,
urea formaldehyde, radioactive materials or waste or other hazardous toxic,
contaminated, or polluting materials, substances, or wastes, including, without
limitation, any "hazardous substances", "hazardous wastes", "hazardous

                                       11
<PAGE>   12
materials", or "toxic substances" under any such laws, ordinances or regulations
(collectively, "Hazardous Materials") in accordance with the provisions
hereinafter set forth.

         (b) Tenant shall, at its own cost and expense, procure, maintain in
effect and comply with all conditions of any and all permits, licenses and other
governmental and regulatory approvals required for Tenant's use of the Leased
Premises including, without limitation, discharge of (appropriately treated)
materials or wastes into or through any sanitary sewer serving the Leased
Premises. Except as discharged into the sanitary sewer in strict accordance and
conformity with all applicable Hazardous Materials Laws, Tenant shall cause any
and all Hazardous Materials removed from the Leased Premises to be removed and
transported solely by duly licensed haulers to duly licensed facilities for
final disposal of such materials and wastes. Tenant shall in all respects
handle, treat, deal with and manage any and all Hazardous Materials in, on,
under, or about the Leased Premises in total conformity with all applicable
Hazardous Materials Laws and prudent industry practices regarding management of
such Hazardous Materials. All reporting obligations imposed by Hazardous
Materials Laws are strictly the responsibility of Tenant. Tenant is "in charge"
of Tenant's "facility" as such terms are used in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendment and Reauthorization Act of 1986.

         Upon expiration or earlier termination of the Term of this Lease,
Tenant shall cause all Hazardous Materials brought to the Leased Premises by
Tenant or its employees, agents, contractors or invitees to be removed from the
Leased Premises and transported for use, storage, or disposal in accordance and
compliance with all applicable Hazardous Materials Laws. Tenant shall not take
any remedial action in response to the presence of any Hazardous Materials in or
about the Leased Premises or the Project, nor enter into any settlement
agreement, consent decree, or other compromise in respect to any claims relating
to any Hazardous Materials in any way connected with the Leased Premises or the
Project, without first notifying Landlord of Tenant's intention to do so and
affording Landlord ample opportunity to appear, intervene, or otherwise
appropriately assert and protect Landlord's interest with respect thereto. In
addition, at Landlord's request, Tenant shall remove any tanks or fixtures which
contain, contained or are contaminated with Hazardous Materials (other than
those present when Tenant took possession of the Leased Premises).

         (c) Tenant shall immediately notify Landlord in writing of: (i) any
enforcement, cleanup, removal or other governmental or regulatory action
instituted, completed or threatened pursuant to any Hazardous Materials Laws;
(ii) any claim made or threatened by any person or party against Tenant, the
Leased Premises or the Project relating to damage, contribution, cost recovery
compensation, loss, or injury resulting from or claimed to result from any
Hazardous Materials; and (iii) any reports made to any environmental agency
arising out of or in connection with any Hazardous Materials in, on, or removed
from the Leased Premises or the Project, including any complaints, notices,
warnings, reports or asserted violations in connection therewith. Tenant shall
also supply to Landlord as promptly as possible, and in any event within five
(5) business days after Tenant first receives or sends the same, copies of all
claims, reports, complaints, notices, warnings, asserted violations relating in
any way to the Leased Premises, the Project or Tenant's use thereof. Tenant
shall promptly deliver to Landlord copies of Hazardous Waste manifests
reflecting the legal and proper disposal of all Hazardous Materials removed from
the Leased Premises.

         (d) Tenant shall indemnify, defend (by counsel reasonably acceptable to
Landlord) and hold Landlord and each of Landlord's partners, employees, agents,
attorneys, successors and assigns, free and harmless from and against any and
all claims, liabilities, penalties, forfeitures, losses, or expenses (including
attorney's fees and disbursements) for death of or injury to any person or
damage to any property whatsoever (including water tables and atmosphere)
arising from or caused in whole or in part, directly or indirectly, by (i) the
presence in, on, under, or about the Leased Premises or the Project or discharge
in or from the Leased Premises or the Project of any Hazardous Materials brought
to, or created at, the Leased Premises by Tenant or its employees, agents,
contractors or invitees, or Tenant's use, analysis, storage, transportation,
disposal, release, threatened release, discharge, or generation of Hazardous
Materials to, in, on, under, about, or from the Leased Premises or the Project,
or (ii) Tenant's failure to comply with any Hazardous Materials Law to the
extent Tenant is required to do so under the terms herein, whether knowingly or
unknowingly, the standard herein being one of strict liability. Tenant's
obligations hereunder shall include, without limitation, and whether foreseeable
or unforeseeable, all costs of any required or necessary repair, cleanup,
detoxification, or decontamination of the Leased Premises or the Project, and
the preparation and implementation of any closure, remedial action, or other
required plans in connection therewith, and shall survive the expiration or
earlier termination of the Term of this Lease. For purposes of the release and
indemnity provision hereof, any acts or omissions of Tenant, or by employees,
agents, assignees, subtenants, contractors, or subcontractors of Tenant or
others acting for or on behalf of Tenant (whether or not they are negligent,
intentional, willful, or unlawful), shall be strictly attributable to Tenant.

         (e) If at any time it reasonably appears to Landlord that Tenant is not
maintaining sufficient insurance or other means of financial capacity to enable
Tenant to fulfill its obligation to Landlord hereunder, whether or not then
accrued, liquidated, conditional, or contingent, Tenant shall, upon Landlord's
demand, procure and thereafter maintain in full force and effect such insurance
or other form

                                       12
<PAGE>   13
of financial assurance, with or from companies or persons and in forms
reasonably acceptable to Landlord, as Landlord may from time to time reasonably
request. Landlord may, but shall be under no obligation to, procure such
insurance if Tenant fails to meet its obligation hereunder and Tenant agrees to
pay to Landlord the cost thereof as additional rent, immediately upon demand.

         (f) If Tenant's use of the Leased Premises shall involve Hazardous
Materials of any kind in any fashion, Landlord shall have the right to require
Tenant to undertake and submit to Landlord a periodic environmental audit from a
qualified environmental engineering firm or auditor which audit will evaluate
Tenant's compliance with the terms of this Lease and all Hazardous Material
Laws.

         (g) To the best of Landlord's knowledge, as of the date hereof, there
are no Hazardous Materials in place in the Leased Premises. Should Tenant,
notwithstanding the foregoing, desire to have materials in place in the Leased
Premises tested for the presence of Hazardous Materials, Landlord hereby grants
Tenant the right to perform such testing, only within the thirty (30) days
following the full execution hereof and prior to the construction of any tenant
improvements. If Tenant elects to perform such testing, it shall notify Landlord
in writing of such election, identifying the licensed and qualified engineer it
has hired and the scheduled date and scope of testing to be performed, within
five (5) business days of the full execution hereof and at least five (5) days
prior to such testing. Upon the completion of any such testing by Tenant, Tenant
shall immediately deliver to Landlord its licensed and qualified engineer's
written report and t est results. In the event that such testing by Tenant
reveals the presence of any materials which require removal pursuant to any
Hazardous Material Laws; then, Tenant may either: (i) cancel and terminate this
Lease upon delivery of notice to Landlord; or (ii) demand that Landlord, on a
timely basis, remove such Hazardous Materials and restore that portion of the
Leased Premises affected by such removal to good condition of repair, all in
accordance with the requirements of all applicable Hazardous Material Laws
(collectively such removal and repair shall be called "Restoration"). Landlord
agrees, upon its receipt of such notice of demand by Tenant, to reimburse Tenant
for all reasonable expenses incurred by Tenant for such testing within the
thirty (30) days following Tenant's completion of such testing and delivery to
Landlord evidence of the costs so incurred, and to credit Tenant for all Minimum
Rent and additional rent due hereunder during the period in which such
Restoration is performed, such credit to be applied towards the first month in
which Minimum Rent and additional rents would otherwise be due and payable by
Tenant to Landlord. Should Landlord fail to commence such Restoration within the
thirty (30) days following its receipt of Tenant's demand, then Tenant may
perform such Restoration, on a timely basis, and Landlord agrees to reimburse
Tenant for all reasonable expenses incurred by Tenant for such testing and
Restoration, thirty (30) days following Tenant's completion of such Restoration
and delivery to Landlord evidence of the removal and lawful disposal of all such
Hazardous Materials and the reasonable costs incurred in connection therewith
and to credit Tenant for the Minimum Rent and additional rent due hereunder
during the period in which such Restoration is performed, such credit to be
applied towards the first month in which Minimum Rent and additional rent would
otherwise be due and payable by Tenant to Landlord. However, should Tenant elect
to test materials in place in the Leased Premises for the presence of Hazardous
Materials as hereinabove described and discover that no Hazardous Materials are
present in the Leased Premises, the cost of such testing shall be borne by
Tenant at Tenant's sole cost and expense.

         33. Miscellaneous: Time is of the essence with respect to this Lease.
This Lease contains the entire agreement of Landlord and Tenant and no
representations or agreement, oral or otherwise, between the parties not
embodied herein shall be of any force or effect. No failure to exercise any
power given hereunder, or to insist upon strict compliance with any obligations
hereunder, and no custom or practice at variance with the terms hereof shall
constitute a waiver of either party's right to demand exact compliance with the
terms hereof. The acceptance of any payment hereunder by Landlord shall not be
deemed to be a waiver of any preceding default of Tenant of any term, covenant
or condition of this Lease, regardless of Landlord's knowledge of such preceding
breach at the time of acceptance of such payment. No endorsement or statement on
any check or any letter accompanying any check or payment shall be deemed an
accord and satisfaction and Landlord may accept any such check or payment
without prejudice to Landlord's right to recover the balance of such payment or
pursue any other remedy provided in this Lease or otherwise. If any clause or
provision of this Lease is illegal, invalid or unenforceable under applicable
present or future laws or regulations effective during the Term of this Lease,
the remainder of this Lease shall not be affected. In lieu of each clause or
provision of this Lease which is illegal, invalid or unenforceable, there shall
be added as a part of this Lease a clause or provision as nearly identical as
may be possible and as may be legal, valid and enforceable. This Lease shall be
governed by, construed under and interpreted and enforced in accordance with the
laws of the state in which the Leased Premises is located. Neither this Lease,
nor any memorandum of this Lease or reference hereto, shall be recorded by
Tenant without Landlord's consent endorsed thereon. Landlord shall be excused
from the performance of any of its obligations under this Lease for the period
of any delay resulting from any cause beyond its control, including, without
limitation, all labor disputes, governmental regulations or controls, fires or
other casualties, inability to obtain any material or services or acts of God.
If Tenant executes this Lease as a corporation, Tenant does hereby represent and
warrant that Tenant is a duly authorized and existing corporation, that Tenant
is qualified to do business in the state in which the Leased Premises are
located, that the corporation has full right and authority to enter into this
Lease, and that each person signing on behalf of the corporation is authorized
to do so. Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other or in respect to

                                       13
<PAGE>   14
any matter whatsoever arising out of or in any way connected with this Lease,
the relationship of Landlord and Tenant hereunder, Tenant's use or occupancy of
the Leased Premises and/or any claim of injury or damages.

         34. Furnishings Covenant: Tenant acknowledges and agrees that Landlord
is making and has made no representation regarding the ownership of the
furniture, fixtures or equipment ("Furnishings") in place in the Leased Premises
and Landlord shall not have any responsibility, legal, financially or otherwise,
with respect to the furnishing. Landlord is not guaranteeing or ensuring that
the Furnishings will remain in the Leased Premises and Tenant acknowledges that
a third party may have rights to remove the Furnishings from the Leased
Premises. Tenant agrees that Landlord's rights to the Furnishings may be
subordinate to one or more adverse claims to the Furnishings and Tenant agrees
to hold Landlord harmless should any adverse claim arise regarding the
Furnishings. Notwithstanding the foregoing, however, subject to Landlord's
receipt of an inventory of the Furnishings and evidence of the ownership
thereof, Landlord hereby agrees that upon Tenant's written request and only
provided that Tenant is not then in default of this Lease, Landlord shall waive
its lien, if any, upon the Furnishings in a form reasonably acceptable to
Landlord, Tenant and the owner of such Furnishings.

         35. Tenant Access: Tenant shall have access to the Leased Premises on
a 24-hour day, seven day a week basis.

         36. Tenant Security System: Tenant shall have the right, at its sole
cost and expense, to install a security system in the Leased Premises; provided
that Tenant shall ensure that Landlord has a means of access to the Leased
Premises at all times during the term of this Lease, including without
limitation, the means for immediate access to the Leased Premises in the case of
an emergency. In connection with the foregoing, Tenant shall provide Landlord at
the commencement of the term of this Lease with at least two functioning card
keys to the Leased Premises.

         37. Heating and Cooling System: Upon the commencement of the Term of
this Lease and in addition to the provisions of Paragraph 6 hereof, Tenant
hereby agrees that it shall effect a preventative maintenance program with
respect to the maintenance of the heating and air conditioning system in place
in the Leased Premises (hereinafter the "HVAC"), and agrees to perform such
preventative maintenance program in a manner consistent with common practice and
reasonable prudence to prevent damage and waste with respect to such system.
Notwithstanding the provisions of Paragraph 6 herein, and only provided Tenant
has complied with the provisions with respect to preventative maintenance
hereinabove set forth, including evidencing such compliance by delivering to
Landlord a signed copy of its contract with a qualified heating, ventilation and
air conditioning contractor (the "Preventative Maintenance Contractor") and
copies of all service reports it receives with respect thereto, Landlord agrees
to pay for the cost to repair or replace any major component of the HVAC in
excess of $1,000.00 per calendar year, Tenant being responsible for the first
$1,000.00 of cost therefor. Landlord's obligation hereunder shall not, at any
time, include items which fall into the category of routine or preventative
maintenance. Should Tenant be informed by its Preventative Maintenance
Contractor of the need to repair or replace any major component of its HVAC
costing $1,000.00 or more, Tenant shall immediately notify Landlord in writing,
prior to the performance of any such replacement, and Landlord shall retain the
right to bid such replacement and to utilize the contractor of its choice to
perform any such requirement.

                                       14
<PAGE>   15
          IN WITNESS WHEREOF, each corporate party hereto has caused this Lease
Agreement to be executed in its name and behalf, by an authorized officer of
the corporation, as of the date set forth above.

WITNESSES:                         LANDLORD: NORTHWEST PROPERTIES REALTY CORP.

By: /s/ Signature Illegible        By: /s/ Christine C. Kurtz
   ------------------------           ----------------------------------------
                                   (title) Vice President

                                   TENANT: G.T. INTERACTIVE SOFTWARE CORP.

By: /s/ Kari L. Heinle             By: /s/ Signature Illegible
   ------------------------           ----------------------------------------
                                   (title) President

                                       /s/ Signature Illegible V.P.  2/17/99
                                      ----------------------------------------

                                       15
<PAGE>   16
                                   EXHIBIT A

                                     [MAP]

                                       16
<PAGE>   17
                                    EXHIBIT B

                                  Tenants Work

Landlord shall reimburse Tenant for improvements to be made by Tenant to the
Leased Premises up to a maximum amount of $10,000 upon (i) evidence that the
improvements were properly performed in accordance with the approved Plans and
Specifications, (ii) Landlord's receipt of paid invoices totaling at least
$10,000 for those improvements, (iii) evidence of payment and final lien waivers
therefore; and (iv) Tenant's receipt and submission to Landlord of all necessary
certificates of occupancy and any other documentation that Landlord may
reasonably require in connection with said construction.

                                       17
<PAGE>   18
                                    EXHIBIT C

                                   Page 1 of 2

                              Rules and Regulations

1. No sign, placard, picture, advertisement, name, notice or sun screening shall
be inscribed, displayed, printed or affixed on or to any part of the outside or
inside of the Building or any portion of the Project without the written consent
of Landlord first had and obtained and in the absence thereof, Landlord shall
have the right to remove any such sign, placard, picture, advertisement, name or
notice without notice to and at the expense of Tenant. All approved signs of
lettering on doors shall be printed, painted, axed or inscribed at the sole risk
and expense of Tenant by a licensed contractor reasonably approved by Landlord
and subject to all laws, ordinances rules, regulations and recommendations of
all governmental and quasi-governmental authorities having jurisdiction
thereover and all insurance companies and fire rating agencies which insure the
Project. Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall which may appear unsightly from
outside the Leased Premises. Landlord may specify a Building standard window
covering for all exterior windows.

2. All parking shall be within the property boundaries of the Project and within
marked parking spaces. There should be no on-street parking and at no time shall
any Tenant obstruct any driveways or loading areas intended for the use of other
tenants, their employees, agents, customers and invitees. The driveways and
parking areas in the Project are for the joint and non-exclusive use of
Landlord's tenants, their employees, agents, customers and invitees, unless
specifically marked to the contrary. In the event Tenant, its agents, customers
and/or invitees use a disportionate portion of the parking areas, Landlord shall
have the right to restrict Tenant, its agents, customers and/or invitees to
certain parking areas. Tenant shall not permit any fleet trucks to park
overnight in the Project's parking areas without Landlord's prior written
approval.

3. Unless specifically approved by Landlord in writing, no materials, supplies
or equipment shall be stored anywhere in, on or about the Project except inside
the Leased Premises. Trash receptacles may not be placed in the service areas
except by Landlord. If Landlord does not supply trash receptacles, Tenant shall
furnish its own receptacles, and shall place such receptacles in a location
reasonably designated by Landlord.

4. No additional locks, other than Landlord approved entry systems, shall be
placed on the doors of the Leased Premises by Tenant nor shall any existing
locks be changed unless Landlord is immediately furnished with two keys thereto.
Landlord will, without charge, furnish Tenant with two keys for each lock on the
entrance doors to the Leased Premises when Tenant assumes possession, with the
understanding that at the termination or expiration of the Term of this Lease
the keys to the Leased Premises shall be returned to Landlord.

5. Tenant will refer all contractors, contractor's representatives and
installation technicians rendering any service on or to the Leased Premises for
Tenant to Landlord for its reasonable approval and supervision before
performance of any service. Landlord shall notify Tenant of its approval or
disapproval of any contractor to be utilized by Tenant within twenty (20)
business days from the date of such request by Tenant. This provision shall
apply to all work performed in the Project, including, but not limited to,
installation of electrical devices and attachments and installations of any
nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment or
any other portion of the Project.

6. No Tenant shall at any time occupy or allow any person to occupy any part of
the Leased Premises or the Project as sleeping or lodging quarters.

7. Tenant shall not place, install or operate on the Leased Premises or in any
part of the Project, any engine, stove or machinery, or conduct mechanical
operations or cook thereon or therein, or place or use in or about the Leased
Premises any explosives, gasoline, kerosene, oil, acids, caustics or any other
flammable, explosive or Hazardous Material without the prior written consent of
Landlord. The foregoing shall not prohibit the use of microwave ovens or coffee
making machines.

8. Windows facing the Building exterior shall at all times be wholly clear and
uncovered (except for such blinds or curtains or other window coverings Landlord
may provide or reasonably approve) so that a full unobstructed view of the
interior of the Leased Premises may be had from outside the Building.

9. The sidewalks, parking lots and exits shall not be obstructed by Tenant, its
employees, agents, contractors, subtenants or assigns or used for any purpose
other than for ingress to and egress from the Leased Premises.

                                       18
<PAGE>   19
                                    EXHIBIT C

                                   Page 2 of 2

                              Rules and Regulations

10. Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Leased Premises, or permit or suffer the Leased Premises
to be occupied or used in a manner offensive or objectionable to Landlord or
other occupants of the Project by reason of noise, odors and vibrations, or
interfere in any way with other Tenants or those having business in the
Project, nor shall any animals or birds be brought in or kept in or about the
Leased Premises or the Project.

11. Landlord reserves the right to exclude or expel from the Project any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who may in any manner do any act in violation of any law or
any rule or regulations of the Project.

12. Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name of the Project and street address of the
Building of which the Leased Premises are a part.

13. Tenant shall not disturb, solicit or canvass any occupant of the Project and
shall cooperate to prevent same.

14. Without the prior written consent of Landlord, Tenant shall not use the name
of the Project in connection with or in promoting or advertising the business of
Tenant except as Tenant's address.

15. Landlord shall have the right to control and operate the common areas of the
Project, the public facilities thereof, as well as the facilities furnished for
the common use of all Tenants, in such manner as it deems appropriate.

16. No satellite dish, radio, television or other aerial or equipment of any
kind may be placed or installed on the roof or on any exterior wall of the
Leased Premises or on the grounds or common areas of the Project without the
prior written consent of Landlord in each instance. Any equipment so installed
without such written consent shall be at the sole risk of Tenant and shall be
subject to removal without notice at any time and Tenant shall pay to Landlord,
on demand, as additional rent, the cost of any damages occasioned thereby
including, but not limited to, the cost to replace any warranty voided or
diminished by such installation and the cost of removal and repairs.

17. Landlord shall have the right from time to time to modify, add to or delete
any of these rules and regulations at Landlord's discretion, provided that any
changes are uniformly applied to all Tenants.

                                       19
<PAGE>   20
                       FIRST AMENDMENT TO LEASE AGREEMENT

         THIS FIRST AMENDMENT TO LEASE ("AMENDMENT"), made this 14th day of May,
1999 between Northwest Properties Realty Corp., a Minnesota corporation
("Landlord"), and G. T. Interactive Software Corp., a Delaware corporation
("Tenant");

                                   WITNESSETH:

         WHEREAS, Landlord and Tenant entered into a lease dated February 22,
1999 (the "Lease"), covering premises consisting of 20,400 square feet, known
and numbered as Suite 150, located in the Northwest Pointe Business Centre
("Building"), 2155 Niagara Lane North, Plymouth, Minnesota 55447 ("Existing
Premises");

         WHEREAS, Landlord and Tenant desire to enter into this Amendment to
provide for Tenant's expansion of the Existing Premises into Suite 151 of the
Building containing approximately 3,000 square feet of office space and to
further amend the Lease; and

         WHEREAS, Tenant desires to extend the term of the Lease for an
additional three (3) month period commencing on December 1, 2002 and expiring
on February 28, 2003 and to further amend the Lease.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, Landlord and Tenant hereby agree to amend the Lease,
effective as of April 1, 1999, as follows:

         1.       The term of the Lease is hereby extended through February 28,
                  2003.

         2.       The space, known and numbered as Suite 151 and located in the
                  Northwest Pointe Business Centre, 2155 Niagara Lane North,
                  Plymouth, Minnesota 55447, as depicted on Exhibit A attached
                  hereto ("Expansion Premises"), shall be added to the Existing
                  Premises, so that as of April 1, 1999, the "Leased Premises"
                  as such term is defined in the Lease shall be increased from
                  20,400 square feet to 23,400 square feet and the "Leased
                  Premises" shall consist of Suites 150 and 151, collectively
                  consisting of approximately 23,400 square feet, and Exhibit A
                  attached hereto shall replace Exhibit A attached to the Lease.
                  The Expansion Premises shall become part of the Leased
                  Premises for all purposes of the Lease, and any reference in
                  the Lease to the Leased Premises shall be deemed to refer to
                  and include the Expansion Premises, except as expressly
                  provided otherwise in this Amendment.

         3.       Tenant covenants to pay to Landlord, without prior demand
                  being made therefor and without offset or deduction of any
                  kind, as Minimum Rent for the Leased Premises, for the period
                  commencing on April 1,1999 and expiring on February 28, 2003,
                  the sum of $219,234.60 per, annum, payable in equal monthly
                  installments, in advance, of $18,269.55 per month.

         4.       That the figure "22.11%" shall be deleted from Paragraph 3(b)
                  of the Lease and the figure "25.37%" shall be inserted in its
                  stead and place.

         5.       That the figure "$5,678.00" shall be deleted from Paragraph
                  3(c) of the Lease and the figure "$6,513.00" shall be inserted
                  in its stead and place.

         6.       That the figure "$1,666.00" shall be deleted from Paragraph
                  3(d) of the Lease and the figure "$1,911.00" shall be inserted
                  in its stead and place.

         7.       That the words "Leased Premises" in the first line of
                  Paragraph 5(c) of the Lease shall be deleted and the words
                  "Existing Premises" shall be inserted in its stead and place.

         8.       Tenant hereby accepts the Expansion Premises in "as is"
                  condition and acknowledges that Landlord shall not be required
                  to perform any work therein in consideration of Tenant's
                  occupancy.

                                       1
<PAGE>   21
         9.       In consideration of Tenant's accepting the Expansion Premises
                  in their present "as is" condition, Tenant shall receive a
                  credit in the amount of $10,267.50 to be applied in equal
                  monthly installments of $3,422.50 per month, towards the
                  Minimum Rent, Operating Expenses and Taxes due under the Lease
                  for the period commencing on April 1,1999 and expiring on June
                  30, 1999.

         10.      Tenant represents and warrants to Landlord that Tenant has had
                  no dealings or negotiations with any broker or agent in
                  connection with the consummation of this Amendment except for
                  Brad Bohlman of Welsh Companies, 8200 Normandale Boulevard,
                  Suite 200, Minneapolis, Minnesota 55437-1060, (hereinafter
                  "Welsh") and John M. Lavander of Caliber Development
                  Corporation, 14505 21st Avenue, Suite 205, Plymouth, Minnesota
                  55447 (hereinafter "Caliber") and Tenant agrees to pay, hold
                  harmless and indemnify Landlord from and against any and all
                  costs, expenses (including attorney's fees and court costs),
                  loss and liability for any compensation, commissions or
                  charges claimed by any broker or agent with respect to this
                  Amendment or the negotiations hereof if such claim or claims
                  by any such broker or agent are based in whole or in part on
                  dealings with Tenant or its representatives. Landlord shall
                  pay the commission due Welsh and Caliber pursuant to the terms
                  of a separate brokerage agreement entered into between
                  Landlord and Welsh.

         11.      Tenant hereby represents and warrants to Landlord that Tenant
                  (i) is not in default of any of its obligations under the
                  Lease and that such Lease is valid, binding and enforceable in
                  accordance with its terms, (ii) has full power and authority
                  to execute and perform this Amendment, and (iii) has taken all
                  actions necessary to authorize the execution and performance
                  of this Amendment.

         12.      The recitals set forth hereinabove are incorporated herein by
                  this reference with the same force and effect as if fully set
                  forth hereinafter.

         13.      Capitalized terms not otherwise defined herein shall have the
                  meaning ascribed to them in the Lease.

         14.      Except as expressly amended hereby, the Lease and all of the
                  terms, covenants and conditions of the Lease are hereby
                  confirmed and ratified and shall remain and continue in full
                  force and effect.

         15.      This Amendment may not be modified or terminated orally and
                  constitutes the entire agreement between the parties with
                  respect to the subject matter hereof.

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment the
day and year first written above.

                                     LANDLORD: Northwest Properties Realty Corp.

                                         By: /s/ (illegible)
                                             -----------------------------------
                                             (Title) Vice President

                                     TENANT:  G. T. Interactive Software Corp.

                                         By: /s/ (illegible)
                                             ----------------------------------
                                             (Title) President

                                       2
<PAGE>   22
                                   EXHIBIT A

                                     [MAP]

                                       16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00029-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00029-of-00352.parquet"}]]