Document:

<PAGE>   1
                                                                     EXHIBIT 4.1

                        CYPRESS SEMICONDUCTOR CORPORATION

                                       TO

             STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.

                                   AS TRUSTEE

                                ----------------

                             SUBORDINATED INDENTURE

                                ----------------

                          DATED AS OF JANUARY 15, 2000

                                ----------------

                          SUBORDINATED DEBT SECURITIES

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
                                                                                               PAGE
                                                                                               ----
<S>                   <C>                                                                       <C>
Reconciliation and Tie...........................................................................v

ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION................................1

        Section 101.  Definitions................................................................1
        Section 102.  Compliance Certificates and Opinions.......................................8
        Section 103.  Form of Documents Delivered to Trustee.....................................9
        Section 104.  Acts of Holders; Record Dates..............................................9
        Section 105.  Notices, etc..............................................................11
        Section 106.  Notice to Holders; Waiver.................................................11
        Section 107.  Conflict with Trust Indenture Act.........................................11
        Section 108.  Effect of Headings and Table of Contents..................................12
        Section 109.  Successors and Assigns....................................................12
        Section 110.  Separability Clause.......................................................12
        Section 111.  Benefits of Indenture.....................................................12
        Section 112.  Governing Law.............................................................12
        Section 113.  Legal Holidays............................................................12
        Section 114.  Indenture and Securities Solely Corporate Obligations.....................12
        Section 115.  Indenture May be Executed in Counterparts.................................13

ARTICLE 2 SECURITY FORMS........................................................................13

        Section 201.  Forms Generally...........................................................13
        Section 202.  Form of Face of Security..................................................13
        Section 203.  Form of Reverse of Security...............................................15
        Section 204.  Form of Legend for Global Securities......................................19
        Section 205.  Form of Trustee's Certificate of Authentication...........................20
        Section 206.  Form of Conversion Notice.................................................20

ARTICLE 3 THE SECURITIES........................................................................21

        Section 301.  Amount Unlimited; Issuable in Series......................................21
        Section 302.  Denominations.............................................................23
        Section 303.  Execution, Authentication, Delivery and Dating............................23
        Section 304.  Temporary Securities......................................................25
        Section 305.  Registration; Registration of Transfer and Exchange.......................25
        Section 306.  Mutilated, Destroyed, Lost and Stolen Securities..........................27
        Section 307.  Payment of Interest; Interest Rights Preserved............................27
        Section 308.  Persons Deemed Owners.....................................................28
        Section 309.  Cancellation..............................................................29
        Section 310.  Computation of Interest...................................................29

ARTICLE 4 SATISFACTION AND DISCHARGE............................................................29

        Section 401.  Satisfaction and Discharge of Indenture...................................29
        Section 402.  Application of Trust Money................................................30

ARTICLE 5 REMEDIES..............................................................................30
</TABLE>

                                      -i-
<PAGE>   3

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
                                                                                               PAGE
                                                                                               ----
<S>                   <C>                                                                       <C>
        Section 501.  Events of Default.........................................................30
        Section 502.  Acceleration of Maturity; Rescission and Annulment........................31
        Section 503.  Collection of Indebtedness and Suits for Enforcement by Trustee...........32
        Section 504.  Trustee May File Proofs of Claim..........................................33
        Section 505.  Trustee May Enforce Claims Without Possession of Securities...............33
        Section 506.  Application of Money Collected............................................33
        Section 507.  Limitation on Suits.......................................................33
        Section 508.  Unconditional Right of Holders to Receive Principal, Premium and
                      Interest and to Convert...................................................34
        Section 509.  Restoration of Rights and Remedies........................................34
        Section 510.  Rights and Remedies Cumulative............................................34
        Section 511.  Section Delay or Omission Not Waiver......................................35
        Section 512.  Control by Holders........................................................35
        Section 513.  Waiver of Past Defaults...................................................35
        Section 514.  Undertaking for Costs.....................................................35
        Section 515.  Waiver of Usury, Stay or Extension Laws...................................36

ARTICLE 6 THE TRUSTEE...........................................................................36

        Section 601.  Certain Duties and Responsibilities.......................................36
        Section 602.  Notice of Defaults........................................................36
        Section 603.  Certain Rights of Trustee.................................................36
        Section 604.  Not Responsible for Recitals or Issuance of Securities....................37
        Section 605.  May Hold Securities and Act as Trustee under Other Indentures.............37
        Section 606.  Money Held in Trust.......................................................38
        Section 607.  Compensation and Reimbursement............................................38
        Section 608.  Conflicting Interests.....................................................38
        Section 609.  Corporate Trustee Required; Eligibility...................................38
        Section 610.  Resignation and Removal; Appointment of Successor.........................39
        Section 611.  Acceptance of Appointment by Successor....................................40
        Section 612.  Merger, Conversion, Consolidation or Succession to Business...............41
        Section 613.  Preferential Collection of Claims Against Company.........................41
        Section 614.  Appointment of Authenticating Agent.......................................41

ARTICLE 7 HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.....................................42

        Section 701.  Company to Furnish Trustee Names and Addresses of Holders.................42
        Section 702.  Preservation of Information; Communications to Holders....................43
        Section 703.  Reports by Trustee........................................................43
        Section 704.  Reports by Company........................................................43

ARTICLE 8 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..................................44

        Section 801.  Company May Consolidate, Etc..............................................44
        Section 802.  Successor Substituted.....................................................44

ARTICLE 9 SUPPLEMENTAL INDENTURES...............................................................45
</TABLE>

                                      -ii-
<PAGE>   4

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
                                                                                               PAGE
                                                                                               ----
<S>                   <C>                                                                       <C>
        Section 901.  Supplemental Indentures without Consent of Holders........................45
        Section 902.  Supplemental Indentures with Consent of Holders...........................46
        Section 903.  Execution of Supplemental Indentures......................................47
        Section 904.  Effect of Supplemental Indentures.........................................47
        Section 905.  Conformity with Trust Indenture Act.......................................47
        Section 906.  Reference in Securities to Supplemental Indentures........................47
        Section 907.  Subordination Unimpaired..................................................47

ARTICLE 10 COVENANTS............................................................................48

        Section 1001. Payment of Principal, Premium and Interest................................48
        Section 1002. Maintenance of Office or Agency...........................................48
        Section 1003. Money for Securities Payments to Be Held in Trust.........................48
        Section 1004. Statement by Officers as to Default.......................................49
        Section 1005. Existence.................................................................49
        Section 1006. Maintenance of Properties.................................................49
        Section 1007. Payment of Taxes and Other Claims.........................................50
        Section 1008. Waiver of Certain Covenants...............................................50

ARTICLE 11 REDEMPTION OF SECURITIES.............................................................50

        Section 1101. Applicability of Article..................................................50
        Section 1102. Election to Redeem; Notice to Trustee.....................................50
        Section 1103. Selection by Trustee of Securities to Be Redeemed.........................51
        Section 1104. Notice of Redemption......................................................51
        Section 1105. Deposit of Redemption Price...............................................52
        Section 1106. Securities Payable on Redemption Date.....................................52
        Section 1107. Securities Redeemed in Part...............................................53

ARTICLE 12 SINKING FUNDS........................................................................53

        Section 1201. Applicability of Article..................................................53
        Section 1202. Satisfaction of Sinking Fund Payments with Securities.....................53
        Section 1203. Redemption of Securities for Sinking Fund.................................54

ARTICLE 13 DEFEASANCE AND COVENANT DEFEASANCE...................................................54

        Section 1301. Company's Option to Effect Defeasance or Covenant Defeasance..............54
        Section 1302. Defeasance and Discharge..................................................54
        Section 1303. Covenant Defeasance.......................................................55
        Section 1304. Conditions to Defeasance or Covenant Defeasance...........................55
        Section 1305. Deposited Money and U.....................................................57
        Section 1306. Reinstatement.............................................................58

ARTICLE 14 CONVERSION OF SECURITIES.............................................................58

        Section 1401. Applicability of Article..................................................58
        Section 1402. Exercise of Conversion Privilege..........................................58
</TABLE>

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                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
                                                                                               PAGE
                                                                                               ----
<S>                   <C>                                                                       <C>
        Section 1403. No Fractional Shares......................................................59
        Section 1404. Adjustment of Conversion Price............................................60
        Section 1405. Notice of Certain Corporate Actions.......................................60
        Section 1406. Reservation of Shares of Common Stock.....................................61
        Section 1407. Payment of Certain Taxes upon Conversion..................................61
        Section 1408. Nonassessability..........................................................61
        Section 1409. Provision in Case of Consolidation, Merger or Sale of Assets..............61
        Section 1410. Duties of Trustee Regarding Conversion....................................62
        Section 1411. Repayment of Certain Funds upon Conversion................................63

ARTICLE 15 SUBORDINATION OF SECURITIES..........................................................63

        Section 1501. Agreement of Subordination................................................63
        Section 1502. Payments to Holders.......................................................63
        Section 1503. Subrogation of Securities.................................................65
        Section 1504. Authorization to Effect Subordination.....................................66
        Section 1505. Notice to Trustee.........................................................66
        Section 1506. Trustee's Relation to Senior Indebtedness.................................67
        Section 1507. No Impairment of Subordination............................................68
        Section 1508. Certain Conversions Deemed Payment........................................68
        Section 1509. Article Applicable to Paying Agents.......................................68
        Section 1510. Senior Indebtedness Entitled to Rely......................................68
</TABLE>

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                        Cypress Semiconductor Corporation

Certain Sections of this Indenture relating to Sections 310 through 318,
inclusive, of the Trust Indenture Act of 1939:

<TABLE>

<S>         <C>                                                             <C>
Section 310 (a)(1)...........................................................609
            (a)(2)...........................................................609
            (a)(3)................................................Not Applicable
            (a)(4)................................................Not Applicable
            (b).........................................................608, 610
Section 311 (a)..............................................................613
            (b)..............................................................613
Section 312 (a).........................................................701, 702
            (b)..............................................................702
            (c)..............................................................702
Section 313 (a)..............................................................703
            (b)..............................................................703
            (c)..............................................................703
            (d)..............................................................703
Section 314 (a)..............................................................704
            (a)(4).....................................................101, 1004
            (b)...................................................Not Applicable
            (c)(1)...........................................................102
            (c)(2)...........................................................102
            (c)(3)................................................Not Applicable
            (d)...................................................Not Applicable
            (e)..............................................................102
Section 315 (a)..............................................................601
            (b)..............................................................602
            (c)..............................................................601
            (d)..............................................................601
            (e)..............................................................514
Section 316 (a)..............................................................101
            (a)(1)(A)...................................................502, 512
            (a)(1)(B)........................................................513
            (a)(2)................................................Not Applicable
            (a)(2)................................................Not Applicable
            (b)..............................................................508
            (c)..............................................................104
Section 317 (a)(1)...........................................................503
            (a)(2)...........................................................504
            (b).............................................................1003
Section 318 (a)..............................................................107
</TABLE>

      NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.

                                      -v-
<PAGE>   7

      SUBORDINATED INDENTURE, dated as of January 15, 2000, between Cypress
Semiconductor Corporation, a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company"), having its
principal executive office at 3901 North First Street, San Jose, California
95134-1599, and State Street Bank and Trust Company of California, N.A., a
national banking association duly organized and existing under the laws of the
United States of America, as Trustee (herein called the "Trustee").

                             RECITALS OF THE COMPANY

      The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as provided in this Indenture.

      All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.

                   NOW, THEREFORE, THIS INDENTURE WITNESSETH:

      For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof appertaining, as follows:

                                    ARTICLE 1

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. DEFINITIONS.

      For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:

      (1)   the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;

      (2)   all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;

      (3)   all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted at the
date of such computation;

      (4)   unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Indenture; and

      (5)   the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

<PAGE>   8

      "Act," when used with respect to any Holder, has the meaning specified in
Section 104.

      "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,

      "Control" when used with respect to any specified Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

      "Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.

      "Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board empowered to act for it with respect
to this Indenture.

      "Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

      "Business Day," when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.

      "Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

      "Common Stock" includes any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company; provided, however,
subject to the provisions of Section 1409, shares issuable upon conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided, further, that
if at any time there shall be more than one such resulting class, the shares of
each such class then so issuable shall be substantially in the proportion which
the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

      "Company" means the corporation named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.

                                      -2-
<PAGE>   9

      "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its principal
financial officer, its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.

      "Corporate Trust Office" means the corporate trust office of the Trustee
at 633 West 5th Street, 12th Floor, Los Angeles, California 90071, Attention:
Corporate Trust Department (Cypress Semiconductor Corporation Subordinated
Indenture dated as of January 15, 2000), or such other office, designated by the
Trustee by written notice to the Company, at which at any particular time its
corporate trust business shall be administered.

      "Corporation" means a corporation, association, company, joint-stock
company or business trust.

      "Covenant Defeasance" has the meaning specified in Section 1303.

      "Defaulted Interest" has the meaning specified in Section 307.

      "Defeasance" has the meaning specified in Section 1302.

      "Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301.

      "Designated Senior Indebtedness" means any particular Senior Indebtedness
in which the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Indebtedness shall be "Designated Senior
Indebtedness" for purposes of the Indenture (provided that such instrument,
agreement or other document may place limitations and conditions on the right of
such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness). If any payment made to any holder of any Designated Senior
Indebtedness or its Representative with respect to such Designated Senior
Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Designated Senior Indebtedness
effective as of the date of such rescission or return.

      "Event of Default" has the meaning specified in Section 501.

      "Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.

      "Expiration Date" has the meaning specified in Section 104.

      "Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or such
legend as may be specified as contemplated by Section 301 for such Securities).

      "Holder" means a Person in whose name a Security is registered in the
Security Register.

      "Indebtedness" means with respect to any Person, and without duplication,
(a) all indebtedness, obligations and other liabilities (contingent or
otherwise) of such Person for borrowed money (including

                                      -3-
<PAGE>   10

obligations of such Person in respect of overdrafts, foreign exchange contracts,
currency exchange agreements, interest rate protection agreements, and any loans
or advances from banks, whether or not evidenced by notes or similar
instruments) or evidenced by credit or loan agreements, bonds, debentures, notes
or similar instruments (whether or not the recourse of the lender is to the
whole of the assets of such Person or to only a portion thereof) (other than any
trade accounts payable or other accrued current expense incurred in the ordinary
course of business in connection with the obtaining of materials or services),
(b) all reimbursement obligations and other liabilities (contingent or
otherwise) of such Person with respect to letters of credit, bank guarantees or
bankers' acceptances, (c) all obligations and liabilities (contingent or
otherwise) (i) in respect of leases of such Person required, in conformity with
generally accepted accounting principles, to be accounted for as capitalized
lease obligations on the balance sheet of such Person, (ii) as lessee under
other leases for facilities equipment (and related assets leased together
therewith), whether or not capitalized, entered into or leased after the date of
this Indenture for financing purposes (as determined by the Company) or (iii)
any lease or related document (including a purchase agreement) in connection
with the lease of real property which provides that such Person is contractually
obligated to purchase or cause a third party to purchase the leased property and
thereby guarantee a minimum residual value of the leased property to the lessor
and the obligations of such Person under such lease or related document to
purchase or to cause a third party to purchase such leased property, (d) all
obligations of such Person (contingent or otherwise) with respect to any
interest rate, currency or other swap, cap, floor or collar agreement, hedge
agreement, forward contract, or other similar instrument or foreign currency
hedge, exchange, purchase or similar instrument or agreement (e) all direct or
indirect guaranties, agreements to be jointly liable or similar agreements by
such Person in respect of, and obligations or liabilities (contingent or
otherwise) of such Person to purchase or otherwise acquire or otherwise assure a
creditor against loss in respect of, indebtedness, obligations or liabilities of
another Person of the kind described in clauses (a) through (d), (f) any
indebtedness or other obligations described in clauses (a) through (d) secured
by any mortgage, pledge, lien or other encumbrance existing on property which is
owned or held by such Person, regardless of whether the indebtedness or other
obligation secured thereby shall have been assumed by such Person and (g) any
and all deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability of
the kind described in clauses (a) through (f).

      "Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301; provided,
however, that if at any time more than one Person is acting as Trustee under
this Indenture due to the appointment of one or more separate Trustees for any
one or more separate series of Securities, "Indenture" shall mean, with respect
to such series of Securities for which any such Person is Trustee, this
instrument as originally executed or as it may from time to time be supplemented
or amended by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof and shall include the terms of particular
series of Securities for which such Person is Trustee established as
contemplated by Section 301, exclusive, however, of any provisions or terms
which relate solely to other series of Securities for which such Person is not
Trustee, regardless of when such terms or provisions were adopted, and exclusive
of any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become such
Trustee, but to which such person, as such Trustee, was not a party; provided,
further that in the event that this Indenture is supplemented or amended by one
or more indentures supplemental hereto which are only applicable to certain
series of Securities, the term "Indenture" for a particular series of Securities
shall only include the supplemental indentures applicable thereto.

                                      -4-
<PAGE>   11

      "Interest," when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.

      "Interest Payment Date," when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.

      "Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.

      "Maturity," when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, repurchase at the option of
the Holder or otherwise.

      "Notice of Default" means a written notice of the kind specified in
Section 501(4).

      "Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the principal financial officer, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee. One of the officers signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the Company.

      "Opinion of Counsel" means a written opinion of counsel, who may be
counsel for, or an employee of, the Company, and who shall be reasonably
acceptable to the Trustee.

      "Original Issue Discount Security" means any Security which provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.

      "Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:

            (1)   Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;

            (2)   Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Securities; provided that, if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;

            (3)   Securities as to which Defeasance has been effected pursuant
to Section 1302; and

            (4)   Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;

                                      -5-
<PAGE>   12

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 502, (B)
if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall
be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security denominated
in one or more foreign currencies or currency units which shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined as of such date in
the manner provided as contemplated by Section 301, of the principal amount of
such Security (or, in the case of a Security described in Clause (A) or (B)
above, of the amount determined as provided in such Clause), and (D) Securities
owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Securities which the Trustee knows
to be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.

      "Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.

      "Payment Blockage Notice" has the meaning specified in Section 1504.

      "Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.

      "Place of Payment," when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.

      "Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

      "Record Date" means any Regular Record Date or Special Record Date.

      "Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.

      "Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.

                                      -6-
<PAGE>   13

      "Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.

      "Representative" means the (a) indenture trustee or other trustee, agent
or representative for any Senior Indebtedness or (b) with respect to any Senior
Indebtedness that does not have any such trustee, agent or other representative,
(i) in the case of such Senior Indebtedness issued pursuant to an agreement
providing for voting arrangements as among the holders or owners of such Senior
Indebtedness, any holder or owner of such Senior Indebtedness acting with the
consent of the required persons necessary to bind such holders or owners of such
Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the holder or owner of such Senior Indebtedness.

      "Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.

      "Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.

      "Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.

      "Senior Indebtedness" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, Indebtedness of the Company, whether outstanding
on the date of this Indenture or thereafter created, incurred, assumed,
guaranteed or in effect guaranteed by the Company (including all deferrals,
renewals, extensions or refundings of, or amendments, modifications or
supplements to, the foregoing), unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption or
guarantee thereof expressly provides that such Indebtedness shall not be senior
in right of payment to the Securities or expressly provides that such
Indebtedness is "pari passu" or "junior" to the Securities. Notwithstanding the
foregoing, the term Senior Indebtedness shall not include (a) any Indebtedness
of the Company to any Subsidiary of the Company, a majority of the voting stock
of which is owned, directly or indirectly, by the Company, (b) any Indebtedness
that is not secured and (c) the Company's 6% Convertible Subordinated Notes due
2002. If any payment made to any holder of any Senior Indebtedness or its
Representative with respect to such Senior Indebtedness is rescinded or must
otherwise be returned by such holder or Representative upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, the reinstated
Indebtedness of the Company arising as a result of such rescission or return
shall constitute Senior Indebtedness effective as of the date of such rescission
or return.

      "Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.

      "Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.

      "Subsidiary" means a corporation of which at least a majority of the
outstanding voting stock having the power to elect a majority of the board of
directors of such corporation is at the time owned, directly or indirectly, by
the Company or by one or more other

                                      -7-
<PAGE>   14

Subsidiaries, or by the Company and one or more other Subsidiaries, and the
accounts of which are consolidated with those of the Company in its most recent
consolidated financial statements in accordance with generally accepted
accounting principles. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.

      "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.

      "Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean the Trustee with respect to Securities of that series.

      "U.S. Government Obligation" has the meaning specified in Section 1304.

      "Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."

SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.

      Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.

      Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include,

      (1)   a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;

      (2)   a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

      (3)   a statement that, in the opinion of each such individual, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

      (4)   a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.

                                      -8-
<PAGE>   15

SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.

      In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

      Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based are erroneous. Any such certificate or opinion of counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.

      Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 104. ACTS OF HOLDERS; RECORD DATES.

      Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. The
Trustee shall promptly deliver to the Company copies of all such instrument or
instruments delivered to the Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.

      The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him or her the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.

      The ownership of Securities shall be proved by the Security Register.

      Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon

                                      -9-
<PAGE>   16

the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.

      The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, vote, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be canceled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities of the relevant series on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities of the relevant series in
the manner set forth in Section 106.

      The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to join
in the giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.

      With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such

                                      -10-
<PAGE>   17

record date shall be deemed to have initially designated the 180th day after
such record date as the Expiration Date with respect thereto, subject to its
right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.

      Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.

SECTION 105. NOTICES, ETC., to Trustee and Company

      Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,

      (1)   the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing (or by
facsimile transmissions, provided that oral confirmation of receipt shall have
been received) to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Department, or

      (2)   the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
at the address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Trustee by the Company, Attention: Chief Financial Officer.

SECTION 106. NOTICE TO HOLDERS; WAIVER.

      Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid or delivered by hand or
overnight courier, to each Holder affected by such event, at its address as it
appears in the Security Register, not later than the latest date (if any), and
not earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail or deliver by hand or overnight courier such notice, nor any
defect in any notice so mailed or delivered by hand or overnight courier, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.

      In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.

SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.

      If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any

                                      -11-
<PAGE>   18

provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act which may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.

SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.

      The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

SECTION 109. SUCCESSORS AND ASSIGNS.

      All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.

SECTION 110. SEPARABILITY CLAUSE.

      In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111. BENEFITS OF INDENTURE.

      Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Indenture.

SECTION 112. GOVERNING LAW.

      THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO SUCH
STATE'S CONFLICTS OF LAWS PRINCIPLES.

SECTION 113. LEGAL HOLIDAYS.

      In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert a Security at a particular conversion price shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities (other than a provision of any Security which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) or, if applicable to a
particular series of Securities, conversion need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on the Interest
Payment Date or Redemption Date, at the Stated Maturity or on such last day for
conversion, as the case may be.

SECTION 114. INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS.

      No recourse for the payment of the principal of or premium, if any, or
interest on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation,

                                      -12-
<PAGE>   19

covenant or agreement of the Company in this Indenture or in any supplemental
indenture or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
employee, agent, officer, or director or subsidiary, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issue of the Securities.

SECTION 115. INDENTURE MAY BE EXECUTED IN COUNTERPARTS.

      This instrument may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instruments.

                                   ARTICLE 2

                                 SECURITY FORMS

SECTION 201. FORMS GENERALLY.

      The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities. Any such Board Resolution or record of such action shall have
attached thereto a true and correct copy of the form of Security referred to
therein approved by or pursuant to such Board Resolution.

      The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.

SECTION 202. FORM OF FACE OF SECURITY.

      [INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE
REGULATIONS THEREUNDER.]

                        CYPRESS SEMICONDUCTOR CORPORATION

      --------------------------------------------------------------------

NO.                                                          $
   ----------                                                 -----------------

                                      -13-
<PAGE>   20
                                                             CUSIP:
                                                                   ------------

      Cypress Semiconductor Corporation, a corporation duly organized and
existing under the laws of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to ________________, or registered
assigns, the principal sum of ________________________________________ Dollars
on ____________ [IF THE SECURITY IS TO BEAR INTEREST PRIOR TO MATURITY, INSERT
-- , and to pay interest thereon from _________ or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on ___________ and __________ in each year, commencing _______________, at the
rate of ____% per annum, until the principal hereof is paid or made available
for payment [IF APPLICABLE, INSERT -- , provided that any principal and premium,
and any such installment of interest, which is overdue shall bear interest at
the rate of ___% per annum (to the extent that the payment of such interest
shall be legally enforceable), from the dates such amounts are due until they
are paid or made available for payment, and such interest shall be payable on
demand]. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the ___________ or ___________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture].

      [IF THE SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY, INSERT -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of ___% per annum (to the extent that the payment of
such interest shall be legally enforceable), from the dates such amounts are due
until they are paid or made available for payment. Interest on any overdue
principal or premium shall be payable on demand. Any such interest on overdue
principal or premium which is not paid on demand shall bear interest at the rate
of ___% per annum (to the extent that the payment of such interest on interest
shall be legally enforceable), from the date of such demand until the amount so
demanded is paid or made available for payment. Interest on any overdue interest
shall be payable on demand.] Payment of the principal of (and premium, if any)
and [IF APPLICABLE, INSERT -- any such] interest on this Security will be made
at the office or agency of the Company maintained for that purpose in
_____________________, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts [IF APPLICABLE, INSERT -- ; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register].

      Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

      Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

                                      -14-
<PAGE>   21

      IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:                                    CYPRESS SEMICONDUCTOR CORPORATION
      ---------------------

                                          By:
                                             ----------------------------------

                                          Title:
                                                -------------------------------

ATTEST:

-------------------------------------

SECTION 203. FORM OF REVERSE OF SECURITY.

      This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Subordinated Indenture, dated as of January 15, 2000 (herein
called the "Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and State Street Bank and Trust Company of
California, N.A., as Trustee (herein called the "Trustee," which term includes
any successor trustee under the Indenture), and reference is hereby made to the
Indenture and all indentures supplemental thereto for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Indebtedness and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [IF APPLICABLE, INSERT -- , limited in aggregate principal
amount to $_________].

      [IF APPLICABLE, INSERT -- The Securities of this series are subject to
redemption upon not less than [IF APPLICABLE, INSERT -- 30] days' notice by
mail, [IF APPLICABLE, INSERT -- (1) on _____________ in any year commencing
with the year _____ and ending with the year _____ through operation of the
sinking fund for this series at a Redemption Price equal to 100% of the
principal amount, and (2)] at any time [IF APPLICABLE, INSERT - on or after
_____________, 19__], as a whole or in part, at the election of the Company, at
the following Redemption Prices (expressed as percentages of the principal
amount): If redeemed [IF APPLICABLE, INSERT-- on or before ______________, ___%,
and if redeemed] during the 12-month period beginning ________ of the years
indicated,

      YEAR          REDEMPTION PRICE          YEAR         REDEMPTION PRICE
    --------        ----------------        --------       ----------------

and thereafter at a Redemption Price equal to _____% of the principal amount,
together in the case of any such redemption [IF APPLICABLE, INSERT -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such

                                      -15-
<PAGE>   22

Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]

      [IF APPLICABLE, INSERT --The Securities of this series are subject to
redemption upon not less than [IF APPLICABLE, INSERT -- 30] days' notice by
mail, (1) on _________ in any year commencing with the year _____ and ending
with the year _____ through operation of the sinking fund for this series at the
Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table below,
and (2) at any time [IF APPLICABLE, INSERT -- on or after __________], as a
whole or in part, at the election of the Company, at the Redemption Prices for
redemption otherwise than through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below: If redeemed
during the 12-month period beginning ________ of the years indicated,

                       REDEMPTION PRICE FOR            REDEMPTION PRICE FOR
                        REDEMPTION THROUGH           REDEMPTION OTHERWISE THAN
                         OPERATION OF THE             THROUGH OPERATION OF THE
      YEAR                 SINKING FUND                     SINKING FUND
    --------           --------------------          -------------------------

and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]

      [IF APPLICABLE, INSERT -- Notwithstanding the foregoing, the Company may
not, prior to __________, redeem any Securities of this series as contemplated
by [IF APPLICABLE, INSERT -- Clause (2) of] the preceding paragraph as a part
of, or in anticipation of, any refunding operation by the application, directly
or indirectly, of moneys borrowed having an interest cost to the Company
(calculated in accordance with generally accepted financial practice) of less
than ___% per annum.]

      [IF APPLICABLE, INSERT -- The sinking fund for this series provides for
the redemption on ___________, in each year beginning with the year _____ and
ending with the year _____ of [IF APPLICABLE, INSERT -- not less than
$__________ ("mandatory sinking fund") and not more than] $___________ aggregate
principal amount of Securities of this series. Securities of this series
acquired or redeemed by the Company otherwise than through [IF APPLICABLE,
INSERT -- mandatory] sinking fund payments may be credited against subsequent
[IF APPLICABLE, INSERT -- mandatory] sinking fund payments otherwise required to
be made IF APPLICABLE, INSERT --, in the inverse order in which they become
due].]

      [IF THE SECURITY IS SUBJECT TO REDEMPTION OF ANY KIND, INSERT -- In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]

                                      -16-
<PAGE>   23

      [IF APPLICABLE, INSERT -- The Indenture contains provisions for defeasance
at any time of [the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [, in
each case] upon compliance with certain conditions set forth in the Indenture.]

      [IF THE SECURITY IS CONVERTIBLE INTO COMMON STOCK OF THE COMPANY, INSERT
-- Subject to the provisions of the Indenture, the Holder of this Security is
entitled, at its option, at any time on or before [INSERT DATE] (except that, in
case this Security or any portion hereof shall be called for redemption, such
right shall terminate with respect to this Security or portion hereof, as the
case may be, so called for redemption at the close of business on the first
Business Day next preceding the date fixed for redemption as provided in the
Indenture unless the Company defaults in making the payment due upon
redemption), to convert the principal amount of this Security (or any portion
hereof which is $1,000 or an integral multiple thereof), into fully paid and
non-assessable shares (calculated as to each conversion to the nearest 1/100th
of a share) of the Common Stock of the Company, as said shares shall be
constituted at the date of conversion, at the conversion price of $_____________
principal amount of Securities for each share of Common Stock, or at the
adjusted conversion price in effect at the date of conversion determined as
provided in the Indenture, upon surrender of this Security, together with the
conversion notice hereon duly executed, to the Company at the designated office
or agency of the Company in ____________, accompanied (if so required by the
Company) by instruments of transfer, in form satisfactory to the Company and to
the Trustee, duly executed by the Holder or by its duly authorized attorney in
writing.

      Such surrender shall, if made during any period beginning at the close of
business on a Regular Record Date and ending at the opening of business on the
Interest Payment Date next following such Regular Record Date (unless this
Security or the portion being converted shall have been called for redemption on
a Redemption Date during the period beginning at the close of business on a
Regular Record Date and ending at the opening of business on the first Business
Day after the next succeeding Interest Payment Date, or if such Interest Payment
Date is not a Business Day, the second such Business Day), also be accompanied
by payment in funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of this Security
then being converted. Subject to the aforesaid requirement for payment and, in
the case of a conversion after the Regular Record Date next preceding any
Interest Payment Date and on or before such Interest Payment Date, to the right
of the Holder of this Security (or any Predecessor Security) of record at such
Regular Record Date to receive an installment of interest (with certain
exceptions provided in the Indenture), no adjustment is to be made on conversion
for interest accrued hereon or for dividends on shares of Common Stock issued on
conversion. The Company is not required to issue fractional shares upon any such
conversion, but shall make adjustment therefor in cash on the basis of the
current market value of such fractional interest as provided in the Indenture.
The conversion price is subject to adjustment as provided in the Indenture. In
addition, the Indenture provides that in case of certain consolidations or
mergers to which the Company is a party or the sale of substantially all of the
assets of the Company, the Indenture shall be amended, without the consent of
any Holders of Securities, so that this Security, if then outstanding, will be
convertible thereafter, during the period this Security shall be convertible as
specified above, only into the kind and amount of securities, cash and other
property receivable upon the consolidation, merger or sale by a holder of the
number of shares of Common Stock into which this Security might have been
converted immediately prior to such consolidation, merger or sale (assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of non-electing
shares). In the event of conversion of this Security in part only, a new
Security or Securities for the unconverted portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.]

                                      -17-
<PAGE>   24

      [IF THE SECURITY IS CONVERTIBLE INTO OTHER SECURITIES OF THE COMPANY,
SPECIFY THE CONVERSION FEATURES.]

      The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes.

      [IF THE SECURITY IS NOT AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT -- If
an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]

      [IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT -- If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to - - INSERT FORMULA FOR DETERMINING THE
AMOUNT. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal, premium and interest (in each
case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and premium and interest, if any, on the Securities of this series
shall terminate.]

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of more than 50% in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

      As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.

                                      -18-
<PAGE>   25

      No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.

      As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or its
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

      The Securities of this series are issuable only in registered form without
coupons in denominations of $_____ and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.

      No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

      Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

      All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES.

      Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

                                      -19-
<PAGE>   26

SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

      The Trustee's certificates of authentication shall be in substantially the
following form:

      This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.

                                          STATE STREET BANK AND TRUST COMPANY OF
                                          CALIFORNIA, N.A., as Trustee

                                          By:
                                             ----------------------------------
                                              Authorized Signatory

SECTION 206. FORM OF CONVERSION NOTICE.

Conversion notices shall be in substantially the following form:

To Cypress Semiconductor Corporation:

      The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of the
Company in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for fractional shares and any
Securities representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If this Notice is being delivered on a date after the close of
business on a Regular Record Date and prior to the opening of business on the
related Interest Payment Date (unless this Security or the portion thereof being
converted has been called for redemption on a Redemption Date during the period
beginning at the close of business on a Regular Record Date and ending at the
opening of business on the first Business Day after the next succeeding Interest
Payment Date, or if such Interest Payment Date is not a Business Day, the second
such Business Day), this Notice is accompanied by payment, in funds acceptable
to the Company, of an amount equal to the interest payable on such Interest
Payment Date of the principal of this Security to be converted. If shares are to
be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect hereto. Any amount required to
be paid by the undersigned on account of interest accompanies this Security.

Principle Amount to be Converted
(in integral multiple of $1,000,
       if less than all):
      U.S. $             .                Owner:
            -------------
Dated:
      ---------------------------         -------------------------------------

                                          Signature(s) must be guaranteed by an
                                          eligible guarantor institution (banks,
                                          stock brokers, savings and loan
                                          associations and credit unions with
                                          membership in an approved signature
                                          guarantee medallion program) pursuant
                                          to Securities and Exchange Commission
                                          Rule 17Ad-15.

                                          -------------------------------------
                                          Signature Guaranty

                                      -20-
<PAGE>   27

      Fill in for registration of shares of Common Stock and Security if to be
issued otherwise than to the registered Holder.

---------------------------------         -------------------------------------
(Name)                                    Social Security or Other Taxpayer
                                          Identification Number

---------------------------------
Please print Name and Address
(including zip code number)

[The above conversion notice is to be modified, as appropriate, for conversion
into other securities or property of the Company.]

                                   ARTICLE 3

                                 THE SECURITIES

SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.

      The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited. The Securities may be issued in
one or more series. There shall be established in or pursuant to a Board
Resolution and, subject to Section 303, set forth, or determined in the manner
provided, in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series,

      (1)   the title of the Securities of the series (which shall distinguish
the Securities of the series from Securities of any other series);

      (2)   any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series pursuant to
Section 304, 305, 306, 906 or 1107 and except for any Securities which, pursuant
to Section 303, are deemed never to have been authenticated and delivered
hereunder);

      (3)   the Person to whom any interest on a Security of the series shall be
payable, if other than the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest;

      (4)   the date or dates on which the principal of any Securities of the
series is payable;

      (5)   the rate or rates at which any Securities of the series shall bear
interest, if any, the date or dates from which any such interest shall accrue,
the Interest Payment Dates on which any such interest shall be payable and the
Regular Record Date for any such interest payable on any Interest Payment Date;

      (6)   the place or places where the principal of and any premium and
interest on any Securities of the series shall be payable;

                                      -21-
<PAGE>   28

      (7)   the period or periods within which, the price or prices at which and
the terms and conditions upon which any Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other than
by a Board Resolution, the manner in which any election by the Company to redeem
the Securities shall be evidenced;

      (8)   the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of the Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which any Securities
of the series shall be redeemed or purchased, in whole or in part, pursuant to
such obligation;

      (9)   if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series shall be
issuable;

      (10)  if the amount of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts shall be determined;

      (11)  if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any premium
or interest on any Securities of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United States of
America for any purpose, including for purposes of the definition of
"Outstanding" in Section 101;

      (12)  if the principal of or any premium or interest on any Securities of
the series is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than that or those in
which such Securities are stated to be payable, the currency, currencies or
currency units in which the principal of or any premium or interest on such
Securities as to which such election is made shall be payable, the periods
within which and the terms and conditions upon which such election is to be made
and the amount so payable (or the manner in which such amount shall be
determined);

      (13)  if other than the entire principal amount thereof, the portion of
the principal amount of any Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;

      (14)  if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which shall be deemed to be the
principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall be
due and payable upon any Maturity other than the Stated Maturity or which shall
be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in
any such case, the manner in which such amount deemed to be the principal amount
shall be determined);

      (15)  if applicable, that the Securities of the series, in whole or any
specified part, shall be defeasible pursuant to Section 1302 or Section 1303 or
both such Sections and, if other than by a Board Resolution, the manner in which
any election by the Company to defease such Securities shall be evidenced;

      (16)  if applicable, the terms of any right to convert Securities of the
series into shares of Common Stock of the Company or other securities or
property;

                                      -22-
<PAGE>   29

      (17)  if applicable, that any Securities of the series shall be issuable
in whole or in part in the form of one or more Global Securities and, in such
case, the respective Depositaries for such Global Securities, the form of any
legend or legends which shall be borne by any such Global Security in addition
to or in lieu of that set forth in Section 204 and any circumstances in addition
to or in lieu of those set forth in Clause (2) of the last paragraph of Section
305 in which any such Global Security may be exchanged in whole or in part for
Securities registered, and any transfer of such Global Security in whole or in
part may be registered, in the name or names of Persons other than the
Depositary for such Global Security or a nominee thereof;

      (18)  whether all of the provisions of this Indenture relating to the
subordination of the Securities (including the provisions of Article 15), or
different subordination provisions, including a different definition of "Senior
Indebtedness" or "Designated Senior Indebtedness," will apply to Securities of
the series;

      (19)  any addition to or change in the Events of Default which applies to
any Securities of the series and any change in the right of the Trustee or the
requisite Holders of such Securities to declare the principal amount thereof due
and payable pursuant to Section 502;

      (20)  any addition to or change in the covenants set forth in Article 10
which applies to Securities of the series; and

      (21)  any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture, except as permitted by Section 901(5)).

      All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.

      If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

      The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article 15.

SECTION 302. DENOMINATIONS.

      The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.

SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

      The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its principal financial officer,
its President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Treasurer, its Assistant Treasurer, its Secretary or one
of its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.

                                      -23-
<PAGE>   30

      Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

      At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established by or
pursuant to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, a copy of such Board Resolution, the Officers' Certificate setting
forth the terms of the series and an Opinion of Counsel, with such Opinion of
Counsel stating,

      (1)   if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;

      (2)   if the terms of such Securities have been established by or pursuant
to Board Resolution as permitted by Section 301, that such terms have been
established in conformity with the provisions of this Indenture; and

      (3)   that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.

      If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.

      Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.

      Each Security shall be dated the date of its authentication and shall be
executed by facsimile or manual signature of the Trustee.

      No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual or facsimile signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and

                                      -24-
<PAGE>   31

delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.

      Neither the Company nor the Trustee shall have any responsibility for any
defect in the CUSIP number that appears on any Security, check, advice of
payment or redemption notice, and any such document may contain a statement to
the effect that CUSIP numbers have been assigned by an independent service for
convenience of reference and that neither the Company nor the Trustee shall be
liable for any inaccuracy in such numbers.

SECTION 304. TEMPORARY SECURITIES.

      Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.

      If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive
Securities of the same series, of any authorized denominations and of like tenor
and aggregate principal amount. Until so exchanged, the temporary Securities of
any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.

SECTION 305. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.

      The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.

      Upon surrender for registration of transfer of any Security of a series at
the office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of like tenor and aggregate
principal amount.

      At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount, upon

                                      -25-
<PAGE>   32

surrender of the Securities to be exchanged at such office or agency. Whenever
any Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive. All Securities issued upon any
registration of transfer or exchange of Securities shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.

      Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or its attorney duly authorized in writing.

      No service charge shall be made to a Holder for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.

      If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (A) to issue, register
the transfer of or exchange any Securities of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.

      The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:

      (1)   Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security or
a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.

      (2)   Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (ii)
has ceased to be a clearing agency registered under the Exchange Act, (B) there
shall have occurred and be continuing an Event of Default with respect to such
Global Security or (C) there shall exist such circumstances, if any, in addition
to or in lieu of the foregoing as have been specified for this purpose as
contemplated by Section 301.

      (3)   Subject to Clause (2) above, any exchange of a Global Security for
other Securities may be made in whole or in part, and all Securities issued in
exchange for a Global Security or any portion thereof shall be registered in
such names as the Depositary for such Global Security shall direct.

      (4)   Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Section, Section 304, 306, 906 or 1107 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security,

                                      -26-
<PAGE>   33

unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.

SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.

      If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.

      If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.

      In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

      Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.

      Every new Security of any series issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.

      The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

      Except as otherwise provided as contemplated by Section 301 with respect
to any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.

      Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:

      (1)   The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of

                                      -27-
<PAGE>   34

business on a Special Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on
each Security of such series and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
given to each Holder of Securities of such series in the manner set forth in
Section 106, not less than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following Clause (2).

      (2)   The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.

      Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.

      Subject to the provisions of Section 1402, in the case of any Security (or
any part thereof) which is converted after any Regular Record Date and on or
prior to the next succeeding Interest Payment Date (other than any Security the
principal of (or premium, if any, on) which shall become due and payable,
whether at Stated Maturity or by declaration of acceleration or otherwise prior
to such Interest Payment Date), interest whose Stated Maturity is on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Security (or any one or more Predecessor Securities) is registered at the close
of business on such Regular Record Date. Except as otherwise expressly provided
in the immediately preceding sentence or in Section 1402, in the case of any
Security (or any part thereof) which is converted, interest whose Stated
Maturity is after the date of conversion of such Security (or such part thereof)
shall not be payable.

SECTION 308. PERSONS DEEMED OWNERS.

      Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

                                      -28-
<PAGE>   35

SECTION 309. CANCELLATION.

      All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order.

SECTION 310. COMPUTATION OF INTEREST.

      Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.

                                    ARTICLE 4

                           SATISFACTION AND DISCHARGE

SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.

      This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when

      (1)   either:

            (A)   all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Trustee or the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been delivered to
the Trustee for cancellation; or

            (B)   all such Securities not theretofore delivered to the Trustee
for cancellation

                  (i)   have become due and payable, or

                  (ii)  will become due and payable at their Stated Maturity
within one year, or

                  (iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company, and the Company,
in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose money in an amount
sufficient to pay and

                                      -29-
<PAGE>   36

discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal and any premium and interest to
the date of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be;

      (2)   the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and

      (3)   the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.

      Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

SECTION 402. APPLICATION OF TRUST MONEY.

      Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.

                                   ARTICLE 5

                                    REMEDIES

SECTION 501. EVENTS OF DEFAULT.

      "Event of Default," wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
15 or be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):

      (1)   default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for a
period of 30 days; or

      (2)   default in the payment of the principal of or any premium on any
Security of that series at its Maturity; or

      (3)   default in the deposit of any sinking fund payment, when and as due
by the terms of a Security of that series; or

      (4)   default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in

                                      -30-
<PAGE>   37

this Section specifically dealt with or which has expressly been included in
this Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or

      (5)   the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 90 consecutive days; or

      (6)   the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
in furtherance of any such action; or

      (7)   any other Event of Default provided with respect to Securities of
that series.

SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

      If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series may declare the principal amount of all the Securities of that
series (or, if any Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be
specified by the terms thereof) to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable. If an Event of Default specified in Section 501(5)
or 501(6) with respect to Securities of any series at the time Outstanding
occurs, the principal amount of all the Securities of that series (or, if any
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified by the terms
thereof) shall automatically, and without any declaration or other action on the
part of the Trustee or any Holder, become immediately due and payable. Any
payments by the Company on the Securities following any such acceleration will
be subject to the subordination provisions of Article 15 to the extent provided
therein.

                                      -31-
<PAGE>   38

      At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if

      (1)   the Company has paid or deposited with the Trustee a sum sufficient
to pay

            (A)   all overdue interest on all Securities of that series,

            (B)   the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor
in such Securities,

            (C)   to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor in such
Securities, and

            (D)   all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and

      (2)   all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513. No such rescission shall affect any
subsequent default or impair any right consequent thereon.

SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.

      The Company covenants that if:

      (1)   default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a period of
30 days, or

      (2)   default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof, the Company will, upon demand of
the Trustee, pay to it, for the benefit of the Holders of such Securities, the
whole amount then due and payable on such Securities for principal and any
premium and interest and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal and premium and on any
overdue interest, at the rate or rates prescribed therefor in such Securities,
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

      If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.

                                      -32-
<PAGE>   39

SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.

      In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607. No provision of this Indenture shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding; provided, however, that the Trustee may, on behalf of the Holders,
vote for the election of a trustee in bankruptcy or similar official and be a
member of a creditors' or other similar committee.

SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.

      All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.

SECTION 506. APPLICATION OF MONEY COLLECTED.

      Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

      FIRST: To the payment of all amounts due the Trustee under Section 607;
and

      SECOND: Subject to Article 15, to the payment of the amounts then due and
unpaid for principal of and any premium, if any, and interest on the Securities
in respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Securities for principal and any premium, if any, and
interest, respectively.

SECTION 507. LIMITATION ON SUITS.

      No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless

                                      -33-
<PAGE>   40

      (1)   such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;

      (2)   the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;

      (3)   such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;

      (4)   the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and

      (5)   no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series; it being
understood and intended that no one or more of such Holders shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders.

SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
             INTEREST AND TO CONVERT.

      Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date), to convert
such Securities in accordance with Article 14 and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.

SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.

      If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.

SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.

      Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of

                                      -34-
<PAGE>   41

any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

SECTION 511. SECTION DELAY OR OMISSION NOT WAIVER.

      No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee (subject to the limitations contained
in this Indenture) or by the Holders, as the case may be.

SECTION 512. CONTROL BY HOLDERS.

      The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that

      (1)   such direction shall not be in conflict with any rule of law or with
this Indenture and the Trustee shall not have determined that the action so
directed would be unjustly prejudicial to Holders of Securities of that series,
or any other series, not taking part in such direction; and

      (2)   the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction or this Indenture.

SECTION 513. WAIVER OF PAST DEFAULTS.

      The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default

      (1)   in the payment of the principal of or any premium or interest on any
Security of such series, or

      (2)   in respect of a covenant or provision hereof which under Article 9
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.

      Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.

SECTION 514. UNDERTAKING FOR COSTS.

      In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section

                                      -35-
<PAGE>   42

nor the Trust Indenture Act shall be deemed to authorize any court to require
such an undertaking or to make such an assessment in any suit instituted by the
Company or in any suit for the enforcement of the right to convert any Security
in accordance with Article 14.

SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.

      The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

                                   ARTICLE 6

                                   THE TRUSTEE

SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.

      The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.

SECTION 602. NOTICE OF DEFAULTS.

      If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.

SECTION 603. CERTAIN RIGHTS OF TRUSTEE.

      Subject to the provisions of Section 601:

      (1)   the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;

                                      -36-
<PAGE>   43

      (2)   any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution;

      (3)   whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) is entitled to and may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;

      (4)   the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;

      (5)   the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;

      (6)   the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
and

      (7)   the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.

SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

      The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity,
sufficiency or priority of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.

SECTION 605. MAY HOLD SECURITIES AND ACT AS TRUSTEE UNDER OTHER INDENTURES.

      The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.

      Subject to the limitations imposed by the Trust Indenture Act, nothing in
this Indenture shall prohibit the Trustee from becoming and acting as trustee
under other indentures under which other securities, or certificates of interest
of participation in other securities, of the Company are outstanding in the same
manner as if it were not Trustee hereunder.

                                      -37-
<PAGE>   44

SECTION 606. MONEY HELD IN TRUST.

      Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.

SECTION 607. COMPENSATION AND REIMBURSEMENT.

      The Company agrees:

      (1)   to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);

      (2)   except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith and

      (3)   to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.

SECTION 608. CONFLICTING INTERESTS.

      If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.

SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

      There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has (or if the
Trustee is a member of a bank holding company system, its bank holding company
shall have) a combined capital and surplus of at least $50,000,000. If any such
Person or bank holding company publishes reports of condition at least annually,
pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section and to the extent permitted by
the Trust Indenture Act, the combined capital and surplus of such Person or bank
holding company shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee with respect to the Securities of any series shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.

                                      -38-
<PAGE>   45

SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

      No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611. The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.

      The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.

If at any time:

      (1)   the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide Holder
of a Security for at least six months, or

      (2)   the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or

      (3)   the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (A) the Company by a Board Resolution may
remove the Trustee with respect to all Securities, or (B) subject to Section
514, any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect to
all Securities and the appointment of a successor Trustee or Trustees.

      If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the Securities
of that or those series (it being understood that any such successor Trustee may
be appointed with respect to the Securities of one or more or all of such series
and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, the
retiring Trustee may petition, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.

                                      -39-
<PAGE>   46

      The Company shall give notice of each resignation and each removal of the
Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series to all Holders of
Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.

SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

      In case of the appointment hereunder of a successor Trustee with respect
to all Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.

      In case of the appointment hereunder of a successor Trustee with respect
to the Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.

      Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.

      No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.

                                      -40-
<PAGE>   47

SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

      Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee (including the trust created by this Indenture), shall be the
successor of the Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.

SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

      If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.

      The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having (or if the Authenticating Agent is a member of a bank holding
company system, its bank holding company has) a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or State authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.

      Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

                                      -41-
<PAGE>   48

      An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

      The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.

      If an appointment with respect to one or more series is made pursuant to
this Section 612, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:

      This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.

                                          STATE STREET BANK AND TRUST COMPANY
                                          OF CALIFORNIA, N.A.

                                          By:
                                             ----------------------------------
                                               As Authenticating Agent

                                          By:
                                             ----------------------------------
                                               Authorized Officer

                                   ARTICLE 7

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.

The Company will furnish or cause to be furnished to the Trustee

      (1)   semi-annually, not later than 15 days after the Regular Record Date,
a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Securities of each series as of such Regular Record
Date, as the case may be, and

      (2)   at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to

                                      -42-
<PAGE>   49

the time such list is furnished; provided that no such list need be furnished by
the Company to the Trustee so long as the Trustee is acting as Security
Registrar.

SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.

      The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701, if any, and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

      The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act. Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.

SECTION 703. REPORTS BY TRUSTEE.

      The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.

      Reports so required to be transmitted at stated intervals of not more than
12 months shall be transmitted no later than July 1 in each calendar year,
commencing with the first July 1 after the first issuance of Securities pursuant
to this Indenture.

      A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.

SECTION 704. REPORTS BY COMPANY.

      The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.

                                      -43-
<PAGE>   50

                                   ARTICLE 8

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. COMPANY MAY CONSOLIDATE, ETC. , Only on Certain Terms.

        The Company shall not consolidate with or merge into any other Person
(in a transaction in which the Company is not the surviving corporation) or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, unless:

      (1)   in case the Company shall consolidate with or merge into another
Person (in an transaction in which the Company is not the surviving corporation)
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of and any premium and interest on all the Securities and the
performance or observance of every covenant of this Indenture on the part of the
Company to be performed or observed and the conversion rights shall be provided
for in accordance with Article 14, if applicable, or as otherwise specified
pursuant to Section 301, by supplemental indenture satisfactory in form to the
Trustee, executed and delivered to the Trustee, by the Person (if other than the
Company) formed by such consolidation or into which the Company shall have been
merged or by the Person which shall have acquired the Company's assets;

      (2)   immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or any Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing; and

      (3)   the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.

SECTION 802. SUCCESSOR SUBSTITUTED.

      Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.

                                      -44-
<PAGE>   51

                                   ARTICLE 9

                             SUPPLEMENTAL INDENTURES

SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

        Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

      (1)   to evidence the succession of another Person to the Company, or
successive successions, and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or

      (2)   to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company; or

      (3)   to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities, stating
that such additional Events of Default are expressly being included solely for
the benefit of such series); or

      (4)   to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons, or to permit or facilitate the issuance of Securities
in uncertificated form; or

      (5)   to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any such
addition, change or elimination (A) shall neither (i) apply to any Security of
any series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (ii) modify the rights of the
Holder of any such Security with respect to such provision or (B) shall become
effective only when there is no such Security Outstanding; or

      (6)   to secure the Securities; or

      (7)   to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or

      (8)   to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more series and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section 611;
or

      (9)   to make provision with respect to the conversion rights of Holders
pursuant to the requirements of Article 14, including providing for the
conversion of the securities into any security (other than the Common Stock of
the Company) or property of the Company; or

                                      -45-
<PAGE>   52

      (10)  to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this Clause (10) shall not
adversely affect the interests of the Holders of Securities of any series in any
material respect; or

      (11)  to supplement any of the provisions of the Indenture to such extent
as shall be necessary to permit or facilitate the defeasance and discharge of
any series of Securities pursuant to Articles 4 and 13, provided that any such
action shall not adversely affect the interests of the Holders of Securities of
such series or any other series of Securities in any material respect.

SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

      With the consent of the Holders of a majority in principal amount of the
Outstanding Securities of each series affected by such supplemental indenture,
by Act of said Holders delivered to the Company and the Trustee, the Company,
when authorized by a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,

      (1)   change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or reduce the amount of the principal of an Original Issue
Discount Security or any other Security which would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502, or
change any Place of Payment where, or the coin or currency in which, any
Security or any premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or modify the provisions of this Indenture with respect to the
subordination of such series of Securities in a manner adverse to the Holders of
Securities of such series, or, in the case of securities of any series that are
convertible into Securities or other securities of the Company, adversely affect
the right of Holders to convert any of the Securities of such series other than
as provided in or pursuant to this Indenture, or

      (2)   reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or

      (3)   modify any of the provisions of this Section, Section 513 or Section
1008, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby; provided, however,
that this clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant changes in
this Section and Section 1008, or the deletion of this proviso, in accordance
with the requirements of Sections 611 and 901(8), or

      (4)   if applicable, make any change that adversely affects the right to
convert any security as provided in Article 14 or pursuant to Section 301
(except as permitted by Section 901(9)) or decrease the conversion rate or
increase the conversion price of any such security.

                                      -46-
<PAGE>   53

      A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

      It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.

      In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 601 and 603) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.

      Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.

      Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.

SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

      Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.

SECTION 907. SUBORDINATION UNIMPAIRED.

      No provision in any supplemental indenture which affects the superior
position of the holders of Senior Indebtedness shall be effective against
holders of Senior Indebtedness.

                                      -47-
<PAGE>   54

                                   ARTICLE 10

                                    COVENANTS

SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.

      The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.

SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.

      The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange, where Securities of that series may be
surrendered for conversion and where notices and demands to or upon the Company
in respect of the Securities of that series and this Indenture may be served.
The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands. Unless otherwise provided
in a supplemental indenture or pursuant to Section 301 hereof, the Place of
Payment for any series of Securities shall be the Corporate Trust Office of the
Trustee.

      The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.

      If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.

      Whenever the Company shall have one or more Paying Agents for any series
of Securities, it will, on or prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.

                                      -48-
<PAGE>   55

      The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.

      The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

      Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for a period
ending on the earlier of the date that is ten Business Days prior to the date
such money would escheat to the State or two years after such principal, premium
or interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in each Place of Payment, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.

SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.

      The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge. The fiscal year of the Company currently ends on
December 31; and the Company will give the Trustee prompt written notice of any
change of its fiscal year.

SECTION 1005. EXISTENCE.

      Subject to Article 8, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence.

SECTION 1006. MAINTENANCE OF PROPERTIES.

      The Company will cause all properties used or useful in the conduct of its
business to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will

                                      -49-
<PAGE>   56

cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as, and to the extent, in the judgment of the Company
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business and not
disadvantageous in any material respect to the Holders.

SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS.

      The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or upon the income,
profits or property of the Company, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (i) whose amount, applicability or validity is being
contested in good faith by appropriate proceedings or (ii) if the failure to pay
or discharge would not have a material adverse effect on the assets, business,
operations, properties or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.

SECTION 1008. WAIVER OF CERTAIN COVENANTS.

      Except as otherwise specified as contemplated by Section 301 for
Securities of such series, the Company may, with respect to the Securities of
any series, omit in any particular instance to comply with any term, provision
or condition set forth in any covenant provided pursuant to Section 301(20),
901(2), 901(7), 1006 or 1007 for the benefit of the Holders of such series if
before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities of such series shall, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.

                                   ARTICLE 11

                            REDEMPTION OF SECURITIES

SECTION 1101. APPLICABILITY OF ARTICLE.

      Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for such Securities) in accordance with
this Article.

SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.

      The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution or in another manner specified as contemplated by Section 301
for such Securities. In case of any redemption at the election of the Company of
less than all the Securities of any series (including any such redemption
affecting

                                      -50-
<PAGE>   57

only a single Security), the Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the
principal amount of Securities of such series to be redeemed and, if applicable,
of the tenor of the Securities to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.

SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

      If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 45 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by lot, or in the Trustee's discretion, on
a pro-rata basis, provided that the unredeemed portion of the principal amount
of any Security shall be in an authorized denomination (which shall not be less
than the minimum authorized denomination) for such Security. If less than all
the Securities of such series and of a specified tenor are to be redeemed
(unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 45 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
and specified tenor not previously called for redemption in accordance with the
preceding sentence.

      If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed shall be treated
by the Trustee as Outstanding for the purpose of such selection.

      The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption as aforesaid and, in case of any Securities selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.

      The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.

      For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.

SECTION 1104. NOTICE OF REDEMPTION.

      Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date,
unless a shorter period is specified in the Securities to be redeemed, to each
Holder of Securities to be redeemed, at its address appearing in the Security
Register.

      All notices of redemption shall state:

                                      -51-
<PAGE>   58

      (1)   the Redemption Date,

      (2)   the Redemption Price (including accrued interest, if any),

      (3)   the applicable CUSIP number, if any,

      (4)   if less than all the Outstanding Securities of any series consisting
of more than a single Security are to be redeemed, the identification (and, in
the case of partial redemption of any such Securities, the principal amounts) of
the particular Securities to be redeemed and, if less than all the Outstanding
Securities of any series consisting of a single Security are to be redeemed, the
principal amount of the particular Security to be redeemed,

      (5)   that on the Redemption Date the Redemption Price will become due and
payable upon each such Security to be redeemed and, if applicable, that interest
thereon will cease to accrue on and after said date,

      (6)   the place or places where each such Security is to be surrendered
for payment of the Redemption Price,

      (7)   if applicable, the conversion price, that the date on which the
right to convert the principal of the Securities or the portions thereof to be
redeemed will terminate will be the Redemption Date and the place or places
where such Securities may be surrendered for conversion, and

      (8)   that the redemption is for a sinking fund, if such is the case.

      Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.

SECTION 1105. DEPOSIT OF REDEMPTION PRICE.

      On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.

      If any Security called for redemption is converted, any money deposited
with the Trustee or with a Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to the right of any Holder of
such Security to receive interest as provided in the last paragraph of Section
307) be paid to the Company on Company Request, or if then held by the Company,
shall be discharged from such trust.

SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE.

      Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with

                                      -52-
<PAGE>   59

said notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided, however, that,
unless otherwise specified as contemplated by Section 301, installments of
interest whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.

      If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.

SECTION 1107. SECURITIES REDEEMED IN PART.

      Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or its attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.

                                   ARTICLE 12

                                  SINKING FUNDS

SECTION 1201. APPLICABILITY OF ARTICLE.

      The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.

      The minimum amount of any sinking fund payment provided for by the terms
of any Securities is herein referred to as a "mandatory sinking fund payment,"
and any payment in excess of such minimum amount provided for by the terms of
such Securities is herein referred to as an "optional sinking fund payment." If
provided for by the terms of any Securities, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 1202. Each sinking
fund payment shall be applied to the redemption of Securities as provided for by
the terms of such Securities.

SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.

      The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to any Securities of such series required to be made pursuant to the terms of
such Securities as and to the extent provided for by the terms of such
Securities; provided that the Securities to be so credited have not been
previously so credited. The Securities to be so credited shall be received and
credited for such purpose by the Trustee at the Redemption Price, as specified

                                      -53-
<PAGE>   60

in the Securities so to be redeemed, for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.

SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.

      Not less than 60 days prior to each sinking fund payment date for any
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant to
Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 days prior to each such sinking fund payment date,
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.

                                   ARTICLE 13

                       DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.

      The Company may elect, at its option at any time, to have Section 1302 or
Section 1303 applied to any Securities or any series of Securities, as the case
may be, designated pursuant to Section 301 as being defeasible pursuant to such
Section 1302 or 1303, in accordance with any applicable requirements provided
pursuant to Section 301 and upon compliance with the conditions set forth below
in this Article. Any such election shall be evidenced by a Board Resolution or
in another manner specified as contemplated by Section 301 for such Securities.

SECTION 1302. DEFEASANCE AND DISCHARGE.

      Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, the
Company shall be deemed to have been discharged from its obligations, and the
provisions of Article 15 shall cease to be effective, with respect to such
Securities as provided in this Section on and after the date the conditions set
forth in Section 1304 are satisfied (hereinafter called "Defeasance"). For this
purpose, such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such Securities and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), subject to
the following which shall survive until otherwise terminated or discharged
hereunder:

      (1)   the rights of Holders of such Securities to receive, solely from the
trust fund described in Section 1304 and as more fully set forth in such
Section, payments in respect of the principal of and any premium and interest on
such Securities when payments are due,

      (2)   the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 1002 and 1003, and, if applicable, Article 14,

                                      -54-
<PAGE>   61

      (3)   the rights, powers, trusts, duties and immunities of the Trustee
hereunder and

      (4)   this Article, subject to compliance with this Article, the Company
may exercise its option (if any) to have this Section applied to any Securities
notwithstanding the prior exercise of its option (if any) to have Section 1303
applied to such Securities.

SECTION 1303. COVENANT DEFEASANCE.

        Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be,

      (1)   the Company shall be released from its obligations under Sections
1006 through 1007, inclusive, and any covenants provided pursuant to Section
301(20), 901(2) or 901(7) for the benefit of the Holders of such Securities,

      (2)   the occurrence of any event specified in Sections 501(4) (with
respect to any of Sections 1006 through 1007, inclusive, and any such covenants
provided pursuant to Section 301(20), 901(2) or 901(7)), shall be deemed not to
be or result in an Event of Default, and

      (3)   the provisions of Article 15 shall cease to be effective, in each
case with respect to such Securities as provided in this Section on and after
the date the conditions set forth in Section 1304 are satisfied (hereinafter
called "Covenant Defeasance"). For this purpose, such Covenant Defeasance means
that, with respect to such Securities, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such specified Section (to the extent so specified in the case of
Section 501(4)) or Article 15, whether directly or indirectly by reason of any
reference elsewhere herein to any such Section or Article or by reason of any
reference in any such Section or Article to any other provision herein or in any
other document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.

SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.

      The following shall be the conditions to the application of Section 1302
or Section 1303 to any Securities or any series of Securities, as the case may
be:

      (1)   The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the requirements
contemplated by Section 609 and agrees to comply with the provisions of this
Article applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefits of the Holders of such Securities,

            (A)   money in an amount, or

            (B)   U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any payment,
money in an amount, or

            (C)   a combination thereof, in each case sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the

                                      -55-
<PAGE>   62

Trustee, to pay and discharge, and which shall be applied by the Trustee (or any
such other qualifying trustee) to pay and discharge, the principal of and any
premium and interest on such Securities on the respective Stated Maturities, in
accordance with the terms of this Indenture and such Securities. As used herein,
"U.S. Government Obligation" means (x) any security which is (i) a direct
obligation of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified in
Clause (x) above and held by such bank for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of or
interest on any U.S. Government Obligation which is so specified and held,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or interest evidenced
by such depositary receipt.

      (2)   In the event of an election to have Section 1302 apply to any
Securities or any series of Securities, as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that

            (A)   the Company has received from, or there has been published by,
the Internal Revenue Service a ruling or

            (B)   since the date of this instrument, there has been a change in
the applicable Federal income tax law, in either case (A) or (B) to the effect
that, and based thereon such opinion shall confirm that, the Holders of such
Securities will not recognize gain or loss for Federal income tax purposes as a
result of the deposit, Defeasance and discharge to be effected with respect to
such Securities and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would be the case if such deposit,
Defeasance and discharge were not to occur.

      (3)   In the event of an election to have Section 1303 apply to any
Securities or any series of Securities, as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Securities will not recognize gain or loss for Federal income
tax purposes as a result of the deposit and Covenant Defeasance to be effected
with respect to such Securities and will be subject to Federal income tax on the
same amount, in the same manner and at the same times as would be the case if
such deposit and Covenant Defeasance were not to occur.

      (4)   The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that neither such Securities nor any other Securities
of the same series, if then listed on any securities exchange, will be delisted
as a result of such deposit.

      (5)   No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Securities or any other
Securities shall have occurred and be continuing at the time of such deposit or,
with regard to any such event specified in Sections 501(5) and (6), at any time
on or prior to the 90th day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until after such 90th day).

                                      -56-
<PAGE>   63

      (6)   Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture Act
(assuming all Securities are in default within the meaning of such Act).

      (7)   Such Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.

      (8)   Such Defeasance or Covenant Defeasance shall not result in the trust
arising from such deposit constituting an investment company within the meaning
of the Investment Company Act unless such trust shall be registered under such
Act or exempt from registration thereunder.

      (9)   At the time of such deposit,

            (A)   no default in the payment of any principal of or premium or
interest on any Senior Indebtedness shall have occurred and be continuing,

            (B)   no event of default with respect to any Senior Indebtedness
shall have resulted in such Senior Indebtedness becoming, and continuing to be,
due and payable prior to the date on which it would otherwise have become due
and payable (unless payment of such Senior Indebtedness has been made or duly
provided for), and

            (C)   no other event of default with respect to any Senior
Indebtedness shall have occurred and be continuing permitting (after notice or
lapse of time or both) the holders of such Senior Indebtedness (or a trustee on
behalf of such holders) to declare such Senior Indebtedness due and payable
prior to the date on which it would otherwise have become due and payable.

      (10)  The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.

SECTION 1305. DEPOSITED MONEY AND U. S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.

      Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this Section and
Section 1306, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 1304 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated
from other funds except to the extent required by law. Money and U.S. Government
Obligations so held in trust shall not be subject to the provisions of Article
15.

      The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and

                                      -57-
<PAGE>   64

interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of Outstanding Securities.

      Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1304 with
respect to any Securities which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Securities.

SECTION 1306. REINSTATEMENT.

      If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1302 or 1303 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1305 with respect to such Securities
in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.

                                   ARTICLE 14

                            CONVERSION OF SECURITIES

SECTION 1401. APPLICABILITY OF ARTICLE.

      The provisions of this Article shall be applicable to the Securities of
any series which are convertible into shares of Common Stock of the Company, and
the issuance of such shares of Common Stock upon the conversion of such
Securities, except as otherwise specified as contemplated by Section 301 for the
Securities of such series.

SECTION 1402. EXERCISE OF CONVERSION PRIVILEGE.

      In order to exercise a conversion privilege, the Holder of a Security of a
series with such a privilege shall surrender such Security to the Company at the
office or agency maintained for that purpose pursuant to Section 1002,
accompanied by a duly executed conversion notice to the Company substantially in
the form set forth in Section 206 stating that the Holder elects to convert such
Security or a specified portion thereof. Such notice shall also state, if
different from the name and address of such Holder, the name or names (with
address) in which the certificate or certificates for shares of Common Stock
which shall be issuable on such conversion shall be issued. Securities
surrendered for conversion shall (if so required by the Company or the Trustee)
be duly endorsed by or accompanied by instruments of transfer in forms
satisfactory to the Company and the Trustee duly executed by the registered
Holder or its attorney duly authorized in writing; and Securities so surrendered
for conversion (in whole or in part) during the period from the close of
business on any Regular Record Date to the opening of business on the next
succeeding Interest Payment Date (excluding

                                      -58-
<PAGE>   65

Securities or portions thereof called for redemption during the period beginning
at the close of business on a Regular Record Date and ending at the opening of
business on the first Business Day after the next succeeding Interest Payment
Date, or if such Interest Payment Date is not a Business Day, the second such
Business Day) shall also be accompanied by payment in funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment Date
on the principal amount of such Security then being converted, and such interest
shall be payable to such registered Holder notwithstanding the conversion of
such Security, subject to the provisions of Section 307 relating to the payment
of Defaulted Interest by the Company. As promptly as practicable after the
receipt of such notice and of any payment required pursuant to a Board
Resolution and, subject to Section 303, set forth, or determined in the manner
provided, in an Officers' Certificate, or established in one or more indentures
supplemental hereto setting forth the terms of such series of Security, and the
surrender of such Security in accordance with such reasonable regulations as the
Company may prescribe, the Company shall issue and shall deliver, at the office
or agency at which such Security is surrendered, to such Holder or on its
written order, a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such Security (or specified portion
thereof), in accordance with the provisions of such Board Resolution, Officers'
Certificate or supplemental indenture, and cash as provided therein in respect
of any fractional share of such Common Stock otherwise issuable upon such
conversion. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which such notice and such
payment, if required, shall have been received in proper order for conversion by
the Company and such Security shall have been surrendered as aforesaid (unless
such Holder shall have so surrendered such Security and shall have instructed
the Company to effect the conversion on a particular date following such
surrender and such Holder shall be entitled to convert such Security on such
date, in which case such conversion shall be deemed to be effected immediately
prior to the close of business on such date) and at such time the rights of the
Holder of such Security as such Security Holder shall cease and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock of the Company shall be issuable upon such conversion shall be
deemed to have become the Holder or Holders of record of the shares represented
thereby. Except as set forth above and subject to the final paragraph of Section
307, no payment or adjustment shall be made upon any conversion on account of
any interest accrued on the Securities (or any part thereof) surrendered for
conversion or on account of any dividends on the Common Stock of the Company
issued upon such conversion.

      In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to or on the order of the Holder thereof, at the expense of the Company,
a new Security or Securities of the same series, of authorized denominations, in
aggregate principal amount equal to the unconverted portion of such Security.

SECTION 1403. NO FRACTIONAL SHARES.

      No fractional share of Common Stock of the Company shall be issued upon
conversions of Securities of any series. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Securities (or specified portions thereof
to the extent permitted hereby) so surrendered. If, except for the provisions of
this Section 1403, any Holder of a Security or Securities would be entitled to a
fractional share of Common Stock of the Company upon the conversion of such
Security or Securities, or specified portions thereof, the Company shall pay to
such Holder an amount in cash equal to the current market value of such
fractional share computed, (i) if such Common Stock is listed or admitted to
unlisted trading privileges on a national securities exchange or market, on the
basis of the last reported sale price regular way on such exchange or market on
the last trading day prior to the date of conversion upon which such a sale
shall have been effected, or (ii) if such Common Stock is not at the time so
listed or

                                      -59-
<PAGE>   66

admitted to unlisted trading privileges on a national securities exchange or
market, on the basis of the average of the bid and asked prices of such Common
Stock in the over-the-counter market, on the last trading day prior to the date
of conversion, as reported by the National Quotation Bureau, Incorporated or
similar organization if the National Quotation Bureau, Incorporated is no longer
reporting such information, or if not so available, the fair market price as
determined by the Board of Directors. For purposes of this Section, "trading
day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday other than
any day on which the Common Stock is not traded on the Nasdaq National Market,
or if the Common Stock is not traded on the Nasdaq National Market, on the
principal exchange or market on which the Common Stock is traded or quoted.

SECTION 1404. ADJUSTMENT OF CONVERSION PRICE.

      The conversion price of Securities of any series that is convertible into
Common Stock of the Company shall be adjusted for any stock dividends, stock
splits, reclassifications, combinations or similar transactions in accordance
with the terms of the supplemental indenture or Board Resolutions setting forth
the terms of the Securities of such series.

      Whenever the conversion price is adjusted, the Company shall compute the
adjusted conversion price in accordance with terms of the applicable Board
Resolution or supplemental indenture and shall prepare an Officers' Certificate
setting forth the adjusted conversion price and showing in reasonable detail the
facts upon which such adjustment is based, and such certificate shall forthwith
be filed at each office or agency maintained for the purpose of conversion of
Securities pursuant to Section 1002 and, if different, with the Trustee. Unless
and until the Trustee shall receive such notice, the Trustee may assume without
inquiry that the conversion price has not been, and is not required to be,
adjusted and that the last conversion price of which it has knowledge remains in
effect. The Company shall forthwith cause a notice setting forth the adjusted
conversion price to be mailed, first class postage prepaid, to each Holder of
Securities of such series at its address appearing on the Security Register and
to any conversion agent other than the Trustee.

SECTION 1405. NOTICE OF CERTAIN CORPORATE ACTIONS.

In case:

      (1)   the Company shall declare a dividend (or any other distribution) on
its Common Stock payable otherwise than in cash out of its retained earnings
(other than a dividend for which approval of any shareholders of the Company is
required) that would require an adjustment pursuant to Section 1404; or

      (2)   the Company shall authorize the granting to all or substantially all
of the holders of its Common Stock of rights, options or warrants to subscribe
for or purchase any shares of capital stock of any class or of any other rights
(other than any such grant for which approval of any shareholders of the Company
is required); or

      (3)   of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of its outstanding shares of Common Stock, or
of any consolidation, merger or share exchange to which the Company is a party
and for which approval of any shareholders of the Company is required), or of
the sale of all or substantially all of the assets of the Company; or

      (4)   of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; then the Company shall cause to be filed with the Trustee,
and shall cause to be mailed to all Holders at their last

                                      -60-
<PAGE>   67

addresses as they shall appear in the Security Register, at least 20 days (or 10
days in any case specified in Clause (1) or (2) above) prior to the applicable
record date hereinafter specified, a notice stating (i) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights,
options or warrants, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution, rights, options or warrants are to be determined, or (ii) the date
on which such reclassification, consolidation, merger, share exchange, sale,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, share
exchange, sale, dissolution, liquidation or winding up. If at any time the
Trustee shall not be the conversion agent, a copy of such notice shall also
forthwith be filed by the Company with the Trustee.

SECTION 1406. RESERVATION OF SHARES OF COMMON STOCK.

      The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock of the Company then issuable upon the conversion of all outstanding
Securities of any series that has conversion rights.

SECTION 1407. PAYMENT OF CERTAIN TAXES UPON CONVERSION.

      Except as provided in the next sentence, the Company will pay any and all
taxes that may be payable in respect of the issue or delivery of shares of its
Common Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of its Common Stock in a
name other than that of the Holder of the Security or Securities to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such tax,
or has established, to the satisfaction of the Company, that such tax has been
paid.

SECTION 1408. NONASSESSABILITY.

      The Company covenants that all shares of its Common Stock which may be
issued upon conversion of Securities will upon issue in accordance with the
terms hereof be duly and validly issued and fully paid and nonassessable.

SECTION 1409. PROVISION IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS.

      In case of any consolidation or merger of the Company with or into any
other Person, any merger of another Person with or into the Company (other than
a merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company) or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company, the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security of a series then Outstanding that is convertible into Common Stock
of the Company shall have the right thereafter (which right shall be the
exclusive conversion right thereafter available to said Holder), during the
period such Security shall be convertible, to convert such Security only into
the kind and amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease by a holder of the
number of shares of Common Stock of the Company into which such Security might
have been converted

                                      -61-
<PAGE>   68

immediately prior to such consolidation, merger, conveyance, sale, transfer or
lease, assuming such holder of Common Stock of the Company (i) is not a Person
with which the Company consolidated or merged with or into or which merged into
or with the Company or to which such conveyance, sale, transfer or lease was
made, as the case may be (a "Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer or lease (provided that
if the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer, or lease is not the same
for each share of Common Stock of the Company held immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease by others than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-electing Share"), then for the
purpose of this Section 1409 the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer
or lease by the holders of each Non-electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-electing
Shares). Such supplemental indenture shall provide for adjustments which, for
events subsequent to the effective date of such supplemental indenture, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article or in accordance with the terms of the supplemental indenture or
Board Resolutions setting forth the terms of such adjustments. The above
provisions of this Section 1409 shall similarly apply to successive
consolidations, mergers, conveyances, sales, transfers or leases. Notice of the
execution of such a supplemental indenture shall be given by the Company to the
Holder of each Security of a series that is convertible into Common Stock of the
Company as provided in Section 106 promptly upon such execution.

      Neither the Trustee nor any conversion agent, if any, shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or other securities or property or cash receivable by Holders of
Securities of a series convertible into Common Stock of the Company upon the
conversion of their Securities after any such consolidation, merger, conveyance,
transfer, sale or lease or to any such adjustment, but may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, an Opinion of Counsel with respect thereto, which the Company
shall cause to be furnished to the Trustee upon request.

SECTION 1410. DUTIES OF TRUSTEE REGARDING CONVERSION.

      Neither the Trustee nor any conversion agent shall at any time be under
any duty or responsibility to any Holder of Securities of any series that is
convertible into Common Stock of the Company to determine whether any facts
exist which may require any adjustment of the conversion price, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed, whether herein or in any supplemental indenture, any
resolutions of the Board of Directors or written instrument executed by one or
more officers of the Company provided to be employed in making the same. Neither
the Trustee nor any conversion agent shall be accountable with respect to the
validity or value (or the kind or amount) of any shares of Common Stock of the
Company, or of any securities or property, which may at any time be issued or
delivered upon the conversion of any Securities and neither the Trustee nor any
conversion agent makes any representation with respect thereto. Subject to the
provisions of Section 601, neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of its Common Stock or stock certificates or other securities or property
upon the surrender of any Security for the purpose of conversion or to comply
with any of the covenants of the Company contained in this Article 14 or in the
applicable supplemental indenture, resolutions of the Board of Directors or
written instrument executed by one or more duly authorized officers of the
Company.

                                      -62-
<PAGE>   69

SECTION 1411. REPAYMENT OF CERTAIN FUNDS UPON CONVERSION.

      Any funds which at any time shall have been deposited by the Company or on
its behalf with the Trustee or any other paying agent for the purpose of paying
the principal of, and premium, if any, and interest, if any, on any of the
Securities (including, but not limited to, funds deposited for the sinking fund
referred to in Article 12 hereof and funds deposited pursuant to Article 13
hereof) and which shall not be required for such purposes because of the
conversion of such Securities as provided in this Article 14 shall after such
conversion be repaid to the Company by the Trustee upon the Company's written
request.

                                   ARTICLE 15

                           SUBORDINATION OF SECURITIES

SECTION 1501. AGREEMENT OF SUBORDINATION.

      Except as otherwise provided in a supplemental indenture or pursuant to
Section 301 hereof, the Company covenants and agrees, and each Holder of
Securities issued hereunder by his acceptance thereof likewise covenants and
agrees, that all Securities shall be issued subject to the provisions of this
Article 15; and each Person holding any Security, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees to be bound by
such provisions.

      The payment of the principal of, premium, if any, and interest on all
Securities (including, but not limited to, the redemption price with respect to
the Securities called for redemption in accordance with Article 11 as provided
in this Indenture) issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full in cash or payment satisfactory to the holders of Senior
Indebtedness of all Senior Indebtedness, whether outstanding at the date of this
Indenture or thereafter incurred.

      No provision of this Article 15 shall prevent the occurrence of any
default or Event of Default hereunder.

SECTION 1502. PAYMENTS TO HOLDERS.

      No payment shall be made with respect to the principal of, or premium, if
any, or interest on the Securities (including, but not limited to, the
redemption price with respect to the Securities to be called for redemption in
accordance with Article 11 as provided in this Indenture), except payments and
distributions made by the Trustee as permitted by the first or second paragraph
of Section 1505, if:

      (i)   a default in the payment of principal, premium, interest, rent or
other obligations due on any Designated Senior Indebtedness occurs and is
continuing (or, in the case of Designated Senior Indebtedness for which there is
a period of grace, in the event of such a default that continues beyond the
period of grace, if any, specified in the instrument or lease evidencing such
Designated Senior Indebtedness), unless and until such default shall have been
cured or waived or shall have ceased to exist; or

      (ii)  a default, other than a payment default, on a Designated Senior
Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity and the

                                      -63-
<PAGE>   70

Trustee receives a notice of the default (a "Payment Blockage Notice") from a
Representative or holder of Designated Senior Indebtedness or the Company.

      Subject to the provisions of Section 1505, if the Trustee receives any
Payment Blockage Notice pursuant to clause (ii) above, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless and until
(A) at least 365 days shall have elapsed since the initial effectiveness of the
immediately prior Payment Blockage Notice, and (B) all scheduled payments of
principal, premium, if any, and interest on the Securities that have come due
have been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
(unless such default was waived, cured or otherwise ceased to exist and
thereafter subsequently reoccurred) shall be, or be made, the basis for a
subsequent Payment Blockage Notice.

      The Company may and shall resume payments on and distributions in respect
of the Securities upon the earlier of:

      (1)   the date upon which the default is cured or waived or ceases to
exist, or

      (2)   in the case of a default referred to in clause (ii) above, 179 days
pass after notice is received if the maturity of such Designated Senior
Indebtedness has not been accelerated, unless this Article 15 otherwise
prohibits the payment or distribution at the time of such payment or
distribution.

      Upon any payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company (whether voluntary or involuntary) or in bankruptcy, insolvency,
receivership or similar proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash, or other payments
satisfactory to the holders of Senior Indebtedness before any payment is made on
account of the principal of, premium, if any, or interest on the Securities
(except payments made pursuant to Article 4 from monies deposited with the
Trustee pursuant thereto prior to commencement of proceedings for such
dissolution, winding-up, liquidation or reorganization); and upon any such
dissolution or winding-up or liquidation or reorganization of the Company or
bankruptcy, insolvency, receivership or other proceeding, any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the Securities
or the Trustee would be entitled, except for the provision of this Article 15,
shall (except as aforesaid) be paid by the Company or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Securities or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, or as otherwise required by law or a
court order) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all Senior Indebtedness in full in cash,
or other payments satisfactory to the holders of Senior Indebtedness after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness, before any payment or distribution is made to the Holders
of the Securities or to the Trustee.

      For purposes of this Article 15, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article 15 with respect to
the Securities to the payment of

                                      -64-
<PAGE>   71

all Senior Indebtedness which may at the time be outstanding; provided that (i)
the Senior Indebtedness is assumed by the new corporation, if any, resulting
from any reorganization or readjustment, and (ii) the rights of the holders of
Senior Indebtedness (other than leases which are not assumed by the Company or
the new corporation, as the case may be) are not, without the consent of such
Holders, altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article 8 shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section 1502 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article 8.

      In the event of the acceleration of the Securities because of an Event of
Default, no payment or distribution shall be made to the Trustee or any Holder
of Securities in respect of the principal of, premium, if any, or interest on
the Securities (including, but not limited to, the redemption price with respect
to the Securities called for redemption in accordance with Article 11 as
provided in this Indenture), except payments and distributions made by the
Trustee as permitted by the first or second paragraph of Section 1505, until all
Senior Indebtedness has been paid in full in cash or other payment satisfactory
to the holders of Senior Indebtedness or such acceleration is rescinded in
accordance with the terms of this Indenture. If payment of the Securities is
accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Indebtedness of such acceleration.

      In the event that, notwithstanding the foregoing provisions, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Trustee or the
Holders of the Securities before all Senior Indebtedness is paid in full in cash
or other payment satisfactory to the holders of Senior Indebtedness, or
provision is made for such payment thereof in accordance with its terms in cash
or other payment satisfactory to the holders of Senior Indebtedness, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in cash or
other payment satisfactory to the holders of Senior Indebtedness, after giving
effect to any concurrent payment or distribution to or for the holders of such
Senior Indebtedness.

      Nothing in this Section 1502 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607. This Section 1502 shall be subject to
the further provisions of Section 1505.

SECTION 1503. SUBROGATION OF SECURITIES.

      Subject to the payment in full in cash or other payment satisfactory to
the holders of Senior Indebtedness of all Senior Indebtedness, the rights of the
Holders of the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article 15 (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to other
indebtedness of the Company to substantially the same extent as the Securities
are subordinated and is entitled to like rights of subrogation) to the rights of
the holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Indebtedness
until the principal, premium, if any, and interest on the Securities shall

                                      -65-
<PAGE>   72

be paid in full in cash or other payment satisfactory to the holders of Senior
Indebtedness; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article 15, and no payment over
pursuant to the provisions of this Article 15, to or for the benefit of the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness; and no payments or
distributions of cash, property or securities to or for the benefit of the
Holders of the Securities pursuant to the subrogation provisions of this Article
15, which would otherwise have been paid to the holders of Senior Indebtedness
shall be deemed to be a payment by the Company to or for the account of the
Securities. It is understood that the provisions of this Article 15 are and are
intended solely for the purposes of defining the relative rights of the Holders
of the Securities, on the one hand, and the holders of the Senior Indebtedness,
on the other hand.

      Nothing contained in this Article 15 or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of (and premium, if any)
and interest on the Securities as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of the Senior Indebtedness, nor shall anything herein or therein
prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article 15 of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.

      Upon any payment or distribution of assets of the Company referred to in
this Article 15, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article 15.

SECTION 1504. AUTHORIZATION TO EFFECT SUBORDINATION.

      Each Holder of a Security by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 15 and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
503 hereof at least 30 days before the expiration of the time to file such
claim, the holders of any Senior Indebtedness or their representatives are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Securities.

SECTION 1505. NOTICE TO TRUSTEE.

      The Company shall give prompt written notice in the form of an Officers'
Certificate to a Responsible Officer of the Trustee and to any Paying Agent of
any fact known to the Company which would prohibit the

                                      -66-
<PAGE>   73

making of any payment of monies to or by the Trustee or any Paying Agent in
respect of the Securities pursuant to the provisions of this Article 15.
Notwithstanding the provisions of this Article 15 or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment of monies to or by the
Trustee in respect of the Securities pursuant to the provisions of this Article
15, unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company (in the
form of an Officers' Certificate) or a Representative or a Holder or Holders of
Senior Indebtedness or from any trustee thereof; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Section 601,
shall be entitled in all respects to assume that no such facts exist; provided
that if on a date not fewer than one Business Day prior to the date upon which
by the terms hereof any such monies may become payable for any purpose
(including, without limitation, the payment of the principal of, or premium, if
any, or interest on any Security) the Trustee shall not have received, with
respect to such monies, the notice provided for in this Section 4.5, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such monies and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Notwithstanding anything in this Article 15 to the contrary, nothing shall
prevent any payment by the Trustee to the Holders of monies deposited with it
pursuant to Section 401, and any such payment shall not be subject to the
provisions of Section 1500 or 102.

      The Trustee, subject to the provisions of Section 601, shall be entitled
to rely on the delivery to it of a written notice by a Representative or a
person representing himself to be a holder of Senior Indebtedness (or a trustee
on behalf of such holder) to establish that such notice has been given by a
Representative or a holder of Senior Indebtedness or a trustee on behalf of any
such holder or holders. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 15, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 15, and if such
evidence is not furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

SECTION 1506. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.

      The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article 15 in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in Section 613 or elsewhere in this Indenture shall deprive the Trustee
of any of its rights as such holder.

      With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 15, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 601, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall pay over or deliver to Holders of Securities,
the Company or any other person money or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article 15 or otherwise.

                                      -67-
<PAGE>   74

SECTION 1507. NO IMPAIRMENT OF SUBORDINATION.

      No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.

SECTION 1508. CERTAIN CONVERSIONS DEEMED PAYMENT.

      For the purposes of this Article 15 only, (1) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article 14
shall not be deemed to constitute a payment or distribution on account of the
principal of (or premium, if any) or interest on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash (except in satisfaction of fractional shares pursuant to
Section 1403), property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on account of the
principal of such Security. For the purposes of this Section 1508, the term
"junior securities" means (a) shares of any stock of any class of the Company,
or (b) securities of the Company which are subordinated in right of payment to
all Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a greater
extent than, the Securities are so subordinated as provided in this Article.
Nothing contained in this Article 15 or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders, the right, which is
absolute and unconditional, of the Holder of any Security to convert such
Security in accordance with Article 14.

SECTION 1509. ARTICLE APPLICABLE TO PAYING AGENTS

      If at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that the first
paragraph of Section 1505 shall not apply to the Company or any Affiliate of the
Company if it or such Affiliate acts as Paying Agent.

SECTION 1510. SENIOR INDEBTEDNESS ENTITLED TO RELY.

      The holders of Senior Indebtedness (including, without limitation,
Designated Senior Indebtedness) shall have the right to rely upon this Article
15, and no amendment or modification of the provisions contained herein shall
diminish the rights of such holders unless such holders shall have agreed in
writing thereto.

                                      -68-
<PAGE>   75

      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.

                                          CYPRESS SEMICONDUCTOR CORPORATION

                                          /s/ Emmanuel Hernandez
                                          -------------------------------------
                                          Name:  Emmanuel Hernandez
                                          Title: Chief Financial Officer

                                          STATE STREET BANK AND TRUST COMPANY
                                          OF CALIFORNIA, N.A., AS TRUSTEE

                                          /s/  Paula M. Oswald
                                          -------------------------------------
                                          Name:  Paula M. Oswald
                                          Title: Vice President

                                      -69-<PAGE>   1
                                                                    EXHIBIT 10.9
                                 LEASE AGREEMENT

        THIS LEASE, made this 26th day of October, 1999 between WESTPORT JOINT
VENTURE, a California joint venture, hereinafter called Landlord, and IPASS,
INC., a California corporation, hereinafter called Tenant.

                                   WITNESSETH:

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

        All of that certain 48,384+ square foot, two-story building located at
3800 Bridge Parkway, Redwood City, California 94065. Said Premises is more
particularly shown within the area outlined in Red on EXHIBIT A attached hereto.
The entire parcel, of which the Premises is a part, is shown within the area
outlined in Green on EXHIBIT A attached. The Premises shall be improved by
Landlord as shown on EXHIBIT B to be attached hereto, and is leased on an
"as-is" basis, in its present condition, and in the configuration as shown in
Red on EXHIBIT B to be attached hereto.

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

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

1.      USE.

Tenant shall use the Premises only in conformance with applicable governmental
laws, regulations, rules and ordinances for the purpose of general office, light
manufacturing, research and development, and storage and other uses necessary
for Tenant to conduct Tenant's business, provided that such uses shall be in
accordance with all applicable governmental laws and ordinances and for no other
purpose. Tenant shall not do or permit to be done in or about the Premises or
the Complex nor bring or keep or permit to be brought or kept in or about the
Premises or the Complex anything which is prohibited by or will in any way
increase the existing rate of (or otherwise affect) fire or any insurance
covering the Complex or any part thereof, or any of its contents, or will cause
a cancellation of any insurance covering the Complex or any part thereof, or any
of its contents. Tenant shall not do or permit to be done anything in, on or
about the Premises or the Complex which will in any way obstruct or interfere
with the rights of other tenants or occupants of the Complex or injure or annoy
them, or use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises or the Complex. No sale by suction
shall be permitted on the Premises. Tenant shall not place any loads upon the
floors, walls, or ceiling, which endanger the structure, or place any harmful
fluids or other materials in the

                                       1.
<PAGE>   2

drainage system of the building, or overload existing electrical or
other mechanical systems. No waste materials or refuse shall be dumped upon or
permitted to remain upon any part of the Premises or outside of the building in
which the Premises are a part, except in trash containers placed inside exterior
enclosures designated by Landlord for that purpose or inside of the building
proper where designated by Landlord. No materials, supplies, equipment, finished
products or semi-finished products, raw materials or article of any nature shall
be stored upon or permitted to remain outside the Premises or on any portion of
common area of the Complex. No loudspeaker or other device, system or apparatus
which can be heard outside the Premises shall be used in or at the Premises
without the prior written consent of Landlord. Tenant shall not commit or suffer
to be committed any waste in or upon the Premises. Tenant shall indemnify,
defend and hold Landlord harmless against any loss, expense, damage, attorneys'
fees, or liability arising out of failure of Tenant to comply with any
applicable law. Tenant shall comply with any covenant, condition, or restriction
("CC&R's") affecting the Premises. The provisions of this paragraph are for the
benefit of Landlord only and shall not be construed to be for the benefit of any
tenant or occupant of the Complex.

2.      TERM.*

        A. The term of this Lease shall be for a period of ten (10) years, one
(1) month, seventeen (17) days (unless sooner terminated as hereinafter
provided) and, subject to Paragraphs 2(B) and 3, shall commence on the 15th day
of January, 2000 and end on the 28th day February of 2010.

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

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

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

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

           (d) As otherwise agreed in writing.

3.      POSSESSION.

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

                                       2.
<PAGE>   3

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

4.      RENT

        A. BASIC RENT. Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises the total sum of
Twenty Five Million Nine Hundred Seventy Two Thousand Eight Hundred Forty three
and 35/100 ($25,972,843.35) Dollars in lawful money of the United States of
America, payable as follows:

        See Paragraph 43 for Basic Rent Schedule

        B. TIME FOR PAYMENT. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30). In the event that the term of this Lease
for any reason ends on a date other than the last day of a calendar month, on
the first day of the last calendar month of the term hereof Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar month
to and including the last day of the term hereof that proportion of the monthly
rent hereunder which the number of days between said first day of said last
calendar month and the last day of the term hereof bears to thirty (30).

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

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

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

                                       3.
<PAGE>   4
           (b) Tenant's proportionate share of all insurance premiums and
deductibles relating to the Complex, as set forth in Paragraph 15, and

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

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

        The Additional Rent due hereunder shall be paid to Landlord or
Landlord's agent (i) within five (5) days for taxes and insurance and within
thirty (30) days for all other Additional Rent items after presentation of
invoice from Landlord or Landlord's agent setting forth such additional Rent
and/or (ii) at the option of Landlord. Tenant shall pay to Landlord monthly, in
advance, Tenant's prorate share of an amount estimated by Landlord to be
Landlord's approximate average monthly expenditure for such Additional Rent
Items, which estimated amount shall be reconciled within 120 days of the end of
each calendar year or more frequently if Landlord so elects to do so at
Landlord's sole and absolute discretion, as compared to Landlord's actual
expenditure for said Additional Rent items, with Tenant paying to Landlord, upon
demand, any amount of actual expenses expended by Landlord in excess of said
estimated amount, or Landlord crediting to Tenant (providing Tenant is not in
default in the performance of any for the terms, covenants and conditions of
this Lease) any amount of estimated payments made by Tenant in excess of
Landlord's actual expenditures for said Additional Rent items. Within thirty
(30) days after receipt of Landlord's reconciliation, Tenant shall have the
right, at Tenant's sole expense, to audit, at a mutually convenient time at
Landlord's office, Landlord's records relating to the foregoing expenses. Such
audit must be conducted by Tenant or an independent nationally recognized
accounting firm that is not being compensated by Tenant or other third party on
a contingency fee basis. Landlord shall be provided a complete copy of said
audit at no expense to Landlord. If such audit reveals that Landlord has
overcharged Tenant and the audit is not challenged by Landlord, the amount
overcharged shall be credited to Tenant's account within thirty (30) days after
the audit is concluded.

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

        E. FIXED MANAGEMENT FEE.  Beginning with the Commencement Date of the
term of this Lease, Tenant shall pay, in addition to the Basic Rent and
Additional Rent, a fixed monthly

                                       4.
<PAGE>   5

management fee ("Management Fee") equal to two percent (2%) of the Basic Rent
due for each month during the Lease term. Said Management Fee shall be paid by
Tenant to A&P Property Management Company at 2560 Mission College Blvd., Suite
101, Santa Clara, CA 95054.

        F. PLACE OF PAYMENT OF RENT AND ADDITIONAL RENT. All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at Westport Joint Venture, 2560 Mission
College Blvd., Suite 101, Santa Clara, CA 95054 or to such other person or to
such other place as Landlord may from time to time designated in writing.

        G. SECURITY DEPOSIT. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord the sum of Four Hundred Ninety Three Thousand
Five Hundred Sixteen and 80/100 ($493,516.80) Dollars. Said sum shall be held by
Landlord as a Security Deposit for the faithful performance by Tenant of all of
the terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the term hereof. If Tenant defaults with respect to any provision
of this Lease, including, but not limited to, the provisions relating to the
payment of rent and any of the monetary sums due herewith, Landlord may (but
shall not be required to) use, apply or retain all or any part of this Security
Deposit for the payment of any other amount which Landlord may spend by reason
of Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
Deposit is so used or applied. Tenant shall, within ten (10) days after written
demand therefor, deposit cash with Landlord in the amount sufficient to restore
the Security Deposit to its original amount. Tenant's failure to do so shall be
a material breach of this Lease. Landlord shall not be required to keep this
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such Deposit. If Tenant fully and faithfully performs
every provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant (or at Landlord's option, to the
last assignees of Tenant's interest hereunder) at the expiration of the Lease
term and after Tenant has vacated the Premises. In the event of termination of
Landlord's interest in this Lease, Landlord shall transfer said Deposit to
Landlord's successor in interest whereupon Tenant agrees to release Landlord
from liability for the return of such Deposit or the accounting therefor. See
Paragraph 57.

5.      RULES AND REGULATIONS AND COMMON AREA.

Subject to the term of conditions of this Lease and such reasonable Rules and
Regulations as Landlord may from time to time prescribe, Tenant and Tenant's
employees, invitees and customers shall, in common with other occupants of the
Complex in which the Premises are located, and their respective employees,
invoices and customers, and others entitled to the use thereof, have the
non-exclusive right to use the access roads, parking areas, and facilities
provided and designated by Landlord for the general use and convenience of the
occupants of the Complex in which the Premises are located, which areas and
facilities are referred to herein as "Common Area". This right shall terminate
upon the termination of this Lease, Landlord reserves the right from time to
time to make changes in the shape, size, location, amount and extent of Common
Area. Landlord further reserves the right to promulgate such reasonable rules
and regulations relating to the use of the Common Area, and any party or parts
thereof, as Landlord may deem appropriate for the best interests of the
occupants of the Complex. The Rules and Regulations shall be binding upon Tenant
upon delivery of a copy of them to Tenant,

                                       5.
<PAGE>   6

and Tenant shall abide by them and cooperate in the observance. Such Rules and
Regulations may be reasonably amended by Landlord from time to time, with or
without advance notice, and all amendments shall be effective upon delivery of a
copy to Tenant, Landlord shall not be responsible to Tenant for the
non-performance by any other tenant or occupant of the Complex of any of said
Rules and Regulations.

        Landlord shall operate, manage and maintain the Common Area. The manner
in which the Common Area shall be maintained and the expenditure for such
maintenance shall be at the discretion of Landlord. Landlord's rights pursuant
to this Paragraph 5 shall be subject to the condition that exercise of any such
rights shall not unreasonably interfere with Tenant's use of the Premises.

6.      PARKING.

        Tenant shall have the right to use with other tenants or occupants of
the Complex 161 parking spaces in the common parking areas of the Complex.
Tenant agrees, that Tenant, Tenant's employees, agents, representatives and/or
invitees shall not use parking spaces in excess of said 161 spaces allocated to
Tenant hereunder. Landlord shall have the right, at Landlord's sole discretion,
to specifically designate the location of Tenant's parking spaces within the
common parking areas of the Complex in the event of a dispute among the tenants
occupying the building and/or Complex referred to herein, in which event Tenant
agrees that Tenant, Tenant's employees, agents, representatives and/or invitees
shall not use any parking spaces other than those parking spaces specifically
designated by Landlord for Tenant's use. Said parking spaces, if specifically
designated by Landlord to Tenant, may be relocated by Landlord at any time, and
from time to time, Landlord reserves the right, at Landlord's sole discretion,
to rescind any specific designation of parking spaces. Tenant shall not, at any
time, park or permit to be parked, any trucks or vehicles adjacent to the
loading area as to interfere in any way with the use of such areas, nor shall
Tenant at any time park, or permit the parking of Tenant's 'trucks or other
vehicles or the trucks and vehicles of Tenant's suppliers or others, in any
portion of the common parking area or other common areas of the Complex. Tenant
agrees to assume responsibility for compliance by its employees with the parking
provision contained herein. If Tenant or its employees park in other than such
designated parking areas, the Landlord may charge Tenant, as an additional
charge, and Tenant agrees to pay, ten ($10.00) Dollars per day for each day or
partial day each such vehicle is parked in any area other than that designated.
Tenant hereby authorizes Landlord at Tenant's sole expense to tow away from the
Complex any vehicle belong to Tenant or Tenant's employees parked in violation
of these provisions, or to attach violation stickers or notices to such
vehicles. Tenant shall use the parking area for vehicle parking only, and shall
not use the parking area for storage.

7.     EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON AREAS
OF THE COMPLEX.

      As Additional Rent and in accordance with Paragraph 4D of this Lease,
Tenant shall pay to Landlord Tenant's proportionate share (calculated on a
square footage or other equitable basis as calculated by Landlord) of all
expense of operations, management, maintenance and repair of the Common Areas of
the Complex including, but not limited to, license, permit, and inspection fees;
security; utility charges associated with exterior landscaping and lighting
(including water

                                       6.
<PAGE>   7

and sewer charges); all charges incurred in the maintenance and replacement of
landscaped areas, private roads within the Complex and roads with reciprocal
easement areas; lakes, parking lots and paved areas (including repairs,
replacement, resealing and restriping), sidewalks, driveways; maintenance,
repair and replacement of all fixtures and electrical, mechanical, and plumbing
systems; structural elements and exterior surfaces of the buildings; salaries
and employee benefits of personnel and payroll taxes applicable thereto;
suppliers, materials, equipment and tools; the cost of capital expenditures
which have the effect of reducing opening expenses, provided, however, that in
the event Landlord makes such capital improvements, Landlord may amortize its
investment in said improvements (together with interest at the rate of fifteen
(15%) percent per annum on the unamortized balance) as an operating expense in
accordance with standard accounting practices, provided, that such amortization
is not at a rate greater than the anticipated savings in the operating expenses.

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

8.      ACCEPTANCE AND SURRENDER OF PREMISES.

By entry hereunder, Tenant accepts the Premises as being in good and sanitary
order, condition and repair and accepts the building and improvements included
in the Premises in the present condition and without representation or warranty
by Landlord as to the condition of such building or as to the use or occupancy
which may be made thereof. Any expectations to the foregoing must be by written
agreement executed by Landlord and Tenant. Tenant agrees on the last day of the
Lease term, or on the sooner termination of this Lease, to surrender the
Premises promptly and peaceably to Landlord in good condition and repair (damage
by Acts of God, fire, normal wear and tear excepted), with all interior walls
painted, or cleaned so that they appear freshly painted, and repaired and
replaced, if damaged; all floors cleaned and waxed; all carpets cleaned and
shampooed; the air conditioning and hearing equipment serviced by a reputable
and licensed service firm and in good operating condition (provided the
maintenance of such equipment has been Tenant's responsibility during the term
of this Lease) together with all alterations, additions, and improvements which
may have been made in, to, or on the Premises (except movable trade fixtures
installed at the expense of Tenant) except that Tenant shall ascertain from
Landlord within thirty (30) days before the end of the term of this Lease
whether Landlord desires to have the Premises or any part or parts thereof
restored to their condition and configuration as when the Premises were
delivered to Tenant and if Landlord shall so desire, the Tenant shall restore
said Premises or such part or parts thereof before the end of the Lease at
Tenant's sole cost and expense. Tenant, on or before the end to the term or
sooner termination of this Lease, shall remove all of Tenant's personal property
and trade fixtures from the Premises, and all property not so removed on or
before the end of the term or sooner termination of this Lease, shall remove all
of Tenant's personal property and trade fixtures from the Premises, and all
property not so remove on or before the end of the term or sooner termination of
this Lease shall be deemed abandoned by Tenant and title to same shall thereupon
pass to Landlord without compensation to Tenant. Landlord may, upon termination
of this Lease, remove all moveable furniture and equipment so abandoned by
Tenant, at Tenant's sole cost, and repair any damage caused by such removal at
Tenant's sole cost. If the Premises be not surrendered at the end of

                                       7.
<PAGE>   8

the term or sooner termination of this Lease, Tenant shall indemnify Landlord
against loss or liability resulting from the delay by Tenant in so surrendering
the Premises including, without limitation, any claims made by any succeeding
tenant founded on such delay. Nothing contained herein shall be construed as an
extension of the term hereof or as a consent of Landlord to any holding over by
Tenant. The voluntary or other surrender of this Lease or the Premises by Tenant
or a mutual cancellation of this Lease shall not work as a merger and, at the
option of Landlord, shall either terminate all or any existing sublease or
subtenancies or operate as an assignment to Landlord of all or any such
subleases or subtenancies.

9.      ALTERATIONS AND ADDITIONS.

        Tenant shall not make, or suffer to be made, any alteration or addition
to the Premises, or any part thereof, without the written consent (which written
consent will specify whether Landlord shall require removal of said alterations
and/or additions, provided Tenant requests such determination from Landlord), of
Landlord first had and obtained by Tenant (which approval shall not be
unreasonably withheld) but at the cost of Tenant, and any addition to, or
alteration of, the Premises, except moveable furniture and trade fixtures, shall
at once become a part to the Premises and belong to Landlord. Landlord reserves
the right to approve all contractors and mechanics proposed by Tenant to make
such alterations and additions. Tenant shall retain title to all moveable
furniture and trade fixtures placed in the Premises. All heating, lighting,
electrical air conditioning, floor to ceiling partitioning, drapery, carpeting,
and floor installation made by Tenant, together with all property that has
become an integral part of the Premises, shall not be deemed trade fixtures.
Tenant agrees that it will not proceed to make such alteration or additions,
without having obtained consent from Landlord to do so, and until five (5) days
from the receipt of such consent, in order that Landlord may post appropriate
notices to avoid any liability to contractors or material suppliers for payment
for Tenant's improvements. Tenant will at all times permit such notices to be
posted and to remain posted until the completion of work. Tenant shall, if
required by Landlord, secure at Tenant's own cost and expense, a completion and
lien indemnity bond, satisfactory to Landlord, for such work. Tenant further
covenants and agrees that any mechanic's lien filed against the Premises or
against the Complex for work claimed to have been done for, or materials claimed
to have been furnished to Tenant, will be discharged by Tenant, by bond or
otherwise, within ten (10) days after the filing thereof, at the cost and
expense of Tenant. Any exceptions to the foregoing must be made in writing and
executed by both Landlord and Tenant. Notwithstanding anything to the contrary
herein, under no circumstances shall Tenant be authorized to penetrate the soil
to a depth that exceeds three and one-half feet from the uppermost surface of
the soil.

10.     TENANT MAINTENANCE.

Tenant shall, at its sole cost and expense, keep and maintain the Premises
(including appurtenances) and every part thereof in a high standard of
maintenance and repair, and in good and sanitary condition. Tenant's maintenance
and repair responsibilities herein referred to include, but are not limited to,
all windows, window frames, plate glass, glazing, truck doors, plumbing systems
(such as water and drain lines, sinks, toilets, faucets, drains, showers and
water fountains), electrical system (such as panels, conduits, outlets, lighting
fixtures, lamps, bulbs, tubes, ballasts), heating and air-conditioning systems
(such as compressors, fans, air handlers, ducts, mixing boxes, thermostats, time
clocks, boilers, heaters, supply and return

                                       8.
<PAGE>   9

grills), store fronts, roofs, downspouts, all interior improvements within the
premises including but not limited to wall coverings, window coverings, carpet,
floor coverings, partitioning, ceilings, doors (both interior and exterior,
including closing mechanisms, latches, locks, skylights (if any), automatic fire
extinguishing systems, and elevators and all other interior improvements of any
nature whatsoever. Tenant agrees to provide carpet shields under all rolling
chairs or to otherwise be responsible for wear and tear of the carpet caused by
such rolling chairs is such wear and tear exceed that caused by normal foot
traffic in surrounding areas. Areas of excessive wear shall be replaced at
Tenant's sole expense upon Lease termination. Tenant hereby waives all rights
under, and benefits of, subsection 1 of Section 1932 and Section 1941 and 1942
of the California Civil Code and under any similar law, statue or ordinance now
or thereafter in effect.

11.     UTILITIES.

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

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

12.     TAXES.

A. As Additional Rent and in accordance with Paragraph 4 D of this Lease, Tenant
shall pay to Landlord Tenant's proportionate share of all Real Property taxes,
which prorata share shall be allocated to the leased Premises by square footage
or other equitable basis, as calculated by Landlord. The term "Real Property
Taxes", as used herein, shall mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership of the Complex)
now or hereafter imposed by any governmental or quasi-governmental authority or
special district having the direct or indirect power to tax or levy assessments,
which are levied or assessed against, or with respect to the value, occupancy or
use of, all or any portion of the Complex (as now constructed or as may at any
time hereafter be constructed, altered, or otherwise changed) or Landlord's
interest therein; any improvements located within the Complex (regardless of
ownership); the fixtures, equipment and other property of Landlord, real or
personal, that are an integral part of and located in the Complex; or parking
areas, public utilities, or energy within the Complex; (ii) all charges, levies
or fees imposed by reason of environmental regulation or other governmental
control of the Complex; and (iii) all costs and fees (including attorneys' fees)
incurred by Landlord in contesting any Real Property Tax and in negotiating with
public authorities as to any Real Property Tax. If at any time during the term
of this Lease the taxation or assessment of the

                                       9.
<PAGE>   10

Complex prevailing as of the commencement date of this Lease shall be altered to
that in lieu of or in addition to any Real Property Tax described above there
shall be levied, assessed or imposed (whether by reason of a change in the
method of taxation or assessment, creation of a new tax or charge, or any other
cause) an alternate or additional tax or charge (i) on the value of the
occupancy of the Complex or Landlord's interest therein or (ii) on a measured by
the gross receipts, income or rentals from the Complex, or Landlord's business
of leasing the Complex, or computed in any manner with respect to the operation
of the Complex, then any such tax or charge, however designated, shall be
included within the meaning of the term "Real Property Taxes" for purposes of
this Lease. If any Real Property Tax is based upon property or rents unrelated
to the Complex, then only that part of such real Property tax that is fairly
allocable to the Complex shall be included within the meaning of the term "Real
Property Taxes". Notwithstanding the foregoing, the term "Real Property Taxes"
shall not include estate, inheritance, gift or franchise taxes of Landlord or
the federal or state net income tax imposed on Landlord's income from all
sources. The term "Real Estate Taxes" shall also include supplemental taxes
related to the period of Tenant's Lease Term whenever levied, including any such
taxes that may be levied after the Lease Term has expired.

        B. TAXES ON TENANT'S PROPERTY

           (a) Tenant shall be liable for and shall pay ten (10) days before
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in or about in the Premises. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property or
if the assessed value of the Premises is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of Tenant and if
Landlord, after written notice to Tenant, pays the taxes based on such increased
assessments, which Landlord shall have the right to do regardless of the
validity thereof, but only under proper protest if requested by Tenant. Tenant
shall upon demand, as the case may be, repay to Landlord the taxes so levied
against Landlord, or the proportion of such taxes resulting from such increase
in the assessment; provided that in any such event Tenant shall have the right,
in the name of Landlord and with Landlord's full cooperation, to bring suit in
any court of competent jurisdiction to recover the amount of any such taxes so
paid under protest, and any amount so recovered shall belong to Tenant.

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

13.     LIABILITY INSURANCE.

                                      10.
<PAGE>   11

        Tenant, at Tenant's expenses, agrees to keep in force during the term of
this Lease a policy of commercial general liability insurance with a combined
single limit coverage of not less than Two Million Dollars ($2,000,000) per
occurrence for injuries to or death of persons occurring in, on or about the
Premises or the Complex, and property damage insurance with limits of $500,000.
The policy or policies affecting such insurance, certificates of insurance of
which shall be furnished to Landlord, shall name Landlord as additional
insureds, and shall insure any liability of Landlord, contingent or otherwise,
as respects acts or omissions of Tenant, its agents, employees or invitees or
otherwise by any conduct or transaction of any of said persons in or about or
concerning the Premises, including any failure of Tenant to observe or perform
any of its obligations hereunder, shall be issued by an insurance admitted to
transact business in the State of California and shall provide that the
insurance effected thereby shall not be canceled, expect upon thirty (30) days'
prior written notice to Landlord. If, during the term of this Lease, in the
considered opinion of Landlord's Lender, insurance advisor, or counsel, the
amount of insurance described in this paragraph 13 is not adequate, Tenant
agrees to increase said coverage to such reasonable amount as Landlord's Lender,
insurance advisor, or counsel shall deem adequate.

14. TENANT'S PERSONAL PROPERTY INSURANCE AND WORKMAN'S COMPENSATION INSURANCE.

        Tenant shall maintain a policy or policies of fire and property damage
insurance in "all risk" form with a sprinkler leakage endorsements insuring the
personal property, inventory, trade fixtures, and leasehold improvements within
the leased Premises for the full replacement value thereof. The proceeds from
any of such pollicies shall be used for the repair or replacement of such items
so insured.

        Tenants shall also maintain a policy or policies of workman's
compensation insurance and any other employee benefit insurance sufficient to
comply with all laws.

15.     PROPERTY INSURANCE.

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

Landlord and Tenant do each hereby respectively release the other, to the extent
of insurance coverage of the releasing party, from any liability for loss or
damage caused by fire or any of the extended coverage casualties included in the
releasing party's insurance policies,

                                      11.
<PAGE>   12

irrespective of the cause of such fire or casualty; provided, however, that if
the insurance policy or either releasing party prohibits such waiver, then this
waiver shall not take effect until consent to such waiver is obtained. If such
waiver is so prohibited, the insured party affected shall promptly notify the
other party thereof.

16.     INDEMNIFICATION.

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

17.     COMPLIANCE.

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

18.     LIENS.

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

                                      12.
<PAGE>   13

such purpose, and all expenses incurred by it in connection therewith, shall be
payable to Landlord by Tenant on demand with interest at the prime rate of
interest as quoted by the Bank of America.

19.     ASSIGNMENT AND SUBLETTING.

Tenant shall not assign, transfer, or hypothecate the leasehold estate under
this Lease, or any interest therein, and shall not sublet the Premises, or any
part thereof, or any right or privilege appurtenant thereto, or suffer any other
person or entity to occupy or use the Premises, or any portion thereof, without,
in each case, the prior written consent of Landlord which consent will not be
unreasonably withheld. As a condition for granting this consent to any
assignment, transfer, or subletting, Landlord shall require Tenant to pay to
Landlord as Additional Rent, seventy-five (75%) percent of all rents and/or
additional consideration due Tenant from its assignees, transferees or
subtenants in excess of the Rent payable by Tenant to Landlord hereunder for the
assigned, transferred and/or subleased space ("Excess Rent"); provided, however,
that before sharing such Excess Rent, Tenant shall first be entitled to recover
from such Excess Rent the amount of any reasonable leasing commissions related
to said transaction paid by Tenant to third party brokers not affiliated with
Tenant. Tenant shall by thirty (30) days written notice, advise Landlord of its
intent to assign or transfer Tenant's interest in the Lease or sublet the
Premises or any portion thereof for any part of the term hereto. Within
thirty(30) days after receipt of said written notice, Landlord may, in its sole
discretion, elect to terminate this Lease as to the portion of the Premises
described in Tenant's notice on the date specified in Tenant's notice by giving
written notice of such election to termination. If no such notice to terminate
is given to Tenant within said thirty (30) day period, Tenant may proceed to
locate an acceptable sublessee, assignee, or other transferee for presentment to
Landlord for Landlord's approval, all in accordance with the terms, covenants,
and conditions of this paragraph 19. If Tenant intends to sublet the entire
Premises and Landlord elects to terminate this Lease, this Lease shall be
terminated on the date specified in Tenant's notice. If, however, this Lease
shall terminate pursuant to the foregoing with respect to less than all the
Premises, the rest, as defined and reserved hereinabove shall be adjusted on a
pro rata basis to the number of square feet retained by Tenant, and this Lease
as so amended shall continue in full force and effect. In the event Tenant is
allowed to assign, transfer or sublet the whole or any part of the Premises,
with the prior written consent of Landlord, no assignee, transferee or subtenant
shall assign or transfer this Lease, either in whole or in part, or sublet the
whole or any part of the Premises, without also having obtained the prior
written consent of Landlord. A consent of Landlord to one assignment, transfer,
hypothecation, subletting, occupation or use by any other person shall not
release Tenant from any of Tenant's obligations hereunder or be deemed to be a
consent to any subsequent similar or dissimilar assignment, transfer,
hypothecation, subletting, occupation or use by any other person. Any such
assignment, transfer, hypothecation, subletting, occupation or use without such
consent shall be void and shall constitute a breach of the Lease by Tenant and
shall, at the option of Landlord exercised by written notice to Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor shall
any interest therein, be assignable for any purpose by operation of law without
the written consent of Landlord. As a condition to its consent, Landlord shall
require Tenant to pay all expenses in connection with the assignment, and
Landlord shall require Tenant's assignee or transferee (or other assignees or
transferees) to assume in writing all of the obligations under this Lease and
for Tenant to remain liable to

                                      13.
<PAGE>   14

Landlord under the Lease. Notwithstanding the above, in no event will Landlord
consent to a sub-sublease.

20.     SUBORDINATION AND MORTGAGES.

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

21.     ENTRY BY LANDLORD.

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

22.     BANKRUPTCY AND DEFAULT.

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

                                      14.
<PAGE>   15

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

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

        The failure to perform or honor any covenant, condition or
representation made under this Lease shall constitute a default hereunder by
Tenant upon expiration of the appropriate grace period hereinafter provided.
Tenant shall have a period of five (5) days from the date of written notice from
Landlord within which to cure any default in the payment of rental or adjustment
thereto. Tenant shall have a period of thirty (30) days from the date of written
notice from Landlord within which to cure any other default under this Lease,
provided, however, that if the nature of Tenant's failure is such that more than
thirty (30) days is reasonably required to cure the same, Tenant shall not be in
default so long as Tenant commences performance within such thirty (30) day
period and thereafter prosecutes the same to completion. Upon an uncured default
of this Lease by Tenant, Landlord shall have the following rights and remedies
in addition to any other rights or remedies available to Landlord at law or in
equity:

           (a) The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided as computed pursuant to
subsection(b) of said Section 1951.2. Any proof by Tenant under subparagraph (2)
and (3) of Section 1951.2 of the California Civil Code of the amount of rental
loss that could be reasonably avoided shall be made in the following manner.
Landlord and Tenant shall each select a licensed real estate broker in the
business of renting property of the same type and use as the Premises and in the
same geographic vicinity. Such two real estate brokers shall select a third
licensed real estate broker, and the three licensed real estate brokers so
selected shall determine the amount of the rental loss that could be reasonably
avoided from the balance of the term of this Lease after the time of award. The
decision of the majority of said licensed real estate brokers shall be final and
binding upon the parties hereto.

                                      15.
<PAGE>   16

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

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

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

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

23.     ABANDONMENT.

Tenant shall not vacate or abandon the Premises at any time during the term of
this Lease and if Tenant shall abandon, vacate or surrender the Premises, or be
dispossessed by the process of law, or otherwise, any personal property
belonging to Tenant and left on the Premises shall be

                                      16.
<PAGE>   17

deemed to be abandoned, at the option of Landlord, except such property as may
be mortgage to Landlord.

24.     DESTRUCTION.

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

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

           (b) Terminate this Lease, (providing that the Premises is damaged to
the extent of 33 1/3% of the replacement cost). If Landlord does not give Tenant
notice in writing within thirty (30) days from the destruction of the Premises
of its election to either rebuild and restore them, or to terminate this Lease,
Landlord shall be deemed to have elected to rebuild or restore them, in which
event Landlord agrees, at its expense, promptly to rebuild or restore the
Premises to their condition prior to the damage or destruction. Tenant shall be
entitled to a reduction in rent while such repair is being made in the
proportion that the area of the Premises rendered untenantable by such damage
bears to the total area of the Premises. If Landlord initially estimates that
the rebuilding or restoration will exceed one hundred eighty (180) days or if
Landlord does not complete the rebuilding or restoration within one hundred
eighty (180) days following the date of destruction (such period of time to be
extended for delays caused by the fault or neglect of Tenant or because of acts
of God, acts of public agencies, labor disputes, strikes, fires, freight
embargoes, rainy or stormy weather, inability to obtain materials, supplies or
fuels, acts of contractors or subcontractors, or delay of the contractors or
subcontractors due to such causes or other contingencies beyond the control of
Landlord), then Tenant shall have the right to terminate this Lease by giving
fifteen (15) days prior written notice to Landlord. Notwithstanding anything
herein to the contrary. Landlord's obligation to rebuild or restore shall be
limited to the building and interior improvements constructed by Landlord as
they existed as of the commencement date of the Lease and shall not include
restoration of Tenant's trade fixtures, equipment, merchandise, or any
improvements, alterations or additions made by Tenant to the Premises, which
Tenant shall forthwith replace or fully repair at Tenant's sole cost and expense
provided this Lease is not cancelled according to the provisions above.

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

        In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33 1/8 % of the replacement
cost thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. Notwithstanding anything to the contrary herein, Landlord may
terminate this Lease in the event of an uninsured event or if insurance proceeds
are insufficient to cover one hundred percent of the rebuilding costs net of the
deductible.

                                      17.
<PAGE>   18

25.     EMINENT DOMAIN.

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

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

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

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

26.     SALE OR CONVEYANCE BY LANDLORD.

In the event of a sale or conveyance of the Complex or any interest therein, by
any owner of the reversion then constituting Landlord, the transferor shall
thereby be released form any further liability upon any of the terms, covenants
or conditions (express or implied) herein contained in favor of Tenant, and in
such event, insofar as such transfer is concerned. Tenant agrees to look solely
to the responsibility of the successor in interest of such transferor in and to

                                      18.
<PAGE>   19

the Complex and this Lease for all obligations thereafter arising. This Lease
shall not be affected by any such sale or conveyance, and Tenant agrees, upon
recognition, to attorn to the successor in interest of such transferor.

27.     ATTORNMENT TO LENDER OR THIRD PARTY.

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

28.     HOLDING OVER.

        Any holding over by Tenant after expiration or other termination of the
term of this Lease with the written consent of Landlord delivered to Tenant
shall not constitute a renewal or extension of the Lease or give Tenant any
rights in or to the leased Premises except as expressly provided in this Lease.
Any holding over after the expiration or other termination f the term of this
Lease, with the consent of Landlord, shall be construed to be a tenancy from
month to month, on the same terms and conditions herein specified insofar as
applicable except that the monthly Basic Rent shall be increased to an amount
equal to one hundred fifty (150%) percent of the monthly Basic Rent required
during the last month of the Lease term.

29.     CERTIFICATE OF ESTOPPEL.

        Tenant shall at any time upon not less than ten (10) days' prior written
notice to Landlord execute, acknowledge and deliver to Landlord a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults, if any, are
claimed. Any such statmeent may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises. Tenant's failure to deliver such
statement with in such time shall be conclusive upon Tenant that this Lease is
in full force and effect, without modification except as may be represented by
Landlord; that there are no uncured defaults in Landlord's performance, and that
not more than one month's rent has been paid in advance.

30.     CONSTRUCTION CHANGES.

It is understood that the description of the Premises and the location of
ductwork, plumbing and other facilities therein are subject to such minor
changes as Landlord or Landlord's architect determines to be desirable in the
course of construction of the Premises, and

                                      19.
<PAGE>   20

no such changes, or any changes in plans for any other portions of the Complex
shall affect this Lease or entitle Tenant to any reduction of rent hereunder or
result in any liability of Landlord to Tenant. Landlord does not guarantee the
accuracy of any drawings supplied to Tenant and verification for the accuracy of
such drawings rests with Tenant.

31.     RIGHT OF LANDLORD TO PERFORM.

        All terms, covenants and conditions of this Lease to be performed or
observed by Tenant shall be performed or observed by Tenant at Tenant's sole
cost and expense and without any reduction of rent. If Tenant shall fail to pay
any sum of money, or other rent, required to be paid by it hereunder and such
failure shall continue for five (5) days after written notice thereof by
Landlord, or shall fail to perform any other term or covenant hereunder on its
part to be performed, and such failure shall continue for thirty (30) days after
written notice thereof by Landlord, Landlord, without waiving or releasing
Tenant from any obligation of Tenant hereunder, may, but shall not be obligated
to, make any such payment or perform any such other term or covenant on Tenant's
part to be performed. All sums so paid by Landlord and all necessary costs of
such performance by Landlord together with interest thereon at the rate of the
prime rate of interest per annum as quoted by the Bank of America from the date
of such payment or performance by Landlord, shall be paid (and Tenant covenants
to make such payment) to Landlord on demand by Landlord, and Landlord shall have
(in addition to any other right or remedy of Landlord) the same rights and
remedies in the event of nonpayment by Tenant as in the case of failure by
Tenant in the payment of rent hereunder. See Paragraph 51.

32.     ATTORNEYS' FEES.

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

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

33.     WAIVER.

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

                                      20.
<PAGE>   21

34.     NOTICES.

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

35.     EXAMINATION OF LEASE.

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

36.     DEFAULT BY LANDLORD.

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

37.     CORPORATE AUTHORITY.

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

38.     LIMITATION OF LIABILITY.

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

                                      21.
<PAGE>   22

      A.    The sole and exclusive remedy shall be against Landlord's interest
in the Premises leased herein;

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

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

      A.    No partner of Landlord shall be required to answer or otherwise
plead to any service of process;

      B.    No judgment will be taken against any partner of Landlord;

      C.    Any judgment taken against any partner of Landlord may be vacated
and set aside at any time without hearing;

      D.    No writ of execution will ever be levied against the assets of any
partner of Landlord;

      E.    These covenants and agreements are enforceable both by Landlord and
also by any partner of Landlord.

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

39.   MISCELLANEOUS AND GENERAL PROVISIONS.

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

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

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

      The term "person" includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If

                                      22.
<PAGE>   23

there be more than one Tenant the obligations of Tenant hereunder are joint and
several. The paragraph headings of this Lease are for convenience of reference
only and shall have no effect upon the construction or interpretation of any
provision here.

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

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

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

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

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

      I.    Paragraphs 43 through 59 are added hereto and are included as a part
of this lease.

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

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

40.   BROKERS.

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

41.   SIGNS.

      No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside of
the Premises or any exterior windows of the Premises without the written consent
of Landlord first had and obtained and Landlord shall have the right to remove
any such sign, placard, picture, advertisement, name or notice without notice

                                      23.
<PAGE>   24

to and at the expense of Tenant. If Tenant is allowed to print or affix or in
any way place a sign in, on, or about the Premises, upon expiration or other
sooner termination of this Lease, Tenant at Tenant's sole cost and expense shall
both remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign.

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

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

<TABLE>

<S>                                                             <C>
LANDLORD:                                                       TENANT:

WESTPORT JOINT VENTURE                                          IPASS, INC.,
a California joint venture                                       a California corporation

JOHN ARRILLAGA SURVIVOR'S TRUST

By /s/ John Arrillaga                                           By   /s/ Michael Mansouri
  ----------------------------------------------------            ------------------------------------
    John Arrillaga, Trustee

Date  11/24/99                                                  Title Chairman & CEO
    -------------------------------------------------                ----------------------------------
PEERY PRIVATE INVESTMENT COMPANY WP, L.P.,
a California limited partnership                                Print or Type Name  Michael Mansouri
                                                                                  ---------------------
By /s/ Richard Perry                                            Date 11/21/99
  --------------------------------------------------                -----------------------------------
   Richard T. Peery, Trustee of the Richard T. Peery
   Separate Property Trust dated 7/20/77, as its
   General Partner

Date 11/24/99
    ------------------------------------------------
PEERY PUBLIC INVESTMENT COMPANY - WP, L.P.,
a California limited partnership

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

Date  11/24/99
    ------------------------------------------------
</TABLE>

                                      24.
<PAGE>   25

Paragraphs 43 through 59 to Lease Agreement dated October 26, 1999, by and
between Westport Joint Venture, a California joint venture, as Landlord, and
iPass, Inc., a California corporation, as Tenant for 48,384+/- Square Feet of
Space Located at 3800 Bridge Parkway, Redwood City, California.

42.   BASIC RENT.

      In accordance with Paragraph 4A herein, the total aggregate sum of
TWENTY-FIVE MILLION NINE HUNDRED SEVENTY NINE THOUSAND SEVEN HUNDRED FIVE AND
38/100 DOLLARS ($25,979,705.38), shall be payable as follows:

      On January 15, 2000, the sum of ONE HUNDRED SIX THOUSAND THREE HUNDRED
SIXTY ONE AND 38/100 DOLLARS ($106,361.30) shall be due, representing the
prorated Basic Rent for the period of January 15, 200 through January 31, 2000.

      On February 1, 2000, the sum of ONE HUNDRED EIGHTY-ONE THOUSAND FOUR
HUNDRED FORTY AND NO/100 DOLLARS ($181,440.00) shall be due, and a like sum due
on the first day of each month thereafter, through and including February 1,
2001.

      On March 1, 2001, the sum of ONE HUNDRED EIGHTY-EIGHT THOUSAND SIX HUNDRED
NINETY-SEVEN AND 60/100 DOLLARS ($188,697.60) shall be due, and a like sum due
on the first day of each month thereafter, through and including February 1,
2002.

      On March 1, 2002, the sum of ONE HUNDRED NINETY-FIVE THOUSAND NINE HUNDRED
FIFTY-FIVE AND 20/100 DOLLARS ($195,955.20) shall be due, and a like sum due on
the first day of each month thereafter, through and including February 1, 2003.

      On March 1, 2003, the sum of TWO HUNDRED THREE THOUSAND TWO HUNDRED TWELVE
AND 80/100 DOLLARS ($203,212.80) shall be due, and a like sum due on the first
day of each month thereafter, through and including February 1, 2004.

      On March 1, 2004, the sum of TWO HUNDRED TEN THOUSAND FOUR HUNDRED SEVENTY
AND 40/100 DOLLARS ($210,470.40) shall be due, and a like sum due on the first
day of each month thereafter, through and including February 1, 2005.

      On March 1, 2005, the sum of TWO HUNDRED SEVENTEEN THOUSAND SEVEN HUNDRED
TWENTY-EIGHT AND NO/100 DOLLARS ($217,728.00) shall be due, and a like sum due
on the first day of each month thereafter, through and including February 1,
2006.

      On March 1, 2006, the sum of TWO HUNDRED TWENTY-FOUR THOUSAND NINE HUNDRED
EIGHTY-FIVE AND 60/100 DOLLARS ($224,985.60) shall be due, and a like sum due on
the first day of each month thereafter, through and including February 1, 2007.

      On March 1, 2007, the sum of TWO HUNDRED THIRTY-TWO THOUSAND TWO HUNDRED
FORTY-THREE AND 20/100 DOLLARS ($232,243.20) shall be due, and a like sum due on
the first day of each month thereafter, through and including February 1, 2008.

                                      25.
<PAGE>   26

      On March 1, 2008, the sum of TWO HUNDRED THIRTY-NINE THOUSAND FIVE HUNDRED
AND 80/100 DOLLARS ($239,500.80) shall be due, and a like sum due on the first
day of each month thereafter, through and including February 1, 2009.

      On March 1, 2009, the sum of TWO HUNDRED FORTY-SIX THOUSAND SEVEN HUNDRED
FIFTY-EIGHT AND 40/100 DOLLARS ($246,258.40) shall be due, and a like sum due on
the first day of each month thereafter, through and including February 1, 2010;
or until the entire aggregate sum of TWENTY-FIVE MILLION NINE HUNDRED
SEVENTY-NINE THOUSAND SEVEN HUNDRED FIVE AND 38/100 DOLLARS ($25,979,705.38) has
been paid.

43.   "AS-IS BASIS.

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

44.   TENANT INTERIOR IMPROVEMENTS.

      Landlord shall, at its sole cost and expense, construct certain interior
improvements (the "Tenant Improvements") in the Premises, as shown on EXHIBIT B
to be attached to the Lease and Landlord agrees to deliver the Premises leased
hereunder to Tenant, at Landlord's expense, in the configuration shown in Red on
EXHIBIT B to be attached hereto. Notwithstanding anything to the contrary above,
it is specifically understood and agreed that Landlord shall be required to
furnish only a standard air conditioning/heating system, normal electrical
outlets, standard fire sprinkler systems, standard bathroom, standard lobby, 2'
x 4' suspended acoustical tile drop ceiling throughout the entire space leased,
carpeting and/or vinyl-coated floor tile, and standard office partitions and
doors, as shown on EXHIBIT B to be attached hereto; provided, however, that any
special HVAC and/or plumbing and/or electrical requirements over and above that
normally supplied by Landlord shall be 100 percent the responsibility of and be
paid for 100 percent by Tenant.

      It is further agreed that Tenant shall furnish Landlord with Tenant's
required specifications and a preliminary space plan showing the layout of the
improvements to be constructed in the Premises by November 15, 1999. At that
time, Landlord shall have the final interior plans drawn by Landlord's
architect. All of the plans and specifications shall be EXHIBIT B to this Lease.
If said preliminary plans and specifications for any items affecting the
interior improvements to be constructed in the building are not received by
Landlord for Landlord's approval (which approval shall not be unreasonably
withheld) by November 15, 1999, then it is

                                      26.
<PAGE>   27

agreed that, notwithstanding anything to the contrary in this Lease, this Lease
and Tenant's obligation to perform all terms, covenants and conditions of this
Lease shall commence February 15, 2000, regardless of whether or not the
building and interior improvements are completed on February 15, 2000, and
Landlord shall complete construction of the interior improvements as soon as
reasonably possible thereafter.

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

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

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

45.   CONSENT.

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

46.   CHOICE OF LAW; SEVERABILITY.

      This Lease shall in all respects be governed by and construed in
accordance with the laws of the State of California. If any provisions of this
Lease shall be invalid, unenforceable or

                                      27.
<PAGE>   28

ineffective for any reason whatsoever, all other provisions hereof shall be and
remain in full force and effect.

47.   AUTHORITY TO EXECUTE.

      The parties executing this Lease Agreement hereby warrant and represent
that they are properly authorized to execute this Lease Agreement and bind the
parties on behalf of whom they execute this Lease Agreement and to all of the
terms, covenants and conditions of this Lease Agreement as they relate to the
respective parties hereto.

48.   ASSESSMENT CREDITS.

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

49.   ASSIGNMENT AND SUBLETTING (CONTINUED).

      A.    In addition to and notwithstanding anything to the contrary in
Paragraph 19 of this Lease and provided Tenant is not in default of this Lease,
Landlord hereby agrees to consent to: (1) Tenant's assigning or subletting said
Lease to: (i) any parent or subsidiary corporation, or corporation with which
Tenant merges or consolidates provided that the net worth of said parent or
subsidiary corporation, or said corporation has a net worth equal to or greater
than the net worth of Tenant (a) at the time of Lease execution or (b) at the
time of such assignment, merger, or consolidation (whichever is greater); or
(ii) any third party or entity to whom Tenant sells all or substantially all of
its assets; provided, that the net worth of the resulting or acquiring
corporation has a net worth after the merger, consolidation or acquisition equal
to or greater than the net worth of Tenant (a) at the time of Lease execution or
(b) at the time of such merger, consolidation or acquisition, whichever is
greater (collectively "Permitted Transfers"); (2) waive its right to terminate
the Lease due to a Permitted Transfer; and (3) waive any rights to Excess Rent
related to a Permitted Transfer. No such assignment or subletting will release
the Tenant from its liability and responsibility under this Lease to the extend
Tenant continues in existence following such transaction. Notwithstanding the
above, Tenant shall be required to (a) give Landlord written notice prior to
such assignment or subletting to any party as described in (i) and (ii) above,
(b) execute Landlord's consent document prepared by Landlord reflecting the

                                      28.
<PAGE>   29

assignment or subletting and (c) pay Landlord's costs for processing said
Consent prior to the effective date of said assignment or sublease.

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

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

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

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

                                      29.
<PAGE>   30

              Initials:                           Initials:                    "
                       ----------------------              --------------------
                             Subtenant                           Tenant

50.   BANKRUPTCY AND DEFAULT.

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

51.   ABANDONMENT.

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

52.   HAZARDOUS MATERIALS.

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

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

      B.    Tenant shall obtain Landlord's written consent, which may be
withheld in Landlord's discretion, prior to the occurrence of any Tenant's
Hazardous Materials Activities (defined below); provided, however, that
Landlord's consent shall not be required for normal use in

                                      30.
<PAGE>   31

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

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

      D.    If Landlord, in its sole discretion, believes that the Property has
become contaminated as a result of Tenant's Hazardous Materials Activities,
Landlord in addition to any other rights it may have under this Lease or under
Environmental Laws or other laws, may enter upon the Property and conduct
inspection, sampling and analysis, including but not limited to, obtaining and
analyzing samples of soil and groundwater, for the purpose of determining the
nature and

                                      31.
<PAGE>   32

extent of such contamination. Tenant shall promptly reimburse Landlord for the
costs of such an investigation, including but not limited to, reasonable
attorneys' fees Landlord incurs with respect to such investigation, that
discloses Hazardous Materials contamination for which Tenant is liable under
this Lease. Except as may be required of Tenant by applicable Environmental
Laws, Tenant shall not perform any sampling, testing or drilling to identify the
presence of any Hazardous Materials at the Property, without Landlord's prior
written consent which may be withheld in Landlord's discretion. Tenant shall
promptly provide Landlord with copies of any claims, notices, work plans, data
and reports prepared, received or submitted in connection with any sampling,
testing or drilling performed pursuant to the preceding sentence.

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

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

                                      32.
<PAGE>   33

that Tenant has satisfied itself as to the environmental conditions of the
Property and the suitability of such conditions for Tenant's intended use of the
Property.

        Initials: /s/ MM                           Initials:  /s/ JA
                 ----------------------------               --------------------
                      Tenant                                     Landlord

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

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

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

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

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

            (e)   Tenant shall be responsible at its expense for repairing any
Environmental Equipment damages due to the negligence of Tenant or Tenant's
agents, employees, contractors, vendors, invitees, visitors, future subtenants
or assignees (such terms "invitees" and "visitors" as used in this Paragraph 53
shall not include Landlord or any other party named as a discharger under the
Order as may be amended, or any of their respective agents, consultants or
contractors, or any Government Representatives).

                                      33.
<PAGE>   34

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

53.   LEASE TERMS CO-TERMINOUS.

      It is acknowledged that (i) concurrently with the execution of this Lease,
Landlord and Tenant are also executing a second Lease Agreement dated October
26, 1999 (hereinafter referred to as the "Building 19 Lease") affecting adjacent
property located at 3600 Bridge Parkway, Redwood City and (ii) it is the
intention of the parties that the term of this Lease be co-terminous with the
term of the Building 19 Lease such that the terms of both leases expire on the
same date; provided, however, the termination of this Lease resulting from the
terms and conditions stated under Paragraph 19 "Bankruptcy and Default" (subject
to Landlord's option as stated in the respective leases' "Cross Default"
Paragraph) or Paragraph 21 "Destruction" or Paragraph 22 "Eminent Domain" shall
not result in a termination of the Building 19 Lease, unless Landlord elects, at
its sole and absolute discretion, to terminate both of the leases.

54.   CROSS DEFAULT.

      As a material part of the consideration for the execution of this Lease by
Landlord, it is agreed between Landlord and Tenant that a default under this
Lease, or a default under said Building 19 Lease may, at the option of Landlord,
be considered a default under both leases, in which event Landlord shall be
entitled (but in no event required) to apply all rights and remedies of Landlord
under the terms of one lease to both leases including, but not limited to, the
right to terminate one or both of said leases by reason of a default under said
Building 19 Lease or hereunder.

55.   ADDITIONAL RENT CONTINUED.

      The following items shall be excluded from "Additional Rent":

      A.    Leasing commissions, attorney's fees, costs, disbursements, and
other expenses incurred in connection with negotiations with other tenants, or
disputes between Landlord and other third party not related to Tenant
(hereinafter referred to as "Third Party"), or in connection with marketing,
leasing, renovating, or improving space for other current or prospective tenants
or other current or prospective occupants of the Complex; notwithstanding
anything to the contrary herein, any costs and expenses Landlord is entitled to
be reimbursed for as stated under Paragraph 22 ("Bankruptcy and Default") ARE
NOT excluded Additional Rent items as reflected in this Paragraph 56.

      B.    The cost of any service sold to any other Third Party or other
occupant whose leased premises are not part of the Premises leased herein and
for which Landlord is entitled to be reimbursed as an additional charge or
rental over and above the basic rent and additional rent payable under the lease
agreement with said other tenant.

      C.    Any costs, fines, or penalties incurred due to violations by
Landlord of any governmental rule or authority, provided Tenant is not
responsible under the Lease for such

                                      34.
<PAGE>   35

costs, fines and/or penalties, and/or provided Tenant's actions or inactions did
not cause, in whole or in part, such costs, fines and/or penalties.

      D.    Wages, salaries, or other compensation paid to executive employees
above the grade of Property Manager.

      E.    Repairs or other work occasioned by fire, windstorm, or other
insured peril, to the extent that Landlord shall receive proceeds of such
insurance or would have received such proceeds had Landlord maintained the
insurance coverage required under this Lease providing said insurance coverage
was available and Tenant paid its share of the premium as required under the
Lease and any insurance deductible(s) which Tenant is responsible for paying and
provided Tenant is not responsible for the damage to the Premises.

      F.    Except as otherwise noted in this Lease, any mortgage debt, or
ground rents or any other amounts payable under any ground lease for the
Property.

      G.    Subject to the terms of Paragraph 53G above, Landlord's costs
related to Lease Paragraphs 53F and 53G.

56.   SECURITY DEPOSIT IN THE FORM OF AN IRREVOCABLE STANDBY LETTER OF CREDIT.

      The cash Security Deposit provided for in Paragraph 4G of the Lease shall
be deposited by Tenant with Landlord upon execution of this Lease; however,
Tenant shall have the right, at Tenant's sole election, to replace one-half
($246,758.40) of the cash Security Deposit held by Landlord with an irrevocable
letter of credit, drawn upon an institutional lender reasonably acceptable and
accessible to Landlord in form and content reasonably satisfactory to Landlord
and for a term equal to the Term of this Lease plus a period of sixty (60) days,
and said irrevocable letter of credit shall not be subject to annual renewal.
Said financial institution must agree that the presentment for demand may be
made in San Jose, Santa Clara or Palo Alto, California. One half of the cash
Security Deposit ($246,758.40) held by Landlord shall be refunded to Tenant upon
Landlord's receipt of an acceptable irrevocable letter of credit. If Tenant
defaults with respect to any provisions of this Lease, including but not limited
to provisions relating to the payment of Rent, Landlord may (but shall not be
required to) draw down on the irrevocable letter of credit for payment of any
sum which Landlord may spend or become obligated to spend by reason of Tenant's
default, or to compensate Landlord for any loss or damage which Landlord may
suffer by reason of Tenant's default. Landlord and Tenant acknowledge that such
irrevocable letter of credit will be treated as if it were a cash Security
Deposit, and such irrevocable letter of credit may be drawn down upon by
Landlord upon demand and presentation of evidence of the identity of Landlord to
the issuing bank, in the event that Tenant defaults with respect to any
provision of this Lease and such default is not cured within any applicable cure
period. Landlord acknowledges that it is not entitled to draw down such
irrevocable letter of credit unless Landlord would have been entitled to draw
upon a cash Security Deposit pursuant to the terms of Paragraph 4G of the Lease.
Concurrently with the delivery of the required information to the issuing bank,
Landlord shall deliver to Tenant written evidence of the default upon which the
draw down was based, together with evidence that Landlord has provided to Tenant
the written notice of such default which was required under the applicable
provision of the Lease, and evidence of the failure of Tenant to cure such
default

                                      35.
<PAGE>   36

within the applicable grace period following receipt of such notice of default.
If any portion of the irrevocable letter of credit is used or applied pursuant
hereto, Tenant shall, within ten (10) days after receipt of a written demand
therefor from Landlord, restore and replace the value of such security by either
(i) depositing cash with Landlord in the amount equal to the sum drawn down
under the irrevocable letter of credit, or (ii) increasing the irrevocable
letter of credit to its value immediately prior to such application. Tenant's
failure to replace the value of the security as provided in the preceding
sentence shall be a material breach of its obligation under this Lease.

57.   ASSIGNMENT OF WARRANTIES.

      During the Term of the Lease, Landlord hereby assigns to Tenant all of
Landlord's Contractor's warranties and shall cooperate with Tenant in enforcing
any of such warranties except that Landlord shall not be required to pay any
legal fees or incur any expenses in this regard.

58.   BROKERS.

      Landlord and Tenant each represent to the other that they have dealt with
no real estate brokers, agents, or finders in connection with this transaction,
except as follows: Cornish & Carey Oncor International ("C&C"), whose commission
shall be paid by Landlord in accordance with Landlord's standard commission
schedule which commission for this Lease is a total of $100,000.00. Each party
agrees to defend, protect, indemnify and hold the other party harmless from and
against all claims for brokerage commissions, finder's fees, and other
compensation made by any broker, agent, or finder as consequence of the
indemnifying party's actions or dealing with such broker, agent or finder. The
parties hereto acknowledge that Landlord will not pay an additional brokerage
fee to C&C or any broker in the event the term of this Lease is extended for any
reason whatsoever.

                                      36.
<PAGE>   37

                              WESTPORT OFFICE PARK

                            REDWOOD CITY, CALIFORNIA

                                     [MAP]
<PAGE>   38
                                                                    EXHIBIT 10.9

                                 LEASE AGREEMENT

                                                       BLDG:      Westport 19
                                                       OWNER:     30
                                                       PROP:      0119
                                                       UNIT:      1
                                                       TENANT:    IPAS01
                                                       LEASE:     0119-IPAS01-01

        This Lease, made this 26th day of October, 1999 between WESTPORT JOINT
VENTURE, a California join venture, hereinafter called Landlord, and IPASS, INC.
a California corporation, hereinafter called Tenant.

                                   WITNESSETH:

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

        All of that certain 48,384+ square foot, two-story building located at
3600 Bridge Parkway, Redwood City, California 94065. Said Premises is more
particularly shown within the area outlined in Red on Exhibit A attached hereto.
The entire parcel, of which the Premises is a part, is shown within the area
outlined in Green on Exhibit A attached. The Premises shall be improved by
Landlord as shown on Exhibit B to be attached hereto, and is leased on an
"as-is" basis, in its present condition, and in the configuration as shown in
Red on Exhibit B to be attached hereto.

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

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

1. USE.

        Tenant shall the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purpose of general
office, light manufacturing, research and development, and storage and other
uses necessary for Tenant to conduct Tenant's business, provided that such uses
shall be in accordance with all applicable governmental laws and ordinances and
for no other purposes. Tenant shall not do or permit it be done in or about the
Premises or the Complex nor bring or keep or permit to be brought or kept in or
about the Premises or Complex anything which is prohibited by or will in any way
increased the existing rate of (or otherwise affect) fire or any insurance
covering the Complex or any part thereof, or any of its contents, or will cause
a cancellation of any insurance covering the Complex or any part thereof, or any
of its contents. Tenant shall not do or permit to be done anything in, on or

                                       1.
<PAGE>   39

about the Premises or the Complex which will in any way obstruct or interfere
with the rights of other tenants or occupants of the Complex or injure or annoy
them, or use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises or the Complex. No sale by auction
shall be permitted on the Premises. Tenant shall not place any loads upon the
floors, walls, or ceiling, which endanger the structure , or place any harmful
fluids or other materials in the drainage system of the building, or overall
existing electrical or other mechanical systems. No waste materials or refuse
shall be dumped upon or permitted to remain upon any part of the Premises or
outside of the building in which the Premises are a part, except in trash
containers placed inside exterior enclosures designated by Landlord for the
purpose or inside of the building proper where designated by Landlord. NO
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
outside the Premises or on any portion of common area of the Complex. No
loudspeaker or other device, system or apparatus which can be heard outside the
Premises shall be used in or at the Premises without the prior written consent
of Landlord. Tenant shall not commit or suffer to be committed any waste in or
upon the Premises. Tenant shall indemnify, defend and hold Landlord harmless
against any loss, expense, damage, attorneys' fees or liability arising out of
failure of Tenant to comply with any applicable law. Tenant shall comply with
any covenant, condition, or restriction ("CC&R's") affecting the Premises. The
provisions of this paragraph are for the benefit of Landlord only and shall not
be construed to be the benefit of any tenant or occupant of the Complex.

2. TERM.*

        A. The term of this Lease shall be for a period of ten (10) years,
fifteen (15) days (unless sooner terminated as hereinafter provided) and subject
to Paragraph 2(B) and 3, shall commence on the 15th day of February, 2000 and
end on the 28th day of February, 2010.

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

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

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

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

-------------------
*    It is agreed in the event said Lease commences on a date other than the
     first day of the month the term of the Lease will be extended to account
     for the number of days in the partial month. The Basic Rent during the
     recruiting partial month will be pro-rated (for the number of days in the
     partial month) at the Basic Rent scheduled for the projected commencement
     date as shown in Paragraph 42.

                                       2.
<PAGE>   40

             (d) As otherwise agreed in writing.

3. POSSESSION.

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

4. RENT

        A. BASIC RENT. Tenant agrees to pay to landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises the total sum of
TWENTY FIVE MILLION SEVEN HUNDRED EIGHTY FIVE THOUSAND SEVEN HUNDRED FIFTY TWO
and 28/100 ($25,785,752.28) Dollars in lawful money of the United States of
America, payable as follows:

        See Paragraph 42 for Basic Rent Schedule.

        B. TIME FOR PAYMENT. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30). In the even that the term of this lease for
any reason ends on a date other than the last day of calendar month, on the
first day of the last calendar month of the term hereof. Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar month
to and including the last day of the term hereof that proportion of the monthly
rent hereunder which the number of days between said final day of said last
calendar month and the last day of the term hereof bears to thirty (30).

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

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

                                       3.
<PAGE>   41

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

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

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

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

        The Additional Rent due hereunder shall be paid to Landlord or
Landlord's agent (i) within five days for taxes and insurance and within thirty
days for all other Additional Rent items after presentation of invoice form
Landlord or Landlord's agent setting forth such Additional Rent and/or (ii) at
the option of Landlord, Tenant shall pay to Landlord monthly, in advance,
Tenant's prorata share of an amount estimated by Landlord to be Landlord's
approximate average monthly expenditure for such Additional Rent items, which
estimated amount shall be reconciled within 120 days of at the end of each
calendar years or more frequently if Landlord so elects to do so at Landlord's
sole and absolute discretion as compared to Landlord's actual expenditure for
said Additional Rent items, with Tenant paying to Landlord, upon demand, any
amount of actual expenses expended by Landlord in excess of said estimated
amount, or landlord crediting to Tenant (providing Tenant is not in default in
the performance of any of the terms, covenants and conditions of this Lease) any
amount of estimated payments made by Tenants in excess of Landlord's actual
expenditures for said Additional Rent Items. Within thirty (30) days after
receipt of Landlord's reconciliation, Tenant shall have the right, at Tenant's
sole expense, to audit, at a mutually convenient time at Landlord's office,
Landlord's records relating to the foregoing expense. Such audit must be
conducted by Tenant or an independent nationally recognized accounting firm that
is not being compensated by Tenant or other third party on a contingency fee
basis. Landlord shall be provided a complete copy of said audit at no expenses
to Landlord. If such audit reveals that Landlord has overcharged Tenant and the
audit is not challenged by Landlord, the amount overcharged shall be credited to
Tenant's account with in thirty (30) days after the audit is concluded.

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

                                       4.
<PAGE>   42

        E. FIXED MANAGEMENT FEE. Beginning with the Commencement Date of the
Term of this Lease, Tenant shall pay, in addition tot he Basic Rent and
Additional Rent, a fixed monthly management fee ("Management Fee") equal to two
percent (2%) of the Basic Rent due for each month during the Lease Term. Said
Management Fee shall be paid by Tenant to A&P Property Management Company at
2560 Mission College Blvd., Suite 101, Santa Clara, CA 95054.

        F. PLACE OF PAYMENT OF RENT AND ADDITIONAL RENT. All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at Westport Joint Venture, 2560 Mission
College Blvd., Suite 101, Santa Clara, CA 95054 or to such other person or to
such other place as Landlord may from time to time designate in writing.

        G. SECURITY DEPOSIT. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord the sum of FOUR HUNDRED NINETY THREE THOUSAND
FIVE HUNDRED SIXTEEN AND 80/100 ($493,516.80) Dollars. Said sum shall be held by
Landlord as a Security Deposit for the faithful performance by Tenant of all of
the terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the term hereof. If Tenant defaults with respect to any provision
of this Lease, including, but not limited to, the provisions relating to the
payment of rent and any of the monetary sums due herewith, Landlord may (but
shall not be required to) use, apply or retain all or any part of this Security
Deposit for the payment of any other amount which Landlord may spend by reason
of Tenant's default or to compensate Landlord for any other loss or damages
which Landlord may suffer by reason of Tenant's default. If any portion of said
Deposit is so used or applied. Tenant shall, within ten (10) days after written
demand therefor, deposit case with Landlord in the amount sufficient to restore
the Security Deposit to its original amount. Tenant's failure to do so shall be
a material breach of this Lease. Landlord shall not be required to keep this
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such Deposit. If Tenant fully and faithfully performs
every provision of this Lease to be performed by it, the Security deposit or any
balance thereof shall be returned to Tenant (or at Landlord's option, to the
last assignee of Tenant's interest hereunder) at the expiration of the Lease
term and after Tenant has vacated the Premises. In the event of termination of
Landlord's interest in this Lease, Landlord shall transfer said deposit to
Landlord's successor in interest whereupon Tenant agrees to release Landlord
from liability for the return of such Deposit or the accounting therefor. See
Paragraph 56.

5. RULES AND REGULATIONS AND COMMON AREA.

        Subject in to the terms and conditions of this Lease and such reasonable
Rules and regulations as Landlord may from time to time prescribe, Tenant and
Tenant's Employees, invitees and customers shall, in common with other occupants
of the Complex in which the Premises are located, and their respective
employees, invitees and customers and others entitled to the use thereof, have
the non-exclusive right to use the access roads, parking areas, and facilities
provided and designated by Landlord for the general use and convenience of the
occupants of the Complex in which the Premises are located, which areas and
facilities are referred to herein as "Common Area". This right shall terminate
upon the termination of this Lease. Landlord reserves the right from time to
time to make changes in the shape, size, location, amount and extent of Common
Area. Landlord further reserves the right to promulgate

                                       5.
<PAGE>   43

such reasonable rules and regulations relating to the use of the Common Area,
and any part of parts thereof, as Landlord may deem appropriate for the best
interests of the occupants of the Complex. The Rules and Regulations shall be
binding upon Tenant upon delivery of a copy of them to Tenant, and Tenant shall
abide by them and cooperate in their observance. Such Rules and Regulations may
be reasonably amended by Landlord from time to time, with or without advance
notice, and all amendments shall be effective upon delivery of a copy to Tenant,
Landlord shall not be responsible to Tenant for the non-performance by any other
tenant or occupant of the Complex of any of said Rules and Regulations.

        Landlord shall operate, manage and maintain the Common Area. The manner
in which the Common Area shall be maintained and the expenditures for such
maintenance shall be at the discretion of Landlord. Landlord's rights pursuant
to this Paragraph 5 shall be subject to the condition that exercise of any such
rights shall not unreasonably interfere with Tenant's use of the Premises.

6.      PARKING.

        Tenant shall have the right to use with other tenants or occupants of
the Complex 161 parking spaces, in the common parking areas of the Complex.
Tenant agrees, that Tenant, Tenant's employees, agents, representatives and/or
invitees shall not use parking spaces in excess of said 161 spaces allocated to
Tenant hereunder. Landlord shall have the right, at Landlord's discretion, to
specifically designate the location of Tenant's parking spaces within the common
parking areas of the Complex in the event of a dispute among the tenants
occupying the building and/or Complex referred to herein, in which event Tenant
agrees that Tenant, Tenant's employees, agents, representatives and/or invitees
shall not use any parking spaces other than those parking spaces specifically
designated by Landlord for Tenant's use. Said parking spaces, if specifically
designated by Landlord to Tenant, may be relocated by Landlord at any time, and
from time to time. Landlord reserves the right, at Landlord's sole discretion,
to rescind any specific designation of parking spaces, thereby returning
Tenant's parking spaces to the common parking area. Landlord shall give Tenant
written notice of any change in Tenant's parking spaces. Tenant shall not, at
any time, park, or permit to be parked, any trucks or vehicles adjacent to the
loading areas so as to interfere in any way with the use of such areas, nor
shall Tenant at any time park, or permit the parking of Tenant's trucks or other
vehicles or the trucks and vehicles of Tenant's suppliers or others, in any
portion of the common area not designated by Landlord for such use by Tenant.
Tenant shall not park nor permit to be parked, any inoperative vehicles or
equipment on any portion of the common parking area or other common areas of the
Complex. Tenant agrees to assume responsibility for compliance by its employees
with the parking provision contained herein. If Tenant or its employees park in
other than such designated parking areas, then Landlord may charge Tenant, as an
additional charge, and Tenant agrees to pay, ten ($10.00) Dollars per day for
each day or partial day each such vehicle is parked in any area other than that
designated. Tenant hereby authorizes Landlord at Tenant's sole expense to tow
away from the Complex any vehicle belonging to Tenant or Tenant's employees
parked in violation of these provisions, or to attach violation stickers or
notices to such vehicles. Tenant shall use the parking areas for vehicle parking
only, and shall not use the parking areas for storage.

                                       6.
<PAGE>   44

7. EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON AREAS OF THE
COMPLEX.

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

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

8. ACCEPTANCE AND SURRENDER OF PREMISES.

        By entry hereunder, Tenant accepts the Premises as being in good and
sanitary order, condition and repair and accepts the building and improvements
included in the Premises in their present condition and without representation
or warranty by Landlord as to the condition of such building or as to the use or
occupancy which may be made thereof. Any exceptions to the foregoing must be by
written agreement executed by Landlord and Tenant. Tenant agrees on the last day
of the Lease term, or on the sooner termination of this Lease, to surrender the
Premises promptly and peaceably to Landlord in good condition and repair
(damages by Acts of God, fire, normal wear and tear excepted), with all interior
walls painted, or cleaned so that they appear freshly painted, and repaired and
replaced, if damaged; all floors cleaned and waxed; all carpets cleaned and
shampooed; the air conditioning and heating equipment serviced by a reputable
and licensed service firm and in good operating condition (provided the
maintenance of such equipment has been Tenant's responsibility during the term
of this Lease) together with all alterations, additions, and improvements which
may have been made in, to, or on the Premises (except movable trade fixtures
installed at the expense of Tenant) except that Tenant shall ascertain from
Landlord within thirty (30) days before the end of the term of this Lease
whether Landlord desires to have the Premises or any part or parts thereof
restored to their condition and configuration as when the Premises were
delivered to Tenant and if Landlord shall so desire, then Tenant shall restore
said Premises or such part or parts thereof before the end of this Lease at
Tenant's sole cost and expense. Tenant, on or before the end of the term or
sooner termination

                                       7.
<PAGE>   45

of this Lease, shall remove all of Tenant's personal property and trade fixtures
from the Premises, and all property not so removed on or before the end of the
term or sooner termination of this Lease shall be deemed abandoned by Tenant and
title to same shall thereupon pass to Landlord without compensation to Tenant.
Landlord may, upon termination of this Lease, remove all moveable furniture and
equipment so abandoned by Tenant, at Tenant's sole cost, and repair any damage
caused by such removal at Tenant's sole cost. If the Premises be not surrendered
at the end of the term or sooner termination of this Lease, Tenant shall
indemnify Landlord against loss or liability resulting from the delay by Tenant
in so surrendering the Premises including, without limitation, any claims made
by any succeeding tenant founded on such delay. Nothing contained herein shall
be construed as an extension of the term hereof or as a consent of Landlord to
any holding over by Tenant. The voluntary or other surrender of this Lease or
the Premises by Tenant or a mutual cancellation of this Lease shall not work as
a merger and, at the option of Landlord, shall either terminate all or any
existing sublease or subtenancies or operate as an assignment to Landlord of all
or any such subleases or subtenancies.

9. ALTERATIONS AND ADDITIONS.

        Tenant shall not make, or suffer to be made, any alteration or addition
to the Premises, or any part thereof, without the written consent of Landlord
(which written consent (i) shall not be unreasonably withheld and (ii) will
specify whether Landlord shall require removal of said alterations and/or
additions, provided Tenant requests such determination from Landlord), first had
and obtained by Tenant, but at the cost of Tenant, and any addition to, or
alteration of, the Premises, except moveable furniture and trade fixtures, shall
at once become a part of the Premises and belong to Landlord. Landlord reserves
the right to approve all contractors and mechanics proposed by Tenant to make
such alterations and additions. Tenant shall retain title to all moveable
furniture and trade fixtures placed in the Premises. All heating, lighting,
electrical, air-conditioning, floor to ceiling partitioning, drapery, carpeting,
and floor installations made by Tenant, together with all property that has
become an integral part of the Premises, shall not be deemed trade floor to
ceiling fixtures. Tenant agrees that it will not proceed to make such alteration
or additions, without having obtained consent from Landlord to do so, and until
five (5) days from the receipt of such consent, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant's improvements. Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work. Tenant
shall, if required by Landlord, secure at Tenant's own cost and expense, a
completion and lien indemnity bond, satisfactory to Landlord, for such work.
Tenant further covenants and agrees that any mechanic's lien filed against the
Premises or against the Complex for work claimed to have been done for, or
materials claimed to have been furnished to Tenant, will be discharged by
Tenant, by bond or otherwise, within ten (10) days after the filing thereof, at
the cost and expense of Tenant. Any exceptions to the foregoing must be made in
writing and executed by both Landlord and Tenant. Notwithstanding anything to
the contrary herein, under no circumstances shall Tenant be authorized to
penetrate the soil to a depth that exceeds three and one-half feet from the
uppermost surface of the soil.

                                       8.
<PAGE>   46

10. TENANT MAINTENANCE.

        Tenant shall, at its sole cost and expense, keep and maintain the
Premises (including appurtenances) and every part thereof in a high standard of
maintenance and repair, and in good and sanitary condition. Tenant's maintenance
and repair responsibilities herein referred to include, but are not limited to,
all windows, window frames, plate glass, glazing, truck doors, plumbing systems
(such as water and drain lines, sinks, toilets, faucets, drains, showers and
water fountains), electrical systems (such as panels, conduits, outlets,
lighting fixtures, lamps, bulbs, tubes, ballasts), heating and air-conditioning
systems (such as compressors, fans, air handlers, ducts, mixing boxes,
thermostats, time clocks, boilers, heaters, supply and return grills), store
fronts, roofs, downspouts, all interior improvements within the premises
including but not limited to wall coverings, window coverings, carpet, floor
coverings, partitioning, ceilings, doors (both interior and exterior, including
closing mechanisms, latches, locks, skylights (if any), automatic fire
extinguishing systems, and elevators and all other interior improvements of any
nature whatsoever. Tenant agrees to provide carpet shields under all rolling
chairs or to otherwise be responsible for wear and tear of the carpet caused by
such rolling chairs if such wear and tear exceeds that caused by normal foot
traffic in surrounding areas. Areas of excessive wear shall be replaced at
Tenant's sole expense upon Lease termination. Tenant hereby waives all rights
under, and benefits of, subsection 1 of Section 1932 and Section 1941 of the
California Civil Code and under any similar law, statute or ordinance now or
hereafter in effect.

11. UTILITIES.

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

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

12. TAXES.

        A. As Additional Rent and in accordance with Paragraph 4D of this Lease,
Tenant shall pay to Landlord Tenant's proportionate share of all Real Property
Taxes, which prorata share shall be allocated to the leased Premises by square
footage or other equitable basis, as calculated by Landlord. The term "Real
Property Taxes", as used herein, shall mean (i) all taxes, assessments, levies
and other charges of any kind or nature whatsoever, general and special,
foreseen and unforeseen (including all installments of principal and interest
required to pay any general or special assessments for public improvements and
any increases resulting from reassessment caused by any change in ownership of
the Complex) now or hereafter imposed by any governmental or quasi-governmental
authority or special district having the direct or indirect

                                       9.
<PAGE>   47

power to tax or levy assessments, which are levied or assessed against, or with
respect to the value, occupancy or use of, all or any portion of the Complex (as
now constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord's interest therein; any improvements located
within the Complex (regardless of ownership); the fixtures, equipment and other
property of Landlord, real or personal, that are an integral part of and located
in the Complex; or parking areas, public utilities, or energy within the
Complex; (ii) all charges, levies or fees imposed by reason of environmental
regulation or other governmental control of the Complex; and (iii) all costs and
fees (including attorneys' fees) incurred by Landlord in contesting any Real
Property Tax and in negotiating with public authorities as to any Real Property
Tax. If at any time during the term of this Lease the taxation or assessment of
the Complex prevailing as of the commencement date of this Lease shall be
altered so that in lieu of or in addition to any Real Property Tax described
above there shall be levied, assessed or imposed (whether by reason of a change
in the method of taxation or assessment, creation of a new tax or charge, or any
other cause) an alternate or additional tax or charge (i) on the value, use or
occupancy of the Complex or Landlord's interest therein or (ii) on or measured
by the gross receipts, income or rentals from the Complex, on Landlord's
business on leasing the Complex, or computed in any manner with respect to the
operation of the Complex, then any such tax or charge, however designated, shall
be included within the meaning of the term "Real Property Taxes" for purposes of
this Lease. If any Real Property Tax is based upon property or rents unrelated
to the Complex, then only that part of such real Property Tax that is fairly
allocable to the Complex shall be included within the meaning of the term "Real
Property Taxes". Notwithstanding the foregoing, the term "Real Property Taxes"
shall not include estate, inheritance, gift or franchise taxes of Landlord or
the federal or state net income tax imposed on Landlord's income from all
sources. The term "Real Estate Taxes" shall also include supplemental taxes
related to the period of Tenant's Lease Term whenever levied, including any such
taxes that may be levied after the Lease Term has expired.

        B. TAXES ON TENANT'S PROPERTY

             (a) Tenant shall be liable for and shall pay ten (10) days before
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in or about the Premises. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property or
if the assessed value of the Premises is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of Tenant and if
Landlord, after written notice to Tenant, pays the taxes based on such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof, but only under proper protest if requested by Tenant, Tenant shall upon
demand, as the case may be, repay to Landlord the taxes so levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment; provided that in any such event Tenant shall have the right, in the
name of Landlord and with Landlord's full cooperation, to bring suit in any
court of competent jurisdiction to recover the amount of any such taxes so paid
under protest, and any amount so recovered shall belong to Tenant.

             (b) if the Tenant improvements in the Premises, whether installed,
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the valuation at which standard office
improvements in other space in the Complex are assessed, then the real

                                      10.
<PAGE>   48

property taxes and assessments levied against Landlord or the Complex by reason
of such assessed valuation shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the provisions of 12B(a) above. If
the records of the County Assessor are available and sufficiently detailed to
serve as a basis for determining whether said Tenant improvements are assessed
at a higher valuation than standard office improvements in other space in the
Complex, such records shall be binding on both the Landlord and the Tenant. If
the records of the County Assessor are not available or sufficiently detailed to
serve as a basis for making said determination, the actual cost of construction
shall be used.

13. LIABILITY INSURANCE.

        Tenant, at Tenant's expense, agrees to keep in force during the term of
this Lease a policy of commercial general liability insurance with a combined
single limit coverage of not less than Two Million Dollars ($2,000,000) per
occurrence for injuries to or death of persons occurring in, on or about the
Premises or the Complex, and property damage insurance with limits of $500,000.
The policy or policies affecting such insurance, certificate of insurance of
which shall be furnished to Landlord, shall name Landlord as additional
insureds, and shall inure any liability of Landlord, contingent or otherwise, as
respects acts or omissions of Tenant, its agents, employees or invitees or
otherwise by any conduct or transactions of any of said persons in or about or
concerning the Premises, including any failure of Tenants to observe or perform
any of its obligations hereunder; shall be issued by an insurance company
admitted to transact business in the State of California; and shall provide that
the insurance effected thereby shall not be canceled, except upon thirty (30)
days' prior written notice to Landlord. If, during the term of this Lease, in
the considered opinion of Landlord's Lender, insurance advisor, or counsel, the
amount of insurance described in this paragraph 13 is not adequate, Tenant
agrees to increase said coverage to such reasonable amount as Landlord's Lender,
insurance advisor, or counsel shall deem adequate.

14. TENANT'S PERSONAL PROPERTY INSURANCE AND WORKMAN'S COMPENSATION INSURANCE.

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

        Tenant shall also maintain a policy or policies of workman's
compensation insurance and any other employee benefit insurance sufficient to
comply with all laws.

15. PROPERTY INSURANCE.

        Landlord shall purchase and keep in force and as Additional Rent and in
accordance with Paragraph 4D of this Lease, Tenant shall pay to Landlord (or
Landlord's agent if so directed by Landlord) Tenant's proportionate share
(calculated on a square footage or other equitable basis as calculated by
Landlord) of the deductibles on insurance claims and the cost of policy or
policies of insurance covering loss or damage to the Premises and Complex in the
amount of the

                                      11.
<PAGE>   49

full replacement value thereof, providing protection against those perils
included within the classification of "all risks" insurance and flood and/or
earthquake insurance, if available, plus a policy of rental income insurance in
the amount of one hundred (100%) percent of twelve (12) months Basic Rent, plus
sums paid as Additional Rent and any deductibles related thereto. If such
insurance cost is increased due to Tenant's use of the Premises or the Complex,
Tenant agrees to pay to Landlord the full cost of such increase. Tenant shall
have no interest in nor any right to the proceeds of any insurance procured by
Landlord for the Complex.

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

16. INDEMNIFICATION.

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

17. COMPLIANCE.

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

                                      12.
<PAGE>   50

any insurance organization or company, necessary for the maintenance of
reasonable fire and public liability insurance covering the Premises.

18. LIENS.

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

19. ASSIGNMENT AND SUBLETTING.

        Tenant shall not assign, transfer, or hypothecate the leasehold estate
under this Lease, or any interest therein, and shall not sublet the Premises, or
any part thereof, or any right or privilege appurtenant thereto, or suffer any
other person or entity to occupy or use the Premises, or any portion thereof,
without, in each case, the prior written consent of Landlord which consent will
not be unreasonably withheld. As a condition for granting this consent to any
assignment, transfer, or subletting, Landlord shall require Tenant to pay to
Landlord, as Additional Rent, seventy-five (75%) percent of all rents and/or
additional consideration due Tenant from its assignees, transferees, or
subtenants in excess of the Rent payable by Tenant to Landlord hereunder for the
assigned, transferred and/or subleased space ("Excess Rent"); provided, however,
that before sharing such Excess Rent, Tenant shall first be entitled to recover
from such Excess Rent the amount of any reasonable leasing commissions related
to said transaction paid by Tenant to third party brokers not affiliated with
Tenant. Tenant shall, by thirty (30) days written notice, advise Landlord of its
intent to assign or transfer Tenant's interest in the Lease or sublet the
Premises or any portion thereof for any part of the term hereof. Within thirty
(30) days after receipt of said written notice, Landlord may, in its sole
discretion, elect to terminate this Lease as to the portion of the Premises
described in Tenant's notice on the date specified in Tenant's notice by giving
written notice of such election to terminate. If no such notice to terminate is
given to Tenant within said thirty (30) day period, Tenant may proceed to locate
an acceptable sublease, assignee, or other transferee for presentment to
Landlord for Landlord's approval, all in accordance with the terms, covenants,
and conditions of this paragraph 19. If Tenant intends to sublet the entire
Premises and Landlord elects to terminate this Lease, this Lease shall be
terminated on the date specified in Tenant's notice. If, however, this Lease
shall be terminated on the date specified in Tenant's notice. If, however, this
Lease shall terminate pursuant to the foregoing with respect to less than all
the Premises, the rent, as defined and reserved hereinabove shall be adjusted on
a pro rata basis to the number of square feet retained by Tenant, and this Lease
as so amended shall continue in full force and effect. In the event Tenant is
allowed to assign, transfer or sublet the whole or any part of the Premises,
with the prior written consent of Landlord, no assignee, transferee or subtenant
shall assign or transfer this Lease, either in whole or in art, or sublet the
whole or any part of the Premises, without also having obtained the prior
written consent of Landlord. A consent of Landlord to one assignment,

                                      13.
<PAGE>   51

transfer, hypothecation, subletting, occupation or use by any other person shall
not release Tenant from any of Tenant's obligations hereunder or be deemed to be
a consent to any subsequent similar or dissimilar assignment, transfer,
hypothecation, subletting, occupation or use by any other person. Any such
assignment, transfer, hypothecation, subletting, occupation or use without such
consent shall be void and shall constitute a breach of this Lease by Tenant and
shall, at the option of Landlord exercised by written notice to Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor shall
any interest therein, be assignable for any purpose by operation of law without
the written consent of Landlord. As a condition to its consent, Landlord shall
require Tenant to pay all expenses in connection with the assignment, and
Landlord shall require Tenant's assignee or transferee (or other assignees or
transferees) to assume in writing all of the obligations under this Lease and
for Tenant to remain liable to Landlord under the Lease. Notwithstanding the
above, in no event will Landlord consent to sub-sublease.

20. SUBORDINATION AND MORTGAGES.

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

21. ENTRY BY LANDLORD.

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

                                      14.
<PAGE>   52

22. BANKRUPTCY AND DEFAULT.

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

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

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

        The failure to perform or honor any covenant, condition or
representation made under this Lease shall constitute a default hereunder by
Tenant upon expiration of the appropriate grace period hereinafter provided.
Tenant shall have a period of five (5) days from the date of written notice from
Landlord within which to cure any default in the payment of rental or adjustment
thereto. Tenant shall have a period of thirty (30) days from the date of written
notice from Landlord within which to cur any other default under this Lease;
provided, however, that if the nature of Tenant's failure is such that more than
thirty (30) days is reasonably required to cure the same, Tenant shall not be in
default so long as Tenant commences performance within such thirty (30) day
period and thereafter prosecutes the same to completion. Upon an uncured default
of this Lease by Tenant, Landlord shall have the following rights and remedies
in addition to any other rights or remedies available to Landlord at law or in
equity:

             (a) The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of

                                      15.
<PAGE>   53

rental loss for the same period that Tenant proves could be reasonably avoided,
as computed pursuant to subsection (b) of said Section 1951.2. Any proof by
Tenant under subparagraphs (2) and (3) of Section 1951.2 of the California Civil
Code of the amount of rental loss that could be reasonably avoided shall be made
in the following manner: Landlord and Tenant shall each select a licensed real
estate broker in the business of renting property of the same type and use as
the Premises and in the same geographic vicinity. Such two real estate brokers
shall select a third licensed real estate broker, and the three licensed real
estate brokers so selected shall determine the amount of the rental loss that
could be reasonably avoided from the balance of the term of this Lease after the
time of award. The decision of the majority of said licensed real estate brokers
shall be final and binding upon the parties hereto.

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

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

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

                                      16.
<PAGE>   54

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

23. ABANDONMENT.

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

24. DESTRUCTION.

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

        A. Rebuild or restore the Premises to their condition prior to the
damage or destruction, or

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

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

                                      17.
<PAGE>   55

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

        In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33 1/3% of the replacement
cost thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. Notwithstanding anything to the contrary herein, Landlord may
terminate this Lease in the event of an uninsured event or if insurance proceeds
are insufficient to cover one hundred percent of the rebuilding costs net of the
deductible.

25. EMINENT DOMAIN.

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

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

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

        If a portion of the Premises be taken by condemnation or conveyance in
lieu thereof and neither Landlord nor Tenant shall terminate this Lease as
provided herein, this Lease shall continue in full force and effect as to the
part of the Premises not so taken or conveyed, and the

                                      18.
<PAGE>   56

rent herein shall be apportioned as of the date of such taking or conveyance so
that thereafter the rent to be paid by Tenant shall be in the ratio that the
area of the portion of the Premises not so taken or conveyed bears to the total
area of the Premises prior to such taking.

26. SALE OR CONVEYANCE BY LANDLORD.

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

27. ATTORNMENT TO LENDER OR THIRD PARTY.

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

28. HOLDING OVER.

        Any holding over by Tenant after expiration or other termination of the
term of this Lease with the written consent of Landlord delivered to Tenant
shall not constitute a renewal or extension of the Lease or give Tenant any
rights in or to the leased Premises except as expressly provided in this Lease.
Any holding over after the expiration or other termination of the term of this
Lease, with the consent of Landlord, shall be construed to be a tenancy from
month to month, on the same terms and conditions herein specified insofar as
applicable except that the monthly Basic Rent shall be increased to an amount
equal to one hundred fifty (150%) percent of the monthly Basic Rent required
during the last month of the Lease term.

29. CERTIFICATE OF ESTOPPEL.

        Tenant shall at any time upon not less than ten (10) days' prior written
notice to Landlord execute, acknowledge and deliver to Landlord a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults, if any, are
claimed. Any such statement may be conclusively relied upon by any

                                      19.
<PAGE>   57

prospective purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon Tenant that
this Lease is in full force and effect, without modification except as may be
represented by Landlord; that there are no uncured defaults in Landlord's
performance, and that not more than one month's rent has been paid in advance.

30. CONSTRUCTION CHANGES.

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

31. RIGHT OF LANDLORD TO PERFORM.

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

32. ATTORNEYS' FEES.

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

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

                                      20.
<PAGE>   58

33. WAIVER.

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

34. NOTICES.

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

35. EXAMINATION OF LEASE.

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

36. DEFAULT BY LANDLORD.

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

37. CORPORATE AUTHORITY.

        If Tenant is a corporation, (or a partnership) each individual executing
this Lease on behalf of said corporation (or partnership) represents and
warrants that he is duly authorized to execute and deliver this Lease on behalf
of said corporation (or partnership) in accordance with the by-laws of said
corporation (or partnership in accordance with the partnership agreement)

                                      21.
<PAGE>   59

and that this Lease is binding upon said corporation (or partnership) in
accordance with its terms. If Tenant is a corporation, Tenant shall, within
thirty (30) days after execution of this Lease, deliver to Landlord a certified
copy of the resolution of the Board of Directors of said corporation authorizing
or ratifying the execution of this Lease.

38. LIMITATION OF LIABILITY.

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

        A. the sole and exclusive remedy shall be against Landlord's interest in
the Premises leased herein;

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

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

        D. no partner of Landlord shall be required to answer or otherwise plead
to any service of process;

        E. no judgment will be taken against any partner of Landlord;

        F. any judgment taken against any partner of Landlord may be vacated and
set aside at any time without hearing;

        G. no writ of execution will ever be levied against the assets of any
partner of Landlord;

        H. these covenants and agreements are enforceable both by Landlord and
also by any partner of Landlord.

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

39. MISCELLANEOUS AND GENERAL PROVISIONS.

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

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

                                      22.
<PAGE>   60

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

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

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

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

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

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

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

        I. Paragraphs 43 through 59 are added hereto and are included as a part
of this lease.

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

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

                                      23.
<PAGE>   61

40. BROKERS.

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

41. SIGNS.

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

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

        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 Premises.

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

LANDLORD:                              TENANT:

WESTPORT JOINT VENTURE                 IPASS, INC.
a California joint venture             a California corporation

John Arrillaga Survivor's Trust

By:  /s/ JOHN ARRILLAGA                By:  /s/ MICHAEL H. MANSOURI
   --------------------------------       --------------------------------------
        John Arrillaga, Trust

Date:  November 29, 1999               Title: Chairman & Chief Executive Officer
     ------------------------------          -----------------------------------

PEERY PRIVATE INVESTMENT COMPANY-WP,
L.P.
a California limited partnership       Print or Type Name:  Michael H. Mansouri
                                                          ----------------------
By:  /s/ RICHARD T. PEERY              Date:  November 23, 1999
-----------------------------------         ------------------------------------
Richard T. Peery, Trustee of the

                                      24.
<PAGE>   62

        Richard T. Peery Separate Property
        Trust dated 7/20/77, as its General
        Partner

Date:  November 24, 1999
     --------------------------------------

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

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

Date:  November 24, 1999
     --------------------------------------

Paragraphs 43 through 59 to Lease Agreement dated October 26, 1999, By and
Between Westport Joint Venture, a California joint venture, as Landlord, and
iPass, Inc., a California corporation, as Tenant for 48,384+ Square Feet of
Space Located at 3600 Bridge Parkway, Redwood City, California.

42. BASIC RENT.

        In accordance with Paragraph 4A herein, the total aggregate sum of
TWENTY FIVE MILLION SEVEN HUNDRED EIGHTY FIVE THOUSAND SEVEN HUNDRED FIFTY TWO
AND 28/100 DOLLARS ($25,785,752.28), shall be payable as follows:

        On February 15, 2000, the sum of NINETY THREE THOUSAND EIGHT HUNDRED
FORTY EIGHT AND 28/100 DOLLARS ($93,848.28) shall be due, representing the
prorated Basic Rent for the period of February 15, 2000 through February 29,
2000.

        On March 1, 2000, the sum of ONE HUNDRED EIGHTY ONE THOUSAND FOUR
HUNDRED FORTY AND NO/100 DOLLARS ($181,440.00) shall be due, and a like sum due
on the first day of each month thereafter, through and including February 1,
2001.

        On March 1, 2001, the sum of ONE HUNDRED EIGHTY EIGHT THOUSAND SIX
HUNDRED NINETY SEVEN AND 60/100 DOLLARS ($188,697.60) shall be due, and a like
sum due on the first day of each month thereafter, through and including
February 1, 2002.

        On March 1, 2002, the sum of ONE HUNDRED NINETY FIVE THOUSAND NINE
HUNDRED FIFTY FIVE AND 20/100 DOLLARS ($195,955.20) shall be due, and a like sum
due on the first day of each month thereafter, through and including February 1,
2003.

                                      25.
<PAGE>   63

        On March 1, 2003, the sum of TWO HUNDRED THREE THOUSAND TWO HUNDRED
TWELVE AND 80/100 DOLLARS ($203,212.80) shall be due, and a like sum due on the
first day of each month thereafter, through and including February 1, 2004.

        On March 1, 2004, the sum of TWO HUNDRED TEN THOUSAND FOUR HUNDRED
SEVENTY AND 40/100 DOLLARS ($210,470.40) shall be due, and a like sum due on the
first day of each month thereafter, through and including February 1, 2005.

        On March 1, 2005, the sum of TWO HUNDRED SEVENTEEN THOUSAND SEVEN
HUNDRED TWENTY EIGHT AND NO/100 DOLLARS ($217,728.00) shall be due, and a like
sum due on the first day of each month thereafter, through and including
February 1, 2006.

        On March 1, 2006, the sum of TWO HUNDRED TWENTY FOUR THOUSAND NINE
HUNDRED EIGHT FIVE AND 60/ 100 DOLLARS ($224,985.60) shall be due, and a like
sum due on the first day of each month thereafter, through and including
February 1, 2007.

        On March 1, 2007, the sum of TWO HUNDRED THIRTY TWO THOUSAND TWO HUNDRED
FORTY THREE AND 20/100 DOLLARS ($232,243.20) shall be due, and a like sum due on
the first day of each month thereafter, through and including February 1, 2008.

        On March 1, 2008, the sum of TWO HUNDRED THIRTY NINE THOUSAND FIVE
HUNDRED AND 80/100 DOLLARS ($239,500.80) shall be due, and a like sum due on the
first day of each month thereafter, through and including February 1, 2009.

        On March 1, 2009, the sum of TWO HUNDRED FORTY SIX THOUSAND SEVEN
HUNDRED FIFTY EIGHT AND 40/100 DOLLARS ($246,758.40) shall be due, and a like
sum due on the first day of each month thereafter, through and including
February 1, 2010; or until the entire aggregate sum of TWENTY FIVE MILLION SEVEN
HUNDRED EIGHTY FIVE THOUSAND SEVEN HUNDRED FIFTY TWO AND 28/100 DOLLARS
($25,785.752.28) has been paid.

43. "AS-IS" BASIS.

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

                                      26.
<PAGE>   64

44. TENANT INTERIOR IMPROVEMENTS.

        Landlord shall, at its sole cost and expense, construct certain interior
improvements (the "Tenant Improvements") in the Premises, as shown on Exhibit B
to be attached to the Lease and Landlord agrees to deliver the Premises leased
hereunder to Tenant, at Landlord's expense, in the configuration shown in Red on
Exhibit B to be attached hereto. Notwithstanding anything to the contrary above,
it is specifically understood and agreed that Landlord shall be required to
furnish only a standard air conditioning/heating system, normal electrical
outlets, standard fire sprinkler systems, standard bathroom, standard lobby, 2'
x 4' suspended acoustical tile drop ceiling throughout the entire space leased,
carpeting and/or vinyl-coated floor tile, and standard office partitions and
doors, as shown on Exhibit B to be attached hereto; provided however, that any
special HVAC and/or plumbing and/or electrical requirements over and above that
normally supplied by Landlord shall be 100 percent the responsibility of and be
paid for 100 percent by Tenant.

        It is further agreed that Tenant shall furnish Landlord with Tenant's
required specifications and a preliminary space plan showing the layout of the
improvements to be constructed in the Premises by November 15, 1999. At that
time, Landlord shall have the final interior plans drawn by Landlord's
architect. all of the plans and specifications shall be Exhibit B to this Lease.
If said preliminary plans and specifications for any items affecting the
interior improvements to be constructed in the building are not received by
Landlord for Landlord's approval (which approval shall not be unreasonably
withheld) by November 15, 1999, then it is agreed that, notwithstanding anything
to the contrary in this Lease, this Lease and Tenant's obligation to perform all
terms, covenants and conditions of this Lease shall commence February 15, 2000,
regardless of whether or not the building and interior improvements are
completed on February 15, 2000, and Landlord shall complete construction of the
interior improvements as soon as reasonably possible thereafter.

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

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

        Tenant shall have thirty (30) days after the Commencement Date to
provide Landlord with a "punch list" pertaining to Landlord's work with respect
to Tenant's interior improvements. As soon as reasonably possible thereafter,
Landlord, or one of Landlord's

                                      27.
<PAGE>   65

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

45. CONSENT.

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

46. CHOICE OF LAW: SEVERABILITY.

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

47. AUTHORITY TO EXECUTE.

        The parties executing this Lease Agreement hereby warrant and represent
that they are properly authorized to execute this Lease Agreement and bind the
parties on behalf of whom they execute this Lease Agreement and to all of the
terms, covenants and conditions of this Lease Agreement as they relate to the
respective parties hereto.

48. ASSESSMENT CREDITS.

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

                                      28.
<PAGE>   66

assessment amount shown on the property tax bill from $1,000.00 to $800.00,
Tenant shall, upon receipt of notice from Landlord, pay to Landlord said $200.00
credit as Additional Rent.

49. ASSIGNMENT AND SUBLETTING (CONTINUED).

        A. In addition to and notwithstanding anything to the contrary in
Paragraph 19 of this Lease and provided Tenant is not in default of this Lease,
Landlord hereby agrees to consent to: (1) Tenant's assigning or subletting said
Lease to: (i) any parent or subsidiary corporation, or corporation with which
Tenant merges or consolidates provided that the net worth of said parent or
subsidiary corporation, or said corporation has a net worth equal to or greater
than the net worth of Tenant (a) at the time of Lease execution or (b) at the
time of such assignment, merger, or consolidation (whichever is greater); or
(ii) any third party or entity to whom Tenant sells all or substantially all of
its assets; provided, that the net worth or the resulting or acquiring
corporation has a net worth after the merger, consolidation or acquisition equal
to or greater than the net worth of Tenant (a) at the time of Lease execution or
(b) at the time of such merger, consolidation or acquisition, whichever is
greater (collectively "Permitted Transfers"); (2) waive its right to terminate
the Lease due to a Permitted Transfer; and (3) waive any rights to Excess Rent
related to a Permitted Transfer. No such assignment or subletting will release
the Tenant from its liability and responsibility under this Lease to the extent
Tenant continues in existence following such transaction. Notwithstanding the
above, Tenant shall be required to (a) give Landlord written notice prior to
such assignment or subletting to any party as described in (i) and (ii) above,
(b) execute Landlord's consent document prepared by Landlord reflecting the
assignment or subletting and (c) pay Landlord's costs for processing said
Consent prior to the effective date of said assignment or sublease.

        B. Landlord hereby acknowledges that, during the first three years of
the Lease Term, Tenant intends to sublease all or a portion of the Leased
Premises. Provided Tenant is not in default of this Lease and the prospective
subtenant(s) use complies with the requirements of the "use" as stated in
Paragraph 1, Landlord agrees that it will not exercise its right, as provided
for in Paragraph 19, to terminate the Lease as a result of Tenant's initial
request(s) to sublease all or a portion of the Premises for a sublease term(s)
not to extend beyond February 14, 2003. In each such event, Landlord agrees to
issue Landlord's standard consent to said sublease, subject to (a) Tenant
submitting to Landlord a copy of said sublease(s) (prior to said sublease
commencing), (b) Landlord, Tenant and Subtenant(s) thereafter executing
Landlord's standard Consent to Sublease agreement and (c) Landlord receiving
payment from Tenant of Landlord's costs for processing said Sublease Consent(s)
prior to said sublease commencing.

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

                                      29.
<PAGE>   67

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

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

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

               Initials: _________           Initials:_________"
                         Subtenant                     Tenant

50. BANKRUPTCY AND DEFAULT.

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

                                      30.
<PAGE>   68

51. ABANDONMENT.

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

52. HAZARDOUS MATERIALS.

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

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

        B. Tenant shall obtain Landlord's written consent, which may be withheld
in Landlord's discretion, prior to the occurrence of any Tenant's Hazardous
Materials Activities (defined below); provided, however, that Landlord's consent
shall not be required for normal use in compliance with applicable Environmental
Laws of customary household and office supplies (Tenant shall first provide
Landlord with a list of said materials use), such as mild cleaners, lubricants
and copier toner. as used herein, the term "Tenant's Hazardous Materials
Activities" shall mean any and all use, handling, generation, storage, disposal,
treatment, transportation, release, discharge, or emission of any Hazardous
Materials on, in, beneath, to, from, at or about the Property, in connection
with Tenant's use of the Property, or by Tenant or by any of Tenant's agents,
employees, contractors, vendors, invitees, visitors or its future subtenants or
assignees. Tenant agrees that any and all Tenant's Hazardous Materials
Activities shall be conducted in strict, full compliance with applicable
Environmental Laws at Tenant's expense, and shall not

                                      31.
<PAGE>   69

result in any contamination of the Property or the environment. Tenant agrees to
provide Landlord with prompt written notice of any spill or release of Hazardous
Materials at the Property during the term of the Lease of which Tenant becomes
aware, and further agrees to provide Landlord with prompt written notice of any
violation of Environmental Laws in connection with Tenant's Hazardous Materials
Activities of which Tenant becomes aware. If Tenant's Hazardous Materials
Activities involve Hazardous Materials other than normal use of customary
household and office supplies, Tenant also agrees at Tenant's expense: (i) to
install such Hazardous Materials monitoring, storage and containment devices as
Landlord reasonably deems necessary (Landlord shall have no obligation to
evaluate the need for any such installation or to require any such
installation); (ii) provide Landlord with a written inventory of such Hazardous
Materials, including an update of same each year upon the anniversary date of
the Commencement Date of the Lease ("Anniversary Date"); and (iii) on each
anniversary Date, to retain a qualified environmental consultant, acceptable to
Landlord, to evaluate whether Tenant is in compliance with all applicable
Environmental Laws with respect to Tenant's Hazardous Materials Activities.
Tenant, at its expense, shall submit to Landlord a report from such
environmental consultant which discusses the environmental consultant's findings
within two (2) months of each Anniversary Date. Tenant, at its expense, shall
promptly undertake and complete any and all steps necessary, and in full
compliance with applicable Environmental Laws, to fully correct any and all
problems or deficiencies in connection with Tenant's Hazardous Materials
Activities identified by the environmental consultant, and promptly provide
Landlord with documentation of all such corrections.

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

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

                                      32.
<PAGE>   70

        E. Tenant shall indemnify, defend (with legal counsel acceptable to
Landlord, whose consent shall not unreasonably be withheld) and hold harmless
Landlord, its employees, assigns, successors, successors-in-interest, agents and
representatives from and against any and all claims (including but not limited
to third party claims from a private party or a government authority),
liabilities, obligations, losses, causes of action, demands, governmental
proceedings or directors, fines, penalties, expenses, costs (including but not
limited to reasonable attorneys', consultants' and other experts' fees and
costs), and damages, which arise from or relate to: (i) Tenant's Hazardous
Materials Activities; (ii) any Hazardous Materials contamination caused by
Tenant prior to the Commencement Date of the Lease; or (iii) the breach of any
obligation of Tenant under this Paragraph 52 (collectively, "Tenant's
Environmental Indemnification"). Tenant's Environmental Indemnification shall
include but is not limited to the obligation to promptly and fully reimburse
Landlord for losses in or reductions to rental income, and diminution in fair
market value of the Property. Tenant's Environmental Indemnification shall
further include but is not limited to the obligation to diligently and properly
implement to completion, at Tenant's expense, any and all environmental
investigation, removal, remediation, monitoring, reporting, closure activities,
or other environmental response action (collectively "Response Actions"). Tenant
shall promptly provide Landlord with copies of any claims, notices, work plans,
data and reports prepared, received or submitted in connection with any Response
Actions.

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

               Initials: _________           Initials:_________
                          Tenant                      Landlord

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

                                      33.
<PAGE>   71

that Landlord's Environmental Indemnity shall be subject to the following
limitations and conditions:

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

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

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

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

             (e) Tenant shall be responsible at its expense for repairing any
Environmental Equipment damaged due to the negligence of Tenant or Tenant's
agents, employees, contractors, vendors, invitees, visitors, future subtenants
or assignees (such terms "invitees" and "visitors" as used in this Paragraph 52
shall not include Landlord or any other party named as a discharger under the
Order as may be amended, or any of their respective agents, consultants or
contractors, or any Government Representatives).

It is agreed that the Tenant's responsibilities related to Hazardous Materials
will survive the expiration or termination of this Lease and that Landlord may
obtain specific performance of Tenant's responsibilities under this Paragraph
52.

53. LEASE TERMS CO-TERMINOUS.

        It is acknowledged that (i) concurrently with the execution of this
Lease, Landlord and Tenant are also executing a second Lease Agreement dated
October 26, 1999 (hereinafter referred to as the "Building 20 Lease") affecting
adjacent property located at 3800 Bridge Parkway, Redwood city and (ii) it is
the intention of the parties that the term of this Lease be co-terminous with
the term of the Building 20 Lease such that the terms of both leases expire on
the same date; provided, however, the termination of this Lease resulting from
the terms and conditions stated under Paragraph 19 "Bankruptcy and Default"
(subject to landlord's option as

                                      34.
<PAGE>   72

stated in the respective leases "Cross Default" Paragraph) or paragraph 21
"Destruction" or Paragraph 22 "Eminent Domain" shall not result in a termination
of the Building 20 Lease, unless Landlord elects, at its sole and absolute
discretion, to terminate both of the leases.

54. CROSS DEFAULT.

        As a material part of the consideration for the execution of this Lease
by Landlord, it is agreed between landlord and Tenant that a default under this
Lease, or a default under said Building 20 Lease may, at the option of Landlord,
be considered a default under both leases, in which event Landlord shall be
entitled (but in no event required) to apply all rights and remedies of Landlord
under the terms of one lease to both leases including, but not limited to, the
right to terminate one or both of said leases by reason of a default under said
Building 20 Lease or hereunder.

55. ADDITIONAL RENT CONTINUED.

        The following items shall be excluded from "Additional Rent".

        A. Leasing commissions, attorneys' fees, costs, disbursements, and other
expenses incurred in connection with negotiations with other tenants, or
disputes between Landlord and other third party not related to Tenant
(hereinafter referred to as "Third Party"), or in connection with marketing,
leasing, renovating, or improving space for other current or prospective tenants
or other current or prospective occupants of the Complex; notwithstanding
anything to the contrary herein, any costs and expenses Landlord is entitled to
be reimbursed for as stated under Paragraph 22 (Bankruptcy and Default") are not
excluded Additional Rent items as reflected in this Paragraph 55.

        B. The cost of any service sold to any other Third Party or other
occupant whose leased premises are not part of the Premises leased herein and
for which Landlord is entitled to be reimbursed as an additional charge or
rental over and above the basic rent and additional rent payable under the lease
agreement with said other tenant.

        C. Any costs, fines, or penalties incurred due to violations by Landlord
of any governmental rule or authority, provided Tenant is not responsible under
the Lease for such costs, fines and/or penalties, and/or provided Tenant's
actions or inactions did not cause, in whole or in part, such costs, fines
and/or penalties.

        D. Wages, salaries, or other compensation paid to executive employees
above the grade of Property Manager.

        E. Repairs or other work occasioned by fire, windstorm, or other insured
peril, to the extent that Landlord shall receive proceeds of such insurance or
would have received such proceeds had Landlord maintained the insurance coverage
required under this Lease providing said insurance coverage was available and
Tenant paid its share of the premium as required under the Lease and any
insurance deductible(s) which Tenant is responsible for paying and provided
Tenant is not responsible for the damage to the Premises.

                                      35.
<PAGE>   73

        F. Except as otherwise noted in this Lease, any mortgage debt, or ground
rents or any other amounts payable under any ground lease for the Property.

        G. Subject to the terms of paragraph 52G above, Landlord's costs related
to Lease Paragraphs 52F and 52G.

56. SECURITY DEPOSIT IN THE FORM OF AN IRREVOCABLE STANDBY LETTER OF CREDIT.

        The cash Security Deposit provided for in Paragraph 4G of the Lease
shall be deposited by Tenant with Landlord upon execution of this Lease;
however, Tenant shall have the right, at Tenant's sole election, to replace
one-half ($246,758.40) of the cash Security Deposit held by Landlord with an
irrevocable letter of credit, drawn upon an institutional lender reasonably
acceptable and accessible to Landlord in form and content reasonably
satisfactory to landlord and for a term equal to the Term of this Lease plus a
period of sixty (60) days, and said irrevocable letter of credit shall not be
subject to annual renewal. Said financial institution must agree that the
presentment for demand may be made in San Jose, Santa Clara or Palo alto,
California. One half of the cash Security Deposit ($246,758.40) held by Landlord
shall be refunded to Tenant upon Landlord's receipt of an acceptable irrevocable
letter of credit. If Tenant defaults with respect to any provisions of this
Lease, including but not limited to provisions relating to the payment of Rent,
landlord may (but shall not be required to) draw down on the irrevocable letter
of credit for payment of any sum which Landlord may spend or become obligated to
spend by reason of Tenant's default, or to compensate Landlord for any loss or
damage which Landlord may suffer by reason of Tenant's default. Landlord and
Tenant acknowledge that such irrevocable letter of credit will be treated as if
it were a cash Security Deposit, and such irrevocable letter of credit may be
drawn down upon by Landlord upon demand and presentation of evidence of the
identity of landlord to the issuing bank, in the event that Tenant defaults with
respect to any provision of this Lease and such default is not cured within any
applicable cure period. Landlord acknowledges that it is not entitled to draw
down such irrevocable letter of credit unless Landlord would have been entitled
to draw upon a cash Security Deposit pursuant to the terms of Paragraph 4G of
the Lease. Concurrently with the delivery of the required information to the
issuing bank, Landlord shall deliver to Tenant written evidence of the default
upon which the draw down was based, together with evidence that Landlord has
provided to Tenant the written notice of such default which was required under
the applicable provision of the Lease, and evidence of the failure of Tenant to
cure such default within the applicable grace period following receipt of such
notice of default. If any portion of the irrevocable letter of credit is used or
applied pursuant hereto, Tenant shall, within ten (10) days after receipt of a
written demand therefor from Landlord, restore and replace the value of such
security by either (i) depositing cash with Landlord in the amount equal to the
sum drawn down under the irrevocable letter of credit, or (ii) increasing the
irrevocable letter of credit to its value immediately prior to such application.
Tenant's failure to replace the value of the security as provided in the
preceding sentence shall be a material breach of its obligation under this
lease.

57. ASSIGNMENT OF WARRANTIES.

        During the Term of the Lease, Landlord hereby assigns to Tenant all of
Landlord's Contractors' warranties and shall cooperate with Tenant in enforcing
any of such warranties

                                      36.
<PAGE>   74

except that Landlord shall not be required to pay any legal fees or incur any
expenses in this regard.

58. BROKERS.

        Landlord and Tenant each represent to the other that they have dealt
with no real estate brokers, agents, or finders in connection with this
transaction, except as follows: Cornish & Carey Oncor International ("C&C"),
whose commission shall be paid by Landlord in accordance with landlord's
standard commission schedule which commission for this Lease is a total of
$100,000.00. Each party agrees to defend, protect, indemnify and hold the other
party harmless from and against all claims for brokerage commissions, finder's
fees, and other compensation made by any broker, agent, or finder as consequence
of the indemnifying party's actions or dealings with such broker, agent or
finder. The parties hereto acknowledge that landlord will not pay an additional
brokerage fee to C&C or any broker in the event the term of this Lease is
extended for any reason whatsoever.

                                      37.

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