Document:

<PAGE>   1

                                                                   EXHIBIT 10.14

                         STANDARD FORM OF OFFICE LEASE
                    The Real Estate Board of New York, Inc.

Agreement of Lease, made as of this 15th day of September 1999, between TRUSTEES
OF THE MASONIC HALL AND ASYLUM FUND, having an address at 71 West 23rd Street,
New York, New York 10010 party of the first part, hereinafter referred to as
OWNER, and ORGANIC ONLINE, INC., having an address at 71 West 23rd Street, New
York, New York 10010 from and after the Commencement Date, party of the second
part, hereinafter referred to as TENANT,

Witnesseth; Owner hereby leases to Tenant and Tenant hereby hires from Owner
part Seventh (7th) floor as shown on Exhibit A annexed hereto (the "demised
premises") in the building known as 71 West 23rd Street (the "Building") in the
Borough of Manhattan, City of New York, for the term of one (1) year (or until
such term shall sooner cease and expire as hereinafter provided) to commence on
the Commencement Date (hereinafter defined), and to end on the Expiration Date
(hereinafter defined) both dates inclusive, at an annual rental rate as set
forth in Article 37B hereof which Tenant agrees to pay in lawful money of the
United States which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, in equal monthly installments in
advance on the first day of each month during said term, at the office of Owner
or such other place as Owner may designate, without any set off or deduction
whatsoever, except that Tenant shall pay the first monthly installment(s) on the
execution hereof (unless this lease be a renewal), and except that Tenant shall
pay four (4) additional months' rent on the Commencement Date which shall be
advance rent for the ninth, tenth, eleventh and twelfth months of this lease.

     In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.

     The parties hereto, for themselves, their heirs, disributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:

Rent:

1.   Tenant shall pay the rent as above and as hereinafter provided.

Occupancy:

2.   Tenant shall use and occupy demised premises for ______________ and for no
other purpose.

Tenant Alterations:

3.   Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written consent. Subject to the prior written consent of
Owner, and to the provisions of this article, Tenant, at Tenant's expense, may
make alterations, installations, additions or improvements which are
non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved in each instance by Owner.

     3.1   Tenant shall, before making any alterations, additions, installations
or improvements, at its expense, obtain all permits, approvals and certificates
required by any governmental or quasi-governmental bodies and (upon completion)
certificates of final approval thereof and shall deliver promptly duplicates of
all such permits, approvals and certificates to Owner and Tenant agrees to carry
and will cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanic's lien

     3.2  is filed against the demised premises, or the building of which the
same forms a part, for work claimed to have been done for, or materials
furnished to, Tenant, whether or not done pursuant to this article, the same
shall be discharged by Tenant within thirty days thereafter at Tenant's expense,
by payment or filing the bond required by law.

     3.3  All fixtures and all paneling, partitions, railings and like
installations, installed in the premises at any time, either by Tenant or by
Owner on Tenant's behalf, shall, upon installation, become the property of Owner
and shall remain upon and be surrendered with the demised premises unless Owner,
by notice to Tenant no later than twenty days prior to the date fixed as the
termination of this lease, elects to relinquish Owner's right thereto and to
have them removed by Tenant, in which event the same shall be removed from the
premises by Tenant prior to the expiration of the lease, at Tenant's expense.
Nothing in this Article shall be construed to give Owner title to or to prevent
Tenant's removal of trade fixtures, moveable office furniture and equipment, but
upon removal of any such from the premises or upon removal of other
installations as may be required by Owner, Tenant shall immediately and at its
expense, repair and restore the premises to the condition existing prior to
installation and repair any damage to the demised premises or the building due
to such removal. All property permitted or required to be removed, by Tenant at
the end of the term remaining in the premises after Tenant's removal shall be
deemed abandoned and may, at the election of Owner, either be retained as
Owner's property or may be removed from the premises by Owner, at Tenant's
expense.

Maintenance and Repairs:

4.   Tenant shall, throughout the term of this lease, take good care of the
demised premises and the fixtures and appurtenances therein. Tenant shall be
responsible for all damage or injury to the demised premises or any other part
of the building and the systems and equipment thereof, whether requiring
structural or nonstructural repairs caused by or resulting from carelessness,
omission, neglect or improper conduct of Tenant, Tenant's subtenants, agents,
employees, invitees or licensees, or which arise out of any work, labor, service
or equipment done for or supplied to Tenant or any subtenant or arising out of
the installation, use or operation of the property or equipment of Tenant or any
subtenant. Tenant shall also repair all damage to the building and the demised
premises caused by the moving of Tenant's fixtures, furniture and equipment.
Tenant shall promptly make, at Tenant's expense, all repairs in and to the
demised premises for which Tenant is responsible, using only the contractor for
the trade or trades in question, selected from a list of at least two
contractors per trade submitted by Owner. Any other repairs in or to the
building or the facilities and systems thereof for which Tenant is responsible
shall be performed by owner at the Tenant's expense. Owner shall maintain in
good working order and repair the exterior and the structural portions of the
building, including the structural portions of

     4.1  demised premises, and the public portions of the building interior and

     4.2  (to the extent such systems presently exist) serving the demised
premises. Tenant agrees to give prompt notice of any defective condition in the
premises for which Owner may be responsible hereunder. There shall be no
allowance to Tenant for diminution of rental value and no liability on the part
of Owner by reason of inconvenience, annoyance or injury to business arising
from Owner or others making repairs, alterations, additions or improvements in
or to any portion of the building or the demised premises or in and to the
fixtures, appurtenances or equipment thereof. It is specifically agreed that
Tenant shall not be entitled to any setoff or reduction of rent by reason of any
failure of Owner to comply with the covenants of this or any other article of
this Lease. Tenant agrees that Tenant's sole remedy at law in such instance will
be by way of an action for damages for breach of contract. The provisions of
this Article 4 shall not apply in the case of fire or other casualty which are
dealt with in Article 9 hereof.

Window Cleaning:

5.   Tenant will not clean nor require, permit, suffer or allow any window in
the demised premises to be cleaned from the outside in violation of Section 202
of the Labor Law or any other applicable law or of the Rules of the Board of
Standards and Appeals, or of any other Board or body having or asserting
jurisdiction.

Requirements of Law, Fire Insurance, Floor Loads:

6.   Prior to the commencement of the lease term, if Tenant is then in
possession, and at all times thereafter, Tenant, at Tenant's sole cost and
expense, shall promptly comply with all present and future laws orders and
regulations of all state, federal, municipal and local governments, departments,
commissions and boards and any direction of any public officer pursuant to law,
and all orders, rules and regulations of the New York Board of Fire
Underwriters, Insurance Services Office, or any similar body

     6.1  which shall impose any violation, order or duty upon Owner or Tenant
with respect to the demised premises, whether or not arising out of Tenant's use
or manner of use thereof, (including Tenant's permitted use) or, with respect to
the building if arising out of Tenant's use or manner of use of the premises or
the building (including the use permitted under the lease). Nothing herein shall
require Tenant to make structural repairs or alterations unless Tenant has, by
its manner of use of the demised premises or method of operation therein,
violated any such laws, ordinances, orders, rules, regulations or requirements
with respect thereto. Tenant may, after securing Owner to
<PAGE>   2
     Owner's satisfaction against all damages, interest, penalties and expenses,
including, but not limited to, reasonable attorney's fees, by cash deposit or by
surety bond in an amount and in a company satisfactory to Owner, contest and
appeal any such laws, ordinances, orders, rules, regulations or requirements
provided same is done with all reasonable promptness and provided such appeal
shall not subject Owner to prosecution for a criminal offense or constitute a
default under any lease or mortgage under which Owner may be obligated, or cause
the demised premises or any part thereof to be condemned or vacated. Tenant
shall not do or permit any act or thing to be done in or to the demised premises
which is contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner with respect to the demised premises or the building of which
the demised premises form a part, or which shall or might subject Owner to any
liability or responsibility to any person or for property damage. Tenant shall
not keep anything in the demised premises except as now or hereafter permitted
by the Fire Department, Board of Fire Underwriters, Fire Insurance Rating
Organization or other authority having jurisdiction, and then only in such
manner and such quantity so as not to increase the rate for fire insurance
applicable to the building, nor use the premises in a manner which will increase
the insurance rate for the building or any property located therein, over 6.2.
Tenant shall pay all costs, expenses, fines, penalties, or damages, which may
be imposed upon Owner by reason of Tenant's failure to comply with the
provisions of this article and if by reason of such failure the fire insurance
rate shall, at the beginning of this lease or at any time thereafter, be higher
than it otherwise would be, then Tenant shall reimburse Owner, as additional
rent hereunder, for that portion of all fire insurance premiums thereafter paid
by Owner which shall have been charged because of failure by Tenant. In any
action or proceeding wherein Owner and Tenant are parties, a schedule or
"make-up" of rate for the building or demised premises issued by the New York
Fire Insurance Exchange, or other body making fire insurance rates applicable to
said premises shall be conclusive evidence of the facts therein stated and of
the several items and charges in the fire insurance rates then applicable to
said premises. Tenant shall not place a load upon any floor of the demised
premises exceeding the floor load per square foot area which it was designed to
carry and which is allowed by law. Owner reserves the right to prescribe the
weight and position of all safes, business machines and mechanical equipment.
Such installations shall be placed and maintained by Tenant, at Tenant's
expense, in setting sufficient, in Owner's judgement, to absorb and prevent
vibration, noise and annoyance.

Subordination:

7.   This lease is subject and subordinate to all ground or underlying leases
and to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.

Property Loss, Damage Reimbursement Indemnity:

8.   Owner or its agents shall not be liable for any damage to property of
Tenant or of others entrusted to employees of the building, nor for loss of or
damage to any property of Tenant by theft or otherwise, nor for any injury or
damage to persons or property resulting from any cause of whatsoever nature,
unless caused by or due to the negligence of Owner, its agents, servants or
employees. Owner or its agents will not be liable for any such damage caused by
other tenants or persons in, upon or about said building or caused by
operations in construction of any private, public or quasi public work. If at
any time any windows of the demised premises are temporarily closed, darkened
or bricked up (or permanently closed, darkened or bricked up, if required by
law) for any reason whatsoever including, but not limited to Owner's own acts.
Owner shall not be liable for any damage tenant may sustain thereby and Tenant
shall not be entitled to any compensation therefor nor abatement or diminution
of rent not shall the same release Tenant from its obligations hereunder nor
constitute an eviction. Tenant shall indemnify and save harmless Owner against
and from all liabilities, obligations, damages, penalties, claims, costs and
expenses for which Owner shall not be reimbursed by insurance, including
reasonable attorneys fees, paid, suffered or incurred as a result of any breach
by Tenant, Tenant's agents, contractors, employees, invitees, or licensees, of
any covenant or condition of this lease, or the carelessness, negligence or
improper conduct of the Tenant, Tenant's agents, contractors, employees,
invitees or licensees. Tenant's liability under this lease extends to the acts
and omissions of any sub-tenant, and any agent, contractor, employee, invitee
or licensee of any sub-tenant. In case any action or proceeding is brought
against Owner by reason of any such claim, Tenant, upon written notice from
Owner, will, at Tenant's expense, resist or defend such action or proceeding by
counsel approved by Owner in writing, such approval not to be unreasonably
withheld.

Destruction, Fire and Other Casualty:

9.   (a) If the demised premises or any part thereof shall be damaged by fire
or other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent and other items of additional rent, until such
repair shall be substantially completed, shall be apportioned from the day
following the casualty according to the part of the premises which is usable.
(c) If the demised premises are totally damaged or rendered wholly unusable by
fire or other casualty, then the rent and other items of additional rent as
hereinafter expressly provided shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner (or sooner reoccupied in part by Tenant
then rent shall be apportioned as provided in subsection (b) above), subject to
Owner's right to elect not to restore the same as hereinafter provided. (d) If
the demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, or 30 days after adjustment of
the insurance claim for such fire or casualty, whichever is sooner, specifying a
date for the expiration of the lease, which date shall not be more than 60 days
after the giving of such notice, and upon the date specified in such notice the
term of this lease shall expire as fully and completely as if such date were the
date set forth above for the termination of this lease and Tenant shall
forthwith quit, surrender and vacate the premises without prejudice however, to
Landlord's rights and remedies against Tenant under the lease provisions in
effect prior to such termination, and any rent owing shall be paid up to such
date and any payments of rent made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant. Unless Owner shall serve a
termination notice as provided for herein, Owner shall make the repairs and
restorations under the conditions of (b) and (c) hereof, with all reasonable
expedition, subject to delays due to adjustment of insurance claims, labor
troubles and causes beyond Owner's control. After any such casualty, Tenant
shall cooperate with Owner's restoration by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
moveable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Owner that the premises are
substantially ready for Tenant's occupancy, (c) Nothing contained hereinabove
shall relieve Tenant from liability that may exist as a result of damage from
fire or other casualty. Notwithstanding the foregoing, including Owner's
obligation to restore under subparagraph (b) above, each party shall look first
to any insurance in its favor before making any claim against the other party
for recovery for loss or damage resulting from fire or other casualty, and to
the extent that such insurance is in force and collectible and to the extent
permitted by law, Owner and Tenant each hereby releases and waives all right of
recovery with respect to subparagraphs (b), (d), and (e) above, against the
other or any one claiming through or under each of them by way of subrogation or
otherwise. The release and waiver herein referred to shall be deemed to include
any loss or damage to the demised premises and/or to any personal property,
equipment, trade fixtures, goods and merchandise located therein. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver shall not invalidate
the insurance. If, and to the extent, that such waiver can be obtained only by
the payment of additional premiums, then the party benefiting from the waiver
shall pay such premium within ten days after written demand or shall be deemed
to have agreed that the party obtaining insurance coverage shall be free of any
further obligation under the provisions hereof with respect to waiver of
subrogation. Tenant acknowledges that Owner will not carry insurance on Tenant's
furniture and/or furnishings or any fixtures or equipment, improvements, or
appurtenances removable by Tenant and agrees that Owner will not be obligated to
repair any damage thereto or replace the same. (f) Tenant hereby waives the
provisions of Section 227 of the Real Property Law and agrees that the
provisions of this article shall govern and control in lieu thereof.

Eminent Domain:

10.  If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose,
then and in that event, the term of this lease shall cease and terminate from
the date of title vesting in such proceeding and Tenant shall have no claim for
the value of any unexpired term of said lease and assigns to Owner, Tenant's
entire interest in any such award. Tenant shall have the right to make an
independent claim to the condemning authority for the value of Tenant's moving
expenses and personal property, trade fixtures and equipment, provided Tenant
is entitled pursuant to the terms of the lease to remove such property, trade
fixture and equipment at the end of the term and provided further such claim
does not reduce Owner's award.

Assignment, Mortgage, Etc.:

11.  Tenant, for itself, its heirs, distributees, executors, administrators,
legal representative, successor and assigns, expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Owner in each instance. 11.1 Transfer of the
majority of the stock of a corporate Tenant or the majority partnership
interest of a partnership Tenant shall be deemed an assignment. If this lease
be assigned, or if the demised premises or any part thereof be underlet or
occupied by anybody other than Tenant, Owner may, after default by Tenant,
collect rent from the assignee, under-tenant or occupant, and apply the net
amount collected to the rent herein reserved but no such assignments,
underletting, occupancy or collection shall be deemed a waiver of this
covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further
assignment or underletting.

Election Current:

12.  Rates and conditions in respect to submetering or rent inclusion, as the
case may be, to be added in RIDER attached hereto. Tenant covenants and agrees
that at all times its use of electric current shall not exceed the capacity of
existing feeders to the building or the risers or wiring installation and
Tenant may not use any electrical equipment which, in Owner's opinion,
reasonably exercised, will overload such installations or interfere with the
use thereof by other tenants of the building. The change at any time of the
character of electric service shall in no wise make Owner liable or responsible
to Tenant, for any loss, damages or expenses which Tenant may sustain.

Access to Premises:

13.  Owner or Owner's agents shall have the right (but shall not be obligated)
to enter the demised premises in any emergency at any time, and, at other
reasonable times, to examine the same and to make such repairs, replacements
and improvements as Owner may deem necessary and reasonably desirable to the
demised premises or to any other portion of the building or which Owner may
elect to perform. Tenant shall permit Owner to use and maintain and replace
pipes and conduits in and through the demised premises and to erect new pipes
and conduits therein provided they are concealed within the walls, floor, or
ceiling. Owner may, during the progress of any work in the demised premises,
take all necessary materials and equipment into said premises without the same
constituting an eviction nor shall the Tenant be entitled to any abatement of
rent while such work is in progress nor to any damages by reason of loss or
interruption of business or otherwise. Throughout the term hereof Owner shall
have the right to enter the demised premises at reasonable hours for the
purpose of showing the same to prospective purchasers or mortgagees of the
building, and during the last six months of the term for the purpose of showing
the
<PAGE>   3
same to prospective tenants. If Tenant is not present to open and permit an
entry into the demised premises, Owner or Owner's agents may enter the same
whenever such entry may be necessary or permissible by master key or forcibly
and provided reasonable care is exercised to safeguard Tenant's property, such
entry shall not render Owner or its agents liable therefor, nor in any event
shall the obligations of Tenant hereunder be affected. If during the last month
of the Term Tenant shall have removed all or substantially all of Tenant's
property therefrom Owner may immediately enter, alter, renovate or redecorate
the demised premises without limitation or abatement of rent, or incurring
liability to Tenant for any compensation and such act shall have no effect on
this lease or Tenant's obligations hereunder.

Vault, Vault Space, Area:

     14. No Vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any sketch, blue print or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding. Owner makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant.

Occupancy:

     15. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the building of which the
demised premises are a part. Tenant has inspected the premises and accepts them
as is, subject to the riders annexed hereto with respect to Owner's work, if
any. In any event, Owner makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations, whether or
not of record.

Bankruptcy:

     16. See paragraph 37C(5) for substitution. Neither Tenant nor any person
claiming through or under Tenant, or by reason of any statute or order of court,
shall thereafter be entitled to possession of the premises demised but shall
forthwith quit and surrender the premises. If this lease shall be assigned in
accordance with its terms, the provisions of this Article 16 shall be applicable
only to the party then owning Tenant's interest in this lease.

     (b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be re-let by the Owner for the unexpired term of said lease, or
any part thereof, before presentation of proof of such liquidated damages to
any court, commission or tribunal, the amount of rent reserved upon such
re-letting shall be deemed to be the fair and reasonable rental value for the
part or the whole of the premises so re-let during the term of the re-letting.
Nothing herein contained shall limit or prejudice the right of the Owner to
prove for and obtain as liquidated damages by reason of such termination, an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such damages are to be
proved, whether or not such amount be greater, equal to, or less than the
amount of the difference referred to above.

Default:

     17. (1) If Tenant defaults in fulfilling any of the covenants of this
lease; or if the demised premises become vacant or deserted; or if any execution
or attachment shall be issued against Tenant or any of Tenant's property
whereupon the demised premises shall be taken or occupied by someone other than
Tenant; or if this lease be rejected under

     17.1 of Title 11 of the U.S. Code (bankruptcy code); or if Tenant shall
fail to move into or take possession of the premises within thirty (30) days
after the commencement of the term of this lease, then, in any one or more of
such events, upon Owner serving a written fifteen (15) days notice upon Tenant
specifying the nature of said default and upon the expiration of said fifteen
(15) days, if Tenant shall have failed to comply with or remedy such default, or
if the said default or omission complained of shall be of a nature that the same
cannot be completely cured or remedied within said fifteen (15) day period, and
if Tenant shall not have diligently commenced curing such default within such
fifteen (15) day period, and shall not thereafter with reasonable diligence and
in good faith, proceed to remedy or cure such default, then Owner may serve a
written five (5) days' notice of cancellation of this lease upon Tenant, and
upon the expiration of said five (5) days this lease and the term thereunder
shall end and expire as fully and completely as if the expiration of such five
(5) day period were the day herein definitely fixed for the end and expiration
of this lease and the term thereof and Tenant shall then quit and surrender the
demised premises to Owner but Tenant shall remain liable as hereinafter
provided.

     (2) If the notice provided for in (1) hereof shall have been given, and
the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.

Remedies of Owner and Waiver of Redemption:

     18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent shall become due thereupon and
be paid up to the time of such re-entry, dispossess and/or expiration, (b)
Owner may re-let the premises or any part or parts thereof, either in the name
of Owner or otherwise, for a term or terms, which may at Owner's option be less
than or exceed the period which would otherwise have constituted the balance of
the term of this lease and may grant concessions or free rent or charge a
higher rental than that in this lease, and/or (c) Tenant or the legal
representatives of Tenant shall also pay Owner as liquidated damages for the
failure of Tenant to observe and perform said Tenant's covenants herein
contained, any deficiency between the rent hereby reserved and/or covenanted to
be paid and the net amount, if any, of the rents collected on account of the
lease or leases of the demised premises for each month of the period which
would otherwise have constituted the balance of the term of this lease. The
failure of Owner to re-let the premises or any part or parts thereof shall not
release or affect Tenant's liability for damages. In computing such liquidated
damages there shall be added to the said deficiency such expenses as Owner may
incur in connection with re-letting, such as legal expenses, reasonable
attorneys' fees, brokerage, advertising and for keeping the demised premises in
good order or for preparing the same for re-letting. Any such liquidated
damages shall be paid in monthly installments by Tenant on the rent day
specified in this lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Owner to
collect the deficiency for any subsequent month by a similar proceeding. Owner,
in putting the demised premises in good order or preparing the same for
re-rental may, at Owner's option, make such alterations, repairs, replacements,
and/or decorations in the demised premises as Owner, in Owner's sole judgement,
considers advisable and necessary for the purpose of re-letting the demised
premises, and the making of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Owner shall in no event be liable in any way whatsoever
for failure to re-let the demised premises, or in the event that the demised
premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of
the covenants or provisions hereof, Owner shall have the right of injunction
and the right to invoke any remedy allowed at law or in equity as if re-entry,
summary proceedings and other remedies were not herein provided for. Mention in
this lease of any particular remedy, shall not preclude Owner from any other
remedy, in law or in equity. Tenant hereby expressly waives any and all rights
of redemption granted by or under any present or future laws in the event of
Tenant being evicted or dispossessed for any cause, or in the event of Owner
obtaining possession of demised premises, by reason of the violation by Tenant
of any of the covenants and conditions of this lease, or otherwise.

Fees and Expenses:

     19. If Tenant shall default in the observance or performance of any term
or covenant on Tenant's part to be observed or performed under or by virtue of
any of the terms or provisions in any article of this lease, after notice if
required and upon expiration of any applicable grace period if any, (except in
an emergency), then, unless otherwise provided elsewhere in this lease, Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder. If Owner, in connection with the foregoing or
in connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the payment of money,
including but not limited to reasonable attorneys' fees, in instituting,
prosecuting or defending any action or proceeding, and prevails in any such
action or proceeding then Tenant will reimburse Owner for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred
by reason of Tenant's default shall be deemed to be additional rent hereunder
and shall be paid by Tenant to Owner within ten (10) days of rendition of any
bill or statement to Tenant therefor. If Tenant's lease term shall have expired
at the time of making of such expenditures or incurring of such obligations,
such sums shall be recoverable by Owner, as damages.

Building Alterations and Management:

     20. Owner shall have the right at any time without the same constituting
an eviction and without incurring liability to Tenant therefor to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the building and
to change the name, number or designation by which the building may be known.
There shall be no allowance to Tenant for diminution of rental value and no
liability on the part of Owner by reason of inconvenience, annoyance or injury
to business arising from Owner or other Tenants making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition
of such controls of the manner of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the security of the
building and its occupants.

No Representations by Owner:

     21. 21.1 Owner nor Owner's agents have made any representations or
promises with respect to the physical condition of the building, the land upon
which it is erected or the demised premises, the rents, leases, expenses of
operation or any other matter or thing affecting or related to the premises
except as herein expressly set forth and no rights, easements or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
the provisions of this lease. Tenant has inspected the building and the demised
premises and is thoroughly acquainted with their condition and agrees to take
the same "as is" and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement

<PAGE>   4
hereafter made shall be ineffective to change, modify, discharge or effect an
abandonment of it in whole or in part, unless such executory agreement is in
writing and signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.

End of Term:

22.  Upon the expiration or other termination of the term of this lease, Tenant
shall quit and surrender to Owner the demised premises, broom clean, in good
order and condition, ordinary wear

22.1 and damages which Tenant is not required to repair as provided elsewhere in
this lease excepted, and Tenant shall remove all its property. Tenant's
obligation to observe or perform this covenant shall survive the expiration or
other termination of this lease. If the last day of the term of this Lease or
any renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.

Quiet Enjoyment:

23.  Owner covenants and agrees with Tenant that upon Tenant paying the rent
and additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to, Article 31
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.

Failure to Give Possession:

24.  If Owner is unable to give possession of the demised premises on the date
of the commencement of the term hereof, because of the holding-over or
retention of possession of any tenant, undertenant or occupants or if the
demised premises are located in a building being constructed, because such
building has not been sufficiently completed to make the premises ready for
occupancy or because of the fact that a certificate of occupancy has not been
procured or for any other reason, Owner shall not be subject to any liability
for failure to give possession on said date and the validity of the lease shall
not be impaired under such circumstances, nor shall the same be construed in
any wise to extend the term of this lease, but the rent payable hereunder shall
be abated (provided Tenant is not responsible for Owner's inability to obtain
possession or complete construction) until after Owner shall have given Tenant
written notice that the Owner is able to deliver possession in condition
required by this lease. If permission is given to Tenant to enter into the
possession of the demises premises to occupy premises other than the demised
premises prior to the date specified as the commencement of the term of this
lease, Tenant covenants and agrees that such possession and/or occupancy shall
be deemed to be under all the terms, covenants, conditions and provisions of
this lease except the obligation to pay the fixed annual rent set forth in the
preamble to this lease. The provisions of this article are intended to
constitute "an express provision to the contrary" within the meaning of Section
223-a of the New Year Real Property Law.

No Waiver:

25.  The failure of Owner to seek redress for violation of, or to insist upon
the strict performance of any covenant or condition of this lease or of any of
the Rules or Regulations, set forth or hereafter adopted by Owner, shall not
prevent a subsequent act which would have originally constituted a violation
from having all the force and effect of an original violation. The receipt by
Owner of rent and/or additional rent with knowledge of the breach of any
covenant of this lease shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless
such waiver be in writing signed by Owner. No payment by Tenant or receipt by
Owner of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated rent, nor shall
any endorsement or statement of any check or any letter accompanying any check
or payment as rent be deemed an accord and satisfaction, and Owner may accept
such check or payment without prejudice to Owner's right to recover the balance
of such rent or pursue any other remedy in this lease provided. No act or thing
done by Owner or Owner's agents during the term hereby demised shall be deemed
an acceptance of a surrender of said premises, and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of
Owner or Owner's agent shall have any power to accept the keys of said premises
prior to the termination of the lease and the delivery of keys to any such
agent or employee shall not operate as a termination of the lease or a
surrender of the premises.

Waiver of Trial by Jury:

26.  It is mutually agreed by and between Owner and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action
proceeding or counterclaim brought by either of the parties hereto against the
other (except for personal injury or property damage) on any matters whatsoever
arising out of or in any way connected with this lease, the relationship of
Owner and Tenant, Tenant's use of or occupancy of said premises, and any
emergency statutory or any other statutory remedy. It is further mutually
agreed that in the event Owner commences any proceeding or action for
possession including a summary proceeding for possession of the premises,
Tenant will not interpose any counterclaim of whatever nature or description in
any such proceeding including a counterclaim under Article 4 except for
statutory mandatory counterclaims.

Inability to Perform:

27.  This Lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in no wise be affected, impaired or excused because Owner is
unable to fullfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment,
fixtures, or other materials if Owner is prevent or delayed from so doing by
reason of strike or labor troubles, government preemption or restrictions or by
reason of any rule, order or regulation of any department or subdivision
thereof of any government agency or by reason of the conditions which have been
or are affected, either directly or indirectly, by war or other emergency -

27.1

Bills and notices:

28.  Except as otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail

28.1 addressed to Tenant at the building of which the demised premises form a
part or at the last known residence address or business address of Tenant or
left at any of the aforesaid premises addressed to Tenant, and the time of the
rendition of such bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same is delivered to
Tenant, mailed, or left at the premises as herein provided. Any notice by Tenant
to Owner must be served by registered mail 28.1 addressed to Owner at the
address first hereinabove given or at such other address as Owner shall
designate by written notice.

Services Provided by Owners:

29.  As long as Tenant is not in default under any of the covenants of this
lease beyond the applicable grace period provided in this lease for the curing
of such defaults, Owner shall provide: (a) necessary elevator facilities on
business days from 8 a.m. to 6 p.m. and have one elevator subject to call at all
other times; (b) heat to the demised premises when and as required by law, on
business days from 8 a.m. to 6 p.m.; (c) water for ordinary lavatory

29.1 purposes, but if Tenant uses or consumes water for any other purposes or in
unusual quantities (of which fact Owner shall be the sole judge), Owner may
install a water meter at Tenant's expense which Tenant shall thereafter maintain
at Tenant's expense in good working order and repair to register such water
consumption and Tenant shall pay for water consumed as shown on said meter as
additional rent as and when bills are rendered; (d) cleaning service for the
demised premises on business days at Owner's expense provided that the same are
kept in order by Tenant. If, however, said premises are to be kept clean by
Tenant, it shall be done at Tenant's sole expense, in a manner reasonably
satisfactory to Owner and no one other than persons approved by Owner shall be
permitted to enter said premises or the building of which they are a part for
such purpose. Tenant shall pay Owner the cost of removal of any of Tenant's
refuse and rubbish from the building; (e) If the demised premises are serviced
by Owner's air conditioning/cooling and ventilating system, air
conditioning/cooling will be furnished to tenant from May 15th through September
30th on business days (Mondays through Fridays, holidays excepted) from 8:00
a.m. to 6:00 p.m., and ventilation will be furnished on business days during the
aforesaid hours except when air conditioning/cooling is being furnished as
aforesaid. If Tenant requires air conditioning/cooling or ventilation for more
extended hours or on Saturdays, Sundays or on holidays, as defined under Owner's
contract with Operating Engineers Local 94-94A, Owner will furnish the same at
Tenant's expense. Rider to be added in respect to rates and conditions for such
additional service; (f) Owner reserves the right to stop services of the
heating, elevators, plumbing, air-conditioning, electric, power systems or
cleaning or other services, if any, when necessary by reason of accident of for
repairs, alterations, replacements or improvements necessary or desirable in the
judgement of Owner for as long as may be reasonably required by reason thereof.
If the building of which the demised premises are a part supplies manually
operated elevator service, Owner at any time may substitute automatic control
elevator service and proceed diligently with alterations necessary therefor
without in any wise affecting this lease or the obligation of Tenant hereunder.

Captions:

30.  The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provisions thereof.

Definitions:

31.  The term "office", or "offices", wherever used in this lease, shall not be
construed to mean premises used as a store or stores, for the sale or display,
at any time, of goods, wares or merchandise, of any kind, or as a restaurant,
shop, booth, bootblack or other stand, barber shop, or for other similar
purposes or for manufacturing. The term "Owner" means a landlord or lessor, and
as used in this lease means only the owner, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the
building or of the land and building) of which the demised premises form a
part, so that in the event of any sale or sales of said land and building or of
said lease, or in the event of a lease of said building, or of the land and
building, the said Owner shall be and hereby is entirely freed and relieved of
all covenants and obligations of Owner hereunder, and it shall be deemed and
construed without further agreement between the parties or their successors in
interest, or between the parties and the purchaser, at any such sale, or the
said lessee of the building, or of the land and building, that the purchaser or
the lessee of the building has assumed and agreed to carry out any and all
covenants and obligations of Owner, hereunder. The words "re-enter" and
"re-entry" as used in this lease are not restricted to their technical legal
meaning. The term "business days" as used in this lease shall exclude
Saturdays, Sundays and all days as observed by the State or Federal Government
as legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service. Wherever it is expressly
provided in this lease that consent shall not be unreasonably withheld, such
consent shall not be unreasonably delayed.

Adjacent Excavation-Shorting:

32.  If an excavation shall be made upon land adjacent to the demised premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person shall deem necessary to
preserve the wall or the building of which demised premises form a part from
injury or damage and to support the same by proper foundations without any
claim for damages or indemnity against Owner, or diminution or abatement of
rent.

Rules and Regulations:

33.  Tenant and Tenant's servants, employees, agents, visitors, and licensees
shall observe faithfully, and comply strictly with, the Rules and Regulations

33.1 and such other and further reasonable Rules and Regulations as Owner or
Owner's agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manners as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit the
question of the reasonableness of such Rule or Regulation for decision

33.2. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Owner within fifteen (15) days
after the giving of notice thereof. Nothing

<PAGE>   5
in this lease contained shall be construed to impose upon Owner any duty or
obligation to enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its
servants, employees, agents, visitors or licensees.

Estoppel Certificate:

35.  Tenant, at any time, and from time to time, upon at least 10 days' prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any
other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), stating the dates to which the rent and additional
rent have been paid, and stating whether or not there exists any default by
Owner under this Lease, and, if so, specifying each such default.

Successors and Assigns:

36.  The covenants, conditions and agreements contained in this lease shall
bind and inure to the benefit of Owner and Tenant and their respective
heirs, distributees, executors, administrators, successors, and except as
otherwise provided in this lease, their assigns. Tenant shall look only to
Owner's estate and interest in the land and building, for the satisfaction of
Tenant's remedies for the collection of a judgment (or other judicial process)
against Owner in the event of any default by Owner hereunder, and no other
property or assets of such Owner (or any partner, member, officer or director
thereof, disclosed or undisclosed), shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenant's remedies under or with
respect to this lease, the relationship of Owner and Tenant hereunder, or
Tenant's use and occupancy of the demised premises.

See Rider Annexed Hereto and Made a Part Hereof

IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.

Witness for Owner:                 TRUSTEES OF THE MASONIC HALL AND ASYLUM
                                   FUND

                                   BY:
-----------------------------        ---------------------------------------

Witness for Tenant:                  Organic, Inc.
                                     ----------------------------------------

                                   BY:  /s/ MARGARET MAXWELL ZAGEL
-----------------------------        ---------------------------------------

                                ACKNOWLEDGEMENTS

CORPORATE OWNER
STATE OF NEW YORK,       ss.:
County of

     On this   day of       , 19   , before me personally came             ,
to me known, who being by me duly sworn, did depose and say that he resides
in                         ; that he is the                of               the
corporation described in and which executed the foregoing instrument, as OWNER;
that he knows the seal of said corporation; the seal affixed to said instrument
is such corporate seal; that is was so by order of the Board of Directors of
said corporation, and that he signed his name thereto by like order.

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

INDIVIDUAL OWNER
STATE OF NEW YORK,       ss.:
County of

     On this   day of       , 19   , before me personally came              ,
to be known and known to me to be the individual described in and who, as
OWNER, executed the foregoing instrument and acknowledged to me that
he executed the same.

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

CORPORATE TENANT
STATE OF NEW YORK,       ss.:
County of

     On this   day of       , 19   , before me personally came                 ,
to me known, who being by me duly sworn, did depose and say that he resides in
           ; that he is the                   of              the corporation
described in and which executed the foregoing instrument, as TENANT; that he
knows the seal of said corporation; the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation, and that he signed his name thereto by like order.

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

INDIVIDUAL TENANT
STATE OF NEW YORK,       ss.:
County of

     On this   day of       , 19   , before me personally came                 ,
to be known and known to me to be the individual described in and who, as
TENANT, executed the foregoing instrument and acknowledged to me he executed
the same.

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

<PAGE>   6
(29.3) For overtime air-conditioning, the following rates shall apply:

<TABLE>
<S>                                                       <C>
   Sundays and holidays from 8:00 a.m. to 4:00 p.m.       $150.00 (flat rate)
   Saturdays after 1:00 p.m.                              $ 25.00/hour

</TABLE>

(33.1) hereinafter set forth and annexed hereto and made a part hereof as
       Exhibit "C"

(33.2) by informal arbitration pursuant to Article 46 hereof.

                                  Inserts - ii
<PAGE>   7
                                    GUARANTY

     FOR VALUE RECEIVED, and in consideration for, and as an inducement to Owner
making the within lease with Tenant, the undersigned guarantees to Owner,
Owner's successors and assigns, the full guaranty performance and observance of
all the covenants, conditions and agreements, therein provided to be performed
and observed by Tenant, including the "Rules and Regulations" as therein
provided, without requiring any notice of non-payment, non-performance, or
non-observance, or proof, or notice, or demand, whereby to charge the
undersigned therefor, all of which the undersigned hereby expressly waives and
expressly agrees that the validity of this agreement and the obligations of the
guarantor hereunder shall in no wise be terminated, affected or impaired by
reason of the assertion by Owner against Tenant of any of the rights or remedies
reserved to Owner pursuant to the provisions of the within lease. The
undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification or extension
of this lease and during any period when Tenant is occupying the premises as a
"statutory tenant." As a further inducement to Owner to make this lease and in
consideration thereof, Owner and the undersigned covenant and agree that in any
action or proceeding brought by either Owner or the undersigned against the
other or any matters whatsoever arising out of, under, or by virtue of the terms
of this lease or of this guarantee that Owner and the undersigned shall and do
hereby waive trial by jury.

Dated: ____________________________ 19 __

-----------------------------------
Guarantor

-----------------------------------
Witness

-----------------------------------
Guarantor's Residence

-----------------------------------
Business Address

-----------------------------------
Firm Name

STATE OF NEW YORK       )  ss.:

COUNTY OF               )

On this _____ day of __________, 19__, before me personally came ______________
to me known and known to me to be the individual described in, and who executed
the foregoing Guaranty and acknowledged to me that he executed the same.

                                        ------------------------------
                                                    Notary

                       >    IMPORTANT - PLEASE READ    <

RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN ACCORDANCE
                                WITH ARTICLE 33.

1.   The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or
encumbered by any Tenant or used for any purpose other than for ingress or
egress from the demised premises and for delivery of merchandise and equipment
in a prompt and efficient manner using elevators and passageways designated for
such delivery by Owner. There shall not be used in any space, or in the public
hall of the building, either by any Tenant or by jobbers or others in the
delivery of receipt of merchandise, any hand trucks, except those equipped with
rubber tires and sideguards. If said premises are situated on the ground floor
of the building, Tenant thereof shall further, at Tenant's expense, keep the
sidewalk and curb in front of said premises clean and free from ice, snow, dirt
and rubbish.

2.   The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.

3.   No carpet, rug or other article shall be hung or shaken out of any window
of the building and no Tenant shall sweep or throw or permit to be swept or
thrown from the demised premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised prmises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the building by reason of noise,
odors, and/or vibrations, or interfere in any way with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.

4.   No awnings or other projections shall be attached to the outside walls of
the building without the prior written consent of Owner.

5.   No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance
door of the premises. In the event of the violation of the foregoing by any
Tenant, Owner may remove same without any liability, and may charge the expense
incurred by such removal to Tenant or Tenants violating this rule. Interior
signs on doors and director tablet shall be inscribed, painted or affixed for
each Tenant by Owner at the expense of such Tenant, and shall be of a size,
color and style acceptable to Owner.

6.   No Tenant shall mark, paint, drill into, or in any way deface any part of
the demised premises or the building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or
other similar floor covering, so that the same shall come in direct contact
with the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt
shall be first affixed to the floor, by a paste or other material, soluble in
water, the use of cement or other similar adhesive material being expressly
prohibited.

7.   No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof. Each Tenant must, upon the termination of his Tenancy,
restore to Owner all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss of any
keys, so furnished, such Tenant shall pay to Owner the cost thereof.

8.   Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease or which these Rules and Regulations are a part.

9.   Canvassing, soliciting and peddling in the building is prohibited and each
Tenant shall cooperate to prevent the same.

10.  Owner reserves the right to exclude from the building all persons who do
not present a pass to the building signed by Owner. Owner will furnish passes
to persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such pass and shall be liable
to Owner for all acts of such persons. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.

11.  Owner shall have the right to prohibit any advertising by any Tenant which
in Owner's opinion, tends to impair the reputation of the building or its
desirability as a building for offices, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.

12.  Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, explosive, or hazardous fluid,
material, chemical or substance, or cause or permit any odors of cooking or
other processes, or any unusual or other objectionable odors to permeate in or
emanate from the demised premises.

13.  If the building contains central air conditioning and ventilation, Tenant
agrees to keep all windows closed at all times and to abide by all rules and
regulations issued by Owner with respect to such services. If Tenant requires
air conditioning or ventilation after the usual hours, Tenant shall give notice
in writing to the building superintendent prior to 3:00 p.m. in the case of
services required on week days, and prior to 3:00 p.m. on the day prior in case
of after hours service required on weekends or on holidays. Tenant shall
cooperate with Owner in obtaining maximum effectiveness of the cooling system
by lowering and closing venetian blinds and/or drapes and curtains when the
sun's rays fall directly on the windows of the demised premises.

14.  Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or fixtures into or out of the building without Owner's prior written
consent. If such safe, machinery, equipment, bulky matter or fixtures requires
special handling, all work in connection therewith shall comply with the
Administrative Code of the City of New York and all other laws and regulations
applicable thereto and shall be done during such hours as Owner may designate.

15.  Refuse and Trash. (1) Compliance by Tenant. Tenant covenants and agrees,
at its sole cost and expense, to comply with all present and future laws,
orders, and regulations of all state, federal, municipal, and local
governments, departments, commissions and boards regarding the collection,
sorting, separation and recycling of waste products, garbage, refuse and trash.
Tenant shall sort and separate such waste products, garbage, refuse and trash
into such categories as provided by law. Each separately sorted category of
waste products, garbage, refuse and trash shall be placed in separate
receptacles reasonably approved by Owner. Such separate receptacles may, at
Owner's option, be removed from the demised premises in accordance with a
collection schedule prescribed by law. Tenant shall remove, or cause to be
removed by a contractor acceptable to Owner, at Owner's sole discretion, such
items as Owner may expressly designate. (2) Owner's Right in Event of
Noncompliance. Owner has the option to refuse to collect or accept from Tenant
waste products, garbage, refuse or trash (a) that is not separated and sorted
as required by law or (b) which consists of such items as Owner may expressly
designate for Tenant's removal, and to require Tenant to arrange for such
collection at Tenant's sole cost and expense, utilizing a contractor
satisfactory to Owner. Tenant shall pay all costs, expenses, fines, penalties,
or damages that may be imposed on Owner or Tenant by reason of Tenant's failure
to comply with the provisions of this Building Rule 15, and, at Tenant's sole
cost and expense, shall indemnify, defend and hold Owner harmless (including
reasonable legal fees and expenses) from and against any actions, claims and
suits arising from such noncompliance, utilizing counsel reasonably
satisfactory to Owner.

Address

Premises
=============================================

                      TO

=============================================
               STANDARD FORM OF
                    OFFICE
[LOGO]              LEASE              [LOGO]

   The Real Estate Board of New York, Inc.

   (c) Copyright 1994. All rights Reserved.
         Reproduction in whole or in
               part prohibited.
=============================================

Dated                              19

Rent Per Year

Rent Per Month

Term
From
To

Drawn by ..................................

Checked by ................................

Entered by ................................

Approved by ...............................
=============================================
<PAGE>   8
        INSERTS TO AGREEMENT OF LEASE BETWEEN TRUSTEES OF THE
        MASONIC HALL AND ASYLUM FUND, AS OWNER, AND ORGANIC ONLINE,
        INC., AS TENANT, DATED AS OF SEPTEMBER 15, 1999

(3.1)   Anything contained in this Article 3 or in Section 37C(3) of this lease
        to the contrary notwithstanding, Owner's consent shall not be
        unreasonably withheld or delayed with respect to any cosmetic,
        networking, telephone, nonstructural Tenant's Changes, provided that (x)
        consent for such Tenant's Change is not required by any third party
        (such as, by way of example, a mortgagee or ground lessor), and (y) such
        Tenant's Change (i) is not visible from the outside of the Building,
        (ii) does not affect any part of the Building other than the demised
        premises, (iii) does not affect any services required to be furnished by
        Owner to any other tenant or occupant of the Building, (iv) does not
        affect the proper functioning of any Building Systems (hereinafter
        defined), (v) does not impair or diminish the value or utility of the
        Building, and (vi) does not affect the certificate of occupancy for the
        Building or the demised premises. Owner's consent shall not be required
        with respect to those nonstructural Tenant's Changes which are merely
        cosmetic or decorative in nature, comply with the provisions of clauses
        (i) - (vi) above, and the cost of which are less than twenty thousand
        dollars ($20,000), provided, however, that such Tenant's Changes shall
        otherwise be performed in accordance with the provisions of this lease.
        With respect to mere cosmetic and/or decorative Tenants Changes, Tenant
        shall only be required to submit to Owner a reasonably detailed
        schematic design or description and such other information AS shall be
        reasonably requested BY Owner. The term "Building Systems" shall mean
        the mechanical, gas, electrical, sanitary, heating, air-conditioning,
        ventilating, elevator, plumbing, life-safety and other service systems
        of the Building.

(3.2)   or U.C.C. financing statement

(3.3)   or otherwise

(3.4)   given together with Owners consent to Tenant's alterations (provided,
        however, that Tenant's request for consent for such alterations must
        specifically state that if Owner does not require removal OF the
        alterations when giving its consent thereto, Owner shall have waived its
        right to have Tenant remove the same prior to the expiration of the term
        of this lease),

(4.1)   the

(4.2)   Building Systems

(6.1)   (collectively, "Requirements")

(6.2)   that which would otherwise be in effect.

(9.1)    or totally inaccessible

(11.1)   , which consent to a sublease or to an assignment shall be governed by
         the terms of Article 47 hereof.

(17.1)   Section 365

(17.2)   for a period in excess of thirty (30) days

(21.1)   Except as expressly provided herein, neither

(22.1)   and damage by fire or other insurable casualty

(27.1)   or by reason of any other cause beyond Owner's reasonable control

(28.1)   or by overnight mail or courier service

(29.1)   and drinking

(29.2)   and on Saturdays from 8:00 a.m. to 1:00 p.m., upon Tenant's prior
         request

                                   Inserts - i
<PAGE>   9

RIDER ATTACHED TO AND FORMING PART OF LEASE DATED AS OF SEPTEMBER 15, 1999
BETWEEN TRUSTEES OF THE MASONIC HALL AND ASYLUM FUND, OWNER, AND ORGANIC ONLINE,
INC., TENANT

PREMISES:    71 WEST 23RD STREET
             NEW YORK, NEW YORK
             PART 7TH FLOOR

37.   Application of this Rider

      A.       Rider Provisions Paramount.  If and to the extent that any of the
provisions of this Rider conflict or are otherwise inconsistent with any of the
preceding printed provisions of this lease, or of the Rules and Regulations
attached to this lease as Exhibit "C", whether or not such inconsistency is
expressly noted in this Rider, the provisions of this Rider shall prevail, and
in case of inconsistency with said Rules and Regulations, shall be deemed a
waiver of such Rules and Regulations with respect to Tenant to the extent of
such inconsistency.

        B.     Additional Definitions.  For the purpose of this lease and all
agreements supplemental to this lease, and all communications with respect
thereto, unless the context otherwise requires:

               (1) The term "fixed rent" shall mean rent consisting of base rent
at the annual rate of Four Hundred Twenty One Thousand Eight Hundred Forty
Dollars ($421,84.0.00) per annum (i.e., $35,153.33 per month) for the period
commencing on the Commencement Date and ending on the Expiration Date.
Date.

The rentable area of the demised premises is agreed to be 10,546 square feet for
all purposes of this lease.

               (2) The term "additional rent" shall mean all sums of money,
other than fixed rent, as shall become due and payable from Tenant to Owner
hereunder, and Owner shall have the same remedies therefor as for a default in
payment of fixed rent.

               (3) The terms "rent" and "rents" shall mean and include fixed
rent and/or additional rent and/or escalation rent hereunder.

               (4) The term "Commencement Date" shall mean the fifth (5th)
business day next following written notice by Owner to Tenant that the demised
premises have been vacated by the present tenant and is available for occupancy
by Tenant, and the term "Expiration Date" shall mean midnight of the day next
preceding the first annual anniversary of the Commencement Date.

               (5) Any provision in this lease that one party or the other or
both shall do or not do or shall cause or permit or not cause or permit a
particular act, condition or circumstance shall be deemed to mean that such
party so covenants or both parties so covenant, as the case may be. Tenant's
obligations hereunder shall be construed in every instance as conditions as well
as covenants. Such provisions shall be deemed to mean that if the performance of
the covenant will involve incurrence of expense such expense shall be borne by
the party responsible for such performance except where this lease expressly
provides otherwise.

               (6) The term "Tenant" shall mean Tenant herein named or any
permitted assignee or other successor in interest (immediate or remote) of
Tenant herein named, when Tenant herein named or such assignee or other
successor in interest as the case may be is in possession of the demised
premises as owner of the Tenant's estate and interest granted by this lease, and
also, if Tenant is not an individual or corporation, all of the individuals,
firms and/or corporations or other entities comprising Tenant.

               (7) Any transfer by operation of law or otherwise, of Tenant's
interest in this lease or of any subtenant's interest in a sublease hereunder,
or, unless Tenant or the subtenant is an entity the securities of which are
registered under appropriate statutory authority and listed and traded on a
national exchange, of a 50% or greater interest in Tenant, or in a subtenant

<PAGE>   10

hereunder (whether stock, partnership interest or otherwise), in a single
transaction or a related series of transactions, shall be deemed an assignment
of this lease within the meaning of Article 11 or an assignment of the sublease
within the meaning of Article 47, as the case may be.

               (8) All references in this lease to numbered Articles and
lettered Exhibits are references to Articles of this lease and Exhibits annexed
to (and thereby made part of) this lease, as the case may be, unless expressly
otherwise designated in the context.

               (9) The words "include", "including" and "such as" shall each be
construed as if followed by the phrase "without being limited to". The words
"herein", "hereof", "hereby", "hereunder" and words of similar import shall be
construed to refer to this lease as a whole and not to any particular Article or
subdivision thereof unless expressly so stated. The rule of ejusdem generis
shall not be applicable to limit a general statement following or referable to
an enumeration of specific matters, to matters similar to the matters
specifically mentioned. Words and phrases used in the singular shall be deemed
to include the plural and vice versa and nouns and pronouns used in any
particular gender shall be deemed to include any other gender, as the sense of
the context may permit.

               (10) The term "Specialty Alterations" shall mean Tenant's Changes
(hereinafter defined) consisting of kitchens, executive bathrooms, raised
computer floors, computer installations, vaults, libraries, internal staircases,
dumbwaiters, pneumatic tubes, vertical and horizontal transportation systems,
and other Tenant's Changes of a similar character.

               (11) The term "Initial Tenant's Changes" shall mean the changes
made by Tenant to initially prepare the demised premises for Tenant's occupancy.

               (12) The terms "substantial completion" or "substantially
completed" or words of similar import shall mean that Owner's Work has been
substantially completed, it being agreed that Owner's Work shall be deemed
substantially complete notwithstanding the fact that minor or insubstantial
details of construction or demolition and/or mechanical adjustment and/or
decorative items remain to be performed.

               (13) The term "Applicable Rate" shall mean the lesser of (a) two
(2) percentage points above the then current rate of interest publicly announced
from time to time by The Chase Manhattan Bank, or its successor, as its "prime
lending rate" (or such other term as may be used by The Chase Manhattan Bank,
from time to time, for the rate presently referred to as its "prime lending
rate"), and (b) the maximum rate permitted by applicable law.

         C.    Some Qualifications of Certain Preceding Printed Articles.

               (1) Notwithstanding Tenant's agreement to pay the fixed rent in
lawful money which shall be legal tender, Owner shall accept, subject to
collection, and Tenant shall pay all fixed rent and additional rent failing due
under this lease by currently dated, unendorsed check of Tenant, payable to
Owner or its designed agent and drawn on a bank or trust company which is a
member of the New York Clearing House. If Tenant shall default in timely payment
of any rent twice in any period of twenty-four (24) months, and whether or not
such default shall be cured, Owner, may by notice given to Tenant at any time
thereafter, require Tenant to make all further rent payments by currently dated,
unendorsed certified or official bank check payable to Owner on a bank or trust
company that is a member of the New York Clearing House.

               (2) The use of the demised premises for the purposes specified in
Article 2 shall not in any event be deemed to include, and Tenant shall not use,
or permit the use of the demised premises or any part thereof for:

                        a)   the conduct of a public auction of any kind or of
       any gaming or gambling activities, or of any political or club
       activities, whether private or public;

                        b)   the conduct of a school of any kind (other than a
       training center for employees of Tenant);

                        c)   the conduct of a cafeteria or restaurant other than
       private dining facilities for Tenants officers, employees and business
       guests;

                                        2

<PAGE>   11

                       d)   the conduct of any business, occupation or activity
        which, in the reasonable judgment of Owner, may (i) create or foster an
        unusual risk to the security of the Building or of any of its tenants or
        occupants, (ii) impair the reputation of the Building for the highest
        class of office and commercial uses, or (iii) interfere with or disturb
        the occupancy of other tenants in the Building; or

                       e)   the conduct of meetings, shows or exhibits for the
        general public.

        In no event shall the demised premises be used or occupied by anyone (as
assignee of this lease or as subtenant or licensee), who shall not have a
financial standing, or shall not be of a character, or shall not be engaged in a
business, or shall not use the demised premises in a manner, which shall be in
keeping with the standards in such respects of the other tenancies in the
Building.

        In no event shall Tenant cause or permit, as the result of any
intentional or unintentional act or omission on the part of Tenant, its agents,
employees, tenants, subtenants or other occupants of the demised premises to
release Hazardous Substances (hereinafter defined) in or from any portion of the
demised premises in violation of any Environmental Laws (hereinafter defined).
Tenant shall indemnify, defend and hold harmless Owner and any property
manager(s) engaged by Owner, their successors, assigns, and each of their
affiliated companies, partners, shareholders, agents, directors, officers and
employees (collectively, "Indemnitees") from and against any and all claims,
demands, penalties, fines, liabilities, settlements, suits, damages, losses,
injuries, costs and expenses of whatever kind or nature, known or unknown,
contingent or otherwise, including, without limitations, attorneys' and
consultants' fees and disbursements and investigation and laboratory fees
arising out of, or in any way related to: (i) the presence, disposal, release or
threat of release of any Hazardous Substance as a result of any act or omission
of Tenant, its agents, employees, tenants, subtenants, invitees or other
occupants of the demised premises, in or from or affecting the demised premises;
(ii) any personal injury (including wrongful death) or property damage (real or
personal) arising out of related to any such Hazardous Substance; (iii) any
lawsuit brought or threatened, settlement reached or government order relating
to such Hazardous Substance; and (iv) any violations of any Environmental Laws.
As used herein the term "Hazardous Substance" shall mean solid waste, hazardous
waste, hazardous substance, petroleum product or similar term as used and
defined in the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Hazardous Material
Transportation Act, the Federal Water Pollution Control Act, the Superfund
Amendments and Reauthorization Act of 1986, any laws relating to underground
storage tanks, and any similar or successor federal law, state law or local
statutes or ordinances and any rules, regulations and policies promulgated
thereunder, as any of the same may be amended from time to time (collectively,
"Environmental Laws"), Tenant's indemnity hereunder shall survive the expiration
or sooner termination of this lease.

               (3)    Supplementing Article 3:

                      a)     Tenant shall cause any permitted alterations,
decorations, installations, additions or improvements (herein called "Tenant's
Changes"; Tenant's Changes shall also include Initial Tenant's Changes) in or
about the demised premises, referred to in Article 3, to be performed in
compliance with all applicable Requirements, and in such manner as not to
interfere with, delay, or impose any additional expense upon Owner in the
construction, maintenance or operation of the Building, or interfere with or
disturb the occupancy of other tenants in the Building, and so as to maintain
harmonious labor relations in the Building. Tenant with diligence and dispatch,
shall procure the cancellation or discharge of all notices of violation arising
from or otherwise connected with Tenant's Changes which shall be issued by the
Department of Buildings or any other public authority having or asserting
jurisdiction.

                      b)     Owner shall not unreasonably withhold or delay any
consent or approval required under Article 3 to Tenants contractor for the
construction of the Tenant's Changes, provided that such contractors are
licensed and experienced in the nature of the Tenant's Changes being performed,
and provided further that Owner may require that any and all mechanical,
electrical and air-conditioning work on behalf of Tenant shall be supervised by
Owner's in-house personnel, if appropriate personnel are available or by the
contractors regularly employed by Owner for such work in the Building. Any such
supervision by Owner's personnel shall be reasonable in scope, taking into
account the type of work being done on behalf of Tenant. Owner may require
submission to it of plans and specifications for any proposed Tenant's Changes
and in granting its consent to any Tenant's Changes may impose such conditions
(in

                                        3

<PAGE>   12

addition to those expressly provided in this lease) as to guaranty of completion
and payment and of restoration and otherwise as Owner may consider desirable. In
no event shall Owner be required to consent to any Tenants Changes which could
physically affect any part of the Building outside of the demised premises or
might adversely affect the proper functioning of any of the Building Systems. In
the event that Owner does not have appropriate in-house personnel available,
Owner may require Tenant to reimburse Owner for Owner's reasonable out-of-pocket
costs and expenses to unrelated third parties for (x) review of Tenant's plans
and specifications for such Tenant's Changes, and (y) supervision of compliance
with the requirements of this lease in the performance of such Tenant's Changes.

                      c)     All counters, screens, grilles, railings, suspended
lighting fixtures, panelling, business machines and equipment which are
installed in the demised premises by or for the account of Tenant, and can be
removed without structural damage to or defacement of the Building, and all
furniture, furnishings and other articles of personal property owned by Tenant
and located in the demised premises (all of which are herein called "Tenant's
Property") shall be and remain the property of Tenant and may be removed by it
at any time during the term of this lease. However, if any of Tenants Property
is removed, or upon the removal of Tenant's Changes and/or Specialty
Alterations, Tenant shall repair or pay the cost of repairing any damage to the
Building resulting from such removal. Any items of Tenant's Property which shall
remain in the demised premises after Tenant surrenders the demised premises, at
the option of Owner, may be deemed to have been abandoned, and in such case
either may be retained by Owner as its property or may be disposed of at
Tenant's cost, without accountability, in such manner as Owner may see fit.

                      d)     Within thirty (30) days after the completion of any
Tenant's Changes (including the Initial Tenants Changes), Tenant shall deliver
to Owner a full set of architectural, structural, mechanical and electrical
drawings and specifications showing the demised premises "as built' by the
performance of such Tenants Changes.

               (4) Supplementing and modifying Article 13, entry upon the
demised premises pursuant to Article 13 shall be accomplished at such times and
in such manner, and (except in the case of emergency) upon such reasonable
notice, which notice may be oral, as to minimize to the extent practicable
(without the necessity of incurring any additional monetary expense) under the
circumstances interference with Tenants use of the demised premises or
inconvenience to Tenant.

               (5) Supplementing Article 16, insert at the beginning thereof in
place of the first sentence thereof, the following:

                      "If, at or before the date fixed as the Commencement Date
        of the term of this lease or if at any time during the term hereby
        demised:

                               i) Tenant shall file a petition commencing a
                voluntary case under the Federal Bankruptcy Code (Title 11 of
                the United States Code), as now or hereafter in effect, or under
                similar law, or file a petition in bankruptcy or for
                reorganization or for an arrangement pursuant to any state
                bankruptcy law or any similar state law or, if Tenant is then a
                banking organization, shall file an application for voluntary
                liquidation or dissolution applicable to banking organizations;
                or

                               ii) an involuntary case against Tenant as debtor
                is commenced by a petition under the Federal Bankruptcy Code
                (Title 11 of the United States Code), as now or hereafter in
                effect, or under similar law, or a petition or answer proposing
                the adjudication of Tenant as a bankrupt or its reorganization
                pursuant to any state bankruptcy law or any similar state law
                shall be filed in any court and shall not be dismissed,
                discharged or denied within sixty (60) days after the filing
                thereof, or if Tenant shall consent or acquiesce in the filing
                thereof; or

                               iii) a custodian, receiver, United States
                Trustee, trustee or liquidator of Tenant or of all or
                substantially all of Tenant's property or of Tenant's property
                in the demised premises shall be appointed in any proceedings
                brought by Tenant; or if any such custodian, receiver, United
                States Trustee, trustee or liquidator shall be appointed in any
                proceedings brought against Tenant and shall

                                        4

<PAGE>   13

               not be discharged within sixty (60) days after such appointment,
               or if Tenant shall consent to or acquiesce in such appointment;
               or

                             iv) if Tenant shall generally not pay Tenant's
               debts as such debts become due, or shall make an assignment for
               the benefit of creditors, or shall admit in writing its inability
               to pay its debts generally as they become due; or

                             v) if Tenant is then a banking organization, if the
               Superintendent of Banks of the State of New York or any other
               public officer having like authority and power over Tenant as a
               banking organization shall take possession of the business and
               property of Tenant at the demised premises;

then, Owner may, at its option, cancel or terminate this lease by giving Tenant
written notice to such effect within a reasonable time after receipt of notice
of the happening of any one or more of such events."

               (6)   Notwithstanding the specific provisions of Article 17:

                      a) In case of default in the payment of fixed rent,
        additional rent or escalation rent reserved herein, Tenant shall have a
        grace period of five (5) days after notice of the existence of such
        default from Owner within which to cure such default and if such payment
        is not made before the expiration of such five (5) day grace period,
        Owner may serve a five (5) day notice of cancellation of this lease as,
        and with the effects, provided in Article 17(1).

                      b) In case of any other default referred to in Article
        17(1) the Tenant shall be given ten (10) days (instead of five (5) days)
        after notice of the existence of such default from Owner within which to
        cure such default, except where failure to cure within a shorter period
        may subject Owner to criminal action or penalty, or where such default
        can be cured by payment of money, in either of which cases the
        provisions of Article 17(1), as written shall govern and except,
        further, that where any other such default can be completely cured or
        remedied in the exercise of due diligence but not within such grace
        period of ten (10) days, such grace period shall be deemed extended to
        such period as may be reasonably necessary to do the work or take such
        other steps as shall be required to correct such default, provided
        Tenant shall have diligently commenced curing such default promptly
        after receipt of notice thereof and shall thereafter proceed diligently
        to remedy the same completely.

                      c) Nothing in subparagraph (a) of this paragraph shall be
        deemed to require Owner to give the notices provided for therein prior
        to the commencement of a summary proceeding for nonpayment of rent or a
        plenary action for the recovery of rent on account of any default in the
        payment of rent, it being acknowledged and agreed by both parties that
        the sole purpose of such notices is to create a conditional limitation
        hereunder, and in the event such notices are given by Owner, Tenant
        shall become a holdover tenant and this lease shall terminate forthwith
        at the expiration of the applicable notice period with the effects
        provided in Article 17(1).

               (7)   Supplementing Articles 17 and 18:

                      a) Tenant expressly recognizes that Tenant's due and
punctual performance of all its obligations under this lease throughout the term
hereof is of paramount importance to Owner and, without limiting the provisions
of Articles 17 and 37C(7), Tenant agrees that, if Tenant (i) shall fail to pay
for five (5) business days after it becomes due an installment of fixed rent or
additional rent for two (2) consecutive months or for a total of three (3)
months in any period of twelve (12) months, or (ii) shall default in the timely
performance of any other obligation of Tenant under this lease with respect to
which Owner shall have given Tenant notice of default, and such default shall
occur more than two (2) times in any period of twelve (12) months, then
notwithstanding that such failure or other default shall have been cured within
the applicable grace period provided in said Articles, any further similar
default shall be deemed to be deliberate and Owner thereafter may, without
further notice of default, serve a five (5) day notice of cancellation of this
lease as and with the effects provided in subparagraph (1) of Article 17.

                                        5

<PAGE>   14

                      b) Instead of the liquidated damages determined pursuant
to Article 18(c), Owner may, at its election, recover from Tenant as liquidated
damages an amount determined pursuant to Article 16(b).

               (8) The parties recognize and agree that the damage to Owner
resulting from Tenant's failure to timely surrender the demised premises to
Owner will be substantial, will exceed the amount of fixed rent, additional rent
and escalation rent theretofore payable hereunder and will be impossible to
accurately measure. Tenant therefore agrees that if possession of the demised
premises is not surrendered to Owner within one (1) day after the Expiration
Date or the sooner expiration of the term of this lease, Tenant shall pay Owner
as liquidated damages for each day during which Tenant holds over in the demised
premises after the Expiration Date or earlier expiration of the term of this
lease, a sum equal to one and one half (1-1/2) times the greater of (a) the then
fair market rental value of the demised premises (on a per diem basis) and (b)
the average fixed rent, additional rent and escalation rent which was payable on
a per diem basis under this lease on the last day of the term thereof. Tenant's
obligations hereunder shall survive the Expiration Date or earlier expiration of
the term of this lease.

               (9) Supplementing Article 28, "requests" or "approvals" by Owner
or Tenant under this lease shall be deemed to be notices. All notices shall be
in writing.

               (10) If Tenant shall fail to pay any installment of fixed rent or
any amount of additional rent for more than five (5) business days after it
shall have become due and payable, then, whether or not a notice of default has
been given therefor pursuant to the provisions of Section 37C(6)(a), Tenant
shall pay Owner a late charge and as additional rent a sum equal to interest at
the Applicable Rate on the amount unpaid, computed from the date such payment
was due through and including the date of payment. Such late charge shall be
without prejudice to any of Owner's rights and remedies hereunder or at law for
nonpayment or late payment of rent and shall be in addition thereto.

               (11) In the event that Tenant and Owner have entered into a
stipulation, whether entered into in court or otherwise, for the repayment of
any of Tenant's rent arrears, any monies received pursuant to said stipulation
shall first be applied to current rent and then any arrears. Further, until such
time as Tenant has fully and completely complied with the terms and provisions
of the stipulation, Tenant shall not be in good standing pursuant to the terms
and provisions of this lease and may not exercise any rights or remedies which
it has, or may have, under or pursuant to this lease.

38.   Electricity

        A.     For purposes of this Article, the following terms shall have the
following meanings:

               (1) The term "Owner's Cost", shall mean, the average cost per
        kilowatt hour and average cost per kilowatt demand, by time of day, if
        applicable, to Owner of purchasing electricity for the building,
        including, without limitation, fuel adjustment charges (as determined
        for each month of the relevant period and not averaged) rate adjustment
        charges, sales tax, and/or any other factors, used by the public utility
        company (the "Utility") servicing the building in computing its charges
        to Owner applied to the kilowatt hours of energy and kilowatts of demand
        purchased by Owner during a given period, and further including
        transmission and transformer losses (to be determined by Owner if such
        losses are not measured by the Submeter, as defined herein); and

               (2) The term "Owner's Statement", shall mean an instrument
        containing a computation (or estimate thereof), of Owner's Cost
        (hereinabove defined), or any other computation to be made by Owner
        pursuant to the provisions of this Article.

        B. Subject to the provisions of subdivision 4 of paragraph C hereof,
Tenant agrees that Owner may furnish electricity to Tenant on a "rent inclusion"
basis or on a "submetering" basis. On the Commencement Date, electricity will be
furnished pursuant to subdivision (2).

               (1) Submetering. Owner may, at Tenant's sole reasonable cost and
expense, install a meter or meters (collectively, the "Submeter"), at a location
designated by Owner, connections from the risers and/or circuits servicing the
demised premises to the Submeter and

                                        6

<PAGE>   15
perform all other work necessary for the furnishing of electric current by Owner
to the demised premises in the manner provided for in this subdivision (1). If
and so long as electric current is supplied by Owner to the demised premises to
service Tenant's office equipment and the machinery and mechanical equipment for
the air conditioning units utilized by Tenant, if any, Tenant will pay Owner or
Owner's designated agent, as additional rent for such service, the amounts, as
determined by the Submeter, for the purpose of measuring Tenant's consumption
and demand. In the event said air conditioning units are used by other tenants
of the Building, the electric charges for such units shall be allocated by Owner
proportionately, on the basis of the respective amount of rentable square feet
occupied by such tenants, including Tenant. The additional rent payable by
Tenant pursuant to this subdivision (1), shall be computed in the same manner as
that for computation of Owner's Cost, as applied to the demised premises, plus a
fee (the "Overhead Charge") equal to twelve (12%) percent of such charge to
Owner, representing administrative/overhead costs to Owner. The amounts computed
from the Submeter together with the Overhead Charge, are herein collectively
called the "Electricity Additional Rent", and such amounts computed from the
Submeter shall be binding and conclusive on Tenant. If the Submeter should fail
to property register or operate at any time during the term of this lease for
any reason whatsoever, Owner may estimate the Electricity Additional Rent, and
when the Submeter is again properly operative, an appropriate reconciliation
shall be made, by Tenant paying any deficiency to Owner within ten (10) days
after demand therefor, or by Owner crediting Tenant with the amount of any
overpayment, as the case may be. Owner, at its option, may from time to time,
increase the Electricity Additional Rent based upon, among other things, any
increase in Owner's Cost. The periods to be used for the aforesaid computation
shall be as Owner, in its sole discretion, reasonably exercised, may from time
to time elect. Where more than one meter measures the electric service to Tenant
(including such electric energy as is consumed in connection with the operation
of the ventilation and air conditioning equipment servicing the demised
premises), the electric service rendered through each meter may be computed and
billed at Owner's option, separately as above set forth, or cumulatively. Bills
for the Electricity Additional Rent ("Bills") shall be rendered to Tenant at
such time as Owner may elect.

      Owner and Tenant agree, that the Submeter might be installed subsequent to
the date (the "Initial Occupancy Date") that Tenant, or anyone (including,
without limitation, any contractors or other workmen) claiming under or through
Tenant first enters the demised premises. In such event, Owner, at Owner's sole
option, may either (x) reasonably estimate the Electricity Additional Rent
payable by Tenant for the period commencing on the Initial Occupancy Date and
ending on the Occupancy Reading Date (hereinafter defined), and Tenant shall pay
to Owner, within ten (10) days after demand therefor, the amount set forth on
Owner's estimate and, after rendition of a subsequent Owner's Statement, an
appropriate reconciliation shall be made for any deficiency owed by Tenant, or
any overage paid by Tenant, or (y) render a Owner's Statement to Tenant, after a
reading of the installed Submeter is made (said date upon which the Submeter is
read, being herein called the "Occupancy Reading Date") on or about the date
upon which Tenant shall have completed the Initial Tenant's Changes, if any, and
commenced normal business operations in the demised premises, and the amount
calculated from the Submeter on the Occupancy Reading Date shall be determined
on a per diem basis and then multiplied by the number of days from the Initial
Occupancy Date through the Occupancy Reading Date to arrive at the amount due
for said period, and Tenant shall pay the Electricity Additional Rent on the
basis of such Submeter reading within ten (10) days after rendition of Owner's
Statement detailing such computation.

      (2) Rent Inclusion. Tenant acknowledges and agrees that if electric
current is furnished to the demised premises on a rent-inclusion basis, then (i)
the fixed rent set forth in this lease shall be increased by the "Electricity
Rent Inclusion Factor" (hereinafter defined and sometimes called the "ERIF") to
compensate Owner for the electrical wiring and other installations necessary
for, and for its obtaining and making available to Tenant the redistribution of
electric current to the demised premises as additional service, and (ii) the
ERIF shall be subject to periodic adjustments as hereinafter provided. The
Electricity Rent Inclusion Factor shall mean (x) the amount determined by
multiplying Owner's Cost by Tenant's average kilowatt hour and average kilowatt
demand usage (determined by the most recent survey under this subdivision (2),
or (y) if no such survey has yet been made, the average on a per rentable square
foot basis of the charges for electric current to the demised premises pursuant
to subdivision (1) of this Section B (exclusive of the Overhead Charge) for the
twelve (12) full calendar months preceding the month in which the provisions of
this subdivision (2) shall become effective, multiplied by number of square feet
of rentable area of the demised premises, plus twelve (12%) percent of the
resulting total. If the provisions of this subdivision (2) shall be effective
prior to the expiration of a period of twelve (12) full consecutive months
during which Tenant is paying for electric energy to the demised premises
pursuant to said subdivision (1) of this Article (and no survey has yet been

                                        7

<PAGE>   16
made under this subdivision (2)), so that the ERIF cannot be determined in the
manner described in the preceding sentence, then the Electricity Rent Inclusion
Factor shall mean the amount determined by multiplying Owner's Cost by Tenant's
average kilowatt hour and average kilowatt demand usage determined by the
estimate of an electrical consultant selected by Owner, plus twelve (12%)
percent of the resulting total. When a survey has been made by the electrical
consultant selected by Owner (the "Consultant"), the parties shall make
adjustment for any deficiency owed by Tenant or any overage paid by Tenant. If
after the first day of any relevant period for which either of the aforesaid
computations is made there is an increase or decrease in Owner's Cost then, the
ERIF for such relevant period shall be recomputed, effective on and after the
change in Owner's Cost, by applying such changed rate and/or charges to the
aforedescribed consumption and demand. Notwithstanding the foregoing, on the
Commencement Date, the ERIF shall be $2.50 per square foot of rentable area in
the demised premises.

      The parties agree that the Consultant shall determine (i) the ERIF in
accordance with the provisions of this subdivision (2), and (ii) the changes in
the ERIF due to changes in Owner's Cost. The Consultant may from time to time
make surveys in the demised promises of the electrical equipment and fixtures
and use of current therein, and the ERIF, effective as of the date of the
survey, shall be redetermined by the Consultant in accordance with the survey
results and the provisions of this subdivision (2).

      The determination by the Consultant shall be binding and conclusive on
Owner and Tenant from and after the delivery of copies of such determinations to
Owner and Tenant, unless within fifteen (15) days after the delivery of such
copies, Tenant disputes such determinations by having an independent reputable
electrical consultant selected and paid for by Tenant, consult with Owner or its
consultant as to said determinations. If they shall both agree upon the same,
their said agreement shall be binding upon the parties, or if the difference
between them is seven (7%) percent or less of the determinations made by the
Consultant then the determinations made by the Consultant shall be binding upon
the parties. If Owner or the Consultant and Tenant's consultant can not agree
within the said seven (7%) percent of each other, they shall jointly select a
third duly qualified independent, reputable electrical consultant who shall
determine the matter and whose decision shall be binding upon both parties with
the same force and effect as if a non-appealable judgment had been entered by a
court of competent jurisdiction. If Owner or the Consultant and Tenant's
consultant can not agree upon such a third electrical consultant, the matter
shall be submitted to arbitration in accordance with Article 46. Any charges of
such third consultant shall be borne equally by both parties. When the amount of
such increase has been determined, the parties shall execute an agreement
supplementary hereto to reflect such adjustment in the amount of fixed rent
effective from the date determined by such electrical consultant as aforesaid.
Notwithstanding the foregoing, until such final determination, Tenant shall pay
fixed rent to Owner in accordance with the determinations made by the
Consultant. After such final determinations, the parties shall make adjustment
for any deficiency owed by Tenant or any overage paid by Tenant.

      C.    General Conditions

            (1)   Owner shall not be liable in any way to Tenant for any failure
or defect in the supply or character of electric service furnished to the
demised premises by reason of any requirement, act or omission of the Utility or
for any other reason not attributable to the gross negligence of Owner, whether
electricity is provided by public or private utility or by any electricity
generation system owned and operated by Owner.

            (2)   Tenant shall at all times comply with the rules, regulations,
terms and conditions applicable to service, equipment, wiring and requirements
of the Utility. Tenant shall not use any electrical equipment which, in Owner's
reasonable judgment, would exceed the capacity of the existing risers serving
the demised premises (the "Basic Capacity"), or interfere with the electrical
service to other tenants of the Building. Tenant agrees not to connect any
additional electrical equipment to the Building electric distribution system,
other than lamps, personal computers, copiers, typewriters and other small
office machines which consume comparable amounts of electricity, without Owner's
prior consent. In the event that, in Owner's sole judgment, reasonably
exercised, Tenant's electrical requirements require in excess of the Basic
Capacity and necessitate installation of an additional riser, risers or other
proper and necessary equipment, Owner shall so notify Tenant of same. Within
five (5) business days after receipt of such notice, Tenant shall either cease
such use of such additional electricity or shall request that additional
electrical capacity (specifying the amount requested) be made available to
Tenant. Owner, in its

                                        8

<PAGE>   17

sole judgment, reasonably exercised, shall determine whether to make available
such additional electrical capacity to Tenant and the amount of such additional
electrical capacity to be made available. If Owner shall agree to make available
additional electrical capacity and the same necessitates installation of an
additional riser, risers or other proper and necessary equipment, including,
without limitation, any switchgear, the same shall be installed by Owner. Any
such installation shall be made at Tenant's sole cost and expense, and shall be
chargeable and collectible as additional rent and paid within ten (10) days
after the rendition of a bill to Tenant therefor. Tenant shall furnish and
install, at its expense, all original and replacement lighting tubes, lamps,
bulbs and ballasts required in the demised premises.

            (3) The parties acknowledge that they understand that it is
anticipated that electric rates, charges, etc. may be changed by virtue of
time-of-day rates or other methods of billing, and that the references in the
foregoing subdivisions to changes in methods of or rules on billing are intended
to include any such changes.

            (4) If required due to changes in requirements of law or the
Utility, Owner shall have the right at any time, and from time to time, during
the term of this lease, upon forty-five (45) days prior written notice to
Tenant, to change the furnishing of electricity to Tenant from a rent inclusion
basis to a submetering basis, or visa versa. In addition, if Owner shall elect
to terminate furnishing electricity to a majority of the tenants in the Building
then receiving electricity from Owner, Owner shall have the right to terminate
the furnishing of electricity to the demised premises on a rent-inclusion,
submetering, or any other basis at any time, upon forty-five (45) days' written
notice to the Tenant in which event Tenant may make application directly to the
Utility for Tenants entire separate supply of electric current to the demised
premises and Owner shall permit its wires and conduits, to the extent available
and safely capable in Owners sole judgment, reasonably exercised, to be used for
such purpose. Any meters, risers or other equipment or connections necessary to
enable Tenant to obtain electric current directly from the Utility shall be
installed at Tenant's sole cost and expense, subject to the provisions of this
lease. Rigid conduit only will be allowed. Owner, upon the expiration of the
aforesaid forty-five (45) days' written notice to the Tenant may discontinue
furnishing the electric current but this lease shall otherwise remain in full
force and effect. Owner will permit Tenant to continue to receive electricity
from Owner on a redistribution basis for such period of time as is reasonably
required by Tenant to arrange to obtain electricity service directly from the
Utility. Commencing when Tenant receives such direct service and as long as
Tenant shall continue to receive such service, the fixed rent payable under this
lease shall be reduced where electricity rent inclusion is discontinued, by a
sum equal to what the ERIF portion of the fixed rent was at the time of such
discontinuance (the parties acknowledge that in the case of termination of
redistribution by submetering, the fixed rent payable under this lease would not
be affected thereby).

            (5) In the event that pursuant to any of the provisions of this
Article, any initial determinations, statements or estimates are made by or on
behalf of Owner (whether such initial determinations, statements or estimates
are subject to dispute or not pursuant to the provisions of this Article),
Tenant shall pay to Owner the amount(s) set forth on such initial
determinations, statements or estimates, as the case may be, until subsequent
determinations, statements or estimates are rendered, at which time, the parties
shall make adjustment for any deficiency owed by Tenant, or any overage paid by
Tenant.

            (6) Notwithstanding any provisions of this Article and regardless of
the manner of service of electric current to the demised premises (whether by
rent inclusion or submetering, in no event shall the cost to Tenant for electric
energy to the demised premises be less or more than one hundred twelve (112%)
percent of Owners Cost unless otherwise provided herein.

            (7) If any tax is imposed upon Owners receipts from the sale or
resale of electric current to Tenant by any Federal, state or municipal
authority, Tenant agrees that, unless prohibited by law, a portion of such taxes
(based on the amount of the Electricity Additional Rent as applied to the
appropriate tax rate) shall be passed on to, and included in the bill of, and
paid by Tenant to Owner as additional rent.

      D. The provisions of this Article are subject to any requirements or
demands imposed by the Utility.

                                        9

<PAGE>   18

39.   Superior Leases and Mortgages

      A.    For the purposes of this Article a "Mortgagee" shall mean the holder
of a mortgage affecting the Building and "Lessor" shall mean the holder of a
superior lease affecting the Building.

      B.   (1) If the date of expiration of any superior lease shall be the
same day as the Expiration Date, the term shall end and expire twelve (12) hours
prior to the expiration of the superior lease. If, in connection with the
financing of the Land, the Building or the interest of the lessee under any
superior lease, or if in connection with the entering into of a superior lease,
any lending institution or Lessor shall request reasonable modifications of this
lease that do not increase Tenants monetary obligations under this lease, or
materially adversely affect or diminish the rights, or materially increase the
other obligations of Tenant under this lease, Tenant shall make such
modifications.

            (2)  Neither the Mortgagee nor the Lessor, as the case may be, nor
anyone claiming by, through or under such Mortgagee or Lessor, as the case may
be, including a purchaser at a foreclosure sale, shall be:

                  i) liable for any act or omission of any prior landlord
            (including, without limitation, the then defaulting Owner), or

                  ii) subject to any defense or offsets which Tenant may have
            against any prior landlord (including, without limitation, the then
            defaulting Owner), or

                  iii) bound by any payment of rental which Tenant may have made
            to any prior landlord (including, without limitation, the then
            defaulting Owner) more than thirty (30) days in advance of the date
            upon which such payment was due, or

                  iv) bound by any obligation to make any payment to or on
            behalf of Tenant, or

                  v) bound by any obligation to perform any work or to make
            improvements to the demised premises, except for (i) repairs and
            maintenance pursuant to the provisions of Article 4 hereof, the need
            for which repairs and maintenance first arises after the date upon
            which such owner, Lessor, or Mortgagee shall be entitled to
            possession of the demised premises, (ii) repairs to the demised
            premises or any part thereof as a result of damage by fire or other
            casualty pursuant to Article 9 hereof, but only to the extent that
            such repairs can be reasonably made from the net proceeds of any
            insurance actually made available to such Lessor or Mortgagee, and
            (iii) repairs to the demised premises as a result of a partial
            condemnation pursuant to Article 10 hereof, but only to the extent
            that such repairs can be reasonably made from the net proceeds of
            any award made available to such Lessor or Mortgagee, or

                  vi) bound by any amendment or modification of this lease made
            without its consent, or

                  vii) bound to return Tenant's security deposit, if any, until
            such deposit has come into its actual possession and Tenant would be
            entitled to such security deposit pursuant to the terms of this
            lease.

         C. If at any time prior to the expiration of the term, any superior
lease shall terminate or be terminated for any reason or any Mortgagee comes
into possession of the Land or the Building or the estate created by any
superior lease by receiver or otherwise, Tenant agrees, at the election and upon
demand of any owner of the Land or the Building, or of the Lessor, or of any
Mortgagee in possession of the Land or the Building, to attorn, from time to
time, to any such owner, Lessor or Mortgagee or any person acquiring the
interest of Owner as a result of any such termination, or as a result of a
foreclosure of such Mortgage or the granting of a deed in lieu of foreclosure,
upon the then executory terms and conditions of this lease, subject to the
provisions of Section 39B hereof, for the remainder of the term, provided that
such owner, Lessor or, Mortgagee, as the case may be, or receiver caused to be
appointed by any of the foregoing, shall then be entitled to possession of the
demised premises. The provisions of this Section 39C shall enure to the benefit
of any such owner, Lessor or Mortgagee, shall apply notwithstanding that, as

                                       10

<PAGE>   19
a matter of law, this lease may terminate upon the termination of any superior
lease, and shall be self-operative upon any such demand, and no further
instrument shall be required to give effect to said provisions. Tenant, however,
upon demand of any such owner, Lessor or Mortgagee, shall execute, at Tenant's
expense, from time to time, instruments, in recordable form, in confirmation of
the foregoing provisions of this Section 39C, satisfactory to any such owner,
Lessor or Mortgagee, acknowledging such attornment and setting forth the terms
and conditions of its tenancy. Nothing contained in this Section 39C shall be
construed to impair any right otherwise exercisable by any such owner, Lessor or
Mortgagee.

         D. As long as any superior lease or mortgage shall exist, Tenant shall
not seek to terminate this lease by reason of any act or omission of Owner until
Tenant shall have given written notice of such act or omission to all Lessors
and Mortgagees at their addresses provided to Tenant, and if any such Lessor or
Mortgagee, as the case may be, shall have notified Tenant within ten (10)
business days following receipt of such notice of its intention to remedy such
act or omission, until a reasonable period of time shall have elapsed following
the giving of such notice, during which period such Lessors and Mortgagees shall
have the right, but not the obligation, to remedy such act or omission.

         E. Owner represents that, as of the date of this lease, there are no
superior leases or mortgages affecting the Building. Owner agrees that it shall
use reasonable efforts to obtain a non-disturbance and attornment agreement from
any future Mortgagees or Lessors, provided, however, that the failure to obtain
such agreement(s) shall not be deemed a default on the part of Owner.

40.     Estoppel Certificate

         Each party shall, at any time and from time to time, at the request of
the other party, upon not less than five (5) days' notice, if given in person,
or ten (10) days' notice, if given by mail, execute and deliver to the other a
statement certifying that this lease is unmodified and in full force and effect
[or if there has been any modification, that the same is in full force and
effect as modified and stating the modification(s)], certifying the dates to
which the fixed rent, additional rent and escalation rent have been paid, and
stating whether or not, to the best knowledge of the signer, the other party is
in default in performance of any of its obligations under this lease, and, if
so, specifying each such default of which the signer may have knowledge, it
being intended that any such statement delivered pursuant hereto may be relied
upon by others with whom the party requesting such certificate may be dealing.

41.     Indemnification and Liability of Owner

         A. Tenant shall indemnify and save harmless Owner against and from (a)
any and all claims (i) arising from (x) the conduct of business in or management
(other than by Owner or any of its employees, agents or contractors) of the
demised premises or (y) any work or thing whatsoever done, or any condition
created (other than by Owner or any of its employees, agents or contractors) in
or about the demised premises during the term of this lease or during the period
of time, if any, prior to the Commencement Date that Tenant may have been given
access to the demised premises pursuant to this lease, or (ii) arising from any
act or omission of Tenant or any of its subtenants or licensees or its or their
employees, agents or contractors, and (b) all costs, expenses and liabilities
incurred in or in connection with each such claim or action or proceeding
brought thereon. Tenant's indemnity hereunder shall survive the expiration or
sooner termination of this lease. In case any action or proceeding be brought
against Owner by reason of any such claim, Tenant, upon notice from Owner, shall
resist and defend such action or proceeding by counsel chosen by Tenant who
shall be reasonably satisfactory to Owner. Tenant or its counsel shall keep
Owner fully apprised at all times of the status of such defense. Counsel for
Tenant's insurer shall be deemed satisfactory to Owner,

         B. Tenant shall look only to Owner's estate(s) in the Land and Building
(or the proceeds thereof) for the satisfaction of Tenants remedies for the
collection of any judgment (or other judicial process) requiring the payment of
money by Owner in the event of any default by Owner under this lease, and no
other property or other assets of Owner shall be subject to levy,

<PAGE>   20
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this lease, the relationship of landlord and
tenant hereunder or Tenants use and occupancy of the demised premises.

42.   Rent Escalation

      A.    Real Estate Taxes

      (1)   In the event that at any time during the term of this lease, the
Owner shall be required to pay real estate taxes levied by the City of New York
against the Building and the Land, the taxes imposed for the first fiscal year
in which such obligation commences (the "Base Tax Year") shall be deemed the
"basic taxes". If during any fiscal year of the City of New York during the term
of this lease subsequent to the Base Tax Year, the real estate taxes levied by
the City of New York against the Land and Building shall be greater then the
basic taxes, Tenant agrees to pay to Owner, as additional rent, the product of
the following: (i) the amount of the excess of such real estate taxes over the
basic taxes; and (ii) a fraction, the numerator of which is the number of
rentable square feet of the demised premises, and the denominator of which is
the number of rentable square feet in the Building subject to real estate taxes.
However, in no event shall Tenant have any obligation under this Section in the
event that real estate taxes for any fiscal year are less than the basic taxes.

      (2)   a) In the event that as a result of administrative or court
proceedings, the real estate taxes for any fiscal year after the Base Tax Year
shall be reduced, Owner shall make an appropriate payment to the Tenant upon
receiving a refund or a tax bill reflecting such reduction from the City of New
York, so that the aggregate payment from Tenant to Owner with reference to such
fiscal year of the City of New York pursuant to the provisions of this Article
shall be brought to the amount which it would have been if the reduced taxes for
such fiscal year were the original taxes levied upon the Land and Building.
Owner's obligation to make such payments shall survive the end or termination of
the term of this lease.

            b) In the event that as a result of administrative or court
proceedings, the real estate taxes for the Base Tax Year shall be reduced,
Tenant shall promptly, upon demand, make appropriate payment(s) to Owner
reflecting such reduction from the City of New York, so that the aggregate
payment from Tenant to Owner with reference to the following fiscal years of the
City of New York pursuant to the provisions of this Article shall be brought to
the amount which it would have been if the reduced taxes for such Base Tax Year
were the original taxes levied upon the Land and Building. Tenant's obligation
to make such payments shall survive the end or termination of the term of this
lease.

      (3)   If the term of this lease shall end or be terminated (for any reason
other than the Tenant's default) on a day other than the end of a fiscal year of
the City of New York and such end or termination shall be during a fiscal year
of the City of New York as to which a payment is agreed to be made by Tenant
pursuant to the provisions of this Article, then such payment shall be reduced
by the proportion thereof which the number of days elapsed from the end or
termination of the term hereof to the end of the then current fiscal year of the
City of New York bears to 365.

      (4)   Any sum payable by Tenant in accordance with this Article shall be
paid on or before the last day of the fourth month of the fiscal year of the
City of New York to which such payment is applicable. At least thirty (30) days
prior to such due date, Owner shall furnish Tenant with a certified statement of
such sum and the calculations on which it is based. The obligation to make such
payment shall survive the end or termination of this lease. Tenant shall not be
required to anticipate payment of its proportionate share of any special
Borough-wide assessment levied against the Land and Building unless Owner shall,
in its sole discretion, elect to anticipate payment thereof.

      (5)   All mention herein of "real estate taxes levied by the City of New
York" shall be deemed to refer to the aggregate of all Borough-wide levies
against the Land and Building, whether called City taxes, City and Borough
assessments or by any other term.

      (6)   If the attorneys for Owner in any administrative or court
proceedings succeed or shall have succeeded in reducing the assessed valuation
for real estate tax purposes of the real estate known as 71 West 23rd Street,
the Borough of Manhattan, City of New York, for any fiscal year of the City of
New York subsequent to the Base Tax Year, the whole or any part of which

                                       12<PAGE>   1
                                                                   EXHIBIT 10.18

                                    SUBLEASE

        THIS SUBLEASE is dated for references purposes as of January 14, 2000,
and is entered by and between LOOKSMART, LTD., a Delaware corporation
("Sublessor"), and ORGANIC, INC., a Delaware corporation ("Sublessee").
Sublessor and Sublessee hereby agree as follows:

        1. Recitals: This Sublease is made with reference to the fact that
Rosenberg SOMA Investments III, LLC ("Master Lessor"), as Landlord, and
Sublessor, as Tenant, entered into that certain Office Lease, dated as of May 5,
1999 ("Master Lease") with respect to that certain four-story building
("Building") commonly known as 625 Second Street, San Francisco, California
94107, as more particularly described in the Master Lease ("Premises"). A true
and complete copy of the Master Lease is attached hereto as Exhibit A and
incorporated by reference herein.

        2. Premises: Sublessor hereby leases to Sublessee, and Sublessee hereby
leases from Sublessor, a portion of the Premises consisting of approximately
thirty thousand (30,000) rentable square feet (including all existing network
cabling) ("Subleased Premises"), located on the ground floor of the Building.
The Subleased Premises and the Building are more particularly described on
Exhibit B attached hereto and incorporated by reference herein.

        3. Term:

               A. Term. The term of this Sublease ("Term") shall be for that
period commencing on the later of (i) the date on which Sublessor delivers the
Subleased Premises to Sublessee in the condition required by this Sublease, and
(ii) the date on which Sublessor has received Landlord's written consent to this
Sublease ("Commencement Date"), and ending on December 31, 2000 ("Expiration
Date"), unless this Sublease is sooner terminated pursuant to its terms or the
Master Lease is sooner terminated pursuant to its terms.

               B. No Option to Extend. The parties acknowledge that Sublessee
has no option to extend the Term of this Sublease.

        4. Rent:

               A. Monthly Base Rent. Commencing on the Commencement Date and
continuing on first day of each calendar month of the Term, Sublessee shall pay
to Sublessor Monthly Base Rent for the Subleased Premises in equal monthly
installments of One Hundred Eight Thousand Seven Hundred Fifty and No/100
Dollars ($108,750.00).

As used herein, "month" shall mean a period beginning on the first (1st) day of
a calendar month and ending on the last day of that month. Monthly Base Rent
shall be paid on or before the first (1st) day of each month. Rent (as defined
in Paragraph 4.B. below) for any period during the Term hereof

                                      -1-
<PAGE>   2

which is for less than one month of the Term shall be a prorata portion of the
monthly installment based on a 30-day month. Rent shall be payable without
notice or demand and without any deduction, offset, or abatement, in lawful
money of the United States of America. Rent shall be paid directly to Sublessor
at 625 Second Street, San Francisco, California 94107, Attn: Accounts
Receivable, or such other address as may be designated in writing by Sublessor.

               B. Additional Rent. In addition to Monthly Base Rent, Sublessee
shall pay to Sublessor, within twenty (20) days after receipt of Sublessor's
invoice therefor, Sublessee's Proportionate Share of Sublessor's costs for all
utilities and janitorial service for the Premises. Sublessee's Proportionate
Share hereby is agreed to be twenty-two and twenty-five hundredths percent
(22.25%), based upon the ratio that the square footage of the Subleased Premises
bears to the square footage of the Premises. Sublessee shall be responsible for
payment of its own telephone, telecommunications and data communications
charges. All monies required to be paid by Sublessee under this Sublease (except
for Monthly Base Rent, as defined in Paragraph 4.A.) shall be deemed additional
rent ("Additional Rent"). Monthly Base Rent and Additional Rent hereinafter
collectively shall be referred to as "Rent."

               C. Payment of First Month's Rent. Upon the execution of this
Sublease by Sublessee, Sublessee shall pay to Sublessor the sum of One Hundred
Eight Thousand Seven Hundred Fifty and No/100 Dollars ($108,750.00), which sum
shall constitute Monthly Base Rent for the first month of the Term.

        5. Security Deposit: Upon the execution of this Sublease by Sublessee,
Sublessee shall deposit with Sublessor, in cash, the sum of Two Hundred
Thirty-Seven Thousand Five Hundred and No/100 Dollars ($237,500.00) as security
for the performance by Sublessee of the terms and conditions of this Sublease
("Security Deposit"). If Sublessee fails to pay Rent or other charges due
hereunder or otherwise defaults with respect to any provision of this Sublease,
and such default continues after the passage of applicable notice and cure
periods, then Sublessor may, but shall not be required to, draw upon, use, apply
or retain all or any portion of the Security Deposit for the payment of any Rent
or other charge in default, for the payment of any other sum which Sublessor has
become obligated to pay by reason of Sublessee's default, or to compensate
Sublessor for any loss or damage which Sublessor has suffered thereby. The use,
application or retention of the Security Deposit, or any portion thereof, by
Sublessor shall not prevent Sublessor from exercising any other right or remedy
provided by this Sublease or by law, it being intended that Sublessor shall not
first be required to proceed against the Security Deposit, and the Security
Deposit shall not operate as a limitation on any recovery to which Sublessor
otherwise may be entitled. If Sublessor so uses or applies all or any portion of
the Security Deposit, then Sublessee shall, within five (5) days after demand
therefor, deposit cash with Sublessor in the amount required to restore the
Security Deposit to the full amount stated above. Within thirty (30) days after
the later of the expiration or earlier termination of this Sublease and the date
that Sublessee surrenders the Subleased Premises in the condition required by
this Sublease, if Sublessee is then in default hereunder beyond applicable
notice and cure periods, Sublessor may retain so much of the

                                      -2-
<PAGE>   3

Security Deposit as is permitted to be applied by Sublessor pursuant to this
Paragraph, or which otherwise is required to cure Sublessee's defaults.
Sublessor shall return the balance, if any, to Sublessee. If Sublessee has not
been in default beyond applicable notice and cure periods under this Sublease,
and, at the beginning of the second-to-last and last months of the Term,
respectively, Sublessee is not then in default beyond applicable notice and cure
periods, then Sublessor shall credit one-half of the Security Deposit to Monthly
Base Rent for the second-to-last month of the Term, and the remaining balance to
the last month of the Term, and Sublessor thereafter shall be relieved of any
obligation to return the Security Deposit to Sublessee.

6. Equipment:

        A. Contents. Sublessor shall deliver the Subleased Premises to Sublessee
equipped with the existing phone switch, voice mail system and one hundred (100)
handsets, in a configuration to be agreed upon by Sublessor and Sublessee.
Sublessor also shall deliver the Subleased Premises to Sublessee with a minimum
of one hundred (100) desks previously used by Sublessor. The phone switch, voice
mail system, handsets and desks hereinafter collectively shall be referred to as
the "Equipment". Sublessee shall use the Equipment in its "as-is, where-is"
condition, and Sublessor shall have no obligation to repair or replace any item
of Equipment. Sublessor makes no representation or warranty of any kind with
respect to the Equipment, including, without limitation, the condition or
fitness of the Equipment for Sublessee's proposed or actual use thereof. Upon
the expiration or earlier termination of this Sublease, Sub-Sublessee shall
return the phone switch, voice mail system and handsets to Sublessor in the
condition received, normal wear and tear excepted, but Sublessee, at its option,
shall be allowed to keep and thereafter own the desks. At Sublessee's request,
Sublessor shall provide to Sublessee a bill of sale with respect to the desks.

        B. Payment. Commencing on the Commencement Date and continuing on the
first day of each full calendar month thereafter, Sublessee shall pay to
Sublessor the sum of Ten Thousand and No/100 Dollars ($10,000.00) as rent
("Equipment Rent") for the Equipment. The Equipment Rent shall be deemed
Additional Rent hereunder, and Sublessee's failure to timely pay the Equipment
Rent shall be a default under this Sublease. Upon the execution of this Sublease
by Sublessee, Sublessee shall pay to Sublessor the sum of Ten Thousand and
No/100 Dollars ($10,000.00), which sum shall constitute Equipment Rent for the
first month of the Term.

        7. Condition of Subleased Premises: On the Commencement Date, Sublessor
shall deliver the Subleased Premises to Sublessee in broom-clean condition.
Sublessee shall have the right, in cooperation with Sublessor, to use the
loading dock for moving into and out of the Subleased Premises. Sublessee shall
be permitted to walk through and inspect the Subleased Premises with Sublessor
to determine whether the Subleased Premises is in the condition required by this
Paragraph and Paragraph 6 above. Other than as provided in the foregoing
sentence and in Paragraph 6, Sublessor shall deliver the Subleased Premises to
Sublessee in its "as-is" condition, and Sublessor shall have no obligation
whatsoever to make or pay the cost of any alterations, improvements or repairs
to the Subleased Premises, including, without limitation, any

                                      -3-
<PAGE>   4

improvement or repair required to comply with any law, regulation, building code
or ordinance (including, without limitation, the Americans with Disabilities Act
of 1990). Subject to Paragraph 29.D. below, Sublessee shall look solely to the
Master Lessor for performance of any repairs required to be performed by Master
Lessor under the terms of the Master Lease.

        8. Indemnity:

               A. Sublessee's Indemnification. In addition to the
indemnifications set forth in Sections 18.1 and 7.2(a) of the Master Lease,
except to the extent caused by Sublessor's gross negligence or willful
misconduct, Sublessee shall indemnify, protect, defend with counsel reasonably
acceptable to Sublessor and hold harmless Sublessor from and against any and all
claims, liabilities, judgments, causes of action, damages, costs and expenses
(including reasonable attorneys' and experts' fees), caused by or arising in
connection with: (i) a breach of Sublessee's obligations under this Sublease; or
(ii) a breach of Sublessee's obligations under the Master Lease.

               B. Sublessor's Indemnification. Except to the extent caused by
Sublessee's negligence or willful misconduct, Sublessor shall indemnify,
protect, defend with counsel reasonably acceptable to Sublessee and hold
Sublessee harmless from and against any and all claims, liabilities, judgments,
causes of action, damages, costs, and expenses (including reasonable attorneys'
and experts' fees), caused by or arising in connection with: (i) a breach of
Sublessor's obligations under this Sublease; or (ii) a breach of Sublessor's
obligations as Tenant under the Master Lease to the extent those obligations are
not assumed by Sublessee under this Sublease; or (iii) the gross negligence or
willful misconduct of Sublessor, its employees, contractors, agents or invitees
occurring on or about the Subleased Premises or the Building. Sublessee shall
have no responsibility or cost obligation with respect to Hazardous Materials
used, stored, released, disposed of, generated or transported by Sublessor, its
agents, employees, contractors or invitees on or about the Subleased Premises or
the Building.

        The foregoing indemnifications referenced and set forth in this
Paragraph shall survive the expiration or earlier termination of this Sublease.

        9. Right to Cure Defaults: If Sublessee fails to pay any sum of money to
Sublessor, or fails to perform any other act on its part to be performed
hereunder after the passage of applicable notice and cure periods, then
Sublessor may, but shall not be obligated to, upon two (2) business days' prior
notice to Sublessee, make such payment or perform such act. All such sums paid,
and all reasonable costs and expenses of performing any such act, shall be
deemed Additional Rent payable by Sublessee to Sublessor upon demand, together
with interest thereon at the maximum rate permitted by law from the date of the
expenditure until repaid.

        10. Assignment and Subletting: Sublessee may not assign this Sublease,
sublet the Subleased Premises, transfer any interest of Sublessee therein, or
permit any use of the Subleased Premises by another party.

                                      -4-
<PAGE>   5

        11. Use: Sublessee may use the Subleased Premises only for the uses
permitted in Article 7 of the Master Lease and for no other purpose. Upon
demand, Sublessee shall pay to Sublessor all taxes or charges imposed by
applicable governmental authorities against the Subleased Premises or Sublessor
(including, without limitation, assessments imposed as a consequence of the
occurrence, storage, use or disposal of Hazardous Materials by Sublessee, its
agents, employees, contractors or invitees in or about the Subleased Premises or
the Building). Sublessee shall not do or permit anything to be done in or about
the Subleased Premises which would (i) injure the Subleased Premises, or (ii)
vibrate, shake, overload, or impair the efficient operation of the Subleased
Premises or the sprinkler systems, heating ventilating or air conditioning
equipment, or utilities systems located therein. Sublessee shall not store any
materials, supplies, finished or unfinished products, or articles of any nature
outside of the Subleased Premises. Sublessee shall comply with all rules and
regulations promulgated from time to time by Master Lessor and which have been
delivered to Sublessee.

        12. Effect of Conveyance: As used in this Sublease, the term "Sublessor"
means the holder of the lessee's interest under the Master Lease. In the event
of any transfer of said lessee's interest, the Sublessor shall be and hereby is
entirely relieved of all covenants and obligations of the Sublessor hereunder
from and after the date of the transfer, and it shall be deemed and construed,
without further agreement between the parties, that the transferee has assumed
and shall carry out all covenants and obligations thereafter to be performed by
Sublessor hereunder. Sublessor shall transfer and deliver any security of
Sublessee to the transferee of said lessee's interest in the Master Lease, and
thereupon the Sublessor shall be discharged from any further liability with
respect thereto.

        13. Delivery and Acceptance: If Sublessor is unable to deliver
possession of the Subleased Premises to Sublessee on or before the Commencement
Date for any reason whatsoever, then this Sublease shall not be void or
voidable, nor shall Sublessor be liable to Sublessee for any loss or damage;
provided, however, in such event, Rent shall abate until Sublessor delivers
possession of the Subleased Premises to Sublessee. By taking possession of the
Subleased Premises, Sublessee shall conclusively be deemed to have accepted the
Subleased Premises in their as-is, then-existing condition, subject to the
provisions of Paragraph 7 hereof.

        14. Improvements: No alterations or improvements shall be made to the
Subleased Premises except in accordance with this Sublease and Article 13 of the
Master Lease, and with the prior written consent of both Master Lessor and
Sublessor, which consent of Sublessor shall not be unreasonably withheld or
delayed. Upon the expiration or earlier termination of this Sublease, Sublessee
shall be responsible for removing any and all alterations or improvements
installed in the Subleased Premises by Sublessee, provided that Sublessor
notified Sublessee in writing of such removal requirement at the time Sublessor
consented to such alterations or improvements.

                                      -5-
<PAGE>   6

        15. Release: Sublessor shall not be liable to Sublessee, nor shall
Sublessee be entitled to terminate this Sublease or to abate Rent, for any
reason, including, without limitation: (i) failure or interruption of any
utility system or service; or (ii) failure of Master Lessor to maintain the
Subleased Premises as may be required under the Master Lease. Notwithstanding
the foregoing to the contrary, to the extent that Rent is abated for Sublessor
with respect to the Subleased Premises pursuant to the terms of the Master
Lease, Sublessee's Rent obligations with respect to the Subleased Premises also
shall be abated. So long as Sublessor or Sublessee are corporations, the
obligations of Sublessor and Sublessee shall not constitute the personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders or other principals or representatives of such
corporations.

        16. Default: Sublessee's performance of each of its obligations under
this Sublease constitutes a condition as well as a covenant, and Sublessee's
right to continue in possession of the Subleased Premises is conditioned upon
such performance. In addition, Sublessee shall be in material default of its
obligations under this Sublease if Sublessee is responsible for the occurrence
of any of the events of default set forth in Section 24.1 of the Master Lease.

        17. Remedies: In the event of any default by Sublessee under this
Sublease beyond applicable notice and cure periods (including, without
limitation, a default pursuant to Section 24.1 of the Master Lease), Sublessor
shall have all remedies provided by applicable law, including, without
limitation, all rights pursuant to Sections 24.2 and 24.4 of the Master Lease.
Sublessor may resort to its remedies cumulatively or in the alternative.

        18. Surrender: On or before the Expiration Date or earlier termination
of this Sublease, Sublessee shall remove all of its trade fixtures and all
alterations and improvements which Master Lessor requires be removed, and shall
surrender the Subleased Premises to Sublessor in the condition required by
Article 32 of the Master Lease, free of Hazardous Materials stored, used or
disposed of by Sublessee. If the Subleased Premises are not so surrendered, then
Sublessee shall be liable to Sublessor for all costs incurred by Sublessor in
returning the Subleased Premises to the required condition, plus interest
thereon at the maximum rate permitted by law. Sublessee shall indemnify, defend,
protect and hold harmless Sublessor against any and all claims, liabilities,
judgments, causes of action, damages, costs, and expenses (including attorneys'
and experts' fees) resulting from Sublessee's delay in surrendering the
Subleased Premises, including, without limitation, any claim made by any
succeeding tenant founded on or resulting from such failure to surrender. The
indemnification set forth in this Paragraph shall survive the expiration or
earlier termination of this Sublease.

        19. Brokers: Sublessor and Sublessee each represent to the other that
they have dealt with no real estate brokers, finders, agents or salesmen in
connection with this transaction, except Julien T. Studley, Inc., representing
Sublessee, and Colliers Parrish International, representing Sublessor. Each
party agrees to hold the other party harmless from and against all claims for
brokerage commissions, finder's fees, or other compensation made by any other
agent, broker,

                                      -6-
<PAGE>   7

salesman or finder as a consequence of said party's actions or dealings with
such agent, broker, salesman, or finder. Pursuant to separate agreement,
Sublessor shall pay any commission due in connection with this transaction.

        20. Notices: Unless five (5) days' prior written notice is given in the
manner set forth in this Paragraph, the addresses of Sublessor and Sublessee for
all purposes connected with this Sublease shall be the addresses set forth below
their respective signatures. All notices, demands, or communications in
connection with this Sublease shall be considered received when (i) personally
delivered, or (ii) if properly addressed and either sent by nationally
recognized overnight courier or deposited in the mail (registered or certified,
return receipt requested, and postage prepaid), on the date shown on the return
receipt or other documentation for acceptance or rejection. All notices given to
the Master Lessor under the Master Lease shall be considered received only when
delivered in accordance with the Master Lease to all parties hereto at the
addresses set forth below their signatures at the end of this Sublease and to
Master Lessor at the address set forth in the Master Lease.

        21. Severability: If any term of this Sublease is held to be invalid or
unenforceable by any court of competent jurisdiction, then the remainder of this
Sublease shall remain in full force and effect to the fullest extent possible
under the law, and shall not be affected or impaired.

        22. Amendment: This Sublease may not be amended except by the written
agreement of all parties hereto.

        23. Sublessee's Liability Insurance: Notwithstanding anything to the
contrary contained in this Sublease or the Master Lease, Sublessor hereby
consents to Sublessee carrying commercial general liability insurance in the
amount of $1,000,000.00 per occurrence, $2,000,000.00 aggregate, with an
umbrella policy in the amount of $10,000,000.00, subject to Master Lessor's
consent.

        24. Other Sublease Terms:

               A. Incorporation By Reference. The terms and conditions of this
Sublease shall include various Sections of the Master Lease, which are
incorporated into this Sublease as if fully set forth, except that: (i) each
reference in such incorporated Sections to "Lease" shall be deemed a reference
to "Sublease"; (ii) each reference to the "Premises" shall be deemed a reference
to the "Subleased Premises"; (iii) each reference to "Landlord" and "Tenant"
shall be deemed a reference to "Sublessor" and "Sublessee", respectively, except
as expressly set forth herein; (iv) with respect to work, services, repairs,
restoration, provision of insurance or the performance of any other obligation
of Master Lessor under the Master Lease, the sole obligation of Sublessor shall
be to request the same in writing from Master Lessor as and when requested to do
so by Sublessee, and to use Sublessor's diligent good faith efforts (without
requiring Sublessor to spend more than a nominal sum) to obtain the Master
Lessor's performance; (v) with respect to any obligation of Sublessee to be
performed under this Sublease, wherever the Master Lease grants to Sublessor a
specified number of

                                      -7-
<PAGE>   8

days to perform its obligations under the Lease, Sublessee shall have three (3)
fewer days to perform the obligation, including, without limitation, curing any
defaults (provided, however, that if any cure period provides for three (3) days
or less to perform, Sublessee shall have two (2) business days to perform); and
(vi) with respect to any approval required to be obtained from the "Landlord"
under the Master Lease, such consent must be obtained from both the Master
Lessor and the Sublessor and the approval of Sublessor may be withheld, if the
Master Lessor's consent is not obtained.

        The following paragraphs of the Master Lease are hereby incorporated
into this Sublease:

        Basic Lease Information Terms (b), (c), (d), (e), (g), and (k);

        The first full paragraph of Section 4.3, except that (i) the references
to "Landlord" in the third, fifth, seventh, ninth and twelfth sentences of that
paragraph shall mean only Master Lessor; and (ii) the reference to "Tenant" in
the seventh sentence shall mean only Sublessor, and (ii) the fourth and sixth
sentences of Section 4.3 hereby are deleted;

        Section 5.2;

        Article 7;

        Article 8, but only with respect to Master Lessor's address and notice
requirements;

        Articles 10 and 11;

        Article 13, except that (i) the references to "$25,000" in Section 13.2
shall be changed to "$5,000", and (ii) the references to "Landlord" in the first
and third sentences of Section 13.8 shall mean only Master Lessor;

        Article 14, except that (i) the first phrase of the first sentence and
the last phrase of the sixth sentence of Section 14.1 hereby are deleted; and
(ii) the references to "Landlord" in the third and fourth sentences of Section
14.1 and in Section 14.2 (other than in line 19) shall mean only Master Lessor;

        Articles 15 through 19;

        Article 20, except that the references to "Landlord" in Sections 20.3
and 20.8 shall mean only Master Lessor;

        Article 21, except that (i) the references to "Landlord" in Sections
21.1, 21.2, 21.3, 21.4, 21.5, 21.6 and 21.7 shall mean only Master Lessor; (ii)
the last two sentences of Sections 21.1 and 21.2 hereby are deleted; and (iii)
the "Tenant's" right to terminate in Sections 21.3 and 21.4 shall be exercised
only by Sublessor in its sole but reasonable discretion;

                                      -8-
<PAGE>   9

        Article 22, except that (i) references to "Landlord" in Sections 22.1
and 22.2 shall mean only Master Lessor; and (ii) the "Tenant's" right to
terminate in Section 22.1 shall be exercised only by Sublessor in its sole but
reasonable discretion;

        Article 23;

        Article 24, except that Sections 24.3 and 24.5 hereby are deleted;

        Articles 26 through 33, except that references to "Landlord" in Articles
27 and 29 shall mean only Master Lessor;

        Articles 34 and 35, except that the reference to "ten (10) days" in
Article 34 shall be changed to "five (5) days";

        Articles 36 through 47, except that references to "Landlord" in the
first sentence of Article 36, the last sentence of Article 39 and the last
sentence of Article 46 shall mean only Master Lessor;

        Article 48, except that the second, third, sixth, seventh, ninth, tenth,
eleventh and twelfth sentences hereby are deleted;

        Articles 49 through 53, except that references in Article 51 to
financial statements for the last two years shall be deemed to mean references
to Sublessee's audited financial statements for the last nine months, together
with additional financial statements if requested by Master Lessor, subject to
Master Lessor's agreement to keep such additional financial statements
confidential;

        Article 55, except that (i) the references to "Landlord" in the first
two sentences of this Article shall mean only Master Lessor; (ii) the first
phrase of the third sentence and the fourth sentence of this Article hereby is
deleted; and (iii) the reference to "Landlord's indemnification obligation"
hereby is deleted; and

        Exhibits A, B, C and D.

        B. Assumption of Obligations: This Sublease is and all times shall be
subject and subordinate to the Master Lease and the rights of Master Lessor
thereunder. Sublessee hereby expressly assumes and agrees except as otherwise
expressly provided herein: (i) to comply with all provisions of the Master Lease
with respect to the Subleased Premises; (ii) to perform all the obligations on
the part of the "Tenant" to be performed under the terms of the Master Lease
with respect to the Subleased Premises during the Term of this Sublease; and
(iii) to hold Sublessor free and harmless of and from all liability, judgments,
costs, damages, claims, demands, and expenses (including reasonable attorneys'
and experts' fees) arising out of Sublessee's failure to comply with or to
perform Sublessee's obligations hereunder or the obligations of the "Tenant"
under the Master

                                      -9-
<PAGE>   10

Lease as herein provided, or to act or omit to act in any manner which will
constitute a breach of the Master Lease.

        25. Condition Precedent: This Sublease and Sublessor's and Sublessee's
obligations hereunder are conditioned upon obtaining the written consent (in
form and content acceptable to Sublessor in Sublessor's sole discretion, and in
form reasonably acceptable to Sublessee) of the Master Lessor. If Sublessor
fails to obtain the Master Lessor's consent, in form and content acceptable to
Sublessor and Sublessee as set forth in the preceding sentence, within thirty
(30) days after the latest of the dates of execution of this Sublease by
Sublessor and Sublessee, then either Sublessor or Sublessee may terminate this
Sublease by giving the other written notice, neither party shall have any
further rights or obligations hereunder and Sublessor shall return to Sublessee
all sums paid to Sublessor in connection with Sublessee's execution hereof. The
return of all sums paid by Sublessee shall be Sublessee's sole and exclusive
remedy in the event of a termination pursuant to the foregoing sentence.

        26. Parking: Sublessee shall have the right to use eight (8) parking
spaces in the Garage (upon completion of the Garage) upon payment of the monthly
Parking Lot Rent per space as set forth in Section 4.3 of the Master Lease.

        27. Signage: Sublessee shall have the right, at Sublessee's sole cost
and expense, to install signage outside the entry to the Subleased Premises in
accordance with the provisions of Section 48 of the Master Lease, subject to the
prior written consent of Sublessor, which shall not be unreasonably withheld or
delayed, and of Master Lessor.

        28. Sublessor's Representations: Sublessor represents and warrants that
it has full right and lawful authority to enter into this Sublease. Sublessor
further represents and warrants that the Master Lease is in full force and
effect, and that, to the best of its knowledge without a duty to investigate,
neither Sublessor nor Master Lessor are in default in the performance of their
respective obligations thereunder. So long as Sublessee pays all of the Rent due
hereunder and performs all of Sublessee's other obligations hereunder, Sublessor
shall do nothing to affect Sublessee's quiet and undisturbed possession and use
of the Subleased Premises for the Term of this Sublease.

        29. Sublessor's Obligations:

               A. No Voluntary Termination. Except with respect to Sublessor's
termination rights in the event of casualty or condemnation as set forth in the
Master Lease, Sublessor shall not voluntarily terminate the Master Lease during
the Term unless and until Master Lessor has agreed in writing to continue this
Sublease in full force and effect as a direct lease between Master Lessor and
Sublessee upon and subject to all of the terms, covenants and conditions of this
Sublease for the balance of the Term hereof. If Master Lessor so consents,
Sublessee shall attorn to Master Lessor in connection with any such voluntary
termination and shall execute an attornment agreement in such form as may
reasonably be requested by Master Lessor; provided, however, that the attornment

                                      -10-
<PAGE>   11

agreement does not materially and adversely affect the use by Sublessee of the
Sublease Premises in accordance with the terms of this Sublease, materially
increase Sublessee's obligations under this Sublease or materially decrease
Sublessee's rights under this Sublease.

               B. Consent of Master Lessor. Sublessor agrees that in any case
where the rights conferred upon Sublessee in this Sublease require the consent
or approval of Master Lessor prior to the taking of any action, Sublessor shall
use commercially reasonable efforts (without the obligation to spend more than a
nominal sum) to obtain the consent or approval of Master Lessor, including the
transmission by Sublessor to Master Lessor of Sublessee's request for such
consent or approval and Sublessor's reasonable cooperation with Sublessee to
obtain such approval or consent.

               C. Notice of Default. Sublessor promptly shall deliver to
Sublessee a copy of any notice received by Sublessor claiming a default or
stating Master Lessor's intention to exercise any remedy reserved to Master
Lessor under the Master Lease. Sublessor agrees that if Sublessor fails to
perform or observe any of its obligations under this Sublease or the Master
Lease (to the extent such obligations under the Master Lease are not the
obligations of Sublessee hereunder), Sublessee may (but shall not be required
to) perform such obligations, and Sublessor shall reimburse Sublessee for its
actual and reasonable costs in connection therewith.

               D. Enforcement of Master Lease. Within a reasonable period after
receipt of request of Sublessee, Sublessor shall notify Master Lessor if Master
Lessor fails to perform any of its obligations under the Master Lease, and
Sublessor shall cooperate with Sublessee, at Sublessee's sole cost and expense,
in requiring the performance by Master Lessor of its obligations under the
Master Lease.

               E. Sublessor's Failure to Pay Rent Due Under the Master Lease.
Sublessor hereby irrevocably authorizes and directs Sublessee, upon receipt of
any written notice from Master Lessor stating that a default exists in the
performance of Sublessor's obligation to pay rent under the Master Lease, to pay
to Master Lessor the Rent due and to become due under this Sublease, unless and
until Master Lessor notifies Sublessee in writing that Sublessee again shall pay
such Rent to Sublessor. Sublessor agrees that Sublessee shall have the right to
rely upon any such statement and request from Master Lessor, and that Sublessee
shall pay such rents to Master Lessor without any obligation to inquire as to
whether such default exists and notwithstanding any notice or claim from
Sublessor to the contrary, and Sublessor shall have no right or claim against
Sublessee for any such Rent so paid by Sublessee.

               F. Estoppel Certificates. Within fifteen (15) days after receipt
of request by the other, Sublessor and Sublessee shall execute, acknowledge and
deliver to the requesting party a statement certifying the Commencement Date,
stating that this Sublease is unmodified and in full force and effect (or if
there have been modifications, that this Sublease is in full force and effect as
modified, and the nature of the modifications), the dates to which Rent has been
paid hereunder, and such other matters as reasonably may be requested by the
requesting party.

                                      -11-
<PAGE>   12

        30. Waiver of Subrogation: By consenting to this Sublease, Master Lessor
hereby agrees that the provisions of Section 20.6 of the Master Lease regarding
waiver of subrogation shall be extended to Sublessee, and Master Lessor,
Sublessor and Sublessee shall be bound thereby.

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

SUBLESSEE:                                         SUBLESSOR:

ORGANIC, INC.,                              LOOKSMART, LTD,
a Delaware corporation                      a Delaware corporation

By: Margaret Maxwell Zagel                  By: /s/ Ed O'Dea

Its: VP, Chief Legal Officer                Its: VP, Corporate Development

By: Sue Field

Its: Chief Executive Officer

Address:                                 Address:
       510 Third Street                         625 Second Street
       San Francisco, California  94107         San Francisco, California  94107
       Attn: Chief Financial Officer            Attn: VP Corporate Development
Telephone:                               Telephone:
       (415) 365-5684                           (415) 348-7553

with a copy to:

Barbara Milanovich, Esq.
Coblentz, Patch, Duffy & Bass
222 Kearny Street, 7th floor
San Francisco, CA  94108

(415) 391-4800

                                      -12-
<PAGE>   13
                                  OFFICE LEASE

                                 by and between

                       ROSENBERG SOMA INVESTMENTS III, LLC
                                   (Landlord)

                                      and

                                LOOKSMART, LTD.
                                    (Tenant)

                                   EXHIBIT A
<PAGE>   14
                               TABLE OF CONTENTS

 1.  The Premises............................................................. 5

 2.  Term..................................................................... 5

 3.  Possession............................................................... 7

 4.  Monthly Basic Rent/Parking Lot Rent...................................... 9

 5.  Operating Expenses.......................................................13

 6.  Security Deposit.........................................................19

 7.  Use......................................................................22

 8.  Payments and Notices.....................................................24

 9.  Brokers..................................................................24

10.  Holding Over.............................................................25

11.  Taxes on Tenant's Property...............................................25

12.  Condition of Premises....................................................26

13.  Alterations..............................................................26

14.  Repairs..................................................................30

15.  Liens....................................................................31

16.  Entry by Landlord........................................................31

17.  Utilities and Services...................................................32

18.  Indemnification..........................................................32

19.  Damage to Tenant's Property..............................................33

20.  Insurance................................................................33

                                       i
<PAGE>   15
21.  Damage or Destruction................................................... 35

22.  Eminent Domain.......................................................... 37

23.  Bankruptcy.............................................................. 38

24.  Defaults and Remedies................................................... 39

25.  Assignment and Subletting............................................... 41

26.  Quiet Enjoyment......................................................... 43

27.  Subordination........................................................... 43

28.  Estoppel Certificate.................................................... 44

29.  Rules and Regulations................................................... 44

30.  Conflict of Laws........................................................ 45

31.  Successors and Assigns.................................................. 45

32.  Surrender of Premises................................................... 45

33.  Professional Fees....................................................... 45

34.  Performance by Tenant................................................... 45

35.  Mortgage and Senior Lessor Protection................................... 46

36.  Definition of Landlord.................................................. 46

37.  Waiver.................................................................. 46

38.  Identification of Tenant................................................ 47

39.  Year 2000............................................................... 47

40.  Terms and Headings...................................................... 47

41.  Examination of Lease.................................................... 47

42.  Time.................................................................... 47

43.  Prior Agreement; Amendments............................................. 47

                                       ii
<PAGE>   16

<TABLE>

<S>     <C>                                                                   <C>

44.      Severability .....................................................    48

45.      Recording ........................................................    48

46.      Limitation on Liability ..........................................    48

47.      Riders ...........................................................    48

48.      Signs ............................................................    48

49.      Modification for Lender ..........................................    49

50.      Accord and Satisfaction ..........................................    49

51.      Financial Statements .............................................    49

52.      Tenant as Corporation ............................................    49

53.      No Partnership or Joint Venture ..................................    49

54.      Rooftop Deck/Rooftop Antennae ....................................    49

55.      Landlord's Representations .......................................    50

56.      Arbitration ......................................................    50

</TABLE>
<PAGE>   17

                       SUMMARY OF BASIC LEASE INFORMATION

      The undersigned hereby agree to the following terms of this Summary of
Basic Lease Information (the "Summary"). This Summary is hereby incorporated
into and made a part of the attached Office Lease (this Summary and the Office
Lease to be known collectively as the "Lease") which pertains to the office
building (the "Building") which is located at 625 Second Street, San Francisco,
California. Each reference in the Office Lease to any term of this Summary shall
have the meaning as set forth in this Summary for such term. In the event of a
conflict between the terms of this Summary and the Office Lease, the terms of
the Office Lease shall prevail. Any capitalized terms used herein and not
otherwise defined herein shall have the meaning as set forth in the Office
Lease.

<TABLE>
<CAPTION>
        TERMS OF LEASE                     DESCRIPTION
        --------------                     -----------
<S>                                        <C>
(a).    Date:                              May 5, 1999

(b).    Landlord:                          Rosenberg SOMA Investments III, LLC,
                                           a Delaware limited liability company

(c).    Address of Landlord:               c/o ROK Properties, Inc.
        (Paragraph 8)                      501 Second Street, Suite 214
                                           San Francisco, California 94107

                     with a copy to:       The Rosenberg Company
                                           580 California Street, Suite 2225
                                           San Francisco, California 94104

(d).    Tenant:                            LookSmart, Ltd., a Delaware corporation

(e).    Address of Tenant (Paragraph 8):   Prior to Commencement Date:
                                           LookSmart Ltd.
                                           487 Bryant Street
                                           San Francisco, California 94107-1516
                                           Attention: Mr. Ed O'Dea
        and

                                           After Lease Commencement Date, to:
                                           625 Second Street
                                           San Francisco, California 94107
                                           Attention: Mr. Ed O'Dea
                                           With a copy to: Director of Facilities

(f).    Premises (Paragraph 1):            All space existing on all four (4) floors of office space in the Building (referred to
                                           as "Floor One" "Floor Two", "Floor Three" and "Floor Four", respectively) consisting of
                                           approximately 134,847 rentable square feet, and all of  the basement parking garage and
                                           basement storage area consisting of approximately 2,162 rentable square feet, all as set
                                           forth in Exhibit A hereto.

</TABLE>
<PAGE>   18
<TABLE>
<CAPTION>
<S>                                       <C>
(g).  Building (Paragraph 1):             625 Second Street, San Francisco, California.

(h).  Term (Paragraph 2):                 Ten (10 years.

      (i)   Lease Commencement Date:      October 15, 1999, subject to adjustment pursuant to Paragraph 3 of
                                          the Lease.

      (ii)  Lease Expiration Date:        In the event that the Lease Commencement Date occurs on the first
                                          day of a calendar month, the Lease Expiration Date shall be the
                                          last day of the calendar month immediately preceding the calendar
                                          month in which the tenth (10th) anniversary of the Lease
                                          Commencement Date occurs and in the event that the Lease
                                          Commencement Date occurs on a date other than the first day of a
                                          calendar month, the Lease Expiration Date shall be the last day of
                                          the calendar month in which the tenth (10th) anniversary of the
                                          Lease Commencement Date occurs.

(i).  Renewal Options (Paragraph 2):      Two (2) consecutive five (5) year terms.

(j).  Monthly Basic Rent (Paragraph 4):

      During First Lease Year:            Three Hundred Sixteen Thousand Eight Hundred Ninety Dollars and 45
                                          CENTS ($316,890.45)

      During Second Lease Year:           Three Hundred Twenty-Eight Thousand One Hundred Twenty-Seven
                                          Dollars and 70 CENTS ($328,127.70)

      During Third Lease Year:            Three Hundred Thirty-Nine Thousand Three Hundred Sixty-Four
                                          Dollars and 95 CENTS ($339,364.95)

      During Fourth Lease Year:           Three Hundred Fifty-Six Thousand Two Hundred Twenty Dollars and 82
                                          CENTS ($356,220.82)

      During Fifth Lease Year:            Three Hundred Sixty-One Thousand Eight Hundred Thirty-Nine Dollars
                                          and 45 CENTS ($361,839.45)

      During Sixth Lease Year:            Three Hundred Seventy-Six Thousand Four Hundred Forty-Seven
                                          Dollars and 87 CENTS ($376,447.87)

      During Seventh Lease Year:          Three Hundred Eighty-Two Thousand Sixty-Six Dollars and 50 CENTS
                                          ($382,066.50)

      During Eight Lease Year:            Three Hundred Eighty-Seven Thousand Six Hundred Eighty-Five
                                          Dollars and 12 CENTS ($387,685.12)

      During Ninth Lease Year:            Three Hundred Ninety-Three Thousand Three Hundred Three Dollars
                                          and 75 CENTS ($393,303.75)

      During Tenth Lease Year:            Three Hundred Ninety-Eight Thousand Nine Hundred Twenty-Two
                                          Dollars and 37 CENTS ($398,922.37)

(k).  Parking Lot Rent (Paragraph 4.3):   See Paragraph 4.3.

(l).  Aggregate Monthly Basic Rent
      (Paragraph 4.5):                    Monthly Basic Rent plus Parking Lot Rent plus Storage Rent
</TABLE>

                                       2
<PAGE>   19
(m). Operating Expenses (Paragraph 5):

     (i) Base Year:                      1999, subject to Paragraph 5.3, and
                                         subject to readjustment at the
                                         commencement of the option terms (see
                                         Paragraph 5.1).

     (ii) Tenant's Percentage Share:     100%

(n). Security Deposit (Paragraph 6):     See Paragraph 6.

(o). Prepaid Rent (Paragraph 4.1):       $316,890.45, representing the first
                                         month's Monthly Basic Rent.

(p). Broker (Paragraph 9):

            Tenant Broker:               Colliers International (Michael D.
                                              McCarthy)
                                         Two Embarcadero Center, Suite 1000
                                         San Francisco, California 94111

            Landlord Broker:             ROK Properties, Inc.
                                         501 Second Street, Suite 214
                                         San Francisco, California 94107

(q). Work Letter (Exhibit E):            Attached.
<PAGE>   20
The foregoing terms of this Summary are agreed to by Landlord and Tenant.

LANDLORD:                                TENANT:

Rosenberg SOMA Investments III, LLC,     LookSmart, Ltd., a Delaware corporation
a Delaware limited liability company

By:  TRC Investors III, LLC, a           By: /s/ EDWARD M. O'DEA
     California limited liability           ------------------------------------
     company, Manager                    Name:   Edward M. O'Dea
                                              ----------------------------------
                                         Its:    VP Corp. Div.
                                             -----------------------------------
     By: The Rosenberg Company, a
         California corporation,         By:
         Manager                            ------------------------------------
                                         Name:
         By: /s/ DOUGLAS C. ROSENBERG         ----------------------------------
            -------------------------    Its:
         Douglas C. Rosenberg,               -----------------------------------
         President

         By: /s/ DOUGLAS C. ROSENBERG
            -------------------------
         Douglas C. Rosenberg,
         Secretary

                                       4
<PAGE>   21
The foregoing terms of this Summary are agreed to by Landlord and Tenant.

LANDLORD:                                TENANT:

Rosenberg SOMA Investments III, LLC,     LookSmart, Ltd., a Delaware corporation
a Delaware limited liability company

By:  TRC Investors III, LLC, a           By:
     California limited liability           ------------------------------------
     company, Manager                    Name:
                                              ----------------------------------
                                         Its:
                                             -----------------------------------
     By: The Rosenberg Company, a
         California corporation,         By:
         Manager                            ------------------------------------
                                         Name:
         By: /s/ DOUGLAS C. ROSENBERG         ----------------------------------
            -------------------------    Its:
         Douglas C. Rosenberg,               -----------------------------------
         President

         By: /s/ DOUGLAS C. ROSENBERG
            -------------------------
         Douglas C. Rosenberg,
         Secretary

                                       4
<PAGE>   22
                                  OFFICE LEASE

This Office Lease ("LEASE"), dated May 5, 1999 (the "EFFECTIVE DATE"), is made
and entered into by and between Rosenberg SOMA Investments III, LLC, a Delaware
limited liability company ("LANDLORD") and LookSmart, Ltd., a Delaware
corporation ("TENANT").

1.    The Premises.

      1.1   Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the Premises designated in the Summary and as outlined on the Floor
Plan attached hereto as Exhibit "A" in the building at the address designated in
the Summary (the "BUILDING"), located on the parcel of real property (the
"SITE") under the Building, subject to those rules and regulations attached
hereto as Exhibit D, and such additional reasonable rules and regulations as
Landlord may deliver in writing to Tenant from time to time. Tenant acknowledges
that Landlord has made no representation or warranty regarding the condition of
the Premises, Building, or Site except as specifically stated in this Lease. The
parties hereto agree that Tenant's leasing of the Premises is upon and subject
to the terms, covenants and conditions herein set forth and Tenant covenants as
a material part of the consideration for this Lease to keep and perform each and
all of said terms, covenants and conditions by it to be kept and performed and
that this Lease is made upon the condition of such performance.

      1.2   The rights and obligations of the parties regarding the construction
of the Premises are described in Paragraphs 2 and 3 of this Lease, and in the
Work Letter ("WORK LETTER") attached as Exhibit E. Any inconsistency between the
provisions of the Work Letter and the provisions of the balance of the Lease
shall be governed by the provisions of the Work Letter.

      1.3   The Premises as described herein shall include the right of Tenant
to use the loading dock. The obligations of Tenant with respect to the Premises
as provided in this Lease shall be applicable to the loading dock as well as to
the remainder of the Premises.

      1.4   References in this Lease to "rentable square feet", "rentable square
footage" and "rentable area" shall have the same meanings, and Tenant hereby
acknowledges and agrees that the rentable square footage of the Premises shall
be deemed, and is, 134,847 rentable square feet excluding the basement parking
and storage areas. No adjustment in the Monthly Basic Rent, Tenant's Percentage
Share, any monetary or other obligation of Tenant, or any other term of this
Lease shall be made by reason of any discrepancy in the rentable square footage
which is later discovered.

2.    Term.

      2.1   Subject to Paragraphs 2.2 and 3.1, the term of this Lease ("TERM")
shall commence on the Lease Commencement Date, and terminate on the Lease
Expiration Date, as such terms are defined in the Summary, unless the Term is
earlier terminated as hereinafter provided. Landlord shall provide Tenant, and
Tenant's consultant's and contractors, with access to the Premise at least three
(3) weeks prior to the anticipated Lease Commencement Date for purposes of
installation by Tenant of its fixtures, equipment, wiring, furniture and other
similar matters. In connection with any such early entry by Tenant, Tenant and
its consultants and contractors shall not interfere with the completion of
construction by Landlord of the Landlord's Work and the Tenant's Improvements
(as defined below). At all times that Tenant has access to the Premises, the
provisions of this Lease shall be applicable, provided only that the obligation
of Tenant to

                                       5
<PAGE>   23
pay Monthly Basic Rent, Parking Lot Rent and Operating Rent (as defined below)
shall not commence until the Lease Commencement Date.

     2.2  Landlord shall substantially complete the initial, base improvements
to the Building and the Premises, as required of Landlord pursuant to the terms
of the Work Letter, ("LANDLORD'S WORK") and shall further substantially
complete the Tenant's Improvements ("TENANT'S IMPROVEMENTS") as described in
the Work Letter on or before October 15, 1999 with respect to Floor Three and
Floor Four and October 22, 1999 with respect to Floor One and Floor Two. The
Lease Commencement Date shall be October 15, 1999 as specified in the Summary,
subject, however, to adjustment pursuant to the provisions of Paragraph 3
below. The Lease Commencement Date shall occur notwithstanding that Floor One
and Floor Two have not been delivered by Landlord to Tenant, it being
acknowledged that it is anticipated that Floor One and Floor Two will be
delivered subsequent to delivery of Floor Three and Floor Four. The actual
Lease Commencement Date shall be specified in Landlord's Notice of Lease Term
Dates ("NOTICE"), in the form of Exhibit "B" attached hereto, and shall be
served upon Tenant as provided in Paragraph 8, as soon as Landlord determines
that the Landlord's Work and the Tenant's Improvements with respect to Floor
Three and Floor Four have been substantially completed as provided in Paragraph
3.1 below. The Notice shall be binding upon Tenant unless Tenant objects to the
Notice in writing, served upon Landlord as provided in Paragraph 8, within five
(5) business days of Tenant's receipt of the Notice.

     2.3  Tenant shall have two (2) consecutive options (the "EXTENSION
OPTIONS"; each an "EXTENSION OPTION") to extend the Term, each for a five (5)
year period (the "FIRST EXTENDED TERM" and "SECOND EXTENDED TERM", respectively;
each an "EXTENDED TERM") on all the terms and conditions contained in this
Lease with the exception of the Monthly Basic Rent and the Base Year which
shall be adjusted pursuant to the provisions of Paragraphs 4.2 and 5.1 below.
Upon commencement of the First Extended Term, the only remaining option to
extend the Term shall be the Second Extended Term, and upon exercise of the
option with respect to the Second Extended Term, no further right to extend the
Term shall exist. In the event Tenant fails to timely exercise the option for
the First Extended Term, Tenant's option for the Second Extended Term shall be
void. In order to exercise an Extension Option, Tenant shall deliver written
notice of its exercise of the option ("OPTION NOTICE") to Landlord at least two
hundred twenty-five (225) days but not more than one (1) year before the
expiration of the initial Term or First Extended Term, as the case may be. The
Extension Options shall be subject to the following terms and conditions:

          (a)  An Extension Option may be exercised only by delivery of the
Option Notice as provided in this Paragraph and only if, as of the date of
delivery of the Option Notice, Tenant is not in default, beyond applicable cure
periods, under this Lease.

          (b)  The rights contained in this Paragraph shall be personal to the
originally named Tenant and may be exercised only by the originally named
Tenant (and not any assignee, sublessee, or other transferee of Tenant's
interest in this Lease other than a Permitted Transferee as defined in
Paragraph 25 below) and only if the originally named Tenant (or Permitted
Transferee) occupies the entire Premises as of the date it exercises an
Extension Option in accordance with the terms of this Paragraph.

          (c)  If Tenant properly exercises an Extension Option and is not in
default, beyond applicable cure periods, under this Lease at the end of the
initial Term (or the First Extended Term, as the case may be), the Term shall
be extended for the applicable Extended Term.

     References in this Lease to the "Term" shall include the initial Term of
ten (10) years and shall, in

                                       6
<PAGE>   24
addition, include the First Extended Term and the Second Extended Term, as
applicable.

      2.4    For purpose of this Lease the term "LEASE YEAR" shall mean each
consecutive twelve (12) month period during the Term provided that (i) the first
Lease Year commences on the Lease Commencement Date and in the case in which the
Lease Commencement Date occurs on the first (1st) day of a calendar month, the
first Lease Year ends on the last day of the twelfth (12th) calendar month
thereafter (inclusive of the calendar month in which the Lease Commencement Date
occurs) and in the case in which the Lease Commencement Date occurs on other
than the first (1st) day of a calendar month, the first Lease Year ends on the
last day of the calendar month in which the first (1st) anniversary of the Lease
Commencement Date occurs; (ii) the second and each succeeding Lease Year
commences on the first day of the next calendar month; and (iii) the last Lease
Year ends on the Lease Expiration Date or earlier date of termination.

3.   Possession.

      3.1     Tenant agrees that in the event Landlord is unable to deliver
possession of Floor Three and Floor Four to Tenant, with Landlord's Work and the
Tenant's Improvements having been substantially completed on or before October
15, 1999, this Lease shall not be void or voidable, nor shall Landlord be liable
to Tenant for any loss or damage resulting therefrom. In the event that Landlord
fails to deliver Floor Three and Floor Four to Tenant with Landlord's Work and
Tenant's Improvements substantially completed on or before October 15, 1999, the
Lease Commencement Date shall be extended to the date on which Landlord delivers
Floor Three and Floor Four to Tenant with Landlord's Work and Tenant's
Improvements substantially completed subject to the limitations as provided in
Paragraph 3.2 below. For purposes of this Lease, Landlord's Work and Tenant's
Improvements shall be considered as having been substantially completed (i) upon
completion in all material respects of Landlord's Work and the Tenant's
Improvements with respect to Floor Three and Floor Four or Floor One and Floor
Two, as the case may be, as certified by Landlord's architect as identified in
the Work Letter ("LANDLORD'S ARCHITECT") subject only to such punch list items
as may have been identified by Landlord's Architect or by Tenant pursuant to the
provisions of Paragraph 12 below, and (ii) upon Landlord obtaining all
governmental approvals and occupancy certificates required for the legal
occupancy of the Floor Three and Floor Four or Floor One and Floor Two, as the
case may be, (collectively, "GOVERNMENT APPROVALS").

     3.2       Notwithstanding the provisions of Paragraphs 3.1 to the
contrary, any extension of the Lease Commencement Date in accordance with the
provisions of Paragraph 3.1 shall be reduced by the aggregate number of days of
Tenant Delay (as defined below). By way of example, if pursuant to the
provisions of Paragraph 3.1 the Lease Commencement Date occurs on October 25,
1999 but there is an aggregate number of ten (10) days of Tenant Delay, then
notwithstanding the provisions of Paragraph 3.1, the Lease Commencement Date
(and the obligation of Tenant to pay Monthly Basic Rent [subject to the
provisions of Paragraph 3.3 below], Parking Lot Rent and Operating Rent) shall
commence as of October 15, 1999. A delay by Tenant ("TENANT DELAY") shall occur
upon: (i) Tenant's failure to perform any obligation of Tenant to be performed
under the Work Letter on or before the date or within the time period set forth
in the Work Letter including, without limitation, any failure by Tenant to
timely satisfy a Tenant Benchmark (as defined in the Work Letter); (ii) any
change by Tenant in the Construction Drawings (as defined in the Work Letter)
which Tenant has previously approved or a change by Tenant in the work to be
performed in connection with the Tenant's Improvements from that work otherwise
specified in the Construction Drawings, which change results in a delay in the
construction of the Tenant's Improvements; (iii) failure of Tenant to timely
pay on or before the date required all amounts required to be paid by Tenant as
provided in the Work Letter; or (iv) any other delay caused by Tenant or
Tenant's Architect in connection with the design, construction or bidding

                                       7
<PAGE>   25
process with respect to the Tenant's Improvements including, without limitation,
the failure by Tenant or Tenant's Architect to promptly respond to reasonable
requests from the Contractor (as defined in the Work Letter) for clarification
and/or additional detail relating to the work to be performed pursuant to the
Construction Drawings. The period of any Tenant Delay with respect to the
matters described in clauses (i) or (iii) above, shall be the number of days
from the date on which the matter was to be performed by Tenant through and
including the day on which the matter is fully cured and performed by Tenant and
the number of days of any Tenant Delay as specified in clause (ii) and clause
(iv) above shall be equal to the number of days of delay in the performance of
the work in connection with the Tenant's Improvements resulting from the failure
by Tenant or by Tenant's consultants or representatives or the delay resulting
from any change made by Tenant as described in clause (ii). In the event that
Landlord during the construction of Tenant's Improvements asserts that a Tenant
Delay has occurred, Landlord shall give written notice of such asserted Tenant
Delay to Tenant and to Tenant's Architect as defined in the Work Letter
("TENANT'S ARCHITECT") which notice ("DELAY NOTICE") shall state specifically
the nature of the purported Tenant Delay. In the event that Landlord fails to
give a Delay Notice within five (5) business days following the occurrence of
the asserted Tenant Delay, Landlord shall be deemed to have waived such asserted
delay and shall thereafter not be entitled to assert such Tenant Delay in
connection with the provisions of this Paragraph 3.2 or Paragraph 3.3 below. In
the event that Landlord timely gives a Delay Notice and Tenant disagrees with
the assertion of the claimed delay by giving written notice of such disagreement
to Landlord within five (5) business days following the date on which the Delay
Notice is given, then within ten (10) days following the substantial completion
of the Landlord's Work and the Tenant's Improvements with respect to Floor One,
Floor Two, Floor Three and Floor Four as evidenced by the certificate of
Landlord's architect and receipt of the Government Approvals (collectively,
"COMPLETION CERTIFICATE"), Landlord's Architect and Tenant's Architect shall
attempt to come to an agreement, which agreement shall be binding on Landlord
and Tenant, as to whether any Tenant Delay has occurred and the number of days
of such Tenant Delay. A copy of the Completion Certificate shall be given by
Landlord to Tenant which, with respect to the Government Approvals, shall
consist of the certificate of occupancy. In the event that Landlord's Architect
and Tenant's Architect are unable to so agree within twenty (20) days following
the date on which the Landlord's Completion Certificate is given to Tenant then
the issue of the occurrence and the extent of any delay caused by Tenant shall
be subject to arbitration in accordance with the provisions of Paragraph 57. In
the event that Tenant fails to object to any Delay Notice given by Landlord by
timely giving written notice of such objection to Landlord, Tenant shall be
considered to have approved the Tenant Delay as set forth in the Delay Notice.
In the event that a final determination with respect to the occurrence of any
Tenant Delay as provided in this Paragraph 3.2 has not occurred on or before the
date asserted by Landlord to be the Lease Commencement Date (taking into account
any Tenant Delay as asserted by Landlord) then the Lease Commencement Date shall
be considered to have occurred on the date as provided in the Summary and in
accordance with the provisions of Paragraphs 2.2 and 3.1 subject to adjustment
as asserted by Landlord pursuant to the provisions of this Paragraph 3.2. In the
event that subsequent to such date it is finally determined that a further delay
in the occurrence of the Lease Commencement Date should have occurred by reason
of the provisions of Paragraph 3.1 and the provisions of this Paragraph 3.2,
then Tenant shall be entitled to a credit in an amount equal to the per day
amount in connection with the Monthly Basic Rent, the Parking Lot Rent and the
Operating Rent as then having been paid by Tenant for the prior of the
additional delay as finally determined pursuant to the provisions of this
Paragraph 3.2. Such credit shall be applied against the next payment of Monthly
Basic Rent, Parking Lot Rent and/or Operating Rent as then due pursuant to this
Lease from Tenant to Landlord.

     3.3  It is anticipated that Floor Three and Floor Four, with the
Landlord's Work and the Tenant's Improvements substantially completed, will be
delivered by Landlord to Tenant prior to delivery of Floor One and Floor Two.
Notwithstanding any provision to the contrary of this Lease, in the event that
Floor One and

                                       8
<PAGE>   26
Floor Two are delivered by Landlord to Tenant with the Landlord's Work and the
Tenant's Improvements substantially completed subsequent to the delivery of
Floor Three and Floor Four then, the Monthly Basic Rent otherwise payable as of
the Lease Commencement Date shall be reduced by fifty percent (50%) until such
time as Floor One and Floor Two are delivered by Landlord to Tenant with
Landlord's Work and Tenant's Improvements substantially completed in accordance
with the provisions of Paragraph 3.1. Commencing on such date (the "SUBSEQUENT
COMMENCEMENT DATE") and continuing thereafter, the full Monthly Basic Rent
shall be payable each month as otherwise provided in this Lease. The date on
which the Subsequent Commencement Date occurs (and thus the date on which the
obligation of Tenant to pay the full Monthly Basic Rent commences) shall be
adjusted to a date earlier than the date otherwise provided pursuant to this
Paragraph 3.3 by the number of days equal to the number of days of Tenant Delay
occurring prior to the Lease Commencement Date as described in Paragraph 3.2
together with the number of days of Tenant Delay occurring on and after the
Lease Commencement Date in connection with delivery by Landlord of Floor One
and Floor Two with the Landlord's Work and the Tenant's Improvements
substantially completed. The determination of the number of days of Tenant
Delay, including the number of days of Tenant Delay occurring on and after the
Lease Commencement Date shall be made in accordance with the provisions of
Paragraph 3.2 and shall be subject to arbitration in accordance with the
provisions of Paragraph 56. In connection with any partial calendar month, the
portion of the Monthly Basic Rent payable in connection with Floor One and
Floor Two (i.e. fifty percent) for each such day of any partial calendar month
shall be pro-rated on the basis of the actual number of days in such calendar
month.

     3.4  Notwithstanding the anticipated delivery dates with respect Floor
Three and Floor Four of October 15, 1999 and with respect to Floor One and
Floor Two of October 22, 1999, Landlord, by giving at least six (6) weeks prior
written notice to Tenant, shall be entitled to deliver Floor Three and Floor
Four substantially complete prior to October 15, 1999 but no earlier than
October 1, 1999 and/or deliver Floor One and Floor Two substantially complete
prior to October 22, 1999 but no earlier than October 8, 1999. In the event
that Landlord gives such notice to Tenant with respect to Floor Three and Floor
Four, the Lease Commencement Date shall occur on the date set forth in such
notice given by Landlord, notwithstanding the provisions to the contrary of
this Lease, including without limitation the provisions of the Summary subject,
however, to adjustment in accordance with the provisions of Paragraphs 2.2, 3.1
and 3.2 above. In the event that Landlord gives such notice with respect to
Floor One and Floor Two, the Subsequent Commencement Date shall occur on the
date set forth by such notice given by Landlord, subject to delay, in
accordance with the provisions of Paragraph 3.3 above. In the event that
Landlord gives any notice of early delivery pursuant to the provisions of this
Paragraph 3.4, Tenant hereby agrees to accept such early delivery in connection
with Floor Three and Floor Four and/or in connection with Floor One and Floor
Two.

     3.5  Notwithstanding anything in the foregoing Paragraphs to the contrary,
if the Landlord's Work and the Tenant's Improvements are not substantially
completed (as evidenced by a Completion Certificate) with respect to Floor
Three and Floor Four and Floor One and Floor Two on or before January 15, 2000,
then Tenant shall have the right to terminate this Lease by written notice
given to Landlord at any time prior to the date a certificate of occupancy is
obtained for the Premises. Termination of the Lease hereunder shall be Tenant's
sole remedy in the event of a failure of delivery of possession of the Premises
to Tenant.

4.   Monthly Basic Rent/Parking Lot Rent/Storage Rent.

     4.1  Tenant agrees to pay to Landlord as Monthly Basic Rent for the
Premises the Monthly Basic Rent designated in the Summary for each respective
period ("MONTHLY BASIC RENT"), each in advance on the first day of each and
every calendar month during said Term except that the first month's Monthly
Basic Rent

                                       9
<PAGE>   27
shall be paid upon the execution hereof. In the event the Term of this Lease
ends on a day other than the last day of a calendar month, then the rental for
such period shall be prorated in the proportion that the number of days this
Lease is in effect during such period bears to thirty (30), and such rental
shall be paid at the commencement of such period. In the event that the Lease
Commencement Date occurs other than on the first day of a calendar month, and
the full first month's Monthly Basic Rent has been previously paid as provided
in this Lease, then the rent for the initial partial calendar month commencing
as of the Lease Commencement Date shall be prorated in the proportion that the
number of days this Lease is in effect during such calendar month bears to
thirty (30) and the prepaid first month's Monthly Basic Rent shall be applied
to such prorated amount with the balance of the prepaid first month's Monthly
Basic Rent being applied to reduce the payment of Monthly Basic Rent to be paid
on the first day of the first full calendar month of the Term of this Lease
(and to the extent not entirely applied by reasons of the provisions of
Paragraph 3.3, applied to reduce the payment of the subsequent month's Monthly
Basic Rent until fully applied). In addition to said Monthly Basic Rent, Tenant
agrees to pay the amount of the rental adjustments as and when provided in this
Lease. Said Monthly Basic Rent and all additional rent including, without
limitation, Parking Lot Rent, Storage Rent and Operating Rent, shall be paid to
Landlord, without any prior demand therefor and without any deduction or offset
whatsoever in lawful money of the United States of America, which shall be
legal tender at the time of payment, at the address of Landlord designated in
Subparagraph (c) of the Summary or to such other person or at such other place
as Landlord may from time to time designate in writing. Further, all charges to
be paid by Tenant hereunder, including, without limitation, payments for
repairs and other costs and expenses shall be considered additional rent for
the purposes of this Lease, and the word "rent" in this Lease shall include such
additional rent as well as Monthly Basic Rent, Parking Lot Rent, Storage Rent
and Operating Rent unless the context specifically or clearly implies that only
the Monthly Basic Rent, Parking Lot Rent, Storage Rent and/or Operating Rent is
referenced. Tenant shall deliver to Landlord as prepaid rent that amount set
forth in the Summary upon execution of this Lease.

     4.   In the event Tenant exercises either of the options to extend the
Term pursuant to the provisions of Paragraph 2.3, the Monthly Basic Rent shall
be adjusted at the commencement of each Extended Term to reflect the then-fair
market rental value of the Premises pursuant to the terms of this Paragraph. The
fair market rental value of the Premises shall be determined in good faith by
Landlord, who shall notify Tenant of such determination in writing within thirty
(30) days of receipt of the Option Notice. If Tenant does not agree with
Landlord's determination, Tenant shall deliver written notice of Tenant's
objection to Landlord within fifteen (15) days of receipt of notice from
Landlord, or Landlord's determination of the fair market rental value shall be
final. If Tenant timely objects to Landlord's determination, Landlord and
Tenant shall diligently attempt in good faith to agree on the fair market
rental value of the Premises on or before the tenth (10th) day following
delivery of Tenant's written objection to Landlord's determination (the
"OUTSIDE AGREEMENT DATE"). If Landlord and Tenant are unable to agree on the new
Monthly Basic Rent by the Outside Agreement Date, the fair market rental value
of the Premises shall be determined by appraisal. Landlord and Tenant shall
first attempt to select a mutually agreeable appraiser to conduct the
appraisal, which appraiser's conclusion shall be binding on the parties. In the
event they are unable to agree on one appraiser within ten (10) days of the
Outside Agreement Date, the parties shall each select an appraiser within 20
(20) days of the Outside Agreement Date, who together shall attempt to
determine the fair market rental value of the Premises. If either party fails
to appoint an appraiser within such time period, the appraiser timely appointed
by the other party shall be the sole appraiser, whose determination shall be
binding on both parties. If two appraisers are timely appointed, but they are
unable to agree on the fair market rental value of the Premises within fifty
(50) days of the Outside Agreement Date, they shall mutually select a third
appraiser and the three appraisers shall each submit their appraisal of the
fair market rental value of the Premises within thirty (30) days of selection
of the third appraiser. The fair market rental value of the Premises shall be
the

                                       10

<PAGE>   28
average of the three appraisals; provided, however, that if either the high or
low appraisal differs from the middle appraisal by ten percent (10%) or more,
it shall be disregarded and the two remaining appraisals shall be averaged to
determine the fair market rental value. If both the high and low appraisals
differ from the middle appraisal by ten percent (10%) or more, then both shall
be disregarded, and the fair market rental value of the Premises shall be as
determined by the middle appraisal. Each party shall bear the cost of their
respective appraisers; if a third appraiser is necessary, the parties shall
share equally the cost of the third appraiser. All appraisers shall be MAI
qualified appraisers, and shall have a minimum of five (5) years experience in
the appraisal of commercial properties in the San Francisco Bay Area and no
appraiser shall have worked previously for Landlord or Tenant in any capacity.
The fair market rental value shall be based on comparable space in San
Francisco, which shall (i) not be subleased, (ii) shall be comparable in size,
location and quality with the Premises, (iii) shall be leased for a term
comparable to the subject option term (five years), and (iv) shall take into
account the value of any rent abatement, tenant improvement allowances or other
concessions given to the tenant of the comparable space. The Monthly Basic Rent
shall be adjusted to reflect the fair market rental value, as so determined.
The Base Year for each Extended Term shall be adjusted as set forth in
Paragraph 5.1 below.

      4.3   In addition to the Monthly Basic Rent, Tenant shall pay an
additional monthly rental amount (the "PARKING LOT RENT") for Tenant's use of
the Garage located in the basement of the Building. The Parking Lot Rent shall
be payable, in advance, on the first day of each and every calendar month during
the Term with amounts payable for any partial month to be prorated in proportion
to the number of days that this Lease is in effect during such period bears to
thirty (30) with such rental to be paid at the commencement of such period. The
Garage shall be delivered by Landlord to Tenant on or before the Lease
Commencement Date. The Garage shall constitute a portion of the Premises and
shall be subject to all terms and conditions of this Lease. During the Term,
Landlord shall provide a parking valet/attendant on all business days during the
hours of 8:00 a.m. to 6:00 p.m. Tenant, at its election, shall be entitled to
request Landlord to adjust the hours during which valet/attendant parking is
provided so that such hours commence one (1) hour earlier or one (1) hour later,
and end one (1) hour earlier or one (1) hour later, as the case may be, provided
that, in all events, Landlord shall not be obligated to provide valet/attendant
parking for in excess of ten (10) hours and further provided that any adjustment
in such hours requested by Tenant shall be subject to compliance with any
collective bargaining agreements then in effect with respect to the employees
providing parking and any excess cost incurred by reason of any such adjustment
in the hours shall be borne solely by Tenant. It is agreed that the number of
vehicles which can be reasonably valet parked in the Garage is ninety (90),
subject to an increase or decrease to a maximum of one hundred (100) and a
minimum of seventy (70) which increase or decrease shall be subject to the
reasonable determination of Landlord and Tenant. Entrance to the Garage shall be
pursuant to a card key access system. Prior to the Lease Commencement Date,
Landlord shall substantially complete installation of a card key reader
apparatus at the Garage entrance facing Colin P. Kelly Street which shall allow
24 hour/7 days per week access to the Garage via the use of magnetic card keys.
The Parking Lot Rent which Tenant shall pay to Landlord shall be the product of
the sum of Two Hundred Dollars ($200.00) multiplied by the number of vehicles
which can be reasonably valet parked in the Garage. The Parking Lot Rent shall
be adjusted upward on an annual basis, commencing on the first day (the "FIRST
ADJUSTMENT DATE")  of the second Lease Year and continuing thereafter on each
subsequent anniversary of the First Adjustment Date thereafter (each, an
"ADJUSTMENT DATE") throughout the initial ten (10) year Term of this Lease, by
an amount equal to four percent (4%) of the Parking Lot Rent in effect for the
month immediately preceding the subject Adjustment Date. Thereafter during the
Extended Terms (if applicable), in the sole and absolute discretion of Landlord,
the Parking Lot Rent shall be periodically adjusted upward to reflect
then-current market conditions. In no event shall the Parking Lot Rent be
decreased from the Parking Lot Rent in effect for the month immediately
preceding any adjustment.

                                       11
<PAGE>   29
     In the event that Landlord and Tenant are unable to agree upon the amount
of the increase or decrease in the number of vehicles which can be reasonably
valet parked in the Garage within ten business days following the written
request of either given to the other ("OUTSIDE PARKING DATE"), then the amount
of such increase or decrease shall be determined by a third party parking
company experienced in the valet parking of vehicles. The right to request a
determination by a third party parking company (or companies) as described in
this Paragraph shall be a one-time right and after exercise by either Landlord
or Tenant shall thereafter not be further exercisable by either Landlord or
Tenant. Landlord and Tenant shall first attempt to select a mutually agreeable
parking company to conduct a review of the Garage and determine on a basis
binding on both parties the amount of increase or decrease in the number of
vehicles which can be reasonably valet parked in the garage (referred to as the
"AMOUNT OF ADJUSTMENT"). In the event Landlord and Tenant are unable to agree
on a parking company within ten (10) days of the Outside Parking Date, the
parties shall each select a parking company within twenty (20) days of the
Outside Parking date, who together shall attempt to determine the Amount of
Adjustment. If either party fails to appoint a parking company within such time
period, the parking company timely appointed by the other party shall be the
sole parking company, whose determination shall be binding on both parties. If
two parking companies are timely appointed but they are unable to agree on the
Amount of Adjustment within forty (40) days of the Outside Parking date, they
shall mutually select a third parking company and the three parking companies
shall each submit their determination of the Amount of Adjustment within ten
(10) business days following the selection of the third parking company. The
Amount of Adjustment shall be the average of the three determinations,
provided, however, that if either the high or low determination differs from
the middle determination by 10% or more, it shall be disregarded and the two
remaining determinations shall be averaged to determine the Amount of
Adjustment. If both the high and low determinations differ from the middle
determination by 10% or more, then both shall be disregarded, and the Amount of
Adjustment shall be as determined by the middle parking company. Each party
shall bear the cost of its respective parking company; if a third parking
company is necessary, the parties shall share equally the cost of the third
parking company. All parking companies shall have a minimum of five (5) years
experience in the management and operation of valet parking lots and/or garages
and no parking company shall have previously worked for either the Tenant or
the Landlord.

     If the Amount of Adjustment is determined subsequent to the Lease
Commencement Date, the Parking Lot Rent payable as of the Lease Commencement
date shall be based upon the number of ninety (90) vehicles. In the event that
it is finally determined that an adjustment is required, then the Parking Lot
Rent payable on the first day of the next succeeding calendar month and
thereafter, shall be based upon the number of vehicles as so adjusted. In
addition, in the event that the Amount of Adjustment results in an increase in
the number of vehicles from the initially determined ninety (90), then within
twenty (20) days following receipt by Landlord and Tenant of final
determination of such Amount of Adjustment, Tenant shall pay to Landlord the
amount of additional Parking Lot Rent attributable to such adjustment based
upon Two Hundred Dollars ($200) per month per additional vehicle (pro rated if
necessary on the basis of a partial month). In the event that the Amount of
Adjustment results in a decrease in the number of vehicles from the initial
ninety (90), then Tenant shall be entitled to a credit against the next Parking
Lot Rent then due based upon such decrease in the number of vehicles at a rent
of Two Hundred Dollars ($200) per vehicle per month (with any partial month to
be pro rated).

     4.4  In addition to the Monthly Basic Rent and Parking Lot Rent, Tenant
shall be obligated to pay an additional monthly rental amount, (the "STORAGE
RENT") in accordance with the provisions of this Paragraph 4.4. Tenant shall be
entitled to use of the storage area within the Building ("STORAGE AREA"), which
Storage Area is described on Exhibit A attached hereto. The Storage Area
consists of Two Thousand One Hundred

                                       12
<PAGE>   30
and Sixty-two (2,162) useable square feet. Notwithstanding any other provision
of this Lease to the contrary, Landlord shall have no obligation to repair or
maintain any portion of the Storage Area or provide services of any kind
whatsoever with respect to the Storage Area. Tenant shall not be obligated to
pay any Storage Rent during the first five (5) Lease Years of the Term.
Commencing as of the first day of the sixth Lease Year of the Term and
continuing on the first (1st) day of each and every calendar month thereafter,
Tenant shall be obligated to pay storage rent in the amount of Two Thousand One
Hundred and Sixty-two Dollars ($2,162) per month. The Storage Rent for each
Extended Term, if applicable, shall be as determined by Landlord in its
reasonable discretion.

     4.5  The aggregate of the Monthly Basic Rent, the Parking Lot Rent and the
Storage Rent from time to time to be paid pursuant to the provisions of this
Lease may sometimes be referred to as the "AGGREGATE MONTHLY BASIC RENT". The
Aggregate Monthly Basic Rent shall be payable in advance on the first day of
each and every calendar month during the Term as provided herein in connection
with the Monthly Basic Rent, the Parking Lot Rent and the Storage Rent,
respectively.

     4.6  All payments received by Landlord from Tenant for Monthly Basic
Rent, Parking Lot Rent, Storage Rent, Operating Rent or any other sums due under
this Lease shall be applied to the oldest payment obligation owed by Tenant to
Landlord. No designation by Tenant, either in a separate writing or on a check
or money order, shall modify this clause or have any force or effect.

     4.7  Landlord shall use commercially reasonable efforts to make available
to Tenant, to the extent required to satisfy parking requirements associated
with the Premises, up to one hundred (100) additional parking spaces located
among the following existing parking facilities controlled by Landlord, or an
affiliate of Landlord, so long as such control exists: 96 Townsend Street;
670-680 Second Street; 635/699 Second Street; 160 King Street and 501 Second
Street, San Francisco, California. In no event, however, shall Landlord (or any
affiliate of Landlord) be required to impair the use of any of the above
described buildings or incur any material costs by reason of provision of the
above described additional parking to Tenant. Further, in connection with the
provision of any such parking, it is agreed that Landlord, and the applicable
affiliate of Landlord, shall retain the right to terminate or otherwise limit
the parking at any particular facility to the extent required in connection with
the use of such facility for the described property and shall further have the
right to terminate any provision of such parking in the event of any sale of the
above described property by Landlord (or the applicable affiliate of Landlord).
In connection with any additional parking as made available to Tenant in
accordance with the provisions of this Paragraph 4.7, Tenant shall pay the
parking fee and any and all other charges made in connection with such parking
on a basis consistent with market rates as determined by Landlord.

5.   Operating Expenses.

     5.1  For the purposes of this Subparagraph 5.1, the following terms are
defined as follows:

     Tenant's Percentage Share. Tenant's Percentage Share shall mean the
percentage set forth in the Summary.

     Base Year. Base Year shall mean the year set forth in the Summary;
provided, however, that should Tenant exercise its option for the First Extended
Term and/or the Second Extended Term, then the Base Year for the applicable
Extended Term shall be revised to mean the calendar year in which the applicable
Extended Term commences.

                                       13
<PAGE>   31
     Operating Expenses. Operating Expenses shall consist of all costs of
operation and maintenance of the Building, the common areas and the Site as
determined by standard accounting practices, calculated assuming the Building is
ninety-five (95%) occupied (unless actually occupied in a greater percentage, in
which case the actual occupancy percentage shall be used), including the
following costs by way of illustration, but not limitation: real property taxes
and assessments and any taxes or assessments hereafter imposed in lieu thereof;
gross receipt taxes (whether assessed against Landlord or assessed against
Tenant and collected by Landlord, or both); the net cost and expense of
insurance for which Landlord is responsible hereunder or which Landlord or any
first mortgagee with a lien affecting the Premises reasonably deems necessary in
connection with the operation of the Building (including the deductible portion
of any insured loss); janitorial services; security; parking valet/attendant
expenses; card key parking apparatus repair and maintenance; any and all
Garage-related expenses, with all such valet/attendant, car key apparatus
repair, maintenance and other Garage-related expenses not to exceed such
expenses incurred by prudent operators of substantially similar sized garages
within the geographical location of the Premises; labor; utilities and utilities
surcharges, and any other costs levied, assessed or imposed by, or at the
direction of, or resulting from statutes or regulations or interpretations
thereof, promulgated by any federal, state, regional, municipal or local
government authority in connection with the use or occupancy of the Building or
the Premises or the parking facilities serving the Building or the Premises; the
cost (amortized over the useful life of the improvement or equipment in question
as reasonably determined by Landlord in accordance with generally accepted
accounting principles at an interest rate of ten percent (10%)) of (a) any
capital improvements made to the Building by the Landlord which are reasonably
anticipated to increase the efficiency of the Building or made to the Building
by Landlord that are required under any governmental law or regulation that was
not applicable to the Building at the time it was constructed, or (b)
replacement of any building equipment needed to operate the Building at the same
quality levels (or levels of efficiency) as prior to the replacement; costs
incurred in the management of the Building, if any (including supplies, wages
and salaries of employees used in the management, operation and maintenance of
the Building, and payroll taxes and similar governmental charges with respect
thereto); on site Building management office rental; a management fee (not to
exceed 3% of the gross revenue receivable by Landlord from time to time in
connection with the Premises pursuant to this Lease); air conditioning; waste
disposal; heating; ventilating; elevator maintenance; supplies; materials;
equipment; tools; repair and maintenance of the structural portions of the
Building and the plumbing, heating, ventilating, air conditioning and electrical
systems installed or furnished by Landlord; and maintenance, costs and upkeep of
all parking and common areas, rental of personal property used in maintenance;
costs and expenses of gardening and landscaping, maintenance of signs (other
than Tenant's signs); personal property taxes levied on or attributable to
personal property used in connection with the entire Building, including the
common areas; reasonable audit or verification fees; and costs and expenses of
repairs, resurfacing, repairing, maintenance, painting, lighting, cleaning,
window washing, refuse removal, security and similar items, including
appropriate reserves.

     Notwithstanding anything contained in this Paragraph 5.1 to the contrary,
Operating Expenses shall not include any of the following:

          (a)  electrical, water, sewer, gas, garbage, and janitorial costs
(including janitorial supplies) with respect to the Premises which are to be
paid directly by Tenant or reimbursed to Landlord as having been separately
billed by Landlord to Tenant as provided in Paragraph 5.2 below;

          (b)  depreciation on the Building or equipment therein;

                                       14
<PAGE>   32
     (c)  Landlord's executive salaries;

     (d)  real estate brokers' commissions;

     (e)  interest expense on Building financing;

     (f)  amortization of cost of tenant improvements in the Building;

     (g)  ground rent;

     (h)  income and franchise taxes;

     (i)  Landlord's cost of electricity or other service sold to tenants to
the extent Landlord is reimbursed therefore as a charge over the Monthly Basic
Rent and any additional rent payable under the lease with that tenant;

     (j)  third party accountants' fees, attorneys' fees and other professional
fees and costs incurred in connection with disputes or lease negotiations with
tenants or other occupants or prospective tenants or occupants of the Building,
the enforcement of any leases (including unlawful detainer proceedings and the
collection of rents), other than de minimis amounts, and requests to assign or
sublet;

     (k)  overhead and profit paid to subsidiaries or affiliates of the
Landlord for management or other services on or to the Building for supplies or
other materials, to the extent that the overall cost of the services, supplies
or materials provided by Landlord materially exceeds the competitive cost of
the services, supplies, or materials if obtained from an unrelated third party
on an arm's length basis;

     (l)  compensation paid to clerks, attendants, or other persons in
commercial concessions operated by the Landlord;

     (m)  rentals and other related expenses incurred in leasing air
conditioning systems, elevators, or other equipment ordinarily considered to be
of a capital nature;

     (n)  items and services for which Tenant reimburses the Landlord or pays
third parties or that the Landlord provides selectively to one or more tenants
of the Building other than Tenant without reimbursement;

     (o)  maintenance costs incurred in connection with repairs or other work
needed because of fire, windstorm, or other casualty or cause insured against
by Landlord or to the extent Landlord's insurance required under the terms of
the Lease would have provided insurance, whichever is greater;

     (p)  all voluntary contributions to any political or charitable
organizations or other industry related associations (e.g., BOMA);

     (q)  capital costs for the acquisition of sculpture, paintings or other
art objects;

     (r)  advertising, marketing and promotion costs;

                                        15
<PAGE>   33
            (s)   costs associated with the operation of the corporation or
other entity which constitutes the Landlord, as distinguished form costs of
operation of the Building, including accounting and legal costs, costs of
defending lawsuits with any mortgagee, and the costs of selling, syndicating,
financing, mortgaging or hypothecating any ownership interest in Landlord, or
any of the Landlord's interests in the Building;

            (t)   costs that are actually reimbursed to the Landlord by
insurance companies or other third parties; provided that the Landlord shall use
commercially reasonable efforts to pursue payment from such insurance companies
or other third parties (the costs of such efforts to procure payment to be
included as an Operating Expense);

            (u)   reserves for capital items, bad debts, or rental losses;

            (v)   the costs incurred to investigate the presence of any
Hazardous Material (as defined below), costs to respond to any claim of
Hazardous Material contamination or damage, costs to remove any Hazardous
Material from the Premises, Building or Site or to remediate any Hazardous
Material contamination, any judgments or other costs incurred in connection with
any Hazardous Material exposure or release, except to the extent that the cost
is caused by the storage, use, release or disposal of the subject Hazardous
Material by Tenant;

            (w)   fines and penalties incurred due to Landlord's operation of
the Building in violation of applicable laws or due to Landlord's failure to
timely pay real property taxes;

            (x)   except to the extent expressly permitted, any repairs of a
capital nature or costs for items that would normally be capitalized under
generally accepted accounting principles; and

            (y)   interest, charges and fees incurred with respect to mortgage
financing for the Building or Site.

     As used herein, the term "real property taxes" shall include any form of
assessment, license fee, license tax, business license fee, tax, levy, charge,
or similar imposition, imposed by any authority having the direct power to
tax, including any city, county, state or federal government, or any school,
agricultural, lighting, drainage or other improvement or special assessment
district thereof, as against any legal or equitable interest of Landlord in the
Premises, including, but not limited to, the following:

      (i)   any tax on Landlord's "right" to rent or "right" to other income
from the Premises or as against Landlord's business of leasing the Premises;

      (ii)  any assessment, tax, fee, levy or charge in substitution, partially
or totally, of any assessment, tax, fee, levy or charge previously included
within the definition of real estate tax, it being acknowledged by Tenant and
Landlord that Proposition 13 was adopted by the voters of the State of
California in the June, 1978 Election and that assessments, taxes, fees, levies
and charges may be imposed by governmental agencies for such services as fire
protection, street, sidewalk and road maintenance, refuse removal and for other
governmental services formerly provided without charge to property owners or
occupants. It is the intention of Tenant and Landlord that all such new and
increased assessments, taxes, fees, levies and charges be included within the
definition of "real property taxes" for the purposes of

                                       16
<PAGE>   34
this Lease;

     (iii) any assessment, tax, fee, levy or charge allocable to or measured by
the area of the Premises or the rent payable hereunder, including, without
limitation, any excise tax levied by the State, City or Federal government, or
any political subdivision thereof, with respect to the receipt of such rent, or
upon or with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or
any portion thereof;

     (iv)  any assessment, tax, fee, levy or charge upon this transaction or any
document to which Tenant is a party, creating or transferring an interest or an
estate in the Premises;

     (v)   any assessment, tax, fee, levy or charge by any governmental agency
related to any transportation plan, fund or system instituted within the
geographic area of which the Building is a part; or

     (vi)  reasonable legal and other professional fees, costs and disbursements
incurred in connection with proceedings to contest, determine or reduce real
property taxes.

     Notwithstanding any provision of this Paragraph 5.1 expressed or implied to
the contrary, "real property taxes" shall not include Landlord's federal or
state income, franchise, inheritance, gift or estate taxes. Real property taxes
also shall not include any tax or assessment expense (i) in excess of the amount
which would be payable if such tax or assessment expense were paid in
installments over the longest possible term; or (ii) imposed on land and
improvements other than the Building and/or Site. Tenant may in good faith
contest any tax or assessment, provided that Tenant indemnifies Landlord from
any loss or liability in connection therewith and further provided that Tenant
bears the cost of any such contest including without limitation the cost of any
interest and penalties which may be assessed.

     5.2  Tenant shall directly and timely pay all electrical, gas, water,
garbage and sewer costs as well as janitorial costs (including the cost of
janitorial supplies) relating to the Premises. With respect to janitorial costs
(including the cost of janitorial supplies) Tenant shall be entitled to contract
with such supplier of janitorial services as Tenant may elect (subject to the
approval of Landlord, which approval shall not be unreasonably withheld or
delayed), or in the alternative, shall be entitled to internally provide
janitorial services in connection with the Premises. In all events, Tenant shall
provide janitorial services in connection with the Premises in a commercially
reasonable fashion consistent with janitorial services provided in first class
commercial buildings in the geographical area in which the Premises is located.
The cost of all janitorial supplies in connection with the Premises shall be the
responsibility of Tenant. All such janitorial costs (including the costs of
janitorial supplies) shall be paid directly by Tenant. Upon request of the
Landlord, from time to time, but no more frequently than once during each Lease
year, Tenant shall provide to Landlord evidence reasonably satisfactory to
Landlord of the payment of such costs. In the event that such costs are not
timely paid by Tenant, Landlord shall be entitled (but not obligated), upon ten
(10) days prior notice to Tenant, to pay such costs which payment shall promptly
be reimbursed by Tenant to Landlord within twenty (20) days after receipt of
Landlord's invoice, together with interest equal to the annual rate of the
lesser of ten percent (10%) or the maximum rate allowed by law from the date of
payment to the date of receipt by Landlord.

     5.3  No later than April of each calendar year following the Lease
Commencement Date during the Term of this Lease, or as soon thereafter as
possible, Landlord shall endeavor to deliver to Tenant a statement ("ESTIMATE
STATEMENT") wherein Landlord shall estimate the Operating Expenses for the
current

                                       17
<PAGE>   35
calendar year, and Tenant's Percentage Share of the excess, if any, of the
estimated Operating Expenses for the current calendar year over the Operating
Expenses for the Base Year. If Operating Expenses estimated in the Estimated
Statement of the current calendar year exceed the Operating Expenses of the
Base Year then Tenant's Percentage Share of such excess amount shall be divided
into twelve (12) equal monthly installments and Tenant shall pay to Landlord
within thirty (30) days, following the receipt of such statement, an amount
equal to one (1) monthly installment multiplied by the number of months from
January in the calendar year in which said statement is submitted to the month
of such payment, both months inclusive. Subsequent installments shall be paid
concurrently with the regular monthly rent payments for the balance of the
calendar year and shall continue until the next calendar year's Estimate
Statement is rendered. If Landlord determines that Tenant's Percentage Share of
the excess Operating Expenses for such current calendar year is greater than
that set forth in the Estimate Statement, then Landlord may, at any time, but
not more frequently than once during each calendar year, deliver a revised
Estimate Statement and Tenant shall pay to Landlord, within thirty (30) days of
the delivery of such revised Estimate Statement, the difference between such
revised Estimate Statement and the original Estimate Statement for the portion
of the current calendar year which has then expired and Tenant shall pay
during the balance of such current calendar year a fraction of the balance of
such difference as would fully amortize such excess over the remaining months
of the then current calendar year. Notwithstanding anything to the contrary set
forth in this Paragraph 5.3, or elsewhere in this Lease or the Summary, Tenant
shall have no obligation to pay Tenant's Percentage Share of the increase in
Operating Expenses over the Base Year for the first twelve full calendar (12)
months following the Lease Commencement Date. Tenant's first obligation to pay
Operating Rent shall accrue in the thirteenth full calendar (13th) month
following the Lease Commencement Date. Notwithstanding the designation of Base
Year in the Summary, for purposes of calculating Tenant's share of the increase
in real property taxes, the initial real property taxes for purposes of
determining any increase, shall be the real property taxes based on an assessed
value of the Premises, Building and Site which takes into account the
construction of Landlord's Work and the Tenant's Improvements. Tenant's
obligation to pay increases in real property taxes, if any, shall commence as
of the thirteenth (13th) full calendar month following the Lease Commencement
Date even if such increases, if any, cannot be calculated until subsequent to
such time.

     By the first day of June of each succeeding calendar year during the Term
of this Lease, or as soon thereafter as possible (but, in any event, no later
than December 31 of such succeeding calendar year), Landlord shall endeavor to
deliver to Tenant a statement ("ACTUAL STATEMENT") wherein Landlord shall
state the actual Operating Expenses for the preceding calendar year. If the
Actual Statement reveals a greater increase in Tenant's Percentage Share of
Operating Expenses in excess of the Base Year than was estimated by Landlord in
the Estimate Statement delivered as provided herein, then within thirty (30)
days following receipt of the Actual Statement by Landlord, Tenant shall pay
a lump sum equal to said total increase over the Operating Expenses for the
Base Year, less the total of the monthly installments of increases set forth on
the Estimate Statement which were paid in the previous calendar year. If the
Actual Statement reveals that Tenant overpaid Operating Expenses for any
calendar year, any overpayment made by Tenant on the monthly installment basis
provided above shall be credited toward the next monthly rent falling due and
the monthly installment of Tenant's Percentage Share of Operating Expenses to
be paid pursuant to the then current Estimate Statement shall be adjusted to
reflect such lower expenses for the most recent calendar year, or if this Lease
has been terminated, such excess shall be credited against any amount which
Tenant owes Landlord pursuant to this Lease and, to the extent all amounts
which Tenant owes Landlord pursuant to this Lease have been paid, Landlord
shall promptly pay such excess to Tenant. Landlord shall not be entitled to
deliver an Actual Statement more than one time per calendar year. Any delay or
failure by Landlord in delivering any estimate or statement pursuant to this
Paragraph shall not

                                       18
<PAGE>   36
constitute a waiver of its right to require an increase in Tenant's share of the
Operating Expenses in excess of the Base Year nor shall it relieve Tenant of its
obligations pursuant to this Paragraph, except that Tenant shall not be
obligated to make any payments based on such estimate or statement until thirty
(30) days after receipt of such estimate or statement.

     5.4  Even though the Term has expired and Tenant has vacated the Premises,
when the final determination is made of Tenant's Percentage Share of Operating
Expenses for the calendar year in which this Lease terminates, Tenant, within
twenty (20) days after receipt of Landlord's determination, shall pay any
increase due over the estimated expenses paid and conversely any overpayment
made in the event said expenses decrease shall be rebated by Landlord to Tenant,
within twenty (20) days after Landlord's determination.

     5.5  Notwithstanding anything contained in this Paragraph 5, the rental
payable by Tenant each month shall in no event be less than the Monthly Basic
Rent specified in Paragraph 4 hereof. The excess Operating Expenses to be paid
by Tenant to Landlord pursuant to the provisions of this Paragraph 5 shall
sometimes be referred to in the aggregate as the "OPERATING RENT".

     5.6  Notwithstanding any provision to the contrary contained in this Lease,
within sixty days after receipt by Tenant of Landlord's Operating Expenses for
any prior calendar year during the Term, Tenant or its authorized representative
shall have the right to inspect the books of Landlord upon reasonable notice and
during the business hours of Landlord at Landlord's office in the Building, or,
at Landlord's option, at such other location as Landlord reasonably may specify,
for the purpose of verifying the information contained in the statement. Unless
Tenant assets specific errors within sixty (60) days after receipt of the
statement, the statement shall be deemed correct as between Landlord and Tenant.

6.   Security Deposit.

     6.1  As and for security for Tenant's full and faithful performance of all
the terms, covenants and conditions of this Lease to be kept and performed by
Tenant, Tenant shall deposit with Landlord (i) cash in the amount of Three
Hundred Sixty Thousand Dollars ($360,000) and (ii) an unconditional, irrevocable
letter of credit ("LOC") in favor of Landlord in the sum of One Million Six
Hundred Forty Thousand Dollars ($1,640,000) (subject to adjustment pursuant to
Subparagraph 6.2) from a bank or other financial institution and in a form
reasonably acceptable to Landlord. If at any time during the Term, any item
constituting rent as provided herein, or any other sum payable by Tenant to
Landlord hereunder, shall be overdue and unpaid, beyond applicable cure periods,
then Landlord may, at the sole option of Landlord, but without any requirement
to do so, draw down or make a claim or demand for draw against the LOC (or at
the election of Landlord against the cash portion of the security deposit) an
amount equal to the overdue and unpaid amount, together with Landlord's actual
and reasonable expenses incurred in connection with the default, beyond any
applicable cure period, and apply such sum to payment of such overdue rent or
other sum. The LOC shall provide that any draw thereunder shall be accompanied
by a certificate of an officer of Landlord stating that Tenant is in default
under the Lease beyond the applicable notice and cure period, if any, and that
Landlord or its authorized agent is entitled to draw down on the LOC the amount
requested pursuant to the terms of this Lease. Further in the event of the
failure of Tenant to keep and perform any term, covenant or condition of this
Lease to be kept or performed by Tenant, beyond any applicable cure period,
then, at the sole option of Landlord, and after termination of this Lease,
Landlord may draw down the entire LOC (and draw against any remaining cash
portion of the security deposit), or so much thereof as may be necessary to
compensate Landlord for any loss or damage sustained or suffered

                                       19
<PAGE>   37
by Landlord due to such breach on the part of Tenant. In the event that all or
any portion of the LOC is drawn down by Landlord to pay overdue rent or other
sums due and payable to Landlord by Tenant hereunder, then Tenant shall, within
ten (10) days after receipt of written demand of Landlord, promptly remit to
Landlord a sufficient amount in cash or an additional letter of credit to
restore Landlord's security to the original amount of the LOC as provided in
this Paragraph. In the event that all or any portion of the cash portion of the
security deposit is charged against by Landlord to pay overdue rent or other
sums due and payable to Landlord by Tenant hereunder, then Tenant shall, within
ten (10) days after receipt of written demand of Landlord, promptly remit to
Landlord a sufficient amount in cash to restore the cash portion of Landlord's
security deposit as drawn against by Landlord. Any failure on the part of Tenant
to restore either the cash portion of the security deposit or the LOC in
accordance with the provisions immediately above within ten (10) days following
the date on which demand for restoration is deemed given hereunder, shall
constitute a default by Tenant pursuant to this Lease. In the event Landlord
transfers the LOC and the cash portion of the security deposit to any successor
in interest of Landlord to title of the Site and Building, then, in such event,
Landlord shall be discharged from any further obligation or liability with
respect to the LOC and the cash portion of the security deposit. Tenant waives
the provisions of California Civil Code Section 1950.7 and all other provisions
of law now in force or that become in force after the date of execution of this
Lease that provide that Landlord may claim from a security deposit only those
sums reasonably necessary to remedy defaults in the payment of rent, to repair
damages caused by Tenant, or to clean the Premises. Landlord and Tenant agree
that Landlord may, in addition, claim those sums reasonably necessary to
compensate Landlord for any out-of-pocket (but not consequential) loss or damage
caused by any act or omission of Tenant or Tenant's officers, agents, employees,
independent contractors or invitees. Landlord's obligations with respect to the
cash portion of the security deposit are those of a debtor and not of a trustee,
and Landlord is entitled to commingle the cash portion of the security deposit
with Landlord's general fund. Landlord shall not be required to pay Tenant
interest on any portion of the security deposit including without limitation the
cash portion of the security deposit.

     The cash portion of the security deposit shall be delivered by Tenant to
Landlord within five (5) days following execution and delivery by Landlord and
Tenant of this Lease. The LOC shall be delivered by Tenant to Landlord within
ten (10) days after execution and delivery of this Lease by Landlord and Tenant.

     6.2  The LOC shall be subject to adjustment under the following
circumstances:

          (a)  Provided that Tenant completely and faithfully performs all
terms, conditions and obligations imposed upon Tenant by this Lease for the
first nine full calendar (9) months of the Term, and provided that Tenant is not
then in default, beyond any applicable cure period, of this Lease, the LOC may
be reduced by ten percent (10%) of its original amount at the conclusion of said
nine (9) month period. Thereafter, on each subsequent anniversary date of the
first reduction, and provided Tenant has not been in default, beyond any
applicable cure period, of this Lease since the prior reduction in the LOC, the
LOC may be further reduced by ten percent (10%) of the outstanding amount of the
LOC. Notwithstanding any provision to the contrary of this Lease including,
without limitation, the provisions of this Paragraph 6.2, in no event shall the
security deposit to be given by Tenant, pursuant to the provisions of Paragraph
6 be reduced to an amount less than a cash deposit in the amount of Three
Hundred Sixty Thousand Dollars ($360,000). Such minimum cash deposit shall be
subject to return to Tenant upon the expiration or earlier termination of this
lease only in accordance with the provisions of Paragraph 6.5 below.

                                       20
<PAGE>   38
          (b)  in the event that (i) Tenant becomes subject to the reporting
requirements of the Securities and Exchange Commission (after the filing of a
Form S-1 Registration Statement), and shares of Tenant become publicly traded on
a nationally recognized exchange, and (ii) the audited net worth of the Tenant
is equal to or greater than One Hundred and Twenty-five Million ($125,000,000)
for an entire calendar quarter and (iii) during the same calendar quarter the
arithmetic average market capitalization value of Tenant exceeds 1.5 Billion
Dollars, then the provisions of this Paragraph 6.2(b) shall be applicable. The
date on which all of the matters specified in clauses (i), (ii), and (iii) above
shall have occurred shall be referred to as the "PUBLIC DATE". Prior to the
occurrence of the Public Date, the provisions of this Paragraph 6.2(b) shall not
be applicable.

               If, on the tenth (10) month anniversary of the occurrence of the
Public Date, or at any time thereafter, Tenant provides Landlord with
satisfactory evidence (such as audited financial statements) that Tenant's
earnings before income taxes, depreciation and amortization (but including
interest) ("EBITDA") reflect a profit for the immediately preceding three (3)
consecutive calendar quarters, and Tenant's net worth is no less than
Seventy-Five Million Dollars ($75,000,000.00), then the LOC may be terminated
and Landlord shall, subject to the provisions below, thereafter hold only the
cash security deposit in the amount of Three Hundred and Sixty Thousand Dollars
($360,000). Thereafter, the LOC shall be reinstated in, or increased to, as the
case may be, an amount equal (i) to two (2) month's Monthly Basic Rent if
Tenant's net worth as determined in accordance with generally accepted
accounting principles falls below Seventy-Five Million Dollars
($75,000,000.00), (ii) to four (4) month's Monthly Basic Rent if Tenant's net
worth falls below Fifty Million Dollars ($50,000,000.00), and (iii) to six (6)
month's Monthly Basic Rent if Tenant's net worth falls below Thirty Million
Dollars ($30,000,000.00). Further, in the event that the financial statements of
Tenant at any time reflect a loss for two or more consecutive calendar quarters
on the basis of EBITDA, then the amount of the LOC otherwise then in effect
shall be increased by an amount equal to one month of Monthly Basic Rent. If the
LOC has been terminated at the time that an increase is required by the
preceding sentence, then the LOC shall be reinstated in the amount required by
the preceding sentence. All multiples of Monthly Basic Rent shall be calculated
on the then applicable Monthly Basic Rent. Notwithstanding any provisions to the
contrary contained in this Paragraph 6.2, if Tenant's net worth, after falling
below any of the variables described above in this Paragraph 6.2(b),
subsequently rises to a higher net worth threshold and remains at such higher
threshold for three consecutive months, at the end of such three month period
Tenant shall have the right to replace the LOC in the higher amount with an LOC
for the lower amount provided for with respect to the higher net worth threshold
as described above in this Paragraph 6.2(b) that Tenant has maintained for the
preceding three month period subject, however, to subsequent increase in the
amount of the LOC should Tenant's net worth again fall below such higher
threshold amount. Tenant shall from time to time promptly provide to Landlord
for each calendar quarter during the Term hereof a copy of Tenant's financial
statement (audited if available) provided that Tenant shall not be obligated to
provide Landlord with a copy of Tenant's financial statement more often than
once per calendar quarter.

     6.3  If, after any default by Tenant beyond applicable cure periods and a
termination of this Lease by Landlord as set forth in Paragraph 6.1 above and
Landlord has drawn down the entire LOC, any proceeds of the LOC in excess of the
sum equal to the amount necessary to compensate Landlord for any loss or damage
sustained or suffered by Landlord due to Tenant's default, together with
Landlord's actual and reasonable expenses incurred in connection therewith,
shall be held in a separate, interest-bearing account ("ACCOUNT") in Landlord's
name at such national bank as Landlord reasonably selects ("BANK"). Tenant shall
have no rights to the money in the Account, except for (i) the return rights
specified below, and (ii) the right to receive interest on the Account, as
specified herein. Landlord agrees to place on the

                                       21
<PAGE>   39
signature card for the Account the following language "[name of Landlord] is
holding the funds in the Account in accordance with a Lease dated [date of
Lease] between [name of Landlord] and LookSmart, Ltd. The rights of [name of
Landlord] and LookSmart, Ltd. in and to the funds are subject to the terms of
such Lease." Within ten (10) business days after Landlord signs the signature
card (or any replacement signature card) on the Account, Landlord agrees to
provide Tenant with a copy of the signature card for the Account. Landlord
agrees to request the Bank to pay interest on the Account directly to Tenant on
a quarterly basis, and to report to the appropriate taxing authorities that such
interest has been paid to Tenant; provided, however, that if, despite Landlord's
request, the Bank will not or cannot pay the interest directly to Tenant, the
(x) the Bank shall pay interest on the Account directly to Landlord, in which
case, within ten (10) business days after Landlord receives such payment of
interest, Landlord shall pay to Tenant the interest Landlord receives from the
Bank on the Account, and (y) Landlord shall have the right to report to the
appropriate taxing authorities that such income is the income of Tenant. Tenant
represents to Landlord that Tenant's Federal Taxpayer Identification Number is
13-3904355. If the proceeds of the LOC are placed in a fixed term instrument,
such as a certificate of deposit, then Landlord shall not be liable for any
prepayment penalty if Landlord uses the Account, or a portion thereof, in
accordance with the provisions of this Paragraph 6.

     6.4  Notwithstanding anything contained in this Paragraph 6 to the
contrary, if Landlord draws on the LOC an amount in excess of the amount
necessary to compensate Landlord in full for any loss or damage sustained or
suffered by Landlord due to the default of Tenant, then Tenant shall have the
right, upon ten (10) days' prior written notice to Landlord, to obtain a refund
from Landlord of any excess proceeds of the LOC which Landlord has drawn upon,
any such refund being conditioned upon Tenant simultaneously delivering to
Landlord a new replacement LOC in the amount then required, and otherwise
meeting the requirements contained in this Paragraph 6.

     6.5  Upon the expiration or earlier termination of this Lease, Landlord
shall return to Tenant so much of the LOC (and the cash portion of the security
deposit) as has not been applied or entitled to be held by Landlord to be
applied to cure any and all defaults by Tenant occurring prior to the expiration
or earlier termination of this Lease and any default by Tenant pursuant to the
provisions of Paragraph 13.1(f) below.

7.   Use.

     7.1  Tenant shall use the Premises for general office purposes and purposes
incident thereto and shall not use or permit the Premises to be used for any
other purpose without the prior written consent of Landlord, which consent may
be granted or withheld in Landlord's sole discretion. Tenant shall not use or
occupy the Premises in violation of any recorded covenants, conditions and
restrictions affecting the Site or of any law or of the Certificate of Occupancy
issued for the Building, and shall upon five (5) days' written notice from
Landlord, discontinue any use of the Premises which is declared by any
governmental authority having jurisdiction to be a violation of any recorded
covenants, conditions and restrictions affecting the Site or of any law or of
said Certificate of Occupancy. Subject to the provision of Paragraph 54.2,
Tenant shall not install any radio or television antenna, loudspeaker or other
device on the roof or exterior walls of the Building. Tenant shall not interfere
with radio or television broadcasting or reception from or in the Building or
elsewhere. Tenant shall comply with any direction of any governmental authority
having jurisdiction which shall, by reason of the nature of Tenant's specific
use or alteration of the Premises, impose any duty upon Tenant or Landlord with
respect to the Premises or with respect to the use or occupation thereof. Tenant
shall not do or permit to be done anything which will invalidate or

                                       22
<PAGE>   40
increase the cost of any fire, extended coverage or any other insurance policy
covering the Building and/or property located therein and shall comply with all
rules, orders, regulations and requirements of the Pacific Fire Rating Bureau or
any other organization performing a similar function. Tenant shall within twenty
(20) days after receipt of demand reimburse Landlord as additional rent for any
additional premium charged for such policy by reason of Tenant's failure to
comply with the provisions of this Paragraph 7. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants or occupants of the Building, or
injure them, or use or allow the Premises to be used for any unlawful purpose,
nor shall Tenant cause, maintain or permit any nuisance in, on or about the
Premises. Tenant shall not commit or suffer to be committed any waste in or upon
the Premises and shall keep the Premises in first-class repair and appearance.
Tenant shall not place a load upon the Premises exceeding the average pounds of
live load per square foot of floor area specified for the Building by Landlord's
Architect, with the partitions to be considered a part of the live load.
Landlord reserves the right to prescribe the weight and position of all safes,
files and heavy equipment which Tenant desires to place in the Premises so as to
distribute properly the weight thereof. Tenant's business machines and
mechanical equipment which cause vibration or noise that may be transmitted to
the Building structure or to any other space in the Building shall be so
installed, maintained and used by Tenant as to eliminate such vibration or
noise. Tenant shall be responsible for all structural engineering required to
accommodate the structural load. Tenant shall fasten all files, bookcases and
like furnishings to walls in a manner to prevent tipping over in the event of
earth movements. Landlord shall not be responsible for any damage or liability
for such events.

      7.2 Except for the normal and proper use and storage of typical cleaning
fluids and solutions, and office equipment and supplies (such as copier toner),
in amounts commensurate with Tenant's use and occupancy of the Premises, Tenant
shall not use, introduce to the Premises, generate, manufacture, produce, store,
release, discharge or dispose of, on, under or about the Premises or transport
to or from the Premises any Hazardous Material (as defined below) or allow its
employees, agents, contractors, invitees or any other person or entity to do so.
Tenant warrants that it shall not make any use of the Premises which may cause
contamination of the soil, the subsoil or ground water. Tenant shall keep and
maintain the Premises in compliance with, and shall not cause or permit the
Premises to be in violation of any and all federal, state or local laws,
ordinances, rules or regulations pertaining to health, industrial hygiene or the
environmental conditions on, under or about the Premises. Tenant shall give
immediate written notice to Landlord of (i) any action, proceeding or inquiry by
any governmental authority or any third party with respect to the presence of
any Hazardous Material on the Premises or the migration thereof from or to other
property or (ii) any spill, release or discharge of Hazardous Materials that
occurs with respect to the Premises or Tenant's operations.

            (a) Tenant shall indemnify and hold harmless Landlord, its
directors, officers, employees, agents, successors and assigns (collectively
"LANDLORD") from and against any and all claims arising from Tenant's use of the
Premises in violation of this paragraph. The indemnity shall include all costs,
fines, penalties, judgments, losses, reasonable attorney's fees, expenses and
liabilities incurred by Landlord for any such claim or any action or proceeding
brought thereon including, without limitation, (a) all foreseeable consequential
damages including without limitation loss of rental income and diminution in
property value; and (b) the costs of any cleanup, detoxification or other
ameliorative work of any kind or nature required by any governmental agency
having jurisdiction thereof or Landlord. This indemnity shall survive the
expiration or termination of this Lease. In any action or proceeding brought
against Landlord by reason of any such claim, upon notice from Landlord if
Landlord does not elect to retain separate counsel, Tenant shall defend the same
at Tenant's expense by counsel reasonably satisfactory to Landlord.

                                       23

<PAGE>   41
employees or invitees, and from and against all costs, reasonable attorneys'
fees, expenses and liabilities incurred for such claim or any action or
proceeding brought thereon. In case any action or proceeding is brought against
Landlord by reason of any such claim, Tenant upon notice from Landlord hereby
agrees to defend the same at Tenant's expense by counsel reasonably approved in
writing by Landlord. Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of damage to property or injury to persons
in, upon or about the Premises from any cause whatsoever except to the extent
caused by Landlord's gross negligence, intentional misconduct or the failure of
Landlord to observe any of the terms and conditions of this Lease where such
failure has persisted for an unreasonable period of time after written notice
of such failure, and Tenant hereby waives all its claims in respect thereof
against Landlord.

     18.2 Landlord shall indemnify Tenant and hold it harmless from any loss by
reason of injury to person or property to the extent such injury is caused by
the gross negligence or intentional misconduct of Landlord or its agents,
employees or contractors, including without limitation any liability or injury
to the person or property of Landlord, its officers, directors, partners,
employees, agents, invitees or guests. Nothing herein shall relieve Tenant of
liability for its own willful acts or negligence.

19.  Damage to Tenant's Property. Notwithstanding the provisions of Paragraph 18
to the contrary, except to the extent caused by the gross negligence or willful
misconduct of Landlord, its agents, employees or contractors, Landlord or its
agents shall not be liable for any damage to property entrusted to employees of
the Building (except by reason of the gross negligence of such employees), nor
for loss of or damage to any property by theft or otherwise, nor for any injury
or damage to persons or property resulting from fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak from any part of
the Building or from the pipes, appliances or plumping works therein or from the
roof, street or sub-surface or from any other place or resulting from dampness
or any other patent or latent cause whatsoever. Landlord or its agents shall not
be liable for interference with the light, air, view or intangible
characteristics or qualities of the Premises. Tenant shall give prompt notice to
Landlord in case of fire or accidents in the Premises or in the Building or of
defects known to Tenant therein or in the fixtures or equipment located therein.
Further, neither Landlord nor any partner, director, officer, agent, servant,
member or employee of Landlord shall be liable: (i) for any such damage caused
by other tenants or persons in, upon or about the Building, or caused by
operations in the construction of any private, public or quasi-public work (the
limitations of liability set forth in this clause (i) shall not apply to any
damage or liability caused by the gross negligence or intentional misconduct of
Landlord or its agents, employees or contractors); or (ii) for consequential
damages, including lost profits, of Tenant or any person claiming through or
under Tenant.

20.  Insurance.

     20.1 During the Term hereof, Tenant, at its sole expense, shall obtain and
keep in force the following insurance:

          (a)  Commercial general liability insurance naming the Landlord as an
additional insured against any and all claims for bodily injury and property
damage occurring in, or about the Premises arising out of Tenant's use and
occupancy of the Premises. Such insurance shall have a combined single limit of
not less than Three Million Dollars ($3,000,000.00) per occurrence with a Six
Million Dollar ($6,000,000.00) aggregate limit. Such liability insurance shall
be primary and not contributing to any insurance available to Landlord and
Landlord's insurance shall be in excess thereto. In no event shall the limits of
such insurance be considered as limiting the liability of Tenant under this

                                       33
<PAGE>   42
          (b)  Landlord shall indemnify and hold harmless Tenant, its directors,
officers, employees, agents, successors and assigns (collectively, "TENANT")
from and against any and all claims arising from or relating to Hazardous
Materials actually existing and present at the Building or the Site or within
the Premises as of the Lease Commencement Date. The indemnity shall include all
costs, fines, penalties, judgments, losses, reasonable attorney's fees, expenses
and liabilities incurred by Tenant for any such claim or any action or
proceeding brought thereon including, without limitation, (a) all foreseeable
consequential damages; and (b) the cost of any clean up, detoxification or other
ameliorative work of any kind or nature required by any governmental agency
having jurisdiction thereof. This indemnity shall survive the expiration or
termination of this Lease. Any action or proceeding brought against Tenant by
reason of any such claim, upon notice from Tenant, if Tenant does not elect to
retain separate counsel, Landlord shall defend the same at Landlord's expense by
counsel reasonably satisfactory to Tenant.

          (c)  As used herein, the term "HAZARDOUS MATERIAL" shall mean any
substance or material which has been determined by any state, federal or local
governmental authority to be capable of posing a risk of injury to health,
safety or property, including all of those materials and substances designated
as hazardous or toxic by the city in which the Premises are located, the U.S.
Environmental Protection Agency, the Consumer Product Safety Commission, the
Food and Drug Administration, the California Water Resources Control Board, the
Regional Water Quality Control Board, San Francisco Bay Region, the California
Air Resources Board, CAL/OSHA Standards Board, Division of Occupational Safety
and Health, the California Department of Food and Agriculture, the California
Department of Health Services, and any federal agencies that have overlapping
jurisdiction with such California agencies, or any other governmental agency now
or hereafter authorized to regulate materials and substances in the environment.
Without limiting the generality of the foregoing, the term "Hazardous Material"
shall include all of those materials and substances defined as "hazardous
materials" or "hazardous waste" in Sections 66680 through 66685 of Title 22 of
the California Administrative Code, Division 4, Chapter 30, as the same shall be
amended from time to time, petroleum, petroleum-related substances and the
by-products, fractions, constituents and sub-constituents of petroleum or
petroleum-related substances, asbestos, and any other materials requiring
remediation now or in the future under federal, state or local statutes,
ordinances, regulations or policies.

8.   Payments and Notices. All rents and other sums payable by Tenant to
Landlord hereunder shall be paid to Landlord by check at the address designated
by Landlord in the Summary or at such other places as Landlord may hereafter
designate in writing. Any notice required or permitted to be given hereunder
must be in writing and may be given by personal delivery, mail, or by recognized
overnight courier. If notice is given by personal delivery, such notice shall be
deemed to be given upon delivery, if notice is given by registered or certified
mail addressed to Tenant at the address designated in the Summary or to Landlord
at both of the addresses designated in the Summary, then such notice shall be
deemed given three (3) business days following deposit in the U.S. mail, postage
prepaid, addressed to Tenant as designated in the Summary or to Landlord at both
of the addresses designated in the Summary and if given by overnight courier
shall be deemed given one (1) business day following delivery to the courier,
charges prepaid, addressed as stated above. Either party may by written notice
to the other specify a different address for notice purposes. If more than one
person or entity constitutes the "Tenant" under this Lease, service of any
notice upon any one of said persons or entities shall be deemed as service upon
all of said persons or entities.

9.   Brokers. The parties recognize that the brokers who negotiated this Lease
are the brokers whose

                                       24
<PAGE>   43
names are stated in the Summary, and agree that Landlord shall be solely
responsible for the payment of brokerage commissions to said brokers, and that
Tenant shall have no responsibility therefor. As part of the consideration for
the granting of this Lease, Tenant represents and warrants to Landlord that to
Tenant's knowledge no other broker, agent or finder negotiated or was
instrumental in negotiating or consummating this Lease and that Tenant knows of
no other real estate broker, agent or finder who is, or might be, entitled to a
commission or compensation in connection with this Lease. Any broker, agent or
finder of Tenant whom Tenant has failed to disclose herein shall be paid by
Tenant. Tenant shall hold Landlord harmless from all damages and indemnify
Landlord for all said damages paid or incurred by Landlord resulting from any
claims that may be asserted against Landlord by any broker, agent or finder who
has, or has claimed to have, rendered services to Tenant undisclosed by Tenant
herein. Landlord shall hold Tenant harmless from all damages and indemnify
Tenant for all said damages paid or incurred by Tenant resulting from any claims
that may be asserted against Tenant by any broker, agent or finder who has, or
has claimed to have, rendered services to Landlord undisclosed by Landlord
herein.

10.  Holding Over.  If Tenant remains in possession of the Premises after
expiration or earlier termination of this Lease with Landlord's express consent,
Tenant's occupancy shall be a month to month tenancy at a rent agreed upon by
Landlord and Tenant but, in no event less than the aggregate of the Monthly
Basic Rent, Parking Lot Rent, Storage Rent and Tenant's Percentage Share of the
Operating Costs payable under this Lease during the last full month before the
date of expiration or earlier termination. The month to month tenancy shall be
on the terms and conditions of this Lease except as provided in the preceding
sentence and the Lease clauses concerning extension rights. If Tenant holds over
after the expiration or earlier termination of the Term hereof without the
express written consent of Landlord, Tenant shall become a tenant at sufferance
only, at a rental rate equal to one hundred fifty percent (150%) of the Monthly
Basic Rent, Storage Rent and Parking Lot Rent which would be applicable to the
Premises upon the date of such expiration (subject to adjustment as provided
herein and prorated on a daily basis) for the first (60) days of such holdover,
and two hundred percent (200%) of such aggregate amount thereafter during the
pendency of such holdover, and otherwise subject to the terms, covenants and
conditions herein specified, so far as applicable including, without limitation,
the obligation to pay increased Operating Expenses as provided in Paragraph 5.
Acceptance by Landlord of rent after such expiration or earlier termination
shall not constitute a consent to a holdover hereunder or result in a renewal.
The foregoing provisions of this Paragraph 10 are in addition to and do not
affect Landlord's right of re-entry or any rights of Landlord hereunder or as
otherwise provided by law. If Tenant fails to surrender the Premises upon the
expiration of this Lease despite demand to do so by Landlord, Tenant shall
indemnify and hold Landlord harmless from all loss or liability arising out of
such failure, including without limitation, any claim made by any succeeding
tenant founded on or resulting from such failure to surrender. No provision of
this Paragraph 10 shall be construed as implied consent by Landlord to any
holding over by Tenant. Landlord expressly reserves the right to require Tenant
to surrender possession of the Premises to Landlord as provided in this Lease
upon expiration or other termination of this Lease. The provisions of this
Paragraph 10 shall not be considered to limit or constitute a waiver of any
other rights or remedies of Landlord provided in this Lease or at law.

11.  Taxes on Tenant's Property.  Tenant shall be liable for and shall pay
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
upon such increased assessments, which Landlord shall have the right to do

                                       25
<PAGE>   44
regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall within ten (10) days after receipt of demand repay to
Landlord the taxes levied against Landlord, or the proportion of such taxes
resulting from such increase in the assessment; provided that in any such event,
at Tenant's sole cost and expense, 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, any amount so recovered to belong to Tenant.

12.  Condition of Premises. Other than with respect to the completion of
Landlord's construction obligations set forth in the Work Letter, which shall be
done in a good and workmanlike manner in accordance with all applicable law
(including, without limitation, the Americans With Disabilities Act of 1990) and
in accordance with the provisions of the Work Letter, using materials and
equipment of good quality, Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation or warranty of any kind whatsoever
with respect to the Premises or the Building or with respect to the suitability
of either for the conduct of Tenant's business. The acceptance of possession of
the Premises by Tenant after receipt of the Notice, without objection within the
time prescribed for such objection, shall conclusively establish that the
Premises and the Building were at such time in satisfactory condition. Tenant
acknowledges and agrees that Tenant is relying solely upon Tenant's own
inspection of the Premises, and Tenant is not relying on any representation or
warranty from the Landlord regarding the Premises or the Building, except as
specifically set forth in this Lease or the Work Letter, including, without
limitation, any representation or warranty as to the physical condition, design
or layout of the Premises. Notwithstanding the foregoing, as of the Lease
Commencement Date, the heating, ventilating and air conditioning system, and the
electrical, plumbing, sewer, life safety and, if applicable, security systems
(collectively, "BUILDING SYSTEMS") serving Floor Three and Floor Four or Floor
One and Floor Two, as the case may be, shall be in good working order and
repair. In connection with delivery of possession of Floor Three and Floor Four
or Floor One and Floor Two, as the case may be, to Tenant with Landlord's Work
and the Tenant's Improvements having been substantially completed, Tenant,
together with Tenant's Architect and a representative of Landlord and Landlord's
Architect, shall conduct a walk through of the applicable portion of the
Premises and prepare a punch list setting forth a description of any and all of
Landlord's Work and/or Tenant's Improvements remaining to be completed or
defective and requiring repair or replacement as reasonably determined by
Tenant's Architect and Landlord's Architect. Landlord shall, following the
preparation of such punch list, diligently pursue completion or repair of the
punch list items and upon completing or repairing all such punch list items,
Landlord shall be considered to have fulfilled its obligations in connection
with construction of both the Landlord's Work and the Tenant's Improvements.
Landlord shall for a period of thirty (30) days following delivery of possession
of Floor Three and Floor Four or Floor One and Floor Two, as the case may be, to
Tenant, perform any repairs required in connection with the Building Systems so
as to maintain such systems in good working order and repair, provided, however,
that Landlord shall have no obligation to make any repairs in connection with
any portion of the Building Systems damaged by Tenant or any of Tenant's
contractors, employees or agents.

13.  Alterations.

     13.1 Tenant may, at any time and from time to time during the Term of this
Lease, at its sole cost and expense, make alterations, additions, installations,
substitutions, improvements and decorations (hereinafter collectively called
"CHANGES" and individually, a "CHANGE") in and to the Premises, excluding
structural changes, on the following conditions, and providing such Changes will
not result in a violation of or require a change in the Certificate of Occupancy
applicable to the Premises:

                                        26
<PAGE>   45
            (a) The outside appearance, character or use of the Building shall
not be affected, and no Changes shall weaken or impair the structural strength
or, in the reasonable opinion of Landlord, lessen the value of the Building or
create the potential for unusual expenses to be incurred upon the removal of
Changes and the restoration of the Premises upon the termination of this Lease.

            (b) No part of the Building outside of the Premises shall be
physically affected.

            (c) The proper functioning of any of the mechanical, electrical,
sanitary and other service systems or installations of the Building ("SERVICE
FACILITIES") shall not be adversely affected and there shall be no construction
which might interfere with Landlord's free access to the Service Facilities or
interfere with the moving of Landlord's equipment to or from the enclosures
containing the Service Facilities.

            (d) In performing the work involved in making such Changes, Tenant
shall be bound by and observe all of the conditions and covenants contained in
this Paragraph 13.

            (e) All work shall be done at such times and in such manner as
Landlord from time to time may reasonably designate.

            (f) At the date upon which the Term of this Lease shall end, or the
date of any earlier termination of this Lease, Tenant shall remove all Changes
with respect to which Landlord has given notice to Tenant requiring such
removal as provided in Paragraph 13.2 below and restore or repair the Premises
in accordance with the direction of Landlord as described in Paragraph 13.2
below. Such removal and restoration or repair shall be made not later than the
date of expiration of this Lease or thirty (30) days following any earlier
termination of this Lease. If Tenant fails to complete the removal and
restoration or repair, as the case may be, before the expiration of the Term, or
in the case of any earlier termination of this Lease, within thirty (30) days
following the occurrence of such termination, Landlord may complete the removal
and restoration or repair and charge the cost of such to Tenant. At the
expiration or earlier termination of this Lease, Tenant shall, in addition, at
the option of Landlord, be required to remove and restore any Change (including
a Minor Changes, as defined below) with respect to which Tenant has failed to
give notice to Landlord in accordance with the provisions of Paragraph 13.2
below. Any such removal and restoration by Tenant shall be made within thirty
(30) days following the request by Landlord (which request by Landlord in the
case of expiration of this Lease, shall not be given later than thirty (30) days
prior to such expiration and, in the case of earlier termination of this Lease,
shall not be given later than the date of such earlier termination) and Landlord
may complete the removal and restoration of any such Change and charge the cost
to Tenant in the event that Tenant fails to timely complete such removal and
restoration.

      13.2 Before proceeding with any Change (exclusive only of changes to
items constituting Tenant's personal property and non-structural Changes not
costing in the aggregate more than Twenty-five Thousand Dollars ($25,000) per
work of improvement and not requiring any building permit or other like permit
from any applicable governmental agency), Tenant shall submit to Landlord plans
and specifications for the work to be done, which shall in all cases require
Landlord's prior written approval which shall not be unreasonably withheld or
delayed. In connection with any nonstructural changes not costing in the
aggregate, more than Twenty-five Thousand Dollars ($25,000) per work of
improvement and not requiring building permit or like permit from any applicable
governmental agency ("MINOR

                                       27

<PAGE>   46
CHANGE"), Tenant shall deliver to Landlord at least ten (10) business days prior
to commencement of such Minor Change, a general description of the proposed
Change including a copy of any plans and specifications available. Landlord's
consent shall not be required in connection with any proposed Minor Change
although construction of any such Minor Change by Tenant shall otherwise be
performed in accordance with the provisions of this Paragraph 13. At the time
Tenant requests the consent of Landlord to a proposed Change (other than a Minor
Change) Landlord, in connection with granting any such consent shall advise
Tenant as to whether Landlord will require Tenant upon the expiration of this
Lease or any earlier termination of this Lease to remove such Change and, in the
event that Landlord elects to require such removal, whether Landlord will
require Tenant to (i) restore the Premises to its condition prior to the making
of such Change or, (ii) merely to remove the Change and repair any damages
resulting from such removal. In connection with any Minor Change of which
Landlord receives notice from Tenant, Landlord shall advise Tenant as to whether
Landlord will require removal of such Change at the expiration or earlier
termination of this Lease and in connection with any required removal, as to
whether Landlord will require restoration or merely repair as described above.
In connection with any Change requiring Landlord's approval, Landlord may confer
with consultants in connection with the review of the plans and specifications.
If Landlord or such consultant(s) shall disapprove of any of the Tenant's plans
Tenant shall be advised of the reasons of such disapproval. In any event, Tenant
agrees to pay to Landlord, as additional rent, the reasonable cost of such
consultation and review (but not in excess of $1,000 per request) within twenty
(20) days after receipt of invoices either from Landlord or such consultant(s).
Any Change for which approval has been received shall be performed strictly in
accordance with the approved plans and specifications, and no material
amendments or additions to such plans and specifications shall be made without
the prior written consent of Landlord which shall not be unreasonably withheld
or delayed. Minor Changes shall generally be performed in accordance with the
notice given by Tenant to Landlord.

     13.3 If the proposed Change requires approval by or notice to the lessor of
a superior lease or the holder of a mortgage, no Change shall proceed until such
approval has been received, or such notice has been given, as the case may be,
and all applicable conditions and provisions of said superior lease or mortgage
with respect to the proposed Change or alteration have been met or complied with
at Tenant's expense; and Landlord, if it approves the Change, will promptly
request such approval or give such notice, as the case may be.

     13.4 Tenant shall submit to Landlord the name and address of each
contractor intended to be used by Tenant in connection with construction of
Changes and Landlord's approval thereof shall not be unreasonably withheld or
delayed. No contractor which is reasonably unacceptable to Landlord shall be
engaged by Tenant. All costs and expenses incurred in Changes shall be timely
paid by Tenant after each billing therefor. If Landlord approves the
construction of specific interior improvements in the Premises by contractors or
mechanics selected by Tenant and approved by Landlord, then Tenant's contractors
shall obtain on behalf of Tenant and at Tenant's sole cost and expense, (i) all
necessary governmental permits and certificates for the commencement and
prosecution of Tenant's Changes and for final approval thereof upon completion,
and (ii) at Landlord's request, a completion and lien indemnity bond, or other
surety, reasonably satisfactory to Landlord, for the Changes. In the event
Tenant shall request any changes in the work to be performed after the
submission of the plans referred to in this Paragraph 13, such additional
changes shall be subject to the same approvals and notices as the changes
initially submitted by Tenant.

     13.5 All Changes and the performance thereof shall at all times comply with
(i) all laws, rules, orders, ordinances, directions, regulations and
requirements of all governmental authorities, agencies

                                       28
<PAGE>   47
offices, departments, bureaus and boards having jurisdiction thereof, (ii) all
rules, orders, directions, regulations and requirements of the Pacific Fire
Rating Bureau, or of nay similar insurance body or bodies, and (iii) all
reasonable rules and regulations of Landlord, and Tenant shall cause Changes to
be performed in compliance therewith and in good and first class workmanlike
manner, using materials and equipment at least equal in quality and class to
the existing improvements and installations of the Building. Changes shall be
performed in such manner as not to delay or impose any additional expense upon
Landlord in construction, maintenance or operation of the Building, and shall
be performed by contractors or mechanics approved by Landlord and submitted to
Tenant pursuant to this Paragraph, who shall coordinate their work in
cooperation with any other work being performed with respect to the Building.
Throughout the performance of Changes, Tenant at its expense, shall carry, or
cause to be carried, workmen's compensation insurance in statutory limits, and
general liability insurance for any occurrence in or about the Building, of
which Landlord and its managing agent shall be named as parties insured, in
such limits as Landlord may reasonably prescribe, with insurers, reasonably
satisfactory to Landlord all in compliance with Subparagraph 20.2.
Notwithstanding any provision of this Lease to the contrary, in no event shall
Landlord be required to undertake any alteration or any improvements of any
kind whatsoever in connection with the Premises or the Building as a result of
or in connection with any Changes being made by Tenant and specifically, but
without limitation, Landlord shall not be required to make any improvements or
alteration of any kind whatsoever in order to comply with any applicable laws,
orders, ordinances, regulations or building codes which may be required in
connection with Changes being made by Tenant.

     13.6 Tenant further covenants and agrees that any mechanic's lien filed
against the Premises or against the Building 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 twenty (20) days after the receipt of
notice of filing thereof, at the cost and expense of Tenant. All alterations,
decorations, additions or improvements upon the Premises, made by either party,
including (without limiting the generality of the foregoing) all wall covering,
built-in cabinet work, paneling and the like, shall, unless Landlord elects
otherwise, at the time set forth in Paragraph 13.1(f) above, become the
property of Landlord, and shall remain upon, and be surrendered with the
Premises, as a part thereof, at the end of the Term hereof.  Notwithstanding
any provision to the contrary contained in this Paragraph 13.6, Tenant shall
not be required to remove or restore any Changes which Landlord agreed in
accordance with the provisions of Subparagraph 13.1(f) need not be removed or
restored. In no event shall Tenant be obligated to remove the Landlord's work
or the Tenant's Improvements upon the expiration or earlier termination of this
Lease.

     13.7 All articles of personal property and all business and trade
fixtures, machinery and equipment, furniture and movable partitions owned by
Tenant or installed by Tenant at its expense in the Premises shall be and
remain the property of Tenant and may be removed by Tenant at any time during
the Term provided Tenant is not in default hereunder, and provided that Tenant
shall repair any damage caused by such removal. If Tenant shall fail to remove
all of its effects from said Premises upon termination of this Lease for any
cause whatsoever, Landlord may, at its option, remove the same in any manner
that Landlord shall choose, and store said effects without liability to Tenant
for loss thereof, and Tenant agrees to pay Landlord within ten (10) days after
receipt of demand any and all expenses incurred in such removal, including
court costs and reasonable attorneys' fees and storage charges on such effects
for any length of time that the same shall be in Landlord's possession or
Landlord may, at its option, without notice, sell said effects, or any of the
same, at private sale and without legal process, for such price as Landlord may
obtain and apply the proceeds of such sale against any amounts due under this
Lease from Tenant to Landlord and against the expense incident to the removal
and sale of said effects.

                                       29
<PAGE>   48
     13.8  Subject to Landlord's agreement to minimize any disturbance of
Tenant's use of the Premises, Landlord reserves the right at any time and from
time to time without the same constituting an actual or constructive eviction
and without incurring any liability to Tenant therefor or otherwise affecting
Tenant's obligations under this Lease, to make such changes, alterations,
additions, improvements, repairs or replacements in or to the Site or the
Building (including the Premises if required so to do by any law or regulation)
and the fixtures and equipment thereof, as well as in or to the street
entrances, halls, passages and stairways thereof, on ninety (90) days advance
written notice to Tenant, and/or to change the name by which the Building is
commonly known, as Landlord may deem necessary or desirable. Nothing contained
in this Paragraph 13, shall be deemed to relieve Tenant of any duty, obligation
or liability of Tenant with respect to making any repair, replacement or
improvement or complying with any law, order or requirement of any government or
other authority and nothing contained in this Paragraph 13, shall be deemed or
construed to impose upon Landlord any obligation, responsibility or liability
whatsoever, for the care, supervision or repair of the Building or any part
thereof other than as otherwise provided in this Lease. Landlord's exercise of
the foregoing rights shall not materially increase Tenant's obligations nor
diminish Tenant's rights under this Lease, or interfere with Tenant's parking
rights.

     13.9  The construction of the improvements to the Premises to be
constructed pursuant to the provisions of the Work Letter attached to this Lease
as Exhibit E shall be governed by the terms of such Work Letter and not by the
provisions of this Paragraph 13.

14.  Repairs.

     14.1  Subject to the provisions of Paragraph 12, by entry hereunder, Tenant
accepts the Premises as being in good and sanitary order, condition and repair.
Tenant shall, when and if needed, at Tenant's sole cost and expense, maintain
and make all repairs to the Premises and every part thereof, to keep, maintain
and preserve the Premises in first class condition, excepting ordinary wear and
tear, casualties, condemnation and acts of God. Any such maintenance and repairs
shall be performed by Landlord's contractor, or a contractor or contractors
reasonably approved in advance in writing by Landlord. All costs and expenses
incurred in such maintenance and repair shall be paid by Tenant within twenty
(20) days after receipt of billing by Landlord or such contractor or
contractors. Tenant shall upon the expiration or sooner termination of the Term
hereof surrender the Premises to Landlord in the same condition as when
received, reasonable wear and tear, casualties, condemnation, Hazardous
Materials not existing, released or disbursed by Tenant or any of its employees,
agents, contractors or invitees, acts of God and Changes not required to be
removed excepted. Landlord shall have no obligation to alter, remodel, improve,
repair, decorate or paint the Premises or any part thereof and the parties
hereto affirm that Landlord has made no representations to Tenant respecting the
condition of the Premises or the Building except as specifically herein set
forth or in the Tenant's Work Letter. Notwithstanding anything set forth above
in this Paragraph to the contrary, Tenant shall have no obligation to install,
maintain, repair or replace any of the structural elements or systems of the
Building (including, without limitation, the Building Systems, as defined
above), unless such work is required due to Tenant's specific use or misuse of
the Premises. Notwithstanding any provision to the contrary contained in this
Lease, as part of its maintenance and repair obligations, Tenant shall not be
required to construct or pay the cost of (i) complying with any laws existing as
of the Commencement Date, including without limitation, all Hazardous Materials
Laws (as defined below) regarding the presence of Hazardous Materials, unless
the same are stored, used or disposed of by Tenant, its agents, invitees or
employees on, in, under or about the Premises; or (ii) the correction of any
condition existing on the Premises as of the Commencement Date;

                                       30
<PAGE>   49
or (iii) the correction of any latent or structural defect in the Premises
during the Term, as it may be extended.

      14.2 Anything contained in Subparagraph 14.1 above to the contrary
notwithstanding, Landlord shall repair and maintain the structural portions of
the Building, including the basic plumbing, heating, ventilating, air
conditioning and electrical systems installed or furnished by Landlord, unless
such maintenance and repairs are caused in part in or in whole by the act,
neglect, fault of or omission of any duty by Tenant, its agents, servants,
employees or invitees, in which case Tenant shall pay to Landlord as additional
rent, the reasonable cost of such maintenance and repairs. Landlord shall not be
liable for any failure to make any such repairs, or to perform any maintenance
unless such failure shall persist for an unreasonable time after written notice
of the need of such repairs or maintenance is given by Tenant to Landlord.
Except as provided in Paragraph 21 hereof there shall be no abatement of rent
and no liability of Landlord by reason of any injury to or interference with
Tenant's business arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises or in or to
fixtures, appurtenances and equipment therein. Tenant hereby waives the
provisions of California Civil Code Sections 1932(1), 1941 and 1942 and of any
similar law, statute or ordinance now or hereafter in effect. Notwithstanding
anything to the contrary contained in this Paragraph 14, Tenant shall maintain
and repair at it sole cost and expense, and with maintenance contractors
approved by Landlord, all non-base building facilities, including lavatory,
shower, toilet, washbasin and kitchen facilities and heating and air
conditioning systems, including all plumbing connected to said facilities or
systems installed by Tenant or on behalf of Tenant (including, without
limitation, the Tenant's Improvements) or existing in the Premises at the time
of delivery of possession of the Premises to Tenant by Landlord exclusive only
of normal wear and tear. The provisions of the immediately preceding sentence
shall not apply to the Building basic heating and air conditioning system or to
the basic plumbing system (excluding lavatory, shower, toilet, washbasin, and
kitchen facilities actually located within the Premises as well as base building
facilities installed by Tenant or at Tenant's request as a part of the Tenant's
Improvements).

15. Liens. Tenant shall not permit any mechanic's, materialmen's or other liens
to be filed against the real property of which the Premises form a part nor
against the Tenant's leasehold interest in the Premises. Landlord shall have the
right at all reasonable times to post and keep posted on the Premises any
notices which it deems necessary for protection from such liens. If any such
liens are filed and Tenant fails to remove such liens within twenty (20) days
after receipt of notice of attachment thereof, Landlord may, without waiving its
rights and remedies based on such breach of Tenant and without releasing Tenant
from any of its obligations, cause such liens to be released by any means it
shall deem proper, including payment in satisfaction of the claim giving rise to
such lien. Tenant shall pay to Landlord at once, upon notice by Landlord, any
sum paid by Landlord to remove such liens, together with interest at the maximum
rate per annum permitted by law from the date of such payment by Landlord.

16. Entry by Landlord. Upon reasonable prior notice, Landlord reserves and shall
at any and all reasonable times (except in the case of emergency, in which case,
Landlord shall have the right for immediate entry without notice) have the right
to enter the Premises for any valid purpose including without limitation to
inspect the same, to supply any service to be provided by Landlord to Tenant
hereunder, to submit said Premises to prospective purchasers or
mortgagors/lenders or, during the last nine (9) months of the Term of this
Lease, to prospective tenants, to post notices of nonresponsibility, to alter,
improve or repair the Premises or any other portion of the Building, all without
being deemed guilty of any eviction of Tenant and without abatement of rent, and
may, in order to carry out such purposes, erect scaffolding and other necessary
structures where reasonably required by the character of the work to be

                                       31
<PAGE>   50
performed, provided that the business of Tenant shall be interfered with as
little as is reasonably practicable. Notwithstanding any provision to the
contrary contained in this Lease, any entry by Landlord or Landlord's agents
shall not impair Tenant's operations more than reasonably necessary, and Tenant
shall have the right to have an employee accompany landlord and/or its agents
at all times that Landlord and/or its agents are present on the Premises except
in the case of an emergency in which event Landlord shall be entitled to enter
the Premises regardless of whether an employee is available to accompany
Landlord. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby
except to the extent caused by the gross negligence or willful misconduct of
Landlord, its agents, employees or contractors. For each of the aforesaid
purposes, Landlord shall at all times have and retain a key with which to
unlock all of the doors in, upon and about the Premises excluding Tenant's
vaults, safes, and security areas, and Landlord shall have the means which
Landlord may deem proper to open said 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 of Tenant from the Premises or any portion thereof,
and any damages caused on account thereof shall be paid by Tenant except to the
extent caused by the gross negligence or willful misconduct of Landlord, its
agents, employees or contractors. It is understood and agreed that no provision
of this Lease shall be construed as obligating Landlord to perform any repairs,
alterations or decorations except as otherwise expressly agreed herein to be
performed by Landlord. Landlord shall attempt in the exercise of its rights
under this Paragraph 16 to minimize any disturbance of Tenant's use and
possession of the Premises and to provide as much notice to Tenant as may be
reasonably possible prior to any such exercise of Landlord's rights under this
Paragraph 16.

17.  Utilities and Services. Consistent with the provisions of Paragraph 5.2,
Tenant is directly paying for and obtaining all utilities in connection with
the Premises as well as all janitorial services (including the cost of all
janitorial supplies). Landlord shall not be liable for, and Tenant shall not be
entitled to any abatement or reduction of rent by reason of the unavailability
or partial unavailability of utility service to the Premises. The cost of all
such utility services as being paid directly by Tenant, shall not be considered
to be a part of the Operating Expenses. Tenant hereby waives the provisions of
California Civil Code Section 1932(1) or any other applicable existing or future
law, ordinance or governmental regulation permitting the termination of this
Lease due to the interruption or failure of or inability to provide any
services required to be provided by Landlord hereunder. Landlord shall allow
Tenant access to the Premises on a twenty-four (24) hour per day basis, subject
to events beyond Landlord's reasonable control.

18.  Indemnification.

     18.1  To the fullest extent permitted by law, and except to the extent
caused by the gross negligence or willful misconduct of Landlord, its agents,
employees or contractors, Tenant hereby agrees to defend, indemnify, protect
and hold Landlord harmless against and from any and all loss, cost, damage or
liability arising in whole or in part from Tenant's use of the Premises or the
conduct of its business or from any activity, work, or thing done, permitted or
suffered by Tenant, it agents, contractors, employees or invitees in or about
the Premises, Building and/or Site, and hereby agrees to further indemnify and
hold harmless Landlord against and from any and all loss, cost, damage or
liability arising in whole or in part from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease or arising from any act, neglect, fault or omission of Tenant, or
of its agents,

                                       32
<PAGE>   51
Lease.

           (b) Personal property insurance insuring all equipment, trade
fixtures, inventory, fixtures and personal property located on or in the
Premises for perils covered by the causes of loss -- special form (all risk)
and in addition, coverage for boiler and machinery (if applicable). Such
insurance shall be written on a replacement cost basis in an amount equal to
the full replacement value of the aggregate of the foregoing less any
applicable deductible.

           (c) Workers' compensation insurance in accordance with statutory law.

           (d) Loss of income and extra expense insurance in such amounts as
will reimburse Tenant for direct or indirect loss of earnings attributable to
all perils commonly insured against by prudent tenants or attributable to
prevention of access to the Premises or to the Building as result of such
perils.

           (e) Any other form or forms of insurance as Tenant, Landlord, or
Landlord's mortgagees or ground or primary lessors may reasonably require from
time to time (with additions not to be required more than once in any Lease
Year) in form, in amounts, and for insurance risks against which a prudent
tenant of a comparable size and in a comparable business would protect itself.

     20.2  The policies required to be maintained by Tenant shall be with
companies rated AX or better in the most current issue of Best's Insurance
Reports. Insurers shall be licensed to do business in the state in which the
Premises are located and domiciled in the USA. Any deductible amounts under any
insurance policies required hereunder shall not exceed Ten Thousand Dollars
($10,000). Certificates of insurance shall be delivered to Landlord prior to
the Lease Commencement Date and annually thereafter at least thirty (30) days
prior to the expiration date of the old policy. Tenant shall have the right to
provide insurance coverage which it is obligated to carry pursuant to the terms
hereof in a blanket policy, provided such blanket policy expressly affords
coverage to the Premises and to Landlord as required by this Lease. Each
policy of insurance shall provide that Landlord and Landlord's managing agent
(and any mortgagee or lender) are additional insureds and shall provide
notification to Landlord at least thirty (30) days prior to any cancellation or
modification to reduce the insurance coverage.

     20.3  During the Term hereof, Landlord shall insure the Building
(excluding any property which Tenant is obligated to insure under
Subparagraph 20.1(b) hereof but including the Landlord's Work and Tenant's
Improvements) against damage with All Risk insurance in the amount of the full
replacement cost of the Building and shall maintain public commercial liability
insurance, all in such amounts and with such deductibles as Landlord considers
appropriate and consistent with the provisions of Paragraph 20.8. Landlord may,
but shall not be obligated to, obtain and carry any other form or forms of
insurance as it or Landlord's mortgagees may determine advisable. Landlord
shall not be required to maintain earthquake coverage. Notwithstanding any
contribution by Tenant to the cost of insurance premiums, as provided herein,
Tenant acknowledges that it has no right to receive any proceeds from any
insurance policies carried by Landlord.

     20.4  Tenant will not knowingly keep, use, sell, or offer for sale in, or
upon, the Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building. If Tenant's occupancy or business
in, or on, the Premises, whether or not Landlord has consented to the same,
results in any increase in premiums for the insurance periodically carried by
Landlord with respect to the Building, Tenant shall pay any such increase in
premiums as additional rent within twenty (20) days

                                       34
<PAGE>   52
after being billed therefor by Landlord. In determining whether increased
premiums are a result of Tenant's use of the Premises, a schedule issued by the
organization computing the insurance rate on the Building or the Premises
showing the various components of such rate, shall be conclusive evidence of
the several items and charges which make up such rate. Tenant shall promptly
comply with all reasonable requirements of the insurance authority or any
present or future insurer relating to the Premises.

     20.5  If any of Landlord's insurance policies shall be canceled or
cancellation shall be threatened or the coverage thereunder reduced or
threatened to be reduced in any way because of the specific use of the Premises
or any part thereof by Tenant or any assignee or sub-tenant of Tenant or by
anyone Tenant permits on the Premises and, if Tenant fails to remedy the
condition giving rise to such cancellation, threatened cancellation, reduction
of coverage, threatened reduction of coverage, increase in premiums, or
threatened increase in premiums, within 72 hours after receipt of notice
thereof, Landlord may, at its option, either terminate this Lease or enter upon
the Premises and attempt to remedy such condition, and Tenant shall promptly
pay the cost thereof to Landlord as additional rent. Landlord shall not be
liable for any damage or injury caused to any property of Tenant or of others
located on the Premises resulting from such entry. If Landlord is unable, or
elects not, to remedy such condition, then Landlord shall have all of the
remedies provided for in this Lease in the event of a default by Tenant.
Notwithstanding the foregoing provisions of this Subparagraph 20.5, if Tenant
fails to remedy as aforesaid, Tenant shall be in default of its obligation
hereunder and Landlord shall have no obligation to remedy such default.

     20.6  Landlord and Tenant hereby mutually waive their respective rights of
recovery against each other for any loss of, or damage to, either parties'
property, to the extent that such loss or damage is insured by an insurance
policy required to be in effect at the time of such loss or damage. Each party
shall obtain any special endorsements, if required by its insurer whereby the
insurer waives its rights of subrogation against the other party. The
provisions of this clause shall not apply in those instances in which waiver of
subrogation would cause either party's insurance coverage to be voided or
otherwise made uncollectible.

     20.7  In the event Tenant does not purchase the insurance required by this
Lease or keep the same in full force and effect, Landlord may, but shall not be
obligated to, purchase the necessary insurance and pay the premium. The Tenant
shall repay to Landlord, as additional rent the amount so paid promptly upon
demand. In addition, Landlord may recover from Tenant and Tenant agrees to pay,
as additional rent, any and all reasonable expense (including attorneys' fees)
and damages which Landlord may sustain by reason of the failure of Tenant to
obtain and maintain such insurance.

     20.8  Landlord shall maintain insurance coverage comparable to insurance
coverage maintained by prudent landlords of buildings in the area in which the
Building is located that are comparable to the Building, and which in any event
includes fire and extended coverage insurance for the Building and commercial
liability coverage.

21.  Damage or Destruction.

     21.1  In the event that the Premises is damaged by fire or other casualty
which is covered under insurance pursuant to the provisions of the foregoing
paragraph, Landlord shall restore such damage provided that: (i) the
destruction of the Building does not exceed fifty percent (50%) of the then
replacement value of the Building; (ii) insurance proceeds are available
(inclusive of any deductible amounts) to pay one hundred percent (100%) of the
cost of restoration; and (iii) in the reasonable

                                       35

<PAGE>   53
judgment of Landlord, the restoration can be completed within three hundred and
sixty-five (365) days after the date of the damage or casualty under the laws
and regulations of the state, federal, county and municipal authorities having
jurisdiction. Landlord shall notify Tenant whether or not the Premises will be
restored under this paragraph within thirty (30) days of the occurrence of the
casualty. The deductible amount of any insurance coverage shall be paid by
Tenant. If such conditions apply so as to require Landlord to restore such
damage pursuant to this paragraph, this Lease shall continue in full force and
effect, unless otherwise agreed in writing by Landlord and Tenant. Tenant shall
be entitled to a proportionate reduction of Monthly Basic Rent, Parking Lot
Rent, Storage Rent and Operating Rent at all times during which Tenant's use of
the Premises is interrupted, such proportionate reduction to be based on the
extent to which the damage and restoration efforts actually interfere with
Tenant's business in the Premises. Tenant's right to a reduction of Rent
hereunder shall be Tenant's sole and exclusive remedy in connection with any
such damage. Notwithstanding the foregoing, if Landlord elects to terminate
this Lease pursuant to this Subparagraph 21.1, if within thirty (30) days after
receipt of Landlord's notice Tenant elects to provide the funds necessary to
make up the shortage (or absence) of insurance proceeds and provides Landlord
with reasonable assurance thereof, Landlord shall restore the Premises as
provided in this Subparagraph provided that the Premises are reasonably subject
to restoration within three hundred and sixty-five (365) days following the
date on which the casualty occurs. Tenant in connection with such election,
shall have the right to exercise the first or second (as applicable) option to
extend the Term provided by Paragraph 2.3 above, provided that Tenant otherwise
meets all requirements necessary for such exercise.

     21.2.  In the event that the Building is damaged by casualty and Landlord
is not required to restore such damage in accordance with the provisions of the
immediately preceding paragraph, Landlord shall have the option to either (i)
repair or restore such damage, with the Lease continuing in full force and
effect, but Monthly Basic Rent, Parking Lot Rent, Storage Rent and Operating
Rent to be proportionately abated as provided above; or (ii) give notice to
Tenant at any time within thirty (30) days after the occurrence of such damage
terminating this Lease as of a date to be specified in such notice which date
shall not be less than thirty (30) nor more than sixty (60) days after the
date on which such notice of termination is given. In the event of the giving of
such notice of termination, this Lease shall expire and all interest of Tenant
in the Premises shall terminate on the date so specified in such notice and the
rent, reduced by any proportionate reduction in Monthly Basic Rent, Parking Lot
Rent, Storage Rent and Operating Rent as provided for above, shall be paid to
the date of such termination. Notwithstanding the foregoing, if within thirty
(30) days after receipt of Landlord's notice, Tenant elects to advance to
Landlord the funds necessary to make up the shortage (or absence) in insurance
proceeds and provides Landlord with reasonable assurance thereof and the
restoration can be completed in a two hundred seventy (270) day period, as
reasonably determined by Landlord, Landlord shall restore the Premises as
provided in the immediately preceding paragraph. Tenant in connection with any
such election, shall have the right to exercise the first or second (as
applicable) option to extend the Term provided by Paragraph 2.3 above, provided
that Tenant otherwise satisfies all requirements in connection with such
exercise.

     21.3  Notwithstanding the foregoing, either Landlord or Tenant may
terminate this Lease if the Building damaged by fire or other casualty (and
Landlord's reasonably estimated cost of restoration of the Premises exceeds ten
percent (10%) of the then replacement value of the Building) and such damage or
casualty occurs during the last twelve (12) months of the Term of this Lease
(or the Term of any renewal option, if applicable) by giving the other notice
thereof at any time within thirty (30) days following the occurrence of such
damage or casualty. Such notice shall specify the date of such termination,
which date shall not be less than thirty (30) nor more than sixty (60) days
following the date on which such notice of

                                       36
<PAGE>   54
termination is given. In the event of the giving of such notice of termination,
this Lease shall expire and all interest of Tenant in the Premises shall
terminate on the date so specified in such notice and the Rent shall be paid to
the date of such termination. Notwithstanding the foregoing to the contrary,
Landlord shall not have the right to terminate this Lease if damage or casualty
occurs during the last twelve (12) months of the Term if Tenant timely
exercises its option to extend the Term of this Lease (if any) within thirty
(30) days after the date of such damage or casualty.

     21.4  In the event that the destruction to the Premises cannot be restored
as required herein under applicable laws and regulations within two hundred
seventy (270) days of the damage or casualty, notwithstanding the availability
of insurance proceeds, or if Landlord commences the restoration but does not
substantially complete the restoration within three hundred (300) days, in
either case Tenant shall have the right to terminate this Lease by giving the
Landlord notice thereof within thirty (30) days of date of the occurrence of
such casualty, or within thirty (30) days after the end of the three hundred
(300) day period, as applicable, specifying the date of termination which shall
not be less than thirty (30) days nor more than sixty (60) days following the
date on which such notice of termination is given. In the event of the giving
of such notice of termination, this Lease shall expire and all interest of
Tenant in the Premises shall terminate on the date so specified in such notice
and the rent, reduced by any proportionate reduction in Monthly Basic Rent,
Parking Lot Rent, Storage Rent and Operating Rent as provided for above, shall
be paid to the date of such termination.

     21.5  Upon any termination of this Lease under any of the provisions of
this Paragraph 21, the parties shall be released thereby without further
obligation to the other from the date possession of the Premises is surrendered
to Landlord except for items which have already accrued and are then unpaid.

     21.6  Tenant shall not be released from any of its obligations under this
Lease except to the extent and upon the conditions expressly stated in this
Paragraph 21. Notwithstanding anything to the contrary contained in this
Paragraph 21, should Landlord be delayed or prevented from repairing or
restoring the damaged Premises within three hundred (300) days after the
occurrence of such damage or destruction by reason of acts of God, war,
governmental restrictions, inability to procure the necessary labor or
materials, or other cause beyond the control of Landlord, Landlord shall be
relieved of its obligation to make such repairs or restoration and Tenant shall
be released from its obligations under this Lease as of the end of said three
hundred (300) day period.

     21.7  It is hereby understood that if Landlord is obligated to or elects
to repair or restore as herein provided, Landlord shall be obligated to make
repairs or restoration only of those portions of the Building and the Premises
which were originally provided at Landlord's expense (including, without
limitation, Landlord's Work or the Tenant's Improvements) or which were insured
by either party and the proceeds of such insurance have been received by
Landlord, and the repair and restoration of items not provided at Landlord's
expense shall be the obligation of Tenant.

     2.18  Tenant hereby waives California Civil Code Sections 1932(2) and
1933(4), providing for termination of hiring upon destruction of the thing
hired and Sections 1941 and 1942, providing for repairs to and of Premises.

22.  Eminent Domain.

     22.1  In case the whole of the Premises, or such part thereof as shall
substantially interfere with

                                       37
<PAGE>   55
Tenant's use and occupancy thereof, shall be taken for any public or
quasi-public purpose by any lawful power or authority by exercise of the right
of appropriation, condemnation or eminent domain, or sold to prevent such
taking, either party shall have the right to terminate this Lease effective as
of the date possession is required to be surrendered to said authority. Tenant
shall not assert any claim against Landlord or the taking authority for any
compensation because of such taking (provided that Tenant may present a separate
claim for Tenant's relocation costs, moving expenses, loss of goodwill, the
unamortized cost of any Changes paid for by Tenant and lost personal property,
so long as such claim does not diminish any award otherwise available to
Landlord), and Landlord shall be entitled to receive the entire amount of any
award without deduction for any estate or interest of Tenant. In the event the
amount of property or the type of estate taken shall not substantially interfere
with the conduct of Tenant's business, Landlord shall be entitled to the entire
amount of the award without deduction for any estate or interest of Tenant. If
this Lease is not so terminated, Landlord shall promptly proceed to restore the
Premises to substantially their same condition prior to such partial taking, and
a proportionate allowance shall be made to Tenant for the rent corresponding to
the time during which, and to the part of the Premises of which, Tenant shall be
so deprived on account of such taking and restoration. Nothing contained in this
Paragraph shall be deemed to give Landlord any interest in any award separately
made to Tenant for the taking of personal property and trade fixtures belonging
to Tenant or for relocation costs incurred by Tenant in relocating Tenant's
business, moving expenses, loss of goodwill and the unamortized cost of any
Changes paid for by Tenant.

       22.2   In the event of taking of the Premises or any part thereof for
temporary use, (i) this Lease shall be and remain unaffected thereby and rent
shall not abate, and (ii) Tenant shall be entitled to receive for itself such
portion or portions of any award made for such use with respect to the period
of the taking which is within the Term, provided that if such taking shall
remain in force at the expiration or earlier termination of this Lease, Tenant
shall then pay to Landlord a sum equal to the reasonable cost of performing
Tenant's obligations under Paragraph 14 with respect to surrender of the
Premises and upon such payment shall be excused from such obligations. For
purpose of this Subparagraph 22.2, a temporary taking shall be defined as a
taking for a period of 270 days or less.

       22.3   Landlord and Tenant each hereby waive the provisions of
California Code of Civil Procedure section 1265.130 and any other applicable
existing or future law, ordinance or governmental regulation providing for, or
allowing either party to petition the courts of the state of California for, a
termination of this lease upon a partial taking of the Premises and/or the
Building.

23.    Bankruptcy. If Tenant shall file a petition in bankruptcy under any
Chapter of federal bankruptcy law as then in effect, or if Tenant be
adjudicated a bankrupt in involuntary bankruptcy proceedings and such
adjudication shall not have been vacated within sixty (60) days from the date
thereof, or if a receiver or trustee be appointed of Tenant's property and the
order appointing such receiver or trustee not be set aside or vacated within
sixty (60) days after the entry thereof, or if Tenant shall assign Tenant's
estate or effects for the benefit of creditors, or if this Lease shall
otherwise by operation of law pass to any person or persons other than Tenant,
then and in any such event Landlord may, if Landlord so elects, with or without
notice of such election and with or without entry or action by Landlord,
forthwith terminate this Lease. Notwithstanding any other provisions of this
Lease, Landlord, in addition to any and all rights and remedies allowed by law
or equity, shall upon such termination be entitled to recover damages in the
amount provided in Subparagraph 24.2 below and neither Tenant nor any person
claiming through or under Tenant or by virtue of any statute or order of any
court shall be entitled to possession of the Premises but shall forthwith quit
and surrender the Premises to Landlord. Nothing herein contained shall

                                       38
<PAGE>   56
limit or prejudice the right of Landlord to prove and obtain as damages by
reason of any such termination an amount equal to the maximum allowed by any
statute or rule of law in effect at the time when, and governing the
proceedings in which, such damages are to be proved, whether or not such
amount be greater, equal to, or less than the amount of damages recoverable
under the provisions of this Paragraph 23.

24.    Defaults and Remedies.

       24.1   The occurrence of any one or more of the following events shall
constitute a default hereunder by Tenant:

              (a)    The vacation or abandonment of the Premises by Tenant.
Abandonment is herein defined to include, but is not limited, to, any absence by
Tenant from the Premises for ten (10) days or longer while in default of any
provision of this Lease.

              (b)    The failure by Tenant to make any payment of Basic Rent,
Parking Lot Rent, Storage Rent, Operating Rent, other rent or sums deemed
herein as additional rent, or any other payment required to be made by Tenant
hereunder as and when due, where such failure continues for a period of five
(5) business days after written notice thereof from Landlord to Tenant.

              (c)    The failure by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in Subparagraph 24.1(a) or 24.1(b)
above, where such failure shall continue for a period of thirty (30) days after
written notice thereof from Landlord to Tenant; provided, however, that any
such notice shall be in lieu of, and not in addition to, any notice required
under California Code of Civil Procedure 1161; provided, further, that if the
nature of Tenant's default is such that more than thirty (30) days are
reasonably required for its cure, then Tenant shall not be deemed to be in
default if Tenant shall commence such cure within said thirty-day period and
thereafter diligently and without interruption prosecute such cure to
completion.

              (d)    (1) The making by Tenant of any general assignment for the
benefit of creditors; (2) the filing by or against Tenant of a petition to have
Tenant adjudged a bankrupt or a petition for reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a petition filed
against Tenant, the same is dismissed within sixty (60) days); (3) the
appointment of a trustee or receiver to take possession of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease,
where possession is not restored to Tenant within sixty (60) days; or (4) the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease where such
seizure is not discharged within sixty (60) days.

              (e)    The failure by Tenant within ten (10) days after receipt
of written demand of Landlord to restore the security deposit by deposit of
additional cash or an additional letter of credit as required pursuant to the
provisions of Paragraph 6.1 of this Lease.

       24.2   In the event of any such default by Tenant, in addition to any
other remedies available to Landlord at law or in equity, Landlord shall have
the immediate option to terminate this Lease and all rights of Tenant
hereunder. Upon such termination of Tenant's right to possession of the
Premises, this Lease shall terminate and Landlord shall be entitled to recover
damages from Tenant as provided in California Civil Code Section 1951.2 or any
other applicable existing or future law, ordinance or

                                       39
<PAGE>   57
regulation providing for recovery of damages for such breach, including but not
limited to the following:

     (a)  the worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plus

     (b)  the worth at the time of award of the amount by which the unpaid rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Tenant proves could have been reasonably
avoided; plus

     (c)  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 such
rental loss that Tenant proves could be reasonably avoided, plus

     (d)  any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform his obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom.

     As used in Subparagraphs 24.2(a) and 24.2(b) above, the "worth at the time
of award" is computed by allowing interest at the maximum rate permitted by law
per annum. As used in Subparagraph 24.2(c) above, the worth at the time of
award is computed by discounting to present value such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).

     24.3 If a default under this Lease, Landlord shall also have the remedy
described in California Civil Code Section 1951.4 (Landlord may continue this
Lease in effect after Tenant has breached this Lease and abandoned the Premises
and recover rent as it becomes due; provided, however that Tenant as the right
to sublet or assign this Lease, subject only to reasonably limitations). Acts
of maintenance or preservation or efforts to relet the Premises or the
appointment of a receiver upon initiative of Landlord to protect Landlord's
interest under this Lease shall not constitute a termination of Tenant's right
to possession.

     24.4 During the continuance of a default beyond applicable cure periods,
Landlord may enter the Premises without terminating this Lease and, upon five
(5) days prior written notice to Tenant, remove all Tenant's personal property,
any Changes and trade fixtures from the Premises and store them at Tenant's
risk and expense. If Landlord removes such property from the Premises and
stores it at Tenant's risk and expense, and if Tenant fails to pay the cost of
such removal and storage after written demand therefor and/or to pay any rent
then due, then after the property has been stored for a period of thirty (30)
days or more Landlord may sell such property at public or private sale, in the
manner and at such times and places as Landlord may sell such property at public
or private sale, in the manner and at such times and places as Landlord deems
commercially reasonably following reasonable notice to Tenant of the time and
place of such sale. The proceeds of any such sale shall be applied first to the
payment of the expenses for removal and storage of the property, the
preparation for and the conducting of such sale, and for reasonable attorneys'
fees and other legal expenses incurred by Landlord in connection therewith; and
the balance shall be applied to any past due amount owing hereunder.

     Tenant hereby waives all claims for damages that may be caused by
Landlord's reentering and taking possession of the Premises or removing and
storing Tenant's personal property pursuant to this Paragraph 24, and Tenant
shall hold Landlord harmless from and against any loss, cost or damage
resulting from any such act. No reentry by Landlord shall constitute or be
construed as a forcible entry by

                                       40
<PAGE>   58
Landlord.

     24.5 All rights, options and remedies of Landlord contained in this Lease
shall be construed and held to be cumulative, and no one of them shall be
exclusive of the other, and Landlord shall have the right to pursue any one or
all of such remedies or any other remedy or relief which may be provided by
law, whether or not stated in this Lease. No waiver of any default of Tenant
hereunder shall be implied from any acceptance by Landlord of any rent or other
payments due hereunder or any omission by Landlord to take any action on
account of such default if such default persists or is repeated, and no express
waiver shall affect defaults other than as specified in said waiver. The
consent or approval or Landlord to or any act by Tenant requiring Landlord's
consent or approval shall not be deemed to waive or render unnecessary
Landlord's consent or approval to or of any subsequent similar acts by Tenant.

     24.6 If Landlord is in default of any obligations under this Lease, and
fails to commence to cure within thirty (30) days after receipt of written
notice from Tenant which notice shall specify the nature of Landlord's default,
Tenant shall be entitled to exercise any and all remedies available to Tenant
at law or in equity except to the extent expressly waived by Tenant pursuant to
this Lease.

25.  Assignment and Subletting. Tenant shall not voluntarily assign or encumber
its interest in this Lease or in the Premises, or sublease all or any part of
the Premises, or allow any other person or entity to occupy or use all or any
part of the Premises, without first obtaining Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed. Any assignment,
encumbrance or sublease without Landlord's prior written consent shall be
voidable, at Landlord's election, and shall constitute a default. If Tenant is
a partnership, a withdrawal or change, voluntary, involuntary or by operation
of law of any partner, or the dissolution of the partnership, shall be deemed a
voluntary assignment. If Tenant consists of more than one person, a purported
assignment, voluntary or involuntary or by operation of law from one person to
the other shall be deemed a voluntary assignment. If Tenant is a nonpublic
corporation, any dissolution of Tenant, or sale or other transfer of a
controlling percentage of the capital stock of Tenant, or the sale of at least
seventy percent (70%) of the value of the assets of Tenant shall be deemed a
voluntary assignment. If Tenant is a publicly traded corporation, any sale or
other transfer of a controlling percentage of the capital stock of Tenant in
one transaction or a series of related transactions to one person or entity or
two or more affiliated entities and/or persons shall be deemed a voluntary
assignment which requires Landlord's consent. Except as set forth in the
sentence immediately above, the transfer of publicly traded shares of Tenant,
whether or not in the aggregate constituting a transfer of a controlling
percentage of the capital stock of Tenant, shall not constitute a voluntary
assignment. No consent to any assignment, encumbrance, or sublease shall
constitute a further waiver of the provisions of this Paragraph. No later than
thirty (30) days prior to the effective date of the proposed assignment or
sublease, Tenant shall notify Landlord in writing of Tenant's intent to assign,
encumber, or sublease, the name of the proposed assignee or sublessee,
information concerning the financial responsibility of the proposed assignee or
sublessee and the terms of the proposed assignment or subletting, and Landlord
shall, within fifteen (15) days of receipt of such written notice as well as
any additional information requested by Landlord concerning the proposed
assignee's or sublessee's financial responsibility, elect one of the following:

          (i)  Consent to such proposed assignment, encumbrance or sublease;

          (ii) Refuse such consent, which refusal shall be on reasonable
grounds, including but not limited to those matters set forth hereinbelow;

                                       41
<PAGE>   59
          (iii)     In the case of an assignment, elect to terminate this
Lease. In the case of a sublease elect to terminate this Lease with respect to
that portion of the Premises being requested for sublease consideration, but
only in the event that a request to sublet would have the result of in excess
of fifty percent (50%) of the rentable square feet of the Premises being
subject to sublease at any time during the Term. In the event that Landlord
elects to terminate the Lease by reason of a proposed assignment or by reason
of a proposed sublease as described immediately above, Landlord shall give
notice of such election ("RECAPTURE NOTICE") to Tenant within fifteen (15) days
after receipt of written notice from Tenant of the proposed assignment or
sublease as well as any additional information requested by Landlord concerning
the proposed assignee's or sublessee's financial responsibility. In the case of
a proposed sublease (and not a proposed assignment), in the event that Landlord
gives a Recapture Notice, Tenant shall be entitled to rescind its proposed
sublease (and thus avoid termination of the Lease) by giving written notice to
Landlord of such rescission within five (5) days following receipt by Tenant of
the Recapture Notice. In the event that Tenant fails to give such notice within
such five (5) days, Tenant shall be considered to have waived its right to give
such rescission notice. The Recapture Notice, if given, shall in addition to
stating Landlord's election to terminate this Lease, state a date of
termination of the Lease which, in no event, shall be earlier than thirty (30)
days following the date on which the Recapture Notice is given no later than 90
days following the date on which the Recapture Notice is given.

     Without limiting the other instances in which it may be reasonable for
Landlord to withhold its consent to an assignment or subletting, Landlord and
Tenant acknowledge that it shall be reasonable for Landlord to withhold its
consent in the following instances: (i) if at the time consent is requested or
at any time prior to the granting of consent, Tenant is in default, beyond any
applicable cure period, under this Lease or would be in default under this
Lease but for the pendency of any grace or cure period under Paragraph 24
above; (ii) if the proposed assignee or sublessee is a governmental agency;
(iii) if, in Landlord's reasonable judgment, the use of the Premises by the
proposed assignee or sublessee (1) would be inconsistent with Paragraph 7 of
this Lease, (2) would contemplate any alterations which would lessen the value
of the leasehold improvements in the Premises, (3) would result in more than a
reasonable number of occupants per floor, or (4) would materially require
increased services by Landlord; (iv) if the proposed assignee's or sublessee's
credit, character and business or professional standing does not meet the
commercially reasonable standards of Landlord; (v) the proposed assignee has a
net worth of less than the net worth of Tenant as of the date of this Lease (in
the approximate amount of One Hundred Twenty-Five Million Dollars
[$125,000,000]); or (vi) if Landlord is currently marketing space in the
Building to such proposed assignee or sublessee.

     Landlord may require that the rent payable by such assignee or sublessee
be at the then current rental rates for the Premises or comparable premises in
the Building and may require that the assignee remit directly to Landlord on a
monthly basis all monies due to Tenant by said assignee. Payments with respect
to any sublease, so long as the Tenant is not in default hereunder, may be made
directly to Tenant and Tenant shall then promptly pay to Landlord any amount
due Landlord in connection with such sublease. In the event that Landlord shall
consent to any assignment or sublease under the provisions of this Paragraph
25, Tenant shall pay Landlord's reasonable processing costs and attorneys' fees
incurred in giving such consent, not to exceed one thousand dollars ($1,000)
per request for consent. If for any proposed assignment or sublease Tenant
receives rent or other consideration, either initially or over the term of the
assignment or sublease, in excess of the rent and monthly amortization of
Transfer Costs (defined below) called for hereunder, or, in case of the
sublease of a portion of the Premises, in excess of the monthly amortization of
all Transfer Costs and such rent fairly allocable to such portion, after

                                       42
<PAGE>   60
appropriate adjustments to assure than all other payments called for hereunder
are taken into account, Tenant shall pay to Landlord as additional rent
hereunder fifty percent (50%) of all of the excess of each such payment of rent
or other consideration received by Tenant promptly after its receipt. As used
herein, "Transfer Costs" shall mean the aggregate of (i) commercially reasonable
brokerage commissions and attorneys' fees incurred by Tenant in negotiating and
documenting such assignment or sublease and (ii) the actual third party costs
incurred by Tenant in connection with constructing improvements to the Premises
directly related to the assignment or sublease subject, however, to a maximum
cost of ten dollars ($10) per rentable square foot. Such Transfer Costs are to
be amortized (without interest) for the purposes of Tenant's recovery of same
from excess consideration, on a straight-line basis over the remaining initial
Term of this Lease as of the effective date of such assignment or subletting.
Landlord's waiver or consent to any assignment or subletting shall not relieve
Tenant from any obligation under this Lease.

     Notwithstanding any provision to the contrary of this Paragraph 25,
Tenant, without Landlord's prior written consent, may sublet all or any portion
of the Premises or assign this Lease to (i) a corporation controlling,
controlled by or under common control with Tenant; (ii) a successor corporation
related to Tenant by merger, consolidation or non-bankruptcy reorganization
provided that if Tenant is not the surviving corporation, then the surviving
corporation shall have a minimum net worth as of the date of sublease or
assignment at least equal to that of Tenant immediately prior to completion of
the subject merger, consolidation or reorganization; or (iii) a purchaser of
substantially all of Tenant's assets, provided that immediately following such
purchase, such purchaser shall have a net worth at least equal to that of
Tenant immediately prior to completion of the subject purchase. In connection
with any such assignment or sublease, Tenant shall not be relieved of any
liability or obligations pursuant to this Lease. The entities described in
clauses (i), (ii) and (iii) above shall sometimes be referred to as a
"PERMITTED TRANSFEREE". In connection with any transfer to a Permitted
Transferee, Tenant shall give Landlord at least thirty (30) days prior to
written notice of such intended transfer and shall provide to Landlord such
information and copies of such documents as Landlord may reasonably request in
connection with such proposed transfer. Notwithstanding any provision of this
Lease to the contrary including, without limitation, any provision of this
Paragraph 25, no assignment or sublease of this Lease shall relieve Tenant of
any of its obligations or liability pursuant to this Lease. Landlord
acknowledges that Tenant intends to sublease not more than fifty thousand
square feet of the Premises within the first twelve (12) months of the Term.

26.  Quite Enjoyment. Landlord covenants and agrees that, conditioned upon
Tenant paying the rent required under this Lease and paying all other charges
and performing all of the covenants and provisions to be observed and performed
by Tenant under this Lease, and subject to the terms and conditions of this
Lease, Tenant shall and may peaceably and quietly have, hold and enjoy the
Premises in accordance with this Lease.

27.  Subordination. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any mortgagee with a lien on the Building or any ground
lessor with respect to the Building, this lease shall be subject and
subordinate at all times to: (a) all ground leases or underlying leases which
may now exist or hereafter be executed affecting the Building or the land upon
which the Building is situated or both, and (b) the lien of any mortgage or
deed of trust which may now exist or hereafter be executed in any amount for
which the Building, land, ground leases or underlying leases, or Landlord's
interest or estate in any of said items is specified as security.
Notwithstanding the foregoing, Landlord shall have the right to subordinate or
cause to be subordinated any such ground leases or underlying leases or any such
liens to this lease. In the event that any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is

                                       43

<PAGE>   61
foreclosed or a conveyance in lieu of foreclosure is made for any reason,
Tenant shall, if requested by the ground lessor, mortgagee or beneficiary, as
applicable, attorn to and become the Tenant of the successor in interest to
Landlord  and in such event Tenant's right to possession of the Premises shall
not be disturbed if Tenant is not in default beyond acceptable cure periods and
so long as Tenant shall pay the rent and all other amounts required to be paid
to Landlord pursuant to the terms hereof and observe and perform all of the
provisions of this Lease, unless the Lease is otherwise terminated pursuant to
its terms. Tenant covenants and agrees to execute and deliver, upon demand by
Landlord and in the form reasonably requested by Landlord, any additional
documents evidencing the priority or subordination of this Lease with respect
to any such ground leases or underlying leases or the lien of any such mortgage
or deed of trust. Should Tenant fail to sign and return any such documents
within ten (10) business days of receipt, Tenant shall be in default, and
Landlord may, at Landlord's option, terminate this Lease provided written
notice of such termination is received by Tenant prior to Landlord's receipt of
such documents. In connection with any subordination by Tenant of its leasehold
interest to any future ground lease, or the lien of any mortgage or deed of
trust, Tenant shall be entitled to obtain a non-disturbance agreement in a form
reasonably satisfactory to Tenant providing that Tenant's right to occupancy of
the Premises shall not be disturbed in the event of any termination of the
ground lease or any foreclosure of the lien of the deed of trust or mortgage.
Landlord shall take such action as is reasonable (without cost to Landlord) so
as to cause a non-disturbance agreement to be available to Tenant in connection
with any subordination by Tenant of its leasehold interest. In connection with
the execution of this Lease by Landlord and Tenant, Landlord shall use its best
efforts (without cost to Landlord) to cause a Subordination and Non-Disturbance
Agreement to be made available to Tenant in a form reasonably acceptable to
Tenant within twenty (20) days following the execution and delivery of this
Lease by Landlord and Tenant in connection with any lender or lenders with
respect to any deed of trust currently constituting a lien against the Building
and Site.

28.  Estoppel Certificate.

     28.1  Within ten (10) business days following receipt of Landlord's
written request, Tenant shall execute and deliver to Landlord a statement, in a
form substantially similar to the form of Exhibit "C" attached hereto,
certifying; (i) the Lease Commencement Date; (ii) the fact that this Lease is
unmodified and in full force and effect (or, if there have been modifications
thereto, that this Lease is in full force and effect, as modified, and stating
the date and nature of such modifications); (iii) the date to which the rent
and other sums payable under this Lease have been paid; (iv) the fact that
there are no current defaults under this Lease by either Landlord or Tenant
except as specified in such statement; and (v) such other matters reasonably
requested by the requesting party. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph 28 may be relied upon by any
mortgagee, beneficiary, purchaser or prospective purchaser of the Building or
any interest therein.

     28.2  Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by the requesting party, (ii) that
there are no uncured defaults in the requesting party's performance, and (iii)
that not more than one (1) month's rent has been paid in advance.

29.  Rules and Regulations. Tenant shall faithfully observe and comply with the
"Rules and Regulations," a copy of which is attached hereto and marked Exhibit
"D", and all reasonable and nondiscriminatory modifications thereof and
additions thereto from time to time put into effect by Landlord that do not
increase any obligations or diminish any rights of Tenant. In the event of any

                                       44

<PAGE>   62
conflict between the terms of this Lease and the Rules and Regulations, the
terms of this Lease shall prevail.

30.  Conflict of Laws. This Lease shall be governed by and construed pursuant
to the laws of the State of California.

31.  Successors and Assigns. Except as otherwise provided in this Lease, all of
the covenants, conditions and provisions of this Lease shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representative, successors and assigns.

32.  Surrender of Premises. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger, and shall,
at the option of Landlord, operate as an assignment to it of any or all
subleases or subtenancies. Upon the expiration or termination of this Lease,
Tenant shall peaceably surrender the Premises and all alterations and additions
thereto broom-clean, in good order, repair and condition, reasonable wear and
tear, casualty, condemnation, acts of God, Hazardous Materials not stored,
used, released or disposed of by Tenant, its agents, employees,invitees or
contractors and Changes with respect to which Landlord has not reserved the
right to require removal excepted. The delivery of keys to any employee of
Landlord or to Landlord's agent or any employee thereof shall not be sufficient
to constitute a termination of this Lease or a surrender of the Premises.

33.  Professional Fees.

     33.1  In the event that 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 provisions of this Lease, or for any other relief
against Tenant or Landlord hereunder, or should either party bring suit against
the other with respect to matters arising from or growing out of this Lease,
then all costs and expenses, including without limitation, its reasonable
professional fees such as appraisers', accountants' and 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.

     33.2  Should Landlord, without gross negligence or willful misconduct by
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 without
limitation, its actual and reasonable professional fees such as appraiser's,
accountants' and attorneys' fees.

34.  Performance by Tenant. All covenants and agreements to be performed by
Tenant under any of the terms of this Lease shall be performed by Tenant at
Tenant's sole cost and expense and without any abatement of rent, except as
expressly set forth in this Lease. Tenant acknowledges that the late payment by
Tenant to Landlord of any sums due under this Lease will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of such cost being
extremely difficult and impractical to fix. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Landlord by the terms of any encumbrance and note secured by
any encumbrance covering the Premises or the Building of which the Premises are
a part. Therefore if, following five (5) business days after Landlord has
notified Tenant that such amount has not been received, any monthly installment
of Monthly Basic Rent is not received by Landlord, or if Tenant fails to pay
any other sum of money due hereunder and such failure continues for ten (10)
days after receipt by Tenant of notice thereof from

                                       45
<PAGE>   63
Landlord, Tenant shall pay to Landlord, as additional rent, ten percent (10%)
of the overdue amount as a late charge. Such overdue amount shall also bear
interest, as additional rent, at the maximum rate permissible by law
calculated, as appropriate, from the date either (a) the monthly installment of
Monthly Basic Rent, or other amount, is due, or (b) of receipt of said notice,
until the date of payment to Landlord. Landlord's acceptance of any late charge
or interest shall not constitute a waiver of Tenant's default with respect to
the overdue amount or prevent Landlord from exercising any of the other rights
and remedies available to Landlord under this Lease or any law now or hereafter
in effect. Further, in the event such late charge is imposed by Landlord for
three (3) consecutive months for whatever reason, Landlord shall have the
option to require that, beginning with the first payment of rent due following
the imposition of the third consecutive late charge, rent shall no longer be
paid in monthly installments but shall be payable three (3) months in advance.

35.  Mortgagee and Senior Lessor Protection. No act or failure to act on the
part of Landlord which would entitle Tenant under the terms of this Lease, or
by law, to be relieved of Tenant's obligations hereunder or to terminate this
Lease, shall result in a release of such obligations or a termination of this
Lease unless (a) Tenant has given notice by registered or certified mail to
Landlord and to any beneficiary of a deed of trust or mortgage covering the
Building and to the lessor under any master or ground lease covering the
Building, the Site or any interest therein whose identity and address shall
have been furnished to Tenant, and (b) Tenant offers such beneficiary,
mortgagee or lessor a reasonable opportunity (but in no event less than thirty
(30) days) to cure the default, including time to obtain possession of the
Premises by power of sale or of judicial foreclosure, if such should prove
necessary to effect a cure. Landlord shall, from time to time, give Tenant
written notice of the identity and address of the beneficiary of any deed of
trust or mortgage covering the Building and/or the lessor under any master or
ground lease.

36.  Definition of Landlord. The term "Landlord" as used in this Lease, so far
as covenants or obligations on the part of Landlord are concerned, shall be
limited to mean and include only the owner or owners, at the time in question,
of the fee title to, or a lessee's interest in a ground lease of the Site or
master lease of the Building. In the event of any transfer, assignment or other
conveyance or transfer of any such title or interest, Landlord herein named
(and in case of any subsequent transfers or conveyances, the then grantor)
shall be automatically freed and relieved from and after the date of such
transfer, assignment or conveyance of all liability with respect to the
performance of any covenants or obligations on the part of Landlord contained
in this Lease thereafter to be performed and, without further agreement, the
transferee of such title or interest shall be deemed to have agreed to observe
and perform any and all obligations of Landlord hereunder, during its ownership
of the Premises. Landlord may transfer its interest in the Premises without the
consent of Tenant and such transfer or subsequent transfer shall not be deemed
a violation on Landlord's part of any of the terms and conditions of this Lease.

37.  Waiver. The failure of Landlord or Tenant to seek redress for violation
of, or to insist upon strict performance of, any term, covenant or condition of
this Lease or the Rules and Regulations attached hereto as Exhibit "D", shall
not be deemed a waiver of such violation or prevent a subsequent act which
would have originally constituted a violation from having all the force and
effect of an original violation, nor shall the failure of Landlord to enforce
any of said Rules and Regulations against any other tenant of the Building be
deemed a waiver of any such Rule or Regulation, nor shall any custom or
practice which may become established between the parties in the administration
of the terms hereof be deemed a waiver of, or in any way affect, the right of
either party to insist upon the performance by the other in strict accordance
with said terms. The subsequent acceptance or payment of rent hereunder by
Landlord or Tenant shall not be deemed to be a waiver of any preceding breach
by Tenant or Landlord of any term,

                                       46
<PAGE>   64
covenant or condition of this Lease, other than the failure of Tenant to pay
the particular rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent.

38.  Identification of Tenant. Unless the provisions of Paragraph 52 herein
below are applicable to this Lease, then if more than one person executes this
Lease as Tenant, (a) each of them is jointly and severally liable for the
keeping, observing and performing of all of the terms, covenants, conditions,
provisions and agreements of this Lease to be kept, observed and performed by
Tenant, and (b) the term "Tenant" as used in this Lease shall mean and include
each of them jointly and severally and the act of or notice from, or notice or
refund to, or the signature of, any one or more of them, with respect to the
tenancy or this Lease, including, but not limited to, any renewal, extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the same force
and effect as if each and all of them had so acted or so given or received such
notice or refund or so signed.

39.  Year 2000. Notwithstanding any covenant or provision contained in the Lease
to the contrary, Landlord shall have no liability or responsibility whatsoever
to Tenant for (i) any disruption or interruption in Tenant's business, (ii) any
disruption or interruption in Tenant's use or possession of the Premises, or
(iii) any other damage or consequence suffered or experienced by Tenant, arising
from or relating in any way to the malfunction, shut down or other abnormal
behavior of any computer or computer controlled system which provides utilities
or services to the Premises, or controls any systems serving the Premises
(whether such computer is within the control of Landlord or otherwise) resulting
from the inability or failure of any such computer or computer controlled system
to recognize the year 2000, and distinguish said year from the year 1900
(sometimes referred to as the "Y2K problem", or the "failure to be year 2000
compliant"). In connection with the construction of the Landlord's Work and the
Tenant's Improvements, Landlord shall request that the Contractor (as defined in
the Work Letter) take such action as is commercially reasonable so that the
systems being installed are year 2000 compliant.

40.  Terms and Headings. The words "Landlord" and "Tenant" as used herein shall
include the plural as well as the singular. Words used in any gender include
other genders. If there be more than one Tenant, i.e., if two or more persons or
entities are jointly referred to in this Lease as "Tenant," the obligations
hereunder imposed upon Tenant shall be joint and several. The Paragraph headings
of this Lease are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part hereof.

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

42.  Time. Time is of the essence with respect to the performance of every
provision of this Lease in which time or performance is a factor. For purposes
of this Lease, the term "BUSINESS DAY" shall refer to any day other than a
Saturday, Sunday or a legal holiday for national banks in the location where the
Building is located.

43.  Prior Agreement; Amendments. This Lease contains all of the agreements of
the parties hereto with respect to any matter covered or mentioned in this
Lease, and no prior agreement or understanding, oral or written, express or
implied, pertaining to any such matter shall be effective for any purpose. No
provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
The parties acknowledge that all prior agreements, representations and
negotiations are deemed superseded by the execution of this Lease to the extent
they

                                       47
<PAGE>   65
are not incorporated herein.

44.  Severability. Any provision of this Lease which shall prove to be invalid,
void or illegal in no way affects, impairs or invalidates any other provision
hereof, and such other provisions shall remain in full force and effect.

45.  Recording. Neither Landlord nor Tenant shall record this Lease nor a short
memorandum thereof without the consent of the other and if such recording
occurs, it shall be at the sole cost and expense of the party requesting the
recording, including any documentary transfer taxes or other expenses related
to such recordation.

46.  Limitation on Liability. The obligations of Landlord under this Lease do
not constitute personal obligations of the individual partners, directors,
officers, members or shareholders of Landlord, and Tenant shall not seek
recourse against the individual partners, directors, officers, members or
shareholders of Landlord or any of their personal assets for satisfaction of any
liability in respect to this Lease. 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, the sole and exclusive remedy shall be against Landlord's interest in
the Building in the rental stream and sales proceeds thereof.

47.  Riders. Clauses, plats and riders, if any, signed by Landlord and Tenant
and affixed to this Lease are a part hereof.

48.  Signs. Tenant shall not place any sign upon the Premises or the Building
without Landlord's prior written consent which consent in the case of interior
signage within the Building, shall not be unreasonably withheld or delayed and
which consent, in the case of exterior signage with respect to the Building
(except as specifically provided in this Paragraph 48) may be given or withheld
by Landlord in its discretion. Notwithstanding the sentence immediately above,
Tenant shall have the exclusive right to display its identity through signage
on the exterior of the Building without any additional compensation to Landlord
except during the Extended Terms as provided below. All such exterior signage
shall be subject to the approval of Landlord, which approval shall not be
unreasonably withheld or delayed. All signs shall be constructed, erected and
affixed to the Premises at Tenant's sole cost and expense, and Tenant shall be
responsible for the removal of such signage, and the repair of any damage to
the Building caused thereby, at the end of the Term. All signs shall be in full
compliance with all applicable ordinances, statutes and regulations imposed by
all applicable governmental authorities. During the Extended Terms, Landlord
may impose a reasonable signage rental fee, and adjust such fee periodically as
Landlord reasonably determines, based on the then-current rental value for
comparable signage. Tenant's rights to utilize the Building facades for signage
is limited to signage related to the business of Tenant only (and in the event
of an assignment or sublease pursuant to the provisions of this Lease, the
business of such assignee or sublessee). Tenant shall have no right to sublet
the signage space, nor otherwise earn a profit therefrom. Following the full
execution and delivery of this Lease by both Landlord and Tenant, Tenant shall
be entitled to place a banner at the roof line on the exterior facade of the
Building announcing the intended occupancy of the Building by Tenant. The
wording of such banner shall be subject to reasonable review by Landlord. Any
and all publicity or public announcements of any kind with respect to the
execution of this Lease or any other matter relating to the Lease (exclusive of
the banner described immediately above) to be made by Tenant shall be subject
to the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. Following the full execution and delivery of
this Lease by Landlord

                                       48
<PAGE>   66
and Tenant, Landlord, at its cost, shall remove any existing signage on the
exterior of the Building.

49.    Modification for Lender. If in connection with obtaining construction,
interim or permanent financing for the Building, the lender shall request
reasonable modifications in this Lease as a condition to such financing, Tenant
will not unreasonably withhold, delay or defer its consent thereto, provided
that such modifications do not increase the obligations of Tenant hereunder or
materially adversely affect the leasehold interest hereby created or Tenant's
right hereunder, including Tenant's parking rights.

50.    Accord and Satisfaction. No payment by Tenant or receipt by Landlord of
a lesser amount than the rent payment herein stipulated shall be deemed to be
other than on account of the rent, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy provided in this Lease. 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 any statute or at common
law.

51.    Financial Statements. At any time during the Term of this Lease, and if
requested by Landlord in connection with a potential sale or financing of the
Building, Tenant shall, upon ten (10) days prior written notice from Landlord,
provide Landlord with a current financial statement and financial statements of
the two (2) years prior to the current financial statement year. Except in
connection with a request by Landlord in connection with a potential sale or
financing, Landlord shall limit its request for financial statements to once
per calendar quarter. Such statements shall be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice of
Tenant, shall be audited by an independent certified public accountant.
Landlord shall use commercially reasonable efforts to protect the
confidentiality of any such statement and to request that any proposed buyer or
lender similarly treat the information contained in such statement as being
confidential in nature, such that such information shall only be disclosed to
the consultants, analysts or counsel as may be reasonably necessary in order to
evaluate a potential purchase of, or loan upon, the Building.

52.    Tenant as Corporation. If Tenant executes this Lease as a corporation,
then Tenant and the persons executing this Lease on behalf of Tenant represent
and warrant that the individuals executing this Lease on Tenant's behalf are
duly authorized to execute and deliver this Lease on its behalf in accordance
with a duly adopted resolution of the board of directors of Tenant, a copy of
which is to be delivered to Landlord on execution hereof, and in accordance
with the By-Laws of Tenant and that this Lease is binding upon Tenant in
accordance with its terms.

53.    No Partnership or Joint Venture. Nothing in this Lease shall be deemed
to constitute Landlord and Tenant as partners or joint venturers. It is the
express intent of the parties hereto that their relationship with regard to
this Lease be and remain that of landlord and tenant.

54.    Rooftop Deck/Rooftop Antennae.

       54.1   Subject to Landlord's prior approval of the plans and
specifications, which approval shall not be unreasonably withheld or delayed,
Tenant shall have the right to construct a roof deck on the Building. Any such
improvement to the Building shall be done at Tenant's sole cost, by licensed,
bonded contractors reasonably approved by Landlord, and in strict compliance
with all applicable rules, regulations, ordinances and other requirements of
every nature imposed by any governmental authority.

                                       49
<PAGE>   67
with jurisdiction over the Building. Tenant shall obtain all applicable permits
and approvals as may also be required for such construction.

     54.2  Subject to Landlord's prior approval, which approval shall not be
unreasonably withheld or delayed, Tenant may install, at Tenant's sole cost, an
antennae or satellite dish on the roof of the Building. Any such improvement to
the Building shall be done at Tenant's sole cost, by licensed, bonded
contractors reasonably approved by Landlord, and in strict compliance with all
applicable rules, regulations, ordinances and other requirements of every
nature imposed by any governmental authority with jurisdiction over the
Building. Tenant shall obtain all applicable permits and approvals as may also
be required for such modifications.

55.  Landlord's Representations. Notwithstanding any provision to the contrary
of this Lease, Landlord represents and warrants to Tenant that, to the best of
Landlord's knowledge: (i) the Premises, the Building and the Site as of the
date of this Lease are in compliance in all material respects with all laws
regarding Hazardous Materials ("HAZARDOUS MATERIALS LAWS"). Landlord further
represents and warrants that, to the best of Landlord's knowledge, no
litigation has been filed or threatened, nor are any settlements pending with
any governmental or private party, concerning the actual or alleged presence of
Hazardous Materials in or on the Premises, Building or Site, nor has Landlord
received any written notice of any violation, or any alleged violation, of any
Hazardous Materials Laws, pending claims or pending investigations with respect
to the presence of Hazardous Materials on or in the Premises, Building or Site.
In addition to Landlord's indemnification of Tenant pursuant to the provisions
of Paragraph 7.2(b) above, except to the extent that the Hazardous Material in
question was released, emitted, used, stored, manufactured, transported or
discharged by Tenant or any of its agents, employees, contractors or invitees,
Tenant shall not be responsible for and Tenant is hereby released from any
claim, remediation obligation, investigation obligation, removal obligation,
monetary obligation, liability, cause of action, penalty, attorneys' fees,
costs, expenses or damages owing or alleged to be owing to any third party with
respect to any Hazardous Materials present in or on the Premises, the Building
or the Site, or the soil, ground water or surface water thereof, without regard
to whether the Hazardous Materials were present in or on the Premises, the
Building or the Site as of the Lease Commencement Date or whether the presence
of the Hazardous Materials was caused by any person other than Landlord. In no
event, however, shall the indemnification obligations of Landlord in connection
with the Hazardous Materials be more expansive than the indemnification
obligation of Landlord as set forth in Paragraph 7.2(b) above. Landlord's
representations and warranties under this Paragraph 56 and Landlord's
indemnification obligation under Paragraph 7.2(b) shall survive termination of
this Lease.

56.  Arbitration. Any dispute pursuant to the provisions of Paragraph 3.2 which
is not resolved pursuant to such Paragraph shall be finally settled by binding
arbitration in accordance with and under the rules of practice and procedure
for arbitration hearings of Judicial Arbitration and Mediation Services, Inc.
("JAMS"), or its successor in San Francisco, California. The parties may agree
upon a retired judge from the JAMS panel. If they are unable to agree, JAMS
shall provide a list of available judges containing one more judge than there
are parties to the arbitration and each party may strike one. The remaining
judge shall serve as the arbitrator. The arbitrator shall have the authority to
grant injunctive and/or other equitable relief. The arbitrator shall not have
the power to commit errors of law or legal reasoning and the appropriate
court shall have the authority to review the award for errors of fact, law or
legal reasoning. The award may also be vacated or corrected pursuant to the
California Code of Civil Procedure for any such error. If and when a demand for
arbitration is made by either party, the parties agree to execute a submission
agreement, provided by JAMS, setting forth the rights of the parties and the
rules and

                                       50
<PAGE>   68
procedures to be followed at the arbitration hearing; provided, however, that
(i) the arbitration shall take place in San Francisco, California; (ii) the
arbitrator shall apply the rules of evidence and substantive law of the State
of California; (iii) the arbitrator shall render written findings of fact and
conclusions of law; (iv) the parties shall be entitled to conduct such
pre-hearing discovery as would otherwise be permitted under California law; (v)
the arbitrator shall have the authority to entertain and decide motions before
the arbitration hearing as otherwise would be permitted in a court of law,
including, by way of example, motions to compel discovery and motions for
summary judgment; and (vi) remedies which the arbitrator shall have the
authority to grant shall be limited to the same remedies which could otherwise
be imposed by a court of law. Such arbitration shall be the sole remedy
available to the parties with respect to disputes involving the matters
described in Paragraph 3.2.

57.  Other Available Space. Landlord shall give written notice to Tenant at any
time that Landlord (or any affiliate of Landlord) has available for lease,
space in a building controlled by Landlord in the immediately geographical area
surrounding the Building, which space is suitable for occupancy by Tenant as
additional space. In no event, however, shall Landlord be in default pursuant
to this Lease in the event that Landlord fails to give any such notice to
Tenant and in no event shall this paragraph be construed as granting to Tenant
an option or first right of refusal or any other right of any kind whatsoever
with respect to any such additional space or controlled building.

     IN WITNESS WHEREOF, the parties have executed and delivered this Lease on
the day and year first above written.

LANDLORD:                                    TENANT:

Rosenberg SOMA Investments III, LLC, a       LookSmart, Ltd., a
Delaware limited liability company           Delaware corporation

By: TRC Investors III, LLC, a California
    limited liability company, Manager
                                             By: [Signature Illegible]
                                                 ----------------------------
    By: The Rosenberg Company, a             Name: [Name Illegible]
        California corporation, Manager            --------------------------
                                             Its: VP Corp Dev
        By: /s/ DOUGLAS C. ROSENBERG              ---------------------------
            ----------------------------
            Douglas C. Rosenberg             By:
            President                            ----------------------------
                                             Name:
        By: /s/ DOUGLAS C. ROSENBERG               --------------------------
            ----------------------------     Its:
            Douglas C. Rosenberg                  ---------------------------
            Secretary

                                       51
<PAGE>   69
                                   EXHIBIT A

                                   FLOOR PLAN
                               625 SECOND STREET

                                                                     FIRST FLOOR
<PAGE>   70
                                   FLOOR PLAN

                               625 SECOND STREET

                                                                    SECOND FLOOR
<PAGE>   71
                                   FLOOR PLAN
                               625 SECOND STREET

                                                                     THIRD FLOOR
<PAGE>   72
                                   FLOOR PLAN
                               625 SECOND STREET

                                                                    FOURTH FLOOR
<PAGE>   73
                                   FLOOR PLAN

                               625 SECOND STREET

                                                                    Garage
<PAGE>   74
                                   EXHIBIT B

                     LANDLORD'S NOTICE OF LEASE TERM DATES

     To: LookSmart, Ltd., a Delaware corporation

     Date: ________________, 1999

     Re: The Office Lease ("Lease") dated March ____, 1999 between LookSmart,
Ltd., a Delaware corporation, ("Tenant"), and Rosenberg SOMA Investments III,
LLC, a Delaware limited liability company, ("Landlord"), concerning that
certain premises (the "Premises") consisting of all four (4) floors of office
space, all of the basement parking garage and basement storage area located in
that certain building (the "Building") commonly known as 625 Second Street, San
Francisco, CA.

     In accordance with the Lease, Landlord and Tenant confirm as follows:

     1.   The Premises and the Building have been delivered to and accepted by
Tenant; Tenant acknowledges that all Tenant Improvements and other Landlord's
Work required under the Lease have been satisfactorily completed.

     2.   The Lease Commencement Date is _____, 1999; the Lease Expiration Date
is ____, 2009.

     3.   Tenant's obligation to pay Aggregate Monthly Basic Rent under the
Lease shall commence on the Lease Commencement Date, as specified in Paragraph
2 above.

     4.   Aggregate Monthly Basic Rent and Operating Rent (when accrued
pursuant to Paragraph 5.3 of the Lease) are due and payable in advance on the
first day of each and every month during the Term of Lease. All payments shall
be made payable to Landlord and
<PAGE>   75
delivered care of ROK Properties, Inc., 501 Second Street, Ste. 214, San
Francisco, CA 94107.

                              AGREED AND ACCEPTED

LANDLORD:                                    TENANT:

Rosenberg SOMA Investments III, LLC, a       LookSmart, Ltd., a
Delaware limited liability company           Delaware corporation

By:  TRC Investors III, LLC, a California    By: ______________________
     limited liability company, Manager      Name: ____________________
                                             Its: _____________________
     By:  The Rosenberg Company, a
          California corporation, Manager    By: ______________________
                                             Name: ____________________
     By: ______________________              Its: _____________________
         Douglas C. Rosenberg
         President

     By: ______________________
         Douglas C. Rosenberg
         Secretary
<PAGE>   76

                                   EXHIBIT C

                                 SAMPLE FORM OF
                          TENANT ESTOPPEL CERTIFICATE

The undersigned, ____________________________ ("LANDLORD"), with a mailing
address c/o ______________________________________________________________
and _________________________ ("TENANT"), hereby certify to
_____________________________, a _______________________ as follows:

     1.   Attached hereto is a true, correct and complete copy of that certain
          lease dated ________________________ between Landlord and Tenant (the
          "LEASE"), which demises premises which are located on the second
          (2nd) floor of the Building located at _________________________.

          The Lease is now in full force and effect and has not been amended,
          modified or supplemented, except as set forth in Paragraph 4 below.

     2.   The term of the Lease commenced on ___________________________.

     3.   The term of the Lease shall expire on ________________________.

     4.   The Lease has: (Initial one)

          ( )  not been amended, modified, supplemented, extended, renewed or
               assigned.

          ( )  been amended, modified, supplemented, extended, renewed or
               assigned by the following described agreements, copies of which
               are attached hereto:

               _______________________________________________________________

               _______________________________________________________________

     5.   Tenant has accepted, is now in possession of and is now conducting
          business in said Premises.

     6.   Tenant and Landlord acknowledge that the Lease will be assigned to
          and that no modification, adjustment, revision or cancellation of the
          Lease or amendments thereto shall be effective unless written consent
          of is obtained, and that until further notice, payments under the
          Lease may continue as heretofore.

     7.   The amount of Basic Annual Rent is $_______________.
          Basic Annual Rent shall be increased based upon operating expense
          increases and as follows:

          _______________________________________.

     8.   The amount of security deposits (if any) is $_________________
          No other security deposits have been made.

<PAGE>   77

     9.   Tenant is paying the full lease rental, which has been paid in full
          as of the date hereof. No rent under the Lease has been paid for more
          than thirty (30) days in advance of its due date.

     10.  All Work required to be performed by Landlord under the Lease has
          been completed and all required contributions by Landlord to Tenant
          on account of Tenant Improvements have been received.

     11.  There are no defaults on the part of the Landlord or Tenant under the
          Lease.

     12.  Tenant has no defense as to its obligations under the Lease and
          claims no set-off or counterclaim against Landlord.

     13.  Tenant has no right to any concessions (rental or otherwise) or
          similar compensation in connection with renting the space it
          occupies, except as provided in the Lease.

     14.  The Lease, amended as noted in Item 4 above, represents the entire
          agreement between Landlord and Tenant as to this leasing.

          All provisions of the Lease and the amendments thereto (if any)
referred to above are hereby ratified.

DATED: ________________________, 19___

   TENANT:                                   LANDLORD:
___________________________________,         _________________________________,
a __________________________________         a ________________________________

By: ________________________________         By: ______________________________
Name: ______________________________         Name: ____________________________
Its: _______________________________         Its: _____________________________

<PAGE>   78
                                   EXHIBIT D
                             RULES AND REGULATIONS

            1.  Subject to Paragraph 48 of the Lease, no sign, placard,
picture, advertisement, name or notice shall be installed or displayed on any
part of the outside or inside of the Building without the prior written consent
of Landlord, which shall not be unreasonably withheld or delayed. Landlord
shall have the right to remove, at Tenant's expense and without notice, any
sign installed or displayed in violation of this rule. All approved signs or
lettering on doors, windows and walls shall be printed, painted, affixed or
inscribed at the expense of Tenant by a person reasonably approved by Landlord,
using materials, style and format reasonably acceptable to Landlord.

            2.  Landlord shall have the right to approve the window coverings
in all exterior and atrium window offices of the Premises, which approval shall
not be unreasonably withheld or delayed. No awning shall be permitted on any
part of the Premises. Tenant shall not place anything against or near glass
partitions or doors or windows which may appear unsightly from outside the
Premises.

            3.  Tenant shall not obstruct any sidewalks, halls passages, exits,
entrances, elevators or stairways of the Building in a manner which would
violate any applicable code or ordinance.

            4.  Landlord will furnish Tenant, free of charge, with 10 keys to
each door lock in the Premises and 90 parking garage entry cards. Landlord may
make a reasonable charge for any additional keys or parking entry cards.
Tenant shall not make or have made additional keys or cards without Landlord's
prior consent. Tenant may install a security system at the Premises at Tenant's
expense, in which event Tenant shall provide Landlord with a key and/or entry
card for purposes of Landlord's entry to the Premises as provided in the Lease.
Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys
for all doors and all parking cards which have been furnished to Tenant, and in
the event of loss of any keys or card keys so furnished, shall pay Landlord
therefor.

            5.  If Tenant requires telegraphic, telephonic, burglar alarm or
similar services, it shall first obtain, and comply with, Landlord's reasonable
instructions in their installation.

            6.  No equipment, materials, furniture, packages, supplies,
merchandise or other property will be received in the Building or carried in
the elevators except between such hours and in such elevators as may be
designated by Landlord.

            7.  Tenant shall not place a load upon any floor of the premises
which

<PAGE>   79
exceeds the load per square foot which such floor was designed to carry and
which is allowed by law. Landlord shall have the right to prescribe the weight,
size and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects, if such objects are considered
necessary by Tenant, as reasonably determined by Landlord, shall stand on such
platforms as determined by Landlord to be necessary to properly distribute the
weight. The persons employed to move such equipment in or out of the Building
must be reasonably acceptable to Landlord. Landlord will not be responsible for
loss of, or damage to, any such equipment or other property from any cause, and
all damage done to the Building by maintaining or moving such equipment or
other property shall be repaired at the expense of Tenant.

          8.   Tenant shall not use or keep in the Premises any kerosene,
gasoline or inflammable or combustible fluid or material other than those
limited quantities necessary for the operation or maintenance of office
equipment. Tenant shall not use or permit to be used in the Premises any foul or
noxious gas or substance, or permit or allow the Premises to be occupied or used
in an unlawful manner by reason of noise, odors or vibrations, nor shall Tenant
bring into or keep in or about the Premises any birds or animals, except animals
assisting disabled persons.

          9.   Tenant shall not use any method of heating or air conditioning
other than that reasonably approved by Landlord. No space heaters of any type
are to be used within the Premises. Landlord reserves the right to remove space
heaters found during normal inspection of Premises.

          10.  Heat and air conditioning shall be provided as set forth in the
Lease.

          11.  Landlord reserves the right, exercisable without notice and
without liability to Tenant, to change the name and street address of the
Building.

          12.  Landlord reserves the right to exclude from the building between
the hours of 6:00 p.m. and 7:00 a.m. the following day, or such other hours as
may be established from time to time by Landlord, and on Saturdays, Sundays and
legal holidays, any person unless that person is known to the person or
employee in charge of the Building and has a pass or is properly identified.
Tenant shall be responsible for all persons for whom it requests passes and
shall be liable to Landlord for all acts of such persons. Landlord shall not be
liable for damages for any error with regard to the admission to or exclusion
from the Building of any person. Landlord reserves the right to prevent access
to the Building in case of invasion, mob, riot, public excitement or other
commotion by closing the doors or by other appropriate action.

          13.  Tenant shall close and lock the doors of its Premises and
entirely shut off all water faucets or other water apparatus, and, except with
regard to Tenant's computers and other equipment which requires utilities on a
twenty-four hour basis, all electricity, gas or air outlets before Tenant and
its employees leave the Premises. Tenant shall be responsible for any damage or
injuries sustained by Landlord for noncompliance with this rule.

                                       2
<PAGE>   80
     14.  The toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein. The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose employees or
invitees, shall have caused it.

     15.  Tenant shall not sell, or permit the sale at retail, of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to
the general public in or on the Premises. Tenant shall not use the Premises for
any business or activity other than that specifically provided for in Tenant's
Lease.

     16.  Tenant shall not mark, drive nails, screw or drill into the
partitions, woodwork or plaster or in any way deface the Premises or any part
thereof, except to install normal wall hangings, and to secure files and
bookcases and other furniture that could fall over. Landlord reserves the right
to direct electricians as to where and how telephone and telegraph wires are to
be introduced to the Premises. Tenant shall not cut or bore holes for wires.
Tenant shall not affix any floor covering to the floor of the Premises in any
manner except as reasonably approved by Landlord. Tenant shall repair any
damage resulting from noncompliance with this rule.

     17.  Tenant shall not install, maintain or operate upon the Premises any
vending machine without the written consent of Landlord.

     18.  Landlord reserves the right to exclude or expel from the Building any
person who, in Landlord's reasonable judgment, is intoxicated or under the
influence of liquor or drugs or who is in violation of any of the Rules and
Regulations of the Building.

     19.  Tenant shall not place in any trash box or receptacle any material
which cannot be disposed of in the ordinary and customary manner of trash and
garbage disposal. All garbage and refuse storage and disposal shall be made in
accordance with directions issued from time to time by Landlord.

     20.  The Premises shall not be used for the storage of merchandise held
for sale to the general public, or for lodging or for manufacturing of any
kind, nor shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking shall be done or permitted by any tenant on the Premises,
except that use by tenant of Underwriters' Laboratory-approved equipment for
brewing coffee, tea, hot chocolate and similar beverages shall be permitted,
and the use of a microwave oven shall be permitted, provided that such
equipment and use is in accordance with all applicable federal, state, county
and city laws, codes, ordinances, rules and regulations.

     21.  Except for mail carts and hand trucks, Tenant shall not bring any
vehicles

                                       3

<PAGE>   81
or any kind into the Building except the Garage. Tenant shall comply with all
reasonable rules and regulations with respect to the use of the Garage as
Landlord may from time to time deliver to Tenant in writing.

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

     23.  Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by any governmental agency or reasonably
established by Landlord.

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

     25.  The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside of
their regular duties unless under special instructions from Landlord, and no
employee of Landlord will admit any person (tenant or otherwise) to any office
without specific instructions from Landlord.

     26.  Landlord may waive any one or more of these Rules and Regulations for
the benefit of Tenant, but no such waiver by Landlord shall be construed as a
permanent or continuing waiver of such Rules and Regulations in favor of
Tenant, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against Tenant.

     27.  These Rules and Regulations are in addition to the terms, covenants,
agreements and conditions of the Lease. In the event these Rules and
Regulations conflict with any provision of the Lease, the Lease shall control.

     28.  Landlord reserves the right to make such other and reasonable Rules
and Regulations as, in its judgment, may from time to time be needed for safety
and security, for care and cleanliness of the Building and for the preservation
of good order therein, provided such rules and regulations do not materially
increase Tenant's obligation hereunder or diminish Tenant's rights hereunder.
Tenant agrees to abide by all such Rules and Regulations hereinabove stated and
any additional rules and regulations which are adopted.

     29.  Tenant shall be responsible for the observance of all of the
foregoing rules by Tenant's employees, agents, clients, customers, invitees and
guests.

     30.  Smoking is prohibited in all enclosed areas of the Building without
limitation. When smoking outside the Building, ash receptacles must be used and
provided by

                                       4
<PAGE>   82
the smoker if not provided by Landlord. Smokers must not leave any ashtrays,
smoking material or debris in the area where they have been smoking, except in
ash receptacles.

                                       5
<PAGE>   83
                                   EXHIBIT E

                                  WORK LETTER

                  625 SECOND STREET, SAN FRANCISCO, CALIFORNIA
                               TENANT WORK LETTER

     This Tenant Work Letter ("WORK LETTER") is entered into effective May 5,
1999, and shall set forth the terms and conditions controlling the construction
of the Premises. Unless otherwise defined herein, all capitalized terms shall
have the meanings ascribed to them in that certain lease between LookSmart,
Ltd., a Delaware corporation ("TENANT") and Rosenberg SOMA Investments III,
LLC, a Delaware limited liability company ("LANDLORD") dated ____, 1999 (the
"LEASE").

                                   SECTION 1
                            SELECTION OF CONTRACTOR

     1.1  Selection for General Contractor. Tenant acknowledges and agrees that
Landlord shall engage Cannon Constructors ("CONTRACTOR") to act as the general
contractor for construction of all Landlord's Work (as defined below) and the
Tenant's Improvements (as defined below) to be performed to the Building.
Landlord shall enter into separate contracts with Contractor for the
construction of Landlord's Work and the Tenant's Improvements (sometimes
referred to collectively as the "IMPROVEMENT WORK"). The contract between
Landlord and Contractor with respect to the Landlord's Work shall separately
reference and describe the Landlord's Work and the costs and charges therefor,
and the contract for the Tenant's Improvements shall separately reference and
describe the Tenant's Improvements and the costs and charges therefor. Landlord
shall use commercially reasonable efforts to cause the Improvement Work to be
substantially completed with respect to Floor Three and Floor Four not later
than October 15, 1999 and with respect to Floor One and Floor Two not later
than October 22, 1999. It is acknowledged, that substantial completion of the
Tenant's Improvements is dependant, in part, on the timely performance by
Landlord of those matters required of Landlord in connection with construction
of the Tenant's Improvements and on the timely performance by Tenant of those
matters required by Tenant in connection with construction of the Tenant's
Improvements, including without limitation, those certain Tenant Benchmarks as
defined and set forth in Paragraph 5.2 below. Tenant's failure to meet a Tenant
Benchmark shall constitute a Tenant Delay and shall be subject to Paragraph 3.2
and 3.3 of the Lease. For purposes of the Lease and this Work Letter,
"substantial completion" of the Improvement Work shall mean the date on which
all of the following have occurred: (i) Landlord has substantially completed
the Improvement Work with respect to Floor Three and Floor Four or with respect
to Floor One and Floor Two, as the case may be, in accordance with this Work
Letter, as certified by Landlord's Architect (as defined below) subject only to
completion of punch list items and such other items as do not materially affect
the ability of Tenant to occupy and use the Premises for general office
purposes; and (ii) Landlord has obtained all governmental approvals and
occupancy certificates required for the legal occupancy of Floor Three and
Floor Four or Floor One and Floor Two, as the case may be. Upon substantial
completion of the Improvement Work with respect to Floor Three and Floor Four
or with respect to Floor One and Floor Two, as the case may be, Landlord shall
give

                                                                          Page 1
<PAGE>   84
written notice thereof to Tenant. Within three (3) business days after Tenant's
receipt of such written notice, a representative of Tenant, a representative of
Landlord and Tenant's Architect (as defined below) and Landlord's Architect
shall conduct a physical inspection and walk through of the Premises for the
purpose of determining which components of the Improvement Work with respect to
Floor Three and Floor  Four or with respect to Floor One and Floor Two, as the
case may be, if any, have not been completed, and which require additional work
or repair. Within three (3) business days thereafter, Tenant's Architect and
Landlord's Architect shall prepare a punch list setting forth such components of
the Improvement Work. Landlord shall thereafter diligently pursue completion
and/or repair of the punch list items. Upon completion of all such punch list
items, Landlord shall be considered to have completely fulfilled its
obligations in connection with the Improvement Work with respect to Floor Three
and Floor Four or Floor One and Floor Two, as the case may be, subject to the
provisions of Paragraph 12 of the Lease. Notwithstanding any provision to the
contrary contained in the Lease or in this Work Letter, Tenant's acceptance of
the Improvement Work or submission of a "punch list" with respect to
Improvement Work shall not be deemed a waiver of Tenant's right to have latent
defects in Improvement Work repaired at no cost to Tenant. Tenant shall give
written notice to Landlord whenever any such defect becomes reasonably apparent
and Landlord shall repair such defect as soon as practicable so long as Tenant
gives such notice to Landlord within one (1) year following substantial
completion of the Improvement Work (as defined in Section 1.1) with respect to
Floor Three and Floor Four or Floor One and Floor Two, as the case may be.
Notwithstanding the above provisions, Landlord shall have no obligation to
repair any defect in the Tenant's Improvements resulting from or relating to
design defects attributable to Tenant's Architect or any one or more of
Tenant's Engineers (as defined below). Subsequent to one (1) year following
substantial completion of the Improvement Work, the repair obligation of
Landlord with respect to latent defects shall be as otherwise set forth in the
Lease. Following such one year period Landlord, upon the request of Tenant
shall assign to Tenant without representation of any kind Landlord's rights, if
any, against Contractor in connection with any latent defects with respect to
construction of the Tenant's Improvements. Landlord, at no cost to Landlord,
shall reasonably cooperate with Tenant in connection with any action commenced
by Tenant against the Contractor with respect to any latent defects in
connection with the Tenant's Improvements. In connection with any assignment of
such rights against Contractor to Tenant, Tenant shall agree to indemnify,
defend and hold Landlord harmless from any and all costs, obligations or
liabilities of any kind whatsoever (including reasonable attorneys' fees)
arising out of or relating to any action taken by Tenant with respect to the
Contractor pursuant to such assignment.

     1.2  General Contractor's Contract for Improvements. As a condition of
Contractor's contract with Landlord for the construction of the Tenant's
Improvements (the "CONSTRUCTION CONTRACT"), Contractor shall solicit and employ
commercially reasonable effort to obtain bids reasonably satisfactory to Tenant
for each component of work contemplated by the Construction Drawings (as
defined below) to be performed pursuant to subcontract. Contractor shall
provide Landlord and Tenant with a copy of all such bids related to the
Tenant's Improvements. Contractor shall also provide Landlord and Tenant with
an itemized breakdown of all general conditions proposed under the Construction
Contract

                                                                          Page 2

<PAGE>   85
related to the Tenant's Improvements. All general conditions shall be subject
to Landlord's approval and to Tenant's approval as provided below in this
paragraph. Contractor shall be limited to three and one-half percent (3-1/2%)
of the total cost of construction of the Tenant's Improvements incurred by
Contractor as Contractor's profit in connection with construction of the
Tenant's Improvements. The proposed form of Construction Contract shall set
forth the cost of construction for Tenant's Improvements (either on fixed basis
or on a guaranteed maximum basis) and relate to the construction of the
Tenant's Improvements in accordance with the Construction Drawings. A copy of
the proposed form of Construction Contract shall be delivered by Landlord to
Tenant. Within five (5) business days following delivery by Landlord to Tenant
of (i) a copy of the proposed form of Construction Contract; (ii) a copy of all
bids of subcontractors in connection with the Construction Contract; and (ii)
an itemized breakdown of the general conditions proposed in the Construction
Contract, Tenant shall deliver written approval or disapproval of all such
items to Landlord. If Tenant disapproves any such items, Tenant's notice to
Landlord shall specify the basis for the disapproval. In the event that Tenant
approves all of such items, Landlord shall proceed with construction of the
Tenant's Improvements in accordance with the Construction Contract as so
approved. In the event that Tenant disapproves any such items, Landlord shall
reasonably attempt to satisfy any such objections of Tenant and shall give
Tenant written notice of suggested resolutions which in each case Tenant shall
approve or disapprove in writing within one (1) business day after receipt.
Landlord may elect not to proceed with construction of the Tenant's Improvements
pursuant to the Construction Contract until all objections as raised by Tenant
have been fully satisfied and Tenant has given written approval of the
Construction Contract in full, including without limitation all of the above
described items. In the alternative, Landlord shall be entitled to proceed with
construction of the Tenant's Improvements pursuant to the Construction Contract
even if Tenant's final approval to all components of the Construction Contract
has not yet been obtained provided that Landlord gives written notice to Tenant
of its intent to so proceed and Tenant fails to object to such notice within
two (2) business days following receipt by giving written notice to Landlord of
such objection.

                                   SECTION 2
                                LANDLORD'S WORK

       2.1    Scope of Landlord's Work. The following work and improvements
("LANDLORD'S WORK") shall be specified in construction drawings (and
specifications) prepared by Landlord's Architect ("LANDLORD'S DRAWINGS") and
shall be constructed at Landlord's sole cost. Prior to Landlord's entry into
the Construction Contract for construction of the Tenant's Improvements,
Landlord shall provide Tenant with a copy of Landlord's Drawings. Landlord
shall not be required to enter into the Construction Contract for the
construction of the Tenant's Improvements until and unless Tenant has given
written approval of Landlord's Drawings. The Landlord's Drawings shall set
forth the scope of the Landlord's Work and shall include, but not be limited
to, the improvements set forth below.

              2.1.1  Installation of the primary heating, ventilating, and
air-conditioning system ("HVAC") for the Building, stubbed out to each floor,
ready for local distribution.

                                                                          Page 3
<PAGE>   86
     2.1.2  Installation of one hour rated electrical closets on each floor
with 480 volt, 3 phase electrical power supply with distribution of 450 amps,
to each floor of the Building as specified in the Construction Drawings.

     2.1.3  Installation of life-safety systems as required by applicable
building codes on an unimproved basis (i.e., an unoccupied building), including
gall strobes (to the extent required by applicable building code), sprinkler
systems, emergency exit systems (including required lighting and signage) and
other required fire safety systems.

     2.1.4  Installation of the main telephone terminal panel with
appropriately sized services in the telephone/electrical room specified in the
Construction Drawings, and installation of telephone closets on each floor of
the Building, ready for secondary line branching throughout each floor.

     2.1.5  Construction of Men's and Women's restrooms on each floor of the
Building, as specified in the Landlord's Drawings, with the exception of the
basement.

     2.1.6  Construction of lighted and gated basement parking and installation
of a card key access system.

     2.1.7  Installation of two (2) new passenger elevators serving all floors,
as specified in the Landlord's Drawings.

     2.1.8  Installation of new or refurbished windows throughout the Building
including new windows to be installed into the south side of the Building.

     2.1.9  Performance of all work necessary for the Building to comply with
all applicable seismic regulations, the Americans with Disabilities Act of 1980
(except with respect to those compliances associated exclusively with the
Tenant's Improvements) and all applicable path of travel regulations.

     2.1.10  Installation of at least one (1) fiber optic system to a location
in the Garage ready for distribution throughout the Building provided that
Tenant selects Landlord's pre-existing provider in connection with such fibre
optic system.

     2.1.11  Sandblasting of substantially all interior brick and wood surfaces
followed by air blasting of such surfaces with clear seal only to be applied to
sand blasted brick.

                                   SECTION 3
                             TENANT'S IMPROVEMENTS

     3.1  Scope of Tenant's Improvements. The physical improvements to the
Premises and the Building (in addition to Landlord's Work) set forth and
described in the Construction

                                                                          Page 4

<PAGE>   87
Drawings shall constitute the "TENANT'S IMPROVEMENTS". For purposes of this Work
Letter, the "TENANT IMPROVEMENT ALLOWANCE ITEMS" shall consist of the following:
(i) all costs incurred in connection with or arising from the Construction
Contract; (ii) all fees and costs of Tenant's Architect and Tenant's Engineers
(as defined below); (iii) all space planning costs (subject to the limitations
of paragraph 3.4); (iv) the cost of Tenant's security system to be installed at
the Premises; (v) Landlord's supervision/construction management fee (as
described in Paragraph 4.3 below); (vi) all costs related to obtaining all
necessary construction and other permits necessary for construction of the
Tenant's Improvements; (vii) all fees and costs associated with the hiring of an
expediter, if any, to assist in obtaining all building and planning department
consents and approvals with respect to the Tenant's Improvements; (viii) the
cost of other items related to the design and construction of the Tenant's
Improvements; and (ix) all other costs and expenses incurred in connection with
the Construction Contract or construction of the Tenant's Improvements. Tenant
shall be responsible for the full amount of all such costs in connection with
the Tenant's Improvements, all of which shall be paid in accordance with the
provisions of this Work Letter. The Tenant Improvement Allowance Items shall
include fifty percent (50%) of the cost of the technology cabling to be
installed within the Premises, which cost Landlord may pay and if paid by
Landlord, Tenant agrees that such technology cabling will remain in the Premises
upon the termination of the Lease. Notwithstanding anything to the contrary
contained in the Lease or this Work Letter, the cost of the Tenant's
Improvements and the Tenant Improvement Allowance Items shall not include (and
Tenant shall have no responsibility for) the following components: (i) costs
attributable to Landlord's Work or improvements installed "off-site" (such as
streets, curbs, gutters, traffic lights, lights for parking and street
lighting); (ii) costs incurred to remove hazardous materials from the Building
unless the presence of such materials was caused by Tenant or its agents,
contractors, employees or invitees in violation of hazardous materials laws (as
such may exist from time to time); (iii) attorneys' fees incurred in connection
with the Construction Contract (or any subcontracts), or attorneys' fees,
experts' fees and other costs of legal and arbitration proceedings to resolve
construction disputes with third parties except for attorney's fees and other
costs incurred in connection with construction disputes relating to or arising
out of decisions made, actions taken or positions taken by Tenant's Architect;
(iv) loan fees, mortgage, brokerage fees, interest and other costs of financing
construction costs; (v) costs incurred as a consequence of a delay by Landlord
or construction defects except for construction defects arising or relating in
whole or in part to services provided or decisions made by Tenant's Architect or
any other consultant or contractor engaged by Tenant; (vi) restoration costs in
excess of insurance proceeds as a consequence of a casualty during construction,
unless the casualty is caused by Tenant, its agents, contractors, employees or
invitees; (vii) costs recovered by Landlord by reason of warranties or
insurance; and (viii) penalties and late charges attributable to the failure to
pay construction costs in accordance with the Construction Contract, except to
the extent such penalties and late charges arise due to delays caused by Tenant,
its agents, contractors, employees or invitees including, without limitation,
Tenant's Architect.

                                                                          Page 5

<PAGE>   88
      3.2  Tenant Improvement Allowance. Tenant shall be entitled to a one-time
tenant improvement allowance (the "TENANT IMPROVEMENT ALLOWANCE") in the amount
of Thirty-One and 50/100 Dollars ($31.50) per rentable square foot of office
space within the Premises. For purposes of calculation of the total Tenant
Improvement Allowance, the maximum amount of the Improvement Loan (as defined
below) and Landlord's obligation to advance space planning costs, the rentable
square feet of the Premises shall be 134,847. The Tenant Improvement Allowance
shall be exclusively applied toward the costs of completing the Tenant's
Improvements. Landlord shall be entitled to employ the Tenant's Improvement
Allowance in connection with payment of the Tenant Improvement Allowance Items.
In no event shall Landlord be obligated to make disbursements pursuant to this
Work Letter, or otherwise for the construction of the Tenant's Improvements, in
excess of the Tenant Improvement Allowance, except as provided in Paragraph
3.3. Tenant shall be solely responsible for all costs incurred in constructing
the Tenant's Improvements in excess of the Tenant Improvement Allowance,
whether resulting from cost overruns, changes to the Construction Drawings
requested by Tenant (or made necessary by reason of design or other issues in
connection with the Construction Drawings prepared by Tenant's Architect or
Tenant's Engineers) or otherwise.

      3.3  Additional Funds for Tenant's Improvements. Notwithstanding the
limitation on the Tenant Improvement Allowance to be provided by Landlord in
the immediately preceding Paragraph, Tenant may request that Landlord loan
Tenant additional funds (the "IMPROVEMENT LOAN") to be used to complete the
Tenant's Improvements, if reasonably necessary, in the event the Tenant
Improvement Allowance is insufficient to pay in full the cost of the Tenant's
Improvements, taking into account any changes to the Construction Drawings made
by Tenant (which shall be at Tenant's sole cost). In the event that the Tenant
Improvement Allowance is insufficient as described above, Landlord shall loan
to Tenant an additional amount not to exceed Three and 50/100 Dollars ($3.50)
per rentable square foot of office space within the Premises. The obligation of
Landlord to make the Improvement Loan shall be conditioned on (i) exhaustion of
the Tenant Improvement Allowance in connection with Tenant Improvement
Allowance Items, (ii) Tenant contributing an amount equal to the Improvement
Loan ("MATCHING FUNDS") and (iii) the Improvement Loan and Matching Funds being
applied only towards hard construction costs as set forth in the Construction
Contract, fees and costs of Tenant's Architect and Tenant's Engineers and fifty
percent (50%) of the costs of the technology cabling to be installed within the
Premises (provided that such technology cabling remains in the Premises at the
termination of the Lease). If, at the time the Construction Contract is
approved by Tenant, the costs of the Tenant Improvement Allowance Items are
reasonably anticipated to be in excess of the Tenant Improvement Allowance,
then as a condition to Landlord's obligation to execute the Construction
Contract, Tenant shall fund the full amount of the reasonably anticipated
Matching Funds to Landlord as provided below. The amount of the Improvement
Loan shall be evidenced by an installment promissory note (the "NOTE") made by
Tenant in favor of Landlord in a form reasonably acceptable to Landlord and
Tenant. The Note shall provide for interest at the rate of nine percent (9%)
per annum, for a term of ten (10) years commencing as of the Lease Commencement
Date and for equal monthly installment payments of principal and interest due
on the first day of each calendar month, which

                                                                          Page 6
<PAGE>   89
payments shall be sufficient to fully amortize the principal amount of the
Improvement Loan over the ten (10) year term of the Note. In the event that at
the time the Construction Contract is finally approved by Tenant, it is not
anticipated that any amount in excess of the Tenant Improvement Allowance will
be required in connection with the cost of the Tenant Improvements, then to the
extent that excess costs are thereafter incurred, Landlord shall be required to
make the Improvement Loan in the maximum amount as described above, subject
however, to the conditions provided in Clauses (i), (ii) and (iii) above. In
connection with any such excess costs anticipated to be incurred and the
requirement for Matching Funds or additional Matching Funds to be contributed
by Tenant, such funds shall be deposited with Landlord as described below.

     Tenant shall solely be responsible for bearing the cost of the Tenant's
Improvements in excess of the Tenant Improvement Allowance and the Improvement
Loan. In the event it becomes reasonably apparent from the Construction
Drawings and Construction Contract that the cost of the Tenant's Improvements
will exceed the Tenant Improvement Allowance, the Improvement Loan and the
Matching Funds, within ten (10) business days following final approval of the
Construction Contract by Tenant, Tenant shall deposit with Landlord (to be held
in an interest bearing account by Landlord) an amount equal to the cost of the
Tenant's Improvements in excess of the Tenant Improvement Allowance, the
Improvement Loan and the Matching Funds as reasonably determined by Landlord.
Tenant shall, in addition, within ten (10) business days following final
approval of the Construction Contract, deposit the Matching Funds with Landlord
to be held in an interest bearing account by Landlord. The amount so deposited
by Tenant ("TENANT'S FUNDS") shall be disbursed and/or employed in accordance
with Paragraph 3.5 below; provided however, that Tenant's Funds shall not be
used or applied towards the cost of completing the Tenant's Improvements until
such time as the Tenant Improvement Allowance has been exhausted in accordance
with the provisions of this Work Letter. In the event that following final
approval of the Construction Contract by Tenant, additional funds are required
by reason of additional costs attributable to change orders or other reasons
approved by Tenant (or Tenant's Architect), which approval shall not be
unreasonably withheld or delayed, Landlord may, thereafter, from time to time
upon written notice to Tenant, require that Tenant deposit additional funds
with Landlord (within ten (10) business days following receipt by Tenant of the
request for an additional deposit) to be held by Landlord in an interest
bearing account as a part of the Tenant's Funds in an amount as reasonably
determined by Landlord equal to such excess amount of costs to be incurred in
connection with construction of the Tenant's Improvements. Any and all interest
accruing on the Tenant's Funds shall accrue for the benefit of Tenant. In the
event that Tenant fails to deposit additional funds with Landlord within ten
(10) business days following receipt by Tenant of the request for an additional
deposit as described above, then Landlord may, at the sole option of Landlord,
but without any requirement to do so, draw down from the cash portion of the
security deposit made by Tenant pursuant to the provisions of Paragraph 6.1 of
the Lease the amount of additional deposit requested by Landlord which Tenant
has failed to timely make. In the event of any such withdrawal by Landlord, the
funds so withdrawn shall be held by Landlord as a portion of the Tenant's Funds
and disbursed by Landlord as otherwise provided herein. Further, in the event
of any draw by Landlord against the cash

                                                                          Page 7
<PAGE>   90
portion of the security deposit, Tenant shall be obligated to restore such
drawn amount to the security deposit within ten (10) days after receipt of
written demand of Landlord requiring such restoration in accordance with the
provisions of Paragraph 6.1 of the Lease. Within ten (10) business days
following completion of construction of the Tenant's Improvements and payment
in full of all costs incurred by Landlord in connection with such
construction, any Tenant's Funds then held by Landlord, together with any
accrued interest then held, shall be disbursed by Landlord to Tenant.

     3.4  Cost of Initial Space Planning. In connection with the Tenant's
Improvements, Landlord shall advance the cost of initial space planning for the
Premises up to the maximum amount of Ten Cents ($0.10) per rentable square foot
of office space within the Premises, which amount actually advanced by Landlord
shall be debited against the Tenant Improvement Allowance otherwise available.

     3.5  Landlord's Disbursement Process. During the construction of the
Tenant's Improvements, Landlord shall make monthly disbursements of the Tenant
Improvement Allowance (and to the extent necessary, the Improvement Loan, the
Matching Funds and Tenant's Funds) for Tenant Improvement Allowance Items for
the benefit of Tenant and shall authorize the release of monies for the benefit
of Tenant as follows:

          3.5.1  Monthly Disbursements. On or before the first day of each
calendar month during the construction of the Tenant's Improvements (or such
other date as Landlord may designate), and before Landlord shall be required to
disburse any funds hereunder, Contractor shall deliver to Landlord: (i) a
request for payment of Contractor (and others as appropriate), approved by
Tenant's Architect (which approval shall not be unreasonably withheld or
delayed), in a form to be provided by Landlord, showing the schedule, by trade,
of percentage of completion of the Tenant's Improvements in the Building,
detailing the portion of the work completed and the portion not completed;
(ii) invoices from Contractor (and others as appropriate), for labor rendered
and materials delivered to the Building; (iii) executed mechanic's lien
releases from Contractor (and all others requesting payment) which shall comply
with the appropriate provisions, as reasonably determined by Landlord, of
California Civil Code Section 3262(d); and (iv) all other information
reasonably requested by Landlord. Tenant's Architect's approval of any request
for payment shall be deemed Tenant's acceptance and approval of the work
furnished and/or the materials supplied as set forth in the subject payment
request. Tenant's Architect and Tenant's Representative (as defined below)
shall approve or disapprove any request for payment within three (3) business
days following receipt of Tenant's Architect of such request and, in connection
with any disapproval of the request, shall specifically state the reason for
disapproval. In connection with any disapproval, Tenant's Architect shall,
thereafter, respond within two (2) business days following receipt by Tenant's
Architect of any revised request for payment. Within five (5) business days
following written approval by Tenant's Architect, Landlord shall deliver a
check made payable to Contractor (or other party as appropriate) in payment of:
(A) amounts so requested by Contractor, as set forth in this Paragraph, less a
retention in accordance with the provisions of the Construction Contract (the
aggregate amount of such retentions to be

                                                                          Page 8
<PAGE>   91
known as the "FINAL RETENTION"), provided that Landlord does not dispute any
request for payment based on non-compliance of any work with the approved
Construction Drawings, or due to any substandard work, or for any other reason.
Landlord's payment of such amounts shall not be deemed Landlord's approval or
acceptance of the work furnished or materials supplied as set forth in the
subject payment request. In addition to the disbursement described immediately
above, Landlord shall be entitled to disburse funds in payment of obligations
incurred by Landlord for Tenant Improvement Allowance Items as Landlord may,
from time to time, deem appropriate. Landlord shall provide to Tenant and
Tenant's Architect, copies of invoices in connection with any such
disbursements within five (5) business days following disbursement. Tenant
shall, in addition, be entitle to submit, from time to time, invoices of
Tenant's Architect and Tenant's Engineers, which invoices shall be approved by
Tenant. Landlord shall pay such invoices as approved by Tenant within thirty
(30) days following receipt by Landlord of approved invoices, but no more often
than once per calendar month.

          In no event shall Landlord have any obligation to make disbursements
in excess of the aggregate of; (i) the Tenant Improvement Allowance, (ii) the
Improvement Loan, (iii) the Matching Funds as having been deposited by Tenant
with Landlord, and (iv) the Tenant's Funds as having been deposited by Tenant
with Landlord (exclusive of Matching Funds).

          3.5.2 Final Retention. Subject to the provisions of this Work Letter,
a check for the Final Retention payable to Contractor shall be delivered by
Landlord to Contractor following the completion of construction of the Tenant's
Improvements, provided that (i) Contractor delivers to Landlord properly
executed mechanics lien releases in compliance with both California Civil Code
Section 3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4), (ii)
Landlord has determined that no substandard work exists which adversely affects
the mechanical, electrical, plumbing, heating, ventilating and air
conditioning, life-safety or other systems of the Building, the structure or
exterior appearance of the Building, and (iii) Tenant's Architect delivers to
Landlord a certificate, in a form reasonably acceptable to Landlord, certifying
that the construction of the Tenant's Improvements in the Building has been
substantially completed.

     3.6  Unused Allowance. In the event that there remains any unused portion
of the Tenant Improvement Allowance following disbursements by Landlord in
connection with the Tenant's Improvements, any such amount shall be retained by
Landlord. Tenant shall have no entitlement to any excess of the Tenant
Improvement Allowance not in good faith consumed in the construction of the
Tenant's Improvements.

                                   SECTION 4
                   CONSTRUCTION DRAWINGS; SUPERVISION OF WORK

     4.1  Selection of Architect/Construction Drawings. Tenant hereby selects
Keith Hooks, Hooks Design and Architecture ("TENANT'S ARCHITECT") to prepare
the Construction

                                                                          Page 9
<PAGE>   92
Drawings, and Landlord hereby consents to such selection of Tenant's Architect.
Tenant shall enter into a written contract with Tenant's Architect reasonably
acceptable to Landlord. To the extent required or appropriate, Tenant also shall
select engineering consultants reasonably acceptable to Landlord ("TENANT'S
ENGINEERS") to prepare and/or review plans and drawings relating to the Tenant's
Improvements. The plans and specifications to be prepared by Tenant's Architect
and Tenant's Engineers shall be known collectively as the "CONSTRUCTION
DRAWINGS". In connection with the preparation of the Construction Drawings,
Tenant shall submit to Landlord, the schematic plans ("SCHEMATIC PLANS") prior
to and in connection with the Construction Drawings, which Schematic Plans shall
be subject to the approval of Landlord which approval shall not be unreasonably
withheld or delayed. Following the approval by Landlord of the final Schematic
Plans, the Construction Drawings shall be prepared and a copy delivered to
Landlord. The Construction Drawings shall be subject to Landlord's written
approval, which shall not be unreasonably withheld or delayed. The Construction
Drawings shall be full and complete and sufficient to obtain all necessary
governmental permits and approvals required in connection with the construction
of the Tenant's Improvements. Tenant's Architect shall respond within three (3)
business days upon receipt of any written request of Landlord or Contractor for
clarification or further definition in connection with the Construction
Drawings. Tenant and Tenant's Architect shall verify in the field the actual
dimensions and surface conditions of the Building, and Tenant and Tenant's
Architect shall be solely responsible therefor and shall rely exclusively
thereon. Landlord shall have no responsibility whatsoever for determination of
the dimensions and conditions of the Building, and makes no representations in
connection therewith. Landlord's review of the Construction Drawings as set
forth in this Paragraph shall be for its sole purpose and shall not imply
Landlord's review of the same, or obligate Landlord to review the same, for
quality, design, code compliance or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
architect, engineers and consultants (if any), and notwithstanding any advice or
assistance which may be rendered to Tenant by Landlord or Landlord's Architect,
engineers, and consultants (if any), Landlord shall have no liability whatsoever
in connection therewith and shall not be responsible for any omissions or errors
contained in the Construction Drawings. No changes, modifications or alterations
in the Construction Drawings may be made without the prior written consent of
Landlord, which shall not be unreasonably withheld or delayed. Any delay in the
completion of construction of the Tenant's Improvements resulting from any
defect or omission in the Construction Drawings including, without limitation,
the failure of the Construction Drawings to satisfy or to comply with any
applicable law, code or regulations shall constitute a Tenant Delay for purposes
of Paragraph 3.2 of the Lease.

     4.2  Permits. Prior to the commencement of construction of the Tenant's
Improvements, Landlord, with the assistance and cooperation of Tenant's
Architect, shall submit the Construction Drawings as approved by Landlord to
the appropriate municipal authorities and Landlord shall obtain all applicable
building permits necessary to allow the Contractor to commence and fully
complete the construction of the Tenant's Improvements

                                                                         Page 10
<PAGE>   93
(the "PERMITS"). Tenant shall reasonably cooperate with Landlord in taking such
action as may be reasonably required so as to enable Landlord to obtain all
such Permits and approvals.

     4.3  Landlord's Supervision Fee. In connection with Landlord's review and
supervision of construction of the Tenant's Improvements as provided in this
Work Letter, Landlord has designated Douglas C. Rosenberg ("LANDLORD'S
SUPERVISOR") to serve as its representative and supervisor of the construction
of the Tenant's Improvements and all related matters, and in connection with
such function, Landlord shall be entitled to a supervision fee equal to
Twenty-Five Thousand Dollars ($25,000), which fee shall be payable
incrementally from time to time from the Tenant Improvement Allowance,
Improvement Loan, Matching Funds and Tenant's Funds. The supervision fee shall
be payable at least once calendar month and shall generally be payable on a
basis consistent with the percentage of the total cost for the Tenant's
Improvements then having been incurred as approved by Landlord's Architect in
accordance with Paragraph 3.5.1 above.

                                   SECTION 5
           TENANT'S COVENANTS AND BENCHMARKS; LEASE COMMENCEMENT DATE

     5.1  Tenant Indemnity. Tenant hereby indemnifies Landlord from any loss,
claims, damages, actions or courses of action (including, without limitation,
reasonable attorney's fees) arising from or relating to the actions of Tenant's
agents, employees or contractors in the Premises or the Building or in the
event Tenant shall conduct additional work to the Premises separate and apart
from the Tenant Improvements prior to substantial completion of the Tenant
Improvements, such as fixture installation or workstation set up, Tenant shall
do so in strict compliance with any and all rules and regulations related
thereto that Contractor or Landlord shall reasonably impose. Tenant shall only
have the right to conduct such activities prior to substantial completion
provided that such activities do not interfere with Landlord's completion of
the Tenant's Improvements.

     5.2  Tenant's Benchmarks. The obligations of Tenant in connection with the
Tenant's Improvements include the following (each a "TENANT BENCHMARK" and
collectively, the "TENANT BENCHMARKS") which Tenant Benchmarks, notwithstanding
any provision to the contrary of this Work Letter or the Lease, are to be
completed by the date indicated below:

<TABLE>
<CAPTION>
                                                                     Date of
              Description of Tenant Benchmark                        Completion
              -------------------------------                        ----------
<S>                                                                  <C>
(i) Tenant's written approval and delivery to Landlord and the       May 17,1999
Contractor of final schematic drawings.
</TABLE>

                                                                         Page 11

<PAGE>   94
<TABLE>
<S>                                                                              <C>
(ii)   Tenant's written approval and delivery to Landlord and                    June 7, 1999
the Contractor of final design development drawings and written
identification of long lead architectural items, light fixtures
and other mechanical, electrical and plumbing items (and
written agreement on specifications for each of such items).

(iii)  Delivery by Tenant to Landlord of final approval and release              4 business days
of the long lead architectural items described immediately above.                following receipt
Landlord will provide to Tenant pricing information and availability             by Tenant of the
information in connection with the long lead items ("LONG LEAD                   Long Lead
SUBMISSION") for purposes of obtaining Tenant's final approval with              Submission
respect to all such items.

(iv)   Delivery by Tenant to Landlord and the Contractor of complete             July 2, 1999
construction drawings and specifications (collectively, the
"CONSTRUCTION DRAWINGS").

(iv)   Final written approval by Tenant of the bid pricing of the                4 business days
Tenant's Improvements (and the guaranteed maximum price) as set forth            following receipt
in the Construction Drawings which bid pricing shall be set forth in             by Tenant of the
a submission by Landlord and the Contractor to Tenant ("PRICING                  Pricing
SUBMISSION") and authorization to proceed with construction of the               Submission
Tenant's Improvements. Tenant may authorize the Contractor to proceed
with portions of the Tenant's Improvements prior to approval of the
Pricing Submission in its entirety, but in any event approval of the
Pricing Submission in its entirety shall be made within the four
business days as provided herein.
</TABLE>

                                   SECTION 6
                                 MISCELLANEOUS

       6.1    Early Access. Prior to the anticipated Lease Commencement Date
and at such time as construction of the Improvement Work allows, and as the
status of such construction is appropriate, Landlord shall provide Tenant and
Tenant's consultants and contractors with access to the Premises for the
purpose of installation by Tenant, at its cost (subject to payment of fifty
percent [50%] of such cabling costs as provided above) of Tenant's technology
cabling within the Premises. Landlord shall attempt to provide access to Tenant
at least three (3) weeks prior to the anticipated Lease Commencement Date. In
connection with any such early entry by Tenant, Tenant and its consultants and
contractors shall not interfere with the completion of construction by Landlord
and any delay in completion of the Improvement Work resulting from the early
access by Tenant and its contractors or consultants shall

                                                                         Page 12
<PAGE>   95
constitute a Tenant Delay for purposes of Section 3.2 of the Lease. In
connection with any early access to the Premises by Tenant, the provisions of
the Lease shall be applicable provided only that the obligation of Tenant to pay
Monthly Basic Rent, Parking Lot Rent and Operating Rent shall not commence until
the Lease Commencement Date. Any and all contractors and consultants acting on
behalf of Tenant in connection with any such early access shall generally follow
the directives of the Contractor in connection with their performance of work
with respect to the Premises so as to facilitate the continuing and orderly
performance by the Contractor of its work.

     6.2  Tenant's Representative. Tenant has designated Matt Oliver as its sole
representative with respect to the matters set forth in this Work Letter, who
shall have full authority and responsibility to act on behalf of the Tenant as
required in this Work Letter.

     6.3  Landlord's Representative. Landlord has designated Landlord's
Supervisor, as defined above, as its sole representative with respect to the
matters set forth in this Work Letter, who, until further notice to Tenant,
shall have full authority and responsibility to act on behalf of the Landlord as
required in this Work Letter.

     6.4  Time of the Essence. Unless otherwise indicated, all references herein
to a "number of days" shall mean and refer to calendar days. If any item
requiring approval is timely disapproved by Landlord or Tenant, the procedure
for preparation of the document and approval thereof shall be repeated until the
document is approved by Landlord or Tenant, as the case may be. Unless otherwise
provided in this Work Letter, Landlord's approval or Tenant's approval of any
submittals required to be approved by the other shall be given or withheld
within three (3) business days after receipt by the approving party of the
submittal. In connection with any disapproved matter, any resubmittal by
Landlord or Tenant, as the case may be, shall be approved or disapproved within
two (2) business days and this procedure shall continue until Landlord's or
Tenant's approval, as the case may be, of any submittal or resubmittal has been
approved. For purposes of this Paragraph 6.3, references to submittals to and
approvals by Tenant, shall be equally applicable to submittals to and approvals
by Tenant's Architect.

     6.5  Hazardous Materials. Landlord shall be responsible for the lawful
treatment and/or disposal of all hazardous or toxic materials (as such terms may
be defined from time to time by any governmental authority with jurisdiction)
existing at the Building prior to the Lease Commencement Date which are
disrupted or disturbed in connection with construction of the Improvement Work,
with the exception of any such materials which were introduced to the Building
or at the Site by Tenant or any of Tenant's representatives, agents, contractors
or invitees.

     6.6  Landlord's Architect. Landlord hereby designates SMP/SHG Incorporated
("LANDLORD'S ARCHITECT") to act as architect on behalf of Landlord in connection
with this Work Letter and the Lease.

                                                                         Page 13
<PAGE>   96
     6.7  Incorporated into the Lease. For all purposes, this Work Letter shall
be and is hereby deemed a part of the Lease, and to the extent necessary, they
shall together be construed as one and the same document.

     IN WITNESS WHEREOF, the parties have executed and delivered this Work
Letter on the day and year first above written.

LANDLORD:                                    TENANT:

Rosenberg SOMA Investments III, LLC, a       LookSmart, Ltd., a Delaware
Delaware limited liability company           corporation

By:  The Rosenberg Company, a
     California corporation, Manager

     By: /s/ DOUGLAS C. ROSENBERG            By: /s/ EDWARD M. O'DEA
        ----------------------------            --------------------------
         Douglas C. Rosenberg,               Name: Edward M. O'Dea
         President                                ------------------------
                                             Its: VP Corp Div.
     By: /s/ DOUGLAS C. ROSENBERG                -------------------------
        ----------------------------
         Douglas C. Rosenberg,               By:
         Secretary                              --------------------------
                                             Name:
                                                  ------------------------
                                             Its:
                                                 -------------------------

                                                                         Page 14

<PAGE>   97

                                  [FLOOR PLAN]

                               626 SECOND STREET

                                   EXHIBIT B

                                                                     FIRST FLOOR

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}]]