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                                                                    EXHIBIT 10.1

                                401 ELLIOTT WEST

                              AMENDED AND RESTATED
                             OFFICE LEASE AGREEMENT

                                     Between

                              401 Elliott West LLC

                                       and

                                F5 Networks, Inc.
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        This Amended and Restated Office Lease Agreement reflects the agreements
of the Parties as set forth in that certain Lease dated July 31, 1999 for
premises located at 401 Elliott West, Seattle, Washington, as amended by Lease
Amendment I dated October 26, 1999, and as further amended by Lease Amendment II
dated April 3, 2000.

1.      BASIC LEASE TERMS

        Section 1 represents a summary of the basic terms of this Office Space
Lease for 401 Elliott West.

<TABLE>
<S>            <C>                                                <C>
        a.     DATE OF LEASE:                                     July 31, 1999

        b.     TENANT:                                            F5 Networks, Inc.

               ADDRESS OF LEASED PREMISES:                        401 Elliott Avenue West
                                                                  Seattle, WA 98119

               ADDRESS FOR BILLING AND NOTICES:                   Prior to Commencement Date:

                                                                  200 First Avenue West, Suite 500
                                                                  Seattle, WA 98119
                                                                  Phone: (206) 505 0800
                                                                  Fax:  (206) 505 0897
                                                                  Attn: Joann Reiter, General Counsel

                                                                  Same as above except the address shall be the same
                                                                  as Premises after commencement of the
                                                                  Lease.

        c.     LANDLORD:                                          401 Elliott West L.L.C.

               ADDRESS FOR NOTICES:                               c/o Koehler McFadyen & Company
                                                                  1601 Fifth Avenue, Suite 2210
                                                                  Seattle, WA  98101
                                                                  Phone: (206) 682 2680
                                                                  Fax:  (206) 467 5975
                                                                  Attn: Steve Koehler

                                                                  or such other place as
                                                                  Landlord may from time to time
                                                                  designate by notice to Tenant

        d.     PREMISES AREA:                                     84,765 rentable square feet,
                                                                  Floors 1 through 4 of Building Two

                                                                  110,111 rentable square feet,
                                                                  Floors 1 through 4 of Building Three

        e.     BUILDING AREA OF BUILDING TWO:                     85,446 rentable square feet
               TENANT'S PERCENTAGE OF                             99.20%
               BUILDING TWO:

               BUILDING AREA OF BUILDING THREE:                   110,111 rentable square feet
               TENANT'S PERCENTAGE OF                             100%
               BUILDING THREE:

        f.     PROJECT AREA:                                      299,643 rentable square feet
               TENANT'S PERCENTAGE OF PROJECT:                    65.04%

        g.     TERM OF LEASE:                                     This Lease shall commence on July 25, 2000 as it
                                                                  relates to all of Building Two, September 1, 2000 as it
                                                                  relates  to  the  first  floor  of  Building  Three,  and
                                                                  October 1, 2000 as it relates to floors 2 through 4 of
                                                                  Building Three, or such earlier or later dates as may be
                                                                  provided in Section 3 (the "Commencement Dates")
                                                                  and shall terminate on the last day of the one hundred
                                                                  and forty-fourth (144th) full calendar month after the
                                                                  Commencement  Date  for  the  Premises  in  Building
                                                                  Two.  Landlord shall use reasonable efforts to obtain
                                                                  early occupancy of the first floor of Building Three
                                                                  under  a  certificate  of  occupancy,  or  temporary
                                                                  certificate of occupancy, so that Tenant can occupy
                                                                  the first floor of Building Three as close as possible to
                                                                  the Commencement Date of Building Two.
</TABLE>

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<TABLE>
<S>            <C>                                                <C>
        h.     BASE MONTHLY RENT:                                 $167,764.06 Building Two
                                                                  $214,818.75 Building Two + Floor 1, Building Three
                                                                  $394,074.89 Building Two and Building Three

        i.     PARKING:                                           Initial Monthly Charge of $100.00 per month for each
                                                                  Parking Permit.

                                                                  Number of parking permits allocated to Tenant: 370
                                                                  spaces.

        j.     RENT ADJUSTMENT(S):                                   MONTHS         BASE MONTHLY RENT
                                                                     ------         -----------------
                                                                    61 - 72             $413,176.92
                                                                    73 - 84             $423,691.84
                                                                    85 - 96             $434,206.76
                                                                    97 - 108            $444,721.68
                                                                   109 - 144            $455,236.58

        k.     ADDITIONAL RENT - ESTIMATED INITIAL
               TENANT'S SHARE OF EXPENSES:                        $ 47,680.31        Building Two
                                                                  $ 61,053.75        Building Two + Floor 1, Building
                                                                                     Three
                                                                  $109,617.75        Building Two and Building Three

        l.     SECURITY DEPOSIT:                                  $6,000,000 in the form of a Letter of Credit as further
                                                                  described in Section 6 and Exhibit H.

        m.     NON-REFUNDABLE CLEANING FEE                        N/A

        n.     PREPAID RENT                                       N/A

        o.     TENANT'S USE OF PREMISES:                          General  Purpose  R&D  Office  with,  Shipping/Light
                                                                  Manufacturing Facility & Storage Space on the First
                                                                  Floor of Building Three

        p.     BROKERS:                                           Douglas Hanafin, Washington Partners, Inc.
               TO BE PAID BY:                                     Landlord

        q.     GUARANTOR(S):                                      N/A

        r.     ADDITIONAL TERMS:                                  Sections 29 to 42

        s.     EXHIBIT(S):                      Exhibit A -       The Premises
                                                Exhibit B -       Tenant's Buildings and the Project
                                                Exhibit C -       Building Shell and Core Outline Specifications
                                                Exhibit D -       Signage Criteria
                                                Exhibit E -       Janitorial Specifications
                                                Exhibit F -       Tenant Work Letter
                                                Exhibit G -       [intentionally omitted]
                                                Exhibit H -       Form of Letter of Credit
</TABLE>

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2.      PREMISES/COMMON AREAS/PROJECT.

        a.      PREMISES. Landlord leases to Tenant the premises described in
                Section 1 and in Exhibit A (the "Premises"), located in the
                buildings described on Exhibit B. The buildings are part of a
                larger, multi-building development shown on Exhibit B (the
                "Project"). As used herein, Buildings Two and Three may be
                referred to as "Tenant's Buildings", and all buildings in the
                Project are referred to collectively as the "Buildings"). Upon
                completion of the Tenant Improvements to the Premises, Landlord
                shall cause the rentable square footage of the Premises to be
                measured by Landlord's architect using the BOMA American
                National Standard Institute Publication, ANSI Z65.1-1996
                standards (the "Rentable Square Footage"), which measurement
                shall govern with respect to the Premises Area of Section 1(d).
                Tenant shall have the right to have a Washington-licensed
                surveyor approved by Landlord and jointly responsible to
                Landlord and Tenant verify the Premises Net Rentable Area
                determined by Landlord's Architect, if it does so within twenty
                (20) days after receipt of the notice from Landlord's Architect.
                If based on such verification Tenant disagrees with the Net
                Rentable Area determined by Landlord's Architect it shall advise
                Landlord and its Architect of the deviation within ten (10) days
                thereafter or be deemed to have accepted Landlord's Architect's
                determination. If Tenant gives a timely notification of
                disagreement, then the parties shall jointly select a
                Washington-licensed surveyor to review the calculations of
                Landlord's architect and the Tenant selected surveyor and make
                the determination of Premises Net Rentable Area, which
                determination shall be final and binding on the parties.
                Landlord shall cause each building within the Project to be
                similarly measured for the purposes of Sections 1(e) and 1(f)
                upon completion of the interior improvements of such
                building(s). Each building shall be deemed added to the Project
                for the purposes of such computation upon the completion of the
                Building Shell and Core improvements, as defined in Exhibit C,
                to such building and the computations of Section 1, if delayed
                pending final measurement of Rentable Square Footage, shall be
                deemed retroactive to such date.

        b.      COMMON AREAS. As used in this Lease, "Common Areas" shall mean
                all portions of the Project not leased or demised for lease to
                specific tenants. During the Lease Term, Tenant and its
                licensees, invitees, customers and employees shall have the
                non-exclusive right to use the public portions of the Common
                Areas, including all parking areas, landscaped areas, entrances,
                lobbies, elevators, stairs, corridors, and public restrooms in
                common with Landlord, other Project tenants and their respective
                licensees, invitees, customers and employees. Landlord shall be
                entitled to create limited Common Areas within specified
                Buildings for exclusive use of the tenants within such
                Buildings. Landlord shall at all times have exclusive control
                and management of the Common Areas and no diminution thereof
                shall be deemed a constructive or actual eviction or entitle
                Tenant to compensation or a reduction or abatement of rent.
                Landlord in its discretion may increase, decrease or change the
                number, locations and dimensions of any Common Areas and other
                improvements shown on Exhibit B, and/or designate such areas
                limited Common Areas assigned to particular buildings within the
                Project.

        c.      PROJECT. Landlord reserves the right in its sole discretion to
                modify or alter the configuration or number of buildings in the
                Project, so long as such modification or alteration does not
                materially modify or alter Tenant's Premises and provided only
                that upon such modification or alteration, the Project Area as
                set forth in Section 1(e) shall be adjusted to reflect such
                modification or alteration using the BOMA American National
                Standard Institute Publication, ANSI Z65.1-1996.

3.      TERM. For the purposes of calculating Commencement Date and effects of
        construction delay under this Section 3, all of Building Two is referred
        to as "Phase I", Floor 1 of Building Three is referred to as "Phase II";
        and Floors 2, 3 and 4 of Building Three are referred to as "Phase III".
        The Commencement Dates listed in Section 1 of this Lease for Phases I,
        II and III represent an estimate of the actual Commencement Dates. The
        actual Commencement Dates for each such Phase shall be the first to
        occur of the following events: (i) the date Tenant has substantially
        commenced the use and occupancy of that Phase or any portion thereof for
        purposes other than completion of the Tenant Work (as defined in Exhibit
        F), or (ii) one hundred twenty (120) days (the "Tenant Work Period")
        after the Delivery Date for that Phase as defined in Exhibit F. The
        scheduled Delivery Date for all of Building Two is March 25, 2000 and
        for all of Building Three is May 31, 2000. As used herein, "Unexcused
        Delay" means the failure to meet an applicable deadline when caused by
        delays other than Tenant Delay or Force Majeure. "Day(s) of Unexcused
        Delay" means the number of days of delay past the applicable deadline
        caused by Unexcused Delay (excluding the effect of Tenant Delay or Force
        Majeure).

        The Tenant Work Period shall be extended by the amount of any Unexcused
        Delay. If on September 25, 2000 with respect to all of Building Two, and
        December 1, 2000 with respect to all of Building Three, as a result of
        Unexcused Delay either (w) the Tenant Work is not yet substantially
        complete or (x) Tenant cannot occupy the Premises because the condition
        of the Building Shell and Core prevents issuance of such building permit
        sign offs as are necessary for beneficial occupancy of the Premises,
        then in addition to any extension of the Tenant Work Period as specified
        above, Tenant shall receive a credit against Base Rent that first
        becomes due under this Lease for the affected building, in an amount
        equal to one (1) day of Base Rent for each such Day of Unexcused Delay.
        If, on November 25, 2000 with respect to all of Building Two, and
        February 1, 2001, with respect to all of Building Three, as a result of
        Unexcused Delay either (y) the Tenant Work is not yet substantially
        complete or (z) Tenant cannot occupy the Premises because the condition
        of the Building Shell and Core prevents issuance of such building permit
        sign offs as are necessary for beneficial occupancy of the Premises, and
        Landlord does not substantially complete the Building Shell and Core so
        that (subject to the completion of the Tenant Work), building permit
        sign offs can be issued allowing Tenant to use and occupy the Premises
        for its intended purposes within thirty (30) days after written notice
        from Tenant of Tenant's intention to terminate this Lease as provided in
        this sentence, then

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        Tenant may terminate this Lease with respect to the affected building by
        written notice given to Landlord at any time after the end of such
        thirty (30) day period and prior to the date the Building Shell and Core
        for such building is substantially complete. If the Commencement Date
        for either building is later than the estimated Commencement Date
        specified in Section 1 above, then, except as otherwise provided in this
        Section 3, this Lease shall not be void or voidable and Landlord shall
        not be liable to Tenant for such delay. Following the Commencement Date
        for each building, Landlord shall confirm such date to Tenant in
        writing. Any dispute between Landlord and Tenant with respect to the
        terms and application of this Section 3 and Exhibits C and F attached
        shall be subject to binding arbitration in accordance with Section 39 of
        this Lease. All provisions of this Lease, other than those relating to
        the commencement of the Lease Term, the payment of Base Rent and
        Additional Rent, shall become effective on the date Tenant or its
        contractor or employees are first present on the Premises for
        construction, installation, move-in or other purposes.

4.      RENT

        a.      BASE MONTHLY RENT. Tenant shall pay Landlord monthly base rent
                in the initial amount in Section 1 which shall be payable
                monthly in advance on the first day of each and every calendar
                month of the Term of the Lease ("Base Monthly Rent") provided,
                however, the first month's Base Monthly Rent and Tenant's Share
                of Expenses, including any adjustments for Rent Abatement as
                described in Section 30 below, is due and payable, with respect
                to Building Two, upon the earlier occurrence of (a) February 1,
                2000 or (b) the Commencement Date of Building Two and with
                respect to Building Three, upon the earlier occurrence of (x)
                seven (7) business days after mutual execution of this Amended
                and Restated Lease or (y) the Commencement Date of Building
                Three.

                For purposes of Section 467 of the Internal Revenue Code, the
                parties to this Lease hereby agree to allocate the stated Rents,
                provided herein, to the periods which correspond to the actual
                Rent payments as provided under the terms and conditions of this
                agreement.

        b.      RENT ADJUSTMENT.

                1)      Base Monthly Rent shall be increased periodically to the
                        amounts and at the times set forth in Section 1(j), and
                        the months referenced therein shall be lease months
                        calculated in reference to the Commencement Date of
                        Phase I (Building Two).

        c.      EXPENSES. The purpose of this Section 4(c) is to ensure that
                Tenant bears its proportionate share of all actual Expenses
                related to the use, maintenance, ownership, repair or
                replacement, and insurance of the Tenant's Buildings and
                associated Common Areas. Accordingly, beginning on the
                Commencement Dates per Section 1(g.) above, Tenant shall each
                month pay to Landlord one-twelfth (1/12) of Tenant's Share of
                Expenses related to Tenant's Buildings and Associated Common
                Areas. As used in this Lease, "Tenant's Share" shall mean the
                Premises Area, as defined in Section 1(d), divided by the total
                Building Area then under lease to Tenant, as defined in Section
                1(e), and "Tenant's Share of Expenses" shall mean total Expenses
                for Tenant's Buildings and associated Common Areas, multiplied
                by Tenant's Share, provided that Landlord may specially allocate
                individual expenses where and in the manner necessary, in
                Landlord's discretion, to appropriately reflect the consumption
                of the expense or service. For example where some but not all
                premises in a building have HVAC, Landlord may reallocate
                Building Expenses for HVAC to all premises utilizing HVAC to be
                apportioned on a per square foot basis, or could allocate to
                each premises utilizing HVAC the cost of maintaining that
                space's individual unit. In the event the average occupancy
                level of a building or the Project for any year is less than
                ninety five percent (95%), the actual Expenses for the building
                or the Project for such year shall be proportionately adjusted
                to reflect those costs which Landlord estimates would have been
                incurred, had the building or Project, as applicable, been
                ninety five percent (95%) occupied during such year, such that
                Tenant's Share of Expenses more accurately reflects Tenant's
                actual usage. Tenant's Buildings are part of a larger,
                multi-building project described on Exhibit B hereto. In the
                event any Expenses are billed on a multi-building basis,
                Tenant's Share of such Expenses shall be charged based on the
                ratio of the Premises Area, as defined in Section 1(d) divided
                by the Project Area, defined in Section 1(f). The intent of the
                parties is to make rental payable by Tenant and other tenants in
                the Project absolutely net to Landlord assuming at least 95%
                occupancy, except for items expressly excluded in Section
                4(c)(1)(f).

                1)      EXPENSES DEFINED. The term "Expenses" shall mean all
                        costs and expenses of the ownership, operation,
                        maintenance, repair or replacement, and insurance of the
                        Project (allocated on a building-by-building basis, to
                        the extent so provided above), including without
                        limitation, the following costs:

                        (a)     All supplies, materials, labor, equipment, and
                                utilities used in or related to the operation
                                and maintenance of the Project,

                        (b)     All maintenance, management, janitorial, legal,
                                accounting, insurance, and service agreement
                                costs related to the Project. If the Building is
                                managed by an affiliate of Landlord, building
                                management fees in excess of management fees
                                charged by independent property managers for
                                comparable buildings in the Building's
                                geographic market area shall be excluded from
                                defined expenses.

                        (c)     All maintenance, replacement and repair costs
                                relating to the areas within or around the
                                Project, including, without limitation, air
                                conditioning systems, sidewalks, landscaping,
                                service areas, driveways, parking Areas
                                (including resurfacing and restriping parking
                                areas), walkways, building exteriors (including

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                                painting), signs and directories, repairing and
                                replacing roofs, walls, etc. These costs may be
                                included either based on actual expenditures or
                                the use of an accounting reserve based on past
                                cost experience for the Project.

                        (d)     Amortization (along with reasonable financing
                                charges) of capital betterments made to the
                                Project which may be required by any government
                                authority or which will improve the operating
                                efficiency of the Project (provided, however,
                                that the amount of such amortization for
                                improvements not mandated by government
                                authority shall not exceed in any year the
                                amount of costs reasonably determined by
                                Landlord in its sole discretion to have been
                                saved by the expenditure either through the
                                reduction or minimization of increases which
                                would have otherwise occurred).

                        (e)     Real Property Taxes including all taxes,
                                assessments (general and special) and other
                                impositions or charges which may be taxed,
                                charged, levied, assessed or imposed upon all or
                                any portion of or in relation to the Project or
                                any portion thereof, any leasehold estate in the
                                Premises or measured by Rent from the Premises,
                                including any increase caused by the transfer,
                                sale or encumbrance of the Project or any
                                portion thereof. "Real Property Taxes" shall
                                also include any form of assessment, levy,
                                penalty, charge or tax (other than estate,
                                inheritance, net income, or franchise taxes)
                                imposed by any authority having a direct or
                                indirect power to tax or charge, including,
                                without limitation, any city, county, state
                                federal or any improvement or other district,
                                whether such tax is (1) determined by the value
                                of the Project or the Rent or other sums payable
                                under this Lease; (2) upon or with respect to
                                any legal or equitable interest of Landlord in
                                the Project or any part thereof; (3) upon this
                                transaction or any document to which Tenant is a
                                party creating a transfer in any interest in the
                                Project, (4) in lieu of or as a direct
                                substitute in whole or in part of or in addition
                                to any real property taxes on the Project, (5)
                                based on any parking spaces or parking
                                facilities provided in the Project, or (6) in
                                consideration for services, such as police
                                protection, fire protection, street, sidewalk
                                and roadway maintenance, refuse removal or other
                                services that may be provided by any
                                governmental or quasi-governmental agency from
                                time to time which were formerly provided
                                without charge or with less charge to property
                                owners or occupants.

                        (f)     Landlord agrees that Expenses as defined in
                                Section 4(c) shall not include the following:
                                (i) the cost of any special services rendered to
                                individual tenants for which a separate charge
                                is billed; (ii) costs of capital betterments
                                except as provided in subsection 4(c)(1)(d)
                                above; (iii) Legal fees, brokerage commissions,
                                advertising costs, or other related expenses
                                incurred by Landlord in an effort to generate
                                rental income; (iv) Repairs, alterations,
                                additions, improvements or replacements made to
                                rectify or correct any defect in the original
                                design, materials or workmanship of Building or
                                common areas (but not including repairs,
                                alterations, additions, improvements or
                                replacements made as a result of ordinary wear
                                and tear); (v) Damage and repairs attributable
                                to fire or other casualty for which Landlord is
                                reimbursed from insurance proceeds; (vi) (a)
                                Executive Salaries or (b) Salaries of service
                                personnel for performance of services except to
                                the extent incurred directly in connection with
                                the management, operation, repair or maintenance
                                of the Building; (viii) Landlord's general
                                overhead expenses not related to the Building,
                                provided that Landlord shall be allowed to
                                include the value of any rent-free or
                                rent-reduced occupancy in the Building if such
                                is given to the managing entity in lieu of a
                                higher management fee; (ix) Legal fees,
                                accountants' fees and other expenses incurred in
                                connection with disputes with tenants or other
                                occupants of the Building or associated with the
                                enforcement of the terms of any leases with
                                other tenants or otherwise incurred for any
                                reason other than for the general benefit of all
                                tenants in the Building; (x) Costs (including
                                permit, license and inspection fees) incurred in
                                renovating or otherwise improving, decorating,
                                painting or altering (a) vacant space (excluding
                                common areas) in the Building, or (b) space for
                                tenants or other occupants in the Building, or
                                (c) costs incurred in supplying any improvement
                                item specifically for, or specific services to,
                                other tenants in the Building; (xi) Principal
                                and/or interest payments called for under any
                                debt secured by a mortgage or deed of trust on
                                the Building; (e) Landlord shall not attempt to
                                collect in excess of one hundred percent (100%)
                                of Operating Expenses and shall not recover any
                                item of cost more than once; (xiii) Any bad debt
                                loss, rent loss, or reserves for bad debts or
                                rent loss; (xiv) All items and services for
                                which Tenant or any other tenant in the Building
                                otherwise reimburses Landlord; (xv) Electric
                                power costs for which any tenant directly
                                contracts with the local public service company;
                                (xvi) Costs arising from Landlord's political or
                                charitable contributions; (xvii) Costs, other
                                than those incurred in ordinary maintenance, for
                                the purchase and installation of sculpture,
                                paintings or other objects of art; (xviii) Tax
                                penalties incurred as a result of Landlord's
                                negligence, inability or unwillingness to make
                                payments when due; (xix) Costs incurred due to a
                                violation by Landlord or any other tenant of the
                                Building of the terms and conditions of any
                                lease; (xx) Costs and expenses incurred in
                                complying with hazardous waste and environmental
                                laws where the lack of compliance is caused by
                                hazardous waste brought into the Project by

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                                Landlord, its employees, agents or contractors
                                or other tenants; (xxi) Costs or expenses which
                                would be capitalized under generally accepted
                                accounting principals, and which relate to the
                                initial completion of the Premises, load bearing
                                walls and other structural elements of the
                                Building or the Project, or during the initial
                                Lease Term related to the replacement of the
                                heating and air conditioning and other Building
                                and Project systems; and (xxii) direct costs of
                                managing the Garage paid to third party garage
                                operators such as management fees, attendants,
                                cashiers and maintenance of ticket dispensing
                                equipment.

                2)      ANNUAL ESTIMATE OF EXPENSES, TENANT'S SHARE. When Tenant
                        takes possession of the Premises, Landlord shall
                        estimate Tenant's share of Expenses for the remainder of
                        the calendar year, and at the commencement of each
                        calendar year thereafter, Landlord shall estimate
                        Tenant's Share of Expenses for the coming year by
                        multiplying the appropriate estimated annual Building or
                        Project Expenses by Tenant's Share.

                3)      MONTHLY PAYMENT OF EXPENSES. Tenant shall pay to
                        Landlord, monthly in advance, as Additional Rent,
                        one-twelfth (1/12) of the Annual Estimate of Tenant's
                        Share of Expenses beginning on the date Tenant takes
                        possession of the Premises. As soon as practical
                        following each calendar year, Landlord shall prepare an
                        accounting of actual Expenses incurred during the prior
                        calendar year and such accounting shall reflect Tenant's
                        Share of Expenses. If the Additional Rent paid by Tenant
                        under this Section 4(c)(3) during the preceding calendar
                        year was less than the actual amount of Tenant's Share
                        of Expenses, Landlord shall so notify Tenant and Tenant
                        shall pay such amount to Landlord within 30 days of
                        receipt of such notice. Such amount shall be deemed to
                        have accrued during the prior calendar year and shall be
                        due and payable from Tenant even though the term of this
                        Lease has expired or this Lease has been terminated
                        prior to Tenant's receipt of this notice. Tenant shall
                        have thirty (30) days from receipt of such notice to
                        contest the amount due, failure to so notify Landlord
                        shall represent final determination of Tenant's Share of
                        Expenses. If Tenant's payments were greater than the
                        actual amount, then such overpayment shall be credited
                        by Landlord to Tenant's Share of Expenses due under this
                        Section 4(c)(3). If such overpayment is determined after
                        termination of this Lease, then such overpayment shall
                        be paid by Landlord to Tenant within thirty (30) days
                        after the annual expense statement is completed with
                        deduction of any remaining sums owed by Tenant to
                        Landlord.

                4)      RENT WITHOUT OFFSET AND LATE CHARGE. As used herein,
                        "Rent" shall mean all monetary sums due from Tenant to
                        Landlord. All Base Monthly Rent shall be paid by Tenant
                        to Landlord without prior notice or demand in advance on
                        the first day of every calendar month, at the address
                        shown in Section 1, or such other place as Landlord may
                        designate in writing from time to time. Whether or not
                        so designated, all other sums due from Tenant under this
                        Lease shall constitute Additional Rent, payable without
                        prior notice or demand when specified in this Lease, but
                        if not specified, then within thirty (30) days of
                        demand, during which time the parties will work to
                        resolve any good faith disagreements on the amount due.
                        All Rent shall be paid without any deduction or offset
                        whatsoever except as otherwise specifically provided
                        herein. All Rent shall be paid in lawful currency of the
                        United States of America. Proration of Rent due for any
                        partial month shall be calculated by dividing the number
                        of days in the month for which Rent is due by the actual
                        number of days in that month and multiplying by the
                        applicable monthly rate. Tenant acknowledges that late
                        payment by Tenant to Landlord of any Rent, Additional
                        Rent or other 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 impracticable to ascertain. Such costs include,
                        without limitation, processing and accounting charges
                        and late charges that may be imposed on Landlord by the
                        terms of any encumbrance or note secured by the
                        Premises. Therefore, if any Rent or other sum due from
                        Tenant is not received within five (5) business days of
                        the date due, Tenant shall pay to Landlord an additional
                        sum equal to 5% of such overdue payment. Landlord and
                        Tenant hereby agree that such late charge represents a
                        fair and reasonable estimate of the costs that Landlord
                        will incur by reason of any such late payment and that
                        the late charge is in addition to any and all remedies
                        available to the Landlord and that the assessment and/or
                        collection of the late charge shall not be deemed a
                        waiver of any other default. Additionally, all such
                        delinquent Rent or other sums, plus this late charge,
                        which are more than thirty (30) days past due, shall
                        bear interest at the rate of 15 percent per annum. If
                        the interest rate specified in this Lease is higher than
                        the rate permitted by law, the interest rate is hereby
                        decreased to the maximum legal interest rate permitted
                        by law. Any payments of any kind returned for
                        insufficient funds will be subject to an additional
                        handling charge of $25.00, and thereafter, Landlord may
                        require Tenant to pay all future payments of Rent or
                        other sums due by money order or cashier's check.

                5)      REVIEW AND AUDIT RIGHT. Tenant shall have the right (no
                        more frequently than once per calendar year) to review
                        Landlord's books and records pertaining to Expenses for
                        the prior year. Tenant may cause an audit of Landlord's
                        books and records which will be conducted by an
                        independent certified public accountant designated by
                        Tenant. If any such audit discloses Tenant overpaid its
                        share of Expenses for any calendar year, Landlord shall
                        pay Tenant the amount of the overpayment within thirty
                        (30) days after the results of the audit have been
                        disclosed to both parties. If any such audit discloses
                        that Tenant underpaid its share of Expenses during any
                        calendar year, Tenant shall pay

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                        Landlord the amount of the underpayment within thirty
                        (30) days after the results of the audit have been
                        disclosed to both parties. All costs and expenses of the
                        audit shall be paid by Tenant; however, if the audit
                        shows Landlord overstated Tenant's share of expenses for
                        the subject calendar year by more than five percent (5%)
                        of the amount actually payable by Tenant, Landlord shall
                        reimburse Tenant for the reasonable costs and expenses
                        of the audit within thirty (30) days of receipt of
                        Tenant's notice of the amount due. Any review or audit
                        of Landlord's books and records pertaining to Expenses
                        shall occur at the office of the Building manager or at
                        such other location in the Seattle Metropolitan Area as
                        Landlord or its Building manager may designate and shall
                        occur during the normal business hours of the Building
                        manager, unless otherwise agreed by Landlord and Tenant.
                        The results of the audit and any information obtained by
                        Tenant from the audit or Tenant's review of Landlord's
                        books and records shall be kept confidential and not
                        disclosed to any other person or entity, including any
                        other tenant of the Buildings or the Project, except as
                        required by court order or applicable law.

5.      PREPAID RENT. Tenant shall, in addition to the payment of the first
        month's Rent as set forth in Section 4(a), pay to Landlord the prepaid
        Rent set forth in Section 1(n), and if Tenant is not in default of any
        provisions of this Lease, such prepaid Rent shall be applied toward Base
        Monthly Rent for the months set forth in Section 1(n). Landlord's
        obligations with respect to the prepaid Rent are those of a debtor and
        not of a trustee, and Landlord can commingle the prepaid Rent with
        Landlord's general funds. Landlord shall not be required to pay Tenant
        interest on the prepaid Rent. Landlord shall be entitled to immediately
        endorse and cash Tenant's prepaid Rent; however, such endorsement and
        cashing shall not constitute Landlord's acceptance of this Lease. In the
        event Landlord does not accept this Lease, Landlord shall return said
        prepaid Rent.

6.      DEPOSIT. Upon execution of this Lease, Tenant shall deposit a security
        deposit as set forth in Section 1(l) with Landlord in the form of an
        irrevocable, unconditional letter of credit from an acceptable financial
        institution. The form of the Letter of Credit and the terms under which
        it shall be extinguished is provided in Exhibit H, Form of Letter of
        Credit. If Tenant is in default, Landlord can use the Letter of Credit
        or any portion of it to cure the default or to compensate Landlord for
        any damages sustained by Landlord resulting from Tenant's default. Upon
        demand, Tenant shall immediately restore the Letter of Credit to its
        full amount. In no event will Tenant have the right to apply any part of
        the security deposit to any Rent or other sums due under this Lease. If
        Tenant is not in default at the expiration or termination of this Lease,
        Landlord shall return the Letter of Credit to Tenant. Landlord shall not
        be required to pay Tenant interest on the security deposit.

7.      USE OF PREMISES AND PROJECT FACILITIES. Tenant shall use the Premises
        solely for the purposes set forth in Section 1 and for no other purpose
        without obtaining the prior written consent of Landlord, which consent
        shall not be unreasonably withheld, delayed or conditioned. Tenant
        acknowledges that neither Landlord nor any agent of Landlord has made
        any representation or warranty with respect to the Premises or with
        respect to the suitability of the Premises or the Project for the
        conduct of Tenant's business, nor has Landlord agreed to undertake any
        modification, alteration or improvement to the Premises or the Project,
        except as provided in writing in this Lease. Tenant acknowledges that
        Landlord may from time to time, at its sole discretion, make such
        modifications, alterations, deletions or improvements to the Project as
        Landlord may deem necessary or desirable, without compensation or notice
        to Tenant as long as such modifications, alterations, deletions or
        improvements do not materially alter Tenant's use of its Premises.
        Tenant shall promptly comply with all laws, ordinances, orders and
        regulations affecting the Premises and the Project, including, without
        limitation, any rules and regulations that may be attached to this Lease
        and to any reasonable modifications to these rules and regulations as
        Landlord may adopt from time to time. Tenant acknowledges that, except
        for Landlord's obligations pursuant to Section 13, Tenant is solely
        responsible for ensuring that the Premises comply with any and all
        governmental regulations applicable to Tenant's conduct of business on
        the Premises, and that Tenant is solely responsible for any alterations
        or improvements that may be required by such regulations, now existing
        or hereafter adopted. Tenant shall not do or permit anything to be done
        in or about the Premises or bring or keep anything in the Premises that
        will in any way increase the premiums paid by Landlord on its insurance
        related to the Project or which will in any way increase the premiums
        for fire or casualty insurance carried by other tenants in the Project.
        Tenant will not perform any act or carry on any practices that may
        injure the Premises or the Project; that may be a nuisance or menace to
        other tenants in the Project; or that shall in any way interfere with
        the quiet enjoyment of such other tenants. Tenant shall not use the
        Premises for sleeping, washing clothes, cooking or the preparation,
        manufacture or mixing of anything that might emit any objectionable
        odor, noises, vibrations or lights onto such other tenants. If sound
        insulation is required to muffle noise produced by Tenant on the
        Premises, Tenant at its own cost shall provide all necessary insulation.
        Tenant shall not do anything on the premises which will overload any
        existing parking or service to the Premises. Pets and/or animals of any
        type shall not be kept on the Premises.

8.      HAZARDOUS SUBSTANCES; DISRUPTIVE ACTIVITIES

        a.      HAZARDOUS SUBSTANCES.

                (1)     Presence and Use of Hazardous Substances. Tenant shall
                        not, without Landlord's prior written consent, keep on
                        or around the Premises, Common Areas or Building, for
                        use, disposal, treatment, generation, storage or sale,
                        any substances designated as, or containing components
                        designated as hazardous, dangerous, toxic or harmful,
                        and/or is subject to regulation, statute or ordinance
                        (collectively referred to as "Hazardous Substances").
                        Notwithstanding the preceding sentence, Tenant may keep,
                        use, store and dispose of, in, on and from the Premises,
                        materials and supplies otherwise constituting

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<PAGE>   9

                        Hazardous Substances which are customarily used for the
                        purposes set forth in Section 1, provided such materials
                        and supplies are used, handled and disposed of in
                        accordance with all applicable governmental rules,
                        regulations, laws and requirements, and in accordance
                        with prudent business practices. With respect to any
                        such Hazardous Substance, Tenant shall:

                        (i)     Comply promptly, timely, and completely with all
                                governmental requirements for reporting,
                                keeping, and submitting manifests, and obtaining
                                and keeping current identification numbers;

                        (ii)    Submit to Landlord true and correct copies of
                                all reports, manifests, and identification
                                numbers at the same time as they are required to
                                be and/or are submitted to the appropriate
                                governmental authorities;

                        (iii)   Within five (5) days of Landlord's request,
                                submit written reports to Landlord regarding
                                Tenant's use, storage, treatment,
                                transportation, generation, disposal or sale of
                                Hazardous Substances and provide evidence
                                satisfactory to Landlord of Tenant's compliance
                                with the applicable government regulations;

                        (iv)    Allow Landlord or Landlord's agent or
                                representative to come on the Premises at
                                reasonable times, with at least twenty four (24)
                                hours prior notice to Tenant (except in an
                                emergency, when no notice is required), to check
                                Tenant's compliance with all applicable
                                governmental regulations regarding Hazardous
                                Substances;

                        (v)     Comply with minimum levels, standards or other
                                performance standards or requirements which may
                                be set forth or established for certain
                                Hazardous Substances (if minimum standards or
                                levels are applicable to Hazardous Substances
                                present on the Premises, such levels or
                                standards shall be established by an on-site
                                inspection by the appropriate governmental
                                authorities and shall be set forth in an
                                addendum to this Lease); and

                        (vi)    Comply with all applicable governmental rules,
                                regulations and requirements regarding the
                                proper and lawful use, sale, transportation,
                                generation, treatment, and disposal of Hazardous
                                Substances.

                (2)     If Tenant violates any provisions of this section, then
                        any and all costs incurred by Landlord and associated
                        with Landlord's monitoring of Tenant's compliance with
                        this Section 8, including Landlord's attorneys' fees and
                        costs, shall be Additional Rent and shall be due and
                        payable to Landlord immediately upon demand by Landlord.

        b.      CLEANUP COSTS, DEFAULT AND INDEMNIFICATION.

                (1)     Tenant shall be fully and completely liable to Landlord
                        for any and all cleanup costs, and any and all other
                        charges, fees, penalties (civil and criminal) imposed by
                        any governmental authority with respect to Tenant's use,
                        disposal, transportation, generation and/or sale of
                        Hazardous Substances, in or about the Premises, Common
                        Areas, or Building.

                (2)     Tenant shall indemnify, defend and save Landlord and
                        Landlord's lender, if any, harmless from any and all of
                        the costs, fees, penalties and charges assessed against
                        or imposed upon Landlord (as well as Landlord's and
                        Landlord's lender's attorneys' fees and costs) as a
                        result of Tenant's use, disposal, transportation,
                        generation and/or sale of Hazardous Substances.

                (3)     Upon Tenant's default under this Section 8, in addition
                        to the rights and remedies set forth elsewhere in this
                        Lease, Landlord shall be entitled to the following
                        rights and remedies:

                        (i)     At Landlord's option, to terminate this Lease
                                immediately; and/or

                        (ii)    To recover any and all damages associated with
                                the default, including, but not limited to
                                cleanup costs and charges, civil and criminal
                                penalties and fees, loss of business and sales
                                by Landlord and other tenants of the Buildings,
                                any and all damages and claims asserted by third
                                parties and Landlord's attorneys' fees and
                                costs.

        c.      DISPOSAL OF WASTE

                (1)     REFUSE DISPOSAL. Tenant shall not keep any trash,
                        garbage, waste or other refuse on the Premises except in
                        sanitary containers and shall regularly and frequently
                        remove same from the Premises. Tenant shall keep all
                        incinerators, containers or other equipment used for
                        storage or disposal of such materials in a clean and
                        sanitary condition.

                (2)     SEWAGE DISPOSAL. Tenant shall properly dispose of all
                        sanitary sewage and shall not use the sewage disposal
                        system (a) for the disposal of anything except sanitary
                        sewage or (b) in excess of the lesser amount (i)
                        reasonably contemplated by the uses permitted under this
                        Lease or (ii) permitted by any governmental entity.
                        Tenant shall keep the sewage

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                        disposal system free of all obstructions and in good
                        operating condition.

                (3)     DISPOSAL OF OTHER WASTE. Tenant shall properly dispose
                        of all other waste or other matter delivered to, stored
                        upon, located upon or within, used on, or removed from,
                        the Premises in such a manner that it does not, and will
                        not, adversely affect the (a) health or safety of
                        persons, wherever located, whether on the Premises or
                        elsewhere (b) condition, use or enjoyment of the
                        Premises or any other real or personal property,
                        wherever located, whether on the Premises or anywhere
                        else, or (c) Premises or any of the improvements thereto
                        or thereon including buildings, foundations, pipes,
                        utility lines, landscaping or parking areas.

        d.      DISRUPTIVE ACTIVITIES. Tenant shall not:

                (1)     Produce, or permit to be produced, any intense glare,
                        light or heat except within an enclosed or screened area
                        and then only in such manner that the glare, light or
                        heat shall not, outside the Premises, be materially
                        different from the light or heat from other sources
                        outside the Premises;

                (2)     Create, or permit to be created, any sound pressure
                        level which will interfere with the quiet enjoyment of
                        any real property outside the Premises, or which will
                        create a nuisance or violate any governmental law, rule,
                        regulation or requirement;

                (3)     Create, or permit to be created, any ground vibration
                        that is materially discernible outside the Premises;

                (4)     Transmit, receive or permit to be transmitted or
                        received, any electromagnetic, microwave or other
                        radiation which is harmful or hazardous to any person or
                        property in, or about the Project; or

                (5)     Create, or permit to be created, any noxious odor that
                        is disruptive to the business operations of any other
                        tenant in the Project.

9.      SIGNAGE. All signing shall comply with rules and regulations set forth
        by Landlord as may be modified from time to time. Tenant shall place no
        window covering (e.g., shades, blinds, curtains, drapes, screens, or
        tinting materials) other than those installed per Exhibit C, stickers,
        signs, lettering, banners or advertising or display material on or near
        exterior windows or doors if such materials are visible from the
        exterior of the Premises, without Landlord's prior written consent.
        Similarly, Tenant may not install any alarm boxes, foil protection tape
        or other security equipment on the Premises without Landlord's prior
        written consent. Any material violating this provision may be destroyed
        by Landlord without compensation to Tenant. Allowed tenant signage is
        provided for in Section 39, Tenant Signage, and Exhibit D, Signage
        Criteria.

10.     PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency all taxes,
        assessments, license fees and public charges levied, assessed or imposed
        upon its business operations as well as upon all trade fixtures,
        leasehold improvements, merchandise and other personal property in or
        about the Premises.

11.     BUILDING PARKING GARAGE.

        a.      GRANT OF NON-EXCLUSIVE RIGHT. Landlord grants to Tenant and
                Tenant's customers, suppliers, employees and invitees, a
                non-exclusive license to use up to 1.9 parking spaces per 1,000
                rentable square feet of the Premises. The estimated number of
                parking spaces is set forth in Section 1(i). This number shall
                be phased in based on rentable square footage under lease
                according to the phased Commencement Dates of Buildings Two and
                Three as provided in Sections 1 and 3. Landlord reserves the
                right at any time to grant similar non-exclusive use to other
                tenants, to promulgate rules and regulations relating to the use
                of such parking areas, including reasonable restrictions on
                parking by tenants and employees, to designate specific spaces
                for the use of any tenant, to make changes in the parking layout
                from time to time, and to establish reasonable time limits on
                parking.

        b.      LOCATION AND DESIGNATION. There shall exist within the Project a
                garage and surface parking area (collectively the "Garage").
                Landlord shall issue to Tenant parking stickers, tags, or access
                cards (collectively referred to herein as a "Parking Permit") in
                a number equal to the number of allocated parking spaces
                specified in Section 11 (a) above. Each Parking Permit will
                authorize parking in the Garage for one (1) car, twenty-four
                (24) hours a day, seven days a week subject to modification as
                provided in this Section 11. Landlord may designate, subject to
                change from time to time, certain areas within the Garage within
                which each car may be parked, and Tenant shall observe such
                designations. Tenant shall observe all reasonable rules and
                regulations promulgated by Landlord from time to time concerning
                the use of the Garage and shall supply such additional
                information relating to persons authorized to use the Garage as
                may be reasonably requested by Landlord from time to time,
                including automobile license numbers related to each Parking
                Permit. All such rules and regulations will apply fairly and
                equally to all tenants.

        c.      OPERATIONS. Landlord may maintain, at it's sole discretion,
                within the Garage or surface parking area, an area designated
                "visitor parking" which may be made accessible on an exclusive
                basis to visitors, clients and other invitees of Building
                tenants, including Tenant, on an hourly charge basis. Upon the
                Commencement of this Lease, the Garage shall be open to the
                general public during the hours of 7:00 a.m. through 7:00 p.m.,
                Monday through Friday, excluding Building

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                holidays. Landlord shall provide an access system to the
                enclosed portion of the Garage for use by Tenant during the
                periods the Garage is not open to the general public. Hours
                during which the general public will have access to the Garage
                shall be determined at Landlord's sole discretion and may be
                adjusted from time to time.

        d.      CHARGES. The initial monthly charge for the Parking Permits to
                be provided Tenant by Landlord shall be the amount set forth in
                Section 1(i) of the Lease. Such rate shall be in effect upon the
                Commencement Date of the Lease, subject to adjustment during
                each year of the Lease term based upon comparable parking rates
                for similar buildings in the Lower Queen Anne area (reflecting
                any applicable federal, state and local taxes and levies),
                however, in no event shall the rate set forth in Section 1(i) be
                increased for Tenant's allocated Parking Permits during the
                initial twelve (12) months of the Lease term and the rate during
                the second twelve (12) months of the lease term shall not be
                increased more than 5% above the rate set forth in Section 1(i).
                Landlord shall maintain a parking validation system for use by
                tenant customers, clients and invitees. Tenant's monthly parking
                charge for all Parking Permits and the charges for all validated
                parking, if any, shall be billed to Tenant and shall be due as
                Additional Rent within ten (10) days after such billing. All
                hourly parking shall be priced comparably to the hourly parking
                rates charged by similar office buildings located in the area
                (reflecting any applicable federal, state and local taxes and
                levies).

        e.      HOV. Parking stalls required by the City of Seattle for Vanpool,
                carpool and other high occupancy vehicle or transportation
                management programs established under a required transportation
                management plan for the Buildings will be allocated to each
                tenant based upon the proportionate share of Parking Permits
                assigned that tenant for the Buildings, and any such HOV Parking
                Permits shall be counted against Tenant's total Permit
                allocation pursuant to Section 11(a).

12.     UTILITIES/SERVICES

        a.      UTILITIES/SERVICES. Landlord shall cause public utilities to
                furnish electricity, gas, water and sewer utilized in operating
                all normal facilities serving the Premises; and to furnish
                Tenant during Tenant's occupancy of the Premises:

                (1)     Hot and cold water at those points of supply provided
                        for general use of Tenant in the Building; central
                        heating and air conditioning in season and at such
                        temperatures and in such amounts as are reasonably
                        considered by Landlord to be standard for comparable
                        buildings in the Lower Queen Anne area. Tenant shall set
                        operating hours for the Building, subject to the
                        reasonable approval of Landlord. For purposes of this
                        Lease in determining the estimated amount in Section
                        1(k), normal business hours for the Building, Common
                        Areas and the Garage of the Project are estimated to be
                        7:00 AM to 6:00 PM Monday through Friday and 7:00 AM to
                        1:00 PM Saturdays, excluding holidays. Routine
                        maintenance, painting and electric lighting service for
                        all public areas and special service areas of the
                        Building shall be provided as reasonably requested by
                        Tenant. During other than normal business hours for the
                        Building such services shall be provided upon request of
                        Tenant, and if reasonably available, Tenant shall bear
                        the entire cost thereof as Additional Rent. Tenant shall
                        have access to the Premises twenty four (24) hours per
                        day, seven (7) days per week, including holidays and
                        weekends, subject to Building security systems and
                        procedures.

                (2)     Janitorial service on a five (5) day week basis in
                        accordance with the janitorial specifications attached
                        hereto as Exhibit E (which standards shall be subject to
                        reasonable modification by Landlord from time to time to
                        reflect changes in the industry). If Tenant requires
                        janitorial service in excess of such established
                        standards, and Landlord provides such service, Tenant
                        shall pay any additional cost attributable thereto as
                        Additional Rent.

                (3)     Electrical facilities to provide sufficient capacity to
                        serve the electrical power needs of Landlord's equipment
                        servicing the Building and including up to 3.0 watts per
                        square foot of Tenant's Premises for convenience outlet
                        loads and Tenant's miscellaneous equipment loads. In the
                        event Tenant requires electrical service (e.g. the
                        supply of power in a specific voltage or amperage
                        configuration) other than what is provided by the
                        Building to serve Tenant's equipment, and should the
                        installation of such equipment require additional air
                        conditioning capacity above that provided by the
                        Building's standard system, then the cost of the
                        installation and operation of the additional electrical
                        service and air conditioning equipment, if any, shall be
                        paid by Tenant.

                In the event Tenant desires any of the aforementioned services
                in amounts in excess of those required to be provided by
                Landlord pursuant to the terms of Section 12(a) above, Tenant
                shall pay Landlord as Additional Rent hereunder the cost of
                providing such additional quantities.

        b.      INTERRUPTION. Failure by Landlord to any extent to furnish any
                service, or any cessation thereof, shall not render Landlord
                liable in any respect for damages to either person or property,
                nor be construed as an eviction of Tenant, nor work an abatement
                of rent, nor relieve Tenant from fulfillment of any covenant or
                agreement hereof. Notwithstanding the foregoing, however, if an
                interruption of services for causes within Landlord's reasonable
                control materially impairs Tenant's ability to effectively use
                the Premises and if such interruption continues for more than
                three (3) consecutive days or ten (10) days out of twenty (20)
                day period, Tenant shall thereafter be entitled to abate rent as
                to that portion of the Premises which cannot be used, until the
                service is restored. Should any of the equipment or machinery
                utilized in supplying the services described herein break

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<PAGE>   12

                down, or for any cause cease to function properly, Landlord
                shall use reasonable diligence to repair same promptly, but
                Tenant shall have no right to terminate this Lease, and shall
                have no claim for rebate or abatement of rent or damages, on
                account of any interruption in service occasioned thereby or
                resulting therefrom. If any interruption of services resulting
                from causes within the reasonable control of Landlord continues
                for thirty (30) consecutive days or more, Tenant may terminate
                this Lease by written notice given to Landlord at any time prior
                to the date on which the services are restored or the
                interference ceases to the extent Tenant can reasonably use and
                occupy the Premises for its intended purposes. With respect to
                an interruption of services which results from causes outside
                the reasonable control of Landlord, if such interruption of
                services continues for more than thirty (30) consecutive days,
                unless the interruption is caused by Tenant, or by repairs or
                alterations requested by Tenant or necessary because of acts or
                omissions of Tenant (or its agents or employees), the Base Rent
                and Additional Rent shall equitably abate in proportion to the
                extent of the interference with Tenant's use of the Premises,
                commencing on the last day of such thirty (30) day period until
                the services are restored or the interference ceases to the
                extent Tenant can again reasonably use and occupy the Premises
                for its intended purposes, and if such interruption of services
                continues for more than one hundred eighty (180) consecutive
                days, Tenant may terminate this Lease by written notice given to
                Landlord at any time prior to the date on which the services are
                restored or the interference ceases to the extent Tenant can
                again reasonably use and occupy the Premises for its intended
                purposes.

13.     MAINTENANCE. Landlord shall maintain, in good condition, the structural
        parts of the Premises, which shall include only the foundations, bearing
        and exterior walls (excluding glass), subflooring and roof (excluding
        skylights), the unexposed electrical, plumbing and sewerage systems,
        including those portions of the systems lying outside the Premises,
        gutters and downspouts on the Building and the heating, ventilating and
        air conditioning system servicing the Premises; provided, however, the
        cost of all such maintenance shall be considered "Expenses" for purposes
        of Section 4(c). Except as provided above, Tenant shall maintain and
        repair the Premises in good condition, including, without limitation,
        maintaining and repairing all walls, storefronts, floors, ceilings,
        interior and exterior doors, exterior and interior windows and fixtures
        and interior plumbing as well as damage caused by Tenant, its agents,
        employees or invitees. Upon expiration or termination of this Lease,
        Tenant shall surrender the Premises to Landlord in the same condition as
        existed at the commencement of the term, except for reasonable wear and
        tear or damage caused by fire or other casualty for which Landlord has
        received all funds necessary for restoration of the Premises from
        insurance proceeds.

14.     ALTERATIONS. Tenant shall not make any alterations to the Premises other
        than Tenant's initial Tenant Improvements per Exhibit F, or to the
        Project, including any changes to the existing landscaping, without
        Landlord's prior written consent, which shall not be unreasonably
        withheld, delayed or conditioned for alterations not affecting
        structural elements or materially altering Building systems. If Landlord
        gives its consent to such alterations, Landlord may post notices in
        accordance with the laws of the state in which the premises are located.
        Any alterations made shall remain on and be surrendered with the
        Premises upon expiration or termination of this Lease, except that
        Landlord may, on or before expiration of the term, elect to require
        Tenant to remove any alterations which Tenant may have made to the
        Premises. At the time Tenant submits plans for alterations to Landlord
        for Landlord's approval, Tenant may request that Landlord elect whether
        such alterations shall be removed at the termination of this Lease, and
        if so requested, Landlord shall make such election simultaneous with its
        approval of the alterations. If Landlord elects to require removal of
        the alterations, then at its own cost Tenant shall restore the Premises
        to the condition designated by Landlord in its election, before the last
        day of the term or within 30 days after notice of its election is given,
        whichever is later.

        Should Landlord consent in writing to Tenant's alteration of the
        Premises, Tenant shall contract with a contractor reasonably approved by
        Landlord for the construction of such alterations, shall secure all
        appropriate governmental approvals and permits, and shall complete such
        alterations with due diligence in compliance with plans and
        specifications reasonably approved by Landlord. All work performed shall
        be done in workmanlike manner and with material (when not specifically
        described in the plans and specifications) of the quality and appearance
        customary in the trade for first-class construction of the type in which
        the Premises are located. All such construction shall be performed in a
        manner which will not interfere with the quiet enjoyment of other
        tenants of the Project. Tenant shall pay all costs for such construction
        and shall keep the Premises and the Project free and clear of all
        mechanics' liens which may result from construction by Tenant. If
        requested by Landlord, Tenant shall post a bond or other security
        reasonably satisfactory to Landlord to protect against liens. Tenant
        will pay directly or reimburse Landlord for any reasonable cost incurred
        by Landlord in reviewing plans and/or monitoring construction.

15.     RELEASE AND INDEMNITY.

        a.      INDEMNITY. Tenant shall indemnify, defend (using legal counsel
                reasonably acceptable to Landlord) and save Landlord and its
                property manager harmless from all claims, suits, losses,
                damages, fines, penalties, liabilities and expenses (including
                Landlord's personnel and overhead costs and attorneys fees and
                other costs incurred in connection with claims, regardless of
                whether such claims involve litigation, but excluding
                consequential damages such as lost profits) resulting from any
                actual or alleged injury (including death) of any person or from
                any actual or alleged loss of or damage to, any property to the
                extent caused by (i) Tenant's occupation, use or improvement of
                the Premises, or that of its employees, agents or contractors,
                or (ii) any act or omission of Tenant or any subtenant,
                licensee, assignee or concessionaire of Tenant, or of any
                officer, agent, employee, guest or invitee of Tenant, or of any
                such entity in or about the Premises. Tenant agrees that the
                foregoing indemnity specifically covers actions brought by its
                own employees. This

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                indemnity with respect to acts or omissions during the term of
                this Lease shall survive termination or expiration of this
                Lease. The foregoing indemnity is specifically and expressly
                intended to, constitute a waiver of Tenant's immunity under
                Washington's Industrial Insurance Act, RCW Title 51, to the
                extent necessary to provide Landlord with a full and complete
                indemnity from claims made by Tenant and its employees, to the
                extent provided herein. Tenant shall promptly notify Landlord of
                casualties or accidents occurring in or about the Premises.
                LANDLORD AND TENANT ACKNOWLEDGE THAT THE INDEMNIFICATION
                PROVISIONS OF SECTION 8.b AND THIS SECTION 15 WERE SPECIFICALLY
                NEGOTIATED AND AGREED UPON BY THEM.

        b.      LANDLORD INDEMNITY. Except as otherwise provided in this Section
                15 or Section 16, Landlord shall indemnify, defend (using legal
                counsel reasonably acceptable to Tenant) and save Tenant
                harmless from all claims, suits, losses, fines, penalties,
                liabilities and expenses (including Tenant's personnel and
                overhead costs and attorneys' fees and other costs incurred in
                connection with claims, regardless of whether such claims
                involve litigation, but excluding consequential damages such as
                lost profits) resulting from any actual or alleged injury
                (including death) of any person or from any actual or alleged
                loss of or damage to, any property to the extent caused by the
                intentional misconduct or negligence of Landlord or of any
                employee or agent of Landlord in the Common Areas. Landlord
                agrees that the foregoing indemnity specifically covers actions
                brought by its own employees. This indemnity with respect to
                actions or omissions during the term of this Lease shall survive
                termination or expiration of this Lease. The foregoing indemnity
                is specifically and expressly intended to constitute a waiver of
                Landlord's immunity under Washington's Industrial Insurance Act,
                RCW Title 51, to the extent necessary to provide Tenant with a
                full and complete indemnity from claims made by Landlord and its
                employees to the extent of their negligence. LANDLORD AND TENANT
                ACKNOWLEDGE THAT THE INDEMNIFICATION PROVISIONS OF SECTION 15
                WERE SPECIFICALLY NEGOTIATED AND AGREED UPON BY THEM.

        c.      RELEASE. Tenant hereby fully and completely waives and releases
                all claims against Landlord for any losses or other damages
                sustained by Tenant or any person claiming through Tenant
                resulting from any accident or occurrence in or upon the
                Premises, including but not limited to: any defect in or failure
                of Project equipment; any failure to make repairs; any defect,
                failure, surge in, or interruption of Project facilities or
                services; any defect in or failure of Common Areas; broken
                glass; water leakage; the collapse of any Building component; or
                any act, omission or negligence of co-tenants, licensees or any
                other persons or occupants of the Building, provided only that
                the release contained in this Section 15.b shall not apply to
                claims for actual damage to persons or property (excluding
                consequential damages such as lost profits) resulting directly
                from Landlord's breach of its express obligations under this
                Lease which Landlord has not cured within a reasonable time
                after receipt of written notice of such breach from Tenant or
                any of Landlord's negligent or willfull misconduct.

        d.      LIMITATION ON INDEMNITY. In compliance with RCW 4.24.115 as in
                effect on the date of this Lease, all provisions of this Lease
                pursuant to which Landlord or Tenant (the "Indemnitor") agrees
                to indemnify the other (the "Indemnitee") against liability for
                damages arising out of bodily injury to Persons or damage to
                property relative to the construction, alteration, repair,
                addition to, subtraction from, improvement to, or maintenance
                of, any building, road, or other structure, project,
                development, or improvement attached to real estate, including
                the Premises, (i) shall not apply to damages caused by or
                resulting from the sole negligence of the Indemnitee, its agents
                or employees, and (ii) to the extent caused by or resulting from
                the concurrent negligence of (a) the Indemnitee or the
                Indemnitee's agents or employees, and (b) the Indemnitor or the
                Indemnitor's agents or employees, shall apply only to the extent
                of the Indemnitor's negligence; PROVIDED, HOWEVER, the
                limitations on indemnity set forth in this Section shall
                automatically and without further act by either Landlord or
                Tenant be deemed amended so as to remove any of the restrictions
                contained in this Section no longer required by then applicable
                law.

        e.      DEFINITIONS. As used in any Section establishing indemnity or
                release of Landlord, "Landlord" shall include Landlord, its
                partners, officers, agents, employees and contractors, and
                "Tenant" shall include Tenant and any person or entity claiming
                through Tenant.

16.     INSURANCE. Tenant, at its cost, shall maintain commercial general
        liability and property damage insurance and products liability insurance
        with a single combined liability limit of $2,000,000, insuring against
        all liability of Tenant and its representatives, employees, invitees,
        and agents arising out of or in connection with Tenant's use or
        occupancy of the Premises. Landlord may, from time to time, require
        modifications of the insurance coverages hereunder to reflect insurance
        coverages commonly provided in similar projects in the area. Commercial
        general liability insurance, products liability insurance and property
        damage insurance shall insure performance by Tenant of the indemnity
        provisions of Section 15. Landlord and its management contractor shall
        be named as additional insured and the policy shall contain
        cross-liability endorsements. On all its personal property, at its cost,
        Tenant shall maintain a policy of standard fire and extended coverage
        insurance with vandalism and malicious mischief endorsements and "all
        risk" coverage on all Tenant's improvements and alterations, including
        without limitation, all items of Tenant responsibility described in
        Section 13 in or about the Premises, to the extent of at least 90% of
        their full replacement value. The proceeds from any such policy shall be
        used by Tenant for the replacement of personal property and the
        restoration of Tenant's improvements or alterations. All insurance
        required to be provided by Tenant under this Lease: (a) shall be issued
        by Insurance companies authorized to do business in the state in which
        the Premises are located with a financial rating of at least an A IX
        status as rated in the most recent edition of Best's Insurance Reports;
        (b) shall be issued as a primary policy; shall be on an occurrence
        basis; and (d)

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<PAGE>   14

        shall contain an endorsement requiring at least 30 days prior written
        notice of cancellation to Landlord and Landlord's lender, before
        cancellation or change in coverage, scope or amount of any policy.
        Tenant shall deliver a certificate or copy of such policy together with
        evidence of payment of all current premiums to Landlord within 30 days
        of execution of this Lease. If Tenant fails at any time to maintain the
        insurance required by this Lease, and fails to cure such default within
        five (5) business days of written notice from Landlord then, in addition
        to all other remedies available under this Lease and applicable law,
        Landlord may purchase such insurance on Tenant's behalf and the cost of
        such insurance shall be Additional Rent due within ten (10) days of
        written invoice from Landlord to Tenant.

        Landlord and Tenant release and relieve the other, and waive their
        entire right of recovery for loss or damage to property located within
        or constituting a part or all of the Building or the Project to the
        extent that the loss or damage is covered by (a) the injured party's
        insurance, or (b) the insurance the injured party is required to carry
        under this Article 16, whichever is greater. This waiver applies whether
        or not the loss is due to the negligent acts or omissions of Landlord or
        Tenant, or their respective officers, directors, employees, agents,
        contractors, or invitees. Each of Landlord and Tenant shall have their
        respective property insurers endorse the applicable insurance policies
        to reflect the foregoing waiver of claims, provided however, that the
        endorsement shall not be required if the applicable policy of insurance
        permits the named insured to waive rights of subrogation on a blanket
        basis, in which case the blanket waiver shall be acceptable.

17.     DESTRUCTION. If during the term, more than 25% of the Premises or more
        than 10% of either of Tenant's Buildings are destroyed from any cause,
        or rendered inaccessible or unusable from any cause, Landlord may, in
        its sole discretion, terminate this Lease as to the affected Building(s)
        by delivery of notice to Tenant within 30 days of such event without
        compensation to Tenant. If in Landlord's estimation, the Premises cannot
        be restored within 120 days following such destruction, the Landlord
        shall notify Tenant and Tenant may terminate this Lease by delivery of
        notice to Landlord within 30 days of receipt of Landlord's notice. If
        neither Landlord nor Tenant terminates this Lease as provided above,
        then Landlord shall commence to restore the Premises in compliance with
        then existing laws and shall complete such restoration with due
        diligence. In such event, this Lease shall remain in full force and
        effect, but there shall be an abatement of Base Monthly Rent and
        Tenant's Share of Expenses between the date of destruction and the date
        of completion of restoration, based on the extent to which destruction
        interferes with Tenant's use of the Premises.

18.     CONDEMNATION.

        a.      TAKING. If all of the Premises are taken by Eminent Domain, this
                Lease shall terminate as of the date Tenant is required to
                vacate the Premises and all Base and Additional Rent shall be
                paid to that date. The term "Eminent Domain" shall include the
                taking or damaging of property by, through or under any
                governmental or statutory authority, and any purchase or
                acquisition in lieu thereof, whether the damaging or taking is
                by government or any other person. If, in the reasonable
                judgment of Landlord, a taking of any part of the Premises by
                Eminent Domain renders the remainder thereof unusable for the
                business of Tenant (or the cost of restoration of the Premises
                is not commercially reasonable), the Lease may, at the option of
                either party, be terminated by written notice given to the other
                party not more than thirty (30) days after Landlord gives Tenant
                written notice of the taking, and such termination shall be
                effective as of the date when Tenant is required to vacate the
                portion of the Premises so taken. If this Lease is so
                terminated, all Base and Additional Rent shall be paid to the
                date of termination. Whenever any portion of the Premises is
                taken by Eminent Domain and this Lease is not terminated,
                Landlord shall at its expense proceed with all reasonable
                dispatch to restore, to the extent of available proceeds issued
                from the taking governmental authority and to the extent it is
                reasonably prudent to do so, the remainder of the Premises to
                the condition they were in immediately prior to such taking, and
                Tenant shall at its expense proceed with all reasonable dispatch
                to restore its personal property and all improvements made by it
                to the Premises to the same condition they were in immediately
                prior to such taking. The Base and Additional Rent payable
                hereunder shall be reduced from the date Tenant is required to
                partially vacate the Premises in the same proportion that the
                Rentable Area taken bears to the total Rentable Area of the
                Premises prior to taking.

        b.      AWARD. Landlord reserves all right to the entire damage award or
                payment for any taking by Eminent Domain, and Tenant waives all
                claim whatsoever against Landlord for damages for termination of
                its leasehold interest in the Premises or for interference with
                its business. Tenant hereby grants and assigns to Landlord any
                right Tenant may now have or hereafter acquire to such damages
                and agrees to execute and deliver such further instruments of
                assignment as Landlord may from time to time request. Tenant
                shall, however, have the right to claim from the condemning
                authority and keep all compensation that may be recoverable by
                Tenant on account of any loss incurred by Tenant in moving
                Tenant's merchandise, furniture, trade fixtures and equipment,
                provided, however, that Tenant may claim and keep such damages
                only if they are awarded separately in the eminent domain
                proceeding and not out of or as part of Landlord's damages.

19.     ASSIGNMENT OR SUBLEASE. Tenant shall not assign or encumber its interest
        in this Lease or the Premises or sublease all or any part of the
        Premises or allow any other person or entity (except Tenant's authorized
        representatives, employees, invitees, or guests) to occupy or use all or
        any part of the Premises without first obtaining Landlord's consent,
        which shall not be unreasonably withheld, delayed or conditioned. In
        determining whether to consent to a proposed assignment or subletting,
        Landlord may consider any commercially reasonable basis for approving or
        disapproving the proposed subletting or assignment, including without
        limitation any of the following: (i) whether the clientele, personnel or
        foot traffic which will be generated by the business of the proposed
        assignee or sublessee is consistent in

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<PAGE>   15

        Landlord's reasonable opinion with the businesses of other tenants of
        the Building or the Project, (ii) whether the proposed assignee has a
        net worth and financial strength and credit record reasonably
        satisfactory to Landlord, and (iii) whether the use of the Premises by
        the proposed assignee or sublessee will violate or create any potential
        violation of any laws or a breach or violation of any other lease or
        agreement by which Landlord is bound. No assignment or sublease shall
        release Tenant from the obligation to perform all obligations under this
        Lease unless otherwise agreed in writing by Landlord. Any assignment,
        encumbrance or sublease without Landlord's written consent shall be
        voidable and at Landlord's election, 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 corporation, any
        dissolution, merger, consolidation or other reorganization of Tenant, or
        sale or other transfer of a controlling percentage of the capital stock
        of Tenant, or the sale of at least 25% of the value of the assets of
        Tenant shall be deemed a voluntary assignment. The phrase "controlling
        percentage" means ownership of and right to vote stock possessing at
        least 25% of the total combined voting power of all classes of Tenant's
        capital stock issued, outstanding and entitled to vote for election of
        directors. The two proceeding sentences shall not apply to corporations
        the stock of which is traded through an exchange or over the counter.
        One half (1/2) of any rent received by Tenant from its subtenants or
        assignees in excess of the Rent payable by Tenant to Landlord under this
        Lease and of any sums to be paid by an assignee to Tenant in which is
        attributable to the leasehold interest, prepayment of rent or "buying
        down" rent (less the costs and expenses incurred by Tenant in connection
        with any such sublease or assignment) shall be paid to Landlord. If at
        the time of the proposed assignment or subletting, the Project is more
        than 15% vacant, then Tenant shall not charge less on the proposed
        assignment or subletting than 95% of the rents being charged by Landlord
        for similar spaces in the Project. For purposes of this Section 19, the
        term "similar spaces in the Project" shall mean similar as to (i)
        location of the floors(s) within the Project, (ii) views, (iii) types of
        tenant improvements and (iv) use. If Tenant requests Landlord to consent
        to a proposed assignment or subletting, Tenant shall pay to Landlord,
        whether or not consent is ultimately given, $100 or Landlord's
        reasonable out of pocket attorney's fees incurred in connection with
        such request, whichever is greater.

        Notwithstanding any other provision of this Section 19, Tenant may
        sublet all or part of the Premises to its parent corporation, if any;
        any subsidiary corporation of Tenant or its parent corporation; or any
        corporation or other entity owned or controlled by Tenant, its parent
        corporation of any subsidiary of Tenant (each an "Affiliate").
        Furthermore, Tenant may assign this Lease to any Affiliates, or to any
        entity resulting from a merger or consolidation with Tenant, provided
        the assignee's financial condition (i.e., net worth and liquidity) is
        comparable to that of Tenant immediately preceding the date of the
        assignment.

        No interest of Tenant in this Lease shall be assignable by involuntary
        assignment through operation of law (including without limitation the
        transfer of this Lease by testacy or intestacy). Each of the following
        acts shall be considered an involuntary assignment: (a) if Tenant is or
        becomes bankrupt or insolvent, makes an assignment for the benefit of
        creditors, or institutes proceedings under the Bankruptcy Act in which
        Tenant is the bankrupt party; or if Tenant is a partnership or consists
        of more than one person or entity, if any partner of the partnership or
        other person or entity is or becomes bankrupt or insolvent, or makes an
        assignment for the benefit of creditors; or (b) if a writ of attachment
        or execution is levied on this Lease; or (c) if in any proceeding or
        action to which Tenant is a party, a receiver is appointed with
        authority to take possession of the Premises. An involuntary assignment
        shall constitute a default by Tenant and Landlord shall have the right
        to elect to terminate this Lease, in which case this Lease shall not be
        treated as an asset of Tenant.

20.     TENANT DEFAULT.

        a.      EVENTS OF DEFAULT. The occurrence of any of the following shall
                constitute a default by Tenant: (i) a failure to pay Rent,
                Additional Rent or other charge when due, provided that Landlord
                shall not exercise any of its rights under this Section 20(a)(i)
                until Landlord has given Tenant notice of such default and a
                cure period of five (5) business days from receipt of such
                notice, and Tenant has failed to pay such Rent, Additional Rent
                or other charge within such cure period provided that, with
                respect to sums due other than Rent and Additional Rent; (ii)
                abandonment and vacation of the Premises (failure to occupy and
                operate the Premises for ten consecutive days while in monetary
                default under this Lease shall be conclusively deemed an
                abandonment and vacation); (iii) failure to perform any other
                material provision of this Lease, provided that Landlord shall
                not exercise any of its rights under this Section 20(a)(iii)
                until Landlord has given Tenant notice of such default and a
                cure period of thirty (30) days from receipt of such notice, and
                Tenant has failed to cure such default within such cure period,
                provided further that if more than thirty (30) days are required
                to complete such performance, the cure period shall not be
                deemed to have run so long as Tenant commences to cure such
                default within the thirty (30) day period and thereafter
                diligently pursues its completion; or (iv) the making by Tenant
                of any general assignment or general arrangement for the benefit
                of creditors or the filing by or against Tenant of a petition in
                bankruptcy, including reorganization or arrangement, unless in
                the case of a petition filed against Tenant and the same is
                dismissed within thirty (30) days, or 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. The notices required by this Section 20 are
                intended to satisfy any and all notice requirements imposed by
                law on Landlord and are not in addition to any such requirement.

        b.      LANDLORD'S REMEDIES. Landlord shall have the following remedies
                if Tenant is in default. (These remedies are not exclusive; they
                are cumulative and in addition to any remedies now or later
                allowed by law): Landlord may terminate Tenant's right to
                possession of the Premises at any time.

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<PAGE>   16

                No act by Landlord other than giving notice to Tenant shall
                terminate this Lease. Acts of maintenance, efforts to relet the
                Premises, or the appointment of a receiver on Landlord's
                initiative to protect Landlord's interest under this Lease shall
                not constitute a termination of Tenant's right to possession.
                Upon termination of Tenant's right to possession, Landlord has
                the right to recover from Tenant: (1) the worth of the unpaid
                Rent that had been earned at the time of termination of Tenant's
                right to possession; (2) the worth of the amount of the unpaid
                Rent that would have been earned after the date of termination
                of Tenant's right to possession; (3) any other amount, including
                but not limited to, expenses incurred to relet the Premises,
                court, attorney and collection costs, necessary to compensate
                Landlord for all detriment caused by Tenant's default. "The
                Worth," as used for Item (1) in this Paragraph 21 is to be
                computed by allowing interest at the rate of 15 percent per
                annum. If the interest rate specified in this Lease is higher
                than the rate permitted by law, the interest rate is hereby
                decreased to the maximum legal interest rate permitted by law.
                "The Worth" as used for Item (2) in this Paragraph 21 is to be
                computed by discounting the amount at the discount rate of the
                Federal Reserve Bank of San Francisco at the time of termination
                of Tenant's right of possession.

21.     LANDLORD DEFAULT. Landlord shall not be in default unless Landlord fails
        to perform its obligations within thirty (30) days after notice by
        Tenant, specifying wherein Landlord has failed to perform; provided,
        that if the nature of Landlord's obligation is such that more than
        thirty (30) days are required for performance, Landlord shall not be in
        default if Landlord commences performance within thirty (30) days of
        Tenant's notice and thereafter diligently completes performance within a
        reasonable time. Tenant's rights under this Lease shall be limited to
        actions for damages and/or specific performance, and no default by
        Landlord shall entitle Tenant to withhold or offset rent, terminate this
        Lease or to engage in self-help remedies, provided only as follows: If
        Landlord is in default under this Lease, and such default materially
        adversely affects Tenant's ability to do business from the Premises, and
        Landlord fails to cure such default within a commercially reasonable
        time for emergencies and otherwise within thirty (30) days after written
        notice from Tenant (provided that if such default cannot be cured with
        30 days, then if Landlord fails to commence to cure with 30 days and
        diligently pursue such cure to completion), then Tenant shall, upon two
        (2) business days prior written notice to Landlord of Tenant's intent to
        cure the default, be entitled to cure the default and the reasonable
        cost of cure shall be reimbursed by Landlord to Tenant with thirty (30)
        days of invoice therefor. If Landlord fails to make such reimbursement,
        then any issues relating to such default and cure shall, at either
        party's election, be resolved by a single-arbitrator before the American
        Arbitration Association ("AAA") under the Arbitration Rules of the AAA
        modified as follows: (i) the total time from date of demand for
        arbitration to final award shall not exceed 25 days; (ii) the arbitrator
        shall be chosen by the AAA without submittal of lists and subject to
        challenge only for good cause shown; (iii) all notices may be by
        telephone or other electronic communication with later confirmation in
        writing; (iv) the time, date, and place of the hearing shall be set by
        the arbitrator in his or her sole discretion, provided that there be at
        least 3 days prior notice of the hearing; (v) there shall be no
        post-hearing briefs; (vi) there shall be no discovery except by order of
        the arbitrator; and (vii) the arbitrator shall issue his or her award
        within 7 days after the close of the hearing. The arbitration shall be
        held in the county in which the Premises is located. The decision of the
        arbitrator shall be final and binding on the parties and judgment on the
        award rendered by the arbitrator may be entered in any court of
        competent jurisdiction. The fees and expenses of the arbitrator shall be
        paid half by Landlord and half by Tenant unless the arbitrator decides
        otherwise in its discretion. The parties shall each hold harmless and
        indemnify the arbitrator from any claims arising in connection with the
        arbitration.

22.     ENTRY ON PREMISES. Landlord and its authorized representatives shall
        have the right to enter the Premises at all reasonable times, with
        reasonable notice given to Tenant except in the case of an emergency,
        for any of the following purposes: (a) to determine whether the Premises
        are in good condition and whether Tenant is complying with its
        obligations under this Lease; (b) to do any necessary maintenance and to
        make any restoration to the Premises or the Project that Landlord has
        the right or obligation to perform; (c) to post "for sale" signs at any
        time during the term, to post "for rent" or "for lease" signs during the
        last 90 days of the term, or during any period while Tenant is in
        default; (d) to show the Premises to prospective brokers, agents,
        buyers, tenants or persons interested in leasing or purchasing the
        Premises, at any time during the term; or (e) to repair, maintain or
        improve the Project and to erect scaffolding and protective barricades
        around and about the Premises but not so as to prevent entry to the
        Premises and to do any other act or thing necessary for the safety or
        preservation of the Premises or the Project. Landlord shall not be
        liable in any manner for any inconvenience, disturbance, loss of
        business, nuisance or other damage arising out of Landlord's entry onto
        the Premises as provided in this Section 22. Tenant shall not be
        entitled to an abatement or reduction of Rent if Landlord exercises any
        rights reserved in this Section 22. Landlord shall conduct his
        activities on the Premises as provided herein in a commercially
        reasonable manner so as to limit inconvenience, annoyance or disturbance
        to Tenant to the maximum extent practicable and to execute
        confidentiality agreements relating to entering areas Tenant keeps
        secure for intellectual property reasons. For each of these purposes,
        Landlord shall at all times have and retain a key with which to unlock
        all the doors in, upon and about the Premises, excluding Tenant's vaults
        and safes. Tenant shall not alter any lock or install a new or
        additional lock or bolt on any door of the Premises without prior
        written consent of Landlord. If Landlord gives its consent, Tenant shall
        furnish Landlord with a key for any such lock.

23.     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 or any beneficiary of a Deed
        of Trust with a lien on the Project or any ground lessor with respect to
        the Project, 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 Project, 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 Project, ground leases or underlying leases,
        or Landlord's interest or estate in any of said items is specified as
        security. This subordination shall be self operative, provided that so
        long as Tenant is not in default hereunder beyond the applicable Section
        20 cure

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<PAGE>   17

        period, Tenant shall have continued enjoyment of the Premises free from
        any disturbance or interruption by reason of any foreclosure of Lender's
        deed of trust or mortgage. In the event that any ground lease or
        underlying lease terminates for any reason or any mortgage or Deed of
        Trust is foreclosed or a conveyance in lieu of foreclosure is made for
        any reason, Tenant shall, notwithstanding any subordination, attorn to
        and become the Tenant of the successor in interest to Landlord, at the
        option of such successor in interest. Tenant covenants and agrees to
        execute and deliver, upon demand by Landlord and in the form requested
        by Landlord any additional documents evidencing the priority or
        subordination of this Lease with respect to any such ground lease or
        underlying leases or the lien of any such mortgage or Deed of Trust,
        subject to the non-disturbance provisions contained herein. If Tenant
        fails to deliver such subordination document as required herein, then
        Tenant hereby irrevocably appoints Landlord as attorney-in-fact of
        Tenant to execute, deliver and record any such document in the name and
        on behalf of Tenant.

        Tenant, within ten days from notice from Landlord, shall execute and
        deliver to Landlord, in recordable form, certificates stating that this
        Lease is not in default, is unmodified and in full force and effect, or
        in full force and effect as modified, and stating the modifications.
        This certificate should also state the amount of current monthly Rent,
        the dates to which Rent has been paid in advance, and the amount of any
        security deposit and prepaid Rent. Failure to deliver this certificate
        to Landlord within ten days shall be conclusive upon Tenant that this
        Lease is in full force and effect and has not been modified except as
        may be represented by Landlord.

24.     NOTICE. Any notice, demand or request required hereunder shall be given
        in writing to the party's facsimile number or address set forth in
        Section 1 hereof by any of the following means: (a) personal service;
        (b) electronic communication, whether by telex, telegram or facsimile;
        (c) overnight courier; or (d) registered or certified, first class mail,
        return receipt requested. Such addresses may be changed by notice to the
        other parties given in the same manner as above provided. Any notice,
        demand or request sent pursuant to either subsection (a) or (b) hereof
        shall be deemed received upon such personal service or upon dispatch by
        electronic means with electronic confirmation of receipt. Any notice,
        demand or request sent pursuant to subsection (c) hereof shall be deemed
        received on the business day immediately following deposit with the
        overnight courier and, if sent pursuant to subsection (d), shall be
        deemed received forty-eight (48) hours following deposit in the U.S.
        mail.

25.     WAIVER. No delay or omission in the exercise of any right or remedy by
        Landlord shall impair such right or remedy or be construed as a waiver.
        No act or conduct of Landlord, including without limitation, acceptance
        of the keys to the Premises, shall constitute an acceptance of the
        surrender of the Premises by Tenant before the expiration of the term.
        Only written notice from Landlord to Tenant shall constitute acceptance
        of the surrender of the Premises and accomplish termination of the
        Lease. Landlord's consent to or approval of any act by Tenant requiring
        Landlord's consent or approval shall not be deemed to waive or render
        unnecessary Landlord's consent to or approval of any subsequent act by
        Tenant. Any waiver by Landlord of any default must be in writing and
        shall not be a waiver of any other default concerning the same or any
        other provision of the Lease. TENANT SPECIFICALLY ACKNOWLEDGES AND
        AGREES THAT, WHERE TENANT HAS RECEIVED A NOTICE TO CURE DEFAULT (WHETHER
        RENT OR NON-RENT), NO ACCEPTANCE BY LANDLORD OF RENT SHALL BE DEEMED A
        WAIVER OF SUCH NOTICE, AND, INCLUDING BUT WITHOUT LIMITATION, NO
        ACCEPTANCE BY LANDLORD OF PARTIAL RENT SHALL BE DEEMED TO WAIVE OR CURE
        ANY RENT DEFAULT. LANDLORD MAY, IN ITS DISCRETION, AFTER RECEIPT OF
        PARTIAL PAYMENT OF RENT, REFUND SAME AND CONTINUE ANY PENDING ACTION TO
        COLLECT THE FULL AMOUNT DUE, OR MAY MODIFY ITS DEMAND TO THE UNPAID
        PORTION. IN EITHER EVENT THE DEFAULT SHALL BE DEEMED UNCURED UNTIL THE
        FULL AMOUNT IS PAID IN GOOD FUNDS.

26.     SURRENDER OF PREMISES; HOLDING OVER. Upon expiration of the term, Tenant
        shall surrender to Landlord the Premises and all Tenant improvements and
        alterations in good condition, except for ordinary wear and tear and
        alterations Tenant has the right or is obligated to remove under the
        provisions of Section 14 herein. Tenant shall remove all personal
        property including, without limitation, all data and phone wires and
        other improvements which Landlord has required Tenant to remove pursuant
        to Section 14 or Exhibit F of this Lease. Landlord can elect to retain
        or dispose of in any manner Tenant's personal property not removed from
        the Premises by Tenant prior to the expiration of the term. Tenant
        waives all claims against Landlord for any damage to Tenant resulting
        from Landlord's retention or disposition of Tenant's personal property.
        Tenant shall be liable to Landlord for Landlord's cost for storage,
        removal or disposal of Tenant's personal property.

        If Tenant, with Landlord's consent, remains in possession of the
        Premises after expiration or termination of the term, or after the date
        in any notice given by Landlord to Tenant terminating this Lease, such
        possession by Tenant shall be deemed to be a month-to-month tenancy
        terminable as provided under Washington law, by either party. All
        provisions of this Lease, except those pertaining to term and Rent,
        shall apply to the month-to-month tenancy. During any holdover term,
        Tenant shall pay Base Monthly Rent in an amount equal to 150% of Base
        Monthly Rent for the last full calendar month during the regular term
        plus 100% of Tenant's share of Expenses pursuant to Section 4(c)(3).

27.     LIMITATION OF LANDLORD'S LIABILITY. In consideration of the benefits
        accruing hereunder, Tenant agrees that, in the event of any actual or
        alleged failure, breach or default of this Lease by Landlord, Landlord's
        liability under this Lease shall be limited to, and Tenant shall look
        only to Landlord's interest in the Project and the rents and proceeds
        thereof.

28.     MISCELLANEOUS PROVISIONS.

        a.      TIME OF ESSENCE. Time is of the essence of each provision of
                this Lease.

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<PAGE>   18

        b.      AUTHORITY. If Tenant is a corporation, Tenant will deliver to
                Landlord, contemporaneously with this Lease, an authorizing
                resolution by Tenant's Board of Directors, authorizing the
                person(s) executing this Lease to do so, or other evidence of
                such person(s) authority as is reasonably satisfactory to
                Landlord.

        c.      SUCCESSORS. This Lease shall be binding on and inure to the
                benefit of the parties and their successors, except as provided
                in Section 19 herein.

        d.      LANDLORD'S CONSENT. Except as otherwise specifically provided
                herein, any consent required by Landlord under this Lease must
                be granted in writing and may be withheld by Landlord in its
                sole and absolute discretion unless otherwise provided herein.

        e.      COMMISSIONS. Each party represents that it has not had dealings
                with any real estate broker, finder or other person with respect
                to this Lease in any manner, except for the broker identified in
                Section 1(p), who shall be compensated by the party identified
                in Section 1(p). Landlord and Tenant recognize that it is
                possible that they may hereafter make additional agreements
                regarding further extension or renewal of this Lease or a new
                lease or leases for all or one or more parts of the Premises or
                other space in the Project for a term or terms commencing after
                the Commencement Date of this Lease. Landlord and Tenant
                recognize that it is also possible that they may hereafter
                modify this Lease to add additional space or to substitute space
                as part of the Premises. If any such additional agreements, new
                leases or modifications to this Lease are made (except for the
                space leased in Buildings Two and Three per the terms of this
                Amended and Restated Lease), unless otherwise agreed in writing
                by Landlord, Landlord shall not have any obligation to pay any
                compensation to any real estate broker or to any other third
                person engaged by Tenant to render services to Tenant in
                connection with negotiating such matters, regardless of whether
                under the circumstances such person is or is not regarded by the
                law as an agent of Landlord.

        f.      OTHER CHARGES. If either party commences any litigation against
                the other party or files an appeal of a decision arising out of
                or in connection with the Lease, the prevailing party shall be
                entitled to recover from the other party reasonable attorney's
                fees and costs of suit. If Landlord employs a collection agency
                to recover delinquent charges, Tenant agrees to pay all
                collection agency and attorneys' fees charged to Landlord in
                addition to Rent, late charges, interest and other sums payable
                under this Lease. Tenant shall pay a charge of $75 to Landlord
                for preparation of a demand for delinquent Rent.

        g.      FORCE MAJEURE. Neither party shall be deemed in default hereof
                nor liable for damages arising from its failure to perform its
                duties or obligations hereunder if such is due to causes beyond
                its reasonable control, including, but not limited to, acts of
                God, acts of civil or military authorities, fires, floods,
                windstorms, earthquakes, strikes or labor disturbances, civil
                commotion, delays in transportation, governmental delays or war,
                provided nothing in this subparagraph shall limit or otherwise
                modify or waive Tenant's obligation to pay Base Rent and
                Additional Rent as and when due pursuant to the terms of this
                Lease, or Landlord's obligation to timely make any payments
                which Landlord is required to make to Tenant pursuant to this
                Lease.

        h.      RULES AND REGULATIONS. Tenant shall faithfully observe and
                comply with such commercially reasonable, non-discriminatory
                "Rules and Regulations" as Landlord may from time to time adopt
                by written notice. Landlord shall not be responsible to Tenant
                for the violation or non-performance by any other tenant or
                occupant of the buildings or Project of said tenant or
                occupant's lease or of any of said Rules and Regulations.

        i.      LANDLORD'S SUCCESSORS. In the event of a sale or conveyance by
                Landlord of the Project, the same shall operate to release
                Landlord from any liability under this Lease from and after the
                date of the sale or conveyance, and in such event Landlord's
                successor in interest shall be solely responsible for all
                obligations of Landlord under this Lease.

        j.      INTERPRETATION. This Lease shall be construed and interpreted in
                accordance with the laws of the state in which the Premises are
                located. This Lease constitutes the entire agreement between the
                parties with respect to the Premises and the Project, except for
                such guarantees or modifications as may be executed in writing
                by the parties from time to time. When required by the context
                of this Lease, the singular shall include the plural, and the
                masculine shall include the feminine and/or neuter. "Party"
                shall mean Landlord or Tenant. If more than one person or entity
                constitutes Landlord or Tenant, the obligations imposed upon
                that party shall be joint and several. The enforceability,
                invalidity or illegality of any provision shall not render the
                other provisions unenforceable, invalid or illegal.

        k.      CLEAN AIR ACT. Tenant acknowledges that Landlord has not made
                any portion of the Premises or Tenant's Buildings accessible for
                smoking in compliance with WAC 296-62-12000. If Tenant wishes to
                make any portion of the Premises accessible for smoking, Tenant
                shall make all improvements necessary to comply with all
                applicable governmental rules and regulations. Tenant
                acknowledges that the indemnity contained in Section 15 of the
                Lease includes, but is not limited to claims based on the
                presence of tobacco smoke as a result of the activities of
                Tenant, its employees, agents, or guests.

29.     OPTION TO EXTEND. So long as Tenant is not in material default under the
        terms of the Lease, Tenant shall have the right to extend the term of
        the Lease for two (2) additional terms of five (5) years each (the

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        "Extension Terms"). Tenant agrees to notify Landlord in writing of
        Tenant's intent to renew not more than twenty-four (24) and not less
        than eighteen (18) months prior to the termination of the then current
        lease term. The rental rate during the Extension Terms shall be equal to
        the then Fair Market Rental Rate (adjusted for lease concessions) for
        comparable space located in Lower Queen Anne, Seattle, Washington.

        Within thirty (30) days following Tenant's notice to Landlord of
        Tenant's desire to extend the Lease, Landlord shall notify Tenant of the
        proposed Extended Term Base Rent, which shall be equal to the then Fair
        Market Rental Rate of the Premises. Fair Market Rental Rate shall be
        defined as the annual Base Rent (projected in reference to the date of
        the commencement of the payment of annual rental to which it applies)
        which Tenant would expect to pay and Landlord would expect to receive
        under leases of space of comparable size and quality to the Premises and
        as provided for in and on terms and conditions comparable to, this Lease
        covering premises similar to the Premises. Tenant shall have thirty (30)
        days following receipt of Landlord's notice of the proposed Extended
        Term Base Rent, in which to accept such determination; or to agree with
        Landlord on a stipulated Fair Market Rental Rate.

        If Tenant notifies Landlord, within the aforesaid thirty (30) day
        period, that Tenant disputes the Prevailing Market Rate quoted by
        Landlord, the parties shall, during the following thirty (30) days,
        negotiate in good faith to determine the Annual Base Rent for the
        renewal Term. If within said thirty-day period the parties are unable to
        agree on the Annual Base Rent, then within ten (10) days thereafter,
        each party shall select a qualified appraiser experienced in appraising
        commercial rental properties in the vicinity of Tenant's Buildings, who
        shall submit appraisals for the Premises within thirty (30) days of
        their appointment. If the difference between the appraisals is five
        percent (5%) or less, the Prevailing Market Rate shall be determined to
        be the average of the two appraisals. If the difference is greater than
        five percent (5%), then the two appraisers shall select a third
        qualified appraiser who shall submit an appraisal within the thirty (30)
        days following the submission of the first appraisals. The Prevailing
        Market Rate shall then be the average of the two (2) closest appraisals.
        The fees of each appraiser shall be paid by the party appointing the
        appraiser and the fees of the third appraiser, if any, shall be shared
        equally by the parties.

        The option shall be void if, at the time of exercise of such option,
        Tenant is not in possession of the Premises or is in default under this
        Lease or if Tenant fails to deliver the requisite notice thereof within
        the time period specified above. The option granted herein shall not be
        severed from this Lease, separately sold, assigned, or transferred.

30.     RENT ABATEMENT. Notwithstanding anything to the contrary contained
        herein, Tenant shall not be liable for the payment of Annual Base Rent
        or Tenant's Share of Operating Costs for that 28,741 square feet of
        rentable area of the Premises identified as Floor 3 of Building Three
        (Rental Abatement Space), for the period commencing with the
        Commencement Date applicable to such floor and ending on the earlier of
        (a) the commencement of month thirteen (13) after said Commencement Date
        or (b) the date that Tenant takes beneficial occupancy of the Rental
        Abatement Space. Should Tenant occupy less than the full floor prior to
        the commencement of month thirteen (13), then the Annual Base Rent and
        Tenant's Share of Operating Costs set forth for the Rental Abatement
        Space shall be charged only for that portion of the Rental Abatement
        Space being occupied. Tenant covenants and agrees to notify Landlord
        immediately at such time as Tenant occupies the Rental Abatement Space.
        As used herein, "occupancy" means any use of the floor by Tenant for
        other than installation of furniture, fixtures and equipment;
        "occupancy" shall include use of the floor for storage or any other
        business use. Upon commencement of the thirteenth (13th) month after the
        lease Commencement Date for the Rental Abatement Space, the full rent as
        provided for in this Amended and Restated Lease, shall be due and
        payable no matter how much of the Rental Abatement Space is occupied.

        Tenant shall be permitted to sublease the Rental Abatement Space per the
        terms and conditions of Section 19, Assignment or Sublease, and such a
        sublease shall not constitute occupancy of the Rental Abatement Space as
        used within this Section 30. If the Rental Abatement Space is subleased,
        the rental abatement with respect to the subleased area shall provide
        only for abatement of Annual Base Rent and Tenant shall be responsible
        for Tenant's Share of Operating Costs.

        It is anticipated that Tenant will complete its tenant improvements per
        the terms of Section 31, Tenant Improvement Allowance, and Exhibit F,
        Tenant Work Letter, for its entire Premises in a continuous fashion.
        However, Tenant may elect to delay the improvements to the Rental
        Abatement Space. If Tenant does delay said improvements, Tenant shall
        provide Landlord six (6) months prior written notice of the desired
        occupancy date in order to allow for the completion of tenant
        improvements of the Rental Abatement Space.

31.     TENANT IMPROVEMENT ALLOWANCE. Landlord shall provide Tenant with an
        allowance (the "Tenant Improvement Allowance") of up to Thirty Dollars
        ($30.00) per Rentable Square Foot of the Premises. The Tenant
        Improvement Allowance may be used only for actual out-of-pocket costs of
        labor and materials (including Washington State Sales Tax), and for all
        professional design services necessary for the design and permitting of
        the Tenant Work, provided by qualified third party contractors approved
        by Landlord for construction of the Tenant Work, which approval will not
        be unreasonably withheld, delayed or conditioned. The Tenant Work and
        method of payment is set forth in Exhibit F hereto.

32.     ARCHITECTURAL AND ENGINEERING SERVICES. Landlord shall provide Tenant
        with an allowance for schematic space plans performed by an approved
        space planner up to a maximum amount of $.12 per rentable square foot of
        the Premises. This design allowance shall be paid by Landlord within
        twenty (20) days after invoice by Tenant with reasonable documentation
        showing costs actually incurred.

33.     [Intentionally Deleted]

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<PAGE>   20

34.     RIGHT OF FIRST OFFER. So long as Tenant is not in material default under
        the terms of the lease, then during the term of this Lease and any
        extensions thereof, Tenant shall have a Right of First Offer (ROFO) to
        lease additional space as follows:

        This ROFO shall be subject to expansion and extension rights of other
        tenants of the Project existing as of March 30, 2000, and to the right
        of any tenant to renew its lease for its then-existing premises. Except
        as provided in the preceding sentence, this ROFO shall apply (i) to any
        space coming vacant in the Project, and, (ii) if Landlord, in its sole
        discretion develops any additional buildings in the Project, to any
        space in such new buildings (collectively "ROFO Space").

        At such time as Landlord intends to offer ROFO Space for lease, Landlord
        shall so notify Tenant, which notice shall include the description of
        the ROFO Space, and the terms (rate, term, etc.) on which Landlord
        intends to offer the ROFO Space. Tenant shall have ten (10) business
        days from receipt of such notice to notify Landlord that Tenant agrees
        to enter into a lease for the ROFO Space on the terms stated in
        Landlord's notice or to enter into a lease for the ROFO Space on such
        other terms as may be mutually agreeable to Landlord and Tenant in their
        sole discretion. Unless otherwise agreed between Landlord and Tenant,
        Tenant's lease must be of the entire ROFO Space being offered. If Tenant
        does not enter into a lease for the ROFO Space as provided above, this
        Right of First Offer shall immediately and without further action by
        Landlord terminate as to the ROFO Space being offered. This Right of
        First Offer shall be personal to Tenant and shall not be exercisable by
        any assignee or sublessee, except an assignee/successor to Tenant's
        business by merger or acquisition. Tenant shall be free during any
        ongoing period in which the ROFO Space remains unleased to request that
        Landlord re-open discussions with Tenant, which Landlord shall do,
        subject to any ongoing discussions that Landlord may then or thereafter
        engage in with other prospective tenants.

35.     RIGHT TO TERMINATE AS TO BUILDING TWO. So long as Tenant is not in
        material default under the terms of this Lease, Tenant shall have a one
        time right (the "Early Termination Right") to terminate the Lease as to
        Building Two effective on July 31, 2007 (the "Early Termination Date")
        subject to the conditions contained in this Section. In order to
        exercise its Early Termination Right, Tenant shall provide Landlord with
        written notice ("the Notice") by July 31, 2006 (at least twelve (12)
        months' notice). If Tenant exercises its Early Termination Right, Tenant
        shall, within thirty (30) days of delivery of the Notice to Landlord,
        pay to Landlord Landlord's unamortized costs (based upon a twelve (12)
        year amortization period and an interest rate of eight percent (8%) per
        annum) including, but not limited to, the Tenant Improvement Allowance,
        Schematic Space Plan Allowance and real estate commissions in connection
        with the initial lease of Building Two to Tenant (the "Unamortized
        Costs"). If Tenant exercises its Early Termination Right, it shall be
        obligated to perform all obligations under the Lease and pay all amounts
        due under the Lease through the Early Termination Date, provided only
        that if during the period between the Notice and the Early Termination
        Date, Landlord enters into a lease with a third party for all or a
        portion of Building 2 and Landlord and Tenant agree on an earlier
        termination of the Lease with respect to such space such that the third
        party lease can commence prior to the Early Termination Date, then the
        Early Termination Date with respect to such space shall be accelerated
        to the date agreed between Landlord and Tenant, and Tenant's obligations
        for the period between such accelerated Early Termination Date and the
        originally-scheduled Early Termination Date with respect to such space
        shall be the amounts that would have been due from Tenant during such
        period reduced by the amount of base monthly rent and additional rent
        actually paid to Landlord by the third party tenant net of Landlord's
        amortization (over the term of the new lease) of Landlord's costs of
        obtaining the new lease, including but not limited to new tenant
        improvements, commission, and space planning. On the Early Termination
        Date (or Dates, if there is additional acceleration due to releasing as
        provided above) the Lease shall terminate with respect to the affected
        spaces (and ultimately all of Building Two) as by expiration of its
        term, and those terms of the Lease dependent on the leasing of Building
        Two (e.g. Base Monthly Rent, Tenant's Share of Expenses, Parking) shall
        be adjusted to reflect the deletion from the Lease of the applicable
        rentable Square Footage of Building Two.

        Tenant may exercise its Early Termination Right under any of the
        following conditions:

        a.      CONTRACTION OF THE PREMISES. If Tenant wishes to occupy a
                smaller premises within Building Two, Tenant shall submit a
                written request to Landlord, within thirty (30) days of the
                Notice, to have the size of the Premises within Building Two
                reduced to the size specified by Tenant. Landlord will notify
                Tenant of its decision whether to grant Tenant's request within
                sixty (60) days of receipt of such request. If Landlord elects
                to reduce the size of the Premises, Tenant will be required to
                pay Landlord's Unamortized Costs, as described above, within
                thirty (30) days of Landlord's notice that it will allow the
                size of the Premises within Building Two to be reduced, provided
                that the amount of such Unamortized Costs shall be prorated
                based on the size of the reduced Premises within Building Two.
                If Landlord declines Tenant's request so to reduce the Premises,
                then Tenant may exercise its Early Termination Right as
                described above.

        b.      CESSATION OF BUSINESS. Tenant or any successor entity ceases
                having its main administrative offices in the Seattle-Bellevue
                Metropolitan area.

        Tenant and Landlord agree that this Early Termination Right is not to be
        used to facilitate the move of Tenant from 401 Elliott West to another
        building in the Seattle-Bellevue Metropolitan area prior to the end of
        the initial Lease term except as stated in this Section.

36.     EARLY POSSESSION. Tenant shall have the non-exclusive right to possess
        the Premises thirty (30) days prior to the Commencement Date for each
        applicable Phase for the purpose of the installation of Tenant's
        furniture, fixtures and equipment. Tenant shall not be charged base
        monthly rent or operating expense charges for such Phase during said
        Early Possession period. Tenant shall coordinate its move-in activities

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        with the contractor's working on the site so as not to impede the final
        completion of the Shell & Core Improvements, including punch list type
        activities. Tenant shall be responsible for the removal and disposal of
        Tenant's furniture and fixture vendor's cartons and trash.

37.     TENANT SIGNAGE. Tenant shall have the right, at Tenant's expense, to
        install dominant building signage on Tenant's Buildings as long as it
        leases in excess of fifty percent (50%) of the rentable area of each of
        Tenant's Buildings. Tenant's signage shall be subject to all
        governmental codes and Landlord's prior written approval, which approval
        will not be unreasonably withheld, delayed or conditioned for signage
        consistent with the Landlord's architectural principles for the Project.
        Landlord shall have the right to withhold its approval of any sign(s)
        which in its reasonable judgment are not harmonious with the design
        standard of the Buildings. A signage exhibit, providing more detail to
        size and location, is further detailed in Exhibit D. Tenant shall have
        the following signage opportunities:

        a.      Install one sign on the Building Two marquee above the entry on
                the south side of the Building.

        b.      Install two exclusive, back lighted, pin-mounted signs on the
                top parapet of each of Tenant's Buildings; one sign per wall, on
                the South, West or East elevations (i.e. 2 of those three
                walls).

        c.      Install identity graphics on the exterior walls of the Building
                Two garage elevator lobby.

38.     FIBER OPTICS. Tenant shall have the right to install satellite dishes,
        fiber optics and related equipment for Tenants sole use at Tenant's sole
        cost, expense and liability, subject to Landlord's approval of the
        location and method of installation, which shall not be unreasonably
        withheld or delayed for installations that do not interfere with other
        electronic installations on the Buildings. Tenant's rights pursuant to
        this Section shall include the right to make reasonable replacements,
        upgrades and additions subject to the terms of this Section.

39.     USE OF THE ROOF FOR BUSINESS PURPOSES. Tenant shall have the right to
        enter on the roof of Tenant's Buildings from time to time, in accordance
        with the provisions of this Section and with the prior approval of
        Landlord, for the purpose of installing and maintaining, at Tenant's
        sole cost and expense, equipment in connection with Tenant's use of the
        Premises (the "Tenant's Equipment") at locations, designated by
        Landlord. Tenant shall submit drawings, specifications, and installation
        data for Tenant's Equipment to Landlord for its approval prior to
        installation.

        Installation of Tenant's Equipment shall be accomplished under the
        direct supervision of Landlord and in accordance with reasonable rules
        and regulations prescribed by Landlord. Tenant's Equipment shall be
        grounded in accordance with Underwriters Laboratories, Inc.
        requirements.

        Tenant shall make no penetration of Tenant's Buildings' roof during
        installation or removal of Tenant's Equipment without the prior written
        consent of Landlord. Tenant shall be responsible for the cost of
        repairing all damages to Landlord's property caused by the installation,
        operation, repair, or removal of Tenant's Equipment, except to the
        extent caused by Landlord, its contractors, or employees. Furthermore,
        in the event Landlord determines that either of Tenant's Buildings roof
        must be repaired or resealed as a direct or indirect result of the
        installation, maintenance, repair, or removal of Tenant's Equipment,
        except to the extent caused by Landlord, its contractors, or employees,
        all such repairing and/or resealing shall be performed by Landlord's
        designated contractor at Tenant's sole cost and expense.

        Upon termination of this Lease, Tenant, at its sole cost, shall remove
        Tenant's Equipment from the roof of Tenant's Buildings, subject to the
        provisions of this Section. Removal of Tenant's Equipment shall be done
        in a manner satisfactory to Landlord.

        If access to Tenant's Buildings roof is required by Tenant at times
        other than normal business hours, Landlord reserves the right to charge
        Tenant any actual costs incurred by Landlord for overtime wages to
        Landlord's employees or contractors.

        Tenant shall obtain and maintain all necessary FCC licenses, if any, and
        all other governmental approvals, licenses, and permits required to
        operate Tenant's Equipment, which operation shall not interfere with the
        quiet enjoyment of the tenants within Tenant's Buildings.

        Tenant agrees that Landlord hereafter shall have the right to install
        and to grant others the right to install transmitting equipment,
        satellite dishes, antennae, and similar equipment on the roof of
        Tenant's Buildings, so long as neither the installation nor operation of
        such equipment interferes with the operation of Tenant's Equipment.

        Tenant agrees that transmissions from Tenant's Equipment shall not cause
        interference with transmissions of other persons currently operating
        communications equipment in the Business Community. Upon written
        notification from Landlord of such interference, Tenant shall
        immediately stop operation of Tenant's Equipment and not resume
        operation until such interference is cured. Any future agreement
        granting another tenant of Tenant's Buildings or any other person the
        right to make rooftop installations shall contain a covenant by such
        other tenant or person that its installation and operation of rooftop
        equipment will not interfere with the operation of Tenant's Equipment,
        and that if such interference occurs, such other tenant or other user
        shall cease installation or operation of its equipment until such
        interference is cured.

40.     [INTENTIONALLY DELETED].

41.     TENANT PARKING. Notwithstanding the provisions of Section 11.a
        designating parking as non-exclusive,

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        four (4) parking spaces located under the footprint of Building Two and
        five (5) parking spaces located under the footprint of Building Three,
        all reasonably close to the respective Building's elevator may be
        reserved by Tenant to be designated as F5 Network spaces and shall be
        counted against the parking stalls allocated to Tenant pursuant to
        Section 11.a.

42.     EMERGENCY POWER GENERATOR. The Premises shall include an electrical
        generator pad located by Landlord at the exterior of Building Three west
        of the loading dock area (the "Generator Pad"). The Generator Pad shall
        be constructed by Tenant in accordance with plans approved in advance by
        Landlord, which approval will not be unreasonably withheld, delayed or
        conditioned, and which plans shall include fencing and such curbing as
        is necessary to contain any fuel spill. Tenant may install on the
        Generator Pad a backup generator and fuel tank (collectively the
        "Generator"), the make, model and design of which shall be subject to
        Landlord's prior approval, which approval will not be unreasonably
        withheld, delayed or conditioned. The design and operation of the
        Generator and Generator Pad shall be such as to avoid material
        interference with other tenants (whether due to vibration, noise, fumes,
        or otherwise) resulting from operation of the Generator. The Generator
        shall be used only for periodic testing and in the event Tenant's
        primary electrical service is interrupted for any reason. All testing
        shall take place at times reasonably selected to minimize interference
        with other tenants. The Generator shall be used only for backup power,
        and may not be used as a primary power source, nor may it be used by any
        occupant of any other premises. The Generator Pad and the Generator
        shall be subject to all terms and conditions of this Lease, including
        but not limited to Sections 8, 15, and 16, provided only that the square
        footage of the Generator Pad shall not be utilized in calculating the
        Premises Rentable Area for the purpose of calculating Base Rent or
        allocating Expenses between the Premises and any larger parcel. Upon
        expiration or earlier termination of this Lease, Tenant shall remove all
        improvements and equipment from the Generator Pad and shall restore same
        to a clean, paved condition, and shall provide such studies or other
        information as is necessary to demonstrate to Landlord's reasonable
        satisfaction that there has been no environmental contamination on the
        Generator Pad as a result of the storage and operation of the generator
        and fuel tank thereon.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day
and year first above written.

Landlord:         401 ELLIOTT WEST L.L.C.

                  By:    CHERLIN L.L.C.,
                  Its:   Manager and Member

                  By: /s/ RICHARD L. CARSON
                     ------------------------------
                          Richard L. Carson
                  Its:  Managing Member

                  By:    KMC-ONE, L.L.C.
                  Its:   Member

                  By: /s/ STEPHEN K. KOEHLER
                     ------------------------------
                       Stephen K. Koehler, President, Koehler McFadyen & Company
                  Its: Managing Member

Tenant:           F5 NETWORKS, INC.

                  By:  /s/ ROBERT J. CHAMBERLAIN
                     ------------------------------
                  Its: VP FINANCE - CFO
                      -----------------------------

                  By:
                     ------------------------------
                  Its:
                      -----------------------------

                                       22
<PAGE>   23

STATE OF WASHINGTON         )
                            )ss.
COUNTY OF KING              )

        I certify that I know or have satisfactory evidence that RICHARD L.
CARSON and STEPHEN K. KOEHLER are the persons who appeared before me, and said
persons acknowledged that they signed this instrument, on oath stated that they
were authorized to execute the instrument and acknowledged it as the Managing
Member on behalf of CHERLIN LLC and KMC-ONE LLC and Member of 401 ELLIOTT WEST
LLC to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.

                    Dated: 6-01-01

                                          /s/ POLLY P. HUTCHINSON
                                         ---------------------------------------
                                         (Signature)

                                         Polly P. Hutchinson
                                         ---------------------------------------
                                         (Print Name)
                                         Notary Public, in and for the State
                                         of Washington, residing at Carnation
                                         My Commission Expires 6-01-01

STATE OF WASHINGTON         )
                            )ss.
COUNTY OF KING              )

        I certify that I know or have satisfactory evidence that ROBERT J.
CHAMBERLAIN is the person who appeared before me, and said persons acknowledged
that they signed this instrument, on oath stated that they were authorized to
execute the instrument and acknowledged it as the CFO and V.P. FINANCE of F5
NETWORKS, INC. to be the free and voluntary act of such party for the uses and
purposes mentioned in the instrument.

                    Dated: 04/03/00

                                          /s/ BRIAN R. DIXON
                                         ---------------------------------------
                                         (Signature)

                                         Brian R. Dixon
                                         ---------------------------------------
                                         (Print Name)
                                         Notary Public, in and for the State
                                         of Washington, residing at Seattle, WA.
                                         My Commission Expires 07-01-00

                                       23<PAGE>   1
                                                                   EXHIBIT 10.40

                          LICENSE AND SUPPLY AGREEMENT

                                  MAY 23, 2000

This Agreement is made as of this 23rd day of May, 2000, by and between Abbott
International, Ltd., a company organized under the laws of the State of
Delaware, USA, with its principal offices at 200 Abbott Park Road, Abbott Park,
IL 60064-6194 ("Abbott") and VIVUS International, Ltd., a company organized
under the laws of Bermuda, with its principal offices at Clarendon House, Church
Street, Hamilton, Bermuda. ("VIVUS").

                                    RECITALS

WHEREAS, VIVUS has developed and is developing products for the treatment of
erectile dysfunction; and

WHEREAS, Abbott is interested in obtaining a license to and/or certain other
rights relating to such products; and VIVUS is interested in granting such
license and/or rights to Abbott; and

WHEREAS, VIVUS is a wholly-owned subsidiary of VIVUS, Inc., a Delaware
corporation, ("VIVUS INC."), with its offices at 1172 Castro Street, Mountain
View, CA 94040, which has guaranteed the performance by VIVUS of this Agreement.

NOW, THEREFORE, in consideration of the mutual obligations and promises as set
forth herein, the parties do hereby agree as follows:

ARTICLE 1 - DEFINITIONS

For purposes of this Agreement, the following terms shall have the following
respective meanings:

1.1      Affiliate means any corporation, firm, partnership or other entity,
         whether de jure or de facto, which directly or indirectly owns, is
         owned by or is under common ownership with a party to the extent of in
         excess of fifty percent (50%) of the outstanding securities or assets
         having the power to vote on or direct the affairs of the entity.

                                  Page 1 of 55
<PAGE>   2

1.2 Confidential Information means any information, data or business plans
relating to the Products, the Future Products, or otherwise to the subject of
this Agreement, which a party discloses to the other party, except any portion
thereof which:

    (i) is known to the receiving party at the time of disclosure and documented
by written records made prior to the date of this Agreement;

    (ii) is disclosed to the receiving party by a third person who has a right
to make such disclosure;

    (iii) becomes patented, published or otherwise part of the public domain
through no fault of the receiving party; or (iv) is independently developed by
the receiving party as evidenced by its written records.

1.3 Effective Date means the date of this Agreement first written above.

1.4 First Commercial Sale means the first sale of Product (as defined below) in
the Territory by Abbott or any Abbott Affiliate or sublicensee to any
unaffiliated third party following Regulatory Approval of the Product, as
evidenced by the selling party's invoice to such third party.

1.5 Future Product means any transurethral product for the treatment of male
erectile dysfunction, which is owned by or licensed (with the right to
sub-license) to VIVUS, VIVUS INC. or its or their Affiliates before the tenth
anniversary of the Effective Date, which has at least one different active
ingredient as compared to either the MUSE Product or the ALIBRA Product, and
which is not a Product or an Improvement. For the avoidance of doubt, "Future
Products" do not include any product for the treatment of female sexual
dysfunction or premature ejaculation, owned by or licensed (with the right to
sub-license) by VIVUS, VIVUS INC. or its or their Affiliates.

1.6 Improvement means any and all additions, developments, improvements,
modifications, enhancements or adaptations, whether or not patented or
patentable, that relate to a Product and that are not a Future Product that
comes into existence during the term of this Agreement.

1.7 Janssen Territory means the countries listed on Exhibit 1.7 attached to this
Agreement, as to which VIVUS has granted certain rights to Janssen subject to
the terms and conditions of the Distribution Agreement by and between VIVUS and
Janssen Pharmaceutica International dated January 22, 1997 granting certain
rights to Janssen for the Products ("Janssen Agreement").

1.8 Licensed Patents means all patents and patent applications (including
without limitation, continuations, continuations-in-part, divisionals, patents
of addition, substitutions, extensions,

                                  Page 2 of 55
<PAGE>   3

reissues, reexaminations, renewals, or SPCs), owned by or licensed (with the
right to sublicense) to VIVUS or VIVUS INC. or its or their Affiliates during
the term of this Agreement, and generically or specifically claiming a Product,
an Improvement, a process for manufacturing a Product or Improvement, an
intermediate used in such process, or a use of a Product or Improvement. With
respect to such patents or applications which VIVUS or VIVUS INC. or its or
their Affiliates licenses or acquires or has licensed or acquired from a third
party, the same shall be included within "Licensed Patents" hereunder to the
extent that VIVUS or VIVUS INC. or its or their Affiliates has the right to
license or sublicense the same hereunder. Exhibit 1.8 attached to this Agreement
lists all Licensed Patents in existence as of the Effective Date.

1.9 Marketing Authorization means all governmental approvals and authorizations
necessary for the commercial marketing and sale of the Products in a country in
the Territory, excluding any pricing approval and pricing reimbursement.

1.10 Net Sales means the gross sales of a Product shipped by Abbott and/or its
Affiliates or sub licensee to third parties in the Territory (as defined below)
less deductions allowed to the final buyer against invoiced amounts for:

    (A) trade discounts earned or granted;

    (B) cash discounts actually allowed;

    (C) transportation charges (including insurance costs), handling charges,
sales taxes, excise, turnover, inventory, value added and similar taxes, duties
and charges invoiced to customers;

    (D) retroactive price reductions imposed by government authorities;

    (F) wholesaler charge backs earned or granted; and

    (G) rebates and management fees earned by or granted to third parties.

1.11 Product means (a) the product for the transurethral delivery of alprostadil
and which VIVUS and/or VIVUS INC. sells outside the Territory, as of the
Effective Date, under the trademark MUSE(R) ("MUSE Product"), (b) the product
for the transurethral delivery of alprostadil and prazosin, and for which VIVUS
plans to file a submission for Marketing Authorization in the European Union,
and which VIVUS and/or VIVUS, INC. plans, as of the Effective Date, to market
outside the Territory under the trademark ALIBRA(R) ("ALIBRA Product"), each
with final packaging and labeling suitable for use by the consumer in the
Territory, and (c) any Improvement.

                                  Page 3 of 55
<PAGE>   4

1.12 Regulatory Approval means all governmental approvals and authorizations
necessary for the commercial sale of the Product in a country in the Territory,
including but not limited to Marketing Authorization, pricing approval and
pricing reimbursement.

1.13 Sales Quarter means for the first Sales Quarter, the period commencing on
the date of Abbott's First Commercial Sale and ending on the last day of that
Abbott fiscal quarter; and for subsequent Sales Quarters, the successive Abbott
fiscal quarters thereafter.

1.14 Sales Year means for the first Sales Year, the period commencing on the
date of Abbott's First Commercial Sale and ending on the last day of that Abbott
fiscal year; and for subsequent Sales Years, the successive Abbott fiscal years
thereafter.

1.15 Specifications means the written manufacturing release specifications and
stability specifications for each of the Products, which shall be agreed upon by
the parties and which shall be set forth in Exhibit 1.15 attached hereto or as
amended pursuant to Article 6.5 below.

1.16 SPC means a right based upon a Licensed Patent to exclude others from
making, using or selling a Product, such as a Supplementary Protection
Certificate.

1.17 Supply Price means the price as set forth in Article 4.2 below.

1.18 Trademarks means the trademarks MUSE(R), ALIBRA(R), and BONDIL. The MUSE(R)
and ALIBRA(R) Trademarks are registered or have pending registration
applications throughout the Territory as of the Effective Date.

1.19 Territory means all countries and territories of the world except for the
United States and the Janssen Territory.

1.20 Valid Claim means any claim of an issued and unexpired patent in the
Licensed Patents which has not been held unenforceable, unpatentable or invalid
by a decision of a court or government agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal or which has not
been admitted by the holder of the patent to be invalid or unenforceable through
reissue, disclaimer or otherwise.

ARTICLE 2 - GRANT OF RIGHTS

2.1 Exclusive License to Abbott.

    (A) VIVUS hereby grants to Abbott an exclusive license (exclusive even as to
        VIVUS) to use and sell the Product and any Improvements in the
        Territory, under the Licensed Patents, with right to sublicense, subject
        only to the rights of Astra AB under the Distribution Agreement between
        Astra AB and VIVUS dated May 29, 1996 ("Astra

                                  Page 4 of 55
<PAGE>   5

        Agreement"), the December 22, 1999 letter agreement from Astra AB to
        VIVUS regarding the termination of the Astra Agreement, and any other
        binding agreement or amendment between VIVUS and Astra relating to the
        Astra Agreement. Abbott may sublicense any one or more of its Affiliates
        at Abbott's sole discretion, and may sublicense third parties with
        VIVUS's prior written consent, such consent not to be unreasonably
        withheld. This exclusive license is granted to Abbott as to all uses,
        forms, indications, packages and strengths for the Product and any
        Product Improvements.

    (B) In the event that during the term of this Agreement, any country in the
        Janssen Territory as of the Effective Date ceases to be part of the
        Janssen Territory, and VIVUS has the right to grant the same license as
        to such country or countries as VIVUS has granted to Abbott pursuant to
        Article 2.1(A) above as to the Territory, then such country or countries
        (up to and including the entirety of the Janssen Territory, as the case
        may be) shall automatically become part of the Territory under this
        Agreement; provided that no such country shall become part of the
        Territory if, at the time such country becomes otherwise available,
        there are in effect export restrictions, economic sanctions, or other
        laws or regulations which prohibit United States corporations from
        selling goods to such country. The parties acknowledge and agree that
        neither party shall take any action in violation of VIVUS's contractual
        obligations to Janssen or otherwise in violation of applicable law, with
        respect to this Article 2.1(B).

2.2 Future Product Rights.

    (A) Subject to the provisions of this Article 2.2, VIVUS hereby grants to
        Abbott an exclusive right of first refusal to obtain an exclusive
        license (exclusive even as to VIVUS) in the Territory to use and sell
        Future Products, to the extent VIVUS has the right to grant such a
        license. Abbott shall have a separate and independent right of first
        refusal as to each Future Product pursuant to this Article 2.2. The
        parties acknowledge that VIVUS (or VIVUS INC, or its or their
        Affiliates, as the case may be) may license or acquire rights to a
        Future Product from a third party, and that VIVUS may not be permitted
        to license or sublicense such rights to Abbott for the full Territory or
        for all fields; but the parties agree that VIVUS and VIVUS INC. shall
        use their best efforts to obtain rights to any such Future Product from
        such third party on a

                                  Page 5 of 55
<PAGE>   6

        basis which will permit VIVUS to license or sublicense such rights to
        Abbott for the full Territory and for all fields. VIVUS shall not
        discuss, negotiate, entertain, solicit, offer, accept or enter into any
        agreement granting to a third party the right to use and sell such
        Future Product in the Territory except as expressly set forth in Article
        2.2(B) below.

    (B) During the term of this Agreement, VIVUS shall use diligent efforts to
        determine whether and when VIVUS wishes to pursue commercialization
        (directly or via a third party) of each of the Future Products in the
        Territory. In each case, but in no event earlier than September 15,
        2001, after VIVUS has completed its first Phase II study with a Future
        Product, VIVUS shall provide Abbott with the results of this Phase II
        study, the Investigational New Drug Application ("IND") (or the
        equivalent of an IND filed with any regulatory agency in the Territory)
        under which this Phase II study was conducted and the results of all
        completed clinical trials under this IND. Within ninety (90) days
        following receipt of such data, Abbott shall notify VIVUS of its
        decision whether or not it wishes to accept an exclusive license for
        such Future Product in the Territory. If Abbott does not wish to accept
        such license, then VIVUS shall be free to negotiate with third parties
        concerning the grant of rights to use and sell such Future Product on
        terms VIVUS deems appropriate, or pursue commercialization of such
        Future Product itself and shall have no further obligation under this
        Article 2.2 with respect to such Future Product.

    (C) If Abbott notifies VIVUS that it does wish to accept such license, then
        such Future Product shall become a Product under this Agreement as of
        the date of Abbott's notice of acceptance, and shall be subject to the
        terms and conditions of this Agreement with the exception of Articles 3
        (in its entirety), 4.3, 9.2 and Exhibit 4, provided that each Future
        Product which so becomes a Product under this Agreement shall also be
        subject to the provisions expressly set forth in Articles 2.2(D) and 8.6
        below, which provisions shall govern for each such Future Product in
        case of any conflict with other provisions of this Agreement. In no
        event shall the provisions of Articles 2.2(D) and 8.6 below apply to the
        MUSE Product or the ALIBRA Product or any Improvements thereof.

    (D) In the event that a Future Product becomes a Product under this
        Agreement pursuant to Article 2.2(B) and (C) above, then the following
        provisions shall apply:

                                  Page 6 of 55
<PAGE>   7

        (i)    The parties shall promptly form a Development Committee and shall
               work together on the further development of such Future Product,
               pursuant to Article 8.6 below;

        (ii)   Abbott shall pay to VIVUS an amount equal to (***) of VIVUS's
               actual, verified out-of-pocket costs for the Phase II studies
               relating to such Future Product, such amount being payable within
               thirty (30) days of the date upon which the first patient is
               enrolled in the first Phase III study relating to such Future
               Product;

        (iii)  Abbott shall pay to VIVUS an amount equal to (***) of VIVUS's
               actual, verified out-of-pocket costs for the Phase III studies
               relating to such Future Product, such amount being payable within
               thirty (30) days after the end of each calendar quarter, as such
               costs are incurred subject to Article 8.6 below;

        (iv)   Abbott shall pay to VIVUS an amount equal to (***) of VIVUS's
               actual, verified out-of-pocket costs for the Phase II and III
               studies (in the case of Phase III studies, such costs are payable
               only if incurred subject to Article 8.6 below) relating to such
               Future Product (bringing the total such amounts paid by Abbott to
               (***) of such costs), payable within thirty (30) days of the date
               by which such Future Product has obtained Marketing Authorization
               in the first two of any of the following countries: France,
               Italy, Germany, Spain, and the United Kingdom;

        (v)    VIVUS shall select a trademark in consultation with Abbott, which
               trademark shall be owned and registered by VIVUS, and which shall
               be a Trademark under this Agreement, exclusively licensed to
               Abbott in the Territory for use in connection with such Future
               Product, and which shall be used where possible by VIVUS and/or
               its licensees in connection with such Future Product outside the
               Territory;

        (vi)   VIVUS shall sell such Future Product to Abbott pursuant to
               Article 4, provided that (i) Article 4.3 and Exhibit 4 shall not
               apply, and (ii) the price of such Future Product shall in no
               event be less than VIVUS's actual variable cost (includes direct
               labor and material and all overhead that is directly related to
               the manufacture of such Future Product and specifically

                                  Page 7 of 55
<PAGE>   8

               excludes fixed overhead items such as facilities rent,
               depreciation, common utilities, taxes and insurance, etc.) of
               producing such Future Product plus any royalties actually paid by
               VIVUS to third parties in connection with the sale of such Future
               Product; and (iii) the price of such Future Product to be used by
               Abbott in the Territory as samples shall be VIVUS's actual,
               variable cost (includes direct labor and material and all
               overhead that is directly related to the manufacture of such
               samples and specifically excludes fixed overhead items such as
               facilities rent, depreciation, common utilities, taxes and
               insurance, etc.) of producing such samples and;

        (vii)  Abbott shall be responsible for, and shall bear all costs of,
               obtaining and maintaining all Regulatory Approvals for such
               Future Product in the Territory, provided that clinical
               development costs for such Future Product which are necessary to
               support the Marketing Authorization for such Future Product in
               the European Countries shall be shared by the parties as set
               forth in Article 8.6(F) below.

        (viii) Abbott shall use due diligence to market and sell such Future
               Product in accordance with Article 9.1 below.

    (E) The only obligations of VIVUS and Abbott under this Article 2.2 are as
        expressly stated therein, and there are no further implied obligations
        relating to the matters contemplated therein. Without limiting the
        foregoing, it is further understood and agreed that the subject Future
        Product(s) may or may not be discovered or reduced to practice at all,
        may or may not be developed through the completion of Phase II, and that
        further modification and/or variations of a Future Product may be
        developed after the completion of Phase II studies. Accordingly, so long
        as VIVUS provides Abbott with such data and information as required by
        Article 2.2(B) above, the requirements of Article 2.2(B) above shall be
        deemed satisfied with respect to any and all improvements,
        modifications, variants or derivatives of the product developed or
        reduced to practice after the completion of Phase II studies; to the
        extent that any such improvements, modifications, variants or
        derivatives were included in the definition of such Future Product as
        offered shall be deemed to be included with such Future Product when it
        is offered to Abbott pursuant to this Article 2.2.

                                  Page 8 of 55
<PAGE>   9

ARTICLE 3 - MILESTONES

3.1 Abbott shall pay VIVUS the following one-time, non-creditable and
non-cumulative milestone fees within thirty (30) days after the event specified:

    (A) (***), upon the ALIBRA Product obtaining Marketing Authorization in the
        first three (3) of the following countries: Belgium, France, Germany,
        Italy, Spain, and the United Kingdom;

    (B) (***), upon the first occasion on which Abbott achieves annual Net Sales
        of the Products of (***) in the Territory; and

    (C) (***), upon the first occasion on which Abbott achieves annual Net Sales
        of the Products of (***) in the Territory.

ARTICLE 4 - PURCHASE AND SALE

4.1 Purchases and Sale of Product. Subject to the terms and conditions of this
Agreement, VIVUS shall sell Products exclusively to Abbott in the Territory and
Abbott shall purchase its requirements of Products exclusively from VIVUS, at
the Supply Price.

4.2 Supply Price. The Supply Price for the MUSE Product shall equal (***) of
Abbott's Net Sales of the MUSE Product in the Territory, calculated as provided
in Article 4.2(B) below. The Supply Price for the ALIBRA Product shall equal
(***) of Abbott's Net Sales of the ALIBRA Product in the Territory, calculated
as provided in Article 4.2(B) below. The Supply Price for both Products shall be
subject to the provisions of Article 4.3 below.

    (A) In order to enable the parties to sell and purchase the Products prior
        to the time in which Abbott's Net Sales for a Sales Quarter are
        determined, Abbott shall pay for Products ordered, delivered and
        accepted pursuant to Article 5 below based upon an interim "Transfer
        Price," which shall be equal to (***) of Abbott's estimated weighted
        average net selling price for an Abbott fiscal year, for the Products in
        the Territory, respectively for the MUSE Product and for the ALIBRA
        Product. Abbott shall advise VIVUS no later than forty-five (45) days
        prior to the start of each of Abbott's fiscal years, during the term of
        this Agreement, of Abbott's estimated weighted average net selling price
        for each of the Products in the Territory for the coming Abbott fiscal
        year, and the Transfer Price for that fiscal year shall be based upon
        such price, subject to any adjustment required under Article 4.2(B)
        below.

                                  Page 9 of 55
<PAGE>   10

    (B) The parties shall conduct a reconciliation no later than forty-five (45)
        days after the end of each Sales Quarter, in order to determine whether
        one party owes the other party any amount in connection with the sale
        and purchase of the MUSE Product and/or the ALIBRA Product in that Sales
        Quarter, based upon the difference (if any) between the respective
        Transfer Price and the Supply Price for that Sales Quarter. For the
        purposes of such reconciliation, Abbott shall provide to VIVUS a
        statement of Abbott's sales in units, per country in the Territory, and
        of Abbott's Net Sales, per country in the Territory and in local
        currency as well as in U.S. dollars, converted pursuant to Article 4.7
        below. In the event that one party owes the other party any amount in
        accordance with this Article 4.2(B), the owing party shall pay such
        amount within thirty (30) days of the date upon which the parties have
        agreed in writing upon the reconciliation calculation. In the event that
        the Supply Price is greater than one hundred ten percent (110%) or less
        than ninety percent (90%) of the Transfer Price for two (2) consecutive
        Sales Quarters, the Transfer Price established in Article 4.2(A) above
        shall be changed for the remainder of that Sales Year to the Supply
        Price applicable to the most recent Sales Quarter.

4.3 Minimum Supply Price. Starting after the first Sales Year, the Supply Price
for the Products shall in no event be less than the Minimum Supply Price as set
forth in Exhibit 4 attached to this Agreement.

4.4 Samples. VIVUS shall sell a quantity of Products to Abbott for use as
samples, at "Sample Prices" as set forth in Exhibit 4 attached to this
Agreement. Abbott may purchase such samples in quantities not to exceed the
following percentages of Abbott's total unit sales of each Product in the
Territory: (***) in each of the first two (2) Sales Years; (***) in each of the
third and fourth Sales Years; and (***) in each Sales Year thereafter.

4.5 Initial Start-Up Costs. Abbott shall pay VIVUS for VIVUS's actual cost paid
to third parties for materials (including but not limited to foil and packaging
materials) associated with the modification of the packaging of the MUSE Product
to incorporate Abbott trade dress and otherwise to meet Abbott's requirements
for the sale by Abbott of the MUSE Product in the Territory ("Initial Start-Up
Costs"). VIVUS shall reimburse Abbott for the payment of such Initial Start-Up
Costs via a credit against Abbott's purchases of the MUSE Product that include
such Initial Start-Up elements. Should any of these Initial Start-Up Costs not
be reimbursed to

                                 Page 10 of 55
<PAGE>   11

Abbott, then VIVUS will provide to Abbott all documents, including copies of
third-party invoices, evidencing such costs.

4.6        Records.

    (A) Abbott and/or its Affiliates shall keep and maintain records of sales
        made pursuant to the license granted hereunder so that Abbott's Net
        Sales and the calculation of the Transfer Price and the Supply Price may
        be verified. Such records shall be open to inspection upon prior written
        notice at any reasonable time during business hours, not more than once
        per calendar year, and each inspection shall cover no more than the two
        (2) calendar years preceding such notice of inspection. The inspection
        shall be conducted at VIVUS's expense by a nationally recognized
        independent certified public accountant who is not VIVUS's auditor of
        record and who is selected by VIVUS and approved by Abbott, which
        approval shall not be unreasonably withheld. The accountant shall be
        bound by confidentiality obligations at least as stringent as those
        provided in Article 19 of this Agreement, and shall then have the right
        to examine the records kept pursuant to this Agreement and report to
        VIVUS the findings (but not the underlying data) of the inspection as
        are necessary to evidence that the records were or were not maintained
        and used in accordance with this Agreement. A copy of any report
        provided to VIVUS by the accountant shall be given concurrently to
        Abbott. If the inspection of records reveals more than five percent (5%)
        underpayment by Abbott for the purchase of the Products (calculated as a
        percentage of all such payments made in connection with a Sales Year),
        then the expenses for the accountant shall be borne by Abbott and Abbott
        shall promptly repay to VIVUS the amount of such underpayment, plus
        interest calculated at the prime rate of interest as published in the
        Wall Street Journal for the date upon which such underpayment was made.
        For the purposes of this Article 4.6, an "underpayment" shall not
        include any amount that the parties determine is owed to VIVUS pursuant
        to the reconciliation procedure set forth in Article 4.2(B) above.

    (B) VIVUS and VIVUS INC. and/or its or their Affiliates shall keep and
        maintain records of their costs of clinical development, regulatory work
        and samples relating to any Future Product which becomes a Product under
        this Agreement pursuant to Article 2.2 above, so that Abbott may verify
        such costs to the extent that Abbott is obligated under this Agreement
        to make payments to VIVUS based on such costs. Such records shall

                                 Page 11 of 55
<PAGE>   12

        be open to inspection upon prior written notice at any reasonable time
        during business hours, not more than once per calendar year, and each
        inspection shall cover no more than the two (2) calendar years preceding
        such notice of inspection. The inspection shall be conducted at Abbott's
        expense by a nationally recognized independent certified public
        accountant who is not Abbott's auditor of record and who is selected by
        Abbott and approved by VIVUS, which approval shall not be unreasonably
        withheld. The accountant shall be bound by confidentiality obligations
        at least as stringent as those provided in Article 19 of this Agreement,
        and shall then have the right to examine the records kept pursuant to
        this Agreement and report to Abbott the findings (but not the underlying
        data) of the inspection as are necessary to evidence that the records
        were or were not maintained and used in accordance with this Agreement.
        A copy of any report provided to Abbott by the accountant shall be given
        concurrently to VIVUS. If the inspection of records reveals more than
        five percent (5%) overpayment by Abbott for payments made based on such
        costs (calculated as a percentage of all such payments made), then the
        expenses for the accountant shall be borne by VIVUS and VIVUS shall
        promptly repay to Abbott the amount of such overpayment, plus interest
        calculated at the prime rate of interest as published in the Wall Street
        Journal for the date upon which such overpayment was made. For the
        purposes of this Article 4.6, an "overpayment" shall not include any
        amount that the parties determine is owed to Abbott pursuant to the
        reconciliation procedure set forth in Article 4.2(B) above.

4.7 Payments. Any payments due VIVUS or Abbott under this Agreement shall be
made by remitting to the bank account designated by the party to whom payment is
to be made. Any such payments shall be made in U.S. Dollars and, in the case of
quarterly payments based upon Abbott Net Sales in currencies other than U.S.
Dollars, such quarterly payments shall be the sum of payments due for the three
(3) months of the applicable quarter calculated for each such month using the
beginning and ending month's published exchange rate, set one business day prior
to month end, by Reuters divided by two (if a Reuters exchange rate is not
available for certain countries, an exchange rate established by a recognized
third party will be used). Any payment which is more than ten (10) days overdue
shall bear interest from the original due date at the prime rate of interest as
published in the Wall Street Journal for the due date.

                                 Page 12 of 55
<PAGE>   13

4.8 Taxes. Where any sum due to be paid to VIVUS hereunder is subject to any
withholding or similar tax, the parties shall use their best efforts to do all
such acts and things and to sign all such documents as will enable them to take
advantage of any applicable double taxation agreement or treaty. In the event
there is no applicable double taxation agreement or treaty, or if an applicable
double taxation agreement or treaty reduces but does not eliminate such
withholding or similar tax, Abbott shall pay such withholding or similar tax to
the appropriate government authority, deduct the amount paid from the amount due
VIVUS and secure and send to VIVUS the best available evidence of such payment.

ARTICLE 5 - FORECASTS, ORDERS, INVOICES AND TITLE

5.1 Initial Forecast. Within sixty (60) days of the Effective Date, Abbott shall
give VIVUS its then current best forecast of the quantity of Products that
Abbott will require from VIVUS prior to and during the first four Sales
Quarters. Abbott shall break down the forecast for the period prior to the first
Sales Quarter and for the first two Sales Quarters of such forecast by month and
by Stock Keeping Unit ("SKU") per Product.

5.2 Rolling Forecasts. No later than seventy-five (75) days prior to the first
day of each Sales Quarter after the initial Sales Quarter, Abbott shall give
VIVUS its then current best forecast of the quantity of Products that Abbott
will require from VIVUS during each of the next four (4) Sales Quarters. Abbott
shall break down the forecast for the first two such Sales Quarters of the
forecast by month and by SKU per Product.

5.3 Order and Acceptance. The forecast for the first Sales Quarter in each of
Abbott's rolling forecasts made pursuant to Article 5.2 above shall constitute
Abbott's firm order for that Sales Quarter, and all firm orders shall specify
delivery date(s) no less than ninety (90) days from the date of such firm order.
Abbott shall not increase or decrease its forecast (by SKU and in total), for
the second Sales Quarter in each of Abbott's rolling forecasts made pursuant to
Article 5.2 above, by more than twenty percent (20%). VIVUS shall accept all
firm orders from Abbott for quantities of Products up to and including one
hundred twenty percent (120%) of the quantity (by SKU and in total) of Products
previously forecasted by Abbott for such Sales Quarter, and shall use its best
efforts to accept all firm orders from Abbott for quantities of Products in
excess of that quantity of Products. Abbott shall not increase or decrease its
forecast, for the third Sales Quarter in each of Abbott's rolling forecasts made
pursuant to Article 5.2 above, by more than fifty percent (50%). VIVUS shall
accept all firm orders from Abbott for quantities of Products

                                 Page 13 of 55
<PAGE>   14

up to and including one hundred fifty percent (150%) of the quantity of Products
previously forecasted by Abbott for such Sales Quarter, and shall use its best
efforts to accept all firm orders from Abbott for quantities of Products in
excess of that quantity of Products. Once an order has been accepted by VIVUS,
then VIVUS shall be obligated to sell, and Abbott shall be obligated to
purchase, the ordered Products.

5.4 Invoices. VIVUS shall invoice Abbott for the Transfer Price in United States
dollars for the Products shipped. Abbott shall pay VIVUS such invoiced amount
within thirty (30) days from the date of the invoice.

5.5 Delivery. VIVUS shall deliver the Products to Abbott, FOB at VIVUS's
facilities located in Lakewood, New Jersey, USA. All shipping costs, liability,
ownership and logistics of Product beyond the Lakewood facility's loading dock
are the responsibility of Abbott.

5.6 Conflicting Terms and Conditions. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall govern,
notwithstanding any additional or inconsistent terms or conditions in Abbott's
form of purchase order or similar document or in VIVUS's acknowledgment,
invoice, or similar documents.

5.7 Post-Expiration Supply. In the event that this Agreement expires pursuant to
Article 17.1 below, and Abbott wishes to continue purchasing the Products from
VIVUS, the parties shall promptly negotiate in good faith the terms and
conditions of a supply agreement for the Products. The Supply Price shall not be
applicable to the sale and purchase of the Products under such separate supply
agreement.

ARTICLE 6 - SAMPLING, TESTING AND ANALYSIS

6.1 Certificate of Analysis. VIVUS shall test or cause to be tested each lot of
the Products pursuant to the Specifications before delivery to Abbott. Each test
shall set forth the items tested, specifications and test results in a
certificate of analysis for each lot delivered. VIVUS shall send or cause to be
sent such certificates to Abbott along with delivery of the Products. Abbott is
entitled to rely on such certificates for all purposes of this Agreement. Abbott
will perform any testing upon entry of the Products into the European Union, or
elsewhere in the Territory, that is necessary for the sale or distribution of
such Product in the territory.

6.2 Manufacturing Compliance.

    (A) On each certificate of analysis provided to Abbott pursuant to Article
        6.1 above, VIVUS shall provide or cause to be provided for each lot of
        the Products purchased a

                                 Page 14 of 55
<PAGE>   15

        statement which will certify that the lot of Products was manufactured
        in accordance with the Specifications and applicable current Good
        Manufacturing Practices ("cGMP") laws and/or regulations.

    (B) Notwithstanding VIVUS's obligation to provide such statement, within
        ninety (90) days of the Effective Date, VIVUS shall permit Abbott to
        inspect, or obtain permission for such inspection, during reasonable
        business hours and upon reasonable prior notice to VIVUS, those areas of
        the facilities where the Products are manufactured, stored, tested and
        handled and to manufacturing records of the Products manufactured by
        VIVUS and/or VIVUS's third-party contract manufacturer(s).

    (C) VIVUS shall advise Abbott promptly if an authorized agent of any
        governmental body in the Territory inspects any of the facilities
        concerning the Products. VIVUS shall promptly furnish to Abbott a copy
        of all material documents and/or written communications relating to such
        visit and the application of such visit to the Products, if any.

    (D) If any such governmental body inspection and/or document or
        communication described in Article 6.2(C) above gives rise to any
        changes in VIVUS's or VIVUS's third-party contract manufacturer(s)
        facilities or manufacturing processes, technical documentation or
        record-keeping relating to the Products (or in the facilities, processes
        or record-keeping of VIVUS's third-party contract manufacturer(s)),
        VIVUS shall advise Abbott of such changes no later than ninety (90) days
        prior to the date upon which such changes become effective; provided
        that, if VIVUS does not itself receive at least ninety (90) days prior
        notice of any such change, then VIVUS shall notify Abbott of such change
        promptly after receiving its own notice.

    (E) If VIVUS or VIVUS's third-party contract manufacturer(s) for any reason,
        other than under Article 6.2(D) above, makes any changes in its or their
        facilities or manufacturing processes, technical documentation or
        record-keeping relating to the Products, VIVUS shall advise Abbott of
        such changes no later than ninety (90) days prior to the date upon which
        such changes are to become effective. Such changes shall be deemed
        accepted by Abbott unless Abbott notifies VIVUS to the contrary within
        such ninety (90) day or other agreed period. If Abbott notifies VIVUS
        that Abbott does not accept such changes, then the parties shall
        promptly meet and mutually determine in good faith any modifications to
        such changes that should be made in

                                 Page 15 of 55
<PAGE>   16

        order to render such changes acceptable to Abbott. The parties
        acknowledge and agree that in considering or implementing any changes or
        modifications to changes being considered and/or made under this Article
        6.2, the parties shall act in such a manner as to avoid, as far as
        possible, any delay or interruption in the supply of Products to Abbott
        and in Abbott's ability to market and sell the Products in the
        Territory.

    (F) The parties acknowledge that the specific requirements, including time
        period, of Section 6.2 (D) and Section 6.2(E) above, may be modified in
        writing by the separate technical agreement referred to in Section 6.6
        below.

6.3 Defective Product. Abbott shall notify VIVUS in writing of any claim
relating to damaged, defective or nonconforming Products or any shortage in
quantity of any shipment of the Products within thirty (30) days of receipt of
such Products. If Abbott fails to give such written claim notice to VIVUS within
said thirty (30) day period, the Products shipped shall be deemed to be
conforming, not damaged nor defective at the time of delivery and shall be
deemed to be sufficient in quantity. If Abbott gives such written claim notice
to VIVUS within said thirty (30) day period, then Abbott and VIVUS shall, in an
appropriate manner to be agreed, jointly inspect the Products to see if claimed
nonconformity, damage or defect actually exists in the Products shipped. If
existence of claimed nonconformity, damage, defect or shortage is reasonably
verified through such inspection, VIVUS shall replace the rejected Products or
make up the shortage as soon as practicable but no later than ninety (90) days
after such verification, at no extra cost to Abbott, and shall make arrangements
with Abbott for the destruction of any rejected Products, at VIVUS's expense.

6.4 Discrepant Inspection Results. In the event of a discrepancy between
Abbott's and VIVUS's inspection results such that one party's results fall
within the Specifications and the other party's results fall outside the
Specifications, the parties shall cause an independent tester, mutually
acceptable to the parties, to perform comparative tests on samples of the
allegedly defective Products. The independent tester's results shall be final
and binding and the parties shall share equally in the cost of the independent
tester.

6.5 Specifications. The Specifications may be modified from time to time by
written agreement of the parties without the necessity of amending this
Agreement.

6.6 Technical Agreement. Within sixty (60) days, the respective manufacturing
groups of VIVUS and Abbott shall enter into a separate technical agreement, in a
format suitable for

                                 Page 16 of 55
<PAGE>   17

submission to the regulatory authorities in each country in the Territory,
recording the Specifications and Manufacturing Standards and measures to ensure
compliance with applicable regulations relating to production, storage,
transportation and release of the Products. Such Technical Agreement will also
further define, as appropriate, the specific requirements and timing for Section
6.2 (D) and Section 6.2 (E), above.

ARTICLE 7 - PATENTS

7.1 Patent Prosecution and Maintenance. To the extent it has the right to do so,
VIVUS shall, at its sole cost and expense, maintain any patent applications and
patents listed in Exhibit 1.8 and/or included in Licensed Patents, and shall
diligently prosecute any such patent applications and obtain all available
patent term extensions; provided that VIVUS may decide, subject to Abbott's
prior written consent (which consent shall not be unreasonably withheld or
delayed), not to prosecute certain of the Licensed Patents, or to cause or
permit certain of the Licensed Patents to lapse or become abandoned in the
Territory if, in VIVUS's reasonable commercial judgment, such decision would not
adversely affect Abbott's ability to exercise its rights and perform its
obligations under this Agreement. To the extent it does not have the right to
maintain such patent applications and patents, prosecute such patent
applications and obtain patent term extensions, VIVUS shall use its best efforts
to ensure that the third party who has the right to take such actions shall do
so. VIVUS shall keep Abbott informed on a quarterly basis and also on Abbott's
reasonable written request about the status of such patent applications and/or
patents, including but not limited to providing Abbott with copies of all
material documents relating to the prosecution and/or the maintenance of the
Licensed Patents in a timely manner so as to allow Abbott a reasonable
opportunity to review and comment on VIVUS's planned patent strategy.

ARTICLE 8 - DEVELOPMENT AND REGULATORY ISSUES

8.1 VIVUS Responsibilities. VIVUS shall be responsible for, and shall bear all
costs of, the following:

    (A) VIVUS shall be responsible for obtaining all Marketing Authorizations
        for the Products in Abbott's name in those countries in Europe which are
        listed on Exhibit 8.1 attached to this Agreement, including but not
        limited to conducting any clinical studies with the Products which may
        be necessary to obtain Marketing Authorization

                                 Page 17 of 55
<PAGE>   18

        for the Products, with labeling for the MUSE Product equivalent to the
        labeling in effect for the MUSE Product as of the Effective Date, and
        with labeling for the ALIBRA Product which the parties mutually
        negotiate with the applicable governmental authorities, and for
        maintaining such Marketing Authorizations until such Marketing
        Authorizations are transferred to Abbott. Promptly after the Effective
        Date, VIVUS shall transfer to Abbott all Marketing Authorizations in the
        Territory for the MUSE Product, and all Marketing Authorization
        applications in the Territory for the ALIBRA Product, as expeditiously
        as possible.

    (B) VIVUS shall provide to Abbott, as expeditiously as possible, any and all
        authorizations, assistance, information and/or materials in VIVUS's
        possession or control required by Abbott in order to enable Abbott to
        market and sell the Products in the Territory (including, but not
        limited to authorizations, assistance, information and/or materials
        relating to Regulatory Approval of the Products by the United States
        Food and Drug Administration and by the European Medicines Evaluation
        Agency, and to the Drug Master Files for the Products). To the extent
        that any material, information, data or documents required by Abbott are
        not in VIVUS's possession or control, VIVUS shall use reasonable efforts
        to obtain such material, information, data or documents for Abbott.

    (C) In fulfilling its obligations under this Agreement, VIVUS shall use its
        best efforts to ensure that the Products are entitled to and receive the
        maximum benefit of any regulatory market exclusivity periods or other
        safeguards or extensions of proprietary status, which are or may be
        applicable in the Territory.

    (D) VIVUS shall be responsible for filing trademark applications for, and
        for the maintenance and upkeep of, the Trademarks in the Territory.

8.2 Abbott Responsibilities. During the term of this Agreement, Abbott shall be
responsible for, and shall bear all cost of, the following:

    (A) Abbott shall be responsible for (i) maintaining all Marketing
        Authorizations obtained by VIVUS for the Products in the countries
        listed on Exhibit 8.1, once such Marketing Authorizations have been
        transferred to Abbott; (ii) obtaining all pricing and reimbursement
        approvals in Abbott's name for the Product in the countries listed on
        Exhibit 8.1; and (iii) obtaining and maintaining all Regulatory
        Approvals in Abbott's name, including but not limited to conducting any
        clinical studies with the Products

                                 Page 18 of 55
<PAGE>   19

        which may be necessary to obtain Marketing Authorization for the
        Products, for the countries in the Territory outside of the countries
        listed on Exhibit 8.1. Should Abbott in connection with the Products
        conduct clinical studies, the parties endeavor to work by consensus in
        the development of protocols for such clinical studies.

    (B) Abbott shall own all registrations and Regulatory Approvals for the
        Products in the Territory.

    (C) In fulfilling its obligations under this Agreement, Abbott shall use its
        best efforts to ensure that the Products are entitled to and receive the
        maximum benefit of any regulatory market exclusivity periods or other
        safeguards or extensions of proprietary status, which are or may be
        applicable in the Territory.

8.3 Pharmacovigilance. Promptly after the Effective Date, the respective
pharmacovigilance groups of VIVUS and Abbott shall enter into a separate
agreement covering adverse event information exchange relating to the Products.
Such agreement will permit the inclusion of the respective pharmacovigilance
groups of other third parties to whom VIVUS has granted or will grant (during
the term of this Agreement) a license under the VIVUS Technology to make, have
made, use and sell the Products in the United States or in the Janssen
Territory.

8.4 Regulatory Communications. Abbott and VIVUS shall promptly inform each other
of any material communications to or from governmental authorities or agencies
relating to the Products, including but not limited to providing each other
promptly with copies of any material written communications. With the exception
of product recalls, which are to be handled pursuant to Article 10 below, or
visits by governmental body to any of the facilities where the Products are
manufactured, which are to be handled pursuant to Article 6.2 above, and of
adverse event reporting, which is to be handled pursuant to Article 8.3 above,
the parties shall consult with each other regarding any issues raised in such
communications, and shall attempt in good faith to agree upon any action to be
taken or response to be made in connection with such communications. If the
parties are unable to agree within a reasonable time prior to when the action is
to be taken or the response is to be made the party responsible for obtaining
Marketing Authorization for the Product in the country in question shall decide
what action to take or response to make.

8.5 Improvements. In the event that development and/or regulatory work and/or
costs are required in order to commercialize an Improvement, the parties shall
negotiate in good faith to

                                 Page 19 of 55
<PAGE>   20

determine the development and/or regulatory strategy and work, and how to
allocate the costs therefor.

8.6 Future Product Development Committee. For each Future Product that becomes a
Product pursuant to Article 2.2 above, Abbott and VIVUS shall form a Development
Committee which shall be responsible for creating and implementing the clinical
development plan for such Future Product from Phase III forward, and for
creating and implementing the regulatory strategy for obtaining Marketing
Authorization for such Future Product in the European Countries set forth on
Exhibit 8.1 attached hereto, including the creation and management of the budget
for such clinical development of and regulatory strategy for such Future
Product. The Development Committee shall be organized and operated as set forth
in this Article 8.6.

    (A) The Development Committee shall consist of no more than six (6)
        individuals, an equal number of which shall be representatives,
        respectively, from Abbott and VIVUS, and shall be chaired alternatively
        on an annual basis by one (1) of the VIVUS representatives and by one
        (1) of the Abbott representatives. Each party's representatives on the
        Development Committee shall be an employee of such party and each shall
        have one (1) vote on any matter arising for decision by the Development
        Committee. Each party shall have the right, at any time, to designate by
        written notice to the other party, a replacement, on a permanent or
        temporary basis, for any of such party's members on the Development
        Committee.

    (B) The Development Committee shall endeavor to work by consensus. In the
        event of a deadlock in any vote on any issue to be decided by the
        Development Committee, the parties shall refer the deadlocked issue to
        VIVUS's Vice President of Research and Development and Abbott's
        International Division Vice President of Medical Affairs. These
        individuals shall attempt, promptly and in good faith, to resolve such
        issue amicably. If such issue remains deadlocked, the parties shall
        refer such issue to, respectively, the President of VIVUS, and the
        President of Abbott's International Division. Any issue remaining
        deadlocked after this last step shall be resolved through an Alternative
        Dispute Resolution ("ADR") procedure pursuant to Article 20.11 below.

                                 Page 20 of 55
<PAGE>   21

    (C) The Development Committee shall meet as necessary, in person or
        otherwise, as the parties shall agree, but no less than once per
        calendar quarter. The chairperson shall be responsible for scheduling
        and arranging such meetings and ensuring that all of the members or
        their designated replacements are able to attend. Each party shall bear
        its own costs, including travel costs, for its representatives on the
        Development Committee attending any meeting of the Development
        Committee.

    (D) Within sixty (60) days of a Future Product becoming a Product under this
        Agreement in accordance with Article 2.2 above, the parties shall reach
        written agreement, through the Development Committee, on the plan for
        the clinical development and regulatory work relating to such Future
        Product for the remainder of that calendar year ("Initial Period") and,
        separately, for the budget therefor. It is understood and agreed that
        any clinical development or regulatory work that had already begun by
        VIVUS at the time a Future Product becomes a Product under this
        Agreement in accordance with Article 2.2 above, will automatically
        become a part of the written agreement on the plan for the clinical
        development and regulatory work related to such Future Product including
        the budget therefor and will not require the approval of the Development
        Committee as long as this plan and a reasonable estimate of costs was
        provided to Abbott during the ninety (90) day evaluation period
        described in Article 2.2 (B) above. Following the Initial Period, at
        least ninety (90) days prior to January 1 of each year, the Development
        Committee will update such plan and budget therefor for the next
        calendar year. Each such plan and budget must be approved by the
        Development Committee, and by VIVUS's President and Abbott's
        International Division Vice President of Medical Affairs, such approval
        not to be unreasonably withheld, before the Development Committee may
        implement such plan and budget. Notwithstanding any other provision in
        this Agreement to the contrary, Abbott shall not be obligated to make
        any payments with respect to any clinical development work done in
        connection with any Future Product unless such work, and the budget
        therefor, was approved in accordance with this Article 8.6(D).

    (E) All applications for Regulatory Approval for such Future Product in the
        Territory shall

                                 Page 21 of 55
<PAGE>   22

        be made in Abbott's name and all Regulatory Approvals obtained in the
        Territory for such Future Product shall be owned by Abbott.

    (F) VIVUS shall bear the costs of all clinical development of such Future
        Product that are necessary to support the Marketing Authorization for
        such Future Product in the European Countries, except as provided
        otherwise expressly in Article 2.2(D) above.

    (G) Abbott shall bear the costs of, and make all final decisions with
        respect to, the regulatory strategy for all aspects of obtaining
        Regulatory Approval in the Territory.

    (H) At the written request of VIVUS, the Development Committee for a given
        Future Product shall be expanded to include VIVUS's other licensee(s),
        if any, for such Future Product outside the Territory that become a
        licensee after the Effective Date of this Agreement, for the sole
        purpose of making the clinical development of such Future Product as
        efficient as possible on a worldwide basis. Abbott and VIVUS intend that
        the Development Committee's discussions and activities shall comply at
        all times with applicable laws and regulations, including but not
        limited to applicable antitrust and/or competition law, and no
        commercial information shall be shared, or discussion of commercial
        issues shall be permitted. Each such additional VIVUS licensee shall
        have an equal number of members on the Development Committee as do VIVUS
        and Abbott respectively, and VIVUS shall ensure that each such
        additional VIVUS licensee complies with the Development Committee
        procedures as set forth in this Article 8.6. Abbott shall not be
        required, and VIVUS shall not be permitted, to share any clinical or
        other data generated by Abbott with such additional licensee(s) without
        Abbott's prior written consent and such consent will not be unreasonably
        withheld. Abbott shall not be required to pay any portion of the costs
        of any clinical studies or other clinical development that relate to any
        country or area outside the Territory, except as provided otherwise
        expressly in Article 2.2(D) above.

ARTICLE 9 - MARKETING AND SALES

9.1 Abbott Diligence. In addition to the items set forth in Article 3.1 above,
Abbott shall use its diligent efforts to market and/or sell the Products in the
Territory, consistent with the efforts that Abbott expends on pursuing
commercialization of Abbott's own products of similar market

                                 Page 22 of 55
<PAGE>   23

potential, including but not limited to products for the treatment of erectile
dysfunction, taking into consideration the proprietary or non-proprietary status
of the Products and determining, in Abbott's best commercial judgment, whether
and how to launch the Products in a given country of the Territory, and what if
any promotional tools are reasonably necessary or desirable in marketing and/or
selling the Products in the Territory. Abbott shall make any such launches and
utilize any such promotional tools at Abbott's own expense.

9.2 Missed Targets. In the event that the fee provided in Article 3.1(B) above
does not become payable by the end of the third Sales Year, or that the fee
provided in Article 3.1(C) above does not become payable by the end of the sixth
Sales Year, then VIVUS may terminate this Agreement upon thirty (30) days
written notice; provided that in either event, if Abbott's annual Net Sales are
at least (i) sixty percent (60%) of the amount specified in Article 3.1(B) or
(C) (as the case may be) in the European Countries listed in Exhibit 8.1 or (ii)
seventy-five percent (75%) of the amount specified in Article 3.1(B) or (C) (as
the case may be) in the Territory, as of the date of VIVUS's notice of
termination, then Abbott may, at its option, avoid termination by paying to
VIVUS an amount equal to the fee otherwise applicable under Article 3.1(B) or
(C) (as the case may be). If Abbott makes such payment within thirty (30) days
of the date of VIVUS's notice of termination, then such notice shall become null
and void, and this Agreement shall remain in full force and effect.

ARTICLE 10 - PRODUCT RECALL

10.1 Recall in the Territory. In the event that, in the Territory, (i) any
government authority issues a request, directive or order that a Product be
recalled, or (ii) a court of competent jurisdiction orders such a recall, or
(iii) Abbott and VIVUS jointly determine that a Product should be recalled,
Abbott shall take all appropriate corrective actions. If such recall results
from any cause or event attributable solely to VIVUS's negligence or fault,
VIVUS shall be responsible for the direct expenses of the recall. If such recall
results from any cause or event attributable solely to Abbott's negligence or
fault, Abbott shall be responsible for the direct expenses of the recall. If
such recall results from any other cause or event (including attribution to the
negligence or fault of both VIVUS and Abbott), the parties shall share equally
the direct expenses of the recall. For the purposes of this Agreement, the
direct expenses of recall shall include, without limitation, the expenses of
notification and return of the recalled Products and

                                 Page 23 of 55
<PAGE>   24

Abbott's costs for the Products, and shall not include the cost of any relaunch
by Abbott of the Products in the Territory subsequent to a recall.

10.2 Recall Outside the Territory. In the event that, outside the Territory, (i)
any government authority issues a request, directive or order that a Product be
recalled, or (ii) a court of competent jurisdiction orders such a recall, or
(iii) VIVUS (or its Affiliates or sublicensees, as the case may be) decides that
the Products should be recalled, VIVUS shall notify Abbott no later than five
(5) business days prior to the effective date of such recall, and shall provide
Abbott with all information and assistance as Abbott may reasonably request in
order to enable Abbott to determine any appropriate actions relating to the
Products in the Territory arising from such recall.

ARTICLE 11 - REPRESENTATIONS AND WARRANTIES

Each party hereby represents and warrants for itself as follows:

11.1 Organized. It is a corporation duly organized, validly existing and is in
good standing under the laws of the jurisdiction of its incorporation, is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification and failure to have such would prevent it
from performing its obligations under this Agreement and has all requisite
corporate power and authority to conduct its business as now being conducted, to
own, lease and operate its properties and to execute, deliver and perform this
Agreement.

11.2. Due Execution. The execution, delivery and performance by it of this
Agreement have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of its stockholders, (ii)
violate any provision of any law, rule, regulation, order, writ, judgement,
injunction, decree, determination or award presently in effect having
applicability to it or any provision of its charter or by-laws, or (iii) result
in a breach of or constitute a default under any material agreement, mortgage,
lease, license (including any license from a third party which is necessary for
the full performance of this Agreement), permit or other instrument or
obligation to which it is a party or by which it or its properties may be bound
or affected.

11.3 No Third Party Approval. No authorization, consent, approval, license,
exemption of, or filing or registration with, any court or governmental
authority or regulatory body (other than health regulatory authorities) is
required for the due execution, delivery or performance by it of this Agreement,
except as provided herein.

                                 Page 24 of 55
<PAGE>   25

11.4 Binding Agreement. This Agreement is a legal, valid and binding obligation
of such party, enforceable against it in accordance with its terms and
conditions. It is not under any obligation to any person, contractual or
otherwise, that is in conflict with the terms of this Agreement. 11.5 Full
Disclosure. Each Party has disclosed to the other in good faith all material
information relevant to the subject matter of this Agreement and to such party's
ability to observe and perform its obligations hereunder. VIVUS further warrants
that it has disclosed to Abbott all material information of which it is aware
necessary or appropriate to evaluate the Licensed Patents, the safety and
efficacy of the Products, and VIVUS manufacturing capacity for the Products.
Such disclosure includes information contained in publicly available filings
with the Securities & Exchange Commission.

ARTICLE 12 - COVENANTS, REPRESENTATIONS AND WARRANTIES OF VIVUS

VIVUS covenants, represents and warrants to Abbott that:

12.1 Agreements. The only agreements in existence as of the Effective Date under
which VIVUS has acquired rights to Licensed Patents are listed in Exhibit 12.1
attached to this Agreement ("Third Party Licenses"). All rights with respect to
Licensed Patents referenced in Exhibit 12.1 as patents for which "Place" or
"Place, et al" are listed as inventor are either included in the license from
Alza or have otherwise been transferred to VIVUS and are owned by VIVUS. The
"Voss Patents," (collectively, the Licensed Patents, rights and technology
granted to (i) Ortho Pharmaceutical Corporation by Gene A. Voss and Alan C.
Eichler dated January 4, 1991, and assigned to VIVUS by Assignment from Ortho
Pharmaceutical Corporation dated January 9, 1992, and (ii) VIVUS by Gene A. Voss
and Alan C. Eichler dated December 28, 1992) are not necessary to use,
manufacture, have manufactured, sell, or have sold Products in the Territory,
and Abbott's use, manufacture, have manufactured, use, sale and have sold of
Products in the Territory will not infringe the Voss Patents. To the best of the
knowledge of VIVUS as of the Effective Date, and other than as set forth above
with respect to the Voss Patents, the Licensed Patents and Third Party Licenses
are the only patents, know-how and technology necessary to make, have made, use
and sell the Products.

                                 Page 25 of 55
<PAGE>   26

12.2 VIVUS Obligations. VIVUS covenants, represents and warrants to Abbott with
respect to the Third Party Licenses that (i) VIVUS and its Affiliates will fully
comply with all of VIVUS's covenants and obligations thereunder, to the extent
material to Abbott's rights under this Agreement, (ii) the Third Party Licenses
are in full force and effect, not having been amended, other than as set forth
in Exhibit 12.1 attached to this Agreement, (iii) VIVUS and its Affiliates have
received no oral or written notification of any alleged breach or default by
VIVUS and/ or its Affiliates (iv) VIVUS and its Affiliates are not aware of any
breach or default thereof by any third party, (v) VIVUS has the full right and
authority to sublicense VIVUS and its Affiliates' rights to Abbott, and (vi)
VIVUS and its Affiliates will not terminate, or otherwise amend the Third Party
Licenses, in any manner which would materially adversely affect Abbott's rights
under this Agreement.

12.3 Specifications. All quantities of the Products will comply with, and VIVUS
shall only release Products for shipment to Abbott which comply with (i) all
specifications of the Products (respectively as to the MUSE Product and the
ALIBRA Product) in the Marketing Authorization applications approved by the
regulatory authorities in the respective countries of the Territory, (ii) all
Specifications, and (iii) all applicable legal and regulatory requirements
relating to the manufacture of the Products for sale in the Territory, including
but not limited to Good Manufacturing Practices.

12.4 Quality of Starting Materials and Packing Materials. All starting materials
and packaging materials used in the manufacture of each of the Products shall
comply with the applicable Specifications and the Manufacturing Standards (as
defined below).

12.5 Current Good Manufacturing Practices ("cGMP") /Regulatory Requirements. All
manufacturing and quality control methods utilized by VIVUS in the manufacture
of the Products shall be carried out according to the procedures and
requirements set forth in the then-current version of the VIVUS Site Master File
for the Medicines Control Agency, or the Site Master File for Janssen
International to the extent that any country listed in Exhibit 1.7 becomes a
part of the Territory in accordance with Article 2.1(B) above, with respect to
each such Product, and (as to each Product) in accordance with all applicable
rules governing medicinal products and/or medical devices in the Good
Manufacturing Practice for medicinal products

                                 Page 26 of 55
<PAGE>   27

and/or medical devices and regulations issued by the health regulatory
authorities in the countries of the Territory for which such Product is to be
sold as in effect at the time and the applicable standards in effect at the time
(collectively, the "Manufacturing Standards").

12.6 Documentation. VIVUS shall keep and maintain, for the approved shelf life
of each Product plus two (2) years (i) reference samples and quality control
records for each batch of starting materials and packaging material used in the
manufacture of the Products, and (ii) manufacturing and quality control records
for each batch of the Products. Each shipment of the Products shall be
accompanied by the following written documentation: (i) the date of manufacture,
(ii) delivered amount of Product units, (iii) a certificate of analysis pursuant
to Article 6.

12.7 Abbott Right of Inspection. Following Abbott's initial facilities and
records inspection as provided in Article 6.2(B) above, VIVUS shall, upon
written request of Abbott, permit Abbott's authorized representative to inspect
the following: (i) all manufacturing and quality control records for all
manufacture of the Products, and (ii) quality control records of all starting
materials used in the manufacture of each of the Products.

12.8 Compliance with Laws and Regulations. All Product delivered to Abbott
pursuant to this Agreement will, to the best of VIVUS's knowledge, at the time
of such delivery not be adulterated or misbranded within the meaning of
applicable laws and regulations, and will not be an article which may not, under
the provisions of such applicable laws and regulations, be introduced in
commerce.

12.9 Shelf Life. Each lot of the Products delivered pursuant to this Agreement
will continue until the applicable expiration date, to conform to the
Specifications. At the time of delivery to Abbott, each lot of the Product
delivered pursuant to this Agreement shall be no more than four (4) months past
its manufacturing date.

12.10 Highest Quality. In manufacturing and releasing to Abbott the Products in
compliance with the Specifications, the Manufacturing Standards, and otherwise
as represented, warranted and covenanted by VIVUS in this Article 12, VIVUS
shall provide to Abbott under this Agreement Products which are of the same or
better quality as the Products marketed by VIVUS or its licensee(s) outside the
Territory, and which meet any other requirements imposed by the relevant
government authorities for the marketing and sale of the Product in the
Territory.

                                 Page 27 of 55
<PAGE>   28

12.11 Patent Validity and Enforceability As of the Effective Date, VIVUS has no
knowledge or information that would materially impact the validity and/or
enforceability of the Licensed Patents and the Licensed Patents have not been,
and will not be, knowingly obtained through any activity, omission or
representation that would limit or destroy the validity of the Licensed Patents.

12.12 Legal Actions There are no actions pending, or, to the best of VIVUS's
knowledge as of the Effective Date, threatened before any court or other
tribunal or body relating to the Licensed Patents.

12.13 Complete Patents/Ownership Exhibit 1.8 lists all patents issued and patent
applications in existence on or before the Effective Date and, except for the
patents licensed to VIVUS, VIVUS is named in the patents and patent applications
listed in Exhibit 1.8 and all inventors named therein have assigned, or are
under obligation to assign, to VIVUS all of their right, title and interest in
the inventions claimed. None of the Licensed Patents as of the Effective Date
has lapsed by reason of abandonment or nonpayment of annuities.

12.14 VIVUS-Astra Agreement. VIVUS represents, warrants and covenants to Abbott
that VIVUS and Astra have mutually agreed to terminate the Astra Agreement,
independent of any action by Abbott, and that VIVUS shall use its best efforts,
in accordance with applicable law and not in violation of any contractual
obligations it may have toward Astra AB, to enable Abbott to exercise the
exclusive license granted under this Agreement without restrictions relating to
any Astra AB rights, as expeditiously as possible.

ARTICLE 13 - FORCE MAJEURE

Upon occurrence of an event of force majeure, the party affected shall promptly
notify the other party in writing, setting forth the details of the occurrence,
its expected duration and how that party's performance of its obligations under
this Agreement is affected. The affected party shall resume the performance of
its obligations as soon as practicable after the force majeure event ceases. If
a party's performance of any obligation under this Agreement is significantly
hindered or is prevented by an event of force majeure for more than six (6)
months, whether or not consecutive, in any twelve (12) month period, then the
other party may terminate this Agreement upon thirty (30) days' notice.

ARTICLE 14 - ALLOCATION OF SUPPLY

                                 Page 28 of 55
<PAGE>   29

14.1 Allocation of Supply. In the event of VIVUS's inability for any reason to
supply the Products ordered by Abbott, VIVUS shall allocate its available supply
between Abbott, VIVUS and VIVUS's licensee(s) outside the Territory on a fair
and equitable basis based on a pro-rata share of worldwide Product sales for the
six (6) months preceding and the forecasted worldwide Product sales for the next
six (6) months following such allocation. If VIVUS is unable to supply ninety
percent (90%) of the Products (on a Product-by-Product basis) ordered by Abbott
and accepted by VIVUS pursuant to Articles 5.3, 5.5 and 5.6 of this Agreement
for a total of four (4) Months, whether or not consecutive, in any consecutive
twelve (12) Month period, Abbott may at its sole option: (i) forgo the
quantities ordered that VIVUS is unable to supply; (ii) take delivery within a
reasonable period of time after VIVUS becomes able to supply the quantities
ordered; or (iii) make or have a third party make, or permit VIVUS to have a
third party (approved by Abbott) make, the Product that VIVUS fails to supply.

14.2 Quality Assurance. In the event that an inspection or report by an
authorized agent of a governmental agency in the Territory reveals that VIVUS's
(or VIVUS's third-party contractor's) facilities and processes for manufacturing
the Products do not comply with applicable laws and regulations, including
without limitation Good Manufacturing Practices, and such lack of compliance
results in VIVUS's inability to fulfill its obligations to Abbott under this
Agreement, then Abbott may, at its sole option, make or have a third party make,
or permit VIVUS to have a third party (approved by Abbott) make, the Products
that VIVUS is not able to supply.

14.3 Right to Manufacture Product. In the event Abbott selects option 14.1(iii)
and/or option 14.2 above, then Abbott shall have the right to make and/or have a
third party make Product and such right shall continue in effect until such time
as VIVUS provides Abbott not less than six (6) months notice and demonstrates
that it is able to adequately supply Abbott's reasonable requirements of Product
in the Territory and VIVUS shall transfer to Abbott or to Abbott's or VIVUS's
designated third party manufacturer all information, assistance, materials and
authorizations useful and necessary with respect to the manufacture, storage and
shipment of the Products, in a timely manner so as to avoid any delay or
interruption in supply of the Products to Abbott. VIVUS shall reimburse Abbott
for up to (***) of Abbott's actual, verified out-of-pocket start-up costs
incurred by Abbott to manufacture Product under this Article 14.3. Abbott shall
pay to VIVUS a royalty on the Net Sales of such Products that are manufactured
under this Article 14.3 equal to the greater of (i) the Supply Price pursuant to
Article 4.2 above less

                                 Page 29 of 55
<PAGE>   30

Abbott's actual cost of obtaining such Product from a third party or its
variable cost (includes direct labor and material and all overhead that is
directly related to the manufacture of such Product and specifically excludes
fixed overhead items such as facilities rent, depreciation, common utilities,
taxes and insurance, etc.) to manufacture such Product and, (ii) (***) of Net
Sales of such Product.

ARTICLE 15 - TRADEMARKS

15.1 Trademark Rights. VIVUS hereby grants to Abbott the exclusive right,
exclusive even as to VIVUS, to use the Trademarks in connection with the
Products in the Territory during the term of this Agreement. Abbott acknowledges
that such Trademarks shall be and are the sole property of VIVUS. In the event
that VIVUS decides to divest itself of the Trademarks, VIVUS shall assign such
Trademarks in the Territory to Abbott upon Abbott's written request.

15.2 Electronic Address. VIVUS hereby grants to Abbott a non-exclusive right to
use VIVUS's registered electronic address, www.vivus.com, for the purpose of
linking electronic users with Abbott's relevant web pages, web sites or other
electronic addresses relating to the Product in the Territory.

15.3 Abbott's Own Mark. In the event that Abbott is unable to use the Trademarks
in connection with the Products in the Territory, for legal, regulatory or
cultural reasons, Abbott may elect to use trademarks of its own choosing in
connection with the Products in the Territory, after consultation with VIVUS,
instead of the Trademarks. VIVUS acknowledges that such trademarks shall be and
are the sole property of Abbott, and that the cost of adoption and registration
of such trademarks shall be borne by Abbott.

ARTICLE 16 - INFRINGEMENT

16.1 Third Party Infringement. Each party will notify the other party if it
becomes aware of the activities of any third party, which are believed to
infringe any of the Licensed Patents or the Trademarks. The parties shall
consult as to potential strategies against the alleged infringer, including but
not limited to litigation strategy.

16.2 Litigation.

    (A) If the efforts of the parties are not successful in abating the alleged
        infringement, then VIVUS shall have the right, but not the obligation,
        to bring an appropriate suit or action against such infringement, at its
        own expense. Abbott agrees to cooperate

                                 Page 30 of 55
<PAGE>   31

        in any such infringement action and agrees to execute all papers and
        perform such other acts as may be reasonably requested by Abbott, at
        VIVUS's expense. VIVUS shall consult with Abbott and take into account
        Abbott's recommendations regarding the conduct of such action, provided
        that VIVUS shall have full right and authority to determine the strategy
        and tactics for such action and to settle, consent to judgment, or
        otherwise resolve any such action or suit. The provisions of the
        foregoing notwithstanding, no such resolution shall be binding on Abbott
        without its prior written consent (which consent shall not be
        unreasonably withheld) unless such resolution does not (i) impose any
        liability, loss, cost or obligation upon Abbott and (ii) adversely
        affect Abbott's rights under this Agreement.

    (B) If VIVUS does not elect to bring suit against the alleged infringer,
        Abbott shall have the right, but not the obligation, to bring an
        appropriate suit or action against such infringer in the Territory, at
        Abbott's own expense. VIVUS agrees to cooperate in any such infringement
        action and agrees to execute all papers and perform such other acts as
        may be reasonably requested by Abbott (including but not limited to
        consent to be joined as a nominal party plaintiff in such action), at
        Abbott's expense. Abbott shall consult with VIVUS and take into account
        VIVUS's recommendations regarding the conduct of such action, provided
        that Abbott shall have full right and authority to determine the
        strategy and tactics for such action and to settle, consent to judgment,
        or otherwise resolve any such action or suit. The provisions of the
        foregoing notwithstanding, no such resolution shall be binding on VIVUS
        without its prior written consent (which consent shall not be
        unreasonably withheld) unless such resolution does not (i) impose any
        liability, loss, cost or obligation upon VIVUS and (ii) adversely affect
        VIVUS's rights under this Agreement.

    (C) If VIVUS or Abbott brings an infringement action pursuant to this
        Article 16, any amount recovered in any action or suit against a third
        party infringer shall be allocated as follows: first, to the party
        bringing such action in order to reimburse such party for the costs and
        expenses of such action; second, with respect to any remaining amount,
        sixty percent (60%) of that portion of such amount resulting from
        infringement within the Territory to Abbott, and the rest of any
        remaining amount to VIVUS.

                                 Page 31 of 55
<PAGE>   32

16.3 Alleged Infringement of Third Party Intellectual Property.

    (A) VIVUS shall indemnify and hold Abbott harmless against any judgment,
        damage, loss, cost or other expense (including legal fees) resulting
        from any claim or suit alleging infringement of any patent or trademark
        owned by a third party arising from Abbott's or its Affiliates' or
        sublicensees' use or sale of the Products and/ or any Improvements and/
        or use of any of the Trademarks in the Territory. Abbott shall promptly
        give notice to VIVUS of any such claim or suit, and VIVUS shall have
        full control over the defense of such claim or suit; provided that
        Abbott shall have the right to participate, at its own expense, with
        counsel of its own choosing, in such defense. Abbott shall provide to
        VIVUS such reasonable assistance at VIVUS's expense as VIVUS may, from
        time to time, reasonably request. VIVUS, at its option and expense, may
        dispose of such claim or may conduct the defense of such suit. If Abbott
        becomes obligated to make any payment, including but not limited to
        royalties and/ or damages, to any third party for patent, trademark or
        other intellectual property infringement allegedly attributable to the
        Products, in order to use and sell the Products in the Territory, such
        payments shall be creditable against Abbott's purchases of the Products,
        which would otherwise be payable to VIVUS hereunder. Abbott shall use
        its best efforts to minimize its third-party payment obligations under
        this circumstance. VIVUS shall not dispose of any such claim or suit by
        agreement, in any fashion which causes Abbott to be enjoined or
        otherwise prohibited from using or selling the Products in any country
        or countries of the Territory, without Abbott's prior written consent.

    (B) If Abbott is enjoined or otherwise prohibited from using or selling the
        Products in a given country in the Territory as a result of alleged
        patent or trademark infringement, then Abbott may exclude such country
        from the Territory upon written notice within thirty (30) days of the
        date of such final, permanent, unappealable or unappealed injunction or
        other order. If Abbott is enjoined or otherwise prohibited from making,
        having made, using or selling any of the Products and/or any of the
        Improvements and/or from using any of the Trademarks in all or a
        significant portion of the Territory as a result of alleged patent or
        trademark infringement, then, at Abbott's sole discretion, Abbott may
        exclude such portion of the Territory from this Agreement, or terminate
        this Agreement upon

                                 Page 32 of 55
<PAGE>   33

        written notice within thirty (30) days of the date of such final,
        permanent, unappealable or unappealed injunction or other order.

ARTICLE 17 - TERM AND TERMINATION

17.1 Term. The term of this Agreement shall commence on the Effective Date and
shall, unless earlier terminated pursuant to this Article 17 or other express
termination provisions in this Agreement, expire on a country-by-country and
Product-by-Product basis upon the later to occur of (i) the expiration of the
last Valid Claim that would be infringed by the manufacture, sale or use of the
Product in such country, and (ii) the tenth (10th) anniversary of the First
Commercial Sale of such Product. Upon the expiration of this Agreement and upon
Abbott's request the parties shall negotiate transfer of all rights to the
Trademarks in the Territory to Abbott.

17.2 Breach. Either party may, in addition to any other remedies available to it
by law or in equity, terminate this Agreement upon sixty (60) days' written
notice in the event that the other party commits a material breaches of this
Agreement and fails to cure such breach within sixty (60) days of notice of the
breach. The party giving notice of breach may withhold any payments otherwise
due and owing to the breaching party, to be used as a setoff against any loss or
damage arising from the breach, and said withholding shall not constitute breach
of this Agreement. Any amounts so withheld shall be deposited by the withholding
party into an interest-bearing escrow account. If the breaching party cures the
breach within the sixty (60) day cure period and this Agreement is not
terminated, then the withholding party shall promptly pay to the other party the
withheld amount, less that portion of such amount which was applied as a setoff.
Notwithstanding the foregoing provision, if Abbott gives notice of breach to
VIVUS, Abbott may withhold other payments pursuant to this Article 17.2 but
shall not be entitled to withhold payment for Product actually ordered by and
delivered to Abbott pursuant to Article 5 of this Agreement.

17.3 Insolvency or Bankruptcy. Either party may, in addition to any other
remedies available to it by law or in equity, terminate this Agreement, upon
thirty (30) days' written notice to the other party in the event the other party
shall have become insolvent or bankrupt, or shall have made an assignment for
the benefit of its creditors, or there shall have been appointed a trustee or
receiver of the other party or for all or a substantial part of its property, or
any case or proceeding shall have been commenced or other action taken by or
against the other party in bankruptcy or

                                 Page 33 of 55
<PAGE>   34

seeking reorganization, liquidation, dissolution, winding-up, arrangement,
composition or readjustment of its debts or any relief under any bankruptcy,
insolvency, reorganization or other similar act or law of any jurisdiction now
or hereinafter in effect.

17.4 Serious Events. Should there occur serious and unexpected events which,
from a reasonable pharmaceutical company's point of view, would make it
impossible or impracticable to pursue the commercialization of the Products,
including but not limited to a serious adverse event associated with the
Products, either party may, with full consultation with the other party,
terminate this Agreement upon thirty (30) days' written notice. Termination by a
party in good faith pursuant to this Article 17.4 shall not, in itself,
constitute a basis for any claim for compensation or other remedies by the other
party.

17.5 Lack of Commercial Viability. Abbott may terminate this Agreement, on a
country-by-country and Product-by-Product basis, upon one hundred eighty (180)
days' notice if, in Abbott's reasonable commercial judgement, the Product(s) are
not commercially viable in such country. In the event that Abbott terminates
this Agreement for one but not both of the Products in a country of the
Territory under this Article 17.5, all rights to use and sell such Product in
such country shall revert to VIVUS as of the effective date of such termination,
and Abbott shall ensure that all registrations and Regulatory Approvals for such
Product in such country shall be promptly assigned to VIVUS. In the event that
Abbott terminates this Agreement for both Products in a country of the Territory
under this Article 17.5, such country shall cease to be part of the Territory
for all purposes of this Agreement, all rights to use and sell Products in such
country shall revert to VIVUS as of the effective date of such termination, and
Abbott shall ensure that all registrations and Regulatory Approvals for the
Products in such country shall be promptly assigned to VIVUS. Termination by
Abbott in good faith pursuant to this Article 17.5 shall not, in itself,
constitute a basis for any claim for compensation or other remedies by the other
party.

17.6 Change of Control or Ownership. Either party may terminate this Agreement
upon thirty (30) days' written notice if the ownership or control of at least
fifty percent (50%) of the assets or voting securities of the other party are
transferred and, in the non-changing party's reasonable judgement, the other
party's new owner or controlling entity is a competitor of the non-changing
party in the field of erectile dysfunction.

17.7 Survival of Liability. Except as expressly provided otherwise in this
Agreement, termination, expiration, cancellation or abandonment of this
Agreement through any means and

                                 Page 34 of 55
<PAGE>   35

for any reason shall not relieve the parties of any obligation accruing prior
thereto and shall be without prejudice to the rights and remedies of either
party with respect to any antecedent breach of any provision of this Agreement.

17.8 Remaining Inventory. Abbott shall maintain a normal level of inventory of
the Products prior to expiration or termination of this Agreement, and shall
have a period of six (6) months from the date of termination of this Agreement
during which it may sell its remaining inventory of Products, provided it sell
such inventory in a manner substantially similar to the manner in which it was
selling Products prior to the termination.

17.9 Survival. Upon expiration or termination of this Agreement, all rights and
obligations of the parties under this Agreement shall terminate except those
rights and obligations described in Articles 1, 4.6, 10.1, 12.6, 17, 18, 19 and
20.

ARTICLE 18 - INDEMNITY

18.1 By VIVUS. In addition to indemnification expressly provided elsewhere in
this Agreement, VIVUS shall indemnify, defend and hold Abbott, its directors,
employees, agents and representatives (including but not limited to Abbott's
Affiliates and sublicensees) harmless from and against all claims, causes of
action, settlement costs (including but not limited to reasonable attorney's
fees and expenses) losses or liabilities of any kind which:

    (A) arise from or are attributable to any negligent act or omission or
        willful misconduct on the part of VIVUS or its Affiliates, or its or
        their directors, employees, agents or representatives relating to any of
        VIVUS's obligations under this Agreement, including but not limited to
        any breach of a representation or warranty;

    (B) arise from or are attributable to a defect in the MUSE Product or in the
        manufacture of a Product, or from the failure of a Product to meet the
        Specifications and the Manufacturing Standards, including any theory of
        strict liability or any other theory of product liability, and which in
        either case are not otherwise attributable to any negligent act or
        omission or willful misconduct on the part of Abbott, its directors,
        employees, agents or representatives (including, but not limited to,
        Abbott's Affiliates); or

    (C) arise from or are attributable to any act or omission of VIVUS or Astra
        AB or, respectively, its Affiliates, or its or their directors,
        employees, agents or

                                 Page 35 of 55
<PAGE>   36

        representatives relating to the Astra Agreement, or any act or omission
        of Abbott or its Affiliates, or its or their directors, employees,
        agents or representatives which allegedly causes harm or damage or loss
        of rights to Astra AB or its Affiliates, or its or their directors,
        employees, agents, shareholders or representatives in connection with
        the Astra Agreement.

18.2 By Abbott. In addition to indemnification expressly provided elsewhere in
this Agreement, Abbott shall indemnify, defend and hold VIVUS, its directors,
employees, agents and representatives harmless from and against all claims,
causes of action, settlement costs (including but not limited to reasonable
attorney's fees and expenses) losses or liabilities of any kind which:

    (A) arise from or are attributable to any negligent act or omission or
        willful misconduct on the part of Abbott, its directors, employees,
        agents or representatives relating to any of its obligations under this
        Agreement; or

    (B) arise from or are attributable to the storage, use, sale, marketing and
        promotion of the Products by Abbott in the Territory and which in either
        case are not otherwise attributable to a defect in the MUSE Product or
        in the manufacture of a Product or the failure of a Product to meet the
        Specifications and Manufacturing Standards as set forth in Article
        18.1(B) above, and which in either case are not otherwise attributable
        to any negligent act or omission or willful misconduct on the part of
        VIVUS, its directors, employees, agents or representatives

18.3 Condition of Indemnification. If either party expects to seek
indemnification under this Article, it shall promptly give notice to the
indemnifying party of the basis for such claim of indemnification. If
indemnification is sought as a result of any third party claim or suit, such
notice to the indemnifying party shall be within fifteen (15) days after receipt
by the other party of such claim or suit (if to Abbott, notice to Abbott
Laboratories, Risk Management, D-317, 100 Abbott Park Road, Abbott Park, IL
60064-3500, with copy to the Abbott persons identified in Article 20.5 below; if
to VIVUS, notice as set forth in Article 20.5 below); provided, however, that
the failure to give notice within such time period shall not relieve the
indemnifying party of its obligation to indemnify unless it shall be materially
prejudiced by the failure. The indemnifying party shall have full control over
the defense of such claim or suit; provided that the indemnified party shall
have the right to participate, at its own expense, with counsel of its own
choosing, in such defense. The indemnified party shall fully cooperate with the

                                 Page 36 of 55
<PAGE>   37

indemnifying party in the defense of all such claims or suits. The indemnifying
party shall make no offer of settlement, settlement or compromise without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld) unless such settlement fully releases the indemnified
party without any liability, loss, cost or obligation.

18.4 Term of Indemnification. The obligations of the parties set forth in this
Article 18 shall apply during the term of this Agreement and for a period of
five (5) years after the date of termination in whole or expiration of this
Agreement or any extension thereof.

ARTICLE 19 - CONFIDENTIALITY AND DISCLOSURE

19.1 Confidentiality. Neither party shall use or disclose any Confidential
Information received by it pursuant to this Agreement without the prior written
consent of the other. This obligation shall continue for a period of seven (7)
years after expiration or termination of this Agreement.

19.2 Disclosure. Nothing contained in this Article shall be construed to
restrict the parties from disclosing Confidential Information as required: (i)
for regulatory, tax, securities or customs reasons, (ii) by court or other
government order, (iii) for confidential audit purposes, or, (iv) from using
such Confidential Information as is reasonably necessary to perform acts
permitted by this Agreement, including the registration, marketing, sale or use
of the Product; provided that the disclosing party shall, in the event of
disclosure under Articles (i) or (ii) above, provide the other party with not
less than five (5) business days notice prior to disclosure (except where the
disclosing party itself receives less than five (5) business days prior notice,
in which case the disclosing party shall immediately notify the other party),
and the disclosing party shall fully cooperate with the other party to the
extent permitted by law, so that the other party may make any objections and/or
secure any protective provisions it deems reasonably necessary.

ARTICLE 20 - MISCELLANEOUS

20.1 Assignment. This Agreement may not be assigned or otherwise transferred,
nor, except as expressly provided hereunder, may any right or obligation
hereunder be assigned or transferred by either party without the prior written
consent of the other party; provided, however, that either VIVUS or Abbott may,
without such consent, assign this Agreement and its rights and obligations
hereunder in connection with the transfer or sale of all or substantially all of
its assets, its merger or consolidation or any similar transaction, and that
Abbott may, without

                                 Page 37 of 55
<PAGE>   38

such consent, assign this Agreement and its rights and obligations hereunder to
one or more of its Affiliates. Any permitted assignee shall assume all
obligations of its assignor under this Agreement.

20.2 Sublicensees. In the event that Abbott grants sublicenses under Article 2,
Abbott shall ensure that such sublicensees shall abide by all the obligations of
Abbott contained in this Agreement to the extent that such obligations are
relevant to and applicable to such sublicensees.

20.3 Damages. Notwithstanding any provision in this Agreement to the contrary,
in no event shall a party hereto be liable to the other party for any indirect
or consequential damages, including but not limited to loss of profits or
business opportunity.

20.4 Severability. Each party intends not to violate any public policy,
statutory or common law, rule, regulation, treaty or decision of any government
agency or executive body thereof of any country or community or association of
countries. If any term or provision of this Agreement is held to be invalid,
illegal or unenforceable by a court or other governmental authority of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other term or provision of this Agreement, which shall remain in full force
and effect. The holding of a term or provision to be invalid, illegal or
unenforceable in a jurisdiction shall not have any effect on the application of
the term or provision in any other jurisdiction.

20.5 Notices. Any consent or notice required or permitted to be given or made
under this Agreement by one party to the other shall be in writing, delivered
personally or by facsimile (and promptly confirmed by personal delivery,
first-class mail or courier), first-class mail or courier, postage prepaid
(where applicable), addressed to the other party as shown below or to such other
address as the addressee shall have last furnished in writing to the addresser
and (except as otherwise provided in this Agreement) shall be effective upon
receipt by the addressee.

            If to VIVUS:       VIVUS International Limited
                               c/o VIVUS, Inc.
                               1172 Castro Street
                               Mountain View, CA  94040
                               Attention:  President
                               Fax:  (650)934-5356
                               cc:  Wilson, Sonsini,Goodrich & Rosati

                                 Page 38 of 55
<PAGE>   39

                           Attention:  Kenneth A. Clark
                           Fax:  (650)493-6811

        If to Abbott:      Abbott International, Ltd.
                           100 Abbott Park Road
                           Abbott Park, IL 60064-3500
                           Attention:  President, Abbott International Division
                           Fax:  (847)935-3260
                           cc:  Vice President, International Legal Operations
                           Fax: (847)938-1342

20.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, excluding its conflict of
laws provision. Application of the United Nations Convention On Contracts For
The International Sale Of Goods is hereby excluded.

20.7 Entire Agreement. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
superseded by this Agreement. Except as expressly provided elsewhere in this
Agreement, this Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by both parties hereto.

20.8 Headings. The captions to the Articles hereof are not a part of this
Agreement, but are merely guides or labels to assist in locating and reading the
Articles hereof.

20.9 Independent Contractors. It is expressly understood and agreed that VIVUS
and Abbott are independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. Neither
VIVUS nor Abbott shall have the authority to make any statement, representations
or commitments of any kind, or to take any action, which shall be binding on the
other, without the prior written consent of the party to do so.

20.10 Waiver. The waiver by either party of any right hereunder or of a failure
to perform or breach by the other party shall not be deemed a waiver of any
other right hereunder or of any other failure or breach whether of a similar
nature or otherwise.

20.11 Alternative Dispute Resolution. The parties agree that any dispute that
arises in connection with this Agreement, which cannot be amicably resolved by
the parties, shall be

                                 Page 39 of 55
<PAGE>   40

resolved by Alternative Dispute Resolution ("ADR") pursuant to the procedure set
forth in Exhibit 20.11 attached hereto.

20.12 Public Announcements. Except as required by law, in which case the
provisions of Article 19.2 shall apply, neither party shall make any public
announcement, statement, response to questions or other disclosure concerning
this Agreement nor the terms nor the subject matter hereof without the prior
written consent of the other party.

20.13 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

THEREFORE, the parties hereto have executed this Agreement as of the first day
above written.

ABBOTT INTERNATIONAL, LTD.                 VIVUS INTERNATIONAL, LTD.

By:_____________________________           By:_______________________________

Title:__________________________           Title:____________________________

Date:___________________________           Date:_____________________________

                                 Page 40 of 55
<PAGE>   41

                            GUARANTEE OF PERFORMANCE

            In order to induce Abbott to enter into the foregoing Agreement,
VIVUS, INC., a corporation organized under the laws of the state of Delaware and
having a principal place of business at 1172 Castro Street, Mountain View, CA
94040, and being the sole shareholder of VIVUS, hereby irrevocably and
unconditionally guarantees any and all obligations (including, without
limitation, any payment obligations) of VIVUS to Abbott, whether or not existing
or hereinafter arising pursuant to the foregoing Agreement (including, without
limitation, all agreements, grants, Undertakings, grants, licenses and
sublicenses now or hereafter entered into pursuant to the Agreement
(collectively, the "VIVUS Undertakings") or as such VIVUS Undertakings may be
hereinafter amended or modified (with or without notice to or consent of VIVUS
INC.).

            VIVUS INC. further agrees that that VIVUS Undertakings may be
extended, renewed, modified, amended or compromised in any way, with or without
notice to or consent of VIVUS INC.

            Notice of acceptance of the Guaranty and of the incurring of any
obligation or any default of the VIVUS Undertakings, as well as demand and
protest with respect to such VIVUS Undertakings and as well as any right to
challenge or dispute the validity and enforceability of this Guarantee, are
hereby waived by VIVUS INC.

            This Guaranty shall be an irrevocable, continuing, absolute and
unconditional guaranty of payment and performance by VIVUS pursuant to the VIVUS
Undertakings.

            VIVUS INC. represents, covenants and warrants to Abbott as follows,
upon which Abbott relies in acceptance of this Guaranty: that (i) VIVUS INC. is
the sole shareholder of all of issued and outstanding capital stock of VIVUS,
(ii) VIVUS INC. will benefit from the Agreement between VIVUS and Abbott, (iii)
VIVUS INC. has received good and valuable consideration for its execution,
delivery and performance of this Guaranty, and (iv) VIVUS INC. has executed and
delivered this Guaranty to Abbott.

            Notice to VIVUS INC. shall be given pursuant to the provisions of
Article 20.5 of the Agreement.

                                 Page 41 of 55
<PAGE>   42

            This Guaranty shall be governed by and construed in accordance with
the laws of the State of Delaware and shall take effect as an instrument under
seal.

            In the event of any dispute under this Guaranty, as to construction
or performance of this Guaranty or any of its provisions or otherwise, such
dispute shall be settled in accordance with Article 20.11 above, which is
incorporated herein by reference, substituting "VIVUS INC." for "VIVUS" in such
Article for purposes of this Guaranty. If an action to enforce this Guaranty is
undertaken, the party prevailing in such enforcement action shall be entitled to
recover its reasonable out-of-pocket expenses (including fees of outside
counsel) with respect to such action.

            VIVUS INC. shall not assign or transfer this Guaranty without the
prior written consent of Abbott.

            THEREFORE, VIVUS INC. executes this Guaranty under seal as of this
16th day of May 2000.

VIVUS, INC.
/s/ Leland F. Wilson
By: Leland Wilson
Title: President and Chief Executive Officer Date:_______________________

                                 Page 42 of 55
<PAGE>   43

                                                         Exhibit 1.7 (p. 1 of 2)

                                JANSSEN TERRITORY

<TABLE>
<CAPTION>
ADDENDUM 1097 TERRITORY                     ADDENDUM 1097                       DISTRIBUTION AGREEMENT
<S>                                         <C>                                 <C>
Afghanistan                                 Mongolia                            Antigua
Algeria                                     Morocco                             Aruba
Angola                                      Mozambique                          Bahamas
Armenia                                     Namibia                             Barbados
Azerbaijan                                  Nepal                               Bermuda
Bahrain                                     Nigeria                             Brunei
Bangladesh                                  North Korea                         Cambodia
Belarus                                     Oman                                Canada
Benin                                       Pakistan                            Cayman Islands
Bhutan                                      Qatar                               China
Bophuthatswana                              Russia                              Curacao
Botswana                                    Rwanda                              Dominican Republic
Burkina Faso                                Saudi Arabia                        Grenada
Burundi                                     Senegal                             Haiti
Cameroon                                    Seychelles                          Hong Kong
Central African Republic                    Sierra Leone                        Indonesia
Chad                                        Somalia                             Jamaica
Comoros                                     Sri Lanka                           Laos
Congo                                       Sudan                               Macau
Cote d'Ivorie                               Swaziland                           Malaysia
Djibouti                                    Syria                               Mexico
Egypt                                       Tajikistan                          Myanmar
Equatorial Guinea                           Tanzania                            Philippines
Eritrea                                     Togo                                Saint Martin
Ethiopia                                    Transkei                            Saint Vincent
Gabon                                       Tunisia                             Santa Lucia
Gambia                                      Turkmenistan                        Singapore
Georgia                                     Uganda                              South Africa
Ghana                                       Ukraine                             South Korea
Guinea                                      United Arab Emirates                Taiwan
Guinea Bissau                               Uzbekistan                          Thailand
India                                       Yemen                               Tortola
Iran                                        Zaire                               Trinidad
Iraq                                        Zambia                              Turks and Caicos Islands
Israel                                      Zansibar                            Vietnam
</TABLE>

                                 Page 43 of 55
<PAGE>   44

                                                         Exhibit 1.7 (p. 2 of 2)

ADDENDUM 1097 TERRITORY

ADDENDUM 1097 TERRITORY
Ivory Coast
Jordan
Kazachstan
Kenya
Krygyzstan
Kuwait
Lebanon
Lesotho
Liberia
Libya
Madagascar
Malawi
Mali
Mauritania

                                 Page 44 of 55
<PAGE>   45

                                                         Exhibit 1.8 (p. 1 of 8)

                                LICENSED PATENTS

                                      (***)

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

Ref. No.                  Title/Inventors                 Status
                                                          Serial and Patent Nos.
--------------------------------------------------------------------------------

                                 Page 45 of 55
<PAGE>   46

                                                         Exhibit 1.15 (p.1 of 2)

                                 SPECIFICATIONS
           MUSE(R) RELEASE AND SHELF-LIFE (REGULATORY) SPECIFICATIONS

                                      (***)

                                 Page 46 of 55
<PAGE>   47

                                                                       Exhibit 4

                                     PRICES

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                   VIVUS produces up   VIVUS produces      VIVUS produces      VIVUS produces      VIVUS produces
                   to (***) of         (***) up to         (***) up to         (***) up to         >(***) of Product*
                   Product*            (***) of Product*   (***) of Product*   (***) of Product*
----------------------------------------------------------------------------------------------------------------------
<S>                <C>                 <C>                 <C>                 <C>                 <C>
Sample Price per   (***)               (***)               (***)               (***)               (***)
unit of Product
----------------------------------------------------------------------------------------------------------------------
Minimum Supply     (***)               (***)               (***)               (***)               (***)
Price per unit
of Product **
----------------------------------------------------------------------------------------------------------------------
</TABLE>

* Total VIVUS worldwide unit production of finished Product in a calendar year
(not only VIVUS finished Product produced for Abbott)

** No Minimum Supply Price applies until after the first anniversary of the
First Commercial Sale in the Territory.

                                 Page 47 of 55
<PAGE>   48

                                                                     Exhibit 8.1

                               EUROPEAN COUNTRIES

COUNTRY
Austria
Belgium
Denmark
France
Finland
Germany
Greece
Ireland
Italy
Luxembourg
Netherlands
Portugal
Spain
Sweden
United Kingdom

                                 Page 48 of 55
<PAGE>   49

                                                                    Exhibit 12.1

                              THIRD PARTY LICENSES
                       AMENDMENTS TO THIRD PARTY LICENSES

1.         Assignment Agreement between VIVUS, Inc. and ALZA Corporation dated
           December 31, 1993.

2.         Assignment between Ortho Pharmaceutical Corporation ("Ortho") and
           VIVUS, Inc. dated June 9, 1992 (assigning to VIVUS Ortho's rights
           under three license agreements between Ortho and:

           (a)       AMSU Ltd. dated June 23, 1989;
           (b)       Kjell Holmquist AB dated June 26, 1989; and
           (c)       Gene A. Voss and Allen C. Eichler dated January 4, 1991.

3.         License Agreement between VIVUS, Inc. and Gene A. Voss and Allen C.
           Eichler, dated December 28, 1992 (amending and restating VIVUS'
           rights under the license agreement between Ortho and Voss and Eichler
           assigned to VIVUS from Ortho);

4.         Amendment between VIVUS, Inc. and AMSU, Ltd. dated April 22, 1992
           (amending the license agreement between Ortho and AMSU assigned to
           VIVUS from Ortho);

5.         Amendment between VIVUS, Inc. and AMSU, Ltd. dated July 3, 1992
           (amending the license agreement between Ortho and AMSU assigned to
           VIVUS from Ortho);

6.         Amendment between VIVUS, Inc. and Kjell Holmquist AB dated April 22,
           1992 (amending the license agreement between Ortho and AMSU assigned
           to VIVUS from Ortho); and

7.         Amendment between VIVUS, Inc. and Kjell Holmquist AB dated July 3,
           1992 (amending the license agreement between Ortho and AMSU assigned
           to VIVUS from Ortho).

                                 Page 49 of 55
<PAGE>   50

Exhibit 20.11 (p.1 of 5)

                         Alternative Dispute Resolution

                     The parties recognize that bona fide disputes as to certain
                     matters may arise from time to time during the term of this
                     Agreement which relate to either party's rights and/or
                     obligations. To have such a dispute resolved by this
                     Alternative Dispute Resolution ("ADR") provision, a party
                     first must send written notice of the dispute to the other
                     party for attempted resolution by good faith negotiations
                     between their respective presidents (or their designees) of
                     the affected subsidiaries, divisions, or business units
                     within twenty-eight (28) days after such notice is received
                     (all references to "days" in this ADR provision are to
                     calendar days).

                     If the matter has not been resolved within twenty-eight
                     (28) days of the notice of dispute, or if the parties fail
                     to meet within such twenty-eight (28) days, either party
                     may initiate an ADR proceeding as provided herein. The
                     parties shall have the right to be represented by counsel
                     in such a proceeding.

                     1. To begin an ADR proceeding, a party shall provide
                     written notice to the other party of the issues to be
                     resolved by ADR. Within fourteen (14) days after its
                     receipt of such notice, the other party may, by written
                     notice to the party initiating the ADR, add additional
                     issues to be resolved within the same ADR.

                     2. Within twenty-one (21) days following receipt of the
                     original ADR notice, the parties shall select a mutually
                     acceptable neutral to preside in the resolution of any
                     disputes in this ADR proceeding. If the parties are unable
                     to agree on a mutually acceptable neutral within such
                     period, either party may request the President of the CPR
                     Institute for Dispute Resolution ("CPR"), 366 Madison
                     Avenue, 14th Floor, New York, New York 10017, to select a
                     neutral pursuant to the following procedures:

                                (a) The CPR shall submit to the parties a list
                     of not less than five (5) candidates within fourteen (14)
                     days after receipt of the request, along with a Curriculum
                     Vitae for each candidate. No candidate shall be an
                     employee, director, or shareholder of either party or any
                     of their subsidiaries or affiliates.

                                 Page 50 of 55
<PAGE>   51

Exhibit 20.11 (p.2 of 5)

                                (b) Such list shall include a statement of
                     disclosure by each candidate of any circumstances likely to
                     affect his or her impartiality.

                                (c) Each party shall number the candidates in
                     order of preference (with the number one (1) signifying the
                     greatest preference) and shall deliver the list to the CPR
                     within seven (7) days following receipt of the list of
                     candidates. If a party believes a conflict of interest
                     exists regarding any of the candidates, that party shall
                     provide a written explanation of the conflict to the CPR
                     along with its list showing its order of preference for the
                     candidates. Any party failing to return a list of
                     preferences on time shall be deemed to have no order of
                     preference.

                                (d) If the parties collectively have identified
                     fewer than three (3) candidates deemed to have conflicts,
                     the CPR immediately shall designate as the neutral the
                     candidate for whom the parties collectively have indicated
                     the greatest preference. If a tie should result between two
                     candidates, the CPR may designate either candidate. If the
                     parties collectively have identified three (3) or more
                     candidates deemed to have conflicts, the CPR shall review
                     the explanations regarding conflicts and, in its sole
                     discretion, may either (i) immediately designate as the
                     neutral the candidate for whom the parties collectively
                     have indicated the greatest preference, or (ii) issue a new
                     list of not less than five (5) candidates, in which case
                     the procedures set forth in subparagraphs 2(a) - 2(d) shall
                     be repeated.

                     3. No earlier than twenty-eight (28) days or later than
                     fifty-six (56) days after selection, the neutral shall hold
                     a hearing to resolve each of the issues identified by the
                     parties. The ADR proceeding shall take place at a location
                     agreed upon by the parties. If the parties cannot agree,
                     the neutral shall designate a location other than the
                     principal place of business of either party or any of their
                     subsidiaries or affiliates.

                     4. At least seven (7) days prior to the hearing, each party
                     shall submit the following to the other party and the
                     neutral:

                                (a) a copy of all exhibits on which such party
                     intends to rely in any oral or written presentation to the
                     neutral;

                                (b) a list of any witnesses such party intends
                     to call at the hearing, and a short summary of the
                     anticipated testimony of each witness;

                                 Page 51 of 55
<PAGE>   52

Exhibit 20.11 (p.3 of 5)

                                (c) a proposed ruling on each issue to be
                     resolved, together with a request for a specific damage
                     award or other remedy for each issue. The proposed rulings
                     and remedies shall not contain any recitation of the facts
                     or any legal arguments and shall not exceed one (1) page
                     per issue.

                                (d) a brief in support of such party's proposed
                     rulings and remedies, provided that the brief shall not
                     exceed twenty (20) pages. This page limitation shall apply
                     regardless of the number of issues raised in the ADR
                     proceeding.

                     Except as expressly set forth in subparagraphs 4(a) - 4(d),
                     no discovery shall be required or permitted by any means,
                     including depositions, interrogatories, requests for
                     admissions, or production of documents.

                     5. The hearing shall be conducted on two (2) consecutive
                     days and shall be governed by the following rules:

                                (a) Each party shall be entitled to five (5)
                     hours of hearing time to present its case. The neutral
                     shall determine whether each party has had the five (5)
                     hours to which it is entitled.

                                (b) Each party shall be entitled, but not
                     required, to make an opening statement, to present regular
                     and rebuttal testimony, documents or other evidence, to
                     cross-examine witnesses, and to make a closing argument.
                     Cross-examination of witnesses shall occur immediately
                     after their direct testimony, and cross-examination time
                     shall be charged against the party conducting the
                     cross-examination.

                                (c) The party initiating the ADR shall begin the
                     hearing and, if it chooses to make an opening statement,
                     shall address not only issues it raised but also any issues
                     raised by the responding party. The responding party, if it
                     chooses to make an opening statement, also shall address
                     all issues raised in the ADR. Thereafter, the presentation
                     of regular and rebuttal testimony and documents, other
                     evidence, and closing arguments shall proceed in the same
                     sequence.

                                (d) Except when testifying, witnesses shall be
                     excluded from the hearing until closing arguments.

                                 Page 52 of 55
<PAGE>   53

Exhibit 20.11 (p.4 of 5)

                                (e) Settlement negotiations, including any
                     statements made therein, shall not be admissible under any
                     circumstances. Affidavits prepared for purposes of the ADR
                     hearing also shall not be admissible. As to all other
                     matters, the neutral shall have sole discretion regarding
                     the admissibility of any evidence.

                     6. Within seven (7) days following completion of the
                     hearing, each party may submit to the other party and the
                     neutral a post-hearing brief in support of its proposed
                     rulings and remedies, provided that such brief shall not
                     contain or discuss any new evidence and shall not exceed
                     ten (10) pages. This page limitation shall apply regardless
                     of the number of issues raised in the ADR proceeding.

                     7. The neutral shall rule on each disputed issue within
                     fourteen (14) days following completion of the hearing.
                     Such ruling shall adopt in its entirety the proposed ruling
                     and remedy of one of the parties on each disputed issue but
                     may adopt one party's proposed rulings and remedies on some
                     issues and the other party's proposed rulings and remedies
                     on other issues. The neutral shall not issue any written
                     opinion or otherwise explain the basis of the ruling.

                     8. The neutral shall be paid a reasonable fee plus
                     expenses. These fees and expenses, along with the
                     reasonable legal fees and expenses of the prevailing party
                     (including all expert witness fees and expenses), the fees
                     and expenses of a court reporter, and any expenses for a
                     hearing room, shall be paid as follows:

                                (a) If the neutral rules in favor of one party
                     on all disputed issues in the ADR, the losing party shall
                     pay 100% of such fees and expenses.

                                (b) If the neutral rules in favor of one party
                     on some issues and the other party on other issues, the
                     neutral shall issue with the rulings a written
                     determination as to how such fees and expenses shall be
                     allocated between the parties. The neutral shall allocate
                     fees and expenses in a way that bears a reasonable
                     relationship to the outcome of the ADR, with the party
                     prevailing on more issues, or on issues of greater value or
                     gravity, recovering a relatively larger share of its legal
                     fees and expenses.

                                 Page 53 of 55
<PAGE>   54

                     Exhibit 20.11 (p.5 of 5)

                     9. The rulings of the neutral and the allocation of fees
                     and expenses shall be binding, non-reviewable, and
                     non-appealable, and may be entered as a final judgment in
                     any court having jurisdiction.

                     10. Except as provided in paragraph 9 or as required by
                     law, the existence of the dispute, any settlement
                     negotiations, the ADR hearing, any submissions (including
                     exhibits, testimony, proposed rulings, and briefs), and the
                     rulings shall be deemed Confidential Information. The
                     neutral shall have the authority to impose sanctions for
                     unauthorized disclosure of Confidential Information.

                                 Page 54 of 55

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