Document:

<PAGE>
                                                                EXHIBIT 10.6

                             100 PINE STREET CENTER

                                  OFFICE LEASE

                                     BETWEEN

                         PINE STREET INVESTORS I, L.L.C.
                      a Delaware limited liability company,

                                    LANDLORD

                                       AND

                                PEOPLE PC, INC.,

                             a Delaware corporation

                                     TENANT

                               DATED June 3, 1999
<PAGE>

                                TABLE OF CONTENTS

                                                                       Page

ARTICLE 1
     Premises.........................................................   1

ARTICLE 2
     Term.............................................................   1

ARTICLE 3
     Base Rent........................................................   3

ARTICLE 4
     Additional Rent..................................................   3

ARTICLE 5
     Personal Property Taxes, Rent Taxes and Other Taxes..............   6

ARTICLE 6
     Condition of Premises............................................   6

ARTICLE 7
     Use and Rules....................................................   7

ARTICLE 8
     Services and Utilities...........................................   7

ARTICLE 9
     Maintenance and Repairs..........................................  10

ARTICLE 10
     Alterations and Liens............................................  10

ARTICLE 11
     Insurance, Subrogation and Waiver of Claims......................  11

ARTICLE 12
     Indemnity........................................................  13

ARTICLE 13
     Destruction or Damage............................................  14

ARTICLE 14
     Condemnation.....................................................  15

ARTICLE 15
     Subordination, Attornment and Mortgagee Protection...............  15

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ARTICLE 16
     Estoppel Certificate..............................................  16

ARTICLE 17
     Assignment and Subletting.........................................  17

ARTICLE 18
     Compliance with Legal Requirements................................  21

ARTICLE 19
     Rights Reserved by Landlord.......................................  22

ARTICLE 20
     Landlord's Remedies...............................................  24

ARTICLE 21
     Landlord's Right to Cure..........................................  26

ARTICLE 22
     Return of Possession..............................................  27

ARTICLE 23
     Holding Over......................................................  28

ARTICLE 24
     No Waiver.........................................................  28

ARTICLE 25
     Attorneys' Fees and Jury Trial....................................  28

ARTICLE 26
     Captions, Definitions and Severability............................  29

ARTICLE 27
     Conveyance by Landlord and Liability..............................  34

ARTICLE 28
     Safety and Security Devices, Services and Programs................  34

ARTICLE 29
     Communication and Computer Lines..................................  35

ARTICLE 30
     Hazardous Materials...............................................  36

ARTICLE 31
     Miscellaneous.....................................................  38

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ARTICLE 32
     Offer............................................................  39

ARTICLE 33
     Notices..........................................................  39

ARTICLE 34
     Signage..........................................................  40

ARITCLE 35
     Real Estate Brokers..............................................  40

ARTICLE 36
     Security Deposit.................................................  40

ARTICLE 37
     Entire Agreement.................................................  41

EXHIBIT A

RIDER ONE

RIDER TWO

RIDER THREE

                                       iii
<PAGE>

                                  OFFICE LEASE
                                  ------------

         THIS LEASE made as of the 3rd day of June, 1999, between  PINE STREET
INVESTORS I, L.L.C., a Delaware limited liability company ("Landlord") and
PEOPLE PC, INC., a Delaware corporation ("Tenant"), whose address is prior
occupancy of the Premises (defined below) is 32 Caselli Street, San Francisco,
California 94114.

                                   WITNESSETH:

         Landlord hereby leases to Tenant and Tenant hires from Landlord the
premises described herein for the term and subject to the terms, covenants,
agreements and conditions hereinafter set forth, to each and all of which Tenant
and Landlord hereby mutually agree.

                                   ARTICLE 1.
                                    PREMISES

         Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
those certain  premises, as shown on the floor plan attached hereto as Exhibit
"A" and made a part hereof ("Premises"), comprising the 11th floor of the
building known as Pine Street Center ("Building") located at 100 Pine Street,
San Francisco, California ("Property" as further described in Article 26).
Tenant acknowledges and agrees that it has had an opportunity to review
Landlord's calculation of rentable area, and Landlord and Tenant hereby agree
that for purposes of this Lease the rentable area of the Premises is 13,285
square feet and the rentable area of the Property is 402,534 square feet.

                                   ARTICLE 2.
                                      TERM

         (A) TERM. The term of this Lease ("Term") shall commence on December 1,
1999  ("Commencement  Date") and, unless sooner terminated as hereinafter
provided, shall expire on November 30, 2004 ("Expiration Date").

         (B) DELAY IN DELIVERY OF POSSESSION. If Landlord is unable, for any
reason except to the extent caused by Tenant, its contractors, agents or
employees, to deliver possession of the Premises to Tenant within one hundred
twenty (120) days from the execution and delivery of this Lease by both Landlord
and Tenant, Tenant shall have the right to terminate this Lease by written
notice to Landlord any time thereafter up until Landlord  delivers the Premises
to Tenant.  Any such delay in  Landlord's ability to deliver possession of the
Premises to Tenant shall not subject Landlord to liability for loss or damage
resulting therefrom and Tenant's sole recourse with respect thereto shall be the
right to terminate this Lease described herein. Upon any such termination,
Landlord and Tenant shall be entirely relieved of their obligations hereunder,
and any Security Deposit and Rent payments shall be returned to Tenant.

                                        1
<PAGE>

         (C) EARLY OCCUPANCY. Landlord acknowledges and agrees that Tenant shall
be  permitted  to occupy the Premises  upon the  execution  and delivery of this
Lease,  which is prior to the  Commencement  Date,  for  purposes of  completing
repairs,   refurbishment,   improvements  or  alterations  to  the  Premises  in
accordance with Article 10;  provided,  however,  Tenant shall have the right to
occupy the Premises  commencing  upon the execution  and delivery  hereof in the
event Tenant elects not to make any such repairs, refurbishment, improvements or
alterations or such work is completed  prior to the  Commencement  Date.  During
such early occupancy  period,  Tenant shall comply with all terms and provisions
of this Lease, except those provisions requiring the payment of Base Rent.

         (D) OPTION  TO  TERMINATE.  Subject  to the  terms  set  forth in this
Paragraph,  Tenant  shall  have the right to  terminate  and  cancel  this Lease
effective as of the expiration of thirty (30) full calendar months following the
Commencement  Date (the  "Termination  Date") by delivering to Landlord  written
notice  thereof  at least  six (6)  months  prior to the  Termination  Date (the
"Termination  Option"). As a condition to the effectiveness of Tenant's exercise
of its Termination Option, and in addition to Tenant's obligation to satisfy all
other  monetary  and  non-monetary  obligations  under  this Lease  through  the
Termination Date, Tenant shall,  thirty (30) days prior to the Termination Date,
pay Landlord a sum equal to: (i) $186,654.24, plus (ii) fifty percent (50.0%) of
any other  direct  costs of  Landlord  incurred in  connection  with this Lease,
including,   without  limitation,   leasing  commissions  paid  by  Landlord  in
connection  with the  execution of this Lease,  the exact sum of which  Landlord
agrees to identify to Tenant prior to Tenant's payment  thereof;  said sum shall
be referred to herein  collectively as the "Termination  Consideration".  Tenant
may not  exercise  the  Termination  Option if Tenant is in  Default  under this
Lease.  The  Termination  Option is personal to Tenant  hereunder and may not be
exercised by or assigned, voluntarily or involuntarily,  to any person or entity
other  than a Related  Entity  (as  defined  in  Article  17(G)) or a  permitted
assignee of Tenant's  interest  in this Lease which  assignee is a successor  to
Tenant either by merger or  consolidation or a purchaser of all or substantially
all of Tenant's  assets  (provided  such  purchaser  shall have also  assumed in
writing  Tenant's  obligations  under this Lease).  Tenant may only exercise the
Termination Option with respect to all (not a portion) of the Premises leased by
Tenant in the Building.  If Tenant properly and in a timely manner exercises its
Termination  Option and properly and in a timely manner delivers the Termination
Consideration  to Landlord and  satisfies  all other  monetary and  non-monetary
obligations  under this Lease,  including,  without  limitation,  the provisions
related to surrender of the Premises,  all of which shall be  accomplished on or
before the  Termination  Date, then this Lease shall terminate as of midnight on
the Termination Date. Landlord agrees to notify Tenant of any attempted exercise
of the  Termination  Option  which  does not  satisfy  the  foregoing  terms and
conditions,  identifying the  deficiencies of such exercise;  if Tenant does not
cure all of such deficiencies  within five (5) days following  Landlord's notice
thereof  or  if  the  deficiency  is  non-curable,   Tenant's  exercise  of  the
Termination Option shall be null and void, and this Lease shall continue in full
force and effect in accordance with its terms.

         (E) OPTION TO EXTEND  TERM.  Tenant  shall have an option to extend the
Term upon the terms and conditions set forth in Rider Two,  attached  hereto and
made a part hereof.

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<PAGE>

                                   ARTICLE 3.
                                   BASE RENT

         Tenant shall pay Landlord as Base Rent in accordance with the following
schedule,  in advance on or before the first day of each  calendar  month during
the Term, except that Base Rent for the first full calendar month for which Base
Rent shall be due shall be paid when Tenant executes this Lease.

<TABLE>
<CAPTION>

Period                                                        Base Rent Per Rentable Square Foot
------                                                        ----------------------------------
<S>                                                                    <C>

December 1, 1999 - November 30, 2000                                   $39.99
December 1, 2000 - November 30, 2001                                   $41.00
December 1, 2001 - November 30, 2002                                   $42.00
December 1, 2002 - November 30, 2003                                   $43.00
December 1, 2003 - November 30, 2004                                   $44.00

<CAPTION>

Period                                                        Annual Base Rent           Monthly Base Rent
------                                                        ----------------           -----------------
<S>                                                           <C>                        <C>

December 1, 1999 - November 30, 2000                          $518,115.00                $43,176.25
December 1, 2000 - November 30, 2001                          $544,685.00                $45,390.42
December 1, 2001 - November 30, 2002                          $557,970.00                $46,497.50
December 1, 2002 - November 30, 2003                          $571,255.00                $47,604.58
December 1, 2003 - November 30, 2004                          $584,540.00                $48,711.67
</TABLE>

         Rent shall be paid  without  any prior  demand or notice  therefor  and
without any deduction, set-off or counterclaim,  or relief from any valuation or
appraisement  laws. If the Term commences on a day other than the first day of a
calendar  month,  or ends on a day other than the last day of a calendar  month,
then the Base Rent for such month  shall be  prorated  on the basis of 1/30th of
the monthly Base Rent for each day of such month.

                                   ARTICLE 4.
                                 ADDITIONAL RENT

         (A) TAXES. Tenant shall pay Landlord as additional rent an amount equal
to  Tenant's  Prorata  Share of Taxes in excess of the  amount of Taxes  paid by
Landlord during the calendar year 1999 ("Base Tax Year").  Ile terms "Taxes" and
"Tenant's Prorata Share" shall have the meanings  specified  therefor in Article
26.

         (B) OPERATING EXPENSES. Tenant shall pay Landlord as additional rent an
amount equal to Tenant's Prorata,  Share of Operating  Expenses in excess of the
amount of Operating  Expenses  paid by Landlord  during the  calendar  year 1999
("Base Expense  Year").  The term  "Operating  Expenses"  shall have the meaning
specified therefor in Article 26.

         (C) MANNER OF PAYMENT. Taxes and Operating Expenses shall be paid in
the following manner:

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            a) Landlord may  reasonably  estimate in advance the amounts  Tenant
            shall owe for Taxes and  Operating  Expenses for any full or partial
            calendar  year of the Term.  In such  event,  Tenant  shall pay such
            estimated amounts, on a monthly basis, on or before the first day of
            each calendar  month,  together with Tenant's  payment of Base Rent.
            Such  estimate  may be  reasonably  adjusted  from  time  to time by
            Landlord.

            b) Within 120 days after the end of each  calendar  year, or as soon
            thereafter  as  practicable,  Landlord  shall  provide  a  statement
            ("Statement") to Tenant showing:  (a) the amount of actual Taxes and
            Operating Expenses for such calendar year, with a listing of amounts
            for major categories of Operating Expenses, and such amounts for the
            Base  Years,  (b)  any  amount  paid by  Tenant  towards  Taxes  and
            Operating  Expenses during such calendar year on an estimated basis,
            and (c) any revised  estimate of Tenant's  obligations for Taxes and
            Operating Expenses for the current calendar year.

            c) If the Statement shows that Tenant's estimated payments were less
            than Tenant's actual  obligations  for Taxes and Operating  Expenses
            for  such  year,  Tenant  shall  pay  the  difference.  If  Landlord
            increases Tenant's estimated payments for the current calendar year,
            Tenant  shall  pay  the  difference   between  the  new  and  former
            estimates,  for the period from  January 1 of the  current  calendar
            year  through the month in which a statement  is sent.  Tenant shall
            make such payments  within thirty (30) days after Landlord sends the
            applicable statement.

            d) If the Statement shows that Tenant's  estimated payments exceeded
            Tenant's actual obligations for Taxes and Operating Expenses, Tenant
            shall receive a credit for the difference  against  payments of Base
            Rent next due. If the Term shall have  expired  and no further  Base
            Rent shall be due, Tenant shall receive a refund of such difference,
            within thirty (30) days after Landlord sends the Statement.

            e) So long as  Tenant's  obligations  hereunder  are not  materially
            adversely   affected   thereby,   Landlord  reserves  the  right  to
            reasonably  change,  from time to time,  the manner or timing of the
            foregoing  payments.  In lieu of providing  one  Statement  covering
            Taxes  and  Operating   Expenses,   Landlord  may  provide  separate
            statements,  at the same or different times. No delay by Landlord in
            providing the Statement (or separate  statements)  shall be deemed a
            default  by  Landlord  or a waiver of  Landlord's  right to  require
            payment of Tenant's  obligations  for actual or  estimated  Taxes or
            Operating  Expenses.  In no  event  shall a  decrease  in  Taxes  or
            Operating  Expenses  below the Base Year amounts,  ever decrease the
            monthly  Base  Rent,  or give rise to a credit or refund in favor of
            Tenant.

         (D) PRORATION.  If the Term commences  other than on January 1, or ends
other than on December 31,  Tenant's  obligations  to pay  estimated  and actual
amounts  towards Taxes and Operating  Expenses for such first or final  calendar
years shall be prorated to reflect the portion

                                        4
<PAGE>

of such years included in the Term.  Such proration shall be made by multiplying
the total estimated or actual (as the case may be) Taxes and Operating Expenses,
for such calendar  years, as well as the Base Year amounts,  by a fraction,  the
numerator of which shall be the number of days of the Term during such  calendar
year, and the denominator of which shall be 365.

         (E)  ADJUSTMENTS.  For purposes of making its  calculation of Operating
Expenses and Taxes payable by Tenant  hereunder,  Landlord will make adjustments
to reflect a 95 % occupancy  rate in the Building for the Base Expense Year, the
Base Tax Year and all subsequent years during the Term hereof. To the extent the
Base Tax Year assessment does not include a fully developed  property and if, as
a direct result thereof,  Taxes for subsequent  years increase or decrease,  the
Base Tax Year shall be adjusted  to reflect a 95 % occupancy  rate by tenants in
space with  completed  tenant  improvements.  Landlord may exclude from the Base
Expense Year, any non-recurring items,  including capital expenditures otherwise
permitted as Operating  Expenses  under  Article 26 of the Lease (and shall only
include the  amortization  of such  expenditures  in subsequent  year  Operating
Expenses to the extent  permitted  under  Article 26,  including  any  remaining
amortization of permitted  expenditures  made prior to or after the Commencement
Date). If Landlord  eliminates from any subsequent  year's Operating  Expenses a
recurring  category of expenses  previously  included in the Base Expense  Year,
Landlord may subtract such category from the Base Expense Year  commencing  with
such subsequent year.

         (F) LANDLORD'S  RECORDS.  Landlord shall  maintain  records  respecting
Taxes and Operating  Expenses and  determine  the same in accordance  with sound
accounting and management practices,  consistently applied.  Although this Lease
contemplates  the  computation of Taxes and Operating  Expenses on a cash basis,
Landlord shall make  reasonable and  appropriate  accrual  adjustments to ensure
that each calendar year,  including the Base Years,  includes  substantially the
same recurring  items.  Landlord  reserves the right to change to a full accrual
system of  accounting so long as the same is  consistently  applied and Tenant's
obligations are not materially adversely affected.

         (G) TENANT'S REVIEW. Tenant, within one hundred twenty (120) days after
receiving  Landlord's  Statement,  shall have the right to provide Landlord with
written notice ("Review  Notice") of its intent to review  Landlord's  books and
records relating to Taxes and Operating  Expenses for such calendar year. Within
a reasonable  time after receipt of a timely Review Notice,  Landlord shall make
such books and records  available to Tenant or Tenant's  agent for its review at
the  Building  office;  provided,  that if  Tenant  retains  an agent to  review
Landlord's  books and records for any  calendar  year,  such agent must be a CPA
firm licensed to do business in California. Except as expressly set forth below,
Tenant  shall be solely  responsible  for any and all costs,  expenses  and fees
incurred by Tenant or its agent in connection with such review. Upon such review
of Landlord's books and records, Tenant shall have the right, within thirty (30)
days after such books and records are made available,  to give Landlord  written
notice  stating in reasonable  detail any objection to Landlord's  Statement for
the applicable calendar year. If Tenant fails to give Landlord written notice of
objection within such thirty (30) day period or fails to provide Landlord with a
timely  Review  Notice,  Tenant  shall be  deemed  to have  approved  Landlord's
Statement in all respects and shall thereafter be barred from raising any claims
with respect thereto. Upon Landlord's receipt of

                                        5
<PAGE>

a timely objection  notice from Tenant,  Landlord and Tenant shall work together
in good  faith to resolve  the  discrepancy  between  Landlord's  Statement  and
Tenant's  review.  If Landlord  and Tenant  determine  that Taxes and  Operating
Expenses for the applicable calendar year are less than reported, Landlord shall
provide Tenant with a credit against future additional rent in the amount of any
overpayment by Tenant or a refund of the  overpayment if such  determination  is
made  following  the  expiration  of the Lease Term.  Likewise,  if Landlord and
Tenant determine that Taxes and Operating  Expenses for the applicable  calendar
year are greater  than  reported,  Tenant  shall  forthwith  pay to Landlord the
amount of underpayment by Tenant. Any information obtained by Tenant pursuant to
the provisions of this section shall be treated as confidential. Notwithstanding
anything  to the  contrary  herein,  Tenant  shall not be  permitted  to examine
Landlord's  books and records or to dispute any Statement unless Tenant has paid
to Landlord the amount due as shown on such Statement.  If it is determined that
Tenant's  Prorata  Share of Taxes or Operating  Expenses are  overstated by more
than five  percent (5 %) for any  applicable  year,  Landlord  agrees to pay the
reasonable and direct costs of Tenant's  review of Taxes and Operating  Expenses
for such year.

         (H) RENT AND OTHER CHARGES. Base Rent, Taxes,  Operating Expenses,  and
any other  amounts  which Tenant is or becomes  obligated to pay Landlord  under
this Lease or other agreement entered into in connection herewith, are sometimes
herein referred to  collectively  as "Rent," and all remedies  applicable to the
non-payment  of Rent  shall be  applicable  thereto.  Rent  shall be paid at any
office  maintained  by Landlord or its agent at the  Property,  or at such other
place as Landlord may designate.

                                   ARTICLE 5.
               PERSONAL PROPERTY TAXES, RENT TAXES AND OTHER TAXES

         Tenant  shall pay prior to  delinquency  all  taxes,  charges  or other
governmental  impositions  assessed  against or levied upon  Tenant's  fixtures,
furnishings,  equipment and personal  property located in the Premises,  and any
Work to the Premises performed under Article 10. Whenever possible, Tenant shall
cause all such items to be assessed and billed  separately  from the property of
Landlord.  In the event any such items  shall be  assessed  and billed  with the
property of Landlord, Tenant shall pay Landlord its share of such taxes, charges
or other  governmental  impositions  within  thirty  (30)  days  after  Landlord
delivers a statement and a copy of the assessment or other documentation showing
the amount of such impositions applicable to Tenant's property.  Further, Tenant
shall pay any rent tax or sales tax,  service  tax,  transfer tax or value added
tax, or any other  applicable  tax on the Rent or services  herein or  otherwise
respecting this Lease (exclusive of Landlord's federal or state income taxes).

                                   ARTICLE 6.
                              CONDITION OF PREMISES

         Tenant  acknowledges and agrees that Tenant has inspected the Premises,
Building, Property, Systems and Equipment (as defined in Article 26), or has had
an  opportunity  to do so, and,  subject to the  performance  by Landlord of its
obligations  as expressly  set forth in Article 9, agrees to accept the same "as
is" without any agreements,  representations,  understandings  or obligations on
the part of Landlord to perform any alterations, repairs or

                                        6
<PAGE>

improvements  except that: (i) Landlord  agrees to be responsible for curing any
latent  defects  which  materially  and  adversely  affect  Tenant's  use of the
Premises as  authorized  herein and  identified by Tenant to Landlord in writing
within three (3) months following the Commencement Date and (ii) Landlord agrees
to credit  Tenant up to $1,500.00 of Base Rent toward the cost of repairing  and
replacing  improperly  cut  telephone  wiring  terminations  within the Premises
and/or the  telephone  closet on the 11th floor of the  Building  upon  Tenant's
delivery to Landlord of proper  receipts  therefor;  Tenant  agrees to make such
repairs and  replacement in accordance with the provisions of Articles 10 and 29
hereof.

                                   ARTICLE 7.
                                  USE AND RULES

         Tenant shall use the Premises  exclusively for business  offices and no
other purpose  whatsoever,  in compliance with all applicable  Laws, and without
disturbing  or  interfering  with any other tenant or occupant of the  Property.
Tenant shall not use the Premises in any manner so as to cause a cancellation of
Landlord's  insurance  policies,  or an increase in the premiums  thereunder and
Tenant shall not commit, or suffer to be committed, any waste upon the Premises,
or any  nuisance or other act or thing that may disturb the quiet  enjoyment  of
any other Tenant in the  Building in which the  Premises may be located.  Tenant
shall  comply  with all  rules  set  forth in Rider  One  attached  hereto  (the
"Rules").  Provided they are not materially  inconsistent with the terms of this
Lease and they do not impose additional material  obligations or restrictions on
Tenant,  Landlord  shall  have the  right to  reasonably  amend  such  Rules and
supplement the same with other reasonable Rules relating to the Property, or the
promotion  of safety,  care,  cleanliness  or good order  therein,  and all such
amendments or new Rules shall be binding upon Tenant after five (5) days' notice
thereof to Tenant. All Rules shall be applied on a non-discriminatory basis, but
nothing herein shall be construed to give Tenant or any other Person (as defined
in Article 26) any claim, demand or cause of action against Landlord arising out
of the violation of such Rules by any other tenant,  occupant, or visitor of the
Property,  or out of the enforcement,  failure to enforce or waiver of the Rules
by Landlord in any particular instance or instances.

                                   ARTICLE 8.
                             SERVICES AND UTILITIES

         (A)  Provided  Tenant  shall not be in  Default  under  this  Lease and
subject to the other  provisions  of this Lease and the  Rules,  Landlord  shall
provide  the  following  services  and  utilities  (the  cost of which  shall be
included in Operating Expenses unless otherwise expressly stated herein):

         1. Electricity for standard office lighting fixtures, and equipment and
         accessories  customary for offices where: (1) the connected  electrical
         load of all of the same  does not  exceed  an  average  of 4 watts  per
         square foot of the Premises (or such lesser amount as may be available,
         based  on the safe  and  lawful  capacity  of the  existing  electrical
         circuit(s) and facilities  serving the Premises),  (2) the  electricity
         will be at nominal 120 volts, single phase (or 110 volts,  depending on
         available  service  in the  Building),  and (3)  the  safe  and  lawful
         capacity of the existing electrical  circuit(s) serving the Premises is
         not exceeded.

                                        7
<PAGE>

         2. Heat and  air-conditioning to provide a temperature  required,  in
         Landlord's reasonable  opinion and in accordance  with applicable Law,
         for occupancy of the Premises under normal business operations, from
         8:00 a.m. until 6:00 p.m. Monday through Friday and from 8:00 a.m.
         until 1:00 p.m.  Saturday,  except on Holidays (as defined in Article
         26). Landlord shall not be responsible for inadequate air conditioning
         or  ventilation to the extent that same occurs because Tenant uses any
         item or items of equipment consuming more than 500 watts at rated
         capacity without providing adequate air-conditioning and ventilation
         therefor.

         3. Water for  drinking,  lavatory and toilet  purposes at those points
         of supply provided for  nonexclusive  general use of other tenants at
         the Property and for sinks or other  fixtures (but  excluding  hook-up)
         installed in the Premises in accordance with Article 10.

         4. Customary office cleaning and trash removal service Monday through
         Friday or Sunday through Thursday in and about the Premises.

         5. Operatorless  passenger  elevator service (if the Property has such
         equipment serving the  Premises)  and freight  elevator service (if the
         Property has such equipment serving the Premises, and subject to
         scheduling by Landlord) in common with  Landlord and other  tenants and
         their  contractors,  agents and  visitors. Landlord agrees to use
         reasonable efforts to provide freight elevator service to accommodate
         the move-in and removal of Tenant's furniture,  fixtures,  equipment
         and other  property in accordance  with  Landlord's  procedures  and
         scheduling requirements.

         (B) Tenant shall  cooperate  fully with Landlord to conserve energy use
in the Building and Tenant shall use its best commercially reasonable efforts to
reasonably minimize its use of gas,  electricity,  water and other utilities and
public  services  throughout  the term hereof.  Tenant agrees to cooperate  with
Landlord and to abide by all  regulations  and  requirements  which Landlord may
reasonably  prescribe  for the proper  functioning  and  protection  of heating,
ventilating, air-conditioning and other systems within the Building.

         (C) So long as Tenant is not in  default  under  this  Lease,  Landlord
shall seek to provide  such extra  utilities or services as Tenant may from time
to time request, if the same are reasonable and feasible for Landlord to provide
and do not  involve  modifications  or  additions  to the  Property  or existing
Systems and Equipment (as defined in Article 26), and if Landlord  shall receive
Tenant's  request  within a  reasonable  period  (but in any  event no less than
forty-eight  hours)  prior to the time such  extra  utilities  or  services  are
required; notwithstanding the minimum notice required herein, if Tenant provides
Landlord  at least  twelve (12) hours  prior  notice of Tenant's  need for after
hours heating and  air-conditioning,  Landlord will attempt to accommodate  such
need.  Landlord  may comply  with  written or oral  requests  by any  officer or
employee of Tenant,  unless Tenant shall notify  Landlord of, or Landlord  shall
request,  the names of authorized  individuals  (up to 3 for each floor on which
the Premises are located) and procedures for written requests. Tenant shall, for
such extra  utilities or services,  pay such charges as Landlord shall from time
to time  reasonably  establish on a cost  recovery  basis.  All charges for such
extra utilities or services shall be due at the same time as the

                                        8
<PAGE>

installment  of  Base  Rent  with  which  the  same  are  billed,  or if  billed
separately, shall be due within twenty (20) days after such billing.

         (D) The  parties  acknowledge  and agree that up to 280 hours per month
shall be  considered  typical  office  use for which  excess  rates  will not be
charged.  Landlord may install and operate meters or any other reasonable system
for  monitoring or estimating any services or utilities used by Tenant in excess
of those  required to be provided by Landlord  under this  Article  (including a
system for Landlord's engineer to reasonably estimate any such excess usage). If
such system  indicates  such  excess  services or  utilities,  Tenant  shall pay
Landlord's  reasonable  charges for installing and operating such system and any
supplementary air conditioning,  ventilation,  heat, electrical or other systems
or equipment  (or  adjustments  or  modifications  to the  existing  Systems and
Equipment), and Landlord's reasonable charges for such amount of excess services
or utilities used by Tenant.

         (E) Landlord  does not warrant  that any services or utilities  will be
free from  shortages,  failures,  variations,  interruptions  caused by repairs,
maintenance,  replacements,   improvements,  alterations,  changes  of  service,
strikes, lockouts, labor controversies, accidents, inability to obtain services,
utilities,  fuel,  steam,  water  or  supplies,   governmental  requirements  or
requests, or other causes beyond Landlord's  reasonable control.  Landlord shall
not be in default  hereunder  or be liable for any  damages  (including  loss of
profits,  business  interruption  or other  consequential  damages)  directly or
indirectly  resulting  from, nor shall it constitute a constructive  eviction of
Tenant, nor shall the Rent reserved herein be abated or Tenant relieved from the
performance  of its other  obligations  under  this  Lease by reason of: (i) the
installation,  use, or  interruption  of use of any equipment in connection with
furnishing  the services to be provided by Landlord  hereunder,  (ii) failure to
furnish or delay in furnishing  any such services when such failure is caused by
accident or any condition  beyond the  reasonable  control of Landlord or by the
making of  necessary  improvements  or  repairs  to the  Premises,  Systems  and
Equipment,  Building  or  the  Property,  (iii)  the  limitation,   curtailment,
rationing or restriction on use of water, electricity,  gas or any other form of
energy,  utility or other public  service  serving the Premises or the Building,
(iv) any  prevention,  delay or stoppage  due to strikes,  labor or materials or
reasonable  substitutes  therefor,   governmental   restrictions,   governmental
regulations,  governmental controls, enemy or hostile governmental action, civil
commotion,  fire or other  casualty.  Without  limiting  the  generality  of the
foregoing and except as set forth in Article 13, if (i) there is a disruption of
essential  services to be provided by Landlord to the Premises as expressly  set
forth in this Lease,  (ii) such  disruption  is not caused by  Tenant's  acts or
omissions,  (iii) such disruption materially interferes with Tenant's use of the
Premises,  and  (iv)  the  restoration  of such  essential  services  is  within
Landlord's  reasonable control,  Tenant will be entitled to: (A) an abatement of
Base  Rent  if  such  essential  services  are  not  restored  within  five  (5)
consecutive  business days from the date such disruption  began,  retroactive to
the date such  disruption  began and (B) terminate  this Lease if such essential
services are not restored  within nine (9) months from the date such  disruption
began by delivering  written notice thereof to Landlord prior to the restoration
of such  essential  services;  for purposes  hereof,  a restoration of essential
services  shall  mean  and  refer to a  restoration  to  substantially  the same
capacity that was in place immediately prior to the disruption.

                                        9
<PAGE>

                                   ARTICLE 9.
                             MAINTENANCE AND REPAIRS

         Except for customary  cleaning and trash  removal  provided by Landlord
under  Article 8, and damage  covered  under  Article 13,  Tenant shall keep the
Premises in good and sanitary  condition,  working  order and repair  (including
without limitation,  carpet, wall-covering,  doors, plumbing and other fixtures,
equipment,  alterations  and  improvements  whether  installed  by  Landlord  or
Tenant), normal wear and tear and damage by casualty excepted. In the event that
any repairs,  maintenance or  replacements  for which Tenant is responsible  are
required,  Tenant  shall  promptly  arrange  for the  same,  in a  first  class,
workmanlike  manner  approved  by Landlord  in advance in  writing,  either,  at
Tenant's option,  through  Landlord for such reasonable  charges as Landlord may
from time to time establish if Landlord is willing to provide such services,  or
such  contractors  as Landlord  generally  uses at the  Property,  or such other
contractors as Landlord shall first approve in writing, which approval shall not
be  unreasonably  withheld  and which  Landlord  agrees to grant or deny  within
fifteen (15) business days from Tenant's  written  request  therefor.  If Tenant
does not promptly make such arrangements,  Landlord may, but need not, make such
repairs,  maintenance  and/or  replacements,  and the costs paid or  incurred by
Landlord  therefor  shall be  reimbursed  by Tenant  promptly  after  request by
Landlord.  Tenant shall indemnify Landlord and pay for any repairs,  maintenance
and replacements to area of the Property  outside the Premises,  caused in whole
or in part, as a result of moving any furniture,  fixtures, or other property to
or from the Premises,  or by Tenant or its employees,  agents,  contractors,  or
visitors  (notwithstanding  anything to the  contrary  contained in this Lease).
Except as provided in this  Article,  or for damage  covered  under  Article 13,
Landlord shall keep the common areas of the Property, connections for electrical
systems (including replacement of bulbs or ballasts),  heating,  ventilation and
air-conditioning  systems,  plumbing  systems (with the exception of any special
installations within the Premises such as a kitchen,  pantry or bathroom),  life
safety support systems, structural elements of the Building (including the roof)
and elevators in good and sanitary condition, working order and repair (the cost
of which shall be included in Operating Expenses).

                                   ARTICLE 10.
                              ALTERATIONS AND LIENS

         (A)  Tenant  shall  make  no   additions,   changes,   alterations   or
improvements  ("Work") to the Premises or the Systems and  Equipment (as defined
in Article 26) pertaining to the Premises  without the prior written  consent of
Landlord,  which shall not be  unreasonably  withheld or delayed.  Landlord  may
impose reasonable  requirements as a condition of such consent including without
limitation  the  submission of plans and  specifications  for  Landlord's  prior
written  approval,   obtaining  necessary  permits,   posting  bonds,  obtaining
insurance,  prior approval of contractors,  subcontractors and suppliers,  prior
receipt  of  copies  of  all  contracts   and   subcontracts,   contractor   and
subcontractor lien waivers,  affidavits listing all contractors,  subcontractors
and supplies, use of union labor (if Landlord uses union labor), affidavits from
engineers acceptable to Landlord stating that the Work will not adversely affect
the Systems and  Equipment or the  structure or operation of the  Property,  and
requirements  as to the manner  and times in which such Work shall be done.  All
Work shall be performed in a good and workmanlike  manner and all materials used
shall be of a quality comparable to or better

                                       10
<PAGE>

than those in the Premises and  Property and shall be in  accordance  with plans
and specifications  approved by Landlord, and Landlord may require that all such
Work  be  performed  under  Landlord's  supervision.  If  Landlord  consents  or
supervises,  the same shall not be deemed a warranty  as to the  adequacy of the
design,  workmanship  or quality of  materials,  and Landlord  hereby  expressly
disclaims any responsibility or liability for the same;  provided,  however,  if
Landlord   supervises  the  Work,  Landlord  agrees  to  assign  any  applicable
warranties to Tenant in the event of errors, omissions or defects by the parties
performing the Work.  Landlord shall under no circumstances  have any obligation
to repair,  maintain  or replace any  portion of the Work.  Landlord  and Tenant
acknowledge and agree that Landlord may withhold its consent to the Work if such
Work  necessitates  compliance  with  any  Laws  for  which  Landlord  might  be
responsible  unless  Tenant  agrees  in  writing  to bear  the  cost of any such
compliance.  Tenant  shall not be  required  to provide  bonds for  payments  or
completion  in  connection  with  Work  with a total  cost of less  than  Twenty
Thousand Dollars ($20,000.00).

         (B) Tenant shall keep the Property, the Building and Premises free from
any  mechanic's,  materialman's  or similar liens or other such  encumbrances in
connection  with any Work on or  respecting  the Premises not performed by or at
the request of Landlord, and shall indemnify and hold Landlord harmless from and
against any claims, liabilities, judgments, or costs (including attorneys' fees)
arising out of the same or in connection  therewith.  Tenant shall give Landlord
notice at least  twenty (20) days prior to the  commencement  of any Work on the
Premises,  or such additional  times as may be necessary  under  applicable Laws
(defined  in Article  26), to afford  Landlord  the  opportunity  of posting and
recording  appropriate  notices of  non-responsibility.  Tenant shall remove any
such  liens or  encumbrance  by bond or  otherwise  within  ten (10) days  after
written notice by Landlord,  and if Tenant shall fail to do so, Landlord may pay
the  amount  necessary  to  remove  such  lien or  encumbrances,  without  being
responsible for investigating the validity thereof.  The amount so paid shall be
deemed additional Rent under this Lease payable upon demand,  without limitation
as to other remedies  available to Landlord under this Lease.  Nothing contained
in  this  Lease  shall  authorize  Tenant  to do any  act  which  shall  subject
Landlord's  title  to  the  Property,  Building  or  Premises  to any  liens  or
encumbrances whether claimed by operation of law or express or implied contract.
Any claim to a lien or  encumbrance  upon the  Property,  Building  or  Premises
arising in connection  with any Work on or respecting the Premises not performed
by or at the request of Landlord shall be null and void, or at Landlord's option
shall  attach only  against  Tenant's  interest in the Premises and shall in all
respects be subordinate to Landlord's title to the Property and Premises.

                                   ARTICLE 11.
                   INSURANCE, SUBROGATION AND WAIVER OF CLAIMS

         (A) At all times during the Lease Term and during any  pre-commencement
occupancy and holdover period,  Tenant,  at its sole expense,  shall procure and
maintain the following types of insurance:

         1. A policy of commercial  general liability  insurance with Broad Form
         Liability,  and  cross-liability  endorsements,  insuring  Landlord and
         Tenant against any claims for bodily injury,  property  damage or other
         liability arising out of the use,  occupancy,  maintenance or ownership
         of the Premises and all areas appurtenant thereto, including

                                       11
<PAGE>

         parking  areas,  with an  "Additional  Insured-Managers  or  Lessors of
         Premises"  Endorsement  and contain  the  "Amendment  of the  Pollution
         Exclusion"  for  damage  caused by heat,  smoke or fumes from a hostile
         fire. Such insurance shall be in an amount satisfactory to Landlord but
         in no event less than $2,000,000 per occurrence, $3,000,000 annually in
         the aggregate for all claims.

         2. Insurance for Tenant's personal  property,  inventory,  alterations,
         fixtures and equipment  located on the Premises,  in an amount not less
         than one hundred  percent  (100%) of their  actual  replacement  value,
         providing All Risk coverage including, without limitation, water damage
         of any type,  including  sprinkler  leakage,  bursting  or  stoppage of
         pipes, explosion, theft, vandalism and malicious mischief. The proceeds
         of such  insurance,  so long as this Lease remains in effect,  shall be
         used  to  repair  or  replace   the   personal   property,   inventory,
         alterations,  fixtures and  equipment so insured.  In addition,  Tenant
         shall  obtain and keep in force,  at all times  during the Term of this
         lease, a policy of business interruption  insurance coverage,  insuring
         that one  hundred  percent  (100%) of the  monthly  Base Rent,  and all
         additional Rent due hereunder, will be paid to Landlord for a period of
         not less than one (1) year if the  Premises are damaged or destroyed or
         rendered  unfit for occupancy by a risk insured under the foregoing All
         Risk coverage.

         3. A policy of worker's compensation insurance as required by appli-
         cable law.

         (B) The  insurance  to be acquired  and  maintained  by Tenant shall be
with  companies  admitted to do business in the State of California  with Best's
Rating Guide of A/10 or better.  The insurance policies required hereunder shall
(to the  extent  applicable):  (i) name  Landlord,  and such  other  parties  as
Landlord shall designate from time to time, as additional insureds,  (ii) not be
canceled or altered  without thirty (30) days' prior written notice to Landlord,
(iii)  insure  performance  of the  indemnity  set forth in Article 12, and (iv)
provide that such coverage is primary to and not  contributory  with any similar
insurance  carried by  Landlord,  whose  insurance  shall be  considered  excess
insurance only.

         (C) The limits of said  insurance  required by this Lease or as carried
by Tenant shall not,  however,  limit the liability of Tenant nor relieve Tenant
of any obligation hereunder. Landlord may periodically,  but not more often than
every five years,  require that Tenant  reasonably  increase the  aforementioned
coverage.

         (D) An original certificate for each policy of insurance required to be
carried by Tenant under this Article  evidencing the existence of such coverage,
together with copies of all endorsements to such policies, shall be delivered to
Landlord  for  retention  by it  prior  to  Tenant's  taking  possession  of the
Premises,  and Tenant shall provide  renewal  certificates  to Landlord at least
twenty (20) days prior to expiration of such policies.  In the event that Tenant
shall fail to insure or shall  fail to furnish  Landlord  the  evidence  of such
insurance as herein required,  Landlord may, but shall not be obligated to, from
time to time acquire such  insurance  for the benefit of Tenant or Landlord,  or
both of them,  for a period not exceeding  one (1) year or the  remaining  Lease
Term,  whichever is less,  and any premium paid by Landlord shall be recoverable
from Tenant as additional Rent on demand.

                                       12
<PAGE>

         (E) Tenant and Landlord shall obtain from their insurers under all
policies of insurance  maintained by the parties pursuant to this Article (other
than  worker's  compensation  insurance)  a waiver of all rights of  subrogation
which the insurer  might have against the other party,  and the parties agree to
indemnify  each  other  against  any  loss  or  expense,   including  reasonable
attorney's fees,  resulting from the failure to obtain or effect such waiver. In
addition,  Tenant and Landlord  hereby waive,  on behalf of themselves and their
insurers,  to the  extent  it would  not have the  effect  of  invalidating  any
insurance  coverage  of Tenant,  all  rights of  subrogation  as to each  other.
Further,  Tenant and  Landlord  hereby  release and relieve each other and waive
their  respective  lights to recover  damages  (whether  in contract or in tort)
against  each other for loss of or damage to their  property  arising  our of or
incident to perils required to be insured  pursuant to this Lease. The effect of
such release and waiver of the right to recover  damages shall not be limited by
the amount of insurance  carried or required,  or by any deductibles  applicable
thereto.

         (F) Landlord  shall  maintain a standard  form of "all risk"  insurance
policy on the Building and the Building standard tenant  improvements within the
Premises in an amount  reasonably  determined  by Landlord to be the  Building's
replacement value.

                                   ARTICLE 12.
                                    INDEMNITY

         (A) In addition to any other  rights or remedies to which Tenant may be
entitled  and without in any way waiving or limiting  said rights and  remedies,
but  except to the  extent  caused by  Landlord's  gross  negligence  or willful
misconduct,  Tenant  agrees to defend and  indemnify  Landlord  against and save
Landlord  harmless from any and all loss, cost,  liability,  damage and expense,
including without limitation, reasonable attorneys' fees and costs, for personal
injury,  death or property  damage,  incurred in connection with or arising from
any cause  whatsoever in, on or about the Premises,  including  without limiting
the  generality of the  foregoing:  (i) the use or occupancy or manner of use or
occupancy of the Premises by Tenant or any person or entity claiming  through or
under  Tenant,  or (ii) the  condition  of the  Premises  or any  occurrence  or
happening  on the  Premises  from any cause  under the  control  or which is the
responsibility  of Tenant,  its agents,  contractors,  subtenants,  assignees or
employees, or (iii) any acts, omissions or negligence of Tenant or any person or
entity  claiming  through  or  under  Tenant,  or of  the  agents,  contractors,
employees,  subtenants,  licensees,  invitees  or visitors of Tenant or any such
person or entity, in, on or about the Premises or the Building,  either prior to
the  commencement  of, during,  or after the  expiration of the term,  including
without limitation any acts, omissions or negligence in the making or performing
of any alterations. Tenant further agrees to defend, indemnify and save harmless
Landlord,  Landlord's  agents and the  lessors  under any  ground or  underlying
leases, from and against any and all loss, cost, liability,  damage and expense,
including without limitation  reasonable  attorneys' fees and costs, incurred in
connection with or arising from any claims by any persons by reason of injury to
persons  or damage to  property  occasioned  by any use,  occupancy,  condition,
occurrence,  happening, act, omission or negligence referred to in the preceding
sentence except to the extent caused by Landlord's  gross  negligence or willful
misconduct.  In the event any action or proceeding is brought  against  Landlord
for any claim with respect to which  Tenant is  obligated to indemnify  Landlord
hereunder,  Tenant  upon  notice  from  Landlord  shall  defend  such  action or
proceeding at Tenant's sole expense by

                                       13
<PAGE>

counsel approved by Landlord, which approval shall not be unreasonably withheld.
The  provisions  of this  Paragraph  shall  survive  the  expiration  or earlier
termination of this Lease.

         (B) Landlord shall not be  responsible  for or liable to Tenant for any
loss or damage that may be  occasioned  by or through the acts or  omissions  of
persons occupying  adjoining premises or any part of the premises adjacent to or
connected  with the  Premises or any part of the Building or Property or for any
loss or damage  resulting  to Tenant or its  property  from  burst,  stopped  or
leaking  water,  gas,  sewer or steam pipes or falling  plaster,  or  electrical
wiring or for any damage or loss of property within the Premises from any causes
whatsoever, including theft, excepting only losses or damages resulting from the
gross  negligence  or willful  misconduct  of  Landlord,  and in no event  shall
Landlord be liable to Tenant for any consequential damages.

                                   ARTICLE 13.
                              DESTRUCTION OR DAMAGE

         If the Premises or any common areas of the  Property  providing  access
thereto shall be damaged by fire or other casualty, Landlord shall use available
insurance   proceeds  to  restore  the  same.  Such  restoration   shall  be  to
substantially  the  condition  prior to the casualty,  except for  modifications
required  by zoning  and  building  codes and other  Laws or by any  Holder  (as
defined in Article  26),  any other  modifications  to the common  areas  deemed
desirable  by  Landlord  (provided  access  to the  Premises  is not  materially
impaired),  and except that Landlord  shall not be required to repair or replace
any  of  Tenant's  furniture,   furnishings,   fixtures  or  equipment,  or  any
non-Building  standard  alterations or improvements or specialized  improvements
within the Premises. The parties acknowledge that the Premises, in its condition
as of the execution of this Lease does not include any non-Building  standard or
specialized improvements.  Landlord shall not be liable for any inconvenience or
annoyance to Tenant or its visitors, or injury to Tenant's business resulting in
any way from any such  damage or the repair  thereof.  However,  Landlord  shall
allow Tenant a proportionate abatement of Rent during the time and to the extent
the Premises are unfit for occupancy for the purposes permitted under this Lease
and not occupied by Tenant as a result thereof; provided,  however, if Tenant or
its employees or agents caused the damage such Rent  abatement,  if  applicable,
shall not  commence  until sixty (60) days  following  the date of the damage or
casualty.  Notwithstanding the foregoing to the contrary,  Landlord may elect to
terminate this Lease by notifying Tenant in writing of such  termination  within
sixty (60) days after the date of damage (such  termination  notice to include a
termination  date  providing  at least ninety (90) days for Tenant to vacate the
Premises),  if the Property  shall be damaged by fire or other casualty or cause
such that: (a) repairs to the Premises and access  thereto cannot  reasonably be
completed  within 120 days after the  commencement  of the  restoration  thereto
without  the payment of  overtime  or other  premiums,  (b) more than 25% of the
Premises is affected by the damage, and fewer than 24 months remain in the Term,
or any material  damage occurs to the Premises  during the last 12 months of the
Term,  (c) any Holder shall require that the  insurance  proceeds or any portion
thereof  be used to retire  the  Mortgage  debt (or shall  terminate  the ground
lease,  as the case may be),  or the damage is not fully  covered by  Landlord's
insurance policies, or (d) the cost of the repairs, alterations,  restoration or
improvement  work would  exceed  25% of the  replacement  cost of the  Building.
Tenant agrees that Landlord's  obligation to restore,  and the abatement of Rent
provided herein, shall be

                                       14
<PAGE>

Tenant's sole recourse in the event of such damage,  and waives any other rights
Tenant may have under any  applicable  Law to  terminate  the Lease by reason of
damage  to  the  Premises  or  Property;  provided,  however,  if in  Landlord's
reasonable  opinion the Premises  cannot be restored within six (6) months after
the  commencement of the restoration  thereto and if such damage  materially and
adversely  affects  Tenant's use of the Premises,  Tenant may elect to terminate
this Lease by delivering  written notice  thereof to Landlord  within sixty (60)
days after the date of such damage in which event this Lease shall  terminate as
of the termination  date specified in such notice and any obligation of Landlord
to restore the  Premises  shall  cease.  Tenant  acknowledges  that this Article
represents the entire  agreement  between the parties  respecting  damage to the
Premises or Property,  and Tenant waives the provisions of California Civil Code
Section 1932(2) and 1933(4) and any similar statute now or hereafter in force.

                                   ARTICLE 14.
                                  CONDEMNATION

         If the whole or any material part of the Premises or Property  shall be
taken by power of eminent domain or condemned by any competent authority for any
public or  quasi-public  use or purpose,  or if any adjacent  property or street
shall be so taken or condemned,  or reconfigured or vacated by such authority in
such manner as to require the use,  reconstruction  or remodeling of any part of
the Premises,  Building or Property,  or if Landlord shall grant a deed or other
instrument in lieu of such taking by eminent  domain or  condemnation,  Landlord
shall have the option to  terminate  this Lease upon ninety  (90) days'  notice,
provided  (i) such notice is given no later than one hundred  eighty  (180) days
after the date of such taking, condemnation,  reconfiguration, vacation, deed or
other  instrument and (ii) Landlord  terminates this Lease in connection with an
overall  plan made in good faith  resulting  as a  consequence  of such  taking.
Tenant  shall have  reciprocal  termination  rights if the whole or any material
part of the  Premises  is  permanently  taken,  or if access to the  Premises is
permanently  materially  impaired.  Landlord  shall be  entitled  to receive the
entire award or payment in connection  therewith,  except that Tenant shall have
the right to file any  separate  claim  available  to Tenant  for any  taking of
Tenant's  personal  property and fixtures  belonging to Tenant and  removable by
Tenant upon expiration of the Term, for loss of goodwill and for moving expenses
(so long as such claim does not diminish the award  available to Landlord or any
Holder,  and such  claim is payable  separately  to  Tenant).  All Rent shall be
apportioned  as of the date of such  termination,  or the  date of such  taking,
whichever  shall first occur.  If any part of the Premises  shall be taken,  and
this Lease shall not be so terminated, the Rent shall be proportionately abated.
The parties waive the provisions of California Code of Civil  Procedure  section
1265.130 or any similar law allowing either party to petition the Superior Court
to terminate this Lease in the event of a partial taking of the Premises.

                                   ARTICLE 15.
               SUBORDINATION, ATTORNMENT AND MORTGAGEE PROTECTION

         This Lease is subject and  subordinate  to all Mortgages (as defined in
Article 26) now placed upon the Property, and all other encumbrances and matters
of  public  record  applicable  to the  Property.  Provided  Tenant  receives  a
commercially reasonable non-disturbance,  subordination and attornment agreement
from any new Holder, which Tenant hereby agrees to

                                       15
<PAGE>

execute,  this Lease shall be subject and  subordinate  any Mortgages  hereafter
placed on the Property.  Landlord agrees to request its existing Holder to enter
into such Holder's current form of subordination, non-disturbance and attornment
agreement  with Tenant.  If any  foreclosure  proceedings  are  initiated by any
Holder (as defined in Article 26) or a deed in lieu is granted (or if any ground
lease is terminated),  Tenant agrees, upon written request of any such Holder or
any purchaser at  foreclosure  sale, to attorn and pay Rent to such party and to
execute and deliver any  instruments  necessary  or  appropriate  to evidence or
effectuate such attornment. However, in the event of attornment, no Holder shall
be: (i) liable for any action or omission of Landlord, or subject to any offsets
or defenses  which  Tenant  might have  against  Landlord  (prior to such Holder
becoming Landlord under such attornment) or (ii) liable for any security deposit
or bound by any prepaid  Rent not actually  received by such Holder.  Any Holder
may elect to make  this  Lease  prior to the lien of its  Mortgage,  by  written
notice to Tenant,  and if the Holder of any prior Mortgage  shall require,  this
Lease  shall be prior to any  subordinate  Mortgage.  Tenant  agrees to give any
Holder by certified  mail,  return  receipt  requested,  a copy of any notice of
default  served by Tenant  upon  Landlord,  provided  that prior to such  notice
Tenant has been notified in writing (by way of service on Tenant of a copy of an
assignment  of leases,  or  otherwise)  of the  address of such  Holder.  Tenant
further  agrees that if Landlord  shall have failed to cure such default  within
the times permitted by Landlord for cure under this Lease, any such Holder whose
address has been  provided to Tenant shall have an  additional  period of thirty
(30) days in which to cure (or such  additional  time as may be required  due to
causes beyond such Holder's control,  including time to obtain possession of the
Property  by  power of sale or  judicial  action).  Tenant  shall  execute  such
reasonable documentation as Landlord may reasonably request from time to time in
recordable form, in order to confirm the matters set forth in this Article.

                                   ARTICLE 16.
                              ESTOPPEL CERTIFICATE

         Tenant shall from time to time,  within  twenty (20) days after written
request  from  Landlord,  execute,  acknowledge  and  deliver  a  statement  (i)
certifying  that this Lease is unmodified  and in full force and effect,  or, if
modified, stating the nature of such modification and certifying that this Lease
as so modified,  is in full force and effect (or if this Lease is claimed not to
be in full force and effect,  specifying the grounds  therefor) and any dates to
which the Rent has been paid in advance, and the amount of any Security Deposit,
(ii)  acknowledging  that there are not,  to  Tenant's  knowledge,  any  uncured
defaults on the part of Landlord  hereunder,  or specifying such defaults if any
are claimed,  and (iii) certifying such other matters  pertaining to this Lease,
the Premises or the Building as Landlord may  reasonably  request,  or as may be
requested by Landlord's  current or  prospective  Holders,  insurance  carriers,
auditors, and prospective  purchasers.  Any such statement may be relied upon by
any such parties.  If Tenant shall fail to execute and return any such statement
within the time required herein,  Tenant shall be deemed to have agreed with the
matters set forth therein.

                                       16
<PAGE>

                                   ARTICLE 17.
                            ASSIGNMENT AND SUBLETTING

         (A) TRANSFERS.  Tenant shall not,  without the prior written consent of
Landlord: (i) assign,  mortgage,  pledge,  hypothecate,  encumber, or permit any
lien to attach to, or otherwise transfer,  this Lease or any interest hereunder,
by operation of law or otherwise,  (ii) sublet the Premises or any part thereof,
or (iii)  permit the use of the  Premises  by any Persons (as defined in Article
26) other than Tenant and its employees  (all of the  foregoing are  hereinafter
sometimes  referred to  collectively  as "Transfers"  and any Person to whom any
Transfer is made or sought to be made is hereinafter  sometimes referred to as a
"Transferee).  Prior to making any  Transfer,  Tenant shall  notify  Landlord in
writing,  which  notice  shall  provide a detailed  description  of the proposed
Transfer,  including, without limitation: (a) the proposed effective date (which
shall not be less than 30 nor more than 180 days after Tenant's notice), (b) the
portion of the Premises to be Transferred  (herein called the "Subject  Space"),
(c) the terms of the proposed Transfer and the consideration  therefor, the name
and  address  of  the  proposed  Transferee,  and  details  as to  the  proposed
Transferee's  form of entity and the  nature of its  business,  and (d)  current
financial  statements  of the  proposed  Transferee,  certified  by an  officer,
partner or owner  thereof,  and any other  information  reasonably  requested by
Landlord  to  enable   Landlord  to  determine  the  financial   responsibility,
character,   and  reputation  of  the  proposed   Transferee,   nature  of  such
Transferee's  business  and proposed  use of the Subject  Space,  and such other
information as Landlord may reasonably  require. If Landlord requests additional
information,  Tenant's  notice shall not be deemed to have been  received  until
Landlord  receives  such  additional  information.  In  addition  to  the  other
requirements  hereunder,  if the Subject Space comprises twenty percent (20%) or
more of the  Premises,  the Subject  Space must be  separately  demiseable  with
appropriate  means of ingress and egress  suitable for normal renting  purposes;
provided,  however,  such  condition  shall not  apply or be the sole  basis for
Landlord  withholding  its consent to any Transfer if Landlord does not exercise
its right to  recapture or sublease the Subject  Space as provided  herein.  Any
Transfer made without  complying with this Article shall, at Landlord's  option,
be null, void and of no effect,  or shall constitute a Default under this Lease.
Whether or not Landlord  shall grant consent,  Tenant shall pay $300.00  towards
Landlord's review and processing expenses,  as well as any reasonable legal fees
incurred by Landlord,  within thirty (30) days after written request therefor by
Landlord.

         (B) APPROVAL.  Subject to the terms set forth in this Article, Landlord
will not  unreasonably  withhold  its  consent to any  proposed  Transfer of the
Subject Space to the Transferee on the terms specified in Tenant's  notice,  and
Landlord agrees to grant or deny such approval within thirty (30) days following
Tenant's  proper  request  therefor.  The parties  hereby agree that it shall be
reasonable  under  this  Lease and  under any  applicable  Law for  Landlord  to
withhold  consent to any proposed  Transfer  where one or more of the  following
applies  (without  limitation  as to other  reasonable  grounds for  withholding
consent):  (i) the  Transferee  is of a character or  reputation or engaged in a
business which is not consistent with the quality of the Property, or would be a
significantly  less prestigious  occupant of the Property than Tenant,  (ii) the
Transferee intends to use the Subject Space for purposes which are not permitted
under this Lease,  (iii) the  Transferee  is either a  government  (or agency or
instrumentality  thereof) or an occupant of the  Property  unless such  occupant
desires to expand its premises and no other comparable space is available in the
Building, (iv) the proposed

                                       17
<PAGE>

Transferee  does not have a  reasonable  financial  condition in relation to the
obligations  to be assumed in  connection  with the  Transfer,  (v) the proposed
Transfer would result in more than two (2) subleases of portions of the Premises
being in effect at any one time during the Term,  or (vi)  Tenant has  committed
and failed to cure a default at the time Tenant requests consent to the proposed
Transfer.

         (C) RECAPTURE.  Notwithstanding  anything  to  the  contrary  in  this
Article,  Landlord  shall have the  option,  by giving  notice to Tenant  within
twenty (20) days after receipt of Tenant's notice of any proposed  Transfer (and
any  additional  information  required or  requested  by Landlord in  connection
therewith)  to: (a) in the case of any Transfer,  terminate this Lease as to the
Subject Space as of the effective date of the proposed Transfer,  in which event
Tenant shall be relieved of all further obligations  hereunder as to the Subject
Space as of such date; or (b) in the case of a sublease, to sublease the Subject
Space from Tenant upon the terms and  conditions  set forth in Tenant's  notice,
except that the rent shall be the lower of the per square foot monthly Base Rent
and  additional  Rent described in Articles 3 and 4 payable under this Lease for
the Subject Space, or that part of the rent and other consideration set forth in
Tenant's  notice which is  applicable  to the Space.  If Landlord  exercises its
option to sublet the Subject  Space,  Tenant shall  sublet the Subject  Space to
Landlord upon the terms and conditions contained in Tenant 's notice;  provided,
however,  that:  (i) Landlord  shall at all times under such  sublease  have the
right and option further to sublet the Subject Space without obtaining  Tenant's
consent or sharing any of the economic consideration received by Landlord;  (ii)
Landlord  and its  subtenants  shall have the right to use in common with Tenant
all lavatories,  corridors and lobbies which are within the Premises and the use
of which is reasonably  required for the use of the Subject Space;  (iii) Tenant
shall have a right of set-off or abatement  if any rental  payment due under the
sublease is not paid when  following  applicable  cure period,  but Tenant shall
have no right to assert a default hereunder by reason of any default by Landlord
under such sublease; and (iv) Landlord's liability under such sublease shall not
be deemed  assumed or taken subject to by any  successor to Landlord's  interest
under this Lease.  No failure of Landlord to exercise either option with respect
to the Subject Lease shall be deemed to be  Landlord's  consent to the Transfer.
If this Lease shall be terminated with respect to less than the entire Premises,
the Rent reserved  herein shall be prorated on the basis of the number of square
feet of rentable area retained by Tenant in proportion to the number of rentable
square feet  contained in the Premises,  this Lease as so amended shall continue
thereafter  in full force and  effect,  and upon  request of either  party,  the
parties shall execute  written  confirmation  of the same.  Notwithstanding  the
foregoing  rights of  Landlord,  Landlord's  right to  recapture or sublease the
Subject  Space as set forth in this  Paragraph  shall  not  apply to a  proposed
sublease of the Premises  where:  (i) the aggregate space sublet and/or proposed
to be sublet by Tenant  (including  the Subject Space and any common area square
footage  allocated or proposed to be allocated to any  Transferees)  is equal to
less  than  twenty  percent  (20 %) of the  Premises,  or (ii)  the  term of the
proposed  sublease is equal to or less than eighteen (18) months,  the aggregate
space sublet and/or proposed to be sublet by Tenant (including the Subject Space
and any common area square footage  allocated or proposed to be allocated to any
Transferees)  is less than  6,000  rentable  square  feet of the  Premises,  the
proposed  Transferee is an affiliate (as such term is defined in the  California
Corporations  Code) of Tenant,  or an  affiliate  of any members of the board of
directors or of a founder of Tenant,  and such proposed  Transferee engages in a
technology, media or internet

                                       18
<PAGE>

related  business or is an internet  related  venture capital firm, or (iii) the
sublease or  assignment  does not require  Landlord's  consent as expressly  set
forth in Article 17(G).

         (D) TERMS OF CONSENT.  If Landlord  consents to a Transfer,  as some of
the  conditions to the  effectiveness  thereof,  (a) the terms and conditions of
this Lease,  including  among other things,  Tenant's  liability for the Subject
Space,  shall in no way be  deemed to have been  waived  or  modified,  (b) such
consent shall not be deemed consent to any further  Transfer by either Tenant or
a  Transferee,  (c) no Transferee  shall succeed to any rights  provided in this
Lease or any  amendment  hereto to extend  the Term of this  Lease,  expand  the
Premises,  or lease  additional  space, any such rights being deemed personal to
Tenant,  and (d) Tenant shall deliver to Landlord  promptly after  execution,  a
copy of all original executed  documentation  pertaining to the Transfer in form
reasonably  acceptable to Landlord.  Any sublease hereunder shall be subordinate
and  subject  to the  provisions  of this  Lease,  and if this  Lease  shall  be
terminated  during the term of any sublease for any reason,  Landlord shall have
the right, in its sole  discretion,  to: (i) treat such sublease as canceled and
repossess  the Subject  Space by any lawful  means,  or (ii)  require  that such
subtenant  attorn  to and  recognize  Landlord  as its  landlord  under any such
sublease. If Tenant shall be in Default hereunder, as described in Paragraph (A)
of Article 20, Landlord is hereby irrevocably authorized,  as Tenant's agent and
attorney-in-fact,  to,  and may (but  shall not be  obligated  to),  direct  any
Transferee to make all payments  thereafter due under or in connection  with the
Transfer  directly to Landlord  (which  Landlord  shall apply  towards  Tenant's
obligations  under this  Lease)  until  such  Default  is cured.  Regardless  of
Landlord's  consent,  no Transfer shall release Tenant of Tenant's obligation or
alter the primary  liability  of Tenant to pay the Rent and to perform all other
obligations  to be  performed by Tenant  hereunder.  The  acceptance  of Rent by
Landlord from any other person shall not be deemed to be a waiver by Landlord of
any provision hereof. Consent to one Transfer shall not be deemed consent to any
subsequent  Transfer.  In the event of default by any  assignee or  successor of
Tenant in the  performance  of any of the terms  hereof,  Landlord  may  proceed
directly  against  Tenant without the necessity of exhausting  remedies  against
said assignee or successor.  Landlord may consent to subsequent Transfers of the
Lease or amendments  or  modifications  to this Lease with  assignees of Tenant,
without notifying Tenant, or any successor of Tenant,  and without obtaining its
or their  consent  thereto  and such  action  shall  not  relieve  Tenant or any
successor  of Tenant of  liability  under this Lease;  provided,  however,  such
amendments or modifications shall not materially  increase Tenant's  obligations
hereunder.

          (E) TRANSFER  PREMIUM.  If Landlord  consents to a Transfer,  and as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
Landlord  seventy-five  percent (75 %) of any Transfer Premium derived by Tenant
from such Transfer.  "Transfer Premium" shall mean all rent,  additional rent or
other  consideration  paid by such  Transferee  in excess of the Rent payable by
Tenant  under  this  Lease (on a monthly  basis  during  the Term,  and on a per
rentable  square foot basis,  if less than all of the Premises is  transferred),
after  deducting  the  reasonable  expenses  incurred by Tenant for any changes,
alterations and improvements to the Premises,  any other economic concessions or
services provided to the Transferee, reasonable attorney's fees directly related
to the Transfer  (not to exceed $1.00 per rentable  square foot of the Premises)
and any customary brokerage commissions paid in connection with the Transfer. If
part of the consideration for such Transfer shall be payable other than in cash,
Landlord's share of such non-cash consideration shall be in such form as is

                                       19
<PAGE>

reasonably  satisfactory to Landlord. The percentage of the Transfer Premium due
Landlord  hereunder shall be paid within ten (10) days after Tenant receives any
Transfer Premium from the Transferee.

         (F) CERTIFICATE; ANNUAL STATEMENT. Tenant shall furnish upon Landlord's
request a complete  statement,  certified  by an  independent  certified  public
accountant,  or Tenant's chief  financial  officer,  setting forth in detail the
computation  of any  Transfer  Premium  Tenant has derived and shall derive from
such Transfer. In addition,  Tenant shall deliver to Landlord a statement within
thirty  (30) days after the end of each  calendar  year in which any part of the
Term occurs,  and the end of the Term,  specifying as to such calendar year each
sublease or assignment in effect during the period covered by such statement and
(i) the date of its execution  and  delivery,  (ii) the number of square feet of
rentable area covered  thereby,  (iii) the term  thereof,  (iv) the rent charged
thereunder,  and (v) the amount (if any)  Transfer  Premium  paid and payable by
Tenant to Landlord.  Landlord or its authorized  representatives  shall have the
right at all reasonable  times to audit the books,  records and papers of Tenant
relating to any Transfer,  and shall have the right to make copies  thereof.  If
the Transfer Premium respecting any Transfer shall be found understated,  Tenant
shall  within  thirty  (30)  days  after  demand  pay  the  deficiency,  and  if
understated by more than 5%, Tenant shall pay Landlord's costs of such audit.

         (G) CERTAIN TRANSFERS.  For purposes of this Lease, the term "Transfer"
shall also include (a) if Tenant is a partnership, or limited liability company,
the withdrawal or change (whether voluntary, involuntary or by operation of law)
of a majority  of the  partners  or  members,  or any  transfer of a majority of
partnership  or  membership  interests or assets (as a  consequence  of a single
transaction or any number of separate  transactions),  or the dissolution of the
partnership or limited liability  company,  (b) if Tenant is a corporation whose
stock is not  publicly  held and not  traded  through  an  exchange  or over the
counter,  the  dissolution,  merger,  consolidation or other  reorganization  of
Tenant,  or (as a consequence of a single  transaction or any number of separate
transactions):  (i) the sale or other  transfer of more than an aggregate of 50%
of the voting shares of Tenant,  or (ii) the sale,  mortgage,  hypothecation  or
pledge of more than an aggregate of 50% of Tenant's net assets, (c) If Tenant is
more than one Person,  any Transfer by any one of the Persons comprising Tenant,
and (d) any Transfer by a Transferee.  Notwithstanding the foregoing or anything
to the  contrary  in this  Article,  as long as People PC, Inc. is the Tenant in
possession  of the Premises  and no Default  then exists,  Tenant shall have the
right,  subject to the terms and conditions  hereinafter set forth,  without the
consent  of  Landlord,  to (a)  assign  its  interest  in this  Lease (i) to any
corporation  which is a successor  to Tenant  either by merger or  consolidation
provided  such  corporation  continues to conduct  Tenant's  business as a going
concern,  or (ii) to a purchaser of all or substantially  all of Tenant's assets
or stock (provided,  in the case of an asset purchase, such purchaser shall have
also  assumed  in writing  Tenant's  obligations  under this Lease and  provided
Tenant's business  continues to be conducted as a going concern),  or (iii) to a
corporation or other entity which shall control,  be under the control of, or be
under the common  control  with,  People PC, Inc.  (the term  "control"  as used
herein shall be deemed to mean ownership of more than fifty percent (50%) of the
outstanding  voting  stock  of a  corporation,  or  other  majority  equity  and
controlling  interest if Tenant is not a  corporation)  (any such entity being a
"Related  Entity"),  or (b)  sublease  all or any  portion of the  Premises to a
Related  Entity;  upon the  condition  that (1) the  principal  purpose  of such
assignment or sublease is not the acquisition of Tenant's

                                       20
<PAGE>

interest  in this Lease  (except if such  assignment  or  sublease  is made to a
Related Entity and is made for a valid  intra-corporate  business purpose and is
not made to circumvent  the  provisions  of this Article 17)),  and (2) any such
assignee  shall have a net worth and annual income and cash flow,  determined in
accordance with generally accepted accounting principals,  consistently applied,
after  giving  effect to such  assignment,  in amounts  necessary to perform its
duties,  obligations  and  liabilities  hereunder,  as reasonably  determined by
Landlord,  and in amount at least  equal to that of People  PC,  Inc.  as of the
execution of this Lease.  Tenant shall as a condition  to the  effectiveness  of
such  assignment or sublease,  within ten (10) business days after  execution of
such assignment or sublease, deliver to Landlord (A) a copy of the instrument of
assignment  or sublease,  as the case may be, in a form which  incorporates  the
requirements  of clause  (C)  below,  duly  executed  by  Tenant,  (B)  evidence
reasonably satisfactory to Landlord establishing compliance by the assignee with
the net worth,  income and cash flow requirements of clause (b)(2) above, (C) an
instrument  in form and  substance  reasonably  satisfactory  to Landlord,  duly
executed  by the  assignee  or  sublessee,  as the  case may be,  in which  such
assignee or sublessee  shall assume  observance and performance of, and agree to
be personally bound by, all of the terms, covenants and conditions of this Lease
on Tenant's part to be observed and  performed and (D) such other  documentation
as Landlord  shall  reasonably  request to satisfy itself that the assignment or
sublease  conforms to the specific  exclusions to the definition of a "Transfer"
as set forth in this Paragraph.

                                   ARTICLE 18.
                       COMPLIANCE WITH LEGAL REQUIREMENTS

         (A) At Tenant's sole cost,  Tenant shall promptly  comply with all Laws
(defined in Article  26) now in force or that may later be in force,  including,
but not limited to, all  provisions of the American With  Disabilities  Act, the
requirements  of any board of fire  underwriters or other similar body now or in
the future  constituted,  and any direction or occupancy  certificate  issued by
public officers (collectively "Legal  Requirements"),  insofar as they relate to
the use or occupancy of the Premises by Tenant, or its subtenants,  assignees or
employees,  or to  Tenant's  obligations  under this  Lease with  respect to the
condition of the Premises;  except for (i) structural  changes or changes to the
electrical,  mechanical, or plumbing systems of the Building, to the extent such
changes are not necessitated by Tenant's acts or by improvements made for Tenant
and (ii)  alterations or  improvements  to the Building as a whole or the common
areas of the Building.

         (B) In the event that  Landlord  shall be  required  to comply with any
Legal  Requirement  as a  result  of  any  structural  changes,  changes  to the
electrical,  mechanical  or plumbing  systems of the Building or the Premises or
any  alterations or  improvements to the Building as a whole or the common areas
of the  Building  done  solely for the benefit of Tenant and  necessitated  by a
request of or Work  performed  by or on behalf of  Tenant,  any and all costs of
such  changes,  alterations  and  improvements  together  with any and all costs
associated  with  Landlord's  compliance  with Legal  Requirements in connection
therewith shall be for the account of Tenant and Tenant shall within thirty (30)
days of receipt pay all invoices therefor as additional rent.

                                       21
<PAGE>

                                   ARTICLE 19.
                           RIGHTS RESERVED BY LANDLORD

         Landlord reserves full rights to control the Property (which rights may
be exercised without  subjecting  Landlord to claims for constructive  eviction,
abatement  of Rent,  damages  or  other  claims  of any  kind),  including  more
particularly, but without limitation, the following rights:

         (A) To change the name or street  address of the Property;  install and
maintain  signs on the  exterior  and  interior of the  Property;  retain at all
times, and use in appropriate  instances,  keys to all doors within and into the
Premises;  grant to any Person the right to conduct  any  business or render any
service  at the  Property,  whether  or not it is the same or similar to the use
permitted  Tenant by this Lease;  and have access for Landlord and other tenants
of the  Property to any mail chutes  located on the  Premises  according  to the
rules of the United States Postal Service.

         (B) Upon  reasonable  notice  (except  in  emergencies),  to enter  the
Premises at reasonable hours for reasonable  purposes,  including inspection and
supplying cleaning service or other services to be provided Tenant hereunder, to
show the Premises to current and prospective  mortgage lenders,  ground lessors,
insurers and prospective  purchasers,  tenants and brokers,  and if Tenant shall
abandon the Premises at any time, or shall vacate the same during the last three
months of the Term, to decorate, remodel, repair or alter the Premises.

         (C) To use any and all means which  Landlord  deems proper to enter the
Premises at any time in an emergency.

         (D) To limit or  prevent  access to the  Property,  shut down  elevator
service,  activate elevator emergency controls, or otherwise take such action or
preventative  measures deemed necessary by Landlord for the safety of tenants or
other  occupants  of the  Property or the  protection  of the Property and other
property located thereon or therein,  in case of fire,  invasion,  insurrection,
riot, civil disorder,  public excitement or other dangerous condition, or threat
thereof.

         (E) To decorate and to make  alterations,  additions and  improvements,
structural  or  otherwise,  in or to the Property or any part  thereof,  and any
adjacent building, structure, parking facility, land, street or alley (including
without  limitation  changes  and  reductions  in  corridors,  lobbies,  parking
facilities  and other public  areas and the  installation  of kiosks,  planters,
sculptures, displays, escalators,  mezzanines, and other structures, facilities,
amenities and features  therein,  and changes for the purpose of connection with
or entrance  into or use of the Property in  conjunction  with any  adjoining or
adjacent  building or  buildings,  now  existing or hereafter  constructed).  In
connection  with  such  matters,   or  with  any  other  repairs,   maintenance,
improvements  or  alterations,  in or about  the  Property,  Landlord  may erect
scaffolding and other structures reasonably required, and during such operations
may, upon reasonable notice and subject to any reasonable security  requirements
Tenant may impose, enter upon the Premises and take into and upon or through the
Premises, all materials required to make such repairs, maintenance,  alterations
or improvements, and may close public entry ways, other public areas, restrooms,
stairways or corridors.

                                       22
<PAGE>

         (F) To substitute for the Premises other premises  (herein  referred to
as the "new premises") at the Property  provided:  (i) the new premises shall be
similar to the Premises in area,  (ii) the new premises shall be on a full floor
in the Building no lower than the 9th floor;  provided,  such new premises shall
be on a full  floor  only if the  constitute  an  entire  floor in the  Building
Premises  as of the date of any  relocation,  (iii)  Landlord  cannot  make such
substitution  more than once during the Lease  Term,  (iv)  Landlord  shall give
Tenant at least sixty (60) days' written  notice before making such change;  and
(v) if Tenant shall already have taken possession of the Premises:  (a) Landlord
shall pay the  direct,  out-of-pocket,  reasonable  expenses of Tenant in moving
from the  Premises  to the new  premises  (such  as  removing  and  reinstalling
Tenant's  furniture,  fixtures,  equipment and any Lines installed in accordance
with  Article  29 and the  cost of a  thirty  day  supply  of  letterhead  and a
reasonable number of business cards) and improving the new premises so that they
are  substantially  similar  to the  Premises,  and (b) such move  shall be made
during  evenings,  weekends so as to incur the least  convenience to Tenant.  In
such case,  the parties shall execute an amendment to the Lease  confirming  the
change within thirty (30) days after Landlord shall request the same.

         (G) To periodically  remeasure the Property and/or the Premises,  which
may result in an increase or decrease in the number of feet  contained  therein,
provided that such a remeasurement shall not (i) by itself result in an increase
or decrease in the Base Rent,  or Tenant's  Prorata  Share of Taxes or Operating
Expenses or any other fee, charge or expense based on the area leased by Tenant;
or (ii)  under any  circumstances  entitle  Tenant to a refund or credit for any
sums paid under this Lease.  The parties shall execute an amendment to the Lease
confirming the  measurement  change within thirty (30) days after Landlord shall
request the same.

         (H) To  terminate  this Lease  upon  written  notice  thereof if Tenant
abandons the Premises,  vacates all or a substantial portion of the Premises for
more than  sixty  (60)  consecutive  days,  or fails to take  possession  of the
Premises within sixty (60) days after the Commencement Date.

         In  connection  with  entering  the  Premises  to  exercise  any of the
foregoing rights, Landlord shall: (a) provide reasonable advance written or oral
notice to  Tenant's  on-site  manager  or other  appropriate  person  (except in
emergencies,  or for routine  cleaning or other routine  matters),  and (b) take
reasonable steps to minimize any interference with Tenant's business.

                                       23
<PAGE>

                                   ARTICLE 20.
                               LANDLORD'S REMEDIES

         (A) DEFAULT.  The occurrence of any one or more of the following events
shall  constitute  a "Default"  by Tenant,  which shall give rise to  Landlord's
remedies set forth in Paragraph  (B) of this  Article:  (i) failure by Tenant to
make when due any payment of Rent; provided, that on the first two (2) occasions
during the Term of Tenant's  failure to pay Rent when due,  no Default  shall be
deemed to have  occurred  unless  Tenant fails to pay Rent within three (3) days
following  Landlord's written notice thereof;  (ii) failure by Tenant to observe
or  perform  any of the terms or  conditions  of this  Lease to be  observed  or
performed by Tenant other than the payment of Rent, or as provided below, unless
such  failure is cured within  thirty (30) days after  written  notice,  or such
shorter period expressly provided elsewhere in this Lease, or such longer period
as may be  reasonably  necessary  if the  failure by its nature  cannot be cured
within  thirty (30) days,  provided  that  within  such thirty  (30)- day period
Tenant commences and thereafter diligently proceeds to cure such failure;  (iii)
failure by Tenant to comply with the Rules,  unless such failure is cured within
five (5) days after written  notice;  (iv) (a) making by Tenant or any guarantor
of this  Lease  ("Guarantor")  of any  general  assignment  for the  benefit  of
creditors,  (b) filing by or against  Tenant or any  Guarantor  of a petition to
have  Tenant  or  such   Guarantor   adjudged  a  bankrupt  or  a  petition  for
reorganization  or arrangement under any Law (defined in Article 26) relating to
bankruptcy  (unless,  in the case of a  petition  filed  against  Tenant or such
Guarantor,  the same is dismissed  within sixty (60) days), (c) appointment of a
trustee or receiver to take possession of  substantially  all of Tenant's assets
or of Tenant's  interest  in this Lease,  where  possession  is not  restored to
Tenant  within thirty (30) days,  (d)  attachment,  execution or other  judicial
seizure of substantially  all of Tenant's assets or of Tenant's interest in this
Lease,  or (e)  Tenant's or any  Guarantor's  inability to pay its debts as they
mature; (v) any material misrepresentation herein, or material misrepresentation
or omission in any financial statements or other materials provided by Tenant or
any  Guarantor  in  connection  with  negotiating  or entering  this Lease or in
connection  with any Transfer  under  Article 17; (vi) making of any Transfer in
violation of Article 17; or (vii)  cancellation or revocation of any guaranty of
this Lease by any Guarantor.  Without limiting the foregoing,  failure by Tenant
to  comply  with the same term or  condition  of this  Lease on three  occasions
during any twelve (12) month  period shall cause any failure to comply with such
term or condition  during the  succeeding  twelve month  period,  at  Landlord's
option,  to constitute an incurable  Default if Landlord has given Tenant notice
of each such failure after each such failure occurs. The parties acknowledge and
agree that time is of the essence of this Lease and, to the extent  allowable by
Law,  the notice  and cure  periods  provided  herein are in lieu of, and not in
addition to, any notice and cure periods provided by Law.

         (B)  REMEDIES.  If Tenant  commits a Default,  in addition to any other
right or remedy  allowed under any Law or other  provision of this Lease (all of
which  remedies  shall be  distinct,  separate  and  cumulative),  Landlord  may
terminate this Lease,  repossess the Premises by unlawful detainer suit, summary
proceedings,  or any other lawful  means,  and recover as damages a sum of money
equal to: (a) the worth at the time of award of the  unpaid  Rent which had been
earned  at the time of  termination;  (b) the  worth at the time of award of the
amount by which the unpaid Rent which would have been earned  after  termination
until the time of the award  exceeds  the  amount of such Rent loss that  Tenant
proves could have been reasonably

                                       24
<PAGE>

avoided;  (c) the worth at the time of award of the  amount by which the  unpaid
Rent for the  balance of the Term after the time of award  exceeds the amount of
such Rent loss that Tenant proves can  reasonably be avoided;  and (d) any other
amounts   necessary  to  compensate   Landlord  for  all  detriment  or  damages
proximately  caused by Tenant's  failure to perform its  obligations  under this
lease or that in the  ordinary  course  would be  likely  to  result  therefrom,
including  without  limitation,  all Costs of Reletting (as defined in Paragraph
(F) of this  Article.  For purposes of computing  the amount of Rent herein that
would have accrued after the time of award,  Tenant's Prorata Share of Taxes and
Operating Expenses shall be projected,  based upon the average rate of increase,
if any, in such items from the Commencement  Date through the time of award. The
"worth at the time of award" of the  amounts  referred to in clauses (a) and (b)
shall be  computed  by  allowing  interest  at the  Default  Rate (as defined in
Article  26).  The  "worth at the time of award" of the  amount  referred  to in
clause (c) shall be computed by discounting  such amount at the discount rate of
the Federal  Reserve Bank of San Francisco at the time of award plus one percent
(1 %).

         (C)  MITIGATION  OF  DAMAGES.  If  Landlord  terminates  this  Lease or
Tenant's right to possession,  Landlord shall use reasonable efforts to mitigate
Landlord's damages, and Tenant shall be entitled to submit proof of such failure
to  mitigate as a defense to  Landlord's  claims  hereunder,  if  mitigation  of
damages  by  Landlord  is  required  by  applicable  Law.  If  Landlord  has not
terminated  this Lease or Tenant's right to  possession,  Landlord shall have no
obligation  to  mitigate,  and may  permit  the  Premises  to  remain  vacant or
abandoned,  and shall have the remedies  under  California  Civil Code,  Section
1951.4, as the same may be modified or replaced hereafter;  in such case, Tenant
may seek to mitigate  damages by  attempting  to sublease the Premises or assign
this Lease subject to the provisions of Article 17.

         (D) SPECIFIC  PERFORMANCE AND COLLECTION OF RENT. Landlord shall at all
times have the rights and remedies  (which shall be  cumulative  with each other
and  cumulative  and in addition to those  rights and remedies  available  under
Paragraph  (B) of this  Article  above  or any law or  other  provision  of this
Lease), without prior demand or notice except as required by applicable Law: (i)
to seek any  declaratory,  injunctive or other equitable relief and specifically
enforce this Lease, or restrain or enjoin a violation or breach of any provision
hereof, and (ii) to sue for and collect any unpaid Rent which has accrued.

         (E) LATE CHARGES AND INTEREST.  Tenant shall pay, as additional Rent, a
service  charge  of  Two  Hundred   Dollars   ($200.00)  for   bookkeeping   and
administrative  expenses, if Rent is not received within five (5) days after its
due date.  In  addition,  any Rent paid more than five (5) days  after due shall
accrue  interest  from the due date at the  Default  Rate (as defined in Article
26),  until  payment is received by Landlord.  Such service  charge and interest
payments shall not be deemed consent by Landlord to late payments,  nor a waiver
of Landlord's  right to insist upon timely payments at any time, nor a waiver of
any  remedies to which  Landlord is entitled as a result of the late  payment of
Rent.

         (F) CERTAIN DEFINITIONS. "Net Re-Letting Proceeds" shall mean the total
amount of rent and other consideration actually paid by any Replacement Tenants,
less all  Costs  of  Re-Letting,  during  a given  period  of  time.  "Costs  of
Re-Letting" shall include, without limitation, all reasonable costs and expenses
incurred by Landlord  for any repairs,  maintenance,  changes,  alterations  and
improvements to the Premises, brokerage commissions,

                                       25
<PAGE>

advertising costs,  attorneys' fees, any customary free rent periods or credits,
tenant improvement allowances,  take-over lease obligations and other customary,
necessary or appropriate  economic incentives  reasonably required to enter into
leases with Replacement  Tenants,  and costs of collecting rent from Replacement
Tenants.  "Replacement Tenants" shall mean any Person (as defined in Article 26)
to whom  Landlord  relets the Premises or any portion  thereof  pursuant to this
Article.

         (G) OTHER  MATTERS.  No re-entry  or  repossession,  repairs,  changes,
alterations  and additions,  reletting,  acceptance of keys from Tenant,  or any
other  action or  omission  by  Landlord  shall be  construed  as an election by
Landlord to terminate this Lease or Tenant's  right to  possession,  or accept a
surrender of the  Premises,  nor shall the same operate to release the Tenant in
whole or in part from any of  Tenant's  obligations  hereunder,  unless  express
written notice of such  intention is sent by Landlord to Tenant.  To the fullest
extent  permitted  by  Law,  all  rent  and  other  consideration  paid  by  any
Replacement Tenants shall be applied: first, to the Costs of Re-Letting, second,
to the payment of any Rent theretofore  accrued,  and the residue, if any, shall
be held by Landlord and applied to the payment of other obligations of Tenant to
Landlord  as the same become due (with any  remaining  residue to be retained by
Landlord).  Landlord may apply payments  received from Tenant to any obligations
of Tenant then accrued,  without regard to such obligations as may be designated
by Tenant.  Landlord  shall be under no  obligation  to  observe or perform  any
provision  of this Lease on its part to be observed or performed  which  accrues
after the date of any Default by Tenant.  Tenant hereby  irrevocably  waives any
right otherwise available under any Law to redeem or reinstate this Lease.

                                   ARTICLE 21.
                            LANDLORD'S RIGHT TO CURE

         (A) If Landlord shall fail to perform any term or provision  under this
Lease  required to be performed by Landlord,  Landlord shall not be deemed to be
in default  hereunder nor subject to any claims for damages of any kind,  unless
such failure shall have continued for a period of thirty (30) days after written
notice thereof by Tenant;  provided, if the nature of Landlord's failure is such
that  more  than  thirty  (30) days are  reasonably  required  in order to cure,
Landlord  shall not be in default if  Landlord  commences  to cure such  failure
within such thirty (30) day period, and thereafter  reasonably  proceeds to cure
such failure to  completion.  The  aforementioned  periods of time permitted for
Landlord to cure shall be extended for any period of time during which  Landlord
is delayed in, or prevented from, curing due to fire or other casualty, strikes,
lock-outs  or other labor  troubles or  shortages,  shortages  of  equipment  or
materials,  governmental  requirements,  power  shortages  or  outages,  acts or
omissions  by  Tenant  or other  Persons,  and other  causes  beyond  Landlord's
reasonable  control.  If Landlord shall fail to cure within the times  permitted
for cure herein,  Landlord shall be subject to such remedies as may be available
to  Tenant  (subject  to the  other  provisions  of this  Lease);  provided,  in
recognition  that Landlord must receive timely  payments of Rent and operate the
Property,  Tenant  shall have no right of  self-help  to perform  repairs or any
other  obligation of Landlord,  and shall have no right to withhold,  set-off or
abate Rent.

         (B) All agreements and provisions to be performed by Tenant under any
of the terms of this Lease shall be at its sole cost and expense and without any
abatement of Rent. If

                                       26
<PAGE>

Tenant shall fail to pay any sum of money, other than Rent,  required to be paid
by it  hereunder,  or shall  fail to  perform  any  other  act on its part to be
performed  hereunder  and such  failure  shall  continue for ten (10) days after
notice thereof by Landlord, or a shorter period if additional damage may result,
Landlord may, to protect its interests, but shall not be obligated to do so, and
without waiving or releasing Tenant from any of its  obligations,  make any such
payment or perform any such other act on Tenant's  part to be made or  performed
as provided  herein.  All sums so paid by Landlord and all necessary  incidental
costs  shall be deemed  additional  Rent  hereunder  and shall be  payable  with
interest from the date Landlord makes such payments until paid by Tenant, at the
Default Rate,  and Landlord shall have (in addition to any other right or remedy
of Landlord) the same rights and remedies in the event of the nonpayment thereof
by Tenant as in the case of default by Tenant in the payment of Rent.

                                   ARTICLE 22.
                              RETURN OF POSSESSION

         At the  expiration  of earlier  termination  of this Lease or  Tenant's
right of possession,  Tenant shall  surrender  possession of the Premises in the
condition  required under Article 9, ordinary wear and tear excepted,  and shall
surrender all keys, key cards, and any parking stickers, to Landlord, and advise
Landlord  as to the  combination  of any locks or vaults then  remaining  in the
Premises,  and shall  remove  all trade  fixtures  and  personal  property.  All
improvements,  fixtures  and other items in or upon the Premises  (except  trade
fixtures and personal property belonging to Tenant), whether installed by Tenant
or Landlord,  shall be  Landlord's  property and shall remain upon the Premises,
all  without  compensation,  allowance  or credit to  Tenant.  However,  if upon
granting its consent to any  alterations or improvements to the Premises made by
Tenant, Landlord gives notice that such work will be required to be removed upon
the  termination  of  expiration  of this  Lease,  Tenant  shall,  prior  to the
expiration or termination of this Lease,  promptly  remove such of the foregoing
items as are designated in such notice and restore the Premises to the condition
prior to the  installation  of such  items and as of the  execution  hereof.  If
Tenant shall fail to perform any repairs or  restoration,  or fail to remove any
items from the Premises required hereunder, Landlord may do so, and Tenant shall
pay  Landlord  the cost  thereof  upon  demand.  All  property  removed from the
Premises by Landlord  pursuant to any provisions of this Lease or any Law may be
handled or stored by Landlord  at Tenant's  expense,  and  Landlord  shall in no
event be responsible  for the value,  preservation or safekeeping  thereof.  All
property not removed from the Premises or retaken from storage by Tenant  within
thirty  (30) days  after  expiration  or  earlier  termination  of this Lease or
Tenant's right to possession,  shall at Landlord's option be conclusively deemed
to have  been  conveyed  by  Tenant to  Landlord  as if by bill of sale  without
payment by Landlord.  Unless prohibited by applicable Law, Landlord shall have a
lien  against such  property for the costs  incurred in removing and storing the
same.

                                       27
<PAGE>

                                   ARTICLE 23.
                                  HOLDING OVER

         Unless Landlord expressly agrees otherwise in writing, Tenant shall pay
Landlord  175 % of the amount of Rent then  applicable  (or the  highest  amount
permitted by law,  whichever  shall be less) prorated on per diem basis for each
day Tenant shall  retain  possession  of the Premises or any part thereof  after
expiration  or earlier  termination  of this  Lease,  together  with all damages
sustained by Landlord on account  thereof.  The foregoing  provisions  shall not
serve as  permission  for  Tenant to  hold-over,  nor  serve to extend  the Term
(although  Tenant shall remain bound to comply with all provisions of this Lease
until Tenant  vacates the  Premises,  and shall be subject to the  provisions of
Article 22).  Notwithstanding the foregoing to the contrary,  at any time before
or after  expiration  or earlier  termination  of the Lease,  Landlord may serve
notice advising  Tenant of the amount of Rent and other terms  required,  should
Tenant desire to enter a  month-to-month  tenancy (and if Tenant shall hold over
more than one full calendar month after such notice,  Tenant shall thereafter be
deemed a month-to-month  tenant,  on the terms and provisions of this Lease then
in effect, as modified by Landlord's notice, and except that Tenant shall not be
entitled  to any  renewal or  expansion  rights  contained  in this Lease or any
amendments hereto).

                                   ARTICLE 24.
                                    NO WAIVER

         No provision of this Lease will be deemed waived by either party unless
expressly  waived in writing  signed by the waiving  party.  No waiver  shall be
implied by delay,  forbearance,  failure to act or any other act or  omission of
either party.  No waiver by either party of any provision of this Lease shall be
deemed a waiver of such provision with respect to any subsequent matter relating
to such provision,  and Landlord's consent or approval  respecting any action by
Tenant shall not constitute a waiver of the requirement for obtaining Landlord's
consent or approval  respecting  any  subsequent  action.  Acceptance of Rent by
Landlord  shall not  constitute  a waiver of any breach by Tenant of any term or
provision of this Lease.  No  acceptance of a lesser amount than the Rent herein
stipulated  shall be deemed a waiver of  Landlord's  right to  receive  the full
amount due,  nor shall any  endorsement  or statement on any check or payment or
any  letter  accompanying  such  check  or  payment  be  deemed  an  accord  and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's  right to recover the full amount due. The  acceptance  of Rent or of
the  performance  of any other  term or  provision  from any  Person  other than
Tenant,  including any  Transferee,  shall not constitute a waiver of Landlord's
right to approve or disapprove any Transfer.

                                   ARTICLE 25.
                         ATTORNEYS' FEES AND JURY TRIAL

         In the event of any  litigation  between the  parties,  the  prevailing
party shall be  entitled  to obtain,  as part of the  judgment,  all  reasonable
attorneys' fees, costs and expenses incurred in connection with such litigation,
except as may be limited by  applicable  Law.  In the  interest  of  obtaining a
speedier  and less  costly  hearing of any  dispute,  the  parties  hereby  each
irrevocably waive the right to trial by jury.

                                       28
<PAGE>

                                   ARTICLE 26.
                     CAPTIONS, DEFINITIONS AND SEVERABILITY

         The  captions  of the  Articles  and  Paragraphs  of this Lease are for
convenience  of  reference  only and shall not be  considered  or referred to in
resolving  questions of  interpretation.  If any term or provision of this Lease
shall be found invalid,  void,  illegal,  or  unenforceable  with respect to any
particular  Person by a court of  competent  jurisdiction,  it shall not affect,
impair or invalidate any other terms or provisions hereof, or its enforceability
with respect to any other Person,  the parties  hereto  agreeing that they would
have  entered  into the  remaining  portion  of this Lease  notwithstanding  the
omission  of the  portion  or  portions  adjudged  invalid,  void,  illegal,  or
unenforceable with respect to such Person.

         (A) "Building" shall mean the structure identified in Article 1 of this
Lease.

         (B) "Default Rate" shall mean five percent (5 %) in excess of the Prime
Rate (as defined in Paragraph  (1) of this  Article)  per annum,  or the highest
rate permitted by applicable Law, whichever shall be less.

         (C)  "Holder"  shall  mean the  holder of any  Mortgage  at the time in
question,  and where such Mortgage is a ground  lease,  such term shall refer to
the ground lessor.

         (D) "Holidays" shall mean all federally  observed  holidays,  including
New Year's Day,  President's  Day,  Memorial Day,  Independence  Day, Labor Day,
Veterans' Day,  Thanksgiving Day,  Christmas Day, and to the extent of utilities
or  services  provided  by union  members  engaged at the  Property,  such other
holidays observed by such unions.

         (E)  "Landlord" and "Tenant" shall be applicable to one or more Persons
as the case may be, and the singular  shall  include the plural,  and the neuter
shall include the  masculine  and  feminine;  and if there be more than one, the
obligations  thereof shall be joint and several.  For purposes of any provisions
indemnifying or limiting the liability of Landlord,  the term  "Landlord"  shall
include  Landlord's  present  and  future  partners,   members,   beneficiaries,
trustees, officers,  directors,  employees,  shareholders,  principals,  agents,
affiliates, successors and assigns.

         (F) "Law" shall mean all federal,  state, county and local governmental
and municipal laws, statutes,  ordinances,  rules, regulations,  codes, decrees,
orders, and other such requirements, applicable equitable remedies and decisions
by courts in cases where such decisions are considered binding precedents in the
state in which the Property is located, and decisions of federal courts applying
the Laws of such State.

         (G) "Mortgage" shall mean all mortgages,  deeds of trust, ground leases
and other  such  encumbrances  now or  hereafter  placed  upon the  Property  or
Building, or any part thereof and all renewals,  modifications,  consolidations,
replacements  or  extensions  thereof,  and all  indebtedness  now or  hereafter
secured thereby and all interest thereon.

         (H) "Operating  Expenses"  shall mean all  expenses,  costs and amounts
(other than Taxes) of every kind and nature  which  Landlord  shall incur or pay
during any calendar year

                                       29
<PAGE>

any portion of which occurs during the Term,  because of or in  connection  with
the ownership, management, repair, maintenance, restoration and operation of the
Property, including, without limitation, any amounts paid for: (a) utilities for
the Property, including but not limited to, electricity,  power, gas, steam, oil
or  other  fuel,  water,  sewer,   lighting,   heating,   air  conditioning  and
ventilating, (b) permits, licenses and certificates necessary to operate, manage
and lease the Property, (c) insurance applicable to the Property, not limited to
the amount of coverage  Landlord is  required to provide  under this Lease,  (d)
supplies,  tools,  equipment and  materials  used in the  operation,  repair and
maintenance of the Property,  (e)  accounting,  legal,  inspection,  consulting,
concierge and other services, (f) any equipment rental (or installment equipment
purchase or equipment financing agreements), or management agreements (including
the cost of any  management  fee actually  paid  thereunder  and the fair rental
value of any office space  provided  thereunder,  up to customary and reasonable
amounts), (g) wages, salaries and other compensation and benefits (including the
fair value of any parking  privileges  provided) for all persons  engaged in the
operation,  maintenance  or  security of the  Property,  and  employer's  Social
Security taxes,  unemployment taxes or insurance,  and any other taxes which may
be levied on such wages, salaries, compensation and benefits, (h) payments under
any  easement,  operating  agreement,   declaration,   restrictive  covenant  or
instrument  pertaining to the sharing of costs in any planned  development,  and
(i)  operation,  repair  and  maintenance  of  all  Systems  and  Equipment  and
components thereof (including  replacement of components),  janitorial  service,
alarm  and  security   service,   window  cleaning,   trash  removal,   elevator
maintenance,  cleaning of walks,  parking facilities and building walls, removal
of ice and snow,  replacement  of wall and floor  coverings,  ceiling  tiles and
fixtures in lobbies,  corridors,  restrooms  and other common or public areas or
facilities,  maintenance and replacement of shrubs,  trees, grass, sod and other
landscaped items,  irrigation  systems,  drainage  facilities fences,  curbs and
walkways, re-paving and re-striping parking facilities, and roof repairs. If the
Property is not fully  occupied  during all or a portion of any  calendar  year,
including the Base Year,  Landlord will, in accordance with sound accounting and
management practices, determine the amount of variable Operating Expenses (i.e.,
those items which vary according to occupancy  levels) that would have been paid
had the  Property  been 95 %  occupied,  and the amount so  determined  shall be
deemed to have been the amount of variable  Operating Expenses for such year. If
Landlord makes such an adjustment,  Landlord shall make a comparable  adjustment
for the Base Expense year.  Notwithstanding  the foregoing,  Operating  Expenses
shall not, however, include:

         (i)  depreciation,  interest (except as set forth below with respect to
         amortization of capital  improvements)  and  amortization on Mortgages,
         and other debt costs or ground lease  payments,  if any;  legal fees in
         connection with leasing, tenant disputes or enforcement of leases; real
         estate  brokers'  leasing  commissions;  improvements or alterations to
         tenant spaces (including permit costs for such improvements);  the cost
         of providing any service  directly to and paid directly by, any tenant;
         any costs expressly  excluded from Operating Expenses elsewhere in this
         Lease; costs of any items to the extent Landlord receives reimbursement
         from  insurance  proceeds or from a third  party  (such  proceeds to be
         deducted from Operating Expenses in the year in which received);  costs
         incurred by Landlord for organizational  expenses,  attorney's fees and
         accounting fees to the extent related to Landlord's  general  corporate
         overhead and general  administrative  expenses (as  distinguished  from
         costs of operating the Property); and

                                       30
<PAGE>

         (ii)  capital  expenditures,  except for:  (a) the costs of any capital
         improvements,  equipment  or devices  installed or paid for by Landlord
         (1)  to  conform  with  any  change  in  Laws,  rules,  regulations  or
         requirements of any governmental or quasi governmental authority having
         jurisdiction  not  applicable  to the  Building  as of the date of this
         Lease or of the board of fire  underwriters or similar  insurance body,
         or (2) to  effect a labor  saving,  energy  saving  or  other  economy,
         amortized  over the  lesser of (A) three (3)  years,  (B) the "pay back
         period," or (C) the useful life of such capital improvement,  equipment
         or  device  (as  determined  in  accordance  with  generally   accepted
         accounting principles or otherwise as determined by Landlord),  or such
         longer  period  as  Landlord  shall  reasonably  determine,  as well as
         interest on the  unamortized  balance at the Prime Rate,  as defined in
         Paragraph (J) below,  on the date the costs are incurred or such higher
         rate as may have been paid by Landlord on borrowed funds. The "pay back
         period" shall be the period within which the  anticipated  savings from
         the use of such capital improvement, equipment or device, as determined
         by Landlord,  will equal the cost of the subject  capital  improvement,
         equipment or device; (b) the costs of (1) exterior window draperies and
         coverings provided by Landlord, (2) carpeting and wall coverings in the
         common areas,  and (3) other  furnishings  in common areas which,  as a
         result of normal use, require periodic replacement,  amortized over the
         useful life of such  improvements  (as  determined in  accordance  with
         generally accepted accounting  principles or otherwise as determined by
         Landlord),  or such longer  period as may be  determined by Landlord in
         its  reasonable  discretion,  as well as  interest  on the  unamortized
         balance  at the Prime Rate on the date the costs are  incurred  or such
         higher rate as may have been paid by Landlord  on  borrowed  funds,  if
         more than fifteen  percent (15 %) of the draperies,  window  coverings,
         carpeting or  furnishings  are replaced  during any calendar  year.  If
         fifteen  percent  (15 %) or less of the  draperies,  window  coverings,
         carpeting or furnishings  are replaced  during any calendar year,  then
         the  entire  cost  of  replacing  such  draperies,   window  coverings,
         carpeting or furnishings  may be included in Operating  Expenses in the
         calendar year the cost is incurred; (c) depreciation or amortization of
         the costs of  materials,  tools,  supplies and  equipment  purchased by
         Landlord to enable  Landlord to supply  services  which  Landlord might
         otherwise  contract for with a third party where such  depreciation and
         amortization  would otherwise have been included in the charge for such
         third party's services;  and (d) costs of minor capital improvements or
         expenditures  where such improvement or expenditure costs less than Ten
         Thousand Dollars ($10,000.00) per calendar year.

         (I)  "Person"  shall  mean an  individual,  trust,  partnership,  joint
venture,  association,  limited  liability  company,  corporation  and any other
entity.

         (J) "Prime  Rate" shall mean the prime rate (or base rate)  reported in
the Money Rates  column or section of THE WALL STREET  JOURNAL as being the base
rate on corporate loans at large U.S. money center  commercial banks (whether or
not such rate has  actually  been  charged by any such bank) on the first day on
which THE WALL STREET  JOURNAL is published in the month  preceding the month in
which the subject costs are incurred.

         (K) "Property" shall mean the Building,  and any common or public areas
or  facilities,  easements,  corridors,  lobbies,  sidewalks,  loading  areas  ,
driveways, landscaped

                                                       31
<PAGE>

area , skywalks,  parking garages and lots, and any and all other  structures or
facilities  operated or maintained in connection  with or for the benefit of the
Building,  and all  parcels or tracts of land on which all or any portion of the
Building or any of the other  foregoing  items are  located,  and any  fixtures,
machinery,  equipment,  apparatus,  Systems and  Equipment,  furniture and other
personal  property located thereon or therein and used in connection  therewith,
whether  title  is held by  Landlord  or its  affiliates.  Possession  of  areas
necessary  for  utilities,  services,  safety  and  operation  of the  Property,
including  the  Systems  and  Equipment  (as  defined  in  this  Article),  fire
stairways,  perimeter walls,  space between the finished ceiling of the Premises
and the  slab of the  floor or roof of the  Property  there  above,  and the use
thereof  together  with the right to  install,  maintain,  operate,  repair  and
replace the Systems and Equipment  including any of the same in, through,  under
or above the  Premises in  locations  that will not  materially  interfere  with
Tenant's use of the Premises,  are hereby excepted and reserved by Landlord, and
not demised to Tenant;  provided  that,  subject to the terms and  conditions of
Article  29,  Tenant  shall have the right to install  wires and  conduit in the
space above the finished ceiling of the Premises as may be reasonably  necessary
to serve Tenant's equipment in the Premises.

         (L) "Rent" shall have the meaning  specified  therefor in Paragraph (H)
of Article 4.

         (M)  "Systems  and   Equipment"   shall  mean  any  plant,   machinery,
transformers,  duct work,  cable,  wires and other  equipment,  facilities,  and
systems designed to supply heat,  ventilation,  air conditioning and humidity or
any other  services or  utilities,  or comprising or serving as any component or
portion of the electrical,  gas,  steam,  plumbing,  sprinkler,  communications,
alarm,  security,  or  fire/life/safety  systems  or  equipment,  or  any  other
mechanical,  electrical,  electronic, computer or other systems or equipment for
the Property.

         (N) "Taxes" shall mean all federal, state, county or local governmental
or municipal taxes,  fees, charge or other impositions of every kind and nature,
whether  general,  special,   ordinary  or  extraordinary  (including,   without
limitation,  real estate taxes, general and special assessments,  transit taxes,
water and sewer  rents,  taxes  based upon the receipt of rent  including  gross
receipts  or sales taxes  applicable  to the receipt of rent or service or value
added taxes  (except to the extent  paid by Tenant  under  Article 5),  personal
property  taxes  imposed upon the  fixtures,  machinery,  equipment,  apparatus,
Systems and Equipment, appurtenances, furniture and other personal property used
in connection  with the Property  which  Landlord  shall pay during any calendar
year,  any  portion  of which  occurs  during  the Term  (without  regard to any
different fiscal year used by such government or municipal authority) because of
or in  connection  with the  ownership,  leasing and  operation of the Property.
Notwithstanding  the  foregoing,  there shall be excluded  from Taxes all excess
profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and
succession taxes,  estate taxes,  federal and state income taxes, other taxes to
the extent applicable to Landlord's  general or net income (as opposed to rents,
receipts or income attributable to operations at the Property) and any penalties
and interest  incurred as a result of Landlord's  failure to pay Taxes when due.
If the method of  taxation of real estate  prevailing  at the time of  execution
hereof  shall be, or has been  altered,  so as to cause the whole or any part of
the taxes now,  hereafter  or  heretofore  levied,  assessed  or imposed on real
estate to be levied, assessed or imposed on Landlord,  wholly or partially, as a
capital levy or otherwise,  or on or measured by the rents  received  therefrom,
then such new or altered taxes  attributable  to the Property  shall be included
within

                                       32
<PAGE>

the term "Taxes," except that the same shall not include any enhancement of said
tax attributable to other income of Landlord.  Any expenses incurred by Landlord
in attempting to protest, reduce or minimize Taxes shall be included in Taxes to
the extent  that Taxes are reduced as a result.  Tax  refunds  shall be deducted
from Taxes in the year they are received by  Landlord,  but if such refund shall
relate to taxes  paid in a prior  year of the Term,  and the  Lease  shall  have
expired,  Landlord  shall mail Tenant's  Prorata Share of such net refund (after
deducting  Tenant's  Prorate Share of expenses and attorneys'  fees),  up to the
amount  Tenant  paid  towards  Taxes  during such year,  to Tenant's  last known
address. If Taxes for the Base Tax Year are reduced as the result of protest, or
by means of  agreement,  or as the  result of legal  proceedings  or  otherwise,
Landlord may adjust  Tenant's  obligations  for Taxes in all years following the
Base Tax Year,  and Tenant  shall pay  Landlord  within 30 days after notice any
additional  amount  required by such  adjustment  for any such years or portions
thereof that have therefore  occurred;  provided,  however,  Tenant shall not be
obligated to pay an amount  greater than the amount  Tenant's  Prorata  Share of
Taxes would have been had the Base Tax Year originally been equal to the reduced
Base Tax Year. If Taxes for any period during the Term or any extension  thereof
(other than the Base Tax Year),  shall be  increased  after  payment  thereof by
Landlord, for any reason, including without limitation, error or reassessment by
applicable governmental or municipal authorities, Tenant shall pay Landlord upon
demand Tenant's Prorata Share of such increase in Taxes. Except for increases in
the Base Tax Year,  Tenant shall pay increased Taxes whether Taxes are increased
as a result  of  increases  in the  assessments  or  valuation  of the  Property
(whether based on a sale,  change in ownership or refinancing of the Property or
otherwise),  increases  in  the  tax  rates,  reduction  or  elimination  of any
rollbacks or other deductions  available under current law, scheduled reductions
of any tax abatement,  as a result of the elimination,  invalidity or withdrawal
of any tax abatement,  or for any other cause  whatsoever.  Notwithstanding  the
foregoing,  if any  Taxes  shall  be paid  based  on  assessments  or bills by a
governmental  or municipal  authority  using a fiscal year other than a calendar
year,  Landlord  may elect to average the  assessments  or bills for the subject
calendar  year,  based on the number of months of such calendar year included in
each such assessment or bill.

         (O) "Tenant's  Prorata Share" of Taxes and Operating  Expenses shall be
3.3003%. Tenant acknowledges that the "rentable area of the Premises" under this
Lease includes the usable area,  without  deduction for columns or  projections,
multiplied by a load or conversion  factor, to reflect a share of certain areas,
which may include lobbies, corridors,  mechanical,  utility, janitorial,  boiler
and service rooms and closets,  restrooms  and other public,  common and service
areas.  Except as provided  expressly to the contrary herein, the "rentable area
of the  Property"  shall  include  all  rentable  area of all  space  leased  or
available for lease at the Property,  which Landlord may reasonably re-determine
from time to time, to reflect  re-configurations,  additions or modifications to
the Property.  If the Property or any  development of which it is a part,  shall
contain  non-office  uses,  Landlord  shall  have  the  right  to  determine  in
accordance with sound  accounting and management  principles,  Tenant's  Prorata
Share of Taxes  and  Operating  Expenses  for only  the  office  portion  of the
Property or of such development, in which event, Tenant's Prorata Share shall be
based on the ratio of the rentable  area of the Premises to the rentable area of
such office portion.  In such event,  the Operating  Expenses and Taxes to which
Tenant's  Prorata Share shall apply shall be reduced to exclude those  Operating
Expenses  and  Taxes  which  relate to the area of the  Property  which has been
excluded in calculating Tenant's Prorata Share. Similarly, if the Property shall
contain

                                       33
<PAGE>

tenants  who do  not  participate  in all or  certain  categories  of  Taxes  or
Operating Expenses on a prorata basis,  Landlord may exclude the amount of Taxes
or  Operating  Expenses,  or such  categories  of the same,  as the case may be,
attributable to (as opposed to recoverable  from) such tenants,  and exclude the
rentable area of their premises,  in computing Tenant's Prorata Share as applied
to such categories.

                                   ARTICLE 27.
                      CONVEYANCE BY LANDLORD AND LIABILITY

         In case Landlord or any successor owner of the Property or the Building
shall convey or otherwise  dispose of any portion  thereof in which the Premises
are  located,  to another  Person (and  nothing  herein  shall be  construed  to
restrict or prevent such  conveyance  or  disposition),  such other Person shall
thereupon  be and become  landlord  hereunder  and shall be deemed to have fully
assumed  and be liable  for all  obligations  of this Lease to be  performed  by
Landlord which first arise after the date of conveyance, and Tenant shall attorn
to such other Person, and Landlord or such successor owner shall, from and after
the date of conveyance, be free of all liabilities and obligations hereunder not
then  incurred.  The liability of Landlord to Tenant for any default by Landlord
under this Lease or arising in connection herewith or with Landlord's operation,
management, leasing, repair, renovation, alteration or any other matter relating
to the Property or the Premises, shall be limited to the interest of Landlord in
the Property (and the rental proceeds thereof) and insurance  proceeds available
to  landlord,  and Tenant  agrees to look solely to  Landlord's  interest in the
Property (and the rental proceeds thereof) and insurance  proceeds  available to
Landlord.  Tenant agrees to look solely to  Landlord's  interest in the Property
(and the rental proceeds thereof) and insurance  proceeds  available to Landlord
for the recovery of any judgment  against  Landlord,  and Landlord  shall not be
personally  liable for any such judgment or deficiency after execution  thereon.
The  limitations of liability  contained in this Article shall apply equally and
inure to the benefit of Landlord's  present and future partners,  beneficiaries,
officers, directors, trustees, members, shareholders,  agents and employees, and
their respective partners, heirs, successors and assigns. Under no circumstances
shall  any  present  or future  partner,  member,  shareholder,  or  trustee  or
beneficiary (if Landlord or any partner,  member or shareholder of Landlord is a
trust) have any liability for the  performance of Landlord's  obligations  under
this Lease.  Notwithstanding the foregoing to the contrary,  Landlord shall have
personal  liability  for  insured  claims,  beyond  Landlord's  interest  in the
Property (and rental proceeds  thereof),  to the extent of Landlord's  liability
insurance coverage available for such claims.

                                   ARTICLE 28.
               SAFETY AND SECURITY DEVICES, SERVICES AND PROGRAMS

         The parties acknowledge that safety and security devices,  services and
programs provided by Landlord,  if any, while intended to deter crime and ensure
safety,  may not in given  instances  prevent theft or other  criminal  acts, or
ensure  safety of persons  or  property.  The risk that any  safety or  security
device,  service or program  may not be  effective,  or may  malfunction,  or be
circumvented  by a  criminal,  is assumed  by Tenant  with  respect to  Tenant's
property and interests, and Tenant shall obtain insurance coverage to the extent
Tenant  desires  protection  against  such  criminal  acts and  other  losses in
addition to insurance required to be

                                       34
<PAGE>

carried by Tenant hereunder. Tenant agrees to cooperate in any reasonable safety
or security program developed by Landlord or any program required by law.

                                   ARTICLE 29.
                        COMMUNICATIONS AND COMPUTER LINES

         (A)  Tenant  may  install,   maintain,   replace,  remove  or  use  any
communications or computer wires,  cables and related devices  (collectively the
"Lines") at the Property in or serving the Premises,  provided: (a) Tenant shall
obtain  Landlord's  prior  written  consent,  use an  experienced  and qualified
contractor  approved  in writing by  Landlord,  and comply with all of the other
provisions of Article 10, (b) any such installation,  maintenance,  replacement,
removal  or use shall  comply  with all Laws  applicable  thereto  and good work
practices,  and shall not interfere  with the use of any then existing  Lines at
the Property,  (c) space for  additional  Lines shall be maintained for existing
and future  occupants of the Property,  as  determined in Landlord's  reasonable
opinion,  (d) if  Tenant  at any time  uses any  equipment  that may  create  an
electromagnetic  field  exceeding  the normal  insulation  ratings  of  ordinary
twisted  pair riser  cable or cause  radiation  higher  than  normal  background
radiation,  the Lines therefor  (including  riser cables) shall be appropriately
insulated to prevent such excessive  electromagnetic fields or radiation, (e) as
a condition to permitting the  installation  of new Lines,  Landlord may require
that Tenant remove  existing Lines located in or serving the Premises  installed
by or on behalf of Tenant to the extent such Lines are being replaced by the new
Lines,  (f)  Tenant's  rights  shall be subject  to the rights of any  regulated
telephone company,  and (g) Tenant shall pay all costs in connection  therewith.
Landlord  reserves the right to require that Tenant  remove any Lines located in
or  serving  the  Premises  which  are  installed  by or on  behalf of Tenant in
violation of these  provisions,  or which are or become at any time in violation
of any Laws or represent a dangerous or potentially dangerous condition (whether
such Lines were  installed by Tenant or any other party),  within three (3) days
after written notice.

         (B)  Landlord may (but shall not have the  obligation  to): (i) install
new  Lines at the  Property,  (ii)  create  additional  space  for  Lines at the
Property,   and  (iii)   reasonably   direct,   monitor  and/or   supervise  the
installation,  maintenance,  replacement  and  removal  of, the  allocation  and
periodic  re-allocation  of available  space (if any) for, and the allocation of
excess  capacity  (if any) on,  any  Lines  now or  hereafter  installed  at the
Property  by  Landlord,  Tenant or any other party (but  Landlord  shall have no
right to monitor or control the  information  transmitted  through  such Lines).
Such rights shall not be in  limitation of other rights that may be available to
Landlord by Law or otherwise.  If Landlord  exercises any such rights,  Landlord
may charge Tenant for the costs  attributable  to Tenant if Tenant has requested
or Tenant's  activities have resulted in such exercise by Landlord,  or Landlord
may include those costs and all other costs in Operating  Expenses to the extent
allowed under Article 26.

         (C)  Notwithstanding  anything to the contrary contained in Article 22,
Landlord  reserves  the right to  require  that  Tenant  remove any or all Lines
installed by or for Tenant  within or serving the Premises upon  termination  of
this Lease, provided Landlord notifies Tenant at least thirty (30) days prior to
expiration or Tenant's permitted early termination  (under Tenant's  Termination
Option)  of this  Lease  or  prior  to or  within  thirty  (30)  days  following
termination upon or following Default. Any Lines not required to be removed

                                       35
<PAGE>

pursuant to this Article  shall,  at Landlord's  option,  become the property of
Landlord  without  payment by Landlord.  If Tenant fails to remove such lines as
required by Landlord, or violates any other provision of this Article,  Landlord
may,  after  twenty (20) days'  written  notice to Tenant,  remove such Lines or
remedy such other violation,  at Tenant's expense (without  limiting  Landlord's
other remedies  available under this Lease or applicable Law). Tenant shall not,
without the prior  written  consent of Landlord in each  instance,  grant to any
third  party,  a  security  interest  or lien in or on the  Lines,  and any such
security  interest or lien granted without  Landlord's  written consent shall be
null and void.  Except to the extent  arising  from the  intentional  or grossly
negligent  acts of Landlord or Landlord's  agents or employees,  Landlord  shall
have no liability for damages  arising from,  and Landlord does not warrant that
the  Tenant's  use of any Lines  will be free from the  following  (collectively
called "Line  Problems"):  (x) any eavesdropping or wire-tapping by unauthorized
parties, (y) any failure of any Lines to satisfy Tenant's  requirements,  or (z)
any shortages,  failures,  variations,  interruptions,  disconnections,  loss or
damage caused by the installation,  maintenance,  replacement, use or removal of
Lines by or for other  tenants or occupants of the  Property,  by any failure of
the environmental  conditions or the power supply for the Property to conform to
any  requirements  for the  Lines  or any  associated  equipment,  or any  other
problems  associated with any Lines by any other cause.  Under no  circumstances
shall any Line Problems be deemed an actual or constructive  eviction of Tenant,
render  Landlord  liable to Tenant for abatement of Rent, or relieve Tenant from
performance of Tenant's obligations under this Lease; provided,  however, in the
event of such  disruption,  Tenant  shall be entitled to the rights and remedies
set forth in Article 8(E)  applicable to the  disruption of essential  services.
Landlord  in no event  shall be liable for damages by reason of loss of profits,
business  interruption  or  other  consequential  damage  arising  from any Line
Problems.

         (C)  Tenant  will have the right to  install  a  satellite  dish at the
Property subject to the terms and conditions set forth in Rider Three,  attached
hereto and made a part hereof.

                                   ARTICLE 30.
                               HAZARDOUS MATERIALS

         (A)  Tenant  shall  not  transport,  use,  store,  maintain,  generate,
manufacture,  handle, dispose, release or discharge any "Hazardous Material" (as
defined below) upon or about the Property, or permit Tenant's employees, agents,
contractors  and other  occupants of the  Premises to engage in such  activities
upon or about the Property. However, the foregoing provisions shall not prohibit
the  transportation  to and from,  and use,  storage,  maintenance  and handling
within,  the Premises of substances  customarily  used in offices (or such other
business or activity expressly  permitted to be undertaken in the Premises under
Article 7),  provided:  (a) such substances shall be used and maintained only in
such  quantities  as are  reasonably  necessary  for such  permitted  use of the
Premises,  strictly in accordance  with  applicable  Law and the  manufacturers'
instructions therefor, (b) such substances shall not be disposed of, released or
discharge on the Property,  and shall be transported to and from the Premises in
compliance with all applicable laws, and as Landlord shall  reasonably  require,
(c) if any applicable Law or Landlord's trash removal  contractor  requires that
any such substances be disposed of separately from ordinary trash,  Tenant shall
make  arrangements  at  Tenant's  expense  for  such  disposal  directly  with a
qualified and licensed  disposal  company at a lawful  disposal site (subject to
scheduling and approval by Landlord), and shall ensure that disposal

                                       36
<PAGE>

occurs  frequently enough to prevent  unnecessary  storage of such substances in
the  Premises,  and (d) any  remaining  such  substances  shall  be  completely,
properly and  lawfully  removed from the  Property  upon  expiration  or earlier
termination of this Lease.

         Tenant shall promptly notify Landlord of: (i) any enforcement,  cleanup
or other regulatory action taken or threatened by any governmental or regulatory
authority with respect to the presence of any Hazardous Material on the Premises
or the migration  thereof from or to other property,  (ii) any demands or claims
made or threatened by any party against  Tenant or the Premises  relating to any
loss or injury  resulting  from any  Hazardous  Materials,  (iii)  any  release,
discharge or nonroutine,  improper or unlawful disposal or transportation of any
Hazardous Material on or from the Premises, and (iv) any matters where Tenant is
required by Law to give a notice to any  governmental  or  regulatory  authority
respecting any Hazardous Material on the Premises. Landlord shall have the right
(but  not the  obligation)  to join  and  participate  as a party  in any  legal
proceedings or actions  affecting the Premises  initiated in connection with any
environmental,  health or safety Law. At such times as Landlord  may  reasonably
request,  Tenant shall  provide  Landlord  with a written list  identifying  any
Hazardous Material then used,  stored, or maintained upon the Premises,  the use
and  approximate  quantity of each such material,  a copy of any material safety
data sheet ("MSDS") issued by the  manufacturer  therefor,  written  information
concerning the removal,  transportation and disposal of the same, and such other
information as Landlord may reasonably require or as may be required by Law. The
term "Hazardous Material" for purposes hereof shall mean any chemical substance,
material or waste or component thereof which is now or hereafter listed, defined
or regulated as a hazardous or toxic chemical,  substance,  material or waste or
component  thereof by any federal,  state or local  governing or regulatory body
having   jurisdiction,   or  which  would  trigger  any  employee  or  community
"right-to-know"  requirements  adopted by any such  body,  or for which any such
body has adopted any  requirements  for the  preparation or  distribution  of an
MSDS.

         If any  Hazardous  Material is released,  discharged  or disposed of by
Tenant, its employees, agents, contractors or any other occupant of the Premises
claiming by under or through Tenant, or their employees,  agents or contractors,
on or about the Property in violation of the foregoing provisions,  Tenant shall
immediately, properly and in compliance with applicable Laws clean up and remove
the  Hazardous  Material from the Property and any other  affected  property and
clean or  replace  any  affected  personal  property  (whether  or not  owned by
Landlord),  at Tenant's expense.  Such cleanup and removal work shall be subject
to Landlord's prior written approval (except in emergencies), and shall include,
without  limitation,  any  testing,  investigation,   and  the  preparation  and
implementation  of any remedial  action plan required by any  governmental  body
having jurisdiction or reasonably required by Landlord.  If Tenant shall fail to
comply with the  provisions  of this Article  within five (5) days after written
notice by  Landlord,  or such shorter time as may be required by Law or in order
to minimize  any hazard to Persons or  property,  Landlord may (but shall not be
obligated to) arrange for such compliance  directly or as Tenant's agent through
contractors or other parties selected by Landlord,  at Tenant's expense (without
limiting  Landlord's  other remedies under this Lease or applicable Law). If any
Hazardous  Material  is  released,  discharged  or  disposed  of on or about the
Property and such release,  discharge or disposal is not caused by Tenant or its
employees,  agents,  contractors or other occupants of the Premises  claiming by
through  or under  Tenant,  or their  employees,  agents  or  contractors,  such
release, discharge or disposal

                                       37
<PAGE>

shall be deemed casualty damage under Article 13 to the extent that the Premises
or common  areas  serving  the  Premises  are  affected  thereby;  in such case,
Landlord  and Tenant  shall have the  obligations  and  rights  respecting  such
casualty damage provided under Article 13.

         (B) The parties  acknowledge  that the material  used in certain of the
fire-proofing  materials applied to certain  structural  members in the Building
and Property (which structural  members are primarily located above the finished
ceiling) contains asbestos. Notwithstanding the foregoing, all rentable areas of
11th floor of the Building have been abated of such asbestos in accordance  with
industry  standards  and, if Landlord  substitutes  the Premises  under  Article
19(F), the rentable area of the new premises shall be free of asbestos. In order
to  preserve  the  air  quality  of the  Building  and  Property,  Landlord  has
established,  and from time to time may modify, rules and regulations  governing
the manner in which  alterations  and  improvements  are to be undertaken in the
areas where the subject  fire-proofing is located.  Tenant shall comply with all
such rules and regulations  established by Landlord.  If any governmental entity
promulgates  or revises a statute,  ordinance,  code or  regulation,  or imposes
mandatory  or  voluntary  controls  or  guidelines  with  respect to the subject
asbestos fireproofing,  or if Landlord is required or elects to make alterations
or to remove the  subject  asbestos  fire-proofing,  Landlord  may,  in its sole
discretion,  comply with such mandatory or voluntary controls or guidelines,  or
make such  alterations  or  remove  such  asbestos  fireproofing.  Neither  such
compliance nor the making of alterations, nor the removal of all or a portion of
such asbestos  fire-proofing  shall in any event entitle  Tenant to any damages,
relieve Tenant of the obligation to pay any sums due hereunder, or constitute or
be construed as a constructive  or other eviction of Tenant.  In accordance with
Proposition 65 and the  regulations  promulgated  thereunder  which require that
person subject to "environmental exposure" to certain designated chemicals, such
as asbestos, receive warnings, you are advised that :

                   WARNING: THE BUILDING CONTAINS ASBESTOS, A
                   CHEMICAL KNOWN TO THE STATE OF CALIFORNIA
                   TO CAUSE CANCER.

                                   ARTICLE 31.
                                  MISCELLANEOUS

         (A) Each of the terms and  provisions  of this  Lease  shall be binding
upon and inure to the benefit of the parties  hereto,  their  respective  heirs,
executors,  administrators,  guardians,  custodians,  permitted  successors  and
assigns, subject to the provisions of Article 17 respecting Transfers.

         (B) Neither this Lease nor any  memorandum of lease or short form lease
shall be recorded by Tenant.

         (C) This Lease shall be  construed in  accordance  with the Laws of the
state of California.

                                       38
<PAGE>

         (D) All  obligations  or  rights  of  either  party  arising  during or
attributable to the period ending upon expiration or earlier termination of this
Lease shall survive such expiration or earlier termination.

         (E) Landlord  agrees that,  if Tenant timely pays the Rent and performs
the  terms  and  provisions  hereunder,  and  subject  to all  other  terms  and
provisions  of this Lease,  Tenant shall hold and enjoy the Premises  during the
Term, free of lawful claims by any Person acting by or through Landlord.

         (F) This  Lease  does not  grant any  legal  rights to "light  and air"
outside the  Premises  nor any  particular  view or  cityscape  visible from the
Premises.

         (G) All remedies  hereinbefore  and hereafter  conferred  upon Landlord
shall be deemed  cumulative and no one shall be exclusive of the other, or shall
in any way Emit the  availability  to Landlord of any other remedy  conferred by
law, whether or not specifically conferred by the provisions of this Lease.

                                   ARTICLE 32.
                                      OFFER

         The  submission  and  negotiation  of this Lease shall not be deemed an
offer to enter the same by Landlord,  but the  solicitation  of such an offer by
Tenant.  Landlord's acceptance of such offer shall be evidenced only by Landlord
signing and delivering this Lease to Tenant.

                                   ARTICLE 33.
                                     NOTICES

         Except as  expressly  provided to the  contrary  in this  Lease,  every
notice  or other  communication  to be given by either  party to the other  with
respect hereto or to the Premises or Property, shall be in writing and shall not
be effective  for any purpose  unless the same shall be served  personally or by
national air courier service,  or United States  certified mail,  return receipt
requested,  postage prepaid,  addressed,  into Tenant,  at the address first set
forth in the Lease, until the Commencement Date, and thereafter to the Tenant at
the Premises, WITH A COURTESY COPY TO: Paul Churchill,  Esq. COOLEY GODWARD LLP,
One Maritime Plaza, 20th Floor, San Francisco,  CA 94111, and if to Landlord, at
the  address at which the last  payment of Rent was  required  to be made and to
Pine Street  Investors I, L.L.C.,  c/o  Danielson  Whitehead,  Inc., at 100 Pine
Street, San Francisco,  California 94111, Attn: Robert Whitehead,  or such other
address or addresses  as Tenant or Landlord  may from time to time  designate by
notice given as above provided.  Every notice or other  communication  hereunder
shall be deemed to have been given as of the third  business day  following  the
date of such mailing (or as of any earlier date evidenced by a receipt from such
national  air  courier  service  or  the  United  States  Postage   Service)  or
immediately  if personally  delivered.  Notices not sent in accordance  with the
foregoing shall be of no force or effect until received by the foregoing parties
at such addressed required herein.

                                       39
<PAGE>

                                   ARTICLE 34.
                                     SIGNAGE

          Landlord  agrees to list Tenant on the main lobby Building  directory.
In  addition,  Tenant  may,  at  Tenant's  sole cost and  expense and subject to
Landlord's prior approval thereof, be allowed to install its standard signage at
the 11th floor elevator lobby of the Building. No other sign, placard,  picture,
advertisement,  name or  notice  (collectively,  "Signs")  shall  be  inscribed,
displayed,  printed or affixed on or to any part of the outside or inside of the
Building without the written consent of Landlord first had and obtained.  Tenant
acknowledges and agrees that Landlord may withhold its consent to the placing of
Signs on the exterior of the Building in its sole and absolute discretion.

                                   ARTICLE 35.
                               REAL ESTATE BROKERS

         Tenant  represents  that it has dealt only with  CUSHMAN & WAKEFIELD OF
CALIFORNIA,  INC. (whose commission,  if any, shall be paid by Landlord pursuant
to separate agreement) as broker,  agent or finder in connection with this Lease
and agrees to indemnify and hold Landlord harmless from all damages,  judgments,
liabilities and expenses (including reasonable attorneys' fees) arising from any
claims or  demands of any other  broker,  agent or finder  with whom  Tenant has
dealt or is claimed to have dealt for any commission or fee alleged to be due in
connection  with  its   participation  in  the  procurement  of  Tenant  or  the
negotiation with Tenant or execution of this Lease.

                                   ARTICLE 36.
                                SECURITY DEPOSIT

         Tenant shall  deposit with Landlord the sum of  $185,104.33  ("Security
Deposit"),  upon Tenant's  execution and submission of this Lease.  The Security
Deposit shall serve as security for the prompt, full and faithful performance by
Tenant of the terms and provisions of this Lease. In the event that Tenant is in
Default hereunder, or in the event that Tenant owes any amounts to Landlord upon
the expiration of this Lease, Landlord may use or apply the whole or any part of
the Security Deposit for the payment of Tenant's obligations hereunder.  The use
or application of the Security  Deposit or any portion thereof shall not prevent
Landlord from exercising any other right or remedy  provider  hereunder or under
any Law and shall  not be  construed  as  liquidated  damages.  In the event the
Security  Deposit is reduced by such use or  application,  Tenant shall  deposit
with Landlord within ten (10) days after written notice, an amount sufficient to
restore the full amount of the Security Deposit.  Landlord shall not be required
to keep the Security  Deposit  separate  from  Landlord's  general  funds or pay
interest on the Security Deposit.  Any remaining portion of the Security Deposit
shall be returned to Tenant  within sixty (60) days after Tenant has vacated the
Premises in accordance with Article 22. If the Premises shall be expanded at any
time,  or if the Term  shall  be  extended  at an  increased  rate of Rent,  the
Security Deposit shall thereupon be proportionately increased.

                                       40
<PAGE>

                                   ARTICLE 37.
                                ENTIRE AGREEMENT

         This  Lease,  together  with  Riders  One,  Two and Three and Exhibit A
(WHICH  COLLECTIVELY ARE HEREBY INCORPORATED WHERE REFERRED To HEREIN AND MADE A
PART HEREOF AS THOUGH FULLY SET FORTH),  contains  all the terms and  provisions
between  Landlord and Tenant  relating to the matters set forth  herein,  and no
prior or contemporaneous agreement or understanding pertaining to the same shall
be  of  any  force  or  effect,   except  any  such  contemporaneous   agreement
specifically  referring to and  modifying  this Lease,  signed by both  parties.
Without  limitation  as to  the  generality  of  the  foregoing,  Tenant  hereby
acknowledges  and agrees that Landlord's  leasing agents and field personnel are
only  authorized to show the Premises and  negotiate  terms and  conditions  for
leases subject to Landlord's final approval,  and are not authorized to make any
agreements,   representations,   understandings  or  obligations,  binding  upon
Landlord,  respecting the condition of the Premises or Property,  suitability of
the same for Tenant's  business,  or any other matter,  and no such  agreements,
representations, understandings or obligations not expressly contained herein or
in such  contemporaneous  written  agreement  shall be of any  force or  effect.
Neither  this  Lease,  nor any  Riders or  Exhibits  referred  to above,  may be
modified, except in writing signed by both parties.

                  LANDLORD:

                  PINE STREET INVESTORS I, L.L.C.
                  a Delaware limited liability company

                  By:      Walton Street Real Estate Fund I, L.P.,
                           a Delaware limited partnership,
                           Managing Partner

                           By:      Walton Street Managers I, L.P.,
                                     a Delaware limited partnership,
                                     General Partner

                                    By:      WSC Managers I, Inc.,
                                              a Delaware corporation,
                                              General Partner

                                             By:/s/HOWARD J. BRODY
                                                ------------------
                                                Name: Howard Brody
                                                Title: VP
                                                Date: 6-1-99

                                       41
<PAGE>

                  TENANT:

                  PEOPLE PC, INC.,
                  A Delaware corporation

                  By:  /s/ NICK GROUF
                       -------------------------
                  Name:   Nick Grouf
                  Title:  Chief Executive Officer
                  Date:

                                       42
<PAGE>

[100 PINE STREET LOGO Goes Here]
LEASE EXHIBIT `A'
ELEVENTH FLOOR

                         [ELEVENTH FLOOR MAP GOES HERE]
<PAGE>

                                    RIDER ONE

                                      RULES

         (1) On Saturdays,  Sundays and Holidays,  and on other days between the
hours of 6:00 p.m.  and 8:00 a.m.  the  following  day,  or such other  hours as
Landlord shall  determine from time to time,  access to the Property  and/or the
passageways,  entrances,  exits, shipping areas, halls, corridors,  elevators or
stairways and other areas in the Property may be restricted and access gained by
use of a key to the outside doors of the Property,  or pursuant to such security
procedures Landlord may from time to time impose. All such areas, and all roofs,
are not for use of the general public and Landlord shall in all cases retain the
right to control and prevent access thereto by all persons whose presence in the
judgment of Landlord shall be prejudicial to the safety,  character,  reputation
and interests of the Property and its tenants  provided,  however,  that nothing
herein  contained shall be construed to prevent such access to persons with whom
Tenant deals in the normal course of Tenant's  business  unless such persons are
engaged in activities which are illegal or violate these Rules. No Tenant and no
employee or invitee of Tenant shall enter into area  reserved for the  exclusive
use of Landlord, its employees or invitees. Tenant shall keep doors to corridors
and lobbies closed except when persons are entering or leaving.

         (2) Tenant shall not paint,  display,  inscribe,  maintain or affix any
sign, placard, picture,  advertisement,  name, notice, lettering or direction on
any part of the outside or inside of the Property,  or on any part of the inside
of the Premises which can be seen from the outside of the Premises,  without the
prior  consent  of  Landlord,  and then only such name or names or matter and in
such color,  size,  style,  character  and material as may be first  approved by
Landlord  in  writing.   Landlord   shall   prescribe   the  suite   number  and
identification  sign for the Premises  (which shall be prepared and installed by
Landlord at Tenant's expense). Landlord reserves the right to remove at Tenant's
expense all matter not so installed or approved without notice to Tenant.

         (3) Tenant shall not in any manner use the name of the Property for any
purpose  other  than that of the  business  address  of the  Tenant,  or use any
picture or likeness of the Property, in any letterheads,  envelopes,  circulars,
notices,  advertisements,  containers or wrapping  material  without  Landlord's
express consent in writing.

         (4) Tenant shall not place  anything or allow  anything to be placed in
the Premises near the glass of any door, partition,  wall or window which may be
unsightly from outside the Premises,  and Tenant shall not place or permit to be
placed any  article of any kind on any window  ledge or on the  exterior  walls.
Blinds,  shades,  awnings or other forms of inside or outside window ventilators
or similar  devices,  shall not be placed in or about the outside windows in the
Premises  except  to the  extent,  if any,  that the  character,  shape,  color,
material and make thereof is first approved by the Landlord.

         (5) Furniture, freight and other large or heavy articles, and all other
deliveries  may be  brought  into the  Property  only at times and in the manner
designated by Landlord, and always at the Tenant's sole responsibility and risk.
Landlord may impose reasonable charges

                                        1
<PAGE>

for use in freight  elevators after or before normal business hours.  All damage
done to the  Property  by moving  or  maintaining  such  furniture,  freight  or
articles shall be repaired by Landlord at Tenant's expense. Landlord may inspect
items  brought into the Property or Premises with respect to weight or dangerous
nature. Landlord may require that all furniture,  equipment, cartons and similar
articles  removed  from the  Premises  or the  Property  be listed and a removal
permit therefor first be obtained from Landlord. Tenant shall not take or permit
to be taken in or out of other entrances or elevators of the Property,  any item
normally taken, or which Landlord otherwise  reasonably requires to be taken, in
or out through  service  doors or on freight  elevators.  Tenant shall not allow
anything  to remain in or obstruct in any way,  any lobby,  corridor,  sidewalk,
passageway,  entrance, exit, hall, stairway,  shipping area, or other such area.
Tenant  shall move all  supplies,  furniture  and  equipment as soon as received
directly to the  Premises,  and shall move all such items and waste  (other than
waste  customarily  removed by  Property  employees)  that are at any time being
taken from the  Premises  directly to the areas  designated  for  disposal.  Any
hand-carts used at the Property shall have rubber wheels.

         (6)  Tenant  shall  not  overload  any  floor  or part  thereof  in the
Premises,  or Property,  including  any public  corridors  or elevators  therein
bringing in or removing any large or heavy articles, and Landlord may direct and
control  the  location  of  safes,  and all other  heavy  articles  and  require
supplementary  supports at Tenant's  expense of such material and  dimensions as
Landlord may deem necessary to properly distribute the weight.

         (7)  Tenant shall not attach or permit to be attached  additional locks
or similar devices to any door or window, change existing locks or the mechanism
thereof,  or make or permit to be made any keys for any door  other  than  those
provided by Landlord.  If more than two keys for one lock are desired,  Landlord
will provide them upon payment therefor by Tenant.  Tenant,  upon termination of
its tenancy, shall deliver to the Landlord all keys of offices, rooms and toilet
rooms which have been furnished  Tenant or which the Tenant shall have had made,
and in the event of loss of any keys so furnished shall pay Landlord therefor.

         (8)  If Tenant desires signal, communication, alarm or other utility or
similar service  connections  installed or changed,  Tenant shall not install or
change the same  without  the prior  approval of  Landlord,  and then only under
Landlord's  direction  at  Tenant's  expense.  Tenant  shall not  install in the
Premises any equipment  which  requires  more electric  current than Landlord is
required to provide under this Lease,  without  Landlord's  prior approval,  and
Tenant shall ascertain from Landlord the maximum amount of load or demand for or
use of electrical current which can safely be permitted in the Premises,  taking
into  account the  capacity of electric  wiring in the Property and the Premises
and the needs of tenants of the  Property,  and shall not in any event connect a
greater load than such safety capacity.

         (9) Tenant  shall not obtain for use upon the  Premises  ice,  drinking
water, towel,  janitor and other similar services,  except from Persons approved
by the  Landlord.  Any  Person  engaged  by Tenant to  provide  janitor or other
services  shall be subject to direction by the manager or security  personnel of
the Property.

         (10) The toilet  rooms,  urinals,  wash bowls and other such  apparatus
shall  not be  used  for any  purpose  other  than  that  for  which  they  were
constructed and no foreign substance of

                                        2
<PAGE>

any kind  whatsoever  shall be thrown  therein and the expense of any  breakage,
stoppage or damage  resulting  from the violation of this Rule shall be borne by
the Tenant who, or whose employees or invitees shall have caused it.

         (11) The janitorial closets, utility closets,  telephone closets, broom
closets,  electrical closets, storage closets, and other such closets, rooms and
areas  shall be used  only for the  purposes  and in the  manner  designated  by
Landlord,  and may  not be  used  by  tenants,  or  their  contractors,  agents,
employees, or other parties without Landlord's prior written consent.

         (12) Landlord  reserves the right to exclude or expel from the Property
any person  who,  in the  judgment  of  Landlord,  is  intoxicated  or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of these  Rules.  Tenant shall not at any time  manufacture,  sell use or
give away, any spirituous,  fermented,  intoxicating or alcoholic liquors on the
Premises,  nor  permit  any of the  same to occur  (except  in  connection  with
occasional  social or business  events  conducted in the  Premises  which do not
violate any Laws nor bother or annoy any other tenants). Tenant shall not at any
time sell,  purchase  or give away,  foods in any form by or to any of  Tenant's
agents or employees or any other parties on the Premises,  nor permit any of the
same to occur  (other than in lunch rooms or kitchens  for  employees  as may be
permitted or installed by Landlord, which does not violate any Laws or bother or
annoy any other tenant).

         (13) Tenant shall not make any room-to-room canvass to solicit business
or information or to distribute any article or material to or from other tenants
or occupants of the Property and shall not exhibit,  sell or offer to sell, use,
rent or  exchange  any  products  or  services  in or from the  Premises  unless
ordinarily  embraced  within the Tenant's  use of the Premises  specified in the
Lease.

         (14)  Tenant  shall  not  waste   electricity,   water,   heat  or  air
conditioning or other utilities or services,  and agrees to cooperate fully with
Landlord to assure the most  effective  and energy  efficient  operation  of the
Property and shall not allow the  adjustment  (except by  Landlord's  authorized
Property personnel) of any controls. Tenant shall keep corridor doors closed and
shall not open any windows,  except that if the air circulation  shall not be in
operation,  windows which are openable may be opened with Landlord's consent. As
a condition to claiming any  deficiency in the air  conditioning  or ventilation
services  provided by  Landlord,  Tenant shall close any blinds or drapes in the
Premises to prevent or minimize direct sunlight.

         (15) Tenant  shall  conduct no auction,  fire or "going out of business
sale" or bankruptcy  sale in or from the Premises,  and such  prohibition  shall
apply to Tenant's creditors.

         (16) Tenant shall  cooperate and comply with any  reasonable  safety or
security  programs,   including  fire  drills  and  air  raid  drills,  and  the
appointment  of "fire  wardens"  developed  by  Landlord  for the  Property,  or
required by Law. Before leaving the Premises unattended,  Tenant shall close and
securely  lock all doors or other means of entry to the Premiss and shut off all
lights and water faucets in the Premises (except heat to the extent necessary to
prevent the freezing or bursting of pipes).

                                        3
<PAGE>

         (17) Tenant will comply with all municipal,  county,  state, federal or
other  government laws,  statutes,  codes,  regulations and other  requirements,
including  without  limitation,   environmental,   health,   safety  and  police
requirements  and  regulations  respecting  the Premises,  now or hereinafter in
force, at its sole cost, and will not use the Premises for any immoral purposes.

         (18) Tenant  shall not (i) carry on any  business,  activity or service
except  those  ordinarily  embraced  within the  permitted  use of the  Premises
specified  in  the  Lease  and  more  particularly,  but  without  limiting  the
generality  of the  foregoing,  shall not (ii)  install or operate any  internal
combustion engine, boiler, machinery, refrigerating, heating or air conditioning
equipment in or about the Premises,  (iii) use the Premises for housing, lodging
or sleeping  purposes  or for the  washing of  clothes,  (iv) place any radio or
television antennae other than inside of the Premises,  (v) operate or permit to
be operated  any musical or sound  producing  instrument  or device which may be
heard outside the Premises, (vi) use any source of power other than electricity,
(vii) operate any  electrical or other device from which may emanate  electrical
or other waves which may interfere with or impair radio, television,  microwave,
or other broadcasting or reception from or in the Property or elsewhere,  (viii)
bring or permit any bicycle or other vehicle, or dog (except in the company of a
blind person or except when  specifically  permitted) or other animal or bird in
the Property,  (ix) make or permit  objectionable  noise or odor to emanate from
the  Premises  (x) do  anything  in or about the  Premises  tending to create or
maintain  a nuisance  or do any act  tending  to injure  the  reputation  of the
Property,  (xi) throw or permit to be thrown or  dropped  any  article  from any
window or other opening in the  Property,  (xii) use or permit upon the Premises
anything that will  invalidate or increase the rate of insurance on any policies
of  insurance  now  or  hereafter   carried  on  the  Property  or  violate  the
certificates  of occupancy  issued for the premises or the Property,  (xiii) use
the Premises for any purpose, or permit upon the Premises anything,  that may be
dangerous to person or property  (including  but not limited to flammable  oils,
fluids, paints, chemicals,  firearms or any explosive articles or materials) nor
(xiv) do or permit  anything to be done upon the  Premises in any way tending to
disturb  any other  tenant  at the  Property  or the  occupants  of  neighboring
property.

         (19) If the Property shall now or hereafter  contain a building garage,
parking  structure or other parking area or facility,  the following Rules shall
apply in such areas or facilities:

              (i) Parking shall be available in areas  designated  generally
              for  tenant  parking,  for such  daily or  monthly  charges as
              Landlord  may  establish  from  time  to  time,  or as  may be
              provided in any parking Agreement attached hereto (which, when
              signed by both parties as provided  therein,  shall  thereupon
              become  effective).  In all cases,  parking for Tenant and its
              employees  and  visitors  shall  be on a  "first  come,  first
              served,"  unassigned basis, with Landlord and other tenants at
              the Property,  and their  employees  and  visitors,  and other
              Persons  (as  defined  in  Article  26 of the  Lease)  to whom
              Landlord shall grant the right or who shall otherwise have the
              right to use the same, all subject to these Rules, as the same
              may  be   amended   or   supplemented,   and   applied   on  a
              non-discriminatory basis, as is further described in Article 6
              of the lease.

                                        4
<PAGE>

              Notwithstanding  the  foregoing  to  the  contrary,   Landlord
              reserves the right to assign specific  spaces,  and to reserve
              spaces for visitors, small cars, handicapped individuals,  and
              other  tenants,  visitors  of  tenants or other  Persons,  and
              Tenant and its  employees  and visitors  shall not park in any
              such  assigned or reserved  spaces.  Landlord  may restrict or
              prohibit full size vans and other large vehicles.

              (ii) In case of any  violation of these  provisions,  Landlord
              may refuse to permit the violator to park,  and may remove the
              vehicle  owned or driven  by the  violator  from the  Property
              without  liability  whatsoever,  at such  violator's  risk and
              expense. Landlord reserves the right to close all or a portion
              of the parking areas or facilities in order to make repairs or
              performance   maintenance   services,  or  to  alter,  modify,
              re-stripe  or renovate  the same,  or if required by casualty,
              strike,   condemnation,   act  of  God,  Law  or  governmental
              requirement,  or any other reason beyond Landlord's reasonable
              control.  In the event  access is denied for any  reason,  any
              monthly  parking  charges shall be abated to the extent access
              is denied, as Tenant's sole recourse. Tenant acknowledges that
              such  parking  areas  or  facilities  may  be  operated  by an
              independent  contractor  not  affiliated  with  Landlord,  and
              Tenant acknowledges that in such event, Landlord shall have no
              liability for claims arising through acts or omissions of such
              independent contractor, if such contractor is reputable.

              (iii) Hours shall be 6 a.m. to 8 p.m.,  Monday through Friday,
              and 10:00 a.m. to 1:00 p.m. on Saturdays,  or such other hours
              as may be  reasonably  established  by Landlord or its parking
              operator  from  time to time;  cars  must be  parked  entirely
              within the stall  lines,  and only small cars may be parked in
              areas  reserved  for small  cars;  all  directional  signs and
              arrows must be observed;  the speed limit shall be 5 miles per
              hour;  spaces  reserved for  handicapped  parking must be used
              only by vehicles properly designated; every parker is required
              to park and lock his own car;  washing,  waxing,  cleaning  or
              servicing of any vehicle is  prohibited;  parking areas may be
              used only for parking  automobiles;  parking is  prohibited in
              areas: (a) not striped or designated for parking,  (b) aisles,
              (c) where "no parking"  signs are posted,  (d) ramps,  and (e)
              loading areas and other specially  designated areas.  Delivery
              trucks  and  vehicles  shall use only those  areas  designated
              therefor.

[LANDLORD'S AND TENANT'S INTIALS GO HERE]

                                        5
<PAGE>

                                    RIDER TWO

                                OPTION TO EXTEND

         Tenant is  hereby  granted  an  option to extend  the Term for a single
additional period of five (5) consecutive Lease Years ("Extension  Period"),  on
the same terms and conditions in effect under the Lease immediately prior to the
Extension  Period,  except  that  monthly  Base Rent shall be  increased  to the
Prevailing  Rental Rate (as defined  herein) and the Base  Expense Year and Base
Tax Year shall be  changed  to the  calendar  year  2004;  Tenant  shall have no
further  option to extend.  The option to extend may be exercised only by giving
Landlord  irrevocable and  unconditional  written notice thereof no earlier than
one  year  and no later  than  nine  months  prior  to the  commencement  of the
Extension Period. Said exercise shall, at Landlord's election,  be null and void
if (i) Tenant is in Default  under the Lease at the date of said  notice or (ii)
if PEOPLE PC, INC. is  occupying  less than  seventy-five  percent (75 %) of the
Premises.  The term "Lease Year"  herein means each twelve month annual  period,
commencing  with the  first  day of the  Extension  Period,  without  regard  to
calendar years.

         "Prevailing  Rental Rate" means the average per square foot rental rate
per month for all renewal leases for renewal  periods  approximately  as long as
the Extension  Period,  executed by tenants for similar uses and lengths of time
for comparable space in the Building and comparable buildings in the vicinity of
the Building during the six (6) months  immediately prior to the date upon which
such  Prevailing  Rental Rate is to become  effective,  where such renewal rates
were not fixed in advance  by the terms of such  leases,  subject to  reasonable
adjustments  for comparable  space on more or less desirable  floors or areas of
the  Property.  In all  cases,  such  rates  shall be based on the  average  net
effective  rate then being  charged for similar  spaces and for similar terms by
landlords (after taking into account any "free rent" or periods of reduced rent,
then generally being provided by landlords for, similar deals).  Notwithstanding
anything to the contrary  herein,  for purposes of  determining  the  Prevailing
Rental Rate, Tenant shall not be entitled to any credit on account of any tenant
improvement allowance recoupment component of prevailing rents paid generally by
other tenants.

         Landlord agrees to make (or provide an allowance for) certain  cosmetic
improvements to the Premises such as painting,  recarpeting,  patching of walls,
repair of doors,  and  replacement  of ceiling tile,  where same is necessary to
generally  make  the  Premises  appear  in  "like  new   condition."   Under  no
circumstances  will Landlord be required to in any way  reconfigure the Premises
or do any other work other than the cosmetic work described above.

         If the parties are unable to agree on the Prevailing Rental Rate within
sixty (60) days after the  commencement  of the  Extension  Period (the "Outside
Agreement Date"),  the Prevailing Rental Rate shall be determined by arbitration
in accordance with Paragraphs (i) to (vii) below.

         (i)      No  later  than  fifteen  (15)  days   following  the  Outside
                  Agreement  Date,  Landlord  and Tenant  shall each appoint one
                  arbitrator who shall by profession be a real estate broker who
                  shall have been active over the five (5) year period ending on
                  the date of such appointment in the

                                        1
<PAGE>

                  appraisal  of  office   properties   in  the  San   Francisco,
                  California.  The  determination  of the  arbitrators  shall be
                  limited solely to the issue of whether  Landlord's or Tenant's
                  submitted  Prevailing  Rental  Rate is the  most  accurate  as
                  determined by the arbitrators.

         (i)      The two (2) arbitrators so appointed shall within fifteen (15)
                  days of the  date of the  appointment  of the  last  appointed
                  arbitrator agree upon and appoint a third arbitrator who shall
                  be qualified under the same criteria set forth hereinabove for
                  qualification of the initial two (2) arbitrators.

         (ii)     The three (3) arbitrators  shall,  within fifteen (15) days of
                  the appointment of the third  arbitrator,  reach a decision as
                  to  whether  the  parties  shall use  Landlord's  or  Tenant's
                  submitted  Prevailing  Rental Rate, and shall notify  Landlord
                  and Tenant thereof.

         (iii)    The decision of the majority of the three (3) arbitrators
                  shall be binding upon Landlord and Tenant.

         (iv)     If either  Landlord or Tenant  fails to appoint an  arbitrator
                  within fifteen (15) days after the Outside Agreement Date, the
                  arbitrator  timely appointed by one of the parties shall reach
                  a  decision,  notify  Landlord  and Tenant  thereof,  and such
                  arbitrator's  decision  shall be  binding  upon  Landlord  and
                  Tenant.

         (v)      If the two (2)  arbitrators  fail to agree upon and  appoint a
                  third arbitrator,  both arbitrators shall be dismissed and the
                  matter  to  be  decided   shall  be  forthwith   submitted  to
                  arbitration  under  the  Commercial  Arbitration  Rules of the
                  American   Arbitration   Association  then  in  effect.   Such
                  determination shall be final and binding upon the parties.

         (vi)     The cost of arbitration shall be borne by Landlord and Tenant
                  equally.

         In recognition  that the Prevailing  Rental may not be determined until
after the  commencement  of the Extension  Period,  Tenant shall pay, during the
Extension  Period until the Prevailing  Rental Rate is determined,  110 % of the
amount of Rent then in effect  (including  Base  Rent,  and all other  charges).
Under no  circumstances  shall the Rent during the Extension Period ever be less
than 100 % of such amount of Rent then in effect,  regardless of the  Prevailing
Rental Rate, as determined in accordance with the foregoing  provisions.  If the
Prevailing Rental Rate is determined to be grater than such amount, Tenant shall
pay  Landlord,  within  thirty (30) days after  written  request  therefor,  the
difference  between the amount required by such  determination of the Prevailing
Rental  Rate and the  amount  of Rent  theretofore  paid by  Tenant  during  the
Extension Period.

         If Tenant  shall fail to  exercise  the option  herein  provided,  said
option shall  terminate,  and shall be null and void and of no further force and
effect.  Tenant's  exercise of said option shall not operate to cure any default
by Tenant of any of the terms or provisions  in the Lease,  nor to extinguish or
impair any rights or remedies of Landlord arising by virtue of such

                                        2
<PAGE>

default.  If the Lease or Tenant's  right to  possession  of the Premises  shall
terminate  in any manner  whatsoever  before  Tenant  shall  exercise the option
herein provided, then immediately upon such termination, sublease or assignment,
the option herein granted to extend the Term, shall simultaneously terminate and
become null and void. Such option is personal to Tenant.  Under no circumstances
whatsoever  shall the  assignee  under a complete or partial  assignment  of the
Lease,  or a  subtenant  under a  sublease  of the  Premises,  have any right to
exercise  the option to extend  granted  herein.  Time is of the essence of this
provision.

[LANDLORD'S AND TENANT'S INTIALS GO HERE]

                                        3
<PAGE>

                                   RIDER THREE

         1.  Subject  to the  terms  hereof,  the  Premises  shall  include  the
non-exclusive  right of Tenant to use a certain  portion of the space  either on
the roof of the  Building or such other  location as  determined  by Landlord in
Landlord's sole but good faith discretion (such location is hereinafter referred
to as the  "Designated  Area"),  for the sole  use and  purpose  of  installing,
maintaining and operating, at the sole expense and risk of Tenant, an antenna or
earth satellite  station (the "Satellite  Dish"). In the event that Tenant shall
elect to install the Satellite Dish,  Tenant shall give Landlord  written notice
thereof,  which  notice  shall be  accompanied  by a  complete  set of plans and
specifications  (to be  prepared  by  Tenant  at its  sole  cost  and  expense),
identifying  the  manner  of  installation  thereof  as well as the  type of any
equipment,  related  elements  and  cabling  with size,  engineering  structure,
broadcast frequencies, operating characteristics and other relevant information,
as requested by Landlord,  of the Satellite  Dish; no work shall  commence until
Landlord  has approved in writing all of said plans and  specifications  and any
such work shall comply with the terms and  conditions set forth in Article 10 of
the  Lease.  Not more than  thirty  (30)  days  after  receipt  of all plans and
specifications  required  herein,  Landlord  shall either  approve or disapprove
Tenant's  request  and,  in the  case of  disapproval,  set  forth  its  reasons
therefor.  Tenant  shall pay all  engineering  fees and other costs  incurred by
Landlord in connection with its review of Tenant's plans and specifications. The
area  used  for the  Satellite  Dish  and the  size,  configuration  and type of
equipment used (including but not limited to any modifications and replacements)
shall be subject to Landlord's approval. Nothing contained herein shall prohibit
Landlord  from  granting  other  tenants  of the  Building  the  right  to place
satellite  earth  stations,  antennas or other  telecommunication  equipment  or
related apparatus in the Designated Area.

         2. Tenant  shall use the  Satellite  Dish solely for its own  internal,
intra-corporate  communications  and shall not use Satellite Dish or allow it to
be used by others for any other purpose, including but not limited to commercial
communication  transmission  or  reception,  except  that  Reuters  and  similar
subscriptions shall be permitted.

         3. Tenant shall pay all federal,  state and local taxes  applicable  to
the Satellite Dish.  Further,  Tenant shall procure,  maintain and pay all fees,
permits and governmental agency licenses (including, without limitation, FAA and
FCC approval,  if  applicable)  necessary in connection  with the  installation,
maintenance  and  operation of the Satellite  Dish.  Landlord  shall  reasonably
cooperate  with Tenant,  at Tenant's  expense,  in obtaining  all such  permits,
licenses and other approvals.

         4. All  installations  required in connection  with the Satellite  Dish
shall be made by means of conduits,  wires or cables which pass through existing
openings in the walls roof decks of the Building if such openings exist, and all
cables and wires  located in the  Designated  Area used in  connection  with the
Satellite Dish shall be covered by rust-proof  conduits and  attachments.  In no
event shall any of Tenant's installations be

[LANDLORD'S AND TENANT'S INITIALS GO HERE]

                                        1
<PAGE>

made without the prior written consent of landlord which consent may be withheld
by Landlord in Landlord's sole but good faith  discretion.  The  installation of
the Satellite Dish shall be subject to Landlord's  review and approval and shall
conform  to the  highest  engineering  standards  commonly  used for  installing
similar earth satellite stations on similar buildings;  no part of the Satellite
Dish shall  extend  beyond the parapet  walls of the  Building if located on the
roof of the Building.  Tenant  further  agrees that the  Satellite  Dish and all
other related equipment installed by Tenant shall be painted so as to blend with
the parapet  wall.  All wiring  installed in the Building or used in  connection
with the Satellite Dish shall be labeled with  information  identifying its use,
points of origin and termination,  and other information reasonably requested by
Landlord.

         5.  Notwithstanding  anything to the contrary contained in the Lease by
which  Landlord may consent to a sublease or assignment by Tenant,  the right to
use the  Designated  Area for the operation of the Satellite  Dish is a personal
right  granted by  Landlord  to Tenant and may not be  assigned by Tenant to any
successor,  sublessee or other  assignee other than a transfer to Related Entity
(as described in the Lease).

         6. Upon the expiration of the Term of the Lease,  or within thirty (30)
days of any earlier  termination of the Lease, Tenant shall remove the Satellite
Dish and all wires and cables used in connection with the Satellite Dish, at the
sole  expense  of  Tenant,  and  shall  restore  and  repair  all  damage to the
Designated Area and the Building occasioned by the installation,  maintenance or
removal of the Satellite  dish. If Tenant fails to timely complete such removal,
restoration and repair, all sums incurred by Landlord to complete such work will
be paid by Tenant to Landlord immediately upon demand.  Default by Tenant in the
performance  of  Tenant's  obligations  hereunder  shall be  treated in the same
manner as a default by Tenant under the Lease.

         7. Landlord  makes no  representations  or warranties  whatsoever  with
respect to the condition of the  Designated  Area, or the fitness or suitability
of the Designated  Area for the  installation,  maintenance and operation of the
Satellite Dish, including,  without limitation,  with respect to the quality and
clarity of any  reception or to or from the  Satellite  Dish and the presence of
any  interference  with such signals  whether  emanating  from the Building,  or
otherwise.  The Designated Area is and shall be delivered to Tenant "as-is" with
all flaws and faults and Tenant  hereby  acknowledges  that it has inspected the
Designated  Area  and  agrees  to  accept  the  Designated  Area in its  present
condition.

         8. Tenant shall  contact the manager of the Building  prior to the date
Tenant proposes to make any modification or replacement of the Satellite Dish or
any part  thereof in order to make  arrangements  for the  movement of materials
needed in  connection  therewith.  Landlord  shall have no  obligation to supply
Tenant with any materials or properly  whatsoever  in  connection  with adequate
security and maintenance  personnel in order to ensure the safe operation of the
Satellite Dish. In addition,  Tenant shall install,  maintain and operate all of
its equipment used in connection with the Satellite Dish in a fashion and manner
so as not to interfere  with use and  operation of any: (a) other  television or
radio equipment ill the Building; (b) present or future

[LANDLORD'S AND TENANT'S INTIALS GO HERE]

                                        2
<PAGE>

electronic  control system for any of the Building's  operating  services or the
operation of the elevators in the Building; (c) other transmitting, receiving or
master  television,  communications or micro-wave antenna currently or hereafter
located in the  Building by or on behalf of  Landlord;  (d) radio  communication
system now or hereafter  used or desired to be used by  Landlord,  its agents or
contractors;  or  (e)  any  such  communications  systems,  antenna  or  similar
equipment now used by other tenants of the Building.  In the event that Tenant's
Satellite  Dish  interferes  with  the use or  operation  of the  communications
systems,  antenna or similar  equipment  hereafter used or desired to be used by
tenants of the Building.  Tenant shall comply with standards  reasonably imposed
by Landlord  affecting  similar  equipment in the Building  and  cooperate  with
Landlord   and  such   other   tenant(s)   to   eliminate   such   interference.
Notwithstanding  anything in the Rules and  Regulations to the contrary,  during
the term of the Lease  Landlord shall afford  Tenant,  its employees,  agents or
contractors  reasonable  access to the roof of the Building  (if the  Designated
Area is on the roof) for purposes of  maintaining  and  repairing  the Satellite
Dish;  provided,  however,  that Tenant shall  provide at least 24 hours advance
notice of same and Landlord may  reasonably  specify the time and any conditions
of such access,  including  but not limited to  requiring  that any such persons
gaining  access to the roof be  accompanied  by the  Building  engineer or other
representatives designated by the Landlord.

         9. In  connection  with Tenant's use and  maintenance  of the Satellite
Dish,  Tenant,  at its sole cost and expense,  shall comply with all present and
future laws, rules, orders,  ordinances,  regulations,  statutes,  requirements,
codes and executive orders,  extraordinary as well as ordinary, all governmental
authorities  now existing or hereafter  created and any  applicable  fire rating
bureau, or other body exercising similar functions,  affecting the Building,  or
affecting the maintenance,  use or occupation of Building,  which are applicable
to the Designated  Area, or the use thereof.  Tenant shall install  maintain and
operate all of its  equipment  used in  connection  with the  Satellite  Dish in
compliance  with the laws,  codes and regulations of all  governmental  agencies
having  jurisdiction over the  installation,  use and operation of the Satellite
Dish;  provided,  however,  if compliance with such laws,  codes and regulations
would require a change in the size,  configuration or location of the designated
Area or the Satellite  Dish,  such changes shall be subject to Landlord's  prior
written consent, which consent may be withheld in Landlord's sole but good faith
discretion.

         10.  Throughout  the term of the Lease,  Tenant,  at Tenant's  cost and
expense, shall maintain and take good care of the Designated Area, including the
Satellite  Dish,  and other  fixtures and  appurtenances  therein,  and make all
non-structural  repairs  thereto  as and when  needed to  preserve  them in good
working order and condition;  provided, however, if Tenant shares the Designated
Area, the cost of maintenance and repair thereof shall be allocated on a prorata
basis.  Notwithstanding  the  foregoing,  all damage or injury to the Designated
Area or any  other  part of the  Building,  or to its  fixtures,  equipment  and
appurtenances, whether requiring structural or non-structural repairs, caused by
or resulting from any act, misuse,  negligent conduct, or omission of Tenant, or
Tenant's agents, contractors, employees, invitees or licensees, will be repaired
at  Tenant's,   sole  cost  and  expense  by  Tenant  to  Landlord's  reasonable
satisfaction (if the repairs

[LANDLORD'S AND TENANT'S INTIALS GO HERE]

                                        3
<PAGE>

required are non-structural in nature and do not affect any Building system); or
by Landlord  at Tenant's  expense (if the  required  repairs are  structural  in
nature or affect any  Building  system).  Tenant shall also repair all damage to
the Building and the Designated Area caused by the Satellite Dish.

         11. If possible,  Tenant  shall pay directly to the utility  company or
the governmental  authority  providing utilities all charges for electricity and
other  sources of energy  consumed in  connection  with the  Satellite  Dish and
Landlord  shall have no  obligation  to provide any  services to the  Designated
Area.  If such  electricity  and  other  sources  of energy  cannot be  provided
directly  to  Tenant,  Tenant  shall  reimburse  Landlord  for all  utility  and
electricity  charges incurred by Landlord which are attributable to Tenant's use
and operation of the Satellite Dish.

         12. To the fullest extent  permitted by law, Tenant shall indemnify and
hold Landlord and  Landlord's  agents,  owner's,  employees and  representatives
harmless from and against all claims, damages,  losses and expenses,  including,
without  limitation,  attorneys' fees,  directly or indirectly arising out of or
resulting  from  Tenant's  use of the  Satellite  Dish or the  Designated  Area,
including, without limitation, all claims, damages, losses or expenses which may
be: (a) attributable to bodily injury,  sickness,  disease or death or to injury
to or destruction of tangible property, including the loss of use therefrom; and
(b) which may be caused in whole or in part by any fault or act or  omission  by
Tenant or anyone  employed  by Tenant,  or anyone  for whose acts  Tenant may by
liable,  or anyone acting on Tenant's  behalf,  except to the extent such bodily
injury,  sickness,  disease or death or injury to or  destruction of property is
caused by  Landlord's  gross  negligence  or willful  misconduct.  The indemnity
provisions of this  paragraph are  cumulative  and in addition to any similar or
related requirements or obligations of Tenant under the Lease, and shall survive
the termination of the Lease.

         13.  Landlord  shall not be liable for any failure to provide access to
the Designated  Area, to assure the beneficial use of the Designated  Area or to
furnish  any  services  or  utilities  required  when such  failure is caused by
natural occurrences, riots, civil disturbances,  insurrection, war, court order,
public enemy,  accidents,  breakages,  repairs,  strike, lockouts or other labor
disputes,  the making of repairs,  alterations or improvements to the Designated
Area or the Building,  the inability to obtain an adequate  supply of fuel, gas.
steam,  water,  electricity,  labor or other supplies or by any other  condition
beyond Landlord's  reasonable  control,  and Tenant shall not be entitled to any
damages  resulting from such failure,  nor shall such failure  relieve Tenant of
the obligation to pay all sums due hereunder or under the Lease or constitute or
be construed as a constructive or other eviction of Tenant.

         14. In addition to any other  rights or remedies to which  Landlord may
be entitled at law or in equity,  if Tenant fails to perform any of the Tenant's
obligations  contained  in this  Rider,  and does not cure such  failure  within
thirty (30) days following written notice thereof, Landlord shall have the right
to (i) pursue any remedies  Landlord  may have in the Lease,  and/or (ii) revoke
Tenant's  right to use to  Designated  Area and  install,  maintain or operate a
Satellite Dish upon five (5) days written notice

[LANDLORD'S AND TENANT'S INITIALS GO HERE]

                                        4
<PAGE>

         15. Upon not less than ten (10) days  written  notice,  Landlord  shall
have the right to require  Tenant to relocate the  Satellite  Dish to such other
suitable  space in the Building as Landlord  shall  reasonably  designate.  Such
relocation of the Satellite  Dash shall be at Tenant's sole cost and expense and
shall  otherwise  be  subject  to the terms  and  conditions  contained  herein;
provided,  however,  Landlord shall be responsible  for the costs and expense of
relocating  the  Satellite  Dish after (and if) Landlord  relocates it more than
twice during the Lease Term.  Upon such  relocation of the Satellite  Disk,  the
Designated  Area  shall be deemed to be such  portion of the  Building  or other
location  determined  by  Landlord,  as the  Satellite  Dish is then  located as
designated by Landlord.

[LANDLORD'S AND TENANT'S INITIALS GO HERE]

                                       5<PAGE>

                                                                EXHIBIT 10.7

                         FIRST AMENDMENT TO OFFICE LEASE

         THIS FIRST  AMENDMENT TO OFFICE LEASE ("First  Amendment")  is made and
entered into this 14th day of January, 2000 by and between PINE STREET INVESTORS
I, L.L.C., a Delaware limited liability company ("Landlord"), and PEOPLEPC INC.,
a Delaware corporation ("Tenant").

                                    RECITALS
                                    --------

         A.  On June 3, 1999,  Landlord  and Tenant  entered  into that  certain
Office  Lease  under which  Landlord  leased to Tenant,  and Tenant  leased from
Landlord,  certain  premises  comprising  the 11th  floor of the  building  (the
"existing Premises") located at 100 Pine Street, San Francisco,  California (the
"Building"). The Office Lease is referred to herein as the "Lease."

         B.  Tenant desires to lease additional office space on the 10th floor
of the Building to increase its existing  Premises and Landlord desires to lease
such space to Tenant on the terms and conditions set forth herein.

         C.  Any terms set forth in this Agreement which are not expressly
defined shall have the meanings ascribed to them in the Lease.

         NOW,  THEREFORE,  in  consideration  of the mutual  promises  contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Landlord and Tenant hereby agree as follows:

                                    AGREEMENT
                                    ---------

1.  ADDITIONAL LEASED SPACE.  Landlord hereby leases to Tenant and Tenant hereby
hires from  Landlord,  in addition to the  existing  Premises,  13,285  rentable
square feet of space  comprising  the tenth (10th) floor of the Building  (Suite
1000),  as identified  on Exhibit A attached  hereto and made a part hereof (the
"Additional  Leased  Space").  The parties  acknowledge and agree that as of the
Commencement Date (defined in Paragraph 2 below):  (i) the existing Premises and
the  Additional  Leased Space shall be  collectively  referred to herein and for
purposes of the Lease, as amended hereby,  as the "Premises," and (ii) the total
rentable area comprising the Premises shall be equal to 26,570 square feet.
<PAGE>

2.  Term.
    ----

    (a)  The lease Term for the  Additional  Leased Space shall  commence on
February 15, 2000 (the  "Commencement  Date"),  and, unless sooner terminated as
provided  herein or in the  Lease,  shall  expire on  February  14,  2005.  Said
Commencement  Date may be postponed as set forth in Paragraph 2(d) of this First
Amendment.  The Term may be extended upon the terms and  conditions set forth in
Rider Two to the Lease.

    (b)  The "Expiration Date" applicable to the existing Premises is hereby
amended to be February 14, 2005.

    (c)  If Landlord fails to deliver  possession of the  Additional  Leased
Space within five (5) business days following the execution and delivery of this
First Amendment by Landlord and Tenant,  the Commencement  Date shall be delayed
for each day beyond said five (5) day period until Landlord delivers  possession
of the Additional Leased Space. If Landlord,  for any reason whatsoever,  cannot
deliver  possession of the Additional Leased Space to Tenant by the Commencement
Date,  this  Amendment and the Lease shall not be void or voidable,  the term of
the Lease shall not be extended by such delay,  the terms and  conditions of the
Lease applicable to the existing  Premises shall in no way be affected  thereby,
and the Landlord shall not be liable to Tenant for any loss or damage  resulting
therefrom;  provided,  however,  if Landlord is unable, for any reason except to
the extent caused by Tenant,  its contractors,  agents or employees,  to deliver
possession of the  Additional  Leased Space to Tenant within one hundred  twenty
(120) days  following  execution  and  delivery of this First  Amendment by both
Landlord  and  Tenant,  Tenant  shall,  as its sole  remedy,  have the  right to
terminate the Lease as to the Additional Leased Space only by delivering written
notice to Landlord any time thereafter until Landlord delivers possession of the
Premises to Tenant. Upon such termination, Landlord and Tenant shall be relieved
of  their  obligations  hereunder  and  under  the  Lease as it  applies  to the
Additional  Leased  Space,  and any Security  Deposit and prepaid Base Rent paid
hereunder  attributable  to the  Additional  Leased  Space  shall be returned to
Tenant.

    (d)  Article 2(D) of the Lease is hereby deleted in its entirety and
replaced with the following:

"Subject to the terms set forth in this  Paragraph,  Tenant shall have the right
to  terminate  and  cancel  the Lease and the First  Amendment  as to either the
existing  Premises  or the  Additional  Leased  Space (the  "Terminated  Space")
effective as of the expiration of thirty (30) full calendar months following the
Commencement  Date applicable to the Additional  Leased Space (the  "Termination
Date") by delivering to Landlord  written notice thereof at least six (6) months
prior to the Termination Date (the "Termination  Option"). As a condition to the
effectiveness of Tenant's exercise of its Termination Option, and in addition to
Tenant's obligation to satisfy all other monetary and nonmonetary obligations as
to the  Terminated  Space  under the Lease and the First  Amendment  through the
Termination Date, Tenant shall,  thirty (30) days prior to the Termination Date,
pay Landlord a sum equal to: (i) four months Base Rent applicable to

                                        2
<PAGE>

the Terminated Space (which,  if the Terminated Space is the existing  Premises,
shall be equal to the average  Base Rent payable by Tenant over the Lease Term),
plus (ii)  fifty  percent  (50.0%) of any other  direct  out of pocket  costs of
Landlord  incurred in  connection  with the leasing of the  Terminated  Space to
Tenant hereunder and under the Lease,  including,  without  limitation,  leasing
commissions  paid by  Landlord in  connection  with the  execution  of the First
Amendment  and the Lease and any  improvement  allowance  provided  to Tenant by
Landlord for the Terminated  Space,  the exact sum of which  Landlord  agrees to
identify to Tenant prior to Tenant's payment  thereof;  said sum, as applicable,
shall be referred to herein  collectively  as the  "Termination  Consideration".
Tenant may not  exercise  the  Termination  Option if Tenant is in  Default  (as
defined  in  Article  20(A))  under  the  First  Amendment  or  the  Lease.  The
Termination  Option is personal to Tenant  hereunder and may not be exercised by
or assigned, voluntarily or involuntarily,  to any person or entity other than a
Related Entity (as defined in Article 17(G)) or a permitted assignee of Tenant's
interest in this Lease which  assignee is a successor to Tenant either by merger
or consolidation  or a purchaser of all or substantially  all of Tenant's assets
(provided such purchaser shall have also assumed in writing Tenant's obligations
under this Lease).  Tenant may only exercise the Termination Option with respect
to all (not a portion) of either the existing  Premises or the Additional Leased
Space,  and  Tenant  may not  exercise  the  Termination  Option  as to both the
existing  Premises and the Additional  Leased Space. If Tenant properly and in a
timely manner  exercises  ,its  Termination  Option and properly and in a timely
manner  delivers the  Termination  Consideration  to Landlord and  satisfies all
other monetary and non-monetary obligations under this Lease, including, without
limitation,  the  provisions  related to  surrender  of the  Premises  as to the
Terminated  Space,  all  of  which  shall  be  accomplished  on  or  before  the
Termination  Date,  then the Lease  and,  to the  extent  applicable,  the First
Amendment  shall  terminate  as of  midnight on the  Termination  Date as to the
Terminated Space.  Landlord agrees to notify Tenant of any attempted exercise of
the  Termination   Option  which  does  not  satisfy  the  foregoing  terms  and
conditions,  identifying the  deficiencies of such exercise;  if Tenant does not
cure all of such deficiencies  within five (5) days following  Landlord's notice
thereof  or  if  the  deficiency  is  non-curable,   Tenant's  exercise  of  the
Termination Option shall be null and void, and the Lease and the First Amendment
shall continue in full force and effect in accordance with its terms.

3.  Rent.
    ----

    (a)  Base Rent. Tenant shall pay Landlord as Base Rent for the Additional
         ---------
Leased Space the sum of $46.00 per rentable square foot of the Additional Leased
Space per year, which shall be equal to an annual Base Rent of $611,110.00 and a
monthly Base

                                        3
<PAGE>

Rent of  $50,925.83.  Said  Base  Rent  shall be  payable  commencing  as of the
Commencement  Date applicable to the Additional  Leased Space,  except that Base
Rent for the first  full  calendar  month for which said Base Rent shall be due,
shall be paid when Tenant executes this First Amendment. Said Base Rent shall be
in addition to the Base Rent payable for the existing  Premises  under Article 3
of the Lease. Any Base Rent shall be paid in advance, on or before the first day
of  each  calendar  month  during  the  Lease  Term.  If the  Commencement  Date
applicable to the  Additional  Leased Space is on a day other than the first day
of a calendar month, Base Rent for the Additional Leased Space shall be prorated
for such month.

    (b)  Operating Expenses. The parties acknowledge and agree that Tenant's
         ------------------
Prorata Share of Taxes and Operating  Expenses  attributable  to the  Additional
Leased Space is 3.3003%.  The Base Tax Year and Base Expense Year  applicable to
the  Additional  Leased  Space  shall  be  the  calendar  year  2000.  As of the
Commencement  Date applicable to the Additional  Leased Space,  Tenant's Prorata
Share of Taxes and Operating Expenses (as defined in Article 26(0) of the Lease)
shall be increased to 6.601% to take into account the Additional Leased Space.

4.  Condition of Additional Leased Space.
    ------------------------------------
    (a)  Tenant acknowledges and agrees that,  notwithstanding  anything to
the  contrary  in Article 6 of the Lease,  it is leasing the  Additional  Leased
Space in its present and "as is" condition, and that Landlord is not responsible
for making any repairs or  improvements  thereto except that Landlord  agrees to
provide the  Allowance as set forth in Paragraph  4(b) of this First  Amendment.
Tenant further  acknowledges that neither Landlord nor any agent of Landlord has
made any representation or warranty with respect to the Additional Leased Space,
the Building, the Building Systems or Tenant's business.

    (b)  Landlord shall provide to Tenant an improvement allowance in an amount
equal  to  One  Hundred   Thirty-Two   Thousand   Eight  Hundred  Fifty  Dollars
($132,850.00) ("Allowance"), to reimburse Tenant for actual costs incurred by it
in connection with the refurbishment,  repair,  improvement and/or alteration of
the Premises,  and/or the installation of Lines (as defined in the Lease) within
the  Premises.  Any repairs,  refurbishment,  improvements  or  alterations  and
installation  of Lines  shall be  completed  by Tenant at its own  expense,  and
subject to the provisions of Articles 10 and 29 the Lease. The Allowance, or any
portion  thereof,  shall be payable by  Landlord as the work  progresses  within
thirty (30) days following  receipt of Tenant's  disbursement  requests  against
such  allowance as set forth herein.  Such requests  shall include the following
items,  to  the  extent   applicable  to  the  items  for  which  the  Allowance
disbursement  is  being  requested:   (i)  proper  receipts  for  said  repairs,
refurbishment,  improvements or  alterations,  or any portions  thereof,  (ii) a
certification  from the  contractor  performing  said work that the sums  billed
reflect work actually  performed,  (iii)  executed  conditional  mechanic's  and
materialman's lien releases,  in the statutory form, from all parties being paid
from such disbursement, (iv) such other information or documentation as Landlord
may reasonably  request.  Five (5) months following the  Commencement  Date, any
unused  portion  of the  Allowance  will be used as a credit  toward  Base  Rent
payable under the Lease as amended hereby.

                                        4
<PAGE>

5.  Security  Deposit.  Upon  Tenant's  execution  and  delivery  of this  First
    -----------------
Amendment,  Tenant shall deposit with Landlord  $50,925.83 ("Cash Deposit").  In
addition,  Tenant shall  deliver and cause to be in effect upon the execution of
this First  Amendment,  during the Lease Term,  and for a period sixty (60) days
thereafter,  an  unconditional,  irrevocable  letter of credit in the  amount of
$509,258.30 in favor of Landlord ("Letter of Credit").  The Cash Deposit and the
Letter of Credit  shall be referred to  collectively  herein as the  "Additional
Security  Deposit".  The Additional  Security  Deposit and the Security  Deposit
provided by Tenant under the Lease shall serve as security for the prompt,  full
and faithful  performance by Tenant of the terms and provisions of the Lease, as
amended hereunder. In accordance with the terms hereof, Tenant shall deliver the
Letter of Credit to Landlord  upon the execution of this First  Amendment.  Such
Letter of Credit shall be in a form reasonably acceptable to Landlord and issued
by a bank  selected by Tenant and  reasonably  acceptable  to Landlord.  Without
limiting the generality of the foregoing,  any bank issuing the Letter of Credit
shall be a bank  that  accepts  deposits,  maintains  accounts,  has a local San
Francisco  office that will  negotiate a letter of credit,  and the  deposits of
which are insured by the Federal Deposit  Insurance  Corporation.  The Letter of
Credit shall  provide  that the issuing bank shall  deliver to Landlord at least
sixty (60) days prior  written  notice of the  termination  or expiration of any
such Letter of Credit.  Tenant shall pay all expenses,  points, or fees incurred
by Tenant in obtaining  and  maintaining  the Letter of Credit.  The  Additional
Security  Deposit and the initial  Security Deposit shall be held by Landlord as
security for the prompt,  full and faithful  performance by Tenant of all of the
terms,  covenants and conditions of the Lease and this First Amendment,  and for
reimbursement of Landlord of certain expenses incurred by Landlord in connection
with the execution of the Lease and this First  Amendment.  Without limiting the
generality of the foregoing or anything in the Lease,  Tenant  acknowledges  and
agrees that the Additional Security Deposit may be applied by Landlord, upon the
occurrence of a Default (including, without limitation, termination of the Lease
following a Default)  to  reimburse  Landlord  for the (i)  unamortized  cost of
leasing commissions payable by Landlord in connection with this First Amendment,
and  (ii)  the  unamortized  cost  of  Landlords  Allowance  (collectively,  the
"Reimbursable  Expenses").  Tenant agrees, upon termination of the Lease (except
under Article 2(D) of the Lease, as revised hereunder) or upon Tenant's Default,
that  Landlord  shall  have the right to draw upon the Cash  Deposit  and/or the
Letter of Credit,  and apply the proceeds thereof to reimburse  Landlord for any
unperformed Lease obligations and any Reimbursable  Expenses. In addition,  upon
the occurrence of a Default under the Lease,  Landlord, in its sole and absolute
discretion,  shall have the right to draw upon the Cash Deposit and/or Letter of
Credit and apply the proceeds to satisfy Tenant's outstanding  obligations under
the Lease.  The use or  application of the  Additional  Security  Deposit or any
portion  thereof shall not prevent  Landlord from  exercising any other right or
remedy  provided  hereunder  or under  any Law and  shall  not be  construed  as
liquidated  damages.  If  Landlord  uses or applies any portion of the Letter of
Credit,  Tenant shall,  within ten (10) business days after demand,  (a) deposit
cash (which shall constitute an additional Security Deposit) with Landlord in an
amount  that,  when  added to the amount  remaining  under the Letter of Credit,
equals $509,258.30,  or (b) deliver written  documentation  executed by the bank
issuing the Letter of Credit that confirms that the Letter of Credit

                                        5
<PAGE>

has been reinstated or a new or additional  Letter of Credit issued in such full
amount,  and  Tenant's  failure to do so shall be deemed a  material  breach and
"Default"  under the Lease.  If Landlord uses or applies any portion of the Cash
Deposit,  Tenant shall, within ten (10) business days after demand, deposit cash
with  Landlord  in an amount that when added to the amount  remaining  under the
Cash Deposit equals $50,925.83. Upon sixty (60) days following expiration of the
Term of the Lease and the vacation of the Premises by Tenant,  other than when a
Default  has  occurred,  Landlord  shall:  (i)  release the Letter of Credit and
Tenant's  obligation to provide the Letter of Credit shall cease and (ii) return
the Cash  Deposit  (without  interest) to Tenant.  In  addition,  if and only if
Tenant  has not been in  Default  under the  Lease,  and if Tenant  has not been
notified by Landlord that it is in default under the Lease  immediately prior to
the applicable period, upon Tenant's written request,  Landlord agrees to review
Tenant's then current financial  condition at the expiration of twenty-four (24)
months following the Commencement  Date for the Additional  Leased Space and, if
applicable,  following the end of each twelve (12) month period thereafter,  for
purposes of  determining  whether the Letter of Credit  should  remain in place,
which  determination  shall  be  made  by  Landlord  in its  sole  and  absolute
discretion;  Tenant  agrees to  provide  Landlord  with such  information  as to
Tenant's financial  condition as Landlord may request from time to time. Nothing
is this Paragraph shall affect or limit  Landlord's  right under Paragraph 36 of
the Lease.

6.  Assignment and Subletting.
    -------------------------
    (a)  The fourth  sentence of Article 17(A) of the Lease is hereby deleted in
its entirety and replaced with the following:

 "In  addition  to  the  other  requirements  hereunder,  if the  Subject  Space
comprises  twenty percent (20%) or more of each full floor of the Premises,  the
Subject Space must be separately  demiseable with  appropriate  means of ingress
and egress  suitable  for  normal  renting  purposes;  provided,  however,  such
condition  shall not apply or be the sole  basis for  Landlord  withholding  its
consent to any Transfer if Landlord  does not exercise its right to recapture or
sublease the Subject Space as provided herein."

    (b)  The last  sentence of Article  17(C) of the Lease is hereby  deleted in
its entirety and replaced with the following:

"Notwithstanding the foregoing rights of Landlord, Landlord's right to recapture
or sublease the Subject Space as set forth in this Paragraph  shall not apply to
a proposed sublease of the Premises where: (i) the aggregate space sublet and/or
proposed to be sublet by Tenant (including the Subject Space and any common area
square  footage  allocated or proposed to be allocated  to any  Transferees)  is
equal to less than twenty percent (20%) of each floor of the Premises (or 40% of
the entire Premises as long as the Premises  comprises two floors),  or (ii) the
term of the proposed sublease is equal to or less than eighteen (18) months, the
aggregate  space sublet and/or  proposed to be sublet by Tenant  (including  the
Subject  Space and any common area square  footage  allocated  or proposed to be
allocated to any  Transferees) is less than 6,000 rentable square feet per floor
of the  Premises,  the  proposed  Transferee  is an  affiliate  (as such term is
defined in the California  Corporations  Code) of Tenant, or an affiliate of any
members of the board

                                        6
<PAGE>

of directors or of a founder of Tenant, and such proposed  Transferee engages in
a  technology,  media or internet  related  business  or is an internet  related
venture  capital  firm,  or (iii) the  sublease or  assignment  does not require
Landlord's consent as expressly set forth in Article 17(G). "

7.  Terms and Conditions.
    --------------------
    (a)  Except as expressly set forth herein,  the terms and  conditions of the
Lease shall apply to the  Additional  Leased  Space and are hereby  incorporated
herein. The Lease shall not otherwise be affected by the Amendment.

    (b)  Tenant  hereby  acknowledges  that,  as of the date of this  Amendment,
there are no existing defaults by Landlord in the performance of its obligations
under the Lease,  nor to the best of Tenant's  knowledge are there now any facts
or conditions  which,  with notice or lapse of time or both,  will become such a
default,  and there is no offset,  defense,  counterclaim  or credit against any
rental or other payment due under the Lease.

8.  Brokers.  The parties  acknowledge  that they have dealt only with CUSHMAN &
    -------
WAKEFIELD OF CALIFORNIA,  INC. and  Landlord's  Building  representative  broker
(whose  commission,  if any,  shall be paid by  Landlord  pursuant  to  separate
agreement) as broker,  agent or finder in connection with the Additional  Leased
Space.  The parties  agree to indemnify  and hold each other  harmless  from all
damages,  judgments,  liabilities and expenses (including  reasonable attorney's
fees)  arising from any claims or demands of any other  broker,  agent or finder
not disclosed  herein with whom the indemnifying  party (Landlord or Tenant,  as
the case may be) has dealt or claimed to have  dealt for any  commission  or fee
alleged to be due in connection  with its  participation  in the  procurement of
Tenant or the negotiations with Tenant concerning the Additional Leased Space or
execution of this First Amendment to Office Lease.

                                        7
<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have executed this Amendment to
Office Lease as of the date first above written.

LANDLORD:

PINE STREET INVESTORS I, L.L.C.
a Delaware limited liability company

 By:      Walton Street Real Estate Fund I, L.P.,
          a Delaware limited partnership,
          Managing Partner

          By:     Walton Street Managers I, L.P.,
                  a Delaware limited partnership,
                  General Partner

                  By:      WSC Managers I, Inc.,
                           a Delaware corporation,
                           General Partner

                           By: /s/ HOWARD BRODY
                               ------------------
                           Name:   Howard Brody
                           Title:  Vice President

TENANT:

PEOPLEPC INC.,
a Delaware corporation

By:  /s/ MARY E. HUMISTON
     --------------------
Name:   Mary E. Humiston
Title:  VP HR & Administration

                                        8
<PAGE>

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