Document:

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                                                                     EXHIBIT 4.1

                                     AVIRON

          $230,000,000 5 1/4% Convertible Subordinated Notes due 2008

           Officer's Certificate Pursuant to Section 2.01 of Indenture

               The undersigned officers of Aviron, a Delaware corporation (the
"Company"), pursuant to authority granted such officers pursuant to resolutions
duly adopted at a meeting of the Board of Directors of the Company on November
30, 2000 and resolutions duly adopted at a meeting of the Pricing Committee of
the Board of Directors of the Company on February 1, 2001 (collectively, the
"Resolutions"), hereby establish a series of Securities under that certain
Indenture, dated as of _______________, 2001 (the "Indenture"), between the
Company and HSBC Bank USA, as trustee ("Trustee"), which Securities are
designated "5 1/4% Convertible Subordinated Notes due 2008," and hereby certify,
pursuant to Sections 2.1 and 2.2 of the Indenture, as follows:

        1.      Form of Note. Attached hereto as Exhibit A is a true and correct
copy of a specimen Note (the "Form of Note") representing the Company's 5 1/4%
Convertible Subordinated Notes due 2008 (the "Notes").

        2.      Terms of the Notes. The terms of the Notes are as follows:

        (a)     The title of the Notes to be issued as a series of Securities
(as defined in the Indenture) under the Indenture shall be the "5 1/4%
Convertible Subordinated Notes due 2008";

        (b)     The aggregate principal amount of the Notes that may be
authenticated and delivered under the Indenture shall be limited to $230,000,000
(except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Article II and
Section 9.6 of the Indenture);

        (c)     The Notes shall be issued at a price equal to 5 1/4% of the
aggregate principal amount thereof;

        (d)     The principal of the Notes shall be payable on February 1, 2008;

        (e)     The Notes shall bear interest at a rate equal to 5 1/4% per
annum; interest on the Notes shall accrue from February __, 2001 or from the
most recent interest payment date to which interest has been paid or provided
for, as the case may be; interest on the Notes shall be payable semi-annually in
arrears in cash on February 1 and August 1 of each year until maturity
commencing on August 1, 2001; and interest on the Notes shall be payable to
holders of record on the January 15 or July 15 immediately preceding the
applicable interest payment date;

        (f)     The place or places where the principal of and any interest in
the Notes shall be payable shall be as set forth in the Notes, the form of which
is attached hereto as Exhibit A;

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        (g)     The Notes shall be subject to redemption, in whole or in part,
                at the option of the Company at any time on or after February 5,
                2004, at the redemption prices (expressed in percentages of
                principal amount) set forth below plus accrued and unpaid
                interest thereon to, but excluding, the redemption date:

<TABLE>
<CAPTION>
                                                                                    Redemption
        Period                                                                        Price
        ------                                                                      ----------
<S>                                                                                 <C>
        Beginning on February 5, 2004 and ending on January 31, 2005..........         103.000%
        Beginning on February 1, 2005 and ending on January 31, 2006..........         102.250%
        Beginning on February 1, 2006 and ending on January 31, 2007..........         101.500%
        Beginning on February 1, 2007 and ending on January 31, 2008..........         100.750%
        February 1, 2008 and thereafter.......................................         100.00%
</TABLE>

                The Company may not so redeem Securities if the Company has
                failed to pay any interest on the Securities when due and such
                failure to pay is continuing. If the redemption date is an
                interest payment date, interest shall be paid to the record
                holder of the relevant record date.

        (h)     The Company shall not be obligated to redeem or purchase the
                Notes pursuant to any sinking fund or at the option of any
                holder thereof prior to maturity;

        (i)     The Company shall be convertible into shares of Common Stock,
                par value $.001 per share, of the Company at any time prior to
                maturity at an initial conversion price of $62.50 per share of
                Common Stock, subject to adjustment as described below;

        (j)     The Notes shall be issued in denominations of $1,000 and any
                integral multiple thereof;

        (k)     100% of the principal amount thereof shall be payable upon
                declaration of acceleration of the maturity thereof pursuant to
                Section 6.2 of the Indenture;

        (l)     In addition to the definitions and provisions set forth in the
                Indenture, the Notes shall include the definitions and
                provisions set forth in Sections 3, 4 and 5 of this Officers'
                Certificate and, in the case of conflict, the definitions and
                provisions set forth in this Officers' Certificate shall
                control;

        (m)     The Trustee for the Notes shall be HSBC Bank USA;

        (n)     The Notes shall be issued initially in the form of a Global Note
                ("Global Note") in definitive, fully registered form without
                interest coupons in substantially the form of Exhibit A, which
                shall be deposited on behalf of the purchasers of the Notes
                represented thereby with the Trustee, at its principal corporate
                trust office in New York City, as custodian for the Depository,
                and registered in the name of the Depository or a nominee
                thereof, duly executed by the Company and authenticated by the
                Trustee where so provided. The aggregate principal amount of the
                Global Notes may from time to time be increased or decreased by
                adjustments made on the records of the Trustee and the
                Depository or its nominee in accordance with the Depository's
                procedures and as provided in Section 2.14 of the Indenture.
                Except as provided in Section 2.14 of the Indenture, owners of
                beneficial interest in Global Notes shall not be entitled to
                receive physical

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                delivery of certificated Notes. The Depository for such Global
                Notes shall be The Depository Trust Company;

        (o)     The Notes shall not be secured by any collateral;

        (p)     The Notes shall not be guaranteed by any person;

        (q)     The Notes shall be general unsecured obligations of the Company
                and shall, to the extent provided in Article XII of the
                Indenture, be subordinated in right of payment to the prior
                payment in full of the Company's senior indebtedness; and

        (r)     The provisions of Section 8.3 and 8.4 of the Indenture shall be
                applicable to the Notes.

        3.      Additional Redemption Provisions. In addition to the redemption
provisions set forth in Article III of the Indenture, the Notes shall include
the following additional provisions:

        Section 3.7. Conversion Arrangement on Call for Redemption.

               In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities by an agreement with
one or more investment bankers or other purchasers to purchase such Securities
by paying to the Trustee in trust for the Holders, on or before the date fixed
for redemption, an amount not less than the applicable redemption price,
together with interest accrued to (but excluding) the date fixed for redemption,
of such Securities. Notwithstanding anything to the contrary contained in this
Article III, the obligation of the Company to pay the redemption price of such
Securities, together with interest accrued to (but excluding) the date fixed for
redemption, shall be deemed to be satisfied and discharged to the extent such
amount is so paid by such purchasers. If such an agreement is entered into, a
copy of which will be filed with the Trustee prior to the date fixed for
redemption, any Securities not duly surrendered for conversion by the Holders
thereof may, at the option of the Company, be deemed, to the fullest extent
permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article XIII) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the date fixed for redemption (and the right to convert any such
Securities shall be extended through such time), subject to payment of the above
amount as aforesaid. At the direction of the Company, the Trustee shall hold and
dispose of any such amount paid to it in the same manner as it would monies
deposited with it by the Company for the redemption of Securities. Without the
Trustee's prior written consent, no arrangement between the Company and such
purchasers for the purchase and conversion of any Securities shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture.

        Section 3.8. Redemption at Option of Holders.

               If there shall occur a Fundamental Change at any time prior to
maturity of the Securities, then each Holder shall have the right, at such
Holder's option, to require the Company to redeem all of such Holder's
Securities, or any portion thereof that is an integral multiple of $1,000
principal amount, on the date (the "Repurchase Date") that is thirty (30) days
after the

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date of the Company Notice (as defined below) of such Fundamental Change (or, if
such 30th day is not a Business Day, the next succeeding Business Day) at a
redemption price equal to 100% of the principal amount thereof, together with
accrued interest to (but excluding) the Repurchase Date; provided that if such
Repurchase Date is February 1 or August 1, then the interest payable on such
date shall be paid to the Holders of record of the Securities on the next
preceding January 15 or July 15, respectively. Upon presentation of any
Securities redeemed in part only, the Company shall execute and, upon the
Company's written direction to the Trustee, the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, new Securities, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Securities so presented.

               On or before the tenth day after the occurrence of a Fundamental
Change, the Company, or, at its written request (which must be received by the
Trustee at least five (5) Business Days prior to the date the Trustee is
requested to give notice as described below, unless the Trustee shall agree to a
shorter period), the Trustee in the name of and at the expense of the Company,
shall mail or cause to be mailed to all Holders of record on the date of the
Fundamental Change a notice (the "Company Notice") of the occurrence of such
Fundamental Change and of the redemption right at the option of the Holders
arising as a result thereof. Such notice shall be mailed in the manner and with
the effect set forth in Sections 3.3 and 3.4 hereof (without regard for the time
limits set forth therein). If the Company shall give such notice, the Company
shall also deliver a copy of the Company Notice to the Trustee at such time as
it is mailed to Holders. Each Company Notice shall specify the circumstances
constituting the Fundamental Change, the Repurchase Date, the price at which the
Company shall be obligated to redeem Securities, that the Holder must exercise
the redemption right on or prior to the close of business on the Repurchase Date
(the "Fundamental Change Expiration Time"), that the Holder shall have the right
to withdraw any Securities surrendered prior to the Fundamental Change
Expiration Time, a description of the procedure which a Holder must follow to
exercise such redemption right and to withdraw any surrendered Securities, the
place or places where the Holder is to surrender such Holder's Securities, and
the amount of interest accrued on such Securities to the Repurchase Date.

               No failure of the Company to give the foregoing notices and no
defect therein shall limit the Holders' redemption rights or affect the validity
of the proceedings for the repurchase of the Securities pursuant to this Section
3.8.

               For Securities to be so repaid at the option of the Holder, the
Company must receive at the office or agency of the Company maintained for that
purpose or, at the option of such Holder, the Corporate Trust Office, such
Securities with the form entitled "Option to Elect Repayment Upon A Fundamental
Change" on the reverse thereof duly completed, together with such Securities
duly endorsed for transfer, on or before the Fundamental Change Expiration Time.
All questions as to the validity, eligibility (including time of receipt) and
acceptance of any Securities for repayment shall be determined by the Company,
whose determination shall be final and binding absent manifest error.

               On or prior to the Repurchase Date, the Company will deposit with
the Trustee or with one or more paying agents (or, if the Company is acting as
its own paying agent, set aside, segregate and hold in trust) an amount of money
sufficient to repay on the Repurchase Date all

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the Securities to be repaid on such date at the appropriate redemption price,
together with accrued interest to (but excluding) the Repurchase Date; provided
that if such payment is made on the Repurchase Date it must be received by the
Trustee or paying agent, as the case may be, by 10:00 a.m. New York City time,
on such date. Payment for Securities surrendered for redemption (and not
withdrawn) prior to the Fundamental Change Expiration Time will be made promptly
(but in no event more than five (5) Business Days) following the Repurchase Date
by mailing checks for the amount payable to the Holders of such Securities
entitled thereto as they shall appear on the registry books of the Company.

               In the case of a reclassification, change, consolidation, merger,
combination, sale or conveyance to which Section 13.6 applies, in which the
Common Stock of the Company is changed or exchanged as a result into the right
to receive stock, securities or other property or assets (including cash), which
includes shares of Common Stock of the Company or another person that are, or
upon issuance will be, traded on a United States national securities exchange or
approved for trading on an established automated over-the-counter trading market
in the United States and such shares constitute at the time such change or
exchange becomes effective in excess of 50% of the aggregate fair market value
of such stock, securities or other property or assets (including cash) (as
determined by the Company, which determination shall be conclusive and binding),
then the person formed by such consolidation or resulting from such merger or
which acquires such assets, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture (accompanied by an Opinion of Counsel that such
supplemental indenture complies with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture) modifying the provisions of
this Indenture relating to the right of Holders of the Securities to cause the
Company to repurchase the Securities following a Fundamental Change, including
without limitation the applicable provisions of this Section 3.8 and the
definitions of the Conversion Price, Common Stock and Fundamental Change, as
appropriate, as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provisions apply to the common
stock and the issuer thereof if different from the Company and Common Stock of
the Company (in lieu of the Company and the Common Stock of the Company).

               The Company will comply with the provisions of Rule 13e-4 and any
other tender offer rules under the Exchange Act to the extent then applicable in
connection with the redemption rights of the Holders of Securities in the event
of a Fundamental Change.

        4.      Conversion Provisions. The Notes shall contain the following
provisions regarding conversion:

                                  "ARTICLE XIII

                            CONVERSION OF SECURITIES

        Section 13.1. Right to Convert.

               Subject to and upon compliance with the provisions of this
Indenture, each Holder shall have the right, at its option, at any time
following the original issuance of the Securities hereunder through the close of
business on the final maturity date of the Securities (except that,

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with respect to any Securities or portion thereof which shall be called for
redemption, such right shall terminate, except as provided in Section 13.2 or
Section 3.7, at the close of business on the Business Day next preceding the
date fixed for redemption of such Securities or portion thereof unless the
Company shall default in payment due upon redemption thereof) to convert the
principal amount of any such Securities, or any portion of such principal amount
which is $1,000 or an integral multiple thereof, into that number of fully paid
and non-assessable shares of Common Stock (as such shares shall then be
constituted) obtained by dividing the principal amount of the Securities or
portion thereof surrendered for conversion by the Conversion Price in effect at
such time, by surrender of the Securities so to be converted in whole or in part
in the manner provided, together with any required funds, in Section 13.2.
Securities in respect of which a holder is exercising its option to require
redemption upon a Fundamental Change pursuant to Section 3.8 may be converted
only if such holder withdraws its election to exercise in accordance with
Section 3.8. A holder of Securities is not entitled to any rights of a holder of
Common Stock until such holder has converted his Securities to Common Stock, and
only to the extent such Securities are deemed to have been converted to Common
Stock under this Article XIII.

        Section 13.2. Exercise of Conversion Privilege; Issuance of Common Stock
on Conversion; No Adjustment for Interest Dividends.

               In order to exercise the conversion privilege with respect to any
Securities in certificated form, the holder of any such Securities to be
converted in whole or in part shall surrender such Securities, duly endorsed, at
an office or agency maintained by the Company as set forth in the Securities,
accompanied by the funds, if any, required by the penultimate paragraph of this
Section 13.2, and shall give written notice of conversion in the form provided
on the Securities (or such other notice which is acceptable to the Company) to
the office or agency that the holder elects to convert such Securities or the
portion thereof specified in said notice. Such notice shall also state the name
or names (with address or addresses) in which the certificate or certificates
for shares of Common Stock which shall be issuable on such conversion shall be
issued, and shall be accompanied by transfer taxes, if required pursuant to
Section 13.7. All such Securities surrendered for conversion shall, unless the
shares issuable on conversion are to be issued in the same name as the
registration of such Securities, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.

               In order to exercise the conversion privilege with respect to any
interest in Securities in global form, the Holder must complete the appropriate
instruction form for conversion pursuant to the Depository's book-entry
conversion program, deliver by book-entry delivery an interest in such
Securities in global form, furnish appropriate endorsements and transfer
documents if required by the Company or the Trustee or conversion agent, and pay
the funds, if any, required by this Section 13.2 and any transfer taxes if
required pursuant to Section 13.7.

               As promptly as practicable after satisfaction of the requirements
for conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Holder (as if such transfer were a transfer of the Securities (or
portion thereof) so converted), the Company shall issue and shall

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deliver to such Holder at the office or agency maintained by the Company for
such purpose as set forth in the Securities, a certificate or certificates for
the number of full shares of Common Stock issuable upon the conversion of such
Securities or portion thereof in accordance with the provisions of this Article
and a check or cash in respect of any fractional interest in respect of a share
of Common Stock arising upon such conversion, as provided in Section 13.3. In
case any Securities of a denomination greater than $1,000 shall be surrendered
for partial conversion, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of the Securities so surrendered, without
charge to him, new Securities in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered Securities.

               Each conversion shall be deemed to have been effected as to any
such Securities (or portion thereof) on the date on which the requirements set
forth above in this Section 13.2 have been satisfied as to such Securities (or
portion thereof), and the person in whose name any certificate or certificates
for shares of Common Stock shall be issuable upon such conversion shall be
deemed to have become on said date the holder of record of the shares
represented thereby; provided, however, that any such surrender on any date when
the stock transfer books of the Company shall be closed shall constitute the
person in whose name the certificates are to be issued as the record holder
thereof for all purposes on the next succeeding day on which such stock transfer
books are open, but such conversion shall be at the Conversion Price in effect
on the date upon which such Securities shall be surrendered.

               All Securities or portion thereof surrendered for conversion
during the period from the close of business on the record date for any interest
payment date to the close of business on the Business Day next preceding the
following interest payment date shall (unless such Securities or portion thereof
being converted shall have been called for redemption on a redemption date which
occurs during the period from the close of business on such record date to the
close of business on the Business Day next preceding the following interest
payment date) be accompanied by payment, in funds acceptable to the Company, of
an amount equal to the interest otherwise payable on such interest payment date
on the principal amount being converted; provided, however, that no such payment
need be made if there shall exist at the time of conversion a default in the
payment of interest on the Securities. Except as provided above in this Section
13.2, no payment or other adjustment shall be made for interest accrued on any
Securities converted or for dividends on any shares issued upon the conversion
of such Securities as provided in this Article.

               Upon the conversion of an interest in Securities in global form,
the Trustee (or other conversion agent appointed by the Company), or the
Custodian at the direction of the Trustee (or other conversion agent appointed
by the Company), shall make a notation on such Securities in global form as to
the reduction in the principal amount represented thereby. The Company shall
notify the Trustee in writing of any conversions of Securities effected through
any conversion agent other than the Trustee.

        Section 13.3. Cash Payments in Lieu of Fractional Shares.

               No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon conversion of Securities. If multiple
Securities shall be surrendered for conversion at one time by the same Holder,
the number of full shares which shall be issuable

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upon conversion shall be computed on the basis of the aggregate principal amount
of the Securities (or specified portions thereof to the extent permitted hereby)
so surrendered. If any fractional share of stock would be issuable upon the
conversion of any Securities, the Company shall make an adjustment and payment
therefor in cash at the current market price thereof to the holder of
Securities. The current market price of a share of Common Stock shall be the
Closing Price on the last Business Day immediately preceding the day on which
the Securities (or specified portions thereof) are deemed to have been
converted.

        Section 13.4. Conversion Price.

               The conversion price shall be as specified in the form of Note
(herein called the "Conversion Price") attached as Exhibit A hereto, subject to
adjustment as provided in this Article XIII.

        Section 13.5. Adjustment of Conversion Price.

               The Conversion Price shall be adjusted from time to time by the
Company as follows:

               (a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator of which shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
For purposes of this paragraph (a), the number of shares of Common Stock
outstanding shall not include shares held in the treasury of the Company. The
Company will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company. If any dividend or distribution of
the type described in this Section 13.5(a) is declared but not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price which would
then be in effect if such dividend or distribution had not been declared.

               (b) In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them (for a period
expiring within forty-five (45) days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined below) on the date fixed for determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date fixed
for determination of stockholders entitled to receive such rights or warrants by
a fraction, the numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for determination of
stockholders entitled to receive such rights and warrants plus the number of
shares which the aggregate offering price of the total

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number of shares so offered would purchase at such Current Market Price, and the
denominator of which shall be the number of shares of Common Stock outstanding
on the date fixed for determination of stockholders entitled to receive such
rights and warrants plus the total number of additional shares of Common Stock
offered for subscription or purchase. Such adjustment shall be successively made
whenever any such rights and warrants are issued, and shall become effective
immediately after the opening of business on the day following the date fixed
for determination of stockholders entitled to receive such rights or warrants.
To the extent that shares of Common Stock are not delivered after the expiration
of such rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. In the event that such
rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the value of
such consideration, if other than cash, to be determined by the Board of
Directors.

               (c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.

               (d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of capital
stock of the Company (other than any dividends or distributions to which Section
13.5(a) applies) or evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in Section 13.5(b),
and excluding any dividend or distribution (x) paid exclusively in cash or (y)
referred to in Section 13.5(a)) (any of the foregoing hereinafter in this
Section 13.5(d) called the "Distributed Securities"), then, in each such case
(unless the Company elects to reserve such Distributed Securities for
distribution to the Holders upon the conversion of the Securities so that any
such converting Holder will receive upon such conversion, in addition to the
shares of Common Stock to which such Holder is entitled, the amount and kind of
such Distributed Securities which such Holder would have received if such Holder
had converted its Securities into Common Stock immediately prior to the Record
Date (as defined in Section 13.5(h)(5) for such distribution of the Distributed
Securities)), the Conversion Price shall be reduced so that the same shall be
equal to the price determined by multiplying the Conversion Price in effect on
the Record Date with respect to such distribution by a fraction, the numerator
of which shall be the Current Market Price per share of the Common Stock on such
Record Date less the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive, and described in

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a resolution of the Board if Directors) on the Record Date of the portion of the
Distributed Securities so distributed applicable to one share of Common Stock
and the denominator of which shall be the Current Market Price per share of the
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following such Record Date; provided, however,
that in the event the then fair market value (as so determined) of the portion
of the Distributed Securities so distributed applicable to one share of Common
Stock is equal to or greater than the Current Market Price of the Common Stock
on the Record Date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Holder shall have the right to receive upon
conversion the amount of Distributed Securities such Holder would have received
had such Holder converted all Securities on the Record Date. In the event that
such dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared. If the Board of Directors
determines the fair market value of any distribution for purposes of this
Section 13.5(d) by reference to the actual or when issued trading market for any
securities, it must in doing so consider the prices in such market over the same
period used in computing the Current Market Price of the Common Stock.

               Under the provisions of the Company's Share Purchase Rights Plan,
dated as of October 8, 1997, between the Company and The First National Bank of
Boston (the "Rights Plan"), upon conversion of the Securities into Common Stock
to the extent that such Rights Plan is still in effect upon such conversion, the
Holders will receive, in addition to the Common Stock, the Rights described
therein (whether or not the Rights have separated at the time of conversion),
subject to certain exceptions set forth in the Rights Plan.

               Rights or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger Event"): (i) are deemed to be transferred with such
shares of Common Stock; (ii) are not exercisable; and (iii) are also issued in
respect of future issuances of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 13.5 (and no adjustment to the
Conversion Price under this Section 13.5 will be required) until the occurrence
of the earliest Trigger Event, whereupon such rights and warrants shall be
deemed to have been distributed and an appropriate adjustment (if any is
required) to the Conversion Price shall be made under this Section 13.5(d). If
any such right or warrant, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to events, upon the
occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date
of the occurrence of any and each such event shall be deemed to be the date of
distribution and record date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights or warrants
without exercise by any of the holders thereof). In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Price under this Section 13.5
was made, (1) in the case of any such rights or warrants which shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Price shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share

                                       10

<PAGE>   11
redemption or repurchase price received by a holder or holders of Common Stock
with respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of such rights or warrants which
shall have expired or been terminated without exercise by any holders thereof,
the Conversion Price shall be readjusted as if such rights and warrants had not
been issued.

               For purposes of this Section 13.5(d) and Sections 13.5(a) and
(b), any dividend or distribution to which this Section 13.5(d) is applicable
that also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock (or both), shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, assets or
shares of capital stock other than such shares of Common Stock or rights or
warrants (and any Conversion Price reduction required by this Section 13.5(d)
with respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
Sections 13.5(a) and (b) with respect to such dividend or distribution shall
then be made), except (A) the Record Date of such dividend or distribution shall
be substituted as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution" and "the date fixed for such
determination" within the meaning of Sections 13.5(a) and (b) and (B) any shares
of Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such determination"
within the meaning of Section 13.5(a).

               (e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding (x) any quarterly
cash dividend on the Common Stock to the extent the aggregate cash dividend per
share of Common Stock in any fiscal quarter does not exceed the greater of (A)
the amount per share of Common Stock of the next preceding quarterly cash
dividend on the Common Stock to the extent that such preceding quarterly
dividend did not require any adjustment of the Conversion Price pursuant to this
Section 13.5(e) (as adjusted to reflect subdivisions or combinations of the
Common Stock), and (B) 3.75% of the arithmetic average of the Closing Price
(determined as set forth in Section 13.5(h)) during the ten Trading Days (as
defined in Section 13.5(h)) immediately prior to the date of declaration of such
dividend, and (y) any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary), then, in such case, the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on such Record Date by a
fraction, the numerator of which shall be the Current Market Price of the Common
Stock on the record date less the amount of cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock and the
denominator of which shall be such Current Market Price of the Common Stock,
such reduction to be effective immediately prior to the opening of business on
the day following the record date; provided, however, that in the event the
portion of the cash so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price of the Common Stock on the
Record Date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Holder shall have the right to receive upon conversion the
amount of cash such Holder would have received had such Holder converted all of
the Securities on the Record Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the

                                       11

<PAGE>   12
Conversion Price which would then be in effect if such dividend or distribution
had not been declared. If any adjustment is required to be made as set forth in
this Section 13.5(e) as a result of a distribution that is a quarterly dividend,
such adjustment shall be based upon the amount by which such distribution
exceeds the amount of the quarterly cash dividend permitted to be excluded
pursuant hereto. If an adjustment is required to be made as set forth in this
Section 13.5(e) above as a result of a distribution that is not a quarterly
dividend, such adjustment shall be based upon the full amount of the
distribution.

               (f) In case a tender or exchange offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire and such
tender or exchange offer (as amended upon the expiration thereof) shall require
the payment to stockholders of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors) as
of the last time (the "Expiration Time") tenders or exchanges may be made
pursuant to such tender or exchange offer (as it may be amended) that exceeds
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator of which shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) on the Expiration Time and the Current Market Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Time. In the event that the Company is obligated to purchase shares
pursuant to any such tender or exchange offer, but the Company is permanently
prevented by applicable law from effecting any such purchases or all such
purchases are rescinded, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such tender or exchange offer
had not been made.

               (g) In case of a tender or exchange offer made by a person other
than the Company or any Subsidiary for an amount which increases the offeror's
ownership of Common Stock to more than twenty-five percent (25%) of the Common
Stock outstanding and shall involve the payment by such person of consideration
per share of Common Stock having a fair market value (as determined by the Board
of Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) at the last time (the "Offer Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds the Current Market Price of
the Common Stock on the Trading Day next succeeding the Offer Expiration Time,
and in which, as of the Offer Expiration Time, the Board of Directors is not
recommending rejection of the offer, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Offer Expiration Time by a fraction,
the numerator of which shall

                                       12

<PAGE>   13
be the number of shares of Common Stock outstanding (including any tendered or
exchanged shares) on the Offer Expiration Time multiplied by the Current Market
Price of the Common Stock on the Trading Day next succeeding the Offer
Expiration Time and the denominator of which shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Offer Expiration Time (the shares deemed so accepted, up
to any such maximum, being referred to as the "Accepted Purchased Shares") and
(y) the product of the number of shares of Common Stock outstanding (less any
Accepted Purchased Shares) on the Offer Expiration Time and the Current Market
Price of the Common Stock on the Trading Day next succeeding the Offer
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Offer Expiration Time. In the event
that such person is obligated to purchase shares pursuant to any such tender or
exchange offer, but such person is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such tender or exchange offer had not been made. Notwithstanding the
foregoing, the adjustment described in this Section 13.5(g) shall not be made
if, as of the Offer Expiration Time, the offering documents with respect to such
offer disclose a plan or intention to cause the Company to engage in any
transaction described in Article V.

               (h) For purposes of this Section 13.5, the following terms shall
have the meaning indicated:

               (1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price, regular way, on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the Nasdaq National Market, or, if such
security is not listed or admitted to trading on such Nasdaq National Market, on
the principal national securities exchange or quotation system on which such
security is quoted or listed or admitted to trading, or, if not quoted or listed
or admitted to trading on any national securities exchange or quotation system,
the average of the closing bid and asked prices of such security on the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or if not so available, in such manner as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose, or a price determined in good faith by the Board of Directors
or, to the extent permitted by applicable law, a duly authorized committee
thereof, whose determination shall be conclusive.

               (2) "Current Market Price" shall, for the purposes of any
computation under subsections (b), (d), (e), (f) and (g) above relating to the
current market price per share of Common Stock at a specified date, mean the
average of the last reported sale prices for the ten (10) consecutive Trading
Days (as defined below) preceding the day before the record date (or, if
earlier, the ex-dividend date) with respect to any distribution, issuance or
other event requiring such computation.

               (3) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.

                                       13

<PAGE>   14
               (4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date fixed for
determination of stockholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).

               (5) "Trading Day" shall mean (x) if the applicable security is
quoted on the Nasdaq National Market, a day on which trades may be made on
thereon or (y) if the applicable security is listed or admitted for trading on
the New York Stock Exchange or another national security exchange, a day on
which the New York Stock Exchange or another national security exchange is open
for business or (z) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.

               (i) The Company may make such reductions in the Conversion Price,
in addition to those required by Sections 13.5 (a), (b), (c), (d), (e), (f) or
(g), as the Board of Directors considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.

               To the extent permitted by applicable law, the Company from time
to time may reduce the Conversion Price by any amount for any period of time if
the period is at least twenty (20) days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall mail to holders of record of the
Securities a notice of the reduction at least fifteen (15) days prior to the
date the reduced Conversion Price takes effect, and such notice shall state the
reduced Conversion Price and the period during which it will be in effect.

               (j) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least one
percent (1%) in such price; provided, however, that any adjustments which by
reason of this Section 13.5(j) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article XIII shall be made by the Company and shall be made to the
nearest cent or to the nearest one-hundredth (1/100) of a share, as the case may
be. No adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. To the extent the
Securities become convertible into cash, assets, property or securities (other
than capital stock of the Company), no adjustment need be made thereafter as to
the cash, assets, property or such securities. Interest will not accrue on the
cash.

               (k) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. Unless and until a Responsible Officer of

                                       14

<PAGE>   15
the Trustee shall have received such Officers' Certificate, the Trustee shall
not be deemed to have knowledge of any adjustment of the Conversion Price and
may assume without inquiry that the last Conversion Price of which it has
knowledge is still in effect. Promptly after delivery of such certificate, the
Company shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the date on which each
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each Holder of Securities at his last address appearing
on the list of Securityholders provided for in Section 2.6 of this Indenture,
within twenty (20) days after execution thereof. Failure to deliver such notice
shall not affect the legality or validity of any such adjustment.

               (1) In any case in which this Section 13.5 provides that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
holder of any Securities converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 13.3.

               (m) For purposes of this Section 13.5, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.

        Section 13.6. Effect of Reclassification, Consolidation, Merger or Sale.

               If any of the following events occur, namely (i) any
reclassification or change of the outstanding shares of Common Stock (other than
a subdivision or combination to which Section 13.5(c) applies), (ii) any
consolidation, merger or combination of the Company with another person as a
result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including

                                       15

<PAGE>   16
cash) with respect to or in exchange for such Common Stock, or (iii) any sale or
conveyance of all or substantially all of the properties and assets of the
Company to any other person as a result of which holders of Common Stock shall
be entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Common Stock, then the Company or
the successor or purchasing person, as the case may be, shall execute with the
Trustee a supplemental indenture (which shall comply with the Trust Indenture
Act as in force at the date of execution of such supplemental indenture)
providing that such Securities shall be convertible into the kind and amount of
shares of stock, securities or other property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Securities (assuming, for such purposes,
a sufficient number of authorized shares of Common Stock available to convert
all such Securities) immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance assuming such holder of
Common Stock did not exercise his rights of election, if any, as to the kind or
amount of securities, cash or other property receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
(provided that, if the kind or amount of stock, securities or other property or
assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance is not the same for each
share of Common Stock in respect of which such rights of election shall not have
been exercised ("nonelecting share"), then for the purposes of this Section 13.6
the kind and amount of securities, cash or other property receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
XIII.

               The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances. If this Section 13.6 applies to any event or occurrence,
Section 13.5 shall not apply.

        Section 13.7. Taxes on Shares Issued.

               The issue of stock certificates on conversions of Securities
shall be made without charge to the converting Holder for any tax in respect of
the issue thereof. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of stock in any name other than that of the holder of any Securities
converted, and the Company shall not be required to issue or deliver any such
stock certificate unless and until the person or persons requesting the issue
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

        Section 13.8. Reservation of Shares; Shares to be Fully Paid; Compliance
with Governmental Requirements; Listing of Common Stock.

               The Company shall provide, free from preemptive rights, out of
its authorized but unissued shares or shares held in treasury, sufficient shares
of Common Stock to provide for the conversion of the Securities from time to
time as such Securities are presented for conversion.

               Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value, if any, of the shares of Common
Stock issuable upon conversion of the Securities, the Company will take all
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue shares of such Common Stock at
such adjusted Conversion Price.

               The Company covenants that all shares of Common Stock which may
be issued upon conversion of Securities will upon issue be fully paid and
non-assessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.

               The Company covenants that if any shares of Common Stock to be
provided for the purpose of conversion of Securities hereunder require
registration with or approval of any governmental authority under any federal or
state law before such shares may be validly issued upon conversion, the Company
will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be.

                                       16

<PAGE>   17
               The Company further covenants that, if at any time the Common
Stock shall be listed on the Nasdaq National Market or any other national
securities exchange or automated quotation system, the Company will, if
permitted by the rules of such exchange or automated quotation system, list and
keep listed, so long as the Common Stock shall be so listed on such exchange or
automated quotation system, all Common Stock issuable upon conversion of the
Securities; provided, however, that if rules of such exchange or automated
quotation system permit the Company to defer the listing of such Common Stock
until the first conversion of the Securities into Common Stock in accordance
with the provisions of this Indenture, the Company covenants to list such Common
Stock issuable upon conversion of the Securities in accordance with the
requirements of such exchange or automated quotation system at such time.

        Section 13.9. Responsibility of Trustee.

               The Trustee and any other conversion agent shall not at any time
be under any duty or responsibility to any holder of Securities to determine the
Conversion Price or whether any facts exist which may require any adjustment of
the Conversion Price, or with respect to the nature or extent or calculation of
any such adjustment when made, or with respect to the method employed, or herein
or in any supplemental indenture provided to be employed, in making the same.
The Trustee and any other conversion agent shall not be accountable with respect
to the validity or value (or the kind or amount) of any shares of Common Stock,
or of any securities or property, which may at any time be issued or delivered
upon the conversion of any Securities; and the Trustee and any other conversion
agent make no representations with respect thereto. Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property or cash upon the surrender of any Securities for the
purpose of conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article. Without limiting the
generality of the foregoing, neither the Trustee nor any conversion agent shall
be under any responsibility to determine the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 13.6
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders upon the conversion of their
Securities after any event referred to in such Section 13.6 or to any adjustment
to be made with respect thereto, but, subject to the provisions of Section 8.1,
may accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers' Certificate (which the Company
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.

        Section 13.10. Notice to Holders Prior to Certain Actions.

               In case:

               (a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in the
Conversion Price pursuant to Section 13.5; or

               (b) the Company shall authorize the granting to the holders of
all or substantially all of its Common Stock of rights or warrants to subscribe
for or purchase any share of any class or any other rights or warrants; or

                                       17

<PAGE>   18
               (c) of any reclassification or reorganization of the Common Stock
of the Company (other than a subdivision or combination of its outstanding
Common Stock, or a change in par value, or from par value to no par value, or
from no par value to par value), or of any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company or any Significant Subsidiary; or

               (d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company or any Significant Subsidiary;

the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Securities at his address appearing on the list of Securityholders
provided for in Section 2.6 of this Indenture, as promptly as possible but in
any event at least fifteen (15) days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective or occur, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up."

                                       18

<PAGE>   19

        5.      Additional Definitions. In addition to the definitions set forth
in Article I of the Indenture or, where applicable, in lieu thereof, the Notes
shall include the following definitions:

                                       20

<PAGE>   20
               "Common Stock" means any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. Subject to the
provisions of Section 13.6, however, shares issuable on conversion of Securities
shall include only shares of the class designated as common stock of the Company
at the date of this Indenture or shares of any class or classes resulting from
any reclassification or reclassifications thereof and which have no preference
in respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.

               "Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all of the Common Stock
shall be exchanged for, converted into, acquired for or constitute solely the
right to receive consideration (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock listed (or, upon consummation of or immediately following such transaction
or event, will be listed) on a United States national securities exchange or
approved for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities prices.

               "Officers' Certificate" means a certificate signed by two
Officers, one of whom must be the Company's principal executive officer,
principal financial officer or principal accounting officer, which certificate
shall include the statements provided for in Section 10.5.

               "Responsible Officer" means any officer of the Trustee with
direct responsibility for the administration of the Indenture and also means,
with respect to a particular corporate trust matter, any other officer to whom
any corporate trust matter is referred because of his or her knowledge of and
familiarity with a particular subject.

        6.      Board Resolutions. Attached hereto as Exhibit B are true and
correct copies of the Resolutions. The Resolutions have not been amended,
modified or rescinded and remain in full force and effect, and the Resolutions
are the only resolutions adopted by the Company's Board of Directors or any
committee thereof relating to the Notes and the transactions related thereto.

               Each of the undersigned officers further states that he has read
the provisions of the Indenture setting forth the conditions precedent to the
issuance, authentication and delivery of the Notes and the definitions relating
thereto, the Resolutions authorizing the issuance of the Notes and the Form of
Notes; that the statements made in this Certificate are based upon the
examination of the provisions of such Indenture, the Resolutions and the Form of
Notes; that he has, in his opinion, made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not the
conditions precedent for the issuance, authentication and delivery of the Notes
have been complied with; and that, in his opinion, such conditions have been
complied with.

                            [Signature page follows]

                                       21

<PAGE>   21
        IN WITNESS WHEREOF, said officers have signed this certificate this __
day of February, 2001.

--------------------------------           --------------------------------
Name:                                      Name:
Title:                                     Title:

                                       22

<PAGE>   22
                                                                       EXHIBIT A

                                 [FORM OF NOTE]

               UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

               TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR DEPOSITARY OR
SUCH SUCCESSOR'S NOMINEE AND LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.

                                     AVIRON

                 5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2008

No. ___                         CUSIP NO. 053762AD2               $_____________

               AVIRON, a Delaware corporation (the "Company"), for value
received, hereby promises to pay to CEDE & CO., as nominee of The Depository
Trust Company, or registered assigns, the principal sum of __________________
Dollars on February 1, 2008.

               Interest Payment Dates: February 1 and August 1

               Record Dates: January 15 and July 15

               Reference is made to the further provisions of this Note set
forth on the reverse hereof. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.

               This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee under the Indenture referred to on the reverse hereof.

<PAGE>   23
               IN WITNESS WHEREOF, AVIRON has caused this instrument to be
signed manually or by facsimile by its duly authorized officers and has caused a
facsimile of its corporate seal to be affixed hereunto or imprinted hereon.

                                     AVIRON

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

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

                          CERTIFICATE OF AUTHENTICATION

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

                                      HSBC BANK USA, as Trustee

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

<PAGE>   24
                              (REVERSE OF SECURITY)

                 5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2008

               Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Indenture referred to below.

               1. Interest. AVIRON, a Delaware corporation (the "Company", which
term shall include any successor thereto in accordance with the Indenture),
promises to pay interest on the principal amount hereof at the rate per annum
shown above. Interest on the Securities shall accrue from February 7, 2001 or
from the most recent interest payment date to which interest has been paid or
provided for, as the case may be; interest on the Securities shall be payable
semi-annually on February 1 and August 1 of each year until maturity, or, if
such day is a Legal Holiday, on the next succeeding day that is not a Legal
Holiday (each, an "Interest Payment Date"), commencing on August 1, 2001; and
interest on the Securities shall be payable to holders of record on the January
15 or July 15 immediately preceding the applicable Interest Payment Date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay defaulted interest on overdue interest, plus (to
the extent lawful) any interest payable on the defaulted interest, as provided
in Section 2.13 of the Indenture.

               2. Method of Payment. The Company will pay interest on the
Securities (except defaulted interest) to the persons who are holders
("Holders") of record in the security register of the Company (the "Security
Register") of Securities at the close of business on the January 15 or July 15
(each a "Record Date") next preceding the Interest Payment Date, in each case
even if the Securities are cancelled solely by virtue of registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
Principal of, premium, if any, and interest on the Securities will be payable,
and the Securities may be exchanged or transferred, at the office or agency of
the Company in the Borough of Manhattan, the City of New York (which initially
will be the Corporate Trust Office of the Trustee); provided that, at the option
of the Company, payment of interest may be made by check mailed to the address
of each Holder as such address appears in the Security Register; provided,
further, that, at the option of each Holder holding an aggregate principal
amount of Securities in excess of $2,000,000, payment of interest shall be made
by check and so mailed to such Holder, provided, however, that payments to the
Depository will be made by wire transfer of immediately available funds to the
account of the Depository or its nominee.

               3. Paying Agent and Registrar. Initially, HSBC Bank USA, a New
York banking corporation (the "Trustee"), will act as Paying Agent and
Registrar. The Company may appoint and change any Paying Agent, Registrar or
co-Registrar without notice to any Holder. The Company or any of its Affiliates
may act as Paying Agent, Registrar or co-Registrar.

               4. Indenture. The Company issued the Securities under an
Indenture dated as of February __, 2001 by and between the Company and the
Trustee, the terms of which have been established in an Officers' Certificate,
dated ___________, 2001, pursuant to Sections 2.1 and 2.2 of the Indenture
(collectively, the "Indenture"). The Securities are a series designated as the

<PAGE>   25
"5 1/4% Convertible Subordinated Notes due 2008" of the Company, limited in
aggregate principal amount to $230,000,000. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in
effect on February __, 2001 (the "TIA"). The Securities are subject to all such
terms, and Holders are referred to the Indenture and the TIA for a statement of
those terms. Any conflict between the terms of this Security and the Indenture
will be governed by the Indenture.

               The Securities are general unsecured obligations of the Company
and shall, to the extent provided in the Indenture, be subordinated in right of
payment to the prior payment in full of the Company's senior indebtedness.

               5. Optional Redemption. The Company, at its option, may redeem
all or any part of the Securities, in whole or in part, at any time on or after
February 5, 2004, at the redemption prices (expressed in percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to,
but excluding, the Redemption Date:

<TABLE>
<CAPTION>
                                                                                    Redemption
        Period                                                                        Price
        ------                                                                      ----------
<S>                                                                                 <C>
        Beginning on February 5, 2004 and ending on January 31, 2005..........        103.000%
        Beginning on February 1, 2005 and ending on January 31, 2006..........        102.250%
        Beginning on February 1, 2006 and ending on January 31, 2007..........        101.500%
        Beginning on February 1, 2007 and ending on January 31, 2008..........        100.750%
        February 1, 2008 and thereafter.......................................        100.00%
</TABLE>

The Company may not so redeem Securities if the Company has failed to pay any
interest on the Securities when due and such failure to pay is continuing. If
the redemption date is an interest payment date, interest shall be paid to the
record holder of the relevant record date.

               6. Redemption at Option of Holders. If a Fundamental Change
occurs at anytime prior to maturity, the Securities will be redeemable on the
30th day after notice thereof (the "Repurchase Date") at the option of the
Holder at a redemption price equal to 100% of the principal amount thereof,
together with accrued interest to (but excluding) the Repurchase Date; provided,
however, that, if such Repurchase Date is a February 1 or August 1, the interest
payable on such date shall be paid to the holder of record of the Securities on
the next preceding January 15 or July 15, respectively. The Securities will be
redeemable in multiples of $1,000 principal amount. The Company shall mail to
all Holders a notice of the occurrence of a Fundamental Change and of the
redemption right arising as a result thereof on or before the 10th day after the
occurrence of such Fundamental Change. For Securities to be so redeemed at the
option of the Holder, the Company must receive at the office or agency of the
Company maintained for that purpose or as otherwise set forth in the Indenture
and in accordance with the terms thereof, such Securities with the form entitled
"Option to Elect Repayment Upon a Fundamental Change" on the reverse thereof
duly completed, together with such Securities, duly endorsed for transfer, on or
before the 30th day after the date of such notice of a Fundamental Change.

<PAGE>   26
               7. Conversion. Subject to the provisions of the Indenture, each
Holder has the right, at its option, at any time after the original issuance of
any Securities through the close of business on the final maturity date of the
Securities, or, as to all or any portion hereof called for redemption, prior to
the close of business on the Business Day immediately preceding the date fixed
for redemption (unless the Company shall default in payment due upon redemption
thereof), to convert the principal thereof or any portion of such principal
which is $1,000 or an integral multiple thereof into that number of shares of
the Company's Common Stock (as such shares shall be constituted at the date of
conversion) obtained by dividing the principal amount of the Securities or
portion thereof to be converted by the Conversion Price of $___, as may adjusted
from time to time as provided in the Indenture, upon surrender of such
Securities, together with a conversion notice as provided in the Indenture (the
form entitled "Conversion Notice" on the reverse hereof), to the Company at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, or at the option of such holder, the Corporate Trust
Office, and, unless the shares issuable on conversion are to be issued in the
same name as this Note, duly endorsed by, or accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the Holder or
such Holder's duly authorized attorney. No adjustment in respect of interest on
any Securities converted or dividends on any shares issued upon conversion
thereof will be made upon any conversion except as set forth in the next
sentence. If such Securities (or portion thereof) are surrendered for conversion
during the period from the close of business on any record date for the payment
of interest to the close of business on the Business Day preceding the following
interest payment date and either (x) have not been called for redemption on a
redemption date that occurs during such period or (y) are not to be redeemed in
connection with a Fundamental Change on a Repurchase Date that occurs during
such period, such Securities (or portion thereof being converted) must be
accompanied by an amount, in New York Clearing House funds or other funds
acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted; provided, however, that no
such payment shall be required if there shall exist at the time of conversion a
default in the payment of interest on the Securities. No fractional shares will
be issued upon any conversion, but an adjustment and payment in cash will be
made, as provided in the Indenture, in respect of any fraction of a share which
would otherwise be issuable upon the surrender of any Securities for conversion.
Securities in respect of which a Holder is exercising its right to require
redemption upon a Fundamental Change may be converted only if such Holder
withdraws its election to exercise such right in accordance with the terms of
the Indenture. Any Securities called for redemption, unless surrendered for
conversion by the Holders thereof on or before the close of business on the
Business Day preceding the date fixed for redemption, may be deemed to be
redeemed from such Holders for an amount equal to the applicable redemption
price, together with accrued but unpaid interest to (but excluding) the date
fixed for redemption, by one or more investment banks or other purchasers who
may agree with the Company (i) to purchase such Notes from the holders thereof
and convert them into shares of the Company's Common Stock and (ii) to make
payment for such Notes as aforesaid to the Trustee in trust for the holders.

               8. Sinking Fund. The Securities will not be subject to the
operation of any sinking fund.

               9. Denominations; Transfer; Exchange. The Securities are in
registered form, without coupons, in denominations of $1,000 of principal amount
and any integral multiple

<PAGE>   27
thereof. A Holder may transfer or exchange Securities in accordance with the
Indenture. No service charge will be made for any registration of transfer or
exchange of Securities, but the Company may require the payment of a sum
sufficient to cover any transfer tax or other similar governmental charge
payable in connection therewith, subject to and as permitted by the Indenture.

               10. Persons Deemed Owners. The registered Holder of this Security
may be treated as the owner of it for all purposes.

               11. Repayment to Company. The Trustee and the Paying Agent shall
pay to the Company upon the Company's request any money held by them for the
payment of principal or interest that remains unclaimed for two years after the
date upon which such payment shall have become due. After payment to the
Company, Holders entitled to the money must look to the Company for payment as
general creditors unless an applicable abandoned property law designated another
Person.

               12. Discharge and Defeasance. Subject to certain conditions, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money
and/or U.S. Government Obligations for the payment of principal and interest on
the Securities to maturity.

               13. Defaults and Remedies. Under the Indenture, Events of
Defaults with respect to the Securities of all Series affected include (a)
failure to pay the principal of, or premium, if any, on such Securities when due
and payable; (b) failure to pay any interest on such Securities when due,
continued for 30 days; (c) failure to perform or observe any other covenants or
warranties of the Company in the Indenture, including failure to comply with the
provisions of the Indenture applicable to consolidation, merger and sale of
assets of the Company, continued for 60 days after written notice as set forth
in the Indenture; and (d) certain events of bankruptcy, insolvency or
reorganization.

               If an Event of Default with respect to the Securities of any
Series (other than an Event or Default relating to certain events of bankruptcy,
insolvency or reorganization) shall occur and be continuing, either the Trustee
or the holders of at least 25% in principal amount of the outstanding Securities
of such Series may, by notice, as provided in the Indenture, declare the unpaid
principal amount of, and any accrued and unpaid interest on, the Securities to
be due and payable immediately. However, at any time after a declaration of
acceleration with respect to the Securities has been made and before any
judgment or decree for payment of money due has been obtained, the Holders of a
majority in principal amount of the outstanding Securities of such Series may,
under certain circumstances, rescind and annul such acceleration if all existing
Events of Default with respect to such Securities have been cured or waived
except nonpayment of principal (or such lesser amount) or interest that has
become due solely because of the acceleration.

               Subject to the duty of the Trustee during an Event of Default to
act with the required standard of care, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request or
direction of any of the holders, unless such holders shall have offered to the
Trustee reasonable security or indemnity. Subject to certain provisions,
<PAGE>   28

including those requiring security or indemnification of the Trustee, the
holders of a majority in principal amount of the outstanding Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities.

               14. Supplements, Amendments and Waivers. Subject to certain
exceptions, the Company and the Trustee may amend the Indenture or the
Securities with the written consent of the Holders of a majority in principal
amount of the then outstanding Securities. The Holders of a majority in
principal amount of the then outstanding Securities may also waive compliance in
a particular instance by the Company with any provision of the Indenture with
respect to the Securities; provided, however, that certain amendments or waivers
may not be made without the consent of each holder of Securities affected as
provided in the Indenture.

               The Company and the Trustee may amend the Indenture or the
Securities without notice to or the consent of any holder of Securities in
certain circumstances described in the Indenture.

               The holders of a majority in principal amount of the outstanding
Securities, by notice to the Trustee, may waive an existing Default or Event of
Default and its consequences except a Default or Event of Default in the payment
of the principal of, or any interest on, the Securities (provided, however, that
the holders of a majority in principal amount of the outstanding Securities may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration).

               15. Trustee Dealings with the Company. Subject to certain
limitations imposed by the TIA, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee.

               16. No Recourse Against Others. A past, present or future
director, officer, employee, stockholder or incorporator, as such, of the
Company or any successor corporation shall not have any liability for any
obligations of the Company under this Security or the Indenture or for any claim
based on, in respect of, or by reason of such obligations or their creation.
Each Securityholder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration of issuance of
the Securities.

               17. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THE INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF
LAWS PROVISIONS THEREOF.

               18. Successors and Assigns. All covenants and agreements of the
Company in the Indenture and the Securities shall bind its successors and
assigns. All agreements of the Trustee in the Indenture shall bind its
successors.

               19. Authentication. This Security shall not be valid until an
authorized signatory of the Trustee (or an authenticating agent) manually signs
the certificate of authentication hereon.
<PAGE>   29

               20. Abbreviations. Customary abbreviations may be used in the
name of a Securityholder or an assignee, such as TEN COM (=tenants in common),
TEN ENT (=Tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).

               21. Subordination. The Securities are subordinated to all Senior
Indebtedness, which includes almost all indebtedness other than (i) indebtedness
that expressly provides that it shall not be senior in right of payment to the
Securities or expressly provides that it is on the same basis or junior to the
Securities; (ii) indebtedness of the Company to any of its majority-owned
subsidiaries; and (iii) the Securities. To the extent provided in the Indenture,
Senior Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Holder by accepting a Security consents and agrees, to the
subordination provided in the Indenture and authorizes the Trustee to give it
effect.

               22. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Securities, and the Trustee may use
CUSIP numbers in notices as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Securities or as
contained in any notice and reliance may be placed thereon.

               The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture. Such requests may be
addressed to:

                                            Aviron
                                            297 North Bernardo Avenue
                                            Mountain View, California 94043
                                            Attention:  Corporate Secretary

<PAGE>   30
                                CONVERSION NOTICE

TO:  AVIRON

The undersigned registered owner of this Note hereby irrevocably exercises the
option to convert this Note, or the portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of
Aviron in accordance with the terms of the Indenture referred to in this Note,
and directs that the shares issuable and deliverable upon such conversion,
together with any check in payment for fractional shares and any Notes
representing any unconverted principal amount hereof, be issued and delivered to
the registered holder hereof unless a different name has been indicated below.
If shares or any portion of this Note not converted are to be issued in the name
of a person other than the undersigned, the undersigned will check the
appropriate box below and pay all transfer taxes payable with respect thereto.
Any amount required to be paid to the undersigned on account of interest
accompanies this Note.

Dated:
      -------------------------

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

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

-------------------------------
Signature(s)

Signature(s) must be guaranteed by a commercial bank or trust company or a
member firm of a major stock exchange if shares of Common Stock are to be
issued, or Notes to be delivered, other than to and in the name of the
registered holder.

Signature Guarantee

Fill in for registration of shares of Common Stock if to be issued, and Notes if
to be delivered, other than to and in the name of the registered holder:

(Please print)

-------------------------------
             (Name)                    Principal amount to be converted
                                       (if less than all):  $_________________

-------------------------------
        (Street Address)               Social Security or Other Taxpayer
                                       Identification Number _________________

-------------------------------
   (City, State and Zip Code)

<PAGE>   31
                            OPTION TO ELECT REPAYMENT
                            UPON A FUNDAMENTAL CHANGE

TO:  AVIRON

The undersigned registered owner of this Note hereby irrevocably acknowledges
receipt of a notice from Aviron (the "Company") as to the occurrence of a
Fundamental Change with respect to the Company and requests and instructs the
Company to repay the entire principal amount of this Note, or the portion
thereof (which is $1,000 or an integral multiple thereof) below designated, in
accordance with the terms of the Indenture referred to in this Note at the
redemption price, together with accrued interest to, but excluding, such date,
to the registered holder hereof.

Dated:
      -------------------------

Signature(s)
            -------------------

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

NOTICE: The above signatures of the registered holder(s) hereof must correspond
with the name as written upon the face of the Note in every particular without
alteration or enlargement or any change whatever.

Principal amount to be converted
(if less than all):  $
                      ----------------------

Social Security or Other Taxpayer
  Identification Number
                       ---------------------

<PAGE>   32
                                 ASSIGNMENT FORM

If you, Holder, want to assign this Note, fill in the form below and have your
signature guaranteed.

        FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
(Please insert assignee's social security or tax ID number)_____________________
________________________________________________________________________________
________________________________________________________________________________
          (Please print or type assignee's name, address and zip code)

the within Note and all rights thereunder, and hereby irrevocably constitute and
appoint such person attorney to transfer such Note on the books of the Company,
with full power of substitution in the premises.

Dated:                        Your signature:
       ----------------                      -------------------------------

NOTICE: The signature to this assignment must correspond with the name as
        written upon the face of the within Note in every particular without
        alteration or enlargement or any change whatsoever.

                                Signature guarantee:

                                -------------------------------<PAGE>   1
                                                                    Exhibit 10.7

                                 LEASE AGREEMENT

        THIS LEASE AGREEMENT (this "Lease"), dated as of the date set forth
below, is between OLAFSON II. LLC, a Utah limited liability company
("Landlord"), and TOMAX TECHNOLOGIES, INC., a Utah corporation ("Tenant").

I.      PREMISES AND TERMS AND PROVISIONS

        This Lease demises to Tenant the land described in Attachment I (the
"Land") and the other property included in the Premises as defined in Section
1.01 of Attachment II and is made upon the terms and provisions set forth in
this Lease and Attachment II, all of which Landlord and Tenant respectively
agree to perform or comply with.

II.      CERTAIN INFORMATION AND DEFINED TERMS

        The following information and defined terms are made part of this Lease:

Date of this Lease:          December 15, 1999

Commencement Date:           October 1, 2000

Expiration Date:             September 30, 2010

Renewals:                    One 5 year and two 2 year consecutive renewal
                             options, exercised by notice given to Landlord at
                             least one hundred twenty (120) days before the end
                             of the then-current term

Rental Factor:               Eleven percent (11%) (See Section 15.03)

Actual Cash Value:           $10,300,000 (See Section 5.02 and 1.01(b))

Basic Rent:                  For the twenty four month period beginning
                             with the Commencement Date, Basic Rent shall be the
                             monthly amount of $69,009, and thereafter until the
                             Expiration Date shall be the monthly amount of
                             $107,648.

After Hours Parking          Landlord shall be permitted to charge
                             all persons, other than non-Tenant employees and
                             invitees, for use of all parking areas on the
                             Premises during the hours between 6:00 p.m. and
                             6:00 a.m.

Development Costs            Landlord has budgeted and shall spend not
                             more than $5,160,412.57 to alter and improve the
                             Premises prior to the

<PAGE>   2

                             Commencement Date. In the event that improvement
                             costs to the Premises exceed such amount, such
                             shall be done at Tenant's expense and shall become
                             Tenant Alterations or Tenant Equipment within the
                             meaning of Section 13.01 of Attachment II.

Renewal Rent:

                             The Rent shall be subject to adjustment: (i) at
                             the beginning of the fifth anniversary of the
                             Commencement Date; and (ii) at the beginning of
                             any renewal term (the "Adjustment Date"), as
                             follows:

                             The base for computing the adjustment shall be the
                             Consumer Price Index for All Urban Consumers
                             (1982-84 = 100) U.S. City Average, All Items,
                             published by the United States Department of Labor,
                             Bureau of Labor Statistics (the "Index"), which was
                             last published on the date of the commencement of
                             the primary term of this Lease (the "Beginning
                             Index"). If the Index last published on the
                             Adjustment Date (the "Extension Index") has
                             increased over the Beginning Index, the monthly
                             Rent for the renewal term and until the next rental
                             Adjustment Date shall be set by multiplying the
                             Basic Rent by a fraction, the numerator of which is
                             the Extension Index and the denominator of which is
                             the Beginning Index. PROVIDED, HOWEVER, in no event
                             shall the rent be decreased for any renewal term.

                             In the event the Index shall hereafter be converted
                             to a different standard reference base or otherwise
                             revised, the determination of any increase in the
                             Index shall be made with the use of such conversion
                             factor, formula or table for converting the Index
                             as may be published by the Bureau of Labor
                             Statistics. In the event the Bureau of Labor
                             Statistics ceases publication of the Index at any
                             time during the term of this Lease but substitutes
                             and commences publication of an index designed and
                             designated to serve the same basic purposes as the
                             Index, Lessor and Lessee shall use such substituted
                             index as the Index hereunder.

The place for the giving of notices, consents, requests, demands and other
communications under Article 12:

(a)     If to Landlord:             Olafson II. LLC
                                    205 North 400 West
                                    Salt Lake City, Utah 84103
                                    Attention: Eric L. Olafson
                                    Facsimile:  (801) 924-3400

                                       2

<PAGE>   3

(b)     If to Tenant:           Tomax technologies, inc.
                                205 North 400 West
                                Salt Lake City, Utah 84103
                                Attention: Director of Operations and Finance
                                Facsimile:  (801) 924-3400

        When used in this Lease, unless the context otherwise requires: (i) each
of the terms "Improvements" and "Premises" shall be deemed to be followed by the
words "or any part thereof"; (ii) the terms "include," "includes," and
"including" shall be deemed to be followed by the words "without limitation";
(iii) the words "herein", "hereof", "hereinafter" and "hereunder" and other
words of similar import refer to this Lease as a whole and not to any particular
Article, Section, Subsection or other subdivision; (iv) any reference to any
agreement or other instrument is to it as amended, supplemented, or replaced,
from time to time; and any reference to a law, statute, regulation or rule is to
it as amended, supplemented, or replaced or as enacted or promulgated after the
date of this Lease; (v) the headings to the Articles have been inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Lease; and (vi) all terms and provisions
of this Lease shall be deemed and construed to be "covenants" and "conditions"
to be performed or complied with by the respective parties.

III.     INTEGRATION OF DOCUMENTS

        This Lease consists of this Lease and Attachments I and II, all of which
shall constitute a single agreement.

        IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the Date of this Lease set forth above.

LANDLORD:                                   TENANT:

OLAFSON II. LLC                             TOMAX TECHNOLOGIES, INC.

By:     /s/ Eric Olafson                    By:    /s/ Jaye Olafson
   ---------------------------                 ---------------------------------

Its:    Manager                             Its:   Manager

                                       3
<PAGE>   4

                                  ATTACHMENT I.
                                    THE LAND

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

        That certain real property situated in Salt Lake City, Salt Lake County,
        State of Utah, described as follows:

        PARCEL 1:

        COMMENCING 110 feet North of the Southeast corner of Lot 8, in Block 60,
        Plat "A", Salt Lake City Survey, and running thence North 140 feet;
        thence West 165 feet; thence South 140 feet; and thence East 165 feet to
        the place of beginning, same constituting the Southerly 140 feet of the
        Northerly 220 feet of the length, by the full width, of said Lot 8.

        PARCEL 2:

        COMMENCING at the Southeast corner of Lot 8, in Block 60, Plat "A", Salt
        Lake City Survey, and running thence North 110 feet; thence West 247 1/2
        feet; thence South 110 feet; and thence East 247 1/2 feet to the place
        of beginning, same constituting the Southerly 110 feet of the length by
        the full width of said Lot 8, and the Southerly 110 of the length, by
        the full width, of the East half of Lot 7 in the same Block, plat and
        survey.

        PARCEL 3:

        BEGINNING 2 1/2 rods East of the Northwest corner of Lot 2, Block 60,
        Plat "A", Salt Lake City Survey, and running thence East 53 3/4 feet;
        thence South 98 1/3 feet; thence West 53 3/4 feet; thence North 98 1/3
        feet to the place of BEGINNING.

        PARCEL 4:

        BEGINNING at the Northeast corner of Lot 7, Block 60, Plat "A", Salt
        Lake City Survey, and running thence South 220 feet; thence West 82.5
        feet; thence South 110 feet; thence West 82.5 feet; thence North 330
        feet; thence East 165 feet to the point of BEGINNING.

        LESS AND EXCEPTING therefrom the following described parcel:

               A part of Lot 7, Block 60, Plat "A", Salt Lake City Survey in
               Salt Lake City, Salt Lake County, Utah:

<PAGE>   5

               BEGINNING at the Northwest corner of said Lot 7 and running
               thence North 89 degrees58'13" East 0.65 feet along the North line
               of said Lot 7 and the South line of 200 South Street to a point
               on the projection of the East edge of an existing brick building;
               thence South 0 degrees11'13" East 44.9 feet along said East edge
               of an existing building to the Southeast corner thereof; thence
               South 89 degrees48'47" West 0.78 feet along South edge of said
               existing building to a point on the West line of said Lot 7;
               thence North 0 degrees01'07" West 44.9 feet along said West line
               of Lot 7 to the point of BEGINNING.

<PAGE>   6

                                 ATTACHMENT II.
                              TERMS AND PROVISIONS

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

                                   ARTICLE 1.
                             PREMISES AND LEASE TERM

      1.01. Upon and subject to the terms and provisions hereinafter set forth,
Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the
following property (collectively, the "Premises") for the term (the "Lease
Term") hereinafter provided:

             (a)  the Land; and

             (b) all buildings, structures and improvements now or hereafter
erected on such Land either prior to the Commencement Date or during the Lease
Term, and all fixtures, equipment and other property (other than Tenant
Equipment, as hereinafter defined) now or hereafter installed therein either
prior to the Commencement Date or during the Lease Term (collectively, the
"Improvements").

SUBJECT, HOWEVER, to zoning ordinances and regulations, covenants, restrictions,
easements, liens, charges, encumbrances, title conditions and exceptions
affecting the Premises as of the Commencement Date.

       1.02. (a) Except as hereinafter provided, the Lease Term shall commence
on the Commencement Date and shall expire at midnight on the Expiration Date.

             (b) If possession of the Premises is not available to Tenant on the
Commencement Date, either because a prior tenant is holding over or construction
or alteration of the Improvements has not yet been substantially completed, or
for any reason not within the reasonable control of Landlord, then Landlord
shall give notice to Tenant when the Premises is ready for occupancy by Tenant
and specifying the Commencement Date (which shall not be less than ten (10) days
after giving of such notice) and the Expiration Date. Landlord shall have no
liability on account of any such change in the Commencement Date, and the
validity and binding effect of this Lease shall be unaffected thereby.

             (c) If Tenant shall use or occupy the Premises prior to the
Commencement Date, such use or occupancy shall be deemed to be under all the
terms and provisions of this Lease, including the obligation to pay Basic Rent
and Additional Rent as hereinafter provided.

                                   ARTICLE 2.
                         BASIC RENT AND ADDITIONAL RENT

       2.01. Tenant shall pay to Landlord Basic Rent over and above the other
and additional payments to be made by Tenant.

<PAGE>   7

      2.02. Basic Rent shall be absolutely net to Landlord so that this Lease
shall yield net to Landlord the Basic Rent throughout the Lease Term.

      2.03. Tenant shall pay, as additional rent, all other amounts,
liabilities, obligations and other payments which Tenant herein assumes or
agrees to pay (collectively, "Additional Rent"), and, in the event of any
failure on the part of Tenant to pay any item of Additional Rent, Landlord shall
have all rights, powers and remedies provided for herein or by law in the case
of nonpayment of Basic Rent.

      2.04. Basic Rent and Additional Rent for the first month or partial month
(calculated on the basis of the actual number of days of such partial month) of
the Lease Term shall be paid to Landlord prior to the Commencement Date, and
thereafter, payment shall be made on the first day of each month, without notice
or demand, at the address specified by Landlord.

      2.05. All payments of Basic Rent and Additional Rent shall be made without
notice, demand, counterclaim, setoff, deduction or defense, and without
abatement, suspension, deferment, diminution or reduction for any reason
whatsoever, except as hereinafter otherwise specifically provided. Should any
payment of Basic Rent or Additional Rent be received by Landlord subsequent to
the 10th day of the month for which it is due, then Tenant shall pay to Landlord
as Additional Rent, at that time, a late charge equal to two percent (2%) of the
amount due under this Section.

      2.06. On the Expiration Date or earlier termination of this Lease, Tenant
shall remove its goods and effects and peacefully yield up the Premises to
Landlord in the order and condition required by the provisions of Sections 10.01
and 10.03. Tenant shall not be obligated to return the Premises with a fair
market value equivalent to the fair market value of the Premises at the
Commencement Date.

      2.07. If the Lease Term shall terminate prior to the Expiration Date
(except pursuant to Section 6.01), then Basic Rent and Additional Rent paid with
respect to periods occurring after the termination of the Lease Term shall be
refunded to Tenant, subject, however, to Landlord's right of setoff with respect
to any uncured default by Tenant in the performance of its obligations under
this Lease.

                                   ARTICLE 3.
                     TAXES, ASSESSMENTS AND UTILITY CHARGES

     3.01. For the purpose of this Lease, "Applicable Taxes" shall mean:

             (a) ad valorem real and personal property taxes assessed and levied
against the Premises and Tenant Equipment (as hereinafter defined);

             (b) all taxes, assessments, levies and charges which are now or
hereafter may be assessed, levied or imposed in addition to, in replacement of
or in substitution for ad valorem real or personal property taxes, including
such taxes, levies and charges which, in whole or in

                                       2
<PAGE>   8

part, are measured or calculated by or based upon Basic Rent and/or Additional
Rent, including, without limitation, gross income, gross receipts, license,
occupation, privilege, value added, documentary stamp, transfer, excise, sales
and use taxes (but excluding special assessments and any tax on or measured by
the net income of Landlord); and

             (c) all taxes, assessments, levies and charges including gross
income, gross receipts, license, occupation, privilege, value added, documentary
stamp, transfer, excise, sales and use taxes (but excluding special assessments
and any tax on or measured by the net income of Landlord) and all license,
permit and authorization fees now or hereafter levied or imposed upon, assessed
against, attributable to or becoming a lien upon the Premises, the appurtenances
thereto, the streets or sidewalks adjacent thereto, this Lease, the leasehold
estate created hereby, the instrument creating the same, the occupancy or use of
the premises, the business conducted thereon, Basic Rent or Additional Rent
payable under this Lease.

      3.02. Landlord shall give notice designating Tenant as addressee for
payment of taxes and shall promptly forward to Tenant any tax bills received by
Landlord. Tenant shall remit to the appropriate collecting authorities before
the delinquency date or dates all Applicable Taxes required to be borne by
Tenant hereunder. In addition, Tenant shall remit to the appropriate collecting
authorities, before the delinquency date or dates, all Applicable Taxes levied
or imposed upon or assessed against Tenant and which become due and payable
during, or which are levied, imposed or assessed for Tax Periods within the
Lease Term. Within ten (10) days after request therefor, Tenant shall furnish to
Landlord (or any person or entity specified by Landlord) receipts or any other
evidence of payment of the Applicable Taxes required to be remitted by Tenant.

      3.03. Tenant shall bear (a) Applicable Taxes for all Tax Periods which
fall wholly within the Lease Term and (b) a portion of the Applicable Taxes for
Tax Periods in which the Commencement Date or Expiration Date occurs in the
proportion that the number of days the Lease Term exists within each such Tax
Period bears to the total number of days in such Tax Period. Tenant shall bear
Applicable Taxes regardless of whether such taxes are required to be remitted by
Landlord or Tenant. Nothing in this Article shall be deemed to affect any right
or remedy of Landlord under any provision of this Lease or any statute or rule
of law to pay any of such Applicable Taxes if not timely paid by Tenant and to
collect from Tenant as Additional Rent the amount so paid, together with
interest at the rate specified in Section 14.03. For the purposes of this Lease,
"Tax Period" shall mean the calendar year.

      3.04. Special assessments which become due in full or any and all
installments of special assessments which become due during the Lease Term
(whether or not such assessments or the first of such installments become due
prior to the Commencement Date) shall be borne by Tenant as Additional Rent and
shall be remitted by Landlord. For purposes of this Section 3.05, payment in
installments over the longest possible term will be deemed to have been elected
in any instance where a determinable option so to pay existed or may exist,
notwithstanding that an assessment may have been or may hereafter be paid in
full, and Tenant shall bear the expense of only such installments as would have
been required to have been paid during the Lease Term had the installment option
been elected.

                                       3

<PAGE>   9

      3.05. (a) Tenant shall not have the right to contest the amount or
validity, in whole or in part, of Applicable Taxes or special assessments,
unless Tenant shall have obtained the prior consent of Landlord thereto, which
consent shall not be unreasonably withheld or delayed, whereupon:

                  (i) all contest proceedings shall be conducted in good faith
and with due diligence by Tenant and by counsel, if any, reasonably satisfactory
to Landlord, and copies of all pleadings and other related documents involved in
the contest shall be submitted to Landlord prior to the filing with any
administrative or judicial body;

                  (ii) the cost of any such contest shall be borne solely by
Tenant; and

                  (iii) any consent to such contest given by Landlord shall not
relieve Tenant of its obligation to make the payments to Landlord specified in
Sections 3.03 and 3.04.

             (b) If Landlord elects, or has elected prior to the Commencement
Date, to contest the amount or validity, in whole or in part, of Applicable
Taxes or special assessments, the benefits and expenses resulting from any such
contest shall be shared and borne ratably by Landlord and Tenant in the same
manner in which Applicable Taxes are required to be borne by each pursuant to
this Article 3 in the absence of a contest; provided, however, Tenant shall not
be required to bear expenses in an amount which shall exceed the benefits in
reduced Applicable Taxes or special assessments accruing to Tenant as a result
of such contest. Where the contest involves or involved Applicable Taxes or
special assessments which are payable over a period longer than one year, such
benefits will be deemed to be the aggregate of the benefits for the portion of
the Lease Term in which such amounts are payable.

      3.06. Personal property taxes on property located upon the Premises, and
used therewith, shall be borne and remitted by Tenant, and Tenant shall file any
and all personal property tax returns that may be required in relation thereto.

      3.07. Tenant shall pay or cause to be paid all charges and taxes incurred
by Tenant for or on account of water, sewer, gas, electricity, light, heat and
power and for protective, telephone and other communication services and for all
other public or private utility services which may be used, rendered or supplied
upon, to or in connection with the Premises at any time during the Lease Term.

                                   ARTICLE 4.
                                 AUTHORIZED USE

      4.01. Tenant shall use and occupy the Premises only for lawful purposes;
provided, however, that Tenant shall not use and occupy the Premises for any
sexually oriented business or for the storage of hazardous substances, hazardous
materials or hazardous wastes listed by the U.S. Environmental Protection Agency
or the State of Utah.

                                       4

<PAGE>   10

      4.02. If any law, ordinance, ruling, order or regulation (collectively,
"Prohibition") now exists or is hereinafter enacted, adopted or issued,
prohibiting or substantially impairing the use and occupancy of the Premises as
a software development business, then, at any time within one (1) year after the
Prohibition becomes effective, Tenant (unless the Prohibition results from any
act or omission by Tenant) or Landlord, by giving notice to the other, may
designate a date on which this Lease shall terminate (which date shall be no
later than sixty (60) days after the giving of such notice); and, thereupon, on
the date fixed in such notice, this Lease shall terminate as if such a date were
the Expiration Date.

                                   ARTICLE 5.
                                    INSURANCE

      5.01. Tenant shall maintain general or public liability insurance against
claims for bodily injury, death or property damage occurring on, in or about the
Premises and the streets and alleys adjoining the Premises, affording protection
of at least $3,000,000 single limit per occurrence of loss or damage. If
underground storage tanks are present on the premises, such coverage shall
provide protection for underground storage tanks as required by the EPA
regulations published October 26, 1988 (and any subsequent provisions or
amendments thereto) and will include providing protection for taking corrective
action and for compensating third parties for bodily injury and property damage
caused by accidental releases arising from the operation of underground storage
tanks. All such insurance shall be effected at Tenant's expense under valid and
enforceable policies issued by insurers of recognized responsibility which are
qualified to do business in the State where the Premises are located and which
are approved by Landlord, which approval shall not be unreasonably withheld.
Such policies shall be for a minimum term of one year, shall name Landlord,
Tenant and all mortgagees as insureds, and shall, to the extent obtainable,
contain an agreement by the insurer that such policies shall not be canceled or
substantially modified without at least thirty (30) days' prior notice to
Landlord. Originals or duplicate originals of such policies shall be delivered
by Tenant to Landlord prior to the Commencement Date, and similar replacement
policies shall be delivered by Tenant to Landlord at least fifteen (15) days
prior to the expiration dates of expiring policies. If Tenant does not provide
such evidence to Landlord of valid liability insurance coverage, then Landlord,
at its option, may provide said coverage at any time and without notice to
Tenant. The cost thereof will be charged to Tenant as Additional Rent.

      5.02. (a) Tenant shall obtain and maintain throughout the Lease Term, fire
and broad form extended coverage insurance covering the Premises (i) in an
amount not less than the greater of (A) 80% of the then actual cash value of the
Improvements, actual cash value being the cost of replacing the Improvements
exclusive of the cost of excavation, foundations and footings below the lowest
basement floor, less depreciation of the Improvements, (B) the amount which
would cause Tenant to be considered a co-insurer under such insurance, and (ii)
subject to such deductibles as Tenant shall determine in its reasonable
discretion from time to time.

                (b) Actual cash value is deemed to be in the amount specified in
the Term Sheet, as of the Commencement Date, and shall at the written request of
Landlord be determined from time to time during the Lease Term (but not more
frequently than once in any 36 calendar

                                       5

<PAGE>   11

months) by an appraiser, engineer, architect or contractor designated by Tenant,
approved in writing by Landlord and paid by Landlord.

      5.03. Tenant, at its sole cost and expense, shall carry such other
insurance as customarily is maintained by operators of similar property, or as
reasonably may be required by Landlord from time to time for its protection
against any loss, hazard, or liability to which Landlord may be exposed.

      5.04. Landlord hereby waives: (a) any obligation on the part of Tenant to
make repairs to the Premises necessitated or occasioned by fire or other
casualty that is an insured risk under such insurance policies and (b) any right
of recovery against Tenant for any loss occasioned by fire or other casualty
that is an insured risk under such policies. Tenant hereby waives any right of
recovery against Landlord, or anyone claiming under Landlord, for any loss
occasioned by fire or other casualty which is an insured risk under Tenant's
policies of fire and extended coverage insurance covering the property of
Tenant.

      5.05. Notwithstanding any other provision of this Article, by Notice to
Landlord, Tenant may elect to self-insure any of the risks covered by this
Article, subject to prior credit approval by Landlord.

                                   ARTICLE 6.
                           REMEDIES IN CASE OF DEFAULT

     6.01. If any one or more of the following events shall occur and be
continuing:

             (a)  default shall be made by Tenant in the due and punctual
                  payment of Basic Rent as and when the same becomes due and
                  payable, and such default shall continue for a period of ten
                  (10) days after notice from Landlord to Tenant; or

             (b)  default shall be made by Tenant in the performance of any
                  other term or provision of this Lease and such default shall
                  continue for a period of twenty (20) days after notice by
                  Landlord to Tenant; or

             (c)  Tenant shall file a voluntary petition in bankruptcy or shall
                  be adjudicated a bankrupt or insolvent or shall file any
                  petition or answer seeking any reorganization, arrangement,
                  composition, readjustment, liquidation, dissolution or similar
                  relief under any present or future bankruptcy or other
                  applicable law, or shall seek or consent to or acquiesce in
                  the appointment of any trustee, receiver or liquidator of
                  Tenant or of all or any substantial part of Tenant's property
                  or its leasehold interest in the Premises, or shall make any
                  general assignment for the benefit of creditors, or shall
                  admit in writing its inability to pay its debts generally as
                  they become due; or

             (d)  (i) a court of competent jurisdiction shall enter an order,
                  judgment or decree approving a petition filed against Tenant
                  seeking any reorganization,

                                       6

<PAGE>   12

                  arrangement, composition, readjustment, liquidation,
                  dissolution or similar relief under any present or future
                  bankruptcy or other applicable law, or (ii) any trustee,
                  receiver or liquidator of Tenant or of all or any
                  substantial part of Tenant's property or its leasehold
                  interest in the Premises shall be appointed without the
                  consent or acquiescence of Tenant; and such order, judgment,
                  decree or appointment shall remain unvacated or unstayed for
                  an aggregate of sixty (60) days (whether or not
                  consecutive); or

             (e)  default shall be made by Tenant in the performance of any term
                  or provision of any lease or sublease (other than this Lease)
                  covering any premises used for software development business
                  purposes in conjunction with the Premises;

then, in any such event, Landlord, at its option, by notice to Tenant, may
designate a date not less than thirty (30) days from the giving of such notice
on which this Lease shall terminate in all respects as if such a date were the
Expiration Date.

      6.02. Upon any such termination, Tenant shall quit and peacefully
surrender its interest in the Premises to Landlord, and Landlord, upon and at
any time after such termination, without further notice, may reenter and
repossess the Premises, either by force, summary proceedings or otherwise,
without being subject to any prosecution therefor.

      6.03. At any time and from time to time after such termination of this
Lease, Landlord may relet the Premises or any part thereof for such term or
terms and on such conditions as Landlord in its discretion may determine, and
Landlord may collect and receive the rents therefor. Landlord in no way shall be
responsible or liable for any failure to relet the Premises or any part thereof
or for any rent upon any such reletting.

      6.04. No such termination of this Lease shall relieve Tenant of its
liabilities and obligations under this Lease, and such liabilities and
obligations shall survive any such termination. In the event of any such
termination, whether or not the Premises or any part thereof shall have been
relet, Tenant shall pay Basic Rent and Additional Rent required to be paid under
this Lease by Tenant up to the time of such termination. Thereafter, until the
Expiration Date, Tenant shall pay to Landlord as liquidated damages for its
default (a) Basic Rent and Additional Rent which would have been payable by
Tenant under this Lease were it still in effect, less (b) the net proceeds of
reletting, if any, effected pursuant to Section 6.03, after deducting all
expenses of Landlord in connection with such reletting. Tenant shall pay such
liquidated damages on the days on which Basic Rent and Additional Rent would
have been payable under this Lease if it were still in effect.

      6.05. At any time after a termination of this Lease pursuant to Section
6.01, whether or not Landlord shall have collected any liquidated damages
pursuant to Section 6.04, Landlord shall be entitled to recover from Tenant, and
Tenant shall pay to Landlord on demand, as and for liquidated final damages for
Tenant's default ("Final Damages") and in lieu of all liquidated damages
pursuant to Section 6.04 beyond the date of such demand, an amount equal to the
excess if any of (a) Basic Rent which would be payable under this Lease from (i)
the date to

                                       7

<PAGE>   13

which Tenant shall have satisfied in full its obligations to pay liquidated
damages pursuant to Section 6.04, to (ii) the Expiration Date, over (b) the then
fair net rental value (net after Additional Rent) of the Premises for the same
period, both discounted to present worth at the rate of six percent (6%) per
annum, compounded annually. However, if any statute or rule of law shall limit
the amount of Final Damages to an amount less than the above agreed-upon amount,
Landlord shall be entitled to prove as Final Damages the maximum amount
allowable under such statute or rule of law.

      6.06. In the event of any expiration or termination of the Lease Term,
Tenant, so far as permitted by law, hereby expressly waives (a) the service of
any notice of intention to reenter provided for by law, (b) the institution of
legal proceedings for reentry or repossession, and (c) any and all rights to
redeem, reenter or repossess the Premises, or to restore the operation of this
Lease. Tenant also waives any right to trial by jury in the event that, upon any
expiration or termination of the Lease Term, legal proceedings shall be
instituted by Landlord and further waives the benefits of any and all laws now
or hereafter in force exempting property from liability for rent or for debt.
The terms "enter", "reenter", "entry" or "reentry" as used in this Lease are not
restricted to their technical legal meaning.

                                   ARTICLE 7.
                              ENVIRONMENTAL MATTERS
                          AND UNDERGROUND STORAGE TANKS

      7.01. Landlord has obtained a Phase I environmental assessment (the
"Commencement Assessment") of the Premises and has delivered a copy to Tenant.
Tenant has reviewed the Commencement Assessment prior to entering into this
Lease.

      7.02. If the Commencement Assessment (or any further environmental
assessment which Tenant may seek to obtain at its expense) shall disclose the
existence emanating from and/or upon, above or beneath the Premises of any
Hazardous Substance which (a) is required by law or regulation to be cleaned up,
removed or otherwise remediated, or (b) in Tenant's judgment should be
remediated (both of the foregoing collectively "Remediation") Landlord shall be
responsible for undertaking Remediation and for dealing with all governmental
bodies having jurisdiction over the Premises or the Remediation. Landlord shall
also be responsible for removal of any in-ground hoists existing on the Premises
(the "Hoists") and installation of any necessary oil-water separators and
above-ground storage tank secondary containment facilities, at its expense,
within 180 days after the Commencement Date, and for any Remediation necessary
in connection with such removal or the existence of the Hoists, all of which
shall constitute Remediation for the purposes of this Lease.

      7.03. If the Commencement Assessment discloses the existence of any
underground storage tanks on the Premises, either Landlord or Tenant shall have
the right, at any time during the Lease Term, to remove any such underground
storage tanks and related pumps, piping and appurtenances (collectively,
"USTs"), and shall have the right, but, not the obligation to replace any UST
during or at the end of the Term. The Cost of Work for removing USTs, or other
Remediation associated therewith, and the cost of installing any replacement
USTs shall be borne

                                       8

<PAGE>   14

by Landlord. However, if Landlord or Tenant receives reimbursement from an
insurer or governmental authority for any such costs, any such amount shall be
paid to Landlord.

      7.04. Pursuant to the terms of Article 14, Landlord shall have the right,
upon notice to Tenant, to enter upon the Premises at any time during the Lease
Term to conduct an inspection or environmental assessment, and if such
inspection or assessment discloses the presence of any Hazardous Substance
emanating from and/or upon, above or beneath the Premises, to undertake the
Remediation of such Hazardous Substance even if such Remediation is the
obligation of Tenant under Article 10. In any case in which the Remediation of
such Hazardous Substance is the obligation of Tenant under Article 10, the Cost
of Work for such Remediation shall be borne by Tenant and shall be remitted to
Landlord as Additional Rent, upon Landlord incurring such expense, or portions
thereof, promptly upon demand. Tenant hereby releases Landlord from any damages
or claims of damages arising from any loss of business or from any increase in
operating costs of Tenant's business resulting directly or indirectly from any
work performed by Landlord or its agent upon, above or beneath the Premises
pursuant to the provisions of this Article 7, whether or not due to Landlord's
negligence.

      7.05. For purposes of this Article 7 and of Article 10, the term "Cost of
Work" shall mean, when applied to environmental assessments, removal or
replacement of USTs or Remediation the following:

                  (i)   the total contract price paid by Landlord to its
                        contractors to assess the Premises (including the cost
                        and expense of environmental consultants and
                        inspections, soil borings, tests and evaluations),
                        whether or not incurred in connection with the removal,
                        disposal or replacement of USTs or Remediation of the
                        Premises;

                  (ii)  the total contract price paid by Landlord to its
                        contractors to close, remove, repair or dispose of USTs
                        (including the disposition of any materials in the USTs
                        and the restoration of soil, landscaping and paving in
                        the area of the USTs), or to install new USTs;

                  (iii) the total contract price paid by Landlord to its
                        contractors in connection with any Remediation of the
                        Premises (including the soil or ground water under the
                        Premises or the air above the Premises); and

                  (iv)  the cost of any additions or changes under any contract
                        contemplated by subsections (i), (ii) and (iii) above,
                        including costs, expenses and charges for consultants
                        and inspections, soil borings, tests and evaluations,
                        site restoration, construction cost estimates, surveys,
                        attorneys', architects' and engineers' services,
                        licenses and permits, and premiums on fire, extended
                        coverage and other insurance, and uninsured casualty
                        losses, together with interest, compounded monthly, at
                        the rate of interest specified in Section 14.03 hereof.

                                       9
<PAGE>   15

      7.06. For the purpose of this Article 7 and of Article 10, the term
"Hazardous Substance" means any substance: (i) the presence of which requires
investigation or Remediation under any federal, state or local statute,
regulation, ordinance, order, action, policy or common law; or (ii) which is or
becomes defined as a "hazardous waste," "hazardous substance," pollutant or
contaminant under any federal, state or local statute, regulation, rule or
ordinance or amendments thereto, including the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601, et seq.)
and/or the Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et
seq.); or (iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board,
agency or instrumentality of the United States, the State where the Premises are
located, or any political subdivision thereof; or (iv) the presence of which on
the Premises causes or threatens to cause a nuisance upon the Premises to
adjacent properties or poses or threatens to pose a hazard to the health or
safety of persons on or about the Premises; or (v) without limitation which
contains gasoline, diesel fuel or other petroleum hydrocarbons.

                                   ARTICLE 8.
                                DISCHARGE OF LIEN

      8.01. In the event that the Premises or Tenant's leasehold interest
therein shall become subject to any vendor's, mechanic's, laborer's,
materialman's or other lien, encumbrance or charge based upon the furnishing of
materials or labor to or at the direction of Tenant, Tenant shall cause the
same, at Tenant's sole cost and expense, to be discharged within 30 days after
notice thereof to Tenant given by or on behalf of the lienor.

                                   ARTICLE 9.
                           INDEMNIFICATION OF LANDLORD

      9.01. Tenant shall indemnify and save harmless Landlord against and from
any and all liabilities, obligations, damages, penalties, claims, costs, charges
and expenses (including fees and expenses of attorneys, expert witnesses,
architects, engineers and other consultants) which may be imposed upon, incurred
by or asserted against Landlord by reason of any of the following occurring
during the Lease Term:

      (a)   any work or thing done by Tenant or any agent, contractor, employee,
            licensee or invitee of Tenant in, on or about the Premises;

      (b)   any use, nonuse, possession, occupation, condition, operation,
            maintenance or management of the Premises, or of any street, alley,
            sidewalk, curb, passageway or space adjacent thereto, or any Tenant
            Equipment;

      (c)   any negligent or tortious act of Tenant or any agent, contractor,
            employee, licensee or invitee of Tenant;

                                       10

<PAGE>   16

      (d)    any accident, injury or damage to any person or property occurring
             in, on or about the Premises or any street, alley, sidewalk, curb,
             passageway or space adjacent thereto; and

      (e)    any failure by Tenant to perform its obligations under this Lease.

In the event that any action or proceeding shall be brought against Landlord by
reason of any claim covered by this Section 9.01, Tenant, upon notice from
Landlord, at Tenant's sole cost and expense, shall resist or defend the same
with counsel approved by Landlord. To the extent of the proceeds received by
Landlord under any insurance furnished to Landlord by Tenant, Tenant's
obligation to indemnify and save harmless Landlord against the hazard which is
the subject of such insurance shall be deemed to be satisfied pro tanto.

      9.02. Tenant is fully familiar with the physical condition of the Premises
and accepts it as is. Landlord has made no representations of whatever nature in
connection with the condition of the Premises, and Landlord shall not be liable
for any latent or patent defect therein.

      9.03. Tenant shall indemnify Landlord against all costs and expenses,
including fees and expenses of attorneys, expert witnesses, architects,
engineers and other consultants, incurred by Landlord in

            (i)   obtaining possession of the Premises after default by Tenant;
                  or

            (ii)  obtaining possession of the Premises after Tenant's default in
                  surrendering possession on the Expiration Date or earlier
                  termination of the Lease Term; or

            (iii) enforcing any obligation of Tenant under this Lease.

                                   ARTICLE 10.
                        REPAIRS AND COMPLIANCE WITH LAWS

      10.01. (a) Tenant shall keep and maintain the Premises (including the
roofs, walls, floors, ceilings and windows, the heating, air conditioning,
electrical, water, power and plumbing systems and equipment, the paved or
blacktopped areas and the adjacent alleys, sidewalks and curbs) and Tenant
Equipment (hereinafter defined) in the condition that existed on the
Commencement Date, reasonable wear and tear excepted (including periodic
painting, washing and general refurbishing) and free of accumulations of trash,
rubbish, snow and ice, and any Hazardous Substance or other contaminants. Except
as provided in Section 5.04, Tenant shall make all repairs, replacements,
alterations, additions and betterments, ordinary and extraordinary, structural
and non-structural, foreseen and unforeseen (including the roofs, walls, floors,
ceilings and windows, the heating, air conditioning, electrical, water, power
and plumbing systems and equipment, the paved or blacktopped areas and the
adjacent alleys, sidewalks and curbs) as may be necessary or desirable in order
to keep and maintain the Premises and Tenant Equipment in the condition that
existed on the Commencement Date, reasonable wear and tear excepted and in

                                       11

<PAGE>   17

a condition suitable for the operation and conduct of Tenant's business. Tenant
shall clean up and remove any release of Hazardous Substance or other
contaminants on or under the Premises.

             (b) Except for the initial construction or alteration of the
Improvements, if any, undertaken by Landlord and except as provided in Section
10.02, Landlord shall not be required to make any repair, replacement,
alteration, addition or betterment to or in the Premises, Tenant hereby assuming
the full and sole responsibility therefor and for the condition and maintenance
thereof during the Lease Term.

      10.02. (a) Tenant shall give notice promptly to Landlord if the Premises
or any Tenant Equipment shall be damaged or destroyed by fire or other casualty,
specifying the date, nature and extent of such damage or destruction. Tenant
shall take whatever steps may be necessary to prevent further damage or
destruction to the Premises or Tenant Equipment.

             (b) If prior to or during the Lease Term (i) the Improvements shall
be damaged or destroyed by fire or other casualty insured against by Tenant's
fire and extended coverage policy covering the Improvements, (ii) Landlord shall
not have elected to terminate this Lease as provided in Subsection 10.02(c), and
(iii) Tenant shall have paid to Landlord, upon demand, the amount of the
deductible under the insurance covering the Improvements, then Landlord shall
repair or restore the Improvements so damaged or destroyed. Landlord shall have
no obligation to repair or restore any Tenant Equipment. If the Premises shall
be rendered untenantable as a result of such damage or destruction, there shall
be a reduction in Basic Rent to the extent and for the period of such
untenantability, all as shall be determined by Landlord in its reasonable
discretion.

             (c) If prior to or during the Lease Term the Improvements shall be
so damaged or destroyed by fire or other casualty that Landlord, in its
reasonable discretion, shall determine that substantial repairs or
reconstruction of the Improvements shall be required, then Landlord, within one
hundred twenty (120) days after such fire or other casualty, by notice given to
Tenant, may designate a date on which this Lease shall terminate (which date
shall be no later than sixty (60) days after the giving of such notice).
Thereupon, on the date fixed in such notice, this Lease shall terminate as if
such date were the Expiration Date.

             (d) Other than as specifically provided in Subsection 10.02(b),
there shall be no abatement of Basic Rent or Additional Rent on account of any
casualty or destruction to or untenantability of the Premises, any statute or
rule of law to the contrary notwithstanding.

      10.03. Tenant, at its sole cost and expense, shall comply with all laws,
rules and regulations (whether now existing or hereafter enacted or promulgated)
of governmental authorities relating to Tenant's use and occupancy of the
Premises, including all laws, rules, and regulations relating to the
environmental condition of the Premises or the use and presence of any Hazardous
Substances on the Premises and all orders, rules and regulations of the board of
fire underwriters or any other body hereafter exercising similar functions
relating to use and occupancy of the Premises. Tenant likewise shall comply with
the requirements of all governmental permits and certificates and all policies
of public liability, fire and other insurance

                                       12

<PAGE>   18

at any time in force with respect to the Premises. Without limiting the
foregoing, Tenant shall promptly deliver to Landlord copies of any notice or
other correspondence sent by Tenant to any governmental body, or received by
Tenant from any governmental body, concerning the environmental conditions of
the Premises.

      10.04. Tenant hereby assigns to Landlord all contractors' warranties and
guarantees received by Tenant in connection with the performance by Tenant of
its obligations under Section 10.01 or of any other work in or upon the
Premises. If a defect in workmanship or materials is discovered by Tenant which
is covered by a contractor's warranty or guaranty received by Landlord, and
Landlord refuses to enforce such warranty or guaranty after demand by Tenant,
then Landlord agrees to assign to Tenant, upon demand by Tenant, all rights of
Landlord to enforce such warranty or guaranty to the extent that the same
relates to the defect in question.

                                   ARTICLE 11.
                            ASSIGNMENT OR SUBLETTING

      11.01. Tenant may not assign or pledge this lease or any interest herein
or sublease all or part of the Premises without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed.

      11.02. During any assignment of this Lease or subleasing of the Premises,
Tenant shall remain liable for the payment of the Rents and for the performance
or observance of all of the covenants, conditions and undertakings of Tenant
hereunder, unless released therefrom in writing by Landlord.

                                   ARTICLE 12.
                                     NOTICES

      12.01. All notices, consents, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
mailed by certified mail or by prepaid overnight delivery service providing
written evidence of delivery, addressed as specified in the Lease or to such
other address as either party may designate to the other by notice. Any notice
by certified mail shall be deemed to have been given on the date of
certification thereof. Any notice by prepaid overnight delivery service shall be
deemed to have been given on the day following the date same was delivered to
the overnight mail service.

                                   ARTICLE 13.
                        ALTERATIONS AND TENANT EQUIPMENT

      13.01. Tenant, at its expense, may make additions, alterations, and
improvements to the Premises (collectively, "Alterations") and may install
therein or thereon fixtures, machinery, equipment and advertising signs
(collectively, "Tenant Equipment"). No consent of the Landlord shall be
necessary for any of the foregoing, except that any structural alterations or
improvements shall be made only with the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed. All Tenant
Equipment (except painting and wall coverings) shall remain Tenant's property,
and at Tenant's election, may be removed prior to termination of

                                      13

<PAGE>   19

this Lease; provided, however, that Tenant shall repair any physical damage to
the Premises occasioned by removal thereof.

      13.02. In no event shall the Rents be changed because of any additions,
improvements, alteration or betterment by Landlord or any other party (including
but not limited to Tenant or any subtenant) unless this Lease shall be amended
in writing and any adjustment in the Rents specifically stated in the amendment.

                                   ARTICLE 14.
                                 RIGHT OF ENTRY

      14.01. Landlord and its authorized representatives, including, without
limitation, mortgagees and lessors of all underlying or ground leases, shall
have the right to enter the Premises at all times for the purpose of (a)
exercising any right, power or remedy reserved to Landlord in this Lease or (b)
after not less than 10 days' prior notice to Tenant, performing any obligation
of Tenant with respect to which Tenant is in default under this Lease.

      14.02. Landlord and its authorized representatives, including mortgagees
and lessors of all underlying or ground leases, shall have the right to enter
the Premises at all reasonable times during normal business hours for the
purpose of (a) examining or inspecting the Premises or (b) showing the Premises
to prospective purchasers, mortgagees or tenants.

      14.03. All payments made by Landlord and all costs and expenses (including
fees and expenses of attorneys, expert witnesses, architects, engineers and
other consultants) incurred by Landlord in connection with the exercise of its
rights under Section 14.01, together with interest at the rate of twelve percent
(12%) per annum (or if twelve percent (12%) per annum shall be in excess of the
highest rate of interest permitted by law to be collected from Tenant, then at
such highest rate permitted by law), from the respective dates of the making of
such payments or the incurring of such costs and expenses, shall constitute
Additional Rent and shall be payable to Landlord by Tenant on demand.

      14.04. The exercise of any right reserved to Landlord or its authorized
representatives in Sections 14.01 or 14.02 shall not constitute an actual or
constructive eviction, in whole or in part, or entitle Tenant to any abatement
or diminution of Basic Rent or Additional Rent or relieve Tenant from any of its
obligations under this Lease or impose any liability on Landlord or its
authorized representatives by reason of inconvenience or annoyance to Tenant or
injury to or interruption of Tenant's business or otherwise.

      14.05. In any case in which Landlord enters the Premises for any of the
purposes set forth in this Article 14, Tenant shall not interfere, directly or
in any manner or form, with the conduct of any work being performed by or for
Landlord. Tenant hereby releases Landlord from any damages or claims of damages
arising from any loss of business or from any increase in operating costs of
Tenant's business, resulting directly or indirectly from the conduct of any such
work, whether or not due to Landlord's negligence.

                                       14

<PAGE>   20

                                   ARTICLE 15.
                                  CONDEMNATION

      15.01. The term "Taking" shall mean a taking prior to or during the Lease
Term (but, in any event, subsequent to the execution of this Lease) of the
Premises as the result of condemnation or by agreement between Landlord and the
condemning authority. The term "Date of Taking" shall mean the date on which
title is vested in the condemning authority.

      15.02. In the event of a Taking of the whole of the Premises, this Lease
shall terminate on the Date of Taking as if such date were the Expiration Date.

      15.03. In the event of a Taking of less than all the Improvements, Tenant,
within one hundred twenty (120) days after the Date of Taking, may terminate
this Lease on a date as shall be specified in a notice given to Landlord by
Tenant, which date shall be not later than sixty (60) days after the giving of
such notice. If Tenant shall not give notice of termination of this Lease within
one hundred twenty (120) days after the Date of Taking, then this Lease shall
remain in full force and effect with respect to the part of the Premises not the
subject of the Taking. If Landlord shall receive any award or other compensation
(collectively, "Award") on account of the Taking, then: (a) any portion of such
award attributable to the value of Alterations and Tenant Equipment shall be
paid to Tenant; and (b) Basic Rent payable from and after the Date of Taking
shall be reduced by an amount equal to one-twelfth of the Rental Factor
(expressed as a percentage) multiplied by the lesser of: (i) the Award received
by Landlord as a result of the Taking, less all amounts to be paid to Tenant
under clause (a) and costs and expenses incurred by Landlord in collecting the
Award or (ii) the cost of that part of the Premises so taken, as determined by
Landlord on the basis of Landlord's property accounts, less, in the case of
either (i) or (ii), all costs and expenses incurred by Landlord in connection
with any rebuilding, alteration, or restoration of the Premises undertaken by
Landlord as a result of the Taking.

      15.04. Except as provided in Section 15.03, Landlord shall be entitled to
receive the entire Award for any Taking, and to such extent Tenant hereby
assigns to Landlord all its right, title and interest in and to such Award.
However, Tenant shall be entitled to make a claim against the condemning
authority and shall be entitled to receive compensation for the value of any
Tenant's moving expenses which may be compensable as a result of the Taking.
Landlord shall have the right to settle any threatened or filed condemnation
proceeding.

                                   ARTICLE 16.
                             RIGHTS OF OTHER PARTIES

      In the event that the Premises or any portion thereof is subject to a
mortgage whose lien would otherwise be superior to Tenant's interest under this
Lease, then this Lease shall not become effective until such time as Landlord,
Tenant and all of the parties holding any such mortgage (collectively, the
"Lender", whether one or more) have executed a non-disturbance agreement in form
reasonably acceptable to Landlord and Tenant which provides, inter alia, that if
the Lender forecloses such mortgage or otherwise acquires title to the Premises
or any portion thereof: (i) the Lender will not join Tenant as a party to such
foreclosure or seek to terminate this

                                       15

<PAGE>   21

Lease or otherwise affect Tenant's occupancy of the Premises under this Lease so
long as Tenant is in compliance with its obligations under this Lease; and (ii)
Tenant shall recognize, and attorn to, the Lender or other party which acquires
title to the Premises by such foreclosure or transfer. In the event that
Landlord shall grant a mortgage covering any portion of the Premises which would
otherwise be inferior to Tenant's interest under this Lease, Tenant, Landlord
and Lender shall enter into an agreement which contains the provisions set out
in the previous sentence and which further provides that Tenant shall
subordinate its interest under this Lease to the Lender's interest under its
mortgage.

                                   ARTICLE 17.
                                  MISCELLANEOUS

      17.01. No failure by Landlord or Tenant to insist upon the strict
performance of any covenant, agreement, term or condition of this Lease or to
exercise any right, power or remedy consequent upon a breach thereof, and no
acceptance of full or partial rent by Landlord during the continuance of any
such breach by Tenant shall constitute a waiver of any such breach, covenant,
agreement, term or condition. No waiver of any breach, covenant, agreement, term
or condition shall affect or alter this Lease, but each and every covenant,
agreement, term and condition of this Lease otherwise shall continue in full
force and effect.

      17.02. The rights and obligations contained in this Lease shall bind and
inure to the benefit of Landlord and Tenant and, except as otherwise provided
herein, their respective personal representatives, successors and assigns.
However, the obligations of Landlord under this Lease shall no longer be binding
upon Landlord after any sale, assignment, or transfer by Landlord (or upon any
subsequent landlord after the sale, assignment, or transfer by any such
subsequent landlord) of its interest in the Premises. In the event of any such
sale, assignment or transfer, such obligations shall thereafter be binding upon
the grantee, assignee, or other transferee of such interest, and any such
grantee, assignee, or transferee, by accepting such interest, shall be deemed to
have assumed such obligations. A Lease of the entire Premises, other than for
occupancy thereof, shall be deemed a transfer within the meaning of this
Section.

      17.03. Each right, power and remedy of Landlord provided for in this Lease
shall be cumulative and concurrent with every other right, power or remedy
provided for in this Lease or now or hereafter existing at law or in equity or
by statute or otherwise, and the exercise or beginning of the exercise by
Landlord of any one or more of such rights, powers or remedies shall not
preclude the simultaneous or later exercise by Landlord of any or all other such
rights, powers or remedies. In the event of any breach or threatened breach by
Tenant of any of the provisions of this Lease, Landlord shall be entitled by
injunction to restrain such breach or threatened breach or to compel performance
of such provisions.

      17.04. If any provision of this Lease or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Lease, or the application of such provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each provision of this Lease shall be valid and
enforceable to the extent permitted by law.

                                       16

<PAGE>   22

      17.05. This Lease shall be construed and enforced in accordance with the
laws of the State where the Premises are located.

      17.06. This Lease contains the entire agreement between the parties, and
all prior negotiations and agreements are merged herein. Neither Landlord nor
Landlord's representatives have made any representations or warranties with
respect to the Premises, the Improvements, or this Lease, except as expressly
set forth herein, and no rights or remedies are or shall be acquired by Tenant
by implication or otherwise unless expressly set forth herein.

      17.07. A Short Form or Memorandum of Lease shall be recorded promptly upon
execution of this Lease.

      17.08. The relationship between the parties hereto is solely that of
landlord and tenant and nothing contained herein shall constitute or be
construed as establishing any other relationship between the parties, including
the relationship of principal and agent, employer and employee, or parties
engaged in a partnership or joint venture. Without limiting the foregoing, it is
specifically understood that neither party is the agent of the other and neither
is in any way empowered to bind the other or to use the name of the other in
connection with the construction, maintenance or operation of the Premises,
except as otherwise specifically provided herein.

      17.09. The indemnification provisions provided for in this Lease shall
survive the expiration or termination of this Lease, whether by lapse of time or
otherwise, for a period of one (1) year only.

      17.10. The prevailing party in any action brought to enforce or interpret
this Lease shall be entitled to recover its attorney fees and costs (including
expert witness fees) incurred in connection with such action.

                              END OF ATTACHMENT II

                                       17

<PAGE>   23

                       FIRST AMENDMENT TO LEASE AGREEMENT

        This First Amendment to Lease Agreement ("First Amendment") is made and
entered into this day of August, 2000, by and between OLAFSON II, LLC, a Utah
limited liability company ("Landlord") and TOMAX TECHNOLOGIES INC., a Utah
corporation ("Tenant").

                                   WITNESSETH:

        The parties entered into a Lease Agreement effective December 15, 1999
and desire to amend certain provisions therein as set forth hereinafter.

        NOW THEREFORE, in consideration of the mutual agreements and promises
set forth hereinafter, the parties hereto hereby agree as follows:

        1. The provision regarding the Commencement Date shall be amended to
read in its entirety as follows:

                                December 1, 2000.

        2. The provision regarding Basic Rent shall be amended to read in its
entirety as follows:

                             For the twenty-four month period beginning with the
                             Commencement Date, Basic Rent shall be the monthly
                             amount of $84,543.25, and thereafter until the
                             Expiration Date shall be the monthly amount of
                             $107,648.00.

Capitalized terms used in this First Amendment have the meanings ascribed to
them in the Lease Agreement. Except as modified as set forth in this First
Amendment, the Lease Agreement shall continue in full force and effect.

        DATED as of the date set forth above.

                                       OLAFSON II, LLC

                                       By:        /s/ Jaye Olafson
                                          --------------------------------------

                                       Title:     Manager
                                             -----------------------------------

                                       TOMAX TECHNOLOGIES INC.

                                       By:  /s/ Virgil Fernandez
                                          --------------------------------------

                                       Title:  CTO
                                             -----------------------------------

<PAGE>   24
                       SECOND AMENDMENT TO LEASE AGREEMENT

     This Second Amendment to Lease Agreement ("Second Amendment") is made and
entered into this day of February, 2001 by and between Olafson II LLC, a Utah
limited liability company ("Landlord"), and Tomax Corporation, a Delaware
corporation, formerly known as Tomax technologies inc., a Utah corporation
("Tenant").

                                    RECITALS:

     WHEREAS, Landlord and Tenant entered into a Lease Agreement effective
December 15, 1999 ("Lease"); and

     WHEREAS, the parties entered into a First Amendment to Lease Agreement in
August 2000; and

     WHEREAS, the parties desire to enter into this Second Amendment to further
amend certain provisions in the Lease, as such amendments are set forth
hereinafter; and

     WHEREAS, Tomax technologies inc., a Utah corporation, has merged with and
into its wholly owned subsidiary Tomax Corporation, a Delaware corporation, with
the purpose and intent of effectuating a change of domicile from the State of
Utah to the State of Delaware, and all obligations of Tomax technologies inc.
under the Lease have, as a result of such merger, been assumed by Tomax
Corporation, which shall for all purposes be substituted as the Tenant under the
Lease Agreement as amended; and

     WHEREAS, the Land and Premises leased pursuant to the Lease constitute an
existing structure formerly known as the "Sweet's Candy Building," which
building was purchased by Landlord in December 1999 and has been remodeled,
reconstructed and refurbished during calendar year 2000 for occupation by Tenant
commencing February 8, 2001; and

     WHEREAS, the initial Lease was entered into between the parties prior to
the commencement of reconstruction and was based on certain assumptions and
understandings relative to the amount of finished space available, as well as
the type of such finished space, with an anticipated move-in date of October 1,
2000; and

     WHEREAS, each of the basement, main, second, third and fourth floors is
comprised of 19,143 square feet, and a mezzanine between the main and second
floors is comprised of 9,551 square feet; and

     WHEREAS, the initial Lease contemplated that Tomax would occupy the second,
third and fourth floors, comprising in the aggregate 57,429 square feet, at the
office space rental rate of $13.50 per square foot, together with 10,563 square
feet of storage space in the basement at a rental rate of $5.00 per square foot,
for a total initial Basic Rent monthly payment of $69,009.00. Such rental rate
was intended to be effective from October 2000 through October 2002, at which
time Tomax was obligated to additionally lease 8,580 square feet of basement
office space at a

<PAGE>   25

rate of $12.00 per square foot, 16,007 square feet on the main level at a rate
of $13.50 per square foot, storage/shipping/receiving space on the main floor of
3,136 square feet at a rate of $5.00 per square foot, and 9,551 square feet on
the mezzanine level at a rate of $13.50 per square foot, which, together with
the initial rent payments, required aggregate monthly lease payments of
$107,648.00 from October 2002 through the end of the lease; and

     WHEREAS, as construction has neared completion, Landlord and Tenant have
mutually agreed to improve the finish for the storage areas and increase the
rate from $5.00 per square foot to $7.00 per square foot, to reduce the amount
of basement storage space, and to increase the amount of finished office space
in the basement to be currently rented by Tomax, with the parties acknowledging
that Landlord has incurred significant additional expenses to finish and outfit
such basement space; and

     WHEREAS, the parties now desire and agree that Tenant shall, for the period
of February 8, 2001 through February 7, 2003, rent 73,794 square feet of office
space at the rate of $13.50 per square foot, together with 6,092 square feet of
storage space at the rate of $7.00 per square foot, for a total rent payable per
month of $86,572.00 during the initial period; and

     WHEREAS, the parties further agree that Tenant shall lease and pay for, at
the earlier of occupancy or February 8, 2003, an additional 25,380 square feet
of finished office space at the rate of $13.50 per square foot on the basement,
main and mezzanine levels, thus bringing the aggregate monthly lease payment
commencing not later than February 8, 2003, to the amount of $115,124.00; and

     WHEREAS, the Premises shall be ready for Tenant's occupancy on February 8,
2001; and

     WHEREAS, regardless of the fact that Tenant does not or may not occupy the
entire Premises prior to February 8, 2003, the parties nevertheless intend that
Tenant shall control the entire Premises from the Commencement Date; and

     WHEREAS, the parties desire to make other minor changes to the Lease as set
forth herein;

     NOW THEREFORE, in consideration of the mutual agreements and promises set
forth hereinafter, the parties hereto hereby agree as follows:

     1.   Recitals. The Recitals set forth hereinabove are incorporated into
this Second Amendment by this reference.

     2.   Commencement Date. The provision in the Lease regarding the
Commencement Date shall be amended to read in its entirety as follows: February
8, 2001.

     3.   Basic Rent. The provision in the Lease regarding Basic Rent shall be
amended to read in its entirety as follows:

                                       2

<PAGE>   26

          For the twenty-four month period beginning with the Commencement Date
          and ending February 7, 2003, Basic Rent shall be the monthly amount of
          $86,572.00, and thereafter until the expiration date shall be the
          monthly amount of $115,124.00; provided, however, that in the event
          Tenant desires, prior to February 8, 2003, to lease all or any portion
          of the additional 25,410 square feet which it becomes obligated to
          lease on February 8, 2003, it shall increase its Basic Rent for the
          additional leased space at the rate of $13.50 per square foot, and
          such additional amount shall be added on to the Basic Rent as of
          actual occupancy, if such is prior to February 8, 2003.

     4.   After Hours Parking. The provision regarding After Hours Parking shall
be amended to read in its entirety as follows:

          Landlord shall be permitted to charge all persons, other than Tenant
          employees and invitees, for use of all parking areas on the Premises
          during the hours between 6:00 p.m. and 6:00 a.m.

     Capitalized terms used in this Second Amendment have the meanings ascribed
to them in the Lease. Except as modified as set forth in this Second Amendment,
the Lease shall continue in full force and effect.

     DATED as of the date set forth above.

                                       OLAFSON II LLC

                                       By: /s/ JAYE OLAFSON
                                          --------------------------------------
                                          Jaye Olafson, Manager

                                       TOMAX CORPORATION

                                       By: /s/ BRAD STEWART
                                          --------------------------------------
                                          Brad Stewart, Chief Financial Officer

                                       3

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