Document:

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                                                                    Exhibit 10.6

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                          LOAN AND SECURITY AGREEMENT

                              SILICON VALLEY BANK

                                      and

                            PLUMTREE SOFTWARE, INC.

                                  $7,500,000

                                March 14, 2001

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<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                               Page
                                                                               ----
<S>                                                                            <C>
1.    ACCOUNTING AND OTHER TERMS............................................     1

2.    LOAN AND TERMS OF PAYMENT.............................................     1

   2.1   Credit Extensions..................................................     1
       2.1.1    Revolving Advances..........................................     1
                ------------------
       2.1.2    Letters of Credit Sublimit..................................     1
       2.1.3    Intentionally Omitted.......................................     2
       2.1.4    Cash Management Services Sublimit...........................     2
   2.2   Overadvances.......................................................     2
   2.3   Interest Rate, Payments............................................     2
   2.4   Fees...............................................................     3

223.  CONDITIONS OF LOANS...................................................     3

   3.1   Conditions Precedent to Initial Credit Extension...................     3
   3.2   Conditions Precedent to all Credit Extensions......................     3

4.    CREATION OF SECURITY INTEREST.........................................     3

   4.1   Grant of Security Interest.........................................     3

5.    REPRESENTATIONS AND WARRANTIES........................................     4

   5.1   Due Organization and Authorization.................................     4
   5.2   Collateral.........................................................     4
   5.3   Litigation.........................................................     4
   5.4   No Material Adverse Change in Financial Statements.................     4
   5.5   Solvency...........................................................     5
   5.6   Regulatory Compliance..............................................     5
   5.7   Subsidiaries.......................................................     5
   5.8   Full Disclosure....................................................     5

6.    AFFIRMATIVE COVENANTS.................................................     6

   6.1   Government Compliance..............................................     6
   6.2   Financial Statements, Reports, Certificates........................     6
   6.3   Inventory; Returns.................................................     6
   6.4   Taxes..............................................................     7
   6.5   Insurance..........................................................     7
   6.6   Primary Accounts...................................................     7
   6.7   Financial Covenants................................................     7
   6.8   Further Assurances.................................................     8

7.    NEGATIVE COVENANTS....................................................     8

   7.1   Dispositions.......................................................     8
   7.2   Changes in Business, Ownership, Management or Business Locations...     8
   7.3   Mergers or Acquisitions............................................     8
   7.4   Indebtedness.......................................................     8
   7.5   Encumbrance........................................................     9
   7.6   Distributions; Investments.........................................     9
   7.7   Transactions with Affiliates.......................................     9
   7.8   Subordinated Debt..................................................     9
</TABLE>

                                       i
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<TABLE>
<S>                                                                          <C>
   7.9   Compliance.........................................................     9

8.    EVENTS OF DEFAULT.....................................................     9

   8.1   Payment Default....................................................    10
   8.2   Covenant Default...................................................    10
   8.3   Material Adverse Change............................................    10
   8.4   Attachment.........................................................    10
   8.5   Insolvency.........................................................    10
   8.6   Other Agreements...................................................    10
   8.7   Judgments..........................................................    11
   8.8   Misrepresentations.................................................    11
   8.9   Guaranty...........................................................    11

9.    BANK'S RIGHTS AND REMEDIES............................................    11

   9.1   Rights and Remedies................................................    11
   9.2   Power of Attorney..................................................    12
   9.3   Accounts Collection................................................    12
   9.4   Bank Expenses......................................................    12
   9.5   Bank's Liability for Collateral....................................    13
   9.6   Remedies Cumulative................................................    13
   9.7   Demand Waiver......................................................    13

10.   NOTICES...............................................................    13

11.   CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER............................    13

12.   GENERAL PROVISIONS....................................................    14

   12.1  Successors and Assigns.............................................    14
   12.2  Indemnification....................................................    14
   12.3  Time of Essence....................................................    14
   12.4  Severability of Provision..........................................    14
   12.5  Amendments in Writing, Integration.................................    14
   12.6  Counterparts.......................................................    14
   12.7  Survival...........................................................    14
   12.8  Confidentiality....................................................    15
   12.9  Attorneys' Fees, Costs and Expenses................................    15

13.   DEFINITIONS...........................................................    15

   13.1  Definitions........................................................    15
</TABLE>

                                      ii
<PAGE>

This LOAN AND SECURITY AGREEMENT dated as of March 14, 2001, between SILICON
VALLEY BANK ("Bank"), whose address is 3003 Tasman Drive, Santa Clara,
California 95054 and PLUMTREE SOFTWARE, INC., a California corporation
("Borrower"), whose address is 500 Sansome Street, San Francisco, CA  94111,
provides the terms on which Bank will lend to Borrower and Borrower will repay
Bank. The parties agree as follows:

1.     ACCOUNTING AND OTHER TERMS.
       --------------------------

       Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document.

2.     LOAN AND TERMS OF PAYMENT
       -------------------------

2.1    Credit Extensions.
       ------------------

       Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions,
as set forth herein.

2.1.1  Revolving Advances.

       (a)  Bank will make Advances not exceeding (i) the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base, minus (ii) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit), minus (iii) the amount of the Cash Management Services Sublimit
designated by Bank at the time of determination as utilized. Amounts borrowed
under this Section may be repaid and reborrowed during the term of this
Agreement.

       (b)  To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower's deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or without instructions if the Advances
are necessary to meet Obligations which have become due. Bank may rely on any
telephone notice given by a person whom Bank reasonably believes is a
Responsible Officer. Borrower will indemnify Bank for any direct loss Bank
suffers due to such reliance.

       (c)  The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances are immediately payable.

2.1.2  Letters of Credit Sublimit.

       Bank will issue or have issued Letters of Credit for Borrower's account
not exceeding (i) the lesser of the Committed Revolving Line or the Borrowing
Base minus (ii) the outstanding principal balance of the Advances minus the
amount of the Cash Management Sublimit designated by Bank at the time of
determination as utilized; provided, however, that the face

                                       1
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amount of outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) may not exceed $5,000,000. Each Letter of Credit will have an
expiry date of no later than 30 days after the Revolving Maturity Date, but
Borrower's reimbursement obligation will be secured by cash on terms acceptable
to Bank at any time after the Revolving Maturity Date if the term of this
Agreement is not extended by Bank. Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request.

2.1.3  Intentionally Omitted.

2.1.4  Cash Management Services Sublimit.

       (a)  Borrower may use up to $5,000,000 for Bank's Cash Management
Services, which may include merchant services, direct deposit of payroll,
business credit card, and check cashing services identified in various cash
management services agreements related to such services (the "Cash Management
Services"). The amount of such aggregate credit limit designated by Bank at the
time of determination as utilized shall reduce by a factor of 1.25 the amount
otherwise available to be borrowed under the Committed Revolving Line.

2.2    Overadvances.
       -------------

       If Borrower's Obligations under Section 2.1.1 and 2.1.2 exceed the lesser
of either (i)  the Committed Revolving Line minus the Cash Management Services
Sublimit or (ii) the Borrowing Base, Borrower must immediately pay Bank the
excess, upon demand.

2.3    Interest Rate, Payments.
       ------------------------

       (a)  Interest Rate. Advances accrue interest on the outstanding principal
balance at a per annum rate of 1.0 percentage point above the Prime Rate;
provided that during any period that Borrower maintains a balance of at least
$2,500,000 (calculated net of the DDA Peg Balance) in a Sweep Account, such
interest rate shall be reduced to 0.75 percentage point above the Prime Rate;
provided, further, that in the event Borrower's Quick Ratio (Adjusted) is less
than 2.00: 1.00 under Section 6.7(i) hereof as of a Date of Determination (as
defined in such section), the rate of interest otherwise applicable to the
Advances shall be increased by one-half (1/2) percentage point (50 basis points)
until the next Date of Determination when such ratio is greater than or equal to
2.00 to 1.00. After an Event of Default, Obligations accrue interest at 5.0
percentage points above the rate effective immediately before the Event of
Default. The interest rate increases or decreases when the Prime Rate changes.
Interest is computed on a 360 day year for the actual number of days elapsed.

       (b)  Payments. Interest due on the Committed Revolving Line is payable on
the first day of each month. Bank may debit any of Borrower's deposit accounts
including Account Number ____________________________ for principal and interest
payments owing or any amounts Borrower owes Bank. Bank will promptly notify
Borrower when it debits Borrower's accounts. These debits are not a set-off.
Payments received after 12:00 noon Pacific time are considered received at the
opening of business on the next Business Day. When a payment is due on a day
that is not a Business Day, the payment is due the next Business Day and
additional fees or interest accrue.

                                       2
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2.4    Fees.
       -----

       Borrower will pay:

       (a)  Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and reasonable expenses) incurred through and after the date of this
Agreement, are payable when due.

       (b)  Loan Fee. A loan fee equal to 1% of the Committed Revolving Line,
payable on the Closing Date; provided that Borrower may elect to pay a reduced
fee equal to 0.5% on the Closing Date and maintain a minimum balance of at least
$1,000,000 in a demand deposit account maintained at Bank (the "DDA Peg
Balance"); provided further that in the event the reduced fee is paid and at any
time thereafter during the term of this Agreement, Borrower fails to maintain
such minimum balance, then Borrower shall immediately pay to Bank the additional
0.5% fee.

       (c)  Letter of Credit Fees. A fee equal to 1.5% of the face amount of
each Letter of Credit, together with an origination and courier fee of $270 at
issuance.

3.     CONDITIONS OF LOANS
       -------------------

3.1    Conditions Precedent to Initial Credit Extension.
       -------------------------------------------------

       Bank's obligation to make the initial Credit Extension is subject to the
condition precedent that it receive the agreements, documents and fees set forth
herein.

3.2    Conditions Precedent to all Credit Extensions.
       ----------------------------------------------

       Bank's obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:

       (a)  timely receipt of any Payment/Advance Form; and

       (b)  the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension and no Event of Default may have occurred and be continuing, or
result from the Credit Extension. Each Credit Extension is Borrower's
representation and warranty on that date that the representations and warranties
of Section 5 remain true.

4.     CREATION OF SECURITY INTEREST
       -----------------------------

4.1    Grant of Security Interest.
       ---------------------------

       Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents.  Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral.  Bank may place a "hold" on any deposit account pledged as

                                       3
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Collateral. If this Agreement is terminated, Bank's lien and security interest
in the Collateral will continue until Borrower fully satisfies its Obligations.

5.     REPRESENTATIONS AND WARRANTIES
       ------------------------------

       Borrower represents and warrants as follows:

5.1    Due Organization and Authorization.
       -----------------------------------

       Borrower and any Subsidiary is duly existing and in good standing in its
state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified, except where the failure to do so could
not reasonably be expected to cause a Material Adverse Change.

       The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound.  Borrower is not in default under any agreement to which or by which it
is bound in which the default could reasonably be expected to cause a Material
Adverse Change.

5.2    Collateral.
       -----------

       Borrower has good title to the Collateral, free of Liens except Permitted
Liens.  The Accounts are bona fide, existing obligations, and the service or
property has been performed or delivered to the account debtor or its agent for
immediate shipment to and unconditional acceptance by the account debtor.
Borrower has no notice of any actual or imminent Insolvency Proceeding of any
account debtor whose accounts are an Eligible Account in any Borrowing Base
Certificate.  All Inventory is in all material respects of good and marketable
quality, free from material defects.  Borrower is the sole owner of the
Intellectual Property, except for non-exclusive licenses granted to its
customers in the ordinary course of business.  Each Patent is valid and
enforceable and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual Property violates the rights of any third party, except to the
extent such claim could not reasonably be expected to cause a Material Adverse
Change.

5.3    Litigation.
       -----------

       Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower's Responsible Officers and legal
counsel, threatened by or against Borrower or any Subsidiary  in which a likely
adverse decision could reasonably be expected to cause a Material Adverse
Change.

5.4    No Material Adverse Change in Financial Statements.
       ---------------------------------------------------

       All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations.  There has not been any material deterioration in

                                       4
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Borrower's consolidated financial condition since the date of the most recent
financial statements submitted to Bank. There has been no material adverse
deviation from the business plan of Borrower which was presented to Bank prior
to the date of this Agreement.

5.5    Solvency.
       ---------

       The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.

5.6    Regulatory Compliance.
       ----------------------

       Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act.  Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors).  Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change.  None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally.  Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes,
except those being contested in good faith with adequate reserves under GAAP.
Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted, except where the failure to do so could not reasonably be
expected to cause a Material Adverse Change.

5.7    Subsidiaries.
       -------------

       Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.

5.8    Full Disclosure.
       ----------------

       No written representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank (taken together with all such
written certificates and written statements to Bank) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading.  It
being recognized by Bank that the projections and forecasts provided by Borrower
in good faith and based upon reasonable assumptions are not viewed as facts and
that actual results during the period or periods covered by such projections and
forecasts may differ, in some instances materially, from the projected and
forecasted results.

                                       5
<PAGE>

6.     AFFIRMATIVE COVENANTS
       ---------------------

       Borrower will do all of the following:

6.1    Government Compliance.
       ----------------------

       Borrower will maintain its and all Subsidiaries' legal existence and good
standing in its jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
cause a material adverse effect on Borrower's business or operations.  Borrower
will comply, and have each Subsidiary comply, with all laws, ordinances and
regulations to which it is subject, noncompliance with which could have a
material adverse effect on Borrower's business or operations or would reasonably
be expected to cause a Material Adverse Change.

6.2    Financial Statements, Reports, Certificates.
       --------------------------------------------

       (a)  Borrower will deliver to Bank: (i) as soon as available, but no
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period, in a form and certified by a Responsible Officer
acceptable to Bank; (ii) as soon as available, but no later than 120 days after
the last day of Borrower's fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified
public accounting firm reasonably acceptable to Bank; (iii) within 5 days of
filing, copies of all statements, reports and notices made available to
Borrower's security holders or to any holders of Subordinated Debt and all
reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission; (iv) a prompt report of any legal actions pending or threatened
against Borrower or any Subsidiary that could reasonably be expected to result
in damages or costs to Borrower or any Subsidiary of $200,000 or more; and (v)
budgets, sales projections, operating plans or other financial information Bank
reasonably requests which shall be treated as Borrower Confidential Information.

       (b)  Within 30 days after the last day of each month, Borrower will
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in
the form of Exhibit C, with aged listings of accounts receivable and accounts
payable.

       (c)  Within 30 days after the last day of each month, Borrower will
deliver to Bank with the monthly financial statements a Compliance Certificate
signed by a Responsible Officer in the form of Exhibit D.

       (d)  Bank has the right to audit Borrower's Collateral at Borrower's
expense, but the audits will be conducted no more often than every year at a
cost not to exceed $3000 per audit unless an Event of Default has occurred and
is continuing.

6.3    Inventory; Returns.
       -------------------

       Borrower will keep all Inventory in good and marketable condition, free
from material defects.  Returns and allowances between Borrower and its account
debtors will follow

                                       6
<PAGE>

Borrower's customary practices as they exist at execution of this Agreement.
Borrower must promptly notify Bank of all returns, recoveries, disputes and
claims, that would be likely to involve a loss or return of more than $200,000.

6.4    Taxes.
       ------

       Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.

6.5    Insurance.
       ----------

       Borrower will keep its business and the Collateral insured for risks and
in amounts, as Bank may reasonably request that are customary in Borrower's
industry. Insurance policies will be in a form, with companies, and in amounts
that are satisfactory to Bank in Bank's reasonable discretion. All property
policies will have a lender's loss payable endorsement showing Bank as an
additional loss payee and all liability policies will show the Bank as an
additional insured and provide that the insurer must give Bank at least 20 days
notice before canceling its policy. At Bank's request, Borrower will deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy will, at Bank's option, be payable to Bank on account
of the Obligations.

6.6    Primary Accounts.
       -----------------

       Borrower will maintain its primary depository and operating accounts with
Bank.  In addition, Borrower shall maintain at least 51% of its cash and cash
equivalents in demand deposit accounts, money market savings accounts and/or
investment accounts at Bank.

6.7    Financial Covenants.
       --------------------

       Borrower will maintain:

          (i)  Quick Ratio (Adjusted). As of the last day of each month ("Date
of Determination"), a ratio of Quick Assets to Current Liabilities minus
Deferred Revenue of at least 1.75 to 1.00; provided that in the event such ratio
as of a Date of Determination is below 2.00 to 1.00, the rate of interest
otherwise applicable to the Advances pursuant to Section 2.3 shall be increased
by one-half (1/2) percentage point (50 basis points) until the next Date of
Determination when such ratio is greater than or equal to 2.00 to 1.00.

          (ii) Maximum Operating Loss; Minimum Profitability. As of the last day
of each quarter, a maximum operating loss (calculated as earnings before
interest, taxes, depreciation and amortization, calculated in accordance with
GAAP but excluding expenses incurred and paid prior to February 28, 2001, in
connection with the issuance of Borrower's S-1 Registration Statement) of
<$5,000,000> for the quarter ending 3/31/01; <$3,000,000> for the quarter ending
6/30/01; <$2,000,000> for the quarter ending 9/30/01; and thereafter, minimum
quarterly net profit after tax (calculated in accordance with GAAP) of $1.00.

                                       7
<PAGE>

6.8    Further Assurances.
       -------------------

       Borrower will execute any further instruments and take further action as
Bank reasonably requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.

7.     NEGATIVE COVENANTS
       ------------------

       Borrower will not do any of the following without Bank's prior written
consent, which will not be unreasonably withheld:

7.1    Dispositions.
       -------------

       Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, other than Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; or (iii) of worn-out or obsolete Equipment.

7.2    Changes in Business, Ownership, Management or Business Locations.
       -----------------------------------------------------------------

       Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably related
thereto or have a material change in its ownership or management (other than the
sale of Borrower's equity securities in a public offering or to venture capital
investors approved by Bank) of greater than 33% (calculated on a fully diluted
basis after giving effect to the subject transaction). Borrower will not,
without at least 30 days prior written notice, relocate its chief executive
office, or add any new offices or business locations at which Borrower maintains
$200,000 or more in assets.

7.3    Mergers or Acquisitions.
       ------------------------

       Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would be reasonably likely to result from such action
during the term of this Agreement and (ii) such transaction would not result in
a decrease of more than 25% of Tangible Net Worth (inclusive of goodwill).  A
Subsidiary may merge or consolidate into another Subsidiary or into Borrower and
Borrower may merge or consolidate into a Subsidiary.

7.4    Indebtedness.
       -------------

       Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.

                                       8
<PAGE>

7.5    Encumbrance.
       ------------

       Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here, subject to Permitted Liens.  As more fully provided in the Negative Pledge
Agreement executed in connection herewith, in no event shall Borrower grant or
suffer to exist any Lien upon the Intellectual Property other than license
rights otherwise permitted hereunder, and Borrower shall not enter into any
agreement with any third party preventing Borrower from granting to Bank a Lien
upon the Intellectual Property.

7.6    Distributions; Investments.
       ---------------------------

       Except as otherwise permitted hereunder, directly or indirectly acquire
or own any Person, or make any Investment in any Person, other than Permitted
Investments, or permit any of its Subsidiaries to do so. Pay any dividends or
make any distribution or payment or redeem, retire or purchase any capital
stock.

7.7    Transactions with Affiliates.
       -----------------------------

       Directly or indirectly enter into or permit any material transaction with
any Affiliate except transactions that are in the ordinary course of Borrower's
business, on terms no less favorable to Borrower than would be obtained in an
arm's length transaction with a non-affiliated Person.

7.8    Subordinated Debt.
       ------------------

       Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any material provision in any document
relating to the Subordinated Debt that would affect either Bank's first priority
status with respect to the Collateral or Bank's senior right to payment, without
Bank's prior written consent.

7.9    Compliance.
       -----------

       Become an "investment company" or a company controlled by an "investment
company," under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or use
the proceeds of any Credit Extension for that purpose; fail to meet the minimum
funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to have a material adverse effect on Borrower's
business or operations or would reasonably be expected to cause a Material
Adverse Change, or permit any of its Subsidiaries to do so.

8.     EVENTS OF DEFAULT
       -----------------

       Any one of the following is an Event of Default:

                                       9
<PAGE>

8.1    Payment Default.
       ----------------

       If Borrower fails to pay any of the Obligations within 5 Business Days
after their due date.  During such 5 Business Day period the failure to cure the
default is not an Event of Default (but no Credit Extension will be made during
the cure period);

8.2    Covenant Default.
       -----------------

       If Borrower does not perform any obligation in Section 6 or violates any
covenant in Section 7 or does not perform or observe any other material term,
condition or covenant in this Agreement, any Loan Documents, or in any agreement
between Borrower and Bank and as to any default under a term, condition or
covenant that can be cured, has not cured the default within 10 days after it
occurs, or if the default cannot be cured within 10 days or cannot be cured
after Borrower's attempts within such10 day period, and the default may be cured
within a reasonable time, then Borrower has an additional period (of not more
than 30 days) to attempt to cure the default.  During the additional time, the
failure to cure the default is not an Event of Default (but no Credit Extensions
will be made during the cure period);

8.3    Material Adverse Change.
       ------------------------

       If there (i) occurs a material adverse change in the business,
operations, or condition (financial or otherwise) of the Borrower, or (ii) is a
material impairment of the prospect of repayment of any portion of the
Obligations.

8.4    Attachment.
       ------------

       If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice.  These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);

8.5    Insolvency.
       -----------

       If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);

8.6    Other Agreements.
       -----------------

       If there is a default in any agreement between Borrower and a third party
that gives the third party the right to accelerate any Indebtedness exceeding
$200,000 or that could reasonably be expected to cause a Material Adverse
Change;

                                       10
<PAGE>

8.7  Judgments.
     ---------

     If a money judgment(s) in the aggregate of at least $200,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Credit
Extensions will be made before the judgment is stayed or satisfied);

8.8  Misrepresentations.
     ------------------

     If Borrower or any authorized Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document; or

8.9  Guaranty.
     --------

     Any guaranty of any Obligations ceases for any reason to be in full force
or any Guarantor does not perform any obligation under any guaranty of the
Obligations, or any material misrepresentation or material misstatement exists
now or later in any warranty or representation in any guaranty of the
Obligations or in any certificate delivered to Bank in connection with the
guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to
any Guarantor.

9.   BANK'S RIGHTS AND REMEDIES
     --------------------------

9.1  Rights and Remedies.
     -------------------
     During the time an Event of Default occurs and continues Bank may, without
notice or demand, do any or all of the following:

     (a)  Declare all Obligations immediately due and payable (but if an Event
of Default described in Section 8.5 occurs all Obligations are immediately due
and payable without any action by Bank);

     (b)  Stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and Bank;

     (c)  Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Bank considers advisable in its
reasonable discretion;

     (d)  Make any payments and do any acts it considers necessary or reasonable
to protect its security interest in the Collateral. Borrower will assemble the
Collateral if Bank requires and make it available as Bank designates. Bank may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank's rights or remedies;

                                       11
<PAGE>

     (e)   Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the account
of Borrower;

     (f)  Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Bank is granted a non-
exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, Patents, Copyrights, Mask Works, rights of use of any name,
trade secrets, trade names, Trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
and

     (g)  Dispose of the Collateral according to the Code.

9.2  Power of Attorney.
     ------------------

     Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to:  (i) endorse Borrower's
name on any checks or other forms of payment or security; (ii) sign Borrower's
name on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits.  If Borrower refuses after Bank's request, Bank may exercise the power
of attorney to sign Borrower's name on any documents necessary to perfect or
continue the perfection of any security interest regardless of whether an Event
of Default has occurred.  Bank's appointment as Borrower's attorney in fact, and
all of Bank's rights and powers, coupled with an interest, are irrevocable until
all Events of Default have been cured, or Obligations have been fully repaid and
performed and Bank's obligation to provide Credit Extensions terminates.

9.3  Accounts Collection.
     -------------------

     During the time an Event of Default occurs and continues, Bank may notify
any Person owing Borrower money of Bank's security interest in the funds and
verify the amount of the Account.  Borrower must collect all payments in trust
for Bank and, if requested by Bank, immediately deliver the payments to Bank in
the form received from the account debtor, with proper endorsements for deposit.

9.4  Bank Expenses.
     -------------

     If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent.  Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral.  No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.

                                       12
<PAGE>

9.5  Bank's Liability for Collateral.
     -------------------------------

     If Bank complies with reasonable banking practices and Section 9-207 of the
Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any loss
or damage to the Collateral; (c) any diminution in the value of the Collateral;
or (d) any act or default of any carrier, warehouseman, bailee, or other person.

9.6  Remedies Cumulative.
     -------------------

     Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative.  Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.

9.7  Demand Waiver.
     -------------

     Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.

10.  NOTICES
     -------

     All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement.  A party may change its notice address by giving the other party
written notice.

11.  CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
     ------------------------------------------

     California law governs the Loan Documents without regard to principles of
conflicts of law.  Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa Clara County, California.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

                                       13
<PAGE>

12.  GENERAL PROVISIONS
     ------------------

12.1 Successors and Assigns.
     ----------------------

     This Agreement binds and is for the benefit of the successors and permitted
assigns of each party.  Borrower may not assign this Agreement or any rights
under it without Bank's prior written consent which may be granted or withheld
in Bank's discretion.  Bank has the right, without the consent of or notice to
Borrower, to sell, transfer, negotiate, or grant participation in all or any
part of, or any interest in, Bank's obligations, rights and benefits under this
Agreement.

12.2 Indemnification.
     ---------------

     Borrower will indemnify, defend and hold harmless Bank and its officers,
employees, and agents against:  (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all direct losses or Bank Expenses
directly incurred, or paid by Bank from, following, or resulting from
transactions hereunder between Bank and Borrower (including reasonable attorneys
fees and expenses), except for losses caused by Bank's gross negligence or
willful misconduct.

12.3 Time of Essence.
     ---------------

     Time is of the essence for the performance of all obligations in this
Agreement.

12.4 Severability of Provision.
     -------------------------

     Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.

12.5 Amendments in Writing, Integration.
     ----------------------------------

     All amendments to this Agreement must be in writing and signed by Borrower
and Bank.  This Agreement represents the entire agreement about this subject
matter, and supersedes prior negotiations or agreements, including without
limitation, that certain Loan and Security Agreement, dated April 10, 1998.  All
prior agreements (including, such Loan and Security Agreement), understandings,
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement merge into this Agreement and the Loan
Documents.

12.6 Counterparts.
     ------------

     This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.

12.7 Survival.
     --------

     All covenants, representations and warranties made in this Agreement
continue in full force while  any Obligations remain outstanding.  The
obligations of Borrower in Section 12.2 to

                                       14
<PAGE>

indemnify Bank will survive until all statutes of limitations for actions that
may be brought against Bank have run.

12.8 Confidentiality.
     ---------------

     In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the loans, (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) reasonably necessary in connection with Bank's
appropriate exercise of its remedies under this Agreement.  Confidential
information does not include information that either: (a) is in the public
domain or in Bank's possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (b) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.

12.9 Attorneys' Fees, Costs and Expenses.
     -----------------------------------

     In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other reasonable costs and expenses incurred, in addition to
any other relief to which it may be entitled.

13.  DEFINITIONS
     -----------

13.1 Definitions.
     ------------
     In this Agreement:

     "Accounts" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and  all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.

     "Advance" or "Advances" is a loan advance (or advances) under the Committed
Revolving Line.

     "Affiliate" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.

     "Bank Expenses" are all audit fees and expenses and reasonable costs and
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).

                                       15
<PAGE>

     "Borrower's Books" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.

     "Borrowing Base" is (i) 70% of Eligible Accounts plus (ii) 70% of Eligible
Foreign Accounts as determined by Bank from Borrower's most recent Borrowing
Base Certificate; provided, however, that Bank may lower the percentage of the
                  --------  -------
Borrowing Base after performing an audit of Borrower's Collateral, based upon
the results of such audit.

     "Business Day" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.

     "Cash Management Services" are defined in Section 2.1.4.

     "Closing Date" is the date of this Agreement.

     "Code" is the California Uniform Commercial Code.

     "Collateral" is the property described on Exhibit A.
                                               ---------

     "Committed Revolving Line" is an Advance of up to $7,500,000.

     "Contingent Obligation" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices;  but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

     "Copyrights" are all copyright rights, applications or registrations and
like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.

     "Credit Extension" is each Advance, Letter of Credit, or any other
extension of credit by Bank for Borrower's benefit.

     "Current Liabilities" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year.

     "DDA Peg Balance" has the meaning set forth in Section 2.4(b).

                                       16
<PAGE>

     "Deferred Revenue" is all amounts received in advance of performance under
maintenance contracts or other contracts and not yet recognized as revenue.

     "Eligible Accounts" are Accounts in the ordinary course of Borrower's
business that meet all Borrower's representations and warranties in Section 5;
but Bank may change eligibility standards in the exercise of Bank's commercially
---
reasonable judgment by giving Borrower 60 days prior notice.  Unless Bank agrees
otherwise in writing, Eligible Accounts will not include:

     (a)  Accounts that the account debtor has not paid within 90 days of
invoice date;

     (b)  Accounts for an account debtor, 50% or more of whose Accounts have not
been paid within 90 days of invoice date;

     (c)  Credit balances over 90 days from invoice date;

     (d)  Accounts for an account debtor, including Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, for the amounts that exceed
that percentage, unless the Bank approves in writing;

     (e)  Accounts for which the account debtor does not have its principal
place of business in the United States except for Eligible Foreign Accounts;

     (f)  Accounts for which the account debtor is a federal, state or local
government entity or any department, agency, or instrumentality;

     (g)  Accounts for which Borrower owes the account debtor, but only up to
the amount owed (sometimes called "contra" accounts, accounts payable, customer
deposits or credit accounts);

     (h)  Accounts for demonstration or promotional equipment, or in which goods
are consigned, sales guaranteed, sale or return, sale on approval, bill and
hold, or other terms if account debtor's payment may be conditional;

     (i)  Accounts for which the account debtor is Borrower's Affiliate,
officer, employee, or agent;

     (j)  Accounts in which the account debtor disputes liability or makes any
claim and Bank believes there may be a basis for dispute (but only up to the
disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business;

     (k)  Accounts for which Bank reasonably determines collection to be
doubtful.

     "Eligible Foreign Accounts" are Accounts for which the account debtor does
not have its principal place of business in the United States but are:  (1)
covered by credit insurance satisfactory to Bank, less any deductible; or (2)
supported by letter(s) of credit  advised and negotiated by Bank or (3) that
Bank approves in writing.

                                       17
<PAGE>

     "Equipment" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

     "ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.

     "GAAP" is United States generally accepted accounting principles.

     "Guarantor" is any present or future guarantor of the Obligations.

     "Indebtedness" is (a) indebtedness for borrowed money or the deferred price
of property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

     "Insolvency Proceeding" are proceedings by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

     "Intellectual Property" is:

     (a)  Copyrights, Trademarks, Patents, and Mask Works including amendments,
renewals, extensions, and all licenses or other rights to use and all license
fees and royalties from the use;

     (b)  Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created, acquired
or held;

     (c)  All design rights which may be available to Borrower now or later
created, acquired or held;

     (d)  Any claims for damages (past, present or future) for infringement of
any of the rights above, with the right, but not the obligation, to sue and
collect damages for use or infringement of the intellectual property rights
above;

     All proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments.

     "Inventory" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.

                                       18
<PAGE>

     "Investment" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.

     "Letter of Credit" is defined in Section 2.1.2.

     "Lien" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

     "Loan Documents" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.

     "Mask Works" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.

     "Material Adverse Change" is defined in Section 8.3.

     "Obligations" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.

     "Patents" are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.

     "Permitted Indebtedness" is:

     (a)  Borrower's indebtedness to Bank under this Agreement or any other Loan
Document;

     (b)  Indebtedness existing on the Closing Date and shown on the Schedule;

     (c)  Subordinated Debt;

     (d)  Indebtedness to trade creditors incurred in the ordinary course of
business; and

     (e)  Indebtedness secured by Permitted Liens.

     "Permitted Investments" are:

     (a)  Investments shown on the Schedule and existing on the Closing Date;
and

     (b)  (i) marketable direct obligations issued or unconditionally guaranteed
by the United States or its agency or any State maturing within 1 year from its
acquisition, (ii) commercial paper maturing no more than 1 year after its
creation and having the highest rating from either Standard & Poor's Corporation
or Moody's Investors Service, Inc., (iii) Bank's certificates of deposit issued
maturing no more than 1 year after issue; and (iv) foreign exchange

                                       19
<PAGE>

contracts entered into by Borrower in the ordinary course of business to hedge
currency exchange risks.

     "Permitted Liens" are:

     (a)  Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;

     (b)  Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority
                                                   --
over any of Bank's security interests;

     (c)  Purchase money Liens (i) on Equipment acquired or held by Borrower or
its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
                                               --
property and improvements and the proceeds of the equipment;

     (d)  Licenses or sublicenses granted in the ordinary course of Borrower's
business and any interest or title of a licensor or under any license or
sublicense;

     (e)  Leases or subleases granted in the ordinary course of Borrower's
business, including in connection with Borrower's leased premises or leased
property; (f) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
                                                            ---
ren ewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.

     "Person" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.

     "Prime Rate" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.

     "Quick Assets" is, on any date, the Borrower's consolidated, unrestricted
cash, cash equivalents, net billed accounts receivable and investments with
maturities of fewer than 12 months determined according to GAAP.

     "Responsible Officer" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.

     "Revolving Maturity Date" is March 14, 2002.

     "Schedule" is any attached schedule of exceptions.

                                       20
<PAGE>

     "Subordinated Debt" is debt incurred by Borrower subordinated to Borrower's
indebtedness owed to Bank and which is reflected in a written agreement in a
manner and form reasonably acceptable to Bank and approved by Bank in writing.

     "Subsidiary" is for any Person, or any other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by the Person or one or more Affiliates of the Person.

     "Sweep Account" is an account maintained by Borrower at Bank, designated as
the Borrower's sweep account.

     "Tangible Net Worth" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
                              -----
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
                      ---

     "Total Liabilities" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.

     "Trademarks" are trademark and service mark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.

BORROWER:

PLUMTREE SOFTWARE, INC., a California corporation

By:     /s/  Eric Borrmann
    -------------------------------------

Title:  Chief Financial Officer
       ----------------------------------

BANK:

SILICON VALLEY BANK

By:   /s/ Kim Crosslin
      -----------------------------------

Title:   Vice President
         --------------------------------

                                       21
<PAGE>

                                   EXHIBIT A
                                   ---------

     Subject to the exclusion below regarding Intellectual Property, the
Collateral consists of all of Borrower's right, title and interest in and to the
following:

     All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;

     All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;

     All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, service marks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;

     All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;

     All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
certificates of deposit, instruments and chattel paper now owned or hereafter
acquired and Borrower's Books relating to the foregoing;

     All copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and

     All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.

     Borrower and Bank are parties to that certain Negative Pledge Agreement,
dated on or about the date of this Agreement, whereby Borrower, in connection
with Bank's loan or loans to Borrower, has agreed, among other things, not to
sell, transfer, assign, mortgage, pledge, lease, grant a security interest in,
or encumber any of its Intellectual Property without Bank's prior written
consent.

                                       22
<PAGE>

     Notwithstanding the foregoing, the Collateral shall not be deemed to
include any Intellectual Property consisting of copyrights, copyright
applications, copyright registration and like protection in each work of
authorship and derivative work thereof, whether published or unpublished, now
owned or hereafter acquired; any patents, patent applications and  like
protections, including without limitation, improvements, divisions,
continuation, renewals, reissues, extension and continuations-in-part of the
same; any trademarks, service marks and applications therefor, whether
registered or not; any of the goodwill of the business of Borrower connected
with and symbolized by such trademarks; any trade secret rights, including any
rights to unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owner or hereafter acquired; or any
claims for damages by way of any past, present and future infringement of any of
the foregoing, except the Collateral shall include the proceeds of all the
Intellectual Property that are accounts (i.e. accounts receivable) of Borrower,
or general intangibles consisting of rights to payment, and, in addition, if a
judicial authority, (including a U.S. Bankruptcy Court) holds that a security
interest in the underlying Intellectual Property is necessary to have a security
interest in such accounts and general intangibles of Borrower that are proceeds
of the Intellectual Property, then the Collateral shall automatically, and
effective as of the Closing Date,  include the Intellectual Property described
in this paragraph to the extent necessary to permit perfection of Bank's
security interest in such accounts and general intangibles of Borrower that are
proceeds of the Intellectual Property.

                                       23
<PAGE>

                                   EXHIBIT B

                  LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM

             DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.

TO: CENTRAL CLIENT SERVICE DIVISION  DATE:_________________________

FAX#: (408) 496-2426                 TIME:_________________________

--------------------------------------------------------------------------------
FROM: PLUMTREE SOFTWARE, INC.
      CLIENT NAME (BORROWER)

REQUESTED BY:____________________________________________________________
                                 AUTHORIZED SIGNER'S NAME

AUTHORIZED SIGNATURE:______________________________________________

PHONE NUMBER:________________________________________________________________

FROM ACCOUNT # __________________     TO ACCOUNT #_________________

REQUESTED TRANSACTION TYPE                 REQUESTED DOLLAR AMOUNT
--------------------------                 -----------------------

PRINCIPAL INCREASE (ADVANCE)        $__________________________________
PRINCIPAL PAYMENT (ONLY)            $__________________________________
INTEREST PAYMENT (ONLY)             $__________________________________
PRINCIPAL AND INTEREST (PAYMENT)$________________________________

OTHER INSTRUCTIONS:__________________________________________________________

_____________________________________________________________________________

All Borrower's representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone request for and Advance confirmed by this Borrowing Certificate; but
those representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of that date.

                                 BANK USE ONLY

TELEPHONE REQUEST:
-----------------

The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.

________________________________              __________________________________
      Authorized Requester                                   Phone #

________________________________              __________________________________
       Received By (Bank)                                    Phone #

                      ___________________________________
                          Authorized Signature (Bank)
--------------------------------------------------------------------------------

                                       24
<PAGE>

                                   EXHIBIT C

                           BORROWING BASE CERTIFICATE

Borrower: PLUMTREE SOFTWARE, INC.                    Bank: Silicon Valley Bank
--------------------------------------------------------------------------------
                                                           3003 Tasman Drive
                                                           Santa Clara, CA 95054
Commitment Amount:  $7,500,000

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

<TABLE>
<S>                                                                    <C>            <C>
ACCOUNTS RECEIVABLE
1.    Accounts Receivable Book Value as of  _____________                             $__________
2.    Additions (please explain on reverse)                                           $__________
3.    TOTAL ACCOUNTS RECEIVABLE                                                       $__________

ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4.    Amounts over 90 days due                                         $__________
5.    Balance of 50% over 90 day accounts                              $__________
6.    Credit balances over 90 days                                     $__________
7.    Concentration Limits                                             $__________
8.    Foreign Accounts                                                 $__________
9.    Governmental Accounts                                            $__________
10.   Contra Accounts                                                  $__________
11.   Promotion or Demo Accounts                                       $__________
12.   Intercompany/Employee Accounts                                   $__________
13.   Other (please explain on reverse)                                $__________
14.   TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS                                            $__________
15.   Eligible Accounts (#3 minus #14)                                 $__________
16.   LOAN VALUE OF ACCOUNTS (70% of #15)                                             $__________

      FOREIGN ACCOUNTS RECEIVABLE DEDUCTIONS
17.   Accounts Receivable Book Value as of ______________              $__________
18.   Additions (please explain on reverse)                            $__________
19.   TOTAL FOREIGN ACCOUNTS RECEIVABLE                                               $__________
      a.    Amounts over 90 days due
      b.    Balance of 50% over 90 day accounts                        $__________
      c.    Concentration Limits                                       $__________
      d.    Governmental Accounts                                      $__________
      e.    Contra Accounts                                            $__________
      f.    Promotion or Demo Accounts                                 $__________
      g.    Intercompany/Employee Accounts                             $__________
      h.    Other (please explain on reverse)                          $__________
20.   TOTAL FOREIGN ACCOUNTS RECEIVABLE
      DEDUCTIONS                                                       $__________
21.   Eligible Accounts (#19 minus #20)                                $__________
22.   LOAN VALUE OF FOREIGN ACCOUNTS (__[50%] of #21)                  $__________

BALANCES
23.   Maximum Loan Amount                                              $__________
24.   Total Funds Available [Lesser of #23 or (#16 plus #22)]                          $__________
25.   Present balance owing on Line of Credit                          $__________
      Outstanding under Sublimits (LC and Cash Management)             $__________
      RESERVE POSITION (#24 minus #25 and #26)                                         $__________
</TABLE>

                                       25
<PAGE>

The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.

COMMENTS:
                                                          ----------------------

                                                          BANK USE ONLY
                                                          ---- --- ----

PLUMTREE SOFTWARE, INC., a California corporation         Rec'd by _____________
                                                                   Auth. Signer
                                                          Date:_________________
By:_______________________________________                Verified:_____________
     Authorized Signer                                             Auth. Signer

                                                          Date:_________________

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

                                       26
<PAGE>

                                   EXHIBIT D
                             COMPLIANCE CERTIFICATE

TO:    SILICON VALLEY BANK
       3003 Tasman Drive
       Santa Clara, CA 95054

FROM:  PLUMTREE SOFTWARE, INC.

     The undersigned authorized officer of PLUMTREE SOFTWARE, INC., a California
corporation ("Borrower"), certifies that under the terms and conditions of the
Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i)
Borrower is in complete compliance for the period ending _______________ with
all required covenants except as noted below and (ii) all representations and
warranties in the Agreement are true and correct in all material respects on
this date.  Attached are the required documents supporting the certification.
The Officer certifies that these are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) consistently applied from one period to
the next except as explained in an accompanying letter or footnotes.  The
Officer acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.

     Please indicate compliance status by circling Yes/No under "Complies"
column.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Reporting Covenant                                  Required                                    Complies
------------------                                  --------                                    --------
------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                                         <C>             <C>
------------------------------------------------------------------------------------------------------------------------------
Monthly financial statements + CC                   Monthly within 30 days                      Yes             No
------------------------------------------------------------------------------------------------------------------------------
Annual (Audited)                                    FYE within 120 days                         Yes             No
------------------------------------------------------------------------------------------------------------------------------
10-Q, 10-K and 8-K                                  Within 5 days after filing with SEC         Yes             No
------------------------------------------------------------------------------------------------------------------------------
A/R & A/P Agings                                    Monthly within 30 days                      Yes             No
------------------------------------------------------------------------------------------------------------------------------
A/R Audit                                           Initial and Annual                          Yes             No
------------------------------------------------------------------------------------------------------------------------------
Borrowing Base Certificate                          Monthly within 30 days                      Yes             No
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Financial Covenant                                     Required                               Actual            Complies
------------------                                     --------                               ------            --------
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                                    <C>               <C>      <C>
-------------------------------------------------------------------------------------------------------------------------------
Maintain:
-------------------------------------------------------------------------------------------------------------------------------
  Minimum Monthly Quick Ratio (Adjusted)               2.00:1.00                              _____:1.00        Yes      No
-------------------------------------------------------------------------------------------------------------------------------
  Maximum Quarterly Operating Loss/ Minimum            Maximum operating loss (EBITDA)        $__________       Yes      No
  Quarterly Profitability                              ($5,000,000) for Quarter ending
                                                       3/31/01; ($3,000,000) for Quarter
                                                       ending 6/30/01; ($1,000,000) for
                                                       Quarter ending 9/30/01; Minimum
                                                       Quarterly Net Profit After Tax of
                                                       $1.00 thereafter
-------------------------------------------------------------------------------------------------------------------------------

Have there been updates to Borrower's intellectual property, if appropriate?                                    Yes      No
</TABLE>

                                       27
<PAGE>

<TABLE>
<S>                                                        <C>
                                                           -----------------------------------
Comments Regarding Exceptions:  See Attached.              BANK USE ONLY

Sincerely,                                                 Received by:_______________________
                                                                          AUTHORIZED SIGNER
PLUMTREE SOFTWARE, INC., a California corporation          Date:______________________________

____________________________________                       Verified:__________________________
Signature                                                                 AUTHORIZED SIGNER

____________________________________                       Date:______________________________
Title
                                                           Compliance Status:         Yes   No
Date________________________________
                                                           -----------------------------------
</TABLE>

                                       28
<PAGE>

                        CORPORATE BORROWING RESOLUTION

Borrower:  PLUMTREE SOFTWARE, INC.,             Bank: Silicon Valley Bank
           500 Sansome Street                         3003 Tasman Drive
           San Francisco, CA  94111                   Santa Clara, CA 95054-1191

I, the Secretary or Assistant Secretary of PLUMTREE SOFTWARE, INC., a California
corporation ("Borrower"), CERTIFY that Borrower is a corporation existing under
the laws of the State of California.

I certify that at a meeting of Borrower's Directors (or by other authorized
corporate action) duly held the following resolutions were adopted.

It is resolved that any one of the following officers of Borrower, whose name,
title and signature is below:

       NAMES                     POSITIONS             ACTUAL SIGNATURES
       -----                     ---------             -----------------
_____________________      _____________________     ______________________
_____________________      _____________________     ______________________
_____________________      _____________________     ______________________
_____________________      _____________________     ______________________

may act for Borrower and:

Borrow Money. Borrow money from Silicon Valley Bank ("Bank").

Execute Loan Documents. Execute any loan documents Bank requires.

Grant Security. Grant Bank a security interest in any of Borrower's assets.

Negotiate Items. Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.

Letters of Credit. Apply for letters of credit from Bank.

Further Acts. Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they think necessary to
effectuate these Resolutions.

                                       29
<PAGE>

Further resolved that all acts authorized by these Resolutions and performed
before they were adopted are ratified. These Resolutions remain in effect and
Bank may rely on them until Bank receives written notice of their revocation.

I certify that the persons listed above are Borrower's officers with the titles
and signatures shown following their names and that these resolutions have not
been modified are currently effective.

CERTIFIED TO AND ATTESTED BY:

X ______________________________________
 *Secretary or Assistant Secretary

X ______________________________________
*NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, this resolution should
also be signed by a second Officer or Director of Borrower.

                                       30<PAGE>

                                                                    Exhibit 10.7

                                  OFFICE LEASE

                               500 SANSOME STREET
                        SAN FRANCISCO, CALIFORNIA 94111

                          Lessor: BPG SANSOME, L.L.C.,
                      a Delaware limited liability company

                                       and

                           Lessee: PLUMTREE SOFTWARE,
                            a California corporation

                              Dated: April 7, 1999
<PAGE>

                              500 SANSOME STREET

                      SUMMARY OF BASIC LEASE INFORMATION

The undersigned hereby agree to the following terms of this Summary of Basic
Lease Information (the "Summary"). This Summary is hereby incorporated into and
made a part of the attached Office Lease ("Office Lease")(this Summary and the
Office Lease to be known collectively as the "Lease") which pertains to the
"Project" (as that term is defined in the Office Lease) located at 500 Sansome
Street, San Francisco, California 94111. Each reference in the Office Lease to
any term of this Summary shall have the meaning as set forth in this Summary for
such term. In the event of a conflict between the terms of this Summary and the
Office Lease, the terms of the Office Lease shall prevail. Any capitalized
terms used herein and not otherwise defined herein shall have the meaning as
set forth in the Office Lease.

         TERMS OF LEASE            DESCRIPTION
         --------------            -----------
         (References are to the Office Lease)

1.   Date:                         April 7, 1999

2.   Lessor:                       BPG SANSOME, L.L.C.,
                                   a Delaware limited liability company

3.   Address of Lessor:            100 First Street, Suite 2200
                                   San Francisco, California 94105
                                   Attention: Richard J. Johnson

4.   Lessee:                       PLUMTREE SOFTWARE,
                                   a California corporation

5.   Address of Lessee:            500 Sansome Street
                                   Suite 100
                                   San Francisco, California 94111
                                   Attention:_____________________
6.   Building; Premises
     (Article 1)

     6.1 Building:                 142,065 rentable square feet of office space.
                                   500 Sansome Street
                                   San Francisco, California 94111

     6.2 Premises:                 Approximately 15,668 rentable square feet of
                                   space located on the 1st floor and mezzanine
                                   of the Project as set forth in Exhibit A
                                   attached hereto.

7.   Term (Article 3):

     7.1 Lease Term:               Thirty-six (36) months.

                                       1
<PAGE>

      7.2   Lease Commencement Date:       The earlier of (i) the date Lessee
                                           occupies the Premises, and (ii)
                                           June 1, 1999.

      7.3   Lease Expiration Date:         The last day of the 36th calendar
                                           month following the month in which
                                           the Lease Commencement Date occurs.

8.    Base Rent (Article 4):

                                                        Annual Rental
                 Lease    Annual         Monthly        Rate per Rentable
                 Months   Base Rent      Installment    Square Foot
                 -------  ---------      -----------    -----------------

                  1-18    $595,384.00    $49,615.33     $38.00

                 19-36    $611,052.00    $50,921.00     $39.00

As used in this Lease, "Lease Year" shall mean each consecutive twelve (12)
month period during the Lease Term.

9.    Additional Rent (Article 4)

      9.1 Base Year:                       Calendar year 1999.

      9.2 Lessee's Percentage Share of
          Basic Costs:                     Approximately 11.03%

10.   Security Deposit (Article 4):        $148,846.00, to be reduced during the
                                           Term as provided in Article 4.

11.   Brokers (Section 20.15):             Lessor Agent:

                                           Barker Pacific Group, Inc.
                                           100 First Street, Suite 2200
                                           San Francisco, California 94105

                                           and

                                           Lessee Agent:

                                           Steven A. Anderson
                                           The CAC Group
                                           255 California Street, 2nd Floor
                                           San Francisco, CA 94111

12.   Use                                  General Office

                                       2

<PAGE>

13.  Tenant Improvement Allowance             Provided that Lessee is not in
                                              default hereunder, Lessor shall
                                              pay to Lessee a tenant improvement
                                              allowance in the amount of $4.00
                                              per rentable square foot of the
                                              Premises, payable upon Lessee's
                                              move-in and occupancy of the
                                              Premises for the costs of
                                              painting, carpeting, cabling, or
                                              otherwise improving the Premises
                                              as Tenant may deem appropriate.

The foregoing terms of this Summary are hereby agreed to by Lessor and Lessee.

"LESSOR":

BPG SANSOME, L.L.C.,
a Delaware limited liability company

By:  BPG PARTNERS, LLC,
     Managing Member

     By:  /s/ Richard J. Johnson
          RICHARD J. JOHNSON
          Manager

"LESSEE":

PLUMTREE SOFTWARE
a California corporation

By:  /s/ John Kunze
     ------------------------

Its: CEO
     ------------------------

                                       3

<PAGE>

                                    EXHIBITS

ARTICLE 1

PROJECT, BUILDING AND PREMISES
  1.1    Project, Building and Premises .................................      1
  1.2    Condition of the Premises ......................................      1
  1.3    Common Areas ...................................................      1
  1.4    Lessor's Reserved Rights in Premises and Common Areas ..........      2
  1.5    Rentable Area ..................................................      2
  1.6    Lessee's Percentage Share ......................................      2

ARTICLE 2

PLANS AND CONSTRUCTION ..................................................      3

ARTICLE 3

TERM; USE; COMPLIANCE WITH LAWS .........................................      3
  3.1    Commencement of Term ...........................................      3
  3.2    General Use and Compliance with Laws ...........................      3

ARTICLE 4

RENT ....................................................................      4
   4.1  Rent ............................................................      4
        (a) Base Rent ...................................................      4
        (b) Expense Rent ................................................      4
   4.2  Rent Adjustment .................................................      4
        (a) Base Rent Adjustment ........................................      4
        (b) Expense Rent Adjustment .....................................      4
   4.3  Definitions .....................................................      5
   4.4  Basic Costs .....................................................      5
   4.5  Monthly Rent Payments ...........................................      7
   4.6  Additional Rent .................................................      7
   4.7  No Deduction or Offset ..........................................      7
   4.8  Late Payment and Interest .......................................      7
   4.9  Security Deposit ................................................      8
   4.10 Prepaid Rent ....................................................      8

ARTICLE 5

SERVICES AND UTILITIES ..................................................      8
  5.1    Basic Services .................................................      8
  5.2    Over Standard Use ..............................................      9
  5.3    Interruption of Use ............................................      9
  5.4    Additional Services ............................................     10
  5.5    Keys and Locks .................................................     10

ARTICLE 6

                                        4
<PAGE>

REPAIRS .................................................................     10

ARTICLE 7

ADDITIONS AND ALTERATIONS ...............................................     11
  7.1    Lessor's Consent to Alterations ................................     11
  7.2    Manner of Construction .........................................     11
  7.3    Payment for Improvements .......................................     11
  7.4    Lessor's Property and Fixtures .................................     12

ARTICLE 8

COVENANT AGAINST LIENS ..................................................     12

ARTICLE 9

INSURANCE ...............................................................     13

  9.1    Lessor Coverage: All Risk ......................................     13
  9.2    Lessee Coverage ................................................     13
         (a) All Risk Insurance .........................................     13
         (b) General Liability ..........................................     13
         (c) Workers' Compensation ......................................     13
  9.3    General Insurance Requirements .................................     13
         (a) Requirements ...............................................     13
         (b) Lessee's Use ...............................................     14
         (c) Waiver of Subrogation ......................................     14
  9.4    Indemnification and Waiver .....................................     15

ARTICLE 10

DAMAGE AND DESTRUCTION ..................................................     15
  10.1   Repair of Damage to Premises by Lessor .........................     15
  10.2   Lessor's Option to Repair ......................................     16
  10.3   Waiver of Statutory Provisions .................................     16

ARTICLE 11

NON-WAIVER ..............................................................     16

ARTICLE 12

EMINENT DOMAIN ..........................................................     17
  12.1   Condemnation and Loss or Damage ................................     17
  12.2   Temporary Taking ...............................................     17
  12.3   Total Taking ...................................................     17

ARTICLE 13

ASSIGNMENT AND SUBLETTING ...............................................     17
  13.1   Transfers ......................................................     17

                                        5
<PAGE>

  13.2   Lessor's Consent ...............................................     18
  13.3   Lessor's Option as to Subject Space ............................     19
  13.4   Transfer Premium ...............................................     19
  13.5   Effect of Transfer .............................................     20
  13.6   Additional Transfers ...........................................     20

ARTICLE 14

SURRENDER OF PREMISES; OWNERSHIP
AND REMOVAL OF TRADE FIXTURES ...........................................     20
  14.1   Surrender of Premises ..........................................     20
  14.2   Removal of Lessee's Property by Lessee .........................     21

ARTICLE 15

HOLDING OVER ............................................................     21

ARTICLE 16

ESTOPPEL, ATTORNMENT AND SUBORDINATION ..................................     21
  16.1   Estoppel Certificate ...........................................     21
  16.2   Subordination ..................................................     21

ARTICLE 17

DEFAULTS; REMEDIES ......................................................     22
  17.1   Events of Default ..............................................     22
         (a) Payment ....................................................     22
         (b) Performance ................................................     22
         (c) Assignment .................................................     22
         (d) Bankruptcy .................................................     22
         (e) Receivership ...............................................     22
         (f) Insolvency or Dissolution ..................................     23
         (g) Attachment .................................................     23
  17.2   Lessor's Remedies ..............................................     23
         (a) Continuation of Lease ......................................     23
         (b) Termination ................................................     23
         (c) Possession .................................................     23
         (d) Recovery ...................................................     23
         (e) Receivership ...............................................     24
         (f) Additional Remedies ........................................     24
         (g) Other Breaches .............................................     24
         (h) Cumulative .................................................     24
         (i) No Waiver ..................................................     24

ARTICLE 18

GRAPHICS ................................................................     25
  18.1   General ........................................................     25
  18.2   Building Directory .............................................     25
  18.3   Prohibited Signage and Other Items .............................     25

                                        6
<PAGE>

ARTICLE 19

  LESSOR'S RIGHT TO CURE DEFAULT; PAYMENTS BY LESSEE ....................     25
  19.1   Lessor's Cure ..................................................     25
  19.2   Lessee's Reimbursement .........................................     25

ARTICLE 20

MISCELLANEOUS PROVISIONS ................................................     26
  20.1   Terms ..........................................................     26
  20.2   Binding Effect .................................................     26
  20.3   Easements ......................................................     26
  20.4   No Light; Air or View Easement .................................     26
  20.5   Authorization ..................................................     26
  20.6   Accord and Satisfaction ........................................     26
  20.7   Peaceful Enjoyment .............................................     26
  20.8   Limitation of Lessor's Liability ...............................     27
  20.9   Time, Calendar Year; Calendar Days .............................     27
  20.10  Severability ...................................................     27
  20.11  Applicable Law .................................................     27
  20.12  Submission of Lease ............................................     27
  20.13  Rules and Regulations ..........................................     27
  20.14  No Nuisance ....................................................     27
  20.15  Broker .........................................................     27
  20.16  Modification for Lender ........................................     28
  20.17  Recording ......................................................     28
  20.18  No Merger ......................................................     28
  20.19  Amendment ......................................................     28
  20.20  Financial Statements ...........................................     28
  20.21  Relocation .....................................................     28
  20.22  Entry ..........................................................     28
  20.23  Financing ......................................................     29
  20.24  Hazardous Substances; Indemnification ..........................     29
  20.25  No Warranty ....................................................     30
  20.26  Entire Agreement ...............................................     30
  20.27  Force Majeure ..................................................     30
  20.28  Waiver of Redemption ...........................................     30
  20.29  Joint and Several ..............................................     30
  20.30  Notices ........................................................     30
  20.31  Attorneys' Fees ................................................     31
  20.32  Independent Covenants ..........................................     31
  20.33  Project Name and Signage .......................................     31
  20.34  Transportation Management ......................................     31
  20.35  No Discrimination ..............................................     31
  20.36  Termination of Prior Lease .....................................     32

A. OUTLINE OF FLOOR PLAN OF PREMISES
B. LEGAL DESCRIPTION
C. WORK LETTER

                                        7
<PAGE>

D. NOTICE OF LEASE TERM DATES
E. RULES AND REGULATIONS
F. FORM OF LESSEE ESTOPPEL CERTIFICATE

                                       8
<PAGE>

                               500 SANSOME STREET

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

This Office Lease, which includes the preceding Summary of Basic Lease
Information (the "Summary") attached hereto and incorporated herein by this
reference (the Office Lease and Summary to be known sometimes collectively
hereafter as the "Lease"), dated as of the date set forth in Article 1 of the
Summary, is made by and between BPG SANSOME, L.L.C., a Delaware limited
liability company ("Lessor"), and PLUMTREE SOFFWARE, a California corporation
("Lessee").

                                    ARTICLE 1

                         PROJECT, BUILDING AND PREMISES

     1.1 Project, Building and Premises. Upon and subject to the terms,
         ------------------------------
covenants and conditions hereinafter set forth in this Lease, Lessor hereby
leases to Lessee and Lessee hereby leases from Lessor the premises set forth in
Article 6 of the Summary (the "Premises"), which Premises are located in the
"Project" (as that term is defined in this Section 1.1). The outline of the
floor plan of the Premises is set forth in Exhibit A attached hereto and made a
part hereof. The Premises are a part of the office building located at 500
Sansome Street, San Francisco, California 94111. The land on which the office
building is located is more particularly described in Exhibit B attached hereto
and made a part hereof. The office building (the "Building"), land and other
improvements surrounding the Building which are designated from time to time by
Lessor as common areas appurtenant to or servicing the Building and the land
upon which any of the foregoing are situated, are herein sometimes collectively
referred to as the "Project." Lessee is hereby granted the right to the
nonexclusive use of the common corridors and hallways, stairwells, elevators,
restrooms and other public or common areas located on the Project; provided,
however, that the manner in which such public and common areas are maintained
and operated shall be at the sole discretion of Lessor and the use thereof shall
be subject to such rules, regulations and restrictions as Lessor may make from
time to time. Lessor reserves the right to make alterations or additions to or
to change the location of elements of the Project and the common areas thereof.

     1.2 Condition of the Premises. Except as specifically set forth in this
         -------------------------
Lease and in the Work Letter attached hereto as Exhibit C and made a part hereof
(the "Work Letter"), Lessor shall not be obligated to provide or pay for any
improvement work or services related to the improvement of the Premises. Lessee
also acknowledges that Lessor has made no representation or warranty regarding
the condition of the Premises or the Project except as specifically set forth in
this Lease and the Work Letter.

     1.3 Common Areas. Appurtenant to the Premises and subject to reasonable
         ------------
rules and regulations from time to time made by Lessor of which Lessee is given
notice, Lessee shall have the right to the use of the following common areas
("Project Common Areas"):

         (a) Building Common Area. The common stairways, corridors and
             --------------------
access-ways vending or mail areas, lobbies and foyers, entrances, stairs,
elevators, restrooms, janitorial, telephone, mechanical and electrical rooms and
any passageways thereto, and the common pipes, ducts, conduits, wires and
appurtenant equipment serving the Premises.

                                       1
<PAGE>

         (b) Land Common Area. The common walkways and sidewalks necessary for
             ----------------
access to the Project. Lessee's acceptance of the Premises shall constitute an
acknowledgment and acceptance of the various temporary inconveniences that may
be associated with the use of the Project Common Areas.

     1.4 Lessor's Reserved Rights in Premises and Common Areas. Lessor reserves
         -----------------------------------------------------
the right from time to time:

         (a) Building Changes. To install, use, maintain, repair and replace
             ----------------
pipes, ducts, conduits, wires and appurtenant meters and equipment for service
to other parts of the Building above the ceiling surfaces, below the floor
surfaces, within the walls and in the central core areas, and to relocate any
pipes, ducts, conduits, wires and appurtenant meters and equipment in the
Premises which are so located or located elsewhere outside the Premises.

         (b) Boundary Changes. To change the lines of the lot on which the
             ----------------
Project stands (the "Lot") and make other reasonable changes and grant others
rights thereto, including without limitation the granting of easements, rights
of way and rights of ingress and egress and similar rights to users of parcels
adjacent to the Lot.

         (c) Facility Changes. To alter or relocate any other common areas or
             ----------------
facilities associated with the Project.

     1.5 Rentable Area. The term "Rentable Area" shall be deemed to include:
         -------------

         (a) in the case of a single tenancy floor, the aggregate of (i) all
floor area of the Premises measured from the inside surface of the outer glass
and extensions of the plane thereof in non-glass areas to the inside surface of
the opposite outer glass and extensions of the plane thereof in non-glass areas
and shall include all areas within the outside walls, excluding only the areas
("Service Areas") used for elevator mechanical rooms, building stairs, fire
towers, elevator shafts, flues, vents, stacks, vertical pipe shafts and vertical
ducts, but including any such Service Areas which are for the specific use of
the particular tenant such as special stairs or elevators, and (ii) Lessee's
Percentage Share (defined in Section 1.6 below) of the square footage of the
Project's elevator and main mechanical rooms, fire control stations and building
lobbies ("Building Areas"); and

         (b) in the case of a partial tenancy floor, the aggregate of (i) all
floor area of the Premises within the inside surface of the outer glass and
extensions of the plane thereof in non-glass areas to the mid-point of the
demising walls separating the Premises from areas leased by or held for lease to
other tenants or from Project Common Areas located on such floor and other
similar facilities for the use of all tenants on such floor, (ii) Lessee's
allocable portion based upon the ratio which the Rentable Area of the Premises
bears to the Rentable Area of the floor of the Project Common Areas located on
such floor and other similar facilities for the use of all tenants on such
floor, and (iii) Lessee's Percentage Share of the square footage of the
Project's Building Areas.

         In determining Rentable Area, no deductions shall be made for columns
or projections necessary for the Building. The Rentable Area of the Premises and
the Rentable Area of the Building (which for the purposes of this Lease is
exclusive of retail and storage or basement uses) have been calculated on the
basis of the foregoing definition and, subject to the provisions of Section 1.6,
are hereby stipulated for all purposes hereof to be the amounts stated in the
Summary.

                                       2
<PAGE>

         1.6 Lessee's Percentage Share. The term "Lessee's Percentage Share"
             -------------------------
shall mean the percentage figure specified in the Summary which represents the
ratio that the Rentable Area of the Premises bears to one hundred percent (100%)
of the Rentable Area of the Building devoted to office use. In the event
Lessee's Percentage Share is changed during a calendar year by reason of a
change in the Rentable Area of the Premises or a change in the total Rentable
Area of the Building or leased portion thereof, Lessee's Percentage Share shall
be re-calculated pursuant to the aforementioned formula and shall be determined
on the basis of the number of days during such calendar year at each such
percentage.

                                    ARTICLE 2

                             PLANS AND CONSTRUCTION

         The Lessee improvements required of Lessor shall be provided in
accordance with the terms and conditions set forth in the Work Letter attached
hereto as Exhibit C.

                                    ARTICLE 3

                         TERM; USE; COMPLIANCE WITH LAWS

     3.1 Commencement of Term. Subject to and upon the terms and conditions set
         --------------------
forth herein, the term of this Lease shall be for a period specified in the
Summary as "Lease Term," commencing upon the date specified in the Summary as
the Lease Commencement Date. If for any reason Lessor cannot deliver possession
of the Premises to Lessee on the scheduled Lease Commencement Date, this Lease
shall not be void or voidable, nor shall Lessor be liable to Lessee for any loss
or damage resulting therefrom, provided that Rent shall not commence to be
payable by Lessee until such delivery of the Premises. No delay in delivery of
possession shall operate to extend the Lease term.

         Upon the Lease Commencement Date, Lessor and Lessee shall execute a
Notice of Lease Term Dates, as shown in Exhibit D attached hereto and made a
part hereof setting forth, among other things, the Lease Commencement Date and
the Lease Expiration Date.

     3.2 General Use and Compliance with Laws. Lessee shall only use the
         ------------------------------------
Premises for general office purposes, and for no other use. At Lessee's sole
cost and expense, Lessee shall comply with and faithfully observe all of the
requirements of municipal, county, state, federal and other applicable
governmental authorities, now in force, or which may hereafter be in force,
pertaining to the use and occupancy of the Premises, Lot, and Project and shall
secure any necessary permits pertaining to Lessee's use and occupancy of the
Premises. In Lessee's use and occupancy of the Premises, Lessee shall not
subject the Premises to any use that would tend to damage any portion thereof or
which shall in any way increase the existing rate of any insurance on the
Project or any portion thereof or cause any cancellation of any insurance policy
covering the Project or any portion thereof. Lessee shall not do or permit
anything to be done in or about the Premises which shall in any way obstruct or
interfere with the rights of other tenants of the Project, or injure or annoy
them, or use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose, nor shall Lessee or Lessee's agents cause,
maintain, or permit any nuisance in, on or about the Premises or commit or
suffer to be committed any waste in, on or about the Premises. Except for normal
office equipment and furnishings, Lessee shall not bring into the Building, or
keep or arrange in the Premises any furniture, equipment, materials or other
objects which individually or collectively overload the Premises or the
Building. Lessor reserves the right to prescribe the weight and position of all
safes, fixtures and heavy installations that Lessee desires to place in the
Premises so as to distribute properly the weight, or to require plans

                                       3
<PAGE>

prepared by a qualified structural engineer for such heavy objects at Lessee's
sole cost and expense. Notwithstanding the foregoing, Lessor shall have no
liability for damage caused by the installation of such safes and heavy
equipment. Furthermore, business machines and mechanical equipment belonging to
Lessee that cause noise and/or vibration that may be transmitted to the
structure of the Building or to any other tenants in the Building shall be
placed and maintained by Lessee, at Lessee's sole cost and expense, in settings
of cork, rubber or spring type noise and/or vibration eliminators and Lessee
shall take such other measures directed by Lessor as needed to eliminate such
vibration and/or noise. Lessee recognizes that the Project is maintained by
Lessor as a location for first-class type of office business and retail
occupancy.

                                    ARTICLE 4

                                      RENT

     4.1 Rent. Lessee shall pay, without notice or demand, to Lessor at such
         ----
place as Lessor may from time to time designate in writing, in currency or a
check for currency which, at the time of payment, is legal tender for or public
debts in the United States of America, "Base Rent" as set forth in Article 8 of
the Summary, payable in equal monthly installments in advance on or before the
first day of each and every month during the Lease Term, without any set off or
deduction whatsoever. Base Rent for the first full calendar month of the Lease
Term shall be paid to Lessor at the time of Lessee's execution of this Lease. As
used in this Lease, "Rent" shall collectively mean "Additional Rent" (as defined
in Section 4.6) together with the following sums:

         (a) Base Rent. The amount specified in the Summary as the Base Rent for
             ---------
the applicable portions of the Lease Term indicated, commencing on the Lease
Commencement Date. The Base Rent includes a component applicable to "Basic
Costs" (defined in Section 4.4) per square foot of Rentable Area of office space
in the Project.

         (b) Expense Rent. For each calendar year following the Base Year, an
             ------------
amount ("Expense Rent") equal to the product of (i) the difference between (A)
the Basic Costs per square foot of Rentable Area of office space in the Project
in years following the Base Year, less (B) the Expense Factor, and (ii) the
Rentable Area of the Premises. "Expense Factor" shall mean Basic Costs per
square foot of Rentable Area of office space in the Project for the Base Year.

     4.2 Rent Adjustment.
         ---------------

         (a) Base Rent Adjustment. The Base Rent adjustments for the Term are
             --------------------
set forth in the Summary.

         (b) Expense Rent Adjustment. The amount to be paid initially as Expense
             -----------------------
Rent has been estimated by Lessor for the calendar year in which the
Commencement Date occurs and is included in the Base Rent. Commencing with the
calendar year following the Base Year and continuing each year thereafter,
Lessee's payment of Expense Rent shall be estimated and adjusted in accordance
with the following procedures and the provisions of Section 4.5.

             (i) Prior to the commencement of each calendar year following the
Base Year, or as soon thereafter as practicable, Lessor shall give Lessee
written notice of its estimate of Expense Rent for the ensuing twelve (12) month
period; provided that if such notice is not given at least twenty (20) days
prior to the commencement of the calendar year, Lessee shall continue to pay on
the basis of the then applicable Expense Rent until the month after such notice
is given, at which time Lessee shall pay Expense Rent based on the amount set
forth in such notice plus, if the

                                       4
<PAGE>

new Expense Rent is greater than the previous Expense Rent, the difference
accrued from January 1 of such calendar year. If the new Expense Rent is less
than the previous Expense Rent, the difference accrued from January 1 of such
calendar year shall be credited against Expense Rent next coming due under this
Lease.

             (ii) Within ninety (90) days after the close of each calendar year
or as soon thereafter as possible, Lessor shall deliver to Lessee a statement
signed by Lessor's accountant setting forth the amount of Expense Rent for that
calendar year. If the Expense Rent estimates paid by Lessee for such calendar
year are less than the actual Expense Rent for such calendar year, Lessee shall
pay the difference to Lessor within thirty (30) days of the delivery of the
statement. If the Expense Rent estimates paid by Lessee for such calendar year
are greater than the actual Expense Rent for such calendar year, Lessor shall
credit such difference against Expense Rent next coming due under this Lease.

Nothing contained in this Section 4.2 shall be construed at any time so as to
reduce the monthly installments of Base Rent payable by Lessee below the amount
set forth in Section 4.1 of this Lease.

     4.3 Definitions. As used in this Article 4, the following terms shall have
         -----------
the meanings hereinafter set forth:

         (a) "Base Year" shall mean the calendar year set forth in Section 9.1
of the Summary.

         (b) "Calendar Year" shall mean each calendar year in which any portion
of the Lease Term falls, through and including the calendar year in which the
Lease Term expires.

     4.4 Basic Costs. The term "Basic Costs" shall consist of all operating
         -----------
expenses of the Project, including without limitation those specified below,
which shall be computed on an accrual basis and shall consist of all
expenditures by Lessor to maintain in quality, first-class condition all
facilities in operation from the beginning of the Term of this Lease and such
additional facilities in subsequent years as may be determined by Lessor to be
necessary or generally beneficial to the Project. The term Basic Costs as used
herein shall mean all expenses, costs and disbursements of every kind and nature
which Lessor shall pay or become obligated to pay because of or in connection
with the ownership, management, operation, maintenance and repair of the
Project, including without limitation the following:

         (a) Wages, salaries, taxes, insurance and related expenses and benefits
of all on-site and off-site employees directly engaged in the operation,
maintenance or access control of the Project.

         (b) All supplies, tools, equipment and materials used in the operation
and maintenance of the Project, including any lease payments therefor.

         (c) Cost of all utilities for the Project and the Project Common Areas,
including the cost of water, power, sewer, heating, lighting, air conditioning
and ventilation for the Project.

         (d) Cost of all maintenance, repair and replacement expenses,
janitorial, building engineering, landscaping, security, legal, other consulting
fees and service agreements for the Project and the equipment therein, including
without limitation alarm service, window cleaning and elevator maintenance.

                                       5
<PAGE>

         (e) Cost of all insurance carried by Lessor in connection with the
Project and Lessor's personal property used in connection therewith.

         (f) All real property taxes and assessments levied against the Project
and the various estates therein, all personal property taxes levied on personal
property of Lessor used in the management, operation, maintenance and repair of
the Project, all taxes, assessments and reassessments of every kind and nature
whatsoever levied or assessed in lieu of or in substitution for existing or
additional real or personal property taxes and assessments on the Project,
service payment in lieu of taxes, excises, transit charges and fees, housing,
park and child care assessments, development and other assessments,
reassessments, levies, fees or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind which are assessed,
levied, charged, confirmed, or imposed by any public authority upon the Project,
its operations or the rent received from the Project, or amounts necessary to be
expended because of governmental orders, whether general or special, ordinary or
extraordinary, unforeseen as well as foreseen, of any kind and nature for public
improvements, services, benefits, or any other purposes which are assessed,
levied, confirmed, imposed or become a lien upon the Premises or Project or
become payable during the Lease Term (hereinafter collectively "Impositions").

             (i) Installment Election. In the case of any Impositions which may
                 --------------------
be evidenced by improvement or other bonds or which may be paid in annual or
other periodic installments, Lessor shall elect to cause such bonds to be issued
or cause such assessment to be paid in installments over the maximum period
permitted by law.

             (ii) Limitation. Nothing contained in this Lease shall require
                  ----------
Lessee to pay any franchise, estate, inheritance or succession transfer tax of
Lessor, or any income, profits or revenue tax or charge, upon the net income of
Lessor from all sources; provided, however, that if at any time during the Lease
Term under the laws of the United States government or the State of California,
or any political subdivision thereof, a tax or excise on Rent is levied or
assessed by any such political body against Lessor on account of collection of
Rent, or a portion thereof, Lessee shall pay one hundred percent (100%) of any
such tax or excise as Additional Rent.

         (g) Repairs, replacements and general maintenance (excluding repairs
and general maintenance paid by proceeds of insurance or by Lessee or other
third parties, and alterations attributable solely to tenants of the Building
other than Lessee).

         (h) All maintenance costs relating to public and service areas of the
Project, including without limitation, sidewalks, landscaping, service areas,
mechanical rooms and Project exteriors.

         (i) Amortization over the useful life of the cost of capital
improvement items, including interest at the "Interest Rate" (as hereinafter
defined), which are primarily for the purpose of reducing operating costs or
which may be required by governmental authority.

         (j) Lessor's central accounting costs and audit fees attributable to
the Project.

         (k) A management cost recovery equal to three percent (3%) of Project
Rent collections.

         Except as specifically provided above, Basic Costs shall not include
specific costs billed to and paid by specific tenants, or expenses attributable
to retail or commercial tenants.

                                       6
<PAGE>

         Notwithstanding any other provision herein to the contrary, it is
agreed that in the event the Building is not at least ninety-five percent (95%)
occupied during any calendar year of the Lease Term, an adjustment shall be made
in computing the Basic Costs for such year so that the Basic Costs shall be
computed for such year as though the Building had been ninety-five percent (95%)
occupied during such year. Lessor and Lessee agree that Expense Rent shall be
paid during the entire term of this Lease, beginning with the Lease Commencement
Date and continuing through the Lease Expiration Date.

     4.5 Monthly Rent Payments. Rent under Sections 4.1(a) and (b) shall be due
         ---------------------
and payable in twelve (12) equal installments of one-twelfth (1/12) each on the
first day of each calendar month during the Lease Term and any extensions or
renewals thereof without demand, counterclaim or offset. If the Lease Term
commences on a day other than the first day of a calendar month or ends on a
day other than the last day of a calendar month, then the Rent under Sections
4.1(a) and (b) for the first and last fractional months shall be appropriately
prorated. If the Lease Term commences on a day other than the first-day of a
calendar year, for purposes of calculating Expense Rent, the Basic Costs and the
Expense Factor shall each be reduced by the proportion that the number of days
of the Lease Term falling within such calendar year bears to three hundred
sixty-five (365) days.

     4.6 Additional Rent. Lessee shall also pay as additional rent all such
         ---------------
other sums of money as shall become due and payable by Lessee to Lessor
("Additional Rent"). Such Additional Rent, including without limitation, all
amounts Lessee shall be responsible for paying pursuant to the terms of Section
7.3 of this Lease, shall not be subject to abatement, set-off or deduction
whatsoever. Except for amounts billed to Lessee under the terms of the Work
Letter (which shall be payable pursuant to the terms of the Work Letter), Lessee
shall pay to Lessor all amounts of Additional Rent within fifteen (15) days of
Lessee's receipt of a bill therefor.

     4.7 No Deduction or Offset. Rent shall be paid to Lessor, without
         ----------------------
abatement, deduction or offset, in lawful money of the United States of America
at Lessor's address as set forth in the Summary or to such other person or at
such place as Lessor may from time to time designate in writing. No payment by
Lessee or receipt by Lessor of a lesser amount of Rent shall be other than on
account of the earliest rent or payment due, nor shall any endorsement or
statement on any check or letter accompanying any such check or payment
constitute an accord and satisfaction and Lessor may accept any such check or
payment or pursue any other remedy under this Lease, at Jaw or in equity.

     4.8 Late Payment and Interest. If any installment of Rent is not paid
         -------------------------
within five (5) days of the date when due, all such past due installments of
Rent shall bear interest from the due date until paid at a rate (the "Interest
Rate") equal to the lesser of (a) three per cent (3%) per annum over the prime
rate of interest announced from time to time by Wells Fargo Bank, National
Association, San Francisco, California or (b) the maximum lawful rate. In
addition, if any installment of Rent is not paid within five (5) days of the
date when due, Lessee shall pay to Lessor a late charge equal to five percent
(5%) of the overdue amount. In the event such late charge is imposed by Lessor
for two (2) consecutive months for whatever reason Lessor shall have the option
to require that, beginning with the first payment of Rent due following the
imposition of the second consecutive late charge, Lessee increase the amount of
the Security Deposit required under Section 4.9 by three hundred percent (300%),
which additional Security Deposit shall be retained by Lessor. This provision
shall not relieve Lessee from payment of Rent at the time and in the manner
herein specified. The payment by Lessee and receipt by Lessor of late payment
charges and interest is not a release or waiver by Lessor of a default by
Lessee.

                                       7
<PAGE>

     4.9 Security Deposit. Upon execution of this Lease, Lessee shall deposit
         ----------------
the amount specified in the Summary as a security deposit, which amount may be
reduced during the Lease Term as provided below ("Security Deposit"), with
Lessor. The Security Deposit shall secure Lessee's obligations under this Lease
to pay Rent and other monetary amounts, to maintain the Premises and repair
damages thereto, to surrender the Premises to Lessor in clean condition and
repair upon termination of this Lease and to discharge Lessee's other
obligations hereunder. If Lessee fails to perform Lessee's obligations
hereunder, Lessor may, but without any obligation to do so, apply all or any
portion of the Security Deposit towards fulfillment of Lessee's unperformed
obligations. If Lessor does so apply any portion of the Security Deposit,
Lessee, upon demand by Lessor, shall immediately pay Lessor a sufficient amount
in cash to restore the Security Deposit to the original amount (as such amount
may have been reduced as provided below). Lessee's failure to forthwith remit to
Lessor an amount in cash sufficient to restore the Security Deposit to the
original sum deposited (as such sum may have been reduced as provided below)
within five (5) days after receipt of such demand shall constitute an "Event of
Default" (defined in Section 17). The Security Deposit shall be held by Lessor
without liability for interest on the same. Lessor is entitled to commingle the
security deposits with its own funds and Lessor is not to be deemed a trustee or
fiduciary for Lessee in respect of the security deposit. Provided that Lessee is
not in default hereunder, (i) upon the commencement of the thirteenth (13th)
month of the Lease Term, one-third of the Security Deposit (i.e., $49,615.33)
shall be returned to Lessee and (ii) upon the commencement of the twenty-fifth
(25th) month of the Lease Term, an additional one-third of the Security Deposit
(i.e., $49,615.33) shall be returned to Lessee. Upon termination of this Lease,
if Lessee has then performed all of Lessee's obligations hereunder, Lessor shall
return the remainder of the Security Deposit to Lessee. If Lessor sells or
otherwise transfers Lessor's right or interest under this Lease, Lessor shall
deliver the Security Deposit to the transferee (less any unreimbursed deductions
from the Security Deposit made by Lessor in accordance herewith), whereupon
Lessor shall be released from any further liability to Lessee with respect to
the Security Deposit.

                                    ARTICLE 5

                             SERVICES AND UTILITIES

     5.1 Basic Services. Lessor shall provide the following Basic Services to
         --------------
the Project on all days during the Lease Term, unless otherwise stated below.

         (a) Subject to all governmental rules, regulations and guidelines
applicable thereto, Lessor shall provide heating and air conditioning when
necessary for normal comfort for normal office use in the Premises, from Monday
through Friday, during the period from 7:00 a.m. to 6:00 p.m.: except for the
date of observation of New Year's Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and other locally
or nationally recognized holidays (collectively the "Holidays").

         (b) Lessor shall provide adequate electrical wiring and facilities and
power for normal general office use as reasonably determined by Lessor. Lessor
shall replace, as part of Basic Costs, lamps, starters and ballast for Building
standard lighting fixtures within the Premises.

         (c) Lessor shall provide city water from the regular Building outlets
for drinking, lavatory and plumbing requirements within the Premises.

                                       8
<PAGE>

         (d) Lessor shall provide janitorial services five (5) days per week,
except the date of observation of the Holidays, in and about the Premises and
window washing services in a manner consistent with such services provided by
owners of comparable office buildings ("Comparable Buildings") of comparable
condition located in the Financial District of San Francisco.

         (e) Lessor shall provide nonexclusive automatic passenger elevator
service at all times.

         (f) Lessor shall provide nonexclusive freight elevator service subject
to scheduling by Lessor.

         (g) Subject to Lessee's repair obligations set forth in Section 6 below
and the provisions of Section 4, Lessor shall operate and maintain the Project
(including the structural components of the Project and the Project's systems
and equipment) in a first-class manner and condition.

         (h) Lessor shall maintain a reasonable security and supervision program
for the Project, which may include, without limitation, security personnel,
cameras, roving patrols, a keyboard system and/or any other security measures
which Lessor deems appropriate.

     5.2 Over Standard Use. Lessee shall not, without Lessor's prior written
         -----------------
consent, use heat generating machines, machines other than normal office
machines, or equipment or lighting other than building standard lights in the
Premises, which may affect the temperature otherwise maintained by the air
conditioning system or increase the water normally furnished for the Premises by
Lessor pursuant to the terms of Section 5.1. If such consent is given, Lessor
shall have the right to install supplementary air conditioning units or other
facilities in the Premises, including supplementary or additional metering
devices, and the cost thereof, including the cost of installation, operation and
maintenance, increased wear and tear on existing equipment and other similar
charges, shall be paid by Lessee to Lessor upon billing by Lessor. If Lessee
uses water or heat or air conditioning in excess of that supplied by Lessor
pursuant to Section 5.1, or if Lessee's consumption of electricity shall exceed
five (5) watts per rentable square foot of the Premises, calculated on an
annualized basis for the hours described in Section 5.1(a) above, Lessee shall
pay to Lessor, upon billing, the cost of such excess consumption, the cost of
the installation, operation, and maintenance-of equipment which is installed in
order to supply such excess consumption, and the cost of the increased wear and
tear on existing equipment caused by such excess consumption; and Lessor may
install devices to separately meter any increased use -and in such event Lessee
shall pay the increased cost directly to Lessor on demand, including the cost of
such additional metering devices. If Lessee desires to use heat, ventilation or
air conditioning ("HVAC") during hours other than those specified in Section 5.1
of this Lease, Lessee shall give Lessor such prior notice as Lessor shall from
time to time establish as appropriate, of Lessee's desired use and Lessor shall
supply such after-hours HVAC to Lessee subject to Lessee's payment to Lessor of
such hourly cost as Lessor shall from time to time establish.

     5.3 Interruption of Use. Lessee agrees that Lessor shall not be liable for
         -------------------
damages, by abatement of Rent or otherwise, for failure to furnish or delay in
furnishing any service (including telephone and telecommunication services), or
for any diminution in the quality or quantity thereof, when such failure or
delay or diminution is occasioned, in whole or in part, by repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water or other fuel at the Project after
reasonable effort to do so, by any accident or casualty whatsoever, by act or
default of Lessee or other tenants, or by any other cause beyond

                                       9
<PAGE>

Lessor's reasonable control, and such failures or delays or diminution shall
never be deemed to constitute an eviction or disturbance of Lessee's use and
possession of the Premises or relieve Lessee from paying Rent or performing any
of its obligations under this Lease. Furthermore, Lessor shall not be liable
under any circumstances for a loss of, or injury to, property or for injury to,
or interference with, Lessee's business, including, without limitation, loss of
profits, however occurring, through or in connection with or incidental to a
failure to furnish any of the services or utilities.

     5.4 Additional Services. Lessor shall also have the exclusive right, but
         -------------------
not the obligation, to provide any additional services which may be requested by
Lessee, including, without limitation, locksmithing, lamp replacement for
non-Building standard lamps or fixtures, additional janitorial service, and
additional repairs and maintenance, provided that Lessee shall pay to Lessor
upon billing, the actual cost to Lessor of providing such additional services,
plus a reasonable administration fee, and same shall be deemed Additional Rent
hereunder and shall be billed on a monthly basis.

     5.5 Keys and Locks. Lessor shall furnish Lessee two (2) keys for each
         --------------
corridor door entering the Premises. Additional keys shall be furnished at a
charge by Lessor on an order signed by Lessee. All such keys shall remain the
property of Lessor. No additional locks shall be allowed on any door of the
Premises without Lessor's prior written permission, and Lessee shall not make or
permit to be made any duplicate keys, except those furnished by Lessor. Upon
termination of this Lease, Lessee shall surrender to Lessor all keys of the
Premises, and give to Lessor the combination of all locks for safes, safe
cabinets and vault doors, if any, in the Premises.

                                    ARTICLE 6

                                     REPAIRS

     Lessee shall, at Lessee's own expense, keep the Premises, including all
improvements, fixtures and furnishings therein, in good order, repair and
condition subject to normal wear and tear, at all times during the Lease Term.
In addition, Lessee shall, at Lessee's own expense but under the supervision and
subject to the prior approval of Lessor, and within any reasonable period of
time specified by Lessor, promptly and adequately repair all damage to the
Premises and replace or repair all damaged or broken fixtures and appurtenances;
provided however, that, at Lessor's option, or if Lessee fails to make such
repairs within fifteen (15) days following notice from Lessor, Lessor may, but
need not, make such repairs and replacements, and Lessee shall pay Lessor the
cost thereof, together with an additional three percent (3%) of the cost
thereof, as reimbursement to Lessor for all overhead, general conditions, fees
and other actual costs or expenses arising from Lessor's management and
coordination of repairs and replacements upon being billed for same. Lessor
shall have the right to enter the Premises at all reasonable times to make such
repairs, alterations, improvements and additions to the Premises or to the
Project or to any equipment located in the Project as Lessor shall desire or
deem necessary or as Lessor may be required to do by governmental or
quasi-governmental authority or court order or decree.

                                    ARTICLE 7

                           ADDITIONS AND ALTERATIONS

     7.1 Lessor's Consent to Alterations. Lessee may not make any improvements,
         -------------------------------
alterations, additions or changes to the Premises (collectively, the
"Alterations") without first

                                       10
<PAGE>

procuring the prior written consent of Lessor to such Alterations, which consent
shall be requested by Lessee not less than thirty (30) days prior to the
commencement thereof, and which consent shall not be unreasonably withheld,
conditioned or delayed by Lessor. The Construction of the initial improvements
to the Premises shall be completed by Lessor and shall be governed by the terms
of the Work Letter.

     7.2 Manner of Construction. Lessor may impose, as a condition of its
         ----------------------
consent to all Alterations or repairs of the Premises, such requirements as
Lessor in its sole discretion may deem desirable, including, but not limited to,
the requirement that upon Lessor's request, Lessee shall, at Lessee's expense,
remove such Alterations upon the expiration or any early termination of the
Lease Term, and/or the requirement that Lessee utilize for such purposes only
contractors, materials, mechanics and management selected by Lessee and approved
by Lessor (which approval shall not be unreasonably withheld); provided,
however, that Lessee shall utilize subcontractors approved by Lessor to perform
all work that may affect the Project systems and equipment, structural aspects
of the Project, the "Base, Shell and Core" (as defined in the Work Letter), or
exterior appearance of the Project or Project Common Areas. Lessee shall
construct such Alterations and perform such repairs in conformance with any and
all applicable rules and regulations of any federal, state, county or municipal
code or ordinance and pursuant to a valid building permit, issued by the City of
San Francisco and in conformance with Lessor's construction rules and
regulations. Any Alterations shall be performed in conformance with plans,
specifications and working drawings first approved by Lessor. Lessor's approval
of the plans, specifications and working drawings for Lessee's Alterations shall
create no responsibility or liability on the part of Lessor for their
completeness, design sufficiency, or compliance with all laws, rules and
regulations of governmental agencies or authorities. All work with respect to
any Alterations must be done in a good and workmanlike manner and diligently
prosecuted to completion to the end that the Premises shall at all times be a
complete unit except during the period of work. In performing the work of any
such Alterations, Lessee shall have the work performed in such manner as not to
obstruct access to the Project for any other lessee of the Project, and as not
to obstruct the business of Lessor or other lessees in the Project, or
interfere with the labor force working in the Project. In the event that Lessee
makes any Alterations, Lessee agrees to carry "Builder's All Risk" insurance in
an amount approved by Lessor covering the construction of such Alterations, and
such other insurance as Lessor may require, it being understood and agreed that
all of such Alterations shall be insured by Lessee pursuant to Article 9
immediately upon completion thereof. In addition, Lessor may, in its discretion,
require Lessee to obtain a lien and completion bond or some alternate form of
security satisfactory to Lessor in an amount sufficient to ensure the lien-free
completion of such Alterations and naming Lessor as a co-obligee. Upon
completion of any Alterations, Lessee agrees to cause a Notice of Completion to
be recorded in the Office of the Recorder of the City and County of San
Francisco in accordance with section 3093 of the Civil Code of the State of
California or any successor statute and Lessee shall deliver to the Building
management office a reproducible copy of the "as built" drawings of the
Alterations.

     7.3 Payment for Improvements. The cost of all Alterations shall be paid
         ------------------------
Lessee. In the event Lessee orders any Alteration or repair directly from
Lessor, or from the contractor selected by Lessor, the charges for such work
shall be deemed Additional Rent under this Lease, payable upon billing therefor,
either periodically during construction or upon the substantial completion of
such work, at Lessor's option. Upon completion of such work, Lessee shall
deliver to Lessor, if payment is made directly to contractors, evidence of
payment, contractors' affidavits and full and final waivers of all liens for
labor, services or materials. If Lessee orders any work directly from Lessor,
Lessee shall pay to Lessor the cost thereof, together with an additional three
percent (3%) of the cost of such work to cover overhead, general conditions,
fees and other costs and expenses arising from Lessor's involvement with such
work. If Lessee does not order any work directly

                                       11
<PAGE>

from Lessor, Lessee shall reimburse Lessor for Lessor's reasonable out-of-pocket
costs and expenses actually incurred in connection with Lessor's review of
and/or involvement with such work.

     7.4 Lessor's Property and Fixtures. All Alterations, improvements, fixtures
         ------------------------------
and/or equipment which may be installed or placed in or about the Premises, and
all signs installed in, on or about the Premises, from time to time, shall be at
the sole cost of Lessee and shall be and become the property of Lessor upon
expiration of the Lease Term, except that Lessee may remove any Alterations,
improvements, fixtures and/or equipment which Lessee can substantiate to
Lessor have not been paid for with any Lessee improvement allowance funds
provided to Lessee by Lessor, provided Lessee repairs any damage to the Premises
and Project caused by such removal. Furthermore, if Lessor, as a condition to
Lessor's consent to any Alterations, requires that Lessee remove any Alterations
upon the expiration or earlier termination of the Lease Term upon Lessor's
request, Lessor may, by written notice to Lessee given prior to or within thirty
(30) days following the end of the Lease Term or any earlier termination of this
Lease, require Lessee at Lessee's expense to remove such Alterations and to
repair any damage to the Premises and Project caused by such removal. If Lessee
fails to promptly complete such removal and/or to repair any damage caused by
the removal of any Alterations, Lessor may do so and may charge the cost thereof
to Lessee. Lessee hereby indemnifies and holds Lessor harmless from any
liability, cost, obligation, expense or claim of lien in any manner relating to
the installation, placement, removal or financing of any such Alterations,
improvements, fixtures and/or equipment in, on or about the Premises.

                                    ARTICLE 8

                             COVENANT AGAINST LIENS

     Lessee has no authority or power to cause or permit any lien or encumbrance
of any kind whatsoever, whether created by act of Lessee, operation of law or
otherwise, to attach to or be placed upon the Project or Premises or any part
thereof, and any and all liens and encumbrances created by Lessee shall attach
to Lessee's interest only. Lessor shall have the right at all times to post and
keep posted on the Premises any notice which it deems necessary for protection
from such liens. Lessee covenants and agrees not to suffer or permit any lien of
mechanics or materialmen or others to be placed against the Project or the
Premises or any part thereof with respect to work or services claimed to have
been performed for or materials claimed to have been furnished to Lessee or the
Premises, and in case of any such lien attaching or notice of any lien, Lessee
covenants and agrees to cause it to be immediately released and removed of
record. Notwithstanding anything to the contrary set forth in this Lease, in the
event that such lien is not released and removed on or before the date notice of
such lien is delivered by Lessor to Lessee, Lessor, at its sole option, may
immediately take all action necessary to release and remove such lien, without
any duty to investigate the validity thereof, and all sums, costs and expenses,
including attorneys' fees and actual costs, incurred by Lessor in connection
with such lien shall be deemed Additional Rent under this Lease and shall
immediately be due and payable by Lessee.

                                    ARTICLE 9

                                    INSURANCE

     9.1 Lessor Coverage: All Risk. During the Term, Lessor shall procure and
         -------------------------
maintain in full force and effect with respect to the Project, a policy or
policies of all risk property insurance (including sprinkler, vandalism and
malicious mischief coverage, earthquake and flood coverage at Lessor's option,
and any other endorsements required by any ground lessor or the holder of any

                                       12
<PAGE>

mortgage) in an amount customarily carried by owners of Comparable Buildings. If
because of the nature of Lessee's operations the annual premiums charged Lessor
for such insurance exceed the standard premium rates or result in increased
exposure, then Lessee, within fifteen (15) days of receipt of appropriate
premium invoices, shall reimburse Lessor for such increased amount.

     9.2 Lessee Coverage.
         ---------------

         (a) All Risk Insurance. During the Lease Term and at its own cost and
             ------------------
expense, Lessee shall maintain in full force and effect a policy or policies of
all risk property insurance (including sprinkler, vandalism and malicious
mischief coverage and including earthquake and flood coverage at Lessee's
option) in an amount adequate to cover damage to the Premises, including without
limitation Lessee's Improvements as defined in the Work Letter, merchandise,
fixtures, trade fixtures, furniture, furnishings, equipment, goods, inventory
and other personal property located on the Premises or in the Project, insuring
the full replacement value of such items.

         (b) General Liability. During the Lease Term and at its own cost and
             -----------------
expense, Lessee shall maintain in full force and effect a policy or policies of
commercial general liability insurance insuring Lessee's activities with respect
to the Premises, Building and/or Project against loss, damage or liability for
personal injury or death of any person or loss or damage to property occurring
in, upon or about the Premises, Building and/or Project with a combined single
limit of One Million Dollars ($1,000,000); such commercial general liability
insurance shall include broad form contractual liability insurance coverage
which shall insure Lessee's performance of the indemnity provisions in this
Lease.

         (c) Workers' Compensation. During the Lease Term and at its own cost
             ---------------------
and expense, Lessee shall maintain in full force and effect the statutory amount
of workers' compensation insurance required by the State of California for the
benefit of Lessee's employees, and employer's liability insurance with no less
than $1,000,000 per employee per occurrence.

         Lessee agrees that if Lessee does not procure and maintain such
insurance continuously, Lessor may (but shall not be required to) procure such
insurance on Lessee's behalf and Lessee shall pay to Lessor the cost thereof, as
Additional Rent, within fifteen (15) days of Lessee's receipt of a bill
therefor.

     9.3 General Insurance Requirements.
         ------------------------------

         (a) Requirements. All insurance required under this Article 9 shall be
             ------------
issued by such good and reputable insurance companies qualified to do and doing
business in California and having a rating of not less than "A-X" as rated in
the most current copy of Best's Insurance report in the form customary to the
locality. All such Lessee insurance shall include (i) an endorsement expressly
providing that such policies shall not be cancelable or subject to reduction of
coverage or otherwise be subject to modification except after thirty (30) days'
prior written notice to the parties named as insureds in this Article 9, (ii) an
endorsement providing that Lessor, its successors, assigns, and nominees holding
any interest in the Premises, including without limitation any ground lessor and
the holder of any mortgage, shall be named as additional insureds under each
such policy of insurance maintained by Lessee pursuant to this Lease, (iii) an
endorsement providing that such insurance as is afforded under Lessee's policy
is primary as respects lessor and that any other insurance maintained by Lessor
is excess and non-contributing with other insurance required under this Article
9, (iv) an endorsement deleting any employee exclusion on personal injury
covered, (v) an endorsement including employees as additional insureds, (vi) an

                                       13
<PAGE>

endorsement deleting any liquor liability exclusion and (vii) an endorsement
providing for coverage of employer's automobile liability. All such insurance
shall provide for severability of interests; shall provide that an act or
omission of one of the named insureds shall not reduce or avoid coverage to the
other named insured; and shall afford coverage for all claims based on acts,
omissions injury and damage which claims occurred or arose (or the onset of
which occurred or arose) in full or in part during the policy period. Expiration
of Lessee's policy shall not limit recovery thereunder; "claims made" insurance
policies are not acceptable to satisfy Lessee's insurance requirements under
this Article 9. Lessee shall furnish to Lessor, upon the Commencement Date and
thereafter within thirty (30) days prior to the expiration of each such policy,
a Certificate of Insurance and endorsement(s) affording evidence of the above
insurance requirements issued by the insurance carrier of each policy of
insurance carried by Lessee pursuant hereto. If at any time during the Term of
this Lease the amount or coverage of insurance which Lessee is required to carry
under this Article 9 is, in Lessor's reasonable judgment, materially less than
the amount or type of insurance coverage typically carried by lessees of
Comparable Buildings, Lessor shall have the right to require Lessee to increase
the amount or change the types of insurance coverage required under this Article
9. Lessee shall submit annually to Lessor a copy of the insurance limits then in
effect.

         (b) Lessee's Use. Lessee will not keep, use, sell or offer for sale in,
             ------------
or upon the Premises any article which may be prohibited by any insurance policy
periodically in force covering the Project. If Lessee's occupancy or business in
or on the Premises, whether or not Lessor has consented to the same, results in
any increase in premiums for the insurance periodically carried by Lessor with
respect to the Project, Lessee shall pay any such increase in premiums as
Additional Rent within ten (10) days after being billed therefor by Lessor. In
determining whether increased premiums are a result of Lessee's use of the
Premises, a schedule issued by the organization computing the insurance rate on
the Project or the Lessee Improvements showing the various components of such
rate, shall be conclusive evidence of the items which make up such rate.

         (c) Waiver of Subrogation. Any policy or policies of property
             ---------------------
insurance, which either party obtains in connection with the Premises, or
Lessee's personal property therein, shall include a clause or endorsement
denying the insurer any rights of subrogation against the other party to the
extent rights have been waived by the insured prior to the occurrence of injury
or loss. Lessor and Lessee hereby waive any rights of recovery against the
other for injury or loss due to hazards covered by insurance containing such a
waiver of subrogation clause or endorsements to the extent of the injury or loss
covered thereby and agree to obtain such a waiver from their respective
insurance carriers and upon request deliver a copy thereof to the other party;
each party shall provide written notice to the other party if such waiver is not
obtained and shall indemnify, defend and hold the other harmless from all
liabilities, penalties, losses, costs, expenses, demands, causes of action,
claims, judgments or damages arising from the indemnifying party's failure to
obtain such a waiver from its insurance company unless such a waiver is not
customarily available.

     9.4 Indemnification and Waiver. To the extent not prohibited by law,
         --------------------------
Lessor, its partners, members, officers, directors, shareholders, beneficiaries,
agents, servants and employees (collectively, the "Lessor Parties") shall not be
liable for any damage either to person or property or resulting from the loss of
use thereof, which damage is sustained by Lessee or by other persons claiming
through Lessee. Lessee shall indemnify, defend, protect and hold harmless Lessor
Parties from any and all loss, cost, damage, expense, liability and claims
(including without limitation court costs and reasonable attorneys' fees)
(collectively "Claims") incurred in connection with or arising from any cause
in, on or about the Premises, from and after the earlier of (i) the

                                       14
<PAGE>

date Lessee conducts any activities in the Premises or the Project or (ii) the
Lease Commencement Date, and continuing until the later of (A) the expiration
or termination of the Lease Term, or (B) the date Lessee vacates and surrenders
possession of the Premises to Lessor. The provisions of this Section 9.4 shall
survive the expiration or sooner termination of this Lease with respect to any
claims or liability occurring prior to such expiration or termination.

                                   ARTICLE 10

                             DAMAGE AND DESTRUCTION

     10.1 Repair of Damage to Premises by Lessor. Lessee shall promptly notify
          --------------------------------------
Lessor of any damage to the Premises resulting from fire or any other casualty.
If the Premises or any common areas of the Project serving or providing access
to the Premises shall be damaged by fire or other casualty, Lessor shall
promptly and diligently prosecute to completion, subject to reasonable delays
for insurance adjustment or other matters beyond Lessor's reasonable control,
and subject to all other terms of this Article 10, restore the Base, Shell and
Core of the Premises and such common areas. Such restoration shall be to
substantially the same condition of the Base, Shell and Core of the Premises and
common areas prior to the casualty, except for modifications required by zoning
and building codes and other laws or by the holder of a mortgage on the Project,
or any other modifications to the common areas deemed desirable by Lessor,
provided access to the Premises and any common restrooms serving the Premises
shall not be materially impaired. Notwithstanding any other provision of this
Lease, upon the occurrence of any damage to the Premises, Lessee shall assign to
Lessor (or to any party designated by Lessor) all insurance proceeds payable to
Lessee under Lessee's insurance required under Article 9 of this Lease insofar
as it applies to Improvements to the Premises (excluding Lessee's personal
property), and Lessor shall repair any injury or damage to the Lessee
Improvements installed in the Premises and shall return such Lessee Improvements
to their original condition; provided that if the cost of such repair by Lessor
exceeds the amount of insurance proceeds received by Lessor from Lessee's
insurance, the cost of such repairs shall be paid by Lessee to Lessor prior to
Lessor's repair of the damage. In connection with such repairs and replacements
Lessee shall, prior to the commencement of construction, submit to Lessor for
Lessor's review and approval all plans specifications and working drawings
relating thereto. Such submittal of plans and construction of improvements shall
be performed in substantial compliance with the terms of the Work Letter as
though such construction of improvements were the initial construction of the
Lessee Improvements. Lessor shall not be liable for any inconvenience or
annoyance to Lessee or its visitors, or injury to Lessee's business resulting in
any way from such damage or the repair thereof; provided however, that if such
fire or other casualty shall have damaged the Premises or common areas necessary
to Lessee's occupancy, Lessor shall allow Lessee a proportionate abatement of
Rent to the extent Lessor is reimbursed from the proceeds of rental interruption
insurance purchased by Lessor as a Basic Cost during the time and to the extent
the Premises are materially damaged and unfit for occupancy for the purposes
permitted under this Lease, and not occupied by Lessee as a result thereof.

     10.2 Lessor's Option to Repair. Notwithstanding the terms of Section 10.1
          -------------------------
of this Lease, Lessor may elect not to rebuild and/or restore the Premises
and/or Project and instead terminate this Lease by notifying Lessee in writing
of such termination within-sixty (60) days after the date of damage, such notice
to include a termination date giving Lessee ninety (90) days to vacate the
Premises, but Lessor may so elect only if the Project shall be damaged by fire
or other casualty or cause whether or not the Premises are affected, and one or
more of the following conditions is present: (a) repairs cannot reasonably be
completed within one hundred twenty (120) days of the date of damage (when such
repairs are made without the payment of overtime or other

                                       15
<PAGE>

premiums), (b) the holder of any mortgage on the Building or ground or
underlying lessor with respect to the Project shall require that the insurance
proceeds or any portion thereof be used to retire the mortgage debt, or shall
terminate the ground or underlying lease, as the case may be; or (c) the damage
is not fully covered, except for deductible amounts, by Lessor's insurance
policies.

     In addition, in the event that the Premises or the Project are materially
destroyed or damaged to any substantial extent during the last twelve (12)
months of the Lease Term, Lessor and Lessee shall have the option to terminate
this Lease by giving written notice to the other of the exercise of such option
within thirty (30) days after such damage or destruction, in which event this
Lease shall cease and terminate as of the date of such notice.

     Upon any such termination of this Lease pursuant to this Section 10.2,
Lessee shall pay Rent, properly apportioned up to such date of termination, and
both parties hereto shall thereafter be freed and discharged of all further
obligations hereunder, except as provided for in provisions of this Lease which
by their terms survive the expiration or earlier termination of the Lease Term.

     10.3 Waiver of Statutory Provisions. The provisions of this Lease,
          ------------------------------
including this Article 10, constitute an express agreement between Lessor and
Lessee with respect to any and all damage to, or destruction of, all or any
part of the Premises, the Project or any portion thereof, and any statute or
regulation of the State of California, including, without limitation, sections
1932(2) and 1933(4) of the California Civil Code, with respect to any rights or
obligations concerning damage or destruction in the absence of an express
agreement between the parties, and any other statute or regulation, now or
hereafter in effect, shall have no application to this Lease or any damage or
destruction to all or any part of the Premises, the Project or any portion
thereof.

                                   ARTICLE 11

                                   NON-WAIVER

     No waiver of any provision of this Lease shall be implied by any failure of
Lessor to enforce any remedy on account of the violation of such provision, even
if such violation shall continue or be repeated subsequently, any waiver by
Lessor of any provision of this Lease may only be in writing, and no express
waiver shall affect any provision other than the one specified in such waiver
and that one only for the time and in the manner specifically stated. No receipt
of monies by Lessor from Lessee after the termination of this Lease shall in any
way alter the length of the Lease Term or Lessee's right of possession hereunder
or after the giving of any notice shall reinstate, continue or extend the Lease
Term or affect any notice given Lessee prior to the receipt of such monies, it
being agreed that after the service of notice or the commencement of a suit or
after final judgment for possession of the Premises, Lessor may receive and
collect any Rent due, and the payment of said Rent shall not waive or affect
said notice, suit or judgment.

                                   ARTICLE 12

                                 EMINENT DOMAIN

     12.1 Condemnation and Loss or Damage. If the whole or any material part of
          -------------------------------
the Premises or Project shall be taken by power of eminent domain or condemned
by any competent authority for any public or quasi-public use or purpose, or if
any adjacent property or street shall be so taken or condemned, or reconfigured
or vacated by such authority in such manner as to require the use,
reconstruction or remodeling of any part of the Premises or Project, or if
Lessor shall grant a deed or other instrument in lieu of such taking by eminent
domain or condemnation,

                                       16
<PAGE>

Lessor shall have the option to terminate this Lease upon ninety (90) days'
notice, provided such notice is given no later than one hundred eighty (180)
days after the date of such taking, condemnation, reconfiguration, vacation,
deed or other instrument. If more than twenty-five percent (25%) of the rentable
square feet of the Premises is taken, or if access to the Premises is
substantially impaired, Lessee shall have the option to terminate this Lease
upon ninety (90) days' notice, provided such notice is given no later than one
hundred eighty (180) days after the date of such taking. Lessor shall be
entitled to receive the entire award or payment in connection therewith, except
that Lessee shall have the right to file any separate claim available to Lessee
for any taking of Lessee's personal property and fixtures belonging to Lessee
and removable by Lessee upon expiration of the Lease Term pursuant to the terms
of this Lease, and for moving expenses, so long as such claim does not diminish
the award available to Lessor, its ground lessor with respect to the Project or
its mortgagee, and such claim is payable separately to Lessee. All Rent shall be
apportioned as of the date of such termination, or the date of such taking,
whichever shall first occur.

     12.2 Temporary Taking. Notwithstanding anything to the contrary contained
          ----------------
in this Article 12, in the event of a temporary taking of all or any portion of
the Premises for a period of one hundred and eighty (180) days or less, then
this Lease shall not terminate but the Base Rent and the Additional Rent shall
be abated for the period of such taking in proportion to the ratio that the
amount of rentable square feet of the Premises taken bears to the total rentable
square feet of the Premises. Lessor shall be entitled to receive the entire
award made in connection with any such temporary taking.

     12.3 Total Taking. A total taking of the Project shall automatically
          ------------
terminate the Lease.

                                   ARTICLE 13

                            ASSIGNMENT AND SUBLETTING

     13.1 Transfers. Lessee shall not, without the prior written consent of
          ---------
Lessor, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder or permit
any assignment or other such foregoing transfer of this Lease or any interest
hereunder by operation of law, sublet the Premises or any part thereof, or
permit the use of the Premises by any persons other than Lessee and its
employees, agents and licensees (all of the foregoing are hereinafter sometimes
referred to collectively as "Transfers" and any person to whom any Transfer is
made or sought to be made is hereinafter sometimes referred to as a
"Transferee"). If Lessee shall desire Lessor's consent to any Transfer, Lessee
shall notify Lessor in writing, which notice (the "Transfer Notice") shall
include:

         (a) the proposed effective date of the Transfer, which shall not be
less than forty-five (45) days nor more than one hundred eighty (180) days after
the date of delivery of the Transfer Notice;

         (b) a description of the portion of the Premises to be transferred (the
"Subject Space");

         (c) all of the terms of the proposed Transfer and the consideration
therefor, including a calculation of the "Transfer Premium," as that term is
defined in Section 13.4 below, in connection with such Transfer, the name and
address of the proposed Transferee, and a copy of all existing and/or proposed
documentation pertaining to the proposed Transfer, including all existing

                                       17
<PAGE>

operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer; and,

         (d) current financial statements of the proposed Transferee certified
by an officer, partner or owner thereof, and any other information required by
Lessor, which will enable Lessor to determine the financial responsibility,
character, and reputation of the proposed Transferee, nature of such
Transferee's business and proposed use of the Subject Space, and such other
information as Lessor may reasonably require. Any Transfer made without Lessor's
prior written consent or not in compliance with this Article 13 shall, at
Lessor's option, be null, void and of no effect, and shall, at Lessor's option,
constitute a default by Lessee under this Lease.

     Lessee shall, within thirty (30) days after written request by Lessor,
reimburse Lessor for all reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Lessor in connection with its review of a proposed
Transfer.

     13.2 Lessor's Consent. Lessor shall not unreasonably withhold its consent
          ----------------
to any proposed Transfer of the Subject Space to the Transferee on the terms
specified in the Transfer Notice. The parties hereby agree that it shall be
reasonable under this Lease and under any applicable law for Lessor to withhold
consent to any proposed Transfer where one or more of the following apply:

         (a) The Transferee is of a character or reputation or engaged in a
business which is not consistent with the quality of the Building;

         (b) The Transferee intends to use the Subject Space for purposes which
are not permitted hereunder;

         (c) The Transferee is either a governmental agency or instrumentality
thereof;

         (d) The Transfer will result in more than a reasonable and safe number
of occupants per floor;

         (e) The Transferee is not a party of reasonable financial worth and/or
financial stability in light of the responsibilities involved under the Lease on
the date consent is requested;

         (f) The proposed Transfer would cause Lessor to be in violation of
another lease or agreement to which Lessor is a party, or would give an occupant
of the Project a right to cancel its lease;

         (g) The terms of the proposed Transfer will allow the Transferee to
exercise any right of renewal, right of expansion, or right of first offer held
by Lessee (or will allow the Transferee to occupy space leased by Lessee
pursuant to any such right);

         (h) Either the proposed Transferee, or any person or entity which
directly or indirectly, controls, is controlled by, or is under common control
with, the proposed Transferee, (i) occupies space in the Building at the time of
the request for consent, or (ii) is negotiating with Lessor to lease space in
the Building at such time, and Lessor has (or will have, upon such Transferee's
                           ---
proposed lease commencement) sufficient available space to accommodate such
Transferee.

                                       18
<PAGE>

     If Lessor consents to any Transfer pursuant to the terms of this Section
13.2 (and does not exercise any recapture rights Lessor may have under Section
13.3 of this Lease), Lessee may within six (6) months after Lessor's consent,
but not later than the expiration of said six-month period, enter into such
Transfer of the Premises or portion thereof, upon substantially the same terms
and conditions as are set forth in the Transfer Notice furnished by Lessee to
Lessor pursuant to Section 13.1 of this Lease, provided that if there are any
changes in the terms and conditions for those specified in the Transfer Notice
such that (i) Lessor would initially have been entitled to refuse its consent to
such Transfer under this Section 13.2, or (ii) which would cause the proposed
Transfer to be more favorable to the Transferee than the terms set forth in
Lessee's original Transfer Notice, Lessee shall again submit the Transfer to
Lessor for its approval and other action under this Article 13 (including
Lessor's right of recapture under Section 13.3 of this Lease).

     13.3 Lessor's Option as to Subject Space. Lessor shall have the option, by
          -----------------------------------
giving written notice to Lessee within thirty (30) days after receipt of any
Transfer Notice, to (i) recapture the Subject Space and terminate the Lease, or
(ii) take an assignment or sublease of the Subject Space from Lessee. In the
event of a recapture by Lessor, if this Lease shall be canceled with respect to
less than the entire Premises, the Rent reserved herein shall be prorated on the
basis of the number of rentable square feet retained by Lessee in proportion to
the number of rentable square feet contained in the Premises, and this Lease as
so amended shall continue thereafter in full force and effect, and upon request
of either party, the parties shall execute written confirmation of the same. If
the Subject Space shall be assigned or subleased by Lessee to Lessor, the rent
for the Subject Space payable by Lessor to Lessee shall be the lesser of (iii)
the effective Base Rent plus the Additional Rent payable by Lessee under this
Lease for the Subject Space on a prorated basis based upon the number of
rentable square feet in the Subject Space, or (iv) the effective rent (taking
into account all concessions made by Lessee to the Transferee) set forth in the
Transfer Notice, and all other provisions of this Lease shall remain in full
force and effect, and upon request of either party, the parties shall execute a
written confirmation of the same. If Lessor declines, or fails to elect in a
timely manner to recapture, sublease or take an assignment of the Subject Space,
then, provided Lessor has consented to the proposed Transfer, Lessee shall be
entitled to proceed to transfer the Subject Space to the proposed Transferee,
subject to provisions of the last paragraph of Section 13.2.

     13.4 Transfer Premium. If Lessor consents to a Transfer, as a condition
          ----------------
thereto which the parties hereby agree is reasonable, Lessee shall pay to Lessor
fifty percent (50%) of any "Transfer Premium," (as that term is hereinafter
defined) received by Lessee from such Transferee. "Transfer Premium" shall mean
all rent, additional rent or other consideration payable by such Transferee in
excess of the Rent and Additional Rent payable by Lessee under this Lease, on a
per rentable square foot basis if less than all of the Premises is transferred,
after deducting the reasonable expenses incurred by Lessee for (i) any changes,
alterations and improvements to the Premises in connection with the Transfer or
contributions to the cost thereof, including reasonable architectural and
engineering fees, and (ii) any brokerage commissions, reasonable attorneys' fees
and reasonable advertising and marketing costs reasonably incurred by Lessee in
connection with the Transfer. "Transfer Premium" shall also include, but not be
limited to, key money and bonus money paid by Transferee to Lessee in
connection with such Transfer, and any payment in excess of fair market value
for services rendered by Lessee to Transferee or for assets, fixture, inventory,
equipment or furniture transferred by Lessee to Transferee in connection with
such Transfer.

     13.5 Effect of Transfer. If Lessor consents to a Transfer, (i) the terms
          ------------------
and conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Lessee or a Transferee, (iii) Lessee shall deliver to Lessor, promptly
after execution, an original executed copy of all documentation

                                       19
<PAGE>

pertaining to the Transfer in form reasonably acceptable to Lessor, (iv) Lessee
shall furnish upon Lessor's request a complete statement, certified by an
independent certified public accountant, or Lessee's chief financial officer,
setting forth in detail the computation of any premium Lessee has derived and
shall derive from such Transfer, (v) any assignee shall assume in writing all
obligations and covenants of Lessee thereafter to be performed or observed under
this Lease, and (vi) no Transfer relating to this Lease or agreement entered
into with respect thereto, whether with or without Lessor's consent, shall
relieve Lessee or any guarantor of the Lease from liability under this Lease.
Lessor or its authorized representatives shall have the right at all reasonable
times to audit the books, records and papers of Lessee relating to any Transfer,
and shall have the right to make copies thereof. If the Transfer Premium
respecting any Transfer shall be found understated, Lessee shall, within thirty
(30) days after demand, pay the deficiency and Lessor's costs of such audit.

     13.6 Additional Transfers. For purposes of this Lease, the term "Transfer"
          --------------------
shall also include: (i) if Lessee is a partnership, the withdrawal or change,
voluntary, involuntary or by operation of law, of fifty percent (50%) or more of
the partners, or transfer of fifty percent (50%) or more of partnership
interests, within a twelve (12) month period, or the dissolution of the
partnership without immediate reconstitution thereof; and (ii) if Lessee is a
closely held corporation (as defined in the California Corporations Code), the
dissolution, merger, consolidation or other reorganization of Lessee; the sale
or other transfer of more than an aggregate of fifty percent (50%) of the voting
shares of Lessee (other than to immediate family members by reason of gift or
death), within a twelve (12) month period; or the sale, mortgage, hypothecation
or pledge of more than an aggregate of fifty percent (50%) of the value of the
unencumbered assets of Lessee within a twelve (12) month period.

                                   ARTICLE 14

                        SURRENDER OF PREMISES; OWNERSHIP
                         AND REMOVAL OF TRADE FIXTURES

     14.1 Surrender of Premises. No act or thing done by Lessor or any agent or
          ---------------------
employee of Lessor during the Lease Term shall be deemed to constitute an
acceptance by Lessor of a surrender of the Premises unless such intent is
specifically acknowledged in a writing signed by Lessor. The delivery of keys to
the Premises to Lessor or any agent or employee of Lessor shall not constitute a
surrender of the Premises or effect a termination of this Lease, whether or not
the keys are thereafter retained by Lessor, and notwithstanding such delivery,
Lessee shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Lessee, whether accepted by Lessor or not, or a
mutual termination hereof, shall not work a merger, and at the option of Lessor
shall operate as an assignment to Lessor of all subtenancies affecting the
Premises.

     14.2 Removal of Lessee's Property by Lessee. Upon the expiration of the
          --------------------------------------
Lease Term, or upon any earlier termination of this Lease, Lessee shall quit and
surrender possession of the Premises to Lessor in as good order and condition as
when Lessee took possession and as thereafter improved by Lessor, reasonable
wear and tear and repairs which are specifically made the responsibility of
Lessor hereunder excepted. Upon such expiration or termination, Lessee shall,
without expense to Lessor, remove or cause to be removed from the Premises all
debris and rubbish, and such items of furniture, equipment, free-standing
cabinet work and other articles of personal property owned by Lessee or
installed or placed by Lessee at its expense in the Premises, and such similar
articles of any other persons claiming under Lessee, as Lessor may, in its sole

                                       20
<PAGE>

discretion, require to be removed, and Lessee shall repair at its own expense
all damage to the Premises and Project resulting from such removal.

                                   ARTICLE 15

                                  HOLDING OVER

     If Lessee holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Lessor,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Base Rent
shall be payable at a monthly rate equal to one hundred fifty percent (150%) of
the Base Rent applicable during the last rental period of the Lease Term under
this Lease. Such month-to month tenancy shall be subject to every other term,
covenant and agreement contained herein. Nothing contained in this Lease shall
be construed as consent by Lessor to any holding over by Lessee, and Lessor
expressly reserves the right to require Lessee to surrender possession of the
Premises to Lessor as provided in this Lease upon the expiration or other
termination of this Lease. The provisions of this Lease shall not be deemed to
limit or constitute a waiver of any other rights or remedies of Lessor provided
herein or at law. If Lessee fails to surrender the Premises upon the
termination or expiration of this Lease, in addition to any other liabilities to
Lessor accruing therefrom, Lessee shall protect, defend, indemnify and hold
Lessor harmless from all loss, costs (including reasonable attorneys' fees) and
liability resulting from such failure, including, without limiting the
generality of the foregoing, any claims made by any succeeding or prospective
tenant founded upon such failure to surrender, and any lost profits to Lessor
resulting therefrom.

                                   ARTICLE 16

                     ESTOPPEL, ATTORNMENT AND SUBORDINATION

     16.1 Estoppel Certificate. Within ten (10) days after request therefor by
          --------------------
Lessor, Lessee shall execute and deliver an estoppel certificate which shall be
substantially in the form of Exhibit F attached hereto and made a part hereof
(or such other form as may be required by any mortgagee or prospective mortgagee
or purchaser of the Project or any portion thereof) and which shall contain such
other information reasonably requested by Lessor or any such mortgagee or
purchaser. Lessee's failure to deliver such statement in time shall constitute
an acceptance of the Premises and an acknowledgment by Lessee that the
statements included in the estoppel certificate are true and correct, without
exception.

     16.2 Subordination. This Lease is subject and subordinate to all present
          -------------
and future ground or underlying leases of the Project or any portion thereof,
and to the lien of any mortgages or trust deeds, now or hereafter in force
against the Project or any portion thereof, if any, and to all renewals,
extensions, modifications, consolidations and replacements thereof, and to all
advances made or hereafter to be made upon the security of such mortgages or
trust deeds, unless the holders of such mortgages or trust deeds, or the lessors
under such ground leases or underlying leases, require in writing that this
Lease be superior thereto. Notwithstanding the foregoing to the contrary, Lessor
agrees to provide Lessee with non-disturbance agreement(s) in favor of Lessee
from any ground lessors, mortgage holders or deed of trust beneficiaries under
any ground lease, mortgage or deed of trust affecting the Project which comes
into existence at any time after the date of execution of this Lease but prior
to the expiration of the Lease Term ("Future Mortgage") in consideration of, and
as a condition precedent to, Lessee's agreement to be bound by the terms of this
Article 16 with respect to such Future Mortgage. Such agreements shall be on
such lessors',

                                       21
<PAGE>

holder's or beneficiaries' standard form. Lessee covenants and agrees in the
event any proceedings are brought for the foreclosure of any such mortgage or
trust deed or termination of a ground lease, to attorn, without any deductions
or setoffs whatsoever, to the purchaser upon any such foreclosure sale or ground
lessor upon any such termination if so requested to do so by such purchaser or
ground lessor, and to recognize such purchaser or ground lessor as the lessor
under this Lease. Lessee shall, within ten (10) days of request by Lessor,
execute such further instruments or assurances as Lessor may reasonably deem
necessary to evidence or confirm the subordination or superiority of this Lease
to any such mortgages, trust deeds, ground leases or underlying lease. Lessee
hereby irrevocably authorizes Lessor to execute and deliver in the name of
Lessee any such instrument or instruments if Lessee fails to do so, provided
that such authorization shall in no way relieve Lessee from the obligation of
executing such instruments of subordination or superiority. Lessee waives the
provisions of any current or future statute, rule or law which may give or
purport to give Lessee any right or election to terminate or otherwise adversely
affect this Lease and the obligations of Lessee hereunder in the event of any
foreclosure proceeding or sale.

                                   ARTICLE 17

                               DEFAULTS; REMEDIES

     17.1 Events of Default. The occurrence of any of the following events shall
          -----------------
constitute an "Event of Default" on the part of Lessee without notice from
Lessor unless otherwise provided:

         (a) Payment. Failure to pay any installment of Base Rent, Additional
             -------
Rent or other monies due and payable hereunder upon the date when said payment
is due, where such failure continues for a period of five (5) days;

         (b) Performance. Default in the performance of any of Lessee's
             -----------
covenants, agreements or obligations hereunder (except default in the payment of
Rent), where such default continues for fifteen (15) days after written notice
thereof from Lessor;

         (c) Assignment. A general assignment by Lessee for the benefit of
             ----------
creditors;

         (d) Bankruptcy. The filing of a voluntary petition by Lessee, or the
             ----------
filing of an involuntary petition by any of Lessee's creditors seeking the
rehabilitation, liquidation or reorganization of Lessee under any law relating
to bankruptcy, insolvency or other relief of debtors and not removed within
ninety (90) days of filing.

         (e) Receivership. The appointment of a receiver or other custodian to
             ------------
take possession of substantially all of Lessee's assets or of the Premises or
any interest of Lessee therein;

         (f) Insolvency or Dissolution. Lessee shall become insolvent or unable
             -------------------------
to pay its debts, or shall fail generally to pay its debts as they become due;
or any court shall enter a decree or order directing the winding up or
liquidation of Lessee or of substantially all of its assets; or Lessee shall
take any action toward the dissolution or winding up of its affairs or the
cessation or suspension of its use of the Premises; and,

         (g) Attachment. Attachment, execution or other judicial seizure of
             ----------
substantially all of Lessee's assets or the Premises or any interest of Lessee
under this Lease.

                                      22
<PAGE>

     17.2 Lessor's Remedies. If an Event of Default shall occur, at any time
          -----------------
thereafter and without limiting Lessor in the exercise of any other right or
remedy at law or in equity, Lessor may elect any of the following remedies:

         (a) Continuation of Lease. Notwithstanding Lessee's breach of the Lease
             ---------------------
and abandonment of the Premises, Lessor may continue the Lease in full force and
effect and enforce all of the Lessor's rights and remedies under the Lease, as
provided by California Civil Code section 1951.4, including the right to recover
rent as it becomes due, so long as Lessor does not terminate Lessee's right to
possession. Acts of maintenance or preservation or efforts to relet the Premises
or the appointment of a receiver upon initiative of Lessor to protect Lessor's
interest under this Lease shall not constitute a termination of Lessee's right
to possession. At any time subsequent to vacation or abandonment of the Premises
by Lessee, Lessor may give notice of termination and shall thereafter have all
of the rights set forth in Section 17.2 (b) below. -

         (b) Termination. So long as the default continues, Lessor shall have
             -----------
the right to terminate this Lease by written notice to Lessee setting forth: (i)
the default; (ii) the requirements to cure it; and (iii) a demand for
possession, which shall be effective upon the later of three (3) days after such
notice is given or the expiration of the times specified in Section 17.1
hereinabove.

         (c) Possession. Following termination of the Lease under Section
             ----------
17.2(b) and without prejudice to any other remedies Lessor may have by reason of
Lessee's default or of such termination, Lessor may then or at anytime
thereafter: (i) peaceably re-enter the Premises, or any part thereof, upon
voluntary surrender by Lessee or expel or remove Lessee therefrom and any other
persons occupying them, using such legal proceedings as are then available; (ii)
repossess and enjoy the Premises; or relet the Premises or any part thereof for
such term or terms (which may be for a term extending beyond the Term) at such
rental or rentals and upon such other terms and conditions as Lessor in its sole
discretion shall determine, with the right to make reasonable alterations and
repairs to the Premises; and (iii) remove all personal property therefrom, store
such personal property at Lessee's expense and sell such property and apply the
proceeds therefrom pursuant to applicable California law, all as
attorney-in-fact for Lessee.

         (d) Recovery. Following termination under Section 17.2(b) above, Lessor
             --------
shall have all the rights and remedies to recover from Lessee damages as
provided by California Civil Code section 1951.2 (or any successor law)
including without limitation: (i) the worth at the time of the award of the
unpaid Rent and other amounts which had been earned at the time of termination;
(ii) the worth at the time of the award of the amount by which the unpaid Rent
which would have been earned after termination until the time of the award
exceeds the amount of such Rent loss that Lessee proves could have been
reasonably avoided; (iii) the worth at the time of the award of the amount by
which the unpaid Rent for the balance of the Lease Term after the time of award
exceeds the amount of such Rent loss Lessee proves could be reasonably avoided;
(iv) any other amount necessary to compensate Lessor for all detriment
proximately caused by Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and (v) at Lessor's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable law.
The "worth at the time of the award" of the amounts referred to in (i) and (ii)
are computed by allowing interest at the Interest Rate applicable to the time of
award. The "worth at the time of the award" of the amount referred to in (iii)
above shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).

         (e) Receivership. Upon application by Lessor, Lessor may have a
             ------------
receiver appointed for Lessee to take possession of the Premises and to apply
all rental collected from the

                                      23
<PAGE>

Premises and to exercise all other rights and remedies granted to Lessor as
attorney-in-fact for Lessee pursuant to Section 17.2(c) above.

         (f) Additional Remedies. In addition to the foregoing remedies, so long
             -------------------
as this Lease is not terminated, Lessor shall have the right to remedy any
default of Lessee, to maintain or improve the Premises without terminating the
Lease, to incur expenses on behalf of Lessee in seeking a new subtenant or to
cause a receiver to be appointed to administer the Premises and new or existing
subleases, and to add to the Rent payable hereunder all of Lessor's reasonable
costs in doing so, with interest at the maximum rate set by statute. Lessor may
pursue any and all other remedies available to Lessor at law or in equity, by
statute or otherwise.

         (g) Other Breaches. If Lessee causes or threatens a breach of any of
             --------------
the covenants, agreements, terms or conditions contained in this Lease, Lessor
shall be entitled to retain all sums held by Lessor for Lessee's account or in
any account provided for herein to enjoin such breach or threatened breach, and
to invoke any right and remedy allowed at law or in equity or by statute or
otherwise as though re-entry, summary proceedings and other remedies were not
provided for in this Lease.

         (h) Cumulative. Each right and remedy of Lessor provided for in this
             ----------
Lease shall be cumulative and shall be in addition to every other right or
remedy provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise. The exercise or beginning of the exercise by
Lessor of any one or more of the rights or remedies provided for in this Lease,
now or hereafter existing at law or in equity or by statute or otherwise, shall
not preclude the simultaneous or later exercise by Lessor of any or all other
rights or remedies provided for in this Lease or now or hereafter existing at
law or in equity or by statute or otherwise.

         (i) No Waiver. Notwithstanding anything to the contrary contained
             ---------
herein, no failure by Lessor to insist upon the strict performance of any term
hereof or to exercise any right or remedy consequent upon a breach thereof, and
no acceptance of full or partial payment of Rent during the continuance of any
such breach shall constitute a waiver of any such breach or of any such term.
Efforts by Lessor to mitigate the damages caused by Lessee's breach of this
Lease shall not be construed to be a waiver of Lessor's right to recover
damages under this Article 17. Nothing in this Article 17 affects the right of
Lessor to be indemnified and/or held harmless by Lessee in accordance with the
provisions of this Lease for liability arising prior to the termination of this
Lease.

                                   ARTICLE 18

                                    GRAPHICS

     18.1 General. Lessor shall provide identification of Lessee's name and
          -------
suite numerals at the main entrance door to the Premises. All graphics of Lessee
visible in or from public corridors or the exterior of the Premises or Project
shall be subject to Lessor's prior written approval and consistent with the
graphic standards established for the Project by Lessor. Upon the expiration or
earlier termination of this Lease, Lessee shall be responsible, at its sole cost
and expense, for the removal of such signage and the repair of all damage caused
by such removal.

     18.2 Building Directory. At Lessor's cost, Lessee shall be entitled to its
          ------------------
proportionate share of lines on the office building directory to display
Lessee's name and location in the Project.

                                      24
<PAGE>

     18.3 Prohibited Signage and Other Items. Any signs, notices, logos,
          ----------------------------------
pictures, names or advertisements which are installed and that have not been
individually approved by Lessor may be removed without notice by Lessor at the
sole expense of Lessee. Lessee may not install any signs on the exterior or roof
of the Building or the common areas of the Project. Any signs, window coverings,
or blinds (even if the same are located behind the Lessor approved window
coverings for the Building), or other items visible from the exterior of the
Premises are subject to the prior approval of Lessor, in its sole discretion.

                                   ARTICLE 19

               LESSOR'S RIGHT TO CURE DEFAULT; PAYMENTS BY LESSEE

     19.1 Lessor's Cure. All covenants and agreements to be kept or performed by
          -------------
Lessee under this Lease shall be performed by Lessee at Lessee's sole cost and
expense and without any reduction of Rent. If Lessee shall fail to perform any
of its obligations under this Lease, Lessor may, but shall not be obligated to,
make any such payment or perform any such act on Lessee's part without waiving
its right based upon any default of Lessee and without releasing Lessee from any
obligations hereunder.

     19.2 Lessee's Reimbursement. Except as may be specifically provided to the
          ----------------------
contrary in this Lease, Lessee shall, within fifteen (15) days after delivery by
Lessor to Lessee of statements therefor, pay to Lessor the following, as
Additional Rent, together with interest at the Interest Rate: (i) sums equal to
expenditures reasonably made and obligations incurred by Lessor in connection
with the remedying by Lessor of Lessee's defaults pursuant to the provisions of
Section 19.1; (ii) sums equal to all losses, costs, liabilities, damages and
expenses referred to in Article 9 of this Lease; and (iii) sums equal to all
expenditures made and obligations incurred by Lessor in collecting or attempting
to collect the Rent or in enforcing or attempting to enforce any rights of
Lessor under this Lease or pursuant to law, including, without limitation, all
legal fees and other amounts so expended. Lessee's obligations under this
Section 19.2 shall survive the expiration or sooner termination of the Lease
Term.

                                   ARTICLE 20

                            MISCELLANEOUS PROVISIONS

     20.1 Terms. The necessary grammatical changes required to make the
          -----
provisions hereof apply either to corporations, partnerships or other entities
or individuals, men or women, as the case may require, shall in all cases be
assumed as though in each case fully expressed.

     20.2 Binding Effect. Each of the provisions of this Lease shall extend to
          --------------
and shall, as the case may require, bind or inure to the benefit not only of
Lessor and of Lessee, but also of their respective successors or assigns;
provided this clause shall not permit any assignment by Lessee contrary to the
provisions of Article 13 of this Lease.

     20.3 Easements. Lessor reserves the right to: (i) alter the boundaries of
          ---------
the Lot, and (ii) grant easements on the Lot and dedicate for public use
portions thereof without Lessee's consent; provided, however, that no such grant
or dedication shall materially interfere with Lessee's use of the Premises.

     20.4 No Light, Air or View Easement. Any diminution or shutting off of
          ------------------------------
light, air or view by any structure which may be erected on lands adjacent to or
in the vicinity of the Project or

                                      25
<PAGE>

any temporary darkening of the windows of the Premises or obstruction of the
light or view therefrom by reason of any repairs, improvements, maintenance or
cleaning in or about the Project shall in no way affect this Lease or impose any
liability on Lessor or reduce or diminish Lessee's obligations under this
Lease.

     20.5 Authorization. If Lessee executes this Lease as a corporation, limited
          -------------
liability company or partnership, then Lessee and the persons executing this
Lease on behalf of Lessee represent and warrant that Lessee is duly qualified to
do business in California and that the individuals executing this Lease on
Lessee's behalf are duly authorized to execute and deliver this Lease on its
behalf, which in the case of a corporation shall be in accordance with a duly
adopted resolution of the board of directors of Lessee, a copy of which is to be
delivered to Lessor on execution hereof, which in the case of a limited
liability company, shall be in accordance with Lessee's operating agreement and
amendments thereto, if any, copies of which are to be delivered to Lessor with
the execution hereof, and which in the case of a partnership, shall be in
accordance with Lessee's partnership agreement and amendments thereto, if any,
copies of which are to be delivered to Lessor with the execution hereof.

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

     20.7 Peaceful Enjoyment. Subject to the other terms hereof, Lessee shall
          ------------------
and may peacefully have, hold and enjoy the Premises, provided that Lessee pays
the Rent and other sums herein to be paid by Lessee and performs all of Lessee's
covenants and agreements contained herein. It is understood and agreed that this
covenant and any and all other covenants of Lessor contained in this Lease shall
be binding upon Lessor and its successors only with respect to breaches
occurring when Lessor has an ownership interest in the Project, and shall be
binding on Lessor's successors only with respect to breaches occurring when such
successors have an ownership interest in the Project.

     20.8 Limitation of Lessor's Liability. The obligations of Lessor under this
          --------------------------------
Lease shall not constitute personal obligations of the partners, directors,
members, officers or shareholders of Lessor, and Lessee shall look solely to the
real estate that is the subject of this Lease and to no other assets of Lessor
for satisfaction of any liability in respect of this Lease and shall not seek
recourse against the partners, directors, members, officers or shareholders of
Lessor or any of their personal assets for such satisfaction.

     20.9 Time, Calendar Year: Calendar Days. Time is of the essence in the
          -----------------------------------
performance of all obligations under this Lease. As used in this Lease, the term
"calendar year" shall mean January 1 through December 31. Except as otherwise
expressly provided herein, all references to days in this Lease shall mean
calendar days, not working or business days; provided, however, that if a
certain date falls on a weekend or holiday, the next business day shall be
substituted for the applicable date.

     20.10 Severability. If any term or provision of this Lease, or the
           ------------
application thereof to any person or circumstance, the deletion of which shall
not adversely affect the receipt of any material benefit of Lessor or Lessee,
shall be invalid, void or unenforceable to any extent, the remainder of this
Lease, and the application of such terms or provisions to other persons or

                                      26
<PAGE>

circumstances, shall not be affected, impaired or invalidated thereby and shall
be enforced to the greatest extent permitted by law.

     20.11 Applicable Law. This Lease, and the rights and obligations of the
           --------------
parties hereto, shall be construed and enforced in accordance with the laws of
the State of California.

     20.12 Submission of Lease. The submission of this document for examination
           -------------------
and negotiation neither constitutes an offer to lease, nor a reservation of, nor
option for leasing the Premises. This document shall become effective and
binding only upon execution and delivery by Lessor. No act or omission of any
employee or agent of Lessor or of Lessor's broker or managing agent shall alter,
change or modify any of the provisions hereof.

     20.13 Rules and Regulations. At all times during the Lease Term, Lessee
           ---------------------
shall comply with rules and regulations (and such amendments as Lessor may
reasonably adopt) for the Project as set forth in Exhibit E attached hereto and
by this reference made a part hereof ("Rules and Regulations").

     20.14 No Nuisance. Lessee shall conduct its business and control its
           -----------
agents, employees, invitees and visitors in such a manner as not to create any
nuisance, or interfere with, annoy or disturb any other tenant or Lessor in its
operation of the Building.

     20.15 Broker. Lessee warrants that it has had no dealings with any real
           ------
estate broker or agent other than the brokers set forth in Article 12 of the
Summary ("Brokers") in connection with the negotiation of this Lease, and that
it knows of no other real estate broker or agent other than Brokers, who may be
entitled to any commission or finder's fee in connection with this Lease. Lessee
hereby indemnifies, defends, protects and holds Lessor harmless from and against
any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and
expenses with respect to any leasing commission or equivalent compensation
alleged to be owing on account of Lessee's dealings with any real estate broker
or agent other than Brokers. Upon and subject to the terms and conditions of a
separate written agreement between Lessor and Lessee's Agent, as identified in
Article 12 of the Summary, Lessee's Agent shall be paid a leasing commission;
however, no commission shall be payable with respect to any storage space.

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

     20.17 Recording. Neither Lessor nor Lessee shall record this Lease nor a
           ---------
short form memorandum thereof.

     20.18 No Merger. The voluntary or other surrender of this Lease by Lessee,
           ---------
or a mutual cancellation thereof, shall not work a merger, and at the option of
Lessor shall terminate all or any existing assignments, subleases or
subtenancies, or at the option of Lessor may operate as an assignment to it of
any or all such assignments, subleases or subtenancies.

     20.19 Amendment. Except as otherwise provided herein, no subsequent
           ---------
alteration, amendment, change or addition to this Lease shall be binding upon
Lessor or Lessee unless in writing and executed by Lessor and Lessee.

                                      27
<PAGE>

     20.20 Financial Statements. At any time during the Lease Term, Lessee shall
           --------------------
upon ten (10) days prior written notice from Lessor provide Lessor with a
current financial statement and financial statements of the two (2) years prior
to the current financial statement year. Such statements shall be prepared in
accordance with generally accepted accounting principles.

     20.21 Relocation. At any time after Lessee's execution of this Lease, but
           ----------
not later than sixty (60) days prior to Lessee's scheduled occupancy, Lessor
shall have the right, upon providing Lessee ten (10) days' written notice, to
provide Lessee, if Lessee occupies less than a full floor, with reasonably
similar space elsewhere in the Building of approximately the same size as the
Premises and to move Lessee to said space. In the event Lessor moves Lessee to
such new space, then this Lease and each and all of the terms and covenants and
conditions hereof shall remain in full force and effect and thereupon be deemed
applicable to such new space except that a revised floor plan shall become part
of this Lease and shall reflect the location of the new space. If Lessee refuses
to permit Lessor to move Lessee to such new space at the end of such ten (10)
day period, Lessor shall have the right to terminate this Lease by written
notice given to Lessee within five (5) days following the end of the ten (10)
day period, which termination shall be effective forty-five (45) days after the
date of the original notice of relocation by Lessor. If the Lessee occupies less
than a full floor, then at any time after Lessee's occupancy of the Premises,
the Lessor, at Lessor's sole cost and expense, including the cost to move
Lessee's equipment, furniture and other personal property to the new premises,
reserves the right to relocate any partial floor occupancy of Lessee to a
different location within the Building; provided, however that such tenant space
shall be of comparable size, quality and layout as the Premises, and shall not
cost Lessee any more rent than is payable for the initial Premises.

     20.22 Entry. After reasonable notice (except in emergencies where no such
           -----
notice shall be required), Lessor, its agents and representatives, shall have
the right to enter the Premises to inspect the same, to clean, to perform such
work as may be permitted or be permitted or required under this Lease, to make
repairs to or alterations of the Project or other tenant spaces therein, to deal
with emergencies, to post such notices as may be permitted or required by law,
to prevent perfection of liens against Lessor interest in the project or to
exhibit the Premises to prospective tenants, purchasers, encumbrances or others,
or for any other purpose as Lessor may deem necessary or desirable; provided,
however, that Lessor shall not unreasonably interfere with Lessee business
operations. Lessee shall not be entitled to any abatement of Rent by reason of
the exercise of any such right of entry.

     20.23 Financing. Lessee shall not execute any document purporting to affect
           ---------
the Premises or any other property of which the Premises are a part, including,
without limitation, any financing statement, without prior written consent of
Lessor.

     20.24 Hazardous Substances: Indemnification.
           -------------------------------------

           (a) Except for general office and photocopying production supplies
typically used in an office or photocopying production area in the ordinary
course of business, such as copier toner, liquid paper, glue, ink, and cleaning
solvents, for use in the manner for which they were designed, in such amounts as
may be normal for the office business operations conducted by Lessee in the
Premises, neither Lessee nor its agents, employees, contractors, licensees,
sublessees, assignees, concessionaires or invitees shall use, handle, store or
dispose of any Hazardous Substances in, on, under or about the Premises or the
Project. Except for Hazardous Substances customarily used in connection with
general office uses, Lessee shall not cause or permit any Hazardous Substance to
be used, stored, generated or disposed of on or in the Project

                                      28
<PAGE>

or the Premises by Lessee, Lessee's agents, employees, contractors, or invitees.
If any Hazardous Substances are used, stored, generated, or disposed of on or in
the Premises including those customarily used in connection with general office
uses, or if the Premises become affected by any release or discharge of a
Hazardous Substance, Lessee shall indemnify, defend and hold harmless Lessor
from and against any and all claims, damages, fines, judgments, penalties,
costs, liabilities, or losses (including, without limitation,' a decrease in
value of the Premises, damages caused by loss or restriction of rentable or
usable space, or any damages caused by adverse impact on marketing of the space,
and any and all sums paid for settlement of claims, attorneys' fees, consultant,
and expert fees) arising during or after the term of this Lease and arising as a
result of such contamination, release or discharge. This indemnification
includes, without limitation, any and all costs incurred because of any
investigation of the site or any clean-up, remediation, removal, or restoration
mandated by federal, state or local agency or political subdivision. Without
limitation of the foregoing, if Lessee causes or permits the presence of any
Hazardous Substance on the Premises and the same results in any contamination,
release or discharge, Lessee shall promptly, at its sole expense, take any and
all necessary actions to return the Premises to the conditions existing prior to
the presence of any such Hazardous Substance on the Premises. Lessee shall first
obtain Lessor's approval for any such remedial action. Furthermore, Lessee shall
immediately notify Lessor of any inquiry, test, investigation or enforcement
proceeding by or against Lessee or the Project concerning the presence of any
Hazardous Substance. Lessee acknowledges that Lessor, at Lessor's election,
shall have the sole right, at Lessee's expense, to negotiate, defend, approve
and appeal any action taken or order issued by any governmental authority with
regard to any Hazardous Substance contamination for which Lessee is obligated
hereunder.

           (b) As used herein, "Hazardous Substance" means asbestos, any
petroleum fuel, polychorobiphenyls ("PCBs") and any hazardous or toxic
substance, material or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States government,
including, but not limited to, any material or substance defined as a "hazardous
waste", "extremely hazardous waste", "restricted hazardous waste", "hazardous
substance", "hazardous material" or "toxic pollutant" under the California
Health and Safety Code and/or under the Comprehensive Environmental Response,
Compensation and Liability Act, 42, U.S.C. section 9601, et. seq.

     20.25 No Warranty. In executing and delivering this Lease, Lessee has not
           -----------
relied on any representation including, but not limited to, any representation
whatsoever as to the amount of any item comprising Rent or the amount of Rent in
the aggregate or that Lessor is furnishing the same services to other Lessees,
at all, on the same level or on the same basis or any warranty or any statement
of Lessor which is not set forth herein or in one or more of the exhibits
attached hereto.

     20.26 Entire Agreement. It is understood and acknowledged that there are
           ----------------
no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Lessor to Lessee with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease and
any side letter or separate agreement executed by Lessor and Lessee in
connection with this Lease and dated of even date herewith contain all of the
terms, covenants, conditions, warranties and agreements of the parties relating
in any manner to the rental, use and occupancy of the Premises, shall be
considered to be the only agreement between the parties hereto and their
representatives and agents, and none of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in writing
signed by the parties hereto. All negotiations and oral agreements acceptable to
both parties have been merged into and are included herein. There are no other

                                      29
<PAGE>

representations or warranties between the parties, and all reliance with respect
to representations is based totally upon the representations and agreements
contained in this Lease.

     20.27 Force Majeure. Any prevention, delay or stoppage due to strikes,
           -------------
lockouts, labor disputes, acts of God, inability to obtain services, labor or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Lessee
pursuant to this Lease (collectively, "Force Majeure"), notwithstanding anything
to the contrary contained in this Lease, shall excuse the performance of such
party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by Force Majeure.

     20.28 Waiver of Redemption. Lessee hereby waives for Lessee and for all
           --------------------
those claiming under Lessee all right now or hereafter existing to redeem by
order or judgment of any court or by any legal process or writ, Lessee's right
of occupancy of the Premises after any termination of this Lease.

     20.29 Joint and Several. If there is more than one Lessee, the obligations
           -----------------
imposed upon Lessee under this Lease shall be joint and several.

     20.30 Notices. All notices, demands, statements, approvals or
           -------
communications (collectively, "Notices") given or required to be given by either
party to the other hereunder shall be in writing, shall be sent by United States
certified or registered mail, postage prepaid, return receipt requested, or
delivered personally (i) to Lessee at the appropriate address set forth in
Section 5 of the Summary, or to such other place as Lessee may from time to time
designate in a Notice to Lessor; or (ii) to Lessor at the addresses set forth in
Section 3 of the Summary, or to such other firm or to other place as Lessor may
from time to time designate in a Notice to Lessee. Any Notice will be deemed
given on the date it is mailed as provided in this Section 20.30 or upon the
date personal delivery is made or attempted to be made. If Lessee is notified of
the identity and address of Lessor's mortgagee or ground or underlying lessor,
Lessee shall give to such mortgagee or ground or underlying lessor written
notice of any default by Lessor under the terms of this Lease by registered or
certified mail, and such mortgagee or ground or underlying lessor shall be given
a reasonable opportunity to cure such default prior to Lessee's exercising any
remedy available to Lessee.

     20.31 Attorneys' Fees. If either party commences litigation against the
           ---------------
other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the parties hereto
agree to and hereby do waive any right to a trial by jury and, in the event of
any such commencement of litigation, the prevailing party shall be entitled to
recover from the other party such costs and actual professional fees such as
appraisers and accountants and reasonable attorneys' fees as may have been
incurred, including any and all costs and fees incurred in enforcing, perfecting
and executing such judgment.

     20.32 Independent Covenants. This Lease shall be construed as though the
           ---------------------
covenants herein between Lessor and Lessee are independent and not dependent and
Lessee hereby expressly waives the benefit of any statute to the contrary and
agrees that if Lessor fails to perform its obligations set forth herein, Lessee
shall not be entitled to make any repairs or perform any acts hereunder at
Lessor's expense or to any set-off of the Rent or other amounts owing hereunder
against Lessor; provided, however, that the foregoing shall in no way impair the
right of Lessee to

                                      30
<PAGE>

commence a separate action against Lessor for any violation by Lessor of the
provisions hereof so long as notice is first given to Lessor and any holder of a
mortgage or deed of trust covering the Building, Project or any portion thereof,
of whose address Lessee has theretofore been notified, and an opportunity is
granted to Lessor and such holder to correct such violations as provided above.

     20.33 Project Name and Signage. Lessor shall have the right at any time to
           ------------------------
change the name of the Project and to install, affix and maintain any and all
signs on the exterior and on the interior of the Project as Lessor may, in
Lessor's sole discretion, desire.

     20.34 Transportation Management. Lessee shall fully comply with all present
           -------------------------
or future programs intended to manage parking, transportation or traffic in and
around the Project, and in connection therewith, Lessee shall take responsible
action for the transportation, planning and management of all employees located
at the Premises by working directly with Lessor, any governmental transportation
management organization or any other transportation-related committees or
entities. Such programs may include, without limitation: (i) restrictions on the
number of peak-hour vehicle trips generated by Lessee, (ii) increased vehicle
occupancy; (iii) implementation of an in-house ride-sharing program and an
employee transportation coordinator; (iv) working with employees and any Project
or area-wide ride-sharing program manager; (v) instituting employer-sponsored
incentives (financial or in-kind) to encourage employees to ride-share; and (vi)
utilizing flexible work shifts for employees.

     20.35 No Discrimination. Lessee covenants by and for itself, its heirs,
           -----------------
executors, administrators and assigns, and all persons claiming under or through
Lessee, and this Lease is made and accepted upon and subject to the following
conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, sex, religion,
marital status, ancestry or national origin in the leasing, subleasing,
transferring, use or employment of the Premises, nor shall Lessee itself, or any
person claiming under or through Lessee, establish or permit such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, sublessees,subtenants or
vendees in the Premises.

     20.36 Termination of Prior Lease. The parties acknowledge that the
           --------------------------
effectiveness of this Lease is conditioned upon the execution and delivery by
the existing tenant of the Premises of a lease termination agreement in form and
substance satisfactory to Lessor. Either party shall have the right to terminate
this Lease, by giving written notice thereof to the other party, should this
condition not be satisfied by April 30, 1999.

                                       31
<PAGE>

     IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be executed
the day and date first above written.

"LESSOR":

BPG SANSOME, L.L.C.,
a Delaware limited liability company

By:  BPG PARTNERS, LLC,
     Managing Member

     By:  /s/ Richard J. Johnson
          ----------------------
          RICHARD J. JOHNSON
          Manager

"LESSEE":

PLUMTREE SOFTWARE,
a California corporation

By:  /s/ John Kunze
     --------------
Its:     CEO
     --------------
<PAGE>

                                   Exhibit A

                                  page 1 of 2

                        [GRAPHICAL INFORMATION OMITTED]

                                                                     FIRST FLOOR

                                                                       REFERENCE
                                                                           NORTH
<PAGE>

                                   Exhibit A

                                  page 2 of 2

                        [GRAPHICAL INFORMATION OMITTED]

                                                                       MEZZANINE

                                                                       REFERENCE
                                                                           NORTH

<PAGE>

                                    EXHIBIT B

                               500 SANSOME STREET

                                LEGAL DESCRIPTION
                                -----------------

All the certain real property located in the City and County of San Francisco,
State of California, described as follows:

APN 5734-013-022

BEGINNING at the point of intersection of the northerly line of Clay Street and
the easterly line of Sansome Street; running thence easterly along said
northerly line of Clay Street 137 feet and 6 inches; thence northerly parallel
with said easterly line of Sansome Street 122 feet to the southerly line of
Merchant Street; thence westerly along said southerly line of Merchant Street
137 feet and 6 inches to the easterly line of Sansome Street; thence southerly
along said easterly line of Sansome Street 122 feet to the point of beginning.

BEING a portion of 50 Vara Block No. 35.

                               Exhibit B - Page 1
<PAGE>

                                    EXHIBIT C

                               500 SANSOME STREET

                                   WORK LETTER
                                   -----------

This Work Letter shall set forth the terms and conditions relating to the
construction of the Lessee improvements in the Premises. Al] capitalized terms
used but not defined herein shall have the meanings given such terms in this
Lease. All references in this Work Letter to Articles or Sections of "this
Lease" shall mean the relevant portion of Articles 1 through 20 of this Lease to
and of which this Work Letter forms a part.

A.   LESSOR'S OBLIGATIONS: The Premises are being delivered to Lessee in an "as
     --------------------
is" condition, and Lessor shall have no obligation to install or provide any
improvements in or to the Premises, except Lessor shall:

     1.   Touch up the paint on the interior walls of the Premises; and

     2.   Clean the existing carpeting in the Premises.

B.   LESSEE'S OBLIGATIONS
     --------------------

     1.   All other improvements which are to be constructed within the
          Premises, if any, that are in addition to the foregoing-described
          Lessor's improvements ("Lessee's Work") will be provided by Lessee at
          Lessee's sole cost and expense and in compliance with the provisions
          of this Work Letter and Article 7 of the Lease. Lessee is required to
          submit plans for all of Lessee's Work with copies of all permits as
          may be required for Lessee's construction from the applicable
          governmental authorities within 14 days of the execution of this Lease
          and receive approval from Lessor prior to the commencement of such
          work.

     2.   Lessee shall reimburse Lessor for all fees levied by appropriate
          governmental jurisdictions which are related to Lessee's Work and/or
          use of the Premises. Lessee agrees to reimburse Lessor for all
          architectural/engineering fees in connection with the preparation
          and/or review of working drawings for Lessee's Work.

     3.   Lessee agrees that all work performed by him or his contractor or
          agent shall be of a good and workmanlike quality, and performed in a
          diligent manner so as not to create nuisance to the other tenants of
          the Building. All debris created by Lessee's Work must be removed from
          site in an approved manner at Lessee's sole cost.

     4.   Lessee further warrants that its contractors shall in no way delay or
          cause delay or nuisance to any other contractor working at the
          Building. Lessee agrees to hold Lessor harmless for the cost of any
          time lost by any other contractor due to the actions or failure to act
          of Lessee's contractors.

     5.   In the event Lessee elects to use a contractor other than Lessor's
          contractor, prior to construction Lessee is to provide Lessor with a
          copy of an agreement between

                               Exhibit C - Page 1
<PAGE>

Lessee and a bonded disbursement company, a performance bond or other method
which will guarantee the payment of construction funds and final lien-free
completion of any and all work performed by Lessee within the Premises.
Method of guarantee shall be approved by Lessor. All fees for this service are
to be paid by Lessee.

                         Exhibit C - Page 2
<PAGE>

                                    EXHIBIT D
                               500 SANSOME STREET
                           NOTICE OF LEASE TERM DATES
                           --------------------------

Re:  Office Lease dated April 7, 1999 between BPG Sansome, L.L.C., Lessor, and
     Plumtree Software, Lessee, concerning Suite 100, located at 500 Sansome
     Street, San Francisco, California 94111.

In accordance with the subject Lease, this Notice will confirm the following:

1.   The Premises have been accepted by Lessee as being substantially complete
     in accordance with the Lease and there is no deficiency in construction.

2.   Lessee has possession of the Premises and acknowledges that under the
     provisions of the Lease, the term of said Lease commenced as of __________,
     1999 for a term of 36 months ending on _______________, 2002.

3.   In accordance with the Lease, Rent commenced to accrue on _____________,
     1999.

4.   If the commencement date of the Lease is other than the first day of the
     month, the first billing will contain a pro rata adjustment. Each billing
     thereafter shall be for the full amount of the monthly installment as
     provided for in the Lease.

5.   Rent is due and payable in advance on the first day of each and every
     month. Rent checks should be made payable to BPG Sansome, L.L.C. and
     delivered to:

                             BPG Sansome, L.L.C.
                             P. 0. Box 8743
                             Los Angeles, CA 90088-8743

6.   The number of rentable square feet in the Premises is approximately 15,668.

7.   Lessee's Percentage Share is 11.03%.

                               Exhibit D - Page 1
<PAGE>

Lessor:

BPG Sansome, L.L.C.,
a Delaware limited liability company
100 First Street, Suite 2200
San Francisco, California 94105

BPG SANSOME, L.L.C.,
a Delaware limited liability company

By:  BPG PARTNERS, LLC,
     Managing Member

     By:   __________________
           RICHARD J. JOHNSON
           Manager

Date: ______________________________

Lessee:

PLUMTREE SOFTWARE,
a California corporation

By:  _______________________________

Its: _______________________________

                              Exhibit D - Page 2
<PAGE>

                                    EXHIBIT E

                               500 SANSOME STREET

                             RULES AND REGULATIONS
                             ---------------------

     Lessee shall faithfully observe and comply with the following Rules and
Regulations. Lessor shall not be responsible to Lessee for the non-performance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project.

     1. Lessee shall not alter any lock or install any new or additional locks
or bolts on any doors or windows of the Premises without obtaining Lessor's
prior written consent. Lessee shall bear the cost of any lock changes or repairs
required by Lessee. Two keys will be furnished by Lessor for the Premises, and
any additional keys required by Lessee must be obtained from Lessor at a
reasonable cost to be established by Lessor.

     2. All doors opening to public corridors shall be kept closed at all times
except for normal ingress and egress to the Premises, unless electrical
hold-backs have been installed.

     3. Lessor reserves the right to close and keep locked all entrance and exit
doors of the office building during such hours as are customary for comparable
buildings in the vicinity of the Project. Lessee, its employees and agents must
be sure that the doors to the office building are securely closed and locked
when leaving the Premises if it is after the normal hours of business for the
Project. Any Lessee, its employees, agents or any other persons entering or
leaving the Project at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Project, may be required to
sign the security register when so doing. Access to the Project may be refused
unless the person seeking access has proper identification or has made a
previous arrangement with regard to the admission to or exclusion from the
Project of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Lessor reserves the right to prevent access to the Project
during the continuance of same by any means it deems appropriate for the safety
and protection of life and property.

     4. Lessor shall have the right to prescribe the weight, size and position
of all safes and other heavy property brought into the Project. Safes and other
heavy objects shall, if considered necessary by Lessor, stand on supports of
such thickness as is necessary to properly distribute the weight. Lessor shall
not be responsible for loss of or damage to any such safe or property in any
case. All damage done to any part of the Project, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be the
sole responsibility of Lessee and any expense of said damage or injury shall be
borne by Lessee.

     5. Except for reasonable delivery of copying materials and supplies for
which Lessee shall have reasonable access without notification to Lessor to the
freight elevator (provided that access to the freight elevator needs to
accommodate other tenants' needs and will be managed by the property manager),
no furniture, freight, packages, supplies, equipment or merchandise will be
brought into or removed from the Building or carried up or down in the
elevators, except upon prior notice to Lessor, and in such manner, in such
specific elevator, and between such hours as shall be designated by Lessor.
Lessee shall provide Lessor with not less than 24 hours' prior notice of the
need to utilize an elevator for any such purpose, so as to provide Lessor with a

                              Exhibit E - Page 1
<PAGE>

reasonable period to schedule such use and to install such padding or take such
other actions or prescribe such procedures as are appropriate to protect against
damage to the elevators or other parts of the Building. In no event shall
Lessee's use of the elevators for any such purpose be permitted during the hours
of 7:00 a.m. - 9:00 a.m., 11:30 a.m. - 1:30 p.m. and 4:30 p.m. - 6:30 p.m.

     6. Lessor shall have the right to control and operate the public portions
of the Project, the public facilities, the heating and air conditioning, and any
other facilities furnished for the common use of tenants, in such manner as is
customary for comparable buildings in the vicinity of the Project.

     7. The requirements of Lessee will be attended to only upon application at
the Office of the Project or at such office location designated by Lessor.
Lessee shall not request employees of Lessor to perform any work or do anything
outside of their regular duties unless Lessee has received special instructions
from Lessor.

     8. Lessee shall not disturb, solicit, or canvass any occupant of the
Project and shall cooperate with Lessor or Lessor's agents to prevent same.

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

     10. Lessee shall not overload the floor of the Premises, nor mark, drive
nails or screws, or drill into the partitions, woodwork or plaster or in any way
deface the Premises or any part thereof without Lessor's consent first had and
obtained, which consent shall not be unreasonably withheld; provided, however,
that Lessee may, without Lessor's prior consent, place pictures and normal wall
hangings on the Premises so long as Lessee repairs any damage resulting
therefrom and Lessee restores the Premises to its condition prior to the
placement of such items.

     11. Except for vending machines rented for the sole use of Lessee's
employees and invitees, no vending machine or machines of any description other
than fractional horsepower office machines, shall be installed, maintained or
operated upon the Premises without the written consent of Lessor.

     12. Lessee shall not use or keep in or on the Premises or the Project any
kerosene, gasoline or other inflammable or combustible fluid or hazardous
material.

     13. Lessee shall not use any method of heating or air conditioning other
than that which may be supplied by Lessor, without the prior written consent of
Lessor.

     14. Lessee shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in or on the Premises, or permit or allow the Premises
to be occupied or used in a manner offensive or objectionable to Lessor or other
occupants of the Project by reason of noise, odors, or vibrations, or interfere
in any way with other tenants or those having business therein.

     15. Lessee shall not bring into or keep within the Project or the Premises
any animals, birds, bicycles or other vehicles.

                               Exhibit E - Page 2
<PAGE>

     16. No cooking shall be done or permitted by any Lessee on the Premises,
nor shall the Premises be used for the storage of merchandise, for lodging or
for any improper, objectionable or immoral purposes. Notwithstanding the
foregoing, Underwriters' laboratory-approved equipment and microwave ovens may
be used in the Premises for heating food and brewing coffee, tea, hot chocolate
and similar beverages, provided that such use is in accordance with all
applicable federal, state and city laws, codes, ordinances, rules and
regulations, and does not cause odors which are objectionable' to Lessor and
other tenants.

     17. Lessor will approve where and how telephone and telegraph wires are to
be introduced to the Premises. No boring or cutting for wires shall be allowed
without the consent of Lessor. The location of telephone, call boxes and other
office equipment affixed to the Premises shall be subject to the approval of
Lessor.

     18. Lessor reserves the right to exclude or expel from the Project any
person who, in the judgment of Lessor, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.

     19. Lessee, its employees and agents shall not loiter in the entrances or
corridors, nor in any way obstruct the sidewalks, lobby, halls, stairways or
elevators, and shall use the same only as a means of ingress and egress for the
Premises.

     20. Lessee shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Lessor to ensure the most effective operation of
the Project's heating and air conditioning system, and shall refrain from
attempting to adjust any controls. This includes the closing of exterior blinds,
disallowing the sun rays to shine directly into areas adjacent to exterior
windows.

     21. Lessee shall store all its trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in San Francisco
without violation of any law or ordinance governing such disposal. All trash,
garbage and refuse disposal shall be made only through entry-ways and elevators
provided for such purposes at such times as Lessor shall designate.

     22. Lessee shall comply with all safety, fire protection and evacuation
procedures and regulations established by Lessor or any governmental agency.

     23. Lessee shall assume any and all responsibility for protecting the
Premises from robbery and pilferage, which includes keeping doors locked and
other means of entry to the Premises closed when the Premises are not occupied.

     24. Lessor may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Lessor shall
be construed as a waiver of such Rules and Regulations in favor of any other
tenant or tenants, nor prevent Lessor from thereafter enforcing any such Rules
or Regulations against any or all tenants of the Building.

     25. No awnings or other projection shall be attached to the outside walls
of the Project without the prior written consent of Lessor. No curtains, blinds,
shades or screens shall be attached to or hung in, or used in connection with,
any window or door of the Premises without the prior written consent of Lessor.
All electrical ceiling fixtures hung in offices or spaces along

                               Exhibit E - Page 3
<PAGE>

the perimeter of the Project must be fluorescent and/or of a quality, tape,
design and bulb color approved by Lessor.

     26. The sashes, sash doors, skylights, windows, and doors that reflect or
admit light and air into the halls, passageways or other public places in the
Building shall not be covered or obstructed by Lessee, nor shall any bottles,
parcels or other articles be placed on the window sills.

     27. The washing and/or detailing of, or the installation of windshields,
radios, telephones in or general work on automobiles shall not be allowed in the
Project.

     28. Food vendors shall be allowed in the Building upon receipt of a written
request from the Lessee. Food vendor shall service only those tenants which have
a written request on file in the Building Management Office. Under no
circumstance shall the food vendor display their products in the public or
common area of the Building, including corridors and elevator lobbies. Any
failure to comply with this rule shall result in immediate, permanent withdrawal
of the vendor from the Project.

     29. Lessees must comply with requests made by the Lessor relative to
informing Lessee's employees of any items of importance affecting them as so
deemed by the Lessor.

     30. Lessee shall comply with the non-smoking ordinance adopted by local
governmental authority.

     31. Lessee shall not leave windows open when it rains, and shall be liable
to Lessor and other Lessees for any damages to the Building or property of other
Lessees resulting from rain coming into the Building through open windows.
Lessee shall see that the windows and doors of said demised Premises are closed
and securely locked before leaving the Building. In addition to the waiver of
any of the Lessor liability in Paragraph 9. It is further specifically provided
that Lessor is not liable for any damage resulting to Lessee property as the
result of windows being left open.

     32. All deliveries to Lessee shall be made at and through the delivery
entrance and nowhere else and Lessee shall advise all parties intending to make
deliveries to Lessee of this Rule.

     33. Lessor shall not be responsible to Lessee or to any other person for
the nonobservance or violation of these rules and regulations by any other
Lessee or other person. Lessee shall be deemed to have read these rules and to
have agreed to abide by them as a condition to its occupancy. Lessor shall use
commercially reasonable efforts to cause observance of these rules and
regulations by all Lessees of the Building.

     34. Lessor shall provide Lessee with a proportionate number of directory
strips on the Directory Board in the Building. Building standard signage on the
entrance door to the Premises will be provided as part of the Lessee
improvements covered by the Work Letter.

                               Exhibit E - Page 4
<PAGE>

                                    EXHIBIT F

                              500 SANSOME STREET

                     FORM OF LESSEE'S ESTOPPEL CERTIFICATE
                     -------------------------------------

The undersigned as Lessee under that certain Office Lease made and entered into
as of April 7, 1999 and between BPG Sansome, L.L.C., a Delaware limited
liability company, and the undersigned as Lessee for Premises on the first floor
of the Office Building located at 500 Sansome, San Francisco, California 94111,
certifies as follows:

     1. Attached hereto as Exhibit A is a true and correct copy of the
referenced Lease and all amendments and modifications thereto (the Lease as so
amended is herein referred to as the "Lease"). The documents contained in
Exhibit A represent the entire agreement between the parties as to the Premises.

     2. The undersigned has commenced occupancy of the Premises described in the
Lease, currently occupies the Premises, and the Lease Term commenced on
________________.

     3. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.

     4. Lessee has not transferred, assigned or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto, except as follows:

     5. Lessee shall not modify the Lease document or prepay any amounts owing
under the Lease to Lessor in excess of thirty (30) days without the prior
written consent of Lessor's mortgagee.

     6. Base Rent became payable on _________________________.

     7. The Lease Term expires on ___________________________.

     8. All conditions of the Lease to be performed by Lessor necessary to the
enforceability of the Lease have been satisfied and Lessor is not in default
thereunder.

     9. No rental has been paid in advance and no security has been deposited
with Lessor except as provided in the Lease.

     10. As of the date hereof, there are no existing defenses or offsets that
the undersigned has, which preclude enforcement of the Lease by Lessor.

     11. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through _______________. The current monthly installment of Base Rent is
$__________________.

     12. The undersigned acknowledges that this Estoppel Certificate may be
delivered to Lessor's mortgagee, prospective mortgagee, or a prospective
purchaser, and acknowledges that it recognizes that if the same is done, said
mortgagee, prospective mortgagee or prospective

                               Exhibit F - Page 1
<PAGE>

purchaser will be relying upon the statements contained herein in making the
loan or acquiring the property of which the Premises are a part, and in
accepting an assignment of the Lease as collateral security, and that receipt by
it of this certificate is a condition of making of the loan or acquisition of
such property.

     13. Each individual executing this Estoppel Certificate on behalf of Lessee
hereby represents and warrants that Lessee is a duly formed and existing entity
qualified to do business in California and that Lessee has full right and
authority to execute and deliver this Estoppel Certificate and that each person
signing on behalf of Lessee is authorized to do so.

     Executed at _____________ on the _____ day of ___________, 19___.

LESSEE:

PLUMTREE SOFTWARE,
a California corporation

By:  ________________________

Its: ________________________

                              Exhibit F - Page 2

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