Document:

<PAGE>

                                                                    Exhibit 10.6
                                                                    ------------

                                  LEASE BETWEEN

                               3559807 CANADA INC.

                                       and

                          ENTRUST TECHNOLOGIES LIMITED

                                       and

                        ENTRUST TECHNOLOGIES INCORPORATED

                                TABLE OF CONTENTS

I       DEFINITIONS............................................................1
               Base Building Core & Shell......................................1
               Building........................................................1
               Business Days...................................................1
               Business Hours..................................................1
               Commencement Date...............................................1
               Development Agreement...........................................2
               Exterior Building Amenities.....................................2
               Land............................................................2
               Lease Year......................................................2
               Notices.........................................................2
               Operating Expenses..............................................4
               Permitted Uses..................................................4
               Premises........................................................4
               Proportionate Share.............................................4
               Real Estate Broker..............................................4
               Real Estate Taxes...............................................5
               Rent............................................................5
               Schedules.......................................................5
               Security Deposit................................................5
               Substantial Performance Date....................................5
               Tax on Capital..................................................5
               Tenant Fit-Up...................................................5
               Term............................................................5
               Termination Date................................................5
II      LEASE..................................................................6
III     TERMINATION............................................................6
IV      RENTAL.................................................................6
V       NET RENTALS............................................................6
VI      REAL ESTATE TAXES, TAX ON CAPITAL AND OPERATING
        EXPENSES...............................................................7
VII     USE OF PREMISES........................................................8
<PAGE>

VIII    UTILITIES AND ADDITIONAL CHARGES.......................................8
IX      SERVICES...............................................................9
X       SECURITY..............................................................10
XI      ASSIGNMENT AND SUBLETTING.............................................10
XII     READINESS FOR OCCUPATION..............................................12
XIII    TENANT CARE...........................................................12
XIV     ALTERATIONS, ADDITIONS, IMPROVEMENTS AND REPAIRS......................13
XV      MAJOR REPAIRS.........................................................16
XVI     ACCESS TO PREMISES....................................................16
XVII    PROTECTION OF EQUIPMENT...............................................17
XVIII   COMPLIANCE WITH LAWS AND INDEMNIFICATION..............................17
XIX     SECURITY DEPOSIT......................................................19
XX      FIRE AND DESTRUCTION OF PREMISES......................................19
XXI     NON-RESPONSIBILITY OF LANDLORD........................................20
XXII    INSURANCE.............................................................21
XXIII   DEFAULT...............................................................22
XXIV    RELOCATION AND MODIFICATION OF BUILDING/PREMISES......................24
XXV     ADDITIONAL PROVISIONS.................................................24
XXVI    RULES AND REGULATIONS.................................................26
XXVII   MORTGAGES AND SUBORDINATION...........................................27
XXVIII  GUARANTOR.............................................................28
XXIX    SCHEDULES.............................................................29

               SCHEDULE "A"
               LEGAL DESCRIPTION..............................................31

               SCHEDULE "B"
               PREMISES DESCRIPTION...........................................32

               SCHEDULE "C"
               LANDLORD'S WORK................................................33

               SCHEDULE "D"
               RULES AND REGULATIONS..........................................34

               SCHEDULE "E"
               MINIMUM BUILDING STANDARDS FOR
               TENANT FINISHES................................................36

               SCHEDULE "F"
               ADDITIONAL PROVISIONS..........................................37
               Certificate as to Area of the Building.........................37
               Adjustment to the Rent.........................................37
               Option to Extend the Term......................................37
               Management of the Building.....................................38
               Maintenance of the Building....................................38
<PAGE>

               Leasehold Improvement Allowance/Tenant Fit-up..................39
               Condition of the Building......................................39
               Tenant's Right to Surrender its Interest in Portions of
                 the Premises.................................................40
               Environmental..................................................41
               Parking........................................................42
               Occupancy......................................................42
               News Release/Public Announcement...............................42
               Consents/Approvals.............................................42
               Tenant's Rights to Install.....................................42
               Operating Expenses.............................................43
               Landlord's Covenants...........................................44
               Generator......................................................45
               Opinion re: Guarantee..........................................46

               SCHEDULE "G"
               COST OF THE WORK FROM CCDC3....................................47
<PAGE>

MEMORANDUM OF AGREEMENT OF LEASE ENTERED INTO THIS 29TH DAY OF DECEMBER, 1999

BY AND BETWEEN:

                               3559807 CANADA INC.

                               (hereinafter referred to as the "Landlord")

AND:

                               ENTRUST TECHNOLOGIES LIMITED

                               (hereinafter referred to as the "Tenant")

AND:

                               ENTRUST TECHNOLOGIES INCORPORATED

                               (hereinafter referred to as the "Guarantor")

THIS AGREEMENT WITNESSETH:

                                   SECTION I
                                   ---------
                                  DEFINITIONS
                                  -----------

1.01 As used herein, the following expressions shall have the following
     meanings:

(a)  Base Building Core & Shell: has the meaning ascribed to it in the
     Development Agreement.

(b)  Building: the building(s), structure(s) and improvements to be constructed
     on the Land in accordance with the Development Agreement, including
     Landlord's equipment, systems and fixtures therein having a gross building
     area of approximately 146,100 square feet.

(c)  Business Days: a day on which the Land Registry Office for the Land Titles
     Division of Ottawa-Carleton is open for business with the public.

(d)  Business Hours: 7 A.M. to 7 P.M. during Business Days or such other times
     as may be designated by the Landlord in consultation with the Tenant from
     time to time.

(e)  Commencement Date: the Substantial Performance Date, providing that the
     Tenant has taken occupancy of the Premises in whole or in part or the City
     of Kanata has issued a completion notice or other notice or permit which
     permits occupation of the Premises and the conduct of regular business
     operations therein without material interference to the
<PAGE>

                                      -2-

     Tenant's business, except that if the reason that the Premises are not fit
     for the purposes intended as aforesaid is due to any Entrust Delay (as
     defined in the Development Agreement), the Commencement Date shall be such
     date as the Premises would have been so fit but for the Entrust Delay.

(f)  Development Agreement: that certain agreement entered into
     contemporaneously with this lease between the Landlord and the Tenant with
     respect to the development of the Land and of the Building.

(g)  Exterior Building Amenities: has the meaning ascribed to it in the
     Development Agreement.

(h)  Land: those certain lands and premises more fully described in Schedule
     "A".

(i)  Lease Year: in respect of the first Lease Year, the period of time
     commencing on the Commencement Date and expiring on the last day of the
     month of December next following; thereafter Lease Year shall consist of
     consecutive periods of twelve (12) calendar months. However, the last Lease
     Year shall terminate upon the Termination Date or earlier termination of
     this lease, as the case may be. Landlord may in its discretion change the
     Lease Year from time to time provided that such change will not increase
     Tenant's liability for any amounts payable pursuant to this lease.

(j)  Notices: for the purpose of all notices to the Landlord, the Landlord's
     address is:

     c/o  Canderel Management Inc.
          2000 Rue Peel
          Suite 900
          Montreal, Quebec
          H3A 2W5
          Attn:    President

          Fax No.:  (514)284-1054

          with a copy to:

          Canderel Management Inc.
          1145 Hunt Club Road,
          Suite 220,
          Ottawa, Ontario,
          KlV 0Y3

          Fax No.:  (613)738-6196

          Attention:  The Senior Vice-President;

     for the purpose of all notices to the Tenant, the Tenant's address is:
<PAGE>

                                      -3-

          Entrust Technologies Limited
          One Preston Park South
          Suite 400
          4975 Preston Park Blvd.
          Plano, TX
          USA 75093

          Attention:  Controller

          Fax:  (972) 943-7305

          With a copy to:

          (a)  prior to the Commencement Date,

          Entrust Technologies Limited
          750 Heron Road
          Suite E08
          Ottawa, Ontario
          KlV 1A7

          Attention:  The Facilities Manager

          Fax:  (613) 247-3663

          (b)  on and after the Commencement Date, at the Premises; and for the
          purpose of all notices to the Guarantor, the Guarantor's address is:

          Entrust Technologies Incorporated
          One Preston Park South
          Suite 400
          4975 Preston Park Blvd.
          Plano, TX
          USA 75093

          Attention:  Controller

          Fax:  (972) 943-7305

     Notwithstanding the foregoing, either of the parties may notify the other
     of a change of address in which event all official notices shall thereafter
     be sent to the last address of which notice is given. All notices required
     or permitted to be given by either Landlord or Tenant to the other shall be
     in writing and sent by registered mail (postage prepaid and return receipt
     requested), delivered personally, delivered by courier or delivered by
     bailiff or sent by facsimile machine during Business Hours to the Landlord
     or the Tenant at the
<PAGE>

                                      -4-

     numbers set out above. Delays shall be computed or measured, as the case
     may be, from the date of actual delivery of any notice referred to herein.

(k)  Operating Expenses: unless otherwise expressly set forth herein as being
     for the account of the Landlord, including any such item set forth in
     Section 15 of Schedule "F" attached hereto, all costs, charges and expenses
     incurred by the Landlord in connection with the operation, maintenance,
     repair of and improvement to the Premises including without limitation:
     heating, ventilating and air-conditioning costs, maintenance, repairs and
     replacements; administration fees equal to two and nine tenths percent
     (2.9%) of all amounts payable by tenants of the Building; salaries, wages
     and benefits of employees directly engaged in the operation,
     administration, maintenance and repair of the Premises, but only to the
     extent of their involvement with the Premises; electricity, fuel, water and
     other utilities, taxes, licenses and fees; insurance costs, premiums and
     deductible payments in respect of fire, casualty, liability, property
     damage, boiler, loss of rental and such other form or forms of insurance
     relating to the Premises from time to time in effect; cleaning,
     supervision, maintenance, operation and repair costs, expenses and charges
     relating to the Premises (including, without limitation, the elevators, the
     garage (if any) and parking facilities and other common areas and
     facilities) and the equipment, systems and fixtures therein and the making
     of all necessary repairs, modifications, renovations or replacements
     therein and thereto (with capital expenditures to be dealt with as
     hereinafter provided); building and cleaning supplies; equipment rental;
     cleaning; capital expenses (including expenditures relating to energy
     conservation measures or programs) amortized over the useful life of the
     item, together with interest on the unamortized portion of such expenses,
     calculated each month at a rate equal to one twelfth (1/12) of the
     aggregate of one and one-half percent (1.5%) plus the "Prime Rate" (as
     hereinafter defined) on the first day of each month for loans in Canadian
     dollars; snow removal, gardening and landscaping; garbage and waste
     collection and disposal; amounts payable pursuant to service contracts with
     independent contractors for maintenance, elevators, cleaning, refuse
     removal, security operations and repairs; legal and accounting fees and
     expenses; any expenses incurred by Landlord in obtaining or attempting to
     obtain a reduction in Real Estate Taxes.

     For the purposes of this lease, the expression "Prime Rate" means the rate
     of interest per annum established from time to time by the Toronto Dominion
     Bank ("the Bank") as the reference rate of interest for the determination
     of interest rates that the Bank will charge to customers of varying degrees
     of credit worthiness in Canada for Canadian Dollar demand loans in Toronto,
     Ontario.

(l)  Permitted Uses: general offices, research and development and related and
     ancillary uses (including the recording of software on recording media and
     the packaging thereof).

(m)  Premises: the Land and the Building.

(n)  Proportionate Share: Deleted.

(o)  Real Estate Broker, if any:
<PAGE>

                                      -5-

     J. J. Barnicke Ltd.

(p)  Real Estate Taxes: all taxes, rates and assessments, general or special, or
     any other taxes, rates, assessments, levies and impositions which are now
     or which may ever be levied against the Premises or revenues or rentals for
     principal, provincial, federal, school, public betterment, general, local
     improvement or other purposes. If the system of taxation with respect to
     the taxes described in the previous sentence now in effect is altered and
     any new tax or levy is imposed or levied upon the Premises and/or the owner
     thereof and/or the revenues or rentals therefrom in substitution for or in
     addition to all taxes presently levied or imposed upon real property, the
     expression "Real Estate Taxes" shall include such new tax or levy. If the
     competent authorities shall at any time eliminate any tax, rate, assessment
     or imposition which comprise part of the Real Estate Taxes, Landlord shall
     eliminate same from the definition of Real Estate Taxes.

(q)  Rent: subject to the provisions of Schedule "F", from the Commencement Date
     until the Termination Date, an annual rental of:

     (i)  during the period between the Commencement Date to and including the
          last day of the fifth year of the Term, Seventeen Dollars and
          Eighty-eight Cents ($17.88) per square foot of gross building area of
          the Building; and

     (ii) during the period between the first day of the sixth year of the Term
          to and including the Termination Date, Twenty Dollars and Twelve Cents
          ($20.12) per square foot of gross building area of the Building.

(r)  Schedules: the following schedules are attached hereto: "A" - Legal
     Description of Land, "B" - Premises Description, "C" - Landlord's Work, "D"
     - Rules and Regulations, "E" - Minimum Building Standards for Tenant
     Finishes, "F" - Additional Provisions, "G" - CCDC3 Cost of the Work.

(s)  Security Deposit: Zero Dollars ($0.00).

(t)  Substantial Performance Date: has the meaning ascribed to it in the
     Development Agreement.

(u)  Tax on Capital: a sum equal to the taxes, levies or excises which are now
     or which may ever be imposed upon a landlord or the owner of the Premises
     by any governmental authority which is measured or based in whole or in
     part upon the capital employed by the Landlord or owner with respect to the
     Premises and whether so characterized as a capital tax, large corporations
     tax, or as any other tax, levy or excise, all calculated as if the Premises
     were the only property of the Landlord.

(v)  Tenant Fit-Up: has the meaning ascribed to it in the Development Agreement.

(w)  Term: the period commencing on the Commencement Date and terminating on the
     Termination Date.
<PAGE>

                                      -6-

(x)  Termination Date: the day that is the last day of the tenth full year after
     the Commencement Date.

                                   SECTION II
                                   ----------
                                      LEASE
                                      -----

2.01 Landlord does hereby lease the Premises to the Tenant for the Term.

                                  SECTION III
                                  -----------
                                  TERMINATION
                                  -----------

3.01 This lease shall terminate without notice or demand therefor being
necessary on the Termination Date (subject to the Tenant exercising an option to
extend the Term pursuant to the provisions of Section 3 of Schedule "F" of this
lease). Should the Tenant remain in occupation of the Premises after the
Termination Date without having executed a new written agreement with the
Landlord, such holding over shall not constitute a renewal or extension of this
lease. In such event, the Landlord may, at its option, elect to treat the Tenant
as one who has not removed at the end of the Term and the Landlord shall be
entitled to all remedies against the Tenant provided by law in that situation,
or the Landlord may elect, at its option, to construe such holding over as a
tenancy from month to month subject to all the terms and conditions of this
lease save as to its duration and save that the Rent payable pursuant to Section
IV hereof shall be two (2) times the Rent payable in the preceding year.

                                   SECTION IV
                                   ----------
                                     RENTAL
                                     ------

4.01 Tenant covenants and agrees to pay the Rent to the Landlord in equal,
consecutive, monthly installments, in advance on the first day of each calendar
month. In the event that the Term begins on any day of the month other than the
first day, any Rent or other amount payable hereunder for such month and the
last month of the Term (as the case may be) shall be calculated on a per diem
basis and paid in advance.

4.02 The Rent shall be payable in lawful money of Canada to Landlord at its
offices in Montreal (being at the date of execution of this lease the address in
Montreal set out in Section 1.01(j) hereof) or at such other place or to such
other person as may be specified from time to time by Landlord without any
demand therefor being necessary, without set-off, reduction, deduction or
compensation whatsoever, save as otherwise specifically set out in this lease.

                                   SECTION V
                                   ---------
                                  NET RENTALS
                                  -----------

5.01 Save only as herein expressly set forth, including, without limitation the
provisions of Schedule "F", Tenant acknowledges that the Rent shall be
absolutely net and carefree to the Landlord; Landlord shall not be responsible
for any costs, charges, expenses or outlays of any
<PAGE>

                                      -7-

nature or kind whatsoever arising from or relating to the Premises, the contents
thereof, or the business carried on therein, and Tenant shall pay all such
charges, impositions, costs and expenses of every nature and kind (including
such as may be incurred by or paid for by Landlord on its behalf) to Landlord's
complete and entire exoneration as well as Real Estate Taxes, Tax on Capital and
Operating Expenses as hereinafter set forth and any taxes imposed thereon and on
the Rent.

5.02 Tenant shall not be responsible for the payment of Landlord's income taxes
(except for Tax on Capital to the extent herein mentioned) and Tenant shall not
be responsible for the payment of principal or interest due under any mortgage
or deed of trust affecting the Premises.

                                   SECTION VI
                                   ----------
            REAL ESTATE TAXES, TAX ON CAPITAL AND OPERATING EXPENSES
            --------------------------------------------------------

6.01 Throughout the Term, any renewal thereof and/or holding over thereunder,
the Tenant shall pay as additional rent Real Estate Taxes in respect of the
Premises. During the first and last years of the Term (in the event same
comprise less than a complete tax year), the amount the Tenant is required to
pay pursuant to the foregoing shall be subject to per diem adjustments.

6.02 The Landlord shall invoice the Tenant for Real Estate Taxes in respect of
the Premises for the then current tax year(s) which the Tenant shall pay no
later than the later of thirty (30) days following receipt or five (5) days
prior to the date on which Real Estate Taxes are payable by the Landlord without
the taxing authority imposing interest or late penalties.

6.03 Deleted.

6.04 Landlord shall have no obligation to contest, appeal, object to or litigate
the levying or imposition of Real Estate Taxes in respect of the Premises and/or
any valuation imposed with respect thereto. Except during the last eleven months
of the Term (and provided that a right to extend the Term as set out in Section
3 of Schedule "F" of this lease has not been exercised) the Landlord shall in
all cases consult with the Tenant prior to the undertaking of any of the
foregoing actions. The Tenant, at its own cost, shall itself have the right to
contest, appeal, object to or litigate the levying or imposition of Real Estate
Taxes and if necessary, in the name of the Landlord, provided the Tenant
received the prior written consent of the Landlord, which consent shall not be
unreasonably withheld or delayed. If required, the Landlord shall provide all
reasonable assistance to the Tenant in respect of such contestation. During the
last eleven months of the Term (and provided that a right to extend the Term as
set out in Section 3 of Schedule "F" of this lease has not been exercised) the
Landlord may settle, compromise, consent to, waive or otherwise determine in its
sole discretion all matters and things relating thereto and the Tenant shall not
itself contest, appeal, object to or litigate the levying or imposition of Real
Estate Taxes in respect of the Premises.

6.05 Throughout the Term, any renewal thereof and/or holding over thereunder,
the Tenant shall pay as additional rent Operating Expenses and Tax on Capital.
During the first and last years of the Term (in the event same comprise less
than a complete Lease Year), the amount the Tenant is required to pay pursuant
to the foregoing shall be subject to per diem adjustments.
                                     --- ----
<PAGE>

                                      -8-

6.06 On or before the Commencement Date Landlord shall estimate the amount of
Operating Expenses and Tax on Capital for the then current Lease Year and shall
invoice Tenant for same in equal consecutive monthly installments which Tenant
shall pay to Landlord in advance on the first day of each calendar month. Within
one hundred and twenty (120) days of the end of each Lease Year, Landlord shall
furnish Tenant with a statement audited by an independent firm of chartered
accountants setting forth the actual Operating Expenses and Tax on Capital for
such year. If such amount is greater or less than the payments on account
thereof made by Tenant pursuant hereto, appropriate adjustments shall be made
forthwith. Thereafter, Tenant shall continue to make the aforementioned monthly
installments on account of estimated Operating Expenses and Tax on Capital for
the ensuing Lease Year on the same basis or on the basis of Landlord's revised
reasonable estimate of same, as the case may be, and so on from time to time.
Landlord shall provide, with such estimate, a reasonably detailed explanation of
the increase in the components of Operating Expenses. The Landlord agrees that
the Tenant shall have the right, at its expense, to inspect and audit the
Landlord's books and records (which inspection may include the taking of copies
of any relevant information, data or invoices in that regard) in respect of any
amount payable by the Tenant with respect to Operating Expenses, Real Estate
Taxes, Tax on Capital and utilities consumed within the Premises for a period of
two (2) years from the date on which the Landlord furnishes the Tenant with the
Landlord's audited statement.

6.07 Deleted.

6.08 Failure or delay on the part of the Landlord to avail itself of any of the
provisions of this Section VI shall not constitute any waiver or renunciation of
its rights provided herein.

                                  SECTION VII
                                  -----------
                                USE OF PREMISES
                                ---------------

7.01 The Tenant shall use the Premises for the Permitted Uses and for no other
purpose. Nothing herein shall be so interpreted as to imply that this lease is
conditional upon the Tenant obtaining any permits or licenses for the
exploitation of such business from any municipal, provincial or other authority,
and the Landlord makes no warranty with respect to the ability of the Tenant to
carry out the Permitted Uses within the Premises.

                                  SECTION VIII
                                  ------------
                        UTILITIES AND ADDITIONAL CHARGES
                        --------------------------------

8.01 The Tenant shall pay as and when due all water taxes or rates, sewer rates,
business taxes, license fees and other similar rates and taxes which may be
levied or imposed upon the Premises or upon the business carried on therein
and/or any property on the Premises owned or brought thereon by Tenant, and also
all other rates and taxes which are or may be payable by the Tenant as tenant or
occupant thereof. If the mode of collecting such taxes be so altered as to make
the Landlord and/or the proprietor liable therefor instead of the Tenant, the
Landlord will pay such accounts and the Tenant will repay the Landlord as
additional rent within ten (10) days of the Tenant's receipt of an invoice for
same, the amount so paid.

8.02 Deleted.
<PAGE>

                                      -9-

8.03 The Landlord (subject to its ability to obtain the same from its principal
supplier) will cause the Premises to be supplied with electric current for the
lightening and power required therein for the operation of the Tenant's
reasonable needs, the cost of which is to form part of Operating Expenses. The
obligations of the Landlord hereunder shall be subject to any rules or
regulations to the contrary of the hydro electric corporation providing
electrical services to the Building, or any other municipal or governmental
authority.

8.04 The Tenant shall pay for the cost of all utilities consumed or used within
the Premises, same to include, without limitation, the cost of electricity,
water, gas, steam, fuel or other energy and Tenant shall pay for the cost of all
fittings, machines, apparatus, meters or other things leased in respect thereof
and for all work or services performed by any corporation or commission in
connection with any such utilities.

8.05 The Tenant shall retain evidence of payment of any charges referred to in
this Section which it pays directly to any public authority for inspection by
the Landlord at the Tenant's offices during Business Hours, the whole for a
period of two (2) years following the due dates for payment of said charges.

                                   SECTION IX
                                   ----------
                                    SERVICES
                                    --------

9.01

(a)  Access to the Premises: The Tenant shall have access to the Premises
     twenty- four (24) hours per day, seven (7) days per week.

(b)  Cleaning: The Landlord shall clean the Building in accordance with
     standards for comparable buildings at such time or times outside Business
     Hours on Business Days as Landlord may, in its sole discretion, determine.
     The Tenant shall leave the Building reasonably tidy for purposes of
     cleaning.

(c)  Heating: The Landlord shall heat labs located within the Building
     twenty-four (24) hours per day, seven (7) days per week and the rest of the
     Building during Business Hours. The Landlord shall not be responsible for
     the failure of heating equipment to perform its functions if such failure
     is due to circumstances beyond the control of the Landlord. The Tenant
     shall be responsible for the failure of heating equipment performing its
     function if such failure results from unapproved partitioning within the
     Building, unapproved changes or alterations thereto.

(d)  Air-Conditioning: The Landlord shall provide reasonable air-conditioning
     service to the labs located within the Building twenty-four (24) hours per
     day, seven (7) days per week and to the rest of the Building during
     Business Hours. The Landlord shall not be responsible for the failure of
     air-conditioning equipment to perform its function if such failure is due
     to circumstances beyond the control of the Landlord. The Tenant shall be
     responsible for the failure of air-conditioning equipment performing its
     functions if such failure shall result from unapproved partitioning within
     the Building or unapproved changes or alterations thereto, the failure on
     the part of the Tenant to shade windows
<PAGE>

                                     -10-

      which are exposed to the sun, or excessive use of electrical power or
      mechanical systems by the Tenant.

(e)   Elevators: The Landlord shall keep the passenger elevator(s) in operation
      during Business Hours. Limited elevator access within the Building will be
      made available at all other times.

(f)   Lightening: Replacement of lamps, bulbs, starters and ballasts within the
      Building shall be completed by the Landlord at the entire cost of the
      Tenant, the Landlord reserving the right to relamp the entire Building at
      the Tenant's cost when the Landlord, acting reasonably considers it cost
      efficient or otherwise in accordance with sound property management
      practice to do so.

9.02  The cost of providing all of the foregoing services shall form part of
Operating Expenses. At the Tenant's request and cost and upon reasonable prior
notice, heating, ventilating and air-conditioning service outside of Business
Hours will be provided. The Landlord warrants that the provision of heating and
air-conditioning services outside of Business Hours can be provided to certain
zones of the Building as described in the "Project Definition Binder" (as
defined in the Development Agreement).

                                   SECTION X
                                   ---------
                                    SECURITY
                                    --------

10.01 Deleted

                                   SECTION XI
                                   ----------
                            ASSIGNMENT AND SUBLETTING
                            -------------------------

11.01 The Tenant shall not assign this lease or sublet the Premises or any part
thereof or allow the Premises or any part thereof to be used by another without
the prior written consent of the Landlord, which consent shall not be
unreasonably withheld. The Landlord's refusal of consent shall be deemed
reasonable (without in any way restricting the Landlord's right to refuse its
consent on other reasonable grounds) where the prospective assignee or subtenant
is a consulate, embassy, trade commission or other representative of a foreign
government, where the Premises are intended to be used as medical or dental
offices or facilities, government or quasi-government offices, where the
proposed assignee or subtenant does not intend to bona fide physically occupy
and carry on business from the Premises, when the proposed assignment or
sublease is made prior to the Tenant commencing to physically and bona fide
occupy and carry on business from the Premises or where it is reasonably
anticipated by the Landlord that the number of persons visiting the Premises
will substantially increase as a result of the assignment or subletting.

11.02 As an alternative to such consent (and without being obliged or affecting
its other rights), the Landlord shall have the right to cancel the lease for the
Premises (or, as the case may be, for that portion thereof that Tenant seeks to
sublet) (with the intention that, subject to the obligations in this lease on
the part of the Tenant that are intended herein to continue after termination
(such
<PAGE>

                                     -11-

as re-adjustments and the condition in which the Premises were to have been
delivered to the Landlord) , the Tenant shall no longer be liable to the
Landlord under this lease with respect to the Premises (or, as the case may be,
for that portion thereof that Tenant seeks to sublet)) the whole as, of and from
the date Tenant wishes to assign this lease or sublet the Premises or permit
their use by another. Landlord shall exercise the rights herein granted by
sending notice thereof to Tenant within thirty (30) days following receipt of
the notice referred to in Section 11.04 hereof.

11.03 Notwithstanding any assignment, subletting or permitted use by another,
the Tenant shall remain jointly and severally responsible with the assignee,
sublessee or user (and in the circumstances contemplated in Section 11.05
hereof, with the party who acquires control), without benefit of division or
discussion, for the payment of the Rent and all additional rentals and for the
performance of all other obligations of the Tenant under this lease. The Rent
payable by the Tenant shall be increased by an amount equal to the profit, if
any, derived by Tenant from the sublease, assignment or transfer. For all
purposes hereof, "profit" shall mean any benefit given, or the rent, additional
rent and other amounts payable directly or indirectly by the subtenant,
transferee or assignee to or for the account of the Tenant in excess of the Rent
and additional rentals payable by Tenant hereunder including but not limited to
all capital or other sums paid for improvements or otherwise. Landlord shall
have the right to require the subtenant, transferee or assignee to pay its rent
directly to the Landlord.

11.04 Tenant agrees to provide Landlord with at least thirty (30) days' prior
written notice of its intention to assign this lease or sublet the Premises, and
the name, address and nature of business of the proposed assignee or sublessee,
such credit references and other information as Landlord may reasonably request
and copies of the executed assignment or sublease agreement which must be
conditional upon Tenant obtaining the Landlord's consent as hereinabove
provided. Landlord may, at its option, require that as a condition of giving its
consent to an assignment or subletting, Tenant and the proposed assignee or sub
lessee sign a form of assignment or sublet document (in form and content
satisfactory to Landlord). Further, all out-of-pocket costs, charges and
expenses incurred by Landlord in respect of such assignment or sublet document,
as well as a reasonable administrative fee shall be payable as a condition of
the giving of Landlord's consent.

11.05 In the event that the Tenant is an incorporated entity, if at any time
effective control of the Tenant is acquired or exercised by any person or
persons not having effective control of the Tenant on the date of execution of
this lease, the same shall be deemed to constitute a sublease to the party
acquiring such control subject to all of the provisions hereof. This provision
shall not apply to Entrust Technologies Limited.

11.06 The Tenant will not advertise the Premises for the purpose of any sublease
or assignment without obtaining the prior written approval of the Landlord to
the proposed text, such approval not to be unreasonably withheld. In no event
will the rental rate appear or be referred to in any such advertisements.

11.07 Without derogating from the provisions of Section 11.03 hereof, the Tenant
shall not be required to obtain the consent of the Landlord to an assignment or
sublease to an affiliated body corporate or a subsidiary body corporate (as such
expressions are defined in the Canada Business
<PAGE>

                                     -12-

Corporations Act R.S.C. 1985, as such Act is constituted as at the date of
execution of this lease) of Entrust Technologies Limited. The Tenant agrees to
provide to the Landlord notice of any such assignment or sublease within five
(5) days of same occurring.

11.08 The Landlord and the Tenant agree that in the event that the Landlord
consents to an assignment of this lease under the provisions of this Section XI
or the assignment of this lease is effected pursuant to section 11.07 hereof,
the said assignment must include an assignment to the proposed assignee of a
certain lease entered into between 786473 Ontario Limited, the Tenant and
Guarantor entered into contemporaneously with this lease with respect to certain
vacant land abutting the Premises.

                                  SECTION XII
                                  -----------
                            READINESS FOR OCCUPATION
                            ------------------------

12.01 Deleted

                                  SECTION XIII
                                  ------------
                                   TENANT CARE
                                   -----------

13.01 The Tenant shall maintain and keep the Premises, including all
replacements, alterations, additions and improvements thereto, in good order and
condition, reasonable wear and tear which does not render the Premises
untenantable, damage by fire and other insured perils excepted, and shall, in
accordance with the procedures set forth in Section XIV hereof, perform or cause
to be performed all repairs (other than structural repairs of a non-recurring
nature not caused by the Tenant's fault, negligence or breach of any obligation
hereunder or at law) which may from time to time be required therein or thereto.

13.02 At the expiration or sooner termination of this lease, Tenant shall return
the Premises to Landlord in the state and condition in which they are to be
maintained and repaired as provided for in this lease, reasonable wear and tear
which does not render the Premises untenantable and damage by fire and other
insured perils excepted.

13.03 The Tenant shall not bring into the Building any machinery, equipment,
article or thing that by reason of weight or size might cause damage thereto and
in no event shall Tenant overload the floors of the Building.

13.04 In the event Tenant fails to comply with the obligation to maintain,
repair and replace imposed hereunder, the Landlord, after giving written notice
of twenty (20) days to the Tenant (unless such default cannot reasonably be
remedied within such twenty (20) day period in which case unless the Tenant has
failed to commence to remedy to prosecute with due diligence the curing of such
default until it is remedied), shall have the right (but shall not be obligated)
to carry out such maintenance, repairs and replacements and any and all costs
incurred by the Landlord in so doing, together with a fee equal to ten per cent
(10%) of such costs, shall be payable by the Tenant to Landlord as additional
rental on demand. Notwithstanding the foregoing, in the event any work or action
is urgently required at times when authorized representatives of Tenant cannot
be located, Landlord may proceed with such reasonable steps as
<PAGE>

                                     -13-

in its discretion are deemed by it to be necessary for the protection and
preservation of the Premises and Tenant shall reimburse Landlord for the amount
expended, together with a fee equal to ten per cent (10%) of such amount, as
additional rental on demand.

                                  SECTION XIV
                                  -----------
                ALTERATIONS, ADDITIONS, IMPROVEMENTS AND REPAIRS
                ------------------------------------------------

14.01 All improvements in and to the Premises other than the improvements which
are the Landlord's responsibility to carry out pursuant to the Development
Agreement (including the Tenant Fit-Up) and other than those which the Landlord
elects to carry out as set out in Section 14.02 of this lease and other than the
Tenant Fit-Up (which the Landlord is to carry out in accordance with the
provisions of this lease and the Development Agreement), shall be the
responsibility of Tenant and shall be performed at Tenant's sole cost and
expense, the whole subject to the terms and conditions set forth in this Section
XIV.

All architectural plans and specifications setting forth Tenant's work may be
prepared by a designer and/or architect of the Tenant's choice but shall be
subject to Landlord's prior written approval as herein mentioned. Said plans and
specifications shall include, without limitation, complete working drawings and
specifications, floor plans, interior elevations, interior finishing schedules,
special facilities or installations that affect the Premises and/or Tenant's
perimeter walls, mechanical, plumbing, sprinklers, telephone and electrical work
(including all fixtures, equipment and under floor services where applicable)
and static and dynamic loading of floors. The Tenant plans and specifications
shall be drawn to the same scale as the base Building working drawings. Tenant
shall be responsible to ensure that the Tenant work, as designed, complies with
all relevant laws, by-laws and regulations as well as with the Building module
and structure and with the Building's mechanical, electrical, plumbing and other
systems. Complete working drawings and specifications shall be submitted:

(a)   with respect to work to be carried out on or about the Commencement Date,
      to the Landlord within twenty-one (21) days following execution of this
      lease or within such other delay as the Landlord and Tenant have otherwise
      agreed; and

(b)   in any other event no later than thirty (30) days prior to the date on
      which the work is to be carried out.

Within ten (10) days following receipt of the complete working drawings and
specifications, Landlord shall notify Tenant either of its approval thereof or
of changes required and if Landlord notifies Tenant that changes are required,
Tenant shall, within seven (7) days thereafter, submit the necessary amended
plans and specifications. Failure by Tenant to submit complete working drawings
and specifications or final plans and specifications within the delays herein
contemplated shall be deemed to be a delay in the completion of the Premises
attributable to Tenant's fault.

14.02 Any and all leasehold improvements and installations to the licenses
required by the Tenant may, at the option of Landlord, be carried out by the
Landlord or under the latter's coordination, in which event the Tenant shall pay
for the costs thereof as well as an amount equal to:
<PAGE>

                                     -14-

(a)   with respect to the Tenant Fit-up, those fees set out in Section 6 of
      Schedule "F" of this lease; and

(b)   with respect to any other leasehold improvements and installations, ten
      percent (10%) of such cost on account of Landlord's overhead and
      administration.

The Landlord agrees that with respect to such leasehold improvements and
installations:

(a)   the Landlord shall issue all such work for tender and shall obtain no less
      than three (3) competitive quotations for all such work, subject to the
      Tenant's written agreement to accept less than three (3) quotations;

(b)   the Landlord shall provide to the Tenant copies of the approved tender
      packages to be issued for tender, all correspondence during the tender
      period and all tender submissions;

(c)   the Landlord shall provide its review and analysis of all tender
      submissions and shall make a recommendation for contract award to the
      Tenant; and

(d)   upon receipt of the Tenant approval and instructions, the Landlord shall
      award the contracts for the said work (which award the Landlord agrees
      that the Tenant may direct to a tendering party which may not have been
      the lowest bidder).

In addition, the Tenant shall pay for the cost of all architectural, engineering
and/or working drawings prepared to comply with the Tenant's requirements and
for the cost of inputting such working drawings in any of the Premises'
computerized design records that may from time to time be maintained as well as
the foregoing fees calculated on the cost thereof. Payment shall be effected by
way of a cash deposit and progress draws during the course of the work, the
specifics of which shall be established by the Landlord, acting reasonably, from
time to time.

14.03 If the applicable work is carried out by the Tenant, the Tenant shall be
required to comply with all applicable laws and regulations with respect to
carrying out same and without limiting the generality of the foregoing, the
Tenant shall not itself make any such improvements, alterations, additions or
repairs to the Premises without obtaining all necessary permits from the
appropriate public authorities and without the prior written consent of the
Landlord pursuant to Section 14.01 hereof. The Tenant shall be required to
submit to the Landlord plans and specifications (in accordance with the
provisions of Section 14.01 hereof and within the delays therein mentioned) for
all such improvements, alterations, additions or repairs and Tenant shall pay
for the cost of inputting such plans and specifications in any Building
computerized design records that may from time to time be maintained. All such
work shall be done by contractors approved by the Landlord, which approval shall
not be unreasonably withheld. All such work shall be conditional upon such
contractors paying the cost of temporary services and coordination during such
construction, upon such contractors timing and performing their work in
accordance with such rules and regulations as the Landlord may from time to time
prescribe, upon such contractors carrying property damage and liability
insurance satisfactory to the Landlord for its operations in the Building and
upon the employees of such contractors not causing any labour trouble by their
presence in the Building. Furthermore, the Tenant shall require that prior to
entering the Premises or performing any work therein, the Tenant's contractors
shall deliver to the Landlord a waiver and release from all lien rights that may
then or
<PAGE>

                                     -15-

thereafter exist for work done, labour performed or materials furnished under
any contract and such contractors must agree to furnish to the Landlord a good
and sufficient waiver of lien rights for every subcontractor and supplier
furnishing labour and material under the contract. In the event that any lien is
registered in respect of any interest in the Lands as a result of any such work,
the Tenant shall forthwith attend to the removal of such lien, failing such
removal within fifteen (15) days the Landlord may, in the name of the Tenant,
and in addition to any other remedies available to the Landlord, be entitled to
attend to the removal of such lien by payment into Court at the cost of the
Tenant (including any expenses and legal fees incurred by the Landlord in
effecting such removal). The Tenant shall be responsible for any costs and
expenses of the Landlord occasioned directly or indirectly by such work in the
Premises as well as the Landlord's reasonable costs and fees for the supervision
and co-ordination of the Tenant's work. The cost of such improvements,
alterations, additions or repairs shall be the sole responsibility of the Tenant
and if any payment in respect thereof shall be made by the Landlord, the
Landlord hereby reserving the right to do so in its sole discretion, the same
shall be immediately payable by the Tenant within ten (10) days of receipt of an
invoice therefor as additional rent. The Tenant shall furthermore pay to the
Landlord as additional rent within ten (10) days of receipt of an invoice
therefor an amount equal to ten percent (10%) of the total cost of all such
work, representing the Landlord's fee for administration and co-ordination of
same.

14.04 All improvements, alterations, additions or repairs to the Premises
(including the Tenant Fit-Up) shall, upon their completion, become part of the
Premises and the property of the Landlord, and, subject as hereinafter provided,
shall be surrendered with the Premises upon termination of the lease without any
compensation being due therefor. Notwithstanding the foregoing, the Tenant may
elect that any or all installations made or installed by or on behalf of the
Tenant (other than Tenant Fit-Up, with the exception of (i) roof-top satellite
dishes, transmission devices and other roof-top devices; and (ii) equipment,
including cafeteria equipment, other than mechanical or electrical equipment) be
removed and if the Tenant so elects then it shall be Tenant's obligation to
restore the Premises to the condition they were in before the installation of
such alterations, installation, partitions and/or fixtures. Without limiting
Tenant's repair and maintenance obligations otherwise set out in this lease, or
the Tenant's obligation to reinstate in accordance with the preceding paragraph,
and subject to the payment obligation set out below, the Tenant shall have no
obligation to remove or reinstate any part of the Building on the Termination
Date (as may be extended in accordance with the provisions of this lease). The
Landlord may elect to require the Tenant to pay for:

(a)   the removal of those items which have been noted by "*" in Section 14 of
      Schedule "F" of this lease;

(b)   the removal of internal staircases (excluding staircases installed as part
      of the Base Building Core & Shell in accordance with applicable laws) and
      the reinstatement of the floor in such areas to base building (smooth,
      trowelled concrete) condition;

(c)   with respect to the cafeteria, the capping of all utility services which
      had serviced the area (including the capping of any exhaust or other
      specialty venting) within such cafeteria area; and
<PAGE>

                                     -16-

(d)   the removal of any or all special, non-standard mechanical or electrical
      equipment or systems, ceilings, and specialty rooms installed after the
      Commencement Date (except that in respect of cables, whether installed
      prior to or after the Commencement Date, the only obligation of the Tenant
      will be to cap or sever such cables, not to pull or remove).

The obligation of the Tenant to pay for the removal and reinstatement of the
applicable items set out above (which for the sake of clarity, does not include
standard building staircases or cables) shall only be to the extent that the
said item is not re-usable by the Landlord. Such re-usability and the quantum of
contribution in respect thereof shall be established by negotiation and based
upon reasonable estimates and allocations provided by an engineer, architect or
quantity surveyor independent of and acceptable to the parties. Failing
agreement on such basis, the quantum of contribution shall be determined by
arbitration in accordance with the provisions of this lease. The Landlord agrees
that it shall obtain three cost estimates with respect to carrying out the
applicable work and the lowest cost estimate so obtained shall be used by the
Landlord for the purposes of invoicing the Tenant with respect to same.

                                  SECTION XV
                                  ----------
                                 MAJOR REPAIRS
                                 -------------

15.01 Should the Landlord effect improvements, alterations, additions,
maintenance, improvements or repairs to the Premises, the Tenant shall permit
same to be performed without being entitled to any indemnity or reduction in
rental or any damages or compensation therefor so long as the Tenant's use and
enjoyment of the Premises are not materially adversely affected (with the
intention that if the Tenant's use and enjoyment of the Premises are materially
adversely affected, and all additional rentals payable hereunder shall abate,
and then only to the extent and for such period of time that the Tenant's use
and occupancy of the Premises are thereby materially adversely affected (Rent to
be calculated at the rate set out in Section 1.01(q) of this lease, subject to
such rate having been varied pursuant to Section 2 of Schedule "F" of this
Lease). All such work shall be completed by the Landlord with reasonable
dispatch and the cost thereof shall be included in Operating Expenses unless
such work is otherwise Landlord's responsibility hereunder.

                                  SECTION XVI
                                  -----------
                              ACCESS TO PREMISES
                              ------------------

16.01 The Landlord, its agents and representatives may enter the Premises at all
reasonable times with prior reasonable notice to the Tenant and subject to the
Tenant's security requirements (and at any time without notice during an
emergency) to examine their condition and to view their state of repair,
maintain, clean, re-lamp or otherwise and Tenant covenants to repair according
to notice.

16.02 The Tenant shall allow the Premises to be exhibited during Business Hours,
with prior reasonable notice to the Tenant and subject to the Tenant's security
requirements, to persons interested in acquiring the Premises or advancing money
upon the security thereof. During the last eleven months of the Term (and
provided that a right to extend the Term as set out in Section 3 of Schedule "F"
of this lease has not been exercised), Tenant shall also allow the Premises to
<PAGE>

                                     -17-

be exhibited to persons interested in leasing same, with prior reasonable notice
to the Tenant and provided the Tenant's reasonable security procedures are
respected.

                                 SECTION XVII
                                 ------------
                            PROTECTION OF EQUIPMENT
                            -----------------------

17.01 The tenant shall protect from damage and the Landlord shall at the expense
of the Tenant (in accordance with the provisions of Section XIV hereof) make all
necessary repairs and replacements to the heating, ventilating and
air-conditioning apparatus, water, gas and drain pipes, water closets, sinks and
accessories thereof in and about the Building and keep same free from all
obstructions that might prevent their free working and shall give to the
Landlord prompt written notice of any accident to or defects in same or any of
their accessories of which the Tenant becomes aware.

                                 SECTION XVIII
                                 -------------
                   COMPLIANCE WITH LAWS AND INDEMNIFICATION
                   ----------------------------------------

18.01 The Landlord and the Tenant will not do or permit anything to be done in,
upon or about the Premises or bring or keep anything therein which will in any
way conflict with the regulations of the fire, police or health departments or
with the rules, regulations, by-laws or ordinances of the municipality in which
the Premises are situate, or any governmental authority having jurisdiction over
the Premises or the business conducted therein, all of which the Landlord and
the Tenant undertake to abide by and conform to.

The Landlord and the Tenant will indemnify and hold harmless the other, their
agents and contractors from and against any penalty imposed for or damage
arising from the breach of any such rules, regulations, by-laws or ordinances by
the applicable party or those for whom the applicable party is in law
responsible.

18.02 The Tenant shall pay to the Landlord any extra premiums of insurance that
the company or companies insuring the Premises may exact in consequence of the
business carried on by the Tenant, of anything brought into or stored in the
Premises by the Tenant, or of the Tenant's operations.

The Tenant shall in no event bring into or store in the Premises anything which
may make any insurance carried by the Landlord subject to cancellation.

18.03 The Tenant shall comply with the requirements of all insurance companies
having policies of any kind whatsoever in effect covering the Premises of which
the Tenant has been given notice. The Landlord represents that as of the date of
execution of this lease it has not received notice from any such insurance
company of any such requirement based upon the proposed use of the Premises as
disclosed by the Tenant to the Landlord. In addition, in the event that the
Landlord receives any such notice from any such insurance company of any such
requirement prior to the Commencement Date, the Landlord shall promptly notify
the Tenant of same. In no event shall any inflammable materials or explosives
(except, to the extent required
<PAGE>

                                     -18-

by Tenant to carry on its business and then only as permitted by Landlord's and
Tenant's insurers) be taken into or maintained within the Premises.

18.04 Unless caused by the negligent acts or omissions of the Landlord, its
employees, agents or contractors and then only in respect of matters against
which the Tenant is not insured nor obliged to be insured pursuant to this
lease, the Tenant shall indemnify and hold harmless the Landlord from and
against all claims, liabilities or payments relating to the use and occupancy of
the Premises and, without limiting the generality of the foregoing, Tenant does
hereby agree to indemnify and hold harmless the Landlord from and against all
claims, liabilities, damages, costs, suits or actions arising from:

(a)   any accident, injury (including death) or damage whatsoever or howsoever
      caused to any person or persons (including the Tenant, its employees,
      agents and invitees, any subtenant or licensee of the Tenant and all other
      persons claiming through or under any of them) or to the property of any
      such person or persons occurring during the Term, caused by want of repair
      (other than want of repair occurring as a result of inherent structural
      defects in the Building), or by the use or occupation of the Premises;

(b)   any breach, violation or non-performance of any covenant, condition or
      agreement set forth in the present lease on the part of Tenant to be
      fulfilled, kept, observed or performed;

(c)   the conduct or management of or from any work or thing whatsoever done, or
      not done, in or about the Premises by the Tenant, its agents, employees or
      contractors, or arising from any act of negligence by the Tenant or any of
      its agents, employees or contractors; and

(d)   the failure of the Tenant to fully, faithfully and punctually comply with
      all of the legitimate requirements of any public or quasi-public authority
      having jurisdiction over the Premises.

18.05 Notwithstanding any express or implicit obligation on the part of Landlord
to insure and further notwithstanding any obligation on the part of Tenant to
contribute to the payment of Landlord's premiums, Tenant acknowledges that
Tenant shall remain responsible for its negligence and those of all persons for
whom it is in law responsible, that no insurable interest is conferred upon the
Tenant under any of Landlord's insurance policies and that Tenant shall have no
right to recover any proceeds thereunder or claim any right or title to such
proceeds.

18.06 Unless any of the following matters are matters against which the Tenant
is insured or obliged to be insured pursuant to this lease (in which case the
following indemnity is not to apply), the Landlord shall indemnify and hold
harmless the Tenant from:

(a)   any accident, injury (including death) or damage whatsoever or howsoever
      caused to any person or persons or to the property of any such person or
      persons occurring during the Term, caused by want of repair occurring as a
      result of inherent structural defects in the Building;
<PAGE>

                                     -19-

(b)   any claims, liability or payments arising from any breach, violation or
      non-performance of any covenant, condition or agreement set forth in this
      lease on the part of the Landlord to be fulfilled, kept, observed or
      performed;

(c)   any negligent act or omission of the Landlord, its employees, agents or
      contractors; or

(d)   the failure of the Landlord to fully, faithfully and punctually comply
      with all of the legitimate requirements of any public or quasi-public
      authority having jurisdiction over the Premises and which requirement is
      the Landlord's responsibility to comply with pursuant to the terms of this
      lease.

                                  SECTION XIX
                                  -----------
                               SECURITY DEPOSIT
                               ----------------

Deleted.

                                  SECTION XX
                                  ----------
                       FIRE AND DESTRUCTION OF PREMISES
                       --------------------------------

20.01 If the Building is damaged or destroyed, in whole or in part the following
      provisions shall apply:

(a)   If the damage is such as to render the whole or any part of the Building
      unusable for the purpose of the Tenant's use and occupancy thereof, the
      Landlord shall deliver to the Tenant within sixty (60 days following the
      occurrence of the damage an independent architect's written opinion as to
      whether or not the damage is capable of being repaired within one hundred
      and eighty (180) days following commencement of reconstruction;

(b)   If in the said architect's opinion the Building is capable of being
      repaired as aforesaid within such one hundred and eighty (180) days, the
      Landlord shall diligently and expeditiously proceed to perform such
      repairs;

(c)   If it is the said architect's opinion that the Building is not capable of
      being repaired as aforesaid within one hundred and eighty (180) days
      following the date of commencement of reconstruction, either the Landlord
      or the Tenant may, at its option, elect by written notice given to the
      other within fifteen (15) days following receipt of the said opinion to
      terminate this lease, whereupon the Tenant shall immediately surrender
      possession of the Premises, and Rent and all other payments for which the
      Tenant is liable hereunder shall be apportioned to the date of the
      occurrence of such damage or destruction. If the Landlord or the Tenant
      does not so elect to terminate this lease, the Landlord shall diligently
      proceed to repair the Building; and

(d)   If the Building is, as a result of any such occurrence, rendered unusable
      in whole or in part for the purpose of the Tenant's use and occupancy
      thereof, the Rent and all additional rentals payable hereunder shall abate
      only to the extent and for such period of time that the Tenant's use and
      occupancy of the Premises is thereby diminished (Rent to
<PAGE>

                                     -20-

      be calculated at the rate set out in Section 1.01(q) of this lease,
      subject to such rate having been varied pursuant to Section 2 of Schedule
      "F" of this lease) from the date of such occurrence, only to the extent
      that the Landlord is able to draw upon the rental insurance which it is
      obliged to keep in force hereunder until Landlord's repair obligations
      have been completed.

The Landlord agrees to make reasonable efforts having regard to the nature and
extent of the loss, to notify the Tenant of the said architect's opinion within
a shorter period of time.

20.02 Notwithstanding the foregoing, Landlord shall not be required to restore
or rebuild the Building under any circumstances in the event less than two (2)
years remain in the Term from the date of occurrence of the damage or
destruction.

20.03 In the event Landlord elects to restore or rebuild as aforesaid, it is
expressly understood and agreed that the extent of Landlord's obligation will be
to rebuild or restore to substantially the condition in which the Premises were
initially delivered to Tenant (which for clarity is to include the Tenant
Fit-Up) subject to existing by-laws and other modifications as Landlord and
Tenant, acting reasonably, shall mutually agree upon. Nothing herein contained
shall be construed to oblige the Landlord to repair or reconstruct any
alterations, improvements or property of the Tenant. On the contrary, all other
improvements in and to the Premises shall be the responsibility of Tenant who
shall be obliged to repair and re-fixture to a standard at least equivalent to
that which existed prior to the date of damage and destruction.

                                  SECTION XXI
                                  -----------
                        NON-RESPONSIBILITY OF LANDLORD
                        ------------------------------

21.01 Save and except for the fault or negligence of the Landlord, or those for
whom the Landlord is in law responsible, and then only in respect of matters
against which the Tenant is not insured nor obliged to be insured pursuant to
this lease, the Landlord shall not be liable for any damage, loss, injury or
destruction arising in or upon the Premises to any property or person nor for
any personal injuries sustained by the Tenant, its officers, servants,
employees, agents, invitees or licensees, which may result at any time from any
reason or cause whatsoever, the Tenant hereby covenanting to indemnify the
Landlord of and from all loss, costs, claims or demands in respect of such
damage, loss, injury or destruction. Without limiting the generality of the
foregoing, the Landlord shall not under any circumstances (other than as set out
above) be liable for any damage resulting from water, steam, rain or snow which
may leak into, issue or flow from the pipes or plumbing or sprinklers or from
any other part of the Building or from any other place or quarter. No event or
occurrence herein contemplated shall be deemed an eviction or disturbance of the
Tenant's enjoyment of the Premises nor render the Landlord liable in damages to
the Tenant nor entitle the Tenant to claim any diminution in Rent or in any
other amount payable hereunder.

21.02 Subject to the provisions of the Development Agreement, Landlord shall not
be liable for failure to perform any of its obligations hereunder nor be
responsible for any damage resulting from delays in the construction and/or
finishing of the Premises and/or the interruption or modification of any service
or facility provided in the Building caused or required by strikes,
<PAGE>

                                     -21-

riots, labour controversies, accidents, fault or delays caused by Tenant or
third parties, fuel shortages, Acts of God or of the Queen's enemies, fire or
other casualty, force majeure, cas fortuit, or any other cause beyond the
Landlord's reasonable control and Landlord shall not be responsible for any acts
or omissions of any other tenants or occupants of the Building or other third
parties. No such occurrence or event shall be deemed an eviction or disturbance
of the Tenant's enjoyment of the Premises nor render the Landlord liable in
damages to the Tenant nor entitle the Tenant to claim any diminution in Rent or
other amounts payable hereunder, but in any such event the Landlord shall
without delay take all reasonable steps to remove the cause of such
interruption.

With the exception of monetary obligations of the Tenant pursuant to this lease,
the Tenant shall not be liable for failure to perform any of its obligations
hereunder caused or required by strikes, riots, labour controversies, accidents,
fault or delays caused by Landlord or third parties, the shortages, Acts of God
or of the Queen's enemies, fire or other casualty, force majeure, cas fortuit,
or any other cause beyond the Tenant's reasonable control. No such occurrence or
event shall render the Tenant liable in damages to the Landlord, but in any such
event the Tenant shall without delay take all reasonable steps to remove the
cause of such interruption.

21.03 Save and except for the fault or negligence of the Landlord, or those for
whom the Landlord is in law responsible, and then only in respect of matters
against which the Tenant is not insured nor obliged to be insured pursuant to
this lease, without limiting the generality of the foregoing, the Landlord shall
not be liable for any damage of any kind or nature to the Premises or to any
goods, merchandise, stock-in-trade, assets, fixtures, furniture, accessories or
equipment belonging to the Tenant or to the Tenant's officers, servants,
employees, agents, invitees or licensees resulting from robbery, burglary, theft
or acts of violence of any kind, and the Tenant will hold the Landlord free,
clear and harmless from any liability or loss resulting therefrom.

                                 SECTION XXII
                                 ------------
                                   INSURANCE
                                   ---------

22.01 Throughout the Term and any renewal thereof, Tenant shall take out and
keep in force:

(a)   comprehensive general liability insurance (including blanket contractual
      liability coverage) with respect to the business carried on in or from the
      Premises and the use and occupancy thereof on an occurrence basis for
      bodily injury and death and damage to property of others in an amount of
      at least five million dollars ($5,000,000.00) for each occurrence as well
      as automobile liability insurance including contractual liability covering
      all licensed vehicles operated by or on behalf of the Tenant;

(b)   all-risks insurance including the perils of fire, extended coverage,
      leakage from sprinkler and other fire protective devices, earthquake,
      collapse and flood in respect to furniture, equipment, inventory and
      stock-in-trade, fixtures, (plate glass if appropriate) and leasehold
      improvements located within the Premises and such other property located
      in or forming part of the Premises, including all mechanical or electrical
      systems (or portions thereof) installed by Tenant in the Premises, the
      whole for the full replacement cost (without depreciation) in each such
      instance;
<PAGE>

                                     -22-

(c)   tenants' legal liability insurance in an amount equal to the replacement
      cost of the Premises; and

(d)   such additional insurance as Landlord, acting reasonably and in accordance
      with industry standards, may from time to time require.

22.02 All policies of insurance shall be placed with insurers to which the
Landlord has no reasonable objection, and provide that they will not be
cancelled or permitted to lapse unless the insurer notifies Landlord in writing
at least thirty (30) days prior to the date of cancellation or lapse. Each such
policy shall name Landlord and any other party required by Landlord, including
but not limited to its property manager and mortgagees, as an additional
insured(s) as its (or their) interest(s) may appear. The Tenant's insurance
policies and coverages shall be primary. Each liability policy will contain a
provision of cross-liability and severability of interests as between Landlord
and Tenant. All other policies referred to above shall contain a waiver of
subrogation rights which Tenant's insurers may have against Landlord, Landlord's
insurers and persons under Landlord's care and control. Notwithstanding anything
contained in this lease to the contrary, Tenant hereby releases and waives any
and all claims against Landlord and those for whom Landlord is in law
responsible with respect to occurrences which are or which are required to be
insured against by Tenant hereunder. Tenant shall from time to time furnish
Landlord with certificates of all such insurance policies and the renewals
thereof.

22.03 Should Tenant fail to take out or keep in force such insurance, Landlord,
subject to a ten (10) day written notification (or such shorter period of time
as the Landlord is given by its insurer to cure the default) to the Tenant
(unless the default is cured within the aforesaid period) will have the right to
do so and to pay the premiums therefor and in such event Tenant shall repay to
Landlord the amount paid as premiums as additional rental on demand.

                                 SECTION XXIII
                                 -------------
                                    DEFAULT
                                    -------

23.01 In any of the events following, namely:

(a)   if the Tenant shall fail to pay the Landlord any installment of Rent or
      any additional rent after it shall have become due and payable as herein
      provided so long as the Landlord has notified the Tenant in writing of its
      default and the Tenant has not rectified the said default within ten (10)
      days of being notified of same;

(b)   if the Tenant or Guarantor shall be declared dissolved, bankrupt or
      wound-up or shall make any general assignment for the benefit of its
      creditors or take or attempt to take the benefit of any insolvency,
      winding-up or bankruptcy legislation or if a petition in bankruptcy or in
      winding-up or for reorganization shall be filed by or granted against the
      Tenant or if a receiver or trustee be appointed for or enter into physical
      possession of the property of the Tenant, or any part thereof;

(c)   if the Tenant shall assign, sublet or permit the use of the Premises by
      others except in a manner herein permitted so long as the Landlord has
      notified the Tenant in writing of its default and the Tenant has not
      rectified the said default within fifteen (15) days' of being
<PAGE>

                                     -23-

      notified of same (or such longer period of time as is necessary for the
      Tenant to remedy such default (provided the Tenant promptly commences and
      thereafter continues diligently to remedy such default));

(d)   if any of the property of the Tenant in the Premises is seized by any
      person whatsoever so long as the Landlord has notified the Tenant in
      writing of its default and the Tenant has not rectified the said default
      within fifteen (15) days' of being notified of same (or such longer period
      of time as is necessary for the Tenant to remedy such default (provided
      the Tenant promptly commences and thereafter continues diligently to
      remedy such default));

(e)   if any insurance carried by the Landlord be cancelled in consequence of
      the business carried on by the Tenant or in consequence of anything
      brought into or stored in the Premises by the Tenant so long as the
      Landlord has notified the Tenant in writing of its default and the Tenant
      has not rectified the said default within fifteen (15) days' of being
      notified of same; or

(f)   if the Tenant shall default in the performance of any of its other
      obligations under this lease including, without limitation, the obligation
      to pay business taxes in a timely manner, fail to effect any payment that
      may result in a charge, lien, encumbrance or other right on the Premises
      or the property located therein or shall violate any of the rules and
      regulations hereinafter set forth or hereafter to be established by the
      Landlord so long as the Landlord has notified the Tenant in writing of its
      default and the Tenant has not rectified the said default within fifteen
      (15) days' of being notified of same (or such longer period of time as is
      necessary for the Tenant to remedy such default (provided the Tenant
      promptly commences and thereafter continues diligently to remedy such
      default)),

this lease may be terminated at the option of the Landlord without further
notice to the Tenant to such effect. It is expressly agreed that such right of
termination shall be in addition and without prejudice to all other rights as
provided by law or herein, and the Landlord may re-enter the Premises to have
again, repossess and enjoy, as of its former estate, anything herein contained
to the contrary notwithstanding and re-let the Premises to whomsoever it may
choose without further notice or demand being necessary and may recover from the
Tenant all amounts due hereunder at the date of such termination, expenses of
such re-letting (including any repairs, decorating, alterations or improvements
necessitated thereby) and rental for the three (3) months next succeeding the
date of such termination or such longer period as may be allowed by law, all of
which shall immediately become due and payable. Thereafter the Tenant shall pay
to the Landlord, as liquidated damages until the end of the Term, an amount
equivalent to the rental provided in this lease, less the sum of the net
receipts (if any) derived by the Landlord from the re-letting of the Premises.
As used herein, the expression "rental" shall mean the Rent, Real Estate Taxes,
Operating Expenses and Tax on Capital, and all other additional rents payable
hereunder. Any sums received by the Landlord from or for the account of the
Tenant when the Tenant is in default hereunder may be applied, at the Landlord's
option, to the satisfaction in whole or in part of any obligation of the Tenant
then due hereunder in such manner as the Landlord sees fit and regardless of any
imputation by law or any designation or instruction of the Tenant to the
contrary. The Landlord agrees that so long as any default by the Tenant is
rectified within the time period hereinbefore provided, the default shall be
deemed to have not occurred.
<PAGE>

                                     -24-

23.02 The Tenant waives and renounces the benefit of any present or future
statute taking away or limiting the Landlord's right of distress, and covenants
and agrees that notwithstanding any such statute none of the goods and chattels
of the Tenant on the Premises at any time during the Term shall be exempt from
levy by distress for rent in arrears.

                                 SECTION XXIV
                                 ------------
               RELOCATION AND MODIFICATION OF BUILDING/PREMISES
              ------------------------------------------------

24.01 Notwithstanding any provision of this lease to the contrary, the Landlord
reserves the right at any time and from time to time, following consultation
with the Tenant, to make minor changes, alterations, amendments or expansions to
the Building as the Landlord, in its sole and entire discretion deems expedient
(save that to the extent any of the foregoing may affect the Tenant's use and
enjoyment of the Premises, no such work, saving an emergency, shall be effected
without the consent of the Tenant) same to include without limitation, the right
of the Landlord to add additional floors to the Building, to expand the length
or width of the Building and/or change, alter and amend the location, dimensions
or specifications of the pipes, wires, ducts, conduits, utilities, mechanical
systems, common areas and other building services (including such as may be
contained within the Premises provided that any such changes, alterations or
amendments which are in the Premises are minor in nature and do not materially
affect the Tenant's use and enjoyment of the Premises). The Tenant waives and
renounces any and all claims as a consequence of the foregoing. In the event any
such change results in additional land being utilized to service the Premises,
such additional land shall be deemed included in the definition of "Land" for
all purposes of this lease.

24.02 Deleted.

                                  SECTION XXV
                                  -----------
                             ADDITIONAL PROVISIONS
                             ---------------------
25.01

(a)   Landlord: In the event of any sale or lease of the Premises, the Landlord
      --------
      shall be and hereby is entirely released and relieved from all covenants
      and obligations of the Landlord hereunder (except for any liability or
      obligations outstanding at the time of the sale or lease of the Premises
      or arising in respect of the period prior to the sale or lease of the
      Premises) provided such purchaser or lessee agrees to assume and carry out
      any and all such covenants and obligations (except for any liability or
      obligations outstanding at the time of the sale or lease of the Premises
      or arising in respect of the period prior to the sale or lease of the
      Premises).

(b)   Amendment of Lease: No assent or consent to changes in or waiver of any
      ------------------
      part of this lease shall be deemed or taken as made unless the same be
      done in writing and attached to or endorsed hereon by Landlord and Tenant.
      No covenant or term of the present lease stipulated in favour of the
      Landlord or Tenant shall be waived, except by express written consent of
      the other, whose forbearance or indulgence in any regard whatsoever shall
      not constitute a waiver of the covenant, term or condition to be
      performed; and until
<PAGE>

                                     -25-

      complete performance of the said covenant, term or condition, the
      applicable party shall be entitled to invoke any remedies available under
      this lease or by law despite such forbearance or indulgence.

(c)   Late Payments: The acceptance by the Landlord any postdated cheque or
      -------------
      money owing for Rent or additional rent after its due date is to be
      considered as a mode of collection only, without novation of, nor
      derogation from any of Landlord's rights, recourses and actions in virtue
      of this lease which demands punctual payment of all obligations. All sums
      owing by either the Landlord or the Tenant under this lease not paid when
      due shall thereafter bear interest at a rate equivalent to two percent
      (2%) per annum above the prime lending rate of The Toronto-Dominion Bank
      from time to time in effect.

(d)   Tenant (and Guarantor, if applicable): All the covenants herein contained
      ------------------------------------
      shall be deemed to have been made by and with the heirs, executors,
      administrators and permitted assigns or successors of each of the parties
      hereto, and if more than one Tenant (or Guarantor, if applicable), the
      covenants herein contained on the part of the Tenant (or Guarantor, if
      applicable) shall be construed as being several as well as joint and where
      necessary reference to the Tenant (or Guarantor, if applicable) as being
      of the masculine gender or in the singular number shall be construed as
      being in the feminine or neuter gender or in the plural number.

(e)   Brokerage Commission: As part of the consideration for the granting of
      --------------------
      this lease, the Tenant represents and warrants that no broker, agent or
      other intermediary introduced the parties or negotiated or was
      instrumental in negotiating or consummating this lease other than the Real
      Estate Broker, if any, named in Section 1.01 hereof.

(f)   Registration of Lease: Tenant shall not register this lease at length but
      ---------------------
      only by notice thereof and then only after the form and terms of such
      notice have been approved in writing by the Landlord or its legal counsel
      (which approval is not to be unreasonably withheld or delayed), the whole
      at the cost of the Tenant, including the cost of registration and a copy
      for the Landlord. Should a notice of this lease be registered, the Tenant
      shall, at the termination of this lease, execute a release of lease in
      form and content satisfactory to the Landlord.

(g)   Additional Rent: In addition to Rent, all other monies payable pursuant to
      ---------------
      this lease, as well as all sales, business transfer, goods and services
      and value added taxes, rates and duties or similar taxes, rates and duties
      which may at any time hereafter be imposed upon or by reference to the
      Rent and other sums owing by Tenant hereunder shall be payable by Tenant
      to Landlord immediately when due without reduction, deduction or
      compensation whatsoever and shall be additional rent and collectable as
      such.

(h)   Prior Agreements: With the exception of the Development Agreement, the
      ----------------
      present lease cancels and supersedes all prior leases and agreements,
      written or otherwise, entered into by the Landlord and the Tenant
      regarding the Premises. This lease and such rules and regulations as may
      be adopted and promulgated by the Landlord from time to time constitute
      the entire agreement between the parties.
<PAGE>

                                     -26-

(i)   Rights Cumulative: No right or remedy herein conferred upon or reserved to
      -----------------
      the Landlord is intended to be exclusive of any other right or remedy
      herein or by law provided, but such rights shall be cumulative and in
      addition to every other right or remedy herein or by law provided.

(j)   Performance by the Landlord: If the Tenant fails to pay any sum to any
      ---------------------------
      third party or perform any other obligation under this lease, the Landlord
      may, after fifteen (15) days written notice to the Tenant, pay the said
      sum or perform the said obligation in the place and stead of the Tenant
      who shall be thereupon obliged to repay the said sum and/or reimburse any
      costs incurred by the Landlord in performing such obligation, together
      with a fee equal to fifteen percent (15%) of the amount paid or the costs
      incurred, as the case may be, the whole without prejudice to any other
      rights or recourses of the Landlord which may accrue in the circumstances.

(k)   Severability: If any clause or provision herein contained shall be
      ------------
      adjudged invalid, the same shall not affect the validity of any other
      clause or provision of this lease, or constitute any other cause of action
      in favour of either party against the other.

(l)   Governing Law: This agreement shall be construed and interpreted in
      -------------
      accordance with the laws of the Province of Ontario.

(m)   Captions: The captions appearing in this lease have been inserted as a
      --------
      matter of convenience and for reference only and in no way define, limit
      or enlarge the scope or meaning of this lease or any provision thereof.

(n)   Time of Essence: Time is of the essence of this lease.
      ---------------

                                 SECTION XXVI
                                 ------------
                             RULES AND REGULATIONS
                             ---------------------

26.01 The rules and regulations respecting the Premises which are more fully set
forth in Schedule "D" hereto shall, during the Term, be observed and performed
by the Tenant, its officers, servants, employees, agents, invitees and
licensees, and the Landlord shall have the right to make reasonable alterations
and additions to such rules and regulations and to make such other and further
reasonable rules and regulations as in its judgment may from time to time be
required for the safety, care and cleanliness of the Premises, and for the
preservation of good order therein, and the same shall be observed and performed
by the Tenant, its officers, servants, employees, agents, invitees and
licensees. The Landlord 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 the
Landlord shall be construed as a waiver of the rules and regulations in favour
of any other tenant or tenants nor prevent the Landlord from thereafter
enforcing any rules and regulations against all or any of the tenants in the
Building. The Landlord agrees to notify the Tenant in writing of any changes in
the rules and regulations. All such rules and regulations shall be adopted by
the Landlord, acting reasonably, and shall not be applied by the Landlord in an
arbitrary or capricious manner. The Landlord agrees that it will consult with
the Tenant prior to making any such changes in the rules and regulations.
<PAGE>

                                     -27-

                                 SECTION XXVII
                                 -------------
                          MORTGAGES AND SUBORDINATION
                          ---------------------------

27.01 Subject to the Landlord receiving from the applicable party an agreement
in from and content satisfactory to the Tenant, acting reasonably, to the effect
that notwithstanding any default by the Landlord and so long as the Tenant is
not in default hereunder, its possession of the Premises will not be disturbed,
this lease and all rights of Tenant hereunder shall be subject and subordinate
at all times to any and all underlying leases, mortgages, hypothecs, deeds of
trust or other security interests affecting the Premises which have been
executed or which may at any time hereafter be executed, and any and all
extensions and renewals thereof and substitutions therefor. Tenant agrees to
execute any instrument or instruments which Landlord may deem necessary or
desirable to evidence the subordination of this lease or to subordinate priority
of its registration to any or any such underlying leases, mortgages, hypothecs,
deeds of trust or other security interests.

27.02 Tenant covenants and agrees that if by reason of default by Landlord as
lessee under any underlying lease in the performance of any of the terms or
provisions of such underlying lease or by reason of a default under any
mortgage, hypothec, deed of trust or other security interest to which this lease
is subject or subordinate and Landlord's title is terminated, it will attorney
to the lessor under such underlying lease or the acquirer of the Premises
pursuant to any action taken under any such mortgage, hypothec, deed of trust or
other security interest and Tenant will recognize such lessor or such acquirer
as Tenant's lessor under this lease.

27.03 Tenant waives the provisions of any statute or rule of law now or
hereafter in effect which may give or purport to give the Tenant any right of
election to terminate this lease or to surrender possession of the Premises in
the event any such proceeding to terminate the underlying lease is brought by
the lessor under any such underlying lease or any such action is taken under any
such mortgage, hypothec, deed of trust or other security interest and agrees
that this lease shall not be affected in any way whatsoever by any such
proceeding.

27.04 Tenant agrees to execute and deliver, at any time and from time to time
upon the request of Landlord or of the lessor under any such underlying lease,
or of the holder of any such mortgage, hypothec, deed of trust or other security
interest any instrument which may be necessary or appropriate to evidence such
attornment. Tenant shall execute and deliver such instrument (or instruments)
within ten (10) Business Days after being requested to do so and failing which
Landlord may do so on Tenant's behalf.

27.05 Tenant will upon request of Landlord furnish to the Landlord, a lessor
under any underlying lease and/or to each creditor under a mortgage, hypothec,
deed of trust or other security interest and/or to an actual or prospective
purchaser, in and to the Premises and/or underlying lease a written statement
that this lease is in full force and effect and that the Landlord has complied
with all its obligations under this lease (or state those with which it has not
complied) and any other reasonable written statement, document or estoppel
certificate requested by the Landlord or any such lessor, creditor, purchaser or
lessee.
<PAGE>

                                     -28-

                                SECTION XXVIII
                                --------------
                                   GUARANTOR
                                   ---------

28.01 The Guarantor, in consideration of the sum of One Dollar ($1.00) now paid
by the Landlord to the Guarantor (the receipt whereof is hereby acknowledged)
and other valuable consideration, hereby directly and unconditionally guarantees
to and covenants with the Landlord that the Tenant will duly perform, observe
and keep each and every covenant, proviso, condition and agreement in this lease
on the part of the Tenant to be performed, observed and kept, including the
payment of rent and all other sums and payments agreed to be paid or payable
under this lease on the days and at the times and in the manner herein
specified, and that if any default shall be made by the Tenant, whether in
payment of any rent or other sums from time to time falling due hereunder as and
when the same become due and payable or in the performance, observance or
keeping of any of the said covenants, provisos, conditions or agreements which
under the terms of this lease are to be performed, observed or kept by the
Tenant, the Guarantor will forthwith pay to the Landlord on demand the said rent
and other sums in respect of which such default shall have occurred and all
damages that may arise in consequence of the non-observance or non-performance
of any of the said covenants, provisions, conditions or agreements.

28.02 The Guarantor covenants with the Landlord that the Guarantor is jointly
and severally bound with the Tenant for the fulfillment of all obligations of
the Tenant under this lease. In the enforcement of its rights hereunder, the
Landlord may proceed against the Guarantor as if the Guarantor were named Tenant
hereunder.

28.03 The Guarantor hereby waives any rights to require the Landlord to proceed
against the Tenant or to take or perfect or proceed against or to exhaust any
security held from the Tenant or to exhaust any security held from the Tenant or
to pursue any other remedy whatsoever which may be available to the Landlord
before proceeding against the Guarantor.

28.04 No neglect or forbearance of the Landlord in endeavouring to obtain
payment of the rent reserved herein or other payments required to be made under
the provisions of this lease as and when the same become due, no delay of the
Landlord in taking any steps to enforce performance or observance of the several
covenants, provisos or conditions contained in this lease to be performed,
observed or kept by the Tenant, no extension or extensions of time which may be
given by the Landlord from time to time to the Tenant, and no other act or
failure to act of or by the Landlord shall release, discharge or in any way
reduce the obligations of the Guarantor under the guarantee contained in this
Section.

28.05 In the event of a termination of this lease other than by a surrender
accepted by the Landlord (including without limitation repudiation by the Tenant
under applicable bankruptcy or insolvency legislation), or in the event of the
bankruptcy or insolvency of the Tenant, or in the event of a disclaimer of this
lease pursuant to any statute, the Guarantor agrees to pay to the Landlord all
rents or other amounts payable hereunder for the full term of this lease
notwithstanding any such disclaimer, bankruptcy, insolvency, or determination
and the Guarantor shall be deemed to have executed a new lease for the Premises
between the Landlord as Landlord and the Guarantor as Tenant for term equal in
duration to the residue of the term remaining unexpired at the date of such
termination or such disclaimer. Such lease shall contain
<PAGE>

                                     -29-

the like Landlord's and Tenant's obligations respectively and the like
covenants, provisos, agreements and conditions in all respects (including the
proviso for re-entry) as are contained in this lease.

28.06 The Guarantor waives notice of the taking effect of and coming into force
of any renewals or extensions of the Term and confirms and acknowledges that the
liability of the Guarantor hereunder shall remain in full force and effect
throughout any such renewals or extensions. In additions the Landlord may deal
with the Tenant with respect to any modification to the terms and conditions of
this lease and/or any security held from the Tenant as the Landlord sees fit and
the liability of the Guarantor hereunder shall remain in full force and effect
and will include any covenants, provisos, conditions or agreement resulting from
such modification.

                                 SECTION XXIX
                                 ------------
                                   SCHEDULES
                                   ---------

29.01 The Schedules are included in and form an integral part of this lease.
<PAGE>

                                     -30-

         IN WITNESS WHEREOF, the parties have signed these presents on the date
first hereinabove mentioned.

3559807 CANADA INC.

Per:  /s/ Douglas Pascal
     ----------------------
Name: Douglas Pascal    c/s

Per:
     ----------------------
Name:

I/We have authority to bind the Corporation

ENTRUST TECHNOLOGIES LIMITED

Per: /s/ David L. Thompson
     ----------------------
Name: David L. Thompson c/s Chief Financial Officer

Per:
     ----------------------
Name:

I/We have authority to bind the Corporation

ENTRUST TECHNOLOGIES INCORPORATED

Per: /s/ David L. Thompson
     ----------------------
Name: David L. Thompson c/s Chief Financial Officer

Per:
     ----------------------
Name:

I/We have authority to bind the Corporation
<PAGE>

                                     -31-

                              3559807 CANADA INC.
                              -------------------

                                 SCHEDULE "A"
                                 ------------

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

Part of Lot 8, Concession 3, Township of March, now in the City of Kanata,
Regional municipality of Ottawa-Carleton, designated as parts 4, 5, 6 and 7 on
Plan 4R-15831.
<PAGE>

                                     -32-

                              3559807 CANADA INC.
                              -------------------

                                 SCHEDULE "B"
                                 ------------

                             PREMISES DESCRIPTION
                             --------------------

N/A
<PAGE>

                                     -33-

                               3559807 CANADA INC.
                               -------------------

                                  SCHEDULE "C"
                                  ------------

                                 LANDLORD'S WORK
                                 ---------------

N/A
<PAGE>

                                     -34-

                               3559807 CANADA INC.
                               -------------------

                                  SCHEDULE "D"
                                  ------------

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

1.  The Landlord will have the care of the heating and air-conditioning
apparatus and may provide information for the regulation of same.

2.  The Tenant shall not permit the introduction of any machine or electrical or
mechanical device of a nature to occasion objectionable noise and vibration or
be injurious to the Premises.

3.  The Tenant shall not without the written consent of the Landlord use any
electric current except that supplied from the general system installed in the
Building, and the Landlord shall not be responsible in damages by reason of any
failure of such current. If the Landlord grants the Tenant permission to
introduce any special electric power, telegraphic or telephone connection, the
Landlord reserves the right to direct where and how wires are to be introduced,
and without such direction no boring or cutting shall be permitted.

4.  The Tenant shall keep the Premises in a good state of preservation and shall
not suffer any accumulation of useless property or rubbish therein. No animals
shall be kept in or about the Premises.

5.  The Tenant, its employees, clerks or servants, shall not use the Premises
for the purpose of lodging rooms, or for any immoral or unlawful purpose, and
shall not throw anything out the windows or doors or down through the passages
or skylights of the Building.

6.  The Tenant shall not mark, paint, drill into or in any way deface the walls,
ceilings, partitions, floors, wood, stone or iron work, or any other
appurtenance to the Premises other than as part of normal office decorating,
provided that same causes no permanent damage to the Premises.

7.  The sidewalks, entries, passages, halls, elevators and stairways shall be
under the exclusive control of the Landlord and shall not be obstructed by the
Tenant, or used by it for any purpose than the ingress and egress to and from
its respective offices or places of business.

8.  Any damages which may be caused to the Premises in the carrying of
furniture, bulky articles or construction materials to or from the Premises
shall be the sole responsibility of the Tenant.

9.  The Landlord shall not be responsible for any damage to the furniture,
effects, goods or equipment of the Tenant while being transported or moved to
and from the Premises or in the elevators, corridors, basement or other premises
of the Landlord.

10. No signs, advertisements, notices or other lettering, other than as set out
in Section 14 of Schedule "F", and other than a sign similar to the Tenant's
building mounted sign age which is at
<PAGE>

                                     -35-

the date of execution of this lease mounted on the building municipally known as
750 Heron Road, Ottawa, Ontario, shall be exhibited, inscribed, painted or
affixed by the Tenant on any part of the outside or inside of the Premises or
Building without the prior written consent of the Landlord. Interior signs on
doors will be inscribed, painted or affixed for the Tenant by the Landlord at
the expense of the Tenant.

11. The Tenant shall not place any additional locks upon any doors of the
Building without written permission and shall not permit any duplicate keys to
be made therefor, but shall use only additional keys obtained from the Landlord
at the expense of the Tenant. The Tenant shall surrender to the Landlord at the
termination of this lease all keys to the Premises and the Building.

12. The Tenant shall not perform any acts which may injure the Premises and
shall forthwith upon the request of the Landlord discontinue all acts or
practices in violation of this regulation and repair any damage or injury to the
Premises caused thereby.

13. The Landlord shall have the right to prohibit any advertising by the Tenant
which, in its opinion, tends to impair the reputation or character of the
Building and upon written notice from the Landlord, the Tenant shall refrain
from or discontinue such advertising.

14. Canvassing, soliciting and peddling in the Building is prohibited and the
Tenant shall cooperate to prevent the same.

15. The Tenant shall have no right to advertise by using the words "LIQUIDATION
SALE", "AUCTION SALE", "FORCED TO VACATE", "GIVING UP LEASE", or "GIVING UP
BUSINESS", or make use of terms and phrases denoting same or having similar
meaning. The Landlord may remove such signs or advertising at the Tenant's cost
without any recourse in damages against the Landlord which the Tenant herein
expressly waives.

16. The Tenant shall not install window shades, vertical venetian blinds,
curtains or drapes of any kind or description without the Landlord's prior
written approval.

17. The Tenant shall not lay linoleum, rubber, cork or other floor coverings so
that the same shall come in direct contact with the floor, and if linoleum,
rubber or cork floor covering is desired to be used, an interlining of builder's
deadening felt shall be first affixed to the floor by a paste or other adhesive
which may be readily removed with water.

18. If any apparatus used or installed by the Tenant requires a permit as a
condition for installation, the Tenant must file a true copy of such permit with
the Landlord.

19. The Tenant undertakes to abide by and participate in any fire drills or
other similar manoeuvres called or arranged by the municipality, fire
department, or the Landlord for the security and protection of the Building.
<PAGE>

                                     -36-

                               3559807 CANADA INC.
                               -------------------

                                  SCHEDULE "E"
                                  ------------

                 MINIMUM BUILDING STANDARDS FOR TENANT FINISHES
                 ----------------------------------------------

The Tenant acknowledges that the Tenant's finishing of the Premises will conform
to the following minimum standards:

(a)   Partitioning:

      Floor to underside of suspended ceiling. 1/2" drywall, complete with sound
      insulation on 2 1/2" steel studs. All drywall surfaces are to be taped,
      sanded and painted to Tenant's choice of colour. All demising walls are to
      be constructed from slab to slab with sound baffling and in compliance
      with Building Code provisions.

(b)   Doors and Frames:

      Solid core 9' height wood veneer doors, frames and entrances conforming to
      Building standards.

(c)   Electrical Outlets:

      Standard duplex wall mounted electrical receptacles and/or standard floor
      mounted monuments.

(d)   Flooring:

      All floors to be finished in either a minimum of twenty-eight (28) ounce
      carpet direct glue down method or 12" x 12" vinyl composite tiles or
      carpet tile installed to Tenant's choice of one colour each from samples
      supplied by the Landlord. Carpet base with serged edge in all carpeted
      areas. Vinyl cove base in all tiled areas.

(e)   Sprinkler Redistribution:

      Installation, modification and redistribution of sprinkler heads in the
      premises shall be according to the standards from time to time of the Fire
      Department of the City of Kanata and the Landlord's insurers.

(f)   Window Blinds:

      Window blinds to be building standard type, if installed by the Tenant.
<PAGE>

                                     -37-

                               3559807 CANADA INC.
                               -------------------

                                  SCHEDULE "F"
                                  ------------

                              ADDITIONAL PROVISIONS
                              ---------------------

1.    CERTIFICATE AS TO THE AREA OF THE BUILDING

The Landlord agrees that the gross building area of the Building shall be
measured prior to the Commencement Date in accordance with ANSI/BOMA "Standard
Method for Measuring Gross Building Area in Office Building" - Single Tenant
Occupancy (Z65.1-1996) at the Landlord's cost by a professional land surveyor or
architect. The Landlord and the Tenant agree that with respect to the basement
level of the Building ("the Basement"), Rent for the Basement shall be
calculated based on the area of the Basement being the lesser of the actual
measured area of the Basement or five thousand (5,000) square feet.

2.    ADJUSTMENT TO THE RENT

The Landlord and the Tenant agree that if modifications (any such modification
to be referred to in this Schedule as a "Modification") in the Preliminary Plans
and Specification, the Progress Drawings and Specification, the Site Plan and
the Tenant Fit-Up Plans and Specifications (all as defined in the Development
Agreement) ordered by the Tenant are consented to by the Landlord and decrease
or increase the total cost of the Base Building Core & Shell, the Rent payable
by the Tenant to the Landlord in each month of the Term shall be decreased or
increased by an amount equal to:

(a)   where the Modification has a useful life beyond the Term and is of value
      to a potential future tenant, $0.08l per square foot per annum for each
      $100,000.00 of cost of the Modification; and

(b)   in any other event, $0.103 per square foot per annum for each $100,000.00
      of cost of the Modification,

all pro-rated to take into consideration the actual cost of the Modification.
The Tenant agrees that the Landlord shall not be required to consent to a
Modification only if:

(A)   the Landlord is unable to obtain funds from the is mortgagee with respect
      to carrying out the modification); or

(B)   the Landlord reasonably determines that the Modification is not beneficial
      to the Premises on a long-term basis; or

(C)   Rent is increased beyond what is deemed by the Landlord, acting
      reasonably, to be an acceptable market rent for premises which are similar
      to and in the vicinity of the Premises.

3.    OPTION TO EXTEND THE TERM

Provided the Tenant is not then in material default at the time of the exercise
of the applicable option in respect of any of the terms and conditions of this
lease beyond any cure period herein
<PAGE>

                                     -38-

provided and provided the Tenant remains in occupation of all of the Premises
(or if the Tenant has exercised any of its rights to cancel this lease with
respect to portions of the Premises as provided for in Section 8 of Schedule "F"
of this lease, the Premises as defined after such cancellation(s)), the Tenant
shall have two (2) consecutive options to extend the Term for the entirety of
the Premises for periods of five (5) years each upon the same terms and
conditions as set out in this lease, save and except that:

(a)   there shall not be any tenant allowances or inducements (subject to what
      is hereinafter set out with respect to establishing Market Rate) or any of
      the rights contained in Section 8 of this Schedule "F");

(b)   there shall be no further options to renew the lease or to extend the
      Term; and

(c)   the Rent shall be the "Market Rate".

To exercise the foregoing option, the Tenant shall provide written notice
thereof to the Landlord no less than twelve (12) months prior to the expiration
of the initial Term or first extension of the Term, as the case may be, in
default whereof the first option and, if applicable, the second option shall be
deemed null and void and of no further legal effect.

For the purposes of this lease, the expression "Market Rate" means the net
rental rate per square foot for comparable space in other buildings in the area
of comparable quality, considering the size of the premises, the quality of the
tenant covenant and the tenant inducements being offered at the time for five
(5) year leases including but not limited to cash and leasehold improvement
allowances and free rent periods, and taking into account applicable brokerage
commissions. The Landlord and the Tenant agree to use their best efforts to
agree on the Market Rate. In the event that they do not so agree upon the Market
Rate for the extended Term nine (9) months prior to the Termination Date, Market
Rate shall be established by the arbitration of a single arbitrator appointed
pursuant to and governed by the provisions of the Arbitrations Act of Ontario
(as such legislation is constituted as at the date of execution of this lease).

4.    MANAGEMENT OF THE BUILDING

The Landlord shall manage the Premises (at the expense of the Tenant, as part of
Operating Expenses) including the provision of landscaping services, snow
removal and maintenance of the exterior of the Building, and excluding security
services for the Premises (which the Tenant shall manage directly) as a prudent
and reasonable owner, in keeping with standard industry practice for first class
office buildings. In the event that the Tenant, acting reasonably, is
dissatisfied with the cost, standard or quality of the delivery of services to
be co-ordinated and administered by the Landlord for the Premises, the Tenant
may request that the Landlord replace the provider of the service and the
Landlord shall use its best efforts to comply with such request.

5.    MAINTENANCE OF THE BUILDING

The Landlord agrees that, subject to the Tenant's obligations set out in this
lease, the Landlord shall maintain the Premises in a first-class condition, in a
good state of repair, and in compliance with applicable laws and the Tenant
agrees that the cost of same shall be included in Operating
<PAGE>

                                     -39-

Expenses (except as otherwise provided for in this lease). Except to the extent
the Tenant is responsible therefor under this lease, the Landlord shall comply
with all laws, by-laws, codes, regulations or ordinances in respect of the
operation, maintenance and condition of the Premises.

6.    LEASEHOLD IMPROVEMENT ALLOWANCE/TENANT FIT-UP

The parties hereto agree that the Tenant Fit-Up shall be carried out by the
Landlord to the Premises at the Tenant's expense and shall be completed, subject
to the provisions of the Development Agreement, on or about the Commencement
Date. The Landlord agrees to contribute an allowance ("the Allowance") towards
the cost of the Tenant Fit- Up, as provided for in Section 4.1(c) of the
Development Agreement. The Allowance shall be paid and applied as against the
cost of the Tenant Fit-Up and in accordance with the provisions of the
Development Agreement.

In addition to administrative out-of pocket disbursements (such as couriers,
faxes, photocopies, long distance telephone charges) of the Landlord, the
following fee shall be payable by the Tenant within respect to the construction
cost component of the Tenant Fit-Up:

(a)   ten percent (10%) with respect to the first Forty Dollars ($40.00) per
      square foot of the "Cost of the Work" (as such expression is defined in a
      CCDC3 1998 cost- plus contract, expanded upon as set out in Schedule "G"
      attached hereto) relating to the Tenant Fit-Up per square foot of gross
      building area of the Building; and

(b)   five percent (5%) with respect to the balance of the Cost of the Work
      relating to the Tenant Fit-Up.

Notwithstanding the foregoing, the fee payable with respect to the Generator (as
hereinafter defined) shall be five percent (5%) of its installation costs (with
no fee applicable to the cost of the Generator itself). No fee shall be payable
with respect to:

      (i)   permits, design or general expenses applicable to the Tenant Fit-Up;

      (ii)  any landscaping or hardscaping costs that the Tenant may be
            responsible to pay for in excess of the $ 175,000.00 allowance
            provided for pursuant to the provisions of Section 3.14 of the
            Development Agreement; or

      (iii) any Tenant's Work (as defined in the Development Agreement).

There shall be no fee (or out-of pocket disbursements) applicable to any design,
consulting, architectural or engineering work relating to, nor in respect of the
construction of, the Base Building Core & Shell or Exterior Building Amenities,
unless same are impacted by the Tenant Fit-Up.

7.    CONDITION OF THE BUILDING

The Landlord warrants that as at the Commencement Date:
<PAGE>

                                     -40-

(a)   it will not be aware of any structural or major repairs required to be
      effected to the Building which have not been remedied, or are in the
      process of being remedied;

(b)   it will not have received any notice of non-compliance of laws, by-laws,
      codes, regulations or ordinances in respect of the Land or Building which
      has not been remedied, or is in the process of being remedied and the
      Building complies with all applicable laws and by-laws;

(c)   the Building and equipment therein will not contain any formaldehyde foam
      insulation, asbestos or polychlorinated biphenyls;

(d)   the heating, air-conditioning and ventilating systems, electrical and
      other systems will be in good working order and are of sufficient capacity
      (having regard to the fact that same were supplied and installed to the
      Tenant's specifications) to service the Building for the uses intended by
      the Tenant as outlined and agreed to in the Project Definition Binder (as
      defined in the Development Agreement); and

(e)   it will be the registered owner of the Land or, in the event that title to
      the Land is not in the name of the Landlord as at such date, the Landlord
      will cause the registered owner of the Land to sign this lease on or
      before the Commencement Date.

8. TENANT'S RIGHT TO SURRENDER ITS INTEREST IN PORTIONS OF THE PREMISES

The Tenant is hereby granted an option ("the First Cancellation Option") to
cancel this lease with respect to one whole floor of the Building on November 1,
2005 and a further option ("the Second Cancellation Option") to cancel this
lease with respect to one whole floor of the Building on November 1, 2007 (the
applicable date to be referred to herein as "the Early Termination Date"). In
order to exercise either such option, the Tenant agrees to give to the Landlord
written notice ("the Surrender Notice") of its intention to do so no later than
nine (9) months prior to the applicable Early Termination Date. The Tenant shall
pay a termination payment to the Landlord on the applicable Early Termination
Date equal to the Unamortized Amount (as hereinafter defined) (pro-rated to take
into consideration the rentable area of the floor which is the subject of the
Surrender Notice), together with an amount equal to Rent, Operating Expenses,
Realty Taxes, Tax on Capital and utilities for a period of three (3) months (as
if the Building had been fully occupied) for such floor, all together with
applicable taxes on such amounts.

For the purposes of this section, the expression "Unamortized Amount" means the
unamortized balance of the following amounts:

(a)   the Allowance;

(b)   legal fees, leasing fees and brokerage commissions incurred in securing
      the transaction contemplated by this lease; and
<PAGE>

                                     -41-

(c)   the cost of all Modifications (having regard only, in the case of those
      detailed in Section 2(b) of this Schedule "F", to the portion of the
      unamortized balance applicable to the end of the initial Term),

all as at the Early Termination Date (which amounts are to be deemed to be
amortized for the purposes of this section over a ten (10) year period from the
Commencement Date (other than in respect of a Modification of the nature
described in Section 2(b) of this Schedule "F", in which case the amortization
is to be over its useful life) with an interest factor often percent (10%) per
annum, compounded monthly).

The Surrender Notice shall specify which floor of the Building is to be the
subject of the Tenant's option. In no event is the said floor to be the ground
floor or basement level of the Building. In addition, if the Tenant has
exercised the First Cancellation Option and then intends to exercise the Second
Cancellation Option, the applicable floors of the Building which are the subject
of the Surrender Notices are to be contiguous.

In the event that the Tenant exercises any or both of the First Cancellation
Option or the Second Cancellation Option, the Tenant acknowledges that:

(a)   the form of this lease shall have to be amended in order to incorporate
      concepts such as (but not limited to) common areas and proportionate
      shares and other amendments appropriate to the conversion of the Building
      to a multi-tenant building;

(b)   the Tenant shall be required to surrender its interest in certain other
      portions of the Premises such as (but not limited to) parking stalls,
      exterior areas (such as landscaping), portions of the ground floor of the
      Building so as to permit the establishment of a lobby area, loading docks,
      mechanical areas (all with the intention that where possible such areas
      are to be for the common use and enjoyment of all tenants of the
      Building); and

(c)   the area of the Premises after any cancellation shall be calculated as
      being the area of the Building as at the Commencement Date (as increased,
      if applicable in the event that further areas of the Building are
      constructed for the Tenant after the Commencement Date) less the area of
      the premises which is the subject of a Surrender Notice (or Surrender
      Notices, as the case may be), which area is to be measured at the Tenant's
      expense in accordance with the ANSI/BOMA "Standard Method for Measuring
      Basic Rentable Area in Office Building" (Z65.l-1996).

9. ENVIRONMENTAL

The Landlord shall be responsible, at its expense, for the cost of clean-up or
any other remedial measures for any contamination to the Land or Building
existing prior to the Commencement Date or caused at any time by any person
other than the Tenant or those for whom the Tenant is in law responsible. The
Landlord agrees that it will indemnify and save harmless the Tenant for any such
costs or fines
<PAGE>

                                     -42-

that may be levied as a result of such contamination. The Landlord warrants that
it is not aware of any such contamination. The Tenant agrees that it shall be
responsible, at its expense, for the cost of clean-up or any other remedial
measures for any contamination to the Land or Building caused by the Tenant or
those for whom the Tenant is in law responsible and it will indemnify and save
harmless the Landlord for any such costs or fines that may be levied as a result
of such contamination. The Tenant shall not be responsible for any contamination
which comes from any adjacent lands unless same is caused by the Tenant or those
for whom the Tenant in law responsible.

10.   PARKING

The Tenant shall have the right during the Term or any extension or renewal
thereof to occupy four (4) stalls per one thousand square feet of gross building
area of the Building within the parking lot to be constructed on the Land
without the payment of any parking rental, other than Operating Expenses, Tax on
Capital and Realty Taxes.

11.   OCCUPANCY

The Landlord and the Tenant agree that in the event that parts of the Building
are ready for occupation by the Tenant prior to the Substantial Completion Date
(as defined in the Development Agreement) and the Tenant is prepared to accept
such partial occupation prior to such date, Rent shall be payable in respect of
such parts so occupied as at the date their being so occupied from the date of
such occupation by the Tenant on the basis of the rate set out in Section
1.01(q) per square foot of gross building area so occupied per annual, together
with all other amounts payable under this lease with respect to the said area so
occupied (including Operating Costs, Real Estate Taxes, Tax on Capital and
utilities consumed within such portion of the Premises).

12.   NEWS RELEASE/PUBLIC ANNOUNCEMENT

No new release, public announcement or any form of advertising shall be made by
the Landlord with respect to this lease without the prior written consent of the
Tenant, which consent is not to be unreasonably withheld or delayed.

13.   CONSENTS/APPROVALS

Any consent, permission or approval of either party required under this lease
shall, unless otherwise specified in this lease, not be unreasonably withheld or
delayed, and the applicable party agrees to give reasons in writing if consent
is refused.

14.   TENANT'S RIGHTS TO INSTALL

Tenant shall, at its expense and in accordance with the provisions of Section
XIV of this lease, have the sole and exclusive right to install any or all of
the following, subject only to municipal approvals where applicable and
Landlord's written consent, such consent not to be unreasonably withheld or
delayed:

-     exterior signage at the top of the Building (*)
-     exterior signage adjacent to the entrance of the Building (*)
-     signage within the Building lobby (*)
-     special lab areas and/or raised floor for dry labs (*)
-     separate security system for the building
-     Building infrastructure upgrades
<PAGE>

                                     -43-

-     Building communication upgrades
-     satellite dishes and transmission devices on the roof of the Building as
      required(*)
-     additional roof-top units
-     core/slab drilling
-     exterior landscaping, including recreational areas (*)
-     smoking shelters and patios (*)

15.   OPERATING EXPENSES

The Landlord agrees that it shall not act in an unreasonable or arbitrary manner
in incurring or allocating Operating Expenses. In addition, the Landlord agrees
that:

(a)   the cost of services and supplies provided by persons or companies not
      dealing at arm's length with the Landlord are to be competitive;

(b)   Operating Expenses are not to include the cost of (i.e. not be charged
      back to the Tenant):

      (i)    the Landlord's head office personnel (i.e. salary, wages and
             benefits only of on-site personnel plus building manager or
             proportionate share thereof, as the case may be are to be included
             in Operating Expenses);

      (ii)   the cost of structural repairs of the Building (including its
             foundation, concrete floors and structural frames) resulting from
             inherent structural defects or weaknesses;

      (iii)  any loss or damage to the Building or any personal injury for which
             the Landlord is or is obliged to have been insured for under this
             lease, other than deductible payments in accordance with industry
             standards;

      (iv)   all fines, suits, claims, demands, costs, charges and expenses for
             which the Landlord is liable by reason of the negligent or willful
             act or omission of the Landlord or those for whom the Landlord is
             in law responsible (and then, only to the extent that the Tenant is
             not insured or required to be insured pursuant to the terms of this
             lease);

      (v)    all work to the Building or Land made necessary by the Landlord's
             noncompliance with applicable laws, regulations, by-laws and
             governing codes relating to the original construction of the
             Building and which were in force at the time of said construction;

      (vi)   the cost of repairing items under warranty during the applicable
             warranty period to the extent that the Landlord is able to enforce
             such warranties;

      (vii)  the cost of repairing latent defects in the design of the Building
             and parking areas;

      (viii) any charges directly levied against or imposed on the Tenant;
<PAGE>

                                     -44-

      (ix)  ground rent (if any);

      (x)   amortization and interest or any capital retirement of debt
            affecting the Land;

      (xi)  any costs to the extent that insurance and/or warranty proceeds in
            respect thereof are recovered by the Landlord from any other person;
            or

      (xii) depreciation of the Building.

16.   LANDLORD'S COVENANTS

(a)   The Landlord covenants with the Tenant for quiet enjoyment and covenants
      to act reasonably and as a prudent owner in exercising all rights and so
      as not to interfere more than is reasonably necessary under the
      circumstances with the Tenant's use and enjoyment of the Premises.

(b)   The Landlord shall, throughout the Term of this lease or any renewal
      thereof, maintain the following insurance at the Tenant's cost:

      (i)   Insurance in respect of such perils as are from time to time covered
            in an "all risks" policy not less broad than the standard commercial
            property floater policy with the exclusions relating to earthquake
            and flood removed therefrom for the replacement cost of the Building
            and its equipment and Landlord's leasehold improvements forming part
            of the Premises (such replacement cost to be determined by Landlord
            acting reasonably upon consultation with Landlord's insurance
            consultants). In addition, this insurance will cover the interest of
            the Tenant, if any, in the leasehold improvements. Subsequent
            increases in such replacement cost shall be determined in the
            reasonable opinion of the Landlord from time to time. However, if
            despite the Landlord's best efforts "all risk" coverage is not
            available at reasonable cost, the Landlord shall obtain the most
            comprehensive coverage available;

      (ii)  Rental insurance in an amount equal to the aggregate of twelve (12)
            months Rent, Real Estate Taxes, Operating Expenses, Tax on Capital,
            utility charges and other amounts payable hereunder;

      (iii) Broad boiler, machinery and unfired pressure vessel, and electrical
            equipment insurance, including repair or replacement coverages in an
            amount mutually agreeable to the Landlord and Tenant or, failing
            such agreement, as established by an appraiser mutually agreeable to
            the Landlord and Tenant and paid for by the Tenant but at no time
            less than as required by any mortgagee of the Building; and

      (iv)  General liability insurance with respect to bodily injury and
            property damage suffered by third parties and arising out of risks
            associated only with the ownership of the Premises in an amount of
            at least five million dollars ($5,000,000.00) for each occurrence or
            such greater amount as the Landlord, may from time to time
            reasonably require.
<PAGE>

                                     -45-

(c)   All insurance policies, where applicable, shall include a waiver of
      subrogation in favour of the Tenant, the Tenant's insurers and those for
      whom the Tenant is in law responsible (whether or not the loss or damage
      is caused by their acts or omissions) and each liability policy shall in
      addition contain a provision for cross-liability and severability of
      interest.

17.   GENERATOR

One or more generators will be installed within the Premises as part of the
Tenant Fit-Up which includes its (or their) associated engine(s), alternator and
alternator control panel, battery and charger system (i.e. what is generally
referred to as the "Uninteruptable Power Supply" or "UPS"), cooling system,
exhaust system, fuel pump and day tank (all of the said items to be collectively
referred to as "the Generator") together with its associated exterior enclosure,
concrete pad and all structural supports and screening, main fuel tank and fuel
delivery system outside the said enclosure, subsystems within the enclosure
(such as, but not limited to power panel, lighting, heating, and monitoring
equipment), automatic transfer switch, and all feeder conductors from the
generator into the Building. The Tenant acknowledges that the Landlord will be
connecting the Building's life safety system ("the LSS") to the Generator and
that such connection shall continue throughout the Term. For clarity, the Tenant
agrees that such connection shall continue in the event that the Tenant has
exercised any of its rights to cancel this lease with respect to portions of the
Premises as provided for in Section 8 of Schedule "F" of this lease. Without
limiting any of the Tenant's obligations under this lease, the Tenant agrees
that it shall maintain the Generator in good order and condition at its expense
throughout the Term. Notwithstanding the foregoing, the testing and maintenance
of the LSS, including such portion of the Generator relating to the LSS, shall
be carried out by the Landlord in accordance with any building codes applicable
thereto. The said testing and maintenance shall be at such intervals as would be
carried out by a prudent owner of a building similar to the Building and the
cost thereof will be included in Operating Expenses.

In consideration of the Tenant permitting the LSS to be connected to the
Generator the Landlord agrees to contribute the sum of $85,000.00 ("the
Generator Allowance") to the acquisition price of the Generator. The Generator
Allowance shall be credited to the Tenant's rental account on the day that is
the later of thirty (30) days after the Commencement Date and the date on which
the LSS is connected to the Generator.

At the end of the Term (as extended, if applicable), the Tenant agrees that the
Landlord shall have the option to purchase the Generator ("the Generator
Purchase Option") upon payment to the Tenant of an amount ("the Landlord's
Generator Payment") calculated as being the unamortized balance (based on a
straight-line amortization over twenty (20) years) of the difference between the
Tenant's acquisition cost of the Generator (which cost for clarity is not to
include any cabling or equipment other than the Generator) and the Generator
Allowance. The Generator Purchase Option may be exercised by the Landlord at any
time prior to the last sixty (60) days of the Term (as extended, if applicable)
and in the event that it is so exercised:

(a)   the Landlord's Generator Payment shall be paid to the Tenant within thirty
      (30) days of the Landlord notifying the Tenant that it is exercising the
      Generator Purchase Option;
<PAGE>

                                     -46-

(b)   the Tenant shall execute and deliver to the Landlord at the time that the
      Generator Payment is made to the Tenant:

      (i)   a bill of sale and other documentation reasonably required by the
            Landlord to transfer title to the Generator to the Landlord or its
            nominee free and clear of any encumbrances; and

      (ii)  an assignment of any and all warranties applicable to the Generator,

      in form and content satisfactory to the Landlord, acting reasonably.

In the event that the Landlord does not so exercise the Generator Purchase
Option, the Tenant shall:

(a)   remove the Generator from the Premises and, at the Landlord's option,
      their associated cabling and equipment and other items set out in the
      first paragraph of this Section 17, and restore the Premises to the
      condition they were in before the installation of the Generator, and

(b)   pay to the Landlord the unamortized balance (based on a straight-line
      amortization over twenty (20) years) of the Generator Allowance within
      forty-five (45) days of the last day of the Term.

18.   OPINION RE: GUARANTEE

The Tenant and the Guarantor agree that the Landlord shall be provided with an
opinion (or opinions) in form and content satisfactory to the Landlord, acting
reasonably, from counsel from the Guarantor as to the enforceability of the
guarantee provisions contained in this lease. In the event that such opinion is
not provided to the Landlord within thirty (30) days of execution of this lease,
the Guarantor agrees that it shall be deemed to be named Tenant hereunder until
such time as the Landlord has been provided with the said opinion(s).
<PAGE>

                                     -47-

                                  SCHEDULE "G"
                                  ------------

                           COST OF THE WORK FROM CCDC3
                           ---------------------------

For the purposes of this Schedule, the definitions from the CCDC3 are to have
the following meanings:

"Contract Documents" means the Development Agreement.

"Contract Fee" means the amounts set out in Section 6(a) of Schedule "F".

"Contractor" means the Landlord.

"Owner" means the Tenant.

"Place of the Work" means the Premises.

"Work" means the Tenant Fit-Up.

"ARTICLE A-9 COST OF THE WORK

The Owner agrees to pay the Contractor for the Cost of the Work in addition to
the Contract Fee. The Cost of the Work shall be at rates prevailing in the
locality of the Place of the Work, except with the prior consent of the Owner,
and shall include:

(a)   wages and benefits paid for labour in the direct employ of the Contractor
      in the performance of the Work under applicable collective bargaining
      agreements, or under a salary or wage schedule agreed upon by the Owner
      and Contractor;

(b)   salaries, wages and benefits of the Contractor's personnel, when stationed
      at the field office, in whatever capacity employed; salaries, wages and
      benefits of personnel engaged at shops, or on the road, in expediting the
      production or transportation of materials or equipment, for that portion
      of their time spent on the Work; salaries, wages and benefits of head
      office or other personnel for that portion of their time spent on the
      Work;

(c)   contributions, assessments or taxes incurred during the performance of the
      Work for such items as unemployment insurance, workers' compensation, and
      Canada or Quebec Pension Plan, insofar as such costs are based on wages,
      salaries, or other remuneration paid to employees of the Contractor and
      included in the Cost of the Work under paragraphs (a) and (b) above;

(d)   the portion of travel and subsistence expenses of the Contractor or of his
      officers or employees incurred while travelling in discharge of duties
      connected with the Work;

(e)   the cost of all materials, products, supplies and equipment incorporated
      into the Work, including costs of transportation thereof;
<PAGE>

                                     -48-

(f)   the cost of materials, products, supplies, equipment, temporary services
      and facilities, and hand tools not owned by the workers, including
      transportation and maintenance thereof, which are consumed in the
      performance of the Work, and cost less salvage value on such items used,
      but not consumed, which remain the property of the Contractor;

(g)   rental costs of all tools, machinery, and equipment, exclusive of hand
      tools, used in the performance of the Work, whether rented from the
      Contractor or others, including installation, minor repairs and
      replacements, dismantling, removal, transportation and delivery costs
      thereof,

(h)   deposits lost;

(i)   the amounts of all subcontracts and the costs to the Contractor that
      result from any Subcontractor's insolvency or failure to perform;

(j)   the cost of quality assurance such as independent inspection and testing
      services;

(k)   charges levied by authorities having jurisdiction at the Place of the
      Work;

(l)   royalties, patent license fees, and damages for infringement of patents
      and costs of defending suits therefor subject always to the Contractor's
      obligations to indemnify the Owner from and against claims, demands,
      losses, costs, damages, actions, suits, or proceedings arising out of the
      Contractor's performance of the Contract Documents which are attributable
      to an infringement or an alleged infringement of a patent of invention by
      the Contractor or anyone for whose acts he may be liable;

(m)   premiums for all bonds and insurance which the Contractor is required, by
      the Contract Documents, to purchase and maintain;

(n)   taxes and duties related to the Work and for which the Contractor is
      liable;

(o)   losses and expenses sustained by the Contractor for matters which are the
      subject of insurance under the policies prescribed in the Contract
      Documents when such losses and expenses are not recoverable because the
      amounts are in excess of collectible amounts or within the deductible
      amounts

(p)   charges for telegrams, telexes, telephones, courier services, expressage,
      and petty cash items incurred in connection with the Work;

(q)   the cost of removal and disposal of Waste products and debris;

(r)   costs incurred due to emergencies affecting the safety of persons or
      property;

(s)   legal costs, incurred by the Contractor, arising out of the execution of
      the Work in accordance with the Contract Documents;
<PAGE>

                                     -49-

(t)   costs incurred by the Contractor for the correction of defects or
      deficiencies in the Work other than those defects or deficiencies to be
      corrected at the Contractor's own expense pursuant to the provisions of
      the Contract Documents;

(u)   the cost of financing the Work;

(v)   the cost of auditing when requested by the Owner;

(w)   the cost of computer time and usage with respect to the Work; and

(x)   other costs incurred in the performance of the Work as listed below:

Cutting and Patching                     Glass Cleaning
DNC Publication                          Garbage Removal
Construction Project Signs               Field Engineer
Shop Drawings                            Supervision
Construction Photographs                 General labour
Quality Control                          Staff mileage
Concrete testing                         Winter Heat
Inspection fees - allowance              Temporary Enclosures
Soils/Compaction Testing                 Climatic Protection
Site office, tools sheds, etc.           Misc. Food and Water
Temporary Light and Power                Financing Charges
Scaffolding and Platforms                Architectural drawings
Courier, office supplies, etc.           Interior design
First Aid Kit                            Structural drawings
Security                                 Mechanical/Electrical drawings
Staff Protective Wear                    Other Project Design Consultants
Hoarding and safety barricades           Accountants
Site toilets                             Insurance - Liability & Builder's Risk
Site Telephone & Fax                     Bonding
Equipment Rentals/Small tools            Building Permit - TFU
Misc. Material                           Mun/RMOC/Educ. Development Charges
Trucking                                 Printing and Photocopies
Hoisting
Clean up & close out

It is the intention of the parties that the Cost of the Work referred to herein
shall cover and include any and all contingencies other than those which are the
result of or occasioned by any failure on the part of the Contractor to exercise
reasonable care and diligence in his attention to the Work. Any cost due to
failure on the part of the Contractor to exercise reasonable care and diligence
in his attention to the Work shall be borne by him.<PAGE>

                                                                     Exhibit 4.1

                           ARTICLES OF INCORPORATION
                                      OF
                        AMERICAN REALTY INVESTORS, INC.

     I, the person hereinafter named as incorporator, for the purpose of
associating to establish a corporation, under the provisions and subject to the
requirements of Title 7, Chapter 78 of Nevada Revised Statutes, and the acts
amendatory thereof, and hereinafter sometimes referred to as the General
Corporation Law of the State of Nevada, do hereby adopt and make the following
Articles of Incorporation:

     FIRST:  The name of the corporation is AMERICAN REALTY INVESTORS, INC. (the
     -----
"Corporation").

     SECOND:  The street address and mailing address of the Corporation's
     ------
registered office in the State of Nevada is 6100 Neil Road, Suite 500, Reno,
Nevada 89520. The name of its resident agent at such address is The Corporation
Trust Company of Nevada.

     THIRD:  The aggregate number of shares of stock that the Corporation shall
     -----
have authority to issue is 1,000 shares of Common Stock, $.01 par value per
share.

     FOURTH: (1) The members of the governing board of the Corporation shall be
     ------
styled directors. The number of directors constituting the initial Board of
Directors is one. Thereafter, the number of directors constituting the Board of
Directors shall be fixed by or in accordance with the bylaws of the Corporation.

             (2) The name and mailing address of the person who is to serve as
director until the first annual meeting of stockholders or until his successor
is elected and qualified is:

               Name                     Mailing Address
               ----                     ---------------

               Karl L. Blaha            Search Plaza
                                        10670 N. Central Expressway
                                        Suite 300
                                        Dallas, Texas 75231

             (3) There shall be no cumulative voting in the election of
directors. Election of directors need not be by written ballot unless the bylaws
of the Corporation so provide.
<PAGE>

     FIFTH:  The name and mailing address of the incorporator are:
     -----

               Name                     Mailing Address
               ----                     ---------------

               Robert A. Waldman        Search Plaza
                                        10670 N. Central Expressway
                                        Suite 600
                                        Dallas, Texas 75231

The power of the incorporator as such shall terminate upon the filing of these
Articles of Incorporation.

     SIXTH:  No stockholder shall have, as a stockholder of the Corporation, any
     -----
preemptive right to acquire, purchase or subscribe for the purchase of any or
all additional issues of stock of the Corporation or any or all classes or
series thereof, or for any securities convertible into such stock, whether now
or hereafter authorized.

     SEVENTH:  The Board of Directors shall have the power to adopt, amend or
     -------
repeal the bylaws of the Corporation.

     EIGHTH:  Special meetings of the stockholders may be called by the Board of
     ------
Directors or by the Chairman of the Board of Directors of the Corporation and
may not be called by any other person.

     NINTH:  The personal liability of the directors of the corporation is
     -----
hereby eliminated to the fullest extent permitted by the General Corporation Law
of the State of Nevada, as the same may be amended and supplemented.

     TENTH:   The corporation shall have perpetual existence.
     -----

     ELEVENTH:  The nature of the business of the corporation and the objects or
     --------
the purposes to be transacted, promoted, or carried on by it are to engage in
any lawful activity.

     TWELFTH:  The corporation reserves the right to amend, alter, change, or
     -------
repeal any provision contained in these Articles of Incorporation in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

     IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of November,
1999.

                                  /s/ Robert A. Waldman
                               ------------------------------
                               Robert A. Waldman, Incorporator
<PAGE>

THE STATE OF TEXAS             (S)
                               (S)
COUNTY OF DALLAS               (S)

     Before me, a notary public in and for said county and state, personally
appeared Robert A. Waldman known to me to be the person whose name is subscribed
to the foregoing document, and being by me first duly sworn, declared that he
executed the same as his free act and deed and that the statements contained
therein are true and correct. Given under my hand and seal of office this 2 day
of November, 1999.

                                              /s/ S.L. Bratton
                                          ------------------------------
                                          Notary Public in and for
                                          the State of Texas

                                             S.L. Bratton
                                          ----------------------------
                                          (Printed Name of Notary)
My Commission Expires:

       8/21/2000
----------------------

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