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                                                                    EXHIBIT 10.3

                                  OFFICE LEASE

THIS LEASE is entered into by and between Landlord and Tenant effective as of
this ____ day of December, 1999.

SECTION 1.  TERMS AND DEFINITIONS

The following terms as used herein shall have the meanings as set forth below:

A.      "Landlord" means HITACHI AMERICA, LTD., a New York corporation, and its
        successors and assigns.

B.      "Tenant" means COLO.COM, INC., a California corporation.

C.      "Building" means the building in which the Premises are located, which
        Building has approximately 266,606 square feet of Rentable Area and is
        located at 2000 Sierra Point Parkway, in the City of Brisbane,
        California.

D.      "Project" means the Building, the Premises, the Common Areas and the
        legal parcel on which the Building is located.

E.      "Premises" means the entire 10th floor of the Building and consists of
        approximately eighteen thousand two hundred sixteen (18,216) square feet
        of Rentable Area, as more particularly shown on Exhibit A attached
        hereto and incorporated herein by this reference.

F.      "Term" means the approximately sixty (60) month period commencing on the
        Lease Commencement Date and expiring on the Expiration Date.

G.      "Lease Commencement Date" means the earlier to occur of (1) March 1,
        2000 and (2) the date Tenant commences operation of its business from
        the Premises; provided, however, that if the Lease Commencement Date
        stated in this subsection is amended pursuant to Section 3(C) below,
        Landlord and Tenant shall execute and attach hereto as a new Exhibit D
        an Amendment of Lease Commencement Date in the form of Exhibit D hereto,
        which shall specify such amended Lease Commencement Date and, if
        applicable, an amended Expiration Date.

H.      "Expiration Date" means February 28, 2005 unless amended as provided in
        an Amendment of Lease Commencement Date executed as provided above.

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I.      "Monthly Rental" means the following:

<TABLE>
<CAPTION>
        Period                                                   Monthly Rental
        ------                                                   --------------
        <S>                                                      <C>
        Lease Commencement Date - February 28, 2001              $67,399.20
        March 1, 2001 - February 28, 2002                        $70,131.60
        March 1, 2002 - February 28, 2003                        $72,864.00
        March 1, 2003 - February 29, 2004                        $75,778.56
        March 1, 2004 - Expiration Date                          $78,875.25
</TABLE>

J.      "Rentable Area" means:

        (1)     As to each floor of the Building on which the entire space
                rentable to tenants is or will be leased to one tenant
                (hereinafter referred to as a Single Tenant Floor), Rentable
                Area shall be the entire area bounded by the inside surface of
                the four exterior glass walls (or in the inside surface of the
                permanent exterior wall(s) where there is no glass) on such
                floor, including all areas used for elevator lobbies, corridors,
                special stairways, or elevators, restrooms, mechanical rooms,
                electrical rooms and telephone closets without deduction for
                columns and other structural portions of the Building or
                vertical penetrations that are included for the special use of
                the tenant of such floor together with a portion of the covered
                or enclosed common facilities which constitute a part of the
                Building and which are maintained by Landlord for the common
                benefit of all tenants of the Building which bears the same
                proportion to the total area of such common facilities as the
                Rentable Area of each Single Tenant Floor bears to the Rentable
                Area of the Building (excluding such common facilities), but
                excluding the area contained within the exterior walls of the
                Building stairs, fire towers, vertical ducts, elevator shafts,
                flues, vents, stacks and pipe shafts.

        (2)     As to each floor of the Building on which space is or will be
                leased to more than one tenant, Rentable Area attributable to
                each such lease shall be the total of (a) the entire area
                included within the premises covered by such lease, being the
                area bounded by the inside surface of any exterior glass walls
                (or the inside surface of the permanent exterior wall(s) where
                there is no glass) of the Building bounding such premises, the
                exterior of all walls separating such premises from any public
                corridors or other public areas on such floor, and the
                centerline of all walls separating such premises from other
                areas leased or to be leased to other tenants on such floor, (b)
                that portion outside the Premises but within space intended for
                use or occupancy as premises by another tenant utilized by
                Tenant for wiring, ducts, vents or other requirements of
                Tenant's operations in the Premises, (c) that portion of the
                covered or enclosed common facilities which constitute a part of
                the Building and which are maintained by Landlord for the common
                benefit of all tenants of the Building which bears the same
                proportion to the total area of such common facilities as the
                Rentable Area of such Premises bears to the Rentable Area of the
                Building (excluding such common facilities), and (d) a pro rata
                portion of any area of the Building devoted to common features
                such as elevator

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                lobbies, corridors, restrooms, mechanical rooms, electrical
                rooms and telephone closets, but excluding any area contained
                within the exterior walls of the Building for stairs, fire
                towers, vertical ducts, elevator shafts, flues, vents, stacks
                and pipe shafts.

K.      "Security Deposit" means $134,798.40.

L.      "Permitted Use" means commercial office use.

M.      "Brokers" means Cornish & Carey Commercial.

N.      "Landlord's Address for Notice" means 2000 Sierra Point Parkway, MS 550,
        Brisbane, California 94005, Attention: Facilities Manager.

O.      "Tenant's Address for Notice" means the address of the Premises.

P.      "Parking Spaces" means 3.3 unreserved parking spaces per 1000 square
        feet of Rentable Area in the Premises in the area of the Project
        designated by Landlord for vehicle parking.

Q.      "Fitness Center Memberships" means eighteen (18) memberships in the
        fitness center located on the first floor of the Building ("Fitness
        Center").

SECTION 2.  PROPERTY LEASED

A.      Premises. Upon and subject to the terms, covenants and conditions
        hereinafter set forth, Landlord hereby leases to Tenant, and Tenant
        hereby leases from Landlord, the Premises; reserving to Landlord,
        however, (1) the use of the exterior walls, roof, return air plenum and
        the area under the Premises floor and (2) the rights to make structural
        (building) modifications and the right to install, maintain, use, repair
        and replace pipes, ducts, conduits, and wires to serve or serving other
        tenant premises in the Building through the Premises in locations which
        will not materially interfere with Tenant's use thereof.

B.      Common Areas. Subject to the terms, covenants and conditions of this
        Lease, Tenant shall have the right, for the benefit of Tenant and its
        employees and invitees, to the non-exclusive use of all of the Common
        Areas as hereinafter defined.

C.      Minor Variations In Area. The Rentable Area of the Premises contained in
        Section 1(E) is agreed to be the Rentable Area of the Premises
        regardless of minor variations resulting from construction of the
        Building and/or tenant improvements.

SECTION 3.  COMMENCEMENT OF TERM AND POSSESSION OF PREMISES

A.      Lease Commencement Date. The Term of the Lease shall commence on the
        Lease Commencement Date (as extended only pursuant to Section 3(C)
        below, if applicable), and shall continue, subject to earlier
        termination as provided herein, until the Expiration

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        Date (as extended only pursuant to Section 3(C) below).

B.      Completion of Tenant Improvements and Possession of Premises. Upon
        execution of this Lease by the parties, Tenant shall have the right to
        enter the Premises solely for purposes of performing and completing all
        tenant improvements described as "Tenant's Work" in Exhibit B hereto,
        and Tenant shall open the Premises for business, on or before the Lease
        Commencement Date. Tenant's occupancy of the Premises prior to the Lease
        Commencement Date shall be subject to all of the terms and conditions of
        this Lease; provided, however, Tenant's obligation to pay Monthly Rental
        shall not commence until the Lease Commencement Date. All tenant
        improvements constructed in the Premises, whether by Landlord or by (or
        on behalf of) Tenant and whether at Landlord's or Tenant's expense,
        shall become part of the Premises and shall be and remain the property
        of Landlord unless Landlord specifically agrees otherwise in writing.

C.      Extension of Lease Commencement Date. If the Premises are not ready for
        occupancy by Tenant on the original Lease Commencement Date specified in
        Section 1(G) due to one or more delays caused by Landlord or caused by
        matters beyond the control of Landlord, this Lease and the obligations
        of Landlord and Tenant hereunder shall nevertheless continue in full
        force and effect. However, in such event Landlord and Tenant shall agree
        on an amendment of the original Lease Commencement Date to reflect such
        delay or delays and shall, in each instance, within thirty (30) days
        after the amended Lease Commencement Date, execute and attach hereto an
        amendment in the form of that attached as Exhibit D hereto stating such
        amended Lease Commencement Date and, if applicable, an amended
        Expiration Date and no rental shall be payable by Tenant hereunder until
        the amended Lease Commencement Date. The delay in commencement of the
        Term and in the accrual of rent described in the foregoing sentence
        shall constitute full settlement of all claims that Tenant might
        otherwise have by reason of the Premises not being ready for occupancy
        on the original Lease Commencement Date specified in Section 1(G) above.

        If the Premises are not ready for occupancy by Tenant on the Lease
        Commencement Date due to one or more delays caused by Tenant, or anyone
        acting under or for Tenant, Landlord shall have no liability for such
        delay and the Lease Commencement Date shall nevertheless begin as of the
        Lease Commencement Date stated in Section 1(G) (as extended only because
        of Landlord's delay pursuant to this Section 3(C), if applicable).

D.      Acceptance and Suitability. Tenant hereby agrees to accept the Premises
        in its "AS IS" condition. Tenant agrees that by taking possession of the
        Premises it will conclusively be deemed to have inspected the Premises
        and found the Premises in satisfactory condition. Tenant acknowledges
        that neither Landlord, nor any agent, employee or servant of Landlord,
        has made any representation with respect to the Premises, the Building,
        or the Project or with respect to the suitability of them for the
        conduct of Tenant's business, nor has Landlord agreed to undertake any
        modifications, alterations, or improvements of the Premises or Building,
        except as specifically provided in this Lease.

        TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, LANDLORD

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        HEREBY DISCLAIMS, AND TENANT WAIVES THE BENEFIT OF, ANY AND ALL IMPLIED
        WARRANTIES, INCLUDING IMPLIED WARRANTIES OF HABITABILITY, FITNESS OR
        SUITABILITY FOR PURPOSE, OR THAT THE BUILDING OR THE IMPROVEMENTS IN THE
        PREMISES HAVE BEEN CONSTRUCTED IN A GOOD AND WORKMANLIKE MANNER.

               -----------------
               Tenant's Initials

SECTION 4.  RENT

A.      Monthly Rental. Commencing on the Lease Commencement Date, Tenant shall
        pay to Landlord during the Term the amount set forth in Section 1(I) in
        monthly installments (the "Monthly Rental"), which sum shall be payable
        by Tenant on or before the first day of each month, in advance, without
        further notice, at the address specified for Landlord in Section 1(N),
        or such other place as Landlord shall designate, without any prior
        demand therefor and without any abatement, demand, counterclaim,
        deduction or setoff whatsoever. If the Lease Commencement Date should
        occur on a day other than the first day of a calendar month, or the
        Expiration Date should occur on a day other than the last day of a
        calendar month, then the rental for such fractional month shall be
        prorated on a daily basis upon a thirty (30) day calendar month.

B.      Rent and Additional Rent. As used in this Lease, the term "rent" shall
        mean Monthly Rental and additional rent, and the term "additional rent"
        shall mean all other amounts payable by Tenant to Landlord pursuant to
        this Lease other than Monthly Rental. All Monthly Rental and additional
        rent shall be paid without any abatement, demand, deduction, setoff or
        counterclaim whatsoever in lawful money of the United States which shall
        be legal tender at the time of payment. Where no other time is stated
        herein for payment, payment of any amount payable from Tenant to
        Landlord hereunder shall be due and made, within ten (10) days after
        Tenant's receipt of Landlord's invoice or statement therefor. Tenant
        expressly acknowledges that Tenant's covenant to pay rent under this
        Lease is separate and independent from Landlord's covenant to provide
        services and other amenities hereunder.

SECTION 5.  COMMON AREAS

A.      Definitions. "Common Areas" means all areas, space, equipment and
        special services provided by Landlord for the common or joint use and
        benefit of Landlord, the tenants and other occupants of the Building,
        and their respective employees, agents, servants, suppliers, customers
        and other invitees, including, by way of illustration, but not
        limitation, retaining walls, fences, landscaped areas, parks, curbs,
        sidewalks, private roads, the cafeteria on the first floor of the
        Building, common restrooms, stairways, elevators, lobbies, common
        hallways, patios, service quarters, parking areas and all common areas
        and other areas within the exterior of the Building and in the Project.

B.      Control of Common Areas. Landlord shall maintain the Common Areas,
        including

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        lobbies,stairs, elevators, corridors, restrooms, windows, mechanical,
        plumbing and electrical equipment, and the structure itself in
        reasonably good order and condition except for damage occasioned by the
        act of Tenant, its employees, agents, contractors or invitees, which
        damage shall be repaired by Landlord at Tenant's expense. Landlord shall
        have the sole and exclusive control of the Common Areas, as well as the
        right to make changes to the Common Areas. Notwithstanding the preceding
        sentence, Landlord is not responsible for any harm or damage to any of
        Tenant's officers, agents, employees, servants, suppliers, customers or
        other invitees as a result of their use of the Common Areas. Landlord's
        rights to make changes shall include, but not be limited to, the right
        to (a) restrain the use of the Common Areas by unauthorized persons, (b)
        utilize from time to time any portion of the Common Areas for
        promotional and related matters, (c) temporarily close any portion of
        the Common Areas for repairs, improvements or alterations, (d) change
        the shape and size of the Common Areas or change the location of
        improvements within the Common Areas, including, without limitation,
        parking areas, roadways and curb cuts, and (e) prohibit access to or use
        of Common Areas that are designated for the storage of supplies or
        operation of equipment necessary to operate the Project or Building.
        Landlord may determine the nature, size and extent of the Common Areas
        as well as make changes to the Common Areas from time to time which, in
        its opinion, are deemed desirable. Noise, dust, dirt or vibration or
        other incidents to new construction of improvements on lands adjacent or
        proximate to the Building, whether or not owned by Landlord, shall in no
        way affect this Lease or impose any liability on Landlord.

SECTION 6.  SECURITY DEPOSIT

Upon execution of this Lease, Tenant shall deposit with Landlord the Security
Deposit defined in Section 1(K) above, which shall be held by Landlord as
security for the performance by Tenant of all terms, covenants and conditions of
this Lease. It is expressly understood and agreed that such Security Deposit is
not an advance rental deposit or a measure of Landlord's damages in case of
Tenant's default. If Tenant defaults with respect to any provision of this
Lease, including, but not limited to, the provisions relating to the payment of
rent or the obligation to repair and maintain the Premises or to perform any
other term, covenant or condition contained herein, Landlord may (but shall not
be required to), without prejudice to any other remedy provided herein or
provided by law and without notice to Tenant, use the Security Deposit, or any
portion of it, to cure the default or to compensate Landlord for all damages
sustained by Landlord resulting from Tenant's default. Tenant shall immediately
on demand pay to Landlord a sum equivalent to the portion of the Security
Deposit so expended or applied by Landlord as provided in this Section so as to
maintain the Security Deposit in the sum initially deposited with Landlord.
Although the Security Deposit shall be deemed the property of Landlord, if
Tenant is not in default at the expiration or termination of this Lease,
Landlord shall return the Security Deposit (or applicable portion thereof) to
Tenant. Landlord shall not be required to keep the Security Deposit separate
from its general funds and Landlord, not Tenant, shall be entitled to all
interest, if any, accruing on any such Security Deposit. Upon any sale or
transfer of its interest in the Building, Landlord shall transfer the Security
Deposit to its successor in interest and thereupon, Landlord shall be released
from any liability or obligation with respect thereto.

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SECTION 7.  TENANT'S TAXES

Tenant shall be liable for any tax (now or hereafter imposed by any governmental
entity) applicable to or measured by or on the rents or any other charges
payable by Tenant under this Lease, including (but not limited to) any gross
income tax, gross receipts tax or excise tax with respect to the receipt of such
rent or other charges or the possession, leasing or operation, use or occupancy
of the Premises, but not including any net income, franchise, capital stock,
estate or inheritance taxes. If any such tax is required to be paid to the
governmental taxing entity directly by Landlord, then Landlord shall pay the
amount due and, upon demand, shall be fully reimbursed by Tenant for such
payment.

Tenant shall also be liable for all taxes levied against the leasehold held by
Tenant or against any personal property, leasehold improvements, additions,
alterations and fixtures placed by or for Tenant in, on or about the Premises,
Building and Project or constructed by Landlord for Tenant in the Premises; and
if any such taxes are levied against Landlord or Landlord's property, or if the
assessed value of such property is increased (whether by special assessment or
otherwise) by the inclusion therein of value placed on such leasehold, personal
property, leasehold improvements, additions, alterations and fixtures, and
Landlord pays any such taxes (which Landlord shall have the right to do
regardless of the validity thereof), Tenant, upon demand, shall fully reimburse
Landlord for the taxes so paid by Landlord or for the proportion of such taxes
resulting from such increase in any assessment.

SECTION 8.  USE OF PREMISES

A.      Permitted Uses. Tenant shall use the Premises solely for the Permitted
        Use specified in Section 1(L) above, and for no other use, and under the
        name specified in Section 1(B) above. Tenant shall, at its own cost and
        expense, obtain any and all licenses and permits necessary for any such
        use. Tenant shall not do or permit anything to be done in or about the
        Premises, Common Areas, Building or Project which will in any way
        obstruct or interfere with the rights of Landlord or other tenants or
        occupants of the Building or injure or annoy them or use or allow the
        Premises to be used for any unlawful purpose, nor shall Tenant cause,
        maintain or permit any nuisance in, on or about the Premises and Common
        Areas or permit any odors to emanate from the Premises and intrude upon
        the Common Areas or the premises of Landlord or other tenants. Tenant
        shall not commit or suffer to be committed any waste in or upon the
        Premises, Common Areas, Building or Project. Tenant shall not do or
        permit anything to be done in or about the Premises, Common Areas,
        Building or Project which may render the insurance thereon void or
        increase the insurance risk thereon. If an increase in any fire and
        extended coverage insurance premiums paid by Landlord for the Building
        and Project is caused by Tenant's use and occupancy of the Premises,
        then Tenant shall pay as additional rental the amount of such increase
        to Landlord.

B.      Compliance with Laws. Tenant shall not use the Premises, Building,
        Project or Common Areas in any way (or permit or suffer anything to be
        done in or about the same) which will conflict with any law, statute,
        ordinance or governmental rule or regulation or any covenant, condition
        or restriction (whether or not of public record) affecting the

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        Premises, Project or Building, now in force or which may hereafter be
        enacted or promulgated including, but not limited to, the provisions of
        any city or county zoning codes regulating the use thereof. Tenant
        shall, at its sole cost and expense, promptly comply with (i) all laws,
        statutes, ordinances and governmental rules and regulations, now in
        force or which may hereafter be in force, applicable to Tenant or its
        use of or business or operations in the Premises including structural,
        utility system and life safety system changes necessitated by Tenant's
        acts, use of the Premises or by improvements made by or for Tenant, (ii)
        all requirements, and other covenants, conditions and restrictions, now
        in force or which may hereafter be in force, which affect the Premises,
        and (iii) all requirements, now in force or which may hereafter be in
        force, of any board of fire underwriters or other similar body now or
        hereafter constituted relating to or affecting the condition, use or
        occupancy of the Premises, Building or Project. The judgment of any
        court of competent jurisdiction or the admission by Tenant in any action
        against Tenant, whether Landlord be a party thereto or not, that Tenant
        has violated any law, statute, ordinance, governmental rule or
        regulation or any requirement, covenant, condition or restriction shall
        be conclusive of the fact as between Landlord and Tenant. Tenant agrees
        to fully indemnify Landlord against any liability, claims or damages
        arising as a result of a breach of the provisions of this Section 8(B)
        by Tenant, and against all costs, expenses, fines or other charges
        arising therefrom, including, without limitation, reasonable attorneys'
        fees and related costs incurred by Landlord in connection therewith,
        which indemnity shall survive the expiration or earlier termination of
        this Lease. Without limiting the generality of the foregoing, it is
        expressly understood and agreed that Tenant is accepting the Premises
        "AS IS," in its present state and condition, without any representations
        or warranties from Landlord of any kind whatsoever, either express or
        implied, with respect to the Premises or the Building, including without
        limitation the compliance of the Premises or the Building with The
        Americans With Disabilities Act and the rules and regulations
        promulgated thereunder, as amended from time to time (the "ADA"). Tenant
        shall be responsible for insuring that the Premises and Tenant's use
        thereof and operations therein fully and completely comply with the ADA.
        If Tenant's use of the Premises or operations therein cause Landlord to
        incur any obligation under the ADA, as reasonably determined by
        Landlord, then Tenant shall reimburse Landlord for Landlord's costs and
        expenses in connection therewith. If Tenant's initial use of the
        Premises is not a "place of public accommodation" within the meaning of
        the ADA, then Tenant may not thereafter change the use of the Premises
        to cause the Premises to become a "place of public accommodation." In
        the event that Tenant desires or is required hereby to make Alterations
        (as defined below) to the Premises in order to satisfy its obligations
        under the ADA, then all such Alterations shall be subject to any
        requirements in this Lease with respect to Alterations of the Premises,
        and shall be performed at Tenant's sole cost and expense.

C.      Hazardous Materials.

        (1)     Tenant covenants and agrees that it shall not cause or permit
                any Hazardous Materials (as defined below) to be brought upon,
                kept, or used in or about the Premises, Building or Project by
                Tenant, its agents, employees, contractors or invitees. The
                foregoing covenant shall not extend to substances typically
                found or

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                used in general office applications so long as (a) such
                substances and any equipment which generates such substances are
                maintained only in such quantities as are reasonably necessary
                for Tenant's operations in the Premises, (b) such substances are
                used strictly in accordance with the manufacturers' instructions
                therefor, (c) such substances are not disposed of in or about
                the Project in a manner which would constitute a release or
                discharge thereof, and (d) all such substances and any equipment
                which generates such substances are removed from the Project by
                Tenant upon the expiration or earlier termination of this Lease.
                Any use, storage, generation, disposal, release or discharge by
                Tenant of Hazardous Materials in or about the Project as is
                permitted pursuant to this Section shall be carried out in
                compliance with all applicable federal, state and local laws,
                ordinances, rules and regulations, including without limitation
                any labeling standards established by state regulations.
                Moreover, no hazardous waste resulting from any operations by
                Tenant shall be stored or maintained by Tenant in or about the
                Project for more than ninety (90) days prior to removal by
                Tenant. Tenant shall, annually within thirty (30) days after
                Tenant's receipt of Landlord's written request therefor, provide
                to Landlord a written list identifying any Hazardous Materials
                then maintained by Tenant in the Project, the use of each such
                Hazardous Material and the approximate quantity of each such
                Hazardous Material so maintained by Tenant, together with
                written certification by Tenant stating, in substance, that
                neither Tenant nor any person for whom Tenant is responsible has
                released or discharged any Hazardous Materials in or about the
                Project.

        (2)     In the event that Tenant proposes to conduct any use or to
                operate any equipment which will or may utilize or generate a
                Hazardous Material other than as specified in Section 8(C)(1)
                above, Tenant shall first in writing submit such use or
                equipment to Landlord for approval. No approval by Landlord
                shall relieve Tenant of any obligation of Tenant pursuant to
                this Section 8(C), including the removal, clean-up and
                indemnification obligations imposed upon Tenant by this Section
                8(C). Tenant shall, within five (5) days after receipt thereof,
                furnish to Landlord copies of all notices or other
                communications received by Tenant with respect to any actual or
                alleged release or discharge of any Hazardous Material in or
                about the Premises or the Project and shall, whether or not
                Tenant receives any such notice or communication, notify
                Landlord in writing of any discharge or release of Hazardous
                Material by Tenant or anyone for whom Tenant is responsible in
                or about the Premises or the Project. In the event that Tenant
                is required to maintain any Hazardous Materials license or
                permit in connection with any use conducted by Tenant or any
                equipment operated by Tenant in the Premises, copies of each
                such license or permit, each renewal or revocation thereof and
                any communication relating to suspension, renewal or revocation
                thereof shall be furnished to Landlord within five (5) days
                after receipt thereof by Tenant. Compliance by Tenant with the
                two immediately preceding sentences shall not relieve Tenant of
                any other obligation of Tenant pursuant to this Section 8(C).

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        (3)     Upon any violation of the foregoing covenants, Tenant shall be
                obligated, at Tenant's sole cost, to clean-up and remove from
                the Project all Hazardous Materials introduced into the Project
                by Tenant or any person or entity for whom Tenant is
                responsible. Such clean-up and removal shall include all testing
                and investigation required by any governmental authorities
                having jurisdiction and preparation and implementation of any
                remedial action plan required by any governmental authorities
                having jurisdiction. All such clean-up and removal activities of
                Tenant shall, in each instance, be conducted to the satisfaction
                of Landlord and all governmental authorities having
                jurisdiction. Landlord's right of entry pursuant to Section 11
                below shall include the right to enter and inspect the Premises
                for violations of Tenant's covenants in this Section 8(C).

        (4)     Tenant shall indemnify, defend and hold harmless Landlord, and
                its successors, assigns, partners, officers, employees, agents,
                lenders and attorneys from and against any and all claims,
                liabilities, losses, actions, costs and expenses (including
                attorneys' fees and costs of defense) incurred by such
                indemnified persons, or any of them, as the result of (a) the
                introduction into or about the Project by Tenant or anyone for
                whom Tenant is responsible of any Hazardous Materials, (b) the
                usage, storage, maintenance, generation, disposition or disposal
                by Tenant or anyone for whom Tenant is responsible of Hazardous
                Materials in or about the Project, (c) the discharge or release
                in or about the Project by Tenant or anyone for whom Tenant is
                responsible of any Hazardous Materials, (d) any injury to or
                death of persons or damage to or destruction of property
                resulting from the use, introduction, maintenance, storage,
                generation, disposal, disposition, release or discharge by
                Tenant or anyone for whom Tenant is responsible of Hazardous
                Materials in or about the Project, and (e) any failure of Tenant
                or anyone for whom Tenant is responsible to observe the
                foregoing covenants of this Section 8(C).

        (5)     Upon any violation of the foregoing covenants, Landlord shall be
                entitled to exercise all remedies available to a landlord
                against a defaulting tenant, including but not limited to those
                set forth in Section 20. Without limiting the generality of the
                foregoing, Tenant expressly agrees that upon any such violation
                Landlord may, at its option, (a) immediately terminate this
                Lease or (b) continue this Lease in effect until compliance by
                Tenant with its clean-up and removal covenant notwithstanding
                any earlier expiration date of the term of this Lease. No action
                by Landlord hereunder shall impair the obligations of Tenant
                pursuant to this Section 8(C).

        (6)     As used in this Section 8(C), "Hazardous Materials" is used in
                its broadest sense and shall include any petroleum based
                products, pesticides, paints and solvents, polychlorinated
                biphenyl, lead, cyanide, DDT, acids, ammonium compounds and
                other chemical products and any substance or material defined or
                designated as hazardous or toxic, or other similar term, by any
                federal, state or local environmental statute, regulation, or
                ordinance affecting the Premises, Building or Project presently
                in effect or that may be promulgated in the future, as such

                                       10
<PAGE>   11

                statutes, regulations and ordinances may be amended from time to
                time, including but not limited to the statutes listed below:

                Resource Conservation and Recovery Act of 1976, 42 U.S.C.
                Section 6901 et seq.
                Comprehensive Environmental Response, Compensation, and
                Liability Act of 1980, 42 U.S.C. Section 9601 et seq.
                Clean Air Act, 42 U.S.C. Sections 7401-7626.
                Water Pollution Control Act (Clean Water Act of 1977), 33 U.S.C.
                Section 1251 et seq.
                Insecticide, Fungicide, and Rodenticide Act (Pesticide Act of
                1987), 7 U.S.C. Section 135 et seq.
                Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.
                Safe Drinking Water Act, 42 U.S.C. Section 300(f) et seq.
                National Environmental Policy Act (NEPA) 42 U.S.C. Section 4321
                et seq.
                Refuse Act of 1899, 33 U.S.C. Section 407 et seq.
                California Health and Safety Code Section 25316 et seq.
                California Code of Federal Regulations, Title 8 Section 5194
                California Code of Federal Regulations, Title 22 Section 12601

        (7)     By its signature to this Lease, Tenant confirms that it has
                conducted its own examination of the Premises and the Project
                with respect to Hazardous Materials and accepts the same "AS IS"
                and with no Hazardous Materials present thereon.

        (8)     Tenant acknowledges that incorporation of any material
                containing asbestos into the Premises is absolutely prohibited.
                Tenant agrees, represents and warrants that it shall not
                incorporate or permit or suffer to be incorporated, knowingly or
                unknowingly, any material containing asbestos into the Premises.

D.      Landlord's Rules and Regulations. Tenant shall, and Tenant agrees to
        cause its agents, servants, employees, invitees and licensees to,
        observe and comply fully and faithfully with the rules and regulations
        attached hereto as Exhibit C or such rules and regulations which may
        hereafter be adopted by Landlord (the "Rules") for the care, protection,
        cleanliness, and operation of the Premises, Building and Project, and
        any modifications or additions to the Rules adopted by Landlord,
        provided that, Landlord shall give written notice thereof to Tenant.
        Landlord shall not be responsible to Tenant for the failure of any other
        party to observe or comply with any of the Rules.

E.      Traffic and Energy Management; Recycling. Tenant agrees to cooperate and
        use its best efforts to participate in governmentally mandated or
        voluntary traffic management and recycling programs generally applicable
        to businesses located in the area in which the Project is situated or to
        the Project and, initially, shall encourage and support van and car
        pooling by employees and shall encourage and support staggered and
        flexible working hours for employees to the fullest extent permitted by
        the requirements of Tenant's business. Landlord shall offer, for the
        benefit of Tenant and other occupants of the Building and their
        respective employees only, the non-exclusive use of a shuttle service
        from the Project to a Caltrain station and a BART station at times
        designated by Landlord. Landlord shall have the option to discontinue
        such shuttle service at any time.

                                       11
<PAGE>   12

        Neither this Section 8(E) nor any other provision in this Lease,
        however, is intended to or shall create any rights or benefits in any
        other person, firm, company, governmental entity or the public. Landlord
        and Tenant agree to cooperate and use their best efforts to comply with
        any and all guidelines or controls imposed upon either Landlord or
        Tenant by federal or state governmental organizations or by any energy
        conservation association to which Landlord is a party concerning energy
        management. Landlord will provide recycling containers for Tenant's use
        at the Premises. Tenant agrees to use its best efforts to encourage its
        employees to recycle all recyclable material. Any costs, fees, fines or
        other levies assessed against Landlord as the result of failure of
        Tenant to comply with this Section 8(E) shall be reimbursed by Tenant to
        Landlord as additional rent.

SECTION 9.  SERVICE AND UTILITIES

A.      Standard Building Services. So long as Tenant is not in default
        hereunder (including any default of a type described in clauses (4) -
        (6) of Section 20(A) below), Landlord agrees to make available to the
        Premises, during the Building's normal business hours of 8:00 a.m. to
        6:00 p.m. Monday through Friday (holidays excepted), which hours are
        subject to change from time to time as reasonably determined by
        Landlord, such heat and air conditioning (hereinafter "HVAC"), water and
        electricity, as may be required in Landlord's judgment for the
        comfortable use and occupation of the Premises for general office
        purposes and at a level which is usual and customary in similar office
        buildings in the area where the Building is located, all of which shall
        be subject to the Rules of the Building as well as any governmental
        requirements or standards relating to, among other things, energy
        conservation.

B.      After-Hours Charges. During non-business hours Landlord shall keep the
        public areas of the Building and Project lighted and shall provide
        elevator service with at least (1) elevator, but shall not be obligated
        to furnish HVAC to the Premises. If Tenant requires HVAC during
        non-business hours, Tenant shall give Landlord at least twenty-four (24)
        hours prior notice of such requirement or shall follow such other
        procedure for activating the building energy management system as
        Landlord may advise Tenant, and Tenant shall pay Landlord for such extra
        service at Landlord's standard rates. Such rates are subject to increase
        from time to time based on increase in Landlord's costs associated with
        providing such extra services. All payments required for such charges
        shall be deemed to be additional rent and Landlord shall have the same
        remedies for a default in payment thereof as for a default in payment of
        rent. If the Building is designed for individual tenant operation of the
        HVAC, Tenant agrees to pay the cost of operating the HVAC at any time
        other than the schedule of hours for providing the same set forth above,
        which cost may include the operation of the HVAC for space located
        outside the Premises when such space is serviced concurrently with the
        operation of the HVAC for the benefit of the Premises.

C.      Limitation on Landlord's Obligations. Landlord shall not be in breach of
        its obligations under this Section 9 unless Landlord fails to make any
        repairs or perform maintenance which it is obligated to perform
        hereunder and such failure persists for an unreasonable time after
        written notice of a need for such repairs or maintenance is given to
        Landlord by

                                       12
<PAGE>   13

        Tenant. Landlord shall not be liable for and Tenant shall not be
        entitled to any abatement or reduction of rent by reason of Landlord's
        failure to furnish or the interruption or termination of any of the
        foregoing when such failure, interruption or termination is caused by
        accidents, breakage, repairs, strikes, brownouts, blackouts, lockouts or
        other labor disturbances or labor disputes of any character, or by any
        other cause, similar or dissimilar, beyond the actual or reasonable
        control of Landlord, nor shall such failure, interruption or termination
        under such circumstances be construed as a constructive or actual
        eviction of Tenant. Landlord shall not be liable under any circumstances
        for loss or injury to property or business, however occurring, through
        or in connection with or incidental to Landlord's failure to furnish or
        the interruption or termination of any of said service or utilities.

D.      Excess Service. Tenant shall not, without the written consent of
        Landlord, use any apparatus or device in the Premises, including,
        without limitation, electronic data processing machines, punch card
        machines or machines using in excess of one hundred twenty (120) volts
        or which consumes more electricity than is usually furnished or supplied
        for the Permitted Use of the Premises, as determined by Landlord. Tenant
        shall not consume water or electric current in excess of that usually
        furnished or supplied for the use of the Premises (as determined by
        Landlord), without first procuring the written consent of Landlord,
        which Landlord may refuse. The excess cost (including any penalties for
        excess usage) for such water and electric current shall be established
        by an estimate made by a utility company or independent engineer hired
        by Landlord at Tenant's expense and Tenant shall pay such excess costs
        each month with the Monthly Rental. All costs and expenses of modifying
        existing equipment, cables, lines, etc. or installing additional
        equipment, cables, lines, etc. to accommodate such excess usage or use
        by Tenant of such apparatus or device shall be borne by Tenant.

E.      Security Services. Certain security measures (both by electronic
        equipment and personnel) may be provided by Landlord in connection with
        the Building and Common Areas. However, Tenant hereby acknowledges that
        such security is intended to be only for the benefit of the Landlord in
        protecting its property from fire, theft, vandalism and similar perils
        and while certain incidental benefits may accrue to Tenant therefrom,
        such security is not for the purpose of protecting either the property
        of Tenant or the safety of its officers, employees, servants or
        invitees. By providing such security, Landlord assumes no obligation to
        Tenant and shall have no liability arising therefrom and Tenant hereby
        releases Landlord from all liability relating thereto. If, as a result
        of Tenant's occupancy of the Premises, Landlord in its sole discretion
        determines that it is necessary to provide security or implement
        additional security measures or devices in or about the Building or the
        Common Areas, Tenant shall be required to pay, as additional rent, the
        cost or increased cost, as the case may be, of such security.

SECTION 10.  MAINTENANCE AND REPAIRS

A.      Landlord's Obligations. Except for special or non-standard systems and
        equipment installed for Tenant's exclusive use, Landlord shall keep in
        good condition and repair, at Landlord's initial cost and expense, HVAC
        systems which service the Premises as well as

                                       13
<PAGE>   14

        other premises within the Building, the foundations, exterior walls,
        structural condition of interior bearing walls and roof of the Premises,
        interior walls, interior surfaces of exterior walls, ceilings, windows,
        doors, cabinets, draperies, electrical and lighting facilities within
        the Premises, window coverings, carpeting and other floor coverings,
        plate glass and skylights located within the Premises and the Building,
        as well as the parking lots, walkways, driveways, landscaping, fences,
        signs, and utility installations of the Project. Janitorial services to
        the Premises shall be provided in accordance with specifications
        established by Landlord, which specifications are subject to change from
        time to time in the reasonable discretion of Landlord. Landlord shall
        also provide elevator service, restroom supplies and window washing with
        reasonable frequency. Landlord shall not be required to make any repairs
        that are the obligation of any other tenant or occupant within the
        Building or Project or repairs for damage caused by any negligent or
        intentional act or omission of Tenant or any person claiming through or
        under Tenant or any of Tenant's employees, suppliers, shippers,
        customers or invitees, in which event Tenant shall repair such damage at
        its sole cost and expense. Tenant hereby waives and releases its right
        to make repairs at Landlord's expense under any law, statute, ordinance,
        rule or regulation now or hereafter in effect in any jurisdiction in
        which the Project is located.

B.      Tenant's Obligations. Tenant shall, at its sole cost and expense, make
        all repairs and replacements as and when Landlord deems reasonably
        necessary to preserve in good working order and condition any special or
        supplementary HVAC systems located within the Premises and installed for
        the exclusive use of the Premises, Tenant's cabling and telephone lines
        and all other non-standard utility facilities and systems exclusively
        serving the Premises, and all of Tenant's trade fixtures located within
        the Premises; provided, however, at Tenant's written request, Landlord
        will maintain such non-standard improvements at Tenant's expense, at a
        cost or charge equal to the costs incurred in such maintenance plus an
        additional overhead charge of fifteen percent (15%). Tenant shall not
        commit or permit any waste in or about the Premises, the Building or the
        Project. Tenant shall reimburse Landlord on demand for all repairs to
        the Premises, Building and Project which are required, in the reasonable
        opinion of Landlord, as a result of any misuse, neglect, negligent or
        intentional act or omission committed or permitted by Tenant or by any
        subtenant, agent, employee, supplier, shipper, customer, invitee or
        servant of Tenant.

C.      Landlord's Right to Make Repairs. In the event that Tenant fails to
        maintain the Premises in good and sanitary order, condition and repair
        as required by this Lease, then, following written notification to
        Tenant (except in the case of an emergency, in which case no prior
        notification shall be required), Landlord shall have the right, but not
        the obligation, to enter the Premises and to do such acts and expend
        such funds at the expense of Tenant as are required to place the
        Premises in good, safe and sanitary order, condition and repair. Any
        amount so expended by Landlord plus an overhead charge of fifteen
        percent (15%) of the expended amount shall be paid by Tenant promptly
        upon demand as additional rent.

D.      Condition of Premises Upon Surrender. Except as otherwise provided in
        this Lease, Tenant shall, upon the expiration or earlier termination of
        the Term, surrender the

                                       14
<PAGE>   15

        Premises to Landlord in the same condition as on the date Tenant took
        possession, reasonable wear and tear excepted. All appurtenances,
        fixtures, improvements, additions and other property attached to or
        installed in the Premises whether by Landlord or by or on behalf of
        Tenant, and whether at Landlord's expense or Tenant's expense, shall be
        and remain the property of Landlord unless Landlord specifically agrees
        otherwise in writing. Any furnishings and personal property of Tenant
        located in the Premises, whether the property of Tenant or leased by
        Tenant (including the fixtures, improvements and other items agreed, in
        writing, by Landlord to belong to the Tenant as provided in the
        preceding sentence and, unless Landlord elects to require Tenant to
        leave the same in the Premises, which Landlord shall have the right to
        do, all data, telephone or other cabling or wiring installed by or on
        behalf of Tenant in the Premises, including the plenum area above the
        ceiling of the Premises), shall be and remain the property of Tenant and
        shall be removed by Tenant at Tenant's sole cost and expense at the
        expiration of the Term. Tenant shall promptly repair any damage to the
        Premises or the Building resulting from such removal. Any of Tenant's
        property not removed from the Premises upon the expiration of the Term
        shall, at Landlord's option, either become the property of Landlord or
        may be removed by Landlord and Tenant shall pay to Landlord the cost of
        such removal within ten (10) days after delivery of a bill therefor or
        Landlord, at its option, may deduct such amount from the Security
        Deposit. Any damage to the Premises, including any structural damage,
        resulting from Tenant's use or from the removal of Tenant's fixtures,
        furnishings and equipment, shall be repaired by Tenant at Tenant's
        expense.

SECTION 11.  ENTRY BY LANDLORD

Landlord reserves and shall at any and all times have the right to enter the
Premises at reasonable times during normal business hours and at any time in
case of an emergency to inspect the same to determine whether Tenant is
complying with its obligations hereunder; to supply janitorial service and any
other service to be provided by Landlord hereunder; and, upon reasonable notice
to Tenant, may exhibit the Premises to prospective purchasers, mortgagees or
prospective tenants; to post notices of nonresponsibility; and to alter, improve
or repair the Premises and any portion of the Building and Project, without
abatement of rent, and may for that purpose erect scaffolding and other
necessary structures that are reasonably required by the character of the work
to be performed by Landlord, provided that the business of Tenant shall not be
interfered with unreasonably. For each of the aforesaid purposes, Landlord shall
at all times have and retain a key with which to unlock all of the doors in,
upon and about the Premises, excluding Tenant's vaults and safes, and Landlord
shall have the right to use any and all means which Landlord may deem proper to
open such doors in the event of an emergency. Any entry to the Premises or
portions thereof obtained by Landlord by any of said means, or otherwise, shall
not under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises, or any portion thereof. Tenant hereby
waives any claim for damages for any injury or inconvenience to or interference
with Tenant's business and any loss of occupancy or quiet enjoyment of the
Premises by reason of Landlord's exercise of its right of entry in accordance
with this Section 11, and Tenant shall not be entitled to an abatement or
reduction of rent in connection therewith.

                                       15
<PAGE>   16

SECTION 12.  ALTERATIONS, ADDITIONS AND TRADE FIXTURES

Except to the extent provided for in Exhibit B hereto, Tenant shall not make any
alterations, additions or improvements to the Premises, or any part thereof,
whether structural or nonstructural (hereafter "Alterations"), without
Landlord's prior written consent. If Tenant does not use Landlord's architect or
contractor to design or perform Alterations, Tenant shall pay to Landlord, as
additional rent, a management fee equal to ten percent (10%) of the cost of the
Alterations plus any professional fees or other costs and expenses incurred by
Landlord in reviewing such plans and specifications or inspecting progress of
any such work. In order to obtain Landlord's preliminary consent, which
preliminary consent may be given or denied in Landlord's sole discretion, Tenant
shall submit such information as Landlord may require, including without
limitation plans and specifications for the Alterations. After Landlord gives
preliminary consent, in order to obtain Landlord's final consent, which consent
may not be unreasonably withheld, Tenant shall then submit (a) permits,
licenses, bonds, and the construction contract, all in conformance with the
plans and specifications preliminarily approved by Landlord; (b) evidence of
insurance coverage in such types and amounts and from such insurers as Landlord
deems satisfactory; and (c) such other information as Landlord deems reasonably
necessary. The construction contract shall, at a minimum, require the general
contractor and all subcontractors to obey the rules and regulations of the
Building and Project. All Alterations shall be done in a good workmanlike manner
by qualified and licensed contractors or mechanics, as approved by Landlord.
Except for Alterations to the Premises, Tenant shall have no right whatsoever to
make any alterations or modifications to any portion of the Building or its
appurtenant facilities nor shall any Alterations affect the structure of the
Building or its exterior appearance. All Alterations made by or for Tenant
(other than Tenant's moveable trade fixtures), shall, unless Landlord expressly
requires or agrees otherwise in writing, immediately become the property of
Landlord, without compensation to Tenant, but Landlord has no obligation to
repair, maintain or insure those Alterations. Carpeting, shelving and cabinetry
are considered improvements of the Premises and not movable trade fixtures,
regardless of how or where affixed. No Alterations will be removed by Tenant
from the Premises either during or at the expiration or earlier termination of
the Term, and they shall be surrendered as a part of the Premises unless
Landlord has required that Tenant remove them. At Landlord's discretion,
Alterations are subject to removal by Tenant and at Tenant's sole cost and
expense. Upon any such removal, Tenant shall repair any damage caused to the
Premises thereby, and shall return the Premises to the condition they were in
prior to installation of such Alterations so removed. Tenant shall indemnify,
defend and keep Landlord free and harmless from and against all liability, loss,
damage, cost, attorneys' fees and any other expense incurred on account of
claims by any person performing work or furnishing materials or supplies for
Tenant or any person claiming under Tenant. Landlord may require Tenant to
provide Landlord, at Tenant's sole cost and expense, a lien and completion bond
in an amount equal to one and one-half times the estimated cost of such
improvements, to insure Landlord against any liability for mechanic's liens and
to insure completion of the work. Landlord shall have the right at all times to
post on the Premises any notices permitted or required by law, or that Landlord
shall deem proper, for the protection of Landlord, the Premises, the Building
and the Project, and any other party having an interest therein, from mechanics'
and materialmen's liens, and Tenant shall give to Landlord written notice of the
commencement of any construction in or on the Premises at

                                       16
<PAGE>   17

least thirty (30) days prior thereto. Prior to the commencement of any such
construction, Landlord shall be furnished certificates of insurance, naming
Landlord as an additional insured, evidencing that each contractor performing
work has insurance acceptable to Landlord, including but not limited to general
liability insurance of not less that Two Million Dollars ($2,000,000.00) and
worker's compensation insurance in the statutorily required amount.

SECTION 13.  MECHANIC'S LIENS

Tenant shall keep the Premises, the Building and the Project free from any liens
arising out of any work performed, material furnished or obligation incurred by
or for Tenant or any person or entity claiming through or under Tenant. In the
event that Tenant shall not, within ten (10) days following the imposition of
any such lien, cause the same to be released of record by payment or posting of
a proper bond, Landlord shall have, in addition to all other remedies provided
herein and by law, the right, but not the obligation, to cause such lien to be
released by such means as Landlord deems proper, including payment of the claim
giving rise to such lien. All such sums paid and all expenses incurred by
Landlord in connection therewith shall be due and payable to Landlord by Tenant
on demand.

SECTION 14.  INSURANCE

A.      Tenant. During the Term hereof, Tenant shall keep in full force and
        effect the following insurance and shall provide appropriate insurance
        certificates to Landlord prior to the Lease Commencement Date and
        annually thereafter before the expiration of each policy:

        (1)     Commercial general liability insurance for the benefit of Tenant
                and Landlord as an additional insured, with a limit of not less
                than Two Million Dollars ($2,000,000.00) combined single limit
                per occurrence, against claims for personal injury liability
                including, without limitation, bodily injury, death or property
                damage liability and covering (a) the business(es) operated by
                Tenant and by any subtenant of Tenant on the Premises, (b)
                operations of independent contractors engaged by Tenant for
                services or construction on or about the Premises, and (c)
                contractual liability;

        (2)     All risk property insurance, insuring the personal property,
                furniture, furnishings and fixtures belonging to Tenant located
                on the Premises for not less than one hundred percent (100%) of
                the actual replacement value thereof;

        (3)     Workers' compensation in the amount required by law; and

        (4)     Business interruption or loss of income insurance in amounts
                satisfactory to Landlord, with a rental interruption rider
                assuring Landlord that the rent due hereunder will be paid for a
                period of not less than twelve (12) months or the remaining term
                of this Lease, whichever is shorter, if the Premises are
                destroyed or rendered inaccessible by a risk insured against by
                a policy of all risk insurance.

        Each insurance policy obtained by Tenant pursuant to this Lease shall
        contain a clause

                                       17
<PAGE>   18

        that the insurer will provide Landlord with at least thirty (30) days'
        prior written notice of any material change, non-renewal or cancellation
        of the policy, shall be in a form satisfactory to Landlord and shall be
        taken out with an insurance company authorized to do business in the
        State in which the Project is located and rated not less than Best's
        Financial Class X and Best's Policy Holder Rating "A". In addition, any
        insurance policy obtained by Tenant shall be written as a primary
        policy, and shall not be contributing with or in excess of any coverage
        which Landlord may carry. The liability limits of the above described
        insurance policies shall in no manner limit the liability of Tenant
        under the terms of Section 15 below.

        Not more frequently than every two (2) years, if, in the reasonable
        opinion of Landlord, the amount of liability insurance specified in this
        Section 14 is not adequate, the above-described limits of coverage shall
        be adjusted by Landlord, by written notification to Tenant, in order to
        maintain the level of insurance protection at least equal to the
        protection afforded on the date the Term commences. If Tenant fails to
        maintain and secure the insurance coverage required under this Section
        14, then Landlord shall have, in addition to all other remedies provided
        herein and by law, the right, but not the obligation, to procure and
        maintain such insurance, the cost of which shall be due and payable to
        Landlord by Tenant on demand.

        If, on account of the failure of Tenant to comply with the provisions of
        this Section, Landlord is deemed a co-insurer by its insurance carrier,
        then any loss or damage which Landlord shall sustain by reason thereof
        shall be borne by Tenant and shall be immediately paid by Tenant as
        additional rent upon receipt of a bill therefor and evidence of such
        loss.

B.      Landlord. During the Term hereof, Landlord shall keep in full force and
        effect the following insurance:

        (1)     All risk property insurance (including flood and earthquake)
                insuring the Building and Landlord's improvements in an amount
                not less than the full replacement cost thereof; and

        (2)     Such other insurance as Landlord deems necessary in its sole and
                absolute discretion.

        All insurance policies shall be issued in the names of Landlord and
        Landlord's lender, if any, and any other party reasonably designated by
        Landlord as an additional insured, as their interests appear. The
        insurance policies shall provide that any proceeds shall be made payable
        to Landlord, or to the holders of mortgages or deeds of trust
        encumbering Landlord's interest in the Premises, Building, and Project,
        or to any other party reasonably designated by Landlord as an additional
        insured, as their interests shall appear.

C.      Waiver of Subrogation. Landlord and Tenant each hereby waives any and
        all rights of recovery against the other, and against any other tenant
        or occupant of the Building and

                                       18
<PAGE>   19

        against the officers, employees, agents, representatives, customers and
        business visitors of such other party and of each such other tenant or
        occupant of the Building, for loss of or damage to such waiving party or
        its property or the property of others under its control, arising from
        any cause insured against under any policy of property insurance
        required to be carried by such waiving party pursuant to the provisions
        of this Lease (or any other policy of property insurance carried by such
        waiving party in lieu thereof) at the time of such loss or damage. The
        foregoing waiver shall be effective whether or not a waiving party
        actually obtains and maintains such insurance which such waiving party
        is required to obtain and maintain pursuant to this Lease (or any
        substitute therefor). Landlord and Tenant shall, upon obtaining the
        policies of insurance which they are required to maintain hereunder,
        give notice (if required) to their respective insurance carrier or
        carriers that the foregoing mutual waiver of subrogation is contained in
        this Lease.

SECTION 15.  INDEMNITY

A.      Indemnification by Tenant. Tenant agrees to indemnify, defend and hold
        Landlord and its officers, directors, partners, agents and employees
        (collectively, "Indemnitees") entirely harmless from and against all
        liabilities, losses, demands, actions, expenses or claims, including
        reasonable attorneys' fees and court costs, for injury to or death of
        any person or for damages to any property or for violation of law
        arising out of or in any manner connected with (i) the use, occupancy or
        enjoyment of the Premises, Building or Project by Tenant or Tenant's
        agents, employees, invitees or contractors (the "Tenant's Agents") or
        any work, activity or other things allowed or suffered by Tenant or
        Tenant's Agents to be done in or about the Premises, Building or
        Project, (ii) any breach or default in the performance of any obligation
        of Tenant under this Lease, and (iii) any act or failure to act, whether
        negligent or otherwise tortious, by Tenant or Tenant's Agents in or
        about the Premises, Building or Project; provided, however, that Tenant
        shall not be required to indemnify Landlord in respect of any loss or
        damage arising by reason of the gross negligence or willful misconduct
        of Landlord.

B.      Limitation on Landlord's Liability; Release of Directors, Officers and
        Partners of Landlord. Tenant agrees that, in the event Tenant shall have
        any claim against Landlord under this Lease arising out of the subject
        matter of this Lease, Tenant's sole recourse shall be against the
        Landlord's interest in the Building, for the satisfaction of any claim,
        judgment or decree requiring the payment of money by Landlord as a
        result of a breach hereof or otherwise in connection with this Lease,
        and no other property or assets of Landlord, its officers, directors,
        employees, successors or assigns, shall be subject to the levy,
        execution or other enforcement procedure for the satisfaction of any
        such claim, judgment, injunction or decree. MOREOVER, TENANT AGREES THAT
        LANDLORD SHALL IN NO EVENT AND UNDER NO CIRCUMSTANCES BE RESPONSIBLE FOR
        ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES INCURRED OR
        SUSTAINED BY TENANT, OR ITS EMPLOYEES, AGENTS, CONTRACTORS OR INVITEES
        AS A RESULT OF OR IN ANY WAY CONNECTED TO TENANT'S OCCUPANCY OF THE
        PREMISES. None of the Indemnitees shall be liable to Tenant for, and, as
        such assumption and waiver do not

                                       19
<PAGE>   20

        violate public policy, Tenant assumes all risk of, and waives any and
        all right to assert claims against, or obtain any damages from, the
        Indemnitees with respect to, loss, injury, or damages which may be
        sustained by the person, goods, wares, merchandise or property of
        Tenant, Tenant's Agents, or any other person in or about the Premises
        from any cause whatsoever, whether such damage or injury results from
        conditions arising within the Premises or from other sources and whether
        known, unknown, foreseen, unforeseen, patent or latent. Tenant
        understands and acknowledges the significance and consequence of such
        specific assumption of risk and waiver.

C.      No Landlord Liability for Force Majeure Events. Landlord shall not be
        liable or responsible to Tenant for any loss or damage to any property
        or person occasioned by theft, fire, act of God, public enemy,
        injunction, riot, strike, insurrection, war, court order, requisition,
        or order of governmental body or authority, or for any damage or
        inconvenience that may arise through repair or alteration of any part of
        the Project, the Building or the Premises, or a failure to make any such
        repairs, except as expressly provided in this Lease.

D.      Indemnification by Landlord. Landlord shall indemnify, defend, protect
        and save Tenant harmless from all losses, costs, damages, claims and
        liability whatsoever on account of any damage or liability of any kind
        or for any injury to or death of persons arising in the Common Areas if
        caused by or resulting from any negligent or willful act or omission of
        Landlord or its employees or agents; provided, however, that Landlord's
        obligation to indemnify and hold harmless Tenant pursuant to the
        foregoing provisions is made for the purpose of providing any benefit
        from time to time available to Tenant under policies of insurance
        carried by Landlord, and further provided that the foregoing provisions
        shall in no event require Landlord to provide any defense to Tenant or
        pay any sum to or on behalf of Tenant in addition to that which may be
        provided and paid pursuant to such policies of insurance as may be
        carried by Landlord from time to time.

SECTION 16.  ASSIGNMENT AND SUBLETTING BY TENANT

A.      Consent Required. Tenant shall not, directly or indirectly, voluntarily
        or by operation of law, sell, assign, encumber, pledge or otherwise
        transfer or hypothecate all or any part of the Premises or Tenant's
        leasehold estate hereunder (collectively "Assignment"), or permit the
        Premises to be occupied by anyone other than Tenant or sublet the
        Premises ("Sublease") or any portion thereof without Landlord's prior
        written consent being had and obtained in each instance, subject to the
        terms and conditions contained in this Section. In no event will
        Landlord's consent be unreasonably withheld. Any sale or other transfer,
        including transfer by consolidation, merger or reorganization, of
        twenty-five percent (25%) or more of the voting stock of Tenant, if
        Tenant is a corporation, or any sale or other transfer of twenty-five
        percent (25%) or more of the partnership interest in Tenant, if Tenant
        is a partnership, shall be an Assignment for purposes of this Section.
        As used in this subsection, the term "Tenant" shall also mean any entity
        that has guaranteed Tenant's obligation under this Lease, and the
        prohibition hereof shall be applicable to any sales or transfers of
        stock or partnership interests of said guarantor.

                                       20
<PAGE>   21

B.      Tenant's Request for Consent. If Tenant desires at any time to enter
        into an Assignment of this Lease or a Sublease of the Premises or any
        portion thereof, Tenant shall request, in writing, at least sixty (60)
        days prior to the effective date of the Assignment or Sublease,
        Landlord's consent to the Assignment or Sublease, and shall provide
        Landlord with the following information:

        (1)     The name of the proposed assignee, subtenant or occupant;

        (2)     The nature of the proposed assignee's, subtenant's or occupant's
                business to be carried on in the Premises;

        (3)     The terms and provisions of the proposed Assignment or Sublease
                and a copy of such documents; and

        (4)     Such financial information concerning the proposed assignee,
                subtenant or occupant which Landlord shall have requested
                following its receipt of Tenant's request for consent.

C.      Landlord's Election. At any time within fifteen (15) business days after
        Landlord's receipt of the notice specified above, Landlord may by
        written notice to Tenant elect either to (1) consent to the proposed
        Assignment or Sublease, (2) refuse to consent to the proposed Assignment
        or Sublease, or (3) terminate this Lease in full with respect to an
        Assignment or terminate in part with respect to a Sublease. Any such
        termination of this Lease shall be conditioned on Landlord successfully
        entering into a new lease covering the Premises or a portion thereof
        with the intended assignee or subtenant on such terms as Landlord and
        such person may agree, or entering into a new lease covering the
        Premises or a portion thereof with any other person. In such event,
        Tenant shall not be entitled to any portion of the profit, if any, which
        Landlord may realize on account of such termination and reletting.
        Landlord's exercise of its aforesaid option shall not be construed to
        impose any liability upon Landlord with respect to any real estate
        brokerage commission(s) or any other proposed subletting or assignment.

D.      Landlord's Factors. Landlord and Tenant agree (by way of example and
        without limitation) that Landlord shall be entitled to take into account
        any fact or factor which Landlord reasonably deems relevant to its
        decision to consent or not consent to an Assignment or Sublease,
        including but not necessarily limited to the following, all of which
        Tenant hereby agrees are reasonable factors for Landlord's
        consideration:

        (1)     The financial strength of the proposed assignee or subtenant
                (which shall be at least equal to that of Tenant as of the date
                of execution of this Lease), including the adequacy of its
                working capital to pay all expenses anticipated in connection
                with any remodeling of the Premises.

        (2)     The quality and nature of the business and/or services to be
                conducted in or from the Premises by the proposed assignee or
                subtenant and in any other locations which it has.

                                       21
<PAGE>   22

        (3)     Violation of exclusive use rights previously granted by Landlord
                to other tenants of the Building.

        (4)     The quality of the appearance of the Premises resulting from any
                remodeling or renovation to be conducted by the proposed
                assignee or subtenant, and the compatibility of such quality
                with that of other premises in the Building.

        (5)     Whether the business in the Premises is, and whether the
                business to be operated by the proposed assignee or subtenant
                will be, a "destination business" (i.e., a business which draws
                patrons to the Building specifically to obtain services from
                such business).

        (6)     Whether the proposed tenant is a direct competitor of Landlord.

        (7)     Whether there then exists any default by Tenant pursuant to this
                Lease or any non-payment or non-performance by Tenant under this
                Lease which, with the passage of time and/or the giving of
                notice, would constitute a default under this Lease.

        Moreover, Landlord shall be entitled to be reasonably satisfied that
        each and every covenant, condition or obligation imposed upon Tenant by
        this Lease and each and every right, remedy or benefit afforded Landlord
        by this Lease is not impaired or diminished by such Assignment or
        Sublease. In no event shall there be any substantial change in the use
        of the Premises in connection with any Assignment or Sublease except as
        expressly approved in writing by Landlord in advance. Landlord and
        Tenant acknowledge that the express standards and provisions set forth
        in this Lease dealing with Assignment and Sublease, including those set
        forth in Sections 16(E) through 16(H) have been freely negotiated and
        are reasonable at the date hereof taking into account Tenant's proposed
        use of the Premises and the nature and quality of the Building and
        Project. No withholding of consent by Landlord for any reason deemed
        sufficient by Landlord shall give rise to any claim by Tenant or any
        proposed assignee or subtenant or entitle Tenant to terminate this Lease
        or to any abatement of rent. Approval of any Assignment of Tenant's
        interest shall, whether or not expressly so stated, be conditioned upon
        such assignee assuming in writing all obligations of Tenant hereunder by
        a written instrument satisfactory to Landlord.

E.      Granting of Consent. If Landlord consents to the Sublease or Assignment
        within said thirty (30) day period, Tenant may enter into such
        Assignment or Sublease of the Premises or portion thereof, but only upon
        the terms and conditions set forth in the notice furnished by Tenant to
        Landlord pursuant to Section 16(B) above.

F.      Assignment and Sublease Profit. In connection with any Assignment or
        Sublease, as a condition to Landlord's consent, seventy-five percent
        (75%) of any sums or other economic consideration received by Tenant
        directly or indirectly in connection with any assignment or sublease
        hereunder (except to the extent of assignment or sublease

                                       22
<PAGE>   23

        commissions paid by Tenant to a licensed broker at prevailing rates for
        comparable space) from assignee or sublessee and leasehold improvement
        costs whether described as rental or otherwise which exceed, in the
        aggregate, the total sums which Tenant is obligated to pay Landlord
        hereunder (prorated to reflect obligations allocable to that portion of
        the Premises assigned or sublet) shall be payable to Landlord as
        additional rent under this Lease. Within fifteen (15) days after written
        request therefor by Landlord, Tenant shall at any time and from time to
        time at Landlord's request certify to Landlord the amount of all such
        sums or other economic consideration received and all such commissions
        and improvement costs incurred, or expected to be received or incurred.

G.      Tenant Remains Liable. No consent by Landlord to any Assignment or
        Sublease by Tenant shall relieve Tenant of any obligation to be
        performed by Tenant under this Lease, whether arising before or after
        the Assignment or Sublease. The consent by Landlord to any Assignment or
        Sublease shall not relieve Tenant of the obligation to obtain Landlord's
        express written consent to any other Assignment or Sublease. Any
        Assignment or Sublease that is not in compliance with this Section 16
        shall be void and, at the option of Landlord, shall constitute a
        material default by Tenant under this Lease. The acceptance of rent by
        Landlord or payment to Landlord of any other monetary obligation by a
        proposed assignee or sublessee shall not constitute the consent by
        Landlord to such Assignment or Sublease. Tenant shall promptly provide
        to Landlord a copy of the fully executed Sublease or Assignment.

H.      Assignee Becomes Liable. Each assignee, sublessee or other transferee,
        other than Landlord, shall assume, as provided in this Section 16(H),
        all obligations of Tenant under this Lease and shall be and remain
        liable jointly and severally with Tenant for the payment of Monthly
        Rental and all other monetary obligations hereunder, and for the
        performance of all the terms, covenants, conditions and agreements
        herein contained on Tenant's part to be performed for the Term;
        provided, however, that the assignee, sublessee, or other transferee
        shall be liable to Landlord for rent only in the amount set forth in the
        Assignment or Sublease. No Assignment shall be binding on Landlord
        unless the assignee or Tenant shall deliver to Landlord a counterpart of
        the Assignment and an instrument in recordable form that contains a
        covenant of assumption by the assignee satisfactory in substance and
        form to Landlord, consistent with the requirements of this Section 16(H)
        but the failure or refusal of the assignee to execute such instrument of
        assumption shall not release or discharge the assignee from its
        liability as set forth above.

I.      Bankruptcy. If this Lease is assigned to any person or entity pursuant
        to the provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq.,
        (the "Bankruptcy Code"), any and all monies or other consideration
        payable or otherwise to be delivered in connection with such assignment
        shall be paid or delivered to Landlord, shall be and remain the
        exclusive property of Landlord and shall not constitute property of
        Tenant or of the estate of Tenant within the meaning of the Bankruptcy
        Code. Any and all monies or other considerations constituting Landlord's
        property under the preceding sentence not paid or delivered to Landlord
        shall be held in trust for the benefit of Landlord and be promptly paid
        or delivered to Landlord. Any person or entity to which this Lease is
        assigned pursuant to the provisions of the Bankruptcy Code, shall be
        deemed, without further act or deed, to

                                       23
<PAGE>   24

        have assumed all of the obligations arising under this Lease on and
        after the date of such Assignment. Any such assignee shall upon demand
        execute and deliver to Landlord an instrument confirming such
        assumption.

J.      Landlord's Fees. Tenant shall pay Landlord's expenses and attorneys'
        fees incurred in processing an Assignment or Sublease, but in no event
        less than Five Hundred Dollars ($500.00) for each such proposed transfer
        to cover the legal review and processing expenses of Landlord, whether
        or not Landlord shall grant its consent to such proposed transfers.

K.      Certain Rights Personal to Tenant. All options to extend, renew or
        expand, if any, contained in this Lease are personal to Tenant. Consent
        by Landlord to any Assignment or Sublease shall not include consent to
        the assignment or transfer of any such rights with respect to the
        Premises or any special privileges or extra services granted to Tenant
        by this Lease, or any addendum or amendment hereto or letter of
        agreement. All such options, rights, privileges and extra services shall
        terminate upon the effective date of such Assignment or Sublease unless
        Landlord specifically grants in writing such options, rights, privileges
        and extra services to such assignee or subtenant. Similarly, any
        allowance, abatement or monetary concession provided to Tenant as an
        inducement to execute this Lease is personal to Tenant and shall be
        amortized (on a straight line basis) over the term of this Lease. Upon
        the effective date of any Assignment or Sublease, the then unamortized
        portion thereof shall be paid by Tenant to Landlord in cash on or before
        the effective date of such Assignment or Sublease.

L.      Sublease Rents. Tenant immediately and irrevocably assigns to Landlord,
        as security for Tenant's obligations under this Lease, all rent from any
        subletting of all or part of the Premises, and appoints Landlord, as
        assignee and as attorney-in-fact for Tenant for purposes hereof.
        Landlord, or a receiver for Tenant appointed on Landlord's application,
        may collect such rents and apply same toward Tenant's obligations under
        this Lease; except that, until the occurrence of an act of default by
        Tenant, Tenant shall have the right and license to collect such rents.

SECTION 17.  TRANSFER OF LANDLORD'S INTEREST

In the event Landlord shall sell or otherwise convey its title to the Building,
then, after the effective date of such sale or conveyance, Landlord shall have
no further liability under this Lease to Tenant except as to matters of
liability which have accrued and are unsatisfied as of the date of sale or
conveyance, and Tenant shall seek performance solely from Landlord's purchaser
or successor in title. In connection with such sale or transfer, Landlord may
assign its interest under this Lease without notice to or consent by Tenant. In
such event, Tenant agrees to be bound to any successor Landlord.

SECTION 18.  DAMAGE AND DESTRUCTION

A.      Minor Insured Damage. In the event the Premises or the Building, or any
        portion thereof, is damaged or destroyed by any casualty that is covered
        by the insurance maintained by

                                       24
<PAGE>   25

        Landlord pursuant to Section 14 above, then Landlord shall rebuild,
        repair and restore the damaged portion thereof, provided that (1) the
        amount of insurance proceeds available to Landlord equals or exceeds the
        cost of such rebuilding, restoration and repair, (2) such rebuilding,
        restoration and repair can be completed within one hundred eighty (180)
        days after the work commences in the opinion of a registered architect
        or engineer appointed by Landlord, (3) the damage or destruction has
        occurred more than twelve (12) months before the expiration of the Term,
        and (4) such rebuilding, restoration or repair is then permitted, under
        applicable governmental laws, rules and regulations, to be done in such
        a manner as to return the damaged portion thereof to substantially its
        condition immediately prior to the damage or destruction, including,
        without limitation, substantially the same Rentable Area on each of the
        damaged floors. To the extent that insurance proceeds must be paid to a
        mortgagee or beneficiary under, or must be applied to reduce any
        indebtedness secured by, a mortgage or deed of trust encumbering the
        Premises, Building or Project, such proceeds, for the purposes of this
        Section 18(A), shall be deemed not available to Landlord unless such
        mortgagee or beneficiary permits Landlord to use such proceeds for the
        rebuilding, restoration and repair of the damaged portion thereof.
        Notwithstanding the foregoing, Landlord shall have no obligation to
        repair any damage to, or to replace any of, Tenant's personal property,
        furnishings, trade fixtures, equipment or other such property or effects
        of Tenant.

B.      Major or Uninsured Damage. In the event the Premises or the Building, or
        any portion thereof, is damaged or destroyed by any casualty to the
        extent that Landlord is not obligated, under Section 18(A) above, to
        rebuild, repair or restore the damaged portion thereof, then Landlord
        shall, within sixty (60) days after such damage or destruction, notify
        Tenant of its election, at its option, to either (1) rebuild, restore
        and repair the damaged portions thereof, in which case Landlord's notice
        shall specify the time period within which Landlord estimates such
        repairs or restoration can be completed; or (2) terminate this Lease
        effective as of the date the damage or destruction occurred. If Landlord
        does not give Tenant written notice within sixty (60) days after the
        damage or destruction occurs of its election to rebuild or restore and
        repair the damaged portions thereof, Landlord shall be deemed to have
        elected to terminate this Lease.

C.      Abatement of Rent. There shall be an abatement of rent by reason of
        damage to or destruction of the Premises or the Building, or any portion
        thereof, to the extent that Landlord receives insurance proceeds for
        loss of rental income attributable to the Premises, commencing on the
        date that the damage to or destruction of the Premises or Building has
        occurred. Such abatement shall be determined by reference to the area of
        the Premises rendered untenantable, except that if so much of the
        Premises shall be untenantable that it is not commercially practicable
        for Tenant to use any portion thereof, rent shall entirely abate during
        restoration of the casualty.

D.      Waiver. Tenant shall have no claim against Landlord for any damage
        suffered by Tenant by reason of any such damage, destruction, repair or
        restoration. Tenant waives the provisions of California Civil Code
        Sections 1932(2) and 1933(4) and any present or future laws or case
        decisions to the same effect. Upon completion of such repair or
        restoration, Tenant shall promptly refixture the Premises substantially
        to the condition

                                       25
<PAGE>   26

        they were in prior to the casualty and shall reopen for business if
        closed by the casualty.

SECTION 19.  CONDEMNATION

A.      Total or Partial Taking. If all or substantially all of the Premises is
        condemned or taken in any manner for public or quasi-public use,
        including but not limited to, a conveyance or assignment in lieu of the
        condemnation or taking, this Lease shall automatically terminate as of
        the earlier of the date on which actual physical possession is taken by
        the condemnor or the date of dispossession of Tenant as a result of such
        condemnation or other taking. If less than all or substantially all of
        the Premises is so condemned or taken, this Lease shall automatically
        terminate only as to the portion of the Premises so taken as of the
        earlier of the date on which actual physical possession is taken by the
        condemnor or the date of dispossession of Tenant as a result of such
        condemnation or taking. If a portion of the Building not including the
        Premises is condemned or otherwise taken so as to require, in the
        opinion of Landlord, a substantial alteration or reconstruction of the
        remaining portions thereof, this Lease may be terminated by Landlord, as
        of the date on which actual physical possession is taken by the
        condemnor or dispossession of Tenant as a result of such condemnation or
        taking, by written notice to Tenant delivered within sixty (60) days
        following notice to Landlord of the date on which such physical
        possession is taken or dispossession will occur.

B.      Award. Landlord shall be entitled to the entire award in any
        condemnation proceeding or other proceeding for taking for public or
        quasi-public use, including, without limitation, any award made for the
        value of the leasehold estate created by this Lease. No award for any
        partial or total taking shall be apportioned, and Tenant hereby assigns
        to Landlord any award that may be made in such condemnation or other
        taking, together with any and all rights of Tenant now or hereafter
        arising in or to the same or any part thereof. Although all damages in
        the event of any condemnation are to belong to Landlord whether such
        damages are awarded as compensation for diminution in value of the
        leasehold or to the fee of the Premises, Tenant shall have the right to
        claim and recover from the condemnor, but not from Landlord, such
        compensation as may be separately awarded or recoverable by Tenant in
        Tenant's own right on account of damages to Tenant's business by reason
        of the condemnation and for or on account of any cost or loss to which
        Tenant might be put in removing Tenant's merchandise, furniture and
        other personal property, fixtures, and equipment, for the interruption
        of or damage to Tenant's business or for Tenant's relocation expenses.

C.      Abatement in Rent. In the event of a partial condemnation or other
        taking that does not result in a termination of this Lease as to the
        entire Premises pursuant to this Section 19, the rent and all other
        charges shall abate in proportion to the portion of the Premises taken
        by such condemnation or other taking. If this Lease is terminated, in
        whole or in part, pursuant to any of the provisions of this Section 19,
        all rentals and other charges payable by Tenant to Landlord hereunder
        and attributable to the Premises taken shall be paid up to the date upon
        which actual physical possession shall be taken by the condemnor.
        Landlord shall be entitled to retain all of the Security Deposit until
        such time as this Lease is terminated as to all of the Premises.

                                       26
<PAGE>   27

D.      Temporary Taking. If all or any portion of the Premises is condemned or
        otherwise taken for public or quasi-public use for a limited period of
        time, this Lease shall remain in full force and effect and Tenant shall
        continue to perform all terms, conditions and covenants of this Lease;
        provided, however, the rent and all other charges payable by Tenant to
        Landlord hereunder shall abate during such limited period in proportion
        to the portion of the Premises that is rendered untenantable and
        unusable as a result of such condemnation or other taking. Landlord
        shall be entitled to receive the entire award made in connection with
        any such temporary condemnation or other taking. Tenant shall have the
        right to claim and recover from the condemnor, but not from Landlord,
        such compensation as may be separately awarded or recoverable by Tenant
        in Tenant's own right on account of damages to Tenant's business by
        reason of the condemnation and for or on account of any cost or loss to
        which Tenant might be put in removing Tenant's merchandise, furniture
        and other personal property, fixtures and equipment or for the
        interruption of or damage to Tenant's business.

E.      Transfer of Landlord's Interest to Condemnor. Landlord may, without any
        obligation to Tenant, agree to sell and/or convey to the condemnor the
        Premises, the Building, the Project or any portion thereof, sought by
        the condemnor, free from this Lease and the rights of Tenant hereunder,
        without first requiring that any action or proceeding be instituted or,
        if instituted, pursued to a judgment.

SECTION 20.  DEFAULT

A.      Tenant's Default. The failure by Tenant to perform any one or more of
        the following obligations shall constitute a default hereunder by
        Tenant:

        (1)     If Tenant abandons all or a substantial portion of the Premises;

        (2)     If Tenant fails to pay any rent or other charges required to be
                paid by Tenant under this Lease and such failure continues for
                five (5) days after such payment is due and payable; provided,
                however, that the obligation of Tenant to pay a late charge or
                interest pursuant to this Lease below shall commence as of the
                due date of the rent or such other monetary obligation and not
                on the expiration of such five (5) day grace period;

        (3)     If Tenant involuntarily transfers Tenant's interest in this
                Lease or voluntarily transfers (attempted or actual) its
                interest in this Lease, without Landlord's prior written
                consent;

        (4)     If Tenant files a voluntary petition for relief or if a petition
                against Tenant in a proceeding under the Federal Bankruptcy Laws
                or other insolvency laws is filed and not withdrawn or dismissed
                within forty-five (45) days thereafter, or if under the
                provisions of any law providing for reorganization or winding up
                of corporations, any court of competent jurisdiction assumes
                jurisdiction, custody or control of Tenant or any substantial
                part of the Premises or any of Tenant's

                                       27
<PAGE>   28

                personal property located at the Premises and such jurisdiction,
                custody or control remains in force unrelinquished, unstayed or
                unterminated for a period of forty-five (45) days;

        (5)     If in any proceeding or action in which Tenant is a party, a
                trustee, receiver, agent or custodian is appointed to take
                charge of the Premises or any of Tenant's personal property
                located at the Premises (or has the authority to do so) for the
                purpose of enforcing a lien against the Premises or Tenant's
                personal property;

        (6)     If Tenant shall make any general assignment for the benefit of
                creditors or convene a meeting of its creditors or any class
                thereof for the purpose of effecting a moratorium upon or
                composition of its debts, or any class thereof;

        (7)     If Tenant fails to discharge any lien placed upon the Premises,
                the Building or the Project by Tenant or any person claiming
                under, by or through Tenant within ten (10) days of the
                imposition of such lien;

        (8)     If Tenant fails to promptly and fully perform any other
                covenant, condition or agreement contained in this Lease (other
                than subparagraphs (1) through (7) above) and such failure
                continues for ten (10) days after written notice thereof from
                Landlord to Tenant, or if such failure cannot be completely
                cured within such ten (10) day period, then if Tenant fails to
                commence such cure within such ten (10) day period and
                thereafter proceed to completely cure such failure within thirty
                (30) days after such written notice; or

        (9)     If Tenant is a partnership or consists of more than one (1)
                person or entity, if any partner of the partnership or other
                person or entity is involved in any of the acts or events
                described in subparagraphs (1) through (8) above.

B.      Remedies. Any notice given by Landlord pursuant to Section 20(A) above
        may be the notice required or permitted pursuant to Section 1161 et seq.
        of the California Code of Civil Procedure or successor statutes, and the
        provisions of this Lease shall not require the giving of a notice in
        addition to such statutory notice to terminate this Lease and Tenant's
        right to possession of the Premises. The periods specified in Section
        20(A) within which Tenant is permitted to cure any default following
        notice from Landlord shall run concurrently with any cure period
        provided by applicable laws. Upon the occurrence of a default by Tenant
        that is not cured by Tenant within any applicable grace period specified
        above, Landlord shall have the following rights and remedies in addition
        to all other rights and remedies available to Landlord at law or in
        equity, which shall be cumulative and non-exclusive:

        (1)     Without further notice or demand of any kind to Tenant or any
                other person, the right to declare this Lease and the term of
                this Lease terminated; re-enter the Premises and the
                improvements located thereon, with or without process of law; to
                eject all parties in possession thereof therefrom; repossess and
                enjoy the Premises together with all said improvements; and to
                recover from Tenant all of

                                       28
<PAGE>   29

                the following:

                (a)     The worth at the time of award of the unpaid rent which
                        had been earned at the time of termination; plus

                (b)     The worth at the time of award of the amount by which
                        the unpaid rent which would have been earned after
                        termination until the time of award exceeds the amount
                        of such rental loss that Tenant proves could have been
                        reasonably avoided; plus

                (c)     The worth at the time of award of the amount by which
                        the unpaid rent for the balance of the Term after the
                        time of award exceeds the amount of rental loss that
                        Tenant proves could be reasonably avoided; plus

                (d)     Any other amount necessary to compensate Landlord for
                        all the detriment proximately caused by Tenant's failure
                        to perform its obligations under this Lease or which in
                        the ordinary course of things would be likely to result
                        therefrom, including, but not limited to, any attorneys'
                        fees, broker's commissions or finder's fees (not only in
                        connection with the reletting of the Premises, but also
                        that portion of any leasing commission paid by Landlord
                        in connection with this Lease which is applicable to
                        that portion of the Term which is unexpired as of the
                        date on which this Lease is terminated); the then
                        unamortized cost of any tenant improvements constructed
                        for or on behalf of Tenant by or at the expense of
                        Landlord or of any moving allowance or other concession
                        made available to Tenant and/or paid by Landlord
                        pursuant to this Lease; any costs for repairs, clean-up,
                        refurbishing, removal (including the repair of any
                        damage caused by such removal) and storage (or disposal)
                        of Tenant's personal property, equipment, fixtures, and
                        anything else that Tenant is required (under this Lease)
                        to remove but does not remove; any costs for
                        alterations, additions and renovations; and any other
                        costs and expenses, including reasonable attorneys' fees
                        and costs, incurred by Landlord in regaining possession
                        of and reletting (or attempting to relet) the Premises.

        (2)     The right to continue this Lease in effect and to enforce all of
                Landlord's rights and remedies under this Lease, including the
                right to recover rent and any other additional monetary charges
                as they become due, for as long as Landlord does not terminate
                Tenant's right to possession. Acts of maintenance or
                preservation, efforts to relet the Premises, the appointment of
                a receiver upon Landlord's initiative to protect its interest
                under this Lease or Landlord's withholding of consent to an
                Assignment or Subletting pursuant to the terms and conditions of
                Section 16 above shall not constitute a termination of Tenant's
                right to possession.

        (3)     The foregoing provisions of clause (2) shall apply even though
                Tenant has breached the Lease and abandoned the Premises, in
                which case Landlord shall have the right to re-enter the
                Premises with or without process of law to eject

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<PAGE>   30

                therefrom all parties in possession thereof, and, without
                terminating this Lease, at any time and from time to time, but
                without obligation to do so, to relet the Premises and the
                improvements located therein or any part or parts of any thereof
                for the account of Tenant, or otherwise, on such conditions as
                Landlord in its discretion may deem proper, with the right to
                make alterations and repairs to the Premises in connection
                therewith, and to receive and collect the rents therefor, and
                apply the same (a) first to the payment of such costs and
                expenses as Landlord may have paid, assumed or incurred: (I) in
                recovering possession of the Premises and said improvements,
                including attorneys' fees, and costs; (II) on expenses for
                placing the Premises and said improvements in good order and
                condition, for decorating and preparing the Premises for
                reletting; (III) for making any alterations, repairs, changes or
                additions to the Premises that may be necessary or convenient;
                and (IV) for all other costs and expenses, including leasing and
                subleasing commissions, and charges paid, assumed or incurred by
                Landlord in or upon reletting the Premises and said
                improvements, or in fulfillment of the covenants of Tenant under
                this Lease; (b) then to the payment of Monthly Rental and other
                monetary obligations due and unpaid hereunder; and (c) any
                balance shall be held by Landlord and applied in payment of
                future amounts as the same may become due and payable hereunder.
                Any such reletting may be for the remainder of the term of this
                Lease or for a longer or shorter period. Landlord may execute
                any lease or sublease made pursuant to the terms of this clause
                (3) either in its own name or in the name of Tenant as its
                agent, as Landlord may see fit. The tenant(s) or subtenant(s)
                thereunder shall be under no obligation whatsoever with regard
                to the application by Landlord of any rent collected by Landlord
                from such tenant or subtenant to any and all sums due and owing
                or which may become due and owing under the provisions of this
                Lease, nor shall Tenant have any right or authority whatever to
                collect any rent whatever from such tenant(s) or subtenant(s).
                If Tenant has been credited with any rent received by such
                reletting and such rent shall not be promptly paid to Landlord
                by the tenant(s) or subtenant(s), or if such rentals received
                from reletting during any month are less than those to be paid
                during that month by Tenant hereunder, Tenant shall pay any such
                deficiency to Landlord. Such deficiency shall be calculated and
                paid monthly. Tenant shall also pay to Landlord as soon as
                ascertained, any costs and expenses incurred by Landlord in such
                reletting or in making such alterations and repairs not covered
                by the rentals received from such reletting. For all purposes
                set forth in this clause (3), Landlord is hereby irrevocably
                appointed as agent for Tenant. No taking of possession of the
                Premises by Landlord shall be construed as Landlord's acceptance
                of a surrender of the Premises by Tenant or an election on
                Landlord's part to terminate this Lease unless written notice of
                such intention is given to Tenant. Notwithstanding any such
                subletting without termination, Landlord may at any time
                thereafter elect to terminate this Lease for such previous
                breach. Election by Landlord to proceed pursuant to this clause
                (3) shall be made upon written notice to Tenant and shall be
                deemed an election of the remedy described in California Civil
                Code Section 1951.4 (providing that a lessor of real property
                may continue a lease in effect after a lessee's breach or
                abandonment and recover rent as it becomes due, if the lessee

                                       30
<PAGE>   31

                has the right to sublet or assign, subject only to reasonable
                limitations). If Landlord elects to pursue such remedy, unless
                Landlord relets the Premises, Tenant shall have the right to
                sublet the Premises and to assign its interest in this Lease,
                subject to all of the standards and conditions set forth in
                Section 16. Landlord may elect to terminate the prosecution of
                such remedy at any time by written notice to Tenant, and the
                right of Tenant to sublet or assign shall terminate upon receipt
                by Tenant of such notice.

        (4)     The right to have a receiver appointed for Tenant, upon
                application by Landlord, to take possession of the Premises and
                to apply any rental collected from the Premises and to exercise
                all other rights and remedies granted to Landlord pursuant to
                this subsection.

C.      Relief From Forfeiture. Tenant hereby waives all rights under California
        Code of Civil Procedure Section 1179 and California Civil Code Section
        3275 providing for relief from forfeiture, and any other right now or
        hereafter existing to redeem the Premises or reinstate this Lease after
        termination pursuant to this Section 20 or by order or judgment of any
        court or by any legal process.

SECTION 21.  LATE PAYMENTS/INTEREST AND LATE CHARGES

A.      [Intentionally Omitted]

B.      Interest. Any amount due from Tenant to Landlord which is not paid when
        due shall bear interest at the rate of one percent (1%) per month or, if
        less, the maximum rate permitted by law from the date such payment is
        due until paid, except that amounts spent by Landlord on behalf of
        Tenant shall bear interest at such rate from the date of disbursement by
        Landlord which Tenant agrees is to compensate Landlord for Tenant's use
        of Landlord's money after it is due. Payment of such interest shall not
        excuse or cure any default by Tenant pursuant to this Lease. Such rate
        shall remain in effect after the occurrence of any breach or default
        hereunder by Tenant to and until payment of the entire amount due.

C.      Late Charges. TENANT HEREBY ACKNOWLEDGES THAT IN ADDITION TO LOST
        INTEREST, THE LATE PAYMENT BY TENANT TO LANDLORD OF RENT OR ANY OTHER
        SUMS DUE HEREUNDER WILL CAUSE LANDLORD TO INCUR OTHER COSTS NOT
        CONTEMPLATED IN THIS LEASE, THE EXACT AMOUNT OF WHICH WILL BE EXTREMELY
        DIFFICULT AND IMPRACTICABLE TO ASCERTAIN. SUCH OTHER COSTS INCLUDE, BUT
        ARE NOT LIMITED TO, PROCESSING, ADMINISTRATIVE AND ACCOUNTING COSTS, AND
        LATE CHARGES WHICH MAY BE IMPOSED UPON LANDLORD BY THE TERMS OF ANY
        ENCUMBRANCE COVERING THE PREMISES. ACCORDINGLY, IF ANY INSTALLMENT OF
        RENT OR ANY ADDITIONAL RENT OR OTHER SUM DUE FROM TENANT SHALL NOT BE
        RECEIVED BY LANDLORD WHEN SUCH AMOUNT SHALL BE DUE (WITHOUT REGARD TO
        ANY GRACE PERIOD GRANTED IN THIS LEASE), TENANT SHALL PAY TO LANDLORD AS

                                       31
<PAGE>   32

        ADDITIONAL RENT HEREUNDER A LATE CHARGE EQUAL TO THE LESSER OF FIVE
        PERCENT (5%) OF SUCH OVERDUE AMOUNT OR $1,500.00. THE PARTIES HEREBY
        AGREE THAT (i) SUCH LATE CHARGE REPRESENTS A FAIR AND REASONABLE
        ESTIMATE OF THE COSTS LANDLORD WILL INCUR IN PROCESSING SUCH DELINQUENT
        PAYMENT BY TENANT, (ii) SUCH LATE CHARGE SHALL BE PAID TO LANDLORD AS
        LIQUIDATED DAMAGES FOR EACH DELINQUENT PAYMENT, AND (iii) THE PAYMENT OF
        THE LATE CHARGE IS TO COMPENSATE LANDLORD FOR THE ADDITIONAL
        ADMINISTRATIVE EXPENSE INCURRED BY LANDLORD IN HANDLING AND PROCESSING
        DELINQUENT PAYMENTS.

        -------------------         -----------------
        Landlord's Initials         Tenant's Initials

D.      No Waiver. Neither assessment nor acceptance of partial payments,
        interest or late charges by Landlord shall constitute a waiver of
        Tenant's default with respect to such overdue amount, nor prevent
        Landlord from exercising any of its other rights and remedies under this
        Lease. Nothing contained in this Section shall be deemed to condone,
        authorize, sanction or grant to Tenant an option for the late payment of
        rent, additional rent or other sums due hereunder, and Tenant shall be
        deemed in default with regard to any such payments should the same not
        be made by the date on which they are due.

SECTION 22. [INTENTIONALLY OMITTED].

SECTION 23.  HOLDING OVER

Any holding over by Tenant in the possession of the Premises, or any portion
thereof, after the expiration or earlier termination of the Term, with the prior
written consent of Landlord, shall be construed to be a tenancy from month to
month at one hundred fifty percent (150%) of the Monthly Rental herein specified
for the last month in the Term (prorated on a monthly basis) unless Landlord
shall specify a lesser amount for rent in its sole discretion, and shall
otherwise be on the terms and conditions herein specified as far as applicable.
Any holding over without Landlord's consent shall constitute a default by Tenant
and shall entitle Landlord to pursue all remedies provided in this Lease and
Tenant shall be liable for any and all direct or consequential damages or losses
of Landlord resulting from Tenant's holding over without Landlord's consent.

SECTION 24.  ATTORNEYS' FEES

Tenant shall pay to Landlord all amounts for costs and expenses, including, but
not limited to, reasonable attorneys' fees and amounts paid to any collection
agency, incurred by Landlord in connection with any breach or default by Tenant
under this Lease or incurred in order to enforce or interpret the terms or
provisions of this Lease. Tenant shall also pay to Landlord all such amounts,
including attorneys' fees, incurred by Landlord in responding to any request by
Tenant (a) to amend or modify this Lease or (b) to prepare any statement or
document in connection with this Lease, including without limitation estoppel
certificates or subordination agreements or

                                       32
<PAGE>   33

the like. Such amounts shall be payable upon demand. In addition, if any action
shall be instituted by either Landlord or Tenant for the enforcement or
interpretation of any of its rights or remedies in or under this Lease, the
prevailing party shall be entitled to recover from the losing party all costs
incurred by the prevailing party in said action and any appeal therefrom,
including reasonable attorneys' fees and court costs to be fixed by the court
therein. In the event Landlord is made a party to any litigation between Tenant
and any third party, then Tenant shall pay all costs and attorneys' fees
incurred by or imposed upon Landlord in connection with such litigation;
provided, however, if Landlord is ultimately held to be liable, then Landlord
shall reimburse Tenant for the cost of any attorneys' fees paid by Tenant on
behalf of Landlord.

SECTION 25.  MORTGAGE PROTECTION/SUBORDINATION

A.      Subordination. The rights of Tenant under this Lease are and shall be,
        at the option of Landlord, either subordinate or superior to any
        mortgage or deed of trust (including a consolidated mortgage or deed of
        trust) constituting a lien on the Premises, Building or Project, or
        Landlord's interest therein or any part thereof, whether such mortgage
        or deed of trust has heretofore been, or may hereafter be, placed upon
        the Premises by Landlord, and to any ground or master lease if
        Landlord's title to the Premises or any part thereof is or shall become
        a leasehold interest. To further assure the foregoing subordination or
        superiority, Tenant shall, upon Landlord's request, together with the
        request of any mortgagee under a mortgage or beneficiary under a deed of
        trust or ground or master lessor, execute any instrument (including
        without limitation an amendment to this Lease that does not materially
        and adversely affect Tenant's rights or materially increase Tenant's
        obligations under this Lease) or instruments intended to subordinate
        this Lease, or at the option of Landlord, to make it superior to any
        mortgage, deed of trust, or ground or master lease. Notwithstanding any
        such subordination, Tenant's right to occupy the Premises pursuant to
        this Lease shall remain in effect for the full Term as long as Tenant is
        not in default hereunder.

B.      Attornment. Notwithstanding Section 25(A) above, Tenant agrees (1) to
        attorn to any mortgagee of a mortgage or beneficiary of a deed of trust
        encumbering the Premises and to any party acquiring title to the
        Premises by judicial foreclosure, trustee's sale, or deed in lieu of
        foreclosure, and to any ground or master lessor, as the successor to
        Landlord hereunder, (2) to execute any attornment agreement reasonably
        requested by a mortgagee, beneficiary, ground or master lessor, or party
        so acquiring title to the Premises, and (3) that this Lease, subject to
        the rights under any outstanding non-disturbance agreement, at the
        option of such mortgagee, beneficiary, or ground or master lessor, or
        other party, shall remain in force notwithstanding any such judicial
        foreclosure, trustee's sale, deed in lieu of foreclosure, or merger of
        titles. Notwithstanding the foregoing, neither a mortgagee of a mortgage
        or beneficiary of a deed of trust encumbering the Premises, any party
        acquiring title to the Premises by judicial foreclosure, trustee sale,
        or deed in lieu of foreclosure, or any ground lessor or master lessor,
        as the successor to Landlord hereunder, shall be liable or responsible
        for any breach of a covenant contained in this Lease that occurred
        before such party acquired its interest in the Premises or for any
        continuing breach thereof until after the successor Landlord has
        received the notice and right to cure as provided herein, and no such
        party

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<PAGE>   34

        shall be liable or responsible for any security deposits held by
        Landlord hereunder which have not been transferred or actually received
        by such party, and such party shall not be bound by any payment of rent
        or additional rent for more than two (2) months in advance.

C.      Amendment. If any lending institution with which Landlord has negotiated
        or may negotiate for financing for the Building or Project requires any
        changes to this Lease, Tenant shall promptly execute and deliver an
        amendment to this Lease prepared by Landlord and embodying such changes,
        so long as such changes do not materially and adversely affect Tenant's
        rights or materially increase Tenant's obligations hereunder. In the
        event that Tenant shall fail to execute and deliver such amendment
        within twenty (20) days after receipt thereof by Tenant, such failure
        shall constitute a default hereunder by Tenant and shall entitle
        Landlord to all remedies available to a landlord against a defaulting
        tenant pursuant to a written lease, including but not limited to those
        remedies set forth in Section 20.

SECTION 26.  ESTOPPEL CERTIFICATE/FINANCIAL STATEMENTS

A.      Estoppel Certificate. Tenant, at any time and from time to time upon not
        less than ten (10) days' prior written notice from Landlord, agrees to
        execute and deliver to Landlord a statement in the form provided by
        Landlord (1) certifying that this Lease is unmodified and in full force
        and effect, or, if modified, stating the nature of such modification and
        certifying that this Lease, as so modified, is in full force and effect
        and the date to which the rent and other charges are paid in advance, if
        any; (2) acknowledging that there are not, to Tenant's knowledge, any
        uncured defaults on the part of Landlord hereunder, or specifying such
        defaults if they are claimed evidencing the status of this Lease; (3)
        acknowledging the amount of the Security Deposit held by Landlord; and
        (4) containing such other information regarding this Lease or Tenant as
        Landlord reasonably requests. Tenant's failure to deliver an estoppel
        certificate within such time shall be conclusive upon Tenant that (i)
        this Lease is in full force and effect without modification except as
        may be represented by Landlord, (ii) to Tenant's knowledge there are no
        uncured defaults in Landlord's performance, (iii) no rent has been paid
        in advance except as set forth in this Lease, and (iv) such other
        information regarding this Lease and Tenant set forth therein by
        Landlord is true and complete.

B.      Furnishing of Financial Statements. Landlord has reviewed the financial
        statements, if any, requested of Tenant and has relied upon the truth
        and accuracy thereof with Tenant's knowledge and representations of the
        truth and accuracy of such statements and that said statements
        accurately and fairly depict the financial condition of Tenant. Said
        financial statements are an inducing factor and consideration for the
        entering into of this Lease by Landlord with this particular Tenant. At
        each of the times provided below, Tenant shall furnish Landlord with
        Tenant's most recent audited financial statements, including a balance
        sheet and income statement, or a document in which Tenant states that
        its books are not independently audited accompanied by Tenant's most
        recent unaudited financial statements, including a balance sheet and
        income statement, signed by Tenant's chief financial officer. Such
        information shall be provided at Landlord's request by Tenant on

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<PAGE>   35

        each and all of the following dates (or if Landlord's request is not
        made at least ten (10) days before such date, within ten (10) days of
        Landlord's request): July 1, 2000; January 1, 2001; July 1, 2001; July
        1, 2002; July 1, 2003 and July 1, 2004.

SECTION 27.  PARKING

A.      Landlord's Obligations. Landlord agrees to maintain or cause to be
        maintained an automobile parking area and to maintain and operate, or
        cause to be maintained and operated, said automobile parking area during
        the Term of this Lease for the benefit and non-exclusive use by Tenant
        and the customers, service suppliers, other invitees and employees of
        Tenant. Whenever the words "automobile parking area" or "parking area"
        are used in this Lease, it is intended that the same shall include,
        whether in a surface parking area or a parking structure, the automobile
        parking stalls, driveways, loading docks, truck areas, service drives,
        entrances and exits and sidewalks, landscaped areas, pedestrian
        passageways in conjunction therewith and other areas designated for
        parking. Landlord shall keep said automobile parking area in a neat,
        clean and orderly condition, lighted and landscaped, and shall repair
        any damage to the facilities thereof. Nothing contained herein shall be
        deemed to impose liability upon Landlord for personal injury or theft,
        for damage to any motor vehicle, or for loss of property from within any
        motor vehicle, which is suffered by Tenant or any of its employees,
        customers, service suppliers or other invitees in connection with their
        use of said automobile parking area. Landlord shall also have the right
        to establish such reasonable rules and regulations as may be deemed
        desirable, at Landlord's sole discretion, for the proper and efficient
        operation and maintenance of said automobile parking area. Such rules
        and regulations may include, without limitation, (i) restrictions on the
        hours during which the automobile parking area shall be open for use and
        (ii) the establishment on a non-discriminatory basis of charges for
        parking therein (on either a reserved or unreserved basis, at Landlord's
        sole discretion) by tenants of the Building as well as by their
        employees, customers and service suppliers.

B.      Tenant's Rights and Obligations. Tenant shall be entitled to use the
        number of vehicle parking spaces allocated to Tenant in Section 1(P)
        without paying any additional rent therefor. Tenant and its employees
        shall park their vehicles only in those portions of the Common Areas or
        other locations designated and provided for that purpose by Landlord.
        Tenant's parking shall not be reserved and shall be limited to vehicles
        no longer than standard size automobiles or pickup or sport utility
        vehicles. Tenant shall not cause large trucks or other large vehicles to
        be parked within the Project or on the adjacent public streets except in
        accordance with the Rules. Vehicles shall be parked only in striped
        parking spaces and not in driveways or other locations not specifically
        designated for parking. Handicapped spaces shall only be used by those
        legally permitted to use them. Tenant shall not use or permit the use of
        loading areas, any spaces which have been specifically assigned by
        Landlord to employees of Landlord or other tenants or for such other
        uses as visitor parking or which have been designated by governmental
        entities as being restricted to certain uses. Tenant shall not permit or
        allow any vehicles that belong to or are controlled by Tenant or
        Tenant's employees, suppliers, shippers, customers, or invitees to be
        loaded, unloaded, or parked in areas other than those designated by

                                       35
<PAGE>   36

        Landlord for such activities. The parking area shall not be used to
        provide car wash, oil changes, detailing, automotive repair or other
        services unless otherwise approved or furnished by Landlord. Tenant
        shall furnish Landlord with its and its employees' license plate numbers
        within fifteen (15) days after taking possession of the Premises, and
        Tenant shall thereafter notify Landlord of any changes within five (5)
        days after such change occurs. If Tenant or its employees fail to park
        their cars in designated parking areas, then Landlord may charge Tenant
        Fifteen Dollars ($15.00) per day for each day or partial day that any
        such car is parked in any area other than those designated. Overnight
        and weekend parking shall not be permitted unless Tenant has provided
        Landlord with advance written notice thereof. If Tenant permits or
        allows any of the prohibited activities described herein, Landlord shall
        have the right, without notice, in addition to any other rights it may
        have, to remove or tow away the vehicle. If Landlord shall tow any
        vehicles of Tenant or its employees, suppliers, shippers, customers, or
        invitees, Tenant shall pay to Landlord the costs and expenses incurred
        by Landlord in connection therewith, within ten (10) days after Landlord
        sends Tenant an invoice therefor.

C.      Control of Parking Area. Landlord shall at all times during the Term
        hereof have the sole and exclusive control of the automobile parking
        area, and may at any time during the Term hereof exclude and restrain
        any person from use or occupancy thereof; excepting, however, Tenant and
        employees, customers, service suppliers and other invitees of Tenant and
        of other tenants in the Building who make use of said area in accordance
        with any rules and regulations established by Landlord from time to time
        with respect thereto. The rights of Tenant and its employees, customers,
        service suppliers and invitees referred to in this Section 27 shall at
        all times be subject to (i) the rights of Landlord and other tenants in
        the Building and their customers, employees, licensees, invitees,
        successors and assigns to use the same in common with Tenant and its
        employees, customers, service suppliers and invitees, (ii) the
        availability of parking spaces in said automobile parking area, and
        (iii) Landlord's right to assign reserved parking spaces and to change
        the location of any assigned reserved parking spaces in such instances
        as shall be determined at Landlord's sole discretion. Notwithstanding
        Landlord's exclusive control and obligations to provide a parking area,
        Landlord is not responsible or liable for any damage to any automobiles
        or persons in the parking area.

SECTION 28.  SIGNS; NAME OF BUILDING

A.      Signs. Landlord shall enter Tenant's name in the Building directory
        located in the main lobby of the Building and in the elevator lobby of
        the floor on which the Premises is located. Tenant shall not have the
        right to place, construct, or maintain on or about the Premises,
        Building or Project, or in any interior portions of the Premises that
        may be visible from the exterior of the Building or Common Areas, any
        signs, names, insignia, trademark, advertising placard, descriptive
        material or any other similar item ("Sign") without Landlord's prior
        written consent, which consent may be withheld in Landlord's sole
        discretion; provided, however, any Signs are further subject to approval
        of any applicable governmental authority and/or compliance with
        applicable governmental requirements and covenants, conditions and
        restrictions applicable to the Building or the Project. In the event
        Landlord consents to Tenant placing a Sign on or about the

                                       36
<PAGE>   37

        Premises, Building or Project, any such Sign shall be subject to
        Landlord's approval of the color, size, style and location of such Sign,
        and shall conform to any current or future Sign criteria established by
        Landlord for the Building or Project. If Landlord enacts a Sign criteria
        or revises an existing Sign criteria, after Tenant has erected a Sign to
        which Landlord has granted its consent, if Landlord so elects, Tenant
        agrees, at Landlord's expense, subject to Landlord's prior approval of
        the cost thereof, to make the necessary changes to its Sign in order to
        conform the Sign to Landlord's Sign criteria, as enacted or revised,
        provided that such changes shall be limited to the color, size, style
        and location of Tenant's Sign and that Tenant shall not be required to
        change the content of its Sign. In the event Landlord consents to
        Tenant's placement of a Sign on the Building, Tenant shall, at its sole
        cost, remove such Sign from the Building at the end of the Term, restore
        the Building to the same condition as before the installation of the
        Sign, ordinary wear and tear excepted and remove any discoloration of
        the Building caused by the presence of such sign.

B.      Building Identification. Landlord reserves the right at any time it
        deems necessary or appropriate to (1) place Signs at any location on the
        Building and Project as it deems necessary and (2) change the name,
        address or designation of the Building and Project.

SECTION 29.  QUIET ENJOYMENT

Upon payment by Tenant of the rents herein provided, and upon the observance and
performance of all the covenants, terms and conditions on Tenant's part to be
observed and performed, Tenant shall peaceably and quietly hold and enjoy the
Premises for the Term without hindrance or interruption by Landlord or any other
person or persons lawfully or equitably claiming by, through or under Landlord,
subject, nevertheless, to the terms and conditions of this Lease, and any
mortgage and/or deed of trust to which this Lease is subordinate.

SECTION 30.  ADDITIONAL FACILITIES AVAILABLE TO TENANT

A.      Conference Rooms. Tenant shall have the right to reserve the use of (1)
        the Bay Conference Room located on the second floor of the Building
        without paying any additional rent therefor, (2) the Pacific Conference
        Room located on the second floor of the Building free of charge once
        each calendar quarter and at other times at a fee of $100.00 per day or
        partial day (plus a set-up fee based on Landlord's standard hourly rates
        to be determined from time to time) and (3) any other conference room
        located on the second floor of the Building at Landlord's standard
        hourly rates to be determined from time to time. Tenant shall pay
        Landlord for any audio/visual, video conferencing or other equipment
        available in any such conference room a fee to be determined by Landlord
        from time to time; provided however, Tenant acknowledges that Landlord
        does not guarantee that any such equipment will be available or in
        working order at any time. Landlord shall notify Tenant of any
        discretionary fees described above at such time as Tenant requests use
        of any such conference room or equipment. Such use of the conference
        rooms on the second floor of the Building shall be on a non-exclusive
        basis during normal business hours (as designated by Landlord from time
        to time) and shall in all other respects be subject to the same
        obligations set forth in this Lease regarding

                                       37
<PAGE>   38

        Tenant's use of the Common Areas. If Tenant desires to reserve a
        conference room, Tenant shall notify Landlord on Landlord's standard
        reservation form or in another manner acceptable to Landlord at least
        ten (10) business days before the desired date of use. Landlord shall
        notify Tenant within five (5) business days after receipt of Tenant's
        request whether the requested conference room is available for Tenant's
        use in accordance with the rules of Landlord from time to time in
        effect, which may include rules to ensure that Tenant's use of
        conference facilities is not disproportionate to the Rental Area of the
        Premises. If not, Tenant may request the use of another conference room,
        however Tenant agrees that Landlord shall have no obligation to respond
        to such request within less than five (5) business days after receipt of
        Tenant's request. Tenant hereby waives any claims it may have against
        Landlord due to the unavailablility of a conference room at any time,
        regardless whether Landlord has notified Tenant that a particular
        conference room is available for Tenant's use, except for claims due to
        Landlord's willful misconduct. Landlord shall not be required to make
        conference facilities available to Tenant if Landlord elects, in its
        discretion, to cease to maintain and operate shared conference
        facilities in the Building.

B.      Fitness Center. Tenant shall be entitled to use the number of Fitness
        Center Memberships allocated to Tenant in Section 1(Q) without paying
        any additional rent therefor. Such use of the Fitness Center at the
        Building shall be on a non-exclusive basis during the standard hours of
        operation of the Fitness Center (as designated by Landlord from time to
        time) and shall in all other respects be subject to the same obligations
        set forth in this Lease regarding Tenant's use of the Common Areas.
        Tenant shall have the right to purchase additional Fitness Center
        Memberships at $50 per Membership per month. Such amounts shall be
        payable to Landlord as additional rent and shall be subject to increase
        on written notice from Landlord. Memberships may only be used by
        employees of Tenant and not spouses or friends of Tenant's employees or
        customers, consultants, vendors or agents of Tenant. Tenant shall assign
        Memberships to specific employees and shall arrange for the security
        badges of such employees to allow them access to the Fitness Center.
        Tenant shall notify Landlord of the names of such employees at such time
        or times as Tenant allocates Memberships to its employees. Tenant shall
        ensure that the assigned employees do not allow other individuals to use
        the assigned Memberships. Memberships shall be granted by Landlord only
        to Tenant; Landlord shall not have any obligation to grant Memberships
        directly to employees of Tenant. Prior to using the Fitness Center for
        the first time, each employee of Tenant shall sign a written waiver on
        Landlord's standard form releasing Landlord from all liability for
        personal injury or theft or for loss of property from within the Fitness
        Center. Nothing contained herein shall be deemed to impose, and Tenant
        hereby waives on behalf of itself and all users of the Fitness Center
        Memberships (authorized or unauthorized, paid or unpaid), liability
        against Landlord for personal injury or theft or for loss of property
        from within the Fitness Center, which is suffered by Tenant or any of
        its employees or other parties. Tenant further agrees to indemnify,
        defend and hold Landlord and its officers, directors, partners, agents
        and employees (collectively, "Indemnitees") entirely harmless from and
        against all liabilities, losses, demands, actions, expenses or claims,
        including reasonable attorneys' fees and court costs, for injury to or
        death of any person or for damages to any property or for violation of
        law arising out of or in any manner connected with the use, occupancy or

                                       38
<PAGE>   39

        enjoyment of the Fitness Center by Tenant or and users of the Fitness
        Center Memberships (authorized or unauthorized, paid or unpaid).
        Landlord shall not be required to make the Fitness Center available as
        provided above if Landlord elects, in its discretion, to discontinue
        operation of the Fitness Center.

C.      Fees. All amounts payable to Landlord pursuant to this Section 30 shall
        be deemed additional rent. All fees described herein shall be payable by
        Tenant regardless whether Tenant or its employees use the conference
        room(s) that have been reserved or the paid Fitness Center Memberships,
        as applicable.

SECTION 31.  NOTICES

Any notice, demand, approval, consent, bill, statement or other communication
("Notice") required or desired to be given under this Lease shall be in writing,
shall be directed to Tenant at Tenant's Address for Notice or to Landlord at
Landlord's Address for Notice and shall be personally served or given by
pre-paid certified U.S. Mail or "overnight" delivery service. In the case of
personal delivery, any Notice shall be deemed to have been given when delivered;
in the case of service by certified mail, any Notice shall be deemed delivered
of the date of receipt, refusal or non-delivery indicated on the return receipt;
and in the case of overnight delivery service, any Notice shall be deemed given
when delivered as evidenced by a receipt. If more than one Tenant is named under
this Lease, service of any Notice upon any one of said Tenants shall be deemed
as service upon all of such Tenants. The parties hereto and their respective
heirs, successors, legal representatives, and assigns may from time to time
change their respective addresses for Notice by giving at least fifteen (15)
days' written notice to the other party, delivered in compliance with this
Section.

SECTION 32.  NOTICE AND CURE TO LANDLORD AND MORTGAGEE

On any act or omission by Landlord which might give, or which Tenant claims or
intends to claim gives, Tenant the right to damages from Landlord or the right
to terminate this Lease by reason of a constructive or actual eviction from all
or part of the Premises, or otherwise, Tenant shall not sue for damages or
attempt to terminate this Lease until it has given written notice of the act or
omission to Landlord and to the holder(s) of the indebtedness or other
obligations secured by any mortgage or deed of trust affecting the Premises as
identified by Landlord, and a reasonable period of time for remedying the act or
omission has elapsed following the giving of the notice, during which time
Landlord and the lienholder(s), or either of them, their agents or employees,
may enter upon the Premises and do therein whatever is necessary to remedy the
act or omission. During the period after the giving of notice and during the
remedying of the act or omission, the Monthly Rental payable by Tenant shall not
be abated and apportioned except to the extent that the Premises are
untenantable.

SECTION 33.  GENERAL

A.      Paragraph Headings. The paragraph headings used in this Lease are for
        the purposes of convenience only. They shall not be construed to limit
        or to extend the meaning of any part of this Lease.

                                       39
<PAGE>   40

B.      Incorporation of Prior Agreements; Amendments. This Lease contains all
        agreements of Landlord and Tenant with respect to any matter mentioned,
        or dealt with, herein. No prior agreement or understanding pertaining to
        any such matter shall be binding upon Landlord. Any amendments to or
        modifications of this Lease shall be in writing, signed by the parties
        hereto, and neither Landlord nor Tenant shall be liable for any oral or
        implied agreements. LANDLORD HAS NOT MADE, AND TENANT MAY NOT RELY ON,
        ANY REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, WITH REGARD TO
        THE PROJECT, THE BUILDING, THE PREMISES OR OTHERWISE OR THE SUITABILITY
        THEREOF FOR TENANT'S BUSINESS, EXCEPT AS EXPRESSLY STATED IN THIS LEASE.
        IN PARTICULAR, LANDLORD HAS NOT AUTHORIZED ANY AGENT OR BROKER TO MAKE A
        REPRESENTATION OR WARRANTY INCONSISTENT WITH THE TERMS OF THIS LEASE AND
        TENANT MAY NOT RELY ON ANY SUCH INCONSISTENT REPRESENTATION OR WARRANTY.

C.      Waiver. Any waiver by Landlord of any breach of any term, covenant, or
        condition contained in this Lease shall not be deemed to be a waiver of
        such term, covenant, or condition or of any subsequent breach of the
        same or of any other term, covenant, or condition contained in this
        Lease. Landlord's consent to, or approval of, any act shall not be
        deemed to render unnecessary the obtaining of Landlord's consent to, or
        approval of, any subsequent act by Tenant. The acceptance of rent or
        other sums payable hereunder by Landlord shall not be a waiver of any
        preceding breach by Tenant of any provision hereof, other than failure
        of Tenant to pay the particular rent or other sum so accepted,
        regardless of Landlord's knowledge of such preceding breach at the time
        of acceptance of such rent, or sum equivalent to rent.

D.      Short Form or Memorandum of Lease. Tenant agrees, at the request of
        Landlord, to execute, deliver, and acknowledge a short form or
        memorandum of this Lease satisfactory to counsel for Landlord, and
        Landlord may, in its sole discretion, record such short form or
        memorandum in the county where the Premises are located. Tenant shall
        not record this Lease, or a short form or memorandum of this Lease,
        without Landlord's prior written consent.

E.      Time of Essence. Time is of the essence in the performance of each
        provision of this Lease.

F.      Examination of Lease. Submission of this instrument for examination or
        signature by Tenant does not constitute a reservation of or option for
        lease, and it is not effective as a lease or otherwise until execution
        by and delivery to both Landlord and Tenant.

G.      Severability. If any term or provision of this Lease or the application
        thereof to any person or circumstance shall, to any extent, be invalid
        or unenforceable, the remainder of this Lease, or the application of
        such term or provision to persons or circumstances other than those as
        to which it is held invalid or unenforceable, shall not be affected
        thereby, and each term and provision of this Lease shall be valid and be
        enforced to the fullest

                                       40
<PAGE>   41

        extent permitted by law.

H.      Surrender of Lease Not Merger. Neither the voluntary or other surrender
        of this Lease by Tenant nor the mutual cancellation thereof shall cause
        a merger of the titles of Landlord and Tenant, but such surrender or
        cancellation shall, at the option of Landlord, either terminate all or
        any existing subleases or operate as an assignment to Landlord of any
        such subleases. The delivery of keys to the Premises to Landlord or its
        agent shall not, of itself, constitute a surrender and termination of
        this Lease.

I.      Authority. If Tenant is a corporation, each individual executing this
        Lease on behalf of Tenant represents and warrants (1) that he or she is
        duly authorized to execute and deliver this Lease on behalf of Tenant in
        accordance with a duly adopted resolution of the Board of Directors of
        Tenant in accordance with the By-laws of Tenant and (2) that this Lease
        is binding upon and enforceable by Landlord against Tenant in accordance
        with its terms. If Tenant is a corporation, Tenant shall, concurrently
        with delivery of an executed Lease to Landlord, deliver to Landlord a
        certified copy of a resolution of its Board of Directors authorizing or
        ratifying the execution of this Lease. If Tenant is a partnership, joint
        venture, or other unincorporated association, each individual executing
        this Lease on behalf of Tenant warrants that this Lease is binding on
        Tenant and that each and both of the persons signing on behalf of Tenant
        were authorized to do so.

J.      Governing Law. This Lease and the rights and obligations of the parties
        hereto shall be interpreted, construed and enforced in accordance with
        the local laws of the State in which the Building is located.

K.      Force Majeure. If the performance by Landlord of any provision of this
        Lease is delayed or prevented by any act of God, strike, lockout,
        shortage of material or labor, restriction by any governmental
        authority, civil riot, flood, and any other cause not within the control
        of Landlord, then the period for Landlord's performance of the provision
        shall be automatically extended for the same time Landlord is so delayed
        or hindered.

L.      Use of Language. Words of gender used in this Lease include any other
        gender, and words in the singular include the plural, unless the context
        otherwise requires.

M.      Successors. The terms, conditions and covenants contained in the Lease
        inure to the benefit of and are binding on, the parties hereto and their
        respective successors in interest, assigns and legal representatives,
        except as otherwise herein expressly provided. All rights, privileges,
        immunities and duties of Landlord under this Lease, including without
        limitation, notices required or permitted to be delivered by Landlord to
        Tenant hereunder, may, at Landlord's option, be exercised or performed
        by Landlord's agent or attorney.

N.      No Reduction of Rental. Except as otherwise expressly and unequivocally
        provided in this Lease, Tenant shall not for any reason withhold or
        reduce the amounts payable by Tenant under this Lease, it being
        understood that the obligations of Landlord hereunder are independent of
        Tenant's obligations. If Landlord is required by governmental authority
        to reduce energy consumption or impose a parking or similar charge with

                                       41
<PAGE>   42

        respect to the Premises, Building or Project, to restrict the hours of
        operation of, limit access to, or reduce parking spaces available at the
        Building, or take other limiting actions, then Tenant is not entitled to
        abatement or reduction of rent or to terminate this Lease.

O.      No Partnership. Notwithstanding anything else to the contrary, Landlord
        is not, and under no circumstances shall it be considered to be, a
        partner of Tenant, or engaged in a joint venture with Tenant.

P.      Exhibits. All exhibits attached hereto are made a part hereof and are
        incorporated herein by this reference. A complete list of said exhibits
        is set forth in the Table of Contents.

Q.      Indemnities. The obligations of the indemnifying party under each and
        every indemnification and hold harmless provision contained in this
        Lease shall survive the expiration or earlier termination of this Lease
        to and until the last to occur of (1) the last date permitted by law for
        the bringing of any claim or action with respect to which
        indemnification may be claimed by the indemnified party against the
        indemnifying party under such provision or (2) the date on which any
        claim or action for which indemnification may be claimed under such
        provision is fully and finally resolved and, if applicable, any
        compromise thereof or judgment or award thereon is paid in full by the
        indemnifying party and the indemnified party is reimbursed by the
        indemnifying party for any amounts paid by the indemnified party in
        compromise thereof or upon a judgment or award thereon and in defense of
        such action or claim, including reasonable attorneys' fees incurred.
        Payment shall not be a condition precedent to recovery upon any
        indemnification provision contained herein.

R.      Nondisclosure of Lease Terms. Landlord and Tenant agree that the terms
        of this Lease are confidential and constitute proprietary information of
        the parties hereto. Disclosure of the terms hereof could adversely
        affect the ability of Landlord to negotiate with other tenants of the
        Building. Each of the parties hereto agrees that such party, and its
        respective partners, officers, directors, employees, agents, brokers and
        attorneys, shall not disclose the terms and conditions of this Lease to
        any other person without the prior written consent of the other party
        hereto except pursuant to an order of a court of competent jurisdiction.
        Provided, however, that Landlord may disclose the terms hereof to any
        prospective purchaser of the Building or any lender now or hereafter
        having a lien on Landlord's interest in the Building or the Project, or
        any portion thereof, and either party may disclose the terms hereof to
        its respective independent accountants who review its respective
        financial statements or prepare its respective tax returns, to any
        prospective transferee of all or any portions of their respective
        interests hereunder (including a prospective sublessee or assignee of
        Tenant), to its respective real estate brokers, to any lender or
        prospective lender to such party, to any governmental entity, agency or
        person to whom disclosure is required by applicable law, regulation or
        duty of diligent inquiry and in connection with any action brought to
        enforce the terms of this Lease, on account of the breach or alleged
        breach hereof or to seek a judicial determination of the rights and
        obligations of the parties hereunder.

                                       42
<PAGE>   43

S.      No Light, Air or View Easement. Any diminution or shutting of light, air
        or view by any structure which may be erected on lands adjacent to the
        Building shall in no way affect this Lease or impose any liability on
        Landlord.

T.      Brokers. Tenant warrants and represents that it has not dealt with any
        real estate broker or agent in connection with this Lease or its
        negotiation except the Brokers identified in Section 1(M). Tenant shall
        indemnify and hold Landlord harmless from any cost, expense or liability
        (including costs of suit and reasonable attorneys' fees) for any
        compensation, commission or fees claimed by any other real estate broker
        or agent in connection with this Lease or its negotiation by reason of
        any act of Tenant.

U.      Counterparts. This Lease may be executed in several duplicate
        counterparts, each of which shall be deemed an original of this Lease
        for all purposes.

SECTION 34. DEFAULT UNDER 6TH FLOOR LEASE

Tenant agrees that any default by Tenant under the Lease dated May 18, 1999, as
amended from time to time, between Landlord and Tenant governing Tenant's
occupancy of the 6th floor of the Building (the "6th Floor Lease") will be
deemed a default under this Lease, entitling Landlord to pursue all of its
rights and remedies under this Lease. Tenant further agrees that any default by
Tenant under this Lease will be deemed a default under the 6th Floor Lease,
entitling Landlord to pursue all of its rights and remedies under the 6th Floor
Lease.

IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the
foregoing provisions, any typed addenda appended hereto and all Exhibits
appended hereto, on the dates indicated below, the later of which shall be
deemed the date of execution of this Lease.

"TENANT"                                    "LANDLORD"

COLO.COM, INC.,                             HITACHI AMERICA, LTD.,
a California corporation                    a New York corporation

By:  /s/ Richard J. Palomba                 By:  /s/ unreadable
   -----------------------------               ---------------------------------

Name: Richard J. Palomba                    Name:

Title: VP Real Estate                       Title:

Dated:   December 23, 1999                  Dated:                        , 1999
      ---------------                             ------------------------

                                       43
<PAGE>   44
                        SECOND AMENDMENT TO OFFICE LEASE

THIS SECOND AMENDMENT TO OFFICE LEASE (this "Amendment"), made as of the 23rd
day of December, 1999, by and between HITACHI AMERICA, LTD., a New York
corporation ("Landlord") and COLO.COM, a California corporation formerly known
as Colomotion, Inc. ("Tenant").

WHEREAS, Landlord and Tenant entered into that certain Office Lease (the
"Lease") captioned "OFFICE LEASE," dated as of May 18, 1999, as amended on
August 31, 1999, providing for, among other matters, the lease of certain space
by Landlord to Tenant known as Suite 601 in that certain building located at
2000 Sierra Point Parkway, Brisbane, CA (the "Premises"); and

WHEREAS, simultaneously herewith, Landlord and Tenant are entering into a new
lease for the 10th floor of the Building (the "New Lease") and desire to amend
this Lease (a) to increase the rent for the months of January 2000 trough June
2000 and (2) in certain respects related to the New Lease.

NOW, THEREFORE, in consideration of the Premises and the respective
undertakings of the parties hereinafter set forth, it is hereby agreed that the
Lease shall be amended as follows:

1.   Defined Terms. Capitalized terms used herein and not defined herein shall
     have the meaning for the same set forth in the Lease.

2.   Monthly Rent. Section 1(I) is hereby deleted in its entirety and replaced
     by the following:

     I.   "Monthly Rental" for the sixth (6th) floor mans the following:

                    PERIOD                        MONTHLY RENTAL
                    ------                        --------------

          Lease Commencement Date - 08/31/99      $18,720.00
          09/01/1999 - 12/31/1999                 $27,577.96
          01/01/2000 - 06/30/2001                 $59,019.84
          07/01/2001 - 06/30/2002                 $61,387.92
          07/01/2002 - 06/30/2003                 $63,938.16
          07/01/2003 - 06/30/2004                 $66,488.40

3.   Phased Occupancy. The last two sentences of Section 2(A) of the Lease are
     hereby deleted in their entirety.

4.   Default Under New Lease. Any default by Tenant under the New Lease will be
     deemed a default under this Lease, entitling Landlord to pursue all of its
     rights and remedies under this Lease. Any default by Tenant under this
     Lease will be deemed a default under the New Lease, entitling Landlord to
     pursue all of its rights and remedies under the New Lease.

<PAGE>   45
5.   Lease in Effect. This Amendment shall be effective as of the date set forth
     above. Except as amended by this Amendment, the Lease shall remain in full
     force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and
year first above written.

HITACHI AMERICA, LTD.                   COLO.COM

By: /s/ [Signature Illegible]           By: /s/ DAVID STANLY
   ----------------------------            -----------------------------

Name: [Name Illegible]                  Name: David Stanly
     --------------------------              ---------------------------

Its: President                          Its: General Counsel
     --------------------------              ---------------------------

                                       2<PAGE>   1
                                                                    EXHIBIT 10.4

                 o  1400 65th STREET, EMERYVILLE, CALIFORNIA o

                         o OFFICE BUILDING NET LEASE  o

                            BASIC LEASE INFORMATION

DATE OF LEASE:           July 16, 1999

LANDLORD:                BEP-EMERYVILLE, L.P.

LANDLORD'S ADDRESS:      c/o Ellis Partners, Inc.
                         433 California Street, Suite 610
                         San Francisco, California 94104
                         Attention: James F. Ellis

TENANT:                  COLO.COM, INC.

TENANT'S ADDRESS:        1400 65th Street
                         Emeryville, CA 94608
                         Attn:  Richard Palomba, Vice President, Real Estate

BUILDING:                1400 65th Street, Emeryville, California

LEASED PREMISES:         Approximately 14,657 rentable square feet on the
                         ground floor on the north office area of the Building.

RENTABLE AREA:           Approximately 14,657 rentable square feet

TERM
COMMENCEMENT DATE:       The earlier of (i) November 15, 1999, or (ii) the date
                         the Tenant Improvements are Substantially Complete

TERM
EXPIRATION DATE:         The last day of the one hundred twentieth (120th)
                         month after the Term Commencement Date

OPTION TO EXTEND:        Number of Extension Periods: Two(2)
                         Years per Extension Period: Five(5)
<PAGE>   2
BASE RENT (NNN):         For months 1 - 12: $1.75 per rentable square foot of
                         Rentable Area per month. Beginning in the second (2nd)
                         year of the Lease, Base Rent shall increase two and
                         one-half percent (2 1/2%) annually.

TENANT'S PROPORTIONATE
SHARE:                   approximately 9.78%

PARKING SPACES:          ten (10) spaces

SECURITY DEPOSIT:        $375,000.00

GUARANTOR:               None

LANDLORD'S BROKER:       CB Richard Ellis

TENANT'S BROKER:         None

<PAGE>   3
The foregoing BASIC LEASE INFORMATION is incorporated herein and made a part
of the LEASE to which it is attached. If there is any conflict between the
BASIC LEASE INFORMATION and the LEASE, the BASIC LEASE INFORMATION shall
control.

                              "LANDLORD":

                              BEP-EMERYVILLE, L.P.,
                              a Delaware limited partnership

                              By:  EPI Investors, 103 LLC,
                                   a California limited liability company
                                   Its: General Partner

                              By:  Ellis Partners, Inc.,
                                   a California corporation
                                   Its: Managing Member

                              By: /s/ HAROLD A. ELLIS, JR.
                                 ------------------------------------
                              Typed Name: Harold A. Ellis, Jr.
                                         ----------------------------
                              Title:  President
                                    ----------------------------------

                              "TENANT"

                              COLO.COM, INC., a California corporation

                              By: /s/ RICHARD J. PALOMBA
                                 ------------------------------------
                              Typed Name: Richard J. Palomba
                                         ----------------------------
                              Title:  VP Real Estate
                                    ----------------------------------

<PAGE>   4
                           OFFICE BUILDING NET LEASE

     THIS LEASE, made as of the date specified in the BASIC LEASE INFORMATION
sheet, by and between the landlord specified in the BASIC LEASE INFORMATION
sheet ("Landlord") and the tenant specified in the BASIC LEASE INFORMATION
sheet ("Tenant").

                                   ARTICLE 1.

                                  DEFINITIONS

     1.01.  DEFINITIONS: Terms used herein shall have the following meanings:

     1.02.  "ADDITIONAL RENT" shall mean all monetary obligations of Tenant
under this Lease other than the obligation for payment of Net Rent.

     1.03.  "BASE RENT" shall mean the sums due from time to time as rental for
the Leased Premises.

     1.04.  "BASIC OPERATING COST" shall have the meaning given in Section 3.05.

     1.05.  "BUILDING" shall mean the building and other improvements
associated therewith identified on the Basic Lease Information sheet.

     1.06.  "BUILDING STANDARD IMPROVEMENTS" shall mean the standard materials
ordinarily used by Landlord in the improvement of the Leased Premises.

     1.07.  "COMMON AREAS" shall mean (a) the areas on individual floors of the
Building devoted to non-exclusive uses such as common corridors, lobbies, fire
vestibules, elevator foyers, stairways, elevators, electric and telephone
closets, restrooms, mechanical closets, janitor closets and other similar
facilities for the benefit of all tenants (and invitees) on the particular
floor and other floors and (b) the parking areas in the Project, sidewalks and
landscaped areas in the Project and other areas of the Project available for
the use and benefit of all tenants (and invitees).

     1.08.  "COMPUTATION YEAR" shall mean a fiscal year consisting of the
calendar year commencing January 1st of each year during the Term, commencing
in 1999 and continuing through the Term with a short or stub fiscal year in (i)
1999 for the period between the Term Commencement Date and December 31 of such
year and (ii) any partial fiscal year in which the Lease expires or is
terminated for the period between January 1 of such year and the date of lease
termination or expiration.

     1.09.  "LANDLORD'S BROKER" shall mean the individual or corporate broker
identified on the Basic Lease Information sheet as the broker for Landlord.

     1.10.  "LANDLORD'S CONTRIBUTION" shall have the meaning given in EXHIBIT B.

     1.11.  "LANDLORD'S IMPROVEMENTS" shall mean the improvements to the Leased
Premises to be installed at Landlord's expense and paid for with Landlord's
Contribution pursuant to EXHIBIT B attached hereto.

                                       1

<PAGE>   5
     1.12. "LEASED PREMISES" shall mean the floor area more particularly shown
on the floor plan attached hereto as EXHIBIT A, containing the Rentable Area (as
such term is defined in Section 1.18 below) specified on the Basic Lease
Information sheet.

     1.13. "NET RENT" shall mean the total of Base Rent and Tenant's
Proportionate Share of Basic Operating Cost.

     1.14. "PERMITTED USE" shall mean general office and administrative services
for a telecommunications related business, and any other related lawful use;
provided, however, that Permitted Use shall not include (a) offices or agencies
of any foreign government or political subdivision thereof; (b) offices of any
agency or bureau of any state, county or city government; (c) offices of any
health care professionals; (d) schools or other training facilities which are
not ancillary to corporate, executive or professional office use; or (e) retail
or restaurant uses.

     1.15. "PROJECT" shall mean the Building situated at 1400 65th Street,
Emeryville, California, the parking areas affiliated therewith, and the real
property on which the Building and the parking areas are located.

     1.16. "RENT" shall mean Net Rent plus Additional Rent.

     1.17. "RENTABLE AREA" shall mean the area or areas of space in the Building
determined in accordance with the Standard Method for Measuring Floor Area in
Office Buildings as most recently published by the Building Owners and Managers
Association International and including a proportionate allocation of the square
footage of the Building's elevator and mechanical equipment areas, telephone and
electrical rooms, loading dock, janitorial service areas, public lobbies and
corridors, which method of measurement shall be subject to reasonable revision
by Landlord from time to time. The Rentable Area of the Leased Premises has been
calculated on the basis of the foregoing definition and is agreed for all
purposes of this Lease to be the amount stated on the Basic Lease Information
sheet, subject to remeasurement by Landlord only in the event of a change in
method of measurement for the Building or the Project as hereinabove provided.

     1.18. "SECURITY DEPOSIT" shall mean the amount specified on the Basic Lease
Information sheet to be paid by Tenant to Landlord immediately prior to
occupancy and held and applied pursuant to Section 5.14.

     1.19. "SUBSTANTIAL COMPLETION" shall mean (and the Leased Premises shall be
deemed "Substantially Complete") when (i) installation of Tenant Improvements
has occurred; (ii) Tenant has direct access from the street to the Leased
Premises; (iii) basic services (as described in Section 4.01) are available to
the Leased Premises; (iv) an architect has issued a certificate of Substantial
Completion with respect to the Leased Premises; and (v) a certificate of
occupancy or its equivalent or a temporary occupancy permit for the Leased
Premises has been issued by appropriate governmental authorities. Substantial
Completion shall be deemed to have occurred notwithstanding a requirement to
complete "punchlist" items or similar corrective work.

     1.20. "TENANT EXTRA IMPROVEMENTS" shall mean the improvements to the Leased
Premises approved by Landlord and to be installed at Tenant's expense pursuant
to EXHIBIT B, if any.

     1.21. "TENANT IMPROVEMENTS" shall mean the Landlord's Improvements and the
Tenant Extra Improvements (if any) installed or to be installed for Tenant
pursuant to EXHIBIT B.

                                       2
<PAGE>   6
     1.22. "TENANT'S BROKER" shall mean the individual or corporate broker
identified on the Basic Lease Information sheet as the broker for Tenant.

     1.23. "TENANT'S PHYSICAL POSSESSION DATE" shall mean October 1, 1999.

     1.24. "TENANT'S PROPORTIONATE SHARE" is specified on the Basic Lease
Information sheet and is based on the percentage which the Rentable Area of the
Leased Premises bears to the total Rentable Area of the Project, subject to
adjustment in the event of the remeasurement of the Building or the Project as
permitted under Section 1.17 above.

     1.25. "TERM" shall mean the period commencing with the Term Commencement
Date and ending at midnight on the Term Expiration Date.

     1.26. "TERM COMMENCEMENT DATE" shall mean the date specified on the Basic
Lease Information sheet.

     1.27. "TERM EXPIRATION DATE" shall mean the date specified on the Basic
Lease Information sheet, unless sooner terminated pursuant to the terms of this
Lease or unless extended pursuant to the provisions of Section 8.01.

     1.28. OTHER TERMS. Other terms used in this Lease and on the Basic Lease
Information sheet shall have the meanings given to them herein and thereon.

                                   ARTICLE 2.
                                LEASED PREMISES

     2.01. LEASE. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Leased Premises upon all of the terms, covenants and conditions set
forth in this Lease.

     2.02. ACCEPTANCE OF LEASED PREMISES. Tenant acknowledges that: (a) it has
been advised by Landlord, Landlord's Broker and Tenant's Broker, if any, to
satisfy itself with respect to the condition of the Leased Premises (including,
without limitation, the HVAC, electrical, plumbing and other mechanical
installations, fire sprinkler systems, security, environmental aspects, and
compliance with applicable laws, ordinances, rules and regulations) and the
present and future suitability of the Leased Premises for Tenant's intended use;
(b) Tenant has made such inspection and investigation as it deems necessary with
reference to such matters and assumes all responsibility therefor as the same
relate to Tenant's occupancy of the Leased Premises and the term of this Lease;
and (c) neither Landlord nor Landlord's Broker nor any of Landlord's agents has
made any oral or written representations or warranties with respect to the
condition, suitability or fitness of the Leased Premises other than as may be
specifically set forth in this Lease. Tenant accepts the Leased Premises in its
AS IS condition existing on the date Tenant executes this Lease, subject to all
matters of record and applicable laws, ordinances, rules and regulations. Tenant
acknowledges that neither Landlord nor Landlord's Broker nor any of Landlord's
agents has agreed to undertake any alterations or additions or to perform any
maintenance or repair of the Leased Premises except for the routine maintenance
and janitorial work specified herein and except as may be expressly set forth in
EXHIBIT B.

     2.03. RIGHT TO RELOCATE LEASED PREMISES. [Intentionally Deleted].

     2.04. RESERVATION OF RIGHTS. Landlord reserves the right from time to time,
so long as reasonable access and basic services to the Leased Premises remain
available, to install, use, maintain, repair, relocate

                                       3
<PAGE>   7
and/or replace pipes, conduits, wires and equipment within and around the
Building and to do and perform such other acts and make such other changes in,
to or with respect to the Building or the Project (including without limitation
with respect to the driveways, parking areas, walkways and entrances to the
Project) as Landlord may, in the exercise of sound business judgment, deem to
be appropriate. In connection therewith, Landlord shall have the right to close
temporarily any of the Common Areas so long as reasonable access to the Leased
Premises remains available. The Landlord shall provide Tenant with not less
than twenty-four (24) hours prior notice (except in cases of emergency) and
shall endeavor to conduct its activities in a manner which is least disruptive
to Tenant's use.

  2.05    ASSOCIATED RIGHTS GRANTED TO TENANT.

          (a)  Tenant shall have the right (collectively the "Associated
Rights") to install at Tenant's cost the following equipment in the areas (the
"Associated Rights Area") located within the Project as designated by Landlord,
in the exercise of its discretion, as provided below:

               (1)  Generator and Fuel Tank. Subject to the provisions of
Article VI, Tenant shall have the right to install, operate, and maintain a
standby power generator (the "Generator") together with associated cabling and
equipment in the area (the "Generator Area") and a 2,000 gallon diesel fuel
tank (the "Fuel Tank") in the area (the "Fuel Tank Area") approved by Landlord
in its reasonable discretion (the Generator Area and the Fuel Tank Area will
most likely be located on the western end of the Building), together with a
jack suitable to connect the Generator to Tenant's telecommunications
facilities.

               (2)  Rooftop Antenna Areas and Roof Access. Subject to
Landlord's reasonable approval, Tenant shall have the right to install, operate
and maintain one antenna and associated supporting and mounting brackets and
associated cabling equipment and facilities one the roof of the Building,
provided that Landlord has, in its reasonable discretion, approved the design
and weight of such antenna and equipment. Tenant shall also have access to the
roof through a roof access, all in the locations (the "Rooftop Antenna Area"
and "Roof Access") approved by Landlord in its reasonable discretion.

          (b)  Tenant shall, at its cost, immediately repair and restore to its
prior condition any damage to the Leased Premises, the Building or the Project
caused by the installation, operation or maintenance of any equipment, fixtures
and cables pursuant to this Section 2.05. If Tenant fails to repair and restore
damage caused to the Leased Premises, the Building or the Project within a
reasonable time to effect such repair or restoration, Landlord shall have the
right to repair and restore such damage and receive reimbursement from Tenant
of all costs incurred by Landlord. Landlord reserves the right to relocate any
equipment, fixtures or cables installed pursuant to Tenant's Associated Rights
within the Project at any time during the Term at Landlord's cost.

          (c)  No installation of equipment, fixtures or cables pursuant to
Tenant's Associated Rights, alterations, additions, or improvements shall made
by Tenant without the prior written consent of Landlord. Tenant shall obtain
all necessary governmental permits required for any installation, alteration,
addition, or improvement approved by Landlord and shall comply with all
applicable governmental law, regulations, ordinances, and codes. Any
installation, alteration, addition, or improvement not including removable
equipment (which removable equipment shall include the Generator and the Fuel
Tank) made by Tenant, pursuant to subsections 2.05(a)(1) above, after consent
has been given and any fixtures installed as part of the construction, shall at
Landlord's option become the property of Landlord on the Term Expiration Date
or other earlier termination of this Lease; provided, however, that Landlord
shall have the right to require Tenant to remove the equipment, fixtures and
cables at Tenant's cost pursuant to Section 5.15(b) of this Lease at Tenant's
cost. If Tenant is required by Landlord to remove the fixtures on termination
of this Lease, Tenant

                                       4
<PAGE>   8
shall repair and restore any damages to the Leased Premises, the Building or
the Project caused by such removal.

                                   ARTICLE 3.
                               TERM, USE AND RENT

     3.01.     TERM. Except as otherwise provided in this Lease, the Term shall
commence on the Term Commencement Date, and shall continue in full force for the
Term. Notwithstanding any other provision of this Lease to the contrary, if
possession of the Leased Premises is not delivered to Tenant within ninety (90)
days after Tenant's Physical Possession Date, excluding from such tally each
day of delay caused by factors entirely beyond the reasonable control of
Landlord, then Tenant may, at its option, by notice in writing to Landlord
within ten (10) days thereafter, cancel this Lease in which event neither
Landlord nor Tenant shall have any further obligations hereunder. If written
notice of cancellation is not received by Landlord within such ten (10)-day
period, Tenant's right to cancel this Lease shall terminate and be of no
further force or effect. When the Term Commencement Date and the Term
Expiration Date have been ascertained, the parties shall promptly execute a
Confirmation of Term of Lease substantially in the form attached as EXHIBIT C.
Tenant shall be given physical possession of the Leased Premises on the
Tenant's Physical Possession Date in order for Tenant to install the Tenant
Improvements, furniture, equipment, cabling and fixtures, and to otherwise
prepare the Leased Premises for occupancy. From the Tenant's Physical
Possession Date through the Term Commencement Date, Tenant shall be subject to
all of the covenants in this Lease, except that Tenant shall not be obligated
to pay Rent. Tenant's obligation to pay Rent shall commence in accordance with
Section 3.03 below.

     3.02.     USE. Tenant shall use the Leased Premises solely for the
Permitted Use and for no other use or purpose, except as permitted by Landlord
pursuant to Landlord's written consent, which consent will not be unreasonably
withheld. It shall not be deemed unreasonable for Landlord to withhold its
consent to a proposed change of use if the proposed use is one set forth in
Section 1.14(a) through (e).

     3.03.     BASE RENT.

               (a)  Tenant shall pay the Base Rent to Landlord in accordance
with the Basic Lease Information sheet and in the manner described below.
Tenant shall pay the Base Rent for the first (1st) month of the Term upon
execution of this Lease. Commencing with the first day of the second (2nd)
calendar month of the Term, Tenant shall pay the Net Rent (consisting of Base
Rent plus, when applicable in accordance with Section 3.04 below, Tenant's
Proportionate Share of Basic Operating Cost) in monthly installments on or
before the first day of each calendar month during the Term and any extensions
or renewals thereof, in advance without demand and without any reduction,
abatement, counterclaim or setoff, in lawful money of the United States at
Landlord's address specified on the Basic Lease Information sheet or at such
other address as may be designated by Landlord in the manner provided for
giving notice under Section 9.11 hereof.

               (b)  If the Term commences on other than the first day of a
month, then the Base Rent provided for such partial month shall be prorated
based upon a thirty (30)-day month and the prorated installment shall be paid
on the first day of the calendar month next succeeding the Term Commencement
Date together with the other amounts payable on that day. If the Term
terminates on other than the last day of a calendar month, then the Net Rent
provided for such partial month shall be prorated based upon a thirty (30)-day
month and the prorated installment shall be paid on the first day of the
calendar month in which the date of termination occurs.

                                       5

<PAGE>   9
     3.04.     TENANT'S PROPORTIONATE SHARE OF BASIC OPERATING COST.

               (a)  Commencing with the Term Commencement Date and continuing
through the remainder of the Term, Tenant shall pay to Landlord Tenant's
Proportionate Share of the Basic Operating Cost attributable to each
Computation Year.

               (b)  During the first Computation Year, on or before the first
day of each month during such Computation Year, Tenant shall pay to Landlord
one-twelfth (1/12th) of Landlord's estimate of the amount payable by Tenant
under Section 3.04(a) as set forth in Landlord's written notice to Tenant
delivered on or before the Term Commencement Date. During the last month of each
Computation Year (or as soon thereafter as practicable), Landlord shall give
Tenant notice of Landlord's estimate of the amount payable by Tenant under
Section 3.04(a) for the following Computation Year. On or before the first day
of each month during the following Computation Year, Tenant shall pay to
Landlord one-twelfth (1/12) of such estimated amount, provided that if Landlord
fails to give such notice in the last month of the prior year, then Tenant shall
continue to pay on the basis of the prior year's estimate until the first day of
the calendar month next succeeding the date such notice is given by Landlord;
and from the first day of the calendar month following the date such notice is
given, Tenant's payments shall be adjusted so that the estimated amount for that
Computation Year will be fully paid by the end of that Computation Year. If at
any time or times Landlord determines that the amount payable under Section
3.04(a) for the current Computation Year will vary from its estimate given to
Tenant, Landlord, by not less than ten (10) business days' notice to Tenant, may
revise its estimate for such Computation Year, and subsequent payments by Tenant
for such Computation Year shall be based upon such revised estimate.

               (c)  Within ninety (90) days of the end of each Computation Year,
Landlord shall deliver to Tenant a statement of amounts payable under Section
3.04(a) for such Computation Year prepared by Landlord's agent. If such
statement shows an amount owing by Tenant that is less than the payments for
such Computation Year previously made by Tenant, and if no event of default (as
defined below) is outstanding at the time such statement is delivered, Landlord
shall credit such amount to the next payment(s) of Net Rent falling due under
this Lease. If such statement shows an amount owing by Tenant that is more than
the estimated payments for such Computation Year previously made by Tenant,
Tenant shall pay the deficiency to Landlord within ten (10) business days after
delivery of such statement. If, within sixty (60) days of Tenant's receipt of
Landlord's statement, Tenant notifies Landlord that Tenant desires to audit or
review Landlord's statement, Landlord shall cooperate with Tenant to permit such
audit or review during normal business hours, Landlord shall make available in
the San Francisco Bay Area at Landlord's, or at Landlord's election at
Landlord's property manager's, place of business, such books and records as are
reasonably necessary for Tenant to conduct and complete such audit. Tenant shall
have the right to make copies of such books and records at Tenant's sole cost
and expense. Tenant shall bear all other costs and expenses associated with
Tenant's audit (including fees of Tenant's auditor). Within five (5) business
days of completion of the audit, if Tenant desires to challenge Landlord's
statement, then Tenant shall provide Landlord with a copy of Tenant's auditor's
report. Within thirty (30) days of Landlord's receipt of Tenant's auditor's
report, Landlord shall notify Tenant as to whether Landlord agrees or disagrees
with the conclusions reached in Tenant's auditor's report. Landlord's failure to
respond shall be deemed to constitute a disagreement with the Tenant's auditor's
report. After Landlord's notice, Landlord and Tenant shall endeavor to resolve
any disagreements regarding Tenant's auditor's report. In the event such audit
reveals a discrepancy in Tenant's favor, and Landlord agrees with the
conclusions of Tenant's auditor, then Landlord shall credit the amount of such
discrepancy to the next payment(s) of Net Rent falling due under this Lease. In
the event such audit reveals a discrepancy in Landlord's favor, Tenant shall pay
the amount of the discrepancy to Landlord within ten (10) business days of
completion of the audit. If the discrepancy in Tenant's favor, as agreed to by
Landlord, or determined by the arbitrator, is greater than five percent (5%) of
Tenant's Proportionate Share of Basic Operating Cost paid by Tenant for the
Computation Year being audited, Landlord shall reimburse Tenant for

                                       6
<PAGE>   10
all reasonable costs and expenses associated with Tenant's audit (including fees
of Tenant's auditor). Any such audit may only be conducted by an independent
nationally recognized accounting firm or a nationally recognized real estate
management or consulting firm that is not being compensated by Tenant on a
contingency fee basis. The failure of Tenant to notify Landlord that Tenant
desires an audit within sixty (60) days of Tenant's receipt of Landlord's
statement under this Section 3.04(c) shall constitute an acceptance by Tenant of
Landlord's statement and a waiver by Tenant of its right to audit for such
Computation Year. If Tenant commences an audit in accordance with this Section
3.04(c), then such audit and the Tenant's auditor's report must be completed
within thirty (30) days of Tenant's notice to Landlord of Tenant's desire to
audit. Failure of Tenant to complete the audit within such thirty (30) day
period shall constitute an acceptance by Tenant of Landlord's statement for such
Computation Year. The respective obligations of Landlord and Tenant under this
Section 3.04(c) shall survive the Term Expiration Date, and, if the Term
Expiration Date is a day other than the last day of a Computation Year, the
adjustment in Tenant's Proportionate Share of Basic Operating Cost pursuant to
this Section 3.04(c) for the Computation Year in which the Term Expiration Date
occurs shall be prorated in the proportion that the number of days in such
Computation Year preceding the Term Expiration Date bears to three hundred
sixty-five (365).

          (d)  Landlord shall have the same remedies for a default in the
payment of Tenant's Proportionate Share of Basic Operating Cost as for a default
in the payment of Base Rent.

          (e)  If the parties cannot agree on the results of Tenant's audit
within sixty (60) days following delivery of Tenant's auditor's report to
Landlord, then either party may commence arbitration with respect to the matters
disputed in Tenant's audit by notice to the other party ("Arbitration Notice").
The failure of Tenant to provide an Arbitration Notice within one hundred twenty
(120) days of Tenant's delivery of the Tenant's auditor's report to Landlord
shall constitute a waiver by Tenant of its right to arbitrate hereunder, and
except for such adjustments as have been agreed to by Landlord, Landlord's
statement provided under Section 3.04(c) shall be conclusive and binding to
Tenant. Within thirty (30) days of the Arbitration Notice, Landlord and Tenant
shall jointly select an arbitrator, who shall be unaffiliated in any manner with
either Landlord or Tenant and shall have been active over the five (5) year
period ending on the date of such appointment in the leasing of comparable
commercial properties in the vicinity of the Building. Neither Landlord nor
Tenant shall consult with such arbitrator as to his or her opinion as to the
disputed matters prior to the appointment. The determination of the arbitrator
shall be limited solely to issues raised by Tenant's auditor's report or by
Landlord's response to Tenant's auditor's report. Such arbitrator may hold
hearings and require such briefs as the arbitrator, in his or her sole
discretion, determines is necessary. In addition, Landlord or Tenant may submit
to the arbitrator with a copy to the other party within ten (10) business days
after the appointment of the arbitrator any data and additional information that
such party deems relevant to the determination by the arbitrator and the other
party may submit a reply in writing within ten (10) business days after receipt
of such data and additional information. The arbitrator shall conduct such
evidentiary hearings as the arbitrator deems necessary or appropriate.

               (1)  The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to the disputed matters in Tenant's auditor's
report, and shall notify Landlord and Tenant of such determination.

               (2)  The decision of the arbitrator shall be binding upon
Landlord and Tenant.

               (3)  If Landlord and Tenant fail to agree upon and appoint such
arbitrator, then the appointment of the arbitrator shall be made by the American
Arbitration Association.

               (4)  If Landlord and Tenant fail to agree upon other matters
relating to the arbitration, then the rules of the American Arbitration
Association shall govern such arbitration.

                                       7
<PAGE>   11
               (5)  The cost of arbitration shall be paid equally by each party.

               (6)  The arbitration proceeding and all evidence given or
discovered pursuant thereto shall be maintained in confidence by all parties.

               (7)  Judgment upon the award rendered by the arbitrator may be
entered by either party into any court having jurisdiction, or application may
be made to such court for a judicial recognition of the award or an order of
enforcement thereof, as the case may be.

     3.05. BASIC OPERATING COST.

           (a) Basic Operating Cost shall mean all expenses and costs (but not
specific costs which are separately billed to and paid by particular tenants of
the Project of every kind and nature which Landlord shall pay or become
obligated to pay because of or in connection with the direct management,
ownership, maintenance, repair, preservation and operation of the Project and
its supporting facilities directly servicing the Project (determined in
accordance with generally accepted accounting principles, consistently applied)
including, but not limited to, the following:

               (1)  Wages, salaries and related expenses and benefits of all
on-site and off-site employees and personnel engaged in the operation,
maintenance, repair and security of the Project, to the extent such charges are
directly allocable to services rendered by the employees and personnel for the
benefit of the Project.

               (2)  Costs of Landlord's office (including the property
management office) and office operation in the Project, as well as the costs of
operation of a room for delivery and distribution of mail to tenants of the
Building.

               (3)  All supplies, materials, equipment and equipment rental used
in the operation, maintenance, repair and preservation of the Project.

               (4)  Utilities, including water, sewer and power, telephone,
communication and cable television facilities, lighting, heating, air
conditioning and ventilating the entire Project (but excluding any power to the
Leased Premises which is separately metered to Tenant or any power for rentable
space within the Building which is not Common Area provided that Tenant has
separately metered power).

               (5)  All maintenance, janitorial and service agreements for the
Project, if any, and the equipment therein, including, without limitation, alarm
and/or security service, sidewalks, landscaping, Building exterior and service
areas, except to the extent Tenant elects to provide such services directly at
its cost pursuant to Section 4.01(b)(iii).

               (6)  A management cost recovery in an amount not to exceed five
percent (5%) of all Rent (excluding such management cost recovery) derived from
the Project.

               (7)  Legal and accounting services for the Project, including the
costs of audits by certified public accountants; provided, however, that legal
expenses shall not include the cost of lease negotiations, termination of
leases, extension of leases or legal costs incurred in proceedings by or against
any specific tenant.

               (8)  All insurance costs, including, but not limited to, the cost
of all risk property and liability coverage and rental income and earthquake
insurance applicable to the Project and Landlord's

                                       8
<PAGE>   12
personal property used in connection therewith, as well as commercially
reasonable deductible amounts applicable to such insurance; provided, however,
that Landlord may, but shall not be obligated to, carry earthquake insurance.

          (9)   Repairs, replacements and general maintenance (except for
repairs paid by proceeds of insurance or by Tenant or other tenants of the
Project or third parties, and alterations attributable solely to tenants of the
Project other than Tenant).

          (10)  All real estate or personal property taxes, possessory interest
taxes, business or license taxes or fees, service payments in lieu of such taxes
or fees, annual or periodic license or use fees, excises, transit charges,
housing fund assessments, open space charges, assessments, bonds, levies, fees
or charges, general and special, ordinary and extraordinary, unforeseen as well
as foreseen, of any kind which are assessed, levied, charged, confirmed or
imposed by any public authority upon the Project (or any portion or component
thereof), its operations, this Lease, or the Rent due hereunder (or any portion
or component thereof), except: (i) inheritance or estate taxes imposed upon or
assessed against the Project, or any part thereof or interest therein, and (ii)
Landlord's personal or corporate income, gift or franchise taxes.

          (11)  Amortization (together with reasonable financing charges) of
capital improvements made to the Project subsequent to the Term Commencement
Date which are designed to improve and actually improve the operating
efficiency of the Project, or which may be required by governmental
authorities, including those improvements required for energy conservation and
for the benefit of individuals with disabilities ("ADA Improvements") or for
energy conservation.

     (b)  With respect to subsection 3.05(a)(11) above, to the best of
Landlord's knowledge, the Project is in compliance with the Americans with
Disabilities Act ("ADA"). ADA Improvements, as defined in subsection
3.05(a)(11) above, includes ADA compliance work in any part of the Project
required by governmental authorities due to changes in law, rules or
regulations after the date of this Lease. ADA Improvements, for the purposes of
Section 3.05(a)(11), shall not include any ADA compliance work in other
tenant's spaces in the Project which is triggered by virtue of tenant
improvement work in such space. Tenant shall be responsible for one hundred
percent (100%) of the cost of ADA compliance work triggered by the Tenant
Improvements (or any subsequent alterations or additions made by Tenant).
Tenant shall promptly reimburse Landlord for any costs incurred by Landlord
with respect thereto.

     (c)  In the event any of the Basic Operating Costs are not allocable
solely to the Building or are not provided on a uniform basis, Landlord shall
make a commercially reasonable and equitable adjustment, in Landlord's sole and
absolute discretion, to the relevant cost allocations to the Building and
Tenant shall pay its proportionate share of such Basic Operating Costs
allocable solely to the Building and 100% of such Basic Operating Costs
allocable solely to the Leased Premises.

     (d)  Notwithstanding any other provision of this Lease to the contrary, in
the event that the Project is not fully occupied during any year of the Term,
an adjustment shall be made in computing Basic Operating Cost for such year so
that Basic Operating Cost shall be computed as though the Project had been 95%
occupied during such year.

     (e)  The following items shall be excluded from Basic Operating Costs: (i)
depreciation on the Building and the Project; (ii) debt service; (iii) rental
under any ground or underlying lease; (iv) attorneys' fees and expenses
incurred in connection with lease negotiations with prospective Project tenants
or alleged defaults with other Project tenants; (v) the cost of any
improvements or equipment which would be properly classified as capital
expenditures (except for any capital expenditures expressly included in Section
3.05(a), including, without limitation, Section 3.05(a)(11)); (vi) the cost of
decorating, improving for tenant

                                       9
<PAGE>   13
occupancy, painting or redecorating portions of the Building or Project to be
demised to tenants; (vii) advertising expenses relating to vacant space; (viii)
real estate brokers' or other leasing commissions, or (ix) janitorial services
for the Project, to the extent that such services are provided to the Leased
Premises by Tenant pursuant to Section 4.01(b)(iii).

                                   ARTICLE 4.
                              LANDLORD'S COVENANTS

     4.01 BASIC SERVICES. Landlord shall operate the Project to a standard of
quality consistent with that of other similar-class office projects in the
immediate geographical area, and, subject to Tenant's obligation to pay
Tenant's Proportionate Share of Basic Operating Cost, Landlord shall:

          (a)  Administer improvement of the Leased Premises in accordance with
EXHIBIT B (if any).

          (b)  Furnish Tenant during Tenant's occupancy of the Leased Premises
the following basic services:

               (i)   Hot and cold water at those points of supply provided for
     general use of other tenants in the Project; central heat and air
     conditioning in season, during the Building hours of operation specified
     in the rules and regulations for the Project adopted pursuant to Section
     5.17 and at such temperatures and in such amounts as are considered by
     Landlord to be standard for the comfortable use and occupancy of the
     Leased Premises or, in all events, as may be permitted or controlled by
     applicable laws, ordinances, rules and regulations.

               (ii)  Structural and exterior maintenance (including exterior
     glass and glazing) and routine maintenance, repairs and electric lighting
     service for all public areas and service areas of the Project in the
     manner and to the extent deemed by Landlord to be standard.

               (iii) Janitorial service on a five (5) day per week basis,
     excluding holidays, except that Tenant may elect effective upon no less
     than thirty (30) days' prior written notice to Landlord, to provide, at
     its sole cost and expense, all such janitorial, window cleaning, and other
     cleaning and maintenance services to the Leased Premises.

               (iv)  Electric lighting service throughout the Leased Premises
     and electrical facilities. Landlord acknowledges that the operation of
     Tenant's business requires electrical services and power for computer,
     telecommunications and switching equipment, and Landlord agrees to provide
     power for such operation in amounts as Landlord and Tenant may mutually
     and in good faith agree, but in no event to exceed 1500 amps 480 volts.
     The electrical expenses described in this clause (iv) shall not be
     included in Tenant's Proportionate Share of Basic Operating Cost; instead,
     Tenant's consumption of the such electrical services shall be separately
     metered (which cost shall be paid for by Tenant or as a cost deducted from
     the Landlord's Contribution for Tenant Improvements) and the cost of such
     electricity shall be billed directly to Tenant by the local public utility.

               (v)   Building Standard lamps, bulbs, starters and ballasts used
     in the Leased Premises.

                                       10
<PAGE>   14
               (vi) Public and handicap elevator service serving the floors on
which the Leased Premises are situated, including freight elevator service when
prearranged with Landlord, subject to such rules and regulations as Landlord
shall promulgate from time to time.

          (c)  Landlord shall not be liable for damages to either person or
property, nor shall Landlord be deemed to have evicted Tenant, nor shall there
be any abatement of Rent, nor shall Tenant be relieved from performance of any
covenant on its part to be performed under this Lease by reason of any (i)
deficiency in the provision of basic services; (ii) breakdown of equipment or
machinery utilized in supplying services; or (iii) curtailment or cessation of
services due to causes or circumstances beyond the reasonable control of
Landlord or by the making of the necessary repairs or improvements, unless such
deficiency, breakdown, curtailment or cessation is due to the active gross
negligence or willful misconduct of Landlord. Landlord shall use reasonable
diligence to make such repairs as may be required to machinery or equipment
within the Project to provide restoration of services and, where the cessation
or interruption of service has occurred due to circumstances or conditions
beyond Project boundaries, to cause the same to be restored, by diligent
application or request to the provider thereof. In no event shall any mortgagee
or the beneficiary under any deed of trust referred to in Section 5.12 be or
become liable for any default of Landlord under this Section 4.01(c).

     4.02. EXTRA SERVICES. Landlord shall provide to Tenant at Tenant's sole
cost and expense (and subject to the limitations hereinafter set forth) the
following extra services:

          (a) Such extra cleaning and janitorial services required if Tenant
Improvements necessitate extra cleaning efforts or are not consistent in
quality and quantity with Building Standard Improvements;

          (b) Additional air conditioning and ventilating capacity required by
reason of any electrical, data processing or other equipment, facilities or
services required to support the same, in excess of that which would be
required for Building Standard Improvements, when prearranged with Landlord;

          (c) Heating, ventilation, air conditioning or extra electrical
service provided by Landlord to Tenant (i) during hours other than the Building
hours of operation specified in the rules and regulations for the Project
adopted pursuant to Section 5.17, which shall provide for Building hours of
operation of 7:00 A.M. to 6:00 P.M., Monday through Friday (excluding holidays)
and from 8:00 A.M. to 1:00 P.M. on Saturday, or (ii) on Saturdays after 1:00
P.M., Sundays, or holidays, all said heating, ventilation and air conditioning
or extra electrical service to be furnished solely upon the prior written
request of Tenant submitted during business hours to Landlord at least 24 hours
in advance of the time such service is needed, or pursuant to such other
procedures as may be established from time to time by Landlord for the Building
or the Project;

          (d) Maintaining and replacing non-Building Standard lamps, bulbs,
starters and ballasts (whether or not the light fixtures were installed by
Landlord as part of the Tenant Improvements);

          (e) Repair and maintenance service which is the obligation of Tenant
under this Lease;

          (f) Repair, maintenance or janitorial service to the Leased premises,
the Common Areas or the Project parking area which is required as a result of
the acts or omissions of Tenant, its agents, employees, contractors, invitees
or licensees; and

          (g) Any basic service in amounts determined by Landlord to exceed the
amounts required to be provided under Section 4.01(b), but only if Landlord
elects to provide such additional or excess service.

                                       11

<PAGE>   15
          For the purposes of this Section 4.02, if, in Landlord's reasonable
opinion, Tenant's use of electrical and/or water service at the Leased Premises
is excessive, Landlord may install a separate meter(s) at the Leased Premises
to measure the amount of electricity and/or water consumed by Tenant therein.
The cost of such installation and of such excess electricity and/or water (at
the rates charged for such services by the local public utility) shall be paid
by Tenant to Landlord upon receipt by Tenant of a bill therefor.

          The cost chargeable to Tenant for all extra services shall constitute
Additional Rent and shall include a management fee payable to Landlord of
fifteen percent (15%). Additional Rent shall be paid monthly by Tenant to
Landlord concurrently with the payment of Base Rent.

     4.03 WINDOW COVERINGS.  All window coverings for the Leased Premises shall
be those provided by Landlord as Building Standard Improvements. Tenant shall
not place or maintain any window coverings, blinds, curtains or drapes other
than those supplied by Landlord on any exterior window without Landlord's prior
written approval, which Landlord shall have the right to grant or withhold in
its absolute and sole discretion.

     4.04 GRAPHICS AND SIGNAGE. Landlord shall provide identification of
Tenant's name and suite numerals (i) on a building directory in the Building
lobby and (ii) at the main entrance door to the Leased Premises. Landlord
reserves the right to exclude any other names from the building directory. All
signs, notices, advertisements and graphics of every kind or character, visible
in or from the Common Areas or the exterior of the Leased Premises shall be
subject to Landlord's prior written approval, which Landlord shall have the
right to withhold in its absolute and sole discretion. Landlord may remove,
without notice to and at the expense of Tenant, any sign, notice, advertisement
or graphic of any kind inscribed, displayed or affixed in violation of the
foregoing requirement. All approved signs, notices, advertisements or graphics
shall be printed, affixed or inscribed at Tenant's expense by a person selected
by Landlord. Landlord shall be entitled to revise the Project graphics and
signage standards at any time.

     4.05 TENANT EXTRA IMPROVEMENTS. All Tenant Extra Improvements (if any)
shall be installed at Tenant's cost, such installation to be made and paid for
pursuant to the provisions of EXHIBIT B.  For purposes hereof, "costs" shall
include, without limitation, all building permit fees for Tenant Extra
Improvements (not already included in the permit fees paid with respect to the
Landlord's Improvements); payments to architects, engineers and other design
consultants for services and disbursements; and such reasonable inspection fees
as Landlord may incur (not to exceed $200.00). Landlord shall not seek the
benefits of depreciation deductions or income tax credit allowances for federal
or state income tax reporting purposes with respect to any Tenant Extra
Improvements for which Tenant has fully reimbursed Landlord under this Section
4.05.

     4.06 REPAIR OBLIGATION.  Subject to Tenant's obligations under Section
3.04 to pay Tenant's Proportionate Share of Basic Operating Cost, Landlord's
obligation with respect to maintenance and repair shall be limited to (i) the
structural portions of the Building; (ii) the exterior walls of the Building,
including exterior glass and glazing; (iii) the roof; (iv) mechanical
(including the HVAC system), electrical, plumbing and life safety systems; (v)
the Common Areas; (vi) the Project parking area; and (vii) landscaped areas (if
any). However, Landlord shall not have any obligation to repair damage caused
by Tenant, its agents, employees, contractors, invitees or licensees. Landlord
shall have the right, but not the obligation, to undertake work of repair which
Tenant is required to perform under this Lease and which Tenant fails or
refuses to perform in a timely and efficient manner. Tenant shall reimburse
Landlord upon demand, as Additional Rent, for all costs incurred by Landlord
in performing any such repair for the account of Tenant, together with an
amount equal to ten percent (10%) of such costs to reimburse Landlord for its
administration and managerial effort. Except as specifically set forth in this
Lease, Landlord shall have no obligation whatsoever to maintain or repair the
Leased Premises or the Project. The parties intend that the terms of this Lease
govern their

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<PAGE>   16
respective maintenance and repair obligations. Tenant expressly waives the
benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease with respect to such obligations or
which affords Tenant the right to make repairs at the expense of Landlord or
terminate this Lease by reason of the condition of the Leased Premises or any
needed repairs.

     4.07.   PEACEFUL ENJOYMENT. Landlord covenants with Tenant that upon
Tenant paying the Rent and all other charges required under this Lease and
performing all of Tenant's covenants and agreements herein contained, Tenant
shall peacefully have, hold and enjoy the Leased Premises subject to all of the
terms of this Lease and to any deed of trust, mortgage, ground lease or other
agreement to which this Lease may be subordinate. This covenant and the other
covenants of Landlord contained in this Lease shall be binding upon Landlord
and its successors only with respect to breaches occurring during its or their
respective ownerships of Landlord's interest hereunder.

                                   ARTICLE 5.

                               TENANT'S COVENANTS

     5.01.   PAYMENTS BY TENANT.  Tenant shall pay Rent at the times and in the
manner provided in this Lease. All obligations of Tenant hereunder to make
payments to Landlord shall constitute Rent and failure to pay the same when due
shall give rise to the rights and remedies provided for in Section 7.08. If
there is more than one Tenant, the obligations imposed under this Lease upon
Tenant shall be joint and several.

     5.02.   TENANT IMPROVEMENTS.  The Tenant Improvements shall be installed
and constructed by Tenant pursuant to EXHIBIT B.  All Landlord's Improvements
shall become the property of Landlord upon installation and shall be
surrendered to Landlord without compensation to Tenant upon termination of this
Lease by lapse of time or otherwise, subject to Landlord's right to require
their removal in the same manner as provided in Section 5.07. All Tenant Extra
Improvements installed pursuant to Section 4.05 (if any) shall become the
property of Landlord upon installation and shall be surrendered to Landlord
without compensation to Tenant upon termination of this Lease by lapse of time
or otherwise, subject to Landlord's right to require their removal in the same
manner as provided in Section 5.07.

     5.03.   TAXES ON PERSONAL PROPERTY AND TENANT EXTRA IMPROVEMENTS. In
addition to, and wholly apart from its obligation to pay Tenant's Proportionate
Share of Basic Operating Costs, Tenant shall be responsible for, and shall pay
prior to delinquency, all taxes or governmental service fees, possessory
interest taxes, fees or charges in lieu of any such taxes, capital levies, and
any other charges imposed upon, levied with respect to, or assessed against
Tenant's personal property, on the value of its Tenant Extra Improvements (if
any) and on its interest pursuant to this Lease. To the extent that any such
taxes are not separately assessed or billed to Tenant, Tenant shall pay the
amount thereof as invoiced to Tenant by Landlord.

     5.04.  REPAIRS BY TENANT.  Tenant shall be obligated to maintain and
repair the Leased Premises, to keep the same at all times in good order,
condition and repair, and, upon expiration of the Term, to surrender the same
to Landlord in the same condition as on the Term Commencement Date, reasonable
wear and tear, taking by condemnation, and damage that is Landlord's
responsibility under Section 7.07 not caused by Tenant, its agents, employees,
contractors, invitees and licensees excepted. Tenant's obligations shall
include, without limitation, the obligation to maintain and repair all walls,
floors, ceilings and fixtures and to repair all damage caused by Tenant, its
agents, employees, contractors, invitees and others using the Leased Premises
with Tenant's expressed or implied permission. At the request of Tenant,
Landlord shall perform the work of maintenance and repair constituting Tenant's
obligation under this Section 5.04 at Tenant's sole cost and expense and as an
extra service to be rendered pursuant to Section 4.02(e). Any work of repair
and maintenance performed by or for the account of Tenant by persons other than
Landlord shall be performed by

                                       13

<PAGE>   17
contractors approved by Landlord and in accordance with procedures Landlord
shall from time to time establish. Tenant shall give Landlord prompt notice of
any damage to or defective condition in any part of the Building's mechanical,
electrical, plumbing, life safety or other system servicing, located in or
passing through the Leased Premises.

     5.05. WASTE. Tenant shall not commit or allow any waste or damage to be
committed in any portion of the Leased Premises or the Project.

     5.06. ASSIGNMENT OR SUBLEASE.

          (a) Tenant shall not voluntarily or by operation of law assign,
transfer or encumber (collectively "Assign") or sublet all or any part of
Tenant's interest in this Lease or in the Leased Premises without Landlord's
prior written consent (which consent shall not be unreasonably withheld) given
under and subject to the terms of this Section 5.06. A change in the control of
Tenant shall constitute an assignment requiring Landlord's consent. Any transfer
of the voting control of Tenant shall constitute a change in control for this
purpose. Notwithstanding the foregoing, the Tenant may, upon notice to the
Landlord, in whole or in part, sublet the Leased Premises, or Assign this Lease
to an affiliate or subsidiary of the Tenant, provided, however, no such
permitted subletting or assignment shall relieve the Tenant of liability under
this Lease.

          (b) Except as permitted in Section 5.06(a) for an assignment to
Tenant's affiliate or subsidiary, if Tenant desires to Assign this Lease or any
interest herein or sublet the Leased Premises or any part thereof, Tenant shall
give Landlord written notice of such intent. Tenant's notice shall specify the
date the proposed assignment or sublease would be effective and be accompanied
by information pertinent to Landlord's determination as to the financial and
operational responsibility and appropriateness of the proposed assignee or
subtenant, including, without limitation, its name, business and financial
condition, financial details of the proposed transfer, the intended use
(including any modification) of the Leased Premises, and exact copies of all of
the proposed agreement(s) between Tenant and the proposed assignee or subtenant.
Tenant shall promptly provide Landlord with (i) such other or additional
information or documents reasonably requested (within ten (10) days after
receiving Tenant's notice) by Landlord, and (ii) an opportunity to meet and
interview the proposed assignee or subtenant, if requested by Landlord.

          (c) Landlord shall have a period of fourteen (14) days following such
interview and receipt of such additional information (or thirty (30) days from
the date of Tenant's original notice if Landlord does not request additional
information or an interview) within which to notify Tenant in writing that
Landlord elects either (i) to terminate this Lease as to the space so affected
as of the effective date specified by Tenant, in which event Tenant will be
relieved of all further obligations hereunder as to such space, or (ii) to
permit Tenant to Assign this Lease or sublet such space, subject, however, to
prior written approval of the proposed assignee or sublessee by Landlord, such
consent not to be unreasonably withheld so long as the use of the Leased
Premises by such proposed assignee or sublessee would be a Permitted Use, the
proposed assignee or sublessee is of sound financial condition as determined by
Landlord in its absolute and sole discretion, the proposed assignee or sublessee
executes such reasonable assumption documentation as Landlord shall require, and
the proposed assignee or sublessee is not (x) already a tenant in the Building
or (y) a party with whom Landlord has been discussing the leasing of space in
the Building. If Landlord fails to notify Tenant in writing of such election
within said period, Landlord shall be deemed to have waived option (i) above.
Failure by Landlord to approve a proposed subtenant or assignee shall not cause
a termination of this Lease.

          (d) In the event Tenant shall request the consent of Landlord to any
assignment or subletting hereunder, Tenant shall pay Landlord a processing fee
of $250.00 and shall reimburse Landlord for

                                       14
<PAGE>   18
Landlord's reasonable attorneys' fees (up to $2,000.00) incurred in connection
therewith. All such fees shall be deemed Additional Rent under this Lease.

           (e)  Any rent or other consideration realized by Tenant under any
such sublease or assignment in excess of the Rent payable hereunder, after
amortization of the reasonable cost of Tenant Extra Improvements for which
Tenant has paid and reasonable subletting and assignment costs, shall be divided
and paid as follows: (i) so long as after such assignment or subletting, the
original Tenant named in the Basic Lease Information sheet occupies not less
than eighty-five percent (85%) of the Rentable Area of the Leased Premises,
fifty percent (50%) to Tenant and fifty percent (50%) to Landlord; and (ii) in
all other cases, twenty-five percent (25%) to Tenant and seventy-five percent
(75%) to Landlord; provided, however, that in either instance, if Tenant is in
default hereunder beyond any applicable cure period, Landlord shall be entitled
to all such excess rent, provided, further, that if the Tenant exercises an
option to extend the term under Section 8.02, then Landlord shall be entitled to
all such excess rent during the Option Term.

           (f)  In any subletting undertaken by Tenant, Tenant shall diligently
seek to obtain not less than fair market rent for the space to sublet. In any
assignment of this Lease in whole or in part, Tenant shall seek to obtain from
the assignee consideration reflecting a value of not less than fair market rent
for the space subject to such assignment.

           (g)  The consent of Landlord to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by Tenant or
to any subsequent or successive assignment or subletting by the assignee or
subtenant. Such action shall not relieve Tenant or any such other party from
liability under this Lease or a sublease.

           (h)  No assignment or subletting by Tenant shall relieve Tenant of
any obligation under this Lease. In the event of default by an assignee or
subtenant of Tenant or any successor of Tenant in the performance of any of the
terms hereof, Landlord may proceed directly against Tenant without the necessity
of exhausting remedies against such assignee, subtenant or successor. Any
assignment or subletting which conflicts with the provisions hereof shall be
void and, at Landlord's option, shall constitute a default under this Lease.

     5.07. ALTERATIONS, ADDITIONS AND IMPROVEMENTS.

           (a) Tenant shall not make or allow to be made any alterations or
additions in or to the Leased Premises without first obtaining the written
consent of Landlord. Landlord's consent will not be unreasonably withheld with
respect to proposed alterations and additions which (i) comply with all
applicable laws, ordinances, rules and regulations; (ii) are compatible with and
does not adversely affect the Building and its mechanical, electrical, HVAC and
life safety systems; (iii) will not affect the structural portions of the
Building; (iv) will not interfere with the use and occupancy of any other
portion of the Building by any other tenant, its employees or invitees; and (v)
will not trigger any additional costs to Landlord. Specifically, but without
limiting the generality of the foregoing, Landlord's right of consent shall
encompass plans and specifications for the proposed alterations or additions,
construction means and methods, the identity of any contractor or subcontractor
to be employed on the work of alterations or additions, and the time for
performance of such work. Tenant shall supply to Landlord any additional
documents and information requested by Landlord in connection with Tenant's
request for consent hereunder.

           (b) Any consent given by Landlord under this Section 5.07 shall be
deemed conditioned upon: (i) Tenant's acquiring all applicable permits required
by governmental authorities; (ii) Tenant's furnishing to Landlord copies of such
permits, together with copies of the approved plans and specifications,

                                       15
<PAGE>   19
prior to commencement of the work thereon; and (iii) the compliance by Tenant
with the conditions of all applicable permits and approvals in a prompt and
expeditious manner.

          (c)  Tenant shall provide Landlord with not less than ten (10) days
prior written notice of commencement of the work so as to enable Landlord to
post and record appropriate notices of non-responsibility. All alterations and
additions permitted hereunder shall be made and performed by Tenant without
cost or expense to Landlord. Tenant shall pay the contractors and suppliers all
amounts due to them when due and keep the Leased Premises and the Project free
from any and all mechanics', materialmen's and other liens and claims arising
out of any work performed, materials furnished or obligations incurred by or
for Tenant. Landlord may require, at its sole option, that Tenant provide to
Landlord, at Tenant's expense, a lien and completion bond in an amount equal to
at least one and one half (1 1/2) times the total estimated cost of any
alterations, additions or improvements to be made in or to the Leased Premises,
to protect Landlord against any liability for mechanics', materialmen's and
other liens and claims, and to ensure timely completion of the work. In the
event any alterations or additions to the Leased Premises are performed by
Landlord hereunder, whether by prearrangement or otherwise, Landlord shall be
entitled to charge Tenant a ten percent (10%) administration fee in addition to
the actual costs of labor and materials provided. Such costs and fees shall be
deemed Additional Rent under this Lease, and may be charged and payable prior
to the commencement of the work.

          (d)  Any and all alterations, additions or improvements made to the
Leased Premises by Tenant shall become the property of Landlord upon
installation and shall be surrendered to Landlord without compensation to
Tenant upon the termination of this Lease by lapse of time or otherwise unless
(i) Landlord conditioned its approval of such alterations, additions or
improvements on Tenant's agreement to remove them, or (ii) Landlord notifies
Tenant prior to (or promptly after) the Term Expiration Date that the
alterations, additions and/or improvements must be removed, in which case
Tenant shall, by the Term Expiration Date (or promptly thereafter), remove such
alterations, additions and improvements, repair any damages resulting from such
removal and restore the Leased Premises to their condition existing prior to
the date of installation of such alterations, additions and improvements.
Notwithstanding anything to the contrary set forth above, this clause shall not
apply to movable equipment or furniture owned by Tenant. Tenant shall repair at
its sole cost and expense all damage caused to the Leased Premises and the
Project by removal of Tenant's movable equipment or furniture and such other
alterations, additions and improvements as Tenant shall be required or allowed
by Landlord to remove from the Leased Premises.

          (e)  All alterations, additions and improvements permitted under this
Section 5.07 shall be constructed diligently, in a good and workmanlike manner
with new, good and sufficient materials and in compliance with all applicable
laws, ordinances, rules and regulations (including, without limitation,
building codes and those related to accessibility and use by individuals with
disabilities). Tenant shall, promptly upon completion of the work, furnish
Landlord with "as built" drawings for any alterations, additions or
improvements performed under this Section 5.07.

     5.08. COMPLIANCE WITH LAWS AND INSURANCE STANDARDS. Tenant shall not
occupy or use, or permit any portion of the Leased Premises to be occupied or
used in a manner that violates any applicable law, ordinance, rule, regulation,
order, permit, covenant, easement or restriction of record, or the
recommendations of Landlord's engineers or consultants, relating in any manner
to the Project, or for any business or purpose which is disreputable,
objectionable or productive of fire hazard. Tenant shall not do or permit
anything to be done which would result in the cancellation, or in any way
increase the cost, of the all risk property insurance coverage on the Project
and/or its contents. If Tenant does or permits anything to be done which
increases the cost of any insurance covering or affecting the Project, then
Tenant shall reimburse Landlord, upon demand, as Additional Rent, for such
additional costs. Landlord shall deliver to Tenant a written statement setting
forth

                                       16
<PAGE>   20
the amount of any such insurance cost increase and showing in reasonable detail
the manner in which it has been computed. Tenant shall, at Tenant's sole cost
and expense, comply with all laws, ordinances, rules, regulations and orders
(state, federal, municipal or promulgated by other agencies or bodies having or
claiming jurisdiction) related to the use, condition or occupancy of the Leased
Premises now in effect or which may hereafter come into effect including, but
not limited to, (a) accessibility and use by individuals with disabilities, and
(b) environmental conditions in, on or about the Leased Premises. If anything
done by Tenant in its use or occupancy of the Leased Premises shall create,
require or cause imposition of any requirement by any public authority for
structural or other upgrading of or alteration or improvement to the Project,
Tenant shall, at Landlord's option, either perform the upgrade, alteration or
improvement at Tenant's sole cost and expense or reimburse Landlord upon
demand, as Additional Rent, for the cost to Landlord of performing such work.
The judgment of any court of competent jurisdiction or the admission by Tenant
in any action against Tenant, whether Landlord is a party thereto or not, that
Tenant has violated any law, ordinance, rule, regulation, order, permit,
covenant, easement or restriction shall be conclusive of that fact as between
Landlord and Tenant.

     5.09. NO NUISANCE; NO OVERLOADING. Tenant shall use and occupy the Leased
Premises, and control its agents, employees, contractors, invitees and visitors
in such manner so as not to create any nuisance, or interfere with, annoy or
disturb (whether by noise, odor, vibration or otherwise) any other tenant or
occupant of the Project or Landlord in its operation of the Project. Tenant
shall not place or permit to be placed any loads upon the floors, walls or
ceilings in excess of the maximum designed load specified by Landlord or which
might damage the Leased Premises, the Building, or any portion thereof.

     5.10. FURNISHING OF FINANCIAL STATEMENTS; TENANT'S REPRESENTATIONS. In
order to induce Landlord to enter into this Lease, Tenant agrees that it shall
promptly furnish Landlord, once a year, within twenty (20) business days of
receipt of Landlord's written request therefor, with financial statements in
form and substance reasonably satisfactory to Landlord reflecting Tenant's
current financial condition. Tenant represents and warrants that all financial
statements, records and information furnished by Tenant to Landlord in
connection with this Lease are true, correct and complete in all respects.

     5.11. ENTRY BY LANDLORD. Landlord, its employees, agents and consultants,
shall have the right to enter the Leased Premises at any time, in cases of an
emergency, and otherwise at reasonable times (with 8 hours prior notice) to
inspect the same, to clean, to perform such work as may be permitted or
required under this Lease, to make repairs to or alterations of the Leased
Premises or other portions of the Project or other tenant spaces therein, to
deal with emergencies, to post such notices as may be permitted or required by
law to prevent the perfection of liens against Landlord's interest in the
Project or to show the Leased Premises to prospective tenants, purchasers,
encumbrancers or others, or for any other purpose as Landlord may deem
necessary or desirable; provided, however, that Landlord shall use its best
efforts to minimize interference with Tenant's business operations in the
Leased Premises. Tenant shall not be entitled to any abatement of Rent or
damages by reason of the exercise of any such right of entry.

     5.12. NONDISTURBANCE AND ATTORNMENT.

           (a) This Lease and the Rights of Tenant hereunder shall be subject
and subordinate to the lien of any deed of trust, mortgage or other
hypothecation or security instrument (collectively, "Security Device") now or
hereafter placed upon, affecting or encumbering the Project or any part thereof
or interest therein, and to any and all advances made thereunder, interest
thereon or costs incurred and any modifications, renewals, supplements,
consolidations, replacements and extensions thereof. With respect to any
Security Device entered into by Landlord after execution of this Lease,
Landlord agrees to use reasonable, good faith efforts to obtain assurance (a
"nondisturbance agreement") from the holder of or beneficiary under such
encumbrance that Tenant's possession will not be disturbed so long as Tenant
is not in default under this Lease

                                       17
<PAGE>   21
and attorns to the record owner of the Leased Premises. Without the consent of
Tenant, the holder of any such Security Device or the beneficiary thereunder
shall have the right to elect to be subject and subordinate to this Lease, such
subordination to be effective upon such terms and conditions as such holder or
beneficiary may direct which are not inconsistent with the provisions hereof.
Tenant agrees to attorn to and recognize as the Landlord under this Lease the
holder or beneficiary under a Security Device or any other party that acquires
ownership of the Leased Premised by reason of a foreclosure or sale under any
Security Device (or deed in lieu thereof). The new owner following such
foreclosure, sale or deed shall not be (i) liable for any act or omission of
any prior landlord or with respect to events occurring prior to acquisition of
ownership; (ii) subject to any offsets or defenses which Tenant might have
against any prior landlord; (iii) bound by prepayment of more than one (1)
month's Rent; or (iv) liable to Tenant for any security deposit not actually
received by such new owner.

          (b)  Tenant shall not unreasonably withhold its consent to changes or
amendments to this Lease requested by the holder of a Security Device so long
as these changes do not alter the basic business terms of this Lease or
otherwise materially diminish any rights or materially increase any obligations
of Tenant hereunder. If, within fifteen (15) business days after notice from
Landlord, Tenant fails or refuses to execute with Landlord the amendment(s) to
this Lease accomplishing the change(s) or amendment(s) which are requested by
such holder, Landlord, at its sole option, shall have the right either to (i)
immediately terminate this Lease or (ii) execute any instrument for or on
behalf of Tenant as its attorney-in-fact. In acknowledgment thereof, Tenant
hereby appoints Landlord as its irrevocable attorney-in-fact solely to execute
any instruments required to carry out the intent of this Section 5.12(b) on
behalf of Tenant.

     5.13.     ESTOPPEL CERTIFICATE. Within ten (10) days following Landlord's
request, Tenant shall execute, acknowledge and deliver written estoppel
addressed to (i) any mortgagee or prospective mortgagee of Landlord, or (ii)
any purchaser or prospective purchaser of all or any portion of, or interest
in, the Project, on a form specified by Landlord, certifying as to such facts
(if true) and agreeing to such notice provisions and other matters as such
mortgagee(s) or purchaser(s) may reasonably require, including, without
limitation, the following: (a) that this Lease is unmodified and in full force
and effect (or in full force and effect as modified, and stating the
modifications); (b) the amount of, and date to which Rent and other charges
have been paid in advance; (c) the amount of any Security Deposit; and (d)
acknowledging that Landlord is not in default under this Lease (or, if Landlord
is claimed to be in default, stating the nature of the alleged default).
However, in no event shall any such estoppel certificate require an amendment of
the provisions of this Lease or otherwise affect or abridge Tenant's rights
hereunder. Any such estoppel certificate may be relied upon by any such
mortgagee or purchaser. Failure by Tenant to execute and deliver any such
estoppel certificate within the time requested shall, at Landlord's election,
constitute a default hereunder and shall be conclusive upon Tenant that (1)
this Lease is in full force and effect and has not been modified except as
represented by Landlord; (2) not more than one month's Rent has been paid in
advance; and (3) Landlord is not in default under this Lease.

     5.14.     SECURITY DEPOSIT.

          (a)  Concurrently with the execution of this Lease, Tenant shall pay
to Landlord immediately prior to occupancy the agreed upon Security Deposit as
security for the full and faithful performance of Tenant's obligations under
this Lease. If at any time during the Term, Tenant shall be in default in the
payment of Rent or in default for any reason, Landlord may use, apply or retain
all or part of the Security Deposit for payment of any amount due Landlord or
to cure such default or to reimburse or compensate Landlord for any liability,
loss, cost, expense or damage (including attorneys' fees) which Landlord may
suffer or incur by reason of Tenant's defaults. If Landlord uses or applies all
or any part of the Security Deposit, Tenant shall, on demand, pay to Landlord a
sum sufficient to restore the Security Deposit to the full amount required by
this Lease. Any time the Base Rent increased during the Term, Tenant shall
(within ten

                                       18
<PAGE>   22
(10) business days of receipt of a request therefor from Landlord) deposit
additional monies with Landlord sufficient to maintain the same ratio between
the Security Deposit and Base Rent as those amounts are specified in the Basic
Lease Information sheet. Upon expiration of the Term or earlier termination of
this Lease and after Tenant has vacated the Leased Premises, Landlord shall
return the Security Deposit to Tenant, reduced by such amounts as may be
required by Landlord to remedy defaults on the part of Tenant in the payment of
Rent, to repair damages to the Leased Premises caused by Tenant and to clean the
Leased Premises. The portion of the deposit not so required shall be paid over
to Tenant (or, at Landlord's option, to the last assignee of Tenant's interest
in this Lease) within thirty (30) days after expiration of the Term or earlier
termination hereof. Landlord shall hold the Security Deposit for the foregoing
purposes; provided, however, that Landlord shall have no obligation to segregate
the Security Deposit from its general funds or to pay interest in respect
thereof. No part of the Security Deposit shall be considered to be held in
trust, or to be prepayment of any monies to be paid by Tenant under this Lease.

          (b)  In lieu of a cash deposit, Tenant may deliver the Security
Deposit to Landlord in the form of a clean and irrevocable letter of credit
(the "Letter of Credit") issued by and drawable upon (said issuer being
referred to as the "Issuing Bank") a financial institution which is approved by
Landlord, provided that Landlord shall not unreasonably withhold its consent to
an Issuing Bank which has outstanding unsecured, uninsured and unguaranteed
indebtedness, or shall have issued a letter of credit or other credit facility
that constitutes the primary security for any outstanding indebtedness (which
is otherwise uninsured and unguaranteed), that is then rated, without regard to
qualification of such rating by symbols such as "+" of "-" or numerical
notation, "Aa" or better by Moody's Investors Service and "AA" or better by
Standard & Poor's Rating Service, and has combined capital, surplus and
undivided profits of not less than $100,000,000. Such Letter of Credit shall
(a) name Landlord as beneficiary, (b) be in the amount of the Security Deposit,
(c) have a term of not less than one year, (d) permit multiple drawings, (e) be
fully transferable by Landlord, and (f) otherwise be in form and content
reasonably satisfactory to Landlord. If upon any transfer of the Letter of
Credit, any fees or charges shall be so imposed, then such fees or charges
shall be payable solely by Tenant and the Letter of Credit shall so specify.
The Letter of Credit shall provide that it shall be deemed automatically
renewed, without amendment, for consecutive periods of one year each thereafter
during the Term unless the Issuing Bank sends a notice (the "Non-Renewal
Notice") to Landlord by certified mail, return receipt requested, not less than
45 days next preceding the then expiration date of the Letter of Credit stating
that the Issuing Bank has elected not to renew the Letter of Credit. Landlord
shall have the right, upon receipt of the Non-Renewal Notice, to draw the full
amount of the Letter of Credit, by sight draft on the Issuing Bank, and shall
thereafter hold or apply the cash proceeds of the Letter of Credit pursuant to
the terms of this Article. The Issuing Bank shall agree with all drawers,
endorsers and bona fide holders that drafts drawn under and in compliance with
the terms of the Letter of Credit will be duly honored upon presentation to the
Issuing Bank at an office location in San Francisco, California. The Letter of
Credit shall be subject in all respects to the Uniform Customs and Practice for
Documentary Credits (1993 revision), International Chamber of Commerce
Publication No. 500.

     5.15 SURRENDER.

          (a)  Subject to the provisions of Section 5.07 hereof, on the Term
Expiration Date (or earlier termination of this Lease), Tenant shall quit and
surrender possession of the Leased Premises to Landlord in as good order and
condition as they were in on the Tenant's Physical Possession Date, reasonable
wear and tear, act of God, taking by condemnation and repairs which are
Landlord's responsibility excepted. Reasonable wear and tear shall not include
any damage or deterioration that would have been prevented by good maintenance
practice if required to be maintained by Tenant under this Lease or by Tenant
performing all of its obligations under this Lease. Tenant shall, without cost
to Landlord, remove all furniture, equipment, trade fixtures, debris and
articles of personal property owned by Tenant in the Leased Premises, and shall
repair any

                                       19
<PAGE>   23
damage to the Project resulting from such removal. Any such property not
removed by Tenant by the Term Expiration Date (or earlier termination of this
Lease) shall be considered abandoned, and Landlord may remove any or all of
such items and dispose of same in any lawful manner or store same in a public
warehouse or elsewhere for the account and at the expense and risk of Tenant.
If Tenant shall fail to pay the cost of storing any such property after storage
for thirty (30) days or more, Landlord may sell any or all of such property at
public or private sale, in such manner and at such times and places as Landlord
may deem proper, without notice to or demand upon Tenant. Landlord shall apply
the proceeds of any such sale as follows: first, to the costs of such sale;
second, to the costs of storing any such property; third, to the payment of any
other sums of money which may then or thereafter be due to Landlord from Tenant
under any of the terms of this Lease; and fourth, the balance, if any, to
Tenant.

          (b) Prior to the Term Expiration Date (or earlier termination of this
Lease), all equipment, fixtures and cables installed pursuant to Section 2.05
(collectively, the "Associated Rights Equipment") shall be removed by Tenant,
and the Leased Premises, the Generator Area, the Fuel Tank Area and all areas
used for cables and equipment serving the foregoing locations shall be repaired
or restored by Tenant in as good order and condition as they were in on the
Tenant's Physical Possession Date, reasonable wear and tear and act of God
excepted. Reasonable wear and tear shall not include any damage or
deterioration that would have been prevented by good maintenance practice if
required to be maintained by Tenant under this Lease or by Tenant performing
all of its obligations under this Lease. Tenant shall repair any damage to the
Leased Premises, the Building or the Project resulting from such removal.

     5.16. TENANT'S REMEDIES. Landlord shall not be deemed in breach of this
Lease unless Landlord fails within a reasonable time to perform an obligation
required to be performed by Landlord. For purposes of this Section 5.16, a
reasonable time shall in no event, be less than thirty (30) days after receipt
by Landlord, and by the holders of any ground lease, deed of trust or mortgage
covering the Leased Premises whose name and address shall have been furnished
Tenant in writing for such purpose, of written notice specifying wherein such
obligation of Landlord has not been performed; provided, however, that if the
nature of Landlord's obligation is such that more than thirty (30) days after
such notice are reasonably required for its performance, then Landlord shall
not be in breach of this Lease if performance is commenced within said thirty
(30)-day period and thereafter diligently pursued to completion. If Landlord
fails to cure such default within the time provided for in this Lease, the
holder of any such ground lease, deed of trust or mortgage shall have an
additional thirty (30) days to cure such default; provided that if such default
cannot reasonably be cured within that thirty (30) day period, then such holder
shall have such additional time to cure the default as is reasonably necessary
under the circumstances. Tenant shall look solely to Landlord's interest in the
Project for recovery of any judgment from Landlord. Neither Landlord nor any of
its trustees, directors, officers, agents, employees or representatives (or, if
Landlord is a partnership, its partners, whether general or limited) shall ever
be personally liable for any such judgment. Any lien obtained to enforce any
such judgment and any levy of execution thereon shall be subject and
subordinate to any lien, deed of trust or mortgage to which Section 5.12
applies or may apply. Tenant shall not have the right to terminate this Lease
or withhold, reduce or offset any amount against any payments of Rent due and
payable under this Lease by reason of a breach of this Lease by Landlord.

     5.17. RULES AND REGULATIONS. Tenant shall comply with the rules and
regulations for the Project attached as EXHIBIT D and such reasonable
amendments thereto as Landlord may adopt from time to time with prior notice to
Tenant.

                                   ARTICLE 6.
                             ENVIRONMENTAL MATTERS

                                       20

<PAGE>   24
     6.01 HAZARDOUS MATERIALS PROHIBITED.

          (a)  Tenant shall not cause or permit any Hazardous Material (as
defined in Section 6.01(c) below) to be brought, kept, used, generated, released
or disposed in, on, under or about the Leased Premises or the Project by Tenant,
its agents, employees, contractors or invitees; provided, however, that Tenant
may use, store and dispose of, in accordance with applicable Laws, limited
quantities of standard office and janitorial supplies, but only to the extent
reasonably necessary for Tenant's operations in the Leased Premises. Tenant
hereby indemnifies Landlord from and against (i) any breach by Tenant of the
obligations stated in the preceding sentence, (ii) any breach of the obligations
stated in Section 6.01(b) below, or (iii) any claims or liability resulting from
Tenant's use of Hazardous Materials. Tenant hereby agrees to defend and hold
Landlord harmless from and against any and all claims, liability, losses
damages, costs and/or expenses (including, without limitation, diminution in
value of the Project, or any portion thereof, damages for the loss or
restriction on use of rentable or usable space or of any amenity of the Project,
damages arising from any adverse impact on marketing of space in the Project,
and sums paid in settlement of claims, fines, penalties, attorneys' fees,
consultants' fees and experts' fees) which arise during or after the term as a
result of any breach of the obligations stated in Sections 6.01(a) or 6.01(b) or
otherwise resulting from Tenant's use of Hazardous Materials. This
indemnification of Landlord by Tenant includes, without limitation, death of or
injury to person, damage to any property or the environment and costs incurred
in connection with any investigation of site conditions or any cleanup,
remedial, removal, or restoration work required by any federal, state or local
governmental agency or political subdivision because of any Hazardous Material
present in, on, under or about the Leased Premises or the Project (including
soil and ground water contamination) which results from such a breach. Without
limiting the foregoing, if the presence of any Hazardous Material present in,
on, under or about the Leased Premises or the Project, Tenant shall promptly
take all actions at its sole expense as are necessary to return the same to the
condition existing prior to the introduction of such Hazardous Material;
provided that Landlord's approval of such actions, and the contractors to be
used by Tenant in connection therewith, shall first be obtained. This
indemnification of Landlord by Tenant shall survive the expiration or sooner
termination of this Lease.

          (b)  Tenant covenants and agrees that Tenant shall at all times be
responsible and liable for, and be in compliance with, all federal, state, local
and regional laws, ordinances, rules, codes and regulations, as amended from
time to time ("Governmental Requirements"), relating to health and safety and
environmental matters, arising, directly or indirectly, out of the use of
Hazardous Materials (as defined in Section 6.01(c) below) in the Project. Health
and safety and environmental matters for which Tenant is responsible under this
paragraph include, without limitation (i) notification and reporting to
governmental agencies, (ii) the provision of warnings of potential exposure to
Hazardous Materials to Landlord and Tenant's agents, employees, licensees,
contractors and others, (iii) the payment of taxes and fees, (iv) the proper
off-site transportation and disposal of Hazardous Materials, and (v) all
requirements, including training, relating to the use of equipment. Immediately
upon discovery of a release of Hazardous Materials associated with Tenant's
activities, Tenant shall give written notice to Landlord, whether or not such
release is subject to reporting under Governmental Requirements. The notice
shall include information on the nature and conditions of the release and
Tenant's planned response. Tenant shall be liable for the cost of any clean-up
of the release of any Hazardous Materials by Tenant on the Project.

          (c)  As used in this Lease, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste which is or becomes regulated
by any local governmental authority, the State of California or the United
States Government. The term "Hazardous Material" includes, without limitation,
any substance, material or waste which is (i) defined as a "hazardous waste" or
similar term under the laws of the jurisdiction where the Project is located,
(ii) designated as a "hazardous substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. Section 1317); (iii) defined as
a "hazardous waste" pursuant

                                       21
<PAGE>   25
to Section 1004 of the Federal Resource, Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903); (iv) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. (42
U.S.C. Section 9601); (v) hydrocarbons, petroleum, gasoline, crude oil or any
products, by-products or fractions thereof; or (vi) asbestos in any form or
condition.

           (d)  As Used in this Article 6, the term "Laws" means any applicable
federal, state or local laws, ordinances, rules or regulations relating to any
Hazardous Material affecting the Project, including, without limitation, the
specific laws, ordinances and regulations referred to in Section 6.01(c) above.
References to specific Laws shall also be references to any amendments thereto
and to any applicable successor Laws.

     6.02. LIMITATIONS ON ASSIGNMENT AND SUBLETTING. It shall not be
unreasonable for Landlord to withhold its consent to any proposed assignment or
subletting of the Leased Premises if the proposed transferee's anticipated use
of the Leased Premises involves the generation, storage, use, treatment, or
disposal of Hazardous Material (excluding standard office and janitorial
supplies; in limited quantities as hereinabove provided).

     6.03. LIMITATIONS ON ASSIGNMENT AND SUBLETTING. It shall not be
unreasonable for Landlord to withhold its consent to any proposed assignment or
subletting of the Leased Premises if (i) the proposed transferee's anticipated
use of the Leased Premises involves the generation, storage, use, treatment, or
disposal of Hazardous Material (excluding standard office and janitorial
supplies; in limited quantities as hereinabove provided); (ii) the proposed
transferee has been required by any prior landlord, lender or governmental
authority to take remedial action in connection with Hazardous Material
contaminating a property if the contamination resulted from such transferee's
actions or use of the property in question; or (iii) the proposed transferee is
subject to an enforcement order issued by any governmental authority in
connection with the generation, storage, use, treatment or disposal of a
Hazardous Material.

     6.04. RIGHT OF ENTRY. Landlord, its employees, agents and consultants,
shall have the right to enter the Leased Premises at any time, in case of an
emergency, and otherwise during reasonable hours and upon reasonable notice to
Tenant, in order to conduct periodic environmental inspections and tests to
determine whether any Hazardous Materials are present. The costs and expenses of
such inspections shall be paid by Landlord unless a default or breach of this
Lease, violation of Laws or contamination caused or permitted by Tenant is found
to exist. In such event, Tenant shall reimburse Landlord upon demand, as
Additional Rent, for the costs and expenses of such inspections.

     6.05. NOTICE TO LANDLORD. Tenant shall immediately notify Landlord in
writing of: (i) any enforcement, clean-up, removal or other governmental or
regulatory action instituted or threatened regarding the Leased Premises or the
Project pursuant to any Laws; (ii) any claim made or threatened by any person
against Tenant or the Leased Premises relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from or claimed to result from
any Hazardous Material; and (iii) any reports made to or received from any
governmental agency arising out of or in connection with any Hazardous Material
in or removed from the Leased Premises or the Project, including any complaints,
notices, warnings or asserted violations in connection therewith. Tenant shall
also supply to Landlord as promptly as possible, and in any event within three
(3) business days after Tenant first receives or sends the same, copies of all
claims, reports, complaints, notices, warnings, asserted violations or other
communications relating in any way to the Leased Premises or Tenant's use
thereof.

                                       22
<PAGE>   26
                                   ARTICLE 7.
             INSURANCE, INDEMNITY, CONDEMNATION, DAMAGE AND DEFAULT

     7.01.  LANDLORD'S INSURANCE. Subject to Tenant's obligations under Section
3.04 to pay Tenant's Proportionate Share of Basic Operating Cost, Landlord shall
secure and maintain policies of insurance for the Project (including the Leased
Premises) covering loss of or damage to the Project, including the Tenant
Improvements (as shown on the "as-built" plans provided to Landlord after
completion of construction of the Tenant Improvements), but excluding all
subsequent alterations, additions and improvements to the Leased Premises, with
loss payable to Landlord and to the holders of any deeds of trust, mortgages or
ground leases on the Project. Landlord shall not be obligated to obtain
insurance for Tenant's trade fixtures, equipment, furnishings, machinery or
other property. Such policies shall provide protection against fire and extended
coverage perils and such additional perils as Landlord deems suitable, and with
such deductible(s) as Landlord shall deem reasonably appropriate. Landlord shall
further secure and maintain commercial general liability insurance with respect
to the Project in such amount as Landlord shall determine, such insurance to be
in addition to, and not in lieu of, the liability insurance required to be
maintained by Tenant. In addition, Landlord may secure and maintain rental
income insurance. Landlord may elect to self-insure for the coverages required
under this Section 7.01. If the annual cost to Landlord for any such insurance
exceeds the standard rates because of the nature of Tenant's operations, Tenant
shall, upon receipt of appropriate invoices, reimburse Landlord for such
increases in cost, which amounts shall be deemed Additional Rent hereunder.
Tenant shall not be named as an additional insured on any policy of insurance
maintained by Landlord.

     7.02.  TENANT'S LIABILITY INSURANCE.

            (a)  Tenant (with respect to both the Leased Premises and the Common
Areas) shall secure and maintain, at its own expense, at all times during the
Term, a policy or policies of commercial general liability insurance with the
premiums thereon fully paid in advance, protecting Tenant and naming Landlord,
the holders of any deeds of trust, mortgages or ground leases on the Project,
and Landlord's representatives (which term, whenever used in this Article 7,
shall be deemed to include Landlord's partners, trustees, ancillary trustees,
officers, directors, shareholders, beneficiaries, agents, employees and
independent contractors) as additional insureds against claims for bodily
injury, personal injury, advertising injury and property damage (including
attorneys' fees) based upon, involving or arising out of Tenant's operations,
assumed liabilities or Tenant's use, occupancy or maintenance of the Leased
Premises and the Common Areas of the Project. Such insurance shall provide for a
minimum amount of Two Million Dollars ($2,000,000.00) for property damage or
injury to or death of one or more than one person in any one accident or
occurrence, with an annual aggregate limit of at least Four Million Dollars
($4,000,000.00). The coverage required to be carried shall include fire legal
liability, blanket contractual liability, personal injury liability (libel,
slander, false arrest and wrongful eviction), broad form property damage
liability, products liability and completed operations coverage (as well as
owned, non-owned and hired automobile liability if an exposure exists) and the
policy shall contain an exception to any pollution exclusion which insures
damage or injury arising out of heat, smoke or fumes from a hostile fire. Such
insurance shall be written on an occurrence basis and contain a separation of
insureds provision or cross-liability endorsement acceptable to Landlord. Tenant
shall provide Landlord with a certificate evidencing such insurance coverage.
The certificate shall indicate that the insurance provided specifically
recognizes the liability assumed by Tenant under this Lease (including without
limitation performance by Tenant under Section 7.04) and that Tenant's insurance
is primary to and not contributory with any other insurance maintained by
Landlord, whose insurance shall be considered excess insurance only. Not more
frequently than every two (2) years, if, in the opinion of any mortgagee of
Landlord or of the insurance broker retained by Landlord, the amount of
liability insurance coverage at that time is not adequate, then Tenant shall
increase its liability insurance coverage as required by either any mortgagee of
Landlord or Landlord's insurance broker.

                                       23
<PAGE>   27
            (b)   Tenant shall, at Tenant's expense, comply with (i) all
insurance company requirements pertaining to the use of the Leased Premises and
(ii) all rules, orders, regulations or requirements of the American Insurance
Association (formerly the National Board of Fire Underwriters) and with any
similar body.

      7.03. TENANT'S ADDITIONAL INSURANCE REQUIREMENTS.

            (a)   Tenant shall secure and maintain, at Tenant's expense, at all
times during the Term, a policy of physical damage insurance on all of Tenant's
fixtures, furnishings, equipment, machinery, merchandise and personal property
in the Leased Premises and on any Tenant Extra Improvements and alterations,
additions or improvements made by or for Tenant upon the Leased Premises, all
for the full replacement cost thereof without deduction for depreciation of the
covered items and in amounts that meet any co-insurance clauses of the policies
of insurance. Such insurance shall insure against those risks customarily
covered in an "all risk" policy of insurance covering physical loss or damage.
Tenant shall use the proceeds from such insurance for the replacement of
fixtures, furnishings, equipment and personal property and for the restoration
of Tenant Extra Improvements and alterations, additions or improvements to the
Leased Premises. Landlord shall be named as loss payee to the extent of the
value of any Tenant Extra Improvements. In addition, Tenant shall secure and
maintain, at all times during the Term, loss of income, business interruption
and extra expense insurance in such amounts as will reimburse Tenant for direct
or indirect loss of earnings and incurred costs attributable to all perils
commonly insured against by prudent tenants or attributable to prevention of
access to the Leased Premises or to the Building as a result of such perils;
such insurance shall be maintained with Tenant's property insurance carrier.
Further, Tenant shall secure and maintain at all times during the Term workers'
compensation insurance in such amounts as are required by law, employer's
liability insurance in the amount of One Million Dollars ($1,000,000.00) per
occurrence, and all such other insurance as may be required by applicable law
or as may be reasonably required by Landlord. In the event Tenant makes any
alterations, additions or improvements to the Leased Premises, prior to
commencing any work in the Leased Premises, Tenant shall secure "builder's all
risk" insurance which shall be maintained throughout the course of
construction, such policy being an all risk builder's risk completed value
form, in an amount approved by Landlord, but not less than the total contract
price for the construction of such alterations, additions or improvements and
covering the construction of such alterations, additions or improvements, and
such other insurance as Landlord may require, it being understood and agreed
that all of such alterations, additions or improvements shall be insured by
Tenant pursuant to this Section 7.03 immediately upon completion thereof.
Tenant shall provide Landlord with certificates of all such insurance. The
property insurance certificate shall confirm that the waiver of subrogation
required to be obtained pursuant to Section 7.05 is permitted by the insurer.
Tenant shall, at least thirty (30) days prior to the expiration of any policy
of insurance required to be maintained by Tenant under this Lease, furnish
Landlord with an "insurance binder" or other satisfactory evidence of renewal
thereof.

            (b)   All policies required to be carried by Tenant under this
Lease shall be issued by and binding upon a reputable insurance company of good
financial standing licensed to do business in the State of California with a
rating of at least A-VII, or such other rating as may be required by a lender
having a lien on the Project, as set forth in the most current issue of "Best's
Insurance Reports." Tenant shall not do or permit anything to be done that
would invalidate the insurance policies referred to in this Article 7. Evidence
of insurance provided to Landlord shall include an endorsement showing that
Landlord, its representatives and the holders of any deeds of trust, mortgages
or ground leases on the Project are included as additional insureds on general
liability insurance, and as loss payees for property insurance, to the extent
required hereunder, and an endorsement whereby the insurer agrees not to
cancel, non-renew or materially alter the policy without at least thirty (30)
days prior written notice to Landlord, its representatives and any mortgagee of
Landlord.

            (c)   In the event that Tenant fails to provide evidence of
insurance required to be provided by Tenant under this Lease, prior to
commencement of the Term, and thereafter during the Term, within ten

                                       24
<PAGE>   28
(10) days following Landlord's request therefor, and thirty (30) days prior to
the expiration date of any such coverage, Landlord shall be authorized (but not
required) to procure such coverage in the amounts stated with all costs thereof
(plus a fifteen percent (15%) administrative fee) to be chargeable to Tenant
and payable upon written invoice therefor, which amounts shall be deemed
Additional Rent hereunder.

            (d)   The minimum limits of insurance required by this Lease, or as
carried by Tenant, shall not limit the liability of Tenant nor relieve Tenant
of any obligation hereunder.

      7.04. INDEMNITY AND EXONERATION.

            (a)   To the extent not prohibited by law, Landlord and Landlord's
representatives shall not be liable for any loss, injury or damage to person or
property of Tenant, Tenant's agents, employees, contractors, invitees or any
other person, whether caused by theft, fire, act of God, acts of the public
enemy, riot, strike, insurrection, war, court order, requisition or order of
governmental body or authority or which may arise through repair, alteration or
maintenance of any part of the Project or failure to make any such repair or
from any other cause whatsoever, except as expressly otherwise provided in
Sections 7.06 and 7.07. Landlord shall not be liable for any loss, injury or
damage arising from any act or omission of any other tenant or occupant of the
Project, nor shall Landlord be liable under any circumstances (excluding
Landlord's negligence) for damage or inconvenience to Tenant's business or for
any loss of income or profit therefrom.

            (b)   Tenant shall indemnify, protect, defend and hold the Project,
Landlord and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses (including without limitation diminution in the value of the Leased
Premises) or expenses (including without limitation attorneys' fees, consultant
fees, testing and investigation fees, expert fees and court costs) arising out
of or in any way related to or resulting directly or indirectly from (i) the
use or occupancy of the Leased Premises, (ii) the activities of Tenant, its
agents, employees, contractors or invitees in or about the Leased Premises or
the Project (where not covered by Landlord's insurance), (iii) any failure to
comply with any applicable law, and (iv) any default or breach by Tenant in the
performance of any obligation of Tenant under this Lease; provided, however,
that the foregoing indemnity shall not be applicable to claims arising by
reason of the negligence or willful misconduct of Landlord.

            (c)   Tenant shall indemnify, protect, defend and hold the Project,
Landlord and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses (including without limitation diminution in the value of the Leased
Premises) or expenses (including without limitation attorneys' fees,
consultants fee, testing and investigation fees, expert fees and court costs)
arising out of or in any way related to or resulting directly or indirectly
from work or labor performed, materials or supplies furnished to or at the
request of Tenant or in connection with obligations incurred by or performance
of any work done for the account of Tenant in the Leased Premises or the
Project.

            (d)   The provisions of this Section 7.04 shall survive the
expiration or sooner termination of this Lease. BY SIGNING ITS INITIALS BELOW,
TENANT ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND
RAMIFICATIONS OF THE PROVISIONS SET FORTH IN THIS SECTION 7.04 AND FURTHER
ACKNOWLEDGES THAT SUCH PROVISIONS WERE SPECIFICALLY NEGOTIATED.

/s/ RP    /s/ HE
-------------------
Tenant's Initials

                                       25

<PAGE>   29
     7.05.  WAIVER OF SUBROGATION. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each waives all rights of recovery, claim,
action or cause of action against the other, its agents (including partners,
both general and limited), trustees, officers, directors, and employees, for
any loss or damage that may occur to the Leased Premises, or any improvements
thereto, or the Project or any personal property of such party therein, by
reason of any cause required to be insured against under this Lease to the
extent of the coverage required, regardless of cause or origin, provided that
such party's insurance is not invalidated thereby; and each party covenants
that, to the fullest extent permitted by law, no insurer shall hold any right of
subrogation against such other party. Tenant shall advise its insurers of the
foregoing and such waiver shall be a part of each policy maintained by Tenant
which applies to the Leased Premises, any part of the Project or Tenant's use
and occupancy of any part thereof.

      7.06. CONDEMNATION.

            (a) If the Leased Premises are taken under the power of eminent
domain or sold under the threat of the exercise of such power (all of which
are referred to herein as "condemnation"), this Lease shall terminate as to the
part so taken as of the date the condemning authority takes title or
possession, whichever first occurs (the "date of taking"). If the Leased
Premises or any portion of the Project is taken by condemnation to such an
extent as to render the Leased Premises untenantable as reasonably determined
by Landlord, this Lease shall, at the option of either party to be exercised in
writing within thirty (30) days after receipt of written notice of such taking,
forthwith cease and terminate as of the date of taking. All proceeds from any
condemnation of the Leased Premised shall belong and be paid to Landlord,
subject to the rights of any mortgagee of Landlord's interest in the Project or
the beneficiary of any deed of trust which constitutes an encumbrance thereon;
provided that Tenant shall be entitled to any compensation separately awarded
to Tenant for Tenant's relocation expenses or, loss of Tenant's trade fixtures.
If this Lease continues in effect after the date of taking pursuant to the
provisions of this Section 7.06(a), Landlord shall proceed with reasonable
diligence to repair, at its expense, the remaining parts of the Project and the
Leased Premises (other than any Tenant Extra Improvements, except to the extent
that there are proceeds adequate for such repair and for all other restoration
purposes) to substantially their former condition to the extent that the same
is feasible (subject to reasonable changes which Landlord shall deem desirable)
and so as to constitute a complete and tenantable Project and Leased Premises.
Net Rent shall abate to the extent appropriate during the period of
restoration, and Net Rent shall thereafter be equitably adjusted according to
the remaining Rentable Area of the Leased Premises and the Building.

            (b) In the event of a temporary taking of all or a portion of the
Leased Premises, there shall be no abatement of Rent and Tenant shall remain
fully obligated for performance of all of the covenants and obligation on its
part to be performed pursuant to the terms of this Lease. All proceeds awarded
or paid with respect thereto shall belong to Tenant.

      7.07. DAMAGE OR DESTRUCTION. In the event of a fire or other casualty in
the Leased Premises, Tenant shall immediately give notice thereof to Landlord.
The following provisions shall then apply:

            (a) If the damage is limited solely to the Lease Premises and the
Leased Premises can, in Landlord's opinion, be made tenantable with all damage
repaired within six (6) months from the date of damage, then Landlord shall be
obligated to rebuild the same to substantially their former condition to the
extent that the same is feasible (subject to reasonable changes which Landlord
shall deem desirable and such changes as may be required by applicable law) and
shall proceed with reasonable diligence to do so and this Lease shall remain in
full force and effect; provided, however, that Landlord shall have no
obligation to repair or restore any Tenant Extra Improvements except to the
extent that Landlord realizes insurance proceeds, if any, sufficient for such
purpose and for all other restoration and repair purposes.

                                       26

<PAGE>   30

          (b) If portions of the Project outside the boundaries of the Leased
Premises are damaged or destroyed (whether or not the Leased Premises are also
damaged or destroyed) and the Leased Premises and the Project can, in Landlord's
opinion, both be made tenantable with all damage repaired within six (6) months
from the date of damage or destruction, and provided that Landlord determines
that it is economically feasible, then Landlord shall be obligated to rebuild
the same to substantially their former condition to the extent that the same is
feasible (subject to reasonable changes which Landlord shall deem desirable and
such changes as may be required by applicable law) and shall proceed with
reasonable diligence to do so and this Lease shall remain in full force and
effect; provided, however, that Landlord shall have no obligation to repair or
restore any Tenant Extra Improvements except to the extent that Landlord
realizes insurance proceeds, if any, sufficient for such purpose and for all
other restoration and repair purposes.

          (c) Notwithstanding anything to the contrary contained in Sections
7.07(a) or 7.07(b) above, Landlord shall not have any obligation whatsoever to
repair, reconstruct or restore the Leased Premises when any damage thereto or to
the Project occurs during the last eighteen (18) months of the Term and Tenant
has not effectively exercised any option granted to Tenant to extend the Term.
Under such circumstances, Landlord shall promptly notify Tenant of its decision
not to rebuild, whereupon the Lease shall terminate as of the date of such
notice.

          (d) If neither Section 7.07(a) nor 7.07(b) above applies, Landlord
shall so notify Tenant within sixty (60) days after the date of the damage or
destruction and either Tenant or Landlord may terminate this Lease within thirty
(30) days after the date of such notice, such termination notice to be
immediately effective; provided, however, that Landlord shall have the right to
elect to reconstruct the Project and the Leased Premises, in which event (i)
Landlord shall notify Tenant of such election within said sixty (60) day period
and Tenant shall thereupon have no right to terminate this Lease, and (ii)
Landlord shall proceed with reasonable diligence to rebuild the Project and the
Leased Premises to substantially their former condition to the extent that the
same is feasible (subject to reasonable changes which Landlord shall deem
desirable and such changes as may be required by applicable law); provided
further, however, that Landlord shall have no obligation to repair or restore
any Tenant Extra Improvements except to the extent that Landlord realizes
insurance proceeds, if any, sufficient for such purpose and for all other
restoration and repair purposes.

          (e) During any period when Tenant's use of the Leased Premises is
significantly impaired by damage or destruction, Net Rent shall abate in
proportion to the degree to which Tenant's use of the Leased Premises is
impaired until such time as the Leased Premises are made tenantable as
reasonably determined by Landlord; provided that no such rental abatement shall
be permitted if the casualty is the result of the negligence or willful
misconduct of Tenant or Tenant's employees, agents, contractors or invitees.

          (f) The proceeds from any insurance paid by reason of damage to or
destruction of the Project or any part thereof insured by Landlord shall belong
to and be paid to Landlord, subject to the rights of any mortgagee of Landlord's
interest in the Project or the beneficiary of any deed of trust which
constitutes an encumbrance thereon. Tenant shall be responsible at its sole cost
and expense for the repair, restoration and replacement of (i) its fixtures,
furnishings, equipment, machinery, merchandise and personal property in the
Leased Premises, (ii) its alteration, additions and improvements, and (iii)
subject to Sections 7.07(a), (b) and (d) above, its Tenant Extra Improvements;
provided, however, that Landlord shall have the option of requiring Tenant to
assign to Landlord (or any party designated by Landlord) some or all of the
proceeds payable to Tenant under this Article 7, whereupon Landlord shall be
responsible for the repair or restoration of such insured property.

          (g) Landlord's repair and restoration obligations under this Section
7.07 shall not impair or otherwise affect the rights and obligations of the
parties set forth elsewhere in this Lease. Subject to Section 7.07(e), Landlord
shall not be liable for any inconvenience or annoyance to Tenant, its employees,
agents,

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<PAGE>   31

contractors or invitees, or injury to Tenant's business resulting in any way
from such damage or the repair thereof. Landlord and Tenant agree that the
terms of this Lease shall govern the effect of any damage to or destruction of
the Leased Premises or the Project with respect to the termination of this
Lease and hereby waive the provisions of any present or future statute or law
to the extent inconsistent therewith.

      7.08. DEFAULT BY TENANT.

            (a)   Events Of Default. The occurrence of any of the following
shall constitute an event of default on the part of Tenant:

                  (1)   Abandonment. Vacating the Leased Premises without the
intention to reoccupy same, or abandonment of the Leased Premises for a
continuous period of fourteen (14) days;

                  (2)   Nonpayment Of Rent. Failure to pay any installment of
Rent due and payable hereunder on the date when payment is due, such failure
continuing for a period of ten (10) business days after written notice of such
failure; provided, however, that Landlord shall not be required to provide such
notice more than two (2) times during the Term with respect to non-payment of
Net Rent or Additional Rent, the third such non-payment constituting default
without requirement of notice; furthermore, if Tenant shall be served with a
demand for the payment of past due Rent, any payment(s) tendered thereafter to
cure any default by Tenant shall be made only by cashier's check, wire-transfer
or direct deposit of immediately available funds;

                  (3)   Other Obligations. Failure to perform any obligation,
agreement or covenant under this Lease other than those matters specified in
subsections 7.08(a)(1) and 7.08(a)(2), such failure continuing for a period of
fifteen (15) business days after written notice of such failure (or such longer
period as is reasonably necessary to remedy such default, provided that Tenant
commences the remedy within such fifteen (15)-day period and continuously and
diligently pursues such remedy at all times until such default is cured);

                  (4)   General Assignment. Any general arrangement or
assignment by Tenant for the benefit of creditors;

                  (5)   Bankruptcy. The filing of any voluntary petition in
bankruptcy by Tenant, or the filing of an involuntary petition against Tenant,
which involuntary petition remains undischarged for a period of sixty (60)
days. In the event that under applicable law the trustee in bankruptcy or
Tenant has the right to affirm this Lease and continue to perform the
obligations of Tenant hereunder, such trustee or Tenant shall, within such time
period as may be permitted by the bankruptcy court having jurisdiction, cure
all defaults of Tenant hereunder outstanding as of the date of the affirmance
of this Lease and provide to Landlord such adequate assurances as may be
necessary to ensure Landlord of the continued performance of Tenant's
obligations under this Lease;

                  (6)   Receivership. The appointment of a trustee or receiver
to take possession of all or substantially all of Tenant's assets or the Leased
Premises, where possession is not restored to Tenant within ten (10) business
days;

                  (7)   Attachment. The attachment, execution or other judicial
seizure of all or substantially all of Tenant's assets or the Leased Premises,
if such attachment or other seizure remains undismissed or undischarged for a
period of ten (10) business days after the levy thereof;

                  (8)   Insolvency. The admission by Tenant in writing of its
inability to pay its debts as they become due; the filing by Tenant of a
petition seeking any reorganization, arrangement,

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<PAGE>   32
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation; the filing by Tenant of an answer
admitting or failing timely to contest a material allegation of a petition
filed against Tenant in any such proceeding; or, if within sixty (60) days
after the commencement of any proceeding against Tenant seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such proceeding shall not have been dismissed;

          (9)  Guarantor. If the performance of Tenant's obligations under this
Lease is guaranteed: (i) the death of a guarantor; (ii) the termination of a
guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty; (iii) a guarantor's becoming insolvent or the
subject of a bankruptcy filing; (iv) a guarantor's refusal to honor the
guaranty; or (v) a guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Tenant's failure, within sixty (60) days
following written notice by or on behalf of Landlord to Tenant of any such
event, to provide Landlord with written alternative assurance or security,
which, when coupled with the then existing resources of Tenant, equals or
exceeds the combined financial resources of Tenant and the guarantor(s) that
existed at the time of execution of this Lease; or

          (10) Partner. If Tenant is a partnership or consists of more than one
(1) person or entity, if any partner of the partnership or any person or entity
constituting Tenant is involved in any of the events or acts described in
subsections 7.08(a)(4) through (8).

          (11) Misrepresentation. The discovery by Landlord that any
representation, warranty or financial statement given to Landlord by Tenant or
any guarantor of Tenant's obligations under this Lease was materially false or
misleading.

     (b)  Remedies Upon Default:

          (1)  Termination. If an event of default occurs, Landlord shall have
the right, with or without notice or demand, immediately (after expiration of
any applicable grace period specified herein) to terminate this Lease, and at
any time thereafter recover possession of the Leased Premises or any part
thereof and expel and remove therefrom Tenant and any other person occupying
the same, by any lawful means, and again repossess and enjoy the Leased
Premises without prejudice to any of the remedies that Landlord may have under
this Lease, or at law or in equity by reason of Tenant's default or of such
termination.

          (2)  Continuation After Default. Even though Tenant has breached this
Lease and/or abandoned the Leased Premises, this Lease shall continue in effect
for so long as Landlord does not terminate Tenant's right to possession under
subsection 7.08(b)(1) hereof in writing, and Landlord may enforce all of its
rights and remedies under this Lease, including (but without limitation) the
right to recover Rent as it becomes due, and Landlord, without terminating this
Lease, may exercise all of the rights and remedies of a landlord under Section
1951.4 of the Civil Code of the State of California or any amended or successor
code section. Acts of maintenance or preservation, efforts to relet the Leased
Premises or the appointment of a receiver upon application of Landlord to
protect Landlord's interest under this Lease shall not constitute an election
to terminate Tenant's right to possession. If Landlord elects to relet the
Leased Premises for the account of Tenant, the rent received by Landlord from
such reletting shall be applied as follows: first, to the payment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; second, to
the payment of any costs of such reletting; third, to the payment of the cost
of any alterations or repairs to the Leased Premises; fourth, to the payment of
Rent due and unpaid hereunder; and the balance, if any, shall be held by
Landlord and applied in payment of future Rent as it becomes due. If that
portion of rent received from the reletting which is applied against the Rent
due hereunder is less than the amount of the Rent due, Tenant shall pay the
deficiency to Landlord promptly upon demand by Landlord. Such deficiency shall
be calculated and

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<PAGE>   33
paid monthly. Tenant shall also pay to Landlord, as soon as determined, any
costs and expenses incurred by Landlord in connection with such reletting or in
making alterations and repairs to the Leased Premises, which are not covered by
the rent received from the reletting.

          (c)  Damages Upon Termination. Should Landlord terminate this Lease
pursuant to the provisions of subsection 7.08(b)(1) hereof, Landlord shall have
all the rights and remedies of a landlord provided by Section 1951.2 of the
Civil Code of the State of California. Upon such termination, in addition to
any other rights and remedies to which Landlord may be entitled under
applicable law, Landlord shall be entitled to recover from Tenant: (i) the
worth at the time of award of the unpaid Rent and other amounts which had been
earned at the time of termination; (ii) the worth at the time of award of the
amount by which the unpaid Rent which would have been earned after termination
until the time of award exceeds the amount of such Rent loss that Tenant proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid Rent for the balance of the Term after the time of
award exceeds the amount of such Rent loss that Tenant at proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which, in the ordinary course of things, would
be likely to result therefrom. The "worth at the time of award" of the amounts
referred to in clauses (i) and (ii) shall be computed with interest at the
lesser of eighteen percent (18%) per annum or the maximum rate then allowed by
law. The "worth at the time of award" of the amount referred to in clause (iii)
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award plus one percent (1%).

          (d)  Computation of Rent for Purposes of Default. For purposes of
computing unpaid Rent which would have accrued and become payable under this
Lease pursuant to the provisions of Section 7.08(c), unpaid Rent shall consist
of the sum of:

               (1)  the total Base Rent for the balance of the Term, plus

               (2)  a computation of Tenant's Proportionate Share of Basic
Operating Cost for six (6) months, the assumed amount for the Computation Year
of the default and each future Computation Year in the Term to be equal to
Tenant's Proportionate Share of Basic Operating Cost for the Computation Year
immediately prior to the year in which default occurs, compounded at a per
annum rate equal to the mean average rate of inflation for the preceding five
(5) calendar years as determined by the United States Department of Labor,
Bureau of Labor Statistics Consumer Price Index (All Urban Consumers, all items
(1982-84=100)) for the Metropolitan Area or Region in which the Project is
located. If such Index is discontinued or revised, the average rate of inflation
shall be determined by reference to the index designated as the successor or
substitute index by the government of the United States.

          (e)  Late Charge. If any payment required to be made by Tenant under
this Lease is not received by Landlord within five (5) business days of the
date the same is due, Tenant shall pay to Landlord an amount equal to five
percent (5%) of the delinquency.

          (f)  Interest on Past-Due Obligations. Except as expressly otherwise
provided in this Lease, any Rent due Landlord hereunder, other than late
charges, which is not received by Landlord on the date on which it was due,
shall bear interest from the day after it was due at the maximum rate then
allowed by law, in addition to the late charge provided for in Section 7.08(e).

          (g)  Landlord's Right to Perform. Notwithstanding anything to the
contrary set forth elsewhere in this Lease, in the event Tenant fails to
perform any affirmative duty or obligation of Tenant under this Lease, then
within five (5) business days after written notice to Tenant (and without
notice in case of an emergency) Landlord may (but shall not be obligated to)
perform such duty or obligation on Tenant's behalf,

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<PAGE>   34
including, without limitation, the obtaining of insurance policies or
governmental licenses, permits or approvals. Tenant shall reimburse Landlord
upon demand for the costs and expenses of any such performance (including
penalties, interest and attorneys' fees incurred in connection therewith). Such
costs and expenses incurred by Landlord shall be deemed Additional Rent
hereunder.

          (h) Remedies Cumulative. All rights, privileges and elections or
remedies of Landlord are cumulative and not alternative with all other rights
and remedies at law or in equity to the fullest extent permitted by law.

          (i) Waiver. Tenant waives any right of redemption or relief from
forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or
under any other present or future law in the event Tenant is evicted and
Landlord takes possession of the Leased Premises by reason of a default.

                                   ARTICLE 8.
                                OPTION TO RENEW

     8.01. OPTION TO RENEW.

     (a)  Landlord hereby grants to Tenant two (2) options (respectively, the
"First Option" and "Second Option," collectively, the "Options") to extend the
term of this Lease for additional periods of five (5) years (respectively, the
"First Option Term" and "Second Option Term"), all on the following terms and
conditions:

          (1) An Option must be exercised, if at all, by written notice
irrevocably exercising the applicable Option ("Option Notice") delivered by
Tenant or Landlord not later than nine (9) months prior to the Term Expiration
Date with respect to the First Option and not later than nine (9) months prior
to the expiration date of the First Option Term ("First Option Expiration Date")
with respect to the Second Option. Further, an Option shall not be deemed to be
properly exercised if, as of the date of the Option Notice or at the Term
Expiration Date or at the First Option Expiration Date, as the case may be, (i)
Tenant is in default under this Lease, (ii) Tenant has assigned this Lease or
its interest therein (other than to an affiliate or subsidiary of Tenant), or
(iii) Tenant, or Tenant's affiliate or subsidiary, is in possession of less than
fifty percent (50%) of the square footage of the Leased Premises. Provided
Tenant has properly and timely exercised the First Option (or the Second
Option), the term of this Lease shall be extended for the period of the First
Option Term (or the Second Option Term), and all terms, covenants and conditions
of this Lease shall remain unmodified and in full force and effect, except that
the Base Rent shall be modified as set forth in subsection 8.01(a)(2) below.

          (2) The Base Rent payable for the First Option Term and the Second
Option Term shall be the greater of (i) the Base Rent payable on the Term
Expiration Date or the First Option Expiration Date, as the case may be, or (ii)
ninety-five percent (95%) of the then-current net rental rate per rentable
square foot (as further defined below, "FMRR") for the First Option Term, and
one hundred percent (100%) of the FMRR for the Second Option Term, being agreed
to in new leases by the Landlord and other landlords of buildings in the
Emeryville, California area which are comparable in quality, location and
prestige to the Building ("Comparable Buildings") and tenants leasing space in
the Building or Comparable Buildings. Annual increases in Base Rent during the
First Option Term and the Second Option Term shall be the annual increases being
agreed to in leases by the Landlord and other landlords of Comparable Buildings
and tenants. As used herein, "FMRR" shall mean the net rental rate per rentable
square foot for which Landlord and other landlords are entering into new leases
within the time period of twelve (12) to nine (9) months prior to the Term
Expiration Date or the First Option Expiration Date, as the case may be ("Market
Determination Period"), with new tenants leasing from Landlord and/or other
landlords office space in the Building and/or Comparable

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<PAGE>   35
Buildings ("Comparative Transactions"). To the extent such other Comparable
Buildings have historically received lower or higher rents from the rents in
the Building, then for the purpose of arriving at the FMRR, such rates when
used to establish the FMRR in the Building shall be increased or decreased as
appropriate to reflect such historical differences. Landlord shall provide its
determination of the FMRR to Tenant within fifteen (15) days after Landlord
receives the Option Notice for the First Option. Tenant shall have fifteen (15)
days ("Tenant's Review Period") after receipt of Landlord's notice of the FMRR
within which to accept such FMRR or to reasonably object thereto in writing. In
the event Tenant objects to the FMRR submitted by Landlord, Landlord and Tenant
shall attempt to agree upon such FMRR. If Landlord and Tenant fail to reach
agreement on such FMRR within ten (10) days following Tenant's Review Period
(the "Outside Agreement Date"), then each party shall place in a separate
sealed envelope its final proposal as to FMRR and such determination shall be
submitted to arbitration in accordance with subparagraph 8.01(b) below.

     (b)  Landlord and Tenant shall meet with each other within ten (10)
business days of the Outside Agreement Date and exchange the sealed envelopes
and then open such envelopes in each other's presence. If Landlord and Tenant
do not mutually agree upon the FMRR within one (1) business day of the exchange
and opening of envelopes, then, within ten (10) business days of the exchange
and opening of envelopes, Landlord and Tenant shall agree upon and jointly
appoint one arbitrator who shall by profession be a real estate appraiser or
broker who shall have been active over the five (5) year period ending on the
date of such appointment in the leasing of comparable commercial properties in
the vicinity of the Building. Neither Landlord nor Tenant shall consult with
such broker or appraiser as to his or her opinion as to FMRR prior to the
appointment. The determination of the arbitrator shall be limited solely to the
issue of whether Landlord's or Tenant's submitted FMRR for the Premises is the
closer to the actual rental rate per rentable square foot for new leases within
the Market Determination Period for Comparative Transactions. Such arbitrator
may hold such hearings and require such briefs as the arbitrator, in his or her
sole discretion, determines is necessary. In addition, Landlord or Tenant may
submit to the arbitrator with a copy to the other party within five (5)
business days after the appointment of the arbitrator any data and additional
information that such party deems relevant to the determination by the
arbitrator ("Data") and the other party may submit a reply in writing within
five (5) business days after receipt of such Data.

          (1) The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to whether the parties shall use Landlord's or
Tenant's submitted FMRR, and shall notify Landlord and Tenant of such
determination.

          (2) The decision of the arbitrator shall be binding upon Landlord and
Tenant.

          (3) If Landlord and Tenant fail to agree upon and appoint such
arbitrator, then the appointment of the arbitrator shall be made by the American
Arbitration Association.

          (4) The cost of arbitration shall be paid by Landlord and Tenant
equally.

          (5) The arbitration proceeding and all evidence given or discovered
pursuant thereto shall be maintained in confidence by all parties.

                                   ARTICLE 9.
                             MISCELLANEOUS MATTERS

     9.01. PARKING.

           (a) Provided Tenant is not in default of any term or provision of
this Lease, Landlord agrees to provide Tenant for use by the employees, agents,
customers and invitees of Tenant the number of

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<PAGE>   36

parking spaces designated on the Basic Lease Information sheet on an unreserved
and unassigned basis on those portions of the Project designated by Landlord for
parking. Tenant shall not use more parking spaces than said number of parking
spaces. The parking spaces will not be separately identified and Landlord shall
have no obligation to monitor the use of the parking area, however, entrance to
the Building garage shall be through a card-key system implemented by Landlord.
If a parking density problem occurs during the Term, Landlord may address the
problem, in its discretion, which solution may include initiating a parking
permit system or a reserved parking system and any costs associated therewith
(including, without limitation, costs of patrolling the Building garage and/or
parking area outside of the Building for compliance with the parking system)
shall constitute a Basic Operating Cost. All parking shall be subject to any and
all rules and regulations adopted by Landlord in its discretion from time to
time. Only automobiles no larger than full size passenger automobiles or pick-up
trucks or standard business use vehicles (which do not require parking spaces
larger than full size passenger automobiles) may be parked in the Project
parking area. Tenant shall not permit or allow any vehicles that belong to or
are controlled by Tenant or Tenant's employees, agents, customers or invitees to
be loaded, unloaded or parked in areas other than those designated by Landlord
for such activities. A failure by Tenant or any of its employees, agents,
customers or invitees to comply with the foregoing provisions shall afford
Landlord the right, but not the obligation, without notice, in addition to any
other rights and remedies available under this Lease, to remove and to tow away
the vehicles involved and to charge the cost to Tenant, which cost shall be
immediately due and payable upon demand by Landlord.

               (b) Landlord reserves the right to charge a per-car parking fee
during the Term if such parking fees are mandated or otherwise imposed by
applicable law. Rates to be charged by Landlord or its operator for such parking
shall be the then-prevailing market rate for parking in such area as established
by Landlord or its operator from time to time. If a parking fee is charged,
Tenant's right to use of the Building garage and/or a parking area shall be
subject to timely payment of the established parking fees.

        9.02. BROKERS. Landlord has been represented in this transaction by
Landlord's Broker. Tenant hat been represented in this transaction by Tenant's
Broker. Upon full execution of this Lease by both parties, Landlord shall pay to
Landlord's Broker a fee for brokerage services rendered by it in this
transaction if provided for in a separate written agreement between Landlord and
Landlord's Broker. Nothing contained in this Lease shall impose on Landlord
any obligation to pay a commission or fee to any party other than Landlord's
Broker and Tenant acknowledges that Landlord will not pay any commission or fee
to Tenant's Broker.

        Tenant represents and warrants to Landlord that the brokers named in the
Basic Lease Information sheet are the only agents, brokers, finders or other
similar parties with whom Tenant has had any dealings in connection with the
negotiation of this Lease and the consummation of the transaction contemplated
hereby. Tenant hereby agrees to indemnify, defend and hold Landlord free and
harmless from and against liability for compensation or charges which may be
claimed by any agent, broker, finder or other similar party by reason of any
dealings with or actions of Tenant in connection with the negotiation of this
Lease and the consummation of this transaction, including any costs, expenses
and attorneys' fern; incurred with respect thereto-

        9.03. NO WAIVER. No waiver by either party of the default or breach of
any term, covenant or condition of this lease by the other shall be deemed a
waiver of any other term, covenant or condition hereof, or of any subsequent
default or breach by the other of the same or of any other term, covenant or
condition hereof. Landlord's consent to, or approval of, any act shall not be
deemed to render unnecessary the obtaining of Landlord's consent to, or approval
of, any subsequent or similar act by Tenant, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. Regardless of Landlord's knowledge of a default or breach at the time
of accepting Rent, the acceptance of Rent by Landlord shall not be a waiver of
any preceding default or breach by Tenant of any provision hereof, other than
the

                                       33
<PAGE>   37

failure of Tenant to pay the particular Rent to accepted. Any payment given
Landlord by Tenant may be accepted by Landlord on account of monies or damages
due Landlord, notwithstanding any qualifying statements or conditions made by
Tenant in connection therewith, which statements and/or conditions shall be of
no force or effect whatsoever unless specifically agreed to in writing by
Landlord at or before the time of deposit of such payment.

        9.04. RECORDING. Neither this Lease nor a memorandum thereof shall be
recorded without the prior written consent of Landlord, which consent may be
withheld in Landlord's sole discretion

        9.05. HOLDING OVER. If Tenant holds over after expiration or termination
of this Lease without the written consent of Landlord, Tenant shall pay for each
month of hold-over tenancy one and one-half times the Net Rent which Tenant was
obligated to pay for the month immediately preceding the end of the Term for
each month or any part thereof of any such hold-over period, together with such
other amounts as may become due hereunder. No holding over by Tenant after the
Term shall operate to extend the Term. In the event of any unauthorized holding
over, Tenant shall indemnify, defend and hold Landlord harmless from and against
all claims, demands, liabilities, losses, costs, expenses (including attorneys'
fees), injury and damages incurred by Landlord as a result of Tenant's delay in
vacating the Leased Premises. Any holding over with the consent of Landlord in
writing shall thereafter constitute this Lease a lease from month-to-month,
terminable upon thirty (30) days' notice from either party, at a monthly rental
rate of one and one-half the Net Rent which Tenant was obligated to pay for the
month immediately preceding the end of the Term, together with such other
amounts as may become due hereunder.

        9.06. TRANSFERS BY LANDLORD. The term "Landlord" as used in this Lease
shall mean the owner(s) at the time in question of the fee title to the Leased
Premises or, if this is a sublease, of the Tenant's integration in the master
lease. If Landlord transfers, in whole or in part, its rights and obligations
under this Lease or in the Project, upon its transferee's assumption of
Landlord's obligations hereunder and delivery to such transferee of any unused
Security Deposit then held by Landlord, no further liability or obligations
shall thereafter accrue against the transferring or assigning person as Landlord
hereunder. Subject to the foregoing, the obligations and/or covenants in this
Lease to be performed by the Landlord shall be binding only upon the Landlord as
defined in this Section 9.06.

        9.07. ATTORNEYS' FEES. In the event either party places the enforcement
of this Lease, or any part of it, or the collection of any Rent due, or to
become due, hereunder, or recovery of the possession of the Leased Premises, in
the hands of an attorney, or files suit upon the same, the prevailing party
shall recover its reasonable attorneys' fees, costs and expenses, including
those which may be incurred on appeal. Such fees may be awarded in the same suit
or recovered in a separate suit, whether or not suit is filed or any suit that
may be filed is pursued to decision or judgment. The term "prevailing party"
shall include, without limitation, a party who substantially obtains or defeats
the relief sought, as the case may be, whether by compromise, settlement,
judgment, or the abandonment by the other party of its claim or defense. The
attorneys' fee award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees reasonably
incurred.

        9.08. TERMINATION; MERGER. No act or conduct of Landlord, including,
without limitation, the acceptance of keys to the Leased Premises, shall
constitute an acceptance of the surrender of the Leased Premises by Tenant
before the scheduled Term Expiration Date. Only a written notice barn Landlord
to Tenant shall constitute acceptance of the surrender of the Leased Premises
and accomplish a termination of this Lease. Unless specifically stated otherwise
in writing by Landlord, the voluntary or other surrender of this Lease by
Tenant, the mutual termination or cancellation hereof or a termination hereof by
Landlord for default by Tenant, shall automatically terminate any sublease or
lesser estate in the Leased Premises; provided

                                       34
<PAGE>   38

however, Landlord shall, in the event of any such surrender, termination or
cancellation, have the option to continue any one or all of any existing
subtenancies. Landlord's failure within thirty (30) days following any such
event to make any written election to the contrary by written notice to the
holder of any such lesser interest, shall constitute Landlord's election to have
such event constitute the termination of such interest.

        9.09. AMENDMENTS; INTERPRETATION. This Lease may not be altered, changed
or amended, EXCEPT by an instrument in writing signed by the parties in interest
at the time of the modification. The captions of this Lease are for convenience
only and shall not be used to define or limit any of its provisions.

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

        9.11. NOTICES. All notices, demands, consents and approvals which are
required or permitted by this Lease to be given by either party to the other
shall be in writing and shall be deemed to have bees fully given by personal
delivery or by recognized overnight courier service or when deposited in the
United States mail, certified or registered, with postage prepaid, and addressed
to the party to be notified at the address for such party specified on the Basic
Lease Information sheet, or to such other place as the parry to be notified may
from time to time designate by at least fifteen (15) days' notice to the
notifying party given in accordance with this Section 9.11, except that upon
Tenant's taking possession of the Leased Premises, the Leased Premises shall
constitute Tenant's address for notice purposes. A copy of all notices given to
Landlord under this Lease shall be concurrently transmitted to such party or
parties at such addresses as Landlord may from time to time hereafter designate
by notice to Tenant.

        Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. Notices delivered
by recognized overnight courier shall be deemed given twenty-four (24) hours
after delivery of the same to the courier. If notice is received on a Saturday,
Sunday or legal holiday, it shall be deemed received on the next business day.
Tenant hereby appoints as its agent to receive the service of all default
notices and notice of commencement of unlawful detainer proceedings the person
in charge of or apparently in charge of or occupying the Leased Premises at the
time, and, if there is no such person, then such service may be made by
attaching the same on the main entrance of the Leased Premises.

        9.12. FORCE MAJEURE. Any prevention, delay or stoppage of work to be
performed by Landlord or Tenant which is due to strikes, labor disputes,
inability to obtain labor, materials, equipment or reasonable substitutes
therefor, acts of God, governmental restrictions or regulations or controls,
judicial orders, enemy or hostile government actions, civil commotion, or other
causes beyond the reasonable control of the party obligated to perform
hereunder, shall excuse performance of the work by that party for a period equal
to the duration of that prevention, delay or stoppage. Nothing in this Section
9.12 shall excuse or delay Tenant's obligation to pay Rent or other charges due
under this Lease.

        9.13. GUARANTOR. If there are to be any guarantors of this Lease, the
guarantee shall be on a form provided by Landlord, and each such guarantor shall
have the same obligations as Tenant under this Lease, including, but not limited
to, the obligation to provide the estoppel certificate and information called
for by Section 5.13. It shall constitute a default of Tenant under this Lease if
any such guarantor fails or refuses, upon reasonable request by Landlord, to
give: (a) evidence of the due execution of the guarantee called for by this
Lease, including the authority of the guarantor (and of the party signing on
guarantor's behalf) to obligate

                                       35
<PAGE>   39

such guarantor on said guarantee, and including, in the case of a corporate
guarantor, a certified copy of a resolution of the board of directors of
guarantor authorizing the making of such guarantee, together with a certificate
of incumbency showing the signatures of the persons authorized to sign on its
behalf, (b) current financial statements of guarantor as may be requested
annually by Landlord; (c) an estoppel certificate; or (d) written confirmation
that the guarantee is still in effect

        9.14. SUCCESSORS AND ASSIGNS. This lease shall be binding upon and inure
to the benefit of Landlord, its successors and assigns (subject to the
provisions hereof including, without limitation, Section 5.15), and shall be
binding upon and inure to the benefit of Tenant, its successors, and to the
extent assignment or subletting, if required to be approved may be approved by
Landlord hereunder, Tenant's assigns or subtenants.

        9.15. FURTHER ASSURANCES. Landlord and Tenant each agree to promptly
sign all documents reasonably requested to give effect to the provisions of this
Lease.

        9.16. INCORPORATION OF PRIOR AGREEMENTS. This Lease, including the
exhibits and addenda attached to it, contains all agreements of Landlord and
Tenant with respect to any matter referred to herein. No prior agreement or
understanding pertaining to such matters shall be effective.

        9.17. APPLICABLE LAW. This Lease shall be governed by, construed and
enforced in accordance with the laws of the State of California.

        9.18. TIME OF THE ESSENCE. Time is of the essence of each and every
covenant of this Lease. Each and every covenant, agreement or other provision of
this lease on Tenant's part to be performed shall be deemed and construed as a
separate and independent covenant of Tenant, not dependent on any other
provision of this Lease or on any other covenant or agreement set forth herein.

        9.19. NO JOINT VENTURE. This Lease shall not be deemed or construed to
create or establish any relationship of partnership or joint venture or similar
relationship or arrangement between Landlord and Tenant hereunder.

        9.20. AUTHORITY. If Tenant is a corporation, trust or general or limited
partnership, each individual executing this Lease on behalf of Tenant represents
and warrants that he or she is duly authorized to execute and deliver this Lease
on Tenant's behalf and that this Lease is binding upon Tenant in accordance with
its terms. If Tenant is a corporation, trust or partnership, Tenant shall,
within ten (10) business days after request by Landlord, deliver to Landlord
evidence satisfactory to Landlord of such authority.

        9.21. DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS. Tenant
acknowledges that it has received and read the CC&Rs for the Project and agrees
to comply with and be bound by all terms, conditions and provisions thereof.
Tenant further acknowledges and agrees that a default by Tenant under the CC&Rs
shall constitute a default hereunder. All obligations of Landlord hereunder
shall be limited to the extent performance of same is prohibited, restricted or
limited under the CC&Rs.

        9.22. OFFER. Preparation of this Lease by Landlord or Landlord's agent
and submission of same to Tenant shall not be deemed an offer to lease to
Tenant. This Lease is not intended to be binding and shall not be effective
until fully executed by both Landlord and Tenant.

                                       36
<PAGE>   40

        9.23. EXHIBITS; ADDENDA. The following Exhibits and addenda are attached
to, incorporated in and made a part of this Lease: EXHIBIT A Floor Plan of the
Leased Premises; EXHIBIT B Initial Improvement of the Leased Premises; EXHIBIT C
Confirmation of Term of Lease; and EXHIBIT D Building Rules and Regulations.

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

                                        "LANDLORD":

                                        BEP-EMERYVILLE, L.P.,
                                        a Delaware limited partnership

                                        By: EPI Investors 103 LLC.,
                                            a California limited liability
                                            company
                                            Its: General Partner

                                        By: Ellis Partners, Inc.,
                                            a California corporation
                                            Its: Managing Member

                                        By: /s/ HAROLD A. ELLIS, JR.
                                           -------------------------------------
                                        Typed Name:  Harold A. Ellis, Jr.
                                                   -----------------------------
                                        Title:       President
                                              ----------------------------------

                                        "TENANT":

                                        COLO.COM. INC.,
                                        a California corporation

                                        By:  /s/ RICHARD J. PALOMBA
                                           -------------------------------------
                                        Typed Name:  Richard J. Palomba
                                                   -----------------------------
                                        Title:       VP Real Estate
                                              ----------------------------------

                                       37
<PAGE>   41

                                    EXHIBIT A

                                   FLOOR PLAN
                                     OF THE
                                 LEASED PREMISES

                                       1
<PAGE>   42

                                  [FLOOR PLAN]

<PAGE>   43

                                    EXHIBIT B
                   INITIAL IMPROVEMENT OF THE LEASED PREMISES

        1. Tenant Improvements. Tenant, through a duly licensed contractor
("Tenant's Contractor") (Tenant's Contractor shall be subject to Landlord's
written approval, which approval shall not be unreasonably withheld), shall
construct and install the Tenant Improvements in the Leased Premises,
substantially in accordance with plans, working drawings and specifications
("Tenant's Plans") prepared by Tenant's architects and engineers and approved by
Landlord. The costs of preparing Tenant's Plans and performing the Tenant
Improvements shall be allocated between, and paid by, Landlord and Tenant as set
forth in this EXHIBIT B.

        2. Tenant's Plans. As soon as reasonably possible, Tenant shall submit
Tenant's Plans to Landlord for Landlord's written approval (which shall not be
unreasonably withheld). Tenant's Plans shall be prepared by qualified licensed
architects and engineers retained by Tenant and approved within five (5)
business days (if Tenant provides Landlord with at least ten (10) business days
prior written notice of the date Tenant's Plans shall be provided to Landlord
for its review ("Review Notice")) in writing by Landlord (which approval shall
not be unreasonably withheld), shall comply with all applicable codes, laws,
ordinances, rules and regulations, shall not adversely affect the Building shell
or core or any systems, components or elements of the Building, shall be in a
form sufficient to secure the approval of all government authorities with
jurisdiction over the Building, and shall be otherwise satisfactory to Landlord
in Landlord's reasonable discretion. Landlord shall have ten (10) business days
to approve Tenant's Plans in writing if Tenant fails to provide or does not
timely provide the Review Notice. Tenant's Plans shall be complete plans,
working drawings and specifications for the layout, improvement and finish of
the Leased Premises consistent with the design and construction of the Building,
including mechanical and electrical drawings and decorating plans, showing the
following:

               (a) Location and type of all partitions;

               (b) Location and type of all doors, with hardware and keying
        schedule;

               (c) Ceiling plans, including light fixtures;

               (d) Location of telephone equipment room, with all special
        electrical and cooling requirements; .

               (e) Location and type of all electrical outlets, switches,
        telephone outlets, and lights;

               (f) Location of all sprinklers;

               (g) Location and type of all equipment requiring special
        electrical requirements;

               (h) Location, weight per square foot and description of any heavy
        equipment or filing system exceeding fifty (50) pounds per square foot
        live and dead load;

               (i) Requirements for special air conditioning or ventilation;

               (j) Type and color of floor covering;

                                       1
<PAGE>   44

               (k) Location, type and color of wall covering;

               (1) Location, type and color of paint or finishes;

               (m) Location and type of plumbing;

               (n) Location and type of kitchen equipment;

               (o) Indicate critical dimensions necessary for construction;

               (p) Details showing all millwork with verified dimensions and
        dimensions of all equipment to be built in, corridor entrances, bracing
        or support of special walls or glass partitions, and any other items or
        information requested by Landlord; and

               (q) Location of all cabling.

        3. Tenant's Plans shall be subject to Landlord's written approval (which
shall not be unreasonably withheld). If Landlord disapproves Tenant's Plans, or
any portion thereof Landlord shall promptly give notice to Tenant setting forth
the reasons for disapproval. As promptly as reasonably possible thereafter, but
not later than five (5) business days after Landlord's notice, Tenant shall
submit to Landlord revised Tenant's Plans. Such revisions shall be subject to
Landlord's written approval within five (5) business days (which approval shall
not be unreasonably withheld). Landlord's review and approval of Tenant's Plans
shall not constitute, and Landlord shall not be deemed to have made, any
representation or warranty as to the compliance of the Tenant Improvements with
any laws or as to the suitability of the Leased Premises or the Tenant
Improvements for Tenant's needs.

        4. Construction.

        (a) Landlord, at its sole cost and expense and with no deduction from
Landlord's Contribution (as defined below), shall provide the "warm shell" of
the Leased Premises as further shown on EXHIBIT B-1, which shall include the
following: (i) windows, side walls and an entry door, (ii) the restroom core;
(iii) HVAC on the roof (one ton of HVAC per 300 rentable square feet), but not
distributed; (iv) insulation; (v) line for plumbing, but not distributed; (vi)
main sprinkler lines, but not distributed; (vii) a new floor slab in the light
well areas; and (viii) extending the second floor deck over the first floor
light wells.

        (b) Tenant's Contractor shall complete the Tenant Improvements in the
Leased Premises substantially in accordance with Tenant's Plans and in a good
and workmanlike manner. Tenant shall promptly pay when due the entire cost of
all of the Tenant Improvements (including the cost of all utilities, permits,
fees, taxes, and property and liability insurance in connection therewith)
required by Tenant's Plans. Landlord shall have the right to inspect the Tenant
Improvements during the course of construction by Landlord's architect, project
manager or other agents. Tenant shall be solely responsible for the timely
completion of the Tenant improvements, and shall be responsible for all
increased costs and expenses attributable to any delays or increases in costs of
labor or materials. Landlord shall have no liability to Tenant if the Leased
Premises is not suitable for Tenant's occupancy or if Tenant has not obtained
all the necessary permits to occupy the Leased Premises by the Term Commencement
Date, unless such delay is caused by Landlord's unreasonable delay in review and
approval of Tenant's plans, provided that Tenant has its best efforts to obtain
occupancy and all necessary permits by the Term Commencement Date.

                                       2
<PAGE>   45
        5. Landlord's and Tenant's Contributions. As Landlord's contribution for
the costs of Tenant Improvements (Landlord is to pay for Landlord's Work,
defined as either improvements constructed or paid for by Landlord), Landlord
shall give Tenant an allowance in the maximum amount of $10.00 per square foot
of Rentable Area, which equals $146,570.00 based upon 14,657 rentable square
feet ("Landlord's Contribution"). Landlord's Contribution may be used only for
direct hard and soft costs, including construction costs, architect fees, and
consultant fees. Any costs of preparing Tenant's Plans and constructing the
Tenant Improvements in excess of Landlord's Contribution shall be paid by Tenant
and shall constitute Tenant's Extra Improvements.

        6. Changes. Except for minor and immaterial changes, if Tenant requests
any change in Tenant's Plans, Tenant shall request such change in a written
notice to Landlord. Each such request shall be accompanied by proper plans and
specifications prepared by Tenant's architects or engineers, at Tenant's
expense, necessary to show and explain such change from the previously approved
Tenant's Plans. All changes in Tenant's Plans (except for minor and
immaterial changes) shall be subject to the prior written approval of Landlord
which shall be given within five (5) business days (which shall not be
unreasonably withheld).

        7. Other Work by Tenant. All work not within the scope of the normal
construction trades employed on the Building, such as the furnishing and
installing of furniture, telephone equipment, office equipment and wiring, shall
be furnished and installed by Tenant at Tenant's expense.

        8. Requirements for Work Performed by Tenant. All work performed at the
Building or in the Project by Tenant or Tenant's Contractor or subcontractors
shall be subject to the following additional requirements:

               a. Such work shall not proceed until Landlord has approved in
        writing: (i) Tenant's contractor, (ii) commercially reasonable amount
        and coverage of public liability and property damage insurance, with
        Landlord named as an additional insured, carried by Tenant's contractor,
        (iii) complete and detailed plans and specifications for such work, and
        (iv) a schedule for the work.

               b. All work shall be done in conformity with a valid permit when
        required, a copy of which shall be furnished to Landlord before such
        work is commenced. In any case, all such work shall be performed in
        accordance with all applicable laws. Notwithstanding any failure by
        Landlord to object to any such work, Landlord shall have no
        responsibility for Tenant's failure to comply with applicable laws.

               c. Tenant or Tenant's Contractor shall arrange for necessary
        utility, hoisting and elevator service, on a nonexclusive basis, with
        Landlord. Landlord shall have the right to require any necessary
        movement of materials by the elevator to be done after regular working
        hours.

               d. Tenant shall be responsible for cleaning the Leased Premises,
        the Building and the Project and removing all debris in connection with
        the Tenant Improvements and its other work. All completed work shall be
        subject to inspection and acceptance by Landlord. Tenant shall reimburse
        Landlord for the cost of third party supervision of construction of the
        Tenant Improvements (which may be deducted by Landlord from Landlord's
        Initial Contribution) upon demand and for all extra expense incurred
        by Landlord by reason of faulty work done by Tenant or Tenant's
        Contractor or by reason of inadequate cleanup by Tenant or Tenant's
        Contractor. Landlord will provide Tenant with copies of third party
        consultant invoices within five (5) business days of Tenant's request
        for such invoices.

               e. Tenant shall be responsible for the cost of separately
        metering electrical utilities to the Leased Premises.

                                       3
<PAGE>   46
                                    EXHIBIT C

                          CONFIRMATION OF TERM OF LEASE

        This Confirmation of Term of Lease is made by and between
BEP-EMERYVILLE, L.P., a Delaware limited partnership, as Landlord,
and_____________________, a___________________ as Tenant, who agree as follows:

        1. Landlord and Tenant entered into a Lease dated________________,
19_______(the "Lease") in which Landlord leased to Tenant and Tenant leased from
Landlord the Leased Premises described in the Basic Lease Information sheet of
the Lease (the "Leased Premises").

        2. Pursuant to Section 3.01 of the Lease, Landlord and Tenant agree to
confirm the commencement date and expiration date of the Term of the Lease as
follows:

                a.      _______________________, 19_____, is the Term
                        Commencement Date;

                b.      _______________________, 19_____, is the Term Expiration
                        Date;

                c.      _______________________, 19____ , is the commencement
                        date of Rent under the Lease.

        3. Tenant hereby confirms that the Lease is in full force and effect
and:

                a.      It has accepted possession of the Leased Premises as
                        provided in the Lease;

                b.      The improvements and space required to be furnished by
                        Landlord under the Lease have been furnished;

                c.      Landlord has fulfilled all its duties of an inducement
                        nature;

                d.      The Lease has not been modified, altered or amended,
                        except as follows: ____________________________________;
                        and

                e.      There are no setoffs or credits against Rent and no
                        security deposit has been paid except as expressly
                        provided by the Lease.

                                       1
<PAGE>   47

        4. The provisions of this Confirmation of Term of Lease shall inure to
the benefit of, or bind, as the case may require, the parties and their
respective successors, subject to the restrictions on assignment and subleasing
contained in the Lease.

        DATED:_____________________________, 19______

"LANDLORD":                                  "TENANT":

BEP-EMERYVILLE, L.P.,                        __________________________________,
a Delaware limited partnership               a_________________________________

By: EPI Investors 103 LLC,                   By:_______________________________
    a California limited liability company   Name:_____________________________
    Its: General Partner                     Title:____________________________

By: Ellis Partners, Inc.,
    a California corporation
    Its: Managing Member

By:_______________________________
Typed Name:_______________________
Title:____________________________

By:_______________________________
Typed Name:_______________________
Title:____________________________

                                       2
<PAGE>   48
                                   EXHIBIT D

                         BUILDING RULES AND REGULATIONS

        1. The sidewalks, doorways, halls, stairways, vestibules and other
similar areas shall not be obstructed by Tenant or used by it for any purpose
other than ingress to and egress from the Leased Premises, and for going from
one part of the Building to another part. Corridor doors, when not in use, shall
be kept closed. Before leaving the Building, Tenant shall ensure that all doors
to the Leased Premises are securely locked and all water faucets and electricity
are shut off.

        2. Plumbing fixtures shall be used only for their designated purpose,
and no foreign substances of any kind shall be deposited therein. Damage to any
such fixtures resulting from misuse by Tenant or any employee or invitee of
Tenant shall be repaired at the expense of Tenant.

        3. Nails, screws and other attachments to the Building require prior
written consent from Landlord, except for the routine hanging of pictures and
diplomas or certifications. Tenant shall not mar or deface the Leased Premises
in any way. Tenant shall not place anything on or near the glass of any window,
door or wall which may appear unsightly from outside the Leased Premises.

        4. All contractors and technicians rendering any installation service to
Tenant shall be subject to Landlord's approval and supervision prior to
performing services. This applies to all work performed in the Building,
including, but not limited to, installation of telephones, telegraph equipment,
wiring of any kind, and electrical devices, as well as all installations
affecting floors, walls, woodwork, windows, ceilings and any other physical
portion of the Building.

        5. Movement in or out of the Building of furniture, office equipment,
safes or other bulky material which requires the use of elevators, stairways, or
the Building entrance and lobby shall be restricted to hours established by
Landlord. All such movement shall be under Landlord's supervision, and the use
of an elevator for such movements shall be restricted to the Building's freight
elevator. Arrangements shall be made at least 24 hours in advance with Landlord
regarding the time, method, and routing of such movements. Tenant shall pay for
the services of the employees of the elevator service company employed when
safes and other heavy articles are moved into or from the Building, and Tenant
shall assume all risks of damage and pay the cost of repairing or providing
compensation for damage to the Building, to articles moved and injury to persons
or property resulting from such moves. Landlord shall not be liable for any acts
or damages resulting from any such activity.

        6. Landlord shall have the right to limit the weight and size of, and to
designate the location of, all safes and other heavy property brought into the
Building.

        7. Tenant shall cooperate with Landlord in maintaining the Leased
Premises. Tenant shall not employ any person for the purpose of cleaning the
Leased Premises other than the Building's cleaning and maintenance personnel.
Window cleaning shall be done only by Landlord's agents at such times and during
such hours as Landlord shall elect. Janitorial services will not be furnished on
nights when rooms are occupied after 7:00 P.M.

        8. Deliveries of water, soft drinks, newspapers or other such items to
the Leased Premises shall be restricted to hours established by Landlord and
made by use of the freight elevator if Landlord so directs.

                                       1
<PAGE>   49
        9. Nothing shall be swept or thrown into the corridors, halts, elevator
shafts or stairways. No birds, fish or animals of any kind shall be brought into
or kept in, on or about the Leased Premises, with the exception of guide dogs
where necessary.

        10. No cooking shall be done in the Leased Premises except in connection
with a convenience lunch room for the sole use of employees and guests (on a
non-commercial basis) in a manner which complies with all of the provisions of
the Lease and which does not produce fumes or odors.

        11. Food, soft drink or other vending machines shall not be placed
within the Leased Premises without Landlord's prior written consent.

        12. Tenant shall not install or operate on the Leased Premises any
electric heater, stove or similar equipment without Landlord's prior written
consent. Tenant shall not use or keep on the Leased Premises any kerosene,
gasoline, or inflammable or combustible fluid or material other than limited
quantities reasonably necessary for the operation and maintenance of office
equipment utilized at the Leased Premises. No explosives shall be brought onto
the Project at any time.

        13. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to assure the most effective operation
of the Building's heating and air conditioning and to comply with any
governmental energy-saving rules, laws or regulations of which Tenant has actual
notice. Tenant shall not tamper with or attempt to adjust temperature control
thermostats in the Leased Premises; Landlord shall make reasonable adjustments
in thermostats upon request from Tenant.

        14. The Building air conditioning system is designed for operation only
with all outside Building windows closed; accordingly, Tenant shall not open or
allow any outside window to be opened at any time.

        15. Tenant, its employees, agents and invitees shall each comply with
all requirements necessary for the security of the Leased Premises, including,
if implemented by Landlord, the use of service passes issued by Landlord for
after-hours movement of office equipment/packages, and the signing of a security
register in the Building lobby after hours. Landlord reserves the right to
refuse entry to the Building after normal business hours to Tenant, its
employees, agents or invitees, or any other person without satisfactory
identification showing his or her right of access to the Building at such time.
Landlord shall not be liable for any damages resulting from any error in regard
to any such identification or from such admission to or exclusion from the
Building. Landlord shall not be liable to Tenant for losses due to theft or
burglary, or for damage by unauthorized persons in, on or about the Project, and
Tenant assumes full responsibility for protecting the Leased Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry closed.

        16. Landlord will furnish Tenant with a reasonable number of initial
keys for entrance doors into the Leased Premises, and may charge Tenant for
additional keys thereafter. All such keys shall remain the property of Landlord.
No additional locks are allowed on any door of the Leased Premises without
Landlord's prior written consent and Tenant shall not make any duplicate keys.
Upon termination of this Lease, Tenant shall surrender to Landlord all keys to
the Leased Premises, and give to Landlord the combination of all locks for safes
and vault doors, if any, in the Leased Premises.

        17. Tenant shall not bring into (or permit to be brought into) the
Building any bicycle or other type of vehicle.

        18. Landlord retains the right at any time without liability to Tenant,
to change the name and street address of the Building, except as otherwise
expressly provided is the Lease with respect to signage.

                                       2
<PAGE>   50
        19. Canvassing, peddling, soliciting, and distribution of handbills in
or at the Project are prohibited and Tenant will cooperate to prevent these
activities.

        20. The Building hours of operation are 7:00 A.M. to 6:00 P.M., Monday
through Friday, excluding holidays, Landlord reserves the right to close and
keep locked all entrance and exit doors of the Building on Saturdays, Sundays
and legal holidays, and between the hours of 6:00 P.M. of any day and 7:00 A.M.
of the following day, and during such other hours as Landlord may deem advisable
for the protection of the Building and the tenants thereof.

        21. The requirements of Tenant will be attended to only upon application
to the Project manager. Employees will not perform any work or do anything
outside of their regular duties unless under specific instruction from the
Project manager.

        22. Tenant shall cooperate fully with the life safety program of the
Building as established and administered by Landlord. This shall include
participation by Tenant and its employees in exit drills, fire inspections, life
safety orientations and other programs relating to fire and life safety that may
be established by Landlord.

        23. No smoking shall be permitted in the Building.

        24. Landlord reserves the right to rescind any of these rules and
regulations and to make future rules and regulations required for the safety,
protection and maintenance of the Project, the operation and preservation of the
good order thereof and the protection and comfort of the tenants and their
employees and visitors. Such rules and regulations, when made and written notice
thereof given to Tenant, shall be binding as if originally included herein.
Landlord shall not be responsible to Tenant for the non-observance or violation
of these rules and regulations, by any other tenant of the Building. Landlord
reserves the right to exclude or expel from the Project any person who, in
Landlord's judgment, is under the influence of liquor or drugs, or who shall in
any manner do any act in violation of any of these rules and regulations.

                                       3
<PAGE>   51
                                    EXHIBIT C

                          CONFIRMATION OF TERM OF LEASE

        This Confirmation of Tern of Lease is made by and between
BEP-EMERYVILLE, L.P., a Delaware limited partnership, as Landlord, and COLO.COM,
Inc., a California Corporation, as Tenant, who agree as follows:

        1. Landlord and Tenant entered into a Lease dated July 16, 1999 (the
"Lease"), in which Landlord leased to Tenant and Tenant leased from Landlord the
Leased Premises described in the Basic Lease Information sheet of the Lease (the
"Leased Premises").

        2. Pursuant to Section 3.01 of the Lease, Landlord and Tenant agree to
confirm the commencement date and expiration date of the Term of the Lease as
follows:

                a.      November 15, 1999, is the Term Commencement Date;

                b.      November 30, 2009, is the Term Expiration Date;

                c.      November 15, 1999, is the commencement date of Rent
                        under the Lease.

        3. Tenant hereby confirms that the Lease is in full force and effect
and:

                a.      It has accepted possession of the Leased Premises as
                        provided is the Lease;

                b.      The improvements and space required to be furnished by
                        Landlord under the Lease have been furnished;

                c.      Landlord has fulfilled all its duties of an inducement
                        nature;

                d.      The Lease has not been modified, altered or amended,
                        except as follows: *see below; and

                e.      There are no setoffs or credits against Rent and no
                        security deposit has been paid except as expressly
                        provided by the Lease.

                        *Basic Lease Information Sheet is hereby reduced to
                        seven (7) spaces due to Tenant's use of six (6) spaces
                        for HVAC equipment.

                                       1
<PAGE>   52

        4. The provisions of this Confirmation of Term of Lease shall inure to
the benefit of or bind, as the case may require, the parties and their
respective successors, subject to the restrictions on assignment and subleasing
contained in the Lease.

        DATED: 12/15, 1999

"LANDLORD":                                  "TENANT":

BEP-EMERYVILLE, L.P.,                        COLO. COM, Inc .
a Delaware limited partnership               a California Corporation
By: EPI Investors 103 LLC,                   By: /s/ RICHARD J. PALOMBA
    a California limited liability company   Name: Richard J. Palomba
    Its: General Partner                     Tide: VP Real Estate

By: Ellis Partners, Inc.,
    a California corporation
    Its: Managing Member

By:___________________________________
Typed Name:___________________________
Title:________________________________

By:___________________________________
Typed Name:___________________________
Title:________________________________

                                       2

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