Document:

<PAGE>

                                                                   Exhibit 10.10

                                     NOTE

$880,000.00                                                       Menlo Park, CA
 ----------

May 10, 2000
------------

          FOR VALUE RECEIVED, Michael I. Green promises to pay to Loudcloud,
Inc., a Delaware corporation (the "Company"), or order, the principal sum of
Eight Hundred Eighty Thousand Dollars ($880,000.00), together with interest on
the unpaid principal hereof from the date hereof at the rate of Six and one-
quarter percent (6.25%) per annum, compounded annually.

          Principal and interest shall be due and payable on May 10, 2004.
Payment of principal and interest shall be made in lawful money of the United
States of America.

          The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.

          This Note is subject to the terms of the Restricted Stock Purchase
Agreement, dated as of May 10, 2000. This Note is secured in part by a pledge of
the Company's Common Stock under the terms of a Security Agreement of even date
herewith and is subject to all the provisions thereof.

          The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.

          In the event the undersigned shall cease to be an employee, director
or consultant of the Company for any reason, this Note shall, at the option of
the Company, be accelerated, and the whole unpaid balance on this Note of
principal and accrued interest shall be immediately due and payable.

          Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned. This Note is being delivered in and shall be construed in
accordance with the laws of the State of California, without regard to the
conflicts of laws provisions thereof.

                                            /s/ Michael I. Green
                                            --------------------------
                                            Signature

                                            /s/ Michael I. Green
                                            --------------------------
                                            Print Name<PAGE>

                                                                   Exhibit 10.11

                                      NOTE

$ 881,377.20                                                      Menlo Park, CA
 -------------------------

June 22, 2000
-------------

          FOR VALUE RECEIVED, Roderick M. Sherwood III promises to pay to
Loudcloud, Inc., a Delaware corporation (the "Company"), or order, the principal
sum of Eight Hundred Eighty-One Thousand Three Hundred Seventy-Seven Dollars and
Twenty Cents ($881,377.20), together with interest on the unpaid principal
hereof from the date hereof at the rate of Six and one-quarter percent (6.25%)
per annum, compounded annually.

          Principal and interest shall be due and payable on June 22, 2004.
                                                             -------------
Payment of principal and interest shall be made in lawful money of the United
States of America.

          The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.

          This Note is subject to the terms of the Restricted Stock Purchase
Agreement, dated as of June 22, 2000. This Note is secured in part by a pledge
                       -------------
of the Company's Common Stock under the terms of a Security Agreement of even
date herewith and is subject to all the provisions thereof.

          The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.

          In the event the undersigned shall cease to be an employee, director
or consultant of the Company for any reason, this Note shall, at the option of
the Company, be accelerated, and the whole unpaid balance on this Note of
principal and accrued interest shall be immediately due and payable.

          Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned. This Note is being delivered in and shall be construed in
accordance with the laws of the State of California, without regard to the
conflicts of laws provisions thereof.

                                             /s/ Roderick M. Sherwood III
                                             ----------------------------------
                                             Signature

                                             Roderick M. Sherwood III
                                             ----------------------------------
                                             Print Name<PAGE>

                                                                   EXHIBIT 10.12

                                     NOTE

$432,599.40                                                       Menlo Park, CA

________________

     FOR VALUE RECEIVED, Roderick Sherwood promises to pay to Loudcloud, Inc., a
Delaware corporation (the "Company"), or order, the principal sum of Four
hundred thirty-two thousand five hundred and ninety-nine and 40/100
($432,599.40), together with interest on the unpaid principal hereof from the
date hereof at the rate of Six and one-quarter percent (6.25%) per annum,
compounded annually.

     Principal and interest shall be due and payable on August 24, 2004. Payment
of principal and interest shall be made in lawful money of the United States of
America.

     The undersigned may at any time prepay all or any portion of the principal
or interest owing hereunder.

     This Note is subject to the terms of the Restricted Stock Purchase
Agreement, dated as of August 24, 2000. This Note is secured in part by a pledge
of the Company's Common Stock under the terms of a Security Agreement of even
date herewith and is subject to all the provisions thereof.

     The holder of this Note shall have full recourse against the undersigned,
and shall not be required to proceed against the collateral securing this Note
in the event of default.

     In the event the undersigned shall cease to be an employee, director or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.

     Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned. This Note is being delivered in and shall be construed in
accordance with the laws of the State of California, without regard to the
conflicts of laws provisions thereof.

                                                 /s/ Roderick Sherwood
                                                 -----------------------------
                                                 Signature

                                                 Roderick Sherwood
                                                 -----------------------------
                                                 Print Name<PAGE>

                                                                   EXHIBIT 10.13

                                Lease Agreement
                         (NNN R&D Tenant Improvements)
                             Basic Lease Information

Lease Date:                January 31, 2000

Landlord:                  Sequoia Del Rey, LLC

Landlord's Address:        c/o J.P. DINAPOLI COMPANIES, INC.
                           99 Almaden Boulevard, Suite 565
                           San Jose, California 95113

Tenant:                    LoudCloud, Inc., a Delaware corporation

Tenant's Address:          599 North Mathilda Avenue
                           Sunnyvale, California 94086

Premises:                  Approximately 75,810 rentable square feet on the
                           first, second and third (1/st/, 2/nd/ & 3/rd/) floors
                           of the Building as shown on Exhibit A, subject to the
                                                       ---------
                           provisions of Section 1 hereof

Premises Address:          599 North Mathilda Avenue
                           Sunnyvale, California 94086

                           Building:     Approximately 75,810 rentable square
                                         feet, subject to the provisions of
                                         Section 1 hereof
                           Lot:          APN: 165-42-003 and 165-42-004
                           Project:      Approximately 75,810 rentable square
                                         feet, subject to the provisions of
                                         Section 1 hereof

Term:                      Subject to the provisions of Section 2.1 hereof, May
                           1, 2000 started 6/1/00 ("Commencement Date"), and
                           expiring on the date which is ten (10) years
                           following the Commencement Date ("Expiration Date")

Base Rent ((S)3):          One Hundred Eighty-nine Thousand Five Hundred Twenty-
                           five Dollars ($189,525.00) per month ($2.50 per
                           rentable square foot per month)

Adjustments to Base Rent:  Sec Section 35 hereof

Advance Rent ((S)3):       One Hundred Eighty-nine Thousand Five Hundred Twenty-
                           five Dollars ($189,525.00) (one month's Base Rent)

Security Deposit ((S)4):   One Hundred Eighty-nine Thousand Five Hundred Twenty-
                           five Dollars ($ 189,525.00) (one month's Base Rent)

*Tenant's Share of Operating Expenses ((S)6.1):          100% of the Building
*Tenant's Share of Tax Expenses ((S)6.2):                100% of the Building
*Tenant's Share of Common Area Utility Costs ((S)7.2):   100% of the Building
*Tenant's Share of Utility Expenses ((S)7.1):            100% of the Building
*The amount of Tenant's Share of the expenses as referenced above shall be
subject to modification as set forth in this Lease.

Permitted Uses ((S)9):     General office, software research and development and
                           other related uses approved by Landlord, but only to
                           the extent permitted by the City of Sunnyvale and all
                           agencies and governmental authorities having
                           jurisdiction thereof

Parking ((S)22):           Two hundred thirty-three (233) exclusive parking
                           spaces within the Premises

Broker (S)33):             Cornish & Carey Commercial for Landlord and Tenant

Exhibits:                  Exhibit A:   Premises, Building, Lot and/or Project
                           Exhibit B:   Tenant Improvements
                           Exhibit C:   Rules and Regulations
                           Exhibit D:   Change of Commencement Date - Example
                           Exhibit E:   Sign Criteria
                           Exhibit F:   Hazardous Materials Disclosure
                                        Certificate

                                       1
<PAGE>

                               Table Of Contents

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
-------                                                                     ----
<S>                                                                         <C>
 1.    Premises..........................................................      3
 2.    Occupancy; Adjustment of Commencement Date........................      3
 3.    Rent..............................................................      4
 4.    Security Deposit..................................................      4
 5.    Condition of Premises; Tenant Improvements........................      5
 6.    Additional Rent...................................................      6
 7.    Utilities and Services............................................      9
 8.    Late Charges......................................................     10
 9.    Use of Premises...................................................     11
10.    Alterations; and Surrender of Premises............................     12
11.    Repairs and Maintenance...........................................     13
12.    Insurance.........................................................     14
13.    Limitation of Liability and Indemnity.............................     16
14.    Assignment and Subleasing.........................................     16
15.    Subordination.....................................................     19
16.    Right of Entry....................................................     19
17.    Estoppel Certificate..............................................     19
18.    Tenant's Default..................................................     20
19.    Remedies for Tenant's Default and Chronic Default.................     20
20.    Holding Over......................................................     21
21.    Landlord's Default................................................     22
22.    Parking...........................................................     22
23.    Transfer of Landlord's Interest...................................     22
24.    Waiver............................................................     22
25.    Casualty Damage...................................................     23
26.    Condemnation......................................................     24
27.    Environmental Matters/Hazardous Materials.........................     24
28.    Financial Statements..............................................     28
29.    General Provisions:...............................................     28
30.    Signs.............................................................     29
31.    Mortgagee Protection..............................................     30
32.    Warranties of Tenant..............................................     30
33.    Brokerage Commission..............................................     30
34.    Quiet Enjoyment...................................................     30
35.    Adjustments to Base Rent..........................................     31
36.    Option to Extend the Lease Term...................................     31
37.    Letter of Credit..................................................     33
38.    Satellite Dish....................................................     34
39.    Emergency Generator...............................................     35
</TABLE>

                                       2
<PAGE>

                          NNN R&D Tenant Improvements
                                Lease Agreement

The Basic Lease Information set forth on Page 1 and this Lease are and shall be
construed as a single instrument.

1. Premises

Landlord hereby leases the Premises to Tenant upon the terms and conditions
contained herein. The term "Project" as used herein shall mean and collectively
refer to the Building, the Common Areas and the Lot. Tenant shall have the right
to use, on a non-exclusive basis, parking areas and ancillary facilities
located within the Common Areas, subject to the terms of this Lease. Landlord
and Tenant hereby acknowledge and agree that as of the Lease Date the Building
has not been constructed on the Lot and all of the improvements have not been
constructed within the Project. In each instance after Landlord has
Substantially Completed (as such term is defined in Exhibit B hereto) the Shell
                                                    ---------
Improvements (defined below) and any other building improvements (as
applicable), Landlord and Tenant shall execute a written amendment to this
Lease, substantially in the form of Exhibit D hereto, wherein the parties shall
                                    ---------
specify (i) the actual approximate rentable square footage of each of the
Premises, the Building and the Project, measured from the exterior surface of
exterior walls (and extensions, in the case of openings) and from the center of
interior partition, and shall include, but not be limited to, restrooms,
mezzanines, patios, warehouse or storage areas, clerical or office areas and
employee areas, and without deduction for any stairwells, columns, or interior
partitions, (ii) the actual amount of Base Rent to be Paid by Tenant, which
shall be based upon the amount of base rent per rentable square foot as
specified in the Basic Lease Information, and the adjustments to Base Rent in
Section 35 hereof, (iii) the actual amount of Tenant's Share of the expenses
specified in the Basic Lease Information, which share shall be based upon such
approximate rentable square footages and (iv) the actual amount of the Advance
Rent required hereunder. Tenant further agrees that the number of rentable
square feet of the Project may subsequently change during the Term of this Lease
commensurate with any modifications by Landlord, and Tenant's Share shall
accordingly change.

2.   Occupancy; Adjustment of Commencement Date

     2.1  If on the Commencement Date, (a) Landlord has not delivered possession
of the Premises with only the Shell Improvements (defined in Section 5.2 below)
Substantially Completed (defined in Exhibit B hereto), or (b) Tenant has not
                                    ---------
Substantially Completed the Tenant Improvements (defined in Exhibit B hereto),
                                                            ---------
Landlord shall not be subject to any liability nor shall the validity of the
Lease be affected; provided, the Term of this Lease and the obligation to pay
Rent shall commence on the date which is the later to occur of (i) May 1, 2000,
(ii) the date which is thirty (30) days after Landlord has Substantially
Completed the Shell Improvements or (iii) the date which is sixty (60) days
after Landlord has delivered the Premises to Tenant and granted Tenant access to
the Premises for construction of the Tenant Improvements. In the event the
commencement date and/or the expiration date of this Lease is other than the
Commencement Date and/or Expiration Date specified herein, Landlord and Tenant
shall execute a written amendment to this Lease, substantially in the form of
Exhibit D hereto, wherein the parties shall specify the actual commencement date
---------
(and such date shall be the "Commencement Date" for all purposes of this Lease),
expiration date and the date on which Tenant is to commence paying Rent. The
word "Term" whenever used herein refers to the initial term of this Lease and
any valid extension(s) or renewal(s) thereof. Notwithstanding the foregoing to
the contrary, in the event that for reasons other than the occurrence of a Force
Majeure Delay (defined below) or a Tenant Delay (defined below) the Premises
have not been delivered to Tenant on or before July 1, 2000 ("Last Occupancy
Date") with the Shell Improvements Substantially Completed, Tenant may elect to
terminate the Lease. Termination of the Lease by Tenant as provided for herein
shall be the sole and exclusive remedy of Tenant for Landlord's failure to
deliver the Premises. Tenant shall exercise the right to terminate provided for
herein by giving Landlord written notice of its intent to so terminate
("Termination Notice"). The Termination Notice shall be given, if at all, on or
before the date which is five (5) days after the Last Occupancy Date.
Termination of the Lease shall be effective thirty (30) days after Landlord's
receipt of the Termination Notice. In the event that Tenant gives the
Termination Notice, and in the further event that during such thirty (30) day
period, Landlord shall deliver the Premises to Tenant with the Shell
Improvements Substantially Completed, the Tenant shall not be entitled to
terminate the Lease as provided for herein. Thirty (30) days following the
termination of the Lease by Tenant pursuant to the terms of this paragraph,
Landlord shall promptly return all prepaid Rent to Tenant.

     2.2  Within three (3) business days after the Substantial Completion of the
Shell Improvements, representatives of Landlord and Tenant shall make a joint
inspection of the Shell Improvements and the results of such inspection shall be
set forth in a written list specifying the incomplete items as well as those
items for which corrections need to be made (the "Punchlist Items").

                                       3
<PAGE>

Landlord and Tenant shall promptly (by no later than three (3) business days
thereafter) and in good faith approve the written list of Punchlist Items.
Landlord, at its sole cost and expense, shall use commercially reasonable
efforts to cause the Punchlist Items to be promptly completed and/or corrected,
as applicable. The performance of the work associated with the Punchlist
Items shall be performed in such a manner so as not to preclude or substantially
prevent Tenant's ability to install and construct the Tenant Improvements in the
Premises. Upon the completion of the Punchlist Items, to Tenant's reasonable
satisfaction, Tenant shall immediately notify Landlord in writing that such
items have been completed to Tenant's reasonable satisfaction. In addition to
the Punchlist Items, Tenant shall be entitled to make a claim against Landlord
for any patent or latent defects in the initial design or construction of the
Shell Improvements during the ninety (90) day period following the Commencement
Date. If Tenant fails to timely deliver to Landlord any such written notice of
the aforementioned patent or latent defects within said 90-day period, Landlord
shall have no obligation to perform any such work thereafter.

     2.3  Landlord shall permit Tenant to enter and occupy the Premises prior to
the Commencement Date for the limited purpose of performing the Tenant's Pre-
Occupancy Work (defined in Exhibit B hereto). Landlord shall consult with its
                           ---------
general contractor and shall notify Tenant, in writing, of the date on which
Tenant may commence such limited purpose occupancy; provided, however, in no
event shall Landlord be required to grant Tenant access to the Premises for
purposes of performing Tenant's Pre-Occupancy Work before that date which is
sixty (60) days prior to the Commencement Date. In no event may Tenant conduct
its business or operations from the Premises until after the Commencement Date.
Such occupancy shall be at Tenant's sole risk and subject to all the
provisions of this Lease, including the requirement to perform all of Tenant's
obligations hereunder, including without limitation, the requirement to prepay
the Advance Rent, and deliver the Security Deposit and the Letter of Credit
(defined below) and to obtain the insurance and deliver insurance certificates
as required pursuant to Section 12 and Exhibit B to this Lease; provided,
                                       ---------
however, Landlord shall waive Tenant's obligation to pay Base Rent during such
pre-Commencement Date occupancy. In addition to the foregoing and the provisions
of Exhibit B hereto regarding such early occupancy, Landlord shall have the
   ---------
right to impose additional reasonable conditions on Tenant's early entry and
occupancy.

3.   Rent

On the date that Tenant executes this Lease, Tenant shall deliver to Landlord
the original executed Lease, the Advance Rent (which shall be applied against
the Rent payable for the first month(s) Tenant is required to pay Rent), the
Security Deposit, and all insurance certificates evidencing the insurance
required to be obtained by Tenant under Section 12 and Exhibit B of this Lease.
                                                       ---------
Tenant agrees to pay Landlord the Base Rent, without prior notice or demand,
abatement, offset, deduction or claim, in advance at Landlord's Address on the
Commencement Date and thereafter on the first (1st) day of each month throughout
the balance of the Term of the Lease. In addition to the Base Rent, Tenant shall
pay Landlord in advance on the Commencement Date and thereafter on the first
(1st) day of each month throughout the balance of the Term of this Lease, as
Additional Rent, Tenant's Share of Operating Expenses, Tax Expenses, Common Area
Utility Costs, and Utility Expenses. The term "Rent" whenever used herein refers
to the aggregate of all these amounts. If Landlord permits Tenant to occupy the
Premises without requiring Tenant to pay rental payments for a period of time
(that is, the above-referenced pre-Commencement Date occupancy or similar "free
rent" period, if any), the waiver of the requirement to pay rental payments
shall only apply to the waiver of the Base Rent; provided, during the pre-
Commencement Date occupancy, Tenant's obligation to pay such Additional Rent
shall not exceed the maximum amount of 20/100 Dollars ($0.20) per rentable
square foot of the Premises per month. The Rent for any fractional part of a
calendar month at the commencement or expiration or termination of the Lease
Term shall be a prorated amount of the Rent for a full calendar month based upon
a thirty (30) day month. The prorated Rent shall be paid on the Commencement
Date and the first (1st) day of the calendar month in which the date of
expiration or termination occurs.

4.   Security Deposit

Simultaneously with Tenant's execution and delivery of this Lease, Tenant shall
deliver to Landlord as a Security Deposit for the faithful performance by Tenant
of its obligations under this Lease, the amount specified in the Basic Lease
Information. If Tenant is in default hereunder beyond applicable notice and cure
periods, Landlord may, but without obligation to do so, use all or any portion
of the Security Deposit to cure the default or compensate Landlord for all
damages sustained by Landlord in connection therewith. Tenant shall, immediately
on demand, pay to Landlord a sum equal to the portion of the Security Deposit so
applied or used to replenish the amount of the Security Deposit held to increase
such deposit to the amount initially deposited with Landlord. As soon as
practicable after the expiration or termination of this Lease, Landlord shall
return the Security Deposit to Tenant, less such amounts as are reasonably
necessary, as determined by Landlord, to remedy Tenant's default(s) hereunder or
Tenant's failure to surrender the Premises in the condition required pursuant to
Section 10 of this Lease. If the cost to restore the Premises exceeds the amount
of the Security Deposit, Tenant shall promptly deliver to

                                       4
<PAGE>

Landlord any and all of such excess sums. Landlord shall not be required to keep
the Security Deposit separate from other funds, and, unless otherwise required
by law, Tenant shall not be entitled to interest on the Security Deposit. In no
event or circumstance shall Tenant have the right to any use of the Security
Deposit and, specifically, Tenant may not use the Security Deposit as a credit
or to otherwise offset any payments required hereunder.

5.   Condition Of Premises; Tenant Improvements

     5.1  Tenant hereby agrees to accept the Premises upon Landlord's
Substantial Completion of the Shell Improvements as suitable for Tenant's
intended use and as then being in good operating order, condition and repair in
its then "AS IS" condition, except as otherwise set forth in Exhibit B attached
                                                             ---------
hereto. The Tenant Improvements shall be installed in accordance with the terms,
conditions, criteria and provisions set forth in Exhibit B. By taking possession
                                                 ---------
of the Premises with only the Shell Improvements Substantially Completed, Tenant
shall be deemed to have accepted the Premises in good, clean and completed
condition and state of repair. Landlord and Tenant hereby agree to and shall be
bound by the terms, conditions and provisions of Exhibit B. Tenant acknowledges
                                                 ---------
and agrees that, except as specifically set forth in the Lease, neither Landlord
nor any of Landlord's agents, representatives or employees has made any
representations as to the suitability, fitness or condition of the Premises for
the conduct of Tenant's business or for any other purpose, including without
limitation, any storage incidental thereto. Any exception to the foregoing
provisions must be made by express written agreement by both parties. Any Tenant
Improvements to be constructed hereunder shall be in compliance with the
requirements of the ADA (defined below), and all costs incurred for purposes of
compliance therewith (other than the costs to cause the Shell Improvements to
comply with the ADA, which costs shall be Landlord's responsibility) shall be a
part of and included in the costs of the Tenant Improvements. Notwithstanding
the foregoing, Tenant shall be entitled to make a claim against Landlord for any
patent or latent defects in the initial design or construction of the Shell
Improvements for a period of ninety (90) days after the Commencement Date;
provided any such claim shall be submitted in writing to Landlord on or before
that date which is ninety (90) days after the Commencement Date. In addition to
the foregoing, Tenant shall be entitled to enforce, concurrently with
Landlord, any warranties made or given to Landlord from the general contractor
and any major subcontractors with respect to the Shell Improvements.
Notwithstanding anything to the contrary contained herein, Tenant shall allow
Landlord to, concurrently with Tenant (if Tenant so desires, otherwise
separately), or after the expiration or earlier termination of this Lease,
individually, make a claim against Tenant's general contractor, namely Devcon
Construction, Inc. (the "Tenant's General Contractor") for any patent or latent
defects in the initial design or construction of the Tenant Improvements for a
period of ninety (90) days after the date of Substantial Completion of the
Tenant Improvements. In addition to the foregoing, Landlord shall be entitled to
enforce, concurrently with Tenant, or after the expiration or earlier
termination of this Lease, individually, any warranties made or given to Tenant
from the Tenant's General Contractor and any major subcontractors with respect
to the Tenant Improvements. Each of Landlord and Tenant shall be third party
beneficiaries of the other party's construction agreements, and accordingly,
each party hereby agrees to include a provision in their respective construction
contracts to effectuate same.

     5.2  The term "Shell Improvements" as used herein shall mean and refer to
the following described improvements only: (i) the site work and building
structure, including foundations, slab on grade, roof framing, roofing, exterior
walls of the Building including exterior doors (per original shell design) and
concrete wall panels; (ii) utilities brought to a perimeter electrical room
within the Building, including electrical power with the main meter section
cabinet set and, water and sewer; (iii) gas line stubbed to a location on the
exterior of the Building (iv) fire sprinkler mains and branch lines (per
original shell design), excluding modification required for Tenant Improvements;
(v) two (2) finished elevator cabs; (vi) finished restrooms on each floor (per
original shell design); and (vii) heating ventilation and air conditioning units
mounted on the roof structure (per original design), excluding horizontal
distribution loops and related control mechanisms. Without limiting the
generality of the foregoing, the term "Shell Improvements" shall expressly
exclude all Tenant Improvements and other improvements including, without
limitation, the following: (a) underslab plumbing, (b) finish carpentry, (c)
interior doors, windows and hardware, (d) interior finishes, (e) drywall
partitions (including demising walls separating the Premises from contiguous
space), (f) acoustic ceiling, (g), floor and window coverings, (h) casework, (i)
dock equipment, (j) plumbing, (k) electrical wiring and distribution, and
electrical panels and meters, (l) fire sprinkler finish, (m) in-rack fire
sprinklers, draft curtains, smoke vents and hose racks, (n) security systems,
(o) phone and data lines and (p) additional doors required for Tenants use and
occupancy. Notwithstanding the foregoing, Landlord shall complete the Shell
Improvements in a good and workmanlike manner and in substantial accordance with
the plans and specifications to the Shell Improvements, dated ___________,
previously delivered to Tenant and Landlord shall use commercially reasonable
efforts to ensure that the Shell Improvements are constructed in compliance with
all Laws applicable at the time of Substantial Completion of the Shell
Improvements.

                                       5
<PAGE>

6.   Additional Rent

It is intended by Landlord and Tenant that this Lease be a "triple net lease."
The costs and expenses described in this Section 6 and all other sums, charges,
costs and expenses specified in this Lease other than Base Rent are to be paid
by Tenant to Landlord as additional rent (collectively, "Additional Rent").

     6.1  Operating Expenses. Tenant shall pay to Landlord Tenant's Share of all
Operating Expenses as Additional Rent. The term "Operating Expenses" as used
herein shall mean the total amounts paid or payable by Landlord in connection
with the ownership, management, maintenance, repair and operation of the
Premises and the other portions of the Project. These Operating Expenses may
include, but are not limited to, Landlord's cost of:

          6.1.1   repairs to, and maintenance of, the roof membrane, the non-
structural portions of the roof and the non-structural elements of the perimeter
exterior walls of the Building;

          6.1.2   maintaining the outside paved area, landscaping and other
common areas of the Project. The term "Common Areas" shall mean all areas and
facilities within the Project exclusive of the Premises and the other portions
of the Project leasable exclusively to other tenants. The Common Areas include,
but are not limited to, interior lobbies, mezzanines, parking areas, access and
perimeter roads, sidewalks, and landscaped areas;

          6.1.3   annual insurance premium(s) insuring against personal injury
and property damage (including, if Landlord elects, "all risk" or "special
purpose" coverage) and all other insurance, including, but not limited to, flood
and commercially reasonable earthquake for the Project, rental value insurance
against loss of Rent for a period of at least twelve (12) months commencing on
the date of loss, and subject to the provisions of Section 25 below, any
deductible (the deductible to be reimbursed by Tenant to Landlord, with respect
to personal injury and property damage insurance, shall not to exceed
$10,000.00);

          6.1.4   (i) modifications and/or new improvements to any portion of
the Project occasioned by any rules, laws or regulations effective subsequent to
the date on which the Shell Improvements are substantially completed; (ii)
reasonably necessary replacement improvements to any portion of the Project
after the Commencement Date; and (iii) new improvements to the Project that
reduce operating costs or improve life/safety conditions, all of the foregoing
as reasonably determined by Landlord, in its sole but reasonable discretion;
provided, however, if any of the foregoing are in the nature of capital
improvements, then the cost of such capital improvements shall be amortized on a
straight-line basis over a reasonable period, which shall not be less than the
lesser of ten (10) years or the reasonably estimated useful life of such
modifications, new improvements or replacement improvements in question (at an
interest rate as reasonably determined by Landlord), and Tenant shall pay
Tenant's Share of the monthly amortized portion of such costs (including
interest charges) as part of the Operating Expenses herein;

          6.1.5   the management and administration of any and all portions of
the Project, including, without limitation, a property management fee,
accounting, auditing, billing, postage, salaries and benefits for clerical and
supervisory employees, whether located on the Project or off-site, payroll taxes
and legal and accounting costs and all fees, licenses and permits related to the
ownership, operation and management of the Project (collectively, the
"Administrative Expenses");

          6.1.6   preventative maintenance and repair contracts including, but
not limited to, contracts for elevator systems (if any) and heating, ventilation
and air conditioning systems, lifts for disabled persons, if Landlord elects to
so procure;

          6.1.7   security and fire protection services for any portion of the
Project, if and to the extent, in Landlord's sole discretion, such services are
provided;

          6.1.8   the creation and modification of any rail spur or track
agreements, licenses, easements or other similar undertakings with respect to
the Project;

          6.1.9   supplies, materials, equipment, rental equipment and other
similar items used in the operation and/or maintenance of the Project and any
reasonable reserves established for replacement or repair of any Common Area
improvements or equipment;

          6.1.10  any and all levies, charges, fees and/or assessments payable
to any applicable owner's association or similar body;

                                       6
<PAGE>

          6.1.11  any barrier removal work or other required improvements,
alterations or work to any portion of the Project generally required under the
ADA (defined below) due to changes in or new requirements under the ADA after
the Commencement Date (the "ADA Work"); provided, if any ADA Work is required
under the ADA due to Tenant's particular use of the Premises or any Alteration
(defined below) made to the Premises by or on behalf of Tenant, then the cost of
such ADA Work shall be borne solely by Tenant and shall not be included as part
of the Operating Expenses; and

          6.1.12  the repairs and maintenance items set forth in Section 11.2
below.

Notwithstanding anything in this Section 6.1 to the contrary, the term
"Operating Expense" shall not include any of the following and none of the
following items shall be payable in whole or in part by or in any way charged to
Tenant:

                         (i)    Interest or penalties resulting from late
payment of any Operating Expense by Landlord due to Landlord's negligence or
willful misconduct (unless Landlord in good faith disputes a charge and
subsequently loses or settles that dispute); provided, that Tenant timely pays
Tenant's Share of Operating Expenses and Tax Expenses to Landlord when due as
set forth herein;

                         (ii)   Costs associated with the investigation and/or
remediation of Hazardous Materials (hereinafter defined) present in, on or about
the Premises or the Project, unless such costs and expenses are the
responsibility of Tenant as provided in Section 27 of this Lease, in which event
such costs and expenses shall be paid solely by Tenant in accordance with the
provisions of Section 27 of this Lease;

                         (iii)  Any cost or expense which is actually reimbursed
to Landlord through insurance or otherwise;

                         (iv)   Costs attributable to seeking and obtaining new
tenants in the Project as well as retaining existing tenants in the Project
(other than Tenant), such as advertising, brokerage commissions, architectural,
engineering and attorneys' fees and costs for renovations and improvements to
buildings in the Project other than the Premises;

                         (v)    Any items for which Landlord is actually
reimbursed by any other tenant of the Project;

                         (vi)   Real estate brokers' leasing commissions;

                         (vii)  Other than any interest charges for capital
improvements referred to in Section 6.1.4 hereinabove, any interest or payments
on any financing for the Building or the Project, and any bad debt loss, rent
loss or reserves for same;

                         (viii) Any costs, fines or penalties incurred solely
and directly resulting from actual violations by Landlord of any governmental
rule or authority for which Landlord is responsible hereunder;

                         (ix)   Costs associated with the operation of the
business of the entity which constitutes Landlord or Landlord's property
manager, as the same are distinguished from the cost of operation of the
Building or the Project, including partnership or corporate accounting and legal
matters, costs of defending any lawsuits with any mortgagee or lender, costs of
selling, syndicating, financing, mortgaging or hypothecating any of Landlord's
interest in the Project or the Building, disputes of Landlord with the property
management company managing the Project, to the extent any of the aforementioned
costs are not, in any way, attributable to the use being made of the Premises by
Tenant and Tenant's Representatives or otherwise attributable to the acts or
omissions of Tenant and/or any of Tenant's Representatives;

                         (x)    Overhead and profit paid to subsidiaries or
affiliates of Landlord for management services to the extent that the cost of
those items would not have been paid had the services been provided by
unaffiliated parties on a competitive basis;

                         (xi)   Costs relating to the repair of the structural
portions of (i) the roof (excluding room membrane), (ii) floors, (iii)
elevators, (iv) foundations and (v) exterior perimeter walls of the Building
(exclusive of glass and exterior doors);

                         (xii)  Advertising or promotional costs;

                                       7
<PAGE>

                    (xiii) Costs of repairs or other work necessitated by fire,
windstorm or other casualty (excluding any commercially reasonable deductibles)
and/or costs of repair or other work necessitated by the exercise of the right
of eminent domain to the extent insurance proceeds or a condemnation award, as
applicable, is actually received by Landlord for such purposes; provided such
costs of repairs or other work shall be paid by the parties in accordance with
the provisions of Sections 25 and 26 below;

                    (xiv)  Except for the Administrative Expenses, executive
wages, salaries, compensation and labor for any employee above the level of
building manager, or any fee, profit or compensation retained by Landlord from
its affiliates for management and administration of the Building in excess of
the management fee which would be charged by a professional management service
to operate comparable buildings (with comparable services and management) owned
by comparable landlords;

                    (xv)   Costs to correct any construction defect in the
original construction of the Shell Improvements or to comply with any CC&R's,
underwriter's requirement or Law applicable to the Premises or Project on the
Commencement Date; and

                    (xvi)  The cost of any renovation, improvement, painting or
redecorating of any portion of the Project not made available for Tenant's use.

     6.2  Tax Expenses. Tenant shall pay to Landlord Tenant's Share of all real
property taxes applicable to the Project. Prior to delinquency, Tenant shall pay
any and all taxes and assessments levied upon Tenant's Property (defined below
in Section 10) located or installed in or about the Premises by, or on behalf of
Tenant. To the extent any such taxes or assessments are not separately assessed
or billed to Tenant, then Tenant shall pay the amount thereof as invoiced by
Landlord. Tenant shall also reimburse and pay Landlord, as Additional Rent,
within ten (10) days after demand therefore, one hundred percent (100%) of (i)
any increase in real property taxes attributable to any and all Alterations,
Tenant Improvements, fixtures, equipment or other improvements of any kind
whatsoever placed in, on or about the Premises for the benefit of, at the
request of, or by Tenant, and (ii) taxes and assessments levied or assessed upon
or with respect to the possession, operation, use or occupancy by Tenant of the
Premises or any other portion of the Project. The term "Tax Expenses" shall mean
and include, without limitation, any form of tax and assessment (general,
special, supplemental, ordinary or extraordinary), commercial rental tax,
payments under any improvement bond or bonds, license fees, license tax,
business license fee, rental tax, transaction tax or levy imposed by any
authority having the direct or indirect power of tax (including any city,
county, state or federal government, or any school, agricultural, lighting,
drainage or other improvement district thereof) as against any legal or
equitable interest of Landlord in the Premises or any other portion of the
Project or any other tax, fee, or excise, however described, including, but not
limited to, any value added tax, or any tax imposed in substitution (partially
or totally) of any tax previously included within the definition of real
property taxes, or any additional tax the nature of which was previously
included within the definition of real property taxes. The term "Tax Expenses"
shall not include any franchise, estate, inheritance, net income, or excess
profits tax imposed upon Landlord, or a penalty fee imposed as a result of
Landlord's failure to pay Tax Expenses when due. With respect to any assessments
or taxes for which Landlord has the right, within Landlord's sole control, to
elect to make a lump sum payment or cause such assessment or tax to be amortized
and paid over a period of time, Landlord shall only include in the definition of
Tax Expenses the amortized portion (calculated at the longest period of time
permitted by such taxing authority) of such taxes and assessments (including any
applicable interest charges) for purposes of this Lease.

     6.3  Payment of Expenses. Landlord shall estimate Tenant's Share of the
Operating Expenses and Tax Expenses for the calendar year in which the Lease
commences. Commencing on the Commencement Date, one-twelfth (1/12th) of this
estimated amount shall be paid by Tenant to Landlord, as Additional Rent, and
thereafter on the first (1st) day of each month throughout the remaining months
of such calendar year. Thereafter, Landlord may estimate such expenses for each
calendar year during the Term of this Lease and Tenant shall pay one-twelfth
(1/12th) of such estimated amount as Additional Rent hereunder on the first
(1st) day of each month during such calendar year and for each ensuing calendar
year throughout the Term of this Lease. Tenant's obligation to pay Tenant's
Share of Operating Expenses and Tax Expenses shall survive the expiration or
earlier termination of this Lease.

     6.4  Annual Reconciliation. By June 30th of each calendar year, or as soon
thereafter a reasonably possible, Landlord shall furnish Tenant with an
accounting of actual and accrued Operating Expenses and Tax Expenses. Within
thirty (30) days of Landlord's delivery of such accounting, Tenant shall pay to
Landlord the amount of any underpayment. Notwithstanding the foregoing, failure
by Landlord to give such accounting by such date shall not constitute a waiver
by Landlord of its right to collect any underpayment by Tenant at any time.
Landlord shall credit the amount of any overpayment by Tenant toward the next
Rent payment(s) falling due, or where the Term of the Lease has expired, refund
the amount of overpayment to Tenant as soon as possible thereafter. If the Term
of the Lease expires

                                       8
<PAGE>

prior to the annual reconciliation of expenses Landlord shall have the right to
reasonably estimate Tenant's Share of such expenses, and if Landlord determines
that there has been an underpayment, Landlord may deduct such underpayment from
Tenant's Security Deposit. Failure by Landlord to accurately estimate Tenant's
Share of such expenses or to otherwise perform such reconciliation of expenses
shall not constitute a waiver of Landlord's right to collect any of Tenant's
underpayment at any time during tile Term of tile Lease or at any time after the
expiration or earlier termination of this Lease.

     6.5  Audit. After delivery to Landlord of at least thirty (30) days prior
written notice, Tenant, at its sole cost and expense, shall have the right to
examine and/or audit the books and records evidencing such costs and expenses
for the previous one (1) calendar year, during Landlord's ordinary business
hours but not more frequently than once during any calendar year.
Notwithstanding the foregoing, Tenant may only audit the books and records of
Landlord with respect to the Premises and/or the Lease so long as Tenant fully
complies with all of the following requirements: (i) any audit by Tenant shall
be conducted by an accounting or audit firm not compensated on a contingency
fee basis or financial officer of Tenant; (ii) any audit shall be conducted in
Landlord's offices during ordinary business hours, and after delivery to
Landlord of at least thirty (30) days' prior written notice; (iii) Tenant may
only audit the books and records for the previous one (1) year period in
question and after the lapse of one (1) year from the date on which Landlord
delivers to Tenant any accounting or statement regarding any rental payments to
be made by Tenant under this Lease, Tenant shall not have any right or ability
to audit Landlord's books and records with respect to such rental payments or
charges; and (iv) if it is determined through such audit that the amount of the
expenses actually paid by Tenant to Landlord for the period in question have
not been overstated by an amount that is more than ten percent (10%) of the
aggregate of such expenses, then Tenant shall immediately pay to Landlord, and
reimburse Landlord for, the costs and expenses incurred by Landlord in
connection with such audit, including without limitation, costs attributable to
the time spent by Landlord's or Landlord's property management company's staff
in connection with such audit, as such costs are reasonably determined by
Landlord; provided, Landlord shall promptly pay to Tenant tile amount by which
such expenses had been overstated. Landlord and Tenant shall use their
commercially reasonable efforts to cooperate in such negotiations and to
promptly resolve any discrepancies between Landlord and Tenant in the accounting
of such costs and expenses.

7.   Utilities and Services

Tenant shall directly pay to the applicable utility provider the cost of all
(i) water, sewer use, sewer discharge fees and sewer connection fees, gas,
electricity, telephone, telecommunications, cabling and other utilities billed
or metered separately to the Premises and (ii) refuse pickup and janitorial
service to the Premises. Utility Expenses, Common Area Utility Costs and all
other sums and charges set forth in this Section 7 are considered part of
Additional Rent. Landlord shall furnish to the Premises during the periods
from 7:00 a.m. to 7:00 p.m., Monday through Friday amid 7:00 a.m. to 4:00 p.m.
Saturday except for New Year's Eve Day after 12:00 noon, New Year's Day,
President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving,
Christmas Eve Day, Christmas and such other holidays as are generally
recognized in the State of California, and subject to Rules and Regulations from
time to time established by Landlord: (a) heating, air conditioning and
ventilation in amounts required, in Landlord's reasonable judgment, for the use
and occupancy of the Premises, (b) freight and passenger elevator service if
the Building contains an elevator and (c) electric current in amounts required
for normal lighting by building standard overhead fluorescent fixtures and for
normal fractional horsepower office machines. It is understood that such freight
and passenger elevator service, electric current, HVAC Systems (defined below)
and water will be available twenty-four (24) hours a day subject to the terms
and conditions contained in this Lease. Landlord shall provide janitorial
service five (5) days per week generally consistent with that furnished in other
office buildings in the area in which the Building is located, and window
washing as determined by Landlord. Landlord makes no representation with respect
to the adequacy or fitness of the air conditioning or ventilation equipment in
the Building to maintain temperatures which may be required for, or because of,
any equipment of Tenant other than normal fractional horsepower office equipment
and Landlord shall have no liability for loss or damage in connection therewith.

     7.1  Utility Expenses. For any such utility fees, use charges, or similar
services that are not billed or metered separately to Tenant, including without
limitation, water and sewer charges, and garbage and waste disposal
(collectively "Utility Expenses"), Tenant shall pay to Landlord Tenant's Share
of Utility Expenses. If Landlord reasonably determines that Tenant's Share of
Utility Expenses is not commensurate with Tenant's use of such services, Tenant
shall pay to Landlord the amount which is attributable to Tenant's use of the
utilities or similar services, as reasonably estimated and determined by
Landlord, based upon factors such as size of the Premises and intensity of use
of such utilities by Tenant such that Tenant shall pay the portion of such
charges reasonably consistent with Tenant's use of such utilities and similar
services. If Tenant disputes any such estimate or determination, then Tenant
shall either pay the estimated amount or cause the Premises to be separately
metered at Tenant's sole expense. Tenant shall also pay Tenant's Share of any
assessments, charges, and fees included within any tax bill for

                                       9
<PAGE>

the Lot on which the Premises are situated, including without limitation,
entitlement fees, allocation unit fees, sewer use fees, and any other similar
fees or charges.

     7.2  Common Area Utility Costs. Tenant shall pay to Landlord Tenant's Share
of any Common Area utility costs, fees, charges and expenses (collectively,
"Common Area Utility Costs"). Tenant shall pay to Landlord one-twelfth (1/12th)
of the estimated amount of Tenant's Share of the Common Area Utility Costs on
the Commencement Date and thereafter on the first (lst) day of each month
throughout the balance of the Term of this Lease. Any reconciliation thereof
shall be substantially in the same manner as set forth in Section 6.4 above.

     7.3  Miscellaneous. Tenant acknowledges that the Premises may become
subject to the rationing of utility services or restrictions on utility use as
required by a public utility company, governmental agency or other similar
entity having jurisdiction thereof. Tenant agrees that its tenancy and occupancy
hereunder shall be subject to such rationing restrictions as may be imposed upon
Landlord, Tenant, the Premises, or other portions of the Project, and Tenant
shall in no event be excused or relieved from any covenant or obligation to be
kept or performed by Tenant by reason of any such rationing or restrictions. If
permitted by applicable Laws, Landlord shall have the right at any time and from
time to time during the Term of this Lease to either contract for service from a
different company or companies (each such company referred to as an "Alternate
Service Provider") other than the company or companies presently providing
electricity service for the Project (the "Electric Service Provider") or
continue to contract for service froth the Electric Service Provider, at
Landlord's sole discretion. Tenant agrees to cooperate with Landlord, the
Electric Service Provider, amid any Alternate Service Provider at all times and,
as reasonably necessary, shall allow Landlord, the Electric Service Provider,
and any Alternate Service Provider reasonable access to the Building's electric
lines, feeders, risers, wiring, and any other machinery within the Premises. No
change to an Alternate Service Provider shall increase Tenant's cost of
electricity.

     7.4  Interruption of Utility Service. In the event any of the utility
services essential to the use and occupancy of the Premises shall be interrupted
(such that any of such services shall not be available for Tenant's use and
occupancy of the Premises) for a period in excess of seventy-two (72) hours,
such interruption shall not have been the result of or arise out of a casualty
or condemnation within the terms of Sections 25 or 26, such interruption shall
have had a material and adverse effect on Tenant's use and occupancy of the
Premises, and Landlord actually receives insurance proceeds related to such
interruption, curtailment or suspension of utility services, Tenant shall
receive an abatement of one (1) day of Rent for each day subsequent to the
expiration of such seventy-two (72) hour period that such utility interruption
continues. Tenant shall not be entitled to any abatement or to exercise any
termination rights in the event Tenant is in Chronic Default of this Lease.

8.   Late Charges

Any and all sums or charges set forth in this Section 8 are considered part of
Additional Rent. Tenant acknowledges that late payment by Tenant to Landlord of
Base Rent (the fifth (5th) day of each month or any time thereafter), Operating
Expenses (the 31st day after Tenant's receipt of Landlord's written demand
therefor or any time thereafter), or other sums due hereunder, will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of such
costs being extremely difficult and impracticable to fix. Such costs include,
without limitation, processing and accounting charges, late charges that may be
imposed on Landlord by the terms of any note secured by any encumbrance against
the Premises, and late charges amid penalties imposed on Landlord as a result of
Tenant's late payment of Operating Expenses. Therefore, if any installment of
Rent or any other sum due from Tenant is not received by Landlord when due,
Tenant shall promptly pay to Landlord an additional sum equal to five percent
(5%) of such delinquent amount plus interest on such delinquent amount at the
rate equal to ten percent (10%) per annum for the time period such payments are
delinquent as a late charge. If Tenant delivers to Landlord a check for which
there are not sufficient funds, Landlord may, at its sole option, require Tenant
to replace such c1ieck with a cashier's check for the amount of such check and
all other charges payable hereunder. The parties agree that this late charge and
the other charges referenced above represent a fair and reasonable estimate of
the costs that the Landlord will incur by reason of late payment by Tenant.
Acceptance of any late charges or other charges shall not constitute a waiver by
Landlord of Tenant's default with respect to the delinquent amount, nor prevent
Landlord from exercising any of the other rights and remedies available to
Landlord for any other breach of Tenant under this Lease. If a late charge or
other charge become payable for any three (3) installments of Rent within any
twelve (12) month period, then Landlord, at Landlord's sole option, can either
require the Rent to be paid quarterly in advance, or be paid monthly in advance
by cashier's check or by electronic funds transfer.

                                       10
<PAGE>

9.   Use of Premises

     9.1  Compliance with Laws and Rules and Regulations. The Premises are to be
used solely for the purposes and uses specified in the Basic Lease Information
and for no other uses or purposes without Landlord's prior written consent.
Landlord's consent shall not be unreasonably withheld or delayed so long as the
proposed use (i) does not involve the use of Hazardous Materials other than as
expressly permitted under the provisions of Section 27 below, (ii) does not
require any additional parking spaces, and (iii) is compatible and consistent
with the other uses then being made in the Project and in other similar types of
buildings in the vicinity of the Project, as reasonably determined by Landlord.
The use of the Premises by Tenant and its employees, representatives, agents,
invitees, licensees, subtenants, customers or contractors (collectively,
"Tenant's Representatives") shall be subject to, and at all times in compliance
with, (a) any and all applicable laws, rules, codes, ordinances, statutes,
orders and regulations as same exist from time to time throughout the Term of
this Lease (collectively, the "Laws"), including without limitation, the
requirements of the Americans with Disabilities Act, a federal law codified at
42 U.S.C. 12101 et seq.,
including, but not limited to Title III thereof, all regulations and guidelines
related thereto and all requirements of Title 24 of the State of California
(collectively, the "ADA"), and (b) any amid all rules and regulations set forth
in Exhibit C hereto, any other reasonable rules and regulations promulgated by
   ---------
Landlord now or hereafter enacted relating to the construction of the Shell
Improvements and/or the construction of the Tenant Improvements, parking and the
operation of the Premises and/or any other part of the Project and any and all
rules, restrictions and/or regulations imposed by any applicable owners
association or similar entity or body provided same are enforced on a non-
discriminatory basis and do not materially and adversely affect Tenant's
Permitted Use (as set forth in the Basic Lease Information) of the Premises
(collectively, the "Rules and Regulations"). Tenant agrees to, and does hereby,
assume full and complete responsibility to ensure that the Premises, including
without limitation, the Tenant Improvements, are in compliance with all
applicable Laws throughout the Term of this Lease. Additionally, Tenant shall be
solely responsible for the payment of all costs, fees and expenses associated
with any modifications, improvements or other Alterations to the Premises and/or
any other portion of the Project occasioned by the enactment of, or changes to,
any Laws arising from Tenant's particular use of the Premises or Alterations or
other improvements made to the Premises regardless of when such Laws became
effective. In the event that any modifications or improvements to the Premises
are occasioned by the enactment of, or changes to, any Laws after that date
which is seven (7) years after the Commencement Date, Provided such
modifications or improvements are unrelated to Tenant's particular use of the
Premises, any costs, fees or expenses related thereto shall be paid by Landlord
and shall become Operating Expenses, and Tenant shall pay the amortized portions
of such Operating Expenses as provided in Section 6.1.4 of this Lease. Tenant
shall not initiate, submit an application for, or otherwise request, any land
use approvals or entitlements with respect to the Premises or any other portion
of the Project, including without limitation, any variance, conditional use
permit or rezoning, without first obtaining Landlord's prior written consent
thereto, which consent may be given or withheld in Landlord's sole discretion.

     9.2  Prohibition on Use. Tenant shall not use the Premises or permit
anything to be done in or about the Premises nor keep or bring anything therein
which will in any way increase the existing rate of or affect any policy of fire
or other insurance upon the Building or any of its contents, or cause a
cancellation of any insurance policy. No auctions may be held or otherwise
conducted in, on or about any portion of the Premises or the Project without
Landlord's prior written consent thereto. Tenant shall not do or permit anything
to be done in or about the Premises which will in any way obstruct or interfere
with the rights of LandLord or other tenants or occupants of any portion of the
Project. The Premises shall not be used for any unlawful purpose. Tenant shall
not cause, maintain or permit any private or public nuisance in, on or about any
portion of the Premises or the Project, including, but not limited to, any
offensive odors, noises, fumes or vibrations. Tenant shall not damage or deface
or otherwise commit or suffer to be committed any waste in, upon or about the
Premises or any other portion of the Project. Tenant shall not place or store,
nor permit any other person or entity to place or store, any property,
equipment, materials, supplies, personal property or any other items or goods
outside of the Premises for any period of time. Tenant shall not permit any
animals, including, but not limited to, any household pets, to be brought or
kept in or about the Premises. Except as specifically set forth in Section 38,
Tenant shall not install any radio or television antenna, satellite dish,
microwave, loudspeaker or other device on the roof or exterior walls of the
Building or any other portion of the Project. Tenant shall not interfere with
radio, telecommunication, or television broadcasting or reception from or in the
Building or elsewhere. Tenant shall place no loads upon the floors, walls, or
ceilings in excess of the maximum designed load permitted by the applicable
Uniform Building Code or which may damage the Building or outside areas within
the Project. Tenant shall not place any harmful liquids in the drainage systems
or dump or store waste materials, refuse or other such materials, or allow such
materials to remain outside the Building area, except for non-harmful materials
which may be stored in refuse dumpsters.

                                       11
<PAGE>

10. Alterations; and Surrender of Premises

    10.1  Alterations. Tenant shall be permitted to make, at its sole cost and
expense, non-structural alterations and additions to the interior of the
Premises without obtaining Landlord's prior written consent provided the cost
of same does not exceed Fifty Thousand Dollars ($50,000) cumulatively during any
twelve (12) consecutive month period of the Term (the "Permitted Improvements").
Tenant, however, shall first notify Landlord in writing at least ten (10) days
in advance of such alterations or additions comprising the Permitted
Improvements so that Landlord may post a Notice of Non-Responsibility on the
Premises. Except for the Permitted Improvements, Tenant shall not install any
signs, fixtures, improvements, nor make or permit any other alterations or
additions (collectively, with the Permitted Improvements, "Alteration(s)") to
the Premises without the prior written consent of Landlord. If any such
Alteration is expressly permitted by Landlord, Tenant shall deliver at least ten
(10) days prior notice to Landlord, from the date Tenant intends to commence
construction, sufficient to enable Landlord to post a Notice of Non-
Responsibility. In all events, Tenant shall obtain all permits or other
governmental approvals prior to commencing any of such work and deliver a copy
of same to Landlord. All Alterations shall be at Tenant's sole cost and expense,
and shall be installed by a licensed contractor (reasonably approved by
Landlord) in compliance with all applicable Laws (including, but not limited to,
the ADA), Development Documents, Recorded Matters, and Rules and Regulations.
Tenant shall keep the Premises and the property on which the Premises are
situated free from any liens arising out of any work performed, materials
furnished or obligations incurred by or on behalf of Tenant. Tenant shall, prior
to construction of any and all Alterations, provide additional insurance as
required, and also such assurances to Landlord, including without limitations,
waivers of lien.

    10.2  Surrender of Premises. At the expiration of the Term or earlier
termination of this Lease, Tenant shall surrender the Premises to Landlord (a)
in good condition and repair (damage by acts of God, casualty, and normal wear
and tear excepted), but with all interior walls cleaned, any carpets cleaned,
all floors cleaned and waxed, all non-working light bulbs and ballasts replaced
and all roll-up doors and plumbing fixtures in good condition and working order,
and (b) in accordance with the provisions of Section 27 hereof. Normal wear and
tear shall not include any damage or deterioration that would have been
prevented by proper maintenance by Tenant, or Tenant otherwise performing all of
its obligations under this Lease. On or before the expiration or earlier
termination of this Lease, (i) Tenant shall remove all of Tenant's Property (as
hereinafter defined) and Tenant's signage from the Premises and the other
portions of the Project, (ii) Landlord may, by notice to Tenant given not later
than ninety (90) days prior to the Expiration Date (except in the event of a
termination of this Lease prior to the scheduled Expiration Date, in which
event no advance notice shall be required), require Tenant, at Tenant's expense,
to remove any or all Alterations (other than the Tenant Improvements and
provided that Tenant will not be required to remove any Alterations as to which,
at the time that Tenant requested permission or approval for making such
Alterations, Tenant requested that Landlord indicate whether or not such
Alterations would be required to be removed and Landlord indicated that such
Alterations would not be required to be removed) and Tenant shall remove such
requested Alterations from the Premises, and (iii) to the extent Landlord has
advised Tenant on or about the time that the Tenant Improvements were
constructed and installed in the Premises that Tenant is to remove all or
portions of the items comprising the Tenant Improvements (the "Removable Tls"),
Tenant shall remove the Removable Tls. Tenant shall repair any damage caused by
such removal of the Tenant's Property, the requested Alterations and the
Removable Tls. For purposes hereof, the term "Tenant's Property" shall mean and
refer to all equipment, trade fixtures, computer wiring and cabling,
furnishings, inventories, goods and personal property of Tenant. Any of Tenant's
Property not so removed by Tenant as required herein shall be deemed abandoned
and may be stored, removed, and disposed of by Landlord at Tenant's expense, and
Tenant waives all claims against Landlord for any damages resulting from
Landlord's retention and disposition of such property; provided, however, Tenant
shall remain liable to Landlord for all costs incurred in storing and disposing
of such abandoned property of Tenant. All Tenant Improvements and Alterations
except those Alterations which Landlord requires Tenant to remove shall remain
in the Premises as the property of Landlord. If the Premises are not surrendered
at the expiration of the Term or earlier termination of this Lease, and in
accordance with the provisions of this Section 10 and Section 27 below, Tenant
shall continue to be responsible for the payment of Rent (as the same may be
increased pursuant to Section 20 below) until the Premises are so surrendered in
accordance with said provisions. Tenant shall indemnify, defend and hold
Landlord and Landlord's Indemnitees (defined below) harmless from and against
any and all damages, expenses, costs, losses or liabilities arising from any
delay by Tenant in so surrendering the Premises including, without limitation,
any damages, expenses, costs, losses or liabilities arising from any claim
against Landlord made by any succeeding tenant or prospective tenant founded on
or resulting from such delay and losses and damages suffered by Landlord due to
lost opportunities to lease any portion of the Premises to any such succeeding
tenant or prospective tenant, together with, in each case, actual attorneys'
fees and costs.

                                       12
<PAGE>

11. Repairs and Maintenance

    11.1  Tenant's Repairs and Maintenance Obligations. Except for those
portions of the Building to be maintained by Landlord, as provided in Sections
11.2 and 11.3 below, Tenant shall, at its sole cost and expense, keep and
maintain all parts of the Premises and such portions of the Building and
improvements as are within the exclusive control of Tenant in good, clean and
safe condition and repair, promptly making all necessary repairs and
replacements, whether ordinary or extraordinary, with materials and workmanship
of the same character, kind and quality as the original thereof, all of the
foregoing to the reasonable satisfaction of Landlord including, but not limited
to, repairing any damage caused by Tenant or any of Tenant's Representatives and
replacing any property so damaged by Tenant or any of Tenant's Representatives.
Without limiting the generality of the foregoing, Tenant shall be solely
responsible for promptly maintaining, repairing and replacing (a) electrical
wiring systems, electrical fixtures and electrical equipment exclusively serving
the Premises, (b) all interior lighting (including, without limitation, light
bulbs and/or ballasts) and exterior lighting exclusively serving the Premises or
adjacent to the Premises, (c) all glass, windows, window frames, window
casements, skylights, interior and exterior doors, door frames and door closers,
(d) all roll-up doors, ramps and dock equipment, including without limitation,
dock bumpers, dock plates, dock seals, dock levelers and dock lights, (e) all
tenant signage, (f) lifts for disabled persons serving the Premises, (g)
security systems, except to the extent maintained by Landlord, and (h) all
partitions, fixtures, equipment, interior painting, interior walls and floors,
and floor coverings of the Premises and every part thereof (including, without
limitation, any demising walls contiguous to any portion of the Premises).
Additionally, Tenant shall be solely responsible for performance of the regular
removal of trash and debris. Except as specifically set forth in Section 38,
Tenant shall have no right of access to or right to install any device on the
roof of the Building or make any penetrations of the roof of the Building
without the express prior written consent of Landlord.

    11.2  Maintenance by Landlord. Subject to the provisions of Section 11.1 and
Section 25, and further subject to Tenant's obligation under Section 6 to
reimburse Landlord, in the form of Additional Rent, for Tenant's Share of the
cost and expense of the following described items, Landlord agrees to repair and
maintain the following items: fire protection services (including without
limitation, sprinkler systems)(the "Fire Protection Services"); the roof and
roof coverings (provided that Tenant installs no additional air conditioning or
other equipment on the roof that damages the roof coverings, in which event
Tenant shall pay all costs relating to the presence of such additional
equipment); the plumbing and mechanical systems (including without limitation,
the heating, ventilation and air conditioning systems (collectively, the "HVAC
Systems")) serving the Building; any rail spur and rail crossing; exterior
painting of the Building; and the parking areas, pavement, landscaping,
sprinkler systems, sidewalks, driveways, curbs, and lighting systems in the
Common Areas. Notwithstanding anything in this Section 11 to the contrary,
Landlord shall have the right to either repair or to require Tenant to
repair any damage to any portion of the Premises and any other portion of the
Project caused by or created due to any act, omission, negligence or willful
misconduct of Tenant or any of Tenant Representatives and to restore the
Premises and the other affected portions of the Project, as applicable, to the
condition existing prior to the occurrence of such damage. If Landlord elects to
perform such repair and restoration work, Tenant shall reimburse Landlord upon
demand for all costs and expenses incurred by Landlord in connection therewith.
Tenant shall promptly report, in writing, to Landlord any defective condition
known to it which Landlord is required to repair, and failure to so promptly
report after discovery of any such defect shall make Tenant responsible to
Landlord for any liability incurred by Landlord by reason of such condition.

Tenant acknowledges and agrees that Tenant has requested that Landlord repair
and maintain the HVAC Systems and Landlord has agreed to do so subject to the
following provisions. Tenant on its own behalf and on behalf of its agents,
members, partners, employees, representatives, related and affiliated entities,
successors and assigns hereby agrees that each of Landlord and Landlord's
Indemnitees shall be, and are hereby, fully and forever released and discharged
from and against all damages or losses to Tenant's Property, whether direct or
indirect, known or unknown, foreseen or unforeseen, that may arise on account of
or in any way be connected with the repair, maintenance, performance or
condition of the HVAC Systems or the Fire Protection Services (collectively,
"HVAC Claim"), including, without limitation, any HVAC Claim or matter relating
to or arising from any loss or damage to Tenant's Property. Tenant hereby waives
and agrees not to commence any action, legal proceeding, cause of action or
suits in law or equity, of whatever kind or nature, directly or indirectly,
against Landlord or Landlord's Indemnitees or their agents in connection with
any HVAC Claims and expressly waives the provisions of Section 1542 of the
California Civil Code which provides:

          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
          CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
          THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
          MUST HAVE

                                       13
<PAGE>

                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
                  DEBTOR

and all similar provisions or rules of law as the same may apply to any HVAC
Claim. Tenant elects to and does assume all risk for such HVAC Claims heretofore
and hereafter arising, whether now known or unknown by Tenant. Landlord has
given Tenant material concessions regarding this transaction in exchange for
Tenant agreeing to the provisions of this Section 11.2. Landlord and Tenant
have each initialed this Section 11.2 to further indicate their awareness and
acceptance of each and every provision hereof. The provisions of this Section
11.2 shall survive the expiration or earlier termination of this Lease.

    INITIALS: LANDLORD: [ILLEGIBLE]^^     TENANT: [ILLEGIBLE]^^
                        -----------               -----------

Notwithstanding the foregoing, at any time during the Term of this Lease Tenant
may request Landlord's consent to Tenant's assumption of all management
obligations relating to the HVAC Systems. Such consent shall be at Landlord's
reasonable discretion and subject to (i) Landlord's written approval of
Tenant's proposed HVAC Systems manager, including without limitation, Landlord's
approval of such manager's license, experience and insurance coverage and (ii)
Landlord's ability to terminate any existing management agreement relating to
the HVAC System without penalty or cost to Landlord. In the event Tenant assumes
such management obligations relating to the HVAC Systems, to the extent that
capital expenditures must be made to replace such HVAC Systems, Landlord shall
cause such work to be completed and such capital expenditures shall become
Operating Expenses, and Tenant shall pay the amortized portions of such
Operating Expenses as provided in Section 6.1.4 of this Lease.

    11.3  Landlord's Repairs and Maintenance Obligations. Subject to the
provisions of Sections 11.1, 25 and 26, and except for repairs rendered
necessary by the intentional or negligent acts or omissions of Tenant or any of
Tenant's Representatives, Landlord agrees, at Landlord's sole cost and expense,
to (a) keep in good repair the structural portions of (i) the roof (excluding
room membrane), (ii) floors, (iii) elevators, (iv) foundations and (v) exterior
perimeter walls of the Building (exclusive of glass and exterior doors), and
(b) keep in good repair, and if required in Landlord's sole judgment, replace
the structural portions of the roof of the Building (excluding the roof
membrane).

    11.4  Tenant's Failure to Perform Repairs and Maintenance Obligation. If
Tenant refuses or neglects to repair and maintain the Premises and the other
areas properly as required herein and to the reasonable satisfaction of
Landlord, Landlord may, but without obligation to do so, at any time make such
repairs or maintenance without Landlord having any liability to Tenant for any
loss or damage that may accrue to Tenant's Property or to Tenant's business by
reason thereof, except to the extent any damage is caused by the willful
misconduct or gross negligence of Landlord or Landlord's Representatives. If
Landlord makes such repairs or maintenance, upon completion thereof Tenant shall
pay to Landlord, as Additional Rent, Landlord's costs and expenses incurred
therefor. The obligations of Tenant hereunder shall survive the expiration of
the Term of this Lease or the earlier termination thereof. Tenant hereby waives
any right to repair at the expense of Landlord under any applicable Laws now or
hereafter in effect with respect to the Premises.

12. Insurance

    12.1  Types of Insurance. Tenant shall maintain in full force and effect at
all times during the Term of this Lease, at Tenant's sole cost and expense, for
the protection of Tenant and Landlord, as their interests may appear, policies
of insurance issued by a carrier or carriers reasonably acceptable to Landlord
and its lender (which afford the following coverages: (i) worker's compensation
and employer's liability, as required by law; (ii) commercial general
liability insurance (occurrence form) providing coverage against any and all
claims for bodily injury and property damage occurring in, on or about the
Premises arising out of Tenant's and Tenant's Representatives' use or occupancy
of the Premises. Such insurance under (ii) above shall include coverage for
blanket contractual liability, fire damage, premises, personal injury, completed
operations and products liability. Such insurance shall have a combined single
limit of not less than One Million Dollars ($1,000,000) per occurrence with a
Three Million Dollar ($3,000,000) aggregate limit and excess/umbrella insurance
in the amount of Three Million Dollars ($3,000,000). If Tenant has other
locations which it owns or leases, the policy shall include an aggregate limit
per location endorsement; (iii) comprehensive automobile liability insurance
with a combined single limit of at least One Million Dollars ($1,000,000) per
occurrence for claims arising out of any company owned automobiles; (iv) "all
risk" or "special purpose" property insurance, including without limitation,
sprinkler leakage, covering damage to or loss of any of Tenant's Property and
the Tenant Improvements located in, on or about the Premises, and in addition,
coverage for earthquake, and business interruption of Tenant. Such insurance
shall be written on a replacement cost basis (without deduction for
depreciation) in an amount equal to one hundred percent (100%) of the full
replacement value of the aggregate of the items referred to in this clause (iv);
and (v) such other insurance or higher limits of

                                       14
<PAGE>

liability as is then customarily required for similar types of buildings within
the general vicinity of the Project or as may be reasonably required by any of
Landlord's lenders.

    12.2  Insurance Policies. Insurance required to be maintained by Tenant
shall be written by companies (i) licensed to do business in the State of
California and (ii) having a "General Policyholders Rating " of at least A:VIII
(or such higher rating as may be required by a lender having a lien on the
Premises) as set forth in the most current issue of "A.M. Best's Rating Guides."
Any deductible amounts under any of the insurance policies required hereunder
shall not exceed Five Thousand Dollars ($5,000). Tenant shall deliver to
Landlord certificates of insurance and true and complete copies of any and all
endorsements required herein for all insurance required to be maintained by
Tenant hereunder at the time of execution of this Lease by Tenant. Tenant shall,
at least fifteen (15) days prior to expiration of each policy, furnish Landlord
with certificates of renewal or "binders" thereof. Each certificate shall
expressly provide that such policies shall not be cancelable or otherwise
subject to material modification except after thirty (30) days prior written
notice to the parties named as additional insureds as required in this Lease
(except for cancellation for nonpayment of premium, in which event cancellation
shall not take effect until at least ten (10) days' notice has been given to
Landlord). Tenant shall have the right to provide insurance coverage which it is
obligated to carry pursuant to the terms of this Lease under a blanket insurance
policy, provided such blanket policy expressly affords coverage for the Premises
and for Landlord as required by this Lease.

    12.3  Additional Insureds and Coverage. Each of Landlord, Landlord's
property management company or agent, and Landlord's lender(s) (of which Tenant
has received written notice) having a lien against the Premises or any other
portion of the Project shall be named as additional insureds or loss payees (as
applicable) under all of the policies required in Section 12.1(ii) and, with
respect to the Tenant Improvements, in Section 12.1(iv) hereof. Additionally,
all of such policies shall provide for severability of interest. All insurance
to be maintained by Tenant hereunder shall, except for workers' compensation and
employer's liability insurance, be primary, without right of contribution from
insurance maintained by Landlord. Any umbrella/excess liability policy (which
shall be in "following form") shall provide that if the underlying aggregate is
exhausted, the excess coverage will drop down as primary insurance. The limits
of insurance maintained by Tenant shall not limit Tenant's liability under
Section 13 of this Lease. Tenant shall not be liable for any damage to
Landlord's property in excess of the insurance carried or required to be carried
by Tenant hereunder. It is the parties' intention that the insurance to be
procured and maintained by Tenant as required herein shall provide coverage for
any and all damage or injury arising from or related to Tenant's operations of
its business and/or Tenant's or Tenant's Representatives use of the Premises and
any of the areas within the Project. Notwithstanding anything to the contrary
contained herein, to the extent Landlord's cost of maintaining insurance with
respect to the Building and/or any other buildings within the Project is
increased as a result of Tenant's acts, omissions, Alterations, improvements,
use or occupancy of the Premises, Tenant shall pay one hundred percent (100%)
of, and for, each such increase as Additional Rent.

    12.4  Failure of Tenant to Purchase and Maintain Insurance. If Tenant fails
to obtain and maintain the insurance required herein throughout the Term of this
Lease, Landlord may, but without obligation to do so, purchase the necessary
insurance and pay the premiums therefor. If Landlord so elects to purchase such
insurance, Tenant shall promptly pay to Landlord as Additional Rent, the amount
so paid by Landlord, upon Landlord's demand therefor. In addition, Landlord may
recover from Tenant and Tenant agrees to pay, as Additional Rent, any and all
losses, damages, expenses and costs which Landlord may sustain or incur by
reason of Tenant's failure to obtain and maintain such insurance.

    12.5  Waiver of Subrogation. Notwithstanding anything to the contrary in
this Lease, Landlord and Tenant hereby mutually waive their respective rights of
recovery against each other for any loss of, or damage to, either parties'
property to the extent that such loss or damage is insured by an insurance
policy required to be in effect at the time of such loss or damage. Each party
shall obtain any special endorsements, if required by its insurer, whereby the
insurer waives its rights of subrogation against the other party. This provision
is intended to waive fully, and for the benefit of the parties hereto, any
rights and/or claims which might give rise to a right of subrogation in favor of
any insurance carrier.

    12.6  Landlord's Insurance. Landlord shall maintain in full force and effect
during the Term of this Lease, subject to reimbursement as provided in Section
6, policies of insurance which afford such coverages as are commercially
reasonable and as is consistent with other properties in Landlord's portfolio.
Landlord shall also procure such additional insurance coverage as Tenant shall
reasonably request Landlord to obtain; provided, however, notwithstanding
anything to the contrary contained herein, Tenant shall pay, and shall be solely
responsible for, any and all cost, premiums and expenses of any such additional
insurance, as Additional Rent, and Tenant shall pay same to Landlord within ten
(10) days of Landlord's demand therefor. Landlord shall obtain and keep in force
during the Term of this Lease, as an item of Operating Expenses, a policy or
policies in the name of Landlord, with loss payable to Landlord and to the
holders of any mortgages, deeds of trust or ground leases on the Premises
("Lender(s)"), insuring loss or damage to the Building, including all
improvements,

                                       15
<PAGE>

fixtures (other than trade fixtures) and permanent additions, rental
interruption insurance for twelve (12) months' rent, and if available, off-
premises services coverage. However, all alterations, additions and improvements
made to the Premises by Tenant (other than the Tenant Improvements) shall be
insured by Tenant rather than by Landlord. The amount of such insurance procured
by Landlord shall be equal to the full replacement cost of the Building
(excluding the cost of excavation and installation of footings), including all
improvements and permanent additions as the same shall exist from time to time,
or the amount required by Lenders. At Landlord's option, such policy or policies
shall insure against all risks of direct physical loss or damage (including,
without limitation, the perils of earthquake), including coverage for any
additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of Building required to
be demolished or removed by reason of the enforcement of any building, zoning,
safety or land use laws as the result of a covered cause of loss. If any such
insurance coverage procured by Landlord has a deductible clause, the deductible
shall not exceed commercially reasonable amounts, and in the event of any
casualty, the amount of such deductible shall be an item of Operating Expenses
as so limited. Notwithstanding anything to the contrary contained herein, to
the extent the cost of maintaining insurance with respect to the Building
and/or any other improvements within the Project is increased as a result of
Tenant's acts, omissions, alterations, improvements (including without
limitation, the Tenant Improvements), use or occupancy of the Premises, Tenant
shall pay one hundred percent (100%) of, and for, such increase(s) as Additional
Rent.

13. Limitation of Liability and Indemnity

    13.1  Except to the extent of damage resulting from the gross negligence or
willful misconduct of Landlord or Landlord's authorized employees,
representatives, agents, licensees or contractors (collectively, "Landlord's
Representatives"), Tenant agrees to protect, defend (with counsel acceptable to
Landlord) and hold Landlord and Landlord's lenders, partners, members, property
management company (if other than Landlord), agents, directors, officers,
employees, representatives, contractors, successors and assigns and each of
their respective partners, members, directors, heirs, employees,
representatives, agents, contractors, heirs, successors and assigns
(collectively, the "Landlord Indemnitees") harmless and indemnify the Landlord
Indemnitees from and against all liabilities, damages, demands, penalties,
costs, claims, losses, judgments, charges and expenses (including reasonable
attorneys' fees, costs of court and expenses necessary in the prosecution or
defense of any litigation including the enforcement of this provision)
(collectively, "Claims") arising from or in any way related to, directly or
indirectly, (i) Tenant's or Tenant's Representatives' use of the Premises and
other portions of the Project, (ii) the conduct of Tenant's business, (iii) from
any activity, work or thing done, permitted or suffered by Tenant in or about
the Premises, (iv) in any way connected with the Premises, the Alterations or
with the Tenant's Property therein, and/or (v) Tenant's failure to perform any
covenant or obligation of Tenant under this Lease. Tenant agrees that the
obligations of Tenant herein shall survive the expiration or earlier termination
of this Lease.

    13.2  Except to the extent of damage resulting from the gross negligence or
willful misconduct of Landlord or Landlord's Representatives, to the fullest
extent permitted by law, Tenant agrees that neither Landlord nor any of the
Landlord Indemnitees shall at any time or to any extent whatsoever be liable,
responsible or in any way accountable for any loss, liability, injury, death or
damage to persons or property which at any time may be suffered or sustained by
Tenant or by any person(s) whomsoever who may at any time be using, occupying or
visiting the Premises or any other portion of the Project, including, but not
limited to, any acts, errors or omissions of any other tenants or occupants of
the Project. Tenant shall not, in any event or circumstance, be permitted to
offset or otherwise credit against any payments of Rent required herein for
matters for which Landlord may be liable hereunder. Neither Landlord nor any of
the Landlord Indemnitees shall be liable for any interference with light or air,
for any latent defect in the Premises or the Building or for any loss or damage
to Tenant's Property that may arise on account of or in any way be connected
with the repair, maintenance, performance or condition of the HVAC Systems.

14. Assignment and Subleasing

    14.1  Prohibition. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, hypothecate, encumber, grant any license or
concession, pledge or otherwise transfer this Lease or any interest herein,
permit any assignment or other such transfer of this Lease or any interest
hereunder by operation of law, sublet the Premises or any part thereof, or
permit the use of the Premises by any persons other than Tenant and Tenant's
Representatives (all of the foregoing are sometimes referred to collectively as
"Transfers" and any person to whom any Transfer is made or sought to be made is
sometimes referred to as a "Transferee"). No consent to any Transfer shall
constitute a waiver of the provisions of this Section 14, and all subsequent
Transfers may be made only with the prior written consent of the Landlord, which
consent shall not be unreasonably withheld, but which consent shall be subject
to the provisions of the Section 14.

                                       16
<PAGE>

    14.2  Request for Consent. If Tenant seeks to make a Transfer, Tenant shall
notify Landlord, in writing, and deliver to Landlord at least thirty (30) days
(but not more than one hundred eighty (180) days) prior to the proposed
commencement date of the Transfer (the "Proposed Effective Date") the following
information and documents (the "Tenant Notice"): (i) a description of the
portion of the Premises to be transferred (the "Subject Space"); (ii) all of
terms of the proposed Transfer including without limitation, the Proposed
Effective Date, the name and address of the proposed Transferee, and a copy of
the existing or proposed assignment, sublease or other agreement governing the
proposed Transfer; (iii) current financial statements of the proposed Transferee
certified by an officer, member, partner or owner thereof, and any such other
information as Landlord may then reasonably require, including without
limitation, audited financial statements for the previous three (3) most recent
consecutive fiscal years, if available; (iv) the Plans and Specifications
(defined below), if any; and (v) such other information as Landlord may then
reasonably require. Tenant shall give Landlord the Tenant's Notice by registered
or certified mail addressed to Landlord at Landlord's Address specified in the
Basic Lease Information. Within thirty (30) days after Landlord's receipt of the
Tenant's Notice (the "Landlord Response Period") Landlord shall notify Tenant,
in writing, of its determination with respect to such requested proposed
Transfer and the election to recapture as set forth in Section 14.5 below. If
Landlord does consent to the requested proposed Transfer, Tenant may thereafter
assign its interests in and to this Lease or sublease all or a portion of the
Premises to the same party and on the same terms as set forth in the Tenant's
Notice. If Landlord fails to respond to Tenant's Notice within Landlord's
Response Period, then, after Tenant delivers to Landlord thirty (30) days
written notice (the "Second Response Period") and Landlord fails to respond
thereto prior to the end of the Second Response Period, the proposed Transfer
shall then be deemed approved by Landlord.

    14.3  Criteria for Consent. Tenant acknowledges and agrees that, among other
circumstances for which Landlord could reasonably withhold consent to a proposed
Transfer, it shall be reasonable for Landlord to withhold its consent where (a)
Tenant is in default of its obligations under this Lease beyond applicable
notice and cure periods, (b) the use to be made of the Premises by the proposed
Transferee is prohibited under this Lease or differs from the uses permitted
under this Lease, (c) the proposed Transferee or its business is subject to
compliance with additional requirements of the ADA beyond those requirements
which are applicable to Tenant, unless the proposed Transferee shall (1) first
deliver plans and specifications for complying with such additional requirements
(the "Plans and Specifications") and obtain Landlord's written consent thereto,
and (2) comply with all Landlord's conditions contained in such consent, (d) the
proposed Transferee does not intend to occupy a substantial portion of the
Premises assigned or sublet to it, (e) Landlord reasonably disapproves of the
proposed Transferee's business operating ability or history, reputation or
creditworthiness or the character of the business to be conducted by the
proposed Transferee at the Premises, (f) the proposed Transferee is a
governmental agency or unit or an existing tenant in the Project, (g) Landlord
or Landlord's agent has shown space in the Project to the proposed Transferee or
responded to any inquiries from the proposed Transferee or the proposed
Transferee's agent concerning availability of space in the Project, at any time
within the preceding six (6) months, (h) Landlord otherwise determines that the
proposed Transfer would have the effect of decreasing the value of the Building
or the Project, or increasing the expenses associated with operating,
maintaining and repairing the Project, (i) either the proposed Transferee, or
any person or entity which directly or indirectly, controls, is controlled by,
or is under common control with, (the proposed Transferee, (1) occupies space in
the Project at the time of the request for consent, (2) is negotiating with
Landlord to lease space in the Project at such time, or (3) has negotiated with
Landlord during the 12 month period immediately preceding the Tenant's Notice or
(j) the proposed Transferee will use, store or handle Hazardous Materials
(defined below) in or about the Premises of a type, nature or quantity not then
acceptable to Landlord.

    14.4  Effectiveness of Transfer and Continuing Obligations. Prior to the
date on which any permitted Transfer becomes effective, Tenant shall deliver to
Landlord (i) a counterpart of the fully executed Transfer document, (ii) an
executed Hazardous Materials Disclosure Certificate substantially in the form of
Exhibit F hereto (the "Transferee HazMat Certificate"), and (iii) Landlord's
---------
commercially reasonable standard form of Consent to Assignment or Consent to
Sublease, as applicable, executed by Tenant and the Transferee in which each of
Tenant and the Transferee confirms its obligations pursuant to this Lease.
Failure or refusal of a Transferee to execute any such consent instrument shall
not release or discharge the Transferee from its obligation to do so or from any
liability as provided herein. The voluntary, involuntary or other surrender of
this Lease by Tenant, or a mutual cancellation by Landlord and Tenant, shall not
work a merger, and any 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 or all such subleases. Each permitted Transferee
shall assume and be deemed to assume this Lease and shall be and remain liable
jointly and severally with Tenant for payment of Rent and for the due
performance of, and compliance with all the terms,

                                       17
<PAGE>

covenants, conditions and agreements herein contained on Tenant's part to be
performed or complied with, for the Term of this Lease. No Transfer shall affect
the continuing primary liability of Tenant (which, following assignment, shall
be joint and several with the assignee), and Tenant shall not be released from
performing any of the terms, covenants and conditions of this Lease. An assignee
of Tenant shall become directly liable to Landlord for all obligations of Tenant
hereunder, but no Transfer by Tenant shall relieve Tenant of any obligations or
liability under this Lease whether occurring before or after such consent,
assignment, subletting or other Transfer. The acceptance of any or all of the
Rent by Landlord from any other person (whether or not such person is an
occupant of the Premises) shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any Transfer. Any and all options,
first rights of refusal, tenant improvement allowances and other similar rights
granted to Tenant in this Lease, if any, shall not be assignable (other than to
an Affiliate (defined below)) by Tenant unless expressly authorized in writing
by Landlord, Any transfer made without Landlord's prior written consent, shall,
at Landlord's option, be null, void and of no effect, and shall, at Landlord's
option, constitute a material default by Tenant of this Lease. As Additional
Rent hereunder, Tenant shall pay to Landlord, a fee in the amount of five
hundred dollars ($500) plus Tenant shall promptly reimburse Landlord for actual
                       ----
reasonable legal and other reasonable expenses incurred by Landlord in
connection with any actual or proposed Transfer.

    14.5  Intentionally Deleted.

    14.6  Transfer Premium. If Landlord consents to a Transfer, as a condition
thereto which (the Tenant hereby agrees is reasonable, Tenant shall pay to
Landlord, as Additional Rent any "Transfer Premium" received by Tenant from such
Transferee. The term "Transfer Premium" shall mean all rent, additional rent
and other consideration payable by such Transferee which either initially or
over the term of the Transfer exceeds the Rent or pro rata portion of the
Rent, as the case may be, for such space reserved in the Lease. Tenant shall pay
the Landlord monthly, as Additional Rent, at the same time as the monthly
installments of Rent are payable hereunder, fifty percent (50%) of the Transfer
Premium.

    14.7  Waiver. Notwithstanding any Transfer, or any indulgences, waivers or
extensions of time granted by Landlord to any Transferee, or failure by Landlord
to take action against any Transferee, Tenant agrees that Landlord may, at its
option, proceed against Tenant without having taken action against or joined
such Transferee, except that Tenant shall have the benefit of any indulgences,
waivers and extensions of time granted to any such Transferee.

    14.8  Affiliated Companies/Restructuring of Business Organization. The
assignment or subletting by Tenant of all or any portion of this Lease or the
Premises to (i) a parent or subsidiary of Tenant, or (ii) any person or entity
which controls, is controlled by or under the common control with Tenant, or
(iii) any entity which purchases all or substantially all of the assets of
Tenant, or (iv) any entity into which Tenant is merged or consolidated (all such
persons or entities described in clauses (i), (ii), (iii) and (iv) being
sometimes herein referred to as "Affiliates") shall not be deemed a Transfer
under this Section 14 (hence, the aforesaid events shall not be subject to
obtaining Landlord's prior consent; Landlord shall not have any right to
receive any Transfer Premium in connection therewith; and Landlord shall not
have the recapture rights described in Section 14.5 above), provided in all
instances that:

          14.8.1  any such Affiliate was not formed as a subterfuge to avoid the
obligations of this Section 14;

          14.8,2  Tenant give Landlord prior notice of any such assignment or
sublease to an Affiliate;

          14.8.3  the successor of Tenant has as of the effective date of any
such assignment or sublease a tangible net worth and net assets, in the
aggregate, computed in accordance with generally accepted accounting principles
(but excluding goodwill as an asset), which is sufficient to meet the
obligations of Tenant under this Lease, as reasonably determined by Landlord;

          14.8.4  any such assignment or sublease shall be subject to all of the
terms and provisions of this Lease, and such assignee or sublessee (i.e., any
such Affiliate), other than in the case of an Affiliate resulting from a merger
or consolidation as described in Section 14.8(iv) above, shall assume, in a
written document reasonably satisfactory to Landlord and delivered to Landlord
upon or prior to the effective date of such assignment or sublease, all the
obligations of Tenant under this Lease; and

          14.8.5  Tenant and any guarantor shall remain fully liable for all
obligations to be performed by Tenant under this Lease, except in the case of an
Affiliate resulting from the acquisition

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<PAGE>

of all or substantially all of the assets of Tenant described in Section
14 .8(iii) or from a merger or consolidation as described in Section 14.8(iv)
above.

15.   Subordination

To the fullest extent permitted by law, this Lease, the rights of Tenant under
this Lease and Tenant's leasehold interest shall be subject and subordinate at
all times to: (i) all ground leases or underlying leases which may now exist or
hereafter be executed affecting the Building, the Lot, or any other portion of
time Project, and (ii) the lien of any mortgage or deed of trust which may now
or hereafter exist for which the Building, the Lot, ground leases or underlying
leases, any other portion of the Project or Landlord's interest or estate in any
of said items is specified as security. Notwithstanding the foregoing, Landlord
or any such ground lessor, mortgagee, or any beneficiary shall have the right to
require this Lease be superior to any such ground teases or underlying leases or
any such liens, mortgage or deed of trust. If any ground lease or underlying
lease terminates for any reason or any mortgage or deed of trust is foreclosed
or a conveyance in lieu of foreclosure is made for any reason, whether with
respect to a present or a future ground lease, underlying lease, mortgage or
deed of trust, Tenant shall attorn to and become the Tenant of the successor in
interest to Landlord, provided such successor in interest will not disturb
Tenant's use, occupancy or quiet enjoyment of the Premises if Tenant is not in
material default of the terms and provisions of this Lease. The successor in
interest to Landlord following foreclosure, sale or deed in lieu thereof shall
not be: (a) liable for any act or omission of any prior lessor or with respect
to events occurring prior acquisition of ownership; (b) subject to any offsets
or defenses which Tenant might have against any prior lessor, except as
specifically set forth in this Lease; (c) bound by prepayment of more than one
(1) month's Rent, except in those instances when Tenant pays Rent quarterly in
advance pursuant to Section 8 hereof, then not more than three months' Rent; or
(d) liable to Tenant for any Security Deposit not actually received by such
successor in interest to the extent any portion or all of such Security Deposit
has not already been forfeited by, or refunded to, Tenant. Landlord shall be
liable to Tenant for all or any portion of the Security Deposit not forfeited
by, or refunded to Tenant, until and unless Landlord transfers such Security
Deposit to the successor in interest. Tenant covenants and agrees to execute
(and acknowledge if required by Landlord, any lender or ground lessor) and
deliver, within ten (10) days of a demand or request by Landlord and in the form
requested by Landlord, ground lessor, mortgagee or beneficiary, any additional
documents evidencing the priority or subordination of this Lease with respect to
any such ground leases or underlying leases or the lien of any such mortgage or
deed of trust. Tenant's agreement to subordinate this Lease to any future ground
or underlying tease or any future deed of trust or mortgage pursuant to the
foregoing provisions of this Section 15 is conditioned upon Landlord delivering
to Tenant from die lessor under such future ground or underlying lease or the
holder of any such mortgage or deed of trust, a non-disturbance agreement
(reasonably satisfactory to the parties thereto) agreeing, among other things,
that Tenant's right to possession of the Premises pursuant to the terms and
conditions of this Lease shall not be disturbed provided Tenant is not in
default under this Lease beyond the applicable notice and cure periods hereunder
(an "SNDA"). Tenant hereby acknowledges that as of the Lease Date there is a
deed of trust encumbering amid in force against, the Premises, the Building and
the Lot in favor of Union Bank of California, N.A.

16.   Right of Entry

Landlord and its agents shall have the right to enter the Premises at all
reasonable times, upon reasonable prior notice (at least twelve (12) hours prior
notice except in the event of aim emergency in which case no notice of any kind
shall be required), for purposes of inspection, exhibition, posting of notices,
investigation, replacements, repair, maintenance and alteration and Landlord
and its agents shall use commercially reasonable efforts to minimize
interference with Tenant's operations in the Premises and to comply with
Tenant's commercially reasonable security measures. It is further agreed that
Landlord shall have the right to use any and all means Landlord deems
necessary, regardless of any Tenant security measures, to enter the Premises in
an emergency; provided Landlord shall have access to all of the Premises as long
as Landlord provides Tenant with a reasonable opportunity to arrange for
Landlord to be accompanied by a representative of Tenant. Landlord shall have
time right to place "for rent", "for lease" or "for sale" signs in the Common
Areas of the Project (excluding any areas on or within the Building's Tenant
hereby waives any Claim from damages or for any injury or inconvenience to or
interference with Tenant's business, or any other loss occasioned thereby except
for any Claim for any of the foregoing arising out of the gross negligence or
willful misconduct of Landlord or its authorized representatives. Landlord shall
not show the Premises to prospective tenants or place "for rent" or "for lease"
signs on the Premises prior to that date which is two hundred seventy (270) days
before the expiration of the Term.

17.   Estoppel Certificate

Tenant shall execute (and acknowledge if required by any lender or ground
lessor) and deliver to Landlord, within ten (10) days after Landlord provides
such to Tenant, a statement in writing certifying

                                       19
<PAGE>

that this Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification), the date to which the Rent and other
charges are paid in advance, if any, acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord hereunder or
specifying such defaults as are claimed, and such other matters as Landlord may
reasonably require. Any such statement may be conclusively relied upon by
Landlord and any prospective purchaser or encumbrancer of the Building or other
portions of the Project. Tenant's failure to deliver such statement within such
time shall be conclusive upon the Tenant that (a) this Lease is in full force
and effect, without modification except as may be represented by Landlord; (b)
there are no uncured defaults in Landlord's performance; and (c) not more than
one month's Rent has been paid in advance, except in those instances when Tenant
pays Rent quarterly in advance pursuant to Section 8 hereof, then not more than
three months' Rent has been paid in advance.

18.   Tenant's Default

The occurrence of any one or more of the following events shall, at Landlord's
option, constitute a material default by Tenant of the provisions of this Lease:

      18.1   The abandonment of the Premises by Tenant or the vacation of the
Premises by Tenant which would cause any insurance policy to be invalidated or
otherwise lapse;

      18.2   The failure by Tenant to make any payment of Rent, Additional Rent
or any other payment required hereunder within three (3) business days after
Landlord's delivery of written notice to Tenant that said payment is past due.
Tenant agrees that any such written notice delivered by Landlord shall, to the
fullest extent permitted by law, serve as the statutorily required notice under
applicable law provided that such notice is served in accordance with California
Code of Civil Procedure Section 1162;

      18.3   The failure by Tenant to observe, perform or comply with any of
the conditions, covenants or provisions of this Lease (except failure to make
any payment of Rent and/or Additional Rent) and such failure is not cured within
(i) fifteen (15) days of the date on which Landlord delivers written notice of
such failure to Tenant for all failures other than with respect to (a) Hazardous
Materials (defined in Section 27 hereof) or (b) the timely delivery by Tenant of
an SNDA, a counterpart of a fully executed Transfer document and a consent
thereto (collectively, the "Transfer Documents"), an estoppel certificate and
insurance certificates, (ii) fifteen (15) days of the date on which Landlord
delivers written notice of such failure to Tenant for all failures in any way
related to Hazardous Materials and (iii) the time period, if any, specified in
the applicable sections of this Lease with respect to subordination, assignment
and sublease, estoppel certificates and insurance. However, Tenant shall not be
in default of its obligations hereunder if such failure (other than any failure
of Tenant to timely deliver an SNDA, the Transfer Documents, an estoppel
certificate or insurance certificates, for which an additional cure period of
three (3) business days shall be given to Tenant) cannot reasonably be cured
within such fifteen (15) "day" period, and Tenant promptly commences, and
thereafter diligently proceeds with same to completion, all actions necessary to
cure such failure as soon as is reasonably possible, but in no event shall the
completion of such cure be later than sixty (60) days after the date on which
Landlord delivers to Tenant written notice of such failure, unless Landlord,
acting reasonably and in good faith, otherwise expressly agrees in writing to a
longer period of time based upon the circumstances relating to such failure as
well as the nature of the failure and the nature of the actions necessary to
cure such failure; or

      18.4   The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary
action, the failure to remove or discharge the same within sixty (60) days of
such filing, the appointment of a receiver or other custodian to take
possession of substantially all of Tenant's assets or this leasehold, any court
entering a decree or order directing the winding up or liquidation of Tenant or
of substantially all of Tenant's assets, Tenant taking any action toward the
dissolution or winding up of Tenant's affairs, the cessation or suspension of
Tenant's use of the Premises, or the attachment, execution or other judicial
seizure of substantially all of Tenant's assets or this leasehold.

19.   Remedies for Tenant's Default and Chronic Default

      19.1   Landlord's Rights. In the event of Tenant's material default under
this Lease beyond applicable cure periods, Landlord may terminate Tenant's right
to possession of the Premises by any lawful means in which case upon delivery of
written notice by Landlord this Lease shall terminate on the date specified by
Landlord in such notice and Tenant shall immediately surrender possession of the
Premises to Landlord. In addition, the Landlord shall have right of re-entry
whether or not

                                       20
<PAGE>

this Lease is terminated, and if this right of re-entry is exercised following
abandonment of the Premises by Tenant, Landlord may consider any of Tenant's
Property and left on the Premises to also have been abandoned. No re-entry or
taking possession of the Premises by Landlord pursuant to this Section 19 shall
be construed as an election to terminate this Lease unless a written notice of
such intention is given to Tenant. If Landlord relets the Premises or any
portion thereof, Tenant shall be liable immediately to Landlord for all costs
Landlord incurs in reletting the Premises or any part thereof, including,
without limitation, broker's commissions (which shall be amortized on a
straight-line basis over the term of the new lease and Tenant shall pay the
portion allocable to the remaining Term), expenses of cleaning and restoring the
Premises to the condition required under this Lease, and other similar costs
(collectively, the "Reletting Costs"), but the Reletting Costs shall exclude
costs incurred in decorating or further improving the Premises or otherwise
improving the Premises for a new tenant. Any and all of the Reletting Costs
shall be fully chargeable to Tenant and shall not be prorated or otherwise
amortized in relation to any new lease for the Premises or any portion thereof.
Reletting may be for a period shorter or longer than the remaining term of this
Lease. In no event shall Tenant be entitled to any excess rent received by
Landlord. No act by Landlord other than giving written notice to Tenant shall
terminate this Lease. Acts of maintenance, efforts to relet the Premises or
the appointment of a receiver on Landlord's initiative to protect Landlord's
interest under this Lease shall not constitute a termination of Tenant's right
to possession. So long as this Lease is not terminated, Landlord shall have the
right to remedy any default of Tenant, to maintain or improve the Premises, to
cause a receiver to be appointed to administer the Premises and new or existing
subleases and to add to the Rent payable hereunder all of Landlord's reasonable
costs in so doing, with interest at time maximum rate permitted by law from the
date of such expenditure.

      19.2   Damages Recoverable. If Tenant breaches this Lease and abandons the
Premises before the end of the Term, or if Tenant's right to possession is
terminated by Landlord because of a breach or default under this Lease, then in
either such case, Landlord may recover from Tenant all damages suffered by
Landlord as a result of Tenant's failure to perform its obligations hereunder,
including all Reletting Costs and the worth at the time of the award (computed
in accordance with paragraph (3) of Subdivision (a) of Section 1951.2 of the
California Civil Code) of the amount by which the Rent then unpaid hereunder
for the balance of the Lease Term exceeds the amount of such loss of Rent for
the same period which Tenant proves could be reasonably avoided by Landlord and
in such case, Landlord prior to the award, may relet the Premises for the
purpose of mitigating damages suffered by Landlord because of Tenant's failure
to perform its obligations hereunder; provided, however, that even though Tenant
has abandoned the Premises following such breach, this Lease shall nevertheless
continue in full force and effect for as long as Landlord does not terminate
Tenant's right of possession, and until such termination, Landlord shall have
the remedy described in Section 1951.4 of the California Civil Code (Landlord
may continue this Lease in effect after Tenant's breach and abandonment and
recover Rent as it becomes due, if Tenant has the right to sublet or assign,
subject only to reasonable limitations) and may enforce all its rights and
remedies under this Lease, including the right to recover the Rent from Tenant
as it becomes due hereunder. The "worth at the time of the award" within the
meaning of Subparagraphs (a)(l) and (a)(2) of Section 1951.2 of the California
Civil Code shall be computed by allowing interest at the rate of ten percent
(10%) per annum. Tenant waives 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 or Landlord takes
possession of time Premises by reason of any default of Tenant hereunder.

      19.3   Rights and Remedies Cumulative. The foregoing rights and remedies
of Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity by statute or otherwise, or
to any equitable remedies Landlord may have, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditors' rights generally. In
addition to all remedies set forth above, if Tenant materially defaults under
this Lease beyond applicable notice and cure periods, all options granted to
Tenant hereunder shall automatically terminate, unless otherwise expressly
agreed to in writing by Landlord.

      19.4   Chronic Default. The term "Chronic Default" as used in this Lease
shall mean that Tenant is in default beyond any applicable notice and cure
period in the performance of any of its obligations under this Lease more than
three (3) times in any twelve (12) month period, unless Tenant shall
subsequently perform all of Tenant's obligations under this Lease without
default beyond any applicable notice and cure period for a total of twenty-four
(24) consecutive months following the last default beyond any applicable notice
and cure period.

20.   Holding Over

If Tenant holds over after the expiration of the Lease Term hereof, with or
without the express or implied consent of Landlord, such tenancy shall be from
month-to-month only, and shall not constitute a renewal hereof or an extension
for any further term, and in such case Base Rent shall be payable at a monthly
rate equal to one hundred twenty-five percent (125%) of the greater of (i) the
Base Rent

                                       21
<PAGE>

applicable during the last rental period of the Lease Term under this Lease or
(ii) the fair market rental rate for the Premises as of the commencement of such
holdover period; provided, however, that if Tenant holds over after the
expiration of the Lease Term hereof with the express consent of Landlord, in
such case Base Rent shall be payable (x) for the first (1st) thirty (30) days
following expiration of the Lease Term at a monthly rate equal to the Base Rent
applicable during the last rental period of the Lease Term under this Lease, and
(y) thereafter, one hundred twenty-five percent (125%) of the greater of (i)
the Base Rent applicable during the last rental period of the Lease Term under
this Lease or (ii) the fair market rental rate for the Premises as of the
commencement of such holdover period. Such month-to-month tenancy shall be
subject to every other term, covenant and agreement contained herein. Landlord
hereby expressly reserves the right to require Tenant to surrender possession of
the Premises to Landlord as provided in this Lease upon the expiration or other
termination of this Lease. The provisions of this Section 20 shall not be deemed
to limit or constitute a waiver of any other rights or remedies of Landlord
provided herein or at law. If Tenant fails to surrender the Premises upon the
termination or expiration of this Lease, in addition to any other liabilities to
Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold
Landlord harmless from all Claims resulting from such failure, including but
not limited to, any Claims made by any succeeding tenant founded upon such
failure to surrender, and any lost profits to Landlord resulting therefrom.

21.   Landlord's Default

Landlord shall not be considered in default of this Lease unless Landlord fails
within a reasonable time to perform an obligation required to be performed by
Landlord hereunder. For purposes hereof, a reasonable time shall be not less
than thirty (30) days after receipt by Landlord of written notice specifying the
nature of the obligation Landlord has not performed; provided, however, that if
the nature of Landlord's obligation is such that more than thirty (30) days,
after receipt of written notice, is reasonably necessary for its performance,
then Landlord shall not be in default of this Lease if performance of such
obligation is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.

22.   Parking

Tenant may use, at no additional cost, the number of parking spaces specified in
the Basic Lease Information. Landlord shall exercise reasonable efforts to
ensure that such spaces are available to Tenant for its use, but Landlord shall
not be required to enforce Tenant's right to use the same. In no event shall
Tenant or any of Tenant's Representatives park or permit any parking of vehicles
overnight.

23. Transfer of Landlord's Interest

If there is any sale or other transfer of the Premises or any other portion of
the Project by Landlord or any of Landlord's interest therein, Landlord shall
automatically be entirely released from all liability under this Lease accruing
thereafter and Tenant agrees to look solely to such transferee for the
performance of Landlord's obligations hereunder after the date of such transfer,
provided that such transferee shall have assumed in writing all of Landlord's
obligations hereunder. Landlord shall use all reasonable efforts to provide
Tenant with a copy of such assumption by such transferee, but providing Tenant
with such a copy shall not be a condition to Landlord being released under this
Section 23. A ground lease or similar long term lease by Landlord of the entire
Building or Lot, of which the Premises are a part, shall be deemed a sale
within the meaning of this Section 23. Tenant agrees to attorn to such new owner
provided such new owner does not disturb Tenant's use, occupancy or quiet
enjoyment of the Premises so long as Tenant is not in material default of any of
the provisions of this Lease.

24.   Waiver

No delay or omission in the exercise of any right or remedy of either party
on any default by the other party shall impair such a right or remedy or be
construed as a waiver. The subsequent acceptance of Rent or any other payment
due by one party to the other by the payee after default by either party shall
not be deemed a waiver of such default, other than a waiver of timely payment
for the particular payment involved, and shall not prevent Landlord or Tenant
from maintaining an unlawful detainer or other action based on such breach. No
payment by either party or receipt by the other party of a lesser amount than
the sums due hereunder shall be deemed to be other than on account of the
earliest sums due, nor shall any endorsement or statement on any check or
accompanying any check or payment be deemed an accord and satisfaction; and
either party may accept such check or payment without prejudice to such party's
right to recover the balance of such sum or pursue any other remedy provided in
this Lease. No failure, partial exercise or delay on the part of either party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.

                                       22
<PAGE>

25.  Casualty Damage

     25.1 Casualty. If the Premises or any part [excluding any of Tenant's
Property, any Tenant Improvements and any Alterations installed by or for the
benefit of Tenant (collectively, the "Tenant's FF&E")] shall be damaged or
destroyed by fire or other casualty, Tenant shall give immediate written notice
thereof to Landlord. Within sixty (60) days after receipt by Landlord of such
notice, Landlord shall notify Tenant, in writing, whether the necessary repairs
can reasonably be made, as reasonably determined by Landlord: (a) in less than
one hundred eighty (180) days or (b) in one hundred eighty (180) days or more,
from the date of such notice.

          25.1.1  Insured Damage Requiring Less Than 180 Days To Repair. If the
Premises (other than the Tenant's FF&E) are damaged only to such extent that
repairs, rebuilding and/or restoration can be reasonably completed, as
reasonably determined by Landlord, in less than one hundred eighty (180) days,
then Landlord shall repair the Premises to substantially the same condition that
existed prior to the occurrence of such casualty, subject to Landlord's right to
terminate pursuant to Section 25.2 below (except that Landlord shall not be
required to rebuild, repair, or replace any of Tenant's FF&E). The Rent payable
hereunder shall be abated proportionately from the date and to the extent Tenant
actually vacates the affected portions of the Premises until any and all repairs
required herein to be made by Landlord are substantially completed but such
abatement shall only be to the extent of the portion of the Premises which is
actually rendered unusable and unfit for occupancy and only during the time
Tenant is not actually using same. If Landlord fails to substantially complete
such repairs in less than one hundred eighty (180) days after the date on which
Landlord is notified by Tenant of the occurrence of such casualty [such 180-day
period to be extended for delays caused by Tenant or any of Tenant's
Representatives ("Tenant Delays") or any force majeure events, which events
shall include, but not be limited to, acts or events beyond Landlord's and/or
its contractors' control, acts of God, earthquakes, strikes, lockouts, riots,
boycotts, casualties not caused by Landlord or Tenant, discontinuance of any
utility or other service required for performance of the work, moratoriums,
governmental delays in issuing permits, governmental agencies and weather, and
the lack of availability or shortage of materials ("Force Majeure Delays");
provided that none of such Force Majeure Delays shall extend said one hundred
eighty (180) day period by more than sixty (60) additional days], Tenant may
within ten (10) business days after expiration of such one hundred eighty (180)
day period (as same may be extended), terminate this Lease by delivering written
notice to Landlord as Tenant's exclusive remedy, whereupon all rights of Tenant
hereunder shall cease and terminate ten (10) business days after Landlord's
receipt of such notice and Tenant shall immediately vacate the Premises and
surrender possession thereof to Landlord.

          25.1.2  Major Insured Damage. If the Premises (other than the Tenant's
FF&E) are damaged to such extent that repairs, rebuilding and/or restoration
cannot be reasonably completed, as reasonably determined by Landlord, in less
than one hundred eighty (180) days, then either Landlord or Tenant may terminate
this Lease by giving written notice within twenty (20) days after notice from
Landlord regarding the time period of repair. If either party notifies the other
of its intention to so terminate the Lease, then this Lease shall terminate and
the Rent shall be abated from the date of the occurrence of such damage,
provided Tenant diligently proceeds to and expeditiously vacates the Premises
(but, in all events Tenant must vacate and surrender the Premises to Landlord by
no later than ten (10) business days thereafter or there shall not be any
abatement of Rent until Tenant so vacates the Premises). If neither party elects
to terminate this Lease, Landlord shall promptly commence and diligently
prosecute to completion the repairs to the Premises, provided insurance proceeds
are available and paid to Landlord to fully repair the damage or Tenant
contributes any shortfall thereof to Landlord (except that Landlord shall not be
required to rebuild, repair, or replace any of Tenant's FF&E). During the time
when Landlord is prosecuting such repairs to substantial completion, the Rent
payable hereunder shall be abated proportionately from the date and to the
extent Tenant actually vacates the affected portions of the Premises until any
and all repairs required herein to be made by Landlord are substantially
completed but such abatement shall only be to the extent of the portion of the
Premises which is actually rendered unusable and unfit for occupancy and only
during the time Tenant is not actually using same.

          25.1.3  Damage Near End of Term. Notwithstanding anything to the
contrary contained in this Lease, if the Premises are substantially damaged or
destroyed during the last year of then applicable term of this Lease, either
Landlord or Tenant may, at their option, cancel and terminate this Lease by
giving written notice to the other party of its election to do so within thirty
(30) days after receipt by Landlord of notice from Tenant of the occurrence of
such casualty. If either party so elects to terminate this Lease, all rights of
Tenant hereunder shall cease and terminate ten (10) days after Tenant's receipt
of delivery of such notice, as applicable, and Tenant shall immediately vacate
the Premises and surrender possession thereof to Landlord.

     25.2 Deductible and Uninsured Casualty. Tenant shall be responsible for and
shall pay to Landlord, as Additional Rent, the deductible amounts under the
insurance policies obtained by Landlord (such deductible not to exceed
($10,000.00) and Tenant under this Lease if the proceeds of which are used

                                       23
<PAGE>

to repair the Premises as contemplated in this Section 25. Notwithstanding the
foregoing, if other portions of the Building are also damaged by said casualty
and insurance proceeds are payable therefor, then Tenant shall only pay its
proportionate share of the deductible as reasonably determined by Landlord. If
any portion of the Premises is damaged and is not fully covered by the aggregate
of insurance proceeds received by Landlord and any applicable deductible, and
Tenant, at Tenant's option, does not contribute any shortfall thereof to
Landlord, or if the holder of any indebtedness secured by the Premises requires
that the insurance proceeds be applied to such indebtedness, then Landlord shall
have the right to terminate this Lease by delivering written notice of
termination to Tenant within thirty (30) days after the date of notice to Tenant
of any such event, whereupon all rights and obligations of Tenant shall cease
and terminate hereunder, except for those obligations expressly provided for in
this Lease to survive such termination of the Lease. Notwithstanding anything to
the contrary contained herein, if the holder of any indebtedness secured by the
Premises or any other portion of the Project requires that the insurance
proceeds be applied to such indebtedness, then Landlord shall have the right to
terminate this Lease by delivering written notice of termination to Tenant
within thirty (30) days after the date of notice to Tenant of any such event,
whereupon all rights and obligations of Tenant shall cease and terminate
hereunder, except for those obligations expressly provided for in this Lease to
survive such termination of the Lease.

     25.3 Tenant's Waiver. Landlord shall not be liable for any inconvenience or
annoyance to Tenant, injury to the business of Tenant, loss of use of any part
of the Premises by Tenant or loss of Tenant's Property, resulting in any way
from such damage, destruction or the repair thereof, except that, Landlord shall
allow Tenant a fair diminution of Rent during the time and to the extent the
Premises are actually unusable and unfit for occupancy and Tenant is not using
or otherwise occupying same as specifically provided above in this Section 25.
With respect to any damage or destruction which Landlord is obligated to repair
or may elect to repair, Tenant hereby waives all rights to terminate this Lease
or offset any amounts against Rent pursuant to rights accorded Tenant by any law
currently existing or hereafter enacted, including but not limited to, all
rights pursuant to the provisions of Sections 1932(2.), 1933(4.), 1941 and 1942
of the California Civil Code, as the same may be amended or supplemented from
time to time.

26.  CONDEMNATION

If twenty-five percent (25%) or more of the Premises is condemned by eminent
domain, inversely condemned or sold in lieu of condemnation for any public or
quasi-public use or purpose ("Condemned"), then Tenant or Landlord may terminate
this Lease as of the date when physical possession of the Premises is taken and
title vests in such condemning authority, and Rent shall be adjusted to the date
of termination. Tenant shall not because of such condemnation assert any claim
against Landlord or the condemning authority for any compensation because of
such condemnation, and Landlord shall be entitled to receive the entire amount
of any award without deduction for any estate of interest or other interest of
Tenant; provided, however, the foregoing provisions shall not preclude Tenant,
at Tenant's sole cost and expense, from obtaining any separate award to Tenant
for loss of or damage to Tenant's Property or for damages for cessation or
interruption of Tenant's business provided such award is separate from
Landlord's award and provided further such separate award does not diminish nor
otherwise impair the award otherwise payable to Landlord. In addition to the
foregoing, Tenant shall be entitled to seek compensation for the relocation
costs recoverable by Tenant pursuant to the provisions of California Government
Code Section 7262 and the unamortized portion of any Tenant Improvements paid
for by Tenant (and Tenant shall not be deemed to have paid for any Tenant
Improvements the cost of which were paid by the Tenant Improvement Allowance).
If neither party elects to terminate this Lease, Landlord shall, if necessary,
promptly proceed to restore the Premises or the Building, as applicable, to
substantially its same condition prior to such partial condemnation, allowing
for the reasonable effects of such partial condemnation, and a proportionate
allowance shall be made to Tenant, as solely determined by Landlord, for the
Rent corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of such partial condemnation and
restoration. Landlord shall not be required to spend funds for restoration in
excess of the amount received by Landlord as compensation awarded.

27.  ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS

     27.1 Hazardous Materials Disclosure Certificate. Prior to executing this
Lease, Tenant has delivered to Landlord Tenant's executed initial Hazardous
Materials Disclosure Certificate (the "Initial HazMat Certificate"), a copy of
which is attached hereto as Exhibit F. Tenant covenants, represents and warrants
                            ---------
to Landlord that the information in the Initial HazMat Certificate is true and
correct and accurately describes the use(s) of Hazardous Materials which will be
made and/or used on the Premises by Tenant. Tenant shall, commencing with the
date which is one year from the Commencement Date and continuing every year
thereafter, deliver to Landlord upon Landlord's request therefor, an executed
Hazardous Materials Disclosure Certificate (the "HazMat Certificate") describing
Tenant's then present use of Hazardous Materials on the Premises, and any other
reasonably necessary documents as requested

                                       24
<PAGE>

by Landlord. The HazMat Certificates required hereunder shall be in
substantially the form attached hereto as Exhibit F.
                                          ---------

     27.2 Definition of Hazardous Materials. As used in this Lease, the term
Hazardous Materials shall mean and include (a) any hazardous or toxic wastes,
materials or substances, and other pollutants or contaminants, which are or
become regulated by any Environmental Laws; (b) petroleum, petroleum by
products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos
and asbestos containing material, in any form, whether friable or non-friable;
(d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and lead-
containing materials; (g) any other material, waste or substance displaying
toxic, reactive, ignitable or corrosive characteristics, as all such terms are
used in their broadest sense, and are defined or become defined by any
Environmental Law (defined below); or (h) any materials which cause or threatens
to cause a nuisance upon or waste to any portion of the Project or any
surrounding property; or poses or threatens to pose a hazard to the health and
safety of persons on the Premises, any other portion of the Project or any
surrounding property. For purposes of this Lease, the term "Hazardous Materials"
shall not include nominal amounts of ordinary household cleaners, office
supplies and janitorial supplies which are not actionable under any
Environmental Laws.

     27.3 Prohibition; Environmental Laws. Except for those Hazardous Materials
of the type and in the quantities specified in the Initial HazMat Certificate
and in the HMMP (defined below), Tenant shall not be entitled to use or store
any Hazardous Materials on, in, or about any portion of the Premises and the
Project without, in each instance, obtaining Landlord's prior written consent
thereto. If Landlord, in its sole discretion, consents to any such usage or
storage, then Tenant shall be permitted to use and/or store only those Hazardous
Materials that are necessary for Tenant's business and to the extent disclosed
in the HazMat Certificate and as expressly approved by Landlord in writing. Any
such usage and storage may only be to the extent of the quantities of Hazardous
Materials as specified in the then applicable HazMat Certificate as expressly
approved by Landlord. In all events such usage and storage must at all times be
in full compliance with any and all local, state and federal environmental,
health and/or safety-related laws, statutes, orders, standards, courts'
decisions, ordinances, rules and regulations (as interpreted by judicial and
administrative decisions), decrees, directives, guidelines, permits or permit
conditions, currently existing and as amended, enacted, issued or adopted in the
future which are or become applicable to Tenant or all or any portion of the
Premises (collectively, the "Environmental Laws"). Tenant agrees that any
changes to the type and/or quantities of Hazardous Materials specified in the
most recent HazMat Certificate may be implemented only with the prior written
consent of Landlord, which consent may be given or withheld in Landlord's sole
discretion. Except for the double contained, leakage monitored above-ground tank
specified in the HMMP, Tenant shall not be entitled nor permitted to install any
tanks under, on or about the Premises for the storage of Hazardous Materials
without the express written consent of Landlord, which may be given or withheld
in Landlord's sole discretion. Such above-ground tank in which diesel fuel is
stored, used and/or distributed therefrom shall be sealed in a leak-proof,
double contained tank using the best available technology at the time of
installation. Landlord shall have the right at all times during the Term of this
Lease to (i) inspect the Premises, (ii) conduct tests and investigations to
determine whether Tenant is in compliance with the provisions of this Section 27
or to determine if Hazardous Materials are present in, on or about the Project,
and (iii) request lists of all Hazardous Materials used, stored or otherwise
located on, under or about any portion of the Premises and/or the Common Areas.
The cost of all such inspections, tests and investigations shall be borne by
Tenant, if Landlord reasonably determines that Tenant or any of Tenant's
Representatives are directly or indirectly responsible in any manner for any
contamination revealed by such inspections, tests and investigations. The
aforementioned rights granted herein to Landlord and its representatives shall
not create (a) a duty on Landlord's part to inspect, test, investigate, monitor
or otherwise observe the Premises or the activities of Tenant and Tenant's
Representatives with respect to Hazardous Materials, including without
limitation, Tenant's operation, use and any remediation related thereto, or (b)
liability on the part of Landlord and its representatives for Tenant's use,
storage or release of Hazardous Materials or the disposal or remediation
thereof, it being understood that Tenant shall be solely responsible for all
liability in connection therewith. Notwithstanding anything to the contrary
contained herein, Tenant and Tenant's Representatives shall not conduct any
diesel or gas filling operations in, on, at or about the Premises it being
Tenant's intention to solely use said diesel for emergency generator situations
only provided Tenant may activate the generator for commercially reasonable
testing purposes. In addition to the foregoing, Tenant and Tenant's
Representatives shall limit the types and amounts of Hazardous Materials to be
stored at the Premises to the types and quantities specified in the Initial
HazMat Certificate attached hereto.

     27.4 Tenant's Environmental Obligations. Tenant shall give to landlord
immediate verbal and follow-up written notice of any spills, releases,
discharges, disposals, emissions, migrations, removals or transportation of
Hazardous Materials on, under or about any portion of the Premises or in any
Common Areas; provided that Tenant has actual, implied or constructive knowledge
of such event(s). Tenant, at its sole cost and expense, covenants and warrants
to promptly investigate, clean up, remove, restore and otherwise remediate
(including, without limitation, preparation of any feasibility studies or

                                       25
<PAGE>

reports and the performance of any and all closures) any spill, release,
discharge, disposal, emission, migration or transportation of Hazardous
Materials arising from or related to the intentional or negligent acts or
omissions of Tenant or Tenant's Representatives such that the affected portions
of the Project and any adjacent property are returned to the condition existing
prior to the appearance of such Hazardous Materials. Any such investigation,
clean up, removal, restoration and other remediation shall only be performed
after Tenant has obtained Landlord's prior written consent, which consent shall
not be unreasonably withheld so long as such actions would not potentially have
a material adverse long-term or short-term effect on any portion of the Project.
Notwithstanding the foregoing, Tenant shall be entitled to respond immediately
to an emergency without first obtaining Landlord's prior written consent.
Tenant, at its sole cost and expense, shall conduct and perform, or cause to be
conducted and performed, all closures as required by any Environmental Laws or
any agencies or other governmental authorities having jurisdiction thereof with
respect to Tenant's or Tenant's Representative's use, storage or release of
Hazardous Materials or the disposal or remediation thereof. If Tenant fails to
so promptly investigate, clean up, remove, restore, provide closure or otherwise
so remediate such Hazardous Materials used, stored, disposed, remediated or
released by Tenant or Tenant's Representatives, Landlord may, but without
obligation to do so, take any and all steps necessary to rectify the same and
Tenant shall promptly reimburse Landlord, upon demand, for all costs and
expenses to Landlord of performing investigation, clean up, removal,
restoration, closure and remediation work. All such work undertaken by Tenant,
as required herein, shall be performed in such a manner so as to enable Landlord
to make full economic use of the Premises and the other portions of the Project
after the satisfactory completion of such work. Notwithstanding anything to the
contrary contained herein and in addition to Tenant's obligations under this
Section 27.4 any Hazardous Materials to be stored at the Premises by Tenant
and/or Tenant's Representatives shall be stored in the tank and concrete
containment structure for the tank and the generators, and handled in the manner
specified in the draft Hazardous Material Management Plan for Tenant's operation
at the Building (the final approved version thereof referred to as the "HMMP")
and in strict accordance with all Environmental Laws, including without
limitation, the regulations, standards and requirements of the National Fire
Protection Association and the applicable building and fire departments. In
addition to any other rights and remedies available to Landlord under the
provisions of this Lease, it will be a material default if Hazardous Materials
are stored and/or used in, on, at or about the Premises in quantities, or are of
a type, other than as specified in the Initial HazMat Certificate hereto or any
subsequent HazMat Certificate, or any Hazardous Materials are handled in any
manner which is different from those procedures specified in the HMMP or as
otherwise required by Environmental Laws. In addition to any other requirements
imposed upon Tenant and Tenant's Representatives under this Section 27 or in any
other provision of this Lease Tenant shall give immediate written notice to
Landlord of: (a) any enforcement, remediation, or other regulatory action or
order, taken or threatened, by and agency regarding, or in connection with, the
presence, release or threat of release of any Hazardous Materials in, on, under,
about or from the Premises, or otherwise resulting from Tenant's or Tenant's
Representatives' use of the Premises; (b) all demands or claims made or
threatened by any third party against Tenant or any of Tenant's Representatives
and relating to liability, loss, damage, or injury resulting from the presence,
release or threat of release of any Hazardous Materials in, on, under, about or
from any portion of the Premises, or otherwise arising, in any manner
whatsoever, from Tenant's or Tenant's Representatives' use of the Premises; (c)
any spill, release, or discharge of Hazardous Materials in, on, under, about or
from the Premises, including without limitation, any such spill, release, or
discharge required to be reported to any agency under any Environmental Law; and
(d) all incidents or matters where Tenant or any of Tenant's Representatives is
required to give notice to any agency pursuant to any Environmental Laws. Tenant
shall post and maintain such notices in, at and about the Premises as required
by any Environmental Laws, including without limitation, any notices required
under Proposition 65. Tenant shall promptly provide to Landlord true and
complete copies of all materials, reports, technical data, notices, and
correspondence relating to the above incidents or any other matters subject to
Landlord notification or notification to other tenants in the Park or to the
general public. Tenant shall also obtain and promptly provide to Landlord true
and complete copies, revisions, and/or modifications of all building permits,
permits, fire permits, manufacturer specifications for the tank and the
generators, approvals, and registrations Tenant receives or submits with respect
to its operations on the Premises, including without limitation, any revisions
or modification to its HMMP, and, at a minimum annually, inspection reports,
leakage reports and test results for the tank and generators. Tenant hereby
covenants, represents and warrants that it shall promptly and diligently prepare
and deliver to Landlord a final approval HMMP with respect to the Premises by no
later than sixty (60) days after the Lease Date. in addition to the foregoing,
Tenant shall (1) implement vapor control and spill prevention control measures
for the tank and the generators, (2) obtain inspection reports from the
applicable building and fire departments after the installation of the tank and
the generators, and (3) promptly deliver to Landlord evidence thereof, including
a true and complete copy of all such inspection reports.

     27.5 Environmental Indemnity by Tenant. In addition to Tenant's obligations
as set forth hereinabove, Tenant agrees to, and shall protect, indemnify, defend
(with counsel acceptable to Landlord) and hold Landlord and the other
Indemnitees harmless from and against any and all Claims

                                       26
<PAGE>

(including, without limitation, diminution in value of any portion of the
Premises or the Project, damages for the loss of or restriction on the use of
rentable or usable space, and from any adverse impact of Landlord's marketing of
any space within the Project) arising at any time during or after the Term of
this Lease in connection with or related to, directly or indirectly, the use,
presence, transportation, storage, disposal, migration, removal, spill, release
or discharge of Hazardous Materials on, in or about any portion of the Project
as a result (directly or indirectly) of the intentional or negligent acts or
omissions of Tenant or any of Tenant's Representatives. Neither the written
consent of Landlord to the presence, use or storage of Hazardous Materials in,
on, under or about any portion of the Project nor the strict compliance by
Tenant with all Environmental Laws shall excuse Tenant from its obligations of
indemnification pursuant hereto. Tenant shall not be relieved of its
indemnification obligations under the provisions of this Section 27.5 due to
Landlord's status as either an "owner" or "operator" under any Environmental
Laws.

     27.6   Survival. Tenant's obligations and liabilities pursuant to the
provisions of this Section 27 shall survive the expiration or earlier
termination of this Lease. If it is determined by Landlord that the condition of
all or any portion of the Project is not in compliance with the provisions of
this Lease with respect to Hazardous Materials used, stored, disposed,
remediated or released by Tenant or Tenant's Representatives, including without
limitation, all Environmental Laws at the expiration or earlier termination of
this Lease, then Landlord may require Tenant to hold over possession of the
Premises until Tenant can surrender the Premises to Landlord in the condition in
which the Premises existed as of the Commencement Date and prior to the
appearance of such Hazardous Materials used, stored, disposed, remediated or
released by Tenant or Tenant's Representatives except for reasonable wear and
tear, including without limitation, the conduct or performance of any closures
as required by any Environmental Laws as a result of Tenant's or Tenant's
Representatives' use, storage or release of Hazardous Materials or the disposal
or remediation thereof. The burden of proof hereunder shall be upon Tenant. For
purposes hereof, the term "reasonable wear and tear" shall not include any
deterioration in the condition or diminution of the value of any portion of the
Project in any manner whatsoever related to directly, or indirectly, Hazardous
Materials used, stored or released by Tenant or the disposal or remediation
thereof. Any such holdover by Tenant will be with Landlord's consent, will not
be terminable by Tenant in any event or circumstance and will otherwise be
subject to the provisions of Section 20 of this Lease.

     27.7.  Tenant's Exculpation. Notwithstanding anything to the contrary in
this Lease, Tenant shall not be liable to Landlord for nor otherwise obligated
to Landlord under any provision of the Lease with respect to the following: (i)
any claim, remediation, obligation, investigation, liability, cause of action,
attorney's fees, consultants' cost, expense or damage resulting from any
Hazardous Materials present in, on or about the Premises or the Building to the
extent not caused or otherwise permitted, directly or indirectly, by Tenant or
Tenant's Representatives; or (ii) the removal, investigation, monitoring or
remediation of any Hazardous Material present in, on or about the Premises or
the Building directly caused by any source, including third parties, other than
Tenant or Tenant's Representatives; provided, however, Tenant shall be fully
liable for and otherwise obligated to Landlord under the provisions of this
Lease for all liabilities, costs, damages, penalties, claims, judgments,
expenses (including without limitation, attorneys' and experts' fees and costs)
and losses to the extent (a) Tenant or any of Tenant's Representatives
contributes to the presence of such Hazardous Materials, or Tenant and/or any of
Tenant's Representatives exacerbates the conditions caused by such Hazardous
Materials, or (b) Tenant and/or Tenant's Representatives allows or permits
persons over which Tenant or any of Tenant's Representatives has control, and/or
for which Tenant or any of Tenant's Representatives are legally responsible, to
cause such Hazardous Materials to be present in, on, under, through or about any
portion of the Premises, the Common Areas or the Building, or (c) Tenant and/or
any of Tenant's Representatives does not take all reasonably appropriate actions
to prevent such persons over which Tenant or any of Tenant's Representatives has
control and/or for which Tenant or any of Tenant's Representatives are legally
responsible from causing the presence of Hazardous Materials in, on, under,
through or about any portion of the Premises, the Common Areas or the Building.
Subject to the provisions of the immediately preceding sentence, Landlord agrees
to remediate, to the extent required by applicable Environmental Laws, at
Landlord's sole cost and expense, any Hazardous Materials in or on the Premises
or the Building to the extend not caused or otherwise permitted, directly or
indirectly, by Tenant or Tenant's Representatives. Tenant hereby acknowledges
and agrees as follows: (a) prior to executing this Lease Tenant has received or
has had ample opportunity to review (as applicable) a true and complete copy of
that certain Phase I Environmental Site Assessment report dated April 8, 1998,
prepared by Lowne Associates (the "Environmental Report"); (b) except for
permissibly disclosing and delivering a copy thereof to its employees, officers
and invitees, not to disseminate or otherwise permit any employee, agent or
other person over which Tenant has lawful authority to copy, publish or
otherwise disseminate the Environmental Report or the information contained
therein (except as may be lawfully compelled or otherwise required by valid
rule, regulation, or law); and (c) Landlord has provided to Tenant the
Environmental Report for informational purposes only and Tenant may not rely
upon the information

                                       27
<PAGE>

contained in the Environmental Report unless and until Tenant obtains the
environmental firm's written consent to such reliance thereon by Tenant.

28.  Financial Statements

Tenant and any permitted Transferee, for the reliance of landlord, any lender
holding or anticipated to acquire a lien upon any portion of the Project or any
prospective purchaser of any portion of the Project within ten (10) days after
Landlord's request therefor, but not more often than twice annually so long as
Tenant is not in material default of this Lease, shall deliver to landlord the
then current audited financial statements of Tenant (including interim periods
following the end of the last fiscal year for which annual statements are
available). If audited financial statements have not been prepared, Tenant and
any permitted Transferee shall provide Landlord with unaudited financial
statements and such other information, the type and form of which are acceptable
to Landlord in Landlord's reasonable discretion, which reflects the financial
condition of Tenant and any permitted Transferee. Landlord shall not furnish the
financial statements or disclose any information therein to any person or entity
other than the proposed lender or purchaser, except for permissibly disclosing
and delivering a copy thereof to its employees and officers and except as may be
lawfully compelled or otherwise required by valid rule, regulation or law, and
Landlord shall take appropriate reasonable steps to assure that the
confidentiality of the financial statements is maintained by such lender or
purchaser or Landlord's employees and officers.

29.  General Provisions:

     29.1  Time. Time is of the essence in this Lease and within respect to each
and all of its provisions in which performance is a factor.

     29.2  Successors and Assigns. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.

     29.3  Recordation. Tenant shall not record this Lease or a short form
memorandum hereof.

     29.4  Landlord Exculpation. The liability of Landlord to Tenant for any
default by Landlord under the terms of this Lease shall be limited to the actual
interest of Landlord and its present or future partners or members in the
Building, and Tenant agrees to look solely to Landlord's interest in the
Building for satisfaction of any liability and shall not look to other assets of
Landlord nor seek any recourse against the assets of the individual partners,
members, directors, officers, shareholders, agents or employees of Landlord,
including without limitation, any property management company of Landlord
(collectively, the "Landlord Parties"). It is the parties' intention that
Landlord and the Landlord Parties shall not in any event or circumstance be
personally liable, in any manner whatsoever, for any judgement or deficiency
hereunder or with respect to this Lease. The liability of Landlord under this
Lease is limited to liability accruing during its actual period of ownership of
title to the Building.

     29.5  Severability and Governing Law. Any provisions of this Lease which
shall prove to be invalid, void or illegal shall in no way affect, impair or
invalidate any other provisions hereof and such other provision shall remain in
full force and effect. This Lease shall be governed by, and construed in
accordance with, the laws of the State of California.

     29.6  Attorneys' Fees. In the event any dispute between the parties results
in litigation or other proceeding, the prevailing party shall be reimbursed by
the party not prevailing for all reasonable costs and expenses, including,
without limitation, reasonable attorneys' and experts' fees and costs incurred
by the prevailing party in connection with such litigation or other proceeding,
and any appeal thereof. Such costs, expenses and fees shall be included in and
made a part of the judgment recovered by the prevailing party, if any.

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

                                       28
<PAGE>

have been merged into and are included herein. There are no other
representations or warranties between the parties, and all reliance with respect
to representations is based totally upon the representations and agreements
contained in this Lease.

     29.8  Warranty to Authority. On the date that Tenant executes this Lease,
Tenant shall deliver to Landlord an original certificate of status for Tenant
issued by the California Secretary of State or statement of partnership for
Tenant recorded in the county in which the Premises are located, as applicable,
and such other documents as Landlord may reasonably request with regard to the
lawful existence of Tenant. Landlord and Tenant represent and warrant that each
person executing this Lease on their behalf is duly and validly authorized to do
so. If such party is a partnership, corporation or trustee, such party
represents and warrants that such partnership, corporation or trustee has full
right and authority to enter into this Lease and perform all of its obligations
hereunder.

     29.9  Notices. All notices, demands, statements or communications
(collectively, "Notices") given or required to be given by either party to the
other hereunder shall be in writing, shall be sent by (i) overnight courier,
cost prepaid, (ii) United States certified or registered mail, postage prepaid,
return receipt requested or (iii) delivered personally (a) to Tenant at the
Tenant's Address set forth in the Basic Lease Information, on to such other
place as Tenant may from time to time designate in a Notice to Landlord; (b) to
Landlord at Landlord's Address set forth in the Basic Lease Information, or to
such other firm or to such other place as Landlord may from time to time
designate in a Notice to Tenant. Any Notice will be deemed given one (1)
business day after being deposited with an overnight courier, three (3) days
after being deposited in the U.S. mail or upon the date personal delivery is
made.

     29.10 Joint and Several; Covenants and Conditions. If Tenant consists of
more than one person or entity, the obligations of all such persons or entities
shall be joint and several. Each provision to be performed by Tenant hereunder
shall be deemed to be both a covenant and a condition.

     29.11 Confidentiality. Tenant acknowledges that the content of this Lease
and any related documents are confidential information. Tenant shall keep and
maintain such confidential information strictly confidential and shall not
disclose such confidential information to any person or entity other than
Tenant's financial, legal, space planning consultants, employees, shareholders,
lenders, and prospective assignees and subtenants.

     29.12 Landlord Renovations. Tenant acknowledges that Landlord may from time
to time, at Landlord's sole option, renovate, improve, develop, alter, or modify
(collectively, the "Renovations") portions of the Building, Premises, Common
Areas and the Project, including without limitation, systems and equipment,
roof, and structural portions of the same. In connection with such Renovations,
Landlord may, among other things, erect scaffolding or other necessary
structures in the Building, limit or eliminate access to portions of the
Project, including portions of the Common Areas, or perform work in the
Building, which work may create noise, dust or leave debris in the Building.
Tenant hereby agrees that such Renovations and Landlord's actions in connection
with such Renovations shall in no way constitute a constructive eviction of
Tenant nor entitle Tenant to any abatement of Rent. Landlord shall have no
responsibility, or for any reason be liable to Tenant, for any direct or
indirect injury to or interference with Tenant's business arising from the
Renovations, nor shall Tenant be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the Premises or of
Tenant's Property, Alterations or improvements resulting from the Renovations or
Landlord's actions in connection with such Renovations, or for any inconvenience
or annoyance occasioned by such Renovations or Landlord's actions in connection
with such Renovations; provided, Landlord shall use commercially reasonable
efforts to minimize disruption to Tenant's business.

30.  Signs

All signs and graphics of every kind visible in or from public view or corridors
or the exterior of the Premises shall be subject to Landlord's prior written
approval (which approval shall not be unreasonably withheld or delayed) and
shall be subject to and in compliance with all applicable Laws, Development
Documents, Recorded Matters, Rules and Regulations, and Landlord's sign criteria
as same may exist from time to time or as set forth in Exhibit E hereto. Tenant
                                                       ---------
shall remove all such signs and graphics prior to the expiration of earlier
termination of this Lease. Such installations and removals shall be made in a
manner as to avoid damage or defacement of the Premises. Tenant shall repair any
damage or defacement, including without limitation, discoloration caused by such
installation or removal. Landlord shall have the right, at its option, to deduct
from the Security Deposit such sums as are reasonably necessary to remove such
signs and make any repairs necessitated by such removal. Notwithstanding the
foregoing, in no event shall any: (a) neon, flashing or moving sign(s) or (b)
sign(s) which are likely to interfere with the visibility of any sign, canopy,
advertising matter, or decoration of any kind of any other business or occupant
of the Building or the other portions of the Project be permitted hereunder.
Tenant

                                       29
<PAGE>

further agrees to maintain each such sign and graphics, as may be approved,
in good condition and repair at all times.

31. Mortgagee Protection

Upon any default on the part of Landlord, Tenant will give written Notice by
registered or certified mail to any beneficiary of a deed of trust or mortgagee
of a mortgage covering the Premises who has provided Tenant with notice of
their interest together with an address for receiving Notice, and shall offer
such beneficiary or mortgagee a reasonable opportunity to cure the default,
including time to obtain possession of the Premises by power of sale or a
judicial foreclosure, if such should prove necessary to effect a cure. If such
default cannot be cured within such time period, then such additional time as
may be necessary will be given to such beneficiary or mortgagee to effect such
cure so long as such beneficiary or mortgagee has commenced the cure within the
original time period and thereafter diligently pursues such cure to completion,
in which event this Lease shall not be terminated while such cure is being
diligently pursued. Tenant agrees that each lender to whom this Lease has been
assigned by Landlord is an express third party beneficiary hereof. Tenant shall
not make any prepayment of Rent more than one (1) month in advance without the
prior written consent of each such lender, except if Tenant is required to make
quarterly payments of Rent in advance pursuant to the provisions of Section 8
above. Tenant waives the collection of any deposit from such lender(s) or any
purchaser at a foreclosure sale of such lender(s)' deed of trust unless the
lender(s) or such purchaser shall have actually received and not refunded the
deposit. Tenant agrees to make all payments under this Lease to the lender with
the most senior encumbrance upon receiving a direction, in writing, to pay said
amounts to such lender and Landlord shall release Tenant as to such payments so
made and received by such lender. Tenant shall comply with such written
direction to pay without determining whether an event of default exists under
such lender's loan to Landlord. If, in connection with obtaining financing for
the Premises on any other portion of the Project, Landlord's lender shall
request reasonable modification(s) to this Lease as a condition to such
financing, Tenant shall not unreasonably withhold, delay or defer its consent
thereto, provided such modifications do not materially and adversely affect
Tenant's rights or obligations hereunder or the use, occupancy or quiet
enjoyment of Tenant hereunder.

32. Warranties of Tenant

Tenant hereby warrants and represents to Landlord, for the express benefit of
Landlord, that Tenant has undertaken a complete and independent evaluation of
the risks inherent in the execution of this Lease and the operation of the
Premises for the use permitted hereby, and that, based upon said independent
evaluation, Tenant has elected to enter into this Lease and hereby assumes all
risks with respect to such investigation and the execution of this Lease. Tenant
hereby further warrants and represents to Landlord, for the express benefit of
Landlord, that in entering into this Lease, Tenant has not relied upon any
statement, fact, promise or representation (whether express or implied, written
or oral) not specifically set forth herein in writing and that any statement,
fact, promise or representation (whether express or implied, written or oral)
made at any time to Tenant, which is not expressly incorporated herein in
writing, is hereby waived by Tenant.

33. Brokerage Commission

Landlord and Tenant each represents and warrants for the benefit of the other
that it has had no dealings with any real estate broker, agent or finder in
connection with the Premises and/or the negotiation of this Lease, except for
the Broker(s) specified in the Basic Lease Information, and that it knows of no
other real estate broker, agent or finder who is or might be entitled to a real
estate brokerage commission or finder's fee in connection with this Lease or
otherwise based upon contacts between the claimant and Tenant. Each party shall
indemnify and hold harmless the other from and against any and all liabilities
or expenses arising out of claims made for a fee or commission by any real
estate broker, agent or finder in connection with the Premises and this Lease
other than Broker(s), if any, resulting from the actions of the indemnifying
party. Unless expressly agreed to in writing by Landlord and Broker(s), no real
estate brokerage commission or finder's fee shall be owed to, or otherwise
payable to, the Broker(s) for any renewals or other extensions of the initial
Term of this Lease or for any additional space leased by Tenant other than the
Premises as same exists as of the Lease Date. Tenant further represents and
warrants to Landlord that Tenant will not receive (i) any portion of any
brokerage commission or finder's fee payable to the Broker(s) in connection with
this Lease or (ii) any other form of compensation or incentive from the
Broker(s) with respect to this Lease.

34. Quiet Enjoyment

Landlord covenants with Tenant, upon the paying of Rent and observing and
keeping the covenants, agreements and conditions of this Lease on its part to be
kept, and during the periods that Tenant is not otherwise in default of any of
the terms or provisions of this Lease beyond applicable notice and cure

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<PAGE>

periods, and subject to the rights of any of Landlord's lenders, (i) that Tenant
shall and may peaceably and quietly have, hold, occupy and enjoy the Premises
and the Common Areas during the Term of this Lease, and (ii) neither Landlord,
nor any successor or assign of Landlord, shall disturb Tenant's occupancy or
enjoyment of the Premises and the Common Areas. The foregoing covenant is in
lieu of any other covenant express or implied.

35. Adjustments to Base Rent

The monthly Base Rent payable by Tenant to Landlord, as set forth in this Lease,
shall be adjusted and increased as follows after the twelfth (12/th/) full
calendar month of the Term of this Lease:

     Months             Monthly Amount
     ------             --------------

      13-24             $196,158.38 (1.035% of Base Rent for months 1-12)
      25-36             $203,023.93 (1.035% of Base Rent for months 13-24)
      37-48             $210,129.77 (1.035% of Base Rent for months 25-36)
      49-60             $217,484.32 (1.035% of Base Rent for months 37-48)
      61-72             $225,096.27 (1.035% of Base Rent for months 49-60)
      73-84             $232,974.65 (1.035% of Base Rent for months 6 1-72)
      85-96             $241,128.77 (1.035% of Base Rent for months 73-84)
     97-108             $249,568.28 (1.035% of Base Rent for months 85-96)
    109-120             $258,303.17 (1.035% of Base Rent for months 97-108)

36.  Option to Extend the Lease Term

     36.1  Grant of Extension 0ption. Subject to the provisions, limitations
and conditions set forth in Section 36.5 below, Tenant shall have an option
(the "Option") to extend the initial term of the Lease for one (1) successive
five (5) year period (the "Extended Term").

     36.2  Tenant's Option Notice. Landlord must receive written notice (an
"Option Notice") from Tenant of Tenant's exercise of the Option on a date
which is not more than twelve (12) months nor less than nine (9) months prior
to the end of the initial term of the Lease.

     36.3  Establishing the Initial Monthly Base Rent for the Extended Term. The
initial monthly Base Rent for the Extended Term shall be one hundred percent
(100%) of the then current market rent for the then current use of the Premises
within the competitive market area of the Premises (the "Fair Rental Value").
Notwithstanding the foregoing, "Fair Rental Value" of the Premises means the
current market rental value of the Premises as of the commencement of the
Extended Term, taking into consideration all relevant factors, including length
of term, the uses permitted under the Lease, the quality, size, design and
location of the Premises, including the condition and value of existing tenant
improvements (but only to the extent the cost of which has been contributed to
by Landlord), and the monthly base rent and additional rent paid by tenants for
premises comparable to the Premises, and located within the competitive market
area of the Premises. In no event shall the monthly Base Rent for any period of
the Extended Term, as determined pursuant to this Section 36.3, be less than the
highest monthly Base Rent charged during the initial term of the Lease.

           (a)   Determination of Base Rent for the Extended Term. Base Rent for
     the Extended Term of this Lease, if applicable, shall be a monthly sum,
     (which in no event shall be less than the monthly sum payable during the
     last full calendar month of the initial term), which shall be determined
     as follows:

                 (i)  Within fifteen (15) days after Landlord's receipt of the
         Option Notice, Landlord and Tenant shall meet at such times as they
         shall mutually agree and endeavor in good faith to agree upon the Base
         Rent for the Extended Term.

                 (ii) If Landlord and Tenant are unable to agree, during the
         period stated in subsection (a)(i), on the Base Rent for the Extended
         Term, such Base Rent shall be determined by appraisal in the manner
         provided in subsection (b) below.

           (b)   Appraisal Process. If Landlord and Tenant are unable to agree
     upon the amount of Base Rent payable during the Extended Term, as provided
     above, they each shall, not later than ten (10) days after the end of the
     period for attempting to agree upon Base Rent, appoint an independent
     M.A.I. appraiser who shall have at least ten (10) years experience in the
     commercial real estate market in which the Premises is located and shall be
     familiar with the valuation of comparable property in such area and
     otherwise qualified to act as an expert witness over objection to give
     opinion testimony addressed to the issue in a court of competent

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<PAGE>

jurisdiction. Within said ten (10) day period, each party shall notify the other
party in writing of the name, address, telephone number and qualifications of
its appraiser so appointed. If cither party shall fail to notify the other party
of its appraiser within said ten (10) day period, the determination of Base Rent
by the single appraiser appointed shall be conclusive and binding upon both
Landlord and Tenant.

               (i)  The appraisers appointed pursuant to this subsection (b)
         shall determine the "Fair Rental Value" for the Premises as of the date
         of calculation thereof.

               (ii) The appraisers shall, not later than seven and one-half (7
         1/2) months prior to the expiration of the initial term, report in
         writing to the party appointing him/her their opinion as to the Fair
         Rental Value. Each party shall, promptly upon receipt of the appraisal
         report from its appraiser, provide the other party with a copy thereof.
         Not later than seven (7) months prior to the expiration of the initial
         Term, Landlord and Tenant shall meet at such times as they shall
         mutually agree and endeavor in good faith to agree upon the Base Rent
         based upon the reports of the appraisers. If Landlord and Tenant are
         unable to agree on the Base Rent within the time specified above, the
         appraisers shall appoint a third (3rd) appraiser, qualified as
         aforesaid, who shall, not later than six (6) months prior to the
         expiration of the initial Term, determine the Fair Rental Value on the
         basis of the two (2) appraisal reports previously prepared and
         consultation with such appraisers and/or other experts and competent
         authorities as such third (3rd) appraiser shall deem relevant or
         appropriate in his/her discretion. So long as it is not inconsistent
         with any of the express provisions of this Lease and is not arbitrary
         and capricious, the written report and determination of Fair Rental
         Value by the third (3rd) appraiser shall be accepted by Landlord and
         Tenant as the Base Rent, which determination shall be final and binding
         and enforceable in a court of competent jurisdiction with the same
         force and effect as if the same were a judgment duly entered by such
         court. In the event that the two (2) originally appointed appraisers
         cannot for any reason agree on a third (3rd) M.A.I. appraiser, then
         either Landlord or Tenant, on behalf on both, may request appointment
         of such third M.A.I. appraiser by the then Chief Judge of the United
         States District Court having jurisdiction over the Premises, and
         neither party shall raise any question as to such Judge's full power
         and jurisdiction to entertain the application for and make such
         appointment hereunder.

              (iii) In the use of appraisers hereunder, each party shall pay the
         fees and expenses of its own appraiser and shall share equally the fees
         and expenses of any third (3rd) appraiser appointed hereunder.

Upon determination of the initial monthly Base Rent for the Extended Term,
pursuant to the terms outlined above, Landlord and Tenant shall immediately
execute an amendment to the Lease. Such amendment shall set forth among other
things, the initial monthly Base Rent for time Extended Term and the actual
commencement date and expiration date of the Extended Term. Tenant shall have no
other right to further extend the term of the Lease under this Section 36 unless
Landlord and Tenant otherwise agree in writing.

     36.4  Condition of Premises and Brokerage Commissions for the Extended
Terms. If Tenant timely and properly exercises the Option, in strict accordance
with the terms contained herein: (1) Tenant shall accept the Premises in its
term "AS--IS" condition and, accordingly, Landlord shall not be required to
perform any additional improvements to the Premises; and (2) Tenant hereby
agrees that it will solely be responsible for any and all brokerage commissions
and finder's fees payable to any broker now or hereafter procured or hired by
Tenant or who otherwise claims a commission based on any act or statement of
Tenant ("Tenant's Broker") in connection with the Option; and Tenant hereby
further agrees that Landlord shall in no event or circumstance be responsible
for the payment of any such commissions and fees to Tenant's Broker.

     36.5  Limitations On, and Conditions To, Extension Options. The Option
described in this Section 36 is personal to Tenant and may not be assigned,
voluntarily or involuntarily, separate from or as part of the lease except for
an assignment to an Affiliate as part of the assignment of the entirety of this
Lease. At Landlord's option, all rights of Tenant and any Affiliate in, to and
under the Option described in this Section 36 shall terminate and be of no force
or effect if any of the following individual events occur or any combination
thereof occur: (1) Tenant or the Affiliate, as the case may be, is in default in
the performance of any of its obligations under this Lease beyond applicable
notice and cure periods at the time of Tenant's or the Affiliate's (as the case
may be) exercise of the Option to extend the initial term of this Lease; and/or
(2) Tenant or the Affiliate (as the case may be) has assigned all of its rights
and obligations under the Lease to any party other than an Affiliate, or Tenant
has subleased all of the Premises; and/or (3) Tenant has failed to exercise
properly the Option described in

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<PAGE>

this Section 36 in a timely manner in strict accordance with the provisions of
this Section 36; and/or (4) Tenant or the Affiliate (as the case may be) no
longer has possession of all of the Premises under the Lease.

37.  Letter of Credit

Simultaneously with Tenant's delivery to Landlord of this Lease, the first
month's Base Rent and Security Deposit in accordance with the provisions of
Section 3 above, Tenant shall &liver to Landlord, as collateral for the full and
faithful performance by Tenant of all of its obligations under this lease and
for all losses and damages Landlord may suffer as a result of any default by
Tenant under this Lease beyond applicable notice and cure periods, an
irrevocable and unconditional negotiable letter of credit, in the form and
containing the terms required herein, payable in the City of Sunnyvale,
California, running in favor of Landlord issued by a solvent bank under the
supervision of the Superintendent of Banks of the State of California, or a
National Banking Association (the "Issuer"), in the amount of Two Million Two
Hundred Seventy-four Thousand Three Hundred Dollars ($2,274,300), (the "Letter
of Credit"). The Letter of Credit shall be (a) at sight, irrevocable and
unconditional, (b) maintained in effect, whether through replacement, renewal or
extension, until the earlier of one (1) month after the Term or until such time
as Tenant achieves two (2) consecutive years of profitability as reported in
Tenant's audited 10K filings while maintaining a minimum liquidity ("Minimum
Liquidity") of Five Million Dollars ($5,000,000) with Minimum Liquidity
calculated as unrestricted cash plus fifty percent (50%) of accounts receivable
(the "Letter of Credit Expiration Date") and Tenant shall deliver a new Letter
of Credit or certificate of renewal or extension to Landlord at least thirty
(30) days prior to the expiration of the Letter of Credit (until the Letter of
Credit Expiration Date), without any action whatsoever on the part of Landlord,
(c) subject to the Uniform Customs and Practices for Documentary Credits (1993-
Rev) International Chamber of Commerce Publication 11500, (d) acceptable to
Landlord in its reasonable discretion, and (e) fully assignable by Landlord by
amendment thereto in accordance with customary letter of credit practice and
shall permit partial draws. In addition to the foregoing, the form and terms of
the Letter of Credit (and the bank issuing the same) shall be acceptable to
Landlord, in Landlord's reasonable discretion, and shall provide, among other
things, in effect that: (1) Landlord, or its then managing agent, shall have the
right to draw down an amount up to the fact amount of the Letter of Credit (but
only to the extent Landlord deems necessary to cover any losses and damages
Landlord has suffered as a result of such default by Tenant beyond applicable
notice and cure periods) upon the presentation to the issuing bank of Landlord's
(or Landlord's then managing agent's) statement certifying that such (A) amount
to be drawn on the Letter of Credit is the amount due Landlord as a result of
Tenant's default beyond applicable notice and cure periods, it being understood
that if Landlord or its managing agent be a limited liability company,
corporation, partnership or other entity, then such statement shall be signed by
a managing member (if a limited liability company), an officer (if a
corporation), a general partner (if a partnership), or any authorized party (if
another entity), and (B) an event of default has occurred under this Lease and,
all applicable notice and cure periods have elapsed; (2) the Letter of Credit
will be honored by the issuing bank without inquiry as to the accuracy thereof
and regardless of whether the Tenant disputes the content of such statement; and
(3) in the event of a transfer of Landlord's interest in the Premises, Landlord
shall transfer the Letter of Credit, in whole or in part (or cause at Tenant's
expense a substitute letter of credit to be delivered, as applicable), to the
transferee and thereupon the Landlord shall, without any further agreement
between the parties, be released by Tenant from all liability therefor, and it
is agreed that the provisions hereof shall apply to every transfer or assignment
of the whole or any portion of said Letter of Credit to a new Landlord. Tenant
hereby acknowledges and agrees that Landlord is entering into this Lease in
material reliance upon the ability of Landlord to draw upon the Letter of Credit
upon the occurrence of any default on the part of Tenant hereunder which
continues beyond any applicable notice and cure periods. Tenant further
acknowledges and agrees that if Landlord cannot draw upon the Letter of Credit
within the times and in the manner as anticipated by Landlord herein, Landlord
shall suffer irreparable damage, harm and injury. From the to time during the
Term of this Lease, including, but not limited to, the event whereby Tenant
meets certain financial condition criterion as set forth in this Section 37, it
is anticipated by the parties that the Letter of Credit will need to be amended,
modified and, possibly reissued. Landlord and Tenant hereby covenant and agree
to cooperate with one another to promptly effectuate any such amendments,
modifications and new issuances, including without limitation, executing and
submitting to the Issuer any and all documents or instruments as may be
reasonably required to effectuate same. Each and every time during the Term of
this Lease there is a change in the identity or address of the parties,
including without limitation, any change in the identity of Landlord due to the
sale, transfer or other conveyance by Landlord of its rights and interests in,
to and under this Lease to any other party, person or entity, the Letter of
Credit shall immediately be amended or reissued to reflect such changes and the
parties hereby agree to execute and submit to the Issuer such further
applications, documents and instruments as may be necessary to effectuate same.
It is the intention of the parties that each and every successor and assign of
both Landlord and Tenant be bound by and subject to the terms and provisions of
this Section 37. Landlord may, at any time and without notice to Tenant and
without first

                                       33
<PAGE>

obtaining Tenant's consent thereto, assign all or any portion of its interest in
and to the Letter of Credit to another party, person or entity, regardless of
whether or not such assignment is separate from or as a part of the assignment
by Landlord of its rights and interests in and to this Lease. If, as a result of
any such application of all or any part of the Letter of Credit, the amount of
the Letter of Credit shall be less than Two Million Two Hundred Seventy-four
Thousand Three Hundred Dollars ($2,274,300), Tenant shall within five (5)
business days thereafter provide Landlord with additional letter(s) of credit in
an amount equal to the deficiency (or a replacement letter of credit in the
total amount of Two Million Two Hundred Seventy-four Thousand Three Hundred
Dollars ($2,274,300) and each such additional (or replacement) letter of credit
shall comply with all of the provisions of this Section 37, and if Tenant fails
to do so, notwithstanding anything to the contrary contained in Section 19
hereof, the same shall constitute an incurable default by Tenant. Tenant
further covenants and warrants that it will neither assign nor
encumber the Letter of Credit or any part thereof and that neither Landlord nor
its successors or assigns will be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance. Without limiting the generality
of the foregoing, if the Letter of Credit expires earlier than the Letter of
Credit Expiration Date, Landlord will accept a renewal thereof or substitute
letter of credit (such renewal or substitute letter of credit to be in effect
not later than thirty (30) days prior to the expiration thereof), which shall be
irrevocable and automatically renewable as above provided through the Letter of
Credit Expiration Date upon the same terms as the expiring letter of credit or
such other terms as may be acceptable to Landlord in its reasonable discretion.
However, if the Letter of Credit is not timely renewed or a substitute letter of
credit is not timely received, or if Tenant fails to maintain the Letter of
Credit in the mount and terms set forth in this Section 37, Landlord shall have
the right to present such Letter of Credit to the bank in accordance with the
terms of this Section 37, and the entire sum evidenced thereby shall be paid to
and held by Landlord as collateral for performance of all of Tenant's
obligations under this Lease and for all losses and damages Landlord may suffer
as a result of any default by Tenant under this Least beyond applicable notice
and cure periods; provided, in the event of such draw upon the Letter of Credit,
Tenant may thereafter provide a replacement letter of credit in the amount and
on the terms set forth in this Section 37 and Landlord shall promptly thereafter
reimburse Tenant the amount of said draw. If there shall occur a default under
this Lease beyond applicable notice and cure periods as set forth in Section 19
of this Lease, Landlord may, but without obligation to do so, draw upon the
Letter of Credit, in part or in whole, but only to the extent Landlord deems
necessary to cure any default of Tenant and/or to compensate Landlord for any
and all damages of any kind or nature sustained or which may be sustained by
Landlord resulting from Tenant's default beyond applicable notice and cure
periods. Tenant agrees not to interfere in any way with payment to Landlord of
the proceeds of the Letter of Credit, either prior to or following a "draw" by
Landlord of any portion of the Letter of Credit, regardless of whether any
dispute exists between Tenant and Landlord as to Landlord's right to draw from
the Letter of Credit. No condition or term of this Lease shall be deemed to
render the Letter of Credit conditional to justify the issuer of the Letter of
Credit in failing to honor a drawing upon such Letter of Credit in a timely
manner. Landlord and Tenant acknowledge and agree that in no event or
circumstance shall the Letter of Credit or any renewal thereof or substitute
therefor be (i) deemed to be or treated as a "security deposit" within the
meaning of California Civil Code Section 1950.7 (as supplemented, amended,
replaced and substituted from time to time), (ii) subject to the terms of such
Section 1950.7 (as supplemented, amended, replaced and substituted from time to
time), or (iii) intended to serve as a "security deposit" within the meaning of
such Section 1950.7 (as supplemented, amended, replaced and substituted from
time to time). The parties hereto recite that, with respect to the Letter of
Credit, (x) the Letter of Credit is not intended to serve as a security deposit
and such Section 1950.7 (as supplemented, amended, replaced and substituted from
time to time) and any and all other laws, rules and regulations applicable to
security deposits in the commercial context ("Security Deposit Laws") shall have
no applicability or relevancy to the Letter of Credit and (y) Tenant waives any
and all rights, duties and obligations either party may now or, in the future,
will have relating to or arising from the Security Deposit Laws. Notwithstanding
anything to the contrary in this Section 37, the face amount of the Letter of
Credit shall be reduced as follows: if at any time following the fourth (4/th/)
year of the Term of this Lease, Tenants' net worth as reported in Tenant's 1OK
filing with the SEC for any fiscal year commencing after said fourth (4/th/)
year of the Term of this Lease (for purposes hereof, net worth shall be
calculated as follows: total assets minus total liabilities and excluding inter
company or affiliate liabilities and notes or accounts receivable) is at least
Two Hundred Million Dollars ($200,000,000) (the "Minimum Net Worth"), then the
face amount of the Letter of Credit shall decline to One Million One Hundred
Thirty Seven Thousand One Hundred Fifty Dollars ($1,137,150) (the "Initial
Reduction"). Furthermore, if Tenant maintains the Minimum Net Worth for two (2)
consecutive fiscal years after the Initial Reduction, as reported in Tenant's
10K filing with the SEC, the Letter of Credit shall expire.

38.  Satellite Dish.

Tenant shall have the right (but only to the extent permitted by the City of
Sunnyvale and all agencies and governmental authorities having jurisdiction
thereof, at Tenant's sole cost and expense, to install and

                                       34
<PAGE>

operate a satellite or microwave dish or dishes ("Satellite Dishes") along with
any necessary cables ("Cables") on a portion of the roof of the Building to be
designated by Landlord ("Roof Space") for the Term of the Lease (the Satellite
Disks and Cables are hereinafter collectively referred to as the "Equipment").
The location and size of the Equipment shall be subject to Landlord's approval,
not to unreasonably withheld and which best promotes the safety, aesthetics and
efficiency of the Equipment; provided, all of the Equipment and any
modifications thereto or placement thereof shall be (i) at Tenant's sole cost
and expense, (ii) contained visually within the roof screen, (iii) installed and
operated to Landlord's reasonable specifications and supervision or review, and
(iv) installed, maintained, operated and removed in accordance with all Recorded
Matters and applicable Laws. Landlord shall cooperate reasonably with Tenant to
modify the roof screen placement (subject to all applicable Laws and Recorded
Matters) if required for signal quality, reconfiguration due to the installation
of any HVAC Systems and other reasonable considerations; provided, the cost of
all such modifications shall be the responsibility of Tenant. All modifications
to the Building, including the Roof Space, if any, shall be reasonably approved
by Landlord prior to commencement of my work with respect to the Equipment. No
additional rent shall be paid by Tenant for use of the Roof Space and operation
of the Equipment. The Equipment shall remain the property of Tenant and Tenant
shall remove the Equipment upon the expiration or earlier termination of the
Lease. Tenant shall restore the Roof Space and any other portion of the Building
affected by the Equipment to its original condition, excepting ordinary wear and
tear and/or damage or destruction due to fire or other casualty not caused
directly or indirectly by Tenant, its agents, employees, contractors or the
Equipment or any part thereof. Tenant may not assign, lease, rent, sublet or
otherwise transfer any of its interest in the Roof Space or the Equipment except
together with the remainder of all of the Premises as more particularly set
forth in Section 14. Each of the other provisions of this Lease shall be
applicable to the Equipment and the use of the Roof Space by Tenant, including
without limitation, Sections 12 and 13 of this Lease. The Equipment shall comply
with all-non-interference rules of the Federal Communications Commission. If
applicable, Tenant shall provide to Landlord a copy of (i) the Federal
Communications Commission (or other agency) grant which has awarded frequencies
to Tenant and (ii) a list of Tenant's frequencies. Anything to the contrary
contained herein notwithstanding, if, during the Lease Term, as such Term may be
extended, Landlord, in its reasonable judgment, believes that the Equipment
poses a human health or environmental hazard that cannot be remediated or has
not been remediated within ten (10) days after Tenant has been notified thereof,
then Tenant shall immediately cease all operations of the Equipment and Tenant
shall remove all of the Equipment within thirty (30) days thereafter. To the
best of Tenant's knowledge, Tenant represents to Landlord that the Equipment
shall not emit or project any electro-magnetic fields which pose a human health
or environmental hazard. In addition, Tenant shall be responsible for insuring
the Equipment and Landlord shall have no responsibility therefor. Tenant shall
indemnify, defend (by counsel reasonably acceptable to Landlord) and hold
harmless Landlord from any and all claims, demands, liabilities, damages,
judgments, costs and expenses (including reasonable attorneys' fees) Landlord
may suffer or incur arising out of or related to the installation, use,
operation, maintenance, replacement and/or removal of the Equipment or any
portion thereof.

39.  Emergency Generator.

Tenant shall have the right (but only to the extent permitted by the City of
Sunnyvale and all agencies and governmental authorities having jurisdiction
thereof), at Tenant's sole cost and expense, to install and operate an emergency
electrical generator (the "Generator") along with any necessary cables
("Cables") on ;I portion of the Lot to be reasonably approved by Landlord
("Generator Space") for the Term of the Lease (the Generator and Cables are
hereinafter collectively referred to as the "Equipment"). The location and size
of the Equipment shall be subject to Landlord's approval, not to unreasonably
withheld and which best promotes the safety, aesthetics and efficiency of the
Equipment; provided, all of the Equipment and any modifications thereto or
placement thereof shall be (i) at Tenant's sole cost and expense, (ii) installed
and operated to Landlord's reasonable specifications and supervision or review,
and (iii) installed, maintained, operated and removed in accordance with all
Recorded Matters and applicable Laws. No additional rent shall be paid by Tenant
for use of the Generator Space and operation of the Equipment. The Equipment
shall remain the property of Tenant and Tenant shall remove the Equipment Upon
the expiration or earlier termination of the Lease. Tenant shall restore the
Generator Space and any other portion of the Building affected by the Equipment
to its original condition, excepting ordinary wear and tear and/or damage or
destruction due to fire or other casualty not caused directly or indirectly by
Tenant, its agents, employees, contractors or the Equipment or any part thereof.
Tenant may not assign, least, rent, sublet or otherwise transfer any of its
interest in the Generator Space or the Equipment except together with the
remainder of all of the Premises as more particularly set forth in Section 14.
Each of the other provisions of this Lease shall be applicable to the Equipment
and the use of the Generator Space by Tenant, including without limitation,
Sections 12, 13 and 27 of this Lease. Tenant shall indemnify, defend (by counsel
reasonably acceptable to Landlord) and hold harmless Landlord from any and all
claims, demands, liabilities, damages, judgments, costs and expenses (including
reasonable attorneys' fees) Landlord may suffer or incur arising out of or
related to the installation, use, operation, maintenance, replacement and/or
removal of the Equipment or any portion thereof.

                                      35
<PAGE>

    IN WITNESS WHEREOF, this Lease is executed by the parties as of the Lease
Date referenced on Page 1 of this Lease.

LANDLORD:

SEQUOIA DEL RAY, LLC,
a California limited liability company

BY: J.P. DINAPOLI COMPANIES, INC.,
    a California corporation, manager

     By: /s/ J. Philip DiNapoli
        -------------------------------
        J. Philip DiNapoli, President

TENANT:

LOUDCLOUD, INC.,
a Delaware corporation

By: /s/ Signature Illegible^^
   ------------------------------------
Its: Executive VP
    -----------------------------------

By:____________________________________
Its:___________________________________

IF Tenant is a CORPORATION, the authorized officers must sign on behalf of the
               -----------
corporation and indicate the capacity in which they are signing. The Lease must
BE executed by the president or vice-president and the secretary or assistant
                                               ---
secretary, unless the bylaws or a resolution of the board of directors shall
           ------
otherwise provide, in which event, the bylaws or a certified copy of the
resolution, as the case may be, must be attached to this Lease.

                                       36
<PAGE>

                         EXHIBIT A TO LEASE AGREEMENT

                    PREMISES, BUILDING, LOT AND/OR PROJECT
                    --------------------------------------

                                [SEE ATTACHED]

                                      A-1
<PAGE>

                         EXHIBIT B TO LEASE AGREEMENT

                              TENANT IMPROVEMENTS
                              -------------------

This exhibit, entitled "Tenant improvements and Shell Improvements", is and
shall constitute Exhibit B to that certain Lease Agreement dated January ___,
                 ---------
2000 (the "Lease"), by and between Sequoia Del Rey, LLC ("Landlord"), and
LoudCloud Inc., a Delaware corporation ("Tenant"), for the leasing of certain
premises located at 599 North Mathilda Avenue, Sunnyvale, California (the
"Premises"). The terms, conditions and provisions of this Exhibit B are hereby
                                                          ---------
incorporated into and are made a part of the Lease. Any capitalized terms used
herein and not otherwise defined herein shall have the meaning ascribed to such
terms as set forth in the Lease.

1.   Tenant To Construct Tenant Improvements. Subject to the provisions below,
     ---------------------------------------
Tenant shall be solely responsible for the planning, construction and completion
of the first (1/st/) floor interior lobby improvements (the "Lobby
Improvements") and all other interior tenant improvements (collectively with the
Lobby Improvements, the "Tenant Improvements") to the Premises in accordance
with the terms and conditions of this Exhibit B. The Tenant Improvements shall
                                      ---------
not include any of Tenant's personal property, trade fixtures, furnishings,
equipment, data and telecommunications equipment, cabling or similar items.

2.   Tenant Improvement Plans.
     ------------------------

     A.   Preliminary Plans and Specifications. Promptly after execution of the
          ------------------------------------
Lease, Tenant shall retain a licensed and insured architect ("Architect") to
prepare preliminary working architectural and engineering plans MD
specifications ("Preliminary Plans and Specifications") for the Tenant
Improvements. Tenant shall deliver the Preliminary Plans and Specifications to
Landlord. The Preliminary Plans and Specifications shall be in sufficient detail
lo show locations, types and requirements for all heat loads, people loads,
floor loads, power and plumbing, regular and special HVAC needs, telephone
communications, telephone and electrical outlets, lighting, lighting fixtures
and related power, and electrical and telephone switches. Landlord shall
reasonably approve or disapprove the Preliminary Plans and Specifications within
live (5) business days after Landlord receives the Preliminary Plans and
Specifications and, if reasonably disapproved, Landlord shall return the
Preliminary Plans and Specifications to Tenant, who shall make all necessary
revisions within tell (10) days after Tenant's receipt thereof.  This procedure
shall be repeated until Landlord approves the Preliminary Plans and
Specifications. The approved Preliminary Plans and Specifications, as modified,
shall be deemed the "Final Preliminary Plans and Specifications".

     B).  Final Plans and Specifications. After the Final Preliminary Plans
          ------------------------------
and Specifications are approved by Landlord and are deemed to be the Final
Preliminary Plans and Specifications, Tenant shall cause the Architect to
prepare in twenty (20) days following Landlord's approval of the Final
Preliminary Plans and Specifications the final working architectural and
engineering plans, specifications and drawings ("Final Plans and
Specifications") for the Tenant Improvements. Tenant shall then deliver the
Final Plans and Specifications to Landlord within such twenty (20) day period.
Landlord shall reasonably approve or disapprove the Final Plans and
Specifications within five (5) business days after Landlord receives the Final
Plans and Specifications and, if disapproved, Landlord shall return the Final
Plans and Specifications to Tenant who shall make all necessary revisions within
ten (10) days after Tenant's receipt thereof. This procedure shall be repeated
until Landlord approves, in writing, the Final Plans and Specifications. The
approved Final Plans and Specifications, as modified, shall be deemed the
"Construction Documents".

     C.   Miscellaneous. All deliveries of the Preliminary Plans and
          -------------
Specifications, the Final Preliminary Plans and Specifications, the Final Plans
and Specifications, and the Construction Documents shall be delivered by
messenger service, by personal hand delivery or by overnight parcel service.
While Landlord has the right to approve the Preliminary Plans and
Specifications, the Final Preliminary Plans and Specifications, the Final Plans
and Specifications, and the Construction Documents, Landlord's interest in doing
so is to protect the Premises, the Building and Landlord's interest.
Accordingly, Tenant shall not rely upon Landlord's approvals and Landlord shall
not be the guarantor of, nor responsible for, the adequacy and correctness or
accuracy of the Preliminary Plans and Specifications, the Final Preliminary
Plans and Specifications, the Final Plans and Specifications, and the
Construction Documents, or the compliance thereof will1 applicable laws, md
Landlord shall incur no liability of any kind by reason of granting such
approvals.

     D.   Building Standard Work. The Construction Documents shall provide that
          ----------------------
the Tenant Improvements to be constructed in accordance therewith must be at
least equal, in quality, to Landlord's building standard materials, quantities
and procedures then in use by Landlord ("Building Standards") attached hereto as
Schedule 2, and shall consist of improvements which are generic in nature.
----------

                                      B-1
<PAGE>

     E.   Construction Agreements. Tenant hereby covenants and agrees that a
          -----------------------
provision shall be included in each and every agreement made with the Architect
and the Contractor with respect to the Tenant Improvements specifying that
Landlord shall be a third party beneficiary thereof, including without
limitation, a third party beneficiary of all covenants, representations,
indemnities and warranties made by the Architect and Contractor, as applicable.

3.   Permits. Tenant, at its sole cost and expense (subject to the provisions of
     -------
Paragraph 5 below), shall (i) obtain all governmental approvals of the
Construction Documents to the full extent necessary for the issuance of a
building permit for the tenant Improvements based upon such Construction
Documents, (ii) cause to be obtained all other necessary approvals and permits
from all governmental agencies having jurisdiction or authority for the
construction and installation of the Tenant Improvements in accordance with the
approved Construction Documents, and (iii) undertake all steps necessary to
ensure that the construction of the Tenant Improvements is accomplished in
strict compliance with all statutes, laws, ordinances, codes, rules, and
regulations applicable to the construction of the Tenant Improvements and the
requirements and standards of any insurance underwriting board, inspection
bureau or insurance carrier insuring the Premises and/or the Building.

4.   Construction.
     ------------

     A.   Tenant shall be solely responsible for the construction, installation
and completion of the Tenant Improvements in accordance with the Construction
Documents approved by Landlord and is solely responsible for the payment of all
amounts when payable in connection therewith without any cost or expense to
Landlord, except for Landlord's obligation to contribute the Tenant Improvement
Allowance in accordance with the provisions of Paragraph 5 below. Tenant shall
diligently proceed with the construction, installation and completion of the
Tenant Improvements in accordance with the Construction Documents and the
completion schedule reasonably approved by Landlord. No material changes shall
be made to the Construction Documents and the completion schedule approved by
Landlord without Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed.

     B.  Tenant at its sole cost and expense (subject to the provisions of
Paragraph 5 below) shall employ a licensed, insured and bondable general
contractor ("Contractor") to construct the Tenant improvements in accordance
with the Construction Documents. The construction contracts between Tenant and
the Contractor and between the Contractor and subcontractors shall be subject to
Landlord's prior written approval, which approval shall not be unreasonably
withheld or delayed. Proof that the Contractor is licensed in California, is
bonded as required under California law, and has the insurance specified in
Schedule 1, attached hereto and incorporated herein by this reference, shall be
----------
provided to Landlord at the time that Tenant requests approval of the Contractor
from Landlord. Tenant shall comply with or cause the Contractor to comply with
all other terms and provisions of Schedule 1.
                                  ----------

     C.  Prior to the commencement of the construction and installation of the
Tenant Improvements, Tenant shall provide the following to Landlord, all of
which shall be to Landlord's reasonable satisfaction:

          (i)   An estimated budget and cost breakdown for the Tenant
     Improvements.

          (ii)  Estimated completion schedule for the Tenant Improvements.

          (iii) Copies of all required approvals and permits from governmental
     agencies having jurisdiction or authority for the construction and
     installation of the Tenant Improvements; provided, however, if prior to
     commencement of the construction and installation of Tenant Improvements
     Tenant has not received the electrical, plumbing or mechanical permits,
     Tenant shall only be required to provide Landlord with evidence that Tenant
     has made application therefor, and, upon receipt by Tenant of such permits,
     Tenant shall promptly provide Landlord with copies thereof.

          (iv)  Evidence of Tenant's procurement of insurance required to be
     obtained pursuant to the provisions of Paragraphs 4.B and 4.G.

     D.  Landlord shall at all reasonable times have a right to inspect the
Tenant Improvements (provided Landlord does not materially interfere with the
work being performed by the Contractor or its subcontractors) and Tenant shall
immediately cease work upon written notice from Landlord if the Tenant
Improvements are not in compliance with the Construction Documents approved by
Landlord. If Landlord shall give notice of faulty construction or any other
material deviation from the Construction Documents, Tenant shall cause the
Contractor to make corrections promptly. however, neither the privilege herein
granted to Landlord to make such inspections, nor the making of such
inspections by Landlord, shall operate as a waiver of any rights of Landlord to
require good and workmanlike construction and improvements constructed in
accordance with the Construction Documents.

                                      B-2
<PAGE>

     E.  Subject to Landlord complying with its obligations in Paragraph 5
below, Tenant shall pay and discharge promptly and fully all claim for labor
done and materials and services furnished in connection with the Tenant
Improvements. The Tenant Improvements shall not be commenced until five (5)
business days after Landlord has received notice from Tenant stating the date
the construction of the Tenant Improvements is to COmmence so that Landlord can
post and record any appropriate Notice of Non-Responsibility.

     F.  Tenant acknowledges and agrees that the agreements and covenants of
Tenant in Sections 9.1 and 10 of the Lease shall be fully applicable to Tenant's
construction of the Tenant Improvements.

     G.  Tenant shall maintain, and cause to be maintained, during the
construction of the Tenant Improvements, at its sole cost and expense, insurance
of the types and in the amounts specified in Schedule 1 and in Section 12 of the
                                             ----------
Lease, together with builders' risk insurance for the amount of the completed
value of the Tenant Improvements on an all-risk non-reporting form covering all
improvements under construction, including building materials, and other
insurance in amounts and against such risks as the Landlord shall reasonably
require in connection with the Tenant Improvements.

     H.  No Alterations shall be installed upon the Premises pursuant to any
agreement by which another party has a security interest or rights to remove or
repossess such item, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld.

     I.  Landlord reserves the right to establish reasonable rules and
regulations for the use of the Building during the course of construction of
the Tenant Improvements, including, but not limited to, construction parking,
storage of materials, hours of work, use of elevators, and clean-up of
construction related debris.

     J.  Upon completion of the Tenant Improvements, Tenant shall deliver to
Landlord the following, all of which shall be to Landlord's reasonable
satisfaction:

          (i)   Any certificates required for occupancy, including a permanent
     and complete Certificate of Occupancy issued by the City of Sunnyvale,
     California.

          (ii)  A Certificate of Completion signed by the Architect who prepared
     the Construction Documents, reasonably approved by Landlord.

          (iii) A cost breakdown itemizing all expenses for the Tenant
     Improvements, together with invoices and receipts for the same or other
     evidence of payment.

          (iv)  Final and unconditional mechanic's lien waivers for all the
     Tenant Improvements.

          (v)   A Notice of Completion for execution by Landlord, which
     certificate once executed by Landlord shall be recorded by Tenant in the
     official records of the county of Santa Clara, and Tenant shall then
     deliver to Landlord a true and correct copy of the recorded Notice of
     Completion.

          (vi)  A true and complete copy of all as-built plans and drawings for
     the Tenant Improvements.

5.   Tenant Improvement Allowance.
     ----------------------------

     A.  Subject to Tenant's compliance with the provisions of this Exhibit B,
                                                                    ---------
Landlord shall provide to Tenant an allowance in the approximate amount of One
Million Eight Hundred Ninety-five Thousand Two Hundred Fifty Dollars
($1,895,250.00) based upon a rate of Twenty-five Dollars ($25.00) per rentable
square foot of the Premises to construct and install only the Tenant
Improvements and an additional allowance in the amount of Fifty Thousand Dollars
($50,000.00) applicable only to the design, preparation, planning, construction
and installation of the Lobby Improvements (collectively, the "Tenant
Improvement Allowance"). The actual amount of the Tenant Improvement Allowance
shall be adjusted commensurately based upon the actual rentable square feet of
the Premises after Landlord's Substantial Completion of the Shell Improvements.
Subject to the provisions of this Exhibit B, the Tenant Improvement Allowance
                                  ---------
shall be used to design, prepare, plan, obtain the approval of, construct and
install the Tenant Improvements and for no other purpose. Except as otherwise
expressly provided herein, Landlord shall have no obligation to contribute the
Tenant Improvement Allowance unless and until the Construction Documents have
been approved by Landlord and Tenant has complied with all requirements set
forth in Paragraph 4.C. of this Exhibit B. The costs to be paid out of the
                                ---------
Tenant Improvement Allowance shall include all reasonable costs and expenses
associated with the design, preparation, approval, planning, construction and
installation of the Tenant Improvements (the "Tenant Improvement Costs"),
including all of the following:

                                      B-3
<PAGE>

          (i)    All costs of the Preliminary Plans and Specifications, the
     Final Plans and Specifications, and the Construction Documents, and
     engineering costs associated with completion of the State of California
     energy utilization calculations under Title 24 legislation:

          (ii)   All costs of obtaining building permits and other necessary
     authorizations from local governmental authorities;

          (iii)  All costs of interior design and finish schedule plans and
     specifications including as-built drawings, if applicable;

          (iv)   All direct and indirect costs of procuring, constructing and
     installing tile Tenant Improvements in the Premises, including, but not
     limited to, the construction fee for overhead and profit and the cost of
     all on-site supervisory and administrative staff, office, equipment and
     temporary services rendered by the Contractor in connection with the
     construction of the Tenant Improvements; provided, however, that the
     construction fee for overhead and profit, the cost of all on-site
     supervisory and administrative staff, office, equipment and temporary
     services shall not exceed amounts which are reasonable and customary for
     such items in the local construction industry;

          (v)    All fees payable to the Architect and any engineer if they are
     required to redesign any portion of the Tenant Improvements following
     Tenant's and Landlord's approval of the Construction Documents;

          (vi)   Utility connection fees;

          (vii)  Inspection fees and filing fees payable to local governmental
          authorities, if any;

          (viii) All costs of all permanently affixed equipment and non-trade
     fixtures provided for in the Construction Documents, including the cost of
     installation; and,

          (ix)   A construction management fee payable to Landlord in the amount
     of one percent (1.O%) of the aggregate of the principal amount of the
     Tenant Improvement Allowance (the "CM Fee").

The Tenant Improvement Allowance shall be the maximum contribution by Landlord
for the Tenant Improvement Costs, and tile disbursement of the Tenant
Improvement Allowance is subject to the provisions contained hereinbelow.
Notwithstanding anything to the contrary herein, Tenant shall not be obligated
to use the Tenant Improvement Allowance for, and Tenant shall not be responsible
for any of the following: (i) costs incurred to remove any Hazardous Materials
from the Premises for which Tenant is otherwise exculpated from liability in
accordance with the provisions of Section 27 of the Lease or (ii) cost incurred
to bring the Shell Improvements into compliance with applicable laws and
restrictions in effect as of the date of Substantial Completion of the Shell
Improvements, including without limitation, the ADA. Except for payment of the
CM Fee, Landlord will make payments to Tenant from the Tenant Improvement
Allowance to reimburse Tenant for Tenant Improvement Costs paid or incurred by
Tenant. Payment of the CM Fee shall be the first payment from the Tenant
Improvement Allowance and shall be made by means of a deduction or credit
against the Tenant Improvement Allowance. All other payments of the Tenant
Improvement Allowance shall be by progress payments not more frequently than
once per month and only after satisfaction of the following conditions
precedent: (a) receipt by Landlord of conditional mechanics' lien releases for
the work completed and to be paid by said progress payment, conditioned only on
the payment of the sums set forth in the mechanics' lien release, executed by
the Contractor and all subcontractors, labor suppliers and materialmen; (b)
receipt by Landlord of unconditional mechanics' lien releases from the
Contractor and all subcontractors, labor suppliers and materialmen for all work
other than that being paid by the current progress payment previously completed
by the Contractor, subcontractors, labor suppliers and materialmen and for which
Tenant has received funds from the Tenant Improvement Allowance to pay for such
work; (c) receipt by Landlord of any and all documentation reasonably required
by Landlord detailing the work that has been completed and the materials and
supplies used as of the date of Tenant's request for the progress payment,
including, without limitation, invoices, bills, or statements for the work
completed and the materials and supplies used; and (d) completion by Landlord or
Landlord's agents of any inspections of the work completed and materials and
supplies used as deemed reasonably necessary by Landlord. Except for the CM Fee
payment (credit), Tenant Improvement Allowance progress payments shall be paid
to Tenant within fourteen (14) days from the satisfaction of the conditions set
forth in the immediately preceding sentence. The preceding notwithstanding, all
Tenant Improvement Costs paid or incurred by Tenant prior to Landlord's approval
of the Construction Document in connection with the design and planning of the
Tenant Improvement by Architect shall be paid from the Tenant Improvement
Allowance, without any retention, within fourteen (14) days following Landlord's
receipt of invoices, bills or statements from Architect evidencing such costs.
Notwithstanding the foregoing to the contrary, Landlord shall be entitled to
withhold and retain five percent (5%) of the Tenant Improvement Allowance or of
any Tenant Improvement Allowance
                                      B-4
<PAGE>

progress payment until the date on which the Tenant Improvements are
substantially completed and the receipt by Landlord of all the items described
in (a) and (b) of this paragraph.

     B.   Landlord shall not be obligated to pay any Tenant Improvement
Allowance progress payment or the Tenant Improvement Allowance retention if on
the date Tenant is entitled to receive the Tenant Improvement Allowance progress
payment or the Tenant Improvement Allowance retention Tenant is in material
default of this Lease. Such payments shall resume upon Tenant curing any such
default within the time periods which may be provided for in the lease.

     C.   If the total cost of constructing the Tenant Improvements is less than
the Tenant Improvement Allowance, the Tenant Improvement Allowance shall be
automatically reduced to the amount equal to said actual cost.

6.   Termination. If the Lease is terminated prior to the date on which the
     -----------
Tenant Improvements are completed, for any reason due to the material default of
Tenant hereunder, in addition to any other remedies available to Landlord under
the Lease, Tenant shall pay to Landlord as Additional Rent under the Lease,
within five (5) days of receipt of a statement therefor, any and all costs
incurred by Landlord and not reimbursed or otherwise paid by Tenant through the
date of termination in connection with the Tenant Improvements to the extent
planned, installed and/or constructed as of such date of termination, including,
but not limited to, any costs related to the demolition and/or removal of all or
any portion of the Tenant Improvements and restoration costs related thereto.
Subject to the provisions of Section 10.2 of the Lease, upon the expiration or
earlier termination of the Lease, Tenant not remove the Tenant Improvements
unless otherwise notified by Landlord, in writing.

7.   Tenant Access. Landlord, in Landlord's reasonable discretion and upon
     --------------
receipt of written confirmation from Landlord's general contractor that such
entry will be in harmony with Landlord's general contractor's work schedule with
respect to the Shell Improvements, will grant Tenant a license to have access to
the Premises prior to the Shell Improvements being Substantially Completed
(defined below) to allow Tenant to do other work required by Tenant to install a
portion of the Tenant's Property and to otherwise make the Premises ready for
Tenant's use and occupancy (the "Tenant's Pre-Occupancy Work"). It shall be a
condition to the grant by Landlord and continued effectiveness of such license
that:

     (a)  Tenant shall give to Landlord a written request to have such access
 not Less than ten (10) business days prior to the date on which such proposed
 access will commence (the "Access Notice"). The Access Notice shall contain or
 be accompanied by each of the following items, all in form and substance
 reasonably acceptable to Landlord: (i) a detailed description of and schedule
 for Tenant's Pre-Occupancy Work; (ii) the names and addresses of all
 contractors, subcontractors and material suppliers and all other
 representatives of Tenant who or which will be entering the Premises on behalf
 of Tenant to perform Tenant's Pre-Occupancy Work or will be supplying materials
 for such work, and the approximate number of individuals, itemized by trade,
 who will be present in the Premises; (iii) copies of all contracts,
 subcontracts, material purchase orders, plans and specifications pertaining to
 Tenant's Pre-Occupancy Work; (iv) copies of all licenses and permits required
 in connection with the performance of Tenant's Pre-Occupancy Work; and (v)
 certificates of insurance (in amounts satisfactory to Landlord and with the
 parties identified in, or required by, the Lease named as additional insureds).

     (b)  Tenant shall indemnify, defend and hold the Indemnitees harmless from
and against any and all claims, liens, actions, costs, expenses (including
without limitation, attorneys' fees and costs), penalties, fines, and damages
arising from or related to, in any manner whatsoever, the Tenant's Pre-Occupancy
Work.

     (c)  Such pre-term access by Tenant and Tenant's employees, agents,
contractors, consultants, workmen, mechanics, suppliers and invitees shall be
subject to scheduling by Landlord.

     (d)  Tenant's employees, agents, contractors, consultants, workmen,
 mechanics, suppliers and invitees shall fully cooperate, work in harmony and
 not, in any manner, interfere with Landlord or Landlord's agents or
 representatives in performing the work related to Substantial Completion of the
 Shell Improvements (the "Work") and any additional work pursuant to approved
 change orders for the Shell Improvements, Landlord's work in other areas of the
 Project, or the general operation of the Project. If at any time any such
 person representing Tenant shall not be cooperative or shall otherwise cause or
 threaten to cause any such disharmony or interference, including, without
 limitation, labor disharmony, and Tenant fails to immediately institute and
 maintain corrective actions as directed by Landlord, then Landlord may revoke
 such license upon twenty-four (24) hours' prior written to Tenant.

     (e)  Any such entry into and limited occupancy of any portion of the
 Premises by Tenant or any person or entity working for or on behalf of Tenant
 shall be deemed to be subject to all of the terms, covenants, conditions and
 provisions of the Lease, excluding only the covenant to pay Base Rent as
 provided for in Section 3 of the Lease. Except to the extent of the gross
 negligence or willful misconduct of Landlord or Landlord's Representatives,
 Landlord shall not be liable for any injury, loss or damage that

                                      B-5
<PAGE>

          may occur to any of Tenant's Pre-Occupancy Work made in or about the
          Premises or to any property placed therein prior to the commencement
          of the Term of the Lease, the same being at Tenant's sole risk and
          liability. Tenant shall be liable to Landlord for any damage to any
          portion of the Premises, the Work or the additional work related to
          any approved change orders caused by Tenant or any of Tenant's
          employees, agents, contractors, consultants, workmen, mechanics,
          suppliers and invitees. In the event that the performance of Tenant's
          Pre-Occupancy Work causes extra costs to be incurred by Landlord or
          requires the use of other Building services, after delivery to Tenant
          of prior notice that such extra costs are reasonably anticipated by
          Landlord to be incurred, Tenant shall promptly reimburse Landlord for
          such extra costs and/or shall pay Landlord for such other Building
          services at Landlord's standard rates then in effect. Notwithstanding
          any provision to the contrary in this Section 7, upon Substantial
          Completion of the Shell Improvements Tenant shall be granted 24-hour
          -a-day 7-day-a-week access to the Premises for purposes of
          constructing the Tenant Improvements.

          8.   Shell Improvements. Subject to the conditions set forth
               ------------------
          herein, Landlord, at its sole cost and expense, agrees to construct
          and install the Shell Improvements on the Lot. In constructing and
          installing the Shell Improvements, Tenant shall not have any approval
          or consensual rights (and Landlord shall not be required to obtain
          Tenant's consent therefor) concerning the Shell Improvements. The
          Shell Improvements shall not include the Tenant Improvements nor any
          of Tenant's personal property, equipment, furnishings, trade fixtures
          or fixtures. Landlord shall use commercially reasonable efforts to
          cause its general contractor to Substantially Complete (defined below)
          the Shell Improvements by March 15, 2000 (the "Completion Date"),
          subject to delays due to (a) acts or events beyond its control
          including, but not limited to, acts of God, earthquakes, strikes,
          lockouts, boycotts, casualties, discontinuance of any utility or other
          service required for performance of the Work, moratoriums,
          governmental agencies and inclement weather (including, but not
          limited to, rain delays), (b) the lack of availability or shortage of
          specialized materials used in the construction of the Shell
          Improvements, (c) any matters beyond the control of Landlord, the
          general contractor or any subcontractors, (d) any changes required by
          the fire department, building and/or planning department, building
          inspectors or any other agency having jurisdiction over the Building,
          the Work and/or the Shell Improvements (except to the extent such
          changes are directly attributable to Tenant's use or the Tenant
          Improvements, in which event such delays are considered Tenant Delays)
          the events and matters set forth in Subsections (a), (b), (c) and (d)
          are collectively referred to as "Force Majeure Delays"), or (e) any
          delay attributable to Tenant and/or any of Tenant's Representatives or
          Tenant's intended use of the Premises (collectively, "Tenant Delays").
          Tenant Delays shall include, but not be limited to, all of the
          following described events or occurrences: (i) delays related to
          changes made or requested by Tenant to the Construction Documents with
          respect to the Tenant Improvements; (ii) the failure of Tenant to
          furnish all or any plans, drawings, specifications, finish details or
          other information required herein; (iii) the failure of Tenant to
          comply with the requirements of this Exhibit B; (iv) Tenant's
                                               ---------
          requirements for special work or materials, finishes, or installations
          other than the Building Standards or Tenant's requirements for special
          construction or phasing; (v) any changes required by the fire
          department, building or planning department, building inspectors or
          any other agency having jurisdiction over the Building, the Work
          and/or the Tenant Improvements if such changes are directly
          attributable to Tenant's particular use or Tenant's specialized tenant
          improvements which do not conform to Landlord's Building Standards;
          (vi) the performance of any additional work pursuant to a change order
          which is requested by Tenant; (vii) the performance of work in or
          about the Premises by any person, firm or corporation employed by or
          on behalf of Tenant, including, without limitation, any failure to
          complete or any delay in the completion of such work; or (viii) any
          and all delays caused by or arising from acts or omissions of Tenant
          and/or Tenant's Representatives, in any manner whatsoever. It is the
          intention of the parties that all of such delays will be considered
          Tenant Delays for which Tenant shall be wholly and completely
          responsible for any and all consequences related to such delays,
          including without limitation, any costs and expenses attributable to
          increases in labor or materials. Any delays in the construction of the
          Shell Improvements due to any of the events described above and
          designated as "Tenant Delays", shall in no way extend or affect the
          date on which Tenant is required to commence paying Rent under the
          terms of the Lease. Provided that Landlord has used commercially
          reasonable efforts to complete the Shell Improvements by March 15,
          2000, Tenant's sole and exclusive remedy for Landlord's failure to
          complete the Shell Improvements on or before the Completion Date is
          described in Section 2.1 of the Lease.

          9.   Substantial Completion of Shell Improvements. The Shell
               --------------------------------------------
          Improvements shall be deemed substantially complete on the date that
          the building officials of the applicable governmental agency(s) issues
          its final approval of the construction of the Shell Improvements
          whether in the form of the issuance of a final permit, certificate of
          occupancy or the written approval evidencing its final inspection on
          the building permits, or the date on which Tenant first takes
          occupancy of the Premises for purposes other than to perform the
          Tenant's Pre-Occupancy Work, or the date that Landlord's general
          contractor issues a certificate stating that the Shell Improvements
          have been substantially completed, whichever first occurs
          ("Substantial Completion", or "Substantially Completed", or
          "Substantially Complete"). Subject to the provisions set forth below,
          if the Work with respect to the Shell Improvements is not deemed to be
          Substantially Completed on or before the scheduled Completion Date,
          (A) Landlord agrees to use

                                      B-6
<PAGE>

reasonable efforts to Substantially Complete the Work as soon as practicable
thereafter, (B) the Lease shall remain in full force and effect, and (C)
Landlord shall not be deemed to be in breach or default of the Lease or this
Exhibit B as a result thereof and, Landlord shall have no liability to Tenant
---------
as a result of any delay in occupancy (whether for damages, abatement of all or
any portion of the Rent, or otherwise). The Commencement Date and the Expiration
Date of the Term of the Lease (as defined in Section 2 of the Lease) shall be
extended commensurately by the amount of time attributable to any Force Majeure
Delays which delay the Substantial Completion of the Shell Improvements.

10.  Lease Provisions; Conflict. The terms and provisions of the Lease, insofar
     --------------------------
as they are applicable, in whole or in part, to this Exhibit B, are hereby
                                                     ---------
incorporated herein by reference, and specifically including all of the
provisions of Section 29 of the Lease. In the event of any conflict between the
terms of the Lease and this Exhibit B, the terms of this Exhibit B shall
                            ---------                    ---------
prevail. Any amounts payable by Tenant to Landlord hereunder shall be deemed to
be Additional Rent under the Lease and, upon any default in the payment of same,
Landlord shall have all rights and remedies available to it as provided for in
the Lease.

                                      B-7
<PAGE>

                                   Schedule 1
                                   ----------

                      Construction Insurance Requirements

Before commencing work, the contractor shall procure and maintain at its sole
cost and expense until completion and final acceptance of the work, at least
the following minimum levels of insurance.

A.   Workers' Compensation in statutory amounts and Employers Liability
     Insurance in the minimum amounts of $100,000 each accident for bodily
     injury by accident and $100,000 each employee for bodily injury by disease
     with a $500,000 policy limit, covering each and every worker used in
     connection with the contract work.

B.   Comprehensive General Liability Insurance on an occurrence basis
     including, but not limited to, protection for Premises/Operations
     Liability, Broad Form Contractual Liability, Owner's and Contractor's
     Protective, and Products/Completed Operations Liability*, in the following
     minimum limits of liability.

     Bodily Injury, Property Damage, and
     Personal Injury Liability    $1,000,000/each occurrence
                                  $3,000,000/aggregate

     *    Products/Completed Operations Liability Insurance is to be provided
     for a period of at least one (1) year after completion of work.

     Coverage should include protection for Explosion, Collapse and Underground
     Damage.

C.   Comprehensive Automobile Liability Insurance with the following minimum
     limits of liability.

     Bodily Injury and Property    $1,000,000/each occurrence
     Damage Liability              $3,000,000/aggregate

     This insurance will apply to all owned, non-owned or hired automobiles to
     be used by the Contractor in the completion of the work.

D.   Umbrella Liability Insurance in a minimum amount of three million dollars
     ($3,000,000), providing excess coverage on a following-form basis over the
     Employer's Liability limit in Paragraph A and the liability coverages
     outlined in Paragraphs B and C.

E.   Equipment and Installation coverages in the broadest form available
     covering Contractor's tools and equipment and material not accepted by
     Tenant. Tenant will provide Builders Risk Insurance on all accepted and
     installed materials.

All policies of insurance, duplicates thereof or certificates evidencing
coverage shall be delivered to Landlord prior to commencement of any work and
shall name Landlord, and its partners and lenders as additional insureds as
their interests may appear. All insurance policies shall (1) be issued by a
company or companies licensed to be business in the state of California, (2)
provide that no cancellation, non-renewal or material modification shall be
effective without thirty (30) days prior written notice provided to Landlord,
(3) provide no deductible greater than $15,000 per occurrence, (4) contain a
waiver to subrogation clause in favor of Landlord, and its partners and lenders,
and (5) comply with the requirements of Sections 12.2, 12.3 and 12.4 of the
Lease to the extent such requirements are applicable.

                                      B-8
<PAGE>

                                  Schedule 2
                                  ----------

                              Building Standards

                                  (To follow)

                                      B-9
<PAGE>

                        EXHIBIT C TO LEASE AGREEMENT

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

1.   Tenant shall not place anything, or allow anything to be placed near the
glass of any window, door, partition or wall which may, in Landlord's judgment,
appear unsightly from outside of the Project.

2.   The Project directory, if any, shall be used by Landlord to display names
and locations of tenants in the Project. No tenant shall use or make any
changes to such directories without Landlord's prior written consent, which
consent shall not be unreasonably withheld.

3.   The sidewalks, halls, passages, exits, entrances, elevators and stairways
shall not be obstructed by Tenant or used by Tenant for any purposes other than
for ingress to and egress from the Premises, unless Tenant is the sole occupant
of the Building. Tenant shall lend its full cooperation to keep such areas
free from all obstruction and in a clean and sightly condition and shall move
all supplies, furniture and equipment as soon as received directly to the
Premises and move all such items and waste being taken from the Premises (other
than waste customarily removed by employees of the Building) directly to the
shipping platform at or about the time arranged for removal therefrom. Neither
Tenant nor any employee, agent, contractor or invitee of Tenant shall go upon
the roof of the Building or any building in the Project except in strict
compliance with the provisions of Section 38 of the Lease Agreement.

4.   The toilet rooms, urinals, wash bowls and other apparatuses shall not be
used for any purposes other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein, and to the
extent caused by Tenant or its employees or invitees, the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by Tenant.

5.   Tenant shall not cause any unnecessary janitorial labor or services by
reason of Tenant's carelessness or indifference in the preservation of good
order and cleanliness.

6.   Tenant shall not install or operate any refrigerating, heating or air
conditioning apparatus, or carry on any mechanical business without the prior
written consent of Landlord, which consent shall not be unreasonably withheld;
use the Premises for housing, lodging or sleeping purposes; or permit
preparation or warming of food in the Premises (warming of coffee and individual
meals with employees and guests excepted). Tenant shall not occupy or use the
Premises or permit the Premises to be occupied or used for any purpose, act or
thing which is in violation of any Governmental Requirement or which may be
dangerous to persons or property.

 7.   Except as otherwise permitted in the Lease Agreement, Tenant shall not
bring upon, use or keep in the Premises or the Project any kerosene, gasoline or
inflammable or combustible fluid or material, or any other articles deemed
hazardous to persons or property, or use any method of heating or air
conditioning other than that supplied by Landlord. Tenant shall not do anything
in the Premises, or bring or keep anything therein, which will in any way
increase or tend to increase the risk of fire or the rate of fire insurance or
which shall conflict with the regulations of the Fire Department or the law or
with any insurance policy on the Premises or any part thereof.

8.   Landlord shall have sole power to direct electricians as to where and how
telephone and other wires are to be introduced. No boring or cutting for wires
is to be allowed without the consent of Landlord, which consent shall not be
unreasonably withheld. The location of telephones, call boxes and other office
equipment affixed to the Premises shall be subject to the reasonable approval of
Landlord.

9.   No additional locks shall be placed upon any doors, windows or transoms in
or to the Premises. Tenant shall not change existing locks or the mechanism
thereof. Upon termination of the lease, Tenant shall deliver to Landlord all
keys and passes for offices, rooms, parking lot and toilet rooms which shall
have been furnished Tenant. In the event of the loss of keys so furnished,
Tenant shall pay Landlord therefor. Tenant shall not make, or cause to be made,
any such keys and shall order all such keys solely from Landlord and shall pay
Landlord for any keys in addition to the two sets of keys originally furnished
by Landlord for each lock.

10.  Tenant shall not install linoleum, tile, carpet or other floor covering so
that the same shall be affixed to the floor of the Premises in any manner except
as approved by Landlord, such approval shall not be unreasonably withheld
subject to the terms and conditions of the Lease Agreement.

                                      C-1
<PAGE>

11.  Tenant shall not take or permit to be taken in or out of other entrances of
the Building, or take or permit on other elevators, any item normally taken in
or out through the trucking concourse or service doors or in or on freight
elevators.

12.  Without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, Tenant shall not use the name of the Project or any
picture of the Project in connection with, or in promoting or advertising the
business of, Tenant, except Tenant may use the address of the Project as the
address of its business.

13.  Tenant shall cooperate fully with Landlord to assure the most effective
operation of the Premises' or the Project's heating and air conditioning.

14.  Tenant assumes full responsibility for protecting the Premises from theft,
robbery and pilferage, which may arise from a cause other than Landlord's or
Landlord's Representatives gross negligence or willful misconduct, which
includes keeping doors locked after normal business hours and other means of
entry to the Premises closed and secured.

15.  Peddlers, solicitors and beggars shall be reported to the office of the
Project or as Landlord otherwise requests.

16.  Tenant shall not advertise the business, profession or activities of Tenant
conducted in the Project in any manner which violates the letter or spirit of
any code of ethics adopted by any recognized association or organization
pertaining to such business, profession or activities.

17.  Except with the express written permission of Landlord, no bicycle (except
in those areas which may be designated for bicycles by Landlord) or other
vehicle and no animals or pets shall be allowed in the Premises, halls, freight
docks, or any other parts of the Building except that blind persons may be
accompanied by "seeing eye" dogs. Except for noise from the reasonable monthly
testing of Tenant's generator, Tenant shall not make or permit any noise,
vibration or odor to emanate from the Premises, or do anything therein tending
to create, or maintain, a nuisance, or do any act tending to injure the
reputation of the Building.

18.  Tenant acknowledges that Building security problems may occur which may
require the employment of extreme security measures in the day-to-day
operation of the Project. Accordingly:

     (a) Landlord may, at any time, or from time to time, or for regularly
scheduled time periods, as deemed advisable by Landlord and/or its agents, in
their sole discretion, require that persons entering or leaving the Project or
the Property identify themselves to watchmen or other employees designated by
Landlord, by registration, identification or otherwise.

     (b) Tenant agrees that it and its employees will reasonably cooperate fully
with Project employees in the implementation of any and all security procedures.

     (c) Such security measures (if taken) shall be the sole responsibility of
Landlord, and Tenant shall have no liability for any action taken by Landlord in
connection therewith, it being understood that Landlord is not required to
provide any security procedures and shall have no liability for such security
procedures or the lack thereof.

19.  Tenant shall not do or permit the manufacture, sale, purchase, use or gift
of any fermented, intoxicating or alcoholic beverages without obtaining written
consent of Landlord.

20.  Tenant shall not disturb the quiet enjoyment of any other tenant.

21.  Subject to the terms of the Lease Agreement, Landlord may retain a pass key
to the Premises and be allowed admittance thereto at all times to enable its
representatives to examine the Premises from time to time and to exhibit the
same and Landlord may place and keep on the windows and doors of the Premises
at any time signs advertising the Premises for Lease, Rent or Sale.

22.  No equipment, mechanical ventilators, awnings, special shades or other
forms of window covering shall be permitted either inside or outside the windows
of the Premises without the prior written consent of Landlord, and then only at
the expense and risk of Tenant, and they shall be of such shape, color, material
quality, design and make as may be approved by Landlord.

23.  Tenant shall not during the term of the Lease Agreement canvas or solicit
other tenants of the Building for any purpose.

                                      C-2
<PAGE>

24.  Except as specifically set forth in the Lease Agreement, Tenant shall not
install or operate any phonograph, musical or sound-producing instrument or
device, radio receiver or transmitter, TV receiver or transmitter, or similar
device in the Building or Project common areas, nor install or operate any
antenna, aerial, wires or other equipment inside or outside the Building, nor
operate any electrical device from which may emanate electrical waves which may
interfere with or impair radio or television broadcasting or reception from or
in the Building or elsewhere, without in each instance the prior written
approval of Landlord, which approval shah not be unreasonably withheld. The use
thereof, if permitted, shall be subject to control by Landlord to the end that
others shall not be disturbed.

25.  Tenant shall promptly remove all rubbish and waste from the Premises.

26.  Tenant shall not exhibit, sell or offer for sale, Rent or exchange in the
Premises or at the Project any article, thing or service, except those
ordinarily embraced within the use of the Premises specified in the Lease
Agreement, without the prior written consent of Landlord.

27.  INTENTIONALLY DELETED.

28.  Tenant shall not overload any floors in the Premises or any public
corridors or elevators in the Building. Landlord may limit weight, size and
position of all safes, fixtures and other equipment used in the Premises.

29.  Tenant shall not do any painting in the Premises, or mark, paint, cut or
drill into, or in any way deface any part of the Premises or the Building,
outside or inside, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld.

30.  Whenever Landlord's consent, approval or satisfaction is required under
these Rules, then unless otherwise stated, any such consent, approval or
satisfaction must be obtained in advance, such consent or approval may be
granted or withheld in Landlord's sole discretion, and Landlord's satisfaction
shah be determined in its sole judgment.

31.  Tenant and its employees shall cooperate in all fire drills conducted by
Landlord in the Building.

32.  Landlord reserves the right at any time to change or rescind any one or
more of these rules or regulations or to make such other and further reasonable
rules and regulations as in Landlord's judgment may from time to time be
necessary for the management, safety, care and cleanliness of the Premises, and
for time preservation of good order therein, as well as for the convenience of
other occupants and tenants of the Project. Landlord shall not be responsible to
Tenant or to any other person for the non-observance or violation of the rules
and regulations by any other tenant or other person. Tenant shall be deemed to
have read these rules and to have agreed to abide by them as a condition to its
occupancy of the space herein leased.

                                      C-3
<PAGE>

                          EXHIBIT D TO LEASE AGREEMENT

                     CHANGE OF COMMENCEMENT DATE - EXAMPLE
                     -------------------------------------

                       FIRST AMENDMENT TO LEASE AGREEMENT
                       ----------------------------------

This First Amendment to Lease Agreement (the "First Amendment") is made as of
_______________, 2000, by and between Sequoia Del Rey, LLC (collectively,
"Landlord"), and LoudCloud Inc., a Delaware corporation ("Tenant"), with
reference to that certain Lease Agreement (the "Lease"), dated January ____,
2000 by and between Landlord and Tenant for the leasing of certain premises (the
"Premises") located at 599 North Mathilda Avenue, Sunnyvale, California, as more
particularly described in the Lease.

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

1.   The Commencement Date shall be ____________________, 2000.

2.   The Expiration Date of the initial term of the Lease shall be
_____________,  ____.

3.   All capitalized terms used in this First Amendment shall have the same
meanings and definitions as set forth in the Lease.

4.   Landlord and Tenant hereby further agree that the Lease is in fuil force
and effect, and that the terms and provisions of this Lease shall remain
unchanged except as modified in this First Amendment.

5.   In the event of any conflict or inconsistency between the terms and
provisions of this First Amemdment, the terms and provisions of this First
Amendment shall prevail.

     IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment
as of the date and year first written above in this First Amendment.

LANDLORD:                                        TENANT:

SEQUOIA DEL RAY, LLC,                            LOUDCLOUD INC.,
a California limited liability company           a Delaware corporation

By: J.P. DINAPOLI COMPANIES,
    INC.,
    a California corporation, manager            By:  /s/[SIGNATURE ILLEGIBLE]^^
                                                      --------------------------
                                                 Its: EXECUTIVE VP
                                                      --------------------------

    BY: _______________________________
        J. Philip DiNapoli, President            By: ___________________________
                                                 Its:___________________________

                                      D-1
<PAGE>

                          EXHIBIT E TO LEASE AGREEMENT

                                 SIGN CRITERIA
                                 -------------

All signs or decorations placed by Tenant or permitted by Tenant to be place on
the land or exterior of the Building shall comply with all applicable
municipal and county ordinances, and be subject to the Landlord's consent,
which consent shall not be unreasonable withheld. Subject to the foregoing
conditions, Landlord hereby grants to Tenant the exclusive right to place
Tenant's sign or logo on the exterior of the Building and place or permit to
be placed Tenant's name and/or logo, address and hours of operation at the
entrance to the Premises. Tenant shall not place or permit to be placed any sign
or decoration on the land or the exterior of the Building without the
proper written consent of Landlord. Tenant, upon written notice by Landlord,
shall immediately remove any sign or decoration that Tenant has placed or
permitted to be placed on the land or the exterior of the Building without the
prior written consent of Landlord, and if Tenant fails to so remove such
sign or decoration within five (5) days after Landlord's written notice,
Landlord may enter upon the Premises and remove said sign or decoration and
Tenant agrees to pay Landlord, as additional rent upon demand, the cost
of such removal. At the termination of this Lease, Tenant shall remove any
sign which it has placed on the Parcel or Building, and shall repair any
damage caused by the installation or removal of such sign.

Subject to the foregoing, the following criteria shall apply:

EXTERIOR SIGNAGE:
----------------

1.   Tenant will be allowed one (1) overhead sign per leased frontage.

2.   Tenant will submit to Landlord for Landlord's approval two (2) sets of
     detailed drawings not less than two weeks prior to the fabrication and
     installation of any sign.

3.   Tenant and/or Tenant's sign company will be responsible for obtaining all
     necessary city permits, and providing copies thereof to Landlord at
     Landlord's request, before any signs are fabricated and installed.

MONUMENT SIGNAGE:
-------- -------

1.   Tenant will be allowed to use the monument sign on Mathilda Avenue.

2.   Tenant will submit to Landlord for Landlord's approval two (2) sets of
     detailed drawings not less than two weeks prior to the fabrication and
     installation of any sign.

3.   Tenant and/or Tenant's sign company will be responsible for obtaining all
     necessary city permits, and providing copies thereof to Landlord at
     Landlord's request, before any signs are fabricated and installed.

FRONT ENTRANCE SIGNAGE (ON GLASS DOOR):
--------------------------------------

1.   Tenant's name shall be in 3" vinyl copy. Tenants with a registered
     trademark or logo and letter style will be allowed to use their
     trademark or logo and letter style, subject to the prior approval of
     Landlord and city authorities.

2.   Additional information such as hours and days of operation shall be in 7/8"
     vinyl copy.

3.   Width of signage on front door shall not exceed thirty inches (30").

BACK ENTRANCE SIGNAGE:
----------------------

1.   Vinyl square with vinyl drop shadow 4 1/2" white vinyl letter depicting
     unit.

2.   Tenant's name shall be 3 1/8" to 4" vinyl copy.

                                      E-1
<PAGE>

                         EXHIBIT F TO LEASE AGREEMENT

              HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE - EXAMPLE
              ----------------------------------------------------

Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is
necessary for the Landlord (identified below) to evaluate and finalize a lease
agreement with you as Tenant. After a lease agreement is signed by you and the
Landlord (the "Lease Agreement"), on an annual basis in accordance with the
provisions of Section 27 of the signed Lease Agreement, you are to provide an
update to the information initially provided by you in this certificate. The
information contained in the initial Hazardous Materials Disclosure
Certificate and each annual certificate provided by you thereafter will be
maintained in confidentiality by Landlord subject to release and disclosure as
required by (i) any lenders and owners and their respective environmental
consultants, (ii) any prospective purchaser(s) of all or any portion of the
property on which the Premises are located, (iii) Landlord to defend itself or
its lenders, partners or representatives against any claim or demand, and (iv)
any laws, rules, regulations, orders, decrees, or ordinances, including, without
limitation, court orders or subpoenas. Any and all capitalized terms used
herein, which are not otherwise defined herein, shall have the same meaning
ascribed to such term in the signed Lease Agreement. Any questions regarding
this certificate should be directed to, and when completed, the certificate
should be delivered to:

Landlord:  Sequoia Del Rey, LLC
           c/o J.P. DINAPOLl COMPANIES, INC.
           99 Almaden Boulevard, Suite 565
           San Jose, California 95113
           Attn: _______________________________
           Phone: (408) 998-2404

Name of (Prospective) Tenant:  Loudcloud, Inc.
                               ------------------

Mailing Address: 615 ????
                ---------------------------------------------------------------
                 Sunnyvale, CA. 94086
-------------------------------------------------------------------------------

Contact Person, Title and Telephone Number(s): ???? Conte, Director of Finance
                                              ---------------------------------
     408-744-7521
----------------------

Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s):
______________________________________________________________________________
______________________________________________________________________________

Address of (Prospective) Premises: 599 Mathilda Avenue, Sunnyvale, CA 94086
                                   -------------------------------------------

Length of (Prospective) Initial Term: 10 years
                                     -----------------------------------------
______________________________________________________________________________

1.   General Information:

                                      G-2
<PAGE>

     Describe the initial proposed operations to take place in, on, or about the
Premises, including, without limitation, principal products processed,
manufactured or assembled services and activities to be provided or otherwise
conducted. Existing Tenants should describe any proposed changes to on-going
operations.

          General office, software R&D, outsourced It infrastructure
     -------------------------------------------------------------------------

2.   Use, Storage and Disposal of Hazardous Materials

     2.1  Will any Hazardous Materials be used, generated, stored or disposed
of in, on or about the Premises? Existing Tenants should describe any Hazardous
Materials which continue to be used, generated, stored or disposed of in, on or
about the Premises.

                  Wastes             Yes [_]      No [X]
                  Chemical Products  Yes [_]      No [X]
                  Other              Yes [_]      No [X]

                  If Yes is marked attach all MSDS's and please explain:______

           _____________________________________________________________________
           _____________________________________________________________________

     2.2  If Yes is marked in Section 2.1, attach a list of any Hazardous
Materials to be used, generated, stored or disposed of in, on or about the
Premises, including the applicable hazard class and an estimate of the
quantities of such Hazardous Materials at any given time; estimated annual
throughput; the proposed location(s) and method of storage (excluding nominal
amounts of ordinary household cleaners and janitorial supplies which are not
regulated by any Environmental Laws); and the proposed location(s) and method
of disposal for each Hazardous Material, including, the estimated frequency, and
the proposed contractors or subcontractors. Existing Tenants should attach a
list setting forth the information requested above and such list should include
actual data from on-going operations and the identification of any variations in
such information from the prior year's certificate.

Attach a Site Plan indicating all storage areas.

3.   Storage Tanks and Sumps

     3.1  Is any above or below ground storage of gasoline, diesel, petroleum,
or other Hazardous Materials in tanks or sumps proposed in, on or about the
Premises? Existing Tenants should describe any such actual or proposed
activities, including any required SPCC Plan.

          Yes [X]    No [_]

          If Yes per please explain: per lease exception Diesel truck marked to
                                     ------------------------------------------
          back-up generator
          -----------------

4.  Waste Management

                                      G-3
<PAGE>

     4. 1  Has your company been issued an EPA Hazardous Waste Generator I.D.
Number? Existing Tenants should describe any additional identification numbers
issued since the previous certificate.

          Yes [_]        No [X]

     4.2  Has your company filed a biennial or quarterly reports as a
hazardous waste generator? Existing Tenants should describe any new reports
filed.
          Yes[_]         No [X]

          If yes, attach a copy of the most recent report flied.

5.   Wastewater Treatment and Discharge

     5.1  Will your company discharge wastewater or other wastes to:

          _______ storm drain?     ________ sewer?
          _______ surface water?   ________ no wastewater or other wastes
                                            discharged.

          Existing Tenants should indicate any actual discharges. If so,
describe the nature of any proposed or actual discharge(s).
          ____________________________________________________________________
          ____________________________________________________________________

     5.2  Will any such wastewater or waste be treated before discharge?

          Yes[_]          No[X]

          If yes, describe the type of treatment proposed to be conducted.
Existing Tenants should describe the actual treatment conducted.

          ____________________________________________________________________
          ____________________________________________________________________

6.   Air Discharges

     6.1  Do you plan for any air filtration systems or stacks to be used in
your company's operations in, on or about the Premises that will discharge into
the air; and will such air emissions be monitored? Existing Tenants
should indicate whether or not there are any such air filtration systems or
stacks in use in, on or about the Premises which discharge into the air and
whether such air emissions are being monitored.

          Yes[_]          No[X]

          If yes, please describe: ____________________________________________
          _____________________________________________________________________
          _____________________________________________________________________

                                      G-4
<PAGE>

     6.2  Do you propose to operate any of the following types of equipment, or
any other equipment requiring an air emissions permit? Existing Tenants should
specify any such equipment being operated in, on or about the Premises.

         _________ Spray booth(s)  _________ incinerator(s)
         _________ Dip tank(s)     _________ Other (Please describe)
         _________ Drying oven(s)  _________ No Equipment Requiring Air Permits

         If yes, please describe:______________________________________________
         ______________________________________________________________________
         ______________________________________________________________________

7.   Hazardous Materials Disclosures

     7.1 Has your company prepared or will it be required to prepare a
Hazardous Materials management plan ("HMMP") pursuant to Fire Department or
other governmental or regulatory agencies' requirements? Existing Tenants should
indicate whether or not an HMMP is required and has been prepared.

         Yes [_]         No [X]

         If yes, attach a copy of the HMMP. Existing Tenants should attach a
copy of any required updates to the HMMP.

     7.2 Are any of the Hazardous Materials, and in particular chemicals,
proposed to be used in your operations in, on or about the Premises regulated
under Proposition 65? Existing Tenants should indicate whether or not there
are any new Hazardous Materials being so used which are regulated under
Proposition 65.

         Yes [_]         No [X]

         If yes, Please explain: ______________________________________________
         ______________________________________________________________________
         ______________________________________________________________________

8.   Enforcement Actions and Complaints

     8.1  With respect to Hazardous Materials or Environmental Laws, has your
company ever been subject to any agency enforcement actions, administrative
orders, or consent decrees or has your company received requests for
information, notice or demand letters, or any other inquiries regarding its
operations? Existing Tenants should indicate whether or not any such actions,
orders or decrees have been, or are in the process of being, undertaken or if
any such requests have been received.

         Yes [_]         No [X]

         If yes, describe the actions, orders or decrees and any continuing
compliance obligations imposed as a result of these actions, orders or decrees
and also describe any requests, notices or demands,

                                      G-5
<PAGE>

and attach a copy of all such documents. Existing Tenants should describe and
attach a copy of any new actions, orders, decrees, requests, notices or, demands
not already delivered to Landlord pursuant to the provisions of Section 27 of
the signed Lease Agreement.
          ____________________________________________________________________
          ____________________________________________________________________
          ____________________________________________________________________

     8.2  Have there ever been, or are there now pending, any lawsuits against
your company regarding any environmental or health and safety concerns?

          Yes [_]        No [X]

          If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and all other documents related
thereto as requested by Landlord. Existing Tenants should describe and attach a
copy of any new complaint(s), cross-complaint(s), pleadings and other related
documents not already delivered to Landlord pursuant to the provisions of
Section 27 of the signed Lease Agreement.

          ____________________________________________________________________
          ____________________________________________________________________
          ____________________________________________________________________

     8.3  Have there been any problems or complaints from adjacent Tenants,
owners or other neighbors at your company's current facility with regard to
environmental or health and safety concerns? Existing Tenants should indicate
whether or not there have been any such problems or complaints from
adjacent Tenants, owners or other neighbors at, about or near the Premises.

          Yes [_]        No [X]

         If yes, please describe. Existing Tenants should describe any such
problems or complaints not already disclosed to Landlord under the provisions of
the signed Lease Agreement.

          ____________________________________________________________________
          ____________________________________________________________________

9.   Permits and Licenses

     9.1  Attach copies of all Hazardous Materials permits and licenses
including a Transporter Permit number issued to your company with respect to its
proposed operations in, on or about the Premises, including, without
limitation, any wastewater discharge permits, air emissions permits, and use
permits or approvals. Existing Tenants should attach copies of any new permits
and licenses as well as any renewals of permits or licenses previously issued.

The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Landlord in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit; (B) that this Hazardous
Materials Disclosure Certificate is being delivered in accordance with, and as
required by, the provisions of Section 27 of the Lease Agreement; and (C) that
Tenant shall have and retain full and complete responsibility and liability with
respect to any of the Hazardous Materials disclosed in the HazMat Certificate
notwithstanding Landlord's/Tenant's receipt and/or approval of such certificate.
Tenant

                                      G-6
<PAGE>

further agrees that none of the following described acts or events shall be
construed or otherwise interpreted as either (a) excusing, diminishing or
otherwise limiting Tenant from the requirement to fully and faithfully
perform its obligations under the Lease with respect to Hazardous Materials,
including, without limitations, Tenant's indemnification of the Indemnitees
and compliance with all Environmental Laws, or (b) imposing upon Landlord,
directly or indirectly, any duty or liability with respect to any such
Hazardous Materials, including, without limitation, any duty on Landlord to
investigate or otherwise verify the accuracy of the representations and
statements made therein or to ensure that Tenant is in compliance with all
Environmental Laws; (i) the delivery of such certificate to Landlord and/or
Landlord's acceptance of such certificate, (ii) Landlord's review and approval
of such certificate, (iii) Landlord's failure to obtain such certificate from
Tenant at any time, or (iv) Landlord's actual or constructive knowledge of the
types and quantities of Hazardous Materials being used, stored, generated,
disposed of or transported on or about the Premises by Tenant or Tenant's
Representatives. Notwithstanding the foregoing or anything to the contrary
contained herein, the undersigned acknowledges and agrees that Landlord and its
partners, lenders and representatives may, and will, rely upon the statements,
representations, warranties, and certifications made herein and the
truthfulness thereof in entering into the Lease Agreement and the continuance
thereof throughout the term, and any renewals thereof, of the Lease Agreement.

\\\\\ continued on next page

                                      G-7
<PAGE>

I (print name) ____________, acting with full authority to bind the (proposed)
Tenant and on behalf of the (proposed) Tenant, certify, represent and warrant
that the information contained in this certificate is true and correct.

(Prospective) Tenant:

By:      Charles J. Katz Jr.
       -----------------------
Title:   Executive V.P.
       -----------------------
Date:  _______________________

                                      G-8

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