Document:

<PAGE>

                                                                   EXHIBIT 10.23

                                     LEASE

                                    BETWEEN

                       PSW TECHNOLOGIES, INC., AS TENANT

                                      AND

                  BCIA NEW ENGLAND HOLDINGS LLC, AS LANDLORD

                  POINT WEST PLACE, FRAMINGHAM, MASSACHUSETTS

The submission of an unsigned copy of this document to Tenant for Tenant's
consideration does not constitute an offer to lease the Premises or an option to
or for the Premises.  This document shall become effective and binding only upon
the execution and delivery of this Lease by both Landlord and Tenant.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                        PAGE
                                                                                                        ----
<S>                                                                                                     <C>
ARTICLE 1
     BASIC DATA; DEFINITIONS...........................................................................    1
     -----------------------
     1.1    Basic Data.................................................................................    1
            ----------
     1.2    Definitions................................................................................    3
            -----------
     1.3    Enumeration of Exhibits....................................................................    6
            -----------------------

ARTICLE 2
     PREMISES AND APPURTENANT RIGHTS...................................................................    7
     -------------------------------
     2.1    Lease of Premises..........................................................................    7
            -----------------
     2.2    Appurtenant Rights and Reservations........................................................    7
            -----------------------------------
     2.3    Option to Extend...........................................................................    8
            ----------------

ARTICLE 3
     BASIC RENT........................................................................................    9
     ----------
     3.1    Payment....................................................................................   10
            -------

ARTICLE 4
     COMMENCEMENT AND CONDITION........................................................................   10
     --------------------------
     4.1    Commencement Date..........................................................................   10
            -----------------
     4.2    Preparation of the Premises................................................................   11
            ---------------------------

ARTICLE 5
     USE OF PREMISES...................................................................................   12
     ---------------
     5.1    Permitted Use..............................................................................   12
            -------------
     5.2    Installations and Alterations by Tenant....................................................   13
            ---------------------------------------
     5.3    Extra Hazardous Use........................................................................   15
            -------------------
     5.4    Hazardous Materials........................................................................   15
            -------------------

ARTICLE 6
     ASSIGNMENT AND SUBLETTING.........................................................................   16
     -------------------------
     6.1    Prohibition................................................................................   16
            -----------
     6.2    Acceptance of Rent.........................................................................   17
            ------------------
     6.3    Excess Payments............................................................................   17
            ---------------
     6.4    Landlord's Recapture Right.................................................................   18
            --------------------------
     6.5    Further Requirements.......................................................................   18
            --------------------
</TABLE>

                                      (i)
<PAGE>

<TABLE>
<S>                                                                                                       <C>
     6.6    Standards for Consent to Assignment and Subletting........................................... 19
            --------------------------------------------------

ARTICLE 7
     RESPONSIBILITY FOR REPAIRS AND CONDITION OF PREMISES; SERVICES TO BE FURNISHED BY LANDLORD.......... 20
     7.1    Landlord Repairs............................................................................. 20
            ----------------
     7.2    Tenant Repairs............................................................................... 21
            --------------
     7.3    Floor Load - Heavy Machinery................................................................. 21
            ----------------------------
     7.4    Utility Services............................................................................. 22
            ----------------
     7.5    Other Services............................................................................... 23
            --------------
     7.6    Interruption of Service...................................................................... 24
            -----------------------

ARTICLE 8
     REAL ESTATE TAXES................................................................................... 25
     -----------------
     8.1    Payments on Account of Real Estate Taxes..................................................... 25
            ----------------------------------------
     8.2    Abatement.................................................................................... 26
            ---------

ARTICLE 9
     OPERATING AND UTILITY EXPENSES...................................................................... 27
     ------------------------------
     9.1    Definitions.................................................................................. 27
            -----------
     9.2    Tenant's Payment of Operating Expenses....................................................... 27
            --------------------------------------

ARTICLE 10
     INDEMNITY AND PUBLIC LIABILITY INSURANCE............................................................ 28
     ----------------------------------------
     10.1   Tenant's Indemnity........................................................................... 28
            ------------------
     10.2   Tenant Insurance............................................................................. 29
            ----------------
     10.3   Tenant's Risk................................................................................ 29
            -------------
     10.4   Waiver of Subrogation........................................................................ 30
            ---------------------

ARTICLE 11
     FIRE, EMINENT DOMAIN, ETC........................................................................... 30
     -------------------------
     11.1   Landlord's Right of Termination.............................................................. 30
            -------------------------------
     11.2   Restoration; Tenant's Right of Termination................................................... 30
            ------------------------------------------
     11.3   Landlord's Insurance......................................................................... 31
            --------------------
     11.4   Abatement of Rent............................................................................ 31
            -----------------
     11.5   Condemnation Award........................................................................... 31
            ------------------

ARTICLE 12
     HOLDING OVER; SURRENDER............................................................................. 32
     -----------------------
     12.1   Holding Over................................................................................. 32
            ------------
     12.2   Surrender of Premises........................................................................ 32
            ---------------------
</TABLE>

                                     (ii)
<PAGE>

<TABLE>
<S>                                                                                                       <C>
ARTICLE 13
     RIGHTS OF MORTGAGEES; TRANSFER OF TITLE............................................................. 32
     ---------------------------------------
     13.1   Rights of Mortgagees......................................................................... 33
            --------------------
     13.2   Assignment of Rents and Transfer of Title.................................................... 33
            -----------------------------------------
     13.3   Notice to Mortgagee.......................................................................... 34
            -------------------

ARTICLE 14
     DEFAULT; REMEDIES................................................................................... 34
     -----------------
     14.1   Tenant's Default............................................................................. 34
            ----------------
     14.2   Landlord's Remedies.......................................................................... 38
            -------------------
     14.3   Additional Rent.............................................................................. 39
            ---------------
     14.4   Remedying Defaults........................................................................... 40
            ------------------
     14.5   Remedies Cumulative.......................................................................... 40
            -------------------
     14.6   Attorneys' Fees.............................................................................. 40
            ---------------
     14.7   Waiver....................................................................................... 40
            ------
     14.8   Security Deposit............................................................................. 41
            ----------------
     14.9   Landlord's Default........................................................................... 41
            ------------------

ARTICLE 15
     MISCELLANEOUS PROVISIONS............................................................................ 41
     ------------------------
     15.1   Rights of Access............................................................................. 41
            ----------------
     15.2   Covenant of Quiet Enjoyment.................................................................. 42
            ---------------------------
     15.3   Landlord's Liability......................................................................... 42
            --------------------
     15.4   Estoppel Certificate......................................................................... 43
            --------------------
     15.5   Relocation................................................................................... 43
            ----------
     15.6   Brokerage.................................................................................... 43
            ---------
     15.7   Rules and Regulations........................................................................ 43
            ---------------------
     15.8   Invalidity of Particular Provisions.......................................................... 43
            -----------------------------------
     15.9   Provisions Binding, Etc...................................................................... 44
            -----------------------
     15.10  Recording.................................................................................... 44
            ---------
     15.11  Notice....................................................................................... 44
            ------
     15.12  When Lease Becomes Binding; Entire Agreement; Modification................................... 45
            ----------------------------------------------------------
     15.13  Paragraph Headings and Interpretation of Sections............................................ 45
            -------------------------------------------------
     15.14  Dispute Resolution........................................................................... 45
            ------------------
     15.15  Financial Statements......................................................................... 45
            --------------------
     15.16  Waiver of Jury Trial......................................................................... 46
            --------------------
     15.17  Time Is of the Essence....................................................................... 46
            ----------------------
     15.18  Multiple Counterparts........................................................................ 46
            ---------------------
     15.19  Governing Law................................................................................ 46
            -------------
</TABLE>

                                     (iii)
<PAGE>

EXHIBIT A
     Location Plan of Premises.............................................. A-1

EXHIBIT B
     Site Plan of Building.................................................. B-1

EXHIBIT C
     Commencement Date Letter............................................... C-1

EXHIBIT D
     Operating Expenses..................................................... D-1

EXHIBIT E
     Rules and Regulations of Building...................................... E-1

                                     (iv)
<PAGE>

                                   L E A S E
                                   ---------

     THIS LEASE is dated as of January __, 2000 between the Landlord and the
Tenant named below, and is of space in the Building described below.

                                    ARTICLE
                            BASIC DATA; DEFINITIONS
                            -----------------------

     1.1  Basic Data.  Each reference in this Lease to any of the following
          ----------
terms shall be construed to incorporate the data for that term set forth in this
Section:

     Landlord: BCIA New England Holdings LLC, a Delaware limited liability
company

     Landlord's Address: c/o Boston Capital Institutional Advisors LLC, One
Boston Place, Boston, MA 02108

     Tenant: PSW Technologies, Inc., a Delaware corporation

     Tenant's Address:   Building 3, Suite 2000
                         6300 Bridgepoint Parkway
                         Austin, TX 78730
                         Attn: General Counsel

     Property:  The land located in Framingham, Massachusetts, together with the
Building and other improvements thereon, all as shown on the site plan attached
hereto as Exhibit B.
          ---------

     Building:  The three-story building commonly known and numbered as 111
Speen Street, shown on the site plan attached hereto as Exhibit B.
                                                        ---------

     Building Rentable Area: Agreed to be 107,984 square feet.

     Premises:  The portion of the Building shown on the location plan attached
hereto as Exhibit A.
          ---------

     Premises Rentable Area:  Agreed to be 5,290 square feet.

     Basic Rent: The Basic Rent is as follows:
<PAGE>

-----------------------------------------------------------------------------
 RENTAL PERIOD                               ANNUAL BASIC RENT   MONTHLY
                                                                 PAYMENT
-----------------------------------------------------------------------------
 From the Rent Commencement Date to the      $158,700.00         $13,225.00
 day immediately preceding the fifth (5th)
 anniversary of the Rent Commencement
 Date.
-----------------------------------------------------------------------------

Notwithstanding the foregoing statement of Basic Rent, in the event that Tenant
uses any amount of Landlord's Contribution as reimbursement for the costs of
Tenant's Work, Landlord will amortize such amount into equal monthly payments
over the period beginning on the date that the next monthly payment of Basic
Rent is due from Tenant after Landlord has paid Landlord's Contribution to
Tenant and ending on the day immediately prior to the fifth anniversary of the
Rent Commencement Date at an interest rate of ten percent (10%) per annum. Such
amortized amount shall be added to the monthly Basic Rent and Tenant shall pay
such amount to Landlord at the times and in the manner provided in this Lease.

     Base Year for Operating Expenses:  Calendar year 2000.

     Base Year for Taxes:  The twelve month period beginning June 30, 1999.

     Tenant's Proportionate Share: 4.90% (which is based on the ratio of (a)
Premises Rentable Area to (b) Building Rentable Area ).

     Security Deposit: $26,450.00, to be held and disposed of as provided in
Section 14.8.

     Scheduled Commencement Date: February 1, 2000.

     Rent Commencement Date: March 1, 2000.

     Term: Five (5) years, commencing on the Commencement Date and expiring at
the close of the day immediately preceding the fifth (5th) anniversary of the
Rent Commencement Date, except that if the Rent Commencement Date is other than
the first day of a calendar month, the expiration of the Term shall be at the
close of the last day of the calendar month in which such anniversary falls.
The Term shall include any extension thereof that is expressly provided for by
this Lease and that is effected strictly in accordance with this Lease; if no
extension of the Term is expressly provided for by this Lease, no right to
extend the Term shall be implied by this provision.

                                       2
<PAGE>

     Initial General Liability Insurance: $2,000,000.00 per
occurrence/$3,000,000.00 aggregate (combined single limit) for property damage,
bodily injury or death.

     Permitted Uses: Executive and general offices.

     Tenant's Share of Parking Spaces: The number of parking spaces equal to 4.0
spaces for every 1,000 square foot of Premises Rentable Area.

     Cost of Tenant's Electricity for Lights & Plugs: $5,290.00 per year
(based on $1.00 per rentable square foot).

     Landlord's Contribution: An amount not to exceed $26,450.00.

     Landlord's Construction Representative: Jan Craig, CB Richard Ellis.

     Tenant's Construction Representative: Shelbi Hearn

     1.2  Definitions. When used in Lease, the capitalized terms set forth
          -----------
below shall bear the meanings set forth below.

     Adequate Assurance: As defined in Section 14.1.

     Adequate Assurance of Future Performance: As defined in Section 14.1.

     Additional Rent: All charges and sums payable by Tenant as set forth in
this Lease, other than and in addition to Basic Rent.

     Agent: BCIA Property Management LLC, or such other person or entity from
time to time designated by Landlord.

     Alterations: As defined in Section 5.2.

     Bankruptcy Code: As defined in Section 14.1.

     Base Operating Expenses: Actual Operating Expenses for the Base Year for
Operating Expenses.

     Base Taxes: Actual Taxes assessed for the Base Year for Taxes.

     Base Year for Operating Expenses: As defined in Section 1.1.

                                       3
<PAGE>

     Base Year for Taxes: As defined in Section 1.1.

     Basic Rent: As defined in Section 1.1.

     Brokers: Spaulding & Slye and Equis Corporation

     Building: As defined in Section 1.1.

     Building Rentable Area: As defined in Section 1.1.

     Business Day: All days except Saturdays, Sundays, and other days when
national banks in the state in which the property is located are not open for
business.

     Commencement Date: As defined in Section 4.1.

     Common Facilities: As defined in Section 2.2.

     Cost of Tenant's Electricity for Lights & Plugs: As defined in Section 1.1.

     Default of Tenant: As defined in Section 14.1.

     Environmental Condition: Any disposal, release or threat of release of
Hazardous Materials on, from or about the Building or the Property or storage of
Hazardous Materials on, from or about the Building or the Property.

     Environmental Laws: Any federal, state and/or local statute, ordinance,
bylaw, code, rule and/or regulation now or hereafter enacted, pertaining to any
aspect of the environment or human health, including, without limitation,
Chapter 21C, Chapter 21D, and Chapter 21E of the General Laws of Massachusetts
and the regulations promulgated by the Massachusetts Department of Environmental
Protection, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. (S) 9601 et seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. (S) 6901 et seq., the Toxic Substances Control Act, 15
U.S.C. (S)2061 et seq., the Federal Clean Water Act, 33 U.S.C. (S)1251, and the
Federal Clean Air Act, 42 U.S.C. (S)7401 et seq.

     Essential Services: As defined in Section 7.6.

     Event of Bankruptcy: As defined in  Section 14.1.

     Force Majeure:  Collectively and individually, strikes or other labor
trouble, fire or other casualty, acts of God, governmental preemption of
priorities or other controls in connection with

                                       4
<PAGE>

a national or other public emergency or shortages of fuel, supplies or labor
resulting therefrom, or any other cause, whether similar or dissimilar, beyond
the reasonable control of the party required to perform an obligation.

     Holder: As defined in Section 13.1.

     Hazardous Materials:  Shall mean each and every element, compound, chemical
mixture, contaminant, pollutant, material, waste or other substance which is
defined, determined or identified as hazardous or toxic under any Environmental
Law, including, without limitation, any "oil," "hazardous material," "hazardous
waste," "hazardous substance" or "chemical substance or mixture", as the
foregoing terms (in quotations) are defined in any Environmental Laws.

     Initial General Liability Insurance: As defined in Section 1.1.

     Land: The land that constitutes a portion of the Property.

     Landlord: As defined in Section 1.1.

     Landlord's Construction Representative: As defined in Section 1.1.

     Landlord's Contribution: As defined in Section 1.1.

     Landlord's Address: As defined in Section 1.1.

     Mortgage: As defined in Section 13.1.

     Operating Expenses: As defined in Section 9.1.

     Operating Year: As defined in Section 9.1.

     Permitted Uses: As defined in Section 1.1.

     Plans: As defined in Section 4.2.

     Premises: As defined in Section 1.1.

     Premises Rentable Area: As defined in Section 1.1.

     Property: As defined in Section 1.1.

                                       5
<PAGE>

     Recapture Date: As defined in Section 6.4.

     Rent Commencement Date: As defined in Section 1.1.

     Rules and Regulations: As defined in Section 2.2.

     Scheduled Commencement Date: As defined in Section 1.1.

     Security Deposit: As defined in Section 1.1.

     Service Interruption: As defined in Section 7.6.

     Successor: As defined in Section 13.1.

     Taxes: As defined in Section 8.1.

     Tax Year: As defined in Section 8.1.

     Tenant: As defined in Section 1.1.

     Tenant's Address: As defined in Section 1.1.

     Tenant's Construction Representative: As defined in Section 1.1.

     Tenant's Proportionate Share: As defined in Section 1.1.

     Tenant's Removable Property: As defined in Section 5.2.

     Tenant's Work: As defined in Section 4.2.

     Term: As defined in Section 1.1.

     Tenant's Share of Parking Spaces: As defined is Section 1.1.

     Termination Date: As defined in Section 15.5.

     1.3  Enumeration of Exhibits.  The following Exhibits are a part of this
          -----------------------
Lease, are incorporated herein by reference attached hereto, and are to be
treated as a part of this Lease for all purposes.  Undertakings contained in
such Exhibits are agreements on the part of Landlord and Tenant, as the case may
be, to perform the obligations stated therein.

                                       6
<PAGE>

          Exhibit A - Location Plan of the Premises
          Exhibit B - Site Plan of Buildings
          Exhibit C - Commencement Date Letter
          Exhibit D - Operating Expenses
          Exhibit E - Rules and Regulations

                                   ARTICLE 2
                        PREMISES AND APPURTENANT RIGHTS
                        -------------------------------

     2.1  Lease of Premises.  Landlord hereby leases to Tenant and Tenant hereby
          -----------------
leases from Landlord the Premises for the Term and upon the terms and conditions
hereinafter set forth.

     2.2  Appurtenant Rights and Reservations.
          -----------------------------------

          (a) Tenant shall have, as appurtenant to the Premises, the non-
exclusive right to use, and permit its invitees to use in common with Landlord
and others, (i) public or common lobbies, hallways, stairways, elevators and
common walkways necessary for access to the Building and the Premises, and if
the portion of the Premises on any floor includes less than the entire floor,
the common toilets, corridors and elevator lobby of such floor; and (ii) the
access roads, driveways, parking areas, loading areas, pedestrian sidewalks,
landscaped areas, trash enclosures, recreation areas and other areas or
facilities, if any, which are located in or on the Property and designated by
Landlord from time to time for the non-exclusive use of tenants and other
occupants of the Building (the "Common Facilities"); but such rights shall
always be subject to reasonable rules and regulations from time to time
established by Landlord pursuant to Section 15.7 (the "Rules and Regulations")
and to the right of Landlord to designate and change from time to time areas and
facilities so to be used.

          (b) Excepted and excluded from the Premises and the Common Facilities
are the ceiling, floor, perimeter walls and exterior windows (except the inner
surface of each thereof), and any space in the Premises used for shafts, stacks,
pipes, conduits, fan rooms, ducts, electric or other utilities, sinks or other
Building facilities, but the entry doors (and related glass and finish work) to
the Premises are a part thereof.  Landlord shall have the right to place in the
Premises (but in such manner as to reduce to a minimum interference with
Tenant's use of the Premises) interior storm windows, sun control devices,
utility lines, equipment, stacks, pipes, conduits, ducts and the like.  In the
event that Tenant shall install any hung ceilings or walls in the Premises,
Tenant shall install and maintain, as Landlord may require, proper access panels
therein to afford access to any facilities above the ceiling or within or behind
the walls.  Tenant shall be entitled to install any such ceilings or walls only
in compliance with the other terms and conditions of this Lease.

                                       7
<PAGE>

          (c) Tenant shall also have the right (subject to the Rules and
Regulations) to use, on a non-exclusive, unreserved basis, Tenant's Share of
Parking Spaces.

          (d) Landlord shall cause Tenant's name to be listed on the building
directory in the Building lobby.

     2.3  Option to Extend.
          ----------------

          (a)  Provided that, at the time of such exercise, (i) this Lease is in
full force and effect, (ii) no Default of Tenant shall have occurred and be
continuing (either at the time of exercise or at the commencement of an Extended
Term), (iii) Tenant shall not have paid any amount of Basic Rent or Additional
Rent after the due date therefor twice in the prior twelve (12) month period,
and (iv) Tenant shall then be occupying the entire Premises and shall not have
assigned or sublet the Premises, Tenant shall have the right and option to
extend the Term of this Lease for one (1) extended term (the "Extended Term") of
five (5) years by giving written notice to Landlord not later than nine (9)
months nor earlier than twelve (12) months prior to the expiration date of the
Initial Term. The effective giving of such notice of extension by Tenant shall
automatically extend the Term of this Lease for the Extended Term, and no
instrument of renewal or extension need be executed.  In the event that Tenant
fails timely to give such notice to Landlord, this Lease shall automatically
terminate at the end of the Initial Term, and Tenant shall have no further
option to extend the Term of this Lease.  The Extended Term shall commence on
the day immediately succeeding the expiration date of the Initial Term, and
shall end on the day immediately preceding the fifth anniversary of the first
day of the Extended Term. The Extended Term shall be on all the terms and
conditions of this Lease, except:  (i) during the Extended Term, Tenant shall
have no further option to extend the Term, and (ii) the Basic Rent for the
Extended Term shall be the greater of (x) the Fair Market Rental Value for the
Premises as of the commencement of the Extended Term, determined pursuant to
paragraph (b), or (y) the Basic Rent due for the last year of the Initial Term.

     (b)  Promptly after receiving Tenant's notice extending the Term of this
Lease pursuant to paragraph (a) above, Landlord shall provide Tenant with
Landlord's good faith estimate of the Fair Market Rental Value of the Premises
for the Extended Term based upon rents being paid by tenants renewing leases in
the area in which the Property is located.  If Tenant is unwilling to accept
Landlord's estimate of Fair Market Rental Value as set forth in Landlord's
notice referred to above, and the parties are unable to reach agreement thereon
within thirty (30) days after the delivery of such notice by Landlord, then
Landlord and Tenant shall, not later than thirty (30) days after the expiration
of the aforesaid thirty (30) day period, each retain a real estate professional
with at least ten (10) years continuous experience in the business of appraising
or marketing commercial real estate in the greater Boston area who shall, within
thirty (30) days of his or her selection, prepare a written report summarizing
his or her determination of the Fair

                                       8
<PAGE>

Market Rental Value for such Extended Term. Landlord and Tenant shall
simultaneously exchange such reports; provided, however, if either party has not
obtained such a report within sixty (60) days after Tenant receives Landlord's
notice, then the determination set forth in the other party's report shall be
final and binding upon the parties. If both parties receive reports within such
time and the lower determination is within ten percent (10%) of the higher
determination, then the greater of (i) the annual Basic Rent in effect
immediately preceding such Extended Term or (ii) the average of the two
determinations shall be deemed to be the Fair Market Rental Value for such
Extended Term. If the lower determination is not within ten percent (10%) of the
higher determination, then Landlord and Tenant shall mutually select a person
with the qualifications stated above (the "Final Professional") to resolve the
dispute as to the Fair Market Rental Value for such Extended Term. If Landlord
and Tenant cannot agree upon the designation of the Final Professional within
thirty (30) days of the exchange of the first valuation reports, either party
may apply to the American Arbitration Association, the Greater Boston Real
Estate Board, or any successor thereto, for the designation of a Final
Professional. Within ten (10) days of the selection of the Final Professional,
Landlord and Tenant shall each submit to the Final Professional a copy of their
respective real estate professional's determination of the Fair Market Rental
Value for such Extended Term. The Final Professional shall not perform his or
her own valuation, but rather shall, within thirty (30) days after such
submissions, select the submission which is closest to the determination of the
Fair Market Rental Value for such Extended Term which the Final Professional
would have made acting alone. The Final Professional shall give notice of his or
her selection to Landlord and Tenant and such decision shall be final and
binding upon Landlord and Tenant, provided, however, in no event shall the Fair
Market Rental Value be less than the annual Basic Rent in effect immediately
preceding such Extended Term. Each party shall pay the fees and expenses of its
real estate professional and counsel, if any, in connection with any proceeding
under this paragraph, and the parties shall each pay one-half of the fees and
expenses of the Final Professional.

                                   ARTICLE 3
                                  BASIC RENT
                                  ----------

     3.1  Payment.
          -------

          (a) Tenant agrees to pay the Basic Rent and Additional Rent to
Landlord, or as directed by Landlord, commencing on the Rent Commencement Date,
without offset, abatement (except as provided in Section 11.1), deduction or
demand.  Basic Rent shall be payable in equal monthly installments, in advance,
on the first day of each and every calendar month during the Term of this Lease,
to Landlord at Landlord's Address or at such other place as Landlord shall from
time to time designate by notice, in lawful money of the United States. In the
event that any installment of Basic Rent or any regularly scheduled payment of
Additional Rent is not paid within three (3) days of when due, Tenant shall pay,
in addition to any charges under Section 14.4, at Landlord's request an
administrative fee equal to 5% of the overdue payment. Landlord

                                       9
<PAGE>

and Tenant agree that all amounts due from Tenant under or in respect of this
Lease, whether labeled Basic Rent, Additional Rent or otherwise, shall be
considered as rental reserved under this Lease for all purposes, including
without limitation regulations promulgated pursuant to the Bankruptcy Code, and
including further without limitation Section 502(b) thereof.

          (b) Basic Rent for any partial month shall be pro-rated on a daily
basis, and if the first day on which Tenant must pay Basic Rent shall be other
than the first day of a calendar month, the first payment which Tenant shall
make to Landlord shall be equal to a proportionate part of the monthly
installment of Basic Rent for the partial month from the first day on which
Tenant must pay Basic Rent to the last day of the month in which such day
occurs, plus the installment of Basic Rent for the succeeding calendar month.

                                   ARTICLE 4
                          COMMENCEMENT AND CONDITION
                          --------------------------

     4.1  Commencement Date.  The Commencement Date shall be the first to occur
          -----------------
of:

          (a) the Scheduled Commencement Date set forth in Section 1.1 hereof,
                                                           -----------
or

          (b) the day Tenant's personnel occupy all or any part of the Premises
for the conduct of its business prior to the Scheduled Commencement Date.

Promptly upon the occurrence of the Commencement Date, Landlord and Tenant shall
enter into a letter agreement substantially in the form annexed hereto as
Exhibit C, but the failure by either party to execute such a letter shall have
---------
no effect on the Commencement Date, as hereinabove determined.

     4.2  Preparation of the Premises.
          ---------------------------

          (a) Tenant is currently preparing, at its sole cost and expense, plans
for the layout of the improvements which Tenant desires to have performed in the
Premises (the "Tenant's Plans").  Tenant's Plans shall be submitted to Landlord
for its approval no later than the date of execution of this Lease and Landlord
shall approve or disapprove of Tenant's Plans within five (5) Business Days of
receiving them. Any disapproval shall be accompanied by a reasonably specific
statement of reasons therefor. At Tenant's sole cost and expense, Tenant shall
cause Tenant's Plans to be revised in a manner sufficient to remedy the
Landlord's objections and/or respond to the Landlord's concerns and for such
revised plans to be redelivered to Landlord, and Landlord shall either approve
or disapprove Tenant's revised plans within five (5) Business Days following the
date of submission. Tenant's Plans shall be stamped by a Massachusetts-
registered architect and engineer, such architect and engineer being subject to

                                      10
<PAGE>

Landlord's approval, and shall comply with all applicable laws, ordinances and
regulations (including, without limitation, the applicable requirements of the
Americans with Disabilities Act of 1990, and the regulations promulgated
thereunder) and the requirements of the Rules and Regulations and shall be in a
form satisfactory to appropriate governmental authorities responsible for
issuing permits, approvals and licenses required for construction. If Tenant's
Plans shall not be approved by the Landlord by June 1, 2000 (the "Final Plans
Date"), Landlord shall have the right, without limitation of other rights or
remedies, to terminate this Lease by giving notice thereof to the Tenant at any
time after the Final Plans Date (such termination right to end if such time, if
any, and Landlord approves Tenant's Plans). Upon such termination, this Lease
shall cease and come to an end in accordance with the terms of such notice and
without further obligation or liability on the part of either party, except that
Tenant shall pay to Landlord the damages suffered by Landlord by reason of such
termination including, without limitation, an amount equal to Landlord's out-of-
pocket expenses incurred in connection with this Lease, including, without
limitation, brokerage and legal fees through the effective termination date.

          (b)  Promptly after approval of Tenant's Plans and execution of this
lease by both parties, Tenant shall exercise all reasonable efforts to complete
the work specified therein necessary to prepare the Premises for Tenant's
occupancy ("Tenant's Work") and Landlord shall afford Tenant access to the
Premises for such purposes, provided, however, that such right of access shall
be upon all of the terms and conditions of this Lease except for the payment of
Basic Rent and Additional Rent. All Tenant's Work shall be completed in
accordance with the requirements set forth in the Rules and Regulations.
Landlord shall reimburse Tenant for the costs incurred by the Tenant with
respect to the performance of Tenant's Work (the "Cost of Tenant's Work") up to
the amount of Landlord's Contribution. To the extent that the Cost of Tenant's
Work exceeds the Landlord's Contribution, Tenant shall be entirely responsible
for such excess. Landlord's Contribution shall be payable by Landlord to Tenant
(or, at Landlord's election, directly to Tenant's contractor) upon written
requisition to Landlord in installments according to reasonable construction
disbursement procedures, as Tenant's Work progresses. In any case, prior to
payment of any such installment Tenant shall deliver to Landlord a written
request, which request shall be given no more frequently than once every thirty
(30) days, for such disbursement, which shall be accompanied by: (i) invoices
for Tenant's Work covered by any previous requisition; (ii) copies of partial
lien waivers or final lien waivers (in the case of a final installment); and
(iii) a certificate signed by the Tenant's architect and an officer of the
Tenant certifying that Tenant's Work represented by the aforementioned invoices
has been completed substantially in accordance with Tenant's Plans and that the
remaining portion of Landlord's Contribution is sufficient to pay in full for
the completion of Tenant's Work. If at any time the amount of Landlord's
Contribution is insufficient to pay for the remaining amount of Tenant's Work,
then Tenant shall pay from its own funds all further sums necessary to enable
Tenant and Tenant's architect to again make the certification required under
(iii) above.

                                       11
<PAGE>

          (c)  The Premises are being leased in their as is condition. The
Premises are being leased without representation or warranty by Landlord. Tenant
acknowledges that it has inspected the Premises and common areas of the Building
and, except for Tenant's Work, has found them satisfactory.

                                   ARTICLE 5
                                USE OF PREMISES
                                ---------------

     5.1  Permitted Use.
          -------------

          (a)  Tenant agrees that the Premises shall be used and occupied by
Tenant only for Permitted Uses and for no other use without Landlord's express
written consent.

          (b)  Tenant agrees to conform to the following provisions during the
Term of this Lease:

               (i)   Tenant shall cause all freight to be delivered to or
     removed from the Building and the Premises in accordance with the Rules and
     Regulations established by Landlord therefor;

               (ii)  Tenant will not place on the exterior of the Premises
     (including both interior and exterior surfaces of doors and interior
     surfaces of windows) or on any part of the Building outside the Premises,
     any sign, symbol, advertisement or the like visible to public view outside
     of the Premises. Landlord will not withhold consent for signs or lettering
     on the entry doors to the Premises provided such signs conform to sign
     standards for the building adopted by Landlord in its sole discretion and
     Tenant has submitted to Landlord a plan or sketch in reasonable detail
     (showing, without limitation, size, color, location, materials and method
     of affixation) of the sign to be placed on such entry doors. Landlord
     agrees, however, to maintain a tenant directory in the lobby of the
     Building (and, in the case of multi-tenant floors, in that floor's elevator
     lobby) in which will be placed Tenant's name and the location of the
     Premises in the Building;

               (iii) Tenant shall not perform any act or carry on any practice
     which may injure the Premises, or any other part of the Building, or cause
     any offensive odors or loud noise or constitute a nuisance or a menace to
     any other tenant or tenants or other persons in the Building;

               (iv)  Tenant shall, in its use of the Premises, comply with the
     requirements of all applicable governmental laws, rules and regulations,
     including,

                                       12
<PAGE>

     without limitation, the Americans With Disabilities Act of 1990 and the
     regulations of the Massachusetts Architectural Access Board; and

               (v)  Tenant shall not abandon the Premises.

     5.2  Installations and Alterations by Tenant.
          ---------------------------------------

          (a)  Tenant shall make no alterations, additions (including, for the
purposes hereof, wall-to-wall carpeting), or improvements (collectively,
"Alterations") in or to the Premises (including any Alterations, other than
Landlord's Work, necessary for Tenant's initial occupancy of the Premises)
without Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed with respect to non-structural Alterations that
do not affect or involve the Building's electrical, plumbing or mechanical
systems or any other Building systems. Notwithstanding the foregoing, Tenant may
make non-structural Alterations that do not affect or involve the Building's
electrical, plumbing or mechanical systems or any other Building systems and
costing less than $5,000.00 without Landlord's prior consent. Any Alterations
shall be in accordance with the Rules and Regulations in effect with respect
thereto and with plans and specifications meeting the requirements set forth in
the Rules and Regulations and approved in advance by Landlord. All work shall be
(i) be performed in a good and workmanlike manner and in compliance with all
applicable laws, ordinances and regulations; (ii) be made at Tenant's sole cost
and expense; (iii) become part of the Premises and the property of Landlord; and
(iv) be coordinated with any work being performed by Landlord in such a manner
as not to damage the Building or interfere with the construction or operation of
the Building. At Landlord's request, Tenant shall, before its work is started,
secure assurances satisfactory to Landlord in its reasonable discretion
protecting Landlord against claims arising out of the furnishing of labor and
materials for the Alterations.

     If any Alterations shall involve the removal of fixtures, equipment or
other property in the Premises which are not Tenant's Removable Property, such
fixtures, equipment or property shall be promptly replaced by Tenant at its
expense with new fixtures, equipment or property of like utility and of at least
equal quality.

          (b)  All articles of personal property and all business fixtures,
machinery and equipment and furniture owned or installed by Tenant solely at its
expense in the Premises ("Tenant's Removable Property") shall remain the
property of Tenant and may be removed by Tenant at any time prior to the
expiration or earlier termination of the Term, provided that Tenant, at its
expense, shall repair any damage to the Building caused by such removal.

          (c)  Notice is hereby given that Landlord shall not be liable for any
labor or materials furnished or to be furnished to Tenant upon credit, and that
no mechanic's or other lien for any such labor or materials shall attach to or
affect the reversion or other estate or interest of

                                       13
<PAGE>

Landlord in and to the Premises, the Building or the Property. To the maximum
extent permitted by law, before such time as any contractor commences to perform
work on behalf of Tenant, such contractor (and any subcontractors) shall furnish
a written statement acknowledging the provisions set forth in the prior clause.
Tenant agrees to pay promptly when due the entire cost of any work done on
behalf of Tenant, its agents, employees or independent contractors, and not to
cause or permit any liens for labor or materials performed or furnished in
connection therewith to attach to all or any part of the Property and
immediately to discharge any such liens which may so attach. If, notwithstanding
the foregoing, any lien is filed against all or any part of the Property for
work claimed to have been done for, or materials claimed to have been furnished
to, Tenant or its agents, employees or independent contractors, Tenant, at its
sole cost and expense, shall cause such lien to be dissolved promptly after
receipt of notice that such lien has been filed, by the payment thereof or by
the filing of a bond sufficient to accomplish the foregoing. If Tenant shall
fail to discharge any such lien, Landlord may, at its option, discharge such
lien and treat the cost thereof (including attorneys' fees incurred in
connection therewith) as Additional Rent payable upon demand, it being expressly
agreed that such discharge by Landlord shall not be deemed to waive or release
the default of Tenant in not discharging such lien. Tenant shall indemnify and
hold Landlord harmless from and against any and all expenses, liens, claims,
liabilities and damages based on or arising, directly or indirectly, by reason
of the making of any alterations, additions or improvements by or on behalf of
Tenant to the Premises under this Section, which obligation shall survive the
expiration or termination of this Lease.

          (d)  In the course of any work being performed by Tenant (including,
without limitation, the "field installation" of any Tenant's Removable
Property), Tenant agrees to use labor compatible with that being employed by
Landlord for work in the Building or on the Property or other buildings owned by
Landlord or its affiliates (which term, for purposes hereof, shall include,
without limitation, entities which control or are under common control with or
are controlled by Landlord or, if Landlord is a partnership or limited liability
company, by any partner or member of Landlord) and not to employ or permit the
use of any labor or otherwise take any action which might result in a labor
dispute involving personnel providing services in the Building or on the
Property pursuant to arrangements made by Landlord.

      5.3 Extra Hazardous Use.  Tenant covenants and agrees that Tenant will not
          -------------------
do or permit anything to be done in or upon the Premises, or bring in anything
or keep anything therein, which shall increase the rate of property or liability
insurance on the Premises or the Property above the standard rate applicable to
Premises being occupied for the Permitted Uses. If the premium or rates payable
with respect to any policy or policies of insurance purchased by Landlord or
Agent with respect to the Property increases as a result of any act or activity
on or use of the Premises during the Term or payment by the insurer of any claim
arising from any act or neglect of Tenant, its employees, agents, contractors or
invitees, Tenant shall pay such increase, from time to time, within fifteen (15)
days after demand therefor by Landlord, as Additional Rent.

                                       14
<PAGE>

     5.4  Hazardous Materials.
          -------------------

          (a)  Tenant may use chemicals such as adhesives, lubricants, ink,
solvents and cleaning fluids of the kind and in amounts and in the manner
customarily found and used in business offices in order to conduct its business
at the Premises and to maintain and operate the business machines located in the
Premises. Tenant shall not use, store, handle, treat, transport, release or
dispose of any other Hazardous Materials on or about the Premises or the
Property without Landlord's prior written consent, which Landlord may withhold
or condition in Landlord's sole discretion.

          (b)  Any handling, treatment, transportation, storage, disposal or use
of Hazardous Materials by Tenant in or about the Premises or the Property and
Tenant's use of the Premises shall comply with all applicable Environmental
Laws.

          (c)  Tenant shall indemnify, defend upon demand with counsel
reasonably acceptable to Landlord, and hold Landlord harmless from and against,
any liabilities, losses claims, damages, interest, penalties, fines, attorneys'
fees, experts' fees, court costs, remediation costs, and other expenses which
result from the use, storage, handling, treatment, transportation, release,
threat of release or disposal of Hazardous Materials in or about the Premises or
the Property by Tenant or Tenant's agents, employees, contractors or invitees.

          (d)  Tenant shall give written notice to Landlord as soon as
reasonably practicable of (i) any communication received by Tenant from any
governmental authority concerning Hazardous Materials which relates to the
Premises or the Property, and (ii) any Environmental Condition of which Tenant
is aware.

                                   ARTICLE 6
                           ASSIGNMENT AND SUBLETTING
                           -------------------------

     6.1  Prohibition.
          -----------

          (a)  Tenant covenants and agrees that neither this Lease nor the term
and estate hereby granted, nor any interest herein or therein, will be assigned,
mortgaged, pledged, encumbered or otherwise transferred, whether voluntarily,
involuntarily, by operation of law or otherwise, and that neither the Premises
nor any part thereof will be encumbered in any manner by reason of any act or
omission on the part of Tenant, or used or occupied or permitted to be used or
occupied, by anyone other than Tenant, or for any use or purpose other than a
Permitted Use, or be sublet (which term, without limitation, shall include
granting of concessions, licenses and the like) in whole or in part, or be
offered or advertised for assignment or subletting by

                                       15
<PAGE>

Tenant or any person acting on behalf of Tenant, without, in each case, the
prior written consent of Landlord. Without limiting the foregoing, any agreement
pursuant to which: (x) Tenant is relieved from the obligation to pay, or a third
party agrees to pay on Tenant's behalf, all or any portion of the Basic Rent or
Additional Rent under this Lease; and/or (y) a third party undertakes or is
granted by or on behalf of Tenant the right to assign or attempt to assign this
Lease or sublet or attempt to sublet all or any portion of the Premises, shall
for all purposes hereof be deemed to be an assignment of this Lease and subject
to the provisions of this Article 6. The provisions of this paragraph (a) shall
apply to a transfer (by one or more transfers) of a controlling portion of or
interest in the stock or partnership or membership interests or other evidences
of equity interests of Tenant as if such transfer were an assignment of this
Lease; provided that if equity interests in Tenant at any time are or become
traded on a public stock exchange, the transfer of equity interests in Tenant on
a public stock exchange shall not be deemed an assignment within the meaning of
this Article.

          (b)  The provisions of paragraph (a) shall not apply to either (x)
transactions with an entity into or with which Tenant is merged or consolidated,
or to which all or substantially all of Tenant's assets are transferred, or (y)
transactions with any entity which controls or is controlled by Tenant or is
under common control with Tenant; provided that in any such event:

               (i)   the successor to Tenant has a net worth, computed in
     accordance with generally accepted accounting principles consistently
     applied, at least equal to the greater of (1) the net worth of Tenant
     immediately prior to such merger, consolidation or transfer, or (2) the net
     worth of Tenant herein named on the date of this Lease,

               (ii)  proof satisfactory to Landlord of such net worth shall have
     been delivered to Landlord at least ten (10) days prior to the effective
     date of any such transaction, and

               (iii) the assignee agrees directly with Landlord, by written
     instrument in form satisfactory to Landlord in its reasonable discretion,
     to be bound by all the obligations of Tenant hereunder, including, without
     limitation, the covenant against further assignment and subletting.

     6.2  Acceptance of Rent.  If this Lease be assigned, or if the Premises or
          ------------------
any part thereof be sublet or occupied by anyone other than Tenant, whether or
not in violation of the terms and conditions of the Lease, Landlord may, at any
time and from time to time, collect rent and other charges from the assignee,
subtenant or occupant, and apply the net amount collected to the rent and other
charges herein reserved, but no such assignment, subletting, occupancy,
collection or modification of any provisions of this Lease shall be deemed a
waiver of this covenant, or the acceptance of the assignee, subtenant or
occupant as a tenant or a release of

                                       16
<PAGE>

Tenant from the further performance of covenants on the part of Tenant to be
performed hereunder. Any consent by Landlord to a particular assignment,
subletting or occupancy or other act for which Landlord's consent is required
under paragraph (a) of Section 6.1 shall not in any way diminish the prohibition
stated in paragraph (a) of Section 6.1 as to any further such assignment,
subletting or occupancy or other act or the continuing liability of the original
named Tenant. No assignment or subletting hereunder shall relieve Tenant from
its obligations hereunder, and Tenant shall remain fully and primarily liable
therefor. Landlord may revoke any consent by Landlord to a particular
assignment, subletting or occupancy if the assignment or sublease does not
provide that the assignee, subtenant or other occupant agrees to be
independently bound by and upon all of the covenants, agreements, terms,
provisions and conditions set forth in this Lease on the part of Tenant to be
kept and performed.

     6.3  Excess Payments.  If Tenant assigns this Lease or sublets the Premises
          ---------------
or any portion thereof, Tenant shall pay to Landlord as Additional Rent fifty
percent (50%) of the amount, if any, by which (a) any and all compensation
received by Tenant as a result of such assignment or subletting, net of
reasonable expenses actually incurred by Tenant in connection with such
assignment or subletting, exceeds (b) in the case of an assignment, the Basic
Rent and Additional Rent under this Lease, and in the case of a subletting, the
portion of the Basic Rent and Additional Rent allocable to the portion of the
Premises subject to such subletting. Such payments shall be made on the date the
corresponding payments under this Lease are due. Notwithstanding the foregoing,
the provisions of this Section shall impose no obligation on Landlord to consent
to an assignment of this Lease or a subletting of all or a portion of the
Premises.

     6.4  Landlord's Recapture Right.  Notwithstanding anything herein to the
          --------------------------
contrary, in addition to withholding or granting consent with respect to any
proposed assignment of this Lease or proposed sublease of all or a portion of
the Premises, Landlord shall have the right, to be exercised in writing within
thirty (30) days after Tenant has given Landlord written notice that Tenant
intends to assign this Lease or sublease all or any portion of the Premises, to
terminate this Lease (in the event of a proposed assignment) or recapture that
portion of the Premises to be subleased (in the event of a proposed sublease).
In the case of a proposed assignment, this Lease shall terminate as of the date
(the "Recapture Date") which is sixty (60) days after the date of Landlord's
election as if such date were the last day of the Term of this Lease. If
Landlord exercises the rights under this Section in connection with a proposed
sublease, this Lease shall be deemed amended to eliminate the proposed sublease
premises from the Premises as of the Recapture Date, and thereafter all Basic
Rent and Additional Rent shall be appropriately prorated to reflect the
reduction of the Premises as of the Recapture Date.

     6.5  Further Requirements.  Tenant shall reimburse Landlord on demand, as
          --------------------
Additional Rent, for any out-of-pocket costs (including reasonable attorneys'
fees and expenses) incurred by Landlord in connection with any actual or
proposed assignment or sublease or other

                                       17
<PAGE>

act described in paragraph (a) of Section 6.1, whether or not consummated,
including the costs of making investigations as to the acceptability of the
proposed assignee or subtenant. Any sublease to which Landlord gives its consent
shall not be valid or binding on Landlord unless and until Tenant and the
sublessee execute a consent agreement in form and substance satisfactory to
Landlord in its reasonable discretion and a fully executed counterpart of such
sublease has been delivered to Landlord. In the event that Landlord consents to
any sublease under the provisions of this Article, the sublease shall provide
that: (i) the term of the sublease must end no later than one day before the
last day of the Term of this Lease; (ii) such sublease is subject and
subordinate to this Lease; (iii) Landlord may enforce the provisions of the
sublease, including collection of rents; and (iv) in the event of termination of
this Lease or reentry or repossession of the Premises by Landlord, Landlord may,
at its sole discretion and option, take over all of the right, title and
interest of Tenant, as sublessor, under such sublease, and such subtenant shall,
at Landlord's option, attorn to Landlord, but nevertheless Landlord shall not
(A) be liable for any previous act or omission of Tenant under such sublease;
(B) be subject to any defense or offset previously accrued in favor of the
subtenant against Tenant; or (C) be bound by any previous modification of such
sublease made without Landlord's written consent or by any previous prepayment
of more than one month's rent.

     6.6  Standards for Consent to Assignment and Subletting.   In the event
          --------------------------------------------------
Landlord does not exercise its option pursuant to Section 6.4 to recapture the
Premises or terminate this Lease in whole or in part and providing that Tenant
is not in default of any of Tenant's obligations under this Lease, Landlord's
consent to a proposed assignment or sublease shall not be unreasonably withheld,
provided and upon condition that:

               (i)   In Landlord's judgment the proposed assignee or subtenant
          is engaged in a business which is in keeping with the then standards
          of the Building and Property and the proposed use is limited to the
          Permitted Use expressly permitted under Section 1.1 and will not
          violate any negative covenant as to use contained in any other lease
          of space in the Property;

               (ii)  The proposed assignee or subtenant is a reputable person or
          entity with sufficient financial worth considering the responsibility
          involved, based on evidence provided by Tenant (and others) to
          Landlord, as determined by Landlord in its reasonable discretion;

               (iii) Neither (a) the proposed assignee or sublessee nor (b) any
          person or entity which, directly or indirectly, controls, is
          controlled by, or is under common control with, the proposed assignee
          or sublessee or any person or entity who controls the proposed
          assignee or sublessee, is then an occupant of any part of the
          Property;

                                       18
<PAGE>

               (iv)   The proposed assignee or sublessee is not a person or
          entity with whom Landlord is then negotiating to lease space at the
          Property;

               (v)    The proposed sublease or assignment shall be in form
          satisfactory to Landlord and shall comply with the applicable
          provisions of this Article 6;

               (vi)   There shall not be more than two business entities with a
          sublease of the Premises;

               (vii)  The amount of the aggregate rent to be paid by the
          proposed subtenant is not less than the then current market rent per
          rentable square foot for the Premises as determined by Landlord in its
          sole discretion, reasonably exercised; and

               (viii) Tenant shall not have (a) advertised or publicized in any
          way the availability of the Premises without prior notice to and
          approval by Landlord, or (b) listed the Premises for subletting,
          whether through a broker, agent, representative, or otherwise at a
          rental rate less than the greater of (1) the Annual Basic Rent and
          Additional Rent then payable hereunder for such space, or (2) the
          Annual Basic Rent and Additional Rent at which Landlord is then
          offering to lease other space in the Building.

                                   ARTICLE 7
                   RESPONSIBILITY FOR REPAIRS AND CONDITION
               OF PREMISES; SERVICES TO BE FURNISHED BY LANDLORD
               -------------------------------------------------

     7.1  Landlord Repairs.
          ----------------

          (a)  Except as otherwise provided in this Lease, Landlord agrees to
keep in good order, condition and repair the roof, public areas, exterior walls
(including exterior glass) and structure of the Building (including all
plumbing, mechanical and electrical systems installed by Landlord, but
specifically excluding any supplemental heating, ventilation or air conditioning
equipment or systems installed at Tenant's request or as a result of Tenant's
requirements in excess of building standard design criteria), all insofar as
they affect the Premises, except that Landlord shall in no event be responsible
to Tenant for the repair of glass in the Premises, the doors (or related glass
and finish work) leading to the Premises, or any condition in the Premises or
the Building caused by any act or neglect of Tenant, its invitees or
contractors. Landlord shall also keep and maintain all Common Facilities in a
good and clean order, condition and repair, free of snow and ice and
accumulation of dirt and rubbish, and shall keep and maintain all landscaped
areas in the Complex in a neat and orderly condition. Landlord shall not be

                                       19
<PAGE>

responsible to make any improvements or repairs to the Building other than as
expressly in this Section 7.1 provided, unless expressly provided otherwise in
this Lease.

          (b)  Landlord shall never be liable for any failure to make repairs
which Landlord has undertaken to make under the provisions of this Section 7.1
or elsewhere in this Lease, unless Tenant has given notice to Landlord of the
need to make such repairs, and Landlord has failed to commence to make such
repairs within a reasonable time after receipt of such notice, or fails to
proceed with reasonable diligence to complete such repairs.

     7.2  Tenant Repairs.
          --------------

          (a)  Tenant will keep the Premises and every part thereof neat and
clean, and will maintain the same in good order, condition and repair, excepting
only those repairs for which Landlord is responsible under the terms of this
Lease, reasonable wear and tear of the Premises, and damage by fire or other
casualty or as a consequence of the exercise of the power of eminent domain; and
Tenant shall surrender the Premises, at the end of the Term, in such condition.
Without limitation, Tenant shall comply with all laws, codes and ordinances from
time to time in effect and all directions, rules and regulations of governmental
agencies having jurisdiction, and the standards recommended by the local Board
of Fire Underwriters applicable to Tenant's use and occupancy of the Premises,
and shall, at Tenant's expense, obtain all permits, licenses and the like
required thereby. Subject to Section 10.4 regarding waiver of subrogation,
Tenant shall be responsible for the cost of repairs which may be made necessary
by reason of damage to the Building caused by any act or neglect of Tenant, or
its contractors or invitees (including any damage by fire or other casualty
arising therefrom).

          (b)  If repairs are required to be made by Tenant pursuant to the
terms hereof, and Tenant fails to make the repairs, upon not less than ten (10)
days' prior written notice (except that no notice shall be required in the event
of an emergency), Landlord may make or cause such repairs to be made (but shall
not be required to do so), and the provisions of Section 14.4 shall be
applicable to the costs thereof. Landlord shall not be responsible to Tenant for
any loss or damage whatsoever that may accrue to Tenant's stock or business by
reason of Landlord's making such repairs.

     7.3  Floor Load - Heavy Machinery.
          ----------------------------

          (a)  Tenant shall not place a load upon any floor in the Premises
exceeding the floor load per square foot of area which such floor was designed
to carry and which is allowed by law. Landlord reserves the right to prescribe
the weight and position of all business machines and mechanical equipment,
including safes, which shall be placed so as to distribute the weight. Business
machines and mechanical equipment shall be placed and maintained by Tenant at
Tenant's expense in settings sufficient, in Landlord's judgment, to absorb and
prevent vibration,

                                       20
<PAGE>

noise and annoyance. Tenant shall not move any safe, heavy machinery, heavy
equipment, freight, bulky matter or fixtures into or out of the Building without
Landlord's prior consent, which consent may include a requirement to provide
insurance, naming Landlord as an insured, in such amounts as Landlord may deem
reasonable.

          (b) If any such safe, machinery, equipment, freight, bulky matter or
fixtures requires special handling, Tenant agrees to employ only persons holding
a Master Rigger's License to do such work, and that all work in connection
therewith shall comply with applicable laws and regulations. Any such moving
shall be at the sole risk and hazard of Tenant, and Tenant will exonerate,
indemnify and save Landlord harmless against and from any liability, loss,
injury, claim or suit resulting directly or indirectly from such moving.

      7.4 Utility Services.
          ----------------

          (a) Landlord shall, on Business Days from 8:00 a.m. to 6:00 p.m. and
Saturdays from 8:00 a.m. to 1:00 p.m., furnish heating and cooling as normal
seasonal changes may require to provide reasonably comfortable space temperature
and ventilation for occupants of the Premises under normal business operation
and an electrical load not exceeding 3.0 watts per square foot of Premises
Rentable Area. If Tenant shall require air conditioning, heating or ventilation
outside the hours and days above specified, Landlord may furnish such service
and Tenant shall pay therefor such charges as may from time to time be in effect
for the Building upon demand as Additional Rent. In the event Tenant introduces
into the Premises personnel or equipment which overloads the capacity of the
Building system or in any other way interferes with the system's ability to
perform adequately its proper functions, supplementary systems may, if and as
needed, at Landlord's option, be provided by Landlord, and the cost of such
supplementary systems shall be payable by Tenant to Landlord upon demand as
Additional Rent.

          (b) Tenant shall be responsible for the payment of all utilities used
and consumed in the Premises. Tenant shall pay for all separately metered
utilities used and consumed in the Premises directly to the provider thereof.
Landlord shall charge Tenant the Cost of Tenant's Electricity for Lights and
Plugs set forth in Section 1.1 above, plus Tenant's Proportionate Share of the
electricity and natural gas used in connection with the HVAC system for the
Building. Tenant shall pay Landlord such amounts as Additional Rent hereunder
within thirty (30) days after receipt of each such invoice. The obligation to
pay for electricity used and consumed in the Premises during the last month of
the Term hereof shall survive expiration of the Term.

Landlord shall purchase and install, at Tenant's expense, all lamps, tubes,
bulbs, starters and ballasts. In order to assure that the foregoing requirements
are not exceeded and to avert possible adverse effect on the Building's electric
system, Tenant shall not, without Landlord's prior consent, connect any
fixtures, appliances or equipment to the Building's electric distribution

                                       21
<PAGE>

system other than personal computers, facsimile transceivers, typewriters,
pencil sharpeners, adding machines, photocopiers, word and data processors,
clocks, radios, hand-held or desk top calculators, dictaphones, desktop
computers and other similar small electrical equipment normally found in
business offices and not drawing more than 15 amps at 120/208 volts.

          (c) From time to time during the Term of this Lease, Landlord shall
have the right to have an electrical consultant selected by Landlord make a
survey of Tenant's electric usage, the result of which survey shall be
conclusively binding upon Landlord and Tenant. In the event that such survey
shows that Tenant has exceeded the requirements set forth in paragraph (b), in
addition to any other rights Landlord may have hereunder, Tenant shall, upon
demand, reimburse Landlord for the cost of such survey and the cost, as
determined by such consultant, of electricity usage in excess of such
requirements as Additional Rent.

      7.5 Other Services.
          --------------

          Landlord shall also provide:

          (a) Passenger elevator service from the existing passenger elevator
system in common with Landlord and others entitled thereto.

          (b) Warm water for lavatory purposes and cold water (at temperatures
supplied by the city in which the Property is located) for drinking, lavatory
and toilet purposes. If Tenant uses water for any purpose other than for
ordinary lavatory and drinking purposes, Landlord may assess a reasonable charge
for the additional water so used, or install a water meter and thereby measure
Tenant's water consumption for all purposes. In the latter event, Tenant shall
pay the cost of the meter and the cost of installation thereof as Additional
Rent upon demand and shall keep such meter and installation equipment in good
working order and repair. Tenant agrees to pay for water consumed, as shown on
such meter, together with the sewer charge based on such meter charges, as and
when bills are rendered, and in the event Tenant fails timely to make any such
payment, Landlord may pay such charges and collect the same from Tenant upon
demand as Additional Rent.

          (c) Cleaning and janitorial services to the Premises, provided the
same are kept in order by Tenant, substantially in accordance with the cleaning
standards from time to time in effect for the Building.

          (d) Access to the Premises at all times, subject to security
precautions from time to time in effect, if any, and subject always to
restrictions based on emergency conditions.

If and to the extent that Tenant desires to provide security for the Premises or
for such persons or their property, Tenant shall be responsible for so doing,
after having first consulted with

                                       22
<PAGE>

Landlord and after obtaining Landlord's consent, which shall not be unreasonably
withheld. Landlord expressly disclaims any and all responsibility and/or
liability for the physical safety of Tenant's property, and for that of Tenant's
employees, agents, contractors and invitees, and, without in any way limiting
the operation of Article 10 hereof, Tenant, for itself and its agents,
contractors, invitees and employees, hereby expressly waives any claim, action,
cause of action or other right which may accrue or arise as a result of any
damage or injury to the person or property of Tenant or any such agent, invitee,
contractor or employee. Tenant agrees that, as between Landlord and Tenant, it
is Tenant's responsibility to advise its employees, agents, contractors and
invitees as to necessary and appropriate safety precautions.

      7.6 Interruption of Service.
          -----------------------

          (a) Landlord reserves the right to curtail, suspend, interrupt and/or
stop the supply of water, sewage, electrical current, cleaning, and other
services, and to curtail, suspend, interrupt and/or stop use of entrances and/or
lobbies serving access to the Building, or other portions of the Property,
without thereby incurring any liability to Tenant, when necessary by reason of
accident or emergency, or for repairs, alterations, replacements or improvements
in the judgment of Landlord reasonably exercised desirable or necessary, or when
prevented from supplying such services or use due to any act or neglect of
Tenant or Tenant's agents employees, contractors or invitees or any person
claiming by, through or under Tenant or by Force Majeure, including, but not
limited to, strikes, lockouts, difficulty in obtaining materials, accidents,
laws or orders, or inability, by exercise of reasonable diligence, to obtain
electricity, water, gas, steam, coal, oil or other suitable fuel or power.
Except as set forth in paragraph (b) below, no diminution or abatement of rent
or other compensation, nor any direct, indirect or consequential damages shall
or will be claimed by Tenant as a result of, nor shall this Lease or any of the
obligations of Tenant be affected or reduced by reason of, any such
interruption, curtailment, suspension or stoppage in the furnishing of the
foregoing services or use, irrespective of the cause thereof. Except as set
forth in paragraph (b) below, failure or omission on the part of Landlord to
furnish any of the foregoing services or use as provided in this paragraph shall
not be construed as an eviction of Tenant, actual or constructive, nor entitle
Tenant to an abatement of rent, nor to render the Landlord liable in damages,
nor release Tenant from prompt fulfillment of any of its covenants under this
Lease.

          (b) Notwithstanding anything contained in this Lease to the contrary,
if (i) an interruption or curtailment, suspension or stoppage of an Essential
Service (as said term is hereinafter defined) shall occur, except any of the
same due to any act or neglect of Tenant or Tenant's agents employees,
contractors or invitees or any person claiming by, through or under Tenant (any
such interruption of an Essential Service being hereinafter referred to as a
"Service Interruption"), and (ii) such Service Interruption occurs or continues
as a result of the negligence or a wrongful conduct of the Landlord or
Landlord's agents, servants, employees or contractors, and (iii) such Service
Interruption continues for more than fifteen (15) Business

                                       23
<PAGE>

Days after Landlord shall have received notice thereof from Tenant, and (iv) as
a result of such Service Interruption, the conduct of Tenant's normal operations
in the Premises are materially and adversely affected, then there shall be an
abatement of one day's Basic Rent for each day during which such Service
Interruption continues after such thirty (30) Business Day period; provided,
however, that if any part of the Premises is reasonably useable for Tenant's
normal business operations or if Tenant conducts all or any part of its
operations in any portion of the Premises notwithstanding such Service
Interruption, then the amount of each daily abatement of Basic Rent and
Additional Rent shall only be proportionate to the nature and extent of the
interruption of Tenant's normal operations or ability to use the Premises. The
rights granted to Tenant under this paragraph (b) shall be Tenant's sole and
exclusive remedy resulting from a failure of Landlord to provide services, and
Landlord shall not otherwise be liable for any loss or damage suffered or
sustained by Tenant resulting from any failure or cessation of services. For
purposes hereof, the term "Essential Services" shall mean the following
services: access to the Premises, water and sewer/septic service and
electricity, but only to the extent that Landlord has an obligation to provide
same to Tenant under this Lease. Any abatement of Basic Rent under this
paragraph shall apply only with respect to Basic Rent allocable to the period
after each of the conditions set forth in subsections (i) through (iv) hereof
shall have been satisfied and only during such times as each of such conditions
shall exist.

                                   ARTICLE 8
                               REAL ESTATE TAXES
                               -----------------

      8.1 Payments on Account of Real Estate Taxes.
          ----------------------------------------

          (a) "Tax Year" shall mean a twelve-month period commencing on July 1
and falling wholly or partially within the Term, and "Taxes" shall mean (i) all
taxes, assessments (special or otherwise), levies, fees and all other government
levies, exactions and charges of every kind and nature, general and special,
ordinary and extraordinary, foreseen and unforeseen, which are, at any time
prior to or during the Term, imposed or levied upon or assessed against the
Property or any portion thereof, or against any Basic Rent, Additional Rent or
other rent of any kind or nature payable to Landlord by anyone on account of the
ownership, leasing or operation of the Property, or which arise on account of or
in respect of the ownership, development, leasing, operation or use of the
Property or any portion thereof; (ii) all gross receipts taxes or similar taxes
imposed or levied upon, assessed against or measured by any Base Rent,
Additional Rent or other rent of any kind or nature or other sum payable to
Landlord by anyone on account of the ownership, development, leasing, operation,
or use of the Property or any portion thereof; (iii) all value added, use and
similar taxes at any time levied, assessed or payable on account of the
ownership, development, leasing, operation, or use of the Property or any
portion thereof; and (iv) reasonable expenses of any proceeding for abatement of
any of the foregoing items included

                                       24
<PAGE>

in Taxes, provided Landlord prevails in such abatement proceeding; but the
amount of special taxes or special assessments included in Taxes shall be
limited to the amount of the installment (plus any interest, other than penalty
interest, payable thereon) of such special tax or special assessment required to
be paid during the year in respect of which such Taxes are being determined.
There shall be excluded from Taxes all income, estate, succession, inheritance
and transfer taxes of Landlord; provided, however, that if at any time during
the Term the present system of ad valorem taxation of real property shall be
changed so that a capital levy, franchise, income, profits, sales, rental, use
and occupancy, or other tax or charge shall in whole or in part be substituted
for, or added to, such ad valorem tax and levied against, or be payable by,
Landlord with respect to the Property or any portion thereof, such tax or charge
shall be included in the term "Taxes" for the purposes of this Article.

           (b) In the event that Taxes during any Tax Year shall exceed Base
Taxes, Tenant shall pay to Landlord, as Additional Rent, an amount equal to (i)
the excess of Taxes for such Tax Year over Base Taxes, multiplied by (ii)
Tenant's Proportionate Share, such amount to be apportioned for any portion of a
Tax Year in which the Commencement Date falls or the Term expires.

          (c) Estimated payments by Tenant on account of Taxes shall be made on
the first day of each and every calendar month during the Term of this Lease, in
the fashion herein provided for the payment of Basic Rent. The monthly amount so
to be paid to Landlord shall be sufficient to provide Landlord by the time real
estate tax payments are due with a sum equal to Tenant's required payment, as
reasonably estimated by Landlord from time to time, on account of Taxes for the
then current Tax Year. Promptly after receipt by Landlord of bills for such
Taxes, Landlord shall advise Tenant of the amount thereof and the computation of
Tenant's payment on account thereof. If estimated payments theretofore made by
Tenant for the Tax Year covered by such bills exceed the required payment on
account thereof for such Tax Year, Landlord shall credit the amount of
overpayment against subsequent obligations of Tenant on account of Taxes (or
promptly refund such overpayment if the Term of this Lease has ended and Tenant
has no further obligation to Landlord); but if the required payments on account
thereof for such Tax Year are greater than estimated payments theretofore made
on account thereof for such Tax Year, Tenant shall pay the difference to
Landlord within thirty (30) days after being so advised by Landlord, and the
obligation to make such payment for any period within the Term shall survive
expiration of the Term.

      8.2 Abatement. If Landlord shall receive any tax refund or reimbursement
          ---------
of Taxes or sum in lieu thereof with respect to any Tax Year all or any portion
of which falls within the Term, then out of any balance remaining thereof after
deducting Landlord's expenses in obtaining such refund, Landlord shall pay to
Tenant, provided there does not then exist a Default of Tenant, an amount equal
to such refund or reimbursement or sum in lieu thereof (exclusive of

                                       25
<PAGE>

any interest, and apportioned if such refund is for a Tax Year a portion of
which falls outside the Term,) multiplied by Tenant's Proportionate Share;
provided, that in no event shall Tenant be entitled to receive more than the
payments made by Tenant on account of Taxes for such Tax Year pursuant to
paragraph (b) of Section 8.1 or to receive any payments or abatement of Basic
Rent if Taxes for any year are less than Base Taxes or if Base Taxes are abated.
If Landlord shall receive a tax refund or reimbursement with respect to the Base
Taxes, Landlord shall advise Tenant of the amount thereof and Tenant shall pay
to Landlord, within thirty (30) days after being so advised by Landlord, the
difference between the reduced Base Taxes and the amounts previously paid by
Tenant for each applicable prior Tax Year in the Term, and the obligation to
make such payment for any period within the Term shall survive expiration of the
Term.

                                   ARTICLE 9
                        OPERATING AND UTILITY EXPENSES
                        ------------------------------

      9.1 Definitions.  "Operating Year" shall mean each calendar year all or
          -----------
any part of which falls within the Term, and "Operating Expenses" shall mean the
aggregate costs and expenses incurred by Landlord with respect to the operation,
administration, cleaning, repair, maintenance and management of the Property,
all as set forth in Exhibit D attached hereto, provided that if during any
portion of the Operating Year for which Operating Expenses are being computed,
less than all of the Building was occupied by tenants or Landlord was not
supplying all tenants with the services being supplied under this Lease, actual
Operating Expenses incurred shall be extrapolated reasonably by Landlord on an
item by item basis to the estimated Operating Expenses that would have been
incurred if the Building were fully occupied for such Operating Year and such
services were being supplied to all tenants, and such extrapolated amount shall,
for the purposes hereof, be deemed to be the Operating Expenses for such
Operating Year.

      9.2 Tenant's Payment of Operating Expenses.
          --------------------------------------

          (a) In the event that for any Operating Year Operating Expenses shall
exceed Base Operating Expenses, Tenant shall pay to Landlord, as Additional
Rent, an amount equal to (i) such excess Operating Expenses multiplied by (ii)
Tenant's Proportionate Share, such amount to be apportioned for any portion of
an Operating Year in which the Commencement Date falls or the Term of this Lease
ends.

                                       26
<PAGE>

          (b) Estimated payments by Tenant on account of Operating Expenses
shall be made on the first day of each and every calendar month during the Term
of this Lease, in the fashion herein provided for the payment of Basic Rent. The
monthly amount so to be paid to Landlord shall be sufficient to provide Landlord
by the end of each Operating Year a sum equal to Tenant's required payment, as
reasonably estimated by Landlord from time to time during each Operating Year,
on account of Operating Expenses for such Operating Year. After the end of each
Operating Year, Landlord shall submit to Tenant a reasonably detailed accounting
of Operating Expenses for such Operating Year, and Landlord shall certify to the
accuracy thereof. If estimated payments theretofore made for such Operating Year
by Tenant exceed Tenant's required payment on account thereof for such Operating
Year according to such statement, Landlord shall credit the amount of
overpayment against subsequent obligations of Tenant with respect to Operating
Expenses (or promptly refund such overpayment if the Term of this Lease has
ended and Tenant has no further obligation to Landlord); but if the required
payments on account thereof for such Operating Year are greater than the
estimated payments (if any) theretofore made on account thereof for such
Operating Year, Tenant shall make payment to Landlord within thirty (30) days
after being so advised by Landlord, and the obligation to make such payment for
any period within the Term shall survive expiration of the Term.

                                  ARTICLE 10
                    INDEMNITY AND PUBLIC LIABILITY INSURANCE
                    ----------------------------------------

      10.1 Tenant's Indemnity. Except to the extent arising from the gross
           ------------------
negligence or willful misconduct of Landlord or its agents or employees, Tenant
agrees to indemnify and save harmless Landlord and Landlord's partners, members,
shareholders, officers, directors, managers, employees, agents and contractors
from and against all claims, losses, cost, damages, liability or expenses of
whatever nature arising: (i) from any accident, injury or damage whatsoever to
any person, or to the property of any person, occurring in or about the
Premises; (ii) from any accident, injury or damage whatsoever to any person, or
to property of any person, occurring outside of the Premises but on or about the
Property, where such accident, damage or injury results or is claimed to have
resulted from any act or omission on the part of Tenant or Tenant's agents,
employees, contractors, invitees or sublessees; or (iii) the use or occupancy of
the Premises or of any business conducted therein, and, in any case, occurring
after the Commencement Date until the expiration of the Term of this Lease and
thereafter so long as Tenant is in occupancy of any part of the Premises.  This
indemnity and hold harmless agreement shall include indemnity against all
losses, costs, damages, expenses and liabilities incurred in or in connection
with any such claim or any proceeding brought thereon, and the defense thereof,
including, without limitation, reasonable attorneys' fees and costs at both the
trial and appellate levels.

                                       27
<PAGE>

      10.2 Tenant Insurance. Tenant agrees to maintain in full force from the
           ----------------
date upon which Tenant first enters the Premises for any reason, throughout the
Term of this Lease, and thereafter so long as Tenant is in occupancy of any part
of the Premises, a policy of commercial general liability and property damage
insurance (including broad form contractual liability, independent contractor's
hazard and completed operations coverage) under which Tenant is named as an
insured and Landlord, Agent (and such other persons as are in privity of estate
with Landlord as may be set out in a notice from time to time) are named as
additional insureds, and under which the insurer agrees to indemnify and hold
Landlord, Agent and those in privity of estate with Landlord, harmless from and
against all cost, expense and/or liability arising out of or based upon any and
all claims, accidents, injuries and damages set forth in Section 10.1. Tenant
may satisfy such insurance requirements by including the Premises in a so-called
"blanket" and/or "umbrella" insurance policy, provided that the amount of
coverage allocated to the Premises shall fulfill the requirements set forth
herein. Each policy required hereunder shall be non-cancelable and non-amendable
with respect to Landlord, Agent and Landlord's said designees without thirty
(30) days' prior notice, shall be written on an "occurrence" basis, and shall be
in at least the amounts of the Initial General Liability Insurance specified in
Section 1.1 or such greater amounts as Landlord in its reasonable discretion
shall from time to time request, and a duplicate original or certificates
thereof satisfactory to Landlord, together with a photocopy of the entire
policy, shall be delivered to Landlord.

      10.3 Tenant's Risk. Tenant agrees to use and occupy the Premises and to
           -------------
use such other portions of the Property as Tenant is herein given the right to
use at Tenant's own risk. Landlord shall not be liable to Tenant, its employees,
agents, invitees or contractors for any damage, injury, loss, compensation, or
claim (including, but not limited to, claims for the interruption of or loss to
Tenant's business) based on, arising out of or resulting from any cause
whatsoever, including, but not limited to, repairs to any portion of the
Premises or the Property, any fire, robbery, theft, mysterious disappearance
and/or any other crime or casualty, the actions of any other tenants of the
Building or of any other person or persons, or any leakage in any part or
portion of the Premises or the Building, or from water, rain or snow that may
leak into, or flow from any part of the Premises or the Building, or from
drains, pipes or plumbing fixtures in the Building, unless due to the gross
negligence or willful misconduct of Landlord or Landlord's agents, contractors
or employees. Any goods, property or personal effects stored or placed in or
about the Premises shall be at the sole risk of Tenant, and neither Landlord nor
Landlord's insurers shall in any manner be held responsible therefor.
Notwithstanding the foregoing, Landlord shall not be released from liability for
any injury, loss, damages or liability to the extent arising from any gross
negligence or willful misconduct of Landlord, its servants, employees or agents
acting within the scope of their authority on or about the Premises; provided,
however, that in no event shall Landlord, its servants, employees or agents have
any liability to Tenant based on any loss with respect to or interruption in the
operation of Tenant's business. Tenant shall carry "all-risk" property insurance
on a "replacement cost" basis, insuring Tenant's

                                       28
<PAGE>

Removable Property and any Alterations made by Tenant pursuant to Section 5.2,
to the extent that the same have not become the property of Landlord.

      10.4 Waiver of Subrogation. The parties hereto shall each procure an
           ---------------------
appropriate clause in, or endorsement on, any property insurance policy on the
Premises or any personal property, fixtures or equipment located thereon or
therein, pursuant to which the insurer waives subrogation or consents to a
waiver of right of recovery in favor of either party, its respective agents or
employees. Having obtained such clauses and/or endorsements, each party hereby
agrees that it will not make any claim against or seek to recover from the other
or its agents or employees for any loss or damage to its property or the
property of others resulting from fire or other perils covered by such property
insurance.

                                  ARTICLE 11
                          FIRE, EMINENT DOMAIN, ETC.
                          --------------------------

      11.1 Landlord's Right of Termination. If the Premises or the Building are
           -------------------------------
substantially damaged by fire or casualty (the term "substantially damaged"
meaning damage of such a character that the same cannot, in the ordinary course,
reasonably be expected to be repaired within sixty (60) days from the time that
repair work would commence), or if any part of the Building is taken by any
exercise of the right of eminent domain, then Landlord shall have the right to
terminate this Lease (even if Landlord's entire interest in the Premises may
have been divested) by giving notice of Landlord's election so to do within
ninety (90) days after the occurrence of such casualty or the effective date of
such taking, whereupon this Lease shall terminate thirty (30) days after the
date of such notice with the same force and effect as if such date were the date
originally established as the expiration date hereof.

      11.2 Restoration; Tenant's Right of Termination. If the Premises or the
           ------------------------------------------
Building are damaged by fire or other casualty, and this Lease is not terminated
pursuant to Section 12.1, Landlord shall thereafter use reasonable efforts to
restore the Building and the Premises (excluding any Alterations made by Tenant
pursuant to Section 5.2) to proper condition for Tenant's use and occupation,
provided that Landlord's obligation shall be limited to the amount of insurance
proceeds available therefor. If, for any reason, such restoration shall not be
substantially completed within six months after the expiration of the ninety-day
period referred to in Section 11.1 (which six-month period may be extended for
such periods of time as Landlord is prevented from proceeding with or completing
such restoration due to Force Majeure, but in no event for more than an
additional three months), Tenant shall have the right to terminate this Lease by
giving notice to Landlord thereof within thirty (30) days after the expiration
of such period (as so extended) provided that such restoration is not completed
within such period. This Lease shall cease and come to an end without further
liability or obligation on the part of either party thirty (30) days after such
giving of notice by Tenant unless, within such thirty-day period,

                                       29
<PAGE>

Landlord substantially completes such restoration. Such right of termination
shall be Tenant's sole and exclusive remedy at law or in equity for Landlord's
failure so to complete such restoration, and time shall be of the essence with
respect thereto.

      11.3 Landlord's Insurance. Landlord agrees to maintain in full force and
           --------------------
effect, during the Term of this Lease, property damage insurance with such
deductibles and in such amounts as may from time to time be carried by
reasonably prudent owners of similar buildings in the area in which the Property
is located, provided that in no event shall Landlord be required to carry other
than fire and extended coverage insurance or insurance in amounts greater than
80% of the actual insurable cash value of the Building (excluding footings and
foundations). Landlord may satisfy such insurance requirements by including the
Property in a so-called "blanket" insurance policy, provided that the amount of
coverage allocated to the Property shall fulfill the foregoing requirements.

      11.4 Abatement of Rent. If the Premises or the Building are damaged by
           -----------------
fire or other casualty, Basic Rent and Additional Rent payable by Tenant shall
abate proportionately for the period during which, by reason of such damage,
there is substantial interference with Tenant's use of the Premises, having
regard for the extent to which Tenant may be required to discontinue Tenant's
use of all or an undamaged portion of the Premises due to such damage, but such
abatement or reduction shall end if and when Landlord shall have substantially
completed sufficient restoration that Tenant is reasonably able to use the
Premises and the Premises are in substantially the condition in which they were
prior to such damage (excluding any Alterations made by Tenant pursuant to
Section 5.2). If the Premises shall be affected by any exercise of the power of
eminent domain, Basic Rent and Additional Rent payable by Tenant shall be justly
and equitably abated and reduced according to the nature and extent of the loss
of use thereof suffered by Tenant. In no event shall Landlord have any liability
for damages to Tenant for inconvenience, annoyance, or interruption of business
arising from any fire or other casualty or eminent domain.

      11.5 Condemnation Award. Landlord shall have and hereby reserves and
           ------------------
excepts, and Tenant hereby grants and assigns to Landlord, all rights to recover
for damages to the Property and the leasehold interest hereby created, and to
compensation accrued or hereafter to accrue by reason of any taking, by exercise
of the right of eminent domain, and by way of confirming the foregoing, Tenant
hereby grants and assigns, and covenants with Landlord to grant and assign to
Landlord, all rights to such damages or compensation, and covenants to deliver
such further assignments and assurances thereof as Landlord may from time to
time request, and Tenant hereby irrevocably appoints Landlord its attorney-in-
fact to execute and deliver in Tenant's name all such assignments and
assurances. Nothing contained herein shall be construed to prevent Tenant from
prosecuting in any condemnation proceedings a claim for the value of any of
Tenant's Removable Property installed in the Premises by Tenant at Tenant's

                                       30
<PAGE>

expense and for relocation expenses, provided that such action shall not affect
the amount of compensation otherwise recoverable by Landlord from the taking
authority.

                                  ARTICLE 12
                            HOLDING OVER; SURRENDER
                            -----------------------

     12.1  Holding Over. Any holding over by Tenant after the expiration of
           ------------
the Term of this Lease shall be treated as a daily tenancy at sufferance at a
rental equal to one hundred and fifty percent (150%) of the Basic Rent then in
effect plus the Additional Rent herein provided (prorated on a daily basis).
Tenant shall also pay to Landlord all damages, direct and/or indirect, sustained
by reason of any such holding over. In all other respects, such holding over
shall be on the terms and conditions set forth in this Lease as far as
applicable. Landlord may, but shall not be required to, and only on written
notice to Tenant after the expiration of the Term hereof, elect to treat such
holding over as a renewal of one (1) year, to be on the terms and conditions set
forth in this Section.

     12.2  Surrender of Premises. Upon the expiration or earlier termination
           ---------------------
of the Term of this Lease, Tenant shall peaceably quit and surrender to Landlord
the Premises in neat and clean condition and in good order, condition and
repair, together with all alterations, additions and improvements which may have
been made or installed in, on or to the Premises prior to or during the Term of
this Lease (except as hereinafter provided), excepting only ordinary wear and
use and damage by fire or other casualty for which, under other provisions of
this Lease, Tenant has no responsibility to repair or restore. Tenant shall
remove all of Tenant's Removable Property and, to the extent specified by
Landlord, all alterations and additions made by Tenant and all partitions wholly
within the Premises unless installed initially by Landlord in preparing the
Premises for Tenant's occupancy; and shall repair any damages to the Premises or
the Building caused by such removal. Any Tenant's Removable Property which shall
remain in the Building or on the Premises after the expiration or termination of
the Term of this Lease shall be deemed conclusively to have been abandoned, and
either may be retained by Landlord as its property or may be disposed of in such
manner as Landlord may see fit, at Tenant's sole cost and expense.

                                  ARTICLE 13
                    RIGHTS OF MORTGAGEES; TRANSFER OF TITLE
                    ---------------------------------------

     13.1  Rights of Mortgagees. This Lease shall be subject and subordinate
           --------------------
to the lien and terms of any mortgage, deed of trust or ground lease or similar
encumbrance (collectively, a "Mortgage", and the holder thereof from time to
time the "Holder") from time to time encumbering the Premises, whether executed
and delivered prior to or subsequent to the date of

                                       31
<PAGE>

this Lease, unless the Holder shall elect otherwise. If this Lease is
subordinate to any Mortgage and the Holder or any other party shall succeed to
the interest of Landlord pursuant to the Mortgage (such Holder or other party, a
"Successor"), at the election of the Holder or Successor, Tenant shall attorn to
the or Successor and this Lease shall continue in full force and effect between
the Holder or Successor and Tenant. Tenant agrees to execute such instruments of
subordination or attornment in confirmation of the foregoing agreement as the
Holder or Successor reasonably may request, and Tenant hereby appoints the
Holder or Successor as Tenant's attorney-in-fact to execute such subordination
or attornment agreement upon default of Tenant in complying with the Holder's or
Successor's request.

     13.2  Assignment of Rents and Transfer of Title.
           -----------------------------------------

           (a) With reference to any assignment by Landlord of Landlord's
interest in this Lease, or the rents payable hereunder, conditional in nature or
otherwise, which assignment is made to the holder of a mortgage on property
which includes the Premises, Tenant agrees that the execution thereof by
Landlord, and the acceptance thereof by the holder of such mortgage shall never
be treated as an assumption by such holder of any of the obligations of Landlord
hereunder unless such holder shall, by notice sent to Tenant, specifically
otherwise elect and, except as aforesaid, such holder shall be treated as having
assumed Landlord's obligations hereunder only upon foreclosure of such holder's
mortgage and the taking of possession of the Premises.

           (b) In no event shall the acquisition of Landlord's interest in the
Property by a purchaser which, simultaneously therewith, leases Landlord's
entire interest in the Property back to the seller thereof be treated as an
assumption by operation of law or otherwise, of Landlord's obligations
hereunder, but Tenant shall look solely to such seller-lessee, and its
successors from time to time in title, for performance of Landlord's obligations
hereunder. In any such event, this Lease shall be subject and subordinate to the
lease to such purchaser. For all purposes, such seller-lessee, and its
successors in title, shall be the Landlord hereunder unless and until Landlord's
position shall have been assumed by such purchaser-lessor.

           (c) Except as provided in paragraph (b) of this Section, in the event
of any transfer of title to the Property by Landlord, Landlord shall thereafter
be entirely freed and relieved from the performance and observance of all
covenants and obligations hereunder.

      13.3 Notice to Mortgagee.  After receiving notice from Landlord of any
           -------------------
Holder of a Mortgage which includes the Premises, no notice from Tenant to
Landlord alleging any default by Landlord shall be effective unless and until a
copy of the same is given to such Holder (provided Tenant shall have been
furnished with the name and address of such Holder), and the curing of any of
Landlord's defaults by such Holder shall be treated as performance by Landlord.

                                       32
<PAGE>

                                  ARTICLE 14
                               DEFAULT; REMEDIES
                               -----------------

     14.1  Tenant's Default.
           ----------------

            (a) If at any time subsequent to the date of this Lease any one or
more of the following events (herein referred to as a "Default of Tenant") shall
happen:

                (i)   Tenant shall fail to pay the Basic Rent or Additional Rent
     hereunder when due and such failure shall continue for five (5) Business
     Days after notice to Tenant from Landlord; or

                (ii)  Tenant shall neglect or fail to perform or observe any
     other covenant herein contained on Tenant's part to be performed or
     observed and Tenant shall fail to remedy the same within thirty (30) days
     after notice to Tenant specifying such neglect or failure, or if such
     failure is of such a nature that Tenant cannot reasonably remedy the same
     within such thirty (30) day period, Tenant shall fail to commence promptly
     (and in any event within such thirty (30) day period) to remedy the same
     and to prosecute such remedy to completion with diligence and continuity
     (and in any event, within ninety (90) days after the notice described in
     this subparagraph (ii)); or

                (iii) Tenant's leasehold interest in the Premises shall be taken
     on execution or by other process of law directed against Tenant; or

                (iv)  Tenant shall make an assignment for the benefit of
     creditors or shall be adjudicated insolvent, or shall file any petition or
     answer seeking any reorganization, arrangement, composition, readjustment,
     liquidation, dissolution or similar relief for itself under any present or
     future Federal, State or other statute, law or regulation for the relief of
     debtors (other than the Bankruptcy Code, as hereinafter defined), or shall
     seek or consent to or acquiesce in the appointment of any trustee, receiver
     or liquidator of Tenant or of all or any substantial part of its
     properties, or shall admit in writing its inability to pay its debts
     generally as they become due; or

                (v)   An Event of Bankruptcy (as hereinafter defined) shall
     occur with respect to Tenant; or

                (vi)  A petition shall be filed against Tenant under any law
     (other than the Bankruptcy Code) seeking any reorganization, arrangement,
     composition, readjustment, liquidation, dissolution, or similar relief
     under any present or future Federal, State or other statute, law or
     regulation and shall remain undismissed or unstayed for an aggregate of
     sixty (60) days (whether or not consecutive), or if any trustee,

                                       33
<PAGE>

     conservator, receiver or liquidator of Tenant or of all or any substantial
     part of its properties shall be appointed without the consent or
     acquiescence of Tenant and such appointment shall remain unvacated or
     unstayed for an aggregate of sixty (60) days (whether or not consecutive);

               (vii)  If: (x) Tenant shall fail to pay the Basic Rent or
     Additional Rent hereunder when due or shall fail to perform or observe any
     other covenant herein contained on Tenant's part to be performed or
     observed and Tenant shall cure any such failure within the applicable grace
     period set forth in clauses (i) or (ii) above; or (y) a Default of Tenant
     of the kind set forth in clauses (i) or (ii) above shall occur and Landlord
     shall, in its sole discretion, permit Tenant to cure such Default of Tenant
     after the applicable grace period has expired; and the same or a similar
                                                    ---
     failure shall occur more than once within the next 365 days (whether or not
     such similar failure is cured within the applicable grace period); or

               (viii) The occurrence of any of the events described in
     paragraphs (a)(iv)-(a)(vi) with respect to any guarantor of all or any
     portions of Tenant's obligations under this Lease;

then in any such case Landlord may terminate this Lease as hereinafter provided.

          (b)  For purposes of clause (a)(v) above, an "Event of Bankruptcy"
means the filing of a voluntary petition by Tenant, or the entry of an order for
relief against Tenant, under Chapter 7, 11, or 13 of the Bankruptcy Code, and
the term "Bankruptcy Code" means 11 U.S.C (S)101, et seq.. If an Event of
                                                  -------
Bankruptcy occurs, then the trustee of Tenant's bankruptcy estate or Tenant as
debtor-in-possession may (subject to final approval of the court) assume this
Lease, and may subsequently assign it, only if it does the following within
sixty (60) days after the date of the filing of the voluntary petition, the
entry of the order for relief (or such additional time as a court of competent
jurisdiction may grant, for cause, upon a motion made within the original sixty-
day period):

               (i)    file a motion to assume the Lease with the appropriate
     court;

               (ii)   satisfy all of the following conditions, which Landlord
     and Tenant acknowledge to be commercially reasonable:

          (A)  cure all Defaults of Tenant under this Lease or provide Landlord
               with Adequate Assurance (as defined below) that it will (x) cure
               all monetary Defaults of Tenant hereunder within ten (10) days
               from the date of the assumption; and (y) cure all nonmonetary
               Defaults

                                       34
<PAGE>

               of Tenant hereunder within thirty (30) days from the date of the
               assumption;

          (B)  compensate Landlord and any other person or entity, or provide
               Landlord with Adequate Assurance that within ten (10) days after
               the date of the assumption, it will compensate Landlord and such
               other person or entity, for any pecuniary loss that Landlord and
               such other person or entity incurred as a result of any Default
               of Tenant, the trustee, or the debtor-in-possession;

          (C)  provide Landlord with Adequate Assurance of Future Performance
               (as defined below) of all of Tenant's obligations under this
               Lease; and

          (D)  deliver to Landlord a written statement that the conditions
               herein have been satisfied.

          (c)  For purposes only of the foregoing paragraph (b), and in addition
to any other requirements under the Bankruptcy Code, any future federal
bankruptcy law and applicable case law, "Adequate Assurance" means at least
meeting the following conditions, which Landlord and Tenant acknowledge to be
commercially reasonable:

               (i)  entering an order segregating sufficient cash to pay
     Landlord and any other person or entity under paragraph (b) above, and

               (ii) granting to Landlord a valid first lien and security
     interest (in form acceptable to Landlord) in all property comprising the
     Tenant's "property of the estate," as that term is defined in Section 541
     of the Bankruptcy Code, which lien and security interest secures the
     trustee's or debtor-in-possession's obligation to cure the monetary and
     nonmonetary defaults under the Lease within the periods set forth in
     paragraph (b) above.

          (d)  For purposes only of paragraph (b) above, and in addition to any
other requirements under the Bankruptcy Code, any future federal bankruptcy law
and applicable case law, "Adequate Assurance of Future Performance" means at
least meeting the following conditions, which Landlord and Tenant acknowledge to
be commercially reasonable:

               (i)  the trustee or debtor-in-possession depositing with
     Landlord, as security for the timely payment of rent and other monetary
     obligations, an amount equal to the sum of two (2) months' Basic Rent plus
     an amount equal to two (2) months' installments on account of Escalation
     Charges;

                                       35
<PAGE>

               (ii)  the trustee or the debtor-in-possession agreeing to pay in
     advance, on each day that the Basic Rent is payable, the monthly
     installments on account of Escalation Charges;

               (iii) the trustee or debtor-in-possession providing adequate
     assurance of the source of the rent and other consideration due under this
     Lease;

               (iv)  Tenant's bankruptcy estate and the trustee or debtor-in-
     possession providing Adequate Assurance that the bankruptcy estate (and any
     successor after the conclusion of the Tenant's bankruptcy proceedings) will
     continue to have sufficient unencumbered assets after the payment of all
     secured obligations and administrative expenses to assure Landlord that the
     bankruptcy estate (and any successor after the conclusion of the Tenant's
     bankruptcy proceedings) will have sufficient funds to fulfill Tenant's
     obligations hereunder.

          (e)  If the trustee or the debtor-in-possession assumes the Lease
under paragraph (b) above and applicable bankruptcy law, it may assign its
interest in this Lease only if the proposed assignee first provides Landlord
with Adequate Assurance of Future Performance of all of Tenant's obligations
under the Lease, and if Landlord determines, in the exercise of its reasonable
business judgment, that the assignment of this Lease will not breach any other
lease, or any mortgage, financing agreement, or other agreement relating to the
Property by which Landlord or the Property is then bound (and Landlord shall not
be required to obtain consents or waivers from any third party required under
any lease, mortgage, financing agreement, or other such agreement by which
Landlord is then bound).

          (f)  For purposes only of paragraph (e) above, and in addition to any
other requirements under the Bankruptcy Code, any future federal bankruptcy law
and applicable case law, "Adequate Assurance of Future Performance" means at
least the satisfaction of the following conditions, which Landlord and Tenant
acknowledge to be commercially reasonable:

               (i)   the proposed assignee submitting a current financial
     statement, audited by a certified public accountant, that allows a net
     worth and working capital in amounts determined in the reasonable business
     judgment of Landlord to be sufficient to assure the future performance by
     the assignee of Tenant's obligation under this Lease; and

                                       36
<PAGE>

               (ii) if requested by Landlord in the exercise of its reasonable
     business judgment, the proposed assignee obtaining a guarantee (in form and
     substance satisfactory to Landlord) from one or more persons who satisfy
     Landlord's standards of creditworthiness.

     14.2 Landlord's Remedies.
          -------------------

          (a)  Upon the occurrence of a Default of Tenant, Landlord may
terminate this Lease by notice to Tenant, specifying a date not less than five
(5) days after the giving of such notice on which this Lease shall terminate and
this Lease shall come to an end on the date specified therein as fully and
completely as if such date were the date herein originally fixed for the
expiration of the Term of this Lease, and Tenant will then quit and surrender
the Premises to Landlord, but Tenant shall remain liable as hereinafter
provided..

          (b)  If this Lease shall have been terminated as provided in this
Article, then Landlord may re-enter the Premises, either by summary proceedings,
ejectment or otherwise, and remove and dispossess Tenant and all other persons
and any and all property from the same, as if this Lease had not been made.

          (c)  If this Lease shall have been terminated as provided in this
Article, Tenant shall pay the Basic Rent and Additional Rent up to the time of
such termination, and thereafter Tenant, until the end of what would have been
the Term of this Lease in the absence of such termination, and whether or not
the Premises shall have been relet, shall be liable to Landlord for, and shall
pay to Landlord, as liquidated current damages:  (x) the Basic Rent and
Additional Rent payable hereunder if such termination had not occurred, less the
net proceeds, if any, of any reletting of the Premises, after deducting all
expenses in connection with such reletting, including, without limitation, all
repossession costs, brokerage commissions, legal expenses, attorneys' fees,
advertising, expenses of employees, alteration costs and expenses of preparation
for such reletting; and (y) if this Lease provides that Tenant was entitled to
occupy the Premises for any period of time without paying Basic Rent, the amount
of Basic Rent that Tenant would have paid for any such period.  Tenant shall pay
the portion of such current damages referred to in clause (x) above to Landlord
monthly on the days which the Basic Rent would have been payable hereunder if
this Lease had not been terminated, and Tenant shall pay the portion of such
current damages referred to in clause (y) above to Landlord upon such
termination.

          (d)  At any time after termination of this Lease as provided in this
Article, whether or not Landlord shall have collected any such current damages,
as liquidated final damages and in lieu of all such current damages beyond the
date of such demand, at Landlord's election Tenant shall pay to Landlord an
amount equal to the excess, if any, of the Basic Rent and Additional Rent which
would be payable hereunder from the date of such demand assuming that, for the
purposes of this paragraph, annual payments by Tenant on account of Taxes and

                                       37
<PAGE>

Operating Expenses would be the same as the payments required for the
immediately preceding Operating or Tax Year for what would be the then unexpired
Term of this Lease if the same remained in effect, over the then fair net rental
value of the Premises for the same period.

          (e)  In case of any Default of Tenant, re-entry, expiration and
dispossession by summary proceedings or otherwise, Landlord may (i) re-let the
Premises or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may at Landlord's option be equal to or
less than or exceed the period which would otherwise have constituted the
balance of the Term of this Lease and may grant concessions or free rent to the
extent that Landlord considers advisable and necessary to re-let the same and
(ii) make such alterations, repairs and decorations in the Premises as Landlord
considers advisable and necessary for the purpose of reletting the Premises; and
the making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid.  Tenant
hereby expressly waives any and all rights of redemption granted by or under any
present or future laws in the event of Tenant being evicted or dispossessed, or
in the event of Landlord obtaining possession of the Premises, by reason of the
violation by Tenant of any of the covenants and conditions of this Lease.

     14.3 Additional Rent.  If Tenant shall fail to pay when due any sums under
          ---------------
this Lease designated as an Escalation Charge or other Additional Rent, Landlord
shall have the same rights and remedies as Landlord has hereunder for failure to
pay Basic Rent.

     14.4 Remedying Defaults.  Landlord shall have the right, but shall not be
          ------------------
required, to pay such sums or do any act which requires the expenditure of
monies which may be necessary or appropriate by reason of the failure or neglect
of Tenant to perform any of the provisions of this Lease, and in the event of
the exercise of such right by Landlord, Tenant agrees to pay to Landlord
forthwith upon demand all such sums, together with interest thereon at a rate
equal to 3% over the base rate in effect from time to time at The First National
Bank of Boston or its successor(but in no event less than 18% per annum), as
Additional Rent. Any payment of Basic Rent and Additional Rent payable hereunder
not paid when due shall, at the option of Landlord, bear interest at a rate
equal to 3% over the base rate in effect from time to time at The First National
Bank of Boston or its successor (but in no event less than 18% per annum) from
the due date thereof and shall be payable forthwith on demand by Landlord, as
Additional Rent.

     14.5 Remedies Cumulative.  The specified remedies to which Landlord may
          -------------------
resort hereunder are not intended to be exclusive of any remedies or means of
redress to which Landlord may at any time be entitled lawfully, and Landlord may
invoke any remedy (including the remedy of specific performance) allowed at law
or in equity as if specific remedies were not herein provided for.

                                       38
<PAGE>

     14.6 Attorneys' Fees.  In the event of any litigation by the parties
          ---------------
concerning this Lease and enforcement of obligations hereunder, the prevailing
party shall be entitled to recover from the opposing party reasonable attorneys
fees and other expenses of litigation.

     14.7 Waiver.
          ------

          (a)  Failure on the part of Landlord or Tenant to complain of any
action or non-action on the part of the other, no matter how long the same may
continue, shall never be a waiver by Tenant or Landlord, respectively, of any of
the other's rights hereunder. Further, no waiver at any time of any of the
provisions hereof by Landlord or Tenant shall be construed as a waiver of any of
the other provisions hereof, and a waiver at any time of any of the provisions
hereof shall not be construed as a waiver at any subsequent time of the same
provisions. The consent or approval of Landlord or Tenant to or of any action by
the other requiring such consent or approval shall not be construed to waive or
render unnecessary Landlord's or Tenant's consent or approval to or of any
subsequent similar act by the other.

          (b)  No payment by Tenant, or acceptance by Landlord, of a lesser
amount than shall be due from Tenant to Landlord shall be treated otherwise than
as a payment on account of the earliest installment of any payment due from
Tenant under the provisions hereof. The acceptance by Landlord of a check for a
lesser amount with an endorsement or statement thereon, or upon any letter
accompanying such check, that such lesser amount is payment in full, shall be
given no effect, and Landlord may accept such check without prejudice to any
other rights or remedies which Landlord may have against Tenant.

     14.8 Security Deposit.  If a security deposit is specified in Section 1.1
          ----------------
hereof, Tenant agrees that the same will be paid upon execution and delivery of
this Lease, and that Landlord shall hold the same throughout the Term of this
Lease as security for the performance by Tenant of all obligations on the part
of Tenant hereunder. Landlord shall have the right from time to time, without
prejudice to any other remedy Landlord may have on account thereof, to apply
such deposit, or any part thereof, to Landlord's damages arising from, or to
cure, any Default of Tenant. If Landlord shall so apply any or all of such
deposit, Tenant shall immediately upon demand deposit with Landlord the amount
so applied to be held as security hereunder. Landlord shall return the deposit,
or so much thereof as shall not have theretofore been applied in accordance with
the terms of this Section, to Tenant on the expiration or earlier termination of
the Term of this Lease and surrender of possession of the Premises by Tenant to
Landlord at such time, provided that there is then existing no Default of Tenant
(nor any circumstance which, with the passage of time or the giving of notice,
or both, would constitute a Default of Tenant). While Landlord holds such
deposit, Landlord shall have no obligation to pay interest on the same and shall
have the right to commingle the same with Landlord's other funds. If Landlord
conveys Landlord's interest under this Lease, the deposit, or any part thereof
not previously applied, may be turned over by Landlord to Landlord's grantee,
and, if so turned over, Tenant agrees to look

                                       39
<PAGE>

solely to such grantee for proper application of the deposit in accordance with
the terms of this Section, and the return thereof in accordance herewith. The
holder of a mortgage shall not be responsible to Tenant for the return or
application of any such deposit, whether or not it succeeds to the position of
Landlord hereunder, unless such deposit shall have been received in hand by such
holder.

     14.9 Landlord's Default.  Landlord shall in no event be in default under
          ------------------
this Lease unless Landlord shall neglect or fail to perform any of its
obligations hereunder and shall fail to remedy the same within thirty (30) days
after notice to Landlord specifying such neglect or failure, or if such failure
is of such a nature that Landlord cannot reasonably remedy the same within such
thirty (30) day period, Landlord shall fail to commence promptly (and in any
event within such thirty (30) day period) to remedy the same and to prosecute
such remedy to completion with diligence and continuity.

                                  ARTICLE 15
                           MISCELLANEOUS PROVISIONS
                           ------------------------

     15.1 Rights of Access.  Landlord  and Agent shall have the right to enter
          ----------------
the Premises at all reasonable hours for the purpose of inspecting the Premises,
doing maintenance or making repairs or otherwise exercising its rights or
fulfilling its obligations under this Lease, and Landlord and Agent also shall
have the right to make access available at all reasonable hours to prospective
or existing mortgagees, purchasers or tenants of any part of the Property.

     15.2 Covenant of Quiet Enjoyment.  Subject to the terms and conditions of
          ---------------------------
this Lease, on payment of the Basic Rent and Additional Rent and observing,
keeping and performing all of the other terms and conditions of this Lease on
Tenant's part to be observed, kept and performed, Tenant shall lawfully,
peaceably and quietly enjoy the Premises during the term hereof, without
hindrance or ejection by any persons lawfully claiming under Landlord to have
title to the Premises superior to Tenant. The foregoing covenant of quiet
enjoyment is in lieu of any other covenant, express or implied.

     15.3 Landlord's Liability.
          --------------------

          (a)  Tenant agrees to look solely to Landlord's equity interest in the
Property at the time of recovery for recovery of any judgment against Landlord,
and agrees that neither Landlord nor any successor of Landlord shall be
personally liable for any such judgment, or for the payment of any monetary
obligation to Tenant.  The provision contained in the foregoing sentence is not
intended to, and shall not, limit any right that Tenant might otherwise have to
obtain injunctive relief against Landlord or any successor of Landlord, or to
take any action not

                                       40
<PAGE>

involving the personal liability of Landlord or any successor of Landlord to
respond in monetary damages from Landlord's assets other than Landlord's equity
interest in the Property.

          (b)  In no event shall Landlord ever be liable to Tenant for any loss
of business or any other indirect or consequential damages suffered by Tenant
from whatever cause.

          (c)  Where provision is made in this Lease for Landlord's consent, and
Tenant shall request such consent, and Landlord shall fail or refuse to give
such consent, Tenant shall not be entitled to any damages for any withholding by
Landlord of its consent, it being intended that Tenant's sole remedy shall be an
action for specific performance or injunction, and that such remedy shall be
available only in those cases where Landlord has expressly agreed in writing not
to unreasonably withhold its consent. Furthermore, whenever Tenant requests
Landlord's consent or approval (whether or not provided for herein), Tenant
shall pay to Landlord, on demand, as Additional Rent, any reasonable expenses
incurred by Landlord (including without limitation reasonable attorneys' fees
and costs, if any) in connection therewith.

          (d)  Any repairs or restoration required or permitted to be made by
Landlord under this Lease may be made during normal business hours, and Landlord
shall have no liability for damages to Tenant for inconvenience, annoyance or
interruption of business arising therefrom.

     15.4 Estoppel Certificate.  Tenant shall, at any time and from time to
          --------------------
time, upon not less than ten (10) business days  prior written notice by
Landlord, execute, acknowledge and deliver to Landlord an estoppel certificate
containing such statements of fact as Landlord reasonably requests.

     15.5 Relocation. Landlord reserves the right to relocate Tenant, upon prior
          ----------
written notice, to other comparable space within the Building at Landlord's sole
cost and expense at any time during the Lease Term; provided, however, that
Landlord shall pay all reasonable costs of moving Tenant to such other space
including the breakdown, move and set-up of furniture and equipment, moving
files, and replacing stationery and signage with substantially equivalent
materials.

     15.6 Brokerage.  Tenant warrants and represents that Tenant has dealt with
          ---------
no broker in connection with the consummation of this Lease other than Broker,
and, in the event of any brokerage claims against Landlord predicated upon prior
dealings with Tenant, Tenant agrees to defend the same and indemnify Landlord
against any such claim (except any claim by Broker).

     15.7 Rules and Regulations.  Tenant shall abide by the Rules and
          ---------------------
Regulations from time to time established by Landlord, it being agreed that such
Rules and Regulations will be established and applied by Landlord in a non-
discriminatory fashion, such that all Rules and

                                       41
<PAGE>

Regulations shall be generally applicable to other tenants of the Building of
similar nature to the Tenant named herein. Landlord agrees to use reasonable
efforts to insure that any such Rules and Regulations are uniformly enforced,
but Landlord shall not be liable to Tenant for violation of the same by any
other tenant or occupant of the Building, or persons having business with them.
In the event that there shall be a conflict between such Rules and Regulations
and the provisions of this Lease, the provisions of this Lease shall control.
The Rules and Regulations currently in effect are set forth in Exhibit E.

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

     15.9   Provisions Binding, Etc.  Except as herein otherwise provided, the
            -----------------------
terms hereof shall be binding upon and shall inure to the benefit of the
successors and assigns, respectively, of Landlord and Tenant (except in the case
of Tenant, only such successors and assigns as may be permitted hereunder) and,
           ----
if Tenant shall be an individual, upon and to his heirs, executors,
administrators, successors and permitted assigns.  Each term and each provision
of this Lease to be performed by Tenant shall be construed to be both a covenant
and a condition.  Any reference in this Lease to successors and assigns of
Tenant shall not be construed to constitute a consent to assignment by Tenant.

     15.10  Recording.  Tenant agrees not to record this Lease, but, if the Term
            ---------
of this Lease (including any extended term) is seven (7) years or longer, each
party hereto agrees, on the request of the other, to execute a notice of lease
in recordable form and complying with applicable law. In no event shall such
document set forth the rent or other charges payable by Tenant under this Lease;
and any such document shall expressly state that it is executed pursuant to the
provisions contained in this Lease, and is not intended to vary the terms and
conditions of this Lease. At Landlord's request, promptly upon expiration of or
earlier termination of the Term, Tenant shall execute and deliver to Landlord a
release of any document recorded in the real property records for the location
of the Property evidencing this Lease, and Tenant hereby appoints Landlord
Tenant's attorney-in-fact, coupled with an interest, to execute any such
document if Tenant fails to respond to Landlord's request to do so within
fifteen (15) days. The obligations of Tenant under this Section shall survive
the expiration or any earlier termination of the Term.

     15.11  Notice.  All notices or other communications required hereunder
            ------
shall be in writing and shall be deemed duly given if delivered in person (with
receipt therefor), if sent by reputable overnight delivery or courier service
(e.g., Federal Express) providing for receipted

                                       42
<PAGE>

delivery, or if sent by certified or registered mail, return receipt requested,
postage prepaid, to the following address:

            (a)   if to Landlord at Landlord's Address, to the attention of Karl
                  W. Weller.

            (b)   if to Tenant, at Tenant's Address, to the attention of General
                  Counsel, and after the Commencement Date, at the Premises,
                  with a copy to Tenant's Address.

     Where receipt of notice or other communication shall be conclusively
established by either (i) return of a return receipt indicating that the notice
has been delivered; or (ii) return of the letter containing the notice with an
indication from the courier or postal service that the addressee has refused to
accept delivery of the notice. Either  party may change its address for the
giving of notices by notice given in accordance with this Section.

     15.12  When Lease Becomes Binding; Entire Agreement; Modification.  The
            ----------------------------------------------------------
submission of this document for examination and negotiation does not constitute
an offer to lease, or a reservation of, or option for, the Premises, and this
document shall become effective and binding only upon the execution and delivery
hereof by both Landlord and Tenant. This Lease is the entire agreement between
Landlord and Tenant, and this Lease expressly supersedes any negotiations,
considerations, representations and understandings and proposals or other
written documents relating hereto. This Lease may be modified or altered only by
written agreement between Landlord and Tenant, and no act or omission of any
employee or agent of Landlord shall alter, change or modify any of the
provisions hereof.

     15.13  Paragraph Headings and Interpretation of Sections.  The paragraph
            -------------------------------------------------
headings throughout this instrument are for convenience and reference only, and
the words contained therein shall in no way be held to explain, modify, amplify
or aid in the interpretation, construction or meaning of the provisions of this
Lease. The provisions of this Lease shall be construed as a whole, according to
their common meaning (except where a precise legal interpretation is clearly
evidenced), and not for or against either party. Use in this Lease of the words
"including," "such as" or words of similar import, when followed by any general
term, statement or matter, shall not be construed to limit such term, statement
or matter to the specified item(s), whether or not language of non-limitation,
such as "without limitation" or "including, but not limited to," or words of
similar import, are used with reference thereto, but rather shall be deemed to
refer to all other terms or matters that could fall within a reasonably broad
scope of such term, statement or matter.

     15.14  Dispute Resolution.  In the event of a dispute between Landlord and
            ------------------
Tenant pursuant to this Lease (other than a dispute relating to the payment of
Basic Rent and Additional Rent the parties agree that prior to pursuing other
available remedies (excluding giving notices of

                                       43
<PAGE>

default), they will attempt to directly negotiate resolution of their dispute.
If negotiation is unsuccessful, then they agree to participate in at least three
hours of mediation to be facilitated by a mediator mutually acceptable to them
under the mediation procedures set by the mediator. The mediation session shall
be conducted within thirty (30) days of the date on which the mediator receives
the request to mediate. The costs of such mediation shall be shared equally by
the parties.

     15.15  Financial Statements. Tenant shall, without charge therefor, at any
            --------------------
time, within ten (10) days following a request by Landlord, deliver to Landlord,
or to any other party designated by Landlord, a true and accurate copy of
Tenant's most recent financial statements. All requests made by Tenant regarding
subleases or assignments must be accompanied by the most recent financial
statement of Tenant's prospective subtenant or prospective assignee.

     15.16  Waiver of Jury Trial.  Landlord and Tenant hereby each waive trial
            --------------------
by jury in any action, proceeding or counterclaim brought by either against the
other, on or in respect of any matter whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant or Tenant's
use or occupancy of the Premises.

     15.17  Time Is of the Essence.  Time is of the essence of each provision of
            ----------------------
this Lease.

     15.18  Multiple Counterparts.  This Lease may be executed in multiple
            ---------------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document.

     15.19  Governing Law.  This Lease shall be governed by the laws of the
            -------------
state in which the Property is located.

                                       44
<PAGE>

     IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed, under seal, by persons hereunto duly authorized, as of the date first
set forth above.

                                   LANDLORD:

                                   BCIA NEW ENGLAND HOLDINGS LLC, a Delaware
                                   limited liability company

                                   By:  BCIA NEW ENGLAND HOLDINGS MASTER LLC, a
                                        Delaware limited liability company, its
                                        Manager

                                     By:  BCIA NEW ENGLAND HOLDINGS MANAGER LLC,
                                          a Delaware limited liability company,
                                          its Manager

                                       By:  BCIA NEW ENGLAND HOLDINGS MANAGER
                                            CORP., a Delaware corporation, its
                                            Manager

                                            By: /s/ Karl W. Weller
                                               ------------------------------
                                               Karl W. Weller
                                               Executive Vice President

                                   TENANT:

                                   PSW TECHNOLOGIES, INC., a Delaware
                                   corporation

                                   By: /s/ Timothy D. Webb
                                      ----------------------------------
                                      Name: Timothy D. Webb
                                      Title: President & CEO

                                       45
<PAGE>

                                   EXHIBIT A
                           Location Plan of Premises

                                       46
<PAGE>

                                   EXHIBIT B
                             Site Plan of Building

                                      B-1
<PAGE>

                                   EXHIBIT C
                           Commencement Date Letter

                                            _______________, 1999

[Name of Contact]
[Name of Tenant]
[Address of Tenant]

     RE:  [Name of Tenant]
          [Premises Rentable Area and Floor]
          [Address of Building]

Dear [Name of Contact]:

     Reference is made to that certain Lease, dated as of             ,1999,
between [Landlord], as Landlord and [Tenant] as Tenant, with respect to Premises
on the ___________ floor of the above-referenced building. In accordance with
Section 4.1 of the Lease, this is to confirm that the Commencement Date of the
Term of the Lease occurred on ___________________________, and that the Term of
the Lease shall expire on ________________________________.

     If the foregoing is in accordance with your understanding, kindly execute
the enclosed duplicate of this letter, and return the same to us.

                                        Very truly yours,

                                        [Landlord]

                                        By:__________________________________
                                           Name: __________________________
                                           Title: _________________________

                                      C-1
<PAGE>

Accepted and Agreed:

[Tenant]

By:____________________________
    Name:______________________
    Title:_____________________
    Date:______________________

                                      C-2
<PAGE>

                                   EXHIBIT D
                              Operating Expenses

Operating Expenses shall include the following, without limitation:

     1.   All expenses incurred by Landlord or Landlord's agents which shall be
          directly related to employment of personnel, including amounts
          incurred for wages, salaries and other compensation for services,
          payroll, social security, unemployment and similar taxes, workmen's
          compensation insurance, disability benefits, pensions,
          hospitalization, retirement plans and group insurance, uniforms and
          working clothes and the cleaning thereof, and expenses imposed on
          Landlord or Landlord's agents pursuant to any collective bargaining
          agreement for the services of employees of Landlord or Landlord's
          agents in connection with the operation, repair, maintenance,
          cleaning, management and protection of the Property, including,
          without limitation, day and night supervisors, manager, accountants,
          bookkeepers, janitors, carpenters, engineers, mechanics, electricians
          and plumbers and personnel engaged in supervision of any of the
          persons mentioned above; provided that, if any such employee is also
          employed on other property of Landlord, such compensation shall be
          suitably prorated among the Property and such other properties.

     2.   The cost of services, utilities, materials and supplies furnished or
          used in the operation, repair, maintenance, cleaning, management and
          protection of the Property.

     3.   The cost of replacements for tools and other similar equipment used in
          the repair, maintenance, cleaning and protection of the Property,
          provided that, in the case of any such equipment used jointly on other
          property of Landlord, such costs shall be suitably prorated among the
          Property and such other properties.

     4.   Where the Property is managed by Landlord or an affiliate of Landlord,
          a sum equal to the amounts customarily charged by management firms in
          the Greater Boston area for similar properties, whether or not
          actually paid, or where managed by other than Landlord or an affiliate
          thereof, the amounts accrued for management, together with, in either
          case, amounts accrued for legal and other professional fees relating
          to the Property, but excluding such fees and commissions paid in
          connection with services rendered for securing or renewing leases and
          for matters not related to the normal administration and operation of
          the Property.

                                      D-1
<PAGE>

     5.   Premiums for insurance against damage or loss to the Property from
          such hazards as Landlord shall determine, including, but not by way of
          limitation, insurance covering loss of rent attributable to any such
          hazards, and public liability insurance.

     6.   If, during the Term of this Lease, Landlord shall make a capital
          expenditure, the total cost of which is not properly includable in
          Operating Expenses for the Operating Year in which it was made, there
          shall nevertheless be included in such Operating Expenses for the
          Operating Year in which it was made and in Operating Expenses for each
          succeeding Operating Year the annual charge-off of such capital
          expenditure.  Annual charge-off shall be determined by dividing the
          original capital expenditure plus an interest factor, reasonably
                                       ----
          determined by Landlord, as being the interest rate then being charged
          for long-term mortgages by institutional lenders on like properties
          within the locality in which the Property is located, by the number of
          years of useful life of the capital expenditure; and the useful life
          shall be determined reasonably by Landlord in accordance with
          generally accepted accounting principles and practices in effect at
          the time of making such expenditure.

     7.   Costs for electricity, water and sewer use charges, gas and other
          utilities supplied to the Property and not paid for directly by
          tenants.

     8.   Betterment assessments, provided the same are apportioned equally over
          the longest period permitted by law, and to the extent, if any, not
          included in Taxes.

     9.   Amounts paid to independent contractors for services, materials and
          supplies furnished for the operation, repair, maintenance, cleaning
          and protection of the Property.

     In no event shall Operating Expenses include:

     1.   Cost of repairs or other work occasioned by the exercise of right of
          eminent domain;

     2.   Leasing commissions, attorneys' fees, costs and disbursements and
          other expenses which are incurred in connection with negotiations or
          disputes with tenants, other occupants or prospective tenants;

     3.   Depreciation and amortization;

                                       2
<PAGE>

     4.   Ground rents, principal payments, or any interest expense on any loans
          secured by mortgages placed upon the Building and underlying land (or
          a leasehold interest therein);

     5.   Any particular items and services for which Tenant otherwise
          reimburses Landlord by direct payment over and above Basic Rent and
          Operating Expenses;

     6.   Advertising and promotional expenditures;

     7.   Any costs, fines or penalties incurred due to violations by Landlord
          of any governmental law, ordinance, rule or authority; and

     8.   Any expense for which Landlord is compensated through proceeds of
          insurance.

                                       3
<PAGE>

                                   EXHIBIT E
                       Rules and Regulations of Building

     The following regulations are generally applicable:

     1.   If the Building is occupied by more than one tenant, the public
          sidewalks, entrances, passages, courts, elevators, vestibules,
          stairways, corridors or halls shall not be obstructed or encumbered by
          Tenant (except as necessary for deliveries) or used for any purpose
          other than ingress and egress to and from the Premises.

     2.   If the Building is occupied by more than one tenant, no awnings,
          curtains, blinds, shades, screens or other projections shall be
          attached to or hung in, or used in connection with, any window of the
          Premises or any outside wall of the Building. Such awnings, curtains.
          blinds, shades, screens or other projections must be of a quality,
          type, design and color, and attached in the manner, approved by
          Landlord.

     3.   No show cases or other articles shall be put in front of or affixed to
          any part of the exterior of the Building, nor, if the Building is
          occupied by more than one tenant, displayed through interior windows
          into the atrium of the Building, nor placed in the halls, corridors or
          vestibules, provided that show cases or articles may be displayed
          through interior windows into the atrium of the Building (if any) with
          Landlord's prior written approval, such approval not to be
          unreasonably withheld or delayed so long as such display does not
          adverse affect the aesthetic integrity of the Building.

     4.   The water and wash closets and other plumbing fixtures shall not be
          used for any purposes other than those for which they were designed
          and constructed, and no sweepings, rubbish, rags, acids or like
          substances shall be deposited therein.  All damages resulting from any
          misuse of the fixtures shall be borne by the Tenant.

     5.   Tenant shall not use the Premises or any part thereof or permit the
          Premises or any part thereof to be used as a public employment bureau
          or for the sale of property of any kind at auction, except in
          connection with Tenant's business.

     6.   Tenant must, upon the termination of its tenancy, return to the
          Landlord all locks, cylinders and keys to offices and toilet rooms of
          the Premises.

     7.   Landlord reserves the right to exclude from the Building after
          business hours and at all hours on days other than Business Days all
          persons connected with or calling upon the Tenant who are not escorted
          in the Building by an employee of Tenant.

                                      E-1
<PAGE>

          Tenant shall be responsible for all persons to whom it allows access
          and shall be liable to the Landlord for all wrongful acts of such
          persons.

     8.   The requirements of Tenant will be attended to only upon application
          at the Building Management Office.  Employees of Landlord shall not
          perform any work or do anything outside of their regular duties,
          unless under special instructions from the office of the Landlord.

     9.   There shall not be used in any space in the Building, or in the public
          halls of the Building, either by Tenant or by jobbers or others, in
          the delivery or receipt of merchandise, any hand trucks, except those
          equipped with rubber tires and side guards.

     10.  No bicycles, vehicles or animals of any kind shall be brought into or
          kept in or about the Premises.

     11.  If the Building is occupied by more than one tenant, no tenant shall
          make, or permit to be made, any unseemly or disturbing noises or
          disturb or interfere with occupants of this or any neighboring
          building or premises or those having business with them whether by use
          of any musical instrument, radio, talking machine, unmusical noise,
          whistling, singing, or in any other way.  No tenant shall throw
          anything out of the doors, windows or skylights or down the
          passageways.

     12.  The Premises shall not be used for lodging or sleeping or for any
          immoral or illegal purpose.

     13.  No smoking shall be permitted in the Premises or the Building.
          Smoking shall only be permitted in smoking areas outside of the
          Building which have been designated by the Landlord.

     14.  Landlord shall have the right, exercisable without notice and without
          liability to any tenant, to change the name and street address of the
          Building.

     15.  The rules and regulations set forth in Attachment I to this Exhibit,
          which is by this reference made a part hereof ,are applicable to any
          Alterations being undertaken by or for Tenant in the Premises pursuant
          to Section 5.2 of the Lease:

                                      E-2
<PAGE>

                           Attachment I to Exhibit E
                 Rules and Regulations for Tenant Alterations
                  --------------------------------------------

     A.   General
          -------

     1.   All Alterations made by Tenant in, to or about the Premises shall be
made in accordance with the requirements of this Exhibit and by contractors or
mechanics approved by Landlord.

     2.   Tenant shall, prior to the commencement of any work, submit for
Landlord's written approval, complete plans for the Alterations, with full
details and specifications for all of the Alterations, in compliance with
Section D below.

     3.   Alterations must comply with the Building Code applicable to the
Property and the requirements, rules and regulations and any other governmental
agencies having jurisdiction.

     4.   No work shall be permitted to commence before Tenant obtains and
furnishes to Landlord copies of all necessary licenses and permits from all
governmental authorities having jurisdiction.

     5.   All demolition, removals or other categories of work that may
inconvenience other tenants or disturb Building operations, must be scheduled
and performed before or after normal business hours, and Tenant shall provide
Agent with at least 24 hours' notice prior to proceeding with such work.

     6.   All inquiries, submissions, approvals and all other matters shall be
processed through Agent.

     7.   All work, if performed by a contractor or subcontractor, shall be
subject to reasonable supervision and inspection by Landlord's representative.
Such supervision and inspection shall be at Tenant's sole expense and Tenant
shall pay Landlord's reasonable charges for such supervision and inspection.

     B.   Prior to Commencement of Work
          -----------------------------

     1.   Tenant shall submit to the Building manager a request to perform the
work.  The request shall include the following enclosures:

                                     EI-1
<PAGE>

               (i)    A list of Tenant's contractors and/or subcontractors for
                      Landlord's approval.

               (ii)   Four complete sets of plans and specifications properly
                      stamped by a registered architect or professional
                      engineer.

               (iii)  A properly executed building permit application form.

               (iv)   Four executed copies of the Insurance Requirements
                      Agreement in the form attached to this Exhibit as
                      Attachment II and made a part hereof from Tenant's
                      contractor and, if requested by Landlord, from the
                      contractor's subcontractors.

               (v)    Contractor's and subcontractor's insurance certificates,
                      including an indemnity in accordance with the Insurance
                      Requirements Agreement.

     2.   Landlord will return the following to Tenant:

               (i)    Two sets of plans approved or a disapproved with specific
                      comments as to the reasons therefor (such approval or
                      comments shall not constitute a waiver of approval of
                      governmental authorities).

               (ii)   Two fully executed copies of the Insurance Requirements
                      Agreement.

     3.   Landlord's approval of the plans, drawings, specifications or other
submissions in respect of any Alterations shall create no liability or
responsibility on the part of Landlord for their completeness, design
sufficiency or compliance with requirements of any applicable laws, rules or
regulations of any governmental or quasi-governmental agency, board or
authority.

     4.   Tenant shall obtain a building permit from the Building Department and
necessary permits from other governmental agencies.  Tenant shall be responsible
for keeping current all permits.  Tenant shall submit copies of all approved
plans and permits to Landlord and shall post the original permit on the Premises
prior to the commencement of any work.

                                     EI-2
<PAGE>

     C.   Requirements and Procedures
          ---------------------------

     1.   All structural and floor loading requirements shall be subject to the
prior approval of Landlord's structural engineer.

     2.   All mechanical (HVAC, plumbing and sprinkler) and electrical
requirements shall be subject to the approval of Landlord's mechanical and
electrical engineers and all mechanical and electrical work shall be performed
by contractors who are engaged by Landlord in constructing, operating or
maintaining the Building.  When necessary, Landlord will require engineering and
shop drawings, which drawings must be approved by Landlord before work is
started.  Drawings are to be prepared by Tenant and all approvals shall be
obtained by Tenant.

     3.   Elevator service for construction work shall be charged to Tenant at
standard Building rates.  Prior arrangements for elevator use shall be made with
Building manager by Tenant.  No material or equipment shall be carried under or
on top of elevators.  If an operating engineer is required by any union
regulations, such engineer shall be paid for by Tenant.

     4.   If shutdown of risers and mains for electrical, HVAC, sprinkler and
plumbing work is required, such work shall be supervised by Landlord's
representative.  No work will be performed in Building mechanical equipment
rooms without Landlord's approval and under Landlord's supervision.

     5.   Tenant's contractor shall:

               (i)    have a superintendent or foreman on the Premises at all
                      times;

               (ii)   police the job at all times, continually keeping the
                      Premises orderly;

               (iii)  maintain cleanliness and protection of all areas,
                      including elevators and lobbies.

               (iv)   protect the front and top of all peripheral HVAC units and
                      thoroughly clean them at the completion of work;

               (v)    block off supply and return grills, diffusers and ducts to
                      keep dust from entering into the Building air conditioning
                      system; and

               (vi)   avoid the disturbance of other tenants.

                                     EI-3
<PAGE>

     6.   If Tenant's contractor is negligent in any of its responsibilities,
Tenant shall be charged for corrective work.

     7.   All equipment and installations must be equal to the standards
generally in effect with respect to the remainder of the Building.  Any
deviation from such standards will be permitted only if indicated or specified
on the plans and specifications and approved by Landlord.

     8.   A properly executed air balancing report signed by a professional
engineer shall be submitted to Landlord upon the completion of all HVAC work.

     9.   Upon completion of the Alterations, Tenant shall submit to Landlord a
permanent certificate of occupancy and final approval by the other governmental
agencies having jurisdiction.

     10.  Tenant shall submit to Landlord a final "as-built" set of drawings
showing all items of the Alterations in full detail.

     11.  Additional and differing provisions in the Lease, if any, will be
applicable and will take precedence.

D.   Standards for Plans and Specifications.
     --------------------------------------

     Whenever Tenant shall be required by the terms of the Lease (including this
Exhibit) to submit plans to Landlord in connection with any Alterations, such
plans shall include at least the following:

     1.   Floor plan indicating location of partitions and doors (details
required of partition and door types).

     2.   Location of standard electrical convenience outlets and telephone
outlets.

     3.   Location and details of special electrical outlets; e.g.,
                                                              ----
photocopiers, etc.

     4.   Reflected ceiling plan showing layout of standard ceiling and lighting
fixtures. Partitions to be shown lightly with switches located indicating
fixtures to be controlled.

     5.   Locations and details of special ceiling conditions, lighting
fixtures, speakers, etc.

     6.   Location and specifications of floor covering, paint or paneling with
paint colors referenced to standard color system.

                                     EI-4
<PAGE>

     7.   Finish schedule plan indicating wall covering, paint, or paneling with
paint colors referenced to standard color system.

     8.   Details and specifications of special millwork, glass partitions,
rolling doors and grilles, blackboards, shelves, etc.

     9.   Hardware schedule indicating door number keyed to plan, size, hardware
required including butts, latchsets or locksets, closures, stops, and any
special items such as thresholds, soundproofing, etc. Keying schedule is
required.

     10.  Verified dimensions of all built-in equipment (file cabinets, lockers,
plan files, etc.)

     11.  Location and weights of storage files.

     12.  Location of any special soundproofing requirements.

     13.  Location and details of special floor areas exceeding 50 pounds of
live load per square foot.

     14.  All structural, mechanical, plumbing and electrical drawings, to be
prepared by the base building consulting engineers, necessary to complete the
Premises in accordance with Tenant's Plans.

     15.  All drawings to be uniform size (30" x 46") and shall incorporate the
standard project electrical and plumbing symbols and be at a scale of 1/8" = 1'
or larger.

     16.  All drawings shall be stamped by an architect (or, where applicable,
an engineer) licensed in the jurisdiction in which the Property is located and
without limiting the foregoing, shall be sufficient in all respects for
submission to applicable authorization in connection with a building permit
application.

                                     EI-5
<PAGE>

                          Attachment II to Exhibit E
                      Contractor's Insurance Requirements
                      -----------------------------------

Building:

Landlord:

Tenant:

Premises:

The undersigned contractor or subcontractor ("Contractor") has been hired by the
tenant named above (hereinafter called "Tenant") of the Building named above (or
by Tenant's contractor) to perform certain work ("Work") for Tenant in the
Premises identified above.  Contractor and Tenant have requested the landlord
named above ("Landlord") to grant Contractor access to the Building and its
facilities in connection with the performance of the Work, and Landlord agrees
to grant such access to Contractor upon and subject to the following terms and
conditions:

     1.   Contractor agrees to indemnify and save harmless Landlord and its
respective officers, employees and agents and their affiliates, subsidiaries and
partners, and each of them, from and with respect to any claims, demands, suits,
liabilities, losses and expenses, including reasonable attorneys' fees, arising
out of or in connection with the Work (and/or imposed by law upon any or all of
them) because of personal injuries, bodily injury (including death at any time
resulting therefrom) and loss of or damage to property, including consequential
damages, whether such injuries to person or property are claimed to be due to
negligence of the Contractor, Tenant, Landlord or any other party entitled to be
indemnified as aforesaid except to the extent specifically prohibited by law
(and any such prohibition shall not void this Agreement but shall be applied
only to the minimum extent required by law).

     2.   Contractor shall provide and maintain at its own expense, until
completion of the Work, the following insurance:

          (a)  Workmen's Compensation and Employers, Liability Insurance
covering each and every workman employed in, about or upon the Work, as provided
for in each and every statute applicable to Workmen's Compensation and
Employers' Liability Insurance.

                                     EII-1
<PAGE>

          (b)  Comprehensive General Liability Insurance including coverages for
Protective and Contractual Liability (to specifically include coverage for the
indemnification clause of this Agreement) for not less than the following
limits:

               Personal Injury:

               $3,000,000 per person
               $10,000,000 per
               occurrence

               Property Damage:
               $3,000,000 per occurrence $3,000,000 aggregate

          (c)  Comprehensive Automobile Liability Insurance (covering all owned,
non-owned and/or hired motor vehicles to be used in connection with the Work)
for not less than the following limits:

               Bodily Injury:
               $1,000,000 per person
               $1,000,000 per occurrence

               Property Damage:
               $1,000,000 per occurrence

     Contractor shall furnish a certificate from its insurance carrier or
carriers to the Building office before commencing the Work, showing that it has
complied with the above requirements regarding insurance and providing that the
insurer will give Landlord ten (10) days' prior written notice of the
cancellation of any of the foregoing policies.

     3.   Contractor shall require all of its subcontractors engaged in the Work
to provide the following insurance:

          (a)  Comprehensive General Liability Insurance including Protective
and Contractual Liability coverages with limits of liability at least equal to
the limits stated in paragraph 2(b).

          (b)  Comprehensive Automobile Liability Insurance (covering all owned,
non-owned and/or hired motor vehicles to be used in connection with the Work)
with limits of liability at least equal to the limits stated in paragraph 2(c).

                                     EII-2
<PAGE>

     Upon the request of Landlord, Contractor shall require all of its
subcontractors engaged in the Work to execute an Insurance Requirements
agreement in the same form as this Agreement.

     Agreed to and executed this day of          , 19  .

                              Contractor:

                              By:____________________________________________

                              By:____________________________________________

                              By:____________________________________________

                                     E-13<PAGE>

                                                                   EXHIBIT 10.24

                            PSW TECHNOLOGIES, INC.

               2000 NON-OFFICER STOCK OPTION/STOCK ISSUANCE PLAN
               -------------------------------------------------

                                  ARTICLE ONE

                              GENERAL PROVISIONS
                              ------------------

     I.    PURPOSE OF THE PLAN

           This 2000 Non-Officer Stock Option/Stock Issuance Plan is intended to
promote the interests of PSW Technologies, Inc., a Delaware corporation, by
providing eligible persons with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in the service of the Corporation.

           Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.

     II.   STRUCTURE OF THE PLAN

           A.   The Plan shall be divided into two separate equity programs:

                    (i)  the Discretionary Option Grant Program under which
     eligible persons may, at the discretion of the Plan Administrator, be
     granted options to purchase shares of Common Stock, and

                    (ii) the Stock Issuance Program under which eligible persons
     may, at the discretion of the Plan Administrator, be issued shares of
     Common Stock directly, either through the immediate purchase of such shares
     or as a bonus for services rendered the Corporation (or any Parent or
     Subsidiary).

           B.   The provisions of Articles One and Four shall apply to all
equity programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.

     III.  ADMINISTRATION OF THE PLAN

           A.   Administration of the Plan with respect to all persons eligible
to participate in the Plan may, at the Board's discretion, be vested in the
Committee, or the Board may retain the power to administer those programs with
respect to all such persons.

           B.   Members of the Committee shall serve for such period of time as
the Board may determine and may be removed by the Board at any time. The Board
may also at any time terminate the functions of any Committee and reassume all
powers and authority previously delegated to such committee.
<PAGE>

          C.   The Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue such
interpretations of, the provisions of such programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Plan or any option or stock issuance thereunder.

          D.   Service on the Committee shall constitute service as a Board
member, and members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such
committee. No member of the Committee shall be liable for any act or omission
made in good faith with respect to the Plan or any option grants or stock
issuances under the Plan.

     IV.  ELIGIBILITY

          A.   The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs are as follows:

                    (i)  Employees who are not officers or directors of the
     Corporation, and

                    (ii) consultants and other independent advisors who provide
     services to the Corporation (or any Parent or Subsidiary).

          B.   The Plan Administrator shall have full authority (subject to the
provisions of the Plan) to determine, (i) with respect to the option grants
under the Discretionary Option Grant Program, which eligible persons are to
receive option grants, the time or times when such option grants are to be made,
the number of shares to be covered by each such grant, the time or times at
which each option is to become exercisable, the vesting schedule (if any)
applicable to the option shares and the maximum term for which the option is to
remain outstanding and (ii) with respect to stock issuances under the Stock
Issuance Program, which eligible persons are to receive stock issuances, the
time or times when such issuances are to be made, the number of shares to be
issued to each Participant, the vesting schedule (if any) applicable to the
issued shares and the consideration to be paid for such shares.

          C.   The Plan Administrator shall have the absolute discretion either
to grant options in accordance with the Discretionary Option Grant Program or to
effect stock issuances in accordance with the Stock Issuance Program.

     V.   STOCK SUBJECT TO THE PLAN

          A.   The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 250,000 shares.

                                       2
<PAGE>

          B.   Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Section
III of Article Two. Unvested shares issued under the Plan and subsequently
cancelled or repurchased by the Corporation, at the original issue price paid
per share, pursuant to the Corporation's repurchase rights under the Plan, shall
be added back to the number of shares of Common Stock reserved for issuance
under the Plan and shall accordingly be available for reissuance through one or
more subsequent option grants or direct stock issuances under the Plan. However,
should the exercise price of an option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an option or the vesting of a stock issuance
under the Plan, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised or which vest under the stock issuance, and not by the net
number of shares of Common Stock issued to the holder of such option or stock
issuance.

          C.   Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of securities and the exercise
price per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive.

                                       3
<PAGE>

                                  ARTICLE TWO

                      DISCRETIONARY OPTION GRANT PROGRAM
                      ----------------------------------

     I.   OPTION TERMS

          Each option shall be a Non-Statutory Option and shall be evidenced by
one or more documents in the form approved by the Plan Administrator; provided,
                                                                      --------
however, that each such document shall comply with the terms specified below.

          A.   Exercise Price.
               --------------

               1.   The exercise price per share shall not be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date unless otherwise determined by the Plan Administrator.

               2.   The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Four and the documents evidencing the option, be payable in one or more
of the forms specified below:

                    (i)    cash or check made payable to the Corporation,

                    (ii)   shares of Common Stock held for the requisite period
     necessary to avoid a charge to the Corporation's earnings for financial
     reporting purposes and valued at Fair Market Value on the Exercise Date, or

                    (iii)  to the extent the option is exercised for vested
     shares, through a special sale and remittance procedure pursuant to which
     the Optionee shall concurrently provide irrevocable written instructions to
     (a) a Corporation-designated brokerage firm to effect the immediate sale of
     the purchased shares and remit to the Corporation, out of the sale proceeds
     available on the settlement date, sufficient funds to cover the aggregate
     exercise price payable for the purchased shares plus all applicable
     Federal, state and local income and employment taxes required to be
     withheld by the Corporation by reason of such exercise and (b) the
     Corporation to deliver the certificates for the purchased shares directly
     to such brokerage firm in order to complete the sale.

          Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

          B.   Exercise and Term of Options. Each option shall be exercisable at
               ----------------------------
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option.  However, no option shall have a term in excess of ten (10) years
measured from the option grant date.

                                       4
<PAGE>

          C.   Effect of Termination of Service.
               --------------------------------

               1.   The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:

                    (i)    Any option outstanding at the time of the Optionee's
     cessation of Service for any reason shall remain exercisable for such
     period of time thereafter as shall be determined by the Plan Administrator
     and set forth in the documents evidencing the option, but no such option
     shall be exercisable after the expiration of the option term. If such
     period is not specified in the documents evidencing the option, then the
     option shall remain exercisable for a period of ninety (90) days following
     the Optionee's cessation of Service.

                    (ii)   Any option exercisable in whole or in part by the
     Optionee at the time of death may be exercised subsequently by the personal
     representative of the Optionee's estate or by the person or persons to whom
     the option is transferred pursuant to the Optionee's will or in accordance
     with the laws of descent and distribution.

                    (iii)  During the applicable post-Service exercise period,
     the option may not be exercised in the aggregate for more than the number
     of vested shares for which the option is exercisable on the date of the
     Optionee's cessation of Service. Upon the expiration of the applicable
     exercise period or (if earlier) upon the expiration of the option term, the
     option shall terminate and cease to be outstanding for any vested shares
     for which the option has not been exercised. However, the option shall,
     immediately upon the Optionee's cessation of Service, terminate and cease
     to be outstanding to the extent the option is not otherwise at that time
     exercisable for vested shares.

                    (iv)   Should the Optionee's Service be terminated for
     Misconduct, then all outstanding options held by the Optionee shall
     terminate immediately and cease to be outstanding.

                    (v)    In the event of an Involuntary Termination following
     a Corporate Transaction, the provisions of Section II of this Article Two
     shall govern the period for which the outstanding options are to remain
     exercisable following the Optionee's cessation of Service and shall
     supersede any provisions to the contrary in this section.

               2.   The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:

                    (i)    extend the period of time for which the option is to
     remain exercisable following the Optionee's cessation of Service from the
     period otherwise in effect for that option to such greater period of time
     as the Plan Administrator shall deem appropriate, but in no event beyond
     the expiration of the option term, and/or

                                       5
<PAGE>

                    (ii)   permit the option to be exercised, during the
     applicable post-Service exercise period, not only with respect to the
     number of vested shares of Common Stock for which such option is
     exercisable at the time of the Optionee's cessation of Service but also
     with respect to one or more additional installments in which the Optionee
     would have vested under the option had the Optionee continued in Service.

          D.   Stockholder Rights.  The holder of an option shall have no
               ------------------
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

          E.   Repurchase Rights.  The Plan Administrator shall have the
               -----------------
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.

          F.   Limited Transferability of Options.  During the lifetime of the
               ----------------------------------
Optionee, a Non-Statutory Option may, to the extent permitted by the Plan
Administrator, be assigned in whole or in part during the Optionee's lifetime
(i) as a gift to one or more members of the Optionee's immediate family, to a
trust in which Optionee and/or one or more such family members hold more than
fifty percent (50%) of the beneficial interest or to an entity in which more
than fifty percent (50%) of the voting interests are owned by one or more such
family members or (ii) pursuant to a domestic relations order. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.

     II.  CORPORATE TRANSACTION/CHANGE IN CONTROL

          A.   In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall not so accelerate
if and to the extent: (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or parent
thereof) or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof), (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested option shares at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.

                                       6
<PAGE>

          B.   All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.

          C.   Notwithstanding Section II.A. and Section II.B. of this Article
Two, the Plan Administrator shall have the discretion, exercisable either at the
time the option is granted or at any time while the option remains outstanding,
to provide for the automatic acceleration of one or more outstanding options
(and the automatic termination of one or more outstanding repurchase rights with
the immediate vesting of the shares of Common Stock subject to those rights)
upon the occurrence of a Corporate Transaction, whether or not those options are
to be assumed or replaced (or those repurchase rights are to be assigned) in the
Corporate Transaction. The Plan Administrator shall also have the discretion to
grant options which do not accelerate whether or not such options are assumed
(and to provide for repurchase rights that do not terminate whether or not such
rights are assigned) in connection with a Corporate Transaction.

          D.   Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

          E.   Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
                         --------
securities shall remain the same.

          F.   The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of any options which are
assumed or replaced in a Corporate Transaction and do not otherwise accelerate
at that time (and the termination of any of the Corporation's outstanding
repurchase rights which do not otherwise terminate at the time of the Corporate
Transaction) in the event the Optionee's Service should subsequently terminate
by reason of an Involuntary Termination within eighteen (18) months following
the effective date of such Corporate Transaction. Any options so accelerated
shall remain exercisable for fully-vested shares until the earlier of (i) the
                                                           -------
expiration of the option term or (ii) the expiration of the one (1)-year period
measured from the effective date of the Involuntary Termination.

          G.   The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to (i) provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Change in Control or (ii)
condition any

                                       7
<PAGE>

such option acceleration (and the termination of any outstanding repurchase
rights) upon the subsequent Involuntary Termination of the Optionee's Service
within a specified period (not to exceed eighteen (18) months) following the
effective date of such Change in Control. Any options accelerated in connection
with a Change in Control shall remain fully exercisable until the expiration or
sooner termination of the option term.

           H.   The grant of options under the Discretionary Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

     III.  CANCELLATION AND REGRANT OF OPTIONS

                    (i)  The Plan Administrator shall have the authority to
     effect, at any time and from time to time, with the consent of the affected
     option holders, the cancellation of any or all outstanding options under
     the Discretionary Option Grant Program and to grant in substitution new
     options covering the same or different number of shares of Common Stock but
     with an exercise price per share based on the Fair Market Value per share
     of Common Stock on the new grant date.

                                       8
<PAGE>

                                 ARTICLE THREE

                            STOCK ISSUANCE PROGRAM
                            ----------------------

     I.   STOCK ISSUANCE TERMS

          Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.

          A.   Purchase Price.
               --------------

               1.   The purchase price per share shall not be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
issuance date unless otherwise determined by the Plan Administrator.

               2.   Subject to the provisions of Section I of Article Four,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:

                    (i)  cash or check made payable to the Corporation, or

                    (ii) past services rendered to the Corporation (or any
     Parent or Subsidiary).

          B.   Vesting Provisions.
               ------------------

               1.   Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives.

               2.   Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

               3.   The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.

                                       9
<PAGE>

               4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to the surrendered shares.

               5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the
cessation of the Participant's Service or the non-attainment of the performance
objectives applicable to those shares. Such waiver shall result in the immediate
vesting of the Participant's interest in the shares of Common Stock as to which
the waiver applies. Such waiver may be effected at any time, whether before or
after the Participant's cessation of Service or the attainment or non-attainment
of the applicable performance objectives.

     II.  CORPORATE TRANSACTION/CHANGE IN CONTROL

          A.   All of the Corporation's outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Corporate Transaction, except to the extent (i) those
repurchase rights are assigned to the successor corporation (or parent thereof)
in connection with such Corporate Transaction or (ii) such accelerated vesting
is precluded by other limitations imposed in the Stock Issuance Agreement.

          B.   Notwithstanding Section II.A. of this Article Three, the Plan
Administrator shall have the discretionary authority, exercisable either at the
time the unvested shares are issued or any time while the Corporation's
repurchase rights remain outstanding under the Stock Issuance Program, to
provide that those rights shall automatically terminate in whole or in part, and
the shares of Common Stock subject to those terminated rights shall immediately
vest in the event of a Corporate Transaction, whether or not those repurchase
rights are to be assigned to the successor corporation (or its parent) in
connection with such Corporate Transaction. The Plan Administrator shall also
have the discretion to provide for repurchase rights with terms different from
those in effect under this Section II in connection with a Corporate
Transaction.

          C.  The Plan Administrator shall have the discretion, exercisable
either at the time the unvested shares are issued or any time while the
Corporation's repurchase rights remain outstanding, to provide that any
repurchase rights that are assigned in the Corporate Transaction shall
automatically terminate, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event the Participant's
Service should subsequently terminate by reason of an Involuntary Termination
within eighteen (18) months following the effective date of such Corporate
Transaction.

                                       10
<PAGE>

          D.   The Plan Administrator shall have the discretion, exercisable
either at the time the unvested shares are issued or at any time while the
Corporation's repurchase right remains outstanding, to (i) provide for the
automatic termination of one or more outstanding repurchase rights and the
immediate vesting of the shares of Common Stock subject to those rights upon the
occurrence of a Change in Control or (ii) condition any such accelerated vesting
upon the subsequent Involuntary Termination of the Participant's Service within
a specified period (not to exceed eighteen (18) months) following the effective
date of such Change in Control.

     III. SHARE ESCROW/LEGENDS

          Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.

                                       11
<PAGE>

                                 ARTICLE FOUR

                                 MISCELLANEOUS
                                 -------------

     I.   FINANCING

          A.   The Plan Administrator may permit any Optionee or Participant to
pay the option exercise price under the Discretionary Option Grant Program or
the purchase price for shares issued under the Stock Issuance Program by
delivering a full-recourse, interest bearing promissory note payable in one or
more installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. In all events, the maximum credit available to the
Optionee or Participant may not exceed the sum of (i) the aggregate option
exercise price or purchase price payable for the purchased shares plus (ii) any
Federal, state and local income and employment tax liability incurred by the
Optionee or the Participant in connection with the option exercise or share
purchase.

          B.   The Plan Administrator may, in its discretion, determine that one
or more such promissory notes shall be subject to forgiveness by the Corporation
in whole or in part upon such terms as the Plan Administrator may deem
appropriate.

     II.  TAX WITHHOLDING

          A.   The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or stock appreciation rights or upon the issuance
or vesting of such shares under the Plan shall be subject to the satisfaction of
all applicable Federal, state and local income and employment tax withholding
requirements.

          B.   The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Withholding Taxes incurred by such holders in connection with the
exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:

                    (i)  Stock Withholding:  The election to have the
                         -----------------
     Corporation withhold, from the shares of Common Stock otherwise issuable
     upon the exercise of such Non-Statutory Option or the vesting of such
     shares, a portion of those shares with an aggregate Fair Market Value equal
     to the percentage of the Withholding Taxes (not to exceed one hundred
     percent (100%)) designated by the holder.

                    (ii) Stock Delivery:  The election to deliver to the
                         --------------
     Corporation, at the time the Non-Statutory Option is exercised or the
     shares vest, one or more shares of Common Stock previously acquired by such
     holder (other than in connection with the option exercise or share vesting
     triggering the Withholding Taxes) with an aggregate Fair Market Value equal
     to the percentage

                                       12
<PAGE>

     of the Withholding Taxes (not to exceed one hundred percent (100%))
     designated by the holder.

     III. EFFECTIVE DATE AND TERM OF THE PLAN

     A.   The Plan shall become effective upon its adoption by the Board.

     B.   The Plan shall terminate upon the earliest of (i) ten (10) years from
                                            --------
the date of adoption of the Plan by the Board, (ii) the date on which all shares
available for issuance under the Plan shall have been issued as fully-vested
shares pursuant to the exercise of the options or the issuance of shares under
the Plan or (iii) the termination of all outstanding options in connection with
a Corporate Transaction. Upon such Plan termination, all outstanding options and
unvested stock issuances shall continue to have force and effect in accordance
with the provisions of the documents evidencing such options or issuances.

     IV.  AMENDMENT OF THE PLAN

          The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect any rights and obligations with respect to
options, stock appreciation rights or unvested stock issuances at the time
outstanding under the Plan unless the Optionee or the Participant consents to
such amendment or modification.

     V.   USE OF PROCEEDS

          Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.

     VI.  REGULATORY APPROVALS

          A.   The implementation of the Plan, the granting of any option or
stock appreciation right under the Plan and the issuance of any shares of Common
Stock (i) upon the exercise of any option or stock appreciation right or (ii)
under the Stock Issuance Program shall be subject to the Corporation's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options and stock appreciation rights
granted under it and the shares of Common Stock issued pursuant to it.

          B.   No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.

     VII. NO EMPLOYMENT/SERVICE RIGHTS

          Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in

                                       13
<PAGE>

any way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining such person) or of the Optionee or the Participant, which rights are
hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.

                                       14
<PAGE>

                                   APPENDIX
                                   --------

          The following definitions shall be in effect under the Plan:

          A.   Board shall mean the Corporation's Board of Directors.
               -----

          B.   Change in Control shall mean a change in ownership or control of
               -----------------
the Corporation effected through either of the following transactions:

                    (i)  the acquisition, directly or indirectly, by any person
     or related group of persons (other than the Corporation or a person that
     directly or indirectly controls, is controlled by, or is under common
     control with, the Corporation), of beneficial ownership (within the meaning
     of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
     percent (50%) of the total combined voting power of the Corporation's
     outstanding securities pursuant to a tender or exchange offer made directly
     to the Corporation's stockholders which the Board does not recommend such
     stockholders to accept, or

                    (ii) a change in the composition of the Board over a period
     of thirty-six (36) consecutive months or less such that a majority of the
     Board members ceases, by reason of one or more contested elections for
     Board membership, to be comprised of individuals who either (A) have been
     Board members continuously since the beginning of such period or (B) have
     been elected or nominated for election as Board members during such period
     by at least a majority of the Board members described in clause (A) who
     were still in office at the time the Board approved such election or
     nomination.

          C.   Code shall mean the Internal Revenue Code of 1986, as amended.
               ----

          D.   Committee shall mean the committee of one (1) or more Board
               ---------
members appointed by the Board to administer the Plan.

          E.   Common Stock shall mean the Corporation's common stock.
               ------------

          F.   Corporate Transaction shall mean either of the following
               ---------------------
stockholder-approved transactions to which the Corporation is a party:

                    (i)  a merger or consolidation in which securities
     possessing more than fifty percent (50%) of the total combined voting power
     of the Corporation's outstanding securities are transferred to a person or
     persons different from the persons holding those securities immediately
     prior to such transaction; or

                    (ii) the sale, transfer or other disposition of all or
     substantially all of the Corporation's assets in complete liquidation or
     dissolution of the Corporation.

                                      A-1
<PAGE>

          G.   Corporation shall mean PSW Technologies, Inc., a Delaware
               -----------
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of PSW Technologies, Inc. which shall by appropriate
action adopt the Plan.

          H.   Discretionary Option Grant Program shall mean the discretionary
               ----------------------------------
option grant program in effect under the Plan.

          I.   Employee shall mean an individual who is in the employ of the
               --------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

          J.   Exercise Date shall mean the date on which the Corporation shall
               -------------
have received written notice of the option exercise.

          K.   Fair Market Value per share of Common Stock on any relevant date
               -----------------
shall be determined in accordance with the following provisions:

                    (i)  If the Common Stock is at the time traded on the Nasdaq
     National Market, then the Fair Market Value shall be the closing selling
     price per share of Common Stock on the date in question, as such price is
     reported by the National Association of Securities Dealers on the Nasdaq
     National Market or any successor system. If there is no closing selling
     price for the Common Stock on the date in question, then the Fair Market
     Value shall be the closing selling price on the last preceding date for
     which such quotation exists.

                    (ii) If the Common Stock is at the time listed on any Stock
     Exchange, then the Fair Market Value shall be the closing selling price per
     share of Common Stock on the date in question on the Stock Exchange
     determined by the Plan Administrator to be the primary market for the
     Common Stock, as such price is officially quoted in the composite tape of
     transactions on such exchange. If there is no closing selling price for the
     Common Stock on the date in question, then the Fair Market Value shall be
     the closing selling price on the last preceding date for which such
     quotation exists.

          L.   Involuntary Termination shall mean the termination of the
               -----------------------
Service of any individual which occurs by reason of:

                    (i)  such individual's involuntary dismissal or discharge by
     the Corporation for reasons other than Misconduct, or

                    (ii) such individual's voluntary resignation following (A) a
     change in his or her position with the Corporation which materially reduces
     his or her level of responsibility, (B) a reduction in his or her level of
     compensation (including base salary, fringe benefits and participation in
     corporate-performance based bonus or incentive programs) by more than
     fifteen percent (15%) or (C) a relocation of such individual's place of
     employment by more than fifty (50) miles, provided and only if such change,
     reduction or relocation is effected by the Corporation without the
     individual's consent.

                                      A-2
<PAGE>

          M.   Misconduct shall mean the commission of any act of fraud,
               ----------
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).

          N.   1934 Act shall mean the Securities Exchange Act of 1934, as
               --------
amended.

          O.   Non-Statutory Option shall mean an option not intended to
               --------------------
satisfy the requirements of Code Section 422.

          P.   Optionee shall mean any person to whom an option is granted
               --------
under the Discretionary Option Grant Program.

          Q.   Parent shall mean any corporation (other than the Corporation)
               ------
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

          R.   Participant shall mean any person who is issued shares of Common
               -----------
Stock under the Stock Issuance Program.

          S.   Plan shall mean the Corporation's 2000 Non-Officer Stock Option/
               ----
Stock Issuance Plan, as set forth in this document.

          T.   Plan Administrator shall mean the particular entity, whether the
               ------------------
Committee or the Board, which is authorized to administer the Plan.

          U.   Service shall mean the provision of services to the Corporation
               -------
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.

          V.   Stock Exchange shall mean either the American Stock Exchange or
               --------------
the New York Stock Exchange.

          W.   Stock Issuance Agreement shall mean the agreement entered into by
               ------------------------
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

          X.   Stock Issuance Program shall mean the stock issuance program in
               ----------------------
effect under the Plan.

                                      A-3
<PAGE>

          Y.   Subsidiary shall mean any corporation (other than the
               ----------
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

          Z.   Withholding Taxes shall mean the Federal, state and local income
               -----------------
and employment withholding tax liabilities to which the holder of Non-Statutory
Options or unvested shares of Common Stock may become subject in connection with
the exercise of those options or the vesting of those shares.

                                      A-4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}]]