Document:

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                                                                    EXHIBIT 10.4

                               RECEIPT.COM, INC.

                                1996 STOCK PLAN

    1.  Purposes of the Plan.  The purposes of this 1996 Stock Plan are to
        --------------------
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or nonstatutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock purchase rights may also be granted
under the Plan.

    2.  Definitions.  As used herein, the following definitions shall apply:
        -----------

        (a)  "Administrator" means the Board or any of its Committees appointed
              -------------
pursuant to Section 4 of the Plan.

        (b)  "Board" means the Board of Directors of the Company.
              -----

        (c)  "Code" means the Internal Revenue Code of 1986, as amended.
              ----

        (d)  "Committee" means the Committee appointed by the Board of Directors
              ---------
in accordance with Section 4(a) of the Plan.

        (e)  "Common Stock" means the Common Stock of the Company.
              ------------

        (f)  "Company" means Receipt.com, Inc., a California corporation.
              -------

        (g)  "Consultant" means any person, including an advisor, who is engaged
              ----------
by the Company or any Parent or Subsidiary to render services and is compensated
for such services, and any director of the Company whether compensated for such
services or not.

        (h) "Continuous Status as an Employee or Consultant" means the absence
             ----------------------------------------------
of any interruption or termination of service as an Employee or Consultant.
Continuous Status as an Employee or Consultant shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other
leave of absence approved by the Administrator, provided that such leave is for
a period of not more than ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or (iv)
in the case of transfers between locations of the Company or between the
Company, its Subsidiaries or their respective successors. For purposes of this
Plan, a change in status from an Employee to a Consultant or from a Consultant
to an Employee will not constitute an Interruption of Continuous Status as an
Employee or Consultant.

             (i)  "Employee" means any person, including officers and directors,
                   --------
employed by the Company or any Parent or Subsidiary of the Company, with the
status of employment

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determined based upon such minimum number of hours or periods worked as shall be
determined by the Administrator in its discretion, subject to any requirements
of the Code. The payment by the Company of a director's fee to a Director shall
not be sufficient to constitute "employment" of such Director by the Company.

       (j)  "Exchange Act" means the Securities Exchange Act of 1934, as
             ------------
amended.

       (k)  "Fair Market Value" means, as of any date, the fair market value of
             -----------------
Common Stock determined as follows:

            (i)  If the Common Stock is listed on any established stock exchange
or a national market system including without limitation the National Market of
the National Association of Securities Dealers, Inc. Automated Quotation
("Nasdaq") System, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported), as quoted on such
system or exchange, or the exchange with the greatest volume of trading in
Common Stock for the last market trading day prior to the time of determination,
as reported in The Wall Street Journal or such other source as the Administrator
deems reliable;

            (ii) If the Common Stock is quoted on the Nasdaq System (but not on
the National Market thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
mean between the high bid and low asked prices for the Common Stock for the last
market trading day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or

            (iii)  In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Administrator.

       (l)  "Incentive Stock Option" means an Option intended to qualify as an
             ----------------------
incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable written option agreement.

       (m) "Nonstatutory Stock Option" means an Option not intended to qualify
            -------------------------
as an Incentive Stock Option, as designated in the applicable written option
agreement.

       (n)  "Option" means a stock option granted pursuant to the Plan.
             ------

       (o)  "Optioned Stock" means the Common Stock subject to an Option or a
             --------------
Stock Purchase Right.

       (p)  "Optionee" means an Employee or Consultant who receives an Option or
             --------
a Stock Purchase Right.

       (q)  "Parent" means a "parent corporation", whether now or hereafter
             ------
existing, as defined in Section 424(e) of the Code, or any successor provision.

       (r)  "Plan" means this 1996 Stock Plan.
             ----

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       (s) "Reporting Person" means an officer, director, or greater than ten
            ----------------
percent shareholder of the Company within the meaning of Rule 16a-2 under the
Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the
Exchange Act.

       (t) "Restricted Stock" means shares of Common Stock acquired pursuant to
            ----------------
a grant of a Stock Purchase Right under Section 10 below.

       (u) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as
            ----------
the same may be amended from time to time, or any successor provision.

       (v) "Share" means a share of the Common Stock, as adjusted in accordance
            -----
with Section 12 of the Plan.

       (w) "Stock Exchange" means any stock exchange or consolidated stock price
            --------------
reporting system on which prices for the Common Stock are quoted at any given
time.

       (x) "Stock Purchase Right" means the right to purchase Common Stock
            --------------------
pursuant to Section 10 below.

       (y) "Subsidiary" means a "subsidiary corporation," whether now or
            ----------
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.

    3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the
       -------------------------
Plan, the maximum aggregate number of Shares that may be optioned and sold under
the Plan is 1,250,000 shares of Common Stock. The Shares may be authorized, but
unissued, or reacquired Common Stock. If an Option should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares that were subject thereto shall, unless the Plan shall have
been terminated, become available for future grant under the Plan. In addition,
any Shares of Common Stock which are retained by the Company upon exercise of an
Option or Stock Purchase Right in order to satisfy the exercise or purchase
price for such Option or Stock Purchase Right or any withholding taxes due with
respect to such exercise shall be treated as not issued and shall continue to be
available under the Plan. Shares repurchased by the Company pursuant to any
repurchase right which the Company may have shall not be available for future
grant under the Plan.

    4.  Administration of the Plan.
        --------------------------

        (a) Initial Plan Procedure. Prior to the date, if any, upon which the
            ----------------------
Company becomes subject to the Exchange Act, the Plan shall be administered by
the Board or a committee appointed by the Board.

        (b) Plan Procedure After the Date, if any, Upon Which the Company
     ---------------------------------------------------------------------
Becomes Subject to the Exchange Act.
-----------------------------------

            (i) Multiple Administrative Bodies. If permitted by Rule 16b-3,
                ------------------------------
grants under the Plan may be made by different bodies with respect to directors,
non-director officers and Employees or Consultants who are not Reporting
Persons.

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            (ii) Administration With Respect to Reporting Persons. With respect
                 ------------------------------------------------
to grants of Options or Stock Purchase Rights to Employees who are Reporting
Persons, such grants shall be made by (A) the Board if the Board may make grants
to Reporting Persons under the Plan in compliance with Rule 16b-3, or (B) a
committee designated by the Board to make grants to Reporting Persons under the
Plan, which committee shall be constituted in such a manner as to permit grants
under the Plan to comply with Rule 16b-3. Once appointed, such committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the committee and thereafter directly make grants to
Reporting Persons under the Plan, all to the extent permitted by Rule 16b-3.

            (iii)  Administration With Respect to Consultants and Other
                   ----------------------------------------------------
Employees. With Consultants who are not Reporting Persons, the Plan shall be
---------
administered by (A) the Board or (B) a committee designated by the Board, which
committee shall be constituted in such a manner as to satisfy the legal
requirements relating to the administration of incentive stock option plans, if
any, of California corporate and securities laws, of the Code and of any
applicable Stock Exchange (the "Applicable Laws"). Once appointed, such
                                ---------------
committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.

       (c)  Powers of the Administrator.  Subject to the provisions of the Plan
            ---------------------------
and in the case of a Committee, the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any Stock Exchange, the Administrator
shall have the authority, in its discretion:

            (i)  to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(k) of the Plan;

            (ii) to select the Consultants and Employees who whom Options and
Stock Purchase Rights may from time to time be granted hereunder;

            (iii)  to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof are granted hereunder;

            (iv) to determine the number of shares of Common Stock to be covered
by each such award granted hereunder;

            (v)  to approve forms of agreement for use under the Plan;

            (vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder;

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            (vii)  to determine whether and under what circumstances an Option
may be settled in cash under Section 9(f) instead of Common Stock;

            (viii)  to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;

            (ix) to determine the terms and restrictions applicable to Stock
Purchase Rights and the Restricted Stock purchased by exercising such Stock
Purchase Rights;

            (x)  to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan; and

            (xi) in order to fulfill the purposes of the Plan and without
amending the Plan, to modify grants of Options or Stock Purchase Rights to
participants who are foreign nationals or employed outside of the United States
in or in order to recognize differences in local law, tax policies or customs.

       (d)  Effect of Administrator's Decision. All decisions, determinations
            ----------------------------------
and interpretations of the Administrator shall be final and binding on all
holders of Options or Stock Purchase Rights.

   5.  Eligibility.
       -----------

       (a)  Recipients of Grants. Nonstatutory Stock Options and Stock Purchase
            --------------------
Rights may be granted to Employees and Consultants. Incentive Stock Options may
be granted only to Employees. An Employee or Consultant who has been granted an
Option Stock Purchase Right may, if he or she is otherwise eligible, be granted
additional Options or Stock Purchase Rights.

       (b)  Type of Option.  Each Option shall be designated in the written
            --------------
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares with respect to which Options designated
as Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares subject to an Incentive Stock Option shall
be determined as of the date of the grant of such Option.

       (c)  The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with such Optionee's right or the Company's right
to terminate his or her employment or consulting relationship at any time, with
or without cause.

   6.  Term of Plan.  The Plan shall become effective upon the earlier to occur
       ------------
of its adoption by the Board of Directors or its approval by the shareholders of
the Company as

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described in Section 19 of the Plan. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 15 of the Plan.

   7.  Term of Option. The term of each Option shall be the term stated in the
       --------------
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement and provided further that, in the case of an
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the written option agreement.

   8.  Option Exercise Price and Consideration.
       ---------------------------------------

       (a)  The per share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as determined by the Board and set
forth in the applicable agreement, but shall be subject to the following:

            (i)  In the case of an Incentive Stock Option that is:

                 (A)  granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.

                 (B)  granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

            (ii) In the case of a Nonstatutory Stock Option that is:

                 (A)  granted to a person who, at the time of the grant of such
Option, owns stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of the grant.

                 (B)  granted to any person, the per Share exercise price shall
be no less than 85% of the Fair Market Value per Share on the date of grant.

       (b)  The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares that (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender or such other period as may be required
to avoid a charge to the Company's earnings, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) authorization for the Company to
retain from the total number of Shares as to which the Option is exercised that
number of Shares having a Fair Market Value on the date of exercise equal to the
exercise price for the total number of Shares as to which the

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Option is exercised, (6) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price and
any applicable income or employment taxes, (7) delivery of an irrevocable
subscription agreement for the Shares that irrevocably obligates the option
holder to take and pay for the Shares not more than twelve months after the date
of delivery of the subscription agreement, (8) any combination of the foregoing
methods of payment, or (9) such other consideration and method of payment for
the issuance of Shares to the extent permitted under Applicable Laws. In making
its determination as to the type of consideration to accept, Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

     9.  Exercise of Option.
         ------------------

         (a)  Procedure for Exercise; Rights as a Shareholder.  Any Option
              -----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, and reflected in the written option
agreement, which may include vesting requirements and/or performance criteria
with respect to the Company and/or the Optionee; provided that such Option shall
become exercisable at the rate of at least twenty percent (20%) per year over
five (5) years from the date the Option is granted. In the event that any of the
Shares issued upon exercise of an Option should be subject to a right of
repurchase in the Company's favor, such repurchase right shall lapse at the rate
of at least twenty percent (20%) per year over five (5) years from the date the
Option is granted.

     An Option may not be exercised for a fraction of a Share.

     An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and the Company has
received full payment for the Shares with respect to which the Option is
exercised. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
not withstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 12 of the Plan.

     Exercise of an Option in any manner shall result in a decrease in the
number of Shares that thereafter may be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is
exercised.

         (b)  Termination of Employment or Consulting Relationship.  Subject to
              ----------------------------------------------------
Section 9(c), in the event of termination of an Optionee's Continuous Status as
an Employee or Consultant with the Company, such Optionee may, but only within
three (3) months (or such

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other period of time not less than thirty (30) days as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option and not exceeding three (3)
months) after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that the Optionee was
entitled to exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate. No
termination shall be deemed to occur and this Section 9(b) shall not apply if
(i) the Optionee is a Consultant who becomes an Employee; or (ii) the Optionee
is an Employee who becomes a Consultant.

         (c)  Disability of Optionee.
              ----------------------

              (i)  Notwithstanding Section 9(b) above, in the event of
termination of an Optionee's Continuous Status as an Employee or Consultant as a
result of his or her total and permanent disability (within the meaning of
Section 22(e)(3) of the Code), Optionee may, but only within twelve (12) months
from the date of such termination (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), exercise
the Option to the extent otherwise entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.

              (ii) In the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of a disability which does not
fall within the meaning of total and permanent disability (as set forth in
Section 22(e)(3) of the Code), Optionee may, but only within six (6) months from
the date of such termination (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), exercise the
Option to the extent otherwise entitled to exercise it at the date of such
termination. However, to the extent that such Optionee fails to exercise an
Option which is an Incentive Stock Option ("ISO") (within the meaning of Section
                                            ---
422 of the Code) within three (3) months of the date of such termination, the
Option will not qualify for ISO treatment under the Code. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within six
months (6) from the date of termination, the Option shall terminate.

       (d)  Death of Optionee.  In the event of the death of an Optionee during
            -----------------
the period of Continuous Status as an Employee or Consultant since the date of
grant of the Option, or within thirty (30) days following termination of
Optionee's Continuous Status as an Employee or Consultant, the Option may be
exercised, at any time within six (6) months following the date of death (but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), by Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of death or, if earlier,
the date of termination of Optionee's Continuous Status as an Employee or
Consultant. To the extent that Optionee was not entitled to exercise the Option
at the date of death or termination, as the case may be, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.

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          (e)  Rule 16b-3.  Options granted to Reporting Persons shall comply
               ----------
with Rule 16b-3 and shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption for Plan
transactions.

          (f)  Buyout Provisions.  The Administrator may at any time offer to
               -----------------
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

     10.  Stock Purchase Rights.
          ---------------------

          (a)  Rights to Purchase.  Stock Purchase Rights may be issued either
               ------------------
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid (which price shall not be less than 85% of the
Fair Market Value of the Shares as of the date of the offer, or, in the case of
a person owning stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, the price shall not be less than one hundred percent (100%) of the
Fair Market Value of the Shares as of the date of the offer), and the time
within which such person must accept such offer, which shall in no event exceed
thirty (30) days from the date upon which the Administrator made the
determination to grant the Stock Purchase Right. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator. Shares purchased pursuant to the grant of a Stock Purchase Right
shall be referred to herein as "Restricted Stock."
                                ----------------

          (b)  Repurchase Option.  Unless the Administrator determines
               -----------------
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original purchase price paid by
the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine, but at a minimum of 20% per year.

          (c)  Other Provisions.  The Restricted Stock purchase agreement shall
               ----------------
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.

          (d)  Rights as a Shareholder.  Once the Stock Purchase Right is
               -----------------------
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date of the Stock Purchase Right is exercised, except as provided in Section
12 of the Plan.

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     11.  Stock Withholding to Satisfy Withholding Tax Obligations. At the
          --------------------------------------------------------
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option or Stock Purchase Right, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by one or some
combination of the following methods: (a) by cash payment, or (b) out of
Optionee's current compensation, (c) if permitted by the Administrator, in its
discretion, by surrendering to the Company Shares that (i) in the case of Shares
previously acquired from the Company, have been owned by the Optionee for more
than six months on the date of surrender, and (ii) have a fair market value on
the date of surrender equal to or less than Optionee's marginal tax rate times
the ordinary income recognized, or (d) by electing to have the Company withhold
from the Shares to be issued upon exercise of the Option, or the Shares to be
issued in connection with the Stock Purchase Right, if any, that number of
Shares having a fair market value equal to the amount required to be withheld.
For this purpose, the fair market value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be determined
(the "Tax Date").
      --------

     Any surrender by a Reporting Person of previously owned Shares to satisfy
tax withholding obligations arising upon exercise of this Option must comply
with the applicable provisions of Rule 16b-3.

     All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

        (a)  the election must be made on or prior to the applicable Tax Date;

        (b)  once made, the election shall be irrevocable as to the particular
Shares of the Option or Stock Purchase Right as to which the election is made;
and

        (c)  all elections shall be subject to the consent or disapproval of the
Administrator.

     In the event the election to have Shares withheld is made by an Optionee
and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Optionee shall receive the full
number of Shares with respect to which the Option or Stock Purchase Right is
exercised but such Optionee shall be unconditionally obligated to tender back to
the Company the proper number of Shares on the Tax Date.

     12.  Adjustments Upon Changes in Capitalization, Merger or Certain Other
          -------------------------------------------------------------------
Transactions.
------------

          (a)  Changes in Capitalization.  Subject to any required action by the
               -------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock that have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or that have
been returned to the Plan upon cancellation or

                                       10
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expiration of an Option or Stock Purchase Right, as well as the price per share
of Common Stock covered by each such outstanding Option or Stock Purchase Right,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination, recapitalization or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option or Stock Purchase Right.

          (b)  Dissolution or Liquidation.  In the event of the proposed
               --------------------------
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action. To the extent it has
not been previously exercised, the Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.

          (c)  Merger or Sale of Assets.  In the event of a proposed sale of all
               ------------------------
or substantially all of the Company's assets or a merger of the Company with or
into another corporation where the successor corporation issues its securities
to the Company's shareholders, each outstanding Option or Stock Purchase Right
shall be assumed or an equivalent option or right shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the successor corporation does not agree to assume the Option or Stock
Purchase Right or to substitute an equivalent option or right, in which case
such Option or Stock Purchase Right shall terminate upon the consummation of the
merger or sale of assets.

          (d)  Certain Distributions.  In the event of any distribution to the
               ---------------------
Company's shareholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per share of Common Stock covered by each
outstanding Option or Stock Purchase Right to reflect the effect of such
distribution.

     13.  Non-Transferability of Options and Stock Purchase Rights.  Options and
          --------------------------------------------------------
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised or purchased during the lifetime of
the Optionee or Stock Purchase Rights Holder only by the Optionee or Stock
Purchase Rights Holder.

     14.  Time of Granting Options and Stock Purchase Rights.  The date of grant
          --------------------------------------------------
of an Option or Stock Purchase Right shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Board; provided
however that in the case of any Incentive Stock Option, the grant date shall be
the later of the date on which the Administrator makes the determination
granting such Incentive Stock Option or the date of commencement of the
Optionee's employment relationship with the Company. Notice of the determination
shall be given to each

                                       11
<PAGE>

Employee or Consultant to whom an Option or Stock Purchase Right is so granted
within a reasonable time after the date of such grant.

     15.  Amendment and Termination of the Plan.
          -------------------------------------

          (a)  Authority to Amend or Terminate. The Board may at any time amend,
               -------------------------------
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made that would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 or with Section 422
of the Code (or any other applicable law or regulation, including the
requirements of any Stock Exchange), the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.

          (b)  Effect of Amendment or Termination.  No amendment or termination
               ----------------------------------
of the Plan shall adversely affect Options already granted, unless mutually
agreed otherwise between the Optionee and the Board, which agreement must be in
writing and signed by the Optionee and the Company.

     16.  Conditions Upon Issuance of Shares.  Shares shall not be issued
          ----------------------------------
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any Stock Exchange. As a condition to the exercise of an Option,
the Company may require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required by law.

     17.  Reservation of Shares.  The Company, during the term of this Plan,
          ---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

     18.  Agreements.  Options and Stock Purchase Rights shall be evidenced by
          ----------
written agreements in such form as the Administrator shall approve from time to
time.

     19.  Shareholder Approval.  Continuance of the Plan shall be subject to
          --------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any Stock Exchange upon which the Common Stock is listed. All Options
and Stock Purchase Rights issued under the Plan shall become void in the event
such approval is not obtained.

                                       12
<PAGE>

     20.  Information and Documents to Optionees and Purchasers.  The Company
          -----------------------------------------------------
shall provide financial statements at least annually to each Optionee and to
each individual who acquired Shares pursuant to the Plan, during the period such
Optionee or purchaser has one or more Options or Stock Purchase Rights
outstanding, and in the case of an individual who acquired Shares pursuant to
the Plan, during the period such individual owns such Shares. The Company shall
not be required to provide such information if the issuance of Options or Stock
Purchase Rights under the Plan is limited to key employees whose duties in
connection with the Company assure their access to equivalent information. In
addition, at the time of issuance of any securities under the Plan, the Company
shall provide to the Optionee or the Purchaser a copy of the Plan and a copy of
the agreement(s) pursuant to which securities under the Plan are issued.

                                       13<PAGE>

                                                                    EXHIBIT 10.6

                      VANNI BUSINESS PARK INDUSTRIAL LEASE
                      ------------------------------------

                                   ARTICLE I
                                   ---------

                                    PARTIES
                                    -------

     This Lease, dated, for reference purposes only, March 6, 2000, is made by
and between the Vanni Business Park, LLC, a Delaware limited liability company
("Lessor"), and Valicert, Inc., a Delaware corporation ("Lessee").

                                   ARTICLE II
                                   ----------

                                    PREMISES
                                    --------

     Section 2.01.   Premises.  Lessor hereby leases to Lessee and Lessee leases
     -------------   --------
from Lessor for the term, at the rental, and upon all of the terms and
conditions set forth herein, the premises (the "Premises") situated in the City
of Mountain View, County of Santa Clara, State of California, commonly known as
Building A of Vanni Business Park (the "Business Park"), 339 North Bernardo
Avenue, Mountain View, California 94043, and more particularly described on the
site plan attached hereto as Exhibit "A" and incorporated herein by this
                             -----------
reference.  The Premises consist only of the building identified on such site
plan as the "Premises."  The Premises are deemed for purposes of this Lease to
contain 48,384 square feet of floor space.  In the absence of a condemnation of
a portion of the Premises that reduces the size of the Premises, or Lessee's
leasing of additional space within the Business Park which increases the size of
the Premises, no remeasurement of the square footage of the Premises by either
party will result in any increase or decrease in rent or any other number in
this Lease which is a function of the square footage of the Premises.

     Section 2.02.   Business Park.  The Premises comprises one of the six
     -------------   -------------
buildings situated in the Business Park as of the date of this Lease.  The
Business Park is shown on the site plan attached hereto as Exhibit "A".  All
                                                           -----------
areas outside the buildings within the Business Park are herein called the
"Common Areas."  Lessee shall be entitled to park in its prorata share of
parking spaces within the parking areas provided from time to time in the Common
Areas; provided that, in all events Lessee shall be entitled to park in no less
than 3.7 parking spaces per 1,000 square feet of floor space within the
Premises.  Lessee shall also be entitled to use such exercise facilities as may
exist thereon from time to time, on a nonexclusive basis with other tenants of
the Business Park and their respective employees and invitees.  Lessee
acknowledges that there are no parking spaces specifically assigned or
designated for the exclusive use of Lessee.  Lessor reserves the right to
designate for each tenant of the Business Park a pro rata share of parking
within the Business Park, in which event Lessee shall thereafter cause its
employees, agents, contractors, and other invitees to park only in the spaces so
designated for Lessee's parking and shall not cause or permit such entities to
park in other areas of the Business Park.  In the event Lessor designates
specific parking areas for
<PAGE>

each tenant of the Business Park, the location and size of the parking area
designated for Lessee shall be subject to Lessee's approval, which approval
shall not unreasonably be withheld or delayed.

                                  ARTICLE III
                                  -----------

                                      TERM
                                      ----

     Section 3.01.   Term.  The term of this lease shall be for seven (7) years,
     -------------   ----
commencing on April 15, 2000 ("Commencement Date"), and ending on April 14,
2007.

     Section 3.02.   Early Possession.  If Lessee occupies the Premises prior to
     -------------   ----------------
the Commencement Date, such occupancy shall be subject to all provisions hereof,
and Lessee shall pay base rent (at the rate payable for the first month of the
term), all triple net expenses, and all other expenses under this Lease for such
period.

     Section 3.03.   Delivery of Possession.  Lessee acknowledges that the
     -------------   ----------------------
Premises are currently leased to another tenant.  Lessor has advised Lessee that
the term of said tenant's lease expires on February 29, 2000.  Lessor shall
deliver possession of the Premises to Lessee on April 15, 2000.  If Lessor for
any reason whatsoever does not deliver possession of the Premises to Lessee on
April 15, 2000, (i) this Lease shall not be void or voidable nor shall Lessor be
liable to Lessee for any loss or damage resulting therefrom, (ii) Lessee agrees
to take possession of the Premises when Lessor is able to deliver possession
thereof, and (iii) until Lessor so delivers possession of the Premises to
Lessee, Lessee shall not be obligated to pay rent or other charges under this
Lease, or to perform its other obligations under this Lease, except that Lessee
shall deposit the first month's rent upon execution of this Lease, and (iv) the
scheduled Commencement Date (i.e., April 15, 2000) and ending date (i.e. April
14, 2007) of the lease term set forth in Section 3.01 shall be extended by the
period of time between April 15, 2000 and the date on which Lessor delivers
possession of the Premises to Lessee.  Lessor may, but is not obligated to,
deliver to Lessee upon or after the Commencement Date a letter specifying the
Commencement Date and the end of the seven year term; upon written request by
Lessor, Lessee shall acknowledge such dates by signing a copy of such letter and
returning the same to Lessor within ten (10) days after receipt thereof from
Lessor.  Notwithstanding the foregoing, in the event Lessor is unable to deliver
possession of the Premises by July 15, 2000, then Lessee, at its sole option,
shall be entitled to terminate this Lease.  Any such termination shall be
effectuated by written notice to Lessor within five (5) days after the end of
such ninety (90) day period.  Time is of the essence with respect to the time of
exercise of any such right of termination.  Upon such termination, neither party
shall have any further obligation to the other under this Lease, provided that
Lessor shall return to Lessee any sums previously deposited by Lessee with
Lessor hereunder to the extent required to do so by law and this Lease.

                                   ARTICLE IV
                                   ----------
<PAGE>

                            RENT:  SPECIAL NET LEASE
                            ------------------------

     Section 4.01.   Base Rent.  Lessee shall pay to Lessor base rent for the
     -------------   ---------
Premises in advance on the first day of each month based on the following
schedule of rents:

<TABLE>
<CAPTION>
                        Rent Per                 Square                 Monthly
  Months                Square Foot              Footage                Base Rent
----------            ---------------         ----------------       ---------------
<S>                     <C>                     <C>                    <C>
  01-12                 $4.00 "NNN"             48,384 sq. ft.         $193,536.00
  13-24                 $4.15 "NNN"             48,384 sq. ft.         $200,793.60
  25-36                 $4.30 "NNN"             48,384 sq. ft.         $208,051.20
  37-48                 $4.45 "NNN"             48,384 sq. ft.         $215,308.80
  49-60                 $4.60 "NNN"             48,384 sq. ft.         $222,566.40
  61-72                 $4.75 "NNN"             48,384 sq. ft.         $229,824.00
  73-84                 $4.90 "NNN"             48,384 sq. ft.         $237,081.60
</TABLE>

     Rent for any period during the term hereof which is for less than one month
shall be a pro rata portion of the monthly installment.  Rent shall be payable
in lawful money of the United States, without prior notice or demand, to Lessor
at the address stated herein or to such other persons or at such other places as
Lessor may designate in writing.  Upon execution of this Lease, Lessee shall pay
the sum of $193,536 as and for the first month's rent.

     Section 4.02.   Special Net Lease.  This Lease is what is commonly called a
     -------------   -----------------
"Net, Net, Net Lease", it is being understood that the Lessor shall receive the
rent set forth in Section 4.01 free and clear of any and all impositions, taxes,
liens, charges or expenses of any nature relating to the Premises except as
otherwise provided in this Lease.  In addition to the rent reserved by Section
4.01., Lessee shall pay to the parties respectively entitled thereto all
insurance premiums, taxes, assessments, operating charges, management fees,
maintenance charges, and any other charges, costs and expenses which arise or
may be contemplated under any provisions of this Lease for the entire Premises
during the term hereof.  All of such charges, costs and expenses shall
constitute additional rent, and upon the failure of Lessee to pay any of such
costs, charges or expenses, Lessor shall have the same rights and remedies as
otherwise provided in this Lease for the failure of Lessee to pay rent.  It is
the intention of the parties hereto that this Lease shall not be terminable for
any reason by Lessee except as set forth in Section 3.01, and that Lessee shall
in no event be entitled to any abatement of or reduction in rent payable under
this Lease, except as herein expressly provided.  Any present or future law to
the contrary shall not alter this agreement of the parties.

                                   ARTICLE V
                                   ---------

                                SECURITY DEPOSIT
                                ----------------
<PAGE>

     Section 5.01.   Cash Security Deposit.  Lessee shall deposit with Lessor,
     -------------   ---------------------
upon execution of this Lease, as a security deposit for Lessee's faithful
performance of Lessee's obligations hereunder, cash in the amount of Two Hundred
Thousand Dollars ($200,000).  If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Lessor may, without waiving or releasing Lessee from any obligation under this
Lease, and without waiving Lessor's right to treat such failure as a default
hereof, use, apply, or retain all or any portion of said cash deposit for the
payment of any rent or other charge in default or for the payment of any other
sum to which Lessor may become obligated by reason of Lessee's default, or to
compensate Lessor for any loss or damage which Lessor may suffer thereby.  If
Lessor so uses or applies all or any portion of said cash deposit, Lessee shall
within ten (10) days after written demand therefor deposit cash with Lessor in
an amount sufficient to restore said deposit to the full amount hereinabove
stated and Lessee's failure to do so shall be a material breach of this Lease.
Said cash deposit, less sums which Lessor is entitled to deduct therefrom
pursuant to this paragraph, shall be returned to Lessee (or, at Lessee's option,
to the last assignee, if any, of Lessee's interest hereunder), without interest,
at the expiration of the term hereof and within twenty one (21) days after
Lessee has vacated the Premises.  No trust relationship is created herein
between Lessor and Lessee with respect to said security deposit, and Lessor may
commingle it, use it in ordinary business, transfer or assign it, or use it in
any combination of those ways.  In the event Lessor transfers its interest in
this Lease, Lessor shall transfer said deposit to Lessor's successor in
interest, whereupon Lessor shall no longer have any liability for the return of
such deposit or the accounting therefor.

     Section 5.02.   Letter of Credit.  Lessee shall also deposit with Lessor,
     -------------   ----------------
upon execution of this Lease, as a security deposit for Lessee's faithful
performance of Lessee's obligations an unconditional irrevocable standby letter
of credit (the "Letter of Credit").  The Letter of Credit shall be in the amount
of One Million Dollars ($1,000,000), subject to later reduction as set forth in
this Article V.  The Letter of Credit shall be in form reasonably satisfactory
to Lessor.  In all events, such form shall provide that Lessor may draw upon the
Letter of Credit solely upon making demand to the issuing bank for the amount
specified by Lessor in its demand, and by presenting evidence to the issuing
bank of the identity of Lessor.  Lessor shall not be required to satisfy any
conditions in order to draw upon the Letter of Credit, it being understood that
the Letter of Credit shall be unconditional and irrevocable.  However, Lessor
shall have access to the funds represented by the Letter of Credit only for the
purposes and under the conditions set forth herein, and shall not make any such
demand for a draw unless Lessor is entitled under this Article V to draw upon
the Letter of Credit.  Lessee shall cause the Letter of Credit to be renewed on
an annual basis and shall renew the same at least thirty (30) days prior to the
scheduled maturity thereof each year (and deliver evidence thereof to Lessor
promptly after such renewal).  The Letter of Credit shall contain language
requiring the issuer to deliver written notice (by certified mail, return
receipt requested) to Lessor which notice meets the notice requirements of this
Lease for notice from Lessee to Lessor in the event the Letter of Credit is not
renewed by Lessee for at least a one year period at least thirty (30) days prior
to the scheduled maturity thereof each year.  In the event Lessee fails
<PAGE>

timely to so renew the Letter of Credit, Lessor shall be entitled to draw the
full amount of the Letter of Credit before expiration thereof, whereupon Lessor
shall hold the same as a cash security deposit together with all other cash held
by Lessor as a security deposit pursuant to this Article V; provided that, if
Lessee thereafter obtains a new letter of credit satisfying the requirements of
this paragraph, such new letter of credit shall be deemed the Letter of Credit
hereunder, and promptly after such new Letter of Credit is issued to Lessor and
Lessor is notified thereof, Lessor shall return to Lessee all but Two Hundred
Thousand Dollars ($200,000) of the cash security deposit (which Two Hundred
Thousand Dollars ($200,000) shall continue in place as the cash portion of the
security deposit as specified in the first sentence of this Article V above).
The preceding sentence shall not be deemed a limitation of Lessor's remedies for
any such failure by Lessee to observe its obligations under this paragraph.
Lessee shall cause the Letter of Credit, as the same may be renewed from time to
time, to remain in effect until the later of thirty (30) days after the
expiration of the term, or thirty (30) days after Lessee has vacated the
Premises. In the event Lessee fails to cause the Letter of Credit to remain in
effect for such thirty (30) day period following expiration of the term or
Lessee's vacation of the Premises, whichever later occurs, Lessor shall be
entitled to draw the full amount of the Letter of Credit before expiration
thereof without any obligation to give Lessee notice thereof, whereupon Lessor
shall hold the same as a cash security deposit together with all other cash held
by Lessor as a security deposit pursuant to this Article V. If Lessee fails to
pay as and when due Base Rent or any other sums payable by Lessee hereunder or
otherwise fails to perform any other obligation of Lessee under this Lease as
and when obligated to perform the same, Lessor may draw from the Letter of
Credit and use, apply or retain the proceeds therefrom to the extent (and only
to the extent) applied (i) to the payment of such sum which has not been paid,
or (ii) to compensate Lessor for the payment of any other sum which Lessor
incurs or becomes obligated to spend as a result of Lessee's failure to so
perform its obligations and/or Lessor's cure of such failure by Lessee, or (iii)
to compensate Lessor for any expenditures, loss or damage which Lessor may
suffer thereby. The intent of the preceding sentence is to limit the amount of
draws by Lessor against the Letter of Credit to sums actually applied pursuant
to clauses (i) through (iii)of the preceding sentence. Lessor may draw and use,
apply or retain such amounts without prejudice to any other remedy Lessor may
have by reason of Lessee's failure to perform its obligations hereunder. If
Lessor so draws all or any portion of the Letter of Credit, Lessee shall, within
twenty (20) days after demand in writing therefor, obtain and deposit with
Lessor a new letter of credit on the terms specified above applicable to the
Letter of Credit but only in the amount of the amount so drawn, and thereafter
such new letter of credit together with the remaining undrawn balance of any one
or more prior letters of credit constituting the Letter of Credit shall
collectively herein be deemed the "Letter of Credit." Lessor shall not be
required to keep any amounts drawn from the Letter of Credit separate from its
general funds, and shall not be deemed a trustee with respect to such amounts.
In the event Lessor transfers its interest in this Lease, Lessee at Lessor's
request shall cause a new Letter of Credit to be issued to Lessor's successor in
interest in replacement of the Letter of Credit issued to Lessor, whereupon
Lessor shall no longer have any liability for the accounting therefor. At such
time as Lessee demonstrates to Lessor's reasonable satisfaction that its
Tangible Net Worth (as defined below) exceeds
<PAGE>

Twenty Million Dollars ($20,000,000), and Lessee deposits additional cash with
Lessor such that the cash portion of the security deposit referenced in Section
5.01 above is increased to Two Hundred Thirty Seven Thousand Eighty One Dollars
and Sixty Cents ($237,081.60), and provided no Event of Default has occurred and
is continuing, then from and after such point in time and for so long as
Lessee's Tangible Net Worth continues to exceed Twenty Million Dollars
($20,000,000) Lessee shall have no obligation to deposit the Letter of Credit
with Lessor and shall be entitled to terminate or otherwise permit the then
existing Letter of Credit to lapse or expire. "Tangible Net Worth" shall mean
Lessee's net worth, determined and certified as true and accurate by a
California licensed certified public accountant, in accordance with GAAP,
excluding good will and other intangible assets. Notwithstanding the preceding
sentence, in the event Lessee sells company stock in an initial public offering
and in conjunction therewith financial statements of Lessee are prepared and
submitted to the U.S. Securities and Exchange Commission ("SEC"), then the
requirement in the preceding sentence that the Tangible Net Worth of Lessee be
certified as true and accurate by a California licensed certified public
accountant shall be deemed replaced by a requirement that such determination be
certified by both the President and Chief Financial Officer of Lessee based on
the financial statements so submitted to the SEC provided that such statements
clearly and unambiguously segregate from the other assets of Lessee all goodwill
and other intangible assets and are prepared in accordance with GAAP. From and
after such time, if ever, that Lessee is first permitted to allow the Letter of
Credit to be terminated pursuant to the foregoing, Lessee shall every year
thereafter (and as often as every 3 months if Lessee's Tangible Net Worth
reasonably appears to Lessor to be less than Twenty Million Dollars
($20,000,000) and Lessor requests the same of Lessee) provide evidence
reasonably satisfactory to Lessor that Lessee continues to meet the Tangible Net
Worth minimum amount specified above. In the event Lessee does not provide such
evidence, as determined by Lessor in its reasonable discretion, then Lessee
shall once again deposit the full One Million Dollar ($1,000,000) Letter of
Credit, and thereupon shall be entitled once again to lower the cash portion of
the security deposit to Two Hundred Thousand Dollars ($200,000).

                                   ARTICLE VI
                                   ----------

                                      USE
                                      ---

     Section 6.01.   Use.  The Premises shall be used and occupied for general
     -------------   ---
offices, warehouse, research and development, laboratories, light assembly,
wholesale sales, and any other incidental related legal use which is otherwise
in compliance with the reasonable rules and regulations that may be imposed by
Lessor from time to time on the Business Park.  Such incidental related uses may
include, without limitation, the right on the part of Lessee to use
telecommunications equipment for internal business purposes, and to have a call
center comprised of a technical support group answering telephone lines.  Lessee
shall not use nor permit the use of the Premises in any manner that will tend to
create waste or a nuisance or tend to unreasonably disturb any other tenants.
This Lease does not grant to Lessee any
<PAGE>

exclusive use rights that would prevent other tenants or lessees from conducting
businesses or operations within the Business Park similar to the business or
operations of Lessee.

     Section 6.02.   Compliance with Law.
     -------------   -------------------

     (a) Lessor warrants to Lessee that the Premises, in its state existing
on the Commencement Date, but without regard to the use for which Lessee will
use the Premises, (i) does not violate any laws, or permits, licenses, or
covenants or restrictions of record, or any applicable building code, regulation
or ordinance in effect upon completion of the initial construction thereof, and
(ii) to the actual knowledge of Lessor has not received notice from any
governmental authority with jurisdiction over the Premises that the Premises are
in violation of any laws, permits, or building code, regulation or ordinance in
effect as of the date this Lease is executed which violation remains uncured.

     (b) Except as provided in Section 6.02(a), Lessee shall, at Lessee's
expense, comply promptly with all applicable statutes, ordinances, rules,
regulations, orders, covenants, and restrictions of record in effect during the
term or any part of the term hereof regulating the use, condition, or occupancy
of the Premises.  Without limiting the generality of the foregoing, Lessee shall
be obligated at its sole expense to make all alterations or improvements to the
Premises which may be required by lawful governmental authority due to new laws,
codes, ordinances or other promulgations of lawful governmental authority which
come into effect during the term of this Lease.  Notwithstanding the preceding
sentence, if any structural alterations to the Premises are required as a result
of a change in laws, codes, ordinances, rules, or regulations (collectively,
"Laws") existing on the date this Lease is executed or as a result of additional
Laws enacted after the date this Lease is executed which changed or additional
Laws are applicable to buildings generally (including the Premises) and are not
applicable to the Premises because of Lessee's particular use of the Premises or
any improvements, additions or alterations (collectively, "Alterations") thereto
by Lessee, then Lessor shall cause such Alterations to be made, and the
Amortized Portion (as defined below) of such cost shall be paid by Lessee to
Lessor as additional rent each month together with and in the same manners as
payments of rent under Section 4.01 above.  The "Amortized Portion" of costs of
items, as reasonably determined by Lessor, shall mean an amount equal to a
fraction of the cost of such item the numerator of which is the lesser of (i)
number of years remaining in the term, (ii) the number of years of the estimated
useful life of such item as reasonably determined by Lessor, and the denominator
of which is the number of years of the estimated useful life of such item as
reasonably determined by Lessor, with such amount amortized monthly over the
remainder of the term as of the date such cost is incurred assuming an interest
rate (the "Assumed Interest Rate") equal to the rate of interest on any loan
obtained by Lessor to pay for such item, or if Lessor does not obtain a loan to
pay for such item, then assuming an interest rate equal to the rate of interest
Lessor would have to pay if Lessor were to borrow such funds, as reasonably
determined by Lessor.  If Lessee later exercises any option to extend the Term,
upon commencement of each such extended term, if such item was not previously
fully amortized pursuant to the preceding sentence, then Lessee
<PAGE>

shall pay as additional rent each month together with and in the same manner as
payments of rent under Section 4.01 an additional Amortized Portion of the cost
of such item equal to a fraction the numerator of which is the lesser of (i)
five, or (ii) the same number of years of the estimated useful life of such item
as originally determined by Lessor as reduced by the number of years Represented
in the numerator determined pursuant to the preceding sentence, and the
denominator of which is the same number of years of the estimated useful life of
such item as originally determined by Lessor (with no reduction in such number
reflecting any time which has passed since the item was made), with such portion
amortized monthly over the five year extended term assuming interest thereon
over such period at the Assumed Interest Rate.

          (c) By executing this Lease, Lessee acknowledges that it has reviewed
and satisfied itself as to its compliance, or intended compliance, with the
applicable zoning and permit laws, hazardous waste requirements, and all other
statutes, laws, or ordinances relevant to the uses stated in Section 6.01 above.

     Section 6.03.   Condition of Premises.
     -------------   ---------------------

          (a) On the Commencement Date, Lessor shall deliver the Premises to
Lessee clean and free of debris, with all life and safety, electrical, plumbing,
gas, HVAC, and other mechanical systems in good operating condition.  Lessor
warrants to Lessee that the Premises were upon completion of the initial
construction thereof built in accordance with the approved plans therefor in a
workmanlike manner.  In the event that it is determined that any of these
covenants or warranties has been violated, then it shall be the obligation of
Lessor, after receipt of written notice from Lessee setting forth with
specificity the nature of the violation, to promptly, at Lessor's sole cost,
rectify such violation.  Lessor shall not have any liability for any claimed
violation by Lessor of the foregoing covenants or warranties unless and except
to the extent Lessor receives written notice from Lessee thereof within thirty
(30) days after the Commencement Date.

          (b) Except as otherwise provided in this Lease, Lessee hereby accepts
the Premises in their condition existing as of the Commencement Date, subject to
all zoning, municipal, county, state, and other applicable laws governing and
regulating the use of the Premises, and any covenants or restrictions of record,
and accepts this Lease subject thereto.  Lessee acknowledges that neither Lessor
nor Lessor's agent has made any representation or warranty as to the present or
future suitability of the Premises for the conduct of Lessee's business.  Except
as specified in Section 6.03(a) above, Lessee acknowledges that Lessor has no
obligation to make any improvements or repairs to the Premises at the outset of
the Lease, and except as provided in Section 6.02(a) above is not warranting
that as of the Commencement Date the interior or exterior of the Premises is in
compliance with all ordinances, rules, codes and regulations of applicable
governmental authority, as Lessee is taking possession of the Premises in their
"as-is" physical condition and will be solely responsible for making any and all
repairs and improvements to the Premises as may be necessary to operate the
Premises for the use specified herein and to bring the Premises into
<PAGE>

compliance with all such ordinances, rules, codes and regulations, all of which
repairs and/or improvements shall be made in strict accordance with the
provisions of this Lease and at the sole cost and expense of Lessee.

     Section 6.04.   Prohibited Uses.  Notwithstanding anything to the contrary
     -------------   ---------------
contained in Section 6.01 above, in no event shall the Premises be used for any
retail use, or for any of the other following uses:  (i) health club, spa or
gymnasium, (ii) night club or discotheque, (iii) mobile home park, trailer
court, labor camp, junkyard, or stockyard (except that this provision shall not
prohibit the temporary use of construction trailers during periods of
construction provided Lessee has obtained Lessor's prior written consent
thereto), (iv) any dumping, disposing, incineration, or reduction of garbage
(exclusive of dumpsters located adjacent to the rear of and outside the
Premises), (v) any close-out, odd lot, fire sale, bankruptcy sale (unless
pursuant to a court order) or auction house operation, (vi) automobile, truck,
trailer or R.V. leasing, display or repair, (vii) skating rink or roller rink,
(viii) living quarters, sleeping apartments, or lodging rooms, (ix) veterinary
hospital or animal raising or grooming facilities, (x) mortuary, (xi)
educational or training facility, (xvii) any movie theater or other theater use,
(xviii) any use which creates vibrations or offensive odors which are noticeable
outside of the Premises, or any noise or sound which can be heard outside of the
Premises and which is offensive due to intermittency, beat, frequency,
shrillness or loudness, provided any usual paging system shall be allowed.

                                  ARTICLE VII
                                  -----------

                          HAZARDOUS OR TOXIC MATERIALS
                          ----------------------------

     Section 7.01.   Hazardous or Toxic Materials.  As used herein, "Hazardous
     -------------   ----------------------------
Materials" means any hazardous, toxic, environmentally damaging or radioactive
materials, substances or wastes, including, but not limited to, those materials,
substances or wastes; (1) defined or listed as hazardous or extremely hazardous
materials or wastes pursuant to Title 22, Division 4.5, Chapter 10 et seq., of
the California Code of Regulations, as may be amended; (2) defined or listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S) 9601, et seq. and regulations
                                                    ------
promulgated thereunder, as may be amended; (3) defined or listed as hazardous or
acutely hazardous wastes pursuant to the Resource Conservation and Recovery Act,
42 U.S.C. (S) 6901, et seq. and regulations promulgated thereunder, as may be
                    ------
amended; and/or (4) which consists in whole or part of petroleum, petroleum
fractions, petroleum products or petroleum distillates.

     Section 7.02.   Compliance with Laws.  Lessee, at its sole expense, shall
     -------------   --------------------
comply with all applicable governmental rules, regulations, codes, ordinances,
statutes, directives and other requirements (collectively, "Environmental Laws")
respecting protection of the environment and/or the transport, use, storage,
maintenance, generation, manufacture, handling, discharge, release or disposal
of Hazardous Materials in, on or about the Premises.  To the extent such
<PAGE>

investigations, cleanup or other response actions referred to below in this
sentence result from or are connected with the transport, use, storage,
maintenance, generation, manufacture, handling, discharge, release or disposal
by Lessee or agents, employees, contractors, assignees, sublessees or invitees
of Lessee of Hazardous Materials in or on the Premises or the Business Park or
in the groundwater or soils underneath the same occurring at any time prior to
the expiration or sooner termination of the term of this Lease and vacation of
the Premises by Lessee, then Lessee, at its sole cost, shall perform all
investigations, cleanup and other response actions in, on, or about the Premises
which may be required of Lessee or Lessor by any governmental authority.  All
actions by Lessee pursuant to the preceding sentence shall be taken in full
compliance with all Environmental Laws.  Without limiting the generality of the
foregoing, Lessee shall at its sole cost:  (1) at all times use, handle,
generate, store, transport, and dispose of Hazardous Materials in compliance
with all Environmental Laws; (2) make any and all improvements to the Premises
necessary to assure the lawful and safe use, handling, generation, storage,
transportation, and disposal of Hazardous Materials; and (3) ensure that valid
permits have been obtained and maintained as required by all Environmental Laws
concerning the activities of Lessee and its agents, employees, contractors,
assignees, sublessees and invitees.

     Section 7.03.   No Underground Tanks.  Under no circumstances shall Lessee
     -------------   --------------------
install or permit the installation of, temporarily or permanently, any
underground tanks relating to the use, storage or disposal of Hazardous
Materials.

     Section 7.04.   Indemnity.  Lessee hereby indemnities and agrees to
     -------------   ---------
protect, defend (by legal counsel selected by Lessee and reasonably approved by
Lessor) and hold harmless Lessor, its members, partners, directors, employees,
assigns, lenders, successors, agents, representatives and their respective
insurers from and against all costs (including, but not limited to,
environmental response costs), expenses, claims, judgments, losses, demands,
liabilities, causes of action, governmental directives, proceedings and
hearings, including attorneys' and experts' fees and costs, relating to the
transport, use, storage, maintenance, generation, manufacture, handling,
discharge, release or disposal of Hazardous Materials by Lessee or agents,
employees, contractors, assignees, sublessees or invitees of Lessee, in or on
the Premises or in the groundwater or soils underneath the same occurring at any
time prior to the expiration or sooner termination of the term of this Lease and
vacation of the Premises by Lessee, and/or relating to the breach of any of the
obligations of Lessee under this Article VII.  Without limiting the foregoing,
the foregoing indemnity shall include (A) the cost of environmental consultants,
attorneys, and other consultants as Lessor determines are appropriate to assist
Lessor in (1) investigating the source, extent, and composition of such
Hazardous Materials, (2) cleaning up or otherwise remediating the same, (3)
dealing with any potential or actual liability of Lessor and/or Lessee
respecting such Hazardous Materials, and (4) otherwise dealing with such
Hazardous Materials, and (B) losses in or reductions to rental income, and (C)
any diminution in the fair market value of the Premises or other affected
property.
<PAGE>

     Section 7.05.   Notification Responsibility.  Lessee shall notify Lessor
     -------------   ---------------------------
orally immediately upon becoming aware of, and in writing within 48 hours after
becoming aware of:  (1) any environmental investigation, cleanup or other
environmental response action requested, demanded, instituted or to be
instituted by any person, including a governmental entity, relating to the
transport, use, storage, maintenance, generation, manufacture, handling,
discharge, release, migration or disposal of Hazardous Materials on, in,
beneath, about, adjacent to or from the Premises; (2) any claim or demand made
or threatened by any person, including but not limited to a governmental entity,
against Lessor or Lessee, relating to damages, contribution, cost recovery,
compensation, loss or injury relating to, or claimed to result from, any
Hazardous Materials that have come to be located on, in, beneath, or about the
Premises as the result of the activities of Lessee or of Lessee's agents,
employees, contractors, assignees, sublessees or invitees, or (3) any data,
workplans, proposals or reports submitted to any governmental entity arising out
of or in connection with any Hazardous Materials on, in, about, or beneath the
Premises, including but not limited to any complaints, notices, warnings of
asserted violations in connection therewith.

     Lessee, at its sole cost, shall provide Lessor with copies of all chemical
lists it provides to governmental entities regarding Lessee's activities on or
about the Premises, as well as any Community Right-to-Know information submitted
to governmental entities regarding chemicals used by Lessee on or about the
Premises, including without limitation, the information required to be submitted
pursuant to California Health and Safety Code, Chapter 6.95, any Hazardous
Materials management plan required by the County of Santa Clara, and any other
reports submitted by Lessee to any and all governmental entities respecting
Hazardous Materials.

     Section 7.06.   Inspection Rights.  Lessor shall have the right, but not
     -------------   -----------------
the obligation, in its sole discretion, to enter upon the Premises to inspect,
sample and/or monitor the Premises regarding Hazardous Materials on, in, beneath
or about the Premises.  Lessor shall give Lessee twenty four (24) hours advance
notice of any such inspection, except in the event of an emergency, in which
case no such notice shall be required.  When conducting any such inspections,
Lessor shall avoid unreasonably disrupting Lessee's activities on the Premises.
Lessee shall reasonably cooperate with Lessor to facilitate any such inspection
by Lessor.  Any such entry and inspection may be conducted by Lessor or by
Lessor's designated agents, representatives or contractors.  If Lessor discovers
that Lessee is not in compliance with the terms of this Article VII, any costs
incurred by Lessor in connection with such inspections, sampling and/or
monitoring, including attorney's and/or consultants' fees, shall be due and
payable by Lessee to Lessor within five (5) days following Lessor's written
demand therefor.

     Section 7.07.   Return of Premises.  Prior to the expiration or termination
     -------------   ------------------
of this Lease, Lessee shall (1) remove all Hazardous Materials which have become
located on, in, beneath or about the Premises as the result of, and (2)
decontaminate and remove any equipment, improvements or facilities used by
Lessee at the Premises in connection with the transport, use, storage,
maintenance, generation, manufacture, handling, discharge, release or disposal
<PAGE>

of Hazardous Materials by Lessee or Lessee's agents, employees, contractors,
assignees, sublessees or invitees, on, in, beneath, about or from the Premises,
such removal, and decontamination and removal to be performed in full compliance
with applicable Environmental Laws.  Not later than 180 days prior to the
expiration date of the Lease or immediately upon any sooner termination, Lessee
shall submit to Lessor for Lessor's approval Lessee's written plan for such
removal, decontamination and disposal of Hazardous Materials which plan shall
identify (1) the Hazardous Materials to be removed and disposed of, (2) the
equipment or other portions of the Premises to be removed, decontaminated and/or
disposed of, (3) the method(s) by which such removal, decontamination, and
disposal will be accomplished, and (4) the licensed and bonded contractor(s) who
will perform such removal, decontamination and disposal.  Prior to preparation
of such written plan, Lessee at its sole cost shall cause to be performed such
tests as Lessor may reasonably require, by an environmental consultant
reasonably designated by Lessor, to ascertain whether Hazardous Materials exist
in the soils or groundwater underneath the Premises, or in any improvements on
the Premises.

     Section 7.08.   Controlling Provisions; Survival of Covenants.  To the
     -------------   ---------------------------------------------
extent any of the provisions of this Lease conflict with the provisions of this
Article VII, the provisions of this Article VII shall be controlling.  The
obligations of Lessee under this Article VII shall survive the termination or
expiration of the term of this Lease.
<PAGE>

                                  ARTICLE VIII
                                  ------------

                      MAINTENANCE, REPAIRS AND ALTERATIONS
                      ------------------------------------

     Section 8.01.   Maintenance - Premises.
     -------------   ----------------------

     (a) Lessor shall at its sole cost and expense keep in good and safe
condition, order and repair, and replace as and if necessary the following
components of the Premises: (i) the roof structure (but not the roof membrane or
other nonstructural components), (ii) structural elements of the exterior walls
(but not including windows, doors, painting, or other nonstructural elements
thereof), and structural elements of interior load-bearing walls, if any, and
(iii) structural elements of the foundation (but not including utility conduits
therein or other nonstructural elements thereof.  Lessor shall have no
obligation to make repairs under this Section 8.01(a) until a reasonable time
after Lessor's receipt of notice from Lessee of the need for such repairs;
provided that, Lessor shall commence repairs no later than thirty (30) days
after Lessor's receipt of notice from Lessee of the need therefor and thereafter
diligently continue the same until completion thereof.  The preceding sentence
shall not be construed to require physical repair work to have commenced within
such thirty (30) day period of time, as Lessor shall be deemed to have commenced
repairs merely by contacting (by telephone or otherwise) a contractor to perform
such work, whether or not such contractor is actually ultimately hired or is
able to commence physical work within such thirty (30) period.  In connection
with all of Lessor's activities under this paragraph, Lessor shall make a
reasonable effort to minimize any disruption of Lessee's business, provided that
Lessor shall not be obligated to incur overtime costs to employ workers who work
after normal business hours and on weekends.  Except as otherwise specifically
provided in Article X below (damage and destruction), there shall be no
abatement of rent or other sums payable by Lessee prior to or during any repairs
by Lessee or Lessor, and Lessee waives all claims for loss of business or lost
profits relating to any such repairs.

     (b) Throughout the term, except as provided in Section 8.01(a) above,
Lessee agrees to keep and maintain each and every part of the Premises in good
and safe condition, order and repair, reasonable wear and tear and damage due to
casualty excepted.  Lessee hereby expressly waives the provisions of any law
permitting repairs by a tenant at the expense of a landlord, including, without
limitation, all rights of Lessee under Sections 1941 and 1942 of the California
Civil Code.  Lessee agrees to keep the Premises clean and in sanitary condition
as required by the health, sanitary and police ordinances and regulations of any
political subdivision having jurisdiction.  Lessee further agrees to keep the
interior of the Premises, such as the windows, floors, walls, doors showcases
and fixtures clean and neat in appearance and to remove all trash and debris
which may be found in or around the Premises, and to maintain in good operating
condition all improvements and appurtenances serving the Premises including all
sewer connections, plumbing, heating and cooling appliances, wiring, and glass.
If Lessee refuses or neglects to commence such repairs and/or maintenance
required under this Lease or does not diligently prosecute same to completion
within thirty
<PAGE>

(30) days after written notice thereof, then Lessor may enter the Premises and
cause such repairs and/or maintenance to be made. Lessee agrees that upon
demand, it shall pay to Lessor the cost of any such repairs, together with
accrued interest from the date of payment at the lower of ten percent per annum
or the prime commercial lending rate then in effect at Bank of America.
Notwithstanding anything to the contrary above, Lessor may elect to enter into a
maintenance contract with a third party for the provision of all or a part of
Lessee's maintenance obligations as set forth in this Section 8.01. Upon such
election, Lessee shall be relieved from its obligations to perform only those
maintenance obligations covered by the maintenance contract, and Lessee shall
bear its pro rata share, as set forth in Section 8.02 below, of the costs of
such maintenance contract which shall be paid in advance on a monthly basis with
Lessee's rent payments.

     Section 8.02.   Maintenance - Common Areas.  Lessor shall maintain the
     -------------   --------------------------
Common Areas, together with all facilities and improvements now or hereafter
located thereon, and together with all street improvements or other improvements
adjacent thereto as may be required from time to time by governmental authority.
The manner in which such areas shall be maintained and the expenditures therefor
shall be at the sole discretion of Lessor.  Lessor shall at all times have
exclusive control of the Common Areas and may at any time temporarily close any
part thereof, may exclude and restrain anyone from any part thereof (except the
bona fide customers, employees and invitees of Lessee who use the Common Areas
in accordance with the rules and regulations that Lessor may from time to time
promulgate), and Lessor may change the configuration of the Common Areas or the
location of facilities thereon so long as any such change by Lessor does not
unreasonably interfere with Lessee's use of the Premises.  Lessor shall also be
entitled to employ third parties to operate and maintain all or any part of such
areas on such terms and conditions as Lessor shall in its sole discretion deem
reasonable and proper.  The surface parking facilities shall be available for
the automobiles of Lessee and Lessee's customers, employees and invitees on a
nonassigned, non-exclusive basis.  In connection with all of Lessor's activities
under this paragraph, Lessor shall make a reasonable effort to minimize any
disruption of Lessee's business, provided that Lessor shall not be obligated to
incur overtime costs to employ workers who work after normal business hours and
on weekends.  Except as otherwise specifically provided in Article X below
(damage and destruction), there shall be no abatement of rent or other sums
payable by Lessee prior to or during any repairs by Lessee or Lessor, and Lessee
waives all claims for loss of business or lost profits relating to any such
repairs.  Lessee shall have the obligation to notify Lessor, in writing, of any
repairs or maintenance to the Common Areas which may be required, and Lessor
shall have a reasonable time to make repairs; provided that, Lessor shall
commence repairs no later than thirty (30) days after Lessor's receipt of notice
from Lessee of the need therefor and thereafter diligently continue the same
until completion thereof.  The preceding sentence shall not be construed to
require physical repair work to have commenced within such thirty (30) day
period of time, as Lessor shall be deemed to have commenced repairs merely by
contacting (by telephone or otherwise) a contractor to perform such work,
whether or not
<PAGE>

such contractor is actually ultimately hired or is able to commence physical
work within such thirty (30) period.

     Lessee shall pay to Lessor, as additional rent, in the manner and at the
time provided below, Lessee's proportionate share, as defined below, of all
costs and expenses incurred by Lessor in the operation and maintenance of the
Common Areas of the Business Park during the term of this Lease.  Such costs and
expenses shall include, without limiting the generality of the foregoing, all
maintenance, pest control, security, gardening, landscaping, cost of public
liability, property damage, vandalism and malicious mischief, earthquake, and
other insurance deemed necessary by the Lessor, real property taxes, property
taxes, property management costs, including a management fee as determined by
Lessor (which shall in no event exceed 3% of the base rent payable for the
period of time covered by such fee), painting, lighting, cleaning, trash
removal, depreciation of equipment, fire protection, and similar items.

     Lessee's proportionate share of such common area expenses shall be 19.88%,
which is based on the ratio between the 48,384 square feet within the Premises
and the total square footage of buildings within the Business Park which is
243,364 square feet.  Such square footage is measured from the exterior surface
of all exterior walls, and includes entryways and the area under covered docks.
Lessee acknowledges that it has measured the square footage of the Premises, or
has had adequate opportunity to do so, and that the square footage of the
Premises set forth above shall be conclusive unless the area of the Premises
changes subsequent to the Commencement Date.

     Lessor shall bill Lessee monthly for Lessee's proportionate share of such
common area costs, which proportionate share shall be based upon the previous
month's actual costs and expenses.  Lessee shall pay such proportionate share
within 15 days of receipt of said billing statement from Lessor.

     Section 8.03.   Alterations and Additions.  No alterations or additions
     -------------   -------------------------
shall be made to the Premises by Lessee without the prior written consent of
Lessor which Lessor will not unreasonably withhold.  Notwithstanding the
preceding sentence, Lessee shall be entitled to make alterations and additions
to the Premises without first obtaining Lessor's consent thereto if and only if
they (i) do not affect the structural elements of the Premises or the roof
membrane of the Premises, (ii) cost in the aggregate over any 12 month period of
time no more than Twenty-Five Thousand Dollars ($25,000.00), and (iii) do not
affect the electrical, gas, plumbing, HVAC or other systems of the Premises.  In
no event shall any alteration or addition be of such a nature as to reduce or
otherwise adversely affect the value of the improvements within the Premises
immediately before making such alterations or additions, or to diminish the
general utility of the Premises for the permitted uses hereunder.  Lessor shall
have absolutely no obligation to consider or consent to any request by Lessee to
make any alteration or addition that affects the structural elements of the
Premises or the roof membrane of the Premises.  Lessee acknowledges that Lessor
desires the interior of the Premises to remain free of interior hard wall
partitions, and Lessor shall not be deemed unreasonable for withholding consent
to any hard wall partitions proposed by Lessee, whether
<PAGE>

to create interior offices, or for a demising wall between Lessee and any entity
to whom it may sublease space, or otherwise. As a condition of giving its
consent to any proposed alterations or additions, Lessor may require that Lessee
agree to remove any such alterations or improvements at the expiration of the
term and to restore the Premises to their prior condition. As a further
condition to giving such consent, Lessor may require Lessee to provide Lessor,
at Lessee's sole cost and expense, with a lien and completion bond in an amount
equal to one and one-half (1-1/2) times the estimated cost of such improvements,
to insure Lessor against any liability for mechanic's and materialmen's liens
and to insure completion of the work. As to any alterations or additions made by
Lessee without Lessor's consent (which Lessee has no right to make except as
specifically provided above), Lessee shall, unless otherwise requested in
writing by Lessor prior to expiration or sooner termination of the lease term,
remove the same from the Premises and restore the Premises, including any
building systems affected thereby, to its condition existing immediately prior
to such alteration or addition being made (subject to reasonable wear and tear).
All changes, alterations, or additions to be made to the Premises shall be under
the supervision of a competent architect or competent licensed structural
engineer and made in accordance with plans and specifications which have been
furnished to and approved by Lessor prior to commencement of work. If the
written consent of Lessor to any proposed alterations by Lessee shall have been
obtained, Lessee agrees to advise Lessor in writing of the date upon which such
alterations will commence in order to permit Lessor to post a notice of
nonresponsibility. All such alterations, changes and additions shall be
constructed in good and workmanlike manner in accordance with all ordinances and
laws relating thereto. Lessee shall deliver to Lessor "as built" plans of any
improvements or alterations to the Premises made by Lessee during the term of
this Lease. Any such changes, alterations or additions to or on the Premises
shall remain for the benefit of and become the property of Lessor, unless Lessor
requires their removal by giving Lessee written notice at least thirty (30) days
before the date Lessee is to vacate the Premises.

     Section 8.04.   Tenant Improvements.  Tenant Improvements to be provided by
     -------------   -------------------
Lessor, if any, are set forth on Exhibit "B".  Except as may be set forth on
                                 -----------
Exhibit "B", Lessor has no obligation to make any improvements or alterations to
-----------
the Premises.

     Section 8.05.   Plumbing.  Lessee shall not use the plumbing facilities for
     -------------   --------
any purpose other than that for which they were constructed.  The expense of any
breakage, stoppage or other damage relating to the plumbing and resulting from
the introduction by Lessee, its agents, employees, or invitees of foreign
substances into the plumbing facilities shall be borne by Lessee.
<PAGE>

                                   ARTICLE IX
                                   ----------

                                   INSURANCE
                                   ---------

     Section 9.01.   Property/Rental Insurance - Premises.  During the term of
     -------------   ------------------------------------
this Lease, Lessor shall keep the Premises insured against loss or damage by
fire and those risks normally included in the term "all risk" including (a)
flood coverage, (b) earthquake coverage at the election of Lessor, (c) coverage
for loss of up to 12 months of rents (including taxes, insurance, and Common
Area costs), and (d) boiler and machinery coverage if the Lessor deems such
coverage necessary.  Any deductibles shall be paid by Lessee to the extent the
deductible relates to damage to the Premises.  Payment of deductibles shall be
made within fifteen (15) days after written request by Lessor therefor.
Notwithstanding the foregoing, the amount of such deductible payable by Lessee
upon request therefor by Lessor shall not exceed an amount equal to one's
month's base rent based on the monthly rent amount payable under this lease at
the time such deductible payment is so requested by Lessor, with any balance of
such deductible paid by Lessee in equal installments amortized over the then
remaining balance of the lease term, assuming interest thereon at the rate of
the lesser of 12% per annum or the highest rate then allowed under law.  For
purposes of calculating the balance of the lease term pursuant to the preceding
sentence, no unexercised options to extend the term shall be taken into
consideration (in other words, any option period shall not be included in
calculating the remaining balance of the term).  The amount of such insurance
shall be not less than one hundred percent (100%) of the replacement value of
the Premises.  Lessor shall be entitled to procure such insurance under a
blanket policy of insurance covering one or more buildings in the Business Park
owned by Lessor.  Any recovery received from said insurance policy or policies
shall be paid to Lessor, and Lessee shall have no interest in any such proceeds.

     Lessee, in addition to the rent and other charges provided herein, agrees
to pay to Lessor its pro rata share of the premiums for all such insurance,
which pro rata share is identical to that provided in Section 8.02, above.  The
insurance premiums shall be paid in accordance with Article IV, within fifteen
(15) days of Lessee's receipt of a copy of Lessor's statement therefor.

     Section 9.02.   Property Insurance - Fixtures and Inventory.  During the
     -------------   -------------------------------------------
term, Lessee shall, at its sole expense, maintain insurance with "all risk"
coverage on any fixtures, leasehold improvements, furnishing, merchandise,
equipment, or personal property in or on the Premises, whether in place as of
the date hereof or installed hereafter, for the full replacement value thereof,
and Lessor shall not have any responsibility nor pay any costs for maintaining
any types of such insurance.  Any deductibles under such insurance shall be paid
by Lessee.  All proceeds from such insurance shall belong to Lessee and shall be
used to restore or replace the items damaged.
<PAGE>

     Section 9.03.   Lessor's Liability Insurance.  During the term, Lessor may
     -------------   ----------------------------
maintain a policy or policies of comprehensive general liability insurance
insuring Lessor (and such others as designated by Lessor)against liability for
bodily injury, death and property damage on or about the Premises or the Common
Area of the Business Park, with combined single limit coverage of not less than
Two Million Dollars ($2,000,000).

     Lessee, in addition to the rent and other charges provided herein, agrees
to pay to Lessor its pro rata share of the premiums for all such insurance,
which pro rata share is identical to that provided in Section 8.02 above.  The
insurance premiums shall be paid in accordance with Article IV, within fifteen
(15) days of Lessee's receipt of a copy of Lessor's statement therefor.

     Section 9.04.   Lessee's Liability Insurance.  Lessee shall, at its sole
     -------------   ----------------------------
cost and expense, obtain and keep in force during the term of this Lease
comprehensive general liability insurance applying to the condition, use,
occupancy, and maintenance of the Premises and the business operated by Lessee,
or any other occupant, on the Premises.  Such insurance shall include broad form
contractual liability insurance coverage insuring all of Lessee's indemnity
obligations under this Lease.  Such coverage shall have a minimum combined
single limit of liability of at least Two Million Dollars ($2,000,000).  All
such policies shall be written to apply to all bodily injury, property damage,
personal injury and other covered loss, however occasioned.  All such policies
shall be endorsed to add Lessor and any lender or other party named by Lessor as
an additional insured and to provide that any insurance maintained by Lessor
shall be excess insurance only.  Such coverage shall also contain endorsements:
(i) deleting any employee exclusion on personal injury coverage; (ii) including
employees as additional insureds; and (iii) providing for coverage of employer's
automobile non-ownership liability.  All such insurance shall provide for
severability of interests; shall provide that an act or omission of one of the
named insureds shall not reduce or avoid coverage to the other named insureds;
and shall afford coverage for all claims based on acts, omissions, injury and
damage, which claims occurred or arose (or the onset of which occurred or arose)
in whole or in part during the policy period.  The limits of all insurance
described in this Section 9.04 shall not, however, limit the liability of Lessee
hereunder.  Not more frequently than once each calendar year if, in the
reasonable opinion of Lessor, the amount of insurance required hereunder is not
adequate, Lessee shall increase said insurance coverage as reasonably required
by Lessor; provided that, in no event shall any such increase result in an
increase in the premium therefor of greater than twenty percent (20%) of the
amount of the premium during the preceding year of the term of this Lease.  The
failure of Lessor to require any additional insurance coverage at any time shall
not relieve Lessee from the obligation to provide increased coverage at any
later time or relieve Lessee from any other obligations under this Lease.
Lessee shall furnish to Lessor prior to the Commencement Date, and at least
thirty (30) days prior to the expiration date of any policy, certificates
indicating that the liability insurance required to be carried by Lessee is in
full force and effect.  Such policy of liability insurance shall specifically
provide that such policy shall not be subject to cancellation or reduction of
coverage except after at least thirty (30) days prior written notice to Lessor.
<PAGE>

     The insurance shall be with insurers approved by Lessor and with policies
in form satisfactory to Lessor, provided however, that such approval shall not
be unreasonably withheld.

     Section 9.05.   Waiver of Subrogation.  Lessor hereby releases Lessee, and
     -------------   ---------------------
Lessee hereby releases Lessor, and their respective officers, agents, employees
and servants, from any and all claims or demands of damages, loss, expense, or
injury to the Premises, or to the furnishings and fixtures and equipment, or
inventory or other property of either Lessor or Lessee in, or about or upon the
Premises, or claims for bodily injury or death which is caused by or results
from perils, events or happenings which are the subject of insurance carried by
the respective parties and in force at the time of any such loss; provided,
however, that such waiver shall be effective only to the extent permitted by the
insurance covering such loss and to the extent such insurance is not prejudiced
thereby.  Lessor and Lessee shall each obtain such policies of insurance as
required hereunder that are not invalidated or prejudiced by the mutual release
described in this Section 9.05 so long as such policies are available at
commercially reasonable rates.  Each party shall cause each insurance policy
obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by any policy.  If either party is unable to obtain such a waiver
of subrogation with respect to the applicable policies of insurance, such party
shall so notify the other party hereto in writing of such failure.

     Section 9.06.   Indemnification.  Except in the case of Lessor's own acts
     -------------   ---------------
or omission, Lessee will indemnify Lessee and save it harmless from and against
any and all claims, actions, damages, liability and expense in connection with
loss of life, personal injury and/or damage to property arising from or out of
any occurrence in, upon or at the Premises, or the occupancy or use by Lessee of
the Premises or any part hereof, or caused wholly or in part by acts or
omissions of Lessee, its agents, contractors, employees, servants, licensees, or
concessionaires or by anyone permitted to be on the Premises by Lessee.  In case
Lessor shall be made a party to any such litigation commenced by or against
Lessee, then Lessee shall protect and hold Lessor harmless from all claims,
liabilities, costs and expenses, and shall pay all costs, expenses and
reasonable legal fees incurred by Lessor in connection with such litigation,
except to the extent caused by the negligence of Lessor.

     Section 9.07.   Waiver of Claims.  Except to the extent caused by the
     -------------   ----------------
negligence of Lessor, Lessee hereby waives any claims against Lessor for injury
to Lessee's business or any loss of income therefrom or for damage to the goods,
wares, merchandise or other property of Lessee, or for injury or death of
Lessee's agents, employees, invitees, or any other person in or about the
Premises or the Business Park from any cause whatsoever, regardless of whether
the same results from conditions existing upon the Premises or from other
sources or places, and regardless of whether the cause of such damage or injury
or the means of repairing the same is inaccessible to Lessee.  Notwithstanding
the foregoing, Lessee waives all claims against Lessor for loss of business or
other consequential damages regardless of the cause thereof, including without
limitation Lessor's negligence or wilful misconduct.
<PAGE>

     Section 9.08.   Plate Glass Replacement.  Lessee shall replace at its sole
     -------------   -----------------------
expense, any and all plate glass and other glass in and about the Premises which
is damaged or broken by vandalism.  If any plate glass or other glass in and
about the Premises is damaged or broken by causes other than vandalism, then
Lessor shall replace the same and Lessee shall reimburse Lessor an amount equal
to Lessor's cost of replacement, provided that such amount shall not exceed the
deductible then in effect on Lessor's insurance policy, if any, covering the
damaged glass.  Nothing herein shall be construed to require Lessor to carry
plate glass insurance.

                                   ARTICLE X
                                   ---------

                             DAMAGE OR DESTRUCTION
                             ---------------------

     Section 10.01.   Right to Terminate on Destruction of Premises.  Lessor
     --------------   ---------------------------------------------
shall have the right to terminate this Lease if, during the term, the Premises
are damaged to an extent exceeding thirty-three percent (33%) of the then
reconstruction cost of the Premises as a whole.  Lessor shall also have the
right to terminate this Lease if any portion of the Premises is damaged by an
uninsured peril.  In either case, Lessor may elect to terminate as provided
above by written notice to Lessee delivered within sixty (60) days of the
happening of such damage.  Both Lessee and Lessor shall have a right to
terminate this Lease if, during the term, the Premises are damaged to an extent
that the estimated restoration time therefor, including obtaining requisite
governmental permits for such restoration and any insurance proceeds necessary
to pay for such restoration, as such period of time is reasonably estimated by
Lessor, exceeds two hundred seventy (270) days from the date of such damage.
Lessor shall notify Lessee of its estimate of the restoration time promptly
after Lessor determines the same.  Each party shall exercise its right of
termination pursuant to the preceding sentence, if at all, by written notice to
the other within ten (10) days after Lessor delivers notice to Lessee of
Lessor's estimate of the restoration time.  Any such notice of termination shall
be effective, and shall result in termination of this Lease, thirty (30) days
after delivery thereof.  Lessor shall have no further obligation to repair such
damage after the date of any such notice of termination by Lessee.

     Section 10.02.   Repairs by Lessor.  If neither Lessor nor Lessee elects to
     --------------   -----------------
terminate this Lease pursuant to Section 10.01, Lessor shall, immediately upon
receipt of insurance proceeds paid in connection with such casualty, but in no
event later than one hundred twenty (120) days after such damage has occurred,
proceed to repair or rebuild the Premises, on the same plan and design as
existed immediately before such damage or destruction occurred and will proceed
expeditiously to complete such restoration, subject to such delays as may be
reasonably attributable to governmental restrictions or failure to obtain
materials or labor, or otherwise due to causes beyond the control of Lessor.
Lessee shall be liable for the repair and replacement of all fixtures, leasehold
improvements, furnishing, merchandise, equipment and personal property as
provided in Section 9.02.
<PAGE>

     Section 10.03.   Reduction of Rent During Repairs.  In the event Lessee is
     --------------   --------------------------------
able to continue to conduct its business during the making of repairs, the base
rent then prevailing under Section 4.01 will be equitably reduced in the
proportion that the square footage of the unusable part of the Premises bears to
the square footage of the whole thereof for the period that repairs are being
made.  No base rent shall be payable while the Premises are wholly unusable due
to casualty damage.

     Section 10.04.   Arbitration.  Any controversy or claim arising out of or
     --------------   -----------
relating to this Article shall be settled by arbitration in accordance with the
rules of the American Arbitration Association as then in effect, and judgment
upon the award rendered by the arbitration may be entered in any court having
jurisdiction.  The expenses of arbitration shall be borne by the parties as
allocated by the arbitrators.  The party desiring arbitration shall serve notice
upon the other party, together with designation of the first party's arbitrator.

     Section 10.05.   Lessor's Overriding Right to Terminate.  Notwithstanding
     --------------   --------------------------------------
anything to the contrary herein, if the discounted present value of the rent due
hereunder for the balance of the term, using as the discount rate the prime
commercial lending rate in effect at the Bank of America as of the date Lessor
is to commence repairs pursuant to Section 10.02 hereof, is less than the cost
of repairing the damage to the Premises, Lessor may at its option terminate this
lease upon thirty (30) days' written notice.

                                  ARTICLE XI
                                  ----------

                              REAL PROPERTY TAXES
                              -------------------

     Section 11.01.   Payment of Taxes.  Lessee shall pay the real property tax,
     --------------   ----------------
as defined in Section 11.02, applicable to the Premises during the term of this
Lease.  All such payments shall be made at least ten (10) days prior to the
delinquency date of such payment.  If any such taxes paid by Lessee shall cover
any period of time prior to or after the expiration of the term hereof, Lessee's
share of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year during which this Lease shall be in effect, and
Lessor shall reimburse Lessee to the extent required.  If Lessee shall fail to
pay any such taxes, Lessor shall have the right to pay the same, in which case
Lessee shall repay such amount to Lessor with Lessee's next rent installment
together with interest at the prime commercial lending rate then in effect at
the Bank of America.

     Section 11.02.   Definition of "Real Properly Tax".  As used herein, the
     --------------   ---------------------------------
term "real property tax" shall include any form of real estate tax or
assessment, general, special, supplemental, ordinary or extraordinary, foreseen
and unforeseen, and any license fee, commercial rental tax, improvement bond or
bonds, levy or tax (excluding in all instances inheritance, federal or state net
income, corporate, franchise or estate taxes) imposed on the Premises by any
authority having the direct or indirect power to tax, including any improvement
district thereof, as against any real property of which the Premises are a part,
as against Lessor's right to rent or other income therefrom, and as against
Lessor's business of
<PAGE>

leasing the Premises, and any taxes or levies in substitution of or in lieu of
any of the foregoing.

     Section 11.03.   Joint Assessment.  If the Premises are not separately
     --------------   ----------------
assessed, Lessee's liability shall be an equitable proportion of the real
property taxes for all of the land and improvements included within the tax
parcel assessed, as reasonably determined by Lessor.  Lessee shall pay Lessor
said proportionate amount at least ten (10) days prior to the delinquency date
of the real property tax.

     Section 11.04.   Personal Property Taxes.
     --------------   -----------------------

     (a) Lessee shall pay prior to delinquency all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere. When possible, Lessee
shall cause said trade fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.

     (b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

     (c) If Lessee shall fail to pay any such taxes, Lessor shall have the right
to pay the same, in which case Lessee shall repay such amount to Lessor with
Lessee's next rent installment together with interest at the prime commercial
lending rate then charged by the Bank of America.

                                  ARTICLE XII
                                  -----------

                           UTILITIES AND JANITORIAL
                           ------------------------

     Lessee shall pay prior to delinquency throughout the term the cost of
water, ilas. heating, cooling, sewer, telephone, electricity, garbage, air
conditioning and ventilation, janitorial service, and all other materials,
utilities, and services supplied to the Premises.  If any such services are not
separately metered to Lessee, Lessee shall pay its proportionate share of all
charges which are jointly metered, as reasonably determined by Lessor, and
payment to be made by Lessee within fifteen (15) days of receipt of the
statement for such charges.

                                 ARTICLE XIII
                                 ------------

                           ASSIGNMENT AND SUBLETTING
                           -------------------------
<PAGE>

     Section 13.01.   Lessor's Consent Required.  Except as otherwise provided
     --------------   -------------------------
in Section 13.02, Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of
Lessee's interest in this Lease or in the Premises, without Lessor's prior
written consent which Lessor shall not unreasonably withhold.  All of the
following shall be deemed an assignment within the meaning of this Article XIII:
(i) any transfer resulting from the merger, consolidation or other
reorganization of Lessee, or transfer to any Affiliate (as defined below) of
Lessee, (ii) any transfer resulting from the sale or other transfer of all or
substantially all of Lessee's assets, and (iii) if Lessee is a corporation,
partnership, limited liability company, trust or unincorporated association, the
sale, issuance or transfer of a controlling interest therein, or the transfer of
a majority interest in or a change in the voting control of any corporation,
partnership, limited liability company, trust, unincorporated association which
is an Affiliate of Lessee, or the transfer of any portion of any general
partnership or managing interest in Lessee or in any such Affiliate.
"Affiliate" shall mean any Entity controlled by, under common control with, or
controlling, Lessee.  "Entity" shall mean any person, corporation, partnership
(general or limited), limited liability company, joint venture, association,
joint stock company, trust or other business entity or organization.  For
purposes of this paragraph, "control" shall mean (i) with respect to a
corporation, the direct or indirect ownership of more than fifty percent (50%)
of any class of voting shares, (ii) with respect to a partnership, the ownership
of a general partnership interest, or entitlement to more than fifty percent
(50%) of the partnership interests in profits or capital, (iii) with respect to
any other Entity, the ownership of a majority of the voting rights thereof, or
the ability to direct its management decisions.  Notwithstanding the foregoing,
an "assignment" for purposes of Article XIII shall not include any transfer or
issuance of stock over the New York Stock Exchange, the American Stock Exchange,
or NASDAQ or by virtue of a private placement with a venture capital firm
wherein such venture capital firm receives stock in Lessee.

     Section 13.02.   Permitted Transfers.  Notwithstanding Section 13.01,
     --------------   -------------------
Lessee shall be entitled to assign this Lease or sublet the Premises or any
portion thereof, without Lessor's consent, to any Affiliate and any Entity which
results from a merger or consolidation with or other reorganization of Lessee,
or to any Entity which acquires substantially all of the stock or assets of
Lessee as a going concern with respect to the business that is being conducted
in the Premises (each a "Permitted Transfer"), provided that as to each
Permitted Transfer either (i) Lessee survives such transaction and remains fully
and primarily liable under this Lease for the performance of all of Lessee's
obligations hereunder, or (ii) if Lessee does not survive (for example, it
merges into another corporation), then the net worth of such assignee on the
effective date of such assignment determined in accordance with GAAP and
exclusive of any good will and other intangible assets is at least equal to the
lesser of (A) the net worth of Lessee immediately prior to such transfer, or (B)
Twenty Million Dollars ($20,000,000).

     Section 13.03.   Request for Permission to Assign or Sublease.  Lessee must
     --------------   --------------------------------------------
make any request for Lessor's approval of a proposed assignment, sublease, or
other transfer in writing and by certified mail.  Lessee's written request to
Lessor for consent to an assignment or
<PAGE>

subletting shall be accompanied by (a) the name and legal composition of the
proposed sublessee; (b) the nature of the proposed sublessee's business to be
carried on in the Premises; (c) the terms and provisions of the proposed
sublease; and (d) such financial and other reasonable information as Lessor may
request concerning the proposed sublessee. Lessor shall respond to Lessee's
request for consent hereunder within twenty (20) days after Lessee's request and
any attempted assignment, transfer, mortgage, encumbrance, or subletting without
such consent shall be void, and shall constitute a breach of this Lease.
Lessor's consent shall not be deemed unreasonably withheld if consent is denied,
among other reasons, because the prospective sublessee or assignee will in any
way diminish the value of the Premises or increase Lessor's exposure to risk due
to the nature of Lessee's proposed use. Each proposed assignment or sublease
agreement shall recite that it is and shall be subject and subordinate to the
provisions of this Lease, that the assignee or sublessee accepts such assignment
or sublease and agrees to perform all of the obligations of Lessee hereunder,
and that the termination of this Lease shall, at Lessor's sole election,
constitute a termination of every such assignment or sublease.

     Section 13.04.   No Release of Lessee.  Regardless of Lessor's consent, no
     --------------   --------------------
subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder.  The acceptance of rent by
Lessor from any other person shall not be deemed consent to any subsequent
assignment or subletting.  In the event of default by any assignee of Lessee or
any successor Lessee in the performance of any of the terms hereof, Lessor may
proceed directly against Lessee without the necessity of exhausting remedies
against said assignee.  If Lessee shall purport to assign this Lease, or
sublease all or any portion of the Premises, or permit any person or persons
other than Lessee to occupy the Premises, without Lessor's prior written
consent, Lessor may collect rent from the person or persons then or thereafter
occupying the Premises and apply the net amount collected to the rent reserved
herein, but no such collection shall be deemed a waiver of Lessor's rights and
remedies under this Article XIII or the acceptance of any such purported
assignee, sublessee or occupant, or a release of Lessee from the further
performance by Lessee of covenants on the part of Lessee herein contained.

     Section 13.05.   Attorneys' Fees.  In the event Lessee shall assign or
     --------------   ---------------
sublet the Premises or request the consent of Lessor to any assignment or
subletting or if Lessee shall request the consent of Lessor for any act Lessee
proposes to do, then Lessee shall pay Lessor's reasonable attorneys' fees
incurred in connection therewith up to but not exceeding Five Thousand Dollars
($5,000).

     Section 13.06.   Excess Rent.  In the event Lessor shall consent to a
     --------------   -----------
sublease or an assignment under the Lease and such sublease or assignment,
together with any prior subleases and assignments, results in a sublease or
assignment of more than 50% of the space initially leased to Lessee under this
Lease, then Lessee shall pay to Lessor with its regularly scheduled rent
payments fifty percent (50%) of all sums collected by Lessee from all sublessees
and/or assignees which are in excess of the rent then owing pursuant to Article
IV
<PAGE>

above after first deducting therefrom any real estate brokerage commissions and
attorneys' fees reasonably incurred by Lessee in connection with said assignment
or subletting, up to but not exceeding Five Dollars ($5.00) per square foot of
space subleased or assigned.

     Section 13.07.   Recapture of Premises.  The provisions of this Section
     --------------   ---------------------
13.07 shall not apply to a sublease which, together with all then current
subleases, results in Lessee subleasing less than 50% of the total floor space
of Premises initially leased to Lessee under this Lease for less than the full
balance of the term, but shall apply to all assignments, and to any sublease
which, together with all other subleases then in effect, results in Lessee
subleasing 50% or more of the total floor space of Premises initially leased to
Lessee under this Lease for the full balance of the term.  Any purported
assignment of less than all of the Lease shall be deemed a sublease for purposes
of this Lease.  In the event Lessee requests Lessor's consent to a proposed
sublease or assignment pursuant to this Article XIII, then in lieu of giving or
denying such consent within the twenty (20) day period of time specified in
Section 13.03 therefor, Lessor may instead elect to terminate the Lease with
respect to the portion of the Premises Lessee has requested Lessor's consent to
sublease, or in the event of an assignment then with respect to the entire
Premises (collectively, the "Recapture Space").  Such election shall be made, if
at all, by written notice to Lessee thereof within said twenty (20) day period.
Such termination shall be effective on the date such sublease would otherwise
have been effective, or if no such date is specified in Lessee's request for
Lessor's consent to such sublease, then on the date which is thirty (30) days
after Lessor's election to terminate.  From and after the date of such
termination, (i) the Recapture Space shall no longer be deemed part of the
Premises, (ii) the amount of rent payable and Lessee's share of common area
expenses, insurance, and taxes under this Lease shall be reduced proportionately
based on the proportionate reduction of square footage of the Premises resulting
from such recapture, and (iii) Landlord at Landlord's sole cost shall erect a
demising wall if there is no pre-existing demising wall segregating such
Recapture Space from the balance of the Premises.  If separate access to areas
outside the Premises is not already available to the Recapture Space, then
Lessee at no cost or liability to Lessor, shall make access from such outside
areas available for any and all occupants of the Recapture Space through
Lessee's remaining Premises as reasonably determined by Landlord.  Lessor may,
but shall not be obligated to, lease the Recapture Space to any entity to whom
Lessee requested Lessor's consent to sublease or assign the same, at the same
rent, or any higher or lower rent, as was proposed by Lessee in connection with
its proposed sublease or assignment.

                                  ARTICLE XIV
                                  -----------

                               DEFAULTS; REMEDIES
                               ------------------

     Section 14.01.   Defaults.  The occurrence of any one or more of the
     --------------   --------
following events shall constitute a material default and breach of this Lease by
Lessee:

          (a) The abandonment of the Premises by Lessee;
<PAGE>

          (b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of five (5) days after delivery of notice to
Lessee that such payment is due; provided: that, any such notice shall
constitute the notice required under Section 1161 of the California Code of
Civil Procedure (and/or any related or successor statutes regarding unlawful
detainer actions) so long as such notice is given in accordance with the
requirements of such statute; and provided further that, if two or more such
failures shall occur in any one year period during the term of this Lease, then,
unless applicable law requires otherwise, each and every succeeding failure to
pay any sum payable hereunder when due shall constitute a material default and
breach of this Lease, and Lessee shall not be entitled to any notice or cure
period with respect to any such failure to pay;

          (c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in Section 14.01(b) above, where such failure shall
continue for a period of 10 days after written notice hereof from Lessor to
Lessee; provided, however, that if the nature of Lessee's default is such that
more than 10 days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commences such cure within said 10 day period
and thereafter diligently prosecutes such cure to completion;

          (d) (i) The making by Lessee of any general arrangement or assignment
for the benefit of creditors; (ii) Lessee becomes a "debtor" as defined in 11
U.S.C. Section 101 or any successor statute thereto; (iii) the taking or
suffering of any action by Lessee under any insolvency or bankruptcy act; (iv)
the appointment of a trustee or receiver to take possession of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, or (v) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease.  Provided, however, in the event that any provisions of
this Section 14.01(d) is contrary to any applicable law, such provision shall be
of no force or effect;

          (e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee of Lessee, any successor in interest of Lessee or
any guarantor of Lessee's obligation hereunder, and any of them, was materially
false.

     Section 14.02.   Remedies.  In the event of any such material default or
     --------------   --------
breach by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any other right or remedy
which Lessor may have by reason of such default or breach, take any of the
following actions:

          (a) Lessor shall be entitled to terminate Lessee's right to possession
of the Premises by any lawful means, in which case this Lease shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor.  In
the event of any such termination of this Lease, Lessor shall be entitled to
recover from Lessee (i) the worth at the time of award of the
<PAGE>

unpaid rent which had been earned at the time of termination; plus, (ii) the
worth at the time of award of the amount by which the unpaid rent which would
have been earned after termination until the time of award exceeds the amount of
such rental loss for the same period that Lessee proves could have been
reasonably avoided; plus (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss for the same period that Lessee proves
could be reasonably avoided; plus (iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by Lessee's failure to perform
Lessee's obligations under this Lease, or which in the ordinary course of things
would be likely to result therefrom. The "worth at the time of award" of the
amounts referred to in clauses (i) and (ii) of this Section 14.02(a) shall be
computed by allowing interest at the lower of twelve percent (12%) per annum, or
the maximum rate then permitted by law. The "worth at the time of award" of the
amount referred to in clause (iii) of this Section 14.02(a) shall be computed by
discounting such amount at the discount rate of the Federal Reserve Board of San
Francisco at the time of award plus one percent (1%). The term "time of award"
as used in subparagraphs (i), (ii), and (iii) shall mean the date of entry of a
judgment or award against Lessee in an action or proceeding arising out of
Lessee's breach of this Lease. The term "rent" as used in this paragraph shall
include all base rent, taxes, insurance, Common Area costs and other sums
required to be paid by Lessee to Lessor pursuant to the terms of this Lease.
This Lease may be terminated by a judgment specifically providing for
termination, or by Lessor's delivery to Lessee of written notice specifically
terminating this Lease. In no event shall any one or more of the following
actions by Lessor, in the absence of a written election by Lessor to terminate
this Lease, constitute a termination of this Lease or a waiver of Lessor's right
to recover damages under this Section 14.02(a): appointment of a receiver in
order to protect Lessor's interest hereunder; consent to any subletting of the
premises or assignment of this Lease by Lessee, whether pursuant to provisions
hereof concerning subletting and assignment or otherwise; or any other action by
Lessor or Lessor's agents intended to mitigate the adverse effects of any breach
of this Lease by Lessee, including without limitation any action taken to
maintain and preserve the Premises, or any action taken to relet the Premises or
any portion thereof for the account of Lessee and in the name of Lessee.

          (b) Lessor shall be entitled to maintain Lessee's right to possession
in which case this Lease shall continue in effect whether or not Lessee shall
have abandoned the Premises.  In such event Lessor shall be entitled to enforce
all of Lessor's rights and remedies under this Lease, including the right to
recover the rent as it becomes due hereunder.

          (c) Lessor shall be entitled to pursue any other remedy now or
hereafter available to Lessor under the laws or judicial decisions of the state
of California.  Unpaid installments of rent and other unpaid monetary
obligations of Lessee under the terms of this Lease shall bear interest from the
date due at the prime rate then charged by Bank of America.

     Section 14.03.   Default by Lessor.  Lessor shall not be in default unless
     --------------   -----------------
Lessor fails to perform obligations required of Lessor within a reasonable time,
but in no event later than
<PAGE>

thirty (30) days after written notice by Lessee to Lessor and to the holder of
any first mortgage or deed of trust covering the Premises whose name and address
shall have theretofore been furnished to Lessee in writing, specifying wherein
Lessor has failed to perform such obligation; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days are
required for performance then Lessor shall not be in default if Lessor commences
performance within such 30-day period and thereafter diligently prosecutes the
same to completion. In the event Lessor does not commence performance within the
thirty (30) day period provided herein, or does not diligently prosecute the
same to completion, Lessee may perform such obligation and will be reimbursed
for its expenses by Lessor together with interest thereon at the prime
commercial lending rate then charged by the Bank of America, provided, however,
that if the parties are in dispute as to what constitutes Lessor's obligations
under this agreement, any such dispute shall be resolved by arbitration in a
manner identical to that provided in Section 10.04 above.

     Section 14.04.   Late Charges.  Lessee hereby acknowledges that late
     --------------   ------------
payment by Lessee to Lessor of rent and other sums due hereunder will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain.  Such costs include, but are not
limited to, processing and accounting charges, and late charges which may be
imposed on Lessor by the terms of any mortgage or trust deed covering the
Premises.  Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designated agent within five
(5) days after such amount is due and owing, Lessee shall pay to Lessor a late
charge equal to 5% of such overdue amount.  The parties hereby agree that such
late charge represents a fair and reasonable estimate of the costs Lessor will
incur by reason of late payment by Lessee.  Acceptance of any such late charge
by Lessor shall in no event constitute a waiver of Lessee's default with respect
to such overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder.  In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding Section 4.01 or any
other provision of this Lease to the contrary.

     Section 14.05.   Impounds.  In the event Lessee fails on two (2) occasions
     --------------   --------
during any consecutive twelve (12) month period to make rental payments within
ten (10) days of Lessee's receipt of written notice of such delinquency, or
shall on two (2) occasions issue a check which is declined by Lessee's bank for
insufficient funds, Lessor may require, by delivery of Notice thereof to Lessee,
that Lessee pay all rent, real property taxes, and insurance expenses quarterly
in advance for the balance of the Lease term, and that all such payments be made
by cash, cashier's check or money order in lieu of Lessee's check.  Acceptance
of payment by check shall not be construed as a waiver of any such rights.  The
exercise of any rights under this paragraph shall not limit or otherwise affect
Lessor's other rights and remedies under this Lease or by law.  Such quarterly
advance installment shall be payable on each January 1, April 1, July 1, and
October 1 thereafter occurring during the Lease term in the amount of rent, real
property tax and insurance expenses as estimated by
<PAGE>

Lessor which are payable by Lessee under the terms of this Lease. Such fund
shall be established to insure payment when due, before delinquency, of any or
all such rent, real property taxes and insurance premiums. If the amounts paid
to Lessor by Lessee under the provisions of this paragraph are insufficient to
discharge the obligations of Lessee to pay such real property taxes and
insurance premiums as the same become due, Lessee shall pay to Lessor, within
three (3) business days after Lessor's demand, such additional sums necessary to
pay such obligations. All moneys paid to Lessor under this paragraph may be
intermingled with other money of Lessor, shall not bear interest, and shall not
create any trust relationship between Lessor and Lessee or any fiduciary duties
on the part of Lessor to Lessee. In the event of a default in the obligations of
Lessee to perform under this Lease, then any balance remaining from funds paid
to Lessor under the provisions of this paragraph may, at the option of Lessor,
be applied to the payment of any monetary default of Lessee in lieu of being
applied to the payment of rent, real property tax and insurance premiums. Any
excess payment by Lessee above the amount of expenses payable by Lessee under
this Lease to which Lessor applies amounts in such fund shall be credited
against next due installments of real property taxes and insurance premiums.

                                  ARTICLE XV
                                  ----------

                           CONDEMNATION OF PREMISES
                           ------------------------

     Section 15.01.   Total Condemnation.  If the entire Premises, whether by
     --------------   ------------------
exercise of governmental power or the sale or transfer by Lessor to any
condemnor under threat of condemnation or while proceedings for condemnation are
pending, at any time during the term, shall be taken by condemnation such that
there does not remain a portion suitable for occupation, this Lease shall then
terminate as of the date transfer of possession is required.  Upon such
condemnation, all rent shall be paid up to the date transfer of possession is
required, and Lessee shall have no claim against Lessor for the value of the
unexpired term of this Lease.

     Section 15.02.   Partial Condemnation.  If any portion of the Premises is
     --------------   --------------------
taken by condemnation during the term, whether by exercise of governmental power
or the sale or transfer by Lessor to a condemnor under threat of condemnation or
while proceedings for condemnation are pending, this Lease shall remain in full
force and effect except that in the event such taking leaves the Premises unfit
for normal and proper conduct of the business of Lessee, then Lessee shall have
the right to terminate this Lease effective upon the date transfer of possession
is required.  Moreover, Lessor and Lessee shall have the right to terminate this
Lease effective on the date transfer of possession is required if more than
thirty-three percent (33%) of the total square footage of the Premises is taken
by condemnation.  Lessee and Lessor may elect to exercise their respective
rights to terminate this Lease pursuant to this Section by serving written
notice to the other within one hundred twenty (120) days of their receipt of
notice of condemnation.  All rent shall be paid up to the date of termination,
and Lessee shall have no claim against Lessor for the leasehold value, or
<PAGE>

the value of any unexpired term of this Lease. If this Lease shall not be
canceled, the rent after such partial taking shall be that percentage of the
adjusted base rent specified herein, equal to the percentage which the square
footage of the untaken part of the Premises, immediately after taking, bears to
the square footage of the entire Premises immediately before the taking. Any
sums owing hereunder which are calculated on the basis of Lessee's pro rata
share (as set forth in Section 8.02) shall also be adjusted to reflect the
decreased square footage of the Premises due to the condemnation. If Lessee's
continued use of the Premises requires alterations and repair by reason of a
partial taking, all such alterations and repair shall be made by Lessee at
Lessee's expense.

     Section 15.03.   Award to Lessee.  In the event of any condemnation,
     --------------   ---------------
whether total or partial, Lessee shall have the right to claim and recover from
the condemning authority such compensation as may be separately awarded or
recoverable by Lessee for loss of its business fixtures, or equipment belonging
to Lessee immediately prior to the condemnation.  The balance of any
condemnation award shall belong to Lessor and Lessee shall have no further right
to recover from Lessor or the condemning authority for any additional claims
arising out of such taking.

                                  ARTICLE XVI
                                  -----------

                                ENTRY BY LESSOR
                                ---------------

     Lessee shall permit Lessor and its agent to enter the Premises at all
reasonable times upon written or oral notice from Lessor to Lessee of Lessor's
entry no less than 24 hours prior to such entry, for any of the following
purposes: to inspect the Premises; to maintain the building in which the
Premises are located; to make such repairs, alterations, and additions to the
Premises as Lessor is obligated or may elect to make; to show the Premises and
post "To Lease" signs for the purposes of reletting during the last ninety (90)
days of the term; to show the Premises as part of a prospective sale by Lessor
or prospective loan to Lessor or to post notices of non-responsibility.  Lessor
shall have such right of entry without any rebate of rent to Lessee for any loss
of occupancy or quiet enjoyment of the Premises thereby occasioned.
<PAGE>

                                 ARTICLE XVII
                                 ------------

                             ESTOPPEL CERTIFICATE
                             --------------------

          (a) Lessee shall at any time upon not less than ten (10) days' prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed,
and (iii) certifying such other information regarding this Lease as Lessor or a
prospective purchaser or lender of Lessor may reasonably request.  Any such
statement may be conclusively relied upon by any prospective purchaser or
encumbrancer of the Premises.

          (b) Lessee's failure to deliver such statement within such time shall
be conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification except as may be represented by Lessor, (ii) that there are
no uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance; or such failure may be considered by
Lessor as a default by Lessee under this Lease.

                                 ARTICLE XVIII
                                 -------------

                LESSOR'S LIABILITY, SUBORDINATION AND ATTORNMENT
                ------------------------------------------------

     Section 18.01.   Transfer of Ownership.  The term "Lessor" as used herein
     --------------   ---------------------
shall mean only the owner or owners at the time in question of the fee title or
a Lessee's interest in a ground lease of the Premises.  In the event of any
transfer of such title or interest, Lessor herein named (and in case of any
subsequent transfers then the grantor) shall be relieved from and after the date
of such transfer of all liability as respects Lessor's obligations thereafter to
be performed, provided that any funds in the hands of Lessor or the then grantor
at the time of such transfer, in which Lessee has an interest, shall be
delivered to the grantee.  The obligations contained in this Lease to be
performed by Lessor shall, subject as aforesaid, be binding on Lessor's
successors and assigns, only during their respective periods of ownership.

     Section 18.02.   Attornment.  Lessee shall attorn to any third party
     --------------   ----------
purchasing or otherwise acquiring the premises at any sale or other proceeding,
or pursuant to the exercise of any rights, powers or remedies under any
mortgages or deeds of trust or ground leases now or hereafter encumbering all or
any part of the premises, as if such third party had been named as Lessor under
this Lease.  Lessee shall execute a new lease with such new Lessor on the same
terms of this Lease if so required by such new Lessor.
<PAGE>

     Section 18.03.   Subordination.  Lessee agrees that this Lease shall be
     --------------   -------------
subject and subordinate to any mortgage, deed of trust, or other instrument of
security (each, a "Mortgage") now of record.  Lessor shall exercise its best
efforts to obtain a nondisturbance agreement within the thirty (30) day period
immediately following the execution of this Lease with respect to the Mortgage
currently of record as of the date of execution of this Lease, which
nondisturbance agreement is substantially in the form of Exhibit "C" attached
                                                         ----------
hereto.  In the event Lessor does not obtain such nondisturbance agreement after
exercising best efforts to do so within said thirty (30) day period of time,
this Lease shall not be voidable or terminable by Lessee as a consequence
thereof, nor shall Lessor be deemed in default hereunder as a result thereof,
but this Lease shall instead continue in full force and effect.  In addition,
Lessee agrees that this Lease shall be subject and subordinate to any Mortgage
which is recorded after the date of this Lease affecting the Premises, and such
subordination is hereby made effective without any further act of Lessee;
provided that, no such subordination shall be effective unless Lessor first
obtains from a lender a written subordination, nondisturbance and attornment
agreement substantially in the form of Exhibit "C" attached hereto.  Lessee
                                       ----------
shall execute in recordable form and return to Lessor said subordination,
nondisturbance and attornment agreement within seven (7) days after delivery
thereof to Lessee, and the failure of Lessee to so execute and return the same
shall constitute a default hereunder.  Notwithstanding anything to the contrary
set forth above, the lender under any Mortgage may at any time subordinate its
Mortgage to this Lease, without any need to obtain Lessee's consent, by
execution of a written document subordinating such Mortgage to this Lease and
thereupon this Lease shall be deemed prior to such Mortgage without regard to
their respective dates of execution, delivery and/or recording.

     Section 18.04.   No Recourse.  The obligations of Lessor under this Lease
     --------------   -----------
shall be without recourse to any partner, officer, trustee, beneficiary,
shareholder, director, member, unit holder or employee of Lessor or to any of
their respective assets.  It is expressly agreed that if Lessee obtains a money
judgment against Lessor resulting from a default by Lessor under this Lease,
that judgment shall be satisfied only out of the rents, issues, profits and
other income actually received on account of Lessor's right, title and interest
in the Premises and no other real, personal or mixed property of Lessor shall be
subject to levy, attachment or execution, or otherwise used to satisfy any such
judgment.  Lessee hereby waives any right to satisfy a judgment against Lessor
except from the rents, issues, profits and other income actually received on
account of Lessor's right, title and interest in the Premises.

                                  ARTICLE XIX
                                  -----------

                           EXPIRATION ON TERMINATION
                           -------------------------

     Section 19.01.   Surrender of Possession.  Lessee agrees to deliver up and
     --------------   -----------------------
surrender to Lessor possession of the Premises and all improvements thereon, in
as good order and condition as when possession was taken by Lessee, excepting
only ordinary wear and tear or any permitted alterations.  Upon termination of
this Lease, Lessor may reenter the Premises
<PAGE>

and remove all persons and property therefrom. If Lessee shall fail to remove
any effects which it is entitled to remove from the Premises upon the
termination of this Lease, for any cause whatsoever, Lessor, at its option, may
remove the same and store or dispose of them, and Lessee agrees to pay to Lessor
on demand any and all expenses incurred in such removal and in making the
Premises free from all dirt, litter, and debris, including all storage and
insurance charges. If the Premises are not surrendered at the end of the Lease
term, Lessee shall indemnify Lessor against loss or liability resulting from
delay by Lessee in so surrendering the Premises, including, without limitation,
actual damages for lost rents.

     Section 19.02.   Holding Over.  If Lessee, with or without Lessor's
     --------------   ------------
consent, remains in possession of the Premises after expiration of the term and
if Lessor and Lessee have not executed an express written agreement as to such
holding over which provides other than as set forth in this Section, then such
occupancy shall be a tenancy from month to month, at a monthly rental equivalent
to 150% of the monthly rental in effect immediately prior to such expiration,
such payments to be made as herein provided.  In the event of such holding over
all of the terms of this Lease including the payment of all charges owing
hereunder other than rent shall remain in full force and effect on said month to
month basis.

                                   ARTICLE XX
                                   ----------

                            MISCELLANEOUS PROVISIONS
                            ------------------------

     Section 20.01.   Severability.  The invalidity of any provision of this
     --------------   ------------
Lease as determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.

     Section 20.02.   Interest on Past-due Obligations.  Except as expressly
     --------------   --------------------------------
herein provided, any amount due to Lessor not paid when due shall bear interest
at the lesser of ten percent (10%) per annum or the prime commercial lending
rate then in effect at Bank of America.  Payment of such interest shall not
excuse or cure any default by Lessee under this Lease.

     Section 20.03.   Time.  Time is of the essence in the performance of all
     --------------   ----
obligations under this Lease.  All references to days contained in this Lease
shall be deemed to mean calendar days, unless otherwise specifically stated.

     Section 20.04.   Additional Rent.  Any monetary obligations of Lessee to
     --------------   ---------------
Lessor under the terms of this Lease shall be deemed to be rent.

     Section 20.05.   Incorporation of Prior Agreements; Amendments.  This Lease
     --------------   ---------------------------------------------
contains all agreements of the parties with respect to any matter mentioned
herein.  No prior agreement or understanding pertaining to any such matter shall
be effective.  This Lease may be modified in writing only, signed by the parties
in interest at the time of the modification.  Except as otherwise stated in this
Lease, Lessee hereby acknowledges that neither Lessor nor
<PAGE>

any employees or agents of the Lessor has made any oral or written warranties or
representations to Lessee relative to the condition or use by Lessee of said
Premises and Lessee acknowledges that Lessee assumes all responsibility
regarding the Occupational Safety Health Act, the Americans With Disabilities
Act, and the legal use and adaptability of the Premises and the compliance
thereof with all applicable laws and regulations in effect during the term of
this Lease except as otherwise specifically stated in this Lease.

     Section 20.06.   Notices.  Any notice required or permitted to be given
     --------------   -------
hereunder shall be in writing and shall be given by personal delivery or
facsimile (provided confirmation of receipt is obtained from the recipient),
overnight courier, or certified mail, and if given personally or by mail, shall
be deemed sufficiently given if addressed to Lessee or to Lessor at the address
noted below the signature line of the respective parties, as the case may be.
Either party may by notice to the other specify a different address for notice
purposes.  A copy of all notices required or permitted to be given to Lessor
hereunder shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate by notice to
Lessee.  Any notice delivered in accordance with the foregoing (i) by commercial
courier or other personal delivery shall be deemed delivered on the date of
actual receipt (as evidenced by signed receipt), or upon refusal of receipt,
(ii) by facsimile shall be deemed delivered on the date of receipt (as evidenced
by written confirmation of receipt by the recipient), or (iii) if delivered by
United States mail on the date of receipt evidenced by the return receipt, or
upon refusal of receipt.  No notice shall be deemed effective under this Lease
unless delivered in compliance with the provisions of this Section 20.06.

     Section 20.07.   Waivers.  No waiver by Lessor of any provision hereof
     --------------   -------
shall be deemed a waiver of any other provision hereof or of any subsequent
breach by Lessee of the same or any other provisions.  Lessor's consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining of
Lessor's consent to or approval of any subsequent act by Lessee.  The acceptance
of rent hereunder by Lessor shall not be a waiver of any preceding breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted, regardless of Lessor's knowledge of such preceding
breach at the time of acceptance of such rent.

     Section 20.08.   Recording.  Either Lessee or Lessor shall, upon request of
     --------------   ---------
the other, execute, acknowledge and deliver to the other a "short form"
memorandum of this Lease for recording purposes.  If any such short form
memorandum of this Lease is recorded in the public records, then upon expiration
or sooner termination of the term of this Lease, Lessee shall within ten (10)
days after request by Lessor therefor execute in recordable form and deliver to
Lessor a quitclaim deed or such other documentation as Lessor shall reasonably
request in order to evidence the termination of this Lease.

     Section 20.09.   Cumulative Remedies.  No remedy or election hereunder
     --------------   -------------------
shall be deemed exclusive but shall, wherever possible, be cumulative with all
other remedies at law or in equity.
<PAGE>

     Section 20.10.   No Jury Trial.  Each party waives any rights it may have
     --------------   -------------
to a jury trial respecting any dispute or other matter arising under or relating
to this Lease.

     Section 20.11.   Binding Effect, Choice of Law; Venue.  Subject to any
     --------------   ------------------------------------
provisions hereof restricting assignment or subletting by Lessee and subject to
the provisions of Article XVIII, this Lease shall bind the parties, their
personal representatives, successors and assigns.  This Lease shall be governed
by the laws of the State of California.  Venue for any action or proceeding
brought to enforce or defend this agreement, and for any other purpose
hereunder, shall be Santa Clara County.

     Section 20.12.   No Accord and Satisfaction.  No payment by Lessee, or
     --------------   --------------------------
receipt by Lessor, of an amount which is less than the full amount of rent and
all other sums payable by Lessee hereunder at such time shall be deemed to be
other than on account of (a) the earliest of such other sums due and payable,
and thereafter (b) to the earliest rent due and payable hereunder.  No
endorsement or statement on any check or any letter accompanying any payment of
rent or such other sums shall be deemed an accord and satisfaction, and Lessor
may accept any such check or payment without prejudice to Lessor's right to
receive payment of the balance of such rent and/or the other sums, or Lessor's
right to pursue any remedies to which Lessor may be entitled to recover such
balance.

     Section 20.13.   Attorneys' Fees.
     --------------   ---------------

          (a) Lessor Made Party to Litigation.  If Lessor becomes a party to any
              -------------------------------
litigation brought by someone other than Lessee and concerning this lease, or
the Lessee's use or occupancy of the Premises or the condition thereof, based
upon any real or alleged act or omission of Lessee or its authorized agents or
representative, Lessee shall be liable to Lessor for reasonable attorneys' fees
and court costs incurred by Lessor in the litigation.

          (b) Certain Litigation Between the Parties.  If any action or
              --------------------------------------
proceeding in law or in equity or any arbitration proceeding is instituted by
Lessor for damages or possession of the Premises or both, for an alleged breach
of any obligation of Lessee under this Lease, to recover rent, to terminate the
tenancy of Lessee at the Premises, to enforce, protect, or establish any right
or remedy of Lessor, or to enforce any other right of either party under this
Lease or interpret any provision of this Lease, the prevailing party in such
action or proceeding its attorneys' fees, expert witness fees, and court costs
are incurred, or as may be fixed by the court or jury, but this provision shall
not apply to any cross-complaint filed by anyone other than Lessor in such
action or proceeding.

     Section 20.14.   Interpretation.  The captions and headings of the numbered
     --------------   --------------
paragraphs of this Lease are inserted solely for the convenience of the parties
hereto, and are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part hereof.  When required by the context
of this Lease, the neuter includes the masculine, the
<PAGE>

feminine, a partnership, a corporation, or a joint venture, and the singular
shall include the plural. The language in all parts of this Lease shall in all
cases be construed as a whole according to its fair meaning and not strictly for
or against either Lessor or Lessee, and without regard to which party prepared
this Lease.

     Section 20.15.   Signs.  Lessee shall not place any sign upon the Premises
     --------------   -----
without Lessor's prior written consent, which consent shall not be unreasonably
withheld.  Any and all signs shall be in accordance with standards generally
observed for signage throughout the Business Park.

     Section 20.16.   Voluntarily Surrender or Merger.  The voluntary or other
     --------------   -------------------------------
surrender of this Lease by Lessee, or a mutual cancellation thereof, or a
termination by Lessor, shall not work a merger, and shall, at the option of
Lessor, terminate all or any existing subtenancies or may, at the option of
Lessor, operate as an assignment to Lessor of any or all of such subtenancies.

     Section 20.17.   Guarantor.  In the event that there is a guarantor of this
     --------------   ---------
Lease, said guarantor shall have the same obligations as Lessee under this
Lease.

     Section 20.18.   Quiet Possession.  Upon Lessee paying the rent for the
     --------------   ----------------
Premises and observing and performing all of the covenants, conditions and
provisions on Lessee's part to be observed and performed hereunder, Lessee shall
have quiet possession of the Premises for the entire term hereof subject to all
of the provisions of this Lease.

     Section 20.19.   Rules and Regulations.  Lessee agrees that it will abide
     --------------   ---------------------
by, keep and observe all reasonable rules and regulations which Lessor may make
from time to time for the management, safety, care and cleanliness of the
Premises and Common Areas, the parking of vehicles and the preservation of good
order therein as well as for the convenience of other occupants and tenants of
the Business Park.  The violations of any such rules and regulations shall be
deemed a material breach of this Lease.  Lessee, however, shall not be bound by
any future rules or regulations, unless it shall approve same, which approval
shall not be unreasonably withheld.

     Section 20.20.   Easements.  Lessor reserves to itself the right, from time
     --------------   ---------
to time, to grant such easements, rights and dedications that Lessor deems
necessary or desirable, and to cause the recordation of parcel maps and
restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee.

     Section 20.21.   Authority to Sign.  The individuals executing this Lease
     --------------   -----------------
on behalf of each party represent and warrant to the other party that they are
fully authorized and legally capable of executing this Lease on behalf of such
party and that such execution is binding upon such party.  Each individual
executing this Lease on behalf of a corporation represents
<PAGE>

and warrants that he is duly authorized to execute and deliver this Lease on
behalf of the corporation in accordance with a duly adopted resolution of the
Board of Directors of the corporation, and that this Lease is binding upon said
corporation in accordance with its terms.

     Section 20.22.   Delays for Cause.  In any case where either party hereto
     --------------   ----------------
is required to do any act, delays caused by or resulting from Acts of God, war,
civil commotion, fire, flood or other casualty, labor difficulties, shortages of
labor, materials or equipment, government regulations, unusually severe weather,
or other causes beyond such party's reasonable control (other than financial
inability) shall not be counted in determining the time during which work shall
be completed, whether such time be designated by a fixed date, a fixed time or
"a reasonable time", and such time shall be deemed to be extended by the period
of such delay.

     Section 20.23.   Brokers.  Lessor shall pay CPS and Cornish & Carey
     --------------   -------
Commercial Oncor International a broker commission pursuant to separate
agreement in connection with this transaction, and Lessee shall have no
liability for payment of same.  Except for the above named brokers, Lessor and
Lessee each represent and warrant to the other that it has not dealt with any
broker in connection with this transaction and that no other real estate broker,
salesperson or finder has the right to claim a real estate brokerage,
salesperson's commission or finder's fee by reason of contact between the
parties brought about by such broker, salesperson or finder.  Except with
respect to the above-named brokers, each party shall hold and save the other
harmless of and from any and all liability, loss, cost, damage, injury or
expense arising out of or in any way related to claims for real estate broker's,
salesperson's or finder's commissions or fees based upon allegations made by the
claimant that it is entitled to such a fee from the indemnified party arising
out of contact with the indemnifying party or alleged introductions of the
indemnifying party to the indemnified party.

     Section 20.24.   Joint and Several Liability.  If Lessee is more than one
     --------------   ---------------------------
person or entity, each such person or entity shall be jointly and severally
liable for the obligations of Lessee hereunder.

     LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO.  THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

                         [TEXT CONTINUED ON NEXT PAGE]
<PAGE>

     The Parties hereto have executed this Lease at the place and on the dates
specified immediately adjacent to their respective signatures.

     Executed at Mountain View, California, on March 6, 2000.
                 -------------                 --------

Lessor:                                          Address:

VANNI BUSINESS PARK, LLC,                        c/o Chris Vanni
a Delaware limited liability company             15650A Vineyard Blvd., #144
Morgan Hill, California 95037                    Morgan Hill, California 95037

By:  /s/  ILLEGIBLE
   ---------------------------------

   _______________, Manager

By:  /s/ Anita M. Vanni
   ---------------------------------
Its:  Member
   ---------------------------------

Lessee:

VALICERT, INC.,                               -------
a Delaware corporation                        -------
                                              -------

By:  /s/  Timothy G. Conley
   ---------------------------------
Its:  V.P. Finance and CFO
    --------------------------------

<PAGE>

                                  EXHIBIT "A"

                                  (Site Plan)
<PAGE>

                                  EXHIBIT "B"

                             (TENANT IMPROVEMENTS)

NONE.
<PAGE>

------------------------------------------------------------------------------
Deed of Trust: A Deed of Trust, Security Agreement and Fixture Filing dated as
of executed by Landlord, to _____________________ as Trustee, for the benefit of
Beneficiary securing repayment of the Note to be recorded in the records of the
County in which the Property is located.
------------------------------------------------------------------------------
Lease and Lease Date:  The lease entered into by Landlord and Tenant dated as of
_______________________ covering the Premises.
[Add amendments]
------------------------------------------------------------------------------
Property:  [Property Name]
[Street Address 1]
[City, State, Zip]
The Property is more particularly described on Exhibit A.
                                               ---------
------------------------------------------------------------------------------

     THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made by and among Tenant, Landlord, and Beneficiary and affects
the Property described in Exhibit A.  Certain terms used in this Agreement are
                          ---------
defined in the Defined Terms.  This Agreement is entered into as of the
Execution Date with reference to the following facts:

     A.  Landlord and Tenant have entered into the Lease covering certain space
in the improvements located in and upon the Property (the "Premises").

     B.  Beneficiary has made or is making the Loan to Landlord evidenced by the
Note.  The Note is secured, among other documents, by the Deed of Trust.

     C.  Landlord, Tenant and Beneficiary all wish to subordinate the Lease to
the lien of the Deed of Trust.

     D.  Tenant has requested that Beneficiary agree not to disturb Tenant's
rights in the Premises pursuant to the Lease in the event Beneficiary forecloses
the Deed of Trust, or acquires the Property pursuant to the trustee's power of
sale contained in the Deed of Trust or receives a transfer of the Property by a
conveyance in lieu of foreclosure of the Property (collectively, a "Foreclosure
Sale") but only if Tenant is not then in default under the Lease and Tenant
attorns to Beneficiary or a third party purchaser at the Foreclosure Sale (a
"Foreclosure Purchaser").

     NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:

     1.  Subordination.  The Lease and the leasehold estate created by the Lease
         -------------
and all of Tenant's rights under the Lease are and shall remain subordinate to
the Deed of
<PAGE>

Trust and the lien of the Deed of Trust, to all rights of Beneficiary under the
Deed of Trust and to all renewals, amendments, modifications and extensions of
the Deed of Trust.

     2.  Acknowledgments by Tenant.  Tenant agrees that: (a) Tenant has notice
         -------------------------
that the Lease and the rent and all other sums due under the Lease have been or
are to be assigned to Beneficiary as security for the Loan.  In the event that
Beneficiary notifies Tenant of a default under the Deed of Trust and requests
Tenant to pay its rent and all other sums due under the Lease to Beneficiary,
Tenant shall pay such sums directly to Beneficiary or as Beneficiary may
otherwise request; (b) Tenant shall send a copy of any notice or statement under
the Lease to Beneficiary at the same time Tenant sends such notice or statement
to Landlord; (c) this Agreement satisfies any condition or requirement in the
Lease relating to the granting of a nondisturbance agreement.

     3.  Foreclosure and Sale.  In the event of a Foreclosure Sale,
         --------------------

         (a) So long as Tenant complies with this Agreement and is not in
default under any of the provisions of the Lease, the Lease shall continue in
full force and effect as a direct lease between Beneficiary and Tenant, and
Beneficiary will not disturb the possession of Tenant, subject to this
Agreement. To the extent that the Lease is extinguished as a result of a
Foreclosure Sale, a new lease shall automatically go into effect upon the same
provisions as contained in the Lease between Landlord and Tenant, except as set
forth in this Agreement, for the unexpired term of the Lease. Tenant agrees to
attorn to and accept Beneficiary as landlord under the Lease and to be bound by
and perform all of the obligations imposed by the Lease, or, as the case may be,
under the new lease, in the event that the Lease is extinguished by a
Foreclosure Sale. Upon Beneficiary's acquisition of title to the Property,
Beneficiary will perform all of the obligations imposed on the Landlord by the
Lease except as set forth in this Agreement; provided, however, that Beneficiary
shall not be: (i) liable for any act or omission of a prior landlord (including
Landlord); or (ii) subject to any offsets or defenses that Tenant might have
against any prior landlord (including Landlord); or (iii) bound by any rent or
additional rent which Tenant might have paid in advance to any prior landlord
(including Landlord) for a period in excess of one month or by any security
deposit, cleaning deposit or other sum that Tenant may have paid in advance to
any prior landlord (including Landlord); or (iv) bound by any amendment,
modification, assignment or termination of the Lease made without the written
consent of Beneficiary; (v) obligated or liable with respect to any
representations, warranties or indemnities contained in the Lease; or (vi)
liable to Tenant or any other party for any conflict between the provisions of
the Lease and the provisions of any other lease affecting the Property which is
not entered into by Beneficiary.

     (b) Upon the written request of Beneficiary after a Foreclosure Sale, the
parties shall execute a lease of the Premises upon the same provisions as
contained in the Lease between Landlord and Tenant, except as set forth in this
Agreement, for the unexpired term of the Lease.
<PAGE>

     (c) Notwithstanding any provisions of the Lease to the contrary, from and
after the date that Beneficiary acquires title to the Property as a result of a
Foreclosure Sale, (i) Beneficiary will not be obligated to expend any monies to
restore casualty damage in excess of available insurance proceeds; (ii) tenant
shall not have the right to make repairs and deduct the cost of such repairs
from the rent without a judicial determination that Beneficiary is in default of
its obligations under the Lease; (iii) in no event will Beneficiary be obligated
to indemnify Tenant, except where Beneficiary is in breach of its obligations
under the Lease or where Beneficiary has been actively negligent in the
performance of its obligations as landlord; and (iv) other than determination of
fair market value, no disputes under the Lease shall be subject to arbitration
unless Beneficiary and Tenant agree to submit a particular dispute to
arbitration.

     4.  Subordination and Release of Purchase Options.  Tenant represents that
         ---------------------------------------------
it has no right or option of any nature to purchase the Property or any portion
of the Property or any interest in the Borrower.  To the extent Tenant has or
acquires any such right or option, these rights or options are acknowledged to
be subject and subordinate to the Mortgage and are waived and released as to
Beneficiary and any Foreclosure Purchaser.

     5.  Acknowledgment by Landlord.  In the event of a default under the Deed
         --------------------------
of Trust, at the election of Beneficiary, Tenant shall and is directed to pay
all rent and all other sums due under the Lease to Beneficiary.

     6.  Construction of Improvements.  Beneficiary shall not have any
         ----------------------------
obligation or incur any liability with respect to the completion of the tenant
improvements located in the Premises at the commencement of the term of the
Lease.

     7.  Notice.  All notices under this Agreement shall be deemed to have been
         ------
properly given if delivered by overnight courier service or mailed by United
States certified mail, with return receipt requested, postage prepaid to the
party receiving the notice at its address set forth in the Defined Terms (or at
such other address as shall be given in writing by such party to the other
parties) and shall be deemed complete upon receipt or refusal of delivery.

     8.  Miscellaneous.  Beneficiary shall not be subject to any provision of
         -------------
the Lease that is inconsistent with this Agreement.  Nothing contained in this
Agreement shall be construed to derogate from or in any way impair or affect the
lien or the provisions of the Deed of Trust.  This Agreement shall be governed
by and construed in accordance with the laws of the State of in which the
Property is located.

     9.  Liability and Successors and Assigns.  In the event that Beneficiary
         ------------------------------------
acquires title to the Premises or the Property, Beneficiary shall have no
obligation nor incur any liability in an amount in excess of $10,000,000 and
Tenant's recourse against Beneficiary shall in no extent exceed the amount of
$10,000,000.  This Agreement shall run with the land and shall inure to the
benefit of the parties and, their respective successors and permitted assigns
including a Foreclosure Purchaser.  If a Foreclosure Purchaser acquires the
Property
<PAGE>

or if Beneficiary assigns or transfers its interest in the Note and Deed of
Trust or the Property, all obligations and liabilities of Beneficiary under this
Agreement shall terminate and be the responsibility of the Foreclosure Purchaser
or other party to whom Beneficiary's interest is assigned or transferred. The
interest of Tenant under this Agreement may not be assigned or transferred
except in connection with an assignment of its interest in the Lease which has
been consented to by Beneficiary.

     IN WITNESS WHEREOF, the parties have executed this Subordination,
Nondisturbance and Attornment Agreement as of the Execution Date.

IT IS RECOMMENDED THAT THE PARTIES CONSULT WITH THEIR ATTORNEYS PRIOR TO THE
EXECUTION OF THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT.

BENEFICIARY:___________________________________
                           a______________________________________________

                           By:_____________________
                              Its:____________________

TENANT:                    ________________________
                           a_______________________

                           By:_____________________
                               Its:____________________

LANDLORD:                  ________________________
                           a

                           By:______________________
                               Its:_____________________
<PAGE>

                               ADDENDUM TO LEASE.

This Addendum is an integral part of the Lease dated March 1, 2000 between Vanni
Business Park, LLC, a Delaware limited liability company ("Lessor"), and
Valicert, Inc., a Delaware corporation ("Lessee").  The Paragraph(s) below are
hereby incorporated into such lease and made a part thereof.

Section 21.  Option to Extend.
             ----------------

21.1  Option.  Subject to the remaining provisions of this Section 21, Lessee
      ------
shall have one option (the "Option") to extend the term of this Lease for a
period of sixty (60) months (such extension period herein called an "Extended
Term").

Such Option shall be exercised, if at all, only by written notice delivered by
Lessee to Lessor at least one hundred eighty (180) days prior to the then-
scheduled expiration of the term hereof.  Notwithstanding the foregoing, Lessee
shall not have the right to exercise the Option if (a) Lessee is in default
under this Lease at the time of the purported Option exercise, (b) two or more
events have occurred during the three year period of time immediately preceding
the date of such purported exercise which constitute events of default.  The
Extended Term shall be upon all of the terms and conditions hereof, except that
the monthly rent for the Extended Term shall be determined in accordance with
Section 21.2. Upon commencement of the Extended Term, all references herein to
the "term" of this Lease shall be deemed to include the Extended Term.  The
option rights of Lessee under this Section 21 are granted for Lessee's personal
benefit and may not be assigned or transferred by Lessee, except pursuant to a
transfer which is deemed a Permitted Transfer in accordance with Section 13.02
above.

21.2  Extended Term Rent.  Within thirty (30) days after Lessor's receipt of
      ------------------
Lessee's notice of exercise of an Option, Lessor shall deliver to Lessee a
proposal setting forth the monthly base rent for the upcoming Extended Term.  If
Lessee within ten (10) days after receipt of such proposal agrees to such
proposal, or fails to notify Lessor of its acceptance or rejection of such
proposal (in which event Lessee shall be deemed to have agreed thereto), the
amount of monthly base rent set forth in such proposal shall be binding on
Lessor and Lessee.  Should Lessee object in writing to Lessor's proposal within
ten (10) days after receipt thereof, then during the ten (10) day period
following Lessee's objection to Lessor's proposal, Lessor and Lessee shall
negotiate in good faith for the purpose of reaching an agreement regarding the
amount of the monthly base rent during the Extended Term.  In the event the
parties fail to agree in a written instrument signed by both parties upon the
amount of the monthly base rent for the Extended Term within such ten (10) day
period, the monthly base rent for the Extended Term shall be determined in the
manner hereafter set forth.

If the parties have not reached agreement on the amount of monthly rent for the
Extended Term by the end of the ten (10) day period of good faith negotiation
referred to in the immediately preceding paragraph, then the fair market monthly
rent for the Premises shall be determined as follows.  Within five (5) days
after such ten (10) day period, Lessor and Lessee
<PAGE>

each shall appoint a broker. Each broker appointed under this Section 21 shall
be a California licensed real estate broker having at least 5 years experience
in leasing commercial properties within a ten (10) mile radius of the Premises.
Such brokers so appointed shall each determine the fair market monthly base rent
for the Premises as of the commencement of the Extended Term, taking into
account the value of the Premises and prevailing comparable rentals in the area
including the value of any improvements installed in the Premises. Such brokers
shall, within twenty (20) business days after their appointment, complete their
determinations and submit their reports thereof to Lessor and Lessee. If the
fair market monthly base rent of the Premises set forth in the two (2) broker
reports varies by less than five percent (5%) of the higher rental, then the
fair market monthly base rent of the Premises shall be deemed to be the average
of such two determinations. If the fair market monthly base rent of the Premises
set forth in the two (2) broker reports varies by five percent (5%) or more of
the higher rental, said brokers, within ten (10) days after submission of the
last report, shall appoint a third broker meeting the broker qualifications set
forth above. Such third broker shall, within twenty (20) business days after his
appointment, determine the fair market monthly base rent of the Premises as of
the commencement of the Extended Term, taking into account the same factors
referred to above, and submit his report thereof to Lessor and Lessee. The fair
market monthly base rent determined by the third broker for the Premises shall
be controlling, unless it is less than that set forth in the lower determination
previously obtained, in which case the rental set forth in said lower
determination shall be controlling, or unless it is greater than that set forth
in the higher determination previously obtained, in which case the rental set
forth in said higher determination shall be controlling. If either Lessor or
Lessee fails to appoint an broker, or if a broker appointed by either of them
fails, after his appointment, to submit a report of his determination within the
required period in accordance with the foregoing, the determination in the
report submitted by the broker properly appointed and timely submitting his
report shall be controlling. If the two brokers appointed by Lessor and Lessee
are unable to agree upon a third broker within the required period in accordance
with the foregoing, application shall be made within twenty (20) days thereafter
by either Lessor or Lessee to a local court of law having jurisdiction which
shall appoint a broker having the qualifications specified above. The cost of
all broker determinations under this subparagraph shall be borne equally by
Lessor and Lessee. The amount of monthly rent for the Premises determined as set
forth above in this paragraph shall be applicable during the first year of the
Extended Term, and thereafter, on the first and each succeeding annual
anniversary of the commencement of the Extended Term, shall be increased to an
amount which is 1.0375 times the amount of monthly rent payable during the month
preceding such increase. The intent of the parties is to increase the monthly
rent amount each year during the Extended Term by 3.75% of the immediately
preceding rent amount.

Notwithstanding anything to the contrary contained in this Section 21.2, in no
event shall the monthly base rent for the Extended Term be less than the monthly
base rent payable hereunder for the last full month of the term of this Lease
immediately preceding commencement of the Extended Term.  For purposes of the
preceding sentence, the amount of monthly base rent for the last month of the
Lease term shall not be reduced to reflect any abatement of rent which may then
be in effect.
<PAGE>

Further notwithstanding anything to the contrary contained in this Section 21.2,
if the amount of monthly rent applicable at the commencement of the Extended
Term is determined by one or more brokers pursuant to the preceding paragraph,
then Lessee shall be entitled to rescind its exercise of the Option by written
notice thereof to Lessor within twenty four hours after the amount of monthly
rent applicable at the commencement of the Extended Term is determined by said
broker(s) pursuant to this Section 21.2. In the event Lessee so rescinds its
exercise of the Option, then Lessee shall promptly pay the fees owing to the
broker(s) who conducted said fair market rent determinations, shall have no
further rights to extend the term of the lease, and the term of the lease shall
expire on the date it is scheduled to expire in the absence of exercise of the
Option.
<PAGE>

                                   EHXIBIT A

                              [MAP APPEARS HERE]

                           MIDDLEFIELD BUSINESS PARK

<PAGE>

                                   EHXIBIT A

                              [MAP APPEARS HERE]

                           MIDDLEFIELD BUSINESS PARK

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