Document:

<PAGE>

                                     LEASE

LEASE, dated March 9, 2000, between Laguna South Exchange LLC, a Washington
limited liability company ("Landlord"), and Advanced Digital Information
Corporation, a Washington corporation ("Tenant").

1.   BASIC LEASE TERMS. This Section sets forth certain basic terms of this
     Lease for reference purposes. This Section is to be read in conjunction
     with the other provisions of this Lease; provided, however, to the extent
     of any inconsistency between this Section and the other provisions of this
     Lease, this Section shall control.

Lease Premises (see Section 2):

Address:     17275 N.E. 67th Court
             Redmond WA 98052

Rentable Sq. Ft. ("RSF"): 78,676

<TABLE>
<S>                                              <C>
Rent (See sections 5 and 6):                     Brokers (See Section 36)
Base Monthly Rent: $62,014                       For Tenant:    Leo Backer, Leibsohn and Company
Rent Adjustment: Base Monthly Rent Shall         For Landlord:  Scott Davis, CB Richard Ellis
                 Increase as follows::
</TABLE>

<TABLE>
<CAPTION>

Effective Date                            New Base Monthly Rent
--------------                            ---------------------

<S>                                       <C>
06-01-2003                                      $63,564.35
06-01-2004                                      $65,153.46
06-01-2005                                      $66,782.29
06-01-2006                                      $68,451.85
06-01-2007                                      $70,163.15
06-01-2008                                      $71,917.23
06-01-2009                                      $73,715.16
</TABLE>

<TABLE>
<S>                                                 <C>
Security Deposit: $83,931.45                        Addresses for Notices (See Section 29):

Estimated Additional Rent: $13,768.30               Landlord:     14850 N.E. 31st Circle
                                                                  Redmond WA 98052
                                                                  Attention: Bill Hart/Glenn Hart
                                                                  Phone: 425-556-9100
                                                                  Fax: 425-556-9200

                                                    Tenant:       PO Box 97057
                                                                  Redmond WA 98073-9757
                                                                  Attention: Leslie S. Rock
                                                                  Phone: (425) 881-8004
                                                                  Fax: (425) 881-2296

Term:             Ten (10) years, subject to        Permitted Use (see Section 7): Office, light
                  provisions of Section 3.          manufacturing, warehouse and distribution,
                                                    assembly and repair and maintenance of electronic
                                                    components for the computer industry and sales
                                                    activities directly related thereto.

Commencement Date    See Section 3                  Rent Commencement Date:    Commencement Date subject
                                                                               to Section 4.

Expiration Date      June 14, 2010                  Extension Options: One five (5) year
</TABLE>

                                       1

<PAGE>

Operating Expenses (See Section 8): Tenant's
Share is 100% of Operating Expenses

1A.  SPECIAL LEASE TERMS. The following additional Lease terms shall apply. To
     the extent of any inconsistency between this Section 1A and the other
     provisions of this Lease, this Section 1A shall control.

       1A.1       IMPROVEMENT OF PREMISES.

                  1A.1.1 INITIAL IMPROVEMENTS. Landlord agrees to perform the
                  following work in subparagraphs (a) and (b) below on behalf of
                  Tenant at Landlord's cost and expense prior to Lease
                  Commencement. Landlord will complete the work described in
                  subparagraph (c) below in a timely manner after the permit is
                  issued and work can begin:

                    a)     Provide all new gas HVAC units on both the downstairs
                           assembly area and the upstairs office area.
                    b)     Repair window seals throughout, and/or replace
                           windows where required.
                    c)     Provide a complete parking lot revision as specified
                           in Section 24.

                  1A.1.2 SECONDARY TENANT IMPROVEMENTS. Additionally, Landlord
                  agrees to perform the following work, under acceptable terms
                  and conditions to both parties, at Tenant's sole cost and
                  expense, or to allow Tenant to perform the following work at
                  Tenant's sole cost and expense. In the event Tenant elects to
                  have Landlord perform the following work at Landlord's cost,
                  then the monthly rent shall be adjusted upward by the cost of
                  the improvements at the interest rate set forth in Section
                  33.8, amortized over the remaining lease term. The amount of
                  Secondary Tenant Improvements that the Landlord is willing to
                  amortize is limited to one hundred and fifty thousand dollars
                  ($150,000). Costs of such improvements in excess of $150,000
                  shall be paid to Landlord by Tenant upon completion of the
                  work. The following Tenant improvements have been approved by
                  Landlord and Tenant shall not be required to remove these
                  improvements at the termination or expiration of the Lease:

                    a)     Construct the low bay mezzanine space into a/c
                           assembly area complete with a drop ceiling, 75 foot
                           candles of lighting, sprinklered, VCT or comparable
                           flooring and SO power drops.
                    b)     Sheetrock, tape and paint all walls in the low-bay
                           assembly area.
                    c)     Improve lighting in the high-bay warehouse area to 75
                           foot candles.
                    d)     Upgrade lunchroom and rest rooms in office area.
                    e)     Add or expand existing rest rooms on the first floor,
                           location subject to Landlord approval.
                    f)     Add or expand existing rest rooms in the high-bay
                           area for manufacturing to accommodate approximately
                           100 employees.
                    g)     Remove approximately 10 offices in the office area
                           (subject to Landlord's consent).
                    h)     Demolish walls in low-bay area.
                    i)     Re-configure the lunch room into office or lab space.
                    j)     Construct a new lunch room in the southeast corner of
                           the first floor (assembly space) near the main
                           entrance to accommodate approximately 160 employees.
                    k)     Add air conditioning (at Tenant's option) to the
                           high-bay warehouse.

                                       2

<PAGE>

         1A.2     MEASUREMENT. The RSF contained in the Premises has been
                  determined under this Lease to be 78,676 square feet based
                  upon a measurement equal to the "Construction Area" (for a
                  single-tenant building), as defined in the Building Owners and
                  Managers Association International (BOMA) American National
                  Standard Method for Measuring Floor Area in Office Buildings,
                  which measurement Landlord and Tenant accept and approve.
                  Landlord and Tenant further acknowledge and agree that any
                  calculation of Base Monthly Rent on a per RSF basis is for
                  convenience of calculation purposes only in order to determine
                  the Base Monthly Rent. Any actual measurement of the square
                  footage or rentable square footage of the Premises and
                  Building shall not be relevant to or control the calculation
                  of Base Monthly Rent.

         1A.3     SIGNAGE. LANDLORD SHALL ALLOW TENANT TO INSTALL EXTERIOR
                  BUILDING SIGNAGE IDENTIFYING TENANT ON THE BUILDING. SAID
                  SIGNAGE IS SUBJECT TO CITY OF REDMOND APPROVAL.

2.       PREMISES. Landlord agrees to lease to Tenant and Tenant agrees to lease
         from Landlord the Premises described on EXHIBIT A-1 and consisting of
         approximately the RSF designated in Section 1. The Premises are the
         entirety of the building (the "Building"), located on the real property
         described on EXHIBIT A-2 ("Property").

3.       TERM.

         3.1      The term of this Lease ("Term") shall commence on the later of
                  (1) June 15, 2000, or (2) fifteen days after after Landlord's
                  work set forth in Section 1A.1.1 above is completed.

         3.2      The Term shall expire on the Expiration Date set forth in
                  Section 1, unless sooner terminated as provided in this Lease.

4.       CONSTRUCTION OF PREMISES; EARLY POSSESSION; DELAYED DELIVERY OF
         POSSESSION.

         4.1      Any improvements to or construction on the Premises shall be
                  carried out in accordance with applicable work documents
                  approved as provided for herein.

         4.2      If Landlord permits Tenant to occupy the Premises prior to the
                  Commencement Date set forth in Section 1, the Commencement
                  Date shall be such date of occupancy. Tenant's occupancy prior
                  to the originally Scheduled Commencement Date shall be subject
                  to all the provisions of this Lease and shall not advance the
                  Expiration Date. In addition, the provisions of Section 14 of
                  this Lease shall apply during the period commencing on the
                  first date upon which Tenant or its employees, agents, or
                  contractors are present on the Premises.

         4.3      If Landlord for any reason cannot deliver possession of the
                  Premises to Tenant at the Commencement Date in addition to the
                  provisions of the Landlord's Construction Agreement relating
                  to such delay, the following shall occur: (i) the Commencement
                  Date shall be the date on which possession of the Premises is
                  delivered to Tenant, (ii) this Lease shall not be void or
                  voidable, nor shall Landlord be liable to Tenant for any loss
                  or damage resulting therefrom, and (iii) the Rent Commencement
                  Date shall be delayed and shall commence on the delayed
                  Commencement Date, except as provided in Section 4.4.

         4.4      If any act or failure to act by Tenant causes any delay in
                  Landlord's completion of the Premises, thereby delaying
                  Tenant's occupancy of the Premises beyond June 1, 2000, then
                  Landlord may at its option require Tenant to commence payment
                  of Rent on June 1, 2000, notwithstanding such delay in
                  delivery of possession.

                                       3

<PAGE>

5.       RENT.

         5.1      Tenant shall pay to Landlord the Base Monthly Rent specified
                  in Section 1 and the Additional Rent as set forth in Section 8
                  and elsewhere in this Lease (the Base Monthly Rent and the
                  Additional Rent are collectively referred to as "Rent"). Rent
                  shall be paid in advance, on or before the first day of each
                  calendar month of the Lease Term.

         5.2      Rent shall be paid without prior notice, demand, set off,
                  counterclaim, deduction or defense and, except as otherwise
                  expressly provided in this Lease, without abatement or
                  suspension. Any such abatement or suspension shall be null and
                  void upon any default by Tenant hereunder, and Tenant shall
                  thereafter upon Landlord's demand pay to Landlord 200% of the
                  amount of Rent abated or suspended.

         5.3      Payment of Rent shall begin on the Rent Commencement Date set
                  forth in Section 1, subject to Section 4. Rent for any period
                  during the Lease term that is for less than one month shall be
                  prorated for the actual number of days in such period.

         5.4      All Rent shall be paid to Landlord at the address for notices
                  set forth in Section 1, in lawful money of the United States
                  of America, or to such other person or at such other place as
                  Landlord may from time to time designate in writing.

6.       PREPAID RENT AND SECURITY DEPOSIT.

         6.1      Upon execution of this Lease, Tenant shall pay to landlord the
                  First Months Rent. The Security Deposit set forth in Section 1
                  shall not be due until the first day of year five (5) of this
                  Lease (the Prepaid Rent and the Security Deposit being
                  collectively referred to as the "Deposit").

         6.2      Landlord shall have the right to all or any of the Deposit to
                  cure any Default by Tenant under this Lease or to compensate
                  Landlord for any damage sustained by it resulting from such
                  Default. In the event of any such application of the Deposit,
                  Tenant shall, on demand, immediately pay to Landlord the
                  amount necessary to replenish the Deposit to the amount set
                  forth in Section 1. The Security Deposit will not be used to
                  remove the approved Tenant Improvements.

         6.3      If Tenant is not in Default at the expiration or termination
                  of this Lease, Landlord shall return the remaining Security
                  Deposit to Tenant, less any amounts necessary to return the
                  Premises and the approved Tenant Improvements to their
                  original condition, reasonable wear and tear excepted.
                  Approved Tenant Improvements will not need to be removed from
                  the Premises pursuant to Section 1A.1.2 above).

         6.4      In the event this Lease is terminated before the end of the
                  Term for any reason, any Rent paid for any period after the
                  date of such termination shall be treated as an addition to
                  the Security Deposit.

         6.5      Landlord's obligations with respect to the Security Deposit
                  are those of a debtor and not a trustee. Landlord may maintain
                  the security deposit separate from Landlord's general funds or
                  may commingle the Security Deposit with other funds of
                  Landlord. No interest shall accrue for Tenant on the Deposit.

7.       USE OF PREMISES.

                                        4
<PAGE>

         7.1      Tenant shall use the Premises only for the purpose set forth
                  in Section 1. Tenant acknowledges that it has determined to
                  its satisfaction that the Premises can be used for those
                  purposes. Tenant waives any right to terminate this Lease in
                  the event the Premises cannot be used for such purposes during
                  the Term. The Premises may not be used for any other purpose
                  without Landlord's written consent.

         7.2      Tenant shall not do or permit anything to be done in or about
                  the Premises or bring or keep anything therein which will in
                  any way increase the cost of or affect any fire or other
                  insurance upon the Building or any part thereof or any of its
                  contents, or cause cancellation of any insurance policy
                  covering the Building or any part thereof or any of its
                  contents.

         7.3      Tenant shall not use or allow the Premises to be used for any
                  unlawful purpose or in any way constituting a nuisance.

8.       ADDITIONAL RENT FOR OPERATING EXPENSES.

         8.1      TENANT PAYMENT. Tenant shall pay, as Additional Rent, all
                  Operating Expenses. Operating Expenses shall be payable on or
                  before the first day of the first full calendar month of the
                  Term or upon the Commencement Date, whichever first occurs,
                  and on the first day of each successive calendar month
                  thereafter during the Term in the same manner as Base Monthly
                  Rent.

         8.2      ACCOUNTING PERIOD. An accounting period is a calendar year;
                  except the first accounting period shall commence on the
                  Commencement Date and end in December 31 of the same calendar
                  year. The last accounting period shall end on the Expiration
                  Date of the Lease Term. Annualized Operating Expenses shall be
                  prorated on a per diem basis for any accounting period that is
                  less than a full calendar year.

         8.3      ADJUSTMENT. Landlord can adjust the Operating Expenses at the
                  commencement of each new accounting period throughout the
                  Lease term, whereupon Tenant's Additional Rent shall be
                  adjusted accordingly. Prior to each January 1 of the Term,
                  Landlord shall furnish Tenant a written statement of the
                  estimated monthly Operating Expenses for the coming calendar
                  year. The estimated monthly Operating Expenses for the period
                  before the first January 1 after the Commencement Date will be
                  provided by Landlord to Tenant no later than 90 days prior to
                  the Commencement Date. Landlord may, by written notice to
                  Tenant, revise its estimate of Operating Expenses from time to
                  time by written notice to Tenant, following which notice
                  Tenant shall increase or decrease, as the case may be, the
                  Additional Rent for the remainder of that accounting period.

                                       5
<PAGE>

         8.4      RECONCILIATION. Within 90 days after each January 1 during the
                  Term, or as soon thereafter as practicable, Landlord shall
                  deliver to Tenant a written statement setting forth the actual
                  Operating Expenses during the preceding calendar year (or
                  portion of such calendar year after the Commencement Date). To
                  the extent actual Operating Expenses exceeded the estimated
                  Operating Expenses paid by Tenant, Tenant shall pay Additional
                  Rent to Landlord within 30 days after receipt of such
                  statement by Tenant, together with interest at the rate set
                  forth in Section 33.8. To the extent actual Operating Expenses
                  were less than the estimated Operating Expenses paid by
                  Tenant, Tenant shall receive a credit against its next payable
                  Rent or such amount shall otherwise be refunded to Tenant as
                  Landlord determines in its sole discretion.

                                       6
<PAGE>

         8.5      DEFINITIONS. "Operating Expenses" means all expenses and
                  charges incurred by Landlord in the operation of the Building
                  and Property, as a first-class facility, including without
                  limitation the following costs by way of illustration: (i) all
                  real property taxes, assessments and other general or special
                  charges levied during the Term by any public, governmental or
                  quasi-governmental authority against the real or personal
                  property included in the Building or Property, including
                  without limitation Landlord's personal property used in the
                  maintenance, repair or operation of the Building or the
                  Property, or any other tax on the leasing of the Building or
                  in the rents from the Building (other than federal, state or
                  local income or franchise tax); (ii) any and all assessments,
                  fees, charges and impositions Landlord must pay for the
                  Building and Property, transportation or any other improvement
                  monitoring or management plans, or any other covenant,
                  condition or reciprocal easement agreements; (iii)
                  electricity, gas and similar energy sources, refuse
                  collection, water, sewer and other utilities' services for the
                  Building and the Property; (iv) all licenses, permits and
                  inspection fees, property management fees paid to independent
                  or affiliated contractors or to Landlord, and legal,
                  accounting and other professional expenses; (v) all costs and
                  expenses relating to the Premises Maintenance Obligations (as
                  defined in Section 9.1), including reasonable reserves; (vi)
                  all costs and expenses relating to the Premises Services
                  Obligations (as defined in Section 9.2), including reasonable
                  reserves; (vii) all costs of improvements or alterations to
                  the Building and Property required by Laws, or to save labor,
                  or to reduce Operating Expenses; (viii) all premiums and
                  deductibles for liability, property damage, casualty,
                  automobile, rental loss, compensation or other insurance
                  maintained by Landlord for the Building or Property; (ix) the
                  cost (amortized over such reasonable period of time as
                  Landlord shall determine together with market rate interest as
                  reasonably determined by Landlord on the unamortized balance)
                  of any capital improvements made to the Property or Building
                  by Landlord for the replacement of any Building equipment
                  needed to operate the Building at the same quality levels as
                  prior to replacement; (x) costs incurred in the management of
                  the Building and Property (including supplies, wages and
                  salaries of employees used in the management, operation and
                  maintenance thereof and payroll taxes and similar governmental
                  charges with respect thereto, and Building management office
                  rental, if any) commensurate with the costs charged tenants
                  for management of similar buildings with similar tenants in
                  the Bellevue/Redmond area; and (xi) any other expense or
                  charge whether or not described above that in accordance with
                  generally accepted accounting and management practices is
                  properly an expense of maintaining, operating or repairing the
                  Building or Property. Operating Expenses shall not include
                  depreciation on the Building or equipment therein, Landlord's
                  executive salaries, real estate brokers' commissions, and
                  costs or expenses for which Landlord is reimbursed or
                  indemnified, by an insurer or condemnor. Except as provided
                  for above, Landlord shall not collect more than 100% of
                  Operating Expenses and shall not recover any item of cost more
                  than once.

         8.6      TENANT OBLIGATION. Landlord shall have the same rights with
                  respect to Tenant's nonpayment of Operating Expenses as
                  required under this Lease as it has with respect to any other
                  nonpayment of Rent under this Lease.

9.       PREMISES MAINTENANCE AND SERVICES OBLIGATIONS.

                                       7
<PAGE>

         9.1      PREMISES MAINTENANCE OBLIGATIONS. Landlord shall cause to be
                  performed all repairs, maintenance, cleaning, replacements,
                  resurfacing and monitoring to the roof membrane, roof,
                  irrigation system, patios, decks, exterior finishes and
                  painting, exterior windows, parking areas, and grounds of the
                  Premises and the Building. Tenant shall cause to be performed
                  all repairs, maintenance, cleaning, replacements, resurfacing
                  and monitoring of all other parts and areas of the Premises,
                  Building and Property, including, without limitation, the
                  elevator equipment and system, the signs, interior windows,
                  doors, skylights, service areas, interior finishes and
                  painting, heating, ventilating and air conditioning systems,
                  cleaning and refuse removal systems, and similar items. The
                  Landlord's obligations shall include establishing reserves
                  (but excluding the telephone, data, cable television,
                  satellite transmission, computer and security systems of the
                  Premises), and any other reasonable and necessary maintenance,
                  repair and replacement (but excluding Tenant's obligations set
                  forth above and trade fixtures) required to keep the Premises,
                  Building and Property in first class order, condition and
                  repair and in compliance with all service and maintenance
                  requirements imposed by any warranty, service or maintenance
                  contract in effect for any portion of the Premises, building
                  or Property (collectively, "Premises Maintenance
                  Obligations").

         9.2      PREMISES SERVICES OBLIGATIONS. Landlord shall arrange for and
                  cause to be provided, all services to the Premises, Building
                  and Property of a continuing nature, including without
                  limitation, janitorial, landscape and irrigation system
                  maintenance, parking lot sweeping and maintenance, window
                  washing, rubbish removal, maintenance of the heating,
                  ventilating, and air conditioning systems, property management
                  services and other similar desired and necessary services (but
                  excluding telephone, cable television, data transmission,
                  satellite transmission, and security system services or
                  computer cabling or wiring) (collectively "Premises Services
                  Obligations").

         9.3      OPERATING EXPENSE. In the manner and to the extent provided in
                  Section 8, any and all costs arising from Landlord's
                  performance of the Premises Maintenance and Services
                  Obligations shall be paid in full by Tenant as Additional Rent
                  and Operating Expenses under this Lease.

         9.4      DEFAULT. Landlord shall perform Landlord's Premises
                  Maintenance and Service Obligations diligently and promptly as
                  circumstances warrant, but so long as Landlord acts with such
                  diligence, Landlord shall not be liable for any failure to
                  perform Landlord's Premises Maintenance and Services
                  Obligations unless such failure shall persist for the period
                  beyond that cure period stated in Section 18.2 after written
                  notice of the failure to perform such Premises Maintenance and
                  Services Obligations is given to Landlord by Tenant. Tenant
                  shall perform Tenant's Premises Maintenance Obligations
                  diligently and promptly as circumstances warrant. Failure to
                  do so shall constitute a default under Section 18.1, subject
                  to the cure periods provided for therein.

         9.5      SURRENDER. Tenant shall surrender the Premises to Landlord
                  upon the expiration or sooner termination of this Lease, in
                  the same condition as when received or as Tenant has modified
                  the Premises with Landlord approval, excluding ordinary wear
                  and tear. Upon expiration or termination of this Lease, any
                  and all damage done to the Premises as a result of Tenant's
                  removal of any personal property, fixtures or furnishings
                  shall be repaired and the Premises restored, at Tenant's
                  expense.

                                       8
<PAGE>

         9.6      NO OBLIGATION TO ALTER. Except as provided elsewhere in this
                  Lease, Landlord shall have no obligation whatsoever to alter,
                  remodel, improve, repair, decorate, or paint the Premises or
                  any part thereof, including without limitation any obligation
                  to alter or remodel the Premises as may be required under
                  the Americans with Disabilities Act. Tenant affirms that
                  Landlord has made no representations to Tenant about the
                  condition of the Premises or the Building, except as
                  specifically herein set forth.

         9.7      TENANT WAIVER. Tenant waives the right to make repairs at
                  Landlord's expense under any law, statute, or ordinance now or
                  hereafter in effect.

10.      STRUCTURAL AND UTILITY MAINTENANCE AND REPAIR RESPONSIBILITY.

         10.1     STRUCTURAL REPAIRS. Subject to the provisions of Section 15,
                  Landlord shall, at Landlord's expense, maintain, repair and
                  replace the roof structure (excluding membrane (except that,
                  if the average costs to maintain, repair and replace the
                  membrane incurred by Tenant over the term (or extension of
                  term, if extended) exceed $5,000 a year, then at the end of
                  the Term Landlord will reimburse Tenant for the aggregate
                  amount of the annual overage in excess of $5,000)), all
                  exterior and bearing walls, the floor slab and the foundation
                  of the Building ("Structural Repairs"). Landlord shall give
                  reasonable advance notice to Tenant of such repairs to the
                  extent practical and feasible.

         10.2     UTILITIES REPAIRS. Subject to the provisions of Section 15,
                  Landlord shall, at Landlord's expense, if required, or cause
                  the utility purveyor to maintain, repair and replace the
                  underground electrical, water, sewer and plumbing utility
                  systems serving the Buildings insofar as such utility systems
                  are located outside the Building between the public right of
                  way and the Building, and the conduits and pipes or wiring
                  located therein and forming a part thereof, ("Utility Systems
                  Repairs").

         10.3     TENANT'S RESPONSIBILITY. To the extent that such Structural
                  Repairs or Utility Systems Repairs are necessitated in part or
                  in whole by the act, neglect, fault, or omission of any duty
                  by the Tenant, its agents, servants, employees, or invitees,
                  Tenant shall pay to Landlord the reasonable costs of such
                  Structural Repairs or Utility Systems Repairs, within thirty
                  (30) days after Landlord's submission of a reasonably detailed
                  invoice for the same, but only to the extent such costs were
                  necessitated by the act, neglect, fault or omission of any
                  duty by the Tenant. Landlord shall not be liable for any
                  failure to make any such Structural Repairs or Utility Systems
                  Repairs, unless such failure shall persist after Landlord's
                  receipt of written notice from Tenant and beyond the cure
                  periods set forth in Section 18.2.

11.      UTILITIES AND SERVICES.

         11.1     LANDLORD RESPONSIBILITY. Landlord shall arrange for and cause
                  to be provided, at Tenant's expense, heat, light, water,
                  electricity, gas and any and all other utility services,
                  excluding, however, telecommunications and data communications
                  services, telephone service, cable television service,
                  satellite transmission service, if any, or computer cabling or
                  wiring.

                                       9
<PAGE>

         11.2     TENANT RESPONSIBILITY. Tenant shall pay, as Additional Rent,
                  prior to delinquency, for heat, water, electricity, gas and
                  any and all other utility services supplied to the Premises
                  and will pay any required deposits therefor. Tenant shall keep
                  the temperature of the Building at such level as may
                  reasonably be requested by Landlord to protect the Building.
                  At Tenant's request, Tenant may be billed directly by utility
                  providers for some or all of utility services provided to the
                  Building and Premises. In such event those utility expenses
                  will not be considered as Operating Expenses or Additional
                  Rent. However, if Tenant fails to timely pay for such utility
                  services, Landlord shall have the right to pay such utility
                  expenses on behalf of Tenant and Tenant shall reimburse
                  Landlord as Additional Rent for such payment within five (5)
                  days of Landlord's demand, together with late fees and
                  interest as provided for in Section 33.8. In addition, if
                  Tenant fails to timely pay any utility expenses, Tenant shall
                  forfeit at Landlord's option the right to pay utility expenses
                  through direct billing and utility expenses shall then be
                  included as Operating Expenses.

         11.3     FAILURE OF SERVICES. In the event of any failure or
                  interruption of such utilities and services, Landlord shall
                  diligently attempt to resume service promptly. Tenant shall
                  not be entitled to any abatement or reduction of Rent by
                  reason of any failure or interruption of utilities or
                  services, no eviction of Tenant shall result from any such
                  failure or interruption, and Tenant shall not be relieved from
                  the performance of any obligation in this Lease because of
                  such failure or interruption.

12.      LIMITS ON LANDLORD'S LIABILITY. Landlord's liability in respect to its
         obligations under Section 9, 10 and 11 to repair and maintain portions
         of the Premises and Building and to provide utilities and services
         (collectively, "Repair and Service Obligations") is subject to the
         following limitations.

         12.1     CIRCUMSTANCES BEYOND LANDLORD'S CONTROL. Landlord shall not be
                  liable for any failure of Repair and Service Obligations when
                  such failure is caused by (i) strikes, lockouts or other labor
                  disturbance or labor dispute of any character, (ii)
                  governmental regulation, moratorium or other governmental
                  action, (iii) inability despite the exercise of reasonable
                  diligence to obtain electricity, water or fuel from the
                  providers thereof, (iv) acts of God or (v) any other cause
                  beyond Landlord's reasonable control.

         12.2     LANDLORD LIABILITY. Subject to Section 12.1, Landlord shall
                  not be liable for any failure of Repair and Service
                  Obligations, unless such failure shall persist for an
                  unreasonable time after written notice of the need of such
                  repairs or maintenance or of the interruption of services is
                  given to Landlord by Tenant. Landlord shall not be liable for
                  any injury to or interference with Tenant's business arising
                  from the making of any repairs, alterations, or improvements
                  in or to any portion of the Building, the Premises, or the
                  Property, or to fixtures, appurtenances, and equipment
                  therein, or the failure of Repair and Service Obligations.
                  Without limiting the generality of this Section 12, in no
                  event shall Landlord have any liability for consequential
                  damages resulting from any act or omission of Landlord in
                  respect of its Repair and Service Obligations, even if
                  Landlord has been advised of the possibility of such
                  consequential damages.

         12.3     RENT ABATEMENT. Except as specifically provided in Sections 15
                  and 16, there shall be no abatement of Rent in any
                  circumstances under this Lease.

                                       10
<PAGE>

13.      ALTERATIONS AND ADDITIONS BY TENANT. With prior written consent of
         Landlord, Tenant may make at its expense additional improvements or
         alterations to the Premises. Any repairs or new construction by Tenant
         shall be done in conformity with plans and specifications approved by
         Landlord, by contractors approved by Landlord, and subject to
         Landlord's reasonable rules and regulations regarding such
         construction. All work performed shall be done lien-free in a
         workmanlike manner and shall become the property of Landlord. Landlord
         may require that Tenant provide to Landlord, at Tenant's expense, a
         lien and completion bond in an amount equal to 150% of the estimated
         cost of any improvements, additions, or alterations in the Premises.
         Landlord shall not unreasonably withhold its consent to Tenant's
         proposed alterations or improvements if the conditions of this Section
         13 are satisfied. All such alterations and improvements shall become
         the property of Landlord; provided that Landlord may require Tenant to
         remove any improvements or alterations at the expiration or termination
         of the Term (except those improvements which Landlord has agreed may
         remain, either as provided herein or after the date hereof), such
         removal to occur at Tenant's expense; and Tenant shall repair all
         damage to the Premises or Building occurring as a result of such
         removal. In the event Tenant fails to remove any improvements or
         alterations as required by Landlord or repair any damage occurring
         during such removal, Landlord shall be entitled to remove any
         improvements or alterations or make such repairs, at Tenant's expense,
         and shall further be entitled to draw upon the Deposit.

14.      INSURANCE; INDEMNITY.

         14.1     TENANT WAIVER. Landlord shall not be liable to Tenant, and
                  Tenant hereby waives all claims against Landlord, for injury
                  or damage to any person or property in or about the Premises,
                  Building, Property or Common Areas by or from any cause
                  whatsoever, including without limitation any acts or omissions
                  of any other tenants, licensees or invitees of the Building.

         14.2     TENANT INDEMNITY. Tenant shall indemnify and defend (using
                  legal counsel acceptable to Landlord) Landlord and hold
                  harmless, from and against any and all loss, cost, damage,
                  liability and expense (including reasonable attorneys' fees)
                  whatsoever that may arise out of or in connection with
                  Tenant's occupation, use or improvement of the Premises, or
                  that of its employees, agents or contractors, or Tenant's
                  breach of its obligations under this Lease. To the extent
                  necessary to fully indemnify Landlord from claims made by
                  Tenant or its employees, this indemnity constitutes a waiver
                  of Tenant's immunity under the Washington Industrial Act, RCW
                  Title 51. This indemnity shall survive the expiration or
                  termination of the Term. Landlord and Tenant acknowledge that
                  this indemnity obligation has been negotiated and agreed to by
                  them.

                                                     /s/  [ILLEGIBLE]
                  -------------------                -----------------
                  Landlord's Initials                Tenant's Initials

         14.3     LANDLORD RESPONSIBILITY. The exculpation, release and
                  indemnity provisions of Sections 14.1 and 14.2 shall not apply
                  to the extent the subject claims thereunder were caused by
                  Landlord's gross negligence or willful misconduct. However, in
                  no event shall Landlord be liable to Tenant for consequential
                  damages.

         14.4     TENANT INSURANCE. Tenant shall procure and maintain throughout
                  the Term at Tenant's expense, the following insurance:

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<PAGE>

                  14.4.1 Comprehensive general public liability insurance,
                  insuring Tenant against liability arising out of the Lease and
                  the use, occupancy, or maintenance of the Premises and all
                  areas appurtenant thereto. Such insurance shall be in the
                  amount of not less than $5,000,000 combined single limit for
                  injury to or death of one or more persons in an occurrence,
                  and for damage to tangible property (including loss of use) in
                  an occurrence (or in such amount as Landlord determines in its
                  reasonable discretion). Such policy shall insure the
                  operations of independent contractors and contractual
                  liability (covering the indemnity in Section 14.2) and shall;
                  (1) name Landlord as an additional insured, (ii) provide a
                  waiver of subrogation endorsements with respect to Landlord,
                  and (iii) provide that it is primary and noncontributing with
                  any insurance in force or on behalf of Landlord.

                  14.4.2 Standard form property insurance insuring against the
                  perils of fire, extended coverage, vandalism, malicious
                  mischief, special extended coverage ("All-Risk") and sprinkler
                  leakage. This insurance policy shall be upon all personal
                  property for which Tenant is legally liable or that was
                  installed at Tenant's expense, and that is located in the
                  Building or Premises, including without limitation all
                  Tenant's furnishings, fixtures, furniture, fittings, and
                  equipment and all improvements to the Premises installed by
                  Tenant, in an amount not less than 90% of the full replacement
                  cost thereof. In the event of a dispute as to the amount of
                  full replacement cost, the decision of Landlord or any
                  mortgagees of Landlord shall be conclusive. Such policy shall
                  also include business interruption coverage, covering direct
                  or indirect loss of Tenant's earnings attributable to Tenant's
                  inability to use fully or obtain access to the Premises or
                  Building, in an amount as will properly reimburse Tenant. Such
                  policy shall name Landlord and any mortgagees to Landlord as
                  insured parties, as their respective interests may appear.

                  14.4.3 Workman's Compensation and Employer's Insurance (as
                  required by state law).

                  14.4.4 Any other form or forms of insurance as Tenant or
                  Landlord or any mortgagees of Landlord may reasonably require
                  from time to time in form, in amounts and for insurance risks
                  against which a prudent tenant would protect itself.

         14.5     POLICIES. All policies of insurance to be obtained by Tenant
                  hereunder shall be in a form satisfactory to Landlord and
                  shall be issued by insurance companies holding a General
                  Policyholder Rating of "A" and a Financial Rating of "X" or
                  better in the most current issue of Best's Insurance Guide.
                  Tenant shall provide Landlord with certificates of such
                  insurance. No such policy shall be cancelable or reducible in
                  coverage except after 30 days' prior written notice to
                  Landlord. Tenant shall, within ten days prior to the
                  expiration of such policies, furnish Landlord with renewals
                  or "binders" thereof, or Landlord may order such insurance and
                  charge the cost thereof to Tenant as Additional Rent.

         14.6     LANDLORD'S INSURANCE. Landlord shall maintain liability and
                  casualty insurance for the Building and Property adequate in
                  Landlord's judgment to cover (with deductibles deemed
                  appropriate by Landlord) the risks customarily insured against
                  by owners of properties similar to the Building.

         14.7     PROCEEDS. The proceeds of any insurance policies maintained by
                  or for the benefit of Landlord shall belong to and be paid
                  over to Landlord. Any interest or right of Tenant in any such
                  proceeds shall be subject to Landlord's interest and right in
                  such proceeds.

                                       12
<PAGE>

         14.8     WAIVER OF SUBROGATION. Anything in this Lease to the contrary
                  notwithstanding, Tenant and Landlord each waives its entire
                  right of recovery, claims, actions, or causes of action
                  against the other for loss or damage to the Premises,
                  Building, or Property or any personal property of such party
                  therein that is caused by or incident to the perils covered by
                  normal extended coverage clauses of standard fire insurance
                  policies carried by the waiving party and in force at the time
                  of damage or loss, including without limitation deductibles
                  and retentions under any such insurance policies in effect,
                  and self-insurance against any such perils. Tenant and
                  Landlord each waives any right of subrogation it may have
                  against the other party to the extent of recovery under any
                  such insurance, and shall cause each insurance policy obtained
                  by it to provide that the insurance company waives all right
                  to recovery by way of subrogation against the other party in
                  connection with any such loss or damage. If either Landlord or
                  Tenant is unable to obtain its insurer's permission to waive
                  any claim against the other party, such party shall promptly
                  notify the other party of such inability.

         14.9     NOTICE OF ACCIDENTS. Tenant shall promptly notify Landlord of
                  any casualty or accident occurring in or about the Premises.

15.      DESTRUCTION.

         15.1     If the Premises or the Building is destroyed by fire,
                  earthquake, or other casualty to the extent that they are
                  untenantable in whole or in part as reasonably determined by
                  Landlord, or if any destruction of the Premises or Building
                  occurs in the last two (2) years of the Term, then Landlord
                  shall have the right but not the obligation to proceed with
                  reasonable diligence to rebuild and restore the Premises or
                  the Building or such part thereof.

         15.2     Landlord shall within 30 days after such destruction or injury
                  notify Tenant whether Landlord intends to rebuild. If Landlord
                  fails to notify Tenant within such period, then this Lease
                  shall terminate as the end of such period.

         15.3     During the period from destruction or damage until restoration
                  (or termination of this Lease), Rent shall be abated in the
                  same ratio as that portion of the Premises which Landlord
                  determined is unfit for occupancy shall bear to the whole
                  Premises, to the extent that Landlord receives the proceeds of
                  Tenant's business interruption insurance. If damage is due to
                  the fault or neglect of Tenant or its agents, employees.
                  invitees, or licensees, there shall be no abatement of Rent.

         15.4     Landlord shall not be required to repair any injury or damage
                  by fire or other cause, or to make any repairs or replacements
                  of any panels, decoration, office fixtures, paintings, floor
                  covering, or any other improvements to the Premises installed
                  by Tenant. Instead, if Landlord repairs or rebuilds the
                  Premises under this Section 15, Tenant shall repair or rebuild
                  such Tenant-installed improvements and other items of
                  property.

         15.5     Tenant shall not be entitled to any compensation or damages
                  from Landlord for loss of the use of the whole or any part of
                  the Premises, the property of Tenant, or any inconvenience or
                  annoyance occasioned by such damage, repair, reconstruction,
                  or restoration.

16.      CONDEMNATION.

                                       13
<PAGE>

         16.1     If all or part of the Premises are taken under power of
                  eminent domain, or sold under the threat of the exercise of
                  said power, this Lease shall terminate as to the part so taken
                  as of the date the condemning authority takes possession.

         16.2     If more than 25% of the floor area of Premises is taken by
                  condemnation, Landlord or Tenant may, by written notice to the
                  other within ten days after notice of such taking, terminate
                  this Lease as to the remainder of the Premises as of the date
                  the condemning authority takes possession.

         16.3     If Landlord or Tenant does not so terminate, this Lease shall
                  remain in effect as to such remainder, except that the Rent
                  shall be reduced in the proportion that the rentable floor
                  area taken bears to the original rentable total floor area.
                  However, if circumstances make abatement based on floor area
                  unreasonable, the Rent shall abate by a reasonable amount to
                  be determined by Landlord. In the event that neither Landlord
                  nor Tenant elects to terminate this Lease, Landlord's
                  responsibility to restore the remainder of the Premises shall
                  be limited to the amount of any condemnation award allocable
                  to the Premises, as determined by Landlord.

         16.4     Any award for the taking of all or part of the Premises under
                  the power of eminent domain, including payment made under
                  threat of the exercise of such power, shall be the property of
                  Landlord, whether made as compensation for diminution in value
                  of the leasehold or for the taking of the fee or as severance
                  damages. Tenant shall only be entitled to such compensation as
                  may be separately awarded or recoverable by Tenant in Tenant's
                  own right for the loss of or damage to improvements to the
                  Premises installed by Tenant, Tenant's trade fixtures and
                  removable personal property. Landlord shall not be liable to
                  Tenant for the loss of the use of all or any part of the
                  Premises taken by condemnation.

         16.5     Landlord shall have the exclusive authority to grant
                  possession and use to the condemning authority and to
                  negotiate and settle all issues of just compensation or, in
                  the alternative, to conduct litigation concerning such issues;
                  provided however, that Landlord shall not enter into any
                  settlement of any separate award that may be made to Tenant as
                  described in Section 16.4 without Tenant's prior approval of
                  such settlement, which approval shall not be unreasonably
                  withheld or delayed.

17.      ASSIGNMENT AND SUBLETTING.

         17.1     Tenant shall not assign this Lease, or sublet the Premises or
                  any part thereof, either by operation of law or otherwise, or
                  permit any other party to occupy all or any part of the
                  Premises, without first obtaining the written consent of
                  Landlord, such consent shall not be unreasonably withheld or
                  delayed.. Tenant shall propose such assignment or sublease by
                  written notice to Landlord, and such notice shall specify an
                  effective date which shall be the first day of a calendar
                  month and shall be not less than 30 days after the date of
                  such notice. This Lease shall not be assignable by operation
                  of law. Tenant shall further provide to Landlord other
                  information and creditworthiness materials concerning any
                  proposed assignee or sublessee as is requested by Landlord.

                                       14
<PAGE>

         17.2     If Tenant is a corporation, any transfer of this Lease from
                  Tenant by merger, consolidation, or liquidation, or any change
                  in the ownership of or power to vote 50% or more of the
                  outstanding voting stock of Tenant shall constitute an
                  assignment under this Lease. If Tenant is a partnership or
                  limited liability company, any change in the identity or
                  majority ownership of partners or members in Tenant serving as
                  general partner or manager or owning 50% or more of the
                  outstanding economic interests in such entity shall constitute
                  an assignment under this Lease.

         17.3     In the alternative to consenting to a proposed assignment or
                  sublease, Landlord shall have the right to recapture the
                  Premises, or applicable portion thereof. Landlord may exercise
                  such right by notice to Tenant within 20 days after receipt of
                  Tenant's notice. Such recapture shall terminate this Lease as
                  to the applicable portion of the Premises effective on the
                  effective date proposed in Tenant's notice.

         17.4     If Landlord elects not to recapture and thereafter elects to
                  give its consent to the proposed assignment or sublease, (i)
                  Landlord may charge Tenant a reasonable sum to reimburse
                  Landlord for legal and administrative costs incurred in
                  connection with such consent; (ii) in the event of a sublease,
                  Landlord and Tenant shall share equally in any rent and other
                  proceeds paid to Tenant in excess of the Rent to be paid to
                  Landlord under this Lease; and (iii) in the event of an
                  assignment or a sublease, Tenant shall remain liable to
                  Landlord for the performance of all Tenant's obligations under
                  this Lease.

         17.5     If the Lease is assigned pursuant to the provisions of said
                  Revised Bankruptcy Act, 11 U.S.C. Section 101 et seq., any and
                  all consideration paid or payable in connection with such
                  assignment shall be Landlord's exclusive property and paid or
                  delivered to Landlord, and shall not constitute the property
                  of tenant or tenant's estate on bankruptcy. Any person or
                  entity to whom the Lease is assigned pursuant to the Revised
                  Bankruptcy Act shall be deemed automatically to have assumed
                  all of Tenant's obligations under this Lease.

         17.6     In the event of any sale of the Building or Property, or any
                  assignment of this Lease by Landlord, Landlord shall be
                  relieved of all liability under this Lease arising out of any
                  act, occurrence, or omission occurring after sale or
                  assignment; and the purchaser or assignee at such sale or
                  assignment or any subsequent sale or assignment of Lease, the
                  Property, or Building, shall be deemed without any further
                  agreement to have assumed all of the obligations of the
                  Landlord under this Lease accruing after the date of such sale
                  or assignment.

         17.7     Subject to the provisions of this Section 17, this Lease shall
                  be binding upon and inure to the benefit of the parties, their
                  heirs, successors and assigns.

18.      DEFAULT.

         18.1     The occurrence of any one or more of the following events
                  shall constitute a material default and breach of the Lease by
                  Tenant ("Default"):

                  18.1.1 vacation or abandonment of all or any portion of the
                  Premises;

                  18.1.2 failure by Tenant to make any payment required as and
                  when due, where such failure shall continue after three days'
                  written notice from Landlord;

                                       15
<PAGE>

                  18.1.3 failure by Tenant to observe or perform any of the
                  covenants, conditions, or provisions of this Lease, other than
                  the making of any payment, where such failure shall continue
                  after 30 days' written notice from Landlord; or

                  18.1.4   (i) the making by Tenant of any general assignment or
                  general arrangement for the benefit of creditors; (ii) the
                  filing by or against Tenant of a petition in bankruptcy,
                  including reorganization or arrangement, unless, in the case
                  of a petition filed against Tenant, the same is dismissed
                  within 30 days; (iii) the appointment of a trustee or receiver
                  to take possession of substantially all of Tenant's assets
                  located at the Premises or of Tenant's interest in this Lease;
                  (iv) the seizure by any department of any governmental or any
                  officer thereof of the business or property of Tenant; and (v)
                  adjudication that Tenant is bankrupt.

         18.2     Tenant shall notify Landlord promptly of any Default by Tenant
                  (or event or occurrence which, with the passage of time, the
                  giving of notice, or both, would become a Default) that by its
                  nature is not necessarily known to Landlord.

         18.3     Landlord shall be in default if it fails to observe or perform
                  any of the covenants, conditions, or provisions of this Lease,
                  where such failure shall continue after 30 days' written
                  notice from Tenant; provided, however, that if the nature of
                  Landlord's obligation is such that more than 30 days are
                  required for performance, Landlord shall not be in default if
                  Landlord commences performance within 30 days after Tenant's
                  notice and thereafter completes such performance diligently
                  and within a reasonable time. Tenant shall copy Landlord's
                  lender with any such notice of default, if Tenant has been
                  provided with the name and address of any such lender.

         18.4     In no event shall a default by Landlord under this Lease give
                  rise to any right of Tenant to terminate this Lease or
                  withhold or offset the payment of Base Monthly Rent or
                  Additional Rent. The obligations of Tenant to pay Base Monthly
                  Rent and Additional Rent shall continue unaffected in all
                  events unless suspended or terminated pursuant to an express
                  provision of this Lease.

19.      REMEDIES IN DEFAULT.

                                       16
<PAGE>

         19.1     Upon a default by Tenant, Landlord shall have the following
                  remedies, in addition to all other rights and remedies
                  provided by law or otherwise provided in this Lease, to which
                  Landlord may resort cumulatively or in the alternative:

                  19.1.1 Landlord may continue this Lease in full force and
                  effect, and this Lease shall continue in full force and effect
                  as long as Landlord does not terminate this Lease, and
                  Landlord shall have the right to collect Rent when due.

                  19.1.2 Landlord may terminate Tenant's right to possession of
                  the Premises at any time by giving written notice to that
                  effect, and relet the Premises or any part thereof. Tenant
                  shall be liable immediately to Landlord for all costs Landlord
                  incurs in reletting the Premises or any part thereof,
                  including, without limitation, brokers' commissions, expenses
                  of cleaning the Premises required by the reletting, and like
                  costs. Reletting may be for a period shorter or longer than
                  the remaining term of this Lease. No act by Landlord other
                  than giving written notice to Tenant shall terminate this
                  Lease. Acts of maintenance, efforts to relet the Premises, or
                  the appointment of a receiver on Landlord's initiative to
                  protect Landlord's interest under this Lease shall not
                  constitute a termination of Tenant's right to possession. On
                  termination, Landlord has the right to remove all Tenant's
                  Personal Property and store same at Tenant's cost and to
                  recover from Tenant as damages:

                           (i)   The worth at the time of award of unpaid Rent
                                 and other sums due and payable 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 and other sums due and
                                 payable which would have been payable after
                                 termination until the time of award exceeds the
                                 amount of such Rent loss that Tenant proves
                                 could have been reasonably avoided; plus

                           (iii) The worth at the time of award of the amount by
                                 which the unpaid Rent and other sums due and
                                 payable for the balance of the Term after the
                                 time of award exceeds the amount of such Rent
                                 loss that Tenant proves could be reasonably
                                 avoided; plus

                           (iv)  Any other amount necessary which is to
                                 compensate Landlord for all the detriment
                                 proximately caused by Tenant's failure to
                                 perform Tenant's obligations under this Lease,
                                 or which, in the ordinary course of things,
                                 would be likely to result therefrom, including,
                                 without limitation, any costs or expenses
                                 incurred by Landlord: (A) in retaking
                                 possession of the Premises; (B) in maintaining,
                                 repairing, preserving, restoring, replacing,
                                 cleaning, altering or rehabilitating the
                                 Premises or any portion thereof, including such
                                 acts for reletting to a new tenant or tenants;
                                 (C) for leasing commissions; and (D) necessary
                                 or appropriate to relet the Premises; plus

                           (v)   At Landlord's election, such other amounts in
                                 addition to or in lieu of the foregoing as may
                                 be permitted from time to time by the laws of
                                 the State of Washington.

                  19.1.3 The "worth at the time of award" of the amounts
                  referred to in subsections 19.1.2(i) and 19.1.2(ii) above is
                  computed by allowing interest at the interest rate in Section
                  33.8 on the unpaid Rent and other sums due and payable from
                  the termination date through the date of award. The "worth at
                  the time of award" of the amount referred to in subsection
                  19.1.2(iii) above is computed by discounting such amount at
                  the discount rate of the Federal Reserve Bank of San Francisco
                  at time of award plus one percent (1%).

                                       17
<PAGE>

         19.2     Whether Landlord has elected to terminate this Lease or not,
                  Tenant agrees to pay Landlord the cost of recovering
                  possession of the Premises, the expenses of reletting, and any
                  other costs or damages arising out of Tenant's Default,
                  including without limitation the costs of removing persons and
                  property from the Premises, the costs of preparing or altering
                  the Premises for reletting, broker's commissions, and
                  attorneys' fees.

20.      ACCESS. Tenant shall permit Landlord to enter the Premises at all
         reasonable times for the purpose of inspecting, altering, and repairing
         the Premises and the Building and ascertaining compliance with the
         provisions of this Lease by Tenant. The existence or exercise of such
         right of access shall not be construed as imposing any obligation on
         Landlord to inspect, discover or correct or repair any condition in the
         Premises or the Building. Landlord may also show the Premises to
         prospective purchasers or tenants at reasonable times, provided that
         Landlord shall not materially interfere with Tenant's business
         operation.

21.      HOLD-OVER TENANCY. If without execution of a new Lease or written
         extension Tenant shall hold over after the expiration or termination of
         the Term, with Landlord's written consent, Tenant shall be deemed to be
         occupying the Premises as a Tenant from month to month, which tenancy
         may be terminated as provided by law, unless the parties agree
         otherwise at the time of Landlord's consent. If Tenant shall hold over
         after expiration or termination of the Term without Landlord's written
         consent, the Base Monthly Rent payable shall be 200% of the Base
         Monthly Rent payable in the last month prior to expiration or
         termination of the Term, and Tenant shall continue to pay Additional
         Rent. During any such tenancy, Tenant shall continue to be bound by all
         of the terms, covenants, and conditions of this Lease, insofar as
         applicable.

22.      COMPLIANCE WITH LAWS. Tenant shall not use the Premises or permit
         anything to be done in or about the Premises which will in any way
         conflict with any applicable law, statute, ordinance, or governmental
         rule or regulation and any restrictive covenants and obligations
         created by private contracts which affect the use and operation of the
         Premises, Building, Common Areas or Business Park, now and hereafter in
         force ("Laws"). Tenant shall at its sole cost and expense promptly
         comply with all Laws, including without limitation the Americans with
         Disabilities Act, and with the requirements of any board of fire
         insurance underwriters or other similar bodies now or hereafter
         constituted, relating to, or affecting the use or occupancy of the
         Premises. Notwithstanding the foregoing, Landlord warrants and
         represents that as of the Commencement Date, the Premises and Building
         will be, to the best of Landlord's knowledge, in compliance with all
         Laws. The judgment of any court of competent jurisdiction, or the
         admission of Tenant in any action, whether Landlord be a party thereto
         or not, that Tenant has violated any Law, shall be conclusive of the
         fact as between Landlord and Tenant.

23.      RULES AND REGULATION. Tenant shall faithfully observe and comply with
         the rules and regulations that Landlord shall from time to time
         promulgate with respect to the Premises, Building, their structure or
         systems. Landlord reserves the right from time to time to make all
         reasonable modifications to such rules and regulations. Additions and
         modifications to rules and regulations shall be binding on Tenant upon
         delivery of a copy of them to Tenant.

                                       18
<PAGE>

24.      PARKING. Parking on the Premises shall be revised per EXHIBIT C,
         subject to City of Redmond approval, to provide a minimum of 135
         parking spaces. Tenant may further maximize available parking stalls
         and or truck dock access by re-striping all or a portion of the parking
         lot depicted on EXHIBIT C to accommodate a higher ratio of compact
         stalls, and to add tandem stalls, and Tenant will be solely responsible
         for all costs and permits required to add additional stalls. Landlord
         shall work with Tenant in order help to maximize its truck dock access.
         Tenant's parking on the Premises shall be subject to reasonable rules
         and regulations and any charges that may be established or altered by
         Landlord for such parking facilities from time to time. Tenant shall
         comply with any and all private and governmentally imposed parking
         restrictions applicable to the Premises, including without limitation,
         the requirements of all designations placed on parking stalls, such as
         car pools. Tenant on the fifth month of commencement of lease term or
         November 15, 2000 whichever occurs first shall have a one time right to
         cancel this lease, if the Landlord is unable to secure a permit for the
         revised parking by this time. Tenant shall notify Landlord in writing
         within fifteen (15) days after the fifth (5th) month of this lease of
         its intention to terminate. Tenant's failure to deliver such statement
         within such time shall be conclusive upon Tenant that this Lease is in
         full force and effect, without modification.

25.      ESTOPPEL CERTIFICATES. Tenant shall execute, within ten business days
         following Landlord's request, a certificate in such reasonable form as
         may be required by Landlord or a prospective purchaser, mortgagee or
         trust deed beneficiary, or Landlord's successor after a sale or
         foreclosure, certifying: (i) the Commencement Date of this Lease, (ii)
         that the Lease is unmodified and in full force and effect, (or if there
         have been modifications hereto, that this Lease is in full force and
         effect, and stating the date and nature of such modifications); (iii)
         that there have been no current defaults under this Lease by either
         Landlord or Tenant except as specified in Tenant's statement, (iv) the
         dates to which the Base Monthly Rent, Additional Rent and other charges
         have been paid, and (v) any other information reasonably requested by
         the requesting party. Such certificate may be relied upon by Landlord
         and/or such other requesting party. Tenant's failure to deliver such
         statement within such time shall be conclusive upon Tenant that this
         Lease is in full force and effect, without modification except to the
         extent represented by Landlord, that there are no uncured defaults in
         Landlord's performance under this Lease, and that not more than one
         month's Rent has been paid in advance. Tenant's failure to deliver said
         statement within ten business days of request, shall constitute
         Tenant's Default.

26.      SUBORDINATION. Tenant agrees that this Lease shall be subordinate to
         the lien of any mortgage, deeds of trust, or ground leases now or
         hereafter placed against the Property or Building, and to all renewals
         and modifications, supplements, consolidations, and extensions thereof.
         Notwithstanding the foregoing, Landlord serves the right; however, to
         subordinate or cause to be subordinated any such mortgage, deed of
         trust or ground lease to this Lease. Upon a foreclosure or conveyance
         in lieu of foreclosure under such mortgage or deed of trust, or a
         termination of such ground lease, and a demand by Landlord's successor,
         Tenant shall attorn to and recognize such successor as Landlord under
         this Lease. Tenant shall execute and deliver on request and in the form
         requested by Landlord, any instruments reasonably necessary or
         appropriate to evidence, effect or confirm such subordination. Should
         Tenant fail to sign and return any such documents within ten business
         days of request, Tenant shall be in Default. Tenant hereby irrevocably
         appoints Landlord as attorney-in-fact of Tenant to execute, deliver and
         record any such document in the name and on behalf of Tenant.

                                       19
<PAGE>

27.      REMOVAL OF PROPERTY. On expiration or other termination of this Lease,
         Tenant shall remove (i) all personal property of Tenant on the
         Premises, including without limitation all Tenant's furnishings,
         fixtures, furniture, fittings, cabling, wiring and equipment; (ii) all
         improvements to the Premises which Landlord requests be removed under
         Section 13; and (iii) at Landlord's request, all non-standard or
         specialty improvements made to the Premises by Landlord or Tenant.
         Tenant shall repair or reimburse Landlord for the cost of repairing any
         damage to the Premises resulting from the installation or removal of
         such property of Tenant. All property of Tenant remaining on the
         Premises after reentry or termination of this Lease shall conclusively
         be deemed abandoned and may be removed by Landlord. Landlord may store
         such property of Tenant in any place selected by Landlord, including
         but not limited to a public warehouse, at the expense and risk of the
         owner thereof, with the right to sell such stored property of Tenant
         without notice to Tenant. The proceeds of such sale shall be applied
         first to the cost of such sale, second to the payment of the cost of
         removal and storage, if any, and third to the payment of any other
         amounts that may then be due from Tenant to Landlord under this Lease,
         and any balance shall be paid to Tenant.

28.      PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency all
         personal property taxes payable with respect to all property of Tenant
         located on the Premises or the Building and promptly upon request of
         Landlord shall provide satisfactory evidence of such payment. "Personal
         property taxes" under this Section 28 shall include all property taxes
         assessed against the property of Tenant, whether assessed as real or
         personal property.

29.      NOTICES. All notices under this Lease shall be in writing. Notices
         shall be effective (i) when mailed by certified mail, return receipt
         requested (ii) when personally delivered, or (iii) when sent by fax, in
         each case to the address or fax number of the receiving party set forth
         in Section 1, Either party may change its address and fax number for
         notices to the other from time to time.

30.      CONDITION OF PREMISES. By taking possession of the Premises, Tenant
         accepts the Premises as being in good, sanitary order, condition and
         repair, and further accepts all aspects of the Premises, Building, and
         Property in their present condition, AS IS, including latent defects,
         without any representations or warranties, express or implied, from
         Landlord.

31.      HAZARDOUS SUBSTANCES.

         31.1     Tenant shall not, without first obtaining Landlord's prior
                  written approval, generate, release, emit, store, deposit,
                  transport, or dispose of (collectively "Release") any
                  hazardous substances, sewage, petroleum products, hazardous
                  materials, toxic substances or any pollutants or substances,
                  defined as hazardous or toxic in applicable federal, state and
                  local laws and regulations ("Hazardous Substances") in, on or
                  about the Premises. In the event, and only in the event,
                  Landlord approves such Release of Hazardous Substances on the
                  Premises, such Release shall occur safely and in compliance
                  with all applicable federal, state, and local laws and
                  regulations.

         31.2     Tenant shall indemnify and defend (with counsel approved by
                  Landlord) Landlord, and hold Landlord harmless, from and
                  against any and all claims, liabilities, losses, damages,
                  cleanup costs, and expenses (including reasonable attorneys'
                  fees) arising out of or in any way relating to the Release by
                  Tenant or any of its agents, representatives, employees or
                  invitees, or the presence of any Hazardous Substances in, on
                  or about the Premises occurring as a result of or in
                  connection with Tenant's use or occupancy of the Premises at
                  any time after the Commencement Date.

                                       20
<PAGE>

         31.3     Landlord shall have the right from time to time to enter the
                  Premises, Building and Property and inspect the same for the
                  presence of Hazardous Substances and compliance with the
                  provisions of this Section 31 and inspect the Premises,
                  Building and Property. Landlord may cause tests to be
                  performed for Hazardous Substances on the Premises from time
                  to time. Tenant shall bear the cost of the first such test in
                  any calendar year and any other such test that occurs upon a
                  reasonable suspicion by Landlord that there may be Hazardous
                  Substances in the Premises in violation of Tenant's
                  obligations under this Lease.

         31.4     The provisions of this Section 31 shall survive the expiration
                  or termination of this Lease with respect to any occurrences
                  during the Term.

32.      SIGNS. Tenant shall not place upon or install in windows or other
         openings or exterior sides of doors or walls of the Premises any
         symbols, drapes, or other materials without the written consent of
         Landlord, which consent shall not be unreasonably withheld or delayed.
         Tenant shall observe and comply with the requirements of all Laws.

33.      GENERAL PROVISIONS.

         33.1     ATTORNEYS' FEES. In the event Landlord reasonably requires the
                  services of any attorney in connection with any Default or
                  violation by Tenant of the terms of this Lease or the exercise
                  by Landlord of its remedies for any Default by Tenant under
                  this Lease, or a request by Tenant for Landlord's waiver of
                  any terms of this Lease or extension of time to perform or pay
                  any obligation of Tenant under this Lease, Tenant shall
                  promptly on demand reimburse Landlord for its reasonable
                  attorneys' fees incurred in such instance. In the event of any
                  litigation, arbitration or other proceeding (including
                  proceedings in bankruptcy and probate and on appeal) brought
                  to enforce or interpret or otherwise arising under this Lease,
                  the substantially prevailing party therein shall be entitled
                  to the award of its reasonable attorneys' fees, witness fees,
                  and court costs incurred therein and in preparation therefor.

         33.2     GOVERNING LAW. This Lease shall be governed by and construed
                  in accordance with the laws of the State of Washington.

         33.3     CUMULATIVE REMEDIES. No remedy or election under this Lease
                  shall be deemed exclusive but shall, wherever possible, be
                  cumulative with all other remedies at law or in equity.

         33.4     EXHIBITS; ADDENDA. Exhibits and Addenda, if any, affixed to
                  this Lease are a part of and incorporated into this Lease.

         33.5     INTERPRETATION. This Lease has been submitted to the scrutiny
                  of all parties hereto and their counsel, if desired, and shall
                  be given a fair and reasonable interpretation in accordance
                  with the words hereof, without consideration or weight being
                  given to its having been drafted by any party hereto or its
                  counsel.

         33.6     JOINT OBLIGATION. If there is more than one Tenant under this
                  Lease, the obligations hereunder imposed upon Tenants shall be
                  joint and several.

         33.7     KEYS. Upon expiration or termination of this Lease, Tenant
                  shall surrender all keys to the Premises to Landlord at the
                  place then fixed for payment of Rent and shall inform Landlord
                  of all combination locks, safes, and vaults, if any, in the
                  Premises.

                                       21
<PAGE>

         33.8     LATE CHARGES; INTEREST. Late payment by Tenant to Landlord of
                  Rent or other sums due under this Lease will cause Landlord to
                  incur costs not contemplated by this Lease, the exact amount
                  of which would be difficult and impractical to ascertain. Such
                  costs include without limitation processing and accounting
                  charges and late charges which may be imposed on Landlord by
                  the terms of any mortgage or trust deed covering the Premises.
                  Accordingly, Tenant shall pay to Landlord as Additional Rent a
                  late charge equal to five percent (5%) of such installment as
                  liquidated damages for such late payment, other than for time
                  value damages. Payment of the Rent via Tenant's delivery of a
                  check returned for "Insufficient Funds" shall constitute the
                  delinquent payment of Rent and shall be subject to the late
                  charge and interest provisions of this Section. In addition,
                  any Rent or other sums due under this Lease to Landlord that
                  is not paid when due shall bear interest at the rate per annum
                  of two percent (2%) over the prime rate in effect at U.S.
                  Bank, Seattle Main Office, on the day such Rent or other sum
                  was due. The existence or payment of charges and interest
                  under this Section shall not cure or limit Landlord's remedies
                  for any Default under this Lease. Tenant will have a one (1)
                  five (5) day grace period per year of the lease term that rent
                  will not be deemed late.

         33.9     LIGHT, AIR, AND VIEW. Landlord does not guarantee the
                  continued present status of light, air, or view in, to or from
                  the Premises.

         33.10    MEASUREMENTS. All measurements of the Premises stated in this
                  Lease, even if approximations, shall govern and control over
                  any actual measurement of the Premises. The Rent provided in
                  this Lease shall not be modified or changed by reason of any
                  measurement or re-measurement of the Premises that may occur
                  after the date of this Lease, and is agreed by Landlord and
                  Tenant to constitute the negotiated rent for the Premises.

         33.11    NAME. Tenant shall not use the name of the Building for any
                  purpose other than as an address of the business conducted by
                  the Tenant in the Premises.

         33.12    PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all of the
                  agreements of the parties with respect to any matter covered
                  or mentioned in this Lease, and no prior agreements of
                  understandings pertaining to any such matters shall be
                  effective for any purpose. No provision of this Lease may be
                  amended or added to except by an agreement in writing signed
                  by the parties or their respective successors in interest.
                  This Lease shall not be effective or binding on any party
                  until fully executed by both parties hereto.

         33.13    RECORDATION. Tenant shall not record this Lease or a short
                  form memorandum of this Lease without the prior written
                  consent of Landlord.

                                       22
<PAGE>

         33.14    LIMITATION OF LIABILITY. In consideration of the benefits
                  accruing hereunder, Tenant's sole and exclusive remedy shall
                  be against the Landlord's interest in the Rents, issues, and
                  profits of the Project, and not against any other assets of
                  Landlord, or its members individually, or of the shareholders,
                  officers, directors, members, partners, or employees of any
                  successors or assigns, except to the extent caused by
                  Landlord's gross negligence or willful misconduct of Landlord.
                  Without limiting the foregoing:

                  a.       The sole and exclusive remedy shall be against assets
                  of Landlord relating to the Premises, as described in Section
                  2;

                  b.       No shareholder, director, officer, member, or partner
                  of Landlord shall be sued or named as a party in any suit or
                  action;

                  c.       No service of process shall be made against any
                  entity or individual other than a general partner of Landlord
                  or Landlord's designated agent for service of process;

                  d.       No individual or entity other than Landlord shall be
                  required to answer or otherwise plead to any service or
                  process;

                  e.       No judgment may be taken against any individual or
                  entity other than Landlord;

                  f.       Any judgment taken against any individual or entity
                  other than Landlord may be vacated and set aside at any time
                  without hearing;

                  g.       No writ of execution may at any time be levied
                  against the assets of any individual or entity other than
                  Landlord;

                  h.       These covenants and agreements are enforceable both
                  by Landlord and also by any shareholder, director, officer,
                  member, or partner of Landlord.

                  Tenant agrees that each of the foregoing provisions shall be
                  applicable to any covenant or agreement either expressly
                  contained in this Lease or imposed by statute or at common
                  law.

         33.15    SEVERABILITY. That any provision of this Lease is invalid,
                  void, or illegal shall in no way affect, impair, or invalidate
                  any other provision of this Lease and such other provision
                  shall remain in full force and effect.

         33.16    TIME. Time is of the essence of this Lease and each of its
                  provisions.

         33.17    WAIVER. No provision of this Lease shall be deemed to have
                  been waived by Landlord unless such waiver is in writing
                  signed by Landlord's duly authorized representatives. The
                  waiver by either party of any provision of this Lease shall
                  not be deemed to be a waiver of such provision or any other
                  provision, in any subsequent instance. The acceptance of Rent
                  by Landlord shall not be deemed to be a waiver of any
                  preceding Default or breach by Tenant under this Lease,
                  whether known or unknown to Landlord, other than the failure
                  of the Tenant to pay the particular Rent so accepted.

         33.18    NO WASTE. Tenant shall not commit or suffer to be committed
                  any waste, damage or nuisance in or upon the Premises.

                                       23
<PAGE>

         33.19    QUIET ENJOYMENT. Provided Tenant observes its obligations
                  under this Lease, its quiet enjoyment of the Premises
                  throughout the Term shall not be disturbed.

34.      AUTHORITY OF TENANT.

         34.1     If Tenant is a corporation, each individual executing this
                  Lease on behalf of Tenant represents and warrants that (s)he
                  is duly authorized by all necessary action of the directors of
                  Tenant to execute and deliver this Lease in behalf of Tenant,
                  and that this Lease is binding upon Tenant in accordance with
                  its terms.

         34.2     If Tenant is a partnership or limited liability company, each
                  individual executing this Lease on behalf of Tenant represents
                  and warrants the (s)he is duly authorized in accordance with
                  Tenant's partnership agreement or limited liability company
                  agreement by all necessary action of the partners or members
                  or managers of Tenant to execute and deliver this Lease on
                  behalf of Tenant, and, and that this Lease is binding upon
                  Tenant in accordance with its terms.

35.      FINANCIAL STATEMENTS. Tenant shall furnish to Landlord upon request
         Tenant's most recent annual audited financial statements. If requested
         by Landlords Lender Tenant shall furnish to Landlord from time to time,
         within 30 days of request, Tenant's most recent financial statements,
         including at a minimum a balance sheet, income statement and statement
         of changes in financial condition, or the equivalent, dated as of and
         for a period ending not more than one quarter prior to the date of
         delivery. Such statements shall be in the form furnished to Tenant's
         principal lender and/or to Tenant's shareholders or other owners, but
         at a minimum shall be reviewed or compiled by an independent certified
         public accountant. Tenant shall accompany such statements with a
         certificate of its chief financial officer that the statements fairly
         present the financial condition and results of operations of Tenant as
         of and for the period ending on the date of such statements.

36.      BROKERAGE FEE. Landlord shall pay a market standard brokerage fee equal
         to the sum of five percent (5%) of the aggregate Base Monthly Rent for
         the first sixty months of the Lease Term, plus two and one-half percent
         (2-1/2%) of the aggregate Base Monthly Rent for the next thirty-six
         (60) months. The total brokerage fee shall be reduced by $31,007, which
         will be credited to Tenant as payment towards its first months rent
         due. The commission shall be due and payable 10 days after the
         expiration of Tenants right to cancel lease as specified in Section 24
         of this Lease. The brokerage fee shall be split evenly between the two
         agents listed in Section 1 of this Lease. Each party represents and
         warrants to the other that it has not had dealings with any real estate
         broker or agent, or salesperson other than the agents identified in
         Section 1, such that the other party would have any liability for any
         commissions or other compensation to such broker, agent or salesperson,
         and that no such broker, agent salesperson has asserted any claim or
         right to any such commission or other compensation. Each party so
         representing and warranting shall defend and indemnify the other party
         and hold the other party harmless from and against any and all loss,
         cost, liability, damage and expense (including reasonable attorneys'
         fees) whatsoever that may arise out of the breach of such
         representation and warranty.

         EXECUTED the day and year above written.

LANDLORD:

                                       24
<PAGE>

LAGUNA SOUTH EXCHANGE LLC,
a Washington limited liability company
By Exchange Properties Corporation,
a Washington corporation, Member
---------------------------------------

By:
      ---------------------------------

Its:
      ---------------------------------

TENANT:

ADVANCED DIGITAL INFORMATION
CORPORATION, a Washington corporation
---------------------------------------

By:   /s/ Jon Gacek
      ---------------------------------

Its:   CFO
      ---------------------------------

                                       25

<PAGE>

STATE OF WASHINGTON        )
                           ) ss.
COUNTY OF__________________)

     On this _____ day of ______________________,____, before me, the
undersigned, a Notary Public in and for the State of Washington, personally
appeared _____________________, to me known to be the ________________ of
_________________, the ______________ that executed the foregoing instrument,
and acknowledged the said instrument to be the free and voluntary act and deed
of said corporation for the uses and purposes therein mentioned, and on oath
stated that he/she was duly authorized to execute the said instrument on behalf
of said corporation.

     WITNESS MY HAND AND OFFICIAL SEAL hereto affixed the day and year first
above written.

                   ___________________________________________________________

                   Name_______________________________________________________

                   NOTARY PUBIC in and for the State of Washington residing at

                   __________________________________________________________.

                   My commission expires ____________________________________.

STATE OF WASHINGTON      )
                         ) ss.
COUNTY OF KING           )

     On this 9th day of MARCH 2000, before me, the undersigned, a Notary
Public in and for the State of WASHINGTON, personally appeared JON GACEK, to
me known to be the Sr. VP & CFO of ADIC, the tenant that executed the
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said ______________, for the uses and purposes
therein mentioned, and on oath stated that he/she was authorized to execute
said instrument on behalf of the ADIC.

     WITNESS MY HAND AND OFFICIAL SEAL hereto affixed the day and year first
above written.

[SEAL]             /s/ Pauline Dorothy Arevalo
                   -----------------------------------------------------------
                   Name    Pauline Dorothy Arevalo
                         -----------------------------------------------------
                   NOTARY PUBLIC in and for the State of Washington residing at
                   Kirkland.
                   My commission expires 01-20-03.

                                       26
<PAGE>

                                   EXHIBIT A

                                  THE BUILDING

                                     [MAP]

                                       27

<PAGE>

                                   EXHIBIT B

                               LEGAL DESCRIPTION

LEGAL DESCRIPTION:

THAT PORTION OF LOTS 18 AND 19 OF MARYMOOR BUSINESS CAMPUS, AS PER PLAT RECORDED
IN VOLUME 117 OF PLATS, PAGES 25 THROUGH 29, RECORDS OF KING COUNTY, AS FOLLOWS:

BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 18;
THENCE SOUTH 88 DEG. 12' 44" EAST ALONG THE SOUTH LINE OF SAID LOTS 18 AND 19, A
DISTANCE OF 342.77 FEET;
THENCE NORTH 01 DEG. 47' 16" EAST PARALLEL WITH THE WEST LINE OF LOT 19, A
DISTANCE OF 414.97 FEET TO THE NORTHERLY LINE OF SAID LOT 19;
THENCE NORTH 88 DEG. 12' 44" WEST 3.17 FEET TO A POINT OF CURVE IN SAID
NORTHERLY LINE;
THENCE ALONG SAID CURVE TO THE LEFT, HAVING A RADIUS OF 25.00 FEET THROUGH A
CENTRAL ANGLE OF 38 DEG. 12' 48", AN ARC DISTANCE OF 16.67 FEET TO A POINT OF
REVERSE CURVE IN SAID NORTHERLY LINE;
THENCE ON SAID CURVE TO THE RIGHT ALONG SAID NORTHERLY LINE AND THE
NORTHEASTERLY LINE OF SAID LOT 18, HAVING A RADIUS OF 45.00 FEET, THROUGH A
CENTRAL ANGLE OF 128 DEG. 12' 48", AN ARC DISTANCE OF 100.70 FEET TO THE NORTH
LINE OF SAID LOT 18;
THENCE NORTH 88 DEG. 12' 44" WEST 255.00 FEET TO THE NORTHWEST CORNER OF SAID
LOT 18;
THENCE SOUTH 01 DEG. 18' 42" WEST 444.99 FEET TO THE POINT OF BEGINNING;

(ALSO KNOWN AS PARCEL 1 OF CITY OF REDMOND LOT LINE ADJUSTMENT NO. SS-83-42,
RECORDED UNDER RECORDING NO. 8312291131);

SITUATE IN THE CITY OF REDMOND, COUNTY OF KING, STATE OF WASHINGTON.

                                       28

<PAGE>

                                   EXHIBIT C

                           NEW PARKING CONFIGURATION

               SECTION 12, TOWNSHIP 25 NORTH, RANGE 5 EAST, W.M.

                                     [MAP]

                                       29
<PAGE>

                          RIDER--OPTION TO EXTEND TERM

         R1. Tenant shall have one (1) option to extend the Term for an
additional five (5) years (the "Extended Term"), provided that Tenant is not in
default at the time of exercise of the option or commencement of the Extended
Term (unless the default is cured within any applicable cure period). Tenant
shall exercise that option by giving Landlord written notice of its election
to do so no less than nine (9) months prior to the end of the Term ("Tenant's
Notice of Exercise"). The exercise of such option to extend shall be for the
entire Premises and shall be on the same terms and conditions as set forth in
the Lease except that the Base Monthly Rent shall be adjusted as set forth
below. The option provided in this Rider is personal to Tenant and may not be
exercised by any assignee of Tenant or subtenant of the Premises and may not
be exercised during any period in which more than fifty percent (50%) of the
RSF of the Premises is subleased by Tenant.

         R2. Upon receipt of Tenant's Notice of Exercise, Landlord shall advise
Tenant in writing of Landlord's calculation of the Base Monthly Rent for the
Extended Term, which shall be equal to the fair market rental value of the
Premises for a five (5) year term, but not less than Base Monthly Rent during
the Term (the "Fair Market Rental"), not later than six (6) months prior to the
end of the Term. If Tenant disagrees with such calculation, it shall advise
Landlord in writing thereof within twenty (20) days thereafter, and the parties
shall promptly meet to attempt to resolve their differences. If these
differences as to Fair Market Rental are not resolved within a two (2) month
period, then the parties shall submit the matter to arbitration in accordance
with the terms of paragraph C below so that Fair Market Rental is determined no
later than three (3) months prior to the end of the Term.

         R3. If the parties are unable to reach agreement on Fair Market Rental
during the period specified in paragraph B, then within ten (10) days thereafter
either party may advise the other in writing of the name and address of its
arbitrator. The arbitrator shall be a licensed commercial real estate broker or
appraiser (MAI or member of a successor or similar institution) with at lease
ten (10) years experience dealing with rental rates in the Redmond, Washington
and greater Eastside areas. The duty of any and all arbitrator(s) appointed
under this paragraph shall be to determine the Fair Market Rental. In doing so,
Fair Market Rental for purposes of this determination shall not include the
value of any improvements made by Tenant to the Premises; provided that, if
Landlord reimburses Tenant for the unamortized costs of those improvements
(using a 15-year straight-line amortization schedule to determine those costs),
the value of those improvements shall be included in the determination of Fair
Market Rental.

         R3.1 Within ten (10) business days after receipt of such notice from
the initiating party (the "Instigator") designating its arbitrator, the other
party (the "Recipient") shall give notice to Instigator, specifying the name
and address of the person designated by Recipient to act as arbitrator on its
behalf who shall be similarly qualified. If Recipient fails to notify
Instigator of the appointment of its arbitrator, within or by the time above
specified, then the arbitrator appointed by Instigator shall be the
arbitrator to determine the issue. If two (2) arbitrators are so chosen the
arbitrators so chosen shall meet within ten (10) business days after the
second arbitrator is appointed. The arbitrators shall have the right to
consult experts and competent authorities with factual information or
evidence pertaining to a determination of Fair Market Rental, but any such
consultation shall be made in the presence of both parties with full right on
their part to cross-examine. The arbitrators shall have no power to modify
the provisions of this Lease. Any decision rendered by an arbitrator or
arbitrators concerning Fair Market Rental shall be in writing and delivered
in counterparts to the parties.

                                       30

<PAGE>

         R3.2 If within ten (10) business days after such first meeting the two
arbitrators shall be unable to agree promptly upon a determination of Fair
Market Rental, they, themselves, shall appoint a third arbitrator, who shall be
a competent and impartial person with qualifications similar to those required
of the first two arbitrators. If they are unable to agree upon such appointment
within five (5) business days after expiration of said ten (10) day period, the
third arbitrator shall be selected by the parties themselves, if they can agree
thereon, within a further period of ten (10) business days. If the parties do
not so agree, then either party, on behalf or both, may request appointment of
such a qualified person by the then presiding judge of King County Superior
Court acting in his or her private non-judicial capacity, and the other party
shall not raise any question as to such Judge's full power and jurisdiction to
entertain the application for and make the appointment. The request to the
presiding judge shall include a request to make that appointment within ten (10)
business days. The person appointed by the presiding judge shall be the third
arbitrator, and the parties agree to indemnify and hold the presiding judge
fully and completely harmless from and against all claims arising out of the
presiding judge's appointment of that arbitrator.

         R3.3 The three (3) arbitrators shall decide the dispute by following
the procedure set forth in this Section. Within ten (10) business days after
appointment of the third arbitrator, the arbitrators selected by each of the
parties shall state in writing his or her determination of the Fair Market
Rental supported by the reasons therefor with counterpart copied to each party.
The arbitrators shall arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to select which of the
two proposed resolutions most closely approximates his or her determination of
Fair Market Rental. The third arbitrator shall have no right to propose a middle
ground or any modification of either of the two proposed resolutions. The
resolution he or she chooses as most closely approximating his or her
determination shall constitute the decision of the arbitrators and be final and
binding upon the parties. The third arbitrator shall render his or her decision
in writing, with counterpart copies to each party, within ten (10) business days
after submission of the proposed resolutions by the other two arbitrators.

         R3.4 In the event of a failure, refusal or inability of any arbitrator
to act, his or her successor shall be appointed by him, but in the case of the
third arbitrator, his or her successor shall be appointed in the same manner as
provided for appointment of the third arbitrator. Each party shall pay the fee
and expenses of its respective arbitrator and both shall share equally the fee
and expenses of the third arbitrator, if any, and the attorneys' fees and
expenses of counsel for the respective parties and of witnesses shall be paid by
the respective party engaging such counsel or calling such witnessses.

                                       31<PAGE>

                                                                    EXHIBIT 4.20

                                  A/B EXCHANGE
                          REGISTRATION RIGHTS AGREEMENT

                            Dated as of June 16, 2000
                                  by and among

                          Tenet Healthcare Corporation

                                       and

              Donaldson, Lufkin & Jenrette Securities Corporation,
                          J.P. Morgan Securities Inc.,
                         Banc of America Securities LLC,
                                       and
               Merrill Lynch, Pierce, Fenner & Smith Incorporated

 -------------------------------------------------------------------------------

<PAGE>

     This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of June 16, 2000, by and among Tenet Healthcare Corporation, a Nevada
corporation (the "COMPANY"), and Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), J.P. Morgan Securities Inc., Banc of America Securities LLC
and Merrill Lynch, Pierce, Fenner & Smith Incorporated (collectively, the
"INITIAL PURCHASERS"). Each of the Initial Purchasers has agreed to purchase the
Company's 9 1/4% Senior Notes due 2010 (thE "SERIES A Notes"), pursuant to the
Purchase Agreement (as defined below).

     This Agreement is made pursuant to the Purchase Agreement, dated June 13,
2000 (the "PURCHASE AGREEMENT"), by and among the Company and the Initial
Purchasers. In order to induce the Initial Purchasers to purchase the Series A
Notes, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchasers set forth in Section 2 of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Indenture, dated as of June 16, 2000,
between the Company and the Bank of New York, as Trustee (the "INDENTURE")
relating to the Series A Notes and the Series B Notes (as defined below).

     The parties hereby agree as follows:

SECTION 1. DEFINITIONS

     As used in this Agreement, the following capitalized terms shall have the
following meanings:

     ACT: The Securities Act of 1933, as amended.

     AFFILIATE: As defined in Rule 144 of the Act.

     BROKER-DEALER: Any broker or dealer registered under the Exchange Act.

     CLOSING DATE: The date hereof.

     COMMISSION: The Securities and Exchange Commission.

     CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes of
this Agreement upon the occurrence of (a) the filing and effectiveness under the
Act of the Exchange Offer Registration Statement relating to the Series B Notes
to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the period required pursuant to Section
3(b) hereof and (c) the delivery by the Company to the Registrar under the
Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.

     CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.

     CONTROLLING PERSON: As defined in Section 8(a) hereof.

<PAGE>

     EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.

     EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.

     EXCHANGE OFFER: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by Holders in connection with such exchange and
issuance.

     EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.

     EXEMPT RESALES: The transactions in which the Initial Purchasers propose to
sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and pursuant to Regulation S under
the Act.

     FILING DATE: As defined in Section 3(a) hereof.

     FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.

     HOLDERS: As defined in Section 2 hereof.

     INDEMNIFIED PERSON: As defined in Section 8(a) hereof.

     LIABILITIES: As defined in Section 8(a) hereof.

     OFFERING MEMORANDUM: As defined in Section 8(a) hereof.

     PROSPECTUS: The prospectus included in a Registration Statement at the time
such Registration Statement is declared effective, as amended or supplemented by
any prospectus supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by reference into such
Prospectus.

     RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.

     REGISTRATION DEFAULT: As defined in Section 5 hereof.

     REGISTRATION STATEMENT: Any registration statement of the Company relating
to (a) an offering of Series B Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, in each case, (i) that is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.

     REGULATION S: Regulation S promulgated under the Act.

                                       -2-

<PAGE>

     RULE 144: Rule 144 promulgated under the Act.

     SERIES B NOTES: The Company's 9 1/4 Senior Notes due 2010 to be issued
pursuant to the Indenture: (i) in the Exchange Offer or (ii) as contemplated by
Section 4 hereof.

     SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.

     SUSPENSION NOTICE: As defined in Section 6(d) hereof.

     TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indenture.

     TRANSFER RESTRICTED SECURITIES: Each Series A Note, until the earliest to
occur of (a) the date on which such Series A Note is exchanged in the Exchange
Offer for a Series B Note which is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (b) the date on which such Series A Note has been disposed of in
accordance with a Shelf Registration Statement (and the purchasers thereof have
been issued Series B Notes), or (c) the date on which such Series A Note may be
resold to the public pursuant to Rule 144 (k) under the Act and each Series B
Note until the date on which such Series B Note is disposed of by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including the delivery of the Prospectus
contained therein).

SECTION 2. HOLDERS

     A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER") whenever such Person owns Transfer Restricted Securities.

SECTION 3. REGISTERED EXCHANGE OFFER

     (a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company shall (i) cause the Exchange Offer Registration Statement to
be filed with the Commission as soon as practicable after the date of the filing
(the "FILING DATE") of the Company's Annual Report on Form 10-K for the year
ending May 31, 2000, but in no event later than 30 days after the Filing Date
(such 30th day being the "FILING DEADLINE"), (ii) use its commercially
reasonable efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 180 days
after the Filing Date (such 180th day being the "EFFECTIVENESS DEADLINE"), (iii)
in connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective and (B) cause all necessary filings, if any, in connection
with the registration and qualification of the Series B Notes to be made under
the Blue Sky laws of such jurisdictions as are necessary to permit Consummation
of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, use its commercially reasonable efforts to commence and
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting (i) registration of the Series B Notes to be offered in exchange
for the Series A Notes that are Transfer Restricted Securities and (ii) resales
of Series B Notes by Broker-Dealers that tendered into the Exchange Offer
Series A

                                       -3-

<PAGE>

Notes that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its Affiliates) as contemplated by
Section 3(c) below.

     (b) The Company shall use its commercially reasonable efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; PROVIDED, HOWEVER, that in no event shall such period be less
than 20 Business Days. The Company shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
Series B Notes shall be included in the Exchange Offer Registration Statement.
The Company shall use its commercially reasonable efforts to cause the Exchange
Offer to be Consummated on the earliest practicable date after the Exchange
Offer Registration Statement has become effective, but in no event later than 30
business days thereafter (such 30th day being the "CONSUMMATION DEADLINE").

     (c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement.

     Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company shall
permit the use of the Prospectus contained in the Exchange Offer Registration
Statement by such Broker-Dealer to satisfy such prospectus delivery requirement.
To the extent necessary to ensure that the Prospectus contained in the Exchange
Offer Registration Statement is available for sales of Series B Notes by
Broker-Dealers, the Company agrees to use its commercially reasonable efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Section 6(a) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of 180 days from the Consummation
Deadline or such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold pursuant
thereto. The Company shall provide sufficient copies of the latest version of
such Prospectus to such Broker-Dealers, promptly upon request, and in no event
later than one business day after such request, at any time during such period.

                                       -4-

<PAGE>

SECTION 4. SHELF REGISTRATION

     (a) SHELF REGISTRATION. If (i) the Exchange Offer is not permitted by
applicable law (after the Company has complied with the procedures set forth in
Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 Business Days following the Consummation
Deadline that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the Series
B Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (C)
such Holder is a Broker-Dealer and holds Series A Notes acquired directly from
the Company or any of its Affiliates, then the Company shall:

                  (x) cause to be filed, on or prior to 30 days after the
         earlier of (i) the date on which the Company determines that the
         Exchange Offer Registration Statement cannot be filed as a result of
         clause (a)(i) above and (ii) the date on which the Company receives the
         notice specified in clause (a)(ii) above, (such earlier date, the
         "FILING DEADLINE"), a shelf registration statement pursuant to Rule 415
         under the Act (which may be an amendment to the Exchange Offer
         Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating
         to all Transfer Restricted Securities, and

                  (y) shall use its commercially reasonable efforts to cause
         such Shelf Registration Statement to become effective on or prior to 60
         days after the Filing Deadline for the Shelf Registration Statement
         (such 60th day, the "EFFECTIVENESS DEADLINE").

     If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; PROVIDED that,
in such event, the Company shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).

     To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company shall
use its commercially reasonable efforts to keep any Shelf Registration Statement
required by this Section 4(a) continuously effective, supplemented, amended and
current as required by and subject to the provisions of Sections 6(b) and (c)
hereof and in conformity with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of at least two years (as extended pursuant to Section
6(c)(i)) following the Closing Date, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Shelf Registration
Statement have been sold pursuant thereto.

     (b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor,

                                       -5-

<PAGE>

the information specified in Item 507 or 508 of Regulation S-K, as applicable,
of the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein and such other information
as the Company may reasonably request. No Holder of Transfer Restricted
Securities shall be entitled to liquidated damages pursuant to Section 5 hereof
unless and until such Holder shall have provided all such information. Each
selling Holder agrees to promptly furnish additional information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.

SECTION 5. LIQUIDATED DAMAGES

     If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded by a post-effective amendment or a
Prospectus supplement to such Registration Statement that cures such failure and
that is itself declared effective promptly (each such event referred to in
clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the Company hereby
agrees to pay to each Holder of Transfer Restricted Securities affected thereby
liquidated damages in an amount equal to $.05 per week per $1,000 in principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues for the first 90-day
period immediately following the occurrence of such Registration Default. The
amount of the liquidated damages shall increase by an additional $.05 per week
per $1,000 in principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of liquidated damages of $.35 per week per $1,000 in
principal amount of Transfer Restricted Securities; PROVIDED that the Company
shall in no event be required to pay liquidated damages for more than one
Registration Default at any given time. Notwithstanding anything to the contrary
set forth herein, (1) upon filing of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (i)
above, (2) upon the effectiveness of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (ii)
above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above,
or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, the
liquidated damages payable with respect to the Transfer Restricted Securities as
a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.

     All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Series A Notes. Notwithstanding the fact that any securities for which
liquidated damages are due cease to be Transfer Restricted Securities, all
obligations of the Company to pay liquidated damages with respect to such
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.

                                       -6-

<PAGE>

SECTION 6. REGISTRATION PROCEDURES

     (a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the Exchange
Offer, the Company shall (x) comply with all applicable provisions of Section
6(c) below, (y) use its commercially reasonable efforts to effect such exchange
and to permit the resale of Series B Notes by Broker-Dealers that tendered, in
the Exchange Offer, Series A Notes that such Broker-Dealer acquired for its own
account as a result of its market making activities or other trading activities
(other than Series A Notes acquired directly from the Company or any of its
Affiliates) being sold in accordance with the intended method or methods of
distribution thereof, and (z) comply with all of the following provisions:

                  (i) If, following the date hereof there has been announced a
         change in Commission policy with respect to exchange offers such as the
         Exchange Offer, that in the reasonable opinion of counsel to the
         Company raises a substantial question as to whether the Exchange Offer
         is permitted by applicable federal law, the Company hereby agrees to
         seek a no-action letter or other favorable decision from the Commission
         allowing the Company to Consummate an Exchange Offer for such Transfer
         Restricted Securities. In connection with the foregoing, the Company
         hereby agrees, if commercially reasonable, to take all such other
         actions as may be requested by the Commission or otherwise required in
         connection with the issuance of such decision, including without
         limitation (A) participating in telephonic conferences with the
         Commission, (B) delivering to the Commission staff an analysis prepared
         by counsel to the Company setting forth the legal bases, if any, upon
         which such counsel has concluded that such an Exchange Offer should be
         permitted and (C) diligently pursuing a resolution (which need not be
         favorable) by the Commission staff.

                  (ii) As a condition to its participation in the Exchange
         Offer, each Holder of Transfer Restricted Securities (including,
         without limitation, any Holder who is a Broker Dealer) shall furnish,
         upon the request of the Company, prior to the Consummation of the
         Exchange Offer, a written representation to the Company (which may be
         contained in the letter of transmittal contemplated by the Exchange
         Offer Registration Statement) to the effect that (A) it is not an
         Affiliate of the Company, (B) it is not engaged in, and does not intend
         to engage in, and has no arrangement or understanding with any person
         to participate in, a distribution of the Series B Notes to be issued in
         the Exchange Offer and (C) it is acquiring the Series B Notes in its
         ordinary course of business. Each Holder using the Exchange Offer to
         participate in a distribution of the Series B Notes hereby acknowledges
         and agrees that, if the resales are of Series B Notes obtained by such
         Holder in exchange for Series A Notes acquired directly from the
         Company or an Affiliate thereof, it (1) could not, under Commission
         policy as in effect on the date of this Agreement, rely on the position
         of the Commission enunciated in MORGAN STANLEY AND CO. INC. (available
         June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13,
         1988), as interpreted in the Commission's letter to SHEARMAN & STERLING
         dated July 2, 1993, and similar no-action letters (including, if
         applicable, any no-action letter obtained pursuant to clause (i)
         above), and (2) must comply with the registration and prospectus
         delivery requirements of the Act in connection with a secondary resale
         transaction and that such a secondary resale transaction must be
         covered by an effective registration statement containing the selling
         security holder information required by Item 507 or 508, as applicable,
         of Regulation S-K.

                                       -7-

<PAGE>

                  (iii) Prior to effectiveness of the Exchange Offer
         Registration Statement, the Company shall provide a supplemental letter
         to the Commission (A) stating that the Company is registering the
         Exchange Offer in reliance on the position of the Commission enunciated
         in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), MORGAN
         STANLEY AND CO. INC. (available June 5, 1991) as interpreted in the
         Commission's letter to SHEARMAN & STERLING dated July 2, 1993, and, if
         applicable, any no-action letter obtained pursuant to clause (i) above,
         (B) including a representation that the Company has not entered into
         any arrangement or understanding with any Person to distribute the
         Series B Notes to be received in the Exchange Offer and that, to the
         best of the Company's information and belief, each Holder participating
         in the Exchange Offer is acquiring the Series B Notes in its ordinary
         course of business and has no arrangement or understanding with any
         Person to participate in the distribution of the Series B Notes
         received in the Exchange Offer and (C) any other undertaking or
         representation required by the Commission as set forth in any no-action
         letter obtained pursuant to clause (i) above, if applicable.

     (b) SHELF REGISTRATION STATEMENT. In connection with the Shelf Registration
Statement, if any, the Company shall (i) (x) comply with all the provisions of
Section 6(c) below and (y) use its commercially reasonable efforts to effect
such registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof
(as indicated in the information furnished to the Company pursuant to Section
4(b) hereof), and pursuant thereto the Company will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof; and

                  (ii) issue, subject to compliance with the applicable
         Indenture, upon the request of any Holder or purchaser of Series A
         Notes covered by any Shelf Registration Statement contemplated by
         this Agreement, Series B Notes having an aggregate principal amount
         equal to the aggregate principal amount of Series A Notes sold
         pursuant to the Shelf Registration Statement and surrendered to the
         Company for cancellation; the Company shall register Series B Notes
         on the Shelf Registration Statement for this purpose and issue the
         Series B Notes to the purchaser(s) of securities subject to the
         Shelf Registration Statement in the names as such purchaser(s) shall
         designate; PROVIDED, that the Holder shall pay any transfer taxes or
         other fees charged in connection with such registration of Series B
         Notes.

     (c) GENERAL PROVISIONS. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Company shall:

                  (i) use its commercially reasonable efforts to keep such
         Registration Statement continuously effective and provide all requisite
         financial statements for the period specified in Section 3 or 4 of this
         Agreement, as applicable. Upon the occurrence of any event that would
         cause any such Registration Statement or the Prospectus contained
         therein (A) to contain an untrue statement of material fact or omit to
         state any material fact necessary to make the statements therein not
         misleading or (B) not to be effective and usable for resale of Transfer
         Restricted Securities during the period required by this Agreement, the
         Company

                                       -8-
<PAGE>

         shall use its commercially reasonable efforts to file promptly an
         appropriate amendment or Prospectus supplement to such Registration
         Statement curing such defect, and, if Commission review is required,
         use its commercially reasonable efforts to cause such amendment to be
         declared effective as soon as practicable;

                  (ii) use its commercially reasonable efforts to prepare and
         file with the Commission such amendments and post-effective amendments
         to the applicable Registration Statement as may be necessary to keep
         such Registration Statement effective for the applicable period set
         forth in Section 3 or 4 hereof, as the case may be; cause the
         Prospectus to be supplemented by any required Prospectus supplement,
         and as so supplemented to be filed pursuant to Rule 424 under the Act,
         and to comply fully with Rules 424, 430A and 462, as applicable, under
         the Act in a timely manner; and comply with the provisions of the Act
         in connection with the disposition of all securities covered by such
         Registration Statement during the applicable period in accordance with
         the intended method or methods of distribution by the sellers thereof
         set forth in such Registration Statement or supplement to the
         Prospectus;

                  (iii) advise each Holder promptly and, if requested by such
         Holder, confirm such advice in writing, (A) when the Prospectus or any
         Prospectus supplement or post-effective amendment has been filed, and,
         with respect to any applicable Registration Statement or any
         post-effective amendment thereto, when the same has become effective,
         (B) of any request by the Commission for amendments to the Registration
         Statement or amendments or supplements to the Prospectus or for
         additional information relating thereto, (C) of the issuance by the
         Commission of any stop order suspending the effectiveness of the
         Registration Statement under the Act or of the suspension by any state
         securities commission of the qualification of the Transfer Restricted
         Securities for offering or sale in any jurisdiction, or the initiation
         of any proceeding for any of the preceding purposes, (D) of the
         existence of any fact or the happening of any event that makes any
         statement of a material fact made in the Registration Statement, the
         Prospectus, any amendment or supplement thereto or any document
         incorporated by reference therein untrue, or that requires the making
         of any additions to or changes in the Registration Statement in order
         to make the statements therein not misleading, or that requires the
         making of any additions to or changes in the Prospectus in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading. If at any time the Commission
         shall issue any stop order suspending the effectiveness of the
         Registration Statement, or any state securities commission or other
         regulatory authority shall issue an order suspending the qualification
         or exemption from qualification of the Transfer Restricted Securities
         under state securities or Blue Sky laws, the Company shall use its
         commercially reasonable efforts to obtain the withdrawal or lifting of
         such order at the earliest possible time;

                  (iv) subject to Section 6(c)(i), if any fact or event
         contemplated by Section 6(c)(iii)(D) above shall exist or have
         occurred, use commercially reasonable efforts to prepare a supplement
         or post-effective amendment to the Registration Statement or related
         Prospectus or any document incorporated therein by reference or file
         any other required document so that, as thereafter delivered to the
         purchasers of Transfer Restricted Securities, the Prospectus will not
         contain an untrue statement of a material fact or omit to state any

                                       -9-

<PAGE>

         material fact necessary to make the statements therein, in the light of
         the circumstances under which they were made, not misleading;

                  (v) furnish to each Holder in connection with such exchange or
         sale, if any, before filing with the Commission, copies of any
         Registration Statement or any Prospectus included therein or any
         amendments or supplements to any such Registration Statement or
         Prospectus (including all documents incorporated by reference after the
         initial filing of such Registration Statement), which documents will be
         subject to the review and comment of such Holders in connection with
         such sale, if any, for a period of at least five Business Days if
         practicable, or such shorter time period as is practicable, and the
         Company will not file any such Registration Statement or Prospectus or
         any amendment or supplement to any such Registration Statement or
         Prospectus (including all such documents incorporated by reference) to
         which such Holders shall reasonably object within five Business Days
         after the receipt thereof. A Holder shall be deemed to have reasonably
         objected to such filing only if such Registration Statement, amendment,
         Prospectus or supplement, as applicable, as proposed to be filed,
         contains an untrue statement of a material fact or omits to state any
         material fact necessary to make the statements therein not misleading
         or fails to comply with the applicable requirements of the Act;

                  (vi) make available, at reasonable times, for inspection by
         one Holder designated by a majority of the Holders and any attorney or
         accountant retained by such Holders, all financial and other records,
         pertinent corporate documents of the Company and cause the Company's
         officers, directors and employees to supply all information reasonably
         requested by any such Holder, attorney or accountant in connection with
         such Registration Statement or any post-effective amendment thereto
         subsequent to the filing thereof and prior to its effectiveness;

                  (vii) if requested by any Holders in connection with such
         exchange or sale, promptly include in any Registration Statement or
         Prospectus, pursuant to a supplement or post-effective amendment if
         necessary, such information as such Holders may reasonably request to
         have included therein, including, without limitation, information
         relating to the "Plan of Distribution" of the Transfer Restricted
         Securities; PROVIDED, that the Company shall not be required to
         participate in a distribution of any derivative security by or on
         behalf of any Holder; and make all required filings of such Prospectus
         supplement or post-effective amendment as soon as practicable after the
         Company is notified of the matters to be included in such Prospectus
         supplement or post-effective amendment;

                  (viii) deliver to each Holder without charge, as many copies
         of the Prospectus (including each preliminary prospectus) and any
         amendment or supplement thereto as such Persons reasonably may request;
         the Company hereby consents to the use (in accordance with law) of the
         Prospectus and any amendment or supplement thereto by each selling
         Holder in connection with the offering and the sale of the Transfer
         Restricted Securities covered by the Prospectus or any amendment or
         supplement thereto;

                  (ix) upon the request of any Holder, enter into such
         commercially reasonable agreements (including underwriting agreements)
         and make such customary representations

                                      -10-

<PAGE>

         and warranties and take all such other commercially reasonable actions
         in connection therewith in order to expedite or facilitate the
         disposition of the Transfer Restricted Securities pursuant to any
         applicable Registration Statement contemplated by this Agreement as may
         be reasonably requested by any Holder in connection with any sale or
         resale pursuant to any applicable Registration Statement. In such
         connection, the Company shall:

                  (A) upon request of any Holder or underwriter of a resale of
         Series A Notes or Series B Notes, furnish (or in the case of paragraphs
         (2) and (3), use its commercially reasonable efforts to cause to be
         furnished) to each such Holder or underwriter upon the effectiveness of
         the Shelf Registration Statement:

                           (1) a certificate, dated such date, signed on behalf
                  of the Company by (x) the President or any Vice President and
                  (y) a principal financial or accounting officer of the
                  Company, confirming, as of the date thereof, the matters set
                  forth in Sections 8(a), 8(b) and 8(c) of the Purchase
                  Agreement and such other similar matters as such Holders may
                  reasonably request;

                           (2) an opinion, dated the date of Consummation of the
                  Exchange Offer or the date of effectiveness of the Shelf
                  Registration Statement, as the case may be, of counsel for the
                  Company covering matters similar to those set forth in
                  paragraph (e) of Section 8 of the Purchase Agreement and such
                  other matters as such Holder may reasonably request, and in
                  any event including a statement to the effect that such
                  counsel has participated in conferences with officers and
                  other representatives of the Company, representatives of the
                  independent public accountants for the Company and have
                  considered the matters required to be stated therein and the
                  statements contained therein, although such counsel has not
                  independently verified the exhibits to the Registration
                  Statement or the accuracy, completeness or fairness of such
                  statements; and that such counsel advises that, on the basis
                  of the foregoing, no facts came to such counsel's attention
                  that caused such counsel to believe that the applicable
                  Registration Statement, at the time such Registration
                  Statement or any post-effective amendment thereto became
                  effective and, in the case of the Exchange Offer Registration
                  Statement, as of the date of Consummation of the Exchange
                  Offer, contained an untrue statement of a material fact or
                  omitted to state a material fact required to be stated therein
                  or necessary to make the statements therein not misleading, or
                  that the Prospectus contained in such Registration Statement
                  as of its date and, in the case of the opinion dated the date
                  of Consummation of the Exchange Offer, as of the date of
                  Consummation, contained an untrue statement of a material fact
                  or omitted to state a material fact necessary in order to make
                  the statements therein, in the light of the circumstances
                  under which they were made, not misleading. Without limiting
                  the foregoing, such counsel may state further that such
                  counsel assumes no responsibility for, and has not
                  independently verified, the exhibits to the Registration
                  Statement or the accuracy, completeness or fairness of the
                  financial statements, notes and schedules and other financial
                  data included in any Registration Statement contemplated by
                  this Agreement or the related Prospectus; and

                                      -11-

<PAGE>

                           (3) a customary comfort letter, dated the date of
                  Consummation of the Exchange Offer, or as of the date of
                  effectiveness of the Shelf Registration Statement, as the case
                  may be, from the Company's independent accountants, in the
                  customary form and covering matters of the type customarily
                  covered in comfort letters to underwriters in connection with
                  underwritten offerings, and affirming the matters set forth in
                  the comfort letters delivered pursuant to Section 8(h) of the
                  Purchase Agreement; and

                  (B) deliver such other documents and certificates as may be
         reasonably requested by the selling Holders to evidence compliance with
         the matters covered in clause (A) above and with any customary
         conditions contained in the any agreement entered into by the Company
         pursuant to this clause (ix);

                  (x) prior to any public offering of Transfer Restricted
         Securities, cooperate with the selling Holders and their counsel in
         connection with the registration and qualification of the Transfer
         Restricted Securities under the securities or Blue Sky laws of such
         jurisdictions as the selling Holders may request and do any and all
         other acts or things necessary or advisable to enable the disposition
         in such jurisdictions of the Transfer Restricted Securities covered by
         the applicable Registration Statement; PROVIDED, HOWEVER, that the
         Company shall not be required to register or qualify as a foreign
         corporation where it is not now so qualified or to take any action that
         would subject it to the service of process in suits or to taxation,
         other than as to matters and transactions relating to the Registration
         Statement, in any jurisdiction where it is not now so subject;

                  (xi) in connection with any sale of Transfer Restricted
         Securities that will result in such securities no longer being Transfer
         Restricted Securities, cooperate with the Holders to facilitate the
         timely preparation and delivery of certificates representing Transfer
         Restricted Securities to be sold and not bearing any restrictive
         legends; and to register such Transfer Restricted Securities in such
         denominations and such names as the selling Holders may request at
         least two Business Days prior to such sale of Transfer Restricted
         Securities;

                  (xii) use its commercially reasonable efforts to cause the
         disposition of the Transfer Restricted Securities covered by the
         Registration Statement to be registered with or approved by such other
         governmental agencies or authorities as may be necessary to enable the
         seller or sellers thereof to consummate the disposition of such
         Transfer Restricted Securities, subject to the proviso contained in
         clause (x) above;

                  (xiii) provide a CUSIP number for all Transfer Restricted
         Securities not later than the effective date of a Registration
         Statement covering such Transfer Restricted Securities and provide the
         Trustee under the Indenture with typed certificates for the Transfer
         Restricted Securities which are in a form eligible for deposit with a
         custodian for the Depository Trust Company;

                  (xiv) otherwise use its commercially reasonable efforts to
         comply with all applicable rules and regulations of the Commission, and
         make generally available to its security holders with regard to any
         applicable Registration Statement, as soon as practicable,

                                      -12-

<PAGE>

         a consolidated earning statement meeting the requirements of Rule 158
         (which need not be audited) covering a twelve-month period beginning
         after the effective date of the Registration Statement (as such term is
         defined in paragraph (c) of Rule 158 under the Act); and

                  (xv) cause the Indenture to be qualified under the TIA not
         later than the effective date of the first Registration Statement
         required by this Agreement and, in connection therewith, cooperate with
         the Trustee and the Holders to effect such changes to the Indenture as
         may be required for such Indenture to be so qualified in accordance
         with the terms of the TIA; and execute and use its commercially
         reasonable efforts to cause the Trustee to execute, all documents that
         may be required to effect such changes and all other forms and
         documents required to be filed with the Commission to enable such
         Indenture to be so qualified in a timely manner.

     (d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Date.

SECTION 7. REGISTRATION EXPENSES

     (a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the Series B Notes
to be issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all reasonable fees and disbursements of
counsel for the Company and the Holders of Transfer Restricted Securities; and
(v) all fees and disbursements of independent certified public accountants of
the Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).

                                      -13-

<PAGE>

     The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.

     (b) In connection with any Shelf Registration Statement required by this
Agreement, the Company will reimburse the Holders of Transfer Restricted
Securities who are selling or reselling Series A Notes or Series B Notes
pursuant to the "Plan of Distribution" contained in the Shelf Registration
Statement for the reasonable fees and disbursements of not more than one
counsel, who shall be Sullivan & Cromwell, unless another firm shall be chosen
by the Holders of a majority in principal amount of the Transfer Restricted
Securities for whose benefit such Shelf Registration Statement is being
prepared.

SECTION 8. INDEMNIFICATION

     (a) The Company agrees to indemnify and hold harmless (i) each of the
Holders and their respective affiliates, (ii) each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
any of the Holders or any of their respective affiliates (any of the persons
referred to in this clause (ii) being hereinafter referred to as a "Controlling
Person"), and (iii) each of the respective officers, directors, partners,
employees, representatives and agents of any of the Holders or any Controlling
Person, and each of their respective officers, directors, partners, employees,
representatives and agents (any person referred to in clause (i), (ii) or (iii)
of this Section 8(a) may hereinafter be referred to as an "Indemnified Person")
to the fullest extent lawful, from and against any and all losses, claims,
damages, judgments, actions, costs, assessments, expenses and other liabilities
(collectively, "Liabilities"), including without limitation and as incurred,
reimbursement of all reasonable costs of investigating, preparing, pursuing or
defending any claim or action, or any investigation or proceeding by any
foreign, Federal, state or local authority, regulatory body, administrative
agency, court or other governmental or quasi-governmental body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Person, to the extent such Liabilities are directly or indirectly
caused by, related to, based upon or arising out of, or in connection with, any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or Prospectus (or any supplement
or amendment thereto) provided by the Company to any Holder or prospective
purchaser of Series B Notes or registered Series A Notes, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such Liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission that is (x) made in reliance upon and in conformity
with information relating to any of the Holders furnished in writing to the
Company by or on behalf of a Holder expressly for use therein, or (y) with
respect to the Holder from whom the person asserting the Liabilities purchased
Transfer Restricted Securities, made in any Preliminary Prospectus if a copy of
the Prospectus (as amended or supplemented, if the Company shall have furnished
the Holders with such amendments or supplements thereto on a timely basis) was
not delivered by or on behalf of such Holder to the person asserting the
Liabilities, if required by law to have been so delivered by the Holder seeking
indemnification, at or prior to the written confirmation of the sale of the
Transfer Restricted Securities, and it shall be determined by a court of
competent jurisdiction or binding mediation or arbitration tribunal, in a
judgment or determination not subject

                                      -14-

<PAGE>

to appeal or review, that the Prospectus (as so amended or supplemented) would
have completely corrected such untrue statement or omission in all material
respects. The foregoing indemnity shall be in addition to any liability that the
Company might otherwise have to any of the Holders and such other Indemnified
Persons. The Company shall notify you promptly after becoming aware of the
institution, threat or assertion of any claim, proceeding (including any
governmental investigation) or litigation in connection with the matters
addressed by this Agreement which involves the Company or an Indemnified Person.

     (b) In case any action or proceeding (for all purposes of this Section 8,
including any governmental or quasi-governmental investigation) shall be brought
or asserted against any of the Indemnified Persons with respect to which
indemnity under this Section 8 may be sought against the Company, such
Indemnified Person promptly shall notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person and payment of all reasonable fees and
expenses; PROVIDED, that the delay or failure to give such notice shall not
relieve the Company from any liability that it may have on account of the
indemnity under this Section 8, except to the extent that such delay or omission
materially adversely affects the ability of the Company to defend or assume the
defense of such action or proceeding. Upon receiving such notice, the Company
shall be entitled to participate in any such action or proceeding and/or to
assume, at its sole expense, the defense thereof, with counsel reasonably
satisfactory to such Indemnified Person (who shall not, except with the consent
of the Indemnified Person to be represented, be counsel to the Company or any of
the Subsidiaries) and, after written notice from the Company to such Indemnified
Person of its election so to assume the defense thereof promptly after receipt
of the notice from the Indemnified Person of such action or proceeding, the
Company shall not be liable to such Indemnified Person hereunder for legal
expenses of other counsel subsequently incurred by such Indemnified Person in
connection with the defense thereof, other than reasonable costs of
investigation, unless (i) the Company agrees in writing to pay such fees and
expenses, or (ii) the Company fails promptly to assume such defense or fails to
employ counsel reasonably satisfactory to such Indemnified Person, or (iii) the
named parties to any such action or proceeding (including any impleaded parties)
include both such Indemnified Person and the Company or an affiliate of the
Company, and that Indemnified Person shall have been advised in writing by
counsel, with a copy of such writing to the Company, that either (x) there may
be one or more legal defenses available to such Indemnified Person that are
different from or additional to those available to the Company or such affiliate
or (y) a conflict may exist between such Indemnified Person and the Company or
such affiliate. In the event of any of clause (i), (ii) and (iii) of the
immediately preceding sentence, the Company shall not have the right to assume
the defense thereof on behalf of the Indemnified Person and such Indemnified
Person shall have the right to employ its own counsel (who shall be reasonably
acceptable to the Company and shall not, except with the Company's consent, be
counsel to the Company) in any such action and the reasonable fees and expenses
of such counsel shall be paid, as incurred, by the Company, subject to repayment
to the Company if it is ultimately determined that an Indemnified Person is not
entitled to indemnification hereunder, it being understood, however, that the
Company shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all of the Indemnified Persons, which firm shall be
designated in writing by a majority of the Holders. The Company shall not be
liable for any settlement of any such action or proceeding effected without the

                                      -15-

<PAGE>

Company's written consent, which consent may not be unreasonably withheld, but
if settled with the written consent of the Company, the Company agrees to
indemnify and hold harmless any Indemnified Person from and against any loss or
liability incurred in such settlement. The Company shall not, without the prior
written consent of each Indemnified Person, which consent shall not be
unreasonably withheld, settle, compromise or consent to the entry of any
judgment in or otherwise seek to terminate any pending or threatened action,
claim, suit, investigation or other proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification or
contribution could have been sought hereunder by such Indemnified Person, unless
such settlement, compromise, consent or termination includes an unconditional
release of each Indemnified Person from all liability on claims that are the
subject matter of such proceeding.

     (c) Each of the Holders agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers, and any person
controlling (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company, to the same extent as the foregoing indemnity from
the Company to each of the Indemnified Persons, but only with respect to claims
and actions based on information relating to such Holder furnished in writing by
or on behalf of such Holder expressly for use in any Registration Statement. In
case any action shall be brought against the Company, any of its directors, any
such officer, or any such controlling person in respect of which indemnity is
sought against any Holder pursuant to the foregoing sentence, the Holder shall
have the rights and duties given to the Company (except that if a Holder shall
have assumed the defense thereof, the Company shall not be required to do so,
but may employ separate counsel therein and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of the
Company), and the Company, its directors, any such officers, and each such
controlling person shall have the rights and duties given to the Indemnified
Person by Section 7(b) above. In no event shall any Holder, its directors,
officers or any Person who controls such Holder be liable or responsible for any
amount in excess of the amount by which the total amount received by such Holder
with respect to its sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages that such
Holder, its directors, officers or any Person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.

     (d) If the indemnification provided for in this Section 8 is finally
determined by a court of competent jurisdiction to be unavailable to an
Indemnified Person in respect of any Liabilities referred to herein, then the
Company, in lieu of indemnifying such Indemnified Person, shall contribute to
the amount paid or payable by such Indemnified Person as a result of such
Liabilities: (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Indemnified Person on
the other hand from the sale of the Transfer Restricted Securities, or (ii) if
the allocation provided by clause (i), above, is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i), above, but also the relative fault of the
Company and the Indemnified Person in connection with the actions, statements or
omissions that resulted in such Liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company and the Holder shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact related to information supplied by the Company or the Holder and
the parties' relative intent, knowledge, access to information and

                                      -16-

<PAGE>

opportunity to correct or prevent such statement or omission. The indemnity and
contribution obligations of the Company set forth herein shall be in addition to
any liability or obligation the Company may otherwise have to any Indemnified
Person.

     The Company and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by PRO RATA
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result of the Liabilities referred
to in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, none of the Holders (or any of their related Indemnified Persons
referred to in Section 8 above) shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of Transfer Restricted Securities pursuant
to a Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages or liabilities
which such Holder (and its related Indemnified Persons referred to in Section 8
above) has otherwise been required to pay or incur by reason of such untrue or
alleged untrue statement or omission or alleged omission or other indemnified
action or proceeding. Notwithstanding anything to the contrary contained herein,
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 8(d) are several in proportion to the
respective aggregate principal amount of Transfer Restricted Securities held by
each of the Holders hereunder and not joint.

SECTION 9. RULE 144A AND RULE 144

     The Company agrees with each Holder, for so long as any Transfer Restricted
Securities remain outstanding and during any period in which the Company (i) is
not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon
request of any Holder, to such Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and
(ii) is subject to Section 13 or 15(d) of the Exchange Act, to use its
commercially reasonable efforts to make all filings required thereby in a timely
manner in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144.

SECTION 10. MISCELLANEOUS

     (a) NO INCONSISTENT AGREEMENTS. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.

                                      -17-

<PAGE>

     (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(b)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.

     (c) THIRD PARTY BENEFICIARY. The Holders shall be third party beneficiaries
to the agreements made hereunder between the Company, on the one hand, and the
Initial Purchasers, on the other hand, and shall have the right to enforce such
agreements directly to the extent they may deem such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.

     (d) NOTICES. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:

          (i) if to a Holder, at the address set forth on the records of the
     Registrar under the Indenture, with a copy to the Registrar under the
     Indenture; and

          (ii) if to the Company:

               Tenet Healthcare Corporation
               3820 State Street
               Santa Barbara, California  93105
               Telecopier No.:  (805) 563-7070
               Attention:  General Counsel

With a copy to:

                Skadden, Arps, Slate, Meagher & Flom LLP
                300 South Grand Avenue, Suite 3400
                Los Angeles, California  90071
                Telecopier No.:  (213) 687-5600
                Attention:  Nicholas P. Saggese

     All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.

                                      -18-

<PAGE>

     Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

     (e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; PROVIDED, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.

     (f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

     (h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.

     (i) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

     (j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

                                      -19-

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                    TENET HEALTHCARE CORPORATION

                                    /s/ Stephen D. Farber
                                    -----------------------------------------
                                    By:
                                            Name: Stephen D. Farber
                                            Title: Senior Vice President and
                                                   Treasurer

DONALDSON, LUFKIN & JENRETTE
      SECURITIES CORPORATION

/s/ Chet Mehta
--------------------------------
By:
         Name: Chet Mehta
         Title: Senior Vice President

J.P. MORGAN SECURITIES INC.

/s/ Maria Sramek
--------------------------------
By:
        Name: Maria Sramek
        Title: Vice President

BANC OF AMERICA SECURITIES LLC

/s/ Charles J. Dithoff
--------------------------------
By:
        Name: Charles J. Dithoff
        Title: Managing Director

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

/s/ James D. Forbes
--------------------------------
By:
        Name: James D. Forbes
        Title: Director

                                      -20-

<PAGE>

                                    EXHIBIT A

                               NOTICE OF FILING OF
                    A/B EXCHANGE OFFER REGISTRATION STATEMENT

To:           Donaldson, Lufkin & Jenrette Securities Corporation
              277 Park Avenue
              New York, New York 10172
              Attention: Louise Guarneri (Compliance Department)
              Fax: (212) 892-7272

From:         Tenet Healthcare Corporation
              9 1/4% Senior Notes due 2010

Date:         _________, 2000

              For your information only (NO ACTION REQUIRED):

              Today, __________, 2000, [we filed an A/B Exchange Registration
Statement/a Shelf Registration Statement] with the Securities and Exchange
Commission. We currently expect this registration statement to be declared
effective within ___ business days of the date hereof.

                                      -21-

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