Document:

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                                                                  EXHIBIT 10.3.4

                              Salient Lease Terms

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                                     LEASE

                               650 TOWNSEND STREET
                                SAN FRANCISCO, CA

                                TABLE OF CONTENTS

 1.  SALIENT LEASE TERMS                                                       1
 2.  DEFINITIONS                                                               4
 3.  PREMISES                                                                 10
 4.  TERM                                                                     11
 5.  PRE-TERM POSSESSION                                                      11
 6.  DELAY IN DELIVERY OF POSSESSION                                          11
 7.  MINIMUM RENT                                                             12
 8.  ADDITIONAL RENT                                                          12
 9.  ACCORD AND SATISFACTION                                                  14
10.  SECURITY DEPOSIT                                                         15
11.  USE                                                                      16
12.  COMPLIANCE WITH LAWS AND REGULATIONS                                     17
13.  SERVICE AND EQUIPMENT                                                    25
14.  WASTE                                                                    26
15.  ALTERATIONS                                                              27
16.  PROPERTY INSURANCE                                                       29
17.  INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION                        30
18.  LIABILITY INSURANCE                                                      32
19.  INSURANCE POLICY REQUIREMENTS                                            33
20.  LESSEE INSURANCE DEFAULT                                                 33
21.  FORFEITURE OF PROPERTY AND LESSOR'S LIEN                                 33
22.  MAINTENANCE AND REPAIRS                                                  34
23.  DESTRUCTION                                                              35
24.  CONDEMNATION                                                             36
25.  ASSIGNMENT AND SUBLETTING                                                38
26.  ABANDONMENT                                                              42
27.  ENTRY BY LESSOR                                                          42
28.  SIGNS                                                                    42
29.  DEFAULT                                                                  43
30.  REMEDIES UPON DEFAULT                                                    43
31.  BANKRUPTCY                                                               46
32.  SURRENDER OF LEASE                                                       49
33.  LESSOR'S EXCULPATION                                                     49
34.  ATTORNEYS' FEES                                                          50
35.  NOTICES                                                                  50
36.  SUBORDINATION                                                            51
                                       i.
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37.  ESTOPPEL CERTIFICATES                                                    52
38.  WAIVER                                                                   52
39.  HOLDING OVER                                                             52
40.  SUCCESSORS AND ASSIGNS                                                   53
41.  TIME                                                                     53
42.  EFFECT OF LESSOR'S CONVEYANCE                                            53
43.  COMMON AREAS                                                             53
44.  TRANSFER OF SECURITY                                                     53
45.  LATE CHARGES                                                             54
46.  CORPORATE AUTHORITY                                                      54
47.  MORTGAGEE PROTECTION                                                     54
48.  MISCELLANEOUS PROVISIONS                                                 55
49.  WAIVER OF CALIFORNIA CODE SECTIONS                                       58
50.  SHUTTLE SERVICE                                                          58

                                       ii.
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THIS LEASE is dated for reference purposes only this 11 day of February, 1999.
                                                     --

                            1.   SALIENT LEASE TERMS

1.1  Rent Payment:                       ZORO, LLC
                                         650 Townsend Street
                                         San Francisco, CA 94103
                                         Attn: Building Management Office
                                         Fax No.: (415) 487-4056

1.2  Parties and Notice                  Lessor: ZORO, LLC
     Address:                            650 Townsend Street
                                         San Francisco, CA 94103
                                         Attn: Building Management Office
                                         Fax No.: (415) 487-4056

                                         Lessee:
                                         LINUXCARE, INC., a Delaware Corporation

                                              After commencement at
                                              the Leased Premises
                                              Attention: Arthur Tyde
                                              Fax No: (to be provided after
                                              installation of fax equipment)

                                         (If more than one party, then the
                                         obligations hereunder shall be joint
                                         and several.)

                                                                  (Section 35.1)

                                       1.
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1.3  Premises:                         (A) Name and Location of Complex:
                                           650 Townsend Street
                                           San Francisco, CA
                                       (B) Leased Premises, indicated on
                                             Exhibits C-1 and C-2 and
                                             consisting of the following:

                                                                      Adjusted
                                                         Usable       Rentable
                                           Suite         Area         Area
                                           -----         ----         ----
                                           320           1,145        1,489*
                                           355           2,534        3,294*

                                           Total                      4,783*

                                       (*based on the Usable square feet
                                       multiplied by a load factor of 1.3)

1.4  Term:                             Commencing with respect to each quadrant
                                       as follows:

                                            Suite 355:         February 1, 1999
                                            Suite 320:         May 1, 1999

                                       and expiring with respect to the entire
                                       Leased Premises (the "Expiration Date")
                                       on December 31, 2003.

                                                                   (Section 4.1)

1.5  Rent:                             Minimum Rent:

                                       From the Commencement Date with respect
                                       to each Premises through the Expiration
                                       Date: $129,141 per year; $10,761.75 per
                                       month.

                                                                   (Section 7.2)

1.6  Security Deposit:                 Letter of Credit in an amount of Seventy
                                       Thousand Dollars ($70,000)

                                                                  (Section 10.1)

                                       2.
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1.7  Use:                              The Leased Premises shall be used for
                                       multimedia software research,
                                       development, production, assembly,
                                       testing, engineering, marketing,
                                       distribution, wholesale and retail sales,
                                       licensing, customer service and related
                                       office and administrative functions.

                                                                  (Section 11.1)

1.8  Pro Rata Percent:                 .71%

                                                                   (Section 2.1)
                                                                  (Section 16.3)

1.9  Base Operating Cost               1999 Base Expense Year and 1998-1999
     for the Complex:                  Base Tax Year

                                                                   (Section 8.2)
                                                                  (Section 16.3)

1.10 Real Estate                       Cushman & Wakefield of California, Inc.
     Brokers:                          and Polatnick Properties (Lessor's
                                       Broker) Pacific Union (Lessee's Broker)

                                                                 (Section 48.14)

1.11 Rentable Area of                  670,604 square feet Building at
     Commencement:

1.12 Contents:                         This Lease consists of:
                                       Pages 1 through 59
                                       Sections 1 through 50
                                       Addenda (if any)
                                       Exhibits:
                                         A - Legal Description of Complex
                                         B - Plan of the Complex
                                         C - (C-1 and C-2) Floor Plan of the
                                             Leased Premises
                                         D - Work Letter Agreement
                                         E - Acknowledgment of Commencement
                                         F - Intentionally Omitted.
                                         G - Rules and Regulations
                                         H - Building Standards
                                         I - Intentionally Omitted.
                                         J - Janitorial Specifications

                                       3.
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                                2.  DEFINITIONS

     2.1    The terms defined in this Article 2 shall, for all purposes of this
Lease and all agreements supplemental hereto, have the meanings herein specified
unless expressly stated otherwise.

            "ADJUSTED RENTABLE AREA" means the Usable Area multiplied by 1.2
             ----------------------
except on the 2nd and 3rd floors for which the multiplicand shall be 1.3.

            "ATRIUM" means the Central Atrium on floors 2 through 6 of the
             ------
Building so identified on Exhibits B and C.

            "BASE BUILDING WORK" shall mean the exhaust line, waste line and
             ------------------
domestic water hook ups which Lessor shall stub to the Leased Premises.

            "BASE OPERATING COST" means the sum set forth in Section 1.9 hereof.
             -------------------

            "BOMA" means the standards of measurement adopted by the Building
             ----
Owners and Managers Association, American National Standard, ANSI/BOMA 2.65.1 -
1996 ("BOMA") as modified by Lessor for uniform use in the Complex.

            "BUILDING" shall mean the structure which contains the Leased
             --------
Premises.

            "BUILDING STANDARDS" shall mean Lessor's standard specifications for
             ------------------
construction in the Building as set forth in Exhibit H and as may be established
by Lessor from time to time.

            "COMMENCEMENT DATE" shall mean the earlier of the following dates:
             -----------------

                   (i)   The day upon which Lessee takes possession of the
Leased Premises; or

                   (ii)  The date upon which the Tenant Improvements, including
the Lessee's Work (as herein defined), have been substantially completed as
determined by Lessor's project architect; or

                   (iii) Sixty (60) days following the Delivery Date (as herein
defined).

            "COMMON AREAS" shall mean all areas and facilities outside the
             ------------
Leased Premises within the exterior boundaries of the Complex of which the
Leased Premises form a part, that are provided and designated by Lessor from
time to time for the general use and convenience of Lessee and of other tenants
of Lessor having the common use of such areas, and their respective authorized
representatives and invitees. Common Areas include, without limitation,
corridors, stairways, elevator shafts, janitor rooms, driveways, parking areas,
and landscaped areas all as generally described on Exhibit B attached hereto.
Exhibit B is tentative and Lessor reserves the right to make alterations thereto
from time to time. Other areas may

                                       4.
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be designated by Landlord from time to time as for the exclusive use of certain
lessees and shall cease being Common Areas.

          "COMPLEX" is the real property of which the Leased Premises forms a
           -------
part, including, but not limited to, the Building, parking facility and
landscaping, which property is described with particularity in Exhibit A
attached hereto and made a part hereof by reference.

          "DELIVERY DATE" shall mean the earlier of the following dates: (i) the
           -------------
date upon which Lessee takes possession of the Leased Premises (provided
possession shall not mean Lessee's possession of and entry to the Leased
Premises for the purpose set forth in Section 5.1) or (ii) the date upon which
Lessor's Work with respect to the Leased Premises has been substantially
completed in accordance with Exhibit D; provided, however, in the event
completion of Lessor's Work is delayed by Lessee's Work or other acts of Lessee
or its agents ("Lessee Delay") any such Lessee Delay shall thereupon effect a
postponement of the date at which Lessor is obliged to deliver the Leased
Premises to Lessee by the number of days of Lessee Delay. However, the Delivery
Date and the Commencement Date as would otherwise be established had Lessee
Delay not occurred shall not be postponed by the number of days of Lessee Delay.

          "FORCE MAJEURE" shall mean event(s) beyond the reasonable control of
           -------------
the obligated party such as, for example only, strikes, riots, governmental act
or failure to act, shortage of materials, weather and other such matters over
which the party does not have reasonable control (except matters resulting from
financial insufficiency).

          "LEASE YEAR" means any calendar year, or portion thereof, following
           ----------
the commencement hereof, the whole or any part of which period is included
within the Term.

          "LESSEE'S WORK" shall mean the work of improvement to the Leased
           -------------
Premises to be performed by Lessee in accordance with the Work Letter Agreement
attached hereto as Exhibit D.

          "LESSOR'S WORK" shall mean the following work to be performed by
           -------------
Lessor in accordance with the Work Letter Agreement attached hereto as Exhibit
D: demolition of all walls within the Leased Premises below the ceiling line;
installation of exhaust line, waste line and domestic water hook-ups stubbed to
the Leased Premises and installation of a check meter (the cost of the check
meter and its installation costs shall be deducted from the Allowance, defined
in Exhibit D).

          "LEASED PREMISES" shall mean the portion of space leased to Lessee
           ---------------
hereunder.

          "LINES" shall mean domestic water and waste pipes and lines, exhaust
           -----
pipes and vents, communications, computer, audio and video, security and
electrical (other than electrical wiring within the Leased Premises terminating
at or connected to Building check meters), cables, wires, lines, duct work,
sensors, switching equipment, control boxes, risers and related improvements at
the Complex, Building or the Leased Premises.

                                       5.
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     "MAJOR VERTICAL PENETRATIONS" shall mean stairs, elevator shafts, flues,
      ---------------------------
pipe shafts, vertical ducts, and the like, and their enclosing walls, which
serve more than one floor of the Building, but shall not include stairs,
dumbwaiters, lifts, and the like, exclusively serving a lessee occupying space
on more than one floor.

     "OCCUPIED FLOOR AREA" means that portion of the Rentable Area of the
      -------------------
Complex which is leased and occupied.

     "OPERATING COSTS" means the total amounts paid or payable, whether by
      ---------------
Lessor or others on behalf of Lessor, in connection with the ownership,
maintenance, repair, replacement and operations of the Complex (including,
without limitation, all areas and facilities within the exterior boundaries of
the Complex) as determined in a manner consistent with generally accepted
accounting principles ("GAAP"). Operating Costs shall include, but not be
limited to, the aggregate of the amount paid for all electricity and fuel used
in heating and air conditioning of the Building; the amount paid or payable for
all electricity furnished by Lessor to the Complex; the cost of periodic
relamping and reballasting of Building Standard lighting fixtures; the amount
paid or payable for all hot and cold water (other than that chargeable to
lessees by reason of their extraordinary consumption of water); the amount paid
or payable for all labor and/or wages and other payments including cost to
Lessor of workers' compensation and disability insurance, payroll taxes, welfare
and fringe benefits made to janitors, caretakers, and other employees,
contractors and subcontractors of Lessor (including wages of the Building
manager) involved in the operation, maintenance and repair of the Complex;
painting for exterior walls of the buildings in the Complex; managerial and
administrative expenses; the total charges of any independent contractors
employed in the repair, care, operation, maintenance, and cleaning of the
Complex; the amount paid or payable for all supplies occasioned by everyday wear
and tear; the costs of VAC (as defined in Section 13.1) of the Complex, (except
to the extent paid by Lessee, or other lessees, for VAC provided to the Leased
Premises, or other leased premises, in respect of VAC provided outside the
Climate Control Hours defined in Section 13.1), window and exterior wall
cleaning, telephone and utility costs; the cost of accounting services necessary
to compute the rents and charges payable by Lessees and keep the books of the
Complex; fees for management, legal, accounting, inspection and consulting
services; the cost of operating, repairing and maintaining and replacing the
Building escalators and elevators and the utility systems, including Lines, of
the Complex including the cost of inspection and service contracts; the cost of
porters, guards and other protection services; the cost of establishing and
maintaining the Building's directory board; payments for general maintenance and
repairs to the plant and equipment supplying climate control; the cost of
supplying all services pursuant to Article 13 hereof to the extent such services
are not paid by individual lessees; amortization of the costs, including repair
and replacement, of all maintenance and cleaning equipment and master utility
meters and of the costs incurred for repairing or replacing all other fixtures,
equipment and facilities serving or comprising the Complex which by their nature
require periodic or substantial repair or replacement, and which are not charged
fully in the year in which they are incurred, at rates on the various items
determined from time to time by Lessor in accordance with GAAP; the cost of the
Shuttle Service described in Article 50 hereof; the cost of operating the
parking facility in the Complex and the cost of parking fees and rents paid to

                                       6.
<PAGE>

the owner of another parcel for use of certain parking spaces therein
(collectively "Parking Costs") net of parking fees and rents collected by Lessor
in connection herewith provided, however, Lessor shall not be obligated to
credit any sums received in excess of the actual Parking Costs; the cost and
expenses for insurance for which Lessor is responsible hereunder or which Lessor
reasonably deems necessary in connection with the operation of the Complex
(including, without limitation, self-insurance and the payment of deductible
amounts under insurance policies); community association dues or assessments and
property owners' association dues and assessments which may be imposed upon
Lessor by virtue of any recorded instrument affecting title to the Complex; and
costs of complying with all governmental regulations, rules, laws, ordinances
and codes, including Environmental Laws as such term is defined in Article 12.
In addition, Operating Costs shall include any Real Estate Taxes as defined in
Paragraph 2.1 hereof. Operating Costs shall also include, without limitation,
the repair and replacement, resurfacing and repaving of any paved areas, curbs,
gutters or other surfaces or areas within the Complex, the repair and
replacement of any equipment or facilities located within or serving the
Complex, and the cost of any capital repairs, replacements or improvements made
by Lessor to the Complex ("Capital Costs"). However, certain Capital Costs (the
"RESTRICTED CAPITAL COSTS") shall be includable in Operating Costs each year
only to the extent of that fraction allocable to the year in question calculated
by amortizing such Restricted Capital Costs over the reasonably useful life of
the improvement resulting therefrom, as determined by Lessor, with interest on
the unamortized balance at the higher of (i) ten percent (10%) per annum; or
(ii) the interest rate as may have been paid by Lessor for the funds borrowed
for the purpose of performing the work for which the Restricted Capital Costs
have been expended, but in no event to exceed the highest rate permissible by
law. The Restricted Capital Costs subject to such amortization procedure are the
following: (x) those costs for capital improvements to the Complex of a type
which do not normally recur more frequently than every five (5) years in the
normal course of operation and maintenance of facilities such as the Complex
(specifically excluding painting of all or a portion of the Complex); (y) costs
incurred for the purpose of reducing other operating expenses or utility costs,
from which Lessee can expect a reduction in the amounts it would otherwise
expend, or reimburse Lessor, and (z) expenditures by Lessor that are required by
governmental law, ordinance, regulation or mandate, including, without
limitation, any Environmental Laws (as such term is defined in Article 12),
which were not applicable to the Complex at the time of the original
construction. Operating Costs shall not include legal or accounting expenses
incurred expressly for negotiating a lease with a particular lessee, or as a
result of a default of a specific lessee, which negotiation or default does not
affect the operation of the Complex.

     "PROPORTIONATE SHARE" or "PRO RATA PERCENT" shall be that fraction
      -------------------      ----------------
(converted to a percentage) the numerator of which is the Rentable Area of the
Leased Premises and the denominator of which is the number of square feet of
Rentable Area of all floors (or leased premises if the Complex is on a single
floor) rentable to lessees in the Complex. Lessee's Proportionate Share as of
the commencement of the Term hereof is specified in Section 1.8. Said
Proportionate Share shall be recalculated as may be required effective as at the
commencement of any period to which the calculation is applicable in this Lease.
Notwithstanding the preceding provisions of this Section, Lessee's Proportionate
Share

                                       7.
<PAGE>

as to certain expenses may be calculated differently to yield a higher
percentage share for Lessee as to certain expenses in the event Lessor permits
other lessees in the Complex to directly incur such expenses rather than have
Lessor incur the expense in common for the Complex (such as, by way of
illustration, wherein a lessee performs its own janitorial services). In such
case Lessee's Proportionate Share of the applicable expense shall be calculated
as having as its denominator the Rentable Area of all floors (or leased premises
if the Complex is on a single floor) rentable to lessees in the Complex less the
Rentable Area of lessees who have incurred such expense directly. Furthermore,
in the event Lessee consumes extraordinary amounts of any provided utility or
other service as determined in Lessor's good faith judgment, Lessee's
Proportionate Share for such utility or service may, at Lessor's election, be
based on usage as opposed to Rentable Area, that is, Lessee's Proportionate
Share of such a utility or service would be calculated as having as its
denominator the total usage of such utility or service in the Complex (or
Building as the case may be), and having as its numerator Lessee's usage of such
utility or service, as determined by Lessor in its sole good faith judgment. In
any case in which Lessee, with Lessor's consent, incurs such expenses directly,
Lessee's Proportionate Share will be calculated specially so that expenses of
the same character which are incurred by Lessor for the benefit of other lessees
in the Complex shall not be prorated to Lessee. If repairs are required for
systems exclusively serving the Leased Premises (whether within or outside of
said Leased Premises), Lessee shall pay one hundred percent (100%) of such
repair costs. Nothing herein shall imply that Lessor will permit Lessee or any
other lessee of the Complex to incur any Common Area Costs or Operating Costs.
Any such permission shall be in the sole discretion of the Lessor, which Lessor
may grant or withhold in its arbitrary judgment.

     "Quadrant." Each floor of the Building is centered around the common Atrium
      --------
with Rentable Area being approximately divided into four unequal parts known as
"Quadrant(s)" and commonly carrying identifying letters as follows:

               Quadrant A: Southeast of Atrium
               Quadrant B: Northeast of Atrium
               Quadrant C: Northwest of Atrium
               Quadrant D: Southwest of Atrium

     "R/U RATIO" (an abbreviation for Rentable/Usable Ratio) shall mean that
      ---------
fraction the numerator of which is Rentable Area and the denominator of which is
Usable Area.

     "REAL ESTATE TAXES" or "TAXES" shall mean and include all general and
      -----------------      -----
special taxes, assessments, fees of every kind and nature, duties and levies,
charged and levied upon or assessed by any governmental authority against the
Complex including the land, the Building, any other improvements situated on the
land other than the Building, the various estates in the land and the Building,
any Tenant Improvements, fixtures, installations, additions and equipment,
whether owned by Lessor or Lessee; except that it shall exclude any taxes of the
kind covered by Section 8.1 hereof to the extent Lessor is reimbursed therefor
by any lessee in the Building. Real Estate Taxes shall also include the
reasonable cost to Lessor of contesting

                                       8.
<PAGE>

the amount, validity, or the applicability of any Taxes mentioned in this
Section. Further included in the definition of Taxes herein shall be general and
special assessments, license fees, commercial rental tax, levy, penalty or tax
(other than inheritance or estate taxes) imposed by any authority having the
direct or indirect power to tax, as against any legal or equitable interest of
Lessor in the Leased Premises or in the Complex or on the act of entering into
this Lease or, as against Lessor's right to rent or other income therefrom, or
as against Lessor's business of leasing the Leased Premises or the Complex, any
tax, fee, or charge with respect to the possession, leasing, transfer of
interest, operation, management, maintenance, alteration, repair, use, or
occupancy by Lessee, of the Leased Premises or any portion thereof or the
Complex, or any tax imposed in substitution, partially or totally, for any tax
previously included within the definition of Taxes herein, or any additional
tax, the nature of which may or may not have been previously included within the
definition of Taxes. Further, if at any time during the Term of this Lease the
method of taxation or assessment of real estate or the income therefrom
prevailing at the time of execution hereof shall be, or has been altered so as
to cause the whole or any part of the Taxes now or hereafter levied, assessed or
imposed on real estate to be levied, assessed or imposed upon Lessor, wholly or
partially, as a capital levy, business tax, fee, permit or other charge, or on
or measured by the Rents received therefrom, then such new or altered taxes,
regardless of their nature, which are attributable to the land, the Building or
to other improvements on the land shall be deemed to be included within the term
Real Estate Taxes for purposes of this Section, whether in substitution for, or
in addition to any other Real Estate Taxes, save and except that such shall not
be deemed to include any enhancement of said tax attributable to other income of
Lessor. With respect to any general or special assessments which may be levied
upon or against the Leased Premises, the Complex, or the underlying realty, or
which may be evidenced by improvement or other bonds, and may be paid in annual
or semi-annual installments, only the amount of such installment, prorated for
any partial year, and statutory interest shall be included within the
computation of Taxes for which Lessee is responsible hereunder.

     "RENT," "rent" or "rental" means Minimum Rent and all other sums required
      ----
to be paid by Lessee pursuant to the terms of this Lease.

     "RENTABLE AREA." The Rentable Area means the Rentable Area determined by
      -------------
BOMA. The Rentable Area of a floor shall mean all areas available or held for
the exclusive use and occupancy of occupants or future occupants of the Complex,
calculated in accordance with BOMA. No deductions shall be made for columns and
projections necessary to the Building. The Rentable Area of that portion of a
lessee's premises located on a floor shall be computed by multiplying the Usable
Area of such premises by the R/U Ratio. The Rentable Area of the Building is the
aggregate of the Rentable Area on all floors.

     "STRUCTURAL" as herein used shall mean any portion of the Leased Premises
      ----------
or Complex which provides bearing support to any other integral member of the
Complex such as, by limitation, the roof structure (trusses, joists, beams),
posts, load bearing walls, foundations, girders, floor joists, footings, and
other load bearing members constructed by Lessor.

                                       9.
<PAGE>

           "TENANT IMPROVEMENTS" shall mean the Lessee's Work in accordance with
            -------------------
the Work Letter Agreement attached hereto as Exhibit D, if any, and all
subsequent alterations to the Leased Premises made by Lessee.

           "TERM" shall mean the term of the lease as specified in Article 4
            ----
hereof, including any partial month at the commencement of the Term.

           "USABLE AREA." The Usable Area of any individual leased premises
            -----------
shall be the number of square feet calculated in accordance with BOMA; provided,
however, that the term Usable Area shall include toilet rooms in each Quadrant
if such toilet rooms are for the exclusive use of a lessee occupying such
Quadrant. The Usable Area of a floor shall be equal to the sum of all Usable
Areas on that floor.

3.   PREMISES

     3.1   DEMISING CLAUSE. Lessor hereby leases to Lessee, and Lessee hires
from Lessor a portion of the Complex as hereinafter defined.

     3.2   DESCRIPTION. The Complex, as defined in Section 2.1, is described
generally in Section 1.3(A) hereof. The premises leased herein are described in
Section 1.3(B) and delineated on Exhibits C-1 and C-2, which are attached hereto
and made a part hereof by reference, consisting of the approximate amount of
square footage as specified in Section 1.3(C) hereof. The term "BUILDING" shall
refer to the Building in which the Leased Premises are located. The portion
leased herein to Lessee is hereinafter referred to as the "LEASED PREMISES."
Lessee acknowledges that Lessor may change the shape, size, location, number and
extent of the improvements to any portion of the Complex without consent of
Lessee and without affecting Lessee's obligations hereunder. Lessor reserves the
area beneath and above the Leased Premises as well as the exterior thereof
together with the right to install, maintain, use, repair and replace Lines,
pipes, ducts, conduits, wires, and structural elements leading through the
Leased Premises serving other parts of the Complex, including, but not limited
to, vertical risers, so long as such items are concealed by walls, flooring or
ceilings. Such reservation in no way affects the maintenance obligations imposed
herein, nor shall such reservation alter the parties' responsibilities and
obligations set forth in this Lease regarding Hazardous Materials (as defined in
Section 12.3(a) below).

     3.3   SUBSTITUTED PREMISES. In the event the Leased Premises consist of
less than six thousand (6,000) square feet, Lessor shall have the right, at any
time during the Term hereof, upon not less than ninety (90) days' prior written
notice to Lessee, to substitute for the Leased Premises such other space in the
Complex as shall be substantially the same size as the Leased Premises (the
"SUBSTITUTED PREMISES"), Provided that Lessor shall pay all expenses of Lessee
incidental to Lessee's relocation to the Substituted Premises and that Lessor
shall improve the Substituted Premises for Lessee's use and occupancy at least
to the same extent as the Leased Premises occupied by Lessee prior to such
relocation.

                                      10.
<PAGE>

     3.4   COVENANTS, CONDITIONS AND RESTRICTIONS. The parties agree that this
Lease is subject to the effect of (a) any covenants, conditions, restrictions,
easements, mortgages or deeds of trust, ground leases, rights of way of record,
and any other matters or documents of record; (b) any zoning laws of the city,
county and state where the Complex is situated; and (c) general and special
taxes not delinquent. Lessee agrees that as to its leasehold estate, Lessee and
all persons in possession or holding under Lessee will conform to and will not
violate the terms of any covenants, conditions or restrictions of record which
may now or hereafter encumber the property (hereinafter the "RESTRICTIONS").
This Lease is subordinate to the restrictions and any amendments or
modifications thereto.

                                    4.  TERM

     4.1   COMMENCEMENT DATE. The Term of this Lease shall commence on the
Commencement Date defined in Section 2.1 and shall be for the term specified in
Section 1.4 hereof, plus any partial month at the commencement of the Term.

     4.2   ACKNOWLEDGMENT OF COMMENCEMENT. After delivery of the Leased Premises
to Lessee, Lessee shall execute a written acknowledgment of the date of
commencement in the form attached hereto as Exhibit E, and by this reference it
shall be incorporated herein.

                            5.  PRE-TERM POSSESSION

     5.1   CONDITIONS OF ENTRY. In the event the Leased Premises are to be
constructed or remodeled by Lessor, Lessor may notify Lessee when the Leased
Premises are ready for Lessee's fixturing or Lessee's Work, which may be prior
to substantial completion of the Leased Premises by Lessor. Lessee may thereupon
enter the Leased Premises for such purposes at its own risk, to make such
improvements as Lessee shall have the right to make, to install fixtures,
supplies, inventory and other property. Lessee agrees that it shall not in any
way interfere with the progress of Lessor's Work by such entry. Should such
entry prove an impediment to the progress of Lessor's Work, in Lessor's
judgment, Lessor may demand that Lessee forthwith vacate the Leased Premises
until such time as Lessor's work is complete, and Lessee shall immediately
comply with this demand.

     During the course of any pre-term possession, whether such pre-term period
arises because of an obligation of construction on the part of Lessor, or
otherwise, all terms and conditions of this Lease, except for rent and
commencement, shall apply, particularly with reference to indemnity by Lessee of
Lessor under Article 17 herein for all occurrences within or about the Leased
Premises.

                      6.  DELAY IN DELIVERY OF POSSESSION

     6.1   DELAY. If Lessor, for any reason whatsoever, cannot deliver
possession of the Leased Premises to Lessee at the Estimated Delivery Date, this
Lease shall not be void or voidable, nor shall Lessor be liable for any loss or
damage resulting therefrom, but in that event, there shall be no accrual of Rent
for the period between the Estimated Delivery Date

                                      11.
<PAGE>

and the Commencement Date. In the event Lessor cannot deliver the Leased
Premises to Lessee within six (6) months beyond the Estimated Delivery Date,
then Lessor may elect to terminate this Lease. In the event the Leased Premises
are not delivered within three (3) years from the date of execution, this Lease
shall automatically terminate.

                                7.  MINIMUM RENT

     7.1   PAYMENT. Lessee shall pay to Lessor at the address specified in
Section 1.1, or at such other place as Lessor may otherwise designate, as
"MINIMUM RENT" for the Leased Premises the amount specified in Section 1.5
hereof, payable in advance on the first day of each month during the Term. If
the Term commences on other than the first day of a calendar month, the rent for
the first partial month shall be prorated accordingly.

     All payments of Minimum Rent (including sums defined as rent in Section
2.1) shall be in lawful money of the United States, and payable without
deduction, setoff, offset, counterclaim, recoupment, notice or demand.

     7.2   ADVANCE RENT. The amount specified in Section 1.5(B) hereof is paid
herewith to Lessor upon execution of this Lease as advance rent, receipt of
which is hereby acknowledged, provided, however, that such amount shall be held
by Lessor as a "SECURITY DEPOSIT" pursuant to Section 10.1 hereof until it is
applied by Lessor to the first Minimum Rent due hereunder.

     7.3   LATE PAYMENT. If during any twelve (12) month period Lessee fails on
more than one occasion to make any payment of Minimum Rent to Lessor on the date
when it is due, then Lessor may, by giving written notice to Lessee, require
that Lessee pay the Minimum Rent to Lessor quarterly in advance.

                              8.  ADDITIONAL RENT

     8.1   PERSONAL PROPERTY, GROSS RECEIPTS, LEASING TAXES. This Section 8.1 is
intended to deal with impositions or taxes directly attributed to Lessee or this
transaction, as distinct from taxes attributable to the Complex which are to be
allocated among various lessees and others and which are included in Operating
Costs. In addition to the Minimum Rent and additional charges to be paid by
Lessee hereunder, Lessee shall reimburse Lessor upon demand for any and all
taxes required to be paid by Lessor (excluding state, local or federal personal
and corporate income taxes measured by the income of Lessor from all sources,
and estate and inheritance taxes) whether or not now customary or within the
contemplation of the parties hereto:

           (a) Upon, measured by, or reasonably attributable to the cost or
value of Lessee's equipment, furniture, fixtures and other personal property
located in the Leased Premises or by the cost or value of any Tenant
Improvements made in or to the Leased Premises by or for Lessee, regardless of
whether title to such improvements shall be in Lessee or Lessor;

                                      12.
<PAGE>

     (b) Upon or with respect to the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Lessee of the Leased
Premises or any portion thereof to the extent such taxes are not included as
Real Estate Taxes as defined in Section 2.1;

     (c) Upon this transaction or any document to which Lessee is a party
creating or transferring an interest or an estate in the Leased Premises; and

     (d) In connection with any testing, investigation, abatement, remediation,
removal, transportation and/or disposal of any Hazardous Materials by Lessee (or
by Lessor, pursuant to any provision of this Lease granting to Lessor the right
to do any of the foregoing and to bill Lessee therefor).

     For purposes of this Section 8.1, the term "taxes" shall include, but not
be limited to, any fees, charges, fines, penalties and costs (including, without
limitation, permit, approval or licensing fees, charges or costs).

     In the event that it shall not be lawful for Lessee so to reimburse Lessor,
the Minimum Rent payable to Lessor under this Lease shall be increased to net
Lessor (i.e., after payment of the Taxes for which Lessor may not receive
reimbursement from Lessee) the amount of Minimum Rent plus reimbursement for
Taxes which would have been receivable by Lessor if such tax had not been
imposed. All Taxes payable by Lessee under this Section shall be deemed to be,
and shall be paid as, additional Rent.

 8.2 OPERATING COSTS.

     (a) During each calendar year or part thereof subsequent to the Base
Expense Year, Lessee shall pay to Lessor as additional Rent, in accordance with
Section 8.3 hereof, Lessee's Proportionate Share of the total dollar increase,
if any, in all Operating Costs for such calendar year over the Operating Costs
for the Base Expense Year. During each tax year (July 1 through June 30) or part
thereof subsequent to the Base Tax Year ending June 30, Lessee shall pay to
Lessor as additional Rent, in accordance with Section 8.3 hereof, Lessee's
Proportionate Share of the total dollar increases, if any, in all Real Estate
Taxes for such tax year over the Real Estate Taxes for the Base Tax Year.
Lessee's Proportionate Share shall be calculated on the basis of the greater of
(i) actual Operating Costs; or (ii) as if the Complex were at least ninety-five
percent (95%) occupied and operational for the whole of such Lease Year.

     (b) If any Lease Year of less than twelve (12) months is included within
the Term, the amount payable by Lessee for such period shall be prorated on a
per diem basis (utilizing a three hundred sixty (360) day year).

     (c) Lessor shall exercise good faith efforts to equitably allocate those
Operating Costs that are incurred for the direct benefit of specific types of
lessees or users in the Complex to and among those specific lessees and/or users
("Cost Pools"). Such Cost Pools may include, but shall not be limited to, the
office and showroom space, the second

                                      13.
<PAGE>

floor Atrium, the lower level exhibition hall, and any retail space lessees of
the Complex. Lessor's determination of such allocations shall be made in a
manner consistent with the terms and conditions of this Section 8.2(c) and shall
be subject to reconciliation per Section 8.3(c). Lessee acknowledges that the
allocation of Operating Costs among Cost Pools does not affect all Operating
Costs and is limited to specific items which Lessor determines, in good faith,
should be shared among the lessees and/or users of a certain Cost Pool.

     8.3  METHOD OF PAYMENT. Any additional Rent payable by Lessee under
Sections 8.1 and 8.2 hereof shall be paid as follows, unless otherwise provided:

          (a) During the Term, Lessee shall pay to Lessor monthly in advance
with its payment of Minimum Rent, one-twelfth (1/12) of the amount of such
additional Rent as estimated by Lessor in advance, in good faith, to be due from
Lessee.

          (b) Annually, as soon as is reasonably possible after the expiration
of each Lease Year, Lessor shall prepare in good faith and deliver to Lessee a
comparative statement, which statement shall be conclusive between the parties
hereto, setting forth (1) the Operating Costs for such Lease Year, and (2) the
amount of additional Rent as determined in accordance with the provisions of
this Article 8.

          (c) If the aggregate amount of such estimated additional Rent payments
made by Lessee in any Lease Year should be less than the additional Rent due for
such year, then Lessee shall pay to Lessor as additional Rent upon demand the
amount of such deficiency. If the aggregate amount of such additional Rent
payments made by Lessee in any Lease Year of the Term should be greater than the
additional Rent due for such year, then should Lessee not be otherwise in
default hereunder, the amount of such excess will be applied by Lessor to the
next succeeding installments of such additional Rent due hereunder; and if there
is any such excess for the last year of the Term, the amount thereof will be
refunded by Lessor to Lessee, provided Lessee is not otherwise in default under
the terms of this Lease.

                          9.  ACCORD AND SATISFACTION

     9.1  ACCEPTANCE OF PAYMENT. No payment by Lessee or receipt by Lessor of a
lesser amount of Minimum Rent or any other sum due hereunder, shall be deemed to
be other than on account of the earliest due rent or payment, nor shall any
endorsement or statement on any check or any letter accompanying any such check
or payment be deemed an accord and satisfaction, and Lessor may accept such
check or payment without prejudice to Lessor's right to recover the balance of
such rent or payment or pursue any other remedy available in this Lease, at law
or in equity. Lessor may accept any partial payment from Lessee without
invalidation of any contractual notice required to be given herein (to the
extent such contractual notice is required) and without invalidation of any
notice required to be given pursuant to California Code of Civil Procedure
Section 1161, et seq., or of any successor statute thereto.

                                      14.
<PAGE>

                             10.  SECURITY DEPOSIT

     10.1 Letter of Credit.
          ----------------
          (a) On or before February 1, 1999, Lessee shall obtain and deliver to
Lessor an irrevocable letter of credit in the amount shown in Section 1.6 (the
"Letter of Credit") in a form acceptable to Lessor. As a material consideration
for Lessor entering into this Lease Lessee shall provide the Letter of Credit to
secure the performance of Lessee's obligations under the terms of the Lease.
Without the Letter of Credit provided by the Lessee herein Lessor would not have
entered into this Lease.

          (b) The Letter of Credit shall be issued by the California office of
either a U.S. bank or a U.S. agency of a foreign bank, authorized to conduct
banking business in the State of California, which Letter of Credit shall be
subject to reduction and cancellation on the terms and conditions contained
below. The Letter of Credit will secure all obligations under the Lease to be
performed by Lessee and its Transferee(s) for the full Term hereof. The Letter
of Credit may be for a period shorter than the entire Term (but not in any case
for a term less than one (1) year), provided: (i) it shall be required to be
renewed or replaced by delivery of a new Letter of Credit subject to the same
requirements as the original (subject to any Permitted Reductions), for a period
of not less than twelve (12) months, (ii) such renewal or replacement shall be
required to be delivered to Lessor not later than thirty (30) days prior to
expiration of the original Letter of Credit (or replacement or renewal, as the
case may be) and, (iii) if not so renewed or replaced by delivery to Lessor,
such failure shall constitute a default entitling Lessor to draw upon the
existing Letter of Credit in full forthwith without notice to Lessee.

     10.2 Right to Draw. Lessor shall be entitled to draw on that portion of the
          -------------
Letter of Credit which Lessor in good faith determines to be necessary to cure
Lessee's default (or, in the event Lessor is barred by applicable law,
specifically including any laws with respect to insolvency, from issuing to
Lessee a default notice, Lessee's breach) of any Lease provision(s). Any such
draw shall be made by Lessor's written signed statement to the drawee bank of
(i) a default by Lessee or its Transferee(s) under this Lease (and the passing
of the applicable cure period provided in the Lease without a cure of the
default, subject to the provisions of Section 10.6 below) or (ii) a breach of
the Lease by Lessee with respect to which Lessor is barred by applicable law,
specifically including any laws with respect to insolvency, from issuing to
Lessee a default notice. No other act or notice whatsoever shall be required by
Lessor in order to be entitled to draw on the entire sum of the Letter of
Credit. Any sums remaining after deduction by Lessor of the amounts owed by
Lessee pursuant to the default or breach under this Lease shall be treated as a
Security Deposit as provided in Section 10.3 below.

     10.3 Payment. For purposes of this Lease, the amount of any draw under the
          -------
Letter of Credit shall be designated as a Security Deposit and the use of the
draw thereon shall be treated as a use of the Security Deposit in the manner
provided in this Article 10. The amount of the draw shall be applied to cure
Lessee's default or breach and any excess shall remain the sole and separate
property of Lessor until actually repaid to Lessee (or at Lessor's

                                      15.
<PAGE>

option the last assignee, if any, of Lessee's interest hereunder), Lessee not
being entitled to the return of said sum until all conditions precedent for its
payment to Lessee have been fulfilled. As this sum both in equity and at law is
Lessor's separate property, Lessor shall not be required to (1) keep said
deposit separate from its general accounts, or (2) pay interest, or other
increment for its use, except that if the amount of the draw exceeds one hundred
fifty percent (150%) of the costs incurred by Lessor to cure a Lessee default,
and such unused portion of the draw is not returned to the drawee bank as set
forth in section 10.5, such unused portion of the draw shall bear interest from
the date of the draw at the rate set forth in Section 50.16 hereof. If Lessee
fails to pay rent or other charges when due hereunder, or otherwise defaults
with respect to any provision of this Lease, including and not limited to
Lessee's obligation to restore or clean the Leased Premises following vacation
thereof, Lessee, at Lessor's election, shall (except as set forth in Section
10.5 below) be deemed not to have the right to receive those portions of draws
used or applied by Lessor for the payment of any rent or other charges in
default, or for the payment of any other sum to which Lessor may become
obligated by reason of Lessee's default, or to compensate Lessor for any loss or
damage which Lessor may suffer thereby. Lessor may retain the Security Deposit
and draw thereupon as it reasonably deems necessary to restore or clean the
Leased Premises following vacation by Lessee to the extent Lessee has such
obligation under this Lease. The amount of any draw is not to be characterized
as rent until and unless so applied in respect of a default by Lessee.

     10.4 Restoration of Deposit. If Lessor draws upon the Letter of Credit,
          ----------------------
Lessee shall, within ten (10) days after written demand therefor, take such
action as is necessary to require the drawee bank to issue a new Letter of
Credit with a face amount equal to the pre-draw amount of the previous Letter of
Credit or to reinstate the previous Letter of Credit to the full pre-draw
amount, and Lessee's failure to so do shall be a material breach of this Lease.
The objective of this Section 10.4 is for Lessee to restore the face amount of
the Letter of Credit to the principal amount that would have existed, as of the
date of any draw, had there been no default which caused the Lessor to draw upon
the Letter of Credit, and Lessee's failure to do so shall be a material breach
of this Lease. The ten (10) day notice specified in the first sentence of this
Section 10.4 shall, insofar as not prohibited by law, constitute full
satisfaction of notice of default provisions required by law or ordinance.

     10.5 Draws Upon Letter of Credit. The proceeds of a draw on the Letter of
          ---------------------------
Credit shall be used by the Lessor to effect a cure of the Lessee's breach. The
unexpended proceeds of the draw shall, after deducting from the amount
originally drawn any costs incurred by the Lessor in curing or attempting to
cure the default, be returned to the drawee bank upon receipt by Lessor of a
Letter of Credit in the pre-draw amount.

                                   11.  USE

     11.1 PERMITTED USE.

          The Leased Premises may be used and occupied only for the purposes
specified in Section 1.7 hereof, and for no other purpose or purposes. Lessee
shall promptly comply

                                      16.
<PAGE>

with all laws, ordinances, orders and regulations affecting the Leased Premises,
their cleanliness, safety, occupation and use.

     11.2 SAFES, HEAVY EQUIPMENT. Lessee shall not place a load upon any floor
of the Leased Premises which exceeds fifty (50) pounds per square foot live
load. Lessor reserves the right to prescribe the weight and position of all
safes and heavy installations which Lessee wishes to place in the Leased
Premises so as properly to distribute the weight thereof, or to require plans
prepared by a qualified structural engineer at Lessee's sole cost and expense
for such heavy objects. Notwithstanding the foregoing, Lessor shall have no
liability for any damage caused by the installation of such heavy equipment or
safes.

     11.3 MACHINERY. Business machines and mechanical equipment belonging to
Lessee which cause noise and/or vibration that may be transmitted to the
structure of the Building or to any other leased space to such a degree as to be
objectionable to Lessor or to any Lessees in the Complex shall be placed and
maintained by the party possessing the machines or equipment, at such party's
expense, in settings of cork, rubber or spring type noise and/or vibration
eliminators, and Lessee shall take such other measures as needed to eliminate
vibration and/or noise. If the noise or vibrations cannot be eliminated, Lessee
must remove such equipment within ten (10) days following written notice from
Lessor.

     11.4 HAZARDOUS ACTIVITIES. Lessee shall not engage in any activities or
permit to be kept, used, or sold in or about the Leased Premises, any article
which may be prohibited by the standard form of fire insurance policies. Lessee
shall, at its sole cost and expense, comply with any and all requirements,
pertaining to the Leased Premises, of any insurance organization or company,
necessary for the maintenance of reasonable fire and public liability insurance
covering the Building and appurtenances.

                   12.  COMPLIANCE WITH LAWS AND REGULATIONS

     12.1 LESSEE'S OBLIGATIONS. Lessee, shall, at its sole cost and expense,
comply with all of the requirements of all municipal, state and federal
authorities now in force, or which may hereafter be in force, pertaining to the
Leased Premises, and shall faithfully observe in the use of the Leased Premises
all municipal ordinances and state and federal statutes and regulations now in
force or which may hereafter be in force, including, without limitation,
Environmental Laws (as hereinafter defined), and the Americans with Disabilities
Act, 42 U.S.C. sections 12101-12213 (and any rules, regulations, restrictions,
guidelines, requirements or publications promulgated or published pursuant
thereto, collectively herein referred to as the "ADA"), whether or not any of
the foregoing were foreseeable or unforeseeable at the time of the execution of
this Lease. The judgment of any court of competent jurisdiction, or the
admission of Lessee in any action or proceeding against Lessee, whether Lessor
be a party thereto or not, that any such requirement, ordinance, statute or
regulation pertaining to the Leased Premises has been violated, shall be
conclusive of that fact as between Lessor and Lessee. Within five (5) days after
receipt of notice or knowledge of any violation or alleged violation of any
Environmental Law(s), and/or the ADA pertaining to the Complex, any governmental
or regulatory proceedings, investigations, sanctions and/or actions threatened

                                      17.
<PAGE>

or commenced with respect to any such violation or alleged violation, and any
claim made or commenced with respect to such violation, or alleged violation,
Lessee shall notify Lessor thereof and provide Lessor with copies of any written
notices or information in Lessee's possession. Lessee shall make, at Lessee's
sole cost and expense, any and all alterations, improvements or non-structural
changes that are required by laws, statutes, ordinances and governmental
regulations or requirements as a result of Lessee's specific use of the Premises
or any alterations, additions or improvements made by Lessee. If any
alterations, improvements or structural changes are required to be made to the
Building in general or are applicable to substantially all lessees in the
Building without regard to Lessee's specific use of the Leased Premises or any
alterations, additions or improvements made by Lessee, then Lessor shall make
such alterations, additions or improvements and the costs thereof shall be
included within Operating Costs pursuant to Section 2.1.

     12.2 CONDITION OF LEASED PREMISES. Subject to Lessor's Work, if any, as
referred to in Exhibit D to this Lease, Lessee hereby accepts the Leased
Premises in the condition existing as of the date of occupancy, subject to all
applicable zoning, municipal, county and state laws, ordinances, rules,
regulations, orders, restrictions of record, and requirements in effect during
the Term or any part of the Term hereof regulating the Leased Premises, and
without representation, warranty or covenant by Lessor, express or implied, as
to the condition, habitability or safety of the Leased Premises, the suitability
or fitness thereof for their intended purposes, or any other matter. Lessor
covenants that the Lessor's Work pursuant to Exhibit D shall be in material
compliance with applicable local and state building codes and ordinances in such
manner that any violations or conditions of non-compliance will not result in
the inability of Lessee to be issued a building permit for Lessee's Work
pursuant to Exhibit D ("Code Compliance").

     12.3 HAZARDOUS MATERIALS.
          -------------------

          (a) Hazardous Materials Defined. As used herein, the term "HAZARDOUS
MATERIALS" shall mean any wastes, materials or substances (whether in the form
of liquids, solids or gases, and whether or not air-borne), which are or are
deemed to be pollutants or contaminants, or which are or are deemed to be
hazardous, toxic, ignitable, reactive, corrosive, dangerous, harmful or
injurious, or which present a risk, to public health or to the environment, or
which are or may become regulated by or under the authority of any applicable
local, state or federal laws, judgments, ordinances, orders, rules, regulations,
codes or other governmental restrictions, guidelines or requirements, any
amendments or successor(s) thereto, replacements thereof or publications
promulgated pursuant thereto (collectively "ENVIRONMENTAL LAWS"), including,
without limitation, any waste, material or substance which is:

              (i) defined as "hazardous waste," "extremely hazardous waste," or
"restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed
pursuant to Section 25140, of the California Health and Safety Code, Division
20, Chapter 6.5 (Hazardous Waste Control Law);

                                      18.
<PAGE>

     (ii)   defined as a "hazardous substance" under Section 25316 of the
California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-
Tanner Hazardous Substance Account Act);

     (iii)  defined as a "hazardous material," "hazardous substance," or
"hazardous waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and
Inventory);

     (iv)   defined as a "hazardous substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage
of Hazardous Substances);

     (v)    defined as a "waste" or "hazardous substance" under Section 13050 of
the California Water Code, Division 7, Chapter 2 (Porter-Cologne Water Quality
Control Act);

     (vi)   listed as a chemical known to the State of California to cause
cancer or reproductive toxicity pursuant to Section 25249.8 of the California
Health and Safety Code, Division 20, Chapter 6.6 (Safe Drinking Water and Toxic
Enforcement Act of 1986);

     (vii)  defined as a "hazardous substance" or "pollutant or contaminant"
pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. section 9601 et
seq.;

     (viii) listed as an "extremely hazardous substance," "hazardous chemical,"
or "toxic chemical" pursuant to the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. section 11001 et seq.;

     (ix)   listed as a "hazardous substance" in the United States Department of
Transportation Table, 49 C.F.R. 172.101 and amendments thereto, or by the
Environmental Protection Agency (or any successor agency) in 40 C.F.R. Part 302
and amendments thereto;

     (x)    defined, listed or designated by regulations promulgated pursuant to
any Environmental Law; or

     (xi)   any of the following: pesticide; flammable explosive; petroleum,
including crude oil or any fraction thereof; asbestos or asbestos-containing
material; polychlorinated biphenyl; radioactive material; or urea formaldehyde.

     In addition to the foregoing, the term Environmental Laws shall be deemed
to include, without limitation, local, state and federal laws, judgments,
ordinances, orders, rules, regulations, codes and other governmental
restrictions, guidelines and requirements, any amendments and successors
thereto, replacements thereof and publications promulgated

                                      19.
<PAGE>

pursuant thereto, which deal with or otherwise in any manner relate to, air or
water quality, air emissions, soil or ground conditions or other environmental
matters of any kind.

     (b) Use, etc. of Hazardous Materials. Lessee agrees that during the Term,
         --------------------------------
there shall be no use, presence, disposal, storage, generation, leakage,
treatment, manufacture, import, handling, processing, release or threatened
release of Hazardous Materials on, from or under the Leased Premises except to
the extent that, and in accordance with such conditions as, Lessor may have
previously approved in writing. The use, presence, disposal, storage,
generation, leakage, treatment, manufacture, import, handling, processing,
release or threatened release of Hazardous Materials are sometimes hereinafter
individually or collectively referred to as "HAZARDOUS USE." It is further
agreed that Lessee shall be entitled to use and store only those Hazardous
Materials which are necessary for Lessee's business, provided that such usage
and storage is in full compliance with Environmental Laws, and all judicial and
administrative decisions pertaining thereto. Lessee shall not be entitled to
install any tanks under, on or about the Leased Premises for the storage of
Hazardous Materials without the express written consent of Lessor, which may be
given or withheld in Lessor's sole arbitrary judgment. For the purposes of this
Section 12.3, the term Hazardous Use shall include Hazardous Use(s) on, from or
under the Leased Premises by any and all lessees, occupants, and/or users of the
Leased Premises (except Lessor), whether known or unknown to Lessee, and whether
occurring and/or existing during or prior to the commencement of the Term.

     (c) Hazardous Materials Report: When Required. Lessee shall submit to
         -----------------------------------------
Lessor a written report with respect to Hazardous Materials ("REPORT") in the
form prescribed in subparagraph (d) below on the following dates:

         (i)   Within ten (10) days after the Commencement Date,

         (ii)  Within ten (10) days after each anniversary of the Commencement
     Date during the Term,

         (iii) At any time within ten (10) days after written request by
     Lessor, and

         (iv)  At any time when there has been or is planned any condition which
constitutes or would constitute a change in the information submitted in the
most recent Report, including any notice of violation as referred to in
subparagraph (d)(vii) below.

     (d) Hazardous Materials Report: Contents. The Report shall contain, without
         ------------------------------------
limitation, the following information:

         (i)   Whether on the date of the Report and (if applicable) during the
period since the last Report there has been any Hazardous Use on, from or under
the Leased Premises.

                                      20.
<PAGE>

         (ii)    If there was such Hazardous Use, the exact identity of the
Hazardous Materials, the dates upon which such materials were brought upon the
Leased Premises, the dates upon which the Hazardous Materials were removed
therefrom, and the quantity, location, use and purpose thereof.

         (iii)   If there was such Hazardous Use, any governmental permits
maintained by Lessee with respect to such Hazardous Materials, the issuing
agency, original date of issue, renewal dates (if any) and expiration date.
Copies of any such permits and applications therefor shall be attached.

         (iv)    If there was such Hazardous Use, any governmental reporting or
inspection requirements with respect to such Hazardous Materials, the
governmental agency to which reports are made and/or which conducts inspections,
and the dates of all such reports and/or inspections (if applicable) since the
last Report. Copies of any such Reports shall be attached.

         (v)     If there was such Hazardous Use, identification of any
operation or business plan prepared for any government agency with respect to
Hazardous Use.

         (vi)    Any liability insurance carried by Lessee with respect to
Hazardous Materials, the insurer, policy number, date of issue, coverage
amounts, and date of expiration. Copies of any such policies or certificates of
coverage shall be attached.

         (vii)   Any notices of violation of Environmental Laws, written or
oral, received by Lessee from any governmental agency since the last Report, the
date, name of agency, and description of violation. Copies of any such written
notices shall be attached.

         (viii)  Any knowledge, information or communication which Lessee has
acquired or received relating to (x) any enforcement, cleanup, removal or other
governmental or regulatory action threatened or commenced against Lessee or with
respect to the Leased Premises pursuant to any Environmental Laws; (y) any claim
made or threatened by any person or entity against Lessee or the Leased Premises
on account of any alleged loss or injury claimed to result from any alleged
Hazardous Use on or about the Leased Premises; or (z) any report, notice or
complaint made to or filed with any governmental agency concerning any Hazardous
Use on or about the Leased Premises. The Report shall be accompanied by copies
of any such claim, report, complaint, notice, warning or other communication
that is in the possession of or is available to Lessee.

         (ix)     Such other pertinent information or documents as are requested
by Lessor in writing.

     (e) Release of Hazardous Materials: Notification and Cleanup. If at any
         --------------------------------------------------------
time during the Term Lessee knows or believes that any release of any Hazardous
Materials has come or will come to be located upon, about or beneath the Leased
Premises, then Lessee shall immediately, either prior to the release or
following the discovery thereof by Lessee, give verbal and follow-up written
notice of that condition to Lessor. Lessee covenants to

                                      21.
<PAGE>

investigate, clean up and otherwise remediate any release of Hazardous Materials
at Lessee's cost and expense; such investigation, clean-up and remediation shall
be performed only after Lessee has obtained Lessor's written consent, which
shall not be unreasonably withheld; provided, however, that Lessee shall be
entitled to respond immediately to an emergency without first obtaining Lessor's
written consent. All clean-up and remediation shall be done in compliance with
Environmental Laws and to the reasonable satisfaction of Lessor. Notwithstanding
the foregoing, whether or not such work is prompted by the foregoing notice from
Lessee or is undertaken by Lessor for any other reason whatsoever, Lessor shall
have the right, but not the obligation, in Lessor's sole and absolute
discretion, exercisable by written notice to Lessee at any time, to undertake
within or outside the Leased Premises all or any portion of any investigation,
clean-up or remediation with respect to Hazardous Materials (or, once having
undertaken any of such work, to cease same, in which case Lessee shall perform
the work), all at Lessee's cost and expense, which shall be paid by Lessee as
additional rent within ten (10) days after receipt of written request therefor
by Lessor (and which Lessor may require to be paid prior to commencement of any
work by Lessor). No such work by Lessor shall create any liability on the part
of Lessor to Lessee or any other party in connection with such Hazardous
Materials or constitute an admission by Lessor of any responsibility with
respect to such Hazardous Materials. It is the express intention of the parties
hereto that Lessee shall be liable under this Section 12.3(e) for any and all
conditions covered hereby which were caused or created by any person or entity
whatsoever (except Lessor) whether such condition occurred, was created or
caused or existed prior to or after the execution of this Lease and/or prior to
or after Lessee's possession of the Leased Premises. Lessee shall not enter into
any settlement agreement, consent decree or other compromise with respect to any
claims relating to any Hazardous Materials in any way connected to the Leased
Premises without first (i) notifying Lessor of Lessee's intention to do so and
affording Lessor the opportunity to participate in any such proceedings, and
(ii) obtaining Lessor's written consent.

          (f) Inspection and Testing by Lessor. Lessor shall have the right at
              --------------------------------
all times during the Term to (i) inspect the Leased Premises, as well as
Lessee's books and records, and to (ii) conduct tests and investigations to
determine whether Lessee is in compliance with the provisions of this Section.
Except in case of emergency, Lessor shall give reasonable notice to Lessee
before conducting any inspections, tests, or investigations. The cost of all
such inspections, tests and investigations shall be borne by Lessee, if Lessor
reasonably believes them to be necessary. Neither any action nor inaction on the
part of Lessor pursuant to this Section 12.3(f) shall be deemed in any way to
release Lessee from, or in any way modify or alter, Lessee's responsibilities,
obligations, and/or liabilities incurred pursuant to Section 12.3 hereof.

     12.4 INDEMNITY. Lessee shall indemnify, hold harmless, and, at Lessor's
option (with such attorneys as Lessor may approve in advance and in writing),
defend Lessor and Lessor's officers, directors, shareholders, trustees,
partners, employees, contractors, agents and mortgagees or other lien holders,
from and against any and all claims, demands, expenses, actions, judgments,
damages (whether consequential, direct or indirect, known or unknown, foreseen
or unforeseen), penalties, fines, liabilities, losses of every kind and nature
(including,

                                      22.
<PAGE>

without limitation, property damage, diminution in value of Lessor's interest in
the Leased Premises or the Complex, damages for the loss or restriction on use
of any space or amenity within the Leased Premises or the Complex, damages
arising from any adverse impact on marketing space in the Complex, sums paid in
settlement of claims and any costs and expenses associated with injury, illness
or death to or of any person), suits, administrative proceedings, costs and
fees, including, but not limited to, attorneys' and consultants' fees and
expenses, and the costs of cleanup, remediation, removal and restoration (all of
the foregoing being hereinafter sometimes collectively referred to as "Losses"),
arising from or related to any violation or alleged violation of any of the
requirements, ordinances, statutes, regulations or other laws referred to in
this Article, including, without limitation, Environmental Laws, any breach of
the provisions of this Article, or any Hazardous Use on, about or from the
Leased Premises caused by the acts or omissions of any persons or entities
whatsoever, whether related or unrelated to Lessee, including without limitation
any Hazardous Use or release of Hazardous Materials arising, occurring or
existing prior to the execution of this Lease and/or Lessee's possession of the
Leased Premises. Lessee warrants that it is leasing the Premises "as-is, where-
is," that it has thoroughly inspected the Leased Premises prior to execution of
this Lease, and that it intends to act as an insurer with respect to any
Hazardous Use on, under or about the Leased Premises.

     12.5 RELEASE AND ASSUMPTION OF RISK.
          ------------------------------

          (a) Lessee, for itself, and its officers, directors, shareholders,
partners, agents, contractors, attorneys, brokers, servants, employees,
sublessees, lessees, invitees, concessionaires, licensees and representatives
(hereinafter referred to as "RELEASORS"), hereby waives, releases, acquits and
forever discharges Lessor and its officers, directors, trustees, shareholders,
partners, agents, contractors, attorneys, brokers, servants, employees, lessees,
invitees, licensees and representatives (hereinafter referred to as "RELEASEES")
of and from any and all Losses, which are in any way connected with, based upon,
related to or arising out of (i) any Hazardous Use or Hazardous Materials on or
about the Leased Premises or the Complex, (ii) any violation by or relating to
the Leased Premises or the Complex (or the ownership, use, condition, occupancy
or operation thereof), or by the Releasors or any other persons or entities, of
any Environmental or Wetlands Laws affecting the Leased Premises or the Complex,
or (iii) any investigation, inquiry, order, hearing, action or other proceeding
by or before any governmental agency or any court in connection with any of the
matters referred to in clauses (i) or (ii) above (collectively, the "RELEASED
MATTERS"), except to the extent caused by the gross negligence or willful
misconduct of the Releasees. Releasors hereby expressly assume any and all risk
of Losses based on or arising out of or pertaining to the Released Matters.

          (b) Lessee agrees, represents and warrants that the Released Matters
are not limited to matters which are known, disclosed or foreseeable, and Lessee
waives any and all rights and benefits which are conferred upon Lessee by virtue
of the provisions of Section 1542 of the California Civil Code, which provides:

                                      23.
<PAGE>

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

          (c) Lessee agrees, represents and warrants that it is familiar with,
has read, understands, and has consulted legal counsel of its choosing with
respect to California Civil Code Section 1542 and Lessee realizes and
acknowledges that factual matters now unknown to it may have given, or may
hereinafter give, rise to Losses which are presently unknown, unanticipated and
unsuspected. Lessee further agrees, represents and warrants that the provisions
of this Section 12.5 have been negotiated and agreed upon in light of that
realization and that Lessee nevertheless hereby intends to release, discharge
and acquit the Releasees from any such unknown Losses which are in any way
related to this Lease or the Complex.

     12.6 INDOOR AIR QUALITY. To prevent the generation, growth or deposit of
any mold, mildew, bacillus, virus, pollen or other microorganism (collectively,
"BIOLOGICALS") and the deposit, release or circulation of any indoor
contaminants, including, but not limited to, emissions from paint, carpet and
drapery treatments, cleaning, maintenance and construction materials and
supplies, pesticides, pressed wood products, insulation, tobacco and other
materials and products (collectively with Biologicals, "CONTAMINANTS"), that
could adversely affect the health, safety or welfare of any tenant, employee, or
other occupant of the Complex or their invitees (each, an "OCCUPANT"), Lessee
shall, at Lessee's sole cost and expense, at all times during the Term (i)
maintain, operate and repair the HVAC system servicing the Leased Premises (to
the extent that Lessee is otherwise obligated to perform such maintenance,
operation and repair pursuant to this Lease) in a manner consistent with
preventing or minimizing the generation, growth, circulation, release or deposit
of any Contaminants, (ii) maintain the humidity level and the air exchange rate
within the Leased Premises (to the extent that Lessee has control thereof) at a
level recommended to prevent or minimize the growth of any Biologicals and the
circulation of any other Contaminants, (iii) maintain, operate and repair the
Leased Premises in such a manner to prevent or minimize the accumulation of
stagnant water and moisture in planters, kitchen appliances and vessels,
carpeting, insulation, water coolers and any other locations where stagnant
water and moisture could accumulate, and (iv) otherwise maintain, operate and
repair the Leased Premises to prevent the generation, growth, deposit, release
or circulation of any Contaminants. If any governmental entity or any Occupant
alleges that health, safety or welfare has been or could be adversely affected
by any such Contaminants, Lessee shall notify Lessor in writing within twenty-
four (24) hours of the time the allegation is made. Lessor may then elect to
engage the services of an industrial hygiene testing laboratory (or
alternatively or concurrently require Lessee to do the same) to determine
whether the cause of any alleged adverse health effect is or could be
attributable to any Contaminants present within the Leased Premises. Lessee
shall be responsible for all such testing costs and for any consequential
damages and costs (including, without limitation, any third-party claims, loss
of

                                      24.
<PAGE>

rental, remediation, removal and/or abatement costs, and increases in insurance
premiums) resulting from Lessee's failure to comply in whole or in part with the
terms of this Section 12.7. The indemnity set forth in Section 12.5 above shall
apply to Lessee's failure to comply with any of the terms of this Section.

                          13.  SERVICE AND EQUIPMENT

     13.1 CLIMATE CONTROL.

          (a) Lessor shall provide as part of Operating Costs ventilating and
air conditioning ("VAC") to the Leased Premises which meets the design load
standards ("Design Load Standards") on file in the Building Management Office
from 8:00 a.m. to 6:00 p.m., Monday through Friday and 8:00 a.m. to 1:00 p.m.
Saturday (the "CLIMATE CONTROL HOURS") provided that Lessor shall have no
responsibility or liability for failure to supply VAC service when making
repairs, alterations or improvements or when prevented from so doing by strikes
or any cause beyond Lessor's reasonable control. Any VAC provided to the Leased
Premises at Lessee's request after the Climate Control Hours shall be at
Lessee's sole cost and expense in accordance with rate schedules promulgated by
Lessor from time to time. Lessee acknowledges that Lessor has installed in the
Building a system for the purpose of climate control. Initially, the use of fans
to circulate outside air or in conjunction with the climate control equipment
outside of the Climate Control Hours shall be charged at $24 per each additional
fan, and the use of chillers outside of the Climate Control Hours shall be
charged at $150 per hour, each prorated among those lessees requiring such
additional hours of climate control. Any use of the Leased Premises which
exceeds the Design Load Standards may require changes or alterations in the
system or ducts through which the climate control system operates. Any changes
or alterations so occasioned, if such changes can be accommodated by Lessor's
equipment, shall be made by Lessee at its cost and expense but only with the
written consent of Lessor first had and obtained, and in accordance with
drawings and specifications and by a contractor first approved in writing by
Lessor. If Lessee's use of the Premises exceeds the Design Load Standards, such
excess use may necessitate the re-balancing of the climate control equipment in
the Leased Premises. In such event, the same will be performed by Lessor at
Lessee's expense. Any charges to be paid by Lessee hereunder shall be due within
ten (10) days of receipt of an invoice from Lessor, which invoice may precede
Lessor's expenditure for the benefit of Lessee.

     13.2 ELEVATOR SERVICE. Lessor shall provide elevator service (which may be
with or without operator at Lessor's option) during normal business hours.

     13.3 CLEANING PUBLIC AREAS. Lessor shall maintain and keep clean the street
level lobbies, sidewalks, truck dock, public corridors and other public portions
of the Building.

     13.4 REFUSE DISPOSAL. Lessee shall pay Lessor, within ten (10) days of
being billed therefor, for the removal from the Leased Premises and the Building
of such refuse and rubbish of Lessee as shall exceed that ordinarily accumulated
daily in the routine of business office occupancy.

                                      25.
<PAGE>

     13.5 Janitorial Service. Lessor shall provide cleaning and janitorial
service in and about the Complex and Leased Premises in accordance with Exhibit
J.

     To the extent that Lessee shall require cleaning and/or janitorial service
in excess of that set forth in Exhibit J (hereinafter referred to as "SPECIAL
CLEANING SERVICE") Lessor may, upon reasonable advance notice from Lessee, elect
to furnish such Special Cleaning Service and Lessee agrees to pay Lessor, within
ten (10) days of being billed therefor, Lessor's reasonable charge for providing
such additional service. If Lessor does not elect to provide said Special
Cleaning Service, Lessee may perform or provide for said Special Cleaning
Service, at Lessee's sole cost and expense.

     13.6 INTERRUPTIONS. Lessor does not warrant that any of the services
referred to above or any other services and/or utilities which Lessor may supply
or are supplied will be free from interruption and/or the need for maintenance
and repairs or replacement. Lessee acknowledges that any one or more such
services may be suspended or reduced by reason of repairs, alterations or
improvements necessary to be made, by strikes or accidents, by any cause beyond
the reasonable control of Lessor, or by orders or regulations of any federal,
state, county or municipal authority. In addition, Lessor shall have no
liability for damages arising from, and Lessor does not warrant that Lessee's
use of any Lines will be free from, (a) any eavesdropping or wire-tapping by
unauthorized parties, (b) any failure of any Lines to satisfy Lessee's
requirements, or (c) any shortages, failures, variations, interruptions,
disconnections, loss or damage caused by installation, maintenance, replacement,
use or removal of Lines by or for other occupants of the Complex, by any failure
of the environmental conditions or the power supply for the Building to conform
to any requirements for the Lines or any associated equipment or any other
problems associated with any Lines by any other cause.

     Any such interruption or suspension of services shall not be deemed an
eviction or disturbance of Lessee's use and possession of the Leased Premises or
any part thereof, nor render Lessor liable to Lessee for damages by abatement of
Rent or otherwise, nor relieve Lessee of performance of Lessee's obligations
under this Lease.

     13.7 BUILDING UPGRADE WORK. Lessor has advised Lessee that Lessor may make
certain upgrades and improvements to the Common Areas and central systems of the
Complex ("Building Upgrade Work"). Lessee acknowledges that the performance of
the Building Upgrade Work may result in noise, dust and other temporary
inconveniences or interruptions to the conduct of normal business activity in
the Building. Lessor will utilize reasonable measures to reduce noise levels
associated with the performance of the Building Upgrade Work; provided, however,
the Building Upgrade Work shall in no event constitute a constructive eviction
or serve as a basis for any abatement or reduction in rent.

                                  14.  WASTE

     14.1 WASTE OR NUISANCE. Lessee shall not commit, or suffer to be committed,
any waste upon the Leased Premises, or any nuisance, or other act or thing which
may disturb the

                                      26.
<PAGE>

quiet enjoyment of any other lessee or occupant of the Complex in which the
Leased Premises are located.

                               15.  ALTERATIONS

     15.1 CONSENT OF LESSOR; OWNERSHIP. Lessee shall not make, or suffer to be
made, any alterations to the Leased Premises, the Building, or the Complex,
and/or Lines, systems and facilities therein, or any part thereof, without the
written consent of Lessor first had and obtained. Any additions to or
alterations of the Leased Premises (except trade fixtures) shall, immediately
upon being made, constitute a part of the realty and Lessor's property, and
shall, at the expiration or earlier termination of this Lease, remain upon the
Leased Premises without compensation to Lessee. Except as otherwise provided in
this Lease, Lessee shall have the right to remove its trade fixtures placed upon
the Leased Premises provided that Lessee restores the Leased Premises as
indicated below. Any and all costs incurred by Lessor, whether in complying with
laws, governmental requirements or otherwise, as a result of any "alterations"
(as hereinafter defined), or as a result of request by Lessee for increased
Lines or other utility capacity above that presently existing (or, in the event
the Building is to be constructed or substantially altered by Lessor prior to
the delivery date, above that which is planned by Lessor for the Building) shall
be paid by Lessee within ten (10) days after demand therefor by Lessor.

     15.2 REQUIREMENTS. Any alterations, additions or installations performed by
Lessee (hereinafter collectively "alterations") shall be subject to strict
conformity with the following requirements:

          (a) All alterations shall be at the sole cost and expense of Lessee;

          (b) Prior to commencement of any work of alteration, Lessee shall
submit detailed plans and specifications, including working drawings
(hereinafter referred to as "Plans"), of the proposed alterations, which shall
be subject to the consent of Lessor in accordance with the terms of Section 15.1
above;

          (c) Following approval of the Plans by Lessor, Lessee shall give
Lessor at least ten (10) days' prior written notice of commencement of work in
the Leased Premises so that Lessor may post notices of non-responsibility in or
upon the Leased Premises as provided by law;

          (d) No coring or penetrations shall be made to the floor or ceiling of
the Leased Premises;

          (e) No alterations shall be commenced without Lessee having previously
obtained all appropriate permits and approvals required by and of governmental
agencies;

          (f) All alterations shall be performed in a skillful and workmanlike
manner, consistent with the Building Standards set forth as Exhibit H, and
pursued with diligence in accordance with the Plans previously approved by
Lessor and in full accord with all applicable

                                      27.
<PAGE>

laws and ordinances. All material, equipment, and articles incorporated in the
alterations are to be new and of recent manufacture and of the most suitable
grade for the purpose intended. Lessee's contractor shall maintain all of the
insurance reasonably required by Lessor, including, without limitation,
commercial general liability, workers' compensation, builder's risk and course
of construction insurance. The limits of such insurance shall be the same as
those specified in Article 18;

         (g) Lessee must obtain the prior written approval from Lessor for
Lessee's contractor before the commencement of the work. Lessor may require that
Lessee use subcontractors designated by Lessor as to specified portions of the
work. Lessee's contractor shall maintain all of the insurance reasonably
required by Lessor, including, without limitation, commercial general liability,
workers' compensation, builder's risk and course of construction insurance. The
limits of such insurance shall be the same as those specified in Article 18;

         (h) As a condition of approval of the alterations, Lessor may require
performance and labor and materialmen's payment bonds issued by a surety
approved by Lessor, in a sum equal to the cost of the alterations guarantying
the completion of the alterations free and clear of all liens and other charges
in accordance with the Plans. Such bonds shall name Lessor as beneficiary;

         (i) The alterations must be performed in a manner such that they will
not interfere with the quiet enjoyment of the other lessees in the Complex;

         (j) Lessor shall have the right to condition any approval of the
alterations upon (i) submission by Lessee of a Report with respect to Hazardous
Materials, and/or (ii) the performance by Lessee at Lessee's cost and expense of
such investigation, clean-up and remediation with respect to Hazardous Materials
as Lessor may request, in Lessor's sole and absolute discretion; provided,
however, that Lessor shall have the right, but not the obligation, to undertake
all or any portion of such investigation, clean-up or remediation at Lessee's
cost and expense in accordance with the provisions of Section 12.3(e) above.
Lessee acknowledges and agrees that Lessor shall have the right, in its sole and
absolute discretion, to disapprove the making of any such alterations based upon
the results of any investigation with respect to Hazardous Materials.

    15.3 LIENS. Lessee shall keep the Leased Premises and the Complex in which
the Leased Premises are situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by Lessee. In the event a
mechanic's or other lien is filed against the Leased Premises or the Complex of
which the Leased Premises form a part as a result of a claim arising through
Lessee, Lessor may demand that Lessee furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to at least one hundred fifty percent
(150%) of the amount of the contested lien claim or demand, indemnifying Lessor
against liability for the same and holding the Leased Premises free from the
effect of such lien or claim. Such bond must be posted within ten (10) days
following notice from Lessor. In addition, Lessor may require Lessee to pay
Lessor's attorneys' fees and costs in participating in

                                       28.
<PAGE>

any action to foreclose such lien if Lessor shall decide it is to its best
interest to do so. Lessor may pay the claim prior to the enforcement thereof, in
which event Lessee shall reimburse Lessor in full, including attorneys' fees,
for any such expense, as additional rent, with the next due rental.

     15.4 RESTORATION. Lessee shall, at Lessee's sole cost and expense, return
the Leased Premises to Lessor at the expiration or earlier termination of this
Lease in good and sanitary order, condition and repair, free of rubble and
debris, broom clean, reasonable wear and tear excepted. In addition, Lessee
shall ascertain from Lessor at the time of approval of any alterations,
installations and improvements, whether Lessor considers any such alterations,
installations and improvements to be specialized and non-reusable areas, such as
class rooms, manufacturing areas and storage racks, and whether Lessor desires
such specialized and non-reusable areas of the Leased Premises, restored to its
condition prior to the making of such permitted alterations, installations and
improvements. In such event, Lessor shall, at least three (3) months prior to
Lease expiration, provide Lessee with an estimate of the costs to so restore the
Leased Premises ("Restoration Costs") and Lessee shall pay to Lessor, as
additional Rent, the entire amount of the Restoration Costs no later than ten
(10) days prior to Lease expiration. The foregoing restoration of the Leased
Premises shall be performed after the Lease expiration. All damage to the Leased
Premises caused by the removal of such trade fixtures and other personal
property that Lessee is permitted to remove under the terms of this Lease and/or
such restoration shall be repaired by Lessee at its sole cost and expense prior
to termination. Lessee's obligations under this Section 15.4 shall apply to the
parking garage, roof and other areas of the Complex impacted by Lessee's use
and/or occupancy of the Complex or any part thereof.

                            16.  PROPERTY INSURANCE

     16.1 LESSOR'S INSURANCE. Lessor shall, to the extent available, procure and
maintain at all times during the Term, an "all risk" or "special form" policy or
policies of insurance covering loss or damage to the Building and the Complex in
an amount sufficient to exceed minimum coinsurance requirements of such policy
(exclusive of Lessee's trade fixtures, inventory, personal property, Tenant
Improvements and equipment), providing protection against all perils included
within the classification of fire and extended coverage, vandalism coverage and
malicious mischief, sprinkler leakage, water damage, and special extended
coverage on Building. Additionally, Lessor may (but shall not be required to)
carry: (i) bodily injury and property damage liability insurance and/or excess
liability coverage insurance; (ii) earthquake and/or flood damage insurance; or
(iii) rental income insurance at its election or if required by its lender from
time to time during the Term; or (iv) any other insurance as Lessor or its
lender reasonably deem appropriate, in such amounts and with such limits as
Lessor or its lender may deem appropriate. The costs of all such insurance shall
be included in Operating Costs.

     16.2 USE OF PREMISES. No use shall be made or permitted to be made on the
Leased Premises, nor acts done, which will increase the existing rate of
insurance upon the Building in which the Leased Premises are located or upon any
other Building in the Complex or cause

                                      29.
<PAGE>

the cancellation of any insurance policy covering the Building, or any part
thereof, nor shall Lessee sell, or permit to be kept, used or sold, in or about
the Leased Premises, any article which may be prohibited by the standard form of
"All Risk" fire insurance policies. Lessee shall, at its sole cost and expense,
comply with any and all requirements pertaining to the Leased Premises, of any
insurance organization or company, necessary for the maintenance of reasonable
property damage and commercial general liability insurance, covering the Leased
Premises, the Building, or the Complex.

     16.3 INCREASE IN PREMIUMS. Lessee agrees to pay to Lessor, as additional
Rent, any increase in premiums on policies which may be carried by Lessor on the
Leased Premises, the Building or the Complex, or any blanket policies which
include the Building or Complex, covering damage thereto and loss of Rent caused
by fire and other perils above the rates for the least hazardous type of
occupancy for office use. Lessee further agrees to pay Lessor, as additional
Rent, any increases in such premiums resulting from the nature of Lessee's
occupancy or any act or omission of Lessee. All payments of additional rent by
Lessee to Lessor pursuant to this Section 16.2 shall be made within ten (10)
days after receipt by Lessee of Lessor's billing therefor.

     16.4 PERSONAL PROPERTY INSURANCE. Lessee shall maintain in full force and
effect on all of its fixtures, furniture, equipment and other business personal
property in the Leased Premises a policy or policies providing protection
against any peril included within the classification "All Risk" to the extent of
at least ninety percent (90%) of their replacement cost, or that percentage of
the replacement cost required to negate the effect of a coinsurance provision,
whichever is greater. No such policy shall have a deductible in a greater amount
than ONE THOUSAND DOLLARS ($1,000.00). Lessee shall also insure in the same
manner the physical value of all its Tenant Improvements and alterations in the
Leased Premises including the Lessee's Work. During the Term, the proceeds from
any such policy or policies of insurance shall be used for the repair or
replacement of the fixtures, equipment, and Tenant Improvements so insured.
Lessor shall have no interest in said insurance, and will sign all documents
necessary or proper in connection with the settlement of any claim or loss by
Lessee. Lessee shall also maintain insurance for all plate glass upon the Leased
Premises. All insurance specified in this Section 16.4 to be maintained by
Lessee shall be maintained by Lessee at its sole cost.

            17.  INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION

     17.1 WAIVER OF SUBROGATION. Lessor and Lessee release each other, and their
respective authorized representatives, from any claims for damage to the Leased
Premises and the Building and other improvements in which the Leased Premises
are located, and to the furniture, fixtures, and other business personal
property, Lessee's improvements and alterations of either Lessor or Lessee, in
or on the Leased Premises and the Building and other improvements in which the
Leased Premises are located, including loss of income, that are caused by or
result from risks insured or required under the terms of this Lease to be
insured against under any property insurance policies carried or to be carried
by either of the parties.

                                      30.
<PAGE>

     17.2  FORM OF POLICY. Each party shall cause each such insurance policy
obtained by it to provide that the insurance company waives all rights of
recovery by way of subrogation against either party in connection with any
damage covered by such policy. Neither party shall be liable to the other for
any damage caused by any peril included within the classification "All Risk"
which is insured against under any property insurance policy carried under the
terms of this Lease.

     17.3  INDEMNITY. Lessee, as a material part of the consideration to be
rendered to Lessor, shall indemnify, defend, protect and hold harmless Lessor
against all actions, claims, demands, damages, liabilities, losses, penalties,
or expenses of any kind which may be brought or imposed upon Lessor or which
Lessor may pay or incur by reason of injury to person or property or business,
from whatever cause, all or in any way connected with the acts and omissions of
Lessee, and the condition or use of the Leased Premises, or the improvements or
personal property therein or thereon, including without limitation any liability
or injury to the person or property or business of Lessee, its agents, officers,
employees or invitees. Lessee agrees to indemnify, defend and protect Lessor and
hold it harmless from any and all liability, loss, cost or obligation on account
of, or arising out of, any such injury or loss however occurring, including
breach of the provisions of this Lease and the negligence of the parties hereto.
Nothing contained herein shall obligate Lessee to indemnify Lessor against its
own sole or gross negligence or willful acts, for which Lessor shall indemnify
Lessee.

     17.4  DEFENSE OF CLAIMS. In the event any action, suit or proceeding is
brought against Lessor by reason of any such occurrence, Lessee, upon Lessor's
request, will at Lessee's expense resist and defend such action, suit or
proceeding, or cause the same to be resisted and defended by counsel designated
either by Lessee or by the insurer whose policy covers the occurrence and in
either case approved by Lessor. The obligations of Lessee under this Section
arising by reason of any occurrence taking place during the Term shall survive
any termination of this Lease.

     17.5  WAIVER OF CLAIMS. Lessee, as a material part of the consideration to
be rendered to Lessor, hereby waives all claims against Lessor for damages or
injury, as described below, from any cause arising at any time, including breach
of the provisions of this Lease and the negligence of the parties hereto:

           (a)   damages to goods, wares, merchandise and loss of business in,
upon or about the Leased Premises; and

           (b)   (notwithstanding anything to the contrary contained in this
Lease, including, without limitation, the definition of Operating Costs in
Section 2.1, which includes "policing") damages to goods, wares, merchandise and
loss of business, in, upon or about the Leased Premises or the Complex, and
injury to Lessee, its agents, employees, invitees or third persons in, upon or
about the Leased Premises or the Complex, where such damage or injury results
from Lessor's failure to police or provide security for the Complex or Lessor's
negligence in connection therewith.

                                       31.
<PAGE>

     Lessee expressly acknowledges and agrees that the provisions of Section
12.5(b) above apply fully with respect to the matters waived pursuant to this
Section 17.5, and, for such purpose, the term Released Matters, as used in
Section 12.5(b), shall be deemed to include the matters waived pursuant to this
Section 17.5.

     17.6  REFERENCES. Wherever in this Article the term Lessor or Lessee is
used and such party is to receive the benefit of a provision contained in this
Article, such term shall refer not only to that party but also to its officers,
directors, shareholders, employees, contractors, partners, agents and mortgagees
or other lien holders.

                            18.  LIABILITY INSURANCE

     18.1  LESSEE'S INSURANCE. Lessee shall, at Lessee's expense, obtain and
keep in force during the Term, a commercial general liability insurance policy
insuring Lessee against the risks of, bodily injury and property damage,
personal injury, contractual liability, completed operations, products
liability, host liquor liability, owned and non-owned automobile liability
arising out of the ownership, use, occupancy or maintenance of the Leased
Premises and all areas appurtenant thereto. Such insurance shall be a combined
single limit policy in an amount not less than ONE MILLION DOLLARS
($1,000,000.00) per occurrence with a TWO MILLION DOLLAR ($2,000,000.00) annual
aggregate; and an umbrella policy of THREE MILLION DOLLARS ($3,000,000.00) any
one occurrence. Lessor and any lender or other party in interest designated by
Lessor shall be named as additional insured(s). The policy shall contain cross
liability endorsements and shall insure performance by Lessee of the indemnity
provisions of this Lease; shall be primary, not contributing with, and not in
excess of coverage which Lessor may carry; shall state that Lessor is entitled
to recovery for the negligence of Lessee even though Lessor is named as an
additional insured; shall provide for severability of interest; shall provide
that an act or omission of one of the insured or additional insureds which would
void or otherwise reduce coverage shall not void or reduce coverages as to the
other insured or additional insured; and shall afford coverage after the Term
(by separate policy or extension if necessary) for all claims based on acts,
omissions, injury or damage which occurred or arose (or the onset of which
occurred or arose) in whole or in part during the Term. The limits of said
insurance shall not limit any liability of Lessee hereunder. Not more frequently
than every three (3) years, if, in the reasonable opinion of Lessor, the amount
of liability insurance required hereunder is not adequate, Lessee shall promptly
increase said insurance coverage as required by Lessor.

     18.2  WORKERS' COMPENSATION INSURANCE. Lessee shall carry Workers'
Compensation insurance as required by law, including an employers' liability
endorsement.

     18.3  RENT LOSS/BUSINESS INTERRUPTION INSURANCE. Lessee shall carry Rental
Loss/Business Interruption insurance covering rental loss or business
interruptions resulting from those risks referred to in Section 18.1 in an
amount equal to all Rent payable under this Lease for a period of twelve (12)
months at the then current rate of charges.

                                       32.
<PAGE>

                       19.  INSURANCE POLICY REQUIREMENTS

     19.1  GENERAL REQUIREMENTS. All insurance policies required to be carried
by Lessee (except Lessee's business personal property insurance) hereunder shall
conform to the following requirements:

           (a)  The insurer in each case shall carry a designation in "Best's
Insurance Reports" as issued from time to time throughout the Term as follows:
Policyholders' rating of A; financial rating of not less than VII;

           (b)  The insurer shall be qualified to do business in the state in
which the Leased Premises are located;

           (c)  The policy shall be in a form and include such endorsements as
are acceptable to Lessor;

           (d)  Certificates of insurance shall be delivered to Lessor at
commencement of the Term and certificates of renewal at least thirty (30) days
prior to the expiration of each policy;

           (e)  Each policy shall require that Lessor be notified in writing by
the insurer at least thirty (30) days prior to any cancellation or expiration of
such policy, or any reduction in the amounts of insurance carried.

                         20.  LESSEE INSURANCE DEFAULT

     20.1  RIGHTS OF LESSOR. In the event that Lessee fails to obtain any
insurance required of it under the terms of this Lease, Lessor may, at its
option, but is not obligated to, obtain such insurance on behalf of Lessee and
bill Lessee, as additional rent, for the cost thereof. Payment shall be due
within ten (10) days of receipt of the billing therefor by Lessee.

                 21.  FORFEITURE OF PROPERTY AND LESSOR'S LIEN

     21.1  REMOVAL OF PERSONAL PROPERTY. Lessee agrees that as at the date of
termination of this Lease or repossession of the Leased Premises by Lessor, by
way of default or otherwise, it shall remove all personal property to which it
has the right to ownership pursuant to the terms of this Lease. Any and all such
property of Lessee not removed by such date shall, at the option of Lessor,
irrevocably become the sole property of Lessor. Lessee waives all rights to
notice and all common law and statutory claims and causes of action which it may
have against Lessor subsequent to such date as regards the storage, destruction,
damage, loss of use and ownership of the personal property affected by the terms
of this Article. Lessee acknowledges Lessor's need to relet the Leased Premises
upon termination of this Lease or repossession of the Leased Premises and
understands that the forfeitures and waivers provided herein are necessary to
aid said reletting, and to prevent Lessor incurring a loss for inability to
deliver the Leased Premises to a prospective lessee.

                                       33.
<PAGE>

     21.2  LESSOR'S LIEN. Lessee hereby grants to Lessor a lien upon and
security interest in all fixtures, chattels and personal property of every kind
now or hereafter to be placed or installed in or on the Leased Premises and
agrees that in the event of any default on the part of Lessee, Lessor shall have
all the rights and remedies afforded the secured party by the chapter on
"DEFAULT" of Division 9 of the Uniform Commercial Code of the state in which the
Leased Premises are located and may, in connection therewith, also (a) enter on
the Leased Premises to assemble and take possession of the collateral, (b)
require Lessee to assemble the collateral and make its possession available to
Lessor at the Leased Premises, and (c) enter the Leased Premises, render the
collateral, if equipment, unusable and dispose of it in a manner provided by the
Uniform Commercial Code of the state in which the Leased Premises are located.
Lessee hereby designates Lessor as his attorney-in-fact for purposes of
executing such documents as may be necessary to perfect the lien and security
interest granted hereunder.

                          22.  MAINTENANCE AND REPAIRS

     22.1  LESSOR'S OBLIGATIONS. Subject to the other provisions of this Lease
imposing obligations in this respect upon Lessee, Lessor shall repair, replace
and maintain the external and Structural parts of the Complex which do not
comprise a part of the Leased Premises and are not leased to others, janitor and
equipment closets and shafts within the Leased Premises designated by Lessor for
use by it in connection with the operation and maintenance of the Complex, and
all Common Areas. Lessee shall maintain and repair equipment, Lines, facilities
or systems of the Building or Complex which are outside of the Leased Premises
or which do not exclusively serve the Leased Premises. Lessor shall perform such
repairs, replacements and maintenance with reasonable dispatch, in a good and
workmanlike manner; but Lessor shall not be liable for any damages, direct,
indirect or consequential, or for damages for personal discomfort, illness or
inconvenience of Lessee by reason of failure of equipment, Lines, facilities or
systems or reasonable delays in the performance of such repairs, replacements
and maintenance, unless caused by the deliberate act or omission of Lessor, its
servants, agents, or employees. The cost for such repairs, maintenance and
replacement shall be included in Operating Costs in accordance with Section 2.1
hereof.

     22.2  NEGLIGENCE OF LESSEE. If the Building, the elevators, escalators,
boilers, engines, pipes or apparatus used for the purpose of climate control of
the Building or operating the elevators, or escalators, or if the water pipes,
drainage pipes, electric lighting or other equipment, Lines, systems and/or
facilities of the Building or the Complex, or the roof or the outside walls of
the Building, fall into a state of disrepair or become damaged or destroyed
through the negligence, carelessness or misuse of Lessee, its agents, employees
or anyone permitted by it to be in the Complex, or through it in any way, the
cost of the necessary repairs, replacements or alterations shall be borne by
Lessee who shall pay the same to Lessor as additional charges forthwith on
demand.

     22.3  LESSEE'S OBLIGATIONS. Lessee shall repair the Leased Premises,
including without limiting the generality of the foregoing, all interior
partitions and walls, fixtures, Leasehold Improvements and alterations in the
Leased Premises and all electrical and telephone outlets and conduits, fixtures
and shelving, and special mechanical and electrical

                                       34.
<PAGE>

equipment which equipment is not a normal part of the Leased Premises installed
by or for Lessee, reasonable wear and tear, damage with respect to which Lessor
has an obligation to repair as provided in Section 22.1 and Section 23.2 hereof
only excepted. Prior to commencement of any repairs, Lessee shall give Lessor at
least ten (10) days' prior written notice thereof so that Lessor may post
notices of non-responsibility in or upon the Leased Premises as provided by law.
Lessee must obtain the prior written approval from Lessor for Lessee's
contractor before the commencement of the repair. Lessor may require that Lessee
use a specific contractor for certain types of repairs. Lessor may enter and
view the state of repair and Lessee will repair in a good and workmanlike manner
according to notice in writing. Notwithstanding the foregoing, Lessee shall not
make any repairs to the equipment, Lines, facilities or systems of the Building
or Complex which are outside of the Leased Premises or which do not exclusively
serve the Leased Premises.

     22.4  CLEANING. Lessee agrees at the end of each business day to leave the
Leased Premises in a reasonably clean condition for the purpose of the
performance of Lessor's cleaning services referred to herein. Lessee shall
maintain the appearance of the Leased Premises in a manner consistent with the
character, use and appearance of the Complex.

     22.5  WAIVER. Lessee waives all rights it may have under law to make
repairs at Lessor's expense.

     22.6  ACCEPTANCE. Except as to the construction obligations of Lessor for
the Lessor's Work, if any, stated in Exhibit D to this Lease, Lessee shall
accept the Leased Premises in "as is" condition as of the date of execution of
this Lease by Lessee, and Lessee acknowledges that the Leased Premises in such
condition are in good and sanitary order, condition and repair. Lessee
acknowledges that there shall be no floor/ceiling coring or penetrations due to
the post tension floor slab structural system of the Building.

                                23.  DESTRUCTION

     23.1  RIGHTS OF TERMINATION. In the event the Leased Premises suffers (a)
an "uninsured property loss" (as hereinafter defined) or (b) a property loss
which cannot be repaired within one hundred twenty (120) days from the date of
destruction under the laws and regulations of state, federal, county or
municipal authorities, or other authorities with jurisdiction, Lessor may
terminate this Lease as at the date of the damage upon written notice to Lessee
following the property loss. For purposes of this Lease, the term "uninsured
property loss" shall mean any loss arising from a peril not covered by the
standard form of "All Risk" property insurance policy.

     23.2  REPAIRS. In the event of a property loss which may be repaired within
one hundred twenty (120) days from the date of the damage, or, in the
alternative, in the event Lessor does not elect to terminate this Lease under
the terms of Section 23.1 above, then this Lease shall continue in full force
and effect and Lessor shall forthwith undertake to make such repairs to
reconstitute the Leased Premises to as near the condition as existed prior to
the property loss as practicable but not including any construction originally
performed by Lessee

                                       35.
<PAGE>

(including Lessee's Work) or subsequently undertaken by Lessee, but shall
include solely property constructed by Lessor (including Lessor's Work) prior to
the commencement of the Term. Such partial destruction shall in no way annul or
void this Lease except that Lessee shall be entitled to a proportionate
reduction of Minimum Rent following the property loss and until the time the
Leased Premises are restored. Such reduction shall be pro rata based upon the
number of Usable square feet of the Leased Premises damaged and not occupied.
Lessor's obligations to restore shall in no way include any construction
originally performed by Lessee or subsequently undertaken by Lessee, but shall
include solely that property constructed by Lessor prior to commencement of the
Term.

     23.3  REPAIR COSTS. The cost of any repairs to be made by Lessor, pursuant
to Section 23.2 of this Lease, shall be paid by Lessor utilizing available
insurance proceeds. Lessee shall reimburse Lessor upon completion of the repairs
for any deductible for which no insurance proceeds will be obtained under
Lessor's insurance policy to the extent such deductible is not reimbursed as an
Operating Cost, or if other premises are also repaired, a pro rata share based
on total costs of repair equitably apportioned to the Leased Premises. Lessee
shall, however, not be responsible to pay any deductible or its share of any
deductible to the extent that Lessee's payment would be in excess of $10,000 if
Lessee's consent has not been received by Lessor, unless such denial of consent
by Lessee is unreasonable in the reasonable judgment of Lessor's insurance
consultant.

     23.4  WAIVER. Lessee hereby waives all statutory or common law rights of
termination in respect to any partial destruction or property loss which Lessor
is obligated to repair or may elect to repair under the terms of this Article.
Further, in event of a property loss occurring during the last two (2) years of
the original Term hereof or of any extension, Lessor need not undertake any
repairs and may cancel this Lease unless Lessee has the right under the terms of
this Lease to extend the Term for an additional period of at least five (5)
years and does so within thirty (30) days of the date of the property loss.

     23.5  LESSOR'S ELECTION. In the event that the Complex or Building in which
the Leased Premises are situated be destroyed to the extent of not less than
thirty-three and one-third percent (33-1/3%) of the replacement cost thereof,
Lessor may elect to terminate this Lease, whether the Leased Premises be injured
or not, in the same manner as in Section 23.1 above. At all events, a total
destruction of the Complex of which the Leased Premises form a part, or the
Leased Premises itself, shall terminate this Lease.

                               24.  CONDEMNATION

     24.1  DEFINITIONS.
           -----------

           (a) "CONDEMNATION" means (i) the exercise of any governmental power,
               --------------
whether by legal proceedings or otherwise, by a condemnor and/or (ii) a
voluntary sale or transfer by Lessor to any condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending.

                                       36.
<PAGE>

           (b)   "DATE OF TAKING" means the date the condemnor has the right to
                  --------------
possession of the property being condemned.

           (c)   "AWARD" means all compensation, sums or anything of value
                  -----
awarded, paid or received on a total or partial condemnation.

           (d)   "CONDEMNOR" means any public or quasi-public authority, or
                  ---------
private corporation or individual, having the power of condemnation.

     24.2  TOTAL TAKING. If the Leased Premises are totally taken by
condemnation, this Lease shall terminate on the date of taking.

     24.3  PARTIAL TAKING: COMMON AREAS.
           ----------------------------

           (a)   If any portion of the Leased Premises is taken by condemnation,
this Lease shall remain in effect, except that Lessee can elect to terminate
this Lease if thirty-three and one-third percent (33-1/3%) or more of the total
number of square feet in the Leased Premises is taken.

           (b)   If any part of the Common Areas of the Complex is taken by
condemnation and as a consequence thereof, the Complex is not in compliance with
applicable governmental codes and requirements, then Lessor shall have the
election to terminate this Lease pursuant to this Section.

           (c)   If fifty percent (50%) or more of the Building in which the
Leased Premises are located is taken, Lessor shall have the election to
terminate this Lease in the manner prescribed herein.

     24.4  TERMINATION OR ABATEMENT. If either party elects to terminate this
Lease under the provisions of Section 24.3 (such party is hereinafter referred
to as the "Terminating Party"), it must terminate by giving notice to the other
party (the "Nonterminating Party") within thirty (30) days after the nature and
extent of the taking have been finally determined (the "Decision Period"). The
Terminating Party shall notify the Nonterminating Party of the date of
termination, which date shall not be earlier than sixty (60) days after the
Terminating Party has notified the Nonterminating Party of its election to
terminate nor later than the date of taking. If Notice of Termination is not
given within the Decision Period, the Lease shall continue in full force and
effect except that Minimum Rent shall be reduced by subtracting therefrom an
amount calculated by multiplying the Minimum Rent in effect prior to the taking
by a fraction the numerator of which is the number of square feet taken from the
Leased Premises and the denominator of which is the number of square feet in the
Leased Premises prior to the taking.

     24.5  RESTORATION. If there is a partial taking of the Leased Premises and
this Lease remains in full force and effect pursuant to this Article, Lessor, at
its cost, shall accomplish all necessary restoration so that the Leased Premises
is returned as near as practical to its condition immediately prior to the date
of the taking, but in no event shall Lessor be

                                       37.
<PAGE>

obligated to expend more for such restoration than the extent of funds actually
paid to Lessor by the condemnor.

     24.6   AWARD. Any award arising from the condemnation or the settlement
thereof shall belong to and be paid to Lessor except that Lessee shall receive
from the award compensation for the following if specified in the award by the
condemning authority, so long as it does not reduce Lessor's award in respect of
the real property: Lessee's trade fixtures, tangible personal property, loss of
business and relocation expenses. At all events, Lessor shall be solely entitled
to all award in respect of the real property, including the bonus value of the
leasehold. Lessee shall not be entitled to any award until Lessor has received
the above sum in full.

                         25.  ASSIGNMENT AND SUBLETTING

     25.1   LEASE IS PERSONAL. The purpose of this Lease is to transfer
possession of the Leased Premises to Lessee for Lessee's personal use in return
for certain benefits, including rent, to be transferred to the Lessor. Lessee's
right to assign or sublet as stated in this Article is subsidiary and incidental
to the underlying purpose of this Lease. Lessee acknowledges and agrees that it
has entered into this Lease in order to acquire the Leased Premises for its own
personal use and not for the purpose of obtaining the right to convey the
leasehold to others.

     25.2   "TRANSFER OF THE LEASED PREMISES" DEFINED. The terms "Transfer of
the Leased Premises" or "Transfer" as used herein shall include any assignment
of all or any part of this Lease (including assignment by operation of law),
subletting of all or any part of the Leased Premises or transfer of possession,
or granting of the right of possession or contingent right of possession of all
or any portion of the Leased Premises including, without limitation, license,
concession, mortgage, devise, hypothecation, agency, franchise or management
agreement, or suffering any other person (the agents and servants of Lessee
excepted) to occupy or use the Leased Premises or any portion thereof. If Lessee
is a corporation which is not deemed a public corporation, or is an
unincorporated association or partnership, or Lessee consists of more than one
party, the transfer, assignment or hypothecation of any stock or interest in
such corporation, association, partnership or ownership interest, in the
aggregate in excess of twenty-five percent (25%), shall be deemed a Transfer of
the Leased Premises; provided, however, that the issuance of up to fifty percent
(50%) of the stock (which percentage shall be calculated at the date of such
issuance) of Lessee to any investor in exchange for capital investment shall not
be deemed a Transfer of the Leased Premises.

     25.3   NO TRANSFER WITHOUT CONSENT. Lessee shall not suffer a Transfer of
the Leased Premises or any interest therein, or any part thereof, or any right
or privilege appurtenant thereto without the prior written consent of Lessor,
and a consent to one Transfer of the Leased Premises shall not be deemed to be a
consent to any subsequent Transfer of the Leased Premises. Any Transfer of the
Leased Premises without such consent shall (i) be voidable, and (ii) terminate
this Lease, in either case, at the option of Lessor.

                                       38.
<PAGE>

     25.4   WHEN CONSENT GRANTED.
            --------------------

            (a)  The consent of Lessor to a Transfer may not be unreasonably
withheld, provided that it is agreed to be reasonable for Lessor to consider any
of the following reasons, which list is not exclusive, in electing to consent or
to deny consent:

                 (i)    Financial strength of the proposed transferee is not at
least equal to that of Lessee at the time of execution of this Lease;

                 (ii)   A proposed transferee whose occupation of the Leased
Premises would cause a diminution in the reputation of the Complex or the other
businesses located therein;

                 (iii)  A proposed transferee whose impact on the common
facilities or the other occupants of the Complex would be disadvantageous to the
operation and management of the Complex including increasing the cost of
operation and management;

                 (iv)   A proposed transferee whose use presents a risk of
violation of Article 12;

                 (v)    A proposed transferee whose occupancy will require a
variation in the terms of this Lease (for example, a variation in the use
clause) or which otherwise adversely affects any interest of Lessor;

                 (vi)   That there be no uncured notices of default under the
terms of this Lease; or

                 (vii)  A proposed transferee who is or is likely to be, or
whose business is or is likely to be, subject to compliance with additional laws
or other governmental requirements beyond those to which Lessee or Lessee's
business is subject.

            (b)  Notwithstanding the foregoing, Lessee shall have the right,
without the consent of Lessor, but upon prior written notice to Lessor, to
assign this Lease to a company incorporated or to be incorporated by Lessee,
provided that Lessee owns or beneficially controls all the issued and
outstanding shares of capital stock of the company; further provided, however,
that in the event that at any time following such assignment, Lessee wishes to
sell, mortgage, devise, hypothecate or in any other manner whatsoever transfer
any portion of the ownership or beneficial control of the issued and outstanding
shares in the capital stock of such company, such transaction shall be deemed to
constitute a Transfer and shall be subject to all of the provisions of this
Article 25 with respect to a Transfer of the Premises including, by specific
reference, the provisions of Section 25.8.

     25.5   PROCEDURE FOR OBTAINING CONSENT.
            -------------------------------

            (a)  Lessor need not commence its review of any proposed Transfer,
or respond to any request by Lessee with respect to such, unless and until it
has received from

                                       39.
<PAGE>

Lessee adequate descriptive information concerning the transferee, the business
to be conducted by the transferee, the transferee's financial capacity, and such
other information as may reasonably be required in order to form a prudent
judgment as to the acceptability of the proposed Transfer, including, without
limitation, the following:

                 (i)    Reasonable financial information concerning the proposed
transferee including the past two years' audited annual Balance Sheets and
Profit and Loss statements, certified correct by a Certified Public Accountant;

                 (ii)   Banking references of the proposed transferee;

                 (iii)  A resume of the business background and experience of
the proposed transferee;

                 (iv)   At least five (5) business references for the proposed
transferee;

                 (v)    An executed copy of the instrument by which Lessee
proposes to effectuate the Transfer;

                 (vi)   A certified statement, including the calculation, of the
amount of unamortized cost of Lessee's Tenant Improvements to the Leased
Premises.

           (b)   Lessee shall reimburse Lessor as additional rent for Lessor's
reasonable costs and attorneys' fees incurred in conjunction with the processing
and documentation of any proposed Transfer of the Leased Premises, whether or
not consent is granted.

     25.6  RECAPTURE.
           ---------

           (a)   By written notice to Lessee (the "Termination Notice") within
twenty (20) business days following submission to Lessor by Lessee of the
information specified in Section 25.5, Lessor (i) may terminate this Lease in
the event of an assignment of this Lease or sublet of the entire Leased
Premises, or (ii), if such proposed subletting will result in more than 50% of
the entire Leased Premises being sublet (in the aggregate with any previous
subleases), terminate this Lease as to all or any portion of the Leased. Any
termination pursuant to clause (ii) above shall be subject to the rights of any
sublessees under any existing subleases provided Lessor has previously consented
to the sublease in accordance with the terms of this Lease. In the event Lessor
elects to terminate this Lease as to that portion of the Leased Premises to be
sublet, an amendment to this Lease shall be executed whereby the description of
the Leased Premises is restated and Lessee's obligations for rent and other
charges are reduced in proportion to the reduction in Rentable Area of the
Leased Premises caused thereby.

           (b)   In the event that Lessor terminates this Lease or terminates
this Lease as to a portion thereof, Lessor may, if it elects, enter into a new
lease covering the Premises or a portion thereof with the intended assignee or
sublessee on such terms as Lessor and such person may agree or enter into a new
lease covering the Premises with any other person; in

                                       40.
<PAGE>

such event, Lessee shall not be entitled to any portion of the profit if any
which Lessor may realize on account of such termination and reletting. From and
after the date of such termination of this Lease, the parties shall have no
further obligations to each other under this Lease except for matters occurring
or obligations arising prior to the date of such termination.

     25.7   REASONABLE RESTRICTION. The restrictions on Transfer described in
this Article 25 are acknowledged by Lessee to be reasonable for all purposes,
including, without limitation, the provisions of California Civil Code (the
"Code") Section 1951.4(b)(2). Lessee expressly waives any rights which it might
otherwise be deemed to possess pursuant to applicable law, including, without
limitation, Section 1997.040 of the Code, to limit any remedy of Lessor pursuant
to Section 1951.2 or 1951.4 of the Code by means of proof that enforcement of a
restriction on use of the Leased Premises would be unreasonable.

     25.8   EFFECT OF TRANSFER. If Lessor consents to a Transfer, (or if a
Transfer occurs without Lessor's consent in accordance with Section 25.4(b)),
the following conditions shall apply:

            (a)  Each and every covenant, condition or obligation imposed upon
Lessee by this Lease and each and every right, remedy or benefit afforded Lessor
by this Lease shall not be impaired or diminished as a result of such Transfer.

            (b)  Lessee shall pay to Lessor on a monthly basis, one hundred
percent (100%) of the excess of any sums of money, or other economic
consideration received by Lessee from the Transferee in such month (whether or
not for a period longer than one month), including higher rent, bonuses, key
money, or the like over the aggregate, of (i) the amortized portion of the
reasonable expenses actually paid by Lessee to unrelated third parties for
brokerage commissions, tenant improvements to the Leased Premises, or design
fees incurred as a direct consequence of the Transfer, and, (ii) the total sums
which Lessee pays Lessor under this Lease in such month, or the prorated portion
thereof if the Leased Premises transferred is less than the entire Leased
Premises. The amount so derived shall be paid with Lessee's payment of Minimum
Rent. The term "amortized portion" is that portion of the applicable expenses
derived by dividing such expenses by the number of months in the original term
of the Transfer transaction.

            (c)  No Transfer, whether or not consent of Lessor is required
hereunder, shall relieve Lessee of its primary obligation to pay the rent and to
perform all other obligations to be performed by Lessee hereunder. The
acceptance of rent by Lessor from any person shall not be deemed to be a waiver
by Lessor of any provision of this Lease or to be a consent to any Transfer of
the Leased Premises.

            (d)  If Lessor consents to a sublease, such sublease shall not
extend beyond the expiration of the Term.

            (e)  No Transfer shall be valid and no transferee shall take
possession of the Leased Premises or any part thereof unless, within ten (10)
days after the execution of the documentary evidence thereof, Lessee shall
deliver to Lessor a duly executed duplicate original

                                       41.
<PAGE>

of the Transfer instrument in form satisfactory to Lessor which provides that
(i) the transferee assumes Lessee's obligations for the payment of rent and for
the full and faithful observance and performance of the covenants, terms and
conditions contained herein, (ii) such transferee will, at Lessor's election,
attorn directly to Lessor in the event Lessee's Lease is terminated for any
reason on the terms set forth in the instrument of transfer and (iii) such
instrument of transfer contains such other assurances as Lessor reasonably deems
necessary.

                                26.  ABANDONMENT

     26.1  LESSEE TO OCCUPY. Lessee shall not abandon the Leased Premises at any
time during the Term, and if Lessee shall abandon, vacate or surrender the
Leased Premises, or be dispossessed by process of law, or otherwise, any
personal property belonging to Lessee and remaining on the Leased Premises
thereafter shall, at the option of Lessor, be deemed abandoned.

                              27.  ENTRY BY LESSOR

     27.1  RIGHTS OF LESSOR. Lessee shall permit Lessor and Lessor's agents to
enter the Leased Premises at all reasonable times for the purpose of inspecting
the same or for the purpose of maintaining the Building and the Lines, systems
and facilities therein, or for the purpose of making repairs, replacements,
alterations or additions to any portion of the Building and the Lines, systems
and facilities therein, including the erection and maintenance of such
scaffolding, canopies, fences and props as may be required, or for the purpose
of posting notices of non-responsibility for alterations, additions or repairs,
or for the purpose of placing upon the Building any usual or ordinary "for sale"
signs, without any rebate of Rent and without any liability to Lessee for any
loss of occupation or quiet enjoyment of the Leased Premises thereby occasioned,
and shall permit Lessor, at any time within ninety (90) days prior to the
expiration of this Lease, to place upon the Leased Premises any usual or
ordinary "to let" or "to lease" signs. This Section in no way affects the
maintenance obligations of the parties hereto.

                                   28.  SIGNS

     28.1  Lessee shall not place on the Leased Premises or on the Complex, any
exterior signs or advertisements nor any interior signs or advertisements that
are visible from the exterior of the Leased Premises including the Atrium,
without Lessor's prior written consent, which Lessor reserves the right to
withhold for any aesthetic reason in its sole judgment. Lessee's name shall be
included on the Building directory in the main lobby of the Building and in
applicable Common Areas, in accordance with Lessor's Sign Program, if
applicable. The cost of installation and regular maintenance of any such signs
approved by Lessor shall be at the sole expense of Lessee. At the termination of
this Lease, or any extension thereof, Lessee shall remove all its signs, and all
damage caused by such removal shall be repaired at Lessee's expense.

                                       42.
<PAGE>

                                  29.  DEFAULT

     29.1   DEFINITION. The occurrence of any of the following shall constitute
a material default and breach of this Lease by Lessee:

            (a)  Any failure by Lessee to pay the rent or to make any other
payment required to be made by Lessee hereunder when due;

            (b)  The abandonment of the Leased Premises by Lessee in violation
of Section 26.1 hereof;

            (c)  Any failure by Lessee to provide executed documents as and when
required under the provisions of Section 36.2 and/or Article 37;

            (d)  A failure by Lessee to observe and perform any other provision
of this Lease to be observed or performed by Lessee, where such failure
continues for ten (10) days after written notice thereof by Lessor to Lessee;
provided, however, that if the nature of the default is such that the same
cannot reasonably be cured within the ten (10) day period allowed, Lessee shall
not be deemed to be in default if Lessee shall, within such ten (10) day period,
commence to cure and thereafter diligently prosecute the same to completion;

            (e)  Either (1) the appointment of a receiver (except a receiver
appointed at the instance or request of Lessor) to take possession of all or
substantially all of the assets of Lessee, or (2) a general assignment by Lessee
for the benefit of creditors, or (3) any action taken or suffered by Lessee
under any insolvency or bankruptcy act shall constitute a breach of this Lease
by Lessee. In such event, Lessor may, at its option, declare this Lease
terminated and forfeited by Lessee, and Lessor shall be entitled to immediate
possession of the Leased Premises. Upon such notice of termination, this Lease
shall terminate immediately and automatically by its own limitation;

            (f)  Any two (2) failures by Lessee to observe and perform any
provision of this Lease during any twelve (12) month period of the Term, as such
may be extended, shall constitute, at the option of Lessor, a separate and
noncurable default.

                           30.  REMEDIES UPON DEFAULT

     30.1   Termination and Damages. In the event of any default by Lessee, then
in addition to any other remedies available to Lessor herein or at law or in
equity, Lessor shall have the immediate option to terminate this Lease and all
rights of Lessee hereunder by giving written notice of such intention to
terminate. In the event that Lessor shall elect to so terminate this Lease, then
Lessor may recover from Lessee:

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

                                       43.
<PAGE>

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

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

            (d)  Any other amount necessary to compensate Lessor for all the
detriment proximately caused by Lessee's failure to perform its obligations
under this Lease or which in the ordinary course of events would be likely to
result therefrom; and

            (e)  At Lessor's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by the applicable
law in the state in which the Leased Premises are located.

     30.2   Definition. As used in subsections 30.1(a) and (b) above, the "worth
at the time of award" is computed by allowing interest at the rate of ten
percent (10%) per annum. As used in subsection 30.1(c) above, the "worth at the
time of award" is computed by discounting such amount at the discount rate of
the Federal Reserve Bank for the region in which the Complex is located at the
time of award plus one percent (1%).

     30.3   PERSONAL PROPERTY.

            (a)  In the event of any default by Lessee, Lessor shall also have
the right, with or without terminating this Lease, to reenter the Leased
Premises and remove all persons and property from the Leased Premises; such
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Lessee.

            (b)  In the event of default, all of Lessee's fixtures, furniture,
equipment, improvements, additions, alterations and other personal property
shall remain upon the Leased Premises and in that event, and continuing during
the length of such default, Lessor shall have the sole right to take exclusive
possession of such property and to use it, rent or charge free, until all
defaults are cured or, at Lessor's option, at any time during the Term, to
require Lessee to forthwith remove such property. The rights stated herein are
in addition to Lessor's rights described in Section 21.1.

     30.4   RECOVERY OF RENT; RELETTING.
            ---------------------------

            (a)  In the event of the vacation or abandonment of the Leased
Premises by Lessee or in the event that Lessor shall elect to reenter as
provided in Section 30.3 above, or shall take possession of the Leased Premises
pursuant to legal proceeding or pursuant to any notice provided by law, then if
Lessor does not elect to terminate this Lease as provided in Section 30.1 above,
this Lease shall continue in effect for so long as Lessor does not terminate
Lessee's right to possession, and Lessor may enforce all its rights and remedies
under this Lease, including, without limitation, Lessor's right from, time to
time, without terminating

                                       44.
<PAGE>

this Lease, to either recover all rental as it becomes due or relet the Leased
Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Lessor, in its sole
discretion, may deem advisable, with the right to make alterations and repairs
to the Leased Premises. Acts of maintenance or preservation or efforts to relet
the Leased Premises or the appointment of a receiver upon initiation of Lessor
or other legal proceeding granting Lessor or its agent possession to protect
Lessor's interest under this Lease shall not constitute a termination of
Lessee's right to possession.

            (b)  In the event that Lessor shall elect to so relet, then rentals
received by Lessor from such reletting shall be applied: first, to the payment
of any indebtedness other than rent due hereunder from Lessee to Lessor; second,
to the payment of any cost of such reletting; third, to the payment of the cost
of any alterations and repairs to the Leased Premises; fourth, to the payment of
rent due and unpaid hereunder; and the residue, if any, shall be held by Lessor
and applied in payment of future rent as the same may become due and payable
hereunder. Should that portion of such rentals received from such reletting
during any month, which is applied by the payment of rent hereunder, be less
than the rent payable during that month by Lessee hereunder, then Lessee shall
pay such deficiency to Lessor immediately upon demand therefor by Lessor. Such
deficiency shall be calculated and paid monthly. Lessee shall also pay to
Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.

            (c)  No reentry or taking possession of the Leased Premises or any
other action under this Section shall be construed as an election to terminate
this Lease unless a written notice of such intention be given to Lessee or
unless the termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Lessor because of any
default by Lessee, Lessor may at any time after such reletting elect to
terminate this Lease for any such default.

            (d)  Lessor has the remedy described in California Civil Code
Section 1951.4 (Lessor may continue Lease in effect after Lessee's breach and
abandonment and recover rent as it becomes due, if Lessee has right to sublet or
assign, subject only to reasonable limitations).

     30.5   NO WAIVER. Efforts by Lessor to mitigate the damages caused by
Lessee's default in this Lease shall not constitute a waiver of Lessor's right
to recover damages hereunder, nor shall Lessor have any obligation to mitigate
damages hereunder.

     30.6   CURING DEFAULTS. Should Lessee fail to repair, maintain, keep clean,
and/or service the Leased Premises, or any part or contents thereof at any time
or times, or perform any other obligations imposed by this Lease or otherwise,
then after having given Lessee reasonable notice of the failure or failures and
a reasonable opportunity which in no case shall exceed ten (10) days, to remedy
the failure, Lessor may enter upon the Leased Premises and perform or contract
for the performance of the repair, maintenance, or other Lessee

                                       45.
<PAGE>

obligation, and Lessee shall pay Lessor for all direct and indirect costs
incurred in connection therewith within ten (10) days of receiving a bill
therefor from Lessor.

     30.7   NO RIGHT TO CURE. Notwithstanding anything to the contrary set forth
in Section 33.1 above, Lessee shall be deemed to have committed a material
default and breach of this Lease, without any right on Lessee's part to cure
such default and breach, upon the failure by Lessee to observe and perform the
provisions of any one or more of the following Sections (or indicated portions
thereof) of this Lease: 3.3, 12.1, 15.1 (first sentence), 25.3, 27.1, 36.2,
37.1, and 37.2.

     30.8   CUMULATIVE REMEDIES. The various rights, options, election powers,
and remedies of Lessor contained in this Article and elsewhere in this Lease
shall be construed as cumulative and no one of them exclusive of any others or
of any legal or equitable remedy which Lessor might otherwise have in the event
of breach or default, and the exercise of one right or remedy by Lessor shall
not in any way impair its right to any other right or remedy.

                                31.  BANKRUPTCY

     31.1   BANKRUPTCY EVENTS. If at any time during the Term there shall be
filed by or against Lessee in any court pursuant to any statute either of the
United States or of any state, commonwealth, district or territory thereof a
petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of Lessee's property or
estate, or if a receiver or trustee takes possession of any of the assets of
Lessee, or if the leasehold interest herein passes to a receiver, or if Lessee
makes an assignment for the benefit of creditors or petitions for or enters into
an arrangement (any of which are referred to herein as a "Bankruptcy Event"),
then the following provisions shall apply:

            (a)  Upon the occurrence of a Bankruptcy Event, or if Lessee takes
advantage of any insolvency laws of any state, district, commonwealth or
territory of the United States, then in any such event Lessor at its option and
sole discretion may terminate this Lease at any time by written notice to Lessee
(subject, however, to applicable provisions of the applicable bankruptcy federal
or state statutes or any insolvency laws during the pendency of any action
thereunder involving Lessee as the subject debtor). If this Lease is terminated
under this Article, (i) Lessee agrees to immediately surrender and vacate the
Premises, waives all statutory or other notice to quit, and agrees that Lessor's
obligations under this Lease shall cease from such termination date, and (ii)
Lessor may recover possession by process of law or in any other lawful manner.
Furthermore, if this Lease terminates under this Section (b), Lessor shall,
subject to the Bankruptcy Code, have all rights and remedies against Lessee as
provided in this Lease and at law for a default of Lessee in the payment of
Minimum Rent, Percentage Rent, if any, and/or additional Rent. Lessee hereby
acknowledges that it shall have abandoned all of its personal property remaining
in the Premises after Lessee surrenders possession of the Premises, and Lessee
hereby authorizes Lessor to dispose of such personal property in any manner
Lessor deems appropriate without accounting to Lessee or its legal
representative for the proceeds thereof. Notwithstanding the foregoing, Lessor
retains the right to assert an administrative claim and a general unsecured
claim that result from a breach

                                       46.
<PAGE>

of this Lease including, without limitation, the cost to remove Lessee's
personal property from the Premises and to restore the Premises after Lessee
surrenders possession thereof.

           (b)   In all events any receiver or trustee in bankruptcy or Lessee
as debtor in possession shall, by written notice, either expressly assume or
reject this Lease within sixty (60) days following the entry of an "Order for
Relief." Failure of the trustee to give notice of such assumption hereof within
said period shall conclusively and irrevocably constitute a rejection of this
Lease and waiver of any rights to assume or assign this Lease.

           (c)   Lessee or the receiver or trustee shall not have the right to
assume this Lease unless (1) Lessee or the receiver or trustee cures any default
or provides adequate assurances that defaults will be promptly cured; (2) Lessee
or the receiver or trustee compensates Lessor and any other party other then
Lessor for all monetary damages and/or any actual pecuniary loss incurred as a
result of such default or provides adequate assurances that compensation will be
made for such monetary damages and/or actual pecuniary loss; (3) the Bankruptcy
Court (or other court of competent jurisdiction) enters an order authorizing the
assumption or assignment; (4) the assumption or assignment is not prohibited
under applicable law, including, but not limited to, Section 365 of the
Bankruptcy Code; and (5) Lessee or the receiver or trustee provides to Lessor
"adequate assurance of future performance" (as defined herein below) of the
Lease. For the purposes of this Section (c), "adequate assurance of future
performance" of all obligations under this Lease shall include, but is not
limited to:

                 (i)    providing financial records which reveal that Lessee's
gross receipts in the ordinary course of its business during the thirty (30)
days immediately preceding the initiation of the case under the Bankruptcy Code
must be at least ten (10) times greater than the next installment of Minimum
Rent and other charges due under this Lease;

                 (ii)   providing financial records which reveal that both the
average and median of Lessee's monthly gross receipts in the ordinary course of
business during the six (6) months immediately preceding initiation of the case
under the Bankruptcy Code must be at least five (5) times greater than the next
installment of Minimum Rent and other charges due under this Lease;

                 (iii)  covenanting in writing to Lessor (and obtaining approval
from the Bankruptcy Court therefor) that Lessee shall pay in advance to Lessor
all Minimum Rent and other sums payable by Lessee hereunder including, but not
limited to, its share (as estimated by Lessor) of the cost of all services
provided by Lessor (whether directly or through agents or contractors, and
whether or not the cost of such services is to be passed through to Lessee) in
advance of the performance or provision of such services;

                 (iv)   covenanting in writing to Lessor (and obtaining approval
from the Bankruptcy Court therefor) that Lessee shall pay Minimum Rent and any
other consideration due under the Lease shall first be paid before any other of
Lessee's costs of operation of its business in the Premises are paid;

                                       47.
<PAGE>

         (v) covenanting in writing to Lessor (and obtaining approval from the
Bankruptcy Court therefor) that Lessee's business shall be conducted in a first
class manner, and that no liquidating sales, auctions, or other non-first class
business operations shall be conducted on the Premises, and that the use of the
Premises as stated in this Lease will remain unchanged, and that the assumption
or assignment of this Lease will not violate or adversely affect the rights of
other lessees located in the Complex, and that if any of these breaches occur,
Lessee or the receiver or trustee will indemnify Lessor against such loss
(including costs of suit and attorneys' fees), occasioned by such breach; and

         (vi) in the event this Lease is for space within a shopping center,
Lessee reasonably satisfying any additional requirements imposed under Section
365(b)(3) of the Bankruptcy Code.

     (d) Where a default exists under the Lease, the party assuming the Lease
may not require Lessor to provide services or supplies incidental to the Lease
before its assumption, unless Lessor is compensated under the terms of the Lease
for such services and supplies before the assumption of such Lease.

     (e) In the event Lessee is unable to: (i) cure its defaults, (ii) reimburse
Lessor or any other party to this Lease for its monetary damages or actual
pecuniary loss to such party resulting from the defaults, (iii) pay the rents
due under this Lease or any other payments required of Lessee under this Lease
when due, or (iv) meet the criteria and obligations imposed by (i) through (vi)
in the previous Section (d), then Lessee hereby agrees in advance that it has
not met its burden to provide adequate assurance of future performance and
therefore cannot assume this Lease, and this Lease may be immediately terminated
by Lessor in accordance with Section (b) above.

     (f) Lessee or the receiver or trustee may only assign this Lease in
accordance with the terms of Article 25 and if adequate assurance of future
performance by the assignee is provided, whether or not there has been a default
under the Lease. Any consideration paid by any assignee in excess of the rental
reserved in the Lease shall be the sole property of, and paid to, Lessor. Upon
assignment by Lessee or the receiver or trustee, the obligations of Lessee under
this Lease shall be deemed to have been assumed by the assignee, and the
assignee shall execute an assumption agreement on request of Lessor.

     (g) Subsequent to the commencement of a Bankruptcy Event, Lessor shall be
entitled to receive as rental for the Premises and the services provided by
Lessor no less than the rental and charges reserved in the Lease.

     (h) It is further stipulated and agreed that, notwithstanding any provision
herein to the contrary, in the event of the termination of this Lease pursuant
this Article, Lessor shall forthwith, upon such termination, to the extent that
Lessor is prevented by the Bankruptcy Code from pursuing remedies under this
Lease, and/or as provided by state law, become entitled to recover as liquidated
damages for the breach of the provisions of this Lease an amount equal to the
amount by which the then cash value of the Minimum Rent reserved hereunder for
the unexpired portion of the Lease Term exceeds the then cash rental value of

                                       48.
<PAGE>

the Premises for such unexpired portion of the Lease Term, unless the statute
which governs or shall govern the proceedings in which such damages are to be
proved limits or shall limit the amount of such claim capable of so being
proved, in which case Lessor shall be entitled to prove as and for liquidated
damages an amount equal to that allowed by or under any such statute. When
calculating damages hereunder, Lessor shall be entitled to recover the amount of
any "free rent" or other concessions extended by Lessor and received by Lessee
prior to the premature expiration of this Lease, it being agreed by Lessee that
such "free rent" and concessions were contingent upon Lessee fulfilling its
obligations for the entire term of this Lease. The provisions of this paragraph
shall be without prejudice to (i) Lessor's right to prove in full damages for
Minimum Rent, Percentage Rent, if any, and additional Rent accrued prior to the
termination of this Lease, but not paid, and (ii) any rights given to Lessor by
any pertinent statute to prove any amounts allowed thereby. In making any such
computation, the then cash rental value of the Premises shall be deemed prima
facie to be the rental realized upon any reletting, if such reletting can be
accomplished by Lessor within a reasonable time after such termination of this
Lease, and the then present cash value of the future rents hereunder reserved to
Lessor for the unexpired portion of the Lease Term hereby demised shall be
deemed to be such sum, if invested at the then current passbook account rate
offered by Wells Fargo Bank, N.A. at its main office in San Francisco, as will
produce the future rent over the period of time in question. Lessor and Lessee
further agree that in making any computation of damages for Lessee holding over
after the termination of this Lease, Lessor may claim damages based on the
Minimum Rent, Percentage Rent, if any, and additional Rent provided herein for
the period of such hold over, it being agreed that the Minimum Rent, Percentage
Rent, if any, and additional Rent constitutes the fair rental value of the
Premises during the hold over period.

     (i) Notwithstanding subsection (i) of this Article, Lessor specifically
reserves any and all remedies available to Lessor in Article 30 hereof or at law
or in equity in respect of a Bankruptcy Event to the extent such remedies are
permitted by law.

                            32.  SURRENDER OF LEASE

    32.1 NO MERGER. The voluntary or other surrender of this Lease by Lessee,
or a mutual cancellation thereof, shall not work as a merger, and shall, at the
option of Lessor, terminate all or any existing subleases or subtenancies, or
may, at the option of Lessor, operate as an assignment to it of any or all such
subleases or subtenancies.

                           33.  LESSOR'S EXCULPATION

    33.1 LIMITED LIABILITY. In the event of default, breach, or violation by
Lessor (which term includes Lessor's partners, co-venturers, co-tenants,
officers, directors, trustees, employees, agents, or representatives) of any of
Lessor's obligations under this Lease, Lessor's liability to Lessee shall be
limited to its ownership interest in the Leased Premises (or its interest in the
Complex, if applicable) or the proceeds of a public sale of such interest
pursuant to foreclosure of a judgment against Lessor. Lessor may, at its option,
and among its other alternatives, relieve itself of all liability under this
Lease by conveying the Leased Premises to

                                      49.
<PAGE>

Lessee. Notwithstanding any such conveyance, Lessee's leasehold and ownership
interest shall not merge.

     33.2 NO RECOURSE. Lessor (as defined in Section 33.1) shall not be
personally liable for any deficiency beyond its interest in the Leased Premises.
All personal liability of all trustees, their employees, agents or
representatives, is expressly waived by Lessee.

                              34.  ATTORNEYS' FEES

     34.1 ACTIONS, PROCEEDINGS, ETC. Lessee hereby agrees to pay, as additional
rent, all attorneys' fees and disbursements, and all other court costs or
expenses of legal proceedings or other legal services which Lessor may incur or
pay out by reason of, or in connection with:

          (a) Any appearance by Lessor (or any officer, partner, or employee of
Lessor) as a witness or otherwise in any action or proceeding whatsoever
involving or affecting Lessee or this Lease except as otherwise covered by
Section 34.3;

          (b) Any assignment, sublease, or leasehold mortgage proposed or
granted by Lessee (whether or not permitted under this Lease), and all
negotiations with respect thereto; and

          (c) Any alteration of the Leased Premises by Lessee, and all
negotiations with respect thereto.

     34.2 SURVIVAL. Lessee's obligations under this Section shall survive the
expiration or any other termination of this Lease. This Section is intended to
supplement (and not to limit) other provisions of this Lease pertaining to
indemnities and/or attorneys' fees.

     34.3 ATTORNEYS' FEES. If there is any legal action or proceeding (including
arbitration) between Lessor and Lessee arising out of any default by Lessee or
Lessor in the observance or performance of any obligation under this Lease or to
enforce this Lease or to protect or establish any right or remedy under this
Lease, the unsuccessful party to such action or proceeding shall pay to the
prevailing party all costs and expenses, including reasonable attorneys' fees
and disbursements, incurred by such prevailing party in such action or
proceeding and in any appeal in connection therewith. If such prevailing party
recovers a judgment in any such action or proceeding (including arbitration) or
appeal thereon, such costs, expenses and attorneys' fees and disbursements shall
be included in and as a part of such judgment.

                                 35.  NOTICES

     35.1 WRITING. All notices, demands and requests required or permitted to be
given or made under any provision of this Lease shall be in writing and shall be
given or made by (i) personal service, or (ii) by telephone facsimile upon which
date and time are imprinted in the course of transmission to the number
indicated in Section 1.2, or (iii) by mailing same by

                                      50.
<PAGE>

registered or certified mail, return receipt requested, postage prepaid, or (iv)
by reputable courier which provides written evidence of delivery, addressed to
the respective party at the address set forth in Section 1.2 of this Lease or at
such other address as the party may from time to time designate, by a written
notice sent to the other in the manner aforesaid.

     35.2 EFFECTIVE DATE. Any such notice, demand or request ("notice") shall be
deemed given or made on the third day after the date so mailed. Notwithstanding
the foregoing, notice given by personal delivery to the party at its address as
aforesaid shall be deemed given on the day on which delivery is made. Notice
given by a reputable courier service which provides written evidence of delivery
shall be deemed given on the business day immediately following deposit with the
courier service.

     35.3 AUTHORIZATION TO RECEIVE. Each person and/or entity whose signature
is affixed to this Lease as Lessee or as guarantor of Lessee's obligations
("obligor") designates such other obligor its agent for the purpose of receiving
any notice pertaining to this Lease or service of process in the event of any
litigation or dispute arising from any obligation imposed by this Lease.

                              36.  SUBORDINATION

     36.1 PRIORITY OF ENCUMBRANCES. This Lease shall be subject and subordinate
at all times to any and all ground leases and the lien of any and all mortgages
and deeds of trust securing any amount or amounts whatsoever which may now exist
or hereafter be placed on or against or encumbering the Building or on or
against or encumbering Lessor's interest or estate therein ("Superior Leases and
Mortgages"), all without the necessity of having further instruments executed by
Tenant to effect such subordination; provided however, (i) with respect to that
certain deed of trust encumbering the Building of record as of the date of this
Lease in favor of WELLS FARGO (the "Bank"), Lessor covenants to use commercially
reasonable efforts (without any requirement to pay any fees to said lender or to
initiate litigation) to cause the Bank to execute and deliver on or before the
Delivery Date a non-disturbance agreement on the current form used by Bank in
favor of Lessee, and (ii) with respect to any Superior Leases and Mortgages
encumbering the Building after the date of this Lease, Lessee shall execute a
subordination agreement, provided that the subordination of this Lease shall be
conditioned upon such Lessor's mortgagee executing a non-disturbance agreement
in favor of Lessee on the current form used by such lender. In the event of a
foreclosure of any such mortgage or deed of trust or of any other action or
proceeding for the enforcement thereof, or of any sale thereunder or in the
event of a termination of any such ground lease, this Lease shall not be
terminated or extinguished, nor shall the rights and possession of Lessee
hereunder be disturbed, if no default then exists under this Lease, and Lessee
shall attorn to the person who acquires Lessor's interest hereunder through any
such mortgage or deed of trust.

     36.2 EXECUTION OF DOCUMENTS. Lessee agrees to execute any documents
required to effectuate such subordination or to make this Lease prior to the
lien of any mortgage, deed of trust or ground lease, as the case may be, and
failing to do so within ten (10) days after written

                                      51.
<PAGE>

demand, does hereby make, constitute and irrevocably appoint Lessor-as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to do so. It is
understood by all parties that Lessee's failure to execute the subordination
documents referred to above may cause Lessor serious financial damage by causing
the failure of a financing or sale transaction.

     36.3 ATTORNMENT. Lessee shall attorn to any purchaser at any foreclosure
sale, or to any grantee or transferee designated in any Deed given in lieu of
foreclosure.

                          37.  ESTOPPEL CERTIFICATES

     37.1 EXECUTION BY LESSEE. Within ten (10) days of request therefor by
Lessor, Lessee shall execute a written statement acknowledging the commencement
and termination dates of this Lease, that it is in full force and effect, has
not been modified (or if it has, stating such modifications) and providing any
other pertinent information as Lessor or its agent might reasonably request.
Failure to comply with this Article shall be a material breach of this Lease by
Lessee giving Lessor all rights and remedies under Article 30 hereof, as well as
a right to damages caused by the loss of a loan or sale which may result from
such failure by Lessee.

     37.2 FINANCING, SALE OR TRANSFER. If Lessor desires to finance, refinance,
sell, ground lease or otherwise transfer the Leased Premises, or any part
thereof, or the Building, Lessee hereby agrees, within ten (10) days of request
therefor by Lessor, to deliver to any lender or to any prospective buyer, ground
lessor or other transferee designated by Lessor such financial statements of
Lessee, its Guarantor and its parent company, if any, as may be reasonably
required by such party. Such statements shall include the past three (3) years'
financial statements of Lessee. All such financial statements shall be received
by Lessor in confidence and shall be used only for the purposes herein set
forth.

                                  38.  WAIVER

     38.1 EFFECT OF WAIVER. The waiver by Lessor of any breach of any Lease
provision shall not be deemed to be a waiver of such Lease provision or any
subsequent breach of the same or any other term, covenant or condition therein
contained. The subsequent acceptance of rent hereunder by Lessor shall not be
deemed to be a waiver of any preceding breach by Lessee of any provision of this
Lease, other than the failure of Lessee to pay the particular rental so
accepted, regardless of Lessor's knowledge of such preceding breach at the time
of acceptance of such rent.

                               39.  HOLDING OVER

     39.1 MONTH-TO-MONTH TENANCY ON ACCEPTANCE. If Lessee should remain in
possession of the Leased Premises after the expiration of the Term and without
executing a new Lease, then, upon acceptance of rent by Lessor, such holding
over shall be construed as a tenancy from month-to-month, subject to all the
conditions, provisions and obligations of this Lease as existed during the last
month of the Term hereof, so far as applicable to a month to

                                      52.
<PAGE>

month tenancy, except that the Minimum Rent shall be equal to twice the Minimum
Rent payable immediately prior to the expiration or sooner termination of the
Lease.

                          40.  SUCCESSORS AND ASSIGNS

     40.1 BINDING EFFECT. The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto;
and all of the parties hereto shall be jointly and severally liable hereunder.

                                   41.  TIME

     41.1 TIME OF THE ESSENCE. Time is of the essence of this Lease with respect
to each and every article, section and subsection hereof.

                       42.  EFFECT OF LESSOR'S CONVEYANCE

     42.1 RELEASE OF LESSOR. If, during the Term, Lessor shall sell its interest
in the Building or Complex of which the Leased Premises form a part, or the
Leased Premises, then from and after the effective date of the sale or
conveyance, Lessor shall be released and discharged from any and all obligations
and responsibilities under this Lease, except those already accrued.

                               43.  COMMON AREAS

     43.1 Lessor shall, in Lessor's sole discretion, maintain the Common Areas
(subject to reimbursement pursuant to Article 8 hereof), establish and enforce
reasonable rules and regulations concerning such areas, close any of the Common
Areas to whatever extent required in the opinion of Lessor's counsel to prevent
a dedication of any of the Common Areas or the accrual of any rights of any
person or of the public to the Common Areas, close temporarily any of the Common
Areas for maintenance purposes, and make changes to the Common Areas including,
without limitation, changes in the location of driveways, corridors, entrances,
exits, vehicular parking spaces, parking area, the designation of areas for the
exclusive use of others, the direction of the flow of traffic or construction of
additional buildings thereupon. Lessor may provide security for the Common Areas
but is not obligated to do so.

                           44.  TRANSFER OF SECURITY

     44.1 TRANSFER TO PURCHASER. If any security be given by Lessee to secure
the faithful performance of all or any of the covenants of this Lease on the
part of Lessee, Lessor may transfer and/or deliver the security, as such, to the
purchaser of the reversion, in the event that the reversion be sold, and
thereupon Lessor shall be discharged from any further liability in reference
thereto.

                                      53.
<PAGE>

                               45.  LATE CHARGES

     45.1 LATE PAYMENT BY LESSEE. Lessee acknowledges that late payment by
Lessee to Lessor of rent or any other payment due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult and impractical to fix. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Lessor by the terms of any encumbrance and note secured by any
encumbrance covering the Leased Premises. Therefore, if any installment of rent,
or any other payment due hereunder from Lessee is not received by Lessor when
due, Lessee shall pay to Lessor an additional sum of ten percent (10%) of such
rent or other charge as a late charge. The parties agree that this late charge
represents a fair and reasonable estimate of the cost that Lessor will incur by
reason of late payment by Lessee. Acceptance of any late charge shall not
constitute a waiver of Lessee default with respect to the overdue amount, or
prevent Lessor from exercising any other rights or remedies available to Lessor.

                           46.  CORPORATE AUTHORITY

     46.1 AUTHORIZATION TO EXECUTE. If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation in accordance with a the Bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. Further, Lessee shall, within thirty (30) days after execution
of this Lease, deliver to Lessor a certified copy of a resolution of the Board
of Directors of said corporation authorizing or ratifying the execution of this
Lease.

                           47.  MORTGAGEE PROTECTION

     47.1 NOTICE AND RIGHT TO CURE DEFAULT. Lessee agrees to give any
mortgage(s) and/or trust deed holders, by registered mail, a copy of any notice
of default served upon Lessor, provided that prior to such notice Lessee has
been notified, in writing (by way of Notice of Assignment of Rents and Leases,
or otherwise), of the address of such mortgagees and/or trust deed holders.
Lessee further agrees that if Lessor shall have failed to cure such default
within the time provided for in this Lease, then the mortgagees and/or trust
deed holders shall have an additional thirty (30) days within which to cure such
default or, if such default cannot be cured within that time, then such
additional time as may be necessary if, within such thirty (30) days, any
mortgagee and/or trust deed holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings, if necessary to effect such cure), in
which event this Lease shall not be terminated while such remedies are being so
diligently pursued.

                                      54.
<PAGE>

                         48.  MISCELLANEOUS PROVISIONS

     48.1 CAPTIONS. The captions of this Lease are for convenience only and are
not a part of this Lease and do not in any way limit or amplify the terms and
provisions of this Lease.

     48.2 NUMBER AND GENDER. Whenever the singular number is used in this Lease
and when required by the context, the same shall include the plural, the plural
shall include the singular, and the masculine gender shall include the feminine
and neuter genders, and the word "person" shall include corporation, firm or
association. If there be more than one Lessee, the obligations imposed under
this Lease upon Lessee shall be joint and several.

     48.3 MODIFICATIONS. This instrument contains all of the agreements,
conditions and representations made between the parties to this Lease and may
not be modified orally or in any other manner than by an agreement in writing
signed by all of the parties to this Lease.

     48.4 PAYMENTS. Except as otherwise expressly stated, each payment required
to be made by Lessee shall be in addition to and not in substitution for other
payments to be made by Lessee.

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

     48.6 NO OFFER. The preparation and submission of a draft of this Lease by
either party to the other shall not constitute an offer, not shall either party
be bound to any terms of this Lease or the entirety of the Lease itself until
both parties have fully executed a final document and an original signature
document has been received by both parties. Until such time as described in the
previous sentence, either party is free to terminate negotiations with no
obligation to the other.

     48.7 DISPUTED SUMS. Under the terms of this Lease numerous charges are and
may be due from Lessee to Lessor including, without limitation, Operating Costs,
Real Estate Taxes and other items of a similar nature including advances made by
Lessor in respect of Lessee's default at Lessor's option. In the event that at
any time during the Term there is a bona fide dispute between the parties as to
the amount due for any of such charges claimed by Lessor to be due, the amount
demanded by Lessor shall be paid by Lessee until the resolution of the dispute
between the parties or by litigation. Failure by Lessee to pay the disputed sums
until resolution shall constitute a default under the terms of the Lease.

     48.8 LESSEE'S REMEDIES. Notwithstanding anything to the contrary contained
in this Lease, if any provision of this Lease expressly or impliedly obligates
Lessor not to unreasonably withhold its consent or approval, an action for
declaratory judgment or specific performance will be Lessee's sole right and
remedy in any dispute as to whether Lessor has breached such obligation.

                                      55.
<PAGE>

     48.9  Light, Air and View. No diminution of light, air, or view by any
structure which may hereafter be erected (whether or not by Lessor) shall
entitle Lessee to any reduction of Rent, result in any liability of Lessor to
Lessee, or in any other way affect this Lease or Lessee's obligations hereunder.

     48.10 PUBLIC TRANSPORTATION INFORMATION. Lessee shall establish and
maintain during the Term hereof a program to encourage maximum use of public
transportation by personnel of Lessee employed on the Leased Premises,
including, without limitation, the distribution to such employees of written
materials explaining the convenience and availability of public transportation
facilities adjacent or proximate to the Complex, staggering working hours of
employees, and encouraging use of such facilities, all at Lessee's sole
reasonable cost and expense. Lessee shall comply with all requirements of any
local transportation management ordinance.

     48.11 RULES AND REGULATIONS. Lessee agrees to comply with all reasonable
rules and regulations adopted and promulgated by Lessor and applicable to all
tenants in the Complex for the lawful, orderly, clean, safe, aesthetic, quiet,
and beneficial use, operation, maintenance, management, and enjoyment of the
Complex. Lessor shall have no liability for violation by any other lessee in the
Complex of any rules or regulations, nor shall such violation or waiver thereof
excuse Lessee from compliance. The initial rules and regulations concerning the
Complex are attached hereto as Exhibit G. Lessor reserves the right to make
additional rules affecting the Complex throughout the Term hereof. All delivery
and dispatch of supplies, fixtures, equipment and furniture shall be by means
and during hours established by Lessor. Lessee shall not at any time park its
trucks or other delivery vehicles in the Common Areas, except in such parts
thereof as from time to time designated by Lessor.

     48.12 JOINT AND SEVERAL LIABILITY. Should Lessee consist of more than one
person or entity, they shall be jointly and severally liable on this Lease.

     48.13 SURVIVAL OF OBLIGATIONS. All obligations of Lessee which may accrue
or arise during the Term or as a result of any act or omission of Lessee during
said Term shall, to the extent they have not been fully performed, satisfied or
discharged, survive the expiration or termination of this Lease.

     48.14 REAL ESTATE BROKERS. Lessor and Lessee each represents and warrants
to the other party that it has not authorized or employed, or acted by
implication to authorize or employ, any real estate broker or salesman to act
for it in connection with this Lease other than the real estate brokers
specified in Section 1.10. Lessor shall pay the commission due Lessor's broker
and Lessee's broker pursuant to a separate agreement between Lessor and Lessor's
broker. Lessor and Lessee shall each indemnify, defend and hold the other party
harmless from and against any and all claims by any real estate broker or
salesman whom the indemnifying party authorized or employed, or acted by
implication to authorize or employ, to act for the indemnifying party in
connection with this Lease.

     48.15 NONLIABILITY OF LESSOR FOR APPROVALS. Except as may otherwise be
expressly stated by a provision of this Lease, and only to the extent so stated,
the consent or approval,

                                      56.
<PAGE>

whether express or implied, or the act, failure to act or failure to object, by
Lessor in connection with any plan, specification, drawing, proposal, request,
act, omission, notice or communication (collectively, "act") by or for, or
prepared by or for, Lessee, shall not create any responsibility or liability on
the part of Lessor, and shall not constitute a representation by Lessor, with
respect to the completeness, sufficiency, efficacy, propriety, quality or
legality of such act.

     48.16 INTEREST ON PAST DUE AMOUNTS. If any sum due Lessor from Lessee is
not received by Lessor within five (5) calendar days after the date such sum is
due and payable, such sum shall bear interest from the due date until paid by
Lessee at the rate of two percent (2%) above the Prime Rate (as herein defined),
not to exceed the maximum rate of interest allowed by law in the state where the
Leased Premises are located, and such interest shall be deemed to be additional
rent. "Prime Rate" means the Prime Rate of interest as quoted in the Wall Street
Journal on the date such sum was due and payable.

     48.17 CONVERSION TO A LIMITED LIABILITY ENTITY.

           (a) No Conversion Without Consent. Anything to the contrary in this
               -----------------------------
Lease notwithstanding, if Lessee is currently a partnership (either general or
limited), joint venture, cotenancy, joint tenancy or an individual, Lessee may
not convert (the "Conversion") the Lessee entity or person into any type of
entity which possesses the characteristic of limited liability such as, by way
of example only, a corporation, a limited liability company, limited liability
partnership or limited liability limited partnership (singularly and
collectively, "Limited Entity"), without the consent of Lessor, which consent,
subject to fulfillment of the conditions below, shall not be unreasonably
withheld.

           (b) Conditions to Lessor's Consent. The following are conditions
               ------------------------------
precedent to Lessor's obligation to act reasonably with respect to a Conversion
to a Limited Entity:

           (i)   The Limited Entity assumes all of Lessee's business and assets
as of the effective date of the Conversion;

           (ii)  As of the effective date of the Conversion, the Limited Entity
shall have a net worth ("Net Worth"), which is not less than the greater of (i)
Lessee's Net Worth on the date of execution of the Lease or (ii) Lessee's Net
Worth as of the date Lessee requests Lessor's consent to the Conversion;

           (iii) Lessee has not been in default under any of the terms,
covenants or conditions of this Lease during the term of the Lease;

           (iv)  Lessee delivers to Lessor an agreement, in form and substance
satisfactory to Lessor and executed by each partner of Lessee, wherein each
partner of Lessee agrees to remain personally liable for all of the terms,
covenants and conditions of the Lease that are to be observed and performed by
the Limited Entity; and

                                      57.
<PAGE>

                 (v)   Lessee shall reimburse Lessor within ten (10) days
following Lessor's written demand therefor for any and all reasonable costs and
expenses that may be incurred by Lessor in connection with the Conversion
including, without limitation, reasonable attorney's fees.

           (c)   Nothing in this Section 48.17 shall modify or reduce the
obligations of Lessee to perform under this Lease.

     48.18 COUNTERPARTS. This Lease may be executed in one or more counterparts,
each of which shall be deemed an original, and all taken together shall
constitute one and the same instrument.

                    49.  WAIVER OF CALIFORNIA CODE SECTIONS

     49.1  WAIVER BY LESSEE. In this Lease, numerous provisions have been
negotiated by the parties, some of which provisions are covered by statute.
Whenever a provision of this Lease and a provision of any statute or other law
cover the same matter, the provisions of this Lease shall control. Therefore,
Lessee waives (for itself and all persons claiming under Lessee) the provisions
of Civil Code Sections 1932(2) and 1933(4) with respect to the destruction of
the Leased Premises; Civil Code Sections 1941 and 1942 with respect to Lessor's
repair duties and Lessee's right to repair; Civil Code Section 1995.310,
granting to a tenant all remedies provided by law for breach of contract
(including, without limitation, the right to contract damages and the right to
terminate the lease) in the event that the landlord unreasonably withholds
consent to a transfer in violation of the tenant's rights under the lease; Code
of Civil Procedure Section 1265.130, allowing either party to petition the
Superior Court to terminate this Lease in the event of a partial taking of the
Leased Premises by condemnation as herein defined; and any right of redemption
or reinstatement of Lessee under any present or future case law or statutory
provision (including Code of Civil Procedure Sections 473 and 1179 and Civil
Code Section 3275) in the event Lessee is dispossessed from the Leased Premises
for any reason. This waiver applies to future statutes enacted in addition to or
in substitution for the statutes specified herein.

                             50.  SHUTTLE SERVICE

     50.1  Lessor shall maintain for the benefit of employees and invitees of
the Building, a van shuttle service which shall operate Monday through Friday
from 7:00 a.m. to 7:00 p.m. with not less than one van vehicle operating
throughout the day and two vehicles operating during peak commute hours of 7:00
a.m. to 9:00 a.m. Monday through Friday and 5:00 p.m. to 7:00 p.m. Monday
through Friday. The shuttle will serve the major transportation centers of San
Francisco, i.e., the Transbay Terminal, BART, the nearest Municipal Railway
stop, the Ferry Building and CalTrain Terminal. The cost of the shuttle service
shall be included in Operating Costs. Lessor may terminate the shuttle service
if the City of San Francisco is, in Lessor's reasonable judgment, then providing
adequate public transportation to the area of the Building and no longer
requires that Lessor provide such shuttle service.

                                      58.
<PAGE>

                                    EXHIBIT D

                              WORK LETTER AGREEMENT
                              ---------------------
                             (LESSOR'S IMPROVEMENTS)

1.   LESSOR'S IMPROVEMENT WORK

     1.1  The Leased Premises shall be delivered to Lessee in as "AS-IS"
          condition and without any obligation on the part of Lessor to perform
          improvements to the Leased Premises, except for the work expressly set
          forth in this Exhibit D as Lessor's Work.

     1.2. Lessor's Work:

          1.2.1. As an inducement to Lessee to enter into the Lease, Lessor
                 agrees to perform the following improvements at its sole cost
                 and expense:

                 1.2.1.1.    Lessor shall install Building standard window film
                             on all demising windows of the Leased Premises.

                 1.2.1.2.    Lessor shall demolish the partitions indicated on
                             the Space Plan (the "Space Plan") attached hereto
                             as Schedule 1.

                 1.2.1.3.    Lessor shall re-key the locks on Lessee's exterior
                             doors and provide Lessee with five (5) sets of
                             keys.

          1.2.2. Lessor shall perform the following work (the "TI's") so long as
                 the cost thereof does not exceed $5.00 for each square foot of
                 Adjusted Rentable Area in the Leased Premises (the
                 "Allowance").

                 1.2.2.1.    Paint the entire Leased Premises in a single color
                             with Building Standard paint.

                 1.2.2.2.    Install new Building Standard carpeting throughout
                             the Leased Premises.

                 1.2.2.3.    Wire into the main electrical panel fire detection
                             devices as required.

                 1.2.2.4.    Install additional electrical outlets in the Leased
                             Premises.

                 Notwithstanding the foregoing, Lessee shall pay all costs
                 incurred in connection with the construction of the Tenant
                 Improvements in excess of the Allowance. Lessor need not
                 perform any work until and unless Lessee pays to Lessor the
                 full amount of any costs of TI's in excess of $23,915.

                                       D-1
<PAGE>

     1.1.  As used herein, the term "Building Standard" refers to the materials
           maintained in stock by Lessor for use in the improvements of Lessee
           space in the Building.

     1.2.  If the Allowance is not used for the costs of Lessor's Work, the
           unused portion shall revert to Lessor and shall not be available for
           any other purpose by Lessee. Lessor shall pay for the costs of
           Lessor's Work upon the presentation of invoices therefor from the
           person(s) performing the work or rendering the services and such
           supporting documentation as Lessor may reasonably request in
           connection therewith.

2.   RENT COMMENCEMENT

     No delay in the completion of Lessor's Work shall be considered in the
determination of the Commencement Date of the Lease and Lessor's Work shall be
considered to be substantially completed for purposes of the determination of
the Commencement Date on the date by which Lessor's Work would have been
completed if there had been no such delay.

                                       D-2
<PAGE>

                                 [CHART OMITTED]

                                   SCHEDULE 1
<PAGE>

                                 [CHART OMITTED]
<PAGE>

                                    EXHIBIT E

                         ACKNOWLEDGMENT OF COMMENCEMENT

                          LOCATION: 650 TOWNSEND STREET
                                SAN FRANCISCO, CA

     This Acknowledgment is made as of ______________, with reference to that
certain Lease (hereinafter referred to as the "Lease") dated February ___, 1999,
by and between Zoro, LLC as "Lessor" therein, and LinuxCare, Inc. as "Lessee."

     The undersigned hereby confirms the following:

     1.  That Lessee accepted possession of the Leased Premises (as described in
the Lease) on the following date: ____________________________; that the Leased
Premises are as represented by Lessor and in good order, condition and repair;
and that the improvements, if any, required by the Lease to be constructed for
Lessee by Lessor have been so constructed and are satisfactorily completed in
all respects.

     2.  That all conditions of the Lease to be performed by Lessor prerequisite
to the full effectiveness of the Lease have been satisfied and Lessor has
fulfilled all of its duties of an inducement nature, except
_______________________________________.

     3.  That in accordance with the provisions of Article 4 of the Lease the
Commencement Date for the Leased Premises is _______________________________ and
that unless sooner terminated, the Expiration Date of the original term of the
Lease is ________________________.

     4.  That the Lease is in full force and effect and that the same represents
the entire agreement between Lessor and Lessee concerning the subject matter of
the Lease.

     5.  That there are no existing defenses or offsets which Lessee has against
the enforcement of the Lease by Lessor, and no presently exercisable offsets or
credits against rentals, except_______________________________________________.

     6.  That Lessee's obligation for payment of Minimum Rent under the Lease is
presently in effect and that all rentals, charges and other obligations on the
part of Lessee under the Lease commenced to accrue on the date set forth in
Section 3 of this Acknowledgment

                                        1
<PAGE>

     7.  That the undersigned Lessee has not made any prior assignment,
hypothecation or pledge of the Lease or of the rents thereunder.

LESSOR:                                        LESSEE
ZORO, LLC,                                     LINUXCARE, INC., A DELAWARE
A CALIFORNIA LIMITED LIABILITY COMPANY         CORPORATION

By:                                            By:
   -----------------------------------            -----------------------------
   Martin I. Zankel                            Its:
   Its Managing Member                             ----------------------------
                                               By:
                                                  -----------------------------
                                               Its:
                                                   ----------------------------

Dated:_______________, 19__                    Dated:________________, 19__.

                                        2
<PAGE>

                                    EXHIBIT G

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

     1.   Common Areas. The sidewalks, halls, passages, exits, entrances,
          ------------
elevators and stairways of the Building shall not be obstructed by Tenant or
used for any purpose other than for ingress to and egress from the Premises. The
halls, passages, exits, entrances, elevators and stairways are not for the
general public and Landlord shall in all cases have the right to control and
prevent access thereto of all persons (including, without limitation, messengers
or delivery personnel not wearing uniforms) whose presence in the judgment of
Landlord would be prejudicial to the safety, character, reputation or interests
of the Building and its tenants. Neither Tenant nor any agent, employee,
contractor, invitee or licensee of Tenant shall go upon the roof of the
Building. Landlord shall have the right at any time, without the same
constituting an actual or constructive eviction and without incurring any
liability to Tenant therefor, to change the arrangement or location of entrances
or passageways, doors or doorways, corridors, elevators, stairs, toilets and
common areas of the Building.

     2.   Signs. No sign, placard, picture, name, advertisement or notice
          -----
visible from the exterior of the Premises shall be inscribed, painted, affixed
or otherwise displayed by Tenant on any part of the Building or the Premises
without the prior written consent of Landlord. Landlord will adopt and furnish
to tenants general guidelines relating to signs inside the Building. Tenant
agrees to conform to such guidelines. All approved signs or lettering shall be
printed, painted, affixed or inscribed at the expense of Tenant by a person
approved by Landlord. Material visible from outside the Building will not be
permitted.

     3.   Prohibited Uses. The Premises shall not be used for the storage of
          ---------------
merchandise held for sale to the general public or for lodging. No cooking shall
be done or permitted on the Premises except that private use by Tenant of
microwave ovens Underwriters' Laboratory-approved equipment for brewing coffee,
tea, hot chocolate and similar beverages will be permitted, provided that such
use is in accordance with all applicable federal, state and municipal laws,
codes, ordinances, rules and regulations. Tenant shall not place any load on the
floors of the Building exceeding fifty (50) pounds per square foot, live or dead
load. Tenant shall not use electricity for lighting, machines or equipment in
excess of four (4) watts per square foot.

     4.   Janitorial Service. Tenant shall not employ any person other than the
          ------------------
janitor of Landlord for the purpose of cleaning the Premises unless otherwise
agreed to by Landlord in writing. Except with the written consent of Landlord,
no persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning the Premises. Tenant shall not cause any
unnecessary labor by reason of Tenant's carelessness or indifference in the
preservation of good order and

                                       G-1
<PAGE>

cleanliness. Landlord shall not be responsible to Tenant for any loss of
property in the Premises, however occurring, or for any damage done to the
effects of Tenant by the janitor or any other employee or any other person.

     5.   Keys. Landlord will furnish Tenant without charge with two (2) keys to
          ----
each door lock provided in the Premises by Landlord. Landlord may make a
reasonable charge for any additional keys. Tenant shall not have any such keys
copied or any keys made. Tenant shall not alter any lock or install a new or
additional lock or any bolt on any door of the Premises. Tenant, upon the
termination of this Lease, shall deliver to Landlord all keys to doors in the
Building.

     6.   Moving Procedures. Landlord shall designate appropriate entrances for
          -----------------
deliveries or other movement to or from the Premises of equipment, materials,
supplies, furniture or other property, and Tenant shall not use any other
entrances for such purposes. All moves shall be scheduled and carried out during
nonbusiness hours of the Building. All persons employed and means or methods
used to move equipment, materials, supplies, furniture or other property in our
out of the Building must be approved by Landlord prior to any such movement.
Landlord shall have the right to prescribe the maximum weight, size and position
of all equipment, materials, furniture or other property brought into the
Building. Heavy objects shall, if considered necessary by Landlord, stand on a
platform of such thickness as is necessary properly to distribute the weight.
Landlord will not be responsible for loss of or damage to any such property from
any cause, and all damage done to the Building by moving or maintaining such
property shall be repaired at the expense of Tenant.

     7.   No Nuisances. Tenant shall not use or keep in the Premises or the
          ------------
Building any kerosene, gasoline or inflammable or combustible fluid or material
other than limited quantities thereof reasonably necessary for the operation or
maintenance of office equipment. Tenant shall not use any method of heating or
air conditioning other than that supplied by Landlord. Tenant shall not use or
keep or permit to be used or kept any foul or noxious gas or substance in the
Premises, or permit or suffer the Premises to be occupied or used in a manner
offensive or objectionable to Landlord or other occupants of the Building by
reason of noise, odors or vibrations, or interfere in any way with other tenants
or those having business in the Building, nor shall any animals be brought or
kept in the Premises or the Building.

     8.   Change of Address. Landlord shall have the right, exercisable without
          -----------------
notice and without liability to Tenant, to change the name or street address of
the Building or the room or suite number of the Premises.

     9.   Business Hours. Landlord establishes the hours of 8:00 a.m. to 6:00
          --------------
p.m. Monday through Friday, except union holidays and legal holidays, as
reasonable and usual business hours for the purposes of this Lease. If Tenant
requests electricity or heat or air conditioning or any other services during
any other hours or on any other days, and if Landlord is able to provide the
same, Tenant shall pay

                                       G-2
<PAGE>

Landlord such charge as Landlord shall establish from time to time for providing
such services during such hours. Any such charges which Tenant is obligated to
pay shall be deemed to be additional rent under this Lease.

     10.  Access to Building. Landlord reserves the right to exclude from the
          ------------------
Building during the evening, night and early morning hours beginning at 6:00
p.m. and ending at 8:00 a.m. Monday through Friday, and at all hours on
Saturdays, Sundays, union holidays and legal holidays, all persons who do not
present identification acceptable to Landlord. Tenant shall provide Landlord
with a list of all persons authorized by Tenant to enter the Premises and shall
be liable to Landlord for all acts of such persons. Landlord shall in no case be
liable for damages for any error with regard to the admission to or exclusion
from the Building of any person. In the case of invasion, mob, riot, public
excitement or other circumstances rendering such action advisable in Landlord's
opinion, Landlord reserves the right to prevent access to the Building during
the continuance of the same by such action as Landlord may deem appropriate,
including closing doors.

     11.  Building Directory. The directory of the Building will be provided for
          ------------------
the display of the name and location of Tenant and a reasonable number of the
principal officers and employees of Tenant at the expense of Tenant. Landlord
reserves the right to restrict the amount of directory space utilized by Tenant.

     12.  Window Coverings. No curtains, draperies, blinds, shutters, shades,
          ----------------
screens or other coverings, hangings or decorations shall be attached to, hung
or placed in, or used in connection with any window of the Building without the
prior written consent of Landlord. In any event, with the prior written consent
of Landlord, such items shall be installed on the office side of Landlord's
standard window covering and shall in no way be visible from the exterior of the
Building. Tenant shall keep window coverings closed when the effect of sunlight
(or the lack thereof) would impose unnecessary loads on the Building's air
conditioning systems.

     13.  Food and Beverages. Tenant shall not obtain for use in the Premises
          ------------------
vending machines or other similar services, except at such reasonable hours and
under such reasonable regulations as may be established by Landlord.

     14.  Procedures When Leaving. Tenant shall ensure that the doors of the
          -----------------------
Premises are closed and locked and that all water faucets, water apparatus and
utilities are shut off before Tenant and its employees leave the Premises so as
to prevent waste or damage. For any default or carelessness in this regard,
Tenant shall be liable and pay for all damage and injuries sustained by Landlord
or other tenants or occupants of the Building. On multiple-tenancy floors,
Tenant shall keep the doors to the Building corridors closed at all times except
for ingress and egress.

     15.  Bathrooms. The toilet rooms, toilets, urinals, wash bowls and other
          ---------
apparatus shall not be used for any purpose other than that for which they were
constructed, no foreign substance of any kind whatsoever shall be thrown
therein, and

                                       G-3
<PAGE>

the expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be paid by Tenant if caused by Tenant or its agents, employees,
contractors, invitees or licensees.

     16.  Prohibited Activities. Except with the prior written consent of
          ---------------------
Landlord, Tenant shall not sell at retail newspapers, magazines, periodicals,
theater or travel tickets or any other goods or merchandise to the general
public in or on the Premises, nor shall Tenant carry on or permit or allow any
employee or other person to carry on the business of stenography, typewriting,
printing or photocopying or any similar business in or from the Premises for the
service or accommodation of occupants of any other portion of the Building, nor
shall the Premises be used for manufacturing of any kind, or any business or
activity other than that specifically provided for in this Lease.

     17.  No Antenna. Tenant shall not install any radio or television antenna,
          ----------
loudspeaker, or other device on the roof or exterior walls of the Building. No
television or radio or recorder shall be played in such a manner as to cause a
nuisance to any other tenant.

     18.  Vehicles. There shall not be used in any space, or in the public halls
          --------
of the Building, either by Tenant or others, any hand trucks except those
equipped with rubber tires and side guards or such other material handling
equipment as Landlord approves. No other vehicles of any kind shall be brought
by Tenant into the Building or kept in or about the Premises.

     19.  Trash Removal. Tenant shall store all its trash and garbage within the
          -------------
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of office building trash and garbage
in the city or county in which the Building is located without being in
violation of any law or ordinance governing such disposal. All garbage and
refuse disposal shall be made only through entryways and elevators provided for
such purposes and at such times as Landlord shall designate. Tenant shall crush
and flatten all boxes, cartons and containers. Tenant shall pay extra charges
for any unusual trash disposal.

     20.  No Soliciting. Canvassing, soliciting, distribution of handbills or
          -------------
any other written material and peddling in the Building are prohibited, and
Tenant shall cooperate to prevent the same.

     21.  No Overnight Use. The premises shall not be used for any lodging or
          ----------------
overnight occupancy.

     22.  Uses Reserved by Landlord. By its execution of the Lease to which
          -------------------------
these Rules and Regulations are attached, Tenant acknowledges that portions of
the Building may be used by the Landlord or its licensees for large scale
exhibitions and special events, including conventions, trade shows, social and
political gatherings and

                                       G-4
<PAGE>

parties, and such that events may generate noise, including music, amplified
sound and revelry, during and after the regular business hours of the Building.
Tenant agrees that the use of the Building for such purposes by Landlord and its
licensees shall not constitute a constructive eviction or breach of any covenant
of quiet enjoyment or entitle Tenant to any abatement of rent.

     23.  Services. The requirements of Tenant will be attended to only upon
          --------
application in writing at the office of the Building. Personnel of Landlord
shall not perform any work or do anything outside of their regular duties unless
under special instructions from Landlord.

     24.  Waiver. Landlord may waive any one or more of these Rules and
          ------
Regulations for the benefit of any particular tenant or tenants, but no such
waiver by Landlord shall be construed as a waiver of such Rules and Regulations
in favor of any other tenant or tenants, nor prevent Landlord from thereafter
enforcing any such Rules and Regulations against any or all of the tenants of
the Building.

     25.  Supplemental to Lease. These Rules and Regulations are in addition to,
          ---------------------
and shall not be construed to in any way modify or amend, in whole or in part,
the covenants of this Lease.

     26.  Amendments and Additions. Landlord reserves the right to make such
          ------------------------
other rules and regulations, and to amend or repeal these Rules and Regulations,
as in Landlord's judgment may from time to time be desirable for the safety,
care and cleanliness of the Building and for the preservation of good order
therein.

                                       G-5
<PAGE>

                                    EXHIBIT H

                               BUILDING STANDARDS

That certain Redevelopment Masterplan for the Townsend Center dated January 20,
1998 and revised on February 5, 1998, copy of which was delivered to Lessee on
January 25, 1999.
<PAGE>

                                    EXHIBIT J

                            JANITORIAL SPECIFICATIONS

A.   Janitorial Service Specifications for Day Porter
     ------------------------------------------------

     Day Porter shall be on duty from 8:30 a.m. to 5:00 p.m., Monday through
     Friday; Saturdays, Sundays and holidays excepted. The duties of the Day
     Porter, who is under the exclusive direction of the Chief
     Engineer/Operations Manager and Property Manager, shall be, but is not
     limited to, the following:

     1.   Entrance Lobby

          The entrance lobby is to be kept neat and clean at all times and the
          following minimum cleaning operations shall be maintained to attain
          this effect:

          a.   Wipe down metal surfaces daily.
          b.   Clean cigarette urns as necessary.
          c.   Wash glass doors and mirrored surfaces daily and as needed.
          d.   Empty garbage receptacles as necessary.

     2.   Elevators/Escalators

          a.   Vacuum carpets daily and as needed. Include spot cleaning as
               required in base contract.
          b.   Spot clean lobby elevator saddles, doors and frames daily.
          c.   Spot clean sides of elevator cars daily.
          d.   Spot clean sides of escalators daily.

     3.   Toilets - Daily

          a.   Fill soap dispensers and paper towel dispensers (towels and soap
               to be furnished by Lessor).
          b.   Report all mechanical deficiencies (i.e., dripping faucets, etc.)
               to the Property Manager.
          c.   Wash all mirrors, powder shelves and lavatory tops.
          d.   Empty paper towel receptacles and debris as needed but not less
               than once daily.
          e.   Stock and maintain all sanitary product machines.
<PAGE>

     4.   Public Areas

          a.   Remove all foreign matter and debris from all public corridors as
               necessary.
          b.   Handles special requests as directed by Manager (i.e., unplug
               toilets, remove trash, etc.)

     5.   Building Service Areas

          a.   Remove foreign matter and debris from planters and sidewalks
               along 8th and Townsend Streets daily.
          b.   Lay down and remove lobby runners, as necessary.
          c.   Ensure that the loading dock area, including the Mail Room, is
               free of debris.

B.   Janitorial Service Specifications for Common Areas and Tenant Suites
     --------------------------------------------------------------------

     1.   Nightly Services - Sunday through Thursday.

          a.   Secure all lights as soon as possible each night.
          b.   Vacuum all Common Area carpets and tenanted areas.
          c.   Dust mop all resilient and composition floors with treated dust
               mops. Damp mop to remove spills and water stains as require.
          d.   Feather dust all desks and office furniture, excluding chairs.
          e.   Papers and folders on desks are not to be moved.
          f.   Empty all ash trays and ash urns. Clean and sanitize as required.
          g.   Empty all waste paper baskets and other trash containers.
          h.   Remove all trash from floors to designated trash areas.
          i.   Remove fingerprints, dirt smudges, graffiti, etc., from all
               doors, frames, glass partitions, windows, light switches, walls,
               elevator door jambs and elevator interiors.
          j.   Return chairs and waste baskets to proper positions.
          k.   Clean, sanitize and polish drinking fountains.

     2.   Weekly Services

          a.   Dust all low reach and high reach areas, including but not
               limited to, structural ledges, mirror tops, partition tops and
               edges, air conditioning diffusers and return air grilles.

                                        2
<PAGE>

     3.   Monthly Services

          a.   Wipe down all walls and metal partitions. Partitions shall be
               left clean and not streaked after this work.
          b.   Clean all ventilation grilles.
          c.   Dust all doors and door jambs.

     4.   Quarterly Services

          a.   Thoroughly clean and reseal all ceramic tile floors, using
               approved sealers.

C.   Main Floor Elevator/Escalator Lobbies and Public Corridors Specifications
     -------------------------------------------------------------------------

     1.   Nightly Services

          a.   Thoroughly wash all swinging glass doors exclusive of tenant
               door.
          b.   Spot clean all glass including low partitions and the corridor
               side of all windows and glass doors to tenant premises.
          c.   Spot clean all chrome brightwork including swinging door
               hardware, kick plates, base, partition tops, handrails, waste
               paper receptacles, planters, elevator call button plates, hose
               cabinets and visible hardware on the corridor side of tenant
               entry doors.
          d.   Spot clean all interior architectural finishes including the
               corridor side of all tenant area window and door frames and
               bases.
          e.   Thoroughly clean all door saddles of dirt and debris.
          f.   Spot clean and dust directory boards and ledges.
          g.   Empty, clean and sanitize as required all waste paperbaskets and
               refuse receptacles.
          h.   Vacuum all carpets and minor spot clean, as necessary.
          i.   Spot clean all elevator doors and frames.
          j.   Police all areas for debris at least once during day time
               operating hours.

     2.   Monthly Services

          a.   Thoroughly clean all chrome and architectural interior finishes.

                                        3
<PAGE>

E.   Basement Corridors, Service Office (Engineering, Security, Cleaning), Store
     ---------------------------------------------------------------------------
     Rooms, Service Corridors, Roof and Service Sink Closets:
     -------------------------------------------------------

     Note: Nightly and periodic services for offices, corridors, locker rooms
     ----
           and restrooms included in the above areas shall be per specifications
           previously outlined for tenant areas and common areas on tenant
           floors. Additional work not previously specified shall be as follows:

     1.    Nightly Services

           a.   Remove trash from all the above areas.
           b.   Maintain an orderly arrangement of all janitorial supplies and
                paper products in the storage rooms and service sink closets.
           c.   Maintain an orderly arrangement of all equipment stored in these
                areas such as mops, buckets, brooms, vacuum cleaners, scrubbers,
                etc.
           d.   Clean and disinfect service sinks.
           e.   Sweep and damp mop service sink closet floors; deodorize and
                disinfect as required.
           f.   Sweep store room floors.
           g.   Receive and store all janitorial supplies in an orderly manner.

     2.    Weekly Services

           a.   Damp mop all composition floors in store rooms; deodorize and
                disinfect as required.
           b.   High dusting of these areas, including all pipes, ducts,
                conduits, ventilating diffusers and grills, mechanical,
                electrical equipment exposed beneath the hung ceilings outside
                of the mechanical equipment rooms.

F.   Passenger Elevator/Escalator Cleaning Specifications
     ----------------------------------------------------

     1.    Nightly Services

           a.   Spot clean walls and interior door.
           b.   Spot clean outside surfaces of all doors and frames.
           c.   Clean all floors thoroughly. Edge thoroughly.
           d.   Vacuum all thresholds.
           e.   Spot clean elevator carpets.

                                        4
<PAGE>

     2.   Weekly Services

          a.   Thoroughly clean entire interior surfaces and finish of all doors
               and frames and outside surfaces of all doors and frames.
          b.   Steel wool clean all thresholds.
          c.   Wipe thoroughly all handrails.

     3.   Monthly Services

          a.   Shampoo all elevator cab floor carpets.
          b.   Wipe clean elevator cab lamps.
          c.   Wipe clean entire cab ceiling.

G.   Trash Area and Service Entrance Specifications
     ----------------------------------------------

     1.   Nightly Services

          a.   Place all miscellaneous trash and debris except construction
               material, in the Property's trash receptacles or compactor.
          b.   Neatly stack all trash in the designated area.
          c.   Sweep entire area.

H.   Exterior Structure and Grounds Services Specifications
     ------------------------------------------------------

     1.   Nightly Services

                                        5<PAGE>

                                                                    EXHIBIT 10.4

                                LINUXCARE, INC.

                             AMENDED AND RESTATED

                                1999 STOCK PLAN

  1.   Purposes of the Plan.  The purposes of this amended and restated 1999
       --------------------
Stock Plan are:

          .  to attract and retain the best available personnel for positions of
             substantial responsibility,

          .  to provide additional incentive to Employees, Directors and
             Consultants, and

          .  to promote the success of the Company's business.

          Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant.  Stock Purchase Rights may also be granted under the Plan.

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

          (a)  "Administrator" means the Board or any of its Committees as
                -------------
shall be administering the Plan, in accordance with Section 4 of the Plan.

          (b)  "Applicable Laws" means the requirements relating to the
                ---------------
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

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

          (d)  "Change in Control" means:
                -----------------

                (i)   The consummation of a merger or consolidation of the
Company with or into another entity or any other corporate reorganization, if
persons who were not stockholders of the Company immediately prior to such
merger, consolidation or other reorganization own immediately after such merger,
consolidation or other reorganization 50% or more of the voting power of the
outstanding securities of each of (A) the continuing or surviving entity and (B)
any direct or indirect parent corporation of such continuing or surviving
entity; or

               (ii)   The sale, transfer or other disposition of all or
substantially all of the Company's assets.
<PAGE>

     A transaction shall not constitute a Change of Control if its sole purpose
is to change the state of the Company's incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons
who held the Company's securities immediately before such transaction.

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

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

     (g) "Common Stock" means the common stock of the Company.
          ------------

     (h) "Company" means Linuxcare, Inc., a Delaware corporation.
          -------

     (i) "Consultant" means any person, including an advisor, engaged by the
          ----------
Company or a Parent or Subsidiary to render services to such entity.

     (j) "Director" means a member of the Board.
          --------

     (k) "Disability" means total and permanent disability as defined in Section
          ----------
22(e)(3) of the Code.

     (l) "Employee" means any person, including Officers and Directors, employed
          --------
by the Company or any Parent or Subsidiary of the Company.  A Service Provider
shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor.  For purposes
of Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the day three (3) months and one (1) day following the
90/th/ day of such leave, any Incentive Stock Option held by the Optionee shall
cease to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option.  Neither service as a Director nor
payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.

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

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

            (i)  If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system on the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

                                      -2-
<PAGE>

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

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

     (o)  "Incentive Stock Option" means an Option intended to qualify as an
           ----------------------
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

     (p)  "Nonstatutory Stock Option" means an Option not intended to qualify as
           -------------------------
an Incentive Stock Option.

     (q)  "Notice of Grant" means a written or electronic notice evidencing
           ---------------
certain terms and conditions of an individual Option or Stock Purchase Right
grant.  The Notice of Grant is part of the Option Agreement.

     (r)  "Officer" means a person who is an officer of the Company within the
           -------
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

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

     (t)  "Option Agreement" means an agreement between the Company and an
           ----------------
Optionee evidencing the terms and conditions of an individual Option grant.  The
Option Agreement is subject to the terms and conditions of the Plan.

     (u)  "Option Exchange Program" means a program whereby outstanding Options
           -----------------------
are surrendered in exchange for Options with a lower exercise price.

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

     (w)  "Optionee" means the holder of an outstanding Option or Stock Purchase
           --------
Right granted under the Plan.

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

     (y)  "Plan" means this amended and restated 1999 Stock Plan.
           ----

     (z)  "Restricted Stock" means shares of Common Stock acquired pursuant to a
           ----------------
grant of Stock Purchase Rights under Section 11 of the Plan.

                                      -3-
<PAGE>

     (aa) "Restricted Stock Purchase Agreement" means a written agreement
           -----------------------------------
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right.  The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.

     (bb) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
           ----------
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.

     (cc) "Section 16(b) " means Section 16(b) of the Exchange Act.
           -------------

     (dd) "Service Provider" means an Employee, Director or Consultant.
           ----------------

     (ee) "Share" means a share of the Common Stock, as adjusted in accordance
           -----
with Section 13 of the Plan.

     (ff) "Stock Purchase Right" means the right to purchase Common Stock
           --------------------
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

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

  3. Stock Subject to the Plan.  Subject to the provisions of Section 13 of
     -------------------------
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 9,302,738 Shares (as adjusted for stock splits, stock
dividends, recapitalizations and the like occurring after the adoption of the
Plan ("Recapitalizations")) plus an annual increase to be added on the first day
of the Company's fiscal year beginning in 2001, equal to the lesser of (i)
4,000,000 shares (as adjusted for Recapitalizations), (ii) 5% of the outstanding
shares on such date or (iii) a lesser amount determined by the Board.  The
Shares may be authorized, but unissued, or reacquired Common Stock.

          If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
             --------
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

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

          (a)  Procedure.
               ---------

                  (i)  Multiple Administrative Bodies.  Different Committees
                       ------------------------------
with respect to different groups of Service Providers may administer the Plan.

                  (ii) Section 162(m).  To the extent that the Administrator
                       --------------
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the

                                      -4-
<PAGE>

meaning of Section 162(m) of the Code, the Plan shall be administered by a
Committee of two or more "outside directors" within the meaning of Section
162(m) of the Code.

          (iii) Rule 16b-3.  To the extent desirable to qualify transactions
                ----------
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.

          (iv)  Other Administration.  Other than as provided above, the Plan
                --------------------
shall be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws.

     (b)  Powers of the Administrator.  Subject to the provisions of the Plan,
          ---------------------------
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:

          (i)    to determine the Fair Market Value;

          (ii)   to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;

          (iii)  to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;

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

          (v)    to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option or Stock Purchase Right granted hereunder.
Such terms and conditions include, but are not limited to, the exercise price,
the time or times when Options or Stock Purchase Rights may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;

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

          (vii)  to institute an Option Exchange Program;

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

          (ix)   to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans established
for the purpose of satisfying applicable foreign laws;

                                      -5-
<PAGE>

               (x)    to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;

               (xi)   to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the minimum amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable;

               (xii)  to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;

               (xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

            (c)  Effect of Administrator's Decision.  The Administrator's
                 ----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.

     5.   Eligibility.  Nonstatutory Stock Options and Stock Purchase Rights
          -----------
may be granted to Service Providers. Incentive Stock Options may be granted only
to Employees.

     6.   Limitations.
          -----------

            (a)  Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

            (b)  Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.

            (c)  The following limitations shall apply to grants of Options:

                    (i)  No Service Provider shall be granted, in any fiscal
year of the Company, Options to purchase more than 3,000,000 Shares (as adjusted
for Recapitalizations).

                                      -6-
<PAGE>

          (ii)  In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 3,000,000 Shares
(as adjusted for Recapitalizations), which shall not count against the limit set
forth in subsection (i) above.

          (iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 13.

          (iv)  If an Option is cancelled in the same fiscal year of the Company
in which it was granted (other than in connection with a transaction described
in Section 13), the cancelled Option will be counted against the limits set
forth in subsections (i) and (ii) above.  For this purpose, if the exercise
price of an Option is reduced, the transaction will be treated as a cancellation
of the Option and the grant of a new Option.

     7. Term of Plan.  Subject to Section 19 of the Plan, the Plan shall become
        ------------
effective upon its adoption by the Board.  It shall continue in effect for a
term of ten (10) years unless terminated earlier under Section 15 of the Plan.

     8. Term of Option.  The term of each Option shall be stated in the Option
        --------------
Agreement.  In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.  Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.

     9. Option Exercise Price and Consideration.
        ---------------------------------------

          (a)   Exercise Price.  The per share exercise price for the Shares
                --------------
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

                  (i)  In the case of an Incentive Stock Option

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

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

                  (ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.  In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

                                      -7-
<PAGE>

               (iii)  Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than 100% of the Fair Market Value per
Share on the date of grant pursuant to a merger or other corporate transaction.

          (b)  Waiting Period and Exercise Dates.  At the time an Option is
               ---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.

          (c)  Form of Consideration.  The Administrator shall determine the
               ---------------------
acceptable form of consideration for exercising an Option, including the method
of payment.  In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant.  Such
consideration may consist entirely of:

               (i)    cash;

               (ii)   check;

               (iii)  promissory note;

               (iv)   other Shares, which in the case of Shares acquired from
the Company, (A) have been owned by the Optionee for more than six months on the
date of surrender, and (B) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised;

               (v)    consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

               (vi)   a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;

               (vii)  any combination of the foregoing methods of payment; or

               (viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

     10.  Exercise of Option.
          ------------------

               (a)  Procedure for Exercise; Rights as a Shareholder.  Any
                    -----------------------------------------------
Option granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator
and set forth in the Option Agreement. Unless the Administrator provides
otherwise, vesting of Options granted hereunder shall be tolled during any
unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.

                      An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is

                                      -8-
<PAGE>

exercised. Full payment may consist of any consideration and method of payment
authorized by the Administrator and permitted by the Option Agreement and the
Plan. Shares issued upon exercise of an Option shall be issued in the name of
the Optionee or, if requested by the Optionee, in the name of the Optionee and
his or her spouse. Until the Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 13 of the Plan.

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

     (b)  Termination of Relationship as a Service Provider.  If an Optionee
          -------------------------------------------------
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement).  In the absence
of a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination.  If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

     (c)  Disability of Optionee.  If an Optionee ceases to be a Service
          ----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for six (6) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

     (d)  Death of Optionee.  If an Optionee dies while a Service Provider, the
          -----------------
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Option is vested on the date of death.  In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination.  If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the

                                      -9-
<PAGE>

Plan. The Option may be exercised by the executor or administrator of the
Optionee's estate or, if none, by the person(s) entitled to exercise the Option
under the Optionee's will or the laws of descent or distribution. If the Option
is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

     11.  Stock Purchase Rights.
          ---------------------

               (a)  Rights to Purchase.  Stock Purchase Rights may be issued
                    ------------------
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to be
paid, and the time within which the offeree must accept such offer. The offer
shall be accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.

               (b)  Repurchase Option.  Unless the Administrator determines
                    -----------------
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.

               (c)  Other Provisions.  The Restricted Stock Purchase Agreement
                    ----------------
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.

               (d)  Rights as a Shareholder.  Once the Stock Purchase Right is
                    -----------------------
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.

     12.  Non-Transferability of Options and Stock Purchase Rights.  Unless
          --------------------------------------------------------
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.  If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.

     13.  Adjustments Upon Changes in Capitalization, Dissolution, Merger or
          ------------------------------------------------------------------
Change of Control.
-----------------

               (a)  Changes in Capitalization.  Subject to any required action
                    -------------------------
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for

                                      -10-
<PAGE>

issuance under the Plan, but as to which no Options or Stock Purchase Rights
have yet been granted or which have been returned to the Plan upon cancellation
or expiration of an Option or Stock Purchase Right, the number of shares that
may be added to the Plan annually pursuant to Section 3(i), as well as the price
per share of Common Stock covered by each such outstanding Option or Stock
Purchase Right, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, stock split, declaration of an
extraordinary dividend payable if the form other than Shares in an amount that
has a material effect on the Fair Market Value of the Common Stock, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.

     (b)  Dissolution or Liquidation.  In the event of the proposed dissolution
          --------------------------
or liquidation of the Company, the Administrator shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Optionee to have the
right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable.  In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated.  To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.

     (c)  Merger or Change of Control.  In the event of a merger of the Company
          ---------------------------
with or into another corporation or a Change of Control, each outstanding Option
and Stock Purchase Right shall be assumed or an equivalent option or right
substituted by the successor corporation, or a Parent or Subsidiary of the
successor corporation, and any Company repurchase option with respect to
Restricted Stock shall be assigned to such successor corporation, or a Parent or
Subsidiary of the successor corporation.  In the event that the successor
corporation refuses to assume or substitute for the Option or Stock Purchase
Right, the Optionee shall fully vest in and have the right to exercise the
Option or Stock Purchase Right as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable.  Any repurchase
option the Company has with respect to Restricted Stock which is not assigned to
such successor corporation shall lapse.  If an Option or Stock Purchase Right
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or Change of Control,

                                      -11-
<PAGE>

the Administrator shall notify the Optionee in writing or electronically that
the Option or Stock Purchase Right shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option or
Stock Purchase Right shall terminate upon the expiration of such period. For the
purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger or Change of Control, the option or
right confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the merger or
Change of Control, the consideration (whether stock, cash, or other securities
or property) received in the merger or Change of Control by holders of Common
Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding Shares); provided, however, that
if such consideration received in the merger or Change of Control is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option or Stock Purchase Right, for each
Share of Optioned Stock subject to the Option or Stock Purchase Right, to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or Change of Control.

     14.  Date of Grant.  The date of grant of an Option or Stock Purchase Right
          -------------
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator.  Notice of the determination shall
be provided to each Optionee within a reasonable time after the date of such
grant.

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

              (a)   Amendment and Termination. The Board may at any time amend,
                    -------------------------
alter, suspend or terminate the Plan.

              (b)   Shareholder Approval.  The Company shall obtain shareholder
                    --------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

              (c)   Effect of Amendment or Termination.  No amendment,
                    ----------------------------------
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.

     16.  Conditions Upon Issuance of Shares.
          ----------------------------------

              (a)   Legal Compliance.  Shares shall not be issued pursuant to
                    ----------------
the exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the approval
of counsel for the Company with respect to such compliance.

              (b)   Investment Representations.  As a condition to the exercise
                    --------------------------
of an Option or Stock Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.

                                      -12-
<PAGE>

     17.  Inability to Obtain Authority.  The inability of the Company to obtain
          -----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

     18.  Reservation of Shares.  The Company, during the term of this Plan,
          ---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     19.  Shareholder Approval.  The Plan shall be subject to approval by the
          --------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted.  Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.

                                      -13-

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