Document:

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                                                            Exhibit 10.4
                                                            ------------

THIS DEVELOPMENT AGREEMENT dated the 29th day of December, 1999

BETWEEN:

                           CANDEREL MANAGEMENT INC.

                         (hereinafter "the Developer")

AND:

                         ENTRUST TECHNOLOGIES LIMITED

                            (hereinafter "Entrust")

WHEREAS Entrust and the Developer have prepared the Project Definition Binder,
pursuant to which the parties now enter into this Development Agreement;

WHEREAS the Developer will design and build the Premises pursuant to the terms
of this Development Agreement; and

WHEREAS Entrust has agreed to lease the Premises on the terms and conditions of
the Lease Agreement to be executed concurrently with this Development Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, agreements, conditions
and undertakings in this Development Agreement, the Developer and Entrust
covenant and agree as follows:

                                   SECTION 1
                                   ---------
                                   RECITALS
                                   --------

The recitals set out above are true and correct.

                                   SECTION 2
                                   ---------
                                  DEFINITIONS
                                  -----------

In this Development Agreement:

"Base Building Core & Shell" means the structures, facilities and improvements
described in the Project Definition Binder as being the Landlord's
responsibility to provide on its own behalf including, without limitation, the
Exterior Building Amenities, as amended during the course of development under
and subject to this Development Agreement.

"Building" means the turnkey office building to be constructed under and subject
to the terms of this Development Agreement, consisting of approximately 146,100
square feet of total floor rentable area.

"Business Day" means a day on which the Land Registry Office for the Land Titles
Division of Ottawa-Carleton is open for business with the public.
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                                       2

"Commencement Date" has the meaning ascribed to it in the Lease Agreement.

"Construction Lien Act" means the Construction Lien Act, R.S.O.  1990, c.  C.30,
as amended.

"Construction Plans and Specifications" means the final plans and specifications
for the Base Building Core & Shell.

"Delay Days" means the calendar days of delay beyond the date of Substantial
Performance of the Base Building Core & Shell and the Tenant Fit-Up.

"Development Schedule" means the schedule annexed to this Development Agreement
as Schedule "2", as amended by the Developer from time to time (provided that no
amendment may reduce the period of time for any action to be taken by Entrust
unless Entrust otherwise agrees in writing).

"Entrust Delay" means delays arising directly or indirectly out of acts or
omissions by Entrust or any person for whom Entrust is responsible in law,
including, without limitation, delays arising from change orders, the
specifications imposed (except to the extent specifically set forth in the
Project Definition Binder) or materials or equipment selected by Entrust or
Entrust's failure to take any action within the time contemplated by the
Development Schedule.

"Exterior Building Amenities" means the structures, facilities and improvements
exterior to the Building:

(i)  described in the Project Definition Binder; and / or

(ii) set forth in the Site Plan,

including, without limitation, landscaping, parking, paving, striping, curbing,
grading and drainage, exterior lighting, flagpoles and signage to the extent:

(i)  described in the Project Definition Binder; and / or

(ii) set forth in the Site Plan.

"Force Majeure Delay" excludes Entrust Delay and means delays caused by:

(i)  acts of God, war, civil commotion, fire, flood or other casualty,
     government regulations not in effect on the date of this Development
     Agreement and labour disputes (other than those limited to the site of the
     Building;

(ii) inability to obtain materials, goods, equipment, service, utility or
     labour, inability to procure any licence or permit or unusual delay by
     common carrier, provided that the Developer has exercised commercially
     reasonable efforts and has diligently attempted to avoid and to mitigate
     such cause(s) of delay; and
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                                       3

(iii) other matters beyond the reasonable control of the Developer, provided
      that the Developer has exercised commercially reasonable efforts and has
      diligently attempted to avoid and to mitigate such cause(s) of delay.

"General Conformity Plans and Specifications" has the meaning ascribed to it in
subsection 3.3(b).

"Lands" means the parcel of land in the City of Kanata, Ontario described in
Schedule "l", consisting of approximately 11.58 acres.

"Lease Agreement" means the lease agreement being executed by the parties
contemporaneously with, and collateral to, this Development Agreement, pursuant
to which Entrust is leasing the Land and the Building.

"Owner" means 3559807 CANADA INC.

"Owner's Mortgagee" means any mortgagee of the Owner holding a mortgage of the
Lands or holding a mortgage of a ground lease granted by the Owner in respect of
the Lands.

"Preliminary Plans and Specifications" means the preliminary plans and
specifications for the Base Building Core & Shell to be prepared by the
Developer's, design consultants and accepted by Entrust.

"Premises" means the Base Building Core & Shell and the Tenant Fit-Up.

"Progress Drawings and Specifications" means the second and subsequent
generations of the Preliminary Plans and Specifications, other than the
Construction Plans and Specifications.

"Project Definition Binder" means the binder of documents and information
assembled and accepted by the parties dated December 20, 1999, representing the
understanding and agreement of the parties as to the scope and definition of the
Building and the Exterior Building Amenities.

"Site Plan" means the site plan for that part of the Lands on which the Building
and the Exterior Building Amenities will be located to be prepared by the
Developer, accepted by Entrust and which is to be approved by the City of
Kanata, as amended from time to time (provided that after acceptance by Entrust,
any material amendments, other than amendments required by municipal
authorities, are subject to further acceptance by Entrust, to be granted or
denied within four (4) Business Days of request for it).

"Substantial Performance" has the meaning ascribed to it in section 2 of the
Construction Lien Act and shall be evidenced by a Certificate or Certificates of
Substantial Performance issued by the Developer's architect, as to the Base
Building Core & Shell, and by the principal of the Developer's interior design
firm, as to the Tenant Fit-Up, which Certificate or Certificates shall be in the
standard form contemplated by the Construction Lien Act.  "Substantially
Performed" has a corresponding meaning.  Notwithstanding the foregoing, the
parties hereto agree that items of a minor nature relating to the exterior of
the Building (such as landscaping) which could not reasonably be completed
because of weather conditions and which do not materially affect Entrust's
ability to enjoy the Building are not to be considered in calculating
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                                       4

whether or not Substantial Performance has occurred. For the purposes of this
Agreement, the said items are to be referred to as "the Finishing Items".

"Substantial Performance Date" means October 23, 2000 subject to revision in
accordance with the terms of this Development Agreement.

"Tenant Fit-Up" means the design, procurement, construction, commissioning and
all related management and supervision with respect to the structures,
facilities and improvements on the interior of the Building, including the
structures, facilities and improvements described as being part of the tenant
fit-up in the Project Definition Binder, but excluding Base Building Core &
Shell.  The structures, facilities and improvements to be included in Tenant
Fit-Up that have been identified as of the date of this Development Agreement
are listed in the Project Definition Binder.

"Tenant Fit-Up Plans and Specifications" means the final plans and
specifications for the Tenant Fit-Up.

"Tenant's Work" means all work relating to the furnishing and installation of
trade fixtures, furnishings, cabling, equipment and other tangible personal
property which Entrust may desire and which is not required of the Developer
under the Construction Plans and Specifications or the Tenant Fit-Up Plans and
Specifications and which may be installed by Entrust.

                                   SECTION 3
                                   ---------
           DESIGN AND CONSTRUCTION OF BASE BUILDING CORE & SHELL AND
           ---------------------------------------------------------
                                 TENANT FIT-UP
                                 -------------

3.1  The Developer's Design and Construction Obligations
     ---------------------------------------------------

(a)  The Developer shall design and construct the Base Building Core & Shell in
     accordance with:

     (i)   any change orders implemented pursuant to subsection 3.4;

     (ii)  plans, specifications, clarifications, confirmations or modifications
           (other than the General Conformity Plans and Specifications (as that
           term is defined in subsection 3.3)) proposed by the Developer which
           may be approved in writing by Entrust from time to time;

     (iii) the General Conformity Plans and Specifications; and

     (iv)  the Project Definition Binder, provided that the Developer may make
           changes to the mechanical, electrical or architectural design or
           specifications if the performance criteria set forth in the Project
           Definition Binder are met or exceeded.

     If there is any conflict among the provisions of subparagraphs (i), (ii),
     (iii) and (iv) of this paragraph 3.1(a), then subparagraph (i) prevails
     over subparagraphs (ii), (iii) and (iv),
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                                       5

     subparagraph (ii) prevails over subparagraphs (iii) and (iv) and
     subparagraph (iii) prevails over subparagraph (iv).

(b)  The Developer shall design and construct the Tenant Fit-Up in accordance
     with the Tenant Fit-Up Plans and Specifications, subject to any change
     orders implemented pursuant to subsection 3.4.

(c)  If and when Entrust becomes aware of any error in, omission from or
     discrepancy between:

     (i)  the Construction Plans and Specifications; and

     (ii) the Project Definition Binder, subject to any change orders
          implemented pursuant to subsection 3.4 and to any approved plans,
          specifications, clarifications, confirmations or modifications
          referred to in subparagraph 3.1(a)(ii),

     then Entrust shall forthwith provide written notice to the Developer
     setting out in reasonable detail the error, omission or discrepancy.

(d)  The Developer shall commence and diligently prosecute and complete the
     design and construction of the Base Building Core & Shell and Tenant Fit-Up
     in accordance with the terms and conditions of this section 3.

3.2  Development Schedule
     --------------------

Subject to extension for Force Majeure Delay or Entrust Delay, the Developer
shall perform its work by the dates set out in the Development Schedule.  The
Developer shall: (i) monitor and control the progress of the work relative to
the Development Schedule; (ii) provide proposed updates or revisions of the
Development Schedule to Entrust's authorized representative from time to time;
and (iii) advise Entrust of any revisions required as the result of delays,
indicating the impact expected from the change in schedule.  The Developer shall
advise Entrust in writing, providing reasonable particulars of any alleged
Entrust Delay which will affect the Development Schedule forthwith after the
Developer becomes aware of the delay.

3.3  Entrust Review and Acceptance of Plans and Specifications
     ---------------------------------------------------------

(a)  The parties acknowledge that the Developer shall prepare and Entrust is to
     review and accept the Site Plan, and the Preliminary Plans and
     Specifications and that the Developer has, as of the date of execution
     hereof prepared and Entrust has received and tentatively accepted a
     preliminary Site Plan, Development Schedule dated December 17, 1999 and
     preliminary Plans and Specifications attached as Schedules hereto.

(b)  In consultation with Entrust, the Developer shall cause the Construction
     Plans and Specifications to be promptly prepared in conformity with: (i)
     the Project Definition Binder (subject to subparagraphs 3.1(a)(i), (ii) and
     (iv)); (ii) the Preliminary Plans and Specifications; and (iii) the
     Progress Drawings and Specifications and in compliance with applicable
     zoning and other laws, codes, by-laws and governmental regulations.  The
     Developer shall submit to Entrust, for the sole purpose of obtaining
     Entrust's
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                                       6

     acknowledgment that they are in general conformity with the Project
     Definition Binder (subject to subparagraphs 3.1(a)(i), (ii) and (iv), the
     following (the "General Conformity Plans and Specifications"):

     (i)   Site Plan (preliminary Site Plan being Drawing No. A01 dated
           November, 1999);

     (ii)  typical floor plate (as set forth in Drawing No. A04 dated November,
           1999);

     (iii) building elevations (for aesthetic purposes only) (as set forth in
           Drawings Nos. A08 and A09 dated November, 1999);

     (iv)  overall concept of mechanical and electrical systems (as set forth in
           the Section C-1 of the Project Definition Binder under the heading
           "Mechanical/Electrical Outline Specification" prepared by R. J. McKee
           Engineering dated November 24, 1999);

     (v)   ground floor plan (as set forth in Drawing No. A03 dated November,
           1999)

For greater certainty, Entrust's review of the General Conformity Plans and
Specifications does not diminish in any way the Developer's obligation to design
and construct the Base Building Core & Shell in a good and workmanlike manner
fit for the purpose intended and in accordance with applicable law.  The General
Conformity Plans and Specifications shall be initialed by both parties and shall
be deemed to be incorporated by reference as part of this Development Agreement.

(c)  In consultation with Entrust, the Developer shall cause the Tenant Fit-Up
     Plans and Specifications to be prepared in conformity with the Project
     Definition Binder (except as the requirements of the Project Definition
     Binder may be amended by written instructions received from Entrust). The
     Developer shall submit the Tenant Fit-Up Plans and Specifications to
     Entrust for Entrust's review and, in the case of architectural and interior
     design plans and specifications forming part of the Tenant Fit-Up Plans and
     Specifications, for Entrust's acceptance. Upon acceptance by Entrust, the
     architectural and interior design plans and specifications forming part of
     the Tenant Fit-Up Plans and Specifications supersede the provisions of the
     Project Definition Binder. The Tenant Fit-Up Plans and Specifications shall
     be initialed by both parties and shall be deemed to be incorporated by
     reference as part of this Development Agreement. The Tenant Fit-Up Plans
     and Specifications shall be prepared by the Developer and reviewed by
     Entrust in accordance with the time frames contemplated by the Development
     Schedule,

(d)  The Developer shall prepare promptly any additional plans which may be
     required by all authorities having jurisdiction in order to obtain all
     necessary permits and approvals. The Developer shall comply with the
     requirements of the governmental agencies having jurisdiction and public
     utilities (including, without limitation, the granting of easements for
     public services). The Developer shall obtain all preliminary and final
     building permits necessary to construct and permit occupancy of the
     Premises in accordance with the Construction Plans and Specifications, the
     Tenant Fit-Up Plans and Specifications and the Development Schedule. The
     Developer shall bear the costs (including, without limitation, applicable
     development charges) associated with obtaining permits for the
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                                       7

     Base Building Core & Shell and Entrust shall bear the costs (including,
     without limitation, applicable development charges) associated with
     obtaining permits for the Tenant Fit-Up.

3.4  Change Orders
     -------------

Prior to completion of construction, Entrust may from time to time in its
discretion order modifications to the Preliminary Plans and Specifications, the
Progress Drawings and Specifications, the Construction Plans and Specifications
and the Tenant Fit-Up Plans and Specifications, subject to an appropriate
extension of the Substantial Performance Date (if applicable).  Each
modification requested by Entrust is subject to the following:

(a)  the consent of the Developer (which consent may only be withheld as set out
     in Section 2 of Schedule "F" of the Lease);

(b)  if the modification increases or decreases total cost of the Base Building
     Core & Shell, then the cost of the modification will be dealt with as set
     out in Section 2 of Schedule "F" of the Lease;

(c)  if consented to, the cost of the modification is to be dealt with as set
     out in Section 4.1 (c) of this Development Agreement.

If at any one time Entrust requests modifications which both increase and
decrease costs, then only the net cost effect of those modifications shall be
considered, provided that the cost effect of modifications to the Base Building
Core & Shell and to the Tenant Fit-Up shall be considered separately.

Entrust also may, in its discretion, require certain immaterial (i.e., at no
change of cost or change in time or material change in design) field
modifications in the Tenant Fit-Up Plans and Specifications without the consent
of the Developer.  The Construction Plans and Specifications shall not be
amended by the Developer in any manner which materially affects the Tenant Fit-
Up Plans and Specifications without the written consent of Entrust.

Except for immaterial field modifications to the Tenant Fit-Up Plans and
Specifications as described above, approval of all modifications requested by
Entrust to or affecting the Construction Plans and Specifications or the Tenant
Fit-Up Plans and Specifications and approval of modifications requested by the
Developer to or affecting the Tenant Fit-Up Plans and Specifications must be in
writing and signed or initialed by both parties through their authorized
construction representatives from time to time.  As of the date of this
Development Agreement, Entrust's authorized representative is Carol Lim or David
Wagner and the Developer's authorized representative is Jonathan Wener, Douglas
Pascal, Oakley Semple or Wayne Jennings.  Each party shall give written notice
to the other of any change in the individuals who have full binding authority to
approve modifications.  If a party withdraws the authority of any such
individual by written notice to the other party, then that withdrawal is not
valid unless the notice specifies a new authorized construction representative
for the withdrawing party.  The Developer shall obtain approval of one of
Entrust's authorized construction representatives for any modifications or
contemplated modifications (the cost of investigating which is Entrust's)
requested by Entrust to or affecting the Construction Plans and Specifications
or the Tenant Fit-Up Plans and
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                                       8

Specifications and for any modifications requested by the Developer to or
affecting the Tenant Fit-Up Plans and Specifications and the Developer is solely
responsible for any changes not approved by one of Entrust's authorized
representatives.

If the Developer forecasts that any changes or modifications requested by
Entrust may cause a delay in meeting the Substantial Performance Date, then the
Developer shall give Entrust notice of the estimated number of Delay Days (which
Delay Days are to be deemed to cause an Entrust Delay).  If Entrust decides to
have the Developer proceed with the change or modification, then the Substantial
Performance Date shall be extended by the actual number of Delay Days.

3.5  Reporting
     ---------

From and after the execution of this Development Agreement, the Developer shall
submit to Entrust monthly written reports describing: (i) the status of the
Developer's obligations under this Development Agreement; (ii) the status of
Base Building Core & Shell and Tenant Fit-Up change orders requested by Entrust
to the date of the report; and (iii) any material deviation from the
Construction Plans and Specifications and Tenant Fit-Up Plans and
Specifications. The Developer's bi-weekly reports shall be accompanied by
architectural and engineering inspection reports received during the preceding
two week period which relate to the Tenant Fit-Up. In addition, the Developer
shall submit to Entrust monthly written reports describing: (i) the schedule of
the Developer's obligations under this Development Agreement and (ii) the status
of the Tenant Fit-Up budget to the date of the report.

3.6  Contractors and Consultants
     ---------------------------

The Developer shall be the construction manager for the construction of the
Premises and is responsible for all work described in the Construction Plans and
Specifications and the Tenant Fit-Up Plans and Specifications. Entrust also has
authorized the Developer's use of the following consultants:

     for architecture: Tolchinsky & Goodz, Architects
     for mechanical/electrical engineering: R.J. McKee Engineering Ltd.;
     for structural engineering: Adjeleian Allen Rubeli Limited;
     for civil engineering: Novatech Engineering Consultants Ltd.;
     for interior design: Gansen Lindsay
     for landscape architecture: Larocque Levstek;
     for elevator consulting: Rooney, Irving & Associates;
     for food service consulting: Design Food Services Incorporated;
     for soils: Golder Associates.

The Developer shall not use any other consultants for the functions and purposes
listed above in connection with the design and construction of the Premises
without first obtaining Entrust's written approval.

3.7  Warranties
     ----------

(a)  The Developer warrants and guarantees that the Base Building Core & Shell
     will be constructed in a good and workmanlike manner and shall correct
     promptly, at its sole cost
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                                       9

     and expense, defects or deficiencies in workmanship, materials and
     equipment not caused by normal wear and tear or by the negligence or
     misconduct of Entrust which appear during the period of one (1) year from
     the date of Substantial Performance.

(b)  The Developer warrants and guarantees that the Tenant Fit-Up will be
     constructed in a good and workmanlike manner and shall correct promptly, at
     its sole cost and expense, defects or deficiencies in workmanship,
     materials and equipment not caused by normal wear and tear or by the
     negligence or misconduct of Entrust which appear during the period of one
     (1) year from the date of Substantial Performance.

(c)  The Developer shall provide the necessary qualified resources to ensure
     that all Base Building Core and Shell CAD standard drawings are provided
     and added to Entrust's database and will deliver as-built drawings, CAD
     representations (updated with all changes of the as-built condition upon
     completion) and training manuals to Entrust within ninety (90) calendar
     days after Substantial Performance of the Premises. All Tenant Fit-Up CAD
     standard drawings are also to be provided and added to Entrust's database
     as well as as-built drawings, CAD representations.

(d)  Without limiting the scope, nature or timing of any claims under the
     warranties in this subsection 3.7, Entrust and the Developer shall inspect
     the Premises immediately prior to the expiry of each warranty period for
     the purpose of agreeing on a list of warranty items to be rectified or
     completed. The Developer shall promptly commence and diligently pursue to
     correction and completion the work set forth in any deficiency list arising
     out of that inspection. If the Developer disputes any item on the
     deficiency list, then the matter shall be settled in accordance with the
     provisions of section 12.

(e)  To the extent that they are assignable, any and all warranties obtained by
     the Owner or Developer and relating to the Base Building Core & Shell and
     the Tenant Fit-Up shall and are hereby assigned to Entrust jointly with the
     Owner and Developer, so that each party shall be able to enforce such
     warranties in order to assist them to comply with their respective
     obligations under this Development Agreement and the Lease.

3.8  Substantial Performance
     -----------------------

(a)  Substantial Performance  The Developer shall Substantially Perform the
     -----------------------
     construction of the Premises in accordance with the Construction Plans and
     Specifications and Tenant Fit-Up Plans and Specifications and shall deliver
     up possession of the Premises to Entrust no later than the Substantial
     Performance Date, subject to extension for Force Majeure Delay or Entrust
     Delay.  Finishing Items are to be completed as soon as possible after
     weather conditions permit such completion.

(b)  Notice of Substantial Performance  The Developer shall notify Entrust from
     ---------------------------------
     time to time of the expected date of Substantial Performance of:  (i) the
     Base Building Core & Shell; (ii) the Tenant Fit-Up; or (iii) components of
     the Base Building Core & Shell or Tenant Fit-Up selected by the Developer
     as being ready for Tenant's Work, in each case at least thirty (30)
     calendar days before the expected date of the applicable Substantial
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                                       10

     Performance, and subsequently shall notify Entrust of the actual date of
     the applicable Substantial Performance.

(c)  Joint Inspection/Deficiency List  Within five (5) calendar days after the
     --------------------------------
     later of (i) receipt by Entrust of the Developer's notice of the actual
     date of Substantial Performance or (ii) the actual date of Substantial
     Performance as set forth in the Developer's notice, Entrust has the right
     to attend at the Premises together with a representative of the Developer
     for the purpose of carrying out a joint inspection with the Developer and
     the Developer's representative of the Substantially Performed work to which
     the Developer's notice relates and agreeing on a list of items to be
     rectified or completed.

(d)  Dispute as to Deficiency List  If either party disputes the inclusion or
     -----------------------------
     exclusion of any item from the parties' joint deficiency list, then the
     matter shall be referred to and determined by an arbitration conducted in
     accordance with section 12.  If applicable, this subsection constitutes the
     required submission to arbitration.

(e)  Correction of Deficiencies  In any event, the Developer shall promptly
     --------------------------
     commence and diligently pursue to correction and completion the work set
     forth in the joint deficiency list and shall complete it within thirty (30)
     calendar days after the preparation of the joint deficiency list (except
     for items which cannot be completed within that thirty (30) day period for
     reasons beyond the Developer's reasonable control, provided the Developer
     shall diligently pursue the correction and completion of those items).

(f)  Deemed Acceptance  Upon the expiration of the five (5) day period referred
     -----------------
     to in paragraph 3.8(c), Entrust shall be deemed to have accepted the
     Substantially Performed work to which the Developer's notice relates and
     the Developer shall be deemed to have satisfied all of its obligations in
     respect to it, save and expect for the uncompleted and incorrectly
     completed items described in the joint deficiency list and latent defects.
     Entrust's deemed acceptance of that work and the Developer's deemed
     satisfaction of its obligations in respect to it does not diminish in any
     way the Developer's warranties and guarantees given to Entrust pursuant to
     subsection 3.7.

3.9  Remedies For Failure to Deliver Premises on the Substantial Performance
     -----------------------------------------------------------------------
     Date
     ----

Entrust shall have no right to terminate the Lease Agreement or to abate rent
due under the Lease Agreement for any failure by the Developer to meet the
Substantial Performance Date, as extended for Force Majeure Delay or Entrust
Delay.  The effect of Force Majeure Delay, Entrust Delay and the failure of the
Developer to meet the Substantial Performance Date (as extended for Force
Majeure Delay or Entrust Delay) on the determination of the Commencement Date is
governed by the Lease Agreement.

The Developer agrees that it shall assign a project manager satisfactory to
Entrust, acting reasonably, for the construction of the Base Building Core &
Shell as well as the Tenant Fit-Up and that such project manager shall be
dedicated on a full-time basis to such construction.  Entrust hereby confirms
that Stephen Martin is a project manager satisfactory to Entrust.
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                                       11

3.10  General Conditions Regarding Construction Work
      ----------------------------------------------

All of the work to be performed by, through and under the Developer shall be
done: (i) in a good and workmanlike manner; (ii) in compliance with all
applicable construction-related legislation, bylaws, ordinances, regulations,
building codes, rules, orders,, licences, zoning and building requirements
applicable to it; and (iii) in accordance with this Development Agreement.
After Substantial Performance, the Developer shall obtain and evidence to
Entrust all permits and authorizations permitting lawful occupancy of the
Premises.  The Developer shall bear the costs (including, without limitation,
applicable development charges) associated with obtaining permits for the Base
Building Core & Shell and Entrust shall bear the costs (including, without
limitation, applicable development charges) associated with obtaining permits
for the Tenant Fit-Up.

Except for Tenant's Work and subject to:

(a)   the Developer's allowance to Entrust of the sum of Fifteen Dollars
      ($15.00) per square foot of rentable area of the Building (exclusive of
      G.S.T.) in respect of the Tenant Fit-Up;

(b)   Entrust paying for the cost of the Tenant Fit-Up in excess the said
      Fifteen Dollars ($15.00) per square foot of rentable area of the Building
      (exclusive of G.S.T.); and

(c)   Entrust paying for the cost of certain items in excess of the Allowance
      (as contemplated by section 3.14 of this Agreement),

the Developer shall pay all construction trades and suppliers monies properly
due and owing to them and shall comply with the provisions of the Construction
Lien Act and all applicable construction-related legislation, bylaws,
ordinances, regulations and building codes.  The Developer shall ensure that
there are no lien claims, notices of security interests or other such
encumbrances registered against Entrust's leasehold interest in the Building as
at and after the Substantial Performance Date arising as a result of the
Developer's failure to comply with its obligations under this subsection.  In
the event of any such lien claim, notice or other encumbrance, the Developer
shall take whatever steps may be required to vacate forthwith the registration
of it.  The Developer also shall indemnify Entrust and hold Entrust harmless
with respect to any and all claims (including, without limitation, solicitor-
client costs) arising out of the supply of services and materials to the
Developer, its construction manager or trades and suppliers for the construction
of the Premises (subject to Entrust's payment of that portion of the cost of the
Tenant Fit-Up which is in excess of Fifteen Dollars ($15.00) per square foot of
rentable area of the Building (exclusive of G.S.T.) in accordance with the terms
of this Development Agreement).

3.11  Entrust's Installations Prior to Completion
      -------------------------------------------

Entrust, at its sole cost and expense, shall perform Tenant's Work.  All
Tenant's Work shall be performed in accordance with the provisions of this
subsection.

In performing the Tenant's Work, Entrust shall pay all construction trades and
suppliers monies properly due and owing to them and comply with the provisions
of the Construction Lien Act and all applicable construction-related
legislation, bylaws, ordinances, regulations and building
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                                       12

codes. Entrust shall ensure that there are no lien claims, notices of security
interests or other such encumbrances registered against the Lands or Building
arising from the Tenant's Work or, to the extent that the cost of the Tenant
Fit-Up exceeds Fifteen Dollars ($15.00) per square foot of rentable area of the
Building (exclusive of G.S.T.), arising from Entrust's failure to pay that
excess in accordance with the terms of this Development Agreement. In the event
of any such lien claim, notice or other encumbrance, Entrust shall take whatever
steps may be required to vacate forthwith the registration of it. Entrust shall
indemnify and hold the Developer and the Owner harmless from any construction
lien claims (including, without limitation, solicitor-client costs) arising out
of the Tenant's Work or, to the extent that the cost of the Tenant Fit-Up
exceeds Fifteen Dollars ($15.00) per square foot of rentable area of the
Building (exclusive of G.S.T.), arising from Entrust's failure to pay that
excess in accordance with the terms of this Development Agreement, including,
without limitation, claims arising out of the supply of services and materials
to Entrust, its trades and suppliers for the Tenant's Work.

After the execution of this Development Agreement and the Lease Agreement and
prior to the Substantial Performance Date, the Developer shall permit
representatives, agents, employees, contractors, architects and engineers
designated by Entrust to enter on the Lands and in the Building at their own
risk for the purpose of performing the Tenant's Work without payment of rent or
other charges except costs relating to the work performed (such as hoisting and
garbage removal and clean-up). Any such entry and the performance of Tenant's
Work: (i) shall be done on notice by Entrust to the Developer; (ii) must not
hamper or delay the Developer's construction work; (iii) shall be scheduled and
coordinated with the Developer's work; (iv) shall be done in accordance with the
Development Schedule; and (v) shall be subject to the reasonable rules and
regulations of the Developer. Until Substantial Performance of the Base Building
Core & Shell, the Developer shall pay the cost of water, sewer, electricity and
other utilities used for the construction of the Base Building Core and Shell
and Entrust shall be responsible for the payment of such items after such time
as well as payments related to such items with respect to the Tenant Fit-Up and
the Tenant's Work.

Without limiting the generality of the foregoing and subject to Force Majeure
Delay and Entrust Delay, the Developer will grant Entrust access on or before
the applicable date(s) set out in the Development Schedule to perform Tenant's
Work in the communication rooms and also will grant Entrust access to other
areas in the Building required to connect communications or electrical cabling
to those rooms, provided that those rooms are not required to be fully completed
or operational by that date and subject to the reasonable rules and regulations
of the Developer. The final locations of those rooms may change during the
course of development, but if Entrust has provided all necessary information to
the Developer in accordance with the Development Schedule with respect to the
location and design of those rooms, then the Developer will provide Entrust
access to those rooms on or before the applicable date(s) set out in the
Development Schedule (subject to Force Majeure Delay and Entrust Delay).

3.12  Entrust's Right of Entry To Review Progress of Construction
      -----------------------------------------------------------

Whenever Entrust considers it appropriate, the Developer shall permit
representatives, agents, employees, lenders, contractors, appraisers, architects
and engineers designated by Entrust to enter the Lands and Building at their own
risk for the purpose of reviewing the progress of construction without the
payment of rent or other charges; provided that except as set forth
<PAGE>

                                       13

below in this subsection 3.12 and in subsection 7.1, Entrust is not assuming any
liability whatsoever as a result of any such entry or review and no such entry
and review diminishes in any way the responsibilities of the Developer under
this Development Agreement. Any such entry: (i) shall be done on notice by
Entrust to the Developer; (ii) is subject to the reasonable rules and
regulations of the Developer; and (iii) must not hamper or delay the Developer's
construction work (including not giving any instructions to construction
personnel on the job site).

3.13  Approvals
      ---------

No approval, consent, authorization or acceptance required or contemplated under
this Development Agreement shall be unreasonably withheld or delayed and each
such approval, consent, authorization or acceptance must be given within the
time frame, if any, contemplated by the Development Schedule or this Development
Agreement.

3.14  Base Building Core & Shell Budget
      ---------------------------------

The parties acknowledge that the budget for the Base Building Core & Shell
includes certain allowances totaling $235,000.00 (the "Allowance"), being
allowances for signage ($25,000.00), relocation of existing signage or new
Building signage ($20,000.00) and landscaping and hardscaping ($150,000.00),
smoking shelter ($15,000.00), security desk ($15,000.00) and bicycle shelter
($10,000.00). Subject to the Developer's obligations to comply with applicable
laws (including municipal site plan requirements), the said allowances may be
used by Entrust as Entrust sees fit. Provided that the Allowance is not
exceeded, Entrust shall also have the ability to allocate or reallocate portions
of the Allowance as between cost items and categories as it sees fit. For
clarity, in the event that the total actual costs for the items set out above
exceeds the Allowance, such excess cost shall be paid by Entrust within forty-
five (45) days after receipt of invoice from time to time from the Developer,
subject to the provisions of the Construction Lien Act.

                                    SECTION 4
                                    ---------
                                  TENANT FIT-UP
                                  -------------

4.1   General
      -------

(a)   The Developer shall ensure that each part of the Tenant Fit-Up complies
      with and conforms to all applicable municipal by-laws for its intended use
      and meets or exceeds all fire and life safety requirements of the Ontario
      Building Code, including all barrier-free provisions and guidelines, as of
      the date on which a building permit is issued for that part.

(b)   The services supplied and the roles and responsibilities assumed by the
      Developer in respect of the Tenant Fit-Up include, but are not limited to,
      the services, roles and responsibilities described in the "Canadian
      Standard Construction Management Contract Form Between Owner and
      Construction Manager" (CCA 5 - 1988), except as otherwise agreed in
      writing.

(c)   The Developer shall contribute up to the sum of Fifteen Dollars ($15.00)
      per square foot of rentable area of the Building (exclusive of G.S.T.) to
      the cost of the Tenant Fit-Up.

<PAGE>

                                       14

     The costs to be paid from that contribution include the costs of all plans
     and permits, the cost of insurance for the Tenant Fit-Up and the costs
     described in the Tenant Fit-Up economics schedule (Section A-4- Schedule
     "B") in the Project Definition Binder, together with those fees set out in
     Section 6 of Schedule "F" of the Lease. If the total cost of the Tenant
     Fit-Up exceeds Fifteen Dollars ($15.00) per square foot of rentable area of
     the Building (exclusive of G.S.T.), then the excess is payable by Entrust
     within forty-five (45) days after receipt of invoice from time to time from
     the Developer, subject to the provisions of the Construction Lien Act.

4.2  Services of the Developer
     -------------------------

The Developer shall provide or cause to be provided the services as described in
the Project Definition Binder from time to time. As well, the Developer shall
identify alternatives and provide value engineering services for the Tenant Fit-
Up that may yield cost benefits to Entrust.

4.3  Budget
     ------

The Developer shall provide cost estimates to Entrust for the Tenant Fit-Up in
accordance with the Project Definition Binder during the schematic design phase,
the design development phase and the tender documents phase. After preparation
of the budget for Tenant Fit-Up and acceptance thereof by Entrust, acting
reasonably, the budget is subject to revision by the Developer during the course
of development to reflect the latest cost estimates received by it, having
regard to the progression of the schematic design phase, the design development
phase and the tender documents phase, subject to review and acceptance of those
cost estimates by Entrust, acting reasonably. The budget shall be monitored and
controlled by the Developer so that it is not exceeded, other than as a result
of changes ordered by Entrust or Force Majeure or with Entrust's agreement. The
budget shall provide an allowance for contingencies equal to ten (10%) percent
of all costs, it being understood that all unused allowances and contingencies
in the Tenant Fit-Up budget shall be to the credit of Entrust.

4.4  Quality Assurance / Quality Control
     -----------------------------------

The Developer shall supply a qualified Quality Assurance / Quality Control
manager who may be an employee of the Developer (subject to Entrust's reasonable
approval) who will use commercially reasonable efforts to ensure that all
aspects pertaining to the quality of the Tenant Fit-Up are met or exceeded, in
accordance with the Project Definition Binder until the completion of the Tenant
Fit-Up Plans and Specifications and then in accordance with the Tenant Fit-Up
Plans and Specifications. The Developer's monthly written reports during Tenant
Fit-Up construction shall include a section entitled "Quality Assurance/Quality
Control" in which all material exceptions are reported and described.

4.5  Schedule
     --------

Subject to Force Majeure Delay and Entrust Delay, the Developer is responsible
for the timely delivery of materials, equipment and labour required to perform
and complete the Tenant Fit-Up in accordance with the Development Schedule.
Entrust is responsible to provide the necessary input, review and approvals
required by the Developer in a timely manner in accordance with the Development
Schedule. The Developer shall provide to Entrust detailed sub-schedules
reflecting
<PAGE>

                                       15

activities in the Tenant Fit-Up design and procurement phases. The sub-schedules
shall incorporate the time frames described in the Development Schedule and
shall provide further detail pertaining to the Developer's design activities and
Entrust input, review and approval dates. In the sub-schedules, the Developer
also shall illustrate in detail procurement activity, including, without
limitation, long-term delivery items, tender packages, tender processes, tender
analysis, tender recommendation and contract award. In all cases, the Developer
shall immediately notify Entrust in writing if and when the Developer forecasts
that the Tenant Fit-Up will or may cause a delay in the Substantial Performance
Date or the Commencement Date.

4.6  Procurement
     -----------

The Developer shall issue all Tenant Fit-Up work for tender and shall obtain no
less than three (3) competitive quotations for all Tenant Fit-Up work, subject
to Entrust's written agreement to accept less than three (3) quotations. The
Developer shall provide to Entrust copies of the approved tender packages to be
issued for tender, all correspondence during the tender period and all tender
submissions. The Developer shall provide its review and analysis of all tender
submissions and shall make a recommendation for contract award to Entrust. Upon
receipt of Entrust's approval and instructions, the Developer shall award the
Tenant Fit-Up contract(s) (which award the Developer agrees Entrust may direct
to a tendering party which may not have been the lowest bidder). If the
quotations received as a result of tendering exceed the most recent budget cost
estimates which have been prepared by the Developer and accepted by Entrust
reflecting the then current accepted design status of the Tenant Fit-Up and if
required by Entrust, the Developer shall arrange to re-design and re-tender as
required to ensure that .costs are within the project budget for the Tenant Fit-
Up, the cost of such re-design and re-tender to be borne by the Developer if it
was negligent in the performance of its obligations hereunder, and otherwise to
be borne by Entrust. In all respects, the Developer shall clearly differentiate
between Base Building Core & Shell work and Tenant Fit-Up work and shall use
commercially reasonable efforts to ensure compatibility and coordination between
them.

Notwithstanding anything to the contrary in this subsection 4.6:

(a)  wherever Tenant Fit-Up mechanical and electrical work interfaces with Base
     Building Core & Shell mechanical and electrical systems and any warranty
     for the Base Building Core & Shell mechanical or electrical system may be
     affected if the work is performed by another person, the Base Building Core
     & Shell mechanical and electrical subcontractor must be used; and

(b)  if Entrust fails to provide information in a timely manner to allow the
     Developer to obtain competitive pricing, then the Developer may require
     unit pricing.

4.7  Construction
     ------------

(a)  All changes and additions to building systems to be located in the ceiling
     space, including, but not limited to, lighting, sprinklers, life support
     systems, HVAC diffusers, electrical distribution systems and ceiling grid
     and tiles, that are part of the Tenant Fit-Up are subject to approval by
     Entrust.  It is understood that the Developer shall be
<PAGE>

                                       16

     responsible to install, at its cost, the Base Building Core & Shell
     building systems in the ceiling spaces with due regard to the Tenant Fit-Up
     requirements, so long as:

     (i)   Entrust adheres to the Development Schedule;

     (ii)  the Tenant Fit-Up item is delivered and capable of being carried out
           within the Development Schedule; and

     (iii) Entrust gives all necessary information requested by the Developer
           before the installation of those building systems as part of the
           construction of the Base Building Core & Shell.

It is also understood that the Tenant shall pay for the incremental costs
associated with the Tenant Fit-Up as it impacts the Base Building Core & Shell
ceiling systems. If, however, the Developer installs the Base Building Core &
Shell ceiling systems without due regard to the Tenant Fit-Up requirements, and
Entrust has complied with its obligations set out in the Development Schedule,
then the costs of relocating the Base Building Core & Shell ceiling systems
shall be borne by the Developer. If Entrust does not give all necessary
information requested by the Developer in accordance with the Development
Schedule before the installation of those building systems as part of the
construction of the Base Building Core & Shell or if Entrust requests any
additions to those building systems, then any changes to those systems resulting
from the Tenant Fit-Up and all additions to those building systems are at
Entrust's cost and, if applicable, the Substantial Performance Date may be
extended for Entrust Delay.

(b)  All wall coverings that are part of the Tenant Fit-Up and all floor
     coverings that are part of the Base Building Core & Shell (except for those
     parts of the Base Building Core & Shell which are usually regarded as
     common areas in multi-tenant office buildings, such as lobbies and
     washrooms) are subject to approval by Entrust. The Developer agrees to
     consult with Entrust with respect to floor coverings for those parts of the
     Base Building Core & Shell which are usually regarded as common areas in
     multi-tenant office buildings.

(c)  Subject to subsection 7.1, the Developer shall take all necessary
     precautions to protect the Tenant Fit-Up work at Entrust's expense during
     construction and acknowledges that it is responsible for all damages caused
     by the Developer or those for whom the Developer is in law responsible
     prior to Substantial Performance of the Premises and turnover to Entrust.

(d)  Subject to subsection 3.4, at Entrust's request the Developer shall in good
     faith consider changes to the Base Building Core & Shell so as to satisfy
     Entrust's requirements for the Tenant Fit-Up, provided that Entrust adheres
     to the Development Schedule and gives all necessary information required by
     the Developer in a timely manner to enable the Developer to make the
     requested changes, if the Developer deems them feasible.
<PAGE>

                                       17

                                   SECTION 5
                                   ---------
          REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER AND ENTRUST
          -----------------------------------------------------------

5.1  The Developer's Representations and Warranties
     ----------------------------------------------

(a)  The Developer represents and warrants that on the Commencement Date, the
     Owner will have good and marketable title in fee simple to the Lands,
     subject only to covenants, restrictions, agreements, rights-of-way,
     easements, mortgages and other encumbrances registered on title to or
     otherwise affecting the Lands and title defects, encroachments or
     irregularities of a minor nature. Schedule "1" sets out the covenants,
     restrictions, agreement, rights-of-way, easements, mortgages and other
     encumbrances of record with respect to the Lands as of the date of this
     Development Agreement.

(b)  The Developer represents and warrants as follows:

     (i)   The Developer is a corporation, duly organized, validly existing and
           in good standing under the laws of Canada and is qualified to do
           business in the Province of Ontario.

     (ii)  The Developer has full capacity, right, power and authority to
           execute, deliver and perform this Development Agreement and all
           documents to be executed by the Developer pursuant to it, and all
           required corporate actions and approvals have been duly taken and
           obtained. The individual(s) signing this Development Agreement and
           all other documents executed or to be executed pursuant to it on
           behalf of the Developer are duly authorized to sign them and to bind
           the Developer. This Development Agreement and all documents to be
           executed pursuant to this Development Agreement by the Developer are
           binding upon and enforceable against the Developer in accordance with
           their respective terms.

     (iii) There are no claims, causes of action or other litigation or
           proceedings pending or, to the best of the Developer's knowledge,
           threatened with respect to the Developer or any of its related
           corporations which would affect the operation of the Lands or
           Building or any part of them or the Developer's ability to enter into
           and perform its obligations under this Development Agreement.

The Developer shall notify Entrust within ten (10) calendar days of receipt of
notice of any contemplated, threatened or anticipated: (i) special tax or
assessment to be levied against the Lands or Building; (ii) widening, change of
grade or limitation on use of streets abutting the Lands or Building; (iii)
change in the zoning classification of the Lands or Building; or (iv) change in
the tax assessment of the Lands or Building, in each case of which the Developer
has been put on notice.

5.2  Entrust's Representations and Warranties
     ----------------------------------------

Entrust represents and warrants as follows:

(a)  Entrust is a corporation, duly organized, validly existing and in good
     standing under the laws of Canada and is qualified to do business in the
     Province of Ontario.

<PAGE>

                                       18

(b)  Entrust has full capacity, right, power and authority to execute, deliver
     and perform this Development Agreement and all documents to be executed by
     Entrust pursuant to it, and all required action and approvals have been
     duly taken and obtained. The individuals signing this Development Agreement
     and all other documents executed or to be executed pursuant to it on behalf
     of Entrust are duly authorized to sign them on Entrust's behalf and to bind
     Entrust. This Development Agreement, the Lease Agreement and all documents
     to be executed pursuant to this Development Agreement by Entrust are
     binding upon and enforceable against Entrust in accordance with their
     respective terms.

(c)  There are no claims, causes of action or other litigation or proceedings
     pending or, to the best of Entrust's knowledge, threatened with respect to
     Entrust which would affect Entrust's ability to enter into and perform its
     obligations under this Development Agreement or the Lease Agreement.

                                   SECTION 6
                                   ---------
                           NO LIABILITY FOR ENTRUST
                           ------------------------

Nothing in this Development Agreement, including, without limitation, any
review, acceptance, authorization, initialing or approval by Entrust of the
design, construction, commissioning or development of the Premises, in whole or
in part, diminishes in any way the Developer's obligations to construct the Base
Building Core & Shell and the Tenant Fit-Up in a good and workmanlike manner and
to construct the Base Building Core & Shell and Tenant Fit-Up in accordance with
applicable law.

                                   SECTION 7
                                   ---------
                                   INDEMNITY
                                   ---------

7.1  Entrust's Indemnity
     ----------

Entrust shall indemnify and hold harmless the Developer, the Owner and the
Owner's Mortgagee, their respective officers, directors, employees and agents
and their respective successors and assigns against any and all liabilities,
losses, damages, costs, expense (including reasonable legal fees and expenses),
claims, demands or judgments of any nature arising during the period prior to
the Commencement Date from:

(a)  entry on the Lands or in the Building by Entrust, its representatives,
     agents, employees, lenders, contractors, appraisers, architects or
     engineers after the date of this Development Agreement and before the
     Substantial Performance of the Premises;

(b)  the performance of the Tenant's Work; or

(c)  Entrust's failure to pay in accordance with the provisions of this
     Development Agreement any sums payable by Entrust under it.

Entrust is not liable in any case to any indemnified party for any liabilities,
obligations, claims, damages, penalties, causes of action, costs or expense to
the extent that they result from the negligence or misconduct of the indemnified
party or the negligence or misconduct of the Developer, any related corporation
of the Developer, or any contractor, subcontractor or material
<PAGE>

                                       19

supplier of the Developer or of a related corporation of the Developer. If the
Developer, any agent of the Developer, the Owner or the Owner's Mortgagee is
made a party to any litigation commenced against Entrust (for liabilities
covered by Entrust's indemnity as specified above) and if Entrust, at its
expense, fails to provide the Developer, its agent, the Owner or the Owner's
Mortgagee with counsel approved by the Developer, its agent, the Owner or the
Owner's Mortgagee, as applicable (which approval shall not be unreasonably
withheld), then Entrust shall pay all costs and reasonable legal fees and
expenses incurred or paid by the Developer, its agent, the Owner or the Owner's
Mortgagee in connection with that litigation. Notwithstanding anything contained
in this Development Agreement to the contrary, Entrust has no liability
whatsoever for consequential, special, exemplary or punitive damages of the
Developer under this Development Agreement or to the Owner under the Lease
Agreement, provided that: (i) the Owner is not precluded from collecting rent
under the Lease Agreement as a result of the deemed commencement of the Lease
Agreement notwithstanding Entrust Delay and (ii) if the Owner is unable to draw
funds from the Owner's Mortgagee on the funding date for the Owner's take-out
financing for the Building as a result of Entrust Delay, Entrust's failure to
execute any subordination agreement or certificate required by the Owner's
Mortgagee, the terms of which have been agreed to by Entrust, within three (3)
business days of receipt of it or otherwise due to the fault of Entrust, then
Entrust shall be liable for and shall indemnify and save harmless the Owner or
Developer as the case may be from any consequential costs and expenses incurred
by it (including, without limitation, all costs and expenses incurred to the
Owner's Mortgagee).

7.2  The Developer's Indemnity
     -------------------------

Save for those matters for which Entrust is to give its indemnity pursuant to
the provisions of subsection 7.1, the Developer and Owner assume liability for
and shall protect, defend and indemnify Entrust, Entrust's officers, directors,
employees and agents and their respective successors and assigns against and
hold them harmless for all liabilities, losses, damages, costs, expense
(including reasonable legal fees and expenses), claims, demands or judgments of
any nature as follows (including claims by third parties):

(a)  relating to any provincial, federal, municipal or other sales, use, excise
     or other taxes due and payable by the Developer;

(b)  actually arising from or in connection with the construction, condition,
     maintenance, or use of the Premises during the period prior to the
     Commencement Date;

(c)  relating to the Premises and the appurtenances to them and the use of them
     by the Developer or anyone claiming by, through or under the Developer
     which may arise with respect to this Development Agreement; and

(d)  arising from or in connection with any of the following events during the
     period prior to the Commencement Date:

     (i)  any injury to or the death of any person arising out of or directly
          connected with the ownership, use, non-use, operation, possession,
          condition, construction, repair or rebuilding of the Premises or
          adjoining property, sidewalks, streets or ways or
<PAGE>

                                       20

           resulting from the condition of any of them during the period prior
           to the Commencement Date;

     (ii)  any claims by third parties to the extent proximately resulting from:
           (A) any actual violation by the Developer of any provision of this
           Development Agreement; (B) any legal requirement affecting the
           Premises during the period prior to the Commencement Date; (C) any
           agreement relating to the Premises to which the Developer is a party
           or by which the Developer is bound; (D) any contract or agreement to
           which the Developer is a party; or (E) any restriction, law,
           ordinance or regulation affecting the Premises or the ownership, use,
           non-use, condition, construction, repair or rebuilding of them or of
           adjoining property, sidewalks, streets or ways; or

     (iii) the Developer's failure to pay in accordance with the provisions of
           this Development Agreement any sums payable by the Developer under
           it.

The Developer is not liable in any case to any indemnified party for any
liabilities, obligations, claims, damages, penalties, causes of action, costs or
expenses to the extent that they result from the negligence or misconduct of the
indemnified party or the negligence or willful misconduct of Entrust or its
subsidiaries. The foregoing shall not be construed to give rise to any third
party beneficiary rights with respect to any person or entity who is not an
indemnified party. If Entrust or any agent of Entrust is made a party to any
litigation commenced against the Developer and if the Developer, at its expense,
fails to provide Entrust or its agent with counsel approved by Entrust or its
agent, as applicable (which approval shall not be unreasonably withheld), then
the Developer shall pay all costs and reasonable legal fees and expenses
incurred or paid by Entrust or its agent in connection with that litigation. The
Developer has no liability to Entrust for any consequential, special, punitive
or exemplary damages under this Development Agreement or the Lease Agreement.

                                    SECTION 8
                                    ---------
                                    INSURANCE
                                    ---------

8.1  Entrust's Insurance
     -------------------

(a)  Liability Insurance At all times prior to Substantial Performance of the
     Premises Entrust shall maintain insurance covering:

     (i)  Tenant's Work and any materials Entrust causes to be delivered to the
          Building; and

     (ii) Entrust's liability for maintenance and use of the Building.

Such insurance shall provide limits of not less than $10,000,000 combined single
limit coverage with respect to bodily injury or death to persons and to property
damage.
<PAGE>

                                       21

8.2  The Developer's Insurance
     -------------------------

(a)  Liability Insurance  At all times prior to Substantial Performance of the
     -------------------
     Premises, the Developer shall maintain insurance covering:

     (i)   the Developer's liability with respect to all construction that the
           Developer may perform in connection with the Lands or Premises under
           this Development Agreement; and

     (ii)  the Developer's liability for ownership, maintenance and use of the
           Lands and Building;

Such insurance shall provide limits of not less than $10,000,000 combined single
limit coverage with respect to bodily injury or death to persons and to property
damage.

(b)  Casualty Insurance At all times prior to Substantial Performance of the
     Premises, the Developer shall maintain:

     (i)   all-risk casualty insurance covering the Premises against loss or
           damage resulting from fire and other insurable casualties in the
           amount of the full replacement value of the Premises;

     (ii)  delayed start-up insurance in the amount of $4,000,000; and

     (iii) general wrap-up insurance in the amount of $10,000,000.

8.3  General Requirements
     --------------------

(a)  Provisions of Policies.  The Developer and Entrust shall use reasonable
     ----------------------
     efforts to maintain insurance policies:

     (i)   on an occurrence basis;

     (ii)  providing primary coverage;

     (iii) containing endorsements requiring thirty (30) calendar days' advance
           written notice to named insureds of any cancellation or reduction in
           coverage; and

     (iv)  written by financially sound insurance companies whose policies are
           valid in the Province of Ontario.

Any policy may be a so-called blanket policy covering additional locations.
Promptly upon the request of either party, the Developer or Entrust shall
provide the other with evidence of the insurance required under this section 8.
All policies which affect the Building shall name Entrust, the Developer, the
Owner and the Owner's Mortgagee as loss payees as their interests may appear, in
the case of casualty policies, and as additional insureds as their interests may
appear, in the case of liability policies.
<PAGE>

                                       22

(b)  Release: Waiver of Subrogation.  The Developer and Entrust each release the
     ------------------------------
     other from liability for damage to the property of the other to the extent
     of insurance maintained under this section 8.  The Developer and Entrust
     shall use reasonable efforts to obtain waivers of subrogation rights by
     their respective insurers against the other in all casualty insurance
     policies affecting any portion of the Building and shall promptly notify
     the other party of those waivers.

                                    SECTION 9
                                    ---------
                                    REMEDIES
                                    --------

All rights and remedies of the parties set out in this Development Agreement are
cumulative and not alternative and, except as set forth in subsections 3.9, 7.1
and 7.2 are without prejudice to any further or other remedies available to the
parties at law.

                                   SECTION 10
                                   ----------
                                      TIME
                                      ----

Time is of the essence with respect to this Development Agreement, subject to
Force Majeure Delay and Entrust Delay.

                                   SECTION 11
                                   ----------
                            RISK OF LOSS OF PREMISES
                            ------------------------

(a)  If at any time or from time to time prior to Substantial Performance of the
     Premises any proceedings are contemplated, commenced or consummated for the
     taking of the Building, the Exterior Building Amenities or a material
     portion of either of them for public or quasi-public use which materially
     affect Entrust's use and enjoyment of the Premises, then the Developer
     shall forthwith give notice to Entrust. That notice shall, if possible, be
     accompanied by a sketch of the portion of the Building or Exterior Building
     Amenities which is affected by the taking and a metes and bounds
     description delineating the area affected. If any taking of the Building,
     the Exterior Building Amenities or any material portion of either of them
     for public or quasi-public use prevents the Developer from complying with
     its obligations under this Development Agreement such that this Development
     Agreement is frustrated in law, then either party may elect to terminate
     this Development Agreement by written notice to the other party given no
     later that thirty (30) calendar days from the date of the notice of taking.
     If this Development Agreement is terminated as aforesaid, then Entrust will
     cooperate with the Developer to attempt to maximize any and all awards and
     other compensation for any such taking. Entrust may make a separate claim
     to the taking authority for Entrust's expenses including, without
     limitation, its expenses related to Tenant's Work to the extent incurred.

(b)  Until Substantial Performance of the Premises, the risk of loss or damage
     to the Premises (but not the Tenant's Work) by fire or otherwise is the
     Developer's. In the event of any fire or other insured damage: (i) the
     Developer shall forthwith give written notice of it to Entrust; (ii) a
     Force Majeure Delay shall be deemed to have occurred; and (iii) the
     Developer shall complete the Premises in accordance with the terms of this
     Development Agreement. The Developer's notice shall specify the extent of
     the damage and the
<PAGE>

                                       23

     estimated time to repair the damage. If the Premises are materially damaged
     by an occurrence against which the Developer is not insured or required to
     be insured under this Development Agreement or beyond the extent to which
     the Developer is required to insure under this Development Agreement and if
     the cost to repair such uninsured damage would exceed $1,000,000 as
     determined by the Developer, acting reasonably, then the Developer may
     elect, in its discretion, to terminate this Development Agreement or to
     complete the Premises in accordance with the terms of this Development
     Agreement (in which event a Force Majeure Delay shall be deemed to have
     occurred), subject to the requirements of the Owner's Mortgagee.

                                   SECTION 12
                                   ----------
                                    DISPUTES
                                    --------

12.1  Differences between the parties as to the interpretation, application or
administration of this Development Agreement shall be submitted to arbitration
pursuant and subject to the Arbitration Act 1991 by one arbitrator. The
arbitrator shall be selected by the parties within ten (10) days after the
giving of written notice by either party to the other that the matter or
disagreement is to be submitted to arbitration, and failing agreement within
that ten (10) day period either party may apply to a Judge of the Superior
Court, Eastern Ontario District for the purpose of having that Judge appoint the
arbitrator. The expense of the arbitration shall be borne equally between the
parties, subject to the jurisdiction of the arbitrator, in his or her
discretion, to award the costs of the arbitration to either party. Any award by
the arbitrator under this subsection is final and binding and is not subject to
appeal.

12.2  The arbitration of any dispute under subsection 12.1 shall not affect the
obligation of 'the Developer to comply with the Development Schedule or the
Substantial Performance Date (subject to extension for Force Majeure Delay or
Entrust Delay) and, as part of the arbitration, the arbitrator shall determine
the proportion of the costs which each party shall bear of any work or other
requirement in dispute performed by the Developer in order to comply with its
obligations under this subsection.

                                   SECTION 13
                                   ----------
                                   ASSIGNMENT
                                   ----------

13.1  Subject to:

(a)  the right of the Developer to assign this Development Agreement to the
     Owner's Mortgagee as security for financing its obligations under this
     Development Agreement; and

(b)  the right of the Developer to assign this Development Agreement to a third
     party ("the Third Party"), so long as:

     (i)  the Developer is not released from its obligations hereunder;

     (ii) the Third Party agrees with Entrust that it is bound by the provisions
          of this Agreement;
<PAGE>

                                       24

     (iii) the Third Party is not a direct competitor of Entrust or an affiliate
           of such a competitor (as in the Canada Business Corporations Act,
           R.S.C. 1985, as such Act is constituted as at the date of execution
           of this Agreement); and

     (iv)  Canderel Management Inc. continues to be the party which carries out
           the Developer's obligations hereunder,

the Developer and Entrust have no right to assign this Development Agreement or
the obligations under it.

                                   SECTION 14
                                   ----------
                                     NOTICES
                                     -------

All notices, demands, requests, instructions and other communications to be
given or made under this Development Agreement shall be in writing and given by:
(i) messenger or a recognized overnight delivery service; (ii) registered or
certified mail, return receipt requested and postage prepaid; or (iii) facsimile
transmission, as follows:

(a)  If to Entrust:

          c/o Entrust Technologies Incorporated
          One Preston Park South
          Suite 400
          4975 Preston Park Blvd.
          Plano, TX
          USA 75093

          Attention: Controller

          Fax: (972) 943-7305

with a copy to:

          (i)  prior to the Commencement Date,

               Entrust Technologies Limited
               750 Heron Road
               Suite E08
               Ottawa, Ontario
               K1V 1A7

               Attention: The Facilities Manager

               Fax: (613) 247-3663

          (ii) on and after the Commencement Date, at the Building
<PAGE>

                                       25

(b)  If to Developer:              c/o Canderel Management, Inc.
                                   1145 Hunt Club Road,
                                   Suite 220,
                                   Ottawa, Ontario,
                                   K1V 0Y3

                     Phone:        (613) 738-9899
                     Fax:          (613) 738-6196
                     Attention:    The Senior Vice-President

     With a copy to:               c/o Canderel Management Inc.
                                   2000 Peel Street, Suite 900
                                   Montreal, Quebec  H3A 2W5

                     Phone:        (514) 842-8636
                     Fax:          (514) 284-1054
                     Attention:    The President

     With a copy to the Owner at:  c/o Canderel Management Inc.
                                   1145 Hunt Club Road,
                                   Suite 220,
                                   Ottawa, Ontario
                                   KlV 0Y3

                     Phone:        (613) 738-9899
                     Fax:          (613) 738-6196
                     Attention:    The Senior Vice-President

     With a copy to:               c/o Canderel Management Inc.
                                   2000 Peel Street, Suite 900
                                   Montreal, Quebec  H3A 2W5

                     Phone:        (514) 842-8636
                     Fax:          (514) 284-1054
                     Attention:    The President

or to such other person or address as may be designated by written notice from
either party to the other. Any notice is deemed to have been given and received:
(i) if sent by messenger or overnight delivery service, then on the date of
receipt; (ii) if sent by mail, then three (3) calendar days after mailing; or
(iii) if sent by facsimile transmission during normal business hours, then on
the date of transmission or if sent by facsimile transmission outside of normal
business hours, then on the following Business Day. Any notice given by
facsimile transmission must be confirmed by overnight recognized courier
delivery.

                                   SECTION 15
                                   ----------
                               PUBLIC ANNOUNCEMENT
                               -------------------
<PAGE>

                                       26

Neither party shall make any public announcement of this transaction or other
matters covered by this Development Agreement or by the Lease Agreement without
the other party's prior written consent.

                                   SECTION 16
                                   ----------
                             SUCCESSORS AND ASSIGNS
                             ----------------------

This Development Agreement is binding upon and endures to the benefit of the
parties to it and their successors. This Development Agreement shall not be
amended and no provision of it may be waived except by an instrument in writing
signed by the party against whom enforcement of the amendment or waiver is
sought.

                                   SECTION 17
                                   ----------
                                  GOVERNING LAW
                                  -------------

This Development Agreement and the transactions contemplated by it shall be
interpreted, governed and enforced in accordance with the laws of the Province
of Ontario.

IN WITNESS WHEREOF the undersigned have executed this Development Agreement and
affixed their corporate seals through their duly authorized signing officer or
officers.

                                        CANDEREL MANAGEMENT INC.

                                        Per:   /s/ Douglas Pascal         (c/s)
                                              ----------------------------
I have authority to                     Name:  Douglas Pascal
bind the corporation                          ----------------------------
                                        Title:  Secretary
                                              ----------------------------

                                        3559807 CANADA INC.

                                        (with respect only to Section 7.2)

                                        Per:   /s/ Douglas Pascal         (c/s)
                                              ----------------------------
I have authority to                     Name:  Douglas Pascal
bind the corporation                          ----------------------------
                                        Title:  Secretary
                                              ----------------------------

                                        ENTRUST TECHNOLOGIES LIMITED

                                        Per:  /s/ David L. Thompson       (c/s)
                                               ---------------------------
                                        Name:  David L. Thompson
                                        Title:  SVP & CFO

                                        Per:  ____________________________(c/s)
                                        Name:  ___________________________
<PAGE>

                                       27

                                        Title:  __________________________

We have authority to bind the corporation.
<PAGE>

                                       28

                                  SCHEDULE "1"
                     LEGAL DESCRIPTION OF LANDS/ENCUMBRANCES

LEGAL DESCRIPTION

Part of Lots 8, Concession 3, Township of March, now in the City of Kanata,
Regional Municipality of Ottawa-Carleton, designated as parts 4, 5, 6 and 7 on
Plan 4R-15831

ENCUMBRANCES

<TABLE>
<CAPTION>
INSTRUMENT       DOCUMENT
NUMBER
<S>             <C>
MH3261           Easement in favour of the Hydro-Electric Power Commission of Ontario

MH3289           Easement in favour of the Hydro-Electric Power Commission of Ontario

MH3515           Easement in favour of the Hydro-Electric Power Commission of Ontario

MH3622           Easement in favour of the Hydro-Electric Power Commission of Ontario

MH3993           Easement in favour of the Hydro-Electric Power Commission of Ontario

MH4019           Easement in favour of the Hydro-Electric Power Commission of Ontario

N483594          Easement in favour of The Kanata Hydro-Electric Commission

LT563174         Easement in favour of Kanata Hydro-Electric Commission

LT599592         Easement in favour of The Kanata Hydro-Electric Commission

LT 1097015       Charge in favour of Fussen Investment (Ontario) Inc.

LT1097017        Charge in favour of Sils-Hines Developments Inc.
</TABLE>
<PAGE>

                                       29

                                  SCHEDULE "2"
                              DEVELOPMENT SCHEDULE

                                6 pages attached
<PAGE>

                                       30

                                  SCHEDULE "3"
            PRELIMINARY SITE PLAN, OUTLINE OF BUILDING, FLOOR PLANS

                                5 pages attached<PAGE>

                                                                    Exhibit 10.5
                                                                    ------------

THIS LEASE made the 29th day of December, 1999.

IN PURSUANCE OF THE SHORT FORMS OF LEASES ACT

BETWEEN:

          786473 ONTARIO LIMITED

          hereinafter called "the Landlord"
                                                             OF THE FIRST PART

AND:

          ENTRUST TECHNOLOGIES LIMITED

          hereinafter called "the Tenant"

                                                            OF THE SECOND PART

AND:

          ENTRUST TECHNOLOGIES INCORPORATED

          hereinafter called "the Guarantor"

                                                            OF THE SECOND PART

BACKGROUND

1. The Landlord is the owner of those lands and premises ("the Reserved
Premises") located within the City of Kanata, Regional Municipality of
Ottawa-Carleton, being the lands legally described as Part of Lots 8 and 9,
Concession 3, Township of March, now in the City of Kanata, Regional
Municipality of Ottawa-Carleton described as parts 1, 2, 3, 8 and 9 on plan
4R-l5831 ("the Reference Plan"),

2. The Tenant will be entering into a lease ("the Main Lease") with 3559807
Canada Inc. with respect to certain lands and premises ("the Main Premises")
abutting the Reserved Premises and legally described as Part of Lot 8,
Concession 3, Township of March, now in the City of Kanata, Regional
Municipality of Ottawa-Carleton described as parts 4, 5, 6 and 7 on the
Reference Plan.

3. The Landlord and the Tenant have agreed that the Tenant is to lease the
Reserved Premises from the Landlord and this Lease is being entered into in
order to evidence same.
<PAGE>

                                                                               2

DEMISE

4.   WITNESSETH that in consideration of the rents, covenants and agreements
hereinafter reserved and contained on the part of the Tenant, to be paid,
observed and performed, the Landlord by these presents does demise and lease
unto the Tenant the Reserved premises.

TERM

5.   The term of this Lease ("the Term") is to be for a period commencing on the
     Commencement Date (as defined in the Main Lease) and terminating:

     (a)  with respect to that portion of the Reserved Premises designated as
          parts 1, 2, and 3 on the Reference Plan ("the North Expansion Lands"),
          on the earlier of:

          (i)  the fifth (5th) anniversary of the Commencement Date; and

          (ii) ninety (90) days after the date on which the Tenant notifies the
               Landlord that the Term is to be at an end;

     (b)  with respect to that portion of the Reserved Premises designated as
          parts 8 and 9 on the Reference Plan ("the Phase 2 Lands"), on the
          earlier of:

          (i)  the Termination Date (as defined in the Main Lease, as extended
               by the provisions of the Main Lease, if applicable); and

          (ii) ninety (90) days after the date on which the Tenant notifies the
               Landlord that the Term is to be at an end; and

     (c)  with respect to any portion of the Reserved Premises, once a lease has
          been entered between the Landlord and the Tenant with respect to an
          Additional Premises (and then only in respect of that portion of the
          Reserved Premises that is the subject of such new lease).

RENTAL

6.   The Tenant agrees to pay to the Landlord during each year of the Term rent
("the Rent") calculated as being the aggregate of the following:

          (i)  13.5% of the amount obtained by multiplying the area, expressed
               in acres, of the North Expansion Lands by $150,000.00 (which
               amount is to increase yearly on each anniversary of the
               Commencement Date commencing on the second (2nd) anniversary of
               the Commencement Date by the percentage increase, if any, in the
               Consumer Price Index (all items, Ottawa) ("CPI") in effect on
               each said anniversary date over the CPI in effect as of the
               Commencement Date);

          (ii) the amount payable by the Landlord on account of real estate
               taxes applicable to the Reserved Premises for such year; and
<PAGE>

                                                                               3

          (iii) Operating Expenses (as defined in the Main Lease) with respect
                to the Phase 2 Lands.

          The Rent shall be payable by the Tenant to the Landlord in and by way
          of even, equal, consecutive monthly installments each on the first
          (1st) day of each month of the Term. Partial months are to be
          prorated.

USE OF THE RESERVED PREMISES

7.   The Reserved Premises are to be used only for recreational purposes, and
then only in conjunction with the Tenant's use of the Main Premises. The Tenant
agrees that:

     (a)  the Landlord shall be permitted to construct from time to time parking
          areas within the Phase 2 Lands (which parking areas are to be used
          solely by the occupants from time to time of the Main Premises);

     (b)  the Landlord shall be permitted to locate therein such services and
          grant such easements therein as the Landlord may require from time to
          time to service the Main Premises, the Expansion Lands and other
          portions of the subdivision within which the Main Premises and the
          Expansion Lands are located.

     The Tenant shall not be permitted to carry out any improvements to the
     Reserved Premises without the prior written approval by the Landlord of the
     Tenant's plans and specifications (the plans so approved to be herein
     referred to as "the Approved Plans and Specifications") as well as the
     consent of the Landlord. The Landlord agrees that it will not unreasonably
     withhold its consent to an improvement so long as:

                (a) the Tenant abides by the provisions of any site development
                or subdivision agreement applicable to the Reserved Premises in
                terms of carrying out such improvement, including, without
                limitation, any such provision dealing with the preservation of
                natural landscaping and vegetation;

                (b) the improvement does not include any permanent structure;

                (c) any and all permits required from any governmental authority
                having jurisdiction with respect to the Reserved Premises have
                been obtained by the Tenant at its expense; and

                (d) the implementation of the improvement has been carried out
                in accordance with the Approved Plans and Specifications; and

                (e) the Tenant agrees to restore the Reserved Premises at its
                expense at the end of the Term to the condition they were in
                prior to the improvement being carried out. Notwithstanding the
                foregoing, any restoration with respect to Additional Premises
                (as hereinafter defined) shall be dealt with in the lease or
                other agreement relating to the construction of the Additional
                Premises.
<PAGE>

                                                                               4

     In any other event the Landlord's consent may be unreasonably withheld.

COVENANT TO PAY RENT

8.   The Tenant covenants with the Landlord to pay Rent.

ASSIGNMENT

9.   The Tenant will not assign this Lease or sub-let the whole or any part of
the Reserved Premises without consent, which consent may be unreasonably
withheld and/or delayed. This Lease shall be deemed to have been assigned with
consent to a permitted assignee of the Main Lease. The Tenant hereby waives and
renounces the benefit of any present or future act of the Legislature of Ontario
which would allow the Tenant to assign this Lease or sub-let the Reserved
Premises without consent of the Landlord.

RISKS OF INJURY

10.  The Tenant agrees that the Tenant shall indemnify and save harmless the
Landlord for any accident, injury (including death) or damage whatsoever or
howsoever caused to any person or persons (including the Tenant, its employees,
agents and invitees, any subtenant or licensee of the Tenant and all other
persons claiming through or under any of them) or to the property of any such
person or persons occurring during the Term, caused by want of repair to or by
the use or occupation of the Reserved Premises (the foregoing to be restricted
to matters against which the Tenant is not insured nor obliged to be insured
pursuant to this Lease). Notwithstanding the foregoing, the Landlord agrees that
in the event that any such injury or damage is caused by the acts or omissions
of the Landlord or those for whom the Landlord is in law responsible, the Tenant
shall not be bound to indemnify and save harmless the Landlord for same (with
the Landlord agreeing to indemnify and save harmless the Tenant with respect to
any such matter).

INSURANCE

11.  During the Term, the Tenant shall at its expense maintain in force
comprehensive general liability insurance against claims for personal injury,
death or property damage arising out of all of its operations at the Reserved
Premises in an amount of no less than Five Million Dollars ($5,000,000.00) per
occurrence. The Landlord, the Landlord's mortgagees and the Tenant shall be
named as an additional insured in respect of the insurance policy. The Landlord
shall on request being made by the Tenant provide the Tenant with proof of the
said insurance coverage.

FURTHER LEASING OF THE RESERVED PREMISES

12.  In the event that the Tenant wishes to cause the Landlord to construct any
improvements in the nature of a building within the Reserved Premises for the
Tenant's use (such improvements to be referred to herein as "Additional
Premises"), the Tenant shall give written notice thereof to the Landlord
("Tenant's Notice"). The Landlord and the Tenant agree that unless mutually
agreed to as part of the negotiations detailed below, any such building shall be
constructed on the Phase 2 Lands, and the North Expansion Lands will be used for
such building's associated parking and landscaping. The Landlord and the Tenant
shall negotiate in good faith within the ninety (90) day period next following
the receipt by the Landlord of the
<PAGE>

                                                                               5

Tenant's Notice as to the location, configuration and area of the Reserved
Premises upon which the Additional Premises are to be erected, the area of the
Additional Premises, and all matters as may be necessary for the parties to
achieve agreement in respect of the construction of the Additional Premises and
the terms and conditions of a further lease to be entered into with respect to
the Additional Premises ("the Additional Lease") including term, rental rate and
such other matters as the parties may deem appropriate; provided, however, that
in such negotiations the parties agree that the location, size and configuration
of the Additional Premises must be in conformity with a plan to be developed by
the Landlord with respect to the development of the Reserved Premises; without
limiting or restricting the generality of the foregoing, the location,
configuration and size of the land comprising the Additional Premises must not
compromise the marketability of the remaining portion of the Reserved Premises
(should the Additional Lease not be for the whole of the Reserved Premises), the
Additional Premises must be of such style and design and composed of such
materials such that the Additional Premises and the Building (as defined in the
Main Lease) and any other buildings erected pursuant to the provisions hereof
shall appear to form part of a single integrated project. In the event that the
parties cannot achieve agreement in respect of any of the foregoing matters
within the ninety (90) day delay, notwithstanding their good faith efforts, then
both Landlord and Tenant shall be relieved of any further obligation to
negotiate further in respect of the subject matter of the Tenant's Notice.

DEFAULT

13.  In any of the events following, namely:

     (a)  if the Tenant shall fail to pay the Landlord any installment of Rent
          or any other amount payable hereunder after it shall have become due
          and payable as herein provided so long as the Landlord has notified
          the Tenant in writing of its default and the Tenant has not rectified
          the said default within ten (10) days of being notified of same;

     (b)  if the Tenant or Guarantor shall be declared dissolved, bankrupt or
          wound-up or shall make any general assignment for the benefit of its
          creditors or take or attempt to take the benefit of any insolvency,
          winding-up or bankruptcy legislation or if a petition in bankruptcy or
          in winding-up or for reorganization shall be filed by or granted
          against the Tenant or Guarantor or if a receiver or trustee be
          appointed for or enter into physical possession of the property of the
          Guarantor, or any part thereof;

     (c)  if the Tenant shall assign, sublet or permit the use of the Premises
          by others without the consent of the Landlord (which consent is to be
          provided or withheld in accordance with section 9 of this Lease);

     (d)  if the Tenant is in default of the Main Lease (or, in the event that
          the Main Lease contains a period within which the Tenant is able to
          cure a default, such period expires without the default being cured);

     (e)  if the Tenant shall default in the performance of any of its other
          obligations under this Lease so long as the Landlord has notified the
          Tenant in writing of its default
<PAGE>

                                                                               6

          and the Tenant has not rectified the said default within fifteen (15)
          days of being notified of same (or such longer period of time as is
          necessary for the Tenant to remedy such default (provided the Tenant
          promptly commences and thereafter continues diligently to remedy such
          default)),

     this Lease may be terminated at the option of the Landlord without further
     notice to the Tenant to such effect. It is expressly agreed that such right
     of termination shall be in addition and without prejudice to all other
     rights as provided by law or herein, and the Landlord may re-enter the
     Reserved Premises to have again, repossess and enjoy, as of its former
     estate, anything herein contained to the contrary notwithstanding and
     re-let the Reserved Premises to whomsoever it may choose without further
     notice or demand being necessary and may recover from the Tenant all
     amounts due hereunder at the date of such termination, and Rent for the
     three (3) months next succeeding the date of such termination or such
     longer period as may be allowed by law, all of which shall immediately
     become due and payable. Thereafter the Tenant shall pay to the Landlord, as
     liquidated damages until the end of the Term, an amount equivalent to the
     rental provided in this Lease, less the sum of the net receipts (if any)
     derived by the Landlord from the re-letting of the Reserved Premises. Any
     sums received by the Landlord from or for the account of the Tenant when
     the Tenant is in default hereunder may be applied, at the Landlord's
     option, to the satisfaction in whole or in part of any obligation of the
     Tenant then due hereunder in such manner as the Landlord sees fit and
     regardless of any imputation by law or any designation or instruction of
     the Tenant to the contrary. The Landlord agrees that so long as any default
     by the Tenant is rectified within the time period hereinbefore provided,
     the default shall be deemed to have not occurred.

NOTICES

14.  For the purpose of all notices to the Landlord, the Landlord's address is:

     c/o  Canderel Management Inc.
          2000 Rue Peel
          Suite 900
          Montreal, Quebec
          H3A 2W5

          Attn:  President

          Fax No.:  (514) 284-1054

          with a copy to:
          Canderel Management Inc.
          1145 Hunt Club Road,
          Suite 220,
          Ottawa, Ontario,
          K1V OY3
<PAGE>

                                                                               7

          Fax No.:  (613) 738-6196

          Attention:  The Senior Vice-President;

     and in respect of the Tenant, the Tenant's address is:

          c/o Entrust Technologies Incorporated
          One Preston Park South
          Suite 400
          4975 Preston Park Blvd.
          Plano, TX
          USA 75093

          Attention:  Controller

          Fax:  (972) 943-7305

          with a copy to:
          (a)  prior to the Commencement Date,
          Entrust Technologies Limited
          750 Heron Road
          Suite E08
          Ottawa, Ontario
          K1V 1A7

          Attention:  The Facilities Manager

          Fax:  (613) 247-3663

          (b)  on or after the Commencement Date, at the Main Premises; and for
               the purpose of all notices to the Guarantor, the Guarantor's
               address is:

          Entrust Technologies Incorporated
          One Preston Park South
          Suite 400
          4975 Preston Park Blvd.
          Plano,TX
          USA 75093

          Attention:  Controller

          Fax:  (972) 943-7305

     Notwithstanding the foregoing, any of the parties may notify the other of a
     change of address in which event all official notices shall thereafter be
     sent to the last address of which notice is given. All notices required or
     permitted to be given by any of the parties
<PAGE>

                                                                               8

     to the other shall be in writing and sent by registered mail (postage
     prepaid and return receipt requested), delivered personally, delivered by
     courier or delivered by bailiff or sent by facsimile machine during
     Business Hours (as defined in the Main Lease) to the numbers set out above.

OVERHOLDING

15.  It is hereby agreed that should the Tenant hold over after the end of the
Term and the Landlord thereafter accept rent for the Reserved Premises, the
Tenant shall hold the Reserved Premises as a monthly tenant only of the Landlord
at one and one-half (1 1/2) times that Rent and otherwise subject in all other
respects to the Terms and conditions of this Lease.

GUARANTEE

16.

     (a)  The Guarantor, in consideration of the sum of One Dollar ($1.00) now
          paid by the Landlord to the Guarantor (the receipt whereof is hereby
          acknowledged) and other valuable consideration, hereby directly and
          unconditionally guarantees to and covenants with the Landlord that the
          Tenant will duly perform, observe and keep each and every covenant,
          proviso, condition and agreement in this Lease on the part of the
          Tenant to be performed, observed and kept, including the payment of
          rent and all other sums and payments agreed to be paid or payable
          under this Lease on the days and at the times and in the manner herein
          specified, and that if any default shall be made by the Tenant,
          whether in payment of any rent or other sums from time to time falling
          due hereunder as and when the same become due and payable or in the
          performance, observance or keeping of any of the said covenants,
          provisos, conditions or agreements which under the terms of this Lease
          are to be performed, observed or kept by the Tenant, the Guarantor
          will forthwith pay to the Landlord on demand the said rent and other
          sums in respect of which such default shall have occurred and all
          damages that may arise in consequence of the non-observance or
          non-performance of any of the said covenants, provisos, conditions or
          agreements.

     (b)  The Guarantor covenants with the Landlord that the Guarantor is
          jointly and severally bound with the Tenant for the fulfillment of all
          obligations of the Tenant under this Lease. In the enforcement of its
          rights hereunder, the Landlord may proceed against the Guarantor as if
          the Guarantor were named Tenant hereunder.

     (c)  The Guarantor hereby waives any rights to require the Landlord to
          proceed against the Tenant or to take or perfect or proceed against or
          to exhaust any security held from the Tenant or to pursue any other
          remedy whatsoever which may be available to the Landlord before
          proceeding against the Guarantor.

     (d)  No neglect or forbearance of the Landlord in endeavoring to obtain
          payment of the Rent reserved herein or other payments required to be
          made under the provisions of this Lease as and when the same become
          due, no delay of the Landlord in taking any steps to enforce
          performance or observance of the several
<PAGE>

                                                                               9

          covenants, provisos or conditions contained in this Lease to be
          performed, observed or kept by the Tenant, no extension or extensions
          of time which may be given by the Landlord from time to time to the
          Tenant, and no other act or failure to act of or by the Landlord shall
          release, discharge or in any way reduce the obligations of the
          Guarantor under the guarantee contained in this Section.

     (e)  In the event of a termination of this Lease other than by a surrender
          accepted by the Landlord (including without limitation repudiation by
          the Tenant under applicable bankruptcy legislation), or in the event
          of the bankruptcy or insolvency of the Tenant, or in the event of a
          disclaimer of this Lease pursuant to any statute, the Guarantor agrees
          to pay to the Landlord all rents or other amounts payable hereunder
          for the full term of this Lease notwithstanding any such disclaimer,
          bankruptcy, insolvency, or determination and the Guarantor shall be
          deemed to have executed a new lease for the Premises between the
          Landlord as Landlord and the Guarantor as Tenant for term equal in
          duration to the residue of the term remaining unexpired at the date of
          such termination or such disclaimer. Such lease shall contain the like
          Landlord's and Tenant's obligations respectively and the like
          covenants, provisos, agreements and conditions in all respects
          (including the proviso for re-entry) as are contained in this Lease.

     (f)  The Guarantor confirms and acknowledges that the liability of the
          Guarantor hereunder shall remain in full force and effect throughout
          any such renewals or extensions. In addition, the Landlord may deal
          with the Tenant with respect to any modification to the terms and
          conditions of this Lease and/or any security held from the Tenant as
          the Landlord sees fit and the liability of the Guarantor hereunder
          shall remain in full force and effect and will include any covenants,
          provisoes, conditions or agreement resulting front such modification.

     (g)  The Guarantor hereby submits to the jurisdiction of the courts of the
          Province of Ontario in any action or proceeding whatsoever by the
          Landlord to enforce its rights hereunder.

MISCELLANEOUS

17.

     (a)  Sale or Lease by Landlord: In the event of any sale or lease of the
          -------------------------
          Reserved Premises, the Landlord shall be and hereby is entirely
          released and relieved front all covenants and obligations of the
          Landlord hereunder (except for any liability or obligations
          outstanding at the time of the sale or lease of the Reserved Premises)
          or arising in respect of the period prior to the sale or lease of the
          Reserved Premises) provided such purchaser or lessee agrees to assume
          and carry out any and all such covenants and obligations (except for
          any liability or obligations outstanding at the time of the sale or
          lease of the Reserved Premises or arising in respect of the period
          prior to the sale or lease of the Reserved Premises)
<PAGE>

                                                                              10

     (b)  Amendment of Lease: No assent or consent to changes in or waiver of
          ------------------
          any part of this Lease shall be deemed or taken as made unless the
          same be done in writing and attached to or endorsed hereon by Landlord
          and Tenant. No covenant or term of the present lease stipulated in
          favour of the Landlord or Tenant shall be waived, except by express
          written consent of the other, whose forbearance or indulgence in any
          regard whatsoever shall not constitute a waiver of the covenant, term
          or condition to be performed; and until complete performance of the
          said covenant, term or condition, the applicable party shall be
          entitled to invoke any remedies available under this Lease or by law
          despite such forbearance or indulgence.

     (c)  Late Payments: The acceptance by the Landlord of any postdated cheque
          -------------
          or money owing for Rent or additional rent after its due date is to be
          considered as a mode of collection only, without novation of, nor
          derogation from any of Landlord's rights, recourses and actions in
          virtue of this Lease which demands punctual payment of all
          obligations. All sums owing by either the Landlord or the Tenant under
          this Lease not paid when due shall thereafter bear interest at a rate
          equivalent to two percent (2%) per annum above the prime lending rate
          of The Toronto-Dominion Bank front time to time in effect.

     (d)  Tenant (and Guarantor, if applicable): All the covenants herein
          -------------------------------------
          contained shall be deemed to have been made by and with the heirs,
          executors, administrators and permitted assigns or successors of each
          of the parties hereto, and if more than one Tenant (or Guarantor, if
          applicable), the covenants herein contained on the part of the Tenant
          (or Guarantor, if applicable) shall be construed as being several as
          well as joint and where necessary reference to the Tenant (or
          Guarantor, if applicable) as being of the masculine gender or in the
          singular number shall be construed as being in the feminine or neuter
          gender or in the plural number.

     (e)  Brokerage Commission: As part of the consideration for the granting of
          --------------------
          this Lease, the Tenant represents and warrants that no broker, agent
          or other intermediary introduced the parties or negotiated or was
          instrumental in negotiating or consummating this Lease.

     (f)  Registration of Lease: Tenant shall not register this Lease at length
          ---------------------
          but only by notice thereof and then only after the form and terms of
          such notice have been approved in writing by the Landlord or its legal
          counsel, the whole at the cost of the Tenant, including the cost of
          registration and a copy for the Landlord. Should a notice of this
          Lease be registered, the Tenant shall, at the termination of this
          Lease, execute a release of lease in form and content satisfactory to
          the Landlord.

     (g)  Additional Rent: In addition to Rent, all other monies payable
          ---------------
          pursuant to this Lease, as well as all sales, business transfer, goods
          and services and value added taxes, rates and duties or similar taxes,
          rates and duties which may at any time hereafter be imposed upon or by
          reference to the Rent and other sums owing by Tenant hereunder shall
          be payable by Tenant to Landlord immediately when due
<PAGE>

                                                                              11

          without reduction, deduction or compensation whatsoever and shall be
          additional rent and collectable as such.

     (h)  Rights Cumulative: No right or remedy herein conferred upon or
          -----------------
          reserved to the Landlord is intended to be exclusive of any other
          right or remedy herein or by law provided, but such rights shall be
          cumulative and in addition to every other right or remedy herein or by
          law provided.

     (i)  Performance by the Landlord: If the Tenant fails to pay any sum to any
          ---------------------------
          third party or perform any other obligation under this Lease, the
          Landlord may, after fifteen (15) days written notice to the Tenant,
          pay the said sum or perform the said obligation in the place and stead
          of the Tenant who shall be thereupon obliged to repay the said sum
          and/or reimburse any costs incurred by the Landlord in performing such
          obligation, together with a fee equal to fifteen percent (15%) of the
          amount paid or the costs incurred, as the case may be, the whole
          without prejudice to any other rights or recourses of the Landlord
          which may accrue in the circumstances.

     (j)  Severability: If any clause or provision herein contained shall be
          ------------
          adjudged invalid, the same shall not affect the validity of any other
          clause or provision of this Lease, or constitute any other cause of
          action in favour of either party against the other.

     (k)  Governing Law: This agreement shall be construed and interpreted in
          -------------
          accordance with the laws of the Province of Ontario.

     (l)  Captions: The captions appearing in this Lease have been inserted as a
          --------
          matter of convenience and for reference only and in no way define,
          limit or enlarge the scope or meaning of this Lease or any provision
          thereof.

     (m)  Time of Essence: Time is of the essence of this Lease.
          ---------------
<PAGE>

                                                                              12

IN WITNESS WHEREOF the parties have executed these presents.

                                      786473 ONTARIO LIMITED

                               Per:   /s/ Douglas Pascal
                                      ______________________________________
                               Name:  Douglas Pascal

                               Per:   ______________________________________
                               Name:

I/We have authority to bind the Corporation.

                                      ENTRUST TECHNOLOGIES LIMITED

                               Per:   /s/ David L. Thompson
                                      ------------------------------------------
                               Name:  David L. Thompson, Chief Financial Officer

                               Per:   ______________________________________
                               Name:

I/We have authority to bind the Corporation.

                                      ENTRUST TECHNOLOGIES INCORPORATED

                               Per:   /s/ David L. Thompson
                                      ------------------------------------------
                               Name:  David L. Thompson, Chief Financial Officer

                               Per:   ______________________________________
                               Name:

I/We have authority to bind the Corporation.

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