Document:

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                                                                   EXHIBIT 10.25

================================================================================

                                     LEASE

                                    between

                              eBAY REALTY TRUST,
                                  as Lessor,

                                      and

                                  eBAY INC.,
                                   as Lessee

                          ___________________________

                           Dated as of March 1, 2000
                          ___________________________

================================================================================

THIS LEASE IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF THE CHASE MANHATTAN
BANK, AS AGENT (THE "AGENT"), UNDER A CREDIT AGREEMENT, DATED AS OF MARCH 1,
2000 AMONG eBAY REALTY TRUST, THE LENDERS, AND THE AGENT, AS AMENDED OR
SUPPLEMENTED.  THIS LEASE HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS.  TO THE
EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS
DEFINED IN THE UNIFORM COMMERCIAL CODE OF THE STATE OF CALIFORNIA OR NEW YORK),
NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART CONTAINING THE
RECEIPT THEREFOR EXECUTED BY THE AGENT ON THE SIGNATURE PAGE HEREOF.
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                               TABLE OF CONTENTS
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SECTION 1.  DEFINITIONS...............................................................................    1
     1.1      Defined Terms...........................................................................    1

SECTION 2.  PROPERTY AND TERM.........................................................................    1
     2.1      Property................................................................................    1
     2.2      Lease Term..............................................................................    1
     2.3      Title...................................................................................    2

SECTION 3.  RENT.......................................................................................   2
     3.1      Rent....................................................................................    2
     3.2      Supplemental Rent.......................................................................    2
     3.3      Performance on a Non-Business Day.......................................................    2

SECTION 4.  UTILITY CHARGES...........................................................................    3
     4.1      Utility Charges.........................................................................    3

SECTION 5.  QUIET ENJOYMENT...........................................................................    3
     5.1      Quiet Enjoyment.........................................................................    3

SECTION 6.  NET LEASE.................................................................................    3
     6.1      Net Lease; No Setoff; Etc...............................................................    3
     6.2      No Termination or Abatement.............................................................    4

SECTION 7.  OWNERSHIP OF PROPERTY.....................................................................    4
     7.1      Ownership of the Property...............................................................    4

SECTION 8.  CONDITION OF PROPERTY.....................................................................    6
     8.1      Condition of the Property...............................................................    6
     8.2      Possession and Use of the Property......................................................    6

SECTION 9.  COMPLIANCE................................................................................    6
     9.1      Compliance with Legal Requirements and Insurance Requirements...........................    6
     9.2      Environmental Matters...................................................................    6

SECTION 10.  MAINTENANCE AND REPAIR...................................................................    7
     10.1     Maintenance and Repair; Return..........................................................    7
     10.2     Right of Inspection.....................................................................    8
     10.3     Environmental Inspection................................................................    8

SECTION 11.  MODIFICATIONS............................................................................    9
     11.1     Modifications, Substitutions and Replacements...........................................    9
</TABLE>

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<TABLE>
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SECTION 12.  TITLE....................................................................................   10
     12.1     Warranty of Title.......................................................................   10
     12.2     Grants and Releases of Easements........................................................   10

SECTION 13.  PERMITTED CONTESTS.......................................................................   11
     13.1     Permitted Contests Other Than in Respect of Impositions.................................   11

SECTION 14.  INSURANCE................................................................................   11
     14.1     Public Liability and Workers' Compensation Insurance....................................   11
     14.2     Hazard and Other Insurance..............................................................   11
     14.3     Coverage................................................................................   12

SECTION 15.  CONDEMNATION AND CASUALTY................................................................   13
     15.1     Casualty and Condemnation...............................................................   13

SECTION 16.  LEASE TERMINATION........................................................................   15
     16.1     Termination upon Certain Events.........................................................   15
     16.2     Procedures..............................................................................   15

SECTION 17.  DEFAULT..................................................................................   15
     17.1     Lease Events of Default.................................................................   15
     17.2     Final Payment...........................................................................   17
     17.3     Lease Remedies..........................................................................   17
     17.4     Waiver of Certain Rights................................................................   19
     17.5     Assignment of Rights Under Contracts....................................................   19
     17.6     Remedies Cumulative.....................................................................   19

SECTION 18.  LESSOR'S RIGHT TO CURE..................................................................    20
     18.1     Lessor's Right to Cure Lessee's Lease Defaults..........................................   20

SECTION 19.  LEASE TERMINATION........................................................................   20
     19.1     Provisions Relating to Lessee's Termination of this Lease or Exercise of
              Purchase Option.........................................................................   20

SECTION 20.  PURCHASE OPTION..........................................................................   20
     20.1     Purchase Option.........................................................................   20
     20.2     Maturity Date Purchase Option...........................................................   21

SECTION 21.  SALE OF PROPERTY.........................................................................   21
     21.1     Sale Procedure..........................................................................   21
     21.2     Application of Proceeds of Sale.........................................................   22
     21.3     Indemnity for Excessive Wear............................................................   22
     21.4     Appraisal Procedure.....................................................................   22
     21.5     Certain Obligations Continue............................................................   23

SECTION 22.  HOLDING OVER.............................................................................   23
</TABLE>
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     22.1     Holding Over............................................................................   23

SECTION 23.  RISK OF LOSS.............................................................................   23
     23.1     Risk of Loss............................................................................   23

SECTION 24.  SUBLETTING AND ASSIGNMENT................................................................   24
     24.1     Subletting..............................................................................   24
     24.2     Subleases...............................................................................   24
     24.3     Assignment of Rents.....................................................................   24

SECTION 25.  ESTOPPEL CERTIFICATES....................................................................   24
     25.1     Estoppel Certificates...................................................................   24

SECTION 26.  NO WAIVER................................................................................   25
     26.1     No Waiver...............................................................................   25

SECTION 27.  ACCEPTANCE OF SURRENDER..................................................................   25
     27.1     Acceptance of Surrender.................................................................   25

SECTION 28.  NO MERGER OF TITLE.......................................................................   25
     28.1     No Merger of Title......................................................................   25

SECTION 29.  NOTICES..................................................................................   25
     29.1     Notices.................................................................................   25

SECTION 30.  MISCELLANEOUS............................................................................   25
     30.1     Miscellaneous...........................................................................   25
     30.2     Amendments and Modifications............................................................   26
     30.3     Successors and Assigns..................................................................   26
     30.4     Headings and Table of Contents..........................................................   26
     30.5     Counterparts............................................................................   26
     30.6     GOVERNING LAW...........................................................................   26
     30.7     Limitations on Recourse.................................................................   26
     30.8     Memorandum of Lease.....................................................................   27
     30.9     Priority................................................................................   27
</TABLE>

Exhibits
--------
Exhibit A     Memorandum of Lease

Schedules
---------
Schedule A    The Land

<PAGE>

                                                                   EXHIBIT 10.25

     LEASE (this "Lease"), dated as of March 1, 2000 between eBAY REALTY TRUST,
                  -----
a Delaware business trust, having its principal office at Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, as lessor (the "Lessor"), and eBAY INC., a Delaware corporation,
                            ------
having its principal office at 2125 Hamilton Avenue, San Jose, California 95125,
as lessee (the "Lessee").
                ------

     In consideration of the mutual agreements herein contained, and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                            SECTION 1.  DEFINITIONS

          1.1 Defined Terms.  Capitalized terms used herein but not otherwise
              -------------
defined in this Lease shall have the respective meanings specified in Annex A to
the Participation Agreement dated as of the date hereof among Lessee, Lessor,
Agent, the Investor and the Lenders named therein, as such Participation
Agreement may be amended, supplemented or otherwise modified from time to time,
and the rules of usage set forth in Annex A to the Participation Agreement.

                         SECTION 2.  PROPERTY AND TERM

          2.1 Property.  Subject to the terms and conditions hereinafter set
              --------
forth, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
following (collectively, the "Property"):

          (a)  all of Lessor's right, title and interest in and to the Land
     described on Schedule A attached hereto;
                  ----------

          (b)  all of Lessor's right, title and interest in and to the
     Improvements;

          (c)  all of Lessor's right, title and interest in and to all the
     Appurtenant Rights;

          (d)  all of Lessor's right, title and interest in and to all the
     Fixtures; and

          (e)  all of Lessor's right, title and interest in and to all leases of
     any portion of the Improvements and rights to Rents thereunder.

          2.2 Lease Term.  (a)  The Property is leased for the Term, unless
              ----------
extended or earlier terminated in accordance with the provisions of this Lease.

          (b) The Term shall be automatically extended if the Maturity Date is
extended pursuant to Section 2.1(c) of the Credit Agreement so that the Term
will expire on the Maturity Date as so extended.
<PAGE>

          2.3 Title.  The Property is leased to Lessee without any
              -----
representation or warranty, express or implied, by Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, the Permitted Exceptions) and all applicable Legal Requirements.
Lessee shall in no event have any recourse against Lessor for any defect in
title to the Property.

                                 SECTION 3.  RENT

          3.1 Rent.  (a)  On each applicable Payment Date, Lessee shall pay the
              ----
Basic Rent attributable to the Property.

          (b) Basic Rent shall be due and payable in lawful money of the United
States and shall be paid by a single wire transfer of immediately available
funds on the due date therefor to such account at such bank or to such other
Person or in such other manner as Lessor shall from time to time direct.

          3.2 Supplemental Rent.  (a) Lessee shall pay to Lessor or the Person
              -----------------
entitled thereto any and all Supplemental Rent promptly as the same shall become
due and payable, and if Lessee fails to pay any Supplemental Rent, Lessor shall
have all rights, powers and remedies provided for herein or by law or equity or
otherwise in the case of nonpayment of Basic Rent.  Lessee shall pay to Lessor
as Supplemental Rent, among other things, on demand, to the extent permitted by
applicable Legal Requirements, interest at the applicable Overdue Rate on any
installment of Basic Rent not paid when due for the period for which the same
shall be overdue and on any payment of Supplemental Rent not paid when due or
demanded by Lessor for the period from the due date or the date of any such
demand, as the case may be, until the same shall be paid.  The expiration or
other termination of Lessee's obligations to pay Basic Rent hereunder shall not
limit or modify the obligations of Lessee with respect to Supplemental Rent.
Unless expressly provided otherwise in this Lease or any other Operative
Agreement, in the event of any failure on the part of Lessee to pay and
discharge any Supplemental Rent as and when due, Lessee shall also promptly pay
and discharge any fine, penalty, interest or cost which may be assessed or added
for nonpayment or late payment of such Supplemental Rent, all of which shall
also constitute Supplemental Rent.

          (b) Lessee shall make a payment of Supplemental Rent equal to the
Maximum Residual Guarantee Amount in accordance with Section 21.1(c).

          3.3 Performance on a Non-Business Day.  If any payment is required
              ---------------------------------
hereunder on a day that is not a Business Day, then such payment shall be due on
the next succeeding Business Day, unless, in the case of payments based on the
Eurodollar Rate, the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
<PAGE>

                          SECTION 4.  UTILITY CHARGES

          4.1 Utility Charges.  Lessee shall pay, or cause to be paid, all
              ---------------
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and  utilities used in or on the Property during the
Term.  Lessee shall be entitled to receive any credit or refund with respect to
any utility charge paid by Lessee and the amount of any credit or refund
received by Lessor on account of any utility charges paid by Lessee, net of the
costs and expenses incurred by Lessor in obtaining such credit or refund, shall
be promptly paid over to Lessee.  All charges for utilities imposed with respect
to the Property for a billing period during which this Lease expires or
terminates shall be adjusted and prorated on a daily basis between Lessor and
Lessee, and each party shall pay or reimburse the other for each party's pro
rata share thereof.

                          SECTION 5.  QUIET ENJOYMENT

          5.1 Quiet Enjoyment.  So long as no Lease Event of Default shall have
              ---------------
occurred and be continuing, Lessee shall peaceably and quietly have, hold and
enjoy the Property for the Term, free of any claim or other action by Lessor or
anyone rightfully claiming by, through or under Lessor.

                             SECTION 6.  NET LEASE

          6.1 Net Lease; No Setoff; Etc.  This Lease shall constitute a net
              --------------------------
lease and, notwithstanding any other provision of this Lease, Lessee shall pay
Basic Rent and Supplemental Rent without counterclaim, setoff, deduction or
defense of any kind and without abatement, suspension, deferment, diminution or
reduction of any kind, and Lessee's obligation to pay all such amounts is
absolute and unconditional.  The obligations and liabilities of Lessee hereunder
shall in no way be released, discharged or otherwise affected for any reason,
including, without limitation, to the maximum extent permitted by law:  (a) any
defect in the condition, merchantability, design, construction, quality or
fitness for use of any portion of the Property, or any failure of the Property
to comply with all Legal Requirements, including any inability to occupy or use
the Property by reason of such non-compliance; (b) any damage to, abandonment,
loss, contamination of or Release from or destruction of or any requisition or
taking of the Property or any part thereof, including eviction; (c) any
restriction, prevention or curtailment of or interference with any use of the
Property or any part thereof, including eviction; (d) any defect in title to or
rights to the Property or any Lien on such title or rights or on the Property;
(e) any change, waiver, extension, indulgence or other action or omission or
breach in respect of any obligation or liability of or by Lessor, Investor,
Agent or any Lender; (f) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceedings
relating to Lessee, Lessor, Investor, Agent, any Lender or any other Person, or
any action taken with respect to this Lease by any trustee or receiver of
Lessee, Lessor, Investor, Agent, any Lender or any other Person, or by any
court, in any such proceeding; (g) any claim that Lessee has or might have
against any Person, including, without limitation, Lessor, Investor, Agent or
any Lender; (h) any failure on the part of Lessor to perform or comply with any
of the terms of this Lease, any other Operative Agreement or of any other
agreement; (i) any invalidity
<PAGE>

or unenforceability or disaffirmance against or by Lessee of this Lease or any
provision hereof or any of the other Operative Agreements or any provision of
any thereof; (j) the impossibility of performance by Lessee, Lessor or both; (k)
any action by any court, administrative agency or other Governmental Authority;
(l) any restriction, prevention or curtailment of or any interference with the
construction on or any use of the Property or any part thereof; or (m) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not Lessee shall have notice or knowledge of any of the foregoing. This Lease
shall be noncancellable by Lessee for any reason whatsoever except as expressly
provided herein, and Lessee, to the extent permitted by Legal Requirements,
waives all rights now or hereafter conferred by statute or otherwise to quit,
terminate or surrender this Lease, or to any diminution, abatement or reduction
of Rent payable by Lessee hereunder. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise, except
as otherwise expressly provided herein, Lessee shall, unless prohibited by Legal
Requirements, nonetheless pay to Lessor (or, in the case of Supplemental Rent,
to whomever shall be entitled thereto) an amount equal to each Rent payment at
the time and in the manner that such payment would have become due and payable
under the terms of this Lease if it had not been terminated in whole or in part,
and in such case, so long as such payments are made and no Lease Event of
Default shall have occurred and be continuing, Lessor will deem this Lease to
have remained in effect. Each payment of Rent made by Lessee hereunder shall be
final and, absent manifest error in the computation of the amount thereof,
Lessee shall not seek or have any right to recover all or any part of such
payment from Lessor, Investor, Agent or any party to any agreements related
thereto for any reason whatsoever. Lessee assumes the sole responsibility for
the condition, use, operation, maintenance, and management of the Property and
Lessor shall have no responsibility in respect thereof and shall have no
liability for damage to the property of Lessee or any subtenant of Lessee on any
account or for any reason whatsoever, unless due to Lessor's gross negligence or
willful misconduct.

          6.2 No Termination or Abatement.  Lessee shall remain obligated under
              ---------------------------
this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting Lessor, or any action with respect to this Lease which may
be taken by any trustee, receiver or liquidator of Lessor or by any court with
respect to Lessor, except as otherwise expressly provided herein.  Lessee hereby
waives all right (i) to terminate or surrender this Lease, except as otherwise
expressly provided herein, or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease.  Notwithstanding any such statute or otherwise, Lessee shall be
bound by all of the terms and conditions contained in this Lease.

                       SECTION 7.  OWNERSHIP OF PROPERTY

          7.1 Ownership of the Property.  (a)  Lessor and Lessee intend that (i)
              -------------------------
for financial accounting purposes with respect to Lessee (A) this Lease will be
treated as an
<PAGE>

"operating lease" pursuant to Statement of Financial Accounting Standards (SFAS)
No. 13, as amended, (B) Lessor will be treated as the owner and lessor of the
Property and (C) Lessee will be treated as the lessee of the Property, but (ii)
for federal, state and local income tax and all other purposes (A) this Lease
will be treated as a financing arrangement, (B) the Lenders will be treated as
senior lenders making loans to Lessee in an amount equal to the Loans, which
Loans will be secured by the Property, (C) Investor will be treated as a
subordinated lender making a loan to Lessee in an amount equal to the Investor
Contribution, which loan is secured by the Property, and (D) Lessee will be
treated as the owner of the Property and will be entitled to all tax benefits
ordinarily available to an owner of property like the Property for such tax
purposes.

          (b) Lessor and Lessee further intend and agree that, for the purpose
of securing Lessee's obligations for the repayment of the above-described loans,
(i) this Lease shall also be deemed to be a security agreement and financing
statement within the meaning of Article 9 of the Uniform Commercial Code and a
real property mortgage or deed of trust, as applicable; (ii) the conveyance
provided for in Section 2 shall be deemed a grant of a security interest in and
a mortgage lien on the Lessee's right, title and interest in the Property
(including the right to exercise all remedies as are contained in the applicable
Mortgage and Memorandum of Lease upon the occurrence of a Lease Event of
Default) and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property, whether in the
form of cash, investments, securities or other property, for the benefit of the
Lessor to secure the Lessee's payment of all amounts owed by the Lessee under
this Lease and the other Operative Agreements and Lessor holds title to the
Property so as to create and grant a first lien and prior security interest in
the Property (A) pursuant to this Lease for the benefit of the Agent under the
Assignment of Lease, to secure to the Agent the obligations of the Lessee under
the Lease and (B) pursuant to the Mortgage to secure to the Agent the
obligations of the Lessor under the Mortgage and the Notes; (iii) the possession
by Lessor or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code; and
(iv) notifications to Persons holding such property, and acknowledgements,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of Lessee shall be deemed to have been given for the purpose of
perfecting such security interest under applicable law.  Lessor and Lessee
shall, to the extent consistent with this Lease, take such actions as may be
necessary to ensure that, if this Lease were deemed to create a security
interest in the Property in accordance with this Section, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the Basic Term.
Nevertheless, Lessee acknowledges and agrees that none of Lessor, Investor, the
Trust Company, Agent, or any Lender has provided or will provide tax, accounting
or legal advice to Lessee regarding this Lease, the Operative Agreements or the
transactions contemplated hereby and thereby, or made any representations or
warranties concerning the tax, accounting or legal characteristics of the
Operative Agreements, and that Lessee has obtained and relied upon such tax,
accounting and legal advice concerning the Operative Agreements as it deems
appropriate.

          (c) Lessor and Lessee further intend and agree that in the event of
any insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State or
<PAGE>

Commonwealth thereof affecting Lessee or Lessor, the transactions evidenced by
this Lease shall be regarded as loans made by an unrelated third party lender to
Lessee.

                       SECTION 8.  CONDITION OF PROPERTY

          8.1 Condition of the Property.  LESSEE ACKNOWLEDGES AND AGREES THAT IT
              -------------------------
IS RENTING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) BY LESSOR AND SUBJECT TO (A) THE EXISTING STATE OF TITLE,
(B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS
WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW AND (D) VIOLATIONS OF
LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE HEREOF.  NONE OF LESSOR, THE
INVESTOR, THE AGENT AND ANY LENDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED, INCLUDING THE
CONDITION OF ANY IMPROVEMENTS THEREON, THE SOIL CONDITION, OR ANY ENVIRONMENTAL
OR HAZARDOUS MATERIAL CONDITION) OR SHALL BE DEEMED TO HAVE ANY LIABILITY
WHATSOEVER AS TO THE TITLE, VALUE, HABITABILITY, USE, CONDITION, DESIGN,
OPERATION, OR FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND NONE OF LESSOR, THE INVESTOR,
THE AGENT AND ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT THEREIN OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY
WITH ANY LEGAL REQUIREMENT.

          8.2 Possession and Use of the Property.  The Property shall be used in
              ----------------------------------
accordance with all applicable Legal Requirements.  Lessee shall pay, or cause
to be paid, all charges and costs required in connection with the use of the
Property.  Lessee shall not commit or permit any waste of the Property or any
part thereof.

                            SECTION 9.  COMPLIANCE

          9.1 Compliance with Legal Requirements and Insurance Requirements.
              -------------------------------------------------------------
Subject to the terms of Section 13 relating to permitted contests, Lessee, at
its sole cost and expense, shall (a) comply with all Legal Requirements
(including all Environmental Laws) and Insurance Requirements relating to the
Property, including the use, construction, operation, maintenance, repair and
restoration thereof, whether or not compliance therewith shall require
structural or extraordinary changes in the Improvements or interfere with the
use and enjoyment of the Property, and (b) procure, maintain and comply with all
licenses, permits, orders, approvals, consents and other authorizations required
for the construction, renovation, use, maintenance and operation of the Property
and for the use, operation, maintenance, repair and restoration of the
Improvements.
<PAGE>

          9.2 Environmental Matters.  (a) Promptly upon Lessee's actual
              ---------------------
knowledge of the presence of Hazardous Substances in any portion of the Property
in concentrations and conditions that constitute an Environmental Violation,
Lessee shall notify Lessor in writing of such condition.  In the event of such
Environmental Violation, Lessee shall, not later than thirty (30) days after
Lessee has actual knowledge of such Environmental Violation, deliver to Lessor
and the Agent an Officer's Certificate and either deliver a Termination Notice
with respect to the Property pursuant to Section 16.1, if applicable, or, at
Lessee's sole cost and expense, promptly and diligently undertake any response,
clean up, remedial or other action necessary to remove, cleanup or remediate the
Environmental Violation in accordance with the terms of Section 9.1.  If Lessee
does not deliver a Termination Notice with respect to the Property pursuant to
Section 16.1, Lessee shall, upon completion of remedial action by Lessee, cause
to be prepared by an environmental consultant reasonably acceptable to Lessor a
report describing the Environmental Violation and the actions taken by Lessee
(or its agents) in response to such Environmental Violation, and a statement by
the consultant that such Environmental Violation has been remedied in full
compliance with applicable Environmental Laws.

          (b) In addition, Lessee shall provide to Lessor, within five (5)
Business Days of receipt, copies of all written communications with any
Governmental Authority relating to any Environmental Law in connection with the
Property.  Lessee shall also promptly provide such detailed reports of any such
environmental claims as reasonably may be requested by Lessor and the Agent.

                      SECTION 10.  MAINTENANCE AND REPAIR

          10.1  Maintenance and Repair; Return.  (a) Lessee, at its sole cost
                ------------------------------
and expense, shall maintain the Property in good condition (ordinary wear and
tear excepted) and make all necessary repairs thereto, of every kind and nature
whatsoever, whether interior or exterior, ordinary or extraordinary, structural
or nonstructural or foreseen or unforeseen, in each case as required by all
Legal Requirements and Insurance Requirements and on a basis reasonably
consistent with the operation and maintenance of commercial properties
comparable in type and location to the Property, subject, however, to the
provisions of Section 15 with respect to Condemnation and Casualty.

          (b) Lessor shall under no circumstances be required to build any
Improvements on the Property, make any repairs, replacements, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease or maintain the Property in any way.
Lessor shall not be required to maintain, repair or rebuild all or any part of
the Property, and Lessee waives the right to (i) require Lessor to maintain,
repair, or rebuild all or any part of the Property, or (ii) make repairs at the
expense of Lessor pursuant to any Legal Requirement, Insurance Requirement,
contract, agreement, covenants, condition or restriction at any time in effect.

          (c) Lessee shall, upon the expiration or earlier termination of the
Term with respect to the Property (other than as a result of Lessee's purchase
of the Property from Lessor as provided herein), vacate, surrender and transfer
the Property to Lessor, at Lessee's own expense,

<PAGE>

free and clear of all Liens other than Permitted Liens described in clauses (i)
and (viii) of the definition of Permitted Liens, Liens described in clause (ii)
of the definition of Permitted Exceptions, and Lessor Liens, in as good
condition as they were on the Closing Date, ordinary wear and tear excepted, and
in compliance with all Legal Requirements and the other requirements of this
Lease (and in any event without (x) any asbestos installed or maintained in any
part of the Property, (y) any polychlorinated byphenyls (PCBs) in, on or used,
stored or located at the Property, and (z) any other Hazardous Substances, other
than as disclosed in the Environmental Audit). If Lessee has not exercised its
Maturity Date Purchase Option, Lessee shall provide, or cause to be provided or
accomplished, at the sole cost and expense of Lessee, to or for the benefit of
Lessor or a purchaser, at least thirty Business Days prior to the expiration or
earlier termination of the Term with respect to the Property, each of the
following: (i) an endorsement to the title policy issued for the Property
showing (A) record title of the Lessor in the fee estate, subject to no Liens
other than Permitted Liens described in clauses (i) and (viii) of the definition
of Permitted Liens, Liens described in clause (ii) of the definition of
Permitted Exceptions, and Lessor Liens and (B) the Mortgage as a valid and
perfected first lien; (ii) an environmental assessment for the Property
satisfying the requirements set forth in Section 10.3 below; (iii) an assignment
(to the extent assignable) of all of the Lessee's right, title and interest in
and to each agreement executed by Lessee in connection with the construction,
renovation, development, use, maintenance or operation of the Property
(including all warranty, performance, service and indemnity provisions); (iv)
copies of all plans and specifications relating to the design, construction,
renovation or development of the Property; (v) an assignment (to the extent
assignable) of all permits, licenses, approvals and other authorizations from
all Governmental Authorities in connection with the construction, operation and
use of the Property; (vi) copies of all books and records, with respect to the
construction, renovation, maintenance, repair, operation or use of the Property.
Lessee shall reasonably cooperate with any independent purchaser of the Property
in order to facilitate the ownership and operation by such purchaser of the
Property after such expiration or earlier termination of the Term, including
providing all books, reports and records regarding the maintenance, repair and
ownership of the Property and all data and technical information relating
thereto, granting or assigning all licenses necessary for the operation and
maintenance of the Property and cooperating in seeking and obtaining all
necessary licenses, permits and approvals of Governmental Authorities. Lessee
shall have also paid the total cost for the completion of all Modifications
commenced prior to such expiration or earlier termination of the Term. The
obligation of Lessee under this Section 10.1(c) shall survive the expiration or
termination of this Lease.

          10.2  Right of Inspection.  Lessor may, at reasonable times and with
                -------------------
reasonable prior notice, enter upon, inspect and examine at its own cost and
expense (unless a Lease Event of Default exists, in which case the out-of-pocket
costs and expenses of Lessor shall be paid by Lessee), the Property.  Lessee
shall furnish to Lessor statements, no more than once per year, accurate in all
material respects, regarding the condition and state of repair of the Property.
Lessor shall have no duty to make any such inspection or inquiry and shall not
incur any liability or obligation by reason of not making any such inspection or
inquiry.

          10.3  Environmental Inspection.  Unless Lessee has previously
                ------------------------
irrevocably exercised the Maturity Date Purchase Option, not less than 12 months
prior to the Maturity Date and not more than thirty Business Days prior to
surrender of possession of the Property, Lessor
<PAGE>

shall, at Lessee's sole cost and expense, obtain a report by an environmental
consultant selected by Lessor and reasonably acceptable to Lessee certifying
that the Property or any portion thereof (i) does not contain Hazardous
Substances under circumstances or in concentrations that could result in a
violation of or liability under any Environmental Law and (ii) is in compliance
with all Environmental Laws. If such is not the case on either such date, then
Lessee shall be deemed to have irrevocably exercised the Maturity Date Purchase
Option pursuant to Section 20.2.

                          SECTION 11.  MODIFICATIONS

          11.1  Modifications, Substitutions and Replacements.  (a)  So long as
                ---------------------------------------------
no Lease Event of Default has occurred and is continuing, Lessee, at its sole
cost and expense, may at any time and from time to time make alterations,
renovations, improvements and additions to the Property or any part thereof
(collectively, "Modifications"); provided, that: (i) except for any Modification
                -------------    --------
required to be made pursuant to a Legal Requirement or an Insurance Requirement,
no Modification, individually, or when aggregated with any (A) other
Modification or (B) grant, dedication, transfer or release pursuant to Section
12.2, shall impair the value of the Property or the utility or useful life of
the Property from that which existed immediately prior to such Modification;
(ii) the Modification shall be performed expeditiously and in a good and
workmanlike manner; (iii) Lessee shall comply with all Legal Requirements
(including all Environmental Laws) and Insurance Requirements applicable to the
Modification, including the obtaining of all permits and certificates of
occupancy, and the structural integrity of the Property shall not be adversely
affected; (iv) Lessee shall maintain or cause to be maintained builders' risk
insurance at all times when a Modification in excess of $500,000 is in progress;
(v) subject to the terms of Section 13 relating to permitted contests, Lessee
shall pay all costs and expenses and discharge any Liens arising with respect to
the Modification; (vi) such Modifications shall comply with Sections 8.2 and
10.1 and shall not change the primary character of the Property as office or
commercial and/or research and development space, in compliance with local
zoning ordinances and (vii) no Improvements shall be demolished, except to the
extent such demolition does not impair the value, utility or useful life of the
Property.  All Modifications (other than those that may be readily removed
without impairing the value, utility or remaining useful life of the Property)
shall remain part of the realty and shall be subject to this Lease, and title
thereto shall immediately vest in Lessor.  So long as no Lease Event of Default
has occurred and is continuing, Lessee may place upon the Property any
inventory, trade fixtures, machinery, equipment or other property belonging to
Lessee or third parties and may remove the same at any time during the term of
this Lease; provided that such inventory, trade fixtures, machinery, equipment
            --------
or other property, or their respective operations, do not materially impair the
value, utility or remaining useful life of the Property.

          (b) Lessee shall notify Lessor of the undertaking of any Modifications
to the Property the cost of which is anticipated to exceed $500,000.  Prior to
undertaking any such Modifications, Lessee shall deliver to Lessor (i) a brief
narrative of the work to be done and a copy of the plans and specifications
relating to such work; and (ii) an Officer's Certificate stating that such work
when completed will not impair the value, utility or remaining life of the
Property.  Lessor, by itself or its agents, shall have the right, but not the
obligation, from time to
<PAGE>

time upon reasonable notice to inspect such Modifications to ensure that the
same is completed consistent with the plans and specifications.

          (c) Lessee shall not without the consent of Lessor undertake any
Modifications to the Property if such Modifications cannot, in the reasonable
judgement of Agent, be completed on or prior to the date that is twelve months
prior to the Expiration Date that exceed $250,000 in cost.

                              SECTION 12.  TITLE

          12.1  Warranty of Title.  (a)  Lessee agrees that, except as otherwise
                -----------------
provided herein and subject to the terms of Section 13 relating to permitted
contests, Lessee shall not directly or indirectly create or allow to remain, and
shall promptly discharge at its sole cost and expense, any Lien, defect,
attachment, levy, title retention agreement or claim upon the Property or any
Modifications or any Lien, attachment, levy or claim with respect to the Rent or
with respect to any amounts held by the Agent pursuant to the Credit Agreement,
other than Permitted Liens.  Lessee shall promptly notify Lessor in the event it
receives knowledge that a Lien (other than a Permitted Lien) exists with respect
to the Property.

          (b) Nothing contained in this Lease shall be construed as constituting
the consent or request of Lessor, expressed or implied, to or for the
performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Property
or any part thereof.  NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
LESSEE, OR TO ANYONE HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER
LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR
MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR IN AND TO THE
PROPERTY.

          12.2  Grants and Releases of Easements.  Provided that no Lease Event
                --------------------------------
of Default shall have occurred and be continuing and subject to the provisions
of Sections 8, 9, 10 and 11, Lessor hereby consents to the following actions by
Lessee, in the name and stead of Lessor, but at Lessee's sole cost and expense:
(a) the granting (prior to the Lien of the Mortgage) of easements, licenses,
rights-of-way and other rights and privileges in the nature of easements
reasonably necessary or desirable for the construction, use, repair, renovation
or maintenance of the Property as herein provided; (b) the release (free and
clear of the Lien of the Mortgage) of existing easements or other rights in the
nature of easements which are for the benefit of the Property; (c) the
dedication or transfer (prior to the Lien of the Mortgage) of unimproved
portions of the Property for road, highway or other public purposes; (d) the
execution of petitions to have the Property annexed to any municipal corporation
or utility district; and (e) the execution of amendments to any covenants and
restrictions affecting the Property; provided, that in each case Lessee shall
                                     --------
have delivered to Lessor an Officer's Certificate stating that:  (i) such grant,
release, dedication or transfer does not impair the value or utility or
remaining useful life of the Property, (ii) such grant, release, dedication or
transfer is necessary or desirable in
<PAGE>

connection with the construction, use, maintenance, alteration, renovation or
improvement of the Property, (iii) Lessee shall remain obligated under this
Lease and under any instrument executed by Lessee consenting to the assignment
of Lessor's interest in this Lease as security for indebtedness, in each such
case in accordance with their terms, as though such grant, release, dedication
or transfer, had not been effected and (iv) Lessee shall pay and perform any
obligations of Lessor under such grant, release, dedication or transfer. Without
limiting the effectiveness of the foregoing, provided that no Lease Event of
Default shall have occurred and be continuing, Lessor shall, upon the request of
Lessee, and at Lessee's sole cost and expense, execute and deliver any
instruments necessary or appropriate to confirm any such grant, release,
dedication or transfer to any Person permitted under this Section.

                        SECTION 13.  PERMITTED CONTESTS

          13.1  Permitted Contests Other Than in Respect of Impositions.  Except
                -------------------------------------------------------
to the extent otherwise provided for in Section 12.2 of the Participation
Agreement, Lessee, on its own or on Lessor's behalf but at Lessee's sole cost
and expense, may contest, by appropriate administrative or judicial proceedings
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any Legal Requirement, or utility charges
payable pursuant to Section 4.1 or any Lien, attachment, levy, encumbrance or
encroachment, and Lessor agrees not to pay, settle or otherwise compromise any
such item, provided that (a) the commencement and continuation of such
proceedings shall suspend the collection thereof from, and suspend the
enforcement thereof against the Property, Lessor, the Agent, the Investor and
the Lenders; (b) there shall be no risk of the imposition of a Lien (other than
a Permitted Lien) on the Property and no part of the Property nor any Rent would
be in any danger of being sold, forfeited, lost or deferred; (c) at no time
during the permitted contest shall there be a risk of the imposition of criminal
liability or civil liability on Lessor, the Agent or any Lender for failure to
comply therewith; and (d) in the event that, at any time, there shall be a
material risk of extending the application of such item beyond the earlier of
the Maturity Date and the Expiration Date for the Property, then Lessee shall
deliver to Lessor an Officer's Certificate certifying as to the matters set
forth in clauses (a), (b) and (c) of this Section 13.1.  Lessor, at Lessee's
sole cost and expense, shall execute and deliver to Lessee such authorizations
and other documents as may reasonably be required in connection with any such
contest and, if reasonably requested by Lessee, shall join as a party therein at
Lessee's sole cost and expense.

                            SECTION 14.  INSURANCE

          14.1  Public Liability and Workers' Compensation Insurance.  During
                ----------------------------------------------------
the Term, Lessee shall procure and carry, at Lessee's sole cost and expense,
commercial general liability insurance for claims for injuries or death
sustained by persons or damage to property while on the Property.  Such
insurance shall be on terms and in amounts that are no less favorable than
insurance maintained by owners of similar properties, that are in accordance
with normal industry practice.  The policy shall be endorsed to name Lessor, the
Trust Company, the Investor, the Agent and the Lenders as additional insureds.
The policy shall also specifically provide that the policy shall be considered
primary insurance which shall apply to any loss or claim before
<PAGE>

any contribution by any insurance which Lessor, the Trust Company, the Agent or
the Lenders may have in force. Lessee shall, in the operation of the Property,
comply with the applicable workers' compensation laws and protect Lessor against
any liability under such laws.

          14.2  Hazard and Other Insurance.  (a)  During the Term, Lessee shall
                --------------------------
keep the Property insured against loss or damage by fire and other risks on
terms and in amounts that are no less favorable than insurance maintained by
owners of similar properties, that are in accordance with normal industry
practice, are in amounts equal to the actual replacement cost of the
Improvements.  Lessee shall keep the Property insured against loss or damage by
earthquake on terms and in amounts that are either (i) no less favorable than
insurance maintained by owners of similar properties, that are in accordance
with normal industry practice or (ii) on terms acceptable to Agent.  In no
event, after the release or rerelease of the Cash Collateral pursuant to Section
8(b) of the Cash Collateral Agreement, shall insurance terms acceptable to Agent
be less favorable than insurance maintained by owners of similar properties,
that are in accordance with normal industry practice.  So long as no Lease Event
of Default exists, any loss payable under the insurance policy required by this
Section will be paid to and adjusted solely by Lessee, subject to Section 15.

          (b) If at any time during the Term the area in which the Property is
located is designated a "flood-prone" area pursuant to the Flood Disaster
Protection Act of 1973 or any amendments or supplements thereto, then Lessee
shall comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973, as may be amended.  In addition, Lessee will
fully comply with the requirements of the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as each may be amended from time
to time, and with any other Legal Requirement, concerning flood insurance to the
extent that it applies to the Property.

          14.3  Coverage.  (a)  Lessee shall furnish Lessor and Agent with
                --------
certificates showing the insurance required under Sections 14.1 and 14.2 to be
in effect and naming Agent, the Lenders, the Lessor, the Investor, and the Trust
Company as an additional insured with respect to liability insurance and showing
the mortgagee endorsement required by Section 14.3(c).  All such insurance shall
be at the cost and expense of Lessee.  Such certificates shall include a
provision in which the insurer agrees to provide thirty (30) days' advance
written notice by the insurer to Lessor and the Agent in the event of
cancellation or modification of such insurance that could be adverse to the
interests of Lessor, the Trust Company, the Agent, the Lenders or the Investor.
If a Lease Event of Default has occurred and is continuing and Lessor so
requests, Lessee shall deliver to Lessor copies of all insurance policies
required by this Lease.

          (b) Lessee agrees that the insurance policy or policies required by
this Lease shall include an appropriate clause pursuant to which such policy
shall provide that it will not be invalidated should Lessee waive, in writing,
prior to a loss, any or all rights of recovery against any party for losses
covered by such policy.  Lessee hereby waives any and all such rights against
Lessor, the Trust Company, the Investor, the Agent and the Lenders to the extent
of payments made under such policies.
<PAGE>

          (c) All insurance policies required by Section 14.2 shall include a
"New York" or standard form mortgagee endorsement in favor of the Agent.

          (d) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with any
insurance required under this Lease except that Lessor may carry separate
liability insurance so long as (i) Lessee's insurance is designated as primary
and in no event excess or contributory to any insurance Lessor may have in force
which would apply to a loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required under this Lease to
be subject to a coinsurance exception of any kind.

          (e) Lessee shall pay as they become due all premiums for the insurance
required by this Lease, shall renew or replace each policy prior to the
expiration date thereof and shall promptly deliver to Lessor and the Agent
certificates for renewal and replacement policies.

                    SECTION 15.  CONDEMNATION AND CASUALTY

          15.1  Casualty and Condemnation.  (a)  Subject to the provisions of
                -------------------------
this Section 15 and Section 16 (in the event Lessee delivers, or is obligated to
deliver, a Termination Notice), and prior to the occurrence and continuation of
a Lease Default, Lessee shall be entitled to receive (and Lessor hereby
irrevocably assigns to Lessee all of Lessor's right, title and interest in) any
award, compensation or insurance proceeds to which Lessee or Lessor may become
entitled by reason of their respective interests in the Property (i) if all or a
portion of the Property is damaged or destroyed in whole or in part by a
Casualty or (ii) if the use, access, occupancy, easement rights or title to the
Property or any part thereof is the subject of a Condemnation; provided,
                                                               --------
however, if a Lease Default shall have occurred and be continuing such award,
-------
compensation or insurance proceeds shall be paid directly to Lessor or, if
received by Lessee, shall be held in trust for Lessor, and shall be paid over by
Lessee to Lessor, and provided further that in the event of any Casualty or
                      -------- -------
Condemnation, the estimated cost of restoration of which is in excess of
$5,000,000, any such award, compensation or insurance proceeds shall be paid
directly to Lessor, or if received by Lessee, shall be held in trust for Lessor
and shall be paid over by Lessee to Lessor to be held and applied by Lessor
toward payment of the cost of restoration in accordance with Section 15.1(e),
or, if applicable, in accordance with Section 16.

          (b) Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof; provided that if the estimated cost of restoration of the
                  --------
Property or the payment on account of such title defect is in excess of
$5,000,000 and no Lease or Event of Default has occurred and is continuing, then
Lessor shall be entitled to participate in any such proceeding or action.  At
Lessee's reasonable request, and at Lessee's sole cost and expense, Lessor and
the Agent shall participate in any such proceeding, action, negotiation,
prosecution or adjustment.  Lessor and Lessee agree that this Lease shall
control the rights of Lessor and Lessee in and to any such award, compensation
or insurance payment.
<PAGE>

          (c) If Lessor or Lessee shall receive notice of a Casualty relating to
any material portion of the Property or a possible Condemnation of the Property
or any interest therein, Lessor or Lessee, as the case may be, shall give notice
thereof to the other and to the Agent promptly after the receipt of such notice.

          (d) In the event of a Casualty or receipt of notice by Lessee or
Lessor of a Condemnation, Lessee shall, not later than thirty (30) days after
such occurrence, deliver to Lessor and the Agent an Officer's Certificate
stating that either (i) (x) such Casualty is not a Significant Casualty or (y)
such Condemnation is neither a Total Condemnation nor a Significant Condemnation
and that this Lease shall remain in full force and effect with respect to the
Property and, at Lessee's sole cost and expense, Lessee shall promptly and
diligently restore the Property in accordance with the terms of Section 15.1(e)
or (ii) this Lease shall terminate with respect to the Property in accordance
with Section 16.1.

          (e) If pursuant to this Section 15.1, this Lease shall continue in
full force and effect following a Casualty or Condemnation with respect to the
Property, Lessee shall, at its sole cost and expense, promptly and diligently
repair any damage to the Property caused by such Casualty or Condemnation in
conformity with the requirements of Sections 10.1 and 11.1 using the as-built
plans and specifications for the Property (as modified to give effect to any
subsequent Modifications, any Condemnation affecting the Property and all
applicable Legal Requirements) so as to restore the Property (i) substantially
to the same condition, operation, function and (ii) to the same value as existed
immediately prior to such Casualty or Condemnation.  In such event, title to the
Property shall remain with Lessor.  Lessor shall make disbursements from time to
time of any award, compensation or insurance proceeds held by it to Lessee for
application to the cost of restoration subject to the satisfaction of the
following conditions:  (i) Lessor shall have received a fully executed
counterpart of a Requisition requesting funds in an amount not exceeding the
cost of work completed or incurred since the last disbursement, together with
reasonably satisfactory evidence of the stage of completion and of performance
of the work in a good and workman-like manner and in accordance with the as-
built plans and specifications, (ii) at the time of any such disbursement, no
Lease Default shall have occurred and be continuing, and no mechanic's or
materialmen's liens shall have been filed and remain undischarged, except those
discharged by the disbursement of the requested funds or bonded, (iii) Lessor
shall be reasonably satisfied that sufficient funds are available to complete
such restoration and (iv) title to the Property shall conform to the
representation set forth in Section 7.3(y) of the Participation Agreement.
Provided no Lease Default shall have occurred and be continuing, any award,
compensation or insurance proceeds remaining after restoration of the Project as
herein provided shall be paid to Lessee.

          (f) In no event shall a Casualty or Condemnation with respect to which
this Lease remains in full force and effect under this Section 15.1 affect
Lessee's obligations to pay Rent pursuant to Section 3.1.

          (g) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1(e), if during the Term a Casualty occurs with respect to
the Property or Lessee receives notice of a Condemnation with respect to the
Property, and following such Casualty or Condemnation, (i) the Property cannot
reasonably be restored on or before the date which is
<PAGE>

twelve months prior to the Maturity Date to substantially the same condition as
existed immediately prior to such Casualty or Condemnation or before such day
the Property is not in fact so restored or (ii) the estimated cost of
restoration of which is greater than $15,000,000, then Lessee shall exercise its
Purchase Option with respect to the Property on the next Payment Date or
irrevocably agree in writing to exercise the Maturity Date Purchase Option with
respect to the Property, and in either such event such remaining Casualty or
Condemnation proceeds shall be paid to the Agent, which shall pay such funds to
Lessee upon the closing of the purchase of the Property.

          (h) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1(e), if during the Term either Lessor or Lessee receives
an amount greater than or equal to $15,000,000 from the proceeds of any title
insurance policy covering the Property, then Lessee shall exercise its Purchase
Option with respect to the Property on the next Payment Date, and such proceeds
shall be paid to the Agent, which shall pay such funds to Lessee upon the
closing of the purchase of the Property.

                        SECTION 16.  LEASE TERMINATION

          16.1  Termination upon Certain Events.  (a) If Lessor or Lessee shall
                -------------------------------
have received notice of a Total Condemnation, then Lessee shall be obligated,
within thirty (30) days after Lessee receives notice thereof, to deliver a
written notice in the form described in Section 16.2(a) (a "Termination Notice")
                                                            ------------------
of the termination of this Lease.

          (b) In the event Lessee or Lessor shall have received notice of a
Condemnation, Casualty or Environmental Violation, the Lessee shall be required
to deliver an Officer's Certificate stating the following:  (i) if a
Condemnation occurs, the Officer's Certificate shall state whether such
Condemnation is a Significant Condemnation; or (ii) if a Casualty occurs, the
Officer's Certificate shall state whether such Casualty is a Significant
Casualty; or (iii) if an Environmental Violation occurs or is discovered, the
Officer's Certificate shall state whether, in the reasonable, good-faith
judgment of Lessee, the cost to remediate the same will exceed $5,000,000.  If
Lessee confirms the occurrence of a Significant Condemnation, Significant
Casualty or an Environmental Violation involving remediation costs in excess of
$5,000,000, then, Lessee shall, simultaneously with the delivery of the
Officer's Certificate pursuant to the preceding clause (i), (ii) or (iii),
deliver a Termination Notice.

          16.2  Procedures.  (a)  A Termination Notice shall contain:  (i)
                ----------
notice of termination of this Lease on a date not more than thirty (30) days
after Lessor's receipt of such Termination Notice (the "Termination Date"); (ii)
                                                        ----------------
a binding and irrevocable agreement of Lessee to pay the Termination Value and
purchase the Property on such Termination Date and (iii) the Officer's
Certificate described in Section 16.1(b).

          (b) On the Termination Date, Lessee shall pay to Lessor the
Termination Value for the Property, plus all amounts owing in respect of Rent
for the Property (including Supplemental Rent) theretofore accruing and Lessor
shall convey the Property to Lessee (or Lessee's designee) all in accordance
with Section 19.1.
<PAGE>

                             SECTION 17.  DEFAULT

          17.1  Lease Events of Default.  If any one or more of the following
                -----------------------
events (each a "Lease Event of Default") shall occur:
                ----------------------

          (a) Lessee shall fail to make payment of (i) any Basic Rent within
     five (5) Business Days after the same has become due and payable or (ii)
     any Maximum Residual Guarantee Amount, Purchase Option Price or Termination
     Value after the same has become due and payable; or

          (b) Lessee shall fail to make payment of any other Supplemental Rent
     due and payable within five (5) Business Days after receipt of notice
     thereof; or

          (c) Lessee shall fail to maintain insurance as required by Section 14;
     or

          (d) Lessee or the Guarantor shall fail to observe or perform any term,
     covenant or condition of Lessee or the Guarantor, respectively, under this
     Lease, the Participation Agreement, the Guarantee or any other Operative
     Agreement to which it is a party (other than those set forth in Section
     17.1(a), (b) or (c) hereof) or any representation or warranty by Lessee or
     the Guarantor, respectively, set forth in this Lease, the Guarantee or in
     any other Operative Agreement or in any document entered into in connection
     herewith or therewith or in any document, certificate or financial or other
     statement delivered in connection herewith or therewith shall be false or
     inaccurate in any material way (including those representations and
     warranties set forth in Section 7.3 of the Participation Agreement, which
     representations and warranties are made only on and as of the Closing
     Date); or

          (e) Lessee, the Guarantor or a Material Subsidiary shall (i) admit in
     writing its inability to pay its debts generally as they become due, (ii)
     file a petition under the United States bankruptcy laws or any other
     applicable insolvency law or statute of the United States of America or any
     State or Commonwealth thereof, (iii) make a general assignment for the
     benefit of its creditors, (iv) consent to the appointment of a receiver of
     itself or the whole or any substantial part of its property, (v) fail to
     cause the discharge of any custodian, trustee or receiver appointed for
     Lessee or the Guarantor or the whole or a substantial part of its property
     within ninety (90) days after such appointment, or (vi) file a petition or
     answer seeking or consenting to reorganization under the United States
     bankruptcy laws or any other applicable insolvency law or statute of the
     United States of America or any State or Commonwealth thereof; or

          (f) insolvency proceedings or a petition under the United States
     bankruptcy laws or any other applicable insolvency law or statute of the
     United States of America or any State or Commonwealth thereof shall be
     filed against Lessee, the Guarantor or a Material Subsidiary and not
     dismissed within ninety (90) days from the date of its filing, or a court
     of competent jurisdiction shall enter an order or decree appointing,
     without its
<PAGE>

     consent of, a receiver of Lessee or the Guarantor or the whole or a
     substantial part of its property, and such order or decree shall not be
     vacated or set aside within ninety (90) days from the date of the entry
     thereof; or

          (g) Lessee or the Guarantor or any Subsidiary shall engage in any
     "prohibited transaction" (as defined in Section 406 of ERISA or Section
     4975 of the Code) involving any Plan, (ii) any "accumulated funding
     deficiency" (as defined in Section 302 of ERISA), whether or not waived,
     shall exist with respect to any Plan or any Lien in favor of the PBGC or a
     Plan shall arise on the assets of the Lessee or any Subsidiary, (iii) a
     Reportable Event shall occur with respect to, or proceedings shall commence
     to have a trustee appointed, or a trustee shall be appointed, to administer
     or to terminate, any Single Employer Plan, which Reportable Event or
     commencement of proceedings or appointment of a trustee is, in the
     reasonable opinion of the Required Lenders, likely to result in the
     termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
     Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
     Lessee or any Subsidiary shall, or in the reasonable opinion of the
     Required Lenders is likely to, incur any liability in connection with a
     withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
     Plan or (vi) any other event or condition shall occur or exist with respect
     to a Plan; and in each case in clauses (i) through (vi) above, such event
     or condition, together with all other such events or conditions, if any,
     could reasonably be expected to have a Material Adverse Effect; or

          (h) a Credit Agreement Event of Default pursuant to Section 6.1(g),
     (i), (j) or (l) of the Credit Agreement shall have occurred and be
     continuing;

then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Section 17 and in Section 18.1, terminate this
Lease by giving Lessee ten (10) days notice of such termination, and this Lease
shall terminate.  Lessee shall, to the fullest extent permitted by law, pay as
Supplemental Rent all costs and expenses incurred by or on behalf of Lessor,
including fees and expenses of counsel, as a result of any Lease Event of
Default hereunder.

          17.2  Final Payment.  If an Event of Default shall have occurred and
                -------------
be continuing, Lessor shall have the right to recover, by demand to Lessee and
at Lessor's election, and Lessee shall pay to Lessor, as and for a final
payment, but exclusive of the indemnities payable under Section 12 of the
Participation Agreement, and in lieu of all damages beyond the date of such
demand the sum of (a) the Termination Value, plus (b) all other amounts owing in
respect of Rent and Supplemental Rent theretofore accruing under this Lease;
provided, however, if an Event of Default has occurred pursuant to Section
--------
17.1(e) or (f), such final payment shall be immediately due and payable without
demand or notice.  Upon payment of the amount specified pursuant to the first
sentence of this Section 17.2, Lessee shall be entitled to receive from Lessor,
at Lessee's request and cost, an assignment of Lessor's right, title and
interest in the Property, in each case in recordable form and otherwise in
conformity with local custom and free and clear of the Lien of this Lease and
Lessor Liens.  The Property shall be quitclaimed to Lessee (or Lessee's
designee) "AS IS" and in their then present physical condition.  If any statute
or rule of law shall limit the amount of such final payment to less than the
amount agreed upon, Lessor shall be entitled to the maximum amount allowable
under such statute or rule of law. It is the intent of the
<PAGE>

Lessor and the Lessee that the payment required to be made pursuant to this
Section together with the payment of the Maximum Residual Guarantee Amount shall
be treated as an obligation on the part of the Lessee to repay a loan obligation
to the Lenders and the Lessor in such amounts; provided, that Lessee shall not
                                               --------
be entitled to receive an assignment of Lessor's interest in the Property unless
Lessee shall have paid in full the Termination Value of the Property.

          17.3  Lease Remedies.  Lessor and Lessee intend that for commercial
                --------------
law and bankruptcy law purposes, this Lease will be treated as a financing
arrangement, as set forth in Section 7.  If, as a result of applicable state
law, which cannot be waived, this Lease is deemed to be a lease of the Property,
rather than a financing arrangement, and Lessor is unable to enforce the
remedies set forth in Section 17.2, the following remedies shall be available to
Lessor:

          (a) Surrender of Possession.  If a Lease Event of Default shall have
              -----------------------
occurred and be continuing, and whether or not this Lease shall have been
terminated pursuant to Section 17.1, Lessee shall, upon thirty (30) days written
notice, surrender to Lessor possession of the Property and Lessee shall quit the
same.  Lessor may enter upon and repossess the Property by such means as are
available at law or in equity, and may remove Lessee and any and all personal
property and Lessee's equipment and personalty and severable Modifications from
the Property.  Lessor shall have no liability by reason of any such entry,
repossession or removal performed in accordance with applicable law.

          (b) Reletting.  If a Lease Event of Default shall have occurred and be
              ---------
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessor may, but shall be under no obligation to, relet all, or any
portion, of the Property, for the account of Lessee or otherwise, for such term
or terms (which may be greater or less than the period which would otherwise
have constituted the balance of the Term) and on such conditions (which may
include concessions or free rent) and for such purposes as Lessor may determine,
and Lessor may collect, receive and retain the rents resulting from such
reletting.  Lessor shall not be liable to Lessee for any failure to relet the
Property or for any failure to collect any rent due upon such reletting.

          (c) Damages.  None of (i) the termination of this Lease pursuant to
              -------
Section 17.1; (ii) the repossession of the Property; or (iii) except to the
extent required by applicable law, the failure of Lessor to relet all, or any
portion, of the Property, the reletting of all or any portion thereof, nor the
failure of Lessor to collect or receive any rentals due upon any such reletting
shall relieve Lessee of its liability and obligations hereunder, all of which
shall survive any such termination, repossession or reletting.  If any Lease
Event of Default shall have occurred and be continuing and notwithstanding any
termination of this Lease pursuant to Section 17.1, Lessee shall forthwith pay
to Lessor all Basic Rent and other sums due and payable hereunder to and
including the date of such termination.  Thereafter, on the days on which the
Basic Rent or Supplemental Rent, as applicable, are payable under this Lease or
would have been payable under this Lease if the same had not been terminated
pursuant to Section 17.1 and until the end of the Term or what would have been
the Term in the absence of such termination, Lessee shall pay Lessor, as current
liquidated damages (it being agreed that it would be impossible accurately to
determine actual damages) an amount equal to the Basic Rent and Supplemental
Rent that are payable under this Lease or would have been payable by Lessee
hereunder if this Lease had not
<PAGE>

been terminated pursuant to Section 17.1, less the net proceeds, if any, which
are actually received by Lessor with respect to the period in question of any
reletting of the Property or any portion thereof; provided that Lessee's
                                                  --------
obligation to make payments of Basic Rent and Supplemental Rent under this
Section 17.3 shall continue only so long as Lessor shall not have received the
amounts specified in Section 17.2. In calculating the amount of such net
proceeds from reletting, there shall be deducted all of Lessor's, the Agent's
and any Lenders' reasonable expenses in connection therewith, including
repossession costs, brokerage commissions, fees and expenses for counsel and any
necessary repair or alteration costs and expenses incurred in preparation for
such reletting. To the extent Lessor receives any damages pursuant to this
Section 17.3, such amounts shall be regarded as amounts paid on account of Rent.

          (d) Acceleration of Rent.  If a Lease Event of Default shall have
              --------------------
occurred and be continuing, and this Lease shall not have been terminated
pursuant to Section 17.1, and whether or not Lessor shall have collected any
current liquidated damages pursuant to Section 17.3(c), Lessor may upon written
notice to Lessee accelerate all payments of Basic Rent due hereunder and, upon
such acceleration, Lessee shall immediately pay Lessor, as and for final
liquidated damages and in lieu of all current liquidated damages on account of
such Lease Event of Default beyond the date of such acceleration (it being
agreed that it would be impossible accurately to determine actual damages) an
amount equal to the sum of (a) all Basic Rent (assuming interest at a rate per
annum equal to the Overdue Rate), as applicable, due from the date of such
acceleration until the end of the Term, plus (b) the Maximum Residual Guarantee
                                        ----
Amount that would be payable under Section 21.1(c) assuming the proceeds of the
sale pursuant to such Section 21.1(c) are equal to zero, which sum is then
discounted to present value at a rate equal to the rate then being paid on
United States treasury securities with maturities corresponding to the then
remaining Term.  Following payment of such amount by Lessee, Lessee will be
permitted to stay in possession of the Property for the remainder of the Term,
subject to the terms and conditions of this Lease, including the obligation to
pay Supplemental Rent, provided that no further Lease Event of Default shall
occur and be continuing, following which Lessor shall have all the rights and
remedies set forth in this Section 17 (but not including those set forth in this
Section 17.3).  If any statute or rule of law shall limit the amount of such
final liquidated damages to less than the amount agreed upon, Lessor shall be
entitled to the maximum amount allowable under such statute or rule of law.

          17.4  Waiver of Certain Rights.  If this Lease shall be terminated
                ------------------------
pursuant to Section 17.1, Lessee waives, to the fullest extent permitted by law,
(a) any notice of re-entry or the institution of legal proceedings to obtain re-
entry or possession; (b) any right of redemption, re-entry or repossession; (c)
the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt; and (d) any other rights which might otherwise
limit or modify any of Lessor's rights or remedies under this Section 17.

          17.5  Assignment of Rights Under Contracts.  If a Lease Event of
                ------------------------------------
Default shall have occurred and be continuing, and whether or not this Lease
shall have been terminated pursuant to Section 17.1, Lessee shall upon Lessor's
demand immediately assign, transfer and set over to Lessor all of Lessee's
right, title and interest in and to each agreement executed by Lessee in
connection with the construction, renovation, development, use or operation of
the Property (including all right, title and interest of Lessee with respect to
all warranty, performance, service
<PAGE>

and indemnity provisions), as and to the extent that the same relate to the
construction renovation, and operation of the Property.

          17.6  Remedies Cumulative.  Lessor shall be entitled to enforce
                -------------------
payment of the indebtedness and performance of the obligations secured hereby
and to exercise all rights and powers under this instrument or under any of the
other Operative Agreements or other agreement or any laws now or hereafter in
force, notwithstanding some or all of the obligation secured hereby may now or
hereafter be otherwise secured, whether by mortgage, security agreement, pledge,
lien, assignment or otherwise.  Neither the acceptance of this instrument nor
its enforcement, shall prejudice or in any manner affect Lessor's right to
realize upon or enforce any other security now or hereafter held by Lessor, it
being agreed that Lessor shall be entitled to enforce this instrument and any
other security now or hereafter held by Lessor in such order and manner as
Lessor may determine in its absolute discretion.  No remedy herein conferred
upon or reserved to Lessor is intended to be exclusive of any other remedy
herein or by law provided or permitted, but each shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute.  Every power or remedy given by any
of the Operative Agreements to Lessor or to which it may otherwise be entitled
may be exercised, concurrently or independently, from time to time and as often
as may be deemed expedient by Lessor.  In no event shall Lessor, in the exercise
of the remedies provided in this instrument, be deemed a "mortgagee in
possession," and Lessor shall not in any way be made liable for any act, either
of commission or omission, in connection with the exercise of such remedies.

                      SECTION 18.  LESSOR'S RIGHT TO CURE

          18.1  Lessor's Right to Cure Lessee's Lease Defaults.  Lessor, without
                ----------------------------------------------
waiving or releasing any obligation or Lease Event of Default, may (but shall be
under no obligation to) remedy any Lease Event of Default for the account and at
the sole cost and expense of Lessee, including the failure by Lessee to maintain
any insurance required by Section 14, and may, to the fullest extent permitted
by law, and notwithstanding any right of quiet enjoyment in favor of Lessee,
enter upon the Property for such purpose and take all such action thereon as may
be necessary or appropriate therefor.  No such entry shall be deemed an eviction
of Lessee.  All reasonable out-of-pocket costs and expenses so incurred
(including the fees and expenses of counsel), together with interest thereon at
the Overdue Rate from the date on which such sums or expenses are paid by
Lessor, shall be paid by Lessee to Lessor on demand as Supplemental Rent.

                        SECTION 19.  LEASE TERMINATION

          19.1  Provisions Relating to Lessee's Termination of this Lease or
                ------------------------------------------------------------
Exercise of Purchase Option.  In connection with the termination of this Lease
---------------------------
pursuant to the terms of Section 16.2, or in connection with Lessee's exercise
of its Purchase Option or Maturity Date Purchase Option, upon the date on which
this Lease is to terminate or upon the Expiration Date, and upon tender by
Lessee of the amounts set forth in Section 16.2(b), 20.1 or 20.2, as applicable:
<PAGE>

          (a) Lessor shall execute and deliver to Lessee (or to Lessee's
     designee) at Lessee's cost and expense an assignment of Lessor's entire
     interest in the Property, in each case in recordable form and otherwise in
     conformity with local custom and free and clear of the Lien of the Mortgage
     and any Lessor Liens; and

          (b) The Property shall be conveyed to Lessee "AS IS" and in then
     present physical condition.

                         SECTION 20.  PURCHASE OPTION

          20.1  Purchase Option.  Provided that no Lease Default or Lease Event
                ---------------
of Default shall have occurred and be continuing, Lessee shall have the option
(exercisable by giving Lessor irrevocable written notice (the "Purchase Notice")
                                                               ---------------
of Lessee's election, which election shall be irrevocable, to exercise such
option not less than ten (10) days prior to the date of purchase pursuant to
such option) to purchase the Property on the date specified in such Purchase
Notice, which date must occur prior to the date which is twelve months prior to
the Maturity Date, at a price equal to the Termination Value (the "Purchase
                                                                   --------
Option Price") (which the parties do not intend to be a "bargain" purchase
------------
price) of the Property.  If Lessee exercises its option to purchase the Property
pursuant to this Section 20.1 (the "Purchase Option"), Lessor shall quitclaim to
                                    ---------------
Lessee or Lessee's designee all of Lessor's right, title and interest in and to
the Property as of the date specified in the Purchase Notice upon receipt of the
Purchase Option Price and all Rent and other amounts then due and payable under
this Lease and any other Operative Agreement, in accordance with Section 19.1.

          20.2  Maturity Date Purchase Option.  Not less than twelve months
                -----------------------------
prior to the Maturity Date, if Lessee does not give Lessor and Agent written
notice to the contrary, Lessee shall be deemed to have given Lessor and Agent
irrevocable notice (the "Maturity Date Election Notice") that Lessee is electing
                         -----------------------------
to exercise the Maturity Date Purchase Option.  If Lessee gives notice that it
will not exercise the Maturity Date Election Notice on or before the date twelve
months prior to the Maturity Date, then Lessee shall be obligated to remarket
the Property pursuant to Section 21.  If Lessee has elected to exercise the
Maturity Date Purchase Option, then on the Maturity Date Lessee shall pay to
Lessor an amount equal to the Termination Value for all the Property (which the
parties do not intend to be a "bargain" purchase price) and, upon receipt of
such amount plus all Rent and other amounts then due and payable under this
Lease and any other Operative Agreement, Lessor shall transfer to Lessee or
Lessee's designee all of Lessor's right, title and interest in and to the
Property in accordance with Section 19.1.

                         SECTION 21.  SALE OF PROPERTY

          21.1  Sale Procedure.  (a)  Unless Lessee shall have elected to
                --------------
purchase the Property and has paid the Purchase Option Price with respect
thereto, or otherwise terminated this Lease with respect thereto and paid the
Termination Value with respect thereto, Lessee shall
<PAGE>

(i) pay to Lessor the Maximum Residual Guarantee Amount as provided for in
Section 21.1(c), and (ii) sell the Property to one or more third parties for
cash in accordance with Section 21.1(b).

          (b) During the Marketing Period, Lessee, as nonexclusive broker for
Lessor, shall use its best efforts to obtain bids for the cash purchase of the
Property being sold for the highest price available in the relevant market,
shall notify Lessor promptly of the name and address of each prospective
purchaser and the cash price which each prospective purchaser shall have offered
to pay for the Property and shall provide Lessor with such additional
information about the bids and the bid solicitation procedure as Lessor may
request from time to time.   In connection with any such sale of the Property,
the Lessee will provide to the prospective purchaser all customary seller's
indemnities, representations and warranties regarding title, absence of Liens
(except Permitted Liens and Lessor Liens) and the condition of the Property, as
well as such other terms and conditions as may be negotiated between the Lessee
and the prospective purchaser.  Lessee shall have obtained, at its cost and
expense, all required governmental and regulatory consents and approvals and
shall have made all filings as required by applicable law in order to carry out
and complete the transfer of the Property.  As to Lessor, any such sale shall be
made on an "as is, with all faults" basis without representation or warranty by
the Lessor other than the absence of Lessor Liens.  Lessor may reject any and
all bids and may assume sole responsibility for obtaining bids by giving Lessee
written notice to that effect; provided, however, that notwithstanding the
                               --------  -------
foregoing, Lessor may not reject a bid if such bid, together with any amounts to
be paid pursuant to Section 21.3, is greater than or equal to the sum of the
Limited Deficiency Amount and all costs and expenses referred to in Section
21.2(i) and is a bona fide offer by a third party purchaser who is not an
Affiliate of Lessee.  If the price which a prospective purchaser shall have
offered to pay for the Property is less than the sum of the Limited Deficiency
Amount and all costs and expenses referred to in Section 21.2(i), Lessor may
elect to retain the Property by giving Lessee at least two Business Days' prior
written notice of Lessor's election to retain the Property, and upon receipt of
such notice, Lessee shall surrender the Property to Lessor pursuant to Section
10.1(c).  Unless Lessor shall have elected to retain the Property pursuant to
the preceding sentence, Lessor shall sell the Property free of any Lessor Liens
attributable to it, without recourse or warranty, for cash to the purchaser or
purchasers identified by Lessee or Lessor, as the case may be.  Lessee shall
surrender the Property so sold to each purchaser in the condition specified in
Section 10.1.

          (c) On the earlier of (i) the date on which the Property is sold
pursuant to Section 21.1(b), and (ii) the Maturity Date, Lessee shall pay to
Lessor the Maximum Residual Guarantee Amount.

          21.2  Application of Proceeds of Sale.  Lessor shall apply the
                -------------------------------
proceeds of sale of the Property in the following order of priority:

              (i) FIRST, to pay or to reimburse Lessor for the payment of all
                  -----
     reasonable costs and expenses incurred by Lessor in connection with the
     sale; and

              (ii) SECOND, the balance shall be paid to the Agent to be applied
                   ------
     pursuant to the provisions of the Credit Agreement.
<PAGE>

          21.3  Indemnity for Excessive Wear.  If the proceeds of the sale
                ----------------------------
described in Section 21.1(b), less all expenses incurred by Lessor in connection
with such sale, shall be less than the Limited Deficiency Amount at the time of
such sale and if it shall have been determined (pursuant to the Appraisal
Procedure) that the Fair Market Sales Value shall have been impaired by greater
than expected wear and tear during the Term, Lessee shall pay to Lessor within
ten (10) days after receipt of Lessor's written statement (i) the amount of such
excess wear and tear determined by the Appraisal Procedure or (ii) the amount of
the Net Sale Proceeds Shortfall, whichever amount is less.

          21.4  Appraisal Procedure.  For determining the Fair Market Sales
                -------------------
Value of the Property or any other amount which may, pursuant to any provision
of any Operative Agreement, be determined by an appraisal procedure, Lessor and
Lessee shall use the following procedure (the "Appraisal Procedure").  Lessor
                                               -------------------
and Lessee shall endeavor in good faith to reach a mutual agreement as to such
amount for a period of ten (10) days from commencement of the Appraisal
Procedure, and if they cannot agree within ten (10) days, then two qualified
appraisers, one chosen by Lessee and one chosen by Lessor, shall mutually agree
thereupon, but if either party shall fail to choose an appraiser within twenty
(20) days after notice from the other party of the selection of its appraiser,
then the appraisal by such appointed appraiser shall be binding on Lessee and
Lessor.  If the two appraisers cannot agree within twenty (20) days after both
shall have been appointed, then a third appraiser shall be selected by the two
appraisers or, failing agreement as to such third appraiser within thirty (30)
days after both shall have been appointed, by the American Arbitration
Association.  The decisions of the three appraisers shall be given within twenty
(20) days of the appointment of the third appraiser and the decision of the
appraiser most different from the average of the other two shall be discarded
and such average shall be binding on Lessor and Lessee; provided that if the
                                                        --------
highest appraisal and the lowest appraisal are equidistant from the third
appraisal, the third appraisal shall be binding on Lessor and Lessee.  The fees
and expenses of all of the appraisers shall be paid by the Lessee.

          21.5  Certain Obligations Continue.  During the Marketing Period, the
                ----------------------------
obligation of Lessee to pay Rent with respect to the Property (including the
installment of Basic Rent due on the Maturity Date) shall continue undiminished
until payment in full to Lessor of the sale proceeds, the Maximum Residual
Guarantee Amount, if any, the amount due under Section 21.3, if any, and all
other amounts due to Lessor with respect to the Property.  Lessor shall have the
right, but shall be under no duty, to solicit bids, to inquire into the efforts
of Lessee to obtain bids or otherwise to take action in connection with any such
sale, other than as expressly provided in this Section 21.

                           SECTION 22.  HOLDING OVER

          22.1  Holding Over.  If Lessee shall for any reason remain in
                ------------
possession of the Property after the expiration or earlier termination of this
Lease (unless the Property is conveyed to Lessee), such possession shall be as a
tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were the Lease then
in full force and effect with respect to the Property and Lessee shall continue
to pay Basic Rent at an annual rate equal to the rate payable hereunder
immediately preceding such expiration
<PAGE>

or earlier termination; provided, however, that from and after the sixtieth
                        --------  -------
(60th) day Lessee shall remain in possession of the Property after such
expiration or earlier termination, Lessee shall pay Basic Rent at an annual rate
equal to two hundred percent (200%) of the Basic Rent payable hereunder
immediately preceding such expiration or earlier termination. Such Basic Rent
shall be payable from time to time upon demand by Lessor. During any period of
tenancy at sufferance, Lessee shall, subject to the second preceding sentence,
be obligated to perform and observe all of the terms, covenants and conditions
of this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to tenants at sufferance, to continue its occupancy and use
of the Property. Nothing contained in this Section 22 shall constitute the
consent, express or implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease as to the Property and nothing
contained herein shall be read or construed as preventing Lessor from
maintaining a suit for possession of the Property or exercising any other remedy
available to Lessor at law or in equity.

                           SECTION 23.  RISK OF LOSS

          23.1  Risk of Loss.  The risk of loss of or decrease in the enjoyment
                ------------
and beneficial use of the Property as a result of the damage or destruction
thereof by fire, the elements, casualties, thefts, riots, wars or otherwise is
assumed by Lessee, and Lessor shall in no event be answerable or accountable
therefor.

                    SECTION 24.  SUBLETTING AND ASSIGNMENT

          24.1  Subletting.  (a)  The Lessee may not assign this Lease hereunder
                ----------
in whole or in part.  The Lessee from time to time, may sublease the Property or
any portion thereof to any Person and extend, modify or renew any sublease
without the approval of Lessor, the Agent or the Lenders; provided, however,
that (i) no sublease or other relinquishment of possession of all or any portion
of the Property shall in any way discharge or diminish any of the Lessee's
obligations to the Lessor hereunder, and the Lessee shall remain directly and
primarily liable under this Lease as to the Property, or portion thereof, so
sublet and (ii) each sublease to an Affiliate of the Lessee shall be made
subject and subordinate to this Lease and the rights of the Lessor hereunder.

          (b)  Lessor hereby agrees, that, in the event of the early termination
of this Lease from any cause whatsoever, and while any sublease is in full force
and effect, such termination of this Lease shall not act as a merger or other
termination of such sublease, and Lessee's interest as sublessor in such
sublease shall be deemed automatically assigned, transferred, and conveyed to
Lessor; and, from and after such termination, Lessor shall be bound by the
provisions of the sublease then in full force and effect on the part of the
Lessee, as sublessor; and that the sublessee shall be deemed thereupon and
without further act to have attorned to Lessor.  It is the intention hereof to
provide that the termination of this Lease while such sublease is in full force
and effect shall not, in any way, by reason thereof, terminate such sublease or
affect the rights of such sublessee.  The foregoing is subject to the right of
Lessee (or Lessor, if the Lease has terminated) to terminate any sublease which
is in default (notice thereof, if any required, having been given and the time
for curing such default having expired) and any other rights and
<PAGE>

remedies reserved to Lessee in such sublease, the right of Lessor to terminate
any sublease made (i) with an Affiliate of Lessee, (ii) on terms less than fair
market value for similar properties in the San Jose, California metropolitan
area at the inception of such sublease or (iii) having an area of 7,500 square
feet or less, and any other rights and remedies afforded to a lessor of real
property against a defaulting lessee.

          24.2  Subleases.  Promptly following the execution and delivery of any
                ---------
sublease permitted by this Section 24, Lessee shall deliver a copy of such
executed sublease to Lessor and the Agent.

          24.3  Assignment of Rents.  As long as a Lease Event of Default does
                -------------------
not occur, Lessee shall collect and receive all rents from any sublessees.

                      SECTION 25.  ESTOPPEL CERTIFICATES

          25.1  Estoppel Certificates.  At any time and from time to time upon
                ---------------------
not less than twenty (20) days' prior request by Lessor or Lessee (the
"Requesting Party"), the other shall furnish to the Requesting Party an
Officer's Certificate certifying that this Lease is in full force and effect (or
that this Lease is in full force and effect as modified and setting forth the
modifications); the dates to which the Basic Rent or Renewal Rent and
Supplemental Rent have been paid; to the best knowledge of the signer of such
certificate, whether or not the Lessor is in default under any of its
obligations hereunder (and, if so, the nature of such alleged default); and such
other matters under this Lease as the Requesting Party may reasonably request.
Any such certificate furnished pursuant to this Section 25 may be relied upon by
the Requesting Party, and any existing or prospective mortgagee, purchaser or
lender, and any accountant or auditor, of, from or to the Requesting Party (or
any Affiliate or assignee thereof).

                            SECTION 26.  NO WAIVER

          26.1  No Waiver.  No failure by Lessor or Lessee to insist upon the
                ---------
strict performance of any term hereof or to exercise any right, power or remedy
upon a default hereunder, and no acceptance of full or partial payment of Rent
during the continuance of any such default, shall constitute a waiver of any
such default or of any such term.  To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.
<PAGE>

                     SECTION 27.  ACCEPTANCE OF SURRENDER

          27.1  Acceptance of Surrender.  Except as otherwise expressly provided
                -----------------------
in this Lease, no surrender to Lessor of this Lease or of all or any portion of
the Property or of any interest therein shall be valid or effective unless
agreed to and accepted in writing by Lessor and, prior to the payment or
performance of all obligations under the Credit Documents, the Agent, and no act
by Lessor or the Agent or any representative or agent of Lessor or the Agent,
other than a written acceptance, shall constitute an acceptance of any such
surrender.

                        SECTION 28.  NO MERGER OF TITLE

          28.1  No Merger of Title.  There shall be no merger of this Lease or
                ------------------
of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, in whole or in part,
(a) this Lease or the leasehold estate created hereby or any interest in this
Lease or such leasehold estate, (b) the fee estate in the Property, except as
may expressly be stated in a written instrument duly executed and delivered by
the appropriate Person, or (c) a beneficial interest in Lessor.

                             SECTION 29.  NOTICES

          29.1  Notices.  All notices, requests and demands to or upon the
                -------
respective parties hereto to be effective shall be given pursuant to the
provisions of Section 13.3 of the Participation Agreement.

                          SECTION 30.  MISCELLANEOUS

          30.1  Miscellaneous.  Anything contained in this Lease to the contrary
                -------------
notwithstanding, all claims against and liabilities of Lessee or Lessor arising
from events commencing prior to the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination.  If any term or
provision of this Lease or any application thereof shall be declared invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby.  If any right or option of
Lessee provided in this Lease, including any right or option described in
Sections 15, 16, 22 or 21, would, in the absence of the limitation imposed by
this sentence, be invalid or unenforceable as being in violation of the rule
against perpetuities or any other rule of law relating to the vesting of an
interest in or the suspension of the power of alienation of property, then such
right or option shall be exercisable only during the period which shall end
twenty-one (21) years after the date of death of the last survivor of the
descendants of Franklin D. Roosevelt, the former President of the United States,
Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the
founder of the Standard Oil Company, known to be alive on the date of the
execution and delivery of this Lease.
<PAGE>

          30.2  Amendments and Modifications.  Neither this Lease nor any
                ----------------------------
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by Lessor and Lessee.

          30.3  Successors and Assigns.  All the terms and provisions of this
                ----------------------
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

          30.4  Headings and Table of Contents.  The headings and table of
                ------------------------------
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.

          30.5  Counterparts.  This Lease may be executed in any number of
                ------------
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.

          30.6  GOVERNING LAW.  THIS LEASE HAS BEEN DELIVERED IN, AND SHALL IN
                -------------
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION, PERFECTION AND
ENFORCEMENT OF LIENS AND SECURITY INTERESTS AND THE EXERCISE OF REMEDIES WITH
RESPECT THERETO, WHICH SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.

          30.7  Limitations on Recourse.  Except as expressly set forth in the
                -----------------------
Operative Agreements, Lessee agrees to look solely to Lessor's estate and
interest in the Property, the proceeds of sale thereof, any insurance proceeds
or any other award or any third party proceeds received by Lessor in connection
with the Property for the collection of any judgment requiring the payment of
money by Lessor in the event of liability by Lessor, and no other property or
assets of Lessor, the Trust Company member, partner or other owner of an
interest, direct or indirect, in Lessor, or any director, officer, shareholder,
employee, beneficiary, Affiliate of any of the foregoing shall be subject to
levy, execution or other enforcement procedure for the satisfaction of Lessee's
remedies under or with respect to this Lease, the relationship of Lessor and
Lessee hereunder or Lessee's use of the Property or any other liability of
Lessor to Lessee; provided that nothing in this Section shall be construed to
                  --------
impair or limit the rights of Lessee against the Investor under the Operative
Agreements. Nothing in this Section shall be interpreted so as to limit the
terms of Section 6.1 or 6.2.

          30.8  Memorandum of Lease.  This Lease shall not be recorded, but
                -------------------
Lessor and Lessee shall execute and deliver a memorandum of this Lease (a
"Memorandum of Lease") substantially in the form of Exhibit A and otherwise in
--------------------                                ---------
form suitable for recording under the laws of the State of California, which
memorandum shall be recorded at Lessee's sole cost and expense.
<PAGE>

          30.9  Priority.  On and prior to the Maturity Date, the Mortgage shall
                --------
be subject and subordinate to this Lease and following the Maturity Date, the
Mortgage, at the sole election of the Agent, shall be senior to this Lease
without any further act by any Person.
<PAGE>

          IN WITNESS WHEREOF, the parties have caused this Lease be duly
executed and delivered as of the date first above written.

                              eBAY INC.

                              By: ____________________________________
                                  Name:
                                  Title:

                              eBAY REALTY TRUST

                              By:  WILMINGTON TRUST COMPANY, not
                                   individually but solely as Trustee

                              By: ____________________________________
                                  Name:
                                  Title:

          Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged on this 1st day of March, 2000.

                              THE CHASE MANHATTAN BANK, as the
                                Agent for the Lenders

                              By: ____________________________________
                                  Name:
                                  Title:<PAGE>

                                                                   EXHIBIT 10.26

                                                                       EXHIBIT D
                                                      TO PARTICIPATION AGREEMENT
                                                      --------------------------

                           CASH COLLATERAL AGREEMENT

     CASH COLLATERAL AGREEMENT dated as of March 1, 2000, made by eBAY INC., a
Delaware corporation (the "Pledgor") in favor of the Chase Manhattan Bank
                           -------
("Chase"), as Agent (in such capacity, the "Agent") and as Securities
-------                                     -----
Intermediary (in such capacity, the "Securities Intermediary"), for the
                                     -----------------------
Beneficiaries (as hereinafter defined).

                             Preliminary Statement
                             ---------------------

          Pledgor wishes to induce (i) the Lenders to enter into the Credit
Agreement and the other Operative Agreements to which they are party and (ii)
Scotiabanc Inc. (the "Investor") to enter into the Participation Agreement (as
                      --------
hereinafter defined) and the other Operative Agreements to which it is party.

          WHEREAS, in order to induce (i) the Lessor to enter into the Lease and
the other Operative Agreements to which it is a party; (ii) the Lenders to enter
into the Credit Agreement and the other Operative Agreements to which they are
party; and (iii) the Investor to enter into the Participation Agreement and the
other Operative Agreements to which it is a party, the Pledgor agrees, for the
benefit of the Lessor, the Agent, for the ratable benefit of the Lenders, and
the Investor and their respective successors and assigns (individually a
"Beneficiary", collectively, the "Beneficiaries") to enter into the Guarantee
 ----------                       -------------
and additionally agrees as follows:

         1.    Defined Terms.  (a) Capitalized terms not otherwise defined
               -------------
herein shall have the meanings set forth on Annex A to the Participation
Agreement dated as of the date hereof among the Lessee, eBay Realty Trust (the
"Lessor"), the Investor, the Agent, and the Lenders.
 ------

          (b)  As used herein, the following terms shall have the following
meanings:

     "Agreement":  this Cash Collateral Agreement, as the same may be amended,
      ---------
modified or otherwise supplemented from time to time.

     "Cash Collateral":  the collective reference to:
      ---------------

     (1)  all cash, instruments, securities, other financial assets and funds
deposited from time to time in the Cash Collateral Account, including, without
limitation, all cash or other money proceeds of any collateral subject to a
security interest for the benefit of the Agent under any Security Document;

     (2)  all investments of funds in the Cash Collateral Account and all
instruments, securities and other financial assets evidencing such investments;
and
<PAGE>

     (3)  all interest, dividends, cash, instruments, securities and other
financial assets and other property received in respect of, or as proceeds of,
or in substitution or exchange for, any of the foregoing; and

     (4)  any security entitlement to any of the foregoing.

     "Cash Collateral Account":  account no. 323143598 and JSD1159477
      -----------------------
established at the office of the Securities Intermediary at 270 Park Avenue, New
York, New York 10017, 37th Floor, Attention: Edmond DeForest, for the Agent as
entitlement holder thereto designated "eBay Cash Collateral Account of the Chase
Manhattan Bank as Agent for certain Lenders and Investor pursuant to that
certain Cash Collateral Agreement dated March 1, 2000 between eBay Inc. and the
Chase Manhattan Bank."

     "Collateral":  the collective reference to the Cash Collateral and the Cash
      ----------
Collateral Account.

     "Permitted Investments" means:
      ---------------------

     (1)  investments in certificates of deposit and time deposits maturing
within 5 years from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, the
domestic office of the Agent; or

     (2)  direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States) and marked to market on a daily basis, in each case
maturing within one year.

     "Secured Obligations":  the collective reference to the Guaranteed
      -------------------
Obligations and all obligations and liabilities of the Pledgor which may arise
under or in connection with this Agreement or any other Operative Agreement to
which the Pledgor is a party, whether on account of reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Agent or to the Beneficiaries that
are required to be paid by the Pledgor pursuant to the terms of this Agreement
or any other Operative Agreement to which the Pledgor is a party).

          (c)  The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.

          (d)  The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

          2.   Grant of Security Interest.  As collateral security for the
               --------------------------
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or
<PAGE>

otherwise) of the Secured Obligations, the Pledgor hereby grants to the Agent,
for the ratable benefit of the Beneficiaries, a security interest in the
Collateral.

          3.  Maintenance of Cash Collateral Account.   (a)  The Cash Collateral
              --------------------------------------
Account shall be maintained until the Secured Obligations have been paid and
performed in full or the Guarantee has been released in accordance with its
terms.

          (b)  The Collateral shall be subject to the exclusive dominion and
control of the Agent, which shall hold the Cash Collateral and administer the
Cash Collateral Account subject to the terms and conditions of this Agreement.
The Pledgor shall have no right of withdrawal from the Cash Collateral Account
nor any other right or power with respect to the Collateral, except as expressly
provided herein.

          (c)  The Cash Collateral Account shall be a "securities account" as
such term is defined in Section 8-501(a) of the UCC. The Securities Intermediary
shall treat the Agent as entitled to exercise the rights that comprise any
financial asset credited to the Cash Collateral Account. All securities or other
property underlying any financial assets credited to the Cash Collateral Account
shall be registered in the name of the Securities Intermediary, indorsed to the
Securities Intermediary or in blank or credited to another securities account
maintained in the name of the Securities Intermediary and in no case will any
financial asset credited to the Cash Collateral Account be registered in the
name of the Pledgor, payable to the order of the Pledgor or specially indorsed
to the Pledgor except to the extent the foregoing have been specially indorsed
to the Securities Intermediary or in blank.

          (d)  The Securities Intermediary hereby agrees that each item of
property (whether investment property, financial asset, security, instrument or
cash) credited to the Securities Account shall be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the UCC.

          4.   Deposit of Funds.  Simultaneously with the execution and
               ----------------
delivery of this Agreement, the Pledgor shall deposit in the Cash Collateral
Account immediately available funds in the amount equal to $126,390,000, or more
if required pursuant to Section 7(a) of this Agreement. Pledgor shall redeposit
such amount or any other amount equal to $126,390,000, or more if required
pursuant to Section 7(a) of this Agreement, in the Cash Collateral Account
within one Business Day if Pledgor obtained a release of the Cash Collateral
pursuant to Section 8(b) and fails to maintain an investment grade rating equal
to or exceeding BBB- from S&P or Baa3 from Moody's.

          5.   Representations and Warranties.  The Pledgor represents and
               ------------------------------
warrants to the Agent that:

          (a)  The Pledgor has the corporate power and authority and the legal
right to execute and deliver, to perform its obligations under, and to grant the
security interest in the Collateral pursuant to, this Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the security interest in the Collateral pursuant
to, this Agreement.
<PAGE>

          (b)  This Agreement constitutes a legal, valid and binding obligation
of the Pledgor enforceable in accordance with its terms and creates in favor of
the Agent a perfected, first priority security interest in the Collateral,
enforceable in accordance with its terms, except in each case as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.

          (c)  The execution, delivery and performance of this Agreement will
not violate any provision of any Requirement of Law or Contractual Obligation of
the Pledgor and will not result in the creation or imposition of any Lien on any
of the properties or revenues of the Pledgor pursuant to any Requirement of Law
or Contractual Obligation of the Pledgor, except as contemplated hereby.

          (d)  No consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder or creditor of the
Pledgor), is required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement.

          (e)  No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor or against any of its properties
or revenues with respect to this Agreement or any of the transactions
contemplated hereby.

          6.   Covenants.  The Pledgor covenants and agrees with the Agent that:
               ---------

          (a)  The Pledgor will not sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral, or
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Collateral, or any interest therein,
except for the security interest created by this Agreement.

          (b)  The Pledgor will maintain the security interest created by this
Agreement as a first, perfected security interest and defend the right, title
and interest of the Agent and the Beneficiaries in and to the Collateral against
the claims and demands of all Persons whomsoever.  At any time and from time to
time, upon the written request of the Agent, and at the sole expense of the
Pledgor, the Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent reasonably
may request for the purposes of obtaining or preserving the full benefits of
this Agreement and of the rights and powers herein granted, including, without
limitation, of financing statements under the UCC.

          7.   Investment of Cash Collateral.  (a)  Subject to the provisions of
               -----------------------------
paragraph, collected funds on deposit in the Cash Collateral Account shall be
invested by the Securities Intermediary from time to time in Permitted
Investments; provided, however, that so long as no Default shall have occurred
             --------  -------
and be continuing, the Securities Intermediary shall make such investments at
the direction of the Pledgor.  If the Pledgor directs the Securities
Intermediary to invest all or a portion of the funds on deposit in the Cash
Collateral Account in obligations permitted under clause (2) of the definition
of Permitted Investments, then the sum of
<PAGE>

all Permitted Investments made under clause (1) of such definition and the
marked to market value (on a daily basis) of the Permitted Investments made
under clause (2) must exceed the sum of the Permitted Investments made under
clause (1) of such definition and the product of 1.01 and the number obtained by
subtracting the sum of Permitted Investments made under clause (1) of such
definition from $126,390,000. The Pledgor shall have one Business Day to cure
any failure to comply with the terms of the foregoing sentence. All investments
shall be made in the name of the Agent or a nominee of the Agent and in a
manner, determined by the Agent in its sole discretion, that preserves the
Agent's perfected, first priority security interest on behalf of the Lenders and
Investor in such investments.

          (b)  The Securities Intermediary shall have no obligation to invest
collected funds during the first night after their collection.

          (c)  The Securities Intermediary shall have no responsibility to the
Pledgor for any loss or liability arising in respect of such investments of the
Cash Collateral (including, without limitation, as a result of the liquidation
of any portion thereof before maturity), except to the extent that such loss or
liability arises from the Securities Intermediary's gross negligence or willful
misconduct. Any Permitted Investment made under clause (1) of the definition of
Permitted Investments shall be a general deposit in the Agent. Any Permitted
Investment made under clause (2) of such definition shall be for the risk and
account of the Pledgor, subject to the provisions of this Agreement.

          (d)  The Pledgor will pay or reimburse the Securities Intermediary for
any and all costs, expenses and liabilities of the Securities Intermediary
incurred in connection with this Agreement, the maintenance and operation of the
Cash Collateral Account and the investment of the Cash Collateral, including,
without limitation, any investment, brokerage or placement commissions and fees
incurred by the Securities Intermediary in connection with the investment or
reinvestment of Cash Collateral, and any investment charges or other fees of
Chase in connection with maintenance of the Cash Collateral Account.

          8.   Release of Cash Collateral.  (a)  Within ten (10) Business Days
               --------------------------
after the end of each calendar quarter, the Securities Intermediary shall
release to the Pledgor Cash Collateral in an amount equal to interest collected
and credited to the Cash Collateral Account in respect of such period.

          (b)  The Securities Intermediary shall release all Cash Collateral to
the Pledgor upon satisfaction of each and all of the following conditions:

          i.   Pledgor obtains an investment grade rating equal to or exceeding
               BBB- from S&P and Baa3 from Moody's; and

          ii.  Pledgor thereafter requests Securities Intermediary and Agent in
               writing to release of all Cash Collateral;

          iii. both (i) the Agent and (ii) Lenders and Investors holding 66 2/3%
               or more of the combined Loans and the Investor Contribution
               approve such request;
<PAGE>

          iv.  Pledgor shall be in compliance with all requirements of Section
               14 of the Lease (including earthquake insurance); and

          v.   Pledgor thereafter opts to release all Cash Collateral if the
               investment grade rating of Pledgor has not changed since such
               request was approved in the foregoing clause (iii).

          (c)  Notwithstanding any other provision of this paragraph, the Agent
shall have no obligation to release Cash Collateral unless each of the following
conditions is satisfied at the time of such release:

          (i)  No Lease Default or Lease Event of Default shall have occurred
               and be continuing or shall result from the release of the Cash
               Collateral; and

          (ii) such release shall not require termination of any investment
               prior to its maturity.

          9.   Remedies.   (a)  Upon the occurrence of a Lease Event of Default,
               --------
the Agent may, without notice of any kind, except for notices required by law
which may not be waived, apply the Collateral, after deducting all reasonable
costs and expenses of every kind incurred in respect thereof or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Agent and the Beneficiaries hereunder,
including, without limitation, reasonable attorneys' fees and disbursements of
counsel to the Agent, to the payment in whole or in part of the Secured
Obligations, in such order as is specified in Section 8.2 of the Credit
Agreement, and only after such application and after the payment by the Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the UCC, need the Agent account for the
surplus, if any, to the Pledgor.  In addition to the rights, powers and remedies
granted to it under this Agreement and in any other agreement securing,
evidencing or relating to the Secured Obligations, the Agent shall have all the
rights, powers and remedies available at law, including, without limitation, the
rights and remedies of a secured party under the UCC.  To the extent permitted
by law, the Pledgor waives presentment, demand, protest and all notices of any
kind and all claims, damages and demands it may acquire against the Agent or any
Beneficiary arising out of the exercise by them of any rights hereunder.

          (b)  The Pledgor waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the UCC.  The Pledgor
shall remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations
and the fees and disbursements of any attorneys employed by the Agent or any
Beneficiary to collect such deficiency.

          10.  Agent's Appointment as Attorney-in-Fact.    (a)  The Pledgor
               ---------------------------------------
hereby irrevocably constitutes and appoints the Agent and any officer or agent
of the Agent, with full power of substitution, as its true and lawful attorney-
in-fact with full irrevocable power and authority in the place and stead of the
Pledgor and in the name of the Pledgor or in the Agent's own name, from time to
time in the Agent's discretion, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents
<PAGE>

and instruments which may be necessary or desirable to accomplish the purposes
of this Agreement, including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.

          (b)  The Pledgor hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
paragraph . All powers, authorizations and agencies contained in this Agreement
are coupled with an interest and are irrevocable until this Agreement is
terminated and the security interests created hereby are released.

          11.  Duty of the Securities Intermediary and the Agent.  The
               -------------------------------------------------
Securities Intermediary's and the Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the UCC or otherwise, shall be to comply with the specific
duties and responsibilities set forth herein.  The powers conferred on the Agent
in this Agreement are solely for the protection of the Agent's and the
Beneficiaries' interests in the Collateral and shall not impose any duty upon
the Agent or any Beneficiary to exercise any such powers.  Neither the Agent nor
any Beneficiary nor its or their directors, officers, employees or agents shall
be liable for any action lawfully taken or omitted to be taken by any of them
under or in connection with the Collateral or this Agreement, except for its or
their gross negligence or willful misconduct.

          12.  Execution of Financing Statements.  Pursuant to Section 9-402 of
               ---------------------------------
the UCC, the Pledgor authorizes the Agent to file financing statements with
respect to the Collateral without the signature of the Pledgor in such form and
in such filing offices as the Agent reasonably determines appropriate to perfect
the security interests of the Agent under this Agreement.  A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.

          13.  Authority of Agent.  The Pledgor acknowledges that the rights and
               ------------------
responsibilities of the Agent under this Agreement with respect to any action
taken by the Agent or the exercise or non-exercise by the Agent of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Agent and the
Beneficiaries, be governed by the Credit Agreement and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Agent and the Pledgor, the Agent shall be conclusively presumed to be acting
as agent for the Beneficiaries with full and valid authority so to act or
refrain from acting, and the Pledgor shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.

          14.  Notices.  All notices, requests and demands to or upon the
               -------
respective parties hereto to be effective shall be given pursuant to the
provisions of Section 13.3 of the Participation Agreement.

          15.  Severability.  Any provision of this Agreement which is
               ------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
<PAGE>

          16.  Amendments in Writing; No Waiver; Cumulative Remedies.    (a)
               -----------------------------------------------------
None of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor, the Agent and the Securities Intermediary, provided that any
                                                        --------
provision of this Agreement may be waived by the Agent and the Beneficiaries in
a letter or agreement executed by the Agent or by telex or facsimile
transmission from the Agent.

          (b)  Neither the Agent nor any Beneficiary shall by any act (except by
a written instrument pursuant to paragraph  hereof) of delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof.  No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Beneficiary, any right, power or
privilege hereunder shall operate as a waiver thereof.  No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Agent or any Beneficiary of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which the
Agent or such Beneficiary would otherwise have on any future occasion.

          (c)  The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

          17.  Section Headings.  The section headings used in this Agreement
               ----------------
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.

          18.  Successors and Assigns.  This Agreement shall be binding upon the
               ----------------------
successors and assigns of the Pledgor and shall inure to the benefit of the
Agent and the Beneficiaries and their successors and assigns.

          19.  Governing Law.  This Agreement shall be governed by, and
               -------------
construed and interpreted in accordance with, the law of the State of New York.
For purposes of the UCC, New York shall be deemed to be the Securities
Intermediary's jurisdiction (and there shall be no contrary agreement of the
Securities Intermediary with the Agent or the Pledgor governing the Cash
Collateral Account and providing for any other such jurisdiction, in either case
without the consent of the Required Lenders) and the Cash Collateral Account (as
well as the securities entitlements related thereto) shall be governed by the
laws of the State of New York.
<PAGE>

          IN WITNESS WHEREOF, the Pledgor, the Agent and the Securities
Intermediary have caused this Cash Collateral Agreement to be duly executed and
delivered as of the date first above written.

                                       eBAY INC.

                                       By:  ___________________________________
                                            Name:
                                            Title:

                                       THE CHASE MANHATTAN BANK, as the Agent

                                       By:  ___________________________________
                                            Name:
                                            Title:

                                       THE CHASE MANHATTAN BANK, as the
                                       Securities Intermediary

                                       By:  ___________________________________
                                            Name:
                                            Title:

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