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Sample Business Contracts

California-San Jose Lease - Sobrato Interests III and Centigram Communications Corp.

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  • Commercial Lease. Start a state-specific lease for the rental of commercial property. Specify the term and rent due, as well as whether the landlord or tenant is responsible for property taxes, insurance, and maintenance and repairs.
  • Commercial Sublease. When a tenant vacates commercial property before the lease term has expired, it may be able to rent the premises to a third party. The tenant would be the sublessor and the third party would be the sublessee. Besides preparing a sublease, both parties will want to review the provisions for assignment or subletting in the original lease agreement between the landlord and the sublessor.
  • Sublease Agreement. Tenants of residential property should prepare a sublease agreement if they are seeking to sublease a room or the entire apartment or house to a third party. All parties should review the original lease agreement to see if there are any restrictions on subletting or assigning the premises.
  • Triple Net Lease. Triple net leases are a type of commercial leases where the tenant has to pay for property taxes, insurance, utilities, and maintenance, in addition to the monthly rent.
  • Office Space Lease. When renting an office space, tenants should understand the amount of the rent and duration of the lease. Other important terms include whether the space can be subleased, which parties are responsible for maintenance, and whether any furniture and furnishings will be provided.

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                                                       INTERIOR PARCEL - EIICHI

SOBRATO                                   10600 N. De Anza Boulevard, Suite 200
DEVELOPMENT                                            Cupertino, CA 95014-2075
COMPANIES                                                        (408) 446-0700
                                                             FAX (408) 446-0583

                              LEASE BETWEEN
      SOBRATO INTERESTS III AND CENTIGRAM COMMUNICATIONS CORPORATION

Section                                                                  Page #
-------                                                                  ------
Parties.......................................................................1
Premises......................................................................1
Use...........................................................................2
Term and Rental...............................................................2
    Rental Adjustment.........................................................2
Security Deposit..............................................................3
Late Charges..................................................................5
Construction and Possession ..................................................5
    Building Shell Construction...............................................5
    Tenant Improvement Plans..................................................5
    Final Building Shell Plans................................................6
    Change Orders.............................................................6
    Construction..............................................................7
    Insurance/Indemnity.......................................................7
    Punch List & Warranty.....................................................8
    Other Work by Tenant......................................................8
    Landlord's Failure to Complete Construction...............................8
Acceptance of Possession and Covenants to Surrender...........................9
Uses Prohibited..............................................................10
Alterations and Additions....................................................10
Maintenance of Premises......................................................11
    Tenant's Obligations.....................................................11
    Landlord's Obligations...................................................12
    Capital Replacements.....................................................12
Hazard Insurance.............................................................12
    Tenant's Use.............................................................12

<PAGE>

    Landlord's Insurance.....................................................12
    Tenant's Insurance.......................................................13
    Waiver...................................................................13
Taxes........................................................................13
Utilities....................................................................14
Abandonment..................................................................14
Free From Liens..............................................................14
Compliance With Governmental Regulations.....................................14
Toxic Waste and Environmental Damage.........................................15
    Tenant's Responsibility..................................................15
    Tenant's Indemnity Regarding Hazardous Materials.........................16
    Actual Release by Tenant.................................................16
    Landlord's Indemnity Regarding Hazardous Materials.......................17
    Environmental Monitoring.................................................17
Indemnity....................................................................17
Advertisements and Signs.....................................................18
Attorney's Fees..............................................................18
Tenant's Default.............................................................18
    Remedies.................................................................19
    Right to Re-enter........................................................19
    Abandonment..............................................................19
    No Termination...........................................................20
Surrender of Lease...........................................................20
Landlord's Default...........................................................20
Notices......................................................................21
Entry by Landlord............................................................21
Destruction of Premises......................................................22
    Destruction by an Insured Casualty.......................................22
    Destruction by an Uninsured Casualty.....................................23
Assignment or Sublease.......................................................23
    Consent by Landlord......................................................23
    Assignment or Subletting Consideration...................................24
    No Release...............................................................24
    Effect of Default........................................................24
    Permitted Transfers......................................................25

                                       Page ii
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Condemnation.................................................................25
Effects of Conveyance........................................................25
Subordination................................................................26
Waiver.......................................................................26
Holding Over.................................................................27
Successors and Assigns.......................................................27
Estoppel Certificates........................................................27
Option to Extend the Lease Term..............................................27
    Grant and Exercise of Option.............................................28
    Determination of Fair Market Rental......................................28
    Resolution of a Disagreement over the Fair Market Rental.................29
Options......................................................................30
Quiet Enjoyment..............................................................30
Brokers......................................................................30
Landlord's Liability.........................................................30
Authority of Parties.........................................................30
Transportation Demand Management programs....................................30
Dispute Resolution...........................................................30
Interference with Use of Premises............................................31
Existing Victorian Home......................................................31
Miscellaneous Provisions.....................................................32
    Rent.....................................................................32
    Management Fee...........................................................32
    Performance by Landlord..................................................32
    Interest.................................................................32
    Rights and Remedies......................................................32
    Survival of Indemnities..................................................32
    Severability.............................................................32
    Choice of Law............................................................32
    Time.....................................................................32
    Entire Agreement.........................................................33
    Representations..........................................................33
    No Presumption Against Drafter...........................................33
    Headings.................................................................33
    Exhibits.................................................................33

                                       Page iii

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Cross-Default................................................................33
EXHIBIT A - Premises, Building & Project.....................................35
EXHIBIT B - Shell Plans and Specifications...................................36
EXHIBIT C - Building Shell Definition........................................37
EXHIBIT D - Tenant Improvement Plans and Specifications......................40


                                        Page iv

<PAGE>

SOBRATO                                   10600 N. De Anza Boulevard, Suite 200
DEVELOPMENT                                            Cupertino, CA 95014-2075
COMPANIES                                                        (408) 446-0700
                                                             FAX (408) 446-0583


1.  PARTIES: THIS LEASE, is entered into on this 20th day of December, 1996, 
between SOBRATO INTERESTS III, a California Limited Partnership, whose 
address is 10600 North De Anza Boulevard, Suite 200, Cupertino, CA 95014 and 
CENTIGRAM COMMUNICATIONS CORPORATION, a Delaware Corporation, whose address 
is 91 East Tasman Drive, San Jose, CA 95134, hereinafter called respectively 
Landlord and Tenant.  The effectiveness of this Lease is expressed 
conditioned upon (i) execution by Landlord and Tenant of the Adjacent 
Building Lease (as defined below), (ii) Tenant's receipt of a recognition and 
non-disturbance agreement in a form and substance reasonably acceptable to 
Tenant from Ground Lessor and from any and all other ground lessors with an 
interest in the Parcel (defined below) and from any and all lenders with a 
lien on the Ground Lease (defined below) or the Parcel, and (iii) Landlord's 
ability to obtain a building permit for construction of a building of not 
less than 100,000 rentable square feet with the number of parking spaces 
required by code.  In the event any of the foregoing conditions have not been 
satisfied or waived by the parties within thirty (30) days following 
execution of this Lease, either Landlord or Tenant shall have the option to 
terminate this lease by providing written notice to the other party.  Upon 
the execution of this Lease, Landlord shall deliver to Tenant a copy of 
Landlord's ground lessee's title insurance policy for the Parcel and, if in 
die possession or control of Landlord, a current preliminary title report for 
the Parcel reflecting the state of title to the Parcel.

    2.   PREMISES: Landlord hereby leases to Tenant, and Tenant hires from 
Landlord those certain Premises with the appurtenances, situated in the City 
of San Jose, County of Santa Clara, State of California, located within a 
four-story steel frame building to be constructed by Landlord consisting of 
approximately 110,881 rentable square feet (the "Building") on a parcel 
leased by Landlord from Eiichi and Suzuye Sakauye ("Ground Lessor") 
consisting of approximately 5.0 acres and an existing historic Victorian home 
consisting of approximately 2,500 rentable square feet (the "Historic Home") 
located at the corner of Guadalupe Parkway and North First Street as outlined 
in red on EXHIBIT "A" ("Parcel").  In addition Tenant shall have the right to 
use the common area consisting of all parking areas, sidewalks and landscape 
areas ("Common Area") surrounding the Building and an additional building of 
110,881 square feet ("Adjacent Building") which Landlord intends to construct 
for Tenant on the adjacent land leased from Kenji and Shizu Sakauye totaling 
approximately 5.0 acres pursuant to another lease between the parties of even 
date herewith ("Adjacent Building Lease").  The Premises, the Adjacent 
Building, the Historic Home and the Common Area shall comprise the "Project". 
 Tenant shall have exclusive use of approximately 370 parking spaces within 
the Parcel.  Unless expressly provided otherwise, the term Premises as used 
herein shall include the Tenant Improvements (defined in Section 7.B) 
constructed by Tenant

                                        Page 1
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pursuant to Section 7.B. Tenant acknowledges Landlord's right to and hereby 
consents to construction of the Adjacent Building.

    3.   USE: Tenant may use the Premises only for the following purposes and 
shall not change the use of the Premises without the prior written consent of 
Landlord: Office, research and development, marketing, light manufacturing, 
storage and other incidental uses.  Landlord makes no representation or 
warranty that any specific use of the Premises desired by Tenant is permitted 
pursuant to any Laws.

    4.   TERM AND RENTAL: The term ("Lease Term") shall be for one hundred 
forty four (144) months, commencing upon the later to occur of (i) two (2) 
months following the date on which Landlord allows Tenant access to the 
Premises to begin construction of the Tenant Improvements pursuant to Section 
7.H, as such two (2) month period is extended by Landlord Delays (hereinafter 
defined), or (ii) substantial completion of the Building Shell, as defined in 
Section 7.D ("Commencement Date"), and ending one hundred forty four (144) 
months thereafter ("Expiration Date").  In addition to all other sums payable 
by Tenant under this Lease, Tenant shall initially pay as base monthly rent 
("Base Monthly Rent") for the Premises in the amount of One Hundred Forty 
Five Thousand One Hundred Twenty Seven and 68/100 Dollars ($145,127.68) 
commencing two (2) months following the Commencement Date as such two (2) 
month period is extended by Landlord Delays (hereinafter defined).  
Commencing twelve (12) months following the Commencement Date, the Base 
Monthly Rent shall increase to One Hundred Forty Nine Thousand Five Hundred 
Sixty Two and 92/100 Dollars ($149,562.92). As used herein, the term 
"Landlord Delays" shall mean delays in Tenant's construction of the Tenant 
Improvements that are caused by Landlord, Landlord's contractors, defects in 
the Building Shell and failure of the Building Shell to conform to the Final 
Building Shell Plans.  Two months prior to the date Landlord reasonably 
estimates the Building Shell will be substantially completed, Landlord shall 
give Tenant written notice and shall exercise its best efforts to allow 
Tenant and its contractor and subcontractors access to the Premises to 
commence construction or installation of the Tenant Improvement Work.  Such 
early access to the Premises shall not be permitted, however, if the same 
would materially delay or interfere with the completion of construction of 
the Building Shell.

Base Monthly Rent shall be due in advance on or before the first day of each 
calendar month during the Lease Term.  All sums payable by Tenant under this 
Lease shall be paid to Landlord in lawful money of the United States of 
America, without offset or deduction and without prior notice or demand, at 
the address specified in Section 1 of this Lease or at such place or places 
as may be designated by Landlord during the Lease Term.  Base Monthly Rent 
for any period less than a calendar month shall be a pro rata portion of the 
monthly installment.

         A.   RENTAL ADJUSTMENT: Beginning thirty (30) months after the 
Commencement Date, and every thirty (30) months thereafter during the initial 
lease term (an "Adjustment Date"), the

                                     Page 2

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then-payable Base Monthly Rent shall be subject to adjustment based on the 
increase, if any, in the Consumer Price Index that has occurred during the 
thirty (30) months preceding the then-applicable Adjustment Date.  The basis 
for computing the adjustment shall be the U.S. Department of Labor, Bureau of 
Labor Statistic's Consumer Price Index for All Urban Consumers, All Items, 
1982-84=100, for the San Francisco-Oakland-San Jose area ("Index").  The 
Index most recently published preceding the Commencement Date for the first 
Adjustment (or previous Adjustment Date, as applicable), shall be considered 
the "Base Index". If the Index most recently published preceding the 
Adjustment Date ("Comparison Index") is greater than the Base Index, the 
then-payable Base Monthly Rent shall be increased by multiplying the 
then-payable Base Monthly Rent by a fraction, the numerator of which is the 
Comparison Index and the denominator of which is the Base Index.  On 
adjustment of the Base Monthly Rent, Landlord shall notify Tenant by letter 
stating the new Base Monthly Rent.  Landlord's failure to adjust Base Monthly 
Rent on an Adjustment Date shall not prevent Landlord from retroactively 
adjusting Base Monthly Rent at any subsequent time during the Lease Term.  If 
the Index base year is changed so that it differs from 1982-84=100, the Index 
shall be converted in accordance with the conversion factor published by the 
United States Department of Labor, Bureau of Labor Statistics. If the Index 
is discontinued or revised during the Lease Term, such other government index 
or computation with which it is replaced shall be used in order to obtain 
substantially the same result as would be obtained if the index had not been 
discontinued or revised.

    5.   SECURITY DEPOSIT: Concurrently with Tenant's execution of this 
Lease, Tenant has deposited with Landlord the sum of One Hundred Forty 
Thousand Dollars ($140,000.00) ("Security "Deposit").  Landlord shall not be 
required to separate the Security Deposit from Landlord's other funds and 
Tenant shall not be entitled to interest on the Security Deposit.  If Tenant 
defaults with respect to any provisions of the Lease, including but not 
limited to the provisions relating to payment of Base Monthly Rent or other 
charges, Landlord may, to the extent reasonably necessary to remedy Tenant's 
default, use any or all of the Security Deposit towards payment of the 
following: (i) Base Monthly Rent or other charges in default; (ii) any other 
amount which Landlord may spend or become obligated to spend by reason of 
Tenant's default; and (iii) any other loss or damage which Landlord may 
suffer by reason of Tenant's default.  If any portion of the Security Deposit 
is so used or applied, Tenant shall, within ten (10) days after written 
demand from Landlord, deposit cash with Landlord in an amount sufficient to 
restore the Security Deposit to its full original amount, and shall pay to 
Landlord such other sums as necessary to reimburse Landlord for any sums paid 
by Landlord.

    The Security Deposit shall be returned to Tenant within thirty (30) days 
after the Expiration Date and surrender of the Premises to Landlord, less any 
amount deducted in accordance with this Section, together with Landlord's 
written notice itemizing the amounts and purposes for such deduction.  In the 
event of termination of Landlord's interest in this Lease, Landlord shall 
transfer the Security Deposit to Landlord's successor in interest.

                                        Page 3
<PAGE>

    At Tenant's election, in lieu of the Security Deposit, Tenant may at any 
time simultaneously with, or following the execution of this Lease, deliver 
to Landlord an irrevocable letter of credit payable in favor of Landlord in 
the amount of One Hundred Forty Thousand Dollars ($140,000).  The letter of 
credit shall provide that it is automatically renewable until the date that 
is not earlier than the expiration of the term hereby demised without any 
action whatsoever on the part of Landlord; provided that the issuing bank 
shall have the right not to renew said letter of credit on written notice to 
Landlord not less than the expiration of the then current term thereof (it 
being understood, however, that the privilege of the issuing bank not to 
renew said letter of credit shall not, in any event, diminish the obligation 
of Tenant to maintain such irrevocable letter of credit with Landlord through 
the expiration of the term hereby demised).

    The form and terms of the letter of credit, and the bank issuing the 
same, shall be reasonably acceptable to Landlord and the letter of credit 
shall provide, among other things, in effect that: (i) Landlord, or its then 
managing agent, shall have the right to draw down an amount up to the amount 
of the sums then due to Landlord under this Lease upon the presentation to 
the issuing bank of Landlord's (or Landlord's then managing agent's) 
statement that such amount is due to Landlord under the terms and conditions 
of this Lease, it is being understood that such statement shall be duly 
signed by a general partner of Landlord; (ii) The letter of credit will be 
honored by the issuing bank without inquiry as to the accuracy thereof and 
regardless of whether the Tenant disputes the content of such statement; 
(iii) In the event of a transfer of Landlord's interest in the Building, 
Landlord shall have the right to transfer the letter of credit to the 
Transferee and the provision hereof shall apply to every transfer or 
assignment of said letter of credit to a new Landlord (or it Tenant is not 
able to obtain a transferable letter of credit, then Tenant shall cause the 
letter of credit to be replaced or amended such that the new Landlord may 
draw).

    If as a result of any such application of all or any part of the proceeds 
of the Letter of Credit, the amount of the lever of credit shall be less than 
$140,000, Tenant shall forthwith provide Landlord with additional letter(s) 
of credit (or a cash security deposit) in an amount equal to the deficiency.  
Any such cash security deposit, and any proceeds of the letter of credit 
which are not applied to sums owed by Tenant to Landlord, shall be held by 
Landlord as a security deposit under the first two paragraphs of this Section 
5.

    Without limiting the generality of the foregoing, if the letter of credit 
expires earlier than sixty (60) days after the expiration of the term of this 
Lease, or the issuing bank notifies Landlord that it shall not renew the 
letter of credit, Landlord will accept a renewal thereof or substitute letter 
of credit (such renewal or substitute letter of credit to be in effect not 
later than the expiration of the expiring letter of credit), irrevocable and 
automatically renewable as above provided upon the same terms as the expiring 
letter of credit or such other terms as may be reasonably acceptable to 
Landlord.  However, (i) if the letter of credit is not timely renewed or a 
substitute letter of credit is

                                        Page 4
<PAGE>

not timely provided, (ii) or if Tenant fails to maintain the letter of credit 
in the amount and terms set forth in this Section 5, Tenant must promptly 
deposit with Landlord cash security in the amounts required by, and to be 
held subject to and in accordance with, all of the terms and conditions set 
forth in the first two paragraphs of this Section 5, failing which the 
Landlord may present such letter of credit to the bank, in accordance with 
the terms of this Section 5, and the entire amount of the letter of credit 
shall be paid to Landlord and shall be held by Landlord as provided in the 
first two paragraphs of this Section 5.

    6.   LATE CHARGES: Tenant hereby acknowledges that late payment by Tenant 
to Landlord of Base Monthly Rent and other sums due hereunder will cause 
Landlord to incur costs not contemplated by this Lease, the exact amount of 
which is extremely difficult to ascertain.  Such costs include but are not 
limited to: administrative, processing, accounting, and late charges which 
may be imposed on Landlord by the terms of any contract,, revolving credit, 
mortgage, or trust deed covering the Premises.  Accordingly, if any 
installment of Base Monthly Rent or other sum due from Tenant shall not be 
received by Landlord or its designee when due, Tenant shall pay to Landlord a 
late charge equal to five (5%) percent of such overdue amount, which late 
charge shall be due and payable on the same date that the overdue amount was 
due.  Landlord agrees to provide Tenant a notice to pay rent or quit if the 
Base Monthly Rent is not received when due and further agrees to waive said 
late charge in the event all amounts set forth in such notice are paid in 
full by cashier's check within five (5) days after Landlord's service upon 
Tenant of such notice.  The parties agree that such late charge represents a 
fair and reasonable estimate of the costs Landlord will incur by reason of 
late payment by Tenant.  Acceptance by Landlord of such late charge shall not 
constitute a waiver of Tenant's default with respect to such overdue amount 
nor prevent Landlord from exercising any of the other rights and remedies 
granted hereunder.

    7.   CONSTRUCTION AND POSSESSION:

         A.   BUILDING SHELL CONSTRUCTION.  Landlord shall cause the shell of 
the Building ("Building Shell") to be constructed by independent contractors 
to be employed by and under the supervision of Landlord's affiliated 
construction company, Sobrato Construction Corporation in accordance with the 
conceptual Building Shell plans and guideline specifications prepared by 
Arctec ("Architect") and approved by Landlord and Tenant, which are attached 
hereto as EXHIBIT "B" ("Preliminary Shell Plans and Specifications") and 
Final Building Shell Plans (defined in subsection 7.C below).  Landlord shall 
construct the Building Shell in accordance with all applicable municipal, 
local, state and federal laws, statutes, rules, regulations and ordinances, 
and shall correct any violations of such laws at no cost to Tenant.  Landlord 
shall pay for all costs and expenses associated with the construction of the 
Building Shell.  The Building Shell shall include those items set forth in 
the attached EXHIBIT "C" ("Building Shell Definition").

         B.   TENANT IMPROVEMENT PLANS.  Tenant, at Tenant's sole cost and 
expense, has also

                                        Page 5

<PAGE>

hired the Architect to prepare plans and outline specifications which will be 
attached hereto upon completion as EXHIBIT "D" ("Tenant Improvement Plans and 
Specifications") with respect to the construction of improvements to the 
interior premises ("Tenant Improvements").  The Tenant Improvements shall 
consist of all items not included within in the scope of the Building Shell 
Definition.  Tenant has hired Permian Builders as the general contractor for 
the Tenant Improvements ("General Contractor").  Tenant shall cause the 
General Contractor to construct the Tenant Improvements in accordance with 
all Tenant Improvement Plans and Specifications. Landlord shall provide 
Tenant a work allowance to be utilized by Tenant for the construction of 
Tenant Improvements ("Work Allowance") in the amount of One Million Six 
Hundred Fifty Thousand and No/100 Dollars ($1,650,000.00). The Work Allowance 
shall be paid by Landlord to Tenant as payments become due to General 
Contractor.  The Tenant Improvements shall become the property of Tenant upon 
installation and shall not be removed or altered by Tenant without the prior 
written consent of Landlord as provided in Section 10.  Tenant shall have the 
right to depreciate and claim and collect any investment tax credits in the 
Tenant Improvements during the Lease Term.  Upon expiration of the Lease Term 
or any earlier termination of the Lease, the Tenant Improvements shall become 
the property of Landlord and shall remain upon and be surrendered with the 
Premises, and title thereto shall automatically vest in Landlord without any 
payment therefore.

         C.   FINAL BUILDING SHELL PLANS.  Within thirty (30) days following 
execution of this Lease, Landlord shall deliver the final Building Shell 
Plans and Specifications for Tenant's review and approval ("Final Building 
Shell Plans").  The Final Building Shell Plans shall include those items set 
forth in the Building Shell Definition attached as EXHIBIT "C" and shall be a 
natural evolution of the Preliminary Building Shell Plans and Specifications 
attached as EXHIBIT "B".  Tenant's approval of the Final Building Shell Plans 
is not a representation or warranty that such improvements illustrated 
therein are in compliance with applicable building codes or the ADA.

         D.   CHANGE ORDERS.  Tenant shall have the right to order changes in 
the manner and type of construction of the Building Shell.  Any change order 
submitted by Tenant after ten (10) days from the date of issuance by the City 
of San Jose of a building permit for the construction of the Building Shell, 
which causes either Landlord's construction schedule to be delayed, shall 
cause the Commencement Date to occur one (1) day in advance of the date the 
Building Shell is Substantially Complete (as defined in Section 7.E) for each 
day of delay. Upon request and prior to Tenant's submitting any binding 
change order, Landlord shall promptly provide Tenant with written statements 
of the cost to implement and the time delay and increased construction costs 
associated with any proposed change order, which statements shall be binding 
on Landlord.  If no time delay or increased construction cost amount is noted 
on the written statement, the parties agree that there shall be no adjustment 
to the construction cost or the Commencement Date associated with such change 
order.  If ordered by Tenant, Landlord shall implement such change order and 
the cost of constructing the Building Shell shall be increased in accordance 
with the cost statement previously

                                        Page 6

<PAGE>

delivered by Landlord to Tenant for any such change order.

         E.   CONSTRUCTION.  Landlord shall use its best efforts to obtain a 
building permit from the City of San Jose as soon as possible after Tenant's 
approval of the Final Building Shell Plans.  The Building Shell shall be 
deemed substantially complete ("Substantially Complete") when (i) the 
Building Shell has been substantially completed in accordance with the Final 
Building Shell Plans, as evidenced by the issuance of a certificate of 
occupancy or its equivalent by the appropriate governmental authority for the 
Building Shell, and the issuance of a certificate by the Architect certifying 
that the Building Shell have been completed in accordance with the Final 
Building Shell Plans and (ii) only punch list type work remains to be 
completed and such punch list work does not materially affect Tenant's 
ability to use the Premises in the manner contemplated by this Lease.

         F.   INSURANCE/INDEMNITY.  Landlord shall indemnify, protect, defend 
and hold Tenant harmless from and against all liability, cost, expense, or 
damage, including attorneys fees, arising from construction of the Building 
Shell; construction defects; or failure to properly construct the Building 
Shell in accordance with the approved Final Building Shell Plans.  Tenant's 
review and approval of plans, specifications, or any other documents shall 
not relieve Landlord from its obligations under the foregoing 
indemnification.  Landlord shall procure a "Broad Form" liability insurance 
policy on an occurrence basis, with a minimum combined single limit in the 
amount of Three Million Dollars ($3,000,000.00), insuring all Landlord's 
construction activities with respect to the Building and Premises naming 
Tenant and Permian Builders as additional insureds and Landlord shall cause 
its general contractor to procure a "Broad Form" liability insurance policy 
on an occurrence basis, with a minimum combined single limit in the amount of 
Three Million Dollars ($3,000,000) insuring all of such general contractors' 
construction activities with respect to the Building and Premises and naming 
Tenant and Permian Builders as additional insureds. Such insurance shall not 
be modified or canceled without thirty (30) days prior notice to Tenant.

    Tenant shall indemnify, protect, defend and hold Landlord harmless from 
and against all liability, cost, expense, or damage, including attorneys 
fees, arising from construction of the Tenant Improvements; construction 
defects; or failure to properly construct the Tenant Improvements in 
accordance with the approved Tenant Improvement Plans and Specifications.  
Landlord's review and approval of plans, specifications, or any other 
documents shall not relieve Tenant from its obligations under the foregoing 
indemnification.  Tenant shall cause General Contractor to procure a "Broad 
Form" liability insurance policy, on an occurrence basis, in a minimum 
combined single limit in the amount of Three Million Dollars ($3,000,000.00), 
insuring all General Contractor's construction activities with respect to the 
Building and Premises naming Landlord and Sobrato Construction Corporation as 
additional insureds.  Such insurance shall not be modified or canceled 
without thirty (30) days prior notice to Landlord.

    Landlord shall also procure (as a cost of the Building Shell) builder's 
risk insurance for the

                                        Page 7

<PAGE>

full replacement cost of the Building Shell and Tenant Improvements while the 
Building and Tenant Improvements are under construction, up until the date 
that the fire insurance policy described in Lease Section 12 is in full force 
and effect.

         G.   PUNCH LIST & WARRANTY.  After the Building Shell is Substantially 
Complete, Landlord shall immediately correct any construction defect or other 
"punch list" item which Tenant brings to Landlord's attention.  All such work 
shall be performed so as to cause the least possible interruption to Tenant 
and its activities on the Premises.  Landlord shall cause its contractor to 
provide a standard contractor's warranty with respect to the Building Shell 
for one (1) year from the Commencement Date and Landlord shall warrant the 
Building Shell against defects in workmanship or material for one (1) year 
from the Commencement Date.  Such warranties shall exclude routine 
maintenance, damage caused by Tenant's negligence or misuse, and acts of God. 
 Landlord shall also promptly correct or cure, after written notice from 
Tenant given from time to time and at no cost to Tenant, any failure of the 
Building Shell to comply with laws in effect as of the date of completion of 
the Building Shell (including, without limitation, building code violations).

         H.   OTHER WORK BY TENANT.  All work not within the scope of work not 
described in the Shell Plans and Specifications shall be furnished and 
installed by Tenant or the General Contractor.  When the construction of the 
Building Shell has proceeded to the point where the construction of the 
Tenant Improvements may begin, Landlord shall notify General Contractor and 
shall permit General Contractor and as authorized representatives and 
contractors access to the Premises before the Commencement Date without the 
payment of rent for the purpose of constructing the Tenant Improvements.  Any 
such installation work by Tenant or its General Contractor shall be 
undertaken upon the following conditions: (i) if the entry into the Premises 
by Tenant or its representatives or contractors interferes with or delays 
Landlord's work, Tenant shall cause the party responsible for such 
interference or delay to leave the Premises; and (ii) any contractor used by 
Tenant or its General Contractor in connection with such entry and 
installation shall use union labor if the use of nonunion labor would disrupt 
Landlord's work when both Landlord and Tenant's contractors are working in 
the Premises.

         I.   LANDLORD'S FAILURE TO COMPLETE CONSTRUCTION:  Notwithstanding the 
foregoing, (i) if the Premises are not Substantially Complete on or before 
that date which is eight (8) months following the date on which Landlord 
obtains a building permit from the City of San Jose allowing Landlord to 
begin construction of the Building, Tenant shall be entitled to rental 
abatement hereunder of one (1) day's rent for each day beyond said eight (8) 
month period in which the Building Shell is not Substantially Complete (i.e., 
the date on which Tenant is required to commence paying rent under this Lease 
shall be extended by one day for each day beyond said eight month period 
during which the Building Shell is not Substantially Complete).  The above 
dates shall be extended one day for every day of delay in completion caused 
by labor strikes, material shortages, inclement weather, Tenant Delays or 
other causes beyond the reasonable control of Landlord ("Force

                                        Page 8

<PAGE>

Majeure Delays"); provided, however, that Landlord must notify Tenant in 
writing within five (5) days after the occurrence of any such Force Majeure 
Delay, and if Landlord does not so notify Tenant in writing, then the 
applicable Force Majeure Delay shall be deemed not to have commenced until 
the date which is five (5) days prior to the date Tenant actually receives 
written notice from Landlord advising Tenant of the applicable Force Majeure 
Delay event.  If the Premises are not Substantially Complete on or before May 
1, 1998 (the "Latest Completion Date"), then Tenant may terminate this Lease 
and the Adjacent Building Lease by written notice to Landlord given on or 
before May 15, 1998.  The Latest Completion Date shall be extended by Tenant 
Delays but not by delays in completion caused by labor strikes, material 
shortages, inclement weather or any other causes beyond the reasonable 
control of Landlord (other than Tenant Delays).  The delay in the 
commencement of rent, the abatement of rent, and termination right provided 
above shall be the sole and exclusive remedies of Tenant with respect by the 
failure by Landlord to achieve Substantial Completion by the Commencement 
Date.

    8.   ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER: On the 
Commencement Date, Landlord shall deliver and Tenant shall accept the 
Premises as being in good and sanitary order, condition and repair, and shall 
accept the Premises and the other improvements in their present condition, 
subject to (i) a reservation of claims of latent defects, (ii) the warranties 
from Landlord contained in this Lease, (iii) Landlord's obligations under 
Section 7.G to correct construction defects, (iv) any failure of the Building 
Shell to comply with laws in effect as of the date of completion, and (v) 
Landlord's obligation to complete punch list items, and (vi) Landlord and its 
general contractor's one (1) year warranties described in Section 7.G above, 
and any other applicable warranties.  Within one hundred twenty (120) days 
after the Commencement Date, Tenant agrees to be in occupancy of at least 
fifty percent (50%) of the rentable square footage of the Premises.

    Tenant further agrees on Expiration Date or on the sooner termination of 
this Lease, to surrender the Premises to Landlord in good condition and 
repair, reasonable wear and tear excepted.  "Good condition" means that all 
interior walls, floors, suspended ceilings, and carpeting within the Premises 
will be cleaned to the same condition as existed at the Commencement Date, 
normal wear and tear and acts of God excepted.  Tenant agrees, at its sole 
cost, to remove all phone and data cabling from the suspended ceiling, repair 
or replace broken ceiling tiles, and relevel the ceiling if required due to 
Tenant's cabling.  On or before the Expiration Date or sooner termination of 
this Lease, Tenant shall remove all its personal property and trade fixtures 
from the Premises.  All property and fixtures not so removed shall be deemed 
as abandoned by Tenant. Approximately sixty (60) days prior to the Expiration 
Date, Landlord shall notify Tenant in writing whether Landlord will require 
the removal of any Alterations made by Tenant to the Premises, except for 
such Alterations Landlord has previously agreed to allow to remain on the 
Premises pursuant to paragraph 10 below.  If Landlord shall so require, 
Tenant shall, at Tenant's sole cost and expense, remove such Alterations as 
Landlord requires and shall repair and restore said Premises or such

                                        Page 9
<PAGE>

parts thereof before the Expiration Date.  Such repair and restoration shall 
include causing the Premises to be brought into compliance with all 
applicable building codes and laws in effect at the time of the removal to 
extent such compliance is necessitated by the repair and restoration work.  
In no event, however, shall Tenant be required to remove any of the Tenant 
Improvements constructed by Tenant prior to its initial occupancy of the 
Premises.  If the Premises are not surrendered at the Expiration Date or 
sooner termination of this Lease in the condition required by this Section 8, 
Tenant shall be deemed in a holdover tenancy pursuant to Section 34, and 
Tenant shall indemnify, defend, and hold Landlord harmless against loss or 
liability resulting from delay by Tenant in so surrendering the Premises 
including, without limitation, any claims made by any succeeding tenant 
founded on such delay.

    9.   USES PROHIBITED:  Tenant shall not commit or suffer to be committed 
on the Premises any waste, nuisance, or other act or thing which disturb the 
quiet enjoyment of any other tenant in or around the   Premises, nor allow 
any sale by auction or any other use of the Premises for an unlawful purpose. 
 Tenant shall not place any loads upon the floor, walls, or ceiling which 
endanger the structure, nor use any machinery or apparatus which harmfully 
vibrate or shake the Premises, nor shall Tenant place any harmful liquids, 
waste materials, or hazardous materials in the drainage system or upon or in 
the soils surrounding the Building.  No materials, supplies, equipment, 
finished products or semi-finished products, raw materials or articles of any 
nature, or any waste materials, refuse, scrap or debris, shall be stored upon 
or permitted to remain on any portion of the Premises outside of the Building 
except in storage enclosures designed for such purposes.

    10.  ALTERATIONS AND ADDITIONS: Tenant shall be entitled without 
obtaining Landlord's consent, to make any alteration or addition to the 
Premises ("Alterations") which (i) does not affect the structure of the 
Building, (ii) cost does not exceed Fifty Thousand Dollars ($50,000.00) per 
alteration nor an aggregate of One Hundred Thousand Dollars ($100,000.00) in 
any twelve (12) month period.  All other Alterations shall require Landlord's 
consent.  If Landlord's consent is required, Tenant shall deliver to Landlord 
the proposed architectural and structural plans for the Alteration and 
Landlord shall have a period of ten (10) business days thereafter to grant 
its consent, which consent shall not be unreasonably withheld.  Landlord 
shall indicate in writing to Tenant at the time of Tenant's request, whether 
or not Landlord will require Tenant to remove such Alteration at the 
Expiration Date.  If, at the time Landlord consents to any Alteration, 
Landlord does not require Tenant to remove such Alteration at the Expiration 
Date, then Landlord shall be deemed to have waived such right to require 
Tenant to remove such Alteration so consented to.  After obtaining Landlord's 
consent, Tenant shall not proceed to make such Alterations until Tenant has 
obtained all required governmental approvals and permits, and provided 
Landlord reasonable security, in form reasonably approved by Landlord, to 
protect Landlord against mechanics' lien claims (if such Alterations exceed 
$1,000,000 in cost).  Tenant agrees to provide Landlord written notice of the 
anticipated and actual start-date of the work, and a complete set of 
half-size (15" X 21") vellum as-built drawings.  All Alterations shall be 
constructed in compliance with applicable buildings codes

                                       Page 10
<PAGE>

and laws.  Any Alterations, except movable furniture and trade fixtures, 
shall become at once a part of the realty and belong to Landlord but shall 
nevertheless be subject to removal by Tenant as provided in this Section 10 
and Section 8 above.  Alterations which are not deemed as trade fixtures 
include heating, lighting, electrical systems, air conditioning, 
partitioning, carpeting, or any other installation which has become an 
integral part of the Premises.  All Alterations shall be maintained, replaced 
or repaired by Tenant at its sole cost and expense.

    11.  MAINTENANCE OF PREMISES:

         A.   TENANT'S OBLIGATIONS: Subject to Sections 11.B, 28 and 30 
below, Tenant shall, at is sole cost, keep, maintain, repair, and replace as 
and when necessary said Premises and appurtenances and every part hereof in 
good and sanitary order, condition, and repair, including but not limited to 
the following: roof membrane, glazing, caulking, sidewalks, parking areas, 
site utilities, elevator, telephone, plumbing, electrical, HVAC systems, and 
all Tenant Improvements.  Notwithstanding the foregoing, Tenant shall have no 
responsibility to perform any repair, maintenance or improvement (i) 
necessitated by the acts or omissions of Landlord or its agents, employees or 
contractors, (ii) occasioned by fire, acts of God or other casualty, whether 
or not covered by insurance, or by the exercise of the power of eminent 
domain, (iii) required as a consequence of any violation of laws or 
construction defect in the Premises existing as of the Commencement Date, or 
(iv) for which Landlord has a right of reimbursement from others.  Tenant 
shall provide Landlord a copy of a service contract between Tenant and: (i) a 
licensed air conditioning and heating contractor providing for bi-monthly 
maintenance of all air conditioning and heating equipment at the Premises; 
and (ii) a licensed elevator maintenance contractor providing for monthly 
maintenance of all elevator related systems. Tenant shall pay the cost of all 
air conditioning, heating, and elevator equipment repairs or replacements 
which are excluded from such service contract or any existing equipment 
warranties.  All wall surfaces and floor tile are to be maintained in an as 
good a condition as when Tenant took possession free of holes, gouges, or 
defacements.

Tenant shall also be responsible, at its sole cost and expense, for the 
preventive maintenance of the membrane of the roof, which responsibility 
shall be deemed properly discharged if Tenant contracts, at its sole cost, 
with a licensed roof contractor reasonably satisfactory to Tenant and 
Landlord to inspect the roof membrane at least every six (6) months, with the 
first inspection due the sixth (6th) month after the Commencement Date; and 
Tenant performs, at Tenant's sole cost, all preventive maintenance 
recommendations made by such contractor within a reasonable time after such 
recommendations are made. Such preventive maintenance might include acts such 
as clearing storm gutters and drains, removing debris from the roof membrane, 
trimming trees overhanging the roof membrane, applying coating materials to 
seal roof penetrations, repairing blisters, and other routine measures.  
Tenant shall provide Landlord a copy of such preventive maintenance contract 
and paid invoices for the recommended work.  Tenant agrees, at its sole cost, 
to water, maintain, and replace

                                       Page 11

<PAGE>

when necessary, any shrubbery and landscaping.

         B.   LANDLORD'S OBLIGATIONS: Landlord at its sole cost and expense, 
shall maintain in good condition, order, and repair, and replace as and when 
necessary, all structural portions of the Building, including, without 
limitation, the foundation, exterior load bearing walls and roof structure of 
the Building Shell.

         C.   CAPITAL REPLACEMENTS: If as a part of Tenant's fulfillment of its 
maintenance obligations under Section 11.A above, a capital improvement or 
replacement to the Premises (not required by new laws, rules or regulations) 
is paid for by Tenant which costs in excess of One Hundred Thousand Dollars 
($100,000.00), Landlord shall, within ten (10) days following receipt of 
written invoices and supporting documentation evidencing costs incurred by 
Tenant, reimburse Tenant for the entire cost of the capital improvement or 
replacement less that portion of the cost equal to the product of such tool 
cost multiplied by a fraction, the numerator of which is the number of years 
remaining in the Lease Term, and the denominator of which is the useful life 
(in years) of the capital improvement or replacement.

    12.  HAZARD INSURANCE:

         A.   TENANT'S USE: Tenant shall not use or permit the Premises, or 
any part thereof, to be used for any purpose other than that for which the 
Premises are hereby leased; and no use of the Premises shall be made or 
permitted, nor acts done, which will cause a cancellation of any insurance 
policy covering the Premises or any part thereof, nor shall Tenant sell or 
permit to be sold, kept, or used in or about the Premises, any article 
prohibited by the standard form of fire insurance policies.  Tenant shall, at 
its sole cost, comply with all reasonable requirements of any insurance 
company or organization necessary for the maintenance of reasonable fire and 
public liability insurance covering the Premises and appurtenances.

         B.   LANDLORD'S INSURANCE: Landlord agrees to purchase and keep in 
force fire, extended coverage, earthquake (at Landlord's election if 
commercially available and required by Landlord's lender), owner's liability, 
and 12-month rental loss insurance.  The amount of the fire, extended 
coverage and earthquake insurance shall equal the replacement cost of the 
Building Shell and Tenant Improvements as determined by Landlord's insurance 
company's appraisers.  Tenant agrees to pay Landlord as additional rent, on 
demand, the full cost of said insurance as evidenced by insurance billings to 
Landlord, and in the event of damage covered by said insurance, the amount of 
any deductible under such policy.  In no event, however, shall Tenant's 
obligation to reimburse Landlord for the deductible exceed $25,000.00. 
Payment shall be due to Landlord within thirty (30) days after written 
invoice to Tenant.  Notwithstanding the foregoing, Tenant's obligation to pay 
the cost of earthquake insurance premiums shall be limited to an amount no 
greater than four (4) times the cost of the fire and extended coverage 
premiums.  It is understood and agreed that Tenant's obligation

                                       Page 12

<PAGE>

under this Section will be prorated to reflect the Lease Commencement and 
Expiration Dates.

         C.   TENANT'S INSURANCE: Tenant agrees, at as sole cost, to insure its 
personal property, Tenant Improvements (for which it has paid from sources 
other than the Work Allowance), and Alterations for their full replacement 
value (without depreciation) and to obtain worker's compensation and public 
liability and property damage insurance for occurrences within the Premises 
with combined limits for bodily injury and property damage of at least 
$1,000,000.00 per occurrence and a general aggregate limit of at least 
$5,000,000.00. Tenant's liability insurance shall be primary insurance 
containing a cross-liability endorsement, and shall provide coverage on an 
"occurrence" rather than on a "claims made" basis.  Tenant shall name 
Landlord and Landlord's lender as an additional insured and shall deliver a 
copy of the policies and renewal certificates to Landlord. All such policies 
shall provide for thirty (30) days' prior written notice to Landlord of any 
cancellation, termination, or reduction in coverage.

         D.   WAIVER: To the extent of the insurance proceeds paid by the 
applicable insurance company, Landlord and Tenant hereby waive all rights 
each may have against the other on account of any loss or damage sustained by 
Landlord or Tenant, as the case may be, or to the Premises or its contents or 
any other property, which may arise from any risk covered by their respective 
insurance policies (or which would have been covered had such insurance 
policies been maintained in accordance with this Lease) as set forth above or 
which are otherwise maintained by Landlord or Tenant.  The parties shall use 
their reasonable efforts to obtain from their respective insurance companies 
a waiver of any right of subrogation which said insurance company may have 
against Landlord or Tenant, as the case may be.

    13.  TAXES: Tenant shall be liable for and shall pay as additional 
rental, prior to delinquency, the following: (i) all taxes and assessments 
levied against Tenant's personal property and trade or business fixtures; 
(ii) all real estate taxes and assessment installments or other impositions 
or charges which may be levied on the Premises or upon the occupancy of the 
Premises, including any substitute or additional charges which may be imposed 
applicable to the Lease Term; and (iii) real estate tax increases due to a 
sale, transfer or other change of ownership of the Premises as it appears on 
the City and County tax bills during the Lease Term.  Tenant's obligation 
under this Section shall be prorated to reflect the Lease Commencement and 
Expiration Dates.  If, at any time during the Lease Term a tax, excise on 
rents, business license tax or any other tax, however described, is levied or 
assessed against Landlord as a substitute or addition, in whole or in part, 
for taxes assessed or imposed on land or Buildings, Tenant shall pay and 
discharge its pro rata share of such tax or excise on rents or other tax 
before it becomes delinquent; except that this provision is not intended to 
cover net income taxes, inheritance, gift or estate tax imposed upon 
Landlord.  In the event that a tax is placed, levied, or assessed against 
Landlord and the taxing authority takes the position that Tenant cannot pay 
and discharge its pro rata share of such tax on behalf of Landlord, then at 
Landlord's sole election, Landlord may increase the Base Monthly Rent by the 
exact amount

                                       Page 13

<PAGE>

of such tax and Tenant shall pay such increase.  Both Landlord and Tenant 
shall have the right to seek a reduction in the assessed value of the 
Premises.  If by virtue of any application or proceeding brought by or on 
behalf of Landlord, there results a reduction in the assessed value of the 
Premises during the Lease Term, Tenant agrees to reimburse Landlord for all 
costs incurred by Landlord in connection with such application or proceeding 
provided such costs do not exceed the present value of the savings.

    14.  UTILITIES: Tenant shall pay directly to the providing utility all 
water, gas, electric, telephone, and other utilities supplied to the 
Premises. Except due to the negligence or willful misconduct of Landlord, 
Landlord shall not be liable for loss of or injury to person or property, 
however occurring, through or in connection with or incidental to furnishing 
or failure to furnish utilities to the Premises, and, except as provided in 
Section 44, Tenant shall not be entitled to abatement or reduction of any 
portion of Base Monthly Rent or any other amount payable under this Lease.

    15.  ABANDONMENT: Tenant shall not abandon the Premises at any time 
during the Lease Term.  In the event Tenant abandons or surrenders the 
Premises or is dispossessed by process of law or otherwise, any personal 
property belonging to Tenant left on the Premises shall be deemed as 
abandoned at the option of Landlord, except such property as may be mortgaged 
to Landlord.

    16.  FREE FROM LIENS: Tenant shall keep the Premises free from all liens 
arising out of work performed, materials furnished, or obligations incurred 
by Tenant or claimed to have been performed for Tenant.  In the event Tenant 
fails to discharge any such lien within twenty (20) days after receiving 
notice of the filing, Landlord shall be entitled to discharge the lien at 
Tenant's expense and all resulting costs incurred by Landlord, including 
attorney's fees shall be due from Tenant as additional rent.

    17.  COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Tenant shall, at its sole 
cost and expense, comply with and faithfully observe in its use of the 
Premises all laws, regulations and other requirements of all Municipal, 
County, State and Federal authorities now in force, or which may hereafter be 
in force, pertaining to Tenant's specific use of the Premises.  The judgment 
of any court of competent jurisdiction or the admission of Tenant in any 
action or proceeding against Tenant (whether Landlord be a party thereto or 
not) that Tenant has violated any such law, regulation or other requirement 
in its use of the Premises shall be conclusive of that fact as between 
Landlord and Tenant.  If any improvement or alteration to the Premises is 
required as a result of any future laws or regulations affecting the Premises 
not related to Tenant's specific use of the Premises, and provided further 
said improvement or alteration is not required because of Alterations made by 
Tenant, the cost of such improvements shall be allocated between Landlord and 
Tenant such that Tenant shall pay to Landlord as additional rent an amount 
determined as follows:

                                       Page 14
<PAGE>

    (a)  all costs reasonably incurred by Landlord to construct such 
improvement shall be fully amortized over the useful life of such improvement 
with interest on the unamortized balance at the prevailing market rate 
Landlord would pay if it borrowed funds to construct such improvements from 
an institutional lender, and Landlord shall inform Tenant of such monthly 
amortization payment required to so amortize such costs, and shall also 
provide Tenant with the information upon which such determination is made; and

    (b)  as additional rent Tenant shall pay the monthly amortization payment 
with respect to any such capital improvement required as a result of any 
future law or regulation affecting the Premises which is not related to 
Tenant's specific use of the Premises as stated above.  Tenant's obligation 
to make payments hereunder with respect to any particular capital improvement 
shall commence when such improvement has been substantially completed and 
shall cease upon the earlier of the expiration of the Lease term (but not 
upon a termination due to any Event of Default on the part of Tenant) or the 
end of the term over which the costs of constructing the particular 
improvement were amortized. Payments of such additional rent required under 
this Section 17 shall be made concurrently with payments of Base Monthly Rent.

    18.  TOXIC WASTE AND ENVIRONMENTAL DAMAGE:

         A.   TENANT'S RESPONSIBILITY: Without the prior written consent of 
Landlord, Tenant shall not bring, use, or permit upon the Premises, or 
generate, create, release, emit, or dispose (nor permit any of the same) from 
the Premises any chemicals, toxic or hazardous gaseous, liquid or solid 
materials or waste, including without limitation, material or substance 
having characteristics of ignitability, corrosivity, reactivity, or toxicity 
or substances or materials which are listed on any of the Environmental 
Protection Agency's lists of hazardous wastes or which are identified in 
Division 22 Title 26 of the California Code of Regulations as the same may be 
amended from time to time ("Hazardous Materials") unless such Hazardous 
Materials are used (i) in compliance with all applicable laws, and (ii) are 
commonly used in connection with general office use.  In order to obtain 
consent, Tenant shall deliver to Landlord its written proposal describing the 
toxic material to be brought onto the Premises, measures to be taken for 
storage and disposal thereof, safety measures to be employed to prevent 
pollution of the air, ground, surface and ground water.  Landlord's approval 
may be withheld in its reasonable judgment. In the event Landlord consents to 
Tenant's use of Hazardous Materials on the Premises, Tenant represents and 
warrants that it will do the following: (i) adhere to all reporting and 
inspection requirements imposed by Federal, State, County or Municipal laws, 
ordinances or regulations and will provide Landlord a copy of any such 
reports or agency inspections; (ii) obtain and provide Landlord copies of all 
necessary permits required for the use and handling Hazardous Materials on 
the Premises; (iii) enforce Hazardous Materials handling and disposal 
practices consistent with industry standards; (iv) surrender the Premises 
free from any Hazardous Materials arising from Tenant's bringing, using, 
permitting, generating, creating, releasing, emitting or disposing of 
Hazardous Materials; and (v) properly close the facility with

                                       Page 15

<PAGE>

regard to Hazardous Materials including the removal or decontamination of any 
process piping, mechanical ducting, storage tanks, containers, or trenches 
which have come into contact with Hazardous Materials and obtain a closure 
certificate from the local administering agency prior to the Expiration Date.

         B.   TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Tenant shall, at
its sole cost, comply with all laws pertaining to, and shall indemnify and 
hold Landlord harmless from, any claims, liabilities, costs or expenses 
incurred or suffered by Landlord arising from the bringing, using, 
authorizing, generating, emitting or disposing of Hazardous Materials by 
Tenant during the Lease Term. Tenant's indemnification and hold harmless 
obligations include, without limitation, the following: (i) claims, 
liability, costs or expenses resulting from or based upon administrative, 
judicial (civil or criminal) or other action, legal or equitable, brought by 
any private or public person under common law or under the Comprehensive 
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 
the Resource Conservation and Recovery Act of 1980 ("RCRA") or any other 
Federal, State, County or Municipal law, ordinance or regulation with respect 
to Hazardous Materials generated or disposed of by Tenant, its agents, 
employees or contractors; (ii) claims, liabilities, costs or expenses 
pertaining to the identification, monitoring, cleanup, containment, or 
removal of Hazardous Materials generated or disposed of by Tenant, its 
agents, employees or contractors from soils, riverbeds or aquifers including 
the provision of an alternative public drinking water source; and (iii) all 
costs of defending such claims.

         C.   ACTUAL RELEASE BY TENANT: Each party agrees to notify the other of
any known lawsuits or order which relate to the remedying of or actual 
release of Hazardous Materials on or into the soils or ground water at or 
under the Premises.  Each party shall also provide the other all notices 
required by Section 25359.7(b) of the Health and Safety Code and all other 
notices required by law to be given in connection with Hazardous Materials.

    In the event of any such release of Hazardous Materials by Tenant, Tenant 
agrees to meet and confer with Landlord and its Lender to attempt to 
eliminate and mitigate any financial exposure to such Lender and resultant 
exposure to Landlord under California Code of Civil Procedure section 736(b) 
as a result of such release, and promptly to take reasonable monitoring, 
cleanup and remedial steps given, inter alia, the historical uses to which 
the Property has and continues to be used, the risks to public health posed 
by the release by Tenant, the then available technology and the costs of 
remediation, cleanup and monitoring, consistent with acceptable customary 
practices for the type and severity of such contamination and all applicable 
laws.  Nothing in the preceding sentence shall eliminate, modify or reduce 
the obligation of Tenant under Section 18.B of this Lease to indemnify and 
hold Landlord harmless from any claims liabilities, costs or expenses 
incurred or suffered by Landlord. Tenant shall provide Landlord prompt 
written notice of Tenant's monitoring, cleanup and remedial steps.

                                       Page 16
<PAGE>

    In the absence of an order of any federal, state or local governmental or 
quasigovernmental agency relating to the cleanup, remediation or other 
response action required by applicable law, any dispute arising between 
Landlord and Tenant concerning Tenant's obligation to Landlord under this 
Section 18.C concerning the level, method, and manner of cleanup, remediation 
or response action required in connection with such a release of Hazardous 
Materials shall be resolved by mediation and/or arbitration pursuant to the 
provisions of Section 45 of this Lease.

         D.   LANDLORD'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Landlord shall
indemnify and hold Tenant harmless from any claims, liabilities, costs or 
expenses incurred or suffered by Tenant related to the removal, 
investigation, monitoring or remediation of Hazardous Materials which are 
present on the Premises as of the Commencement Date or which come to be 
present on the Premises due to the acts of Landlord, its employees, agents or 
contractors.  Landlord's indemnification and hold harmless obligations 
include, without limitation, (i) claims, liability, costs or expenses 
resulting from or based upon administrative, judicial (civil or criminal) or 
other action, legal or equitable, brought by any private or public person 
under common law or under the Comprehensive Environmental Response, 
Compensation and Liability Act of 1980 ("CERCLA"), the Resource Conservation 
and Recovery Act of 1980 ("RCRA") or any other Federal, State, County or 
Municipal law, ordinance or regulation with respect to Hazardous Materials 
generated or disposed of by Landlord, its agents, employees or contractors, 
(ii) claims, liabilities, costs or expenses pertaining to the identification, 
monitoring, cleanup, containment, or removal of Hazardous Materials generated 
or disposed of by Landlord, its agents, employees or contractors from soils, 
riverbeds or aquifers including the provision of an alternative public 
drinking water source, and (iii) all costs of defending such claims.  In no 
event shall Landlord be liable under this Lease for any consequential damages 
suffered or incurred by Tenant as a result of any such contamination.

         E.   ENVIRONMENTAL MONITORING: Provided Landlord (i) gives 
reasonable prior notice (except in case of emergency) and (ii) minimizes its 
interference with Tenant's business, Landlord and its agents shall have the 
right to inspect,  investigate, sample and monitor the Premises including any 
air, soil, water, ground water or other sampling or any other testing, 
digging, drilling or analysis to determine whether Tenant is complying with 
the terms of this Section 18.  If Landlord discovers that Tenant is not in 
compliance with the terms of this Section 18, any such reasonable costs 
incurred by Landlord, including attorneys' and consultants' fees, shall be 
due and payable by Tenant to Landlord within thirty (30) days following 
Landlord's written demand therefore.

    19.  INDEMNITY: As a material part of the consideration rendered to 
Landlord, Tenant hereby waives all claims against Landlord for damages to 
goods, wares and merchandise, and all other personal property in, upon or 
about said Premises and for injuries to persons in or about said Premises, 
from any cause (other than due to the negligence or willful misconduct of 
Landlord, its agents, employees, invitees and contractors) arising at any 
time to the fullest extent permitted by law, and Tenant shall indemnify and 
hold Landlord exempt and harmless from any damage or

                                       Page 17

<PAGE>

injury to any person, or to the goods, wares and merchandise and all other 
personal property of any person, arising from the use of the Premises, 
Building, and/or Project by Tenant, its employees, contractors, agents and 
invitees or from the failure of Tenant to keep the Premises in good condition 
and repair as herein provided, except to the extent due to the negligence or 
willful misconduct of Landlord, its employees, agents, invitees, or 
contractors. Further, in the event Landlord is made party to any litigation 
due to the acts or omission of Tenant, its employees, contractors, agents and 
invitees, Tenant will indemnify and hold Landlord harmless from any such 
claim or liability including Landlord's costs and expenses and reasonable 
attorney's fees incurred in defending such claims.

    20.  ADVERTISEMENTS AND SIGNS:  Tenant will not place or permit to be 
placed, in, upon or about the Premises any signs not approved by the city or 
other governing authority.  Tenant will not place or permit to be placed upon 
the Premises any signs, advertisements or notices without the written consent 
of Landlord as to type, size, design, lettering, coloring and location, which 
consent will not be unreasonably withheld.  Any sign placed on the Premises 
shall be removed by Tenant, at its sole cost, prior to the Expiration Date or 
promptly following the earlier termination of the lease, and Tenant shall 
repair, at its sole cost, any damage or injury to the Premises caused 
thereby, and if not so removed, then Landlord may have same so removed at 
Tenant's expense.

    21.  ATTORNEY'S FEES:  In the event a suit or alternative form of dispute 
resolution is brought for the possession of die Premises, for the recovery of 
any sum due hereunder, to interpret the Lease, or because of the breach of 
any other covenant herein; then the losing party shall pay to the prevailing 
party reasonable attorney's fees including the expense of expert witnesses, 
depositions and court testimony as part of its costs which shall be deemed to 
have accrued on the commencement of such action.  The prevailing party shall 
also be entitled to recover all costs and expenses including reasonable 
attorney's fees incurred in enforcing any judgment or award against the other 
party.  The foregoing provision relating to post-judgment costs is severable 
from all other provisions of this Lease.

    22.  TENANT'S DEFAULT:  The occurrence of any of the following shall 
constitute a material default and breach of this Lease by Tenant: (i) 
Tenant's failure to pay any rent due under this Lease by die date such rent 
is due, which failure continues for ten (10) days after written notice from 
Landlord; (ii) the abandonment of the Premises by Tenant; (iii) Tenant's 
failure to observe and perform any other required provision of this Lease, 
where such failure continues for thirty (30) days after written notice from 
Landlord (provided however, that if the nature of the default is such that it 
cannot reasonably be cured within the 30-day period, Tenant shall not be 
deemed in default if Tenant commences within such period to cure the default 
and thereafter diligently prosecutes the cure to completion); (iv) Tenant's 
making of any general assignment for the benefit of creditors; (v) the filing 
by or against Tenant of a petition to have Tenant adjudged a bankrupt or of a 
petition for reorganization or arrangement under any law relating to 
bankruptcy (unless, in the case of a petition

                                       Page 18
<PAGE>

filed against Tenant, the same is dismissed after the filing); (vi) the 
appointment of a trustee or receiver to take possession of substantially all 
of Tenant's assets located at the Premises or of Tenant's interest in this 
Lease, where possession is not restored to Tenant within thirty (30) days; 
(vii) the attachment, execution or other judicial seizure of substantially 
all of Tenant's assets located at the Premises or of Tenant's interest in 
this Lease, where such seizure is not discharged within thirty (30) days; or 
(viii) an uncured default by Tenant under the Adjacent Building Lease after 
applicable notice has been given and any applicable cure period has expired.  
The notice requirements set forth herein are in lieu of and not in addition 
to the notices required by California Code of Civil Procedure Section 1161.  
Any notice given by Landlord to Tenant pursuant to California Code of Civil 
Procedure 1161 regarding Tenant's failure to pay rent under this Lease by the 
date due shall provide Tenant with a period of at least ten (10) (lays to pay 
such rent or quit.

         A.   REMEDIES:  In the event of any such default by Tenant, then in 
addition to other remedies available to Landlord at law or in equity, 
Landlord shall have the immediate option to terminate this Lease and all 
rights of Tenant hereunder by giving written notice of such intention to 
terminate.  In the event Landlord elects to so terminate this Lease, Landlord 
may recover from Tenant all the following: (i) the worth at time of award of 
any unpaid rent which had been earned at the time of such termination; (ii) 
the worth at time of award of the amount by which the unpaid rent which would 
have been earned after termination until the time of award exceeds the amount 
of such rental loss for the same period that Tenant proves could have been 
reasonably avoided; (iii) the worth at time of award of the amount by which 
the unpaid rent for the balance of the Lease Term after the time of award 
exceeds the amount of such rental loss that Tenant proves could be reasonably 
avoided; (iv) any other amount necessary to compensate Landlord for all 
detriment proximately caused by Tenant's failure to perform its obligations 
under this Lease, or which in the ordinary course of things would be likely 
to result therefrom; and (v) at Landlord's election, such other amounts in 
addition to or in lieu of the foregoing as may be permitted by applicable 
California law.  The term "rent", as used herein, is defined as the minimum 
monthly installments of Base Monthly Rent and all other sums required to be 
paid by Tenant pursuant to this Lease, all such other sums being deemed as 
additional rent due hereunder.  As used in (i) and (ii) above, "worth at the 
time of award" shall be computed by allowing interest at a rate equal to the 
discount rate of the Federal Reserve Bank of San Francisco plus five (5%) 
percent per annum.  As used in (iii) above, "worth at the time of award" 
shall be computed by discounting such amount at the discount rate of the 
Federal Reserve Bank of San Francisco at the time of award plus one (1%) 
percent.

         B.   RIGHT TO RE-ENTER:  In the event of any such default by Tenant, 
Landlord shall have the right, after terminating this Lease, to re-enter the 
Premises and remove all persons and property.  Such property may be removed 
and stored in a public warehouse or elsewhere at the cost of and "or the 
account of Tenant, and disposed of by Landlord in any manner permitted by law.

         C.   ABANDONMENT: If Landlord does not elect to terminate this Lease as
provided in

                                       Page 19

<PAGE>

Section 22.A or 22.B above, then the provisions of California Civil Code 
Section 1951.4, (Landlord may continue the lease in effect after Tenant's 
breach and abandonment and recover rent as it becomes due if Tenant has a 
right to sublet and assign, subject only to reasonable limitations) as 
amended from time to time, shall apply and Landlord may from time to time, 
without terminating this Lease, either recover all rental as it becomes due 
or relet the Premises or any part thereof for such term or terms and at such 
rental or rentals and upon such other terms and conditions as Landlord in its 
sole discretion may deem advisable, with the right to make alterations and 
repairs to the Premises.  In the event that Landlord elects to so relet, 
rentals received by Landlord from such reletting shall be applied in the 
following order to: (i) the payment of any indebtedness other than Base 
Monthly Rent due hereunder from Tenant to Landlord; (ii) the payment of any 
cost of such reletting; (iii) the payment of the cost of any alterations and 
repairs to the Premises necessary to relet the Premises; and (iv) the payment 
of Base Monthly Rent due and unpaid hereunder. The residual rentals, if any, 
shall be held by Landlord and applied in payment of future Base Monthly Rent 
as the same may become due and payable hereunder. In the event the portion of 
rentals received from such reletting which is applied to the payment of rent 
hereunder during any month be less than the rent payable during that month by 
Tenant hereunder, then Tenant shall pay such deficiency to Landlord 
immediately upon demand.  Such deficiency shall be calculated and paid 
monthly.  Tenant shall also pay to Landlord, as soon as ascertained, any 
reasonable costs and expenses incurred by Landlord in such reletting or in 
making such alterations and repairs not covered by the rentals received from 
such reletting.

         D.   NO TERMINATION: Landlord's re-entry or taking possession of the 
Premises pursuant to 22.B or 22.C of this Section 22 shall not be construed 
as an election to terminate this Lease unless written notice of such 
intention is given to Tenant or unless the termination is decreed by a court 
of competent jurisdiction.  Notwithstanding any reletting without termination 
by Landlord because of any default by Tenant, Landlord may at any time after 
such reletting elect to terminate this Lease for any such default.

    23.  SURRENDER OF LEASE:  The voluntary or other surrender of this Lease 
by Tenant, or a mutual cancellation thereof, shall not automatically effect a 
merger of the Lease with Landlord's ownership of the Premises.  Instead, at 
me option of Landlord, Tenant's surrender may terminate all or any existing 
subleases or subtenancies or may operate as an assignment to Landlord of any 
or all such subleases or subtenancies, thereby creating a direct 
Landlord-Tenant relationship between Landlord and any subtenants.

    24.  This paragraph intentionally left blank.

    25.  LANDLORD'S DEFAULT:  In the event of Landlord's failure to perform 
any of its covenants or agreements under this Lease, Tenant shall give 
Landlord written notice of such failure and shall give Landlord thirty (30) 
days to cure or commence to cure such failure prior to any claim

                                       Page 20
<PAGE>

for breach or resultant damages, provided, however, that if the nature of the 
default is such that it cannot reasonably be cured within the 30-day period, 
Landlord shall not be deemed in default if it commences within such period to 
cure, and thereafter diligently prosecutes the same to completion.  Further 
in the event that this Lease is terminated due to an uncured default by 
Landlord, Tenant shall also have the right to terminate the Adjacent Building 
Lease after written notice and expiration of any applicable cure period.  
Upon any such failure by Landlord, Tenant shall also give notice by 
registered or certified mail to any person or entity with a security interest 
in the Premises ("Mortgagee") that has provided Tenant with notice of its 
interest in the Premises, and shall provide Mortgagee a reasonable 
opportunity to cure such failure, including such time to obtain possession of 
the Premises by power of sale or judicial foreclosure, if such should prove 
necessary to effectuate a cure.  Tenant agrees that each of the Mortgagees to 
whom this Lease has been assigned is an expressed third-party beneficiary 
hereof.  Tenant shall not make any prepayment of rent more than one (1) month 
in advance without the prior written consent of Mortgagee.  Tenant waives any 
right under California Civil Code Section 1950.7 or any other present or 
future law to the collection of any payment or deposit from Mortgagee or any 
purchaser at a foreclosure sale of Mortgagee's interest unless Mortgagee or 
such purchaser shall have actually received and not refunded the applicable 
payment or deposit.

    26.  NOTICES:  All notices, demands, requests, or consents required to be 
given under this Lease shall be sent in writing by U.S. certified mail, 
return receipt requested, overnight delivery by a reputable carrier, or by 
personal delivery addressed to the party to be notified at the address for 
such party specified in Section 1 of this Lease, or to such other place as 
the party to be notified may from time to time designate by at least fifteen 
(15) days prior notice to the notifying party.

    27.  ENTRY BY LANDLORD: Landlord (i) shall not enter the Premises without 
first giving twenty-four (24) hours notice to Tenant of such entry except in 
the case of emergency, (ii) shall be accompanied by an employee of Tenant at 
all times while in the Premises, (iii) shall comply with Tenant's security 
procedures applicable to the Premises, and (iv) shall not unreasonably 
interfere with Tenant's use of the Premises.  Provide the foregoing 
conditions are satisfied, Tenant shall permit Landlord and his agents to 
enter into and upon the Premises at all reasonable times, and without any 
rent abatement (except as otherwise provided in Section 45) or reduction or 
any liability to Tenant for any loss of occupation or quiet enjoyment of the 
Premises thereby occasioned, for the following purposes: (i) inspecting and 
maintaining the Premises; (ii) making repairs, alterations or additions to 
the Premises; (iii) to construct the Adjacent Building; and (iv) performing 
any obligations of Landlord under the Lease including remediation of 
hazardous materials if determined to be the responsibility of Landlord.  If 
Landlord or its agents, employees or contractors are negligent in connection 
with or during any such entry, or if any such entry unreasonably interferes 
with Tenant's use of the Premises, then subject to Section 41 below, Landlord 
shall be liable therefore.  Tenant shall permit Landlord and his agents, at 
any time within one hundred eighty (180) days prior to the Expiration Date 
(or at any time during the Lease if Tenant is in default hereunder after 
notice

                                       Page 21
<PAGE>

and expiration of any applicable cure period), to place upon the Premises 
"For Lease" signs and exhibit the Premises to real estate brokers and 
prospective tenants subject to the conditions contained in this Section 27.

    28. DESTRUCTION OF PREMISES:

         A.   DESTRUCTION BY AN INSURED CASUALTY: In the event of a 
destruction of the Premises during the Lease Term by a casualty for which 
Landlord has received insurance proceeds sufficient to repair the damage or 
destruction, Landlord shall repair the same to the extent of such proceeds.  
Such destruction shall not annul or void this Lease; however, Tenant shall be 
entitled to a proportionate reduction of Base Monthly Rent commencing on the 
date of damage or destruction and continuing while repairs are being made, 
such proportionate reduction to be based upon the extent to which the repairs 
or damage interferes with Tenant's business in the Premises, as reasonably 
determined by Landlord. Within sixty (60) days after any damage or 
destruction of the Premises, Landlord shall notify Tenant in writing of 
Landlord's estimate of the time required to repair the damage or destruction, 
and if Landlord estimates that the repairs cannot be made in 180 days from 
the date of receipt of all governmental approvals necessary under the laws 
and regulations of State, Federal, County or Municipal authorities, as 
reasonably determined by Landlord, or if the repairs actually take longer 
than said 180 day period, then Tenant may terminate this Lease within fifteen 
(15) days of Landlord's notice or the expiration of the 180 day period as 
applicable.  Landlord shall use reasonable efforts to promptly obtain all 
governmental approvals and permits required for the repairs. Notwithstanding 
the foregoing, either Landlord or Tenant shall have the option to terminate 
the Lease in the event of a total destruction of the Premises or in the event 
of a partial destruction occurs in the last year of the Lease Term and will 
take more than sixty (60) days to repair; provided, however, that if the 
partial destruction occurs after Tenant shall have exercised its Option under 
Section 37 below or if Tenant exercises its Option under Section 37 within 
twenty days following the event of partial damage or destruction, then the 
last year of the Lease Term shall be deemed to be the last year of the Option 
Term. In no event shall Landlord be required to replace or restore 
Alterations, Tenant's fixtures or personal property.  With respect to a 
destruction which Landlord is obligated to repair or may elect to repair 
under the terms of this Section, Tenant waives the provisions of Section 
1932, and Section 1933, Subdivision 4, of the Civil Code of the State of 
California, and- any other similarly enacted statute, and the provisions of 
this Section 28 shall govern in the case of such destruction.

    In the event that this Lease is terminated as the result of damage or 
destruction and any insurance proceeds are payable to Landlord, Landlord 
shall deliver to Tenant a portion of such insurance proceeds equal to the 
portion of the costs of the Tenant Improvements paid for by Tenant ("Tenant's 
Contribution") that remains unamortized as of the date this Lease is 
terminated (calculated by amortizing Tenant's Contribution on a straight-line 
basis over the initial term of this Lease, or if the termination occurs after 
Tenant exercises its Option under Section 37 below, then

                                       Page 22

<PAGE>

calculated by amortizing Tenant's Contribution on a straight-line basis over 
the term of this Lease, as so extended); provided, however, that Landlord's 
obligation to pay such insurance proceeds to Tenant shall be subject and 
subordinate to any obligation that Landlord may have to apply such insurance 
proceeds to any loans made to Landlord for the construction of the Building 
Shell which are secured by the Building Shell and the Ground Lease.

         B.   DESTRUCTION BY AN UNINSURED CASUALTY: In the event of a 
destruction of the Premises during the Lease Term by a casualty for which 
Landlord will not received insurance proceeds sufficient to repair the damage 
or destruction (except for any deductible amount) and Tenant has not elected 
to contribute the shortfall (excluding any deductible amount payable by 
Landlord), the Lease shall automatically terminate unless (i) Landlord elects 
to rebuild, and (ii) the damage can be repaired within one hundred eighty 
(180) days from the date of receipt of all governmental approvals necessary 
under the laws and regulations of State, Federal, County or Municipal 
authorities, as reasonably determined by Landlord and communicated to Tenant 
in writing within sixty (60) days after the damage or destruction.

    29.  ASSIGNMENT OR SUBLEASE:

         A.   CONSENT BY LANDLORD: Except as specifically provided in this 
Section 29, Tenant may not assign, sublet, hypothecate, or allow a third 
party to use the Premises without the express written consent of Landlord 
which shall not be unreasonably withheld or delayed.  In the event Tenant 
desires to assign this Lease or any interest herein including, without 
limitation, a pledge, mortgage or other hypothecation, or sublet the Premises 
or any part thereof, Tenant shall deliver to Landlord executed counterparts 
of any agreement and of all ancillary agreements with the proposed 
assignee/subtenant, and a notice containing the name and address of the 
proposed assignee/subtenant, proposed use of the Premises, rental rate and 
current financial statement.  At Landlord's request, Tenant shall also 
provide additional information reasonably required by Landlord to determine 
whether it will consent to the proposed assignment or sublease.  Landlord 
shall have a ten (10) day period following receipt of all the foregoing 
within which to notify Tenant in writing that Landlord elects to: (i) permit 
Tenant to assign or sublet such space to the named assignee/subtenant on the 
terms and conditions set forth in the notice; or (ii) refuse consent.  If 
Landlord should fail to notify Tenant in writing of such election within the 
10-day period, Landlord shall be deemed to have elected option (ii) above.  
In the event Landlord elects option (i) above, Landlord's written consent to 
the proposed assignment or sublease shall not be unreasonably withheld, 
provided and upon the condition that: (i) the proposed assignee or subtenant 
is engaged in a business that is limited to the use expressly permitted under 
this Lease; (ii) the proposed assignee or subtenant is a company with 
sufficient financial worth and management ability to undertake the financial 
obligation of this Lease and Landlord has been furnished with reasonable 
proof thereof; (iii) the proposed assignment or sublease is in form 
reasonably satisfactory to Landlord; (iv) Tenant reimburses Landlord on 
demand for any reasonable costs that may be incurred by Landlord in

                                       Page 23
<PAGE>

connection with said assignment or sublease, including the costs of making 
investigations as to the acceptability of the proposed assignee or subtenant 
and legal costs incurred in connection with the granting of any requested 
consent; and (v) Tenant shall not have advertised or publicized in any way 
the availability of the Premises without prior notice to Landlord.  In the 
event all or any one of the foregoing conditions are not satisfied, Landlord 
shall be considered to have acted reasonably if it withholds its consent.

         B.   ASSIGNMENT OR SUBLETTING CONSIDERATION: Any rent or other economic
consideration realized by Tenant under any sublease and assignment, in excess 
of the rent payable hereunder and reasonable subletting and assignment costs 
(which shall include without limitations, all tenant improvement costs 
expended for the subtenant, attorney's fees and brokerage commissions), shall 
be divided and paid fifty percent (50%) to Landlord and fifty percent (50%) 
to Tenant.  Tenant's obligation to pay over Landlord's portion of the 
consideration constitutes an obligation for additional rent hereunder.  The 
above provisions relating to Landlord's right to terminate the Lease and 
relating to the allocation of bonus rent are independently negotiated terms 
of the Lease which constitute a material inducement for the Landlord to enter 
into the Lease, and are agreed by the parties to be commercially reasonable.  
No assignment or subletting by Tenant shall relieve it of any obligation 
under this Lease.  Any assignment or subletting which conflicts with the 
provisions hereof shall be void.

         C.   NO RELEASE: Notwithstanding any such sublease or assignment and 
the acceptance of rent by Landlord from any subtenant or assignee, Tenant and 
any guarantor shall remain fully liable for the payment of Base Monthly Rent 
and additional rent due, and to become due hereunder, for the performance of 
all the covenants, agreements, terms, provisions and conditions contained in 
this Lease on the part of Tenant to be performed and for all acts and 
omissions of any licensee, subtenant, assignee or any other person claiming 
under or through any subtenant or assignee that shall be in violation of any 
of the terms and conditions of this Lease, and any such violation shall be 
deemed a violation by Tenant.  Tenant shall indemnify, defend and hold 
Landlord harmless from and against all losses, liabilities, damages, costs 
and expenses (including reasonable attorney fees) resulting from any claims 
that may be made against Landlord by the proposed assignee or subtenant or by 
any real estate brokers or other persons claiming compensation in connection 
with the proposed assignment or sublease.

         D.   EFFECT OF DEFAULT: In the event of Tenant's default, Tenant hereby
assigns all rents due from any assignment or subletting to Landlord as 
security for performance of its obligations under this Lease, and Landlord 
may collect such rents as Tenant's Attorney-in-Fact, except that Tenant may 
collect such rents unless a default occurs as described in Section 22 and 24 
above and such default is continuing.  A Lease termination due to Tenant's 
default shall not automatically terminate an assignment or sublease then in 
existence; rather at Landlord's election, such assignment or sublease shall 
survive the Lease termination, the assignee or subtenant shall attorn to 
Landlord,

                                       Page 24

<PAGE>

and Landlord shall undertake the obligations of Tenant under the sublease or 
assignment; except that Landlord shall not be liable for prepaid rent, 
security deposits or other debuts of Tenant to the subtenant or assignee, or 
for any acts or omissions of Tenant, its agents, employees, contractors or 
invitees.

         E.   PERMITTED TRANSFERS: Tenant may, without Landlord's prior written 
consent, sublet the Premises or assign the Lease to: (i) a subsidiary, 
affiliate, division or corporation controlled or under common control with 
Tenant; (ii) a successor corporation related to Tenant by merger, 
consolidation, non-bankruptcy reorganization, or government action; or (iii) 
a purchaser of substantially all of Tenant's assets, provided, however, that 
the sublessee or assignee has a net worth sufficient to meet is obligations 
under this Lease ("Permitted Transferees").  For the purpose of this Lease, 
sale of Tenant's capital stock through any public exchange shall not be 
deemed an assignment, subletting, or any other transfer of the Lease or the 
Premises.

    30.  CONDEMNATION: If any part of the Premises shall be taken for any 
public or quasipublic use, under any statute or by right of eminent domain or 
private purchase in lieu thereof, and only a part thereof remains which is 
susceptible of occupation hereunder, this Lease shall, as to the part so 
taken, terminate as of the day before the vests in the condemnor or purchaser 
("Vesting Date") and Base Monthly Rent payable hereunder shall be adjusted so 
that Tenant is required to pay for the remainder of the Lease Term only such 
portion of Base Monthly Rent as the value of the part remaining after such 
taking bears to the value of the entire Premises prior to such taking; but in 
such event Tenant shall have the option to terminate this Lease as of the 
Vesting Date if the portion remaining is no longer suitable for Tenant's 
intended use.  If all of the Premises or such part thereof be taken so that 
there does not remain a portion susceptible for occupation hereunder, this 
Lease shall terminate on the Vesting Date.  If part or all of the Premises be 
taken, all compensation awarded upon such taking shall go to Landlord, and 
Tenant shall have no claim thereto; but Landlord shall cooperate with Tenant, 
without cost to Landlord, to recover compensation for damage to or taking of 
any Alterations, Tenant Improvements paid for by Tenant from sources other 
than the Work Allowance, or for Tenant's moving costs.  Tenant hereby waives 
the provisions of California Code of Civil Procedures Section 1265.130 and 
any other similarly enacted statue, and the provisions of this Section 30 
shall govern in the case of such taking.

    31.  EFFECTS OF CONVEYANCE: As used in this Lease, the term "Landlord" is 
defined only as the owner for the time being of the Premises, so that in the 
event of any sale or other conveyance of the Premises or in the event of a 
master lease of the Premises, Landlord shall be entirely freed and relieved 
of all its covenants and obligations hereunder to the extent such obligations 
accrue after the date of said sale or master lease, and only to the extent 
the purchaser or master lessee agrees in writing to assume the obligations of 
Landlord hereunder arising after said sale or master lease, and it shall be 
deemed and construed, without further agreement between the parties and the 
purchaser at any such sale or the master tenant of the Premises, that the 
purchaser or

                                       Page 25

<PAGE>

master tenant of the Premises has assumed and agreed to carry out any and all 
covenants and obligations of Landlord hereunder.  Such transferor shall 
transfer and deliver Tenant's security deposit to the purchaser at any such 
sale or the master tenant of the Premises, and thereupon the transferor shall 
be discharged from any further liability in reference thereto.

    32.  SUBORDINATION: Subject to the recognition and nondisturbance 
agreements described in Section 1, this Lease is subject and subordinate to 
ground and underlying leases, mortgages and deeds of trust (collectively 
"Encumbrances") which may now affect the Premises, to any covenants, 
conditions or restrictions of record, and to all renewals, modifications, 
consolidations, replacements and extensions thereof; provided, however, if 
the holder or holders of any such Encumbrance ("Holder") require that its 
Lease be prior and superior thereto, within seven (7) days after written 
request of Landlord to Tenant, Tenant shall execute, have acknowledged and 
deliver all documents or instruments, in the reasonable form presented to 
Tenant, which Landlord or Holder deems necessary or desirable for such 
purposes.  Landlord shall have the right to cause this Lease to be and become 
and remain subject and subordinate to any and all Encumbrances which are now 
or may hereafter be executed covering the Premises or any renewals, 
modifications, consolidations, replacements or extensions thereof, for the 
full amount of all advances made or to be made thereunder and without regard 
to the time or character of such advances, together with interest thereon and 
subject to all the terms and provisions thereof, on the condition that the 
Holder delivers to Tenant a non-disturbance agreement providing that in the 
event of termination of any such lease or upon the foreclosure of any such 
mortgage or deed of trust, the Holder agrees to recognize Tenant's rights 
under this Lease as long as Tenant is not then in default and continues to 
pay Base Monthly Rent and additional rent and observes and performs all 
required provisions of this Lease (in each case, after notice and the 
expiration of any applicable cure period).  Within fifteen (15) days after 
Landlord's written request, Tenant shall execute any reasonable documents 
required by Landlord or the Holder to make this Lease subordinate to any lien 
of the Encumbrance provided Tenant shall have received a Nondisturbance 
Agreement from the Holder of the applicable Encumbrance.  If Tenant fails to 
do so, then in addition to such failure constituting a default by Tenant it 
shall be deemed that this Lease is so subordinated to such Encumbrance 
provided Tenant shall have received a Nondisturbance Agreement from the 
Holder of the applicable Encumbrance.  Notwithstanding anything to the 
contrary in this Section, Tenant hereby attorns, and agrees to attorn. to any 
entity purchasing or other-wise acquiring the Premises at any sale or other 
proceeding or pursuant to the exercise of any other rights, powers or 
remedies under such encumbrance.

    33.  WAIVER: The waiver by Landlord or Tenant of any breach of any term, 
covenant or condition, herein contained shall not be deemed to be a waiver of 
such term, covenant or condition or any subsequent breach of the same or any 
other term, covenant or condition herein contained.  The subsequent 
acceptance of rent hereunder by Landlord shall not be deemed to be a waiver 
of any preceding breach by Tenant of any term, covenant or condition of this 
Lease, other than the failure of Tenant to pay the particular rental so 
accepted, regardless of Landlord's knowledge of such

                                       Page 26

<PAGE>

preceding breach at the time of acceptance of such rent.  No payment by 
Tenant or receipt by Landlord of a lesser amount than any installment of rent 
due shall be deemed to be other than payment on account of the amount due.  
No delay or omission in the exercise of any right or remedy by Landlord or 
Tenant shall impair such right or remedy or be construed as a waiver thereof 
by the non-defaulting party.  No act or conduct of Landlord, including, 
without limitation, the acceptance of keys to the Premises, shall constitute 
acceptance of the surrender of the Premises by Tenant before the Expiration 
Date (only written notice from Landlord to Tenant of acceptance shall 
constitute such acceptance of surrender of the Premises).  Landlord's consent 
to or approval of any act by Tenant which require Landlord's consent or 
approvals shall not be deemed to waive or render unnecessary Landlord's 
consent to or approval of any subsequent act by Tenant.

    34.  HOLDING OVER: Any holding over after the termination or Expiration 
Date with Landlord's consent, shall be construed as month-to-month tenancy, 
terminable on thirty (30) days written notice from either party, and Tenant 
shall pay as Base Monthly Rent to Landlord a rate equal to one hundred thirty 
three percent (133%) of the Base Monthly Rent due in the month preceding the 
termination or Expiration Date, plus all other amounts payable by Tenant 
under this Lease.  Any holding over shall otherwise be on the terms and 
conditions herein specified, except those provisions relating to the Lease 
Term and any options to extend or renew, which provisions shall be of no 
further force and effect following the expiration of the applicable exercise 
period.  Tenant shall indemnify, defend, and hold Landlord harmless from all 
loss or liability (including, without limitation, any loss or liability 
resulted from any claim against Landlord made by any succeeding tenant) 
resulting from Tenant's failure to timely surrender the Premises to Landlord 
and losses to Landlord due to lost opportunities to lease the Premises to 
succeeding tenants.

    35.  SUCCESSORS AND ASSIGNS: Subject to the provisions of Section 29, the 
covenants and conditions of this Lease shall apply to and bind the heirs, 
successors, executors, administrators and assigns of all parties hereto; and 
all parties hereto shall be jointly and severally liable hereunder.

    36.  ESTOPPEL CERTIFICATES: At any time during the Lease Term, Landlord 
or Tenant shall, within fifteen (15) days following written notice from the 
other, execute and deliver a written statement certifying, if true, the 
following: (i) that this Lease is unmodified and in full force and effect 
(or, if modified, stating the nature of such modification); (ii) the date to 
which rent and other charges are paid in advance, if any; (iii) acknowledging 
that there are not, to the party's knowledge, any uncured defaults (or 
specifying such defaults if they are claimed); and (iv) such other 
information as may be reasonably requested. Any such statement may be 
conclusively relied upon by a third party.  Tenant agrees to provide, within 
twenty (20) days of Landlord's request, Tenant's most recent annual report 
and latest quarterly reports.

    37.  OPTION TO EXTEND THE LEASE TERM:

                                       Page 27
<PAGE>    

        A.   GRANT AND EXERCISE OF OPTION: Landlord grants to Tenant, subject 
to the terms and conditions set forth in this Section, the option (the 
"Option") to extend the Lease Term for an additional term (the "Option Term") 
of one hundred twenty (120) months.  The Option shall be exercised, if at 
all, by written notice to Landlord no earlier than eighteen (18) months prior 
to the Expiration Date but no later than twelve (12) months prior to the 
Expiration Date. Tenant's ability to exercise the Option is expressly 
conditioned on Tenant's exercise of its option to extend the Adjacent 
Building Lease.  If Tenant exercises the Option, all of the terms, covenants 
and conditions of this Lease except this Section shall apply during the 
Option Term as though the expiration date of the Option Term was the date 
originally set forth herein as the Expiration Date, provided that the terms 
of EXHIBIT B shall not apply to the Option Term and Tenant shall not have any 
obligation in connection with the Option Term to make or pay for any tenant 
improvements and provided, further, that Base Monthly Rent for the Premises 
payable by Tenant during the Option Term shall be the greater of either (i) 
the Base Monthly Rent applicable to the period immediately prior to the 
commencement of the Option Term, or (ii) ninety five percent (95%) of the 
Fair Market Rental as hereinafter defined.  Notwithstanding anything herein 
to the contrary, if Tenant is in monetary or material non-monetary default 
under any of the terms, covenants or conditions of this Lease either at the 
time Tenant exercises the Option or as the commencement date of the Option 
Term (after notice and expiration of any applicable cure period), Landlord 
shall have, in addition to all of Landlords other rights and remedies 
provided in this Lease, the right to terminate the Option upon notice to 
Tenant, in which event the expiration date of this Lease shall be and remain 
the Expiration Date.  As used herein, the term "Fair Market Rental" is 
defined as the rental and all other monetary payments, including any 
escalations and adjustments thereto (including without limitation Consumer 
Price Indexing) that Landlord could obtain during the Option Term from a 
third party desiring to lease the Premises, based upon the current use and 
other potential uses of the Premises under or permitted by this Lease, as 
determined by the rents then being obtained for new leases of space 
comparable in age and quality to the Premises in the locality of the 
Building.  The parties hereto agree that in calculating the Fair Market 
Rental of the Premises, the value of all Tenant Improvements and Alterations 
paid for solely by Tenant shall not be taken into consideration.  The parties 
further agree that the appraisers shall be instructed that the foregoing five 
percent (5%) discount is intended to reduce comparable rents which include 
(i) brokerage commissions, (ii) tenant improvement allowances, and (iii) 
vacancy costs, to account for the fact that Landlord will not suffer such 
costs in the event Tenant exercises its Option.

        B.   DETERMINATION OF FAIR MARKET RENTAL: If Tenant exercises the 
Option, Landlord shall send Tenant a notice setting forth the Fair Market 
Rental for the Option Term within thirty (30) days following the Exercise 
Date.  If Tenant disputes Landlord's determination of Fair Market Rental for 
the Option Term, Tenant shall, within thirty (30) days after the date of 
Landlord's notice setting forth Fair Market Rental for the Option Term, send 
to Landlord a notice stating that Tenant either elects to terminate its 
exercise of the Option, in which event the Option shall lapse and this Lease

                                       Page 28
                                           
<PAGE>    

shall terminate on the Expiration Date, or that Tenant disagrees with 
Landlord's determination of Fair Market Rental for the Option Term and elects 
to resolve the disagreement as provided in Section 37.C below.  If Tenant 
does not send Landlord a notice as provided in the previous sentence, 
Landlord's determination of Fair Market Rental shall be the basis for 
determining the Base Monthly Rent payable by Tenant during the Option Term.  
If Tenant elects to resolve the disagreement as provided in Section 37.C and 
such procedures are not concluded prior to the commencement date of the 
Option Term, Tenant shall pay to Landlord as Base Monthly Rent the Fair 
Market Rental as determined by Landlord in the manner provided above.  If the 
Fair Market Rental as finally determined pursuant to Section 37.C is greater 
than Landlord's determination, Tenant shall pay Landlord the difference 
between the amount paid by Tenant and the Fair Market Rental as so determined 
in Section 37.C within thirty (30) days after such determination.  If the 
Fair Market Rental as finally determined in Section 37.C is less than 
Landlord's determination, the difference between the amount paid by Tenant 
and the Fair Market Rental as so determined in Section 37.C shall be credited 
against the next installments of rent due from Tenant to Landlord hereunder.

        C.   RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL: Any 
disagreement regarding Fair Market Rental shall be resolved as follows:

             1.   Within thirty (30) days after Tenant's response to 
Landlord's notice setting forth the Fair Market Rental, Landlord and Tenant 
shall meet at least two (2) times at a mutually agreeable time and place, in 
an attempt to resolve the disagreement.

             2.   If within the 30-day period referred to above, Landlord and 
Tenant cannot reach agreement as to Fair Market Rental, each party shall 
select one appraiser to determine Fair Market Rental.  Each such appraiser 
shall arrive at a determination of Fair Market Rental and submit their 
conclusions to Landlord and Tenant within thirty (30) days after the 
expiration of the 30-day consultation period described above.

             3.   If only one appraisal is submitted within the requisite 
time period, it shall be deemed as Fair Market Rental.  If both appraisals 
are submitted within such time period and the two appraisals so submitted 
differ by less than ten percent (10%), the average of the two shall be deemed 
as Fair Market Rental.  If the two appraisals differ by more than 10%, the 
appraisers shall immediately select a third appraiser who shall, within 
thirty (30) days after his selection, make and submit to Landlord and Tenant 
a determination of Fair Market Rental.  This third appraisal will then be 
averaged with the closer of the two previous appraisals and the result shall 
be Fair Market Rental.

             4.   All appraisers specified pursuant to this Section shall be 
members of the American Institute of Real Estate Appraisers with not less 
than ten (10) years experience appraising office and industrial properties in 
the Santa Clara Valley.  Each party shall pay the cost of the appraiser 
selected by such party and one-half of the cost of the third appraiser.

                                       Page 29


<PAGE>    


    38.  OPTIONS: In the event Tenant has multiple options to extend this 
Lease, a later option to extend the Lease cannot be exercised unless the 
prior option has been so exercised.

    39.  QUIET ENJOYMENT: Upon Tenant's faithful and timely performance of 
all the terms and covenants of the Lease and except as otherwise provided in 
this Lease, Tenant shall quietly have and hold the Premises for the Lease 
Term and any extensions thereof.

    40.  BROKERS: Landlord and Tenant represent they have not utilized or 
contacted a real estate broker or finder with respect to this Lease other 
than BT Commercial and each party agrees to indemnify, defend and hold the 
other harmless against any claim, cost, liability or cause of action asserted 
by any other broker or finder.

    41.  LANDLORD'S LIABILITY: If Tenant recovers a money judgment against 
Landlord arising in connection with this Lease, the judgment shall be 
satisfied only out of (i) all rents and profits from the Parcel, (ii) 
Landlord's interest in the Parcel, and (iii) Landlord's insurance and 
interest in any insurance proceeds and neither Landlord nor any of its 
partners, officers, directors, agents, trustees, shareholders or employees 
shall be liable personally for any deficiency.  Tenant expressly waives all 
rights to proceed against the individual partners or the officers, directors 
or shareholders of any corporate partner, except to the extent of their 
interest in said limited partnership.

    42.  AUTHORITY OF PARTIES: Tenant represents and warrants that it is duly 
formed and in good standing, and is duly authorized to execute and deliver 
this Lease on behalf of said corporation, in accordance with a duly adopted 
resolution of the Board of Directors of said corporation or in accordance 
with the by-laws of said corporation, and that this Lease is binding upon 
said corporation in accordance with its terms.  Landlord represents and 
warrants that it is duly formed and in good standing, and is duly authorized 
to execute and deliver this Lease on behalf of said partnership, and that 
this Lease is binding upon said partnership in accordance with its terms.  At 
Landlord's request, Tenant shall provide Landlord with corporate resolutions 
or other proof in a form acceptable to Landlord, authorizing the execution of 
the Lease.

    43.  TRANSPORTATION DEMAND MANAGEMENT PROGRAMS: Should a government 
agency or municipality require Landlord or Tenant to institute a TDM 
(Transportation Demand Management) program, Tenant agrees to pay the cost or 
expenses associated with such TDM programs which are required for the 
Premises.

    44.  DISPUTE RESOLUTION: Except for the Tenant's failure to timely pay Base
Monthly Rent, any controversy, dispute, or claim of whatever nature arising out
of, in connection with, or in relation to the interpretation, performance or
breach of this Lease, including any claim based on

                                       Page 30


<PAGE>    


contract, tort, or statute, shall be resolved at the request of any party to 
this agreement through a two-step dispute resolution process administered by 
JAMS or another judicial and mediation service mutually acceptable to the 
parties involving first mediation, followed, if necessary, by final and 
binding arbitration administered by and in accordance with the then-existing 
rules and practice of the judicial and mediation service selected, and 
judgment upon any award rendered by the arbitrator(s) may be entered by any 
State or Federal Court having jurisdiction thereof.

    45.  INTERFERENCE WITH USE OF PREMISES: If the Premises should become 
unsuitable for Tenant's use as a consequence of (i) die presence of any 
Hazardous Material which does not result from Tenant's use, storage or 
disposal of such material in violation of applicable Law, or (ii) as the 
result of a cessation of utilities not caused by Tenant or from a casualty, 
which persists for seventy two (72) consecutive hours or which is caused by 
Landlord, ("Interfering Event") then Tenant shall be entitled to an abatement 
of rent to the extent of the interference with Tenant's use of the Premises 
occasioned thereby from the date of the Interfering Event, and, if such 
interference cannot be corrected or the damage resulting therefrom repaired 
so that the Premises will be reasonably suitable for Tenant's intended use 
within one hundred eighty (180) days following the occurrence of the 
Interfering Event, then Tenant shall be entitled to terminate ads Lease by 
delivery of written notice to the other within five (5) days following the 
expiration of such one hundred eighty (180) day period.

    46.  EXISTING VICTORIAN HOME: Landlord agrees to relocate the Historic 
Home onto the Parcel in the location shown in Exhibit "A" and remodel or 
improve the interior and exterior of the Historic Home in compliance with the 
conditions set forth by the City of San Jose and all applicable municipal, 
local, state and federal laws, statutes, rules, regulations and ordinances to 
allow Tenant to utilize the Historic Home for general office/conference uses 
and Tenant shall have the right under this Lease to utilize the Historic Home 
for such purposes. The cost of the improvements to the Historic Home shall be 
paid by Landlord and Tenant as follows: (i) Landlord shall pay the cost to 
relocate the Home (which scope of work is outlined in EXHIBIT "E") and the 
first Two Hundred Twelve Thousand Dollars ($212,000.00) of improvement costs, 
(ii) Tenant shall pay the next Fifty Thousand Dollars ($50,000.00) of 
improvement costs (if necessary), and (iii) Landlord shall pay any remaining 
improvement costs (if necessary).

    The Historic House shall be considered part of the Premises for all 
purposes under this Lease except that me portion of the Base Monthly Rent 
applicable to the Historic House shall be $3,200 per month (as provided in 
Section it above and subject to escalation pursuant to Section 4.B) and the 
provisions of Section 4 of this Lease to the contrary notwithstanding, 
Tenant's obligation to pay Base Monthly Rent for the Historic House shall not 
commence until the later of (i) the date the Historic House has be relocated, 
remodeled and improved by Landlord as provided in this Section 46 above, or 
(ii) the date two (2) months following the Commencement Date of the Lease as 
such two month period is extended by Landlord Delays as described in Section 
4 of the Lease. Landlord shall

                                       Page 31
                                           
<PAGE>    


use commercially reasonable efforts to complete the relocation and 
improvement of the Historic House prior to the Commencement Date.

    47. MISCELLANEOUS PROVISIONS:

         A.   RENT: All monetary sums due from Tenant to Landlord under this 
Lease, including, without limitation those referred to as "additional rent", 
shall be deemed as rent.

         B.   MANAGEMENT FEE: During the Lease Term commencing two months 
following the Commencement Date, Tenant shall pay Landlord a fee of two 
percent (2%) of the Base Monthly Rent to reimburse Landlord for property 
management costs related to the Project.

         C.   PERFORMANCE BY LANDLORD: If Tenant fails to perform any 
obligation required under this Lease or by law or governmental regulation, 
Landlord in its sole discretion may, after giving Tenant at leak thirty (30) 
days prior written notice, without waiving any rights or remedies and without 
releasing Tenant from its obligations hereunder, perform such obligation, in 
which event Tenant shall pay Landlord as additional rent all sums paid by 
Landlord in connection with such substitute performance, including interest 
as provided in Section 47.D below within ten (10) days of Landlord's written 
notice for such payment.

         D.   INTEREST: All sums due hereunder, if not paid by Tenant or 
Landlord within thirty (30)  days after they are due, shall bear interest at 
the maximum rate the parties are permitted to contract for under California 
law, accruing from the date due until the date paid.

         E.   RIGHTS AND REMEDIES: All rights and remedies hereunder are 
cumulative and not alternative to the extent permitted by law, and are in 
addition to all other rights and remedies in law and in equity.

         F.   SURVIVAL OF INDEMNITIES: All indemnification, defense, and hold 
harmless obligations of Landlord and Tenant under this Lease shall survive 
the expiration or sooner termination of the Lease.

         G.   SEVERABILITY: If any term or provision of this Lease is held 
unenforceable or invalid by a court of competent jurisdiction, the remainder 
of the Lease shall not be invalidated thereby but shall be enforceable in 
accordance with its terms, omitting the invalid or unenforceable term.

         H.   CHOICE OF LAW: This Lease shall be governed by and construed in 
accordance with California law.  Venue shall be Santa Clara County.

         I.   TIME: Time is of the essence hereunder.

                                             Page 32

<PAGE>    


         J.   ENTIRE AGREEMENT: This Lease contains all of the agreements and 
conditions made between the parties hereto and may not be modified orally or 
in any other manner other than by written agreement signed by all parties 
hereto or their respective successors in interest.  This Lease supersedes and 
revokes all previous negotiations, letters of intent, lease proposals, 
brochures, agreements, representations, promises, warranties, and 
understandings, whether oral or in writing, between the parties or their 
respective representatives or any other person purporting to represent 
Landlord or Tenant.

         K.   REPRESENTATIONS: Except as expressly provided in this Lease, 
Tenant acknowledges that neither Landlord nor any of its employees or agents 
have made any agreements, representations, warranties or promises with 
respect to the Premises or with respect to present or future rents, expenses, 
operations, tenancies or any other matter.  Except as herein expressly set 
forth herein, Tenant relied on no statement of Landlord or its employees or 
agents for that purpose.

         L.   NO PRESUMPTION AGAINST DRAFTER: Landlord and Tenant understand, 
agree and acknowledge that this Lease has been freely negotiated by both 
parties; and that in any controversy, dispute, or contest over the meaning, 
interpretation, validity, or enforceability of this Lease or any of its terms 
or conditions, there shall be no inference, presumption, or conclusion drawn 
whatsoever against either party by virtue of that party having drafted this 
Lease or any portion thereof.

         M.   HEADINGS: The headings or titles to the Sections of this Lease 
are not a part of this Lease and shall have no effect upon the construction 
or interpretation of any part thereof.

         N.   EXHIBITS: All exhibits referred to are attached to this Lease 
and incorporated by reference.

    48.  CROSS-DEFAULT.  If this Lease is terminated as the result of a 
default by Landlord or Tenant or the exercise by Landlord or Tenant of any 
right to terminate given to Landlord or Tenant under this Lease (other than a 
right to terminate exercised by Landlord or Tenant with respect to damage to 
or destruction of the Premises), then subject to the provisions of Section 
28.A concerning the payment by Landlord to Tenant of the unamortized cost of 
the Tenant Improvements paid for by Tenant, the non-defaulting party may 
elect to terminate the Adjacent Lease by giving written notice of such 
termination to the other party concurrently with, or within ten (10) business 
days after, the termination of this Lease.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day 
and year first above written.

LANDLORD: SOBRATO INTERESTS III                TENANT: CENTIGRAM COMMUNICATIONS
                                                       CORP.
                                       Page 33


<PAGE>    


a California Limited Partnership               a Delaware Corporation
                                           
By: /s/ signature unreadable                   By: /s/ signature unreadable
    ------------------------                       ------------------------
Its: General Partner                           Its: President & CEO





                                       Page 34
                                           

<PAGE>

                 EXHIBIT "A" - PREMISES, BUILDING & PROJECT NOT SHOWN

                                   IMAGE NOT SHOWN





                                       Page 35
                                           

<PAGE>

                     EXHIBIT "B" - SHELL PLANS AND SPECIFICATIONS
                          (SHEET REFERENCES TO BE ATTACHED)
                                           



ARCHITECTURAL DRAWINGS


SHEET NO.     SHEET NAME

A0.1          Project Information and Notes
A1.0          Site Plan
A2.0A         Building One - First Level Floor Plan
A2.1A         Building One - Second Level Floor Plan
A2.2A         Building One - Third Level Floor Plan
A2.3A         Building One - Fourth Level Floor Plan
A2.4A         Building One - Roof Plan
A2.5B         Building Two - First Level Floor Plan
A2.6B         Building Two - Second Level Floor Plan
A2.7B         Building Two - Third Level Floor Plan
A2.8B         Building Two - Fourth Level Floor Plan
A2.9B         Building Two - Roof Plan
A3.0A         Building One - North and South Exterior Elevations
A3.1A         Building One - East and West Exterior Elevations
A3.2B         Building Two - East and West Exterior Elevations
A3.38         Building Two - North and South Exterior Elevations
A4.0          Wall Sections
A4.1          Wall Sections
A4.2          Wall Sections
A4.3          Wall Sections
A6.0          Detail Stair Floor Plans
A6.1          Stair Details
A6.2          Stair Sections and Details

CIVIL DRAWINGS

C-1           Topographical Survey
C-2           Preliminary Grading Plan


                                       Page 36
                                           
<PAGE>

STRUCTURAL DRAWINGS

S1            Horne House Foundation Plans and Details
S2.0          Building One Foundation Plan
S2.1          Building One - Second Floor Framing Plan
S2.2          Building One - Third Floor Framing Plan
S2.3          Building One - Fourth Floor Framing Plan
S3.1          Building One - Braced Frame Elevations
S3.2          Typical Structural Details
S6.l          Wall Sections
S6.2          Wall Sections
S6.3          Wall Sections
S6.4          Wall Sections
S3.1          Panel Elevations
S3.2          Panel Elevations
S3.3          Panel Elevations
S4.0          Foundation Details

ELECTRICAL DRAWINGS

SE.1          Site Electrical Plan
E.1a          Building One - First Level Power Plan
E1.b          Building Two - First Level Power Plan
E2.a          Building One a Second Level Power Plan
E2.b          Building Two - Second Level Power Plan

LANDSCAPE DRAWINGS

L1.1          General Landscape Notes and Legend
Ll.2          Plant List and Planting Notes
L2.1          Irrigation Site Plan
L4.l          Planting Site Plan
L6.1          Landscape Details
L7.1          Fountain Plan, Notes and Details

                                           
<PAGE>

                  EXHIBIT "C" - BUILDING SHELL DEFINITION
                                           
The Building Shell shall be a four -story steel frame structure with 90% of 
the perimeter containing glass.  The Building Shell shall include the 
following items:

1.  BUILDING STRUCTURE

    (a)  All foundations to include footings, piers, caissons, pilings, grade 
beams, foundation walls or other  building foundation components required to 
support the building structure.

    (b)  Five inch (5") thick concrete slab on grade with below grade vapor 
barrier and welded wire mesh and any other reinforcing or structural 
connections that may be necessary or required as specified by structural 
engineer.

    (c)  Complete structural framing system comprised of rolled steel or pipe 
columns, light weight braced-frame steel structure with corrugated metal deck 
and concrete toping over and openweb bar joist and girder floor support 
system, all members fireproofed as required by code.  Floor support system 
shall provide for a minimum of 120 pounds per square foot live load.

    (d)  Tinted high performance glass with Robertson composite metal panels 
including required caulking and sealants.  Four (4) exterior double doors, 
door closers and locking devices as necessary.

    (e)  Four (4) ply built up roofing with cap sheet by Owens-Corning, John 
Manville, or equal and all flashings over a rigid insulated corrugated metal 
deck roof system.

    (f)  Exterior painting of any concrete with Tex-Coat or Kel-Tex textural 
paint, all caulking of exterior concrete joints in preparation for painting.

    (g)  Two (2) steel fire stairs at perimeter of building One ship ladder 
to roof of building with roof hatch.

    (h)  Mechanical roof screen.

    (i)  Loading area with grade level access with hydraulic scissors lift
external of building.

    (j)  penetrations of the roof and floor for the mechanical ducting and for
the elevators (elevator penetrations to accommodate two hydraulic passenger
elevators at the core and one freight elevator near the dock area)

    (k)  Riser for Building sprinkler system (no sprinkler grid or drops)


                                       Page 37
                                           
<PAGE>


2.  SITEWORK

    (a)  All work outside the building perimeter walls shall be considered 
site work for the Building Shell and shall include grading, asphalt concrete, 
paving, landscaping, landscape irrigation, storm drainage, utility service 
laterals, curbs, gutters, sidewalks, specialty paving (if required, i.e. 
reinforced roadway section to truck doors), retaining walls, planters, trash 
enclosure, parking lot and landscape lighting and other exterior lighting per 
code. Landscape design to include screen dining patio (no furniture) and 
three flag poles with bases.

    (b)  Paving sections for automobile and truck access shall be according to
the Geologic Soils Report

    (c)  All parking lot striping to include handicap spaces and signage.

    (d)  Underground site storm drainage system shall be connected to the city
storm system main.

3.  PLUMBING

    (a)  Underground sanitary sewer laterals connected to the city sewer main 
in the street and stubbed to the core of the building.

    (b)  Domestic water mains connected to the city water main in the street 
and stubbed to the building.

    (c)  Roof drain leaders and downspouts piped and connected to the site 
storm drainage system.

    (d)  Gas lines connected to the city or public utility mains and run to 
gas meters adjacent to, and in close proximity to the building.  Meter 
supplied by utility company.

4.  ELECTRICAL

    (a)  A primary electrical raceway service from the street to the 
building, including underground conduit, wire feeders, and transformer pads.  
Transformer supplied by utility company.  Underground conduits and secondary 
feeders from transformer pads into the building.

    (b)  4" Underground conduit from the street to the building for telephone 
trunk lines by Pacific Telephone.

                                       Page 38
                                           
<PAGE>

    (c)  An electrically operated landscape irrigation system, with 
controller, that is a complete and functioning system.

    (e)  Underground conduit from the building to the main fire protection 
system post indicator valve (PIV) for installation of supervisory alarm 
wiring.

    (f) Telephone and data conduits between the Building and the Adjacent 
Building

All other costs shall be deemed Tenant Improvements.

                                       Page 39
                                          
<PAGE>

            EXHIBIT "D" - TENANT IMPROVEMENT PLANS AND SPECIFICATIONS
                          (SHEET REFERENCES TO BE ATTACHED)


                                           

                                       Page 40
                                           
<PAGE>


                                           
                      EXHIBIT "E" - HISTORIC HOME RELOCATION SCOPE
                          (SHEET REFERENCES TO BE ATTACHED)
                                           
[LOGO]
                          HORNE HOUSE RELOCATION ACTIVITIES
                                           


In conjunction with the development of Centigram's Headquarters Facility at 
North First and Guadalupe Parkway, the develop will relocate the historic 
Horne House to a new location on the development site.  Those activities, 
that the developer will perform at his cost, not subject to deduce from the 
improvement allowances agreed to in the lease, are outlined below.

RELOCATION-DEVELOPER COST


    1.   Preparation of pathway for transit of house from existing location to
         new location.

    2.   Preparation and placement of foundation for the new house.  The new
         configuration will eliminate the basement and cause the house floor
         structure to be positioned within 18" of the ground (crawl space).

    3.   Extension of utility services in the house for its reconnection, to
         include sanitary sewer, water, electricity, and telephone conduit.
         Should the City require that the relocated structure have fire
         sprinklers installed, the fire sprinkler main would also be extended
         to the house perimeter.

    4.   The physical move of the house and its placement on the new foundation.

    5.   Patching and repair/restoration of any damage to the house caused by
         the move process, i.e. patching any holes in the side walls caused by
         placement of support beams under or over the structure and repair of
         walls, floor and roof in the event that the house is divided into
         sections in order to facilitate its move.

    6.   Demolition and removal of the old foundation, site improvements and
         terminated utility services.

    7.   Any other items required by the City as part of the relocation
         activity, excluding external/internal improvements.


                                    Page 41
<PAGE>