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California-Walnut Creek-2121 North California Boulevard Lease - California Plaza of Walnut Creek Inc. and Electronic Arts Inc.

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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.
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                                  OFFICE LEASE

                                    between


                    CALIFORNIA PLAZA OF WALNUT CREEK, INC.,

                      a Florida not-for-profit corporation
                                   (Landlord)

                                      and

                             ELECTRONIC ARTS, INC.

                             a Delaware corporation
                                    (Tenant)

<PAGE>

                               TABLE OF CONTENTS

                                  OFFICE LEASE

Article    Title                                                            Page
-------    -----                                                            ----

1          Definitions                                                        1
2          Premises                                                           4
3          Lease Term                                                         5
4          Rental                                                             9
5          Security Deposit                                                  17
6          Use of Premises                                                   17
7          Utilities and Services                                            19
8          Maintenance and Repairs                                           22
9          Alterations, Additions and Improvements                           22
10         Indemnification and Insurance                                     25
11         Damage or Destruction                                             28
12         Condemnation                                                      29
13         [Intentionally Deleted]                                           29
14         Assignment and Subletting                                         30
15         Default and Remedies                                              33
16         Attorneys' Fees; Costs of Suit                                    36
17         Subordination and Attornment                                      37
18         Quiet Enjoyment                                                   39
19         Rules and Regulations                                             39
20         Estoppel Certificates                                             39
21         Entry by Landlord                                                 40
22         Landlord's Lease Undertakings; Transfer of Landlord's Interest    40
23         Holdover Tenancy                                                  41
24         Notices                                                           42
25         Brokers                                                           42
26         Communications and Computer Lines                                 42
27         Parking                                                           43
28         Miscellaneous                                                     44

                                    EXHIBITS

Exhibit "A"        Floor Plan
Exhibit "B"        Work Letter Agreement
Exhibit "C"        Rules and Regulations
Exhibit "D"        Suite Acceptance Letter
Exhibit "E"        Special Suite 600 Period Operating Expenses
Exhibit "F"        Schedule of Janitorial Specifications

                                      (i)
<PAGE>

                                  OFFICE LEASE

         THIS  OFFICE  LEASE  ("Lease"),  dated  for  reference  purposes  as of
February 1, 2001,  is made and entered into by and between  CALIFORNIA  PLAZA OF
WALNUT  CREEK,  lNC.,  a Florida  not-for-profit  corporation  ("Landlord")  and
ELECTRONIC ARTS,  INC., a Delaware  corporation  ("Tenant"),  upon the following
terms and conditions:

                                   ARTICLE 1
                                  DEFINITIONS

         Unless the context otherwise specifies or requires, the following terms
shall have the meanings specified herein;

         1.01  Building.  The term  "Building"  means the  office  building  and
related common areas located at 2121 North California  Boulevard,  Walnut Creek,
California  94956 and  commonly  known as  CALIFORNIA  PLAZA  together  with any
related  land,  improvements,   parking  facilities,  common  areas,  driveways,
sidewalks and landscaping.

         1.02 Premises. The term "Premises" means Suite 600 (consisting of Suite
600, and the former Suites 680 and 690) on the sixth (6th) floor of the Building
(hereinafter  together  referred to as "Suite 600") and Suite 700 on the seventh
(7th) floor of the Building),  all as more particularly  outlined on the drawing
attached hereto as Exhibit "A" and incorporated  herein by reference.  Provided,
however, the Premises do not include any storage area in the Building,  any such
storage  area used by Tenant will be the  subject of a separate  lease or rental
agreement.

         1.03 Net Rentable Area of Building;  Rentable Area of the Premises. The
phrase "Net  Rentable  Area of the  Building"  means three  hundred  sixty eight
thousand two hundred ninety (368,290) rentable square feet. The phrase "Rentable
Area of the Premises"  shall mean a total of  seventy-nine  thousand two hundred
thirty two (79,232) rentable square feet as follows:

         (A) With  respect  to  Suite  600,  forty-two  thousand  three  hundred
ninety-eight (42,398) rentable square feet, and

         (B) With  respect  to Suite  700,  thirty-six  thousand  eight  hundred
thirty-four (36,834) rentable square feet.

Landlord and Tenant  hereby  stipulate  and agree as to the Net Rentable Area of
the  Building  and  the  Rentable  Area  of the  Premises,  and  any  subsequent
remeasurement of the Building or the Premises shall not affect Tenant's monetary
obligations under this Lease.  Tenant acknowledges that the Net Rentable Area of
the  Building and the  Rentable  Area of the Premises  includes the usable area,
without  deduction  for columns or  projections,  multiplied by a load factor to
reflect  a share  of  certain  areas,  which  may  include  lobbies,  corridors,
mechanical, utility, janitorial, boiler and service rooms and closets, restrooms
and other public, common and service areas of the Building.

                                       1
<PAGE>

         1.04 Initial  Lease Term;  Lease Year.  The phrase  "Lease Term" and/or
"Initial Lease Term" shall mean the period between the Commencement Date and the
Expiration  Date  (as  such  terms  are  hereinafter  defined),   unless  sooner
terminated as otherwise  provided in this Lease.  Each  consecutive  twelve (12)
month period  following the  Commencement  Date shall constitute a "Lease Year."
The Initial Lease Term shall consist of eight (8) Lease Years.

         1.05 Commencement Date. The "Commencement Date" means February 1, 2001.

         1.06 Expiration Date. The "Expiration Date" means the date which is the
last  day of the  eighth  (8th)  Lease  Year  (the  "Expiration  Date").  On the
Expiration Date, the Initial Lease Term will terminate and expire.

         1.07 Monthly Base Rent. Subject to adjustment as provided in Article 4,
the phrase  "Monthly Base Rent" shall be in the monthly amounts set forth below,
and shall be due and owing on the first  (1st)  day of each  month  during  each
Lease Year of the Initial Lease Term:

                                        Monthly      Monthly        Total
                                        Base Rent    Base Rent      Monthly
Lease Year                              Suite 600    Suite 700      Base Rent
----------                              ---------    ---------      ---------

First Lease Year:
        2/1/01 - 7/31/01:                $61,577.24 + $122,657.22 = $184,234.46
        8/1/01 - 11/30/01:               $62,287.34 + $122,657.22 = $184,944.56
       12/1/01 - 1/31/02:                $62,749.04 + $122,657.22 = $185,406.26

Second Lease Year:
        2/1/02 - 11/30/02:               $62,749.04 + $127,563.51 = $190,312.55
       12/1/02 - 1/31/03:               $141,185.34 + $127,563.51 = $268,748.85

Third Lease Year (2/1/03 - 1/31/04):    $146,832.75 + $132,666.05 = $279,498.80

Fourth Lease Year (2/1/04 - 1/31/05):   $152,706.06 + $137,972.69 = $290,678.75

Fifth Lease Year (2/1/05 - 1/31/06):    $158,814.31 + $143,491.59 = $302,305.90

Sixth Lease Year (2/1/06 - 1/31/07):    $165,166.88 + $149,231.25 = $314,398.13

Seventh Lease Year (2/1/07 - 1/31/08):  $171,773.55 + $155,200.50 = $326,974.05

Eighth Lease Year (2/1/08 - 1/31/09):   $178,644.50 + $161,408.52 = $340,053.02

                                       2
<PAGE>

         Within  three (3)  business  days from the date  Tenant  executes  this
Lease,  Tenant  shall pay to  Landlord  the  amount of One  Hundred  Twenty  Two
Thousand Six Hundred Fifty Seven and 22/100 Dollars  ($122,657.22) as and for an
advance  payment of Monthly  Base Rent for Suite 700 for the first full month of
the First Lease Year.

         1.08 Property Taxes and Operating Expenses; Tenant's Percentage Share.

         (A) Suite 600: In connection with Suite 600 only, the phrase  "Tenant's
Percentage Share (Suite 600)" shall mean eleven and fifty-one hundredths percent
(11.51%) with respect to Property Taxes and Operating Expenses for the Building.
Tenant shall pay  Tenant's  Percentage  Share (Suite 600) of Property  Taxes and
Operating Expenses as follows:

                  (i) Special  Suite 600 Period  (Commencement  Date to November
30,  2002).  During the period from the  Commencement  Date up to and  including
November  30, 2002 (the  "Special  Suite 600  Period"),  Tenant  shall pay (on a
monthly basis as additional Rent for Suite 600) Tenant's Percentage Share (Suite
600) of  Property  Taxes and  Operating  Expenses  paid or  incurred by Landlord
during said Special  Suite 600 Period,  in  estimated  monthly  installments  as
determined by Landlord.  Provided, however, during the Special Suite 600 Period,
Operating  Expenses  shall only include the items set forth in the  "Schedule of
Special Suite 600 Operating Expenses" listed in Exhibit "E" attached hereto, and
shall be subject to the limitations and adjustments set forth in Exhibit "E".

                  (ii) December 1, 2002 to December 31, 2002.  During the period
from December 1, 2002 to December 31,2002,  Tenant shall pay (on a monthly basis
as  additional  Rent for Suite 600)  Tenant's  Percentage  Share  (Suite 600) of
Property Taxes and Operating  Expenses paid or incurred by Landlord  during said
period in the same  manner  and  pursuant  to the same  formula  as set forth in
Section 1 .08(A)(i) above.

                  (iii)  January  1, 2003 to  December  31,  2003.  During  this
period,  Tenant  shall not be  charged  for any share of the  Property  Taxes or
Operating Expenses for the Building.

                  (iv)  January  1, 2004 to the  Expiration  Date.  Starting  on
January  1,2004 and during  each and every month  thereafter  during the Initial
Lease Term,  Tenant shall pay Tenant's  Percentage Share (Suite 600) of Property
Taxes and  Operating  Expenses  in excess of the  Property  Taxes and  Operating
Expenses paid or incurred by Landlord during the Suite 600 Base Year (defined in
Section 4.01(A)).

         (B) Suite 700: In connection with Suite 700 only, the phrase  "Tenant's
Percentage  Share (Suite 700)" shall mean ten percent  (10.00%)  with respect to
Property Taxes and Operating Expenses for the Building.

                  (i)  January  1,  2002 to the  Expiration  Date.  Starting  on
January  1, 2002 and during  each and every month  thereafter during the Initial
Lease Term,  Tenant shall pay Tenant's  Percentage Share (Suite 700) of Property
Taxes and  Operating  Expenses  in excess of the
                                       3
<PAGE>

Property  Taxes and Operating  Expenses paid or incurred by Landlord  during the
Suite 700 Base Year (defined in Section 4.01 (A)).

         (C) All references in this Lease to "Tenant's  Percentage  Share" shall
mean either Tenant's  Percentage Share (Suite 600) or Tenant's  Percentage Share
(Suite 700) as determined during the applicable period set forth above.

         (D) Landlord may  redetermine  Tenant's  Percentage  Share from time to
time to reflect reconfigurations, additions or modifications to the Building.

         1.90  Security  Deposit.  The  phrase  "Security  Deposit"  shall  mean
Seventy-Five Thousand Fifty-Nine and 50/100 dollars ($75,059.50).

         1.10 Tenant's Permitted Use. The phrase "Tenant's  Permitted Use" shall
mean general office use including sales,  training, and research and development
of software products (with related functions).

         1.11 Business Hours.  The phrase  "Business Hours" shall mean the hours
of 7:00 A.M. to 6:00 P.M., Monday through Friday,  and 7:00 A.M. to 1:00 P.M. on
Saturdays  (federal and state  holidays  excepted).  Holidays are defined as the
following:   New  Year's  Day,  Memorial  Day,   Independence  Day,  Labor  Day,
Thanksgiving  Day and Christmas  Day, and to the extent of utilities or services
provided by union members engaged at the Building,  such other holidays observed
by such unions.

         1.12 Landlord's Address For Notices. The phrase "Landlord's Address for
Notices" shall mean  Transwestern  Commercial  Services,  2121 North  California
Boulevard,  Suite 230, Walnut Creek,  California 94596, Attn:  Property Manager,
telephone: (925)932-3700; facsimile: (925)932-7971.

         1.13  Tenant's  Address For  Notices.  The term  "Tenant's  Address for
Notices" shall mean 2121 North  California  Boulevard,  Suite 600, Walnut Creek,
California 94596, Attn: Office  Manager,  telephone:  (925)927-3778;  facsimile:
(925)927-3769  (with a  copy to, but  which copy  shall not  constitute  notice:
Electronic  Arts,  Inc., 209 Redwood Shores  Parkway,  Redwood City,  California
94065, Attn: General Counsel).

         1.14 Brokers.  The term  "Brokers"  means as follows:  Cornish & Carey,
which represents only the interests of Landlord; and Cushman Realty Corporation,
which represents only the interests of Tenant.

                                    ARTICLE 2
                                    PREMISES

         2.01 Lease of Premises.  Landlord hereby leases the Premises to Tenant,
and Tenant  hereby  leases the Premises  from  Landlord,  upon all of the terms,
covenants and  conditions  contained in this Lease.  On the  Commencement  Date,
Landlord shall deliver the Premises to

                                       4
<PAGE>

Tenant in substantial conformance with the Work Letter Agreement attached hereto
as Exhibit "B."

         2.02 Acceptance of Premises.  Tenant acknowledges that Landlord has not
made any  representation  or  warranty  with  respect  to the  condition  of the
Premises or the Building or with respect to the suitability or fitness of either
for the conduct of Tenant's  Permitted  Use or for any other  purpose  except as
expressly  set  forth  herein.  To the  best of  Landlord's  knowledge,  without
inquiry,  the Building and Premises  comply with  Applicable Laws (as defined in
Section 6.02(A)).  Tenant currently occupies Suite 600 pursuant to a prior lease
agreement  ("Prior Lease") which will be terminated on the Commencement Date and
replaced by this Lease. Prior to the Commencement Date, Landlord or its designee
and Tenant will walk Suite 700 for the purpose of reviewing the condition of the
same (and the condition of completion and workmanship of any tenant improvements
in the Premises which Landlord is required to construct in the Premises pursuant
to this Lease);  after such  review,  Tenant  shall  execute a Suite  Acceptance
Letter,  in the form of Exhibit "D" attached  hereto,  accepting  the  Premises.
Except  as is  expressly  set  forth in this  Section  2.02 or the  Work  Letter
Agreement  attached  hereto,  if any, or as may be expressly  set forth in Suite
Acceptance  Letter,  Tenant  agrees to accept the  Premises  and the Building in
their   respective   "as  is"  physical   condition   without  any   agreements,
representations,  understandings  or  obligations  on the  part of  Landlord  to
perform any  alterations,  repairs or improvements  (or to provide any allowance
for same).

                                   ARTICLE 3
                                   LEASE TERM

         3.01 Lease Term. Except as otherwise  provided in this Lease, the Lease
Term shall be for the period described in Section 1.04 of this Lease, commencing
on the  Commencement  Date described in Section 1.05 of this Lease and ending on
the Expiration Date described in Section 1.06 of this Lease; provided,  however,
that, if, for any reason,  Landlord is unable to deliver possession of Suite 700
on the date  described  in Section  1.05 of this  Lease,  Landlord  shall not be
liable for any damage caused  thereby,  nor shall the Lease be void or voidable,
but, rather,  the Commencement Date shall  nonetheless  commence on the date set
forth in Section  1.05 but  Monthly  Base Rent for Suite 700 shall not be due or
payable  until  Suite 700 is so tendered  to Tenant  (except  for  Tenant-caused
delays which shall not be deemed to delay payment of Monthly Base Rent).

         3.02 Option to Extend Term. Tenant is hereby granted the one-time right
and option to extend the  Initial  Lease Term  ("Option  to Extend  Term") for a
single  additional  period  of five  (5)  consecutive  Lease  Years  ("Extension
Period") from and after the Expiration Date. The terms and conditions applicable
to the Extension  Period shall be the same terms and  conditions in effect under
the  Lease  immediately  prior  to the  Extension  Period,  with  the  following
exceptions:  (i) if the Option to Extend Term is exercised  for less than all of
the Premises,  then the exercise must include at least one (1) full floor in the
Building  (i.e.,  either the entire Suite 600 and/or the entire Suite 700); (ii)
if the Option to Extend Term is  exercised  for more than one (1) full floor but
for less than all of the  Premises,  then (a) the  exercise  must include all of
Suite 700 and a portion of Suite  600,  and (b) Tenant  must  obtain  Landlord's
prior  written  consent as to which  portion of Suite 600 is included  and which
portion of Suite 600 is excluded from the

                                       5
<PAGE>

exercise,  which consent shall not be unreasonably nor untimely withheld;  (iii)
Tenant shall have no further  options to extend the Lease Term; (iv) the Monthly
Base Rent for each month of each Lease Year during the Extension Period shall be
increased to that amount which is equal to the Fair Market Rent (defined  below)
for each month of each Lease Year during the  Extension  Period;  and (v) if the
Option to Extend Term is exercised for less than all of the  Premises,  then (a)
at  commencement  of the Extension  Period the  definition of Premises  shall be
revised to include  only the portion of the  Premises  which was included in the
exercise, and (b) the Monthly Base Rent shall be reduced to that amount which is
equal to the number of  rentable  square  feet in the  portion  of the  Premises
included in the exercise  multiplied by the Monthly Rental Rate Per Square Foot.
For  purposes of this Lease,  the phrase  "Monthly  Rental Rate Per Square Foot"
means the amount which is equal to the monthly Fair Market Rent (defined  below)
as calculated for the entire  Premises  pursuant to this Section 3.02 divided by
seventy-nine  thousand two hundred  thirty two (79,232).  In order for the Lease
Term to be extended to include the Extension Period, Tenant must timely exercise
the  Option to Extend  Term  pursuant  to the  provisions  set forth in  Section
3.02(A)  below.  If Tenant  timely  exercises  the Option to Extend  Term,  then
Monthly Base Rent for the  Premises  during each month of each Lease Year during
the Extension  Period shall be the Fair Market Rent (defined in Section 3.02(B))
for each month of each Lease Year during the  Extension  Period  (which shall in
any event not be less than the Monthly Base Rent charged Tenant during the Lease
Year preceding  commencement of the Extension Period).  However,  any attempt by
Tenant to exercise the  Option To Extend shall, at Landlord's election,  be null
and void if Tenant is in default under the Lease (which default  remains uncured
following expiration of any applicable notice and cure period) as of the date of
attempted  exercise or at any time  thereafter and prior to  commencement of the
Extension  Period.  Following  timely exercise of the Option to Extend Term, (x)
Tenant and Landlord shall during the Rent Negotiation Period (defined in Section
3.02(C))  meet and  confer  and in good  faith,  using  commercially  reasonable
standards,  attempt to agree on what Fair  Market Rent will be for each month of
each Lease Year  during the  Extension  Period,  and (y) the Lease Term shall be
extended to include the  Extension  Period and each and every term and condition
of this Lease shall remain in full force and effect until the date the Extension
Period  expires  ("Extended  Expiration  Date").  If by  expiration  of the Rent
Negotiation  Period  Landlord and Tenant agree on what the Fair Market Rent will
be for each month of each Lease Year  during the  Extension  Period,  they shall
within ten (10) business days following  said  agreement  execute and deliver to
one another an amendment to this Lease which  extends the Lease Term through the
Extension Period, states the number of rentable square feet in the Premises, and
what the Monthly Base Rent for the  Premises  shall be during each month of each
Lease Year during the Extension Period. Thereafter, all references in this Lease
to the Expiration Date shall  automatically  mean the Extended  Expiration Date,
and all references to "Lease Year" shall mean each consecutive twelve (12) month
period  commencing  with the first (1st) day of the  Extension  Period,  without
regard to calendar years. If, however,  Tenant shall fail to timely exercise the
Option to Extend  Lease  Term,  then the  Option to  Extend  Term  shall  itself
terminate and expire, shall be null and void and shall have no further force and
effect. Tenant's exercise of the Option to Extend Term shall not operate to cure
any  default by Tenant of any of the terms or  provisions  in the Lease,  nor to
extinguish  or impair any rights or remedies  of  Landlord  arising by virtue of
such  default.  If the  Lease,  the  Initial  Lease  Term or  Tenant's  right to
possession of the Premises shall terminate in any manner  whatsoever  before the
date Tenant timely  exercises the Option to Extend Term, or if Tenant shall have
subleased  or assigned  all or any portion of the  Premises  without  Landlord's

                                       6
<PAGE>

prior written consent (where such consent was required),  then  immediately upon
such  termination,  sublease  or  assignment,  the  Option to Extend  Term shall
simultaneously  terminate and become null and void. The Option to Extend Term is
personal to Tenant,  however,  if Landlord  consents in writing to an assignment
pursuant  to this Lease,  said  assignee  shall have the right to  exercise  the
Option to Extend Term. Except as provided in the immediately preceding sentence,
in no circumstance  shall the assignee under a complete or partial assignment of
the Lease,  or a subtenant  under a sublease of the Premises,  have the right to
exercise the Option to Extend Term.  Any  purported  assignment of this Lease by
Tenant  without  Landlord's  prior  written  consent  (where  such  consent  was
required),  or any  purported  sublease  by Tenant  of any part of the  Premises
without  Landlord's  prior written  consent  (where such consent was  required),
after the date  Tenant  has  exercised  the  Option to  Extend  Term and  before
commencement of the Extension  Period,  shall  automatically  and  retroactively
cause said exercise to become null and void and of no force or effect,  in which
event the original  Expiration Date set forth in Section 1.07 of the Lease shall
be reinstated. Time is of the essence of this provision.

         (A) Exercise of Option to Extend Term. In order to timely  exercise the
Option to Extend Term, Tenant must deliver unequivocal and unconditional written
notice  thereof to Landlord  ("Notice of Exercise of Option to Extend  Term") at
least two hundred  seventy (270) calendar days prior to the Expiration  Date but
not more than three  hundred sixty (360)  calendar days prior to the  Expiration
Date.

         (B) Definition of Fair Market Rent. The phrase "Fair Market Rent" shall
mean the average per square foot net monthly  base rental rate per month for all
leases for periods  approximately as long as the Extension  Period,  executed by
new tenants  (not  renewing  tenants)  for similar  uses and lengths of time for
comparable  space in buildings  similar to the Building in size, age,  amenities
and condition  which are located  either in the downtown  Walnut Creek  business
district  or in the  Pleasant  Hill BART  business  district  during the six (6)
months  immediately  prior to commencement of the Extension  Period,  subject to
reasonable  adjustments for comparable space on more or less desirable floors or
areas of the Building,  as determined in accordance  with Section 3.02(C) below.
If no such  comparable  space has been leased  during such six (6) month period,
then Fair Market Rent shall be determined  pursuant to the  provisions set forth
in  Section  3.02(C)  hereof,  and  shall be  determined  based  on a  so-called
"modified face rate" of such comparable new leases,  i.e.  without regard to any
free rent periods,  take-over lease obligations or other economic incentives but
taking into consideration any tenant improvement  allowances  provided with such
comparable  new leases.  If such  comparable  leases  include  base years,  stop
levels, or other provisions  respecting taxes or operating expenses,  or include
any  other  economic  provisions  (such as but not  limited  to  consumer  price
provisions, utility reimbursements,  or fixed rent increases), the same shall be
included in Tenant's renewal terms.

         (C)  Determination  Fair Market Rent. The period which commences on the
date which is one hundred  eighty (180)  calendar  days prior to the  Expiration
Date and which ends on the date which is ninety (90)  calendar days prior to the
Expiration  Date  shall be  referred  to as the "Rent  Negotiation  Period."  On
condition  that Tenant timely  exercises the Option to Extend Term,  then during
the Rent  Negotiation  Period  Landlord  and Tenant shall meet and confer and in
good faith, using commercially  reasonable  standards,  attempt to agree on what
the  Fair  Market  Rent  shall be for each month during  each  Lease Year of the
Extension  Period  for  the  Premises.

                                       7
<PAGE>

However, if by expiration of the Rent Negotiation Period Landlord and Tenant are
for any reason  unable to agree on the Fair Market  Rent,  then Fair Market Rent
shall be determined as follows:

                  (i) If less then the entire  Premises will be leased by Tenant
during the  Extension  Period,  then the parties shall (a) determine the monthly
Fair Market Rent for the entire Premises,  (b) then determine the Monthly Rental
Rate Per Square  Foot by dividing  the  monthly  Fair Market Rent for the entire
Premises by 79,232,  and (c) then determine the monthly Fair Market Rent for the
reduced  Premises by multiplying  the Monthly Rental Rate Per Square Foot by the
number of rentable square feet in the reduced Premises.

                  (ii) Within ten (10) business days from expiration of the Rent
Negotiation  Period,  Landlord  and  Tenant  shall (a) each  place in a separate
sealed envelope their final  determination as to what the Fair Market Rent shall
be during each month of each Lease Year  during the  Extension  Period,  and (b)
meet with each other, exchange the sealed envelopes and then open such envelopes
in each  other's  presence.  If within  one (1)  business  day of the  exchange,
Landlord  and Tenant do not  mutually  agree upon the Fair  Market Rent for each
month of each  Lease Year  during the  Extension  Period,  then  within ten (10)
business days of said exchange and opening of envelopes  Landlord  shall appoint
an individual ("Landlord's Appointment"), and Tenant shall appoint an individual
("Tenant's Appointment").  Landlord's Appointment and Tenant's Appointment shall
each by profession be duly licensed real estate  brokers in good standing in the
State of  California  who shall have been active during the most recent ten (10)
year period in the leasing of comparable  commercial  properties in the vicinity
of the Building  (together,  the "Initial  Brokers").  The Initial Brokers shall
then select one of the Landlord's or Tenant's  determination of Fair Market Rent
(which were in the sealed envelopes) which most closely  approximates their good
faith  determination  of the Fair  Market  Rent for the  Premises.  The  Initial
Brokers  shall  not have  the  authority  to  modify  or  change  either  of the
Landlord's or Tenant's  determination of Fair Market Rent, nor shall the Initial
Brokers have the authority to select a middle ground or compromise position. The
Initial  Broker's  authority  shall be limited  solely to  determining  which of
Landlord's  or  Tenant's  submitted  Fair  Market  Rent  determinations  for the
Premises  most closely  approximate  his/her  determination  of Fair Market Rent
during each month of each Lease Year during the  Extension  Period.  The Initial
Brokers  may hold such  hearings  and  require  such  briefs  as they  determine
necessary.  In  addition,  Landlord or Tenant may submit to the Initial  Brokers
(with a copy concurrently delivered to the other party) within five (5) business
days after the appointment of the Initial Brokers any market data and additional
information  that such party deems relevant to the  determination of Fair Market
Rent for each month during each Lease Year of the Extension Period and the other
party may submit a reply in writing  within five (5) business days after receipt
of such market data.

                  (iii) The Initial  Brokers shall,  within thirty (30) calendar
days of their appointment,  reach a decision as to whether the parties shall use
Landlord's or Tenant's submitted Fair Market Rent, and shall notify Landlord and
Tenant of such determination. The decision of the Initial Brokers shall be final
and binding upon Landlord and Tenant.

                  (iv) If the Initial  Brokers fail to timely agree upon whether
Landlord's  or Tenant's  submitted  Fair Market Rent shall  constitute  the Fair
Market Rent for each month of

                                       8
<PAGE>

each Lease Year during the  Extension  Period,  then within forty (40)  calendar
days  following  appointment of the Initial  Brokers,  Landlord and Tenant shall
meet,  confer  and  attempt  to agree on the  appointment  of a third  qualified
individual  ("Third  Broker").  However,  if  Landlord  and Tenant are unable to
timely agree on selection  of a Third  Broker,  then one or both of said parties
may apply to the Presiding  Judge of the Contra Costa County  Superior Court for
appointment of the Third Broker.

                  (v) The  role of the  Third  Broker  shall  be to  review  and
analyze the results of the  hearings  held by the  Initial  Brokers,  review the
briefs,  information,  testimony and data presented to the Initial Brokers,  and
review any reports submitted by the Initial Brokers.  The Third Broker shall not
have the  authority  to modify or change  either of the  Landlord's  or Tenant's
determination of Fair Market Rent, nor shall the Third Broker have the authority
to select a middle ground or compromise  position.  The Third Broker's authority
shall be limited solely to determining which of Landlord's or Tenant's submitted
Fair  Market Rent  determinations  for the  Premises  most  closely  approximate
his/her  determination  of Fair Market Rent during each month of each Lease Year
during  the  Extension  Period.  Within  thirty  (30)  calendar  days of his/her
appointment,  the Third  Broker  shall  decide  whether  the  parties  shall use
Landlord's or Tenant's submitted Fair Market Rent, and shall notify Landlord and
Tenant of such  determination.  The  decision of the Third Broker shall be final
and binding upon Landlord and Tenant.

                  (vi) The cost of the proceedings and any fee or charge payable
to the Initial Brokers and, if applicable, to the Third Broker, shall be paid by
Landlord and Tenant equally.

                                   ARTICLE 4
                                     RENTAL

         4.01 Definitions. As used herein:

         (A) "Base Year" shall have the following meaning:

                  (i) Suite 600: For Suite 600, the phrase "Suite 600 Base Year"
shall mean as follows:

                           a. During the Special Suite 600 Period  (Commencement
Date to  November  30,  2002),  there  shall be no Suite 600 Base Year,  instead
Tenant shall pay  Tenant's  Percentage  Share (Suite 600) of Property  Taxes and
Operating Costs pursuant to the provisions set forth in Section 1.08(A)(i).

                           b. During the period  December 1,2002 to December 31,
2002,  Tenant shall pay Tenant's  Percentage Share (Suite 600) of Property Taxes
and Operating Costs pursuant to the provisions set forth in Section 1.08(A)(ii).

                           c.  Following  expiration  of the  Special  Suite 600
Period,  the phrase  "Suite 600 Base Year" shall mean  calendar  year 2003,  and
Tenant shall pay Tenant's

                                       9
<PAGE>

Percentage  Share (Suite 600) of Property Taxes and Operating  Costs pursuant to
the provisions set forth in Sections 1.08(A)(iii) and (iv).

                  (ii) Suite  700.  For Suite  700,  the phrase  "Suite 700 Base
Year" shall mean calendar year 2001.

         All references in this Lease to "Base Year" shall mean either the Suite
600 Base Year or the Suite 700 Base Year, as the context dictates.

         (B) "Property Taxes" shall mean the aggregate amount of all real estate
taxes,  assessments  (whether  they be  general  or  special),  sewer  rents and
charges,  transit  taxes,  taxes  based  upon the  receipt of rent and any other
federal,  state or local  govermnental  charge,  general,  special,  ordinary or
extraordinary  (but not  including  income or franchise  taxes,  capital  stock,
inheritance,  estate,  gift,  or any other  taxes  imposed  upon or  measured by
Landlord's gross income or profits,  unless the same shall be imposed in lieu of
real estate taxes or other ad valorem taxes), which Landlord shall pay or become
obligated to pay in connection  with the Building or any part thereof.  Property
Taxes shall also include all  reasonable  fees and costs,  including  attorneys'
fees,  appraisals  and  consultants'  fees,  reasonably  incurred by Landlord in
seeking to obtain a  reassessment,  reduction of, or a limit on the increase in,
any  Property  Taxes,  regardless  of whether any  reduction  or  limitation  is
obtained. Property Taxes for any calendar year shall be Property Taxes which are
due for  payment or paid in such year,  rather  than  Property  Taxes  which are
assessed  or become a lien during such year.  Property  Taxes shall  include any
tax, assessment,  levy,  imposition or charge imposed upon Landlord and measured
by or based in whole or in part upon the  Building or the rents or other  income
from the  Building,  to the  extent  that such  items  would be  payable  if the
Building  was the only  property  of  Landlord  subject  to same and the  income
received by Landlord from the Building was the only income of Landlord. Property
Taxes shall also include any personal property taxes imposed upon the furniture,
fixtures, machinery, equipment, apparatus, systems and appurtenances of Landlord
used in connection with the Building.

         (B) Subject to the provisions set forth in Section 1.08(A) with respect
to the Special  Suite 600  Period,  "Operating  Expenses"  shall mean all costs,
fees,  disbursements  and expenses  paid or incurred by or on behalf of Landlord
(excluding Property Taxes) in the operation, ownership, maintenance,  insurance,
management, replacement and repair of the Building including without limitation:

                  (i)  Premiums  for   property,   casualty,   liability,   rent
interruption or other types of insurance carried by Landlord.

                  (ii)  Salaries,  wages and other  amounts  paid or payable for
personnel  including  the  Building  manager,   superintendent,   operation  and
maintenance  staff, and other employees of Landlord  involved in the maintenance
and operation of Building,  including  contributions and premiums towards fringe
benefits, unemployment,  disability and worker's compensation insurance, pension
plan  contributions and similar premiums and contributions and the total charges
of any independent  contractors or property  managers  engaged in the operation,
repair, care, maintenance and cleaning of any portion of the Building.

                                       10
<PAGE>

                  (iii)      Cleaning      expenses,      including      without
limitation janitorial services, window cleaning, and garbage and refuse removal.

                  (iv)  Landscaping   expenses,   including  without  limitation
irrigating, trimming, mowing, fertilizing, seeding, and replacing plants.

                  (v) Heating, ventilating, air conditioning and steam/utilities
expenses,  including fuel, gas, electricity,  water, sewer, telephone, and other
services.

                  (vi) Subject to the provisions of Section 4.01(C)(xii)  below,
the cost of  maintaining,  operating,  repairing  and  replacing  components  of
equipment or machinery,  including without  limitation  heating,  refrigeration,
ventilation,  electrical, plumbing, mechanical, elevator, escalator, sprinklers,
fire/life  safety,  security and energy  management  systems,  including service
contracts, maintenance contracts, supplies and parts.

                  (vii) All items of repair or  maintenance  of the Building not
mentioned elsewhere in this Section.

                  (viii)  The  costs of  policing  and  providing  security  and
supervision of the Building.

                  (ix) Fair market rental with respect to the management  office
for the Building.

                  (x) The cost of the rental of any  machinery or equipment  and
the cost of supplies used in the maintenance and operation of the Building.

                  (xi) Audit fees and the cost of accounting  services  incurred
in the  preparation  of  statements  referred  to in this  Lease  and  financial
statements,  and in the  computation of the rents and charges payable by tenants
of the Building.

                  (xii)  Capital  expenditures  (a)  made  to  reduce  Operating
Expenses,  (b) in  connection  with Suite 600,  to comply with any laws or other
governmental  requirements  enacted after June 1, 1995;  (c) in connection  with
Suite 700, to comply with any laws or other  governmental  requirements  enacted
after  February  1, 2001;  or (d) for  replacements  and  repairs (as opposed to
additions or new improvements) of  non-structural  items located in the Building
or its common areas  required to keep such areas in good  condition  and repair;
provided,  all such permitted  capital  expenditures  (together with  reasonable
financing  charges)  shall be  amortized  for  purposes of this Lease over their
useful lives as reasonably determined by Landlord's independent certified public
accountants.

                  (xiii) Legal fees and expenses.

                  (xiv)  Payments  under  any  easement,   operating  agreement,
declaration,  restrictive  covenant,  or instrument pertaining to the sharing of
costs in any planned development.

                                       11
<PAGE>

                  (xv) A commercially  reasonable fee for the administration and
management of the Building  generally  consistent with other  comparable Class A
office buildings in the Walnut Creek area.

                  (xvi) The cost to remove,  remediate or encapsulate  hazardous
materials or substances  which are located  anywhere in the Building  (excluding
the  Premises)  or  Common  Areas  but  only if  said  removal,  remediation  or
encapsulation  is related to the repair and  maintenance of the Building  and/or
Common Areas.

         Notwithstanding the foregoing, Operating Expenses shall not include the
following:  any ground lease or underlying lease rental; repair of damage to the
Building or its equipment  and/or systems,  to the extent Landlord is reimbursed
by insurance proceeds,  warranties or guaranties;  construction and installation
of tenant  improvements,  renovations,  or decorations made for tenants or other
occupants  in the  Building or for vacant  tenant  suites  within the  Building,
including, without limitation, fees and costs for space planning,  architectural
drawings,  construction,  permits,  licenses and  inspection;  costs incurred in
connection  with  negotiations  and  transactions  with  present or  prospective
tenants or other  occupants of the Building for leases,  subleases,  assignments
and other related transactions,  including, without limitation,  attorneys' fees
for such negotiations and transactions;  interest, principal, points and fees on
debts  or  amortization  on any  mortgage  or  any  other  financing  instrument
encumbering the Building;  Landlord's general corporate overhead;  all items and
services  for  which  Tenant  or  any  other  tenant  in the  Building  directly
reimburses to Landlord; leasing commissions;  electric power costs for which any
tenant  directly  contracts with the local public service  company and which are
paid for by any such tenant;  (i) the cost to remove,  remediate or  encapsulate
hazardous  materials or substances located in the Premises,  and (ii) unless the
same is related to the repair and  maintenance  of the  Building  and/or  Common
Areas (in which case the cost shall be included in Operating Expenses), the cost
to remove,  remediate or encapsulate  hazardous  materials or substances located
anywhere in the Building or Common  Areas;  Landlord's  charitable  or political
contributions; costs to remediate Hazardous Materials (defined below) which were
deposited,  released  or  discharged  in Suite  600  prior  to June 1,  1995 (in
connection  with Suite 600) or which were  deposited,  released or discharged in
Suite 700 prior to February  1, 2001;  and legal fees and  expenses  incurred in
connection with the enforcement of any leases.

         4.02  Monthly  Base Rent.  During the Lease Term,  Tenant  shall pay to
Landlord as rental for the Premises  the Monthly Base Rent  described in Section
1.07  above,  subject  to the  following  adjustments  (herein  called the "Rent
Adjustments"):

         (A) Suite 600.

                  (i) Special  Suite 600 Period  (Commencement  Date to November
30. 2002).  During the Special Suite 600 Period, the Monthly Base Rent for Suite
600  payable by Tenant to  Landlord,  as adjusted  pursuant to Section  1.07 and
subject to the provisions set forth in Section 1.08(A) above, shall be increased
by that amount  which is equal to (i) Tenant's  Percentage  Share (Suite 600) of
all Property  Taxes paid or incurred by Landlord  during each calendar year, and
(ii)

                                       12
<PAGE>

Tenant's Percentage Share (Suite 600) of the Operating Expenses paid or incurred
by Landlord during each calendar year.

                  (ii) December 1, 2002 to December 31, 2002.  During the period
December  1, 2002 to December  31,  2002,  the  Monthly  Base Rent for Suite 600
payable  by  Tenant to  Landlord  shall be  determined  in the same  manner  and
pursuant to the same formula as set forth in Section 4.02(A)(i) above.

                  (iii) January 1, 2003 to December 31. 2003.  During the period
January 1, 2003 to December 31, 2003, Tenant shall have no obligation to pay any
share of Property Taxes or Operating Expenses with respect to Suite 600.

                  (iv) January 1, 2004 to Expiration  Date.  Starting on January
1,2004 and during each calendar year  thereafter  during the Initial Lease Term,
the Monthly Base Rent for Suite 600 payable by Tenant to  Landlord,  as adjusted
pursuant  to Section  1.07 above (but no longer  subject to the  provisions  set
forth in Section 1.08(A)),  shall be increased by (a) Tenant's  Percentage Share
(Suite 600) of the total  dollar  increase,  if any, in Property  Taxes for such
year  over  Property  Taxes  for the  Suite  600  Base  Year;  and (b)  Tenant's
Percentage Share (Suite 600) of the total dollar increase,  if any, in Operating
Expenses paid or incurred by Landlord  during such year over Operating  Expenses
paid or  incurred  by  Landlord  during the Suite 600 Base Year.  A decrease  in
Property Taxes or Operating Expenses below the Suite 600 Base Year amounts shall
not decrease the amount of the Monthly Base Rent due hereunder or give rise to a
credit in favor of Tenant.

         (B) Suite 700.  Starting  on January 1, 2002 and during  each  calendar
year  thereafter  during the Initial Lease Term, the Monthly Base Rent for Suite
700 payable by Tenant to Landlord,  as adjusted  pursuant to Section 1.07 above,
shall be  increased by (a)  Tenant's  Percentage  Share (Suite 700) of the total
dollar increase, if any, in Property Taxes for such year over Property Taxes for
the Suite 700 Base Year;  and (b) Tenant's  Percentage  Share (Suite 700) of the
total  dollar  increase,  if any,  in  Operating  Expenses  paid or  incurred by
Landlord  during such year over Operating  Expenses paid or incurred by Landlord
during  the Suite 700 Base Year.  A  decrease  in  Property  Taxes or  Operating
Expenses  below the Suite 700 Base Year amounts shall not decrease the amount of
the Monthly Base Rent due hereunder or give rise to a credit in favor of Tenant.

         (C) In each case during the Initial  Lease Term where Monthly Base Rent
has been subject to a Rent Adjustment pursuant to the provisions of this Section
4.02, each specific Rent Adjustment shall be referred to as a "Tax and Operating
Expense Adjustment."

         4.03 Adjustment  Procedure;  Estimates.  The Tax and Operating  Expense
Adjustments specified in Section 4.02 shall be determined and paid as follows:

         (A) During each  calendar year of the Lease Term,  Landlord  shall give
Tenant written notice of its  reasonable  estimate of the amounts  payable under
Section  4.02(A)  for that  calendar  year.  On or before  the first day of each
calendar  month  during  the  calendar  year in  question,  Tenant  shall pay to
Landlord one-twelfth (1/12th) of such estimated amounts; provided, however

                                       13
<PAGE>

that,  not more often than once per  calendar  year,  Landlord  may,  by written
notice to Tenant,  revise its estimate for such year, and subsequent payments by
Tenant for such year shall be based upon such revised estimate.

         (B)  Within  one  hundred  twenty  (120)  days  after the close of each
calendar year or as soon thereafter as is practicable, Landlord shall deliver to
Tenant a statement of that year's Property Taxes and Operating Expenses, and the
actual Tax and Operating Expense  Adjustment to be made pursuant to Section 4.02
for such calendar year, as determined by Landlord (the  "Landlord's  Statement")
and such Landlord's  Statement shall be binding upon Tenant,  except as provided
in Section  4.04 below.  If the final  amount of the Tax and  Operating  Expense
Adjustment as shown in  Landlord's  Statement is more than the estimated Tax and
Operating Expense Adjustment  payments actually paid by Tenant for such calendar
year,  Tenant shall pay the  deficiency to Landlord  within thirty (30) calendar
days from receipt of Landlord's  Statement.  However, if the final amount of the
Tax and Operating  Expense  Adjustment as shown in Landlord's  Statement is less
than the estimated Tax and Operating Adjustment payments actually paid by Tenant
for  such  calendar  year,  any  excess  shall  be  credited  against  Rent  (as
hereinafter  defined)  next  payable by Tenant under this Lease or, if the Lease
Term has expired, any excess shall be paid to Tenant within thirty (30) calendar
days  after  the date the same has  been  determined  by  Landlord.  No delay in
providing Landlord's Statement described in this subparagraph (B) shall act as a
waiver of Landlord's right to payment under Section 4.02 above.

         (C) If this  Lease  shall  terminate  on a day other  than the end of a
calendar year, the amount of the Tax and Operating Expense Adjustment to be paid
pursuant to Section 4.02 that is  applicable  to the calendar year in which such
termination  occurs  shall be  prorated  on the basis of the number of days from
January 1 of the calendar year in question to the termination date bears to 365.
The  termination of this Lease shall not affect the  obligations of Landlord and
Tenant pursuant to Section 4.03(B) to be performed after such termination.

         4.04 Review of  Landlord's  Statement.  Provided  that Tenant is not in
default beyond any applicable cure period under this Lease, and provided further
that Tenant strictly  complies with the provisions of this Section 4.04,  Tenant
shall have the right to reasonably  review  supporting data for any portion of a
Landlord's Statement for the calendar year to which said Statement pertains plus
the calendar year  preceding  that calendar year if the same has not  previously
been audited (for a possible total look-back  period of two (2) calendar years);
provided,  however,  Tenant  may not audit  any  calendar  year more than  once.
Further,  Tenant may not have the right to audit all  documentation  relating to
all  Building  operations  as this  would far exceed  the  relevant  information
necessary to properly document a pass-through billing statement, but real estate
tax statements, and information on utilities, repairs, maintenance and insurance
will be available), in accordance with the following procedure:

         (A) Tenant shall, within sixty (60) calendar days after delivery of any
Landlord's  Statement,  deliver a  written  notice to  Landlord  specifying  the
portions  of the  Landlord's  Statement  that are claimed to be  incorrect,  and
Tenant  shall  simultaneously  pay to  Landlord  all  amounts due from Tenant to
Landlord as specified in the Landlord's Statement. Except as expressly set forth
in  subsection  (C) below,  in no event  shall  Tenant be  entitled  to withhold
deduct, or offset any monetary  obligation of Tenant to Landlord under the Lease
(including,

                                       14
<PAGE>

without  limitation,  Tenant's  obligation  to make all payments of Monthly Base
Rent including the annual adjustments  required by Section 1.07 and all payments
of Tenant's Tax and Operating Expense  Adjustment) pending the completion of and
regardless of the results of any review of records under this Section 4.04.  The
right of Tenant  under  this  Section  4.04 may only be  exercised  once for any
Landlord's Statement, and if Tenant fails to meet any of the above conditions as
a  prerequisite  to the  exercise of such right,  the right of Tenant under this
Section 4.04 for a particular Landlord's Statement shall be deemed waived.

         (B) Tenant  acknowledges  that  Landlord  maintains its records for the
Building in  Landlord's  property  manager's  offices  presently  located at the
address set forth in Section  1.12 and Tenant  agrees that any review of records
under  this  Section  4.04  shall be at the sole  expense of Tenant and shall be
conducted by an  independent  firm of certified  public  accountants of national
standing which does not charge on a contingency-fee  basis.  Tenant acknowledges
and  agrees  that any  records  reviewed  under  this  Section  4.04  constitute
confidential  information  of  Landlord,  which shall not be disclosed to anyone
other than Tenant's  attorneys,  accountants,  other  employees and  consultants
performing  the review,  the principals of Tenant who receive the results of the
review and other parties pursuant to court order, subpoena or Applicable Laws as
defined below  (collectively,  "Permitted  Recipients").  The disclosure of such
information  to any person  other  than a  Permitted  Recipient,  whether or not
caused by the  conduct of Tenant,  shall  constitute  a material  breach of this
Lease.

         (C) Any errors disclosed by the review shall be  promptly  corrected by
Landlord,  provided,  however,  that if Landlord disagrees with any such claimed
errors,  Landlord  shall have the right to cause another review to be made by an
independent firm of certified public accountants of national standing which does
not charge on a  contingency-fee  basis. In the event of a disagreement  between
the two  accounting  firms,  the  review  that  discloses  the  least  amount of
deviation from Landlord's  Statement shall be deemed to be correct. In the event
that the results of the review of Landlord's  records  (taking into account,  if
applicable, the results of any additional review caused by Landlord) reveal that
Tenant has  overpaid  obligations  for a  preceding  period,  the amount of such
overpayment   shall  be  credited   against  Tenant's   subsequent   installment
obligations to pay the estimated Tax and Operating  Expense  Adjustment;  and if
the  results  demonstrate  that  Tenant  overpaid  obligations  by more than ten
percent (10%), Landlord shall pay Tenant's reasonable costs of the audit. In the
event that the results of the review of Landlord's records (taking into account,
if applicable,  the results of any additional  review caused by Landlord) reveal
that Tenant has underpaid obligations for a preceding period, the amount of such
underpayment  shall be paid by Tenant to Landlord along with the next succeeding
installment  of  estimated  Tax and  Operating  Expense  Adjustment;  and if the
results  demonstrate that Tenant underpaid  obligations by more than ten percent
(10%), Tenant shall pay Landlord's reasonable costs of the audit.

         4.05  Payment.  Within  three (3)  business  days from the date  Tenant
executes  this Lease,  Tenant shall pay Landlord the Monthly Base Rent for Suite
700 for the first full  calendar  month of the first  Lease Year of Lease  Term.
Thereafter  the Total  Monthly Base Rent  described in Section 1.07, as adjusted
annually in accordance  with Section 1.07 and by the Rent  Adjustments set forth
in Section  4.02,  shall be payable in advance on the first day of each calendar
month. All Rent, and all other amounts payable to Landlord by Tenant pursuant to
the

                                       15
<PAGE>

provisions of this Lease,  shall be paid to Landlord,  without  notice,  demand,
abatement  (unless  otherwise  provided in this Lease),  deduction or offset, in
lawful  money of the United  States at  Landlord's  office in the Building or to
such other person or at such other place as Landlord may designate  from time to
time by  written  notice  given to  Tenant.  No  payment by Tenant or receipt by
Landlord of a lesser amount than the correct Rent due hereunder  shall be deemed
to be other than a payment on account; nor shall any endorsement or statement on
any check or any letter accompanying any check or payment be deemed to effect or
evidence  an accord and  satisfaction;  and  Landlord  may accept  such check or
payment without  prejudice to Landlord's  right to recover the balance or pursue
any other remedy in this Lease or at law or in equity provided.

         4.06 Late Charge;  Interest.  Tenant acknowledges that the late payment
of  Monthly  Base  Rent or any other  amounts  payable  by  Tenant  to  Landlord
hereunder (all of which shall constitute additional rental to the same extent as
Monthly Base Rent) will cause Landlord to incur  administrative  costs and other
damages, the exact amount of which would be impracticable or extremely difficult
to ascertain.  Subject to the provisions of Section 4.06(A) below,  Landlord and
Tenant  agree that if Landlord  does not  receive any such  payment on or before
five (5) calendar days after  receipt of written  notice from Landlord that such
payment is overdue ("Notice of Late Payment"),  Tenant shall pay to Landlord, as
additional  rent, a late charge equal to five percent (5%) of the overdue amount
to cover such additional administrative costs. In addition,  Landlord and Tenant
agree that if Landlord  does not receive any such  payment on or before the date
when due,  Tenant shall pay to Landlord,  as  additional  rent,  interest on the
delinquent  amounts at the lesser of the maximum rate permitted by law if any or
ten percent (10%) per annum from the date due to the date paid.

         (A) Notwithstanding  the foregoing,  Landlord shall only be required to
deliver  one (1) Notice of Late  Payment to Tenant  during any Lease  Year.  If,
during any Lease Year,  Landlord has  delivered to Tenant one (1) Notice of Late
Payment,  thereafter Landlord and Tenant agree that if Landlord does not receive
any such payment on or before five (5) calendar days after the date such payment
is due,  Tenant shall pay to Landlord,  as  additional  rent,  (a) a late charge
equal to five  percent  (5%) of the  overdue  amount  to cover  such  additional
administrative  costs; and (b) interest on the delinquent  amounts at the lesser
of the maximum rate  permitted by law if any or ten percent (10%) per annum from
the date due to the date paid.

         4.07 Additional  Rent. For purposes of this Lease,  all amounts payable
by Tenant to  Landlord  pursuant to this Lease,  whether or not  denominated  as
such, shall constitute  additional  rental  hereunder.  Such additional  rental,
together  with the Monthly Base Rent and Rent  Adjustments,  shall  sometimes be
referred to in this Lease as "Rent".

         4.08 Additional Taxes.  Notwithstanding  anything in Section 4.01(B) or
Section 4.02 to the contrary,  Tenant shall  reimburse  Landlord upon demand for
any and all taxes payable by or imposed upon Landlord (and not charged to Tenant
by Landlord as Property  Taxes or Operating  Expenses)  upon or with respect to:
any  fixtures  or  personal  property  located in the  Premises;  any  leasehold
improvements  made in or to the  Premises  by or for  Tenant;  the Rent  payable
hereunder, including, without limitation, any gross receipts tax, license fee or
excise  tax  levied by any  governmental  authority;  the  possession,  leasing,
operation,  management, maintenance, alteration, repair, use or occupancy of any
portion of the Premises (including

                                       16

<PAGE>

without   limitation  any  applicable   possessory   interest  taxes);  or  this
transaction or any document to which Tenant is a party creating or  transferring
an interest or an estate in the Premises.

                                   ARTICLE 5
                                SECURITY DEPOSIT

         5.01 Security  Deposit.  Tenant has already deposited with Landlord the
Security  Deposit  described  in  Section  1.9 above as  security  for  Tenant's
performance  under the Prior Lease.  The Security  Deposit is made by Tenant and
shall be retained and used by Landlord to secure the faithful performance of all
the terms,  covenants and conditions of this Lease to be performed by Tenant. If
Tenant shall default with respect to any covenant or provision hereof,  Landlord
may use, apply or retain all or any portion of the Security Deposit to cure such
default or to  compensate  Landlord  for any loss or damage  which  Landlord may
suffer  thereby.  If  Landlord  so uses or  applies  all or any  portion  of the
Security  Deposit,  Tenant shall within five (5) business  days after receipt of
written demand deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to the full amount  hereinabove  stated.  Landlord shall not be
required to keep the Security  Deposit  separate  from its general  accounts and
Tenant shall not be entitled to interest on the Security Deposit.  Within thirty
(30)  days  after  the  expiration  of the Lease  Term and the  vacation  of the
Premises by Tenant,  the Security Deposit,  or such part as has not been applied
to cure the default, shall be returned to Tenant.

                                   ARTICLE 6
                                USE OF PREMISES

         6.01  Tenant's  Permitted  Use.  Tenant shall use the Premises only for
Tenant's  Permitted  Use as set forth in Section 1.10 above and shall not use or
permit the Premises to be used for any other purpose.  Tenant shall, at its sole
cost and expense, obtain all governmental licenses and permits required to allow
Tenant to conduct Tenant's  Permitted Use. Landlord  disclaims any warranty that
the Premises are suitable for Tenant's intended use and Tenant acknowledges that
it has had a full opportunity to make its own determination in this regard.

         6.02 Compliance With Laws and Other Requirements.

         (A) Tenant shall cause the Premises to comply in all material  respects
with all  laws,  ordinances,  regulations  and  directives  of any  governmental
authority having jurisdiction including,  without limitation, any certificate of
occupancy and any law, ordinance, regulation, covenant, condition or restriction
affecting the Building or the Premises which in the future may become applicable
to the Premises  (collectively  "Applicable  Laws"), but only to the extent such
compliance  obligation arises from changes in Applicable Laws after June 1, 1995
with  respect  to  Suite  600 or from  changes  in  Applicable  Laws  after  the
Commencement  Date with  respect to Suite  700,  and in each  instance  the same
relate  either  to (i)  Tenant's  use of the  Premises  which  is  other  than a
Permitted  Use, or (i) any  alterations,  additions or changes made by Tenant to
the Premises (whether or not with the consent of Landlord) or by Landlord at the
request of Tenant.

                                       17
<PAGE>

         (B) Tenant  shall not use the  Premises,  or permit the  Premises to be
used, in any manner which:  (i) violates any  Applicable  Law; (ii) causes or is
reasonably  likely  to cause  damage  to the  Building  or the  Premises;  (iii)
violates a requirement  or condition of any fire and extended  insurance  policy
covering the  Building or the  Premises,  or increases  the cost of such policy;
(iv) constitutes or is reasonably likely to constitute a nuisance,  annoyance or
inconvenience  to other  tenants or occupants of the Building or its  equipment,
facilities or systems; (v) interferes with, or is reasonably likely to interfere
with, the transmission or reception of microwave,  television,  radio, telephone
or other  communication  signals by antennae or other facilities  located in the
Building; or (vi) violates the Rules and Regulations described in Article 19.

         (C) Subject and  subordinate  to  Tenant's  obligations  to comply with
Applicable  Laws set forth in Section  6.02(A) and (B),  Landlord  agrees to and
shall cause the Premises to comply with Applicable Laws.

         6.03 Hazardous Materials.

         (A) No Hazardous  Materials,  as defined herein,  shall be Handled,  as
also defined herein,  upon, about,  above or beneath the Premises or any portion
of the Building by or on behalf of Tenant,  its subtenants or its assignees,  or
their respective contractors,  clients, officers, directors,  employees, agents,
or invitees.  Any such Hazardous Materials so Handled shall be known as Tenant's
Hazardous  Materials.   Notwithstanding  the  foregoing,  normal  quantities  of
Tenant's  Hazardous  Materials  customarily used in the conduct of the Permitted
Uses (e.g.,  copier fluids and cleaning supplies) may be Handled at the Premises
without Landlord's prior written consent.  Tenant's Hazardous Materials shall be
Handled at all times in compliance with the manufacturer's instructions therefor
and all applicable Environmental Laws, as defined herein.

         (B)  Notwithstanding  the  obligation  of Tenant to indemnify  Landlord
pursuant to this Lease,  Tenant  shall,  at its sole cost and expense,  promptly
take all actions required by any Regulatory Authority,  as defined herein, which
requirements  or  necessity  arises  from the  Handling  of  Tenant's  Hazardous
Materials  upon,  about,  above or beneath  the  Premises  or any portion of the
Building. To the extent required by any Regulatory Authority, such actions shall
include, but not be limited to, the investigation of the environmental condition
of the Premises or any affected portion of the Building,  the preparation of any
feasibility  studies or reports and the  performance  of any cleanup,  remedial,
removal or restoration  work. Tenant shall take all actions necessary to restore
the Premises or any affected  portion of the Building to the condition  existing
prior to the introduction of Tenant's Hazardous  Materials,  notwithstanding any
less stringent standards or remediation allowable under applicable Environmental
Laws.  Tenant shall  nevertheless  obtain  Landlord's  written approval prior to
undertaking  any actions  required by this Section,  which approval shall not be
unreasonably  withheld  so long as such  actions  would not  potentially  have a
material adverse  long-term or short-term effect on the Premises or any affected
portion of the Building.

         (C) Tenant agrees to execute affidavits,  representations, and the like
from  time to time at  Landlord's  request  stating  Tenant's  actual  knowledge
regarding the presence of Hazardous Materials on the Premises.

                                       18
<PAGE>

         (D)  "Environmental  Laws"  means and  includes  all now and  hereafter
existing statutes, laws, ordinances, codes, regulations, rules, rulings, orders,
decrees,  directives,  policies and  requirements  by any  Regulatory  Authority
regulating,   relating  to,  or  imposing  liability  or  standards  of  conduct
concerning public health and safety or the environment.

         (E) "Hazardous  Materials"  means:  (i) any material or substance:  (a)
which is defined  or becomes  defined  as a  "hazardous  substance",  "hazardous
waste,"  "infectious waste," "chemical mixture or substance," or "air pollutant"
under  Environmental Laws; (b) containing  petroleum,  crude oil or any fraction
thereof;  (c)  containing  polychlorinated  biphenyls  (PCB's);  (d)  containing
asbestos;  (e) which is  radioactive;  or (f) which is  infectious;  or (ii) any
other material or substance displaying toxic,  reactive,  ignitable or corrosive
characteristics,  as all such terms are used in their  broadest  sense,  and are
defined, or become defined by Environmental Laws.

         (F) "Handle," "handle," "Handled," "handled," "Handling," or "handling"
shall mean any installation,  handling,  generation,  storage,  treatment,  use,
disposal,  discharge,  release,  manufacture,  refinement,  presence, migration,
emission, abatement, removal, transportation,  or any other activity of any type
in connection with or involving Hazardous Materials.

         (G)  "Regulatory  Authority"  shall  mean any  federal,  state or local
governmental agency, commission, board or political subdivision.

                                   ARTICLE 7
                             UTILITIES AND SERVICES

         7.01 Building Services.  As long as Tenant is not in default under this
Lease,  Landlord  agrees to furnish or cause to be furnished to the Premises the
following  utilities and services,  subject to the  conditions and standards set
forth herein:

         (A) Non-attended  automatic  elevator service (if the Building has such
equipment  serving the Premises),  in common with Landlord and other tenants and
occupants and their agents and invitees.

         (B)  During  Business  Hours,  such  air   conditioning,   heating  and
ventilation as, in Landlord's  reasonable  judgment and which is consistent with
other Class A office  buildings in the downtown  Walnut Creek area, are required
for the comfortable use and occupancy of the Premises;  provided,  however, that
if Tenant shall require  heating,  ventilation or air  conditioning in excess of
that which Landlord shall be required to provide hereunder, Landlord may provide
such additional heating, ventilation or air conditioning and electricity service
at the  following  rates:  (i) $85 per hour  for  heating,  ventilation  and air
conditioning  service,  and (ii) $2.50 per hour for electricity for every 10,000
square feet for  after-Business  Hour lighting;  subject however,  to Landlord's
right to reasonably increase said rates from time to time.

         (C) Water for drinking and rest room purposes.

                                       19
<PAGE>

         (D) Janitorial and cleaning services five (5) days per week (consistent
with the  "Schedule of  Janitorial  Specifications"  attached  hereto as Exhibit
"F"), provided that the Premises are used exclusively for the Permitted Uses and
are kept reasonably in order by Tenant. If the Premises are not used exclusively
as offices,  Landlord,  at  Landlord's  sole  discretion,  may require  that the
Premises  be kept  clean and in order by Tenant,  at  Tenant's  expense,  to the
satisfaction  of  Landlord  and by persons  approved  by  Landlord;  and, in all
events,  Tenant shall pay to Landlord the cost of removal of Tenant's refuse and
rubbish, to the extent that the same exceeds the refuse and rubbish attendant to
normal office usage.

         (E) At all reasonable times,  electric current as required for building
standard  lighting and  fractional  horsepower  machines  generally  used in the
conduct of the Permitted Uses; provided,  however,  that: (i) without Landlord's
consent,  Tenant shall not install, or permit the installation,  in the Premises
of any computers, word processors, electronic data processing equipment or other
type of  equipment  or machines  which will  increase  Tenant's  use of electric
current in excess of that  which  Landlord  is  obligated  to provide  hereunder
(provided,  however,  that the foregoing  shall not preclude the use of personal
computers  or similar  office  equipment  generally  used in the  conduct of the
Permitted Uses); (ii) if Tenant shall require electric current which may disrupt
the provision of  electrical  service to other  tenants,  Landlord may refuse to
grant its consent or may condition its consent upon Tenant's payment of the cost
of installing and providing any additional  facilities  required to furnish such
excess  power to the  Premises  and upon the  installation  in the  Premises  of
electric current meters to measure the amount of electric current  consumed,  in
which latter  event Tenant shall pay for the cost of such  meter(s) and the cost
of  installation,  maintenance  and  repair  thereof,  as well as for all excess
electric  current  consumed at the rates charged by the applicable  local public
utility,  plus a reasonable amount to cover the additional  expenses incurred by
Landlord in keeping  account of the electric  current so consumed;  and (iii) if
Tenant's   increased   electrical   requirements   will  materially  affect  the
temperature  level in the Premises or the  Building,  Landlord's  consent may be
conditioned upon Tenant's requirement to pay such amounts as will be incurred by
Landlord to install and operate any machinery or equipment  necessary to restore
the  temperature  level to that  otherwise  required to be provided by Landlord,
including but not limited to the cost of  modifications  to the air conditioning
system.  Landlord  shall not, in any way, be liable or responsible to Tenant for
any loss or damage or expense  which  Tenant  may incur or  sustain  if, for any
reasons beyond Landlord's  reasonable control,  either the quantity or character
of  electric  service is  changed  or is no longer  available  or  suitable  for
Tenant's  requirements.  Tenant  covenants that at all times its use of electric
current  shall never exceed the capacity of the  feeders,  risers or  electrical
installations  as  currently  existing  in  the  Building.   If  submetering  of
electricity  in the  Building  will  not  be  permitted  under  future  laws  or
regulations,  the Rent will  then be  equitably  and  periodically  adjusted  to
include an additional  payment to Landlord  reflecting  the cost to Landlord for
furnishing electricity to Tenant in the Premises.

         (F) Security for the Building as reasonably determined by Landlord from
time to time. The parties acknowledge that safety and security devices, services
and programs  provided by Landlord,  if any,  while  intended to deter crime and
ensure safety,  may not in given instances prevent theft or other criminal acts,
or ensure  safety of persons or  property.  The risk that any safety or security
device,  service or program  may not be  effective,  or may  malfunction,  or be
circumvented by a criminal,  is assumed by Tenant with respect to Tenant's

                                       20
<PAGE>

property and interests, and Tenant shall obtain insurance coverage to the extent
Tenant  desires  protection  against such  criminal  acts and other  losses,  as
further  described in this Lease.  Tenant agrees to cooperate in any  reasonable
safety or security program developed by Landlord or required by Applicable Laws.

         Any amounts  which  Tenant is  required to pay to Landlord  pursuant to
this Section 7.01 shall be payable upon demand by Landlord and shall  constitute
additional rent.

         7.02  Interruption  of Services.  Landlord  shall not be liable for any
failure to  furnish,  stoppage  of, or  interruption  in  furnishing  any of the
services or utilities  described in Section 7.01, when such failure is caused by
accident, breakage, repairs, strikes, lockouts, power shortages, labor disputes,
labor disturbances,  governmental regulation,  civil disturbances,  acts of war,
moratorium or other  governmental  action,  or any other cause beyond Landlord's
reasonable  control,  and,  in such event,  Tenant  shall not be entitled to any
damages nor (except as otherwise  provided in Section  7.02(A)  below) shall any
failure or interruption abate or suspend Tenant's obligation to pay Monthly Base
Rent and Additional Rent required under this Lease or constitute or be construed
as a  constructive  or other  eviction  of  Tenant.  Further,  in the  event any
governmental  authority  or  public  utility  promulgates  or  revises  any law,
ordinance,  rule or  regulation,  or  issues  mandatory  controls  or  voluntary
controls  relating to the use or  conservation of energy,  water,  gas, light or
electricity, the reduction of automobile or other emissions, or the provision of
any other  utility or  service,  Landlord  may take any  reasonably  appropriate
action to comply with such law, ordinance,  rule, regulation,  mandatory control
or voluntary guideline and Tenant's obligations  hereunder shall not be affected
by any such action of Landlord. Notwithstanding the foregoing:

         (A) If (i) during the Lease Term  Landlord  is unable to furnish to the
Premises any of the  utilities  and  services  described in Section 7.0 1(A)-(E)
hereinabove  (a "Service  Failure")  for a continuous  period of fifteen (15) or
more  business days  ("15-Day  Period"),  and (ii) during said 15-Day Period the
Service  Failure renders the Premises  substantially  unusable for the Permitted
Uses, then (iii) commencing at expiration of the 15-Day Period and ending on the
date that the Service Failure ends, the Monthly Base Rent for the Premises shall
be  abated  pro rata in  proportion  to the  portion  of the  Premises  rendered
substantially unusable as a consequence of the Service Failure.

         (B) If (i) during the Lease Term a Service Failure occurs and continues
for a continuous period of ninety (90) or more calendar days ("90-Day  Period"),
and (ii) during said 90-Day  Period the  Service  Failure  renders the  Premises
substantially  unusable  for  the  Permitted  Uses,  then  (iii)  commencing  at
expiration of the 90-Day Period and ending thirty (30) calendar days  thereafter
(the "Window Period"),  Landlord and Tenant shall each have the right and option
to terminate this Lease.  Landlord and/or Tenant shall exercise this termination
right,  if at all, by delivery of written  notice  thereof to the other Landlord
prior to  expiration  of the Window  Period,  in which  event  this Lease  shall
terminate,  expire and have no further force or effect,  said  termination to be
effective  thirty (30) calendar days after delivery of the  termination  notice.
However,  if prior to expiration of the Window Period neither Landlord or Tenant
exercise  their right to terminate  the Lease as provided in this Section  7.02,
then the right to terminate  herein granted shall itself  terminate,  expire and
have no further force or effect.

                                       21
<PAGE>

                                   ARTICLE 8
                            MAINTENANCE AND REPAIRS

         8.01  Landlord's  Obligations.  Except as provided in Section  8.02 and
Section 8.03 below,  Landlord shall maintain the Building,  the common areas and
the  utility  delivery  systems to the point of entry into the  Premises in good
order and repair  throughout the Lease Term;  provided,  however,  that Landlord
shall not be liable  for any  failure  to make any  repairs  or to  perform  any
maintenance  unless such failure  shall persist for an  unreasonable  time after
written  notice of the need for such repairs or maintenance is given to Landlord
by Tenant.  Except as  provided in Article 11,  there shall be no  abatement  of
Rent,  nor shall there be any liability of Landlord,  by reason of any injury or
inconvenience to, or interference with,  Tenant's business or operations arising
from the making of, or failure to make, any  maintenance or repairs in or to any
portion  of the  Building.  Subject  to the  foregoing,  Landlord  agrees to use
commercially reasonable efforts to perform any necessary repairs and maintenance
to the Building.

         8.02 Tenant's Obligations.  During the Lease Term, Tenant shall, at its
sole  cost  and  expense,  maintain  the  Premises  in  good  order  and  repair
(including,  without limitation, the carpet, wall-covering,  doors, plumbing and
other fixtures,  equipment,  alterations and improvements,  whether installed by
Landlord or Tenant).  Further,  Tenant shall be responsible for, and upon demand
by Landlord shall promptly  reimburse Landlord for, any damage to any portion of
the Building or the Premises  caused by (a) Tenant's  activities in the Building
or the Premises; (b) the performance or existence of any alterations,  additions
or improvements made by Tenant in or to the Premises; (c) the installation, use,
operation  or  movement of  Tenant's  property  in or about the  Building or the
Premises;  or (d) any actively negligent act or wilful omission by Tenant or its
officers,  directors,   shareholders,   members,  partners,  employees,  agents,
representatives, agents, contractors, and (while on, in or about the Building or
Premises) invitees of Tenant.

         8.03 Landlord's  Rights.  Landlord and its  contractors  shall have the
right,  at all  reasonable  times and upon  prior oral or  telephonic  notice to
Tenant at the Premises, other than in the case of any emergency in which case no
notice shall be required,  to enter upon the Premises to make any repairs to the
Premises  or Building  reasonably  required or deemed  reasonably  necessary  by
Landlord and to erect such equipment,  including  scaffolding,  as is reasonably
necessary to effect such repairs.  Subject to the  foregoing,  when entering and
working in the Premises Landlord agrees to use commercially  reasonable  efforts
to minimize interference with Tenant's business operations.

                                   ARTICLE 9
                    ALTERATIONS, ADDITIONS AND IMPROVEMENTS

         9.01  Landlord's  Consent;  Conditions.  Subject to the  provisions  of
Section  9.01(A)  below,  Tenant  shall  not  make  or  permit  to be  made  any
alterations,  additions,  or improvements in or to the Premises  ("Alterations")
without the prior written  consent of Landlord,  which consent,  with respect to
non-structural  alterations,  shall not be unreasonably  withheld.  Landlord may
impose as a condition to  consenting to any  Alterations  such  requirements  as
Landlord

                                       22
<PAGE>

reasonably deems necessary or desirable including without  limitation:  Tenant's
submission to Landlord,  for Landlord's prior written approval, of all plans and
specifications relating to the Alterations; Landlord's prior written approval of
the time or times when the Alterations are to be performed;  Tenant's receipt of
all necessary  permits and approvals from all  governmental  authorities  having
jurisdiction  over the Premises prior to the  construction  of the  Alterations;
Tenant's  delivery  to Landlord of such bonds and  insurance  as Landlord  shall
reasonably require; and Tenant's payment to Landlord of all reasonable costs and
expenses paid or incurred by Landlord because of Tenant's Alterations, including
but not limited to costs incurred in reviewing the plans and specifications for,
and the progress of, the  Alterations.  All Alterations  shall be performed by a
general contractor and/or  subcontractors  that is/are duly licensed and in good
standing by the State of California,  who is/are  bonded,  reputable and who are
approved by Landlord in the  exercise of its  reasonable  discretion.  Tenant is
required to provide Landlord  written notice of whether the Alterations  include
the Handling of any Hazardous  Materials  and whether  these  materials are of a
customary  and typical  nature for industry  practices.  Upon  completion of the
Alterations,  Tenant  shall  provide  Landlord  with two (2) copies of  as-built
plans. Neither the approval by Landlord of plans and specifications  relating to
any  Alterations  nor Landlord's  supervision  or monitoring of any  Alterations
shall  constitute  any  warranty by  Landlord  to Tenant of the  adequacy of the
design for Tenant's intended use or the proper performance of the Alterations.

         (A) Notwithstanding the foregoing,  without first receiving  Landlord's
consent Tenant shall have the right to construct and install  Alterations in the
Premises,  but  only on the  following  terms  and  conditions:  (a) the cost of
constructing  and installing  said  Alterations  do not in the aggregate  exceed
Fifteen  Thousand and No/100 Dollars  ($15,000.00);  (b) the  Alterations do not
affect,  involve,  change or modify any heating, air conditioning,  ventilating,
electrical,  gas, steam or other utility system in the Premises or Building; and
(c) the  Alterations  do no affect,  involve,  change or modify  any  structural
component  or  system  in  the  Premises  or  Building  (hereinafter,  a  "Small
Alteration").  Provided,  however,  at least  ten (10)  calendar  days  prior to
commencing  the  construction  or  installation  of any Small  Alteration in the
Premises,  Tenant shall first deliver  written  notice thereof to Landlord along
with a true and correct copy of (i) all plans and specifications relating to the
Small  Alterations,  and (ii)  all  necessary  permits  and  approvals  from all
governmental  authorities  having  jurisdiction  over the Premises  prior to the
construction and installation of the Small Alterations.

         (B) All further  references in this Lease to Alterations shall mean and
include  Small  Alterations  but shall  exclude the Work  described  in the Work
Letter Agreement attached hereto as Exhibit "B".

         9.02  Performance  of  Alterations  Work.  All  work  relating  to  the
Alterations  shall be performed in compliance with the plans and  specifications
approved by Landlord,  all Applicable Laws, ordinances,  rules,  regulations and
directives  of  all  governmental  authorities  having  jurisdiction  (including
without  limitation  Title 24 of the  California  Administrative  Code)  and the
requirements of all carriers of insurance on the Premises and the Building,  the
Board of Underwriters,  Fire Rating Bureau, and similar organizations.  All work
shall  be  performed  in a  diligent,  first  class  manner  and  so as  not  to
unreasonably  interfere with any other tenants or occupants of the Building. All
costs incurred by Landlord relating to the Alterations shall be

                                       23

<PAGE>

payable to Landlord by Tenant within thirty (30) calendar days following receipt
of written demand therefore  (accompanied by reasonable  supporting  information
documenting  said  costs).  No  asbestos-containing  materials  shall be used or
incorporated in the Alterations. No lead-containing  surfacing material, solder,
or other  construction  materials  or fixtures  where the presence of lead might
create a condition of exposure not in compliance with  Environmental  Laws shall
be incorporated in the Alterations.

         9.03 Liens.  Tenant shall pay when due all costs for work performed and
materials supplied to the Premises. Tenant shall keep Landlord, the Premises and
the Building free from all liens, stop notices and violation notices relating to
the  Alterations  or any other work  performed  for,  materials  furnished to or
obligations incurred by or for Tenant and Tenant shall protect,  indemnify, hold
harmless and defend Landlord,  the Premises and the Building of and from any and
all loss, cost,  damage,  liability and expense,  including  attorneys' fees and
costs, arising out of or related to any such liens or notices.  Further,  Tenant
shall  deliver to Landlord not less than ten (10)  calendar  days prior  written
notice  before  commencing  any  Alterations  in or about the Premises to permit
Landlord to post appropriate  notices of  non-responsibility.  Tenant shall also
secure,  prior to  commencing  any  Alterations,  at Tenant's  sole  expense,  a
completion and lien indemnity bond  satisfactory  to Landlord for such work, but
only if  reasonably  required  by  Landlord  based on the size and  scope of the
contemplated Alteration project, the reputation of the contractor performing the
work and the  anticipated  cost of the work.  During the  progress of such work,
Tenant shall, upon Landlord's request,  furnish Landlord with sworn contractor's
statements  and lien waivers  covering all work  theretofore  performed.  Tenant
shall satisfy or otherwise  discharge all liens, stop notices or other claims or
encumbrances  within thirty (30) calendar days after Landlord notifies Tenant in
writing that any such lien, stop notice, claim or encumbrance has been filed. If
Tenant  fails to pay and remove  such lien,  claim or  encumbrance  within  such
thirty (30) calendar day period,  Landlord, at its election, may pay and satisfy
the same and in such event the sums so paid by Landlord,  with interest from the
date of payment at the rate set forth in Section  4.06 hereof for  amounts  owed
Landlord  by Tenant  shall be deemed to be  additional  Rent due and  payable by
Tenant at once without notice or demand.

         9.04 Lease  Termination.  Except as provided in this Section 9.04, upon
expiration  or earlier  termination  of this Lease  Tenant shall  surrender  the
Premises to Landlord in the same  condition  as existed on the date Tenant first
occupied  the  Premises  (whether  pursuant to this Lease or an earlier  Lease),
subject  to  reasonable  wear and tear.  Unless  otherwise  agreed in writing by
Landlord  and Tenant  prior to the  expiration  or earlier  termination  of this
Lease,  upon the  expiration or earlier  termination  of this Lease Tenant shall
remove all of the Alterations  and shall promptly  repair any resulting  damage,
all at Tenant's sole  expense.  All business and trade  fixtures,  machinery and
equipment, furniture, movable partitions and items of personal property owned by
Tenant or installed by Tenant at its expense in the Premises shall be and remain
the  property of Tenant;  upon the  expiration  or earlier  termination  of this
Lease,  Tenant shall, at its sole expense,  remove all such items and repair any
damage to the Premises or the Building  caused by such removal.  If Tenant fails
to remove any such  Alterations,  items or repair such damage promptly after the
expiration or earlier  termination of the Lease,  Landlord may, but need not, do
so with no liability  to Tenant,  and Tenant shall pay Landlord the cost thereof
upon demand.  Notwithstanding the foregoing,  Tenant shall have no obligation to
remove from the

                                       24
<PAGE>

Premises any Work constructed or installed in the Premises  pursuant to the Work
Letter Agreement attached hereto as Exhibit "B".

                                   ARTICLE 10
                         INDEMNIFICATION AND INSURANCE

         10.01 Indemnification.

         (A) Tenant  agrees to  protect,  indemnify,  hold  harmless  and defend
Landlord and any  Mortgagee,  as defined  herein,  and each of their  respective
partners, directors, officers,  shareholders,  agents, employees, successors and
assigns  (except  to the extent  the  losses  described  below are caused by the
active negligence or wilful  misconduct of Landlord,  its agents and employees),
from and against:

                  (i) any and all  loss,  cost,  damage,  liability  or  expense
(including  but not  limited  to  reasonable  attorneys'  fees and legal  costs)
arising out of or related to any claim,  suit or judgment brought by or in favor
of any person or persons for damage, loss or expense due to, but not limited to,
bodily injury,  including  death, or property damage sustained by such person or
persons which arises out of, is occasioned by or is in any way  attributable  to
the use or occupancy of the Premises or any portion of the Building by Tenant or
the acts or omissions of Tenant or its agents, employees,  contractors, clients,
invitees or subtenants (except to the extent the losses are caused by the active
negligence or willful  misconduct of Landlord or its agents or employees).  Such
loss or damage shall include, but not be limited to, any injury or damage to, or
death of,  Landlord's  employees  or agents  or  damage to the  Premises  or any
portion of the Building.

                  (ii) any and all  environmental  damages which arise from: (a)
the Handling of any Tenant's Hazardous Materials,  as defined in Section 6.03 or
(b) the breach of any of the  provisions of this Lease.  For the purpose of this
Lease, "environmental damages"  shall mean (1) all claims,  judgments,  damages,
penalties, fines, costs, liabilities,  and losses (including without limitation,
diminution in the value of the Premises or the Building, damages for the loss of
or  restriction  on use of  rentable  or usable  space or of any  amenity of the
Premises  or any  portion  of the  Building,  and from  any  adverse  impact  of
Landlord's  marketing  of space);  (2) all sums paid for  settlement  of claims,
attorneys' fees, consultants' fees and experts' fees; and (3) all costs incurred
by Landlord in connection  with  investigation  or  remediation  relating to the
Handling  of  Tenant's   Hazardous   Materials,   whether  or  not  required  by
Environmental  Laws or otherwise  required under this Lease.  To the extent that
Landlord  is held  strictly  liable by a court or other  governmental  agency of
competent  jurisdiction  under any Environmental  Laws,  Tenant's  obligation to
Landlord and the other  indemnities  under the foregoing  indemnification  shall
likewise  be  without  regard  to fault on  Tenant's  part with  respect  to the
violation of any Environmental Law which results in liability to the indemnitee.
Tenant's  obligations  and  liabilities  pursuant  to this  Section  10.01 shall
survive the expiration or earlier termination of this Lease.

         (B) Landlord  agrees to protect,  indemnify,  hold  harmless and defend
Tenant  from,  and  against  any  and  all  loss,  cost,  damage,  liability  or
expense, including reasonable attorneys' fees,

                                       25
<PAGE>

with  respect  to any claim of damage or injury to persons  or  property  at the
Premises,  caused by the active  negligence or wilful  misconduct of Landlord or
its agents or employees.

         (C) Notwithstanding  anything to the contrary contained herein, nothing
shall be interpreted or used to in any way affect, limit, reduce or abrogate any
insurance coverage provided by any insurers to either Tenant or Landlord.

         (D)  Notwithstanding  anything to the contrary contained in this Lease,
nothing  herein  shall be  construed to infer or imply that Tenant is a partner,
joint venturer,  agent,  employee, or otherwise acting by or at the direction of
Landlord.

         10.02 Property Insurance.

         (A) At all times  during  the Lease  Term,  Tenant  shall  procure  and
maintain,  at its sole expense,  "all-risk"  property  insurance,  for damage or
other loss caused by fire or other casualty or cause including,  but not limited
to, vandalism and malicious mischief, theft, water damage of any type, including
sprinkler leakage,  bursting of pipes, explosion, in an amount not less than one
hundred percent (100%) of the replacement cost covering (i) all Alterations made
by or for Tenant in the Premises;  and (ii) Tenant's trade  fixtures,  equipment
and other  personal  property from time to time  situated in the  Premises.  The
proceeds of such  insurance  shall be used for the repair or  replacement of the
property  so  insured,  except  that  if not so  applied  or if  this  Lease  is
terminated  following a  casualty,  the  proceeds  applicable  to the  leasehold
improvements  pursuant to which  Landlord  contributed  Landlord's  Contribution
(pursuant to the Work Letter Agreement  attached hereto as Exhibit "B") shall be
paid to Landlord and the proceeds applicable to Tenant's personal property shall
be paid to Tenant.

         (B) At all times  during the Lease  Term,  Landlord  shall  procure and
maintain "all-risk"  property insurance for damage and other loss caused by fire
or other  casualty to the  Building,  in such amounts and with such  insurers as
Landlord deems necessary or appropriate in the exercise of its discretion.

         (C) At all times  during  the Lease  Term,  Tenant  shall  procure  and
maintain business interruption insurance in such amount as will reimburse Tenant
for direct or  indirect  loss of  earnings  attributable  to all perils  insured
against in Section 10.02(A).

         10.03 Liability Insurance.

         (A) At all times  during  the Lease  Term,  Tenant  shall  procure  and
maintain,  at its sole expense,  commercial general liability insurance applying
to the use and  occupancy of the  Premises and the business  operated by Tenant.
Such  insurance  shall have a minimum  combined  single limit of liability of at
least Two Million Dollars  ($2,000,000)  per occurrence and a general  aggregate
limit of at least Two Million Dollars  ($2,000,000).  All such policies shall be
written to apply to all bodily injury,  property damage,  personal injury losses
and  shall be  endorsed  to  include  Landlord  and its  agents,  beneficiaries,
partners,  employees,  and any deed of trust  holder or Mortgagee of Landlord or
any ground  lessor  (whose  names have been  provided  to Tenant) as  additional
insureds.  Such liability  insurance shall be written as primary  policies,  not
excess or

                                       26
<PAGE>

contributing with or secondary to any other insurance as may be available to the
additional insureds.

         (B)  Prior  to the  sale,  storage,  use or  giving  away of  alcoholic
beverages on or from the Premises by Tenant or another  person,  Tenant,  at its
own  expense,  shall  obtain a policy  or  policies  of  insurance  issued  by a
responsible  insurance  company  and in a form  acceptable  to  Landlord  saving
harmless and protecting  Landlord and the Premises  against any and all damages,
claims, liens, judgments,  expenses and costs, including actual attorneys' fees,
arising under any present or future law,  statute,  or ordinance of the State of
California or other governmental  authority having jurisdiction of the Premises,
by reason of any storage,  sale, use or giving away of alcoholic beverages on or
from the  Premises.  Such policy or policies of  insurance  shall have a minimum
combined  single limit of two Million  Dollars  ($2,000,000)  per occurrence and
shall apply to bodily injury, fatal or nonfatal; injury to means of support; and
injury to  property of any person.  Such policy or policies of  insurance  shall
name  Landlord  and  its  agents,  beneficiaries,  partners,  employees  and any
Mortgagee of Landlord or any ground lessor of Landlord as additional insureds.

         (C) Landlord  shall,  at all times  during the Lease Term,  procure and
maintain  commercial  general liability  insurance for the Building in which the
Premises are located. Such insurance shall have minimum combined single limit of
liability of at least Two Million Dollars  ($2,000,000)  per  occurrence,  and a
general aggregate limit of at least Two Million Dollars ($2,000,000).

         10.04 Workers'  Compensation  Insurance.  At all times during the Lease
Term,  Tenant shall  procure and  maintain  Workers'  Compensation  Insurance in
accordance  with the laws of the State of California,  and Employer's  Liability
insurance  with a limit not less than One Million  Dollars  ($1,000,000)  Bodily
Injury Each Accident;  One Million Dollars ($1,000,000) Bodily Injury By Disease
- Each Person; and One Million Dollars  ($1,000,000)  Bodily Injury to Disease -
Policy Limit.

         10.05 Policy  Requirements.  All insurance required to be maintained by
Landlord  and Tenant  shall be issued by insurance  companies  authorized  to do
insurance  business in the State of California and rated not less than A-VIII in
Best's  Insurance  Guide.  A certificate  of insurance  evidencing the insurance
required  under this  Article 10 shall be  delivered  to  Landlord  prior to the
Commencement   Date.  No  such  policy  shall  be  subject  to  cancellation  or
modification  without  thirty (30) days prior written  notice to Landlord and to
any deed of trust holder,  mortgagee or ground lessor  designated by Landlord to
Tenant.  Tenant shall  furnish  Landlord  with a  replacement  certificate  with
respect to any insurance not less than thirty (30) days prior to the  expiration
of the current  policy.  Tenant  shall have the right to provide  the  insurance
required  by this  Article 10  pursuant  to blanket  policies,  but only if such
blanket  policies  expressly  provide  coverage to the  Premises and Landlord as
required by this Lease.

         10.06  Waiver of  Subrogation.  Each party  hereby  waives any right of
recovery  against  the  other  for  injury  or loss due to  hazards  covered  by
insurance or required to be covered, to the extent of the injury or loss covered
thereby. Any policy of insurance to be provided by Tenant

                                       27
<PAGE>

or  Landlord  pursuant  to this  Article 10 shall  contain a clause  denying the
applicable insurer any right of subrogation against the other party.

         10.07  Failure to Insure.  If Tenant  fails to maintain  any  insurance
which Tenant is required to maintain  pursuant to this Article 10,  Tenant shall
be liable to  Landlord  for any loss or cost  resulting  from  such  failure  to
maintain. Tenant may not self-insure against any risks required to be covered by
insurance without Landlord's prior written consent,  which Landlord may grant or
deny in its reasonable discretion.

                                   ARTICLE 11
                             DAMAGE OR DESTRUCTION

         11.01 Total  Destruction.  Except as provided in Section  11.03  below,
this Lease shall automatically terminate if the Building is totally destroyed.

         11.02 Partial  Destruction of Premises.  If the Premises are damaged by
any  casualty  and,  in  Landlord's  opinion,  the  Premises  (exclusive  of any
Alterations  made to the Premises by Tenant) can be restored to its pre-existing
condition  within two hundred  seventy (270) calendar days after the date of the
damage or  destruction,  Landlord  shall,  upon  written  notice  from Tenant to
Landlord of such damage,  except as provided in Section 11.03, promptly and with
due diligence repair any damage to the Premises (exclusive of any Alterations to
the Premises made by Tenant,  which shall be promptly  repaired by Tenant at its
sole expense) and,  until such repairs are  completed,  the Rent shall be abated
from the date of damage or destruction in the same  proportion that the rentable
area of the portion of the  Premises  which is unusable by Tenant in the conduct
of its business  bears to the total  Rentable  Area of the  Premises.  Provided,
however, the Rent shall not be abated if either (a) the damage or destruction is
repaired  within five (5) business days after Landlord  receives  written notice
from Tenant of the casualty,  or (b) the damage or  destruction is the result of
the active negligence or wilful misconduct of Tenant, or any officers, partners,
employees, agents or invitees of Tenant, or any assignee or subtenant of Tenant.

         (A) Notwithstanding the foregoing, if, within ninety (90) calendar days
after the date of the damage or destruction, Landlord reasonably determines (and
such  determination  is delivered to Tenant in writing) that such repairs cannot
be made within said two hundred  seventy (270) calendar day period,  then either
Landlord or Tenant  shall have the right,  by written  notice given to the other
within  thirty  (30)   calendar   days  after  receipt  of  Landlord's   written
determination,  to  terminate  this  Lease  as of  the  date  of the  damage  or
destruction.

         (B) Notwithstanding the foregoing, if, within ninety (90) calendar days
after the damage or destruction,  Landlord either (i) fails to deliver to Tenant
a written determination that such repairs cannot be made within said one hundred
eighty (180) calendar day period,  or (ii) fails to commence making the repairs,
then either  Landlord or Tenant shall have the right, by written notice given to
the other  within  two  hundred  ten (210)  calendar  days after the date of the
damage or  destruction,  to terminate this Lease as of the date of the damage or
destruction.

                                       28
<PAGE>

         11.03 Exceptions to Landlord's Obligations. Notwithstanding anything to
the contrary  contained in this Article 11, Landlord shall have no obligation to
repair the  Premises  if either:  (a) the  Building  is so damaged as to require
repairs to the Building  exceeding  twenty  percent (20%) of the full  insurable
value of the  Building;  or (b) the damage or  destruction  occurs  within three
hundred  sixty-five  (365)  calendar days of the Expiration  Date  (inclusive of
option  periods  which  either  have been  exercised  by Tenant or which  remain
capable of being exercised by Tenant).

         11.04 Waiver.  The provisions  contained in this Lease shall  supersede
any contrary laws (whether statutory,  common law or otherwise) now or hereafter
in effect relating to damage, destruction,  self-help or termination,  including
California Civil Code Sections 1932 and 1933.

                                   ARTICLE 12
                                  CONDEMNATION

         12.01 Taking.  If the entire  Premises or so much of the Premises as to
render the balance  unusable by Tenant shall be taken by  condemnation,  sale in
lieu of  condemnation  or in any other  manner  for any  public or  quasi-public
purpose (collectively "Condemnation"), and if Landlord, at its option, is unable
or unwilling to provide substitute premises containing at least as much rentable
area as described in Section 1.03 above,  then this Lease shall terminate on the
date  that  title or  possession  to the  Premises  is  taken by the  condemning
authority, whichever is earlier.

         12.02  Award.  In the event of any  Condemnation,  the entire award for
such  taking  shall  belong to  Landlord.  Tenant  shall  have no claim  against
Landlord  or the  award  for the value of any  unexpired  term of this  Lease or
otherwise.  However, Tenant shall be entitled to independently pursue a separate
award in a separate  proceeding  for Tenant's  costs and expenses of relocation,
the taking of any improvements and any other costs directly  associated with the
taking,  and Landlord agrees to reasonably  cooperate with Tenant so long as the
same does not diminish Landlord's award.

         12.03  Temporary  Taking.  No temporary  taking of the  Premises  shall
terminate  this Lease or entitle  Tenant to any abatement of the Rent payable to
Landlord under this Lease; provided,  however, that any award for such temporary
taking shall  belong to Tenant to the extent that the award  applies to any time
period  during  the Lease  Term and to  Landlord  to the  extent  that the award
applies to any time period outside the Lease Term.

                                   ARTICLE 13

                             [INTENTIONALLY DELETED]

                                       29
<PAGE>

                                   ARTICLE 14
                           ASSIGNMENT AND SUBLETTING

         14.01  Restriction.  Without  the prior  written  consent of  Landlord,
Tenant shall not, either  voluntarily or by operation of law, assign,  encumber,
or otherwise  transfer this Lease or any interest herein, or sublet the Premises
or any part thereof,  or permit the Premises to be occupied by anyone other than
Tenant or Tenant's  employees  (any such  assignment,  encumbrance,  subletting,
occupation or transfer is hereinafter referred to as a "Transfer"). For purposes
of this Lease, the term "Transfer" shall also include (a) if Tenant is a general
partnership  or  limited  partnership,  the  withdrawal  or  change,  voluntary,
involuntary  or by operation  of law, of a majority of the partners  (limited or
general),  or a transfer  of a majority  of  partnership  interests  (limited or
general),  within  any twelve  (12)  month  period,  or the  dissolution  of the
partnership, and (b) if Tenant is a corporation whose stock is not publicly held
and not traded through an exchange or over the counter,  or a limited  liability
company, the dissolution, merger, consolidation,  division, liquidation or other
reorganization  of Tenant,  or if any of the  following  occur within any twelve
(12) month period:  (i) the sale or other  transfer of more than an aggregate of
fifty percent (50%) of the voting  securities of Tenant (other than to immediate
family  members  by  reason  of  gift or  death)  or (ii)  the  sale,  mortgage,
hypothecation  or pledge of more than an  aggregate  of fifty  percent  (50%) of
Tenant's net assets.  Any Transfer without the prior written consent of Landlord
shall be void and shall constitute a material breach of this Lease.

         (A)  Notwithstanding  the  foregoing,  Tenant  shall  have the right to
assign  this  Lease  or  sublease  the  Premises,  or any  part  thereof,  to an
"Affiliate"  without the prior written  consent of Landlord,  but only if Tenant
first  delivers  fifteen (15)  business  days' or more prior  written  notice to
Landlord.  For purposes of this provision,  the term "Affiliate"  shall mean any
corporation or other entity controlling,  controlled by, or under common control
with (directly or indirectly) Tenant, including,  without limitation, any parent
corporation  controlling Tenant or any subsidiary that Tenant controls. The term
"control," as used herein, shall mean the power to direct or cause the direction
of the management and policies of the controlled entity through the ownership of
more than  fifty  percent  (50%) of the  voting  securities  in such  controlled
entity.

         (B)  Notwithstanding  the  foregoing,  Tenant  expressly  covenants and
agrees not to enter  into any  lease,  sublease,  license,  concession  or other
agreement for the use,  occupancy or  utilization of the Premises which provides
for rental or other  payment for such use,  occupancy  or  utilization  based in
whole or in part on the net  income or profits  derived  by any person  from the
property  leased,  used,  occupied or utilized  (other than an amount based on a
fixed  percentage  or  percentages  of  receipts  or  sales),  and that any such
purported  lease,  sublease,  license,  concession or other  agreement  shall be
absolutely  void and ineffective as a conveyance of any right or interest in the
possession, use, occupancy or utilization of any part of the Premises.

         14.02 Notice to Landlord;  Request for  Consent.  If Tenant  desires to
assign this Lease or any interest  herein to a third party or entity  (including
an Affiliate),  or to sublet all or any part of the Premises to a third party or
entity (including an Affiliate),  or to otherwise engage in a Transfer,  then at
least thirty (30) days but not more than ninety (90) calendar days prior to the

                                       30
<PAGE>

effective date of the proposed assignment,  subletting or Transfer, Tenant shall
submit to Landlord in connection with Tenant's request for Landlord's consent:

         (A) A  statement  signed by the  Tenant and by the  proposed  assignee,
subtenant  or  transferee  containing  (i) the name and address of the  proposed
assignee,  subtenant  or  transferee;  (ii) a copy of the  proposed  assignee's,
subtenant's or transferee's audited (if prepared, or if not prepared, unaudited)
financial statements (including a balance sheet, a profit and loss statement and
a statement  of cash flows) for the fiscal year to date and for the  immediately
preceding  three (3) fiscal years;  (iii) if the  transferee is an Affiliate,  a
certified  statement  as to how  the  ownership  and  control  of the  Affiliate
complies with the  provisions of Section 14.0 1(A), (v) the type of use proposed
for the Premises; and (v) all of the principal terms of the proposed assignment,
subletting or Transfer; and

         (B) If an assignment or sublease,  one (1) true and correct copy of the
proposed final document of assignment or sublease.

         Excluding  a  proposed  assignment  or sublet to an  Affiliate,  within
fifteen (15)  business days after  Landlord's  receipt of all (but not less than
all) of the information and documents  required by this Section 14.02,  Landlord
shall,  at its option by written  notice to  Tenant,  either:  (1) in good faith
acting reasonably,  request such further or additional information that Landlord
may  require in order to make an informed  decision  (in which event the fifteen
(15)  business day period shall be  reinstated  upon  Landlord's  receipt of the
requested information);  or (2) consent to the proposed assignment,  sublease or
Transfer on the identical  terms and conditions set forth in the information and
documents delivered to Landlord; or (3) exercise its rights set forth in Section
14.03. If Landlord for any reason fails to deliver any written notice to Tenant,
then  Landlord  shall be deemed to have  reasonably  withheld its consent.  As a
condition to granting  consent to a proposed  assignment  or sublease,  Landlord
shall have the right to require  that the Tenant and the  proposed  assignee  or
sublessee  execute  and  deliver to one  another  Landlord's  form of Consent to
Sublease or Consent to Assignment of Lease, as appropriate.

         14.03 Landlord's  Recapture Rights.  Excluding a proposed assignment or
sublet to an  Affiliate,  at any time within  fifteen (15)  business  days after
Landlord's  receipt  of all (but  not  less  than  all) of the  information  and
documents  described  in Section  14.02  above,  Landlord  may, at its option by
written notice to Tenant,  elect to: (a) if Tenant proposes to sublet all (100%)
of the Premises,  then Landlord  shall have the right but not the  obligation to
terminate  all (100%) of the Lease;  (b) if Tenant  proposes to sublet less than
all of the Premises,  then Landlord  shall have the right but not the obligation
to sublet the  portion  thereof  proposed  to be sublet by Tenant  upon the same
terms as those  offered to the  proposed  subtenant;  (c) if Tenant  proposes to
assign all (100%) of its  interest in the Lease,  then  Landlord  shall have the
right but not the obligation to terminate all (100%) of the Lease.

         14.04 Landlord's Consent; Standards. Excluding a proposed assignment or
sublet to an Affiliate, Landlord's consent to a proposed assignment,  subletting
or other Transfer shall not be  unreasonably  withheld,  conditioned or delayed;
however,  notwithstanding the foregoing and in addition to any other grounds for
denial, Landlord's consent shall be deemed reasonably withheld if, in Landlord's
good faith judgment: (a) the proposed assignee, subtenant or

                                       31
<PAGE>

transferee does not have the financial strength to perform its obligations under
this Lease or any proposed  sublease;  (b) the business  and  operations  of the
proposed assignee,  subtenant or transferee are not of comparable quality to the
business and operations  being  conducted by other tenants in the Building;  (c)
the proposed  assignee,  subtenant or transferee  intends to use any part of the
Premises for a purpose not permitted  under this Lease;  (d) either the proposed
assignee,  subtenant or  transferee,  or any person which directly or indirectly
controls,  is  controlled  by,  or is under  common  control  with the  proposed
assignee,  subtenant  or  transferee  occupies  space  in  the  Building,  or is
negotiating  with  Landlord to lease space in the  Building;  (e) the use of the
Premises or the  Building by the  proposed  assignee,  subtenant  or  transferee
would, in Landlord's reasonable judgment, significantly impact the Building in a
negative  manner  including  but not  limited to  significantly  increasing  the
pedestrian  traffic in and out of the  Building  or  requiring  any  substantial
alterations  to the  Building to comply with  Applicable  Laws;  (f) the subject
space is not  regular in shape  with  appropriate  means of  ingress  and egress
suitable for normal renting purposes;  (g) the proposed  assignee,  subtenant or
transferee is a government (or agency or instrumentality thereof); or (h) Tenant
has failed to cure a breach or  default  of this  Lease (and the same  continues
after  expiration of any  applicable  cure periods) at the time Tenant  requests
consent to the proposed Transfer.

         14.05 Additional Rent.  Excluding a proposed assignment or sublet to an
Affiliate,  if Landlord  consents to any such  assignment,  subletting  or other
Transfer,  two-thirds  (2/3's) of the amount by which all sums or other economic
consideration received by Tenant in connection with such assignment,  subletting
or  Transfer,  whether  denominated  as rental  or  otherwise,  exceeds,  in the
aggregate,  the total sum which Tenant is  obligated to pay Landlord  under this
Lease  (prorated  to  reflect  obligations  allocable  to less  than  all of the
Premises  under a sublease)  after  deduction for any  improvement  allowance or
other economic concession (planning allowance,  moving expenses,  etc.) actually
paid by Tenant to  sublessees  or assignees,  broker's  commissions,  attorneys'
fees,  costs of  advertising  the space for sublease or  assignment,  etc.  Said
amount shall be paid by Tenant to Landlord  promptly  after receipt by Tenant as
additional  Rent  under  the  Lease  without  affecting  or  reducing  any other
obligation of Tenant hereunder.

         14.06  Landlord's  Costs. If Tenant shall Transfer this Lease or all or
any part of the  Premises  or shall  request  the  consent  of  Landlord  to any
Transfer,  Tenant shall pay to Landlord as additional rent Landlord's reasonable
costs  related  thereto,   including  Landlord's   reasonable  attorneys'  fees.
Provided, however, Landlord's costs and it's attorneys' fees paid or incurred to
review Tenant's  request for a Transfer shall not exceed Two Thousand and No/100
Dollars ($2,000.00) per Transfer.

         14.07 Continuing  Liability of Tenant.  Notwithstanding any assignment,
subletting or other Transfer,  Tenant shall remain as fully and primarily liable
for the  payment of Rent and for the  performance  of all other  obligations  of
Tenant  contained  in  this  Lease  to the  same  extent  as if the  assignment,
subletting  or Transfer had not  occurred;  provided,  however,  that any act or
omission of any assignee,  sublessee or transferee,  other than  Landlord,  that
violates  the terms of this Lease shall be deemed a  violation  of this Lease by
Tenant.

                                       32
<PAGE>

         14.08 Non-Waiver.  The consent by Landlord to any assignment,  sublease
or other Transfer shall not relieve Tenant, or any person claiming through or by
Tenant,  of the  obligation to obtain the consent of Landlord,  pursuant to this
Article 14, to any further assignment,  sublease or other Transfer. In the event
of an assignment, subletting or other Transfer, and with Tenant's prior consent,
Landlord may collect rent from the  assignee,  subtenant or  transferee  without
waiving any rights hereunder and collection of the rent from a person other than
Tenant  shall not be  deemed a waiver of any of  Landlord's  rights  under  this
Article 14, an acceptance of the assignee, subtenant or transferee as Tenant, or
a release of Tenant  from the  performance  of Tenant's  obligations  under this
Lease. If Tenant shall default under this Lease and fail to cure within the time
permitted, then and only in such event Landlord (after written notice to Tenant)
is  irrevocably  authorized to direct any  assignee,  sublessee or transferee to
make all payments under or in connection with the Transfer  directly to Landlord
(which Landlord shall apply towards Tenant's obligations under this Lease) until
such default is cured.

                                   ARTICLE 15
                              DEFAULT AND REMEDIES

         15.01  Events  of  Default  By  Tenant.  The  occurrence  of any of the
following  shall  constitute  a  material  default  and  breach of this Lease by
Tenant:

         (A) The failure by Tenant to pay Monthly Base Rent,  additional Rent or
make any other payment required to be made by Tenant hereunder as and when due.

         (B) The  failure  by Tenant to  execute  and  return  to  Landlord  the
Estoppel Certificate within the period of time required by Section 20.01 of this
Lease.

         (C) The making by Tenant or its Guarantor of any general assignment for
the benefit of creditors,  the filing by or against Tenant or its Guarantor of a
petition under any federal or state  bankruptcy or insolvency  laws (unless,  in
the  case of a  petition  filed  against  Tenant  or its  Guarantor  the same is
dismissed within thirty (30) days after filing); the appointment of a trustee or
receiver to take  possession  of  substantially  all of  Tenant's  assets at the
Premises or Tenant's interest in this Lease or the Premises,  when possession is
not restored to Tenant within thirty (30) days; or the attachment,  execution or
other seizure of substantially all of Tenant's assets located at the Premises or
Tenant's  interest  in  this  Lease  or the  Premises,  if such  seizure  is not
discharged within thirty (30) days.

         (D) The  making by Tenant  of: (i) any  material  misrepresentation  or
omission in this Lease or in connection  with  negotiating or entering into this
Lease;  (ii)  any  material  misrepresentation  or  omission  in  any  financial
statements  or other  materials  provided  at any time  during the Lease Term by
Tenant or by any Guarantor to Landlord; (iii) any material  misrepresentation or
omission in any Estoppel Certificate  delivered by Tenant pursuant to Article 20
of this Lease; or (iv) any material  misrepresentation or omission in connection
with any proposed or actual  assignment,  subletting  or other  Transfer of this
Lease.

         (E) The failure by Tenant to observe or perform any  provision  of this
Lease to be  observed  or  performed  by Tenant  or the  breach by Tenant of any
covenant in this Lease made by

                                       33
<PAGE>

Tenant,  other than those  described  in Sections  15.01 (A),  (B),  (C) and (D)
above,  if such failure  continues  for twenty (20)  calendar days after written
notice thereof by Landlord to Tenant;  provided,  however, that if the nature of
the failure is such that it cannot be cured within the twenty (20)  calendar day
period, no failure shall exist if (i) Tenant commences the curing of the failure
within  the  twenty  (20)  calendar  day  period,  (ii)  thereafter   diligently
prosecutes the same to completion,  and (iii) actually completes the cure within
ninety (90)  calendar  days from receipt of notice of such  failure.  The twenty
(20)  calendar  day  notice  described  herein  shall be in lieu of,  and not in
addition to, any notice  required under Section 1161 of the  California  Code of
Civil  Procedure  or any other law now or  hereafter  in effect  requiring  that
notice of default be given prior to the commencement of an unlawful  detainer or
other legal proceeding.

         15.02 Landlord's  Right To Terminate Upon Tenant Default.  In the event
Tenant  commits  any default or breach of this Lease  pursuant to Section  15.01
above,  Landlord  shall  have the right to  terminate  this  Lease  and  recover
possession  of the  Premises by giving  written  notice to Tenant of  Landlord's
election to terminate  this Lease,  in which event Landlord shall be entitled to
receive from Tenant:

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

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

         (C) The worth at the time of award of the  amount  by which the  unpaid
Rent for the  balance of the term after the time of award  exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided; plus

         (D) Any other  amount  necessary  to  compensate  Landlord  for all the
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

         (E) At  Landlord's  election,  such other  amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable law.

         As used in  subparagraphs  (A) and (B)  above,  "worth  at the  time of
award"  shall be  computed  by  allowing  interest  on such  amounts at the then
highest lawful rate of interest,  but in no event to exceed one percent (1%) per
annum plus the rate  established by the Federal Reserve Bank of San Francisco on
advances made to member banks under  Sections 13 and 13a of the Federal  Reserve
Act ("discount  rate") prevailing at the time of the award. As used in paragraph
(C) above,  "worth at the time of award" shall be computed by  discounting  such
amount by (i) the discount  rate of the Federal  Reserve  Bank of San  Francisco
prevailing at the time of award plus (ii) one percent (1%).

         15.03  Mitigation of Damages.  Whether or not Landlord  terminates this
Lease or terminates Tenant's right to possession of the Premises, Landlord shall
under no circumstance

                                       34
<PAGE>

have any obligation to mitigate Landlord's damages except to the extent required
by applicable law. If Landlord is required by applicable law to mitigate damages
as  provided  herein:  (a)  Landlord  shall be required  only to use  reasonable
efforts to mitigate,  which shall not exceed such efforts as Landlord  generally
uses to lease other space in the  Building,  (b) Landlord  will not be deemed to
have failed to mitigate if Landlord or its  affiliates  lease any other portions
of the Building or other  projects  owned by Landlord or its  affiliates  in the
same geographic area,  before reletting all or any portion of the Premises,  and
(c) any failure to mitigate as  described  herein with  respect to any period of
time shall only reduce the Rent and other amounts to which  Landlord is entitled
hereunder by the reasonable  rental value of the Premises during such period. In
recognition that the value of the Building depends on the rental rates and terms
of leases  therein,  Landlord's  rejection of a prospective  replacement  tenant
based on an offer of rentals below Landlord's  published rates for new leases of
comparable  space at the  Building  at the time in  question,  or at  Landlord's
option,  below the rates  provided  in this  Lease,  or  containing  terms  less
favorable than those contained herein,  shall not give rise to a claim by Tenant
that Landlord failed to mitigate Landlord's damages.

         15.04  Landlord's  Right To Continue Lease Upon Tenant Default.  In the
event Tenant commits a default or breach of this Lease pursuant to Section 15.01
above and Tenant abandons the Premises,  if Landlord does not elect to terminate
this Lease as provided in Section  15.02 above,  Landlord may from time to time,
without  terminating  this Lease,  enforce all of its rights and remedies  under
this Lease. Without limiting the foregoing, Landlord has the remedy described in
California Civil Code Section 1951.4 (Landlord may continue this Lease in effect
after Tenant's  default and  abandonment  and recover Rent as it becomes due, if
Tenant has the right to Transfer,  subject only to reasonable  limitations).  In
the event Landlord re-lets the Premises, to the fullest extent permitted by law,
the  proceeds of any  reletting  shall be applied  first to pay to Landlord  all
costs and expenses of such reletting  (including without  limitation,  costs and
expenses of retaking or repossessing the Premises, removing persons and property
therefrom,   securing  new  tenants,   including   expenses  for   redecoration,
alterations  and other costs in connection  with  preparing the Premises for the
new tenant,  and if Landlord shall maintain and operate the Premises,  the costs
thereof) and receivers' fees incurred in connection  with the appointment of and
performance by a receiver to protect the Premises and Landlord's  interest under
this Lease and any necessary or reasonable  alterations;  second, to the payment
of any  indebtedness  of  Tenant to  Landlord  other  than  Rent due and  unpaid
hereunder;  third,  to the  payment  of Rent due and unpaid  hereunder;  and the
residue,  if any,  shall be held by Landlord  and applied in payment of other or
future obligations of Tenant to Landlord as the same may become due and payable,
and Tenant shall not be entitled to receive any portion of such revenue.

         15.05 Right of Landlord to Perform.  All covenants and agreements to be
performed  by Tenant  under this Lease shall be  performed by Tenant at Tenant's
sole cost and expense.  If Tenant shall fail to pay any sum of money, other than
Rent, required to be paid by it hereunder or shall fail to perform any other act
on its  part to be  performed  hereunder  beyond  any  applicable  cure  period,
Landlord  may,  but shall not be  obligated  to, make any payment or perform any
such other act on  Tenant's  part to be made or  performed,  without  waiving or
releasing  Tenant  of its  obligations  under  this  Lease.  Any sums so paid by
Landlord and all necessary  incidental costs,  together with interest thereon at
the lesser of the maximum rate  permitted by law if any or ten percent (10%) per
annum from the date of such payment, shall be payable to Landlord as

                                       35
<PAGE>

additional  rent on demand and Landlord  shall have the same rights and remedies
in the event of nonpayment as in the case of default by Tenant in the payment of
Rent.

         15.06  Non-Waiver.  Nothing in this  Article  shall be deemed to affect
Landlord's rights to indemnification  for liability or liabilities arising prior
to termination of this Lease for personal  injury or property  damages under the
indemnification  clause or clauses  contained in this Lease.  No  acceptance  by
Landlord of a lesser sum than the Rent then due shall be deemed to be other than
on  account  of the  earliest  installment  of such  rent  due,  nor  shall  any
endorsement  or statement on any check or any letter  accompanying  any check or
payment as rent be deemed an accord and  satisfaction,  and  Landlord may accept
such check or payment  without  prejudice  to  Landlord's  right to recover  the
balance of such  installment  or pursue any other remedy in the Lease  provided.
The delivery of keys to any employee of Landlord or to  Landlord's  agent or any
employee thereof shall not operate as a termination of this Lease or a surrender
of the Premises.

         15.07 Cumulative Remedies.  The specific remedies to which Landlord may
resort  under the terms of the Lease are  cumulative  and are not intended to be
exclusive of any other  remedies or means of redress to which it may be lawfully
entitled in case of any breach or threatened  breach by Tenant of any provisions
of the Lease. In addition to the other remedies provided in the Lease,  Landlord
shall be entitled to a restraint by  injunction of the violation or attempted or
threatened  violation of any of the  covenants,  conditions or provisions of the
Lease or to a decree  compelling  specific  performance  of any such  covenants,
conditions or provisions.

         15.08 Default by Landlord. Landlord's failure to perform or observe any
of its obligations under this Lease shall constitute a default by Landlord under
this Lease only if such failure shall  continue for a period of thirty (30) days
(or such additional  time, if any, that is reasonably  necessary to promptly and
diligently cure the failure) after Landlord  receives written notice from Tenant
specifying  the default.  The notice shall give in reasonable  detail the nature
and extent of the failure and shall identify the Lease  provision(s)  containing
the  obligation(s).  If Landlord shall default in the  performance of any of its
obligations  under this Lease (after notice and  opportunity to cure as provided
herein),  Tenant may pursue any remedies  available to it under the law and this
Lease,  except that, in no event shall Landlord be liable for punitive  damages,
lost profits,  business interruption,  speculative,  consequential or other such
damages.  In recognition  that Landlord must receive timely payments of Rent and
operate the Building, Tenant shall have no right of self-help to perform repairs
or any  other  obligation  of  Landlord,  and shall  have no right to  withhold,
set-off, or abate Rent.

                                   ARTICLE 16
                         ATTORNEYS FEES: COSTS OF SUIT

         16.01  Attorneys Fees. If either Landlord or Tenant commence any action
or other proceeding against the other arising out of, or relating to, this Lease
or the  Premises  or the  Building,  the  prevailing  party shall be entitled to
recover  from the losing  party,  in  addition to any other  relief,  its actual
attorneys fees  irrespective of whether or not the action or other proceeding is
prosecuted  to judgment and  irrespective  of any court  schedule of  reasonable
attorneys'  fees. In addition, where the prevailing  party of any such action is
the Landlord,  Tenant shall reimburse Landlord,  upon demand, for all reasonable
attorneys' fees incurred in collecting Rent or

                                       36
<PAGE>

otherwise seeking  enforcement  against Tenant,  its sublessees and assigns,  of
Tenant's  obligations  under this Lease.  If any action or proceeding  hereunder
embraces  more than one  dispute  and one  party is the  prevailing  party  with
respect to one but not all of the disputes,  the court shall apportion the costs
and  expenses  and  reasonable  attorneys'  fees  incurred by the parties to the
separate  disputes,  and thereby  equitably  determine the amount to be borne by
each party.

         16.02  Indemnification.   Should  Landlord  be  made  a  party  to  any
litigation  instituted by Tenant  against a party other than  Landlord,  or by a
third party against  Tenant,  Tenant shall  indemnify,  hold harmless and defend
Landlord from any and all loss, cost,  liability,  damage or expense incurred by
Landlord,  including attorneys' fees, in connection with the litigation,  except
to the extent such losses,  costs and damages are  directly  caused by the gross
negligence or wilful misconduct of Landlord.

                                   ARTICLE 17
                          SUBORDINATION AND ATTORNMENT

         17.01  Subordination.  This Lease, and the rights of Tenant  hereunder,
are and shall be subject and  subordinate to the interests of(a) all present and
future ground  leases and master leases of all or any part of the Building;  (b)
present and future  mortgages and deeds of trust  encumbering all or any part of
the Building;  (c) all past and future advances made under any such mortgages or
deeds of trust; and (d) all renewals, modifications, replacements and extensions
of any such  ground  leases,  master  leases,  mortgages  and  deeds  of  trust;
provided,  however,  that any lessor under any such ground lease or master lease
or any  mortgagee or  beneficiary  under any such mortgage or deed of trust (any
such  lessor,   mortgagee  or  beneficiary  is  hereinafter  referred  to  as  a
"Mortgagee"  and any  such  lease,  mortgage  or deed of  trust  is  hereinafter
referred to as a "Mortgage")  shall have the right to elect,  by written  notice
given to Tenant,  to have this Lease  made  superior  in whole or in part to any
such Mortgage (or subject and  subordinate  to such Mortgage but superior to any
junior  mortgage or junior deed of trust).  Upon demand,  Tenant shall  execute,
acknowledge and deliver any instruments  reasonably requested by Landlord or any
such Mortgagee to effect the purposes of this Section 17.01, provided,  however,
such instruments must contain (and any  subordination  required pursuant to this
Section  17.01 shall be subject to and  conditioned  upon) the  agreement by any
such Mortgagee (or by any other person taking title to the Building by reason of
the termination or foreclosure of any superior Mortgage) not to disturb Tenant's
quiet  enjoyment of the  Premises so long as Tenant shall not have  committed an
Event of Default  hereunder  which remains uncured  following  expiration of all
applicable  cure  periods.  Such  instruments  may contain,  among other things,
provisions  to the effect that such  Mortgagee  (hereafter,  for the purposes of
this Section 17.01, a "Successor  Landlord") shall (i) not be liable for any act
or omission of Landlord or its  predecessors,  if any, prior to the date of such
Successor  Landlord's  succession to Landlord's  interest under this Lease; (ii)
not be subject to. any offsets or defenses  which Tenant might have been able to
assert against Landlord or its  predecessors,  if any, prior to the date of such
Successor  Landlord's  succession to Landlord's interest under this Lease; (iii)
not be liable for the return of any security  deposit under the Lease unless the
same shall have actually been deposited with such  Successor  Landlord;  (iv) be
entitled  to  receive  notice of any  Landlord  default  under this Lease plus a
reasonable  opportunity to cure such default prior to Tenant having any right or
ability to terminate this Lease as a result of such Landlord default; (v) not be
bound by any rent

                                       37
<PAGE>

or additional  rent which Tenant might have paid for more than the current month
to Landlord;  (vi) not be bound by any amendment or modification of the Lease or
any cancellation or surrender of the same made without the existing  Mortgagee's
prior written consent;  (vii) not be bound by any obligation to make any payment
to  Tenant  which  was  required  to be made  prior to the time  such  Successor
Landlord  succeeded  to  Landlord's  interest,  and  (viii)  not be bound by any
obligation  under the Lease to perform any work or to make any  improvements  to
the demised  Premises.  Any  obligations  of any  Successor  Landlord  under its
respective  lease  shall be  non-recourse  as to any  assets  of such  Successor
Landlord other than its interest in the Premises and improvements.

         (A)  Notwithstanding  the foregoing,  provided Tenant is not in default
under this  Lease,  Landlord  agrees to use  diligent,  commercially  reasonable
efforts  to  obtain  a  subordination  agreement  from  the  Mortgagee  which is
reasonably acceptable to Tenant. Such subordination agreement may be embodied in
the Mortgagee's customary form of subordination,  non-disturbance and attornment
agreement.  If,  however,  after  exerting  diligent,   commercially  reasonable
efforts,  Landlord is unable to obtain a  subordination  agreement from any such
Mortgagee  which is  commercially  reasonable to Tenant,  Landlord shall have no
further  obligation to Tenant with respect thereto and Tenant's  obligations set
forth in this Section 17.01 shall remain in force and effect.

         17.02  Attornment  and  Non-Disturbance.  If the  interests of Landlord
under  the  Lease  shall  be  transferred  to any  superior  Mortgagee  or other
purchaser or person taking title to the Building by reason of the termination of
any superior lease or the foreclosure of any superior mortgage or deed of trust,
then Tenant shall be bound to such  Successor  Landlord  under all of the terms,
covenants  and  conditions  of the Lease  for the  balance  of the term  thereof
remaining  and any  extensions  or  renewals  thereof  which may be  effected in
accordance with any option therefor in the Lease, with the same force and effect
as if  Successor  Landlord  were the  landlord  under the Lease.  In said event,
Tenant shall attorn to and recognize as Tenant's  landlord under this Lease such
Successor Landlord, as its landlord,  and the Successor Landlord shall agree not
to disturb  Tenant's quiet enjoyment of the Premises to and recognize  Tenant as
the Tenant under this Lease, but only so long as Tenant shall not have committed
an event of default hereunder which remains uncured following  expiration of all
applicable cure periods.  Said attornment and  non-disturbance  agreements shall
become operative without execution of any further  instruments.  However, if the
Successor   Landlord   shall   require   execution   of  an   attornment  and/or
non-disturbance  agreement,  Tenant  shall,  upon demand,  execute any documents
reasonably  requested  by  any  such  person  to  evidence  the  attornment  and
non-disturbance  described in this Section 17.02, but only on condition that the
same are reasonably  acceptable to Tenant.  Such attornment and  non-disturbance
agreements may be embodied in the  Mortgagee's  customary form of  subordination
and non-disturbance agreement.

         17.03  Mortgagee  Protection.  Tenant agrees to give any Mortgagee,  by
registered  or  certified  mail,  a copy of any  notice of default  served  upon
Landlord by Tenant,  provided that prior to such notice Tenant has been notified
in writing  (by way of service  on Tenant of a copy of  Assignment  of Rents and
Leases, or otherwise) of the address of such Mortgagee  (hereafter the "Notified
Party").  Tenant  further agrees that if Landlord shall have failed to cure such
default  within  twenty  (20) days after  such  notice to  Landlord  (or if such
default cannot be cured

                                       38
<PAGE>

or corrected  within that time, then such additional time as may be necessary if
Landlord has commenced  within such twenty (20) days and is diligently  pursuing
the  remedies or steps  necessary  to cure or correct  such  default),  then the
Notified Party shall have an additional thirty (30) days within which to cure or
correct  such default (or if such  default  cannot be cured or corrected  within
that time,  then such  additional time as may be necessary if the Notified Party
has  commenced  within  such  thirty (30) days and is  diligently  pursuing  the
remedies or steps necessary to cure or correct such default).

                                   ARTICLE 18
                                QUIET ENJOYMENT

         18.01 Quiet Enjoyment.  Provided that Tenant timely performs all of its
obligations hereunder, Tenant shall have and peaceably enjoy the Premises during
the Lease  Term free of claims by or  through  Landlord,  subject  to all of the
terms and conditions contained in this Lease.

                                   ARTICLE 19
                             RULES AND REGULATIONS

         19.01 Rules and Regulations.  The Rules and Regulations attached hereto
as  Exhibit  "C" are hereby  incorporated  by  reference  herein and made a part
hereof.  Tenant shall abide by, and faithfully observe and comply with the Rules
and   Regulations   and  any  reasonable  and   non-discriminatory   amendments,
modifications and/or additions thereto as may hereafter be adopted and published
by written notice to tenants by Landlord for the safety,  care,  security,  good
order and/or cleanliness of the Premises or the Building.  Landlord shall not be
liable to Tenant for any  violation of such rules and  regulations  by any other
tenant or  occupant  of the  Building,  provided,  however,  Landlord  shall use
commercially reasonable efforts to cure any such violations.

                                   ARTICLE 20
                             ESTOPPEL CERTIFICATES

         20.01 Estoppel Certificates. Tenant agrees at any time and from time to
time  upon not less than ten (10)  business  days'  prior  written  notice  from
Landlord  to  execute,  acknowledge  and  deliver to  Landlord or any current or
prospective  Mortgagee  or  purchaser  of the  Building,  a statement in writing
addressed and certifying to Landlord and any current or prospective Mortgagee or
purchaser of the Building, and to any other party designated by Landlord, to the
extent accurate,  that this Lease is unmodified and in full force and effect (or
if there have been  modifications,  that the same is in full force and effect as
modified and stating the modifications);  that Tenant has accepted possession of
the Premises,  which are acceptable in all respects,  and that any  improvements
required by the terms of this Lease to be made by Landlord  have been  completed
to the satisfaction of Tenant; that Tenant is in full occupancy of the Premises;
that no rent has been paid more than thirty (30) days in advance; that the first
month's Monthly Base Rent has been paid; that Tenant is entitled to no free rent
or other  concessions  except as stated in this Lease;  that Tenant has not been
notified of any previous assignment of Landlord's or any predecessor  landlord's
interest  under this Lease;  the dates to which  Monthly  Base Rent,  additional
rental and other  charges have been paid;  that  Tenant,  as of the date of such
certificate has no charge, lien or claim of setoff under this Lease or otherwise
against Monthly Base Rent,

                                       39
<PAGE>

additional  rental or other charges due or to become due under this Lease;  that
Landlord  is  not in  default  in  performance  of any  covenant,  agreement  or
condition contained in this Lease; that Tenant does not have the right to extend
the Lease  Term,  or to renew the Lease,  or to expand  into other  space in the
Building;  and any other  matter  relating to this Lease or the  Premises or the
Building,  and  if so,  specifying  each  such  default,  matter  or  item  with
particularity. In addition, in the event that such certificate is being given to
any  Mortgagee,  such  statement  may contain any other  provisions  customarily
required by such Mortgagee  including,  without limitation,  an agreement on the
part of Tenant to  furnish to such  Mortgagee,  written  notice of any  Landlord
default and a reasonable  opportunity for such Mortgagee to have additional time
to cure such default  prior to Tenant being able to  terminate  this Lease.  Any
such statement delivered pursuant to this Section may be relied upon by Landlord
or any current or prospective  Mortgagee or purchaser of the Building to whom it
is  addressed  and  such  statement,  if  required  by  its  addressee,  may  so
specifically  state.  If Tenant  does not  execute,  acknowledge  and deliver to
Landlord the statement as and when required  herein,  Landlord is hereby granted
the right to execute such statement on Tenant's behalf, which statement shall be
binding on Tenant to the same extent as if executed by Tenant.

                                   ARTICLE 21
                               ENTRY BY LANDLORD

         21.01  Entry By  Landlord.  Upon  providing  at least 24 hours  advance
notice to Tenant (except in the event of an emergency, when advance notice shall
not be required),  Landlord may enter the Premises at all  reasonable  times to:
with good cause,  inspect the same; exhibit the same to prospective  purchasers,
Mortgagees or tenants;  determine  whether  Tenant is complying  with all of its
obligations  under  this  Lease;  supply  janitorial  and other  services  to be
provided   by   Landlord  to  Tenant   under  this   Lease;   post   notices  of
non-responsibility;  and make repairs or  improvements  in or to the Building or
the Premises; provided, however, that all such work shall be done as promptly as
reasonably  possible  and so as to cause as  little  interference  to  Tenant as
reasonably  possible.  Tenant hereby waives any claim for damages for any injury
or  inconvenience  to, or  interference  with,  Tenant's  business,  any loss of
occupancy or quiet  enjoyment of the  Premises or any other loss  occasioned  by
such  entry.  Landlord  shall at all times  have and  retain a key with which to
unlock all of the doors in, on or about the Premises (excluding Tenant's vaults,
safes and  similar  areas  designated  by Tenant in  writing  in  advance),  and
Landlord  shall  have the right to use any and all means by which  Landlord  may
deem proper to open such doors to obtain entry to the Premises, and any entry to
the Premises  obtained by Landlord by any such means,  or  otherwise,  shall not
under any  circumstances  be deemed or  construed  to be a forcible  or unlawful
entry into or a detainer of the Premises or an eviction, actual or constructive,
of Tenant from any part of the Premises. Such entry by Landlord shall not act as
a termination of Tenant's duties under this Lease.

                                   ARTICLE 22
                         LANDLORD'S LEASE UNDERTAKINGS;
                        TRANSFER OF LANDLORD'S INTEREST

         22.01 Landlord's Lease  Undertakings.  Notwithstanding  anything to the
contrary  contained in this Lease or in any exhibits,  riders or addenda  hereto
attached (collectively the

                                       40
<PAGE>

"Lease  Documents"),  it is expressly  understood  and agreed by and between the
parties  hereto that:  (a) the recourse of Tenant or its  successors  or assigns
against  Landlord  with  respect  to the  alleged  breach  by or on the  part of
Landlord of any  representation,  warranty,  covenant,  undertaking or agreement
contained in any of the Lease Documents or otherwise arising out of Tenant's use
of the Premises or the Building (collectively,  "Landlord's Lease Undertakings")
shall  extend only to  Landlord's  interest in the  Building  and real estate of
which the Premises are a part  ("Landlord's  Real  Estate") and not to any other
assets of Landlord or its officers, directors or shareholders; and (b) except to
the extent of  Landlord's  interest  in  Landlord's  Real  Estate,  no  personal
liability  or  personal  responsibility  of  any  sort  with  respect  to any of
Landlord's  Lease  Undertakings  or any alleged breach thereof is assumed by, or
shall at any time be asserted or  enforceable  against,  Landlord,  its property
manager,  its  asset  manager,  its  leasing  broker,  or  against  any of their
respective  directors,   officers,   employees,  agents,  constituent  partners,
beneficiaries, trustees or representatives.

         22.02 Transfer of Landlord's Interest.  In the event of any transfer of
Landlord's  interest  in the  Building  and upon the  assumption  of  Landlord's
obligations  by the  transferee,  Landlord  shall  be  automatically  freed  and
relieved  from all  applicable  liability  with  respect to  performance  of any
covenant or obligation on the part of Landlord, provided any deposits or advance
rents held by Landlord are turned over to the grantee and said grantee expressly
assumes, subject to the limitations of this Article 22, all the terms, covenants
and  conditions of this Lease to be performed on the part of Landlord,  it being
intended  hereby that the covenants and  obligations  contained in this Lease on
the part of Landlord shall, subject to all the provisions of this Article 22, be
binding on Landlord,  its successors and assigns,  only during their  respective
periods of ownership.

                                   ARTICLE 23
                                HOLDOVER TENANCY

         23.01  Holdover  Tenancy.  If Tenant holds  possession  of the Premises
after the  expiration  or  termination  of the Lease  Term,  by lapse of time or
otherwise,  Tenant  shall  become a tenant at  sufferance  upon all of the terms
contained herein, except as to Lease Term and Rent. During such holdover period,
Tenant shall pay to Landlord a monthly  rental  equivalent  to one hundred fifty
percent  (150%) of the  Monthly  Base Rent  payable by Tenant to  Landlord  with
respect  to the last  month of the  Lease  Term,  plus such  Additional  Rent as
becomes due from time to time during the holdover period.  The Base Monthly Rent
payable for such holdover  period shall in no event be construed as a penalty or
as liquidated  damages for such  retention of possession.  Without  limiting the
foregoing, Tenant hereby agrees to indemnify,  defend, protect and hold harmless
Landlord,  its  beneficiaries,  and their  respective  agents,  contractors  and
employees,  from and against any and all claims,  liabilities,  actions, losses,
damages  (including  without  limitation,   direct,  indirect,   incidental  and
consequential)  and expenses  (including,  without  limitation,  court costs and
reasonable  attorneys' fees) asserted against or sustained by any such party and
arising from or by reason of such  retention of  possession,  which  obligations
shall survive the expiration or termination of the Lease Term.

                                       41
<PAGE>

                                   ARTICLE 24
                                    NOTICES

         24.01  Notices.  Any  communication,  notice  or  demand  of  any  kind
whatsoever  that  Landlord or Tenant may be required or may desire to give to or
serve upon the other  shall be in  writing  and  addressed  to  Landlord  at the
address set forth Section 1.13 above, and addressed to Tenant at the address set
forth in Section 1.14 above,  and delivered by personal  service,  or by Federal
Express,  DHL or other  similar  overnight  delivery  service,  or by  facsimile
transmission,  or by  registered  or certified  mail,  postage  prepaid,  return
receipt requested.  Any such notice shall be deemed delivered as follows: (a) if
personally  delivered,  the date of  delivery  to the  address  of the person to
receive  such  notice;  (b) if sent by  Federal  Express,  DHL or other  similar
courier  service,  the date of  delivery to the address of the person to receive
such notice; (c) if sent by facsimile transmission,  the date transmitted to the
person to receive such notice if sent by 5:00 p.m. (San Francisco  time) and the
next  business  day if sent  after 5:00 p.m.  (San  Francisco  time);  or (d) if
mailed,  two (2) calendar days after depositing same in the U.S. Postal Service.
Any notice  sent by  facsimile  transmission  must be  confirmed  by  personally
delivering or mailing a copy of the notice sent by facsimile  transmission.  Any
party may change its address for notice by written  notice given to the other at
least five (5)  calendar  days before the  effective  date of such change in the
manner provided in this section.

                                   ARTICLE 25
                                    BROKERS

         25.01 Brokers. The parties recognize as the broker(s) who procured this
Lease the firm(s)  specified  in Section 1.14 and agree that  Landlord  shall be
solely  responsible  for  the  payment  of any  brokerage  commissions  to  said
broker(s),  and that Tenant shall have no responsibility therefor unless written
provision to the  contrary  has been made a part of this Lease.  If either party
has dealt with any other  person or real  estate  broker in respect to  leasing,
subleasing or renting  space in the Building,  the party engaged in such dealing
shall be solely  responsible  for the payment of any fee due said person or firm
and said party shall  protect,  indemnify,  hold  harmless  and defend the other
party from any liability in respect thereto.

                                   ARTICLE 26
                       COMMUNICATIONS AND COMPUTER LINES

         26.01 Communications and Computer Lines.

         (A)  Tenant  may,  in a  manner  consistent  with  the  provisions  and
requirements  of this  Lease,  install,  maintain,  replace,  remove  or use any
communications or computer wires,  cables and related devices  (collectively the
"Lines") at the  Building  or in or serving the  Premises,  provided  that:  (i)
Tenant shall obtain  Landlord's  prior  written  consent,  which  consent may be
conditioned  as  required  by  Landlord,  (ii) if  Tenant  at any time  uses any
equipment  that  may  create  an  electromagnetic  field  exceeding  the  normal
insulation  ratings of  ordinary  twisted  pair riser  cable or cause  radiation
higher than normal  background  radiation,  the Lines therefor  (including riser
cables)   shall  be   appropriately   insulated   to  prevent   such   excessive
electromagnetic  fields or  radiation,  and (iii)  Tenant shall pay all costs in
connection  therewith

                                       42
<PAGE>

Landlord  reserves the right to require  that Tenant  remove any Lines which are
installed in violation of these provisions.

                  1.  Notwithstanding  the  foregoing,  on condition that Tenant
delivers to Landlord at least five (5)  calendar  days  advance  written  notice
prior to installation,  maintenance,  replacement and/or removal of any Lines in
the Building or Premises,  Landlord's consent to install,  maintain,  replace or
remove any such Lines  shall not be  required,  but only if (a) the cost of said
installation,  maintenance,  replacement or removal is less than $5,000.00,  and
(b) said  installation,  maintenance,  replacement or removal does not affect or
involve any Building  systems or the  structure of the Building or the safety of
the  Building  and/or its  occupants,  and (c) said  installation,  maintenance,
replacement or removal does not adversely affect any other Lines in the Building
or Premises.

         (B)  Landlord may (but shall not have the  obligation  to): (i) install
new Lines at the  Building,  and (ii) create  additional  space for Lines at the
Building, and adopt reasonable and uniform rules and regulations with respect to
the Lines.

         (C)  Notwithstanding  anything to the contrary  contained in Article 9,
Landlord  reserves  the right to  require  that  Tenant  remove any or all Lines
installed within or serving the Premises upon termination of this Lease.  Tenant
shall not, without the prior written consent of Landlord in each instance, grant
to any third party a security  interest or lien in or on the Lines, and any such
security  interest or lien granted without  Landlord's  written consent shall be
null and void. Except to the extent arising from the gross negligence or willful
misconduct of Landlord or Landlord's agents or employees, Landlord shall have no
liability for damages  arising from, and Landlord does not warrant that Tenant's
use of any Lines  will be free from the  following  (collectively  called  "Line
Problems"):  (i) any eavesdropping or wire-tapping by unauthorized parties, (ii)
any  failure  of any  Lines to  satisfy  Tenant's  requirements,  or  (iii)  any
shortages, failures, variations,  interruptions,  disconnections, loss or damage
caused by the installation, maintenance, replacement, use or removal of Lines by
or for other tenants or occupants at the Building.  Under no circumstances shall
any Line Problems be deemed an actual or constructive eviction of Tenant, render
Landlord  liable to  Tenant  for  abatement  of Rent,  or  relieve  Tenant  from
performance of Tenant's obligations under this Lease. Landlord in no event shall
be liable for damages by reason of loss of  profits,  business  interruption  or
other consequential damage arising from any Line Problems.

                                   ARTICLE 27
                                    PARKING

         27.01 Parking.  So long as Tenant has not committed an event of default
under this Lease which remains  uncured  following  expiration of all applicable
during  periods,  then Landlord  shall lease to Tenant and Tenant shall have the
right to lease from  Landlord  up to a total of two hundred  twenty-eight  (228)
unreserved  parking  spaces,  and ten (10)  reserved  parking  spaces.  For each
unreserved  parking space,  Tenant shall pay Landlord the prevailing rental rate
of Sixty Five and No/100 Dollars ($65.00) per space per month. For each reserved
parking  space,  Tenant  shall pay Landlord  the  prevailing  rental rate of One
Hundred  Twenty  Five and No/l00  Dollars  ($125.00)  per space per  month.  All
amounts due from Tenant to Landlord for

                                       43

<PAGE>

parking space rental shall be deemed Rent and shall be due and payable by Tenant
to Landlord along with and in addition to Tenant's  payment of Monthly Base Rent
for the  Premises.  The monthly rate for all parking  spaces shall be subject to
periodic adjustments to the then fair market value charged by other managers and
operators  of parking  spaces  situated in the  downtown  Walnut  Creek area (as
determined  by Landlord in its  reasonable  discretion).  Tenant  shall have the
right,  not more than two (2) times during any  calendar  year and upon at least
sixty (60)  calendar  days advance  written  notice to Landlord,  to increase or
decrease  the  number of  unreserved  parking  spaces in  increments of ten (10)
parking spaces per change; provided,  however, in no event shall Tenant have the
right to lease more than two  hundred  twenty-eight  (228)  unreserved  parking
spaces. Subject to the foregoing,  Tenant shall only be obligated to pay for the
actual number of the unreserved  parking spaces which Tenant utilizes during the
Lease Term. Tenant shall not assign,  sublease or transfer the rights and use of
any or all of the parking  spaces to any third party  without the prior  written
consent of Landlord, which consent shall not be unreasonably withheld or delayed
(however,  if Landlord  approves a sublease or  assignment of the Premises or in
the event of a Permitted  Transfer,  the  assignee or  sublessee  shall have the
right to use the  number  of  parking  rights  set  forth in said  agreement  of
sublease or assignment).  If offered by Landlord, Tenant shall have the right to
purchase discounted validation coupon books, which discount may change from time
to time,  and may from time to time be limited in volume of books  available per
month,  but not less than one set (a set being one book of full day  coupons and
one book of 1/2 hour  coupons) of discounted  validation  coupon books per month
will be available  for Tenant's  purchase.  In the event  Tenant  exercises  the
Option to Extend set forth in Section 3.02 above,  and if the exercise  includes
all (100%) of the Premises, then Tenant shall be entitled to lease from Landlord
the same number of  unreserved  parking  spaces and reserved  parking  spaces as
Tenant is entitled to lease  pursuant to this Article 27 at one hundred  percent
(100%) of the then prevailing rate per parking space.  However, if upon exercise
of the Option to Extend the number of rentable  square  feet in the  Premises is
reduced,  then the number of unreserved  spaces that Tenant shall have the right
to lease from Landlord during the Extension Period shall also be reduced to that
number  which is equal to the number of  rentable  square  feet in the  Premises
divided by 1,000, multiplied by 3, minus 10 (to account for the reserved parking
spaces Tenant will retain).

         (A) Notwithstanding the foregoing,  if in the normal course of business
Landlord modifies the procedures  pursuant to which all tenants and occupants of
the Building  can  increase or decrease the number of parking  spaces which they
are obligated to lease,  then upon Landlord's  receipt of a written request from
Tenant,  Tenant  shall be granted  substantially  the same right to  increase or
decrease  the number of parking  spaces to which it is  obligated to lease under
this Lease.

                                   ARTICLE 28
                                 MISCELLANEOUS

         28.01 Entire  Agreement.  This Lease contains all of the agreements and
understandings  relating to the leasing of the Premises and the  obligations  of
Landlord and Tenant in connection with such leasing.  Landlord has not made, and
Tenant is not  relying  upon any  warranties,  or  representations,  promises or
statements  made by Landlord or any agent of Landlord,  except as expressly  set
forth herein. This Lease supersedes any and all prior

                                       44
<PAGE>

agreements and  understandings  between  Landlord and Tenant and alone expresses
the agreement of the parties.

         28.02 Amendments.  This Lease shall not be amended, changed or modified
in any way unless in writing executed by Landlord and Tenant. Landlord shall not
have  waived or  released  any of its rights  hereunder  unless in  writing  and
executed by Landlord.

         28.03 Successors.  Except as expressly provided herein,  this Lease and
the obligations of Landlord and Tenant  contained  herein shall bind and benefit
the successors and assigns of the parties hereto.

         28.04 Force  Majeure.  Landlord shall incur no liability to Tenant with
respect to, and shall not be  responsible  for any  failure to  perform,  any of
Landlord's  obligations hereunder if such failure is caused by any reason beyond
the control of Landlord  including,  but not limited to, strike,  labor trouble,
governmental rule,  regulations,  ordinance,  statute or  interpretation,  or by
fire, earthquake, civil commotion, or failure or disruption of utility services.
The amount of time for Landlord to perform any of Landlord's  obligations  shall
be  extended  by the  amount of time  Landlord  is delayed  in  performing  such
obligation  by reason of any force  majeure  occurrence  whether  similar  to or
different from the foregoing types of occurrences.

         28.05 Survival of  Obligations.  Any  obligations of Landlord or Tenant
accruing  prior to the  expiration of the Lease shall survive the  expiration or
earlier termination of the Lease, and Tenant and Landlord shall promptly perform
all such obligations whether or not this Lease has expired or been terminated.

         28.06 Light and Air. No diminution or shutting off of any light, air or
view by any structure  now or hereafter  erected shall in any manner affect this
Lease or the obligations of Tenant hereunder, or increase any of the obligations
of Landlord hereunder.

         28.07  Governing Law. This Lease shall be governed by, and construed in
accordance with, the laws of the State of California.

         28.08  Severability.  In the event any provision of this Lease is found
to be unenforceable,  the remainder of this Lease shall not be affected, and any
provision  found to be invalid shall be enforceable  to the extent  permitted by
law. The parties  agree that in the event two different  interpretations  may be
given  to any  provision  hereunder,  one of which  will  render  the  provision
unenforceable,  and one of which will  render  the  provision  enforceable,  the
interpretation rendering the provision enforceable shall be adopted.

         28.09 Captions. All captions,  headings,  titles,  numerical references
and computer  highlighting  are for convenience only and shall have no effect on
the interpretation of this Lease.

         28.10 Interpretation. Tenant acknowledges that it has read and reviewed
this Lease and that it has had the  opportunity  to confer  with  counsel in the
negotiation of this Lease.  Accordingly,  this Lease shall be construed  neither
for nor  against  Landlord or Tenant,  but shall

                                       45
<PAGE>

be given a fair and reasonable  interpretation in accordance with the meaning of
its terms and the intent of the parties.

         28.11 Independent Covenants.  Each covenant,  agreement,  obligation or
other  provision  of this  Lease to be  performed  by Tenant  are  separate  and
independent covenants of Tenant, and not dependent on any other provision of the
Lease.

         28.12  Number  and  Gender.  All terms and  words  used in this  Lease,
regardless  of the number or gender in which  they are used,  shall be deemed to
include the appropriate number and gender, as the context may require.

         28.13 Time is of the Essence.  Time is of the essence of this Lease and
the performance of all obligations hereunder.

         28.14  Joint  and  Several  Liability.  If  either  Landlord  or Tenant
comprises more than one person or entity,  or if this Lease is guaranteed by any
party,  all such persons  shall be jointly and  severally  liable for payment of
rents and the performance of said party's obligations hereunder.

         28.15  Exhibits.  Exhibit "A" (Outline of Premises),  Exhibit "B" (Work
Letter  Agreement),  Exhibit  "C" (Rules and  Regulations),  Exhibit  "D" (Suite
Acceptance  Letter),  Exhibit "E" (Special Suite 600 Period Operating  Expenses)
and Exhibit "F" (Schedule of Janitorial  Specifications)  are incorporated  into
this Lease by reference and made a part hereof.

         28.16  Offer to Lease.  The  submission  of this Lease to Tenant or its
broker  or other  agent,  does not  constitute  an offer to  Tenant to lease the
Premises. This Lease shall have no force and effect until (a) it is executed and
delivered  by Tenant to Landlord  and (b) it is fully  reviewed  and executed by
Landlord;  provided,  however,  that, upon execution of this Lease by Tenant and
delivery  to  Landlord,   such  execution  and  delivery  by  Tenant  shall,  in
consideration  of the time and expense  incurred by  Landlord in  reviewing  the
Lease `and Tenant's credit,  constitute an offer by Tenant to Lease the Premises
upon the terms and  conditions  set forth herein  (which offer to Lease shall be
irrevocable for twenty (20) business days following the date of delivery).

         28.17  Choice  of Laws.  Landlord  and  Tenant  hereby  submit to local
jurisdiction  in the State of  California  and agrees  that any action by either
party against the other shall be instituted in the County of Contra Costa, State
of California,  which shall have personal  jurisdiction over Landlord and Tenant
for any action brought in the State of California.

         28.18 Electrical Service to the Premises. Anything set forth in Section
7.01 or  elsewhere  in this  Lease to the  contrary  notwithstanding,  if Tenant
elects to provide its own  electricity to the Premises and does not require that
the same be  furnished  by  Landlord,  then the same  shall be  furnished  by an
electric  utility  company  serving the Building  which is approved by Landlord.
Landlord shall permit Tenant to receive such service  directly from such utility
company at Tenant's cost (except as otherwise  provided herein) and shall permit
Landlord's  wire and  conduits,  to the extent  available,  suitable  and safely
capable, to be used for such purposes.

                                       46
<PAGE>

In said event, Tenant's Percentage Share of Operating Expenses shall be adjusted
to include  only  electricity  furnished to the common areas of the Building and
Real Property.

         28.19 Rights  Reserved by  Landlord.  Landlord  reserves the  following
rights exercisable without notice (except as otherwise expressly provided to the
contrary in this Lease) and without being deemed an eviction or  disturbance  of
Tenant's  use or  possession  of the  Premises  or giving  rise to any claim for
set-off or  abatement of Rent:  (a) to change the name or street  address of the
Building;  (b) to install,  affix and maintain all signs on the exterior  and/or
interior of the Building  (but only to the extent that  Landlord does not reduce
or alter  Tenant's  signage  rights  elsewhere set forth in this Lease);  (c) to
designate  and/or  approve  prior to  installation,  all types of signs,  window
shades,  blinds,  drapes,  awnings  or other  similar  items,  and all  internal
lighting   that  may  be  visible  from  the  exterior  of  the  Premises   and,
notwithstanding  the  provisions of Article 9, the design,  arrangement,  style,
color and general  appearance  of the portion of the  Premises  visible from the
exterior,  and  contents  thereof,  including,  without  limitation,  furniture,
fixtures,  signs,  art work, wall  coverings,  carpet and  decorations,  and all
changes, additions and removals thereto, shall, at all times have the appearance
of premises having the same type of exposure and used for substantially the same
purposes that are generally  prevailing  in comparable  office  buildings in the
area. Any violation of this provision  shall be deemed a material breach of this
Lease; (d) to change the arrangement of entrances,  doors, corridors,  elevators
and/or  stairs  in the  Building,  provided  no  such  change  shall  materially
adversely  affect access to the  Premises;  (e) to grant any party the exclusive
right to conduct any  business or render any service in the  Building,  provided
such  exclusive  right  shall not  operate  to  prohibit  Tenant  from using the
Premises  for the  purposes  permitted  under this Lease;  (f) to  prohibit  the
placement of vending or dispensing machines of any kind in or about the Premises
other than for use by Tenant's employees,  guests and invitees;  (g) to prohibit
the placement of video or other  electronic games in the Premises other than for
use by Tenant's employees,  guests and invitees;  (h)to have access for Landlord
and other  tenants of the Building to any mail chutes and boxes located in or on
the  Premises  according  to the rules of the United  States  Post Office and to
discontinue  any mail chute business in the Building;  (i) to close the Building
after Business Hours, except that Tenant and its employees and invitees shall be
entitled to admission at all times under such rules and  regulations as Landlord
prescribes for security purposes; (j) to install,  operate and maintain security
systems which  monitor,  by close circuit  television or otherwise,  all persons
entering or leaving the  Building;  (k) to install and  maintain  pipes,  ducts,
conduits,  wires and  structural  elements  located in the Premises  which serve
other  parts or other  tenants of the  Building;  and (1) to retain at all times
master keys or pass keys to the Premises.

         28.20  Signage  Rights.  Tenant  shall  have  the  right to (a) two (2)
identification  strips  bearing  Tenant's  name and suite  numerals  at the main
Building directory,  (b) two (2) identification strips for each of the sixth and
seventh  floor  lobby  directories,  (c) one (1)  Building  standard  suite sign
located at the  entrances of Suites 600 and 700, and (d) the single  approximate
3' x 2' identification sign as the same is currently affixed to the lobby on the
ground  floor of the  Building.  Tenant  shall be  responsible  for all costs of
Tenant's signs outside of the entrance doors to Suites 600 and 700. All graphics
of Tenant  visible in or from public  corridors  or the exterior of the Premises
shall be subject to Landlord's prior written approval.

                                       47
<PAGE>

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

LANDLORD                                     TENANT

CALIFORNIA PLAZA OF WALNUT                   ELECTRONIC ARTS, INC.,
CREEK, INC., a Florida not-for-profit        a Delaware corporation
corporation,
By: HEITMAN CAPITAL                          By: David L. Carbone
    MANAGEMENT CORP.,                           Name: David L. Carbone
    an Illinois corporation, agent              Title: Sr. V.P. Finance

By: Thomas M. BUEDI
    Name: Thomas M. BUEDI
    Title: V.P.

                                       48
<PAGE>

                                  EXHIBIT "A"
                             FLOOR PLAN OF PREMISES

                                 TO BE ATTACHED

<PAGE>

FLOOR LEVEL 6

                               [GRAPHIC OMMITTED]

FLOOR 6
Office Square Footage

<PAGE>

FLOOR LEVEL 7

                               [GRAPHIC OMMITTED]

FLOOR 7
Office Square Footage

<PAGE>

                                  EXHIBIT "B"
                             WORK LETTER AGREEMENT

                             [Tenant Performs Work]

         This Work Letter Agreement  ("Work Letter") is executed  simultaneously
with that certain Office Lease (the "Lease")  between  ELECTRONIC  ARTS, INC., a
Delaware corporation, as "Tenant", and CALIFORNIA PLAZA OF WALNUT CREEK, INC., a
Florida not-for-profit  corporation as "Landlord",  relating to demised premises
("Premises") in the building  ("Building") commonly known as CALIFORNIA PLAZA OF
WALNUT CREEK, which Premises are more fully identified in the Lease. Capitalized
terms used herein,  unless otherwise defined in this Work Letter, shall have the
respective meanings ascribed to them in the Lease.

         For and in consideration of the agreement to lease the Premises and the
mutual covenants  contained herein and in the Lease,  Landlord and Tenant hereby
agree as follows:

         1. Work. Tenant, at its sole cost and expense,  shall perform, or cause
to be  performed,  the work (the  "Work") in the  Premises  provided  for in the
Approved  Plans  (as  defined  in  Paragraph  2  hereof).  Subject  to  Tenant's
satisfaction of the conditions  specified in this work letter Agreement,  Tenant
shall be entitled to Landlord's  Contribution (as defined in Paragraphs 8[b] and
8[c] below.

         2. Pre-Construction Activities.

                  (a)  Prior to the  commencement  of any Work in the  Premises,
Tenant  shall  submit  the  following  information  and  items to  Landlord  for
Landlord's review and approval:

                           (i) A detailed  critical path  construction  schedule
containing  the major  components  of the Work and the time  required  for each,
including the scheduled commencement date of construction of the Work, milestone
dates and the estimated date of completion of construction.

                           (ii) An itemized statement of estimated  construction
cost, including fees for permits and architectural and engineering fees.

                           (iii)  Evidence   satisfactory  to  Landlord  in  all
respects  of Tenant's  ability to pay the cost of the Work as and when  payments
become due.

                           (iv) The names and addresses of Tenant's  contractors
(and said contractor's  subcontractors)  and materialmen to be engaged by Tenant
for the Work (individually,  a "Tenant Contractor," and collectively,  "Tenant's
Contractors"). Landlord has the right to approve or disapprove all or any one or
more of Tenant's Contractors. Landlord may, at its election, designate a list of
approved   contractors   for   performance  of  those  portions  work  involving
electrical,  mechanical,  plumbing,  heating,  air  conditioning  or life safety
systems,  from which  Tenant must  select its  contractors  for such  designated
portions of work.

                                       1
<PAGE>

                           (v)  Certified   copies  of  insurance   policies  or
certificates  of insurance  as  hereinafter  described.  Tenant shall not permit
Tenant's  Contractors  to commence  work until the required  insurance  has been
obtained and certified copies of policies or certificates have been delivered to
Landlord.

                           (vi)  Payment  and  performance   bonds  for  all  of
Tenant's  Contractors  naming Landlord (or an agent,  designee or representative
appointed  by  Landlord's  written  notice to  Tenant  given  prior to  Tenant's
procurement of paid bonds) as a dual obligee.

                           (vii)  The  Plans (as  hereinafter  defined)  for the
Work,  which Plans shall be subject to Landlord's  approval in  accordance  with
Paragraph 2(b) below.

                           Tenant  will  update  such  information  and items by
notice to Landlord of any changes.

                  (b) As used herein the term  "Approved  Plans"  shall mean the
Plans (as hereinafter  defined), as and when approved in writing by Landlord. As
used herein, the term "Plans" shall mean the full and detailed architectural and
engineering  plans and  specifications  covering  the Work  (including,  without
limitation,  architectural,  mechanical and electrical  working drawings for the
Work). The Plans shall be subject to Landlord's approval and the approval of all
local  governmental  authorities  requiring  approval  of the  work  and/or  the
Approved Plan.  Landlord shall give its approval or disapproval  (giving general
reasons in case of disapproval) of the Plans within ten (10) business days after
their delivery to Landlord.  Landlord  agrees not to  unreasonably  withhold its
approval of said Plans; provided,  however, that Landlord shall not be deemed to
have acted  unreasonably  if it withholds its approval of the Plans because,  in
Landlord's  reasonable  opinion:  the Work as shown in the  Plans is  likely  to
adversely affect Building  systems,  the structure of the Building or the safety
of the  Building  and/or  its  occupants;  the Work as shown on the Plans  might
impair  Landlord's  ability to furnish services to Tenant or other tenants;  the
Work would  increase the cost of operating the Building;  the Work would violate
any governmental  laws, rules or ordinances (or  interpretations  thereof);  the
Work contains or uses hazardous or toxic materials or substances; the Work would
adversely affect the appearance of the Building; the Work might adversely affect
another  tenant's  premises;  or the Work is prohibited by any mortgage or trust
deed  encumbering the Building.  The foregoing  reasons,  however,  shall not be
exclusive of the reasons for which Landlord may withhold consent, whether or not
such other  reasons  are similar or  dissimilar  to the  foregoing.  If Landlord
notifies  Tenant that  changes are  required  to the final  Plans  submitted  by
Tenant,  Tenant  shall,  within three (3) business  days  thereafter,  submit to
Landlord,  for its approval, the Plans amended in accordance with the changes so
required. The Plans shall also be revised, and the Work shall be changed, all at
Tenant's cost and expense,  to incorporate  any work required in the Premises by
any local governmental field inspector.  Landlord's  approval of the Plans shall
in no way be deemed to be (i) an acceptance  or approval of any element  therein
contained which is in violation of any applicable laws, ordinances,  regulations
or other governmental requirements, or (ii) an assurance that work done pursuant
to the  Approved  Plans  will  comply  with  all  applicable  laws  (or with the
interpretations thereof) or satisfy Tenant's objectives and needs.

                  (c) No Work shall be  undertaken or commenced by Tenant in the
Premises  until (i) Tenant has delivered,  and Landlord has approved,  all items
set forth in Paragraph 2(a) above, and (ii) all necessary  building permits have
been applied for and obtained by Tenant.

                                       2

<PAGE>

         3. Landlord's Costs and Expenses. Within thirty (30) calendar days from
receipt of written  notice  thereof,  Tenant shall pay  Landlord,  as additional
Rent,  an amount equal to (a) the fees,  costs and expenses  paid or incurred by
Landlord to attorneys, architects, engineers and other consultants to review the
Lease, the Plans and/or to coordinate the Work, (b) all equipment, materials and
other items used by  Landlord  and/or its  consultants  in  reviewing  the Plans
and/or coordinating the Work, and (c) the gross salaries of Landlord's employees
(prorated  to  reflect  the  actual  time  spent   reviewing  the  Plans  and/or
coordinating the Work).

         4. Change Orders.  All material changes to the Approved Plans requested
by Tenant must be approved by Landlord in advance of the  implementation of such
changes  as part of the  Work.  All  delays  caused by  Tenant-initiated  change
orders,  including,  without limitation,  any stoppage of work during the change
order review process, are solely the responsibility of Tenant and shall cause no
delay  in the  commencement  of the  Lease  or the  payment  of Rent  and  other
obligations therein set forth.

         5.  Standards Of Design And  Construction  And  Conditions  Of Tenant's
Performance.  All work  done in or upon the  Premises  by  Tenant  shall be done
according to the standards set forth in this Paragraph 5, except as the same may
be  modified in the  Approved  Plans  approved  by or on behalf of Landlord  and
Tenant.

                  (a)  Tenant's  Approved  Plans and the  design,  construction,
installation  and  performance  of the Work  shall  comply  with all  applicable
statutes,   ordinances,   regulations,   laws,  codes  and  industry  standards,
including,  but not  limited  to,  requirements  of  Landlord's  fire  insurance
underwriters.  Further,  if Tenant's design,  construction,  installation and/or
performance of the Work triggers any governmental requirement that Landlord must
cause any  other  part of the  Building  to comply  with  statutes,  ordinances,
regulations,  laws and/or codes,  then Tenant agrees to and shall pay all (100%)
of the cost of said compliance.

                  (b)  Tenant  shall,  at its own cost and  expense,  obtain all
required building permits and occupancy permits. Tenant's failure to obtain such
permits  shall  not  cause a delay in the  obligation  to pay Rent or any  other
obligations set forth in the Lease.

                  (c)  Tenant's  Contractors  shall  be  licensed   contractors,
possessing good labor relations,  capable of performing quality  workmanship and
working in harmony with Landlord's contractors and subcontractors and with other
contractors and  subcontractors  in the Building.  All work shall be coordinated
with any  other  construction  or other  work in the  Building  in order  not to
adversely  affect  construction  work being  performed by or for Landlord or its
tenants.

                  (d) Landlord shall have the right, but not the obligation,  to
perform, on behalf of and for the account of Tenant, subject to reimbursement by
Tenant,  any work which  pertains  to patching of the Work and other work in the
Building.  Landlord shall notify Tenant of its election to perform the foregoing
at the time Tenant submits the Plans for Landlord's review and consent.

                  (e) Tenant  shall use only new,  first-class  materials in the
Work,  except where  explicitly  shown in the Approved Plans.  All Work shall be
done  in a  good  and  workmanlike  manner.  Tenant  shall  obtain  contractors'
warranties of at least one (1) year duration from the

                                       3
<PAGE>

completion of the Work against  defects in workmanship and materials on all work
performed and equipment installed in the Premises as part of the Work.

                  (f) Tenant and Tenant's  Contractors shall make all reasonable
efforts  and  take  all  reasonable   steps   appropriate  to  assure  that  all
construction  activities do not unreasonably interfere with the operation of the
Building or with other  tenants and  occupants  of the  Building.  In any event,
Tenant shall comply with all reasonable rules and regulations existing from time
to  time at the  Building.  Tenant  and  Tenant's  Contractors  shall  take  all
reasonable precautionary steps to minimize dust, noise and construction traffic,
and to protect their  facilities  and the  facilities of others  affected by the
Work and to properly police same. Construction equipment and materials are to be
kept within the Premises and  delivery  and loading of equipment  and  materials
shall be done at such  locations and at such time as Landlord shall direct so as
not to burden the  construction  or operation  of the  Building.  If  reasonably
required by Landlord,  the Premises  shall be sealed off from the balance of the
office  space on the  floor(s)  containing  the  Premises so as to minimize  the
dispersement of dirt, debris and noise.

                  (g)  Landlord  shall have the right to order  Tenant or any of
Tenant's  Contractors who violate the requirements imposed on Tenant or Tenant's
Contractors  in  performing  work to cease  work and remove  its  equipment  and
employees  from the  Building.  No such  action  by  Landlord  shall  delay  the
obligation to pay Rent or any other obligations therein set forth.

                  (h) Utility costs or charges for any service  (including HVAC,
hoisting  or  freight  elevator  and the  like)  to the  Premises  shall  be the
responsibility  of Tenant  from the date  Tenant is  obligated  to  commence  or
commences the Work and shall be paid for by Tenant at Landlord's  standard rates
then in effect.  Tenant  shall  apply and pay for all utility  meters  required.
Tenant shall pay for all support services provided by Landlord's  contractors at
Tenant's request or at Landlord's discretion resulting from breaches or defaults
by Tenant  under this Work Letter  Agreement.  All use of freight  elevators  is
subject to scheduling by Landlord and the rules and regulations of the Building.
Tenant shall  arrange and pay for removal of  construction  debris and shall not
place debris in the Building's waste containers. If required by Landlord, Tenant
shall sort and separate its waste and debris for recycling and/or  environmental
law compliance purposes.

                  (i) Tenant shall permit access to the  Premises,  and the Work
shall  be  subject  to  inspection,   by  Landlord  and  Landlord's  architects,
engineers, contractors and other representatives, at all times during the period
in which the Work is being constructed and installed and following completion of
the Work.

                  (j)  Tenant  shall   proceed  with  its  work   expeditiously,
continuously  and  efficiently,  and  shall  after  construction  has  commenced
diligently  prosecute  said  construction  to  completion.  Tenant  shall notify
Landlord upon  completion of the Work and shall furnish  Landlord and Landlord's
title  insurance  company  with such further  documentation  as may be necessary
under Paragraphs 7 and 8 below.

                  (k) Tenant shall not materially or substantially  deviate from
the Approved Plans in performance of the Work,  except as authorized by Landlord
and its designated

                                       4
<PAGE>

representative in writing.  Tenant shall furnish to Landlord "as-built" drawings
of the Work within thirty (30) days after completion of the Work.

                  (1) Landlord shall have the right to run utility lines, pipes,
conduits, duct work and component parts of all mechanical and electrical systems
where necessary or desirable through the Premises,  to repair, alter, replace or
remove the same,  and to require  Tenant to install and maintain  proper  access
panels thereto.

                  (m) Tenant shall impose on and enforce all applicable terms of
this Work Letter Agreement against Tenant's architect and Tenant's Contractors.

         6. Insurance and Indemnification.

                  (a) In addition to any insurance  which may be required  under
the  Lease,  Tenant  shall  secure,  pay  for and  maintain  or  cause  Tenant's
Contractors  to  secure,   pay  for  and  maintain  during  the  continuance  of
construction  and fixturing  work within the Building or Premises,  insurance in
the following minimum coverages and the following minimum limits of liability:

                           (i) Worker's  Compensation  and Employer's  Liability
Insurance  with limits of not less than  $500,000.00,  or such higher amounts as
may be required from time to time by any Employee Benefit Acts or other statutes
applicable  where the work is to be  performed,  and in any event  sufficient to
protect Tenant's Contractors from liability under the aforementioned acts.

                           (ii)   Comprehensive   General  Liability   Insurance
(including  Contractors'  Protective  Liability)  in an  amount  not  less  than
$1,000,000.00  per occurrence,  whether  involving  bodily injury  liability (or
death resulting therefrom) or property damage liability or a combination thereof
with a minimum aggregate limit of $2,000,000.00, and with umbrella coverage with
limits not less than  $5,000,000.00.  Such insurance shall provide for explosion
and collapse,  completed  operations coverage and broad form blanket contractual
liability  coverage and shall insure  Tenant's  Contractors  against any and all
claims for bodily injury, including death resulting therefrom, and damage to the
property of others and arising from its operations  under the contracts  whether
such  operations are performed by Tenant's  Contractors or by anyone directly or
indirectly employed by any of them.

                           (iii) Comprehensive  Automobile  Liability Insurance,
including the ownership,  maintenance and operation of any automotive equipment,
owned,  hired,  or  non-owned  in an amount not less than  $500,000.00  for each
person in one accident,  and $1,000,000.00 for injuries sustained by two or more
persons in any one accident and property damage  liability in an amount not less
than  $1,000,000.00  for each  accident.  Such insurance  shall insure  Tenant's
Contractors  against  any and all  claims  for bodily  injury,  including  death
resulting  therefrom,  and damage to the  property  of others  arising  from its
operations  under the  contracts,  whether  such  operations  are  performed  by
Tenant's  Contractors,  or by anyone  directly or indirectly  employed by any of
them.

                           (iv)  "All-risk"  builder's  risk  insurance upon the
entire Work to the full insurable  value thereof.  This insurance  shall include
the interests of Landlord and Tenant (and

                                       5
<PAGE>

their respective contractors and subcontractors of any tier to the extent of any
insurable  interest  therein) in the Work and shall insure against the perils of
fire and extended coverage and shall include "all-risk" builder's risk insurance
for physical loss or damage including,  without  duplication of coverage,  theft
vandalism  and  malicious  mischief.  If portions of the Work are stored off the
site of the  Building  or in  transit  to said site are not  covered  under said
"all-risk"  builder's  risk  insurance,  then Tenant  shall  effect and maintain
similar property  insurance on such portions of the Work. Any loss insured under
said  "all-risk"  builder's  risk  insurance is to be adjusted with Landlord and
Tenant and made  payable to  Landlord,  as trustee  for the  insureds,  as their
interests may appear.

         All  policies  (except  the  worker's  compensation  policy)  shall  be
endorsed to include as  additional  insured  parties  the parties  listed on, or
required by, the Lease, Landlord's contractors, Landlord's architects, and their
respective beneficiaries,  partners, directors,  officers, employees and agents,
and such additional persons as Landlord may designate. The waiver of subrogation
provisions  contained in the Lease shall apply to all insurance policies (except
the  workmen's  compensation  policy) to be obtained by Tenant  pursuant to this
paragraph.  The  insurance  policy  endorsements  shall  also  provide  that all
additional insured parties shall be given thirty (30) days' prior written notice
of any reduction,  cancellation or non-renewal of coverage (except that ten (10)
days' notice shall be sufficient in the case of cancellation  for non-payment of
premium)  and  shall  provide  that  the  insurance  coverage  afforded  to  the
additional  insured parties thereunder shall be primary to any insurance carried
independently   by  said  additional   insured  parties.   Additionally,   where
applicable,  each policy shall contain a  cross-liability  and  severability  of
interest clause.

                  (b)  Without  limitation  of  the  indemnification  provisions
contained in the Lease, to the fullest extent  permitted by law Tenant agrees to
indemnify,  protect,  defend and hold harmless Landlord,  the parties listed, or
required  by,  the  Lease  to  be  named  as  additional  insureds,   Landlord's
contractors,   Landlord's  architects,   and  their  respective   beneficiaries,
partners,  directors,  officers,  employees  and  agents,  from and  against all
claims, liabilities, losses, damages and expenses of whatever nature arising out
of or in connection with the Work or the entry of Tenant or Tenant's Contractors
into the Building and the Premises,  including,  without limitation,  mechanic's
liens,  the cost of any repairs to the Premises or the Building  necessitated by
activities  of  Tenant  or  Tenant's  Contractors,   bodily  injury  to  persons
(including,  to the maximum  extent  provided by law,  claims  arising under the
California  Structural  Work Act) or  damage  to the  property  of  Tenant,  its
employees,  agents,  invitees,  licensees  or others,  except to the extent such
claims,  liabilities and losses are directly  caused by the gross  negligence or
willful misconduct of Landlord.  It is understood  and agreed that the foregoing
indemnity shall be in addition to the insurance requirements set forth above and
shall not be in discharge of or in substitution  for same or any other indemnity
or insurance provision of the Lease.

         7. Landlord's Contribution; Excess Amounts.

                  (a) Upon completion of the Work, Tenant shall furnish Landlord
with full and final waivers of liens and contractors' affidavits and statements,
in such form as may be required by Landlord,  Landlord's title insurance company
and  Landlord's  construction  or  permanent  lender,  if any,  from all parties
performing labor or supplying  materials or services in connection with the Work
showing that all of said parties have been  compensated  in full and waiving all
liens in  connection  with the  Premises  and  Building.  Tenant shall submit to
Landlord a

                                       6
<PAGE>

reasonably  detailed  breakdown of Tenant's total construction  costs,  together
with such evidence of payment as is reasonably satisfactory to Landlord.

                  (b) Upon  completion of the Work and Tenant's  satisfaction of
all requirements set forth in this Work Letter Agreement,  Landlord shall make a
dollar  contribution  in the  amount  not to exceed  Three  Hundred  Ninety  Six
Thousand  One  Hundred  Sixty and No/100  Dollars  ($396,160.00)  (which is Five
Dollars  ($5.00)  per  square  foot  of  Rentable  Area  in  the  Premises)  for
application  to  the  extent  thereof  to the  cost  of  the  Work  ("Landlord's
Contribution").  If the cost of the Work exceeds Landlord's Contribution, Tenant
shall have sole  responsibility  for the payment of such excess cost. Tenant may
allocate  Landlord's  Contribution  to  Suite  600  or  Suite  700  at  Tenant's
discretion, and if the cost of the Work originally undertaken in one part of the
Premises is less than  Landlord's  Contribution,  Tenant  shall be entitled at a
later date to commence  additional  Work in the  Premises and use the balance of
Landlord's Contribution. However, under no circumstance shall Tenant be entitled
to  receive  any  payment  or credit  for any  unused  Landlord's  Contribution.
Notwithstanding   the  foregoing:   (i)  Landlord  may  deduct  from  Landlord's
Contribution  any amounts due to Landlord or its  architects or engineers  under
this Work Letter before disbursing any other portion of Landlord's Contribution;
and (ii) on May 31,2003 Landlord's  obligation to make any further contributions
of Landlord's  Contribution  to Tenant  (whether or not the same has theretofore
been made in whole or in part) shall terminate, expire and have no further force
or effect.

         8. Miscellaneous.

                  (a) If the Plans for the Work  require  the  construction  and
installation of more fire hose cabinets or telephone/electrical closets than the
number  regularly  provided by Landlord in the core of the Building in which the
Premises are located,  Tenant agrees to pay all costs and expenses  arising from
the  construction  and  installation  of such  additional  fire hose cabinets or
telephone/electrical closets.

                  (b) Time is of the essence of this Work Letter Agreement.

                  (c) Any person signing this Work Letter Agreement on behalf of
Landlord and Tenant warrants and represents he has authority to sign and deliver
this Work Letter Agreement and bind the party on behalf of which he has signed.

                  (d) If Tenant  fails to make any payment  relating to the Work
as required hereunder,  Landlord,  at its option, may complete the Work pursuant
to the Approved  Plans and continue to hold Tenant  liable for the costs thereof
and all other costs due to Landlord. Tenant's failure to pay any amounts owed by
Tenant  hereunder  when due or  Tenant's  failure  to  perform  its  obligations
hereunder  shall also  constitute a default  under the Lease and Landlord  shall
have all the  rights  and  remedies  granted  to  Landlord  under  the Lease for
nonpayment  of any amounts owed  thereunder  or failure by Tenant to perform its
obligations thereunder.

                  (e) Notices  under this Work Letter shall be given in the same
manner as under the Lease.

                                       7
<PAGE>

                  (f) The liability of Landlord hereunder or under any amendment
hereto or any instrument or document executed in connection herewith (including,
without  limitation,  the  Lease)  shall be limited  to and  enforceable  solely
against Landlord's interest in the Building.

                  (g) The headings set forth herein are for convenience only.

                  (h) This Work Letter sets forth the entire agreement of Tenant
and  Landlord  regarding  the Work.  This Work  Letter may only be amended if in
writing, duly executed by both Landlord and Tenant.

                  (i) All amounts due from Tenant  hereunder  shall be deemed to
be Rent due under the Lease.

         9. Project  Manager.  Tenant agrees to designate a person or persons on
its staff to coordinate, monitor and supervise the construction and installation
of the Work.  Said person(s)  must be  experienced  in  supervising  the design,
construction and installation of improvements  such as the Work in premises such
as the Premises, and shall serve as the liaison between Landlord and Tenant with
respect to the Work.  Such  person(s)  must become  familiar  with all rules and
regulations  and  procedures of the Building and all  personnel  of the Building
engaged directly or indirectly in the management,  operation and construction of
the Building.  Such person(s) shall be accountable and responsible to Tenant and
to Landlord.  The entire cost and expense of such  person(s)  shall be borne and
paid for by Tenant.

         10.  Exculpation Of Landlord,  Heitman Capital  Management  Corp.,  and
Transwestern  Commercial  Services.  Notwithstanding  anything  to the  contrary
contained in this Work  Letter,  it is  expressly  understood  and agreed by and
between the parties hereto that:

                  (a) The  recourse  of  Tenant  or its  successors  or  assigns
against  Landlord  with  respect  to the  alleged  breach  by or on the  part of
Landlord of any  representation,  warranty,  covenant,  undertaking or agreement
contained   in  this  Work  Letter   (collectively,   "Landlord's   Work  Letter
Undertakings")  shall extend only to  Landlord's  interest in the real estate of
which the Premises  demised under this Lease Documents are a part  (hereinafter,
"Landlord's  Real  Estate")  and not to any  other  assets  of  Landlord  or its
officers, directors or shareholders; and

                  (b) Except to the extent of Landlord's  interest in Landlord's
Real Estate, no personal  liability or personal  responsibility of any sort with
respect to any of  Landlord's  Work Letter  Undertakings  or any alleged  breach
thereof is assumed by, or shall at any time be asserted or enforceable  against,
Landlord, Heitman Capital Management Corp., Transwestern Commercial Services, or
against  any  of  their  respective  directors,   officers,  employees,  agents,
constituent partners, beneficiaries, trustees or representatives.

/
/
/
/
/
/

                                       8
<PAGE>

         IN WITNESS  WHEREOF,  this Work Letter Agreement is executed as of this
1st day of February, 2001.

LANDLORD                                  TENANT
CALIFORNIA PLAZA AT WALNUT                ELECTRONIC ARTS, INC.,
CREEK, INC., a Florida not-for-profit     a Delaware corporation,
corporation,

By: HEITMAN CAPITAL                       By: David L. Carbone
    MANAGEMENT CORP.,                        Name: David L. Carbone
    an Illinois corporation, agent           Title: Sr. V.P. Finance

        By: Thomas M. BUEDI
        Name: Thomas M. BUEDI
        Title: V.P.

                                       9
<PAGE>

                                   SCHEDULE 1

                             COPIES OF INITIAL PLAN


           [Type description of Initial Plans on this cover sheet and
                 attach copies of such plans after this page.]


                                       1

<PAGE>

                                  EXHIBIT "C"
                             RULES AND REGULATIONS

         1. The sidewalks,  entrances, passages, courts, elevators,  vestibules,
stairways,  corridors or halls shall not be  obstructed  or used for any purpose
other than  ingress  and  egress.  The halls,  passages,  entrances,  elevators,
stairways,  balconies  and roof are not for the use of the general  public,  and
Landlord  shall in all cases  retain  the right to  control  or  prevent  access
thereto by all  persons  whose  presence in the  judgment  of Landlord  shall be
prejudicial  to the safety,  character,  reputation or interests of Landlord and
its  tenants,  provided  that  nothing  herein  contained  shall be construed to
prevent  such  access by  persons  with whom the  tenant  normally  deals in the
ordinary  course of its  business  unless  such  persons  are engaged in illegal
activities.  No tenant and no  employees of any tenant shall go upon the roof of
the Building without the written consent of Landlord.

         2. No awnings or other  projections  shall be  attached  to the outside
walls or  surfaces  of the  Building  nor shall the  interior or exterior of any
windows be coated  without  the prior  written  consent of  Landlord.  Except as
otherwise  specifically  approved by Landlord,  all electrical  ceiling fixtures
hung  in  offices  or  spaces  along  the  perimeter  of the  Building  must  be
fluorescent and of a quality,  type, design and bulb color approved by Landlord.
Tenant shall not place anything or allow anything to be placed near the glass of
any window,  door, partition or wall which may appear unsightly from outside the
Premises.

         3. No sign, picture,  plaque,  advertisement,  notice or other material
shall be exhibited,  painted, inscribed or affixed by any tenant on any part of,
or so as to be seen from the outside of, the  Premises or the  Building  without
the prior  written  consent of  Landlord.  In the event of the  violation of the
foregoing by any tenant, Landlord may remove the same without any liability, and
may charge the expense  incurred in such  removal to the tenant  violating  this
rule.  Interior  signs on doors and the  directory  tablet  shall be  inscribed,
painted or affixed for each  tenant by  Landlord at the expense of such  tenant,
and shall be of a size, color and style acceptable to Landlord.

         4. The toilets and wash basins and other plumbing fixtures shall not be
used for any purpose  other than those for which they were  constructed,  and no
sweepings, rubbish, rags or other substances shall be thrown therein. All damage
resulting  from any misuse of the fixtures  shall be borne by the tenant who, or
whose servants,  employees, agents, visitors or licensees, shall have caused the
same.

         5. No tenant or its officers, agents, employees or invitees shall mark,
paint,  drill  into,  or in any  way  deface  any  part of the  Premises  or the
Building.  No boring,  cutting or  stringing  of wires or laying of  linoleum or
other similar floor coverings  shall be permitted  except with the prior written
consent of Landlord and as Landlord may direct.

         6. No  bicycles,  vehicles or animals of any kind shall be brought into
or kept in or about the  Premises  and no cooking  shall be done or permitted by
any tenant on the  Premises  except  that  microwave  cooking  in a  UL-approved
microwave  oven and the  preparation  of coffee, tea, hot chocolate  and similar
items for the tenant and its employees and business visitors shall be permitted.
Tenant  shall not cause or permit any unusual or  objectionable  odors to escape
from the Premises.

                                       1
<PAGE>

         7. The Premises shall not be used for  manufacturing or for the storage
of  merchandise  except  as such  storage  may be  incidental  to the use of the
Premises  for  general  office  purposes.  No  tenant  shall  engage  or pay any
employees on the Premises  except those actually  working for such tenant on the
Premises nor  advertise  for  laborers  giving an address at the  Premises.  The
Premises shall not be used for lodging or sleeping or for any immoral or illegal
Purposes.

         8. No tenant or its officers, agents, employees or invitees shall make,
or permit to be made any unseemly or disturbing noises,  sounds or vibrations or
disturb or interfere with occupants of this or neighboring buildings or Premises
or those having business with them whether by the use of any musical instrument,
radio, phonograph, unusual noise, or in any other way.

         9. No tenant or its officers, agents, employees or invitees shall throw
anything out of doors, balconies or down the passageways.

         10. Tenant shall not maintain  armed  security in or about the Premises
nor possess any weapons, explosives,  combustibles or other hazardous devices in
or about the Building and/or Premises.

         11. No tenant or its officers,  agents,  employees or invitees shall at
any time  use,  bring or keep  upon the  Premises  any  flammable,  combustible,
explosive,  foul or  noxious  fluid,  chemical  or  substance,  or do or  permit
anything to be done in the leased Premises,  or bring or keep anything  therein,
which shall in any way increase the rate of fire  insurance on the Building,  or
on the property kept therein,  or obstruct or interfere with the rights of other
tenants, or in any way injure or annoy them, or conflict with the regulations of
the Fire  Department  or the fire laws,  or with any  insurance  policy upon the
Building,  or any part thereof, or with any rules and ordinances  established by
the Board of Health or other governmental authority.

         12. No  additional  locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanism  thereof.  Each tenant must, upon the termination of this
tenancy,  restore to Landlord  all keys of stores,  offices,  and toilet  rooms,
either furnished to, or otherwise  procured by, such tenant, and in the event of
the loss of any keys so furnished, such tenant shall pay to Landlord the cost of
replacing  the same or of changing  the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such change.

         13. All  removals,  or the  carrying  in or out of any safes,  freight,
furniture,  or bulky matter of any description  must take place during the hours
which  Landlord may  determine  from time to time.  The moving of safes or other
fixtures or bulky  matter of any kind must be made upon  previous  notice to the
manager  of the  Building  and under  his or her  supervision,  and the  persons
employed by any tenant for such work must be  acceptable  to Landlord.  Landlord
reserves the right to inspect all safes,  freight or other bulky  articles to be
brought into the Building and to exclude from the Building all safes, freight or
other bulky  articles  which violate any of these Rules and  Regulations  or the
Lease of which these Rules and  Regulations  are a part.  Landlord  reserves the
right to prohibit or impose  conditions upon the installation in the Premises of
heavy objects  which might  overload the building  floors.  Landlord will not be
responsible  loss of or damage to any safes,  freight,  bulky  articles or other
property from any cause, and all

                                       2
<PAGE>

damage  done to the  Building  by moving or  maintaining  any such safe or other
property shall be repaired at the expense of the tenant.

         14.  No  tenant  shall  purchase  or  otherwise  obtain  for use in the
Premises water, ice, towel,  vending machine,  janitorial,  maintenance or other
like services, or accept barbering or bootblacking services, except from persons
authorized by Landlord, and at hours and under regulations fixed by Landlord.

         15.  Landlord  shall have the right to prohibit any  advertising by any
tenant  which,  in  Landlord's  opinion,  tends to impair the  reputation of the
Building or its  desirability  as an office  building  complex and upon  written
notice  from  Landlord  any  tenant  shall  refrain  from  or  discontinue  such
advertising.

         16.  Landlord  reserves the right to exclude from the Building  between
the hours of 10:00 p.m. and 7:00 a.m. and at all hours of Saturdays, Sundays and
legal  holidays  all  persons  who do not  present a pass  signed  by  Landlord.
Landlord shall furnish  passes to persons for whom any tenant  requests the same
in  writing.  Each  tenant  shall be  responsible  for all  persons  for whom he
requests  passes and shall be liable to Landlord  for all acts of such  persons.
Landlord shall in no case be liable for damages for any error with regard to the
admission  to or  exclusion  from the  Building  of any  person.  In the case of
invasion, mob, riot, public excitement or other commotion, Landlord reserves the
right to prevent access to the Building  during the  continuance of the same, by
the closing of the gates and doors or  otherwise,  for the safety of the tenants
and others and the protection of the Building and the property therein.

         17. Any outside  contractor  employed by any tenant shall, while in the
Building,  be subject to the prior  written  approval of Landlord and subject to
the Rules and  Regulations of the Building.  Tenant shall be responsible for all
acts of such  persons  and  Landlord  shall not be  responsible  for any loss or
damage to property in the Premises, however occurring.

         18. All doors  opening  onto  public  corridors  shall be kept  closed,
except when in use for ingress and egress, and left locked when not in use.

         19.  The  requirements  of  tenants  will  be  attended  to  only  upon
application to the office of the Building Manager in the Building.

         20. Canvassing,  soliciting and peddling in the Building are prohibited
and each tenant shall cooperate to prevent the same.

         21. All office  equipment of any electrical or mechanical  nature shall
be placed by tenants in the Premises in settings approved by Landlord, to absorb
or prevent any vibration, noise or annoyance.

         22.  No air  conditioning  unit or  other  similar  apparatus  shall be
installed or used by any tenant without the written consent of Landlord.

         23. There shall not be used in any space, or in the public halls of the
Building  either by any tenant or others,  any hand trucks except those equipped
with rubber tires and side guards.

                                       3
<PAGE>

         24. Landlord will direct electricians as to where and how telephone and
telegraph  wires  are to be  introduced.  No  boring  or  cutting  for  wires or
stringing of wires will be allowed  without  written  consent of  Landlord.  The
location of  telephones,  call boxes and other office  equipment  affixed to the
Premises  shall be subject to the approval of  Landlord.  All such work shall be
effected pursuant to permits issued by all applicable  governmental  authorities
having jurisdiction.

         25. No vendor with the intent of selling such goods shall be allowed to
transport or carry  beverages,  food,  food  containers,  etc., on any passenger
elevators.  The  transportation of such items shall be via the service elevators
in such manner as prescribed by Landlord.

         26. Tenants shall cooperate with Landlord in the conservation of energy
used in or about the Building,  including without  limitation,  cooperating with
Landlord in obtaining  maximum  effectiveness  of the cooling  system by closing
drapes or other window coverings when the sun's rays fall directly on windows of
the Premises,  and closing windows and doors to prevent heat loss.  Tenant shall
not obstruct,  alter or in any way impair the efficient  operation of Landlord's
heating,  lighting,  ventilating and air conditioning system and shall not place
bottles, machines, parcels or any other articles on the induction unit enclosure
so as to  interfere  with air flow.  Tenant  shall not tamper with or change the
setting of any thermostats or temperature  control valves,  and shall in general
use heat, gas, electricity,  air conditioning equipment and heating equipment in
a manner compatible with sound energy conservation practices and standards.

         27.  All  areas  of  the  parking  garage,  parking  ramps  and  areas,
pedestrian  walkways,  plazas,  and  other  public  areas  forming a part of the
Building  shall be under the sole and  absolute  control  of  Landlord  with the
exclusive right to regulate and control these areas. Tenant agrees to conform to
the rules and  regulations  that may be  established by Landlord for these areas
from time to time.

         28.  Landlord  reserves the right to exclude or expel from the Building
any person  who,  in the  judgment  of  Landlord,  is  intoxicated  or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the rules and regulations of the Building.

         29.  Tenant and its  employees,  agents,  subtenants,  contractors  and
invitees  shall  comply  with  all  applicable   "no-smoking"   ordinances  and,
irrespective  of  such  ordinances,   shall  not  smoke  or  permit  smoking  of
cigarettes, cigars or pipes outside of Tenant's Premises (including plaza areas)
in any portions of the Building except areas specifically  designated as smoking
areas by Landlord.  If required by  applicable  ordinance,  Tenant shall provide
smoking areas within Tenant's Premises.

                                       4
<PAGE>

                                  EXHIBIT "D"
                           SUITE ACCEPTANCE AGREEMENT

Tenant Name:    ELECTRONIC ARTS, INC.
Lease Dated:
Premises:       Suites 600 and 700
Building:       2121 North California Boulevard, Walnut Creek, California 94596
Name of Tenant's Contact: _______________________ Phone #:_______

Ladies and Gentlemen:

         As a representative  of the referenced  Tenant,  I/we certify that: (a)
Tenant  has  occupied  Suite 600 prior to the date of this Lease  pursuant  to a
previous  lease and accept Suite 600 in its current "as is"  condition;  and (b)
Tenant  has  physically   inspected   Suite  700  and  its   improvements   with
__________________, a representative of the Landlord. Except as set forth below,
I/we accept the improvements constructed and installed in Suite 700 in their "as
is" condition  and  verifies  that the  same  comply  with all the  requirements
indicated in the Lease. I/we also verify that the following information is true,
accurate and may be relied on by Landlord:

Commencement Date:                      February 1,2001
Date First Lease Year Commenced:        February 1,2001
Rent Commencement Date for Suite 700:   February 1,2001
Rent Commencement Date for Suite 600:   February 1,2001
Expiration Date of Initial Lease Term:  January 31, 2009
Date Keys To Suite 700 Delivered:       February 1,2001
Suite 700 Items Requiring Attention:    (i) Water leak at sliding glass doors.
                                        (ii) To the extent required  pursuant to
the Letter  Agreement dated February 8,2001 between Landlord and Blue Cross, any
remediation work in connection with possible mold spores in Suite 700.

TENANT

ELECTRONIC ARTS, INC.,
a Delaware corporation

By:_________________________________    Date:______________________
   Name:____________________________
   Title:___________________________

                                       1
<PAGE>

                                  EXHIBIT "E"

             SCHEDULE OF OPERATING EXPENSES CHARGEABLE TO SUITE 600
                        DURING SPECIAL SUITE 600 PERIOD

         A. Operating Expenses.  "Operating  Expenses" shall mean all reasonable
costs, expenses and disbursements  incurred in connection with the ownership and
operation  of the  Building  and such  additional  facilities  as  Landlord  may
determine to be  necessary  to the  operation  of the  Building.  All  Operating
Expenses shall be determined in accordance  with generally  accepted  accounting
principles which shall be consistently applied. Operating Expenses shall include
all expenses and costs (but not specific  costs which are  separately  billed to
and paid by specific  tenants) of every kind and nature which Landlord shall pay
or become  obligated to pay because of or in  connection  with the ownership and
operation of the Building and supporting  facilities of the Building.  Operating
Expenses shall include, but not be limited to, the following:

                  (i) Wages,  salaries and related  expenses and benefits of all
onsite and offsite employees or agents engaged in the operation, maintenance and
security of the Building,  and the costs of an office in the Building,  incurred
by Landlord.

                  (ii)  Equipment  rental and all supplies and materials used in
the operation and maintenance of the Building.

                  (iii) Utilities, including water and power, heating, lighting,
air conditioning and ventilating for the entire Building.

                  (iv) All  maintenance,  janitorial and service  agreements for
the Building and the equipment therein,  including,  without  limitation,  alarm
service, window cleaning and elevator maintenance.

                  (v) A management  cost recovery equal to three percent (3%) of
all Rental derived from the Building.

                  (vi) Building  legal expense and accounting  costs,  including
the costs of audits by certified public accountants.

                                       1
<PAGE>

                  (vii) All  insurance  premiums  and costs,  including  but not
limited to, the premiums and costs of fire,  casualty  and  liability  coverage,
rental  abatement and earthquake  insurance (if Landlord  elects to provide such
coverage)  applicable to the Building and Landlord's property used in connection
therewith.

                  (viii)   Repairs,   replacements   and   general   maintenance
(excluding repairs and general maintenance paid from proceeds of insurance or by
Tenant or other third parties, and alterations attributable solely to tenants of
the Building other than Tenant).

                  (ix) All  maintenance  costs  relating  to public and  service
areas of the Building,  including,  but not limited to, sidewalks,  landscaping,
service areas, mechanical rooms and Building exteriors.

                  (x) All taxes,  service  payments in lieu of taxes,  annual or
periodic  license  or  use  fees,   excises,   transit  charges,   housing  fund
assessments,  other assessments,  levies, fees or charges,  general and special,
ordinary and extraordinary, unforeseen as well as foreseen of any kind which are
assessed,  levied,  charged,  confirmed, or imposed by any public authority upon
the Building, its operations, or on the entering of this Lease, or on the use or
occupancy of the Building, or the Rent (or any portion of component thereof), or
imposed by recorded  covenants,  conditions and restrictions  upon the Building,
including any other tax, fee, and other excise,  however described,  that may be
levied or assessed  as a  substitute  for, or as an addition  to, in whole or in
part, any other tax or fee whether or not now customary or in the  contemplation
of the parties on the date of this Lease except (a)  inheritance or estate taxes
imposed upon or assessed  against the Building,  or any part thereof or interest
therein,  and (b) taxes  computed upon the basis of the net income  derived from
the Building by Landlord or the owner of any interest therein.

                  (xi)  Amortization  over a period  consistent  with  generally
accepted  accounting  principles,  of capital  improvements made to the Building
which will (a) improve the operating efficiency of the Building (but only to the
extent  of  savings),   or  (b)  which  may  be  required  by  any  governmental
authorities.

                  (xii) All costs and expenses of additional  services  supplied
by Landlord to the Building in the future.

                  (xiii) Any unreimbursed amounts paid to satisfy any judgments,
claims or liens arising from third party vendor  claims for  Operating  Expenses
during  the  course  of  Building  operations  during  the  Term of this  Lease,
exclusive of penalties and other than costs which  Landlord must bear under this
Lease.

         B. Exclusions From Operating  Expenses.  Notwithstanding the foregoing,
the Operating Expenses shall not include the following:

                  (i) Any ground lease or underlying lease rental;

                  (ii)  Capital   improvements   and  equipment  which  are  not
consistent with the capital improvements referred to above;

                                       2
<PAGE>

                  (iii) Repair of damage to the Building, to the extent Landlord
is reimbursed by insurance proceeds, warranties or guaranties;

                  (iv)  Construction  and  installation of tenant  improvements,
renovations,  or decorations made for tenants or other occupants in the Building
or for vacant tenant suites within the Building,  including, without limitation,
fees  and  costs  for  space  planning,  architectural  drawings,  construction,
permits, licenses and inspection;

                  (v)  Costs  incurred  in  connection  with   negotiations  and
transactions  with  present or  prospective  tenants or other  occupants  of the
Building for leases,  subleases,  assignments  and other  related  transactions,
including,  without  limitation,  attorneys'  fees  for  such  negotiations  and
transactions;

                  (vi)  Sums  paid  to  Landlord  or to  subsidiaries  or to the
Building  to the  extent  that such sums  exceed  the costs of such goods and or
service which would be rendered by  unaffiliated  third parties on a competitive
basis;

                  (vii)  Interest,  principal,  points  and  fees  on  debts  or
amortization on any mortgage or any other financing  instrument  encumbering the
Building.

                  (viii) Landlord's  general corporate  overhead and general and
administrative expenses other than the management fee and reasonable general and
administrative expenses related to the Building;

                  (ix)  Rental  payments   incurred  under  leases  for  capital
equipment  where such  leases  are  capitalized  under the tax basis  accounting
principles to the extent such capital equipment are not covered under the Lease.
Landlord  shall  allocate  to  Operating  Expenses  only such costs for  capital
equipment incurred as Landlord may reasonably determine are attributable to such
services performed for the Building;

                  (x) All  items  and  services  for  which  Tenant or any other
tenant  in  the  Building   directly   reimburses  or  which  Landlord  provides
selectively to one or more tenants (other than Tenant) without reimbursement;

                  (xi)   Marketing   costs,   including   leasing   commissions,
advertising  and  promotional  expenditures,  and  costs  of  signs in or on the
Building identifying the owner of the Building or other tenants' signs;

                  (xii)  Electric  power  costs for which  any  tenant  directly
contracts  with the local public  service  company and which are paid for by any
such tenant;

                  (xiii)  Upgrading the Building to comply with  handicap,  life
safety,  fire and  safety as to the extent  Landlord  was in  violation  of such
codes;  provided,  Landlord shall have the right to include such upgrading costs
in the  Operating  Expenses  in  order to  comply  with any code or law of which
Landlord was not in violation of as of the Term Commencement date;

                  (xiv)  The cost to  remove  or  encapsulate  the  presence  of
hazardous  materials  or  substances  in or  about  the  Building  or  Building,
including, without limitation, hazardous

                                       3
<PAGE>

substances in the ground water or soil to the extent said hazardous  material or
substance was not caused by the Tenant;

                  (xv) Landlord's charitable or political contributions;

                  (xvi) Sculpture, paintings or other objects of art;

                  (xvii) Legal fees and expenses incurred in connection with the
enforcement  of any leases or defense of Landlord's  title to or interest in the
Building;

                  (xviii)  Wages/benefits  of all on-site Building  employees or
property/asset   management  employees  above  the  classification  of  property
manager;

                  (xix)  Tax  penalties  incurred  as  a  result  of  Landlord's
negligence,  inability or  unwillingness to make payments and/or to file any tax
or information returns when due;

                  (xx) The cost of completing any punch-list work.

         C. Gross-Up  Provision.  Notwithstanding  any other provision herein to
the contrary, in the event the Building is not fully occupied during any year of
the Term,  an adjustment  shall be made in computing the Operating  Expenses for
such year so that  Operating  Expenses shall be computed for such year as though
the Building had been fully occupied during such year.

         D.  Adjustments.  Notwithstanding  any  other  provision  herein to the
contrary:

                  (i) Tenant's  obligation to pay Tenant's  Percentage  Share of
increases in the Operating  Expenses shall except as provided  below, be limited
such that  Tenant's  obligation  to pay such  increases  shall not  exceed a six
percent (6%) increase per year above the  preceding  year's  Operating  Expenses
("Operating  Expense Cap") on all items comprising the Operating Expenses as set
forth  hereinabove,  except for the  following  items,  which  items  comprise a
portion of the Operating Expenses of the Building to which the Operating Expense
Cap shall not apply.

                           1. All utility costs;

                           2. Extra tenant service charges;

                           3. Real Estate taxes and assessments;

                           4. Special  governmental  and municipal  assessments,
special taxes, or mandated capital improvement costs; and

                           5. All insurance costs for the Building,  operations,
maintenance and replacement.

         The items  referred  to above as 1 through 5 are herein  referred to as
the "Non-Capped Operating Expenses". All Operating Expenses which are not herein
defined  as  Non-Capped  Operating  Expenses  may be  referred  to herein as the
"Capped Operating Expenses".

                                       4
<PAGE>

                  (ii) The Operating Expense Cap set forth above shall not apply
to any  costs of any  service(s)  provided  by  Landlord  other  than the  basic
services  described  in this  Lease,  and  shall  not  apply to the costs of any
service(s)  provided by  Landlord  (1) during  hours other than normal  Building
hours of  operation,  (2) on  Saturday  afternoons,  (3) on  Sundays,  or (4) on
holidays.

                                       5
<PAGE>

                                  EXHIBIT "F"

                           JANITORIAL SPECIFICATIONS
                           BUILDING STANDARD SERVICES

OFFICES

1. NIGHTLY SERVICES

   a. Vacuum all carpeted areas.

   b. Dust all clear surfaces with treated dust cloths.

   c. Empty all  wastebaskets  and other trash  containers.  Liners changed when
      needed.

   d. Dust mop all resilient and composition floors with treated dust mops. Spot
      mop to remove spills and stains as required.

   e. Dust and spot clean walls as necessary.

   f. Remove all trash from floors to the designated trash areas.

   g. Polish all metal surfaces as necessary.

   h. Remove fingerprints,  dirt, smudges,  graffiti, etc., from all doors, door
      frames, glass partitions,  windows, light switches,  walls, elevator lobby
      and elevator door jambs.

   i. Clean, sanitize, polish drinking fountains.

   j. Dust and remove  debris  from all metal door  thresholds  and  ventilating
      louvers within reach.

   k. Clean lobby elevator brightwork as necessary.

   1. Return chairs and wastebaskets to proper positions.

   m. Secure all lights as soon as possible each night.

2. WEEKLY SERVICES

   a. Dust all low reach  areas  including,  but not limited  to,  chair  rungs,
      structural and furniture ledges,  baseboards,  window sills, door louvers,
      wood paneling, molding, etc.

   b. Dust inside of all door brightwork.

   c. Spot clean and polish all brightwork.

                                       1
<PAGE>


   d. Lower all blinds.

   e. Spray buff all building standard resilient composition flooring.

3. MONTHLY SERVICES

   a. Dust all high reach  areas  including,  but not  limited  to, tops of door
      frames,  structural and furniture ledges,  air conditioning  diffusers and
      return grilles, tops of partitions, picture frames, window blinds, etc.

   b. Vacuum upholstered furniture.

   c. Edge vacuum all carpeted areas.

4. SEMI-ANNUAL SERVICES

   a. Strip and wax all building standard resilient composition flooring.

   b. Clean all sidelights in tenant suites.

5. ANNUAL SERVICES

   a. Dust ceiling surfaces, other than acoustical ceiling materials.

RESTROOM SERVICES SPECIFICATIONS

1. NIGHTLY SERVICES

   a. Restock all  restrooms  with  supplies,  including  paper  towels,  toilet
      tissue, seat covers and hand soap as required.

   b. Remove stains, descale toilets, urinals, sinks as required.

   c. Restock all sanitary napkin and tampon dispensers.

   d. Wash  and  polish  all  mirrors,  dispensers,  faucets,  flushometers  and
      brightwork with nonscratch  disinfectant  cleaner.  Wipe dry all sinks.

   e. Wax and sanitize all countertops with disinfectant cleaner.

   f. Mop all restroom floors with disinfectant cleaner.

   g. Empty and sanitize all waste and sanitary napkin and tampon receptacles.

   h. Remove all restroom trash.

   i. Spot clean all  fingerprints,  marks and graffiti from walls,  partitions,
      glass, aluminum and light switches as required.

                                       2
<PAGE>

   j. Report  all  mechanical  deficiencies,  e.g.,  faucet  leaks  to  Property
      Manager.

2. WEEKLY SERVICES

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

3. MONTHLY SERVICES

   a. Wipe down all tile walls and metal  partitions.  Partitions  shall be left
      clean and unstreaked.

   b. Clean all ventilation grilles.

4. QUARTERLY SERVICES

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

MAIN BUILDING LOBBY, ELEVATOR LOBBIES AND PUBLIC CORRIDORS

   To be performed by Day Porter and Night Janitors

1. DAILY SERVICES

   a. Spot clean all exterior glass at building entrances.

   b. Spot clean all  brightwork  including  door  hardware,  kick plates,  base
      framing, partition top, handrails, waste receptacles,  planters,  elevator
      call button  plates,  fire  extinguisher  cabinets,  hose cabinets and any
      other visible hardware.

   c. Clean all door saddles of dirt and debris.

   d. Spot clean, vacuum, sweep and damp mop all flooring as required.

   e. Spot clean and dust director boards.

   f. Empty,  clean and  sanitize  as  required,  all waste  baskets  and refuse
      containers.

   g. Vacuum all carpets.

   h. Spot clean all elevator doors and frames.

   i. Empty and recycle sand urns and ashtrays.

   j. Clean, polish, sanitize all public telephones.

   k. Spot clean all wall surfaces.

                                       3
<PAGE>

   1. Police  lobby and  public  corridors,  keep in clean  condition,  spot mop
      spillage, and dust and vacuum as necessary.

   m. Police all stairwells and maintain in clean condition.

   n. Dust all railings necessary.

   o. Sweep, mop and buff all lobby flooring.

2. WEEKLY SERVICES

   a. Change sand in urns.

3. MONTHLY SERVICES

   a. Sweep all stairwells.

   b. Clean all brass and architectural brass interior finishes.

   c. Clean, polish light fixtures.

   d. Dust all high reach areas,  including but not limited to,  structural  and
      architectural ledges, door frames, grilles, artwork, etc.

PASSENGER ELEVATOR CLEANING SPECIFICATIONS

1. NIGHTLY SERVICES

   a. Spot clean and polish interior surface of cab walls, door and panels.

   b. Spot clean and polish outside surfaces of all elevator doors and frames.

   c. Sweep, mop and buff elevator cab flooring.

   d. Clean all thresholds.

2. WEEKLY SERVICES

   a. Clean entire interior.

   b. Wipe clean cab ceiling.

EXTERIOR GROUNDS

1. NIGHTLY SERVICES

   a. Sweep trash receptacle areas.

                                       4
<PAGE>

   b. Police  immediate  grounds and landscape  areas keeping litter debris to a
      minimum.

DAY PORTER DUTIES

   a. Vacuum all elevator cabs daily.

   b. Spot  clean  glass in  lobbies,  clean  sand urns and spot mop  lobbies as
      necessary.

   c. Check restrooms for adequate supplies. Spot clean as necessary.

   d. Check exterior perimeter of building and pick up any trash or litter.

                                       5
<PAGE>

                       TERMINATION OF ORIGINAL LEASE AND
                              CONSENT TO SUBLEASE

         THIS  TERMINATION  OF  ORIGINAL  LEASE AND  CONSENT TO  SUBLEASE  (this
"Agreement") is made to be effective as of January 31, 2001  ("Effective  Date")
by and among CALIFORNIA  PLAZA OF WALNUT CREEK,  INC., a Florida not for-profit-
corporation  ("Landlord"),  ELECTRONIC  ARTS  ,  INC.,  a  Delaware  corporation
("Tenant" and/or  "Sublessor", as the  context  dictates),  and  BLUE  CROSS  OF
CALIFORNIA, a California corporation ("Sublessee").

                                    RECITALS

         A. Air Liquide  Corporation  ("Air Liquide")  leased the entire seventh
floor  ("Suite  700") plus other space in the building  ("Building")  located at
2121 North  California  Blvd,  Walnut Creek,  California,  pursuant to an office
lease with  Landlord  dated  September  16, 1985 (the "Air Liquide  Lease").  On
August 14, 1995,  Air Liquide  subleased  Suite 700 to Blue Cross of  California
("Air Liquide/Blue  Cross Sublease").  The term of the Air Liquide Lease and the
term of the Air Liquide/Blue Cross Sublease expired on January 31, 2001.

         B. Tenant  leased the entire sixth floor  ("Suite 600") in the Building
pursuant  to a  separate  lease  agreement  with  Landlord  dated  June 2,  1995
("Tenant's  Original  Lease").  Pursuant to Tenant's  Original Lease,  and on or
about October 23, 2000, Tenant exercised its right of first opportunity to lease
Suite 700 ("Right to Lease").  Following exercise of the Right to Lease,  Tenant
approached  Blue Cross in connection with entering into a new sublease for Suite
700 following  expiration of the Air Liquide/Blue  Cross Sublease.  In December,
2000,  Tenant and Blue Cross  executed a new  sublease  agreement  for Suite 700
("First  EA/Blue  Cross  Sublease"),  the  term  of  which  was to  commence  at
expiration of the Air Liquide Lease.

         C.  Subsequently,  Landlord and Tenant entered into  negotiations for a
new master lease pursuant to which Tenant would lease Suite 600 and Suite 700 in
the Building,  and the parties would  concurrently  terminate  Tenant's Original
Lease.

         D. Landlord and Tenant now intend to execute and deliver to one another
that certain office lease ("Master Lease") for the premises ("Master  Premises")
located in the  building  ("Building")  at 2121 North  California  Blvd,  Walnut
Creek,  California,  and terminate  Tenant's Original Lease. The Master Premises
consist  of Suite 600 and Suite 700.  Suite 600  contains  approximately  42,398
rentable square feet,  Suite 700 contains  approximately  36,834 rentable square
feet, and the entire Master Premises contains a total of approximately 79,232

                                        1            February 20, 2001 (11:50am)
<PAGE>

rentable square feet.

         E. As a consequence of the foregoing, Tenant and Blue Cross have agreed
to terminate the First EA/Blue  Cross  Sublease and  substitute in its place the
"Second  EA/Blue Cross  Sublease" in the form attached hereto as Exhibit "A" and
incorporated herein by reference.

         F. A condition  to  execution  and delivery of the Master Lease is that
(i) Landlord consent to the Second EA/Blue Cross Sublease,  (ii) Tenant and Blue
Cross terminate the First EA/Blue Cross Sublease,  and (iii) Landlord and Tenant
terminate Tenant's Original Lease.

         NOW,  THEREFORE,  in  consideration of the covenants and conditions set
forth in the Master  Lease and for other good and  valuable  consideration,  the
receipt and sufficiency of which is hereby  acknowledged,  the undersigned agree
as follows:

         1. Recitals. The foregoing Recitals are incorporated by reference as if
fully set forth herein.

         2.  Landlord's  Agreement.  Subject to the terms and conditions of this
Agreement, Landlord hereby consents to the Second EA/Blue Cross Sublease.

                  a.  Landlord  hereby  agrees,  for the  benefit  of Tenant and
Sublessee,  that the provisions of Sections 14.02, 14.03, 14.04 and 14.06 of the
Master Lease shall not apply to the foregoing  consent of Landlord to the Second
EA/Blue Cross  Sublease;  provided,  however,  said Sections of the Master Lease
shall apply to any and all further assignments,  subleases or sub-subleases that
may in the future be proposed by Tenant or Sublessee  with respect to the Second
EA/Blue Cross Sublease or to the subleased premises which are the subject of the
Second EA/Blue Cross Sublease.

         3. Termination of Tenant's  Original Lease.  Landlord and Tenant hereby
terminate Tenant's Original Lease.

         4.  Termination of First EA/Blue Cross Sublease.  Pursuant to the terms
and conditions set forth in that certain Sublease  Termination  Agreement by and
between  Tenant and  Sublessee  dated to be  effective as of February 1, 2001 (a
copy of which is  attached  hereto as  Exhibit  "B" and  incorporated  herein by
reference),  the First  EA/Blue  Cross  Sublease has been  terminated  as of the
Effective Date of this Agreement.

         5.  Subordination  to Master Lease.  The Second  EA/Blue Cross Sublease
shall be subject and  subordinate at all times to the Master Lease and to all of
its terms,  covenants,  conditions,  provisions  and  agreements.  Sublessor and
Sublessee  agree  that  to  the  extent  any  terms,  conditions,  covenants  or
provisions of the Second EA/Blue Cross Sublease are  inconsistent or in conflict
with,  or contrary to, any terms,  conditions,  covenants or  provisions  of the
Master Lease, the  inconsistent,  conflicting or contrary terms,  conditions and
provisions

                                        2            February 20, 2001 (11:50am)
<PAGE>

of the Second EA/Blue Cross Sublease are deemed revoked as to Landlord,  and the
terms, conditions, covenants and provisions of the Master Lease shall govern. As
to Landlord,  the terms and  conditions  of this  Agreement and the Master Lease
shall prevail over any contrary terms and conditions of the Second EA/Blue Cross
Sublease.

         6. Effect of the Second EA/Blue Cross Sublease and Consent to Sublease.
Sublessor  and  Sublessee  each agree that  neither  the  Second  EA/Blue  Cross
Sublease nor this Agreement shall in any case:

                  a.  release  or  discharge  Sublessor,  as  Tenant,  from  any
liability or obligation under the Master Lease;

                  b. be  construed  as a  Agreement  by  Landlord to any further
subleasing  either  by Tenant  under  the  Master  Lease or by  Sublessor  or by
Sublessee under the Second EA/Blue Cross Sublease,  of any portion of the Master
Premises or Suite 700.

                  c.  modify,  waive  or  affect  (i)  any  of  the  provisions,
covenants or conditions of the Master Lease, (ii) any of Sublessor's obligations
as the  Tenant  under  the  Master  Lease or (iii) any of  Landlord's  rights or
remedies under the Master Lease; or

                  d. be  construed  as  extending  the term of the Master  Lease
beyond that which is provided therein.

         7.  Assignment.  This Agreement shall not be assignable by operation of
law or otherwise.

         8.   Relationship.   Except   as   set   forth   specifically   herein,
notwithstanding  anything to the  contrary  which may be contained in the Second
EA/Blue  Cross  Sublease,  no privity of contract or estate shall exist  between
Landlord and Sublessee by reason of this  Agreement or the Second  EA/Blue Cross
Sublease,  and  Landlord  is  neither a party to,  nor  obligated  to perform or
refrain from performing, any act under the Second EA/Blue Cross Sublease.

         9.  Alterations  and   Improvements.   Sublessees  and  Sublessor  each
understands,  acknowledges and agrees that Landlord's  consent granted herein is
not a consent to any  improvement or alteration  work to be performed,  and that
Landlord's  consent  thereto  must be  separately  sought  if and to the  extent
provided in the Master Lease and will not necessarily be given.

         10.  Examination  of the Master Lease.  Sublessee,  by the execution of
this  Agreement,  acknowledges  and  represents to Landlord  that  Sublessee has
received a copy of, has  examined  and is familiar  within each and every of the
terms, provisions and conditions of the Master Lease.

                                        3            February 20, 2001 (11:50am)
<PAGE>

         11.  Attornment  to Landlord.  In the event of the  termination  of the
Master  Lease,  Landlord  shall  have  the  option,  in its  sole  and  absolute
discretion,  upon thirty (30) days advance  written notice to Sublessee,  (a) to
terminate the Second EA/Blue Cross Sublease,  in which event all of Sublessee' s
rights and obligations  thereunder  shall  terminate,  or (b) to keep the Second
EA/Blue Cross Sublease in full force and effect as a direct Master Lease between
Landlord and Sublessee,  in which event Sublessee shall automatically  attorn to
Landlord thereunder. Such attornment shall be self-operative, provided, however,
upon Landlord's written request,  Sublessee shall within ten (10) days of demand
therefore  execute any  instruments or other  documents which may be required by
Landlord to memorialize such attornment.

         12.  Landlord's  Right to Collect Rent from  Sublessee.  Sublessor  and
Sublessee  acknowledge  and agree that, in accordance  with the Master Lease, in
the event of a default by Tenant  under the Master Lease which  remains  uncured
beyond any applicable cure period,  Landlord has the right, power and authority,
but not the  obligation,  to collect  rents due to Tenant,  as  Sublessor,  from
Sublessee  and apply said rents toward any and all amounts due to Landlord  from
Tenant under the Master Lease,  upon delivery of written notice to Sublessor and
Sublessee.  Notwithstanding the acceptance of the payment of rent from Sublessee
as a result of any default by Sublessor,  as Tenant under the Master  Lease,  or
any other payment of rent from Sublessee directly to Landlord  regardless of the
circumstances or reasons  therefore,  such payment of rent by Sublessee shall in
no manner whatsoever be deemed an attornment by Sublessee to Landlord,  or serve
to release Sublessor,  as Tenant, from any liability under the terms, covenants,
conditions and provisions  under the Master Lease,  in the absence of a specific
written  agreement  signed  by  Landlord  to such  effect.  Notwithstanding  the
foregoing  (a) any rents  accepted by Landlord from  Sublessee  shall be applied
toward  sums due for the  leased  premises  which are the  subject of the Second
EA/Blue Cross Sublease,  and (b) on condition that Sublessee has not committed a
breach or default under the Second EA/Blue Cross Sublease which remains  uncured
beyond any  applicable  cure  period,  Landlord  will not  terminate  the Second
EA/Blue Cross  Sublease prior to expiration of any period for which Landlord has
accepted rent from Sublessee.

         13. Brokerage Fees.  Sublessor and Sublessee each jointly and severally
agree that:  (a) Landlord  shall not be liable under any  circumstances  for any
brokerage  commission or other similar charge or expense in connection  with the
Second  EA/Blue Cross  Sublease,  and (b)  Sublessor  and  Sublessee  shall each
indemnify,  defend  and hold  Landlord  and  each  and all of its  shareholders,
officers,  employees,  agents,  affiliates,  lenders and advisors (collectively,
"Landlord   Indemnitees")  harmless  from  and  against  all  claims,   demands,
proceedings,   losses,  obligations,   liabilities,  causes  of  action,  suits,
judgments,   damages,   penalties,   costs  and  expenses  (including,   without
limitation,  attorneys' fees and court costs) (collectively "Claims,  Losses and
Costs")  resulting from any claims that may be asserted  against Landlord by any
broker,  agent,  finder,  person or entity who claims a right to compensation or
commission with respect to the Second EA/Blue Cross Sublease.

/
/

                                        4            February 20, 2001 (11:50am)
<PAGE>

         14. Representations and Authority.

                  a.  Sublessor.  Sublessor  hereby  represents  and warrants to
Landlord as follows:

                           (i)  Authority.  Sublessor  has the  full  right  and
authority to enter into the Second EA/Blue Cross Sublease and this Agreement and
the person  signing the Second  EA/Blue  Cross  Sublease  and this  Agreement on
behalf of  Sublessor  is duly  authorized  to do so.  The Second  EA/Blue  Cross
Sublease  and this  Agreement  are legal,  valid,  and  binding  obligations  of
Sublessor  and are  enforceable  against  Sublessor  in  accordance  with  their
respective terms.

                           (ii) Ownership of Master Leasehold: No Assignment: No
Other  Agreements.  As of the effective date of this  Agreement,  (i) it is sole
owner of the Tenant's  interest in the Master Lease, (ii) except as set forth in
this Agreement, it had not made any assignment,  sublease, transfer, conveyance,
hypothecation,  or  other  disposition  of the  Master  Lease,  or any  interest
therein,  and (iii) there are no other agreements  (written or otherwise) of any
kind between  Sublessor and Sublessee in connection with the subleased  premises
which are the subject of the Second EA/Blue Cross Sublease  except for the First
EA/Blue Cross Sublease (which is being terminated concurrently herewith), Second
EA/Blue Cross Sublease and this Agreement.

                  (b)  Sublessee.  Sublessee  hereby  represents and warrants to
Landlord as follows:

                           (i)  Authority.  Sublessee  has the  full  right  and
authority to enter into the Second  EA/Blue Cross  Sublease and this  Agreement;
and the person  signing the Second  EA/Blue Cross Sublease and this Agreement on
behalf of  Sublessee  is duly  authorized  to do so.  The Second  EA/Blue  Cross
Sublease  and this  Agreement  are legal,  valid,  and  binding  obligations  of
Sublessee  and are  enforceable  against  Sublessee  in  accordance  with  their
respective terms.

                           (ii) No Other Agreements. As of the effective date of
this Agreement, there are no other agreements (written or otherwise) of any kind
between Sublessor and Sublessee in connection with the subleased  premises which
are the  subject  of the  Second  EA/Blue  Cross  Sublease  except for the First
EA/Blue Cross Sublease (which is being terminated  concurrently  herewith),  the
Second EA/Blue Cross Sublease and this Agreement.

                  (c)  Landlord.  Landlord  has the full right and  authority to
enter into this  Agreement  and the person  signing this  Agreement on behalf of
Landlord is duly  authorized  to do so. This  Agreement is a legal,  valid,  and
binding obligation of Landlord and is enforceable against Landlord in accordance
with its terms.

                                        5            February 20, 2001 (11:50am)
<PAGE>

         15. No Right to Self-Insure.  Sublessee hereby  acknowledges and agrees
that is has no right under the Second EA/Blue Cross Sublease to self-insure  any
of its insurance obligations thereunder.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the Effective Date.

LANDLORD:         CALIFORNIA PLAZA OF WALNUT CREEK, INC.,
                  a Florida not-for-profit corporation,

                  By: HEITMAN CAPITAL
                      MANAGEMENT CORP.,
                      an Illinois corporation, agent,

                      By: Thomas M. BUEDI
                          Name: Thomas M. BUEDI
                          Title: V.P.

TENANT/SUBLESSOR: ELECTRONIC ARTS, INC., a Delaware corporation,

                      By: David L. Carbone
                          Name: David L. Carbone
                          Title: Sr. V.P. Finance

                      By: ___________________________
                          Name: _____________________
                          Title: ____________________

SUBLESSEE:        BLUE CROSS OF CALIFORNIA, a California corporation,

                      By: John Sieman
                          Name: John Sieman
                          Title: Vice President

                      By: ___________________________
                          Name: _____________________
                          Title: ____________________

                                        6            February 20, 2001 (11:50am)
<PAGE>

                                  EXHIBIT "A"


                  ATTACH COPY OF SECOND EA/BLUE CROSS SUBLEASE


                                        1            February 20, 2001 (11:50am)