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California-Mountain View-1350 Charleston Road Sublease - Silicon Graphics Inc. and VeriSign Inc.

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                              SUBLEASE AGREEMENT
                              ------------------


EFFECTIVE DATE: September 17, 1998

ARTICLE 1:     FUNDAMENTAL SUBLEASE PROVISIONS.

Article 1.1    PARTIES:  Sublessor:  SILICON GRAPHICS, INC., a Delaware
corporation

                         Sublessee:  VERISIGN, INC., a Delaware corporation

               MASTER LEASE: (Article 3): Sublessor, as tenant, is leasing from
Master Lessor (as described below), as landlord, approximately 51,834 square
feet of space located at 1350 Charleston Road, Mountain View, California (the
"Premises") upon the terms and conditions of that Lease executed on June 14,
1996 (the "Master Lease").  A copy of the Master Lease is attached hereto as
Exhibit A.

Article 1.2    MASTER LESSOR: SHORELINE INVESTMENTS VI, a California general
partnership

Article 1.3    SUBLEASE PREMISES: (Article 2): The Sublease Premises consists of
               the entirety of the Premises and contains approximately 51,834
               square feet (the "Sublease Premises"). The Sublease Premises is
               further described on the drawing attached hereto as Exhibit B.

Article 1.4    SUBLEASE TERM: (Article 4): The Sublease Term shall commence on
               the Commencement Date and end on the Termination Date, unless
               terminated earlier pursuant to the terms of this Sublease.

Article 1.5    COMMENCEMENT DATE: (Article 4.1): January 1, 1999

Article 1.6    TERMINATION DATE:(Article 4.1): June 30, 2005

Article 1.7    RENTAL COMMENCEMENT DATE: January 1, 1999

Article 1.8    MINIMUM MONTHLY RENT: (Article 5.2):

               01/01/99 - 12/31/99   $147,726.90 per month NNN
               01/01/00 - 12/31/00   $152,158.70 per month NNN
               01/01/01 - 12/31/01   $156,723.46 per month NNN
               01/01/02 - 12/31/02   $161,425.17 per month NNN
               01/01/03 - 12/31/03   $166,267.93 per month NNN
               01/01/04 - 12/31/04   $171,255.97 per month NNN
               01/01/05 - 6/30/05    $176,393.64 per month NNN

Article 1.9    PREPAID RENT: (Article 5.4): $147,726.90
<PAGE>
 
Article 1.10   SECURITY DEPOSIT: (Article 6): $176,393.64

Article 1. 11  PERMITTED USE: (Article 7): General and administrative office,
computer labs, research and development, storage and distribution, training, 
education and promotional uses, to the extent permitted under the Master Lease,
only.

Article 1.12   ADDRESSES FOR NOTICES: (Article 11):

               Master Lessor: SHORELINE INVESTMENTS VI
                              c/o RealProp Development Company
                              1710 Zanker Road, Suite 100 
                              San Jose, CA  95112          

               Sublessor:     SILICON GRAPHICS, INC.
                              2011 N. Shoreline Blvd.                    
                              Mountain View, CA 94043-1389               
                              Attn:  Manager, Corporate Real Estate      
                              M/S 720                                     
            
                              With a copy to

                              SILICON GRAPHICS, INC.
                              2011 N. Shoreline Blvd.                    
                              Mountain View, CA 94043 -1389    
                              Attn: Legal Services             
                              M/S 710                           
                      
               Sublessee:     VERISIGN, INC.
                              1390 Shorebird Way     
                              Mountain View, CA 94043
                              Attn: Dana Evan         
            
Article 1.13   SUBLESSOR'S BROKER: (Article 19.4): Phil Mahoney, Cornish & Carey
Commercial

Article 1.14   SUBLESSEE'S BROKER: (Article 19.4): Jeff Rodgers, Cornish & Carey
Commercial

Article 1.15   EXHIBITS AND ADDENDA: The following exhibits and any addenda are
annexed to this Sublease:

               Exhibit A - Master Lease
               Exhibit B - Description of Sublease Premises

Each reference in this Sublease Agreement ("Sublease") to any provision in
Article 1 shall be construed to incorporate all of the terms of each such
provision.  In the event of any conflict between this Article 1 and the balance
of the Sublease, the balance of the Sublease shall control.

                                       2
<PAGE>
 
ARTICLE 2:   SUBLEASE PREMISES.

Article 2.1  SUBLEASE.  Sublessor hereby subleases to Sublessee and Sublessee
hereby subleases from Sublessor for the Sublease Term, at the Rent and upon the
terms and conditions hereinafter set forth, the Sublease Premises.  Sublessee
acknowledges that the area of the Sublease Premises as specified in Article 1 is
an estimate and that Sublessor does not warrant the exact area of the Sublease
Premises.  By taking possession of the Sublease Premises, Sublessee accepts the
area of the Sublease Premises as that specified in Article 1.

Article 2.2  CONDITION OF THE SUBLEASE PREMISES.  Sublessee shall accept
possession of the Sublease Premises on the Commencement Date in its "as-is,
where-is" condition.  Sublessee acknowledges that except as expressly stated in
this Sublease, (i) Sublessor makes no warranties or representations regarding
the physical condition of the Sublease Premises; (ii) Sublessee has had an
opportunity to inspect the Sublease Premises, including the roof and structural
components of the building; the electrical, plumbing, HVAC, and other building
systems serving the Sublease Premises; and the environmental condition of the
Sublease Premises and related common areas; and to hire experts to conduct such
inspections on its behalf, and (iii) Sublessee is leasing the Sublease Premises
based on its own inspection of the Sublease Premises and those of its agents,
and is not relying on any statements, representations or warranties of Sublessor
or its employees, brokers, agents or other representatives regarding the
physical condition of the Sublease Premises.  Sublessee's taking of possession
of the Sublease Premises shall constitute conclusive evidence that the Sublease
Premises are in good, clean and tenantable condition.  Notwithstanding the
foregoing, Sublessee shall have the right, within two (2) weeks of the
Commencement Date only, to inform Sublessor of any material adverse change in
the condition of the Sublease Premises from the condition thereof as of the
Effective Date.  Sublessor shall promptly thereafter (a) remedy those conditions
that are the tenant's responsibility under the Master Lease and (b) request that
Master Lessor remedy those conditions that are the landlord's responsibility
under the Master Lease.

ARTICLE 3:   TERMS OF THE MASTER LEASE.

Article 3.1  SUBLEASE SUBORDINATE.  This Sublease is subordinate and subject to
all of the terms and conditions of the Master Lease.  If the Master Lease
terminates for any reason whatsoever, this Sublease shall terminate
concurrently, and the parties hereto shall be relieved of any liability
thereafter accruing under this Sublease; provided, however, that the foregoing
shall not be deemed to relieve either party of liability for its failure to
perform its obligations under this Sublease if the Master Lease terminates due
to such a failure.

Article 3.2  ASSUMPTION OF OBLIGATIONS.  To the extent applicable to the
Sublease Premises and Sublessee's use of the Sublease Premises and common areas,
Sublessee hereby expressly agrees to comply with, and assumes and agrees to
perform and discharge, as and when required by the Master Lease, all duties and
obligations to be paid, performed or discharged by Sublessor under the terms,
covenants and conditions of the Master Lease from and after the Commencement
Date, except as specifically set forth in this Sublease.  Sublessee shall not
commit or suffer at any time any act or omission that would violate any
provision of the Master 

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<PAGE>
 
Lease. So long as Sublessee complies with the terms and conditions, and performs
all of its obligations under this Sublease, Sublessor shall not commit any act
or omission during the Sublease Term which would lead to the termination of the
Master Lease by Master Lessor. Notwithstanding the foregoing, if Sublessee fails
to comply with any of its obligations under this Sublease, and does not cure
such failure within the applicable cure period, then Sublessor shall have no
obligation to Sublessee to maintain the Master Lease for Sublessee's benefit.

Article 3.3   MASTER LESSOR'S OBLIGATIONS.  Sublessor shall not be responsible
to Sublessee for furnishing any service, maintenance or repairs to the Sublease
Premises which are the obligation of the Master Lessor under the Master Lease,
it being understood that Sublessee shall look solely to Master Lessor for
performance of any such service, maintenance or repairs.  However, if Master
Lessor shall fall to perform its obligations under the Master Lease, Sublessor,
upon receipt of written notice from Sublessee, shall use commercially reasonable
efforts to attempt to enforce the obligations of Master Lessor under the Master
Lease; provided, however, that Sublessor shall not be required to incur any
costs or expenses in connection therewith unless Sublessee agrees to reimburse
Sublessor for any such costs and expenses as Additional Rent hereunder.

Article 3.4   SUBLESSOR'S RIGHTS AND REMEDIES.  In addition to all the rights
and remedies provided to Sublessor at law or in equity, (a) if Sublessee fails,
within any applicable grace periods provided herein, to perform any act on its
part to be performed pursuant to the requirements of the Master Lease or as
otherwise required by this Sublease, then Sublessor may, but shall not be
obligated to, enter the Sublease Premises to perform such act, and all costs and
expenses incurred by Sublessor in doing so shall be deemed Additional Rent
payable by Sublessee to Sublessor upon demand; and (b) in the event of any
breach by Sublessee of any of 'Its obligations under this Sublease, Sublessor
shall have all of the rights with respect to such default which are available to
Master Lessor under the Master Lease.  Unless otherwise provided in this
Sublease, Sublessee shall be in material default of its obligations under this
Sublease if (i) Sublessee fails to pay Rent as and when due and such failure is
not cured within the time period set forth in the Master Lease less two (2)
business days, or (ii) Sublessee fails to perform any term, covenant or
condition of this Sublease as and when due (except those requiring payment of
Rent) and such failure is not cured within the time period set forth in the
Master Lease less ten (10) days.

Article 3.5   SUBLESSOR'S REPRESENTATIONS.  Sublessor represents that it has not
received from or given to Master Lessor any notices of default under the Master
Lease that have not been cured.

ARTICLE 4:    SUBLEASE TERM.

Article 4.1   COMMENCEMENT AND TERMINATION DATES.  The term of this Sublease
("Sublease Term") shall be for the period of time commencing on the commencement
date described in Article 1 (the "Commencement Date") and ending on the
termination date described in Article 1 or on such earlier date of termination
as provided herein (the "Termination Date").  Sublessee shall have no option to
extend or renew the Sublease Term.

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<PAGE>
 
Article 4.2   DELAY IN COMMENCEMENT.  If for any reason possession of the
Sublease Premises has not been delivered to Sublessee by the scheduled
Commencement Date or any other date, Sublessor shall not be liable to Sublessee
or any other person or entity for any loss or damage resulting therefrom.  In
the event of such delay, the Commencement Date shall be delayed until possession
of the Sublease Premises is delivered to Sublessee, but the Termination Date
shall not be extended.  If Sublessor is unable to deliver possession of the
Sublease Premises to Sublessee within thirty (30) days after the Commencement
Date, then Sublessee may terminate this Sublease by giving written notice to
Sublessor at any time after that date, and the parties shall have no further
liability thereafter accruing under this Sublease; provided, however, that if
Sublessor tenders possession to Sublessee within five (5) days after receipt of
Sublessee's notice of termination, such notice shall be void.  In the event that
this Sublease is terminated pursuant to the terms of this Section 4.2, Sublessor
shall return to Sublessee any Prepaid Rent and/or Security Deposit delivered to
Sublessor pursuant to the terms hereof.

Article 4.3   EARLY OCCUPANCY.  If Sublessor and Sublessee agree that Sublessee
may occupy the Sublease Premises prior to the Rental Commencement Date, such
occupancy shall be subject to all of the provisions of this Sublease, including
the payment of Rent.  Early occupancy of the Sublease Premises shall not advance
the Termination Date.  Sublessee shall, prior to entering the Sublease Premises,
deliver to Sublessor certificates of insurance evidencing the policies required
of Sublessee under this Sublease.

ARTICLE 5:    RENT AND ADDITIONAL EXPENSES.

Article 5.1   PAYMENT OF RENT.  All monies payable by Sublessee under this
Sublease shall constitute "Rent."  All Rent shall be paid in lawful money of the
United States, without any deduction or offset, to Sublessor at the address of
Sublessor specified in Article 1 or such other place as Sublessor may designate
in writing.  No payment by Sublessee of a lesser amount than the Rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated Rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment of Rent be deemed an accord and
satisfaction, and Sublessor may accept such check or payment without prejudice
to its right to recover the balance of such Rent or to pursue any other remedy.
Rent for any partial calendar months at the beginning or end of the Sublease
Term shall be prorated based on a thirty (30) day month.

Article 5.2   MINIMUM MONTHLY RENT.  Sublessee shall pay to Sublessor the sums
set forth in Article 1 hereof as Minimum Monthly Rent, in advance, on the first
day of each calendar month throughout the Sublease Term, commencing on the
Rental Commencement Date.

Article 5.3   ADDITIONAL RENT.  In addition to Minimum Monthly Rent, Sublessee
shall pay to Sublessor from time to time upon demand, the amount of any real
property taxes, maintenance, insurance, utilities and other charges attributable
to the Sublease Premises and common and outside areas payable by Sublessor under
the Master Lease.  It is the parties' intent that this Sublease shall be an
absolute net sublease, and Sublessee agrees that any and all charges, fees,
impositions and payments of any kind whatsoever due or owing by Sublessor under
the Master Lease shall be passed through to Sublessee as Additional Rent
hereunder, except to the extent 

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<PAGE>
 
any such amounts are due and owing by Sublessor as a result of Sublessor's
failure to pay rent under the Master Lease (where Sublessee has timely made such
payments to Sublessor) or carry the insurance required under the Master Lease.

Article 5.4   PREPAID RENT.  Sublessee shall pay to Sublessor the sum specified
in Article 1 as prepaid Rent, which shall be applied to the installments of
Minimum Monthly Rent first coming due under this Sublease, as follows: (i)
$73,861.45 upon execution of this Sublease and (ii) $73,863.45 on November 1,
1998.

Article 5.5   LATE CHARGE.  If Sublessee fails to pay any Rent due hereunder
within five (5) days after Sublessor notifies Sublessee that such amount is past
due, then Sublessee shall pay Sublessor a late charge equal to six percent (6%)
of such delinquent amount as liquidated damages for Sublessee's failure to make
timely payment.  Any notice given by Sublessor pursuant to Sections 1161 and
1162 of the California Code of Civil Procedure shall be deemed to be concurrent
with. and not in addition to, the notice required herein.  This provision for a
late charge shall not be deemed to grant Sublessee a grace period or extension
of time for performance.  If any Rent remains delinquent for a period in excess
of thirty (30) days then, in addition to such late charge, Sublessee shall pay
to Sublessor interest on the delinquent amount from the end of such thirty (30)
day period until paid, at the rate of ten percent (10%) per annum or the maximum
rate permitted by law.

ARTICLE 6:    SECURITY DEPOSIT.  Sublessee shall deposit with Sublessor in cash
the sum specified in Article 1 hereof as a "Security Deposit" as follows: (i)
$88,196.82 upon execution of this Sublease and (ii) $88,196.82 on November 1,
1998.  The Security Deposit shall be held by Sublessor as security for
Sublessee's faithful performance under this Sublease.  If Sublessee fails to pay
any Rent as and when due under this Sublease or otherwise fails to perform its
obligations hereunder, then Sublessor may, at its option and without prejudice
to any other remedy which Sublessor may have, apply, use or retain all or any
portion of the Security Deposit toward the payment of delinquent Rent or for any
loss or damage sustained by Sublessor due to such failure by Sublessee.
Sublessee shall upon demand restore the Security Deposit to the original sum
deposited.  The Security Deposit shall not bear interest nor shall Sublessor be
required to keep such sum separate from its general funds.  Sublessee shall have
the right to provide the Security Deposit in the form of a letter of credit in
the full amount of the Security Deposit (the "Letter of Credit").  The Letter of
Credit shall be in a form and issued by a financial institution that is
reasonably acceptable to Sublessor.  Sublessee shall cause the Letter of Credit
to remain in effect during the entire Sublease Term and for an additional sixty
(60) days following the expiration or earlier termination of this Sublease.  If
Sublessee fails to maintain, renew or replace the Letter of Credit at least
thirty (30) days before its stated expiration date, Sublessor may, without
prejudice to any other right or remedy, draw upon the entire amount of the
Letter of Credit.  Any amount drawn by Sublessor on the Letter of Credit but not
applied by Sublessor to satisfy Sublessee's obligations hereunder shall be held
by Sublessor in accordance with the other provisions of this section.  If
Sublessor draws on any portion of the Letter of Credit and applies such amount
to cure Sublessee's default, Sublessee shall, within three (3) days of demand by
Sublessor, restore the Letter of Credit to the full amount or deposit
immediately available funds with Sublessor in the amount drawn under the Letter
of Credit.  To the extent not otherwise applied by Sublessor as 

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<PAGE>
 
provided herein, the Security Deposit shall be returned to Sublessee within
thirty (30) days after the Termination Date. In the event of bankruptcy or other
debtor-creditor proceedings filed by or against Sublessee, such Security Deposit
shall be deemed to be applied first to the payment of Rent due Sublessor for the
period immediately prior to the filing of such proceedings.

ARTICLE 7:   USE.

Article 7.1  USE OF THE SUBLEASE PREMISES.  Sublessee shall use the Sublease
Premises solely for the purposes specified in Article 1 and otherwise in strict
conformance with the requirements of the Master Lease, and for no other purpose
whatsoever.

Article 7.2  SUITABILITY.  Sublessee acknowledges that neither Sublessor nor any
agent of Sublessor has made any representation or warranty with respect to the
Sublease Premises, the permitted uses that can be made of the Sublease Premises
under existing laws, or the suitability of the Sublease Premises for the conduct
of Sublessee's business, nor has Sublessor agreed to undertake any modification,
alteration or improvement to the Sublease Premises.

Article 7.3  ALTERATIONS.  Sublessee shall make no alterations, improvements or
additions to, in, on or about the Sublease Premises without the prior written
consent of both Sublessor and Master Lessor (which consent shall not be
unreasonably withheld by Sublessor) and otherwise in strict conformance with the
requirements of the Master Lease.

Article 7.4  HAZARDOUS MATERIALS.

     Article 7.4.1  DEFINITIONS.  As used herein, the term "Hazardous Material"
shall have the meaning set forth in Section 39 of the Master Lease.  As used
herein, the term "Hazardous Material Law" shall mean any statute, law,
ordinance, or regulation of any governmental body or agency which regulates the
use, storage, generation, discharge, treatment, transportation, release, or
disposal of any Hazardous Material.

     Article 7.4.2  USE RESTRICTION.  Sublessee shall not cause or permit any
Hazardous Material to be used, stored, generated, discharged, treated,
transported to or from, released or disposed of in, on, over, through, or about
the Sublease Premises, or any other land or improvements in the vicinity of the
Sublease Premises, except to the extent permitted under Section 39(H) of the
Master Lease, without the prior written consent of Master Lessor and Sublessor,
which consent may be withheld in the sole and absolute discretion of Master
Lessor and/or Sublessor.  Without limiting the generality of the foregoing, (a)
any use, storage, generation, discharge, treatment, transportation, release, or
disposal of Hazardous Material by Sublessee shall strictly comply with all
applicable Hazardous Material Laws, and (b) if the presence of Hazardous
Material on the Sublease Premises caused or permitted by Sublessee or its
agents, employees, invitees or contractors results in contamination of the
Sublease Premises or any soil, air, ground or surface waters under, through,
over, on, in or about the Sublease Premises, Sublessee, at its expense, shall
promptly take all actions necessary to return the Sublease Premises to the
condition existing prior to the existence of such Hazardous Material.

                                       7
<PAGE>
 
     Article 7.4.3  INDEMNITY.  Sublessee shall defend, protect, hold harmless
and indemnify Sublessor and its agents, employees, contractors, stockholders,
officers, directors, successors and assigns with respect to all judgments,
claims, damages, actions, losses, penalties, fines, liabilities and other
expenses (including, but not limited to, reasonable attorneys', consultants',
and expert witnesses' fees) which result from or arise out of the storage, use,
generation, discharge, treatment, transportation. release or disposal of
Hazardous Material by Sublessee or its agents, employees, contractors, or
invitees in, on, over, through, from or about the Sublease Premises.  The
foregoing obligations shall survive the expiration or earlier termination of
this Sublease.

ARTICLE 8:   SURRENDER.

Article 8.1  CONDITION OF THE SUBLEASE PREMISES.  Upon the expiration or
earlier termination of this Sublease, Sublessee shall surrender the Sublease
Premises in good condition and repair, excepting only ordinary wear and tear and
damage by fire, earthquake, act of God or the elements.  Sublessee agrees to
repair any damage to the Sublease Premises, or the building of which the
Sublease Premises are a part, caused by or related to the removal of Sublessee's
personal property, fixtures, furniture, equipment or signage, or any
improvements, alterations or additions installed by Sublessee which Sublessor
and/or Master Lessor allow or require Sublessee to remove upon expiration or
earlier termination of this Sublease, including, without limitation, repairing
the floor and patching and/or painting the walls to the reasonable satisfaction
of Sublessor and/or Master Lessor, all at Sublessee's sole cost and expense.
Upon the expiration of this Sublease, Sublessor will not require the removal of
any such improvements, alterations or additions if such removal is not required
by Master Lessor.  Sublessee shall indemnify Sublessor against any loss or
liability resulting from delay by Sublessee in so surrendering the Sublease
Premises, including, without limitation, any claims made by the Master Lessor
founded on such delay.  Such indemnity obligation shall survive the expiration
or earlier termination of this Sublease.

Article 8.2  SUBLESSOR'S RIGHT TO ACCESS.  In the thirty (30) days prior to the
expiration of this Sublease, or such longer time as is reasonably necessary,
Sublessor shall have the right, upon at least twenty-four (24) hours prior
notice, to enter the Sublease Premises to remove personal property, business or
trade fixtures, machinery, equipment cabinetwork, signs, furniture, movable
partitions or permanent improvements or additions which Sublessor is required to
remove (not including those items to be removed by Sublessee pursuant to Article
8.1 of this Sublease) prior to surrender pursuant to the terms of the Master
Lease.  Any work performed by Sublessor pursuant to the terms of the preceding
sentence shall be done in a reasonable manner to minimize the amount of
inconvenience and interference to Sublessee's use and occupancy of the Sublease
Premises; provided, however, Sublessor shall not be liable to Sublessee for any
such inconvenience or interference caused by Sublessor's exercise of its rights
pursuant to this provision.

ARTICLE 9:   CONSENT.  Whenever the consent or approval of Master Lessor is
required pursuant to the terms of the Master Lease, for the purposes of this
Sublease, Sublessee, in each such instance, shall be required to obtain the
written consent or approval of both Master Lessor and Sublessor, which consent
shall not be unreasonably withheld or delayed by Sublessor if 

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<PAGE>
 
Master Lessor so consents. If Master Lessor refuses to grant its consent or
approval, Sublessor may withhold its consent or approval and Sublessee agrees
that such action by Sublessor shall be deemed reasonable.

ARTICLE 10:  INSURANCE.  All insurance policies required to be carried by
Sublessor under the Master Lease shall be maintained by Sublessee pursuant to
the terms of the Master Lease, and shall name Sublessor and Master Lessor (and
such other lenders, persons, firms, or corporations as are designated by Master
Lessor) as additional insureds (by endorsement, if required under the applicable
policy).  All policies shall be written as primary policies with respect to the
interests of Master Lessor and Sublessor and such other additional insureds and
shall provide that any insurance carried by Master Lessor or Sublessor or such
other additional insureds is excess and not contributing insurance with respect
to the insurance required hereunder.  All policies shall also contain "cross
liability" or "severability of interest" provisions, and shall insure the
performance of the indemnity set forth in Article 14 of this Sublease.
Sublessee shall provide Master Lessor and Sublessor with copies or certificates
of all policies, including in each instance evidence (by endorsement if required
under the applicable policy) that such insurance shall not be canceled or
reduced except after thirty (30) days prior written notice to Master Lessor and
Sublessor.  All deductibles, if any, under any such insurance policies shall be
subject to the prior reasonable approval of Sublessor, and all certificates
delivered to Master Lessor and Sublessor shall specify the limits of the policy
and all deductibles thereunder.

ARTICLE 11:  NOTICES.

Article 11.1 NOTICE REQUIREMENTS. All notices, demands, consents, and approvals
which may or are required to be given by either party to the other under this
Sublease shall be in writing and may be personally delivered or given or made by
overnight courier such as Federal Express, by facsimile transmission or made by
United States registered or certified mail addressed as shown in Article 1. Any
notice or demand so given shall be deemed to be delivered or made on the date
personal service is effected or, on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and received
by 5:00 p.m. Pacific time or on the second business day after the same is
deposited in the United States Mail as registered or certified and addressed as
above provided with postage thereon fully prepaid. Either party hereto may
change its address at any time by giving written notice of such change to the
other party in the manner provided herein at least ten (10) calendar days prior
to the date such change is desired to be effective.

Article 11.2 NOTICES FROM MASTER LESSOR. Each party shall provide to the other
party a copy of any notice or demand received from or delivered to Master Lessor
within twenty four (24) hours of receiving or delivering such notice or demand.

ARTICLE 12:  DAMAGE, DESTRUCTION, CONDEMNATION.  To the extent that the Master
Lease gives Sublessor any rights following the occurrence of any damage,
destruction or condemnation to terminate the Master Lease, to repair or restore
the Sublease Premises, to contribute toward such repair or restoration costs to
avoid termination, to obtain and utilize insurance or condemnation proceeds to
repair or restore the Sublease Premises, or any similar 

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<PAGE>
 
rights, such rights shall be reserved to and exercisable solely by Sublessor, in
its sole and absolute discretion. and not by Sublessee. The exercise of any such
right by Sublessor shall under no circumstances constitute a default or breach
under this Sublease or subject Sublessor to any liability therefor. In the
event, however, that Sublessor elects, in its sole and absolute discretion, to
prevent Master Lessor from terminating the Master Lease by paying Master Lessor
the amount required to restore the Sublease Premises in excess of the amount
required to be paid by Master Lessor (as set forth in Section 16 of the Master
Lease), Sublessee shall not be required to reimburse Sublessor for such amount
unless Sublessee has agreed, within five (5) days after notice from Sublessor,
to reimburse Sublessor for such amount. In the event that Sublessee fails to
agree to reimburse Sublessor for such amount within such time period, however,
Sublessor shall have the right to terminate this Sublease upon delivery of ten
(10) days' notice to Sublessee. Notwithstanding the preceding to the contrary,
if, pursuant to Article 16 of the Master Lease, the Sublease Premises is damaged
or destroyed from any insured peril to the extent of less than fifty percent
(50%) of the then replacement cost of the Sublease Premises and Master Lessor's
written notice to Sublessor sets forth a repair period greater than one hundred
eighty (180) days (a copy of which notice shall be promptly delivered to
Sublessee by Sublessor), then Sublessee shall have the right to terminate this
Sublease by delivering written notice of termination to Sublessor within twenty
(20) days following receipt of Master Lessor's written notice. In the event that
Sublessor's rent under the Master Lease is abated as a result of a casualty, the
Minimum Monthly Rent due hereunder shall be abated on a pro rata basis such that
the Minimum Monthly Rent shall be reduced by the same percentage as the "
Monthly Installments" are reduced under the Master Lease.

ARTICLE 13:  INSPECTION OF THE SUBLEASE PREMISES.  Sublessee shall permit
Sublessor and its agents to enter the Sublease Premises at any reasonable time
for the purpose of inspecting the same or posting a notice of non-responsibility
for alterations, additions or repairs, provided that Sublessor (i) provides at
least twenty-four (24) hours prior notice (except in the case of emergency),
(ii) shall be accompanied by an employee of Sublessee at all times while in the
Sublease Premises, (iii) shall comply with Sublessee's security procedures, and
(iv) shall not unreasonably interfere with Sublessee's use of the Sublease
Premises or the conduct of its business therein.

ARTICLE 14:  INDEMNITY; EXEMPTION OF SUBLESSOR FROM LIABILITY.

Article 14.1 SUBLESSEE INDEMNITY. Sublessee shall indemnify, defend (with
counsel reasonably satisfactory to Sublessor), protect and hold Sublessor
harmless from and against any and all claims, demands, actions, suits,
proceedings, liabilities, obligations, losses, damages, judgments, costs,
expenses (including, but not limited to, reasonable attorneys', consultants' and
expert witness fees) arising out of or related (i) Sublessee's use of the
Sublease Premises, the conduct of Sublessee's business therein, or any activity,
work or thing done, permitted or suffered by Sublessee in or about the Sublease
Premises, (ii) a breach by Sublessee in the performance in a timely manner of
any obligation of Sublessee to be performed under this Sublease, (iii) a failure
by Sublessee to comply with any term, covenant, condition or restriction under
the Master Lease required to be performed by or applicable to Sublessee, or (iv)
the negligence or

                                       10
<PAGE>
 
intentional acts of Sublessee or Sublessee's agents, contractors, employees,
subtenants, licensees, or invitees related to the Sublease Premises or this
Sublease.  The foregoing obligations shall survive the expiration or earlier
termination of this Sublease.

Article 14.2 SUBLESSEE WAIVER.  Sublessee, as a material part of the
consideration to Sublessor, hereby waives all claims against Sublessor for
damage to property or injury to persons in, upon or about the Sublease Premises
arising from any cause, except to the extent such damage or injury is caused by
the gross negligence or willful misconduct of Sublessor.  This waiver shall
survive the expiration or earlier termination of this Sublease.

Article 14.3 MUTUAL WAIVER OF SUBROGATION. The parties hereby waive any rights
of recovery each may have against the other in connection with any loss or
damage occasioned to either party's respective property, the Sublease Premises,
or its contents, arising from any risk generally covered by fire and extended
coverage insurance, irrespective of the cause of such fire or casualty. In
addition, the parties each, on behalf of their respective insurance companies,
waive any right of subrogation that such insurance company may have against the
other party for any such loss or damage, provided that such waiver does not
invalidate any such policy. In the event that such waiver would invalidate such
policy, the insured party shall promptly notify the other in writing.

ARTICLE 15:  ASSIGNMENT AND SUBLETTING.  Sublessee shall not voluntarily or by
operation of law assign this Sublease or enter into license or concession
agreement, sublet all or any part of the Sublease Premises, or otherwise
transfer, mortgage, pledge, hypothecate or encumber all or any part of
Sublessee's interest in this Sublease or in the Sublease Premises or any part
thereof (each, a "Transfer"), without the prior written consent of Master Lessor
(pursuant to the terms of the Master Lease) and Sublessor, which consent shall
not be unreasonably withheld by Sublessor.  Sublessee shall have no right to
Transfer less than the entire area of the Sublease Premises, and Sublessee
agrees that it shall be reasonable for Sublessor or Master Lessor to withhold
its consent to any Transfer of a portion of the Sublease Premises.  Any attempt
to effect a Transfer without such consent being first had and obtained shall be
wholly void and shall constitute a default by Sublessee under this Sublease.
Sublessee hereby irrevocably assigns to Sublessor all rent and other sums or
consideration in any form, from any such subletting or assignment, and agrees
that Sublessor, as assignee and as attorney-in-fact for Sublessee, or a receiver
for Sublessee appointed upon Sublessor's application, may collect such rent and
other sums and apply the same against amounts owing to Sublessor in the event of
Sublessee's default; provided, however, that until the occurrence of any act of
default by Sublessee or Sublessee's assignee or subtenant, Sublessee shall have
the right to collect such sums, provided that two-thirds (2/3) of all rent and
other charges payable by any such assignee, subtenant or other transferee in
excess of the Rent payable under this Sublease shall belong solely and
exclusively to Sublessor and paid to Sublessor within thirty (30) days following
Sublessee's receipt thereof.  It is the intention of the parties that Sublessor
pay to Master Lessor one-half (1/2) of such amounts paid by Sublessee as may be
required under Section 25(B)(1) of the Master Lease.

                                       11
<PAGE>
 
ARTICLE 16:  DELIVFRY OF DOCUMIENTS.  Sublessee shall execute and deliver any
document or other instrument reasonably required by Master Lessor or Sublessor
pursuant to the Master Lease within five (5) days following receipt of a written
request from Master Lessor or Sublessor.  Failure to comply with this provision
shall constitute a default by Sublessee under this Sublease.

ARTICLE 17:  HOLDING OVER. Any holding over by Sublessee after the Termination
Date, without the prior written consent of Master Lessor and Sublessor, shall
not constitute a renewal or extension of this Sublease or give Sublessee any
rights in or to the Sublease Premises. Any holding over by Sublessee after the
Termination Date, with the prior written consent of Master Lessor and Sublessor,
shall be construed as a month-to-month tenancy on the same terms and conditions
as specified in this Sublease, except that Sublessee shall pay to Sublessor as
Minimum Monthly Rent during such tenancy an amount equal to One Hundred Fifty
Percent (150%) of the most recent Minimum Monthly Rent. Any holding over by
Sublessee after the Termination Date, without the prior written consent of both
Master Lessor and Sublessor, shall be construed as a tenancy at sufferance
(terminable upon notice by Sublessor) on the same terms and conditions as
specified in this Sublease, except that Sublessee shall pay to Sublessor as
Minimum Monthly Rent during such tenancy an amount equal to Two Hundred Percent
(200%) of the most recent Minimum Monthly Rent.

ARTICLE 18:  OPTIONS. Any right of Sublessor to extend or renew the term of the
Master Lease or to expand the Premises (if any) shall be reserved to and
exercisable solely by Sublessor, in its sole discretion, and not by Sublessee.
Sublessor agrees to exercise such options to extend or renew the Master Lease
only to the extent necessary to fulfill its obligation to sublease the Sublease
Premises to Sublessee for the Sublease Tenn.

ARTICLE 19:  GENERAL PROVISIONS.

Article 19.1 SEVERABILITY. If any term or provision of this Sublease shall, to
any extent, be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Sublease shall not be affected thereby, and
each term and provision of this Sublease shall be valid and enforceable to the
fullest extent permitted by law.

Article 19.2 ATTORNEYS' FEES; COSTS OF SUIT.  If Sublessee or Sublessor shall
bring any action for any relief against the other, declaratory or otherwise,
arising out of this Sublease, including any suit by Sublessor for the recovery
of Rent or possession of the Sublease Premises, the prevailing party shall be
entitled to recover its reasonable attorneys' fees and costs of suit.

Article 19.3 WAIVER.  No covenant, term or condition or the breach thereof
shall be deemed waived, except by written consent of the party against whom the
waiver is claimed, and any waiver of the breach of any covenant, term or
condition shall not be deemed to be a waiver of any other covenant, term or
condition.  Acceptance by Sublessor of any performance by Sublessee after the
time the same shall have become due shall not constitute a waiver by Sublessor
of the breach or default of any covenant, term or condition unless otherwise
expressly agreed to by Sublessor in writing.

                                       12
<PAGE>
 
Article 19.4 BROKERAGE COMMISSIONS.  The parties represent and warrant to each
other that they have dealt with no brokers, finders, agents or other person in
connection with the transaction contemplated hereby to whom a brokerage or other
commission or fee may be payable, except for the brokers named in Article 1.
Each party shall indemnify, defend and hold the other harmless from any claims
arising from any breach by the indemnifying party of the representation and
warranty in this Section 19.4.

Article 19.5 BINDING EFFECT.  Preparation of this Sublease by Sublessor or
Sublessor's agent and submission of the same to Sublessee shall not be deemed an
offer to lease.  This Sublease shall become binding upon Sublessor and Sublessee
only when fully executed by Sublessor and Sublessee and approved in writing by
Master Lessor.

Article 19.6 ENTIRE AGREEMENT.  This instrument, along with any exhibits and
addenda hereto, constitutes the entire agreement between Sublessor and Sublessee
relative to the Sublease Premises.  This Sublease may be altered, amended or
revoked only by an instrument in writing signed by both Sublessor and Sublessee.
There are no oral agreements or representations between the parties affecting
this Sublease, and this Sublease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements, representations and
understandings, if any, between the parties hereto.

Article 19.7 EXECUTION. This Sublease may be executed in one or more
counterparts, each of which shall be considered an original counterpart, and all
of which together shall constitute one and the same instrument. Each person
executing this Sublease represents that the execution of this Sublease has been
duly authorized by the party on whose behalf the person is executing this
Sublease.

Article 19.8 MASTER LESSOR CONSENT.  The obligations of the parties under this
Sublease are conditioned upon receipt by Sublessor of Master Lessor's written
consent to this Sublease in substantially the same form as Exhibit C attached
hereto.

Article 19.9 ACCESS TO FIBER STATION.  Sublessor reserves the right to access
during the Sublease Term the underground data fiber station located within the
parking area of the Premises and shown on Exhibit D ("Fiber Station").
Sublessor agrees to provide Sublessee with at least twenty-four (24) hours
notice of any such entry, except that no such notice shall be required in the
event of an emergency (including, without limitation, emergency service of the
fiber and related installations).  Sublessee agrees that it shall have no right
to access or use the Fiber Station unless and until Sublessee enters into a
separate access agreement in a form reasonably acceptable to Sublessor.

                                       13
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have entered into this Sublease as
of the Effective Date set forth hereinabove.

SUBLESSOR                                SUBLESSEE:

SILICON GRAPHICS, INC.,                  VERISIGN, INC.,
a Delaware corporation                   a Delaware corporation

By /s/ Raymond E. Johnson                By /s/ Dana Evan
   ---------------------------              ----------------------------

Its Vice Pres. Real Estate & Facilities  Its CFO
    -----------------------------------      ---------------------------

                                       14
<PAGE>
 
                                LEASE AGREEMENT
                                ---------------

     1.   Parties.  This lease is made by and between SHORELINE INVESTMENTS VI,
          -------                                                              
a California general partnership ("Landlord"), and SILICON GRAPHICS, INC., a
Delaware corporation (Tenant").

     2.   Demise of Premises.  Landlord hereby leases to Tenant and Tenant
          ------------------                                              
hereby leases tram Landlord, upon the terms and conditions hereinafter set
forth, those certain premises (the "Premises") situated in the City of Mountain
View, County of Santa Clara, State of California, described as follows: that
certain building containing approximately fifty-one thousand eight hundred
thirty-four (51,834) square feet of floor space commonly known as 1350
Charleston Road, shown cross-hatched on the site plan (the "Site Plan") attached
hereto as Exhibit "A" together with all improvements now or hereafter located
therein or thereon. The Building is located on the parcel (the "Parcel")
described in Exhibit "B" attached hereto.  Tenant currently occupies the
Premises pursuant to a prior lease and is thoroughly familiar with the physical
condition of the Premises.  Landlord shall not be required to make any
alterations, additions or improvements to the Premises and the Premises shall be
leased to Tenant in its "as-is" condition.

     3.   Term  The term of this Lease ("Lease Term"') shall be for five (5)
          ----                                                              
years, commencing on July 1, 1997 (the "Commencement Date") and ending on June
30, 2002 unless sooner terminated pursuant to any provision hereof.
Notwithstanding said scheduled Commencement Date, if for any reason Landlord
cannot deliver possession of the Premises to Tenant on said date, Landlord shall
not be subject to any liability therefor, nor shall such failure affect the
validity of this Lease or the obligations of Tenant hereunder, but in such case
Tenant shall not be obligated to pay rent until possession of the Premises is
tendered to Tenant and the commencement and termination dates of this Lease
shall be revised to conform to the date of Landlord's delivery of possession.

     4.   Rent.
          ---- 

          A.   Time of Payment.  Tenant shall pay to Landlord as rent for the
               ---------------                                               
Premises the sum specified in Subparagraph 4.B below (the "Monthly Installment")
each month in advance on the first day of each calendar month, without deduction
or offset, prior notice or demand, commencing on the Commencement Date and
continuing through the term of this Lease, together with such additional rents
as are payable by Tenant to Landlord under the terms of this Lease.  The Monthly
Installment for any period during the Lease Term which period is less than one
(1) full month shall be a pro rate portion of the Monthly Installment based upon
a thirty (30) day month.

          B.   Monthly Installment.  The Monthly Installment of rent payable
               -------------------                                          
each month during the period from July 1, 1997 through and including December
31, 1998, shall be the sum of Sixty-Four Thousand Seven Hundred Ninety Dollars
($64,790.00) per month.  The Monthly installment of rent payable each month
during the period from January 1, 1999 through and including June 30, 2002,
shall be the sum of Sixty-Nine Thousand Nine Hundred Seventy-Six Dollars
($69,976.00) per month.
<PAGE>
 
          C.   Late Charge.  Tenant acknowledges that late payment by Tenant to
               -----------                                                     
Landlord of rent and other sums due hereunder will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which will he extremely
difficult to ascertain.  Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Landlord by the
terms of any mortgage or deed of trust covering the premises.  Accordingly, if
any installment of rent or any other sum due from Tenant shall not be -received
by Landlord within ten (10) days after Tenant's receipt of written notice from
Landlord of the unpaid amount, Tenant shall pay to Landlord, as additional rent,
a late charge equal to six percent (6%) of such overdue amount.  The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs Landlord will incur by reason of late payment by Tenant.  Acceptance
of such late charge by Landlord shall in no event constitute a waiver of
Tenant's default with respect to such overdue amount, nor prevent Landlord from
exercising any of its other rights and -remedies granted hereunder.

          D.      Additional Rent. All taxes, insurance premiums, Outside Area
                  ---------------
Charges, late charges, costs and expenses which Tenant is required to pay
hereunder, together with all interest and penalties that may accrue thereon in
the event of Tenant's failure to pay such amounts, and all reasonable damages,
costs, and attorneys' fees and expenses which Landlord may incur by reason of
any default of Tenant or failure on Tenant's part to comply with the terms of
this Lease, shall be deemed to be additional rent ("Additional Rent") and shall
be paid in addition to the Monthly Installment of rent, and, in the event of
nonpayment by Tenant, Landlord shall have all of the rights and remedies with
respect thereto as Landlord has for the nonpayment of the monthly installment of
rent.

          E.   Place of Payment.  Rent Shall be pay-able in lawful money of the
               ----------------                                                
United States of America to Landlord at 1710 Zanker Road, Suite 100, San Jose,
California 95112 or to such other person(s) or at such other place(s) as
Landlord may designate in writing.

          F.   Advance Payment.  Concurrently with the execution of this Lease,
               ---------------                                                 
Tenant shall pay to Landlord the sum of none Dollars ($0.00) to the applied to
the Monthly installment of rent first accruing under this Lease.

     5.   Security Deposit.  Tenant shall deposit the sum of none Dollars
          ----------------                                               
($0.00) (the "Security Deposit") upon execution of this Lease, to secure the
faithful performance by Tenant of each term, covenant and condition of this
Lease.  If Tenant shall at any time fail to make any payment or fail to keep or
perform any term, covenant or condition on its part to be made or performed or
kept under this Lease, Landlord may, but shall not be obligated to and without
waiving or releasing Tenant from any obligation under this Lease, use, apply or
retain the whole or any part of the Security Deposit (A) to the extent of any
sum due to Landlord; (B) to make any required payment on Tenant's behalf; or (C)
to compensate Landlord for any loss, damages, attorneys' fees or expense
sustained by Landlord due to Tenant's default.  In such event, Tenant shall,
within five (5) days of written demand by Landlord, remit to Landlord sufficient
funds to restore the security Deposit to its original sum.  No interest shall
accrue on the Security Deposit.  Landlord shall not be required to keep the
Security Deposit separate from its general funds.  Should Tenant comply with all
the terms, covenants, and conditions of this Lease 


                                       2
<PAGE>
 
and at the end of the term of this Lease leave the Premises in the condition
required by this Lease, then said Security Deposit, less any sums owing to
Landlord or which Landlord is otherwise entitled to retain, shall be returned to
Tenant within thirty (30) days after the termination of this Lease and vacancy
of the Premises by Tenant.

     6.   Use of Premises.  Tenant shall use the Premises only in conformance
          ---------------                                                    
with applicable governmental laws, regulations, rules and ordinances for the
purpose of research and development, office, administration, light
manufacturing, assembly, warehousing and distribution of electronics products,
training, education, promotional and other related legal uses and for no other
purpose.  Tenant shall indemnify, protect, defend, and hold Landlord harmless
against any loss, expense, damage, attorneys' fees or liability arising out of
the failure of Tenant to comply with any applicable law applicable to Tenant's
use of the Premises.  Tenant shall not commit or suffer to be committed, any
waste upon the Premises, or any nuisance, or other acts or things which may
disturb the quiet enjoyment of any other tenant in the buildings adjacent to the
Premises, or allow any sale by auction upon the Premises, or allow the Premises
to be used for any unlawful purpose, or place any loads upon the floor, walls or
ceiling which endanger the structure, or place any harmful liquids in the
drainage system of the Building.  No waste materials or refuse shall be dumped
upon or permitted to remain upon any part of the Premises outside of the
Building, except in trash containers placed inside exterior enclosures
designated for that purpose by Landlord.  No materials, supplies, equipment,
finished products or semifinished products, raw materials or articles of any
nature shall be stored upon or permitted to remain on any portion of the
Premises outside of the Building.  Tenant shall strictly comply with the
provisions of Paragraph 39 below.

     7.   Taxes and Assessments.
          --------------------- 

          A.   Tenant's Property.  Tenant shall pay before delinquency any and
               -----------------                                              
all taxes and assessments, license fees and public charges levied, assessed or
imposed upon or against Tenant's fixtures, equipment, furnishings, furniture,
appliances and personal property installed or located on or within the Premises.
Tenant shall cause said fixtures, equipment, furnishings, furniture, appliances
and personal property to be assessed and billed separately from the real
property of Landlord.  If any of Tenant's said personal property shall be
assessed with Landlord's real property, Tenant shall pay Landlord the taxes
attributable to Tenant's personal property within ten (10) days after receipt of
a written statement from Landlord setting forth the taxes applicable to Tenant's
property.

          B.   Property Taxes.  Tenant shall pay, as additional rent, all
               --------------                                            
Property Taxes levied or assessed with respect to the Premises and the land
comprising the Parcel and with respect to all buildings and improvements located
on the Parcel which become due or accrue during the term of this Lease.  Tenant
shall pay such Property Taxes to Landlord on or before twenty (20) days after
receipt of billing.  If Tenant fails to do so, Tenant shall reimburse Landlord,
on demand, for all interest, late fees and penalties that the taxing authority
charges Landlord.  In the event Landlord's mortgagee requires an impound for
Property Taxes, then on the first day of each month during the Lease Term,
Tenant shall pay Landlord one twelfth (1/12) 

                                       3
<PAGE>
 
of its annual share of such Property Taxes. Tenant's liability hereunder shall
be prorated to reflect the Commencement and termination dates of this Lease.

     For the purpose of this Lease, "Property Taxes" means and includes all
taxes, assessments (including, but not limited to, assessments for public
improvements or benefits), taxes based on vehicles utilizing parking areas,
taxes based or measured by the rent paid, payable or received under this Lease,
taxes on the value, use, or occupancy of the Premises, the Building and/or the
Parcel, Environmental Surcharges, and all other governmental impositions and
charges of every kind and nature whatsoever, whether or not customary or within
the contemplation of the parties hereto and regardless of whether the same shall
be extraordinary or ordinary, general or special, unforeseen or foreseen, or
similar or dissimilar to any of the foregoing which, at any time during the
Lease Term, shall be applicable to the Premises, the Building and/or, the Parcel
or assessed, levied or imposed upon the Premises, the Building and/or the
Parcel, or become due and payable and a lien or charge upon the Premises, the
Building and/or the Parcel, or any part thereof, under or by virtue of any
present or future laws, statutes, ordinances, regulations or other requirements
of any governmental authority whatsoever.  The term "Environmental Surcharges"
shall mean and include any and all expenses, taxes, charges or penalties imposed
by the Federal Department of Energy, the Federal Environmental Protection
Agency, the Federal Clean Air Act, or any regulations promulgated thereunder or
any other local, state or federal governmental agency or entity now or hereafter
vested with the power to impose taxes, assessments, or other types of surcharges
as a means of controlling or abating environmental pollution or the use of
energy.  The term "Property Taxes" shall not include any federal, state or local
net income, estate, or inheritance tax imposed on Landlord.  Notwithstanding the
foregoing, the term "Property Taxes" shall not include any Environmental
Surcharge arising out of any Hazardous Material (a) existing in, on, under, over
or about the Premises and/or Parcel prior to the Commencement Date or (b) not
otherwise used, stored, generated, discharged, transported to or from, or
disposed of in, on, under, over or about the Premises and/or Parcel by Tenant or
its agents, employees or contractors.  Notwithstanding anything in this
Paragraph 7.B to the contrary, during the initial three (3) year term of this
Lease only, the term "Property Taxes" shall not include any increases in real
property taxes that result from a voluntary sale or ocher transfer of the
Premises and/or Parcel by Landlord or controlling interest of Landlord or the
acquisition by Landlord of the reversionary interest in the Parcel; provided,
however, "Property Taxes" shall include any increases in real property taxes
that result from a foreclosure sale, deed lieu of foreclosure or other
involuntary transfer of ownership of the Premises and/or the Parcel.
Notwithstanding the foregoing, if the initial term of this Lease is extended by
the exercise of any option to extend granted in this Lease or otherwise, the
term "Property Taxes" shall include all real property taxes due or accruing
during such extended lease term, including any increases in property taxes
attributable to any sale or other transfer of ownership occurring at any time
following the Commencement Date of this Lease.

          C.   Other Taxes:  Tenant shall, as additional rent, pay or reimburse
               -----------                                                     
Landlord for any tax based upon, allocable to, or measured by the area of the
Premises or the Building or the Parcel; or by the rent paid, payable or received
under this Lease; any tax upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy of the
Premises or any portion thereof; any privilege tax, excise tax, business and

                                       4
<PAGE>
 
occupation tax, gross receipts tax, sales and/or use tax, water tax, sewer tax,
employee tax, occupational license tax imposed upon Landlord or Tenant with
respect to the Premises; any tax upon this transaction or any document to which
Tenant is a party creating or transferring an interest or an estate in the
Premises.

     8.   Insurance.
          --------- 

          A.   Indemnity.  Tenant agrees to indemnify, protect and defend
               ---------                                                 
Landlord against and hold Landlord harmless from any and all claims, causes of
action, judgments, obligations or liabilities, ,and all reasonable expenses
incurred in investigating or resisting the same (including reasonable attorneys
fees), on account of, or arising out of, the operation, maintenance, use or
occupancy of the Premises and the Parcel and all areas appurtenant thereto;
provided, however, that in no event shall Tenant have any obligation to
indemnify, protect, defend, release or hold Landlord harmless from any such
claims, causes of action, judgments, obligations, liabilities, costs and
expenses arising from (i) the negligent acts or omissions or willful misconduct
of Landlord or its agents, employees, invitees or contractors; or (ii) any
breach of Landlord's obligations under this Lease.  Landlord shall indemnify,
defend and hold Tenant harmless from any and all claims, causes of action,
judgments, obligations or liabilities and all reasonable expenses incurred in
investigating or resisting the same (including reasonable attorneys' fees) on
account of, or arising out of, third party claims for personal injury or
property damage caused by the negligent acts or omissions of Landlord or its
employees, agents, invitees or contractors, or any breach of Landlord's
obligations under this Lease.  This Lease is made on the express understanding
that Landlord shall not be liable for, nor suffer loss by reason of, injury to
person or property, from whatever cause (except for the negligence or willful
misconduct of Landlord or its agents, employees, contractors or invitees), which
in any way may be connected with the operation use or occupancy of the Premises
specifically including, without limitation, any liability for injury to the
person or property of Tenant, its agents, officers, employees, licensees and
invitees.

          B.   Liability Insurance.  Tenant shall, at Tenant's expense, obtain
               -------------------                                            
an keep in force during the term of this Lease a policy of comprehensive public
liability insurance insuring Landlord and Tenant against claims and liabilities
arising out of the operation, use, or occupancy of the Premises and the Parcel
and all areas appurtenant thereto, including parking areas.  Such insurance
shall be in an amount of not less than Three Million Dollars ($3,000,000.00) for
bodily injury or death as a result of any one occurrence and Five Hundred
Thousand Dollars ($500,000.00) for damage to property as a result of any one
occurrence.  The insurance shall be with companies having a rating of at least
A/10 in Best's Insurance Guide.  Tenant shall deliver to Landlord, prior to
possession, and at least thirty (30) days prior to the expiration thereof, a
certificate of insurance evidencing the existence of the policy required
hereunder and such certificate shall certify that the policy (1) names Landlord
as an additional insured, (2) shall not be canceled or altered without thirty
(30) days prior written notice to Landlord, (3) insures performance of the
indemnity set forth in Subparagraph 8.A above, (4) the coverage is primary and
any coverage by Landlord is in excess thereto and (5) contains a cross-liability
endorsement.  Landlord may maintain a policy or policies of comprehensive
general liability insurance insuring Landlord (and such others as are designated
by Landlord), against liability for personal injury, 

                                       5
<PAGE>
 
bodily injury, death and damage to property occurring or resulting from an
occurrence in, on or about the Premises or the Outside Area, with such limits of
coverage as Landlord may from time to time determine are reasonably necessary
for its protection. The cost of any such liability insurance maintained by
Landlord shall be a Outside Area Charge and Tenant shall pay, as additional
rent, the full cost of such insurance to Landlord as provided in Paragraph 12
below.

          C.   Property Insurance.  Landlord shall obtain and keep in force
               ------------------                                          
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Premises and the Building, in the amount of the full replacement
value thereof, providing protection against those perils included within the
classification of "all risk" insurance, plus a policy of rental income insurance
in the amount of one hundred percent (100%) of twelve (12) months rent
(including, without limitation, sums payable as Additional Rent), plus any other
coverages (including earthquake and flood insurance) to the extent recruited
from time to time by Landlord's mortgagee; provided, however, that in no event
shall Tenant be required to pay for the cost of pollution liability insurance.
Tenant shall have no interest in nor any right to the proceeds of any insurance
procured by Landlord on the Premises.  Tenant shall, within thirty (30) days
after receipt of billing, pay to Landlord as additional rent, the full cost such
insurance procured and maintained by Landlord.  Tenant acknowledges that such
insurance procured by Landlord shall contain a deductible which reduces Tenant's
cost for such insurance and, in the event of loss or damage, Tenant shall be
required to pay to Landlord the amount of such deductible, not to exceed Ten
Thousand Dollars ($10,000.00).

     Notwithstanding the foregoing, Tenant shall not be liable for any portion
of any earthquake insurance premium applicable to the Premises which exceeds
three cents ($0.03) per square foot of leasable space within the Premises per
month; except the three cent ($0.03) limit shall be increased on each
anniversary of the Commencement Date by the same percentage increase as the
percentage increase in the Consumer Price Index from the Commencement Date to
such anniversary.  As used herein, the term "Consumer Price Index" means that
Consumer Price Index for All Urban Consumers (all items) as published by the
United States Department of Labor, Bureau of Labor Statistics, for the San
Francisco/Oakland/San Jose Metropolitan Area (1982-1984 = 100 base).

          D.   Tenant's Insurance, Release of Landlord.  Tenant acknowledges
               ---------------------------------------                      
that the insurance to be maintained by Landlord on the Premises pursuant to
Subparagraph 8.C above will not insure any of Tenant's property.  Accordingly,
Tenant, at Tenant's own expense, shall maintain in full force and effect on all
of its fixtures, equipment, leasehold improvements and personal property in the
Premises, a policy of "All Risk" coverage insurance to the extent of at least
ninety percent (90%) of their insurable value.

          E.   Mutual Waiver of Subrogation.  Tenant and Landlord hereby
               ----------------------------                             
mutually waive their respective rights for recovery against each other for any
loss of or damage to the property of either party, to the extent such loss or
damage is insured by any insurance policy required to be maintained by this
Lease or otherwise in force at the time of such loss or damage.  Each party
shall obtain any special endorsements, if required by the insurer, whereby the
insurer waives its right of subrogation against the other party hereto.  The
provisions of this 

                                       6
<PAGE>
 
Subparagraph E shall not apply in those instances in which waiver of subrogation
would cause either party's insurance coverage to be voided or otherwise made
uncollectible.

     9.   Utilities.  Tenant shall pay for all water, gas, light, heat, power,
          ---------                                                           
electricity, telephone, trash pick-up, sewer charges, and all other services
supplied to or consumed on the Premises, and all taxes and surcharges thereon.
In addition, the cost of any utility services supplied to the Outside Area or
not separately metered to the Premises shall be an Outside Area Charge and
Tenant shall pay one hundred percent (100%) of such costs to Landlord as
provided in Paragraph 12 below.

     10.  Repairs and Maintenance.
          ----------------------- 

          A.   Landlord's Repairs.  Subject to the provisions of Paragraph 16,
               ------------------                                             
Landlord shall keep and maintain the exterior roof, structural elements and
exterior walls of the Building in good order and repair.  Landlord shall not,
however, be required to maintain, repair or replace the interior surface of
exterior walls, nor shall Landlord be required to maintain, repair or replace
windows, doors, skylights or plate glass.  Landlord shall have no obligation to
make repairs under this Subparagraph until a reasonable time after receipt of
written notice from Tenant of the need for such repairs.  Tenant shall reimburse
Landlord, as additional rent, within thirty (30) days after receipt of billing,
for the cost of such repairs and maintenance which are the obligation of
Landlord hereunder, provided however, that Tenant shall not be required to
reimburse Landlord for the cost of maintenance and repairs of the structural
elements of the Building unless such maintenance or repair is required because
of the negligence or willful misconduct of Tenant or its employees, agents, or
invitees.  As used herein, the term "structural elements of the Building" shall
mean and be limited to the foundation, footings, floor slab (but not flooring),
structural walls, and roof structure (but not roofing or roof membrane).
Notwithstanding anything in the foregoing to the contrary, if during the term of
this Lease or any extension thereof, the roofing or roof membrane requires
replacement, Landlord shall perform such replacement and Tenant shall pay to
Landlord, as Additional Rent, a fraction of the cost of such replacement, which
fraction shall have its numerator the number of calendar months remaining in the
Lease Term at the time of such replacement and shall have as its denominator one
hundred eighty (180) months.  If Tenant exercises any option to extend the term
of this Lease, then at the commencement of any such option term, Tenant shall
pay to Landlord an additional fraction of the cost of such replacement, which
fraction shall have as its numerator the number of years in the option term in
question, and shall have as its denominator one hundred eighty (180) months.
All payments required of Tenant under this Subparagraph 10.A shall be made
within thirty (30) days after receipt of billing.

          B.   Tenant's Repairs.  Except as expressly provided in Subparagraph
               ----------------                                               
10.A above, Tenant shall, at its sole cost, keep and maintain the entire
Premises and every part thereof, including without limitation, the windows,
window frames, plate glass, glazing, skylights, truck doors, doors and all door
hardware, the walls and partitions, and the electrical, plumbing, lighting,
heating, ventilating and air conditioning systems and equipment in good order,
condition and repair.  The term "repair", shall include replacements,
restorations and/or renewals when necessary as well as painting.  Tenant's
obligation shall extend to all alterations, additions 

                                       7
<PAGE>
 
and improvements to the Premises, and all fixtures and appurtenances therein and
thereto. Tenant shall, at all times during the Lease Term, have in effect a
service contract for the maintenance of the heating, ventilating and air
conditioning ("HVAC") equipment with an HVAC repair and maintenance contractor
approved by Landlord. The HVAC service contract shall provide for periodic
inspection and servicing at least once every three (3) months during the term
hereof, and Tenant shall provide Landlord with a copy of such contract and all
periodic service reports.

     Should Tenant fail to commence any repairs required of Tenant hereunder
forthwith upon five (5) days written notice from Landlord or should Tenant fail
thereafter to diligently complete the repairs, Landlord, in addition to all
other remedies available hereunder or by law and without waiving any alternative
remedies, may make the same, and in that event, Tenant shall reimburse Landlord
as additional rent for the cost of such maintenance or repairs within five (5)
days of written demand by Landlord.

     Landlord shall have no maintenance or repair obligations whatsoever with
respect to the Premises except as expressly provided in Subparagraph 10.A and
Paragraphs 11 and 16.  Tenant hereby expressly waives the provisions of
Subsection 1 of Section 1932 and Sections 1941 and 1942 of the Civil Code of
California and all rights to make repairs at the expense of Landlord as provided
in Section 1942 of said Civil Code.

     Notwithstanding any provision of this Lease to the contrary, Tenant shall
not be responsible for performing or paying for the cost of, and Landlord shall
perform at its sale cost and expense, any and all maintenance, repairs,
replacements, alterations, additions or modifications to the Premises, Building
and/or Outside Areas (i) necessitated by the negligent acts or omissions or
willful misconduct of Landlord or its agents, employees, invitees or
contractors, (ii) necessitated by the occurrence of any insured casualty for
which and to the extent Landlord has received insurance proceeds, (iii) arising
from a failure by Landlord to construct the Premises, Building (including,
without limitation, all HVAC, electrical, plumbing, lighting and other building
systems) and/or Outside Areas in a good and workmanlike manner and in accordance
with applicable laws, rules, codes and regulations existing at the time of their
construction or installation (provided, however, the failure described in this
clause (iii) shall not include or apply to any construction or installation of
any alterations, additions, improvements or replacements by any previous tenant
or subtenant of the Premises); or (iv) for which Landlord has received
reimbursement from others.  Landlord shall use its best efforts to collect such
insurance proceeds and other reimbursements.  If, during the Lease Term, the
HVAC condenser unit requires replacement, Landlord shall replace the same and
Tenant shall pay to Landlord, as additional rent, a fraction of the cost of such
replacement, which fraction shall have as its numerator the number of calendar
months remaining in the Lease Term at the time of such replacement and as its
denominator one hundred twenty (120) months.  If Tenant exercises any option to
extend the term of this Lease, Tenant shall pay to Landlord an additional
fraction of the cost of such replacement, which fraction shall have as its
numerator the number of calendar months in the option term in question and shall
have as its denominator one hundred twenty (120) months.

                                       8
<PAGE>
 
     11.  Outside Area.  Subject to the terms and conditions of this Lease,
          ------------                                                     
Tenant and Tenant's employees, invitees and customers shall, in common with
others entitled to the use thereof, have the non-exclusive right to use the
access roads, parking areas and facilities provided and designated by Landlord
for the general use and convenience of the occupants of the Parcel, which areas
and facilities are referred to herein as "Outside Area."  This right shall
terminate upon the termination of this Lease.  Landlord reserves the right from
time to time to make changes in the shape, size, location, amount and extent of
the outside Area, provided that the same do not (a) interfere with access to or
use of the Premises, Building and/or Outside Areas by Tenant and its agents,
employees, invitees and contractors or (b) reduce the number of parking spaces
located within the Outside Areas and otherwise available for use by Tenant and
its agents, employees, invitees and contractors, unless such reduction is
required by law.  Tenant shall have the exclusive use of all parking spaces and
shipping and loading areas in the Outside Area.  Tenant shall not abandon any
inoperative vehicles or equipment on any portion of the Outside Area.  Tenant
shall make no alterations, improvements or additions to the Outside Area.

     Landlord shall operate, manage, insure, maintain and repair the Outside
Area in good order, condition and repair.  The manner in which the outside Area
shall be maintained and the expenditures for such maintenance shall be at the
discretion of Landlord.  The cost of such repair, maintenance, operation,
insurance and management, including without limitation, maintenance and repair
of landscaping, irrigation systems, paving, sidewalks, fences, and lighting,
shall be a Outside Area Charge and Tenant shall pay to Landlord its share of
such costs as provided in Paragraph 12 below.

     12.  Outside Area Charges.  Tenant shall pay to Landlord, as additional
          --------------------                                              
rent, upon demand but not more often than once each calendar month, an amount
equal to one hundred percent (100%) of the Outside Area Charges as defined in
Subparagraph. 8.B and Paragraphs 9, 11, 13 and 36 of this Lease.  Tenant
acknowledges and agrees that the Outside Area Charges shall include an
additional five percent (5%) of the actual expenditures in order to compensate
Landlord for accounting, management and processing services.  Notwithstanding
the preceding to the contrary, in no event shall any "Outside Area Charge"
include (i) costs incurred by Landlord in performing its obligations under
Paragraph 10.A above, (ii) depreciation, amortization or other expense reserves,
(iii) payments, interest, fees or other charges on debt or rent, fees or other
charges under ground leases, (iv) costs to investigate, remove or otherwise
remediate any Hazardous Material from all or any portion of the Premises,
Building, Outside Area and/or Parcel or the soils and groundwater thereunder,
including, without limitation, any judgments, penalties, clean-up costs,
remediation costs, consulting fees or attorneys' fees.  The preceding sentence
shall not reduce or modify Tenant's obligations under Paragraph 10.A above and
Paragraph 39 below.

     Notwithstanding the foregoing, if during the Lease Term or any extension
thereof, the paving of the parking lot or any other improvement in the Outside
Area requires replacement, and if the replacement will cost more than Five
Thousand Two Hundred Dollars ($5,200.00) and will have a useful life extending
beyond the then remaining Lease Term, then Landlord shall make such replacement
and a fraction of the cost of such replacement shall be included as an Outside
Area Charge for the year of such replacement, which fraction shall have as its
numerator 

                                       9
<PAGE>
 
the number of months then remaining in the Lease Term and shall have as its
denominator one hundred twenty (120) months. If Tenant exercises any option to
extend the term of this Lease, Tenant shall pay to Landlord, at the commencement
of the Option Term in question, an additional fraction of the cost of such
replacement, which additional fraction shall have as its numerator the number of
months in the Option Term in question and shall have as its denominator one
hundred twenty (120) months. As used herein, the "replacement" shall not include
patching or sealing. The cost of patching and sealing shall be an Outside Area
Charge. In no event shall any capital expenditures chargeable to Tenant
hereunder include the five percent (5%) administrative charge.

     13.  Alterations.  Tenant shall not make, or suffer to be made, any
          -----------                                                   
alterations, improvements or additions in, on, about or to the Premises or any
part thereof, without the prior written consent of Landlord (which shall not be
unreasonably withheld or delayed) and without a valid building permit issued by
the appropriate governmental authority.  As a condition to giving such consent,
Landlord may require that Tenant agree to remove any such alterations,
improvements or additions at the termination of this Lease, and to restore the
Premises to their prior condition.  Unless Landlord requires that Tenant remove
any such alteration, improvement or addition, any alteration, addition or
improvement to the Premises, except movable furniture and trade fixtures not
affixed to the Premises, shall become the property of Landlord upon termination
of the Lease and shall remain upon and be surrendered with the Premises at the
termination of this Lease.  Without limiting the generality of the foregoing,
all heating, lighting, electrical (including all wiring, conduit, outlets,
drops, buss ducts, main and subpanels), air conditioning, permanent
partitioning, drapery, and carpet installations made by Tenant regardless of how
affixed to the Premises, together with all other additions, alterations and
improvements that have become an integral part of the Building, shall be and
become the property of the Landlord upon termination of the Lease, and shall
remain upon and be surrendered with the Premises at the termination of this
Lease.

     Notwithstanding the preceding to the contrary, (i) Tenant shall have the
right to make alterations and additions to the interior or the Premises that do
not affect the structural elements of the Building and have a cost of Five
Thousand Dollars ($5,000.00) or less per project without the prior written
approval of Landlord, and (ii) Tenant shall be required to remove only those
alterations and additions which Landlord has, at the time of its approval,
requested Tenant to remove upon expiration of the Lease Term, or which Tenant
has otherwise constructed or installed without the prior approval of Landlord.

     If, during the Lease Term (or any extensions thereof), any alteration,
addition or change of any sort to all or any portion of the Premises is.
required by law, regulation, ordinance or order of any public agency (including,
without limitation, any alterations required by the Americans with Disabilities
Act) by reason of (1) Tenant's use of the Premises, (2) Tenant's obtaining a new
permit or governmental approval (except as provided in Paragraph 10.B), or (3)
Tenant's construction or installation of any leasehold improvements or trade
fixtures (except as provided in Paragraph 10.B), Tenant shall promptly make the
same at its sole cost and expense.  If during the Lease Term (or any extensions
thereof), any alteration, addition, or change to the Outside Area, or to the
Premises for any reason other than for the reasons described in the preceding

                                      10
<PAGE>
 
sentence, is required by law, regulation, ordinance or order of any public
agency, Landlord shall make the same and Tenant shall pay an amount equal to one
and one-half percent (1-1/2%) of the cost of such alteration, addition or change
per month during the remainder of the Lease Term as an Outside Area Charge.
Notwithstanding the preceding sentence to the contrary, any such alteration,
addition or change to a structural element of the Building that is required by
law, regulation, ordinance or order of any public agency shall be made by
Landlord at its sole cost and expense and shall not constitute an Outside Area
Charge.

     14.  Acceptance of the Premises.  By entry and taking possession of the
          --------------------------                                        
Premises pursuant to this Lease, Tenant accepts the Premises as being in good
and sanitary order, condition and repair and accepts the Premises in their
condition existing as of the date of such entry, and Tenant further accepts the
tenant improvements to be constructed by Landlord, if any, as being completed in
accordance with the plans and specifications for such improvements.  Tenant
acknowledges that neither Landlord nor Landlord's agents has made any
representation or warranty as to the suitability of the Premises to the conduct
of Tenant's business.  Any agreements, warranties or representations not
expressly contained herein shall in no way bind either Landlord or Tenant, and
Landlord and Tenant expressly waive all claims for damages by reason of any
statement, representation, warranty, promise or agreement, if any, not contained
in this Lease.  This Lease constitutes the entire understanding between the
parties hereto and no addition to, or modification of, any term or provision of
this Lease shall be effective until set. forth in a writing signed by both
Landlord and Tenant.

     15.  Tenant's Default.
          ---------------- 

          A.   Events of Default.  A breach of this Lease by Tenant shall exist
               -----------------                                               
if any of the following events (hereinafter referred to as "Event of Default")
shall occur:

          (1)  Default in the payment when due of any installment of rent or
other payment required to be made by Tenant hereunder, where such default shall
not have been cured within ten (10) days after written notice of such default is
given to Tenant;

          (2) Tenant's failure to perform any other term, covenant or condition
contained in this Lease where such failure shall have continued for thirty (30)
days after written notice of such failure is given to Tenant or, if such failure
cannot be reasonably cured within said thirty (30) day period, Tenant's failure
to commence such cure within said thirty (30) day period and, thereafter, to
diligently pursue the same to completion;

          (3) Tenant's vacating or abandonment of the Premises for a period
exceeding forty-five (45) days;

          (4) Tenant's assignment of its assets for the benefit of its
creditors;

          (5) The sequestration of, attachment of, or execution on, any
substantial part of the property of Tenant or on any property essential to the
conduct of Tenant's business, shall have occurred and Tenant shall have failed
to obtain a return or release of such property within 

                                      11
<PAGE>
 
sixty (60) days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier;

          (6) Tenant or any guartantor of Tenant's obligations hereunder shall
commence any case, proceeding or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors, or seek appointment of a receiver, trustee, custodian, or other
similar official for it or for all or any substantial part of its property and
such action or proceeding is not dismissed within sixty (60) days thereafter;

          (7) Tenant or any such guarantor shall take any corporate action to
authorize any of the actions set forth in Clause 6 above; or

          (8) Any case, proceeding or other action against Tenant or any
guarantor of Tenant's obligations hereunder shall be commenced seeking to have
an order for relief entered against it as debtor, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors, or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property, and
such case, proceeding or other action (i) results in the entry of an order for
relief against it which is not fully stayed within seven (7) business days after
the entry thereof or (ii) remains undismissed for a period of sixty (60) days.

     B.   Remedies.  Upon any Event of Default, Landlord shall have the
          --------                                                     
following remedies, in addition to all other rights and remedies provided by
law, to which Landlord may resort cummulatively, or in the alternative:

          (1) Recover of Rent.  Landlord shall he entitled to keep this Lease in
              ---------------                                                   
full force and effect (whether or not Tenant shall have abandoned the Premises)
and to enforce all of its rights and remedies under this Lease, including the
right to recover rent and other sums as they become due, plus interest at the
Permitted Rate (as defined in Paragraph 33 below) from the due date of each
installment of rent or other sum until paid.

          (2) Termination.  Landlord may terminate this Lease by giving Tenant
              -----------                                                     
written notice of termination.  On the giving of the notice all of Tenant's
rights in the Premises and the Building and Parcel shall terminate.  Upon the
giving of the notice of termination, Tenant shall surrender and vacate the
Premises in the condition required by Paragraph 34, and Landlord may re-enter
and take possession of the Premises and all the remaining improvements and eject
Tenant or any of Tenant's subtenants, assignees or other person or persons
claiming any right under or through Tenant or eject some and not others or eject
none.  This Lease may also be terminated by a judgment specifically providing
for termination.  Any termination under this paragraph shall not release Tenant
from the payment of any sum then due Landlord or from any claim for damages or
rent previously accrued or then accruing against Tenant.  In no event shall any
one or more of the following actions by Landlord constitute a termination of
this Lease:

               (a)  maintenance and preservation of the Premises;

                                      12
<PAGE>
 
               (b)  efforts to relet the Premises;

               (c) appointment of a receiver in order to protect Landlord's
interest hereunder;

               (d) consent to any subletting of the Premises or assignment of
this Lease by Tenant, whether pursuant to provisions hereof concerning
subletting and assignment or otherwise; or

               (e) any other action by Landlord or Landlord's agents intended to
mitigate the adverse effects from any breach of this Lease by Tenant.

          (3)  Damages.  In the event this Lease is terminated pursuant to
               -------                                                    
Subparagraph 15.B.2 above, or otherwise, Landlord shall be entitled to damages
in the following sums:

               (a) the worth at the time of award of the unpaid rent which has
been earned at the time of 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 that 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; and

               (d) any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including, without limitation the following:  (i) expenses for
cleaning, repairing or restoring the Premises; (ii) expenses for altering,
remodeling or otherwise improving the Premises for the purpose of reletting,
including installation of leasehold improvements (whether such installation be
funded by a reduction of rent, direct payment or allowance to the succeeding
lessee, or otherwise); (iii) real estate broker's fees, advertising costs and
other expenses of reletting the Premises; (iv) costs of carrying the Premises
such as taxes and insurance premiums thereon, utilities and security
precautions; (v) expenses in retaking possession of the Premises; (vi)
attorneys' fees and court costs; and (vii) any unamortized real estate brokerage
commission paid in connection with this Lease.

               (e) The "worth at the time of award" of the amounts referred to
in Subparagraphs (a) and (b) of this Paragraph 15.B(3) is computed by allowing-
interest at the Permitted Rate. The "worth at the time of award" of the amounts
referred to in Subparagraph (c) of this Paragraph 15.B(3) is computed by
discounting such amount at the discount rate of the 

                                      13
<PAGE>
 
Federal Reserve Board of San Francisco at the time of award plus one percent
(3.%). The term "rent" as used in this Paragraph 1.5 shall include all sums
required to be paid by Tenant to Landlord pursuant to the terms of this Lease.

     16.  Destruction.  In the event that any portion of the Premises are
          -----------                                                    
destroyed or damaged by any peril not covered by the insurance required to be
carried by Landlord pursuant to the terms Of this Lease, then Landlord shall, at
its sole cost and expense, promptly restore the Premise, and this Lease shall
continue in full force and effect unless Tenant otherwise terminates this Lease
as provided hereinbelow; provided, however, that Landlord shall have the right
to terminate this Lease if the cost of the restoration or repair exceeds ten
percent (10%) of the replacement cost of -the Building, unless Tenant otherwise
agrees to contribute the balance of the Cost of restoration or repair in excess
of said ten percent (10k) amount.

     In the event the Premises are damaged or destroyed from any insured peril
to the extent of fifty percent (50-t) or more of the then replacement cost of
the Premises, Landlord may, upon written notice to Tenant, given within thirty
(30) days after the occurrence of such damage or destruction, elect to terminate
this Lease.  If Landlord does not give such notice in writing within such
period, Landlord shall be deemed to have elected to rebuild or restore the
Premises, i-n which event Landlord shall, at its expense, promptly rebuild or
restore the Premises to their condition prior to the damage or destruction and
Tenant shall pay to Landlord upon commencement of -reconstruction the amount of
any deductible from the insurance policy, not to exceed Ten Thousand Dollars
($10,000.00).

     In the event the Premises are damaged or destroyed from any insured peril
to the extent of less than fifty percent (50%) of the then replacement cost of
the Premises, Landlord shall, at Landlord, s expense, promptly rebuild or
restore the Premises to their condition prior to the damage or destruction and
Tenant :shall pay to Landlord upon commencement of reconstruction the amount of
any deductible from the insurance policy, not to exceed Ten Thousand Dollars
($10,000.00).

     In the event that, pursuant to the foregoing provisions, Landlord is to
rebuild or restore the Premises, Landlord shall, within thirty (30) days after
the occurrence of such damage or destruction, provide Tenant with written notice
               --        
of the time required for such repair or restoration. If such period is longer
than one hundred eighty (180) days from the date of casualty, Tenant may, within
thirty (30) days after receipt of Landlord's notice, elect to terminate the
Lease by giving written notice to Land-lord of such election, whereupon the
Lease shall immediately terminate.  Landlord, s obligation to repair or restore
the Premises shall not include restoration of Tenant's trade fixtures,
equipment, merchandise, or any improvements, alterations or additions made by
Tenant to the Premises.

     Landlord and Tenant shall each have the right to terminate the Lease if (i)
such damage to the Premises occurs during the last year of the term of the Lease
and (ii) it is estimated that necessary repairs will take more than sixty (60)
days from the date of casualty, unless Tenant exercises its option to extend
this Lease within thirty (30) days of the date of casualty.

                                      14
<PAGE>
 
     Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect; provided, however,'-that from and
after the date of casualty until the repairs or restoration are completed by
Landlord, rent and all other amounts to be paid by Tenant on account of the
Premises and this Lease shall be abated in proportion to the area of the
Premises rendered not reasonably suitable for the conduct of Tenant's business
thereon.  Tenant hereby expressly waives the provisions of Section 1932,
Subdivision 2 and Section 1933, Subdivision 4 of the California Civil Code.

     17.  Condemnation.
          ------------ 

          A.   Definition of Terms.  For the purposes of this Lease, the term
               -------------------                                           
(1) "Taking" means a taking of the Premises or damage to the Premises related to
the exercise of the power of eminent domain and includes a voluntary conveyance,
in lieu of court proceedings, to any agency, authority, public utility, person
or corporate entity empowered to condemn property; (2) "Total Taking" means the
taking of the entire Premises or so much of the Premises as to prevent or
substantially impair the use thereof by Tenant for the uses herein specified;
provided, however, in no event shall a Taking of less than ten percent (10%) of
the Premises he deemed a Total Taking; (3) "Partial Taking" means the taking of
only a portion of the Premises which does not constitute a Total Taking; (4)
"Date of Taking" means the date upon which the title to the Premises, or a
portion thereof, passes to and vests in the condemnor or the effective date of
any order for possession if issued prior to the date title vests in the
condemnor; and (5) "Award" means the amount of any award made, consideration
paid, or damages ordered as a result of a Taking.

          B.   Rights.  The parties agree that in the event of a Taking all
               ------                                                      
rights between them or in and to an Award shall be as set forth herein and
Tenant shall have no right to any Award except as set forth herein.

          C.   Total Taking.  In the event of a Total Taking during the term
               ------------                                                 
hereof (1) the rights of Tenant under the Lease and the leasehold estate of
Tenant in and to the Premises shall cease and terminate as of the Date of
Taking; (2) Landlord shall refund to Tenant any prepaid rent; (3) Tenant shall
pay Landlord any rent or charges due Landlord under the Lease, each prorated as
of the Date of Taking; (4) Tenant shall receive from Landlord those portions of
the Award attributable to trade fixtures of Tenant and for moving expenses of
Tenant; and (5) the remainder of the Award shall be paid to and be the property
of Landlord.

          D.   Partial Taking.  In the event of a Partial Taking during the term
               --------------                                                   
hereof (1) the rights of Tenant under the Lease and the leasehold estate of
Tenant in and to the portion of the Premises taken shall cease and terminate as
of the Date of Taking; (2) from and after the Date of Taking the Monthly
Installment of rent shall be an amount equal to the product obtained by
multiplying the Monthly installment of rent immediately prior to the Taking by a
fraction, the numerator of which is the member of square feet contained in the
Premises after the Taking and the denominator of which is the number of square
feet contained in the Premises prior to the Taking; (3) Tenant shall receive
from the Award the portions of the Award attributable to trade fixtures of
Tenant; and (4) the remainder of the Award shall be paid to and be the property
of 

                                      15
<PAGE>
 
Landlord.  In the event of a Partial Taking of more than ten percent (10%) of
the Premises, Tenant may, within thirty (30) days of notice of such Partial
Taking, terminate this Lease if Tenant, in its sole discretion, determines that
such Partial Taking causes an unacceptable restriction of its use of the
Premises.

     18.  Mechanics' Lien.  Tenant shall (A) pay for all labor and services
          ---------------                                                  
performed for, materials used by or furnished to, Tenant or any contractor
employed by Tenant with respect to the Premises; (B) indemnify, defend, protect
and hold Landlord and the Premises harmless and free from any liens, claims,
liabilities, demands, encumbrances, or judgments created or suffered by reason
of any labor or services performed for, materials used by or furnished to,
Tenant or any contractor employed by Tenant with respect to the Premises; (C) if
the cost of such work is in excess of Five Thousand Dollars ($5,000.00) give
notice to Landlord in writing five (5) days prior to employing any laborer or
contractor to perform services related to, or receiving materials for use upon
the Premises; and (D) permit Landlord to post a notice of nonresponsibility in
accordance with the statutory requirements of California Civil Code Section 3094
or any amendment thereof.  In the event Tenant is required to post an
improvement bond with a public agency in connection with the above, Tenant
agrees to include Landlord as an additional obligee.

     19.  Inspection of the Premises.  Tenant shall permit Landlord and its
          --------------------------                                       
agents to enter the Premises at any reasonable time for the purpose of
inspecting the same, performing Landlord's maintenance and repair
responsibilities, posting a notice of non-responsibility for alterations,
additions or repairs and at any time within one hundred eighty (180) days prior
to expiration of this Lease, to place upon the Premises, ordinary "For Lease" or
"For Sale" signs; provided that Landlord, except in the case of emergency, (i)
shall not enter the Premises without first giving one (1) days notice to Tenant,
(ii) shall be accompanied by an employee of Tenant at all times while in the
Premises, (iii) shall comply with Tenant's security procedures, and (iv) shall
not unreasonably interfere with Tenant's use of the Premises or the conduct of
its business therein.

     20.  Compliance with Laws.  Subject to Paragraphs 10.A, 11, 12 and 13
          --------------------                                            
above, Tenant shall, at its own cost, comply with all of the requirements of all
municipal, county, state and federal authorities now in force, or which may
hereafter be in force, pertaining to the use and occupancy of the Premises, and
shall faithfully observe all municipal, county, state and federal law, statutes
or ordinances now in force or which may hereafter be in force.  The judgment of
any court of competent jurisdiction or the admission of Tenant in any action or
proceeding against Tenant, whether Landlord be a party thereto or not, that
Tenant has violated any such ordinance or statute in the use and occupancy of
the Premises shall he conclusive of the fact that such violation by Tenant has
occurred.

     21.  Subordination.  The following provisions shall govern the relationship
          -------------                                                         
of this Lease to any underlying lease, mortgage or deed of trust which now or
hereafter affects the Premises, the Building and/or the Parcel, or Landlord's
interest or estate therein (the "Project") and any renewal, modification,
consolidation, replacement, or extension thereof (a "Security Instrument").

                                      16
<PAGE>
 
          A.   Priority.  This Lease is subject and subordinate to all Security
               --------                                                        
Instruments existing as of the Commencement Date.  However, if any Lender so
requires, this Lease shall become prior and superior to any such Security
Instrument.

          B.   Subsequent Security Instruments.  At Landlord's election, this
               -------------------------------                               
Lease shall become subject and subordinate to any is Security instrument created
after the Commencement Date, provided that such Lender executes and delivers to
Tenant a recognition and non-disturbance agreement reasonably acceptable to
Tenant providing that Tenant's right to quiet possession of the Premises shall
not be disturbed so long as Tenant is not in default and performs all of its
obligations under this Lease, unless this Lease is otherwise terminated pursuant
to its terms.

          C.   Documents.  Subject to the provisions of this Paragraph 21,
               ---------                                                  
Tenant shall execute any document or instrument required by Landlord or any
Lender to make this Lease either prior or subordinate to a Security Instrument,
which may include such other matters as the Lender customarily requires in
connection with such agreements, including provisions that the Lender not be
liable for (1) the return of the Security Deposit unless the Lender receives it
from Landlord, and (2) any defaults on the part of Landlord occurring prior to
the time that the Lender takes possession of the Project in connection with the
enforcement of its Security instrument.  Tenant's failure to execute any such
document or instrument within ten (10) days after written demand therefor shall
constitute a default by Tenant or, at Landlord's option, Landlord may execute
such documents an behalf of Tenant as Tenant's attorney-in-fact.  Tenant does
hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney-
in-fact to execute such documents in accordance with this Paragraph.

          D.   Tenant's Attornment.  Tenant shall attorn (1) to any purchaser of
               -------------------                                              
the Premises at any foreclosure sale or private sale conducted pursuant to any
security instrument encumbering the Project; (2) to any grantee or transferee
designated in any deed given in lieu of foreclosure; or (3) to the lessor under
any underlying ground lease should such ground lease be terminated, provided
that, in any such event, the party acquiring Landlord's interest in this Lease
assumes in writing all of the obligations of Landlord hereunder to be performed
after such acquisition.

          E.   Lender.  The term "Lender" shall mean (1) any beneficiary,
               ------                                                    
mortgagee, secured party, or other holder of any need of trust, mortgage, or
other written security device or agreement affecting the Project; and (2) any
lessor under any underlying lease under which Landlord holds its interest in the
Project.

     22.  Holding Over.  This Lease shall terminate without further notice at
          ------------                                                       
the expiration of the Lease Term.  Any holding over by Tenant after expiration
shall not constitute a renewal or extension or give Tenant any rights in or to
the Premises except as expressly provided in this Lease.  Any holding over after
the expiration with the consent of Landlord shall be construed to be a tenancy
from month to month, at one hundred twenty-five percent (25%) of the monthly
rent for the last month of the Lease Term, and shall otherwise be on the terms
and conditions herein specified insofar as applicable.

                                      17
<PAGE>
 
     23.  Notices.  Any notice required or desired to be given under this Lease
          -------                                                              
shall be in writing with copies directed as indicated below and shall be
Personally served or given by mail.  Any notice given by mail shall be deemed to
have been given when forty-eight (48) hours have elapsed from the time such
notice was deposited in the United States mails, certified and postage prepaid,
addressed to the party to be served with a copy as indicated herein at the last
address given by that party to the other party under the provisions of this
Paragraph 23.  At the date of execution of this Lease, the address of Landlord
is:

          1710 Zanker Road, Suite 100
          San Jose, CA 95112

and the address of Tenant is:

          Silicon Graphics, Inc.
          2011 N. Shoreline Blvd.
          Mountain View, CA 94039-7311
          Attn:  Legal Services

     24.  Attorneys' Fees.  In the event either party shall bring any action or
          ---------------                                                      
legal proceeding for damages for any alleged breach of any provision of this
Lease, to recover rent or possession of the Premises, to terminate this Lease,
or to enforce, protect or establish any term or covenant of this Lease or right
or remedy of either party, the prevailing party shall he entitled to recover as
a part of such action or proceeding, reasonable attorneys' fees and court costs,
including attorneys, fees and costs for appeal, as may be fixed by the court or
jury.  The term "prevailing party" shall mean the party who received
substantially the relief requested, whether by settlement, dismissal, summary
judgment, judgment, or otherwise.

     25.  Nonssignment.
          ------------ 

          A.   Landlord's Consent Required.  Tenant's interest in this Lease is
               ---------------------------                                     
not assignable, by operation of law or otherwise, nor shall Tenant have the
right to sublet the Premises, transfer any interest of Tenant therein or permit
any use of the Premises by another party, without the prior written consent of
Landlord to such assignment, subletting, transfer or use, which consent Landlord
agrees not to withhold unreasonably subject to the provisions of Subparagraph
25.2 below; provided, however, that the prior written consent of Landlord shall
not be required with respect to any assignment of this Lease and/or subletting
of the Premises (a) to a parent, subsidiary or other affiliate of Tenant, (b) in
connection with the sale of all or substantially all of Tenant's assets, or (c)
in connection with a merger, consolidation, or non-bankruptcy reorganization of
Tenant.  A consent to one assignment, subletting, occupancy or use by another
party shall not be deemed to be a consent to any subsequent assignment,
subletting, occupancy or use by another party.  Any assignment or subletting
without such consent shall be void and shall, at the option of Landlord,
terminate this Lease.

     Landlord's waiver or consent to any assignment or subletting hereunder
shall not relieve Tenant from any obligation under this Lease unless the consent
shall so provide.

                                      18
<PAGE>
 
          B.   Transferee Information Required.  If Tenant desires to assign its
               -------------------------------                                  
interest in this Lease or sublet the Premises, or transfer any interest of
Tenant therein, or permit the use of the Premises by another party (hereinafter
collectively referred to as a "Transfer"), Tenant shall give Landlord at least
ten (10) business days prior written notice of the proposed Transfer and of the
terms of such proposed Transfer, including, but not limited to, the name and
legal composition of the proposed transferee, a financial statement of the
proposed transferee, the nature of the proposed transferee's business to be
carried on in the Premises, the payment to be made or other consideration to be
given to Tenant on account of the Transfer, and such other pertinent information
as may be requested by Landlord, all in sufficient detail to enable Landlord to
evaluate the proposed Transfer and the prospective transferee.  It is the intent
of the parties hereto that this Lease shall confer upon Tenant only the right to
use and occupy the Premises, and to exercise such other rights as are conferred
upon Tenant by this Lease.  The parties agree that this Lease is not intended to
have a bonus value nor to serve as a vehicle whereby Tenant may profit by a
future Transfer of this Lease or the right to use or occupy the Premises as a
result of any favorable terms contained herein, or future changes in the market
for leased space.  It is the intent of the parties that any such bonus value
that may attach to this Lease shall be and remain the exclusive property of
Landlord.  Accordingly, in the event Tenant seeks to Transfer its interest in
this Lease or the Premises, Landlord shall have the following options, which may
be exercised at its sole choice without limiting Landlord in the exercise of any
other right or remedy which Landlord may have by reason of such proposed
Transfer:

               (1) Landlord may consent to the proposed Transfer on the
condition that Tenant agrees to pay to Landlord, as additional rent, fifty
percent (50%) of any and all rents or other consideration (including key money)
received by Tenant from the transferee by reason of such Transfer in excess of
the rent payable by Tenant to Landlord under this Lease (less any brokerage
commissions or advertising expenses incurred by Tenant in connection with the
Transfer). Tenant expressly agrees that the foregoing is a reasonable condition
for obtaining Landlord's consent any Transfer; or

               (2) Landlord may reasonably withhold its consent to the proposed
Transfer.

     26.  Successors.  The covenants and agreements contained in this Lease
          ----------                                                       
shall be binding on the parties hereto and on their respective heirs, successors
and assigns (to the extent the Lease is assignable).

     27.  Mortgage Protection.  In the event of any default on the part of
          -------------------                                             
Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage encumbering the
Premises, whose address shall have been furnished to Tenant, and shall offer
such beneficiary or mortgagee a reasonable opportunity to cure the default,
including time to obtain possession of the Premises by power of sale or judicial
foreclosure, if such should prove necessary to effect a cure.

     28.  Landlord Loan or Sale.  Tenant agrees within ten (10) days following
          ---------------------                                               
request by Landlord to execute and deliver to Landlord any documents, including
estoppel certificates 

                                      19
<PAGE>
 
presented to Tenant by Landlord, (1) certifying that this Lease is unmodified
and in full force and effect and the date to which the rent and other charges
are paid in advance, if any, and (2) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, and
(3) evidencing the status of the Lease as may be required either by a lender
making a loan to Landlord to be secured by a deed of trust or mortgage covering
the Premises or a purchaser of the Premises from Landlord. Tenant's failure to
deliver an estoppel certificate within ten (10) days following such request
shall be an Event of Default under this Lease. Within ten (10) days following
request by Tenant, Landlord shall execute and deliver to Tenant any documents,
including estoppel certificates presented to Landlord, (i) certifying that the
Lease is unmodified and in full force and effect and the date to which the rent
and other charges are paid in advance, if any, and (ii) acknowledging that there
are not, to Landlord's knowledge, any uncured defaults on the part of Tenant
under the Lease.

     29.  Surrender of Lease Not Merger.  The voluntary or other surrender of
          -----------------------------                                      
this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger
and shall, at the option of Landlord, terminate all or any existing subleases or
subtenants, or operate as an assignment to Landlord of any or all such subleases
or subtenants.

     30.  Waiver.  The waiver by Landlord or Tenant of any breach of any term,
          ------                                                              
covenant or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained.

     31.  General.
          ------- 

          A.   Captions.  The captions and paragraph headings used in this Lease
               --------                                                         
are for the purposes of convenience only.  They shall not be construed to limit
or extend the meaning of any part of this Lease, or be used to interpret
specific sections.  The word(s) enclosed in quotation marks shall be construed
as defined for purposes of this Lease.  As used in this Lease, the masculine,
feminine and neuter and the singular or plural number shall each be deemed to
include the other whenever the context so requires.

          B.   Definition of Landlord.  The term LANDLORD as used in this Lease,
               ----------------------                                           
so far as the covenants or obligations on part of Landlord are concerned, shall
be limited to mean and include only the owner at the time in question of the fee
title of the Premises, and in the event of any transfer or transfers of the
title of such fee, the Landlord herein named (and in case of any subsequent
transfers or conveyances, the then grantor) shall after the date of such
transfer or conveyance be automatically freed and relieved of all liability with
respect to performance of any covenants or obligations on the part of Landlord
contained in this Lease, thereafter accruing or to be performed by Landlord;
provided that any funds in the hands of Landlord or the then grantor at the time
of such transfer, in which Tenant has an interest, shall be turned over to the
grantee and provided, further, that landlord's successor-in-interest assumes in
writing all of Landlord's obligations under this Lease to be performed or
accruing after the transfer.  It is intended that the covenants and obligations
contained in this Lease on the part of Landlord shall, 

                                      20
<PAGE>
 
subject as aforesaid, be binding upon each Landlord, its heirs, personal
representatives, successors and assigns only during its respective period of
ownership.

          C.   Time of Essence.  Time is of the essence for the performance of
               ---------------                                                
each term, covenant and condition of this Lease.

          D.   Severability.  In case any one or more of the provisions
               ------------                                            
contained herein, except for the payment of rent, shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Lease, but this Lease shall be construed as if such invalid, illegal or
unenforceable provision had not been contained herein.  This Lease shall be
construed and enforced in accordance with the laws of the State of California.

          E.   Joint and Several Liability.  If Tenant is more than one person
               ---------------------------                                    
or entity, each such person or entity shall be jointly and severally and liable
for the obligations of Tenant hereunder.

          F.   Law.  The term "law" or "laws" shall mean any judicial decision,
               ---                                                             
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirement of any government agency or authority having
jurisdiction over the parties to this Lease or the Premises or both, in effect
at the Commencement Date of this Lease or any time during the Lease Term,
including, without limitation, any regulation, order, or policy of any quasi-
official entity or body (e.g., board of fire examiners, public utility or
                         ---                                             
special district).

     32.  Sign.  Tenant shall not place or permit to be placed any sign or
          ----                                                            
decoration on the Parcel or the exterior of the Building without the prior
written consent of Landlord which consent shall not be unreasonably withheld or
delayed.  Tenant, upon written notice by Landlord, shall immediately remove any
sign or decoration that Tenant has placed or permitted to be placed on the
parcel or the exterior of the Building without the prior written consent of
Landlord, and if Tenant fails to so remove such sign or decoration within five
(5) days after Landlord's written notice, Landlord may enter upon the Premises
and remove said sign or decoration and Tenant agrees to pay Landlord, as
additional rent upon demand, the cost of such removal.  At the termination of
this Lease, Tenant shall remove any sign which it has placed on the Parcel or
Building and shall repair any damage caused by the installation or removal of
--------                                                                     
such sign.

     33.  Interest on Past Due Obligations.  Any Monthly Installment of rent or
          --------------------------------                                     
any other sum due from Tenant under this Lease which is received by Landlord
more than thirty (30) days after the date the same is due shall bear interest
from said date until paid, at an annual rate equal to the greater of (the
"Permitted Rate"):  (1) ten percent (10%); or (2) five percent (5%) plus the
rate established by the Federal Reserve Bank of San Francisco, as of the twenty-
fifth (25th) day of the month immediately preceding the due date, on advances to
member banks under Sections 13 and 13(a) of the Federal Reserve Act, as now in
effect or hereafter from time to time amended.  Payment of such interest shall
not excuse or cure any default by Tenant.  In addition, Tenant shall pay all
costs and attorneys' fees incurred by Landlord in collection of such amounts.

                                      21
<PAGE>
 
     34.  Surrender of the Premises.  On the last day of the Term hereof, or on
          -------------------------                                            
the sooner termination of this Lease, Tenant shall surrender the Premises to
Landlord in their condition existing as of the Commencement Date of this Lease,
ordinary wear and tear and casualty and condemnation excepted, with all
originally painted interior walls washed, and other interior walls cleaned, and
repaired or replaced, all carpets shampooed and cleaned, the air conditioning
and heating equipment serviced and repaired by a reputable and licensed service
firm, all floors cleaned and waxed, all to the reasonable satisfaction of
Landlord.  Tenant shall remove all of Tenant's personal property and trade
fixtures from the Premises, and all property not so removed shall be deemed
abandoned by Tenant.  Tenant, at its sole cost, shall repair any damage to the
Premises caused by the removal of Tenant's personal property, machinery and
equipment, which repair shall include, without limitation, the patching and
filling of holes and repair of structural damage.  If the Premises are not so
surrendered at the termination of this Lease, Tenant shall indemnify, defend,
protect and hold Landlord harmless from and against loss or liability resulting
from delay by Tenant in so surrendering the Premises including without
limitation, any claims made by any succeeding tenant or losses to Landlord due
to lost opportunities to lease to succeeding tenants.

     35.  Authority.  The undersigned parties hereby warrant that they have
          ---------                                                        
proper authority and are empowered to execute this Lease on behalf of Landlord
and Tenant, respectively.

     36.  C. C. & R.'s.  This Lease is made subject to all matters of public
          ------------                                                      
record affecting title to the property of which the Premises are a part.  Tenant
shall abide by and comply with all private conditions, covenants and
restrictions of public record now or hereafter affecting the Premises and any
amendment thereof, including, but not limited to, the following:

          A.   Those covenants, conditions and restrictions for the Shoreline
Business Park Regarding Drainage Facilities executed by New England Mutual Life
Insurance Company and recorded June 1, 1979, in Book E535 at page 186, Santa
Clara county Records.

          B.   Those covenants, conditions and restrictions for the Shoreline
Business Park Regarding Architectural Control, Development and Use executed by
New England Mutual Life Insurance Company and recorded on June 1, 1989, in Book
E535 at page 233, Santa Clara County Records.

     All assessments and charges which are imposed, levied or assessed against
the Parcel and Building pursuant to the above-described covenants, conditions
and restrictions shall be a Outside Area Charge and Tenant shall pay its share
of such assessments and charges to Landlord as provided in Paragraph 12 above,
provided, however, that if such assessment or charge relates to a capital
improvement, Tenant shall only be responsible for paying a fraction of the cost
of such reassessment or charge, which fraction shall have as its numerator the
number of calendar months remaining in the Lease Term at the time of such
assessment or charge and shall have as its denominator one hundred twenty (120)
months.

     37.  Brokers.  Each party hereto represents and warrants to Landlord that
          -------                                                             
it has not dealt with any broker respecting this transaction other than Cornish
& Carey Commercial and 

                                      22
<PAGE>
 
hereby agrees to indemnify and hold such other party harmless from and against
any brokerage commission or fee, obligation, claim or damage (including
attorneys' fees) paid or incurred respecting any broker (other than Cornish &
Carey Commercial) claiming through such indemnifying party or with which/whom it
has dealt.

     38.  Limitation on Landlord's Liability.  Tenant, for itself and its
          ----------------------------------                             
successors and assigns (to the extent this Lease is assignable), hereby agrees
that in the event of any actual, or alleged, breach or default by Landlord under
this Lease that:

          A.   Tenant's sole and exclusive remedy against Landlord shall be as
against Landlord's interest in the Building;

          B.   No partner of Landlord shall be sued or named in a party in a
suit or action (except as may be necessary to secure jurisdiction of the
partnership);

          C.   No service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of the partnership);

          D.   No partner of Landlord shall be required to answer or otherwise
plead to any service of process;

          E.   No judgment will be taken against any partner of Landlord;

          F.   Any judgment taken against any partner of Landlord may be vacated
and set aside at any time nunc pro tunc;

          G.   No writ of execution will ever be levied against the assets of
any partner of Landlord;

          H.   The covenants and agreements of Tenant set forth in this
Paragraph 38 shall be enforceable by Landlord and any partner of Landlord.

     39.  Hazardous Material.
          ------------------ 

          A.   Definitions.  As used herein, the term "Hazardous Material" shall
               -----------                                                      
mean any substance (a) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation, ordinance,
order, action, policy or common law; (b) which is or becomes defined as a
"hazardous waste," "hazardous substance," pollutant or contaminant under any
federal, state or local statute, regulation, rule or ordinance or amendment
thereto including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and/or the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.); (c)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of California or any political
subdivision thereof; (d) the presence of which on the Premises and/or the Parcel
causes or threatens to cause a nuisance upon the 

                                      23
<PAGE>
 
Premises and/or the Parcel or to adjacent properties or poses or threatens to
pose a hazard to the health or safety of persons on or about the Premises and/or
the Parcel; (e) the presence of which on adjacent properties could constitute a
trespass; (f) without limitation which contains gasoline, diesel fuel or other
petroleum hydrocarbons; (g) without limitation which contains polychlorinated
biphenyls (PCBs), asbestos or urea formaldehyde foam insulation; or (h) without
limitation radon gas.

          B.   Use Restriction.  Subject to the terms and conditions set forth
               ---------------                                                
herein, Tenant shall be permitted to use and store in the Premises those
materials described in Paragraph H below, in the quantities set forth in said
Paragraph and such other Hazardous Materials and quantities of Hazardous
Materials that Landlord may approve in writing from time to time, which approval
Landlord may withhold on grant in its sole discretion.  Except as specifically
allowed in this Lease, Tenant shall not cause or permit any Hazardous Material
to be used, stored, generated, discharged, transported to or from, or disposed
of in or about the Premises, the Building, the Parcel and/or the outside Area.
The presence of any Hazardous Material caused by Tenant or its agents,
employees, invitees or contractors that is not permitted by this Lease in or
about the Premises shall be deemed an event of default under Paragraph 15 above.
Without limiting the generality of the foregoing, Tenant, at its sole cost,
shall comply with all laws relating to the storage, use, generation, transport,
discharge and disposal by Tenant or its agents, employees, invitees or
contractors of any Hazardous Material.  If the presence of any Hazardous
Material on the Premises caused by Tenant or its agents, employees, invitees or
contractors results in contamination of the Premises, the Building, the Parcel
and/or the Outside Area or any soil, air, ground or surface waters under,
through, over, on, in or about the Premises, the Building, the Parcel and/or
Outside Area, Tenant, at its expense, shall promptly take all actions necessary
to return the Premises, the Building, the Parcel and/or the Outside Area to the
condition existing prior to the appearance of such to reduce the presence of
such Hazardous Hazardous Material (action Level') at which any federal, Material
to below the regulation, ordinance, rule, order, state or local statute, law,
action or policy requires investigation, testing, monitoring, containment,
clean-up , remuneration, response or other action. if the Action Level is
reduced at any time prior to the date three years following the termination of
this Lease, Tenant shall be obligated (even after the termination of this Lease)
to take all actions required to reduce the presence of such Hazardous Material
to below such new Action Level.

     Tenant shall defend, protect, hold harmless and indemnify Landlord and its
agents and employees with respect to all actions, claims, losses, fines,
penalties, fees, costs, damages and liabilities (including, but not limited to,
attorneys' and consultants' fees) arising out of or in connection with any
Hazardous Material used, generated, discharged, transported to or from, stored,
or disposed of by Tenant or its agents, employees, invitees or contractors in,
on, under, over, through or about the Premises and/or the Parcel.  Tenant shall
not suffer any lien to be recorded against the Premises as a consequence of any
Hazardous Material, including any so called state, federal or local "super fund"
lien related to the "clean up" of any Hazardous Material in, over, on, under,
through, or about the Premises.

     Notwithstanding any provision of this Paragraph 39 to the contrary, in no
event shall Tenant be responsible to Landlord for the presence of any Hazardous
Material in, on, under,

                                      24
<PAGE>
 
over, through or about the Premises and/or Parcel not caused by Tenant or its
agents, employees, invitees or contractors.

          C.   Compliance.  Ten . ant shall immediately notify Landlord of any
               ----------                                                     
inquiry, test, investigation, enforcement proceeding by or against Tenant or the
Premises concerning any Hazardous Material.  Any remediation plan prepared by or
on behalf of Tenant must be submitted to Landlord prior to conducting any work
pursuant to such plan and prior to submittal to any applicable government
authority and shall be subject to Landlord's consent, which approval shall not
be unreasonably withheld or delayed.

          D.   Assignment and Subletting.  It shall not be unreasonable for
               -------------------------                                   
Landlord to withhold its consent to any proposed assignment or subletting if (i)
the proposed assignee's or subtenant's anticipated use of the Premises involves
the storage, generation, discharge, transport, use or disposal of any Hazardous
Material not described in Subparagraph H below or not approved in writing by
Landlord pursuant to Subparagraph B above; (ii) if the proposed assignee or
subtenant has been required by any prior landlord, lender or governmental
authority to "clean up" or remediate any Hazardous Material (with associated
costs in excess of $50,000.00) and such proposed assignee or subtenant is not a
Fortune 500 Company; (iii) if the proposed assignee or subtenant is subject to
investigation or enforcement order or proceeding by any governmental authority
in connection with the use, generation, discharge, transport, disposal or
storage of any Hazardous Material (with associated costs in excess of
$50,000.00) and such proposed assignee or subtenant is not a Fortune 500
Company.

          E.   Surrender.  Upon the expiration or earlier termination of the
               ---------                                                    
Lease, Tenant, at its sole cost, shall remove all Hazardous Materials from the
Premises and the Parcel which Tenant introduced to the Premises and/or Parcel.
If Tenant fails to so surrender the Premises and Parcel, Tenant shall indemnify,
protect, defend and hold Landlord harmless from and against all damages
resulting from Tenant's failure to surrender the Premises as required by this
Paragraph, including, without limitation, any actions, claims, losses,
liabilities, fees (including, but not limited to, attorneys' and consultants'
fees), fines, costs, penalties, or damages in connection with the condition of
the Premises including, without limitation, damages occasioned by the inability
to relet the Premises or a reduction in the fair market and/or rental value of
the Premises by reason of the existence of any Hazardous Material in, on, over,
under, through or around the Premises.

          F.   Right to Appoint Consultant.  Landlord shall have the right to
               ---------------------------                                   
appoint a consultant to conduct an investigation to determine whether any
Hazardous Material is being used, generated, discharged, transported to or from,
stored or disposed of in, on, over, through, or about the Premises, in
accordance with this Section 39.  Any entry onto the Premises by such consultant
shall be subject to the provisions of Paragraph 19 above.  If the consultant
determines that Tenant is not in compliance with applicable laws, rules and
regulations regarding the use, storage, generation, disposal or transportation
of Hazardous Materials of, to or from the Premises and/or Parcel, then Tenant
shall reimburse Landlord for the cost of such consultant.  Tenant, at its
expense, shall comply with all reasonable recommendations of the consultant.

                                      25
<PAGE>
 
          G.   Holding Over.  If any action of any kind is required or requested
               ------------                                                     
to be taken by any governmental authority to clean-up, remove, remediate or
monitor any Hazardous Material from the Premises and/or Parcel caused by Tenant
or its agents, employees, invitees or contractors and such action is not
completed prior to the expiration or earlier termination of the Lease, Tenant
shall be deemed to have impermissibly held over until such time as such required
action is completed, and Landlord shall be entitled to all damages directly or
indirectly incurred in connection with such holding over, including without
limitation, damages occasioned by the inability to re-let the Premises or a
reduction of the fair market and/or rental value of the Premises.

          H.   Permitted Materials.  Limited quantities of substances typically
               -------------------                                             
used in connection with general office uses, such as ordinary office supplies
and janitorial products.

          I.   Landlord's Indemnity.  Landlord shall defend, protect, hold
               --------------------                                       
harmless and indemnify Tenant from and against all claims, fines, penalties,
damages, government orders, losses, liabilities, costs and expenses (including
attorneys' fees) arising out of (i) any Hazardous Material used, generated,
discharged, transported to or from, stored disposed of in, on or under the
Premises and/or Parcel by Landlord or its agents, employees or contractors or
(ii) any Hazardous Material which was present in, on, under, over, through or
about the Premises and/or Parcel (including the soils and groundwater
thereunder) as of the Commencement Date of this Lease except to the extent
introduced to the Premises and/or Parcel by any act or omission.

          J.   Provisions Survive Termination.  The provisions of this Paragraph
               ------------------------------                                   
39 shall survive the expiration or termination of this Lease.

          K.   Controlling Provisions.  The provisions of this Paragraph 39 are
               ----------------------                                          
intended to govern the rights and liabilities of the Landlord and Tenant
hereunder respecting Hazardous Materials to the exclusion of any other
provisions in this Lease that might otherwise be deemed applicable.  The
provisions of this Paragraph 39 shall be controlling with respect to any
provisions in this Lease that are inconsistent with this Paragraph 39.

     40.  Option to Extend.
          ---------------- 

          (a) Provided that Tenant is not in default under this Lease at the
time of exercise of the hereinafter described option or at the time of
termination of the then existing term of this Lease, as the case may be, Tenant
shall have one option to extend the term of this Lease for a period of three (3)
years (the "Option Term").  Said option shall be exercised only by written
notice delivered to Landlord not later than one hundred eighty (180) days prior
to the expiration date of the then existing term of this Lease.  In all
respects, the terms, covenants and conditions of this Lease shall remain
unchanged during the Option Term, except that the Monthly Installment of rent
payable during the Option Term shall be as specified in Subparagraph (b) below,
and except that there shall be no further option to extend the term of this
Lease at the end of the Option Term.

          (b) The Monthly Installment of rent payable during the Option Term
shall be the sum of Eighty Thousand Three Hundred Forty-Three Dollars
($80,343.00) per month.

                                      26
<PAGE>
 
     41.  Landlord's Default.  If Landlord fails to perform its obligations
          ------------------                                               
under this Lease within thirty (30) days following written notice from Tenant,
Tenant may perform Landlord's obligations at Landlord's expense, and Landlord
shall reimburse Tenant for the cost of such performance within thirty (30) days
after receipt of billing; provided, however, if the nature of Landlord's failure
reasonably requires more than thirty (30) days to cure, the Landlord shall not
be in default so long as it commences to cure the default within said thirty
(30) day period and thereafter diligently continues to Cure the default.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below.

                                         TENANT:

                                         SILICON GRAPHICS, INC.,

                                         a Delaware corporation

Dated:________________                   By:__________________________________
                                         Name:________________________________
                                         Title:  Senior V.P., Administration

                                         LANDLORD:

                                         SHORELINE INVESTMENTS VI.,

                                         a California general partnership

Dated:________________                   By:__________________________________
                                         Name:________________________________
                                         Title:  General Partner

Dated:________________                   By:__________________________________
                                         Name:
                                         Title:  General Partner

                                      27
<PAGE>
 
                                   EXHIBIT A

                               [INSERT GRAPHIC]

                            SHORELINE BUSINESS PARK
                               SITE MASTER PLAN
                               MOUNTAIN VIEW, CA
<PAGE>
 
                                   EXHIBIT B


                                   SITE PLAN

                                INSERT GRAPHIC

                                   EXHIBIT C

                              CONSENT TO SUBLEASE

     This Consent to Sublease is made to be effective as of September __, 1998
by, between and among SHORELINE INVESTMENTS VI, a California general partnership
("Master Lessor"), SILICON GRAPHICS, INC., a Delaware corporation ("Sublessor"),
and VERISIGN, INC., a Delaware corporation ("Sublessee") with reference to the
following facts, understandings and intentions:

     A.   Sublessor is leasing from Master Lessor those certain premises
consisting of approximately 51,834 square feet of space commonly known as 1350
Charleston Road, Mountain View, California (the "Premises"), on the terms and
subject to the conditions of that certain Lease Agreement executed on June 14,
1996 (the "Master Lease").

     B.   Sublessor desires to sublease the Premises to Sublessee, and Sublessee
desires to sublease the Premises from Sublessor, on the terms and conditions set
forth in the Sublease Agreement of even date herewith (the "Sublease").  A copy
of the Sublease is attached hereto as Attachment 1 and incorporated herein by
                                      ------------                           
reference.

     C.   Sublessor and Sublessee now desire to obtain the consent of Master
Lessor to the Sublease as required by the Master Lease.

     NOW, THEREFORE, the Master Lessor, Sublessor and Sublessee agree as
follows:

     1.   Master Lessor hereby consents to the execution and delivery of the
Sublease by and between Sublessor and Sublessee and to the subletting of the
Premises by Sublessor to Sublessee. Master Lessor's consent to the Sublease does
not constitute approval by Master Lessor of any of the provisions of the
Sublease, and neither the Sublease nor Master Lessor's consent thereto shall be
deemed to alter, amend or otherwise modify any of the terms or provisions of the
Master Lease.

     2.   The Sublease is and shall be at all times subject and subordinate to
the Master Lease and all of the provisions, covenants and conditions thereof.

     3.   Neither the Sublease nor Master Lessor's consent thereto shall release
or discharge Sublessor from any liability under the Master Lease and Sublessor
shall remain primarily liable 
<PAGE>
 
and responsible for the full performance and observance of all the provisions,
covenants and conditions set forth in the Master Lease on the part of Sublessor
to be performed and observed.

     4.   This Consent by Master Lessor shall not be construed as a consent by
Master Lessor to any further subletting either by Sublessor or Sublessee. The
Sublease may not be assigned nor shall the Premises be further sublet without
the prior written consent of Master Lessor in each instance in accordance with
the terms of the Master Lease.

     5.   So long as the Master Lease is not in default, Master Lessor agrees to
furnish all services, maintenance and repairs to the Premises which are the
obligations of the Master Lessor under the Master Lease, and to comply with all
obligations and covenants under the Master Lease with respect to Sublessee as if
Sublessee were the tenant thereunder.

     6.   In addition to the notice requirements under the Master Lease, Master
Lessor agrees to provide Sublessee with written notice of any default by
Sublessor of any obligations under the Master Lease and agrees to accept any
cure thereof tendered by Sublessee. Such notice or demand shall be given or
served in writing in accordance with the terms of the Master Lease at the
address of Sublessee set forth in the Sublease. Sublessee may change such
address by delivering written notice thereof to Master Lessor by certified or
registered mail.

     7.   Pursuant to Paragraph 25 of the Master Lease, Sublessor has agreed to
pay to Master Lessor, as Additional Rent under the Master Lease, fifty percent
(50%) of any and all rents or other consideration (including key money) received
by Sublessor from the Sublessee by reason of the Sublease in excess of the rent
payable by Sublessor to Master Lessor under the Master Lease (less any brokerage
incurred by Sublessor in connection with the Sublease). Accordingly, provided
that the Sublease remains unmodified, in full force and effect and that the rent
thereunder is paid in full and not abated, Sublessor shall pay to Master Lessor,
within five (5) days following receipt of the monthly rent from Sublessee, the
following respective sums during the following respective time periods as
Additional Rent pursuant to this paragraph:

                 TIME PERIOD            AMOUNT OF ADDITIONAL RENT
                 -----------            -------------------------

             01/01/99 - 03/31/99                $     0      
             04/01/99 - 04/30/99                 12,959
             05/01/99 - 12/31/99                 38,876
             01/01/00 - 12/31/00                 41,091
             01/01/01 - 12/31/01                 43,374
             01/01/02 - 06/30/02                 45,725
             07/01/02 - 12/31/02                 40,541
             01/01/03 - 12/31/03                 42,963
             01/01/04 - 12/31/04                 45,457
             01/01/05 - 06/30/05                 48,025

                                      30
<PAGE>
 
     8.   Sublessor and Sublessee represent and warrant to Master Lessor that
there are no additional payments of rent or consideration of any type payable by
Sublessee to Sublessor with regard to the Premises other than as disclosed in
the Sublease, a true and complete copy of which is attached hereto as Attachment
                                                                      ----------
1 and incorporated herein by this reference.
-                                           

     9.   Master Lessor represents and warrants that as of the date hereof, to
Master Lessor's actual knowledge, Sublessor is not in breach or default under
the Master Lease and no event has occurred which, with notice, or time, or both,
would constitute such a breach or default.

     10.  Master Lessor's right under Section 25(B)(1) of the Master Lease to
condition its consent to a Transfer of the Premises on Sublessor's agreement to
pay Master Lessor fifty percent (50%) of the "bonus rent" received by Sublessor,
shall mean, in the event of a Transfer of the Sublease by Sublessee, fifty
percent (50%) of the amounts received by Sublessor from Sublessee under Section
15 of the Sublease.

     11.  This Consent may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one agreement.

     12.  This Consent shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.

                                      31
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed this Consent to Sublease as
of the respective dates set forth below.

  SUBLESSEE:                       VERISIGN, INC., a Delaware corporation

                                   By: _____________________________________

                                   Name: ___________________________________

                                   Title: __________________________________

                                   Date: ___________________________________

  SUBLESSOR:                       SILICON GRAPHICS, INC.,
                                   a Delaware corporation

                                   By: _____________________________________

                                   Name: ___________________________________

                                   Title: __________________________________

                                   Date: ___________________________________

  MASTER LESSOR:                   SHORELINE INVESTMENTS VI,
                                   a California general partnership

                                   By: _____________________________________

                                   Name: ___________________________________

                                   Title: __________________________________

                                   Date: ___________________________________

                                      32
<PAGE>
 
                                   EXHIBIT D


                     [MAP DISPLAYING LOCATION OF PREMISES]